VI. TRADE REGULATIONS AND STANDARDS Bulgaria's import regime was liberalized in early 1991, when import restrictions were eliminated and the number of items requiring import licenses was greatly reduced. That same year Bulgaria introduced a new tariff schedule which lowered duties to within the norms of the GATT. Subsequent legislation expanded duty-free items and waived registration requirements for certain products and raised quota limits on specialty food items and certain fruits. In 1991, the United States accorded Bulgaria most-favored-nation status (column 1) duty rates. In the following year, the United States granted GSP (General System of Preferences) for certain Bulgarian exports to the U.S. A. Tariffs and Import Taxes/Customs Valuation U.S. products entering Bulgaria are subject to preferential tariff rates. Tariffs are based on the harmonized system (HS) and calculated on an ad valorem basis. U.S. products receive the most preferential standard rates. As of April 1, all imports are subject to an 18% VAT. There is also a 0.5% customs processing fee assessed on the valuation of the goods. Agricultural import tariffs for products such as wheat, corn, rye, oats, sorghum, and rice range from 15-25%. For oilseeds, soybeans, and sunflower seeds, the duties are from 10-15% Additionally, for plant and animal breeding materials, 5%; and for processed products, 10-40% duties are assessed. B. Import Licenses Only a limited number of products require import licenses. Some agricultural products are subject to this requirement but licenses are usually readily obtained. In the non-agricultural sectors, products requiring licenses include the following: specialty pharmaceutical and dental products, narcotics and psychotropic substances, tobacco, nuclear materials, explosives, sporting weapons, hand guns, ammunition, military production technology as well as hazardous materials, precious metals, and endangered wildlife species. Bulgarian importers must petition the Ministry of Trade's approval in order to obtain such a license. The approval process may take anywhere from a few days to two weeks. The U.S. Embassy has no complaints on record from U.S. exporters that the import license regime has affected U.S. exports. C. Export Controls Regarding the export of U.S. products to Bulgaria, in 1993 COCOM export controls were eased on selected technologies and products. Bulgaria was granted "favorable consideration status", the same as the Czech Republic and Poland. Favorable consideration status means a presumption of approval for COCOM applications and a shorter approval period. For Bulgarian exports, certain products require export permission such as tobacco, scrap metal, lumber, cultural artifacts, protected plants and animals. Due to extraordinary circumstances, there is a ban on Bulgarian exports of grain through September 30, 1994. This ban was instituted to comply with the U.S. P.L. 480 program of corn sales and due to the poor harvest due to drought in 1993. The ban is not expected to continue beyond the above date given the improved harvests expected in 1994. D. Import/Export Documentation/Temporary Entry Imports of goods require the usual types of documentation normally required in international trade. Bulgaria applies the single administrative document used by the European Community. Temporary entry of goods may be obtained in a number of ways: - A) either through an ATA Carnet for Temporary Import of Goods, obtained from the local Chamber of Commerce in the U.S. - B) through other carnets, such as Carnet "TIR" or special Carnets for "Tobacco and Alcohol." - C) authorized shippers and forwarders for major promotional events and trade fairs will normally handle the temporary entry of goods as long as proper documentation is received from the U.S. party i.e. that invoices/shipping documents clearly state that goods are to be used only for demonstration/display purposes. Souvenirs and advertising materials are normally exempt from custom duties. Temporary import may not exceed 6 months and may not be sold without proper authorizations. E. Labelling, Marking Requirements Bulgaria has adopted many EC trade regulations and while not explicitly proscribed by Bulgarian statutes, adherence to such practices would be advisable and a positive competitive element. Warnings should be clearly visible. F. Prohibited Imports As noted above, EC standards may be applied as a general guideline, with some exceptions. Items such as electrical appliances not meeting safety standards; livestock and food products from countries under quarantine, noxious weeds, diseased animals, and food products not meeting Bulgarian health requirements are all prohibited. G. Standards The Bulgarian Government aspires to a system of standardization in line with internationally accepted principles and practices. In this regard, some experts are familiar with ISO 9000 standards but Bulgaria is a long way away from its implementation. In general, imported goods must conform to minimal Bulgarian standards. The practice has been that imports have been accorded no less favorable treatment than for comparable domestic products. Bulgaria accepts test results, certificates or marks of conformity issued by recognized authorities of other countries (such documentation should be authenticated by the U.S. Department of State, see IX, B). All imports of plant or animal origin are subject to veterinary and phytosanitary control. Relevant certificates should accompany such goods. Finally, the pharmaceutical sector has its own procedures and standards for the acceptance of drugs in Bulgaria which includes requests for full documentation and possible clinical trials. H. Free Trade Zones/Warehouses Seven free trade zones (FTZs) were established in Bulgaria in 1987: Rouse, Vidin, Plovdiv, Svilengrad, Dragoman, Bourgas, and Petrich. These FTZs have only limited functions such as storage, handling, and transshipment of goods. Only foreigners and joint ventures are permitted to operate within the FTZs. Due to their limited services, the FTZs have not attracted much usage, however recent figures indicate growing interest in FTZs. Moreover, some changes in the statutory framework, such as permitting Bulgarian entities to participate, are under consideration. Transactions within the FTZs are however, exempt from the 18% V.A.T. Basic warehouse space is plentiful in Bulgaria. Special climate controlled or fully equipped facilities are rare. Moreover, users should question the level of security provided by such facilities before making any commitments. I. Special Import Provisions Revisions to Bulgaria's tariff regime of January 1, 1994, brought additional opportunities for U.S. exporters. Duty-free status was extended to such products as pharmaceutical and agricultural equipment; environmental protection products such as instruments, monitoring devices and supplies needed for environmental assessments. Processed baby milk, mining equipment and parts, and radioactive isotopes are included in the duty free list. Duty free status also covers materials and equipment for enhancing nuclear safety. Medical instruments and spare parts which have received duty free status in the past will continue to receive such treatment. Medical products under this heading include the following HS numbers: 30019010, 30021010, 30021020, 30022000, 30061000, 34070020, 34070030, 90181100, 90181900, 90182000, 90183100, 90183900, 90184100, 90184900, 90185000, 90189000, 90191000, 90192000, 90211100. A final category of products under the 1994 revision are those qualifying for duty-free treatment but with certain quota limitations. Such products include food additives and products derived from natural calcium phosphates. In the agricultural sector, insecticides and fungicides are included. In the manufactured sector, duty-free but quota limited items are small- horsepower engines for small-scale agricultural equipment as well as larger engines for tractors (HS numbers: 84073200; 84073300; 84082000); machines for hay harvesting and threshing machines; machines for poultry breeding; drying and sifting machines; tractors and spare parts (under HS numbers: 84333000; 84334000; 84335200; 84335100; 84362100; 84362900; 84369100; 84371010; 84371020; 87013000; 87019000). J. Membership in Free Trade Arrangements Bulgaria signed an EC-Association Agreement permitting eventual free access of EC origin goods in a phase-out of 10% or 20% annual tariff reductions, depending on the product category. Bulgaria has a similar association agreement with EFTA member states. Finally, Bulgaria has reactivated its accession negotiations with the GATT; it already has observer status.