Opinion of the Economic and Social Committee on "Malta on the road to accession"
Date: 2001-07-11
Institutions: European Economic and Social Committee
Subjects: Malta, accession to the European Union

17.9.2001

EN

Official Journal of the European Communities

C 260/93

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

(2001/C 260/17)

On 13 July 2000 the Economic and Social Committee decided to draw up an own-initiative opinion on
‘Malta on the road to Accession’.

The Section for External Relations, which was responsible for preparing the Committee’s work on this
subject, adopted its opinion on 28 June 2001. The rapporteur was Mr Kenneth Walker.

At its 383rd plenary session on 11 and 12 July 2001 (meeting of 11 July) the Economic and Social
Committee adopted the following opinion by 66 votes to 28 with 22 abstentions.

N.B.: The situation with regard to Malta’s progress towards
accession is very fast-moving, both in relation to the process
of closing chapters and the introduction of legislative measures
in Malta; the information given below has been corrected to
28 June 2001, the date of the Section meeting. Subsequent
developments may not be reflected in this document.

1.

Introduction

1.1.
The Republic of Malta is a parliamentary democracy
with a long and chequered history, during which its strategic
position in the Mediterranean has resulted in the Maltese
people playing a pivotal role in the development of European
civilisation. Since pre-historic times, Malta has proved popular
with visitors, not all of whom have been unequivocally
welcome. It has been ruled in turn by the Phoenicians, the
Romans, the Knights of the Order of St. John, the French and
the British. Twice over the centuries it has stood at the cross-
roads of history; in the sixteenth century, when the Knights of
Malta repulsed the Turkish invaders, and again in the Second
World War, when Malta stood firm against the might of the
Axis powers, it was instrumental in determining the course of
Western European history; for the second of these exploits,
Malta was awarded the George Cross, the highest British
civilian award for gallantry.

The Helsinki European Council of 10-11 December
1.2.
1999 gave its approval to the opening of accession nego-
tiations with Malta and five other applicant countries. These
states have subsequently been known as ‘The Helsinki Group’.

tive pressures within the Union, provided that it creates the
necessary conditions for the further industrial restructuring
which will have to take place regardless of EU membership.

However, there is one major obstacle which will have
1.3.1.
to be overcome. Uniquely among the candidate countries,
Malta does not at present have a clear political consensus on
Union membership. Unless and until such a consensus is seen
to be in place, and to have credible prospects of being
sustainable, there must always be a question mark over the
country’s readiness for membership.

This report will focus on the present state of prep-
1.4.
aration of the Maltese economy and the Maltese people for
meeting the acquis communautaire and fulfilling the other
obligations which attach to membership.
It will seek to
evaluate what has already been achieved and assess what
it will also deal with the
remains to be done. Inevitably,
political issues which will ultimately determine whether Malta
wishes to proceed with its application.

1.5.
The rapporteur was assisted in his work by Dr Leonard
Mizzi of the Malta Business Bureau, to whom he is greatly
indebted. A delegation of the study group visited Malta on 21-
23 March 2001(1).

2. Assessment of Malta’s progress towards accession

The history of Malta’s relations with the EU,

2.1.
the
political, economic and social background, the negotiating
process, the progress of negotiations, an assessment of areas
of potential difficulty, the state of the social and civil dialogues
in Malta, the impact of accession on selected sectors, the
attitudes in Malta towards accession and the issue of funding
are all dealt with in a separate document.

1.3. Malta is well-placed economically and politically to be
amongst the leading candidates for membership of the Union;
it fulfils the Copenhagen criteria, it has a functioning market
economy and should be capable of withstanding the competi-

(1) Report on a fact-finding visit to Malta conducted as part of the
preparation of an opinion on ‘Malta on the road to accession’
R/CES 460/2001.

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3. Executive Summary

3.1. Malta does not have at present a clear political
consensus on Union membership. The ruling Nationalist Party
is in favour of immediate entry, believing that this is not only
desirable from a historical and political perspective but is
necessary to provide the incentive and the financial support to
tackle Malta’s acknowledged structural problems.

3.2.
The Labour Party, on the other hand, would prefer to
defer entry until the worst of these problems have been
resolved, in the meantime, maintaining friendly relations with
the EU and negotiating some form of free trade association,
‘Switzerland in the Mediterranean’.

3.3.
The Nationalist Party plans to hold a referendum on
membership when the accession negotiations have been
completed and, in any case, prior to the next parliamentary
elections, which are due in January 2004 at the latest. The
Labour Party has declared that,
if it is returned to power
at these elections it will withdraw Malta’s application for
membership, regardless of the outcome of the referendum.

The latest opinion polls show that the numbers in
3.3.1.
favour of immediate EU entry and those opposing it are almost
equally balanced, with a substantial proportion undecided.

Currently, Malta fulfils all the Maastricht criteria except
3.4.
that of annual budget deficit. However,
the accumulated
government debt is around 59 % of GDP; while this is within
the Maastricht criterion of 60 %, and below that of several
Member States, it is on a rising trend which, if sustained,
would take it above the reference level prior to the target
accession date.

3.4.1. Malta’s GDP in Purchasing Power Parities is 52 % of
the EU average.

3.4.2.
The economy is very export-orientated, with exports
of goods and services amounting to 89 % of GDP in 1999.
The EU is Malta’s largest trading partner, accounting for 65 %
of Maltese imports, and has a large trade surplus.

3.4.3.
The principal economic activities are electronics,
shipping, shipyards and tourism. Agriculture accounts for only
2,5 % of GDP; the agricultural industry is highly fragmented.

3.4.5.
The Maltese economy is dominated by micro-busi-
nesses, with 95 % of enterprises employing less than ten
people.

3.5.
The Malta-EU Steering and Action Committee (MEUS-
AC) has been formed with the objective of improving the
the negotiation process by including all
transparency of
interested sectors.

Some of the bodies consulted by MEUSAC complain
3.5.1.
that there is not always sufficient time allowed for discussion
to enable them to consult their members.

3.6. Malta’s first National Programme for the Adoption of
the Acquis (NPAA) was published on 18 September 2000.

3.6.1. Malta has received a four-year transition period
under the Energy Chapter to enable it to build up strategic
reserve stocks of oil.

The EU has indicated that Malta is most likely to
3.6.1.1.
qualify for a post-accession derogation in respect of the
classification of its electricity supply system as a ‘small isolated
system’.

3.6.1.2. Malta has been granted a four-year transition
period under the Chapter on Free Movement of Goods for
the renewal of marketing authorisations for pharmaceutical
products.

3.6.1.3.
Under the Chapter on Free Movement of Workers,
Malta has been granted a seven-year transitional period during
which it may apply safeguards on the right of workers from
other EU Member States to seek work in Malta. Malta differs
from other candidate countries in that the post accession flow
of workers is expected to be inward, whereas in the other
applicant states it is expected to be from those states to the
EU.

To date, Malta has opened 28 chapters of the acquis
3.6.2.
and provisionally closed 17. It hopes to open the chapter on
Agriculture during the Belgian presidency.

There are some areas of potential difficulty which will

3.7.
have to be resolved during the negotiating process.

3.7.1.
real estate in Malta by foreign nationals.

There are still some restrictions on the purchase of

is very densely populated, with some
3.4.4. Malta
1 200 inhabitants per square kilometre; 21 % of the total land
mass is urbanised.

There is a need to strengthen the administrative
3.7.2.
capacity to enforce intellectual property rights (i.e. the police,
customs and out-of-court settlement problems).

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3.7.3.
In order to comply with EU competition policy, Malta
faces an intense two years of further legislative approximation,
rigorous re-structuring and increased liberalisation and privati-
sation. The existing subsidies to the shipyards will have to be
phased out.

3.8.
Consultation procedures between the Maltese Govern-
ment and the social partners are formalised through the
Malta Council for Economic and Social Development, a self-
regulating, tripartite body consisting of representatives of
employers’ associations, trade unions and the Government.

3.7.4.
In the Fisheries area, the NPAA identified problems
with the 15 % customs tariff applied to exported fish and the
need to continue to maintain the fisheries conservation zone
within 25 nautical miles to conserve stocks.

3.8.1.
At present, the involvement of the other elements of
civil society is peripheral to this process rather than forming
an integral part of it but it is generally accepted that this is the
first step in an evolutionary process.

There are some concerns in the EU with the detention
3.7.5.
rate in EU ports of ships flying the Maltese flag and the rate of
flag-state inspections in Malta. Malta has the fourth largest
fleet in the world, many of them oil tankers. The Malta
maritime authority is far from being able to keep tabs on the
ships registered in Malta, the overwhelming majority of which
are the property of ship-owners from non-Member States.

3.8.2.
The Maltese Government is proposing the creation
of a Malta-EU Joint Consultative Committee with six represen-
tatives from each side.

Certain sectors of the Maltese economy will be heavily

3.9.
impacted by EU membership.

3.7.6.
The cost of meeting the environmental acquis is
around 5 % of Malta’s GDP. Problem areas include waste
management and the availability, quality and cost of water
supply.

Tourism is one of the major industries in Malta but
3.9.1.
its development will be hampered by lack of space, facilities
and resources. The industry is also concerned about some
aspects of Community employment legislation.

3.7.7.
The Agricultural acquis is expected to create prob-
lems. The question of Malta’s protective tariffs for agricultural
products will be one issue; another will be competition
from the EU for Malta’s fragmented and relatively inefficient
agricultural industry.

3.7.8. Malta has requested transitional periods under the
Working Time, Noise at Work, Temporary/Mobile Construc-
tion Sites and Use of Work-Equipment Directives. Some
Maltese industrialists do not consider the transition periods
requested to be sufficient.

3.7.9.
Draft legislation to align Malta’s consumer-protection
policy with the EU Product-Liability Directive will be intro-
duced this year but it is not clear how the Travel Package
Directive will be enforced in the short term, since the relevant
enforcement agencies will only be established in 2002.

3.7.10. Maltese businesses would like to see a high thres-
hold of exemption from VAT and would favour the adoption
of the zero-rating provisions current in the UK and Ireland.
Fears are also expressed that pressure for the harmonisation of
taxes in the EU would lead to an increase in the overall burden
of taxation for Maltese businesses.

3.9.2.
Shipyards and ship-building are an important, but
loss-making, part of the Maltese economy. There is need both
for a re-structuring programme and sensitive negotiation on
how subsidies are to be phased out.

The manufacturing sector is concerned about the
3.9.3.
impact of several Directives in the field of EU Labour,
Employment and Health and Safety Legislation. A very high
proportion of businesses in Malta are micro-businesses which
are not unionised and cannot therefore negotiate special
customised agreements.

Bird hunting is a popular sport in Malta, with some
3.9.4.
15 000 adherents. They are concerned that EU legislation will
curtail or even abolish their sport and are unlikely to vote in
favour of accession unless a satisfactory compromise can be
achieved.

3.9.5.
The island of Gozo suffers from the problem of
‘double insularity’ and its inhabitants perceive a need for
assistance from the EU on the most favourable terms possible.

Compliance with the EMU acquis is conditional on
3.9.6.
the completion of the process of liberalisation in capital
movements.

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3.9.7.
The back-log of cases in Malta’s Civil Court is a cause
for concern. Although the Maltese authorities have taken steps
to address the problem, entry to the EU is likely to create an
increase in litigation which would exacerbate the situation.

Unlike the CEEC candidate countries, Malta is not a
3.10.
position to benefit from ISPA or SAPARD funding. The
Committee believes that
the ISPA programme should be
extended to cover Malta.

4. Conclusions

4.1.
It is generally accepted in Malta that, regardless of the
question of EU membership, significant structural reforms
need to be implemented to enable Maltese society to adapt
itself to a changing world in order to be able to compete in an
increasingly globalised economy. There are those who feel that
the present pace of change, driven by the need to meet
the requirements of the acquis communautaire within the
government’s pre-set timetable for accession, is too frenetic
and that it would be preferable to proceed at a more measured
rate but there can be no doubt that the prospect of EU
membership is acting as a catalyst for change and it is
questionable whether, without this stimulus, the necessary
reforms would, in fact, be implemented.

4.4.
To date, Malta has requested some derogations and has
asked for a number of transitional periods. Some industrialists
feel that the transition periods requested are not sufficiently
numerous or lengthy. On the other hand, the number of
transition periods requested is amongst the highest of all the
candidate countries to date. This in part reflects the problems
posed by Malta’s island status and the need to present an
attractive package to the Maltese people.

4.5. Malta has a well-developed social dialogue, which is in
the process of being further enhanced. At present, NGOs and
other civil society organisations are peripheral to this process
rather than forming an integral part of it.

4.6.
The Maltese government has established a wide-rang-
ing consultation process on the subject of EU membership
through the medium of MEUSAC. There are some complaints
that the volume of information and the truncated time-scale
for responses is impairing the ability of organisations, and
particularly voluntary organisations,
to give a measured
response. Concerns were also voiced to the delegation that the
government declined to make public the results of its impact
assessments or that the results were only divulged when the
negotiated position had already been submitted to Brussels.

4.6.1.
Following the delegation’s visit to Malta, the govern-
ment announced that the results of impact assessments would
be published from April 2001.

Certainly, the government is succeeding at present in
4.1.1.
transposing considerable portions of the acquis at a remarkable
rate. They are also clearly determined to complete the process
of adopting the acquis within their deadline.

4.7. Malta has a comprehensive social security system,
which compares favourably with those found in the majority
of Member States.

4.2.
There is a need for capacity building within the public-
sector infrastructure. It will take time to create the organisation
needed to give effect to the mass of new legislation required
for adoption of the acquis and to ensure an adequate level of
enforcement. There is also a need to enhance the ability of the
Judiciary to handle the volume of resulting litigation.

4.8.
The Committee welcomes the proposal to set up an
EU-Malta JCC but would point out that JCC delegations on
both sides are customarily drawn from representatives of the
social partners and other elements of civil society. Given the
fact that JCCs act in an advisory role to governments, it would
seem incongruous to have direct government representation
on the delegations.

4.3.
There is a tendency for those who are opposed to EU
entry to castigate information programmes initiated by the
government with EU assistance as ‘propaganda’. However,
many respondents have indicated that there is a general lack
of understanding amongst the Maltese people of the issues
involved. Given the far-reaching consequences of the decision
which has to be taken, it is obviously desirable that, when they
come to exercise their vote in the referendum, people should
be fully informed of the issues involved.

4.9.
The Committee considers that consideration should be
given to extending eligibility for ISPA funding, both on a pre-
accession and post-accession basis, to Malta.

In order to present an acceptable package to the Maltese
the negotiating process will have to result, as a
people,
minimum, in a satisfactory outcome to a series of issues which
are discussed in a separate document. Malta’s negotiators will

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have to identify, preferably at an early stage, what the fall-back
position will be if their negotiating stance on key elements is
not acceptable to the EU.

derogations and transition periods which are currently being
enjoyed by existing Member States or to expect that the
standard of enforcement in the accession countries should be
higher than in the present Union.

4.10. While it
is generally accepted in Malta that an
application to join the European Union implies a commitment
to adopt the acquis communautaire and that there can be no
question of an ‘à la carte Europe’, there is a belief that it is
unreasonable to refuse to extend to the applicant countries

4.11.
In terms of economic, political and social develop-
ment and in relation to the progress made with the adoption
of the acquis, Malta is well-placed to be in the forefront of
states entering the Union. The question remains of whether
the political will exists to achieve this.

Brussels, 11 July 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on ‘Request by the European Commission for
the Committee to draw up an exploratory opinion in anticipation of the Commission
Communication on health and safety at work’

(2001/C 260/18)

On 12 December 2000, in a letter by Commissioner Diamantopoulou, the Commission requested the
Economic and Social Committee, under Article 262 of the Treaty establishing the European Community,
to draw up an exploratory opinion in anticipation of the above-mentioned communication.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee’s work on the subject, adopted its opinion on 20 June 2001. The rapporteur was Mr Etty and
the co-rapporteur was Mrs Schweng.

At its 383rd plenary session of 11 and 12 July 2001 (meeting of 11 July), the Economic and Social
Committee adopted the following opinion by 123 votes to 1, with four abstentions.

1.

Introduction

— to respond to new risks such as work-related stress, by

initiatives on standards and exchanges of good practice;

1.1.
The Nice summit adopted the European social agenda
for the years to come and outlined, under the heading
‘Anticipating and capitalising on change in the working
environment by creating a new balance between flexibility and
security’, that the Commission should develop the Community
strategy on health and safety at work on the basis of a
Communication. The Council also outlined the cornerstones
for this new strategy:

— to promote the application of legislation in SMEs, taking
into account the special constraints to which they are
exposed, to apply them by means of a specific pro-
gramme;

— to develop, from 2001 onwards, exchanges of good
practice and collaboration between labour inspection
institutions in order to satisfy the common essential
requirements more effectively.

— to consolidate, adapt and, where appropriate, simplify

existing standards;

Furthermore, under the heading ‘More and better
1.1.1.
jobs’ it was stated that in its employment policy it wants to
focus more on attaining quality in work and its importance