Towards the enlarged Union - Strategy Paper and Report of the European Commission on the progress towards accession by each of the candidate countries {SEC (2002) 1400 - 1412}
Date: 2002-10-09
Institutions: European Commission
Subjects: accession to the European Union, economic situation, enlargement of the Union, political situation, report, social situation

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 9.10.2002
COM(2002) 700 final

TOWARDS THE ENLARGED UNION
Strategy Paper
and
Report of the European Commission
on the progress towards accession by each of the candidate countries

{SEC (2002) 1400 - 1412}

Towards the Enlarged Union

Strategy Paper

and

Report of the European Commission
on the progress towards accession
by each of the candidate countries

2

Table of Contents

1.

The overall context ..................................................................................................... 6

1.1.

1.2.

1.3.

1.4.

1.5.

1.6.

Europe on the eve of enlargement .......................................................................... 6

Public opinion and the enlargement process .......................................................... 8

Administrative preparations for enlargement......................................................... 8

The Copenhagen Criteria........................................................................................ 9

Reinforcing administrative and judicial capacity................................................. 11

The accession negotiations ................................................................................... 12

1.6.1.

State of play........................................................................................................ 12

1.6.2. Commitments ..................................................................................................... 13

1.6.3.

Transitional arrangements .................................................................................. 13

2.

Progress by the Candidate Countries in Meeting the membership Criteria ............. 14

2.1.

Political Criteria ................................................................................................... 14

2.1.1. Overall development .......................................................................................... 14

2.1.2. Conclusions ........................................................................................................ 15

2.2.

Economic Criteria................................................................................................. 15

2.2.1. Overall development .......................................................................................... 15

2.2.2. Conclusions ........................................................................................................ 16

2.3.

Other obligations of membership (including administrative capacity) ................ 17

2.3.1. Overall development .......................................................................................... 17

2.3.2. Conclusions ........................................................................................................ 21

2.4.

Overall conclusions and recommendations .......................................................... 21

3. Completing the process ............................................................................................ 22

3.1.

Concluding the negotiations ................................................................................. 22

3.1.1.

The financial framework .................................................................................... 22

3.1.2. How to deal with new acquis and the revisiting of chapters .............................. 23

3.1.3.

The chapter on “Other matters” ......................................................................... 24

3.2.

3.3.

Finalising the Accession Treaty ........................................................................... 24

Participation in the work of the Union before accession...................................... 25

3.4. Monitoring and safeguards ................................................................................... 26

3

3.5.

After enlargement................................................................................................. 28

3.5.1.

Institution building ............................................................................................. 28

3.5.2.

EMU and the Euro.............................................................................................. 28

3.5.3.

Schengen ............................................................................................................ 29

3.5.4.

The European Economic Area ........................................................................... 29

4. A revised Accession Strategy for Bulgaria and Romania ........................................ 29

4.1.

4.2.

4.3.

4.4.

Progress to-date .................................................................................................... 30

Indicative date ...................................................................................................... 30

Accession roadmaps ............................................................................................. 30

Pre-accession assistance ....................................................................................... 31

5. A new impetus to the Enlargement process with Turkey......................................... 31

5.1.

5.2.

Strengthening the Pre-Accession Strategy ........................................................... 33

Additional financial support ................................................................................. 34

6. Conclusions and Recommendations......................................................................... 35

Annex 1: Conclusions of the Regular Reports ................................................................. 37

Bulgaria 37

Cyprus 40

The Czech Republic ......................................................................................................... 43

Estonia 47

Hungary50

Latvia

54

Lithuania........................................................................................................................... 58

Malta

63

Poland 66

Romania............................................................................................................................ 70

Slovakia74

Slovenia78

Turkey 81

Annex  2 : The chapter “other matters”............................................................................ 88

Annex 3: Human Rights Conventions.............................................................................. 90

4

Annex 4: Twinning projects ............................................................................................. 92

Annex 5: Peer Reviews .................................................................................................... 95

Annex 6: State of Play of Negotiations ............................................................................ 99

Annex 7: Main statistical indicators ............................................................................... 100

5

1. 

THE OVERALL CONTEXT

1.1. 

Europe on the eve of enlargement

The  next  enlargement  of  the  Union  will  further  strengthen  the  unity  of  the  European
continent and help create an area of lasting peace and prosperity.

In 1993, the Copenhagen European Council opened up the perspective of enlargement to
include the countries of Central and Eastern Europe. The EU subsequently launched an
ambitious  pre-accession  strategy  that  has  guided  and  sustained  the  candidates’
preparations for membership until the present day.

In  striving  to  fulfil  the  EU’s  accession  criteria  and  adopting  the  EU’s  regulatory
framework, candidates have been able to accelerate domestic reforms at the same time as
they  have  been  preparing  for  EU  membership.  Europe’s  citizens  have  grown  closer
together – as shown in the solidarity among current and future  EU members during the
severe floods which hit Central and Eastern Europe this summer.

The  historical  and  political  arguments  in  favour  of  enlargement  are  compelling.  It  will
also produce substantial economic benefits.

 Both  the  existing  Member  States  and  the  prospective  members  benefit  from  political
stability. Stable democracies have emerged in Central and Eastern Europe. The credit for
this  success  belongs  mainly  to  the  people  of  those  countries  themselves.  The  political
stability  in  the  Central  and  East  European  candidate  countries  is  rooted  in  common
European values : democracy, the rule of law, respect for human rights and the protection
of  minorities.  Causes  of  conflict,  such  as  minority  issues  and  border  problems,  are
removed.  A  stable  political  framework  is  a  precondition  for  lasting  peace  and
neighbourly co-existence, as well as for a successful economy.

This means an opportunity for the  candidate countries to improve their living standards
and their prospects in global competition. Candidate countries already conduct between a
half and two-thirds of their trade  with  the  EU.  The rapid  growth  in  trade  has  helped to
develop new markets and investment.  Full integration with accession, together with the
adoption  of  common  rules  and  standards  across  the  world’s  largest  single  market,  will
further  enhance  the  opportunities  to  achieve  socially  and  environmentally  sustainable
growth.

On  the  basis  of  political  and  economic  stability,  the  enlarged  Union  will  be  better
equipped to confront global challenges. An enlarged Union will add weight to the EU’s
external  relations,  in  particular  to  the  development  of  a  common  foreign  and  security
policy.  Improved  co-operation  between  current  and  future  Member  States  will  help
combat international crime and terrorism.

The  enlarged  EU  will  need  to  look  beyond  its  own  borders  to  develop  a  new
neighbourhood policy for the benefit of all. Reflections on the policy for a 'wider Europe'
are being developed. They aim for a more coherent approach of an enlarged Union to the
neighbouring  countries.  The  Commission  is  presently  examining  the  options  of

6

enhancing the EU policy towards the new neighbours in order not only to counterbalance
that  enlargement  provides
possible  fears  following  enlargement  but 
opportunities, such as an expected increase in trade and economic growth on both sides.
Such  a  new  proximity  policy  will  underline  that  an  enlarged  EU  will  ensure  an  open
attitude  and  foster  common  interests  and  activities  with  its  neighbours  in  the  Western
Balkans, Eastern Europe and the Mediterranean.

to  ensure 

The  future  Member  States  are  making  valuable  contributions  to  the  discussions  on  the
future of Europe in the context of the European Convention which prepares the way for
the  next  institutional  reform.  The  work  of  the  Convention  is  essential  for  the  future  of
Europe.  The  full  participation  of  the  candidate  countries  has  clearly  shown  the  added
value of an enlarged Union.

The  Commission’s  assessment  of  candidate  countries  in  this  year’s  Regular  Reports
carries three important messages:

(cid:1)  The Union’s pre-accession strategy has proved a success. The transformation process
in  the  candidate  countries  has  been  considerably  accelerated  by  the  prospect  of
enlargement.

(cid:1)  The accession negotiations, which have been based on the  principles of own merits,
differentiation and catching up, can be concluded with most candidates by the end of
2002. Preparations for enlargement will continue.

(cid:1)  Enlargement  is  an  inclusive  process  which  is  not  yet  completed  with  the  first
accessions.  The  European  Union  continues  to  give  its  full  support  to  current
candidates that will not be in a position to participate in the next wave of enlargement.

Candidates  have  invested  significant  efforts  in  the  enlargement  process.  Important
political and economic decisions have been made in anticipation of enlargement. In order
to  reach  the  full  benefits  of  integration  for  both  future  and  current  Member  States,  the
envisaged timeframe for enlargement must be kept without compromising the quality of
the accession process.

The Commission hopes to see a re-united Cyprus acceding to the European Union on the
basis of a comprehensive settlement, as the best outcome for all concerned. . As indicated
in the conclusions of the Seville European Council, the Union is ready to accommodate
the  terms  of  a  political  settlement  in  the  accession  arrangements  in  line  with  the
principles  on  which  the  European  Union  is  founded.  The  Commission  welcomes  that
substantial  UN  involvement  will  continue.  All  parties  concerned  should  now  make  a
concerted  effort  to  achieve  such  a  settlement  before  the  completion  of  the  accession
negotiations.  Taking  into  account  the  statements  of  the  UN  Security  Council,  the
Commission  urges  Turkey,  in  particular,  to  lend  full  support  to  efforts  to  reach  a
comprehensive  settlement  this  year.  In  this  event,  Cyprus’  terms  of  accession  can  be
adapted  to  reflect  the  comprehensive  settlement  as  well  as  its  implications  for  the
application of the acquis throughout the island.

The  Commission  continues  to  be  active  in  contact  with  all  the  parties  concerned  to
reinforce  efforts  to  reach  a  settlement.  It  has  proposed  that  the  Union  make  available
considerable resources to support the northern part of the island to catch up and to back
up a settlement. The Commission notes that, in the absence of a settlement, the decisions

7

to  be  taken  in  December  by  the  Copenhagen  European  Council  will  be  based  on  the
conclusions of the Helsinki European Council.

In  its  successive  meetings  in  Gothenburg,  Laeken  and  Seville,  the  European  Council
reaffirmed that, if the present rate of progress in negotiations and reforms is maintained,
the  European  Union  is  determined  to  conclude  the  negotiations  with  Cyprus,  Malta,
Hungary,  Poland,  the  Slovak  Republic,  Lithuania,  Latvia,  Estonia,  the  Czech  Republic
and Slovenia by the end of 2002, if those countries are ready. The objective remains that
these countries should participate in the elections for the European Parliament in 2004 as
full members. The European Council in Seville added that, in order to enable it to decide
with  which  candidate  countries  negotiations  can  be  concluded  at  the  end  of  2002,  the
Commission would have to draft appropriate recommendations in the light of its Regular
Reports.

The  Seville  European  Council  also  encouraged  Bulgaria  and  Romania  to  pursue  their
efforts  and  reiterated  the  Union’s  commitment  to  give  them  full  support  in  their
preparation for accession.

It  added  that  an  updated  road  map  and  a  revised  and  enhanced  pre-accession  strategy
should  be  adopted  in  Copenhagen  for  the  candidate  countries  still  engaged  in
negotiations.  An  increase  in  pre-accession  financial  aid  could  also  be  contemplated.
Furthermore, if the current pace is maintained, a more precise timetable could be set for
these countries' accession process by the end of the year.

This Communication examines the above-mentioned requests of the European Council.

1.2. 

Public opinion and the enlargement process

The  major  role  in  explaining  enlargement  to  citizens  in  candidate  countries,  as  in  the
Member  States,  should  be  played  by  the  national  governments.  The  Commission
supports  this  effort  and  has  developed  a  communication  strategy  for  that  purpose.  The
clear  message,  which  should  be  given  by  all  actors  responsible  for  the  success  of  the
process, is that enlargement is a win-win game, in which the re-unification of Europe will
extend the area of peace, prosperity and security throughout the continent.

Support for enlargement is generally strong in the candidate countries. In Member States,
it is important to increase the awareness and knowledge of the countries that will soon be
joining the Union and to explain the results of the enlargement process. More needs to be
done  to  explain  the  benefits  of  an  enlarged  Union  both  in  terms  of  increased  political
stability and the prospect for sustained economic growth, and the enormous progress that
has been made in economic and political reform in the region since 1989. This will help
to dispel perceived problems as to the preparedness of the candidates to join the Union.

1.3. 

Administrative preparations for enlargement

Ensuring a successful and smooth transition to an enlarged EU also requires preparations
at  the  administrative  level  within  the  current  EU  Institutions.    Such  preparations  have
been underway for some time, to ensure that all necessary measures are in place by the
date of accession.  This ongoing work includes, inter alia, assessments of staffing needs
and  associated  recruitment  preparations,  provision  of  translating  and  interpreting  in

8

additional  languages,  preparation  of  buildings,  schools  etc.    The  Institutions  have  been
working together to ensure that such preparations are in place for each Institution.  The
Commission  described  the  progress  made  on  the  tasks  ahead  in  its  Road  Map  for
Administrative Preparations for Enlargement1,which is based on the working hypothesis
that ten acceding  countries with nine additional languages will join on 1  January 2004.
This roadmap will be updated once the decisions on the acceding countries and their date
of accession have been taken.

In  its  Communication  on  Activities  and  Human  Resources  of  the  Commission  in  the
Enlarged  EU2,  the  Commission  identified  in  particular  its  additional  human  resource
needs in terms of full-time posts, which should be phased-in from 2004 and be completed
by  around  2008.    Moreover,  it  is  clear  that  in  certain  policy  areas  such  as  agriculture,
structural  policies  and  the  linguistic  services,  the  human  resource  needs  arising  from
enlargement will be high not only after but also immediately prior to accession.  For this
reason  the  Commission  undertook  a  thorough  assessment  of  its  additional  resource
requirements which resulted in its request for 500 non-permanent posts already in 2003
to meet priority needs, mostly to be filled by nationals from candidate countries.

1.4. 

The Copenhagen Criteria

In  June  1993,  the  European  Council  at  Copenhagen  laid  down  the  foundations  of  the
current enlargement process by declaring that  "the associated countries in Central and
Eastern  Europe  that  so  desire  shall  become  members  of  the  European  Union”  and  by
defining  the  membership  conditions,  the  so-called  Copenhagen  criteria.    Under  the
Copenhagen criteria, membership requires that the candidate country ensures :

(cid:1)  "stability of institutions guaranteeing democracy, the rule of law, human rights and

the respect for and protection of minorities”: the political criteria.

Since  the  entry  into  force  of  the  Treaty  of  Amsterdam  in  May  1999,  these
requirements  have  been  enshrined  as  constitutional  principles  in  the  Treaty  on
European Union, and have been emphasised in the Charter of Fundamental Rights of
the European Union, that was proclaimed at the Nice European Council in December
2000.

(cid:1)  “the existence of a functioning market economy as well as the capacity to cope with
competitive pressure and market forces within the Union” : the economic criteria.

These criteria are consistent with the principles for economic policies as enshrined in
the EC Treaty by the Maastricht Treaty that entered into force on 1 November 1993.

(cid:1)  “ability to take on the obligations of membership, including adherence to the aims of
political, economic and monetary union". This criterion refers to the implementation
of the Union’s legislation, known as the acquis communautaire. For that reason, it is
referred  to  thereafter  as  the  acquis  criterion.  Subsequent  European  Councils,  in
particular  the  Madrid  European  Council  in  1995,  have  highlighted  the  importance,

1 see SEC(2002) 1015 of 25.09.2002
2 COM(2002) 311 of 05.06.2002

9

                                                
not only of incorporating the acquis into national legislation, but also of ensuring its
effective application through appropriate administrative and judicial structures.

Since its 1997 Opinions on the applications for membership by the countries of Central
and  Eastern  Europe,  the  Commission  has  evaluated  annually  in  its  Regular  Reports,
extended  also  to  Cyprus,  Malta  and  Turkey,    the  progress  made  by  the  candidate
countries towards meeting  the  Copenhagen  criteria.  The  Commission  developed,  in  the
context of Agenda 20003, a methodology for that purpose.

Under this methodology, the Regular Reports assess progress in terms of legislation and
measures actually adopted or implemented.  This approach ensures equal treatment for all
candidates and permits an objective assessment of the situation in each country. Progress
towards  meeting  each  criterion  is  assessed  against  a  detailed  standard  checklist,  which
allows account to be taken of the same aspects for each  country and which ensures the
transparency of the exercise. The Reports draw on, and are cross-checked with, numerous
sources, starting from  information  provided  by  the  candidate  countries  themselves,  and
many  other  sources  including  reports  from  the  European  Parliament,  evaluations  from
Member  States,  or  the  work  of  international  organisations  and  non-governmental
organisations.  This year’s Reports also contain some forward-looking elements.

In  order  to  evaluate  the  extent  to  which  candidates  meet  the  political  criteria,  the
Commission  not  only  provides  a  description  of  their  various  institutions  (Parliament,
Executive,  and  Judiciary),  but  examines  how  the  various  rights  and  freedoms  are
exercised in practice. With regard to human rights, the Commission analyses the way in
which the candidate countries respect and implement the provisions of the major human
rights conventions, including in particular the European Convention for the Protection of
Human Rights and Fundamental Freedoms. As regards respect for minority rights and the
the
protection  of  minorities, 
implementation of the various principles laid down in the Council of Europe Framework
Convention  for  the  Protection  of  National  Minorities.  Measures  undertaken  by  the
countries in order to fight against corruption are also examined.

the  Commission  devotes  particular  attention 

to 

The  economic  criteria  consist  of  two  elements  :  the  existence  of  a  functioning  market
economy,  and  the  capacity  to  withstand  competitive  pressure  and  market  forces  within
the Union. These two elements are assessed through a number of sub-criteria which have
been defined in Agenda 2000.  The existence of a functioning market economy requires
that  prices,  as  well  as  trade,  are  liberalised  and  that  an  enforceable  legal  system,
including  property  rights,  is  in  place.  Macroeconomic  stability  and  consensus  about
economic  policy  enhance  the  performance  of  a  market  economy.  A  well-developed
financial  sector  and  the  absence  of  any  significant  barriers  to  market  entry  and  exit
improve the efficiency of the economy. The capacity to withstand competitive pressure
and  market  forces  within  the  Union  requires  the  existence  of  a  market  economy  and  a
stable  macroeconomic  framework.  It  also  requires  a  sufficient  amount  of  human  and
physical capital, including infrastructure. It depends on the extent to which government
policy  and  legislation  influence  competitiveness,  on  the  degree  of  trade  integration  a
country achieves with the Union and on the proportion of small firms.

3 Agenda 2000: For a stronger and wider Union, COM (97) 2000 final.  See in particular Part Two - The

Challenge of Enlargement: I. Assessment on the basis of the accession criteria.

10

                                                
The  ability  to  take  on  the  obligations  of  membership  requires  the  adoption,
implementation and enforcement of the acquis. In its Reports, the Commission analyses,
for  each  of  the  twenty-nine  chapters  of  the  acquis,  the  extent  to  which  the  necessary
legislative  measures  have  been  taken  to  enable  implementation  of  the  acquis  in  that
chapter,  and  what  remains  to  be  done  in  this  regard.  Furthermore,  the  Commission
assesses to what extent each candidate country has established administrative structures
required to implement the acquis.

This year’s Regular Reports take a broader perspective than in previous years. In addition
to  assessing  progress  made  by  each  candidate,  they  also  evaluate  to  what  extent  the
candidates  will  fulfil  the  Copenhagen  criteria  by  accession,  taking  into  account  the
envisaged timeframe for enlargement defined by the European Council.

This  requires  a  careful  examination  of  the  progress  achieved  by  each  country  over  the
past  years4,  of  their  track  record  in  implementing  the  commitments  made  in  the
negotiations  and  of  whether  the  countries  sufficiently  fulfil  the  Copenhagen  criteria.
These latter aspects are particularly important when assessing the  ability  to  take on  the
obligations  of  membership.  The  implementation  already  now  by  a  given  candidate
country  of  a  critical  mass  of  the  acquis  in  the  various  chapters,  and  a  positive  track
record over the past years, are necessary conditions for concluding that this country will
be able to apply the acquis upon accession. Information available to the Commission on
the relevant ongoing preparations, in particular in the context of the monitoring process,
is also taken into account.

The  Regular  Reports  identify  the  candidate  countries  which  will  meet  the  Copenhagen
criteria  within  the  envisaged  accession  timeframe.  They  are  the  basis  upon  which  the
Commission recommends the conclusion of the negotiations with these countries  at  the
end  of  2002.  For  all  countries,  the  Reports  identify  the  areas  where  further  efforts  are
needed or reforms have to be pursued.

1.5. 

Reinforcing administrative and judicial capacity

The Commission attaches the greatest importance to ensuring that the candidates further
reinforce  their  administrative  and  judicial  capacity.    It  is  an  essential  requirement  for
creating mutual trust among Member States, indispensable for membership.  In its 1997
Opinions and subsequent Regular Reports, the Commission has carefully monitored the
progress made by each country in this area. Large parts of the Community pre-accession
assistance have been programmed since the early 1990s to help candidates in their efforts
to build and reinforce their administrative and judicial structures.

As announced in its 2001 Enlargement Strategy Paper, Making a success of enlargement,
the  Commission  has  prepared  in  the  first  quarter  of  2002  jointly  with  each  negotiating
country an Action Plan to reinforce their administrative and judicial capacity. Based on
the  2002  Accession  Partnership  priorities,  the  Action  Plans  identify  the  concrete

4 since the 1997 Opinions for the Central European candidates,  since the 1998 Regular Report for Cyprus

and Turkey, and since the 1999 update of the Opinion for Malta

11

                                                
measures  that  remain  to  be  taken  for  each  country  to  achieve  an  adequate  level  of
administrative capacity by the time of accession.

The  Action  Plans  identify  targeted  assistance  required  to  support  the  countries  in  their
efforts. For that purpose, the Commission has mobilised additional financial assistance of
up to € 250 million in 2002 to accompany these efforts, bringing the Community's total
support to strengthen the administrative and judicial capacity of the negotiating countries
in 2002 to around €1 billion.

Furthermore,  the Action Plans  note  the relevant  commitments made  in  the  negotiations
and any additional monitoring actions, in particular  peer reviews, that may be required in
certain areas to assess each country's preparations. All 12 negotiating countries have been
subject  to  peer  reviews  to  different  degrees.  In  total,  205  peer  reviews  have  been
conducted  through  the  Technical  Assistance  Information  Office  (TAIEX)  in  17  sectors
and involving the mobilisation of over 800 experts (details provided in Annex 5). Some
peer  reviews,  in  the  financial  control  sector,  have  been  organised  through  Support  for
Improvement in Governance and Management (SIGMA), while the Commission services
have  themselves  undertaken  a  number  of  monitoring  actions  in  other  areas.  A  special
peer  review  on  nuclear  safety  was  carried  out  during  the  first  half  of  2002  under  the
auspices of the Council that resulted in a status report in June 2002.

The  exchange  of  information  between  experts  from  equivalent  bodies  in  the  candidate
countries and Member States is a key component of the peer review exercise. The reports
of the peer reviews, which have been made available to the candidate countries and to the
Member States, have contributed to the Commission’s analysis contained in the Regular
Reports. The results of the peer reviews will be used by the candidates to identify further
necessary actions. They should also contribute to developing peer assistance activities for
the candidates, in order to exchange best practice, in the period up to their accession and
beyond.

The Action Plans have given a new impetus to the candidates’ efforts in reinforcing their
administrative  and  judicial  capacity.  On  the  whole,  they  are  being  implemented
according to schedule. It is important that candidate countries continue to make sustained
efforts in implementing the Action Plans.

1.6. 

The accession negotiations

1.6.1. 

State of play

The accession negotiations are well advanced. Six countries have been negotiating since
1998  (Cyprus,  Czech  Republic,  Estonia,  Hungary,  Poland,  Slovenia),  and  six  further
countries  entered  negotiations  in  early  2000  (Bulgaria,  Latvia,  Lithuania,  Malta,
Romania, and Slovakia). The European Council in Nice in December 2000 decided on a
roadmap for the accession negotiations, which established a timeframe for the Union to
define  its  position  on  outstanding  negotiating  chapters.  The  roadmap  has  been  very
useful in moving the negotiations forward, by helping all sides to follow a realistic plan.
The  Union  has  defined  common  positions  in  accordance  with  the  roadmap,  leading  to
provisional  closure  of  a  considerable  number  of  chapters.  The  state  of  play  of  the
negotiations is presented in Annex 6.

12

1.6.2.  Commitments

The  provisional  closure  of  a  chapter  depends  inter  alia  on  the  Union  accepting  the
credibility of the commitments made by the candidate countries. Generally, this is based
on key parts of the acquis having been already transposed. Candidate countries have to
ensure  that  they  meet  all  their  commitments  as  planned.  The  Commission  closely
monitors  the  implementation  of  these  commitments,  in  particular  through  monitoring
reports  and  the  Action  Plans  on  administrative  and  judicial  capacity.  So  far,  the
implementation  of  commitments made in the negotiations  has  been  largely  on  track;  in
the few cases where problems or delays had arisen, solutions were found and there was
no need for the  Commission to recommend the reopening of any chapter.

The  assessment  made  in  this  year’s  Regular  Reports  confirms  that,  in  most  cases,
candidates  generally  meet  the  commitments  made  in  the  negotiations.  Where  the
commitments  refer  to  measures  to  be  completed  by  the  time  of  accession,  the
Commission’s  assessment  is  based  on  the  relevant  preparatory  process.  The  Reports
their
identify  some  cases  where  candidates  experience  problems 
commitments. This concerns mainly the areas of  agriculture, environment and fisheries.
In such cases candidates should take all necessary remedial actions in order to ensure that
commitments are fully met.

in  meeting 

1.6.3.  Transitional arrangements

While  accession  negotiations  are  based  on  the  principle  that  candidate  countries
effectively  apply  the  acquis  upon  accession,  a  number  of  well-justified  transitional
measures have been agreed in the negotiations, in line with the principles laid down for
transitional  measures.  These  principles  state  that  any  transitional  measure  has  to  be
limited in time and scope and be accompanied by  a plan clearly defining stages for the
application  of  the  acquis.  In  addition,  transitional  measures  must  not  involve
amendments to  the rules  and  policies  of  the  Union,  disrupt  their  proper  functioning,  or
lead  to  significant  distortions  of  competition.  Transitional  measures  have  been  agreed,
upon request of both the candidate countries (some 190 requests accepted so far) and the
Union  (some  28  requests  accepted  so  far).  The  scope  of  these  measures  varies  across
sectors and countries.

Transitional measures requested by candidate countries have been agreed, for example in
areas  where  the  effective  application  of  the  acquis  requires  substantial  prior  financial
investments.  Examples  are  the  construction  of  waste  water  treatment  plants  in
municipalities or the building up of emergency oil stocks. Investment plans and detailed
strategies  for  the  gradual  compliance  with  the  acquis  have  been  agreed  in  such  cases.
Also, the free movement of capital from current into new Member States with the aim to
buy land and secondary homes has been temporarily restricted.

Upon request of the Union, few well-defined and limited transitional arrangements have
been agreed in response to perceived regional or sectoral disturbances resulting from the
full application of the acquis in the enlarged Union. The free movement of workers from
new  into  current  Member  States  has  been  temporarily  restricted,  the  protection  of
industrial  property  rights  for  pharmaceutical  products  and  community  trademarks  from
the EU has been enhanced  and access to the national road transport markets (cabotage)
between current and certain new Member States has been temporarily restricted.

13

2. 

PROGRESS  BY  THE  CANDIDATE  COUNTRIES  IN  MEETING  THE  MEMBERSHIP
CRITERIA

2.1. 

Political Criteria

2.1.1.  Overall development

In  its  1997  Opinions  and  subsequent  Regular  Reports,  the  Commission  has  been
evaluating candidates’ progress towards meeting the Copenhagen political criteria. Since
1999, the Commission has judged  that  all  candidates  involved  in  the  negotiations  meet
these  criteria.  Over  the  past  five  years,  progress  in  consolidating  and  deepening
democracy and respect for the rule of law, human rights and the rights of minorities has
been considerable.

Over  the  past  year,  the  functioning  of  the  democratic  systems  of  government  in  the
candidate countries was confirmed. National or local elections, which were free and fair,
were held in several countries.

Work  continued  to  consolidate  and  modernise  the  public  administration.    A  legal
framework for the civil service has now been established in all candidates, and training
of  civil  servants  has  become  the  norm.  Several  countries  have  progressed  with
establishing  codes  of  conduct,  clear  distinctions  between  political  and  administrative
responsibilities, and putting in place legislation on access to public information.

Most  countries  have  advanced  in  reforming  and  strengthening  their  judicial  system,  a
key  factor  in  ensuring  respect  for  the  rule  of  law  and  the  effective  enforcement  of  the
acquis.    Decisive  steps  forward  were  taken  in  most  countries  in  adopting  basic
legislation, strengthening human resources and improving working conditions. In several
countries, progress was  made  in  developing  and  reinforcing  mechanisms  to  ensure  that
court  decisions  are  duly  enforced,  and  in  improving  citizens'  access  to  justice.  In  most
countries, further progress was made in tackling the problem of judicial backlogs. Efforts
to further consolidate reforms in this area will need to continue.

Progress has been made in the fight against corruption, fraud and economic crime, but
this area remains a source of concern. Anti-corruption strategies are now in place in most
countries  and  anti-corruption  bodies  have  been  further  reinforced.  Further  progress  has
been made in terms of legislation, including in such areas as public procurement and the
financing  of  political  parties,  and  significant  efforts  have  been  made  in  terms  of
awareness  raising.    There  are  indications  that  in  a  number  of  countries,  popular
awareness  of  the  dangers  of  corruption  for  the  economy  and  society  as  whole  is
increasing. Encouraging developments noted as regards transparency, accountability and
efficiency of the public administration are of relevance also in this field.  Efforts must be
sustained.

In  a  number  of  countries  further  steps  were  taken  to  reinforce  the  legislative  and
institutional framework for ensuring gender equality. In some countries significant steps
forward were taken also to assist victims of domestic violence. Further efforts are needed
to promote the economic and social equality between women and men.

In all countries with considerable Roma communities, progress has been made with the
implementation of national action plans to improve the difficult situation the members of

14

these  communities  are  facing.  Continued  efforts  are  required  to  ensure  that  the  various
action  plans  continue  to  be  implemented  in  a  sustained  manner,  in  close  co-operation
with  Roma  representatives.  Adoption  and  due  implementation  of  comprehensive  anti-
discrimination legislation, in line with the Community anti-discrimination acquis, would
be an important step forward where such legislation is still missing.

Further positive developments can be noted with regard to the protection of minorities.
In Estonia and Latvia, continued progress was made in the integration of non-citizens. In
several  countries,  the  legal  and  institutional  framework  for  the  protection  of  minorities
was  further  reinforced.  In  Bulgaria,  Slovakia  and  Romania  members  of  minority
communities continued to play an important role in national political life.

In previous years, the Commission had underlined the problem of childcare institutions
in  Romania.    The  legislative,  administrative  and  financial  measures  taken  by  the
Romanian authorities are beginning to bear fruit.  The number of children in residential
care  has  decreased,  and  their  living  conditions  have  improved.  Efforts  need  to  be
maintained.

2.1.2.  Conclusions

All  presently  negotiating  countries  continue  to  meet  the  Copenhagen  political  criteria.
This has been confirmed over the past year.

Turkey’s progress and situation as regards the political criteria is presented in section 5
below.

The conclusions of each Regular Report are contained in Annex 1.  The list of Human
Rights conventions ratified by the candidate countries is in Annex 3.

2.2. 

Economic Criteria

2.2.1.  Overall development

This  year’s  Regular  Reports’  assessments  of  candidates’  progress  towards  meeting  the
Copenhagen economic criteria take a broader look than in previous years. They look at
progress  achieved  since  the  last  Regular  Reports,  and  take  stock  of  achievements  in
meeting  these  criteria  over  the  period  since  1997,  when  the  Commission  drafted  its
Opinion for most candidates. A summary of main developments is presented below and
selected economic indicators per country are presented in Annex 7.

Over  the  period  1997-2001,  most  candidate  countries  registered  average  rates  of
economic growth well above the EU average of 2.6%. The global slowdown that started
in late 2000 also affected the EU, and with it, the candidates. As a result, growth slowed
down  in  a  number  of  candidate  countries  in  2001,  but  over  the  first  half  of  2002,  the
aggregate  economic  development  has  been  fairly  stable.  GDP  per  capita  measured  in
Purchasing Power Standards reached, on average for the ten transition economies, 39.3%
of  the  EU  average  in  2001,  up  from  38.5%  in  2000.  Over  the  five  year  period,  most
candidates witnessed some catching up.

15

Candidate countries have continued to adjust their production structures. They saw their
agricultural sector’s share in GDP decline over the period, and the service sector further
increase, although not yet reaching EU levels.

Inflation  in  most  candidate  countries  has  been  on  a  downward  trend  over  the  period.
This trend towards lower inflation continued in 2001 with single digit inflation in most
countries. Over the past 5 years, most candidates have established an independent central
bank, many of which have adopted inflation targeting strategies aiming at price stability.

On  average  for  all  candidate  countries,  the  period  has  been  marked  by  falling
employment,  mainly  driven  by  the  ongoing  restructuring  of  domestic  industries  and
partly  by  some  structural  deficiencies  in  labour  markets.  Unemployment  rates  are  still
high in many countries. In 2002, a number of countries appear to be ending a period of
labour shedding and are recording employment growth.

All  candidates  reported  general  government  deficits  over  the  period.  In  2001  the
average deficit of the 10 Central and Eastern European countries rose from 3.2% to 3.8%,
as a result of the economic slowdown, loosening of fiscal policy, transition related one-
off expenditures and better measurement.

Over the period, the trade and current account deficits have remained relatively high in
most countries but they stay within sustainable levels. Most countries have been able to
attract  sufficient  inflows  of  foreign  direct  investments  to  finance  these  deficits.  In
general, the trade and current account deficits improved somewhat in 2001.

Privatisation of the economy has made impressive progress since 1997, reaching levels
comparable to the EU, but efforts are required to complete the restructuring of a number
of sectors.

Financial  intermediation  has  strengthened.  Almost  all  countries  now  have  a  more
efficient  and  stable  banking  sector.  The  average  of  the  transition  economies’  domestic
bank lending to the private sector is still low at nearly 27% of GDP in 2001.

Market entry and exit conditions have reached sufficient degrees of efficiency and legal
certainty. Property rights are well established and important progress has been made on
bankruptcy  legislation  and  procedures.  However,  in  most  countries,  implementation  of
the legal framework needs to be further enhanced.

The European Union is the main trading partner and foreign investor for all candidates. A
high degree of economic integration of candidates with the EU has been achieved.

2.2.2.  Conclusions

The  progress  of  each  country  has  been  assessed  according  to  the  sub-criteria  of  the
Copenhagen economic criteria – the existence of a functioning market economy and the
capacity to withstand competitive pressure and market forces within the Union.

Taking  the  two  sub-criteria  together,  it  is  re-iterated  that  Cyprus  and  Malta  are
functioning market economies and should be able to cope with competitive pressure and
market forces in the Union.

16

The Czech Republic, Estonia,  Hungary,  Latvia,  Lithuania, Poland, the  Slovak Republic
and  Slovenia  are  likewise  functioning  market  economies,  as  previously  concluded.
According  to  this  year’s  assessments,  these  countries  have  made  further  and  sufficient
progress  in  macroeconomic  stabilisation  and  economic  reform  and  the  continuation  of
their  current  reform  paths  should  enable  them  to  cope  with  competitive  pressure  and
market forces within the Union.

Hence, taking into account the commitments which have to be met by accession by these
ten  countries,  the  Commission  considers  that  they  will  have  fulfilled  the  Copenhagen
economic criteria within the timeframe envisaged for accession. The conclusions of the
Regular Reports identify the major areas where improvements to the functioning of the
market economy or the competitiveness in the Union should still be made. These areas,
whilst not exhaustive, indicate priority areas of action.

After having been considered  close to  being a functioning  market  economy,  this  year’s
Regular  Report  for  the  first  time  concludes  that  Bulgaria  is  a  functioning  market
economy.  Provided  it  continues  implementing  its  reform  programme  to  remove
remaining  difficulties,  it  should  be  able  to  cope  with  competitive  pressure  and  market
forces within the Union in the medium term.

Romania has continued to make progress towards being a functioning market economy,
for  which  the  prospects  have  improved.  Sustained  and  full  implementation  of  planned
measures together with the completion of the reform agenda should allow Romania to be
able to cope with competitive pressure and market forces within the Union in the medium
term.

Turkey  has  made  progress  on  the  functioning  of  its  market  economy  which  should
improve  its  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the
Union,  but  is  still  undergoing  the  consequences  of  two  deeply  destabilising  financial
crises.

The conclusions of each Regular Report are contained in Annex 1.

2.3. 

Other obligations of membership (including administrative capacity)

2.3.1.  Overall development

This year’s Regular Reports’ assessment of developments with regard to the Copenhagen
acquis criteria also take a broader look than in previous years. In addition to evaluating
progress made by each candidate since the last year, this year’s Reports look at progress
achieved  by  each  country  since  the  1997  Opinions  (since  the  1998  Regular  Report  for
Cyprus  and  Turkey,  and  since  the  1999  update  of  the  Opinion  for  Malta),  their  track
record  in  implementing  the  commitments  made  in  the  negotiations  and  the  degree  of
alignment and implementation of the acquis. As the  acquis has  considerably developed
over the last 3 to 5 years, progress during that period has also been  assessed as regards
the  new  acquis  adopted  by  the  Union.  In  addition,  information  available  to  the
Commission on the relevant ongoing preparations and detailed implementation plans has
been taken into account.

The Reports show that, overall, candidate countries have generally reached a high degree
of  alignment  in  many  areas,  as  a  result  of  the  considerable  progress  in  transposing  the

17

acquis  over  the  last  years.  Steady  progress  has  also  been  made  in  building  up  the
administrative and judicial structures required for implementing and enforcing the acquis
and  most  countries  are  well  advanced  towards  reaching  an  adequate  administrative
capacity  in  a  considerable  number  of  fields.  Moreover,  commitments  made  in  the
negotiations are generally being fulfilled.

The  acquis  is  already  being  implemented  in  a  number  of  sectors.  In  other  sectors,
alignment  with  the  acquis  needs  to  be  finalised  and  the  building  up  of  the  necessary
administrative capacity needs to be completed in view of accession. The continuation of
countries’  efforts  in  line  with  the  commitments  or  requirements  agreed  in  the
negotiations should enable them to assume their obligations of membership with regard
to these sectors within the envisaged enlargement timeframe.

For example, in the internal market sector, substantial progress has been made and most
countries have  now reached  a reasonable  level of  alignment  and  implementation  of  the
acquis.  Good  progress  has  been  made  in  particular  in  the  areas  of  standardisation  and
certification  where  framework  legislation  and  basic  infrastructure  are  in  place  in  most
countries.  Transposition  of  the  acquis  on  financial  services,  in  particular  the  banking
legislation, is generally well advanced. Liberalisation of capital movements in line with
the acquis is now almost complete in most countries.

Further efforts are still needed in order to reinforce the  administrative capacity in areas
such  as  market  surveillance  and  food  safety.  In  public  procurement,  legislative
transposition  needs  to  be  completed  and  enforcement  structures  reinforced.  Attention
should  be  paid  to  the  area  of  mutual  recognition  of  professional  qualifications,  where
legislative  alignment  with  respect  to  the  health  care  professions  still  needs  to  be
completed and, in some cases, curricula and training adapted to Community requirements
Attention  also  needs  to  be  paid  to  the  proper  implementation  of  the  money  laundering
directives and financial services legislation, in particular the independence of supervisory
authorities.  While  the  transposition  of  the  intellectual  and  industrial  property  rights
advances at a satisfactory pace, the degree of enforcement of the legislation can still be
improved.

In the field of competition, anti-trust legislation is already largely in line with the acquis
in  most  countries,  but  continuous  attention  has  to  be  devoted  to  ensure  the  effective
application and enforcement of the rules. As regards state aid, in a number of  countries
incompatible  existing  aid  schemes,  often  in  the  form  of  fiscal  incentives,  should  be
brought into line with the acquis and the countries’ enforcement track record needs to be
developed.  In  addition,  a  number  of  countries  still  need  to  improve  state  aid  control  in
certain sensitive sectors, such as shipbuilding and steel, where in particular restructuring
plans need to be implemented.

In  the  area  of  consumer  policy,  where  legislative  alignment  is  generally  advanced,
candidates need to continue their efforts to complete transposition and to implement the
legislation.  Effective  implementation  of  the  acquis  will  make  sure  that  the  products  on
the enlarged internal market are safe and that the rights of the consumers are protected.

In  the  environment  sector,  in  addition  to  finalising  the  transposition  of  the  acquis,
candidates need to focus their efforts on reinforcing their overall administrative capacity
to apply it, in particular in the areas of waste management and industrial pollution. For a
number of issues, the provision of necessary financial means needs to be ensured.

18

In  the  field  of  transport,  legislative  alignment  has  been  progressing  in  most  candidate
countries,  with  implementing  legislation  outstanding.  However,  some  candidates  still
need  to  complete  alignment  and  to  carry  out  reform  in  the  rail  sector.  Others  have  to
make important progress in the field of maritime transport. Administrative capacity needs
to be strengthened in all areas to enforce the acquis strictly, in particular in the field of
road  transport  (including  the  social  acquis).  Similarly,  a  number  of  countries  need  to
strengthen  their  efforts  in  order  to  comply  with  the  acquis  concerning  maritime  safety
The  extended  Trans-European  Transport  Network  will  require  substantial  investments
over the coming decade.

In the field of energy, some countries still need to complete the additional requirements
arising  from  the  necessary  legislation  for  the  internal  energy  market.  This  is  also
important  in  view  of  the  forthcoming  acquis.  Most  need  to  strengthen  their
administrative capacity. The recommendations of the Council report on ‘Nuclear Safety
in the context of Enlargement’ are being addressed. In particular, some countries need to
continue efforts to strengthen their nuclear safety authorities. Two candidates have made
firm commitments to close certain nuclear power plants. These commitments will need to
be included in the Accession Treaty.

In the field of telecommunications, efforts are still needed for full implementation of the
telecommunication  acquis, 
the
independence  of  the  regulator  in  most  countries.  The  economic  impact  of  full
implementation of the universal service obligations has to be assessed.

the  administrative  capacity  and 

to  strengthen 

In  the  area  of  social  policy  and  employment,  while  alignment  with  the  acquis  is  well
advanced,  most  countries  still  need  to  strengthen  their  administrative  capacity  in
particular  in the areas of public health and  health and safety at work. In addition, social
inclusion should be further promoted in the light of the common objectives set out for the
Union  and  candidate  countries  need  to  continue  translating  the  Union’s  objectives  into
their national employment policies. Candidate countries should strengthen their efforts in
the areas of social inclusion and employment to prepare for their future participation in
the  open  method  of  cooperation  at  EU  level  and  for  their  preparation  for  the  future
intervention  of  the  European  Social  Fund.  The  importance  of  investing  in  sustainable
health systems also needs to be underlined.

In  the  fisheries  sector,  the  main  priority  is  to  reinforce  the  capacity  of  the  national
administrations  concerned  to  apply  Community  legislation,  particularly  in  the  area  of
market  regulations  and  maintenance  of  the  fishing  fleet  register.  Enforcement  of
Community  rules  on  fishing,  such  as  catch  limits  and  technical  regulations,  will  also
require a significant increase in resources in some candidate countries.

In the field of  justice  and home affairs,  most countries have made  good  progress in  all
areas of the acquis. In particular, each country’s Schengen Action plan has allowed them
to  structure  the  necessary  key  actions  and  to  advance  in  their  implementation.
Administrative and judicial capacity needs to be markedly reinforced, in particular in the
context  of  border  management,  fight  against  fraud,  corruption,  money  laundering  and
organised crime.

In the field of taxation, the generally good legislative alignment needs to be completed in
most  countries,  in  particular  as  concerns  VAT  and  excise  legislation.  Administrative

19

capacity  needs  further  strengthening  and  efforts  need  to  be  mobilised  for  the
computerised tax information systems to be implemented and become operational.

In the area of external relations, candidates have reached a good level of alignment with
the  acquis.  However,  decisive  steps  are  needed  as  a  matter  of  urgency  to  bring  the
bilateral investment treaties in conformity with Treaty obligations. Failure to do so will
mean  that  the  conflict  between  the  bilateral  investment  treaties  and  Treaty  obligations
will need to be resolved through the Accession Treaty.

For  a  limited  number  of  sectors,  this  year’s  Reports  identify,  for  individual  countries,
areas  of  the  acquis  where  special  efforts  are  needed,  underlining,  in  some  cases,  the
measures  which  need  to  be  urgently  taken.  Special  efforts  from  several  candidates  are
required, in particular in the sectors outlined below.

In the customs sector, alignment with the acquis, although very advanced, still needs to
be completed in some countries. Special efforts should now focus on further reinforcing
the  administrative  capacity  to  apply  the  acquis  in  this  sector  and  on  information
technology development.  In particular, preparations for  ensuring full interconnection  of
the national systems with Community  customs information technology systems  need to
be  pursued  or  accelerated  depending  on  the  countries.  The  capacity  of  the  customs
services to combat customs fraud also needs to be strengthened in a number of countries.
In addition, all countries need to take the necessary steps to prepare for the application of
measures and provisions that will be introduced only at the time of accession, including
in some cases in relation to free zones.

In  the  agriculture  sector,  most  countries  need  to  focus  their  efforts  on  finalising
alignment  of  their  legislation  with  the  Common  Agricultural  Policy  acquis  and  further
reinforcing their administrative capacity to implement and enforce it. In particular, very
few  candidate  countries  are  at  an  advanced  stage  regarding  the  setting  up  of  the
integrated  administration  and  control  scheme  (IACS),  including  the  land  parcel
identification  system  which  is  indispensable  for  the  management  and  control  of  direct
payments. Many candidates need to step up their efforts to build up an operational IACS
by  accession  and  for  some  candidate  countries  urgent  and  very  serious  efforts  are
required on key decisions and related funding if IACS is to be operational by accession.
If  the  required  administration  and  control  structures  are  not  fully  operational  or  do  not
operate correctly upon accession, the candidates concerned will be unable to benefit fully
from  the  support  systems  under  the  common  agricultural  policy,  or  will  be  required  to
reimburse  EC  funds  already  received.  A  number  of  countries  need  to  complete
preparations  for  the  paying  agency  and  others  still  need  to  conclude  the  process  of
agricultural land reform.

Administrative  capacity  also  needs  to  be  reinforced  in  the  veterinary  field  and  that  of
food  safety,  where  particular  attention  should  be  given  to  ensuring  that  establishments
are  duly  upgraded  to  meet  Community  standards.  Failure  to  do  so  could  preclude
candidates  from  availing  fully  of  the  opportunities  presented  by  the  Internal  Market  in
this domain.

In the regional policy sector, while a legislative framework for the implementation of the
acquis  has  generally  been  introduced,  candidates  need  to  clearly  define  their  final

20

implementation  structures  and  reinforce  their  administrative  capacities.  In  particular,
countries need to focus their efforts on completing their programming documents. They
need to strengthen inter-ministerial co-ordination and partnership as well as to reinforce
their systems and procedures for effective monitoring, financial management and control
of structural and cohesion funds at all levels. The Commission draws also the attention to
the fact that Community funding can not be approved until all conditions ensuring sound
management of the funds are in place.

In  the  financial  control  sector,  where  legislative  alignment  is  well  advanced  in  most
countries,  candidates  need  to  focus  their  efforts  on  implementing  adequate  Public
Internal  Financial  Control  and  External  Audit  systems.  For  Community  funding  to  be
available,  all  conditions  ensuring  the  sound  management  of  these  funds  need  to  be  in
place. Countries need to ensure the proper management of pre-accession funds and future
structural  funds  and  to  strengthen  their  administrative  structures  to  protect  the
Community’s financial interests by the second half of 2003.

The  progress  made  over  the  past  years  results  in  a  situation  where  most  candidate
countries  already  implement  considerable  parts  of  the  acquis.  In  most  countries,  the
necessary  legislative  framework  and  implementing  structures  are  in  place  to  a  large
extent.  Detailed  plans  have  been  agreed,  in  particular  in  the  negotiations  and  in  the
Action Plans, to cover the identified remaining gaps and are being implemented.

2.3.2.  Conclusions

Cyprus,  the  Czech  Republic,  Estonia,  Hungary,  Latvia,  Lithuania,  Malta,  Poland,  the
Slovak Republic and Slovenia have reached a high level of alignment with the acquis and
have made considerable advances towards ensuring adequate administrative and judicial
capacity. Bearing in mind the progress achieved by these countries, their track record in
implementing  the  commitments  they  have  made  in  the  negotiations,  and  taking  into
account their preparatory work in progress and foreseen, the Commission considers that
these countries will be able to assume the obligations of membership in accordance with
the envisaged timeframe.

These countries should continue their efforts in legislative alignment and administrative
capacity  building  as  foreseen.  The  Regular  Reports  show  that  they  need  to  undertake
urgent action in a limited number of specific areas within certain chapters. The candidate
countries  have  been  informed.  The  Commission  expects  them  to  initiate  the  necessary
measures in order to overcome the problems identified. This will be closely monitored.

Bulgaria,  Romania  and  Turkey  do  not  fully  meet  the  acquis  criteria.  These  countries
should focus further efforts on the areas identified in the Regular Reports.

The conclusions of each Regular Report are contained in Annex 1.

2.4. 

Overall conclusions and recommendations

This  year’s  Regular  Reports  show  that  all  candidate  countries  have  made  considerable
further progress in implementing the Copenhagen criteria.

21

Cyprus,  the  Czech  Republic,  Estonia,  Hungary,  Latvia,  Lithuania,  Malta,  Poland,  the
Slovak  Republic  and  Slovenia  fulfil  the  political  criteria.  Bearing  in  mind  the  progress
achieved  by  these  countries,  the  track  record  in  implementing  their  commitments,  and
taking  into  account  their  preparatory  work  in  progress,  the  Commission  considers  that
these countries will have fulfilled the economic and acquis criteria and will be ready for
membership from the beginning of 2004.

The  Commission  therefore  recommends  to  conclude  the  accession  negotiations  with
these countries by the end of this year. They will be referred to below as the ten acceding
countries.

The Regular Reports point to a number of areas where further improvements need to be
made  in  the  context  of  the  political  and  economic  criteria  and  in  relationship  to  the
adoption,  implementation  and  enforcement  of  the  acquis.  These  should  be  vigorously
pursued.

Bulgaria and Romania fulfil the political criteria but do not fully meet, to various extents,
the economic and acquis criteria. Turkey does not fully meet the political, economic or
acquis criteria. The political criteria for Turkey are assessed below.

3. 

COMPLETING THE PROCESS

3.1. 

Concluding the negotiations

For  all  ten  acceding  countries,  negotiations  on  both  the  chapters  “agriculture”  and
“financial and budgetary matters” are not yet provisionally closed, although most issues
in these chapters which are not linked to the financial framework to be proposed by the
Union  have  been  dealt  with.  Moreover,  even  if  the  chapters  “regional  policy”  and
“institutions”  have  been  provisionally  closed,  specific  questions  linked  respectively  to
the budgetary allocations and to institutional matters (transition rules in 2004; number of
Parliamentarians and qualified majority threshold) have been reserved for the last stretch
of  negotiations.    As  to  the  chapter  ‘other  matters’,  a  number  of  issues  still  need  to  be
considered. Furthermore, eight other chapters still need further negotiation: the chapters
“competition” for five countries, “transport” for the Czech Republic, and “taxation” and
“customs union” for Malta.

In  the  following,  the  Commission  lays  out  its  view  on  how  to  address  some  essential
points for completing the negotiations.

3.1.1.  The financial framework

In  its  information  note  of  30  January  2002,  the  Commission  has  proposed  a  common
financial  framework  for  the  accession  negotiations.  This  framework  was  based  on  the
overall  Berlin  financial  framework  and  on  the  assumption  that  ten  new  Member  States
would join the European Union. The Commission’s proposals remain valid. In particular,
the Commission considers that:

(cid:1)  In the field of agriculture, the objective of gradually introducing direct payments for

farmers in the new Member States from the year 2004 should be maintained.

22

(cid:1)  The structural actions should be based on a share of  one third  for the cohesion fund
and  be  based  on  the  overall  volume  proposed  in  January  2002.  Once  this  overall
envelope  is  agreed,  the  individual  amounts  per  country  and  per  policy  will  be
determined  on  the  basis  of  the  percentages  of  the  total  allocation  which  has  been
determined  following  the  methodology  applied  for  current  Member  States  for  the
period 2000-2006.

(cid:1)  As to internal policies, additional funds should be allocated for a transition facility for
institution building  and  continuous  decommissioning  efforts  for  the  Ignalina  nuclear
power  plant  in  Lithuania  and,  in  order  to  fully  commit  funds  allocated  under  pre-
accession assistance, for the Bohunice nuclear power plant in Slovakia.

(cid:1)  A  temporary  budgetary  compensation,  through  a  lump  sum  payment,  should  be
envisaged  for  each  new  Member  State  which  would  find  itself  in  a  net  budgetary
position which is worse in comparison with its situation in the year before accession
as beneficiary of pre-accession funds.

(cid:1)  The Commission reiterates the need to earmark additional funds for the northern part

of Cyprus in order to back up a political settlement.

3.1.2.  How to deal with new acquis and the revisiting of chapters

Acceding countries will be required to apply fully the acquis of the European Union in
force by the date of accession, except in those areas where transitional arrangements will
have been granted.

All the acquis adopted and published by the end of the first semester of 2002 has been
transmitted by the Commission to the negotiating countries. The latter have been called
upon  to  take  a  position  on  that  acquis,  including  any  possible  need  for  transitional
arrangements,  and  to  communicate  the  technical  adaptations  that  may  be  needed.
Positions of the candidate countries on all new acquis transmitted so far have been taken
into  account  in  the  negotiations.  In  some  cases,  such  as  recently  for  the  chapter
“environment”, positions taken by the candidates on new acquis can make it necessary to
revisit a chapter.

In  line  with  a  practice  followed  in  previous  enlargements,  it  will  not  be  possible  to  go
beyond  a  certain  point  in  time  when  considering  new  acquis  in  the  negotiations.  The
Commission  has  proposed  to  limit  the  scope  of  the  negotiations  as  such  to  all  acquis
adopted and published up until 1 November 2002. For the new acquis adopted between 1
July  and  1  November  2002,  such  as  in  the  field  of  telecommunications,  negotiating
countries  are  requested  to  transmit  their  positions  as  well  as  any  necessary  technical
adaptations by mid November. This would allow to deal with any additional requests for
transitional  arrangements  which  might  lead  to  possible  revisiting  of  chapters  in  the
negotiations in the second half of November.

The  Accession  Treaty  will,  as  in  previous  enlargements,  include  provisions  that  will
permit decisions on the necessary adaptations and temporary arrangements to the acquis
adopted between 1 November 2002 and the date of signature of the Accession Treaty to
be  taken  at  a  later  stage,  upon  duly  substantiated  requests  from  the  future  Member

23

States.5 Such provisions may be necessary in fields where important parts of the acquis
are  in  the  process  of  being  adopted,  such  as  transport,  energy  or  Justice  and  Home
Affairs.

3.1.3.  The chapter on “Other matters”

The  chapter  on  “other  matters”  will  not  be  treated  as  the  other  negotiating  chapters.  It
essentially  constitutes  a  negotiating  box  in  which  a  number  of  elements,  which  are
largely uncontroversial but do not have their place in the other negotiating chapters, can
be placed.  The chapter “other matters”, which should be dealt with in early November, is
likely to include the following elements :

- the rules applicable to the management and phasing out of pre-accession funds;

- the definition of the envisaged transition facility for certain institution building
actions;

-  the  legal  basis  for  the  management  of  funds  for  the  decommissioning  of  the
nuclear power plants of Ignalina in Lithuania and Bohunice in Slovakia;

- a number of declarations, protocols and additional elements to be included in
the  Treaty,  such  as  the  closure  commitments  for  the  above-mentioned  nuclear
power plants ;

- a legal basis for the above mentioned facility for the northern part of Cyprus.

Further details on these elements are given in Annex 2.

3.2. 

Finalising the Accession Treaty

The  Seville  European  Council  stated  that  “drafting  of  the  Treaty  of  Accession  should
continue  so  that  it  can  be  completed  as  soon  as  possible  after  the  conclusion  of  the
accession  negotiations.  It  would  seem  reasonable  to  expect  that  the  Treaty  of
Accessioncould be signed in spring 2003.”

The results of the accession negotiations in terms of transitional arrangements agreed and
the  technical  adaptations  to  the  acquis  as  a    result  of  enlargement  will  be  embodied  in
one legal instrument and its associated acts: the Accession Treaty. Work on the drafting
of  this  Treaty  formally  started  in  March  2002  and  is  already  well  advanced.  Most
negotiated  measures  and  necessary  adaptations  have  already  been  incorporated  in  the
draft  Treaty.  Taking  the  conclusions  of  the  Laeken  European  Council  as  a  point  of
departure, the Treaty is being drafted based on the assumption of an enlargement of ten
new  Member  States,  and  following  a  structure  very  similar  to  that  of  the  previous
enlargement. Because of the technical adaptations necessary, the Treaty may have around
1000 pages in the Official Journal.

Once the negotiations are concluded, the drafting of the Treaty will need to be finalised
in order to incorporate in it the final results of the negotiations. Taking into account the

5  See for example Articles 30, 151 and  169 of the Act concerning the conditions of Accession for Austria,

Finland and Sweden.

24

                                                
advanced stage of the drafting process, it seems reasonable to expect that the Accession
Treaty could be finalised no later than six weeks after the conclusion of the negotiations.

Once  the  text  of  the  Treaty  has  been  agreed  by  all  parties  to  the  negotiations,  the
Commission should adopt its Opinion on the applications for accession of the concerned
countries. The European Parliament should then be asked to give its assent in accordance
with Article 49 of the EU Treaty, followed by a decision of the Council on the admission
of new Member States. Provided that the Commission can issue its Opinion in February
2003,  and  allowing  sufficient  time  for  the  decision  making  process  in  Parliament  and
Council, the Accession Treaty can be expected to be signed in spring 2003, as foreseen
by  the  Seville  European  Council.  Thereafter,  the  Treaty,  drawn  up  in  all  present  and
future Community languages, will be signed by the parties.

After  signature,  the  Treaty  will  be  submitted  for  ratification  by  the  present  and  future
Member  States,  in  accordance  with  their  respective  constitutional  requirements.  The
Accession  Treaty  should,  as  in  the  past,  contain  a  date  for  the  accession  of  the  new
Member  States,  provided  that  the  necessary  instruments  of  ratification  are  deposited,
with  the possibility to adjust relevant provisions if any of the acceding countries do not
ratify.

3.3. 

Participation in the work of the Union before accession

Candidate  countries  already  participate  in  a  number  of  Community  committees  and
agencies6.  In  order  to  reinforce  the  gradual  integration  of  acceding  States  into
Community structures, these states should be given, after the signature of the Accession
Treaty, the possibility to further participate, wherever legally possible, as observers in all
committees  set  up  by  the  comitology  procedure  and  all  other  committees.  The
Commission,  furthermore,  considers  that  acceding  States  should  also  be  able  to
participate at least as observers in the relevant structures of all Community agencies.The
general principles and details of this participation will be defined at a later stage. In order
to facilitate financing the costs of effective participation, each acceding State could, if it
so  wishes,  reserve  appropriate  amounts  in  the  envelope  of  its  national  pre-accession
programme.

The  European  Parliament  is  equally  planning  to  let  observers  from  the  candidate
countries participate in the work of the Parliament.

There will also be a need to define the modalities of involving the acceding countries in
the  process  of  adopting  new  acquis  during  the  period  between  the  signature  of  the
Accession  Treaty  and  the  date  of  accession.  This  has  traditionally  been  done  by  an
exchange of letters on the information and consultation procedure for acceding countries
prior to decisions taken by the Council. The Council intends, as in past enlargements, to
take  appropriate  decisions  in  order  to  allow  the  acceding  countries  to  take  part  in  the
decision shaping process.

6  See  Commission  communication  of  20.12.99  on  “Participation  of  candidate  countries  in  Community

programmes, agencies and committees”, COM (1999) 710 final

25

                                                
3.4.  Monitoring and safeguards

The Commission has been closely monitoring how candidate countries are meeting their
commitments  made  in  the  accession  negotiations.  It  is  highly  important  that  the
commitments undertaken by the future Member States in the framework of the accession
negotiations be implemented  as foreseen.  In order  to assess  precisely  this  situation,  the
Commission  will  continue  to  monitor  this  closely  until  the  signature  of  the  Treaty  and
report on this to the Council on the basis of current procedures.

The Regular Reports identify  areas where further efforts are required. The Commission
will  continue  the  monitoring  process  also  between  the  signature  of  the  Treaty  and
accession.  This  continuous  monitoring,  which  will  also  include  the  monitoring  of  the
implementation of the Action Plans, should be done through established channels such as
the structures of the Association Agreements.

The Commission will, building on its present practice, signal any delays or problems in
economic reform or the  fulfilment of commitments, in particular through early warning
letters at a political level.

Specific targeted actions such as high level groups in the field of food safety, or on the
introduction  of  extended  decentralisation  as  well  as  peer  reviews,  technical  meetings,
workshops, seminars and questionnaires will continue to be used in specific fields until
accession.

For  economic  matters,  candidate  countries  are  continuing  to  prepare  for  EMU’s
multilateral surveillance and economic policy co-ordination. They are participating in the
Pre-accession  Fiscal  Surveillance  Procedure  (PFSP)  which  has  three  components  –  the
fiscal notification, the pre-accession economic programme and the multilateral dialogue.
The PFSP has started in spring 2001 and will continue also until accession.

All  relevant  information  resulting  from  these  activities  will  be  pulled  together  in
monitoring  reports  presented  regularly  to  the  Council  Six  months  before  the  accession
date,  the  Commission  will  produce  a  comprehensive  Monitoring  Report,  which  will
look  at  the  advancement  of  the  implementation  of  necessary  reforms  and  all
commitments  in  the  field  of  the  Community  acquis  by  each  of  the  acceding  countries.
This  comprehensive  Monitoring  Report  will  be,  for  the  ten  acceding  countries,  a
precursor of the Annual Report on the Monitoring of the Application of the Community
Law,  issued  regularly  by  the  Commission  for  all  Member  States7  At  the  latest  in  July
2003, the Commission will assess the implementation of commitments necessary for the
programming of structural funds.

After accession, the Commission, in its role as guardian of the treaties, will continue to
check  how  the  acquis  is  implemented  by  the  new  Member  States,  using  the  same
mechanisms as those applied to the existing Member States. These include in particular
benchmarking, peer pressure, annual reporting on implementation of Community law and
the  launching  of  infringement  procedures  with  the  European  Court  of  Justice  if
necessary. In the specific area of nuclear safety, the Laeken European Council envisaged
the need to monitor the security and safety of nuclear power stations in the Union.

7  See  the  “Nineteeth  Annual  Report  on  Monitoring  the  Application  of  the  Community  Law  (2001)  of

28.6.2002, COM (2002) 324 final.

26

                                                
The Accession Treaty  will, as in the  previous  enlargement,  contain  a  general economic
safeguard clause. This clause is already being discussed in the Council drafting group of
the  Treaty  on  the  basis  of  a  text  modelled  on  Art.  152  of  the  Act  of  Accession  for
Austria, Finland and Sweden. As the acceding countries do not form part of the European
Economic  Area,  the  Commission  considers  that  the  duration  of  the  validity  of  the
safeguard clause should be two years and not one year, as in the previous enlargement.

This  general  economic  safeguard  clause  applies  to  situations  where  “difficulties  arise
which are serious and liable to persist in any sector of the economy or which could bring
about  serious  deterioration  in  the  economic  situation  of  a  given  area”.  The  safeguard
clause  would  allow  the  Commission  to  determine  the  necessary  protective  measures.
Both,  new  and  current  Member  States  would  be  able  to  make  use  of  this  safeguard
clause.  The  draft  text,  as  in  the  previous  enlargement,  specifies  that  the  protective
measures “shall not entail frontier controls”.

The  safeguard  clause  does  not  cater  for  situations,  which,  on  the  one  hand,  are  due  to
failure  to  comply  with  accession  obligations,  and  on  the  other  hand,  which  may  have
serious  non-economic  consequences  such  as  for  the  protection  of  health  or  life  of
humans, animals or plants, protection of intellectual property or general reasons of public
policy as defined in Art 30 EC Treaty. For these  cases, either Art. 30 of the EC Treaty
applies,  or  specific  safeguard  clauses  may  have  been  introduced  into  specific  sectoral
legislation according to Art 95, para. 10 EC Treaty.

However,  in  a  number  of  cases,  the  Community  legislation  either  does  not  contain  a
safeguard  clause  or  the  safeguard  clause  does  not  cover  the  specific  situations  arising
from enlargement. The Commission therefore considers that the Accession Treaty should
as a precautionary measure envisage the introduction of a specific internal market related
safeguard mechanism.

Such a mechanism could be based on the following elements:

(cid:1)  The mechanism should be implemented by the Commission on request of a Member

State or on its own initiative.

(cid:1)  The  Commission  should  be  authorised  to  take  the  decisions  on  the  necessary

measures. The measures should be proportional and limited in time.

(cid:1)  The  scope  should  be  limited  to  a  serious  breach  of  the  functioning  of  the  internal
market  or  an  imminent  risk  of  such  breach  and  should  also  cater  for  particular
situations in respect of food safety.

(cid:1)  The  mechanism  should  be  triggered  where  the  Commission  establishes  a  failure  to
meet  the  commitments  made  by  the  new  Member  States  in  the  context  of  the
accession negotiations.

(cid:1)  During the period of  application of the measures, the new Member State  concerned
shall  provide  regular  information  to  the  Commission  on  steps  taken  to  redress  the
breach.    The  measures  should  be  lifted  as  soon  as  the  Commission  has  determined
that the breach has been redressed .

27

(cid:1)  The  safeguard  clause  should  only  exist  for  a  limited  time  span.  The  possibility  to

invoke the internal market safeguard mechanism should be limited to 2 years.

The comprehensive Monitoring Report will  identify  any  areas  where,  in  the  absence of
remedial action, such safeguard measures may be considered. This would also allow  to
give  an  early  warning  before  membership.  Moreover,  until  accession,  the  safeguard
clauses under the Association Agreements will remain applicable.

In this context, the particular situation in the area of Justice and Home Affairs deserves a
special mention. Unlike at the time of the last enlargement, there is now a considerable
acquis  in  this  area,  and  it  is  still  evolving  as  the  process  of  implementation  of  the
Amsterdam Treaty and the Tampere  European Council conclusions continues. It covers
difficult and politically sensitive subjects, in particular where the freedom of movement
of people and the consequences of the suppression of internal frontiers are concerned. As
explained  in  paragraph  3.5.3  below,  the  implementation  of  these  Schengen-based
objectives is subject to a two-stage process, which eliminates the need  for  any  separate
safeguard mechanism. There are, however, other non-Schengen  components in the area
of freedom, security and justice (for instance regarding the implementation of judicial co-
operation, in particular mutual recognition) where the monitoring process may indicate a
need  for  a  sui  generis  safeguard  clause  to  address  any  serious  breach  or  a  threat  of  a
serious  breach  in  the  functioning  of  this  area,  by  e.g.  providing  for  a  temporary
suspension of mutual recognition provisions.

3.5. 

After enlargement

3.5.1. 

Institution building

The  process  of  building  up  administrative  and  judicial  capacity  will  need  to  continue
after enlargement. A number of transitional arrangements agreed in the negotiations also
demonstrate  that  in certain areas candidate countries  need  to  continue efforts  until  they
are in a position to apply fully the Community acquis. This is why the Commission has
proposed to make available for the first three years after enlargement a special transition
facility for institution building (see Annex 2).

The  Commission  proposes  to  continue  to  use  in  specific  identified  areas  Community
financed instruments which have proven their usefulness, such as twinning and twinning
light.  Moreover,  mobilisation  of  experts  from  other  Member  States  through  such  tried
mechanisms  as  TAIEX  will  continue  to  be  used  in  order  to  provide  peer  assistance.
Furthermore,  the  Commission  proposes  to  finance  short-term  placements  of  the  new
Member States’ officials in the administrations of the EU 15. Additionally, the transition
institution building facility could also be used to co-finance investments in the acquis in
particular in such areas as border controls, customs administrations, statistics, food safety
and integrated agricultural administration and control systems.

3.5.2.  EMU and the Euro

In  accordance  with  the  EU  Treaty,  new  Member  States  cannot  immediately  adopt  the
Euro  upon  accession.  However,  as  for  all  Member  States,  economic  policies  become  a
matter of common concern and hence are subject to policy co-ordination and multilateral
surveillance procedures. The main instruments for co-ordination are the Broad Economic
Policy Guidelines, the Stability and Growth Pact and a number of processes which deal

28

with  specific  policy  areas.  The  exchange  rate  policy  becomes  a  matter  of  common
interest.  Participation  in  the  Exchange  Rate  Mechanism  II  is  expected  some  time  after
accession.

Participation  in  the  euro  area  is  the  ultimate  goal  of  new  Member  States.  They  will
integrate,  at  that  moment,  into  the  single,  stability-oriented  monetary  policy  and  the
single exchange rate policy, in addition to the full application of the economic policy co-
ordination and surveillance procedures. Until that time, the Treaty obliges Member States
to  pursue  the  high  degree  of  sustainable  convergence  required  for  the  adoption  of  the
euro, but does not specify  the timetable to attain this. Its attainment will depend on the
economic characteristics of each country and its success in applying the policies geared
to sustainable convergence.

3.5.3. 

Schengen

The  Union  has  made  clear  that  full  application  of  the  Schengen  acquis  necessitates  a
process in two stages. In the first stage, by the date of accession, acceding countries will
need  to  have  achieved  a  high  level  of  border  control,  even  though  certain  special
arrangements  such  as  shared  infrastructure  and  equipment  or  joint  patrols  could  be
envisaged  with  other  Member  States.  The  lifting  of  internal  border  controls  will  only
occur some time after accession and will be subject to a separate decision making process
for each new Member State separately, based on the full implementation of the Schengen
acquis.

3.5.4.  The European Economic Area

The acceding countries will need to apply to join the European Economic Area (EEA), in
accordance  with  Article  128  of  the  EEA  Agreement.  In  order  to  ensure  a  smooth
functioning  of  the  extended  EEA,  accession  of  candidate  countries  to  the  EEA  should
take  effect  at  the  same  time  as  accession  to  the  EU.  The  EEA  Agreement  needs  to  be
adapted to enlargement in accordance with the procedures stipulated in Article 128. The
process of agreeing on the terms and conditions of membership of the EEA should start
right after the conclusion of negotiations on accession to the EU in order to provide as far
as possible for a simultaneous entry into force of the EU- and the EEA-membership.

4. 

A REVISED ACCESSION STRATEGY FOR BULGARIA AND ROMANIA

The Seville European Council encouraged Bulgaria and Romania to pursue their efforts
and  reiterated  “its  commitment  to  give  them  full  support  in  their  preparation  for
accession.  An  updated  road  map  and  a  revised  and  enhanced  pre-accession  strategy
should  be  adopted  in  Copenhagen  for  the  candidate  countries  still  engaged  in
negotiations.  An  increase  in  pre-accession  financial  aid  could  also  be  contemplated.
Furthermore, if the current pace is maintained, a more precise timetable could be set for
these countries' accession process by the end of the year”.

The  criteria  set  by  the  Copenhagen  and  Madrid  European  Councils  as  well  as  the
principles  which  have  guided  the  accession  process  from  the  outset  remain  valid.  All
candidates  participate  on  an  equal  footing  and  all  are  expected  to  join  the  European
Union on  the basis  of  the  same  criteria  and  depending  on  their  individual  progress.  As

29

confirmed  by  the  2001  Laeken  European  Council,  the  accession  process  is  now
irreversible.

As  the  accession  negotiations  with  all  twelve  negotiating  candidate  countries  are  an
inclusive process,  the  Accession  Treaty  should  acknowledge  that  the  results  reached  in
the  negotiations  with  those  candidates  which  will  not  join  in  the  first  round  of
enlargement will not be put into question.

4.1. 

Progress to-date

This year’s Regular Reports show that Bulgaria and Romania have made further progress
towards  meeting  the  Copenhagen  criteria.  In  order  to  successfully  complete  their
preparations, they need to strengthen their efforts in meeting the economic criteria and in
transposing,  implementing  and  enforcing  the  acquis.  They  also  need  to  continue  the
reform of public administration and the judiciary.

Bulgaria  and  Romania  have  made  considerable  progress  in  the  negotiations.  All
negotiating chapters have now been opened with Bulgaria and almost all with Romania.
With  Bulgaria,  the  remaining  chapters  were  opened  in  the  first  half  of  2002  and  with
Romania it should be possible to open the last four chapters before the end of this year,
thus fulfilling the Laeken European Council’s objective to have all chapters opened with
these two countries in 2002.

4.2. 

Indicative date

Bulgaria and Romania have set 2007 as their indicative date for  accession. Negotiation
chapters have been provisionally closed on the basis of this indicative accession date. 22
chapters have been provisionally closed with Bulgaria and 13 with Romania.

The time scales made for the implementation  of negotiation commitments take account
of  this  perspective.  As  in  the  past,  progress  towards  the  completion  of  the  accession
negotiations will reflect progress in the adoption, implementation and enforcement of the
necessary measures in each country.

The  Commission  will  strongly  support  the  two  countries  in  achieving  this  objective,
which will continue to be guided by the principles of differentiation and own merits.

4.3. 

Accession roadmaps

As announced in its 2001 Enlargement Strategy Paper, the Commission will propose, on
the basis of the analysis in the 2002 Regular Reports, detailed roadmaps for Bulgaria and
Romania  before  the  Copenhagen  European  Council.  These  roadmaps  will  cover  the
period  up  to  accession  and  will  be  prepared  on  the  basis  of  a  close  dialogue  with  each
country.

The  roadmaps  will  be  based  on  the  commitments  made  in  the  negotiations  and  on  the
requirements to fulfil the Copenhagen criteria. They will indicate the steps each country
needs to take to be ready for membership, with particular emphasis on administrative and
judicial capacity and on economic reform. The roadmaps will provide clear benchmarks
against  which  commitments  made  in  the  course  of  the  negotiations  as  well  as  progress
with economic reform can be monitored. Progress in implementing the road maps will be

30

monitored  in  particular  through  the  Europe  Agreement  structures  and  the  Regular
Reports.

4.4. 

Pre-accession assistance

The Commission will propose to revise next year the Accession Partnerships for Bulgaria
and Romania in the light of the findings of the Regular Reports and the roadmaps. The
Accession  Partnerships  will  continue  to  be  the  basis  for  programming  pre-accession
assistance,  but  priorities  for  assistance  will  also  be  drawn  from  roadmaps,  Regular
Reports and revised National Development Plans. Phare assistance will continue to focus
on strengthening public administration and the judiciary, institution building, investment
related to the adoption of the acquis as well as economic and social cohesion and cross-
border co-operation. Work on extending decentralised implementation systems should be
accelerated.  With  regard  to  SAPARD,  although  it  is  already  fully  decentralised,  the
instrument  will  continue  to  prepare  the  candidate  countries  in  terms  of  agricultural
structures  and  rural  development  as  well  as  strengthening  the  related  institutional
capacity. ISPA will continue to provide financial support to infrastructure investments in
the field of environment and transport.

The Commission considers that financial assistance to Bulgaria and Romania should be
increased considerably from the date of the first round of accessions, linked to progress
in implementing the roadmaps and their absorption capacity..

5. 

A NEW IMPETUS TO THE ENLARGEMENT PROCESS WITH TURKEY

The  Seville  European  Council  in  June  2002  concluded  that  “new  decisions  could  be
taken  in  Copenhagen  on  the  next  stage  of  Turkey’s  candidature”  in  the  light  of
developments  before  the  Copenhagen  European  Council,  on 
the
Commission’s  Regular  Report  and  in  accordance  with  the  Helsinki  and  Laeken
conclusions.

the  basis  of 

The  2002  Regular  Report  makes  a  detailed  analysis  of  Turkey’s  progress  in  the  pre-
accession strategy over the past twelve months. Turkey’s progress is assessed by means
of the same criteria and the same methodology as applied to all candidates. As with all
candidates,  and  pursuant  to  the  conclusions  of  the  Copenhagen  and  Madrid  European
Councils,  the  report  pays  attention  both  to  legislative  changes  and  to  Turkey’s
administrative capacity to implement and enforce the acquis properly.

The Report shows that Turkey  has moved forward  in  the  three  major  areas  covered  by
the Accession Partnership: the political, economic and acquis criteria established by the
Copenhagen European Council in 1993.

Turkey has made noticeableprogress towards meeting the Copenhagen political criteria.
Through constitutional reform, and a series of legislative packages, Turkey has addressed
several  of  the  key  priorities  specified  in  the  Accession  Partnership.  The  legal  changes
adopted  by  Parliament  in  August  2002  are  particularly  welcome  as  they  show  a
willingness to introduce far-reaching reforms. The death penalty has been lifted except in
case of war and important steps have been taken to permit broadcasting and education in
languages  other  than  Turkish.  The  lifting  of  the  state  of  emergency  in  two  of  the  four
provinces  where  it  had  applied,  and  the  undertaking  to  lift  it,  this  year,  in  the  two

31

provinces  where  it  still  applies  should  open  the  way  to  greater  protection  of  human
rights.

The  Commission  welcomes  these  developments  and  recognises  the  break-through  they
represent  in  the  Turkish  political  context.  In  addition,  the  reforms  were  adopted  in
particularly  difficult  circumstances.  These  reforms  are  promising  for  the  future  as  they
demonstrate  the  will  and  the  capacity  of  the  Turkish  political  system  to  make  progress
even in areas hitherto regarded as highly sensitive.

Nonetheless, Turkey does not fully meet the political criteria. First, the reforms contain a
number  of  significant  limitations,  which  are  set  out  in  the  Regular  Report,  on  the  full
enjoyment  of  fundamental  rights  and  freedoms.  Secondly,  many  of  the  reforms  require
the  adoption  of  regulations  or  other  administrative  measures  and,  to  be  effective,  will
need  to  be  implemented  in  practice  by  executive  and  judicial  bodies  at  different  levels
throughout the country. Thirdly, a number of important issues arising under the political
criteria have  yet to be adequately addressed. These include the fight against torture and
ill-treatment,  certain  questions  concerning  civilian  control  of  the  military,  and  the
situation  of  persons  imprisoned  for  expressing  non-violent  opinions  and  in  compliance
with the decision of the European Council of Human Rights..

In the light of the considerable progress made in recent years and of the remaining areas
requiring  further  attention,  Turkey  is  encouraged  to  pursue  the  reform  process  to
strengthen  democracy  and  the  protection  of  human  rights,  in  law  and  in  practice.  This
should    enable  Turkey  to  tackle  the  remaining  obstacles  to  full  compliance  with  the
political criteria.

The  Commission  recalls  that  efforts  to  resolve  the  Cyprus  problem  form  part  of  the
enhanced  political  dialogue  between  the  European  Union  and  Turkey.  Noting  the
statements issued by the United Nations Security Council, following reports by the UN
Secretary  General’s  Special  Adviser  for  Cyprus,  Mr.Alvaro  de  Soto,  the  Commission
urges  all parties  concerned and particularly, in  the  present  context,  Turkey, to  lend  full
support to the efforts of the United Nations to achieve a comprehensive settlement of the
Cyprus problem this year.

With respect to the economic criteria, Turkey has made progress in the functioning of its
market economy, which should improve its capacity to cope with competitive pressure,
but is still undergoing the consequences of recession and financial crises.

With respect to  the acquis criteria, Turkey  has made  progress  in  aligning  legislation  in
the areas covered by the customs union and a number of other sectors, such as banking,
telecommunications,  energy  and  agriculture.  The  financial  sector  has  been  restructured
and administrative capacity in this field has been streamlined.  In most other areas there
remain major differences between the acquis and Turkish legislation.

The  outstanding  issues  as  regards  the  modalities  for  participation  by  Turkey  in  the
decision  making  process  as  regards  EU-led  operations  using  NATO  assets  need  to  be
resolved as a matter of priority.

32

5.1. 

Strengthening the Pre-Accession Strategy

The  Helsinki  European  Council  set  out  the  pre-accession  strategy  for  Turkey  in  1999.
The  Laeken  European  Council  endorsed  a  new  phase  of  this  strategy  last  year.    Since
then, substantial progress has been made in its implementation.

Against this background, the Commission recommends that the European Union should
enhance its support for Turkey’s pre-accession preparations, in view of the next stage of
its candidature. More detailed recommendations are given below as to how this objective
can be achieved.

(cid:1)  The  Accession  Partnership  has  proved  to  be  a  valuable  instrument  in  the  pre-
accession strategy. It should be updated and revised to focus clearly on areas where
priority action is still needed.

(cid:1)  The  enhanced  political  dialogue  between  the  EU  and  Turkey  covers  political
reforms, human rights, the Cyprus issue and the matter of the peaceful settlement of
border  disputes,  and  will  be  pursued  intensively.  There  is  a  need  for  detailed
discussions  on  the  various  initiatives  taken  by  Turkey  to  meet  the  Copenhagen
political criteria.  New ways will be sought to ensure improved understanding of the
reforms and other issues requiring attention.

(cid:1)  The  enhanced  economic  dialogue  between  the  EU  and  Turkey  covers  issues  of
macroeconomic  performance  and  stability  and  economic  reforms,  and  will  be
pursued  intensively.  The  various  measures  taken  by  Turkey  to  restore  economic
stability and to meet the Copenhagen economic criteria have to be discussed in detail.

(cid:1)  The process  of  legislative  scrutiny,  focusing  on  precise  sector  issues,  supplemented
by TAIEX assistance, is well underway and will be further developed.  This process
guides  Turkey  in  the  requirements  for  transposition  of  the  acquis,  including
administrative capacity and enforcement.

(cid:1)  Additional efforts are being  made  to  reinforce  and  extend  the  scope  of  the  customs
union to cover services and public procurement, as well as removing obstacles to the
free  circulation  of  goods.    This  will  have  an  impact  on  the  wider  work  to  be
undertaken by Turkey in accordance with its candidate country status.

(cid:1)  The  deepening  of  trade  relations  with  Turkey,  both  on  a  bilateral  basis  and  in
relations  with  third  countries,  should  be  pursued.  For  example,  preferential  market
access for EC-Turkey trade in agricultural products could be extended on a reciprocal
basis;  this should be accompanied by  greater  co-operation on veterinary  and  phyto-
sanitary  matters.  In  negotiating  trade  agreements  with  third  countries,  the  EU  will
step up efforts to ensure that such countries agree similar arrangements with Turkey.
The dialogue between the EU and Turkey on trade issues should be enhanced and the
use of trade defence instruments kept under review.

(cid:1) 

In  order  to  stimulate  investment  flows,  a  further  liberalisation  of  foreign  direct
investment between the EU and Turkey should be pursued.

33

(cid:1)  Co-operation  with  Turkey  should  be  reinforced  in  the  area  of  Justice  and  Home
Affairs,  including  illegal  immigration  and  adoption  and  implementation  of  the
Schengen acquis, as well as the free movement of persons, and maritime safety.

(cid:1)  Turkey will participate in a number of Community programmes and agencies.

(cid:1)  The  new  financial  management  system  has  begun  to  bear  fruit.    The  substantial
backlog  in commitments  of  EU finance for  Turkey  is  now  being  cleared.    The  pre-
accession  driven  approach  in  the  financial  assistance  programmes  is  being  fully
implemented.    From  2003  greater  responsibility  will  be  passed  to  the  Turkish
authorities for the implementation of these programmes.

The Commission will take the necessary initiatives to put this strengthened pre-accession
strategy  into  place.  The  Commission  will  put  forward  a  revised  Accession  Partnership,
taking account of progress made and the areas where further efforts are needed. Progress
will be discussed in appropriate fora, such as the EC-Turkey Association Committee and
in the Customs Union Joint Committee.

It  is  therefore  necessary  to  increase  the  availability  of  financial  assistance  to  Turkey,
bearing in mind Turkey’s specific needs and capacity to absorb such funds.

5.2. 

Additional financial support

In  order  to  help  accelerate  the  implementation  of  Turkey’s  pre-accession  strategy,
increased financial assistance  will be provided from 2004.  This increase is intended to
enable Turkey to strengthen its public administration, support the adoption of the acquis,
and to facilitate Turkey’s integration into the European economy.

Pre-accession assistance will focus on helping Turkey meet the Copenhagen criteria, and
in particular on strengthening public administration at all levels, institution building, and
investment  related  to  the  adoption  of  the  acquis.    Assistance  will  also  be  available  for
improving  the  functioning  of  Turkey’s  economy  and  its  capacity  to  cope  with
competitive pressure within the internal market. Cross-border  cooperation with existing
EU  Member  States  and  other  candidate  countries  will  also  be  promoted.    Priorities  for
assistance will be drawn from the Accession Partnership and the Regular Reports.

In  order  to  facilitate  the  full  devolution  of  implementation,  Turkey  will  need  to  take
further measures to ensure sound financial control.

Capacity  building  for  Turkey’s  public  administration  will  be  matched  by  resources  for
investment  in  regulatory  infrastructure,  acquis-related  investment  and  economic  and
social cohesion. Turkey will be asked to prepare a National Development Plan to guide
the commitment of resources to addressing economic and social cohesion issues.

The  Commission  will  put  forward  early  next  year  a  revised  Accession  Partnership  for
Turkey based on priorities emerging form this year’s Regular Reports. In this context, the
Commission  will  propose  to  the  budgetary  authority  that  grant  assistance  to  Turkey
should be allocated under heading 7 of the financial perspectives 2000-2006 and should
be steadily increased in the period from 2004 to 2006. The size of annual allocations will
be  linked  to  performance  in  meeting  the  Copenhagen  criteria  and  in  the  effective

34

management of pre-accession assistance.  It can be expected that total assistance could at
least double by 2006, taking into account Turkey’s needs and absorptive capacity

6. 

CONCLUSIONS AND RECOMMENDATIONS

In the light of the above, the European Commission's conclusions and recommendations
are the following:

(1) 

(2) 

(3) 

(4) 

This  year’s  Regular  Reports  show  that  all  candidate  countries  have  made
considerable progress over the last year in implementing the accession criteria.

Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
the Slovak Republic and Slovenia fulfil the political criteria. Bearing in mind the
progress  achieved  by  these  countries,  the  track  record  in  implementing  their
commitments,  and  taking  into  account  their  preparatory  work  in  progress  and
foreseen,  the  Commission  considers  that  these  countries  will  have  fulfilled  the
economic  and  acquis  criteria  and  will  be  ready  for  membership  from  the
beginning  of  2004.  The  Commission  therefore  recommends  to  conclude  the
accession negotiations with these countries by the end of this year with the aim to
sign the Accession Treaty in spring 2003.

The Commission hopes to see a re-united Cyprus acceding to the European Union
on the basis of a comprehensive settlement, as the best outcome for all concerned.
As indicated in the conclusions of the Seville European Council, the EU is ready
to accommodate the terms of a political settlement in the accession arrangements
in  line  with  the  principles  on  which  the  European  Union  is  founded.  The
Commission welcomes that substantial UN involvement will continue and urges
all  parties  concerned  and,  in  particular  Turkey,  to  lend  full  support  to  efforts  to
reach  a  comprehensive  settlement  this  year.  Cyprus’  terms  of  accession  can  be
adapted to reflect the comprehensive settlement as well as its implications for the
application  of  the  acquis  throughout  the  island.  The  Commission  has  proposed
that considerable resources should be made available to support the northern part
of  the  island  to  catch  up  and  to  back  up  a  settlement.  In  the  absence  of  a
settlement, the decisions to be taken in December  by the Copenhagen European
Council will be based on the conclusions of the Helsinki European Council .

Acceding countries need to implement the acquis by the date of accession, except
in  cases  where  transitional  arrangements  have  been  agreed.  Commitments
undertaken  in  the  negotiations  must  be  fully  met  before  accession.  The  Regular
Reports point to a number of areas where further improvements need to be made
in  the  context  of  the  political  and  economic  criteria  and  in  relationship  to  the
adoption,  implementation  and  enforcement  of  the  acquis.  These  should  be
vigorously  pursued.  In  order  to  analyse  progress  and  to  facilitate  successful
membership of the European Union, the Commission will regularly monitor this
and  report  to  Council.  The  Commission    will  produce  six  months  before  the
envisaged  date  of  accession  a  comprehensive  monitoring  report  for  the  Council
and the European Parliament. The Commission considers that a specific safeguard
clause needs to be introduced in the Accession Treaty. This clause should allow
the Commission for a limited period of time to take appropriate measures in the
internal market field.

35

(5) 

(6) 

(7) 

Conclusion  of  negotiations  requires  that  the  necessary  solutions  be  found  to  the
remaining  open  questions  in  the  negotiations.  As  to  the  financial  offer  of  the
Union, such solution should be based on the financial framework for negotiations
put forward by the Commission on 30 January 2002 and the principles contained
therein.

Bulgaria  and  Romania  have  set  2007  as  their  indicative  date  for  accession.  The
Commission  will  strongly  support  the  two  countries  in  achieving  this  objective,
which  will  continue  to  be  guided  by  the  principles  of  differentiation  and  own
merits.  The  Commission  will  propose,  on  the  basis  of  the  analysis  in  the  2002
Regular  Reports,  detailed  roadmaps  for  Bulgaria  and  Romania  before  the
Copenhagen  European  Council.  In  order  to  prepare  Bulgaria  and  Romania  for
membership in the European Union, an increased focus will be put on judicial and
administrative reform. Furthermore, pre-accession assistance provided to Bulgaria
and Romania should be increased considerably from the date of the first round of
accessions,  linked  to  progress  in  implementing  the  roadmaps.  As  the  accession
negotiations  with  all  twelve  negotiating  candidate  countries  are  an  inclusive
process, the Accession Treaty should acknowledge that the results reached in the
negotiations  with  those  candidates  which  will  not  join  in  the  first  round  of
enlargement will not be put into question.

Through  constitutional  reform  and  a  series  of  legislative  packages  Turkey  has
made  noticeable  progress  towards  meeting  the  Copenhagen  political  criteria,  as
well as moving forward on the economic criteria and alignment with the acquis.
Nonetheless, considerable further efforts are needed. Against this background and
in view of the next stage of its candidature, the Commission recommends that the
EU should enhance its support for Turkey's pre-accession preparations and should
provide  significant  additional  resources  for  this  purpose.    The  Commission  will
propose  a  revised  Accession  Partnership  and  intensify  the  process  of  legislative
scrutiny.    It  recommends  renewed  efforts  to  extend  the  Customs  Union  and
improve its functioning, with a view to deepening EC - Turkey trade relations and
increasing investment flows.  Turkey is encouraged to pursue its reform process
and thus to carry forward its candidature for EU membership.

36

ANNEX 1: CONCLUSIONS OF THE REGULAR REPORTS

Bulgaria

In  its  1997  Opinion,  the  Commission  concluded  that  Bulgaria  fulfilled  the  political
criteria. Since that time, Bulgaria has made considerable progress in further consolidating
and  deepening  the  stability  of  its  institutions  guaranteeing  democracy,  the  rule  of  law,
human rights and respect for and protection of minorities. This has been confirmed over
the past year. Bulgaria continues to fulfil the Copenhagen political criteria.

Significant progress has been made on the judicial reform strategy with the adoption of
an  Action  Plan  and  major  amendments  to  the  Law  on  the  Judicial  System.  These  need
now  to  be  implemented  in  order  to  translate  them  into  concrete  improvements  in  the
functioning  of  the  system.  Issues  relating  to  the  structure  of  the  judicial  system  and
immunity still need to be addressed.

There have also been positive further developments in the fight against corruption, which
remains  a  cause  for  serious  concern,  with  inter  alia  the  adoption  of  an  action  plan  to
implement the National Anti-Corruption Strategy. Whilst the need to tackle corruption is
now  high  on  the  agenda  Bulgaria  needs  to  continue  to  make  concerted  efforts  to
implement the measures.

There has been some further progress on public administration reform with revisions to
the legislative framework and the adoption of a Strategy  for Modernisation of the State
Administration but serious efforts are now required to develop and implement reforms to
ensure an efficient, transparent and accountable public administration.

Bulgaria  continues  to  respect  human  rights  and  freedoms.  Bulgaria  has  considerably
improved the legal framework, for tackling trafficking, corruption and organised crime as
well as for asylum. However, there are a number of areas which continue to give cause
for  concern.  A  new  issue  that  has  been  identified  is  the  very  poor  living  conditions  of
people in institutions, in particular the mentally handicapped. This needs to be addressed
urgently. Bulgaria also needs to strengthen its efforts to reform the child care system, to
make  sure  that  the  best  interests  of  the  child  are  reflected  and  reduce  the  number  of
children in institutions. Poor conditions for detainees in particular in police stations and
pre-trial detention also need to be addressed.

The recent changes to the Penal Code are an important step in removing discrimination
on the grounds of sexual orientation.

Concerning  the  Roma  community,  little  has  been  done  to  remedy  problems  of  social
discrimination  or  to  take  concrete  action  to  improve  very  poor  living  conditions.  The
adoption  of  comprehensive  anti-discrimination  legislation  would  be  an  important  step
forward in this regard.

Bulgaria  is  a  functioning  market  economy.  It  should  be  able  to  cope  with  competitive
pressure  and  market  forces  within  the  Union  in  the  medium  term,  provided  that  it
continues implementing its reform programme to remove remaining difficulties.

37

Bulgaria has achieved a high degree of macroeconomic stability and market mechanisms
are now working sufficiently to allow for a better allocation of resources. Good progress
has been made  in  structural reforms,  especially as  regards procedures  for market entry,
the restructuring of the financial sector and privatisation, thus setting the microeconomic
basis for a process of sustained growth.

However, further efforts are needed to improve the flexibility  of  markets.  In particular,
the  efficiency  of  the  administrative  and  judicial  system  has  to  be  reinforced,  to  allow
economic  agents  to  make  decisions  in  a  climate  of  stability  and  predictability.
Administrative  procedures  affecting 
including  bankruptcy
procedures,  must  be  streamlined.  The  level  of  financial  intermediation  continues  to  be
low.  Specific  deficiencies  remaining  in  the  land  market  affect  the  performance  of  this
market  and  of  related  economic  sectors.  An  implementation  of  these  reform  measures
should  contribute  to  higher  levels  of  private  and  public  investment  which  are  key
requirements for sustained growth and sufficient competitiveness within the Union.

the  enterprise  sector, 

Since the Opinion in 1997, Bulgaria has made good progress in most areas of the acquis.
It has maintained a generally good pace of alignment of legislation throughout this period
and has advanced on development of administrative capacity albeit at a slower pace.

Over the past  year,  Bulgaria  has  continued  to  progress  in  terms  of  legal  alignment  and
administrative capacity, with an acceleration of efforts on judicial reform.

Overall,  and  in  view  of  Bulgaria’s  target  date  for  accession,  Bulgaria  has  achieved  a
reasonable degree of  alignment with the acquis in  many  areas.  Administrative  capacity
has  also  developed,  although  significant  further  efforts  remain  to  be  made.  More
attention needs to be paid to how laws will be implemented and enforced. In this regard,
progress on public administration and judicial reform needs to be sustained.

Regarding the internal market, Bulgaria has made further progress in most areas. In free
movement of goods, progress continued with amendments to the Law on Standardisation,
which  remove  conflicts  of  interest  between  standardisation  and  regulatory  functions
and/or  certification.  Considerable  efforts  are  still  needed  to  reinforce  administrative
infrastructure for standardisation and certification and to systems for national conformity
assessment  and  market  surveillance.  The  new  Public  Procurement  Act  is  a  further  step
towards implementation of the acquis, but is not yet fully aligned. This and enforcement,
in line with the principles of the acquis, needs to be ensured. As regards food safety, a
considerable amount of legislation has been transposed but efforts need to be pursued to
ensure  proper  implementation  and  enforcement  of  the  acquis.  Reinforcement  of
administrative  capacity  is  still  needed,  notable  laboratory  upgrading  and  accreditation.
On the freedom to provide services, Bulgaria has developed  sound banking  supervision
practices.  It  has  made  good  progress  in  implementing  the  banking  acquis  but  is  less
advanced in the field of insurance and securities. The establishment of the Consultative
Council for Financial Sector Supervision is a further step in the right direction. Bulgaria
has  made  progress  on  legal  alignment  with  the  acquis  on  data  protection  but  needs  to
ensure  full  alignment  with  the  acquis  and  take  steps  to  put  administrative  capacity  in
place to implement and enforce this.

Company law has been further aligned but still needs to be brought  fully  into line with
elements of the acquis, especially on acquisitions, mergers and divisions of  companies.
On  the  legal  framework  for  protecting  intellectual  and  industrial  property  rights  (IPR),

38

there  have  been  further  improvements  but  steps  need  to  be  taken  to  ensure  this  is
enforced  at  borders  and  that  law  enforcement  bodies  and  the  judiciary  are  trained  to
handle IPR matters.  On competition policy, important progress  has been made with the
entry  into  force  of  the  Law  on  State  Aid.  Further  efforts  are  now  needed  to  develop  a
credible  state  aid  enforcement  record.  On  anti-trust,  Bulgarian  legislation  is  largely  in
line with the acquis. Bulgaria needs to continue to build a record of effective application
and  enforcement  of  rules.  The  restructuring  of  the  steel  sector  will  need  to  be  closely
monitored.

For  customs  and  taxation,  Bulgaria  still  needs  to  develop  IT  systems  that  allow  for
exchange  of  data  with  the  EC.  As  regards  strengthening  of  administrative  capacity,  in
customs, implementation of reforms is progressing, but there has been limited progress in
the reform of tax administration.

Bulgaria has progressed in aligning with the telecommunications acquis.  Efforts should
focus on completing transposition, speeding up effective implementation, and enhancing
the capacity of the regulator.

In  agriculture,  approximation  of  legislation  in  the  veterinary  and  phytosanitary  sectors
has progressed well. Further efforts are still necessary in the transposition of the acquis.
However,  substantial  efforts  will  be  necessary  to  develop  the  necessary  administrative,
inspection  and  control  mechanisms, 
to  ensure  enforcement  of
veterinary/hygiene  control  standards.  Progress  on  fisheries  has  continued,  but  Bulgaria
needs  to  take  further  measures  to  ensure  full  compliance  with  EC  hygiene  and  health
requirements.

in  particular 

On social policy and employment, some progress has been made But considerable further
work remains on legal transposition in the areas of labour law, equal opportunities, anti-
discrimination  and  health  and  safety  at  work.  Social  dialogue  in  line  with  EC  practice
needs to be fostered.

Concerning  regional  policy,  Bulgaria  has  made  progress  in  preparing  for  the
implementation of structural policies with the adoption of a strategy for structural funds,
which  clarifies  the  institutional  structure  for  structural  and  cohesion  fund  assistance.
Bulgaria  needs  to  focus  efforts  on  strengthening  capacity  for  future  implementation  of
structural  funds  in  key  ministries,  including  appropriate  control,  monitoring  and
evaluation  mechanisms.  Bulgaria  still  needs  to  prepare  a  coherent  development  plan  as
required  by  the  structural  funds  regulations  and  integrate  it  into  the  national  budgetary
and policy-making framework.

Bulgaria  has  continued  to  transpose  the  environmental  acquis  with  the  adoption  of  the
Environmental  Protection  Act.  Efforts  are  needed 
to  prepare  directive-specific
implementation  plans  and  financing  strategies,  on  environmental  investments,  and  to
further  elaborate  mechanisms  to  monitor  effective  implementation.  Implementation
remains  a  major  challenge  as  is  the  need  for  increased  administrative  capacity  and  the
cost of alignment.

Bulgaria has continued to make progress in aligning transport legislation with the acquis,
notably 
the  railway  sectors.  The  newly-established
administrative structures need to be strengthened. For maritime transport, the poor safety
record of the Bulgarian fleet remains a cause for concern.

transport  and 

the  road 

in 

39

Bulgaria has stepped up progress in reforming the energy sector where restructuring had
been slow in previous years. A new national energy strategy was adopted. The legislative
basis for market opening has been created and privatisation of the distribution companies
is under preparation. Bulgaria now needs to set clear timetables for restructuring  of the
energy sector. Bulgaria must respect closure commitments for Kozloduy NPP and ensure
a high level of nuclear safety.

In justice and home affairs, Bulgaria made good progress in aligning with the acquis in
most  areas.  It  has  adopted  an  action  plan  for  the  adoption  of  Schengen  requirements.
However, a major effort is still needed in order to strengthen implementation capacity.

Substantial progress has been made in strengthening financial control with the entry into
force of the new laws on Public Internal Financial Control and the National Audit Office.
Bulgaria  should  focus  now  on  strengthening  the  required  institutional  structures,
including for the protection of the EC financial interests.

Bulgaria  still  needs  to  make  sustained  efforts  to  develop  sufficient  administrative  and
judicial capacity to implement and enforce the acquis. As well as continuing horizontal
reform  of  the  public  administration,  it  needs  to  focus  in  particular  on  developing  the
capacity  to  be  part  of  the  internal  market  and  to  apply  the  acquis  in  areas  such  as
agriculture, environment and regional policy. Further efforts are also required to establish
the  necessary  administrative  capacity  to  ensure  the  sound  and  efficient  management  of
EC funds.

In  the  accession  negotiations,  22  chapters  have  been  provisionally  closed.  The
commitments made in the negotiations are with a view to accession from 2007 and  are
generally being met by Bulgaria.

Cyprus

The Commission has repeatedly concluded that Cyprus fulfils the political criteria. This
was the conclusion  of previous Regular Reports, and  has  been  confirmed  over  the  past
year. Cyprus continues to fulfil the Copenhagen political criteria.

The  state  public  administration  has  been  considerably  strengthened  by  the  creation  of
new posts and the promotion of regular training.

Cyprus  continues  to  respect  human  rights  and  freedoms.  Cyprus  has  improved  the
procedure  for  the  protection  of  refugees.  It  has  abolished  restrictions  on  the  right  to
marry for Turkish Cypriots living in the south.

Cyprus is a functioning market economy and it should be able to cope with competitive
pressure and market forces within the Union.

The  first  1998  Regular  Report  already  acknowledged  the  economic  reform  efforts
undertaken  by  the  Cypriot  authorities  to  prepare  for  EU  accession.  Since  then,  the
Cypriot authorities’ commitment to the economic requirements of EU accession has been
sustained.

Further improvements can be made to the functioning of markets by keeping to plans to
liberalise the telecom, energy, air transport and postal services sectors. Adherence to the

40

fiscal  consolidation  programme  will  contribute  to  reducing  the  current  account  deficit.
Care must be taken to improve co-ordination of the supervision of co-operative financial
institutions and banks.

Since  the  1998  Regular  Report,  Cyprus  has  made  substantial  progress  in  the  different
areas  of  the  acquis.  The  legislative  alignment  process  has  accelerated  in  recent  years.
Cyprus has continued to pay attention to implementation and enforcement structures.

Over  the  past  year,  Cyprus  has  further  advanced  with  legislative  alignment  and  has
improved its position in relation to administrative capacity, in particular in the fields of
social  insurance,  veterinary  and  phytosanitary  inspections,  pharmaceutical  services,
combating  money  laundering,  ship  inspection,  inland  revenue,  planning,  environmental
services, consumer and health protection, and customs.

Overall, Cyprus has achieved a good degree of alignment with the acquis in most areas
and  is  advanced  towards  reaching  adequate  administrative  capacity  to  implement  the
acquis  in  a  considerable  number  of  fields,  although  further  efforts  remain  to  be  made.
Detailed plans have been agreed, in particular in the negotiations and in the Action Plan,
to cover the remaining gaps.

There  has  been  significant  progress  in  the  different  areas  of  the  internal  market.  As
regards  free  movement  of  goods  approximation  has  been  completed  in  a  number  of
sector-specific areas. The adoption of the framework legislation on the New and Global
Approach  principle,  following  an  initial  delay,  has  allowed  substantial  legislative
progress and constituted an important step towards further alignment with the acquis. In
the field  of  public  procurement  full  alignment  has  not  yet  been  achieved.  Furthermore,
efforts  are  still  required  for  transposition  of  the  acquis  relating  to  the  notification
procedure, market surveillance and product safety. The newly  established  Company  for
Certification  has  reinforced  the  infrastructure  for  standardisation  and  certification,
whereas Cyprus has to continue efforts to enhance its market surveillance systems. In the
field  of  free  movement  of  persons  Cyprus  has  taken  a  major  step  by  adopting  the
framework legislation on the recognition of professional qualifications. It has abolished
inconsistencies as regards the co-ordination of social security systems and has reached a
good level of administrative capacity. On freedom to provide services good progress can
be  reported  in  terms  of  harmonisation,  in  particular  with  legislation  on  insurance
companies and banks, including offshore banks. Enhancement of administrative capacity
should  particularly  continue  as  regards  supervisory  authorities  in  the  field  of  financial
services. The liberalisation of capital movement is on course to achieve full alignment by
accession.  Although  the  administrative  capacity  for  combating  money  laundering  has
been  further  enhanced  through  the  recruitment  of  additional  personnel,  Cyprus  must
continue sustained efforts in this domain.

As  regards  company  law,  Cyprus’s  legislative  alignment  with  the  acquis  is  at  an
advanced stage. With respect to intellectual and industrial property rights, further efforts
are required to strengthen enforcement capacity in relation to border controls, combating
piracy and counterfeiting.  In the field of competition steady progress has been made in
adopting anti-trust and state aid legislation. A substantial improvement in state-aid and in
anti-trust  enforcement  is  evident  after  years  of  standstill.  The  State  aid  monitoring
authority and the  fully independent  authority  for  the  protection  of competition  function
well, but should be developed further.

41

Cyprus has reached a good level of legislative alignment in the field of agriculture and
has  taken  significant  steps  as  regards  the  establishment  of  the  Common  Market
Organisations. However, the administrative capacity to implement and enforce the acquis
needs  to  be  further  strengthened  in  this  field.  Due  priority  should  be  given  to  the
preparation of the Integrated Administration and Control System. In the area of fisheries,
legislation  has  been  aligned  to  a  reasonable  extent.  Administrative  capacity  is  in  place
but needs to be further reinforced. Cyprus has continued its efforts to further reduce the
number  of  fishing  vessels  under  its  flag,  but  its  Fishing  Vessel  Register  has  not  yet
become  fully  operational.  However,  the  relevant  infrastructure  for  the  establishment  of
the register has been introduced and the implementation mechanisms are under way.

The comprehensive tax reform, concerning both indirect and direct taxation, has moved
Cyprus  significantly  forward  in  the  field  of  taxation.  Cyprus  has  also  made  important
progress  with  developing  the  necessary  administrative  capacity  and  has  reached  an
adequate  level  in  this  respect.  Cyprus  can  also  rely  on  a  well-organised  and  well
functioning  customs  administration.  Further  legislative  alignment  is  needed  concerning
inward  and  outward  processing,  temporary  importation,  cultural  goods,  and  procedural
aspects. The adoption of the pending and outstanding legislation in this area is urgently
required in order to achieve this alignment.

Cyprus needs to focus on full liberalisation of the telecommunications markets, speeding
up the implementation of the acquis, and the establishment of the regulator's office

As regards Economic and Monetary Union good progress can be reported, as the Central
Bank has now become independent.

Legislation in the transport sector is largely in line with the acquis, but some legislation,
in  particular  regarding  aviation,  remains  to  be  transposed.  Safety  matters  have  been
particularly 
legislative  alignment  and  strengthened  administrative
capacities. Efforts in the area of maritime transport need to be continued.

improved  by 

As  regards  social  policy  and  employment,  Cyprus  has  achieved  substantial  progress.
Alignment with the legislative acquis needs to be completed in a few areas. There is still
a strong need to enhance administrative capacity.

Progress has been made at a moderate pace in the field of energy. As regards alignment
with the internal energy market acquis and the security of supplies and oil stocks, Cyprus
has  advanced  only  in  a  limited  manner.  Cyprus  is  strongly  encouraged  to  ensure  the
progressive building up of oil stocks and the relevant authority according  to the  agreed
timetable.  Ongoing  legislative  work  in  order  to  align  with  the  internal  energy  market
acquis  and  to  establish  the  oil  stocks  authority  should  be  continued  without  delay,  as
should efforts to ensure the necessary oil stocks storage capacity.

Cyprus  has  continued  the  integration  of  the  environment  into  other  policies  and  has
achieved  a  considerable  alignment  with  the  acquis  in  the  various  sectors  of
environmental  and  nature  protection.  However,  measures  need  to  be  adopted  in  the
important  fields  of  air  and  water  quality,  industrial  pollution  control,  chemicals,  and
genetically modified organisms. Particular attention should be paid to waste management
and to enhancing administrative capacity. Investment needs to be secured in the medium
term to ensure implementation of the environmental acquis.

42

Concerning justice and home affairs good progress in the fields of visa policy, asylum,
the fight against organised crime and corruption can be reported. On asylum, alignment
has  been  accelerated  and  an  independent  review  authority  has  been  established.
Concerning  the  Schengen  acquis,  Cyprus  is  continuing  its  preparations  by  fully
implementing  the  existing  Schengen  Action  Plan  and  by  developing  the  National
information  system.  Cyprus  has  ratified  various  conventions  with  respect  to  data
protection, 
terrorism,  and  proceeds  from  crime.  In  general,
administrative capacity has still to be further strengthened in this area.

the  fight  against 

As regards regional policy, Cyprus has continued to make important progress in aligning
with the acquis preparing for participation in structural instruments. Cyprus is also well
advanced with respect to administrative structures.

Cyprus has achieved further progress in the field of financial control. Its Public Internal
Financial Control system is well developed and international audit standards are largely
met. Efforts should be undertaken as to strengthening the administrative capacity of the
Treasury.

Cyprus  has  further  strengthened  its  administrative  capacity.  Additional  staff  has  been
recruited  in  key  areas  and  has  been  included  in  the  Supplementary  Budget  for  2002,
which  is  not  yet  approved.  In  important  areas  such  as  capital  movement,  competition,
agriculture,  taxation,  customs,  environment,  and  justice  and  home  affairs  enforcement
structures  have  been  reinforced.  Close  attention  is  required  as  regards  the  structures
which  are  necessary  to  implement  the  acquis  which  will  be  applicable  only  upon
accession, in particular as regards sound and efficient management of EC funds.

In  the  accession  negotiations,  28  chapters  have  been  provisionally  closed.  Cyprus  is
generally  meeting  the  commitments  it  has  made  in  the  negotiations.  However,  delays
have occurred with regard to the establishment of the fishing vessel register,  and in the
legal alignment as regards oil stocks and with the electricity Directive. These issues need
to be addressed.

Bearing  in  mind  the  progress  achieved  since  the  1998  Regular  Report,  the  level  of
alignment  that  Cyprus  has  achieved  at  this  point  in  time,  and  its  track  record  in
implementing  the  commitments  it  has  made  in  the  negotiations,  the  Commission
considers  that  Cyprus  will  be  able  to  assume  the  obligations  of  membership  in
accordance  with  the  envisaged  timeframe.  In  the  period  leading  to  accession,  Cyprus
needs  to  continue  its  preparations,  in  line  with  the  commitments  it  has  made  in  the
accession negotiations.

The Czech Republic

In  its  1997  Opinion,  the  Commission  concluded  that  the  Czech  Republic  fulfilled  the
political criteria. Since that time, the country has made considerable progress in  further
consolidating and deepening the stability of its institutions guaranteeing democracy, the
rule  of  law,  human  rights  and  respect  for  and  protection  of  minorities.  This  has  been
confirmed  over  the  past  year.  The  Czech  Republic  continues  to  fulfil  the  Copenhagen
political criteria.

The  government  has  taken  further  steps  to  improve  the  functioning  of  the  central
administration.  In particular, it has adopted a Civil Service Act which establishes a legal

43

framework for the central public administration and reforms the existing arrangements in
a  number  of  key  areas.  The  Act  foresees  a  gradual  implementation  of  its  provisions
during  a  transition  period  which  may  extend  up  to  the  end  of  2006,  in  order  to  allow
sufficient  time  for  their  careful  preparation  and  thorough  application.    Nonetheless,  it
would be desirable for full implementation to be achieved as soon as possible so that the
Czech  public  administration  will  be  better  equipped  to  deal  with  the  extra  demands
created  by  accession  to  the  European  Union.    The  process  of  decentralization  has
continued, with the continued transfer of competencies to the regions and municipalities.

The reform of the judiciary has made further progress, in particular with the introduction
of  a  new  system  of  administrative  law  and  the  implementation  of  the  streamlined
Criminal Proceedings Code. However, further efforts are needed to reduce the length of
court  proceedings,  particularly  in  civil  cases.  Overall,  the  recent  reforms  need  to  be
underpinned  by  additional  human  and  material  resources  as  well  as  increased  judicial
training.

Some  additional  legal  and  organizational  measures  have  been  taken  to  fight  against
corruption and economic crime, which remain a cause for serious concern.  Efforts need
to be increased.  In particular it is necessary to ensure that the relevant law enforcement
institutions  receive  additional  human  and  technical  resources.      A  recent  government
report  highlights  the  importance  of  ensuring  full  support  from  political  forces  in  this
field.

The Czech Republic continues to respect human rights and freedoms.

An amendment to the Asylum Law, which entered into force in February 2002, tightened
the  conditions  for  granting  asylum.  It  also  established  a  second  independent  appeal
instance for  rejected  asylum  applications.    The  Council  for  Equal  Opportunities  started
its work in January 2002.

Some additional activities have been undertaken to improve the difficult situation facing
the Roma community.  However, more structural measures are needed in order to achieve
significant  results  in  remedying  discrimination  in  access  to  education,  housing  and
employment. The adoption of comprehensive anti-discrimination legislation would be an
important step forward in this regard.

The 1997 Opinion already acknowledged the substantial reform efforts undertaken by the
Czech  authorities  to  transform  their  economy.  Since  the  Opinion,  and  against  a
challenging  international  economic  environment,  economic  performance  has  improved.
Macroeconomic  stability  has  been  achieved,  reforms  have  deepened  while  the  Czech
authorities’  commitment  to  the  economic  requirements  of  EU  accession  has  been
sustained.

Hence,  it  is  concluded  that  the  Czech  Republic  is  a  functioning  market  economy.  The
continuation  of  its  current  reform  path  should  enable  the  Czech  Republic  to  cope  with
competitive pressure and market forces within the Union.

Improvements can be made as regards the management of public finance, in particular by
addressing the high and rising mandatory and quasi-mandatory government expenditures.
Reforms  of  social  expenditure,  such  as  pension  and  health  care  schemes,  must  be
pursued.  Furthermore,  a  more  decisive  approach  towards  selling  off  bad  assets  of  the

44

Czech  Consolidation  Agency  to  private  investors  would  free  the  economy  of
misallocated resources.

Since the Opinion, the Czech Republic has made very good progress.  Whilst the pace of
legislative alignment was slow in the initial period, subsequently there was a significant
acceleration.    In  recent  years  there  has  also  been  steady  progress  in  building  up
administrative capacity to implement the acquis, together with the reform of the judicial
system.

Over  the  past  year,  the  Czech  Republic  has  further  advanced  legislative  alignment,  in
particular  as  regards  financial  services,  phytosanitary  legislation,  road  transport,  social
policy, environment and justice and home affairs.  However, limited further progress has
been made in the field of taxation.  Efforts have continued to strengthen  administrative
capacity, including the adoption of a legal framework for the public administration.

Overall, the Czech Republic has achieved a high degree of alignment with the acquis in
many  areas  and  is  well  advanced  towards  reaching  adequate  administrative  capacity  to
implement  the  acquis,  although  further  efforts  remain  to  be  made.  Detailed  plans  have
been  agreed,  in  particular  in  the  negotiations  and  in  the  Action  Plan,  to  cover  the
remaining gaps.

In the field of the internal market, transposition of the acquis is well advanced as regards
the  four  freedoms  and  efforts  should  focus  on  filling  in  the  remaining  gaps.
Administrative  capacity  is  generally  good.    On  the  free  movement  of  goods,  the  Czech
Republic now implements almost all harmonised European standards, including those on
foodstuffs;  however,  market  surveillance  capacity  will  need  to  be  further  increased.
Alignment  with  the  public  procurement  acquis  should  be  completed,  building  on  the
welcome progress achieved recently. On the free movement of persons, alignment is high
on citizens’ rights and free movement of workers, but further work is urgently needed on
the mutual recognition of professional qualifications. On the free movement of services,
transposition  of  the  banking  acquis  has  advanced  well,  whilst  alignment  needs  to  be
completed as regards other financial sectors.  Supervision of the financial sector should
be  further  improved.    On  the  free  movement  of  capital,  there  has  been  good  recent
progress on removing restrictions on acquisition of real estate as well as on the regulation
of  cross-border  credit  transfers.  Administrative  capacity  to  fight  money  laundering
should be further reinforced.

As regards company law, there is a high degree of alignment with the acquis although as
regards  enforcement  of  intellectual  property  rights,  further  improvement  is  required,
including tackling pirated and counterfeited goods. Concerning competition, legislation is
largely  in  line  with  the  acquis  and  the  Office  for  the  Protection  of  Competition  has
developed a  satisfactory  track  record  of  enforcement  on  anti-trust  as  well  as  state  aids.
The  state  aid  enforcement  and  restructuring  of  the  steel  sector  will  need  to  be  closely
monitored. In the area of banking, increased transparency is needed.

As  regards  economic  and  fiscal  matters,  a    high  level  of  alignment  has  been  achieved
with  the  acquis  on  economic  and  monetary  union,  with  significant  recent  progress  as
regards  the  independence  of  the  central  bank.    A  good  level  of  alignment  has  been
reached  on  taxation,  but  this  needs  to  be  completed  in  important  areas  of  VAT  and
excise.  Continued progress is necessary to develop information technology systems for
the  exchange  of  electronic  data  with  the  Community  and  its  Member  States.  Ongoing

45

efforts to strengthen administrative capacity in this area should be vigorously pursued. A
high level of compatibility has been achieved with the customs acquis.  It is necessary to
finalise  the  work  on  computerisation  and  full  interconnection  of  national  systems  with
EC customs information technology systems.

Sectoral  policies  have  reached  an  overall  good  level  of  alignment  with  the  acquis  and
administrative  capacity  is  generally  satisfactory.    As  regards  transport,  road  and  air
legislation is largely in line with the acquis but further efforts are needed as regards the
railways.   Sufficient administrative capacity to enforce the acquis remains to be ensured.
In  the  energy  sector,  there  is  a  good  level  of  alignment,  in  particular  on  establishing  a
competitive electricity market. Full and timely implementation of legislation now needs
to be ensured. The Czech Republic has accepted and is addressing all recommendations
of the Council report on Nuclear Safety in the Context of Enlargement.

In the field of agriculture, the overall level of preparation is good, in particular as regards
the  implementing  structures  for  the  Common  Agricultural  Policy  and  alignment  with
phytosanitary  legislation.    Continued  efforts  are  needed  to  complete  alignment  and
strengthen inspection arrangements in the veterinary field.

In  the  area  of  economic  and  social  cohesion,  as  regards  social  policy  and  employment,
alignment  is  well  advanced,  in  particular  on  labour  law  and  health  and  safety  at  work.
Administrative  capacity  with  regard  to  occupational  health  and  safety,  in  particular  the
labour inspectorates, needs further reinforcement.  In regional policy, over the last  year
important progress has been made so that the legal framework is largely in place.  Efforts
need to continue to render the implementing and control structures fully operational and
as regards the technical preparation of projects eligible for Community funding.

Concerning the environment, the Czech Republic has achieved a high level of legislative
alignment  and  significant  investments  have  produced  notable  results,  particularly  as
regards air and water quality.  Continued efforts are needed to finalise transposition and
implementation  in  the  areas  of  water  quality,  waste,  nature  protection  and  industrial
pollution prevention.  Also, administrative capacity at local and regional levels needs to
be ensured and long term financial investments need to be planned.

On  telecommunications,  the  Czech  Republic  has  made  further  recent  progress  and  has
achieved  a  good 
the
telecommunications  infrastructure  and  diversification  of  the  market.  However,  full
market  liberalisation  remains  to  be  achieved  and  the  independence  of  the  regulatory
authority needs to be ensured.

level  of  alignment  concerning 

the  development  of 

As  regards  the  audio-visual  sector,  the  Czech  Republic  is  well  advanced  in  terms  of
legislative  alignment.  However,  effective  implementation  will  require  strengthening  of
administrative  capacity.  It  remains  particularly  important  to  establish  and  supervise
effectively a transparent and predictable regulatory framework in the audio-visual sector.

Concerning justice and home affairs, notable progress has been made in almost all areas
and legislative alignment is almost complete. Continued efforts should be made to ensure
further upgrading of border management and the implementation of the Schengen Action
Plan as well as strengthening the fight against fraud, corruption and organised crime.

46

Regarding  financial  questions,  in  the  field  of  financial  control  legislative  alignment  is
completed  but  further  substantial  efforts  are  required  to  ensure  full  implementation  of
public  internal  financial  control.  Overall,  the  administrative  capacity  of  the  Czech
Republic has been strengthened considerably.  Efforts need to be pursued in particular as
regards agriculture, the environment, regional policy, justice and home affairs as well as
financial control.  Special attention should be given to the structures necessary to ensure
sound and  efficient  management of  EC  funds. Currently ongoing  activities, notably  the
strengthening of the internal audit units through increasing human resources and training,
need to be vigorously pursued in order to attain full operational capacity by accession.

In  the  accession  negotiations,  25  chapters  have  been  provisionally  closed.    The  Czech
Republic  is  generally  meeting  the  commitments  it  has  made  in  the  negotiations.
However, delays have occurred with regard to the full alignment of public procurement
legislation,  completion  of  alignment  regarding  mutual  recognition  of  professional
qualifications,  adoption  of  parts  of  veterinary  legislation,  and  the  completion  of
alignment of certain VAT and excise duties.  These issues need to be addressed.

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  the  level  of  alignment  and
administrative capacity that the Czech Republic has achieved at this point in time, and its
track  record  in  implementing  the  commitments  it  has  made  in  the  negotiations,  the
Commission considers that the Czech Republic will be able to assume the obligations of
membership  in  accordance  with  the  envisaged  timeframe.    In  the  period  leading  up  to
accession,  the  Czech  Republic  needs  to  continue  its  preparations,  in  line  with  the
commitments it has made in the accession negotiations.

Estonia

In  its  1997  Opinion,  the  Commission  concluded  that  Estonia  fulfilled  the  political
criteria.  Since  that  time,  the  country  has  made  considerable  progress  in  further
consolidating and deepening the stability of its institutions guaranteeing democracy, the
rule  of  law,  human  rights  and  respect  for  and  protection  of  minorities.  This  has  been
confirmed over the past year. Estonia continues to fulfil the Copenhagen political criteria.

Implementation  of  the  public  administration  reform  programme  has  continued,  and  the
functioning of the Estonian civil service and its administrative procedures continue to be
satisfactory.  There  remains  a  need  to  continue  to  improve  transparency  in  personnel
matters and coordination across different bodies.

Judicial modernisation has progressed well  and  the  independence  and administration of
the judiciary have been enhanced. Improvements in the training of judges have continued
and court information systems have been upgraded.  Estonia should make efforts to fill
vacant  prosecutors  posts.  As  noted  last  year,  Estonia  needs  to  continue  to  increase
efficiency  in  dealing  with  court  cases  as  well  as  the  quality  and  enforcement  of  court
decisions.

Estonia continues to respect human rights and freedoms.

Estonia  has  encouraged  the  further  integration  of  non-citizens  by  removing  language
requirements  for  candidates  in  parliamentary  and  local  elections  and  by  supporting
language  learning  and  cultural  exchanges  through  the  state  integration  programme.
Estonia should continue efforts to increase the rate of naturalisation and to facilitate the

47

process. Estonia should ensure that the implementation of language legislation continues
to  respect  the  principles  of  justified  public  interest  and  proportionality,  Estonia's
international obligations and the Europe Agreement.

The 1997 Opinion already acknowledged the substantial reform efforts undertaken by the
Estonian  authorities  to  transform  their  economy.  Since  the  Opinion,  and  against  a
challenging  international  economic  environment,  in  particular  the  Russian  crisis,
economic  performance  has  improved.  Macroeconomic  stability  has  been  achieved,
reforms  have  deepened  while  the  Estonian  authorities’  commitment  to  the  economic
requirements of EU accession has been sustained.

Hence, it is concluded that Estonia is a functioning market economy. The continuation of
its  current  reform  path  should  enable  Estonia  to  cope  with  competitive  pressure  and
market forces within the Union.

Improvements can be made by the government and the private sector to the functioning
of  labour  markets  by  taking  a  more  active  role  to  tackle  the  unemployment  problem.
Furthermore,  the  consolidation  of  the  local  authorities’  finances  should  be  taken  up  to
reinforce the prudent stance of fiscal policy. In addition, the restructuring of the oil shale
sector should be actively pursued.

Since  the  Opinion,  Estonia  has  made  good  progress  in  adopting  the  acquis  and  more
recently, has also made progress in gradually building up the administrative capacity to
implement and effectively enforce the acquis.

Over  the  past  year,  Estonia  has  made  further  advances  in  many  areas  including  in  the
internal market, agriculture and justice and home affairs. However, the rate of progress in
general has been slower than foreseen in Estonia’s own planning as set out in its National
Programme for the Adoption of the Acquis.

Overall,  Estonia  has  now  achieved  a  high  degree  of  alignment  with  the  acquis  in  the
large  majority  of  areas.  It  is  also  relatively  advanced  in  having  developed  adequate
administrative  capacity  to  implement  the  acquis  in  a  considerable  number  of  fields.
Estonia  has  most  of  the  necessary  institutions  in  place.  Nevertheless,  in  some  sectors,
further  efforts  are  required  to  strengthen  the  capabilities  of  these  institutions.  Detailed
plans have been agreed, in particular in the negotiations and in the Action Plan, to cover
the remaining gaps.

Concerning the internal market, some progress has been made in free movement of goods
in  aligning  both  horizontal  and  sectoral  specific  legislation.    Nevertheless,  the  market
surveillance  system  including  food  safety  should  be  improved.    For  free  movement  of
persons,  there  has  been  further  alignment  on  mutual  recognition  of  professional
qualifications, citizens’ rights and free movement of workers although there is a need to
ensure training of professionals is brought fully into line with EC standards. As regards
freedom  to  provide  services,  free  movement  of  capital,  company  law,  competition,  and
consumers  and  health  protection  where  preparations  are  relatively  advanced,  there  has
been  some  further  alignment  with  the  acquis.  Areas  where  administrative  capacity  has
been  strengthened  include  the  newly  operating  unified  Financial  Supervisory  Authority
and the introduction of a cross border payment system. Continued attention needs to be
given to further developing  the  capacity of the Data Protection  Inspectorate,  the  Public
Procurement Office and the Financial Intelligence Unit (anti-money laundering).  There

48

is also a need  to ensure  the effective  application  of  competition  acquis  and  to  improve
law enforcement in the areas of piracy and counterfeit goods.

Concerning  agriculture,  preparations  have  continued  for  the  Common  Agricultural
Policy and further alignment has been made in the veterinary and phytosanitary sectors.
A new Rural Development Foundation has been established. Work needs to continue, to
strengthen the future paying agency and the Ministry of Agriculture in developing CAP
systems  including  the  Integrated  Administration  and  Control  System,  also  to  develop
capacity in  the  veterinary  field,  strengthen  the  Plant  Protection  Inspectorate  and  border
controls,  and  ensure  that  food  quality  standards  are  met.      In  fisheries,  the  pace  of
progress  has  been  slow  although  some  steps  have  been  made  in  resource  management,
inspection and control.  Urgent improvements are necessary, in particular in continuing
to  develop  the  fisheries  information  system,  to  develop  and  implement  structural  and
market  policy  and  improve  administrative  capacity  and  coordination  between  the
Ministries  of  Agriculture  and  Environment.  Drafting  of  market  legislation  is  currently
ongoing  and  several  projects  are  under  preparation  for  the  analysis  of  producer
organisations,  fisheries  databases  and  registers.  Estonia  has  begun  to  take  steps  to
improve  the  co-ordination  of  the  fisheries  administration  but  these  efforts  need  to  be
substantially  stepped  up.  The  full  implementation  of  the  measures  in  the  Action  Plan
would help to ensure that the current gaps in the preparations are filled.

In transport policy, Estonia has continued to make steady progress in both aligning and
implementing  legislation  including  the  establishment  of  an  independent  Air  Traffic
Investigations Department. There is a need to complete alignment in the railway sector,
implement the social acquis in the road sector and improve  maritime safety. In energy,
progress has been made in removing market price distortions, improving regulation and
nuclear safety.  Estonia should continue to align legislation, in particular as regards the
internal  electricity  and  gas  markets,  develop  renewable  energy  sources  and  further
strengthen  the  energy  market  regulator.    More  generally,  in  terms  of  industrial  policy,
Estonia  should  complete  the  process  of  industrial  restructuring  by  focusing  on  the  oil-
shale  sector.  In  telecoms  and  culture  and  audiovisual  policy  alignment  of  legislation  is
largely complete.  Nevertheless, Estonia should ensure universal service.

For  social  policy  and  employment,  Estonia  has  made  some  progress  in  aligning  health
and safety legislation. The National Labour Board has been upgraded and designated as
the  focal  point  for  European  Agency  for  Health  and  Safety  at  work.  Further  work  is
required  in  aligning  labour  law,  equality  legislation  and  to  improve  capacity  to
implement  and  enforce  legislation  in  public  health,  health  and  safety  at  work.  Social
dialogue should be further developed.  In regional policy steady progress has been made
in  preparation  for  the  structural  funds.  However,  Estonia  still  needs  to  greatly  improve
the capacity of authorities designated to programme  and implement EC  regional  policy
after accession including the development of sound financial controls.

In  the  environment  sector,  further  progress  has  been  made.  Estonia  needs  to  continue
alignment,  in  particular  in  the  areas  of  waste,  nature,  chemicals,  air  protection  and
radiation;  to  invest  in  infrastructure  including  waste  and  waste  water  treatment;  and  to
strengthen  administrative  capacity,  at  both  ministerial  and  local  government  level.
Estonia also needs to continue to improve enforcement of environmental legislation.

Estonia  has  made  further  progress  in  the  field  of  justice  and  home  affairs  in  data
protection, border control, visas, migration, police and judicial cooperation. New systems

49

have  been  introduced  -  an  online  visa  register  and  an  online  criminal  register  for  the
police services. Legislative alignment needs to be completed in particular in the fields of
migration, asylum and money laundering. Attention should also be paid to implementing
the Schengen Action Plan, reinforcing border controls and fighting organised crime.

In  taxation,  progress  has  been  made  in  aligning  VAT  legislation.    Estonia  needs  to
continue  alignment  and  strengthen  the  capacity  of  the  tax  board.  In  the  field  of  the
customs  union,  Estonia  has  made  progress  in  alignment  and  IT  development,  and  has
established  an  investigation  department  at  the  Custom  Board.    Substantial  efforts  are
urgently  required  to  develop  the  administrative  capacity  to  implement  EC-compatible
customs  measures  and  relevant  training  of  customs  officials.    Estonia  must  continue  to
develop and ensure the interconnectivity of its customs IT systems with those of the EC
and  is  currently  receiving  significant  support  from  the  EC  in  this  area.  It  should
furthermore continue and step up its preparations for implementation upon accession of
customs procedures involving the collection or suspension of customs duties, as well as
the reorganisation of customs services.

In  financial  control  good  progress  has  been  made  in  implementing  internal  financial
control,  in  introducing  legislation  on  external  financial  control  and  on  protecting  the
financial interests of the EC.  On financial and budgetary procedures good progress has
been  made  in  introducing  new  budgetary  procedures.    There  is  a  need  to  reinforce
capacity for own resources calculations.

In  most  areas  Estonia  is  reasonably  advanced  in  terms  of  developing  the  necessary
administrative  capacity  to  implement  and  enforce  the  acquis.  However,  as  highlighted
above, there are a number of areas where much has already been done but further efforts
will also be needed to complete the work.  In particular, these areas are free movement of
persons, fisheries,  agriculture, taxation, social policy  and  employment,  energy,  regional
policy, environment, customs and justice and home affairs.

In  the  accession  negotiations,  28  chapters  have  been  provisionally  closed.  Estonia  is
generally meeting the commitments that it has made in the negotiations.  However delays
have  occurred  in  adopting  fisheries  legislation,  implementing  a  fisheries  information
system, ensuring the full operation and compliance of the Fishing Vessel Register, and in
aligning  legislation  on  air  quality  and  radiation  protection.  These  issues  need  to  be
addressed.

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  the  level  of  alignment  and
administrative capacity that Estonia has achieved at this point in time and its track record
in implementing the commitments that it has made in the negotiations, the Commission
considers  that  Estonia  will  be  able  to  assume  the  obligations  of  membership  in
accordance with the envisaged timeframe. In the period leading up to accession, Estonia
needs  to  continue  its  preparations,  in  line  with  the  commitments  it  has  made  in  the
accession negotiations.

Hungary

In  its  1997  Opinion,  the  Commission  concluded  that  Hungary  fulfilled  the  political
criteria.  Since  that  time,  the  country  has  made  considerable  progress  in  further
consolidating and deepening the stability of its institutions guaranteeing democracy, the
rule  of  law,  human  rights  and  respect  for  the  protection  of  minorities.  This  has  been

50

confirmed  over  the  past  year.  Hungary  continues  to  fulfil  the  Copenhagen  political
criteria.

Public administration reform at central level has been completed to a large extent. In this
respect, the 2001 Law on Civil Servants, partly enforced in 2002, was an important step
forward  in  the  consolidation  of  the  legal  framework  for  civil  servants.  Following  a
complex  review  of  the  salary  structure,  the  gap  between  earnings  in  the  public  and
private  sector  was  further  reduced.  A  financial  reform  of  the  local  self-governments  is
still outstanding.

the 

judiciary, 

the  constitutional  and 

Within 
judicial
independence  are  well-established  in  Hungary  and  the  system  of  judicial  self-
administration  functions  efficiently.  The  decisions  to  introduce  the  Regional  Courts  of
Appeal  and  to  strengthen  the  judiciary’s  financial  independence  are  important  steps  as
regards the improvement of the judicial capacity.

legislative  guarantees  of 

In  line  with  its  anti-corruption  strategy,  the  Hungarian  Government  has  continued  to
adopt a series of legal and practical measures to fight corruption, which remains a cause
for  concern.  It  is  important  that  the  new  decisions  be  implemented  quickly  to  better
address the situation.

Hungary continues  to  respect  human  rights  and  freedoms.  In  the  area  of  public  service
media, political parties are again fully represented in the Supervisory Boards of Trustees.
New steps were taken to improve social dialogue.

With a view to addressing the difficult situation of the Roma, the implementation of the
1997 medium-term programme continued. The institutional framework has been further
strengthened  and  a  new  monitoring  system  introduced.  Still,  Roma  policy  is  not  well
integrated into general social development strategies and exists as a separate and parallel
project. Roma continue to suffer discrimination. The Government is currently revising its
Roma  policy.  The  envisaged  adoption  of  a  comprehensive  long-term  strategy  and
comprehensive  anti-discrimination  legislation  would  be  major  steps  forward  in  this
regard.

The  1997  Opinion  already  acknowledged  the  comprehensive  reform  efforts  undertaken
by the Hungarian authorities to transform their economy. Since the Opinion, and against
a challenging international economic environment, economic performance has improved.
Macroeconomic stability has been achieved, reforms have continued while the Hungarian
authorities’  commitment  to  the  economic  requirements  of  EU  accession  has  been
sustained.

Hence, it is concluded that Hungary is a functioning market economy. The continuation
of its current reform path should enable Hungary to cope with competitive pressure and
market forces in the Union.

Improvements  can  be  made  to  macroeconomic  management  by  reducing  the  general
government deficit, thus preventing fiscal policy to become pro-cyclical and supporting a
further  reduction  of  the  inflation  rate.  A  more  fundamental  reform  of  the  health  care
sector now needs to be embarked on. Wage developments will have to be brought in line
the  country’s
again  with  productivity  growth 
competitiveness.

to  compromise 

in  order  not 

51

Since the Opinion, Hungary has made continuous progress in aligning with the acquis in
all  areas.  Implementation  of  the  new  legislation  has  been  proceeding  well  in  most
sectors. Considerable  efforts  have  been  made  by  the  country  since  1997  to  improve  its
administrative capacity needed for a satisfactory implementation of the acquis.

Over the past  year,  Hungary  has  further  advanced  in  a  number  of  areas,  such  as  social
policy,  justice  and  home  affairs,  telecommunications,  culture  and  audio-visual  and
energy with regard to the adoption and the enforcement of the acquis. Among the sectors
in which only limited progress was made in the reporting year as regards administrative
capacity  figure  agriculture  and  regional  policy.  However,  administrative  capacity  was
further  improved  in  many  other  sectors,  thereby  increasing  the  level  of  preparations  to
effectively implement and enforce Community legislation.

Overall,  Hungary  has  achieved  a  high  degree  of  alignment  with  the  acquis  and  is  also
well  advanced  with  regard  to  achieving  adequate  administrative  capacity  to  implement
the acquis. However, further efforts remain to be made for Hungary to be fully capable of
enforcing  it  by  accession.  Detailed  plans  have  been  agreed,  in  particular  in  the
negotiations and in the Action Plan, to cover the remaining gaps.

Continued good progress  could  be  noted  in  the  internal  market  sector.  As  described  in
last  year’s  report,  the  major  part  of  the  acquis  has  been  adopted,  and  administrative
structures are in place. Since transposition of the acquis is very advanced as regards the
free movement of goods,  attention  is  now focusing  on enforcement, for  example on the
effective  establishment  of  the  Food  Safety  Agency  as  well  as  on    market  surveillance.
The  necessary  infrastructure  for  standardisation  and  certification  is  in  place.  Progress
could  be  noted  with  the  adoption  of  legislation  on  procurement  in  the  motorway
construction  sector.  However,  further  efforts  are  needed  to  align  with  the  acquis  on
public procurement in particular as far as its correct application is concerned. In the field
of services, Hungary’s legislation is largely aligned. On data protection, however, legal
alignment  has 
the  appropriate  administrative  structures
strengthened.  Following  the  adoption  of  legislation  on  the  fight  against  money
laundering, Hungary was removed  from  the OECD  Financial  Action  Task  Force  list  of
non-co-operative countries in June 2002. Also in the sector of free movement of capital,
new  legislation  on  land  was  adopted.  However,  further  adaptations  are  still  required.
Administrative capacity to ensure the due supervision of financial services is adequate. In
the field of company law, Hungarian legislation is largely in line with the acquis. While
Hungary has  a  relatively good  enforcement  record,  border  control  measures  need  to  be
strengthened with respect to intellectual property rights and the fight against piracy  and
counterfeiting further intensified. In competition policy, further efforts are still necessary
to align State aid schemes, in particular the fiscal aid schemes. Both anti-trust and State
aid enforcement bodies continued to work satisfactorily.

to  be  completed  and 

In taxation, Hungary’s legislation is to a large extent aligned with the acquis. However,
transposition of the acquis, notably as regards VAT and excise duty, has to be completed.
Efforts  should  be  continued  to  ensure  that  the  computerised  tax  information  system  is
fully  operational  ahead  of  accession.  In  customs,  legislation  is  largely  aligned  with  the
acquis.  Further  efforts  were  made  as  regards  customs  warehousing,  temporary
importation,  valuation  and  non-commercial  consignments.  Hungary  continued  to
strengthen  the  administrative  and  operational  capacity  of  the  Hungarian  Customs  and
Finance  Guard  and  undertook  significant  steps  to  revitalise  the  development  of

52

interconnectivity  enabling 
interconnectivity with EC computerised systems in the customs area.

systems.  Efforts 

should  be  continued 

to  ensure

With regard to industrial policy and small and medium-sized enterprises, the Széchenyi
Plan will  now  concentrate  on  SME  development  and  EC  pre-accession  projects  and  be
integrated into the National Development Programme.

Good progress was again made in the area of environment, notably through the adoption
of  legislation  in  the  air,  water,  industrial  pollution  control  and  genetically  modified
organisms  sectors.  However,  the  National  Waste  Management  Plan  still  needs  to  be
adopted. Administrative capacity in  this sector  was improved, inter alia, by  changes  in
ministerial responsibilities,  but due attention should be given to this issue in the future.
In addition, environmental investments need to be further increased.

As  to  agriculture,  Hungary  has  a  steady  basis  upon  which  to  implement  the  acquis.
However, the preparation of key management instruments such as the paying agency and
the  Integrated  Administration  and  Control  System  (IACS)  has  been  delayed,  and  a
number of decisions on the distribution of responsibilities are awaited. As regards IACS,
serious efforts are needed to ensure that a fully functioning system will be soon in place.
Delays have also occurred in making the SAPARD Agency operational. Steady progress
could  be  noted  in  the  veterinary  and  phytosanitary  fields,  but  the  upgrading  of  Border
Inspection Posts and of establishments needs appropriate attention. Ongoing efforts need
to  be  substantially  stepped  up.  Legal  alignment  proceeded  in  the  area  of  transport,  in
particular in the road and rail sectors. Although some additional steps have been taken,
the  restructuring  of  the  rail  sector  should  be  completed  to  fully  implement  the  market
access acquis. In addition, institution-building efforts have to be further enhanced in this
sector.

Considerable progress was made in the energy sector with the adoption of the electricity
law, which  paved  the  way  for  the  liberalisation  of  the  Hungarian  market.  However,  no
similar progress was made  in  the  gas sector.  Administrative  capacity  is  at  an  advanced
level. Good  progress  could  be  noted  in  the  audio-visual  sector  through  the  adoption  of
the media law, but further efforts are needed to achieve full alignment.

Considerable  progress  was  made  in  the  area  of  social  policy  and  employment,  notably
with  the  adoption  of  further  implementing  legislation  to  the  Labour  Law.  As  to  social
dialogue, the new Government introduced confidence-building measures and decided to
set up a National Interest-Reconciliation Council to enhance real dialogue. The capacity
to implement the acquis on occupational safety and health, including the strengthening of
labour inspectorates, has been increased, but needs further attention.

In relation to regional policy, it  was decided in June 2002  to establish a  more  efficient
institutional framework for programming and implementation of structural and cohesion
funds.  However,  the  capacity  of  the  managing  and  paying  authorities  has  to  be
strengthened.  Further  progress  is  also  needed  as  regards  the  technical  preparation  of
projects  eligible  for  Community  funding.  While  progress  was  made  in  establishing
financial  management  and  control  systems,  the  programming  process  suffered  from
delays in the reporting period. Hungary’s preparations for the structural instruments have
to be substantially stepped up.

53

Considerable progress was made in the telecommunications sector, where the Hungarian
market was opened for competition with the adoption of the communications law. Efforts
need to focus on ensuring affordable universal service.

In  the  area  of  Justice  and  Home  Affairs,  significant  progress  was  achieved  through
further alignment with the acquis in the fields of visa policy, migration and asylum. The
fight  against  fraud,  corruption,  money  laundering  and  organised  crime  was  made  more
efficient  through  the  adoption  of  additional  legislation  and  reinforced  institutional
structures.  A revised Schengen Action Plan addresses the main issues of the acquis.

In  the  area  of  common  foreign  and  security  policy,  Hungary  still  needs  to  find  an
agreement with Slovakia and Romania on the implementation of the Law on Hungarian
minorities  living  in  neighbouring  countries.  Also,  the  law  needs  to  be  aligned  with  the
acquis upon accession.

As  to  financial  control,  enhanced  efforts  are  needed  in  the  sector  Public  Internal
Financial Control, both in terms of legal alignment and administrative capacity. In order
to tackle  the  weaknesses  identified,  Hungary  is  in  the  process  of  redefining  its  internal
audit  functions  and  structures  according  to  international  practice  and  to  redraft  the
respective legislation. Efforts need, however, to be considerably stepped up.

Hungary  has  continued  to  make  progress  in  building  up  its  administrative  capacity  to
apply  the  acquis  in  most  areas.  However,  further  efforts  will  have  to  be  made  in
particular  in  areas  such  as  agriculture,  transport,  regional  policy,  environment  and
financial  control.  Further  action  is  also  still  required  in  establishing  the  necessary
administrative capacity to ensure the sound, efficient and controllable management of EC
funds.

In  the  accession  negotiations,  26  chapters  have  been  provisionally  closed.  Hungary  is
generally  meeting  the  commitments  it  has  made  in  the  negotiations.  However,  delays
have  occurred  with  regard  to  the  transposition  of  parts  of  the  veterinary  acquis,
legislation on the size control of imported fish, the adoption of the gas law and several
pieces  of  environmental  legislation  (national  climate  change  strategy,  National  Waste
Management Plan, regional and local waste management plans, packaging and packaging
waste and waste oils). These issues need to be addressed.

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  the  level  of  alignment  and
administrative  capacity  that  Hungary  has  achieved  at  this  point  in  time,  and  its  track
record  in  implementing  the  commitments  it  has  made  in  the  negotiations,  the
Commission  considers  that  Hungary  will  be  able  to  assume  the  obligations  of
membership  in  accordance  with  the  envisaged  time  frame.  In  the  period  leading  up  to
accession, Hungary needs to continue its preparations in line with the commitments it has
made in the accession negotiations.

Latvia

In its 1997 Opinion, the Commission concluded that Latvia fulfilled the political criteria.
Since that time, the country has made considerable progress in further consolidating and
deepening the stability of its institutions guaranteeing democracy, the rule of law, human
rights and respect for and protection of minorities. This has been confirmed over the past
year. Latvia continues to fulfil the Copenhagen political criteria.

54

Regarding  public  administration  reform,  Latvia  has  continued  to  address  the  remaining
reform  issues  and  the  legislative  and  administrative  framework  will  be  fairly
comprehensive  once  the  Civil  Service  Law  and  Public  Administration  Law  are  fully
implemented.  It  is  now  important  to  speed  up  the  introduction  of  the  uniform  civil
service pay system and to ensure sufficient funding.

Overall, while most of the deficiencies of the judicial system have been identified, only
part of them have been addressed. Efforts in this field need to be multiplied in order to
ensure  a  thorough  systemic  reform,  based  on  political  support  for  modernising  the
judiciary and sufficient funding. The legislative framework still remains to be completed
and  the  increasing  backlog  of  court  cases  should  be  reduced.  The  issue  of  pre-trial
detention  requires  continued  attention.  Further  significant  efforts  to  strengthen  the  de
facto independence, efficiency and quality of the judiciary are needed. The upgrading of
the infrastructure of courts needs to be completed.

Latvia has made further progress in the fight against corruption, which remains a cause
for serious concern. The legislative framework has been improved, the institutional set-
up  has  been  strengthened  and  public  awareness  as  well  as  the  involvement  of  civil
society  are  rising.  However,  further  efforts  are  needed  in  order  to  complete  the
institutional  set-up  and  to  provide  the  new  Anti-Corruption  Bureau  with  the  necessary
means in order to achieve concrete results.

Latvia continues to respect human rights and freedoms.

Latvia  has  encouraged  the  further  integration  of  non-citizens  into  Latvian  society  by
removing language requirements in the election law, and increasing support to facilitate
the  naturalisation  process,  and  through  the  activities  of  the  Society  Integration
Foundation.  The  integration  process  needs  however  to  be  accelerated  and  sufficient
funding  made  available  to  encourage  naturalisation  and  language  training  in  particular.
Latvia  should  ensure  that  at  all  levels  the  implementation  of  the  language  law  respects
the  principles  of  justified  public  interest  and  proportionality,  Latvia’s  international
obligations and the Europe Agreement.

The  1997  Opinion  already  acknowledged  the  reform  efforts  undertaken  by  the  Latvian
authorities  to  transform  their  economy.  Since  the  Opinion,  and  against  a  challenging
international  economic  environment,  in  particular  the  Russian  crisis,  economic
performance  has  improved.  Macroeconomic  stability  has  been  achieved,  reforms  have
accelerated while the Latvian authorities’ commitment to the economic requirements of
EU accession has been sustained.

Hence, it is concluded that Latvia is a functioning market economy. The continuation of
its  current  reform  path  should  enable  Latvia  to  cope  with  competitive  pressure  and
market forces within the Union.

Improvements  can  be  made  to  the  functioning  of  the  labour  markets,  in  particular  by
active labour market measures in favour of disadvantaged groups, reinforcing public and
private infrastructure necessary for the mobility of the workforce and further reforms to
the educational system. Fiscal policy has to maintain a prudent approach, also in view of
the high current account deficit. In addition, improving the general business environment
and strengthening the administrative and judicial capacity would support a more broad-
based private sector development.

55

Since  the  Opinion,  Latvia  has  made  steady  progress  in  aligning  its  legislation  with  the
acquis, in particular during the last 2 years. As a consequence the majority of the primary
legislation has been put in place. At the same time, considerable efforts have been made
to  strengthen  its  administrative  capacity,  albeit  not  to  the  same  extent  as  legislative
alignment.

Over the past year, Latvia has further advanced in completing alignment and creating or
restructuring  related  specialised  bodies  in  the  vast  majority  of  areas.  It  has  as  well
intensified training in most areas with a view to complying with the requirements of the
acquis.

Overall, Latvia has achieved a high degree of alignment with the acquis in many areas,
and is well advanced towards reaching adequate administrative capacity to implement the
acquis  in  most  fields.  Further  efforts  remain  to  be  made,  in  particular  regarding  its
administrative capacity in most fields, as well as completion of legislation in a number of
sectors.  Detailed  plans  have  been  agreed,  in  particular  in  the  negotiations  and  in  the
Action Plan, to cover the remaining gaps.

The preparation for participation in the internal market is well advanced and Latvia has
achieved a good level of alignment in this area. As regards free movement of goods, the
legal  and  institutional  framework  is  generally  in  place.  There  has  been  sustained
development of the standardisation system, which needs  however  to  be reinforced.  The
reform of the market surveillance system and its infrastructure, including on food safety
and  in  the  field  of  public  procurement,  requires  further  strengthening.  The  process  of
bringing  Latvia’s  legislation  and  structures  in  relation  to  the  free  movement  of  persons
into  line  with  the  acquis  has  developed  satisfactorily,  although  further  efforts  are
required,  especially  on  mutual  recognition  of  professional  qualifications  as  well  as  on
strengthening institutional capacity. In the area of freedom to provide services, legislative
alignment  has  advanced,  notably  regarding  financial  services  and  banking,  but  further
work  remains  necessary  regarding  insurance  and  securities.  In  the  area  of  capital
movements, legislative alignment is well advanced, but the process needs to be completed
as regards capital movements and payments. The administrative capacity has been put in
place in this field, though further reinforcement remains necessary. On company law, an
important development was the  recent entry  into force  of  the Commercial Code, which
now needs to be implemented. While Latvia’s legislation is well advanced in the field of
intellectual  and  industrial  property  rights,  effective  action  to  fight  against  piracy  and
counterfeiting  remains  a  challenge.  In  the  area  of  competition,  Latvia’s  legislative
alignment,  administrative  capacity  and  enforcement  record  is  reasonably  advanced,  but
efforts  should  continue  to  develop  a  track  record  on  effective  implementation  of
competition legislation.

As  regards  customs,  legislation  is  largely  aligned,  but  organisational  restructuring  and
implementation needs to continue, as it does for taxation, where legislation needs to be
completed  on  direct  and  indirect  taxation.  Latvia  should  step  up  its  ongoing  legislative
work,  and  urgently  speed  up  its  preparations  for  electronic  interconnectivity.  For  both
areas,  Latvia  has  committed  itself  to  introducing  adequate  information  technology
systems  so  as  to  allow  the  exchange  of  electronic  data  with  the  Community  and  its
member states. Significant further work is required as a priority for these systems to be
operational by the date of accession.

56

Latvia  has  made  further  progress  in  the  field  of  agriculture  as  well  as  more  recently
through upgrading of administrative structures with a view to the implementation of the
Common Agricultural Policy. The establishment of the Food  and Veterinary  Service as
the joint body  responsible  for controls  of  the  entire  food  chain and the  accreditation  of
the  SAPARD  agency  constitute  a  significant  achievement.  However,  important
challenges lie ahead to complete alignment, and to reinforce the institutional capacity to
implement  the  Common  Agricultural  Policy  and  its  implementing  measures,  including
the  paying  agency,  the  Integrated  Administration  and  Control  System  (IACS)  and  the
Common Market Organisations (CMO). Particular efforts  remain  necessary  in  the  field
of veterinary and food safety controls as well as on upgrading of food establishments to
Community  Standards.  As  regards  fisheries,  Latvia’s  legislation  has  been  aligned  to  a
reasonable  extent,  although  there  are  gaps,  notably  as  regards  structural  actions  and
market  policy.  The  administrative  structures  have  been  partially  established.  Latvia's
efforts  now  need  to  focus  on  further  reinforcing  administrative  capacity  and  ensuring
sufficient funding.

While  Latvia’s  legislation  is  to  a  great  extent  in  line  with  the  acquis  in  the  field  of
transport, the relevant framework laws (with the exception of maritime transport) are in
place and the administrative capacity is being strengthened. Further efforts are necessary
to  complete  the  alignment  process  notably  in  the  rail  and  maritime  sectors  as  well  as
regarding  administrative  capacity  in  road,  rail  and  air  transport.  The  recent  increase  in
capacity  regarding  maritime  safety  and  Flag  State  performance  needs  to  be  further
enhanced.

A significant step forward was the adoption of the new Labour Code in the field of social
policy and employment. Legislative alignment in this field is well advanced, but needs to
be  completed.  Effective  implementation  and  enforcement  regarding  labour  law,  health
and safety and public health remains important. In the field of energy, a reasonable level
of alignment of legislative and institutional capacity has been achieved, but this process
needs to be completed, in particular regarding the internal energy market (electricity and
gas),  oil  stocks,  increased  energy  efficiency  and  reinforcement  of  the  administrative
capacity  of  the  various  bodies.  Latvia  has  achieved  considerable  progress  in  aligning
with  the  environmental  acquis.  This  process  needs  to  be  completed  and  the
administrative capacity needs further strengthening, especially regarding inspections, co-
operation and coordination at all levels. Investments should be enhanced.

With the adoption of the Law on Telecommunication and the establishment of the Public
Utility Commission as regulator, the legislation is largely aligned and the institutions are
in place. However, particular efforts are necessary with a view to a further liberalisation
of  the  telecommunications  market,  the  strengthening  of  the  independence  and
effectiveness  of  the  regulator  and  legislative  alignment  in  the  field  of  postal  services.
Particular progress was made recently in terms of institutional strengthening in the field
of culture  and  audio-visual  policy, where  Latvia’s legislation is largely in line  with the
acquis.

In the field of  justice  and home affairs, significant progress has been  made in terms  of
legal  alignment  as  well  as  continued  strengthening  its  institutional  capacity.  Latvia’s
efforts  need  now  to  focus  on  completion  of  legislative  alignment,  especially  on
migration,  money  laundering,  and  protection  of  the  financial  interests  of  the  European
Communities and judicial co-operation and implementation of the high quality Schengen

57

Action Plan. Further reinforcing of the law enforcement bodies is needed, with particular
attention to be paid to the fight against drugs and trafficking in general, smuggling, fraud,
corruption  and  organised  crime,  including  through  improved  cooperation  between  the
various bodies involved. Strengthening  of integrated  border  controls  and  completion  or
upgrading of structures also remains an important priority.

As  for  regional  policy  and  the  co-ordination  of  structural  instruments,  progress  was
made recently in preparing for the implementation of structural policies and designation
of  the  main  institutions  involved.  However,  efforts  will  need  to  focus  on  building  up
adequate  and  efficient  administrative  capacity  for  the  management  of  the  Structural
Funds and Cohesion Fund at all levels. Moreover, preparation of an up-to-standard draft
Single Programming Document should be speeded up and inter-ministerial co-ordination
and partnership needs to be ensured. Generally, all systems and procedures for effective
monitoring,  financial  management  and  control  should  be  reinforced  and  the  legal
framework  has  to  be  completed.  There  is  a  particular  need  for  progress  as  regards  the
technical  preparation  of  projects  eligible  for  Community  funding.  Latvia  has  started  to
take measures  to address the weaknesses identified, including  through  the  allocation  of
human resources. Ongoing efforts need to be continued and substantially stepped up. The
establishment of the Public Internal Financial Control system is relatively advanced, but
needs to be completed, including legislative alignment.

Preparing  its  administrative  capacity  for  membership  remains  one  of  the  greatest
challenges Latvia faces. With a view to the responsibilities Latvia will have to assume in
managing and enforcing the acquis upon accession, a substantial portion of the necessary
institutions  have  been  restructured  or  created.  While  this  process  is  well  advanced,
further  substantial  efforts  are  required  to  ensure  that  these  institutions  become  fully
operational.  This  is  particularly  important  in  areas  such  as  internal  market,  agriculture,
fisheries,  transport,  regional  policy,  environment,  justice  and  home  affairs  and  with
regard  to  the  implementation  of  information  technology  systems  for  taxation  and
customs. Finally, continued efforts are necessary to enhance Latvia’s capacity to ensure
sound, efficient and controllable management of EC funds.

In  the  accession  negotiations,  27  chapters  have  been  provisionally  closed.  Latvia  is
generally meeting the commitments it has made in the negotiations.

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  and  in  particular  over  the
recent past, the level of alignment and administrative capacity that Latvia has achieved at
this point in time, and its track record in implementing the commitments it has made in
negotiations, the Commission considers that Latvia will be able to assume the obligations
of membership in accordance with the envisaged timeframe. In the period leading up to
accession, Latvia needs to continue its preparations, in line with the commitments it has
made in the accession negotiations.

Lithuania

In  its  1997  Opinion,  the  Commission  concluded  that  Lithuania  fulfilled  the  political
criteria.  Since  that  time,  the  country  has  made  considerable  progress  in  further
consolidating and deepening the stability of its institutions guaranteeing democracy, the
rule  of  law,  human  rights  and  respect  for  and  protection  of  minorities.  This  has  been
confirmed over the past year. Lithuania continues to fulfil the political criteria.

58

Lithuania  has  made  considerable  progress  in  pursuing  public  administration  reform,
notably through the adoption of the new Civil Service Law and the related implementing
legislation. Lithuania needs to ensure that the reform is duly implemented in all services
and that adequate financing is secured as a matter of priority.

Substantial  progress  has  been  made  in  reforming  the  judicial  system,  in  particular,
notably  through  the  adoption  of  the  Law  on  Courts.  Due  attention  should  be  given  to
ensuring  proper  implementation  of  the  new  legislation.  Further  efforts  are  needed  to
improve  the  professional  capacity  of  judges  and  prosecutors.  This  is  fundamental  to
guaranteeing  the  quality  of  legal  proceedings  and  respect  for  procedural  rights  and
professional  ethics.  Further  progress  is  required  also  in  accelerating  court  proceedings
and ensuring the enforcement of judgements.

Considerable progress has been made as regards the fight against corruption, mainly with
the  adoption  of  the  National  Anti-Corruption  Programme  and  the  Law  on  Corruption
Prevention.  Sustained  efforts  should  be  made  by  law  enforcement  bodies  and  line
ministries  to  ensure  the  proper  and  effective  implementation  of  measures  against
administrative corruption, which remains a cause for concern.

Lithuania continues to respect human rights and freedoms.

The 1997 Opinion already acknowledged the reform efforts undertaken by the Lithuanian
authorities  to  transform  their  economy.  Since  the  Opinion,  and  against  a  challenging
international  economic  environment,  in  particular  the  Russian  crisis,  economic
performance  has  improved.  Macroeconomic  stability  has  been  achieved,  reforms  have
accelerated while the Lithuanian authorities’ commitment to the economic requirements
of EU accession has been sustained.

Hence, it is concluded that Lithuania is a functioning market economy. The continuation
of its current reform path should enable Lithuania to cope with competitive pressure and
market forces within the Union.

Improvements can be made to the labour market by addressing the high unemployment.
The management of public finances should be improved, in particular by addressing, at
municipal level, the accumulation of expenditure arrears. Furthermore, the completion of
the pension reform, by the planned introduction of a funded compulsory pension scheme,
should  make  public  finances  more  sustainable  in  the  long  term  and  support  the
development  of  financial  markets.  In  addition,  strengthening  the  administrative  and
judicial  capacity,  and  simplifying  procedures,  in  areas  relevant  for  the  business  sector,
including  in  bankruptcy  and  enterprise  restructuring,  would  enhance  market  entry  and
exit of companies.

Since the Opinion, Lithuania has made significant progress in terms of both transposition
of the acquis and administrative capacity. While the initial efforts were unsystematic, in
recent  years  the  pace  and  scope  of  transposition  has  considerably  improved  and
increasing efforts have been devoted to the challenging task of building up the necessary
administrative capacity.

Over  the  past  year,  Lithuania  has  further  advanced  in  its  accession  preparations,  in
particular  in  the  areas  of  free  movement  of  goods,  free  movement  of  persons,
competition, energy, regional policy and justice and home affairs.  Limited progress has

59

been made in the areas of financial control and fisheries. Although progress was made in
the areas of agriculture and environment, continuous efforts are still needed.

Overall, Lithuania has achieved a good degree of alignment with the acquis across most
fields, and in some areas the level of alignment is now high. Lithuania has set up most of
the  administrative  structures  which  are  necessary  to  implement  the  acquis;  however,
further sustained efforts to reinforce the administrative capacity are required, notably as
regards  training  and  retaining  qualified  staff  and  ensuring  effective  inter-agency  co-
ordination. Detailed plans have been agreed, in particular in the negotiations and in the
Action Plan, to cover the remaining gaps.

Lithuania has continued to make progress in the area of the internal market. In the field
of  free  movement  of  goods  the  legislation  is  aligned  to  a  large  extent.  The  main
administrative structures are in place but these are not  yet fully operational.  As regards
market  surveillance,  efforts  are  needed  to  further  develop  the  infrastructure,  notably  in
the areas of testing and certification. In the field of food safety, progress has been made
in  terms  of  alignment  and  administrative  capacity,  but  further  efforts  are  required  as
regards  the  abolition  of  pre-market  authorisation  of  foodstuffs.  Legislation  on  public
procurement  has  been  further  aligned  but  still  needs  some  fine-tuning,  and  the  public
procurement  office  needs  to  be  further  strengthened.  As  regards  free  movement  of
persons,  Lithuania  has  reached  a  good  level  of  alignment,  while  the  administrative
structures in place are not yet operating satisfactorily. In the area of mutual recognition of
qualifications, major efforts remain to be made in the area of medical professions. In the
area  of  freedom  to  provide  services,  legislation  is  aligned  to  a  reasonable  extent,  but
administrative structures do not yet operate in a fully satisfactory manner. Good progress
has  been  made  in  the  fields  of  banking  and  securities.  Legislation  concerning  the
insurance sector and data protection should be further aligned, notably to  guarantee  the
independence  of  the  supervisory  bodies.  Co-operation  between  supervisory  institutions
should be strengthened. Further progress has taken place in the area of free movement of
capital,  where  Lithuania  had  already  achieved  a  high  degree  of  liberalisation.  Further
sustained  efforts  are  needed  as  regards  payment  systems  and  the  fight  against  money
laundering.

As  regards  company  law,  Lithuania  has  reached  a  reasonable  level  of  alignment  and
administrative structures are in place but not yet fully operational. Further alignment has
been achieved concerning patent and intellectual property rights. The fight against piracy
and counterfeiting needs to be significantly intensified, as does co-operation between the
authorities  involved  in  the  enforcement  of  intellectual  property  rights.  In  the  area  of
competition  policy  legislation  is  aligned  to  a  broad  extent  and  administrative  structures
are in place and are operational. Lithuania should continue to develop a track record of
proper  application  and  enforcement  of  its  legislation.  The  Competition  Council  should
focus  on  a  more  deterrent  sanctions  policy  in  the  field  of  anti-trust  and  pay  close
attention to rescue and restructuring aid.

As regards taxation, Lithuania has reached a good level of alignment and administrative
capacities  are  largely  in  place  but  need  further  strengthening.  Lithuania  has  made
significant progress in aligning its tax legislation although further alignment is required
in the areas of VAT and excise duties. The tax administration reform has also made some
progress.  In  the  area  of  customs  union,  Lithuania  has  achieved  a  good  degree  of
alignment  and  administrative  capacities  are  partially  in  place.  However,  further  efforts

60

remain to be made in strengthening inter-agency  co-operation and in enforcing existing
provisions  on  fraud,  intellectual  property  rights  and  anti-corruption.  For  both  areas,
particular efforts are necessary to ensure adequate information technology systems so as
to allow the exchange of data with the EC and its Member States.

As  regards  agriculture,  transposition  of  legislation  is  proceeding  well.  Administrative
structures  are  partly  in  place  but  further  improvements  are  needed.  Lithuania  should
focus  on  border  inspection  posts,  the  Integrated  Administration  and  Control  System,
administrative  capacity  to  manage  the  Common  Agriculture  Policy,  paying  agency,
upgrading of establishments, and animal waste treatment.

As regards  fisheries, legislation  has been  aligned to a  reasonable  extent,  although  there
are  gaps, notably  as  regards  market  and  structural  policy.  The  administrative  structures
have  been  partially  established.  Further  efforts  are  needed  to  develop  market  and
structural policy and reinforce the control and inspection functions. The establishment of
the fishing vessel register needs to be finalised.

largely 

Legislation  in  the  transport  sector  is  now  to  a  great  extent  in  line  with  the  acquis,
although further efforts are needed as regards rail transport. The relevant framework laws
are  in  place  and  only  a  limited  amount  of  implementing  legislation  remains  to  be
implemented.  Administrative  structures  are 
in  place,  but  need  further
strengthening.  In  the  energy  sector,  Lithuania  has  achieved  a  high  level  of  legislative
alignment,  while  administrative  structures  are  largely  in  place  but  need  further
strengthening. Progress regarding the internal energy market has been good. As regards
nuclear safety, Lithuania took the very important step of formally confirming that Unit 1
of the Ignalina NPP will be closed before 2005 and formally committing to close Unit 2
of  this  plant  by  2009.  The  EU  expressed  its  readiness,  on  the  basis  of  Community
solidarity,  to  continue  to  provide  adequate  additional  Community  assistance  to  the
decommissioning effort after Lithuania’s accession. Lithuania's efforts now need to focus
on  ensuring  full  and  timely  implementation  of  legislation;  on  nuclear  safety,  including
the  timely  installation  of  a  diverse  second  shutdown  system  at  Unit  2  of  the  Ignalina
NPP,  and  the  preparation  of  the  closure  and  decommissioning  of  this  NPP;  and  on
strengthening  the  administrative  capacity,  in  particular  the  energy  regulator  and  the
nuclear safety authority.

In  the  field  of  social  policy,  legislation  has  been  transposed  to  a  large  extent  and
administrative structures are largely in place but need further strengthening. Progress has
taken place with the adoption of the Labour Code and of the new provisions on collective
agreements.  Lithuania  needs  to  complete  transposition  and  effectively  implement  the
acquis in the areas of public health and health and safety at work, including through the
strengthening of relevant institutions; develop social dialogue and social protection; and
further  strengthen  the  administrative  structures  to  manage  support  from  the  European
Social  Fund.  In  the  field  of  environment,  transposition  has  reached  a  relatively  good
level,  but  implementation  is  not  yet  fully  satisfactory.  Lithuania  needs  to  focus  on
finalising  the  transposition  and  strengthening  the  overall  administrative  capacity.  Close
attention is required to implementation of the acquis with regard to waste management,
water quality, industrial pollution control, chemicals and GMOs and nature protection.

In the area of telecommunications, Lithuania has reached a good level of alignment but
implementing legislation remains to be transposed. Administrative capacities are in place
but  not  yet  fully  operational.  The  independence  of  the  Communication  Regulatory

61

Authority  has  been  substantially  strengthened.  Further  efforts  remain  to  be  made  on
completing  legislative  alignment  and  preparing  for  full  liberalisation  and  strengthening
the administrative capacity of the regulator.

In  the  field  of  justice  and  home  affairs,  Lithuania  has  achieved  significant  legislative
alignment. Administrative structures are mainly in place, although further efforts are still
necessary. Lithuania has  updated and has continued  to implement the Schengen  Action
Plan.  Lithuania  needs  to  focus  on  finalising  alignment  (notably  on  visas,  Schengen,
asylum,  money  laundering  and  protection  of  the  financial  interests  of  the  European
Communities) and on further reinforcing the law enforcement  agencies,  in  particular  as
regards  data  protection,  the  protection  of  the  external  border  and  the  fight  against
corruption.

In  the  field  of  regional  policy  and  co-ordination  of  structural  instruments,  the
institutional  framework  is  largely  in  place,  but  the  administrative  capacity  and  the
technical preparation of projects have not yet reached the level required. Administrative
capacity  has  been  strengthened,  inter-ministerial  co-ordination  improved  and  good
progress has been made as regards programming and partnership. Lithuania should focus
efforts  on  completing  the  programming  documents,  defining  the  final  implementation
structures  and  further  reinforcing  the  administrative  capacity,  in  particular  as  regards
technical  preparation  of  projects  eligible  for  Community  funding,  monitoring,  financial
management and control.

In the area of financial control, while the acquis has been transposed, further efforts are
required  to  consolidate  the  fragmented  legal  provisions  relating  to  public  internal
financial  control  into  a  single  comprehensive  law.  The  administrative  structures  are
partially  in  place  but  not  yet  fully  operational.  They  need  to  be  strengthened
considerably,  in  order  to  implement  effectively  the  consolidated  legislation.  Ongoing
work  on  the  audit  manuals  should  be  finalised.  Full  implementation  of  the  measures
foreseen  in  the  Action  Plan  with  regard  to  the  implementation  of  a  methodology  for
financial management and control, for internal audit throughout the Government, and for
training  of  human  resources  would  go  a  long  way  to  ensure  that  the  current  gaps  in
administrative  capacity  and  implementation  of  the  acquis  are  filled.  In  the  area  of
financial  and  budgetary  provisions,  the  legal  framework  is  largely  in  place  but  the
administrative  capacity  needs  further  improvement,  in  particular  as  regards  the
calculation, control and provision of own resources by accession.

As  regards  administrative  capacity,  Lithuania  has  achieved  a  sufficient,  though  still
rather fragile, capacity to ensure effective implementation and enforcement of the acquis,
notably  in  the  area  of  internal  market  and  the  various  Community  policies.  Lithuania
needs  to  ensure  the  administrative  structures  are  fully  operational,  in  particular  with  a
view  to  guaranteeing  the  uniform  and  predictable  implementation  of  the  acquis.
Particularly  close  attention  is  required  regarding  the  structures  which  are  necessary  to
implement  that  part  of  the  acquis  which  will  be  applicable  only  upon  accession,  in
particular as regards sound and efficient management of EC funds.

In the accession negotiations, 28 chapters have been provisionally closed with Lithuania.
Lithuania  is  generally  meeting  the  commitments  it  has  made  in  the  negotiations.
However, delays have occurred with regard to fisheries (completion of the fishing vessels
register),  statistics  (conduct  of  the  agricultural  census)  and  environment  (legislation  on
packaging and on biocides). These issues need to be addressed.

62

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  the  level  of  alignment  and
administrative capacity which Lithuania has achieved at this stage, and Lithuania’s track
record  in  implementing  the  commitments  it  has  taken  in  the  negotiations,  the
Commission  considers  that  Lithuania  will  be  able  to  assume  the  obligations  of
membership  in  accordance  with  the  envisaged  timeframe.  In  the  period  leading  up  to
accession, Lithuania needs to continue its preparations, in line with the commitments it
has made in the accession negotiations.

Malta

The  Commission  has  repeatedly  concluded  that  Malta  fulfils  the  political  criteria.  This
was the conclusion  of previous Regular Reports,  and  has  been  confirmed  over  the  past
year. Malta continues to fulfil the Copenhagen political criteria.

Malta has taken further measures to improve the quality of the civil service as well as of
the judicial system.

Malta continues to respect human rights and freedoms.  It has  made further  progress by
improving  its  legal  framework  in  the  area  of  asylum,  the  fight  against  racism  and  the
fight against trafficking in human beings.

Malta is a  functioning  market economy  and  it  should  be  able  to  cope  with  competitive
pressure and market forces within the Union.

The  1999  update  of  the  Opinion  already  acknowledged  the  economic  reform  efforts
undertaken by the Maltese authorities to prepare for EU accession. Since the Opinion, the
Maltese authorities’ commitment to the economic requirements of EU accession has been
sustained.

Further  improvements  can  be  made  to  macroeconomic  management  by  reducing  the
general  government  deficit  and  reforming  public  expenditure  to  ensure  medium-term
fiscal  sustainability.  More  progress  can  be  made  on  restructuring  large  loss-making
public enterprises and public utilities. Attention should be paid to the supervision of non-
performing loans in the banking sector.

Since  the  update  of  the  Opinion  in  1999,  Malta  has  made  considerable  progress  in
aligning its legislation with the acquis and it has significantly improved its administrative
capacity, particularly as regards free movement of goods, statistics, telecommunication,
regional policy, justice and home affairs, and financial control. There has been progress,
although uneven, in all other areas of the acquis.

Over  the  past  year,  Malta  has  made  considerable  legislative  progress  in  the  areas  of
freedom  to  provide  services,  environment  and  customs  and  further  progress  in  other
areas,  particularly  regarding  free  movement  of  goods,  free  movement  of  persons  and
statistics. It has continued to improve its administrative capacity, notably in the areas of
standardisation  and  market  surveillance,  statistics,  regional  policy,  justice  and  home
affairs, customs and financial control. However, progress has been limited in the areas of
agriculture, fisheries, transport and social policy.

Overall  Malta  has  achieved  a  good  degree  of  alignment  with  the  acquis  in  many  areas
and is well advanced towards adequate administrative capacity to implement the acquis

63

in  many  fields,  although  further  efforts  remain  to  be  made,  in  particular  as  regards
agriculture  and  environment.  Detailed  plans  have  been  agreed,  in  particular  in  the
negotiations and the Action Plans, to cover the remaining gaps.

In  the  field  of  the  internal  market,  there  has  been  considerable  legislative  progress  on
free movement of goods, and Malta has reached a high level of alignment with the acquis
in  this  area.  Malta  must  finalise  the  alignment  of  its  public  procurement  legislation  as
regards  the  remedies  system  and  bodies  governed  by  public  law.  Its  administrative
capacity is broadly adequate in this area. As regards free movement of persons, there has
been  progress  in  adopting  a  legislative  framework  for  the  mutual  recognition  of
professional  qualifications,  but  alignment  is  still  incomplete  in  the  fields  of  citizens’
rights and free movement of workers. Malta has continued to progress on free movement
of  services  and  capital,  particularly  as  regards  financial  services  and  data  protection,
however  further  legislative  alignment  is  needed  in  particular  as  regards  the  right  of
establishment  and  freedom  to  provide  services.  In  the  area  of  company  law,  there  has
been little progress over the past year and Malta still needs to transpose some directives
on  intellectual  and  industrial  property  rights  in  order  to  align  fully  with  the  acquis.  As
regards competition, Malta has made further progress in the enforcement of the State aid
rules, but it  still needs to adopt an  appropriate  framework  for  public  undertakings.  The
compatibility of the aid granted to the shipyards needs to be ensured. The administrative
capacity  of  the  Competition  Board  and  of  the  State  Aid  Monitoring  Authority  should
reach a satisfactory level, provided efforts to strengthen them are continued.

In the field of taxation, Malta has achieved a high level of alignment  as  regards  excise
tax, but further alignment is needed as concerns VAT (scope of exempt transactions) and
the code of conduct on direct taxation. The administrative capacity is on track to reach an
adequate  level  as  regards  VAT  and  direct  tax,  but  urgent  efforts  are  needed  as  regards
excise  tax.  In  the  area  of  customs,  following  the  adoption  of  a  new  customs  code,  the
Maltese customs legislation is now largely in line with the acquis, and the administrative
capacity is on track to fulfil the requirements in this area.

As regards transport, there has been little progress over the past year, and that mainly in
the  field  of  maritime  transport.  Malta  still  has  to  transpose  considerable  parts  of  the
acquis. Following the implementation  of  the Maritime  Action  Plan  by  Malta,  there  has
been an improvement regarding maritime safety but the administrative capacity needs to
be further strengthened and efforts on maritime safety need to be pursued to achieve the
objective  of  being  removed  from  the  Paris  Memorandum  of  Understanding  black  list.
The  Maritime  Action  Plan  has  introduced  some  improvements  in  this  area.  Ongoing
efforts  must  be  pursued.  In  the  field  of  energy,  Malta  progressed  in  transposing  the
acquis,  in  particular  as  regards  energy  efficiency.  Recent  progress,  in  particular  on  the
internal energy market, needs to be sustained to align Maltese legislation in this area to
the acquis. Administrative capacity needs to be further strengthened.

In the area of agriculture, there has been some legislative progress, but little progress as
regards  the  administrative  capacity.  Malta  has  still  to  adopt  considerable  parts  of  the
agriculture  acquis.  The  capacity  to  enforce  the  acquis  remains  a  source  of  particular
concern in the area of agriculture and it should be strengthened as a matter of priority. In
particular  Malta  must  improve  its  administrative  capacity  to  implement  the  Common
Agricultural Policy and the EC rural development schemes and has to upgrade inspection
arrangements in the veterinary and phytosanitary fields, as well as the border inspection

64

arrangements. Steps have been taken for the setting up of the  Integrated Administrative
Control  System  and  the  Paying  Agency,  and  funds  have  been  committed  to  further
strengthen  the  administrative  capacity  regarding  rural  development.  However,  a
comprehensive plan to strengthen the administrative capacity in this area is still lacking.
Ongoing efforts to reinforce administrative  capacity  and  to  continue  the  dismantling  of
levies should be vigorously pursued. As regards fisheries, Malta also needs to finalise the
alignment  of  its  legislation  with  the  acquis  and  to  implement  fully  its  plans  for
substantial  strengthening  of  its  administrative  capacity.  Current  plans  to  strengthen  the
fisheries  department  are  steps  in  the  right  direction.  Substantial  further  efforts  are  still
required in this regard.

Malta  has  made  some  progress  in  the  area  of  social  policy,  mainly  as  regards
occupational health and safety. The alignment with the acquis is insufficient in the fields
of  labour  law  and  equal  opportunities.  Malta  is  on  track  to  achieve  adequate
implementation capacity for occupational health and safety, provided the current efforts
are pursued, but a strengthening of the capacity regarding public health is needed. There
has been continued progress in the area of regional policy, where the overall framework
is in place to implement the structural and cohesion funds, however Malta still needs to
finalise its Single Programming Document. As regards the administrative capacity, some
bodies  involved  in  implementation  need  to  be  further  strengthened.  As  regards  the
environment, there has been considerable legislative progress but Malta needs to stick to
its tight schedule of alignment with the acquis. It should also significantly strengthen its
administrative  capacity  in  the  field  of  environment,  which  remains  very  weak.  It  is
crucial,  to  that  purpose,  that  Malta  implements  its  plan  to  increase  the  staffing  of  the
competent bodies in this area considerably (mainly the Malta Environment and Planning
Authority) and to reinforce its permitting and inspection practices. These plans need to be
adhered to strictly.

Malta  has  reached  a  good  level  of  alignment  with  the  acquis  in  the  field  of
telecommunications, although further alignment is still needed, and in culture and audio-
visual policy, and its administrative capacity in these areas is broadly adequate.

In the field of justice and home affairs, there has been progress, in particular as regards
the acquis on asylum, data protection, visa policy and money laundering, as well as with
the adoption of a Schengen Action Plan and strengthening of the administrative capacity
in the areas of border control and asylum. Malta has achieved a good level of alignment
with  the  acquis  but  further  progress  is  needed  as  regards  immigration  and  judicial  co-
operation. The administrative capacity in this area is generally adequate, but the current
plans  to  strengthen  it  in  the  fields  of  data  protection,  money  laundering,  asylum  and
border control need to be fully implemented.

In the field of financial control, the regulatory framework and the institutional capacity
are  broadly  satisfactory  and  efforts  need  only  focus  on  the  finalisation  of  the
arrangements regarding fight against fraud and protection of EC financial interests. In the
statistics area, the administrative capacity is broadly adequate and Malta well on track to
fully align its methodologies with EC standards, provided the current efforts continue.

Overall, provided Malta implements its plans to strengthen its administrative capacity as
mentioned above, it should be able to ensure a reliable enforcement of the acquis and to
participate  adequately  in  the  Union’s  policy-making  processes.  Malta’s  capacity  to
ensure sound, efficient and controllable management of EC funds is generally good and

65

should be  fully  adequate once it has  finalised its plans  regarding  the  body  in charge of
fight against fraud and protection of EC financial interests.

In  the  accession  negotiations,  25  chapters  have  been  provisionally  closed.  Malta  is
generally  meeting  the  commitments  it  has  made  in  the  negotiations.  However  delays
have  occurred  in  the  areas  of  free  movement  of  persons  (citizens’  rights  and  free
movement  of  workers),  fisheries  (vessel  monitoring,  market  policy),  agriculture
(establishment of the Paying Agency), transport (road and maritime transport) and social
policy (labour law and gender equality). These issues need to be addressed.

Bearing in mind the progress achieved since the 1999 update of the Opinion, the level of
alignment and administrative capacity that Malta has achieved at this point in time, and
its  track  record  in  implementing  the  commitments  it  has  made  in  the  negotiations,  the
Commission considers that Malta will be able to assume the obligations of membership
in accordance with the envisaged timeframe. In the period leading up to accession, Malta
needs  to  continue  its  preparations,  in  line  with  the  commitments  it  has  made  in  the
accession negotiations.

Poland

In its 1997 Opinion, the Commission concluded that Poland fulfilled the political criteria.
Since that time, the country has made considerable progress in further consolidating and
deepening the stability of its institutions guaranteeing democracy, the rule of law, human
rights and respect for and protection of minorities.  This has been confirmed over the past
year. Poland continues to fulfil the Copenhagen political criteria.

The  reinforcement  of  administrative  capacity  across  the  civil  service  is  an  important
issue, recent developments have been mixed and further efforts are needed.  In the area of
public administration progress in the implementation of the 1999 Civil Service Law has
been  limited  by  the  temporary  suspension  of  the  system  of  recruitment  by  open
competition.  It is essential that the pace of implementation, most notably with respect to
recruitment, is accelerated so as to ensure that an independent, well trained and motivated
civil service is in place by the time of accession.

Poland has made further progress in reforming the judiciary and in creating conditions to
allow  for  a  reduction  in  the  most  pressing  bottlenecks.    Efforts  should  now  focus  on
ensuring that the progress to date delivers the desired result in terms of improved efficacy
of the judiciary.  Issues relating to judicial immunity are being addressed and should be
followed up. Similar priority needs to be given to the training of judges, in particular in
EC Law.  While there have been ongoing efforts a sustainable structured programme of
training needs to be put in place.

Corruption  remains  a  cause  for  serious  concern,  a  comprehensive  strategy  has  been
adopted  to  combat  the  problem.  Substantial  efforts  are  required  to  ensure  concrete
results,  which  to  date  have  been  limited,  and  in  particular  to  develop  a  political,
administrative and business culture which can resist corruption.

Poland continues to respect human rights and freedoms.

The  1997  Opinion  already  acknowledged  the  comprehensive  reform  efforts  undertaken
by  the  Polish  authorities  to  transform  their  economy.  Since  the  Opinion,  and  against  a

66

challenging  international  economic  environment,  economic  performance  has  improved.
Macroeconomic  stability  has  been  achieved,  reforms  have  continued  while  the  Polish
authorities’  commitment  to  the  economic  requirements  of  EU  accession  has  been
sustained.

Hence, it is concluded that Poland is a functioning market economy. The continuation of
its  current  reform  path  should  enable  Poland  to  cope  with  competitive  pressure  and
market forces within the Union.

Improvements  can  be  made  to  fiscal  policy  through  the  implementation  of  the
government’s  new  expenditure  norm  at  all  levels  of  government  as  part  of  a  more
broadly  based  structural  reform  of  public  finances  to  support  fiscal  consolidation.
Furthermore,  restructuring  and  privatisation,  mainly  in  heavy  industry,  the  financial
sector,  energy  distribution  and  agriculture,  needs  to  be  completed.  In  addition,
bankruptcy procedures and the land registry call for further improvement. Finally, central
bank  independence  must  be  preserved  to  ensure  macroeconomic  stability  and  investor
confidence.

Since  the  Opinion,  Poland's  progress  has  been  characterised  by  a  slow  start  and  a
subsequent acceleration in respect of the adoption of legislation.  As a consequence the
vast  majority  of  primary    acquis  is  now  in  place,  although    in  some  sectors  there  are
considerable  gaps  in  the  necessary  implementing  legislation,  for  example,  in  the
veterinary, environment and food safety areas.  There has been a knock on effect in terms
of administrative capacity which has progressed since the Opinion, but  not  to  the  same
extent as legislative alignment.

Over  the  past  year,  Poland  has  further  advanced  its  alignment  of  primary  legislation,
notably  in  the  areas  of  transport  and  free  movement  of  persons.    The  performance  in
adopting  implementing  legislation  has  varied  considerably  between  sectors.    The
development  of  administrative  capacity  has  mirrored  the  progress  of  implementing
legislation.

Overall, Poland has achieved a high degree of alignment with the acquis in many areas,
and is  well advanced  with  reaching adequate  administrative  capacity  to implement the
acquis in a number of fields, although further efforts remain to be made across the board
with  respect  to  administrative  capacity,  and  in  a  number  of  sectors  in  particular  with
regard to alignment with the acquis. Detailed plans have been agreed, in particular in the
negotiations and in the Action Plan, to cover the remaining gaps.

With regard to the internal  market,  in the area of  free  movement  of  goods  considerable
progress has been made over the last two to three years, notably by putting in place the
framework  legislation  needed  and  by  developing  further  the  institutional  infrastructure
needed for its implementation.  To date a high level of alignment has been achieved in
relation to the primary legislation and administrative  capacity has reached  a  reasonable
level.    Legislative  developments  in  the  area  of  market  surveillance  need  to  be  built  on
through  the  development  of  the  necessary  administrative  capacity.  The  area  of  food
safety has not seen the progress in the adoption of implementing legislation identified as
necessary in the last Regular Report and administrative capacity remains weak.  Further
work  is  also  required  to  ensure  the  structures  are  in  place  to  implement  the  public
procurement acquis.  In overall terms, a high level of alignment with the acquis has been
achieved and a strong administrative capacity developed in the area of free movement of

67

persons.    In  the  field  of  free  movement  of  services,  there  is  generally  a  good  level  of
alignment  and  sound  administrative  capacity.    However,  further  efforts  are  required  in
aligning  existing  legislation  concerning  banking,  insurance  and  securities.  A  course  of
action  to  resolve  these  difficulties  has  been  agreed.    Following  the  peer  gropu  review,
Poland has produced an action plan but several problems such as discriminatory language
requirements,  problems  with  administrative  structures  and  ensuring  independent
supervisory structures remain. Poland’s track record in the free movement of capital has
been  one  of  steady  progress,  both  in  aligning  its  legislation  and  in  developing  the
necessary administrative structures. Poland has to a large extent achieved alignment with
the  acquis  in  the  area  of  company  law,  and  gradual  progress  has  been  made  with
strengthening  administrative  capacity  which  has  achieved  a  reasonable  level,  with  the
exception  of  intellectual  property  enforcement.    Building  up  administrative  capacity  is
essential  if  effective  implementation  is  to  be  ensured.  In  the  field  of  competition,
legislative alignment is largely complete, although there remain some gaps on State aid,
and efforts have focused on establishing a credible record of enforcement in the area of
State  aid.    These  efforts  will  need  to  be  continued  and  intensified,  with  a  specific  and
urgent  focus  on  the  restructuring  of  the  steel  sector  where  aid  can  only  be  given  if  an
acceptable  overall  restructuring  programme  including  necessary  measures  for  reaching
viability and necessary cuts in production capacity is reached.

In  the  telecommunications  area,  Poland  has  made  steady  progress  since  the  Opinion  in
aligning  with  the  acquis  and  liberalising  its  market.    Implementation  of  the  existing
legislation has improved over the last year; further legislative alignment is awaited, as is
the  evaluation  of  the  economic  implications  of  full  implementation  of  the  universal
service acquis.

With regard to EMU, alignment is almost complete, however the legislative amendment
necessary  to  ensure  the  degree  of  independence  of  the  National  Bank  as  set  out  in  the
acquis remains to be undertaken.

There  has  been  further  progress  in  aligning  rates  of  indirect  taxation.  In  overall  terms,
Poland  has  achieved  a  reasonable  level  of  alignment  with  the  acquis  and  moderate
development  of  the  necessary  implementing  capacity.  Significant  further  work  is
required to ensure that the systems are in place to allow for the exchange of computerised
data  between  the  EC  and  Poland  by  the  date  of  accession.  In  the  customs  area  the
situation  is  similar,  with  a  respectable  record  on  alignment  but  a  weaker  one  on
administrative  capacity.  The  establishment  of  the  necessary  information  technology
infrastructure will require considerable further effort if  the intended deadlines  are to be
respected.  This will require an approach which gives urgent attention to accelerating the
work on computerisation and interconnectivity and overcoming the disruption caused by
the  reorganisation  of  the  central  customs  service.  Steps  have  been  taken  to  secure  the
necessary  funding  but  this  matter  will  need  to  be  kept  under  close  scrutiny  and  the
Commission  intends  to  report  on  progress  at  the  end  of  the  first  half  of  2003.  Efforts
should also focus on completing the alignment of Poland's customs legislation on that of
the Community, in particular by adopting the amendment to the customs code which is
currently under preparation.

Further  transformation  is  needed,  in  terms  of  policy,  legislation  and  structures  in  the
agriculture  sector,  where  the  overall  situation  in  terms  of  legislative  alignment  and  in
particular  administrative  capacity  has  been  weak.    There  has  been  some  progress  with

68

regard to primary legislation.  In the veterinary sector the good work of the previous year
has  not  been  built  on  and  requires  urgent  attention.  There  have  been  some  efforts  to
address  the  considerable  weaknesses  in  administrative  capacity.    However  these  will
need  to  be  intensified,  in  particular  at  the  regional  level,  if  they  are  to  have  any
significant  impact.  Considerable  further  efforts  are  needed  in  upgrading  establishments
and  ensuring  that  adequate  inspection  arrangements  at  the  borders  are  in  place.  The
Integrated Administration and Control System (IACS) in  particular  must be in place, if
Poland  is  to  be  in  a  position  to  effectively  administer  and  control  the  CAP  support
schemes.  This has been acknowledged  through the efforts  which  the Polish  authorities
are undertaking. These need to be substantially stepped up.

In  the  fisheries  sector,  there  has  been  a  moderate  degree  of  alignment.    Some  further
legislative  progress  has  occurred  and  there  have  been  efforts  to  reinforce  the
administrative  capacity  at  the  central  level,  although  the  capacity  at  the  regional  level
continues to be weak.  Greater effort needs to be put into meeting the objectives set out in
the Action Plan.

In  the  social  field,  the  degree  of  alignment  varies  considerably  between  sectors.  The
capacity  to  implement  the  acquis  has  received  some  attention  but  this  needs  to  be
intensified.  Additional efforts continue to be required, in particular to further align and
implement the EC labour law and the acquis on occupational health and safety. Adoption
of the pending legislation would do much  to further  alignment in this area. There have
been  further  developments  with  regard  to  legislation  in  the  area  of  regional  policy.
Specific  attention  is  required  to  carry  through  in  a  timely  manner  the  implementation
plans  and  further  reinforce  the  administrative  capacity  including  strengthening  inter-
ministerial co-operation and partnership.  To this end the objectives set out in the Action
Plan should be realised as soon as possible.  Particular attention needs to be paid to the
technical  preparation  of  projects  eligible 
funding.  Existing
implementation and administrative capacity plans, including the increase of personnel in
the managing and paying authorities, should be implemented with due vigour.

for  Community 

In  the  area  of  environment,  further  progress  has  been  made  in  terms  of  primary
legislation, where there is a high level of alignment. The adoption and implementation of
the  necessary  implementing  legislation,  and  the  accompanying  administrative  capacity,
especially at the regional level, is  required;  given the limited strength of administrative
capacity the  implementation  of  the  objectives  set  out  in  the  Action  Plan  should  be  one
focus  of  attention.  Ensuring  adequate  investment,  as  set  out  in  the  environmental
investment plans, is also essential.

The  energy  sector  has  a  good  level  of  alignment  and  the  administrative  capacity  is
adequate.    Work  to  further  align  the  existing  legislation  with  the  acquis  is  required,  in
particular on the internal energy market (notably gas). In the transport sector there is also
a good level of alignment.  The focus of attention should now be on putting in place the
necessary  implementing  legislation  and  strengthening  the  administrative  capacity  to
implement this legislation. The Action Plan sets out a range of objectives in this respect.

There has been further progress in justice and home affairs, especially with regard to the
border  guards  and  border  management.    There  has  been  a  continuation  of  efforts  to
improve  the  situation  with  regard  to  law  enforcement  bodies  dealing  with  the  fight
against  organised  crime  and  drugs,  in  particular  the  police  services.    These  need  to  be
intensified  and  adequate  resources,  financial  as  well  as  human,  allocated  to  implement

69

the  Schengen  Action  Plan  and  other  strategies  so  as  to  ensure  that  the  necessary
administrative capacity is in place to implement the acquis.  In overall terms alignment
with the acquis is good but administrative capacity has not progressed to the same extent.

Further legislative  progress  has  been noted in  terms  of  internal  financial  control  where
there is now a reasonable level of alignment with the acquis.  The challenge continues to
be to put in place the necessary control mechanisms by completing alignment (PIFC and
protection  of  EC  financial  interests),  by  completing  and  strengthening  the  required
institutional  structure, and by  moving forward  substantially  on the  management  of  pre-
accession  funding  and  the  establishment  of  the  necessary  structures  and  adequate
administrative capacity for the implementation of the future structural funds, in particular
regarding 
the  full  and  vigorous
implementation of the Action Plan.

internal  financial  control.  This  will  require 

There continues to be some disparity between progress in the adoption of legislation and
the reinforcement of administrative capacity.  Continued efforts are needed to set up or
strengthen  administrative  capacities  across  the  board,  notably  on  market  surveillance,
agriculture  and  food safety,  fisheries  and  regional  policy, the  social field,  environment,
customs  and  justice  and  home  affairs.  Particularly  close  attention  is  required  regarding
the  structures  necessary  to  implement  those  parts  of  the  acquis  which  will  become
applicable only from the date of accession, with a special focus on those parts which are
essential for the sound and efficient management of EC funds.

In  the  accession  negotiations,  27  chapters  have  been  provisionally  closed.  Poland  is
generally  meeting  its  commitments  made  in  the  negotiations.  However,  delays  have
occurred  in  the  areas  of  agriculture  (implementation  of  the  animal  identification  and
registration  system),  fisheries  (adoption  of  legislation  related  to  resource  management,
inspection  and  control,  and  in  the  area  of  market  policy),  environment  (adoption  of
implementing  legislation  with  regard  to  water  quality,  industrial  pollution  control  and
risk management, and chemicals). These issues need to be addressed.

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  the  level  of  alignment  and
administrative capacity that Poland has achieved at this point in time, and its track record
in  implementing  the  commitments  it  has  made  in  the  negotiations,  the  Commission
considers  that  Poland  will  be  able  to  assume  the  obligations  of  membership  in
accordance with the envisaged timeframe.  In the period leading up to accession, Poland
needs  to  continue  its  preparations  in  line  with  the  commitments  it  has  made  in  the
accession negotiations.

Romania

In  its  1997  Opinion,  the  Commission  concluded  that  Romania  fulfilled  the  political
criteria.  Since  then  the  country  has  made  progress  in  consolidating  and  deepening  the
stability  of  its  institutions  guaranteeing  democracy,  the  rule  of  law,  human  rights  and
respect  for  and  protection  of  minorities.    This  has  been  confirmed  over  the  past  year.
Romania continues to fulfil the Copenhagen political criteria.

The launch of a major programme of administrative reform is an important development
and ensuring the  successful implementation of these  reforms should  be  considered as  a
priority. Significant progress was also made with the decision to demilitarise the police.
This will increase  the public accountability of police officers - although further actions

70

are needed to ensure the proportionality of their actions. New institutional structures have
been created for fighting corruption, which remains a cause for very serious concern, but
they have yet to have an impact.

Romania  still  needs  to  improve  the  decision  making  and  legislative  processes.    In
particular,  the  Government’s  reliance  on  emergency  ordinances  should  be  reduced  and
parliament’s ability to scrutinise legislation increased. Reform of the judiciary has been
limited.  A lack of resources means that the judicial system is severely strained and the
executive’s involvement in judicial affairs has not been reduced in practice.  In order to
address  these  issues,  judicial  reform  should  be  made  a  political  priority  and  a
comprehensive  strategy  to  improve  the  functioning  of  the  judicial  system  should  be
drawn up.

Romania  continues  to  respect  human  rights  and  freedoms.  It  has  made  significant
progress  with  child  protection,  reducing  the  number  of  children  in  residential  care  and
improving  actual  living  conditions.  Progress  has  also  been  made  in  promoting  equal
opportunities between men and women, with developing structures to reduce trafficking
in human beings and with setting up the institutional framework to fight discrimination.
The development of a probation system has continued although prison conditions remain
extremely poor. Additional steps need to be taken to strengthen safeguards for freedom
of expression.

Positive developments took place with regard to the treatment of minorities.  Legislation
extending  the  official  use  of  minority  languages  was  implemented  relatively  smoothly.
Important  steps  were  taken  to  implement  the  National  Strategy  for  Improving  the
Condition of Roma, with the aim of effectively combating discrimination and improving
living  conditions,  although  additional  financial  resources  will  be  necessary  to  make
further progress.

Romania has continued to make progress towards being a functioning market economy,
for  which  the  prospects  have  improved.  Sustained  and  full  implementation  of  planned
measures together with the completion of the reform agenda should allow Romania to be
able to cope with competitive pressure and market forces within the Union in the medium
term.

Some significant gains on macroeconomic stabilisation have been achieved over the last
years. A more appropriate policy-mix is decreasing inflation, while growth has resumed
and the external position remains sustainable.  Considerable  progress  has  been  made  on
the  creation  of  the  necessary  market  institutions.  The  ongoing  overhaul  of  the  banking
sector, the successive improvements in the supervisory and regulatory framework for the
financial  markets  and  the  advances  in  privatisation  have  progressively  tightened
enterprises financial discipline. Price and trade liberalisation coupled, over the last year,
with a significant  adjustment of  energy  tariffs  and  important  reforms  of  the  tax  system
have set the stage for a more efficient allocation of resources. Restructuring is advancing
in a number of sectors.

To  build  upon  this  progress,  the  authorities  should  give  priority  to  establishing  a  track
record on macroeconomic stabilisation grounded on further disinflation, by maintaining
an  appropriate  policy  mix  and  underpinning  it  with  the  enforcement  of  enterprises’
financial  discipline.  Commitments  to  restrict  the  total  wage  bill  in  the  public  sector
should be respected. The recent sharp growth in money supply and credit requires careful

71

monitoring  and  a  readiness  to  take  prompt  actions.  Establishing  enterprises’  financial
discipline  requires  improved  tax  administration  and  compliance,  a  consistent  and
transparent implementation of the latest measures to reduce the arrears of energy users, a
determined and transparent use of the recently approved legal provisions for accelerating
loss-making  enterprises.  Completing
liquidate 
privatisation,  and  a  readiness 
privatisation  in  the  banking  sector,  continuing  the  reform  of  public  expenditures  and
budgetary procedures, and ensuring the implementation of improved regulatory and legal
frameworks would also support the establishment of a functioning market economy and
the  development  of  Romania’s  capacity  to  cope  with  competitive  pressure  and  market
forces within the Union.

to 

Since  the  1997  Opinion,  Romania  has  made  steady  progress  with  the  adoption  of  the
acquis.  However, in many areas, there has been an increasing gap between progress in
legal transposition and the limited ability of the Romanian administration to implement
and enforce the newly adopted legislation.

Over the last  year, Romania has accelerated the process of  legislative  transposition and
has continued work, albeit at a slower pace, on developing the administrative structures
required by the acquis.

Overall,  and  in  view  of  Romania’s  target  date  for  accession,  Romania’s  progress  has
been reasonable and national legislation has been aligned with the acquis in many areas.
Administrative capacity building will require a comprehensive, structural reform of both
the public administration and the judicial system.

In  the  area  of  the  internal  market,  framework  legislation  on  the  New  and  Global
Approach  has  allowed  accelerated  alignment  with  the  sector-specific  acquis  on  free
movement  of  goods.  Considerable  progress  has  also  been  made  in  the  establishment  of
bodies  to  administer  the  acquis.  Further  efforts  should  concentrate  on  improving
standardisation  and  certification,  on  reinforcing  market  surveillance  systems,  on  re-
structuring the food control system, and on effectively implementing public procurement
legislation. The foundations for future progress with the free movement of persons have
been laid, although further transposition is necessary to address shortcomings in the area
of  mutual  recognition  and  administrative  capacity  should  be  strengthened  in  all  areas.
Considerable efforts have been made to facilitate the free movement of services, although
the newly developed institutional framework for supervising financial services still needs
to be supported. Liberalisation has continued in the area of free movement of capital and
Romania  is  committed  to  a  timetable  for  dismantling  exchange  controls  and  other
restrictions  on  capital  movements.  Further  efforts  are  particularly  needed  to  revise  the
legal framework in the area of money laundering. Romania has aligned with most of the
acquis on company law, although the level of piracy and counterfeiting remains a serious
problem and enforcement should be improved.  In the area of competition policy, some
progress has been made with the transposition of the acquis, mainly in the field of anti-
trust, but Romania’s enforcement record in respect of both state aid and anti-trust needs
to be improved. The restructuring of the steel sector will need to be closely monitored.

Romania has made steady progress towards alignment with the taxation acquis although
further adjustments are needed  and  the ability to  implement  and  enforce  tax  legislation
remains limited. Despite a high level of harmonisation with the customs acquis, further
legislative  alignment  is  needed  as  are  efforts  to  reduce  levels  of  corruption  within  the
customs  administration.    Work  should  continue  on  developing  IT  systems  to  allow  the

72

exchange  of  computerised  data  between  Romania  and  the  EC.  In  order  to  develop  a
successful industrial policy and to promote SME development further efforts are needed
to simplify and stabilise the business environment.

Alignment  with  the  acquis  on  agricultural  policy  has  accelerated,  although  legislative
developments have not yet been matched by the development of administrative structures
able  to  effectively  implement  the  acquis.  Structural  reforms  have  only  been  slowly
introduced. Inspection arrangements should be improved in the phytosanitary sector and,
even  more  urgently,  in  the  veterinary  sector.  In  the  area  of  fisheries,  Romania  has
adopted  the  necessary  framework  legislation,  although  there  have  been  delays  in  the
establishment of the required administrative structures.

On social policy and employment, some progress has been made but considerable further
work remains on legal transposition in the areas of labour law, equal opportunities, and
health and safety at work.

Progress with regional policy has been slower and Romania does not yet have a clear and
consolidated  cohesion  policy.  Work  has  begun  on  developing  administrative  capacity,
but continued efforts are needed to design management and implementation systems.

Romania’s progress in the transport sector has been mixed: good with regard to road and
railway  transport,  reasonable  in  the  area  of  aviation,  but  only  limited  in  the  case  of
maritime  safety.  The  key  issues  facing  Romania  are  developing  institutions  able  to
enforce  recently  adopted  legislation  and  securing  the  funding  to  make  the  heavy
investments  required  by  the  acquis.  Despite  progress  in  terms  of  legislative  alignment,
many structural issues still have to be addressed in the energy sector and new operating
structures need to be consolidated. Despite having transposed a considerable amount of
environmental  legislation,  Romania  has  neither  the  administrative  nor  the  financial
resources to implement it.  Future efforts should focus less on legislative alignment and
more  on  developing  implementation  capacities  as  well  as  securing  resources  for
environmental  investments.  Alignment  with  the  consumer  protection  acquis  has
continued  and  implementation  structures  are  in  place  -  although  inter-institutional  co-
operation should be improved.

Steady progress has been made with aligning with the telecoms acquis and progress has
been  made  with  preparing  for  the  liberalisation  of  the  communications  and  postal
markets.  Future  efforts  should  focus  on  developing  the  newly  established  regulatory
administration into a truly efficient and independent body, and on the  evaluation of  the
economic implications of full implementation of the universal service acquis.

Romania has started to make structural reforms in the area of justice and  home affairs,
although a considerable amount of work remains to be done on legal approximation and
above all on strengthening  administrative  and judicial  capacity.  Despite  recent reforms,
including the adoption  of  a Schengen  Action Plan, the efficiency of  all police forces  is
limited and border infrastructure and management need to be improved. Major efforts are
required to increase the efficiency of the judiciary.

In the  area of  external relations, trade barriers  have  been progressively  eliminated, and
Romania has achieved a generally high level of alignment with the acquis.

73

Progress has been made with regard to financial control and modern systems of financial
management and  control are  being  introduced. Further work is necessary  to  protect  the
Communities’ financial  interests, administrative capacity  needs  to  be  strengthened  with
regard  to  public  internal  financial  control,  and  the  independence  of  the  Court  of  Audit
should be guaranteed.

The  overall  capacity  of  the  public  administration  to  implement  the  acquis  remains
limited  and  represents  a  major  constraint  on  Romania’s  accession  preparations.  While
certain  parts  of  the  administration  are  able  to  function  effectively  there  are  many
important  sectors  where  the  weakness  of  the  administration  is  a  serious  cause  for
concern.    These  concerns  extend  beyond  adoption  of  the  acquis  and  also  apply  to  the
management  of  EC  financial  assistance. This issue is  beginning  to  be  addressed  by  the
Government which has announced a major reform programme. However, these reforms
are only at the design stage and still need to be carried out.

In  the  accession  negotiations,  13  chapters  have  been  provisionally  closed.  The
commitments  made  in  the  negotiations  are  with  a  view  to  accession  in  2007  and  are
generally being met.

Slovakia

Whereas the 1997 Opinion and the 1998 Regular Report concluded that Slovakia did not
fulfil the political criteria, the 1999 Regular Report came, for the first time, to a positive
evaluation in this respect. Since that time, the country has made considerable progress in
further  consolidating  and  deepening  the  stability  of  its  institutions  guaranteeing
democracy,  the  rule  of  law,  human  rights  and  respect  for  and  protection  of  minorities.
This has been confirmed over the past year. Slovakia continues to fulfil the Copenhagen
criteria.

Progress was achieved with regard to the structure and functioning of the administration,
notably  by  setting  up  a  Civil  Service  Office  and  building  up  decentralised,  regional
administrations.  Delays  have  occurred  in  implementing  the  Civil  Service  Law.  The
proper  functioning  of  the  self-administration  may  be  hampered,  as  the  transfer  of
competencies  from  state  to  regional  level  is  not  going  hand  in  hand  with  fiscal
decentralisation.

Further  important  steps  were  taken  to  strengthen  the  independence  of  the  judiciary.  In
particular,  further  key  legislation  was  adopted  and  a  Judicial  Council  was  set  up.  The
new  legislation  and  institutions  should  be  used  to  the  full,  so  as  to  guarantee  the
judiciary’s professional impartiality and political neutrality.

Some progress can be noticed in the fight against corruption, which remains a cause for
serious concern, notably by further implementing the relevant action plans and drawing
codes of ethics for the public sector. These efforts must be continued.

Slovakia continues to respect human rights and freedoms.

In particular, legislation and administration was reinforced to fight trafficking in human
beings. A new Asylum Act was adopted, providing, inter alia, for the establishment of an
independent body to act as the second instance in the asylum procedure.

74

Considerable  efforts  were  made  in  further  developing  and  putting  into  practice
approaches  to  protect  minority  rights.  In  particular,  the  Office  of  the  Government
Plenipotentiary for Roma affairs was strengthened and the relevant strategy enhanced and
financial means increased. These efforts must be continued and reinforced as a matter of
priority,  to  effectively  combat  discrimination  and  improve  the  living  conditions  of  the
Roma community. The adoption of comprehensive anti-discrimination legislation would
be an important step forward in this regard.

The  1997  Opinion  already  acknowledged  the  reform  efforts  undertaken  by  the  Slovak
authorities  to  transform  their  economy.  Since  the  Opinion,  and  against  a  challenging
international 
improved.
Macroeconomic stability has been achieved, reforms  have  accelerated while  the Slovak
authorities’  commitment  to  the  economic  requirements  of  EU  accession  has  been
sustained.

economic  performance  has 

environment, 

economic 

Hence,  it  is  concluded  that  the  Slovak  Republic  is  a  functioning  market  economy.  The
continuation of its current reform  path should enable the Slovak Republic to cope with
competitive pressure and market forces within the Union.

Improvements  can  be  made  to  the  macroeconomic  situation,  which  requires  urgent
measures to reduce both the fiscal and current account deficits. Expenditure reforms, in
particular  in  the  health  and  pension  area  and  as  regards  subsidies  and  guarantees,  are
essential. The unemployment problem necessitates  a whole  range  of  structural  reforms,
including  the  elimination  of  disincentive  effects  in  the  social  protection  system  and  a
more  flexible  labour  legislation.  Supervision  of  the  financial  sector  can  be  further
strengthened. The effective implementation of the legal framework for a market economy
needs to be further enhanced.

Since the  Opinion, Slovakia has  made very  good progress in legislative alignment  and,
increasingly,  in  strengthening  administrative  capacity.  Structural  weaknesses,  which
persist  in  a  number  of  areas  like  company  law,  transport  policy,  environment  and
financial control, have been continuously remedied to a large extent.

Over  the  past  year,  Slovakia  has  further  advanced  in  aligning  with  the  acquis  and
strengthening  its  administrative  capacity.  Particular  progress  has  been  achieved  in  the
areas  of  free  movement  of  goods,  freedom  to  provide  services,  agriculture,  transport,
energy,  environment,  and  justice  and  home  affairs.  Sectors,  in  which  only  limited
progress was  made in the  reporting  period  include regional policy and  co-ordination  of
structural instruments.

Overall, Slovakia has achieved a high degree of alignment with the acquis in many areas
and  is  reasonably  well  advanced  towards  reaching  adequate  administrative  capacity  to
implement the acquis in a considerable number of fields, although further efforts remain
to be made. Detailed plans have been agreed, in particular in the negotiations and in the
Action Plan, to cover the remaining gaps.

Concerning the internal market, Slovakia has achieved a good degree of alignment and is
relatively  well  advanced  in  having  appropriate  administrative  capacities  in  place.  As
regards  free  movement  of  goods,  alignment  is  largely  complete  and  administrative
capacity  broadly  in  place.  Slovakia’s  standardisation  and  accreditation  bodies  function
well. The focus needs to be put on the outstanding transposition of the foodstuffs acquis

75

and the strengthening of the related administrative structures. In particular, an appropriate
market surveillance infrastructure still needs to be fully set up and structures for public
procurement need to be reinforced. In the area of freedom of movement of persons, where
preparations  are  generally  well  advanced,  legislation  for  the  mutual  recognition  of
qualification,  in  particular,  must  be  completed  and  the  administrative  capacities  for  the
future  co-ordination  of  the  social  security  systems  need  to  be  reinforced.  Concerning
freedom  to  provide  services,  good  progress  has  been  achieved  in  the  field  of  financial
services  over  the  past  year.  Despite  an  advanced  level  in  this  area,  Slovakia  needs  to
concentrate  its  efforts  on  completing  alignment,  notably  in  the  insurance  sector,  and
strengthening  the  administrative  structures,  in  particular  with  respect  to  financial
supervision.  Alignment  in  the  area  of  free  movement  of  capital  is  well  andvanced;
Slovakia  needs  to  focus,  in  particular,  on  reinforcing  administrative  capacities  to  fight
money laundering.

As  regards  company  law,  Slovakia  has  reached  a  good  level  of  alignment  and  is
relatively  well  advanced  in  terms  of  administrative  preparations.  Over  the  past  year,
legislative  progress  can  be  particularly  noted  in  the  field  of  trademarks,  design  and
patents.  Administrative  structures  to  combat  piracy  and  counterfeiting  need  to  be
reinforced. Concerning competition policy, a good level of alignment has been achieved,
and operational administrative structures put in place. Over the past year, a considerable
track record of enforcement in the State aid area has been built up. However, in the steel
sector,  state  aid  granted  in  Slovakia  is  not  compatible  with  Protocol  2  of  the  Europe
Agreement.  Administrative  capacities  in  this  field,  as  well  as  in  the  area  of  anti-trust,
however, need to be further reinforced.

As regards agriculture, Slovakia is advanced in transposition and implementation of the
acquis. Over the past year, in particular, good legislative alignment has been achieved in
the  phytosanitary  and  veterinary  area.  Administrative  strengthening  requires  further
attention. Efforts are required for the construction and proper functioning of the Border
Inspection Posts and food processing establishments need to be upgraded. Serious efforts
are needed to ensure that a fully functional Integrated Administration and Control System
(IACS)  is  put  in  place.  A  timetable  has  been  drawn  up  to  remedy  the  identified
shortcomings for the IACS.

Legislative alignment and administrative preparation in the area of energy are advanced.
Overall  administrative  capacities  need  to  be  further  strengthened.  As  regards  nuclear
energy, Slovakia has committed itself to close the two Bohunice V1 reactors by 2006 and
2008  respectively.  Slovakia  should  refine  its  project  pipeline  to  ensure  satisfactory
projects for the  decommissioning of  the two  reactors.  In  transport  policy,  Slovakia  has
aligned  with  the  acquis  to  a  considerable  extent  and  significant  steps  have  been
undertaken  to  strengthen  the  administrative  capacities.  Alignment,  in  particular  in  the
area  of  rail  transport  and  inland  waterways,  needs  to  be  completed.  Co-ordination
between the different ministries and bodies involved in this sector has to be improved.

With respect to taxation, Slovakia has reached a good level of alignment and the reform
of  its  tax  administration  is  ongoing.  Alignment  both  in  the  areas  of  direct  and  indirect
taxation  remains  to  be  completed.  Modernisation  and  strengthening  of  the  tax
administration  needs  to  be  reinforced  as  the  general  tax  collection  remains  weak.
Slovakia  has  a  comprehensive  and  consistent  reform  agenda  in  place  to  address  the
identified shortcomings. As regards customs union, Slovakia has completed its legislative

76

alignment  and  has,  in  principle,  developed  and  reinforced  the  necessary  administrative
capacity.  Attention  should  continue  to  be  paid  to  the  enforcement  of  the  transposed
legislation.  Considerable  efforts  on  IT  systems  to  allow  for  the  exchange  of  electronic
data  with  the  European  Community  and  its  Member  States  have  been  made  in  the
taxation and customs areas, but these still require further work.

Alignment in the area of telecommunications and information technologies has reached a
high  level  and  administrative  structures  are  being  put  in  place,  though  completion  of
legislative  alignment  and  further  strengthening  of  administrative  structures  as  well  as
proper separation of  regulatory and operational functions are needed. The evaluation of
the  economic  implications  of  full  implementation  of  the  universal  service  acquis  is
awaited.

In the field of social policy and employment, Slovakia is advanced in terms of legislative
alignment.  Administrative  structures  are  mostly 
in  place,  but  require  further
strengthening. There is a particular need to co-ordinate the supervision and enforcement
of  the  transposed  health  and  safety  acquis.  Administrative  preparations  for  the  future
management of the European Social Fund need to be reinforced.

Slovakia has aligned with the acquis in the area of regional policy and co-ordination of
structural  instruments  but  effective  administrative  structures  are  only  in  place  to  a
limited  extent.  Over  the  past  year,  the  management  structures  and  paying  authority  for
the implementation of the Structural Funds and Cohesion Fund have been designated. A
clear  definition  of  the  final  implementation  structure,  however,  is  missing.  There  is  a
substantial  need  to  reinforce  the  administrative  capacities  in  this  area.  The  technical
preparation of projects eligible for Community funding has to be considerably improved.
The remaining administrative weaknesses have been identified in the commitments made
in  the  framework  of  the  negotiations  as  well  as  in  the  Action  Plan,  and  the  necessary
steps  are  being  taken  to  remedy  these  shortcomings.  Ongoing  efforts  need  to  be
substantially stepped up.

Concerning  the environment, Slovakia is advanced in alignment  with  the  acquis  and  in
having  the  necessary  administrative  capacity  to  implement  it.  Slovakia  has  recently
increased  its  environmental  investment  significantly.  Efforts  need  to  focus  now  on
finalising transposition, in particular in the area of Integrated Pollution Prevention and on
implementation in the area of Control and Discharge of Dangerous Substances, as well as
on  strengthening  administrative  capacities.  As  regards  consumer  protection,  legislative
alignment and administrative strengthening is advanced but not yet completed.

With  respect  to  co-operation  in  the  fields  of  justice  and  home  affairs,  Slovakia  is  to  a
considerable extent aligned with the acquis and administrative structures are generally in
place. Implementation of the Schengen Action Plan is progressing well. The focus needs
now  to  shift  to  strengthening  implementation  of  the  transposed  acquis  and  to  further
reinforcing administrative capacities, in particular in the areas of border control and the
fight against illegal immigration and crime.

As  regards  financial  control,  Slovakia  is  advanced  with  regard  to  legislative  alignment
and the necessary institutional structures are being put in place. It needs to pay attention
to  strengthening  and  building  up  the  necessary  administrative  capacity,  notably  in  the
area  of  public  internal  financial  control.  Concrete  actions  have  been  planned  and  are
being implemented to remedy the identified shortcomings. Efforts should be stepped up.

77

Concerning  the  administrative  capacity,  Slovakia  has  largely  achieved  a  sufficient,
though still rather fragile, capacity to ensure effective implementation  and enforcement
of  the  acquis,  notably  in  the  area  of  the  internal  market  and  the  various  Community
policies. Slovakia needs  to  ensure  the  full  operation  of  the  administrative  structures,  in
particular with a view to guaranteeing the uniform and predictable implementation of the
acquis.  Particularly  close  attention  is  required  regarding  the  structures  necessary  to
implement  that  part  of  the  acquis  which  will  be  applicable  only  upon  accession,  in
particular as regards sound and efficient management of EC funds.

In  the  accession  negotiations,  27  chapters  have  been  provisionally  closed.  Slovakia  is
generally meeting the commitments it has made in the negotiations.

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  the  level  of  alignment  and
administrative  capacity  that  Slovakia  has  achieved  at  this  point  in  time,  and  its  track
record  in  implementing  the  commitments  it  has  made  in  the  negotiations,  the
Commission  considers  that  Slovakia  will  be  able  to  assume  the  obligations  of
membership  in  accordance  with  the  envisaged  timeframe.  In  the  period  leading  up  to
accession,  Slovakia  needs  to  continue  its  preparations,  in  line  with  the  commitments  it
has made in the accession negotiations.

Slovenia

In  its  1997  Opinion,  the  Commission  concluded  that  Slovenia  fulfilled  the  political
criteria.  Since  that  time,  the  country  has  made  considerable  progress  in  further
consolidating and deepening the stability of its institutions guaranteeing democracy, the
rule  of  law,  human  rights  and  respect  for  and  protection  of  minorities.  This  has  been
confirmed  over  the  past  year.  Slovenia  continues  to  fulfil  the  Copenhagen  political
criteria.

Slovenia  has  made  considerable  progress  on  public  administration  reform  by  adopting
the laws on civil servants, public agencies and state administration. With the adoption of
these laws, the framework legislation for public administration reform is now in place. It
is important that these laws are now fully implemented.

Reform  of  the  judiciary  has  continued  through  legislative  changes  and  the  adoption  of
measures  aimed  at  abolishing  the  backlog  of  pending  court  cases.  Slovenia  has
recognised the need to improve the situation further.

Slovenia continues to respect human rights and freedoms.

The 1997 Opinion already acknowledged the substantial reform efforts undertaken by the
Slovenian  authorities  to  transform  their  economy.  Since  the  Opinion,  and  against  a
challenging  international  economic  environment,  economic  performance  has  improved.
Macroeconomic stability has been achieved, reforms have deepened while the Slovenian
authorities’  commitment  to  the  economic  requirements  of  EU  accession  has  been
sustained.

Hence, it is concluded that Slovenia is a functioning market economy. The continuation
of its current reform path should enable Slovenia to cope with competitive pressure and
market forces in the Union.

78

Improvements  can  be  made  on  reducing  the  inflation  rate  by  the  further  elimination  of
indexation schemes and by directing the macroeconomic policy mix more convincingly
towards inflation reduction. The competitiveness of the economy would be supported by
speeding up structural reforms, such as the final liquidation of the Slovene Development
Corporation and further privatisation in the financial sector.

Since  the  Opinion,  Slovenia  has  made  very  good    progress  in  transposition  and
implementation  of  the  acquis  as  well  as  in  developing  the  institutions  needed  for
implementing and enforcing the acquis.

Over  the  past  year,  Slovenia  has  further  advanced,  especially  in  the  areas  of  free
movement of persons, fisheries, Economic and Monetary Union, employment and social
policy, regional policy, environment and  financial control.  Limited  further  progress has
been made in the area of consumers and health protection.

Overall, Slovenia has achieved a high degree of alignment with the acquis in most areas,
and  is  well  advanced  concerning  the  administrative  capacity  needed  to  implement  the
acquis,  although  further  efforts  are  still  needed.  Detailed  plans  have  been  agreed,  in
particular in the negotiations and in the Action Plan, to cover the remaining gaps.

Slovenia  is  well  advanced  in  legislative  alignment  concerning  the  key  areas  of  the
internal  market  and  most  of  the  institutions  have  been  established  and  are  functioning
well.  Concerning  free  movement  of  goods,  Slovenia  is  well  advanced  in  legislative
alignment  and  in  ensuring  functioning  of  the  institutions.  However,  some  acquis  still
remains  to  be  transposed,  especially  on  foodstuffs  and  some  other  areas  of  sectoral
legislation, as well as on public procurement. The new institutes for standardisation and
certification function well and their administrative capacity should be further reinforced
and  market  surveillance  systems  strengthened.  Following  the  adoption  of  important
legislation  in  the  past  year,  the  legislative  framework  for  free  movement  of  persons  is
almost  complete.  However,  some  fine  tuning  is  needed  on  mutual  recognition,  and
alignment  on  citizen’s  rights  needs  to  be  completed  by  accession.  The  Slovenian
legislation in the area of freedom to provide services is largely aligned with the acquis,
and  should  now  be  completed;  administrative  capacity  should  be  enhanced  further,
including  concerning  supervision  of  financial  services.  The  level  of  preparations  for
membership  in  the  area  of  free  movement  of  capital  is  advanced,  and  further  progress
was  made  in  the  past  year  through  adoption  of  new  legislation  and  through  lifting  of
several restrictions on money transactions. Due attention should be given to the delay in
removing  restrictions  on  foreign  direct  investment  concerning  investment  funds  and
management companies, and preparations for accession in the area of payments systems
remain to be completed.  The  situation  in  the  area of company law is  good in Slovenia,
however,  further  efforts  should  be  made  to  complete  the  legislative  alignment  process
and  efforts  to  ensure  enforcement  of  intellectual  property  rights  should  continue.
Concerning  competition  policy,  Slovenia’s  preparations  are  reasonably  advanced  and  it
should now focus on completing the legislative alignment process and on establishing a
good  track  record  on  enforcement  with  a  view  to  ensuring  efficient  competition  in  the
Slovenian market.

Legislative  alignment  has  continued  in  the  taxation  area  and  Slovenia’s  legislation  is
almost  fully  aligned  with  the  acquis.  Slovenia  should  now  focus  on  completing
alignment. Slovenia has reached a high level of alignment in the customs area and should
now  focus  on  removing  remaining  inconsistencies  with  the  acquis  and  on  further

79

strengthening  of  the  administration  through  the  ongoing  reform.  IT  systems  should  be
further developed in both areas so as to allow for exchange of computerised data between
the EC and Slovenia.

Slovenia  has  continued  to  make  steady  progress  in  the  agriculture  area,  especially  on
veterinary and phyto-sanitary issues, through adoption of new legislation, establishment
of  several  new  institutions  and  through  accreditation  of  the  SAPARD  Agency.  Good
progress has been made in upgrading food establishments. Slovenia should now focus on
the  Common
further  strengthening 
Agricultural Policy management mechanisms; and setting up of adequate phyto-sanitary
and  veterinary  inspections,  in  particular  at  the  borders,  and  ensuring  their  proper
functioning.

the  administrative  capacity,  completion  of 

Slovenia has  made  good progress  in  the  fisheries  sector,  and  the  situation  is  in  general
satisfactory.  Efforts  in  this  sector  should  focus  on  adopting  the  outstanding  legislation,
and on further reinforcing capacity for implementation and enforcement.

Further  progress  has  been  made  in  the  transport  sector  through  the  setting  up  of  new
institutions.  The  overall  situation  in  this  area  is  good,  although  some  delays  have
occurred  in  the  rail  sector.  Slovenia  should  now  focus  on  completing  legislative
alignment and strengthening the administrative capacity. Preparations for membership in
the energy sector have continued and are advanced. Administrative capacity needs to be
strengthened  further,  in  particular  as  regards  the  regulator  and  the  nuclear  safety
authority. The latter body needs to be made de iure independent from the promotion of
nuclear energy.

for 

responsible 

implementing  regional  policy  and  preparations 

Slovenia has made very good progress since the last Regular Report  in  designating  the
for
structures 
implementation  of  structural  and  cohesion  funds  are  well  on  track.  These  should  be
continued,  including  the  technical  preparation  of  projects  eligible  for  Community
funding. Legislative alignment has advanced considerably in the past year in the area of
employment  and  social  affairs,  notably  through  the  adoption  of  the  Employment
Relations Act. The overall situation in this area is good and efforts should now focus on
strengthening  the  implementation  capacity  for  the  acquis  on  occupational  health  and
safety, including the strengthening of labour inspectorates.

The  level  of  alignment  in  the  environment  area  is  high  following  the  adoption  of
important  new  legislation  in  the  past  year.  Slovenia  should  now  focus  on  completing
transposition  of  horizontal  legislation,  transposition  of  the  delayed  Integrated  Pollution
Prevention  and  Control  directive  and  to  securing  sufficient  investments  to  ensure  the
implementation of the environment acquis. Although the level of alignment in the area of
consumers and health protection is advanced, alignment still needs to be completed and
administrative capacity improved.

Good  progress  was  made  in  the  past  year  in  the  postal  sector  through  adoption  of  the
Postal  Act  and  preparations  for  accession  are  well  on  track.  Attention  should  now  be
focussed  on  increasing  competition  in  the  telecommunications  area.  The  level  of
preparedness  in  the  culture  and  audio-visual  sector  is  good,  however,  Slovenia  should
complete legislative alignment and strengthen the institutions.

80

Slovenia has continued to make good progress in preparing for accession in the area of
justice and home affairs, especially by setting up new institutions. Legislative alignment
is  advanced  but  remains  to  be  completed,  especially  on  asylum  and  migration.  The
institutions  should  be  strengthened  further  and  Slovenia  should  continue  its  efforts  to
upgrade  capacity  and  infrastructure  for  border  management  in  accordance  with  the
Schengen Action Plan, especially at what will become the Union’s external border.

Very good progress has been made since the last Regular Report on financial control and
the  preparations  for  membership  are  well  advanced  in  this  area.  Slovenia  should  now
focus  on  effective 
the  planned  strengthening  of
administrative capacity on public internal financial control.

implementation  and  ensuring 

Slovenia’s  administrative  capacity  for  the  implementation  of  the  acquis  has  been
enhanced  further  in  the  reporting  period.  Most  of  the  institutions  necessary  for  the
implementation  of  the  acquis  are  now  in  place  and  attention  should  be  focussed  on
providing  them  with  sufficient  resources  to  carry  out  their  work.  Slovenia  should
continue  its  efforts  to  improve  the  administrative  capacity,  in  particular  in  the  areas  of
freedom 
transport,  energy,
telecommunications,  culture  and  audio-visual,  environment,  consumers  and  health
protection,  and  justice  and  home  affairs.  Special  attention  should  be  given  to  the
structures  necessary  to  implement  the  acquis  which  will  be  applicable  only  upon
accession, in particular as regards sound and efficient management of EC funds.

services,  agriculture, 

to  provide 

fisheries, 

rail 

In  the  accession  negotiations  28  chapters  have  been  provisionally  closed.  Slovenia  is
generally  meeting  the  commitments  it  has  made  in  the  negotiations.  However,  delays
have  occurred  with  regard  to  removing  restrictions  on  foreign  direct  investment
concerning  investment  funds  and  management  companies,  the  establishment  of  the
Fishing  Vessel  Register,  creating  the  legislative  basis  for  restructuring  of  the  railways
and  transposition  of  the  Integrated  Pollution  Prevention  and  Control  directive.  These
issues need to be addressed.

Bearing  in  mind  the  progress  achieved  since  the  Opinion,  the  level  of  alignment  and
administrative  capacity  that  Slovenia  has  achieved  at  this  point  in  time,  and  its  track
record  in  implementing  the  commitments  it  has  made  in  the  negotiations,  the
Commission  considers  that  Slovenia  will  be  able  to  assume  the  obligations  of
membership  in  accordance  with  the  envisaged  timeframe.  In  the  period  leading  up  to
accession, Slovenia needs to continue its preparations in line with the commitments it has
made in the accession negotiations.

Turkey

The  decision  on  the  candidate  status  of  Turkey  in  Helsinki  in  1999  has  encouraged
Turkey to introduce a series of fundamental reforms. A major constitutional reform was
introduced  in  October  2001  aimed  at  strengthening  guarantees  in  the  field  of  human
rights  and  fundamental  freedoms  and  restricting  the  grounds  for  capital  punishment.  A
new  Civil  Code  was  adopted  in  November  2001.  Three  sets  of  reform  packages  were
adopted  in  February,  March  and  August  2002.  The  death  penalty  has  been  lifted  in
peacetime.  The  state  of  emergency  has  now  been  lifted  in  two  provinces  in  the  South
East and the decision has been taken to lift it in the two provinces where it still applies by
the end of this year.

81

The adoption of these reforms is an important signal of the determination of the majority
of  Turkey's  political  leaders  to  move  towards  further  alignment  with  the  values  and
standards  of  the  European  Union.  The  August  reforms  were  adopted  under  difficult
political  and  economic  circumstances  and  are  particularly  significant  as  they  impinge
upon traditionally sensitive issues.

The reform of the prison system continued, and progress was made in terms of improving
physical  conditions.  Monitoring  Boards  and  the  new  system  of  enforcement  judges  are
now  operational.  A  number  of  recommendations  of  the  European  Committee  for  the
Prevention of Torture (CPT) are being implemented. However, despite progress, certain
problems remain with conditions in F-Type prisons.

The  reduction  in  the  length  of  pre-trial  detention  (police  custody)  periods  is  a  positive
development in the context of the fight against torture. However, the lack of immediate
access  to  a  lawyer  means  that  incommunicado  detention  for  prisoners  convicted  under
State Security Courts continues. Longer periods of custody still apply in the areas under
the  state  of  emergency.    There  have  been  continued  allegations  of  torture  and  ill-
treatment and little progress in the prosecution of those accused of such abuses.

The reform package of August provides for the retrial of persons whose convictions have
been found by the European Court of Human Rights to be in violation of the European
Convention on Human Rights and Fundamental Freedoms.

The change made to Article 159 of the Turkish Penal Code means that the expression of
opinion  without  the  “intention”  of  “insulting”  public  institutions  will  no  longer  face
criminal sanction. Changes to Articles 312 of the Penal Code and to the Anti-Terror Law,
the Press  Law, the  Law  on  Political  Parties  and  the  Law  on  Associations  eased  certain
restrictions on freedom of expression, association, the press and broadcasting.

The  August  package  removed  some  restrictions  in  the  law  on  broadcasting  which  had
been  readopted  by  Parliament  in  May  following  the  president's  veto.    However  the
prosecution of writers, journalists and publishers has continued.

Progress  has  been  made  in  the  area  of  freedom  of  association  where  the  law  on
associations has been modified and some restrictions lifted. Various grounds for banning
associations remain, however.

The  generally  restrictive  character  of  the  Law  on  Associations  remains,  including  the
prior  authorisation  system.    Foreign  associations  in  Turkey  are  subject  to  certain
limitations and strict controls.

As  part  of  the  August  package,  broadcasting  and  education  in  languages  other  than
Turkish have now been authorised. Although the Law on Foundations has been amended,
religious  minorities  continue  to  face  limitations  regarding  legal  personality,  property
rights, training of clergy and education.

The  new  Civil  Code  includes  provisions  aimed  at  improving  gender  equality  and
strengthening guarantees regarding the protection and rights of the child. Turkey ratified
the  1969  UN  Convention  on  the  Elimination  of  All  Forms  of  Racial  Discrimination.
However,  trade  unions  remain  subject  to  restrictions  and  child  labour  persists.  The

82

legislation which allows for reduced sentences for crimes related to "honour killings" is
still applicable.

Reform  of  the  judicial  system  has  continued.  The  competence  of  the  State  Security
Courts has been narrowed and the period of pre-trial detention reduced. The functioning
of  these  Courts,  though,  is  still  not  in  line  with  international  standards.  There  are
continued reports that the judiciary does not always act in an independent and consistent
manner.  Training  courses  in  human  rights  have  taken  place  for  judges  and  law
enforcement officials.

A  number  of  initiatives  to  foster  more  transparency  in  Turkey's  public  life  have  been
taken  in the  last  year.  Nonetheless,  corruption  remains  a  serious  problem.  The  relevant
Conventions of the Council of Europe have not yet been ratified.

The  lifting  of  the  state  of  emergency  in  two  provinces  of  the  South  East  has  led  to  an
improvement in the conditions of daily life there. The protection of human rights in the
region needs to be strengthened.

The  constitutional  amendment  introducing  changes  to  the  composition  and  role  of  the
National Security Council has been put into practice. Nonetheless, these changes do not
appear  to  have  modified  the  way  in  which  the  National  Security  Council  operates  in
practice.

Turkey has continued to express support for direct talks between the leaders of the two
communities  in  Cyprus  to  achieve  a  comprehensive  settlement  of  the  Cyprus  problem.
The  EU,  in  line  with  statements  issued  by  the  United  Nations  Security  Council,  has
emphasised the  need for Turkey  to  take  further  steps  to  encourage  the  Turkish  Cypriot
leadership  to  work  towards  reaching  a  settlement  before  the  end  of  accession
negotiations.

Relations between Turkey and Greece have continued to improve. Efforts are continuing
to put in effect new confidence building measures. Exploratory contacts  on the Aegean
between the two foreign ministries started in March 2002.

Overall, Turkey has made noticeable progress towards meeting the Copenhagen political
criteria since the Commission issued its report in 19988, and in particular in the course of

8 In its Report of 1998, the Commission concluded that: "On the political side, the evaluation  highlights
certain anomalies in the functioning of the public authorities, persistent human rights violations and major
shortcomings in the treatment of minorities. The lack of civilian control of the army give cause for concern.
This  is  reflected  by  the  major  role  played  by  the  army  in  political  life  through  the  National  Security
Council. A civil, non-military solution must be found to the situation in south-eastern Turkey, particularly
since  many of the  violations  of  civil  and  political  rights  observed  in  the  country  are  connected  with  this
issue.  The  Commission  acknowledges  the  Turkish  government's  commitment  to  combat  human  rights
violations  in  the  country  but  this  has  not  so  far  had  any  significant  effect  in  practice.  The  process  of
democratic  reform  on  which  Turkey  embarked  in  1995  must  continue.  In  addition  to  these  problems,
Turkey  must  make a constructive contribution to the  settlement of  all  disputes  with  various  countries  by
peaceful  means  in  accordance  with  international  law."    Issues  such  as  civilian  control  over  the  military,
persistent  human  rights  violations,  torture  as  well  as  lack  of  protection  for  cultural  rights  have  been
mentioned in the subsequent reports.

83

                                                
the  last  year.  The  reforms  adopted  in  August  2002  are  particularly  far-reaching.  Taken
together,  these  reforms  provide  much  of  the  ground  work  for  strengthening  democracy
and  the  protection  of  human  rights  in  Turkey.  They  open  the  way  for  further  changes
which  should  enable  Turkish  citizens  progressively  to  enjoy  rights  and  freedoms
commensurate with those prevailing in the European Union.

Nonetheless Turkey does not fully meet the political criteria. First, the reforms contain a
number of significant limitations, which are set out in this report, on the full enjoyment
of fundamental rights and freedoms. Important restrictions remain, notably, to freedom of
expression,  including  in  particular  the  written  press  and  broadcasting,  freedom  of
peaceful  assembly,  freedom  of  association,  freedom  of  religion  and  the  right  to  legal
redress.

Secondly, many of the reforms require the adoption of regulations or other administrative
measures,  which  should  be  in  line  with  European  standards.  Some  of  these  measures
have already been introduced and others are being drawn up. To be effective, the reforms
will  need  to  be  implemented  in  practice  by  executive  and  judicial  bodies  at  different
levels throughout the country.

The Commission considers that the decision of the High Electoral Board to prevent the
leader of a major political party from participating in the November 3 General Elections
does not reflect the spirit of the reforms.

Thirdly, a number  of important issues arising  under  the political  criteria have  yet  to be
adequately  addressed.  These  include  the  fight  against  torture  and  ill-treatment,  civilian
control  of  the  military,  the  situation  of  persons  imprisoned  for  expressing  non-violent
opinions, and compliance with the decisions of the European Court of Human Rights.

In the light of  the  noticeable  progress  made  in  recent  years  and  of  the  remaining  areas
requiring  further  attention,  Turkey  is  encouraged  to  pursue  the  reform  process  to
strengthen  democracy  and  the  protection  of  human  rights,  in  law  and  in  practice.  This
will  enable  Turkey  to  overcome  the  remaining  obstacles  to  full  compliance  with  the
political criteria.

Turkey  has  made  progress  on  the  functioning  of  its  market  economy  which  should
improve  its  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the
Union, but is still undergoing the consequences of the two deeply destabilising financial
crises.

After  several  attempts  to  stabilise  the  economy,  the  current  reform  programme  is
producing positive results  and  growth  has  resumed.  Fiscal  discipline  has  improved  and
the  transparency  of  public  sector  accounts  has  increased  markedly,  while  inflationary
pressures  are  declining.  Political  interference,  a  main  source  for  Turkey's  economic
instability,  has  been  reduced  and  structural  weaknesses,  such  as  a  fragile  and  distorted
banking  sector,  are  being  addressed.  Financial  market  regulation  and  supervision  have
been  strengthened.  Important  steps  have  been  taken  to  liberalise  key  markets,  such  as
agriculture and energy.

To  improve  the  functioning  of  its  markets  and  its  competitiveness,  Turkey  needs  to
continue  the  present  reform  process  in  order  to  achieve  macroeconomic  stability  and
fiscal  sustainability.  Further  reducing  chronically  high  inflation  and  maintaining  fiscal

84

discipline are important  pre-conditions  to  this end.  Prudential and accounting standards
in  the  banking  sector  have  to  be  brought  in  line  with  international  norms.  The
privatisation  of  state  banks  and  enterprises  has  to  be  accelerated  and  the  market
deregulation  completed.  Increasing  investment  into  productive  uses  and  devoting
particular  attention  to  education  is  important  to  increase  the  competitiveness  and  the
growth potential of the economy. The inflow of FDI has to be encouraged by simplifying
bureaucratic procedures and by removing remaining barriers.

Since  the  1998  Report,  Turkey  has  made  progress  in  aligning  legislation  in  the  areas
covered  by  the  Customs  Union.  Progress  has  also  been  achieved  in  areas  such  as  the
banking  sector,  telecommunications,  energy  and  agriculture.  The  financial  sector  has
been  restructured  and  administrative  capacity  in  this  field  has  been  streamlined.  Little
progress has been achieved in other areas.

Over the past year, Turkey has further advanced in the areas of internal market, notably
in the field of public procurement, as well as in the areas of energy and justice and home
affairs.    Progress  in  strengthening  administrative  capacity  to  implement  the  acquis  has
been limited.

Overall, Turkey has achieved a good degree of legislative alignment in the areas covered
by  the  Customs  Union,  while  in  other  areas  this  alignment  is  less  advanced.  Major
discrepancies between the acquis and Turkish legislation remain. Administrative capacity
needs to be strengthened. Considerable further efforts are needed.

Regarding the internal market, in the area of free movement of goods, the framework law
on the free circulation of products adopted in 2001 has entered into force. Various pieces
of  implementing  legislation  have  been  adopted  throughout  a  wide  range  of  sectors.
Substantial technical barriers to trade remain.  Harmonization activities in sectors such
as  foodstuffs,  pharmaceuticals  and  cosmetics  should  continue.  Substantial  work  also
remains  to  be  done  to  establish  and  improve  the  functioning  of  various  bodies
(standardization,  accreditation,  and  conformity  assessment).  An  appropriate  market
surveillance system should be established. Despite the adoption of the Framework Law,
pre-market  surveillance  is  still  in  force.  Current  efforts  focus  on  training  of  staff  and
improving the equipment capacity of the relevant bodies. On public procurement, a new
law  was  adopted  in  May  and  subsequently  amended  in  June  2002.  The  law  is  a
significant  step in  the  direction  of  aligning  Turkey’s  public  procurement  rules  with  the
Community acquis. Further efforts are needed to address substantial differences between
the new law and the acquis. No progress can be reported in the field of free movement of
persons.

In the field of free movement of capital, important restrictions on foreign investment in
various sectors have remained. The implementation of legislation in the  field of  money
laundering  should  be  given  greater  attention.  Turkey's  alignment  concerning  financial
services is well advanced, and further progress has taken place in 2001, in the framework
of the reorganisation of the financial sector.  In the field of non-financial services, there
has been no progress, and much work still remains to be done in order to align Turkish
legislation with the relevant acquis. In the area of company law, efforts have been made
concerning the fight against piracy and counterfeiting. Implementation of the legislation
should be further pursued and the Turkish Patent Institute needs to be fully independent.
In  the  field  of  competition  policy,  the  application  of  anti-trust  provisions  remains
satisfactory.    There  has  been  no  progress  in  aligning  Turkey's  state  aid  policy  with  the

85

acquis  and  an  independent  State  aid  authority  should  be  established  as  a  matter  of
priority.

On  agriculture,  Turkey  has  started  the  registration  of  land  and  of  live  bovine  animals.
Preparations  for  a  plant  passport  system  have  not  started.  Other  elements  under  the
relevant  priority  of  the  Accession  Partnership  have  not  been  addressed.  Concerning
veterinary and plant health, an alignment strategy is under development. No upgrading of
enforcement  capacity  has  taken  place.  Turkey  should  focus  on  the  transposition,
implementation  and  enforcement  of  EC  legislation  in  the  veterinary  and  phyto-sanitary
sectors.  Overall,  progress  on  alignment  with  the  acquis  in  the  field  of  agriculture  is
limited.

On fisheries, no progress has been made in alignment with the Common Fisheries Policy.
A modernized fleet registration system needs to be established. Major discrepancies with
the  main  elements  of  the  EC's  fisheries  policy  remain,  particularly  on  resource
management, inspection and control and market and structural policies.

As  regards  transport  policy,  Turkey  should  step  up  the  legislative  work  necessary  to
adopt  the  transport  acquis.  The  administrative  capacity  to  apply  and  implement  the
relevant legislation in all sectors should be improved. In many sectors (road and maritime
transport in particular), alignment is very partial, resulting mainly from the transposition
of international Conventions.

On taxation, alignment on excise duties and VAT has started and some progress has been
achieved  with  respect  to  rates  and  other  exemptions.  In  the  area  of  indirect  taxation,
significant  further  efforts  are  needed.  As  for  direct  taxation,  Turkey  needs  to  improve
direct  tax  collection  and  to  eliminate  discriminatory  measures.  Overall,  alignment  with
the  acquis  in  the  field  of  direct  and  indirect  taxation  is  partial.  As  regards  Customs
Union,  there  is  a  large  degree  of  alignment  on  paper,  but  little  effective  alignment  of
practices.

In  most  fields,  Turkey's  statistical  infrastructure  is  still  very  different  from  that  of  the
EU.  Co-operation  between  the  Turkish  authorities  and  Eurostat  has  started  recently.
Alignment with the acquis has started and substantial efforts are needed.

Steps have been taken in the field of social policy and employment, but are not always in
full conformity with the acquis.  There is an urgent need to develop and strengthen the
conditions  for  a  genuine  social  dialogue  at  all  levels.  While  some  progress  has  been
made, in most areas Turkish legislation is still far from alignment with the acquis.

As  regards  energy,  substantial  progress  has  been  achieved  in  the  electricity  and  gas
sectors.  The  two  major  laws  adopted  last  year  have  been  further  implemented  and
progress  has  been  achieved  in  establishing  an  independent  regulatory  authority  for  the
electricity  and  gas  sectors.  Alignment  with  the  acquis  is  well  under  way.  However,
further efforts are needed.

In the telecommunications sector, there has been no progress in liberalisation in mobile
and  fixed  markets  and  the  implementation  of  the  legal  framework  with  respect  to  the
dominant operators. Progress has been achieved in adopting new legislation in the field
of licensing, interconnection and to some extent on universal service. Further efforts are
needed to improve the administrative capacity of the Telecom Authority, in particular in

86

relation  to  human  resources  and  training.  Overall,  alignment  with  the  acquis  remains
limited.

As  regards  culture  and  audio-visual  policy,  the  new  law  on  broadcasting  is  not  in  line
with the acquis. Overall, alignment with the acquis remains limited.

As  regards  regional  policy,  the  definition  by  Turkey  of  a  provisional  map  for  regional
development purposes according to NUTS classification criteria has been completed and
approved  by  EUROSTAT.  However,  the  use  of  this  classification  for  planning  and
regional policies has not yet started. No effective regional policy strategy in line with the
EU standards has been developed. Overall, alignment with the acquis remains limited

In  the  environmental  field,  legislation  to  align  with  the  Environmental  Impact
Assessment  Directive  has  been  adopted.  Steps  have  been  taken  to  develop  a  plan  for
financing  investments.  The  adoption  of  a  new  Regulation  on  Environmental  Inspection
represents  a  positive  step  towards  increasing  Turkish  administrative  capacity  to
implement the acquis. Overall, alignment with the acquis remains limited

On  consumers  and  health  protection,  alignment  is  limited  and  substantial  efforts  are
needed  to  align  the  legislation  and  to  reinforce  administrative  capacity  and  consumers'
awareness.

In the field of justice and home affairs, efforts have been made to raise awareness on the
legislation  and  practices  of  the  EU,  in  particular  in  areas  such  as  asylum  and  illegal
migration. Further steps have been taken to strengthen the fight against organized crime,
drugs  trafficking  and  corruption.  The  legal  basis  for  combating  trafficking  in  human
beings has been established. Alignment with the acquis has started, in particular on visa
policy, but substantial further efforts are needed. The fight against illegal migration needs
to be drastically strengthened.

Concerning  external  relations,  the  adoption  of  the  Generalized  System  of  Preferences
should be pursued.

On  financial  control,  budgetary  and  financial  control  mechanisms  inside  the  Turkish
administation  should  be  improved.  Overall,  alignment  with  the  acquis  has  started  and
substantial further efforts are needed.

Administrative  capacity  in  different  areas  needs  to  be  strengthened  to  ensure  that  the
acquis  is  implemented  and  enforced  effectively.  Significant  reform  at  all  levels  of  the
administration  is  required.  In  some  cases,  this  will  entail  the  establishment  of  new
structures, for example in the field of state aid and regional development. In some areas,
new regulatory bodies have been set up. Their autonomy should be assured while at the
same time sufficient staff and financial resources need to be made available.

87

ANNEX  2 : THE CHAPTER “OTHER MATTERS”

The  chapter  on  “other  matters”  will  not  be  treated  as  the  other  negotiating  chapters.  It
essentially  constitutes  a  negotiating  box  in  which  a  number  of  elements,  which  are
largely uncontroversial but do not have their place in the other negotiating chapters, can
be placed.

First,  the  Accession  Treaty  will  need  to  provide  for  the  rules  applicable  to  the
management  and  phasing  out  of  pre-accession  funds.  Altogether,  some  €  5  billion  of
funds  under  the  ISPA,  SAPARD  and  PHARE  programmes  up  to  the  end  of  2003  will
have been committed for the new Member States but will still need to be contracted or at
least  paid  until  the  end  of  2006.  Whereas  ISPA  and  SAPARD  will  be  continued  in  a
similar  setting  under  the  cohesion  and  rural  development  funds,  PHARE  funding  will
need to be phased out by 2006. Certain transitional arrangements including rules related
to the further transfer of responsibility in the management of pre-accession aid to the new
Member  States  in  an  extended  decentralised  implementation  system  (EDIS)  (including
human resources and conditions for the  release of funds) will need to be included in the
Accession  Treaty.    The  release  of  PHARE  funds  should  be  made  conditional  on  the
implementation  of  the  extended  decentralised  system  by  the  acceding  countries.  For
ISPA,  in  order  not  to  discriminate  the  new  Member  States  vis-à-vis  current  Member
States, such an approach can not be implemented.

Second, the envisaged transition facility for certain institution building actions will need
to be more closely defined. In order to implement these actions and since these actions
are a continuation of activities under the PHARE programme, the Commission proposes
to use the established structures for the years 2004 to 2006, i. e. the PHARE committee
and to work through the established EDIS in the new Member States. In order to avoid
overlap with the type of action which can in future be financed by the structural funds,
the  Commission  proposes  at  this  stage  to  limit  institution  building  actions  to  the
following:

(cid:1)  Justice and Home Affairs (strengthening of the judicial system, border controls, anti-

corruption strategy);

(cid:1)  Internal Market, including customs union;

(cid:1)  Environment;

(cid:1)  Veterinary services and administrative capacity building related to food safety;

(cid:1)  Agricultural administration and control, including IACS;

(cid:1)  Nuclear safety;

(cid:1)  general  public  administration 

reform  and  horizontal 

technical  assistance

(TAIEX/Statistics).

However, other actions may need to be foreseen at a later stage, in particular to take into
account the results of the negotiations.

88

Third,  as  to  decommissioning  of  the  nuclear  power  plants  of  Ignalina  in  Lithuania  and
Bohunice  V1  in  Slovakia,  the  results  of  the  negotiations  foresee  the  need  to  create  a
specific  decommissioning  facility  in  order  to  finance  Community  support  for  such
activities  at  least  up  to  the  year  2006.  The  Commission  has  proposed,  in  its
Communication of 30 January 2002 to commit annually an amount of € 70 million on a
yearly  basis  from  2004  to  2006  for  the  decommissioning  of  Ignalina.  Furthermore,  the
Commission  indicated  that  funds  that  would  have  otherwise  been  allocated  under  the
PHARE  programme  would  need  to  be  committed  from  heading  3  of  the  budget  after
enlargement.  The  estimated  figures  will  be  revised  as  appropriate  on  the  basis  of  the
spending  profile  for  the  decommissioning  activities  of  the  Bohunice  and  Ignalina
decommissioning funds.

Since  the  financing  of  these  activities  constitutes  a  continuation  of  activities  financed
under  the  PHARE  programme,  the  Commission  considers  that  annual  budgetary
decisions on the allocation of Community support to decommissioning efforts should be
taken,  as  in  the  past,  in  consultation  with  the  PHARE  management  committee.  This
approach  would  also  allow  the  necessary  time  to  prepare  the  necessary  legal  basis  to
provide Community support to decommissioning activities for Ignalina envisaged for the
next  financial  perspective.  The  Commission  proposes  that  this  commitment  should  be
laid down in a Protocol annexed to the Act concerning the conditions of accession.

Fourth,  a  number  of  declarations,  protocols  and  additional  elements  will  need  to  be
included in the Treaty.

For example, with regard to nuclear safety, the commitments by Lithuania and Slovakia
to the early closure of the Ignalina and Bohunice V1 nuclear power plants will need to be
included in the Act concerning the conditions of accession.

Fifth, a legal base for  the  facility  for  the  northern  part  of  Cyprus in  order  to  back up a
political settlement.

89

ANNEX 3: HUMAN RIGHTS CONVENTIONS

Human Rights Conventions ratified by the Candidate Countries,
15 September 2002

BG

CY

CZ

EE

HU

LV

LT MT

PL

RO

SK

SI

TK

Adherence to following
conventions and protocols

ECHR (European Convention
on Human Rights)

Protocol 1 (right of property)

Protocol 4 (freedom movement et
al.)

Protocol 6 (death penalty)

Protocol 7 (ne bis in idem)

European Convention for the
Prevention of Torture

European Social Charter

Revised European Social
Charter

Framework Convention for
National Minorities

ICCPR (International Covenant
on Civil and Political Rights)

Optional Protocol to the ICCPR
(right of individual
communication)

Second Optional Protocol to
ICCPR (death penalty)

ICESCR (International Covenant
on Economic, Social and Cultural
rights)

CAT (Convention against
Torture)

CERD (Convention on the
Elimination of All Forms of
Racial Discrimination)

CEDAW (Convention on the
Elimination of All Forms of
Discrimination against Women)

X

X

X

X

X

X

O

X

X

X

X

X

X

X

X

X

Optional Protocol to the CEDAW O

CRC (Convention on the Rights
of the Child)

X

X = Convention ratified

X

X

X

X

X

X

X

O

O

X

X

O

X

X

X

X

O

X

X

X

X

X

X

X

O

X

X

X

X

X

X

X

X

X

O

X

X

X

X

X

O

X

X

O

X

X

X

X

X

X

X

X

O

X

X

X

X

X

O

X

X

O

X

X

X

O

X

X

X

X

O

X

X

X

X

X

X

X

O

X

X

X

X

X

X

X

X

X

O

X

X

X

X

X

X

X

X

O

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

O

X

X

X

X

X

X

X

X

X

O

X

X

X

O

O

O

X

X

O

O

O

O

O

O

X

O

X

O

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

O

X

X

X

O

X

X

X

X

X

X

X

X

X

X

X

X

O

X

X

X

X

O

X

X

X

X

O

X

X

X

X

X

X

X

X

O

X

X

X

X

X

X

X

X

X

X

90

O = Convention NOT ratified

BG=Bulgaria;  CY=Cyprus;  CZ=Czech  Republic;  EE=Estonia;  HU=Hungary;  LV=Latvia;  LT=Lithuania;  MT=Malta;
PL=Poland; RO=Romania; SK= Slovak Republic; SV=Slovenia; T=Turkey

91

ANNEX 4: TWINNING PROJECTS

NUMBER OF TWINNING PROJECTS FINANCED UNDER PHARE IN 1998-2002*

                Sector

Agriculture

Environment

(incl. Veterinary
and
Phytosanitary
projects)

Candidate

Country

Bulgaria

Cyprus

Czech Rep.

Estonia

Hungary

Latvia

Lithuania

Malta

Poland

Romania

Slovak Rep.

  13

  –

    7

    8

  12

    4

    7

    4

  27

  11

    9

  11

  –

  10

    4

  11

    3

    2

    1

  12

    6

    9

Public Finance
(incl. Taxation,
Customs, Internal
Market, etc.)

Justice and
Home Affairs

Social Policy

Others

Total

Regional
Development

and
Preparation for
Structural
Funds

  17

    1

  19

    8

  10

    7

  12

    1

  16

  22

  17

  2

–

15

  7

  8

  2

  6

  1

12

  9

  6

  4

–

  6

  3

  4

  4

  3

  1

19

15

  3

  2

–

  7

  1

  3

  3

  8

  1

12

  6

  7

  64

    2

  80

  39

  60

  36

  50

  10

134

  95

  61

  15

    1

  16

    8

  12

  13

  12

    1

  36

  26

  10

92

Slovenia

Turkey

Total

    9

    2

113

    1

    1

  71

  11

    1

162

    8

    6

144

  3

–

71

  5

–

67

  3

  3

56

  40

  13

684

*) The number of projects for 2002 is still subject to changes

93

NUMBER OF TWINNING PROJECTS 1998-2002* IN WHICH MEMBER STATES

ARE INVOLVED AS LEADERS OR PARTNERS

Country     A    B      D

  DK     E

  FIN      F

EL   IRL      I

   NL     P     S

   UK

Total

BG

CY

CZ

EE

HU

LV

LT

MT

PL

RO

SK

SI

TR*

Total

  7

–

  5

–

11

–

–

–

  4

  2

12

11

–

52

–

–

–

–

1

1

1

–

–

1

–

–

–

4

21

–

23

11

17

  7

12

–

33

15

18

13

–

  2

  1

  4

–

  5

  2

  9

–

11

  3

  1

–

–

170

38

  6

  1

  7

–

10

  2

  4

  2

16

11

  8

  8

–

75

–

–

  2

11

  5

  5

  8

–

  5

–

  2

–

–

10

–

15

  4

14

  3

  6

–

37

23

12

  5

–

38

129

  6

  1

  1

  1

  2

  1

–

–

  1

  6

  6

  1

–

26

  2

–

  3

  4

  1

–

–

  1

  3

–

  2

  2

–

18

  1

–

  4

  1

  4

–

  3

  1

  8

11

  5

  2

–

40

  4

–

12

  4

  5

  1

  1

–

15

  9

  7

  4

–

62

 –

 –

1

 –

 –

 –

 –

 –

1

 –

 –

 –

 –

2

  4

 –

  3

  8

  7

  7

14

 –

  9

  4

  6

  5

 –

67

  9

–

22

  3

11

  4

  6

  3

24

11

  8

  4

 –

      72

        3

   102

      47

      93

      33

      64

        7

   167

      96

      87

      55

–

105

   826 **

*)  Selection of Twinning partners for 2002 is not yet finalised.

**) This total does not correspond to the total number of projects, some projects involve more than one Member State

94

ANNEX 5: PEER REVIEWS

Peer reviews: Number of Expert mobilisations per Member State

Member State

Total number of expert
mobilisations

Austria

Belgium

Denmark

Finland

France

Germany

Greece

Ireland

Italy

Luxembourg

Netherlands

Portugal

Spain

Sweden

United Kingdom

Total

71

33

41

61

57

78

19

27

47

10

61

49

35

74

137

800

95

Peer reviews carried out by the TAIEX office, DG Enlargement

Candidate
country

Chapter 19

Free
Movement
of Goods

Chapter  210
Freedom  of
movement
of Persons

Chapter  311
Freedom
to  provide
services

Chapter 712

Chapter 1313

Agriculture

Social Policy

Chapter  1914
Telecommu-
nications
and
information
technologies

2215
Chapter 
Environment

Chapter  2316
Consumers
and  Health
Protection

2417
Chapter 
Co-operation
in  the  field  of
Justice 
and
Home Affairs

Total

Bulgaria

Cyprus

Czech
Rep.

Estonia

Hungary

Latvia

Lithuania

Malta

Poland

Romania

2

2

2

2

2

2

2

2

6

6

6

6

6

6

6

6

6

6

1

2

1

2

1

1

1

2

1

5

6

5

7

5

5

3

5

2

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

9

18

21

19

22

17

17

16

187

10

9 Rapid Alert System for Food and Feed, Novel Foods/GMOs
10 Mutual recognition of professional qualifications in the medical sector:Doctors, Dentists, Pharmacists, Veterinarians, Nurses, Midwives
11 Financial Services, Data Protection (not all topics in all countires)
12 Bovine database, Fruits and Vegetables, IACS, Milk Quotas, Veterinary BIPs, Veterinary Establishments,  Wine (not all topics in all countires)
13 Communicable Diseases
14 Postal Services
15 Environment including topics such as: Air, Chemicals, Dangerous substances to water, Drinking water, EIA, GMO’s, IPPC, Nature Protection, Nitrates, SEVESO, Waste
16 General Product Safety
17 Justice and Home affairs including topics such as: Implementation of the Schengen Action Plan/External Borders, Judiciary, Asylum, Drugs, Visa Policy, Money laundering, Fight against economic

and financial crime, Fraud and corruption, Police co-operation

96

                                                
Slovak
Rep.

Slovenia

Total

2

2

20

6

6

72

1

1

13

7

5

56

1

1

12

1

4

1

1

10

1

1

12

20

18

205

1

6

97

Peer reviews carried out by other services of the Commission and other institutions

Candidate
country

Bulgaria

Cyprus

Czech Rep.

Estonia

Hungary

Latvia

Lithuania

Malta

Poland

Romania

Slovak Rep.

Slovenia

Total

Chapter  418
Free
movement
of capital

Chapter 1419

Energy

2520

Chapter 
Customs
Union

Chapter  2821
Financial
Control

Total

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

12

12

1

1

1

1

1

1

1

1

1

9

1

1

1

3

3

3

3

3

3

3

4

2

4

2

3

3

36

18 Peer reviews carried out by the Central European Bank
19 Peer review in the field of Nuclear Safety carried out under the auspices of the EU Council Working Group on

Atomic Questions

20 Peer review in the field of customs financed through the Customs 2002 programme
21 Peer review in the field of Public International Financial Control carried out by SIGMA

98

                                                
N°

CHAPTER

CY

CZECH

EST

HUN

POL

SLO

BUL

LAT

LIT

MAL

ROM

SLK

ANNEX 6: STATE OF PLAY OF NEGOTIATIONS

1 Free movement of goods

2 Free movement of persons

3 Free movement of services

4 Free movement of capital

6 Competition

7 Agriculture

8 Fisheries

9 Transport

10 Taxation

11 EMU

12 Statistics

13 Social policy and employment

14 Energy

15 Industry

16 Small and medium-sized enterprises

17 Science and research

18 Education and training

19 Telecommunication

20 Culture and audiovisual policy

21 Regional policy

22 Environment

23 Consumers and health protection

24 Justice and home affairs

25 Customs union

0

0

0

0

0

0

0

0

0

0

99

0

0

 0

 0

~

0

0

~

0

 0

 0

0

0

 0

 0

 0

 0

0

0

0

0

0

 0

0

 0

0

 0

 0

 0

0

26 External relations

27 Common foreign and security policy

28 Financial control

29 Financial and budgetary provisions

30 Institutions

31 Other

Chapters opened (1)

Chapters closed (2)

0

~

30

28

0

0

~

30

25

0

~

30

28

0

0

~

30

26

0

~

30

27

0

~

30

28

 0

~

30

22

0

0

~

30

27

0

~

30

28

0

~

~

30

25

0

~

~

27

13

0

~

30

27

Chapters remaining open  (3)+

       3

       6

        3

      5

       4

      3

      9

       4

       3

       7

     18

       4

0  : Chapter open, under negotiation; blank: Chapter provisionally closed; ~  : Chapter not yet opened to negotiations

ANNEX 7: MAIN STATISTICAL INDICATORS

CANDIDATE COUNTRIES

MAIN STATISTICAL INDICATORS (2001)

Area

Population

Density

GDP in PPS (Purchasing Power Standards)(1)(2)

GDP %
Change

Agriculture

1000
km²

Million

inhabitants

Inhabitants
/ km²

Billion €

GDP per capita

GDP per capita

%

€

% of EU average

Bulgaria

Cyprus

Czech Rep.

Estonia

111

9

79

45

7.9

0.8

10.2

1.4

71

82

130

30

51.5

14.1

136.0

13.4

6,500

18,500

13,300

9,800

28

80

57

42

%
gross
added
value

13.8

3.9

4.2

5.8

4.0

4.0

3.3

5.0

%

employment

26.7

4.9

4.6

7.1

100

Hungary

Latvia

Lithuania

Malta

Poland

Romania

Slovakia

Slovenia

Turkey

93

65

65

0.3

313

238

49

20

775

10.2

2.4

3.5

0.4

38.6

22.4

5.4

2.0

68.6

110

36

53

1,250

124

94

110

98

89

Sources : Eurostat from national sources.

121.3

18.1

30.3

11,900

7,700

8,700

51

33

38

4.6 (3)

11,700 (3)

55(3)

355.5

132.2

59.7

31.9

356.8

9,200

5,900

11,100

16,000

5,200

40

25

48

69

22

3.8

7.7

5.9

-0.8

1.1

5.3

3.3

3.0

4.3(4)

4.7

7.0

2.4

3.4

14.6

4.6

3.1

-7.4

12.1

6.1

15.1

16.5

2.2

19.2

44.4

6.3

9.9

35.4

(1)

The method for calculating GDP in P.P.S. has been adjusted since last year’s reports.

Data are therefore not comparable.

(2)

(3)

(4)

For the elaboration of GDP per capita, data related to global population are coming from national accounts, they may differ from demographic
statistics.

1999

2000

101

CANDIDATE COUNTRIES

MAIN STATISTICAL INDICATORS (2001)

Inflation
rate

Unemployment
rate

General

Government

Budget

External Trade

Current
Account

Foreign Direct
Investment

Annual
Average

% labour force (5)

Balance in

Trade balance

% of GDP

exports/imports

in %

Exports to EU
in % of

total exports

Imports
from EU in
% total
imports

Bulgaria

Cyprus

Czech Rep.

Estonia

Hungary

Latvia

Lithuania

Malta

Poland

Romania

Slovakia

Slovenia

Turkey

7.4

2.0

4.5

5.6

9.1

2.5

1.3

2.5

5.3

34.5

10.8(3)

8.6

57.6

19.9

4.0

8.0

12.4

5.7

13.1

16.5

6.5

18.4

6.6

19.4

5.7

8.5

1.7

-3.0(4)

-5.5

-0.4

-4.1

-1.6

-1.9

-7.0

-3.9

-3.4

-5.6

-2.5

-28.7

76.3

13.0

91.6

77.0

90.5

57.1

72.1

71.8

71.8

73.0

85.5

91.2

75.8

102

54.8

49.0

68.9

69.4

74.3

61.2

47.8

41.3

69.2

67.8

59.9

62.2

51.6

49.4

55.5

61.8

56.5

57.8

52.6

44.0

63.6

61.4

57.3

49.8

67.7

44.6

Balance

Balance

in % of
GDP

of  EU

with the

countries

(Mio €)

Stock in
€ per
capita

(1) (2)

Net
inflow
in % of
GDP

(2)

380

1,670

2,376

19

-481

466

773

1,304

8,976

967

-264

1,819

-67

-6.0

-4.5

-4.7

-6.1

272

/

2,284

2,084

-2.2

1,790(3)

-9.7

-4.8

-4.8

-4.1

-5.9

-8.8

-0.4

2.3

970

720

/

952

245

521

1,527

/

5.1

1.8

8.7

9.7

4.7

2.3

3.7

8.8

3.2

2.8(3)

6.3

1.9

2.2

Sources : Eurostat from national sources.

(1) Figures have been calculated using the population figures from National Accounts, which may differ from those used in demographic statistics.

(2) Balance of payments data.

(3) 2000

(4) Estimate

(5) Labour Force Survey Definition

103

CANDIDATE COUNTRIES

MAIN STATISTICAL INDICATORS (Average 1997/2001)

G.D.P.
growth

Inflation
rate

Unemployment
rate

General

Government

External
Trade

Current

Foreign Direct

Account

Investment

Change
in %

Annual
Average

% active
population (4)

Budget

Balance in

Balance

Balance

Net inflow

% of GDP

of EU

in % of

GDP

with the
country

(Mio €)

in % of

GDP (1)

Bulgaria

Cyprus

Czech Rep.

Estonia

Hungary

Latvia

Lithuania

Malta

Poland

Romania

Slovakia

Slovenia

Turkey

2.0

4.2

1.1

5.2

4.5

6.1

3.6

3.4

4.2

-1.0

3.3

4.2

1.2

9.8

2.7

5.6

6.1

12.4

3.9

3.3

3.6

9.9

46.3

8.9(2)

8.0

69.9

15.2

4.3

7.1

11.5

7.4

14.0

16.5

6.0

13.6

6.2

15.7

6.8

7.3

-1.5

-4.5

-4.3

-7.8

-3.4

-8.6

-8.9

-7.1

-5.4

-5.3

-7.4

-1.7

-0.8

188

1,768

2,604

496

1,090

318

696

1,358

10,750

1,050

48

1,704

7,398

0.5

-4.0(3)

-3.8

-0.5

-5.4

-1.7

-2.9

-8.8

-2.8

-4.0

-7.0

-2.3

-15.7

104

5.6

1.3

7.8

8.1

4.3

5.7

4.8

11.9

4.2

3.5(2)

4.4

1.4

0.8

Sources : Eurostat and Commission services calculations from national sources.

(1) Balance of payments data.

(2) Average 1997/2000

(3) Estimate average 1997/2000

(4) Labour Force Survey Definition

105