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

29.6.98

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Official  Journal  of  the  European  Communities

C 202/23

ESTONIA:  ACCESSION  PARTNERSHIP

(98/C 202/03)

1.

INTRODUCTION

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

it  continues 
intensifies 

its  efforts  on 

its  work 

and 

in 

The  Europe  Agreement  will  remain  the  basis  for  the
European  Union’s  relations  with  Estonia.  However  the
pre-accession  strategy  will  be  reinforced  to  enable
assistance  to  be  directed  towards  the  specific  needs  of
each  applicant  so  as  to  provide  support  for  overcoming
particular  problems  identified  in  the  opinion.  As  the
Commission  indicated  in  Agenda  2000:  ‘The  reinforced
pre-accession  strategy  has  two  main  objectives.  First,  to
bring together the different forms of support provided by
the  Union 
the  Accession
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, 

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 Estonia and on the basis of
the  principles,  priorities,  intermediate  objectives  and
conditions  which  have  been  decided  by  the  Council.

2. OBJECTIVES

The purpose of the Accession Partnership is to set out in
a  single  framework  the  priority  areas  for  further  work
identified  in  the  Commission’s  opinion  on  Estonia’s
application  for  membership  of  the  European  Union,  the
financial means available to help Estonia implement these

priorities  and  the  conditions  which  will  apply  to  that
assistance.  This  Accession  Partnership  provides  a
framework for a number of policy instruments which will
be  used  to  help  the  candidate  countries 
in  their
preparations  for  membership.  These  will  include,  inter
alia,  the  National  Programme  for  the  Adoption  of  the
Acquis to be adopted by Estonia, the Joint Assessment of
Economic  Policy  Priorities,  the  Pact  against  Organised
Crime  and  the  internal  market  road  maps.  Each  of  these
instruments  is  different  in  nature  and  will  be  prepared
and  implemented  according  to  specific  procedures.  They
will  not  be  an  integral  part  of  this  Partnership  but  the
priorities  they  contain  will  be  compatible  with  it.

3. PRINCIPLES

The  main  priority  areas  identified  for  each  candidate
country relate to their ability to assume the obligations of
meeting 
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.

4. PRIORITIES  AND  INTERMEDIATE  OBJECTIVES

and 

the  Council’s
The  Commission’s  opinions 
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

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29.6.98

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 
into  two
intermediate  objectives  have  been  divided 
groups — short and medium term. Those listed under the
short  term  have  been  selected  on  the  basis  that  it  is
realistic to expect that Estonia can complete or take them
substantially  forward  by  the  end  of  1998.  In  view  of  the
the
short 
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 

Estonia will be invited to draw up a National Programme
for  the  Adoption  of  the  Acquis  (NPAA)  by  the  end  of
March  which  should  set  out  a  timetable  for  achieving
these  priorities  and  intermediate  objectives  and,  where
possible  and  relevant,  indicate  the  necessary  staff  and
financial resources.

The  Accession  Partnership  indicates  that  Estonia  will
have  to  address  all  issues  identified  in  the  opinion.  The
these.
summary 
annex  provides  a 
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.

checklist  of 

Drawing  on  the  analysis  of  the  Commission’s  opinion
and  the  Council’s  examination  of  this,  the  following
short  and  medium-term  priorities  and 
intermediate
objectives  have  been  identified  for  Estonia.

4.1. Short  term  (1998)

— Political  criteria:    take  measures  to  facilitate  the
integrate
including  Stateless  children.  Enhance
non-Estonian

naturalisation  process  and 
non-citizens 
Estonian 
speakers.

to  better 

language 

training 

for 

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

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

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

services, 

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

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

implementation 

of 

of 

4.2. Medium  term

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

— Economic  policy: 

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  Estonia  is  not  expected  to  adopt  the
euro  immediately  on  accession,  it  is  expected  to
pursue policies which aim to achieve real convergence
in accordance with the Union’s objectives of economic
and  social  cohesion,  and  nominal  convergence
compatible  with  the  ultimate  goal  of  adoption  of  the
euro.

— Reinforcement  of 

institutional  and  administrative
capacity:  in  particular  as  regards  regulatory  and

— Reinforcement  of 

institutional  and  administrative
capacity:  at  central  and  local  level  to  ensure  efficient
management  of  the  public  sector;  special  attention

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control, 

environment 

should  be  paid  to  the  budgetary  process,  internal
financial 
and
statistics, 
agriculture; improved operation of the judicial system,
training  for  the  judiciary  in  Community  law  and  its
application;  reinforcement  of  justice  and  home  affairs
institutions  (ensuring  sufficient  and  properly  trained
personnel, 
in  particular  police,  border  guards,
ministries  and  courts),  reform  of  customs  and  tax
administrations  to  ensure  readiness  to  apply  the
acquis  and 
food  control
the  reinforcement  of 
administration.

— Internal  market:  including  alignment,  in  particular  in
public  procurement,  financial  services  (banking  and
insurance  rules),  intellectual  and  industrial  property
and  State  aids,  data  protection,  strengthening  of
securities  regulatory  bodies,  audiovisual  and  indirect
of 
taxation.  Upgrading 
and
standardisation 
structures,  alignment  of
conformity  assessment 
technical 
industrial  products  and
establishment  of  a  market  surveillance  system.
effective
Completion 
implementation  of 
the
reinforcement  of  competition  authorities,  promotion
of enterprise development, including SMEs, alignment
with  the  acquis  in  the  fields  of  telecommunications,
consumer  protection  and  the  internal  energy  market.

alignment 
competition 

legislation  on 

and 
law 

and 

of 

— Justice  and  home  affairs:  ratification  and  application
of  necessary  international  legal  instruments  relevant
for 
the  acquis,  enhanced  border  management
especially  on  the  eastern  border,  implementation  of
migration  policy  and  asylum  procedures,  enhanced
fight  against  organised  crime  (in  particular  money
laundering,  drugs  and  trafficking  in  human  beings),
and  to  align  visa  policy  with  that  of  the  European
Union  and  to  complete  alignment  to  international
conventions,  notably  in  view  of  the  Schengen  acquis.

— Agriculture:  including  alignment  with  the  agricultural
(including  veterinary  and  phytosanitary
acquis 
matters, 
in  particular  external  border  controls),
attention  to  environmental  aspects  of  agriculture  and
biodiversity,  completion  of  the  land  restitution  and
land registration process. Development of the capacity
to  implement  and  enforce  the  common  agricultural
policy,  in  particular  the  fundamental  management
mechanisms  and  administrative  structures  to  monitor
the agricultural markets and implement structural and
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 

— Fisheries:  development  of  capacity  to  implement  and

enforce  the  common  fisheries  policy.

— Transport: further efforts on alignment with acquis in
particular  in  road  transport  (market  access,  safety

rules)  and  maritime  transport  (safety)  and  rail
transport,  and  to  provide  necessary  investment  for
transport 
extension  of
trans-European  networks.

infrastructure,  notably 

as 

policies 

preparation 

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;
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.

in  particular  early  adoption  of 

further  development  of 

and 

planning 

implementation 

— Environment:  including  development  of  monitoring
and  implementation  control  structures  and  capacities,
continuous 
of
approximation programmes related to individual legal
acts.  A  particular  emphasis  should  be  given  to  the
water  and  waste  sectors  and  air  pollution,  including
protection
radioactive  waste. 
requirements 
sustainable
development  must  be  integrated  into  the  definition
and  implementation  of  national  and  sectoral  policies.

Environmental 
for 
need 

and 

the 

— Regional  policy  and  cohesion:  further  develop  the
legal,  administrative  and  budgetary  framework  for  a
national policy to address regional disparities through
an  integrated  approach,  in  order  to  participate  in
European  Union 
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  90  million.  Subject  to  the  approval  of  the
Phare  budget  for  the  remaining  period,  the  Commission
will confirm the allocations for 1998 and 1999. Financial
proposals  will  be  submitted  to  the  Phare  Management
Committee  as  provided  for  in  Council  Regulation  (EEC)
No  3906/89.  Joint  financing  by  the  applicant  countries
will be systematically required for all investment projects.
The  Commission  will  work  with  Estonia,  the  EIB  and
international  financing 
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
for  agriculture  and  a
onwards  will  comprise  aid 

institutions, 

relating 

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structural instrument which will give priority to measures
similar  to  the  Cohesion  Fund.  In  addition  Estonia  will
have  access  to  funding  from  multi-country  programmes
directly  related  to  the  acquis.

The Phare programme is the main financial instrument of
the  reinforced  pre-accession  strategy.  Phare’s  prime
objective  is  to  help  prepare  Central  and  East  European
countries  for  accession  by  focusing  the  assistance  it
provides  on  the  adoption  of  the  Community  acquis  and
in  particular  on  the  priorities  identified  in  this  Accession
Partnership  and  in  the  National  Programme  for  the
Adoption  of  the  Acquis.  Each  year  the  Commission  will
sign  a  financing  memorandum  with  Estonia  in  which
Estonia will undertake to meet a number of the priorities
identified 
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.

this  Accession  Partnership  and 

in 

In  addition,  the  subsequent  allocation  of  financial
assistance  will  be  closely  tied  to  the  respect  by  the
Estonian  Government  of  the  commitments  made  in  the
NPAA.  Certain  pre-accession  activities  can  be  reinforced
now  (e.g.  support  for  institution  building)  but  others,
such  as  the  financing  of  major  investment  projects
designed  to  meet  the  requirements  of  the  acquis  in  areas
such  as  environment  and  nuclear  safety  will  have  to  be
programmed  over  a  period  of  five  to  six  years.

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) 

small 

and 

(iv) 

5.2. Role  of  international  financial  institutions

Cooperation  between  Estonia  and  the 
international
financial  institutions  will  receive  a  new  impetus  and  a
new  focus  through  the  Accession  Partnership.  The  grant
resources made available under the Accession Partnership
will  serve  as  seed  money  and  a  catalyst  for  larger
amounts  of  development  finance  from  the  IFIs.  This
process  will  be  developed  by  the  Commission  in  liaison
with  the  candidate  countries,  the  EIB  and  the  IFIs,  in
particular the EBRD and the World Bank with a view to
facilitating  the  co-financing  of  projects  relating  to
pre-accession  priorities.

Under  a  new  lending  mandate  covering  the  period  1997
to  1999,  the  EIB  can  make  available  ECU  3 520  million
in  Central  and  Eastern  Europe.  The  new  pre-accession
facility  approved  by  the  EIB’s  governors  in  early  1998
increases this amount to ECU 7 billion. EIB loans shall be
used  in  all  sectors  eligible  for  EIB  financing  to  facilitate
the  accession  process.

From  1998  Phare  assistance  will  be  channelled  through
the  following  types  of  actions:

6. CONDITIONALITY

— 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 
in
Estonia  with  relevant  bodies  in  the  Member  States.
Initially this twinning will focus on priority areas such
as finance, agriculture, environment, justice and home
affairs.

institutions  and  administrations 

— Investment  support  (around  70 %),  in  order  to  make
the  necessary  investments  possible  for  the  adaptation
of  Estonian  infrastructure  to  the  Community  acquis.
This  support  will  concentrate  on:  (i)  structural
actions, 
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,

technological 

development 

particular 

covering 

in 

Community  assistance  will  be  conditional  on  respect  by
Estonia of its commitments under the Europe Agreement,
further  steps  towards  satisfying  the  Copenhagen  criteria
and  progress  in  implementing  this  Accession  Partnership.
Failure to respect these general conditions could lead to a
decision  by  the  Council  on  the  suspension  of  financial
assistance on the basis of Article 4 of Council Regulation
(EC)  No  622/98.

7.

IMPLEMENTATION  OF  PRE-ACCESSION  ASSISTANCE

The  provision  of  financial  assistance  to  Estonia  will
depend  on  the  maturity  of  projects  proposed  by  the

(1) Concerning  investment  projects  in  general,  Estonia  will  be
required  to  fulfil  the  principle  of  complementarity  by  means
of  contributing  a  minimum  amount  of  25 %  to  jointly
financed  projects.

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

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inclusion 

in  a  financing
Estonian  Government  for 
memorandum.  Where  projects  need  to  be  tendered  the
Commission  will  only  finance  those  projects  which  are
ready  for  tendering  at  the  stage  of  the  signature  of  the
financing memorandum. In addition any previous/existing
commitments  in  the  same  sector  must  have  been  fully
contracted  or  be  on  track.  In  order  to  ensure  efficient
implementation,  projects  to  be  financed  must  not,  in
principle, fall below a threshold of ECU 2 to 3 million, in
particular  in  the  case  of  infrastructure  projects.  If  these
principles  lead  to  a  situation  where  Estonia  cannot
absorb its full indicative allocation, the allocation will be
reduced  accordingly.  The  difference  between 
the
indicative  and  final  allocation  will  be  transferred  to  the
horizontal  SME  and/or  the  large  scale  infrastructure
facility. No subsequent compensation of this amount will
be  made.

The  Government  of  Estonia  is  invited  to  put  in  place  an
implementation  structure  which  ensures  coherence  and
complementarity  between  all  types  of  European  Union
financial  assistance  and  national  resources.  A  national
coordinator  will  be  responsible  for  ensuring  a  close  link
the
the  general  accession  process  and 
between 
programming  of  the  Community  financial  assistance.

and 

institution 

promotion 

The  Government  of  Estonia  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
decentralised 
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.

implementation 

in  order 

to 

the  Government  of  Estonia
In  cooperation  with 
the  Commission  will  pursue  a  policy  of 
further
decentralisation  of  the  implementation  of  the  financial
assistance  where  certain  pre-conditions  are  met,  and  to
the  extent  permitted  by  the  European  Communities’
Financial  Regulation,  in  particular  Article  105(3).  This
will be done with the intention to establish, within limits
and  in  a  gradual  manner,  a  relationship  between  the
Commission  and  Estonia  where  responsibility  is  shared
along  the  lines  of  the  relationship  existing  with  the
Member  States  for  implementing  the  Structural  Funds.

In  this  context,  the  possibility  of  applying  national
procurement  procedures  in  the  tendering  and  contracting

following, 

of Phare projects may be explored by the Commission, if
so requested by the Government of Estonia, in particular
in  the  field  of  investment.  The  Commission’s  decision  on
this  matter  will  be 
inter  alia,
taken 
examination  of  the  Estonian  national  procurement  law
for respect of and compatibility with the basic provisions
of  the  European  Community’s  public  procurement  rules
and 
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 
individual  financing
memoranda.

Financial  Regulation, 

including 

in  the 

its 

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 

8. MONITORING

The  implementation  of  the  Accession  Partnership  will  be
monitored  in  the  framework  of  the  Europe  Agreement.
This  will  commence  in  1998  before  the  Commission
presents  its  first  regular  report  to  the  Council  reviewing
the  progress  made  by  Estonia  including  implementation
of  the  Accession  Partnership.

in 

the  appropriate 

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
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 Estonia in
meeting  the  objectives  set  out  in  this  partnership.

thereafter.  These 

reviews  will 

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ANNEX

Estonia  will  have  to  address  all  issues  identified  in  the  opinion.  The  purpose  of  this  Annex  is  to  provide  a
summary  checklist  of  these  issues.  These  are  formulated  as  recommendations  for  action.  They  are  listed  in
the order in which they appear in the opinion without any ranking in terms of importance or urgency. The
priority  areas  for  action  by  each  candidate  are  set  out  as  priorities  and  intermediate  objectives  in  the
Accession  Partnership  itself.

1.

Political criteria

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

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

2.

Economic criteria

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

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

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

3.

Ability  to  assume  the  obligations  of  membership

3.1.

Internal  market  without  frontiers

The  four  freedoms

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

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

F r e e   m o v e m e n t   o f   c a p i t a l   —  restrictions concerning acquisition of real estate by non-residents must
be  removed.

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

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

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

3.2.

Innovation

Education,  training  and  youth

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

Research  and  technological  development

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

Telecommunications

Substantial  changes  to  legislation  are  needed  to  comply  with  European  Union  Directives,  in  particular  to
secure the independence of the regulatory authority. At the same time, the acquis now requires governments
to  ensure  that  a  modern  telephone  service  is  available  everywhere  at  an  affordable  price.  Meeting  this
obligation  will  require  significant  investment  in  the  system.

Audiovisual

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

3.3. Economic  and  fiscal  affairs

Economic  and  monetary  union

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

Taxation

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

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

In  the  field  of  excise  duties  particular  attention  should  be  given  to  the  setting  up  of  a  warehousing  system
for the movement of goods under duty suspension arrangements. Tax structures and the level of excise rates
need  to  be  aligned  on  the  Community  model.

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Statistics

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

3.4. Sectoral  policies

Industry

To enhance competitiveness, further efforts should be made to pursue policies aimed at promoting open and
competitive markets and taking on the instruments which make up European Community industrial policy,
relating  both  to  the  operation  of  markets  (product  specification  and  market  access,  trade  policy,  State  aids
and  competition  policy)  and  measures  related  to  industry’s  capacity  to  adapt  to  change  (stable
macroeconomic  environment,  technology,  training,  etc.).

Agriculture

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

Fisheries

The  fisheries  administration  must  be  strengthened  to  ensure  the  effective  implementation  of  the  common
fisheries  policy,  in  particular  as  regards  the  conservation  and  the  management  of  resources,  the
implementation  of  a  monitoring  and  control  system,  the  management  of  the  common  organisation  of  the
market  in  the  fishery  and  aquaculture  sector,  the  implementation  of  a  structural  policy  in  the  fisheries  and
aquaculture  sector,  the  keeping  of  a  fishing  vessel  register,  the  collection  of  statistical  data  as  well  as  the
implementation  of  European  Union  fishery  policy  on  environmental  protection.

Energy

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

Transport

Efforts  must  be  made  to  ensure  the  necessary  legislation  and  effective  implementation  in  road  haulage
(access  to  the  sector,  weights  and  dimensions,  safety  rules),  the  maritime  sector  (safety),  and  air  transport.
Financial transparency must be ensured in the rail sector. Steps must be taken to ensure the future extension
of  the  trans-European  networks.  Inspection  bodies,  in  particular  for  transport  safety,  should  be
strengthened.  At  a  national  level  there  is  a  need  to  develop  specific  strategies  for  transport  infrastructure
development  and  financing.

Small  and  medium-sized  enterprises

Steps  must  be  taken  to  further  refine  and  increase  the  coherence  of  small  and  medium-sized  enterprise
(SME) policy, to simplify legislation, and the administrative environment to make it more SME-friendly, to
strengthen  support  infrastructures,  to  improve  the  tax  environment  and  to  develop  SME  access  to
financing.

3.5. Economic  and  social  cohesion

Employment  and  social  affairs

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

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dialogue  and  social  protection  must  be  developed.  The  administrative  structures  must  be  strengthened  to
ensure  effective  implementation  of  legislation.

Regional  policy  and  cohesion

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

3.6. Quality  of  life  and  environment

Environment

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

Consumer  protection

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

3.7.

Justice  and  home  affairs  (JHA)

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

3.8. External  policies

Trade  and  international  economic  relations

Preparations  must  be  made  for  applying,  on  accession,  the  Community’s  various  cooperation  and
preferential  agreements,  multilateral  and  bilateral  commercial  policy  commitments  and  its  autonomous
commercial  defence  instruments.  At  the  same  time,  national  legislation  in  the  field  must  be  repealed.
Membership  of  non-proliferation  regimes  should  be  pursued.

Development

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

Customs

Customs  legislation  must  be  aligned  on  that  of  the  European  Community.  Estonia  will  have  to  align  its
tariff  structure  to  meet  the  common  customs  tariff.  The  organisation  and  duties  of  staff  must  be  aligned

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with those of a modern customs administration. An effort must be made to introduce computerised systems
for  full  participation  in  the  customs  union  and  the  internal  market.

Particular  attention  must  be  paid  to  preparing  the  customs  administrations  for  the  operation  of  all  the
customs procedures with economic impact, the system of tariff suspensions and the administration of tariff
quotas  and  ceilings.

Strategic  planning  needs  to  take  account  of  the  reinforcement  of  border  posts  along  the  external  frontier
that  Estonia  will  have  with  countries  other  than  European  Union  Member  States  at  the  time  of  accession.

3.9. Financial  questions

The  necessary  financial  management  and  control  mechanisms  must  be  established  to  ensure  satisfactory
implementation  of  Community  policies.  An  anti-fraud  unit  will  need  to  be  developed  to  protect  European
Community  financial  interests.  The  existing  accounting  system  as  well  as  the  customs  system  should  be
amended to ensure the efficient administration of the ‘own resources’ system. The reliability of the national
accounts  must  be  ensured  with  a  view  to  the  accurate  calculation  of  the  GNP  resource.

4.

Administrative  capacity  to  apply  the  acquis

To  ensure  the  effective  implementation  and  enforcement  of  the  acquis,  major  reform  efforts  must  be  made
to  strengthen  Estonia’s  administrative  structures  in  virtually  all  European  Union  relevant  sectors.  Special
efforts  must  be  made  to  strengthen  the  authorities  ensuring  the  correct  application  of  Community
requirements in the Single Market and the customs authorities. The regulatory and monitoring bodies must
be  strengthened  in  such  fields  as  competition,  securities,  insurance,  banks,  money  laundering,  public
procurement, consumer protection, transport safety, veterinary and phytosanitary controls and food control
as  well  as  standards  and  certification,  and  the  labour  inspectorates.

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

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