This document is an excerpt from the EUR-Lex website
Document 52011SC1208
COMMISSION STAFF WORKING PAPER ANALYTICAL REPORT
COMMISSION STAFF WORKING PAPER ANALYTICAL REPORT
COMMISSION STAFF WORKING PAPER ANALYTICAL REPORT
/* SEC/2011/1208 final */
COMMISSION STAFF WORKING PAPER ANALYTICAL REPORT /* SEC/2011/1208 final */
TABLE OF CONTENTS A........... Introduction.................................................................................................................... 3 a).......... Application
for membership............................................................................................ 3 b).......... Relations
between the EU and Serbia.............................................................................. 4 c).......... Contents of
the Analytical Report.................................................................................... 7 B........... Criteria for
membership.................................................................................................. 8 1........... Political
criteria............................................................................................................... 8 1.1........ Democracy and
the rule of law........................................................................................ 8 1.1.1..... Parliament...................................................................................................................... 9 1.1.2..... The executive............................................................................................................... 11 1.1.3..... Public
administration..................................................................................................... 14 1.1.4..... Judicial
system.............................................................................................................. 16 1.1.5..... Anti-corruption
policy................................................................................................... 20 1.1.6..... Civilian
oversight of security forces................................................................................ 22 1.2........ Human rights
and the protection of minorities................................................................. 23 1.3........ Regional
issues and international obligations................................................................... 33 1.4........ General
evaluation........................................................................................................ 37 2........... Economic
criteria.......................................................................................................... 40 2.1........ Economic
developments............................................................................................... 40 2.2........ Assessment in
terms of the Copenhagen Criteria............................................................ 43 2.2.1..... The existence
of a functioning market economy.............................................................. 43 2.2.2..... The capacity
to cope with competitive pressure and market forces within the Union........ 51 2.3........ General
evaluation........................................................................................................ 54 3........... Ability to
assume the obligations of membership............................................................. 54 3.1........ Chapter 1:
Free movement of goods............................................................................. 55 3.2........ Chapter 2:
Freedom of movement for workers.............................................................. 57 3.3........ Chapter 3:
Right of establishment and freedom to provide services................................. 60 3.4........ Chapter 4:
Free movement of capital............................................................................. 61 3.5........ Chapter 5:
Public procurement...................................................................................... 63 3.6........ Chapter 6:
Company law.............................................................................................. 65 3.7........ Chapter 7:
Intellectual property law............................................................................... 66 3.8........ Chapter 8:
Competition Policy...................................................................................... 68 3.9........ Chapter 9:
Financial Services........................................................................................ 70 3.10...... Chapter 10:
Information society and media.................................................................... 72 3.11...... Chapter 11:
Agriculture and rural development.............................................................. 74 3.12...... Chapter 12:
Food safety, veterinary and phytosanitary policy......................................... 77 3.13...... Chapter 13:
Fisheries.................................................................................................... 79 3.14...... Chapter 14:
Transport policy........................................................................................ 80 3.15...... Chapter 15:
Energy....................................................................................................... 82 3.16...... Chapter 16:
Taxation.................................................................................................... 85 3.17...... Chapter 17:
Economic and Monetary Policy.................................................................. 87 3.18...... Chapter 18:
Statistics.................................................................................................... 89 3.19...... Chapter 19:
Social Policy and employment.................................................................... 91 3.20...... Chapter 20:
Enterprise and industrial policy................................................................... 95 3.21...... Chapter 21:
Trans European Networks......................................................................... 97 3.22...... Chapter 22:
Regional policy and coordination of structural instruments........................... 98 3.23...... Chapter 23:
Judiciary and fundamental rights............................................................... 100 3.24...... Chapter 24:
Justice, freedom and security.................................................................... 105 3.25...... Chapter 25:
Science and research............................................................................... 111 3.26...... Chapter 26:
Education and Culture.............................................................................. 113 3.27...... Chapter 27:
Environment............................................................................................ 114 3.28...... Chapter 28:
Consumer and health protection............................................................... 120 3.29...... Chapter 29:
Customs Union........................................................................................ 122 3.30...... Chapter 30:
External relations..................................................................................... 125 3.31...... Chapter 31:
Foreign, Security and Defence Policy....................................................... 127 3.32...... Chapter 32:
Financial Control..................................................................................... 129 3.33...... Chapter 33: Financial
and budgetary provisions........................................................... 131 3.34...... General
evaluation...................................................................................................... 132 Statistical Annex....................................................................................................................... 135 A. Introduction a) Application for membership Serbia presented its application for membership of the
European Union on 22 December 2009. Subsequently, on 25 October 2010, the
Council of the European Union requested the Commission to submit its opinion on
this application, in line with the procedure laid down in Article 49 of the
Treaty on European Union, which states: 'Any European State which respects
the values referred to in Article 2 and is committed to promoting them may
apply to become a member of the Union. The European Parliament and
national Parliaments shall be notified of this application. The
applicant State shall address its application to the Council, which
shall act unanimously after consulting the Commission and after receiving the
consent of the European Parliament, which shall act by a majority of its
component members. The conditions of eligibility agreed upon by the
European Council shall be taken into account.' Article 2 states that 'the Union is founded on the
values of respect for human dignity, freedom, democracy, equality, the rule of
law and respect for human rights, including the rights of persons belonging to
minorities. These values are common to the Member States in a society in which
pluralism, non-discrimination, tolerance, justice, solidarity and equality between
women and men prevail.' This is the legal framework within which the Commission
submits its Opinion and the present analytical report. The Feira European Council in June 2000 had acknowledged
that Western Balkan countries participating in the Stabilisation and
Association Process were 'potential candidates' for EU membership. The European
perspective of these countries was further confirmed by the Thessaloniki
European Council in June 2003, which endorsed the "Thessaloniki Agenda for
the Western Balkans”. This agenda remains the cornerstone of the EU policy
towards the region. The European Council of December 2006 renewed the EU's
commitment "that the future of the Western Balkans lies in the European
Union" and reiterated that "each country's progress towards
the European Union depends on its individual efforts to comply with the
Copenhagen criteria and the conditionality of the Stabilisation and Association
Process. A country's satisfactory track-record in implementing its obligations
under a Stabilisation and Association Agreement (SAA), including trade related
provisions, is an essential element for the EU to consider any membership
application". At the Sarajevo EU-Western Balkans ministerial
meeting on 2 June 2010, the EU reiterated its unequivocal commitment to the European
perspective of the Western Balkans and that the future of these countries lies
in the European Union. In line with the Treaty requirements, the current
assessment is made in terms of the conditions of eligibility laid down by the European
Council. In Copenhagen in June 1993, the European Council concluded that: "Accession will take place as soon as a country is
able to assume the obligations of membership by satisfying the economic and
political conditions required. Membership requires: that the candidate country has achieved stability of
institutions guaranteeing democracy, the rule of law, human rights and respect
for and protection of minorities; the existence of a functioning market
economy, as well as the capacity to cope with competitive pressure and market
forces within the Union; the ability to take on the obligations of membership
including adherence to the aims of political, economic and monetary
union". The Union's capacity to absorb new members, while
maintaining the momentum of European integration, is also an important
consideration in the general interest of both the Union and the candidate
countries. In December 1995, in Madrid, the European Council referred
to the need "to create the conditions for the gradual, harmonious
integration of [the applicant] countries, particularly through the development
of the market economy, the adjustment of their administrative structures and
the creation of a stable economic and monetary environment". The Stabilisation and Association Process (SAP)
conditionalities were defined by the Council on 31 May 1999. They include
co-operation with the International Criminal Tribunal for the Former Yugoslavia
(ICTY) and regional co-operation. As a fundamental element of the SAP, these
conditions are integrated into the Stabilisation and Association Agreement
(SAA) with Serbia, currently under ratification, as well as in the Interim
Agreement (IA) on trade and trade-related matters, which entered into force on
1 February 2010. In December 2006, the European Council agreed that "the
enlargement strategy based on consolidation, conditionality and communication,
combined with the EU's capacity to integrate new members, forms the basis for a
renewed consensus on enlargement". In the present Opinion, the Commission analyses Serbia's
application on the basis of the country's capacity to meet the criteria set by
the Copenhagen European Council of 1993 and the conditionality of the
Stabilisation and Association process. Serbia's track-record in implementing
its obligations under the Stabilisation and Association Agreement and the
Interim Agreement on trade and trade-related matters, is also being examined. In line with the renewed consensus on enlargement, this
Opinion also identifies key policy areas likely to require particular attention
in the event of the accession of Serbia and provides initial impact estimates
with regard to the policies and sectors concerned. The Commission will provide
more detailed impact assessments for these key policy areas at later stages of
the pre-accession process. In addition, an accession treaty for Serbia would
involve a technical adaptation of the EU institutions in the light of the
Treaty on the European Union. b) Relations between the EU and Serbia Relations between the EU and Serbia have
developed since the democratic changes of 2000, initially with the Federal
Republic of Yugoslavia and from 2003 onwards with the State Union of Serbia and
Montenegro. The EU continued its relations with the Republic of Serbia as the
successor state of the State Union when Montenegro became independent in 2006. Serbia is participating in the Stabilisation and
Association Process. The Stabilisation and Association Agreement
provides a framework of mutual commitments on a wide range of political, trade
and economic issues. It was signed, along with the Interim Agreement on trade and trade-related matters, in
April 2008. EU ministers agreed to submit the SAA to their parliaments for ratification and to implement the Interim
Agreement as soon as the Council decided that Serbia was fully
cooperating with the International Criminal Tribunal for the former Yugoslavia.
Serbia started on 1 January 2009 to implement the Interim Agreement. The
Interim Agreement entered into force on 1 February 2010. At the 14 June 2010
Foreign Affairs Council, Ministers agreed to submit the Stabilisation and
Association Agreement to their parliaments for ratification. The process is
ongoing. A European Partnership with Serbia was adopted by
the Council in 2004 and updated in 2006 and 2008. Political dialogue meetings at ministerial level have been held since 2003.
Policy dialogue between the European Commission and the Serbian authorities has
been taking place in the framework of the Enhanced Permanent Dialogue
(EPD) since 2003. Inter-parliamentary meetings between representatives of the
European Parliament and of the Serbian parliament have been held annually since
2006. Serbia has built a positive track record in implementing
the obligations of the Stabilisation and Association Agreement and the Interim
Agreement on trade and trade-related matters.
An interim committee and a number of sub-committees meet annually, including on
the internal market, competition, transit traffic, trade, customs, taxation,
agriculture and fisheries. Several sub-EPD meetings are covering all sectors of
the SAA that are not included in the Interim Agreement, such as energy,
environment, social policy, justice, freedom and security. In general terms,
Serbia does respect its SAA commitments in these areas and cooperation is
progressing well. Serbia participates in the economic dialogue with the
Commission and the EU Member States. The aim of this dialogue is to prepare
Serbia for participation in the multilateral surveillance and economic policy
co-ordination currently in place in the EU as part of the Economic and Monetary
Union. In this framework, Serbia presented in January 2011 an update of its
annual Economic and Fiscal Programme (EFP). Visa liberalisation for Serbian
citizens travelling to the Schengen area was granted by the Council, after
consultation with the European Parliament, as of 19 December 2009. This
decision was based on substantial progress in the areas of justice, freedom and
security and fulfilment of the specific conditions set out in the roadmap for
visa liberalisation. The rules for visa-free travel have been respected by the
vast majority of travellers. To ensure the continued implementation of the
commitments, a post visa liberalisation monitoring mechanism was established in
view of increased numbers of asylum seekers from the region. The Commission
presented its first monitoring report to the European Parliament and the
Council in June 2011. An agreement on readmission between the European Union
and Serbia has been in force since January 2008. Serbia continued to be an active participant in regional
initiatives, including the South East European Cooperation Process (SEECP)
of which it has assumed the chairmanship in 2011, and the Regional Cooperation
Council (RCC). Serbia held the Chairmanship of CEFTA in 2010. Serbia signed the
Energy Community Treaty in October 2005 and the European Common Aviation Area
(ECAA) agreement in June 2006. In October 2008, the
Government of Serbia adopted the National Programme for the Integration of
Serbia in the European Union for the period 2008-2012. A revised and updated
version of this document was adopted in December 2009. In December 2010, the
Government adopted an Action Plan on the fulfilment of priorities under the
European Commission 2010 Progress Report, with the aim
of increasing focus and achieving additional results on the reform agenda,
ahead of the present Opinion. As regards trade, Serbia has been a member of CEFTA
since May 2007 and the negotiations for its accession to WTO are in a final
stage. The EU is, with CEFTA, the main trading partner of Serbia. Trade
integration with the EU is high. In 2010, 56% of Serbian imports worth €7.1
billion came from the EU (8.5% from CEFTA), mostly consisting of mineral fuels,
chemicals, machinery and transport equipment, and manufactured goods. 57% of
Serbian exports, or goods worth €4.2 billion, went to the EU (29% to CEFTA),
consisting mainly of food products, cereals, basic metals, machinery and
transport equipment. Serbia's trade deficit with the EU amounted to €2.9
billion in 2010. The share of EU investments to Serbia is high, reaching in
a peak of almost 88% of total FDI in 2010. Serbia has been receiving EU financial assistance since
2001. Overall, between 2001 and 2011, the EU committed over €2 billion to
Serbia in the form of grants and €5.8 billion in the form of soft loans. From
2001 to 2006, Serbia benefited from EU CARDS assistance worth €1,045 million.
Since 2007, CARDS has been replaced by the Instrument for Pre-Accession
Assistance (IPA), under which Serbia received assistance worth €974 million
between 2007 and 2011. The assistance under IPA is designed to support the reforms
undertaken as part of the European integration process, with a focus on the
rule of law, institution building, approximation with the EU acquis,
sustainable economic and social development, and support to civil society. The Commission adopted in June 2011 a Multi-Annual
Indicative Planning Document for the IPA programme in Serbia for the period
2011-2013. It introduces a new sector-based approach, focusing assistance on
the following seven sectors: justice and home affairs; public administration
reform; social development; private sector development; transport; environment,
climate change and energy; agriculture and rural development. Financial aid under IPA is structured under two components.
Component I focuses on political and socio-economic development (rule of law,
alignment with the acquis, education, transport, energy, environment,
agriculture etc.), while Component II focuses on cross-border cooperation
(environment, culture, research, security etc.). Serbia received €100 million
in the form of budgetary support under the 2009 IPA programme, to help it
alleviate the socio-economic impact of the economic downturn. An Agreement on
Macro Financial Assistance was signed in July 2010 between EU and Serbia and
€100 million were disbursed in July 2011. IPA assistance is currently managed centrally by
the EU Delegation in Belgrade. Serbia is preparing for decentralised management
of IPA funds. Further extensive efforts, including the strengthening of
administrative capacities, remain necessary before Serbia is in a position to
take over responsibility. Serbia participates
fully in a number of EU programmes: the 7th Framework Programme for research
and technological development, PROGRESS, the Competitiveness and Innovation
Programme, the Information and Communication Technologies Policy Support
Programme, the Culture Programme, the Customs Programme and the Fiscalis
Programme. IPA funds are used to meet part of the costs of participation in
these programmes. c) Contents of the Analytical Report The analytical report takes account of the conclusions of
the European Council in Copenhagen in 1993 and subsequent European Council
conclusions. The report: Describes the relations between Serbia and the
Union; Analyses the situation in respect of the
political conditions established by the European Council (democracy, rule of
law, human rights, protection of minorities; regional issues and international
obligations); Assesses the country's situation and prospects
in respect of the economic conditions established by the European Council
(functioning market economy, capacity to cope with competitive pressure); Addresses the question of the capacity of the
country to adopt the obligations of membership, i.e. the total body of EU
legislation as expressed in the Treaty, the secondary legislation, and also the
policies of the Union (acquis of the European Union); Provides, in line with the December 2006 European
Council conclusions, initial impact estimates in the fields of freedom of
movement for workers (chapter 2), agriculture and rural development (chapter
11), regional policy and coordination of structural instruments (chapter 22),
and financial and budgetary provisions (chapter 33). These have been identified
as the main policy areas likely to require particular attention in the case of
Serbian accession. In assessing Serbia's situation with regard to the economic
criteria and its capacity to assume the obligations of the acquis, the
Commission has also estimated the progress which could reasonably be expected
in the years ahead, before possible accession, taking account of the fact that
the acquis itself will continue to develop. The Commission has drawn on a number of sources of
information: answers given by the Serbian authorities to a detailed
questionnaire and additional follow-up questions, consultations with the EU
Delegation in Serbia, reports of expert missions, reporting by the Member
States' Embassies in Belgrade, European Parliament reports[1], assessments by
international organisations (including the Council of Europe, OECD, OSCE, IMF,
World Bank), as well as local and international non-governmental organisations. This Opinion has been prepared following a methodology
similar to that used in previous Opinions. The Commission organised a number of
expert missions in Serbia, which were concentrated mainly in the fields covered
by the political criteria. This methodology allowed a sound assessment to be
made of the administrative capacities of Serbian institutions and of the way
legislation is implemented, and it helped to better identify the remaining
challenges and priorities for future action. The Commission has analysed both
the present situation and the medium-term prospects. For the purpose of this
Opinion, and without prejudging any future date of accession, the medium-term
perspective has been defined as a period of five years. B. Criteria
for membership
1.
Political criteria
The European Council in Copenhagen in 1993 set a number of
political criteria for accession to be met by applicant countries. A country
must have achieved 'stability of institutions guaranteeing democracy, the rule
of law, human rights and respect for and protection of minorities'. In the case
of the Western Balkans the conditions defined by the Stabilisation and
Association Process are also a fundamental element of EU policy, which will be
assessed in this report. These include regional cooperation, good neighbourly
relations and compliance with international obligations, such as cooperation
with the UN International Tribunal for the former Yugoslavia (ICTY). The political criteria established in Copenhagen derive
from the fundamental values on which the EU is founded, as set out in Article 2
of the Treaty on European Union. These principles are emphasised in the Charter
of Fundamental Rights of the European Union. Article 6(1) of the Treaty states
that: 'The Union recognises the rights, freedoms and principles set out in
the Charter of Fundamental Rights of the European Union of 7 December 2000, as
adapted at Strasbourg, on 12 December 2007, which shall have the same legal
value as the Treaties'. The assessment set out below examines the main ways in
which public authorities are organised and operate, and the situation with
regard to protection of fundamental rights. It is not confined to a formal
description, but seeks to ascertain the way in which democracy and the rule of
law actually function in practice.
1.1.
Democracy and the rule of
law
The Republic of Serbia
continued as a successor state of the former State Union of Serbia and
Montenegro, following Montenegro's proclamation of independence in June 2006. A new Constitution was
adopted by an overwhelming majority in parliament and in a subsequent
referendum, and entered into force in November 2006. The Constitution lays down
the rules of parliamentary democracy, separation of powers and independence of
the judiciary. It defines the fundamental principles of rule of law, social justice,
respect for human and minority rights, and prohibits capital punishment and
discrimination of any kind. The Constitution establishes the right to
constitutional appeal and the Ombudsman. It sets out the principle of
democratic and civilian control of the armed forces. It provides that Serbia
can only conclude international treaties that are compatible with the
Constitution[2].
A two-thirds majority vote is required in parliament to both launch and approve
a revision of the Constitution. The process of aligning the legal framework
with the new Constitution has been almost completed. The Constitution is
largely in line with European standards. However, some provisions would still
need to fully reflect the recommendations of the Venice Commission in its Opinion
of March 2007, in particular those allowing control by political parties over
parliamentary mandates (See also section infra) and those providing for
an excessive role of parliament in appointments and dismissals, in particular
in the judicial system. Overall, the Constitution lays down the necessary
principles for a parliamentary democracy based on the rule of law and the
separation of powers. It is largely in line with European standards.
1.1.1.
Parliament
The Serbian Parliament
is unicameral, with 250 members elected by direct universal suffrage for a
four-year term. The Constitution guarantees the right to vote to all Serbian
citizens over the age of 18. The Law on the Election of Members of Parliament
provides for proportional representation, according to the D'Hondt method, of
candidate lists which have achieved a five per cent threshold of votes; in
order to facilitate their representation, no threshold is applied to lists
representing national minorities. Serbia is regarded as a single constituency. The parliamentary elections,
held in May 2008, were assessed by OSCE/ODIHR as being overall in line with
international standards. The work of the election administration was good and
transparent. However, significant shortcomings of the electoral legislation
against EU standards were noted, particularly provisions that allowed political
parties to appoint Members of Parliament (MPs) after the vote without adhering
to the order of the lists of candidates presented to the voters. In April 2010,
the Constitutional Court ruled similar provisions in the Law on Local Elections
to be unconstitutional. The electoral
legislation has since been brought into line with European standards. The 2000
Law on the Election of Members of Parliament was amended in May 2011 and now
requires that the appointment of MPs should follow the order of the lists. It
also puts an end to the practice of 'blank resignations', by which MPs were
tendering resignation letters to their parties. Similar changes were also
introduced in the Law on local elections in July 2011. The 2009 Law on a Single
Voters Register will also improve the accuracy and security of data when it
enters into force in December 2011. The Law on Financing of Political
Activities adopted in June 2011 covers the financing of electoral campaigns
with provisions on transparency of funding sources, allocation of state funding
and enhanced control prerogatives for the Anti-Corruption Agency. The Speaker of
Parliament is elected for a four-year term. Among the six deputy speakers, four
are currently from the opposition. There are 30 standing committees, 12 of
which are chaired by MPs from the opposition. Debates in committees are open to
the media and plenary sessions are broadcast. The President of the Republic can
dissolve parliament on a proposal from the government and shall dissolve
parliament when it fails to elect a new government following its resignation or
a motion of non-confidence. Women account for 22% of the number of MPs, a
proportion which will be increased to at least 30% in the next legislature, in
accordance with the May 2011 amendments to the electoral law. Requests to waive
the immunity of an MP in cases involving criminal offences have recently begun
to be processed. Legislative proposals
can be tabled by each MP, the government, the Assembly of the Autonomous
Province, an initiative supported by 30,000 voters and, in their respective
areas of competence, by the Ombudsman and the National Bank of Serbia. Laws are
normally adopted after four readings: two in the relevant committees, followed
by two readings in the plenary comprising, respectively, a general debate on
the rationale, objectives and essential elements of the proposed legislation
and a detailed debate on those articles that are the subject of amendments,
before final adoption. A single debate may be organised for a number of bills
that are related. An urgent procedure, which shortens the deadlines of readings
and the length of debates, may be used under exceptional circumstances,
including for the purpose of alignment with the EU acquis. A fast-track
procedure, with similarly abbreviated stages, can be applied to legislation
aimed at achieving harmonisation with the EU acquis. Laws are generally
adopted by a simple majority vote and with the proviso that a majority of MPs
are present. The 2010 Law on the
National Assembly established the budgetary autonomy of parliament, a
"collegium" composed of the bureau of parliament and the heads of
political groups, which meets occasionally, and rules on the transparency of
parliamentary bodies. The first autonomous budget was approved in December
2010; an office for budget planning and analysis was established and an
internal auditor was appointed in April 2011. The rules of procedure adopted in
2010 clarified the legislative procedures, introduced public hearings and
enhanced the existing instruments of control over the executive. Under these
rules the number of standing parliamentary committees will be reduced to 19 as
from the next legislature. Amendments adopted in 2010 allowing MPs to hold
other public functions were deemed invalid by the Constitutional Court in July
2011 and concerned MPs had to choose between their mandates in September 2011. Twenty-one political parties are currently represented in
parliament; four parties representing national minorities have constituted a
parliamentary group. They took part in the parliamentary elections of May 2008,
either individually or as part of coalition lists. The largest opposition party
split after the elections into two separate political groups. The 2009 Law on
Political Parties established stricter rules for party registration, including
the obligation to collect 10,000 signatures (1,000 for parties representing
national minorities). Following its entry into force, a total of 81 parties
have been registered, of which 45 represent national minorities. Parliamentary business
has run more smoothly and effectively under the current legislature than
previously. Since 2008, parliament engaged in extensive legislative activity
aimed at establishing a systemic legal framework in line with European
standards. New procedural rules have streamlined the parliamentary agenda and
reduced the previously widespread practices of parliamentary obstruction. There
was also an intense mobilisation in 2011 on the priorities of the government's Action
Plan aimed to address the challenges identified in the 2010 Commission Progress
report. Nevertheless, urgent and other abbreviated procedures were applied in
many instances, including for key pieces of legislation, thereby limiting
parliamentary and public debate. Stricter criteria should be applied to urgent
and fast-track procedures aimed at harmonisation with the EU acquis in
order to limit their application to measures of technical alignment with the EU
acquis. There is no consistent approach to the consultation of
stakeholders. Not enough attention is paid to the quality of legislation. As a
result, the Constitutional court invalidated parts of several important pieces
of legislation. Appointments that fall under the competence of parliament are
often late and in some instances based on unclear criteria. A Committee for
European Integration has been in place since May 2004 and is tasked with
verifying the compatibility of proposed legislation and other measures with
European standards. Since 2009 it has held regular hearings of the government
on the implementation of the National Plan for European Integration. There has been a
gradual improvement in parliament's role of oversight and control of the
government. It is exercised mainly by means of parliamentary questions
addressed to the government, to one or more ministers and to the Prime
Minister, during sessions held on a monthly basis. There is provision for
interpellations, votes of confidence and the establishment of committees of
inquiry. The Government presents an annual report. Individual ministers provide
specific reports and attend hearings of the relevant committees. Although the
use of oversight tools has developed, it remains largely formal. Parliament
adopted amendments to its rules of procedure in February 2011 that clarified
its relations with independent regulatory bodies. It still needs to develop the
use of their findings to enhance its own oversight over the executive. The work of committees
remains weak and largely reactive due to limited resources and expert staff.
This hampers the ability of parliament to scrutinise draft legislation in
depth, including its financial implications, and to monitor the implementation
of legislation. A European Integration Department, with some initial
capabilities, was established in the parliamentary service to support the work
of the Committee for European Integration. Overall, elections have been consistently conducted in
accordance with international standards for democratic elections since 2001.
The electoral legislation has recently been brought into line with European
standards and consolidates the free exercise of parliamentary mandates, a
principle which also needs to be fully enshrined, in due course, in the
Constitution. There has been a marked
improvement in the functioning and the legislative activity of parliament in
the current legislature. There was a striking mobilisation of efforts in the
last year, which led to substantial results. Improved rules of procedure helped
to streamline the debates, while at the same time reducing obstruction. Further
efforts are needed in order to enhance the legislative process, including the
conduct of proper impact assessments and a consistent approach to the
consultation of stakeholders. Oversight of the government, including the
monitoring of the implementation of legislation, has still to be strengthened.
1.1.2.
The executive
The President of
Serbia is elected by direct, universal suffrage for a five-year term of office,
which is renewable once. The unity of the State is vested in the President. The
President represents Serbia nationally and abroad, promulgates laws and may
exercise a suspensive veto. He proposes a Prime Minister-designate to the Parliament.
He appoints one third of the members of the Constitutional Court. The President
may dissolve the Parliament upon a proposal from the Government. The President
appoints and dismisses ambassadors and other diplomatic representatives upon a
proposal from the Government, and grants amnesty and performs other duties laid
down in the Constitution. He is the commander of the armed forces and has the
power to appoint, promote and dismiss military officers. The President enjoys
equivalent immunity to that of Members of Parliament and may not perform any
other public function or professional activity. The President may be impeached
for violation of the Constitution under a parliamentary procedure initiated by
at least one third of MPs and confirmed by a two-thirds majority vote,
following an opinion of the Constitutional Court. The current President
is Boris Tadic, who was elected in June 2004 as President of the Republic of
Serbia within the State Union of Serbia and Montenegro, and elected in February
2008 as President of the Republic of Serbia. The decision to appoint
the Prime Minister is taken by parliament on a proposal by the President. Parliament
approves the composition of the government and its programme by an
absolute majority, on a proposal by the Prime Minister-designate. All
government members, including the Prime Minister, enjoy immunity due to their
function, but are accountable to parliament. Their position is incompatible
with being an MP or holding executive or representational functions at the
level of an autonomous province or local self-government. The current government
is led by Prime Minister Mirko Cvetkovic and was appointed in July 2008. It was
restructured and downsized in March 2011. It has 21 members, of whom three are
women, and it includes a Vice Prime Minister and three Deputy Prime Ministers,
one of whom is in charge of EU integration. The Prime Minister currently also
assumes the functions of Minister of Finance. The government's
powers, internal organisation and working procedures are regulated by the
Constitution, the Law on Government, the Law on Ministries, the Law on Public
Administration and its rules of procedure. The government is supported by a
General Secretariat. There are rules on the coordination of public appearances
and statements of ministers relating to the work and decisions of the
government. The government, as well as all other public administration bodies,
are bound to provide public access to information on their work, pursuant to
the Law on free access to public information. Transparency of decision-making
and access to sensitive information, such as appointments and salaries in
public companies, have yet to be improved. The government conducts
Serbia's domestic and foreign policies and implements legislation. It steers
the country's reforms, coordinates the work of public administration bodies,
and adopts policy guidelines and strategies. The government meets and takes
decisions in regular weekly sessions. It works on the basis of an annual work
programme, including a legislative programme and a budget memorandum defining
the fundamental objectives of public finances and of macroeconomic policy. The government's rules
of procedure were strengthened in June 2010 as regards the practice of drawing
up for each legislative proposal a statement of compliance with the EU acquis,
which is now mandatory and must also include a table of concordance.
Such legislative proposals must also include an impact assessment with an
estimate of their financial implications. Government is supported by a
Legislative Secretariat, which checks the constitutionality and legality of
draft measures, and an Office for Regulatory Reform and Regulatory Impact
Analysis, established in November 2010, to assist in developing impact assessment.
The Ministry of Finance reviews the financial implications of draft
legislation. In spite of those recent improvements, the government's
capacity for strategic policy planning has yet to be developed.
Inter-ministerial and inter-agency coordination need to be improved and
compartmentalisation reduced. The quality of legislation prepared by government
remains uneven. A more consistent and fully transparent approach to the
consultation of stakeholders is needed for the preparation of draft legislation,
as well as sufficient consideration of its enforceability. There is room for
improvement of the consideration given to suggestions made by relevant state
institutions and independent regulatory bodies. The Serbian European Integration Office (SEIO) was established
in 2004 and has since developed its capacities and demonstrated great ability
to coordinate government activity in relation to the EU agenda of reforms. A
structure comprising a high-level coordination body supported by an expert
group and 35 expert sub-groups covering all chapters of the acquis was
established in 2007. The government adopted a National Programme for EU Integration (NPI) in 2008 and
revised it in 2009. It is a comprehensive planning document that encompasses
the legislative and administrative reforms that are considered necessary in
order to prepare for EU membership. In December 2010, the government adopted an
Action Plan aimed to address the challenges identified in the 2010 Commission
Progress report. The SEIO monitors the implementation of commitments identified
in the NPI and the Action Plan, and reports on them on a quarterly basis. The
rules of procedure of the government were adapted in May 2010 to step up the
process of harmonisation of legislation with the acquis, in line with
the stated priority attached by the government to the European integration
process. A robust network of EU integration correspondents and departments in
line ministries will be needed to help Serbia progress in its EU integration
process. Serbia has two main
levels of government – central and local self-government – as well as
the autonomous province of Vojvodina. A Law on Territorial Organisation, the
Law on Local Government and the Law on the Capital City were adopted in 2007.
Serbia encompasses 122 municipalities, 22 towns and the city of Belgrade, as a
special territorial unit. As regards the Province of Vojvodina, a new Statute
was adopted by the Provincial Assembly in 2008; the Statute and the Law
determining the competences of Vojvodina were approved in the National Assembly
in 2009. A Law on public property which entails transfers of competences to the
Province of Vojvodina, as well as to municipalities, was adopted in September
2011. (See also political criteria – Human Rights and the protection of
minorities – property rights.) Central authorities
have delegated competences to units of local self government in areas such as
building permits, utilities, culture, education, health, social and child
welfare, protection of the environment and agricultural land. A law on fiscal
decentralisation was adopted in June 2011 which aims at providing
municipalities with additional funding through allocations stemming from the
income tax. However, a complete overview and inventory of the functions delegated
to municipalities remain to be established. Transfers have been made without
ensuring sufficient capacity and resources at local level, in part because of
the impact of the economic crisis on public finances which meant that
municipalities' own revenues were also shrinking. The National Council for
Decentralisation was established in 2009, but has been mostly inactive since.
There has been insufficient consultation with local authorities in the
decision-making process relating to the development of new legislation or
amendments to existing laws that have implications at the local level. Overall, Serbia
has a well-established functioning system of executive power. Serbia attaches
high priority to the European integration process and the government has adapted
its procedures accordingly. The Serbian European Integration Office plays a
central and valuable role in the coordination of the EU reform agenda. Serbia
has established a Statute for the province of Vojvodina and has taken steps to
increase competencies at municipal level. The government's capacities for
policy planning and coordination need to be seriously overhauled. Further
efforts are needed in order to make effective use of the regulatory impact
assessment and improve public consultation in the legislative process,
particularly with regard to civil society and local self-government.
Implementation of laws needs to be better prepared and monitored. Transfers of
competences at local level should be backed up by corresponding resources and
appropriate attention paid to sound financial management.
1.1.3.
Public administration
The legal framework
providing for public administration reform (PAR) is largely in place in Serbia
and administrative capacities are generally well developed, in particular at
central level. A Strategy for PAR was adopted by the Government in 2004 and
supplemented by an Action Plan covering the period 2009-2012. The aim of the
Strategy and Action Plan is to create a public administration oriented towards
the citizens and based on the principles of depoliticisation,
professionalisation, rationalisation, modernisation and decentralisation. The
two main actors involved in coordinating and monitoring the reform are the
Council for PAR, established in 2002, and the Ministry for Human and Minority
Rights, Public Administration and Local Self-Government. The PAR Council is
chaired by the Prime Minister and brings together the ministers holding the
main responsibilities in the reform program. It ensures the strategic
coordination of the PAR strategy. The Ministry is entrusted with the day-to-day
coordination and monitoring of reforms. In order to ensure the coordination of all actors, reform
coordinators/teams have been appointed in each relevant body of the public
administration. The implementation of
the Strategy is making slow progress. The PAR Council has met several times
since April 2009, but mainly to consider administrative and technical issues. A
stronger political commitment and a strengthened strategic approach to reform
are needed. Enhanced coordination is necessary because responsibilities are
divided between several actors, and the monitoring of PAR implementation needs
to be improved. Sufficient human and financial resources have to be allocated
to the Ministry in order for it to efficiently carry out its PAR coordination
tasks. The Law on Civil Servants (LCS), adopted in 2005, regulates
the position of employees in the public administration. The Law was subsequently amended to establish educational requirements for civil
servant posts, aimed at increasing
professionalism and reducing the
risk of political influence and nepotism. However,
the LCS exclusively regulates the legal regime of civil servants in state
authorities and does not apply to local self-government employees. A significant
number of appointments for senior civil servant positions are still pending. Selection
procedures are not applied uniformly and, in the absence of criteria for final
recruitment decisions, managers still have excessive discretionary powers when
choosing candidates from lists prepared by the competitions' selection panels. Competence and professionalism in appointments
at management and lower levels in the administration need to become the rule. Temporary employees are not recruited according
to competitive criteria and
contracts are allocated without internal or public competition. A Human Resources Management Service was established in
2006, in charge of: internal advertising and public competitions for
non-management jobs; checking staffing plans for Government bodies; keeping
records of the central public administration personnel and overseeing the
general professional training programme for civil servants. A Strategy for the
professional training of civil servants for the period 2011- 2013 was adopted
in July 2011. The Strategy aims at creating a new system of training, through
the establishment of a central institution in charge of the implementation of
training programmes for civil servants. A fifth annual training programme was
adopted in January 2011. The programme embraces a wide range of topics,
including development of senior management and EU integration. However, only a
small percentage of civil servants, and in particular a very small percentage
of managers, takes part in this training. Induction training is not provided. The Law on
Administrative Disputes, regulating the judicial control of administrative acts
and the competences of the Administrative court, was adopted in December 2009. The Administrative court, as a court of special
jurisdiction, became operational as of 1 January 2010. The adoption of a new
Law on Administrative Procedures, aimed at introducing simplified procedures in
order to reduce the caseload, is still pending. The Law on Administrative Disputes allows only individual administrative acts to be
challenged before the administrative court, which is not in line with European standards on
the judicial review of administrative acts. In recent years, Serbia
created all of the necessary independent regulatory bodies (IRBs). Rules governing relations between parliament and
IRBs were clarified in February 2011 to better acknowledge the role and
independence of IRBs. It provides for a parliamentary review of the regular
annual reports of the Ombudsman, the Commissioner for Free Access to Public
Information and for Data Protection, the State Audit Institution, the
Anti-corruption Agency and the Equality Protection Commissioner. Such reviews
were held in July 2011 on the bodies' 2010 reports and provided valuable
information for parliament to exercise its oversight powers over the executive.
IRBs have slowly but surely been given additional resources to exercise their
mandate. They have overall a clear basis for their funding and a satisfactory
degree of autonomy for planning and implementing the budget. Despite recent
improvements, Parliament has given only limited attention to legislative
proposals tabled by IRBs, including in cases when they are making use of a
statutory right of initiative. There is room for improving the transparency and
timeliness of appointments of heads of IRBs, members of boards or executive
directors. Several IRBs continue to be faced with logistical constraints, such
as limited available space in current premises which slows down recruitment,
and rigidities in the application of the law on civil service which does not
allow remuneration that is commensurate with the expertise and qualifications
required. Auditing of expenditure of IRBs needs to be ensured. The first State Ombudsman
was appointed by parliament in 2007 for a period of five years. There is also a
specific ombudsman for Vojvodina and several others at municipal level with
whom the State Ombudsman has established cooperation. A local field office was
opened in Southern Serbia in June 2010. The public have demonstrated increasing
interest and confidence in the Ombudsman. Ombudsman offices at both state and
provincial level were very active and led to a greater awareness among the
general public, which resulted in an increase in the number of complaints. The
number of complaints has significantly increased each year. So far, the State
Ombudsman has received almost 6,000 complaints from citizens, two third of
which were resolved. The majority of complaints relate to social and economic
rights and to the lack of responsiveness on the part of the administration.
Since 2007, the State Ombudsman issued some 270 individual and 50 general
recommendations, of which nearly 80% were satisfactorily followed up. He also proposed
legislative changes, issued general recommendations, visited various
institutions and was active in promoting the protection of human rights and
minority rights. The Commissioner for Free Access to Information of Public
Interest was established in 2004. The Commissioner was appointed by parliament
for a seven-year term. The 2008 Personal Data Protection Act extended its
powers, and further amendments adopted in 2010 introduced a mechanism for
enforcing its decisions. From the outset, the Commissioner has been very active
and has enjoyed the confidence of the public. However, his recommendations are
still not being followed up sufficiently. The State Audit Institution (SAI) is the body in charge of
auditing public funds in Serbia. It was established by the 2005 Law on the
State Audit Institution and has been a member of the International Organisation
of Supreme Audit Institutions (INTOSAI) since November 2008. The SAI performed
its first audit in 2008, which was the first time the state budget had been
audited since 2001. Since then, the SAI has steadily improved its performance;
its cooperation with other independent regulatory bodies and the status of the
auditors have improved, although its recruitment plan needs to be completed in
order for the SAI to perform its tasks fully. Overall,
administrative capacity is in general well developed at central level and a
strategy for public administration reform is in place under the auspices of a
Council reporting to the Prime Minister. There is a need for further alignment
of legislation and more effective implementation of the existing legal
framework and strategy. Progress remains slow and is affected by a lack of
coordination among stakeholders and insufficient managerial capacities. The
establishment of a merit-based recruitment and career system is not yet
complete and appointments remain vulnerable to politicisation. Public
administration is weak at the local level. Independent regulatory bodies have
been established in all important areas. The follow-up of their findings and
decisions should be strengthened.
1.1.4.
Judicial system (See also
Chapter 23 – Judiciary and fundamental rights)
The Serbian judiciary
is organised in a three-tier court system, which broadly respects the key
requirements of independence, impartiality, accountability and efficiency. In
2010, the judicial budget amounted to 182 M € (0.61 % of the GDP). There are 34
Basic Courts, 26 Higher Courts, 4 Appellate Courts and the Supreme Court of
Cassation. Courts of special jurisdiction are the 16 Commercial Courts and the
Appellate Commercial Court, as well as 45 Misdemeanour Courts and the Higher
Misdemeanour Court. An administrative court was established recently. The
organisation of the public prosecution is hierarchical and reflects the
structure of the general court system. The Republic Prosecutor's Office is the
highest public prosecutor's office. Public prosecutor's offices of special
jurisdiction have been established for war crimes and for organised crime and
corruption. The Constitutional
Court was established in 2008, following the adoption of the 2006 Constitution.
It has 15 judges with a renewable nine-year term of office; five of them are
appointed by parliament, five by the President of the Republic and five by the
general session of the Supreme Court of Cassation. The latter five judges were
appointed as recently as April 2010. The Court rules on the constitutionality
of legislation and on constitutional appeals for violation of human rights by
individual acts or actions of state authorities. The Court faces a large
backlog of cases. On 15 September 2011, the Court had 8,549 pending cases
compared to some 7,000 in September 2010. Given the limited efficiency of the
Court, urgent measures are needed to handle the increasing inflow of cases. The independence
of the judiciary is guaranteed by the Constitution and is generally ensured.
Serbia launched an ambitious reform of the judiciary based on a national
strategy adopted in 2006 and a package of judicial laws in 2008. The High
Judicial Council and the State Prosecutorial Council were established as the
key bodies for stronger self-administration of the judiciary and were set up in
their transitional composition in June 2009 and in their permanent composition
in April 2011. The High Judicial Council and the State Prosecutorial Council
consist of eleven members, of whom three are ex officio members: respectively
the President of the Supreme Court of Cassation or the Republic Public
Prosecutor, the Minister of Justice and the President of the Parliamentary
Committee for Judicial Affairs. The other eight members are appointed for five
years by parliament: six of them are proposed after a secret ballot
respectively among judges and public prosecutors; two are prominent lawyers –
one representative of the bar and one professor of law selected by the relevant
parliamentary committee. The Councils are responsible for defining the total
number of positions and for the selection, appointment, promotion, dismissal
and disciplinary measures concerning judges and deputy prosecutors
respectively. They are also responsible for the administration of the budget
for courts and prosecution offices. However, in the absence of sufficient
capacities, the handing over of the management of the budget from the Ministry
of Justice has been postponed. Amendments of 2011 to
the Law on Judicial Academy strengthened the merit based approach to
recruitments, making the completion of a vocational training programme a
general precondition for the appointment of basic court and misdemeanour
judges, as well as for deputy basic prosecutors. The Judicial Academy is
competent for the vocational training and continued professional development of
judges, prosecutors and judicial staff. A first vocational training course
started in September 2010. A proper merit-based career system for judges and
prosecutors needs to be fully developed. It is still possible to enter the
judicial profession, in particular at higher levels, on the basis of unclear
criteria without having passed the Judicial Academy. Regular performance
evaluations are only starting to be introduced. The Judicial Academy operates
on scarce resources and has not yet finalised its curricula. The constitutional and
legislative framework still leaves some room for undue political influence on
the judiciary. Parliament appoints and dismisses the President of the Supreme
Court, who is also ex officio president of the High Judicial Council,
and the Republic Public Prosecutor for a renewable six-year term of office,
upon a proposal from the government and the opinion of the relevant
parliamentary committee. Parliament also appoints court presidents and public
prosecutors for a renewable six-year term on the basis of non-binding proposals
by the respective Councils, as well as first time judges and deputy prosecutors
for a probation period of three years. The prosecution service is vulnerable to
political influence due to its hierarchical organisation and the ongoing
practice of issuing oral instructions, despite the legal obligation for written
instructions. A re-appointment
procedure for all judges and prosecutors, aimed at raising professional and
integrity standards and removing unsuitable persons from the system, was
carried out during the second half of 2009 and took effect as of January 2010.
As part of this systematic exercise, the number of judges was reduced from
2,686 in 2009 to 1,972, out of which 1,802 posts were initially filled.
Previous misdemeanour judges were integrated into the normal court system,
which led to an overall number of 2,587 judges' posts. A total of 871 new
judges entered the system, 292 of whom were first time judges with a three-year
mandate and 579 were previous misdemeanour judges. In July 2011, 2.405 judges'
positions were filled. The number of clerical staff in courts was reduced to
some 12,900 positions. The number of prosecutors was reduced from 129 to 67 and
the number of deputy prosecutors from 670 to 586. The prosecution service has
some 1,400 clerical staff. Significant shortcomings affected the re-appointment
procedure, which was carried out in a very short period of time. Both the High
Judicial Council and the State Prosecutorial Council acted in their transitory
forms and not all members had been appointed, which did not ensure adequate
self-representation of the profession. Judges and prosecutors, as well as first
time candidates, were not heard during the procedure. Criteria were applied in
a non-transparent manner and reasoned decisions were not issued in a timely
manner. Problems arose with the calculation of the number of necessary posts,
which were reduced in the first stage and increased again at later stages. The
right for non re-appointed judges and prosecutors to appeal was limited to
taking their case to the Constitutional Court. Some 1,500 appeals were filed,
but the Court lacked the capacity to deal with the large number of cases within
a reasonable time. Given the initial
shortcomings, the Serbian authorities launched a review of the procedure at the
end of 2010. Legislative amendments were adopted in December 2010, transferring
the cases back from the Constitutional Court to the High Judicial Council and
the State Prosecutorial Council. Respective guidelines for the review procedure
for non re-appointed judges and prosecutors were adopted in May 2011 by the
High Judicial Council and the State Prosecutorial Council in their permanent
form. Broad consultation of all stakeholders was conducted on the guidelines.
These guidelines include clear and transparent criteria and provided a sound
basis for the review procedure which was launched at the end of June. In the
837 cases concerning non re-appointed judges, 375 hearings had been conducted
and 155 cases decided by mid September. As regards the 157 cases of
prosecutors, 127 decisions had been made. While written justifications yet have
to be issued for most cases, the review on judges has been so far conducted in
a satisfactory manner. Despite some procedural shortcomings, the majority of
decisions were generally taken in line with the guidelines. As regards
prosecutors, certain procedural shortcomings occurred and remaining doubts on
the observance of the guidelines will have to be dispelled by the written
decisions. The review for newly elected judges and prosecutors and for those
re-appointed despite ongoing disciplinary procedures is under preparation. The review process of re-appointment of judges
and prosecutors still needs to be brought to a satisfactory conclusion. The impartiality
of judges is broadly ensured. Legal provisions on conflict of interest are in
place. Cases are generally allocated on a random basis, which is more difficult
in small courts or court units with only a few judges. The regulatory and
institutional framework ensuring the accountability of the judiciary is
generally in place. A code of ethics for judges was adopted in 2010. Internal
inspections on technical and administrative matters are carried out by the
Ministry of Justice, based on reports from the court president and on the spot
visits. Presidents of higher courts are also entitled to inspect lower courts.
The Republic Public Prosecutor is accountable for the work of the prosecution
service to parliament, which also decides on his re-election for another
(six-year) term and on termination of office. A track record of effective
inspections still needs to be established. There is a twin-track
procedure for ordinary disciplinary offences (leading to disciplinary
sanctions) and serious disciplinary offences (which can result in dismissal).
The competent bodies are the Disciplinary Prosecutors and Disciplinary
Commissions, established by the respective Councils. Procedures for ordinary
offences are launched by the Disciplinary Prosecutors, decided by the
Disciplinary Commissions and can be appealed against before the Councils.
Dismissal procedures are conducted by the respective Councils, which also
decide in the case of judges and deputy prosecutors. For court presidents and
public prosecutors, the final decision is taken by the parliament upon
recommendation of the respective Council. The High Judicial Council set up the
disciplinary authorities in December 2010. Until 15 September, 104 complaints
were examined and one disciplinary case was opened, but has not yet been
finalised. The State Prosecutorial Council has not yet set up the relevant
disciplinary bodies. The double-track procedure for disciplinary offences
should be streamlined in order to avoid possible gaps between the proceedings.
Disciplinary authorities for the prosecution service need to be set up and a
track record of effective disciplinary procedures developed. Judges and prosecutors,
as well as the elected members of the two Councils, enjoy functional immunity.
Procedures for lifting immunity are in the hands of parliament, and prior
approval of the High Judicial Council is needed for judges. In practice there
were only five cases, two concerning judges and three concerning prosecutors,
in which the immunity has been lifted since the entry in force of the new
Constitution in 2006. This low number raises concerns over too high protection for
judges and prosecutors from criminal investigations. Another key step in the
judicial reform process was the overhaul of the court network in order to
rationalise the system and increase its efficiency. The previous 138
municipal courts were replaced by 34 basic courts as of January 2010. District
courts were abolished and their competences divided between Higher Courts and
Appellate Courts. Competences of the previous Supreme Court were divided
between the Appellate Courts and the Supreme Court of Cassation. The reduction
of the number of courts had positive effects towards a more equal distribution
of work between the courts. New laws on enforcement of judgements – introducing
private bailiffs – and on public notaries were adopted in May 2011. Additional
measures included the launch of a programme to reduce the number of old cases
in five pilot courts, as well as improvements to the infrastructure and
equipment. The newly-established Administrative Court with 33 judges took over
the entire backlog from the previous administrative section of the Supreme
Court and succeeded in processing a large number of cases, despite the
continuously high inflow of new cases. New Civil and Criminal
Procedure Codes have been adopted in September 2011. The Civil Procedure Code
aims at streamlining civil procedures and is generally a good basis to increase
the efficiency of the Serbian judiciary. The Criminal Procedure Code profoundly
changes criminal proceedings by giving the lead of investigations to the
prosecution service and introducing an adversarial system. In a first stage, it
will only be applied to proceedings carried out by the special prosecutors for
organised crime and for war crimes, before extending it to the whole system.
There are concerns over insufficient procedural safeguards in the new Code. Serbia continues to
face a large backlog of old cases. On 30 June 2011, some 1.9 million pending
cases were older than 9 months. Many of these relate to the enforcement of both
civil and criminal decisions, with an average duration of over 600 days for
civil cases. The present system of enforcement of civil cases relies on an
insufficient number of court agents. Serbia needs to pursue the establishment
of public notaries and private bailiffs, foreseen under the new laws, without
further delays. The impact of the rationalisation of the court network has not
yet reached its full potential. There continue to be significant differences in
the workload between courts, with a particularly high influx of cases in the
Belgrade courts. Basic courts maintained court units dealing with civil cases
in the locations of the previous municipal courts. Continued operation of court
units still creates maintenance costs for the buildings and travelling expenses
of judicial staff and can entail some risks to the security of the proceedings,
in particular in view of the need to transport files and to secure the court
unit buildings. The IT based case management system is not fully operational
for the entire court network. Overall, substantial reforms of the judiciary have been
pursued in Serbia since the adoption of the national strategy in 2006, and were
intensified in 2009 and 2010. Independence and self-administration were
strengthened with the establishment of the new High Judicial and State
Prosecutorial Councils. The restructuring of the court network, including the
creation of an administrative court, and a new law on enforcement of court
decisions were appropriate steps for increasing the efficiency of the
judiciary. The initial significant shortcomings identified in the
re-appointment procedure are in the course of being addressed through a review
process, for which there are clear guidelines. The review process remains to be satisfactorily completed
in a transparent manner, in line with these guidelines. At the same time, the Serbian judiciary still
faces a number of challenges. Constitutional and legal provisions on
appointments, promotion and dismissals in the judiciary will need in due course
to be brought into line with European standards. Further efforts are needed in
order to increase public confidence in the judiciary, improve the effectiveness
of disciplinary proceedings, reinforce the execution of judgements and further
reduce the large backlog of pending cases.
1.1.5.
Anti-corruption policy (See
also Chapter 23 – Judiciary and fundamental rights)
Serbia has established the relevant
institutional and legal framework to combat corruption. Its main components are
the 2008 Law on the Anti-Corruption Agency, the 2009 Law on the Organisation
and Competence of the State Authorities in Suppressing Organised Crime,
Corruption and other especially serious criminal offences, the 2008 Law on
Seizure and Confiscation of the Proceeds from Crime, amendments of 2007 to the
Criminal Procedure Code regarding special investigative measures, the Law of
2005 on Civil Servants, and the amendments of 2009 to the Law on Free Access to
Information of Public Importance. However, implementation of legislation and
practical results are still lagging behind. The government adopted a National Anti-Corruption Strategy
and a respective Action Plan in 2005. The Strategy and Action plan have been
implemented slowly and need to be updated. The current Strategy does not cover
the education and health sectors, which are areas prone to corruption. The
Action Plan does not precisely define activities and does not set clear
indicators. The Strategy and the Action Plan are in the process of being
revised. The Minister of Justice was appointed anti-corruption coordinator in May
2011 to improve the so far inadequate cooperation between the stakeholders
involved in the fight against corruption. The Anti-Corruption Agency became operational as the
central anti-corruption body in 2010. It is managed by a Director, who is
appointed by an Anti-Corruption Board whose members are appointed by
parliament. The Agency reports annually to parliament. The powers of the Agency
are focused on the prevention of corruption. They include supervision of the
implementation of the National Anti-Corruption Strategy and Action Plan,
conflicts of interest, declarations of assets and gifts, financing of political
parties, revision of draft legislation to identify and eliminate corruption
risks, integrity plans, and education on corruption. The Agency took over the
responsibilities of the Republic Board for the Resolution of Conflicts of
Interest, which was phased out from that point. The Agency has no mechanism to
ensure the enforcement of its decisions. Currently, the Agency lacks capacity
with only 60 employees, when its organisation chart has provision for 96 posts.
The Agency was allocated adequate premises in September 2011, which will enable
it to complete its recruitment plan. The Agency has been very active in some of its
areas of responsibility, particularly in the verification of asset
declarations. By the end of 2010, over 18,000 asset declarations had been
received from the 25,000 public officials who are required to fulfil that
obligation. The Agency processed 3,500 of these. Between October 2010 and September 2011, the Agency
initiated misdemeanor procedures in 8 cases and criminal procedures in 2 cases;
2 cases were transferred to the prosecution service. In the area of conflict of interest, the Agency issued some
800 decisions and received over 4,000 requests from officials asking to retain
their dual functions. However, the capacity and powers to investigate
fraudulent declarations and discrepancies between income and assets are
lacking. Not all relevant data have been entered into the Assets Registry on
the Agency's website, thus preventing the public from gaining full insight into
the property disclosure reports of public officials. A new Law on the Financing of Political
Activities was adopted in June 2011. It covers both the regular financing of
political parties and the funding of electoral campaigns. The law enhanced the
transparency of funding sources and the allocation of state funding. It
considerably strengthened the investigative powers of the Anti-Corruption
Agency. The Anti-Corruption Agency had previously carried out controls on the
electoral campaigns of five parties or coalitions and submitted six
misdemeanour complaints due to the failure to report funds collected and spent
in election campaigns. In March 2010, the Agency issued rules on the content of
the records and financial reports of political parties. It still has to
establish a track record of effective control of party funding. The Anti-Corruption Council, an advisory body to
the government, was established in 2001 with the task of proposing legislative
changes and other measures aimed at combating corruption and assessing on-going
anti-corruption activities. The Council continued to raise public awareness of
high-profile cases of corruption, mostly in the media and in public events. It
filed two criminal charges against high profile politicians and well-known
businessmen. It has also identified a number of, mainly large, privatisation
transactions in which there were suggestions of corruption, but only a few were
investigated and even fewer were prosecuted. The State Audit Institution
performed the second partial audit of state finances in 2010, which widened the
scope of the audited entities, and also included some public enterprises.
Internal control systems need to be strengthened and the capacities of the
State Audit Institution significantly increased. The law enforcement bodies and the judiciary
have enhanced their specialisation on corruption cases. The competences of the
prosecutor for organised crime were extended to higher level corruption cases
in January 2010. In 2011, its office significantly increased its activities;
until mid September, it launched investigations in some 330 corruption cases.
These include several medium to high level cases. The police have the means and
the ability to carry out basic investigations. Its capacities for proactive
investigation of such cases have yet to be developed. An internal control
sector has been established in the police with some initial results and an
increasing number of cases of corruption being detected within the police. The
Head of the Directorate for internal control and the Head of the Sector for
internal control were appointed in June 2011. The customs authority has been
increasingly active in combating corruption amongst customs officials and has
taken a number of disciplinary measures against wrongdoers. Preventive measures
against corruption need to be strengthened in the judiciary. Further efforts
are needed overall in order to establish a track record of pro-active
prosecutions and final convictions, in particular in high-level cases resulting
in significant harm to state funds. The capacities of law enforcement bodies to
conduct financial investigations need to be strengthened. Corruption continuous to affect many areas,
particularly public procurement, privatisation procedures and public
expenditure, as well as the health and education sectors. While the 2008 Public
Procurement Law contains specific anti-corruption rules, the coordination
between all stakeholders needs to be strengthened in order to ensure effective
prevention and processing of corruption cases in the area of public
procurement. Stronger political will and further efforts are needed in order to
process corruption cases more effectively, from investigations to final
convictions, in particular in relation to the spending of public money. Integrity plans are envisaged for a number of
State institutions, public bodies and State-owned companies on the basis of
guidelines issued in 2010 by the Anti-Corruption Agency. In spite of the legal
obligation and in the absence of a legal deadline, the majority of bodies
failed to appoint a person in charge of the preparation and implementation of
the integrity plans. Amendments in 2010 to the Law on the Anti-Corruption
Agency and the Law on Free Access to Information of Public Importance have
strengthened the legal basis for the protection of whistleblowers. A rulebook
on whistleblowers, produced by the Anti-Corruption Agency, entered into force
in August 2011. However, whistleblower protection is only applicable in cases
where no classified information has been disclosed. Practical implementation
remains weak. Overall, Serbia has put in place the legal and
institutional framework to combat corruption, including an Anti-Corruption
Agency and a new law on funding of political parties in line with European
standards. The Minister of Justice was appointed anti-corruption coordinator.
The authorities have launched a review of the outdated strategy and action plan
for the fight against corruption. Steps have been taken towards specialisation
of the law enforcement agencies and a greater number of cases have been
prosecuted. Corruption remains
prevalent in many areas and continues to be a serious problem. Stronger political
will is needed in order to significantly improve the performance in combating
corruption. The competences and capacities of the Anti-Corruption Agency need
to be strengthened. Law enforcement authorities need to adopt a more pro-active
approach in investigating and prosecuting corruption and the judiciary needs to
gradually and significantly build up a track record of final convictions,
including in high level cases.
1.1.6.
Civilian oversight of
security forces
Civilian control of the
security forces is regulated by an extensive legal framework. According to the
Constitution, the armed forces are under democratic and civilian control and
parliament must authorise their use outside Serbian borders. As part of the
constitutional adjustments, a Law on the Army of Serbia, a Defence Law and a
Law on Basic Principles of Establishment of Security Services were adopted in
December 2007. The Defence Strategy, the National Security Strategy and the Law
on the Military Security Agency and the Military Intelligence Agency were
adopted in October 2009. The legislative framework also includes the Law on the
Military, Labour and Material Obligations, the Law on Civilian Service, the Law
on the Use of the Army and other Defence Forces in Multinational Operations
outside Serbia and the Decision abolishing compulsory military service. Security forces are
divided into three main categories: the armed forces, the police forces and the
security services. Security services are civilian, the Security-Information
Agency (BIA), and military, the Military Security Agency (VBA) and Military
Intelligence Agency (VOA). The Defence Inspectorate is the administrative body
in the Ministry of Defence which inter alia inspects the implementation
of public procurement rules and deals with citizens' complaints. The armed
forces assist civilian authorities in countering security threats, including
terrorism, organised crime, natural and man-made disasters. The police, including the gendarmerie, is in charge of
internal security and the prevention and suppression of all forms of crime. It
is organised through the general police directorate at central level, the City
of Belgrade police directorate, regional police directorates and police
stations at municipal level. The reform of the police is based on the 2005 Law
on Police and the development strategy for the Ministry of Interior for the
period 2011-2016. It includes a border police that is responsible for the
protection and control of the state border. The accountability of the police is
enforced through the work of the sector for internal control, which has
established close working relations with the State Ombudsman. The
Security-Information Agency is a separate state agency in charge of the
protection of Serbia's internal security and constitutional order. It is
accountable to the government and parliament and provides regular reports at
least twice a year. The government appoints and dismisses its Director. In
2010, the State Ombudsman reviewed the legality of the Agency's activities and
their implications in the area of human rights and protection of minorities.
Its overall assessment was that the Agency abided by the legal order, but that
further legislative and procedural improvements were needed in order to better
regulate the agency's procedures related to the protection of the guaranteed
human rights. The Military Security Agency and the Military Intelligence Agency
are accountable to the government and parliament. An Inspector General, in
charge of their oversight, was appointed by the government in February 2011 for
a five-year term. Parliament has the key
role in the oversight of the security forces. The Defence and Security
Committee currently performs this function, reviews proposed legislation and
conducts inspection visits to the three security agencies. Under the new Rules
of Procedure, the oversight will be performed by two standing bodies as from
the next legislature: the Committee for Defence and Internal Affairs and the
Committee for the Oversight of Security Services. A Council for National
Security, chaired by the President of the Republic, reviews issues relevant to
national security, and steers and coordinates the work of the security
services. Parliamentary oversight
remains weak, as the Committee does not have the resources, expertise and
specialised staff to deal with the wide range of jurisdiction which currently
covers defence, internal affairs and security issues. Its work is mainly
reactive and limited to routine periodic hearings as required by law. A law
regulating access to state security files has not yet been adopted. The
internal control department in the Ministry of Interior needs to be reinforced
and coordination with the department in charge of prevention of corruption
enhanced. Unlike most EU intelligence agencies, the Serbian security agencies
have investigative powers. This raises serious concerns, as they are in the
position of controlling intelligence material used in criminal investigations. Overall, an extensive constitutional and legal
framework for the democratic civilian oversight of security forces is in place.
Further efforts are needed in order to strengthen parliamentary capacity and
expertise. The ability of security agencies to carry out special investigative
measures in criminal investigations gives rise to serious concerns.
1.2.
Human rights and the
protection of minorities (See also Chapter 23 – Judiciary and fundamental rights)
Observance of international human rights law The legislative framework on human rights and the
protection of minorities is in place and generally in line with EU standards.
The Constitution guarantees a wide range of human rights and fundamental
freedoms. It also provides for the possibility of filing a Constitutional
appeal as a final remedy for the protection of human rights. A number of laws
relating to the promotion, implementation and protection of human rights and
the prevention of discrimination have also been introduced. Serbia has signed
and ratified all significant international human rights instruments
that are relevant for the protection of human rights. Following the dissolution of the State Union with
Montenegro in 2006, Serbia became the successor state in the Council of Europe
and took over its obligations and commitments, including under the European
Convention for the Protection of Human Rights and Fundamental Freedoms. On 1
September 2011, 5,704 allocated applications regarding Serbia were pending
before the European Court for Human Rights (ECtHR). Between October 2010
and September 2011, there were five judgments finding violations of the
Convention. The largest numbers relate to the violation of the right to a fair
trial and to the length of proceedings, including non-enforcement of judicial
decisions. Several State bodies and institutions are responsible for
the promotion and enforcement of human rights. The Ministry for Human
and Minority rights was merged with the Ministry for Public Administration and
Local Self-Government in March 2011. The Ministry is tasked with the
preparation and coordination of the periodic reports on the implementation of
the main international instruments. Investigations into threats and violence
against human rights defenders have been slow. Although a number of
investigations relating to high profile cases were initiated by the police or
prosecution, only a few resulted in a final conviction and an appropriate
sentence. Public officials often refrained from publicly condemning such
attacks. Besides the Ministry, the institutional framework providing
for the promotion, monitoring and protection of human rights includes other
bodies: the various Ombudsman offices – at state and local level – the
Commissioner for the Protection of Equality and parliament's Committee on Human
and Minority Rights and Gender Equality. Training programmes on human rights
standards have been organised for judges, prosecutors, legal practitioners,
police and prison officers and other relevant professionals. The direct
enforcement of ratified international treaties has still to be improved. Access
to information is supervised by the Commissioner for Free Access to Information
of Public Importance and Personal Data Protection. Civil and political rights The Constitution prohibits the death penalty.
Serbia has ratified Protocol No 13 to the European Convention for the
Protection of Human Rights and Fundamental Freedoms, concerning the abolition
of the death penalty in all circumstances. The Constitution
prohibits torture and ill-treatment. In July, the Parliament adopted
legislative amendments establishing a national prevention mechanism for the
implementation of the Optional Protocol of the Convention Against Torture and
Other Cruel, Inhuman or degrading Treatment or Punishment and designating the
State Ombudsman to perform these prerogatives. The national prevention
mechanism is not yet operational. Poor conditions in police custody facilities
are a matter of concern. Regular independent inspections should be carried out
to ensure prevention of potential ill-treatment. Efforts have been made to improve conditions in the prison
system, but significant challenges remain due to the increasing
overcrowding. A strategy on overcrowding was adopted in July 2010. The decision
to establish the Parliamentary Commission in charge of oversight of prisons was
adopted in May 2011 and its members were appointed in September 2011. Efforts
have been undertaken to build new prisons, improve outdated prison
infrastructure and train prison staff, as well as to amend treatment rules,
respecting the rights of prisoners and improving medical care. Enforcement of
alternative sanctions started in 2008 and house arrest under electronic
surveillance was introduced in 2010 as a new procedure for serving prison
sentences for minor offences. However, overcrowding of prisons continued to increase.
The actual prison population amounted to 11,500 persons in 2010, while prison
capacities are between 4,500 and 6,000 places. Alternative penalties are only
used in a few cases, while short term imprisonment sentences of up to six
months are still frequent. The large number of pre-trial detainees, which
stands at 3,500, is due to the broad application of such pre-trial detention
and to lengthy court proceedings. The majority of prisons in Serbia are
outdated and lack adequate facilities. Poor and deteriorating living
conditions, unsatisfactory healthcare and lack of adequate treatment programmes
in prisons are causes of serious concern. The prison service is facing problems
of ensuring security due to insufficient numbers of frontline prison staff. An
internal control mechanism for prisons has yet to be established. Programmes
for education and rehabilitation are only available for a few prisoners. The Constitution guarantees access to justice.
However, the length of court proceedings and the backlog of cases remain issues
of concern. Legislation and funding for an effective system of free legal aid
need to be developed. Freedom of expression is guaranteed by the Constitution and broadly ensured. The
media landscape is diverse and pluralistic. Independent investigative
journalism exists. The Law on Public Information, amended in 2009, defines the
rights of freedom of expression, the right to access public information and to
distribute information through media and broadcasting agencies. The law prohibits
incitement to violence or racial, ethnic or religious hatred. The Law on
Broadcasting, adopted in 2009, lays down broadcasting standards and prohibits
unauthorised media concentration. A code of ethics for journalists was adopted
in 2006 and the establishment of a Press Council as self-regulatory body for
print media was agreed in 2009 between the representatives of journalists and
media associations. Prison sentences for libel cases were abolished in 2005. Violence and threats against journalists remain a matter
for concern. The Serbian authorities provided police protection to journalists
and media outlets which received threats, but reactions by the government,
including public condemnation, remained weak. Investigations into the murders
of journalists dating back to the late 1990s/early 2000s and into recurring
threats against journalists have been unable to identify the perpetrators. A
more comprehensive and proactive approach by the police and the judiciary are
essential. Application of existing legislation in court judgments is not always
consistent as regards the scope of journalistic freedom and the level of
sanctions; civil and criminal libel cases are sometimes used to exert undue
pressure on journalists. Gaps prevail in the supervision carried out by the
Republican Broadcasting Agency, in particular as regards the monitoring of
discriminatory or hate speech. The procedure by which its members are appointed
raises concerns about the independence of this body and creates a risk of
politicisation. Advertising access to media is under the influence of a few key
players, which creates a significant risk of political and economic influence
on the media and of increasing self-censorship. The lack of transparency in
media ownership hampers effective monitoring and creates a risk of hidden media
concentration. A long awaited Strategy for the Development of the Media Sector
(media strategy) was adopted in September 2011. It aims at increasing editorial
independence and better protecting media outlets from undue influence. It also
lays down the foundations for forthcoming legislative changes which should
clarify the market environment in which media outlets are operating. Freedom of assembly and association are guaranteed by the Constitution.
Assemblies are covered by the 1992 Law on Public Assembly. Public gatherings in
the open are subject to registration, but do not require authorisation, while
gatherings indoors do not even need to be registered. Police may only prohibit
public gatherings for the purposes of protecting public health, morality,
security or the rights of others. Provisional prohibition, pending a final
court decision, is possible in cases involving threats to the constitutional
order or violation of human rights. Legislation banning gatherings of far right
organisations and prohibiting the use of national-socialist and fascist symbols
was adopted in 2009. There have been improvements in cooperation and action by
the Serbian police to provide protection during public gatherings. A first
Belgrade Pride Parade took place in October 2010, representing a step forward
in the promotion of constitutionally guaranteed fundamental rights. The police
took appropriate action, including making a number of arrests, in response to
violent incidents by rioters protesting against the Parade. A second parade
which was scheduled to take place on 2 October 2011 had to be called off for
security reasons. Rules regulating the prevention of sports related violence
have been tightened up and the reaction by law enforcement agencies to sports
incidents has improved. The trial in connection with the murder of a French
football fan in September 2009 was concluded in first instance in 2011 and the
perpetrators were given long prison sentences. The Law on Public Assembly needs
to be updated in order to reduce the requirements for the registration of
assemblies, to lessen restrictions imposed regarding locations of assemblies
and to limit the liabilities of organisers. Freedom of association is respected on the whole. The Constitution
prohibits secret and paramilitary associations. A decision banning an
association may be made by the Constitutional Court on grounds prescribed by
the Constitution. The 2009 Law on Associations introduced rules regulating
foreign associations. Army and police officers, judges, prosecutors and the
State Ombudsman are prohibited from being members of a political organisation.
Members of the police are allowed to establish trade unions and professional
associations. Activities of extreme right-wing organisations and of violent
groups of so-called sports fans are a major cause of concern. One such
organisation was banned in June 2011 following a Constitutional Court ruling. Civil society
organisations are well developed and play an important role in the social,
economic and political life of Serbia. Some 8,500 associations have so far
completed the registration procedure. NGOs are exempted from the 2.5% of taxes
on gifts and donations provided they are performing activities of public
interest. An Office for cooperation with civil society, aimed at improving
cooperation between public administration and civil society organisations was
established in April 2010. The first Director of the Office was appointed in
January 2011. However, the Office is still not fully operational. Cooperation
between state bodies and civil society organisations remains on an ad hoc basis
and is unevenly developed across Serbia, with civil society activities still
predominantly Belgrade-centred. Awareness-raising on human rights is needed
most at local level. NGO activists dealing with sensitive issues, in particular
war crimes and the fight against organised crime, as well as human rights
defenders, continue to be subjected to threats, verbal abuse and even physical
attacks. Freedom of thought,
conscience and religion is guaranteed by the Constitution and laws, and
is respected in practice. The number of religiously motivated incidents has
decreased over the past years. The Constitution prescribes separation between
the state and the church and prohibits a state religion. Conscientious
objection is guaranteed and the relevant law was adopted in October 2009. The
Constitution prescribes equality of churches and their freedom to organise
themselves independently. A decision on a possible ban of a religious
organisation may be made by the Constitutional Court, on strictly defined
grounds. The key systemic act in this area is the 2006 Law on Churches and
Religious Communities. However, the law differentiates between the seven 'traditional'
churches, automatically assigned legal status and registration by the law, and other
religious organisations, which have to apply for registration in the procedure
regulated by a Ministerial act. The lack of transparency and consistency in the
registration process is one of the main obstacles preventing some smaller
religious groups from exercising their rights. The constitutionality of the law
is currently being assessed by the Constitutional Court. Sporadic graffiti and
vandalism on places of worship or graveyards persist. The response to such acts
by police and prosecutors has been insufficient, and such cases continue to be
referred to as minor offences. Extremist organisations and right-wing groups
continued to propagate anti-Semitic comments and publications and hate speech
against smaller churches. The Republic Broadcasting Authority intervened in
early 2011, for the first time, in a case of anti-Semitic language on
television and instructed TV stations to cease live broadcasting of certain
programmes. Overall,
the legal and institutional framework for the protection of civil and political
rights is in place, is broadly in line with European standards and is generally
respected. The Ombudsman and the Commissioner for access to information and
data protection are playing an increasingly effective role in oversight of the
administration. Implementation and full enforcement of the guaranteed rights
need to be further developed. Particular efforts are needed in order to display
public support to journalists and the media in view of threats and violence. A
newly adopted media strategy aims to address important shortcomings in the
media sector. Conditions in prisons are a matter of serious concern. Economic and social rights (see also Chapter 19 – Social policy and employment) As regards women's rights and gender equality,
gender equality is guaranteed by the Constitution. Serbia is party to the UN
Convention on the Political Rights of Women and the Convention Concerning Equal
Remuneration of Men and Women for Work of Equal Value. The National Strategy
for Improving the Position of Women and Enhancing Gender Equality for
2009-2015, adopted in 2009, identifies six of the most critical areas:
improvement of the economic position, health, representation in public life,
equality in education, suppression of violence against women and elimination of
gender stereotypes in media. A National Strategy for the Prevention and
Suppression of Violence against Women in Families and Partner Relationships was
adopted in 2011. A Law on Gender Equality was adopted, providing for measures
aimed at preventing and eliminating discrimination based on sex and gender. At
the level of the Province of Vojvodina, the Strategy for the Protection from
Domestic Violence and Other Forms of Gender Based Violence for the period 2008
– 2012 was adopted in 2008. However, implementation of the national strategies
in this area remains slow. Disabled women, single mothers, older women and
those living in rural areas are most affected by discrimination. Women's
average wages are generally lower than those of men on the labour market,
although the extent of the pay gap varies significantly between sectors.
Domestic violence often goes unreported and there is insufficient response from
the responsible institutions or reliable data. Children's rights are explicitly recognised by the Constitution and the
legislative framework has been largely aligned with international standards.
Serbia ratified the international Convention on the Rights of the Child in 2001
and its two optional protocols. The National Plan of Action for Children covers
the period 2004-2015 and defines the policy towards children. The Law on
Juvenile Justice was adopted in 2006. The regulatory framework to prevent and
protect children from violence has been adopted. There are several relevant
institutions to promote and monitor children's rights - the National Council on
Child Rights, the Deputy Ombudsman Office, the office of the Children's
Ombudsman in Vojvodina, the Commissioner for Equality, and a Parliamentary
Working Group on Child Rights. Training
programmes are being implemented, aimed at capacity building and awareness
raising for judges, prosecutors and
the police. Several shelters for
street children were set up. However,
difficulties regarding children's rights persist. Roma children remain the most
vulnerable. Implementation of the legal framework remains insufficient. Further
efforts are needed in order to protect children from domestic violence. The level of coordination between the relevant
institutions and bodies included in the
system of child protection needs to
be improved. The legislative framework for the protection of socially
vulnerable persons and/or persons with disabilities is broadly in place.
The rights of persons with disabilities in Serbia are explicitly protected by
the Constitution. In 2009, Serbia ratified the Convention of the Rights of
Persons with Disabilities and the Optional Protocol. In addition to the general
anti-discrimination framework, a Law on preventing discrimination against
persons with disabilities was adopted in 2006 and a Law on vocational
rehabilitation and employment of persons with disabilities in 2009. The 2009
Law on the foundations of the education system includes comprehensive provisions
for inclusive education for children with disabilities, learning difficulties
and disadvantages. The 2010 Law on Social Welfare fosters
deinstitutionalisation, the development of community-based services, including
day care services and residence in a supportive environment with an emphasis on
independent living. However, implementation of the legislative framework
remains a challenge. Authorities do not actively follow up infringements of the
rights of persons with disabilities and court decisions are not always
adequately implemented by the public administration. Institutionalisation of
persons with mental health problems and elderly people remains widespread.
3,750 persons are placed in the 13 institutions for adults with mental health
problems; there are five large psychiatric hospitals with 3,000 beds. The
availability of community-based services across the country is still limited.
Persons with disabilities often face unemployment. Although access to public
buildings for persons with disabilities has advanced in urban areas, there are
still important shortcomings in rural areas. As regards anti-discrimination policies, the legal
and institutional framework is largely in place. A comprehensive
Anti-discrimination Law prohibiting any kind of discrimination was adopted in
March 2009. A Commissioner for the Protection of Equality was appointed in May
2010. The Commissioner acts upon complaints of discrimination and may initiate
a law suit, promote and monitor equality, initiate the adoption and amendments of
regulations in the area of discrimination, and recommend measures aimed at
ensuring equality of public bodies. Awareness raising activities were carried
out in August 2011. However, the anti-discrimination law still has to be
brought further into line with EU legislation, in particular as regards exceptions
for religious communities. In practice, those most exposed to discrimination
are Roma, women, persons with disabilities and the LGBT population. They are
frequently victims of intolerance, hate speech and even physical attacks.
Public officials have been reluctant to publicly condemn such incidents. As regards labour
and trade union rights, freedom to join trade unions and any other form of
association is guaranteed by the Constitution and is further regulated by the
Labour Law. Serbia has ratified the major labour rights conventions of the
International Labour Organisation (ILO) as well as the revised European Social
Charter. Only persons serving in the armed forces are not allowed to join trade
unions. The issue of the representativeness of trade unions at the level of a
company, a specific branch of economic activity and nationally, is regulated by
the Labour Law which defines specific criteria for each level. In the case of
labour-related disputes, the Labour Law and the Law on Amicable Resolution of
Labour Disputes, together with the Law on Mediation, provide the possibility of
resolving individual and collective industrial disputes through conciliation,
arbitration and mediation. The right to strike is guaranteed by the Serbian
Constitution, which provides for the right to strike for employees in
accordance with the Labour Law and collective agreement. However, the Law on
strike from 1996 is not in line with the ILO conventions and EU standards, in particular
as regards possible limitations to the right to strike; a new law is under
preparation. Several registered trade unions are not recognised and concerns
remain as to the criteria for employers' organisations. Social dialogue has
been limited and needs to be further improved. At national level, tripartite
social dialogue has had to contend with a lot of problems. Its impact on the
economy was rather limited, as consultations between the partners have not
taken place regularly. At a lower level, this dialogue has been non-existent in
most municipalities, as it was not possible to establish local economic and
social councils mainly owing to the lack of representative social partners,
particularly on the employers' side. Even in those municipalities where the
councils have been established, tripartite dialogue remains very weak. Property rights are protected by the Constitution.
Expropriations are regulated by the Law on Expropriation, which was amended in
2009; they are only allowed if there is a public interest and if fair
compensation is provided. However, nationalisations under the communist regime,
which have been mainly carried out in the 1940s, 50s and 60s, have been dealt
with in a fragmented manner. Agricultural land was partially handed back in the
1990s and a law on the restitution of church property was adopted in 2006. The
2009 Law on planning and construction provides for the transformation of usage
rights into full ownership. This transformation of usage rights constituted de
facto restitution in kind in cases where the beneficiary is the former
owner, while it pre-empts such restitution in cases where the beneficiary is
not the former owner. This situation led to uncertainty on ownership rights and
negatively affected the investment climate. In September 2011, a general Law on
restitution was adopted. The law establishes the principle of in kind
restitution. In cases where in kind restitution is not possible or excluded,
financial compensation, with an overall cap of €2 billion, is foreseen. It
needs to be ensured that restitution is carried out without further delays and
in a non discriminatory and transparent manner. Once properly implemented, the
law should address the previously unclear situation of ownership rights and
provide legal certainty. It should also end the fragmented manner in which
restitution previously had been dealt with. A Law on public property, which was
adopted in September 2011, provides for the transfer of ownership from state to
provincial and municipal level and sets the rules for public ownership of
property. However, implementation still faces important challenges. In the
absence of a reliable overview on state owned properties, the transfer of state
property to provincial and municipal level leaves room for potential corruption
and fraud. Overall,
the legal framework for the protection of economic and social rights is in
place and Serbia has acceded to a number of international conventions in this
area. A long awaited law on restitution as well as a new law on public property
were adopted. Transparent and non discriminatory implementation of both laws
has to be ensured and further measures taken to fully establish legal clarity
over property rights The Commission will monitor the implementation and
application of these laws. Combating all kinds of discrimination calls for
greater efforts in practice. Respect for and protection of minorities and cultural
rights Respect for and protection of minorities is
guaranteed by the Constitution. Serbia ratified the framework convention for
the protection of national minorities and the European Charter on Regional and
Minority Languages. The 2009 Law on National Councils of National Minorities
regulates the election, powers, functioning and funding of the national
minorities' councils – bodies through which national minorities exercise their
right of self-government in the area of education, use of language, information
and culture. The 2009 Law on Political Parties provides for a smaller number of
signatures for the registration of minority political parties; 45 minority
parties have been registered. In addition, the 2007 Law on Local
Self-Government envisages for ethnically mixed municipalities the establishment
of councils for inter-ethnic relations, to deliberate issues regarding the
exercise, protection and promotion of ethnic equality. The official use of language and scripts of national
minorities on the territory of local self-government units where national
minority members traditionally live is guaranteed. Also, the conditions for usage of the mother tongue for
minority representatives in the republic and provincial parliament are provided
for. Serbia has signed bilateral agreements on the protection of
national minorities with Romania, Hungary, Croatia and the former Yugoslav
Republic of Macedonia. Commissions with Hungary Croatia and Romania have been
formed and are operational. The Ministry for Human
and Minority Rights and Public Administration and Local Government is competent
for the protection and promotion of minorities. Besides the Ministry, other
bodies such as the Ombudsman and the Commissioner for Equality Protection are
involved in this area. A Republican Council for National Minorities was
established in 2002 with the task of coordinating cooperation between minority
national councils and state bodies. In line with the Law on
National Minority Councils, the first direct elections for the National
Minority Councils were organised in 2010. Nineteen national minorities elected
their respective councils. All national minority councils have been constituted
and started to be operational, except the Bosniak one. While some
irregularities were reported during the elections of the national minority
councils, they did not significantly affect the overall results. The inter-ethnic situation is good overall. During the past years, recorded ethnically-based
incidents have been decreasing in numbers and were generally minor. However, the implementation of the legal
framework in this area has still to be improved. The Republican Council has met
only twice since it was established. The functioning of the national minority
councils still has to be strengthened if they are to be able to carry out their
mandate effectively and ensure proper management of their financial resources.
The Ombudsman, the Commissioner for the Protection of Personal Data and the
Commissioner for Equality Protection made a number of recommendations with a
view to improving the electoral framework for the national minority councils,
which remain to be followed up. Information and education in minority languages
needs to be further improved and consistently ensured throughout the country. The inter-ethnic
situation in the Autonomous Province of Vojvodina is good and there has
already been a further decrease in the limited number of incidents. In line
with the Constitution, the new Provincial Statute and other sectoral laws, the
Provincial authorities have important powers for regulating the enforcement of
human rights, including the protection of minorities. The legal and
institutional framework for the protection of minorities in the areas of
culture, education, information and official use of language is secured, but
the implementation of these provisions is in some cases inconsistent. The 13 national
minority councils which have their seat in Vojvodina are working well. There is
a specific Council of national communities which acts as a consultative body in
the Provincial Assembly. Good cooperation has been established between the
State and Provincial authorities in activities for promoting tolerance. Police
investigation of inter-ethnic incidents and police sensitivity to treat them as
a criminal offence of incitement to ethnic, racial and religious hatred, as
opposed to the previously referring to them as ordinary incidents, has
improved. However, both the system of monitoring such cases and their legal
processing needs to be further improved. As regards the
municipalities of Presevo, Bujanovac and Medvedja, the situation is
overall satisfactory, but there are a number of outstanding issues which have
not been dealt with for a long period that still have to be resolved. The
security situation is broadly stable. In general, incidents have been
infrequent and their number continues to fall. The government's coordinating
body for that area was restructured in 2009. It has yet to become fully
effective. Bilingual branches of faculties of law and of economics were opened
in Medvedja in October 2009. A Task Force, facilitated by the OSCE High
Commissioner for National Minorities, has been working with a view to opening a
multilingual branch in Bujanovac. Serb political representatives were
integrated and a multiethnic municipal administration was set up in Bujanovac
in December 2010. The Government adopted a decision on the opening of a
maternity ward in Presevo. The office of the State Ombudsman opened local
branches in the municipalities of Presevo, Bujanovac and Medvedja. There is a
well-established local multi-ethnic police. ABC books in Albanian language were
delivered in September 2011 for elementary schools. The decision of July 2010
opening up additional vacancies in public administration and bodies to contribute
to the integration of Albanians remains to be fully implemented. A sustainable
solution remains to be found and implemented to the issue of the acceptance of
diplomas issued by the University of Pristina. Although in the 2011 census the
recruitment of Albanian enumerators and the availability of corresponding
linguistic versions of census materials have been ensured, some Albanian
politicians have called for a boycott of the census. The government needs to
demonstrate greater commitment to the economic development of the area, which
is one of the poorest in Serbia. Regarding the Sandzak
area, the situation has been tense and occasionally unstable. While
inter-ethnic incidents are rare, the divisions among the Bosniak community have
led to recurring incidents. The
police response needs to be improved, as investigations are too rarely
initiated. Follow up by the judiciary does not often lead to final convictions.
After the minority councils' elections of June 2010, the Bosniak council has
still to be established, due to a number of open issues related to its
constitution. The Ombudsman noted inconsistencies in the implementation of the
right to officially use the Bosniak language in certain municipalities. The
number of educational institutions needs to be further increased. Bosniaks
remain underrepresented in the public administration bodies at local level,
including the police. The area suffers from a lack of basic infrastructures
which seriously hampers its economical development. The unemployment rate is
high and foreign investment is scarce. Government should pay more attention to
the challenges facing Sandzakand a regional strategy development has yet to be
established. As regards the Roma, Serbia is actively taking part
in the Decade of Roma Inclusion 2005 – 2015. There are several bodies competent
for improvement of the status of the Roma: the Ministry for Human and Minority
Rights and Public Administration and Local Government, a Roma Council,
chaired by a Deputy Prime Minister, as well as a Roma National Minority
Council. A Roma Inclusion Office has been established at the level of Vojvodina
Province and has been particularly active in the area of education and
employment. A national strategy for the improvement of the Status of Roma and a
related action plan were adopted in 2009. Education, health and employment
policies and measures are largely in place. Infant and child mortality among
children living in Roma settlements has been halved during the past five years.
A number of measures in the education sector have resulted in a significant
improvement in enrolment and completion of primary education, as well as
initial encouraging results in higher education. Seventy-five Roma health
mediators and 175 pedagogical assistants have been employed so far and a system
of health cards has been put in place. Awareness-raising activities for Roma
inclusion have continued. A series of measures were taken between May and
September 2011 aiming at alleviating existing obstacles to the registration of
"legally invisible persons" and improving access to basic rights: the
administrative fee for subsequent registration of births was abolished; new
possibilities to register under a provisional address were introduced. However, implementation of the legislation and policies
currently in place need to be strengthened so that efforts can be felt on the
ground. Widespread discrimination and marginalisation of the Roma continue in
practice. Roma have been the subject of several ethnically motivated attacks or
threats over the past years. The national Roma strategy needs further funds for
its implementation. The rate of Roma employment is very low, including in the
public administration. Roma women and children are subject to exploitation and
family violence, which often goes unreported. A large number of Roma live in
illegal settlements under unacceptable conditions. There is still no systematic
approach to the relocation of illegal Roma settlements, which is often
conducted inappropriately, resulting in serious violations and breaches of
basic human rights. Serbia hosts approximately 73,000 refugees and
210,000 internally displaced persons (IDPs), according to the United
Nations High Commissioner for Refugees. There is a legal and institutional
framework in place for refugees and internally displaced persons. The National
Strategy for Resolving Issues of Refugees and IDPs was adopted in 2002 and
revised in March 2011. Amendments to the Law on Refugees have enabled refugees
since 2010 to buy apartments that were built from donations. The programme to
support the municipalities which prepared local action plans for the
improvement of the status of refuges and IDPs that opted for local integration
has been implemented for several years, yielding positive results including as
regards the housing situation. A Housing Agency was established in August 2011
in order to streamline the management of the funds allocated to social housing.
The number of collective centres has been gradually reduced, from 388 in 2002
to 29 as of September 2011. These centres continue to provide accommodation for
almost 800 refugees and over 2,500 IDPs in poor conditions. Around 97,000 of
the IDPs remain in need of assistance for housing, employment and personal
identification documents. Roma IDPs are the most disadvantaged segment of the
IDP population and are facing serious displacement-related needs. Overall,
the legal and institutional framework on the respect and protection of
minorities in Serbia is in place. The Constitution guarantees to members of national
minorities specific rights in addition to the rights guaranteed to all
citizens, and introduces the National Minority Councils as a constitutional
category. At State level, the Ombudsman and the Commissioner for Equality are
exercising their prerogatives in this area. However, the implementation of the
legal framework still needs to be improved. The situation in the Sandzak area
has been tense and occasionally unstable. Further efforts are necessary in
order to improve the status and socio-economic conditions of the Roma, who
continue to be the most vulnerable and marginalised minority. The situation of
refugees and IDPs remains particularly worrying.
1.3.
Regional issues and
international obligations
There are no outstanding issues in connection with Serbia's
compliance with the Dayton/Paris Peace Agreement. In 2006, in line with
the provisions of the Dayton Agreement, Serbia and Republika Srpska (BiH)
signed an Agreement on special parallel relations, which established a
Cooperation Council at presidential and prime ministerial level, as well as
cooperation between governments and parliaments. Serbia consistently
acknowledges the territorial integrity of Bosnia and Herzegovina. Cooperation with the International
Criminal Tribunal for the former Yugoslavia (ICTY) has greatly improved
since 2008. After the fall of Milosevic, the Federal Republic of Yugoslavia had
initially actively engaged in cooperation with the ICTY; the search for
fugitives was largely ineffective in the years that followed the assassination
of Prime Minister Djindjic, although several fugitives gave themselves up
voluntarily. Since 2008, Serbia substantially stepped up its cooperation to a
now fully satisfactory level as it responded to a total of 46 requests from the
ICTY for handing over indictees, including the arrests and handovers of Radovan
Karadzic in July 2008, Ratko Mladic in May 2011 and Goran Hadzic in July 2011. A Law on Cooperation with the ICTY was adopted in 2002 and
one on the freezing of assets of ICTY fugitives in 2006. Two main bodies were
established: the National council for cooperation with ICTY (NCCI), established
in 2002, which has been effectively cooperating on access to archives,
documents and witnesses; and the Team for the implementation of the Action plan
for completion of cooperation (Action team), formed in 2006, responsible for
measures aimed at arrests and handovers of the remaining fugitives. An appeal
judgment from July 2011 ordered a re-trial of an important case against a
network of Mladic's aids, who were acquitted in first instance on the basis of
the statute of limitation and insufficient evidence. Serbia is advanced in the
processing of the cases transferred by the ICTY. Further efforts to explain and
defend the role of the ICTY and confront the past are essential for a lasting
reconciliation. Full cooperation with the ICTY remains an essential condition
for membership of the EU, in line with the Council conclusions of 25 October
2010. The investigative capacity of the police in the area of war
crimes has become increasingly professional. It would benefit from
additional expert staff such as military analysts and intelligence officers.
Problems of extradition and recognition of sentences with some countries of the
region continued. The activation by
Serbia of indictments of war crimes issued by military courts, during the
conflicts of the 1990s, against citizens of Croatia and of Bosnia and
Herzegovina, has occasionally burdened relations with these countries. Serbia
has initiated a review of these indictments. Serbia ratified the Rome Statute establishing the
International Criminal Court in 2001 and adopted the Law on Cooperation
with the International Criminal Court in 2009. In line with the EU's guiding
principles and EU Common Positions on the integrity of the Rome Statute, Serbia
does not have any bilateral immunity agreement. The Parliamentary Assembly of the Council of Europe
has monitored Serbia's fulfilment of its membership obligations since 2003. In
June 2009, the Committee of Ministers ended its post-accession monitoring in
the light of the progress achieved by Serbia in meeting its membership
commitments and obligations. This monitoring was replaced by a lighter regular
stocktaking of cooperation and progress. Serbia chaired the Committee of
Ministers from May to November 2007. Serbia does not
recognise Kosovo[3]'s
unilateral declaration of independence. In July 2010, the International Court
of Justice (ICJ) issued an advisory opinion on a case initiated by Serbia,
concluding that the declaration of independence of Kosovo adopted on 17
February 2008 did not violate general international law and UN Security Council
Resolution 1244/1999. The UN General Assembly adopted on 9 September 2010 a
resolution tabled jointly by Serbia and the 27 EU Member States which
acknowledged the content of the ICJ advisory opinion and welcomed the readiness
of the European Union to facilitate a process of dialogue between the parties
as a factor for peace, security and stability in the region and to promote
cooperation, achieve progress on the path to the European Union and improve the
lives of the people. The dialogue, which started in March and was conducted in
a generally constructive spirit until September, has led to agreements on
several issues: free movement of goods and persons, civil registry and
cadastre. The Serbian authorities have started to implement the agreement
reached on 2 September on the acceptance of the Kosovo customs stamps notified
by UNMIK to allow the entry or transit in Serbia of goods from Kosovo. But
Serbia interrupted its participation in the dialogue at the end of September,
in the light of tensions in northern Kosovo. Further results of the dialogue
remain to be achieved, in order to implement, as a matter of priority, the
principle of inclusive regional cooperation and to provide sustainable
solutions on EU-related matters in sectors such as energy and telecoms. The
agreements reached to date need to be implemented in good faith. Serbia generally
cooperates with EULEX at an operational level, including with regard to
administrative cooperation, as well as on war crimes related to Kosovo. It
needs to improve implementation of the police protocol and exchange of
information in the fight against organised crime. Control and surveillance of the
administrative boundary line with Kosovo needs to be improved, in particular in
view of regional organised crime activities. The situation in northern Kosovo
and the issue of the control of the administrative boundary line have led to
tension in the summer and beyond, including several outbreaks of violence which
resulted in casualties. The situation has also led to more frequent
inflammatory rhetoric by the Serbian leadership. The EU has called on both
parties to defuse tensions and help re-establish free movement of persons and
goods which would benefit the lives of the people in the region. Serbia needs
to cooperate actively with EULEX in order for it to exercise its functions in
all parts of Kosovo. Serbia maintains its
structures in Kosovo and organised parallel municipal by-elections in May 2008,
which is inconsistent with UNSCR 1244/1999. Serbia failed to play a
constructive role in the return of Kosovo Serb and Kosovo Albanian judges and
prosecutors to the Mitrovica District Court, which remains staffed only by
EULEX personnel. Declarations by some Serbian government officials, in early
2011, discouraging the participation of Kosovo Serbs in the census in north
Kosovo had a detrimental effect, which contributed to the census not taking
place in northern Kosovo. Serbian mobile operators maintained the activities of
unlicensed branches in Kosovo. Similar activities in the provision of
electricity were also maintained. There were a number of statements by high
officials advocating partition of Kosovo. Serbia has restored its
relations with EU Member States and its neighbours that recognised Kosovo's
independence. The disagreement over Kosovo's representation is undermining
regional cooperation generally and hampering Kosovo's participation in regional
meetings and initiatives. It is holding up the signature of the EU-Western
Balkans Transport Community Treaty. Significant progress was made with regard to the
Sarajevo Declaration Process, launched through the Sarajevo Declaration of
31 January 2005. Bosnia and Herzegovina, Croatia, Montenegro and Serbia
cooperate within this process to find solutions for refugees who were displaced
as a result of the armed conflicts in ex-Yugoslavia between 1991 and 1995.
Countries have continued to progress on a number of outstanding issues such as
data exchange, civil documentation, public information, pensions and trust fund
mechanisms, in the framework of the established regional working groups.
Following the meetings of June and September 2011, Bosnia and Herzegovina,
Croatia, Montenegro and Serbia agreed on a number of issues, including the text
of a joint declaration to be signed at a ministerial conference in November
2011 in Belgrade. A regional multi-year programme, aimed at addressing the
needs of the most vulnerable refugees, has also been agreed, together with a
donors' conference to be held in the first half of 2012 in Sarajevo. As regards missing
persons, as of September 2011, there were still approximately 14,000 people
missing from the conflicts in the region. Of these, some 10,000 were related to
the conflict in Bosnia and Herzegovina, 2,000 to the conflict in Croatia and
over 1,800 to the conflict in Kosovo. A working group between Belgrade and
Pristina chaired by ICRC meets regularly, but progress on resolving cases has
been hampered by the lack of information on gravesite locations. There has also
been recent progress in the cooperation between Serbia and Croatia. The lack of
information on new gravesites and difficulties in identifying the already exhumed
remains have considerably slowed down the process of resolving the fate of
missing persons. Regional cooperation
and good neighbourly relations form
an essential part of the process of Serbia's moving towards the European Union.
Serbia participates constructively in most regional initiatives and on the
whole plays a stabilising role in the Western Balkans but an agreement
remains to be found on a sustainable solution for the participation of Kosovo
in regional fora. Serbia needs to fully implement the principles of inclusive
and functioning regional cooperation. In 2011 Serbia held the
chairmanship of the South East Europe Cooperation Process (SEECP), the Central
European Initiative (CEI), the Adriatic-Ionian Initiative (AII), and the
Migration, Asylum, Refugees Regional Initiative (MARRI). It held the Presidency
of the Central European Free Trade Agreement (CEFTA) in 2010 and continues to
play an active part in the Regional Cooperation Council (RCC), the Energy
Community Treaty, the European Common Aviation Area Agreement and the EU
Strategy for the Danube Region. In March 2011, within the framework of the
SEECP, Serbia endorsed the Regional Strategic Document and Action Plan on
Justice and Home Affairs 2011-2013. Serbia supports the RECOM initiative on
reconciliation. Serbia will host the 22nd session of the Igman Initiative in
October 2011. Serbia has overall good bilateral relations
with other enlargement countries and with EU neighbouring states Hungary,
Romania and Bulgaria. Periodic high-level meetings in a trilateral format have
been organised with Croatia and Slovenia, with Croatia and Hungary, and with
Bosnia and Herzegovina and Turkey. In recent years Serbia has also taken
significant initiatives aimed at regional reconciliation, including a number of
landmark visits undertaken by the Serbian President in Bosnia and Herzegovina
and in Croatia, as well as the adoption by parliament in March 2010 of a
declaration condemning the crime in Srebrenica and referring to the
International Court of Justice ruling on Srebrenica. Relations with Albania
have recently improved to a good level. In 2010, during the first visit of the
Albanian Minister of Foreign Affairs in five years, an agreement on cooperation
in fighting organised crime, international drug trafficking and international
terrorism was signed. Both countries abolished visas between them in 2010. Relations with Bosnia
and Herzegovina have steadily improved and are good. President Tadic
undertook his first official visit to Sarajevo in July 2011; he had attended
the Srebrenica commemoration in July 2010. An Ambassador from Bosnia and
Herzegovina took office in 2010 following three years during which the post was
vacant. Agreements are in force in several areas, including economic
cooperation, mutual legal assistance in criminal matters, police cooperation,
culture and sport, as well as on determination of border crossings with Bosnia
and Herzegovina. The Inter-State Cooperation Council has only recently been
re-activated. The border demarcation remains an open issue. Relations with Croatia have recently
improved to a good level. Regular contacts and a good level of cooperation are
established, most notably at presidential and government levels. In November
2010 President Tadic made a landmark visit with President Josipovic to Vukovar
where they together paid their respects to Croat victims in Ovcara and to Serb
victims in Paulin Dvor. A defence cooperation agreement was concluded and a
good level of cooperation was established between war crimes prosecutors and
between parliaments. A number of sectoral agreements are in force in areas such
as protection of national minorities, extradition for serious crimes and police
cooperation. Croatia handed over its translations of the EU acquis to
Serbia. Border demarcation remains an outstanding issue and reciprocal
genocide lawsuits are pending before the ICJ. Relations with the
former Yugoslav Republic of Macedonia are good. High-level visits
take place at regular intervals. There are agreements in place on issues
such as local cross-border traffic and the protection of national minorities. The
Serbian authorities maintained their policy of non-recognition of the border
demarcation agreement between the former Yugoslav Republic of Macedonia and
Kosovo. Unresolved issues remain concerning relations between the Orthodox
churches in the two countries. Relations with Montenegro
are good. The dissolution of the former State Union went smoothly overall.
Reciprocal high level visits have taken place. Agreements were concluded in
many areas, including defence and police cooperation, extradition and disaster
preparation. Cooperation in the fight against organised crime remains to be
improved. Issues stemming from the dissolution of the State Union, such as
distribution of assets and liabilities, citizenship rights, border demarcation
and relations between the Orthodox churches in the two countries, have still to
be resolved. Relations with Turkey are good. Reciprocal
high-level visits take place. Trilateral meetings are held regularly, together
with Bosnia and Herzegovina, at presidential and ministerial levels. In April
2011, the President of Turkey attended a three-party meeting of Turkey, Serbia
and Bosnia and Herzegovina in Belgrade. Agreements are in place in areas such
as economic cooperation, free trade, tourism, social security. Serbia continues to
enjoy good relations and cooperation with Hungary, Romania and Bulgaria.
There is on-going high-level political dialogue with these countries. Bilateral
agreements on protection of national minorities were signed and relevant Joint
Inter-governmental commissions were established with Hungary and Romania
respectively. Overall, Serbia generally complies with its
international obligations and the conditions of the Stabilisation and
Association process. The arrest and transfer of Radovan Karadzic, Ratko Mladic
and Goran Hadzic to the Hague tribunal represent major successes for Serbia's
cooperation with the ICTY, which has greatly improved since 2008 to reach a
fully satisfactory level. Regional cooperation has improved and Serbia made
significant progress in its bilateral relations with other enlargement
countries, particularly Croatia and Bosnia and Herzegovina, while continuing to
have good relations with neighbouring EU member states. A number of outstanding
bilateral issues, in particular regarding border demarcation, remain to be
addressed. Serbia does not recognise Kosovo's unilateral declaration of
independence. It maintains its structures in Kosovo and organised parallel
municipal by-elections in May 2008, which is inconsistent with UNSCR 1244/1999.
On the basis of the UN General Assembly resolution adopted on 9 September 2010,
which had been tabled jointly by Serbia and the 27 EU Member States, a process
of dialogue between Belgrade and Pristina started in March. It has been
conducted in a generally constructive spirit until September
and it has led to agreements on several issues: free movement of goods and persons,
civil registry and cadastre. The agreements reached to date need to be
implemented in good faith. Further results remain to be achieved to
implement, as a matter of priority, the principles of inclusive and functioning
regional cooperation and to provide sustainable solutions on EU acquis related
matters in sectors such as energy and telecoms. All sides need to play their
part in defusing the tension in north Kosovo and allow for free movement of
persons and goods, for the benefit of the people of the region.
1.4.
General evaluation
The present assessment
is based on the Copenhagen criteria relating to the stability of institutions
guaranteeing democracy, the rule of law, human rights and respect for and
protection of minorities, as well as on the conditionality of the Stabilisation
and Association Process. Serbia is a
parliamentary democracy. Its constitutional and legislative framework is
largely in line with European principles and standards and its institutions are
well developed. Serbia is committed to its objective of membership of the
European Union and since 2008 has increasingly focused its efforts on the
EU-related reform agenda. The government has upgraded some of its procedures
and parliament has become far more effective in its legislative activity under
the current legislature. The legislative process would benefit from more
thorough preparation and greater emphasis on consultation of stakeholders.
Capacity for parliamentary oversight and governmental policy planning,
coordination and implementation remains to be further developed. Serbia has set
up all the necessary independent regulatory bodies. The rules governing the
parliamentary review of their annual reports have been clarified even though
the follow-up of recommendations by independent and regulatory bodies needs to
be strengthened. The public administration is in general well developed, in
particular at central level. The principle of a merit-based career system needs
to be fully implemented. Serbia has established a Statute for the Province of
Vojvodina and has undertaken to transfer some competences to the municipal
level. Since 2001, elections
have been consistently conducted in Serbia in accordance with international
standards. The electoral legislation was recently brought into line with
European standards. It now provides that the appointment of MPs follows the
order of the lists presented to the voters and it puts an end to the practice
of 'blank resignations', by which MPs were tendering resignation letters to
their parties at the beginning of their mandate. This consolidates the free exercise
of parliamentary mandates, a principle which needs, in due course, to be fully
enshrined in the Constitution. The legal and
institutional framework for the rule of law in Serbia, including the
fight against corruption and organised crime, has been enhanced, particularly
following substantial reforms in the judiciary, the setting-up of the
Anti-Corruption Agency and the stepping-up of international cooperation in
criminal matters. This has led to initial results. The main challenges remain
in the areas of the judiciary, the fight against corruption and the fight
against organised crime. In particular, a proactive approach in the fight
against corruption leading to a credible track record of opened investigations
and final convictions remains to be built up. An extensive framework for
civilian control of the security forces is in place. Substantial reforms of
the judiciary were pursued in Serbia following the adoption of the national
strategy in 2006 and intensified in 2009 and 2010. Independence and self-administration
were strengthened with the establishment of the new High Judicial and State
Prosecutorial Councils, which have been functioning in their permanent
compositions since April 2011. A re-appointment procedure for all judges and
prosecutors was undertaken in December 2009, aiming in particular at raising
their professional and integrity standards. The initial significant
shortcomings identified in that procedure are in the course of being addressed
by a review process for which there are clear guidelines. The review process remains to be satisfactorily
completed in transparent manner in line with these guidelines. A revision of the role given by the Constitution
to parliament on appointments and dismissals in the judiciary will need to be
undertaken in due course, to further reduce the risk of undue political
influence. Several steps have been taken to increase the efficiency of the
judicial system. The court network was restructured and the number of courts
reduced, leading to a better distribution of workload. An Administrative Court
was set up and a Law on enforcement of court decisions adopted in May 2011.
Further efforts are still needed to improve the functioning of the judiciary,
reap the full benefits of the restructured network of courts and ultimately
increase public trust. Efforts to strengthen the execution of judgments and
further reduce the important backlog of pending cases are to be pursued. The legal and
institutional framework for fighting corruption is, overall, in place in
Serbia. An Anti-Corruption Agency was established and is competent in the areas
of integrity of public officials and control of party funding. Its resources
were recently further increased. An enhanced framework for controlling
financing of political parties' activities and electoral campaigns has been
established in line with European standards. The Minister of Justice was
appointed coordinator for the fight against corruption. The authorities have
launched a review of the outdated strategy and action plan for the fight
against corruption. The State Audit Institution has started to play a useful
role in controlling public expenditure and uncovering irregularities. The
customs administration and the police have stepped up their internal controls
resulting in a greater number of cases being investigated and sanctioned. Steps
have also been taken towards specialisation of the law enforcement agencies and
a greater number of cases have been prosecuted. Corruption remains prevalent in
many areas and continues to be a serious problem. Stronger political will is
essential in order to significantly improve performance in combating
corruption. Enhanced investigation capacity and coordination of law enforcement
bodies are indispensable. The track record of investigations, prosecutions and
final convictions in corruption cases at all levels needs to be gradually and
significantly built up. There are also concerns regarding supervision of public
procurement, privatisation, spatial planning and construction permits. In the fight against
organised crime, the legal framework developed by Serbia is generally adequate
and capacity has improved, including on international cooperation. This has led
to significant results, such as the dismantling of a major international
drug-trafficking ring. Money laundering and drug smuggling are key areas of
concern and the track record of investigations and convictions needs to be
built up further. Capacity for proactive and better coordinated investigations
and enhanced cooperation at regional and international levels also remain to be
further developed. Technical capacity to carry out special investigative
measures should be developed within the law enforcement bodies, under the
direct control of the judiciary. The legal and policy
framework for human rights and the protection of minorities in
Serbia is, overall, in line with European standards. The Constitution
guarantees a wide range of human rights and fundamental freedoms and recognises
the possibility of filing a Constitutional appeal as the final remedy for
protection of human rights. However, implementation of the legislation needs to
be stepped up. Advanced training of the administration, the police and the
judiciary remain to be developed to ensure more active and consistent
application of standards in this field. Human rights are generally respected in Serbia. The
Ombudsman and the Commissioner for access to information and data protection
are playing an increasingly effective role in the oversight of the
administration. The legal framework to combat discrimination has been
substantially improved and mechanisms have been set up to oversee its
implementation, which is at an early stage. The authorities have also been
paying growing attention to safeguarding the respect of the freedom of assembly
and freedom of association and the role of civil society. The newly adopted
media strategy aims at substantially clarifying the legal and market
environment in which media outlets are operating. More comprehensive and
proactive action is expected from the relevant institutions in cases of threats
and violence against journalists and media, emanating notably from radical
groups. The current prison conditions are a matter of serious concern. A long
awaited law on restitution as well as a new law on public property were
adopted. Transparent and non discriminatory implementation of both laws has to
be ensured and further measures taken to fully establish legal clarity over
property rights. The Commission will monitor the implementation and application
of these laws. The legal and
institutional framework for respecting and protecting minorities in Serbia is
in place. The Constitution guarantees specific rights to members of national
minorities in addition to the rights guaranteed to all citizens and provides a legal
basis for the National Minority Councils. Political representation of
minorities is ensured. At State level, the Ombudsman and the Commissioner for
Equality are exercising their prerogatives in this area. Serbia has established
a comprehensive strategy for the integration of Roma and is currently
progressing in its implementation. Active social inclusion measures have been
taken, in particular in the fields of health, education and housing. Measures
have recently been taken to alleviate obstacles to the registration of 'legally
invisible persons' which will improve their access to basic rights. Further
serious efforts, including financial resources, are needed in order to improve
the status and socio-economic conditions of the Roma, who continue to be the
most vulnerable and marginalised minority, as illustrated by the high number of
illegal settlements. The situation of refugees and internally displaced persons
remains a concern, even though significant progress was achieved in recent
years in reducing the number of collective centres. Serbia generally
fulfils the conditions of the Stabilisation and Association Process.
Cooperation with the International Criminal Tribunal for the former Yugoslavia
has greatly improved since 2008 to a now fully satisfactory level, as best
illustrated by the arrests and transfers to the Hague tribunal of Radovan
Karadzic in 2008, Ratko Mladic and Goran Hadzic in 2011. Serbia is committed to
pursuing this cooperation at the same level. It participates actively in
regional initiatives and has taken significant steps to foster reconciliation.
The agreement reached with Bosnia and Herzegovina, Croatia and Montenegro in
the Sarajevo Declaration Process on durable solutions for refugees and IDPs is
a major achievement. Serbia has made good progress in its bilateral relations
with other enlargement countries, particularly Croatia, Bosnia and Herzegovina
and Montenegro, while continuing to maintain good relations overall with
neighbouring EU Member States. A number of outstanding bilateral issues remain
with its neighbours, in particular regarding border demarcation. Serbia does not
recognise Kosovo's unilateral declaration of independence. It maintains its
structures in Kosovo and organised parallel municipal by-elections in May 2008,
which is inconsistent with UNSCR 1244/1999. On the basis of the UN General
Assembly resolution adopted on 9 September 2010, which had been tabled jointly
by Serbia and the 27 EU Member States, a process of dialogue between Belgrade
and Pristina started in March. It has been conducted in a generally
constructive spirit until September and it has led to agreements on several issues:
free movement of goods and persons, civil registry and cadastre. The agreements
reached to date need to be implemented in good faith.
Further substantial results remain to be achieved to implement, as a matter of
priority, the principles of inclusive and functioning regional cooperation and
to provide sustainable solutions on EU acquis-related matters in sectors
such as energy and telecommunications. All sides need to play their part in
defusing the tension in northern Kosovo and allow for free movement of persons
and goods, for the benefit of the people of the region.
2.
Economic criteria
In 1993, the European
Council in Copenhagen defined the following economic criteria for accession to
the EU: - the existence of a
functioning market economy, - the capacity to cope
with competitive pressure and market forces within the Union. These criteria are
interlinked. A functioning market economy will cope better with competitive
pressure and, in the context of membership of the Union, the market of
reference is the internal market. Following a brief
overview of economic developments and policies in a historical perspective, the
report goes on to consider the extent to which Serbia fulfils the two economic
criteria established by the Copenhagen European Council.
2.1.
Economic developments
Serbia is a relatively
small economy with a population of approximately 7.3 million, living on a
territory of around 77,500 square kilometres. The country is endowed with
fertile arable land and natural mineral resources, including one of Europe's
largest reserves of copper and up to one tenth of the
world's stock of antimony. It has significant coal resources and the potential
for hydroelectric-power generation. Serbia's gross domestic product (GDP) at current prices was
close to €30 billion in 2010, accounting for 0.25% of EU-27's GDP. GDP per
capita in purchasing power parity (PPP) terms was 35% of the EU-27 average. The
regional disparities in income are very high, with a difference of 1:10 between
the capital and certain municipalities in the south. Macroeconomic background Serbia was the largest
constituent of the Socialist Federal Republic of Yugoslavia in terms of surface
and population. It was a medium developed republic. In the wake of the break-up
of the former Yugoslavia in 1991, when moves had already been made towards
liberalisation and the development of private sector, Serbia began the
transition period with higher living standards than many other transition
economies. However, the result of the loss of its traditional markets and the
breakup of the existing supply chains as well as the imposition of
international sanctions, against a backdrop of regional conflicts, was a severe
recession. Poor economic governance, which reversed many market-oriented
reforms from the 1980s, devastated the production capacity of the economy.
Workers stayed formally employed, but were de facto on long-term leave.
The informal economy became widespread. During 1992 and early 1994, one of the
highest levels of hyperinflation in history paralysed the banking system and
undermined the economic activity. In spite of a monetary reform in 1994, which
partly stabilized the new dinar, the Deutsche Mark acted as a parallel currency
throughout the 1990s. In 2000, GDP was less than half of its 1989 level, while
other central and eastern European countries were making significant progress
on the path of transition. The economic imbalances
began to slowly subside as Serbia re-launched the transition process as part of
the democratic changes in 2000. The reforms included an overhaul of the
institutional framework, liberalisation of the trade regime and privatisation
as well as adjusting economic policies to a market economy. Starting from a very
low base, Serbian real GDP rose steadily during the period 2001-2008 at an
average yearly rate of around 4.5%, reaching a peak of 9.3% in 2004. Growth was
lent impetus by the initiation of the privatisation process, which attracted
foreign direct investment, and by the rebuilding of confidence in the banking
system. The National Bank of
Serbia (NBS) put in place adequate prudential mechanisms and, together with the
government, consolidated the banking sector, which led to the closure of four
major state-owned banks and the subsequent establishment of new banks with
fresh capital. Against the background of tight monetary policy, inflation
gradually subsided, but in regional terms it remained high – at two-digit
levels. In 2006, the NBS declared price stability to be its main policy
objective and to that end started pursuing inflation targeting. Post-2000 reforms were
also geared towards establishing a comprehensive, transparent and accountable
public finance management system. A set of new tax laws was introduced with the
aim of modernising the tax administration and improving tax collection. In
particular, the replacement of the sales tax by VAT in 2005 boosted tax
revenues. Large budgetary deficits, which were mainly funded by the
International Financial Institutions, began to decline in step with favourable
economic conditions, and the deficits turned into a surplus in 2005. On the other hand,
economic growth that was largely fuelled by domestic demand weighed on Serbia's
external balance. As imports rallied, the trade gap continued to widen, driving
the current account deficit to over 20% of GDP by 2008. Given the large gap
between domestic investment and savings, the private sector increasingly
resorted to borrowing abroad, which led to a rapid rise in Serbia's foreign
indebtedness. One of the main
concerns was also the weak labour market. The restructuring of companies after
2000, which involved rationalisation or closure of facilities, resulted in
massive layoffs. Low labour activity, with the employment rate barely reaching
50%, became entrenched, as insufficient effort was made to remove labour market
rigidities and improve the business environment. The dependence of
growth on foreign financial resources and a number of unresolved structural
shortcomings exposed Serbia's economy to adverse spill-overs of the global
crisis in 2009. Macroeconomic stability has been broadly preserved thanks to
the implementation of an economic recovery programme agreed with the IMF under
a Stand-by Arrangement (SBA). With further support from the EU and other
International Financial Institutions, including the World Bank and EBRD, Serbia
avoided a financial meltdown. However, the recession that followed a severe
contraction of manufacturing and construction activities, in particular,
substantially eroded public finances and led to a deterioration in living
standards. With around 400,000 jobs lost, an unemployment rate of above 20% and
the poverty rate rising above 9% in the aftermath of the 2009 crisis, Serbia's
economy is faced with the need to tackle urgently a number of acute weaknesses
if it is to withstand the competitive pressures. Structural change Serbia began the
transition process in the early 1990's as an industrialised economy. The
manufacturing sector, which included a productive automotive industry,
collapsed as a consequence of the trade shocks related to the dismantling of
the former Yugoslav markets and the international embargo, the war-inflicted
damage to infrastructure and the mismanagement of public assets. After 2000,
the economic revival was mainly based on services, which now account for almost
two thirds of Serbia's output. While agriculture has seen its share of GDP
halve to around 10%, the share of industry fell more gradually to less than a
quarter. Given the prevalence of mostly unskilled labour- and capital-intensive
sectors at the low-end of the production chain the export base remains shallow,
limiting the share of exports in GDP to only about 30%. Yet Serbia has been
increasingly reorienting its exports towards the EU markets, which accounted
for around 56 % of total exports in 2010. Since 2001, a
liberalisation of trade and prices has been underway but the process has been
occasionally challenged by state interference in dealing with market disturbances.
The system of administered prices has allowed the state and local authorities
to control prices of all major utilities, which are often below cost-recovery
levels. Another privatisation
process was initiated in 2002 which covered some 500 state enterprises
(excluding public enterprises and banks which were considered strategic) and
around 2,500 socially owned companies. While in the 1990s, insider shares were
distributed among the employees, in the second stage the sale of assets was
carried out by public auction and tender procedures. However, the process has
been slow and, with the 2009 crisis, it has lost momentum or even gone
backwards as a result of the repeal of numerous sale contracts on the grounds
of breach of contract obligations. The share of the private sector remains low,
at around 60% of GDP. Progress in the restructuring of enterprises, including
the development of modern corporate governance, and the improvements of the
regulatory framework were also limited. The banking sector
underwent major structural changes in the period 2000-2005. The number of banks
was halved as a result of mergers and acquisitions and revoked licences to
insolvent and illiquid banks. Further consolidation and privatisation attracted
international private banks, which currently hold around three quarters of the
total assets of the banking system. In keeping with sustained economic growth,
financial intermediation expanded vigorously but, as a legacy of the monetary
instabilities from the 1990s, the bulk of deposits and loans continued to be
in, or indexed to, foreign currency. A high degree of 'euroisation', within the
framework of a flexible exchange rate regime, makes Serbia's economy vulnerable
to exchange rate volatility. Nevertheless, the banking system has emerged
largely unscathed thanks to a conservative lending policy and adequate
supervision and prudential regulations put in place by the central bank. Given its limited
domestic financial resources, Serbia has had to rely heavily on foreign
capital. The liberalisation of long-term capital movements and privatisation
opportunities attracted significant foreign direct investment (FDI) in the
period to 2006. After 2008, FDI inflows dried up, partly as a result of the
crisis. Road and, in
particular, rail transport infrastructure remain insufficiently developed.
Following the rehabilitation of the power production and transmission systems,
the present electricity demand has been met. However, the existing capacities
are far from sufficient in the light of future needs. Investment in new
infrastructure and production facilities is part of Serbia's new development
strategy, which is looking towards a shift to more export-driven growth, based
on higher-tech industries and domestic resources. To that end Serbia needs also
to enhance its human capital.
2.2.
Assessment in terms of the
Copenhagen Criteria
2.2.1.
The existence of a
functioning market economy
The existence of a functioning market economy requires that
prices, as well as trade, should be liberalised and that an enforceable legal
system, including property rights, is in place. Macroeconomic stability and a
consensus on economic policy enhance the performance of a market economy. A
well-developed financial sector and the absence of significant barriers to
market entry and exit improve the efficiency of the economy. Economic policy essentials Since 2000, there has
been a broad political consensus on the fundamentals of a market economy and
economic policies required by EU membership. Serbia has been included in the EU's
economic and fiscal surveillance arrangements applying to potential candidate
countries since 2006. An appropriate framework for economic policy
co-ordination among national stakeholders is in place. The commitment to
reforms has been forged by several technical and financial agreements with the
EU, IMF and the World Bank. Macroeconomic stabilisation and recovery in the
aftermath of the 2009 global crisis have been anchored by the programmes agreed
with the IMF: notably a Stand-By Arrangement in the period from January 2009 to
April 2011 and a new 18-month precautionary programme . Serbia has implemented important market-oriented reforms
over the past ten years. However, structural rigidities persist. The new
post-crisis development strategy devised by the authorities for the period up
to 2020, which is geared to long-term, sustainable and balanced growth, has
stepped up efforts to strengthen the economic fundamentals. In particular,
significant strides were made towards improving the framework of public finances.
Overall, there is consensus on the economic policies required for
establishing a market economy, but the remaining structural adjustments need to
be implemented without delay. Macroeconomic stability After the political
changes in 2000, the economic revival regained momentum, with steady and robust
average growth of 4.5% per annum in real GDP. Growth was fuelled by domestic
demand, which was to a large extent financed by foreign capital. There was a
boom in investment activity, in particular, leading to an increase in the share
of gross fixed capital formation in GDP from just above 10% in 2001 to close to
24% in 2008. Services, in particular retail trade, telecommunication, financial
intermediation and real estate, were the main drivers of growth. The upward
trend was interrupted in 2009 as domestic demand failed to provide the usual
stimulus in the face of the global financial turmoil. Serbia' output shrank by
3.5% in real terms. The sectors hardest hit by the crisis were construction and
manufacturing. The economy bounced back in 2010, with GDP up by 1%, thanks to
vigorous export growth while domestic consumption and investment remained
constrained. As economic recovery gradually got underway among Serbia's main
trading partners, and the dinar continued to depreciate, exports rallied. In
2011, an export-led economic upturn was continuing, but is poised to be
affected by the fragile international environment. Its sustainability will
depend on the strengthening and expansion of the tradable sector as household
consumption and investment have been picking up only slowly given the
constraints on disposable incomes. Overall, the global crisis has
revealed the vulnerabilities of a growth pattern based on domestic demand and
financed by foreign capital inflows. In order to enhance the economy's
resilience through sustainable export-led growth, Serbia needs to step up its
structural reforms. Against the background
of the pre-crisis growth pattern, which involved a sustained surge in imports
to meet accelerating domestic demand, Serbia's balance of payments position
deteriorated sharply. The current account deficit increased to over 20% of GDP
by 2008. The trade gap widened to 26% of GDP as import growth continued to
outpace export growth, which was constrained by low value-added products and
low market diversification. The current account deficit narrowed to about 7% of
GDP in 2009, following a sharp contraction in foreign trade in the aftermath of
the crisis, and also due to a surge in current transfers, mainly in the form of
higher net inflows of remittances. Since imports fell much more sharply than
exports, the trade deficit was also significantly lower than previous levels
but, at 18% of GDP, it was still considerable. In 2010, contrary to
expectations that the gradual pick-up in activity and trade would widen the
current account deficit, the gap was contained at the 2009 level by strong
export growth. As imports have begun to accelerate steadily in 2011 in step
with buoyant industrial activity based on strong foreign demand, it remains to
be seen whether the recent rebalancing will last. Overall, substantial
external imbalances have been reduced in the wake of the crisis, but dependence
on external financing remains high. Serbia gained access to
international capital markets following the agreement on debt restructuring
with the Paris Club in 2001, by which two thirds of the debt accumulated during
the 1990s were redeemed. Driven largely by privatisation, FDI strengthened
steadily until 2006, when net inflows amounted to €3.3 billion or 14% of GDP,
but diminished thereafter, dropping to a mere €860 million or 3% of GDP in
2010. This was the consequence of the unfavourable conditions abroad, as well
as the weak domestic environment, characterised by impediments to doing
business and limited privatisation opportunities. Nevertheless, in 2011 FDI has
started to pick up. Given the
underdeveloped domestic capital markets, the Serbian corporate sector had to
resort to foreign loans to finance its pre-crisis expansion. In the aftermath
of the crisis, firms began to deleverage, while domestic commercial banks
continued to borrow mostly long term. Against a background of sizeable inflows
of foreign resources, official foreign exchange reserves have been largely
stable at around €10 billion, i.e. one third of GDP or sufficient to cover some
eight months of merchandise imports. Owing to the increasing private borrowing
abroad, Serbia's gross external debt grew rapidly. In 2010, it accounted for
more than 80% of GDP, of which around one quarter was public debt. External
sustainability is a point to watch, especially in the light of the lately
modest financial and capital inflows. Overall, cross-border borrowing
has led to a substantial increase in Serbia's external indebtedness that will
need to be curtailed by attracting more foreign investment. Despite high levels of
economic growth, the labour market remained weak as a result of the
restructuring of the economy and of a limited response of the private sector in
job creation. The employment rate stayed below 50% and the activity rate at
just under 60%. In the aftermath of the crisis, the number of employed persons
dropped to a historic low and the unemployment rate soared from 14% to above
20%. Unemployment is a long-term phenomenon and
reflects substantial regional disparities. It is particularly high among people
under 35 years of age, who account for half of the unemployed persons. Many of
the inactive and unemployed are graduates with secondary education or
university degrees, which points to a major mismatch of skills. Structural
unemployment, in particular among educated young people, suggests that
structural rigidities have been hampering the functioning of the labour market.
These include a regressive labour tax system and early retirement rules. The
poor performance of the labour market has led to a deterioration in social
conditions, which had gradually improved during the boom period as a result inter
alia of the rapid rise in wages. Since 2009, wage moderation prevailed, largely
due to the nominal freeze in public sector wages between 2009-2011. Overall,
labour market weaknesses, such as high structural unemployment, a very low
employment rate and widespread informal employment, are exacerbated by
persistent structural rigidities. The authorities used
monetary policy as a tool to support macroeconomic and financial stability. In
particular, the timely response of the National Bank of Serbia (NBS) after the
outbreak of the global financial crisis was instrumental in quickly restoring
confidence in Serbia's banking system. The guaranteed savings deposit was
increased to €50,000, the reserve requirements were gradually relaxed and the
tax on interest income from foreign currency savings was temporarily barred.
The NBS has committed itself to price stability and since 2009 it has pursued
inflation targeting by setting a broad band around the targeted consumer price
index (CPI) inflation instead of core inflation, as previously. Under this
framework inflationary expectations became broadly anchored and inflation was
gradually brought back down to single digits. However, disinflation was
interrupted in the middle of 2010 due to rising agricultural/food prices and
the knock-on effects of the depreciation of the dinar. By the end of 2010,
inflation soared to 10.3% year-on-year, overshooting the 6%±2% target range.
The inflation pattern points to major structural shortcomings due to the fact
that prices persistently over-react to common external shocks, and inflation
remains much higher than in countries with comparable income levels. Following
renewed inflationary tensions, the NBS reversed its course of gradually
relaxing monetary conditions to embrace monetary tightening by increasing the
key reference interest rate to 12.5% in April 2011. However, from mid-2011 the
stance has been somewhat relaxed in view of signs that inflation is slowing and
the dinar is strengthening, with the interest rate currently at 11.25%. Overall,
achieving the price stability objective is a challenge in the face of volatile
global commodity prices and structural shortcomings, in particular the slow
process of price liberalisation and the knock-on effect of the exchange rate
fluctuations. In 2010, the NBS was
actively engaged in preserving exchange rate stability as the pace of the dinar
depreciation was deemed to be jeopardising the process of economic
stabilisation. Operations on the foreign exchange market became more frequent,
especially from mid-May when the pressure on the exchange rate intensified, following
the fall out of the Greek dept crisis. In spite of a number of foreign exchange
operations and substantial selling of currency reserves on the foreign exchange
market, the dinar was on a depreciating path in both nominal and real terms
during 2010. Serbia's export competitiveness therefore improved, which led to
vigorous export growth. A period of strengthening at the end of 2010 and early
2011 was triggered by an interest rate rise and an increased demand for
treasury bills against a lower risk premium. Overall, monetary policy is
pursuing exchange rate stability as an implicit priority. Public finances have
been characterised by pro-cyclical fiscal policies during most of the last
decade. The overall fiscal imbalance improved in the times of economic prosperity
which generated tax-rich revenues and led to a budget surplus of 1% of GDP in
2005. However, since 2006, Serbia's public finances have been continuously
eroded by expansionary policies and weak tax compliance. A relaxation of the
tax burden was allowed as from 2007 as a result of a new income tax regime and
adjustments of indirect taxes. The structure of general government expenditures
remained heavily biased towards mandatory current spending, which accounted for
over 90% of total public outlays. With a reduced fiscal space and significant
pressures on public finances stemming from the economic crisis, Serbia's fiscal
position deteriorated significantly after 2008. The expansionary fiscal policy
became constrained by the SBA programme requirements. Expenditure savings came
largely from a nominal freeze on public sector wages and pensions and
restricted hiring in the public administration. Capital outlays were also
reduced in order to buffer the dwindling revenues. In addition, an ad hoc
temporary tax on mobile services was introduced and excise duties on cigarettes and on oil products were raised, but key tax
rates remained unchanged. However, the corrective measures only partly compensated for the sizeable revenue
shortfall in the face of a sharp economic downturn, prompting the adoption of
supplementary budgets in both 2009 and 2010. In 2010, the fiscal deficit
increased to 4.7% as the automatic stabilisers were allowed to come fully into
play: additional social assistance and subsidies were provided in response to
the weak labour market performance and poor living conditions. In 2011, the
budgetary situation remained tense, as revenues underperformed given the
slower-than-expected economic upswing. Overall, pro-cyclical fiscal
policy undermined public finances and prompted the adoption of emergency fiscal
adjustments to mitigate the deterioration in the wake of the crisis. The widening budgetary
gaps have prompted government borrowing in particular in dinars, in line with
the debt management strategy. Higher borrowing and the depreciation of the
dinar led to a surge in public debt to almost 43% of GDP in 2010, up by around
8 percentage points compared to the previous year. However, budgetary financing
has been difficult given the lack of investor' interest in treasury bills with
long-end maturities, due to the significant exchange rate risk. The first
10-year eurobond was issued in September 2011. Also, the recent attempts to
raise privatisation proceeds by selling the remaining state owned enterprises
were unsuccessful. The government resorted to borrowing from domestic
commercial banks. At the end of 2010, foreign debt accounted for almost 60% of
total public debt and was predominantly euro-denominated. The issuance of
dinar-denominated treasury bills since 2009 has resulted in a steady increase
in the share of dinar-denominated debt, as well as the share of short-term debt
in the debt portfolio. Nevertheless, the repayment profile of the total public
debt remains largely long-term and evenly distributed over time. Overall,
public debt sustainability has become an issue of concern in the light of the
recently large fiscal deficit, especially given the uncertainties in the
macroeconomic outlook, and the budgetary financing by largely short-term
commercial borrowing. Against the background
of a significant fiscal deterioration, the authorities took steps to address
some of the structural weaknesses of public finances. A multi-annual budgetary
process, which is supposed to underpin a more rigorous and efficient
medium-term planning, has been formalised in the revised Law on the budget
system. The amendments adopted in 2010 established numerical fiscal rules and
procedures, including the setting-up of a fiscal council, which determine the
path of expenditure-driven fiscal consolidation. A set of general and specific
fiscal rules commits the policy makers to cutting the fiscal deficit to 1% of
GDP by capping the outlays for public sector wages and pensions, at 8 and 10%
of GDP respectively, by 2015 and keeping public debt (without restitution
costs) below 45% of GDP. The
revised law also defined a new indexation formula for public sector wages and
pensions, with three adjustments in 2011 and bi-annual indexation thereafter. The 2010 pension reform will also help in
restraining public spending over the long term. The new law, which will be phased in gradually over the period
2011-2022, extends the working
period and age for assuming pension rights, tightens up the rules on early retirement and adjusts the indexation
mechanism. Although the recent adjustments are an important step forward,
further reforms will be necessary in order to enhance the long-term
sustainability of public finances. Serbia will need to make additional adjustments in the pension and
healthcare systems, as well as to further improve the cost-effectiveness of the
public sector. Overall, the recent efforts to strengthen the legal
framework of public finances will need to be pursued by means of a rigorous
implementation of the new fiscal responsibility provisions and backed by
additional systemic changes over the medium-to-long term. Pre-crisis growth based
primarily on the non-tradable services sector, an expansionary fiscal stance
and widening gaps in the current account, largely financed through borrowing
abroad, have exacerbated the economy's vulnerability to adverse external
shocks. The policy mix in place has shown itself to be limited in responding to
the global crisis. Counter-cyclical fiscal policies, which would have been
necessary to support a rapid recovery, have been constrained by the reduced
room for manoeuvre. The effectiveness of monetary policy has been restricted as
a result of the high level of 'euroisation' and the effective pursuit of dual
objectives by the NBS, namely smoothing the exchange rate depreciation while
being committed to inflation targeting. Yet some of the immediate negative
effects have been cushioned by the timely stabilisation measures implemented
under the IMF programme. The recent strengthening of the fiscal policy
framework is an important step in improving the economic policy mix. Overall,
the crisis has exposed the economic policy shortcomings and highlighted the
need for fully-fledged structural adjustments to gear the economy towards a
more sustainable growth path. Interplay of market
forces Price liberalisation
has been ongoing since 2000. However, the market formation of prices has
occasionally been challenged as the government capped prices in the face of
shortages of some basic food items (dairy products, cooking oil, some types of
bread). The government continues to control prices of public utilities, either
through government bodies (electricity and gas transmission, transport and
distribution, oil pipeline transport, railway passenger transport, some postal
services) or sectoral regulators (fixed telephony). The government also sets
the limit on increases in the price of communal and public city transport
services, which are under the control of the local authorities. As of 2011, oil
derivatives imports have been liberalised. A small number of products remain
subject to direct price control (medicines). Administered prices account for
more than 20% of the CPI inflation basket, with regulated energy prices
accounting for around half of this share. Overall, the state control
over prices is substantial, as price liberalisation has been slow and
occasionally reversed. Due to the slow
progress of privatisation, the state influence in the economy has remained
high, with the private sector currently accounting for around 60% of GDP and
total employment. The privatisation process was given a boost in 2002 by
allowing socially owned companies to be sold through tenders and auctions. The
process led to the privatisation of more than 2,400 firms with over 340,000
employees, but it has not yet been completed. About 600 sale contracts signed
between 2002-2009 were later cancelled due to non-compliance with some or all
of the five standard contract obligations, which brought the number of annulled
privatisations to almost one quarter of the firms initially earmarked for
privatisation. Given the unfavourable market conditions in the wake of the
crisis, the process has continued to be delayed well beyond the official
deadline for finalising privatisation of the socially-owned companies by 31
December 2008. Privatisation of the state owned companies is largely
incomplete; apart from Serbian Oil Company (NIS) no major firm has yet been
reorganised or privatised. The state retains the majority shareholding in the
large network industries, such as the national electric power company, the
telecoms incumbent operator, the airports, and the air carrier. Although the
government announced privatisation strategies for a number of companies, the
planned sales did not materialise, as the tenders did not attract the expected
demand. To facilitate the privatisation of those enterprises in which the state
retains a stake, the government decided to distribute free shares worth 15% of
the company's equity to those citizens who have not benefited from any free
share distribution in the past. In 2010, the distribution of the remaining
state shares was carried out only in the oil company NIS. Privatisation of
about 500 utilities in the local communities has not yet begun, as the strategy
for their restructuring and reorganisation has still to be defined. Overall,
the unfinished privatisation and/or liquidation of socially and state owned
enterprises and local utilities remains a challenge in Serbia's transition to a
market economy. Market entry and
exit Since 2005, new
companies have been registered centrally with the Business Registers Agency, in
line with the uniform registration procedure. For companies dealing with
financial activities, prior approval and consent by the competent authority are
required. In 2009, the registration procedure was improved by the introduction
of the one-stop shop, which provided for simultaneous registration with the tax
authorities, the social and health insurance fund and the employment agency.
The new system has stimulated business start-ups by reducing the time necessary
to register a new company from 23 to 5 days, on average, and by lowering
administrative costs. However, the use of different identification numbers in
the different state bodies remains an administrative obstacle. Further removal
of barriers to doing business has been initiated by a comprehensive regulatory
reform. Since its launch in 2009, around two thirds out of 304 recommendations
have been adopted and around 36 recommendations are still the subject of
parliamentary procedure. Setting-up a new business is hampered in particular by
the delays in obtaining construction permits due to the slow and inconsistent
implementation of the 2009 Law on planning and construction. Differences in
administrative costs across municipalities create additional distortions. Overall,
progress was made in facilitating market entry, but the business environment
continues to be marred by complex legislation and red tape, as the
implementation of the regulatory reform has been delayed. A new bankruptcy law
entered into force in 2010. At that time, many bankruptcy cases that were
opened under the previous law had not been closed. The new law established automatic bankruptcy in cases where
the firm's accounts had been blocked for more than 3 years. This resulted in a
significant increase in the number of opened cases, which totalled over 2,400
at end-2010. The authorities have initiated actions to regulate out-of-court
settlements in order to lower the cost and speed up the privatisation process. Overall,
the new bankruptcy law has improved market exit procedures, but the efficiency
of the courts remains an issue of concern in view of the considerable backlog
of bankruptcy cases. Legal system A number of steps have
been taken so far to establish a legal system which underpins the market
economy. Nevertheless, the business environment has continued to be constrained
by shortcomings in the enforcement of the
rule of law and the so far unclear situation in relation to property rights.
The reliability of land property ownership is being improved since late 2004
through the gradual introduction of the digital real estate cadastre and
registration, which is due to be completed by the end of 2011.
Amendments to the Law on planning and construction of March 2011 have to some
extent addressed these previous shortcomings, in particular by means of
simplification of procedures and easier legislation in the case of buildings
constructed without permits. However, construction activities have been
hampered by the slow implementation of the law. Restitution of property
has been dealt with in a fragmented manner. Agricultural land was already
partially returned in the 1990s and a law on the restitution of church property
was adopted in 2006. A general law clarifying restitution issues was adopted in
September 2011. The new law is an important step to overcome legal uncertainty
investors face when acquiring property under the privatisation process. The scope of the
informal economy in Serbia remains substantial. Despite some measures taken in
recent years to strengthen the fight against corruption, informal methods of
contract enforcement, which by-pass the legal system, continue to be
widespread. This is abetted by the lengthy enforcement procedures for court
decisions and the major backlog in this area. Overall, in spite of the effort to establish legal
predictability, the so far existing lack of legal clarity in relation to
property rights has had a negative impact on business activities. Delays and
poor enforcement of court decisions and corruption undermine confidence in the
legal system among economic operators and hinder investment. Financial sector development Serbia's financial
intermediation expanded rapidly until 2008, followed by a marked slowdown in
financial activities at the onset of the crisis. In 2010, banking sector assets
accounted for around 80% of GDP. At the end of 2008, the banking system was
challenged by a mass withdrawal of household deposits. The run on the banks had
limited effects thanks to ample liquidity and solvency reserves, which was a
result of prudent monetary policy and adequate risk-based supervision by the
NBS. After the initial financial stabilisation, the NBS adapted administrative
and regulatory measures and eased monetary policy to provide additional
liquidity in support of the macroeconomic stability. Credit activity to
households and enterprises was also sustained as a result of the European Bank
Coordination ('Vienna') Initiative, whereby foreign parent banks undertook to
maintain their exposure in the Serbian subsidiaries at end 2008 level until
April 2010, and keep it at least at 80% by the expiry in March 2011. Overall, the financial sector expansion has been driven largely by
the rapid development of the banking sector, which remained relatively
unscathed by the global crisis, thanks to a prudent monetary policy. Currently, there are 33
banks in Serbia, of which 3 majority state owned, holding a 2.6% market share,
and 21 are foreign owned. Foreign banks account for around70% of the total
assets of the banking sector. Subsidiaries of Austrian, Greek and Italian banks
are in the top five banks. Among domestic private banks one is the second
largest in the market. Overall, the consolidation and privatisation of
the banking sector resulted in foreign-dominated ownership. The banking sector
expansion started from a low base and was driven by both the introduction of
new products and the strengthening of the deposit base. Deposits, of which 70%
are in foreign currency, account for almost 60% of the total liabilities of the
banking sector. Similarly, loans account for some 60% of banking sector assets.
Over three quarters of loans are denominated in foreign currency or are
foreign-currency linked, predominantly in euros. Given the high level of 'euroisation'
of the economy, the NBS has put forward a 'dinarisation' strategy. It
has initiated steps, such as tightening of the eligibility criteria for foreign
currency loans as of mid-2011, improving protection and diversifying
financial instruments, with the aim of encouraging lending in dinars. More than
half of the loans are granted to the corporate sector (mainly to trade and
industry — around 20% each) and about one third to households. Since 2009, when dinar-denominated government securities were introduced, the banks have been increasing
their investment in the treasury bills owing to higher yield. Credit
growth for the private sector decelerated substantially, but began to pick up
after the government put in place a support scheme to subsidise commercial bank
loans to companies and households. Overall, the banks' balance sheets
continue to be characterised by high 'euroisation', and the monetary
authorities have taken steps to rebalance the loan portfolio. Capitalisation of the
banking sector is high due to intense capital growth prior to the crisis. The
capital adequacy ratio stands at 20%, well above the 12% threshold imposed by
the NBS. However, the asset quality of the banking sector has deteriorated following the
modest and gradual rebound from the recession, high unemployment, accelerating inflation and the
depreciation of the dinar. Gross non-performing
loans (NPL) as a percentage of total loans rose to almost 17% at end-2010,
largely due to an increase in the corporate NPL ratio. In the light of this
portfolio deterioration and the substantial exchange rate risk related to the
high degree of 'euroisation', the
Serbian banks are vulnerable to credit risk. Yet the stress tests of the
banking system carried out in 2010 concluded that the banks are still
sufficiently resilient, given that they continued to be adequately capitalised
and liquid. Liquid assets accounted for some 35% of total assets in 2010.
Against the background of high capital and reserve requirements, the
profitability of the Serbian banking sector was relatively stable but
deteriorated slightly in the wake of the crisis; banks' return on assets (ROA)
was around 1% and return on equity (ROE) was just below 6%. Despite the rise in
NPL, the profitability of the banks improved in 2010 owing largely to sizeable
net interest income. Overall, the banking sector is generally sound, but vigilance is
required due to the impaired loan portfolio of the banks and a considerable
exposure to exchange rate risk. Non-banking financial
institutions account for only a small share of financial intermediation. The
insurance market has expanded gradually, albeit from a low base. The sector is
supervised by the NBS. At end-2010,
there were 26 active insurance
companies, 22 in insurance and 4 in
reinsurance. 7 insurance companies
rely mainly on domestic capital, while 19 are in majority foreign ownership and
hold the bulk of the market (more
than 90% in non-life insurance and 60% in life insurance). Following a
deterioration in performance due to
the crisis, the sector saw a surge
in profits in 2010. The market capitalisation of the Belgrade Stock
Exchange was below €10 billion, i.e. around one third of GDP at end-2010, and
annual turnover was at
€220 million, down from a peak of over €2 billion in 2007 (90% in shares). Overall,
non-banking financial institutions and capital markets play a limited role in the financing of
domestic companies.
2.2.2.
The capacity to cope with
competitive pressure and market forces within the Union
The ability to fulfil this criterion depends on
the existence of a market economy and a stable macroeconomic framework which
allows economic agents to take decisions in a climate of predictability. It
also requires a sufficient amount of human and physical assets. Enterprises
need to invest to improve their efficiency and they need to innovate in order
to adjust to a globalised and highly competitive external environment. The more
an economy is integrated with the Union before accession, the better it will be
able to assume the obligations of membership. Existence of a
functioning market economy Serbia is a small
economy with a state owned sector that is still significant and which remains
to be restructured and privatised. Although foreign exchange and trade regimes
are liberalised, price liberalisation has been slow. A comprehensive legal
framework is in place, but its implementation is ineffective and inconsistent.
Throughout the transition, the policy mix has been geared towards macroeconomic
stability, but proved to be rather limited in responding to adverse external
shocks, of the kind experienced during the recent global crisis. Serbia's
economy gradually regained stability owing to the adoption of timely and
adequate short-term corrective measures in agreement with the IMF. However, in
the wake of the recession, the persistent structural imbalances and weaknesses,
such as high and volatile inflation and a low employment rate, have become more
pressing. Market mechanisms remain hampered by legal uncertainty, red tape,
heavy state involvement, insufficient competition and sectoral distortions. Structural rigidities in the labour market,
reflected in high unemployment and the very low participation rate, further
constrain both actual and potential growth of the economy. Overall, Serbia has achieved a degree of macroeconomic stability
which broadly allows economic operators to make decisions in a climate of
predictability. However, Serbia needs to address the rigidities which are
preventing the further development of a viable market economy. Human and physical
capital endowment Serbia's human capital
has been slowly strengthening, with a growing participation in all levels of
education over time. In 2010, the number of those with high educational
attainment stood at less than 9% of the total population and public spending on
education was around 3.5% of GDP. Despite high unemployment, the economy
suffers from a shortage of skilled labour. The large share of unfilled job
vacancies and the persistent structural unemployment of persons with secondary
or higher levels of educational attainment point to a major mismatch of
qualifications and skills. The adoption of the Law on Education System
Fundamentals in 2009 is poised to narrow the gap between demand for and supply
of skilled workforce by embracing
the entire education system, including vocational education and training (VET). However, supply has been only gradually
adjusting to an increasing demand for highly skilled workers, especially in
manufacturing. Although the
employment agency has designed various
programmes to promote cooperation
between the labour market stakeholders, self-employment and vocational training – along with lifelong learning – structural rigidities remain important.
Further effort will be needed in order to forge an effective link between the
education system and vocational training programmes, on the one hand, and the
labour market, on the other. Domestic resources devoted to the development of a
knowledge-based economy remain marginal; gross expenditure on science accounted
for 0.3% of GDP in 2010. Overall, the ongoing skills mismatch continues
to act as a drag on the development of new segments of the economy and requires
further reforms of the education and training system that would respond better to labour market demand. Serbia will need to
invest significantly given the inadequate and low-quality physical capital
stock that is hampering the productive capacity of the economy. After 2001, gross fixed capital formation accelerated
steadily – with the share of GDP more than doubling between 2001-2007 – but it
was largely fuelled by a boom in real estate. Green-field investment was modest. Given the large gap
between savings and investment of the private sector, the expansion was mainly financed by foreign capital. By end-2010, the FDI inward
stock since 2000 amounted to about €15 billion. After 2007, FDI lost momentum while domestic investment has been also declining as a
result of scarce local source. However, since beginning of 2011, FDI has
started to pick up. Investment was
directed mainly to the non-tradable sectors, which also contributed to the
growing external imbalances. In cumulative terms for the period 2001-2009, one
third of total capital investment was to banks (€11.8 billion), less than one
fifth each in the real estate sector (€6.2 billion) and manufacturing (€5.8
billion) and about one tenth each in trade (€4.5 billion) and transport and
telecommunication (€4.1 billion). Overall, the previous orientation of investment
to predominantly non-traded sectors increased the export capacity of the economy to only a limited
extent. The government has made
the reliability of electricity supply through diversified sources of power one
of its key priorities. It aims to mobilise financial resources for investment
in the energy sector with the support of International Financial Institutions. However, energy efficiency is low and
the electricity capacities are being used at levels close to their maximum
potential, which is increasingly pushing Serbia to resort to energy imports.
The average price of electricity, which was last adjusted in April 2011, is
still below the cost-recovery level and is restraining new investment. Overall,
energy infrastructure will need to be modernised and extended in order to
strengthen industrial activity. The telecommunications
infrastructure is fairly well developed. Fixed telephony, operated by the
telecoms incumbent in majority state ownership, has been partly digitalised.
Mobile telephony density has increased, following the market entry of two
foreign operators. However, access to broadband network and internet use by
business remain low. Overall, telecommunications are not a constraining
factor to doing business, but a higher broadband penetration is needed in order
to develop higher value-added segments in the industry. Transport infrastructure
needs to be further developed in order to enhance the country's economic
potential. The construction of new roads has been making very slow progress.
The rail network is obsolete due to the lack of significant investment in past
decades. There are plans for an upgrade of 750
kilometres of railroad, including the laying of a second track, along the
Pan-European transport Corridor X with the support of International Financial Institutions. Overall,
transport infrastructure has suffered from insufficient investment. Sector and
enterprise structure The structure of Serbia's
economy has undergone significant changes during the last two decades. Services
currently contribute more than 60% of GDP, agriculture approximately 10% and industry 23%. While the metal,
electronic and textile industries previously dominated, production became
diversified during the last decade, especially into the food and beverages
sector. The global crisis had an adverse impact on manufacturing and construction. Public companies still
generate around 40% of Serbia's output. However, their performance has been
undermined by the crisis, with the erosion of capital and accumulated losses
rising to over €3 billion, i.e. more than a quarter of their total capital at
end-2010. Private companies account for the bulk of foreign trade. Around 75%
of Serbia's exports are undertaken by companies that are predominantly under
foreign ownership. The informal
sector, taking advantage of weaknesses in tax and expenditure policies, and
also in law enforcement, including the fight against corruption, remained
significant. Overall, the structural adjustment of the economy has been lagging
behind due to the very slow pace of the reform process, and performance has
been marred by the economic crisis. The informal sector poses a major
challenge. Serbia's restructuring
process has translated into a steady rise in the share of small and
medium-sized enterprises (SMEs) in the economy. Currently, the majority of
private enterprises are micro companies. SMEs contributed around 57% to the
gross value added of the non-financial sector and accounted for about two
thirds of overall employment. The sector has been facing diminishing demand,
stricter financing conditions and increasing payment arrears since the crisis
broke. This resulted in illiquidity and indebtedness which led the government
to adopt measures aimed at facilitating access to financing, although so far
this has had little effect. Overall, although SMEs have increased their
share of the economy, they face constraints in both their current activities
and in obtaining finance for investment. State influence on
competitiveness State subsidies were cut from 3.3% of GDP in
2005 to 2.3% of GDP by 2009, but they surged to 2.6% of GDP in 2010 as a result
of sizeable stimulus packages designed to support the economic recovery. The
programmes, inter alia, included direct subsidies to companies for job-creating
investment projects as well as financial assistance for concessional borrowing
in dinars by business and citizens alike. The legislation regulating State aid
control was adopted in 2009 and needs to be consistently enforced, in
particular as regards effective monitoring by the State aid authority. The
state-controlled monopolistic structures remain in place in a number of
sectors, particularly in energy, telecommunication and postal services, but
also in agriculture and tourism. Overall, state influence on
competitiveness through legal and financial mechanisms is substantial. Economic integration
with the EU Since 2000, Serbia has
been continuously strengthening trade links with the EU, which accounts for
almost 56% of Serbia's total merchandise trade; in 2010 the share of exports
stood at 60% and that of imports at 55% of the respective totals. During the
period 2005-2010, two thirds of total inward investment to Serbia originated
from the EU and EFTA countries, with the largest FDI inflows coming from
Austria, Greece and Norway. The pace of integration with the EU advanced in
step with Serbia's international competitiveness. In the period 2001-2007, real
wage growth was broadly in line with labour productivity growth, but the
appreciation of the dinar against the euro led to rising real unit labour
costs. During 2009-2010, export price competitiveness improved thanks to a
rapid depreciation in the real effective exchange rate. Overall,
improved export competitiveness since 2009 helped to further Serbia's economic
integration with the EU.
2.3.
General evaluation
The present assessment is made on the basis of the
Copenhagen criteria related to the existence of a functioning market economy,
as well as the capacity to cope with competitive pressure and market
forces within the Union. There is a broad political consensus in Serbia on the
fundamentals of a market economy as well as a track record in the implementation of economic reforms.
Serbia achieved a degree of macroeconomic
stability that allows economic operators to make decisions in a climate of
predictability. The economic policies of the past decade supported steady
growth of close to 5% on average, gradually declining inflation and a general
improvement of living standards. However, the global financial and economic crisis
exposed the vulnerabilities of a growth paradigm, which was based on domestic
demand financed largely by borrowing abroad, as well as the ensuing limitations
of the policy mix to respond effectively to adverse external shocks. Recently,
substantial progress has been made towards strengthening the financial
framework and the quality of public finances, which would underpin a shift to
more sustainable and balanced growth, driven by exports and investment. The
free interplay of market forces has developed, albeit at a slow and uneven
pace, through privatisation and liberalisation of trade and prices. Progress
has been achieved in facilitating market entry and exit. Economic integration
with the EU is high. A number of structural weaknesses persist and hamper the
economic performance. The state influence in the economy has remained high due
to the slow progress of privatisation and
price liberalisation. In spite of the steps towards establishing legal
predictability and removing red tape, the business environment continues to be
constrained by legal uncertainty. Lengthy enforcement procedures for court
decisions undermine trust in the legal system. Lack of competition in certain
sectors and significant infrastructure
bottlenecks are a further drag on
the economic potential. Foreign direct investment was relatively strong prior
to 2008 and, following a substantial drop during the economic crisis, has
started to slowly recover, but Serbia needs to further improve the investment
climate. Against a modest economic recovery, unemployment remains high and the social situation strife. Serbia needs to urgently address structural
rigidities on the labour market, including the mismatch between demand for and supply of skilled
workforce. The informal economy remains an
important challenge.
3.
Ability to assume the obligations of
membership
The European Council in Copenhagen in June 1993 included
among the criteria for accession “the ability to take on the obligations of membership, including
adherence to the aims of political, economic and monetary union”. In applying for EU membership, Serbia has accepted without
reserve the basic aims of the Union, including its policies and instruments. This part of the analytical report analyses Serbia's
ability to assume the
detailed obligations of membership — that is, the EU acquis, as
expressed in the Treaties, the secondary legislation and the policies of the
Union. It follows the structure of the 33 negotiating chapters into which the
EU acquis has been divided for the purpose of conducting accession
negotiations. Each chapter examines the current situation and prospects in
Serbia. As the European Union has developed, the EU acquis has
become progressively more onerous and presents a greater challenge for future
accessions than was the case in the past. The ability of Serbia to implement
the EU acquis will be central to its capacity to function successfully
within the EU. In this respect, alignment with the EU acquis is a
necessary but not sufficient condition to meet the obligations of EU
membership. Serbia must also take all necessary measures to create the
requisite implementing structures, to bring its administrative capacity to the
required level and to ensure effective enforcement. An analysis and assessment
of the country's administrative capacity is therefore included in each of the
chapters below. For the purpose of this
analytical report, and without prejudging any future date of accession, the
medium-term perspective in the assessments has been defined as a period of five
years.
3.1.
Chapter 1: Free movement of
goods
The principle of free movement of goods means that products
must be traded freely from one part of the Union to another. In a number of
sectors this general principle is supplemented by a harmonised regulatory
framework, following either the 'old approach' (laying down precise product
specifications) or the 'new approach' (setting general product requirements).
Alignment with harmonised European product legislation accounts for the bulk of
the obligations under this chapter. Smooth implementation and proper
enforcement of the EU acquis require sufficient administrative capacity
to notify restrictions on trade and to apply horizontal and procedural measures
in areas such as standardisation, conformity assessment, accreditation,
metrology and market surveillance. Regarding general principles, Serbia needs to ensure
that its legislation is compatible with Articles 34 to 36 of the Treaty on the
Functioning of the European Union and the related case law of the European
Court of Justice, with special emphasis on the principle of mutual recognition.
The Interim Agreement and, subsequently, the Stabilisation
and Association Agreement (SAA) create a number of obligations in the field of
free movement of goods, such as establishment of a free-trade area after a
period of six years. The SAA also provides for gradual alignment with EU
technical regulations and standards and metrology, accreditation and conformity
assessment procedures. In the case of horizontal measures, during 2009 and
2010 Serbia adopted new legislation on accreditation, standardisation and
metrology, on general product safety and on technical requirements for products
and conformity assessment, to harmonise with the EU principles and with the
horizontal EU acquis. These measures have brought Serbian legislation
substantially closer to the EU acquis. In the area of standardisation, a framework Law was
adopted in 2009 and, after a change of status, the Institute for
Standardisation of Serbia (ISS) became a public institution at the beginning of
2010. The ISS is currently an affiliate member of the European Committee for
Standardisation (CEN) and of the European Committee for Electrotechnical
Standardisation (CENELEC). It is also full member of the international standardisation
organisations ISO, IEC and IECEE and is a Codex Alimentarius contact point for
Serbia. The ISS became the Serbian 'national standards body' in 2011 and in now
also responsible for transposing the standards of the European
Telecommunications Standards Institute (ETSI) as Serbian standards. The current
staff of the ISS numbers 62 employees. Its financial and human resources have
been improved. The ISS has approximately 250 technical committees. The Chairman
and the Members of the supervisory board were appointed in August 2011. By
August 2011 a total of 12.216 EN standards had been adopted as Serbian
standards. Serbia has repealed all mandatory standards. As regards conformity assessment, the Serbian
framework Law on technical requirements for products and conformity assessment,
together with implementing legislation, were adopted in 2009, but some revision
is necessary in order to take full account of the latest (2008) horizontal EU acquis.
So far, five accredited conformity assessment bodies have been designated in
accordance with the EU directives. In line with Regulation (EC) 765/2008,
accreditation remains, in principle, voluntary for the designation of
conformity assessment bodies unless prescribed otherwise in the sectoral laws.
A vast number of laboratories and certification and inspection bodies which
were authorised to carry out conformity assessment activities under the old
legal framework were designated and accredited in accordance with the new
Serbian horizontal legislation and the relevant international and European
standards. The accreditation framework was set by the 2010 Law
on accreditation, aligning Serbia's policy with the EU principles. The
Accreditation Body of Serbia (ABS) was set up as a not-for-profit public body,
professionally and financially independent of its clients. It is in charge of
accreditation of conformity assessment bodies. The ATS has a full-time staff of
32 but needs more human resources. It signed a cooperation contract with
European Cooperation for Accreditation (EA) in 2007 and is preparing for
signing a bilateral agreement with the EA under the conditions applicable to
signatories of the EA Multilateral Agreement in the fields of testing and
calibration laboratories and inspection bodies. It has later broadened its
application to certification bodies for products, management systems and
environmental management systems as well as medical laboratories. Serbia has
418 accredited conformity assessment bodies. The framework law on Metrology was adopted in 2010.
In 2011, Serbia adopted legislation on the control of objects made of precious
metals. The Directorate for Measures and Precious Metals in the Ministry of
Economy and Regional Development, which also acts as the national metrology
institute, is in charge of implementation of the law and of legal and
scientific metrology. The Directorate has been restructured in order to
separate verification and market surveillance functions. Two of the
laboratories of the Directorate, for calibration and for testing, have been
accredited. The Directorate has a staff of 120. As regards market surveillance, Serbia
adopted legislation on general product safety in 2009. It has a Market
Surveillance Strategy for the period 2010-2014. A national rapid information
exchange system similar to RAPEX for providing information on dangerous
products, known as NEPRO, was established in 2010. However, new legislation on
market surveillance is needed in order to align further with the 2008
horizontal EU acquis. In order to strengthen the capacity of the State
Market Inspectorate, new professional examinations for market inspectors have
started in 2011. Coordination between the different market surveillance
authorities was initiated, including a common database. With this in mind, the
Ministry of Economic Affairs and Regional Development, the Customs
Administration and the Ministry of Trade signed a Memorandum of Understanding
in March 2011. Serbia needs to make sustained efforts to establish a market
surveillance system which is fully in line with the EU acquis. Serbia has not yet aligned its legislation with the vast
majority of sector-specific EU legislation. In areas covered by the 'Old
Approach' product legislation, discrepancies from the EU acquis
remain to be addressed. Although Serbia has already adopted legislation on
motor vehicles, medicinal products for human use, medicinal products for
veterinary use and chemicals, the alignment is only partial and further
alignment is needed. Furthermore, legislation on cosmetics, pre-packaging, units
for measurement, aerosol dispensers, emission of pollutants from non-road
mobile engines, crystal glass, textiles and footwear also needs to be aligned
with the EU acquis. As regards the 'New and Global Approach' product
legislation, Serbia has started to align its legislation with the relevant
directives. So far, it has adopted aligning legislation in the fields of
low-voltage equipment, electromagnetic compatibility, medical devices,
machinery and lifts. It has not yet aligned its legislation with the EU acquis
on recreational craft, non-automatic weighing instruments, eco-design
requirements for energy-related products, toys, noise emissions from outdoor
equipment, personal protective equipment, equipment and protective systems
intended for use in potentially explosive atmospheres, gas appliances, pressure
equipment, simple pressure vessels, cableway installations, construction
products, radio equipment, telecommunications terminal equipment and measuring
instruments. Regarding procedural measures, Serbia has aligned
with the Directive on provision of information in the field of technical
regulations and standards. In order to be fully in line with the EU acquis,
some amendments are nevertheless required, in particular as regards standstill
periods. As regards external border checks, the Serbian legislation does
not yet meet all the requirements of the EU acquis on control of
products from third countries. In the case of civil firearms, the
Law on weapons and ammunition needs further amendment to bring it fully into
line with the EU acquis. As regards the return of cultural objects
unlawfully removed from the territory of EU Member States, Serbia has not
aligned its legislation with the EU acquis. Conclusion During the last few years Serbia has taken substantial
steps to bring its horizontal legislation and administrative set-up into line
with the principle of free movement of goods. New framework laws have been
adopted on accreditation, standardisation and metrology, on general product
safety and on technical requirements for products and conformity assessment.
Serbia has established administrative infrastructure necessary to implement EU acquis
under the chapter on free movement of goods. Standardisation, accreditation
and metrology functions have been separated. However, sustained efforts towards alignment with the EU acquis
will be necessary. Major elements of the EU acquis are not yet in place.
In particular, old and new approach product legislation still needs to be
harmonised with the EU legislation. As regards horizontal and procedural
measures, the framework legislation on technical requirements for products and
conformity assessment procedures and on market surveillance needs to be aligned
with the EU acquis. Procedural measures need to be addressed.
Furthermore, administrative capacity and coordination need to be strengthened. Overall, if
Serbia undertakes additional efforts, it should be in a position to align with
the EU acquis and to implement it effectively in the medium term.
3.2.
Chapter 2: Freedom of
movement for workers
The EU acquis
under this chapter provides that EU citizens of one Member State have the right
to work in another EU Member State, to reside there for that purpose with their
family and to be treated in the same way as national workers when it comes to
working conditions and social and tax advantages. Furthermore, the EU acquis
includes instruments on coordination of the different national social security
systems. The Stabilisation
and Association Agreement provides that, subject to the specific conditions
and procedures applicable, Serbia and EU Member States will ensure that their
nationals who are legally employed on the territory of a partner country are
free from any discrimination based on nationality in aspects of employment such
as working conditions, remuneration or dismissal. As regards access to
the labour market, the 2009 Law on employment and unemployment insurance
(amended in 2010), along with the 2005 Labour Law (last amended in 2009),
prohibit any direct or indirect discrimination against persons seeking
employment or already employed, on grounds of their place of birth, language,
race, skin colour, nationality, religion or other affiliation. This prohibition
of direct and indirect discrimination also applies to migrant workers from the
EU. In other words, they are protected from direct and indirect discrimination
with regard to employment, termination of contracts of employment and pay.
Families of EU migrant workers have the right to reside in Serbia for the same
duration as the workers, and foreign nationals – including children of EU
workers – are entitled to education on the same conditions as Serbian
nationals. The 1978 Law on the
conditions for the employment of foreign citizens (last amended in 2005) and
other labour laws draw no distinction between EU nationals and nationals of
non-EU countries. Except in cases of specific agreements between Serbian and EU
companies (on business and technical cooperation, long-term production
cooperation, transfers of technology and foreign investment), the Law requires
EU citizens to apply for a work permit. Upon accession to the EU, Serbia's
national law will have to ensure that EU citizens will be able to look for and
take up work in Serbia without any restrictions and without being subject to a
work permit scheme. The large majority of
jobs in state and public administration, in local self-governments units as
well as political functions, judges and public prosecutors are reserved for
Serbian nationals. Future legislation will have to take into account the EU acquis
in this field, in particular case law, which allows EU Member States to
restrict posts in the public service to their own nationals only if they are
directly related to the specific activities of the public service, i.e. involve
exercising public authority and responsibility for safeguarding the general
interests of the State. Serbia needs to prepare
for its future participation in the EURES (European Employment Services)
network. A national vacancy database will have to be established and also made
available in English. The language skills of potential EURES advisors will have
to be checked. In order to increase territorial mobility, local and regional
offices need to be able to share vacancy data not only with the central
employment agency but also with each other. As regards supplementary pensions, upon accession, Serbia
will need to implement measures in line with EU legislation to guarantee equal
treatment between EU migrants and nationals regarding preservation of vested
second-pillar supplementary pension rights and payment thereof in another
Member State. Moreover, posted workers must have the possibility to continue to
pay contributions to a supplementary pension scheme in their country of origin
for the duration of their posting, in which case they are exempt from
contributing to such a scheme in the host Member State. Concerning coordination
of social security systems, the Serbian social security scheme includes all
traditional branches of social security which fall within the scope of EU
coordination rules. The system is based on the principle of compulsory
insurance in the country of work. Serbia also has a number of special benefits
for war victims. Serbia has signed a
number of bilateral social security agreements, including with 17 EU Member
States (most recently with Slovenia in 2009). Agreements have also been signed
with, amongst others, the former Yugoslav Republic of Macedonia, Croatia,
Bosnia and Herzegovina and Montenegro. In spite of the
experience acquired in administering the existing bilateral agreements, the
main challenge for Serbia will be to build up the administrative capacity
necessary in order fully to apply the EU rules on coordination of social
security systems upon accession. This will entail training staff from the
Serbian Fund for Pensions and Disability Insurance, the Health Insurance Fund
and the National Employment Service, along with investment in IT
infrastructure. Upon accession, and
independently of national health cards, Serbia will have to issue the European
health insurance card to persons entitled to healthcare in Serbia. Impact The estimated impact of
Serbia's possible accession on the EU labour market has to be related to a
number of factors, such as the size of Serbia's working age population,
unemployment, age structure and migration movements. Serbia's total
population was estimated at around 7.32 million in 2009. Based on the
demographic projections, it is expected to stagnate or decrease slightly over
the next ten years. As regards the age structure, the youngest (15 and under)
at 15.3% (2009) is very close to the EU average of 15.5%. Serbia's working age
population (aged 15-64) in 2010 was estimated at 4.82 million, of whom an
estimated 2.84 million were economically active. This is equal to around 1.5%
of the EU working-age population and 1% of the EU economically active
population. In 2010, the employment rate was estimated at around 47.2% (down
from 53.7% in 2008 due to the economic crisis) compared with 64.2% in the EU.
Labour force survey data point to an unemployment rate of 20% in October 2010.
Furthermore, according to estimates, up to 1 million people are working in
the informal economy. Despite strong annual growth in real GDP over the last few
years (higher than 5% since 2004 except in 2009 due to the economic crisis),
based on 2009 data, large differences remain between GDP per capita in Serbia
and the EU. Expressed in purchasing power parity, Serbia's GDP per capita stood
at 35% of the EU-27 average in 2010. Since the early 1990s large-scale migration movements have
taken place from Serbia towards other countries, including EU Member States,
particularly Germany. However, as a result of return migration, the overall
number of Serbian nationals living in the EU has decreased since 2000.
Estimates suggest that around 650,000 Serbian citizens currently (1 January
2010) live in the EU (with the largest numbers in Germany, Austria and Italy),
making up 2% of the foreign population living in the EU (and 0.1% of the total
EU population). This preliminary
assessment indicates that Serbia's membership of the EU would have a relatively
minor impact on the EU labour market. However, this will need to be
monitored closely, taking into account developments in Serbia and the EU. Conclusion By the time of its
accession to the EU, Serbia will have to adapt its rules in order to implement
fully the EU acquis on freedom of movement for workers. Its national law
will have to ensure that EU citizens will be able to look for and take up work
in Serbia without any restrictions and without being subject to a work permit
scheme. Furthermore, restrictions on access to jobs in the public sector and
language skill requirements in certain professions will have to be reviewed. In
relation to coordination of social security systems, Serbia
already has experience of applying the EU principles, stemming from the high
number of bilateral agreements in this area. However, further efforts will be
needed to strengthen its administrative capacity in order to adjust it to new
tasks in the context of EU accession. Overall, Serbia will
have to make additional efforts to align its legislation in the field of
freedom of movement for workers with the EU acquis and to implement it
effectively in the medium term.
3.3.
Chapter 3: Right of
establishment and freedom to provide services
Member States must
ensure that the right of establishment of EU nationals and legal persons in any
Member State and the freedom to provide cross-border services, as provided for in
Articles 49 and 56 of the Treaty on the Functioning of the European Union
(TFEU), are not hampered by national legislation, subject to the exception
stated in the Treaty. The core piece of EU acquis in this area is the
Services Directive. The EU acquis also harmonises the rules concerning
regulated professions to ensure mutual recognition of qualifications and
diplomas between Member States. For certain regulated professions a common
minimum training curriculum must be followed in order to have the qualification
automatically recognised in an EU Member State. The EU legislation on postal
services aims to ensure provision of a universal postal service and to
establish an internal market for postal services and a high-quality postal
service for end-users. The Stabilisation
and Association Agreement provides for gradual liberalisation of the right
of establishment and the freedom to provide services between the EU and Serbia
over a period of four years. It includes a standstill clause as regards
restrictions on provision of services by suppliers established in a country
other than that of the person for whom the services are intended. In the case of the right
of establishment, the Serbian legislation does not discriminate against
foreign operators or their subsidiaries or branches. The procedures for
registration in the Register of Business Entities are, with some exceptions,
non-discriminatory. Some language, residence and reciprocity requirements still
exist. Specific authorisation schemes exist for the energy sector, mining,
inland waterway navigation, postal services, insurance, gambling, tourism and
attorneys' services. As regards freedom
to provide cross-border services, Serbian legislation is not in line with
the EU acquis, particularly with the Services Directive. Serbian
legislation regulates provision of services with an establishment in Serbia,
but not provision of cross-border services. A comprehensive review of
legislation has not started yet and Serbia has yet to establish a point of
single contact. Full alignment with, and implementation of, the Services
Directive will require building up and strengthening administrative capacity.
Furthermore, effective compliance with the EU acquis will entail
adequate coordination at national level between all relevant administrative
bodies and, eventually, upon accession, with EU Member States. The 2005 Law on postal
services, amended in 2010, partially follow the principles and objectives
laid down in the EU acquis. However, the development strategy for postal
services, prepared in 2008 and updated in 2010, has not been fully implemented
yet. This in particular concerns the corporatisation and restructuring of the
public postal operator. Further efforts have to be made for full alignment the
Third Postal Directive. In this regard particular attention will need to be
paid to the universal service obligation, reserved area, authorisation system,
tariff regulation and complaints procedure. The Ministry of
Culture, Media and the Information Society is responsible for policymaking and
supervises implementation of the Law. The financial independence of the
national regulatory authority, the Republic Agency for Postal Services (RAPS),
established in 2010, is secured by proceeds from authorisations and licences.
However, the administrative capacity of the Agency needs to be strengthened. In the field of mutual
recognition of professional qualifications, Serbian legislation does not
provide for mutual recognition of foreign professional qualifications for
regulated professions. A legislative framework for recognition and with a view
to granting actual access to the regulated professions remains to be adopted.
Furthermore, training requirements for automatically-recognised sectors remain
to be fine-tuned in order to achieve full compliance with the EU acquis.
These training requirements relate in particular to important health
professions, namely doctors, dentists, pharmacists, nurses and midwives.
Substantial efforts will also be required to establish an adequate institutional
framework for mutual recognition of all kinds of professional qualifications,
including e-government facilities and contact points assisting citizens
requesting recognition of their qualifications. Conclusion Serbian legislation
allows establishment of operators from the EU, but barriers still remain in
some areas. Efforts need to be made on alignment of the legislation on the
freedom to provide services and also on administrative capacity and
interinstitutional cooperation. Full alignment with EU postal services
legislation has yet to be achieved. The Agency for Postal Services is not yet
fully independent, nor does it have sufficient administrative capacity.
Relevant administrative structures and procedures need to be established to
ensure recognition of professional qualifications. Overall, Serbia will
have to make additional efforts to align its legislation in the field of right
of establishment and freedom to provide services with the EU acquis and
to implement it effectively in the medium term.
3.4.
Chapter 4: Free movement of
capital
In the area of free
movement of capital, Member States are expected to remove all restrictions on
capital movements and payments both within the EU and between Member States and
non-EU countries. The EU acquis is based on Articles 63 to 66 of the
Treaty on the Functioning of the European Union (TFEU). Freedom of capital
movements is an essential precondition for the functioning of the EU internal
market. However, the TFEU allows certain exceptions from the general prohibition
of any impediments to free movement of capital. The EU acquis also
includes rules on cross-border payments and execution of transfer orders
concerning securities. The Directive on the fight against money laundering and
terrorist financing requires banks and other economic operators to identify
customers and report certain transactions, particularly when dealing with
high-value items or large cash transactions. A key requirement in order to
combat financial crime is effective administrative and enforcement capacity,
including cooperation between supervisory, law-enforcement and prosecution
authorities. The Stabilisation
and Association Agreement sets a timetable for gradual liberalisation of
capital movements over a period of four years. With regard to capital
movements, Serbia assumed the obligations imposed by Article VIII of
the IMF Articles of Association, and hence full current account convertibility,
in May 2002. As a result, foreign direct investment (FDI) has been a key factor
in the development of the Serbian economy in recent years. The Law on foreign
exchange operations was adopted in July 2006 and amended in May 2011. It was
followed by a number of decisions adopted by the National Bank of Serbia (NBS)
over the period 2007-2010 relating to various aspects of foreign exchange
operations. The Law calls for gradual liberalisation of capital movements. To
that end, long-term capital operations have been liberalised and resident
deposit operations have been partly liberalised, but the limitations applicable
to short-term capital operations have been kept so far. With effect from the
fourth year after entering into force of the Stabilisation and Association
Agreement, Serbia will be required to honour its commitment to guarantee the
free movement of capital related to financial loans and credits with maturity
shorter than one year. It will also have to abolish any restrictions on
portfolio investment. The Foreign Exchange Law envisages that, in the event of
more serious disturbances in the balance of payments (excessive inflows or
outflows of capital) that threaten to cause serious difficulties when it comes
to implementing monetary policy and foreign exchange rate policy, the
government may adopt protective measures for the duration of the disturbances, but
for not longer than six months. This is in line with the EU acquis. Certain restrictions
exist on acquisition of real estate. Foreign nationals, including EU citizens,
may acquire property rights, but only provided there is reciprocity with the
purchaser's home country. Under the Law on agricultural land, foreigners are
not allowed to own agricultural land. Serbia has not retained
special rights in privatised companies and needs to ensure that privatisation
of the remaining State-owned enterprises is carried out in a manner compatible
with the EU acquis in the field of capital movements. As regards payment
systems, Serbia's legislation concentrates on internal payment transactions
in dinar. Cross-border transactions are subject to prior authorisation. However,
the Serbian legal framework for payments covers only a very limited range of
issues in comparison with the EU legislation and focuses on the technical side
of transactions. Large areas of payment services are not regulated at all. In
particular, rules on the transparency of conditions and information
requirements for payment service-providers are limited to national services. No
payment institutions and e-money institutions exist in Serbia. As regards the fight
against money laundering, Serbian legislation is partially in line with the
EU acquis. The Serbian legislation explicitly prohibits opening or
keeping anonymous accounts and provides for verification of customers'
identity. Due diligence measures are applied when establishing a business relationship
with a customer, when carrying out a transaction equivalent to € 15,000 or
more, when there are reasons to suspect money laundering or terrorism financing
with respect to a customer or transaction and when there are doubts about the
credibility of previously obtained data about a customer or beneficiary.
Financial institutions – banks, exchange offices, investment funds, voluntary
pension funds, etc. – are under an obligation to inform the Administration for
the Prevention of Money Laundering (APML, which is the national financial
intelligence unit – FIU) of any cash transaction exceeding € 15,000 and
whenever there are reasons to suspect money laundering or terrorism financing
with respect to a transaction or customer, regardless of the amount of the
transaction. Amendments made to the Law on the prevention of money laundering
in 2010 even prohibit sellers of goods or services from accepting cash payments
above € 15,000 from a customer or third party. However, an effective
system for monitoring and analysing cash transactions still needs to be
introduced. High level of cash usage influences the effectiveness of the fight
against money laundering and financing of terrorism. Implementation of the
Law on the prevention of money laundering is supervised by the APML with the
cooperation of the National Bank of Serbia, the Securities Commission, the
Ministry of Trade, the Foreign Currency Inspectorate, the Administration for
Games of Chance, the Ministry of Culture and Media and the Bar Association.
This cooperation needs to be strengthened. The APML is part of the Ministry of
Finance and was established in 2005. It is run by a director appointed for a
five-year period by the government. The Administration has a staff of 40
working in three departments: Analysis, International cooperation, legal and
financial issues and suspicious transactions. In order fully to enforce the
anti-money-laundering legislation, the capacity of the APML needs to be
increased. Furthermore, the judiciary and law enforcement services lack
expertise in handling money laundering cases and financial investigations. Over
the past years, there have been few investigations, prosecutions or convictions
related to terrorist financing or final convictions related to money
laundering. Conclusion Capital movements in
Serbia are partly liberalised, but further efforts are necessary in order fully
to align legislation with the EU acquis in this area. Serbia needs to
complete its legal framework so that the free movement of capital, as defined
by the European legislation, is guaranteed. Legislation on payment systems is
still at an early stage and needs to be aligned with the EU acquis.
Concerning the fight against money laundering and financing of terrorism,
progress has been made with adoption of relevant legislation and establishment
of the necessary institutional framework. However, implementation needs to be
enhanced, as the high level of cash usage influences the effectiveness of the
fight against money laundering and financing of terrorism. Overall, Serbia will have to make additional efforts to
align with the EU acquis in this area and to implement it
effectively in the medium term.
3.5.
Chapter 5: Public
procurement
The EU acquis on public procurement includes the
general principles of transparency, equal treatment and non-discrimination. In
addition, specific EU rules apply to coordination of the award of public
contracts for works, services and supplies, for the classical sectors, for
utilities and for defence and security. Their scope is defined in terms of the
contracting entities and contracts covered and application thresholds and
specific exclusions. The EU acquis also lays down rules on review
procedures and the availability of remedies. Compliance with the procurement
directives will require adequate implementation capacity. The Stabilisation and
Association Agreement (SAA) stipulates that, at the latest five years
after the entry into force of the Agreement, EU companies not established in
Serbia must be granted access to contract award procedures in Serbia on terms
no less favourable than those accorded to Serbian companies. While the general
principles applying to public procurement in the internal market have been
largely introduced in the Serbian legislation consistent implementation and
enforcement need to be ensured by strengthening administrative capacity at all
levels and boldly stepping up the policies to fight corruption in public
procurement. The strategy for upgrading the public procurement system in Serbia
was adopted in September 2011.Current provisions of the 2009 Public Procurement
Law that grant preferential treatment to Serbian companies have to be gradually
aligned with the EU acquis following the entry into force of the SAA.
The lack of an appropriate regulatory framework on concessions still remains to
be addressed. The award of public
contracts is regulated by the Public Procurement Law that entered into
force in 2009 and was followed by adoption of the relevant implementing
legislation. The Law is largely based on the current EU public procurement
legislation. However, it still displays some discrepancies. In particular, the
definitions of exempted and excluded contracts are broader than those allowed
in the EU directives. Moreover, the scope for using negotiated procedures is
wider than stipulated by the EU rules, whereas the scope for use of the
restricted procedure is more limited. Award of public contracts relating to
utilities is not fully aligned with the EU acquis. The ongoing reforms
of the regulatory framework on concessions and public-private partnerships
(PPPs) need to be in line with the applicable EU rules and harmonised with the
legislative and institutional framework on public procurement. In terms of
administrative capacity, the Ministry of Finance is in charge of legislative
activity and the Ministry of Economy and Regional Development in charge of
concessions. The Public Procurement Office (PPO), set up in 2002, is an
executive body designed to create the conditions for correct use of public
funds. Its Director was appointed in June 2011. The PPO has published a
set of standard forms, templates and models to facilitate procurement. The PPO
continues to provide training seminars for stakeholders throughout the country,
to promote the public procurement web portal and to provide assistance and
advice to procurers and bidders. Certification of public procurement officials
started in December 2010. However, e-procurement has still to be adopted by
practitioners, even though the legal basis for introducing it exists. The
Public Procurement Unit in the Ministry of Finance, which is responsible for
legislative initiatives and general coordination, remains persistently
understaffed. With regard to the remedies
system, the Commission for Protection of Bidders' Rights was set up in October
2010 as an independent body accountable directly to parliament. This Commission
is a second-instance body in the review procedure with powers to cancel public
procurement procedures entirely or partially. Members of the Commission were
appointed in October 2010. The Commission was established as a separate and
independent institution with its own budget and premises. It still needs to
build its credibility by timely handling of cases, consistent jurisprudence and
a transparent enforcement record. Furthermore, it needs to ensure effective
enforcement by systematically monitoring and scrutinising implementation of its
decisions and to notify cases of non-compliance to the State Audit Institution,
the Budget Inspectorate, the national parliament and the government of Serbia. A coordination mechanism between the main stakeholders in
the public procurement system still needs to be established, especially with a
view to reducing the scope for corruption, which is widespread in the award of
public contracts. Institutional cooperation in this field remains very weak.
Sustained political will is needed to ensure proper implementation of public
procurement legislation. Conclusion Serbia's legislation on public procurement is partially
aligned with the EU acquis. A strategy for upgrading the public
procurement system in Serbia was adopted in September 2011. Shortcomings remain
in the legislative framework, including the lack of an appropriate regulatory
framework on concessions and PPPs. The administrative capacity of all key
institutions forming part of the public procurement system, especially the
Ministry of Finance, needs to be significantly strengthened. Decisions adopted
by the Commission for Protection of Bidders' Rights have to be enforced
effectively. Mechanisms need to be instituted for coordination between the main
stakeholders, including anti-corruption, audit and judicial institutions,
notably with a view to reducing corruption in public procurement. Overall, Serbia will
have to make additional efforts to align with the EU acquis in the area
of public procurement and to implement it effectively in the medium term.
3.6.
Chapter 6: Company law
The EU acquis on
company law includes rules on disclosure requirements, formation, maintenance and
alteration of capital, mergers and divisions, takeover bids, shareholders'
rights and corporate governance principles. In the area of financial reporting,
the EU acquis lays down rules on presentation of annual and consolidated
accounts, including simplified rules for small and medium-sized enterprises.
Specific accounting rules apply to banking and insurance. Application of
International Accounting Standards (IAS) is mandatory for some public-interest
entities. In addition, the EU acquis sets out rules for the approval,
professional integrity and independence of statutory auditors. Serbia adopted a new Company Law in May 2011 in order to
align further with the EU acquis in this field. The Laws on the business
registers agency and the registration entities are broadly in line with the EU acquis.
As regards administrative structures, the Ministry of Economy and Regional
Development is responsible for policy proposals and performs duties of the
State administration related to companies and other business entities. The
Agency for Business Registers was established in 2004 as a central institution
keeping the registers and a single centralised database of business entities.
It also manages other registers, notably the register of financial statements
and data on solvency of legal entities and entrepreneurs. The amendments to the
Accounting and Auditing Law place an obligation on legal entities and
entrepreneurs to submit their regular annual financial statements to the Agency
by not later than the end of February of the following year. Eight staff in the Ministry of Economy and Regional Development, divided into two
departments, are responsible for company law. The Agency for Business Registers
has over 370 staff. The registration procedure has been successfully reformed,
introducing a 'one-stop shop' service as of May 2009, thus allowing business
entities to follow only one procedure instead of submitting several
registration applications. The Agency performs its tasks efficiently. Corporate accounting is regulated by the Law on accounting and
auditing adopted in June 2006 and amended in 2009. It is broadly aligned with
the Fourth and Seventh Company Law Directives for issues not covered by the
international accounting standards. Specific derogations or special treatment
are envisaged for small companies. A number of pieces of implementing
legislation regulate specific areas. The law has incorporated the option
included in Article 5 of the International Auditing Standard (IAS) Regulation.
This gives Member States the possibility to order application of
IAS/International Financial Reporting Standards (IFRS) to legal entities,
irrespective whether securities are traded on a regulated market or not.
Consequently, all medium-sized and large Serbian entities are required to
prepare their financial statements in accordance with the IAS/IFRS
international accounting standards. Based on the Law on accounting and auditing, the National
Commission for Accounting was established in 2006 as an advisory authority The same law regulates auditing.
Statutory auditing of the regular annual financial
statements and consolidated financial statements complies with the
International Auditing Standards and the Code of Ethics for Professional
Accountants. The following are subject to audit: large and medium-sized legal
entities including all financial institutions, parent legal entities preparing
consolidated financial statements and all legal entities issuing securities and
other financial instruments traded on an organised market. However, the
requirements of the Eighth Company Law Directive and the Commission
Recommendations of 2008 have only partially been implemented. The Serbian laws
are not aligned in areas such as independent public oversight, quality
assurance and investigations. The Ministry of Finance is currently responsible
for supervision over auditing firms, but the scope of this supervision is not
in line with the directive. The Chamber of Certified Auditors is responsible
for quality assurance of the statutory audits. However, the Chamber has not yet
started this task and its staff needs to be reinforced. Conclusion The new Serbian Company
Law of 2011 brings Serbia further into line with the EU acquis. Its
legislation on business registration is largely in line with the EU acquis. Serbian
rules on corporate accounting and audits are largely aligned with EU rules and
international standards. However, in general, some challenges remain on
effective implementation and enforcement of legislation, in particular as
regards independent public oversight, quality assurance and investigations.
Progress in this area should improve corporate culture and further develop
systems of corporate governance. Overall, Serbia should, in the medium term, have the
capacity to comply with the requirements of the EU acquis in the field
of company law and to implement it effectively, provided it continues its
efforts.
3.7.
Chapter 7: Intellectual
property law
The primary objective of the EU acquis in the area
of intellectual property rights is to ensure the proper functioning of the
internal market while striking the appropriate balance between the rights of
right-holders and the interests of users and adapting the legal framework to
the changing technological environment. The EU acquis on copyrights
harmonises rules on the legal protection of copyright and related rights.
Specific provisions apply to protect databases, computer programs and
semiconductor topographies. The EU acquis on industrial property rights
sets out harmonised rules for legal protection of trademarks and designs.
Specific provisions apply to biotechnology inventions, pharmaceuticals and
plant protection products. The EU acquis also establishes an EU
trademark and EU design. Finally, the EU acquis contains harmonised
rules for enforcement of copyright and related rights and industrial property
rights. It requires Member States to set up adequate implementing mechanisms,
in particular effective enforcement capacity. In accordance with the Interim Agreement Serbia has
to take the necessary measures to guarantee, no later than January 2014, a
level of protection of intellectual, industrial and commercial property rights
similar to that existing in the EU, including effective means of enforcing such
rights. The Interim Agreement also requires Serbia to accede to a number of
multilateral conventions on intellectual, industrial and commercial property
rights by the same deadline. In the area of copyright and neighbouring rights,
the Law on optical disks was adopted in July 2011. The Law on copyright and
related rights was adopted in December 2009 and was followed by implementing
legislation. The Commission for Copyright and Related Rights was established in
December 2010. It is empowered to decide on the tariffs if no agreement is
reached with collective rights management organisations. Currently three
organisations in Serbia are authorised for collective management of copyright
and related rights. The National Strategy for Intellectual Property Rights was
adopted in June 2011. The draft Law amending the Law on copyright and related
rights is pending adoption in the Parliament. The Intellectual Property Office (IPO), established in
2003, has asserted its role as the national coordinator for intellectual
property rights. It has set up an in-house education and information centre and
become the leading promoter of reforms in this area. The administrative and IT
capacity of the IPO have been significantly strengthened over recent years.
However, the financial sustainability of the IPO remains unresolved: the Office
is still financed from the State budget and has not yet been established as a
financially autonomous agency. Serbia's legislative framework on industrial property
rights, including its legislation on industrial design and trademarks, is
largely aligned with the EU acquis. The Law on patents is pending
adoption in the Parliament. The 2009 Law on the protection of topographies of
integrated circuits, needs to be further harmonized to the EU acquis. Serbia has acceded to all the relevant multilateral
conventions, as required by the Interim Agreement, apart from the TRIPS
Agreement, which is subject to Serbia's accession to the WTO. Since October
2010, Serbia has been a member of the European Patent Organisation. Enforcement of intellectual property rights is specifically
regulated by the Law on special powers for the purpose of efficient protection
of intellectual property rights, which entered into force in 2006. A new Decree
on the terms and means of enforcement of measures for protection of intellectual
property rights at the border, which is aligned with the new Customs Law,
entered into force in January 2011. The key enforcement institutions are the prosecutor for
high-tech crime, two specialised police units, the specialised customs department,
the specialised tax inspection unit, the tax police, the market inspectorate
and different court panels. The administrative capacity of individual
institutions is improving, albeit with varying speed and quality. Via its new
Education and Information Centre, the IPO coordinates training and
awareness-raising activities on intellectual property rights. However, the distribution of administrative powers, notably
inspection powers, is unclear. In this complex institutional setting, there is
a lack of coordination mechanisms. Inter-institutional cooperation takes place
on a bilateral and ad hoc basis, rather than in an institutionalised and
predictable manner. Exchanges of information are not standardised and lack a
solid IT platform that would ensure transparency and statistical tools for
tracking a comprehensive enforcement record in the area of intellectual
property rights. Participation of economic operators and consumers in
preventing counterfeiting and piracy needs to be ensured systemically across all
enforcement institutions. The issue of inadequate storage and destruction
facilities for counterfeited and pirated goods still remains to be solved. As regards judicial protection of intellectual property
rights, the Law on the organisation and jurisdiction of government authorities
in the fight against high-tech crime was adopted in 2005 and is being applied
since 2007. Special high-tech crime units were established in the Public
Prosecutor's Office, the Higher Court in Belgrade and the Ministry of the Interior,
as provided for by this law. However, specialisation of prosecutors, judges and
court panels handling cases in all segments of intellectual property law needs
to be ensured. Conclusion Legislative alignment with the EU acquis in the area
of intellectual property law has been progressing well. A national strategy
providing a comprehensive framework for concerted enforcement by all competent
institutions has been in June 2011adopted. However, enforcement still remains
weak. In more general terms, the administrative capacity of all enforcement
institutions needs to be strengthened, with the IPO taking the leading role in
education and awareness-raising activities. Court panels adjudicating on
intellectual property law require specialisation and intensive judicial
training. Overall, Serbia will have to make additional efforts to
align with the EU acquis and to implement intellectual property law
effectively in the medium term.
3.8.
Chapter 8: Competition
Policy
The EU acquis on
competition covers antitrust, merger and State aid policies. It includes rules
and procedures to fight anti-competitive behaviour by companies (restrictive
agreements between undertakings and abuses of dominant market positions), to
scrutinise mergers between undertakings and to prevent governments from
granting State aid which distorts competition on the internal market. The
competition rules are directly applicable in the EU, and Member States must
cooperate fully with the Commission on enforcing them. The Interim Agreement,
and subsequently the SAA, include provisions comparable to the EU acquis on
competition, covering anti-competitive agreements, abuses of dominant market
positions and State aid. Moreover, they include special rules applying to
public undertakings and undertakings with special and exclusive rights and
prohibit quantitative restrictions on imports from the EU into Serbia. The
Agreement calls for operationally independent authorities to supervise
application of the competition rules in Serbia. It also includes a separate
protocol establishing the State aid rules which will apply in the event that
restructuring aid is granted to the Serbian steel industry. As regards antitrust
and mergers, all fundamental aspects of the legal and institutional
frameworks are aligned with the EU acquis. A revised Competition Law
entered into force on 1 November 2009 and the necessary implementing
legislation has been adopted. Competition law applies to all sectors of the
economy, to public and private undertakings and to goods and services. The
principles set out in Article 106(2) of the TFEU regarding services of general
economic interest are incorporated in the Serbian competition law. However, conflicting
legislation limiting the scope and effectiveness of the competition law,
notably on mandatory car insurance, has been adopted without prior consultation
of the Commission for the Protection of Competition (CPC), the Serbian
competition authority, and remains in force. Serbia needs to rectify these
contradictory provisions in its legislation. Furthermore, to avoid this in
future, the CPC should be consulted on all draft legislation which could have
an impact on competition in Serbia. The CPC, established in
2006, is an independent body accountable to parliament. It is a self-financing
institution. The CPC has substantial investigation powers and may impose fines
for infringements of the competition rules. The authority's decisions are
subject to judicial review by the Administrative Court. In addition to the
Chairperson and the four other members of the CPC's collegiate decision-making
body, the authority has 28 employees, which is not sufficient to fulfil its
tasks. The authority needs to reinforce its capacity for economic analyses, as
part of this work is currently outsourced. Following the approval of the 2011
Financial Plan for the CPC, the Commission should have the funds needed to hire
additional economists as case-handlers. The CPC has started to build a track
record on enforcing competition rules on the Serbian market. However, further
efforts are needed in this respect. A series of CPC decisions have been
overturned on appeal for procedural reasons, indicating a systemic issue. The
CPC needs to reinforce its capacity in administrative and procedural law. The capacity of the
judiciary to assess complex legal and economic evidence in competition cases
remains weak. Significant efforts are needed to increase this capacity. In the field of State
aid control, the legal and institutional framework has been put in place.
The Law on State aid control entered into force in January 2010 and
implementing legislation in March 2010. The collegiate decision-making body –
the Commission for Control of State Aid (CCSA) – consists of a President
appointed by the Ministry of Finance, a Vice-President nominated by the CPC and
three members appointed by the Ministry of Economy and Regional Development,
the Ministry of Infrastructure and the Ministry of Environment. The CCSA is
supported by the Division for Control of State Aid (DCSA) in the Ministry of Finance,
which investigates State aid notifications and drafts decisions. With five
permanent employees and one person employed on a temporary basis, the DCSA's
current staff level is inadequate to fulfil its tasks. In accordance with the
Interim Agreement, the CCSA needs to establish a comprehensive State aid
inventory and existing State aid schemes must be aligned with the EU acquis
by January 2013. The Serbian Government adopted a State aid inventory in
September 2011. Any proposed State aid measures need to be consistently
notified to the DCSA, which should raise awareness of the State aid rules among
potential aid granters. More efforts are needed to fulfil the obligations
imposed by the Interim Agreement. Given the institutional
set-up of the Serbian State aid authority, the de facto operational
independence of the authority must be closely monitored. In this respect, it is
crucial that the CCSA demonstrates its ability to act independently of
aid-granting institutions (in particular ministries) and establishes a solid
track record of well-reasoned decisions. Concerning liberalisation of specific sectors, a
number of Serbian undertakings enjoy, de facto or de jure,
special or exclusive rights, notably in the fields of energy, transport,
infrastructure, postal services, telecommunication services, broadcasting,
agriculture and the environment. Further efforts need to be made towards market
liberalisation in line with the EU acquis. Conclusion Serbia has established both the legal and the institutional
framework in the area of competition, but additional efforts to increase
administrative capacity are necessary. The CPC has started to build up
enforcement records, but further efforts are needed. Priority needs to be given
to increasing the judiciary's knowledge of competition law. A State aid
inventory has been adopted by the Government in September, in line with the
Interim Agreement. The operational independence of the CCSA needs to be
demonstrated in practice. The CCSA must establish credible and consistent
enforcement records. Progress towards market liberalisation in reserved
economic sectors is needed. . Overall, Serbia will have to make additional efforts to
align with the EU acquis in the area of competition and to implement it
effectively in the medium term. This applies, in particular, to safeguarding
the operational independence of the State aid authority and to the increasing
of consistent enforcement records of the competition authority.
3.9.
Chapter 9: Financial
Services
The main objectives of
the EU acquis on financial services are to ensure financial stability,
the financial soundness of companies operating in the financial sector and
appropriate protection of consumers, investors and policy-holders. The aim is
to build up confidence in the financial markets and to provide a level
playing-field. The EU acquis on financial services includes rules on
authorisation, operation and supervision of financial institutions in the areas
of banking, insurance, supplementary pensions, investment services and securities
markets and on financial market infrastructure. Financial institutions can
operate across the EU in accordance with the 'single passport' and the 'home
country control' principle, either by establishing branches or by providing
cross-border services. The SAA provides for
gradual opening of establishment of financial services. In the case of banks and financial conglomerates,
there is good alignment with the EU acquis and international standards.
The Law on banks, adopted in 2005 and amended in 2010, regulates the licensing
of banks. It gives foreign credit institutions the right to establish banks in
Serbia and treats these banks as domestic legal entities. Banks may be founded
by one or more domestic or foreign legal entities or natural persons who
provide the bank with equity capital of a minimum value of € 10,000,000.
Serbia will need to align with the single passport and home country control
principles by the time of accession. As regards capital
adequacy and supervision, Serbia is currently implementing Basel I requirements
and is preparing to implement Basel II. To this end, a regulation was adopted
in December 2010 on capital requirements, (standardised approach) risk
management, disclosure and consolidated supervision. Serbia will need to catch
up with implementation of Basel II and ensure timely implementation of Basel
III, as the Basel standard is the basis for the EU capital adequacy
legislation. The deposit guarantee
scheme in Serbia is governed by the Law on deposit insurance, which was adopted
in 2005 and amended in 2008 and 2010. The institution in charge of deposit
insurance in Serbia is the Deposit Insurance Agency and the minimum amount
insured is € 50,000 per bank depositor. Responsibility for
supervision of banks and financial conglomerates lies with the National Bank of
Serbia (NBS). As the independent regulatory body, it reports directly to
parliament. The banking supervision section of the NBS has six departments with
102 employees. It has two departments dealing with on-site and off-site
inspections and one with supervision of financial leasing companies. The NBS is
fully independent for carrying out supervision in the financial sectors under
its responsibility and has cooperation agreements with many home authorities
and institutions and also with foreign supervisory authorities. It has
sufficient administrative capacity. The Law on bankruptcy
and liquidation of banks and insurance companies covers aspects of
reorganisation and winding-up of banks and financial conglomerates in Serbia. The main legislation in
the area of insurance and occupational pensions are the 2004 Law on
insurance, amended in May 2011, and the 2009 Law on compulsory traffic
insurance regulating the minimum coverage for compulsory motor vehicle
insurance. Some aspects of the operation of insurance companies are also dealt
with in the Law on the National Bank of Serbia and the Law on bankruptcy and
liquidation of banks and insurance companies. The Law on insurance grants
insurance companies licensed to perform insurance activities in Serbia the
status of a domestic legal entity (domestic insurance company) operating under
equal conditions to other companies, regardless of whether the owners are
domestic or foreign entities. Cross-border services are allowed only against
risks that are not insured in Serbia or for specified risks defined by the
government. Serbia will need to
align with Solvency II directive by providing quality insurance and human
resources management and developing the internal control system. The National Bank of
Serbia is empowered to regulate and supervise the insurance sector. In this
capacity, the NBS issues and revokes licences to conduct insurance activities
and supervises and controls these activities. Its Insurance Supervision
Department employs 42 staff. Its administrative capacity is sufficient. In
order to improve its supervisory functions over the insurance sector, the NBS
signed a number of memoranda of cooperation, notably with EU countries such as
Hungary, Belgium and Austria. Bankruptcy and liquidation of insurance companies
are regulated by the Law on bankruptcy and liquidation of banks and insurance
companies. As regards financial markets infrastructure, the Law
on the market for securities and other financial instruments is not aligned
with the EU legislation on financial collateral arrangements and on investor
compensation schemes. A newly adopted Law on capital markets aims to bring the
Serbian legislation further into line with the EU acquis in the area of
financial markets infrastructure too. As regards securities markets and investment services,
the regulatory framework is defined by the Law on capital markets, adopted in
May 2011, which aims at aligning with the EU legislation on markets in
financial instruments, on securities prospectuses and on prevention of market
abuse. It also requires annual and interim reporting, as stipulated by the
Directive on transparency. Broker dealer companies, banks and investment fund
management companies and voluntary pension fund management companies may be
established by domestic or foreign natural persons and legal entities but need
to be licensed in order to be registered. There is no possibility for an
EU-authorised investment company to provide cross-border services directly or
to manage a pension fund in Serbia. Furthermore, there is no legislation
governing rating agencies. The legal framework for investment funds was adopted in
2006 and amended in 2009 and in 2011. The investment fund law only partially
aligns the EU acquis on undertakings for collective investment in
transferable securities (UCITS). The Serbian Securities
Commission is the supervisory authority for the securities sector. The
Commission has five members, including the president. The president and the
members of the Commission are elected by the national parliament for five
years. A new president and members of the Commission were appointed in July
2011. The Commission employs 42 staff all together. It is financially
independent (self-financed from fees and taxes from participants in the
market), and appears to have sufficient administrative capacity. It has been a
member of IOSCO since 2002. The Securities Commission conducts supervision
by reviewing reports, documentation and other data that the supervised entities
are under an obligation to keep or submit to the Commission. Conclusion The legislation on
financial services covers the requirements of the EU acquis to a
considerable extent. Serbia is currently implementing Basel I and is moving
towards alignment with Basel II. The NBS carries out its supervisory role in a
satisfactory manner. Further efforts will need to be made to align with
Solvency II directive and the EU regulations on financial market
infrastructure. Alignment with securities markets legislation is needed and the
newly appointed Securities Commission needs to make sure that it carries out
its supervisory functions properly. Overall, Serbia will
have to make additional efforts to align fully with the EU acquis in
this field and to implement it effectively in the medium term.
3.10.
Chapter 10: Information
society and media
The EU acquis on
the information society and media aims to eliminate obstacles to effective
operation of the internal market in electronic communications services and
networks, promote competition and safeguard consumer interests in the sector,
including the universal availability of basic modern services. It also includes
rules on information society services and a transparent, predictable and
effective regulatory framework for audiovisual media services in line with
European standards. As regards electronic
communications and information technologies, the Stabilisation and
Association Agreement sets the ultimate objective of Serbia adopting the EU
acquis in the sector of electronic communications networks and services
three years after the entry into force of the SAA. This means that Serbia will
have to fully align with a substantial number of directives and to ensure their
implementation by that date. Liberalisation of the
electronic communications market has started. In January 2010 Serbia granted a
fixed telephony licence to a second operator, but kept the market closed for
other newcomers until the end of 2011. The mobile telephony
market has been opened to competition, with two additional operators licensed
in 2006. Mobile number portability was introduced in 2011. Internet services
have also been opened to competition. Most of the Internet service-providers
have been providing ADSL services based on the incumbent operator's wholesale offer
and relying on its international interconnectivity. However, although 39 VoIP[4] licences have been
granted since 2008, few of the operators are functioning effectively. Most of
the safeguards necessary to create a competitive market have not yet been introduced.
The incentives to open the market for liberalisation were further offset in
2011, with the cancellation of the privatisation of the incumbent operator,
Telekom Srbija. The broadband market is underdeveloped with penetration level
standing at around 8% in 2010. The Law on electronic
communications entered into force in July 2010, repealing most of the 2003
Telecommunications Law and further aligning with the 2002, and some provisions
of the 2009, EU regulatory framework. Implementing legislation remains to be
adopted. The strategy for the development of electronic communications from
2010 to 2020 was adopted in September 2010. The Ministry for the
Information Society and Telecommunications was merged with the Ministry of
Culture in March 2011. The administrative capacity of the ministerial
department in charge of electronic communications is not sufficient to meet the
tasks at hand. The Republic Agency for
Electronic Communications (RATEL) has been established as an autonomous
regulatory authority which became operational in 2005. The five members of the
management board are appointed by parliament, on a proposal from the
government. The independence of RATEL remains to be fully ensured in order to
avoid political influence in its decision-making. RATEL has yet to introduce
most of the competitive safeguards in the market. The administrative capacity
of RATEL is good but its expertise on implementation of the legislation has to
be further improved. Market competitiveness remains limited. In the field of information
society services, a ten-year strategy for the development of the
information society was adopted in July 2010. A strategy for the development of
e-government from 2009 to 2013 was adopted in October 2009. The Ministry for
Culture, Media and the Information Society is in charge of policies and
strategies on the information society. The legislation on e-signatures has been
aligned with the acquis following adoption of the 2004 Law on electronic
signatures and the 2009 Law on electronic documents. However, the
administrative capacity of the ministry is limited, in particular in the sector
for the information society. Implementing rules still remain to be adopted to
ensure that the switchover takes place as indicated in the 2009 digital switchover
strategy. Protection of the conditional access equipment from piracy remains to
be extended beyond the field of intellectual property. As regards audiovisual
policy, the media environment is regulated by a large set of laws, notably
the Public Information Law, the Broadcasting Law, the Law on
telecommunications, the Advertising Law, the Law on copyright and neighbouring
rights, the Law on free access to information of public importance and the Law
on electronic communications. Adoption of the draft Law on unallowable mergers
and the transparency of ownership, which was tabled by the Ministry of Culture,
is still pending. A comprehensive media strategy was adopted in September 2011.
It aims at increasing editorial independence and better protecting media
outlets from undue influence. It also lays the foundations for forthcoming
legislative changes which should clarify the market environment in which media
outlets are operating. The Ministry for Culture, Media and the Information
Society is in charge of policymaking and the Republican Broadcasting Agency
(RBA) is the regulatory authority monitoring enforcement of the relevant
legislation. The RBA's administrative and technical capacity is sufficient to
meet the obligations set under the Audiovisual Media Services Directive. However, Serbia's
legislative framework remains to be fully aligned with the EU acquis,
particularly with the Audiovisual Media Services Directive. The legislation
also lacks provisions for regulating on-demand and online audiovisual services.
The existing legal framework remains to be clarified, as there is a
contradiction between the Broadcasting Law on the one hand, which does not
allow municipal ownership of broadcasters, and the Law on local self-governance
along with the Law on the City of Belgrade on the other, which allow public
establishment and ownership of the media. This contradiction was deepened in
2009 when the Law on national minority councils transferred foundation and
managerial rights over media to National Minority Councils too. This lays down
conditions for political control of the media in minority languages by the
dominant political minority groups. The regulation on electing members of the
RBA needs to be amended to guarantee the RBA's independence from political influence.
The RBA needs to step up its activities and take action in cases of breaches of
legislation. The transparency of its activities has to be improved. In line with the commitments under the Interim Agreement,
the financing of certain media from the State budget will have to be brought
into line with the EU acquis as it constitutes State aid. Conclusion As regards electronic
communications and information technologies, Serbia has partly aligned its
legislation with the EU acquis, but implementation of the new legal
framework is at an early stage. Full market liberalisation remains to be
ensured. The two regulatory authorities ─ RATEL and the RBA ─ have relatively
good capacity, but their independence and enforcement powers need to be
strengthened in order to give all market players a competitive level
playing-field. The legislation on media ownership has yet to be aligned with
the EU legislation on State aid. Overall, Serbia will
have to make additional efforts to align with the EU acquis in the area
of the information society and the media and to implement it effectively in the
medium term.
3.11.
Chapter 11: Agriculture and
rural development
The EU acquis on
agriculture and rural development covers a large number of binding rules, many
of which are directly applicable. Proper application of these rules, effective
enforcement and control of them by an efficient public administration are
essential for the functioning of the common agricultural policy (CAP). Running
the CAP requires setting up a paying agency and management and control systems
such as the integrated administration and control system (IACS) and also the
capacity to implement rural development measures. Member States must be able to
apply the EU legislation on direct support schemes and to implement the common
market organisation for various agricultural products. Pending the entry into
force of the Stabilisation and Association Agreement (SAA), the Interim
Agreement on trade and trade-related matters in force since 1 February 2010
provides for gradual liberalisation of agricultural trade. The SAA also
includes provisions on cooperation in the area of agriculture. Agriculture is one of
the most important economic activities in Serbia. The total area of
agricultural land in Serbia is 5,097,000 hectares, some 80% of which is arable
land. In 2009, crop production accounted for around 70% of the value of all
agricultural production and livestock production 30%. Primary production
from agriculture, hunting, forestry and fisheries generated approximately 10%
of GDP. Agricultural exports are continuing to expand and contributed about 24%
of Serbia's total exports in 2009. Serbia has a trade surplus with the EU in
basic agricultural goods. Approximately 55% of the population lives in rural
areas and around one third of the active population rely wholly or partly on
agriculture for their livelihood. Agriculture remains the prevailing economic
activity in most rural areas, which are dominated by smaller farms, low
productivity and low farm profits. Serbia's agricultural policy is based on the Law on
agriculture and rural development adopted in 2009. This law sets the objectives
of agricultural policy and provides the general framework for development of
and support for agriculture and rural areas. The policy is implemented by means
of the Agricultural and Rural Development Strategy. The strategy for the period
2011-2020 has not yet been adopted. Serbia's agricultural budget in 2010
accounted for just over 2% of the total budget, providing limited support for
further development of Serbian agriculture; direct payments predominated. Although there have been improvements over the last few
years, the current capacity of the Ministry of Agriculture, Trade, Forestry and
Water Management needs to be strengthened in order to adapt its structures and
systems to EU requirements. In addition, agricultural statistics need to be
developed in line with the EU acquis. The agricultural census, scheduled
for 2012, should provide results which will allow Serbia to advance in the formulation
and implementation of agricultural and rural development policies. Concerning horizontal issues, Serbia needs to pay
extra attention to establishing the administrative structures required for the
common agricultural policy. Since the EU acquis on the paying agency and
the IACS, central elements for management and control of CAP funds, is very
demanding, planning and preparation will require investment and institution
capacity building well in advance of accession. Serbia will need to establish a
farm accountancy data network (FADN) in line with the EU acquis. Direct aid payments are currently granted for Serbia's key
production sectors: dairy, meat and crops (per head for livestock and per
hectare of crop production area, together with price support for certain
products). One prerequisite for entitlement is insurance with a Pension
Insurance Fund for Farmers. In every case, a yearly budgetary ceiling is set
which limits individual payments. Direct payments in Serbia gradually
need to be brought into line with EU rules, decoupling direct aid payments from
production. In relation to State aid, apart from market-related
subsidies and rural development measures, Serbia applies a number of additional
measures. Serbia will need to bring all its State aid measures into line with
EU rules and guidelines adopted in this area. Considerable attention
has to be paid to strengthening the administrative capacity in order to manage common
market organisation. With regard to
arable crops, most of the agricultural land in Serbia is used for the
production of grain crops (wheat, barley, rye, oats, corn, millet and sorghum),
which cover approximately 60% of the total area sown. Corn is the most
important crop with around 1.2 million hectares sown annually. Wheat takes second
place with approximately 500,000 hectares. Serbia is also a large producer of
oil crops. Sugar beet was grown on just over 60,000 hectares in 2009, producing
about 3 million tonnes. Serbia is the largest
producer of meat among CEFTA countries. However, production is moderate
compared with EU levels. On productivity, livestock production is lower
than in most European countries in terms of number of head per hectare of
agricultural land. Milk production in Serbia is very important,
involving more than 280,000 producers. In terms of
specialised crops, fruit and vegetables production is a significant
agricultural activity in Serbia, with the most important crops being potatoes,
cabbage, tomatoes, apples, berries and plums. With an overall annual production
of around 80,000 tonnes, Serbia is one of the major raspberry producers in the
world. The fruit and vegetables processing and preserving industry shows
significant potential for development. Serbia applies a per-hectare subsidy for
planting fruit trees which is not in line with the EU acquis. A basis
already exists for producer groups, as in the EU, but the administrative
structure and legal provisions to allow them to operate in line with the EU acquis
will need to be set up. A sound basis for marketing standards for fresh
fruit and vegetables and conformity checks already exists, but further
harmonisation is needed in order to align with the EU acquis. The viniculture and
wine-making sector has a long tradition in Serbia. Currently, it has great
untapped potential but efforts are underway to develop and promote the sector.
The Serbian Law on wine has many elements in common with the EU wine
legislation. Serbia is a member of the International Organisation for Vine and
Wine (OIV). The policy formulation capacity of the Ministry of Agriculture for
this area remains limited. Implementing legislation for the vineyard register
has been adopted. However, the vineyard register remains to be established and
the procedure for authorisation of oenology laboratories needs to be put in
place. The 2009 Law on Rakija and other alcoholic beverages needs to be aligned
with the EU acquis in the spirits sector. As regards rural
development, the Law on agriculture and rural development put in place a
strategic framework that largely resembles the one established under the
current EU legislation. However, the scope and provisions of the law need to be
further elaborated in terms of measures and scope of implementation with a view
to full alignment with the EU acquis. The agri-environmental orientation
of Serbia's rural development policy remains weak. Extension services and
advisory support exist but need to be boosted. While the law establishes
administrative structures similar to those implementing the current rural
development programmes in the EU, the administrative capacity
needs to be enhanced. Regarding the
preparations for decentralised management of Instrument for Pre-Accession
Assistance for Rural Development (IPARD – component V), several positive
actions have been undertaken, including efforts to establish IPARD structures.
A Directorate for Agrarian Payments which is planned to serve as a future IPARD
agency, has been set up. However, progress needs to continue and attention must
be given to ensuring the consistency and functioning of resources assigned to
these structures. The readiness of the National Fund for IPARD must be ensured. As regards quality
policy, Serbia has legislation in place which regulates protection of
designations of origin, geographical indications and traditional names. This
legislation needs to be amended and updated to bring it fully into line with
the EU acquis. The organic farming sector in Serbia can be
expected to grow in the future, due to domestic support and ongoing
international trends. A new law, based on the EU framework, entered into force
in 2011 and now needs to be implemented. Overall responsibility lies with the
Ministry of Agriculture, Trade, Forestry and Water Management which authorised
eight control bodies in 2010. At present no precise data are available on the
area under organic production, but the new law calls for mandatory reporting.
Supervisory activities need to be strongly supported and enforced. Impact The estimated impact of
eventual EU accession by Serbia on the EU common agricultural policy is
relative to the structure and size of Serbia's agricultural sector, which
accounted for 10.6% of GDP in 2009. If Serbia joins the EU, it would add
5,097,000 hectares of agricultural land to the EU. This corresponds to 3% of
the utilised arable area (UAA) in the EU-27. Overall, Serbia's membership of
the EU would therefore be expected to have a limited impact on the CAP. Conclusion Accession to the EU
will have a big impact on Serbian agriculture which is a very important sector
for the country's economy and rural society. In the field of agriculture and
rural development, agricultural policy will require adjustments, moving towards
decoupled support measures. Although good progress has been made in recent
years, Serbia will have to strengthen its administrative capacity and ensure
the fundamental instruments and institutions for managing the CAP. Considerable
attention must be paid to strengthening the administrative capacity in order to
manage the common market organisation and rural development activities.
Continuing to focus on establishing all IPARD structures for implementing
pre-accession assistance is essential. Overall, Serbia will
have to make considerable and sustained efforts to align its legislation with
the EU acquis and to effectively implement and enforce it.
3.12.
Chapter 12: Food safety,
veterinary and phytosanitary policy
The EU has an integrated approach aimed at ensuring a high
level of public health, animal health, animal welfare and plant health by means
of coherent farm-to-table measures and adequate monitoring, while ensuring
effective functioning of the internal market. The EU acquis lays down
hygiene rules for food production and veterinary rules, which are essential for
safeguarding animal health, animal welfare and the safety of food of animal
origin in the internal market. EU phytosanitary rules cover issues such as seed
quality, plant protection products, harmful organisms and animal nutrition.
Member States must have appropriate administrative structures for inspection
and control of food products, including appropriate laboratory capacity. The SAA includes provisions on cooperation in the field of
veterinary and phytosanitary controls. In the area of general food safety, food safety
rules and specific rules for feed, the responsibilities for control
of food and animal feed safety have been defined in the 2009 Law on food
safety. The Veterinary, Phytosanitary and Agricultural Inspections of the
Ministry of Agriculture, Trade, Forestry and Water Management are responsible
for official controls of food and feed of animal and plant origin in primary
production, processing, sale, import, transit and export. The Sanitary
Inspections of the Ministry of Health is responsible for control of novel
foods, dietetic products, additives, aromas, enzymes of non-animal origin and
of all types of potable water. The Veterinary Directorate of the Ministry of
Agriculture is the competent authority for the safety of food of animal origin.
The current administrative structures are reliable even if staffing needs to be
strengthened in several sectors. The Food Safety Law includes most of the principles
required in the EU acquis. However, enforcement of the Law needs to be
considerably improved. Some of the features introduced by the Food Safety Law
are not yet applied (e.g. the principle of risk analysis). The implementation
by food businesses as well as the related official controls of other key
principles (e.g. hazard analysis and critical control points - HACCP) also need
to be improved. Both the skills base and the equipment of the authorities
responsible for official controls and policymaking in this area need to be
strengthened. The National Reference Laboratories Directorate is severely
understaffed and, thus, unable to perform the duties assigned to it by the Food
Safety Law. As regards genetically modified organisms (GMOs),
the existing legislation is not compatible with the EU acquis. The legislative framework in the veterinary sector
consists of the 2005 Law on veterinary matters (amended in 2010) and the 2009
Law on animal welfare. Implementing legislation for eradication of a number of
animal diseases and on animal welfare has been approved following adoption of
the framework legislation. Serbia has a functioning animal identification and
registration system. In order to be able to implement the legislation properly,
the veterinary IT systems need to be upgraded. Official controls of
implementation of the animal identification and registration system (including
control of cattle markets) need to be improved. With regard to placing on the market of food, feed and
animal by-products, access to the EU market is improving. Currently five
slaughterhouses have been approved to export beef, four processing
establishments to export beef and pork meat products, two fish establishments
and two dairy plants to export dairy products to the EU. However, Serbia is not
yet on the list of countries authorised to export fresh meat of pigs and
poultry. So far, no establishments processing poultry meat products are listed
for export to the EU. The national programme for upgrading establishments to EU
standards has yet to be prepared. The national system for management of animal by-products
needs to be substantially upgraded in order to comply with EU requirements. The framework acts regulating the phytosanitary area
consist of the Laws on plant health (2009), registration of agricultural plant
varieties (2010), plant breeders rights (2009) and plant protection products
(2009). Progress has been noted on adoption of implementing legislation, for
example on maximum residue levels of plant protection products in food and on
plant-breeders' rights. However, the procedure for registration of new plant
protection products is not harmonised with the EU acquis and an official
pesticide residues monitoring programme meeting EU requirements has yet to be
put in place. The phytosanitary strategy for introduction of a plant passport
system has not been formally adopted and the plant passport system has not yet been
implemented. The capacity of both the national reference laboratory and the
regional laboratories for control of seed and seed material and for pesticide
residue analysis requires further strengthening to meet EU requirements. Conclusion Serbia has started the process and made good progress with
aligning its legislation with EU requirements in the area of food safety,
veterinary and phytosanitary policy. However, further strengthening of the
administrative capacity of the institutions involved in controlling food chain
safety, in particular of the veterinary, phytosanitary and national reference
laboratories within the Ministry of Agriculture, Forestry and Water Management,
is required in order for Serbia to be able to comply with EU requirements in this
area. Overall, Serbia will
have to make additional efforts to achieve full alignment with the EU acquis
in the medium term and also with implementation of the harmonised
legislation.
3.13.
Chapter 13: Fisheries
The EU acquis on fisheries consists of directly applicable
Regulations, which do not require transposition into national legislation.
However, it does require the introduction of measures to prepare the
administration and operators for participation in the common fisheries policy
(CFP), which covers aquaculture, market provisions and State aid. Furthermore,
certain provisions of the European Fisheries Fund (EFF) Regulation will have to
be implemented and a severe system established for control of fisheries
products, with the aim of ending illegal, unreported and unregulated fishing.
However, the CFP does not cover 'inland fishing'. Consequently, CFP rules
provide rather limited coverage in Serbia. EU requirement on resource and
fleet management and inspection and control do not apply to inland
fishing and is therefore not applicable for Serbia. The Interim
Agreement on trade and trade-related matters and subsequently the SAA,
regulates preferential trade in fish and fishery products and encourages
cooperation in the field of fisheries. The SAA also introduces cooperation on
fisheries. Serbia has no coastline
and, therefore, no marine fisheries. Serbia's very small fishing sector
(accounting for € 6 million in 2008, with around 1,500 people working as
professional fishermen or fish-farm employees) consists of commercial inland
fishing carried out on the Rivers Danube, Sava and Tisa. Serbia has approximately
55 natural lakes with a total surface area of 5,000 hectares, plus about 150
reservoirs and ponds. Inland fishing in Serbia includes warm-water aquaculture,
mainly common carp, and cold-water aquaculture, mainly rainbow trout. Since
2003 a slight rise in catches has been recorded for all fish species in inland
waters. Since 2005 a small increase in fisheries exports has been recorded.
However, imports significantly surpass exports, in terms of both quantity and
value. Serbia has been included on the list of countries allowed to export
fishery products to the EU. Serbia has no specific structural
action or State aid for aquaculture and small-scale commercial
fisheries. However, a limited number of structural measures for inland fishing
exist, in line with the EFF Regulation. With regard to market
policy, Serbia has established no marketing standards for fisheries
products. Serbia will therefore have to align its legislation with the EU acquis
in this area, also when it comes to compulsory consumer information when
products are offered for retail sale to the final consumer. As regards aquaculture,
Serbia will need to establish a national administrative body with the aim of
preventing, effectively controlling and eradicating alien species which
threaten ecosystems, habitats or species. Serbia will also have to establish a
national catch certification scheme for imports and exports of fishery
products. Conclusion The Serbian fishing
industry is very small and consists of inland fishing, which is not covered by
the EU acquis. The administrative body for the fisheries sector needs to
be adapted to the needs of the CFP, while the capacity of the administration
dealing with management and control of fishing activities needs to be enhanced
and brought into line with CFP obligations. Overall, Serbia should be able to align with the EU acquis
in the fisheries chapter and to implement it effectively in the medium
term.
3.14.
Chapter 14: Transport policy
EU transport
legislation aims at improving the functioning of the internal market by
promoting efficient, environment and user-friendly transport services. The EU acquis
on transport covers road transport, railways, aviation, maritime
transport and inland waterways. It governs technical and safety standards,
social standards and market liberalisation in the context of the single
European transport market. In the field of road
transport, in line with the Interim Agreement, Serbia has granted
unrestricted access to EU transit traffic to cross its territory. The new Law on road
transport adopted in April 2010 was a step forward towards alignment with the
EU acquis. However, two issues are still outstanding: compliance with
the regulations on access to the international road market and to the
occupation of road transport operator. The Law on road safety was adopted in
July 2010. Implementing legislation has yet to be adopted, in particular on
drivers' hours, driving and rest times and transport safety conditions for
tunnels. The Law on road safety established the Road Traffic Safety Agency,
which is now operational; 40 of the 65 posts in the Agency were filled until
now. In the area of the EU
social acquis, the legal framework regulating the driving times and rest
periods of drivers performing international transport operations and
introducing tachographs was adopted in mid-2010. It is in line with the
European Agreement concerning the work of crews of vehicles engaged in
international road transport (AETR). Serbia needs to step up
establishment of a system of digital tachographs. The Law on transport of
dangerous substances by road, rail and inland waterways entered into force
in May 2011 and is consistent with EU legislation. Serbia is a party to
the European Agreement concerning the international carriage of dangerous goods
by road (ADR). However, Serbia needs to strengthen its mechanisms for
monitoring theimplementation of the relevant international rules and EU
legislation, including those on transportable pressurised equipment, roadside
checks on vehicles and safety advisors. Legislation and organisational
arrangements for roadworthiness testing are in place. The national limits on
the maximum weights and dimensions for road vehicles are harmonised with the EU
requirements. Serbia applies a fee for special transport operations exceeding
the permitted vehicle dimensions, total mass and axle load. More transparency
is needed as far as determination and application of this special fee is
concerned. On rail transport, a new law on railways has been
adopted by the Government in August 2011 and is currently in parliamentary
procedure. The draft law is partially harmonised with the relevant EU rules and
will bring progress to the opening-up of the rail market. Further efforts will
be needed to complete the alignment. Serbian railways were transformed into a
joint stock company in June 2011. The draft law on railways envisages its
further transformation into a holding with different daughter companies for
freight, passenger and infrastructure management. However, the holding
structure of Serbian Railways will not ensure the independence of the
infrastructure manager or prevent cross subsidisation. Serbian railways have
not yet published the network statement of the infrastructure manager needed to
ensure transparency and non discriminatory access to rail infrastructure for
all railway undertakings. The EU safety and interoperability rules have not
been introduced into the national legislation. Similarly, there is no contract
to compensate public service obligations in line with the corresponding EU
Regulation. According to the draft law on railways, the Railway Directorate
which is a legal entity under the state administration shall perform the role
of railway regulatory body. The independence of this body will need to be
further ensured, and it will need to be given the required competences and
administrative capacity. Serbia has yet to establish an independent accident
investigation body. Concerning border crossing, four Protocols were signed
under the Border Crossing Agreement between Montenegro and Serbia. The
Agreement needs to be further aligned with the EU legislation. Serbia needs to
speed up the implementation of its commitments set in the Addendum for a Common
South East European Railway Area. On inland waterway
transport, the 2010 Law on safety of navigation by inland waterways
contains provisions harmonising with European and international regulations in
this sector. The River Information System is being implemented in line with EU
requirements. A public agency to manage the inland ports has been established
in September 2011. As regards combined
transport, Serbia is in the initial phases of developing its policy. The Law on air
transport was adopted in 2010. However, more efforts need to be made to
implement it properly. The law was amended in 2011. The amendments introduced
the establishment of a Centre for investigation of accidents and serious
incidents as a separate and independent institution and transferred the inspection oversight functions
and activities from the Ministry of Infrastructure to the Civil Aviation
Directorate. Serbia has made some
progress with implementation of the first transitional phase of the European
Common Aviation Area (ECAA) Agreement. Opening of the market has led to an
increase in the number of carriers operating in Serbia and in passenger
traffic. Serbia has aligned
partially with the EU Regulation on passengers rights, fulfilling its
obligation under the ECAA Agreement. Passenger rights in the event of denied
boarding, cancellation or long delays of flights are regulated by the Law on
obligations and basic rights in air transport. However, Serbia needs to adopt
the rules concerning the protection of rights of disabled persons and persons
with reduced mobility in accordance with the EU Regulation. Specific national
bodies for enforcement of these rights have not yet been appointed. Both EU and
international (Montreal Convention) rules on air carrier liability in the event
of accidents have been introduced into Serbia's national legislation. EU rules on
groundhandling have been implemented, but further efforts are needed to improve
their application. Progress has to be made on implementing the Regulation on
allocation of slots. In relation to airport charges, further clarification of
the rules on disputes between airport users and the airport managing body is
needed. Regarding regulatory
alignment within the programme for implementation of the single European sky in
South-East Europe, Serbia adopted implementing legislation aligning with the
framework and the service provision regulations of the single European sky and
with the regulations on the software safety assurance system for air navigation
service providers and safety oversight in air traffic management. Legislation
on the organisation and use of airspace, interoperability of the European air
traffic management network and the regulation on flexible use of airspace needs
to be adopted to ensure regulatory convergence in the air traffic management
field. Serbia needs to comply with
requirements concerning inspections. The security control system has to
be overseen by an independent body. In the area of maritime
transport, no sea-going vessels call at inland waterways ports in Serbia
and no fleet is registered in the country. Progress on harmonisation of the
national legislation with the EU rules on safety of maritime navigation was
made in July when the government adopted the Law on maritime navigation, which
is now in parliamentary procedure. Serbia has stated its
intention of taking part in the Galileo satellite navigation programme. Conclusion Serbia has framework
legislation on road transport and inland waterways, and is about to adopt a law
on maritime navigation. However, more efforts need to be made to implement it
properly. A new law on the railway market opening generally in line with the EU
legislation is pending parliamentary adoption. Serbia will need to adopt
appropriate legislation for the safety of railways. Serbia has implemented most
of the EU aviation legislation, but there is a considerable delay in
implementation of the single European sky legislation. Administrative capacity
needs to be strengthened to ensure implementation of the legislation, in
particular as far as enforcement and inspection bodies for road transport,
railways and aviation are concerned. Overall, Serbia will
have to make additional efforts to align with the EU acquis and to
implement it effectively in the medium term.
3.15.
Chapter 15: Energy
The EU's energy policy
objectives are to improve competitiveness and ensure security of supply, while
protecting the environment and combating climate change. The EU energy acquis
consists of rules and policies covering competition and State aid, the
internal energy market (opening up electricity and gas markets in particular),
promoting renewable energy sources, energy efficiency, crisis management and
oil stock security obligations, nuclear energy, nuclear safety and radiation
protection. Serbia's overall energy
balance comprises coal, oil, gas, firewood, hydroelectricity, and other
renewable energy sources. There is currently no nuclear energy production. In
2008, the three largest major energy sources for covering gross inland
consumption were coal (51%), oil (27%) and natural gas (13%). Domestic
production covers 60% of total primary energy consumption. Serbia's energy
sector accounts for more than 10% of its GDP. As a transit hub in South-East
Europe, Serbia's interconnections with neighbouring countries are very often
congested. Serbia's energy
strategy is outlined in the Energy
Sector Development Strategy adopted in 2005. An implementing plan was adopted
in 2007 and has subsequently been updated, most recently in 2010. The
development of a new energy strategy for a period of at least fifteen years is
foreseen under a new Energy Law, adopted in July 2011. As a member of the Energy Community, Serbia is legally
bound to implement large parts of the EU acquis on energy. The new
Energy Law represents a substantial step towards full transposition of key
provisions of the EU acquis on electricity and gas. The new
Energy Law foresees a new market model, and the unbundling of distribution and
supply functions for gas and electricity. It also foresees stronger powers for
the Energy Agency of the Republic of Serbia (AERS), notably as regards the
definition of tariffs, oversight of the unbundling process, market rules,
allocation rules, and network development plans. Under the new Energy
Law, the tasks and powers of the AERS are, in principle, in line with the 'second
package' of the EU energy acquis. However, they are resource-intensive
and implementation of the new law will require an increase in the AERS's staff.
There are also concerns about the independence of the Agency, because the
members of the board are appointed following a non-competitive procedure. With respect to security
of supply, Serbia's production is dominated by coal and it relies on
imports for cleaner energy sources. Serbia's dependence on natural gas imports
exceeds 80%. Gas is mostly imported from Russia through Ukraine and Hungary.
Local production and gas storage projects to diversify supply together with
construction of new interconnections are planned in the Energy Sector
Development Strategy. The Nis-Dimitrovgrad project linking Serbia to Bulgaria
is the most advanced, with a feasibility study under way. The underground gas
storage facility in Banatski Dvor, co-owned by Gazprom (51%) and Srbijagas
(49%) is in operation since 2009. There are plans for the development of a
second underground gas storage, in connection with the possible South Stream
gas project, which would transport gas from Russia through the Black Sea and
Bulgaria. Concerning electricity,
Serbia has given priority to the new interconnection with the former Yugoslav
Republic of Macedonia. On the Serbian side, section 1 of the line (substation
NIS-Leskovac) is in operation. Construction of section 2 (substation
Leskovac-Vranje-border) is ongoing and approaching completion. Other
electricity interconnections with Montenegro, Bosnia and Herzegovina and along
the transmission corridor towards Italy are at the pre-feasibility study stage.
The level of emergency
oil stock reserves is classified as a state secret according to the Serbian Law
on commodity reserves. A new Law on commodity reserves is being prepared. Under
the new law, mandatory oil stocks would be reclassified as a mandatory stock
rather than a commodity reserve, so the level of these stocks would no longer
be a State secret. No information has been received so far on the actual level
of oil stocks, although Serbia indicates a timeframe of about 10 years for
meeting current EU requirements. As regards the
competitiveness of the internal energy market (opening-up of the electricity and gas markets), the new
Energy Law is largely in line with the requirements of the Energy Community. A
remaining shortcoming in the field of electricity is that all eligible
customers connected to the distribution system will be entitled to be supplied
at regulated tariffs until the end of 2013. The government will now need to
focus on implementing and enforcing the new Law correctly. Serbia also needs to
start preparing for alignment with the EU's 'third internal energy market
package', which entered into force in March 2011. Electricity consumption
totalled 33.7 TWh in 2008. The electricity sector is gradually making progress
with its process of unbundling. Since 2005, operation of the transmission
system and the electricity market has been under the responsibility of the
public enterprise EMS (Elektromreza Srbije). The remaining functions
(generation, distribution and supply) are performed by the vertically
integrated public company EPS (Elektroprivreda Srbije). In accordance with the
new Energy Law, EPS needs to, however, complete the legal unbundling of distribution
and supply. By law, the electricity market has been open since February 2008
for all non-household consumers which make up 47% of the market. However, in
practice, no eligible customers have switched supplier. EPS holds a de facto
monopoly, due to the persistence of regulated prices, set at levels below
the market price. The choice of the market model, the move towards tariffs and
prices reflecting costs and the independent functioning of AERS will all be
crucial to achieve real opening of the market and attract the necessary
investment. The reform of the tariff system must not be postponed any longer. Serbia needs to
implement the Regulation on cross-border allocation of capacity. In September
2010, the Energy Community Secretariat sent an opening letter following a
complaint against Serbia under the Energy Community dispute settlement
mechanism. The complaint concerned the absence of compensation for electricity
transit to the Kosovo electricity transmission system and market operator
(KOSTT) and the allocation of cross-border capacities. Serbia is impeding
Kosovo's participation in regional mechanisms to plan and be remunerated for
electricity transit. In October
2011, the Secretariat stated in its Reasoned Opinion on this complaint that
Serbia has failed to fulfill its obligations under the Energy Community Treaty.
Furthermore, the Serbian
electricity utility is maintaining an unlicensed branch in the north of Kosovo. Gas consumption in
Serbia totals some 3.2 billion cubic metres a year. The State-owned Srbijagas
is a fully integrated company and is the only wholesale supplier on the market.
It has not been unbundled. Srbijagas purchases gas from Gazprom via the
intermediary Yugorosgaz (50% Gazprom, 25% Central ME Energy & Gas AG, 25%
Srbijagas). Yugorosgaz holds rights for developing gas transmission in southern
Serbia. The difficult financial situation of Srbijagas will need to be
addressed as a matter of priority. The new Energy Law is partly in line with the Renewable
Energy Sources Directive. The main part of the framework for the promotion
of renewable energy will be at the level of subsequent by-laws. Therefore, the
development of the Serbian regulatory system for renewable energy will require
continuous monitoring to ensure compliance with the EU acquis. In the
framework of the Energy Community, Serbia is preparing a binding target for the
percentage of renewable energy in final energy consumption by 2020. Serbia will
also need to prepare a National Renewable Energy Action Plan (NREAP), which
will provide a roadmap for achieving this target. Serbia has significant potential for renewable energy,
which remains largely untapped. To date, only the hydroelectricity and biomass
sectors have been partly developed. The 2005 Energy Sector Development Strategy
aims at a 2.2% increase in electricity produced from renewable energy sources
by 2012. The share of renewable energy sources in total primary energy
production in Serbia was 8% in 2008. Feed-in tariffs are in place, but the
administrative procedures for authorisation, licensing and network connections
are the biggest barrier to the uptake of renewables. The current level of
biofuel production is negligible. Serbia will need to pay continued attention to promoting
renewable energy, in particular in transport and in heating/cooling. The
administrative capacity in his area needs to be strengthened. Further
efforts should be undertaken towards creating a regulatory environment
fostering the increased use of renewable energy sources in all sectors. Serbia's economy is highly energy-intensive, consuming 2.7
times more energy per unit of output than the OECD average. While energy
efficiency is a priority in Serbia's energy strategy, Serbia has not
yet adopted the planned framework law on rational use of energy. A draft law
has been prepared. It covers energy performance in buildings, labelling of
domestic appliances and energy services. The draft law also provides for
establishing of an energy efficiency fund. Ensuring sufficient administrative
capacity for implementation of the new legislation will be essential. Nuclear safety and radiation protection issues are regulated by the 2009 Law on
ionising radiation protection and nuclear safety. The Serbian Agency for
Ionising Radiation Protection and Nuclear Safety (SRPNA) was established as a
separate body in 2009 and started functioning in mid-2010. The Agency
implements the international conventions which Serbia has signed. The transfer
of inspection functions from a variety of ministries to the Agency has not yet been
achieved, in line with best regulatory practices. Effective independence and
sufficient levels of staff and funding will be essential to ensure proper
functioning of the Agency, particularly for licensing of nuclear facilities.
Serbia still needs to accede to the Convention on Nuclear Safety and to the
Joint Convention on the Safety of Spent Fuel Management and on the Safety of
Radioactive Waste Management. Serbia still needs to develop a national strategy
for nuclear waste management and decommissioning of its research reactor at
Vinča. A Quality Management System for the Agency should be in place. Further
efforts are required to improve the radiological situation at Vinča. Conclusion Serbia's energy sector
is characterised by the lack of a competitive market and low levels of
efficiency. By adopting the new Energy Law, Serbia has put
itself in a good position to make the necessary reforms and to foster the
development of its energy sector, in line with the requirements of the EU acquis.
Adoption of relevant implementing legislation, accompanied by adequate
enforcement, will be essential. Special attention needs
to be paid to genuine opening of the electricity market, reforms in the gas
sector, increasing mandatory oil stocks, meeting the objectives for improving
energy efficiency and promoting renewable energy in electricity generation,
transport, heating and cooling. Serbia will need to reinforce its
administrative capacity in order to ensure effective implementation and
enforcement of its legal obligations in the energy sector. The effective
independence of regulatory bodies will require particular attention. Serbia
needs to develop a new energy strategy aligned with EU 2020 objectives. Serbia
also needs to comply with its Energy Community Treaty obligations. Overall, Serbia will
have to make additional efforts to align with the EU acquis on energy
and to implement it effectively in the medium term.
3.16.
Chapter 16: Taxation
The EU acquis on
taxation covers the area of indirect taxation extensively, as regards both VAT
(value-added tax) and excise duties. It lays down the definitions for and
principles of VAT. Excise duties on mineral oils, tobacco products and
alcoholic beverages are subject to EU directives covering the structure of the
duties, the minimum rates and the holding and movement of excisable goods. As
concerns direct taxation, the EU acquis covers some aspects of corporate
taxes and aims mainly at removing obstacles to cross-border activities between
enterprises. Finally, the EU legislation on administrative cooperation and
mutual assistance provides tools to avoid evasion of both direct and indirect
taxation. The Interim Agreement,
and subsequently the SAA, prohibit fiscal discrimination. The SAA also
establishes cooperation between the EU and Serbia in the area of taxation with
the aims of aligning with the EU acquis, further reforming Serbia's
fiscal system, ensuring effective tax collection and fighting fiscal fraud. With regard to indirect
taxation, value-added tax was introduced in 2004 and is regulated by
the Law on value-added tax (VAT). The law introduces all the basic principles
and follows the structure of the EU legislation on VAT. It stipulates that
domestically-produced and imported goods are charged the same tax rate – either
18% (general rate) or 8% (specific rate). However, there are some
discrepancies between the Serbian VAT legislation and the EU acquis,
notably: the lack of any possibility for non-established taxable persons to
register in Serbia for VAT purposes despite the fact that they may be taxable
in that country. The same applies to the place of supply of services; the
special scheme on investment gold; some exemptions; and the general refund
procedure In terms of territorial
scope, VAT on goods which are supplied from Kosovo is not paid in Serbia but
collected by the branches of the Serbian Tax Administration operating in the
north of Kosovo. The STA offices also collect annual income taxes and certain
other taxes in northern Kosovo. This is not compatible with the fact that
Kosovo is a separate customs territory. The Law on excise
duties has been in force since 2001. Serbia applies excises on tobacco,
alcohol, energy products and coffee (an ad valorem duty of 30%). The law
provides for equal treatment of domestic and imported goods in terms of the
excise tax rates applicable. In
June 2011, Serbia aligned its excise duties on motor fuels with the
requirements of the Interim Agreement. However, discriminatory excise duties on imported spirits still
exist. They need to be brought into line with the duties on local production in
order to comply fully with the Interim Agreement. Considerable discrepancies
from the EU acquis exist for harmonised excisable goods (tobacco,
alcohol and energy products) as regards scope, classification of the goods,
exemptions, structures and the minimum rates. Serbia has no duty suspension and
movement system. As storage excise warehouses for importers do not exist, the
excise has to be paid at the moment of importation, thus putting importers at a
disadvantage over local producers. Serbia needs to align its law on excise tax
fully with the EU acquis. As regards direct
taxation, Serbia's corporate tax system is generally in line with the EU acquis.
The tax incentives available seem to include none of the major harmful features
described in the EU Code of Conduct. Nevertheless, certain aspects of the
Serbian direct tax system, such as the taxation of dividends and interest
received by individual investors or the taxation of non-resident artists and sportsmen,
could conflict with the EU acquis, as they discriminate against
non-resident taxpayers. Upon accession, Serbia needs to implement the Savings
Directive and the new Mutual Assistance Directive. With regard to administrative
cooperation or mutual assistance, agreements with the tax administrations
of Bosnia and Herzegovina, Bulgaria, the former Yugoslav Republic of Macedonia
and Montenegro were signed in 2006. Serbia has ratified double taxation
agreements with 47 States. Concerning operational
capacity and computerisation, the Serbian Tax Administration (STA)
establishes, collects and enforces public revenue – in accordance with the 2002
Law on tax procedures and tax administration. It has a good level of
administrative capacity and practices in terms of tax proceedings, the
registration of taxpayers, tax accounting, detection of tax offences and
instituting offence proceedings. A corporate strategy for 2011-2015 defines
major future steps needed to modernise it. Preparations are being made to establish
a single tax registry. The STA has well-qualified staff. However,
non-competitive salaries have triggered a significant outflow of staff. The
inspection department is understaffed, as well as the Large Taxpayers Office.
Staff training needs to be further developed and become more specialised. There
is room for further improvement in both external and internal communication.
Coordination between the different levels of the STA needs to be improved and
the level of collaboration and cooperation with the Ministry of Finance
strengthened. Modernisation of IT
systems is a priority for the STA, not only to prepare for accession but also
to enhance collection and the fight against the informal economy. The IT system
is insufficiently prepared for the introduction of electronic communication
with taxpayers and has limited possibilities for sound risk analysis or
processing tax returns. Manual inputting of information submitted on paper by
taxpayers burdens the allocation of staff for inspections and identification of
unregistered taxpayers. The Tax Administration
of Serbia has a good administrative capacity to prepare for interconnectivity
and interoperability with the Commission's IT system. However, further
capacity-building is necessary to develop and operate all the national parts of
trans-European taxation and excise IT systems. Conclusion The tax legislation in
Serbia is partly aligned with the EU acquis. Further alignment will be
needed in the area of direct and indirect (VAT and excise duties) taxation. VAT
legislation is not yet fully compatible with all the provisions of the VAT
Directive and there are considerable discrepancies from the EU acquis
for harmonised excisable goods. Certain aspects of the Serbian direct taxation
system concerning individuals could conflict with the EU acquis as they
discriminate against non-resident taxpayers. Some tax relief measures will need
to be further examined in order to determine whether they are harmful. The
Serbian Tax Administration works well, overall. It has administrative
structures and resources for implementation of the EU acquis, but will
need to be further modernised in line with its recently adopted strategy
documents. Modernisation of the IT systems is a priority in order to facilitate
the development of a sound system of risk analysis that would shift the focus
from control of registered economic entities to detection of non-registered
entities. Overall, while
still facing challenges in the areas of legislative alignment and
administrative capacity, if it continues its efforts, Serbia should, in the
medium term, be able to acquire the capacity to comply with the requirements of
the EU acquis.
3.17.
Chapter 17: Economic and
Monetary Policy
The EU acquis in
the area of economic and monetary policy contains rules requiring the
independence of central banks in Member States and prohibiting both direct
financing of the public sector by the central banks and privileged access for
the public sector to financial institutions. Member States are expected to
coordinate their economic policies and are subject to the rules of the
excessive deficit procedure and of the Stability and Growth Pact. The national
central banks are subject to the Statute of the European System of Central
Banks (ESCB) and the European Central Bank (ECB). New Member States are also
committed to complying with the criteria for adopting the euro. Until they join
the euro area, they will participate in the economic and monetary union (EMU)
as Member States with a derogation and must treat their exchange rate policy as
a matter of common concern. The SAA includes
provisions on cooperation and exchanges of information, allowing Serbia
gradually to approximate its policies to the stability-oriented policies of the
European Economic and Monetary Union. In the area of monetary
policy, Serbia uses the dinar as its sole legal tender. All financial
obligations arising from transactions concluded in Serbia are denominated and
paid in dinar. In line with this, the National Bank of Serbia (NBS) uses
the dinar as the official currency for conducting its monetary policy. The euro is widely used as a parallel currency,
as most bank loans are indexed in euro and almost all savings are in euro. The
origin of Serbia's 'euroisation' dates back to the 1990s when, during the period
of devastating hyperinflation, the German mark was used for a time both as a
means of payment and as an instrument for protecting value. The National Bank of Serbia is largely independent and performs the
tasks set by the 2010 Law on the NBS. The law also prescribes that, while
performing their duties, the NBS and its bodies and members of the bodies are
not allowed to receive or request instructions from government bodies and
organisations or any third party. The same law strictly prohibits government bodies, organisations and
other persons from jeopardising the independence and autonomy of the NBS or
influencing the NBS while performing its duties. The NBS is subject
only to supervision by parliament, to which it reports on its performance.
Parliament appoints the Governor, based on a proposal by the President of the
Republic, for a period of six years. The length of tenure of the Vice-Governors
and of members of the Council of the NBS is the same, i.e. six years, with the
right to be re-elected. With regard to financial independence, the NBS has its own sources of income that are
provided in the Bank's financial plan (income and expenditure projections) for
the following year. The primary objective of the NBS is to maintain price
stability. In the field of
monetary policy, since 1 January 2009 the NBS has been implementing
inflation-targeting as its monetary strategy and a key instrument of monetary
policy, using the key policy rate (interest reference rate) in monetary policy
core operations. However, the high share of credit indexed in foreign exchange
and the undeveloped domestic financial market restrain the efficiency of the
monetary policy. The NBS conducts a managed floating exchange rate system for
the dinar, in which the NBS intervenes only in cases of excessive daily
fluctuations in the foreign exchange market. The dinar is not pegged to the
euro. Regarding prohibition of direct financing of the public sector, the Law
on the NBS explicitly prohibits extending credit facilities to the central government,
provincial authorities and municipal authorities or to public enterprises
founded and owned by them. The NBS stopped approving credits to the public
sector in November 2003. The legislation contains no provisions which give the
government privileged access to financial institutions. As regards the
excessive deficit procedure, the amendments to the Law on the budget system,
introducing fiscal responsibility, were adopted in October 2010. They set the
maximum level of public debt at 45% of GDP (excluding property restitution). Regarding economic
policy, since 2006 Serbia has been participating in the pre-accession economic
policy surveillance aimed at strengthening the economic planning capacity of
the Serbian government. This mechanism prepares candidate and potential
candidate countries for their eventual participation in the economic policy
coordination and budgetary surveillance mechanism of the EMU. In this context,
Serbia regularly submits economic and fiscal programmes (EFP). The latest
(2011) EFP, submitted in January 2011, covered the period 2011-2013 and
provided an overview of expected future macroeconomic developments.
Furthermore, Serbia has adopted the new development plan for the period
2011-2020 in compliance with the Europe 2020 Strategy (see also Economic
criteria). Compared with the previous programme, some progress was made
towards producing a solid document. The authorities need to strive to make
further improvements in order to raise the public profile of its development
plan, both at home and abroad. Conclusion Alignment with the EU acquis
is relatively well-advanced and Serbia's preparations for participation in the
third stage of EMU as a Member State with a derogation should pose no major
problems. Important aspects of the legislation related to central bank
independence and prohibition of direct financing/privileged access of the
public sector to financial institutions are already in place. However,
particular attention will have to be paid to monetary stability, strengthening
the NBS's own policy instruments and containing the parallel use of the euro in
the economy, which limits the NBS's room for manoeuvre to conduct monetary
policy. Implementation of economic policy also needs to be strengthened. Overall, if it pursues its efforts, Serbia will be in a
position to implement the EU acquis in the area of economic and monetary
policy in the medium term.
3.18.
Chapter 18: Statistics
The EU acquis on
statistics consists almost exclusively of legislation which is directly
applicable in the Member States, such as European Parliament and Council
regulations and Commission decisions or regulations. It also includes a range
of methodology handbooks and manuals. International agreements and gentleman's
agreements with the EU Statistical Office (Eurostat) provide a further basis
for production of statistics. The SAA establishes
cooperation in the area of statistics with the aim of developing an efficient
and sustainable statistical system in Serbia. In the area of statistical
infrastructure, the Serbian Statistical Office (SORS) is the main producer
of official statistics and responsible for coordination of the Serbian
statistical system. The SORS has 472 employees, of whom the Director, his
Deputy and the Assistant Directors (top eight management positions) are
appointed by the government. As part of the streamlining of public
administration, the staff resources of the SORS decreased by approximately 10%
in 2010 compared with 2009. This did not severely affect its functioning.
However, in order to implement the tasks required for full compliance with the
EU acquis, there is a need to increase the number of qualified staff in
the SORS over the next few years. The Law on statistics
was adopted in 2009 and is broadly aligned with international standards.
Adoption of the law has considerably accelerated development of the statistical
system. The law defines the basic principles of impartiality, reliability and
professional independence. It also provides for creation of the Statistical
Council which enables more direct involvement of end-users in defining the
output from the official statistical system. The Council is an advisory body
which primarily deals with strategic issues, such as the development strategy
for official statistics or drafting a five-year programme and annual plans for
statistical surveys, censuses, standards and methodologies. The draft programme
for 2011-2015 has been prepared in line with the EU principles. It also
encompasses the development strategy in place for official statistics (adopted
in January 2009 for the period 2009-2012). The SORS signed a
number of cooperation agreements with other Serbian bodies, notably the
Ministry of Finance and the National Bank. It also signed a number of memoranda
of understanding with various Serbian ministries and with the Serbian tax and
customs administrations. In the area of classification
and registers, the 2010 classification of activities (CA 2010) is based on
the European NACE Rev. 2 classification (Nomenclature of Economic Activities).
Since 1 January 2011, CA 2010 has become the obligatory standard for all units
in the statistical business register, legal entities and economic operators.
Adoption of the new classification allowed harmonisation of other related
economic classifications. The statistical business register was established in
2005 and is used as the frame for surveys in the field of business statistics.
A regional statistical classification (NUTS) has been proposed by Serbia but
has not been agreed by the European Commission. A revised proposal, in line
with the EU acquis, is expected. In the area of sectoral
statistics, the population census was planned in April 2011 but, for budget
reasons, was postponed to October 2011 In 2009, two pilot censuses were
conducted, one on population, household and dwellings in April, the other on
education of Roma people in November. Following postponement of the population
census, the agriculture census, initially planned for October 2011, has also
been delayed until November 2012. The quality of agricultural statistics has
generally been of low quality o far, as they are based on estimates by
municipal assessors. Agromonetary statistics are in an initial phase and
currently being improved. Labour force surveys are carried out regularly twice
a year – in April and October. A number of other surveys are conducted in the
area of social statistics, such as on migration and asylum, earnings and labour
costs, education and health, together with the household budget survey. Concerning
macroeconomic statistics, the SORS produces estimates of gross domestic product
(GDP) and national accounts broadly in accordance with the European System of
Accounts (ESA95). The results of the quarterly GDP estimates at constant prices
have been published since 2005. Government finance statistics are produced by
the Ministry of Finance and follow the International Monetary Fund manual on
government finance statistics. The balance of payments, foreign direct
investment and monetary and financial statistics are compiled by the National
Bank. With regard to price statistics, the harmonised consumer price index
still has to be developed. Foreign trade statistics have been harmonised with
the standards and procedures applied in the EU and data are forwarded to the
European Commission. Short-term statistics on energy and some transport
statistics (on passenger mobility, road freight and rail transport) are not yet
produced. Conclusion Production of
statistics is at an advanced level. Progress has been made in most areas and the
range of statistics is increasing, though challenges remain, especially in the
areas of agricultural statistics. Additional human and financial resources will
also need to be made available. The SORS is well-positioned to perform its
role. Although certain progress has been made lately, coordination with other
bodies within the administration needs to be strengthened. Overall, if it
continues its efforts, Serbia should be able, in the medium term, to align
fully with the EU acquis in the area of statistics.
3.19.
Chapter 19: Social Policy
and employment
The EU acquis on
social policy and employment includes minimum standards in the areas of labour
law, equal opportunities, health and safety at work and anti-discrimination.
Member States participate in EU processes in the area of employment policy,
social inclusion and social protection. The social partners of Member States
participate in social dialogue at European level. The European Social Fund is
the main financial tool from which the EU supports implementation of its
employment strategy and contributes to social inclusion efforts. The SAA establishes
cooperation in the area of social policy and employment aiming at supporting
Serbia's alignment with the EU acquis. As regards labour
law, Serbian legislation ─ in particular the 2005 Labour Law (last amended
in 2009) ─ covers several basic principles laid down by the EU labour law
directives. The Labour Law applies to all employees and is implemented via a
number of governmental and ministerial regulations and collective agreements.
The law guarantees a minimum level of protection of basic rights of employees
and regulates a number of conditions of work and pay such as the minimum
working age, prohibition of discrimination, protection of employees, maximum
working hours, daily rest periods, minimum annual leave, etc. It also
recognises the right to information and consultation at national level and to
protection in case of collective redundancies or transfer of an enterprise.
However, a number of amendments and additional implementing instruments are
still necessary in order to align fully with the EU acquis. The Labour Department
of the Ministry of Labour and Social Policy has 15 staff directly or indirectly
involved in drafting labour legislation. . The central piece of legislation in the area of health
and safety at work is the 2005 Law on health and safety at work, which is
partly in line with the EU acquis. A number of implementing regulations
have been adopted, in the field of health and safety at work, covering areas
such as personal protective equipment, manual handling of loads, work on
construction sites, exposure to chemical substances and asbestos and risk
assessment procedures. Furthermore, a number of Rulebooks adopted in the former
Socialist Federal Republic of Yugoslavia, are still in force in certain
industries. However, their co-existence with the new law raises concerns about
the consistency of the applicable legislation and the compatibility of certain
provisions with the EU acquis. In 2009, the government
adopted a Strategy on Health and Safety at Work for 2009-2012. Its general goal
is to improve and preserve the health of the economically active population, by
improving working conditions and preventing and minimising work-related
injuries and occupational diseases. The number of injuries has been falling by
10 to 15% per year for the last few years. However, Serbia still needs to
implement the EU acquis on compulsory insurance of all employees against
work-related injuries and occupational and work-related diseases. There is no
single system for registration of work-related injuries and no law, as required
by the Law on health and safety at work, on employers' obligation to insure all
employees against work-related injuries and occupational and work-related
diseases. Currently employees' medical costs are paid by the general
Health Insurance Fund to which all employees contribute. However, there is no
separate fund for work-related injuries, and damage compensation has to go
through normal court procedures which take a long time. In
the Labour Department of the Ministry of Labour and Social Policy nine
employees deal with occupational health and safety. The Labour Inspectorate, an
administrative body of the same Ministry, monitors implementation of
occupational health and safety laws and deals with labour relations. The number
of staff at the Labour Inspectorate has been reduced since 2010 and is
currently 283, of whom 261 are labour inspectors. Overall, the Labour
Inspectorate has the adequate structure, powers and facilities to monitor
enforcement of occupational health and safety laws. Nevertheless, there is room
for improvement, notably in planning of the Inspectorate's activities, visits
by inspectors to actual workplaces (instead of verifying documentation only)
and the availability of information technology. Social dialogue at tripartite level takes place within the
Economic and Social Council. The Council was established in 2001 but did not obtain a
legal basis for its work until 2004 with the adoption of the Law on the
Economic and Social Council. It is an independent body which, at central level,
consists of representatives of the government, associations of employers and
trade unions. The Council considers a large range
of issues, notably labour legislation, improvements in collective bargaining,
the rights of employers and employees to organise themselves freely and
employment, labour and social rights. The Council has established several
working groups dealing with economic issues, legislation, negotiation and
peaceful settlement of labour disputes and occupational health and safety. For
several years, the general level of activity of the Council has been hampered
by discussions on the representability of member organisations. This situation,
which still persists, has also had a negative impact on the Council's ability
to provide advice on legislation. Furthermore, local Economic and Social Councils have been established in only 18
municipalities and have carried out few activities. Two
trade unions are recognised as representative at national level: the
Confederation of Autonomous Trade Unions of Serbia (CATUS) and the Trade Union
Confederation "Nezavisnost" (TUC). Four more are registered, but not
yet recognised. On the employers' side, criteria for being recognised as
representative are set high and the only representative association is the
Union of Employers of Serbia, which is only sporadically present at local
level. The
2008 General Collective Agreement expired in April 2011. Due to the economic
crisis it had not been implemented and was replaced by a socio-economic
agreement between the three parties in April 2011 following a
number of protests in the public sector earlier in the year. This agreement
commits all three signatories to respect rules aimed at maintaining
macroeconomic stability while simultaneously providing for social cohesion. A
number of bilateral collective agreements have been signed in various sectors
(most recently in the areas of construction, agriculture and water management).
Collective agreements have also been signed in the public administration.
However, in general, social dialogue at branch and company level remains
underdeveloped. Moreover, in line with ILO recommendations, the duration of
negotiated agreements need to be set autonomously by the signatories by mutual
agreement. Strikes
are strictly regulated and the current legislation needs to be brought fully
into line with ILO conventions and EU standards. Furthermore, Serbia has an Agency for peaceful resolution of
labour disputes. As regards employment policy and the labour market,
the aftermath of the economic crisis is continuing to have a deep impact on
unemployment. Unemployment is particularly high among young people. It is also
pronounced among women, has a long-term character and reflects substantial
regional disparities in economic development. Low and declining labour market
participation and low employment rates as well as a high level of informal
employment, together with substantial skills mismatch and inadequacies of human
capital development represent considerable challenges for the Serbian labour
market as the economic restructuring continues. Serbia has started
developing employment strategies inspired by the EU objectives and guidelines.
The National Employment Strategy
for 2011-2020 was adopted in May 2011. Serbia is implementing a wide
range of active labour market programmes (ALMPs) targeting the most vulnerable
unemployed and is making special efforts to help jobless young people. In
addition to macroeconomic measures and stimulus packages, the government
reallocated funds from the budget to active labour market programmes in 2009
and maintained them at the same level in 2010 and 2011. Nevertheless, the
budget spent on ALMP in 2010 was equivalent to only 0,1% of GDP and ALMPs
address only a small share of the jobless and need to be better targeted. Employment policy falls
under the responsibility of the Ministry of Economic Affairs and Regional
Development which has a specific department for employment with 16 civil
servants. The Ministry is also responsible for supervising the work of the
National Employment Service (NES), which has 1,953 employees. While the NES
staff are generally competent, its capacity is curbed by its increased workload
and limited new recruitment. In terms of
preparations for the European Social Fund, preparation of the competent
authorities for the management of IPA component IV - human resources
development - is under way. In this regard, the operating structures for
managing and implementing the Operational Programmes have been established. The
Ministry of Economic Affairs and Regional Development has been designated as
the body responsible for the Operational Programme for component IV and the
Assistant Minister for Employment has been appointed as Head of the Operating
Structure. Serbia has shown
readiness to prepare for participation in the open method of coordination in
the areas of social protection and social inclusion. A team for social
inclusion attached to the Deputy Prime Minister for EU Integration and a
working group for social inclusion have been established. Monitoring tools are
being developed and in March 2011 the government adopted the first National
Report on Social Inclusion and Poverty Reduction, covering the period
2008–2010. Preparations for developing statistics comparable to those used in
EU policy coordination have started. Additional efforts are necessary to ensure
social inclusion of vulnerable groups, such as Roma, disabled persons, young
people, elderly persons and other socially and economically disadvantaged. As
the framework of legal provisions concerning persons with disabilities is
increasingly extensive, the focus of activities in this area should shift
towards implementation, including the gathering of evidence for possible
revisions of legislative and implementing acts. Presently, there is little
evidence available regarding the effects of the Strategy for Improvement of the
Position of Persons with Disabilities in Serbia 2007-2015. In 2010, due to the economic crisis, the positive trend in
poverty reduction seen in previous years was reversed and the poverty rate
increased by 12% compared with 2008, when the Serbian household budget survey
showed 7.9% of the population living beneath the absolute poverty line. The
rural population remains more vulnerable to poverty than the urban population.
Many of the employed people living below the poverty line work in the informal
economy. A new Social Welfare Law was adopted in April 2011, which increases
allowances for the poorest segment of society. Serbia has implemented a number of reforms in the field of social
protection, notably of pensions. The Law on voluntary pension funds and pension plans was adopted in
May 2011, and administration of the three pension funds has been merged. Serbia
has adopted new legislation which gradually raises the minimum pensionable age
to 58 years for both women and men. Normal pension age in Serbia 65 for men and 60 for women. Nevertheless,
the pension system continues to show a high deficit, especially following the
crisis. Many older people are exposed to poverty, including those not covered
by the system. Further efforts are needed to increase employment, to increase
the effective exit age from the labour market in general - and avoid
unnecessary early retirements in particular - and to cover undeclared workers
by the pension system. A general Anti-Discrimination Law was
adopted in March 2009. Certain aspects of the law remain to be aligned with the
EU acquis, notably the scope of exceptions from the principle of equal
treatment, which are wider than allowed under the EU acquis, the
definition of indirect discrimination and the obligation to ensure reasonable
accommodation for disabled employees. The Anti-Discrimination Law also
established the Commissioner for the Protection of Equality as an independent
State authority, who was elected by the Assembly of the Republic of Serbia in
May 2010. The Commissioner acts upon complaints of discrimination and, with the
consent of the person discriminated against, may even initiate a law suit. He
also promotes and monitors equality, initiates adoption and amendment of
regulations in the area of discrimination, recommends measures to public bodies
aimed at ensuring equality, etc. If any violation of rights guaranteed by the
Law is proven, the Commissioner may submit misdemeanour notices. The
Commissioner submits an annual report to the National Assembly about the
situation concerning protection of equality. In practice, those most exposed to
discrimination are Roma, women, adults and children with disabilities and the
lesbian, gay, bisexual, and transgender population. Serbia is party to a
number of international conventions on equal opportunities, including
the UN Convention on the elimination of all forms of discrimination against
women. Discrimination on grounds of gender in relation to employment is
prohibited under Serbian legislation, mainly the Labour Law (2005), the Law on
gender equality (2009) and the Anti-Discrimination Law (2009). These laws also
contain provisions on gender equality, covering equal pay, access to employment
and maternity protection, including maternity leave. Furthermore, Serbia has a
number of bodies dealing with gender equality (the Gender Equality Committee in
the Serbian parliament and the Council for Gender Equality with half of its
members from the government) plus the Commissioner for Protection of Equality
who is also authorised to fight against gender discrimination. However, on average,
women are still paid lower salaries than men, including for the same job, their
unemployment rate is higher (20.1% in April 2010, against 18.6% for men). In
2009 Serbia therefore adopted a Strategy for the enhancement of women's
position and gender equality, along with an Action Plan to implement it over
the period 2010-2015. In addition to dealing with improving the economic
situation of women, the Action Plan aims to increase participation by women in
decision-making, enhance gender equality in the education and health sectors
and prevent violence against women. At present, although Serbia has both
legislation and implementation bodies in place as regards both
anti-discrimination and gender equality, effective implementation of the
existing legislation and further strengthening of the administrative capacity
remain major challenges. In particular, the independence of the bodies
responsible for the implementation of the main international instruments should
be strengthened. Conclusions Serbia is in the process of aligning with the EU acquis in
the areas of labour law, health and safety at work, anti-discrimination and
equal opportunities. However, further steps are necessary in order to align
completely and correctly with the EU acquis and ensure effective
implementation and enforcement. There are serious medium-term challenges
regarding employment, poverty and social inclusion. The informal economy
continues to be large, social dialogue remains weak and measures to increase
employment will need time to produce the expected effects. In general, building
capacity for policymaking, implementation and monitoring is still a major
challenge, also in the shorter term with a view to preparing for decentralised
management of IPA component IV. Overall, Serbia will have to make additional efforts to
align with the EU acquis in the areas of social policy and employment
and to implement it effectively in the medium term. It will also need to
prepare itself further for participation in the cooperation processes developed
at European level in the fields of employment, social inclusion and social
protection.
3.20.
Chapter 20: Enterprise and
industrial policy
The EU acquis
under the enterprise and industrial policy chapter consists largely of policy
principles and policy recommendations, which are reflected in communications,
recommendations and Council conclusions. The EU's enterprise and industrial
policy, including its small and medium-sized enterprises (SME) policy, seeks to
promote the competitiveness of the economy. It is strongly driven by the Europe
2020 Strategy and by the 2008 Small Business Act for Europe. Enterprise and
industrial policy instruments include financial support and regulatory
measures. The acquis also includes sectoral policies, such as
recommendations for more targeted policy analysis and for new initiatives and
consultations at sectoral level. The SAA establishes
cooperation to promote modernisation and restructuring of industry and
individual sectors, in particular tourism, and to develop and strengthen SMEs. With regard to enterprise
and industrial policy principles, Serbia is pursuing privatisation and
restructuring of the formerly socially-owned and to some extent State-owned
enterprises and, in parallel, is aiming to develop a thriving SME sector (See
Economic criteria). The main component of
Serbian industry is manufacturing with a share of 15% of GDP in 2009.
Manufacturing in Serbia is well diversified with numerous sub-sectors. Among
them, food and beverages is the biggest single sub-sector with a share of 4.6%
of GDP in 2009, with chemicals, rubber and plastics second on 2.7% of GDP and
15% of total exports. A new industrial
strategy was adopted in June 2011. It is largely aligned with EU policy
principles. The strategic goal of Serbia is to form export-oriented and
competitive industry. The share of SMEs in
employment, GDP and exports has increased in recent years. Serbia has taken the
European Charter for Small Enterprises, and later the Small Business Act, as a
reference framework for shaping its own SME policy, In October 2008 Serbia
adopted the Strategy for development of competitive and innovative small and
medium-sized enterprises for the period 2008-2013. This strategy is largely in
line with the principles contained in the Small Business Act and focuses on
five principles: promoting the spirit of enterprise, improving human resources,
facilitating access to finance, improving the competitiveness of SMEs and
improving the general business environment. The Ministry of Economic Affairs
and Regional Development and the National Agency for Regional Development are
the main institutions involved in SME policy, but many others are included in
implementation of the strategy, such as the Development Fund, the National
Employment Service (NES) and the Serbia Investment and Export Promotion Agency
(SIEPA). In addition, the government established the SME Council in 2006, a
body in charge of coordination
of formulation and enforcement of SME policy. Its members are drawn from
various ministries and agencies and also from the most important institutions
representing the interests of SMEs such as the Serbian Chamber of Commerce, the
Serbian SME Association and the Union of Employers. Furthermore, a Business
Council was founded in March 2010, bringing together representatives of SMEs
from all over Serbia. Serbia uses a definition of SME which is not fully in
line with the EU recommendation. Serbia has started to
develop an innovation policy. In addition to the Strategy for development of
competitive and innovative small and medium-sized enterprises for 2008-2013, in
2010 the government adopted a Strategy for scientific and technological
development. It is based on the concept of a national innovation system, which
networks enterprises, universities, research and development institutes,
financial institutions and the public research community. Organisational
innovation in the services sector, which includes, for example, tourism,
logistics and knowledge-intensive business services, is only marginally covered
by this strategy. Private investment in research and development remains low,
at around 0.2% of GDP according to unofficial estimates. Public investment is
only 0.1% of GDP. Serbia has set itself an ambitious target of investing 1.5%
of GDP in research and innovation by 2020. As
regards the European enterprise and industrial policy instruments,
Serbia signed a Memorandum of Understanding allowing accession to the
Entrepreneurship and Innovativeness Programme (EIP) under the Competitiveness
and Innovation Framework Programme (CIP). Since the signature, Serbia has been
successful in several calls (Play and Learn as Young European Entrepreneur,
European Network of Female Entrepreneurship Ambassadors, among others) and
participates actively in the Enterprise Europe Network, with several
partnership agreeements signed and the organisation of several events. Access to finance is a
big obstacle to development of the private sector. On the one hand, the
procedures for obtaining loans are long and the collateral requirements and
interest rates are very high. On the other, access to finance for SMEs is
constrained by demand-side weaknesses. The government plays an active role in
stimulating SMEs' market development via credit and guarantee facilities. A
first Business Angel network was created at the end of 2009. Although progress
has been achieved, further efforts are needed to improve the design and impact
of credit guarantee schemes. Serbia will need to
align its legislation with the Directive on combating late payment in
commercial transactions. The issue of late payment to companies is not
regulated by any specific piece of legislation but, instead, by general rules
in several pieces of legislation, including the Law on contracts. During the
economic crisis, this has recently led to substantial delays in payments
between economic operators and resulted in chronic illiquidity that is hitting
suppliers of various goods and services particularly hard. Serbia has no specific sectoral
policies, except on tourism for which a strategy was adopted in 2006,
giving priority to commercialisation of a number of tourist products. Most of
the remaining specific sectors are covered by the industrial strategy adopted
in summer 2011. The following sectors have been identified by the Serbian
authorities as having growth potential, especially for exports and in
attracting foreign investors: food production, production of transport
equipment, information and communication technologies, metal production, and
pharmaceutical industries. Conclusion Serbia has developed
key aspects of an industrial policy. Both the industrial strategy and the SME
strategy are broadly in line with EU principles in this area. As part of its EU
obligations, Serbia will need to align with the Directive on combating late
payments, which will also benefit its SMEs. Overall, Serbia should, in the medium term, have the
capacity to comply with the requirements of the EU acquis in the area of
enterprise and industrial policy provided it continues its efforts.
3.21.
Chapter 21: Trans European
Networks
This chapter covers
trans-European networks policy in the areas of transport and energy
infrastructure, including the EU guidelines on the development of
trans-European networks and the support measures for developing projects of common
interest. The aim of establishing and developing trans-European networks and
promoting proper interconnection and interoperability of national networks is
to harness the full potential of the internal market and contribute to economic
growth and job creation in the European Union. The SAA opens up the
support for development of multi-modal infrastructure in connection with the
main trans-European networks. As regards transport
networks (TEN-T), Serbia activelytakes part in implementing and monitoring
the multiannual plan for 2011-2015 within the South-East Europe Transport
Observatory (SEETO) and in implementing the Memorandum of Understanding on the
development of the South-East Europe Core Regional Transport Network. The SEETO comprehensive
transport network, a priority transport network was integrated into Serbia's
Strategy for development of railway, road, waterway, airway and intermodal
transport from 2009 to 2015. In 2010 a general masterplan was adopted covering
infrastructure projects for all modes of transport up to 2027. Implementation of an
action plan for construction of corridor X is still at a relatively early
stage, although work has been completed on some road sections, and is ongoing
on others. Serbia needs to give greater priority to the currently underinvested
railways to improve connections, which would considerably decrease travelling
time between the main urban centres. Serbia has made considerable investments
in the navigation infrastructure and ports along the River Danube and is
improving the airports in Niš and Belgrade. In future more attention needs to
be paid to development of the River Sava. As regards
trans-European energy networks (TEN-E), Serbia needs to strengthen the
electricity network in order to be in a position to place on the market the
surplus hydroelectricity expected following the construction of new
hydroelectricity plants, in particular reversible plants. By virtue of its
central location in South-East Europe, Serbia has large cross-border
electricity flows across its borders. As its interconnections are usually
congested, increasing the capacity for interconnectivity needs to be a
priority. Serbia is currently constructing a new interconnection with the
former Yugoslav Republic of Macedonia. On the Serbian side, section 1 of the
line (substation NIS-Leskovac) is in operation. Construction of section 2
(substation Leskovac- Vranje border) was completed in 2011. Project
documentation is being prepared for an interconnection project with Romania,
connecting Pancevo (Serbia) to Resita (Romania). Most of Serbia's
natural gas (92%) is supplied by Russia, via Ukraine and Hungary, the only
entry point into the Serbian gas network. The transportation system is also
used for gas transit bound for Bosnia and Herzegovina. A feasibility study on
the gas pipeline link to Bulgaria (Nis-Dimitrograd) is being prepared. Serbia
is supporting implementation of the Gas Ring of South-East Europe, but it will
require more tangible regional cooperation, including steps towards construction
of gas transmission lines and interconnectors. The capacity of the Banatski
Dvor underground natural gas storage facility is currently 5 million m3
a day. Another storage facility is planned. Serbia needs to implement the
regional priority projects in the gas sector and further develop the
underground natural gas storage facilities. Serbia's oil
infrastructure is outdated. It forms part of the main Adriatic pipeline (JANAF)
that has been operational since 1979. Serbia is supporting the planned pan-European
oil pipeline. Conclusion Serbia is centrally
placed in South-East Europe and therefore has an important role to play in
building the trans-European networks in the region. Progress on transport and
energy infrastructure is also crucial for Serbia's economic development and
security of energy supply. Serbia has made some progress, but major challenges
remain in terms of interconnection of energy and transport networks. Overall, Serbia will have to make additional efforts in
the field of trans-European networks to align with the EU acquis and to
implement it effectively in the medium term.
3.22.
Chapter 22: Regional policy
and coordination of structural instruments
The EU acquis on
regional policy and coordination of structural instruments consists mostly of
general regulations and fund-specific regulations, which per se do not
require transposition into national legislation. The current EU acquis
establishing its cohesion policy is in force until the end of 2013. The
cohesion policy regulations lay down the rules for drawing up, approving and
implementing multiannual operational programmes which, under the shared
management delivery system, are negotiated and agreed with the Commission.
Implementation of cohesion policy is principally the responsibility of the
Member States. In doing so, Member States must fully comply with the EU
acquis, for example in the areas of multiannual budgeting, public
procurement, competition, the environment, equality between men and women,
non-discrimination and sustainable development, when selecting and implementing
projects. The SAA establishes
measures to strengthen regional and local development cooperation, with the
objective of contributing to economic development and reducing regional
imbalances. As regards the legislative
framework which impacts regional policy, Serbia has introduced a degree of
multiannual budgeting by adopting a law providing for three-year budget
projections. In the area of State aid, the legislative framework has been
largely put in place, but efforts are needed to implement an effective
competition policy. In the area of public procurement and the environment,
efforts remain to be made to align with the EU acquis and to implement
it effectively. Serbia has two levels
of regional governance: central authorities plus local authorities, which are
self-government units. Serbia also has an autonomous province. The architecture
of the future NUTS regions will require special attention when considering
future operational programmes. With regard to the institutional framework, Serbia
is currently preparing for implementation of IPA components III (regional
development) and IV (human resources development), which, under the current IPA
Regulation, would become available once Serbia is granted candidate country status.
The main aim of IPA components III and IV is to prepare candidate countries for
management of financial instruments under the Structural and Cohesion Funds
following EU accession. A Strategic Coordinator has been appointed and the
Heads of the Operating Structures have been designated. Yet, the operating
structures and the way they will work remain to be specified in more detail and
to be put in place in time. The 2010 Law on
regional development established a national system for implementing
domestic, non-EU- funded, regional policy in Serbia. This Law does not apply to
EU programmes. Under this law, regional policy in Serbia, covering both
programming and implementation of projects, falls under the responsibility of
the Ministry of Economic Affairs and Regional Development. However, in the medium
term maintaining two parallel systems, one for national policy and one for IPA
components III and IV, is likely to be less effective, as the procedures set up
for implementing the national policy could divert already limited national
resources (not only staff but also co-financing capacity) away from IPA and
ultimately slow down implementation of IPA and preparations for Structural and
Cohesion Funds. The administrative capacity to deal with the requirements of the EU cohesion policy
needs to be built up. To manage this process, organisational development and
training strategies need to be developed. In order to obtain the quality
required in programming, implementation, sound financial management, control and
monitoring mechanisms, adequate human resources will be needed. The Serbian
administration still relies excessively on external consultants. Significant
efforts need to be made to build up expertise within the national
administration, at both central and local levels. In order to attract and
retain qualified staff, adequate career planning and salary policies for civil
servants involved in management of EU funds must be developed. The necessary
financial resources need to be allocated. With regard to programming, the government of Serbia
has developed a number of strategy documents to promote and implement sectoral
policies for regional development purposes. The draft Strategic Coherence
Framework (a precursor of the National Strategic Reference Framework, NSRF) and
the draft Operational Programmes for IPA components III and IV were submitted
to the Commission. Further improvements remain to be made before they can be
adopted. In the context of programming, timely preparation of a pipeline of
high-quality and mature projects to implement IPA and cohesion policy is of the
utmost importance. The capacity of potential beneficiaries to prepare and
implement projects must be significantly strengthened. Action under IPA components I and II has allowed the Serbian
authorities to familiarise themselves with the basic requirements for monitoring
and evaluating EU projects. However, proper national systems and mechanisms
need to be put in place to evaluate and monitor the quality and impact of
multiannual development programmes. For decision-making and reporting purposes,
a management information system needs to be introduced for EU programmes. With regard to financial management and control, the
Ministry of Finance is the main body responsible. Within the context of IPA
components III and IV, the National Authorising Officer, as the Head of the
National Fund, would be responsible for sound financial management of EU funds
once the country is accredited to manage IPA funds in a decentralised manner.
This responsibility would be assumed by the State Secretary of the Ministry of
Finance. The Central Finance and Contracts Unit (CFCU) within the Ministry of
Finance should to be in charge of tendering and contracting, since the capacity
developed in it can serve as basis for implementing future programmes under IAP
components III and IV. An Audit Authority for IPA funds was established in June
2011. Its full independence and staffing will need to be ensured before
management of IPA funds can be transferred to the Serbian authorities. Conclusion Cohesion policy structures and procedures are at an early
stage in Serbia. Further efforts are needed in order to build the
administrative capacity necessary to allow successful participation in IPA
components III and IV and EU cohesion policy. A positive start has been made
with preparations for IPA components III and IV. However, additional efforts
will be necessary to set up sound procedures, ensure competent and stable
administrative structures and enhance the programming capacity to allow Serbia
to implement programmes under IPA in the medium term and, further in the
future, under the cohesion policy. Overall, Serbia will have to make additional efforts to
align with the EU acquis in the field of regional policy and to
implement this policy effectively in the medium term.
3.23.
Chapter 23: Judiciary and
fundamental rights (see also Political criteria)
The aim of EU policies
in the area of the judiciary and fundamental rights is to maintain and further
develop the Union as an area of freedom, security and justice. The
establishment of an independent and efficient judiciary is of paramount
importance. Impartiality, integrity and high standards of adjudication by the
courts are essential for safeguarding the rule of law. This requires a firm
commitment to eliminating external influences over the judiciary and to
providing for adequate financial resources and training. Legal guarantees for
fair trial procedures must be in place. Likewise, Member States must fight
corruption effectively, as it represents a threat to the stability of
democratic institutions and the rule of law. A sound legal framework and
reliable institutions are necessary in order to underpin a coherent policy of
prevention and deterrence of corruption. Member States must ensure respect for
fundamental rights and EU citizens' rights as guaranteed by the acquis
and by the Charter of Fundamental Rights. An ambitious reform of
the judiciary in Serbia has already started in 2006 with the
adoption of the Constitution and the National Reform Strategy. The objectives
set out in the Strategy are: strengthening of independence, efficiency,
accountability and transparency. The principle of independence of the judiciary is
ensured in the Constitution, including through the guarantee of permanent
tenure of judges and deputy prosecutors, and further specified in the Laws on
judges and on prosecutors. The establishment of the High Judicial Council and
the State Prosecutorial Council has improved the self administration of the
judiciary. The Law on the Judicial Academy, adopted in December 2009, has
reinforced a merit based approach to recruitments. As part of the judicial
reform, a re-appointment procedure for judges and prosecutors was carried out
in the second half of 2009. The re-appointment exercise was affected by a
number of shortcomings; in particular, the decisions were not based on a
transparent application of objective criteria, candidates were not heard during
the procedure and initially no written justifications were provided. These
shortcomings are in the process of being addressed through a review of the
process carried out in 2011, which still needs to be satisfactorily completed.
However, Parliament, in line with the Constitution, still decides on the
appointments and dismissals of the President of the Supreme Court, court
presidents and public prosecutors, allowing for the possibility of undue
political influence. Also, first time judges and deputy prosecutors are
appointed in Parliament for a probationary period of three years. Legal
clarifications would be needed in order to ensure that elected members of the
High Judicial and State Prosecutorial Councils will be appointed by Parliament
only in a declaratory manner. Impartiality of the judiciary is generally ensured.
Provisions on the random allocation of cases and on conflict of interest are in
place. Impartiality is further strengthened though the ongoing introduction of
an IT based case management system and a reduced number of courts. However,
implementation of the random allocation of cases is confronted by practical
difficulties in small courts with only few judges. Rules on conflicts of
interest should be implemented more vigorously. The High Judicial
Council and the State Prosecutorial Council were established as the key bodies
ensuring the accountability of the judiciary. A Code of ethics for
judges was adopted in December 2010. Violation of provisions of the Code of
ethics is a serious disciplinary offence for judges. The twin-track procedure
for ordinary disciplinary offences (leading to disciplinary sanctions) and
serious disciplinary offences (which can result in dismissal) can lead to
inefficiency and, in certain cases, even impunity if the tier chosen is not
successful. Judges and prosecutors enjoy functional immunity. They may not be
held liable or be arrested for a criminal offence committed in the performance
of their office, unless immunity is lifted by the parliament, in the case of
judges with prior approval from the High Judicial Council. The President of the
Supreme Court enjoys full immunity, which can only be lifted by the parliament.
Since 2006, there have only been very few criminal proceedings against judges
or prosecutors in which their immunity was lifted. This raises concerns over
the efficiency of the control mechanisms, as allegations of corruption in the
judiciary persist. In order to improve the efficiency of the judicial
system, new Civil and Criminal Procedure Codes were adopted in September 2011.
A new court network was established as of January 2010. The new network reduced
the number of courts and improved the division of labour between the different
courts. However, in the first year of its operation, the backlog continued to
grow by some 200,000 cases, reaching around 1.7 million cases at the end of
2010 and some 1.9 million cases on 30 June 2011. This was partly due to the
transition phase. The effects of the reduction in the number of courts was
weakened as the courts to be closed were transformed into court units of the
remaining courts, thus creating inefficiencies and giving rise to security
concerns, in particular involving travelling by judges and the necessary
transfer of files. Certain inequalities in workload between different courts
persist. In relation to anti-corruption policy, Serbia has
established the relevant legal and institutional framework. A National
Anti-Corruption Strategy and the respective Action Plan were adopted in 2005.
Serbia ratified the Council of Europe Criminal Law Conventions on Corruption
and its additional protocol in 2002 and 2008 respectively and the Civil Law
Conventions on Corruption in 2008. In 2003, Serbia became a member of GRECO,
the Group of States against Corruption. Serbia ratified the United Nations
Convention Against Corruption in 2005. However, Serbia has not signed the OECD
Conventions on Combating Bribery of Foreign Public Officials in International
Business Transactions and on Bribery in International Business Transactions. The Law on the Anti-Corruption Agency was adopted in 2008.
The Anti-Corruption Agency was established as the central anti-corruption
institution and began operation in January 2010. It was allocated adequate
premises in September 2011. The Agency is mainly responsible for prevention and
awareness-raising with regard to corruption, verification of declarations of
assets, monitoring of political party financing and the resolution of conflicts
of interest for those holding state functions. A new Law on financing of
political activities was adopted in June 2011, ensuring a more transparent
funding of political parties and providing the Anti-Corruption Agency with
broader powers in this area. Special departments within the police and public prosecutor's
office were established for corruption offences. In 2010, the powers for
dealing with high level corruption (over € 2 million) and for
corruption offences committed by certain state officials were transferred to
the special prosecutor for organised crime and the special departments for
organised crime in the Higher and the Appellate Court in Belgrade. In May 2011,
the Minister of Justice was appointed national coordinator for the fight
against corruption. However, implementation and tangible results are lagging
behind. Corruption continues to affect many areas, notably public procurement,
privatisation procedures and public expenditure, as well as the health and
education sectors. The National Anti-Corruption Strategy and the respective
Action Plan are outdated and have only partially been implemented. The
authorities have launched the process of updating both documents. Further
efforts are needed in order to establish a track record of pro-active
prosecutions and final convictions, in particular in high-level cases resulting
in major damage to state funds. Protection of whistleblowers needs to be
strengthened. The competencies of the Anti-Corruption Agency regarding
the monitoring of asset declarations are limited. The Agency also needs
additional resources to be able to carry out its task as the main supervisory
authority in the fight against corruption. Serbia has a well advanced legal and institutional
framework for the protection of fundamental rights. However, further
efforts are needed for the existing legislation to be fully implemented. The death penalty has been
abolished in Serbia. The framework for the prevention of torture
and ill-treatment is in place. A decision has been taken to establish a
national prevention mechanism for the prevention of torture, but the service is
not yet operational. Poor conditions in detention facilities are a matter of
concern. The prison system faces serious problems
due to overcrowding. Serbia has only begun to tackle this problem, including
through the construction of new prison facilities. Further efforts are needed
in order to improve living conditions, healthcare and adequate treatment
programmes for prisoners and to extend the use of alternative penalties. Access to justice is guaranteed by the Constitution. However, the length of
court proceedings and the lack of an effective system of free legal aid are
matters of concern. Freedom of expression is guaranteed by the Constitution and further
regulated by the Law on Public Information, which was amended in 2009. A
comprehensive strategy for the development of the media sector was adopted in September
2011 and now needs to be implemented. The media landscape is highly diverse and
pluralistic. However, violence and threats against journalists are a cause of
concern. The lack of economic sustainability and financial strength of media
outlets and the dominance of a few key players in the advertising market are
matters for concern. Independence of the Republican Broadcasting Council and
its supervisory activities need to be strengthened. Freedom of assembly and association is guaranteed by the Constitution and generally
respected. The Government financially supports the work of civil society
through a range of projects. An office for cooperation with civil society has
been set up. However, amendments are needed to the Law on public assembly in
order to reduce the requirements for registration of assemblies, reduce
restrictions on the areas where assemblies can be held, limit the liabilities
of organisers and ensuring protection also for foreigners. Civil society organisations are well developed and
play an important role in the social, economic and political life of Serbia.
However, cooperation between state bodies and civil society organisations needs
to be improved. Threats, verbal abuse and even physical attacks against NGO
activists dealing with war crimes and other sensitive topics need to be
addressed. Freedom of thought, conscience and religion is guaranteed by the Constitution and laws, and
is respected in practice. However, there is insufficient transparency and
consistency in the registration process for smaller religious groups. Concerning women's rights and gender
equality, Serbia is party to the UN Convention on the Political Rights of
Women and the Convention Concerning Equal Remuneration of Men and Women for
Work of Equal Value. The legislative framework is in place. However, further
efforts are needed in order to fully ensure its implementation. The Constitution explicitly recognises children's
rights. The legislative framework has been largely aligned with
international human rights standards. Several relevant institutions have been
established to promote and monitor children's rights. However, the insufficient level of coordination of relevant
institutions and bodies included in the system for children's protection is a
matter of concern. Further enhancement
of the protection mechanism is needed. The legislative framework for the protection of socially
vulnerable and/or persons with disabilities is broadly in place and
the rights of persons with disabilities are explicitly protected by the
Constitution. However, full implementation of the legislative framework remains
to be ensured. The high institutionalisation rate of persons with mental health
problems and elderly people needs to be addressed. As regards anti-discrimination policies,
the Constitution as well as several pieces of legislation prohibit
discrimination. However, the mechanisms for prevention, monitoring and
protection of discrimination cases are not sufficiently developed and should be
improved. Discrimination is most prevalent
against Roma, women, persons and children with disabilities and the LGBT
population. As regards labour and trade union rights,
freedom to join trade unions and any other form of association as well as the
right to strike are guaranteed by the Constitution and further regulated by the
Labour Law. However, social dialogue has been limited and needs to be further
improved. The Law on strike needs to be revised. Property rights are protected by the Constitution. With the
adoption of the Laws on restitution and on public property in September 2011,
the legal framework was completed. The Law on restitution, once implemented,
will clarify the so far unclear and fragmented manner in which restitution of
property nationalised under the communist regime has been dealt with. However,
implementation of both laws still faces important challenges. Restitution needs
to be carried out in a fair and transparent manner. The transfer of state
property to provincial and municipal level faces risks of corruption and fraud,
as a reliable overview of state owned properties is missing. Respect for and protection of minorities and
cultural rights are guaranteed
by the Serbian legal and institutional framework. Serbia ratified the framework
convention for the protection of national minorities and the European Charter
on Regional and Minority Languages. The Law on National Councils of National
Minorities was adopted in August 2009. In line with the Law on National
Councils of National Minorities, the first direct elections for the National
Minority Councils were organised in 2010. Nineteen national minorities elected
their respective councils. All national minority councils have been constituted
and started operation, except the Bosniak Council. While some irregularities
were reported during the elections of the national minority councils, they did
not significantly affect the overall results. The inter-ethnic situation is
good overall, and the number and intensity of ethnically-based incidents has
decreased in recent years. However, the Republican Council for National
Minorities, which is responsible for coordinating cooperation between minority
national councils and state bodies, is not operational. The national minority
councils are highly politicised and their effective functioning still needs to
be strengthened. There is no effective control of their funding and
expenditure. Regarding the Sandjak area, the situation has been tense
and escalated further over the issue of the constitution of the Bosniak
national minority council. Following the June 2010 elections, the constitution
of the Council is still affected by a number of open issues. Repeat elections
were announced, but no final date was set. Roma remain one of the most
marginalised groups. Despite certain improvements, such as teaching assistants
and female health mediators, Roma face poor living conditions and difficulties
in exercising their social, political and economic rights. The legal and institutional framework for the protection
of personal data is broadly in place. Serbia has ratified the Council of
Europe Convention for the Protection of Individuals with regard to Automatic
Processing of Personal Data in 2005 and the additional protocol in 2008. The
Strategy on personal data protection was adopted in 2010 along with several
rulebooks and regulations concerning collection, storage and protection of
data. The Law on Protection of Personal Data entered into force in January 2009
and implementing legislation was adopted. The Commissioner for Free Access to
Information of Public Importance and Personal Data Protection is the competent
supervisory authority. Infringements of the legal framework can result in both
misdemeanour and criminal liability. However, several provisions of the Law on
Protection of Personal Data are not fully in line with EU standards. An action
plan implementing the strategy has yet to be adopted. The office of the
Commissioner, who is also responsible for ensuring access to information, lacks
financial and human resources. This raises concerns with regard to his ability
to adequately perform his supervisory tasks in both areas. Further efforts are
needed in order to ensure the collection and processing of personal data in
line with the legal provisions. To ensure EU citizens' rights to vote
and stand as a candidate in municipal and European Parliament elections,
Serbia will need to harmonise the provisions of the Constitution, laws and
other regulations, which regulate the exercise of the right to vote, with the
acquis and especially with Council Directives 94/80/EC and 93/109/EC. As
regards residence rights for EU citizens, the Serbian system of
temporary residence permits is not in line with the acquis and will need to be
amended. In order to comply with the acquis, Serbia will have to implement the
Decision on diplomatic and consular protection for EU citizens and the
Decision on the establishment of an emergency travel document. Conclusion Serbia will
have to make continuing efforts to fully align with the acquis in this
chapter. It has made good progress in its ambitious reform of the judiciary,
but further efforts are needed in order to fully ensure independence,
impartiality, accountability and efficiency. The legal and institutional
framework to fight corruption has been established, but implementation of
anti-corruption policies has to lead to tangible results, in particular final
convictions in criminal cases. Provisions for the protection of fundamental
rights are in place, but need to be fully implemented. Overall, Serbia needs to undertake considerable and
sustained efforts to align with the EU acquis in the medium term.
3.24.
Chapter 24: Justice, freedom
and security
EU policies aim to
maintain and further develop the Union as an area of freedom, security and
justice. On issues such as migration, asylum, border control, visas, judicial
cooperation in criminal and civil matters, police cooperation, the fight
against organised crime and terrorism, cooperation in the field of drugs and
customs cooperation, Member States need to be properly equipped in order to
implement the growing framework of common rules adequately. Above all, this
requires strong and well-integrated capacity within the law enforcement
agencies and other relevant bodies to attain the necessary standards. A
professional, reliable and efficient police organisation is of paramount
importance. The most detailed part
of the EU's policies on justice, freedom and security is the Schengen acquis,
which entails lifting internal border controls in the EU. For a new Member
State, substantial parts of the Schengen acquis are implemented
following a separate Council decision to be taken after accession. Cooperation in the area
of justice, freedom and security makes up an important part of the SAA. Title
VII of the Agreement establishes cooperation in a wide range of areas, notably
border management, asylum and migration, money laundering and prevention of
organised crime. Visa liberalisation for Serbian citizens travelling to the Schengen area was
granted with effect from 19 December 2009. This decision was based on
substantial progress in the areas of justice, freedom and security,
particularly fulfilment of the specific conditions set out in the roadmap for
visa liberalisation. The rules for visa-free travel have been respected by the
vast majority of travellers. However, under the visa-free regime, increases in
the number of unfounded asylum applications by Serbian citizens in several EU
Member States occurred. Following decisive measures by the Serbian authorities,
including awareness raising campaigns, investigations into illegal residence
changes, facilitated by corrupt officials, and enhanced border checks, the
numbers declined until September 2011, but then increased again. Efforts to
address this issue are ongoing. In order to ensure ongoing implementation of
the commitments taken, a post visa liberalisation monitoring mechanism has been
established. The Commission presented its first monitoring report to the
European Parliament and the Council in June 2011. Serbia has made efforts
to align its migration policy with EU standards by adopting a number of
strategies on migration management, combating illegal migration, resolving the
problems of refugees and IDPs and reintegrating returnees. The November 2007
Law on asylum and the October 2008 Law on foreigners are broadly in line with
the EU acquis, allowing foreigners to acquire residence and family
reunification under certain conditions. The largest groups of persons that have
acquired Serbian citizenship over the last few years are from Croatia and
Bosnia and Herzegovina, mainly persons with refugee status or internally
displaced persons who had been legally residing in Serbia for several years.
The total number stood at 19,310 by 2010, including persons with dual
citizenship under the agreement between Serbia and Bosnia and Herzegovina. Implementation of the
migration related strategies needs to be made more effective and coherent.
Limited resources, overall lack of capacity and insufficient coordination of
the bodies responsible are the main challenges in this area. An efficient
data-sharing mechanism between law enforcement bodies and competent authorities
remains to be established. Transformation of the Commissariat for Refugees into
a Migration Management Agency has been delayed, due to the lack of resources
and administrative capacity combined with inefficient inter-agency coordination
and cooperation. Serbia needs to make further efforts to ensure full alignment
with EU acquis on legal migration, notably on the right to family
reunification, long-term residence and conditions of admission of third-country
nationals for the purpose of studies. An agreement on
readmission between the European Union and Serbia has been in force since
January 2008.The implementation of the agreement has continued without
significant challenges. Some 4,377 persons were returned in 2009 and 3,979 in
2010. Under the Agreement, bilateral implementing protocols have been concluded
with the following Member States: Austria, Bulgaria, France, Germany, United
Kingdom, Hungary, Italy, Malta, Slovakia and Slovenia. The main countries from
where returns take place are Germany, Switzerland and Sweden. A more
comprehensive database on returnees is being developed by the Commissariat for
Refugees. Serbia's asylum legislation
adopted in November 2007 is largely in line with the essential elements
of the EU legislation on eligibility, procedures and reception conditions for
asylum-seekers. Two reception centres were established since 2008 for an
overall capacity of 200 people. Continuous training has been provided by the
UNHCR. However, an Asylum Office remains to be established in line with the
law. The number of asylum claims has been increasing continuously since 2008,
but the number and quality of decisions taken remains very low. Out of 522
claims in 2010, only 58 interviews were conducted, resulting in 28 rejections.
The procedure and sources of verification of safe countries of origin and the
list of safe third countries are not fully aligned with European standards. Mixed
migration flows and the lack of an efficient mechanism to identify genuine
asylum-seekers, combined with the poor prospects for protection or integration
in Serbia, are resulting in increased transit of migrants towards the EU. A
national database for checking personal data and fingerprints of asylum-seekers
is not in place. There is a need to improve capacity and practices in this
area. Serbia has taken steps
to align its visa policy and the types of visas issued with EU
standards. New visa stickers have been issued since June 2010 and are broadly
in line with EU standards. Serbia also issues visas on behalf of Montenegro,
the former Yugoslav Republic of Macedonia and Bosnia and Herzegovina. However,
the list of countries subject to a visa obligation is not fully aligned with
Regulation 539/2001 and recent liberalisation agreement concluded with Ukraine
further widened the gap. A proper visa information system has not yet been
established and only 32 out of 80 Serbian consular missions have the capacity to
collect biometric data. The validity of the old non-biometric passports has
been extended until the end of 2011. Upgrading of administrative capacity
coupled with enforcement of adequate control mechanisms are required in this
area. Regarding external borders and Schengen, the
conditions and arrangements necessary for implementing efficient border control
and surveillance are broadly in place. The national strategy and action plan
for integrated border management (IBM) were adopted in 2006 and steps have been
taken to implement them. The new legal framework on border control has been
aligned with the Schengen Border Code. Legislation and agreements provide for
inter-agency and international cooperation. A coordination body was established
in 2009, followed by an operational-level working group in 2010. Steps were
taken to improve infrastructure and equipment. Further progress has been made
with installation of the TETRA radio signal system with a view to full coverage
of all the major border crossing points by 2012. Cooperation at regional and
international levels is improving and agreements on border police cooperation
have been signed with Bulgaria, Romania, Bosnia and Herzegovina and Montenegro.
Cooperation with Frontex has continued to improve, including with the aid of
regular data exchanges and participation in the Western Balkans Risk Analysis
Network. However, the IBM strategy needs to be updated. Disparities
in infrastructure between border crossing points persist. There is no full
connection between all border crossing points and the central database of the
Ministry of the Interior. Modernisation and upgrading of equipment and
infrastructure are required, both at border crossing points and for
surveillance purposes, including access to relevant Interpol databases. The
number of devices available for detecting
forgeries at border crossing points needs to be
increased. The border police is not fully staffed and needs to improve its
internal organisation and continue with its modernisation and training so as to
ensure consistency in implementing policies and rules. Surveillance and
control along the administrative boundary line with Kosovo need to be improved,
especially in response to security concerns and to combat major international
trafficking. The administrative boundary line is controlled by normal police
and gendarmerie, not border police. The lower level of training and the more
lenient controls for local residents of Serbian origin weaken the overall level
of controls. In this area, practical cross-border communication and cooperation
need to be organised and implemented efficiently. Border demarcation with
Bosnia and Herzegovina and Croatia has not been finalised. Regarding judicial
cooperation in civil and criminal matters, the relevant legislative
framework is mostly in place. A number of agreements on mutual legal assistance
in civil matters and on recognition of foreign judgments are in force. Serbia
has adhered to a number of international conventions. Foreign judicial
decisions are legally enforceable only if recognised by a Serbian court. The
statistics on enforcement of foreign judgments remain low (the Higher Court in
Belgrade ruled in 79 cases and the Commercial Appellate Court in Belgrade in 10
in 2010). The number of unsolved requests for international legal assistance in
civil matters increased significantly in 2010 and 2011, resulting in some 3367
unsolved cases as of September 2011. Further improvements are needed in
practical enforcement of both the national and international legal frameworks. In the case of judicial
cooperation in criminal matters, Serbia has ratified international conventions.
In 2009 it also adopted the Law on mutual legal assistance in criminal maters,
regulating this area in more detail, in addition to certain general provisions
of the Criminal Procedure Code and the Criminal Code. Legislation on the
organisation and responsibilities for suppression of organised crime,
corruption and other severe criminal offences and the Law on seizure and
confiscation of the proceeds of crime further regulate assistance.
Responsibility for mutual legal assistance is shared between the courts,
prosecution offices and the Ministry of Justice. However, implementation
remains a major challenge in view of the limited capacity, especially in
relation to the overall organisation and effectiveness of the existing
procedures. Steps are also needed to ensure effective cooperation with
Eurojust. Serbia has established
a good framework for police cooperation and the fight against organised crime.
International police cooperation is carried out via the National Cooperation
Bureau (Interpol), including exchanges of files via a 24-7 connection. An
agreement on strategic cooperation with Europol was signed in 2009. Agreements
on police cooperation and on cooperation in the fight against organised crime
have been signed with Albania, Austria, Bosnia and Herzegovina, Bulgaria, the
Czech Republic, Croatia, Cyprus, the former Yugoslav Republic of Macedonia,
France, Greece, Hungary, Italy, Montenegro, Romania, Slovakia, Spain and
Switzerland. Agreements with Croatia and Montenegro allow extradition of own
nationals in cases of organised crime and corruption. An agreement establishing
a regional office in Belgrade for improving cooperation in the fight against
organised crime was signed in October 2010. An international law enforcement
coordination unit has been established. Serbia has launched an initiative for a
regional arrest warrant. The national Strategy
to fight organised crime and the Action Plan implementing it were adopted in
2009. The legal framework for the fight against organised crime is generally in
place. The Criminal Code, amended in 2009, classifies organised crime
activities as criminal offences. A new Criminal Procedure Code (CPC) was adopted
in September 2011. It profoundly changes criminal proceedings by transferring
the leading role in criminal investigations from the investigating judge to the
prosecution service and introducing an adversarial system. It provides law
enforcement bodies with relevant tools for investigating organised crime,
including special investigative measures. As preparatory work for its
implementation has been slow, notably on building the expertise and
infrastructure for the prosecution service, it will, in a first stage, only be
applied to proceedings carried out by the special prosecutors for organised
crime and for war crimes, before extending it to the whole system. There are
concerns over insufficient procedural safeguards in the new Code. Serbia has an institutional
framework which generally allows it to fight organised crime effectively. The
entry into force of the Law on the organisation and responsibilities of the
State institutions in suppressing organised crime, corruption and other severe
criminal offences in January 2010 extended the powers of the Special Prosecutor
for Organised Crime. The Prosecutor is primarily responsible for cases of
organised crime and high-level corruption. As the court of first instance, the Higher
Court in Belgrade deals with organised crime and high-level corruption cases
for the whole of Serbia. In the second instance, such cases are dealt with by
the Appellate Court in Belgrade. This specialisation increases the expertise of
the players involved. Police capacity for investigating financial crimes was
improved by setting up a financial investigation unit within the Ministry of
the Interior. Specialised units have been established within the police forces,
including on cybercrime and drug smuggling, allowing greater specialisation and
expertise. A Commission for Inter-ministerial Coordination in the field of
Justice and Home Affairs was established in 2008 to improve coordination
between ministries in the fight against organised crime. Since 2008, Serbia has
successfully conducted a number of police operations in close cooperation with
Interpol, Europol, EU Member States and non-EU countries, leading to the arrest
and prosecution of members of several organised crime organisations. However, organised
crime remains a serious concern in Serbia. Although criminal investigations
have been launched in a number of organised crime cases, final convictions
remain rare. Capacity to carry out complex, in particular financial,
investigations needs to be built up. Certain specialised services, in
particular the unit for witness protection, lack sufficient staff, resources
and adequate premises. The level of inter-agency cooperation, information flow
and exchanges between law enforcement agencies needs to be improved. A
centralised criminal intelligence system has not been established and there is
a lack of harmonised statistical data. Risk assessments and crime mapping need
to be used more broadly and intelligence-led policing needs to be developed.
The dependence of the police on the security intelligence agency to carry out
certain special investigative measures in criminal investigations is not in
line with EU standards. The Law on seizure and confiscation of proceeds from crime,
adopted in 2008, provides the basis for temporary freezing of assets and,
conditional on a final judgment, permanent confiscation. The Directorate for
Managing Seized and Confiscated Assets has been in operation since March 2009
and is responsible for storage of temporarily seized assets. Cooperation
between the authorities for discovering, seizing and managing proceeds of crime
has gradually improved. However, practical results in the confiscation of
assets remain limited and were achieved in only a small number of cases. Sales
of temporarily seized assets without immediate risk of deterioration are a
cause for concern. The Directorate for Managing Seized and Confiscated Assets
lacks storage space and needs to improve the quality of its record-keeping to
satisfy requirements on security, accessibility and protection of sensitive
data. The legal and institutional framework for the fight against
money laundering is in place. The Law on the Prevention of and Fight against
Money-Laundering and Terrorist Financing was adopted in 2009 and has been
consolidated by the adoption of several guidelines. The Council of Europe
Convention on laundering, search, seizure and confiscation of the proceeds from
crime and on the financing of terrorism was ratified in 2009. A strategy to
prevent money laundering and terrorism financing was adopted in 2008, followed
by an action plan in 2009. Training has improved expertise in the
Administration for the Prevention of Money Laundering (APML, the financial
intelligence unit) to provide effective support for criminal and financial
investigations. International cooperation is in place, including with MONEYVAL
and the Egmont Group. However, practical results in the fight against money
laundering remain to be improved. There is a need to strengthen the analytical
capacity of the APML further. The numbers of suspicious transactions identified
remain low and reporting, especially from outside the banking sector, needs to
be improved. An effective system for monitoring cash transactions needs to be
established. With the number of final convictions remaining low, law
enforcement and judicial authorities need to improve their capacity to handle
money laundering cases (see also Chapter 4 — Free movement of capital). Serbia ratified the Council of Europe Conventions on action
against trafficking in human beings in 2009 and on protection of children
against sexual exploitation and sexual abuse in 2010. A strategy to address
human trafficking was adopted in 2006 and an action plan to implement it in
2009. Law enforcement capacity in this area is generally well-developed. To
coordinate activities against trafficking in human beings better, the
government established a ministerial-level council and the Minister of the
Interior has been appointed coordinator in this area. A Republican team,
consisting of representatives of government institutions along with
non-governmental and international organisations, has been in operation since
2003. However, Serbia remains a country of origin, transit and destination for
trafficking in human beings. Further efforts are needed to ensure full
implementation of policies in this area and a specific monitoring mechanism has
not yet been set up. The strategy and associated action plan need to be updated
in order to tackle current trends better and improve cooperation between law enforcement
and judicial bodies. Better protection of victims, including provision of
assistance or shelter and reintegration, is needed. An age- and gender-specific
approach should be developed. Cooperation with and support for civil society
active in this field should be improved. Serbia has taken steps
to align its legislation with the existing international regulatory framework
for the fight against terrorism, including on financing of terrorism.
These include: international and Council of Europe conventions, specific
criminal offences under the powers of the Special Prosecutor and a number of
bilateral agreements on police cooperation which also include terrorism. Two
specialised units of the Serbian police have been assigned counter-terrorism
tasks. However, a national database and a more efficient exchange of
information are lacking, while internal organisation and inter-agency
cooperation also need further improvement. With regard to cooperation
in the field of illicit drugs, the strategic, legislative and institutional
framework is in place. A new Law on drugs was adopted in 2010. The national
strategy adopted in 2009 is in line with the EU Drug Strategy and covers both
drug demand and drug supply reduction. Serbia continued its good international
and regional cooperation. A new national correspondent to the European
Monitoring Centre for Drugs and Drug Addiction (EMCDDA) has been formally
appointed and cooperation with the Centre is improving. Between October 2010
and August 2011, Serbian authorities seized some 1.9 tons of drugs, as compared
to 1.1 tons during the previous year. Seizures included some 180 kg of heroin,
7 kg of cocaine and 1.4 tons of cannabis. The Ministry of Health is active in
the area of prevention of drug abuse and addiction. However, Serbia is on one
of the main Balkan drug trafficking routes. Trafficking of drugs through Serbia
remains high and also consumption in the country is of concern. Significant
weaknesses persist in surveillance of the borders with Bosnia and Herzegovina,
Croatia, the former Yugoslav Republic of Macedonia and Montenegro and of the
administrative boundary line with Kosovo. Police and border police need to be
fully connected to the central database on drugs. The lack of financial
resources is having a negative effect on effective implementation of preventive
anti-drugs policies. A national Commission serving as the central inter-service
coordination body has been established but is not working effectively. The
legal framework for reducing demand for drugs needs to be improved. Initiatives
on substitution treatment and other programmes largely remain donor-driven. A
large quantity of seized drugs still has not been destroyed due to alleged
environmental concerns. Regarding customs
cooperation, the customs administration is established as an administrative
authority within the Ministry of Finance. Serbia is currently implementing 20
bilateral agreements on mutual administrative assistance in the customs field,
including with neighbouring countries. Technical arrangements on electronic
exchange of customs data via the Electronic Exchange of Data System were
established with the customs administrations of Bosnia and Herzegovina,
Montenegro and the former Yugoslav Republic of Macedonia. In April 2010 Serbia
and Bulgaria signed an agreement on establishing and operating a joint contact
centre for police and customs cooperation. However, Serbia needs to align with
the EU legislation on use of technology for customs purposes and to ratify and
then implement the 'Naples II' Convention on mutual assistance and cooperation
between customs administrations. For protection of the euro against counterfeiting,
see Chapter 32 – Financial control. Conclusion Serbia has put in place the overall legal and institutional
framework in the area of justice, freedom and security. Law enforcement
agencies generally have sufficient capacity to carry out standard
investigations. Serbia is actively involved in international police and
judicial cooperation. However, further continued efforts are needed to increase
the capacity to carry out complex, in particular financial, investigations. A
track record of proactive investigations and final convictions in organised
crime cases needs to be built up. Sustained efforts are needed to improve coordination
between law enforcement agencies and also law enforcement and the judiciary.
Management of the administrative boundary line with Kosovo is a cause for
concern. Further efforts will be necessary to ratify outstanding international
instruments and align legislation fully with the EU acquis. Overall, Serbia needs to undertake considerable and
sustained efforts to align with the EU acquis in the medium term.
3.25.
Chapter 25: Science and
research
In principle, the EU acquis in the field of science
and research does not require transposition of EU rules into the national legal
order. Successful implementation of the EU acquis in this domain mainly
requires fulfilling the conditions necessary to participate effectively in the
EU's Research Framework Programmes, to integrate into the European Research
Area (ERA) and to contribute to the Innovation Union (IU). Good administrative
capacity (adequate staffing and knowledge of research cooperation) is
necessary, as is scientific excellence, in order to carry out research and
innovation projects successfully, together with research entities from the EU
Member States and international partners. This, in turn, requires
well-developed research and innovation capacity to produce scientific
excellence to support a sustainable economy and knowledge-based society. The SAA establishes cooperation in civil scientific
research and technological development. As a potential candidate country, Serbia has been
associated with the Seventh EU Research Framework Programme (FP7) since January
2007. Science and research policy has been under the authority of the Ministry of Education
and Science since March 2011. The Ministry is responsible for both policymaking
and funding. It cooperates closely with other relevant ministries, the Vojvodina
Provincial Secretariat for Science and Technological Development, the National
Council for Scientific and Technological Development and the Academy of
Sciences and Arts. The National Council for Scientific and Technological
Development, reformed in 2010, is made up of 16 members representing the
scientific, academic and business communities. It acts as an independent expert
and advisory body. A separate agency for the field of nuclear safety was
established in 2009. A National Strategy for Scientific and Technological
Development for the period 2010-2015 was adopted in February 2010. The strategy
is the result of broad consultations with all stakeholders and aims at turning
Serbia into an innovative country, in order to reach EU standards and advance its
technological development. The overall aim is further integration into the
European Research Area and alignment with the EU acquis on research and
innovation policy. It is built on the principles of focus and
partnership. It also establishes the strengths and weaknesses of the scientific
landscape in Serbia and prepares the ground for action to address the
challenges which lie ahead: increasing investment in research, modernising
infrastructure, increasing human capital and building innovative capacity. However, the Action plan implementing the 2010-2015
Strategy remains to be adopted. Investment in research is very low: only about
0.30% of GDP in 2010. As part of the strategy, the aim is to increase the level
of investment by 0.15% in each of the next five years, taking it up to 1.05% by
2015. The lack of reliable statistics, in particular on investment by the
private sector, makes it very difficult to monitor the targets set. Human research capacity is available, but suffers from an
ageing population. Serbia had 11,534 full-time scientists in 2009 or 0.6 % of
the total workforce. As another part of the strategy, Serbia aims to increase
the number of scientists. It is already taking a number of measures to attract
young people to science studies and to address the brain drain from which it is
still suffering. In line with the legislation on scientific and research
activities, a Centre for Promotion of Science was established in 2010. Investments
have been made in research capacity to improve the infrastructure, including
science centres and state-of-the art laboratories. A fund for innovation
activities has been established which, amongst other things, provides
early-stage financing and supports transfers of technology. Since Serbia has been participating, as an associated
country, in the Seventh EU Research Framework Programme (FP7), it has
created good administrative capacity and drawn up measures to promote research
cooperation. Serbia has shown a good take-up of FP7 projects throughout the
programme but further efforts are necessary. In particular efforts are
necessary to increase participation by SMEs. Serbia has expressed interest in becoming associated with
the Seventh Euratom Research Framework Programme (2013-2014). Regarding policy initiatives to facilitate integration into
the European Research Area (ERA), the 2010-2015 strategy is fully in
line with the objectives of the ERA. Serbia is actively participating in the
work of all ERA governance bodies. This demonstrates Serbia's administrative
capacity and determination to integrate into the ERA and contribute to the
Innovation Union. International cooperation, particularly with EU partners, is
high on the national agenda. Serbia has concluded numerous bilateral
cooperation agreements with several neighbouring countries and other
international partners. It is also involved in key international research
organisations (COST and Eureka) and has started accession negotiations with
CERN. However, serious efforts are needed to achieve the targets set in the
2010-2015 strategy, in particular the investment target, to integrate into the
European Research Area as well as regarding the Innovation Union. Conclusion Serbia has been actively involved in EU research policy
through its association to the Seventh EU Research Framework Programme. The
National Strategy for Scientific and Technological Development for the period
2010-2015 is fully in line with the objectives and targets of the European
Research Area and the Innovation Union. However, consistent implementation and
close monitoring of the targets set at national level, in particular on
investment in research and on mobility of researchers are of key importance. Overall, if it continues its efforts, Serbia should, in the
medium term, have the capacity to comply with the requirements of the EU acquis.
3.26.
Chapter 26: Education and
Culture
The EU acquis on
education and culture consists mainly of a cooperation framework made up of
programmes and of the open method of coordination, which aims at convergence of
national policies and attaining shared objectives. In the fields of education
and youth, Member States need to ensure sound management of decentralised EU
programmes. The EU acquis also requires Member States to facilitate the
education of children of EU migrant workers and to prevent discrimination
against EU nationals. In the field of culture, the 2005 UNESCO Convention on
the protection and promotion of the diversity of cultural expressions, ratified
by the EU, is a major component of the EU acquis. The EU also
contributes to promoting European sporting issues. The SAA provides for
enhanced cooperation, with the aim of raising the level of general education
and vocational education and training in Serbia and of youth policy. As regards education
and training, Serbia has initiated reforms in all areas of education and
the legal framework is largely in place, including legal texts for pre-school,
primary, secondary, vocational, higher and adult education. The reforms focus
on making education more inclusive, training teachers and putting in place
quality assurance systems. However, Serbia's
education sector in general is reforming slowly. There are high drop-out rates
at all levels of education. Adult education is in the early stages of reform
and a law on adult education remains to be adopted. Improving quality assurance
mechanisms at all levels of education and developing a national qualifications
framework remain a challenge. The Serbian vocational
education and training (VET) system needs further reforms and modernisation.
The mismatch between qualifications and the needs of employers remains a
challenge in the fight against unemployment. Certain curricula are failing to
respond to labour market needs. Drop-out rates are particularly high from
three-year VET programmes (see also Economic criteria). Serbia started to
introduce Bologna reforms in higher education in 2003 and has introduced the
European Credit Trading System across the entire higher education system. The
higher education system has benefited greatly from Tempus. Serbia is one of the
leading partner countries in this programme. It hosted in March 2011 the
ministerial conference commemorating the 20 years of the establishment of the
programme. Serbia's participation to Erasmus Mundus programme has allowed for
increased student mobility and benefited so far to over 500 students and
teachers. However, higher education teaching methods need to become more
student-centred and external quality assurance mechanisms need to be
implemented. Serbia has been active in the field of youth policy
since the Ministry for Youth and Sports was established in 2007. A National
Youth Strategy was adopted in 2008, followed by an Action Plan for implementing
it in 2009 and a Strategy for career guidance and counselling in 2010. A Law on
youth was adopted in July 2011, providing an appropriate legal framework for
the government's priorities and actions in this area. So far, 123 youth offices
have been established all over Serbia which, in cooperation with the Ministry,
are adopting and implementing local youth action plans. Serbia has been a
leading partner country within the Youth in Action programme framework and the
Ministry has actively promoted its opportunities. Young people are offered the
possibility of obtaining scholarship funding, support for their initiatives and
projects and career guidance. Proper implementation and monitoring of these
measures need to be ensured, including setting clear objectives and indicators.
Serbia's legislation needs to be amended to comply fully
with the EU legislation on education of children of migrant workers and allow
equal access to education for EU citizens. As regards culture, Serbia ratified the 2005 UNESCO
Convention on the protection and promotion of the diversity of cultural expressions
in 2009 and subscribes to the objectives of the European Agenda for Culture. In
accordance with the Law on culture adopted in 2009, Serbia is supporting
programmes and projects in all fields of artistic and creative work by
organising public competitions. The Ministry of Culture organises training for
artists, especially on cultural management. Serbia is actively participating in
the regional cultural initiatives and in the EU's Culture programme
(2007-2013), where it has taken the lead in coordinating some projects. Conclusion Serbia is conducting
reforms in order to comply with the EU acquis and EU standards on
education and training, culture and youth. The education sector is undergoing
reforms in all areas, but these efforts need to be intensified, especially in
the VET sector, to enhance the quality of education and its links with the
labour market. Strengthening quality assurance, designing national
qualifications and ensuring social inclusion at all stages of education
deserves specific attention. Non-discrimination against EU citizens within the
Serbian education system will need to be ensured. Overall, if it
continues its efforts Serbia should, in the medium term, have the capacity to
comply with the requirements of the EU acquis in this area.
3.27.
Chapter 27: Environment
Environment EU environment policy aims to promote sustainable
development and protect the environment for present and future generations. It
is based on integration of environmental protection into other EU policies,
preventive action, the polluter pays principle, fighting environmental damage
at source and shared responsibility. The EU acquis comprises over 200
major legal acts covering horizontal matters, water and air quality, waste
management, nature protection, industrial pollution and risk management,
chemicals and noise. Ensuring compliance with the EU acquis requires
significant investment, but also brings significant benefits. A strong and
well-equipped administration at national and local levels is imperative for
application and enforcement of the EU environmental acquis. The SAA establishes cooperation with the aim of
strengthening administrative structures and procedures to ensure strategic
planning of environmental issues and coordination between relevant stakeholders
and is focusing on aligning Serbia's legislation with the EU acquis. A
number of articles relevant to other areas, such as energy, transport and
industrial development, also underline the environmental aspects of the
cooperation. The Constitution of the Republic of Serbia establishes the
right of every citizen to a healthy environment and to timely and full
information about the state of the environment. It holds the Republic and the
Autonomous Province accountable for environmental protection and defines the
environmental management powers of the three tiers of the administration,
namely the Republic, the Autonomous Province and the municipalities or local
self-government. The basic legal framework for environmental protection is
provided by the 2004 Law on environmental protection, which was amended in
2009. Serbia has also established two strategic environmental planning
documents, each covering ten years: the Sustainable Development Strategy was
adopted in 2008 and recently updated and the National Programme for
Environmental Protection was adopted in March 2010. Regarding the institutional and administrative framework
for environmental management, the Ministry of the Environment, Mining and
Spatial Planning was set up in 2007. In March 2011 it also assumed
responsibility for mining and waste from extractive industries. Serbia has also
established an Environmental Protection Agency (SEPA) to regulate and develop
the national information system for environmental protection. Formal
coordination, information and joint decision-making mechanisms between the
governmental bodies for effective implementation of the EU acquis are
weak. Responsibility for protection and management of water resources is shared
with the Ministry of Agriculture, the Ministry of Health and the Ministry of
Infrastructure. Environmental monitoring is ensured by the central government,
Autonomous Province and municipal authorities, with overlaps and gaps. Efforts
to streamline this system have just started, with the progressive transfer of
environmental monitoring tasks to the SEPA, thus significantly increasing its
capacity in terms of staff from 29 to 88 employees and monitoring functions of
both air and water quality, but the fragmentation of responsibility for
implementation of the EU's environmental acquis remains a challenge.
Serbia needs to pursue the consolidation of its public administration in charge
of environmental policy more vigorously to focus on meeting the requirements of
the EU acquis. Furthermore, environmental management tasks at municipal
level are underfunded and require substantial strengthening to justify and
sustain decentralisation. The 2004 Law on environmental protection (amended in 2009)
sets out the principal functions, duties and powers of inspectors of the
Republic, the Autonomous Province and the local self-government. Details of
these inspection duties and powers are given in a number of other laws,
including on environmental impact assessment (EIA) and on integrated pollution
prevention and control (IPPC). The powers of inspectors are far-reaching,
including authority to prohibit, confiscate and order action to fulfil legal
obligations. However, substantial restrictions exist on access to sites without
prior notice and on taking samples. Only courts can impose fines. The Control and Surveillance Sector in the Ministry of the
Environment, Mining and Spatial Planning started to apply the minimum criteria for environmental inspections
in early 2007, allowing a first assessment of the effectiveness of environmental
inspection and prosecution. A more effective enforcement system is required.
Cooperation between the various inspectorates (for the environment, water,
health and trade) needs to be streamlined and cooperation with police and
prosecutors formalised. Serbia has launched a programme to address legislative
and systemic weaknesses impeding effective inspection. This is a long-term
process requiring considerable political will and adequate resources. Environmental
investment planning is based on the National Programme for Environmental
Protection adopted in 2010 and the Sustainable Development Strategy adopted in
2008. Serbia needs to adopt also its Environmental Approximation Strategy. It
will have to be followed by a more detailed audit to establish clearly the
state of environmental infrastructure and of utility service-providers in
Serbia. This will clarify the 'starting position' with a view to preparing
detailed implementation plans. An affordability study at national and regional
levels is also required to provide affordability references and benchmarks. Public awareness of environmental issues is increasing, but
public participation in environmental decision-making and public access to
environmental information remain weak. Further efforts are needed to build a
solid partnership between the government and civil society. There are some
mechanisms for integrating the environment into other policies, but application
in practice is limited. Regarding horizontal legislation, Serbia has
achieved a high level of alignment. The government has adopted a Rulebook
on the National List of environmental Indicators, including indicators and theme indicators units classified into thematic
areas. Further efforts are needed to align
legislation relating to trans-border aspects of environmental impact assessment
(EIA) more closely. Serbia needs to accede to the first and second amendments
to the Espoo Convention, with its provisions relating to access to
environmental information and access to justice. Particular attention needs to
be given to enforcing the Environmental Liability Directive. In particular,
EIAs need to be properly carried out wherever legally required, and proper
coordination between different authorities and with all stakeholders needs to
be ensured. Serbia has substantially progressed in its alignment with air
quality legislation. Its legislation is almost fully aligned with
the Air Quality Framework Directive. However, some remaining provisions of the
Directive covering arsenic, cadmium, mercury, nickel and polycyclic aromatic
hydrocarbons in ambient air remain to be introduced. Serbia needs to continue
to work on alignment with the relevant parts of the National Emission Ceilings
Directive and on the directives dealing with fuel standards. Serbia has produced its first preliminary air quality
assessment and is proceeding with dividing its territory into zones and
conurbations. It needs to complete this exercise and continue preparing pilot
clean air plans, starting with environmental hotspots. Belgrade and other
cities suffer from high levels of air pollution. Implementing legislation has been adopted on monitoring of
the air ambiance quality and on establishing agglomeration zones. Air Quality
Plans for the cities of Belgrade, Novi Sad and Bor are being prepared. The
Serbian Environmental Protection Agency (SEPA) has installed an automatic
ambient air quality monitoring network that has started to operate alongside
automatic, semi-automatic and manually operated measurement points managed by
municipalities and other public bodies. The integration of ambient air quality
monitoring networks needs to be further advanced and non-EU-compliant measuring
methods discontinued. SEPA's capacity to operate this network sustainably needs
to be enhanced, possibly with the aid of further transfers of staff and
resources from other institutions working in the area of the environment. As regards waste management, Serbia has aligned its
legislation with the key EU policies on waste and hazardous waste management,
introducing the principles of waste prevention, re-use, recycling and recovery.
Serbia has substantially aligned its legislation with the EU acquis on
packaging and packing waste and on specific waste streams. Implementation has
started. Legislation providing for waste separation is likewise in place.
However, law enforcement is hampered by low waste collection rates in rural
communities, thousands of illegal dumpsites and the absence of treatment
facilities for hazardous waste. There is a significant problem with stockpiles
of hazardous waste in temporary storage and environmental hotspots in need of
remediation. Legislation on sewage sludge and on waste from extractive
industries needs to be aligned as a matter of priority, given the significance
of the extractive industries in Serbia. A number of requirements of the new EU
Waste Framework Directive, notably application of the best available
techniques, need to be introduced. The first waste oil collection and
processing plant in Serbia was opened in September in the port of Kladovo
(Danube river), with the capacity to annually process between 3,000 and 5,000
tonnes of waste oil and oily water. Implementing legislation on managing Polychlorinated
Biphenyls (PCBs) waste was adopted, and implementing legislation for persistent
organic pollutants (POPs) management is under adoption. The National Waste Management Strategy adopted in May 2010
provides for increasing the number of EU-compliant landfills and the collection
rates for municipal waste. Whilst
recycling of specific waste streams such as car batteries is up to 80%, the
overall rates of recycling of household waste are still low at an estimated 8%.
Product charges covering the collection and recycling of special waste streams
have been introduced and are collected via the Ekofund. However, there are no
incinerators and only few composting plants. Segregated collection of different
packaging waste at source, and pre-treatment in regional sorting plants to
generate marketable recyclable materials, need to be introduced over time.
Furthermore, a combined strategy needs to be developed to meet targets for
reducing biodegradable waste going to landfill, for home composting in rural
areas, for segregated collection of bio-waste and for composting bio-waste in
central plants in large cities. As regards water
quality, only 10% of wastewater discharged is treated. Sewage
collection ranges from over 70% in urban areas to less than 10% in rural
Serbia. The country's three largest cities have no wastewater treatment plants.
Surface water quality is problematic, notably in the tributaries to the big
Rivers Danube and Sava. There are quality issues related to both the
microbiology and physio-chemical properties of drinking water in some parts of
the country. Whilst Serbian drinking water legislation has been largely
aligned with EU law, large parts of the Water Framework Directive (WFD) still
remain to be aligned with the EU acquis. This includes the principle of
cost recovery for water services, the delineation of water basins to replace
the current delineation of water districts following administrative/political
boundaries and the definition and mandate of the competent authority. EU
legislation on the protection of groundwater against pollution and
deterioration, groundwater monitoring, the Nitrates Directive and Urban Waste
Water Treatment Directive still need to be fully introduced into Serbian law.
Implementing legislation on emission limit values of pollutants in water and
deadlines for its accomplishment has been adopted. Complying with the overall
legislative framework, organising governance of this sector in line with the
principles of the WFD and catching up with the unusually vast backlog, notably
in development of wastewater infrastructure, will be major challenges for
Serbia. Serbia has progressed with transposing the EU nature
protection legislation. The Law on nature protection is largely in line
with the Birds and Habitats Directives. A Biodiversity Strategy with an action
plan was adopted in early 2011. Approximately 6% of the country's territory is
protected under national legislation and international commitments.
Implementing legislation on the compensation for damages caused by illegal
actions against the strictly protected and the protected wildlife was adopted
in June. The management of protected areas needs to be reviewed. In particular,
the funding of conservation needs to be made independent from resource use.
Efforts are under way to establish a preliminary list of Natura 2000 sites.
Whilst establishment of a preliminary list of specially protected areas in
compliance with the EU Birds Directive is progressing, identification of
habitats sites is hampered by the absence of a clear delineation of tasks of
key stakeholders. As regards industrial pollution and risk management,
alignment with both the Directive on integrated pollution prevention and
control (IPPC) and the Directive on control of major accident hazards (Seveso
II) has been largely completed and implementation has commenced. The most
recent update of the EU legislation on IPPC will have to be taken into account
to ensure full compliance with the EU acquis in the field of industrial
emissions. Each of the approximately 180 IPPC installations needs to hold a
valid permit by 2015. The first applications are now being received and
processed. The first IPPC integrated licence was issued to the Titan cement
plant in July. However, while the majority of permits will be issued by the
central and the Autonomous Province authorities, permits for some industries
fall within the remit of local government, which lacks both the knowledge and
the resources to implement the IPPC Law. The Law on environmental protection provides a basis for
application of voluntary instruments such as ISO standard 14001, the eco-management
and audit scheme (EMAS), national ecolabels, cleaner production, management and
technical standards. The Group for Standards and Cleaner Production in the
Ministry of the Environment, Mining and Spatial Planning is the body
responsible. ISO standard 14001 is already widely applied in Serbia.
Implementation of EMAS, however, awaits completion of the implementing
legislation. The 2009 Laws on chemicals and on biocidal products,
both amended in 2010, adhere to the principal concepts of the corresponding EU
legislation, notably the REACH Regulation and the Regulation on classification,
labelling and packaging of substances and mixtures and the Directive concerning
the placing of biocidal products on the market. Moreover, Serbia has also
ratified the Rotterdam Convention on the prior informed consent procedure for
certain hazardous chemicals and pesticides in international trade. Steps have
been taken to implement the Stockholm Convention on persistent organic
pollutants. In relation to the national profile for chemical management, a
preliminary inventory of discarded persistent organic pollutants, has been
created. A regulatory and implementation body dealing with biocidal products
and chemicals is now in operation. A chemicals register and helpdesk meeting
REACH requirements have been installed. Bans and restrictions on trade
movements of chemical substances have entered into force and inspection plans
are being drawn up to enforce them. Serbia now needs to enforce the provisions
concerning classification and labelling of hazardous substances and mixtures. There is essentially no regulatory framework in place for
soil protection and soil monitoring, though ad hoc soil monitoring is
carried out by the relevant research institutes. The provisions of the Directive
on noise were transposed into Serbia's national legislation by the 2009
Law on noise protection, amended in 2010, and the subsequent implementing
legislation. As regards civil protection, Serbia has made
significant progress towards an integrated emergency management system by
establishing the Sector for Emergency Management in the Ministry of the
Interior, with the aim of coordinating the activities of all State institutions
involved in emergency management. Serbia has also adopted the Law on emergency
situations. Efforts are still needed to allow proper implementation and
enforcement of the legislation and of the new institutional setting and to
adopt implementing legislation. Coordination between ministries and bodies
needs to be improved. Further efforts will be needed to fill certain capacity
gaps like the lack of modern equipment, early warning systems or risk
assessment and mapping tools for both disaster prevention and response. Climate change EU climate action is a
central pillar for ensuring sustainable growth and the shift to a low-carbon
and resource-efficient economy. The EU acquis on the climate covers the
EU emissions trading system (EU ETS), greenhouse gas (GHG) reductions for
non-ETS sectors, fluorinated gases, ozone-depleting substances, vehicle
efficiency standards, fuel-quality standards, carbon capture and storage plus
monitoring and reporting of GHG emissions. Due account needs to be taken of the
climate dimension in all policies and adaptation measures taken to reduce
vulnerability to the impact of climate change. In relation to policy
development, the Serbian National Sustainable Development Strategy, adopted in
2008 and recently updated, along with the National Environmental Protection
Programme adopted in 2010, identify climate change as a key risk and put
forward action to adapt to and mitigate it. Other key documents include the
Energy Development Strategy until 2015, the Forestry Development Strategy and
the Strategy for Scientific and Technological Development. Further strategies
on air protection and on biodiversity, together with the relevant action plans,
are also being prepared. Significant awareness-raising is required at all
levels of the country. Serbia is a non-Annex-1
Party to the United Nations Framework Convention on Climate Change (UNFCCC) and
has ratified the Kyoto Protocol. The government adopted a national Clean
Development Strategy in February 2010. Serbia submitted its first national
communication in November 2010, with greenhouse gas (GHG) inventories for 1990
and 1998, plus projections for 2012 and 2015. The country has also begun
preparing the second national communication (to cover GHG emissions from 2000
to 2010). Serbia is currently assessing the financing needed for mitigation,
including preparing the necessary financial plans. Nationally appropriate
mitigation action up to 2020 for the energy efficiency sub-sector is being
developed and should be completed by mid-2013. With respect to the EU acquis
on climate change, Serbia is still at an early stage. Some
sector-specific laws, such as on energy, waste or air, are contributing to
climate change mitigation, while the legislation on forestry includes certain
adaptation measures. Some alignment has taken place with the legislation on the
quality of petrol and diesel fuels, but this needs to be completed, including
with respect to GHG emissions. The national airline JAT has prepared a
monitoring plan. The new Energy Law tightens up the legal provisions for more
rational use of energy. Serbia is participating actively in the climate work
under the Regional Environmental Network for Accession (RENA). Serbia is an Article 5
Party to the Montreal Protocol on substances that deplete the ozone layer. It
has ratified all amendments to it and demonstrates a satisfactory level of
compliance with the Protocol. Serbia associated itself with the Declaration
adopted at the 22nd meeting of the Parties to the Montreal Protocol in November
2010 on the global transition away from HCFCs and CFCs. As far as administrative
capacity is concerned, the Ministry of the Environment, Mining and Spatial
Planning bears main responsibility for formulating and implementing climate
change policy. It cooperates with a number of other ministries and authorities
with climate responsibilities. The Serbian Environmental Protection Agency
(SEPA) is responsible for data collection, processing and reporting on GHG. The
Republican Hydro-Meteorological Service (RHMS) is in charge of monitoring,
research and forecasting. A National Centre for Climate Change was established
within the RHMS in 2007 to perform the functions of the Sub-regional South-East
European Virtual Climate Change Centre. However, both
administrative capacity and technical and financial resources need to be
increased considerably for Serbia to be able to align with and implement all
the requirements of the EU climate change policy and legislation. Significant
efforts are needed at all levels of the country to promote cooperation and
coordination between the different ministries and authorities involved. Conclusion Over the last few years
Serbia has progressed well with alignment of its legislation with the EU's
environmental acquis. A good level of alignment has been achieved with
the EU's horizontal environmental legislation and also in the areas of waste
management, nature protection and chemicals, whereas efforts are still needed
to align with the EU acquis on water quality, and climate change. Serbia
has established an Environmental
Protection Agency and a Chemicals Agency. Nevertheless the country faces big
challenges in implementing and enforcing the EU environmental and climate
change acquis. It will be particularly important to create the
conditions for building the technical and administrative capacity and resources
necessary in this area, including for raising awareness at all levels in the
country. Overall, Serbia will have to make considerable and
sustained efforts to align with and, especially, to implement and enforce the
EU environmental and climate acquis. Effective compliance with EU
legislation requiring a sustained high level of investment and considerable
administrative efforts can only be achieved in the long term.
3.28.
Chapter 28: Consumer and
health protection
The EU acquis on
consumer protection covers the safety of consumer goods and protection
of the economic interests of consumers in a number of specific sectors. Member
States need to transpose the EU acquis into national law and to put in
place independent administrative structures and enforcement powers that allow
effective market surveillance and enforcement. Appropriate judicial and
out-of-court dispute resolution mechanisms, consumer information and education,
and a role for consumer organisations should be ensured as well. This chapter
also covers rules in the area of public health. The SAA provides
for enhanced cooperation with the aim of aligning consumer protection standards
in Serbia with those of the European Union, including by means of active
consumer protection and efficient law enforcement. The legal framework for
consumer protection is enshrined in the Law on consumer protection adopted in
2010, aligning with 15 EU directives. However, implementation of this law is at
an early stage. Overall responsibility for consumer protection policy lies with
the Ministry of Agriculture, Trade, Forestry and Water Management. The capacity
of the consumer protection department remains weak, despite recent improvements
in staff levels. There are consumer protection organisations in Serbia, but
they are still weak and lack adequate resources. This continues to hamper their
effectiveness. They have started improving their coordination and promoting
public awareness. However, their development and role are contingent upon the
new Law concerning the registration of consumer protection organisations, which
still needs to be implemented fully. As regards product-safety-related
issues, market surveillance is primarily based on the Law on general product
safety, but further amendments will be required to achieve full alignment with
the EU acquis. Other parts of the EU product safety acquis, along
with a number of the framework standards set in the General Product Safety
Directive, remain to be put in place in Serbia. The legal framework is
supplemented by a relatively comprehensive system of active coordination of
market surveillance across different ministries. This includes a system for
rapid exchanges of information on dangerous products between authorities and
between authorities and the public. In the area of non-safety-related
issues, the Law on protection of users of financial services was adopted in
May 2010, based on a proposal drafted by the National Bank. However, the law is
not fully aligned with the EU acquis, especially as regards calculation
of the annual percentage rate of charge Concerning public health, the overall aim of the EU's
policy is to improve health and prevent human illness and diseases. The EU acquis
consists of a limited number of legally binding instruments and a larger
body of non-binding measures and policy documents, plus two international
commitments on health. Overall responsibility
for this area in Serbia lies with the Ministry of Health, the authority in
charge of health policy, while the Public Health Institute is in charge of
preserving and improving the health of all citizens, with the National Health
Insurance Fund managing the financing of the system. Serbia's health system is based on the 2005 Laws on
healthcare and on health insurance, along with the accompanying regulations and
both amended in August 2011. In November 2010 Serbia adopted a Healthcare
Development Plan. e-health starts being implemented as a policy tool but not
yet in a fully integrated manner. Full-scale implementation remains
outstanding, as does active involvement of patients' and health professionals'
associations. Legislation on tobacco is partially aligned with the
EU acquis. Missing elements include the ban of oral tobacco and the
completion of the legislation concerning tobacco advertising. A national
strategy for tobacco control was adopted in 2007
followed by a Law on protection of the population from exposure to
tobacco smoke adopted by parliament in 2010, providing for a partial protection
from environmental tobacco smoke. However, despite a decrease in smoking between
2000 and 2006, smoking remains a persistent problem in Serbia. The basic act regulating communicable diseases in
Serbia is the Law on the protection of the population against communicable
diseases adopted in 2004 and the implementing legislation on reporting such
diseases. However, some case definitions for reporting communicable diseases,
including clinical, laboratory and epidemiological criteria, are missing and EU
case definitions have to be progressively adopted. The legal basis, national
structures and resources are generally in place and are being strengthened.
However, the surveillance and response capacity is still limited and requires
some modernisation, in particular in the form of human and material resources.
In April 2011, Serbia adopted a National HIV/AIDS Response Strategy for
2011–2015. Serbia's action in this field corresponds to the broad lines of the
EU Communication on combating HIV/AIDS. However, further efforts are needed to
implement the newly adopted Strategy, especially on raising public awareness. Serbia's legislation on blood, tissues and
cells is broadly aligned with the EU acquis. In 2009 four laws
were adopted on biomedicine and transfusion activities. In the field of organ
transplantation, the Directorate for Biomedicine in the Ministry of Health was
established in mid-2010, but further efforts are needed to implement the Law on
organ transplantation. Administrative and technical capacity needs to be
strengthened. Regarding mental health, Serbia's Strategy for the
development of mental healthcare identifies a series of efforts needed, but the
administrative capacity is inadequate to ensure implementation. Further action needs to be taken to promote
inclusion of people with mental health problems and ensure equal access to basic
human rights, employment, education and social services. Efforts towards
de-institutionalisation need to continue and community-based mental health
services should be further supported as an alternative to institutions. On cancer prevention
and control, Serbia adopted in 2009 a national programme entitled 'Serbia
against Cancer'. However, Council recommendations on cancer screening have yet
to be implemented. Reducing the harmful effects of alcohol and drugs is
included among the specific goals
of health policy up to 2020. A national strategy and action plan on the
prevention of alcoholism needs to be adopted in line with the EU alcohol
strategy. The prevention of illicit drug use and the treatment of drug abuse
problems is addressed in the Strategy and action plan on drugs 2009-2013. Conclusion Serbia has recently aligned its legislation with a
significant part of the EU acquis in the area of consumer
protection. Efforts are now needed to implement and enforce the legislation. On health protection, while the country has taken many
steps forward in the recent past and the basic administrative and legal
infrastructure is in place, efforts are needed for it to be able to align with
the EU acquis and to implement it effectively in the medium term. Overall, Serbia will
need to make additional efforts to achieve full alignment with the EU acquis
on consumer and health protection and to implement and enforce it properly in
the medium term.
3.29.
Chapter 29: Customs Union
The EU acquis in
this sector consists of the Community Customs Code and its implementing
provisions, the EU's Combined Nomenclature (CN), the Common Customs Tariff
including trade preferences, tariff quotas and tariff suspensions and other
customs-related legislation outside the scope of the Customs Code. Member
States must ensure that the necessary implementing and enforcement capacity,
including links to the relevant EU computerised customs systems (tariff-related
systems, NCTS, ECS, ICS, etc.) are in place. The customs authorities must also
ensure adequate capacity to implement and enforce special rules laid down in
related areas of the EU acquis such as on external trade, health and
security. The Interim Agreement
establishes a free-trade area with the EU and the progressive removal of
customs duties on a wide range of products. It places an obligation on Serbia
to adopt the Combined Nomenclature. It also provides for administrative
cooperation on customs matters and lays down rules of origin which have to be
observed in order for EU and Serbian operators to benefit from the trade
preferences. In addition, it paves the way for gradual approximation of the
Serbian customs legislation to the EU acquis. In terms of customs
legislation, Serbian law is
largely aligned with the EU acquis. The Customs Law adopted in March
2010 is basically harmonised with the EU Customs Code. In January 2011, the
relevant implementing legislation entered into force. The Combined Nomenclature
(CN) is applied and the classification rules are largely in line with the EU acquis.
However, classification practice, including decisions on binding tariff
information, is still to be upgraded to EU standards. In June 2011 Serbia also abolished administrative customs
fees for regular activities, thereby bringing the system into line with the
requirements of the Interim Agreement and the EU acquis. Preferential
tariff quotas are managed by the Information System of Customs Services (ISCS)
on a first-come, first-served principle on a daily basis. The country does not
apply erga omnes tariff quotas or tariff ceilings and lacks an automated
system for collecting statistics. The system of autonomous suspensions and
tariff quotas needs to be brought into line with the provisions applied in the
EU. Serbia implements
preferential rules of origin and methods of administrative cooperation that
largely reflect those used by the EU in its free-trade agreements. Furthermore,
it applies diagonal cumulation with the EU and other countries subject to the
European Union Stabilisation and Association Process. The status of approved
exporter also exists. Serbia complies with EU law on customs value. The national legislation on duty relief is well harmonised
with the EU acquis, but some discrepancies still exist, notably the
rules on duty relief for equipment imported by, and for, passengers or the
monetary threshold for duty relief and the rates for simplified declaration. Serbia is observer in
the Common Transit Convention and intends to join it once all the legal and
technical requirements are met. The Customs Administration needs to encourage
further use of simplified customs procedures in the framework of specific
authorisations. The legislation on
customs-related security initiatives, including authorised economic operators,
has been adopted, but implementing provisions are missing. Post-clearance
controls and the risk analysis systems have been relatively successful over the
last year, but need to be used more frequently for systematic planning and
execution of ex-post controls. The risk analysis capacity is also
hampered by an insufficient IT system and lack of strategy. Customs perform a
high percentage of physical controls but is not producing proportionate
findings. Risk analysis and management need to be changed to a thematic system
targeting risk control, similar to the system applied in the EU, supported by
an adequate IT application. In line with the
requirements of the Interim Agreement, the Customs Administration of Serbia
(CAS) has made efforts to reach the EU level of protection of intellectual
property rights (IPR). It has substantially tightened up the control procedures
at the border and should now further reinforce effective means of enforcement.
On drug precursors, Serbia has put in place a system for pre-export
notification, while on cultural goods Serbia still has to adopt legislation and
apply controls in line with the EU requirements. The provisions on cash control
do not meet the requirements of the EU legislation. Concerning administrative
and operational capacity, the CAS has been continually strengthening its
administrative capacity for effective enforcement of customs legislation. It is
well-organised and implements sound procedures and working methods allowing the
competent staff to enforce the customs and related legislation sufficiently.
However, there are still room for improvement. A properly equipped and
functioning customs laboratory is missing and the overall operational capacity
needs to be strengthened to ensure further enforcement of legislation (for
example, on IPR and safety The coordination between the Ministry of Finance and
the CAS needs to be better streamlined. In 2010, the CAS, in cooperation with
the World Customs Organisation, initiated a pilot project on strengthening the
integrity of customs officials and stepping up the fight against corruption.
However, further efforts are needed in fields such as office management, the
performance appraisal system, ethics and training. Moreover, the audit
resources need to be reinforced and the central customs administration should
be allowed to carry out audits. In December 2010 the
Customs Administration adopted a business strategy for 2011-2015. A customs IT
strategy was adopted in early autumn 2011. The CAS currently uses the
Information System of Customs Services (ISCS). There are plans to merge the
ISCS with the Integrated Customs Tariff TARIS. Although around 90% of customs
declarations are submitted electronically, data exchange for customs
formalities is only partially processed through the IT system. In general, Serbia
has progressed on customs computerisation and is planning future
interconnectivity with EU customs IT systems. However, further upgrading of the
customs IT systems is needed. Serbia joined the
Customs 2013 Programme in April 2009 and has participated regularly in
activities under it ever since. Through the conclusion of agreements on
international cooperation, the customs authorities share information with other
foreign institutions. In terms of trade facilitation, the customs
administration formalised procedures for exchanging pre-arrival information
with neighbouring countries. Implementation of the integrated border management
strategy and action plan continued (see also Chapter 24 – Justice, freedom
and security). The customs procedures
and formalities to guarantee correct application of the EU acquis need
to be applied at the administrative boundary line (ABL) between Kosovo and
Serbia, in particular at gates 1 and 31 to the north of Kosovo. At the ABL,
insufficient controls create the risk of VAT carrousels, fraud with excises,
illicit trade and imports without paying customs duties. Serbia needs to
prevent this illicit trade in a way that respects that Kosovo is a separate
customs territory. Impact of the modifications to VAT refund rules adopted in September
2011 in this respect as regards oil and oil derivatives, will have to be
assessed. The agreement on
accepting the Kosovo customs stamps needs to be implemented in full compliance
with CEFTA rules. Conclusion The customs legislation
is almost fully aligned with the EU acquis. The obligations stemming
from the Interim Agreement are being met well. The administrative and
operational capacity of the Serbian Customs Administration is good. It has the
administrative structures and adequate resources to implement and enforce the
customs legislation and make sure that procedures and working methods are
implemented effectively. However, in order to be able to address the future
challenges, the Customs Adminitration will need to be reinforced, notably to increase
post-clearance controls based on risk analysis, expand use of simplified
procedures for reliable economic operators, step up use of the guarantee
management system and upgrade interconnectivity and interoperability with the
EU IT systems. Customs procedures to guarantee correct application of the EU acquis
at the ABL with Kosovo have to be introduced. Overall, Serbia is already well on the way to meeting
the EU acquis and remains committed to reforms in the area of customs.
If it continues its efforts, Serbia should, in the medium term, have the
capacity to comply with the requirements of the EU acquis in the field
of customs.
3.30.
Chapter 30: External
relations
The EU acquis in
the field of external relations consists mainly of directly applicable EU
legislation which does not require transposition into national law. The Interim Agreement contains the core trade part of the
Stabilisation and Association Agreement that establishes a free-trade area
between Serbia and the EU. It includes provisions requiring the Parties to act
in accordance with the rules of the WTO or relevant international obligations.
Serbia is also required to enhance trade liberalisation within the Western
Balkans and with other countries involved in the enlargement process. Upon accession, Serbia will be bound by the common
commercial policy. Serbia will have to apply all the Free-Trade Agreements,
the Customs Union and all the autonomous (preferential and non-preferential)
trade regimes that the EU grants to certain non-EU countries, including the
Generalised System of Preferences (GSP). Serbia will also have to terminate all
its current preferential trade agreements with non-EU countries and bring all
other agreements, including non-preferential trade agreements, into line with
the obligations imposed by EU membership. Moreover, Serbia will become party to
the European Economic Area (EEA) and will have to apply all the EU's
international trade agreements. Serbia is not yet a member of the World Trade
Organisation (WTO) but the membership negotiations are at a very advanced
stage. The bilateral track of negotiations has already been completed with most
WTO partners, while progress has also been made on the multilateral track.
Finalisation of the process will depend on the pace of the remaining bilateral
negotiations and further legislative reforms. Serbia's commitments under the
General Agreement on Trade in Services (GATS) are generally in accordance with
those given by the EU. However, the final commitments will have to be verified
when the last outstanding bilateral negotiations are concluded, especially in
the areas sensitive for the EU, such as energy, pipelines and road transport.
Depending on the final terms of Serbia's accession to the WTO, Serbia might
have to modify its WTO commitments upon accession to the EU. The average Serbian ad valorem tariff rate applied
is 22.16% for agricultural products, 8.72% for fish and fishery products and
6.31% for industrial goods, with an overall average of 9.72%. The EU average
MFN ad valorem tariff rate is 9.74% for agricultural products, 10.02%
for fish and fishery products and 3.75% for industrial goods, with an overall
average of 4.83%. Upon accession to the EU, Serbia will have to apply the EU
Common Customs Tariff. Serbia's Law on foreign trade transactions and implementing
bylaws include provisions on anti-dumping, countervailing and safeguard
measures. Upon accession, Serbia will have to repeal national legislation
related to its trade defence instruments and measures based on this legislation
and apply the EU rules and measures. Serbia does not apply any Generalised System of
Preferences (GSP) scheme. Upon accession, Serbia will need to apply the EU
GSP scheme. The export credits scheme in Serbia is operated
solely by the State-owned Serbian Export Credit and Financing Agency (AOFI)
that covers both short-term and medium-/long-term export credit insurance. The
AOFI also provides short-term support for exports to the EU. It applies the
OECD method and is a member of the Berne Union. Upon accession, Serbia will
need to ensure full alignment of its short-term export credit insurance system
with the EU competition rules. As regards medium- and long-term export credits,
Serbia will need to align its relevant legislation with the relevant EU acquis
and EU international obligations. Concerning dual-use export controls, Serbia applies
legislation adopted in 2005 and amended in 2009 that establishes an export
control system for dual-use goods, weapons and military equipment. Serbia is
not a member of the Kimberley process and does not control trade with rough
diamonds. Upon accession it will have to apply the relevant EU regulation. As regards free-trade agreements (FTA) with third
countries, Serbia has been a member of CEFTA since May 2007. Serbia signed an
FTA with the European Free Trade Association (EFTA). Serbia also has bilateral
FTAs with Turkey, the Russian Federation, Belarus and Kazakhstan. Since the
customs union of the Russian Federation, Belarus and Kazakhstan entered into
force, Serbia has been renegotiating the FTAs with the Russian Federation and
Belarus in order to harmonise trade arrangements with all three countries in
this customs union. Serbia has been implementing 46 bilateral investment
treaties (BIT) and is currently
negotiating agreements of the same type with several other countries. Some of
the provisions included in Serbia's BITs will need to be aligned with the EU acquis
in line with the obligations of the Treaty on the Functioning of the European
Union and the relevant case law. Serbia has been implementing 125 agreements on
trade and economic cooperation and is currently negotiating agreements of the
same type with several other countries. These agreements would also need to be
brought into line with the EU acquis upon Serbia's accession to the EU. With regard to administrative capacity, participation in
the EU decision-making mechanisms on trade and implementation and enforcement
of the EU acquis will require strengthening coordination mechanisms
between various ministries. As regards development policy and humanitarian aid
policies, Serbia is an aid recipient and, so far, has provided limited ad
hoc aid to non-EU countries on a case-by-case basis, notably in response to
natural disasters. There is no legislation on development policy and
dispatching humanitarian aid and no relevant administrative structures are in
place. In relation to setting up an integrated emergency
management system, in 2009 Serbia adopted a Law on emergency situations,
establishing a Sector for Emergency Management in the Ministry of the Interior
that coordinates the activities of all institutions in emergency situations.
The National Disaster Response Team coordinates international assistance that
can be provided upon approval by the government. Serbia needs to continue to develop its legal framework to
cover development and humanitarian aid, including civil protection, in non-EU
countries in accordance with the relevant EU policies and principles. Serbia
will need to strengthen the administrative structures inside the government and
its ability to participate in the EU decision-making process on development and
humanitarian aid policies. Conclusion In preparing for membership, Serbia will need to ensure
that its commercial policy and commitments to third countries and international
organisations are aligned and coordinated with those of the EU. It is important
that Serbia is aware of the obligations in connection with development and
humanitarian policy, and it needs to establish capacity to fulfil the obligations
of EU membership in this area. Overall, if it continues its efforts, Serbia should, in
the medium term, have the capacity to comply with the EU requirements in the
field of external relations.
3.31.
Chapter 31: Foreign,
Security and Defence Policy
The common foreign and
security policy (CFSP) and the common security and defence policy (CSDP) are
based on legal acts, including legally binding international agreements, and on
political documents. The EU acquis consists of EU statements, Council
decisions, political declarations, joint actions, common positions and
agreements. Member States must be able to conduct political dialogue in the
framework of CFSP, to align with EU statements, to take part in EU actions and
to apply any restrictive measures agreed. Applicant countries are required to
progressively align with EU statements and to apply restrictive measures when
and where required (Concerning relations with other enlargement countries
and Member States, see Political criteria 2.3 – Regional issues and
international obligations). Serbia generally supports the efforts of the European Union
to strengthen its role as a cohesive force in international relations and its
ability to promote European interests and values on the international scene.
Serbia has declared that it is committed to being ready and able to participate
fully and actively in the EU's CFSP and CSDP, as defined in the Treaty on
European Union, by the date of accession. Serbia's Constitution prescribes that
international treaties ratified must not contravene constitutional norms. Serbia's administrative structures are mostly adequate, but
further strengthening will be needed. The Ministry of Foreign Affairs bears the
main responsibility for conducting foreign policy and international relations.
An Assistant Minister acts at the same time as Head of the Directorate for the
European Union. A specialised CSDP Unit has been established within the
Directorate for Security Policy. There is no specific post of European
correspondent but this function is performed by the Head of the Unit for EU
institutions within the EU Directorate. Serbia has 63 embassies, 7 permanent
missions and 20 general consulates. The diplomatic service consists of 1,078
employees, of whom 536 are in Belgrade. The Ministry of Defence is responsible
for defence policy. A Unit for European integration and regional initiatives
was established in 2010. The legislative framework for defence reforms and for
democratic control over security forces has been completed. The Ministry of Economic
Affairs and Regional Development is in charge of controlling exports of arms,
military equipment and dual-use goods. The Ministry needs more staff in order
to be fully capable of implementing policies and adjusting them to the EU
legislation. As regards political dialogue, Serbia has
established close political consultations with EU Member States. The
Stabilisation and Association Agreement includes inter alia provisions
for establishing a political dialogue on CFSP matters. Serbia supported the adoption
of the UN resolution on EU participation in the work of the UN General
Assembly. Serbia has in most instances, when invited, aligned itself with
Council decisions, EU declarations and démarches. Serbia will progressively
need to take a more consistent approach on aligning with EU positions. (As
regards the International Criminal Court, see Political criteria 2.3 — Regional
issues and international obligations.) Serbia's relations with other countries are good, overall.
It has established a foreign policy based on four pillars – the EU, the USA,
Russia and China. Strategic partnerships have been formally established with
several countries, including China, Russia and two EU Member States (Italy and
France). Serbia is playing a constructive role concerning regional
cooperation in South East Europe and participates in initiatives such as the
South East European Cooperation Process, the Central European Initiative, and
the Adriatic-Ionian Initiative. However, an agreement
remains to be found on a sustainable solution for the participation of Kosovo
in regional fora. (See Political criteria). Serbia implements United Nations Security Council restrictive
measures. However, there is no system for tracking its implementation of EU
restrictive measures. Serbia needs to establish a consistent approach and
consolidated data in this connection. Serbia is participating
in most international export control regimes and instruments concerning the non-proliferation
of weapons of mass destruction. Serbia has applied to become a party to the
Wassenaar Arrangement on export controls for conventional arms and dual-use
goods and technologies. The Law on foreign trade in arms, military equipment
and dual-use goods was adopted in 2005. Serbia incorporated into its national law
in 2008 the criteria guiding arms export licensing in the EU, as laid down in
the 1998 EU Code of Conduct on arms exports. Serbia remains to fully align with
the EU acquis laying down common rules governing exports of military
technology and equipment. The national Strategy for control of small arms and
light weapons was adopted in 2010. A national coordinator for the Strategy
remains to be appointed. The Ministry of the Interior has been destroying
surplus weapons but additional efforts are needed to complete collection of
illegal weapons and destroy them. Regarding nuclear safeguards, Serbia is a party to the main
non-proliferation treaties. With regard to cooperation with international
organisations, Serbia is a member of the UN, the Council of Europe, the
OSCE and other major international organisations and agreements. Serbia
participates in the NATO Partnership for Peace Programme that it joined in
2006. As regards security measures, Serbia has adopted the
legal basis and introduced the basic practical arrangements necessary to comply
with the Council decisions on information security, including on handling of
classified information. An agreement with the EU on security procedures for
exchanging and protecting classified information was signed in May 2011. As regards the common
security and defence policy (CSDP), Serbia is prepared to participate actively
in the EU civil and military crisis management missions. An agreement
establishing a framework for participation by Serbia in EU crisis management operations
was signed in June 2011. The Serbian parliament adopted in February 2011 a
decision approving the annual plan for participation by the Serbian army in
multinational operations. This plan envisages participation in two EU CSDP
operations: EUTM and EU NAVFOR Somalia. The Serbian military forces are
currently participating in five UN peacekeeping operations, MONUSCO, UNMIL,
UNOCI, UNIFIL and UNFYCYP. The Serbian police is taking part in two UN
missions, UNMIL and MINISTAH. Conclusion The legal and institutional
framework covering the common foreign and security policy, including the common
security and defence policy, is largely in place. Serbia has signed an
agreement on security procedures for exchanging and protecting classified
information and another on participation in CSDP operations with the EU. Serbia
needs to align further with EU statements and Council decisions. Overall, Serbia should be able to fulfil its obligations
under the CFSP and CSDP in the medium term, provided it takes the necessary
legal and administrative measures and makes the necessary adjustments.
3.32.
Chapter 32: Financial
Control
The EU acquis on
financial control relates to the following policy areas: public internal
financial control (PIFC) - which covers internationally agreed standards
and EU good practice on internal control across the entire public sector - and external
audit which covers the operational and financial independence of the
external audit function (national audit office). The PIFC is made up of three
pillars: managerial accountability underpinned by financial management and
control systems; functionally independent internal audit systems; and a Central
Harmonisation Unit for developing methodologies and standards relating to the
first two pillars. Management and control
of EU funds are discussed in the other relevant chapters (e.g. on agriculture
and rural development, regional policy, coordination of structural instruments
or fisheries). This chapter covers the more general aspects of internal control
and external audit of national funds. It also covers protection of the EU's
financial interests, including administrative cooperation and criminal law
protection (the PIF Convention and its protocols). Finally, the section on protection
of the euro against counterfeiting deals with the first-pillar aspects of
this issue. Serbia is still at a
relatively early stage of implementing the public internal financial control
(PIFC) system. The government adopted a PIFC policy paper for 2009-14 in
July 2009. The legal framework for PIFC, which is provided by the Budget System
Law and two implementing regulations, one on Financial Management and Control
(FMC), the other on internal audit, applies to all users of the national
budget. However, the legal framework is not yet fully in line with
international standards. The relevant provisions in the Budget System Law and
implementing regulations need to be revised, especially to ensure better
definition of managerial accountability and separation of the roles of manager
and accountant. The provisions on centralised budget inspection will need to be
amended as well, as inspection is not yet PIFC-compatible. The PIFC policy
paper for 2009-2014 envisages that the provisions will be amended in 2014, once
internal control systems have been properly developed. A Central Harmonisation
Unit (CHU) was formally established in March 2010 as a department in the
Ministry of Finance, but has been in place de facto for over three
years. The CHU has limited staff and so far has focused mainly on training,
both for internal auditors and on control and risk management. More
awareness-raising activities need to be organised with the senior management of
budget users in order to improve their understanding of their role and
responsibilities in setting up internal control systems and of the role of an
internal auditor within an organisation. Internal audit has been the main focus of PIFC development
in Serbia. A formal framework for internal audit at central government level is
largely in place. By September 2011 there were around 40 internal audit units.
Three direct budget users who are required by law to establish an internal
audit unit had not yet done so. Introduction of internal audit at local level
has not started, except for the City of Belgrade. Around 130 internal auditors
have been trained by the CHU and around 70 of them have been certified. An
updated certification programme with more emphasis on practical audit work is
being developed. Internal audit cannot however grow to its full potential if
the public sector internal control as a managerial responsibility is not
developed in parallel. Development of FMC is currently focusing on the legality
and regularity of financial transactions, without any explicit consideration
for economy, efficiency and effectiveness. Development of FMC is severely
weakened by the fact that there is not yet a well-developed understanding of
managerial accountability. Administrative reforms, including proper delegation
structures, would also be required for further development of FMC. The CHU
would therefore need to work closely with organisations responsible for overall
public administration and civil service reforms. External audit is at an early stage of development in Serbia.
The State Audit Institution (SAI) has been doing audit work since 2009. The
independence of the SAI is anchored in the Constitution. The 2005 SAI Law
(amended in 2010) is broadly in line with the INTOSAI standards. It provides a
broad audit mandate, including for audit of EU funds. The law empowers the SAI
to implement both financial and performance audits and provides that the SAI is
independent for planning and implementing audits. Amendments to the SAI Law
should be considered in order to strengthen both the functional and the
operational independence of the SAI. The SAI is in the
institution-building phase and is gradually building up its full potential. By
September 2011, 92 posts had been filled out of the 159 planned, including 34
audit positions. Recruitment is continuing. The SAI was able to conduct a
limited audit of execution of the State budget in 2008 and 2009, but is
increasing the coverage for the audit of the 2010 financial statements. The SAI
does not yet have a strategic development plan in place. A financial audit
manual and associated methodology are being prepared. There are plans to
introduce performance audits from 2013 onwards. Full implementation of the
INTOSAI standards cannot be achieved until the posts have been filled and
auditors properly trained. The staff training and certification programme needs
to be adopted and implemented. In line with the SAI Law, the SAI must submit to
competent authorities all evidence of misdemeanours and criminal offences. In
view of the time required to prepare evidence, the SAI currently spends a lot
of time on initiating procedures against officials. It should look for
alternative approaches to meet this requirement, because it is limiting the
capacity for actual audit work. The SAI reports to
parliament by submitting an annual activity report, special reports throughout
the year and an audit report on budget execution to the Committee on Finance,
the State Budget and Control of Public Spending. No deadline has been set in
the law for submission of the budget execution report, but in practice it is
submitted in December, allowing sufficient time for parliament to take the
audit findings into account during the budget discharge procedure. Even though
parliament started to discuss the SAI reports in 2010, the follow-up is still
rather weak. With regard to protection
of the EU's financial interests (PFI), Serbia's national penal legislation
covers many elements of the Convention on the protection of the EU's financial
interests and its protocols, such as on the treatment of suspected fraud cases,
definitions of active and passive bribery, abuse of official status, the
liability of legal entities, fraud, smuggling, money laundering and related
penalties. However, further alignment of the national legislation is needed to
provide for full implementation of the PFI instruments upon accession. Although a solid track
record of operational cooperation with the European Commission and its European
Anti-Fraud Office (OLAF) has yet to be developed, Serbia provides sufficient
institutional capacity for operational cooperation on protection of the EU's
financial interests. Serbia now needs to designate an authority as a contact
point for cooperation with OLAF. A national anti-fraud structure for protecting
the EU's financial interests involving all relevant authorities also needs to
be set up. In the area of protection
of the euro against counterfeiting, Serbia has a national law which
covers the definition of counterfeiting of money and also of value
tokens. Serbia would need further to develop the legal basis and
procedures for transmission of examples of counterfeit foreign currency notes
and coins. With regard to institutional capacity, cooperation between the
National Bank of Serbia, the Ministry of the Interior, the Public Prosecutor's
Office and courts is well-established. By law, the National Bank of Serbia is
responsible for establishing the authenticity of suspect money. The National
Bank is reorganising the procedures for technical analysis and processing of
information on counterfeit bank notes and coins in order to act as a national
analysis centre. The Serbian authorities are participating in relevant EU and
international training programmes on regular basis. Conclusion Serbia has started preparations, but it will have to make
considerable and sustained efforts to align with the EU acquis and to
implement it effectively in the medium term. The national legislation in this
chapter will need to be further aligned. Implementation of PIFC will
require better understanding of the managerial accountability principle, and
considerable additional training and awareness-raising especially with the
senior management will be needed. With regard to external audit, the SAI
is still at the institution-building phase and does not yet have sufficient
staff for full audit coverage in line with the SAI Law. In the areas of protection
of the EU's financial interests and protection of the euro against
counterfeiting, the implementing structures still need to be set up. Overall, Serbia needs to undertake sustained efforts to
align with the EU acquis and to implement it effectively in the medium
term.
3.33.
Chapter 33: Financial and
budgetary provisions
This chapter covers the
rules concerning the financial resources necessary for funding the EU budget ('own
resources'). These own resources are made up mainly of contributions from
Member States based on traditional own resources derived mainly from customs
duties and sugar levies, resources based on VAT collection and resources based
on the level of GNI (gross national income). The EU acquis
under this chapter consists of EU legislation that is directly binding on the
Member States and does not require transposition into national law. However,
all necessary steps need to be taken to ensure, from accession, full and
correct application of the rules on own resources. The basic principles
and institutions for the underlying policy areas shaping the traditional own
resources system are in place in Serbia. A national VAT system is in
operation (under the Law on VAT), customs duties are levied on imports (under
the Customs Tariff Law) and national accounts and GDP/GNI are harmonised
with ESA95 standards. Further progress is needed for full implementation of ESA
95 standards. As regards operational
management of the own resources system, Serbia will need to ensure, in due
course, the human and administrative resources necessary to apply the EU
rules concerning payments to the EU budget. As a rule, Member States must have
appropriate administrative capacity to coordinate adequately and ensure correct
forecasting, calculation, accounting, collection, payment and control of own
resources. Impact Given its GDP level,
the impact of Serbia's accession on the EU budget is expected to be limited.
This applies both to its likely receipts under the various EU expenditure
programmes and to its expected contribution to the EU budget based on
application of the own resources rules. Conclusion There are no
significant divergences between the systems in Serbia and the EU in terms of
the basic principles and institutions in the policy areas underlying
application of the own resources rules. Overall, if it continues its efforts, Serbia should, in
the medium term, have the capacity to comply fully with the requirements of the
EU acquis in this area.
3.34.
General evaluation
The ability of Serbia
to assume the obligations of membership has been evaluated on the basis of the
following indicators: the obligations set out
in the Stabilisation and Association Agreement; progress with adoption,
implementation and enforcement of the EU acquis. Overall, Serbia has
smoothly implemented its obligations under the Interim Agreement and is
generally respecting its commitments under the Stabilisation and Association
Agreement. In 2008 Serbia adopted
a National Programme for Integration into the European Union, which is a
comprehensive and ambitious plan for the period 2008-2012 providing for
approximation of its national legislation to the EU acquis. Since then,
significant progress has been made with adopting legislation aligned with the
EU acquis, particularly on the internal market, statistics,
trade-related provisions, customs and taxation. Administrative capacity is
overall well developed and the judiciary is undergoing a significant overhaul.
However, the country faces challenges in implementing and enforcing
legislation. Particular and continued attention to the fight against corruption
will be expected over time. The country will need to make additional efforts in
order to assume the obligations of membership in the medium term. If it continues its
efforts Serbia should, in the medium term, have the capacity to comply with the
requirements of the acquis in the following fields: ·
Company law; ·
Fisheries; ·
Taxation; ·
Economic and monetary
policy; ·
Statistics; ·
Enterprise and industrial
policy; ·
Science and research; ·
Education and culture; ·
Customs union; ·
External relations; ·
Foreign, security and
defence policy; ·
Financial and budgetary
provisions. ·
Serbia will have to
undertake additional efforts to align with the acquis and to implement it
effectively in the medium term in the following fields: ·
Free movement of goods; ·
Freedom of movement for
workers; ·
Right of establishment and
freedom to provide services; ·
Free movement of capital; ·
Public procurement; ·
Intellectual property law; ·
Competition policy; ·
Financial services; ·
Information society and
media; ·
Food safety, veterinary and
phytosanitary policy; ·
Transport policy; ·
Energy; ·
Social policy and
employment; ·
Trans-European networks; ·
Regional policy and
coordination of structural instruments; ·
Consumer and health
protection. ·
Further adjustments of the
legal and institutional framework, in particular strengthening of
administrative and implementation capacity are needed in the above areas. ·
Serbia will have to make
considerable and sustained efforts to align with the EU acquis and to implement
it effectively in the medium term in the following fields: ·
Agriculture and rural
development; ·
Judiciary and fundamental
rights; ·
Justice, freedom and
security; ·
Financial control. Considerable adjustments
of the legal and institutional framework and significant strengthening of
administrative and implementation capacity are needed in these areas. Regarding the environment and climate change, further
coordinated and sustained efforts will be needed to align with the EU acquis
and to implement it effectively. These should include substantial investments
and strengthening of the administrative capacity for enforcement of legislation
in order to achieve compliance on the most important issues, including climate
change, in the medium term. Full compliance with the acquis could be
achieved only in the long term and would necessitate higher levels of
investment. Statistical Annex STATISTICAL DATA (as of 30.09.2011) || || || || || || || || || || || || Serbia || || || || || || || || || || || || || || || || || || || || || || || Basic data || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Population (thousand) || || 7 528 || 7 505 || 7 502 || 7 491 || 7 470 || 7 456 || 7 425 || 7 398 || 7 366 || 7 335 || 7 307 Total area of the country (km²) || || 77 474 || 77 474 || 77 474 || 77 474 || 77 474 || 77 474 || 77 474 || 77 474 || 77 474 || 77 474 || 77 474 || || || || || || || || || || || || National accounts || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Gross domestic product (GDP) (million national currency) || || 384 225 || 762 178 || 972 580 || 1 125 840 || 1 380 712 || 1 683 483 || 1 962 073 || 2 276 886 || 2 661 387 || 2 713 206 || 2986613 GDP (million euro) || 1) || 25 539 || 12 821 || 16 028 || 17 306 || 19 026 || 20 306 || 23 305 || 28 468 || 32 668 || 28 883 || 28 985 GDP (euro per capita) || 1) 2) || 3 398 || 1 709 || 2 137 || 2 313 || 2 549 || 2 729 || 3 144 || 3 857 || 4 445 || 3 945 || : GDP (in Purchasing Power Standards (PPS) per capita) || || : || : || : || : || : || 7 100 || 7 700 || 8 200 || 9 000 || 8 300 || : GDP per capita in PPS (EU-27 = 100) || || : || : || : || : || : || 32 || 32 || 33 || 36 || 35 || 35 Real GDP growth rate (growth rate of GDP volume, national currency, % change on previous year) || || : || 5.3 || 4.3 || 2.5 || 9.3 || 5.4 || 3.6 || 5.4 || 3.8 || -3.5 || 1.0 Employment growth (national accounts, % change on previous year) || || : || 2.0 || -0.4 || -4.4 || 1.1 || -5.5 || 7.2 || 2.3 || 1.0 || : || : Labour productivity growth: GDP growth per person employed (% change on previous year) || || 5.6 || 3.5 || 4.3 || 7.1 || 7.1 || 11.8 || -1.8 || 4.5 || 4.5 || : || : Real unit labour cost growth (national accounts, % change on previous year) || || : || : || : || : || : || : || : || : || : || : || : Labour productivity per person employed (GDP in PPS per person employed, EU-27 = 100) || || : || : || : || : || : || : || : || : || : || : || : Gross value added by main sectors (%) || || || || || || || || || || || || Agriculture and fisheries || || 19.9 || 19.8 || 15.2 || 13.3 || 13.8 || 12.1 || 11.3 || 10.3 || 10.7 || 9.7 || : Industry || || 26.7 || 25.1 || 25.0 || 23.6 || 24.6 || 24.2 || 24.1 || 23.0 || 22.5 || 23.0 || : Construction || || 3.8 || 3.4 || 3.7 || 4.5 || 5.1 || 4.8 || 4.9 || 5.3 || 5.6 || 4.9 || : Services || || 51.5 || 53.5 || 59.0 || 60.3 || 58.6 || 61.1 || 62.0 || 63.7 || 63.9 || 65.5 || : Final consumption expenditure, as a share of GDP (%) || || 97.2 || 104.0 || 107.0 || 103.0 || 97.1 || 95.9 || 96.0 || 96.9 || 97.1 || 99.8 || : Gross fixed capital formation, as a share of GDP (%) || || 12.7 || 10.7 || 12.4 || 16.8 || 19.2 || 19.0 || 21.0 || 24.3 || 23.8 || 18.8 || : Changes in inventories, as a share of GDP (%) || || -4.6 || 1.0 || -1.4 || -2.3 || 9.0 || 4.7 || 3.1 || 4.7 || 6.0 || -1.0 || : Exports of goods and services, relative to GDP (%) || || 11.3 || 25.6 || 23.8 || 25.9 || 25.5 || 28.3 || 31.4 || 30.6 || 31.4 || 29.5 || : Imports of goods and services, relative to GDP (%) || || 16.7 || 41.3 || 41.8 || 43.4 || 50.8 || 47.9 || 51.5 || 56.5 || 58.2 || 47.2 || : || || || || || || || || || || || || Industry || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Industrial production volume index (2005=100) || || 94.2 || 94.3 || 96.0 || 93.3 || 99.4 || 100.0 || 104.2 || 108.5 || 110.0 || 96.1 || 98.5 || || || || || || || || || || || || Inflation rate || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Annual average inflation rate (CPI, % change on previous year) || || 79.6 || 93.3 || 16.6 || 9.9 || 11.4 || 16.2 || 11.7 || 7.0 || 13.5 || 8.6 || 6.8 || || || || || || || || || || || || Balance of payments || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Balance of payments: current account total (million euro) || || -158 || 282 || -671 || -1 347 || -2 620 || -1 778 || -2 356 || -5 053 || -7 054 || -2 084 || -2 082 Balance of payments current account: trade balance (million euro) || || -1 720 || -2 602 || -3 398 || -3 538 || -5 201 || -4 278 || -4 981 || -7 069 || -8 501 || -5 118 || -4 773 Balance of payments current account: net services (million euro) || || 154 || 272 || 136 || 179 || 133 || -5 || -41 || -261 || -185 || 18 || 5 Balance of payments current account: net income (million euro) || || 0 || 7 || -74 || -119 || -173 || -259 || -330 || -599 || -922 || -502 || -670 Balance of payments current account: net current transfers (million euro) || || 1 409 || 2 605 || 2 665 || 2 131 || 2 621 || 2 764 || 2 996 || 2 876 || 2 554 || 3 518 || 3 356 of which government transfers (million euro) || || 303 || 652 || 519 || 423 || 391 || 268 || 185 || 166 || 163 || 197 || 193 Net foreign direct investment (FDI) (million euro) || || 54 || 184 || 500 || 1 194 || 770 || 1 250 || 3 323 || 1 821 || 1 824 || 1 372 || 860 Foreign direct investment (FDI) abroad (million euro) || || -2 || -39 || -34 || -140 || 2 || -18 || 70 || -692 || -193 || -38 || -143 of which FDI of the reporting economy in EU-27 countries (million euro) || || : || : || : || 1 || 2 || 4 || 4 || -53 || -78 || -28 || -33 Foreign direct investment (FDI) in the reporting economy (million euro) || || 56 || 223 || 534 || 1 334 || 772 || 1 268 || 3 392 || 2 513 || 2 018 || 1 410 || 1 003 of which FDI of EU-27 countries in the reporting economy (million euro) || || : || : || : || 850 || 477 || 963 || 2 008 || 1 813 || 1 470 || 808 || 776 || || || || || || || || || || || || Public finance || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 General government deficit/surplus, relative to GDP (%) || || : || : || : || : || : || 1.0 || -1.6 || -1.9 || -2.6 || -4.5 || -4.7 General government debt relative to GDP (%) || || : || 105.2 || 72.9 || 66.9 || 55.3 || 52.2 || 37.7 || 30.92 || 29.2 || 34.8 || 42.9 || || || || || || || || || || || || Financial indicators || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Gross foreign debt of the whole economy, relative to GDP (%) || || 131.7 || 85.6 || 58.7 || 55.9 || 49.8 || 60.1 || 60.9 || 60.2 || 64.6 || 77.9 || 82.6 Gross foreign debt of the whole economy, relative to total exports (%) || || 454.5 || 407.3 || 300.9 || 251.6 || 211.5 || 228.9 || 204.1 || 197.3 || 207.6 || 265.3 || 236.2 Money supply: M1 (banknotes, coins, overnight deposits, million euro) || || 461 || 975 || 1 525 || 1 454 || 1 410 || 1 695 || 2 533 || 3 141 || 2 717 || 2 695 || 2 401 Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) || || 561 || 1 141 || 1 803 || 1 828 || 1 853 || 2 248 || 3 531 || 4 928 || 4 459 || 4 555 || 3 891 Money supply: M3 (M2 plus marketable instruments, million euro) || || 1 111 || 2 101 || 3 113 || 3 583 || 4 093 || 5 367 || 8 031 || 11 407 || 11 198 || 12 573 || 12 899 Total credit by monetary financial institutions to residents (consolidated) (million euro) || || 4 067 || 4 866 || 3 519 || 3 949 || 4 902 || 6 531 || 8 153 || 10 771 || 12 926 || 14 863 || 17 544 Interest rates: day-to-day money rate, per annum (%) || || : || : || : || : || : || 9.9 || 11.5 || 8.3 || 18.4 || 9.5 || 12.0 Lending interest rate (one year), per annum (%) || || 27.1 || 16.9 || 15.2 || 14.4 || 21.3 || 22.2 || 17.0 || 12.5 || 20.3 || 12.0 || 14.0 Deposit interest rate (one year), per annum (%) || || : || : || 3.8 || 3.2 || 3.0 || 6.0 || 11.0 || 7.5 || 15.3 || 7.0 || 9.0 euro exchange rates: average of period - 1 euro = … national currency || || 49.870 || 59.780 || 60.660 || 65.130 || 72.700 || 83.000 || 84.110 || 79.960 || 81.440 || 93.950 || 103.040 Effective exchange rate index (2005=100) || || 157.3 || 126.8 || 126.4 || 123.8 || 114.2 || 100.0 || 98.5 || 105.5 || 105.4 || 90.1 || 81.5 Value of reserve assets (including gold) (million euro) || || : || : || 2 186 || 2 836 || 3 104 || 4 921 || 9 020 || 9 634 || 8 162 || 10 602 || 10 002 || || || || || || || || || || || || External trade || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Value of imports: all goods, all partners (million euro) || || : || : || : || : || : || 8 439.2 || 10 462.6 || 13 500.9 || 15 683.9 || 11 337.3 || 11 652.8 Value of exports: all goods, all partners (million euro) || || : || : || : || : || : || 3 148.4 || 4 991.9 || 6 615.1 || 7 039.2 || 5 631.8 || 7 066.7 Trade balance: all goods, all partners (million euro) || || : || : || : || : || : || -5 290.9 || -5 470.7 || -6 885.8 || -8 644.8 || -5 705.5 || -4 586.1 Terms of trade (export price index / import price index) || 3) || 100.2 || 103.1 || 98.0 || 101.6 || 108.4b || 98.4 || 104.5 || 102.6 || 97.6 || 100.9 || 100.1 Share of exports to EU-27 countries in value of total exports (%) || || : || : || : || : || : || 60.2 || 58.2 || 58.1 || 56.0 || 54.8 || 58.7 Share of imports from EU-27 countries in value of total imports (%) || || : || : || : || : || : || 54.2 || 54.4 || 55.0 || 53.5 || 55.1 || 54.3 || || || || || || || || || || || || Demography || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Natural growth rate: natural change (births minus deaths) (per 1000 inhabitants) || || -4.0 || -2.7 || -3.3 || -3.3 || -3.5 || -4.6 || -4.3 || -4.7 || -4.6 || -4.6 || : Infant mortality rate: deaths of children under one year of age per 1000 live births || || 10.6 || 10.2 || 10.1 || 9.0 || 8.1 || 8.0 || 7.4 || 7.1 || 6.7 || 7.0 || 6.7 Life expectancy at birth: male (years) || || 68.9 || 69.6 || 69.7 || 69.9 || 70.0 || 70.2 || 70.8 || 70.9 || 71.3 || 71.4 || : Life expectancy at birth: female (years) || || 74.4 || 75.0 || 75.0 || 75.1 || 75.5 || 75.6 || 76.1 || 76.5 || 76.6 || 76.7 || : || || || || || || || || || || || || Labour market || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Economic activity rate (15-64): share of population aged 15-64 that is economically active (%) || || 68.2 || 68.9 || 68.4 || 68.9 || 66.4 || 65.2 || 63.6 || 63.4 || 62.7 || 60.6 || 59.0 * Employment rate (15-64): share of population aged 15-64 in employment (%) || || 59.2 || 59.7 || 58.5 || 57.9 || 53.4 || 51.0 || 49.9 || 51.5 || 53.7 || 50.4 || 47.2 Employment rate male (15-64) (%) || || 68.2 || 68.6 || 67.1 || 67.0 || 63.1 || 61.2 || 59.2 || 60.0 || 62.3 || 58.1 || 54.4 Employment rate female (15-64) (%) || || 50.4 || 50.8 || 50.0 || 48.7 || 44.0 || 40.8 || 40.6 || 43.0 || 45.3 || 43.0 || 40.1 Employment rate of older workers (55-64): share of population aged 55-64 in employment (%) || || 43.3 || 42.1 || 42.0 || 44.3 || 37.3 || 35.4 || 32.6 || 33.5 || 36.7 || 35.4 || 32.8 Employment by main sectors (%) || || || || || || || || || || || || Agriculture || 4) || : || : || : || : || 24.0 || 23.3 || 20.5 || 20.8 || 25.1 || 23.9 || 22.2 Industry || 4) || : || : || : || : || 21.7 || 21.5 || 23.3 || 23.4 || 19.9 || 20.1 || 21.0 Construction || 4) || : || : || : || : || 5.2 || 6.1 || 6.0 || 6.1 || 6.3 || 5.2 || 5.0 Services || 4) || : || : || : || : || 48.9 || 49.0 || 50.1 || 49.7 || 48.6 || 50.8 || 51.7 Unemployment rate: share of labour force that is unemployed (%) || || 13.3 || 13.3 || 14.5 || 16.0 || 18.7 || 21.1 || 21.0 || 18.3 || 13.6 || 16.1 || 19.2 Share of male labour force that is unemployed (%) || || 11.1 || 11.5 || 12.9 || 15.1 || 15.3 || 17.0 || 18.1 || 16.0 || 11.9 || 14.8 || 18.4 Share of female labour force that is unemployed (%) || || 15.9 || 15.7 || 16.5 || 17.2 || 23.1 || 26.5 || 24.9 || 21.2 || 15.8 || 17.8 || 20.2 Unemployment rate of persons < 25 years: share of labour force aged <25 that is unemployed (%) || || 50.2 || 46.4 || 45.3 || 44.8 || 48.1 || 47.7 || 47.8 || 43.7 || 35.2 || 41.6 || 46.2 Long-term unemployment rate: share of labour force that is unemployed for 12 months and more (%) || || 9.9 || 9.0 || 9.9 || 11.0 || 14.5 || 16.7 || 17.0 || 14.8 || 9.7 || 10.5 || 13.3 || || || || || || || || || || || || Social cohesion || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Average nominal monthly wages and salaries (national currency) || || 3 799.0 || 8 691.0 || 13 260.0 || 16 612.0 || 20 555.0 || 25 514.0 || 31 745.0 || 38 744.0 || 45 674.0 || 44 147.0 || 47 450.0 Index of real wages and salaries (index of nominal wages and salaries divided by the CPI/HICP) (2000=100) || || 100.0 || 118.4 || 154.9 || 176.5 || 196.1 || 209.5 || 233.3 || 266.1 || 275.7 || 245.4 || 246.9 * Early school leavers - Share of population aged 18-24 with at most lower secondary education and not in further education or training (%) || || : || : || : || : || 11.5 || 11.4 || 12.6 || 12.6 || 11.6 || 9.3 || 8.2 || || || || || || || || || || || || Standard of living || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Number of passenger cars per 1000 population || 5) || 169.2 || 184.2 || 179.1 || 185.3 || 194.8 || 198.6 || 203.6 || 199.7 || 201.8 || 223.2 || 214.5 Number of subscriptions to cellular mobile telephone services per 1000 population || || 155.1 || 251.1 || 322.5 || 399.3 || 578.8 || 700.4 || 894.7 || 1 142.6 || 1 194.2 || 1 351.3 || : || || || || || || || || || || || || Infrastructure || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Density of railway network (lines in operation, per 1000 km²) || || 49.2 || 49.2 || 49.2 || 49.2 || 49.2 || 49.2 || 49.2 || 49.2 || 49.2 || 49.2 || 49.2 Length of motorways (thousand km) || || 0.4 || 0.4 || 0.4 || 0.4 || 0.4 || 0.4 || 0.4 || 0.4 || 0.5 || 0.5 || 0.5 || || || || || || || || || || || || Innovation and research || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Spending on human resources (public expenditure on education in % of GDP) || || 2.4 || 2.4 || 3.0 || 3.7 || 3.4 || 3.1 || 3.3 || 3.5 || 3.6 || 3.8 || : * Gross domestic expenditure on R&D in % of GDP || || : || : || : || : || : || : || : || : || : || : || : Percentage of households who have Internet access at home (%) || || : || : || : || : || : || : || 18.5 || 26.3 || 33.2 || 36.7 || 39.0 || || || || || || || || || || || || Environment || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 * Greenhouse gas emissions, CO2 equivalent (tons, 1990=100) || || : || : || : || : || : || : || : || : || : || : || : Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP) || || : || : || : || : || : || 413.1 || 413.6 || 660.7 || : || : || : Electricity generated from renewable sources in % of gross electricity consumption || || 42.1 || 43.3 || 41.2 || 36.5 || 44.9 || 46.9 || 41.8 || 37.9 || 35.1 || 39.3 || : Road share of inland freight transport (% of tonne-km) || || : || : || : || : || : || : || : || : || : || : || : || || || || || || || || || || || || Energy || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Primary production of all energy products (thousand TOE) || || : || : || : || : || : || 7 729 || 7 925 || 8 797 || 9 441 || 9 487 || : Primary production of crude oil (thousand TOE) || || : || : || : || : || : || : || : || 654 || 652 || 676 || : Primary production of hard coal and lignite (thousand TOE) || || : || : || : || : || : || 6 696 || 6 966 || 7 073 || 7 369 || 7 330 || : Primary production of natural gas (thousand TOE) || || : || : || : || : || : || : || : || 198 || 231 || 232 || : Net imports of all energy products (thousand TOE) || || : || : || : || : || : || 1 431 || 1 686 || 7 260 || 7 477 || 5 046 || : Gross inland energy consumption (thousand TOE) || || : || : || : || : || : || 8 322 || 8 765 || 14 996 || 15 620 || 14 657 || : Electricity generation (thousand GWh) || || 32.0 || 31.0 || 31.0 || 32.0 || 34.0 || 36.0 || 36.0 || 37.0 || 37.0 || 38.0 || : || || || || || || || || || || || || Agriculture || Note || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 Agricultural production volume index of goods and services (producer prices, previous year=100) || || 87.0 || 118.0 || 97.0 || 93.0 || 120.0 || 95.0 || 100.0 || 92.0e || 108.0 || 101.0 || 99.4 Total utilised agricultural area (thousand hectare) || || 5 074 || 5 077 || 5 071 || 5 079 || 5 075 || 5 075 || 5 066 || 5 053 || 5 055 || 5 058 || 5 051 Livestock: cattle (thousand heads, end of period) || 6) || 1 162 || 1 128 || 1 112 || 1 102 || 1 079 || 1 096 || 1 106b || 1 087 || 1 057 || 1 002 || 938 Livestock: pigs (thousand heads, end of period) || 6) || 3 615 || 3 587 || 3 634 || 3 439 || 3 165 || 3 212 || 3 999b || 3 832 || 3 594 || 3 631 || 3 489 Livestock: sheep and goats (thousand heads, end of period) || 6) || 1 670 || 1 612 || 1 685 || 1 741 || 1 728 || 1 748 || 1 718b || 1 756 || 1 760 || 1 647 || 1 604 Production and utilisation of milk on the farm (total whole milk, thousand tonnes) || 7) || 1 585 || 1 594 || 1 596 || 1 590 || 1 593 || 1 616 || 1 602 || 1 562 || 1 548 || 1 488 || 1 471 Crop production: cereals (including rice) (thousand tonnes, harvested production) || 8) || 5 213 || 9 001 || 8 298 || 5 453 || 9 867 || 9 587 || 8 349 || 6 212 || 8 833 || 9 111 || 9 280 Crop production: sugar beet (thousand tonnes, harvested production) || || 1 070 || 1 806 || 2 098 || 1 738 || 2 814 || 3 101 || 3 189 || 3 206 || 2 300 || 2 798 || 3 325 Crop production: vegetables (thousand tonnes, harvested production) || || 1 043 || 1 283 || 1 340 || 1 172 || 1 340 || 1 289 || 1 348 || 1 128 || 1 277 || 1 257 || 1 314 : = not available p = provisional e = estimated value b = break in series * = Europe 2020 indicator All data refer to the territory of the Republic of Serbia
excluding Kosovo. The balance of
payments sign conventions are used for FDI. For FDI abroad a minus sign means
investment abroad by the reporting economy exceeded its disinvestment in the
period, while an entry without sign means disinvestment exceeded investment.
For FDI in the reporting economy an entry without sign means that investment
into the reporting economy exceeded disinvestment, while a minus sign indicates
that disinvestment exceeded investment. Footnotes: 1) GDP
estimations in Euro are based on the average annual exchange rate. 2) Mid-year
population figures used. 3) From 2004
onwards the data are not comparable with the previous years as since January
2004 Uniform Customs Document harmonized with EU regulations has been used. 4) 2004-2009,
data according to NACE Rev. 1.1. 5) Ministry of Interior
Affaires excluded the vehicles that were not registered before the given
deadline (1 month) 6) Since
2006, the reference date is 1 December (instead 15 January as it is for the
previous years). 7) In million
litres, includes
cows and sheep milk. 8) No rice
production; since 2005, triticale is included. [1] The rapporteur for Serbia is Mr Jelko Kacin. [2] According to Article 182 of the
Constitution 'Kosovo and Metohija' is an Autonomous Province ("In the Republic of Serbia, there are the Autonomous
Province of Vojvodina and the Autonomous Province of Kosovo and Metohija") and is referred to as a constituent part of Serbia's territory in
Article 114 (as part of the presidential oath). Serbia is prevented from
exercising administrative authority over the territory of Kosovo since UNSCR
1244/1999 placed Kosovo under interim administration. Kosovo declared its
independence on 17 February 2008. The Council noted in its conclusions on 18
February 2008 "that Member States will decide, in accordance with
national practice and international law, on their relations with Kosovo".
[3] Under UNSCR 1244/1999 [4] Voice over the Internet Protocol.