Information from the Commission - Czech Republic: Accession Partnership
Date: 1998-06-29
Institutions: European Commission
Subjects: Czechia, EU aid, EU programme, accession to the European Union, cooperation policy, financial aid

29.6.98

EN

Official  Journal  of  the  European  Communities

C 202/13

CZECH  REPUBLIC:  ACCESSION  PARTNERSHIP

(98/C 202/02)

1.

INTRODUCTION

in 

the  opinion 

recommended 

the  Commission 

In  the  opinion  which  it  submitted  to  the  Council  in  July
1997,  in  accordance  with  the  provisions  of  Article  O  of
the  Treaty, 
that
negotiations  for  accession  should  be  opened  with  the
Czech  Republic.  This  recommendation  derives  from  the
analysis  contained 
the
Commission  is  of  the  view  that  the  Czech  Republic  (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  marked  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  on  its  implementation.

in  which 

to  provide  support 

The  Europe  Agreement  will  remain  the  basis  for  the
European  Union’s  relations  with  the  Czech  Republic.
However  the  pre-accession  strategy  will  be  reinforced  to
enable assistance to be directed towards the specific needs
of  each  applicant  so  as 
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 
their
participation  in  Community  programmes.’

the  possibility  of 

through 

that 

At  its  meeting  in  Luxembourg  in  December  1997  the
European  Council 
the  Accession
decided 
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  the  Czech  Republic  and  on
intermediate
the  basis  of  the  principles,  priorities, 
objectives and conditions which have been decided by the
Council.

Republic’s  application  for  membership  of  the  European
Union,  the  financial  means  available  to  help  the  Czech
Republic  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  the  Czech
Republic,  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 
that
membership  requires:

the  Copenhagen  criteria  which  state 

— 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.

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  the  Czech

4. PRIORITIES  AND  INTERMEDIATE  OBJECTIVES

The  Commission’s  opinions 
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

and 

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Official  Journal  of  the  European  Communities

29.6.98

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
the  others.  The  priorities  and
negotiations  with 
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  the  Czech  Republic  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.

The  Czech  Republic  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  the  Czech
Republic  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
intermediate
short  and  medium-term  priorities  and 
objectives  have  been  identified  for  the  Czech  Republic.

4.1. Short  term  (1998)

of 

framework 

— Economic  reform:  establishment  of  medium-term
economic policy priorities and joint assessment within
the 
the  Europe  Agreement;
implementation  of  policies  to  maintain  both  internal
and  external  balance;  improvement  of  the  framework
for corporate governance, in particular by accelerating
the  restructuring  of  certain  industrial  sectors  such  as
steel  as  well  as  of  banks,  by  implementing  the  laws
regulating the financial sector (banks and investments
companies),  and  by  enforcing  the  supervision  by  the
new  Securities  and  Exchange  Commission.

— Reinforcement  of 

institutional  and  administrative
capacity:  improving  capacity  in  banking  supervision

securities,  and  insurance  sectors,  internal  financial
control,  environment,  agriculture,  reinforcement  of
phytosanitary 
administrations,
particularly  as  regards  facilities  at  external  borders,
begin  to  set  up  structures  needed  for  regional  and
structural  policy.

veterinary 

and 

— Internal  market:  including  in  the  areas  of  intellectual
property  rights  (legislation  and  enforcement),  and
certification and standardisation (further alignment of
legislative  measures  and  conclusion  of  a  European
Conformity  Assessment  Agreement),  amendment  of
anti-trust  law,  further  development  of  the  legislative
framework  for  State  aid  control  and 
increased
transparency  through  submission  of  additional  State
aid  inventory.

— Justice  and  home  affairs:  development  of  effective

border  management.

establishment 

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

approximation 

programmes 

detailed 

and 

4.2. Medium  term

— Political  criteria:  further  work  on  the  integration  of
the  Roma.  Strengthening  of  laws  which  guarantee
press  freedom.  Further  attention  to  ensuring  equal
access  to  public  services.

— Economic  policy: 

the 

regular 

review  of 

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  the  Czech  Republic  is  not  expected  to
adopt  the  euro 
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.

immediately  on  accession, 

it 

— Reinforcement  of 

for 

the 

public 

system, 

training 

continue 

law  and 

institutional  and  administrative
capacity: 
administration
modernisation  policy;  improved  operation  of  the
judicial 
in
its  application;  customs,
Community 
establishment  of  independent  bodies  for  supervision
of  data  protection  and  for  consumer  protection;
reinforcement  of  justice  and  home  affairs  institutions
(ensuring sufficient and properly trained personnel, in
particular  police,  border  guards,  ministries  and
courts),  strengthening  of  nuclear  safety  authority,
completion of alignment of financial control capacity,

judiciary 

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C 202/15

reform  of  customs  and  tax  administrations  to  ensure
readiness to apply the acquis and the reinforcement of
food  control  administration.

— Internal  market: 

services, 

financial 

consumer 

including  alignment  of  public
procurement  legislation,  accounting  legislation,  data
taxation,
protection, 
indirect 
audiovisual, 
further
protection, 
standardisation  and  conformity
development  of 
assessment bodies and establishment and operation of
a  market  surveillance  system,  technical  legislation  on
industrial  products  strengthening  of  competition
authorities,  completion  of  alignment  and  effective
law,  promotion  of
enforcement  of  competition 
enterprise  development,  including  SMEs,  alignment
with  the  acquis  in  the  fields  of  telecommunications,
consumer  protection  and  the  internal  energy  market.

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

the 

— Agriculture:  including  alignment  with  the  agricultural
(including  veterinary  and  phytosanitary
acquis 
matters, 
in  particular  external  border  controls),
attention  to  environmental  aspects  of  agriculture  and
biodiversity.  Development  of 
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
and
rural 
implementation  of  the  veterinary  and  phytosanitary
requirements,  upgrading  of  certain  food-processing
establishments  and  testing  and  diagnostic  facilities,
restructuring  of  the  agri-food  sector.

development  measures, 

adoption 

capacity 

— Transport: further efforts on alignment with acquis in
particular  in  road  transport  (market  access,  safety
rules and taxation) and rail transport, and to provide
necessary 
infrastructure,
notably  extension  of  trans-European  networks.

investment  for  transport 

employment 

— Employment  and  social  affairs:  development  of
appropriate labour market structures and joint review
of 
for
participation 
coordination;
in  European  Union 
alignment  of  labour  and  occupational  health  and
safety  legislation  and  development  of  enforcement
structures, 
the
framework  Directive  on  health  and  safety  at  work;

in  particular  early  adoption  of 

preparation 

policies 

as 

enforcement  of  equal  opportunities  between  women
and  men;  further  development  of  active,  autonomous
social  dialogue; 
social
protection,  undertake  steps  to  bring  public  health
standards  into  line  with  European  Union  norms.

further  development  of 

— Environment:  development  of  monitoring  and
implementation  control  structures  and  capacities,
continuous  planning  of  approximation  programmes
related  to  individual  legal  acts.  Particular  emphasis
should  be  given  to  air,  water  and  the  waste  sector.
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:  establishment  of  a
legal, administrative and budgetary framework for an
integrated  regional  policy  in  order  to  participate  in
European  Union 
after
membership.

structural  programmes 

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  224  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 the Czech Republic, 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  the  Czech
Republic  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  the  Czech  Republic

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29.6.98

in  which  the  Czech  Republic  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  the
Czech  Republic’s  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  the
Czech  Republic  with  relevant  bodies  in  the  Member
States.  Initially  this  twinning  will  focus  on  priority
areas such as finance, agriculture, environment, justice
and  home  affairs.

to 

actions, 

covering 

structural 

infrastructure 

the  Czech  Republic’s 

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

technological 
(ii) 
in  particular 

and 
programme; 

medium-sized 

research 

small 

and 

as 

(1) Concerning 

investment  projects 
to 

the  Czech
Republic  will  be  required 
the  principle  of
complementarity  by  means  of  contributing  a  minimum
amount  of  25 %  to  jointly  financed  projects.

in  general, 
fulfil 

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

5.2. Role  of  international  financial  institutions

through 

Cooperation  between  the  Czech  Republic  and  the
international  financial  institutions  will  receive  a  new
impetus  and  a  new 
the  Accession
focus 
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

steps 

further 

Community  assistance  will  be  conditional  on  respect  by
the Czech Republic of its commitments under the Europe
Agreement, 
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.

satisfying 

towards 

7.

IMPLEMENTATION  OF  PRE-ACCESSION  ASSISTANCE

The  provision  of  financial  assistance  to  the  Czech
Republic  will  depend  on  the  maturity  of  projects
proposed  by  the  the  Czech  Republic’s  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 the Czech Republic cannot absorb its full
indicative  allocation,  the  allocation  will  be  reduced

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accordingly.  The  difference  between  the  indicative  and
final allocation will be transferred to the horizontal SME
and/or 
facility.  No
subsequent  compensation  of  this  amount  will  be  made.

infrastructure 

large 

scale 

the 

The  Government  of  the  Czech  Republic  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  Community
financial assistance.

the  programming  of 

functioning  under 

through  which  Phare  and  other 

The  Government  of  the  Czech  Republic  will  establish
(preferably  in  the  Ministry  of  Finance)  during  1998  a
national  fund  for  investment  promotion  and  institution
building 
the  responsibility  of  a
National  Authorising  Officer  (NAO).  As  the  central
forms  of
entity 
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  the  Czech
Republic, 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 the Czech Republic 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  the  Czech  Republic,
in particular in the field of investment. The Commission’s
decision on this matter will be taken following, inter alia,
examination  of  the  the  Czech  Republic’s  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.

individual 

jointly  with 
in 

the  Commission 
the 

The  monitoring  of  programme  implementation  shall  be
through
carried  out 
procedures  established 
financing
memoranda.  In  order  to  ensure  effective  monitoring  of
implementation 
Phare
assistance 
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.

under 

the 

of 

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  the  Czech  Republic  including
implementation  of  the  Accession  Partnership.

in 

the  appropriate 

The relevant sections of the Accession Partnership will be
subcommittee.  The
discussed 
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 
include
consideration  of  the  need  to  further  specify  intermediate
objectives in the light of the progress made by the Czech
Republic  in  meeting  the  objectives  set  out  in  this
partnership.

thereafter.  These 

reviews  will 

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ANNEX

The Czech Republic will have to address all issues identified in the opinion. The purpose of this Annex is to
provide  a  summary  checklist  of  these  issues  mentioned  in  the  opinion  on  the  Czech  Republic.  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

The  remaining  weaknesses  in  laws  governing  freedom  of  the  press  must  be  addressed.  Particular  attention
needs  to  be  paid  to  the  conditions  governing  any  further  extension  of  a  law  excluding  from  public  service
members  of  the  former  security  service  and  active  members  of  the  Communist  regime.  Efforts  need  to  be
made to end the overloading of courts in particular through improvements in experience and qualifications
of  judges.  The  fight  against  corruption  must  be  intensified.  The  problem  of  discrimination  affecting  the
Roma,  notably  through  the  operation  of  the  citizenship  law,  needs  to  be  addressed.

2.

Economic criteria

Measures should be taken to restore external and internal macroeconomic balance. In particular the country
should  take  both  structural  and  macroeconomic  measures  to  control  the  deficit  of  the  balance  of
payments.

One  of  the  key  priorities  should  be  to  continue  to  take  measures  to  improve  the  framework  for  corporate
governance,  particularly  with  a  view  to  accelerating  enterprise  restructuring.  In  this  respect,  the  remaining
State-owned  banks  should  be  privatised.  Recent  changes  to  laws  governing  banking  and  investment  should
be  implemented  fully.

Measures  need  to  be  taken  to  strengthen  the  financial  sector  in  the  Czech  Republic,  as  well  as  to  improve
transparency  and  restore  investor  confidence.  In  particular,  the  new  Securities  and  Exchange  Commission
should  be  allowed  to  have  a  strong  regulatory  role.  The  banking  sector  should  also  be  strengthened,  and
banking  supervision  enhanced.

3.

Ability  to  assume  the  obligations  of  membership

3.1.

Internal  market  without  frontiers

The  four  freedoms

G e n e r a l   f r a m e w o r k   —  further work is required, notably in the area of public procurement, intellectual
property protection and the implementing structures for personal data protection. Efforts of a lesser degree
are  required  in  the  field  of  company  law  and  accounting  to  bring  Czech  legislation  fully  into  line  with  EC
legislation.

F r e e   m o v e m e n t   o f   g o o d s   —   the  framework  legislation  which  will  enable  the  Czech  Republic  to
implement  the  European  Union  system  has  been  adopted.  Full  alignment  with  EC  legislation  needs  to  be
completed.  Completion  of  alignment  of  new  approach  legislation,  strengthening  of  the  conformity
assessment  infrastructure,  completion  of  harmonisation  of  legislation  on  chemicals  and  pharmaceuticals,
improvement  of  legislation  on  foodstuffs  and  acceleration  of  the  harmonisation  of  legislation  on  motor
vehicles  and  establishment  of  a  market  surveillance  mechanism  are  now  necessary.  The  Czech  Republic
should maintain this quick pace of approximation of legislation on industrial products so as to fully adopt
the  European  Union  system.

F r e e   m o v e m e n t   o f   c a p i t a l   —   laws  need  to  be  amended  to  allow  for  acquisition  of  domestic  real
estate  by  non-residents.

F r e e   m o v e m e n t   o f   s e r v i c e s   —   considerable  further  efforts  need  to  be  made  in  the  financial  services
sector.  Banking  supervision  needs  to  be  strengthened.  Legislation  on  securities,  the  stock  exchange,

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investment companies and funds must be fully aligned. Implementation of measures in the Internal Market
White  Paper  (first  stage  Directives)  in  the  insurance  field  must  be  accelerated.

F r e e   m o v e m e n t   o f   p e r s o n s   —   further  efforts  must  be  made  to  ensure  the  necessary  legislative  and
enforcement measures as regards mutual recognition of diplomas and qualifications. Further efforts must be
made  to  ensure  the  necessary  legislative  and  enforcement  measures  as  regards  the  coordination  of  social
security schemes.

Competition

Anti-trust  rules  must  be  completed  and  further  aligned  with  Community  law.  In  the  field  of  State  aid,
additional  efforts  are  necessary  to  ensure  full  transparency.  In  particular,  information  should  be  made
available on all existing direct and indirect aid measures granted by the State, regional or local authorities or
through  public  resources  in  order  to  establish  and  continuously  update  a  more  comprehensive  State  aid
inventory on the same basis as in the Community. Moreover, the necessary legal framework for the granting
of  State  aid  in  accordance  with  European  Community  State  aid  legislation  must  be  created.  The  State  aid
monitoring authority should be given sufficient powers and qualified staff and the necessary procedures and
practical tools to implement the monitoring. As to sectors traditionally subject to monopolies, the policy of
liberalising  and  opening  up  to  competition  should  be  continued.

3.2.

Innovation

Education,  training  and  youth

The  legal  framework  needs  to  be  strengthened  and  refined,  with  attention  to  higher  education
(diversification  of  financing  and  supply,  improvement  of  university  strategic  management,  development  of
the  non-university  sector)  and  adaptation  of  curricula  in  European  Community  regulated  professions.  A
more  strategic  approach  needs  to  be  taken  to  the  reform  of  the  vocational  training  system.

Research  and  technological  development

Improvement  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

Policy changes will be needed to secure the required independence of the regulatory authority and to enable
it  to  acquire  a  convincingly  pro-competitive  nature.  New  legislation  is  needed  to  secure  compliance  with
European Union Directives. 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

A  major  and  concerted  effort  is  needed  to  make  Czech  audiovisual  legislation  compatible  with  European
Community  legislation.  Legislative  deficiencies  in  the  areas  of  freedom  of  reception,  the  promotion  of
European  and  recent  works,  independent  producers  and  isolated  advertising  spots  must  be  addressed.

3.3. Economic  and  fiscal  affairs

Economic  and  monetary  union

Central  Bank  legislation  must  be  made  compatible  with  European  Community  rules.  Privatisation  and
restructuring  of  the  banking  sector  has  to  continue  and  bankruptcy  procedures  should  be  properly
enforced.

Taxation

Particular efforts need to be made as regards the VAT rate structure and the VAT refund scheme applicable
to  foreign  taxable  persons  and  tourists.

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.

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Statistics

Some issues of transparency and confidentiality still need attention, and there are deficiencies in sectors such
as  the  business  register,  regional,  financial  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.).  Further  restructuring  of  certain  industrial  sectors,
in  particular  steel,  is  required.

Agriculture

Particular  efforts  are  needed  to  implement  and  enforce  veterinary  and  phytosanitary  requirements,
upgrading  of  establishments  to  meet  European  Community  standards,  strengthen  administrative  structures
to  ensure  the  necessary  capacity  to  implement  and  enforce  the  policy  instruments  of  the  common
agricultural  policy  and  restructure  further  the  agri-food  sector  to  improve  its  competitive  capacity.

Energy

Current  alignment  efforts  must  be  maintained,  in  particular  with  regard  to  adjustment  of  monopolies
including  import  and  export  issues,  access  to  networks,  energy  pricing,  emergency  preparedness  including
the building up of mandatory oil stocks, State interventions in the solid fuels and uranium sectors, and the
development  of  energy  efficiency  and  fuel  quality  standards  need  to  be  closely  followed.

Special attention must be given to timely implementation of nuclear safety programmes in order to bring all
the nuclear reactors to the safety levels generally accepted in the European Union, and longer term solutions
for  waste  have  to  be  defined.  The  strengthening  of  the  nuclear  safety  authority  should  be  supported.

Transport

The  Czech  Republic  must  improve  the  operation  of  its  domestic  road  haulage  market  (in  particular  on
market access, safety rules and tax) and the financial transparency of the rail sector. Resources needed to lay
the  foundations  for  the  future  extended  trans-European  transport  network  should  be  made  available.  At  a
national  level  there  is  a  need  to  develop  specific  strategies  for  transport  infrastructure  development  and
financing.  Administrative  structures,  and  in  particular  bodies  supervising  areas  such  as  safety,  should  be
rapidly  reinforced.

Small  and  medium-sized  enterprises

Efforts  should  be  made  to  refine  and  increase  the  coherence  of  SME  policy  to  create  a  legal  and
administrative  environment  supportive  of  SMEs.

3.5. Economic  and  social  cohesion

Employment  and  social  affairs

Efforts need to be pursued to approximate legislation for the protection of health and safety of workers in
specific areas. Labour laws in the areas of protection of employees in case of insolvency of the employer and
collective  redundancies  need  to  be  further  aligned.  On  transfer  of  undertakings,  information  of  employees
on the conditions applicble to the employment relationship and on working time, legislative adaptations are
needed. Information and consultation of workers as set out in certain European Community Directives must
be further developed. Changes will need to be made to national law to introduce the right to free movement
particularly  as  regards  access  to  employment  and  treatment  free  from  discrimination  on  grounds  of
nationality.  Certain  technical  adaptations  will  be  necessary  in  the  field  of  social  security  for  migrant
workers. European Community Directives on the warning labelling of cigarette packages and the maximum
tar  content  must  be  transposed.  The  financing  system  of  the  Czech  health  system  needs  to  be  overhauled.

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Regional  policy  and  cohesion

A  legal,  administrative  and  budgetary  framework  for  an  integrated  regional  policy  in  compliance  with
European  Union  rules  needs  to  be  established.

3.6. Quality  of  life  and  environment

Environment

Gaps  in  sectoral  legislation  and  in  secondary  legislation  governing  economic  instruments,  implementation
and  enforcement  must  be  addressed.  Particular  attention  must  be  given  to  the  quick  transposition  of
framework Directives dealing with air, waste and water and the Integrated Pollution Prevention and Control
(IPPC)  Directive,  as  well  as  the  establishment  of  financing  strategies  for  legislation  in  the  water,  air  and
waste  sectors.

Substantive  compliance  with  the  acquis  is  low  in  certain  areas,  and  focus  is  needed  on  efficient
implementation and enforcement, including efficiency of economic instruments. Significant investment, both
public  and  at  enterprise  level,  will  be  needed.  Accompanying  mechanisms,  such  as  licensing  systems  or
public  participation  have  to  be  established  or  improved  and  institutions  involved  in  enforcement  and
implementation  need  to  be  reinforced.

Consumer  protection

Further  efforts  are  needed  to  align  legislation  on  misleading  advertising  and  unfair  contract  terms.
Legislation  needs  to  be  introduced  in  fields  such  as  sales  away  from  business  premises,  distance  selling,
package  travel,  timeshare  property  and  consumer  credit.  A  few  important  elements  are  still  missing  as
regards obligations on general product safety and dangerous imitations. The responsibilities of the different
institutional  bodies  involved  in  consumer  protection  need  to  be  coordinated  and  organised  and
implementation  of  legislation  ensured.  A  strong  and  independent  consumer  movement,  sustained  by  public
authorities,  will  need  to  be  developed.

3.7.

Justice  and  home  affairs

Some important gaps need to be filled in legislation. Work is needed to bring migration flows under control.
Institutional  resource  constraints  and  lack  of  expertise  with  new  legislation  in  the  police  and  the  judiciary
need  to  be  tackled.  The  acquis  in  the  field  of  migration/asylum  legislation  needs  to  be  adopted.  The
independence  of  the  judiciary  (judges  and  prosecutors)  must  be  strengthened  and  its  functioning  improved.
Administrative  courts  need  to  be  established.  Communication  within,  and  cooperation  between,  the  police,
border  police  and  the  judiciary  should  be  improved.  Considerable  administrative  work  in  the  police  and
judiciary  should  be  carried  out  by  administrative  personnel.  Police  and  border  police  must  follow  the
Schengen  model.  Reinforcement  of  policies  for  combating  the  various  forms  of  organised  crime,  including
trafficking  in  women,  money  laundering,  trafficking  in  drugs,  arms,  explosives  and  nuclear  materials  is
needed.  Institutional  corruption  must  be  addressed.

Communication  systems  in  the  field  of  border  management  need  to  be  improved.  Effective  systems  for
combating  drug  trafficking  and  organised  crime  need  to  be  developed  and  maintained.

3.8. External  policies

Trade  and  international  economic  relations

Preparation must be made for applying, on accession, the Community’s various cooperation and preferential
agreements,  multilateral  and  bilateral  commercial  policy  commitments  and  its  autonomous  commercial
defence  instruments.  At  the  same  time,  national  legislation  in  the  field  must  be  repealed.

Development

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

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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.  The  Czech  authorities  must
accelerate the dismantling of duty-free shops at the land border with Germany and Austria. An effort must
be  made  to  develop  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 will need to take account of the reinforcement of border posts
along  the  external  frontier  that  the  Czech  Republic  will  have  with  countries  other  than  European  Union
Member  States  at  the  time  of  accession.

3.9. Financial  questions

Financial control

Financial management and control mechanisms must be established to ensure satisfactory implementation of
Community  policies  (particularly  an  independent  control).  To  fight  fraud,  there  is  a  need  to  ensure
appropriate  staffing  levels  and  a  unified  information  system  for  the  exchange  of  information,  and  develop
an  anti-fraud  unit  to  protect  Community  financial  interest.

4.

Administrative  capacity  to  apply  the  acquis

The  lack  of  a  central  department  with  general  oversight  of  the  civil  service  and  of  a  civil  service  law  are
major  structural  weaknesses  which  must  be  addressed.

In  most  ministries  the  units  responsible  for  legal  administration  are  poorly  staffed.  The  shortage  of
experienced  staff  in  areas  such  as  banking  supervision  and  capital  markets,  and  implementation  and
enforcement  structures  in  areas  such  as  environmental  policy  need  to  be  addressed.  Rules  for  recruitment
and  promotion  must  be  improved,  and  problems  of  salaries  must  be  addressed.  Efforts  are  needed  to
strengthen  monitoring  and  regulatory  bodies  in  the  fields  of  veterinary  and  phytosanitary  controls,  food
control  and  consumer  protection.

The  fight  against  corruption  must  be  intensified.