[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 6.7.2006

SEC(2006) 885 final

RECOMMENDATION FROM THE COMMISSION TO THE COUNCIL

to amend the Negotiating Directives for a Stabilisation and Association Agreement with Serbia and Montenegro in order to continue negotiations with the Republic of Serbia

1. EXPLANATORY MEMORANDUM

Through the Stabilisation and Association process (SAp)[1] the EU has set up in 1999 a framework for the establishment of closer relations between the EU and the countries in the Western Balkans, notably through a new category of agreements, the Stabilisation and Association Agreements (SAA).

To help overcome the difficulties arising from Serbia and Montenegro’s complex institutional structure and to re-energise Serbia and Montenegro’s progress towards the EU, a “twin-track” approach was proposed by the Commission to negotiate an SAA with the State Union and its two constituent Republics according to the repartition of competences.

This approach was subsequently endorsed by the Council and the political leaders of Serbia and Montenegro in October 2004, which in turn enabled the Commission in April 2005 to present its Feasibility Report on an SAA with Serbia and Montenegro.[2] The Report concluded that Serbia and Montenegro were sufficiently prepared to negotiate an SAA but that in order to progress through the various stages of the process, both before and during the negotiations, Serbia and Montenegro must continue to co-operate with the ICTY, and achieve full cooperation without delay. The Commission also considered that the State Union and the two Republics should continue to implement the revised European Partnership priorities through their Action Plans and that they should pay special attention to a number of issues that are particularly relevant for an SAA enumerated in the Report This report was endorsed by the Council on 25 April 2005. In its 2005 Progress Report the Commission could also note further improvements in the areas relevant for the SAA.

On a recommendation from the Commission, the Council decided on 3 October 2005 to authorise the Commission to negotiate a Stabilisation and Association Agreement with Serbia and Montenegro in conformity with the Negotiating Directives adopted simultaneously[3]. The negotiation for a Stabilisation and Association Agreement with Serbia and Montenegro was launched on 10 October 2005. Two official rounds, in Belgrade on 7 November 2005 and 5 April 2006, as well as two technical rounds, on 20-21 December 2005 and on 22-23 February 2006, have taken place so far. Good progress has been achieved, reaching provisional agreement on an important number of the provisions of the future SAA.

However, the Commission decided on 3 May 2006 to call off the negotiation round on 11 May considering that Serbia and Montenegro did not fully cooperate with the International Criminal Tribunal for the former Yugoslavia (ICTY). The Commission continues to work with Serbia on all other aspects of the Stabilisation and Association process .

The referendum on 21 May 2006 in Montenegro resulted in a 55.5% majority for independence. The Montenegrin Parliament consequently adopted on 3 June 2006 a Declaration of Independence. The Republic of Montenegro has withdrawn from the State Union of Serbia and Montenegro.

According to Article 60 of the Constitutional Charter, Serbia is the successor state of the State Union of Serbia and Montenegro and inherits its international personality. At the General Affairs and External Relations Council meeting of 12 June 2006 the Council took note of the Parliament of Serbia’s Decision that defines the Republic of Serbia as the continuing State of the State Union of Serbia and Montenegro. Furthermore, the Serbian Government has adopted a Decree taking over the responsibility of the main institutions of the State Union and is proceeding to replace the State Union in international organisations.

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Consequently, the current framework of negotiations with the State Union of Serbia and Montenegro for a Stabilisation and Association Agreement will have to be adapted to these developments. The Commission recommends that it continues the negotiations on the basis of the results achieved so far with a view of concluding two separate agreements, with Montenegro and with Serbia respectively.

The Commission's Feasibility Report of April 2005 regarding the capacity of Serbia and Montenegro to negotiate a Stabilisation and Association Agreement is still valid in its main conclusions, considering that Serbia and Montenegro were sufficiently prepared to negotiate an SAA. Serbia has so far shown a remarkable capacity to negotiate the Stabilisation and Association Agreement. The Commission will in its progress report this autumn give specific emphasis to Serbia's capacity to properly implement the future Agreement. In the report the Commission will also assess Serbia's capacity to conclude the negotiations in line with Feasibility Report and the Council Conclusions on 3 October 2005.[4]

As the Republic of Serbia is the successor state to the State Union, the Council decision of 3 October 2005 needs to be amended to take into account the new legal situation. However, all what is required is a technical adaptation replacing the reference to the State Union by a reference to the Republic of Serbia, and deleting all references to Montenegro. This will allow the Commission to conduct the negotiations, on the basis, as to the substance, of the negotiating directives as adopted on 3 October 2005, continuing, from the point at which they have been interrupted on 3 May 2006. The Serbian side have indicated their readiness to continue negotiations on this basis.

This Recommendation has no implications on the Commission's decision on 3 May 2006 to freeze the SAA negotiations as long as Serbia does not fulfil its obligations to fully co-operate with the ICTY. However, the adoption of this Amendment will enable the Commission to rapidly resume the negotiations as soon as the obligations towards the ICTY are fulfilled.

When presenting this Recommendation, the Commission shall inform the special committee appointed to assist it (COWEB) of the results of the negotiations so far and will make available the draft SAA text.

2. RECOMMENDATION

In the light of the above, the Commission hereby recommends that the Council:

- finds that the authorisation to negotiate a Stabilisation and Association Agreement with the State Union of Serbia and Montenegro, adopted on 3 October 2005, is applicable, henceforth, on the negotiation of a Stabilisation and Association Agreement with the Republic of Serbia;

- decides that the Negotiating Directives for a SAA with Serbia and Montenegro adopted on 3 October 2005, be amended as follows:

- the references to "the State Union of Serbia and Montenegro" or "the two republics" are replaced with references to the Republic of Serbia,

- the provisions referring to the Republic of Montenegro are deleted,

- the third paragraph of section 1 and the thirteenth and fourteenth indents in 3.1 are deleted;

- last sentence of the 1st indent in section 3.6.2; last sentence in 3.6.6 and last sentence of 2nd indent in 3.7.3 are deleted.

- reconfirms that the Commission will be assisted by a special committee composed of representatives of the Member States in this task.

[1] with Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia and Serbia and Montenegro. See COM(1999) 235 of 26 May 1999

[2] COM(2005) 476 final of 12 April 2005

[3] Council Documents 12882/05, 12708/05, 12589/05 and 12590/05

[4] Council Document 12591/05