BULGARIA: ACCESSION PARTNERSHIP (98/C 202/01)

1. INTRODUCTION

In the opinion which it submitted to the Council in July 1997, in accordance with the provisions of Article O of the Treaty, the Commission recommended that negotiations for accession should be opened with Bulgaria as soon as it has made sufficient progress in satisfying the conditions for membership defined by the European Council in Copenhagen. This recommendation derives from the analysis contained in the opinion, in which the Commission is of the view that (i) Bulgaria is on the way to satisfying the political criteria with regard to the existence of stable institutions, guarantees for the rule of law, human rights and the protection of minorities, (ii) Bulgaria's progress in the creation of a market economy has been limited and the country would consequently not be able to cope with competitive pressure and market forces within the Union in the medium term, and that (iii) despite the progress that has been made, it is uncertain whether Bulgaria will be in a position to apply the acquis, in the medium term and, moreover, substantial administrative reform will be indispensable if Bulgaria is to apply and enforce it effectively.

The Europe Agreement will remain the basis for the European Union's relations with Bulgaria. However the pre-accession strategy will be reinforced to enable assistance to be directed towards the specific needs of each applicant so as to provide support for overcoming particular problems identified in the opinion. As the Commission indicated in Agenda 2000: 'The reinforced pre-accession strategy has two main objectives. First, to bring together the different forms of support provided by the Union in a single framework, the Accession Partnerships, and to work together with the applicants, within this framework, on the basis of a clearly defined programme to prepare for membership, involving commitments by the applicants to particular priorities and to a calendar for carrying them out. Second, to familiarise the applicants with Union policies and procedures through the possibility of their participation in Community programmes.`

At its meeting in Luxembourg in December 1997 the European Council decided that the Accession Partnerships would be the key feature of the enhanced pre-accession strategy, mobilising all forms of assistance to the applicant countries within a single framework. This Accession Partnership has been decided by the Commission, after consulting Bulgaria and on the basis of the principles, priorities, intermediate objectives and conditions which have been decided by the Council.

2. OBJECTIVES

The purpose of the Accession Partnership is to set out in a single framework the priority areas for further work identified in the Commission's opinion on Bulgaria's application for membership of the European Union, the financial means available to help Bulgaria implement these priorities and the conditions which will apply to that assistance. This Accession Partnership provides a framework for a number of policy instruments which will be used to help the candidate countries in their preparations for membership. These will include, inter alia, the National Programme for the Adoption of the Acquis to be adopted by Bulgaria, the Joint Assessment of Economic Policy Priorities, the Pact against Organised Crime and the internal market road maps. Each of these instruments is different in nature and will be prepared and implemented according to specific procedures. They will not be an integral part of this Partnership but the priorities they contain will be compatible with it.

3. PRINCIPLES

The main priority areas identified for each candidate country relate to their ability to assume the obligations of meeting the Copenhagen criteria which state that membership requires:

- that the candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities,

- the existence of a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the Union,

- the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union.

At its meeting in Madrid, the European Council stressed the need for the candidate countries to adjust their administrative structures to ensure the harmonious operation of Community policies after accession and at Luxembourg it stressed that incorporation of the acquis into legislation is necessary, but not in itself sufficient; it is necessary to ensure that it is actually applied.

4. PRIORITIES AND INTERMEDIATE OBJECTIVES

The Commission's opinions and the Council's examination of these have highlighted the extent of the efforts which still have to be made in certain areas by the candidate countries to prepare for accession and took the view that none of these countries fully satisfies all of the Copenhagen criteria at the present time. This situation will require the definition of intermediate stages in terms of priorities, each to be accompanied by precise objectives to be set in collaboration with the countries concerned, the achievement of which will condition the degree of assistance granted and the progress of the negotiations under way with some countries and the opening of new negotiations with the others. The priorities and intermediate objectives have been divided into two groups - short and medium term. Those listed under the short term have been selected on the basis that it is realistic to expect that Bulgaria can complete or take them substantially forward by the end of 1998. In view of the short time span, and taking into account the administrative capacity required to achieve them, the number of priorities selected for the short term has been limited. The priorities listed under the medium term are expected to take more than one year to complete although work may and should also begin on them during 1998.

Bulgaria will be invited to draw up a National Programme for the Adoption of the Acquis (NPAA) by the end of March which should set out a timetable for achieving these priorities and intermediate objectives and, where possible and relevant, indicate the necessary staff and financial resources.

The Accession Partnership indicates that Bulgaria will have to address all issues identified in the opinion. The annex provides a summary checklist of these. Incorporation of the acquis into legislation is not in itself sufficient; it will also be necessary to ensure that it is actually applied to the same standards as those which apply within the Union. In all of the areas listed below there is a need for credible and effective implementation and enforcement of the acquis.

Drawing on the analysis of the Commission's opinion and the Council's examination of this, the following short and medium-term priorities and intermediate objectives have been identified for Bulgaria.

4.1. Short term (1998)

- Economic reform: establishment of medium-term economic policy priorities and joint assessment within the framework of the Europe Agreement; pursuit of the programme launched by the government, including transparent privatisation of State enterprises and banks and restructuring measures in industry, financial sector and agriculture and measures to encourage increased foreign direct investment.

- Reinforcement of institutional and administrative capacity: adoption of the draft civil service law and progress in public administration reform as well as institutional strengthening in the areas of internal financial control capacity, environment, customs policy, reinforcement of phytosanitary and veterinary administrations, particularly as regards facilities at external borders, begin to set up structures needed for regional and structural policy.

- Internal market: further alignment including in the areas of intellectual and industrial property rights (strengthening of enforcement of protection), financial services, taxation, the adoption of the necessary legislative framework for State aid monitoring and the establishment of a first State aid inventory, the adoption of a new competition law.

- Justice and home affairs: concrete steps to combat corruption and organised crime and improve border management.

- Environment: continue transposition of framework and horizontal legislation, establishment and implementation of detailed approximation programmes and implementation strategies related to individual acts. Planning and commencement of implementation of these programmes and strategies.

- Energy: in particular establishing a comprehensive, long-term, energy strategy and respect of nuclear safety standards and realistic closure commitments for certain units as entered into in the Nuclear Safety Account Agreement.

4.2. Medium term

- Political criteria: further efforts to integrate the Roma and consolidation of protection of individual liberties.

- Economic reform: complete the privatisation process. Strengthen market economy institutions.

- Economic policy: regular review of the joint assessment of economic policy priorities, within the Europe Agreement framework, focusing on satisfying the Copenhagen criteria for membership of the Union and the acquis in the area of economic and monetary policy (coordination of economic policies, submission of convergence programmes, avoidance of excessive deficits); while Bulgaria is not expected to adopt the euro immediately on accession, it is expected to pursue policies which aim to achieve real convergence in accordance with the Union's objectives of economic and social cohesion, and nominal convergence compatible with the ultimate goal of adoption of the euro.

- Reinforcement of institutional and administrative capacity: completion of reform at all levels, including training for civil servants; improved operation of the judicial system, training for the judiciary in Community law and its application; further development of the National Audit Office and internal financial control structures; establishment of anti-trust and State aid monitoring bodies; improvements in accounting, auditing and statistics and strengthening nuclear regulatory authority; reinforcement of justice and home affairs institutions (ensuring sufficient and properly trained personnel, in particular police, border guards, ministries and courts), reform of customs and tax administrations to ensure readiness to apply the acquis and the reinforcement of food control administration.

- Internal market: including alignment of competition policy, State aids, customs, taxation, audiovisual policies, public procurement legislation (including transparency), upgrading of standardisation, conformity assessment structures and establishment of a market surveillance system and harmonisation of technical legislation on industrial standards. Further alignment of competition law and effective enforcement of competition laws, reinforcement of competition authorities, promotion of enterprise development, including SMEs, alignment with the acquis in the fields of telecommunications, consumer protection and the internal energy market.

- Justice and home affairs: development of effective border management and frontier control systems, implementation of migration policy and asylum procedures as well as the fight against organised crime (in particular money laundering, drugs and trafficking in human beings) and corruption, and to align visa policy with that of the European Union and to complete alignment to international conventions, notably in view of the Schengen acquis.

- Agriculture: including the land restitution process and establishment of a land register and functioning land market, alignment with the agricultural acquis (including veterinary and phytosanitary matters, in particular external border controls), attention to environmental aspects of agriculture and biodiversity. Development of the capacity to implement and enforce the common agricultural policy, in particular the fundamental management mechanisms and administrative structures to monitor the agricultural markets and implement structural and rural development measures, adoption and implementation of the veterinary and phytosanitary requirements, upgrading of certain food-processing establishments and testing and diagnostic facilities, restructuring of the agri-food sector.

- Fisheries: development of capacity to implement and enforce the common fisheries policy.

- Energy: implementation of a comprehensive policy based on efficiency and diversification including respect of Bulgaria's commitments on the phased closure of certain units of Kozloduy nuclear power plant, decommissioning and nuclear waste management plan.

- Transport: further efforts on alignment with acquis in particular in maritime, air and road freight transport (safety rules) and to provide necessary investment for transport infrastructure, notably extension of trans-European networks.

- Employment and social affairs: development of appropriate labour market structures and joint review of employment policies as preparation for participation in European Union coordination; alignment of labour and occupational health and safety legislation and development of enforcement structures, in particular early adoption of the framework Directive on health and safety at work; enforcement of equal opportunities between women and men; further development of active, autonomous social dialogue; development of social protection, undertake steps to bring public health standards into line with European Union norms.

- Environment: development of monitoring and implementation control structures and capacities, continuous planning and implementation of approximation programmes related to individual legal acts. A particular emphasis should be given to the waste and water sectors and air pollution, including institutional requirements. Environmental protection requirements and the need for sustainable development must be integrated into the definition and implementation of national sectoral policies.

- Regional policy and cohesion: introduction of legal basis and development of administrative structures and budgetary procedures. Strengthen financial instruments and control mechanisms in order to participate in European Union structural programmes after membership.

5. MAIN INSTRUMENTS FOR COMMUNITY TECHNICAL AND FINANCIAL ASSISTANCE

5.1. Programming of financial resources

The Phare allocation for the period 1995 to 1997 has totalled ECU 212 million. Subject to the approval of the Phare budget for the remaining period, the Commission will confirm the allocations for 1998 and 1999. In addition, Bulgaria is eligible for support from the 'catch-up` facility envisaged for 1998 to finance projects relating to privatisation/restructuring, promotion of foreign direct investment and the fight against corruption. Financial proposals will be submitted to the Phare Management Committee as provided for in Council Regulation (EEC) No 3906/89. Joint financing by the applicant countries will be systematically required for all investment projects. The Commission will work with Bulgaria, the EIB and international financing institutions, in particular the EBRD and World Bank, with a view to facilitating the co-financing of projects relating to pre-accession priorities. Financial assistance from the year 2000 onwards will comprise aid for agriculture and a structural instrument which will give priority to measures similar to the Cohesion Fund. In addition Bulgaria will have access to funding from multi-country programmes directly related to the acquis.

The Phare programme is the main financial instrument of the reinforced pre-accession strategy. Phare's prime objective is to help prepare Central and East European countries for accession by focusing the assistance it provides on the adoption of the Community acquis and in particular on the priorities identified in this Accession Partnership and in the National Programme for the Adoption of the Acquis. Each year the Commission will sign a financing Memorandum with Bulgaria in which Bulgaria will undertake to meet a number of the priorities identified in this Accession Partnership and the Commission will undertake to contribute financially to their realisation. Programming of Community financial assistance will take into account the priorities and timetable of the NPAA.

In addition, the subsequent allocation of financial assistance will be closely tied to the respect by the Bulgarian Government of the commitments made in the NPAA. Certain pre-accession activities can be reinforced now (e.g. support for institution building) but others, such as the financing of major investment projects designed to meet the requirements of the acquis in areas such as environment and nuclear safety will have to be programmed over a period of five to six years.

From 1998 Phare assistance will be channelled through the following types of actions:

- Institution building (around 30 %), which involves the strengthening of democratic institutions, rule of law, public administration and all entities responsible for public services in order to establish the necessary institutional and administrative structures and train the people required to apply the acquis. Institution building support will be implemented, inter alia, through, training actions, technical assistance and twinning of institutions and administrations in Bulgaria with relevant bodies in the Member States. Initially this twinning will focus on priority areas such as finance, agriculture, environment, justice and home affairs.

- Investment support (around 70 %), in order to make the necessary investments possible for the adaptation of Bulgarian infrastructure to the Community acquis. This support will concentrate on: (i) structural actions, covering in particular agricultural restructuring, regional development and investment in human and intellectual capital, which could include Phare contributions to participation in the research and technological development framework programme; (ii) compliance with Community norms, in particular as regards environment, agriculture, industry, occupational safety and health, transport and telecommunications; (iii) co-financing of large scale infrastructure (1) and (iv) small and medium-sized enterprises development (2).

5.2. Role of international financial institutions

Cooperation between Bulgaria and the international financial institutions will receive a new impetus and a new focus through the Accession Partnership. The grant resources made available under the Accession Partnership will serve as seed money and a catalyst for larger amounts of development finance from the IFIs. This process will be developed by the Commission in liaison with the candidate countries, the EIB and the IFIs, in particular the EBRD and the World Bank with a view to facilitating the co-financing of projects relating to pre-accession priorities.

Under a new lending mandate covering the period 1997 to 1999, the EIB can make available ECU 3 520 million in Central and Eastern Europe. The new pre-accession facility approved by the EIB's governors in early 1998 increases this amount to ECU 7 billion. EIB loans shall be used in all sectors eligible for EIB financing to facilitate the accession process.

6. CONDITIONALITY

Community assistance will be conditional on respect by Bulgaria of its commitments under the Europe Agreement, further steps towards satisfying the Copenhagen criteria and progress in implementing this Accession Partnership. Failure to respect these general conditions could lead to a decision by the Council on the suspension of financial assistance on the basis of Article 4 of Council Regulation (EC) No 622/98.

7. IMPLEMENTATION OF PRE-ACCESSION ASSISTANCE

The provision of financial assistance to Bulgaria will depend on the maturity of projects proposed by the Bulgarian Government for inclusion in a financing memorandum. Where projects need to be tendered the Commission will only finance those projects which are ready for tendering at the stage of the signature of the financing memorandum. In addition any previous/existing commitments in the same sector must have been fully contracted or be on track. In order to ensure efficient implementation, projects to be financed must not, in principle, fall below a threshold of ECU 2 to 3 million, in particular in the case of infrastructure projects. If these principles lead to a situation where Bulgaria cannot absorb its full indicative allocation, the allocation will be reduced accordingly. The difference between the indicative and final allocation will be transferred to the horizontal SME and/or the large scale infrastructure facility. No subsequent compensation of this amount will be made.

The Government of Bulgaria is invited to put in place an implementation structure which ensures coherence and complementarity between all types of European Union financial assistance and national resources. A national coordinator will be responsible for ensuring a close link between the general accession process and the programming of the Community financial assistance.

The Government of Bulgaria will establish (preferably in the Ministry of Finance) during 1998 a national fund for investment promotion and institution building functioning under the responsibility of a National Authorising Officer (NAO). As the central entity through which Phare and other forms of Community financial assistance will be channelled, the national fund will be responsible for the management of these funds under decentralised implementation in order to increase transparency and reduce dispersion of funds. It will have overall responsibility for management of funds including respect of provisions of the financing memorandum and be accountable to the Commission for the use of the funds. It will also ensure and supervise the flow of national and other co-financing resources as set out in the financing memorandum. The detailed functions and responsibilities of the national fund will be set out in the individual financing memoranda.

In cooperation with the Government of Bulgaria, the Commission will pursue a policy of further decentralisation of the implementation of the financial assistance where certain pre-conditions are met, and to the extent permitted by the European Communities' Financial Regulation, in particular Article 105(3). This will be done with the intention to establish, within limits and in a gradual manner, a relationship between the Commission and Bulgaria where responsibility is shared along the lines of the relationship existing with the Member States for implementing the Structural Funds.

In this context, the possibility of applying national procurement procedures in the tendering and contracting of Phare projects may be explored by the Commission, if so requested by the Government of Bulgaria, in particular in the field of investment. The Commission's decision on this matter will be taken following, inter alia, examination of the Bulgarian national procurement law for respect of and compatibility with the basic provisions of the European Community's public procurement rules and its Financial Regulation, including equal participation in tenders and the provisions of Article 118. Any decision on the use of national procurement rules will be taken by the Commission on a case-by-case basis and will be confirmed in the individual financing memoranda.

The monitoring of programme implementation shall be carried out jointly with the Commission through procedures established in the individual financing memoranda. In order to ensure effective monitoring of implementation of assistance under the Phare programme, each Phare programme will incorporate quantified physical and financial objectives which will be specified in the financing memorandum. In order to gauge their effectiveness all operations financed under the Phare programme will be subject to ex-post evaluation to appraise their impact with respect to their objectives.

8. MONITORING

The implementation of the Accession Partnership will be monitored in the framework of the Europe Agreement. This will commence in 1998 before the Commission presents its first regular report to the Council reviewing the progress made by Bulgaria including implementation of the Accession Partnership.

The relevant sections of the Accession Partnership will be discussed in the appropriate subcommittee. The Association Committee will discuss overall developments, progress and problems in meeting its priorities and intermediate objectives as well as more specific issues referred to it from the subcommittees. The Association Committee will report to the Association Council on the implementation of the Accession Partnership.

The Phare Management Committee will ensure that financing decisions are compatible with the Accession Partnerships.

The Accession Partnership will be amended as necessary in accordance with Article 2 of Regulation (EC) No 622/98. The Commission will propose a review of this partnership before the end of 1999 and at regular intervals thereafter. These reviews will include consideration of the need to further specify intermediate objectives in the light of the progress made by Bulgaria in meeting the objectives set out in this partnership.

(1) Concerning investment projects in general, Bulgaria will be required to fulfil the principle of complementarity by means of contributing a minimum amount of 25 % to jointly financed projects.

(2) A horizontal facility for SMEs will be available to remedy the shortage of investment capital available to small enterprises.

ANNEX

Bulgaria will have to address all issues identified in the opinion. The purpose of this Annex is to provide a summary checklist of these issues. These are formulated as recommendations for action. They are listed in the order in which they appear in the opinion without any ranking in terms of importance or urgency. The priority areas for action by each candidate are set out as priorities and intermediate objectives in the Accession Partnership itself.

1. Political criteria

Efforts are needed to reinforce democratic institutions by practices more in keeping with the rule of law at all levels of the State apparatus. Considerable efforts must be made to combat corruption, improve administration of justice and provide fuller protection for individual freedoms. Democratic control of the police and secret service need to be assured. Increased efforts to fully integrate minorities (Roma) are needed.

2. Economic criteria

A sustained and consistent effort is needed to consolidate the economic situation and economic reforms, including full implementation of the Government's economic and structural reform programme which will address many of the challenges faced. Privatisation of State enterprises, including banks needs to be pursued. Measures need to be taken to restructure industry, the financial sector and agriculture, and to complete price liberalisation, encourage increased foreign direct investment and establish a comprehensive energy policy. Completion and strengthening of market economy institutions is necessary. In agriculture, priority must be given to the land restitution process and removal of bureaucratic obstacles to the functioning of the land market. Agricultural wholesale markets and agro-food enterprises need to be privatised and opened to competition.

3. Ability to assume the obligations of membership

3.1. Internal market without frontiers

The four freedoms

General framework - substantial further efforts are required in the area of public procurement, enforcement of intellectual property rights and personal data protection in order to bring Bulgaria fully into line with EC legislation and standards. Further efforts are needed to implement company law, particularly to ensure the judiciary has sufficient knowledge and experience on company and commercial law issues. As regards accounting and auditing, significant efforts are needed to ensure the full application of legislation.

Free movement of goods - the framework legislation which will enable Bulgaria to take up the basic principles of the European Union system needs to be adopted. This will enhance the shift from mandatory to voluntary standardisation. Then the standardisation and conformity assessment infrastructures (including the separation of regulatory, standardisation and product certification functions) need to be reinforced and the alignment with new approach Directives accelerated. Technical legislation on chemicals, motor vehicles, foodstuffs and pharmaceuticals will also have to be completed. Once the sectoral legislation is fully harmonised, a market surveillance mechanism will have to be set up to become fully operational in the longer term.

Free movements of capital - as further economic stabilisation is achieved, liberalisation of outward capital movements will have to be enhanced. Restrictions concerning acquisition of real estate and land by non-residents must be removed.

Free movement of services - progress on financial services needs to be sustained and to follow closely the structural reform programme. On banking laws, further alignment with Stage I measures, and new legislation for Stage II measures, including provisions for bank deposit guarantee schemes and money laundering, are necessary. Further steps need to be taken to fully liberalise the insurance market. In the restructuring of the financial sector, attention must be paid to transparency and strengthening of the supervisory structure.

Free movement of persons - further efforts are needed to establish legal provisions determining the rights of entry and residence enjoyed by a worker's family and the equal treatment of European Union workers in general. Significant efforts are needed to enhance cooperation in the field of mutual recognition of diplomas and professional qualifications with Member States as well as enforcement of the respective public bodies. Further efforts must be made to ensure the necessary legislative and enforcement measures as regards the coordination of social security schemes.

Competition

Competition law must be made fully compatible with European Community competition laws. Structural reforms are required for the effective implementation of the legislation, in particular by enhancing the administrative powers of the Committee for the Protection of Competition. In the field of State aid, a credible control system should be established. In particular, full transparency should be created through the establishment and updating of a comprehensive State aid inventory in accordance with Community practice. Moreover, the necessary legislation must be created. The State aid monitoring authority should receive sufficient powers to review existing aid and monitor new aid and it should have sufficient and qualified staff. Exclusive rights and State monopolies which are not compatible with the Community acquis must be progressively adjusted and/or abolished.

3.2. Innovation

Information society

Further progress is needed on economic liberalisation in order to create more favourable conditions for the development of an information society.

Education, training and youth

Structural, financial and curricular reform initiatives need to be continued. Specific attention must be given to further reform of the financing of education and training, and to efforts for upgrading knowledge and skills among teachers as well as to investments in education infrastructure. A special effort is needed through training to combat the social exclusion of young persons and of the newly unemployed. Social dialogue on education and training requires strengthening.

Research and development

Greater efforts are needed if Bulgarian research and technological development is to become efficient and competitive at European level.

Telecommunications

The adoption of a telecommunications law is essential for compliance with European Community legislation and for the creation of an independent regulatory authority. At the same time, the acquis now requires governments to ensure that a modern telephone service is available everywhere at an affordable price. Meeting this obligation will require significant investment in the system.

Audiovisual

Legislation needs to be aligned fully with European Community requirements, with regard to the scope of the legislation (i.e. covering all kinds of broadcaster and all modes of transmission), jurisdiction, the promotion of European and independent production, advertising and protection of minors.

3.3. Economic and fiscal affairs

Economic and monetary union

Macroeconomic policy should seek to keep inflation and interest rates low and ensure confidence in the economy. The restructuring of the financial sector must be continued.

Taxation

Substantial adjustments need to be made to bring VAT legislation into line with the requirements of the Community acquis in particular with regard to the scope of exemptions and the need to allow foreign persons to register for VAT in Bulgaria. In the field of excise duties particular attention should be given to the setting up of a warehousing system for the movement of goods under duty suspension arrangements. Tax structures and the level of excise rates need to be aligned on the Community model.

Statistics

Efforts must be made to improve the process of statistics collection to ensure the reliability, punctuality, and dissemination of official statistics. Improvements are needed in sectors such as external trade, transport and regional statistics, financial accounts and coverage of the business register. Internationally comparable classifications must be introduced.

3.4. Sectoral policies

Industry

To enhance competitiveness, further efforts should be made to pursue policies aimed at promoting open and competitive markets and taking on the instruments which make up EC industrial policy, relating both to the operation of markets (product specification and market access, trade policy, State aids and competition policy) and measures related to industry's capacity to adapt to change (stable macroeconomic environment, technology, training, etc.). A particular effort is needed to restructure energy intensive industries, including steel.

Agriculture

Substantial changes to government policies and to the physical and managerial structures of farming and agro-industries are needed to meet the conditions for accession and to enable this sector to meet competition from established European Union enterprises. Considerable development or strengthening of administrative structures is needed to align with common agricultural policy organisations and mechanisms. Priorities include the establishment of a functioning land market, rural banking networks and State or private farm advisory services. Particular efforts must be made to build institutional capabilities and strengthen enforcement of health and disease controls at borders as well as internally.

Fisheries

The fisheries administration must be strengthened to ensure the effective implementation of the common fisheries policy, in particular as regards the conservation and the management of resources, the implementation of a monitoring and control system, the management of the common organisation of the market in the fisheries and aquaculture sector, the implementation of a structural policy in the fisheries and aquaculture sector, the keeping of a fishing vessel register, the collection of statistical data as well as the implementation of European Union fishery policy on environmental protection.

Energy

Efforts need to be stepped up considerably in particular with regard to development of a comprehensive policy covering legislative and structural reforms, reform of the management of the energy sector, energy efficiency and related acquis, emergency preparedness (including building up oil stocks), interconnection and investment, internal energy market in combination with competition and State aids. Particular effort needs to be dedicated to the upgrading of units 5 to 6 of Kozloduy NPP. This is particularly urgent given Bulgaria's commitments in the framework of the NSA agreement on the phased closure of units 1 to 4 at the Kozloduy nuclear power plant. Long-term solutions for nuclear waste need to be found. Continued support to the safety authority should be foreseen.

Transport

Efforts must be made to ensure rapid alignment of the necessary legislation and effective implementation in the maritime, air and road freight, particularly in respect of safety and monitoring (rail). Resources should be made available as far as possible to lay the foundations for the future extended trans-European transport network, and rapidly to compensate for the shortcomings in the road network. At a national level there is a need to develop specific strategies for transport infrastructure development and financing.

Small and medium-sized enterprises

Determined efforts are required to stabilise the macroeconomic environment, simplify the legal and administrative environment, strengthen the support infrastructure created, improve the tax environment and develop access to finance for SMEs.

3.5. Economic and social cohesion

Employment and social affairs

Within the framework of the government's structural reform policy, modern labour market policies and institutions need to be developed. Major efforts are needed in the area of labour law and occupational health and safety, both at the level of legislation and the structures for enforcement. The application of equal opportunity laws between women and men must be ensured. Viable social protection mechanisms (public and private sector) must be established. Continued efforts are required to ensure that adequate measures of social protection are developed. Administrative capacity in the field of social security for migrant workers needs to be developed. An active, autonomous social dialogue must be developed.

Regional policy and cohesion

Bulgaria must introduce an integrated and efficient regional policy. It should develop the administrative structures and budgetary procedures necessary to participate fully in European Union structural policy and efficiently channel the structural funds after membership.

3.6. Quality of life and environment

Environment

Substantial efforts are needed to increase approximation in areas including air and water quality, waste management, chemical substances, radiation protection and nature protection. Regulations on environmental impact assessment need to be further developed. Particular attention should be given to the quick transposition of framework Directives dealing with air, waste, water and the Integrated Pollution Prevention Control Directive (IPPC), as well as the establishment of financing strategies for legislation in the water, air and waste sectors.

Major investments will be needed for effective implementation of Community standards in most areas, particularly in water quality, urban waste and in the modernisation of industry. Considerable efforts are necessary to build adequate institutional capacity to adopt, implement and enforce EC legislation.

Consumer protection

The draft law on consumer protection needs to be adopted urgently and adjustments particularly concerning abusive clauses, controls and penalties on product safety need to be made, in order to comply with Community standards. Initiatives have to be taken in the field of package travel. A strong and independent consumer movement, sustained by public authorities, will need to be developed.

3.7. Justice and home affairs (JHA)

Some key legislation is still required. There is a need for officials to gain practical experience of working with European Union counterparts and institutions, and to develop more effective regional cooperation mechanisms against transnational crime. Reform of JHA institutions to improve their efficiency and effectiveness must be pursued and attention should be paid to embedding respect for the rule of law. Structural and staffing deficiencies, and institutional corruption must be tackled. Further progress on border management and the fight against illegal immigration is needed. The fight against all fields of organised crime including drug trafficking and trafficking in women and other serious crimes needs to be intensified. Current asylum procedures need to be further aligned with international standards, especially as concerns interviewing and expulsion procedures. Efforts to strengthen the visa and admission systems to bring them into line with European Union systems must be pursued. Judicial cooperation in penal and civil matters needs to be enhanced. Ratification of international conventions in the field of JHA have to be completed and implementing regulations need to be adopted. A comprehensive data protection system needs to be developed.

3.8. External policies

Trade and international economic relations

Remaining balance of payments restrictions need to be phased out prior to accession. Preparations must be made for applying, on accession, the Community's various cooperation and preferential agreements, multilateral and bilateral commercial policy commitments and its autonomous commercial defence instruments. At the same time, national legislation in the field must be repealed.

Development

Preparations must be made for applying, on accession, the Lomé trade regime to the ACP States and for participating, together with the other Member States, in financing the European Development Fund.

Customs

Customs legislation must be aligned on that of the European Community. Special attention should be given ensuring clarity in the legal framework. The organisation and duties of staff must be aligned on those of a modern customs administration. Control by central customs authorities over customs offices at the border must be reinforced.

A major effort is needed to ensure the probity of the customs services, as a whole, and that staff of the customs services have a good knowledge of the legislation. Efforts must be intensified to introduce the computerised systems necessary for full participation in the customs union and the internal market. Particular attention must be paid to preparing the customs administrations for the operation of all the customs procedures with economic impact, the system of tariff suspensions and the administration of tariff quotas and ceilings. Strategic planning will need to take account of the reinforcement of border posts along the external frontier that Bulgaria will have with countries other than European Union Member States at the time of accession.

3.9. Financial questions

Major efforts are needed to establish and strengthen internal financial management and control functions. The National Audit Office has to be strengthened. Further cooperation with the Commission is needed to align accounting procedures with European Union requirements. The tax and custom services need restructuring in order to ensure the effectiveness of tax collection. The appropriate implementation, monitoring, control and audit structures for future funding of agricultural and regional policies should be established.

4. Administrative capacity to apply the acquis

To ensure efficiency and effectiveness in implementation and enforcement of the acquis, Bulgaria needs to develop its public administration infrastructure at all levels. A stable and professional civil service needs to be created with a clear statute. Institutional coordination needs to be improved and legal and administrative procedures simplified.

Major efforts are needed in strengthening institutions and practice in the fields of customs, free movement of goods and services, competition, intellectual property, veterinary and phytosanitary controls, food control, transport safety, labour inspection, environment, consumer protection, standards and conformity assessment and audit and financial control mechanisms.

The judicial system must be strengthened in order to assure the effective application of the acquis. Institutional capacity for border management and controls, judicial and police cooperation and the fight against organised crime and corruption needs to be enhanced.