REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Common principles for future contractual relations with certain countries in South- Eastern Europe
Date: 1996-10-02
Institutions: European Commission
Subjects: Central and Eastern Europe, EU relations, cooperation agreement (EU), development aid, economic situation

— 

1  COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  02.10.1996 
COM(96) 476 final 

REPORT  FROM  THE COMMISSION  TO THE  COUNCIL 
AND  THE EUROPEAN  PARLIAMENT 

Common principles  for future  contractual  relations with certain countries in 
South-Eastem Europe 

REPORT  FROM  THE  COMMISSION  TO  THE  COUNCIL 

Subject: 

Common  principles  for  future  contractual  relations  with  certain  countries  in 
South-Eastern  Europe 

1. 

The  Context 

The  overriding  objective  of  the  European  Union's  action  in  South-Eastern  Europe  is  the 
successful  implementation  of  the  Dayton/Paris  peace  agreements  and  the  creation  of  an  area 
of  political  stability  and  economic  prosperity,  also  by  fostering  the  process  of  political  and 
economic  reforms  and  the  respect  of  human  and  minority  rights  and  democratic  principles. 
Cooperation  and  the  establishment  of  good  neighbourly  relations  between  the countries  in  the 
region  is  an  essential  element  in  this  context. 

Following  the  report  from  the  Commission  of  14  February  1996  on  the  prospects  for  the 
development  of  regional  cooperation  for  the  former  Yugoslavia  and  what  the  Community 
could  do  to  foster  such  cooperation,  the  General  Affairs  Council  of  26  February  defined  a 
regional  approach  which  "should  be  directed  primarily  at  those  countries  of  the  region  for 
which  the  European  Community  has  not  adopted  directives  for  the  negotiation  of  association 
agreements  (i.e.  Albania  and  four  of  the  five  successor  republics  of  former  Yugoslavia). 
Neighbouring  countries  which  so  wish  should  be  able  to  be  associated  in  the  cooperation  by 
appropriate  means". 

The  Council  noted  that  the  future  agreements  with  each  of  these  countries  would  be 
particularly  useful  tools  for  favouring  political  stability  and  economic  development  as  well 
as  cooperation  between  these  countries  and  with  their  neighbours.  It  considered  that  "the 
incentive 
agreements  with  each  of  the  countries  concerned  must  be  designed  as a substantial 
to political  stability  and  as an instrument  for  economic  development  and  cooperation  between 
them,  between 
those  countries  and  their  neighbours,  and  with  the  European  Union".  The 
Council  was  of the  view  that  "the agreements  must  be  consistent,  while  taking  account  of  the 
special  nature  of  each  country's  individual  situation.  It  must  be  clear  that  conclusion  of  these 
agreements  will  depend  on  the  willingness  of  the  countries  concerned 
towards 
consolidating  peace  and  to  respect  human  rights,  the  rights  of  minorities  and  democratic 
principles".  It  concluded  in  particular  that  the  "application  of  the  agreements  will  be  subject, 
to  the  readiness  of  each  of  the 
pculicularly  where  economic  cooperation 
countries  concerned  to  cooperate  with  its  neighbours.  They  will  have  to  undertake  to  adopt 
reciprocal  measures,  particularly  regarding  the free  movement  of  goods  and persons  and  the 
interest.  Through  this  regional 
provision  of  services,  and  to  develop  projects  of  common 
approach,  financial  aid from 
the  European  Union  could  be  oriented  towards  jointly  defined 
and  cross-border  projects". 

is  concerned, 

to  work 

The  Council  also  reconfirmed 
the 
conditionality  with  respect  to  the  development  of  contractual  relations,  and  reiterated  the 
importance  of  each  country's  contribution  to  the  peace  process  and  the  respect  of  human  and 
minority  rights  and  democratic  principles. 

its  conclusions  of  30  October  1995  concerning 

After  the  visit  of  President  Santer  and  the  President  of  the  Council  to  certain  countries  of  the 
region  the  General  Affairs  Council  of  10  June  1996  has  underlined  that  the  cooperation 
between  the  countries  concerned  is an  indispensable  condition  for  the  establishment  of  closer 
links  with  the  European  Union.  A  stable  development  of  these  countries  should,  indeed,  not 
predominantly  depend  on  external  support,  but  base  itself  on  cooperative  and  good 
neighbourly  relations  among  themselves.  The  Council  has  also considered  it to be  appropriate 
that  common  principles  should  be  defined  for  the  future  agreements  with  these  countries. 

2. 

Geographical  coverage 

the  process  of  stability  and  good-
initiative  on 
The  European  Union's  Royaumont 
neighbourliness  in  South-Eastern  Europe  has undertaken  to promote  regional  and  sub-regional 
cooperation  in  this  region.  There  are  other  efforts,  such  as  the  Bulgarian  or  the  American 
initiatives,  which  are  also  based  on  multilateral  discussions  and  cooperation  between  the 
countries  involved  and  interested  parties. 

Through  its  technical  and  financial  assistance  and  through  its  future  bilateral  relations,  the 
European  Union  has  a  specific  role  to  play  to  complement  this  process.  As  concerns  in 
particular  its  future  agreements,  it  must  ensure  that  a  strong  mechanism  is  in  place  in  order 
to  encourage  cooperation  actively. 

As  regards  countries  for  which  the  European  Community  has  not  adopted  directives  for  the 
negotiation  of an  association  agreement,  it  is necessary  to draw  a distinction  between  Albania 
and  FYROM  on  the  one  side  and  the  other  three  countries  concerned  on  the  other.1 

a) 

Albania  and  FYROM 

Albania  and  FYROM  were  not  involved  in  the  war  in  former  Yugoslavia  and  are  not  parties 
to  the  peace  agreements.  They  have  made  considerable  efforts  and  have  contributed  to 
regional  stability.  They  have  an  overall  positive  record  on  human  rights  and  are, 
notwithstanding  significant  setbacks  (as  for  example  the  recent  parliamentary  elections  in 
Albania), engaged  in an active  policy  of democracy  building  and economic  reform.  Moreover, 
their  relations  to the  European  Union  are much  more  advanced  than  in the  case  of Bosnia  and 
Herzegovina,  Croatia  and  the  Federal  Republic  of  Yugoslavia  (FRY). 

Although  both  countries  have  important  minorities  and  their  internal  stability  as  well  as  their 
relations  to  each  other  and  to  their  neighbours  are  crucial  for  the  overall  stability  in  the 
region,  it  is justified  to  differentiate  between  them  and  the  former  Yugoslav  republics  which 

The  present  state  of  play  concerning  the  Community's  relations  with  the  five  countries 
concerned  is summarized  in the  annex. 

are  parties  to  the  peace  agreements.  In  addition  to  possible  variations  in  the  content  of  these 
agreements  in  order  to  take  account  of  their  specific  economic  situation,  this  differentiation 
concerns  the  institutional  mechanisms  of  their  bilateral  agreements  with  the  Community  as 
the  same 
well  as  the 
considerations  of  possible  interdependence  nor  the  political  conditionality  as  in  the  case  of 
the  other  three  countries. 

timing  of  the  negotiations  which  are  constrained  neither  by 

As  early  as  1992  the  Community  has  concluded  with  Albania  a  non-preferential  Trade  and 
Cooperation  Agreement  (without  Financial  Protocol). This agreement  contains an  evolutionary 
clause  referring  to  the  objective  of  an  association  agreement,  when  conditions  are  met.  Both 
sides  also  agreed  in  a  Joint  Declaration  on  a political  dialogue.  Since  1992  Albania  benefits 
from  PHARE  assistance  and  it  is  beneficiary  of  the  GSP. 

In  1996  the  Community  has  negotiated  a  preferential  Cooperation  Agreement  with  FYROM, 
including  a  Financial  Protocol.  This  agreement  also  contains  an  evolutionary  clause 
expressing  the Contracting  Parties' desire to strengthen  their relationship  and making  reference 
to  FYROM's  aspirations  towards  an  association.  A  Joint  Declaration  provides  for  a  regular 
political  dialogue  which  should  be  organised  on  a  regional  level,  where  appropriate. 
In 
addition  to the  traditional  emphasis  on  the respect  for  democratic  principles  and  human  rights 
as  well  as  principles  of  market  economy,  the  agreement  (i)  encourages  cooperative  and  good 
neighbourly  relations  with  the  other  countries  of  the  region,  (ii)  emphasises  the  contribution 
to  regional  cooperation  of  the  Community's  assistance  and  cooperation,  and  (iii)  underlines 
the  importance  of  such  open  and  cooperative  relations  for  the  further  development  of  the 
relations  with  the  European  Union.  This  agreement  is  intended  to  be  concluded  soon  so  as 
to  enter  into  force  on  1 January  1997.  FYROM  has  also  become  beneficiary  of  PHARE  and 
benefits  from  preferential  access  to  the  Community  market  and  from  the  GSP  for  agricultural 
products. 

The  next  agreement  with  Albania  should  also  have  a  preferential  character  which  will  be 
justified  in  the  light  of the  general  character  of  political  and  economic  relations  between  this 
country  and  the  Community.  Moreover,  the  above-mentioned  regional  elements  in  the 
agreement  with  FYROM  which  are  adequate  in  order  to  ensure  FYROM's  contribution  to 
regional  stability  and  cohesion,  could  be taken  as  model  for  the  next  agreement  with  Albania. 

b) 

Bosnia  and  Heizegovina,  Croatia,  FRY 

The  circumstances  have  not yet permitted  the negotiation  of such agreements  with  Bosnia  and 
Herzegovina,  Croatia  and  FRY.  Negotiations  of  a  cooperation  agreement  with  Croatia  (and 
the  application  of  the  PHARE  programme  to  it)  were  suspended  after  the  Croatian  military 
operation  in  the  UN  Protected  Areas  (Krajinas)  in  August  1995.  Croatia's  role  in  the 
implementation  of  the  peace  agreements  (Federation,  Mostar),  but  also  its  record  on  human 
and  minority  rights  did  not  yet  permit  the  resumption  of  the  negotiations  or  of  the 
implementation  of the  PHARE  programme.  Nor  has the  Federal  Republic  of  Yugoslavia  fully 
met  essential  conditions  for  contractual  relations  with  the  European  Union,  including  a 
constructive  approach 
the  Kosovo  problem  and  a 
commitment  to  genuine  political  and  economic  reform.  Negotiations  with  Bosnia  and 
Herzegovina  have  not  been  possible  before  the  establishment  of the new  common  institutions 

towards  a  satisfactory  solution  to 

following  the  14  September  elections. 

Moreover,  the  fact  that  these  countries  were  involved  in  the  war,  and  that  their  behaviour  and 
mutual  relations  have  a  direct  impact  on  the  realisation  of  the  objectives  of  the  peace 
agreements  and  in  particular  on  the  future  of  Bosnia  and  I lerzegovina  as  one  state,  renders 
cooperative  and  good  neighbourly  relations  between  them  particularly  important.  This  should 
be  reflected  in  the  agreements  by  an  adequate  conditionality  and  institutional  mechanisms. 

3. 

Cendiftoiiality  and common principles in relation to future agreements with Bosnia and 
Herzegovina,  Croatia  and  FRY 

a) 

Conditionaliry 

Due to geographic  proximity  the  European  Union has a particularly  great  interest  in peace  and 
stability  in  the  former  Yugoslavia.  The  area  is  surrounded  by  Member  States  and  associated 
countries,  and  the  spreading  of  political  and  military  conflicts  and  economic  crises  onto  its 
own  present  and  future  territory  must  be  avoided.  The  European  Union  can  influence  the 
development  in the area  in a variety  of ways.  Its economic  assistance  (PHARE,  reconstruction 
aid)  is  already  subject  to  relevant  general  and  specific  conditionality.  Given  the  three  above-
mentioned  republics'  interest  in forging  closer ties with the European  Union, the  establishment 
and  content  of contractual  relations  with  them  does also represent  an effective  tool  in  bringing 
about  the  desired  stability.  Agreements  with  these  countries  should  be  negotiated  at  a  time 
and  with  a  content  so  as  to  make  a  maximum  contribution  to  the  stability  in  the  region. 

The  above-mentioned  Council  conclusions  of  30  October  1995  have  stipulated  that  the 
agreements  "should  have  an element  of  clear political  and  economic  conditionality, 
including 
in particular  respect for  human  rights,  minority  rights,  the  right  to  return  of  displaced  persons 
and  refugees,  democratic  institutions,  political  and  economic  reform,  readiness  to  establish 
open  and  cooperative  relations  between  these  countries,  full  compliance  with  the  terms  of  the 
peace  agreement  and,  with  regard  to  the  FRY  (Serbia  and  Montenegro), 
the  granting  of  a 
large  degree  of  autonomy  within  it  to  Kosovo".  Particular  emphasis  will  have  to  be  placed 
in  this  context  on  the  effective  possibility  of  return  for  refugees.  In  addition,  the  Presidency's 
declaration  of  9 April  1996 underlined  the  importance  of a constructive  approach  by  the  FRY 
to  a  number  of  key  issues  as  a  precondition  for  the  development  of  good  relations  with  the 
European  Union.  These  conditions  included  in  addition  to  the  above  elements  the  mutual 
recognition  among  all the states of  former  Yugoslavia,  cooperation  with  the  International  War 
Crimes  Tribunal,  and  a  constructive  approach  towards  agreement  with  the  other  successor 
republics  on  succession  issues. 

N.B.:  Such  conditionality  is  not  applicable  to  humanitarian  aid  which  may  be  given  to  the 
region.  Such  aid  would  continue  to  be  granted  solely  on  an  evaluation  of  need  and  without 
prior  reference  to  the  authorities  in  the  area. 

Since  open  and  cooperative  relations  between  these  three  countries  constitute  an  important 
political  objective  and  element  of  conditionality,  the  following  common  principles  should 
apply  to  agreements  with  them: 

b) 

(i) 

Common  principles 

Type  of  agreement: 

Traditionally  the Community  has negotiated  at a first stage (trade and) cooperation  agreements 
before  considering  their  evolution  towards  association  (Europe)  agreements.  The  latter  -  in 
addition  to  an  explicit  perspective  of  eventual  membership  in  the  Union  -  provide  for  more 
intense  cooperation,  free  trade  after  appropriate  transition  and  the  phasing  in  of  the  free 
movement  of services, capital  and  persons.  These  elements  reflect  a higher  level  of  economic 
and  political  maturity  of  the  countries  concerned. 

The  economic  maturity  of  the  three  countries  concerned  clearly  differs  significantly,  Croatia 
in  particular  is  economically  more  advanced.  The  economic  and  trade  aspects  of  the  future 
agreements  could  be  adjusted  accordingly  without,  however,  prejudging  the  level  of  the 
respective  political  relations  with  the  European  Union.  The  first  agreements  with  the  three 
core  countries  should  remain  cooperation  agreements  even  if  in  certain  respects  they  may  go 
beyond  the  economic  content  of  traditional  first  generation  agreements  and  could  be, 
If  an  association  with  the  European  Union  in  the  long 
therefore,  considered  as  sui  generis. 
term  will  in  any  case  require  an  advanced  economic  maturity,  such  maturity  itself  does  not 
automatically  qualify  any  of these  countries  for  association  or  indeed  any  additional  political 
progress  in  its  relations  to  the  Union.  The  political  dimension  is  of  key  importance,  and  each 
case  will  have  to  be  assessed  with  particular  care  both  in  its  regional  context  and  against  the 
conditionalities  that  apply,  before  the  bilateral  relations  with  the  European  Union  can  move 
to  a  higher  level. 

(ii) 

Content  of  agreements 

Any  future  agreements  with  the  three  countries  concerned  need  not  have  the  same  content 
but can take  into account  the  specific  situation  of each  of the countries. The  level  of  economic 
development  may,  for  example,  influence  the  level  of  economic  cooperation  offered  by  the 
Community.  The  agreements  with  all  three  countries  should,  however,  include  certain 
common  structural  elements.  They  should  encourage  regional  cooperation  and  good 
neighbourly  relations  and  link  the  further  development  of  relations  between  the  Community 
and  the  respective  countries  to  their  readiness  to  enter  into  cooperative  and  good  neighbourly 
relations  with  other  countries  of  the  region.  In  addition  they  should  provide  for  mechanisms 
for  an  active  implementation  of  the  regional  dimension  and  thereby  directly  contribute  to  a 
normalisation  of  economic  and  political  relations  in  the  region. 

Economic  cooperation 

The  agreements  should  link  the  economic  and  financial  cooperation  to  the  respective 
contracting  parties'  readiness  to  cooperate  with  their  neighbours  and  to  develop  trans-border 
projects  in  all  areas  covered  by  them. 
By  offering  concrete  assistance,  the  Community  has  a  bigger  leverage  on  the  countries 
concerned  and  should  actively  support  regional  cooperation.  The  agreements  should  stipulate 
that  Community  financial  aid  instruments  be  directed  towards  regional  cooperation.  PHARE 
assistance  as  well  as  the  aid  under  Council  Regulation  (EC)  N°  1628/96  are  important 

instruments  in  this  respect.  The  agreements  should  also  favour  Community  support  for 
cooperation  in  the  area  of  customs  and  approximation  of  legislation  which  would  be  of 
particular relevance with regard to the objective to facilitate trade flows between the countries. 
Financial  protocols  for  the  support  of  infrastructure  development  should  mandate  that  in 
addition to the interest of the Community  and the contracting  party concerned  the interest  of 
other countries in the region  shall be taken into account  as one of the determining  factors  for 
the  eligibility  of  individual  projects. 

Cross border cooperation 

PHARE  offers  important  instruments  (cross border cooperation2, multi-country  programmes, 
CREDO)  which  respond  to  the  need  for  regional  and  cross  border  cooperation.  PHARE 
programming  can be designed  so as to contribute to the creation of a subregional  cooperation 
framework,  although sufficient  room must be left to allow the use of PHARE in favour  of the 
specific  reform  process  in  each  country.  Such  a cooperation  framework  should  also  extend 
to  other  countries  in  the  region.  The  financial  means  available  for  this  aspect  of  PHARE 
should  be fixed in  accordance  with the  importance  of the  regional  dimension. 

Likewise,  the  projects,  programmes  and  cooperation  schemes  implemented  within  the 
framework  of  Council  Regulation  (EC)  Ny  1628/96  shall  cover  in  particular  regional 
cooperation  and  transborder  projects. 

Cooperation in other areas 

The  agreements  should  also  contain  unilateral  commitments,  so  far  as  compatible  with 
Community competence, by each of these countries to cooperate with each other in areas such 
as energy, telecommunications, transport, RDT, agriculture, tourism, environment, health and 
provision  of  services.  The  encouragement  to  allow  free  movement  of  persons  also  remains 
an  important  objective,  but  has to be  seen  in the  context  of the  peace  agreements. 

Trade  concessions 

The  Community  will  offer  concessions  in the area of movement  of  goods along  the  lines of 
the  autonomous  import  regime  for  the  Ex-Yugoslav  successor  republics  applied  since  1992. 
Such offer  should  be made conditional  upon  Bosnia and  Herzegovina's, Croatia's  and  FRY's 
readiness  to  negotiate  reciprocal  facilities  with  their  respective  two  neighbours,  allowing, 
however,  for  account  being  taken  of  their  individual  economic  situation.  The  only 
commitment asked of these countries will be MFN treatment of Community exports. One way 
of ensuring that these countries enter  into preferential  agreements between themselves  would 
be  for  the  Community  to  delay  conclusion  of  its  agreement  until  these  countries  have 
negotiated  their  reciprocal  agreements. None  of  the  countries  will  be  held  responsible  for  a 
lack  of  reciprocal  readiness  of  its potential  regional  partners. 

Subject  to  the  European  Union's  wider  international  obligations  in 

the  areas  of  trade  in 

Including the  possibility  of a combination  with  Interreg  HA or C 

services and  capital  movement  a similar approach  will  be applied,  if these  areas  are covered 
in  the  Community's  agreements  with  these  countries. 

The linkage of the Community's trade and trade-related  concessions to reciprocal  concessions 
between  the  three  countries  concerned  is  necessary  in order  to  preserve  the  unity  of  Bosnia 
and  Herzegovina.  In particular,  it would eliminate any  rationale  for  the collection  of customs 
duties  along  the  inter-entity  boundary  line. 

The cooperation agreements should offer  to these countries the benefit of cumulation of origin 
the implementation of which depends on administrative cooperation between them. This  offer 
should  be made contingent  on trade  liberalisation  between  them, including  the possibility  of 
cumulation  of  origin  among  themselves. 

Political dialogue 

Political  dialogue  will  have  to  be  an  important  element  in  the  framework  of  any  agreement 
with  any  of  the  countries  concerned.  It will  be  agreed  upon  in  the  form  of  a  separate  Joint 
Declaration  as  in  the  case  of  the  Agreements  with  Albania  and  FYROM.  The  international 
community  and  in  particular  the  European  Union  have  a  responsibility  for  promoting 
internationally  recognised  standards  of human  and minority  rights and  democratic  principles 
as well as the values embodied in the relevant international conventions especially  in a region 
where these principles have been violated on a large scale. Political dialogue is an appropriate 
instrument  in  this  regard.  In  order  to  promote  regional  stability  and  to  prevent  or  settle 
conflicts,  it should, whenever  appropriate, be held  in a sub-regional  format,  thereby  offering 
the countries concerned the possibility  to meet directly, possibly with variable geometry. The 
contracting parties should express their support for the initiative on stability  in  South-Eastern-
Europe  and  agree  that  the  political  dialogue  should  contribute  to this  process. 

Evolutionary clause 

A  key  issue  in  all  future  negotiations  will  be  the  question  of  the  "evolutionary  clause" 
defining  the perspectives  for  the development  of bilateral  relations with the European  Union. 
Albania  and  FYROM  have  received  such  clauses  in their  agreements. 

The  three  countries  are  in  principle  eligible  for  closer  relations,  although  at  present  it  is 
impossible to forecast  when the necessary  conditions  will  be met. An evolutionary  clause in 
a  bilateral  agreement  can  give a sense  of purpose  to the action  of the  contracting  parties.  It 
has  not  the  objective  of  accelerating  the  establishment  of  closer  relations  to  the  European 
Union  and  should  not  encourage  premature  claims  for  an  association  with  the  Union.  Such 
an  evolutionary  clause  would,  therefore,  have  to  spell  out  the  essential  preconditions  for  a 
further  development  of  relations  to  the  Union  including,  inter  alia,  not  only  the  full 
implementation  of the key  principles  of the  Dayton/Paris agreements, but  also  the  existence 
of solid  foundations  for  cooperation  and  good-neighbourly  relations  between these  countries 
and their full  cooperation to allow for the effective  return of the refugees  residing in  Member 
States. 

(iii) 

Institutional framework 

A  Cooperation  Committee  will  be  the  standard  body  overseeing  the  implementation  of  the 
Cooperation  Agreement.  In  addition  a  Joint  Programming  and  Monitoring  Commission 
(JPMC)  should  be  set  up  by  the  Community,  the  principle  task  of  which  will  be  the 
discussion,  planning,  coordination  and  monitoring  of  programmes  and  projects  having  a  clear 
regional  dimension  which  are  (co)financed  by  the  Community.  The  JPMC,  which  will  be 
chaired  by  the  Commission,  will  not  only  comprise  representatives  from  the  three  countries 
concerned,  but  also  from  Albania  and  FYROM  as  well  as  from  other  interested  countries  of 
the  region. 

(iv) 

Political  conditionality  and  human  rights  suspension  clause 

A  key  objective  is  to  ensure  that  the  three  countries  should  make  a  particularly  strong 
commitment  on  their  side  with  regard  to  elements  which  are  essential  for  peace  and  stability 
in  the  region,  namely  human  rights,  including  minority  rights, the  right  to  return  of  refugees 
as  well  as  democratic  structure  and  political  and  economic  reform.  Moreover,  it  is  necessary 
to  stipulate  the  full  compliance  with  the  terms  of  the  peace  agreements,  the  readiness  to 
establish  open  and  cooperative  relations  with  their  neighbours  and  (in  the  case  of  FRY)  the 
granting  of  a  large  degree  of  autonomy  for  the  Kosovo. 

The  standard  reference  in  all  Community  agreements  to  respect  for  human  rights  and 
democratic  principles  as an essential  element  of the agreement  should  be included.  This  could 
be  combined  with  regular  reporting  requirements  and  an  institutionalised  verification 
procedure.  The  exceptional  situation  in  these  countries justifies  departing  from  past  practice. 
The  Community's  capacity  to  suspend  the  agreements  (and  financial  cooperation)  in  case  of 
non-compliance  with  essential  elements  should  allow  immediate  action  in  cases  of  special 
urgency. 

4. 

Approach  towards  negotiations 

In accordance  with  the  GAC  conclusions  of 26  February  negotiations  with  the  three  countries 
need  not  be  undertaken  in  parallel.  An  informed  political  assessment  will  be  required  in  due 
course  with  regard  to  each  country  before  negotiations  can  start,  taking  into  account  the 
relevant  conditionality  and  the  need  to  maintain  the  necessary  degree  of  balance  of  the 
European  Union's  bilateral  relations  with  each  of  the  three  countries.  The  full  and  definitive 
compliance  with  the  provisions  of  the  Dayton/Paris  and,  where  applicable,  Erdut  (Eastern 
Slavonia)  agreements,  the  readiness  to  establish  open  and  cooperative  relations  with  their 
neighbours  and  (in  the  case  of  FRY)  the  granting  of  a  large  degree  of  autonomy  to  Kosovo 
are  absolute  preconditions  for  negotiations  with  any  of  the  three  states.  The  creation  of 
contractual  relations  with  the  European  Union  must  not  encourage  any  party  from  taking  its 
obligations  under  these  agreements  less  serious. The  entire  negotiating  process  will  then  have 
to  be  accompanied  by  an  evaluation  of  relevant  political  developments  which  may  have  an 
impact  on  the  progress  of  negotiations  or  the  content  of  the  agreements.  The  readiness  to 
conclude  and  implement  readmission  agreements  for  refugees  residing  in  Member  States  will 
also  be  a  precondition  for  the  conclusion  of  agreements  with  the  Community. 

The  above  common  principles  will  be  explained  to  each  of  the  three  countries.  Before  the 
conclusion  of  the  agreements,  stock  will  have  to  be  taken  of  the  extent  to  which  the  general 
their 
and  specific  conditionalities  have  been  fulfilled  and 

they  have  complied  with 

commitment. 

It  is  not  yet  certain,  when  negotiations  with  each  of  the  three  countries  can  begin  or  indeed 
be  concluded.  The  prenegotiations  and  negotiations  phase  will  be  used  with  a  view  to  the 
consolidation  of  peace  in  the  region.  The  European  Union  should  in  the  meantime  focus  its 
policies  with  regard  to  them  also  on  the  regional  cooperation  aspect.  The  Commission's  study 
on  economic  relations  between  the  countries  covered  by  the  regional  approach  is  one 
into  consideration.  Projects  and 
important  element  which  future  actions  should 
programmes  financed  by PHARE  and under Council  Regulation  (EC) NL> 1628/96 should  place 
particular  emphasis  on  this  aspect.  The  Community  will  negotiate  in  the  WTO  with  a  view 
to  obtaining  a  waiver  for  preferential  agreements  with  the  countries  concerned.  It  will  also 
examine  effective  needs  of  these  countries  in  the  context  of  their  economic  recovery  and 
structural  adjustment  programmes  negotiated  with  the  IFI's,  to  which  it  may  respond 
favourably  if  the  necessary  conditions  will  be  met.  All  these  activities  will  contribute  to 
preparing  the  ground  for  future  contractual  relations  with  the  European  Union. 

take 

ANNEX 

Subject: 

Albania: 

FYROM: 

State  of  play  of  relations  with  the  countries  concerned  by  the  regional 
approach 

Non-preferential  Trade  and  Cooperation  Agreement  of  I  December  1992, 
without  Financial  Protocol. (Evolutionary  clause:  "Agreement  will  contribute 
to  progress  towards  the  objective  of  an  association  agreement  in  due  course, 
when  conditions  arc  met, and  to the  further  development  of  relations  between 
them".  No  reference  to  regional  cooperation.)  Joint  Declaration  on  political 
dialogue. 

Textiles  Agreement  of  I  January  1993 

GSP 

PHARE  (since  1992) 

Preferential  Cooperation  Agreement,  initialled  on  20  June  1996,  including 
Financial  Protocol.  (Evolutionary  clause:  "Contracting  Parties  desire  to 
strengthen  their  contractual  relations  as  soon  as  possible,  taking  full  account 
of the aspirations  of  FYROM  for  an advanced  relationship  with  the  European 
Union".  Art. 45  refers  to the aspirations  "for an advanced  relationship  towards 
an  association  with  the  European  Union."  FYROM's  readiness  "to  enter  into 
cooperative  and  good  neighbourly  relations  with  other  countries  of the  region 
is" important factor  in the development  of the relations" with the  Community.) 
Joint  Declaration  on  political  dialogue,  including  on  a  regional  basis. 

Agreement  in  the  Field  of  Transport,  initialled  on  20  June  1996 

Textiles  Agreement  and  Wine  and  Spirits  Agreement  to  be  negotiated  soon. 

Preferential  import  regime,  GSP  (agricultural  products  only) 

PHARE  (since  1996) 

Bosnia  and  Heizegovina: 

Preferential  import  regime,  GSP  (agricultural  products  only) 

PHARE  (since  1996) 

Croatia: 

- 

Preferential  import  regime,  GSP  (agricultural  products  only) 

PHARE  (suspended  since  4  August  1995) 

Federal  Republic  of  Yugoslavia: 

none 

10 

J ; vis *Ï68N=8254-1475 

COM(96) 476  final 

DOCUMENTS 

EN 

il 

Catalogue number  : CB-CO-96-494-EN-C 

ISBN 92-78-09772-1 

Office for Officiai Publications of the European Communities 

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