Proposal for a COUNCIL DECISION Concerning the signature of the Stabilisation and Association Agreement between the European Communities and its Member States and the Republic of Croatia on behalf of the European Community

(presented by the Commission)

EXPLANATORY MEMORANDUM

The Commission Communication of 26.05.1999 on the Stabilisation and Association Process with Bosnia and Herzegovina, Croatia, Federal Republic of Yugoslavia and former Yugoslav Republic of Macedonia and Albania [1], established a new framework for closer relations between the EU and these countries, to be developed through a progressive approach adapted to the specific situation of each country. This new context provides for a wide-ranging partnership, notably through a new category of agreements, the Stabilisation and Association Agreements (SAA).

[1] COM(1999) 235 of 26.05.1999.

The opening of negotiations for a SAA depends upon compliance by the specific country with the relevant political and economic conditions. The political developments in the Republic of Croatia, following Parliamentary and Presidential Elections in early 2000, marked a new beginning in bilateral relations and resulted in the adoption by the Commission on 24 May 2000 [2] of a positive report on the feasibility of negotiating a Stabilisation and Association Agreement with the Republic of Croatia. The report underlined the encouraging steps undertaken by the new Croatian Government towards compliance with the EU conditionality and assessed that the Republic of Croatia has the capacity ultimately to fulfil the obligations of a Stabilisation and Association Agreement. It therefore concluded that the conditions for the opening of negotiations for a Stabilisation and Association Agreement with the Republic of Croatia were met.

[2] COM(2000) 311 of 24.05.2000.

As a result, on 19 July 2000 the Commission adopted its recommendation for the opening of negotiations. The Council, in its conclusions of 20 November 2000, authorised the Commission to open negotiations for a Stabilisation and Association Agreement with the Republic of Croatia, on the basis of agreed negotiating directives.

The negotiations were opened by the Commission on 24 November 2000, in the margins of the Zagreb Summit. Following three official rounds of negotiations and several technical meetings, the negotiating process was concluded in Zagreb on 11 May. The Commission conducted all the negotiations in close consultation with the Special Committee created by the Council for this purpose, namely the COWEB. The Stabilisation and Association Agreement was therefore initialled by Commissioner Patten and the Croatian Chief negotiator, Mr. Mimica, on 14 May 2001.

The Stabilisation and Association Agreement initialled with Croatia is the second one, since a similar type of agreement has already been signed with the Former Yugoslav Republic of Macedonia. The output of the negotiations with Croatia takes fully into account the precedent framework while certain parts of the agreement are tailor-made for the individual situation of the Republic of Croatia.

It is to note that the Stabilisation and Association Agreement will be the first comprehensive contractual relation established between the European Communities and the Republic of Croatia. Negotiations for a Cooperation Agreement, as well as for a Transport Agreement, started in 1995 but were never concluded because of the "frozen" political relations between the EU and this country. At present, the bilateral relations have been developed as follows:

- The trade regime is regulated by the autonomous trade preferences, unilaterally granted by the Community to Croatia under Council Regulation No. 2007/2000 of 18 September 2000, as amended by Council Regulation 2563/2000 of 20 November 2000;

- A Textiles agreement, initialled on 8 November 2000 and signed on 17 May 2001, is applied since 1 January 2001;

- An EU/Croatia Consultative Task Force, set up in February 2000, has served as a forum for bilateral technical discussion, in the absence of any other formalised body.

The establishment of contractual relations with the Republic of Croatia in the form of a SAA, will provide for a wide-ranging co-operation and will take forward the process of its integration into European structures. The agreement focuses on the following elements:

- The establishment of a formalised framework for political dialogue with the Republic of Croatia, both a bilateral and regional level;

- Enhanced regional co-operation;

- The promotion of economic and trade relations with the perspective of establishing a free trade area covering goods and services after a transitional period of six years from the entry into force of the agreement;

- The regulation of movement of workers, freedom of establishment, supply of services, current payments and movement of capital;

- The commitment by the Republic of Croatia to progressively harmonise its legislation with that of the European Community, notably in key areas of the internal market;

- The establishment of wide-ranging relations covering all the fields of Community interest and including co-operation in the field of justice and home affairs;

- The complete liberalisation of road transit traffic across the Republic of Croatia and the Community as a whole and the development of the associated infrastructure, within a specific protocol on land transport which takes into account the absence of a pre-existing Transport agreement;

- The formalisation of Community financial and technical assistance to the Republic of Croatia as a support to the implementation of certain aspects of the agreement;

- The establishment of a specific institutional framework in the form of a Stabilisation and Association Council which supervises the implementation of the agreement, a Stabilisation and Association Committee and a Stabilisation and Association Parliamentary Committee.

After the entry into force of the Stabilisation and Association Agreement the more favourable trade concessions granted by Council Regulation 2007/2000 of 18 September 2000 (as amended by Council Regulation No. 2563/2000 of 20 November 2000) will continue to apply.

Having completed the negotiating process the Commission proposes now to the Council to approve the results of the negotiations and to engage the procedures aimed at the signature and the conclusion of this agreement. To this regard the Commission presents two proposals, which constitute the legal instruments for the signature and the conclusion of the Stabilisation and Association Agreement between the European Communities and their Member States, on the one part, and the Republic of Croatia, on the other part:

(i) Proposal for a Council Decision for the signature of the Agreement;

(ii) Proposal for a Council and Commission Decision for the conclusion of the Agreement.

The procedures for the signature and the conclusion of the Agreement are different for the three European Communities: (European Community, European Atomic Energy Community and European Coal and Steel Community):

a) as regards signature, Article 300.2, first indent, first sentence of the EC Treaty provides for a separate Council Decision concerning the signing of the Agreement on behalf of the European Community. Similar acts are not required under the ECSC and EAEC Treaties;

b) as regards the conclusion of the Agreement:

- The Council concludes the Agreement on behalf of the European Community, after having received the assent of the European Parliament, by virtue of Article 310 of the Treaty;

- The Council approves the Agreement on behalf of the European Atomic Energy Community by virtue of the second paragraph of Article 101 of the EAEC Treaty and the Agreement is then concluded by the Commission;

- The Commission concludes the Agreement on behalf of the European Coal and Steel Community, by virtue of Article 95 of the ECSC Treaty, with the unanimous assent of the Council and following consultation of the Consultative Committee.

In the light of the above, the Commission proposes:

- that the Council decide on the signature of the Stabilisation and Association Agreement between the European Communities and the Republic of Croatia on behalf of the European Community;

- that the Council conclude the Stabilisation and Association Agreement between the European Communities and the Republic of Croatia on behalf of the European Community and give its assent and approval for conclusion by ECSC and EURATOM.

Ratification by all Member States of the European Union is a prerequisite for the entry into force of the Agreement.

Proposal for a COUNCIL DECISION Concerning the signature of the Stabilisation and Association Agreement between the European Communities and its Member States and the Republic of Croatia on behalf of the European Community

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 310 in conjunction with the first sentence of the first sub paragraph of Article 300 (2) thereof,

Having regard to the proposal from the Commission [3],

[3] OJ C ...

Whereas:

(1) The Commission had been authorised by the Council on 20 November 2000 to open negotiations for a Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Croatia, of the other part;

(2) These negotiations have been completed and the Agreement has been initialled on 14 May 2001;

(3) The commercial provisions contained in this agreement are of an exceptional nature, connected with the policy implemented within the framework of the stabilisation and association process and will not constitute, for the European Union, any precedent in the commercial policy of the Community with regard to third countries other than those of the Western Balkans;

(4) The Agreement should therefore be signed on behalf of the European Community, subject to a possible conclusion at a later stage.

HAS DECIDED AS FOLLOWS:

Sole Article

The President of the Council is hereby authorised to designate the persons empowered to sign, on behalf of the European Community, the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Croatia, of the other part, subject to a possible conclusion at a later stage.

Done at Brussels,

For the Council

The President