Opinion of the Economic and Social Committee on 'Hungary on the road to accession'
Date: 2000-03-01
Institutions: European Economic and Social Committee, Provisional data
Subjects: Hungary, accession to the European Union, economic situation, political situation, social situation

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Opinion of the Economic and Social Committee on ‘Hungary on the road to accession’

(2000/C 117/08)

On 29 April 1999 the Economic and Social Committee, acting under the third paragraph of Rule 23 of
its Rules of Procedure, decided to draw up an opinion on ‘Hungary on the road to accession’.

The Section for External Relations, which was responsible for preparing the Committee’s work on the
subject, adopted its opinion on 10 February 2000. The rapporteur was Mr Gafo Ferna´ndez and the
co-rapporteur was Mrs Florio.

At its 370th plenary session on 1 and 2 March 2000 (meeting of 1 March), the Economic and Social
Committee adopted the following opinion unanimously.

1.

Introduction

Hungary is one of the countries initially selected at the

1.1.
Luxembourg Summit for accession to the European Union.

1.2.
Hungary was selected on account of the significant
progress it has made in meeting the political and economic
criteria laid down at the Copenhagen European summit This
progress will be examined in detail below.

The rapporteurs for this opinion have also been in
1.3.
contact with the European Commission and the Hungarian
Embassy to the European Union, and the study group visited
Hungary in October 1999, meeting various representatives of
government and the social partners. The resolutions of the
European Parliament (1) and of the EU-Hungary Joint Consulta-
tive Committee (2) have also been taken into account.

2. The economic and social situation in Hungary in 1999

It clearly emerges from all the sources consulted that
2.1.
in general, Hungary has reached a highly advanced stage of
preparation for EU accession.

Hungary reformed its constitution in 1989. In the
2.2.
wake of the May 1998 parliamentary elections, a tripartite
coalition government was formed, representing 213 of the
386 parliamentary deputies. The prime minister of
this
centre-right government, Mr Orba´n, belongs to the majority
Fidesz party which won 38,3 % of the vote and 148 seats. The
main opposition party is the MSzP (socialist) with 34,7 % of
the vote and 134 seats. The president of the republic possesses
some powers, but performs a mainly representative function.

Lastly, it is worth noting that Hungary became a full member
of NATO in March 1999. All sources indicate that in general,
Hungary’s democratic institutions and parliamentary system
are functioning properly, and meet the criteria for entry to the
European Union.

2.3.
Hungary’s relations with its neighbours have improved
markedly in the last few years. Agreements were signed in
1996 with Slovakia and Romania. A number of minor
problems with both countries persist concerning Hungarian-
speaking minorities and, in the case of Slovakia, use of the
Danube.

2.4.
Economic data for 1997 and 1998 point to strong
recovery in growth rates, rising by 4,4 and 4,5 %: the latest
estimates for 1999 point to growth of 4,2 %. Inflation is
falling, although it still stood at 10 % in 1999, falling from
14,9 % in 1998, far higher than comparable rates in the euro
zone. Government deficit fell slightly from 4,8 % in 1997 to
4,5 % in 1998 and 3,9 % in 1999: high growth rates did not
succeed in bringing this figure down lower. Two further
significant factors are the unemployment rate (8 % in 1998,
6,5 % in 1999) which, given earlier economic circumstances,
has generated a degree of social tension in a country used to
full employment; and secondly, a current account deficit of
some 2,5-3,5 % of GDP over the last five years, although this
has been offset by major inflows of foreign investment to a
value of some 21 000 million euros.

2.5.
The country has made significant progress in dereg-
ulating and privatising key sectors of the economy, particularly
since the new law of 1995, although some individual problems
have arisen. The Hungarian economy may, in general terms,
be considered to be totally integrated into the free market
flow, with 80 % of GDP generated by the private sector and
64 % of foreign trade being conducted with EU countries.

(1) Resolution on the regular report from the Commission, adopted

15 April 1999.

(2) Agricultural policy and Hungary’s accession to the EU; reforming
social welfare systems in the EU and Hungary; the social dialogue.

The situation in the different production sectors has
2.6.
been affected by major variations, partly due to privatisation
processes. Although there has been a major shift of workers

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away from agriculture to other sectors in recent years, it still
employs a considerable part of the work force (9,4 % in 1998
according to Eurostat sources, 7 % in 1999 according to
Hungarian sources). A further such shift is likely in the future.
In 1998 micro-enterprises (less than 10 employees) provided
work for some 1 million people; small enterprises (10 to
49 employees) 360 000, and small and medium-sized enter-
(50-249 employees) approximately half a million.
prises
Together, then, they account for close to 50 % of the working
population (source: ILO, Budapest, 1998).

2.9.3.
The six most representative trade union organisations
are affiliated to the ETUC (European Trade Union Confeder-
ation). With the support of the ETUC, a National Trade Union
Committee for Integration (NUCI) was set up in Hungary
under the aegis of the Phare programme, as in the other CEECs.
This body channels information on European affairs and
enlargement issues to the unions. All trade union organisations
are also kept informed of, and consulted on, questions arising
from the EU accession negotiations. The Hungarian NUCI
coordinator is an official member of the government’s strategic
working group on integration.

2.7.
The industrial sector has a dual structure. While a
small number of foreign-investment-based companies achieve
relatively high levels of productivity, many others, geared to
the domestic market, suffer from low productivity and, most
inadequate technology, meaning they cannot
importantly,
readily fit into an open, competitive system. The environmental
challenges can be particularly formidable.

2.8.
The service sector appears to be advancing at a faster
pace, often because the activities involved are totally new and
as such, do not require restructuring. However, there is a clear
need to press ahead with modernisation.

2.9.4.
A tripartite forum was set up in late 1988, leading in
turn to the establishment of the Interest Conciliation Council
(ICC). The aim was to head off conflicts and provide
employers’, workers’ and government representatives with a
system for two-way consultation and information and for
reaching agreement between the parties. The fragmentation of
employers’ and trade union representation has clearly also had
implications for the work of the Council, and for the impact
of its decisions.

The Council has discussed the minimum wage and
2.9.5.
the question of pay increases in sectors exposed to compe-
tition, and a number of national agreements have been signed.
Other legal and socio-economic questions have also been
broached.

2.9. Developments in Hungarian industrial relations (Appendix 1)

2.9.1.
The reorganisation of the labour market during the
1990s led to fragmentation of representative arrangements,
affecting both trade union confederations and employers’
organisations.

Under the rules governing the Council’s operation, the social
partners were entitled to be informed on all specifically
labour-related matters, and to take an active part in framing
legislation. The government was required to carry out consul-
tation before adopting legislation (2).

The transition to a market economy ushered in a
2.9.2.
pluralist model of
the main
industrial relations. Four of
trade union confederations have emerged from the previous
Hungarian confederation (SZOT), and have undergone reform
(MSzOSz, Autonomous, SZEF, ESZT), and two new ones have
been set up (LIGA and MOSz).

Most of the numerous sector-based trade unions are affiliated
to one of the six most representative confederations.

This fragmentation of representative structures was also fuelled
by the freedom of trade union association law, which allowed
groupings of at least 10 workers to register as a works union
(1989 Law of Association). Many attempts at inter-union
mergers or cooperation have been made, but have never
advanced beyond an embryonic, experimental stage, and the
efforts have proved inadequate (1).

At the suggestion of the ICC, the Labour Code has been
amended in a number of points, particularly with regard to
the protection of workers not covered by collective labour
contracts.

2.9.6.
Fresh consultations on amendments to the Labour
Code, and on the government’s new plans for social dialogue
structures, commenced in March 1999. The ICC has been
abolished, along with the Social Security Management Com-
mittees, with no prior consultation of employers’ or trade
union organisations.

Under the proposals submitted by the government to parlia-
ment, works’ councils would be able to enter into negotiations
directly at company level, even where there is no trade union
presence.

(1) G. Casale: Workers’ Participation in CEECs (ILO, 1998).

(2) See the EU-Hungary JCC document of 26 October 1998 Social

policy: the social dialogue, drawn up by La´szlo´ Sa´ndor.

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In practice,

2.9.7.
the Hungarian government’s new
approach is to dismantle social dialogue structures and replace
them with a system of separate forums (see appendix) which,
while broadly-based, have few decision-making or advisory
powers. Two types of forum have been set up: Labour Forums,
and economic and social consultative forums. The Labour
Forums are strictly tripartite (government, employers and trade
unions). The other two major arenas for discussion (the
Economic Council and the Social Council) are to meet only
twice yearly; membership is to be extended to the Hungarian
Central Bank, the Stock Exchange Council, representatives of
multinationals and some chambers of commerce. On the
Social Council, the government is to encounter representatives
of disadvantaged sectors of society, the disabled, non-gov-
ernmental organisations and various associations, but not the
social partners.

2.9.8.
A degree of decentralisation of Hungary’s planned
economy began as early as 1968. This resulted in a shift of
responsibility for setting pay structures away from the national
trade union centre towards workers’ representative bodies
within individual companies (1).

The Labour Code, as put forward in 1992, has
2.9.9.
undergone a series of changes over recent years,
initially
intended to model Hungarian labour relations on the German
system. Under the system thus conceived, works councils
would be able to conclude agreements relating to the immedi-
ate workplace, while the national sector federations were
responsible for agreements covering more than one company.

Trade unions are presently authorised to enter into
2.9.10.
company-level agreements only if they have secured 50 % of
votes cast in the last works’ councils election.

2.9.11.
Employers are represented by nine national organis-
ations, now linked in a single association set up for inter-
national issues. The Hungarian Employers’ Confederation for
International Cooperation (MMNSZ), which was set up in
January 1999, is the only such association affiliated to UNICE.
Private employers’ associations are not authorised by their
member companies to conclude collective agreements or enter
into commitments binding upon the latter. The main role of
the employers’ associations seems to be more to represent
economic and commercial interests to the government. This
goes some way to explaining the significant fall in the number
of collective agreements concluded since the high point of
1991 and 1992.

2.9.12.
The transition to a market economy has heralded
serious economic and social consequences for many sectors of
Hungarian society. Unemployment reached a worrying peak
in 1993 (11,3 %). Large numbers joined the lists of the

long-term unemployed at this time. According to the Com-
mission report (October 1999), the unemployment rate had
fallen back to 7,8 %, but with significant regional variations
and a marked increase among minorities (2).

The new government has restructured the state
2.9.13.
apparatus, creating a new Ministry of Social and Family Affairs,
while the responsibilities of the Ministry of Labour, established
in 1990 and abolished in 1998, have been distributed between
the Ministry of Economic Affairs, the Ministry of Education
and the Ministry of Social and Family Affairs.

2.9.14.
The national public health service, set up to provide
preventive health care, and the works inspectorate, whose
tasks include monitoring workplace health, are frequently
uncoordinated and possess inadequate resources to meet
public needs and to prevent work-related accidents.

Administrative decentralisation cannot be described
2.9.15.
as complete, although structures have been set up at regional
and sub-regional level. Regional financial resources remain
restricted, and are spread between the nine ministries involved:
this also applies to measures to combat unemployment (3).
Public employment agencies have been set up for this purpose.
Use has also been made of NGOs, which have examined
vocational retraining and back-to-work schemes. Over recent
years, such bodies have significantly stepped up their activities
and boosted their political influence (4).

2.9.16.
Turning to the overall cost of the social security
system (approximately 24 % of GDP), the Hungarian govern-
ment is preparing thorough-going reform of the pensions
scheme by setting up a legal framework guaranteeing (1) the
establishment and operation of private pension funds, based
on compulsory contributions, (2) an optional supplementary
scheme (Law LXXXII of 1997), and (3) a compulsory state
pension scheme (5).

2.9.17.
The government has set up an equal opportunities
department, charged with pursuing a policy of equal oppor-
tunities for men and women. Several associations and NGOs
are working to strengthen the role of women at work.

(2) See the ESC information report of July 1999 Stocktaking of the
employment situation and the social situation in the applicant countries.
(3) G. Juhas: Threats against further integration?, Lund University, Stock-

holm, 1998.

(4) World Bank, regional office in Hungary: NGO stock-taking in

(1) Andras Toth: The transformation of industrial relations in Hungary in

South East Europe Review, 3-1998.

Hungary.

(5) See the EU-Hungary JCC document of 26 October 1998.

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2.9.18.
The number of NGOs grew rapidly following the
collapse of the regime in 1989. Some 60 000 are currently
registered, employing more than 47 000 people and with an
economic turnover equivalent to 1,5 % of GDP. This is an
approximate figure which includes foundations, associations
and local organisations that are not all fully operative. The
Prime Minister’s Office has a department responsible for
strengthening and supporting the role of the associative and
voluntary sectors in Hungary.

2.9.19. While the work done by voluntary associations is
to be welcomed, the Economic and Social Committee would
voice its doubts concerning the structure and role of the
associative movement, which in no way can stand in for the
basic tasks for which government institutions are responsible,
and for the legitimate representation and involvement of the
socio-economic players.

Although there are major variations in development
2.10.
levels between the different regions of Hungary, they are no
greater than those existing within EU Member States.

2.11.
Administrative reform has made considerable head-
way, although much remains to be done. Less progress appears
to have been made in modernising the police. This could
become an urgent problem in view of the emergence of
organised crime.

2.12.
The Phare programme has clearly scored notable
successes over recent years in areas such as industrial restruc-
turing, privatisation and institutional reform and consoli-
dation. Since 1998, the priorities under the PHARE programme
have been the same as those set out in the Pre-accession
Strategy, thereby becoming one of the main elements in the
strategy. However, the social partners are critical of the use of
Phare programmes, as they raise difficulties in terms of access
and management. One of the major problems is the need for
government support and agreement.

3.3.
The first, emphasised by virtually all the socio-occupa-
tional organisations consulted, was the breakdown of the
structured social dialogue with the Hungarian government.

3.4.
This has culminated in the replacement of the ICC,
where the social dialogue was conducted, with a series of
six consultative committees. This has fragmented the work
previously carried out by the ICC, although in some cases the
effect has been to broaden the functions involved. Furthermore,
many of these advisory bodies have no rules of procedure, or
rules which do not specify how often, and under what
circumstances, they should meet and reach decisions.

3.5.
The picture regarding employers’ and workers’ organis-
ations is very mixed, with nine organisations representing the
former and six the latter. The employers’ organisations have,
however, set up a coordinating body, HECIC, as the first step
towards progressive integration. The study group also met the
main consumers’ association which, despite modest resources,
is highly active and makes a considerable public impact.

3.6.
The study group was able to meet with representatives
of Hungarian NGOs. There are 60 000 NGOs in the country,
30 000 of which are currently active. This remarkable number
in fact covers many types of business organisation, often
cooperatives but sometimes full-scale companies which have
evolved in this direction from the former collectivist structures
on account of the tax benefits it offers.

3.7.
The Hungarian government vigorously supports NGOs
and sees them as an alternative to direct dialogue with the
conventional socio-occupational organisations. A practical
instance is that all natural persons may freely allocate 1 % of
their annual income tax to an NGO of their choice. In contrast,
contributions by companies to employers’ organisations, or
by workers to trade unions, cannot be set against tax.

3. Summary of the talks held by the study group in

Hungary

3.1.
The study group responsible for preparing the present
opinion visited Hungary shortly after the publication of
the European Commission’s second evaluation report on
Hungary’s progress towards EU accession.

During its visit, the study group was able to meet
3.2.
several Hungarian government officials closely involved in the
accession process, as well as the group of EU delegation
officials responsible for monitoring the process and, in particu-
lar, the most representative socio-occupational organisations.
The following conclusions were reached in the wake of the
visit.

3.8.
The study group was favourably impressed by the
expertise of Hungarian government officials working on
accession, and congratulated them on several occasions. The
support provided by the European Commission has helped in
this respect.

3.9.
Two causes for concern, however, emerged from the
meetings with both the social partners and government
officials.

3.9.1.
The first aspect, in the unanimous view of those the
study group spoke to, is the EU report’s over-emphasis on the
Roma ethnic group (and not minority), and on corruption.
Both issues are overestimated. In the case of the Roma, they

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accepted that the problem existed but felt that it was less
serious and intense than described in the report. Concerning
corruption, they quoted a recent report by Transparency
International in which Hungary scored better than one of the
EU’s founding countries and came close to a number of other
Member States.

not only has the EU brought peace and mutual trust to Europe,
it has also created a new dimension of mutual support and
shared progress, facilitating the spread of a unique economic
model, described as the ‘European social model’. Under this
model, all the economic and social actors defend their own
interests, while jointly pursuing the shared social good.

3.9.2.
The second, and more far-reaching, cause is that the
lack of a firm, predictable date for accession is generating a
degree of public disenchantment and uncertainty over attempts
to bring Hungary fully into line with the acquis communautaire.
The study group was told on several occasions that lengthy
postponement of the accession date might provoke a slow-
down in adjustment efforts.

4. Analysis of the current state of the accession pro-

cedure

4.1.
This section is based on three references. The first is
the European Commission’s December 1998 and October
1999 reports on Hungary’s preparations for accession. The
second includes various documents and reports, in particular
the European Parliament’s opinion on the question (1) and the
resolutions adopted by the EU-Hungary Joint Consultative
Committee (2). The last is the outcome of the rapporteurs’
contacts with both the European Commission and the Hungari-
an mission to the EU and, in particular, the study group’s
meetings with socio-occupational organisations and auth-
orities in Hungary in October 1999.

that

The Committee would repeat

4.5.
the process of
integrating a country, in this case Hungary, into the EU is a
joint task involving every part of that country’s society. It must
therefore express its concern at the lack of an open social
dialogue between the Hungarian government and the country’s
most representative socio-occupational organisations.

4.6.
The ESC does not consider itself qualified to make any
judgment on the ultimate causes of this situation, or on any
individual responsibilities on the part of those concerned. It
does, however, wish to call upon the Hungarian government,
together with the socio-occupational organisations, to seek
compromise formulas allowing the dialogue to be restored.
Without this dialogue, accession — while perhaps not imposs-
ible — will at the least experience significantly greater difficult-
ies in terms of implementation and acceptability to Hungarian
society as a whole.

4.7. Comments on the political situation

4.2.
The recent Helsinki European summit, insofar as it
established a more favourable climate for accession by appli-
cant countries meeting the political and economic require-
ments and in terms of adopting the acquis, was good news for
Hungary in its efforts to join the European Union at the earliest
possible date.

In particular,

4.7.1.
The ESC agrees with the bulk of the European
Commission’s analysis.
it shares the Com-
the democratic
mission’s views on the consolidation of
and governmental system, and on the system of individual
freedoms. It was also able to confirm that the workings of the
judicial system have improved following an injection of more
and improved material resources.

4.3.
The Economic and Social Committee would point out
that the initial stages of the EU accession process are always
difficult, as they entail a country surrendering certain legal and
administrative powers to a supranational authority. Moreover,
in the case of the current applicants, such as Hungary,
it
involves a major effort to attune production structures and
social practices to more demanding standards.

4.7.2. With regard to corruption, the ESC accepts that
isolated problems do exist in certain areas such as, for example,
the security forces and border controls: priority action should
be taken here as part of the reform of the country’s administrat-
ive machinery.

However,

4.4.
the
experience of the 15 Member States has been highly positive:

the ESC must also point out

that

4.7.3.
The ESC acknowledges the existence of a problem
regarding the Roma community, requiring urgent corrective
action. It would, however, express the following qualifications.

(1) Resolution on the regular report from the Commission, adopted

15 April 1999.

(2) Reforming social welfare systems in the European Union and Hungary;
Social policy — social dialogue; Agricultural policy and Hungary’s
accession to the EU.

4.7.3.1.
The 600 000-strong Hungarian Roma community,
which also exists in other applicant countries as well as in
many EU Member States, must be respected by the public
authorities and the general public.

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4.7.3.2.
Efforts to end the discrimination suffered by the
Roma community should hinge upon a series of positive
measures — which do seem to have been launched in a
medium-term Action Plan by the Hungarian government —
especially education, and in some cases specific support
programmes in which employers’ associations and trade
unions can play a prominent part. Such policies must not,
however, lead to compulsory assimilation of the individuals
belonging to this community.

The ESC considers it unacceptable to equate the
4.7.3.3.
situation of the Roma community with that of the Hungarian
minorities in other central European countries. Major political
and cultural differences separate them.

4.8. Comments on the macroeconomic situation

The Hungarian economy is making highly satisfac-
4.8.1.
tory progress towards stable, non-inflationary growth, while
striving to reduce government deficit to acceptable levels.

4.8.2.4.
Progress in the privatisation process is highly
satisfactory. The national fiscal deficit has been reduced by
selling loss-making enterprises and reducing government debt,
with a consequent cut in debt servicing. Specific difficulties
arose in privatising one public bank, but these have now been
resolved. Another element which should be borne in mind is
that 14 % of farm land still remained unprivatised at the end
of 1998. This could have a considerable impact on applying the
acquis communautaire in relation to the Common Agricultural
Policy (CAP).The risk of a slow-down in the final privatisation
drive should not be underestimated if the accession nego-
tiations do not advance at the rate the Hungarian authorities
would wish.

4.8.3.
To sum up: by the end of the preparatory period,
the Hungarian economy could be in a position to compete
openly on world markets, provided that productivity continues
to rise strongly and overall incomes do not outstrip it, in line
with inflation, employment and quality of life targets, and
provided that investment in modernisation increases, funded
either from domestic savings or from foreign investment. It is
the ESC’s view that the overall competitiveness of the Hungari-
an economy — especially its industrial sector — should be
subject to systematic and detailed analysis by the European
Commission.

4.8.2.
macroeconomic difficulties possibly facing Hungary.

The Committee would, however, point to some

4.9. Comments on the internal market and the situation of the

different economic sectors

4.8.2.1.
The first is the effect of the recent introduction of
a system of fixed parity with the euro (on 1 January 2000) on
a more rigorous anti-inflation policy. Similarly, the supervisory
capacity of the overall financial system must be strengthened.

4.8.2.2.
The need to continue reducing the fiscal deficit ties
in closely with this. Three problems arise in this area, in the
Committee’s view. The first is the need to continue and speed
up reform of public administration, which may require a
significant rise in pay levels and even in the numbers of
specialist officials. Secondly,
the
regional and local authorities in public sector expenditure.
Thirdly, the inadequate tax base, which is clearly indicated by
the considerable weight of the black economy and the system
of tax exemptions. Solving the government deficit will require
coordinated, simultaneous action on all three fronts.

the significant share of

4.8.2.3.
A further cause for concern is the polarisation of
the economy into clearly externally-oriented, competitive
sectors, whose success is closely linked to the foreign direct
investment they receive, and production sectors geared to the
domestic market, and which may not be competitive. The
Hungarian government must try to speed up the transform-
ation of these sectors before the complete disappearance of
tariff barriers and other forms of protection which, under the
Europe Agreement, is scheduled for 31 December 2000.

4.9.1. With regard to the exercise of the four freedoms
underpinning the single, border-free market, Hungary appears
to be making good progress with the construction of a legal
framework in line with the acquis, although the process of
joining Community standardisation systems such as CEN and
CENELEC should be speeded up in order to reach the 80 %
harmonisation level set out in a recent Hungarian government
decree by the end of 2000. In the future, the ESC should
consider extending its remit by means of the Joint Consultative
Committees (as it does with the Single Market Observatory) in
order to detect practical obstacles in the applicant countries
and suggest how to remove them.

4.9.2.
Some problems have arisen in the application of
Community competition law. Incorporation into Hungarian
law of the agreement set by the Association Council has raised
some problems of constitutionality, since the Hungarian
constitution does not allow the direct application of non-Hun-
garian legislation. As a result, the Hungarian law transposing
the decision of the Association Council has to be amended to
bring it into line with the constitution. Similarly, a number of
difficulties exist concerning proper accounting and supervision
in the state aid system. To resolve these, the Hungarian
government has set up a monitoring agency for such aid. On
the other hand, Hungary does appear to be making great
strides forward in adjusting the laws and procedures governing
public procurement.

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4.9.3.
The agricultural sector represents one of the key —
and also most complex — factors in the accession procedure,
on account of its economic weight and, above all, its social
repercussions. The EU-Hungary Joint Consultative Committee
has recently voiced its views on this subject (1). Its recommen-
dations focus on three elements:

— acceptance of the financial perspectives agreed at the Berlin

European Council;

4.9.5.
In telecommunications, Hungary has asked for its
exclusive rights in telephone services to continue until 2002.
Wherever technically and economically possible and socially
acceptable, the Committee would call for certain high added
value and high growth rate services (e.g. data transmission
networks, mobile communications) to be liberalised faster, as
the effects on the economy’s overall productivity could only
be beneficial. The rights of consumers and those working in
the sector must be respected at all stages of this process.

— the possible impact on rural employment and migration
to urban areas of inappropriate application of the CAP.
Ways must be found of maintaining a decent standard of
living for Hungarian farmers;

4.9.6.
Environmental aspects may pose particular practical
difficulties when accession takes place. In its opinion on the
application of the acquis to the candidate countries (4), the
Committee outlined the thinking which should underpin this
process, based on the following points:

— pursuit of a mutually acceptable compromise on com-

pensatory farm aid.

— strengthening the Community’s pre-accession instruments

in this area;

The ESC supports these conclusions of the Joint Consultative
Committee. They should be used as a benchmark for progress
in the agricultural negotiations.

— establishing limited transitional periods for the application
of the environmental acquis , in cases where major single
market obstacles are not involved;

Moreover, Hungary has called for a 10-year transitional period
land by non-Hungarian
for the purchase of agricultural
citizens, cooperatives or limited companies. While reserving
judgment on the merits of the request itself, the ESC would
like to suggest a possible compromise solution whereby
natural persons who are EU nationals and are actually resident
in Hungary, or agricultural cooperatives registered in the
country, could purchase land immediately.

— requiring all new installations or projects which are fully
or partly funded by Community loans or aid to apply
current Community standards, even when these are not
formally in force in Hungary;

— reinforcing administration and specialist measurement
systems, so that environmental standards can be effectively
applied.

4.9.4.
In the transport field , Hungary has made great
advances in implementing new legislation in line with the
acquis, although there is still some way to go. In its opinions
on pan-European transport policy (2), as well as in the Resol-
ution of the Joint Consultative Committee (3), the Committee
highlighted Hungary’s key role in the TINA initiative, as
well as the need to set up major rail, and especially road,
infrastructure programmes. The JCC also suggested separating
transport issues relating to the Hungarian economy’s inter-
national dimension from those relating, at least initially, to the
domestic market. Lastly, the JCC emphasised the need to
improve training systems for workers and the self-employed
in the transport sector.

Moreover, given Hungary’s central position in relation to other
applicant countries, the environmental policies adopted by
these countries should also be taken into account, particularly
with regard to the Danube and its tributaries.

4.9.7.
The Committee welcomes Hungary’s achievements
on legislation governing consumers’ rights, and hopes that
representatives of consumer organisations will be actively
involved in the process of preparing the relevant legislation
and public education.

(1) Resolution adopted by the EU-Hungary Joint Consultative Com-

mittee, Brussels, 10 May 1999.

(2) Opinion on the implementation of

the Helsinki declaration
(CES 1133/98, OJ C 407, 28.12.1998) and Opinion on implemen-
tation of the structured social dialogue in the pan-European
transport corridors (OJ C 329, 17.11.1999).

(3) DI 83/99 fin Joint Resolution on Transport policy and Hungary’s

accession to the EU.

(4) Opinion on the Communication from the Commission to the
Council, the European Parliament,
the Economic and Social
Committee, the Committee of the Regions and the candidate
countries in central and eastern Europe on accession strategies for
environment: meeting the challenge of enlargement with the
candidate
Europe
(COM(1998) 294 final), in OJ C 40, 15.2.1999.

countries

eastern

central

and

in

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5. The Accession Partnership and national programme

to take up the acquis communautaire

5.1.
The Accession Partnership created under Regulation
622/98 seeks to rank priorities for each country for adopting
the acquis, by identifying such priorities and allocating the
resources to implement them. On this basis, each applicant
country has prepared a national programme for adopting the
acquis.

5.2.

The Hungarian programme set the following priorities:

— economic reform;

— reinforcing institutional and administrative capacity;

— internal market;

— justice and home affairs;

— the environment.

5.3.
The ESC considers that Hungary is making remarkable
progress in the overall application of the programme, although
it feels that certain areas require special attention. Here, it
would make the following recommendations:

5.3.1.
Concerning regional development, Hungary not only
displays significant disparities in income levels, but also lacks
an administrative structure capable of implementing a regional
cohesion policy. The creation of such a structure is an urgent
and necessary task if Hungary wishes to benefit from ERDF
resources from the moment of accession. Similarly, an action
plan for the Roma community, boosting its integration and
facilitating access to education for its children, could be an
element in this policy.

The same applies to application of health and plant
5.3.2.
health standards, which is becoming a highly sensitive issue in
the EU. Insufficient focus on these aspects could deprive
Hungary’s agri-foodstuffs sector of major potential oppor-
tunities on Community markets.

5.3.2.1.
The ESC would draw special attention to the urgent
need for Hungarian law to incorporate the provisions of the
acquis communautaire to counter drugs trafficking, organised
crime and money laundering.

1988 it had still not ratified numerous multilateral agreements
to which the EU is a signatory, or revoked others not
compatible with the Community acquis. In the Committee’s
view, Hungary should in future be informed of new agreements
to be signed by the EU so that the country can adopt them
more quickly.

5.3.4.
Hungary remains markedly out of step with the EU
in customs affairs. This aspect merits urgent attention, not
only because of
implications for both the
Hungarian treasury and the Community budget, but also
because Hungary shares borders with non-EU countries.

the financial

5.3.5.
Although there has been an appreciable improve-
ment in the design and implementation of the Phare pro-
gramme for Hungary over the last year, there is still some way
to go if the opportunities it offers are to exploited to the full.
The same is true of the ISPA and the future Sapard programme.
The ESC recommends that the socio-occupational organis-
ations be more actively involved in identifying priorities and
selecting specific objectives.

6. Conclusions

6.1.
The ESC believes that Hungary’s overall preparation
for EU accession is highly satisfactory, and that it should press
ahead with its efforts even if, for purely internal reasons, the
In the
EU cannot set a detailed timetable for accession.
ESC’s view, cooperation between the EU institutions and the
Hungarian government on a joint footing needs to be stepped
up.

6.2.
The ESC would, however, voice its concern at the
breakdown of a constructive social dialogue between Hunga-
ry’s government and social partners, and urges all sides to
re-establish this dialogue. This would speed up the country’s
preparations for accession and increase its public acceptability.

Hungary has made considerable progress in rational-
5.3.3.
ising its external trade relations, particularly those deriving
from the WTO, in line with the acquis. However, at the end of

6.3.
In the future, the ESC should consider extending its
remit by means of the Joint Consultative Committees (as it
does with the Single Market Observatory) in order to detect
practical obstacles in the applicant countries and suggest how
to remove them.

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26.4.2000

6.4.
The ESC wishes to harness the means and opportunities
offered by the Treaty on European Union in order to assist in
this process, either directly or through the EU-Hungary Joint
Consultative Committee, by making available to the social

partners all
its resources and capacity for influence and
mediation with the Community institutions and the govern-
ment and other institutions of Hungary.

Brussels, 1 March 2000.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

APPENDIX

to the Opinion of the Economic and Social Committee

Summary table of the new system of social dialogue

Forums

Subject

Participants

Macro level forums

A. Labour

1. National Labour Council

Sitting: as appropriate

2. National ILO Council

Sitting: as appropriate

Labour legislation applicable to the entire economy; Government representatives, associations of organis-
negotiated agreement on the national minimum ations representing national employers; confeder-
wage, on rearranging the working days of the week,
national
and on measures concerning the authority of the
social partners

ations
of
employees

organisations

representing

Participating in preparing international labour agree- Government representatives, associations of organis-
ations representing national employers; confeder-
ments, managing continuous contact with the Inter-
ations
national
of
national Labour Organisation
employees

organisations

representing

B. Economic and social consultation Forums

1. Economic Council

Sitting: at least twice a year

Consultation on strategic questions affecting the Government representatives, national interest organ-
isations representing economic chambers, the bank
whole economy
association, Stock Exchange Council, organisations
representing foreign investors, etc.

2. European Integration Council

Sitting: quarterly, then as required
by the intensity of the preparations

Consultation on the general context of activity in Government
rep-
interest, economic chambers,
technical working groups, and on the domestic and resenting national
international efforts of representative organisations NGOs (plus permanent guest and persons invited
to promote integration

according to the current subject)

representatives, organisations

3. Social Council

Sitting: as appropriate

Forum for preparing the most comprehensive Government representatives, representatives of main-
decisions concerning the socially most exposed taining and funding organisations of
the central
and regional institution system; NGOs, occupational
groups
representative organisations

4. National Regional Development Consultation on the current

issues of regional/ Government

Council

territorial and infrastructure development

Sitting: as appropriate

representatives, economic chambers,
local govern-

interest representation organisations,
ments’ interest groups, NGOs