Albania started a process of reform towards a market economy in the early 1990s. This implied a complete overhaul of its economic regime, including trade policy. The process of integration into the global economy received a boost when Albania became a WTO Member in 2000. Since then, Albania has continued to actively promote economic, legal, and institutional reform, and this has resulted in an open trade and investment regime, characterized by low tariffs and few non-tariff barriers to trade. A considerable effort has also been made on the administrative side to facilitate trade and investment flows.
The process of reform is, however, ongoing, and there are areas in which further effort is required, particularly with respect to the implementation of laws and regulations and as regards review and appeal processes. It is also of utmost importance to continue efforts towards developing a strong, effective, and transparent judicial system.
A large number of trade-related reforms are being driven by Albania's desire to become more closely integrated into the European Union (EU). The Stabilisation and Association Agreement (SAA) with the EU, which entered into force on 1 April 2009, contains obligations on a range of political, trade, and economic issues. This has complemented implementation of WTO rules, which has already been largely achieved, as the main driving force for institutional and legal reform. However, the Albanian authorities consider approximation to EU rules as a complement to the changes already implemented to comply with WTO provisions, which remain the basis of Albania’s trade policy regime.
Albania has been an active participant in the Doha Development Agenda and in WTO activities in general. Albania has an impressive record on making notifications to the WTO. It has never been involved in a dispute under WTO rules.
The Albanian foreign investment regime is very open. Investment is permitted on the same terms to both foreign and domestic investors, the only exception being with respect to land ownership. Prior authorization is not required for investments to be undertaken. Companies investing in Albania have the right to employ foreign citizens. Funds related to investments may be transferred outside of the country, with limitations in certain circumstances.
Albania is signatory to the Central European Free Trade Agreement (CEFTA) and it has two bilateral free-trade agreements, with the European Union (EU) and Turkey. Albania signed an FTA with EFTA States on 17 December 2009, which is expected to enter into force in 2010. Albania submitted its application for EU membership on 28 April 2009. and if this is accepted, hopes that negotiations may be completed before 2014. Albania has received considerable amounts of aid for trade assistance from the EU in recent years..
Trade Policy Formulation and Implementation
The Constitution of the Republic of Albania sets out, inter alia, the functions of the executive, legislature, and judiciary.1
The President is the Head of State, and is elected through a qualified majority vote of the National Assembly.2 The Presidential term in office is five years, renewable once. The Constitution grants limited authority to the President, hence this role is largely ceremonial.3 Executive power is vested in the Council of Ministers, comprising the Prime Minister, the Deputy Prime Minister, and Ministers. The President appoints the Prime Minister on the proposal of the party or coalition with the majority of seats in the Assembly, usually following a general election. Albania's Assembly comprises 140 Members, elected by proportional representation for a four-year term.4
The Constitution (Article 95-2) grants large powers to the Council of Ministers, which may exercise any state function that is not attributed to other bodies of central or local government. Some observers have noted this is often used as a constitutional basis for general and even enlarged discretionary powers of the administration5 (Articles 9 and 21 of the Code of Administrative Procedures).
Law No. 9,000 of 30 January 2003, On the Organization and Functioning of the Council of Ministers, sets out the competences and rules of conduct of the Prime Minister and other Members of the Council of Ministers, as well as the procedures for preparation and submission of proposals for decision by the Council and the role of inter-ministerial committees. Under this law, the Council of Ministers has the authority to approve ministries’ areas of activity and their principal functions. Law No. 9,000/2003 also gives guidelines for the creation of subordinate institutions.
In accordance with the 1998 Constitution, the Government must be organized in a decentralized manner, and regions and local governments have autonomy in certain decisions.6 There are 373 local government units in Albania, 65 of which are municipalities and 308 communes, which form the 12 regions. The president of a region is elected by the regional council composed of representatives of the communes and municipalities. The regions have the responsibility of coordinating economic development measures and promoting public investment, and may exercise activities entrusted by the communes and municipalities. Prefects are responsible for controlling the legality of local government decisions.
The People’s Advocate (Ombudsman) was established as an institution by Law No. 8,454 of 4 February 1999, as amended by Law No. 8,600 of 10 April 2000 and Law No. 9,398 of 12 May 2005, following Article 60 of the Constitution. The People’s Advocate, an independent body with its own budget, is in charge of defending the rights, freedoms, and lawful interests of individuals from unlawful or improper actions or failures to act of the public administration bodies. The People’s Advocate is elected by a three-fifths majority of all members of the Assembly for a five-year period, with the right of re-election. The Advocate is intended to serve as a reviewer towards better governance, and publishes an annual report presented before the Assembly and available online, including in English. In 2007, last year for which data are available, the Ombudsman received 2,037 complaints and initiated procedures on 822.7
Albania has a legal system based on civil law traditions. In the hierarchy of laws, the Constitution has the highest legal force; ratified international agreements have superiority over domestic laws and legal acts issued by the Council of Ministers. As set out in the Constitution, laws may be proposed by the Council of Ministers, Members of the Assembly or by popular initiative supported by at least 20,000 voters. Proposed laws must be accompanied by a report justifying the financial expenses of their implementation. Non-governmental draft laws that would have budgetary implications must be submitted to the Council of Ministers for its opinion. Draft laws are voted upon three times; they are passed with a majority of votes, in the presence of more than half of the Assembly members. Certain laws require, however, a three-fifths majority.8 The President must either promulgate a law within 20 days or, through the issuance of a decree, send it back to the Assembly for review. The Presidential decree for a review loses its effect when the majority of Assembly members vote against it. Laws enter into force 15 days after their publication in the Official Journal. Referenda to abrogate specific existing laws or to introduce new legislation can be organized if 50,000 signatures of voters are gathered.
The President has authority to sign international agreements. Most agreements must be ratified by the Assembly through a simple majority vote in order to enter into force in domestic law.9 As indicated, international agreements that have been ratified have superiority over other Albanian laws and take precedence in the event of any incompatibility.10 The Constitutional Court (below) is responsible for deciding on the compatibility of international agreements with the Constitution prior to their ratification, as well as the compatibility of laws with international agreements. Since Albania’s accession to the WTO there has been one instance when domestic legislation has been found to be incompatible with WTO Agreements; this legislation was amended as a consequence.11
Albania's court system comprises a High Court, seven courts of appeal (including a Serious Crimes Appeal Court, which was established in 2004), and 23 courts of first instance (including a Serious Crimes Court, also established in 2004). In addition, Law No. 9,877 of 18 February 2008, On the Organization of the Judicial Power, provides for the creation of administrative courts. As noted by the authorities, however, these have yet to be established, and administrative conflicts are currently settled within the first instance courts. The establishment of commercial courts is one of the long term objectives set out in the Government's National Strategy for Development and Integration.
The courts of appeal hear appeals from first instance courts, and in so doing, they may consider issues of law and fact. The High Court is charged with hearing decisions of the courts of appeal and may only consider issues of law but not of fact. It also has initial jurisdiction for charges against the Government, deputies of the Assembly, and Judges of the High Court and the Constitutional Court when there are criminal charges against them. Albania's Constitutional Court is charged with ensuring the provisions of the Constitution are respected and their interpretation. Its decisions are final.12
Legislative reforms taken over the period under review have included the adoption of a law on judicial reform, Law No. 9,877 of 18 February 2008, On the Organization of the Judicial Power in the Republic of Albania, which sets out the organization and competences of the courts, the conditions and procedures for judicial appointments, the rights and obligations of judges, and related disciplinary procedures. This was followed in 2009 by the issuance of Presidential decrees to advance certain reforms.13 The authorities indicated that the Government is working on a new justice strategy, amendments to the Civil Procedure Code and the Criminal Procedure Code, as well as new draft laws.14 There have also been efforts to improve the management of cases through the installation of enhanced information technology systems.
In the context of its enlargement monitoring activities, the EU had noted that while Albania has made some progress in undertaking judicial reforms, this has been limited. Concern remains that judicial procedures are slow and lack transparency, and that the system continues to function poorly due to shortcomings in accountability and transparency.15 A recent study, under the American Bar Association’s Rule of Law Initiative, indicated that the 2008 Judicial Reform Index (JRI) for Albania demonstrates that the pace of judicial reform, with the aim of encouraging the functioning of an independent, transparent, impartial, efficient, and professional judiciary, has been slow. Of the 30 factors analysed in the JRI, seven (relating to training of judicial candidates and sitting judges, judicial jurisdiction over human rights cases, appellate process, budgetary process, judicial immunity, and professional associations) were rated positive in 2008, while 19 factors were rated neutral. The four remaining factors, which related to improper influence in judicial decision-making, enforcement powers of the courts, public access to court proceedings, and publication of judicial decisions, were rated negative.16
The importance of developing a strong, effective, and transparent judicial system is a key theme in the Government's National Strategy for Development and Integration. It acknowledges that shortcomings in Albania's judicial system, including poor implementation of laws, had enabled corruption and organized crime to develop as well as tax evasion, a disregard for property rights and other unregistered activities. The Strategy also notes that political interventions in judicial decisions have been numerous. Priorities for reform, inter alia, include: guaranteeing judicial independence; orienting the court system to best European practices; strengthening the status of judges and prosecutors; increasing the efficiency and transparency of criminal and civil procedures; and increasing the level of execution of court decisions towards the standards of EU countries. The Strategy sets out medium- and long-term goals for achieving a judiciary that would function in an independent, transparent, responsive, and efficient manner.
Trade policy formulation, implementation, and objectives
The Ministry of Economy, Trade and Energy (METE) has overall responsibility for the formulation of trade policy. The Trade Policy Department, staffed by nine professionals, formulates most of Albania’s trade policies and follows up all trade policy issues, including those related to WTO participation. A number of other ministries and agencies have policy-making responsibilities in trade-related areas (see Chapters III and IV). Private sector and civil society input into policy making has been institutionalized through the Business Advisory Council established under Law No. 9,607 of 11 September 2006, On Business Advisory Council. The Council comprises representatives from the Chamber of Commerce and Industry, local and foreign business associations, civil society involved in business, state institutions and local government bodies; it became operational in 2006.
Trade-related reforms are largely being driven by Albania's desire to become more closely integrated into the European Union. Albania submitted its formal application for membership in April 2009.17 The mechanism to achieve this closer integration is the Stabilization and Association Agreement (SAA), which Albania signed with the EU in 2006. The SAA, inter alia, contains commitments to create a free-trade zone between the European Union and Albania (section (3)(ii) below), as well as provisions regarding the gradual alignment of Albania's current and future laws with the acquis communautaire. In this regard, the initial focus is on fundamental elements of the Internal Market acquis, as well as other areas, which include: competition; intellectual property rights; public procurement; standards and certification; financial services; and land and maritime transport.18
The authorities have indicated in the context of this Review, that, after accession to the WTO in 2000, compliance with all WTO rules was considered the main trade policy driving force. Currently, trade policy changes are driven mainly by compliance with SAA requirements and approximation to EU law. The Albanian authorities consider this to be a complement to the changes already implemented for compliance with WTO rules, which remain the base platform of minimum requirements for Albania’s trade policy regime.