As regards the common commercial policy, Bulgaria has further liberalised its trade with the Customs Tariff introduced in 2000. Trade with the EC has also been further liberalised on the basis of the Europe Agreement and a unilateral decision of the Bulgarian government of 20 February 2000 giving exemption from tariff duties for 143 tariff headings covering imports in particular of industrial goods originating in the EC and EFTA needed by investors. The negotiation of the additional concessions in agricultural trade also concluded successfully and negotiations on a new wine agreement are progressing. The Bulgarian authorities are aware of the differences in the preferential treatment principles used by Bulgaria and the EC, and they are currently reviewing these differences with a view to adopting the EC GSP on accession.

Bulgaria’s tariffs currently average 15.1% on all products, 24.4% on agricultural products, 13.5% on fishery products and 12.6% on industrial products. By comparison, EC tariffs currently stand at 5.3 % on all products, 9.4 % on agricultural products, 12.4% on fishery products and 4.2 % on industrial products.

With a view to the new round of WTO negotiations, close co-operation is taking place in order to co-ordinate standpoints with a view to ensuring convergence with the EU’s commercial policy. To this end the EU and Bulgaria have established a framework for co-operation regarding WTO issues both at ministerial and at departmental level and Bulgaria has been supportive of EU policies and positions within the WTO framework. Bulgaria is at present an observer to the plurilateral Agreement on Government Procurement and has presented an offer on GPA. It is also preparing its accession to the Information Technology Agreement within the WTO. The EU and Bulgaria have established a framework for co-operation regarding WTO issues both at ministerial and departmental level. As regards the new round, Bulgaria concurs with the EU on the need to launch a comprehensive trade round as soon as possible and shares the view that the results of work under the built-in agenda would be less substantial in its absence.

Concerning arms export control, existing legislation needs to be revised to ensure tighter controls on trade in arms and clearer division of responsibilities between institutions to eliminate potential sources of conflict of interest. Proposals to amend and supplement the Foreign Trade in Arms and in Potential Dual-Use Goods and Technologies Act have completed the first reading in the National Assembly. The revision of the legislative framework is intended to tighten controls in both licensing arms-trading companies and clearing individual transactions.

As regards bilateral agreements with third countries, in July Bulgaria requested consultations in accordance with the Europe Agreement on the possible establishment of a Free Trade Agreement between Bulgaria and Croatia. It has also requested consultations concerning its negotiations on a Free Trade Agreement with Israel. Bulgaria has a Free Trade Agreement with FYROM, which entered into force on 1 January 2000. In April 2000, Bulgaria finalised expert level talks on an FTA with Lithuania. It is conducting negotiations with Estonia, Latvia and Morocco. Adoption of a schedule for aligning all bilateral agreements concluded by Bulgaria with the acquis is a priority of Bulgaria’s NPAA.

Within CEFTA, the member countries, including Bulgaria, signed the Additional Protocol No. 8 on the updated version of the Pan-European cumulation of origin of goods.

Overall assessment

Bulgaria’s progress over the reporting period has been generally good, particularly as far as negotiation and signature of bilateral FTAs with EC preferential partners is concerned. It is noteworthy that Bulgaria is conducting a review of all bilateral agreements with a view to bringing them into compliance with the acquis. Bulgaria has concluded an FTA with FYROM which entered into force on 1 January 2000. Bulgaria is a member of CEFTA and is in the process of conducting negotiations for free trade agreements with Lithuania, Latvia, Estonia, Israel and Morocco. Further progress will be necessary to achieve full alignment with the EC’s international trade obligations. Bulgaria should keep the Union fully informed about existing trade agreements or negotiations aimed at the conclusion of any new trade agreements with a third country.

The progress made in the area of arms export control in both legislative improvement and implementation has been insufficient.

As regards the WTO Agreement on Trade in Textiles and Clothing, Bulgaria needs to use the third stage of integration under the ATC to align its integration programmes on those of the EC, while notably avoiding integrating products not yet integrated by the EC. As concerns alignment with EU policy within the WTO, Bulgaria should join the two plurilateral agreements on Government Procurement and Civil Aircraft upon accession.

Attention should be paid to the importance of co-operation to ensure the alignment of Bulgaria’s GATS commitments with the EC commitments and MFN exemptions.

Where medium and long-term export credits are granted, further alignment to the acquis is necessary.

Bulgaria’s alignment with and future participation in the Common Commercial Policy is administered by the Ministry of the Economy (Multilateral Trade Policy Directorate), the Ministry of Foreign Affairs and the Export Insurance Agency. Co-ordination on issues relating to EU membership is ensured through the Working Group on External Relations, which is part of Bulgaria’s co-ordination mechanism for EU integration. Following a restructuring of ministries, this group is now chaired by the Ministry of Economy. Bulgaria has sufficient resources of good quality in this area including expertise in WTO and Common Commercial Policy issues. Co-ordination between the institutions has improved since the last Report. However, one area where administrative capacity is insufficient is capacity to ensure control of arms exports. Whilst authorities have stated their intention to increase staff and create a special agency for export control, this has not taken place and there is no clear timetable for the establishment of the new agency.

Administrative infrastructure, which needs to be in place as regards customs services, is addressed under the chapter relating to the Customs Union (Chapter 25 - Customs Union). Decisions on development and humanitarian aid are made by the Council of Ministers. At this stage no specific issues are to be highlighted in terms of administrative capacity over and above the analysis presented above in this report (Section B.1.1. - Democracy and the rule of law - The executive).