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

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Official  Journal  of  the  European  Communities

29.6.98

LATVIA:  ACCESSION  PARTNERSHIP

(98/C 202/05)

1.

INTRODUCTION

the  principles,  priorities,  intermediate  objectives  and
conditions  which  have  been  decided  by  the  Council.

in 

the  opinion, 

the  European  Council 

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 provided its recommendation
to 
for
the  Council  regarding  Latvia’s  application 
membership  of  the  European  Union.  The  Commission
considers that negotiations for accession to the European
Union  should  be  opened  with  Latvia  as  soon  as  it  has
made  sufficient  progress  in  satisfying  the  conditions  of
membership  defined  by 
in
Copenhagen.  This  recommendation  derives  from  the
analysis  contained 
the
Commission  is  of  the  view  that  Latvia  (i)  presents  the
characteristics  of  a  democracy,  with  stable  institutions,
guarantees  the  rule  of  law,  human  rights  and  the  respect
for and protection of minorities; but measures need to be
taken 
the  rate  of  naturalisation  of
non-citizens  to  enable  them  to  become  better  integrated
into  Latvian  society,  (ii)  has  made  considerable  progress
in  the  creation  of  a  market  economy,  but  would  face
serious  difficulties  in  coping  with  competitive  pressure
and market forces within the Union in the medium term,
and  (iii)  has  made  some  progress  in  transposing  and
implementing the acquis relating particularly to the single
market  and  should  with  considerable  further  effort  be
able  to  participate  fully  in  the  single  market  in  the
medium  term.

to  accelerate 

in  which 

The  Europe  Agreement  will  remain  the  basis  for  the
European  Union’s  relations  with  Latvia.  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  Accession
the  Union 
Partnerships,  and  to  work  together  with  the  applicants,
within  this  framework,  on  the  basis  of  a  clearly  defined
programme 
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.’

for  membership, 

in  a  single 

to  prepare 

framework, 

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  Latvia’s
application  for  membership  of  the  European  Union,  the
financial  means  available  to  help  Latvia  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  Latvia,  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  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  Latvia  and  on  the  basis  of

that 

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.

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4. PRIORITIES  AND  INTERMEDIATE  OBJECTIVES

and 

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
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  Latvia  can  complete  or  take  them
substantially  forward  by  the  end  of  1998.  In  view  of  the
short 
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.

into  account 

span,  and 

taking 

time 

Latvia  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 Latvia 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  Latvia.

4.1. Short  term  (1998)

— Political  criteria:  take  measures  to  facilitate  the
naturalisation  process  to  better  integrate  non-citizens
including  stateless  children  and  enhance  Latvian
language  training  for  non-Latvian  speakers.

— Economic  reform:  establishment  of  medium-term
economic policy priorities and joint assessment within

the framework of the Europe Agreement; acceleration
of  market-based  enterprise  restructuring,  in  particular
through  the  completion  of  the  privatisation  process;
the  banking  sector;
continued  strengthening  of 
modernisation  of 
and
the 
establishment  of  a  land  and  property  register.

agriculture 

sector 

— Reinforcement  of 
further 

institutional  and  administrative
capacity: 
reform  of  public
structural 
administration  is  needed  and  in  particular  in  customs
and  tax  administration,  financial  control  capacity,
reinforcement  of  the  agriculture  ministry  and  the
establishment  of  a  training  strategy  for  the  judiciary,
reinforcement  of  the  veterinary  and  phytosanitary
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:  further  alignment  including  in  the
areas  of  intellectual  and  industrial  property  rights,
public  procurement,  financial  services,  competition,
State aids and indirect taxation, adoption of a law on
through
State  aid  and 
improvement  of  the  aid  inventory  and  reinforcement
of  the  new  anti-trust  authority.

transparency 

increased 

— Justice  and  home  affairs:  in  particular  further  efforts
to  implement  measures  to  combat  corruption  and
organised  crime  and  to  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 
these
programmes  and  strategies.

implementation 

of 

of 

4.2. Medium  term

— Political 

criteria: 

of
non-citizens  by  facilitating  the  naturalisation  process
including  for  stateless  children.

accelerated 

integration 

— Economic  reform:  consolidation  of  the  privatisation
process;  reinforcement  of  market-driven  restructuring
in  the  enterprise,  finance  and  banking  sectors,
development of regulatory framework for utilities and
financial  services,  and  strengthening  of  competition
policy.

— 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

C 202/44

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29.6.98

deficits);  while  Latvia  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 

(including 

statistical  capacities) 

institutional  and  administrative
capacity:  enforcement  of  European  Community’s
legislation  and  establishment  of
internal  market 
institutions  able  to 
implement  the  Community’s
regional  development  programmes  and  agricultural
policy 
including
anti-fraud  services,  strengthening  of  the  budgetary
process  and  macroeconomic  forecasting  capacity;
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 
the
reinforcement  of  food  control  administration.

the  acquis  and 

to  apply 

— Internal  market:  including  alignment  of  legislation  in
the  fields  of  customs,  audiovisual  policies,  statistics
and  financial  services,  upgrading  of  standardisation
and  conformity  assessment  structures,  establishment
of  a  market  surveillance  system  and  alignment  of
horizontal technical legislation on industrial products,
further  alignment  of  competition 
in
particular  in  the  field  of  State  aid,  reinforcement  of
anti-trust  and  State  aid  authorities,  promotion  of
enterprise  development,  including  SMEs,  alignment
with  the  acquis  in  the  fields  of  telecommunications,
consumer  protection  and  the  internal  energy  market.

legislation 

— Justice  and  home  affairs:  including  development  of
effective  border  management  in  particular  on  the
eastern  border,  implementation  of  migration  policy
and  asylum  and  refugee  legislation,  continuation  of
fight  against  organised  crime  (in  particular  money
laundering,  drugs  and  trafficking  in  human  beings)
and  corruption,  and  to  align  visa  policy  with  that  of
the  European  Union  and  to  complete  alignment  to
international  conventions,  notably  in  view  of  the
Schengen  acquis.

— Agriculture:  including  alignment  with  the  agricultural
(including  veterinary  and  phytosanitary
acquis 
matters, 
in  particular  external  border  controls),
attention  to  environmental  aspects  of  agriculture  and
biodiversity,  consolidation  of 
land  structure  and
development  of  a  rural  policy.  Development  of  the
capacity  to  implement  and  enforce  the  common
agricultural  policy,  in  particular  the  fundamental
management  mechanisms 
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
testing  and
food-processing  establishments  and 

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  freight  transport  (technical  rules
and  taxation),  shipping  (safety)  and  rail  transport,
and  to  provide  necessary  investment  for  transport
infrastructure,  notably  extension  of  trans-European
networks.

— Employment and social affairs: development of labour
market  policies  and  joint  review  of  these  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: 

the 

planning 

including 

capacities, 

development 

of
monitoring  and  implementation  control  structures
and
continuous 
and 
implementation of approximation programmes related
to  individual  legal  acts.  A  particular  emphasis  should
be  given  to  drinking  water,  waste  water,  the  waste
sector  and  air  pollution.  Environmental  protection
sustainable
requirements 
development  must  be  integrated  into  the  definition
and  implementation  of  national  sectoral  policies.

need 

and 

the 

for 

— Regional  policy  and  cohesion:  introduce  the  legal,
administrative  and  budgetary 
for  a
national policy to address regional disparities through
an  integrated  approach,  in  order  to  participate  in
after
European  Union 
membership.

structural  programmes 

framework 

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  112  million.  Subject  to  the  approval  of  the

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Phare  budget  for  the  remaining  period,  the  Commission
will  confirm  the  allocations  for  1998  and  1999.  In
addition, Latvia is eligible for support from the ‘catch-up’
facility  envisaged  for  1998  to  finance  projects  relating  to
privatisation/restructuring,  promotion  of  foreign  direct
investment  and  the  fight  against  corruption.  Financial
proposals  will  be  submitted  to  the  Phare  Management
Committee  as  provided  for  in  Council  Regulation  (EEC)
No  3906/89.  Joint  financing  by  the  applicant  countries
will be systematically required for all investment projects.
The  Commission  will  work  with  Latvia,  the  EIB  and
international  financing 
in  particular  the
EBRD  and  World  Bank,  with  a  view  to  facilitating  the
co-financing  of  projects 
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  Latvia  will
have  access  to  funding  from  multi-country  programmes
directly  related  to  the  acquis.

institutions, 

relating 

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  Latvia  in  which
Latvia  will  undertake  to  meet  a  number  of  the  priorities
the
identified 
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.

this  Accession  Partnership  and 

in 

In  addition,  the  subsequent  allocation  of  financial
assistance  will  be  closely  tied  to  the  respect  by  the
Latvian  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:

through,  training  actions,  technical  assistance  and
twinning  of  institutions  and  administrations  in  Latvia
with  relevant  bodies  in  the  Member  States.  Initially
this  twinning  will  focus  on  priority  areas  such  as
finance,  agriculture,  environment,  justice  and  home
affairs.

in 

covering 

particular 

— Investment  support  (around  70 %),  in  order  to  make
the  necessary  investments  possible  for  the  adaptation
of  Latvian  infrastructure  to  the  Community  acquis.
This  support  will  concentrate  on:  (i)  structural
actions, 
agricultural
restructuring, regional development and investment in
human  and  intellectual  capital,  which  could  include
Phare  contributions  to  participation  in  the  research
and 
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
and
scale 
medium-sized  enterprises  development (2).

infrastructure (1) 

technological 

development 

small 

and 

(iv) 

5.2. Role  of  international  financial  institutions

the 

Cooperation  between  Latvia  and 
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.

— 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,

(1) Concerning  investment  projects  in  general,  Latvia  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.

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6. CONDITIONALITY

responsibilities of the national fund will be set out in the
individual financing memoranda.

Community  assistance  will  be  conditional  on  respect  by
Latvia  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

for 

in  a 

inclusion 

The  provision  of  financial  assistance  to  Latvia  will
depend  on  the  maturity  of  projects  proposed  by  the
Latvian  Government 
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 Latvia 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 
facility.  No
subsequent  compensation  of  this  amount  will  be  made.

infrastructure 

large 

scale 

the 

The  Government  of  Latvia  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
the  general  accession  process  and 
programming  of  the  Community  financial  assistance.

a 

of 

policy 

pursue 

In  cooperation  with  the  Government  of  Latvia,  the
further
Commission  will 
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  Latvia  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  Latvia,  in  particular
in  the  field  of  investment.  The  Commission’s  decision  on
this  matter  will  be 
inter  alia,
taken 
examination of the Latvian 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.

following, 

individual 

jointly  with 
in 

the  Commission 
the 

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

and 

institution 

promotion 

The  Government  of  Latvia  will  establish  (preferably  in
the Ministry of Finance) during 1998 a national fund for
investment 
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
increase
decentralised 
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

implementation 

in  order 

to 

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 Latvia including implementation of
the  Accession  Partnership.

The relevant sections of the Accession Partnership will be
discussed 
subcommittee.  The
Association Committee will discuss overall developments,
progress  and  problems  in  meeting  its  priorities  and

the  appropriate 

in 

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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  Latvia  in
meeting  the  objectives  set  out  in  this  partnership.

thereafter.  These 

reviews  will 

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ANNEX

Latvia  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  Latvia.  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 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  Latvian  society  including  the  review  of  the  ‘window  policy’  and  facilitation  of
naturalisation  of  stateless  children.  Latvia  should  also  pursue  its  efforts  to  ensure  general  equality  of
treatment  for  non-citizens  and  minorities,  in  particular  with  regard  to  access  to  professions.  The  efforts
undertaken  to  teach  Latvian  to  non-Latvian  speakers  need  to  be  continued.

2.

Economic  criteria

The liberalisation process should continue. In particular remaining obstacles to the entry of new firms into
the market, such as excessive bureaucracy and inconsistent legislation, should be removed. The privatisation
process should be completed. Special attention should be paid to enterprise restructuring, and to eliminating
structural  constraints  which  prevent  faster  restructuring.  In  this  regard,  the  establishment  of  a  functioning
land  and  property  register  is  a  priority.  Competition  authorities  should  be  strengthened,  and  regulatory
bodies  for  the  utilities  and  the  financial  sector  should  be  established.

Strengthening  of  the  banking  system,  and  measures  to  encourage  the  deepening  of  the  financial  sector
should  continue.

High levels of investment will be required in such fields as the environment, energy and transport. Economic
policy  needs  to  stimulate  proper  training  of  the  labour  force  with  a  view  to  increasing  flexibility  and
orientation  towards  a  market  economy.

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   —   efforts  must  be  made  to  accelerate  law  reform  in  the  field  of  public
procurement,  for  instance  as  regards  the  utilities  sector  and  the  rules  concerning  services  and  tendering
procedures.  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  third,  11th  and  12th
Directives  must  be  ensured.  Legislation  on  accounting  and  auditing  must  be  fully  aligned  with  European
Union  requirements,  while  efforts  must  be  made  as  regards  the  shortage  of  qualified  accountants  and
auditors.  The  protection  of  personal  data  must  be  improved  in  order  to  correspond  to  the  level  of
protection  in  the  European  Community  framework  Directive.

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 Latvia to take up the basic
principles  of  the  European  Union  system  has  already  been  adopted  and  should  be  implemented.
Strengthening  of  the  standardisation  and  conformity  assessment  infrastructures  is  now  needed.  In  parallel,
progress  on  alignment  of  sectoral  Directives  should  be  accelerated,  in  particular  in  the  case  of
pharmaceuticals,  chemicals  and  motor  vehicles.  Once  the  technical  legislation  is  fully  harmonised  a  market
surveillance  mechanism  will  have  to  be  set  up  to  become  fully  operational  in  the  longer  run.

F r e e   m o v e m e n t   o f   c a p i t a l   —   Latvia  has  introduced  current  account  convertibility  and  almost
completed  liberalisation  of  capital  movements  and  should  be  able  to  abolish  remaining  restrictions  in  the
medium  term.

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F r e e   m o v e m e n t   o f   s e r v i c e s   —  the banking sector needs to be strengthened in order for it to function
as  a  financial  intermediary  supporting  domestic  investments.  In  addition,  legislation  in  the  banking  sector
must  be  fully  amended  to  fulfil  European  Union  requirements,  including  provisions  for  bank  deposit
guarantee schemes and money laundering. Legislative amendments in the securities (e.g. insider dealing and
stock  exchange  listings)  and  insurance  fields  are  also  necessary  in  order  to  comply  with  European
Community legislation.

F r e e   m o v e m e n t   o f   p e r s o n s   —   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

Further  alignment  of  competition  law  is  required,  in  particular  in  the  field  of  merger  control.  Proceedings
for the adoption of legislation on the control of State aid, including both substantive and procedural rules,
should  be  finalised.  Improved  transparency  is  required  regarding  the  granting  of  aid  through  the
establishment  and  continuous  updating  of  a  comprehensive  aid  inventory  in  accordance  with  Community
practice.  A  review  of  all  existing  aid  measures  should  be  undertaken  and  those  measures  which  are  not
compatible  with  the  Europe  Agreement  must  be  modified  or  abolished.  New  aid  measures  must  be
effectively  monitored  on  a  systematic  basis.  Certain  exclusive  rights  and  State  monopolies  which  are  not
compatible  with  the  Community  acquis  must  be  progressively  adjusted  and/or  abolished.

3.2.

Innovation

Education,  training  and  youth

In  order  to  achieve  progress  in  competitiveness  and  quality  of  production,  efforts  must  be  made  to  ensure
considerable  investments  in  curriculum  reform,  teacher  training,  text  books,  equipment  and  buildings.

Research  and  technological  development

Continued  support  must  be  given  to  reform  initiatives  aiming  to  modernise  and  rationalise  the  research
system.

Telecommunications

Substantial  changes  of  policy  and  legislation  are  needed  to  comply  with  European  Union  Directives,  in
particular  to  curtail  the  monopoly  granted  to  the  main  national  operating  company.  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

The provisions and the practice of the Central Bank’s budget deficit financing should be amended to ensure
full  compatibility  with  European  Community  rules.  Efforts  to  strengthen  the  banking  sector,  which  is  still
vulnerable,  should  be  sustained.

Taxation

Substantial adjustments must be made in the legislation on VAT and excise duties to achieve full compliance
with  European  Union  requirements  to  ensure  a  consistent  and  less  general  application.  Particular  efforts
need to be made as regards the scope of the exemptions from VAT and the VAT refund scheme applicable
to  foreign  taxable  persons.

Discrepancies between the Latvian excise regime and European Union requirements need to be addressed. In
the field of excise duties particular attention should be given to the setting up of a warehousing system for
the  movement  of  goods  under  duty  suspension  arrangements.  Tax  structures  and  the  level  of  excise  rates
need  to  be  aligned  with  the  Community  model.

Statistics

Efforts must be made in the field of official statistics, in particular with regard to business statistics, national
accounts,  agricultural  accounts,  and  the  application  of  classifications  and  nomenclatures.

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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  Latvian  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 the 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,  energy  efficiency,
environmental  norms  and  to  emergency  preparedness  including  the  building  up  of  mandatory  oil  stocks.

Transport

Further  efforts  in  assimilating  European  Community  legislation  in  the  transport  field  must  be  made  to
ensure  the  necessary  legislation  and  its  effective  implementation,  in  particular  regarding  road  freight
transport  (access  to  profession,  weights  and  sizes,  road  tax),  shipping  (safety)  and  rail  (public  service  and
standardisation  of  accounting  procedures)  sectors.  Latvia  needs  to  invest  in  infrastructure  used  by
international  traffic,  for  example  in  improvements  to  its  east-west  rail  network,  and  to  improve  border
crossing  infrastructures  at  all  borders  as  well  as  in  the  ports.  Latvia  would  be  advised  to  improve  its
administrative structures, including inspection bodies such as those responsible for safety. At a national level
there  is  a  need  to  develop  specific  strategies  for  transport  infrastructure  development  and  financing.

Small  and  medium-sized  enterprises

Steps must be taken to further refine and increase the coherence of 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  SMEs’  access  to  financing.

3.5. Economic  and  social  cohesion

Employment  and  social  affairs

Legislation  must  be  aligned  with  European  Union  requirements  in  such  areas  as  occupational  health  and
safety,  labour  law  and  equal  opportunities  and  structures  must  be  developed  to  ensure  effective
implementation  of  such  legislation.  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.

Regional  policy  and  cohesion

Latvia  must  introduce  an  integrated  and  efficient  regional  policy.  It  should  develop  the  administrative
structures and budgetary procedures necessary to participate fully in European Union structural policy and
efficiently  channel  the  Structural  Funds  after  membership.

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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  attention  should  be  given  to  the  quick  transposition  of
framework  Directives  dealing  with  air,  waste,  water  and  the  Integrated  Pollution  Prevention  and  Control
(IPPC)  Directive.  Investments  must  be  strengthened,  in  particular  as  regards  urban  waste  water  treatment,
drinking  water,  aspects  of  waste  management  and  air  pollution  legislation.  A  considerable  effort  must  be
made  to  develop  adequate  implementation  and  enforcement  structures.

Consumer  protection

Legislation  must  be  amended  in  such  areas  as  protection  of  economic  interests  of  consumers  (sales  away
from  business  premises,  distance  selling,  timeshare  property,  and  consumer  credit).  Amendments  are  also
needed  to  align  legislation  on  misleading  advertising,  unfair  contract  terms  and  for  product  safety  in  some
sectors. Alignment of legislation on package travel and indication of prices needs to be completed. A strong
and  independent  consumer  movement,  sustained  by  public  authorities,  will  need  to  be  developed.

3.7.

Justice  and  home  affairs

Important  gaps  need  to  be  filled  in  Latvia’s  legislation  and  implementation  systems.  The  fight  against
financial  crime  should  be  intensified.  Border  management  sytems  on  the  eastern  frontier  need  substantial
upgrading  of  human  resources,  technical  resources  and  control  structures.  The  physical  demarcation  of  the
frontier  between  Latvia  and  Belarus  remains  to  be  completed.  The  effective  implementation  of  the  1951
Geneva Convention as well as the Law of Refugees must be ensured. The fight against organised crime must
be  intensified  in  such  fields  as  drug  trafficking,  trafficking  in  women,  prostitution,  money  laundering  and
smuggling.  Enforcement  of  anti-drugs  legislation  must  be  further  enhanced.  The  Latvian  judiciary  needs  to
be  prepared  for  European  Union  membership.  Institutional  resource  constraints  and  lack  of  experienced
personnel,  as  well  as  management  weaknesses  leading  to  inefficiencies  and  some  corruption  must  be
tackled.

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.

Development

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

Customs

Customs legislation must be aligned with that of the European Community and the organisation and duties
of staff must be aligned with those of a modern customs administration. Great efforts are needed to ensure
the  probity of the customs services  as a  whole. 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  has  to  take  account  of  the  reinforcement  of  border  posts  along  the  external  frontier  that  Latvia
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.  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.

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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  Latvia’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,  standards  and  certification,  environment,  financial
control,  veterinary  and  phytosanitary  controls  and  food  control  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.