ROMANIA: ACCESSION PARTNERSHIP (98/C 202/08)

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 Romania 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 Romania (i) is on its way to satisfying the political criteria with respect to the existence of stable institutions, guarantees for the rule of law, human rights and the protection of minorities, (ii) has made considerable progress in the creation of a market economy, but would still face serious difficulties in coping with competitive pressure and market forces within the Union in the medium term, and (iii) despite the progress that has been made, it has neither transposed nor taken on the essential elements of the acquis, particularly as regards the internal market. It is therefore uncertain whether Romania will be in a position to assume the obligations of membership in the medium term and, moreover, substantial administrative reform will be indispensable if Romania is to apply and enforce the acquis effectively.

The Europe Agreement will remain the basis for the European Union's relations with Romania. 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 Romania 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 Romania's application for membership of the European Union, the financial means available to help Romania 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 Romania, 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 Romania 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.

Romania 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 Romania 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 Romania.

4.1. Short term (1998)

- Economic reform: establishment of medium-term economic policy priorities and joint assessment within the framework of the Europe Agreement; make satisfactory progress on the Government's economic reform programme, including the privatisation of two banks, the transformation into commercial companies of most régies autonomes, the efficient and transparent implementation of the foreign investment regime, and restructuring/privatisation of a number of large State-owned industrial (e.g. coal and steel) and agricultural companies (notably by reducing their losses and financial arrears); continue the implementation of the agreements with the international financial institutions.

- Reinforcement of institutional and administrative capacity: adoption of draft law on the civil service and progress in public administration reform, phytosanitary and veterinary controls, particularly as regards facilities at the external borders, the financial sector (strengthening of supervisory bodies of banking, financial services and capital markets), customs; strengthening of financial control and auditing mechanisms and competition, anti-trust and State aid monitoring bodies and environment, begin to set up structures needed for regional and structural policy.

- Internal market: including the restructuring of the banking sector and the capital markets, the completion of company law reform, including measures for the promotion of enterprise development and SMEs, foreign direct investment, harmonisation and improved application of indirect taxation, harmonisation of public procurement, adoption of a law on State aid and a first State aid inventory. Establishment of standardisation and conformity assessment structures.

- Justice and home affairs: in particular further efforts to implement measures to combat corruption and organised crime and improve border management.

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

4.2. Medium term

- Political criteria: continuation of child protection reform, further efforts to integrate the Roma, consolidation of protection of individual liberties and improvement of the functioning of the courts.

- Economic reform: particular attention should be devoted to creating the basis for a sustained increase of productivity and to the further restructuring/privatisation of State-owned enterprises, including banks.

- 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 Romania 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: in particular the implementation of a comprehensive public administration reform programme; major efforts to improve public administration including competition, strengthening of internal financial control; improved operation of the judicial system; training for the judiciary in Community law and its application; 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, strengthening of the nuclear regulatory authority.

- Internal market: promotion of enterprise development, including SMEs, alignment with the acquis in the fields of telecommunications, consumer protection, the internal energy market and audiovisual policies, enforcement of intellectual property rights, insurance, competition policy, in particular effective enforcement of competition law, reinforcement of standardisation of conformity assessment structures, establishment of a market surveillance system and alignment of technical legislation on industrial products.

- Justice and home affairs: improvement of border management systems, capacity to handle asylum and migration questions, 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 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.

- Transport: further efforts on alignment with acquis in particular in maritime, rail and road freight sectors (safety rules and taxation), 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 adequate social protection, undertake steps to bring public health standards into line with European Union norms.

- Environment: including the 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 air and water sectors. 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: complete establishment of legal basis, development of administrative structures and budgetary procedures. Strengthening 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 284 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, Romania 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 Romania, 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 Romania 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 Romania in which Romania 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 Romanian 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 Romania 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 Romanian 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 Romania 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 Romania 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 Romania will depend on the maturity of projects proposed by the Romanian 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 Romania 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 Romania 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 Romania 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 Romania, 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 Romania 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 Romania, in particular in the field of investment. The Commission's decision on this matter will be taken following, inter alia, examination of the Romanian 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 Romania 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 Romania in meeting the objectives set out in this partnership.

(1) Concerning investment projects in general, Romania 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

Romania 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

Continuing attention should be paid to ensuring respect of the primacy of law at all levels of the apparatus of the State.

Further efforts are needed to root out corruption, improve the work of the courts and protect individual liberties from the activities of the police and secret service or in the course of criminal proceedings.

Further improvements in the situation of the Roma are needed. Reforms concerning the protection of children need to be pursued.

2. Economic criteria

Sustained and consistent efforts are needed to consolidate the economic situation and implement a comprehensive, consistent and realistic economic reform strategy. Major structural transformation of the economy consistent with and supported by sound fiscal policy management is still necessary. Privatisation and restructuring of large State-owned enterprises need to be accelerated. Price liberalisation needs to be completed, in particular as regards energy. Uncertainty about property rights and blockages on land transactions should be removed quickly.

Specific attention must be paid to the restructuring of the financial sector including further privatisation of State-owned banks, strengthening the financial market and setting up effective regulatory mechanisms. Reform of the agriculture sector is needed to increase efficiency and competitiveness.

3. Ability to assume the obligations of membership

3.1. Internal market without frontiers

The four freedoms

General framework - in general, efforts to accelerate approximation of legislation need to be intensified. Law reform in the field of public procurement, completion of legislation on data protection and strengthening control mechanisms for intellectual and industrial property need to be undertaken.

Free movement of goods - progress in adopting framework legislation needs to accelerate to enable Romania to take up the basic principles of the European Union system. Framework legislation on industrial products will have to be implemented and independent standardisation and conformity assessment infrastructures will have to be established. Sectoral legislation needs to be harmonised and a market surveillance mechanism created.

Free movement of capital - the regulatory and administrative environment for foreign direct investment must be streamlined, supported by an overall improvement in the administrative, judicial and macroeconomic framework. Efforts to remedy the structural weakness of the financial system must be stepped up.

Free movement of services - Romania must take additional measures concerning money laundering, the supervision of banks, and limiting the credit risks of credit establishments. To further stabilise the fragile banking sector the privatisation of State-owned banks is crucial. The independence and supervisory capacity of the National Bank needs to be strengthened. The securities market is still embryonic and law reform needs to be intensified, while the market supervision authorities must be strengthened. Insurance legislation and related implementation and supervisory mechanisms need to be established.

Free movement of persons - as regards mutual recognition of professional qualifications, efforts to harmonise legislation and set up implementing structures must be intensified. Further efforts must be made to ensure the necessary legislative and enforcement measures as regards the coordination of social security schemes.

Competition

Effective enforcement of anti-trust legislation must be enhanced. In the field of State aid, a comprehensive inventory of all existing aid must be established and continuously updated in accordance with Community practice. A national legal framework on State aid, covering the monitoring and admissibility of State aid must be created. A review of all existing aid measures should be undertaken and those measures which are not compatible with the Europe Agreement must be modified or abolished. New aid measures must be effectively monitored on a systematic basis. Certain exclusive rights and State monopolies which are not compatible with the Community acquis must be progressively adjusted and/or abolished.

3.2. Innovation

Education, training and youth

Further reform of the educational system is necessary. In order to achieve progress in competitiveness and quality of production, special emphasis should be placed on higher education, investment in curriculum reform, teacher training and remuneration, text books, and equipment.

Research and technological development

Efforts to strengthen enterprise targeted research and development need to be continued and financial allocations further shifted to private sector activities, aimed at the rationalisation of the current system.

Telecommunications

Substantial changes of policy and regulation are needed to comply with European Union Directives and to ensure the efficiency and independence of the 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

Amendments to the existing legislation must be completed, in particular with regard to questions such as promotion of European independent production and certain advertising/sponsorship rules.

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.

Taxation

Particular efforts are needed as regards the scope of exemption from VAT and the VAT refund scheme to foreign taxable persons. The significant discrepancies between the Romanian excise regime and the European Union requirements need to be addressed. 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 with the Community model. Control procedures need to be strengthened.

Statistics

Efforts must be made to address sectoral deficiencies in sectors such as regional, household, agricultural and environment statistics, and to improve national quarterly and financial accounts. The quality of business and land registers needs to be improved.

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 European Community 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.). Further restructuring is necessary in certain sectors such as food, steel, other heavy industry and mining.

Agriculture

Considerable efforts must be made to adopt the Community acquis for the primary agricultural and agri-food industries. Priority should be given to implementation and enforcement of veterinary and plant-health requirements and upgrading of establishments and management practices to meet European Community food hygiene and quality standards. Administrative structures must be strengthened to ensure effective implementation and enforcement of the policy instruments of the common agricultural policy including external trade arrangements and associated rural development and diversification measures. The agriculture and the agri-food privatisation should be completed rapidly and measures taken to support increased efficiency and competitive capacity.

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 fishery 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 legislative alignment, adjustment of monopolies, including import and export issues, energy pricing, State intervention in the solid fuel sector and emergency preparedness, including the building-up of mandatory oil stocks. There is a need for rationalisation and financial transparency in the operation of this sector. Special attention must be paid to energy efficiency and environmental norms. Nuclear safety standards, in particular those related to plant operation should be handled appropriately. The independence of the safety authority should be supported. Longer-term solutions for the storage of waste need to be found. There is a need to develop an overall energy policy.

Transport

Steps must be taken to ensure upgrading and extension of the trans-European networks, especially regarding the major road network. Efforts must be made to ensure the necessary legislation and effective implementation in road haulage (road safety, weights and dimensions, taxation), the maritime sector (safety), and air transport. Shipping and road haulage both pose a problem in particular with regard to safety. Romania's administrative structures need to be strengthened, in particular bodies supervising areas such as safety. At a national level there is a need to develop specific strategies for transport infrastructure development and financing.

Small and medium-sized enterprises

Steps must be taken to further refine and increase the coherence of small and medium-sized enterprise (SME) policy, to simplify legislation and the administrative environment to make it more SME-friendly, to strengthen support infrastructures and to develop SMEs' access to financing.

3.5. Economic and social cohesion

Employment and social affairs

Legislation must be aligned with European Union requirements in all areas. Major efforts need to be undertaken in the fields of health and safety at work, public health and labour market and employment policies. Labour inspectorates must be strengthened and the social security system reformed in line with fiscal constraints. The administrative structures must be strengthened to ensure effective implementation of legislation.

Regional policy and cohesion

A comprehensive framework for regional development incorporating policy, legislation and instruments needs to be developed as well as the administrative capacity to manage European Community funds and conduct an integrated regional development policy after membership. The respective roles and responsibilities of existing authorities have to be clarified.

3.6. Quality of life and environment

Environment

Major efforts must be undertaken to advance the very low level of approximation of environmental legislation. There is a need to improve administrative capacity to deal with environmental issues in a market economy. Particular attention should be given to the quick transposition of framework Directives dealing with air, waste, water and the Integrated Pollution Prevention and Control Directives, as well as the establishment of financing strategies for legislation in the water, air and waste sectors requiring major investments.

Overall, Romania will have to place higher priority on environmental issues, significantly increase related finance and develop its administrative and financing capacity. A considerable effort must be made to develop adequate implementation and enforcement structures. Public awareness with regard to the environment field must be stimulated.

Consumer protection

Legislation must be amended in such areas as the indication of prices, sales away from business premises, distance selling, timeshare property, unfair contract terms and consumer credit. Effective application of consumer legislation must be ensured and the necessary financial resources made available to these ends. A strong and independent consumer movement, sustained by public authorities, will need to be developed.

3.7. Justice and home affairs (JHA)

Accountability of the JHA authorities needs to be improved in practice. Corruption must be addressed. Substantial progress in all major areas of JHA must be achieved. Progress in this area depends critically on a more general institutional and administrative reform. In terms of legislation, Romania should ratify the Data Protection Convention, sign the international money laundering conventions and ratify the main drugs conventions, change key elements of the law relating to drugs and complete the new law on foreigners, in particular aiming at tackling illegal immigration, clandestine labour, deportation of illegal migrants and to tighten the residence regime. Further key international criminal conventions must be ratified, judicial cooperation with European Union countries improved and Romania should accede to the Lugano Convention.

As regards asylum, the special office needs to be staffed properly and requires substantial training. The border management system must be strengthened and the frontier guard reformed. Policy on drugs prevention and supply reduction is at an early stage of development and must be strengthened. Considerable further work needs to be done to increase the professionalism of the police. The fight against organised crime must be intensified in the economic and financial spheres, including also trafficking arms, radioactive materials, stolen cars, drugs and human beings, counterfeiting and racketeering.

Particular attention must be paid to ensuring the necessary resources for institutional development. Considerable effort will have to be made to continue reforms to JHA institutions and the judiciary.

3.8. External policies

Trade and international economic relations

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.

Development

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

Customs

Customs legislation must be aligned with that of the European Community and the organisation and duties of staff must be aligned with those of a modern customs administration. A major effort must be made to ensure that the customs services are fully conversant with the legislation. An effort must be made to introduce computerised systems 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 suspension and the administration of tariff quotas and ceilings. Strategic planning needs to take account of the reinforcement of border posts along the external frontier that Romania will have with countries other than European Union Member States at the time of accession.

3.9. Financial questions

The necessary financial management and control mechanisms must be established to ensure satisfactory implementation of Community policies. Major efforts are essential to strengthen internal financial control functions while the Romanian Court of Auditors should be limited to carrying out external control functions. A central body for the fight against fraud should be established. The existing accounting system as well as the customs system should be amended to ensure the efficient administration of the 'own resources` system. The reliability of the national accounts must be ensured with a view to the accurate calculation of the GNP resource.

4. Administrative capacity to apply the acquis

To ensure the effective implementation and enforcement of the acquis, major reform efforts must be made to strengthen Romania's administrative structures in virtually all European Union relevant sectors. Special efforts must be made to strengthen the authorities ensuring the correct application of Community requirements in the Single Market and the customs authorities. The adoption of the law on the status of civil servants is a prerequisite for successful reform. A comprehensive public administration reform strategy should be developed, to be monitored and supervised by Central Government institutions responsible for steering the process.

The regulatory and monitoring bodies must be strengthened in such fields as banking, insurance, State aids, telecommunications, transport safety as well as standards and certification, the labour inspectorates, taxation, veterinary and phytosanitary control, food control, financial control, environment, consumer protection, money laundering, asylum and migration, border management, police and judicial cooperation, efficient management and control systems for public expenditure, including provisions to fight fraud.

Increased efforts must be made to upgrade staff qualifications on European Union-related issues and efficient public management in general. This should include the setting up of a national institute for the training of civil servants and the elaboration of a comprehensive national training strategy.

The judicial system must be strengthened in terms of staffing, resources and relevant expertise. A comprehensive upgrading of judges, in particular in European Union matters, must be carried out.