ESTONIA: ACCESSION PARTNERSHIP (98/C 202/03)

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 Estonia. This recommendation derives from the analysis contained in the opinion in which the Commission is of the view that Estonia (i) presents stable institutions, guarantees the rule of law, human rights and the protection of minorities, (ii) can be regarded as a functioning market economy able to cope with the competitive pressure and market forces within the Union in the medium term, and (iii) should be capable in the medium term of applying the acquis provided it continues its efforts on its transposition and intensifies its work in its implementation.

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

Estonia 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 Estonia 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 Estonia.

4.1. Short term (1998)

- Political criteria: take measures to facilitate the naturalisation process and to better integrate non-citizens including Stateless children. Enhance Estonian language training for non-Estonian speakers.

- Economic reform: establishment of medium-term economic policy priorities and joint assessment within the framework of the Europe Agreement; in particular with a view to sustaining the high growth rates of recent years, while reducing inflation and increasing the level of national savings; acceleration of land reform with a view to increasing private ownership and introduction of key legislation linked to pension reform.

- Reinforcement of institutional and administrative capacity: in particular as regards regulatory and monitoring bodies and the development of a comprehensive national training strategy for civil servants and developing a strategy and timetable for the consolidation of the various supervisory agencies in the financial sector, strengthen internal financial control, reinforcement of phytosanitary and veterinary administrations, particularly as regards facilities at external borders, institutional strengthening in the area of environment, begin to set up structures needed for regional and structural policy.

- Internal market: including further alignment in the areas of public procurement, intellectual and industrial property, financial services, taxation, technical legislation and competition (especially the transparency of State aids). Adoption of the new competition law, covering both anti-trust and State aid, reinforcement of the State aid monitoring authority and the establishment of a first State aid inventory.

- Justice and home affairs: in particular further efforts to implement measures to combat corruption and organised crime and continue judicial reform.

- Environment: continue transposition of framework and horizontal 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: pursue integration of non-citizens by strengthening Estonian language training for Russian speakers in primary and secondary schools as well as adult training courses, and by further measures to accelerate the naturalisation process.

- 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 Estonia 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: at central and local level to ensure efficient management of the public sector; special attention should be paid to the budgetary process, internal financial control, statistics, environment and agriculture; 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.

- Internal market: including alignment, in particular in public procurement, financial services (banking and insurance rules), intellectual and industrial property and State aids, data protection, strengthening of securities regulatory bodies, audiovisual and indirect taxation. Upgrading of standardisation and conformity assessment structures, alignment of technical legislation on industrial products and establishment of a market surveillance system. Completion of alignment and effective implementation of competition law and the 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: ratification and application of necessary international legal instruments relevant for the acquis, enhanced border management especially on the eastern border, implementation of migration policy and asylum procedures, enhanced fight against organised crime (in particular money laundering, drugs and trafficking in human beings), 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 alignment with the agricultural acquis (including veterinary and phytosanitary matters, in particular external border controls), attention to environmental aspects of agriculture and biodiversity, completion of the land restitution and land registration process. 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 road transport (market access, safety rules) and maritime transport (safety) and rail transport, 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; further development of social protection, undertake steps to bring public health standards into line with European Union norms.

- Environment: including 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 water and waste sectors and air pollution, including radioactive waste. Environmental protection requirements and the need for sustainable development must be integrated into the definition and implementation of national and sectoral policies.

- Regional policy and cohesion: further develop the legal, administrative and budgetary framework for a national policy to address regional disparities through an integrated approach, 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 90 million. Subject to the approval of the Phare budget for the remaining period, the Commission will confirm the allocations for 1998 and 1999. 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 Estonia, 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 Estonia 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 Estonia in which Estonia 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 Estonian 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 Estonia 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 Estonian 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 Estonia 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 Estonia 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 Estonia will depend on the maturity of projects proposed by the Estonian 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 Estonia 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 Estonia 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 Estonia 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 Estonia 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 Estonia 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 Estonia, in particular in the field of investment. The Commission's decision on this matter will be taken following, inter alia, examination of the Estonian 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 Estonia 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 Estonia in meeting the objectives set out in this partnership.

(1) Concerning investment projects in general, Estonia 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

Estonia 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 should be made to enhance the judicial system, to establish an Ombudsman institution, to improve conditions in prisons and to intensify the fight against corruption.

Particular measures must be taken to accelerate the process of naturalisation and to improve the integration of non-citizens into Estonian society. Steps must be taken to make naturalisation of stateless children easier. More resources must be made available for the teaching of Estonian to non-Estonian speakers.

2. Economic criteria

The liberalisation process should be completed, in particular by removing remaining price controls and by establishing or strengthening the regulatory bodies who ensure the proper functioning of the market (notably in the energy, telecommunications and transport sectors). Restitution and privatisation of land must be accelerated. Special attention must be paid to preserving macroeconomic stability, mainly by increasing the export base, mobilising national savings, and reducing the inflation rate, and to maintaining the price competitiveness of exports.

Sound management of the general government budget (including local budgets and extra-budgetary funds) is also crucial to increase resources for public investment, notably in such fields as the environment, energy and transport.

Both the public and the private sectors must devote considerable attention and resources to education and training of the labour force, with a view to satisfying the increasingly complex and diversified needs of the economy.

3. Ability to assume the obligations of membership

3.1. Internal market without frontiers

The four freedoms

General framework - efforts must be made to accelerate law reform in the field of public procurement, for instance as regards the utilities sector, the remedies system and the White Paper Stage II measures. In the field of intellectual and industrial property, legislation, as well as control mechanisms, must be substantially enhanced. As regards company law, full compatibility with the first and 12th Directives must be ensured. Legislation on accounting and auditing must be fully aligned with European Union requirements, while efforts must be made to deal with the shortage of qualified accountants and auditors. Improvement must be made in the protection of personal data, notably the establishment of an independent supervisory authority.

Free movement of goods - efforts should be continued to develop the framework legislation which will enable Estonia to take up the basic principles of the European Union system, with a particular emphasis on conformity assessment. In parallel there is an urgent need to speed up the adoption of new approach Directives and to strengthen the standardisation and conformity assessment infrastructures. Harmonisation of technical legislation on pharmaceuticals, foodstuffs and chemicals should be completed, and legislation on motor vehicles should be taken over. A market surveillance mechanism needs to be set up and to become fully operational, once sectoral legislation is fully aligned with EC Directives.

Free movement of capital - restrictions concerning acquisition of real estate by non-residents must be removed.

Free movement of services - banking legislation must be amended to fulfil European Union requirements, including provisions for bank deposit guarantee schemes and money laundering. In the securities field, law reform needs to be intensified, while the securities inspectorate must be strengthened considerably. The existing Insurance Act must be revised to increase minimum capital requirements and complete privatisation, while the insurance supervision system must be enhanced.

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

Competition

The necessary measures should be taken for the effective implementation of the new Competition Act, covering both anti-trust and State aid. In respect of State aid, considerable efforts are necessary to ensure full transparency, in particular through the establishment and updating of a State aid inventory in accordance with Community practice. It is necessary to review all existing aid measures and modify or abolish those measures which are not compatible with the Europe Agreement (for example, export aid measures). Procedures must be established to ensure the monitoring of new aid 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

Efforts must be made to ensure considerable investment in curriculum reform, teacher training, text books, equipment and buildings. Policies in the field of vocational training should aim to increase the general level of education and to improve the skills of the labour force.

Research and technological development

Improvements must be made in the level of innovation in the economy as well as in the links between research institutes, industry and small and medium-sized enterprises.

Telecommunications

Substantial changes to legislation are needed to comply with European Union Directives, in particular to secure the 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

The existing legislation must be amended, in particular with regard to the questions of freedom of reception, promotion of European works, advertising rules and the protection of minors.

3.3. Economic and fiscal affairs

Economic and monetary union

On-going reform efforts in terms of monetary policy should be continued in particular with a view to reducing inflation. The restructuring of the financial sector should be completed.

Taxation

Substantial adjustments must be made to bring VAT legislation into line with European Union requirements to ensure a consistent and less general application.

Particular efforts need to be made with regard to the scope of VAT exemptions and the VAT refund scheme applicable to foreign taxable persons.

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 quality, comprehensiveness and timeliness of official statistics, in particular with regard to business statistics, the establishment of a business register, short-term economic indicators, input/output statistics, and agricultural statistics.

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.).

Agriculture

Substantial efforts must be made to ensure the alignment of Estonian legislation with European Union requirements. With regard to veterinary and phytosanitary requirements, special attention must be paid to the upgrading of establishments and the inspection and control arrangements for protecting the European Union's external borders. Administrative structures must be strengthened to ensure the implementation and enforcement of the policy instruments of the common agricultural policy including import arrangements. The agri-food sector must be further restructured to ensure its 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

Current efforts need to be intensified in particular with regard to legislative alignment, adjustment of monopolies, including import and export issues, access to networks, energy pricing and State interventions. Special attention must be paid to the restructuring of the oil-shale sector, energy efficiency, environmental norms, and to emergency preparedness including the building up of mandatory oil stocks.

Transport

Efforts must be made to ensure the necessary legislation and effective implementation in road haulage (access to the sector, weights and dimensions, safety rules), the maritime sector (safety), and air transport. Financial transparency must be ensured in the rail sector. Steps must be taken to ensure the future extension of the trans-European networks. Inspection bodies, in particular for transport safety, should be strengthened. 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, to improve the tax environment and to develop SME access to financing.

3.5. Economic and social cohesion

Employment and social affairs

Legislation must be realigned with European Union requirements in such areas as occupational health and safety, labour law and equal opportunities. Social reform must be pursued while investments in the public health system need to be significantly enhanced. Active labour market policies must be developed and jointly reviewed as preparation for participation in European Union coordination. An active, autonomous social dialogue and social protection must be developed. The administrative structures must be strengthened to ensure effective implementation of legislation.

Regional policy and cohesion

A differentiated policy addressing regional disparities must be introduced and the administrative and budgetary structures required to manage integrated European Community structural actions after membership must be established.

3.6. Quality of life and environment

Environment

Steps must be taken to ensure the full transposition of the environmental acquis as well as substantial progress in effective compliance. Particular efforts must be made to achieve full European Union compatibility of the waste, water and nature legislation and to ensure the transposition of the framework Directives dealing with air, waste, water and the Integrated Pollution Prevention and Control Directive. Investments must be strengthened, in particular as regards large combustion plants, the water sector, industry, urban air pollution, solid and hazardous waste management and management of municipal waste. A considerable effort must be made to develop adequate implementation and enforcement structures. Public awareness with regard to the environment must be stimulated. The nuclear waste situation at the former Soviet Union Paldiski naval submarine base should be followed closely.

Consumer protection

Legislation must be amended in such areas as protection of economic interests, sales away from business premises, distance selling, package travel, timeshare property, unfair terms of consumer contracts, misleading advertising, price indication, consumer credit and product safety. A strong and independent consumer movement, sustained by public authorities, will need to be developed.

3.7. Justice and home affairs (JHA)

Some important gaps need to be filled in legislation. Improvements are necessary in the levels of education and experience of the legal profession and in the administration dealing with issues related to refugees and asylum seekers. Progress concerning border management and control must be continued. The effective implementation of the Geneva Convention and the 1967 Protocol as well as the Law of Refugees must be ensured. The fight against organised crime must be intensified in such fields as drug trafficking, money laundering, car theft, security services and fraud. Anti-drugs legislation and systems must be further enhanced. Steps must be taken to ensure ratification of the international conventions in the JHA field. Particular attention must be paid to ensuring the necessary resources for institutional development.

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. At the same time, national legislation in the field must be repealed. Membership of non-proliferation regimes should be pursued.

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 on that of the European Community. Estonia will have to align its tariff structure to meet the common customs tariff. The organisation and duties of staff must be aligned with those of a modern customs administration. 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 suspensions 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 Estonia 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. An anti-fraud unit will need to be developed to protect European Community financial interests. 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 Estonia'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 regulatory and monitoring bodies must be strengthened in such fields as competition, securities, insurance, banks, money laundering, public procurement, consumer protection, transport safety, veterinary and phytosanitary controls and food control as well as standards and certification, and the labour inspectorates.

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

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