Romania Country Brief
Bilateral Relations
Australia and Romania share a relationship based on commercial linkages and community ties.
According to the 2006 census, there were 12,950 Romanian-born people living in Australia, with the majority residing in New South Wales and Queensland. It is estimated that there are around 16,000 people living in Australia who are of Romanian descent.
Diplomatic relations between Australia and Romania were established in 1968. Australia is represented by an Honorary Consulate in Bucharest. Austrade is also represented in Bucharest. Australia's non-resident Ambassador to Romania is based in Belgrade. Romania has an Embassy in Canberra, an Honorary Consulate in Melbourne and a Consulate-General in Sydney.
Bilateral Agreements
Romania and Australia have concluded an Investment Promotion and Protection Agreement, signed in 1994, a Trade and Economic Agreement (signed in full effect for Australia in July 2002 and for Romania in January 2003) and an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion, signed in 2001.
High level visits
Prime Minister Kevin Rudd attended the NATO Summit in Bucharest in April 2008. Former Minister for Trade, Mr Vaile, visited Romania in October 1999 to participate in a Joint Ministerial Commission.
An Australian Parliamentary delegation to Romania was led by the then President of the NSW Legislative Council in July 2002. An Australian Parliamentary delegation led by Senator Alan Ferguson, the then Chairman of the Joint Standing Committee on Foreign Affairs, Defence and Trade, visited Romania in April 2003. The purpose of the visit was to lead an Inquiry on the potential for Australian trade and investment in Central Europe. The Inquiry concluded that there were good prospects for Australian companies to further expand trade and investment with Central European countries, including Romania. The full report can be found on the Parliament House website.
The Romanian Deputy Minister responsible for relations with the diaspora, Christian Niculescu, visited Australia in October 2001, principally to meet with the Romanian community. Former President Emil Constantinescu visited Australia in September 2000 for the Olympic Games. Romania's then Defence Minister Mr Ioan Mircea Pascu, visited Australia in April 2000. The Speaker of the Chamber of Deputies of the Romanian Parliament, Mr Bogdan Olteanu, visited Australia in September 2006 with a business delegation
Political Overview
Under the 1991 Constitution (revised in 2003), Romania has a presidential political system. Under this system, an executive President is elected directly for a maximum of two five-year terms and acts as the Head of State. While in office, the President must renounce all party positions and affiliations. The President is the Commander of the Armed Forces, represents the State in foreign relations and may take part in Government meetings to discuss issues of national interest. The President appoints the Prime Minister and the Government based on parliamentary election results. Under the new Constitution passed in October 2003, the Presidential term was increased from four years to five. Mr Traian Basescu was sworn in as President of Romania on 20 December 2004.
The legislature comprises two chambers: the Chamber of Deputies (343 seats) and the Senate (143 seats). All members of the legislature are directly elected for four year terms by means of proportional representation. The Constitution gives Parliament a central place in the system of state authorities. It has power in exceptional circumstances to dismiss or suspend the President.
Romania's parliamentary and presidential elections on 28 November 2004 resulted in the ruling Social Democratic Party (PSD) receiving the greatest proportion of votes in the House of Representatives (114 seats), against the opposition Liberal-Democrat Alliance (PNL-PD, 112 seats). The Greater Romania Party and the Hungarian Democratic Union (UDMR) won 48 and 22 seats respectively, and the Humanist Party (PUR) has 18 seats. Following a Cabinet reshuffle in April 2007, Prime Minister Calin Popescu Tariceanu’s heads a minority government made up of PNL and UDMR parties, with partisan support from the PSD. Since January 2008, Romania's Minister for Foreign Affairs is Mr Lazar Comanescu.
Foreign policy issues
Romania's overriding foreign policy priority remains strengthening relations with other European countries and the United State s through its membership of both the European Union and NATO. Romania has made small but significant contributions to military deployments in Afghanistan and Iraq. Romania recently concluded an agreement with the US on US access to Romanian military facilities
Romania has been a member of NATO since 2004. It hosted the Bucharest NATO Summit in April 2008. There is strong public support for Romania’s NATO membership, which is seen by Romanians as an important guarantor of stability in its immediate region, both in a strategic sense and also politically and economically. There are also hopes that closer integration with regional and international organisations such as NATO will attract further foreign investment.
Romania joined the European Union on 1 January 2007. Romania had long desired EU membership and achieving the political and economic reforms required for accession was a key priority for the Government. Romania’s government has pledged to maintain the momentum on EU reforms.
Economic Overview
Romania’s economy has improved markedly over the past few years with GDP growing by an average of more than 5 per cent since 2000 . Romania’s strong growth performance has been a result of a number of factors, including a stronger political commitment to reform, post-recession recovery, strong FDI, greater macroeconomic stabilisation and the country’s strong export performance.
The Romanian economy is expected to continue to grow strongly over the next few years (more than 5 per cent p.a.). However, it will take several years for Romania to catch up with the European average, with its GDP per head at purchasing power parity (PPP) being considerably less than that of the average income level of other EU countries.
Romania's economy is largely based on services, which contribute 55 per cent of GDP. Industry constitutes the second largest sector at around 35 per cent, followed by agriculture at 10 per cent (which provides employment for about 40 per cent of the labour force).
Inflation has been at high two-digit levels for the most of the time during the transition period, for the first time coming down below 10 per cent in November 2004 and decreasing steadily since then.
Unemployment has decreased steadily from 11.5 per cent in 1999 to 5.2 per cent in 2006. While unemployment is declining to quite respectable levels, this masks high levels of underemployment, significant rural unemployment and the impact of remittances which support families and individuals. Some EU member states have imposed limits on the numbers of Romanian guest workers.
On 1 January 2005 changes to Romania’s taxation system came into effect, reducing corporate and personal taxes to a 16 per cent flat rate. This move has boosted foreign direct investment concentrated in telecommunications and services.
Trade and Investment
In 2007, Australia’s exports to Romania increased to A$142 million (A$114 million in 2006). Main exports to Romania were increases in sales of zinc ores and coal. Australian imports of Romanian merchandise have grown in recent years with clothing, rubber tyres, telecommunications equipment and fertilizers.
Australian companies are well placed to take advantage of the demand for foreign investment and imported goods and services as Romania's economy improves and further reforms are made. Opportunities exist particularly in the services sector as Romania modernises its government services. Targeted areas include taxation systems, construction, social security, port management, air traffic control, railway administration, irrigation control, and water and sewerage. Several Australian companies have won contracts in these areas.
There is also keen interest from Romanian students wishing to study in Australia. Other important sectors envisaged for cooperation are agribusiness, information technology and communications, construction and biotechnologies.
Last reviewed date: 10/09/2008