Communication from the Commission to the Council on the progress achieved by Bosnia and Herzegovina in implementing the priorities identified in the “Feasibility Study on the preparedness of Bosnia and Herzegovina to negotiate a Stabilisation and Association Agreement with the European Union (COM (2003) 692 final)”
Date: 2005-10-21
Institutions: European Commission
Subjects: Bosnia and Herzegovina, association agreement (EU), economic situation, economic stabilisation, negotiation of an agreement (EU), political situation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.10.2005 
COM(2005) 529 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 

on the progress achieved by Bosnia and Herzegovina in implementing the priorities 
identified in the “Feasibility Study on the preparedness of Bosnia and Herzegovina to 
negotiate a Stabilisation and Association Agreement with the European Union 
(COM (2003) 692 final)” 

EN 

   EN 

 
 
 
  
1. 

INTRODUCTION 

The Thessaloniki European Council in June 2003 confirmed the Stabilisation and Association 
process (SAP) as the European Union’s policy framework for South Eastern Europe. The SAP 
provides for the establishment of Stabilisation and Association Agreements (SAAs) between 
the  EU  and  the  SAP  countries1.  The  Thessaloniki  European  Council  also  confirmed  that 
Bosnia  and  Herzegovina  is  a  potential  candidate  for  EU  membership.  The  European 
perspective for the Western Balkans has been confirmed by the Presidency Conclusions of the 
June 2005 European Council. 

In November 2003, the Commission presented a Feasibility Study (FS) on the preparedness of 
Bosnia and Herzegovina to negotiate a SAA2. The FS concluded that the Commission would 
decide  on  a  recommendation  for  a  Council  decision  to  open  negotiations  for  a  SAA  with 
Bosnia and Herzegovina as soon as it would ascertain that significant progress had been made 
in meeting the sixteen priorities set out under Section C (Conclusion) of the Study. 

The present Communication assesses whether Bosnia and Herzegovina has made the required 
“significant progress” in addressing the FS priorities. 

2. 

RELATIONS BETWEEN THE EUROPEAN UNION AND BOSNIA AND HERZEGOVINA 

Currently, the EU has no contractual relation with Bosnia and Herzegovina. Nevertheless, a 
structured  dialogue  between  Bosnia  and  Herzegovina  and  the  EU  has  been  established  in 
recent  years.  Bosnia  and  Herzegovina  has  been  benefiting  from  various  SAP  instruments 
since the outset of this initiative, notably from autonomous trade concessions covering almost 
all Bosnia and Herzegovina’s products, and from substantial financial support.  

In 1998 an EU Declaration on “Special Relations between EU and Bosnia and Herzegovina” 
led  to  the  establishment  of  the  EU/Bosnia  and  Herzegovina  Joint  Consultative  Task  Force 
(CTF) to  assist in the  preparation  of  contractual relations. Since the  2003  Feasibility Study, 
the CTF has focussed upon promoting and monitoring reforms in the key areas identified by 
the  FS.  These  areas  coincide  to  a  very  large  extent  with  the  short  term  priorities  of  the 
European Partnership for Bosnia and Herzegovina adopted in June 20043 

3. 

PROGRESS  BY  BOSNIA  AND  HERZEGOVINA  IN  ADDRESSING  THE  PRIORITIES 
IDENTIFIED IN THE 2003 FEASIBILITY STUDY (FS) 

The  2003  FS  and  the  perspective  to  negotiate  a  SAA  have  acted  as  a  powerful  catalyser  to 
implement reforms in Bosnia and Herzegovina. The most relevant achievements in addressing 
the sixteen FS priorities are summarised below.  

In  relation  to  existing  conditionality  and  international  obligations  (FS1),  Bosnia  and 
Herzegovina  has  completed  the  remaining  requirements  of  the  EU  Road  Map4  and  has 

1 
2 
3 
4 

Albania, Bosnia and Herzegovina, Croatia, former Yugoslav Republic of Macedonia, Serbia and Montenegro 
COM (03) 692 of 18 November 2003 
Council Decision 2004/515/EC; OJ L221/2004 
In 2000, an EU "Road Map" identified eighteen initial steps to be taken by Bosnia and Herzegovina prior to the preparation by the 
Commission of a study assessing the feasibility of opening SAA negotiations with Bosnia and Herzegovina. The Road Map steps 

EN 

2 

   EN 

 
                                                 
ensured compliance with the Dayton-Paris Peace Accords. Co-operation with the International 
Criminal  Tribunal  for  former  Yugoslavia  (ICTY)  has  seen  important  progress  and  a 
substantial  number  of  indicted  war  criminals  have  been  transferred  to  The  Hague  in  recent 
months.  In  its  tenth  report  issued  at  the  end  of  April  20055,  the  Council  of  Europe  (CoE) 
recognised  that  Bosnia  and  Herzegovina  has  honoured  most  of  its  post-accession 
commitments, and outlined a number of recent positive developments in the fields of human 
rights  and  the  rule  of  law.  Regarding  governance  (FS2),  the  functioning  of  the  Council  of 
Ministers (CoM) and of the Parliament has overall improved. New State-level Ministries and 
institutions have been established and they are now progressively being equipped to properly 
perform  all  their  duties.  The  “Action  Plan  for  Priority  Reforms”  has  been  adopted,  and  a 
consolidated  State-level  government  work  plan  matching  policy  priorities  with  budgetary 
resources has been established. 

Bosnia  and  Herzegovina’s  public  administration  (FS3)  has  also  been  strengthened.  The 
necessary funding has been provided for the Civil Service Agencies at State and Entity levels, 
and  inter-agency  co-operation  has  improved.  The  administrative  structures  directly  related 
with  European  integration  (FS4)  have  been  considerably  reinforced.  In  particular,  the 
Directorate  for  European  Integration  (DEI)  is  now  operational  and  has  become  a  central 
counterpart for the development of the relations between Bosnia and Herzegovina and the EU.  

In the area of human rights (FS5), it is important to note that legislation necessary to support 
refugee returns has  been  adopted,  and  that a Bosnia and Herzegovina Refugee Return Fund 
has  been  established  and  is  in  operation.  Human  rights-related  competencies  have  been 
transferred  from  the  Entity-level  to  the  State-level,  as  recommended  by  the  CoE  and  other 
international  bodies.  The  Human  Rights  Commission  has  been  established;  it  is  working 
within the Constitutional Court and is ensuring due follow up to human rights-related cases. 
Adequate  funding  is  provided  for  the  Court.  In  the  field  of  judiciary  (FS6),  legislation  to 
establish  a  single  High  Judicial  and  Prosecutorial  Council  (HJPC)  for  Bosnia  and 
Herzegovina  has  been  adopted  and  the  HJPC  is  now  operational.  This  is  a  crucial  step  to 
consolidate State authority over the Entity judiciaries and to strengthen the independence of 
the judiciary throughout Bosnia and Herzegovina. Staff and funding for the State Court and 
Bosnia and Herzegovina’s State Prosecutor have been provided. 

As  regards  tackling  crime,  especially  organised  (FS7)  crime,  Bosnia  and  Herzegovina  has 
made considerable progress in building up State-level law enforcement capacity, in particular 
by allocating the necessary resources to ensure the proper functioning of the State Information 
and  Protection  Agency  (SIPA).  The  Bosnia  and  Herzegovina  Ministry  of  Security  is 
progressively being equipped in order to implement its tasks adequately. In the field of police 
reform, the Agreement on Restructuring of Police has been adopted by the parties, in line with 
the  three  principles  outlined  by  the  Commission,  namely  i)  all  legislative  and  budgetary 
competencies  for  all  police  matters  must  be  vested  at  the  state  level,  ii)  no  political 
interference  with  operational  policing  and  iii)  functional  local  police  areas  must  be 
determined  by  technically  policing  criteria  where  operational  command  is  exercised  at  the 
local level.  

were  "substantially  completed"  in  September  2002.  This  opened  the  door  to  the  preparation  of  the  Commission’s  Feasibility 
Study (FS).  

5 

SG/Inf (2005)8 of 25 April 2005 

EN 

3 

   EN 

 
                                                                                                                                                         
Proper  structures  to  address  asylum  and  migration  (FS8)  in  conformity  with  international 
standards have been established. The Ministry of Security has taken over the responsibility for 
refugee status determination from UNHCR and has defined related criteria and procedures. 

With  regard  to  the  reform  of  the  customs  and  tax  administrations  (FS9),  Bosnia  and 
Herzegovina  has  ensured  the  implementation  of  the  recommendations  of  the  Indirect  Tax 
Policy Commission, notably through the adoption of the Law on the Indirect Tax Authority 
(ITA)  and  the  related  enabling  legislation.  ITA  is  now  operational,  as  well  as  the  new 
Customs Authority. Progress has been made as regards the introduction of the VAT, which is 
now scheduled for 1st January 2006.  

In  the  area  of  budget  legislation  and  practice  (FS10  +  FS11),  budget  legislation  covering 
multi-annual  budget  planning  and  forecasting  has  been  adopted  and  substantial  steps  have 
been  taken  to  elaborate  a  consolidated  government  account.  Moreover,  progress  has  been 
made  as  regards  the  establishment  of  a  centralised  record  for  all  income  accruing  to  public 
authorities at different levels of government, including grants and other forms of international 
assistance.  

As  regards  statistics  (FS12),  Bosnia  and  Herzegovina  has  adopted  and  is  implementing  the 
Law  on  Statistics  aiming  at  the  creation  of  a  functioning  system  with  clear  lines  of 
responsibility and co-ordination mechanisms. Bosnia and Herzegovina has started to provide 
trade statistics to EUROSTAT. 

In the field of trade (FS13), Bosnia and Herzegovina has prepared a draft trade policy. With a 
view  to  promoting  exports,  but  also  to  enhancing  standards  and  the  single  economic  space, 
Bosnia and Herzegovina has established, at State-level, certification and other procedures for 
the export of animal products. A Phyto-sanitary Office has been established.  

In  the  field  of  energy  (FS14),  Bosnia  and  Herzegovina  has  developed  Action  Plans  for  the 
restructuring  of  the  electricity  market  and  started  their  implementation.  It  has  also  made 
progress in terms of regional co-operation in this area, notably through the implementation of 
measures identified in the 2003 Athens Memorandum of Understanding on Energy.  

Bosnia  and  Herzegovina  has  been  able  to  make  significant  achievements  in  establishing  a 
single economic space (FS15) within the country. It has adopted a new Competition Law and 
established  its  main  management  body,  the  Competition  Council.  It  has  also  introduced 
provisions on the mutual recognition of products by the Entities and has set the framework for 
the  implementation  of  a  common  public  procurement  regime  throughout  the  country.  Some 
progress has also been made in removing duplicate licences, permits and similar authorisation 
requirements,  facilitating  operations  of  service  providers  (limited  to  the  areas  of  banking, 
insurance  and  accounting  and  auditing).  Finally,  Bosnia  and  Herzegovina  has  adopted  the 
necessary  legislation  for  the  creation  of  a  single  business  registration  system,  recognised 
throughout the whole country.  

As far as public broadcasting (FS16) is concerned, Bosnia and Herzegovina has adopted the 
Law on Public Broadcasting System and the parliamentary procedure for the adoption of the 
Law on Public Broadcasting Service has been initiated and is well advanced. This legislation 
is in line with European standards and the Dayton-Paris Peace Accords.  

EN 

4 

   EN 

 
4. 

OVERALL CONCLUSION  

Taking  into  account  the  above,  the  European  Commission  considers  that  Bosnia  and 
Herzegovina has made significant progress in addressing the sixteen priorities identified in the 
framework  of  the  2003  Feasibility  Study.  Therefore,  in  line  with  the  FS  conclusions,  the 
Commission is in a position to recommend to the Council the opening of negotiations for a 
Stabilisation and Association Agreement with Bosnia and Herzegovina. The Commission will 
accordingly present draft negotiating directives to the Council. 

However,  the  opening  of  negotiations  will  require  that  BiH  State  Parliament  endorses  the 
Agreement on Restructuring of Police. 

Moreover, Bosnia and Herzegovina needs to continue, in a sustained way, its reforms. Bosnia 
and  Herzegovina  should  ensure  the  completion  of  outstanding  FS  issues  and  focus  on 
adequate  implementation  of  the  European  Partnership  priorities.  The  Commission  will 
continue monitoring closely the progress made by Bosnia and Herzegovina.  

The pace at which Bosnia and Herzegovina draws closer to the EU depends essentially on its 
speed  in  adopting  and  implementing  the  necessary  reforms.  Continued  focus  by  the 
authorities  on  European  integration  is,  therefore,  key  to  the  sustainability  of  the  process.  In 
order  to  progress  through  the  various  stages  of  the  process,  both  before  and  during  the 
negotiations,  Bosnia  and  Herzegovina  must,  in  particular,  continue  to  co-operate  with  the 
International  Criminal  Tribunal  for  former  Yugoslavia  (ICTY)  with  a  view  to  rapidly 
achieving  full  co-operation,  adopt  the  Law  on  Public  Broadcasting  Service  and  ensure  the 
implementation of the police reform and of the Public Broadcasting legislation.  

In addition to the above-mentioned areas, the authorities should pay special attention to and 
achieve substantial progress in relation to the following issues: 

Implementation of the outstanding Council of Europe post-accession obligations, in particular 
in the areas of electoral law and education and adoption of the  legislation necessary for the 
establishment of a single Ombudsman in Bosnia and Herzegovina.  

With regard to governance and public administration, adequate staffing and suitable premises 
need  to  be  made  available  for  all  State-level  ministries  and  institutions.  Bosnia  and 
Herzegovina must develop a comprehensive Action-plan for public administration reform and 
ensure  its  implementation.  It  should  also  enhance  aid  co-ordination  capacities  of  the 
Directorate  for  European  Integration.  Furthermore, 
that  State-Entity 
coordination be further improved. 

is  essential 

it 

Sustained efforts are necessary to tackle crime, and in particular organised crime, efficiently. 
The  Ministry  of  Security  should  be  reinforced  both  in  terms  of  staff  and  funding.  The  laws 
establishing the Data Protection Commission and the Information Society Agency should be 
adopted.  The  Specific  Action  Oriented  Measures  against  Organised  Crime  should  be  fully 
implemented. 

A  sound  and  comprehensive  Trade  Policy  Strategy  should  be  rapidly  adopted  and 
implemented.  Bosnia  and  Herzegovina  should  ensure  that  its  trade-related  contractual 
commitments are fulfilled and that the Free Trade Agreements are properly implemented. BiH 
international  trade  commitments,  including  its  offers  within  the  ongoing  WTO  accession 
negotiations,  should  be  fully  consistent  with  the  objectives  of  the  future  EU-Bosnia  and 

EN 

5 

   EN 

 
Herzegovina  SAA  and  with  Bosnia  and  Herzegovina’s  obligations  therein  and  should 
therefore  take  fully  into  account  EC  own  international  trade  commitments.  Ensuring  the 
adequate  supervision  and  management  of  free  zones  in  accordance  with  EU  standards  is 
essential.  Furthermore,  the  issuing  and  control  of  certificates  of  origin  need  to  be  enhanced 
and  BiH  should  fully  apply  customs  valuation  rules  in  accordance  with  international 
standards.  

Additional  measures  are  necessary  to  achieve  Bosnia  and  Herzegovina’s  single  economic 
space.  Bosnia  and  Herzegovina  needs  to  accelerate  the  removal  of  duplicate  licences, 
authorisations  and  similar  barriers  to  the  existence  of  an  actual  single  economic  space, 
including  through  the  establishment  of  the  necessary  state-level  institutions.  Public 
procurement legislation should be brought progressively in line with EU standards and should 
be  consistently  implemented,  including  through  the  establishment  of  the  bodies  foreseen  by 
the law. Continued efforts are necessary to implement the laws on standardisation, metrology 
and  intellectual  property,  as  well  as  to  ensure  the  adequate  functioning  of  a  single  business 
register. Further efforts are necessary to complete the implementation of the Law on Statistics and to 
further develop and harmonise the production of statistics. 

Should the Commission note at any time that Bosnia and Herzegovina has not lived up to its 
this 
in 
commitments  and  has  not  satisfactorily  addressed 
Communication, it may propose to the Council that the SAA negotiations be suspended.  

issues  highlighted 

the 

To  support  the  efforts  made  by  Bosnia  and  Herzegovina  before  the  formal  opening  of 
negotiations  and  throughout  the  negotiation  process,  the  Commission  will  further  intensify 
discussions  with  the  authorities,  in  particular  by  setting  up  sectoral  groups,  as  appropriate. 
The Commission is also committed to supporting this process through its financial assistance 
programme. 

EN 

6 

   EN