The Start of the Alliance
Romania is a republic situated in southeastern Europe at the lower part of the Danube River. Under the rule of the Communists, its economy was highly centralized and functioned within official plans. It was in the 1980's when the country experienced some economic problems leading to its decline. Back then, it had to payoff a debt amounting to $10 billion.
The Communist era was a period for heavy and nationalized industries. Machine building was the primary factor for the state's investments. Some problems were encountered though especially because fixed assets were already aging. This increased the energy inefficiency rate of the republic. To stabilize the economy, petrochemical manufacturing capacity had been developed. Food processing as well as textile manufacturing became an essential component of the light industries.
Ninety percent (90%) of Romania's agricultural and productive lands were collectivized during the Communist regime. Farm productivity was very minimal because of several factors such as lack of investments, bad management and absence of mechanized systems. After the revolution of 1989, the new government disseminated the land to private farmers. This was part of the attempt to increase production. The principal crops are corn, wheat, fruits and vegetables, rye, sugar beets, potatoes and oilseeds. Dairy products made its market share and other goods such as wines and meats were produced in bulk. Despite being left with food shortages after the Communist era, Romania is still a good food exporter.
During the 1980's 25% of the foreign trade of Romania was reliant upon the existence of then Union Soviet Socialist Republic (USSR). The remaining 75% of its trade was distributed to other nations which includes the United States. Its partnership with the latter was not seen even after World War II. However, in the 1960's, bilateral relations of Romania and the US improved a lot. To make a good start they focused not only on each other's economy but also included exchanges for culture, education and science.
The early years of the trade relations were characterized by differences in political conditions. Each of the two governments played a vital role to circumvent the disparities thus yielding to positive results. Up to these days, these two countries have strengthened the friendship with a variety of goods going to and coming from each other's boundaries.
Major Exports and Imports between the Two Nations
Romania's exports are comprised of textiles, footwear, metal and metal products, minerals and fuels, chemicals, machinery and equipment and agricultural products. Its principal imports are textiles, basic metals, machinery and equipment, fuels and chemicals, minerals and agricultural products. In 2005, the US ranked seventh among all the export partners of Romania with a contribution of 4.1% to the total.
The US Census Bureau recorded US exports to Romania for the ten-month period ending October 2008 at $879.3 million. On the other hand, imports of the former from the latter gained total market share of $916.4 million. For the year 2007, the following totals were tracked by the same agency:
Major Trade Agreements between the Two Nations
- Romanian Exports to US. The year 2007 was a good year for Romanian products entering the jurisdiction of the United States. In fact, total sales for all the said goods were recorded at $1.05 billion. Of this total amount $117.31 million which is equivalent to 11.17% of the year's total went to the sales of fertilizers, pesticides and insecticides. Joining these goods on top of the list were: other industrial machinery; automotive tires and tubes; unmanufactured steelmaking and ferroalloying materials; apparel and household goods from cotton; engines for civilian aircraft; semifinished iron and steel mill products; apparel and household goods from other textiles; drilling and oilfield equipment and platforms; and iron and steel products except advanced manufactures. The last listed product earned a total income of $40.26 million or 3.83% of 2007's total.
- Romanian Imports from US. The products coming from US going to Romania made total sales of $680.43 million for the year 2007. Of this total amount, $66.07 million which is 9.71% of the entire amount went to the sales of other coal and fuel. Included in the top ranks were: telecommunications equipment; drilling and oilfield equipment; unmanufactured tobacco; computer accessories; new and used passenger cars; measuring, testing and control instruments; metallurgical grade coal; medicinal equipment; and photo, service industry machinery. The last product was sold for an amount of $17.76 million which is equivalent to 2.61% of the total for the year 2007.
- Fastest-Growing US Exports to Romania. The commodities coming from US exported to Romania made remarkable sales for 2007 compared with their total for 2006. Of the many products sold in the Romanian Market, civilian aircraft totaled to $17.51 million which is 62,550% higher than its sales in 2006. Other goods given due recognition were: engines and turbines for military aircraft; nonfarm tractors and parts; tanks, artillery, missiles, rockets, guns and ammunitions; and corn. Corn made an increase of 1,678% from 2006 totaling $5.20 million.
- Fastest-Growing US Imports from Romania. Romanian products were sold in the US market for some time already. Every year the sales for each set of commodity changes. For the year 2007, it was recorded that a lot of products soared as compared to the lists of 2006. First on the ranks were other chemicals such as photo chemicals, printer inks and paint which had total sales of $974 thousand which increased by 2,632.43% from 2006. Other commendable goods were: textile, sewing and leather working machinery; movies, miscellaneous imports and special transactions; miscellaneous nonferrous metals; and other materials except chemicals. The last product increased by 742.11% from 2006 with its total sales of $141 thousand for 2007.
There are actually two notable treaties between Romania and the United States. These two are said to be the core concepts to which the rules of foreign trade between the two nations are founded. They brought significant changes to the people and the government. They produced a great impact in the economy of both lands. Here are the trade agreements between Romania and US:
Trade Conflicts between the Two Nations
- Romania Bilateral Investment Treaty. As always covered in any bilateral investment treaty, this one focused on the encouragement of mutual relations of the two nations as to cultural, social, political, spiritual and economic aspects. This had helped avoid vested interests thus promoting equality on the investments made by individuals, parties and companies entering the jurisdiction of the other contracting party. Included in this treaty is the agreement to international law standards when it comes to expropriation and appropriate compensation. There was also the permission for free transfer of funds associated with investment. The option of the investor to solve disputes with the host government may also be done through the facilitation of international arbitration.
- Agricultural Agreement. In December 5 to 9 of 2005, the US government through its Department of Agriculture conducted a second Trade and Investment Mission to Romania in order to discuss agricultural concerns. The agreement came up with vital considerations on agribusiness, cooperation and trade and investment. They particularly came up with a consensus for agricultural production, investment, livestock genetics, inputs, meat and poultry, processed foods and feed and grains. This was also an attempt to eliminate double taxation on agricultural products from or to Romania or US.
The trade disparities between Romania and US were brought about by several factors. Issues came from a variety of concerns and brought war between the two countries. The conflicts date from as early as the World War II. The following barriers led to some trade conflicts:
The Future of Trade between the Two Nations
- World War II. On June 5, 1942, the war began when both Romania and the US declared war against each other. The war included other European nations such as Hungary and Bulgaria. It was recorded that these European nations were the first to declare war against the US. The latter was provoked thus declaring war against the three nations as well.
- Communist Regime. The Communist era in Romania led to some problems in the country's trading with other nations outside Europe. In this regard, goods coming from other countries such as US were not allowed to interfere in the Romanian market. This was a hindrance to the country's international business thus with a declined stature in world economy, especially for Eastern Europe.
The wars between the two nations have already ended. Since its dramatic transfer of power from dictatorship in the land to a fully democratic government, Romania had seized its war with the United States and other countries in global trade. Looking at the future, the former focuses on a better trade relation with the rest of the countries to which it is dealing on the goals of international business.
The traces left by war are already minimal. What matters now is how to move forward and set a good example to other trade relations in the world. Thus, Romania and the United States will continue its diplomatic missions. This in effect will lead to a better nation for both these countries. The generations ahead will surely benefit from the understanding made by the governments of the two nations. There is no known hindrance that could get into the way of a fruitful and wonderful trade for the future.
US-Romania Trade References