Europaudvalget 2002-03
EUU Alm.del Bilag 90
Offentligt
1461351_0001.png
Modtaget via elektronisk post. Der tages forbehold for evt. fejl
Europaudvalget
(Alm. del - bilag 90)
Det Europæiske Råd
(Offentligt)
Medlemmerne af Folketingets Europaudvalg
og deres stedfortrædere
Bilag
1
Journalnummer
400.C.2-0
Kontor
EU-sekr.
11. oktober 2002
Til underretning for Folketingets Europaudvalg vedlægges i forbindelse med Det Europæiske Råd i Bruxelles den 24.-25. oktober 2002 Kommissionens fremskridtsrapport for Letland,
KOM(2002) 700 endelig.
COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 9.10.2002
SEC(2002) 1405
2002
REGULAR REPORT
ON
 PDF to HTML - Convert PDF files to HTML files
1461351_0002.png
LATVIA’S
PROGRESS TOWARDS ACCESSION
{COM(2002) 700 final}
2002
REGULAR REPORT
ON
Latvia’s
PROGRESS TOWARDS ACCESSION
***********************
Table of contents
A. Introduction
*
a) Preface
*
b) Relations between the European Union and Latvia
*
Recent developments under the Europe Agreement, including bilateral trade
*
Accession Partnership
*
Action Plan for reinforcing administrative and judicial capacity
*
National Programme for the Adoption of the Acquis
*
Community Assistance
*
Twinning
*
Negotiations
*
B. Criteria for membership
*
1. Political criteria
*
Introduction
*
Recent developments
*
1.1. Democracy and the rule of law
*
The parliament
*
The executive
*
The judicial system
*
Anti-corruption measures
*
1.2. Human rights and the protection of minorities
*
Civil and political rights
*
Economic, social and cultural rights
*
Minority rights and the protection of minorities
*
1.3. General evaluation
*
2. Economic criteria
*
 PDF to HTML - Convert PDF files to HTML files
1461351_0003.png
2.1. Introduction
*
2.2. Summary of economic developments since 1997
*
2.3. Assessment in terms of the Copenhagen criteria
*
The existence of a functioning market economy
*
The capacity to cope with competitive pressure and market forces within the Union
*
2.4. General evaluation
*
3. Ability to assume the obligations of membership
*
Introduction
*
3.1. The chapters of the
acquis
*
Chapter 1: Free movement of goods
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 2: Free movement of persons
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 3: Freedom to provide services
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 4: Free movement of capital
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 5: Company law
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 6: Competition policy
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 7: Agriculture
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 8: Fisheries
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 9: Transport policy
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 10: Taxation
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 11: Economic and Monetary Union
*
Progress since the last Regular Report
*
Overall assessment
*
 PDF to HTML - Convert PDF files to HTML files
1461351_0004.png
Conclusion
*
Chapter 12: Statistics
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 13: Social policy and employment
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 14: Energy
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 15: Industrial policy
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 16: Small and medium-sized enterprises
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 17: Science and research
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 18: Education and training
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 19: Telecommunications and information technologies
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 20: Culture and audio-visual policy
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 21: Regional policy and co-ordination of structural instruments
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 22: Environment
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 23: Consumers and health protection
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 24: Co-operation in the field of justice and home affairs
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
 PDF to HTML - Convert PDF files to HTML files
1461351_0005.png
Chapter 25: Customs union
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 26: External relations
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 27: Common foreign and security policy
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusion
*
Chapter 28: Financial control
*
Progress since the last Regular Report
*
Conclusion
*
Chapter 29: Financial and budgetary provisions
*
Progress since the last Regular Report
*
Overall assessment
*
Conclusions
*
3.2. Translation of the
acquis
into the national languages
*
3.3. General evaluation
*
C. Conclusion
*
D. Accession Partnership and Action Plan for strengthening administrative and judicial capacity: Global assessment
*
Political criteria
*
Economic criteria
*
Ability to assume the obligations of membership
*
Annexes
*
Human Rights Conventions ratified by the Candidate Countries,
15 September 2002
*
Statistical data
*
Introduction
Preface
In Agenda 2000, the Commission said it would report regularly to the European Council on progress made by each of the candidate countries of Central and Eastern Europe with preparations for
membership, and that it would submit its first Report at the end of 1998.
The Luxembourg European Council decided that:
"From the end of 1998, the Commission will make Regular Reports to the Council, together with any necessary recommendations for opening bilateral intergovernmental conferences, reviewing the progress
of each Central and Eastern European applicant State towards accession in the light of the Copenhagen criteria, in particular the rate at which it is adopting the Union
acquis
[…] The Commission’s reports
will serve as the basis for taking, in the Council context, the cisions on the conduct of the accession negotiations or their extension to other applicants. In that context, the Commission will continue to follow
the method adopted by Agenda 2000 in evaluating applicant States’ ability to meet the economic criteria and fulfil the obligations deriving from accession."
On this basis, the Commission presented a first series of Regular Reports in October 1998, a second in October 1999, a third in November 2000, and a fourth in November 2001.
In its 2001 Enlargement Strategy Paper, which accompanied the 2001 Regular Reports, the Commission indicated that, given the pace of negotiations and the progress made so far, the Commission should be
able to make recommendations on those candidate countries ready for accession on the basis of its 2002 Regular Reports. At its meeting in Seville in June 2002, the European Council concluded that "in
order to enable the European Council to be held in the coming autumn to decide which wi ll be the candidate countries with which negotiations can be concluded at the end of 2002, […] the Commission
will have to draft appropriate recommendations in the light of the Regular Reports." The Commission has prepared this fifth series of Regular Reports with a view to the Brussels European Council in
autumn 2002.
. At its meeting in Seville in June 2002, the European Council concluded that "in order to enable the European Council to be held in the coming autumn to decide which wi
The structure followed for this Regular Report is largely the same as that used for the 2000 and 2001 Regular Reports. In line with previous Regular Reports, the present Report:
• describes the relations between Latvia and the Union, in particular in the framework of the Association Agreement;
• analyses the situation in respect of the political criteria set by the 1993 Copenhagen European Council (democracy, rule of law, human rights, protection of minorities);
• assesses Latvia’s situation and prospects in respect of the economic criteria defined by the Copenhagen European Council (a functioning market economy and the capacity to cope with competitive
pressures and market forces within the Union);
• addresses the question of Latvia’s capacity to assume the obligations of membership, that is, the
acquis
as expressed in the Treaties, the secondary legislation, and the policies of the Union. In this part,
special attention is paid to nuclear safety standards, which were emphasised by the Cologne and Helsinki European Councils. This part includes not only the alignment of legislation, but also the
development of the judicial and administrative capacity necessary to imple nd enforce the
acquis.
The European Council stressed the importance of this latter aspect at its meeting in Madrid in 1995 and
on a number of subsequent occasions, most recently at Seville in June 2002. At Madrid, the European Council stressed that the candidate countries must adjust their administrative structures, so as to
create the conditions for the harmonious integration of these States. The Seville European Council also stressed how important it was that candidate countries should continue to make progress with
the implementation and effective application of the
acquis,
and added that candidate countries must take all necessary measures to bring their administrative and judicial capacity up to the required level.
This Report takes into consideration progress since the 2001 Regular Report. It covers the period up to 15 September 2002. In some particular cases, however, measures taken after that date are mentioned. It
looks at whether planned reforms referred to in the 2001 Regular Report have been carried out, and examines new initiatives. In addition, this Report provides a global assessment of the overall situation for
each of the aspects under consideration, setting out for each of them the ma in steps still to be taken by Latvia in preparing for accession.
 PDF to HTML - Convert PDF files to HTML files
1461351_0006.png
Furthermore, in view of the fact that the 2002 Regular Reports will provide the basis on which the Commission will formulate its recommendations as to which countries are ready to conclude negotiations,
this Report includes an evaluation of Latvia’s track record since the 1997 Opinion. As regards the economic criteria, the report also provides a dynamic, forward-looking evaluation of Latvia’s economic
performance.
For each of the negotiating chapters, this Report provides a summary evaluation of the extent to which commitments made in the negotiations have been implemented, as well as an overview of transitional
arrangements that have been granted. The commitments made by each country reflect the result of the accession negotiations, and, in accordance with the principle of differentiation underlying the
negotiation process, may differ between countries. Where negotiating countries have committed t hemselves to completing specific measures by the time of accession, the Commission assesses the relevant
preparatory processes. For chapters on which the accession negotiations continue, and final commitments remain to be defined, an indicative assessment is given of the state of implementation of the
commitments that have been made to date.
The Report contains a separate section examining the extent to which Latvia has addressed the Accession Partnership priorities. This section also assesses the progress Latvia has made in implementing the
measures set out in the Action Plan for strengthening administrative and judicial capacity that the Commission developed with each negotiating country in the spring of 2002.
As has been the case in previous Reports, "progress" has been measured on the basis of decisions actually taken, legislation actually adopted, international conventions actually ratified (with due attention
being given to implementation), and measures actually implemented. As a matter of principle, legislation or measures which are in various stages of either preparation or Parliamentary approval have not been
taken into account. This approach ensures equal treatment for all the candidate countries and permits an objective assessment of each country in terms of their concrete progress in preparing for accession.
The Report draws on numerous sources of information. The candidate countries have been invited to provide information on progress made in preparations for membership since the publication of the last
Regular Report. The information each of the candidate countries has provided within the framework of the Association Agreement and the negotiations, the National Programmes for the Adoption of the
Acquis
where they are available, as well as the process of developing the Action P lans, and various peer reviews that have taken place to assess candidate countries' administrative capacity in a number of
areas, have served as additional sources. Council deliberations and European Parliament reports and resolutions have been taken into account in the preparations. The Commission has also drawn on
assessments made by various international organisations, and in particular the contributions of the Council of Europe, the OSCE and the international financial institutions, as well as those of non-
governmental organisations.
Relations between the European Union and Latvia
Recent developments under the Europe Agreement, including bilateral trade
Latvia has continued to implement the Europe Agreement and has contributed to the smooth functioning of the various joint institutions.
The fifth meeting of the Association Council and the fifth Association Committee were held in February and June 2002 respectively. The system of sub-committees continues to function as a forum for
technical discussion.
Since the Commission’s last Regular Report, the Joint Parliamentary Committee, comprising representatives of the Latvian and European Parliaments, met in June 2002. Co-operation with the Committee of
the Regions has continued at a working level.
Latvia’s trade with the EC has continued to increase, both in absolute terms and in its rate of growth. Latvia’s exports to the EC accounted for 61 % (€ 2 billion) of total 2001 exports, while its imports from
the EC amounted to 53 % (€ 2.4 billion) of total imports in the same year. In 2001 Latvia’s exports to the EC increased by 3 % by comparison with the previous year and imports from the EC increased by 19
%. Latvia’s export to the EC is heavily dom , minerals, machinery and electrical equipment, while its most important imports from the Union are machinery, electrical and transport equipment, and
agricultural goods.
As a consequence of the agreement which emerged from the first round of trade negotiations in the agriculture sector (adopted on an autonomous basis, pending the conclusion of an Additional Protocol to
the Europe Agreement), approximately 94% of EC agricultural imports from Latvia and 74% of EC agricultural exports to Latvia are duty-free or benefit from preferential reduced duty rates (average trade
figures for 1998-2000).
Negotiations on a further round of liberalisation, covering more sensitive sectors, began at the end of 2001 and were concluded in April 2002. The result of this further round, applicable as of July 2002,
enhances the existing agricultural trade preferences between the parties and promotes the abolition or reduction of import duties either within tariff quotas or for unlimited amounts, in sectors such as cereals,
dairy products, beef and sheep meat. This further agreement also includes a commitment by the parties to eliminate export refunds in certain sectors.
In October 2001, the Association Council took a decision on improvements in the trade with processed agricultural products in Protocol 2 to the Europe Agreement. Both parties agreed on the application of
a more favourable trade regime for processed agricultural products. Tariff quotas on export and import of processed agricultural products between Latvia and the EC became effective from December 2001.
With regard to further liberalisation of trade in fish and fisheries products, technical negotiations on reciprocal tariff concessions have been concluded between the European Community and the Republic of
Latvia.
In March 2002, in response to protectionist measures taken by the US, which greatly restricted access to their market and created the risk of considerable trade diversion, the EU initiated provisional
safeguard measures, with erga omnes effect, on imports of certain steel products. The measures were partly confirmed in September 2002.
The Protocol to the European Agreement on Conformity Assessment and Acceptance of Industrial Products (PECA) and four sector annexes to the Protocol were signed in May 2002 in Brussels. New
sectoral legislation on chemicals, cosmetics, medical equipment, explosives, food safety, and other areas was adopted in 2001.
Accession Partnership
A revised Accession Partnership was adopted in January 2002. Its implementation is reviewed in Part D of this report.
Action Plan for reinforcing administrative and judicial capacity
As announced in the Commission's 2001 Enlargement Strategy, in spring 2002 the Commission and Latvia jointly developed an Action Plan to strengthen Latvia's administrative and judicial capacity, on
which a common understanding was reached in April. The revised Accession Partnership adopted in January has served as the point of departure for this exercise.
The purpose of this Action Plan is to identify jointly the next steps required for Latvia to achieve an adequate level of administrative and judicial capacity by the time of accession, and ensure that all necessary
measures in this regard are taken, providing Latvia with targeted assistance in areas that are essential for the functioning of an enlarged Union. As such, the Action Plan is a key tool for meeting the common
objective of the EU and Latvia, i.e. to ensure that Latvia's preparat ions for accession take place as effectively as possible within the planned timeframe.
The implementation of the Action Plan is reviewed in Part D of this Report.
National Programme for the Adoption of the Acquis
In April 2002 - check with Latvia, Latvia adopted a revised National Programme for the Adoption of the Acquis (NPAA), in which it outlined its strategy for accession including how to achieve the priorities
set out in the revised Accession Partnership.
Community Assistance
Three
pre-accession instruments
have been financed by the European Community to assist the applicant countries of Central and Eastern Europe with their pre-accession preparations: the
Phare
programme;
SAPARD,
which provides aid for agricultural and rural development; and
ISPA,
which finances infrastructure projects in the fields of environment and transport. The support provided by these
programmes is focused on the Acces sion Partnership priorities, which are intended to help the candidate countries meet the criteria for membership.
For the years 2000-2002, total financial assistance to Latvia amounts to around €35 million annually from Phare, €22.2 million from SAPARD, and between €36.4 and €57.2 million from ISPA.
The
Phare
programme has been providing support to the countries of Central and Eastern Europe since 1989, helping them through a period of fundamental economic and social transition and political
change. Its current "pre-accession" focus was established in 1997, in response to the Luxembourg European Council’s launching of the present enlargement process.
Phare provides the applicant countries of Central and Eastern Europe with support for institution building, investment to strengthen the regulatory infrastructure needed to ensure compliance with the
acquis,
and investment in economic and social cohesion. This support comprises co-financing for technical assistance, "twinning" and investment-support projects, to help these countries with their efforts to adopt
the
acquis
and strengthen the institutions necessary fo r implementing and enforcing the
acquis.
Phare also helps the candidate countries develop the mechanisms and institutions that will be needed to
implement Structural Funds after accession and is supported by a limited number of measures (investment and grant schemes) with a regional or thematic focus. In the context of the Action Plans for
strengthening administrative and judicial capacity, a particular emphasis is placed on the issue of institution building and associated investment intended to ensu re compliance with the
acquis.
For 2002, the
Commission has mobilised special financial assistance of up to €250 million to accompany negotiating countries' efforts, over and above the indicative annual allocations for each of the Phare countries,
bringing total Community assistance for strengthening the administrative and judicial capacity of the negotiating countries in 2002 to around €1 billion.
The Phare programme allocated commitments of €320.3 million to Latvia during the 1992-1999 period, €34.8 million in 2000, and €36.2 million in 2001. The
2002 Phare Programme
for Latvia consists of
an allocation of € 27 million for the National Programme, complemented by 5 million under the Phare 2002 supplementary institution building facility. The 2002 Phare programme focuses on the following
priorities:
 PDF to HTML - Convert PDF files to HTML files
1461351_0007.png
• priority 1: Political Criteria (€3.1 million), including Promotion of the Integration of Society in Latvia and Civil Society;
• priority 2: Free Movement of Goods / Consumer Protection (€2.2 million), including Market Surveillance in the Non-Food Sector and Food Chain Surveillance;
• priority 3: Free Movement of Services (€0.8 million) including Data State Inspection;
• priority 4: Agriculture (€0.9 million), including TSE/BSE Control;
• priority 5: Statistics (€1 million), including Intra-Community Trade Statistics;
• priority 6: Social Policy and Employment (€1.8 million), including the Employment Strategy (Institution Building);
• priority 7: Telecommunications and Information Technologies (€0.5 million), including the Public Utilities Commission;
• priority 8: Regional Policy and Co-ordination of Structural Instruments (€4.5 million), including Public Finance Management and a Project Preparation Facility;
• priority 9: Environment (€1.9 million), including Environment Monitoring;
• priority 10: Co-operation in the Field of Justice and Home Affairs (€6.5 million), including Preparation for Participation in the Schengen Information System, Sea Border Surveillance and State Police;
• priority 11: Customs Union (€4.8 million), including the Customs Business Strategy and Customs Data Systems;
• priority 12: Overall Administrative Capacity (€4.2 million) including Community Programmes and Agencies, Twinning Light Facility.
An additional €3 million has been allocated for the Baltic Cross-Border Co-operation Programme.
Latvia also participates in and benefits from Phare-funded multi-country and horizontal programmes, such as TAIEX, the Small and Medium-sized Enterprises Facility, SIGMA and the nuclear safety
programme.
Furthermore, Latvia participates in the following Community programmes: Leonardo da Vinci II, Socrates II, Youth, Life III, the Multi-annual Programme for Enterprises and Entrepreneurship, Culture
2000, Gender Equality, Combating Social Exclusion and the Fifth Framework on Research and Technological Development. It is also affiliated to the European Environment Agency.
Overall, the impact of Phare has been positive. Effective transfer of know-how, equipment and financial resources has taken place in important fields such as the public finance sector, health and safety at
work, agriculture, justice and home affairs, eastern border management and statistics. In the agriculture and food control sector, know how and equipment have been supplied to veterinary services and
border facilities including training in food safety, hygiene and quality matters at cen tral and regional level.
For example, in Latvia, Phare has played a particularly important role in:
• Major support for the development of the Latvian Eastern Border Management. The facilities of 9 Latvian border-crossing-points are being upgraded to EU standards (€7.3 million) with Phare
support, while the other improvements necessary are financed through the Latvian state budget.
• The development of a Latvian Integrated Border Control System (€1 million). This project implemented through a Twinning partnership, has focused on the development of an Integrated Border
Management Strategy. It has facilitated a comprehensive assessment of current border security and aims to improve the effectiveness of co-operation and the implementation of joint tasks by the
border agencies. All agencies involved in border surveillance have been closely involved in the projec>
• Society integration, where Phare has been the most important supporter of the Latvian Language Training Programme (€5.1 million since 1996), a multi-donor programme hitherto administered by the
United Nations Development Programme. The programme, now managed by the Latvian authorities, has focused on enhancing Latvian language training in minority schools, providing language
training opportunities for targeted groups of adults and promoting society integration at community level rious means.
The 2000 Phare Review confirmed the accession-driven approach and emphasised the importance of helping countries to prepare for the Structural Funds. The trends introduced in 1997 have continued,
with an increased role for Commission Delegations, further streamlining of procedures and increasing emphasis on raising the verifiable and quantifiable impact of Phare projects in institution building,
investment in compliance with the
acquis
and economic and social cohesion.
The Review also provided for the possibility of further decentralisation of Phare management, by waiving the requirement for
ex ante
approval by the Commission Delegations for tendering and contracting.
For this to be possible, strict pre-conditions covering programme management, financial control and structures regarding public finance must be met. An extended decentralised implementation system
(EDIS) should be put in place for each negotiating country at the latest by the time o f accession. High-Level Working Groups have been established for each country to oversee this process, along with other
key procedural steps in the run-up to accession.
The Commission approved the Latvian
SAPARD
programme in October 2000. The indicative allocation for SAPARD in Latvia for 2002 is € 22.9 million, at 2002 prices (allocation 2001: € 22.6 million at
2001 prices).
The operational programme is based on the following three priorities: development of sustainable agriculture (4 measures: 54% of the EC funds); integrated rural development (2 measures: 36%);
improvement of the environment (3 measures: 4%).
The Multi-annual Financing Agreement (MAFA),
which sets out the rules for implementing SAPARD, is in force since July 2001.
The Annual Financing Agreement (AFA),
which sets out the Community financial
commitment to Latvia for the year 2000, is in force since May 2001.
The Annual Financing Agreement for 2001. was signed in February 2002, and entered into force in June 2002.
The following structures are responsible for the implementation of SAPARD: the National Fund, located within the Ministry of Finance, administers the SAPARD funds under the responsibility of the
National Authorising Officer (NAO) and is responsible for the national accreditation of SAPARD Agency; the Managing Authority is located within the Latvian Ministry of Agriculture; the Rural Support
Service (RSS) has been designated by the Latvian Government as the SAPARD agency responsible for th e implementation and financial management of the programme. The agency operates from its
headquarters in Riga with 9 regional offices throughout Latvia.
The Commission adopted a Decision in December 2001 provisionally conferring management authority for SAPARD, on a fully decentralised basis, to the Rural Support Service (SAPARD Agency) in Latvia.
The decision includes approval of six measures covering 92% of the amount available for Latvia. Simultaneously, an initial payment on account of € 5.4 million was made to the SAPARD Euro Account in
the National Fund. Up to June 2002 the SAPARD Agency has received 444 project applications otential beneficiaries. Of these 219 have been approved, involving around € 10.4 million of public support.
A Monitoring Committee has been established by the Managing Authority and has met three times.
The
ISPA
programming framework is governed by the national strategy papers for transport and environment which the Latvian authorities finalised in 2000. In the case of transport, the emphasis is on the
rehabilitation of the TINA (Transport Infrastructure Needs Assessment) Road Corridor I and the modernisation of the TINA East-West railway link. In the environmental field, the Latvian Government's
priorities for ISPA financing are waste and drinking water (in the seven largest citi es, as well as for the most important river basins) and waste management (closure of old landfills and opening of new ones
that meet European standards).
For the years 2000 and 2001, the full (mid-range) allocation for Latvia has been committed, i.e. €94.8 million (€46.8 million in 2000 and €48 million in 2001). The allocation for 2002 will be between €38.1
million and €59.9 million.
Five environmental projects were approved in 2001, dealing with solid waste management in Ventspils (with an ISPA contribution of €3.0 million), in Liepaja (€5.1 million) and in Ziemelvidzeme (€3.4
million), water services in the Eastern Latvian river basins (€44.6 million) and technical assistance for environmental projects (€3.4 million). Three transport projects were approved in 2001: upgrading of the
Riga-Adazi section of the Via Baltica (€10.6 alling systems on the East-West railway link (€67.5 million), and technical assistance for road projects (€0.6 million). So far in 2002, two measures have been
approved: a water services project in Jurmala (€8.3 million) and the rehabilitation of the security system on the East-West railway link (€11.3 million). More projects are in preparation.
As regards the decentralisation process (EDIS) for ISPA, the Commission approved a technical assistance package at the end of 2001 (with ISPA financing of €0.7 million) to assist the Latvian authorities in
their preparations.
Contracts have been signed for three projects in the transport sector, in addition to the technical assistance for EDIS. The tenders for most other ISPA 2000 projects are currently in preparation (except
for the Jelgava water services project).
Twinning
One of the main challenges still facing the candidate countries is the need to strengthen their administrative and judicial capacity to implement and enforce the
acquis.
As of 1998, the European Commission
began to mobilise significant human and financial resources to help them with this process, using the mechanism of twinning administrations and agencies. In 2001, the Commission strengthened this
emphasis on institution building through the launch of the Action Plans for strengthening administrative and judicial capacity.
 PDF to HTML - Convert PDF files to HTML files
1461351_0008.png
The twinning process makes the vast body of Member States’ expertise available to the candidate countries through the long-term secondment of civil servants and accompanying short-term expert missions
and training.
A total of 503 twinning projects were funded by the Community between 1998 and 2001. Between 1998 and 2000, these projects primarily targeted the main priority sectors identified in the Accession
Partnerships: agriculture, the environment, public finance, justice and home affairs and preparation for the management of Structural Funds. Since 2000, other important sectors of the
acquis
have also been
addressed through twinning, such as social policy, the fight against drugs, transpor t, and telecommunications regulation. Twinning now covers all sectors pursuant to the
acquis.
Thanks to the strong support of the EU Member States, 103 twinning partnerships were funded by Phare 1998, involving all the candidate countries and almost all the Member States. These first-generation
projects have already come to an end. Under Phare 1999 a further 123 projects are currently being implemented and the programming exercise for Phare 2000 included a further 146 twinning projects. The
2001 programming exercise includes 131 twinning projects embracing all the Phare beneficia ry countries, as well as Cyprus and Malta. Under the 2002 programming exercise, 119 twinning projects have
already been planned and approved for implementation. A substantial number of additional twinning projects are planned, and these should be approved and implementation launched before the end of 2002.
They include twinning projects identified in the Action Plans for strengthening administrative and judicial capacity in the negotiating countries. It is estimated that around 300 twinning projects are ope
rational throughout the candidate countries at any one time. Furthermore, the candidate countries are being offered a further way of drawing on Member States' expertise through "Twinning light", a
mechanism to address carefully-circumscribed projects of limited scope which emerge during the negotiation process as requiring adaptation.
In Latvia, ten projects are currently being implemented through twinning. They include a project with partners from France to help develop the capacity required for Latvia’s participation in the Structural
Funds. A significant project in the area of public expenditure management, with a particular focus on external audit and procurement matters and audit issues in public agencies is being implemented together
with UK partners. A drug prevention project with a Spanish partner organis has just started.
In addition, an agricultural project to help Latvia develop the requisite management mechanisms for the Common Agriculture Policy is being implemented with a partner from the Netherlands. Another
project, run in tandem with a team from Denmark, addresses the institutional strengthening of the Tax and Customs Administration. In the field of Social Policy and Employment, a project with partners
from Germany and the United Kingdom focuses on strengthening the dialogue between the two side of industry. Another project with a team from Greece and Sweden will help Latvia establish a system for
asylum and migration management. The remaining twinning projects financed under the 2001 programme are being prepared and are scheduled to start soon. They include support to enhance the
administrative capacity of the Latvian maritime administration. Finally, another project to fight organised crime is being prepared with partners from Germany and Sweden.
Negotiations
Since the opening of the accession negotiations, substantial discussions on the individual chapters of the
acquis
have been launched, and by June 2002, negotiations on all chapters apart from, Chapter 31 –
"Other" were underway.
By the end of September 2002 the following 27 negotiation chapters had been provisionally closed: free movement of goods, freedom of movement for persons, freedom to provide services, free movement
of capital, company law, competition policy, fisheries, transport policy, taxation, EMU, statistics, social policy and employment, energy, industrial policy, SMEs, science and research, education and training,
telecommunications, culture and audio-visual policy, regional policy, environment, c onsumer and health protection, justice and home affairs, customs union, external relations, common foreign and security
policy and financial control.
Criteria for membership
Political criteria
Introduction
The political criteria for accession to be met by the candidate countries, as laid down by the Copenhagen European Council in June 1993, stipulate that these countries must have achieved "stability of
institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities."
In its 1997 Opinion on Latvia's application for EU membership, the Commission concluded:
"Latvia’s political institutions function properly and in conditions of stability. They respect the limits on their competencies and co-operate with each other. Elections in 1992 and 1995 were free and fair, and in each case permitted the
establishment of coalition governments. The Opposition plays a normal part in the operation of the institutions. Efforts to improve the operation of the judicial system and to intensify the fight against corruption need to be sustained.
There are no major problems over respect for fundamental rights. But Latvia needs to take measures to accelerate naturalisation procedures to enable the Russian-speaking non-citizens to become better integrated into Latvian society. It should
also pursue its efforts to ensure general equality of treatment for non-citizens and minorities, in particular for access to professions and participation in the democratic process.
With the reservation that steps need to be taken to enable the Russian-speaking minority to become better integrated into society, Latvia demonstrates the characteristics of a democracy, with stable institutions guaranteeing the rule of law and
human rights."
In its 2001 Regular Report, the Commission found that:
"In its 1997 Opinion, the Commission concluded that Latvia fulfilled the political criteria. Since that time, the country has made considerable progress in further consolidating and deepening the stability of its institutions guaranteeing democracy,
the rule of law, human rights and respect for and protection of minorities. Over the past year, further efforts have been made in this direction. Latvia continues to fulfil the Copenhagen political criteria.
During the last year, the government remained committed to reforming the Public Administration and the judiciary, as well as to fighting against corruption. Strategic documents on public administration reform and corruption prevention were
adopted, as was framework legislation on public agencies, and practical measures were pursued in all three areas. It will now be necessary to maintain the momentum of public administration reform with the completion of the legal framework and
the development of a stable civil service, including through the introduction of pay reform. In parallel, the reform of the judicial system must be carried on, with particular attention to the legal framework, speeding up and enforcing court decisions,
and addressing the issue of pre-trial detention. Measures to combat corruption, which remains a source of concern, need to continue with a view to achieving concrete results on a broad scale.
Further important steps were taken to promote the integration of non-citizens into Latvian society, notably measures to facilitate the naturalisation procedure and the adoption of both a more elaborate Society Integration Programme and the legal
basis for the future Social Integration Foundation. The ongoing efforts to support the integration of non-citizens need to be sustained through the implementation of the comprehensive Society Integration Programme in all its aspects, including act
ivities to encourage naturalisation and the expansion of Latvian language training. Latvia should ensure that the implementation of the Language Law respects the principles of justified public interest and proportionality, Latvia’s international
obligations and the Europe Agreement.
Latvia has achieved progress towards meeting the short-term priorities of the Accession Partnership in the areas of the Language Law and language training, as well as administrative and judicial capacity. Some progress has also been made
towards meeting the medium-term priorities in the areas of further integrating non-citizens, developing the civil service and improving the capacity of the public administration; however, these efforts need to continue."
The section below provides an assessment of developments in Latvia, seen from the perspective of the Copenhagen political criteria, including the overall functioning of the country’s executive and its judicial
system. Developments in this context are in many ways closely linked to developments regarding Latvia’s ability to implement the
acquis,
in particular in the domain of justice and home affairs. Specific
information on the development of Latvia’s ability I>acquis in the field of justice and home affairs can be found in the relevant section (Chapter
24 – Co-operation in the field of justice and home affairs)
of part
B.3.1.
of this Report.
Recent developments
No major shift in government policy has taken place over the past year, and EU membership remains among the government’s key objectives.
On 5 October 2002, parliamentary elections took place. The elections were free and fair and in line with international standards and commitments on democratic elections.
Democracy and the rule of law
Latvia has achieved stability of institutions guaranteeing democracy and the rule of law. This was the conclusion of the 1997 Opinion and the subsequent Regular Reports, and has been confirmed by the
developments over the past year. This section focuses on the most significant developments since the last Regular Report.
The parliament
Over the past year, no major changes in the structure of Parliament have been reported. Parliament has been involved actively in the vital issues related to Latvia’s integration that should be addressed to
muster the support of citizens for EU issues. The changes already introduced in early 2001 on rules of procedure regarding EU matters have continued to function properly. Regular meetings were held
between the parliamentary secretaries and the Eur Integration Bureau regarding European integration issues, especially the negotiation process.
In February 2002, Parliament adopted three reports on the implementation of Latvia’s Strategy for Integration into the EU. At the same time the Saeima EU Information Centre (SEUIC) opened a new office
and broadened its activities.
In May 2002, with a majority of more than 75%, Parliament amended the election laws, abolishing the provisions requiring citizens standing as candidates in national and local elections to be proficient in the
Latvian language.
The executive
 PDF to HTML - Convert PDF files to HTML files
1461351_0009.png
During the past year, implementation of the reform of public administration continued on the basis of the Latvian Action Plan for the implementation of the Public Administration Reform Strategy. With the
adoption of the Framework Law on Public Administration and secondary legislation ensuring implementation of the Civil Service Law and the Law on Agencies, the legal framework for the reform of the
public administration is in place. Preparations for enforce ment of the Administrative Procedure Law have continued, and the reform of the remuneration system is under way. Further improvements have
been achieved in setting up the framework for policy co-ordination and strategic planning.
The Action Plan for the implementation of the Public Administration Reform Strategy for the years 2001-06 was approved by the Government in December 2001, and a corresponding Co-ordination
Council was established to monitor its implementation. The Council reports twice a year to the Government on the results achieved in implementing the Action Plan.
In June 2002, the Framework Law on Public Administration, which regulates the establishment, subordination, control, accountability and funding arrangements of public administration bodies, was adopted.
It seeks to introduce the principles of good governance throughout the whole public administration, including in self-government bodies and in those institutions, which perform public administrations
functions delegated by the state.
A new Law on Administrative Procedure defining administrative procedure in public institutions and courts was adopted in October 2001 and is due to enter into force in July 2003. The implementation of
the Civil Service Law is in progress, and the confirmation of civil service posts and assignment of civil service status was completed in February 2002. In addition, the performance-appraisal system for civil
servants was put in place and the first annual performance-appraisal round was completed in December 2001. In October 2001 the Government adopted a regulation to define the procedure for the
determination of qualification grades of civil servants, which will also constitute the basis for the new pay scale.
As regards the development of a unified pay system, the ongoing evaluation of the qualification grades will be decisive in determining the necessary financial resources to be allocated to the state budget in
2003. Adequate information on actual needs and job descriptions in the administration as well as details of category scales and corresponding financial costs are essential inputs for legislation to establish the
new system.
Latvia has made good progress since the last Regular Report regarding implementation of the Law on Agencies. Criteria for the establishment of public agencies were set by the Government and around 150
enterprises and non-profit organisations have been analysed. So far a list has been adopted of 25 agencies to be restructured as state agencies by the end of the year. In addition, a number of regulations have
been adopted defining the operational conditions of public agencies, includ ing state responsibility for public agencies' liabilities, the obligation to establish internal audit units and the methodology for setting
fees for services provided by public agencies.
During the reporting period, the Government has adopted a number of guidelines and rules to improve policy planning, involve society, strengthen the link between policy planning and budgeting, speed up
the decision-making process and implement government policies.
Since the last Regular Report, 7 753 civil servants have attended training courses at the Latvian School of Public Administration. Training priorities included EU policies, administrative procedures, legal
drafting, prevention of corruption, project management, internal audit, strategic management, personnel management and quality management.
Latvia has continued to address the remaining reform issues, and the legislative and administrative framework will be quite comprehensive once the Civil Service Law and the Framework Law on Public
Administration are fully implemented. As the importance of a professional and stable civil service is widely recognised, it is now important to ensure minimum staffing levels, training, and adequate financial
resources, including the completion of a uniform civil service pay syst em, at all levels of the public administration, with a view to strengthening the capacity to implement the
acquis.
The judicial system
Since the last Regular Report, limited progress has been made on the reform of the judicial system.
The need for the reform of the judiciary has been recognised at the highest political level, and some steps have been taken to strengthen the effectiveness and independence of the judicial system mainly on
the basis of the Judicial System Development Programme for the years 2001-2006. Efforts need to be stepped up to ensure continued and effective implementation of the programme.
The Latvian judicial system is composed of three tiers: district (city) courts, regional courts and the Supreme Court. In addition, there is a Constitutional Court, which may be addressed directly by citizens in
cases of violation of fundamental rights. In Latvia, judges are nominated by the Ministry of Justice and confirmed by Parliament. Their independence is enshrined in the Constitution. The Ministry of Justice
determines the number of Judges and administers the budgetary resources of the Judiciary. It supervises the organisation of activities at regional and district courts.
The last Regular Report mentioned three pending pieces of legislation: the Law on Sworn Court Bailiffs, the new Law on Criminal Procedures and the amendments to the Law on Judicial Power, as being
essential for improving the functioning of the judiciary. So far, none of these laws has been adopted.
Despite international support, including Community assistance, the proposed new Law on Criminal Procedures, which would simplify and modernise the criminal procedure including court proceedings,
reduce the backlog of court cases, speed up the consideration of juvenile cases, and extend the use of alternative penalties, is still at the drafting stage. This is regrettable.
Pending the adoption of the proposed new Law on Criminal Procedures, a number of other measures are being implemented to achieve the above-mentioned aims, in particular through relevant amendments
to the existing Criminal Procedure Code. Amendments have been made in order to provide for an even case distribution among courts. Priority is now also given to the expeditious consideration of juvenile
cases. In addition, other amendments to the Code aimed at simplifying and modernising the cri minal procedure and at aligning legislation with EU requirements, including those on extradition, transfer of
persons and recognition of decisions, were adopted in June 2002.
Amendments to the Law on Judicial Power, aimed at increasing the efficiency of court proceedings, by allowing judges to consider several cases at the same time, still remain to be adopted. In addition, in
order to simplify court proceedings further, amendments to the Civil Procedure Law also need to be introduced.
The Law on Sworn Court Bailiffs, which has been pending for several years, should be adopted without delay. It aims at establishing an effective mechanism for enforcing court decisions, and at determining
the rights and obligations of sworn bailiffs. It is thus essential in establishing the grounds for better co-ordination between court bailiffs and the court system.
The issue of the independence and efficiency of the judicial system, including the establishment of an independent court administration, still needs to be addressed. Furthermore, other issues such as the
absence of well defined criteria and transparent methods for selecting judicial apprentices and appointees, and the Ministry of Justice’s influence over career paths, also need to be tackled.
As a measure to address the issue of judges' remuneration, which remains comparatively low, judges and court staff are to benefit from a special scheme in addition to the general remuneration reform of the
public administration. In January 2002, amendments to the Law on Judicial Power entered into force, which introduce the same social guarantees and benefits for judges as for civil servants. However, while a
policy document on the Remuneration of Judges still needs to be adopted, its fin ancial implications have been included in the list of budget priorities for 2003. In the meantime, concerns over perceived
corruption among the judiciary remain. While the budget available for the judicial system remains largely insufficient, a limited increase was made in the budget of the Ministry of Justice for 2002, which was
increased to LVL 28 551 258 (€ 50 984 871), compared with LVL 25 845 085 (€ 46 234 499) in 2001. In addition, the number of posts at the M ustice was increased from 175 in 2001 to 203 in 2002. The
number of judges' posts remained unchanged at 333. In total, eighteen posts were vacant at the time of writing.
In the absence of decisive new legislative measures to reform the judicial system, the number of pending court cases rose even further during 2001. At the beginning of July 2002, there was still a total of
5 062 criminal court cases and 22 829 civil cases pending, compared with 5 396 and 22 371 in 2001. Since the bulk of the backlog is in Riga, 350 cases were transferred from Riga district court to other courts
in Latvia. The increasing backlog is pre-occupying, and ne eds urgently to be addressed.
As mentioned in previous Reports, lengthy pre-trial detention, a related issue stemming from the backlog of cases, has continued to pose a serious problem. While fundamental measures to address the
problem are still pending, and the length of pre-trial detention is not always in conformity with international standards, initial progress has been made in speeding up the review of juvenile cases
(see also below,
section 'Civil and Political Rights").
Decisive further measures are need ed to further improve this situation.
More frequent use is being made of alternative penalties. While in 2000 4.7% of convicted offenders were sentenced to community service, the figure rose to 8% in 2001. The establishment of a probation
service has, however, been postponed until 2003, due to a lack of funding for implementing such a system.
As regards training, the implementation of a training policy for judges and other legal professions has continued mainly through the Judicial Training Centre, which has offered training measures on national,
international and EC law and on human rights. All judges of regional and district courts participated in training seminars at the Centre at least once in 2001. A series of seminars on European law, human
rights, corruption, economic crimes, narcotic and toxic substances and intellectu al property rights has been organised, and there is an ongoing project to modernise university law studies. Priority should be
now be given to providing training for court managers, other court staff, prosecutors and bailiffs.
In 2002, the allocation to the Judicial Training Centre from the state budget was increased to LVL 60 000 (€ 107 143), from LVL 40 000 (€ 71 556) in 2001. However, the training of judges and other legal
professions, especially in EC law and human rights issues, continues to depend largely on bilateral support and international donors. In order to address the generally low level of qualification in these fields
and to increase the capacity to enforce the
pon accession, training needs to be intensified and adequate funding from the state budget secured.
The modernisation of courts continued by upgrading the infrastructure of court buildings and by setting up a unified information network. The reconstruction of Daugavpils Regional Court was completed by July and work continued at the Riga
Regional Court. The renovation of Riga District Court, where there is the largest backlog of court cases, will not be finished before the end of 2002. The computerisation of courts has continued, and a computer-based civil case management system
is due t o be operational in early 2003.
There is a need to improve citizens' access to justice (see below under Civil and political rights). The existing Criminal Procedure Code provides for a system of free legal aid in criminal cases, whereby the Ministry of Justice covers the costs from
the budget allocated for this purpose. The Civil Procedure Law provides statutory legal aid and relief of litigation expenses. However, contrary to the principles generally applied to legal aid, at present, defendants have to pay back legal aid when a
case is lost. Generally, the implementation of existing provisions on criminal and civil matters poses certain problems. Next to continued reforms of the court administration, the adoption of the new Law on Criminal Procedure as well as new
legislation on civil matters should also address this issue.
 PDF to HTML - Convert PDF files to HTML files
1461351_0010.png
Overall, while most of the deficiencies of the judicial system have been identified, only part of them have been addressed. Efforts in this field need to be multiplied in order to ensure a thorough systemic reform, based on political support to
modernise the judiciary and sufficient funding. The legislative framework still remains to be completed and the increasing backlog of court cases should be reduced. Further significant efforts to strengthen the de facto indep endence, efficiency and
quality of the judiciary are needed. The upgrading of the infrastructure of courts needs to be completed.
Anti-corruption measures
Surveys indicate that corruption remains a source of concern in Latvia. The last Regular Report stated that further sustained efforts were still needed to complete the legal framework and to ensure
effectiveness in the fight against corruption, and added that the perceived level of corruption in Latvia continued to be relatively high, to the detriment of public trust in the public administration, the judiciary
and private investors' confidence. Since then the Government has remained committed to preventing and fighting corruption and has taken further steps to deal with the problem. The legislative framework
has been improved, foreseeing strengthening of the institutional set-up, and both public awareness and the involvement of civil society are on the increase. However, a number of critical legislative and
administrative measures still need to be taken.
The Corruption Prevention Programme of 2001 has been largely implemented and important pieces of legislation concerning the fight against corruption have been passed. The Law on the Anti-Corruption
Bureau entered into force in May 2002. It gives the Bureau, which is to start its operations before the end of 2002, the power to initiate criminal proceedings and to conduct investigative and operational
activities. The Bureau is also responsible for checking officials’ income declaratio auditing party finances. The adoption of the law and the appointment of the Head of the Bureau by the Government are
positive steps. It is now of vital importance that, following confirmation of this appointment by Parliament, the Bureau swiftly become operational.
In April 2002, Parliament passed the Law on the Prevention of Conflict of Interest in Activities of Public Officials replacing the existing Law on Corruption Prevention. The law, which entered into force in
May 2002, specifies in more detail the circle of public officials who are subject to regulations on conflict of interest and designates the newly established Anti-Corruption Bureau as the institution responsible
for implementing the law. The law lays down restrictions on assuming outsi de employment, accepting gifts and donations, etc. Since June 2002 public officials have not been allowed to hold more than one
position in state institutions. This has led to resignation of officials from the board of public companies.
An important step in the fight against corruption was the adoption of amendments to the Law on the Financing of Political Organisations in June 2002. Parties are now required to publish the names of
donors together with the amount and date of donations on the Internet before and after the elections. The maximum allowable donations from a single donor within a calendar year has been reduced from
LVL 25 000 (€ 41 736) to LVL 10 000 (€ 17 857). Parties are no ed to accept donations from companies in which the state or a municipality has holdings. The law also prohibits loans and provision of free
services to political parties.
The adoption of the law represents a positive step in the promotion of transparency in party financing. However, the enforcement of the law will require the Anti-Corruption Bureau to build up quickly its
capacity to effectively check the financial declarations submitted by the parties. As the checking of financial declarations will pose major administrative challenges for the Bureau, adequate financial and human
resources will have to be provided.
Several other pieces of legislation were adopted which also affect the fight against corruption. In January 2002, the Law on Procurement for Government and Municipal Needs entered into force and the
Public Procurement Surveillance Bureau was established in order to enforce transparency, surveillance and review mechanisms in the public procurement procedure. In April 2002, amendments to the
criminal law adopted by Parliament introduced provisions including criminal liability for tra ding in influence and offering bribes, and defined a public official. The amendments also aim to complete the legal
framework for the implementation of the Council of Europe Criminal Law Convention on Corruption. Further training, particular for public officials in charge of public procurement, should be provided.
In order to increase the efficiency of Latvia’s anti-corruption policy further and to ensure better co-ordination with the policies for fighting other forms of crime, the Corruption Prevention Council has been
merged with the Crime Prevention Council to form the Corruption and Crime Prevention Council. The new Council and its secretariat are to co-ordinate the activities of the institutions involved in
preventing and combating corruption at the highest political level. It is chaired e Prime Minister. The budget of the Council’s secretariat has, however, been significantly reduced, and it remains unclear how
the functioning of the secretariat will be financed.
However, despite the recent steps taken, the institutional set-up continues to be scattered among a number of institutions which are to a greater or lesser extent directly involved in the fight against
corruption, including the Anti-Corruption Bureau. Their competencies continue to overlap and the lack of co-ordination continues to significantly weaken the effectiveness of the fight against corruption in
Latvia. The establishment of the new Anti-Corruption Bureau could offer a chance to o vercome these shortcomings, thanks to its institutional independence and investigative power, provided it can be given
a clearly co-ordinating role and establish a clear corruption prevention strategy. Besides the question of competencies, the success of the Bureau largely depends on the political will to fight high-level
corruption and state capture and to supply the Bureau with sufficient funding and human resources.
During the reporting period, particular emphasis has been put on the fight against corruption in the customs and police services. The Customs Officials' Code of Ethics and Conduct was approved in
October 2001, and it is now important for the State Revenue Service to implement the Code and the Action Plan for the prevention of corruption.
Since 2001, territorial customs units have performed regular high corruption-risk analyses, opinion polls have been carried out, hot-lines have been put in place and 15 internal audits have been carried out
leading to a total of 161 disciplinary measures and four dismissals in 2001. In the police sphere, a series of activities have taken place, including better control of document flow, rotation of road-traffic police
officers, an internal audit of the State Police, and selective inspecti ons of the territorial police boards. In 2001, 15 police officers were detained for delinquent behaviour and seven were sentenced. In 2001 a
total of 56 cases of abuse of official status, 53 cases of "passive bribery" (bribe-taking) and 12 cases of "active bribery" (bribe-giving) were detected in state institutions. Five persons were sentenced for the
abuse of official status, 11 for passive bribery and six for active bribery.
The Civil Service Code of Ethics, which came into force in January 2001, continues to be applied, and training on ethics in the civil service has been intensified at the Latvian School of Public Administration.
In addition, an active seminar policy was pursued in co-operation with international donors to raise public awareness and involvement in corruption prevention. Seminars have been held for judges,
prosecutors, policemen and representatives of the mass media. At the Latvian School of Public Administration 276 civil servants attended training courses on conflict of interest in 2001 and 264 during the
first five months of 2002. In 2001, 92 civil servants were trained in corruption prevention (by May 463 individuals had attended these courses).
Latvia ratified the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of Proceeds from Crime in 1998 and the Council of Europe Criminal Law Convention on Corruption in
February 2001. The necessary changes to criminal law were adopted by Parliament in April 2002. Latvia is involved, jointly with Estonia and Lithuania, in the Baltic Anti-Corruption Initiative, with the
support of the OECD Secretariat. The Government has applied for accession to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The
Council of Europe Civil Law Convention on Corruption has not yet been signed
(see Chapter 24 – Co-operation in the field of Justice and Home Affairs).
Latvia joined the Council of Europe Group of States Against Corruption (GRECO) in June 2000. As a member of GRECO, Latvia received a GRECO evaluation mission in December 2001. According to
the evaluation report that was made public in March 2002, the scale of the problem of corruption in Latvia is difficult to quantify, but public perception is that corruption is a worrying phenomenon that
affects the activities of some public institutions in Latvia such as customs, traffic police and jud icial authorities. The report added that the seriousness of the problem appeared to be recognised at the highest
political level and that the Government seemed to be more committed to further improving the legal framework and its implementation, but that the real challenge was changing attitudes and behaviour. The
report noted that Latvian society’s mentality vis-à-vis corruption was changing and that people increasingly reported to the police or other law-enforcement agencies cases of suspecte uption, but that
dissatisfaction with the rate of progress of reform had bred suspicion and resentment. The report indicated that this raised two real challenges for institutions combating corruption: to gain the trust of the
public and demonstrate effectiveness by producing results. It added that there are at present in Latvia a range of institutions that contribute to the fight against corruption, and that their efforts are
fragmented, with an obvious lack of direction and co-ordination. In conclusion, GR ECO addressed fifteen specific recommendations to Latvia, which it is strongly encouraged to follow up.
Overall, since the last Regular Report, Latvia has made further progress in the fight against corruption. The legislative framework has been improved, foreseeing the strengthening of the institutional set-up,
and both public awareness and the involvement of civil society are on the increase. However, further efforts are needed to clarify and consolidate the institutional set-up and to provide the new Anti-
Corruption Bureau with the necessary means to effectively ensure its independence. The Latvian Government should remain strongly committed to further combating high-level political corruption and state
capture. The effective implementation of the existing anti-corruption legislation will be vital for overcoming the public's continuing mistrust of the judiciary and the public administration and for gaining the
confidence of private investors.
Human rights and the protection of minorities
Latvia continues to respect human rights and freedoms. This was the conclusion of the 1997 Opinion and the subsequent Regular Reports, and has been confirmed by developments over the past year. This
section focuses on the most significant developments since the last Regular Report.
Latvia has acceded to most of the major international human rights instruments. The Council of Europe Framework Convention for the Protection of National Minorities has, however, not yet been ratified.
In April 2002, Latvia signed Protocol No 13 to the Convention for the Protection of Human Rights and Fundamental Freedoms, concerning the abolition of the death penalty in all circumstances. In January
2002, Latvia ratified the European Social Charter.
Latvia has signed but not ratified the Additional Protocol No 12 to the European Convention on Human Rights prohibiting discrimination on any grounds. No significant new developments regarding the
transposition and implementation of the anti-discrimination
acquis
can be reported (see
Chapter 13 – Social policy and employment).
On 31 December 2001, the OSCE mission to Latvia was closed, following the Chairman-in-Office's statement that its tasks under the missions’ guidelines concerning citizenship, language (in particular,
language provisions in the election law), education, the integration programme and the ombudsman institution had been completed, were being completed or could be achieved by other more appropriate
instruments.
The institutional set-up of the National Human Rights Office (NHRO) remains largely unchanged. The working group established in 2001 with the aim of studying different options, including the Office's
conversion to an ombudsman institution with a broader mandate, has provided recommendations, which have been partly implemented. Some improvements of the institutional structure took place, but
duplication of tasks between state human rights bodies seems to persist, especially between the NHR O and the State Children's Rights Protection Centre.
Civil and political rights
 PDF to HTML - Convert PDF files to HTML files
1461351_0011.png
There have been positive developments since the previous Regular Report regarding legislation on trafficking in human beings and asylum. There have also been some improvements in prison conditions.
Some limited steps have been taken to address the situation regarding pre-trial detention, but the situation on the issue remains a source of serious concern.
Since July 2001, when individuals were granted the right to apply to the Constitutional Court regarding violations of their basic rights, 16 cases out of 575 complaints received have been deemed admissible
and the Court has pronounced 12 judgements.
Latvia has made progress in adopting, in April 2002, amendments to the criminal law regarding
trafficking in human beings
and organised criminal groups which bring Latvia’s anti-trafficking legislation into line
with the UN Protocol to ‘prevent, suppress and punish trafficking in persons, especially women and children’. Latvia remains a country of origin. It co-operates with Interpol and various countries to prevent
such crimes.
While some legislation has been put in place, the length of
pre-trial detention
remains a very serious concern. In April 2002, about 44% of inmates in Latvian prisons were pre-trial detainees (no significant
change compared with 2001). However, in most recent months figures have slightly gone down as a result of amendments to the existing Criminal Procedure Code. Concerns have been expressed regarding
cases of excessive use of force by the police against people in custody.
As reported above, as a result of measures taken to speed up the review of juvenile cases, in April 2002, juveniles accounted for 63% of the total number of persons in pre-trial detention, compared with 70%
in mid 2001. This remains very high. The length of pre-trial detention for juveniles is not always in conformity with international standards. A working group established on the initiative of the State President
has drawn up a draft Law on Education and Correctional Measures for Juveni les in order to improve the situation.
Several regulations have been adopted in order to improve
prison conditions,
covering such issues as internal rules on imprisonment, payment for work by prisoners, financial aid to released prisoners, medical
aid, the provision of nourishment and other daily necessities, and facilities for children to stay with their imprisoned mothers.
Since the last Regular Report, progress has been made towards renovating detention facilities under the Public Investment Programme. Reconstruction of Liepaja prison, as well as parts of the central prison
and the Matisa prison has been completed. Further reconstruction work is in progress in Olaine prison (including the building of a tuberculosis hospital), parts of the central prison and Matisa prison, and in
Jelgava prison. Nevertheless, the situation in prisons continues to be reporte d as critical in terms of health and sanitary conditions, overcrowding and occupational measures. A positive development is the
fact that the number of tuberculosis cases in prisons has further decreased. Furthermore, several social rehabilitation programmes are being implemented in co-operation with NGOs, including a special
programme for juveniles.
Some structural problems still remain unresolved. As mentioned in the 2001 Regular Report, seven detention centres and prisons (out of a total of 15 institutions) continue to be guarded by a special regiment
of the Ministry of the Interior. In October 2001 the Cabinet of Ministers decided to transfer three more prisons to professional guards in 2002 and to complete the reform by the end of 2003.
Regarding
legal aid,
further improvements of legislation and practice are necessary. As set out above, the Criminal Procedure Code provides for a system of free legal aid in criminal cases (which is mandatory
in the case of minors, the disabled, persons not knowing the language, and for all pre-trial investigations). The Civil Procedure Law also provides statutory legal aid. However, there are difficulties with the
implementation of this legislation, exacerbated by a general shortage of lawyers, lack of sufficient budget, as well as a lack of knowledge and experience. Further efforts are necessary to bring the existing
legislation fully in line with existing international standards in this field. In this context, the adoption of the new Law on Criminal Procedure as well as of legislation regarding civil matters is of particular
importance and should take place without delay.
Latvia has made particular progress on
asylum,
with the adoption of a law on asylum in March 2002 which covers general procedures for refugee asylum seekers, guarantees with regard to relevant appeal
procedures, and the competencies and responsibilities of the various parties concerned. While this law is generally perceived as an important step towards aligning the legislation, particular attention will now
have to be paid to adequate implementation, including the application of ac celerated procedures, the ‘third country concept’ and the minimum guarantees for appeal. No concrete progress to improve living
conditions at Olaine Detention Centre can be reported.
Freedom of expression
and
freedom of religion
are enshrined in the Constitution of Latvia, and no particular problems have been reported in this respect.
Economic, social and cultural rights
Since the last Regular Report, the main positive developments in this area have been the ratification of the European Social Charter and the entry into force of the new labour legislation.
With regard to
equal opportunities,
the Government adopted in March 2002 an Action Plan, which provides for a National Gender Equality Strategy 2003-07. In 2001, one case involving the principle of gender
equality was brought to court. The claimant sued the prison administration for refusing to employ her as a prison guard because she was a woman. The Court confirmed that there had been gender
discrimination. The new Labour Law, which entered into force in June 2002, is a ma jor step forward and should contribute to addressing the discrimination which women continue to face in the workplace
in terms of recruitment and pay (see
Chapter 13 – Social policy and employment).
There were 21 female members of Parliament (out of a total of 100) and 2 women in the Government.
Regarding
children’s rights,
Latvia ratified the European Convention on the Recognition and Enforcement of Decisions concerning Custody of Children and on Restoration of Custody of Children in April
2002.
Improvements are needed with regard to the treatment of
disabled and mentally ill persons.
Further legislation to protect the rights of the mentally ill has to be adopted. Recourse to proper proceedings in case of
detention of persons and prevention of degrading treatment of those in care need to be systematically ensured. Despite gradual improvement, the conditions in some facilities, including the Riga main
psychiatric hospital, and the lack of state support for medicines require d by some patients remain a source of serious concern.
Regarding
the role of trade unions,
all the essential legislative preconditions for the formation and functioning of trade unions exist. However, trade unions continue to struggle with distrust from the legacy of the
past.
In January 2002, the Latvian Parliament ratified the
European Social Charter.
Latvia has selected ten Articles in Part II of the Charter as binding, guaranteeing the right to work, the right of organisation, the
right of collective bargaining, the right to protection of employed women, the right to vocational guidance, the right to health protection, the right to social and medical assistance, the right to benefit from
social welfare services, the right of the family to soci al, legal and economic protection, and the right of mothers and children to social and economic protection. The Charter entered into force in March 2002.
Minority rights and the protection of minorities
In March 2001, the Latvian Parliament rejected ratification of the Council of Europe Framework Convention for the Protection of National Minorities. The Framework Convention has thus still not been
ratified. Latvia is urged to ratify it.
Since the last Regular Report, positive developments have included abolition of language restrictions in the election law, further facilitation of naturalisation with a view to increasing the rate of naturalisation,
the inception of the Society Integration Foundation and an increase in its funding, and extended language training. However, the fact that funding for the Naturalisation Board has been reduced in 2002 is a
cause for concern.
The Naturalisation procedure
Of Latvia’s total population of about 2.34 million, around 523 100 (22.4%) were non-citizens in 2002. The number of non-citizens is slowly decreasing (from 24.6% in 2000 to 22.4% in 2002).
By June 2002, more than 54 000 naturalisation applications had been received and 53 681 persons had obtained Latvian citizenship since the beginning of naturalisation in 1995. Altogether, 7 156 children had
been granted Latvian citizenship by June 2002. In 2001, 10 637 persons obtained Latvian citizenship. In the first three months of 2002, the number of naturalisation applications increased by approximately
30% compared with the same period in 2001 (2 997 in 2002 ; 2 298 in 2001), but the rate is still low.
The increase in the rate of naturalisation during the first months of 2002 appears to be largely linked to the reduction in the naturalisation fee, the second stage of free language courses for persons wishing to
be naturalised, and a public awareness and information campaign.
One of the most important obstacles for many potential applicants remains the lack of language proficiency. To address this problem, the Society Integration Foundation has adopted a plan for the further
development of the state language training system for naturalisation candidates, indicating sources of financing from the national budget in 2003, and gradually increasing the number of places on the courses
by 5 000 per year. Taking into account that the language courses offered were greatly oversubscribed, the allocation of adequate financial and human resources is of utmost importance.
At the end of 2001, an extensive campaign informing the public about citizenship issues was launched, with advertising in the mass media and regional newspapers, an Internet web site and the organisation
of a citizenship day at Latvian schools. A free information hot-line on Latvian citizenship and related issues started to operate at the Naturalisation Board.
In 2001, the number of employees at the Naturalisation Board remained unchanged with an average of 170. With a view to strengthening the administrative capacity of the Naturalisation Board, all civil
servants attended in-service training courses at least once in 2001. However, in a preoccupying development, the budget allocated to the Board in 2002 is significantly lower than in previous years.
As regards children whose parents are stateless or non-citizens, the number of applications for citizenship remained low. Since February 1999, when it became possible to obtain citizenship for children born
in Latvia after 21 August 1991, a total of 887 had been registered as citizens by August 2002.
Latvia has continued to follow the recommendations expressed by the OSCE in the area of citizenship and naturalisation. In the period ahead, Latvia should continue and enhance activities to encourage the
naturalisation process. In order to make this possible, it will be important to provide adequate funding for the Naturalisation Board so that it can properly discharge all its responsibilities.
Special passports for non-citizens
 PDF to HTML - Convert PDF files to HTML files
1461351_0012.png
By April 2002 a total of 600 000 special passports had been issued since 1997, representing virtually all eligible non-citizens. It was still possible to exchange the old Soviet passport, which had expired at the
end of March 2000. Travelling to Russia is still easier with a non-citizenship passport than with a Latvian passport, as the cost and the nature of the visa differ.
Integration of minorities
Since the last Regular Report, attention has focused on the implementation of the "Integration of Society in Latvia" programme, the establishment of the Society Integration Foundation, and the
implementation of language legislation. A positive development has been the repeal of language provisions in Latvian election legislation. However, a number of concerns remain.
The Society Integration Foundation, which is one of the main implementing mechanisms of the National Programme for Integration of Society in Latvia, became fully operational in October 2001.
The Latvian state provides the Society Integration Foundation with a total budget of LVL 282 000 (€ 503 571) for 2002 compared to LVL 170 000 (€ 303 571) for 2001. The Society Integration Foundation
supported 21 projects last year, including 17 projects on ethnic integration and four projects on social integration. By June 2002, 64 out of 390 projects submitted for the first half of 2002 had been approved.
Three projects have been completed to date. Trainin ndation's staff is in progress.
In implementing the programme, there is a need to ensure the awareness, consultation and involvement of all sections of the Latvian population.
The National Programme for Latvian Language Training (1996-2006) continues as planned. The funding provided by the government remains almost unchanged at LVL 426 000 (€ 760 714), compared with
LVL 428 000 (€ 765 653) in 2001. So far, 57 503 (June 2002) individuals have attended Latvian language courses free of charge under the National Programme. It will be important that this support be
maintained and increased in the years to come, including by addre ortage of qualified teachers.
In accordance with the provisions of the Education Law of 1998, the introduction of bilingual education has continued. As of 2004, all state-funded schools will provide secondary education (from 10
th
grade
onwards) with the Latvian state language as the only language of instruction. This will result in about 70% of subjects being taught in Latvian, and about 30% in the minority language, such as the minority
language in question, geography, history of culture and literature. Tr ansition to education in the state language in secondary schools is planned to be completed by 2007/08. Under the National Programme
for Latvian Language Training, teaching materials and textbooks have been produced and training for schoolteachers has continued. Until now, 9 498 non-Latvian-speaking kindergarten teachers and 23 156
non-Latvian-speaking teachers have attended courses provided by the National Programme.
Teachers who teach in Latvian or bilingually in minority schools have continued to benefit from a bonus scheme. The government funding allocated to this scheme was further increased from LVL 600 000
(€ 1 043 333) in 2000 to LVL 718 000 (€ 1 284 436) in 2001. Further efforts to involve parents and minority schools and to train and recruit bilingual teachers will continue to be necessary. Sufficient
flexibility should be provided for in the transition phase i nsure equal education opportunities, and efforts should be enhanced to closely involve minority representatives in any relevant decision-making
processes.
As already stated in previous Regular Reports, the Latvian Language Law (of 1999) and the implementing regulations are essentially in conformity with Latvia’s international obligations and the Europe
Agreement. Furthermore, neither the Language Law itself nor the implementing regulations contain provisions that are manifestly incompatible with Latvia’s obligations under the Europe Agreement.
However, some of the provisions are worded in such a way that they could give rise to terpretations.
The State Language Centre carries out the supervision and control of the implementation of the State Language Law. Currently the Centre has 21 staff members, 14 inspectors, three employees in the
Consultation Department and four administrators. Since September 2001, employees of the Centre have issued six warnings and imposed 77 penalties. The most common violations have been the failure to
master the state language as necessary for special professional duties and the disregard of governm ent regulations when providing information to the public. It should be noted that the Centre has so far not
checked enterprises on a systematic basis but has reacted to complaints by the population. So far, around 7 000 complaints have been received and 3 000 companies have been inspected. In February 2002, an
Information and Consultation Department was created at the State Language Centre. In co-operation with the OSCE and the Council of Europe, practical manuals for language inspectors are being drawn up
and remain to be introduced.
So far no court has applied the provisions of the Administrative Violations Code imposing fines for "disrespect towards the state language".
Some limited changes have been made regarding the rules for spelling foreign names in the Latvian language in official documents, following a decision of the Constitutional Court which concluded that the
way of recording a person’s name and surname in the original in the passport excessively restricted the person’s privacy and therefore did not comply with the State Language Law. In compliance with the
new passport regulations, and upon request, the person’s name in the is now to be recorded more prominently. A case related to this question was declared admissible by the European Court of Human
Rights in Strasbourg. According to the European Court of Justice, every person has a right to use his/her name in its own language and according to the correct spelling in that language.
As emphasised in previous Regular Reports, it is important that the competent authorities, including the State Language Centre and the judicial system, only apply and enforce the Language Law and its
implementing regulations to the extent required by legitimate public interest, having regard to the principle of proportionality, as contained in Article 2 of the Language Law, and in view of Latvia's obligations
under international human rights instruments and the rights and freedoms guarant eed under the Europe Agreement.
As regards the linguistic restrictions, which still figure in legislation other than the Language Law, important developments have taken place over the past year. The Latvian State President actively supported
the repeal of election legislation imposing language requirements on political candidates. In January 2002, the State President, supported by the Prime Minister, took the decision to establish a standing
Commission on the State Language, composed of linguists, sociologists and philo sophers and of civil servants responsible for the application of the state language policy. The main task attributed to the
Commission is to draw up guidelines for Latvian language policy for the next three years and to recommend concrete measures for enhancing the status of the Latvian language.
In April 2002, the Constitution was amended with the aim of strengthening the state language in the context of planned changes to the election laws. A loyalty oath for Members of Parliament was introduced
and the status of Latvian as the official procedural language in parliament and municipalities was confirmed. As the previous constitutional text already incorporated a provision on the Latvian language as the
official language of the Republic of Latvia, the amendments essentially do not introduce substantive changes likely to affect the functioning of either parliament or local government.
However, the amendments to the Constitution opened the way for the repeal of election law provisions requiring candidates in national and local elections to be proficient in Latvian. As mentioned above, in
May 2002 the Latvian parliament abolished these requirements and amended the election laws by a majority of more than 75% of its members.
On the other hand, recent amendments to the Law on Local Councils concerning the working language in such councils and their subordinate institutions reportedly represent a potential risk to the
opportunities that exist in practice for the use of minority languages in dealings with public authorities.
As reported last year, in February 2001 the European Court of Human Rights declared admissible the case of a Latvian citizen of Russian origin who had not been allowed to stand as a candidate in the 1998
parliamentary elections due to an alleged insufficient knowledge of the official language, despite the fact that the candidate had previously presented the required language proficiency certificate. In April 2002,
the Court ruled that Latvia had violated the claimant’s right to free ion in terms of the procedures applied by the administration and ordered Latvia to pay € 9 000 in damages. At the same time, the European
Court of Human Rights also found that the purpose of the legislation on parliamentary elections barring citizens without an advanced degree of proficiency in the national language from standing for election
was to ensure the proper functioning of the Latvian institutional system. It was not for the Court to determine the choice of the working language of a nati arliament, as that choice was dictated by historical
and political considerations and, in principle, was exclusively for the State concerned to determine.
Several other elements limit the integration of non-citizens in the economic sphere. Non-citizens continue to be excluded from some professions (lawyers, armed security guards and private detectives) on the
grounds of state security.
General evaluation
In its 1997 Opinion, the Commission concluded that Latvia fulfilled the political criteria. Since that time, the country has made considerable progress in further consolidating and deepening the stability of its
institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities. This has been confirmed over the past year. Latvia continues to fulfil the Copenhagen political
criteria.
Regarding public administration reform, Latvia has continued to address the remaining reform issues and the legislative and administrative framework will be fairly comprehensive once the Civil Service Law
and Public Administration Law are fully implemented. It is now important to speed up the introduction of the uniform civil service pay system and to ensure sufficient funding.
Overall, while most of the deficiencies of the judicial system have been identified, only part of them have been addressed. Efforts in this field need to be multiplied in order to ensure a thorough systemic
reform, based on political support for modernising the judiciary and sufficient funding. The legislative framework still remains to be completed and the increasing backlog of court cases should be reduced.
The issue of pre-trial detention requires continued attention. Further significa nt efforts to strengthen the
de facto
independence, efficiency and quality of the judiciary are needed. The upgrading of the
infrastructure of courts needs to be completed.
Latvia has made further progress in the fight against corruption, which remains a cause for serious concern. The legislative framework has been improved, the institutional set-up has been strengthened and
public awareness as well as the involvement of civil society are rising. However, further efforts are needed in order to complete the institutional set-up and to provide the new Anti-Corruption Bureau with
the necessary means in order to achieve concrete results.
Latvia continues to respect human rights and freedoms.
Latvia has encouraged the further integration of non-citizens into Latvian society by removing language requirements in the election law, and increasing support to facilitate the naturalisation process, and
through the activities of the Society Integration Foundation. The integration process needs however to be accelerated and sufficient funding made available to encourage naturalisation and language training in
particular. Latvia should ensure that at all levels the implementation of the language law respects the principles of justified public interest and proportionality, Latvia’s international obligations and the Europe
Agreement.
 PDF to HTML - Convert PDF files to HTML files
1461351_0013.png
Economic criteria
Introduction
In its 1997 Opinion on Latvia’s application for EU membership, the Commission concluded:
"Latvia has made considerable progress in the creation of a market economy"; it "… would face serious difficulties in coping with competitive pressure and market forces within the Union in the medium-
term".
ociety Integration Foundation. The integration process needs however to be accelerated and sufficient funding made available to encourage naturalisation and language training in particular. Latvia should
ensure that at all levels the implementation of the
In its 2001 Regular Report, the Commission found that:
"Latvia is a functioning market economy. Provided that it makes further substantial efforts in maintaining the pace of, and completing, its structural reforms, it should be able to cope with the competitive
pressure and market forces within the Union in the near term."
In examining the economic developments in Latvia since the Opinion, the Commission’s approach was guided by the June 1993 conclusions of the European Council in Copenhagen in, which stated that
membership of the Union requires:
• the existence of a functioning market economy;
• the capacity to cope with the competitive pressure and market forces within the Union.
In the analysis below, the Commission has followed the methodology applied in the Opinion and the previous annual Regular Reports. The analysis in this year’s Regular Report takes stock of developments
since the Opinion was drafted.
Summary of economic developments since 1997
Macroeconomic development has been favourable in most respects.
GDP growth has been strong, steady and broad-based, underpinned by both domestic and external demand. Only in 1999 did development deviate
from this trend, as the economy was hit by the Russian crisis, but the economy succeeded in recovering rapidly. However, strong private consumption and investment have lead to a large current
account deficit. It has, nonetheless, been covered by FDI to a large extent. In 2001, FDI fell considerably but that was due to a single transaction by a domestic enterprise and it should not be too
emphasised. Despite strong domestic demand, inflation has remained moderate and stable. The general government deficit has varied somewhat over the years, with a peak in 1999. Since then,
however, it has decreased every year. Recent economic developments have, by and large, confirmed these trends, although the weakening of external demand has started to influence exports. The
budget law for 2002 provides for an increase in the budget deficit to 2.75% of GDP. So far, however, the actual deficit has been much lower than that and in agreement with the IMF, the target for the
year has been set to 1.8% of GDP.
Main Economic Trends
Latvia
1997
1998
1999
2000
2001
Average
2002 latest
Real GDP growth rate
Inflation rate
a
-  annual average
per cent
per cent
8.4
8.1
4.8
4.3
2.8
2.1
6.8
2.6
7.7
2.5
6.1
3.9
3.8 Q1
2.8 July
c
-  December-on-December
per cent
6.4
2.7
3.0
1.7
3.2
3.4
1.1 July
Unemployment rate
-  LFS definition
General
balance
government
budget
14.4
per cent
per cent of
GDP
per cent of
GDP
Million
ECU/€
1.8
14.5
13.7
14.2
13.1
14.0
13.5 Q2
-0.7
-5.3
-2.7
-1.6
-1.7
Current account balance
-6.1
-10.6
-9.7
-6.9
-9.7
8.6
-305
-576
-599
-538
-825
d
569
-275 Jan.-June
d
Gross foreign debt of the whole
economy
-  debt export ratio
per cent of
exports of
goods and
services
Million
ECU/€
20.6
70.6
111.8
100.0
:
:
523
1,968
b
3,052
3,546
:
:
Foreign direct investment inflow
-  balance of payments data
9.3
per cent of
GDP
5.8
5.2
5.7
2.3
5.7
Million
ECU/€
460
318
324
442
198
348
304 Jan.-June
d
Sources: Eurostat. National sources. OECD external Debt Statistics
a
b
PROXY HICP since 1998 (see methodological notes);
series break as a result of some technical changes to the definition.
c Moving 12 months average rate of change.
d Source: Website of the National Bank.
Structural reforms have strengthened the performance of the economy, even if the implementation of the reforms can be a challenge.
An ambitious work to improve the business environment began in 1999. An essential element was the systematic involvement of the business community in the programming of structural reforms, which has paid off in terms of a wide range of actions undertaken. Legal certainty has been strengthened in the land
market and in the bu siness sector. The privatisation process is almost completed, but the process has gone much slower during the last years than initially planned. Progress was made during the last year, but some large enterprises are still awaiting their privatisation. With the introduction of a mandatory funded pillar in 2001, the pension reform is now largely completed. The financial sector has undergone
substantial progress. Although financial intermediation is still relatively limited, restructuring and consolidation of the sector have gone far. Supervision of the financial sector has also been significantly strengthened.
The transition to a market economy, and subsequent restructuring, has contributed to a rise, though geographically uneven, of incomes.
GDP per capita in PPS reached 33.1% of the EU average in 2001. This measure shows good progress made since the Opinion in the process of catching up to income levels seen in the EU. However, growth has not been evenly distributed, but largely concentrated to a few areas.
This is reflected both in terms of GDP, and in terms of unemployment. The Riga region reached close to half the EU level in 1999, whereas some inland rural areas have significantly lower levels. However, this measure, GDP per capita, do not fully reflect income per capita, and should therefore be treated cautiously. The economic activity rate, around 68%, and the employment rate, around 59% have been overall
fairly stable. The unemployment rates in some eastern districts are more than five times higher than in Riga city. Unemployment rates for men are, by about 3 percentage points, hi gher than those of women and have, unlike that for women not fallen over the past years.
Main Indicators of Economic Structure in 2001
Population (average)
GDP per head
a
Thousand
PPS
per cent of EU average
Share of agriculture
b
in:
-  gross value added
-  employment
Gross fixed capital formation/GDP
Gross foreign debt of the whole
economy/GDP
c
Exports of goods & services/GDP
Stock of foreign direct investment
Long term unemployment rate
per cent
per cent
per cent
per cent
per cent
Million €
€ per head
a
per cent of labour force
2,355
7,700
33
4.7
15.1
27.3
45.7
44.9
2,284
c
970
7.7
 PDF to HTML - Convert PDF files to HTML files
1461351_0014.png
a
Figures have been calculated using the population figures from National Accounts, which may differ from those used in demographic statistics.
b
Agriculture, hunting, forestry and fishing.
c
Data refer to 2000.
Assessment in terms of the Copenhagen criteria
The existence of a functioning market economy
The existence of a functioning market economy requires that prices, as well as trade, are liberalised and that an enforceable legal system, including property rights, is in place. Macroeconomic stability and consensus about economic policy enhance the performance of a market economy. A well-developed financial sector and the absence of any significant barriers to market entry and exit improve the efficiency of the economy.
Overall, there has been a broad consensus about the essentials of economic policy.
Governments have changed frequently in the past, but economic policy has remained stable. Some disagreements about economic policy have, nevertheless, been evident as in the case of the privatisation process. Latvia has participated in the Pre-Accession Fiscal Surveillance Procedure. In particular, the most recent Pre-Accession Economic Programme of August 2002 indicated the commitment of the Latvian government towards further macroeconomic stabilisation and market-based structural reforms. Over the past years Latvia requested a series of
stand-by arrangements from the International Monetary Fund as a precautionary measure. The present one was approved in April 2001, for a period of 20 months.
Growth has been strong and broad-based, and the economy has shown a remarkable capacity to adapt to changes in the external economic environment.
Real GDP has grown by about 6.1% annually, and despite the worldwide slow down in economic activity, it expanded by even 7.7% in 2001. Only in 1999 was growth significantly lower, because of the crisis in Russia. Both domestic and external demand have contributed considerably to growth. Domestic demand has mainly been driven by gross fixe d capital formation and private consumption, while the contribution from public consumption has been close to nil. Most important in domestic
demand has been gross fixed capital formation, increasing by 19.5% annually, and 17.0% in 2001. However, investment growth has been very volatile, with annual growth rates ranging between -4.0% and 44.0%. Private consumption, growing by 4.8% on average, has contributed nearly as much as capital formation to growth, Growing by 6.1% annually, exports have also been impo rtant for growth. They have been affected by changes in the world economy, but have managed to adapt rapidly.
Reflecting strong domestic demand, and in particular a need for investment goods, the current account deficit remains large, with no trend of decline.
The trade balance recorded a large deficit, 16.3% of GDP on average. After two years of decrease, the trade deficit increased sharply in 2001 to 17.9%. This was, however, mostly explained by a large one-off investment by the Latvian Shipping Company. Latvia’s geographical position has made transit trade an important business, r ng in a surplus in the balance of services, which partly offsets the trade deficit. The deficit in the current account amounted to 8.6% of GDP on average. In 2001, the current
account deficit amounted to 9.7%, of which approximately 2 percentage points was explained by the above-mentioned one-off investment. Over the years, a major part of the deficit has been covered by foreign direct investment (FDI), except for 2001, when FDI decreased at the same time as the current account deficit increased.
The unemployment rate has remained high and stable, despite rapid growth in the economy.
In contrast to rapid GDP growth, employment has barely changed. After a small rise in 1998, employment has since been falling back to levels prevailing in 1997. This slow contraction in employment continued in the first quarter of 2002. The unemployment rate has been more or less unchanged, except for a minor peak in 1999. The average unemployment rate since 1997 has been 14.0%, and the 2001 un employment rate was 13.1%. Long-term unemployment forms a large and increasing proportion of unemployment: 55.8% in 1997, and 59.1%
in 2001. Considerable regional discrepancies are also a distinctive feature, pointing to low mobility of the labour force. This is attributable to several causes, for instance poor commuting facilities and a mismatch between supply and demand for skills.
Inflation has been falling to moderate levels.
Average annual inflation was 3.9%, but the trend has been downward, from 8.1% in 1997 to 2.5% in 2001. Core inflation stood at 4% on average, thus very close to the overall rate of inflation. Yet the downward trend in core inflation was smoother and more sustained than for the overall inflation rate. Prices for services have increased more than twice as much as prices for goods. Part of the increase for services originates from rising fees for public services. Prices for railway transports, postal services, and telephone services for instance, have increased much more than prices on average.
However, the picture during 2001 was different. Prices for services increased less than prices for goods, and prices for the above-mentioned services decreased. Annual inflation increased somewhat in the second half of 2001, mainly as a result of faster rising food prises, but started to decline again in the second quarter of 2002.
Since 1994, the lat has been pegged against the SDR, which has served as a nominal anchor in monetary policy, and helped to secure price stability.
Within the limits set by the goals of exchange rate stability and low inflation, monetary policy also aims at avoiding excessive volatility in interest rates. Partly reflecting the decline in inflation, and the growing credibility of the fixed exchange rate, interest rates have slowly declined. The average lending rate stood at 14.8% in 1997 and 10.2% in 2001. To move closer to the standards prevailing in the EMU area, reserve requirements have been lowered continuously, from 8% in 1997 to 5% as from
January 2002. This monetary policy framework has led to stable and relatively low money market rates over the whole period. Real interest rates have also shown relatively low and stable levels over the period.
Since the peak in the budget deficit in 1999, fiscal policy has been directed towards budget balance in the medium term.
At the beginning of the period, Latvia had a budget surplus, 1.8% of GDP according to national figures. However, the economic slowdown in 1999, and the subsequent increase in unemployment, together with tax reductions, changed the situation. In 1999, revenues increased slowly, and social expenditure increased rapidly, which resulted in a budget deficit of 5.3% of GDP in harmonised EU standards, ESA95. Benefiting from strong growth, and only modest increases in expenditure, the budget deficit decreased in the
subsequent years. In 2001, it stood at 1.6% of GDP. In 2001, a compulsory funded pension scheme ("second pillar") was introduced. Although this step will make public finance more sustainable over the medium term, in the short term it causes additional government expenditure. Furthermore, tax reductions were proposed, which will put additional stress o n the budget. A second main task of fiscal policy, apart from budget balance in the medium term, is the reform of the tax system, aiming at a lower overall tax burden and a shift of taxation from production to consumption. In line with that, the corporate tax will be cut
in stages down to 15% in 2004. Social security contributions and the real estate tax have also been discussed to be reduced. However, the reduction of the real estate tax will be compensated by a broadening of the tax base, expected to more than compensate for the reduction of the tax rate. Average general government gross debt for the period amounts to a comparatively low 13.6% of GDP. It has been increasing every year, in 2001 by 2.1 percentage points to 16.0% of GDP.
The macroeconomic policy mix has been adequate and managed to cope with external shocks.
The monetary framework, defined by the peg of the lat, has been stable and predictable. Fiscal policy has been responsive to this framework, by adopting a prudent stance overall, translating into relatively low deficits on average, and flexibility in times of adverse economic shocks. This was in particular the case in 1999 in the aftermath of the Russian crisis, when automatic stabilisers were allowed to play freely and some tax arrears were extended, leading to a temporary sharp increase in the government deficit in 1999.
Price liberalisation was completed prior to 1997, and market forces determine the majority of prices of goods and services.
The proportion of items whose prices are regulated has been the same for several years, at about 20% of consumer price index, CPI. It is mainly prices for the services of public utilities that are still regulated; e.g. electricity, gas, water and telephone services. A cost-recovery mechanism is in place.
The share of the private sector increased rapidly up to 1998 and has continued to increase since, but at a slower pace.
Some 62% of GDP were produced in the private sector in 1997, which had increased to 69% by 2001. In terms of employment, the percentage is slightly higher. The land reform is close to being completed, and about 90% of agricultural land are in private hands. A real-estate market exists and a system of mortgage lending is fully operational. The privatisation of apar tments is ongoing. Of all apartments, some 95% are assigned for privatisation, and of these about 77% had been privatised by 31 October 2001.
The privatisation process is nearly completed, but some large companies are still state-owned.
Privatisation of small and medium-sized enterprises was by and large completed in mid-1998. However, the process has been slower since then. Nevertheless, some progress has been achieved, and only a few large enterprises remain to be privatised. The privatisation of Latvian Gas was carried out in several stages and successfully completed in February 2002, with two German and one Ru ssian investors emerging as the major shareholders. The conditions for the sale of the remaining state-owned shares in Ventspils Nafta and the Latvian Savings
Bank are being worked out. The sale of Lattelekom is expected to resume as soon as the ongoing arbitration case, concerning the curtailing of Lattelekom’s monopoly, is settled. An important step forward was the sale of 83% of the shares in the Latvian Shipping Company (LASCO) in 2002. The privatisation of LASCO started more than five years ago, s interrupted several times. A large stake, close to 50%, has now been bought by Ventspils Nafta, which is itself partly (32%) owned by the state. This transaction might have an impact on the scope for selling the remaining state share in Ventspils Nafta. In mid-2000, it was
decided that the Latvian electricity utility, Latvenergo, should be temporarily removed from the list of enterprises to be privatised. Latvenergo, as well as the Latvian railway company, Latvijas Dzelzcels, is currently under restructur ing.
No significant barriers to market entry or exit are present.
In 1999, a long-term co-operation between the authorities and the business community, represented by the FICIL, began. The aim was to identify and remove obstacles and administrative barriers in the business environment. 77 measures to improve the business environment have been suggested, and up to mid-2002 68 had been undertaken. Following the success of this work the co-operation has recently been broadened to incorpora te a wider range of the business community. New firms have been created every year at the average rate of about 7% of total firms. The rate
is slowly declining, naturally as the total number of firms is steadily increasing, and in 2001 the rate was about 6%. A new bankruptcy law became effective in late 1996, and was followed by a peak in liquidations during 1997 and 1998. Almost 10% of the existing companies were liquidated both years. Since then, about 2% of companies have been liquidated annually on aver age. However, the lack of administrative and judicial capacity is still a problem, and results in lengthy court proceedings and poor supervision of enterprises, which in turn makes life easy for tax evaders and those who do not obey laws and regulations.
The legal framework for enterprises is in place, although enforcement of relevant legislation still poses problems.
Several important steps have recently been taken to create a comprehensive legal system. In July 2001, the computerised national Land Book was introduced, strengthening the legal certainty in the real estate market. In October 2001, a new unified utilities regulator, the Public Utilities Commission, started its activities. Finally, an important and long awaited change in company law was the new Commercial Code that came into force in January 2002. The law simplifies legislation, makes it more transparent, and brings it into line with
EU requirements. However, the business community still points at the lack of administrative capacity, which undermines the enforcement of the legislation.
The financial sector is functioning well, although intermediation is still low.
On average, domestic credit to the private sector has increased by some 46% annually since 1997. However, the increase has taken place from low levels. Thus it only amounted to 28.6% of GDP at the end of 2001, roughly double the ratio compared to that in 1997. 22 banks are currently operating in Latvia. Although some of them are very small and operating in market niches, this relatively high number of m arket operators guarantees a sufficient degree of competition, as witnessed by the downward trend in spreads between interest rates on loans and
deposits. The spread for short-term loans and deposits has significantly declined from 9.4 percentage points to 5.9 in 2001, and for long-term loans and deposits from 7.2 to 3.6. Foreign involvement in the banking sector has been large and stable during the last years. The privatisation of the banking sector is almost complete and state ownership amounted at the en d of 2001 to just 3.7% of total bank capital, whereas foreigners held 67.8%.
The financial sector has reached an adequate degree of stability.
As a share of total loans, non-performing loans have decreased from 10.0% to 2.8%. All banks fully comply with the capital adequacy requirements. The capital adequacy ratio was 16.2% on average between 1997 and 2001, but has been declining and was 14.2% at the end of 2001. The sector as a whole reports stable profits. Supervision of the capital markets has improved significantly. In July 2001, the new Financial and C apital Market Commission started to operate. The commission unifies the supervision of the financial and capital markets into one body, and has been
given far-reaching independence, similar to that of the central bank. Latvia is close to full compliance with the Basle Core Principles.
The non-bank financial sector is small, but slowly expanding.
Stock market capitalisation has risen from 8.4% of GDP to 9.3%. A bond market did not exist in 1997, and its capitalisation only amounted to 5.7% of GDP in 2001. Part of that rise is due to the issue of government securities aimed at developing domestic financial markets, exceeding the budget financing needs. However, the introduction of the second pillar in the pension system in July 2001 is expected to promote the expa nsion of the capital market in the coming years.
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, allowing economic agents to make decisions in a climate of predictability. It also requires a sufficient amount of human and physical capital, including infrastructure. State enterprises need to be restructured and all enterprises need to invest to improve their efficiency. Furthermore, the more access enterprises have to outside finance and the more successful they are at restructuring and innovating, the greater will be their capacity to adapt. Overall, an economy will be better able to take on the obligations of
membership the higher the degree of economic integration it achieves with the Union before accession. Both the volume and the range of products traded with EU Member States provide evidence of such integration.
The existence of a market economy, with sufficient macroeconomic stability and progress on structural reforms, has established a favourable environment for economic growth and competitiveness.
On the whole, economic policy has been conducted with a sufficient degree of predictability to allow proper decision-making by economic agents. The Latvian economy has shown resistance against external shocks, as proved by its reorientation of exports after the Russian crisis and its steady i ncrease in exports to the EU, despite the appreciating exchange rate of the lat and the economic slowdown in Western Europe.
Average educational attainment is relatively high, although the situation is somewhat nuanced.
Enrolment in higher education has increased constantly since 1997, and the number of students at higher educational establishments in 2001/02 was almost twice as high as in 1996/97. At the end of 2001, 14.4% of the population had higher education (12.7% at the end of 1996), 52.5% second-level education (52.8%), and 7.9% only basic education (10.6%). However, the majority of second-level q ualifications is vocational; in many cases gained in the past, over-specialised and not adapted to current needs. In addition, the number of students in
some technical courses is very small. This has created a shortage of certain skilled workers for industry. Furthermore, low remuneration has made it difficult to attract qualified teachers, particularly in rural areas. This fact is conflicting with the need of further restructuring in the agricultural sector, which implies additional efforts on education. T hese problems have been recognised by the government, and education has been given priority in the budget. The reform of teachers’ remuneration is ongoing and is expected to be finalised in 2003. Spending on research and development is relatively low and amounted to 0.4% of
GDP in 1999, out of which some 17% was spent in the business sector.
To address the high and typically structural unemployment, employment policies should focus on active labour market measures.
Vocational training and retraining of all unemployed is becoming increasingly important among these labour market measures. Since 1997, the number of unemployed involved in active labour market measures has more than doubled, although the increase mainly concerns job clubs and not the more expensive but also more necessary training initiatives. The effective ness of training is evidenced by the fact that more than two thirds of those who received special training have found employment afterwards. To provide
young, unemployed people with skills demanded by employers, the legislative base for apprenticeship has recently been worked out.
Latvia has been successful in attracting foreign direct investment even in times when the privatisation process has halted.
Net inflow of foreign direct investment (FDI) has equalled 5.4% of GDP on average since 1997. In 2001, FDI was significantly lower at 2.7% of GDP. However, this was due to a local investor’s take over of a foreign-owned enterprise, which is the same as negative FDI inflow. In the first quarter 2002, FDI was back at the previous higher level. By the end o , 22.2% of the stock of FDI had gone into wholesales and retail trade, 17.4% had gone into financial intermediation, and 17.0% into manufacturing. The most important
foreign investors were from Sweden (11.6% of total accumulated investment), Germany and the United States (each 11.5%). From 1997 to 1998, the share of total gross fixed capital formation in GDP increased from 18.7%, to 27.3%, induced by both private and public investment. The share of fixed capital formation in GDP, which was affected by the g eneral economic slowdown in 1999 and tight fiscal policy, has since then been relatively stable at about 26%. Still, increased public expenditure on infrastructure is needed, particularly in roads and in the energy sector in rural areas.
Enterprise restructuring has proceeded well, although the agricultural sector lags behind.
Promoted by the privatisation process, which is more or less complete, and a steady inflow of foreign direct investment, restructuring of enterprises has been far- reaching. The agricultural sector, however, is still characterised by many small farms with low productivity, even subsistence farming. This is reflected in the fact that the agricultural sector’s share in total employment is three times as large as the share in total GDP. However, a process of restructuring is also taking place in the agricultural sector, as shown by the decrease of total employment,
at the same time as the share of employees increases.
The structural change of the economy has been significant but recently slowing down.
The structural change of the economy has continued along its previous lines; i.e. the share of industry in total value added has declined, and the share of services has grown. The share of industry has decreased from 27.4% to 18.8%, which is exclusively due to a significant fall in manufacturing. The share of services has increased from 62.1% to 70.6%, driven particularly by a strong rise in wholes ale and retail trade as well as in business services. However, the changes during 2001 were almost insignificant, which might indicate that the economy has
reached a more sustainable structure. In terms of employment, the development is similar.
The situation of small and medium-sized enterprises (SMEs) has improved, but entrepreneurial activity is still low.
The above-mentioned co-operation with the Foreign Investors’ Council in Latvia has resulted in general improvements in the fields of taxes, custom procedures, education, corruption etc. Besides these improvements of the business environment in general, some measures aimed directly at SMEs have been undertaken, such as tax exemptions, a simplified reporting syste small business, and business incubators. Access to funds for setting up business, and for SME development has been a problem. To facilitate access to funds, a
program on SME crediting was approved in 1999. Together with a general decline in interest rates, the situation has improved significantly, and access to funds is now a smaller obstacle. Still, entrepreneurial activity is low with 17 active SMEs per 1000 inhabitants. SMEs employ more than 70% of total employment and create about 65% of total GDP.
State involvement in the private sector is moderate.
During the period, tariff barriers have declined substantially. State aid has also declined and amounted to 1.2% of GDP in 2000, only half as much as in 1997. This development was mostly due to the decrease in support to the financial sector. A bank support programme was launched in 1994, which continued for several years. Then in 1999, the Central Bank and the government rescued the Riga Commercial Bank, which had become insolve nt as a result of the Russian crisis. When these actions were completed, state aid to the financial sector decreased by 84.3% in 2000. State
support to the industrial sector is mainly given in terms of capitalisation of tax debts. SMEs benefit from favourable credit lines, and small companies with less than 25 employees are entitled to tax exemptions. Subsidies are also given to the agricultural sector and represented 0.67% of GDP in 2000.
The Latvian economy is highly open with increasing trade links with the EU.
Latvia is conducting a liberal foreign trade policy, aimed at finding new markets and enlarging the market share of existing markets. In February 1999, Latvia became a member of the WTO. The value of exports and imports to GDP has varied above 100%. In 2001, the sum of exports and imports represented 102.9% of GDP. Merchandise exports to the EU as a share of total merchandise exports have increased nearly e very year. In 1997 they constituted 48.9%, and in 2000 64.6%. However, in 2001 the weakness of EU imports caused the share of Latvian
exports to the EU in total Latvian exports to drop to 61.2%. The share of merchandise imports from the EU has been stable during the period at around 53.6%. However, exports are very much concentrated around a few branches and Latvia has made little progress in diversifying its export portfolio. In particular, the share of wood and articles of wood accounted for about 30% of total exports in 1997, and for some 34% in 2001; textiles and textile articles accounted for some 14% in 2001, one percentage point up from 1997. Still, within the branch of wood and articles of wood, there has been an orientation towards higher-
value-added products.
Strong productivity growth has secured external competitiveness.
Strong growth in fixed investment has made it possible for productivity to grow rapidly without extensive lay-offs. On average, productivity has grown by 5.2%, and in 2001 it grew by 7.7%. This strong rise in productivity has offset the rise in real wages in recent years, and unit labour costs have therefore been relatively stable in recent years and have secured the price competitiveness of Latvian exporters, as witn essed by the strong export performance.
General evaluation
The 1997 Opinion already acknowledged the reform efforts undertaken by the Latvian authorities to transform their economy. Since the Opinion, and against a challenging international economic environment, in particular the Russian crisis, economic performance has improved. Macroeconomic stability has been achieved, reforms have accelerated while the Latvian authorities’ commitment to the economic requirements of EU accession has been sustained.
Hence, it is concluded that Latvia is a functioning market economy. The continuation of its current reform path should enable Latvia to cope with competitive pressure and market forces within the Union.
Improvements can be made to the functioning of the labour markets, in particular by active labour market measures in favour of disadvantaged groups, reinforcing public and private infrastructure necessary for the mobility of the workforce and further reforms to the educational system. Fiscal policy has to maintain a prudent approach, also in view of the high current account deficit. In addition, improving the general business environment and strengthening the administrative and judicial c apacity would support a more broad-based private sector development.
Ability to assume the obligations of membership
Introduction
This section addresses the question of Latvia’s ability to assume the obligations of membership – that is, the legal and institutional framework, known as the
acquis,
by means of which the Union implements its objectives. Alongside an evaluation of relevant developments since the 2001 Regular Report, this section seeks to provide an overall assessment of Latvia’s ability to assume the obligations of membership, and of what remains rmore, it includes an evaluation of Latvia's track record since the 1997 Opinion. It also provides, for each of the negotiating chapters, a summary evaluation of the extent to which commitments
made in the negotiations have been implemented, as well as an overview of transitional arrangements that have been granted.
This section is structured in accordance with the list of 29 negotiating chapters, and incorporates an assessment of Latvia’s administrative capacity to implement the
acquis
in its various aspects. Latvia's progress in translating the
acquis
into its official language is assessed in a separate section.
In December 1995, the Madrid European Council remarked on the need to create the conditions for the gradual, harmonious integration of the candidate countries, particularly through the adjustment of their administrative structures. Taking up this theme, in Agenda 2000 the Commission underlined the importance of effectively incorporating Community legislation into national legislation, and the even greater importance of implementing it properly in the field, via the appropriate administrat ive and judicial structures. This is an essential precondition for creating the mutual trust indispensable for future membership.
In June 2002, the Seville European Council repeated how important it was that candidate countries should continue to make progress with the implementation and effective application of the
acquis,
and added that candidate countries must take all necessary measures to bring their administrative and judicial capacity up to the required level. Building on the assessment of Latvia’s administrative capacity provided in the 2001 Regular Report, the present Report seeks to add furthe h and detail, focusing on the main administrative structures required for implementing the various aspects of the
acquis.
In its 1997 Opinion on Latvia's application for EU membership, the Commission concluded:
"Latvia has made some progress in transposing and implementing the acquis relating particularly to the single market. With considerable further effort it should become able to participate fully in the single market in the medium term. Particular efforts, including investment, will be needed to apply the acquis fully in sectors such as environment and agriculture. Strengthening of the administrative structure is indispensable if Latvia is to have the structures to apply and enforce the acquis effectively."
In the 2001 Regular Report, the Commission found that :
"Latvia has kept up a steady pace in aligning its legislation with the acquis in most areas. The need to strengthen the administrative capacity to manage and enforce the acquis has been recognised, even though this process continues to represent considerable challenges. Efforts during the last year included both re-organisation of existing structures and the creation of several specialised bodies with a view to complying with the various requirements of the acquis.
Preparations for the Internal Market advanced further. As concerns movement of goods, the transposition of European standards accelerated, and the institutions for accreditation and standardisation have been further strengthened. The new Market Surveillance Council became operational, but the reform of the market surveillance system needs to continue. Further legislation was also adopted in the area of public procurement, but the Public Procurement Surveillance Bureau has not yet been cr eated. In the area of free movement of persons, framework legislation on mutual recognition of professional qualifications was adopted. In the area of freedom to provide services, two new bodies, the Financial and Capital Market Commission and
the Stata Data Inspectorate started to function, even though further improvements of the legislative basis of the latter will be necessary. Further legislation was also adopted concerning the movement of capital, in particular on security services and cross-border cre dit transfers. In the area of company law, the enforcement of legislation remains a matter of concern. Delays in the entry into force of the Commercial Code and the effective protection of intellectual and industrial property rights constitute a serious challenge. The adoption of legislation related to state aid represents an important step towards meeting requirements of competition policy; Latvia’s enforcement record in this area has also developed but efforts to ensure the full implementation
of an st and state aids rules should continue. In the area of customs, progress was made in alignment and in upgrading the administrative structures, which were also strengthened for taxation. For both areas, the development of IT systems so as to allow for the exchange of electronic data with the Community and its member states needs to be carried forward.
Encouraging efforts were undertaken in the area of agriculture, in particular concerning veterinary and phytosanitary matters, as well as food safety. Achievements include the adoption of amendments to the Law on Agriculture, the adoption of an implementation plan for common market organisations, the entry into force of a new Law on Veterinary Medicine and the restructuring and strengthening of the administration. Important challenges still lie ahead, both in completing alignment and in introducing and upgrading the necessary structures and mechanisms, including the paying agency, the integrated administration and control system, common market organisations and inspection arrangements.
Alignment also continued for road and railways transport, and the ongoing efforts to improve maritime safety have shown some first results. A significant step in transposing the social policy and employment acquis was reached with the adoption of the Labour Code and the Law on Labour Protection. To ensure the proper implementation of legislation, the administrative capacity should be reinforced, in particular concerning occupational health and safety, including the further strengthening o f the State Labour Inspectorate. Further alignment was achieved in the areas of energy and environment. For energy, this needs to continue with special emphasis on the electricity and gas directives, as well as oil stocks; for the area of environment,
alignment needs to be completed as concerns access to environmental information, waste management and chemicals. Several specialised bodies were set up, including the Energy Inspectorate, the Radiation Safety Centre and the Latvian Environment Agency, and, but further efforts to upgrade the administrative structures are needed.
The transposition of most of the requirements for telecommunications is still pending. Considerable progress was made in aligning to the culture and audiovisual acquis. For justice and home affairs, progress could be noted on data protection, visas and border control, including also the adoption of a Schengen Action Plan. These efforts need to be maintained, and alignment in the areas of migration and asylum completed. Upgrading the capacity and infrastructure for border management also r emains a priority. The fight against organised crime, drug trafficking, money laundering, fraud and corruption also needs to be reinforced.
As to regional policy and the co-ordination of structural instruments, the basic legislation remains to be adopted. Progress is also needed on programming, monitoring and evaluation capacities. The decision to entrust the Ministry of Finance with the future responsibility for Structural Funds represents an important step. Although further legislation on Public Internal Financial Control and external audit remains to be adopted, some advancements in this area could be noted, in particular as concerns the strengthening of the administrative structures; this process needs to continue.
Preparing its administration for EU membership remains one of the greatest challenges Latvia faces. With a view to the responsibilities Latvia will have to assume in managing and enforcing the acquis upon accession, a substantial portion of the necessary institutions and bodies have been re-structured or created. This process needs to continue, including the setting up of further new bodies and mechanisms, for example a Public Procurement Surveillance Bureau, agricultural market intervent ion mechanisms and the Guarantee Fund for the Protection of Employees in the Event of Insolvency of Their Employer. Furthermore, it will be vital to provide all institutions with sufficient resources to ensure the reliable implementation and
enforcement of the acquis, for example, the new Public Services Regulation Commission, which will have important acquis-related regulatory responsibilities in the areas of railways, energy and telecommunications. Continued efforts will also be necessary to ensure sound, efficient and controllable management of EC funds.
Latvia has made progress on all the short-term Accession Partnership priorities. Achievements included for example the areas of free movement of goods, social policy and employment as well as environment, where the process is close to completion. All the medium-term priorities have been addressed, and progress is well underway for most of them. Major steps forward could be noted for the free movement of persons, audiovisual legislation and customs. However, work towards all priorities sho uld continue, with particular attention on those areas where important legislation still needs to be adopted, such as energy, telecommunications, and economic and social cohesion, or the administrative structures strengthened, such as agriculture, fisheries
and the control of EC funds."
The chapters of the
acquis
As indicated, the following review of Latvia’s ability to assume the obligations of membership has been structured in accordance with the list of 29 negotiating chapters. Accordingly, this section opens with an assessment of progress relating to the cornerstones of the internal market which are know n as the "four freedoms", and continues with a systematic review of progress on each of the chapters, covering all aspects of the
acquis,
including sectoral policies, economic and fiscal affairs, regional policy, environment, justice and home affairs, external policies, and financial questions.
Progress since the last Regular Report
Since the last Regular Report, Latvia has continued to make steady progress in aligning its legislation with the
acquis
in this domain and in strengthening the relevant administrative capacities.
In the area of
horizontal and procedural measures,
the transposition of the general legal framework for the
New and Global Approach principles
has been completed. In the field of standardisation, Latvia accelerated the adoption of European standards. By the beginning of July 2002, the Latvian standardisation body has adopted 8 116 standards, including 7 420 European standards. Latvia had transposed 6 617 CEN standards, representing 90.7% of the t otal; 614 CENELEC standards, representing 15.3% of the total; 189 ETSI standards, representing 10.3% of the total number. As regards safety checks on borders, border
inspection posts on external borders have been modernised.
Progress can also be reported on the adoption of
sector-specific legislation.
Latvia continued the transposition of sectoral directives. In the areas covered by
New Approach Directives,
all but a few Directives have now been transposed. Since the last Regular Report, progress was made in the implementation of the
acquis
on radio and telecommunications terminal equipment, and on medical devices. There has, however, been no significant progress in the field of recreatio nal craft.
As regards sectors covered by
Old Approach Directives,
progress has been made in the implementation of the
acquis
on fertilisers, medicines for human use, medicines for veterinary use and aerosol dispensers. In the field of fertilisers, the law on production and marketing of fertilisers was adopted in November 2001 and the secondary legislation in June 2002. With the enactment of this law the State Plant Protection Service will carry out surveillance and control functions in respect of production and marketing of fertilisers. Regarding medicines for human use, the Regulation adopted in November 2001 aims at aligning to the
acquis
in this field. Amendments to the law on veterinary medicine were adopted in December 2001. In the field of aerosol dispensers, the regulation, adopted in March 2002, aims at transposing the
acquis
in this area. Since the last Regular Report, there has been no progress in the field of explosives for civilian use.
As regards the issue of food safety and foodstuffs legislation (see
also Chapter 7 - Agriculture),
Latvia transposed legislation on genetically modified foods, novel foods and labelling.
Some progress has been made regarding the transposition of the
acquis
on firearms and cultural goods. Amendments to the law on cultural monument protection were adopted in November 2001. The Law on weapons, ammunition, explosives and pyrotechnical products was adopted in June 2002. The Law provides for classification of weapons, special tools and pyrotechnics, and determines the terms of production, repair, purchase, collection, export, import and transit, awarding, usage, storage, transportation, forwarding, confiscation of the mentioned articles and mechanisms.
As regards the development of Latvia’s administrative capacity for the implementation of horizontal and procedural measures and sector-specific legislation, since the last Regular Report, further efforts have been undertaken to strengthen the administrative capacity, in particular in the areas of standardisation, metrology, and market surveillance. The national standardisation institution has continued its pro of transposing European standards. Since January 2002, it has represented Latvia, as an associate member, in the International Electrotechnical Commission, and since March 2002, as an affiliate member, in CENELEC. In
2001, the Latvian National Metrology Centre strengthened its administrative capacity and the market surveillance system has been enhanced. Since January 2002, the Market Surveillance Council, a consultative forum including representatives of ministries, surveillance authorities, customs author ities and consumer organisations, has been operational. Its main tasks are to ensure effective co-operation between members and to create an uniform approach to the market surveillance of all sectors, taking into account consumer and industry interests. As concerns food safety, the Joint Food Supervision Service, the Food and
Veterinary Service (FVS), as the sole institution responsible for official control of the entire food chain, has been operational since January 2002. Institutional preparations in the field of Rapid Alert System for Foodstuffs and Feed (RASFF) as well as genetically modified and novel food have commenced.
Since the last Regular Report, progress has been made as regards the
non-harmonised area.
The screening of legislation for provisions that might not be compatible with Articles 28 to 30 of the EC Treaty has been completed, and some obstacles have been identified. They mainly concern licence systems.
In the area of
public procurement,
progress has been made both with regard to the alignment of legislation through the adoption of the law on procurement for state or local government needs, and regarding the administrative capacity through the establishment of the Procurement Monitoring Bureau in January 2002. The Bureau provides information, statistics and training on public procurement and is the central point for the publication of tender notices and award results. It also ensu res the proper application of rules, receives complaints, investigates and is able to stop procedures.
Overall assessment
Latvia has transposed a significant part of the
acquis
on free movement of goods. The legal framework on the New and Global Approach is in place and there is sustained development of the standardisation system in Latvia. Steps have been taken in order to reform the market surveillance system. Regarding notification procedures, the Latvian Standards body acts as the WTO/TBT enquiry point and is also responsible for the co-ordination of the exchange o f information in the areas of technical barriers to trade and sanitary and phytosanitary measures in the context of the
acquis.
As regards the non-harmonised area, correct implementation of Articles 28 to 30 of the EC Treaty, identification and elimination of trade barriers by amending the relevant legislation, implementation of the mutual recognition principle, and the establishment of appropriate administrative capacity to deal with problems related to this area should remain a priority.
As regards sector-specific legislation, a large part of the
acquis
is in place. The transposition of the New Approach directives has progressed and for the remaining sectors such as aerosols, radio and telecommunications terminal equipment, recreational craft, gas appliance and pressure vessels, the transposition is underway. As regards the Old Approach, the legal and administrative framework on drug precursors, glass, textiles, footwear and wood are already in place and transposit ion of legislation is progressing steadily. However, completion of alignment is still necessary in the fields of medicines for human use, medicines for
veterinary use, and explosives for civilian use.
As regards food legislation, Latvia is fairly advanced in transposition, but the process needs to be completed, including legislation on irradiation, so as to remove any possible inconsistencies between Latvian legislation and the
acquis
in this field. Further efforts have now to be made to ensure enforcement of the transposed legislation.
As for administrative capacity in this area, the Latvian accreditation, standardisation and metrology bodies have been in place for years and their administrative capacity continues to be strengthened. The Accreditation Council together with the Latvian National Accreditation Bureau and the Technical Committees constitute the accreditation system. The Latvian Accreditation Bureau has been a full member of the European Co-operation for Accreditation since June 1999. A new assessment of the Bureau is ongoing in order to make it possible to sign Mutual Recognition Agreements between the Bureau and other European
Co-operation for Accreditation members by the end of 2002. The good pace of adoption of European standards needs to be maintained. New equipment and training allowed strengthening the administrative capacity of the Latvian National Metrology Centre.
In the field of Market Surveillance, some efforts have been made to enhance the administrative capacity. The Market Surveillance Council has been established to ensure co-ordination between Market Surveillance bodies. Moreover, the Consumer Rights Protection Centre, which is the main authority responsible for general product safety in almost all non-food products, has strengthened its administrative capacity through training. Latvia should continue to develop infrastructure in the areas o f market surveillance.
Regarding food safety (see
also Chapter 7 - Agriculture),
the establishment of the Food and Veterinary Service now requires more adequate resources and further training to ensure in particular a sufficient level of sampling and to bring control activity of food of non-animal origin up to the required level. Latvia also needs to boost its preparations for future membership of the Rapid Alert System for Foodstuffs and Feed with particular focus on procedures in case of alerts and wit hdrawals. Implementation of novel food legislation is advanced, but the laboratory for genetically modified foodstuff testing needs to be designated and
additional resources should be made available.
As regards sector specific legislation, Latvia has to make further efforts to enhance administrative capacity, in particular in the food sector.
As regards safety checks on products at external borders, Latvia has to continue to strengthen customs and market-surveillance infrastructure, as well as administrative co-operation between competent authorities.
The new legislation on public procurement constitutes a significant step towards alignment with the
acquis
in this area. However, incompatibilities remain in particular regarding coverage and publicity. While a public procurement body is now in place, the administrative structures and notification procedures need to be strengthened in order to comply with the requirements of the
acquis.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia had made some efforts to fulfil the requirements of Community legislation on free movement of goods. Efforts from Latvian authorities should focus on improving the alignment record in technical legislation where reinforcement of technical expertise is needed. The Commission added, that, if the pace of harmonisation was maintai ned, implementation of the
acquis
should not represent a serious obstacle to Latvian accession, but the major difficulty in this process was the lack of experienced staff. The Latvian authorities should also ensure that in the non-
harmonised sector, their own national laws did not hamper trade. Further legislative work was also necessary in the field of public procurement.
Since the Opinion, Latvia has made steady progress in the adoption of the
acquis
in this field, and a good level of transposition has been achieved. The legal and institutional framework is generally in place, and there is sustained development of the standardisation system, which needs however to be reinforced. Steps have been taken in order to reform the market surveillance system and to establish the respective infrastructure, including on food safety and public procurement, but further strengthening is necessary. Overall, Latvia is at an advanced stage in terms of transposition and administrative capacity in the field of free
movement of goods.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia should now focus efforts on completing transposition (notably in the area of sectoral legislation, with a special focus on food safety and foodstuffs legislation, as well as on public procurement). It should continue efforts on eliminating trade barriers which were identified during the screening of legislation in the non-harmonised areas
Progress s nce he as Regu ar Repor
Overa assessmen
Conc us on
Progress s nce he as Regu ar Repor
Overa assessmen
 PDF to HTML - Convert PDF files to HTML files
1461351_0015.png
The overall standard of supervision in the
financial services
sector in Latvia is satisfactory. The Financial and Capital Market Commission (FCMC), which started its operations in July 2001, is well equipped in terms of computerisation and telecommunication devices. It has developed good co-operation with foreign financial supervisory authorities. Regarding its supervisory practice in the banking sector, the Law on Credit Institutions provides that on-site examinations must be carr ied out at least once a year. 25 examinations were conducted in 2001 and 7 in the first quarter of 2002. Concerning the insurance sector, in 2001, 42
examinations, including 7 audits, were carried out in insurance companies. The transfer of powers to the integrated supervisory body has not disrupted the supervision process but has strengthened co-ordination. Full financial independence will gradually be achieved by 2007.
As regards the
protection of personal data and the free movement of such data,
Latvia should introduce the necessary amendments in its legislation so as to be fully aligned with the
acquis.
Furthermore, Latvia still needs to finish setting up a fully independent national supervisory authority for data protection. Particular attention should be paid to the procedure for appointing and dismissing the head of this body.
In the field of
information society
services, efforts to transpose the legal provisions of the
acquis
in this area, in particular the
acquis
on electronic commerce, conditional access and the transparency mechanism, have so far remained at conceptual level. The administrative structure still needs to be established, and human resources necessary for the effective implementation and enforcement of the
acquis
allocated.
Conclusion
In its 1997 Opinion, the Commission concluded that in this area Latvia was well advanced and would in the coming years not have any major problems in meeting the requirements of the main EC directives. The Commission added that the most important remaining difficulty was the strengthening of the banking sector in order for it to function as a financial intermediary supporting domestic investments.
Since the Opinion, Latvia has made steady progress in most areas of the chapter, both in terms of legislation and in bolstering the administrative and regulatory infrastructure required to supervise the financial services sector. While more remains to be done in particular in the insurance and securities sectors, overall a high level of alignment has been achieved in this field.
Negotiations on this chapter have been provisionally closed. Latvia has been granted two transitional periods (both until 31 December 2007) in which it has to ensure that its legislation on the deposit-guarantee scheme and the investor compensation scheme fully complies with the
acquis.
Latvia is generally meeting the commitments it made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on completing alignment, in particular in the areas of life and non-life insurance, securities markets, investment (undertakings for collective investment in transferable securities) and information society services. It should also complete alignment with the data protection
acquis,
including the establishment of a fully independent data protection authority and eliminate provisions which dis ate against non-nationals as regards the right of establishment and freedom to provide services.
Progress since the last Regular Report
Since the last Regular Report, Latvia has continued to align with the
acquis
in the area of free movement of capital and has taken further steps to improve the administrative capacity in this field.
In the field of
capital movements and payments,
no major developments have taken place since the last Regular Report.
The Bank of Latvia has been granted new powers this year through amendments to the Law on the Bank of Latvia, which entered into force in January 2002. These amendments assigned the function of
payment systems
oversight as a legal responsibility of the Bank of Latvia. In April 2002 amendments to the law on credit institutions were adopted to include provisions on the settlement of disputes between banks and customers on cross borders credit transfers. In July 2001, the Bank of Latvia adopted Recommendations to align with the
acquis
on electronic payment instruments. Finally, in July 2002 the Bank of Latvia
adopted Regulations to fully transpose the Directive on cross-border credit transfers.
As regards
money laundering,
in November 2001 new guidelines concerning suspicious financial transactions were approved. The guidelines broaden the scope of supervision by extending the reporting obligations not only to credit institutions, but also to brokerage firms, investment companies, insurers, stock exchanges and private pension funds. The Latvian Financial Intelligence Unit (FIU), the Office for the Prevention of Money Laundering, has improved its software and IT systems an d strengthened its internal control mechanism.
Overall assessment
In the field of capital movements, liberalisation in line with the
acquis
is now almost complete. However, a number of restrictions on capital movements nevertheless remain. The law on security services, which entered into force in July 2001, still includes restrictions concerning citizenship and language requirements. With regard to the acquisition of real estate, Latvia still has to adopt legislation in order to end the restrictions concerning acq uisition of land by foreign natural persons. Further alignment is also necessary to reach full compliance with respect to the four guarantee funds, as well as the Law on Collective
Investment Undertakings. As regards investments in foreign assets by supplementary pension funds and insurance companies, further alignment of the laws on private pension funds with the
acquis
is necessary.
As regards payment systems, the alignment of security settlement systems and of cross-border credit transfer with the
acquis,
especially the Settlement Finality Directive, remains to be completed. Latvia still needs to establish an out-of-court redress scheme to deal with the settlement of complaints between banks and their customers.
The Bank of Latvia regulates and supervises credit and financial institutions, operates exchange controls and oversees the payment system. The Bank appears to have appropriate competence and capacity to administer the liberalisation scheme and to initiate the flanking policies needed to fully implement a regime of free capital movements.
As regards money laundering, Latvia’s legislation is generally in line with the
acquis.
However, a few amendments to the Law on prevention of the legalisation of the proceeds derived from criminal activity are still necessary. Further improvements are still required in respect of alignment with the
acquis
of the law on the prevention of the laundering of proceeds from crime.
Latvia has a separate Financial Intelligence Unit (FIU - the Office for the Prevention of Money Laundering), which employs 13 staff, including 5 financial transaction analysts. Out of the total number of 3 303 reports received in 2001, only 59 were forwarded to the Prosecutor General’s Office (40 in 2000). The Office needs to be reinforced further, in particular in terms of staff and equipment. Training activities for the FIU, Economic Police, Prosecutors, Customs Officials, B nagers and employees should be pursued. More emphasis should be placed on reinforcing co-operation between the competent bodies and on
rendering the prosecution of complaints lodged by the FIU with the law enforcement bodies more effective. In addition, an adequate increase in the resources of the FIU is necessary. Steps should be taken to ensure compliance with the Recommendations of the Financial Action Task Force.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia had introduced current account convertibility and almost completed liberalisation of capital movements. It added that Latvia should be able to eliminate the remaining restrictions on the movement of capital in the medium term, thus fully assuming the Community
acquis
in this area.
Since the Opinion, Latvia has made steady progress, both in aligning its legislation and in developing the necessary administrative structures. Overall, legislative alignment is well advanced, but the process needs nevertheless to be completed as regards capital movements and payments. The administrative structure has been put in place in this field, but further reinforcement of its capacity in some areas remains necessary.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this field. Latvia is generally meeting the commitments it has made in the accession negotiations in this domain.
In order to complete preparations for membership, Latvia's efforts should now focus on completing alignment and eliminating all remaining restrictions, and reinforcing administrative capacity, paying particular attention to the bodies involved in the fight against money laundering.
Progress since the last Regular Report
Since last year’s Regular Report, Latvia has made further progress in the areas of company law and the protection of intellectual and industrial property rights.
Regarding
company law,
the new Commercial Law entered into force in January 2002, providing for a transition period for companies to re-register with the state enterprise register by the end of 2004. In February 2002, the Parliament adopted amendments to the Commercial Law, providing for the protection of minority shareholders. The administrative capacity of the state enterprise register has been further strengthened; additional funds have been allocated, to upgrade the technical infrastructure and to hire 30 new employees. In 2001, 7 402 enterprises were registered in the state enterprise register, compared with 8 048
in 2000.
As regards
accounting,
with the entry into force of the Law on Sworn Auditors in January 2002, transposing the 8
th
Directive, the accounting and auditing legislation appears to be in line with the
acquis.
The law creates the legal basis for the professional operation of sworn auditors and the Ministry of Finance supervises the operation of the Latvian Sworn Auditor Association, the responsible authority. In order to ensure state supervision, the Ministry of Finance appointed three authorised representatives in January 2002.
In the field of
industrial property rights,
the administrative capacity of the Latvian patent office has been strengthened: in 2001, 26 employees were trained on the legislation and registration of trademarks, as well as on the implementation of the system of Community trademarks issues. During the reporting period, there has been a significant increase in the number of patents and trademarks granted as well as appeals against the decisions of the patent office.
In the field of
intellectual property rights,
two Regulations, one on the distribution of films and one on private copy, came into force in January 2002. The co-ordinating bodies in the areas of intellectual and industrial property rights continued with the implementation of approved action plans in the framework of the strategic development programme on the development and protection of intellectual property (2001-2005).
Administrative capacity in this field has been strengthened. Specialised seminars and training were organised for police, prosecutors, customs officials, and judges. These activities aim to establish a situation where each customs point has a customs official with special skills in the area of the protection of intellectual property rights. In order to streamline the enforcement of the legislation on the protection of intellectual property rights, a manual for customs officials has been p repared. Through a reorganisation, the division to combat audio, video and computer piracy was established (22 employees) in the economic police
bureau in March 2002. Two additional staff positions have been allocated to the intellectual property protection division of the national customs board.
During 2001, a significant increase was observed in seizures of CDs, videotapes and software, as well as in the number of administrative protocols drawn up. However, only a small increase was reported in registered and disclosed infringement cases regarding copyrights and neighbouring rights.
No new developments are to be reported in the area of the
Regulation replacing the Brussels Convention
on jurisdiction and enforcement of judgements in civil and commercial matters and of the
Rome Convention
on the law applicable to contractual obligations.
Overall assessment
Regarding company law, Latvia's legislation is already largely in line with the
acquis
on accounting law, but some discrepancies still remain. Although in general progress has been made with regard to administrative capacity, almost a quarter of companies obliged to submitt their annual accounts to the state enterprise register failed to do so. Regarding
accounting law,
Latvia’s legislation was already broadly in line with the
acquis but remains to be amended in order to allow fair value accounting.
Also in the field of industrial property rights, Latvia’s legislation is well advanced although full alignment with the acquis remains to be achieved on patents, trademark and designs legislation. However, Latvia should be able to introduce the remaining outstanding industrial property measures in due course. In January 2002, 1 947 patents, 27 965 trademark and 488 industrial design patents were in force.
As far as intellectual property rights are concerned, Latvian legislation is largely in line with the Community acquis. However, further alignment is needed in view of the acquis on copyright in the information society as well as on resale rights.
As regards the enforcement of copyright legislation, and despite some positive trends, the high levels estimated by private industry of counterfeit and pirated music (64%), software (59%) and videos (85%) remain a matter of serious concern. The fight against counterfeiting and piracy must therefore continue to be high on the agenda. Better co-operation and co-ordination among enforcement bodies remains a matter of priority.
While administrative capacity has slightly improved, border controls still require substantial strengthening. Regarding the judiciary, even though considerable efforts have been made to train judges in various aspects of national and international intellectual and industrial property rights law, the track record of convictions in criminal cases remains rather poor. To a large extent, this is due to the outdated provisions of the current criminal procedural law and the still pending adopti on of the new Law on Criminal Procedure.
With respect to the Regulation replacing the Brussels convention on jurisdiction and enforcement of judgements in civil and commercial matters, and the Rome Convention on the law applicable to contractual obligations, Latvia needs to continue preparations and draw up the necessary legislation.
Conclusion
In its 1997 Opinion, the Commission concluded that in certain areas significant progress had been made regarding the adoption of framework directives necessary for regulating a market economy. Still, further legislative efforts had to be made, especially regarding intellectual and industrial property rights, before full compliance could be achieved. The Commission added that, if the pace of harmonisation with EC legislation achieved was maintained, Latvia should have a good chance of fulfilling the legislative requirements in this field in the medium term, although some problems of implementation and enforcement might
persist.
Since the Opinion, Latvia has made progress in aligning company law, and has also aligned its laws on trademarks and patents with the
acquis.
Latvia’s legislation in the field of industrial and intellectual property rights is also largely aligned. Furthermore, gradual progress has been made with strengthening administrative capacity.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia has agreed to the EU proposal regarding intellectual property rights for pharmaceutical products and Community Trademark. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia's efforts now need to focus on ensuring full alignment with the
acquis
along the lines set out above, intensifying measures to combat piracy and counterfeiting and, more broadly, further improving co-ordination between enforcement bodies (customs, police, judiciary).
Progress since the last Regular Report
Since last year’s Regular Report, Latvia has made further progress in this area.
In the
anti-trust
field, the new Competition Law, which entered into force in January 2002, introduced important improvements of both substantive and procedural rules, including the definition of dominance, the criteria for merger control, and sanctioning powers. In June 2002, a block exemption in the field of rail and cargo transport was adopted.
The
Competition Council,
together with its investigative Competition Bureau, has continued to build on its enforcement record over the past year. In 2001, it took 30 anti-trust decisions (compared to 20 in 2000), including 6 prohibitions (1 with fines). The decisions included 15 cases of abuse of dominant position, 11 cases of restrictive agreements and 4 merger cases. The Competition Council (in its decision-making capacity) has operated, for a large part of the year, with only 3 of the required 5 members. The level of overall staffing remained at around 40, but with a continued high turnover rate of 30%. The budget of the
Competition Council was increased by 3.8%.
In the field of
state aid,
important amendments aimed at aligning the special economic zone and free port legislation with the EC
acquis
entered into force in January 2002. Latvia's annual state aid report for 2000 was presented to the European Commission in November 2001.
There has been progress with regard to measures to strengthen the administrative capacity for the enforcement of state aid legislation, and training activities have continued. In January 2002, a new division, the State Aid Control Division (currently with a staff of 3) was created within the Ministry of Finance. This division takes over the role of Secretariat to the
State Aid Surveillance Commission
(an independent collegiate institution made up of 13 officials representing differ ent state institutions). In 2001, there were 21 decisions/opinions taken in state aid cases. Most of the cases were linked to tax debt capitalisation and write-
offs of tax debts that originated before privatisation.
Overall assessment
As regards anti-trust, further strengthening is still required. While the Law on Competition of 2001 contains the main principles of Community anti-trust rules as regards restrictive agreements and abuse of dominant position and merger control, it must be ensured that the rules also allow for effective enforcement. Further implementing legislation still needs to be adopted, primarily in relation to the policy represented by the three EC block exemptions fo r vertical and horizontal agreements.
As regards the Competition Council, including its investigative Competition Bureau, increased priority still needs to be given to increasing the level of resources. Particular attention needs to be given to enhancing the competence of staff, as well as decreasing its turnover rate. The proper functioning and independence of the Council in its decision-making capacity must also be ensured (including the appointment of all 5 members). Not least in view of the planned modernisation and decen tralisation of the application of EC anti-trust rules, efforts to further strengthen the enforcement record need to continue, giving priority
to cases concerning the most serious distortions of competition, and imposing more deterrent sanctions. Increased awareness of the rules is important, especially among the business community, as well as training of the judiciary.
The state aid control legislation of 1998 contains the main principles of state aid control, and Latvia is also able to apply the
acquis
directly through the Europe Agreement. Moreover, a review of the state aid legislation, taking into account recent developments in the
acquis,
is under preparation. A regional aid map with maximum aid intensities of 50% for the whole country (as justified by GDP figures) is being applied, though still pending joint adoption in the Associati on Committee. As regards transparency, state aid reports have been submitted for the years up to 2000, which closely follow the methodology and presentation
of the European Commission’s survey on state aid in the EC and are of good quality. The State Aid Surveillance Commission, together with its reinforced secretariat within the Ministry of Finance, functions well. It has a proven track record of enforcement. Increased awareness of the rules is important, especially among the aid grantors, the busine munity and the judiciary.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia was making progress as regards alignment with the
acquis
in the field of anti-trust and state aid, though further efforts were required as regards state aid transparency.
Since the Opinion, Latvia has made steady progress in adopting anti-trust legislation, developing the Competition Council's administrative capacity and establishing an enforcement record, although further progress is still required. Steady progress has also been made in adopting state aid legislation and increasing the transparency of the system, as well as in developing the administrative capacity in the State Aid Surveillance Commission and its secretariat and establishing an enforcemen t record. Overall, on legislative alignment, administrative capacities and enforcement record Latvia is reasonably advanced. However, increased
attention needs to be paid to the implementation of the legislative framework and the strengthening of administrative capacity in the anti-trust sector.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments taken and the requirements for sufficient legislative alignment, administrative capacity and enforcement record, arising from the negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on ensuring that it continues to update its alignment as the
acquis
in this area evolves and, most importantly, on continuing to develop a track record of proper application and enforcement of both anti-trust and state aid legislation. In particular, Latvia will need to make important efforts to strengthen its legal and administrative capacity in order to ensure an effective antitrust enforce /P>
Progress since the last Regular Report
Latvia has made further progress in the area of agriculture, both with aligning legislation and with strengthening administrative capacity. Progress has been more limited on border controls, animal waste and processing establishments. Agriculture in Latvia accounted for 4.7 % of gross value added in 2001 compared with 4.9 % in 2000. Employment in agriculture has declined considerably over recent years, and now accounts for 15.1 % of total employment
< up="">.
In 2001, overall agricultural trade
3
between Latvia and the EC increased significantly, largely due to the "double- zero-agreements" to liberalise trade in agriculture. EC imports of agricultural products originating in Latvia increased by 43 % to € 53 million. EC exports to Latvia increased by 16 % to € 268 million. The trade balance in favour of the Community amounted to € 215 million compared to € 194 million in 2000. EC imports were dominat scellaneous edible preparations, tobacco, fruit and nuts, sugars and sugar confectionery were the main export goods from the EC.
In 2001, a total sum equivalent to LVL 24.14 million (€ 43.07 million) was allocated to agriculture (including rural development) from the central government budget. The share of support for agriculture and rural development in the budget is about 3%.
In the area of land reform, Latvia has continued to make some progress. Whereas registration in the Cadastre has been virtually complete for several years, registration in the Legal Register (Land Book) has continued, albeit at a slow pace. Latvia has started preparations for land reparcelling.
Horizontal issues
Latvia has made progress in its preparations for the future implementation of the
European Agricultural Guidance and Guarantee Fund (EAGGF).
The Rural Support Service (RSS) of the Ministry of Agriculture was accredited as the SAPARD agency in December 2001 and has a good basis for building up the necessary functions to meet the EAGGF Guarantee and Guidance requirements
(see A.b – Relations between the an Union and Latvia).
In order to set up the paying agency in Latvia, a working group for merging of the Rural Support Service (RSS) and the Agricultural Market Intervention Agency (AMIA) has been established and
the necessary legislative amendments were adopted in May 2002. In addition, 3 new structural units of the RSS became operational in January 2002: the EU direct support department, the EAGGF division within the finance department and the IACS division within the info rmation department.
Regarding the
Integrated Administration and Control System
(IACS), in December 2001 Latvia adopted an implementation regulation defining the main elements of IACS implementation in Latvia, such as the computerised database, land register, animal register and integrated control system. An amendment to this Regulation adopted in September 2002 defined the responsibilities of the Rural Support Service and the State Land Service for setting up the land register. Latvia intends to opt f or the methodology of physical blocks to build its land parcel identification system, i.e. blocks of parcels delimited by permanent boundaries
such as roads, rivers, forests, etc. Latvia already has aerial photographs covering its territory, with the exception of some border areas, which are covered by satellite images. In order to implement the system, preparatory work has started to set up the land parcel identification system and a pilot project has been prepared.
As regards
trade mechanisms,
a detailed action plan for the implementation of the Common Market Organisations has been prepared and presented to an inter-ministerial working group of the Ministry of Finance, the National Board of Customs and the Rural Support Service, responsible for the administration of trade mechanisms.
Regarding
quality policy,
preparatory work has been carried out regarding new legislation to establish a system similar to the EC system for protection of designations of origin, geographical indications and certificates of specific character.
No major developments can be reported on
organic farming.
A regulation concerning procedures for the setting up, maintenance and operation of the
Farm Accountancy Data Network (FADN)
was approved in July 2002 and designated the Latvian State Institute of Agrarian Economics as the Liaison Agency of the FADN. The regulation also sets up the National Committee for the Data Network responsible for the co-ordination and supervision of the FADN and communication with the EC.
Common Market Organisations (CMO)
Since last year’s Regular Report, Latvia has made some progress on introducing a legal framework and administrative structures for the establishment of Common Market Organisations.
As regards the
administrative capacity
in this field, Latvia has continued to implement its action plan for the implementation of Common Market Organisations. Sector-by-sector competent authorities have been identified, measures, procedures and functions have been planned and estimations of necessary human resources have been prepared with a view to the implementation of the CAP in Latvia. In order to establish the administration system for CAP management mechanisms in Latvi a, three new structural units of the Rural Support Service became operational in January 2002. In 2002, the number of staff in the Rural
Support Service and respective budget appropriations have been increased to satisfy the growing need for administrative capacity required for the management and implementation of the different support schemes, including SAPARD. Latvia has taken some preparatory steps to develop its agricultural policy. A concept on necessary changes in the national legislation for the impl ementation of the EC Common Agricultural Policy has been elaborated and a ministerial working group is preparing the relevant legislation.
Preparations for implementing the CAP with regard to the systems of area payments have continued for cereals, vegetables and oilseeds and the introduction of an area payments system for grain was started in 2000-2001. In the field of
arable crops,
Latvia continued to apply a public storage scheme for cereals which has been further aligned to EC practices in the "Regulation on Grain Market Intervention for the period 2002-2003.
As regards the
sugar sector,
amendments to the Sugar Law were adopted in February 2002 as well as legislation regarding sugar production quotas and the state balance of sugar production and consumption. These are aimed at bringing Latvia’s national quota system further in line with the EC quota system.
For
fruit and vegetables,
the functions of the responsible institutions have been determined during the reporting period (all administration of the system of producer organisations will be done by the Rural Support Service, which will be the single EAGGF-Guarantee Section paying agency). Further elaboration of the regulations on fruit and vegetable producer organisations is needed.
Regarding
animal products,
in November 2001 Latvia adopted legislation on the handling of milk and dairy products, which provides for setting up a Milk Producers' Register, containing a system of detailed accounting of milk deliveries to dairies, which will serve as a basis for establishing and implementing the EC milk quota system. Legislative steps have been taken on labelling of beef and financial support to beef producers: a slaughter premium for adult male bovine animal s and a suckler cow premium were assigned. No new developments have been reported in the
wine sector.
Rural development and forestry
The most significant development in this area has been the accreditation of the Rural Support Service as the SAPARD agency in December 2001 (see
Section A.b. – Relations between the European Union and Latvia).
Measures supported include modernisation of agricultural machinery, equipment and construction of buildings, afforestation, development and diversification of economic activities. Latvia has a national scheme to promote organic farming, and has sed additional pilot agri-environment measures, which will assist in the preparation of full-scale post-accession measures. Intensive consultations and social discussions are
taking place regarding rural development measures in view of the elaboration of the Rural Development Plan.
Veterinary and phytosanitary issues, including food safety
During last year, Latvia continued to adopt legislation in the
veterinary
and
phytosanitary
sectors as well as in
food safety.
The Food and Veterinary Service continued restructuring and strengthened its capacity further.
Latvia has continued to align its legislation with the
acquis
in
animal welfare,
notably by adopting regulations on the welfare of pigs and calves and requirements for use, keeping, trade and killing of animals used for experimental and scientific purposes. Since January 2002 the Food and Veterinary Service is carrying out inspections on farm animal sheds and assessing their compliance with animal welfare requirements.
Regarding
animal health,
Latvia has adopted legislation concerning eradication and elimination procedures, prevention and combat of diseases and working conditions for veterinary examinations. Furthermore, instructions of the Food and Veterinary Service have been issued covering occurrence or suspicion of bovine spongiform encephalopathy (BSE), eradication of foot-and-mouth disease and the elimination of these and some other diseases. Latvia has joined the Animal Disease Notificati on System (ADNS).
The capacity of the administrative structures was reinforced over the last year. The number of inspectors was significantly increased compared with 2001. Since 2002, the Food and Veterinary Service has been carrying out control of the whole food chain. Particular progress has also been made in terms of training, including the establishment of a human resource and training programme and the installation of equipment.
As regards border inspection posts on external borders, the Sanitary Border Inspection of the Food and Veterinary Service has continued work to upgrade the Border Inspection Posts which Latvia wishes to maintain after accession, in order to bring them up to the standard required by the
acquis.
Construction work has started on 3 out of the 7 long-term posts planned. The technical equipment of the Sanitary Border Inspection has been upgraded. A pre-audit has been carried out in the p hytosanitary and management area of the Sanitary Border Inspection in order to prepare for its accreditation.
Latvia continues to prepare for participation in the computerised network linking veterinary authorities ANIMO, including provision of compatible technical equipment, and established a list of postal codes and files in December 2001 containing ANIMO contact points to be used for information exchange.
Regarding
public health protection,
Latvia has further aligned its legislation as regards requirements for production and placing on the market of milk, meat and fresh poultry and rabbit meat. In November 2001 Latvia adopted legislation on the handling of milk and dairy products relating to production, treatment, transport and processing which aim at bringing its legislation further in line with compulsory requirements on hygiene, quality and veterinary standards as well as require ments for packaging, accounting and the registration system. The upgrading of food-processing establishments has been progressing particularly in the
dairy and fish sectors. Latvia has established annual state supervision and control programmes, which are being implemented by the Food and Veterinary Service. In addition to these activities, the Food and Veterinary Service has carried out assessments of all establishments involved in the food chain and has prepared modernisation plans together with each esta blishment.
As regards
animal waste treatment,
the policy document on Collection, Rendering and Disposal of Animal Waste adopted by the Latvian government in April 2002 provides for the establishment of high risk waste collection and treatment system under private ownership.
In the
phytosanitary
sector, progress was made in further aligning Latvia's legislation to the
acquis
as well as institutional strengthening. A phytosanitary survey plan has been elaborated for the year 2002 and an internal control plan for phytosanitary inspectors has been set up. Co-operation between the Plant Protection Service and the Sanitary Border Inspection of the Food and Veterinary Service was improved.
As regards
plant health
(harmful
organisms)
and
plant hygiene,
several instructions have been adopted laying down guidelines for control and eradication of harmful organisms and testing methods. Moreover, a plan for further implementation of the
acquis
granting authorisation of plant protection products has been finalised.
In March 2002, legislation was adopted to further align the implementing measures for plant passports to the
acquis.
The issuing of plant passports for all plants will start in January 2003. Until EU accession, they will be for use within Latvia only. The plant-health registration of producers and importers of particular plants and plant products has continued. So far, only a limited number of producers and importers have been registered.
Administrative structures for phytosanitary issues have been strengthened. The new structure of the State Plant Protection Service (SPPS) entered into force in March 2002. Its aim is to further rationalise the institution and to increase its effectiveness by separating control and surveillance of the implementation of legislation from co-ordination and planning. In addition, 7 regional offices have been created. As regards staffing, 210 persons work in the state plant protection service, 50 in the central administration, 106 inspectors and 25 specialists in the regional offices and 26 staff in the laboratory.
In order to improve phytosanitary border controls, the Sanitary Border Inspection has started working on accreditation in the phytosanitary field according to the European Standard. Control procedures have been elaborated. Another positive development concerns the signature of an agreement on co-operation and exchange of information signed between the State Plant Protection Service and the State Plant Protection Service Division for Diagnostics of Plant Quarantine Organisms.
As regards
food safety
(see
also Chapter 1 - Free movement of goods),
there have been some developments regarding the institutions responsible for food safety inspections. In January 2001 the Food and Veterinary Service started operating as the sole institution responsible for control of the entire food chain. Co-operation between the Sanitary Border Inspection of the Food and Veterinary Service of the Ministry of Agriculture and the State Plant Protection Service has been improved with an inter-institutional agreement on co-operation and exchange of information. Work to improve co-operation among institutions involved in
border inspections is ongoing.
The upgrading of food processing establishments, as referred to above, has been progressing particularly in the dairy and fish sectors. The Food and Veterinary Service carries out the assessment, supervision and control of establishments involved in the entire food chain in order to tackle this problem and upgrading plans for all establishments have been produced in order to be in compliance by the date of accession. However, no fully reliable classification of the establishments a ccording to the severity of the deficiencies has been carried out.
BSE-related measures have been adopted and have been implemented and routine testing is being extended. However, further significant efforts are requested to meet EC standards.
Overall assessment
In the area of
horizontal measures,
preparatory work for the creation of the paying agency in Latvia is in place. Continued attention should be paid to the merger between the Rural Support Service (RSS) and the Agricultural Market Intervention Agency (AMIA) and its transformation from a SAPARD agency into the single paying agency which will be responsible for the management of
the Agriculture Guidance and Guarantee Funds (EAGGF)
upon accessio n. Latvia needs to address more swiftly and energetically the preparation for the
Integrated Administration and Control System (IACS),
as its timetable appears very tight, and in
particular completion of the strategy, completion of the land parcel system as well as digitisation. Very serious efforts are urgently needed in order for Latvia to be able to build up an operational IACS by accession. The necessary decisions must be taken immediately and the related funding put in place without delay if Latvia is to be in a position as of accession to administer and control efficiently the CAP aid-schemes. Further legislative work and preparation of administrative structures and procedures are necessary in the fields of
organic farming
and
quality policy,
where a clear definition of the role of the different institutions is
needed, and the
Farm Accountancy Data Network (FADN).
As regards
Common Market Organisations,
Latvia now needs to take more decisive steps in terms of implementation of developed action plans for each market sector in order to prepare the necessary national legislation. Latvia already has some parallel mechanisms for some areas for which market organisations exist in the EU, including cereals and sugar. However, they need to be further aligned with EC requirements,
As regards administrative capacity, the newly established structure of the Rural Support Service needs to become operational and the remaining adjustments to the requirements of the
acquis
should be carried out. Special attention needs to be paid to the timely preparation of administrative structures and detailed descriptions of procedures for all measures. Training of staff in the competent institutions should continue.
Latvia is well advanced in building up administrative capacity for implementing
rural development
policies, as a result of the accreditation of the Rural Support Service as the SAPARD agency. Latvia should continue the development of its Rural Development Plan and of its Structural Funds’ rural development priority.
Slow progress with
land reform
is still a strain on the development of the agricultural sector in Latvia, and on adequate identification of land for CAP purposes. While the Cadastre is virtually complete, registration in the Legal Register (Land Book) is progressing only slowly. Generally, with the exception of the part around and south of Riga, the land market in Latvia is not very active.
Concerning the
veterinary field,
while legislation adopted so far constitutes a good basis, Latvia needs to significantly speed up the process of transposing and implementing the
acquis
in this area.
Regarding
animal welfare,
Latvian legislation has been largely aligned to the
acquis
requirements concerning general welfare. This process needs to be completed. Further alignment work is necessary in the field of
animal health,
where Latvia should also make further efforts to ensure effective implementation.
The situation regarding controls at border inspection posts requires special attention as to the general hygiene situation and the quality of controls carried out. Latvia needs to increase its efforts in order to comply with agreed timetables for completion of the construction of its 7 long-term border inspection posts. Preparation for participation in ANIMO should continue.
With regard to
public health protection,
the upgrading of processing establishments in the dairy and fish sectors is rather advanced, with 16 establishments approved in total, but further efforts are required, particularly in respect of meat-processing establishments.
As regards
animal waste treatment,
Latvia needs to ensure implementation of its newly adopted legislation on collection, rendering and disposal of animal waste. Preparation for the establishment of a waste collection system for the treatment of high-risk animal waste upon accession must continue. Very serious efforts are needed to ensure that the system can be operational as scheduled.
In the field of
animal nutrition,
framework legislation, which aims at transposing the bulk of the relevant Community legislation remains to be adopted.
In the
phytosanitary sector,
transposition and implementation of legislation is relatively advanced, in particular legislation on plant passports. This process remains to be completed. Further harmonisation is needed, particularly with regard to seed and propagating material. Registration of producers and importers should be speeded up and completed well before accession, being one of the cornerstones of the EC
plant health
system.
The changes made to the administrative structures constitute a very good step towards guaranteeing the smooth functioning of the State Plant Protection Service (SPPS). Latvia should now ensure the effective enforcement of this service, including the recently established regional structures. Work of the State Border Inspectorate on accreditation as well as on effective implementation of established control procedures should continue. In particular, further staff training is needed and labo ratory capacity should be further improved.
As regards
food safety
(see
also Chapter 1 - Free movement of goods),
as is mentioned above, considerable progress has been made, particularly regarding coverage of controls in the food sector, the preparation for the upgrading and control of food establishments and the increase in measures to deal with BSE.
The reorganisation of some of the bodies dealing with food safety i.e. the Food and Veterinary Service, increased administrative capacity for supervision of modernisation plans and laboratory equipment, and improved co-operation among the authorities involved should further improve effectiveness in this area.
Conclusion
In its 1997 Opinion, the Commission concluded that substantial efforts to align with the
acquis
were still necessary, although progress had been made in adopting the measures mentioned in the Commission’s White Paper of 1995 on the Internal Market. The Commission added that particular efforts were needed on: the implementation and enforcement of veterinary and phytosanitary requirements and upgrading establishments to meet EC standards (an asp particular importance with regard to the inspection and control arrangements that protect the EU's external borders); strengthening administrative structures to ensure the
necessary capacity to implement and enforce CAP policy instruments, including the import arrangements; and further restructuring of the agri-food sector to improve its competitive capacity. The Commission further pointed out that since only a limited number of the mechanisms of the Common Agricultural Policy existed at that point in time , fundamental reform of policy would be needed, and a substantial effort would be necessary to prepare for accession in the medium term.
Since the Opinion, Latvia has made considerable progress towards alignment with the EC agricultural
acquis,
in particular over the past two years and, more recently, has progressed with developing the necessary administrative capacity to implement the
acquis
in this area. As regards preparations to apply the Common Agricultural Policy, some preparatory steps have been taken in terms of administrative structures for the necessary legislative alignment, but considerable legisl ative work lies ahead and only limited progress has been made with the actual implementation of the CAP. Transposition of legislation is proceeding well.
Administrative structures are partly in place and further efforts are needed to strengthen administrative capacity.
Negotiations on this chapter continue although all negotiation issues in the veterinary and phytosanitary fields have been clarified. Latvia has been granted a transitional arrangement for public health in 11 milk processing establishments, 29 fish processing establishments and 77 meat establishments (until three years after the date of accession). Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia's efforts now need to focus on finalising alignment; further reinforcing the administrative capacity to implement and enforce the
acquis
of the Common Agricultural Policy in particular for the paying agency, the Integrated Administration and Control System and the Common Market Organisation mechanisms, and especially in the veterinary field and that of food safety; ensuring that establishments are duly upgraded to meet Commun ity Standards; and concluding the process of agricultural land reform.
Progress since the last Regular Report
Latvia has continued to make progress in alignment with the
acquis,
especially as regards resource management, inspection and control.
As regards institutional issues and administrative capacity, the Department of Fish Resources in the Ministry of Environment was abolished in January 2002. The Ministry of Agriculture is responsible for fisheries policy preparation and implementation. The Fisheries Department now employs 25 civil servants. Fisheries administration in Latvia is also represented by the National Board on Fisheries, which operates under the supervision of the Ministry of Agriculture.
In the field of
resource management, inspection and control,
legislation was further harmonised with the
acquis
requirements through the adoption of amendments to the Law on Fisheries and in particular the adoption of legislation on commercial fishing in the territorial waters and economic zones in November 2001.
As regards administrative capacity in this area, the National Board of Fisheries has the responsibility for overall management of the fisheries sector, quota management, sector development strategy and legal acts and regulations in fisheries, including the implementation of the
acquis.
In 2002, two additional employees were recruited with responsibility for structural programming and the integrated control and information system.
The capacity of the Marine Environmental Board of the Ministry of Environmental Protection and Regional Development, which carries out control and enforcement in Latvian waters, has been strengthened through additional staffing as well as enhanced training of inspectors and improved equipment. In 2001, 80 inspection trips were carried out outside coastal waters. 11 inspectors are responsible for fish landing controls in ports.
 PDF to HTML - Convert PDF files to HTML files
1461351_0016.png
Some progress has been made concerning the legal base necessary for implementing
structural actions
in fisheries. In December 2001, the Rural Support Service was accredited as the SAPARD Agency, with the task of improving agricultural and fisheries product processing and marketing.
The Latvian Vessel Register is part of the Maritime Administration of the Ministry of Transport and covers all Latvian vessels, including fishing vessels, with an engine power of 55 kW or more. The new maritime code requires registration of coastal fishing vessels under this threshold in order to meet EC requirements. So far, 70% of all fishing vessels have been re-measured according to the
acquis
requirements. Regarding
market policy,
amendments to the Food Circulation Moni toring Law were adopted in December 2001, stipulating that the Food Veterinary Service monitors and controls food producing companies and
the food circulation process, including trade in fish and fish products.
As regards
state aid to the fisheries sector,
there are no new developments to report.
Concerning
international fisheries agreements,
no particular developments have been recorded since the last Regular Report.
Overall assessment
Concerning resource management, inspection and control, legislative alignment needs to be completed. Regarding administrative capacity, the National Board of Fisheries should be able to deploy its capacity more effectively through greater delegation of responsibilities and clearer distribution of tasks. The Marine Environmental Board is currently inspecting 90% of landings, thereby not allowing for a thorough investigation and the Latvian Fisheries Institute still lacks funds.
All Latvian vessels fishing in EU waters are already equipped with satellite tracking devices.
As regards structural actions, these are currently based on annually revised development programmes concerning the fishing fleet, the processing industry and fisheries education and science under the National Development Programmes. Two programmes are under preparation in this context. However, further progress remains to be made with regards to structural policy for the fisheries sector. The establishment of institutional arrangements required for programming, implementation, financial c ontrol, monitoring and evaluation of structural funds need to be accelerated. Early establishment would facilitate smooth
implementation of the SAPARD programme as far as fisheries are concerned. Preparation of programmes for structural actions should be enhanced.
While developments regarding fleet registration appear satisfactory, there is still a need for further amendment of the legal framework of the fishing vessel register and the adoption of regulations on safety requirements (including external marketing requirements).Re-measurement according to the requirements of the
acquis
is well under way.
Regarding market policy, according to the implementation plan of June 2001, market intervention mechanisms still have to be developed. Full legislative harmonisation requires the adoption of regulations on marketing of fisheries and aquaculture products in line with the
acquis.
Producers’ organisations have not yet been established.
State aid to the fisheries sector consists of subsidies that are mainly used for structural purposes, including modernisation of fishing vessels. There is no state aid for vessel construction.
Latvia's fisheries policy is partly aligned to the
acquis
in this area. Significant efforts will still be necessary, building on the progress that has already been achieved.
Latvia is a member of several international fisheries organisations, in particular the International Baltic Sea Fisheries Commission and the North-Eastern Atlantic Fisheries Commission, and has bilateral fisheries agreements with the European Community, the Faeroe Islands (Denmark), the Russian Federation, the USA and Canada.
Conclusion
In its 1997 Opinion, the Commission concluded that the process of modernisation and
acquis
implementation would require significant efforts and that in the medium term the fishery sector did not appear to pose any major problem.
Since the opinion, Latvia has made progress, in particular in terms of legislative alignment in the field of resource management, inspection and control. Latvia’s legislation has been aligned to a reasonable extent, although there are gaps notably as regards structural actions and market policy. The administrative structures have been partially established.
Negotiations on this chapter have been provisionally closed. Latvia has been granted a specific management regime for the entire Gulf of Riga, and the inclusion of sprat (Sprattus
sprattus)
of the Baltic Region into the list of species that are subject to management measures under the Common Fisheries Policy. Latvia has not requested any transitional arrangements. Lavia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia's efforts now need to focus on further reinforcing administrative capacity and ensuring sufficient funding. Further efforts are needed to complete alignment, notably concerning structural actions (vessel registration and safety requirements) and market policy (regulations on marketing of fishery and aquaculture products).
Progress since the last Regular Report
During the last year, Latvia has made progress in aligning its legislation with the
acquis,
in particular in the fields of road transport. As regards implementation and enforcement, the strengthening of the administrative capacity of the Road Transport Administration has been put on track. On maritime safety, the detention rate of Latvian flag vessels continues to improve.
As concerns
Trans-European Transport Networks,
during last year investments in the main transport infrastructure corridors were reported to be €121 million, of which about 26 % were covered by the national budget. Emphasis has been put on the rail network. The implementation of the first stage of the "Via Baltica" project was completed in November 2001.
With regard to
land transport,
legal alignment has progressed in the
road transport sector.
Latvia has fully aligned with the EC rules on weights and dimensions of vehicles and has continued to harmonize its legislation on the transport of dangerous goods. Latvia has also aligned with driving times and rest period rules and has provided for the installation of tachographs. In May 2002, the relevant road framework legislation was amended, providing the basis for completion of legal alignment with the
acquis
through the adoption of implementing legislation. In April 2002, Latvia ratified the INTERBUS Agreement on the
international occasional carriage of passengers by coach and bus. Concerning administrative capacity in this area, the Road Transport Administration was slightly strengthened with additional staff. In June 2002 the Government adopted a ‘Concept on Control in Road Transport’, establishing that the Road Transport Administration will be split into a rt Inspectorate, responsible for checks in the road transport sector, and a Road Transport Agency, which will retain the function of licensing transport operators. It also makes provision for upgrading the technical equipment of control units (portable computers, communication
devices, and an additional mobile weighing unit).
On
railways,
in the framework of the restructuring of the Joint Stock Company "Latvian Railways", a separate Passenger Transport Operator for inland transport, the subsidiary Joint Stock Company "Passenger Train", was established in January 2002. No further developments can be reported.
As to
inland waterways transport,
in June 2002 legislation was adopted to ensure recognition of boatmasters' certificates issued by other Member States.
No new developments are to be reported in the area of
combined transport
other than the adoption of the amendments to the Law on Carriage by Road.
Concerning
air transport,
Latvia had already aligned its legislation with a substantial part of the aviation
acquis
and in May 2002 amendments to the Law on Aviation were adopted transposing the computerised reservation system requirements.
In the area of
maritime transport,
in November 2001, Latvia acceded to the 1974 Athens Convention relating to the carriage of passengers and their Luggage by Sea and its Protocol of 1976, and in February 2002 to the 1924 International Convention for the Unification of Certain Rules relating to Bills of Lading, and its Protocol of 1968 and Protocol of 1979.
Concerning
maritime safety
structures, in January 2002, as a result of the restructuring of the Latvian Maritime Administration, the Maritime Rescue Co-ordination Centre was transferred to the Latvian Navy (Coast Guard) of the Ministry of Defence. At present there are 108 employees in the Maritime Administration of Latvia. 14 inspectors in the Maritime Safety Inspectorate of the Latvian Maritime Administration perform the Flag State and Port State inspections.
According to 2001 statistics under the Paris Memorandum of Understanding, the percentage of Latvian flag vessels detained following Port State control was 5%, a further decrease compared to 7.6 % in 2000 and 14.6% in 1999. This compares with an average for EU-flagged vessels of 3.14 % in 2001. In May 2002 Latvia became a co-operative member of the Paris Memorandum of Understanding on Port State control.
Overall assessment
As regards Trans-European Transport Networks, Latvia should continue with the further modernisation and development of both priority transport infrastructure along transit corridor I, and the main transport infrastructure network. Special emphasis should be given to ensuring the necessary administrative capacity (both in qualitative and quantitative terms) to prepare for the significant investments that will be needed in road and rail infrastructure.
In the road sector Latvia is well advanced in terms of legal alignment with the relevant
acquis.
Further efforts are still to be made in the transposition of technical rules (speed limitation devices, driving licenses) and the fiscal
acquis,
as well as in the implementation of social rules (admission to the occupation, and driving times and rest periods) particularly in the domestic sector. On the administrative side, it is now important that the Concept on Control in Road T ransport is turned into concrete action to improve controlling capacity and reform the institutions responsible for control of road transport operations. The ensuing
institutional reform of the present road authorities has to meet the need for an operational and efficient structure, with adequate financial means and significantly increased controlling capacity, covering also control at premises.
Regarding rail transport, considerable further efforts are needed to allow for implementation of the revised railway
acquis.
Legislative alignment also needs to be completed as regards requirements on interoperability of both high-speed train systems and conventional railways, and in this context particular attention has to be paid to the criteria for appointing the notified bodies. The restructuring and modernisation of the sector should continue. In the framework of the restructu ring of the Joint Stock Company "Latvian Railway", the creation of a number of separate companies (infrastructure manager, freight operator) is
pending. The capacity of the technical railway inspectorate, the regulator and other railway administrations needs to be strengthened.
Even though inland waterways in Latvia are of limited local importance, Latvia needs to align its legislation with the remaining relevant
acquis.
On combined transport, legal alignment needs to be completed.
As regards air transport, the legislative framework in this sector is largely aligned with EC requirements; however, the legal basis and the status of the independent aviation accident investigation body are still pending and its administrative capacity needs strengthening. Latvia should continue to progressively incorporate the Joint Aviation Requirements.
For maritime transport, the adoption of the two framework laws and of the ensuing implementing legislation are still pending. On maritime safety, there is already alignment or partial alignment in the area of reporting requirements for ships carrying dangerous goods, reduced charges for vessels with segregated ballast tanks, passenger ship safety and Port State control. Further legislative work is needed on Flag State inspection, classification societies and marine equipment measures. On the administrative side, measures should be taken to strengthen administrative capacity in the field of maritime transport safety in order to
further improve the Flag State performance of the Latvian fleet.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia was making noteworthy progress in assimilating the
acquis
in the transport field, particularly that of air transport. Provided efforts (also as regards the effective implementation of the
acquis)
were made in the goods-by-road, (access to profession, weights and sizes, road tax), shipping (safety) and rail (public service and standardisation of accounting procedures) sectors, the trans port industry was unlikely to pose any major difficulties as regards the assimilation of the
acquis
relating to the single market. By contrast, Latvia was advised to improve its administrative
structures, including inspection bodies such as those responsible for safety, as soon as possible.
Since the Opinion, Latvia has made steady progress in aligning legislation. Its legislation in the transport sector is now to a great extent in line with the EC
acquis;
the relevant framework laws (with the exception of maritime transport) are in place and only a limited amount of implementing legislation remains to be put into practice. However, implementation of the maritime safety
acquis
needs continued attention. In addition, the administrative capacity is being strength ened.
Negotiations on this chapter have been provisionally closed. Latvia has been granted transitional arrangements regarding the introduction of the financial standing criterion for domestic road transport operators (until 31 December 2006) and the installation of tachographs for vehicles registered before 1 January 2001 and exclusively operating on the domestic market (until 31 December 2005). Latvia has agreed to a transitional arrangement put forward by the EU concerning the gradual reciprocal access to the cabotage market in the road haulage sector. Latvia is generally meeting the commitments it has made in the accession
negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts should now focus on: accomplishing transposition and implementation of the fiscal and social/technical
acquis
in the road sector, the further legislative alignment in the rail and maritime sector and strengthening the administrative capacity in road, rail and air transport. Particular attention will need to be paid to further strengthening the administrative capacity in the field of maritime transport safety a roving the flag state performance of the Latvian fleet.
Progress since the last Regular Report
Since the last Regular Report, Latvia has made progress with aligning its tax legislation with the
acquis
in the area of VAT.
In the area of
indirect taxation,
as regards VAT, amendments to the Law on Value Added Tax were adopted in November 2001. These amendments will introduce a reduced VAT rate on the supply of goods and services that were previously exempt in contradiction with EC VAT legislation. The amendments also introduce a VAT refund scheme for foreign taxable persons not established in Latvia. However, these amendments will only enter into force as of January 2003. In the field of
exc ise duties,
no further developments as regards the alignment of excise legislation are to be reported.
No progress can be reported on
direct taxation and administrative co-operation and mutual assistance.
Since last year’s Regular Report, some further steps have been taken to reform and strengthen Latvia’s tax administration. In December 2001, the State Revenue Service (SRS) approved the Tax Administration Strategy for 2002-2004. The ongoing introduction of the three level organisational structure has resulted in the establishment of 5 regional offices.
Some progress has been made with improving taxpayer compliance. Improvements in the productivity of VAT audits have led to an increase of 19 % in the amounts collected per audit. The information base for tax audits regarding bankruptcy cases has improved and some measures have been taken to improve the arrears enforcement methodology.
In order to improve the quality of services to the public, two new taxpayers’ service halls (27 in total) were opened and a number of other activities were carried out to improve information available to taxpayers. The expansion of electronic filing practice has continued and taxpayers may submit declarations and statements electronically to the SRS. A data warehouse analysis system was launched in 2001 in order to improve tax control work.
Since last years’ Regular Report, new units and sectors have been established in the Financial Police Department at the central tax administration and new departments have been created at the regional offices in order to increase the capacity of the Latvian State Revenue Service when fighting against financial crimes.
Overall assessment
Regarding indirect taxation and alignment of VAT legislation, further alignment is necessary, in particular with regard to intra-Community trade.
Further alignment is also needed in excise legislation in order to introduce the combined rate of specific duty and ad valorem duty for cigarettes. In addition, the excise duty rates on certain mineral oils - gas oil, kerosene and heavy fuel oil – as well as that on beer should be increased in order to reach the EC minimum rates.
Concerning direct taxation, the Latvian legislation needs to align further with that of the
acquis.
Legislation will have to be reviewed in order to eliminate potentially harmful tax measures, so as to comply with the Code of Conduct for Business Taxation to the same extent as current Member States upon accession. The legislation on Special Economic Zones and Free Ports should also be brought into line with the tax
acquis,
notably with the imposition of VAT on supplies of go ods, and of excise tax on fuel consumed in free zones, as well as with the Code of Conduct for Business Taxation.
Further efforts are needed in order to modernise and strengthen the State Revenue Service. The organisation of the State Revenue Service should be further streamlined and the introduction of a three-level organisational structure should be completed. Appeal procedures should also be strengthened according to the existing plans.
Regarding information technology and interconnectivity, urgent measures need to be taken to complete alignment. The understanding of the technical details of functional specifications of the VAT Information Exchange system (VIES) should be improved. In general, preparations for the establishment of the Central Liaison Office (CLO) and the VIES should be accelerated.
Conclusion
In its 1997 Opinion, the Commission concluded that the
acquis
concerning direct taxation should present no significant difficulties, and that where indirect taxation was concerned, a considerable effort would be required if Latvia was to comply with the
acquis
on VAT and excise duties in the medium term. The Commission added that it should be possible for Latvia to start participating in mutual assistance as the tax administration developed i ts expertise in this respect.
Since the Opinion, and especially over the last two years, Latvia has made significant progress in aligning with the EC
acquis
on taxation. Latvia has also made progress with developing the necessary administrative capacity to implement the
acquis
in this area, but the organisational restructuring which is underway represents a major challenge. Latvia’s level of alignment with the taxation
acquis
has reached a reasonable degree although a number of weaknesses re o be addressed. Its implementation capacity is partly hampered by the delays in information technology and interconnectivity. This needs to be urgently addressed.
Negotiations on this chapter have been provisionally closed. Latvia has been granted, for an indefinite period of time, the right to apply a VAT registration and exemption threshold of LVL 10 000 (€ 17 857) for small and medium-sized enterprises; a technical transitional period of one year for the purpose of applying, once a Member State, for a derogation for simplified procedures on VAT on timber transactions; and a transitional period until 31 December 2009 in order to reach the E mum excise duty levels on cigarettes. In addition, Latvia has been granted specific arrangements to continue VAT exemption with credit for
input tax on international passenger transport and without credit for input tax on services supplied by authors, artists and performers. Latvia is generally meeting the commitments it has made in the context of the accession negotiations.
In order to be ready for membership, Latvia should focus further efforts on completing transposition - except for areas where transitional arrangements have been agreed - in the areas of indirect and direct taxation, including intra-Community transactions, and on further pursuing the measures taken to modernise and reinforce the tax administration. Latvia should step up its ongoing legislative work, and urgently speed up its preparations for electronic interconnectivity.
Progress since the last Regular Report
A detailed assessment of the various aspects of Latvia's economic policy has been given above, in the Chapter discussing the economic criteria (B-2). Therefore, the present section is limited to a discussion of those aspects of the Economic and Monetary Union
acquis
- as defined by Title VII of the EC Treaty and the other relevant texts - which candidate countries should implement before accession, i.e. the prohibition of direct public sector financ ing by the central bank, the prohibition of privileged access of the public sector to financial institutions, and the independence of the national central bank. As to the process of
liberalisation of capital movements, upon the completion of which compliance with the EMU
acquis
is conditional, this aspect has been covered above, in the section on
Chapter 4 - Free movement of capital.
Since the last Regular Report, some progress was made in the adoption of the EMU-related
acquis.
Alignment concerning
prohibition of direct public sector financing
by the Central Bank had already been achieved in 2001.
As regards
privileged access of the public sector to financial institutions,
no legislative developments took place on private pension funds concerning rules for investing pension capital.
Since the last Regular Report, new legislation has been adopted with amendmentsto the law on the Bank of Latvia in June 2002 which aim at further alignment with the
acquis
concerning the requirements for the
independence of the Central Bank,
particularly regarding grounds for dismissal of members of the board.
Overall assessment
Latvia will participate in EMU upon accession with the status of a country with a derogation under Article 122 of the EC Treaty, and it will need to implement the necessary changes to its institutional and legal framework by the date of accession.
As regards privileged access of the public sector to financial institutions, further changes to Latvian legislation on private pension funds concerning rules for investing pension capital will be necessary. This concerns mainly the law on Private Pension Funds, which requires further alignment.
In the area of independence of the Central Bank, a high degree of compliancet with the
acquis
has been achieved.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia’s participation in the third stage of EMU as a non-participant in the euro area would pose problems in the medium term. It added that the provisions and the practice of the central bank’s budget deficit financing were not yet fully compatible with EC rules.
Since the Opinion, steps forward have been taken and a high level of alignment with the EMU-related
acquis
has been achieved and the administrative capacity has been put in place.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on aligning the rules for investing pension capital.
Progress since the last Regular Report
Latvia has made very good progress over the past year in this area resulting in improved infrastructure and compliance with EC statistical requirements.
As regards
statistical infrastructure,
over the past year, the Latvian Central Statistical Bureau (CSB) has significantly improved co-operation with other institutions with a view to a more effective use of administrative sources for the production of statistics as well as further compliance with the
acquis.
In 2002, the budget for the CSB was increased significantly.
Regarding
classifications,
the Latvian Statistical Bureau (CSB) was appointed as the main co-ordinating agency for classifications in the country.
Concerning
demographic and social statistics,
the final results of the Census of Population and Housing were published in April 2002.
Statistics at
regional
level have a high standard. During the past year regional data have greatly improved as a result of the implementation of the population and agricultural censuses. Some indicators are available also at level 4 and 5.
Macro-economic statistics
are produced on the basis of the European System of Accounts (ESA-95) methodology at a high level of compliance. The CSB is working on the creation of an integrated system of annual accounts and supply-use tables. Quarterly national accounts were further improved. Latvia is a member of the European comparison programme, which supplies the data for the compilation of Purchasing Power Standards. As regards Government finance statistics, the CSB’s co-operation with other institutions has improved. The CSB has also compiled first sets of statistics on deficit and debt.
Monetary, financial and Balance of Payments statistics are compiled by the Bank of Latvia and considerably improved in 2001 also as a result of an increased statistics budget. The take-over of Balance of Payments statistics by the Bank of Latvia from the CSB was smooth and successful and key Balance of Payments indicators are now available on a monthly basis.
Structural
business statistics
are very broadly based and benefit from high response rates. Short-term business statistics have been further developed.
Large parts of
environment statistics
have to be compiled on the basis of administrative data provided by other institutions. During the past year the CSB has improved the production of statistics in this field.
For
external trade,
work concentrated on the preparations for the INTRASTAT system, which monitors trade between Member States. The activities in this area have started in good time and have been managed effectively until now.
In the field of
agricultural statistics,
Latvia conducted an agricultural census in 2001, which will greatly improve the quality of agricultural statistics in the near future, in particular through an update of the statistical farm register. Economic accounts for agriculture (EAA) are compiled together with the Ministry of Agriculture on the basis of the EAA-97 methodology.
Overall assessment
The recent reinforcement of administrative capacity, increased co-operation, and the experience gained recently constitute a very good basis for
acquis
implementation. However, particular efforts are needed, especially regarding the structural adaptations that lie ahead of the CSB.
Regarding sectoral statistics, further efforts are needed on upgrading Government deficit and debt statistics, facilitating the observation of local kind of activity units and further improving the use of administrative sources for the production of statistics. Statistics in the field of the environment need further improvement, as do forestry statistics, where further alignment to international methodology is necessary, in particular as regards ownership and regional breakdown. The imple mentation of INTRASTAT will require substantial efforts and direct access by the CSB to VAT data for ensuring reliability.
Building up general administrative capacity remains a priority. Whilst significant investments took place at the CSB, further training is needed, in particular for staff at regional level.
While the Government has demonstrated its willingness to address the resource problems of the CSB through a considerable increase of the basic budget in 2002, staff turnover in some important departments remains comparatively high. The reorganisation of the regional network and the creation of the professional interviewers’ service should be completed urgently. The still existing legal incoherence between the statistical law, the data protection law and tax legislation should be dea h in order to further improve the current situation. Better access of the CSB to individual tax data would further facilitate the production of
statistics.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia would need to make a sustained effort to comply with EC requirements.
Since the Opinion, Latvia has made very good progress in almost all areas of statistics, in particular by conducting a population and housing census as well as an agricultural census during the last two years. Overall, Latvia is quite advanced in this field.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on further improvements for implementation of the
acquis
on sectoral statistics, adequate budgeting and increasing administrative capacity, including effective use of administrative resources and structural adaptations at all levels.
Progress since the last Regular Report
Since the last Regular Report further progress has been made in aligning with the
acquis.
In the area of
labour law,
the new Labour Code transposing the majority of the labour law
acquis
entered into force in June 2002. In December 2001, the Law on the Protection of Employees in the Event of Insolvency of their Employer, aimed at transposing the relevant
acquis,
was adopted. Concerning the transposition of the
acquis
on the protection of young people at work, implementing legislation was approved in January and May 2002. The amendments to the L aw on the Insolvency of Enterprises and Enterprises Societies have been adopted in June 2002. The Law on the State Labour Inspectorate, which entered into
force in January 2002, clarifies and strengthens the legal status, tasks and functions of the State Labour Inspectorate. The Inspectorate has been designated as the liaison office under the
acquis
on posting of workers and as the competent public authority required under the Directives on collective redundancies. In 2002 the Inspectorate organised training sessions on the new Labour Code for trainers and judges.
The task of implementing the Law on the Protection of Employees in the Event of Insolvency of their Employer was attributed to the Insolvency Administration operational as of February 2002. The Administration will combine the functions of the guarantee institution and the supervision of insolvency process.
Concerning
equal treatment
for women and men, efforts have focussed on promoting implementation of the Concept of Gender Equality, which was adopted in October 2001. In March 2002, the accompanying Action Plan for the implementation of the concept in 2002 was approved. It foresees the elaboration of the National Gender Equality Strategy 2003-2007. With the decision in February 2002 to establish the Gender Equality Council, a co-ordination and advisory body has been created. A train ing programme on gender equality for civil servants was elaborated in early 2002 and courses at the Latvian School of
Administration have started. In 2002, the second court case concerning gender discrimination in Latvia ended in favour of the claimant (see
also B.1. – Political criteria).
With regard to
health and safety,
the Law on Labour Protection, which aims at transposing the framework Directive on health and safety at work, came into force in January 2002. Implementing legislation transposing Directives on labour protection when working with carcinogenic substances at work and labour protection requirements at workplaces have also been adopted since the last Regular Report. In December 2001, in accordance with the EC principles of occupational health and s afety, the new State Labour Inspectorate Law was adopted. To strengthen the administrative capacity of the State Labour Inspectorate,
an active training policy has been pursued. The new training programme for occupational safety and health experts was accepted in March 2002. The professional standards for occupational safety and health experts and senior experts have been elaborated.
The tripartite structure still continued to dominate the
social dialogue.
The acceptance and understanding of the importance of bipartite social dialogue remain weak. The number of collective agreements, covering a small percentage of the labour force, has not significantly risen since the last Regular Report. In 2001, 2 287 collective agreements were concluded, compared to 2 057 in 2000. The collective agreements concluded in 2001 cover 203 374 employees (203 725 in 2000 ). 2 167 of the collective agreements were concluded at company level, while the number of collective agreements at branch level (17) was lower than
in previous years.
Efforts to strengthen the
public health
system have focused on implementation of the Public Health Strategy adopted in 2001. In the context of this strategy, in January 2002, it was decided to re-organise the National Environmental Health Centre and its regional branches into a Public Health Agency. The new institution is responsible for implementation of the State’s public health policy and for epidemiological safety. In the domain of communicable disease surveillance, contr islation was adopted to align with the
acquis.
An organised system of epidemiological surveillance and control of infectious diseases with clearly defined competence and responsibility of the institutions involved has been developed. A computer network for epidemiological surveillance of infectious diseases is being developed.
The Annual Social Report 2001 published by the Ministry of Welfare points out that 3.5% of GDP was allocated to the health sector. This marks a further decrease, both in absolute terms and in relation to GDP, since the previous year (5.5% in 2000). Latvia is now even further from the minimum level of 7% in the EU countries.
As regards
employment policy,
Latvia and the European Commission have launched an employment policy review in the form of a Joint Assessment of Employment Priorities in Latvia (JAP), with a view to examining the progress made by Latvia in adapting its employment system so as to be able to implement the European Employment Strategy. This document, still to be finalised, will lay down the key priorities and tasks for the pre-accession period.
Achievement of a consensus on such priorities and tasks is proving difficult to reach.
The unemployment rate has decreased, to 13.1 % in 2001 compared to 14.2% in 2000. Unemployment rates for both men and women are decreasing and reached 14.6% for men and 11.5% for women. The high and increasing long-term unemployment at 59% is of great concern. Efforts have been made to increase the number of persons covered by active labour market measures. In 2001, 25% of registered unemployed persons were involved in active labour market measures (training, courses, and temporary public works). Given that such measures are only available to registered unemployed persons, care should be taken to
ensure that registration becomes as widespread as possible, if necessary by identifying and removing any possible obstacles. The modernisation of the Public Employment Services and enhancement to the IT services should continue with a view to further progress in that regard.
In 2001, the administrative capacity of the State Employment Service was upgraded with the supply of computer hardware to the Board of the Service and its regional offices.
The Government decided in February 2002 on the designation of the main institutions to be involved in Structural Funds management. The Ministry of Finance is designated as the Managing Authority of the Structural Funds, including the European Social Fund (ESF). The State Treasury, a separate legal entity within the Ministry of Finance, is appointed as Paying Authority. The Ministry of Welfare will be the partner institution to the Managing Authority for the ESF. The intermediate body/ies will be nominated later.
As a follow-up to the Gothenburg European Council, where the EU invited the candidate countries to translate the EU objectives into their national policies, the Commission and Latvia have initiated a joint co-operation exercise to prepare for future participation in the EU
social inclusion
process after accession. This exercise consists in joint identification of the social exclusion challenges and relevant policy responses. In this context, the Central Statistical Bureau of Latvia co-operates with Eurostat to produce data on poverty and social exclusion. Preliminary figures suggest that overall income disparities seem to be rather
high, as is the poverty rate after social transfers (16.8%).
As regards other areas of
social protection,
since the last Regular Report implementation of the pension reform has remained the focus of Latvian efforts in this field. In December 2001, Parliament amended the Law on State Pensions. The amendments set the minimum pension that is linked to a person’s working record and prescribe a new formula for the indexation of low pensions. In March 2002 the Government accepted the Concept on the Development of Providing Social Assistance es. The Concept envisages changes in the financing system of social assistance that would facilitate the development of alternative
social care services by municipalities. The financing principle "money follows the client" is implemented in social institutions belonging to municipalities.
The new Labour Law in force since June 2002 contains provisions banning discrimination in employment on the grounds covered by Article 13 of the EC Treaty, with the exception of sexual orientation. Since the last Regular Report no further legislative progress concerning the implementation of the two directives on
anti-discrimination
has been made.
An inter-institutional working group with the task of evaluating alignment with the Directives was established in February 2002
(see also Section B.1.2. - Human rights and the protection of minorities).
Overall assessment
In the area of labour law, alignment is well advanced but some efforts are still required. In particular, Latvia has to transpose Directives related to the involvement of workers in the European Company and regarding information and consultation of workers. Also amendments to the Labour Dispute Law still have to be adopted.
Effective implementation and enforcement of the
acquis
should be a priority and the State Labour Inspectorate needs to be strengthened. An independent guarantee fund for employees in the case of employer's insolvency has to be established. The legal status of the Insolvency Administration needs confirmation.
The enforcement of the
acquis
in the field of equal treatment for women and men should be improved. The Action Programme for the implementation of the Concept Paper on Gender Equality remains to be adopted and implemented.
 PDF to HTML - Convert PDF files to HTML files
1461351_0017.png
Alignment with the
acquis
on health and safety at work is well advanced, but still has to be completed, and the necessary implementing legislation must be adopted. The State Labour Inspectorate should be reinforced.
The reform of the public health sector should continue. The health status of the population is still much lower than the EU average, and progress is needed to improve it. The incidence of some communicable diseases gives rise to concern. Public expenditure on health care should be considerably increased. The transposition of the current tobacco legislation has not been completed yet and no specific time schedule has been made in this respect. The Action Plan to ensure the implementation o f the Public Health Strategy is still pending. New legislation, in particular rules on communicable diseases notification, surveillance
and reporting forms is required. The list of notifiable diseases should be revised to include all diseases listed in the EC Decisions, and should include EC case definitions. In addition, training in modern epidemiology is needed, specifically on analytical methods, field investigation, data protection and management. Participation of Latvia in EC disease-specific networks needs to be accelerated. Moreover, laboratory equipment, procedures and protocols need to be upgraded at national and regional level. In particular, a national reference virological laboratory should be established. Generally, effective implementation of the
acquis
needs to be ensured.
The bipartite social dialogue is lagging behind. Sectoral and enterprise level social dialogue should be more effectively promoted and its coverage extended, both in terms of enterprises and percentage of the labour force covered by collective agreements. The adoption of the Labour Dispute Law would represent a major step in the promotion of this dialogue. In addition, Latvia should enhance activities to develop and systematise the information available to social partners and increase tra ining of all parties involved.
Regarding employment policy, the Joint Assessment of the Employment Policy Priorities of Latvia (JAP) will represent an important step in preparation for future participation in the European Employment Strategy upon accession. It is important to ensure effective monitoring of the phasing-in of the priorities and commitments agreed in the JAP. There is a need to focus on more active and preventive strategy and to develop and examine the benefit systems to enhance the incentives for unemplo yed and inactive people to take up jobs.
Concerning the European Social Fund (ESF), implementing legislation on the administration of the Fund remains to be adopted. The Ministry of Welfare needs to further strengthen its administrative capacity for programming, implementation and monitoring. Reinforced administrative capacities also need to be built up in the intermediate bodies of the ESF at the national and regional levels to guarantee proper implementation of the funds at the project level. Division of competencies among ins titutions of ESF management and development of a co-ordination model should be established.
A national integrated strategy on promoting social inclusion, taking into account the EU objectives, needs to be developed. As poverty and social exclusion are multidimensional by nature, it is important to promote an integrated approach mobilising various governmental bodies and all relevant stakeholders in the process. It is also crucial to improve and develop social statistics systems on poverty and social exclusion in line with the EU commonly agreed indicators on social inclusion.
As regards other areas of social protection, implementation of the social assistance reform should continue. Introduction of the guaranteed minimum income level system is pending, requiring adoption of the necessary legislation, establishment of social assistance offices at municipality level and availability of the necessary funds.
Further efforts are needed to ensure alignment and enforcement of the
acquis
on anti-discrimination. Legislation transposing the Directives based on Article 13 of the EC Treaty has to be introduced and implemented. The Equality Body foreseen in the
acquis
needs to be established.
Conclusion
In its 1997 Opinion, the Commission concluded that social reforms should be pursued, and the public health system needed to be significantly improved. In addition, the social dialogue needed to be further developed. Latvia would need to make substantive efforts to ensure the realignment of its legislation with EC requirements in areas such as health and safety, labour law and equal opportunities and to continue to develop the structures needed to ensure ef fective implementation of legislation. Provided Latvia pursued its efforts, it should be possible to take on the obligations of EU membership in the medium term.
Since the Opinion, Latvia has made good overall progress in aligning with the
acquis,
especially over the last two years and in particular in the areas of labour law and equal treatment for women and men. Efforts have been made as well to strengthen the administrative capacity of social institutions.
Negotiations on this chapter have been provisionally closed. Latvia has been granted transitional arrangements in respect of the following Directives: Directive on work equipment – until 1 July 2004; Directive on workplace – until 31 December 2004; Directive on display screen equipment – until 31 December 2004. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts should now focus on: completing transposition (anti-discrimination, health and safety, labour law and tobacco); effective implementation and enforcement (labour law, equal treatment, health and safety, public health, and anti-discrimination); developing the bipartite social dialogue; and reinforcing the administrative capacities of the State Labour Inspectorate and of the bodies related to the European Structural Fun >
Progress since the last Regular Report
Latvia continued the alignment with the energy
acquis
and progress has been achieved, in particular as regards security of supply and the creation of the internal energy market. Steps have been taken to further improve the administrative capacity and to reinforce the legal base for the functioning of the Public Utilities Commission and the State Energy Inspectorate.
Concerning
security of supply,
in March 2002 a Regulation aiming at compliance with EC legislation on maintaining oil stocks was approved. Oil stocks will be held by the companies holding licenses for business operation with oil products and by the State itself. Oil stocks will be increased gradually to the required level, while the burden will be shared among the licence holding companies and the State.
Legislation concerning the energy information system was adopted in May 2002. It requires the Ministry of Economy to establish an energy database in order to ensure balanced energy consumption and demand, and to prepare for energy crisis management.
The Ministry of Finance and the Ministry of Economy have been nominated as the institutions responsible for the control of the formation and maintenance of oil stocks. In July 2002, the Ministry of Economy established the first monthly report on the level of oil stocks.
Regarding oil supply crisis management measures, progress has continued with the adoption of implementing legislation in March 2002 defining restrictions on energy consumption. A State Energy Crisis Centre has been established, which includes representatives of ministries and the largest enterprises. The Energy Department of the Ministry of Economy is the Secretariat of the Crisis Centre.
In the area of
competitiveness and the internal energy market,
a policy document on Energy Policy in the Electricity Sector, aiming at ensuring the reliability and quality of electricity supply and at creating competition in the electricity market, was approved in September 2001. In line with this document, implementing legislation was adopted in January 2002, concerning production of electricity from renewable sources and the purchase price for surplus electricity generated thereb y.
Regarding the
electricity market,
the market is being opened gradually. In November 2001, instructions and criteria on electricity consumption for the status of eligible customer were approved. In 2001, there were 10 eligible customers representing together 13.8 % of the total consumption of electricity in Latvia. As the threshold was not changed for 2002, the number of qualified customers remains approximately the same. Currently the threshold is set at an annual consumptio n of 40 GWh. This threshold will be lowered to 20 GWh from January 2003, corresponding to a market opening of approximately 20 %. Full market
opening is scheduled for 2006.
In the framework of the implementation of the Plan for restructuring the state-owned energy utility, Latvenergo Joint Stock Company (JSC), the Transmission System Operator was established and registered in December 2001. The new Transmission System Operator is a separate legal entity fully owned by Latvenergo JSC.
Further progress has been made for the creation of legal preconditions for the liberalisation of the
gas market.
In October 2001, the Concept on the Liberalisation of the Gas Market was adopted. The concept aims at introducing elements such as third party access, designation of eligible customers, regulation of transmission, distribution and storage tariffs, and abolition of regulated natural gas selling prices. In October 2001, an Action Plan for implementation of the Concept was adopted.
The privatisation of Latvijas Gāze was completed in February 2002. The last 3% of the state-owned shares were sold through a public offering accepting privatisation vouchers.
The regulatory body for energy issues (responsible also for telecommunications, postal and railway transportation), the Public Utilities Commission (PUC), is financed through state-collected fees from regulated enterprises. The approved annual budget for the PUC in 2002 is LVL 1 million (€1.8 million). As of April 2002, the PUC had 66 employees. Staff of the Public Utilities Commission benefited during the reporting period from extensive training.
Concerning
energy efficiency and renewable energy,
in accordance with the Energy Efficiency Strategy approved in November 2001, implementing legislation was adopted in January 2002 to promote the use of renewable energy sources and domestic production of heat and electricity in combined heat and power plants.
The State Energy Inspectorate, the institution responsible for energy efficiency control and supervision, has been operational since November 2001; its statute was approved in May 2002. In 2002, LVL 52 700 (€94 100) were allocated for the Inspectorate, which had contracted 7 employees by the end of April 2002.
As regards
nuclear energy,
Latvia operates no nuclear power plant. In the field of
nuclear safety,
the decommissioning of the Salaspils nuclear reactor, a pool-type research reactor closed in 1998, is continuing. Tender procedures on the right to prepare tender documentation and to organise the tender procedures for decommissioning and dismantling of the reactor were completed in May 2002. Latvia has continued to make progress in finding solutions for managing spent fuel fro m the research reactor and radioactive waste. Implementing legislation dealing with the requirements for practices involving radioactive waste and
related materials and with the criteria and principles for determining equivalence between low, intermediate and high level radioactive wastes, has been adopted in March and April 2002. To ensure operation of the Radiation Safety Centre, responsible for the supervision and control of radiation safety, LVL 184 439 (€329 355) were allocated in the state budge 2002. The Centre completed 179 working days of educational and training activities in 2001.
Overall assessment
Concerning security of supplies, implementing legislation now has to be adopted to achieve alignment with the energy
acquis.
A continuous effort will be required to ensure the financing and build-up of the mandatory oil stocks. On the administrative side, the services in the Ministries of Economy and Finance responsible for the control of oil stocks should be strengthened.
On competitiveness and the internal energy market, the issue of energy price distortion remains to be addressed. The Public Utilities Commission has to be further strengthened and assure its full independence in order to be able to carry out the functions defined in the Electricity and Gas Directives.
Latvia is well advanced in implementing the internal energy market, but harmonisation with the Electricity and Gas Directives has not yet been fully accomplished. Concerning electricity, the market was opened, albeit to a limited extent, ahead of accession; the gradual opening of the market should continue in order to achieve at least the minimum requirements of the Electricity Directive upon accession. Reorganisation of the state electricity utility, Latvenergo, has to be completed with the establishment of separate and independent distribution, administration and power generation companies. Regarding gas, alignment with
the Gas Directive should be completed, while the sector needs further restructuring. The Energy Law should be amended to provide the legal basis for third-party access and the establishment of eligible customers.
Concerning energy efficiency, harmonisation with the
acquis
on labelling appliances and minimum efficiency standards has to be completed. Additional efforts are required to improve further energy efficiency and to enhance the use of renewable energy. The State Energy Inspectorate should be strengthened.
In June 2001, the Council of the European Union took note of a Report on Nuclear Safety in the Context of Enlargement. Whereas Latvia does not operate commercial nuclear power stations, the Report contains recommendations of relevance to Latvia with regard to other nuclear installations, including the safe management of radioactive waste. During the first half of 2002, a special Peer Review on nuclear safety assessed the progress made by candidate countries in implementing all recommendat ions. This exercise under the auspices of the Council resulted in a Status Report published in June 2002, which concludes that
Latvia has accepted and adequately addressed all the recommendations contained in the June 2001 Report on Nuclear Safety in the Context of Enlargement.
Longer-term solutions for spent fuel and nuclear waste will continue to need attention. On the administrative side, the capacity of the Radiation Safety Centre should be strengthened.
Latvia will need to ensure compliance with Euratom requirements and procedures. In this respect, due attention will need to be given to preparing the implementation of Euratom Safeguards procedures, in particular, direct reporting of nuclear material flows and inventories by the persons or undertakings operating nuclear installations, or storing nuclear material. This includes small holders like universities, hospitals and medical practices. It should be noted that Latvia has concluded a Full-Scope Safeguards Agreement with the IAEA.
Conclusion
In its 1997 Opinion, the Commission concluded that provided that Latvia’s efforts were intensified, no major problems were foreseen to approximate progressively to the then existing
acquis
in the medium term, adding that aspects such as the adjustment of monopolies, access to networks, energy pricing, emergency preparedness, including the building up of mandatory oil stocks, energy efficiency remained of specific importance. The Commission add t, while no major difficulties were foreseen for compliance with Euratom provisions, Latvia should become rapidly party to certain international nuclear regimes.
Since the Opinion, Latvia has made progress in aligning with the
acquis
in all areas, especially over the last two years. The implementation of the internal energy market is under way. The formation of oil product reserves has begun. Steps have been taken to improve the administrative capacity and the functioning of the Public Utilities Commission and of the State Energy Inspectorate. An overall reasonable level of legislative and administrative alignment with the EC requirements h as been achieved.
Negotiations on this chapter have been provisionally closed. Latvia has been granted a transitional arrangement concerning the building up of oil stocks until 31 December 2009. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts should now focus on ensuring full and timely implementation of legislation in this area, in particular with regard to implementing legislation on oil stocks, the internal energy market (gas and electricity), on ensuring finance to progressively build up oil stocks and on reinforcing the administrative capacity of the various bodies (independence of the energy regulator).
Progress since the last Regular Report
Since the 2001 Regular Report, progress has been made in this area. Latvia has confirmed its new approach to industrial policy, but only limited progress has been made in terms of implementation. As in previous years, the Government has focused on investment promotion. Limited progress has been made to strengthen administrative capacity.
As regards
industrial strategy,
the reflection on ways to promote competitiveness has further advanced. Latvia has confirmed the shift away from a sectoral approach towards the promotion of growth-generating activities and cluster development. However, policy documents, including the industrial policy guidelines, have not been updated and are still very vague on delivery mechanisms, responsibilities, resources and timetable, thus not allowing for proper monitoring.
The Ministry of Economic Affairs and the Latvian Development Agency, which has been reorganised into a state agency, are playing an increasing role in the promotion of industrial clusters. The business dialogue has been strengthened through the involvement of the business community (industrialists, professional associations and bankers) as well as of academic and research institutions in the cluster pilot projects. The dialogue has been particularly fruitful in the IT and forest-based sectors. However, it is not yet clear how these initiatives will be continued especially with regards to the preparations for structural funds.
Government policy has continued to focus on investment promotion, in particular through the simplification of legal and administrative procedures as well as the introduction of several tax incentives. In 2001 the steady growth in both domestic and foreign investments was confirmed. The real growth rate of gross fixed capital formation was 17.0% and the share of gross fixed capital formation in GDP reached 27.3%. Non -financial investment increased by 8%, and machinery and equipment accoun ted for almost half of it. The manufacturing sector continues to attract foreign direct investments, although at lower levels
than before (17% in 2001 against 20-25% in previous years). The good investment performance in Latvia can be attributed mainly to the stable macroeconomic environment, the reduction of interest rates, the expansion of the banking sector, and the improvement of the business environment (see
also Chapter 16 – Small and medium-sized enterprises).
Since last year,
privatisation and restructuring
have made further progress. In the manufacturing sector the share of private companies in gross value-added now exceeds 90% (see
also Section B.1.2. - Economic criteria).
Overall assessment
Latvia has further developed its industrial strategy. The Government is starting to implement a pro-active innovation policy, which is crucial in a small open economy where technology-driven industries still account for less than one tenth of exports. It has engaged in cluster development with a view to enhancing industrial competitiveness, delivering focused state support and structuring the dialogue with the business community. However, efforts to base i ndustrial policy on an effective strategic planning system and to introduce an effective monitoring and evaluation system should continue in the context of structural funds.
Latvia has achieved a lot in terms of investment promotion. Continued improvement of the business environment to foster investment should remain a priority. Efforts should be sustained with a view to confirming the increase in investment diversification.
The necessary administrative structures are in place, but are still weak. The central body responsible for the formulation and co-ordination of industrial policy is the Ministry of Economy. The Ministry still has to better define its role, including in the preparations for structural funds. The main implementation body is the Latvian Development Agency (LDA). In addition to its new role in cluster promotion, the LDA will take over most of the responsibilities of the Latvian Privatisation Agency, which is about to be liquidated. The LDA needs to be strengthened to ensure that it can play its role as an integrated agency for
enterprise development efficiently. The other agencies and governmental bodies involved in the implementation process include the Competition Council, the Latvian Standards Organisation, the Regional Development Council and the Latvian Technological Centre.
Over the past years, Latvia has witnessed increasing activity by business associations and significant improvement in their dialogue with the Government. The strengthening of professional associations should continue and the links between the various consultative mechanisms should be tightened. This will be facilitated by the merger of the secretariats of the Foreign Investors’ Council (organisation leading the process of simplifying the business environment) and the National Econom cil (Ministry of Economy’s consultative body representing the interests of the local business community) under the auspices of the LDA.
It should be noted that an important element of any industrial policy is the control of state aid and the compatibility of support schemes with EC rules
(see also Chapter 6 - Competition policy).
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia would be able to cope with integration into the EU in this area, provided that it strengthened measures to foster domestic capital formation and continued to encourage positive trends in privatisation, enterprise restructuring and attracting foreign direct investment.
Since the Opinion, Latvia has continued to make good progress in most areas, and Latvia’s policy towards industry generally complies with the concepts and principles of EC industrial policy, i.e. it is market-based, stable and predictable.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia's efforts now need to focus on further implementing the principles set out in its industrial strategy and co-ordinating its administrative structures, as well as further enhancing competitiveness in the enterprise sector so as to achieve full integration into the Single Market.
Progress since the last Regular Report
Since last year’s Regular Report, Latvia has made limited progress in revising its SME strategy and reforming the state support system for business promotion. However, efforts to improve the business environment have continued.
Since the last Regular Report, some progress has been achieved on
SME policy.
Latvia endorsed in April 2002 the European Charter for Small Enterprises. The Charter principles will be reflected in the new SME strategy for the period 2002-2006 (National Programme for SME development 2002-2006), which is under preparation. The second phase of the government’s SME lending programme, in collaboration with commercial banks, public and international financial institutions has led to ter access to finance for small business. Some efforts have also been made as to improve access to information such as the Latvian
Development Agency’s Internet portal for exporters. Only some progress has been made in reforming the support system for business promotion. In October 2001, it was decided to close down the Latvian Export Credit organisation. Discussions are ongoing about a future guarantee scheme.
In April 2002, Latvia endorsed the principles of the European Charter for Small Enterprises. The European Charter, adopted by the European Council in June 2000, is the reference document in the field of enterprise policy within the economic strategy set up at the Lisbon European Council. The reporting process on the implementation of the European Charter in Latvia started in May 2002.
The
business environment
continues to be improved in collaboration with the Council of Foreign Investors in Latvia, the National Economy Council and local business associations. The Latvian Development Agency is conducting a reassessment of the administrative barriers to investment, in collaboration with the Foreign Investment Advisory Service, which is part of the World Bank’s group.
The new Commercial Code entered into force in January 2002. Amongst other things, it reduces the number of legal business forms from seventeen to the internationally recognised five. However, enterprises point to some practical problems, to the costs due to the obligation to re-register companies and to the coexistence of two systems in the transition period. The law "on annual reports of enterprises" provides for a simplified reporting system for small businesses.
The new law, which is being prepared on the control of State aid (see
Chapter 6 - Competition policy),
is expected to take into account the Commission Recommendation on
SME definition.
The distinction between micro-, small and medium-sized enterprises and the criterion of financial independence will be introduced.
Overall assessment
Latvia has made progress in structuring an SME policy in line with that promoted by the EU. While the Government has acknowledged in various documents the importance of SMEs for increasing economic competitiveness, it took time before commitments were translated into concrete actions. The allocation of adequate resources has proven to be a further problem.
The administrative capacity to manage SME policies remains weak. The budget reduction in 2002 for the Latvian Development Agency has come at a time when new tasks are being allocated. So far, the Ministry of Economic Affairs has not been actively involved in the preparation for the Structural Funds, through which significant support to SMEs can be provided in future.
Over the last few years, emphasis has been put on improving access to finance and on the improvement of the legal and administrative framework for business activities. The availability of bank finance no longer seems to be a real problem. Increased attention will have to be drawn to non-banking sources of finance, such as schemes for start-ups, and to equity. Efforts should be strengthened to prepare for full use of structural funds in the area of enterprise development.
The business environment has significantly improved as a result of regular consultations between the Government and business representatives, including foreign companies and more recently also local business associations. According to the business community, the functioning of courts, administrative capacity at municipal level, construction and real estate transfer procedures, education and training, infrastructure development, and the fight against tax evasion are among the issues still requiring urgent attention. Efforts also need to be sustained in such areas as customs, public procurement, and the particular needs of
smaller enterprises. The emerging practice of consulting business representatives when preparing new legislation must be continued. Efforts must be made to ensure a proper follow-up to these consultations and to inform the interlocutors about subsequent changes.
Efforts are needed to upgrade business support services and to inform businesses better of the rules applying to them within the EU. Also business associations must be strengthened so that they can efficiently present their views to the authorities, irrespective of their size and political adherence.
Conclusion
In its 1997 Opinion, the Commission concluded that the basic structures for SMEs were in place, but there was a need for further refinement of policy, the simplification of legislation to make it more SME-friendly, the strengthening of support infrastructures, an improvement of the tax environment and the development of SMEs’ access to finance.
Since the Opinion, Latvia has made further progress in addressing some of the challenges of SME policy and has markedly improved the business environment. Its policy towards SMEs is generally in line with the EU approach.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on establishing and strengthening the delivery mechanisms as well as the administrative capacity to manage SME policies.
Progress since the last Regular Report
Further progress has been made in this area since the last Regular Report.
In November 2001, Latvia adopted Priority Directions of Science for Financing of Fundamental and Applied Research for the Period 2002 to 2005, which cover information technologies, organic synthesis and bio–medicine, material sciences, forestry science and wood technologies.
The state budget for science and research has slightly increased. In 2001, Latvia allocated an extra amount for the promotion of more research-oriented projects.
Latvia continued to be associated with the Fifth EC
Framework Programme
and with the Fifth Euratom Framework Programme. Latvia expressed interest in being associated with the Sixth Framework Programme (2002-2006). The Latvian National Contact Point office for the Fifth Framework Programme has been active in informing and supporting scientists during the application process.
Overall assessment
The framework for co-operation in the field of science and technology (including National Contact Point network) is well established. However, Latvia's research-related administrative capacity needs to be further developed.
Latvia’s gross domestic expenditure on research and development as a percentage of GDP remains very low and still needs to be increased significantly in order to come closer to the EU average. Financial constraints limit Latvia’s possibilities to participate effectively in the European Research Area. Promoting science and research in Latvia will, in particular, require a further increase in business expenditure on research and development (BERD), i.e. spending on science and r vities by industry, small and medium-sized enterprises and the private business sector in general. Furthermore, research activities in universities should
be fostered and proper risk capital legislation must be introduced. Under these circumstances, it has been noted that the number of scientists is slowly decreasing, while the number of young researchers working abroad has increased.
The National Innovation Concept aiming at promoting the link between research and industry is not adopted yet. Once adopted, it should be also reflected in the establishment of the national development policies. The links between research, SMEs and industry have to be further developed in order to create more dynamic and fruitful interaction.
Conclusion
In its 1997 Opinion, the Commission concluded that, in the perspective of accession, no major problems were expected in this field. Accession would be of mutual benefit.
Since the Opinion, Latvia has established the institutional and financial framework for its participation in the Fifth Framework Programme.
Negotiations in this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts need to focus on reinforcing the science- and research-related infrastructure, promoting effective links between research and the private sector and finally increasing significantly its gross domestic expenditure on research and development. These are vital issues for a successful association with the relevant Communities’ Framework Programmes.
Progress since the last Regular Report
Since the last Regular Report further progress has been achieved in this area. Latvia’s efforts concentrated on the education reform, the development of vocational training and the strengthening of administrative capacity.
Latvia continued to participate in the second generation of the Socrates, Leonardo da Vinci and Youth
Community programmes
(see
section A.b - Relations between the European Union and Latvia).
Given that Latvia had already transposed the
Directive concerning the education of children of migrant workers,
no further legislative developments are to be reported in this respect.
Concerning
reforms in the field of education, training and youth,
the Concept on Development of Education for 2002-2005 was adopted in June 2002. It defines the main development areas such as increasing the quality of education and effective use of resources as well as access to education and institutional development. In the framework of remuneration reform, teachers’ salaries will increase gradually within the next two years. In February 2002, the Government adopted the Inv t Strategy of the Ministry of Education and Science for 2003–2007.
Regarding vocational education and training, a regulation introducing centralised vocational qualification examinations was approved in October 2001. Between July 2001 and April 2002, ten standards for professions were adopted.
The Ministry of Education and Science undertook training actions to strengthen its administrative capacity.
Overall assessment
After satisfactory participation in the first phase of Community programmes, Latvia has continued to participate in the second generation of the Socrates, Leonardo and Youth programmes. The national agencies responsible for participation in the Community programmes are functioning properly.
Though legislation for a mobile and adaptable vocational education and training system is in place, implementation of the education reform should be considerably stepped up. Standards for basic vocational education are still to be developed. For the proper functioning of the Vocational, Education and Training Council, it is necessary to co-ordinate and to strengthen the administrative capacity of the constituent ministries. The qualifications of teachers and trainers should be raised, inc luding particularly at local levels. The process of exam standardisation has to continue and greater flexibility needs to be introduced into the
curricula.
Private enterprises need to be involved actively in the development of vocational education. Particular attention should be paid to the further development of a coherent system of continuing vocational training. The vocational training system should assist in the implementation of education policies targeted also at the less well developed regions, particularly those where unemployment remains very high. The system has to be made more accessible to low-skilled, disadvantaged groups. Suffi cient funding needs to be ensured in order to support the reform process.
Conclusion
In its 1997 Opinion, the Commission concluded that, in the perspective of accession, no major problems should be expected in these fields.
Since the Opinion, Latvia has participated actively in the Community programmes, and the reform of the education and training system has got under way. Latvia's legislation is globally in line with the
acquis
in this area.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia efforts now need to focus on the implementation of the Directive concerning education of children of migrant workers, strengthen the institutions involved, completing the reform of the education system, and raising the overall quality of vocational education and training.
Progress since the last Regular Report
Since last year’s Regular Report, Latvia has made good progress in aligning with the
acquis
in the area of telecommunications and has also improved the administrative capacity, notably of the regulator.
The new Law on Telecommunications, adopted in November 2001, provides the legal basis for full
liberalisation of the telecommunications market
as of January 2003. The Law aims at aligning Latvian legislation with most of the
acquis
requirements. Amongst others, the Law provides for the expiry of the exclusive rights that are granted to the national operator Lattelekom, the monopoly provider, regarding the provision of telecommunications services through the fixed netw ork as of January 2003. No progress can however be observed as regards the further privatisation of the national operator.
As regards the
regulatory framework,
the new Law on Telecommunications also transposed a number of
acquis-related
provisions, including provisions on licensing, tariffs, universal service provisions, interconnection, data protection, independent management of the national numbering plan and the frequency spectrum as well as number portability. Whiled most of the regulatory functions have been assigned to the Public Utility Commission (PUC), which started to exercise its regu latory functions for telecommunications in October 2001, responsibility for telecommunication policy and certain regulations remain with the
Ministry of Transport. Since then, implementing legislation required under the transitional arrangements of the law has been adopted in accordance with an implementation plan. By May 2002, several regulations such as on general permits and licenses, undertakings with significant market power, the methodology for tariff calculation, dispute settlement as well as regardi ng the general principles on universal service and operation of the Universal Service Fund were adopted.
The capacity of the regulatory body has been enhanced through further staff increases (now 66 persons) and an increase in the budget for 2002 to LVL 1 million (€ 1.8 million).
In the field of information technologies, in December 2001 the Government adopted the Action Plan for implementation of the Concept on Electronic Commerce. Latvia’s national programme for the eEurope+ Action Plan has been updated to include the concept of e-Latvia devoted to the inclusion of everybody in the process of information society development.
Since the last Regular Report, no new legislative developments were registered in the area of
postal services
other than the issuing of standards for universal postal service in September 2002.
Overall assessment
Latvia will need to transpose the updated telecommunication
acquis
before accession and to complete the implementation procedures as soon as possible afterwards.
Concerning the
liberalisation of the telecommunications market,
Latvia should enhance efforts to facilitate entry to the part of the market so far monopolised by Lattelecom. Latvia has committed itself under the WTO as well as under the negotiations for accession to fully liberalise the telecommunications market as of January 2003, instead of 2013 as originally planned.
In 1998, the Government had already decided to privatise the state’s remaining 51% shares of Lattelecom, but this has been delayed by a contractual dispute.
Penetration in mobile services has reached 30%. There are two GSM operators, but MTS licences have yet to be issued. Fixed network penetration reached 32% and is now static. Network modernisation and price rebalancing should be continued.
Regarding the
regulatory framework,
Latvia has transposed most of the core norms of the existing EC telecommunications
acquis.
Further efforts have been made to improve the administrative capacity and legal base for the functioning of the telecommunications branches of the PUC. The separation of functions required by the
acquis
is however prejudiced by the Ministry of Economy’s combined responsibilities for presenting PUC regulations to the to the Government for ion and for privatisation of the state’s shareholdings in operating companies.
Latvia has adopted a strategy in June 2002 in order to be able to evaluate the economic implications of fully implementing the universal service
acquis
so as to achieve affordability. A decision on this point remains outstanding.
 PDF to HTML - Convert PDF files to HTML files
1461351_0018.png
In the field of
postal services,
legislative alignment has to be completed regarding the licensing regime, universal service providers, reserved area, requirements for tariff principles, transparency and separation of accounts for postal service providers as well as standards for quality monitoring of postal services.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia would have some difficulty in meeting the
acquis
in the medium term because legislative reform was progressing slowly and existing commitments concerning exclusive rights for the public operator were a barrier to liberalisation. The Commission added that greater competitiveness for the public operator must be achieved to attract the investment needed to modernise and face up to competition. <>
Since the Opinion, and especially over the last year, Latvia has made good progress in aligning with most of the
acquis
requirements as well as in strengthening the administrative capacity in this field.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this domain.
In order to complete preparations for membership, Latvia’s efforts need to focus on the opening-up of the fixed telecommunications market to competition, on adopting implementing legislation, on improving the effectiveness of the regulator and on completing legislative alignment on postal services.
Progress since the last Regular Report
During the reference period further developments have taken place in this sector, particularly in terms of developing institutional structures.
However, there has been no particular progress in alignment of legislation with the
audio-visual
acquis
during the last year.
Actions were taken to reinforce the Information Centre of the National Broadcasting Council.
The Information Centre of the National Broadcasting Council has finished the codification, study and evaluation of information resources. Activities carried out by the Centre included establishment of a web-site containing information on the Council and related activities, a seminar for local and regional TV broadcasters and a publication on electronic mass media in Latvia.
A Memorandum of Understanding, providing for Latvian participation in the Community Media Plus and Media Training programmes, was signed in July 2002, taking effect from January 2002.
In the field of
culture,
the Association Council decision allowing Latvia to participate fully in the "Culture 2000" programme as from 2001 was adopted in October 2001.
Overall assessment
Latvian legislation in this area is largely in line with the
acquis.
However, further amendments to the Latvian Radio and Television Law, in particular relating to provisions regarding major events and the proportion of Latvian music to be broadcast, will be necessary. Latvia must also review the requirements on the broadcasting time which public broadcasters must reserve for in-house production, in order to make it proportionate. Furthermore, the i mplementing legislation concerning broadcasting of major events provided for in the Radio and Television Law needs to be adopted.
The administrative structure of the National Broadcasting Council and its monitoring capabilities have to be further strengthened in terms of staffing and budgeting. Its sanctioning powers should be reinforced in order to assure effective compliance of broadcasters with the Law.
Latvia is party to the Council of Europe Convention on Transfrontier Television and its amending Protocol.
Conclusion
In its 1997 Opinion, the Commission concluded that provided that the necessary legislative amendments were pursued with sufficient urgency and were accompanied by the necessary structural adaptation of the industry, Latvia should be able to meet EC requirements in the audio-visual sector in the medium term.
Since the Opinion, Latvia has made significant progress, especially through the adoption in February 2001 of the Radio and Television Law. Latvia is well advanced in this domain, in particular as regards legislative alignment. The necessary administrative structures are in place.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts should now focus on completing alignment with the
acquis
and on reinforcing the sanctioning and monitoring powers of the National Broadcasting Council so as to assure effective and transparent supervision of the sector.
Progress since the last Regular Report
Since the last Regular Report, Latvia has made important progress in preparing for the implementation of structural policies.
As regards
territorial organisation,
in April 2002, an agreement was reached with Eurostat on NUTS classification for the purpose of collecting and disseminating regional statistics at Community level. According to the agreement, the whole of Latvia corresponds to NUTS I and NUTS II level. The five planning regions Kurzeme, Latgale, Riga, Vidzeme and Zemgale correspond to NUTS III level, but the precise borders of each of the 5 planning regions will be re-defined.
In order to establish the
legislative framework,
Latvia adopted the Regional Development Law in March 2002, which lays down the general system for regional policy. The new law includes provisions linked to the planning and co-ordination of the EC Structural Funds regarding regional development. The Spatial Planning Law, which defines the framework as well as institutional responsibilities for spatial planning at all levels, was adopted in May 2002.
Concerning
institutional structures,
in February 2002, the main institutions to be involved in the process of management of the Structural Funds and the Cohesion Fund were designated. The Ministry of Finance will become the Managing Authority for the future Single Programming Document and the Cohesion Fund. The State Treasury is designated as the paying authority for the Structural Funds and the Cohesion Fund. A number of partner institutions have also been assigned to implement ac tivities of each particular Structural Fund. In addition two implementing bodies have been appointed for Cohesion Fund
activities. In order to establish the implementation system of the Structural Funds and the Cohesion Fund, guidelines on the management, monitoring, evaluation and control of EC Structural Instruments were adopted in March 2002, defining tasks and responsibilities of the managing authority, paying authority, partner institutions and intermediate bodies. As of March 2002, a Structural Funds Inter-Ministerial Working Group is operating in order to facilitate inter-ministerial co-ordination on a day to day management basis and to become a permanent Structural Funds Steering Committee upon accession.
In order to strengthen the administrative capacity of the future managing authority, the Ministry of Finance started its reorganisation in 2002 by merging several institutions under its authority, creating new departments and through the recruitment of additional staff. In March 2002, an inter-ministerial working group was established to develop a Human Resources Development Plan for all the institutions that will be involved in the management, monitoring, evaluation and control of Struct ural Funds and Cohesion Fund.
In relation to preparation of
programming,
the National Development Plan (2002-2006) was submitted to the Commission in January 2002. This plan will serve as the basis for the establishment of the draft Single Programming Document as required by the Structural Funds regulations. The preparation of this draft and of the programme complement started at the beginning of 2002. In July 2002, the Government reached an agreement on the priorities of the draft SPD. They include five priorities: one for each Fund (EAGGF, FIFG, ESF) and two for ERDF (business development and infrastructure) with an additional
priority for Technical Assistance. The Management Group is entrusted by decision of the Government of March 2002 with the task of steering the preparation of the development plan.
In the framework of the
partnership principle
and in order to promote co-operation among the public administrative levels (central, regional, local) and non-public partners, the Management Group of the National Development Plan (including representatives of ministries and planning regions) organised in March and April 2002 two partnership seminars with representatives of non-government organisations and planning regions to discuss the elaboration of the Plan. The new Regiona l Development Law provides inter alia for the establishment of the National Regional Development Council that will perform the functions
of the co-ordinating institution in the area of regional development at the political level.
With regard to
monitoring and evaluation,
no particular developments can be reported other than the adoption the above mentioned guidelines. The Ministry of Finance as the managing authority will become responsible for setting up the monitoring and evaluation system and the Foreign Assistance Co-ordination Department of the Ministry will be responsible for development and maintenance of an effective external resource monitoring system. Structures have already been established in ot her line ministries to ensure monitoring of pre-accession financial assistance.
In relation to
financial management and control,
the institutional structure established in the guidelines designates the State Treasury as the Paying Authority for the Structural Funds and the Cohesion Fund. On the control side, the Ministry of Finance will ensure the overall co-ordination of internal audit units of all public institutions. Internal audit units will be operational by the date of accession. The State Audit Office will perform the external financial control, entitli ng the State Audit Office to audit every element of the chain down to the final beneficiaries of EC funds.
Concerning
statistics,
preparatory work for a computerised monitoring data exchange system, covering the four funds is underway.
Overall assessment
Latvia has already organised its territory into units corresponding to the NUTS classification, but the exact borders of the currently defined five NUTS III planning regions need to be confirmed.
The establishment of institutional structures has advanced. Latvia has designated the bodies, which are to be responsible for the implementation of the Structural and Cohesion Funds. However, the allocation of tasks has still to be completed and implementing legislation remains to be adopted in order to define the management, monitoring and control system, the allocations of functions and the organisational relationship between the various bodies. The administrative capacity is presently a matter of concern and the Human Resources Development Plan concerning the institutions involved will have to be completed. Latvia
will thus have to step up its efforts significantly to bring the administrative capacity of the managing and paying authorities, intermediate bodies and other relevant bodies up to the level required.
Latvia should pay particular attention to guarantee that project selection and decision-making will be managed within a framework that ensures transparency, efficiency and reliability in the implementation of programmes. It should also continue to work towards developing the necessary structures and co-ordination mechanisms to manage financial assistance from the different Funds in the context of the priorities and strategies of the European Union.
With regard to programming, the adoption of the National Development Plan for 2001-2006 and Latvia’s decision to opt for a Single Programming Document are important steps forward. However, Latvia still needs to significantly improve its programming capacity. To that end, there will need to be efficient and effective inter-ministerial co-operation and partnership throughout the whole process of preparing the draft Single Programming Document. The ex-ante evaluation of the draft Singl ramming Document (SPD) is still to be started. Further progress must also be made with the technical preparation of projects eligible
for Structural and Cohesion Funds assistance (project pipeline) and with building up adequate capacity at national and sub-national level. Concerning project implementation, the administrative capacity at sub-national level should be strengthened.
The final allocation of responsibilities for monitoring and evaluation has not been defined yet. Work on ensuring compliance with the
acquis
requirements for monitoring and evaluation must thus continue, in particular as regards the ex-ante evaluation of the draft Single Programming Document. To ensure effective and efficient implementation of the Structural Funds programmes, it is crucial that the computerised data exchange system for monitoring of the Structural Funds and the Coh esion Fund is tested and operational by the date of accession.
Regarding financial control, control units have been established within each Ministry, but the final allocation of functions between the managing authority, paying authority, partner institutions and intermediate bodies is not defined yet, so the process needs first to be completed. As far as statistics are concerned, efforts should continue to ensure the availability of relevant and reliable statistics for programming, monitoring and evaluation.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia manifested a clear political awareness of the need to address rising regional disparities. Given its small size, the decision to maintain regional policy within the framework of the national development strategy seemed justified. The Commission added that, although Latvia needed to improve the administrative structures intended to manage integrated regional development programmes, its administrative capacity should be able to meet these challenges, and subject to the necessary reforms should, in the medium-term, be ready to apply Community rules and channel
effectively funds from the EC structural policies.
Since the Opinion, progress has been achieved mainly during the present reporting period with the adoption of the legal framework and the designation of the institutional structure. Latvia has continued to adopt the framework legislation related to the
acquis
covered by this chapter, but significant efforts are required to create the institutional structures and to translate legislation into concrete action.
Negotiations for this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it made in the accession negotiations in this field.
In order to be ready for membership, Latvia should focus further efforts on building up at national and sub-national levels an adequate and efficient administrative capacity for the management of the Structural Funds and Cohesion Fund. Moreover, preparation of an up-to-standard draft Single Programming Document should be speeded up and inter-ministerial co-ordination and partnership needs to be ensured. Generally, all systems and procedures for effective monitoring, financial management a nd control should be reinforced and the legal framework has to be completed. The focus in the forthcoming period should
shift to the implementation of the commitments made. Latvia has started to take measures to address the weaknesses identified, including through the allocation of human resources. Ongoing efforts need to be continued and substantially stepped up.
Progress since the last Regular Report
Latvia has continued to make good progress in alignment with the
acquis,
in particular in relation to water quality, waste management, nature protection, and noise. Concerning administrative capacity, attention has been devoted to implementation issues and institutional strengthening. A new Nature Protection Board has been created.
With regard to the
integration of environment into other policies,
Latvia continued to implement the action programme for sustainable development adopted by all Baltic Sea countries within the framework of ‘Agenda 21 for the Baltic Sea region’. A Council for sustainable development was established in March 2002, chaired by the Prime Minister. Environmental issues have been included in strategic documents of other sectors (such as agriculture, energy and fisheries).
As regards access to information under
horizontal legislation,
the law on environmental protection was amended in December 2001. The Aarhus Convention was ratified by Parliament in April 2002. With regard to environmental impact assessment, during 2001 8 Environmental Impact Assessments were performed and 10 are ongoing. Concerning climate change, the third national communication under the UN Framework Convention on Climate Change was approved in November 2001 and the Parliament r atified the Kyoto Protocol in June 2002. The Strategy for Sustainable Development (based on the Rio
Declaration) was adopted in August 2002.
Regarding
air quality,
amendments were adopted to the existing Regulations on volatile organic compound emissions from storage and distribution of petrol in January 2002. In July 2002 amendments were adopted to the Law on air quality as regards benzene and carbon monoxide. Also in July 2002, amendments were adopted to the Regulation on conformity assessment of petrol and diesel fuel. In addition, legislation was adopted in June 2002 on fuel quality. Improvements have been made in t erms of procurement of new equipment within institutions and monitoring stations have been established.
Since the last Regular Report, legislation has been adopted in the field of
waste management
as regards waste framework Directives, landfill of waste, packaging and packaging waste, disposal of waste oils, PCB/PCT and batteries and accumulators. Progress regarding establishment of new landfills and closure of the existing landfills has continued, bringing the number of landfills down to 252 (from 500). There has also been progress as regards enhancing the collection and recovery of waste and as regards preparations to overhaul the permitting system. The National Waste Management Plan was adopted in August 2002. In
addition, rules regarding the temporary storage of hazardous waste and requirements concerning packaging waste have been adopted in July 2002.
Concerning
water quality,
Latvia has adopted legislation on urban waste water treatment, nitrate pollution, discharges of dangerous substances, groundwater, surface water for drinking water abstraction, bathing water, fish life and drinking water. On implementation, the development of action programmes for vulnerable zones was started in April 2002. Legislation adopted in January 2002 identifies the entire territory of Latvia as a sensitive area as defined by the urban wastewater D irective. Latvia has also established a preliminary list of possible sources of emissions of the so-called List I and II substances under the
Dangerous Substances Directive and its daughter directives.
In the
nature protection
sector, amendments were adopted as regards the relevant law on birds and habitats. In May 2002, legislation was adopted setting the criteria for establishing protected nature territories. There was progress with site selection. The new State Environmental Monitoring Programme, including a comprehensive chapter on the monitoring of biological diversity, was also adopted in May 2002. As regards enforcement, a Nature Protection Board, responsible for the imple mentation of the nature protection legislation, was created and started operations in May 2002.
In the field of
industrial pollution control and risk management,
an integrated permitting system concerning integrated pollution prevention and control was introduced in January 2002. So far, one integrated permit has been issued. Legislation aiming at alignment with the
aquis
on VOC emissions from solvents, limiting values for benzene and carbon monoxide in ambient air, was adopted in July 2002, and the new
acquis
on Large Combustion Plants was adopted in August 200 2. The State Environmental Inspection was strengthened with the establishment as of January 2002 of a new division with five employees working
specifically on integrated pollution prevention and control and major accident hazards installations.
In the area of
genetically modified organisms and chemicals,
new legislation was adopted in October 2001 on asbestos as well as on animal welfare. Amendments to the Regulation on the protection of the ozone layer were adopted in January 2002. In August 2002, the government adopted a regulation on procedures for notification and environmental and human health risk assessment of new chemical substances. Resources at policy level as well as the established institutions seem largel y adequate. Co-ordination and co-operation are being improved. However, as regards contained use of genetically modified organisms,
there appears to be a shortage of resources.
In the field of
noise,
new legislation was adopted in early 2002 addressing airborne noise emissions from household appliances as well as noise from equipment used outdoors. With a view to strengthening administrative capacity, the Consumer Rights Protection Centre is now the competent authority for noise emitted by household appliances. In the area of noise from equipment used outdoors, the competence is however divided among various institutions.
In the area of
nuclear safety and radiation protection,
implementing regulations have been adopted
(see also Chapter 14 – Energy)
regarding procedures for control and accounting of exposure of workers as well as subsequent pieces of legislation in the field of medical contradictions to ionising radiation exposure. Further legislation was adopted in relation to the requirements for practices involving radioactive waste and related materials, accountancy and control of n materials, and the criteria and principles for establishment of equivalence for radioactive waste. The Radiation Safety Centre has continued training of staff on
nuclear safety issues.
Latvia has carried out a number of activities (additional staff and training) to strengthen the
administrative capacity
and improve co-ordination of the environmental bodies responsible for the implementation and enforcement of the
acquis
at central and regional level. The Sustainable Development Council was established in March 2002 and the Nature Protection Board started to operate in May 2002. Latvia has also paid particular attention to the strengthening of the in spection system. During the reporting period training programmes have continued; they have mainly focused on horizontal legislation and inspectors of the
Regional Environmental Boards, air quality, waste management, nature protection and nuclear safety and radiation protection.
As regards issuing of permits, the system is at present media-based, but is being overhauled. Public participation in the environmental impact assessment process, elaboration of new legislation and issuing of integrated permits is constantly increasing. In June 2002, legislation on all permits regarding waste management, including hazardous waste, was adopted and particular progress was made on industrial pollution control. Regarding enforcement, monitoring programmes have been prepared i n some areas, including nature protection.
Overall assessment
Considerable alignment has been achieved with the EC environmental
acquis.
The Kyoto Protocol has been ratified. Work is still needed to adopt legislation in order to complete transposition in the fields of air quality (including the Directive on the sulphur content of liquid fuels ), waste management (end-of-life-vehicles), nature protection, water quality (water management Law, drinking water), chemicals and genetically modified organisms and nuc lear safety and radiation protection (basic safety standards). Close attention should be paid to the implementation of the
acquis
with regard to waste management (permitting,
including permitting of temporary storage of hazardous waste), air quality (ambient air quality programme), water quality (designation of vulnerable zones and preparation of action plans, review of permits), industrial pollution control (issuing of integrated permits) and chemicals (administrative capacity).
The principle of integration requires continuous attention both at national and at Community level. While Latvia is already implementing an Action Plan for Sustainable Development in the Baltic Sea, it needs to continue integrating environmental protection requirements into the definition and implementation of all other sectoral policies so as to promote sustainable development.
Latvia’s administrative capacity to implement the
acquis
still requires attention. While generally co-ordination between the different institutions and bodies has improved, co-ordination and co-operation between the environmental bodies and the other government departments has to be improved significantly. Strengthening of all environment bodies, in particular the Latvian Environment Agency and Regional Environmental Boards are essential, including further clarification of ro d responsibilities. Staff resources remain limited and awareness of the requirements of EC environmental rules need to be further improved.
Further training on EC environmental policy is still necessary. Particularly in the industrial pollution sector, there is a need to improve the distinctions between permitting, compliance, verification and enforcement within the Regional Environmental Boards. Appeal mechanisms should be strengthened and made more effective. Particular attention should be paid to establi shment of more effective structures at the local level in terms of the high number of entities presently responsible for municipal waste and local protected areas.
Monitoring and reporting systems are being strengthened, but further efforts are needed to strengthen the co-ordination and communication capacity, notably of the Latvian Environment Agency. As regards planning and programming, it is important to strengthen the capacity at regional and local level and speed up preparations for EC environmental policy. This is vital to ensure that Latvia has the necessary programming capacity at accession. Latvia still needs to reinforce its monitoring cap acity further. Progress has been achieved in the field of nature protection, air and water, but monitoring infrastructure and equipment
still need to be upgraded and modernised. The co-ordination of monitoring and reporting procedures also needs further improvement and more efficient use should be made of monitoring data when issuing permits and carrying out inspections. Particular attention should be paid to improving the waste monitoring system. Finally, more human resources should be devoted to co-operat ion and support of private enterprises.
While the number of inspections has increased, they still focus on large installations, and small and medium-sized installations escape controls. In addition, inspections still need to adopt an integrated approach, and co-ordination between monitoring and inspection must be improved. Legislation on inspections and inspectors remains to be clarified as some areas partly use managed regulations as well as administrative instruments. Laboratories and equipment should also be improved further . As there is so far little practical experience with enforcement mechanisms, significant efforts remain to be made to ensure the
enforcement of the environmental
acquis
in Latvia. In this context, fines are an effective source of revenue and provide an incentive for operators to agree on improvement programmes with the environmental authorities. Considerable investments need to be secured, also in the medium-term, to ensure the implementation of the environment
acquis.
However, Latvia needs t o step up its efforts to establish comprehensive investment strategies, which would improve investment efficiency by focusing the available resources on implementing the requirements of the
acquis.
Conclusion
In its 1997 Opinion, the Commission concluded that with the current pattern and speed of reforms in Latvia, full transposition of the environmental
acquis
should be achieved in the medium term. However, effective compliance with a number of pieces of legislation (e.g. urban waste treatment, drinking water, aspects of waste management and air pollution legislation) could be achieved only in the long term and would require a significant increase in en vironmental investment, as well as a major effort to reinforce the administrative capacity.
Since the Opinion, Latvia has achieved considerable progress in aligning with the EC environmental
acquis,
in particular over the past two years, and, more recently, has progressed in developing the necessary administrative capacity to implement the
acquis
in this area.
Negotiations on this chapter have been provisionally closed. Latvia has been granted transitional arrangements with regard to volatile organic compound emissions from storage and distribution of petrol (end 2008), packaging and packaging waste (end 2007), temporary storage of hazardous waste as regards landfill of waste (end 2004), urban waste water treatment (end 2015), drinking water (end 2015), existing integrated pollution prevention and control installations (end 2010), asbestos (end 2004), and ionising radiation from medical equipment (end 2005). Latvia is generally meeting the commitments it has made in the
accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on finalising transposition (air quality; nature protection; waste management; water quality; chemicals and genetically modified organisms and nuclear safety and radiation protection), improving co-ordination and co-operation between national, regional and local levels and strengthening the overall administrative capacity.
Progress since the last Regular Report
During the reference period further progress was made in this sector in terms of legal alignment and strengthening the administrative capacity, notably in the regions.
Regarding
safety related measures,
the Government adopted legislation on requirements for aerosol dispensers and labelling procedures in March 2002. Further amendments concerning labelling of foodstuffs, relating to the novel foodstuffs requirements of the
acquis,
were approved in August 2001 (see
also Chapter 1 – Free movement of goods).
On
non-safety related measures
the Parliament adopted amendments to the Consumer Rights Protection Law in November 2001, aiming at further alignment with the
acquis
in the areas of unfair contract terms, guarantees and injunctions. The Government adopted legislation on distance selling in May 2002.
As regards the
functioning market surveillance mechanism,
-the Market Surveillance Council has been established to ensure co-ordination between market surveillance institutions themselves and with other bodies such as Customs. Since 2001 it has met three times.
In 2001, the Consumer Rights Protection Centre (the main authority responsible for general product safety in almost all non-food products) set up a division dealing with surveillance of advertising and in particular misleading and comparative advertising and hired 9 extra staff.
In 2002, budget allocations were increased by 28%, allowing the establishment of a legal department as well as of 3 new regional offices (Tukums, Jelgava and Daugavpils).
As regards enforcement, in 2001 the inspectors of the Centre carried out 2508 controls relating to goods and services and detected 1899 breaches; only a few of them concerned the safety of consumer products. The Centre received 596 complaints in 2001, of which 401 were solved in favour of the consumer, and adopted 924 decisions on administrative breaches. So far, it is estimated that 80% of the complaints are solved through mediation and no case has yet been brought before courts.
Regarding the exchange system of information on dangerous products (TRAPEX), about 200 TRAPEX alerts have been received by Latvia; no TRAPEX notifications were made by Latvia itself.
Non-governmental consumer organisations play an increasing role in consumer protection and promotion of general awareness of consumer rights. In 2001, the Latvian Consumers’ Protection Association received 4258 complaints from consumers concerning quality of goods and services and gave legal advice in order to protect consumer rights.
Overall assessment
Further adjustments of existing legislation are still needed to fully align it with the
acquis,
in the field of both safety and non-safety measures as well as on general product safety.
While Latvia is in the process of removing barriers to trade such as licences and pre-market authorisations, it is crucial to intensify post-market control to ensure consumer safety, both within the country and in the future enlarged internal market. There is still a danger that unsafe products can be dumped on the market, due to the lack of a coherent system and to the still small number of inspectors as well as the low capability for testing the safety of consumer products falling under the scope of the Directive on General Product Safety.
Furthermore, additional financial and human resources should be allocated to Latvian surveillance authorities and to the Consumer Protection Centre. Awareness among the general public about the safety of non-food consumer products should be improved. A market surveillance information system for the rapid and secure exchange of information should be promoted to link surveillance authorities among themselves.
Further support for consumer organisations is needed in order to enable them to protect consumer interests effectively. Progress also remains to be made in enhancing consumers' and producers' awareness of their respective rights and responsibilities.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia needed to continue reform in the field of consumer protection since the existing legislation needed to be substantially adjusted or new laws brought forward. There was also a need for more efficient institutional structures to ensure the application of legislation. But taking on the consumer protection
acquis
in the medium term was not expected to cause major problems for Latvia.
Since the Opinion, Latvia has continued to make progress, and few problems have been encountered. Latvia has progressively put in place the legislative framework in the area of consumer and health protection in line with the
acquis
and has continued to strengthen its administrative capacity in this domain.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia's efforts now need to focus on completing transposition, ensuring that the administrative structures are in place and effectively fulfil their task in terms of market surveillance and increasing consumers’ and producers’ awareness.
Progress since the last Regular Report
During the reporting period, Latvia continued to align its legislation with the
acquis,
especially as regards visa policy and asylum. Institutions concerned with the area of external borders, visa and migration, money laundering and other forms of economic crime have been strengthened. However, less progress was made in the fight against drugs and trafficking in general and in co-operation between the various agencies involved in JHA.
As regards
data protection,
the 1981 Convention of the Council of Europe on the Protection of Individuals with regard to Automatic Processing of Personal Data entered into force in September 2001. Progress was made on personal data protection, where improvements were made regarding the further strengthening of the administrative capacity of the State Data Inspectorate (see
chapter 3 - freedom to provide services).
As far as
visa policy
is concerned, progress was made in amending the regulation concerning visa issuing, i.e. extending the uniform visa and limiting the issuing of new visas. Amendments in force since May 2002 require transit visas for transit train passengers. Since the last Regular Report, agreements on a visa-free regime have been concluded with Monaco, Panama and Romania. At present, a mutual visa-free regime has been established with 16 states, and with two states a visa-fre e regime is applied unilaterally.
As regards administrative capacity, the development of the Unified Visa Information System (UVIS) has continued and implementation of the Invitation Database and Entry Prohibition Database continued. Since September 2001, twelve border crossings on future external borders were connected to UVIS, and at present 38 out of 42 external border crossings have an on-line connection. Training on visa issues, including the newly created UVIS databases, has been conducted for all institutions invol ved.
Strengthening of
external borders
has continued through the implementation of the State Border Guard Development Concept 2001 – 2005. The main focus has been on the adoption of supplementary legislation to improve border control.
Regarding the establishment of an integrated border management system, several agreements were signed between the various institutions involved such as the State Border Guard and the Office of Citizenship and Migration Affairs as well as the Sanitary Border Inspectorate and the National Customs Board. The responsibility of the Border Guard was extended to the entire border and a Sea Border Guard Service was established.
Over the reporting period, strengthening of the state border continued at sea borders as well as the eastern border, including the green border. During the reporting period, secondary legislation was adopted in order to improve the effectiveness of border control. For 2002, the budget was increased, and three border crossing points and seven surveillance towers were built and modern equipment such as video surveillance systems and radiation control equipment was installed. Progress was al so made in enhancing capacity to detect forged documents and to prepare for the participation in the False and Authentic Document
(FADO) system, in connection with which a regulation was adopted in May 2002 and checking devices for detecting forgeries were provided to border crossings.
The electronic border control information system REIS-1999 is now operating on-line at all ports, providing also on-line connection to UVIS. The State Border Guard Information System (RAIS) continues to be implemented.
As regards administrative capacity, measures have been taken to strengthen the effectiveness of the Border Guard by increasing its budget as well as salaries. The establishment in April 2002 of the State Border Guard College based on a policy document for professional personnel training in the period 2001-2005 was a positive step. Training continued at the Rezekne Border Guard School. Other training activities focused on technical surveillance systems, border guard management, radiation c ontrol, falsified documents and foreign languages.
Co-operation among the bodies involved in border controls was also strengthened, especially in relation to the detection and identification of narcotic substances. The Border Guard and Customs have extended their co-operation on common information systems and use of unified technologies.
Latvia is making progress in aligning itself with the
Schengen
/ EU requirements and continues to prepare for future participation in the Schengen Information System (SIS II). The Government has established a very thorough Schengen Action Plan in this respect, which was revised in October 2001. The Information Centre, the Department of Citizenship and Migration Affairs, the State Border Guard, the Ministry of Foreign Affairs and the State Revenue Service are involved in the setting up of the SIRENE bureau and preparation for the National Schengen Information System. The development of information
technology infrastructure and national registers continued.
As regards
migration,
steps for further alignment have been taken, but no new legislation has been adopted. In order to improve the efficiency of combating illegal immigration, in January 2002, the Immigration Service was established within the State Border Guard, mainly dealing with the identification, interviewing and extradition of illegal immigrants. The Service consists of the Immigration Board, regional units in every regional border guard board and the Olaine Detention Centr e.
Co-operation with the other competent institution in the area of migration, the Office of Citizenship and Migration Affairs, was intensified, including the establishment of access to a common database. A co-operation agreement with the Russian Federation was signed in August 2002.
In May 2002, the Law on Identity Cards and Passports, which defines the types, content and usage of ID cards and passports, was adopted. The new passport system will include citizens' and non-citizens' passports, diplomatic and service passports, as well as stateless persons' travel documents. All these documents will serve as travel documents and will be elaborated in accordance with the demands stipulated in the resolution of the International Civil Aviation Organisation (ICAO) of 1999 and the Council Resolution of 17 October 2000 as regards passport contents, structure and security.
During the reporting period, training was continued concerning issues such as illegal migration, the rights of migrants, employment and self-employed persons, the role of border control in fighting terrorism, family reunification, implementation of Schengen / EU requirements in the area of migration and visas, and migration and asylum policy in the Baltic States.
In the field of
asylum,
significant progress was made in adopting the Law on Asylum in March 2002 which addresses the shortcomings of the previous legislation in terms of refugee status and the granting of subsidiary and temporary protection. The Law also addresses issues such as
non-refoulement,
safe third countries, family reunification, minimum guarantees for asylum procedures, detention of asylum seekers and repeated asylum applications, as well as providing for longer d eadlines in case of the accelerated procedure.
In order to accelerate administrative procedures, the institutional structure was streamlined in early 2002. The State Border Guard is now responsible for interviewing asylum seekers and the Office of Citizenship and Migration Affairs considers cases and makes decisions on the granting or refusal of refugee status. A working group established in March 2002 within the Ministry of the Interior is designing strategies to improve the co-operation between institutions involved in the asylum pr ocess. Co-operation at international level has increased. In order to strengthen administrative capacity, training has been increased
regarding the new legislation in place.
In 2001, 11 persons applied for asylum and one of them was granted refugee status. The number of asylum seekers was thus reduced significantly compared to 2000 (87 persons).
In the field of
police co-operation and the fight against organised crime,
progress was made in terms of further alignment in the field of organised crime and trafficking as well as on strengthening the administrative capacity of the police. Amendments to the Criminal Law, which aims at aligning Latvian legislation with regard to trafficking in human beings and organised criminal groups, entered into force in April 2002. In June 2002, an intergovernmental agreement between Latvia a nd Uzbekistan on co-operation in fighting terrorism, organised crime and drug trafficking was concluded.
In view of the conclusion of a co-operation agreement with Europol, in April 2002, a specialized attaché of the Ministry of the Interior was posted to The Hague to act as a liaison officer when the agreement is concluded. During the reporting period co-operation agreements on police co-operation were signed with Belgium, the Netherlands, Sweden, Georgia, the Russian Federation and Slovakia.
As regards administrative capacity, funding from the state budget increased to € 337 621 for 2002 and police salaries were increased by 11%. In order to increase efficiency of the police structures, reorganisation has continued. The Economic Police Bureau has been reorganized, particularly with respect to strengthening the fight against smuggling, money laundering, counterfeiting and product piracy. To fight against the smuggling of goods, the National Customs Board is increasingly ng risk-analysis as well as different information systems. Latvia has also streamlined its structure in order to increase the efficiency and co-
ordination of state anti-crime policy.
As regards the
fight against terrorism,
in December 2001 Latvia signed the 1999 International Convention for the Suppression of the Financing of Terrorism.
As far as the
fight against fraud and corruption
is concerned (see
also Section B.1.1 - Democracy and the rule of law – Anti-corruption measures),
the renewed Corruption Prevention Programme (adopted in May 2001) has been further implemented. Several new legislative instruments have been developed. Amendments to the Criminal Law were made in order to implement the Council of Europe Criminal Law Convention on Corruption, and entered into force in April 2002. Latv continuing preparation for full co-operation with OLAF upon accession.
In order to create an effective implementing capacity and improved inter-institutional co-operation, the Anti-Corruption and Combating Bureau is being established following the adoption of the Law on the Anti-Corruption Bureau in July 2002. A series of seminars concerning the investigation of corruption cases have been held for judges, prosecutors, policemen and representatives of the mass media.
In the field of
drugs,
no new legislative developments can be reported, but implementation of the National Strategy for Drug Control and Drug Abuse Prevention 1999-2003 continued. Preparations for participation in EMCDDA (European Monitoring Centre for Drugs and Drug Addiction) and Reitox have commenced and the necessary legal and institutional framework for the National Focal Point (NFP) is being developed. Co-operation between institutions has been further strengthened. Particula r attention is being paid to reducing the number of drug users and drug-related crime.
In order to strengthen the capacity of institutions dealing with drug prevention and combating issues, training activities have continued on issues such as investigation of drug crimes, smuggling of drugs, precursor control and gathering of evidence. 279 border guards have been trained in detecting risk groups and in identifying narcotic substances. Regular information exchange and co-operation between the Drug Enforcement Bureau and the State Border Guard as well as other bodies concerne d has been intensified in order to prevent use, illicit trafficking and smuggling of drugs. In 2001, the Drug Enforcement Bureau
detected 134 more drug-related crimes than in 2000 and drug detection on the border has also increased somewhat.
As regards
money laundering
(see
also Chapter 4 – Free movement of capital),
legislative alignment has continued and the capacity of the institutions has been strengthened. In June 2002, amendments to the Law on Prevention of Laundering of the Proceeds Derived from Crime, providing,
inter alia,
for the freezing of financial transactions linked to terrorism, were adopted.
The administrative capacity was strengthened through the establishment of specialised divisions dealing with money laundering issues in the Economic Police Bureau (7 staff positions) as well as in the Financial Police of the State Revenue Service (4 staff positions). In order to strengthen the capacity of the Financial Intelligence Unit (FIU), additional resources are budgeted for 2003 to finance an increase in human resources (6 more staff) as well as for information technology systems. Training organised by the FIU for financial institutions and law enforcement bodies has continued.
The number of cases forwarded by the FIU for further investigation has increased compared to previous years (59 cases in 2001).
With regard to
customs co-operation,
several Memoranda of Understanding between Customs and other Latvian institutions and businesses have been agreed and co-operation agreements with 14 countries have been concluded. Preparations for joining the Naples II Convention on Mutual Assistance and Co-operation between Customs Administrations have commenced.
As concerns
judicial co-operation in criminal and civil matters,
Latvia has made further progress in aligning in the field of criminal matters. Amendments to the Criminal Procedural Code aimed at aligning with EU requirements on such issues as extradition and sentenced persons entered into force in June 2002. The 1980 Hague Convention on the Civil Aspects of International Child Abduction entered into force in February 2002 and the 1980 Convention on the Recognition and Enforcement of Decisions Concerning Custody of Children has been ratified, and entered into force in August 2002. In the first quarter of
2002, there were 198 incoming requests and 99 outgoing requests for legal assistance. During the reporting period a manual for international legal co-operation for judges as well as a National Action Plan were prepared. Training of judges and court staff on legal co-operation has continued.
 PDF to HTML - Convert PDF files to HTML files
1461351_0019.png
Overall assessment
As regards
data protection,
EC requirements in this field have been largely implemented. The 1981 Convention of the Council of Europe on the Protection of Individuals with regard to Automatic Processing of Personal Data entered into force in September 2001. In order to improve national legislation on personal data protection, including its extension to the police sector, and the independence of the State Data Inspectorate further legislation needs t o be adopted. Despite recent positive developments, further strengthening of the Inspectorate in terms of staff and resources appears nonetheless necessary. In addition,
Latvia needs to ensure effective implementation of Recommendation No R (87) of the Committee of Ministers of the Council of Europe (police data) as well the relevant provisions of the Europol and Schengen
acquis,
including designation of a national data protection supervision authority of the Schengen Information System in due time.<>
Latvia has continued to advance on
visa policy,
and its legislation is now broadly in line with the
acquis.
It is now essential to adopt all the necessary provisions and to put in place the necessary structures in advance of accession in order to ensure effective implementation upon accession of the new visa
acquis.
While Latvia has further extended the visa-free regime to several countries, this alignment needs to be completed. The adoption of the envisaged new Law o n Immigration together with implementing regulations and instruction will be essential to address the remaining shortcomings in this field.
While progress was made regarding the uniform format for visas in line with the
acquis,
Latvia should continue efforts to align with the rules of the Common Consular Instructions and to ensure proper functioning of the visa-issuing procedures, administrative management and organisation. Enhanced co-operation between the different authorities dealing with visa issues should be promoted further. The development of the on-line Unified Visa Information System (UVIS) is on track. Its ex tension to all border checkpoints and diplomatic and consular institutions needs now to be ensured.
As regards external borders,
strengthening of border controls remains a priority for Latvia. Despite continued efforts in this field in terms of legislation, training and equipment, an integrated border control approach, integrating the numerous services involved, is still in its infancy. It will therefore be of utmost importance to continue developing the ‘Integrated Border Control System’ and to implement the State Border Guard Development Concept 2001-2005. It is ess the State Border Guard can ensure effective control for the entire border, including the sea border. The newly created Sea Border Guard should take full
responsibility for ensuring that this objective regarding the sea border is achieved. The establishment of the integrated sea surveillance system should be completed.
Encouraging measures have also been taken with regard to improved equipment, salaries and training. Whereas co-operation among bodies involved in border controls has been addressed through agreements, further efforts are necessary to achieve an integrated management approach, including co-ordinated and consolidated structures and a common unified border-check procedure. This essential component of an integrated control system should help Latvia to achieve more effective results.
The equipment of Latvia’s border crossings with technical devices for the detection of falsified and counterfeit documents has advanced well. The preparation for Latvia’s future participation in the envisaged False and Authentic Documents (FADO) system should be continued. Equally important is the full implementation of the State Border Guard electronic information system (RAIS) as well as the on-line system border control information system (REIS).
On the basis of the existing high-quality
Schengen
Action Plan, implementation should continue. In order to prepare for the future participation in the Schengen Information System, the required information technology infrastructure and national registers need to be developed. The preparatory work started on the establishment of the National Schengen Information System and the SIRENE bureau should be continued.
Latvia should also continue efforts to sign a new agreement with the Russian Federation on mutual travelling of citizens and the fostering of practical co-operation. Legislation on
migration
is broadly in line with the
acquis,
but further alignment is still necessary. Latvia needs to adopt and implement the Administrative Violations Code as well as the outstanding Law on Immigration, which should address the remaining shortcomings, including on carrier liability and entry an d stay of third-country nationals.
The establishment of the Immigration Service at the State Border Guard is considered to be a positive step, but co-operation between all bodies responsible for migration requires continued improvements. Training for staff of these institutions should also continue on such issues as EURODAC, family reunification priniciples, accelerated procedure, detention and appeal and recognition of travel documents.
Readmission agreements have now been concluded with Austria, Benelux, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Liechtenstein, Lithuania, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, Ukraine and Romania. Latvia is encouraged to ratify its outstanding readmission agreements and sign further agreements with Member States, candidate countries and third countries such as Belarus and the Russian Federation.
Regarding implementation, during 2001 the number of expelled persons was 238. During the first three months of 2002, 36 persons were expelled. In mid-2002, there were 44 people in the illegal immigrant detention centre in Olaine. The number of expelled persons has remained at the same level over the past years. In general, illegal immigration does not seem to be a particular problem in Latvia at present, but capacity to fight illegal immigration should be further increased and the activit ies initiated should be continued. The planned separation of convicted criminals from expelled and illegal migrants at the detention
centres needs to be implemented and training for the officials of the Immigration Service and the Office of Citizenship and Migration Affairs should be further enhanced, including training on organised illegal trafficking. The establishment of a temporary residence centre for illegal migrants and asylum seekers in Daugavpils for the accommodation of approximately 80 persons sh ould continue. Data exchange with other systems such as UVIS and the RAIS should be improved.
In the field of
asylum,
legislation has been brought further in line with the
acquis
through the adoption of the Law on Asylum. Implementation of the new legislation, including issuing and registering residence permits to refugees and persons granted alternative status and respecting in all situations the principle of
non-refoulement,
will be essential. Moreover, particular attention needs to be paid to the adequate implementation of the accelerated procedure and the ‘third country notion’ as well as to minimum guarantees for appeal.
As regards the administrative capacity, measures taken largely correspond with the needs identified in this field. Despite the low number of asylum seekers in Latvia, particular attention should continue to be paid to improving co-operation between the various institutions involved. Latvia should now prepare for ratification of the criteria and mechanisms for determining the responsible member state (Dublin Convention) including provisions on databases, fingerprinting and data protection and the establishment of the EURODAC Regulation. The development of the Common Information System for Migration and Asylum
Issues is equally important. Altogether, 8 persons have been granted refugee status since 1998.
Regarding
police co-operation and the fight against organised crime,
Latvia has advanced in terms of acceding to the relevant international regulatory instruments and establishing a legal basis for co-operation in the fight against organised crime including the restructuring and upgrading of institutions to address new forms of crime more effectively. However, further legislative alignment is necessary. Latvia should adopt further amendments to the criminal law to align with the provisions of the 2000 UN Convention against Transnational Organised Crime (Palermo Convention), and sign and ratifiy
the third additional Protocol to this Convention on firearms; and to align with the provisions the UN Cybercrime Convention, and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of Proceeds from Crime. Latvia also needs to complete accession to the Protocol against trafficking in human beings and to the Protocol against smuggling of migrants by land, sea and air, supplementing the United Nations Convention against Transnational Organized Crime. Moreover, the UN Convention for the Suppression of the Financing of Terrorism and other relevant international
instruments need to be ratified. Latvia should also sign and ratify the Second Additional Protocol to the European Convention on Mutual Legal Assistance in Criminal Matters of 8 November 2001.
Latvia should continue efforts to align as soon as possible with the
acquis
and other international standards on the fight against the misuse of the financial system, in particular money laundering and terrorism financing. Latvia needs to adopt amendments to the Personal Data Protection Law in order to ensure that all prerequisites for the signature of the co-operation agreement with EUROPOL are completed.
As regards implementation, particular progress has been made in restructuring and strengthening the police, but Latvia needs to step up means to allow police forces to combat more effectively specific forms of organised crime, such as trafficking in human beings and trafficking in drugs, and new types of crime, such as financial crime, money laundering and "high-tech" crime. This requires an enhanced flow of information between institutions working in the field of law enforcement, includi ng prosecutors and the judiciary, as well as the large-scale availability of computer-assisted search facilities, and continued training on
the fight against specific types of crime. Further work is also necessary to develop reliable national statistical instruments for measuring crime rates as well as new methods of crime investigation, including development of forensic investigation. The administrative capacity of the State Police, particularly the Bureau for Combating Organised Crime and Corruption, shou ld be increased.
Regarding the
fight against fraud and corruption,
good progress has been made in terms of legislative alignment, and the institutional framework has now been put in place. Latvia has largely implemented its Corruption Prevention Programme and important legislation on procurement, prevention of conflict of interest of officials and party financing has been adopted. Its full implementation should now become a priority for Latvia. The administrative capacity of the newly established A nti-Corruption Bureau should be further increased and its independence strengthened in order to ensure effective implementation and
improved inter-institutional co-operation on the anti-corruption policy. Latvia should pay more attention to the fact that prevention through transparency and accountability standards is as important as repressive tools.
Latvia should also enhance preparations with a view to ratifying the 1995 Convention on the Protection of the EC’s Financial Interests and its Protocols, including with regard to the criminal offence of corruption for EU officials, and adopt amendments to the Criminal Code in order to fully align with the provisions of this Convention, in particular with the elements of the definition of fraud, the criminal liability of heads of business and the liability of legal persons.
Latvia is party to the main international conventions listed under the
acquis
in the field of
drugs,
but still needs to complete preparations for accession to the 1995 Council of Europe Agreement on Illicit Traffic by Sea, implementing Article 17 of the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. While implementation of its National Strategy for Drug Control and Drug Abuse Prevention 1999-2003 has continued, work on a revised strategy , in line with the EU Drugs Strategy 2000-2004, and on an Action Plan for 2002-2006 should be completed.
While Latvia has taken a number of steps to strengthen the capacity of institutions dealing with drug prevention and combating issues, including training and improved information exchange, both drug-related crime and the increasing numbers of drug users still remain a significant problem. Whereas registered drug related crimes decreased from 495 to 323 in the first half of 2002 compared to the same period in 2001 and also the number of persons prosecuted fell significantly, seizures of dr ugs by the police increased. Despite reinforced border controls by drug experts, the detection rate remains relatively low and no clear
supply reduction strategy has been designed. Latvia particularly needs to increase its capacity to fight drug trafficking by strengthening the administrative capacity of its law enforcement services, especially the police, customs and border guards and the Drug Enforcement Bureau, and improving their co-operation. Training of officials should continue, particularly regardin g risk analyses, controls of drugs and precursors, pre-arrival controls and use of related information systems. Further work is necessary to prepare Latvia for integration in the common European Information Network (Reitox) and to ensure full participation
in the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA). The necessary legal and institutional framework for the National Focal Point of the Drug Information System should be completed and the capacity of National Focal Point be further st rengthened. Co-operation with Member States and with Europol should be intensified.
As regards
money laundering,
legislative alignment needs to be completed and its enforcement should be further improved. Latvia should adopt the respective amendments to the Law on the Prevention of the Laundering of Proceeds from Crime in line with the
acquis
and ensure its implementation. Despite the strengthened administrative capacity of the services involved in this field, and a clear increase in the number of investigations and of launched criminal cases (37 in total), the current control and repression of fiscal fraud, bankruptcy, money laundering, corruption and common economic crimes still need significant
improvement. Further strengthening of the human and financial resources of the Financial Intelligence Unit (FIU) as well as the other specialised bodies acting in this field remains necessary. Training activities for the FIU, economic police, prosecutors, customs officials, bank managers and employees should be further enhanced.
With regard to
customs co-operation,
Latvia’s legislation is now largely in line with the
acquis
in this field as a number of Memoranda of Understanding between customs and other institutions as well as co-operation agreements have been concluded. The fight against corruption has been addressed through a number of measures, but still remains a problem. The application of risk-analysis concepts has started. Generally, co-operation between customs and the police, the bor ards and the FIU has improved through access to customs information, but the process should be intensified in terms of an integrated database and
further inter-agency co-operation and regular forms of co-operation with business organisations. Customs should enhance training to increase their capacity to deal with special investigation techniques such as controlled deliveries, drug search, cross-border surveillance, hot pursuit and joint special investigation teams.
Latvia should continue its co-operation on and prepare for accession to and implementation of the Naples II Convention on Mutual Assistance and Co-operation between Customs Administrations upon accession as well as the CIS Convention on Use of Information Technology for Customs Purposes.
As far as
judicial co-operation in criminal and civil matters
is concerned, Latvia has ratified almost all the international conventions included in the
acquis.
Latvia still has to ratify the European Convention on the International Validity of Criminal Judgements. Latvia has joined all the relevant Conventions of the Council of Europe with the exception of the Convention on Cybercrime. It has signed bilateral agreements on judicial co-operation with several countries. Latvi a should take further measures to ensure implementation of the Community instruments in the area of judicial co-operation in civil matters, notably as
regards mutual recognition and enforcement of judicial decisions. Direct contacts between competent judicial authorities should be made possible.
Latvia should also take steps to ensure full implementation upon accession of recently adopted instruments concerning judicial co-operation in criminal matters, such as the Framework Decision on the European arrest warrant and execution of orders freezing property or evidence. Latvia still needs to adopt and implement the new Criminal Procedure Code as well as the Law on Criminal Procedure, which will allow the implementation of the above-mentioned conventions on judicial cooperation in c riminal matters as well as the new Civil Procedure Code. The administrative capacity of the department of the Ministry of
Justice responsible for judicial co-operation needs to be further strengthened and the number of staff at the Prosecutor-General’s Office as well as the technical equipment to be further reinforced. In view of the further increase in incoming and outgoing requests, further training, including in foreign languages, remains necessary.
All the
human rights
legal instruments which are part of the Justice and Home Affairs
acquis
have been ratified by Latvia.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia was starting from a low base in the JHA field and was facing considerable institutional problems in preparing itself for effective co-operation with EU JHA institutions. The Commission added that a major, sustained effort was required if Latvia was to have the possibility of meeting the Justice and Home Affairs
acquis
(present and future) in the medium term.
Since the Opinion, progress has been made, with significant progress being made in particular over the last two years, especially in terms of legal alignment. Latvia has also continued strengthening of the institutional capacity in this field. As most legislative shortcomings have been addressed, efforts are now needed in particular to further enhance the implementation and enforcement capacity.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on finalising alignment (migration, money laundering, and protection of the financial interests of the European Communities, judicial co-operation), continued strengthening of border controls and further reinforcing the law enforcement agencies, with particular attention given to the fight against drugs and trafficking in general and co-operation between the various bodies involved in Justice and Ho airs, particularly the bodies in charge of the fight against organised crime and corruption.
Progress since the last Regular Report
Latvia has achieved progress in the customs field as regards alignment and has continued restructuring and strengthening the administration.
As regards alignment of Latvia’s legislation with the
customs
acquis,
in May 2002, the Parliament adopted amendments to the Customs Law, which aim at ensuring full compatibility with the
acquis
establishing the Community Customs Code. The Law on Customs Duty (Tariffs) was amended in December 2001 in order to bring Latvia’s legislation further in line with the
acquis
on autonomous tariff quotas, tariff ceilings, tariff sus to introduce the Generalised System of Preferences. Several implementing regulations have been adopted in the reference period, covering issues such as the deferment of payment of customs duties,
free zones and warehouses, exportation, re-exportation, abandonment and destruction of goods and returned goods. The Government adopted legislation implementing the
acquis
regarding re-exportation, abandonment of goods, returned goods, destruction of goods, protection of intellectual property rights, custom s declaration procedure and simplified clearance and summary declaration as well as storage of goods. Further legislation was adopted to ensure implementation of the EC Integrated Tariff (TARIC).
As far as
administrative and operational capacity
to implement the
acquis
is concerned, progress in modernisation of the customs services of the State Revenue Service (SRS) has been made. Modernisation of Latvian Customs is based on the SRS Customs Business Strategy for the years 2001–2005. The strengthening of the customs system appear to have resulted in an increase of 15% in total revenues collected by the Latvian Customs in 2001 as compared to 2000.
Regarding organisation and infrastructure, the investment programme to complete customs control points has continued and has benefited from increased budgeting in 2001. Additional financial resources have been also granted for the recruitment of 39 new staff in the National Customs Board (NCB), allocated to the enforcement division, the post-clearance and audit division and the newly established special operations and investigation division. In 2001, border control posts received modern c omputers and special technical equipment (x-ray for control of postal dispatches, drug, explosives and metal detectors, etc.) for
customs control.
In the area of intellectual property right protection, regular training activities for customs officers on counterfeiting and piracy issues have continued.
Since the last Regular Report, activities in the field of corruption prevention have continued. The issue of customs ethics is now part of the basic training of customs officials and customs brokers. As part of the fight against corruption, the rotation of officials exposed to high risk of corruption has continued.
Regarding computerisation, a customs information system, composed of several sub-systems, is in place. By April 2002 the computerised entry-processing system was implemented in 92 customs posts, while a new version was installed in only 7 customs offices. In 2001, about 20% of all customs declarations were submitted electronically. The implementation of the computerised entry-processing system has enabled optimisation of the number of customs posts to begin. At present, the number of the customs posts has been reduced by 51.
No new developments are to be reported in the area of Customs IT interconnectivity. The absence of project management structure and ownership for interconnectivity-related projects, coupled with weak national support in terms of human and financial resources, has left problems outstanding in all IT areas.
As regards co-operation, five Memoranda of Understanding were signed in 2001 with economic operators and law enforcement bodies to ensure effective controls, improving co-operation between Customs and other institutions. Furthermore, the use of a simplified declaration procedure with one operator has started on a pilot basis.
Latvia and the Russian Federation signed in April 2002 an intergovernmental agreement on mutual assistance in customs matters, which should further improve the exchange of information.
Overall assessment
Latvia’s customs legislation is largely aligned to the
acquis
in this field. Nevertheless, further work will be necessary, especially in terms of implementation and enforcement. Moreover, as the full range of EC commercial policy measures and export refunds will not apply until accession, and these affect the context in which the provisions in areas such as non-preferential origin, inward and outward processing are applied, Latvia will have to steps in this areas.
As regards administrative and operational capacity to implement the
acquis,
Latvia has still too many customs houses which should be replaced by a smaller number of larger, and modern inland facilities. The reorganisation of customs regions should continue, in particular for the Riga region. A separate budget for the National Customs Board‘s activities within the State Revenue Service should be established.
Continued efforts are necessary to improve border management, combat irregularities and corruption, improve capacity for risk assessment, intelligence and investigation, and to improve co-operation with other enforcement bodies.
With regards to IT interconnectivity, more support is necessary in both human and financial resources. In order to be ready to connect to the EC customs computerised systems, which is a precondition of managing the customs union and the internal market, the IT issue must be addressed at the highest level; if no urgent and serious measures are taken, Latvia will not be ready to connect in time for accession.
It is also important to continue training activities targeted at specific issues such as corruption, risk analysis as well as the fight against smuggling and counterfeit goods and to increase co-operation with other law enforcement bodies.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia would need to continue major efforts to align its legislation, organisation and staff to the duties that have to be carried out by a modern customs administration. In doing so it might be able to meet EC requirements in the medium term.
Since the Opinion, Latvia has achieved steady progress in aligning with the
acquis
in this area, and has almost completed the alignment of its customs legislation with the
acquis.
It has also gradually developed and reinforced the necessary administrative capacity, although a number of issues remain to be tackled in this regard. In terms of administrative capacity, the capabilities of the staff are satisfactory, but the necessary information technology systems are lacking.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to be ready for membership, Latvia's needs to focus further efforts on providing the necessary human and financial resources and management structure to make progress on computerisation in the customs area, including interconnection to EC information technology systems. Latvia should continue its efforts on further restructuring and streamlining of the territorial customs organisation. Further efforts should focus on strengthening the customs services’ capacity to reduce wa times at borders and to combat fraud and economic crime, in close co-operation with other enforcement bodies. Latvia should also take
steps necessary to prepare for the application of measures and provisions that will be introduced only at the time of accession. Ongoing efforts to address the remaining shortcomings in this field should be stepped up, in particular with regard to the interconnection of information technology systems.
Progress since the last Regular Report
Since the last Regular Report Latvia has continued to align with the
acquis
on common commercial policy and to co-ordinate positions and policies within the World Trade Organisation (WTO) with the EU, in particular with regard to the Doha Development Agenda negotiations. Steps have been taken to prepare for Latvia’s participation in the EU development policy.
As regards the
common commercial policy,
upon accession Latvia will be required to align its tariffs with those of the EC. Latvia’s applied tariffs currently average 4.2% (MFN) on all products, 13% on agricultural products, 7.9% on fishery products and 1.7% on industrial products. By comparison, EC tariffs currently stand at 6.3% on all products, 16.2% on agricultural products, 12.4% on fishery products and 3.6% on industrial products.
With regard to the
acquis
in the area of
dual-use goods,
legislation on a new list of strategic goods entered into force in March 2002. The new legislation on controls regarding export, import and transit of dual-use goods will provide further alignment to the
acquis,
although full alignment to the
acquis,
in particular the general export authorisations, can only take place upon accession. Latvia keeps the industry regularly informed of developments in this fie ld.
As regards
bilateral agreements with third countries,
Latvia has concluded negotiations on a Free Trade Agreement with the Republic of Bulgaria and negotiations are proceeding with Israel and the Faeroe Islands.
With regard to
development policy,
co-operation and assistance, amendments to the Law on Customs Duty were adopted in November 2001, introducing a General System of Preferences regime in conformity with WTO-rules. Moreover, Latvia is adapting its development practices to the guidelines laid down by the OECD Development Assistance Committee and the EU Development Policy (Policy document of Latvia’s participation in the EU Development policy) the implementation of
humanitarian aid
initiatives, the authorities co-operate with Non-Governmental Organisations established in Latvia. Latvia has no
specific budget allocation for development or humanitarian aid, but has granted aid on a case-by-case basis.
Overall assessment
The EU and Latvia have established a framework for co-operation regarding WTO issues at both ministerial and departmental level. Latvia has been supportive of EU policies and positions within the WTO framework, in particular during the preparation for and the launching of the Doha Development Agenda. The close cooperation should continue. Close coordination is needed and should continue to ensure the smooth alignment of Latvia’s GATS commitments with C’s commitments and MFN exemptions and steps have been defined to this extent.
Latvia is an observer to the WTO Government Procurement Agreement (GPA) and a signatory to the WTO Agreement on Trade in Civil Aircraft (ATCA) and the Information Technology Agreement (ITA). With regard to
the WTO Agreement on Trade in Textiles and Clothing (ATC), co-ordination has taken place within the
third stage of integration under the ATC to
align Latvia's integration programmes with those of the EC, although some discrepancies remain.
If Latvia provides medium and long term export credits, further efforts are necessary to align with the
acquis.
Although progress in the field of dual use goods has been made, completion of alignment is necessary.
Latvia has bilateral free trade agreements with the Czech Republic, Hungary, the Slovak Republic, Slovenia, Poland, Estonia and Lithuania (Baltic Free Trade Agreement), Ukraine, Turkey, Bulgaria and EFTA. Latvia needs to ensure that the Union is kept fully informed both about existing trade agreements and about any negotiations aimed at the conclusion of the new trade agreements with a third country. Prior to accession,
Latvia will need to renegotiate or renou nce all international agreements concluded with third countries that are incompatible with its future obligations as an EU Member State. Decisive
steps are needed, as a matter of urgency, to bring bilateral investment treaties in conformity with the Treaty obligations. Failure to do so will mean that the conflict between the bilateral investment treaties and Treaty obligations will need to be resolved in the Accession Treaty.
Latvia’s alignment with and future participation in the common commercial policy is administered by the Ministry of Economy and the Ministry of Foreign Affairs. The department of trade policy within the Ministry of Agriculture deals with agricultural trade issues (including WTO matters). Some upgrading might be needed in order to have the necessary administrative capacity upon accession, also with regard to participating in the EU’s development and humanitarian aid policies. T ative infrastructure, which needs to be in place with respect to customs services is discussed in the chapter on customs union (Chapter
25 –
Customs union).
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia was well placed to meet Community requirements, provided existing trade barriers were eliminated so as to align more closely with the Community's trade regime.
Since the Opinion, Latvia has made gradual progress and has achieved a generally high level of alignment with the
acquis.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on finishing the process of legislative alignment, on taking decisive steps, as a matter of urgency, towards the renegotiation or abrogation of its bilateral investment treaties in full conformity with its EU membership obligations, as well as on ensuring that the capacity exists to fully implement and enforce the
acquis
in this field upon accession.
Progress since the last Regular Report
Since the last Regular Report, Latvia has made further progress in aligning its foreign policy with that of the European Union.
In the context of the regular
political dialogue
established by the Association Agreement, Latvia continues to align its foreign and security policy with that of the Union. It continues to participate actively in the framework of the Common Foreign and Security Policy, including the meetings at the level of Political Directors, European Correspondents and Working Groups.
Latvia is aiming to contribute by all means required to the development of European Security and Defence Policy as part of the Common Foreign and Security Policy and plays an active role in the context of the EU + 15 format (i.e. non-EU European NATO members and candidates for accession to the EU).
As regards
alignment with EU statements and declarations,
Latvia is regularly aligning its positions with those of the Union and has continued to associate itself with the Union’s
common positions, joint actions
and other Common Foreign and Security Policy instruments. Since October 2001, it has aligned itself with eight EU common positions and with the Joint Action of July 2002 on the EU’s contribution to combating the destabilising accumulation and spre arms and light weapons.
Latvia’s legislation on
international sanctions and restrictive measures
have already been brought into line with the
acquis.
The administrative capacity of the Ministry of Foreign Affairs and the Ministry of Defence has been further improved in order to meet the requirements of the Common Foreign and Security Policy.
During the reporting period, Latvia played an active role in the Capabilities Improvement Conference in November 2001 and in the EU +15 Defence Minister’s meeting in May 2002.
In response to the 11 September events, on October 2001 Latvia adopted the action plan for combating terrorism, comprising a package of legislative, executive and regulatory measures with regard to national and international co-operation. In December 2001, Latvia signed the 1999 International Convention for the Suppression of the Financing of Terrorism.
Latvia has also ratified the Rome Statute establishing the International Cri minal Court in December 2001.
As regards defence cooperation, Latvia has made considerable efforts to support international peacekeeping missions. It has participated in SFOR, KFOR, ISAF and UN peacekeeping and observer operations. In January 2002 the Parliament approved the proposal to deploy an air movement control team in the operation
Enduring Freedom
in the vicinity of Afghanistan.
Overall assessment
Latvia is pursuing a policy of regional co-operation and good neighbourly relations. It is an active member of the Council of Baltic Sea States and closely co-ordinates its foreign and security policy with the other two Baltic countries. In the defence area, BALTBAT (the Baltic Battalion), BALTNET (Baltic Air Surveillance System) and BALTRON (Baltic Naval Squadron) are focal points of this co-operation. Latvia is preparing for military participation in the EU Rapid Intervention Force as of 2003; assets for the European Police mission have been put in place and participation in peace missions is ensured.
Latvia is seeking to strengthen its bilateral relations with neighbouring countries. Relations with Russia are characterised by openness for dialogue. The border agreement with Russia was finalised by Latvia, but still awaits final approval on the Russian side.
The Ministry of Foreign Affairs is connected to the
Associated Correspondents’ Network
information system, through which the EU communicates with associated partners within the CFSP. The functions of a Political Director and European Correspondent are fulfilled by different persons within the Ministry of Foreign Affairs, but close coo ion is ensured.
Conclusion
In its 1997 Opinion, the Commission concluded that
the assessment of Latvian foreign and security policy led to the expectation that as a member it could fulfil its obligations in this field.
Since the Opinion, Latvia has made steady progress in aligning with the CFSP
acquis.
The alignment of legislation is in general satisfactory at this stage and administrative structures are being put in place.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it made in the accession negotiations in this domain.
In order to complete preparations for membership, Latvia's efforts now need to focus on ensuring that
its foreign policy orientation remains in line with the Union's developing foreign and security policy, adopting the legislation on economic sanctions and finalising the development of the necessary administrative structures. In particular, Latvia should ensure that its national policies and practice conform to the EU's common positions, should defend these po sitions in international fora, and should ensure that all sanctions and restrictive measures can be duly implemented.
Progress since the last Regular Report
Latvia has continued to make good progress in this field since the last Regular Report.
The
Public Internal Financial Control
(PIFC) systems have evolved further. In December 2001, a Regulation was adopted obliging state enterprises and state institutions subordinated to ministries to establish the internal audit function. The scope of the internal audit system has now been extended to all budget income and spending centres. No new developments can be reported with regard to the Internal Audit Law. Regulations were adopted in January 2002, introducing the concept of m anagerial accountability in public agencies and providing for its implementation.
As regards administrative capacity in the area of internal audit, the Internal Audit Department of the Ministry of Finance, which is responsible for harmonisation of the internal audit methodology in the public sector, has received 3 new posts in addition to the 11 staff in place in 2001. Training of staff of the Internal Audit Department has continued through seminars, courses and conferences. A human resources development plan is currently being elaborated to provide for staff training on a regular basis. In terms of implementation guidelines further progress has been achieved. An Audit Charter has been developed and
approved. The number of auditors in the government sector has now been increased to 196.
Latvia has made further progress in the area of
external audit.
A new State Audit Office Law amending the existing law entered into force in June 2002. It now ensures the operational, functional and improved financial independence of the State Audit Office (SAO). The Law provides for a wide scope of audits including the authority to audit final beneficiaries of EC funds. The SAO has adopted INTOSAI (International Organisation of Supreme Audit Institutions) auditing standards and c arries out financial and performance audits. The SAO has also developed an audit manual.
To ensure implementation of the new Law, 15 posts have been created in the SAO, in addition to the 201 staff in place. The SAO’s Strategic Development Plan 2000–2005 continues to be implemented. It provides for training for 80 staff members, currently under way, in the area of financial and performance audit. The first pilot audits were carried out in close co-operation with the European Court of Auditors and were completed in January 2002. A common audit methodology and techn een adopted and tested.
Latvia has made some progress in the area of
control over structural action expenditure.
In December 2001, the Commission adopted a Decision provisionally conferring management authority for SAPARD, on a fully decentralised basis, to the SAPARD Agency. The Commission's guidelines concerning certification of Latvia's accounting procedures have been respected and judged satisfactory. The Internal Audit Department is setting up a database for reported irregularities in the administration of SAPARD and ISPA. Concerning ISPA implementation, in general, good progress has been made to establish a management
and control system. Latvia has started to establish quarterly reports on irregularities in SAPARD or ISPA programmes. Latvia has already started the gap assessment exercise which is the first step leading to the extended decentralised implementation system (EDIS).
The Latvian authorities have put forward the Ministry of Finance’s Internal Audit Co-ordination and Methodology Division as anti-fraud co-ordinating service, responsible for the co-ordination of all activities related to the
protection of the financial interests of the European Communities.
Further clarifications are needed in this respect.
Overall assessment
Although in Latvia the Public Internal Financial Control (PIFC) system seems to be generally in place, legislation needs to be adopted to ensure the functional independence of internal audit, including procedures for the appointment and dismissal of auditors, audit planning and reporting. The new Framework Law on Internal Audit currently under discussion needs to be adopted. Further efforts should aim at strengthening managerial accountability, in particul ar by refining the Law on Budget and Financial Management. Guidelines for setting performance targets for all budgetary bodies should be developed. A Code of
Ethics for auditors in Latvia needs to be endorsed. Financial management and control manuals for national and EC funds remain to be completed. Further work is required to develop the concept of audit trails and prepare audit trails for Community funds.
Regarding external audit, the new State Audit Office Law has further strengthened the financial independence of the State Audit Office (SAO) by abolishing the current practice of financing the SAO from fines and surcharges imposed on auditees. A formal mechanism in Parliament to discuss the SAO’s reports and recommendations remains however to be introduced. In addition, INTOSAI (International Organisation of Supreme Audit Institutions) auditing standards including guidelines and the manual need to be approved and implemented. Latvia needs to further develop the operational capacity of the SAO.
With regard to the control of structural action expenditure, substantial efforts need to be made in order to enhance Latvia’s capacity to manage pre-accession funding and future structural funds, in particular through the establishment of clear PIFC rules and procedures, together with substantial reinforcement of Latvia’s administrative capacity in this regard
(see also Chapter 21 – Regional policy and co-ordination of structural instruments).
The development of m rapid recovery of lost EC funds is equally important. Latvia needs to reinforce and accelerate efforts leading to the extended decentralised implementation system before mid
2003 in order to allow EDIS accreditation to be achieved in the second semester of 2003.
With regard to the protection of the European Communities’ financial interests, Latvia needs to ensure operational independence of the anti-fraud service responsible for the co-ordination of all legislative, administrative and operational aspects of the protection of the European Communities’ financial interests. Latvia also needs to put in place the necessary legislative and administrative framework to allow this service to carry out its co-ordinating role, including a defini tions with other institutions or bodies involved in the protection of the Communities’ financial interests.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia would need to make substantial efforts to establish the necessary management and control mechanisms to cope with EU requirements. The Commission added, however, that if the necessary initiatives could be taken in this respect, this field would not appear to represent a major obstacle, in the medium term, for Latvia’s accession.
Since the Opinion, Latvia has made good progress in developing its Public Internal Financial Control systems as well as completing alignment in the field of external audit.
Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on completing the establishment of a well-functioning Public Internal Financial Control system in compliance with EC requirements, including, in particular, the completion of alignment of internal audit legislation so as to ensure functional independence of the internal auditor. Latvia will have to take all the necessary measures to ensure that the use of EC pre-accession funding is adequately manag controlled and further develop its legislative framework and administrative capacity to protect the Communities’ financial interests.
Progress since the last Regular Report
Latvia has made some progress in this area since the last Regular Report.
Concerning the
national budget and EC co-financed measures,
Latvia has concentrated its efforts on improving the budget planning process in the context of the medium-term budget planning framework. The planning mechanism now provides for planning of EC co-financed measures as well as national co-financing for Structural and Cohesion Funds assistance (included already in the 2002 state budget).
Some progress has been achieved in terms of development of the supporting systems for budget planning and training of staff. Regarding forecasting capacities, a model for macroeconomic analysis has been developed and an expenditure model of the central government and local government budget elaborated. Work on the elaboration of short-term expenditure forecasts of the state budget has been started. The IT system for budget planning has somewhat improved.
Preparations for the application of the
own resources system
have continued. As regards administrative capacity, the institutions which will participate in the system of own resources are in place with the exception of sugar levies. The inter-ministerial working group under the management of the Ministry of Finance has continued its activities. Its task is to co-ordinate the establishment of the necessary procedures, infrastructure and capabilities to fulfil the administrative con ditions in the area of own resources. The working group should be replaced by a permanent own resources unit in the Ministry of Finance to co-
ordinate the calculation, control and payment of own resources and contacts with and reporting to the Commission in this area. Latvia has taken administrative steps to ensure adequate co-ordination between the various authorities involved in the application of the system of own resources.
Overall assessment
Latvia has further advanced in strengthening its budgetary rules, but particular efforts are still necessary to bring its budgetary framework further into line with the standards generally applicable in the Community. Evaluation and monitoring procedures for programmes and projects need to be improved.
Overall preparations for application of the
acquis
on own resources are progressing well, but sustained efforts continue to be required with regard to the build-up of technical and administrative capacity. Moreover, Latvia needs to develop its reporting system on cases of fraud and irregularity. As regards traditional own resources, Latvian customs legislation is largely in line with the EC
acquis,
but further harmonisation should be carried out. Particular efforts need to b e made with regard to certain reporting and accounting requirements. The systems for 'A' and 'B' accounts are still to be set up in the National Customs Board as
well as in the National Tax Board for sugar levies. The central accounting system for customs duties at the National Customs Board has to be modified to meet 'A' and 'B' account requirements. The final organisation and procedures for sugar levies remain to be established. Reliable data transmission between the customs clearance system and the centr al accounting system needs to be
 PDF to HTML - Convert PDF files to HTML files
1461351_0020.png
Conclusions
In its 1997 Opinion, the Commission concluded that, in order to ensure that own resources were established, monitored and made available in line with Community regulations, Latvia would have to overhaul its existing customs system. Furthermore, for the purposes of accurately calculating the GNP resource considerable improvements would have to be made to the national accounts to ensure that they were reliable, homogeneous and complete. The Commission added that improving the statistics would also be essential for drawing up the VAT own resources base, which would mean bringing Latvia’s VAT system fully
into line with the Community directives.
Since the Opinion, Latvia has made considerable progress in these areas, in particular as regards the alignment of its customs system and progress towards applying the ESA-95 concept. The legal framework for budgetary management and for the transparency and efficiency of financial flows to and from the EC budget is largely in place, but needs to be completed. The institutional structures are generally in place, but further strengthening is essential.
Negotiations on this chapter continue. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.
In order to complete preparations for membership, Latvia’s efforts now need to focus on the strengthening of its technical and administrative capacity. In particular, Latvia needs to focus on the calculation of the VAT base, setting up the necessary procedures for sugar levies and achieving TARIC-interoperability of the customs clearance system. Also the exhaustiveness of the national accounts should be guaranteed and the ESA-95 concept fully implemented so as to ensure the capacity tablish properly and make available the country’s contribution to each of the own resources of the Communities. Latvia needs to put in
place a permanent own resources unit that will be responsible for the calculation, control and making available of own resources by the date of accession.
Translation of the
acquis
into the national la nguages
Applicant countries are required to translate the various legal texts constituting the
acquis
into their national languages by the time of their accession. Primary and secondary legislation alone represents a considerable volume of texts, roughly estimated at 60 000-70 000 pages of the Official Journal. In the framework of the translation of the
acquis,
the Court of Justice has defined a set of key judgements to be translated as a prior ity (representing about 15 000 pages). To help the candidate countries in this process, assistance is being provided under the Phare programme. With the help of TAIEX, a dedicated database has been
set up to act as a repository of all translated acts and as a tool through which candidate countries forward their translations to the Commission and the Council. The legal revisers of the Commission and the Council vet the submitted texts; they meet regularly and liaise with representatives of the centralis ed Translation Coordination Units in each country.
The translation of the
acquis
is the responsibility of the Translation and Terminology Centre (TTC) established in 1996, which reports to the European Integration Bureau. The TTC is responsible mainly for the translation of EC legislation into Latvian and the translation of Latvian legislation into English. Translation priorities are established in co-operation with the line ministries and approved for each quarter by the Council of Senior Officials.
As regards EC legislation translations, the TTC employs 12 revisers, 9 terminologists, 4 in-house and 14 freelance translators, and 4 translation assistants. For the translation of Latvian legislation into English the TTC employs 9 specialists. All translations produced by the TTC go through a terminology check and a revision stage. Terminology is an important part of the work done by the TTC. By May 2002 the TTC terminology database contained 40 117 terms. In the framework of a project w ith the Parliament of Latvia, the TTC participates in the elaboration of terminology for the
Eurovoc
Thesaurus.
As at September 2002, 32 700 pages of revised text were registered in the dedicated Commission database. According to Latvian sources, by May 2002, more than 44 000 standard pages of EC legislation had been translated and fully revised into Latvian, of which 16 240 pages were translated between June 2001 and May 2002. Most of the translations have been concentrated on matters dealt with by the Ministry of Agriculture (53.8 %), followed by the Ministry of Finance and the Ministry of Environmental Protection and Regional Development (5.4 % each). All the primary legislation of Latvia has been translated into
English. Sustained further efforts are required in this area.
Due attention must also be paid to the training of conference interpreters.
General evaluation
Since the Opinion, Latvia has made steady progress in aligning its legislation with the
acquis,
in particular during the last 2 years. As a consequence the majority of the primary legislation has been put in place. At the same time, considerable efforts have been made to strengthen its administrative capacity, albeit not to the same extent as legislative alignment.
Over the past year, Latvia has further advanced in completing alignment and creating or restructuring related specialised bodies in the vast majority of areas. It has as well intensified training in most areas with a view to complying with the requirements of the
acquis.
Overall, Latvia has achieved a high degree of alignment with the
acquis
in many areas, and is well advanced towards reaching adequate administrative capacity to implement the
acquis
in most fields. Further efforts remain to be made, in particular regarding its administrative capacity in most fields, as well as completion of legislation in a number of sectors. Detailed plans have been agreed, in particular in the negotiations and in the Action Plan, to cover the remaining gap s.
The preparation for participation in the internal market is well advanced and Latvia has achieved a good level of alignment in this area. As regards
free movement of goods,
the legal and institutional framework is generally in place. There has been sustained development of the standardisation system, which needs however to be reinforced. The reform of the market surveillance system and its infrastructure, including on food safety and in the field of public procurement, requires fu rther strengthening. The process of bringing Latvia’s legislation and structures in relation to the
free movement of persons
into line with the
acquis
has
developed satisfactorily, although further efforts are required, especially on mutual recognition of professional qualifications as well as on strengthening institutional capacity. In the area of
freedom to provide services,
legislative alignment has advan otably regarding financial services and banking, but further work remains necessary regarding insurance and securities. In the area of
capital movements,
legislative alignment is well advanced, but the process needs to be completed as regards capital movements and payments. The administrative capacity has been put in place in this field, though further reinforcement remains necessary. On
company law,
an important development was the recent entry into force of the Commercial Code, which now nee ds to be implemented. While Latvia’s legislation is well advanced in the field of intellectual and industrial property rights, effective action to fight against piracy and counterfeiting remains a challenge. In the area of
competition,
Latvia’s legislative alignment, administrative capacity and enforcement record is reasonably advanced, but efforts should continue to develop a track record on effective implementation of competition legislation.
As regards
customs,
legislation is largely aligned, but organisational restructuring and implementation needs to continue, as it does for
taxation,
where legislation needs to be completed on direct and indirect taxation. Latvia should step up its ongoing legislative work, and urgently speed up its preparations for electronic interconnectivity. For both areas, Latvia has committed itself to introducing adequate information technology systems so as to allow the exchange of ele ctronic data with the Community and its member states. Significant further work is required as a priority for these systems to be operational by the date of
accession.
Latvia has made further progress in the field of
agriculture
as well as more recently through upgrading of administrative structures with a view to the implementation of the Common Agricultural Policy. The establishment of the Food and Veterinary Service as the joint body responsible for controls of the entire food chain and the accreditation of the SAPARD agency constitute a significant achievement. However, important challenges lie ahead to complete alignment, and to reinforce th e institutional capacity to implement the Common Agricultural Policy and its implementing measures, including the paying agency, the
Integrated Administration and Control System (IACS) and the Common Market Organisations (CMO). Particular efforts remain necessary in the field of veterinary and food safety controls as well as on upgrading of food establishments to Community Standards. As regards
fisheries,
Latvia’s legislation has been aligned to a reasonable extent, although there are gaps, not s regards structural actions and market policy. The administrative structures have been partially established. Latvia's efforts now need to focus on further reinforcing administrative capacity and ensuring sufficient funding.
While Latvia’s legislation is to a great extent in line with the
acquis
in the field of
transport,
the relevant framework laws (with the exception of maritime transport) are in place and the administrative capacity is being strengthened. Further efforts are necessary to complete the alignment process notably in the rail and maritime sectors as well as regarding administrative capacity in road, rail and air transport. The recent increase in capacity regarding maritime s and Flag State performance needs to be further enhanced.
A significant step forward was the adoption of the new Labour Code in the field of
social policy and employment.
Legislative alignment in this field is well advanced, but needs to be completed. Effective implementation and enforcement regarding labour law, health and safety and public health remains important. In the field of
energy,
a reasonable level of alignment of legislative and institutional capacity has been achieved, but this process needs to be completed, in particu lar regarding the internal energy market (electricity and gas), oil stocks, increased energy efficiency and reinforcement of the administrative capacity of the various
bodies. Latvia has achieved considerable progress in aligning with the
environmental acquis.
This process needs to be completed and the administrative capacity needs further strengthening, especially regarding inspections, co-operation and coordination at all levels. Investments should be enhanced.
With the adoption of the Law on Telecommunication and the establishment of the Public Utility Commission as regulator, the legislation is largely aligned and the institutions are in place. However, particular efforts are necessary with a view to a further liberalisation of the
telecommunications
market, the strengthening of the independence and effectiveness of the regulator and legislative alignment in the field of postal services. Particular progress was made recently in terms of institutional strengthening in the field of culture and audio-visual policy, where Latvia’s legislation is largely in line with the
acquis.
In the field of
justice and home affairs,
significant progress has been made in terms of legal alignment as well as continued strengthening its institutional capacity. Latvia’s efforts need now to focus on completion of legislative alignment, especially on migration, money laundering, and protection of the financial interests of the European Communities and judicial co-operation and implementation of the high quality Schengen Action Plan. Further reinforcing of the law enforc bodies is needed, with particular attention to be paid to the fight against drugs and trafficking in general, smuggling, fraud, corruption and organised crime,
including through improved cooperation between the various bodies involved. Strengthening of integrated border controls and completion or upgrading of structures also remains an important priority.
As for
regional policy and the co-ordination of structural instruments,
progress was made recently in preparing for the implementation of structural policies and designation of the main institutions involved. However, efforts will need to focus on building up adequate and efficient administrative capacity for the management of the Structural Funds and Cohesion Fund at all levels. Moreover, preparation of an up-to-standard draft Single Programming Document should be speeded up and i nter-ministerial co-ordination and partnership needs to be ensured. Generally, all systems and procedures for effective monitoring, financial
management and control should be reinforced and the legal framework has to be completed. There is a particular need for progress as regards the technical preparation of projects eligible for Community funding. Latvia has started to take measures to address the weaknesses identified, including through the allocation of human resources. Ongoing efforts need to be contin ued and substantially stepped up. The establishment of the Public Internal
Financial Control
system is relatively advanced, but needs to be completed, including legislative alignment.
Preparing its administrative capacity for membership remains one of the greatest challenges Latvia faces. With a view to the responsibilities Latvia will have to assume in managing and enforcing the
acquis
upon accession, a substantial portion of the necessary institutions have been restructured or created. While this process is well advanced, further substantial efforts are required to ensure that these institutions become fully operational. This is particularly important in areas such as internal market, agriculture, fisheries, transport, regional policy, environment, justice and home affairs and with regard to the implementation of
information technology systems for taxation and customs. Finally, continued efforts are necessary to enhance Latvia’s capacity to ensure sound, efficient and controllable management of EC funds.
In the accession negotiations, 27 chapters have been provisionally closed. Latvia is generally meeting the commitments it has made in the negotiations.
Bearing in mind the progress achieved since the Opinion, and in particular over the recent past, the level of alignment and administrative capacity that Latvia has achieved at this point in time, and its track record in implementing the commitments it has made in negotiations, the Commission considers that Latvia will be able to assume the obligations of membership in accordance with the envisaged timeframe. In the period leading up to accession, Latvia needs to continue its preparations, in line with the commitments it has made in the accession negotiations.
Conclusion
In its 1997 Opinion, the Commission concluded that Latvia fulfilled the political criteria. Since that time, the country has made considerable progress in further consolidating and deepening the stability of its institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities. This has been confirmed over the past year. Latvia continues to fulfil the Copenhagen political criteria.
Regarding public administration reform, Latvia has continued to address the remaining reform issues and the legislative and administrative framework will be fairly comprehensive once the Civil Service Law and Public Administration Law are fully implemented. It is now important to speed up the introduction of the uniform civil service pay system and to ensure sufficient funding.
Overall, while most of the deficiencies of the judicial system have been identified, only part of them have been addressed. Efforts in this field need to be multiplied in order to ensure a thorough systemic reform, based on political support for modernising the judiciary and sufficient funding. The legislative framework still remains to be completed and the increasing backlog of court cases should be reduced. The issue of pre-trial detention requires continued attention. Further significa nt efforts to strengthen the
de facto
independence, efficiency and quality of the judiciary are needed. The upgrading of the infrastructure of courts
needs to be completed.
Latvia has made further progress in the fight against corruption, which remains a cause for serious concern. The legislative framework has been improved, the institutional set-up has been strengthened and public awareness as well as the involvement of civil society are rising. However, further efforts are needed in order to complete the institutional set-up and to provide the new Anti-Corruption Bureau with the necessary means in order to achieve concrete results.
Latvia continues to respect human rights and freedoms.
Latvia has encouraged the further integration of non-citizens into Latvian society by removing language requirements in the election law, and increasing support to facilitate the naturalisation process, and through the activities of the Society Integration Foundation. The integration process needs however to be accelerated and sufficient funding made available to encourage naturalisation and language training in particular. Latvia should ensure that at all levels the implementation of the language law respects the principles of justified public interest and proportionality, Latvia’s international obligations and the Europe Agreement.
The 1997 Opinion already acknowledged the reform efforts undertaken by the Latvian authorities to transform their economy. Since the Opinion, and against a challenging international economic environment, in particular the Russian crisis, economic performance has improved. Macroeconomic stability has been achieved, reforms have accelerated while the Latvian authorities’ commitment to the economic requirements of EU accession has been sustained.
Hence, it is concluded that Latvia is a functioning market economy. The continuation of its current reform path should enable Latvia to cope with competitive pressure and market forces within the Union.
Improvements can be made to the functioning of the labour markets, in particular by active labour market measures in favour of disadvantaged groups, reinforcing public and private infrastructure necessary for the mobility of the workforce and further reforms to the educational system. Fiscal policy has to maintain a prudent approach, also in view of the high current account deficit. In addition, improving the general business environment and strengthening the administrative and judicial c apacity would support a more broad-based private sector development.
Since the Opinion, Latvia has made steady progress in aligning its legislation with the
acquis,
in particular during the last 2 years. As a consequence the majority of the primary legislation has been put in place. At the same time, considerable efforts have been made to strengthen its administrative capacity, albeit not to the same extent as legislative alignment.
Over the past year, Latvia has further advanced in completing alignment and creating or restructuring related specialised bodies in the vast majority of areas. It has as well intensified training in most areas with a view to complying with the requirements of the
acquis.
Overall, Latvia has achieved a high degree of alignment with the
acquis
in many areas, and is well advanced towards reaching adequate administrative capacity to implement the
acquis
in most fields. Further efforts remain to be made, in particular regarding its administrative capacity in most fields, as well as completion of legislation in a number of sectors. Detailed plans have been agreed, in particular in the negotiations and in the Action Plan, to cover the remaining gap s.
The preparation for participation in the internal market is well advanced and Latvia has achieved a good level of alignment in this area. As regards
free movement of goods,
the legal and institutional framework is generally in place. There has been sustained development of the standardisation system, which needs however to be reinforced. The reform of the market surveillance system and its infrastructure, including on food safety and in the field of public procurement, requires fu rther strengthening. The process of bringing Latvia’s legislation and structures in relation to the
free movement of persons
into line with the
acquis
has
developed satisfactorily, although further efforts are required, especially on mutual recognition of professional qualifications as well as on strengthening institutional capacity. In the area of
freedom to provide services,
legislative alignment has advan otably regarding financial services and banking, but further work remains necessary regarding insurance and securities. In the area of
capital movements,
legislative alignment is well advanced, but the process needs to be completed as regards capital movements and payments. The administrative capacity has been put in place in this field, though further reinforcement remains necessary. On
company law,
an important development was the recent entry into force of the Commercial Code, which now nee ds to be implemented. While Latvia’s legislation is well advanced in the field of intellectual and industrial property rights, effective action to fight against piracy and counterfeiting remains a challenge. In the area of
competition,
Latvia’s legislative alignment, administrative capacity and enforcement record is reasonably advanced, but efforts should continue to develop a track record on effective implementation of competition legislation.
As regards
customs,
legislation is largely aligned, but organisational restructuring and implementation needs to continue, as it does for
taxation,
where legislation needs to be completed on direct and indirect taxation. Latvia should step up its ongoing legislative work, and urgently speed up its preparations for electronic interconnectivity. For both areas, Latvia has committed itself to introducing adequate information technology systems so as to allow the exchange of ele ctronic data with the Community and its member states. Significant further work is required as a priority for these systems to be operational by the date of
accession.
Latvia has made further progress in the field of
agriculture
as well as more recently through upgrading of administrative structures with a view to the implementation of the Common Agricultural Policy. The establishment of the Food and Veterinary Service as the joint body responsible for controls of the entire food chain and the accreditation of the SAPARD agency constitute a significant achievement. However, important challenges lie ahead to complete alignment, and to reinforce th e institutional capacity to implement the Common Agricultural Policy and its implementing measures, including the paying agency, the
Integrated Administration and Control System (IACS) and the Common Market Organisations (CMO). Particular efforts remain necessary in the field of veterinary and food safety controls as well as on upgrading of food establishments to Community Standards. As regards
fisheries,
Latvia’s legislation has been aligned to a reasonable extent, although there are gaps, not s regards structural actions and market policy. The administrative structures have been partially established. Latvia's efforts now need to focus on further reinforcing administrative capacity and ensuring sufficient funding.
While Latvia’s legislation is to a great extent in line with the
acquis
in the field of
transport,
the relevant framework laws (with the exception of maritime transport) are in place and the administrative capacity is being strengthened. Further efforts are necessary to complete the alignment process notably in the rail and maritime sectors as well as regarding administrative capacity in road, rail and air transport. The recent increase in capacity regarding maritime s and Flag State performance needs to be further enhanced.
A significant step forward was the adoption of the new Labour Code in the field of
social policy and employment.
Legislative alignment in this field is well advanced, but needs to be completed. Effective implementation and enforcement regarding labour law, health and safety and public health remains important. In the field of
energy,
a reasonable level of alignment of legislative and institutional capacity has been achieved, but this process needs to be completed, in particu lar regarding the internal energy market (electricity and gas), oil stocks, increased energy efficiency and reinforcement of the administrative capacity of the various
bodies. Latvia has achieved considerable progress in aligning with the
environmental acquis.
This process needs to be completed and the administrative capacity needs further strengthening, especially regarding inspections, co-operation and coordination at all levels. Investments should be enhanced.
With the adoption of the Law on Telecommunication and the establishment of the Public Utility Commission as regulator, the legislation is largely aligned and the institutions are in place. However, particular efforts are necessary with a view to a further liberalisation of the
telecommunications
market, the strengthening of the independence and effectiveness of the regulator and legislative alignment in the field of postal services. Particular progress was made recently in terms of institutional strengthening in the field of culture and audio-visual policy, where Latvia’s legislation is largely in line with the
acquis.
In the field of
justice and home affairs,
significant progress has been made in terms of legal alignment as well as continued strengthening its institutional capacity. Latvia’s efforts need now to focus on completion of legislative alignment, especially on migration, money laundering, and protection of the financial interests of the European Communities and judicial co-operation and implementation of the high quality Schengen Action Plan. Further reinforcing of the law enforc bodies is needed, with particular attention to be paid to the fight against drugs and trafficking in general, smuggling, fraud, corruption and organised crime,
including through improved cooperation between the various bodies involved. Strengthening of integrated border controls and completion or upgrading of structures also remains an important priority.
As for
regional policy and the co-ordination of structural instruments,
progress was made recently in preparing for the implementation of structural policies and designation of the main institutions involved. However, efforts will need to focus on building up adequate and efficient administrative capacity for the management of the Structural Funds and Cohesion Fund at all levels. Moreover, preparation of an up-to-standard draft Single Programming Document should be speeded up and i nter-ministerial co-ordination and partnership needs to be ensured. Generally, all systems and procedures for effective monitoring, financial
management and control should be reinforced and the legal framework has to be completed. There is a particular need for progress as regards the technical preparation of projects eligible for Community funding. Latvia has started to take measures to address the weaknesses identified, including through the allocation of human resources. Ongoing efforts need to be contin ued and substantially stepped up. The establishment of the Public Internal
Financial Control
system is relatively advanced, but needs to be completed, including legislative alignment.
Preparing its administrative capacity for membership remains one of the greatest challenges Latvia faces. With a view to the responsibilities Latvia will have to assume in managing and enforcing the
acquis
upon accession, a substantial portion of the necessary institutions have been restructured or created. While this process is well advanced, further substantial efforts are required to ensure that these institutions become fully operational. This is particularly important in areas such as internal market, agriculture, fisheries, transport, regional policy, environment, justice and home affairs and with regard to the implementation of
information technology systems for taxation and customs. Finally, continued efforts are necessary to enhance Latvia’s capacity to ensure sound, efficient and controllable management of EC funds.
In the accession negotiations, 27 chapters have been provisionally closed. Latvia is generally meeting the commitments it has made in the negotiations.
Bearing in mind the progress achieved since the Opinion, and in particular over the recent past, the level of alignment and administrative capacity that Latvia has achieved at this point in time, and its track record in implementing the commitments it has made in negotiations, the Commission considers that Latvia will be able to assume the obligations of membership in accordance with the envisaged timeframe. In the period leading up to accession, Latvia needs to continue its preparations, in line with the commitments it has made in the accession negotiations.
Accession Partnership and Action Plan for strengthening administrative and judicial capacity: Global assessment
Latvia’s progress and overall state of preparation in respect of the Copenhagen criteria has been examined and conclusions drawn above. The present section assesses the extent to which the priorities of the Accession Partnership have been met and the measures foreseen under the Action Plan implemented according to schedule. It should be noted that both the Accession Partnership and the Action Plan have a time perspective of two years covering 2002 an , providing for another 15 months for priorities to be met. Furthermore, much has already been achieved based on previous Accession Partnerships. The present one
focuses on remaining specific and well-circumscribed topics identified as requiring more work to prepare Latvia for membership. Therefore the analysis below only focuses on these specific topics and does not give an overall picture of the state of preparation of Latvia in each domain.
The purpose of the Accession Partnership is to set out in a single framework:
•
•
•
the priority areas for further work identified in the Commission’s Regular Report;
the financial means available to help candidate countries implement these priorities;
the conditions which will apply to this assistance.
The Accession Partnerships are revised on a regular basis, to take account of progress made, and to allow new priorities to be set. The Council adopted a revised Accession Partnership for Latvia in January 2002, based on a proposal from the Commission.
The revised Accession Partnership has served as the point of departure for the Commission and Latvia to develop jointly an Action Plan to strengthen Latvia's administrative and judicial capacity.
The purpose of the Action Plan is to identify jointly the next steps required for Latvia to achieve an adequate level of administrative and judicial capacity by the time of accession, and ensure that all necessary measures in this regard are taken, providing Latvia with targeted assistance in areas that are essential for the functioning of an enlarged Union.
Developing adequate administrative and judicial capacity for EU membership is a demanding and wide-ranging task, which requires detailed preparations in each and every domain covered by the Union's policies and legislation. In preparing individual Action Plans, the Commission has taken a comprehensive approach. All priorities from the revised Accession Partnerships which relate to the development of administrative and judicial capacity have been included in the Action Plans. Each of these priorities is treated separately in the Action Plans, and specific measures have been designed to address each of them.
In the following, progress in addressing each of these priorities is reported. For ease of reference and to avoid repetitions, wording from the
Accession Partnerships
is rendered in italics. As regards the measures foreseen by the Action Plan, implementation is checked against timetables and reported.
Political criteria
Regarding
public administration
reform, good progress was made in putting the legal framework (including the Framework Law on Public Administration, the Law on Agencies) in place in order to
develop a professional and stable civil service.
Preparations to establish a
sound remuneration system,
including evaluation of grades, are behind the schedule laid down by the Action Plan and need to be speeded up. Generally, efforts to ens ure
minimum staffing levels, adequate financial resources
as well as
training
of the
administration need to continue in order to strengthen the capacity to implement the acquis.
Some progress has been made in addressing the deficiencies of the
judicial system,
however the legal framework still needs to be completed, including the adoption of the new
Law on Criminal Procedure.
Progress was made in adopting the
Law on Public Administration
regarding the judiciary, but several pieces of legislation still need to be adopted (the Law on Judicial Powers, the Law on Sworn Court Bailiffs, the Civil Procedure Law as well as the
policy document
on court administration). While some issues were addressed through interim legislation, no notable progress was achieved regarding
alleviation of courts, workload, elimination of
backlog of pending court cases and ensuring the enforcement of court decisions
in practice. While preparations to improve
remunerations of judges
have started, the process needs to be completed without delay, and sufficient funding needs to be ensured.
Training of judges
continued, but should be intensified. So me progress was made to
improve courts’ infrastructure and computerisation.
Little was done to promote
access to justice.
Good progress was however made in the field of
fight against corruption
in continuing the
implementation
of the
anti-corruption strategy,
the adoption of a legal framework to strengthen the administrative capacity in view of the
establishment of the Anti-Corruption Bureau in line with the requirements of the Action Plan. However, the appointment o head should not further delay the start of its operation and thus the implementation of the Action Plan. Moreover, adequate means to
ensure
effective
implementation
of the existing anti-corruption
legislation
are also required.
International co-operation
has been improved.
Regarding
human rights and protection of minorities,
some initial progress was achieved in terms of legislative changes aiming at the reduction of
pre-trial detention for juveniles,
in line with the requirements of the Action Plan, but the issue still continues to pose a very serious problem. Continued attention is to be paid ensuring that the responsible authorities only apply and enforce the
Language Law and its implementation regulation in line with the p rinciples of
justified public interest and
proportionality, international standards and the Europe Agreement.
Progress was made on promoting
integration of non-citizens into Latvian society,
notably through
increased support to facilitate the integration process, through
language training and information campaigns,
including the establishment of the Society Integration Foundation as required by the Action Plan, but process of naturalisation remains slow. The abolition of linguistic requirements in the election law was a positive development. While generally progress was made in this field, the whole process needs to be accelerated significantly and sufficient funding to encourage further integration and adequate
language training
are to be provided. Therefore, the Accession Partnership priorities related to the political criteria have been
partially met. Implementation of the measures under the Action Plan isslightly delayed.
Economic criteria
Latvia has made progress in the
privatisation of the remaining large enterprises
in the shipping and energy sector (Latvian Gas, Latvian shipping company LASCO), leaving only a few large enterprises to be privatised. This process will be more difficult. As required by the Action Plan, some progress on
finalising the land and property register
was made through completion of land properties in the Cadastral Register, but legal registrati on in the Land Book needs to be enhanced. The Computerised National Land Book should contribute to improving the functioning
of the land market.
Further progress is needed
to promote competitiveness, notably
through measures aimed at stimulating domestic and inward investment in growth-generating activities,
as the National Innovation Programme and a related Action Plan are still pending. The entry into force of the Commercial Code and the newly established utility regulator is c onsidered as a step to
improve business environment,
but the National Programme for SME development is still to be adopted. While the legislative framework has been largely put in place, particular attention must be paid to further
remove the remaining regulatory and administrative constraints.
Overall, the Accession Partnership priorities in the area of the economic criteria have
been largely met.
Ability to assume the obligations of membership
Chapter 1: Free movement of goods
Alignment of public procurement legislation
continued and administrative capacity in this field has been strengthened in terms of increase in staff and training as required by the Action Plan. While
implementation
is generally on track, the adoption of the policy document concerning the development of the public procurement system has been delayed. The
transposition of the New Approach Directives as concerns food legislation
is well ad vanced. Progress was made regarding the strengthening of the administrative capacity of the Food and Veterinary Service and legislative and institutional preparations (in the field of
food)
are on track, including
further training of food safety inspectors as required by the Action Plan. Moreover,
the renewal of existing marketing authorisations for pharmaceuticals
is well advanced and strengthening of administrative capacity of the State Agency of Medicines and the State Pharmaceutical Inspec tion is proceeding according to schedule. The
screening of Latvian legislation in the non-harmonised area
has been completed. Supplementary administrative resources have been allocated to strengthen the administrative capacity of the State Heritage Inspectorate. In accordance with the requirements of the Action Plan, the
national accreditation system
has been
reinforced and the
national metrology system
has been upgraded through intensified training and upgrading of equipment. The
re form of the market surveillance system
is proceeding as scheduled; the Consumer Rights Protection Centre set up several regional offices as a result of an increased budget and strengthened public awareness as foreseen in the Action Plan. No progress was made regarding
bodies for notification procedures. Adoption of EN standards
is on track. Overall, the Accession Partnership priorities in the area of free movement of goods have been met to a considerable extent. The time schedule set in th e Action Plan is being
largely respected.
Chapter 2: Free movement of persons
The
alignment of mutual recognition of professional qualifications and diplomas
is proceeding as scheduled. In accordance with the requirements of the Action Plan, the
administrative structures
of the Academic Information Centre have been strengthened through an increase of staff, but further efforts are necessary; implementation of
training programmes
is on track. With regard to
professional qualifications obtained before harmonisation,
measures need to be introduced.
The administrative structure for the co-ordination of social security
has been further developed; an inter-institutional working group to supervise preparations in this field has been established
as outlined in the Action Plan. Overall, the Accession Partnership priorities in the area of free movement of persons have been met to a large extent. The time schedule set in the Action Plan is being largely respected.
Chapter 3: Freedom to provide services
The
reinforcement of the supervision of financial services
has continued. Measures foreseen in the Action Plan in this field such as exchange of information with the financial and capital market supervisory authorities and training, are on track. In order to
complete alignment of the data protection legislation
further amendments need to be adopted, which also need to
ensure independence of the supervisory body.
As required in the Action Plan , the State Data Inspectorate was strengthened in terms of budgeting and staffing. Overall, the Accession Partnership priorities in the area of freedom to provide services have been partially met. The time schedule
set in the Action Plan is being largely respected.
Chapter 4: Free movement of capital
In order to further
comply with the recommendations of the Financial Action Task Force,
the administrative capacity of the Financial Intelligence Unit has continued to be strengthened, in line with the requirement of the Action Plan. Regarding the second
Directive against money laundering,
legislative alignment needs to be completed. Overall, the Accession Partnership priority in the area of free movement of capital has been met to a considerable ex tent. The time schedule set in the Action Plan is being largely respected.
Chapter 5: Company law
As required by the Action Plan, the urgent priority
of enforcing intellectual and industrial property rights
is being acted upon through the establishment of a specialised division in the State Police, increased of staff numbers and training, but
co-operation
between
customs and the police
needs to be further
improved.
Despite the progress made,
piracy and counterfeiting
still remain a matter of great concern.
Intensive train ing for enforcement bodies including judges and prosecutors
has started, but needs to continue. Regarding the urgent priority
to implement the Commercial Code,
the relevant law has entered into force, but effective implementation has yet to
continue. Overall, the Accession Partnership priorities in the area of company law have been partially met. The implementation of the measures under the Action Plan is largely on track.
Chapter 6: Competition
Latvia has continued to make progress in the field of
competition and state aid rules.
The
Competition Council and the Bureau
nevertheless require further strengthening in terms of competence and enforcement record as required by the Action Plan. The
State Aid Surveillance Commission
and its reinforced
secretariat
have a proven track record. Further
increased awareness raising
is needed not least in relation to the
market par ticipants and aid grantors. Training of the judiciary,
including judges and members of the Competition Council,
on competition-related matters
is being carried out, as required by the Action Plan, but must be intensified. Overall, the
Accession Partnership priorities in the area of competition have been partially met. The implementation of the measures under the Action Plan is largely on track.
Chapter 7: Agriculture
As required by the Action Plan, some progress was made in
upgrading
the general
structure
including the establishment of a legal framework and
administrative structures
through the implementation of Latvia’s action plan to implement the Common Market Organisations. There was some progress in
completing preparations for enforcement and practical application of the management mechanisms of the Common Agricultural Policy,
in particu regards market intervention, sugar quotas and animal products. As foreseen in the Action Plan, some further progress was made regarding preparation for the
Integrated Administration and Control System,
mainly
through increased staff and intensified co-operation with the Commission, which needs however to be speeded up; preparatory steps were taken to establish the
Paying Agency.
A significant development was the accreditation of the SAPARD agency. Progress was made regard ing the
implementation and enforcement of veterinary and phytosanitary and food safety legislation,
as the joint body became operational, in line with the timetable of the Action Plan. Generally, the
administrative structures needed for the design, implementation, monitoring, control and evaluation of EC-funded rural development programmes
were strengthened, but the Rural Development
Plan still needs to be drawn up.
Veterinary and phytosanitary inspection arrangements
were upgrad ed in terms of establishment of data bases, computerisation and training, but special attention needs to be paid to respecting timetables regarding the modernisation of border inspection posts as foreseen in the Action Plan. Regarding
animal diseases,
measures are being implemented, including monitoring and testing of BSE, as required by the Action Plan. Progress was made in establishing
restructuring
plans for the
agri-food sector,
but
modernisation of processing plants,
is slow , and no progress was achieved in the
meat
sector. Progress was made
in setting up the control structure which should ensure respect of
EC food safety standards,
but implementation and enforcement are still to be introduced. Therefore, the Accession Partnership priorities in the area of agriculture have been partially met. Implementation of the measures under the Action Plan is largely on track.
Chapter 8: Fisheries
Further steps have been taken to
establish the administrative structures and equipment to ensure the implementation of the Common Fisheries Policy,
but particular efforts are still necessary. As regards
resource management, inspection and control,
progress has been achieved, which needs to continue.
Market policies
still have to be adopted (on marketing of fisheries and aquaculture products) and further important efforts are needed concerning
structural actions,
where activities have only started. Good progress was made regarding the
fishing vessel register
and a fleet development programme exists as required by the Action Plan. Therefore, the Accession
Partnership priorities in the area of fisheries have been partially met. The implementation of the measures under the Action Plan is largely on track.
Chapter 9: Transport
Legislative alignment
has continued
in road transport,
but no new legislation was adopted in relation to railway and maritime transport. On
air transport,
the computerised reservation system requirements were transposed. Some measures have been taken to start
strengthening administrative capacity
in
road transport
through the adoption of a political document on control of road transport, which aims at further restructuring, prov ision of additional resources, training and upgrading of the administration in this field, as addressed by the Action Plan. Regarding
railway transport,
a passenger carriage operator was established in line with the
Action Plan, but further strengthening of railway inspection is necessary. The legal base for the establishment of an investigation authority in the area of
air transport needs still to be put in place.
On
maritime transport,
framework laws need to be adopted as well as implementing legislation which is lagging behind. As required by the Action Plan, measures are being developed to address the urgent priority concerning
strengthening of administrative capacity in the field of maritime
safety in terms of increase of resources, further restructuring of the Latvian Maritime Administration and training, and their timely implementation remains important
in order to increase efficiency. Regarding
Flag State performance,
progress was made as the Por t State controls and detention rates of Latvian ships were improved, but the safety record should be raised significantly to reach EU level. Therefore, the Accession Partnership priorities in the area of transport have been partially met. Implementation of the measures under the Action Plan is largely on track.
Chapter 10: Taxation
Progress was made regarding
alignment of VAT legislation,
but not for excise duties and direct taxation. Review of legislation to ensure compliance
with the Code of Conduct for Business Taxation
is in process. On
administrative capacity and control procedures,
some progress was made in line with the Action Plan, particularly in the field of customer service and regarding collection of revenues and audits. In line with the requirements of the Action Plan, implementation of the State Revenue Service Modernisation Project (1998-2002) has continued in terms of the organisational structure, the establishment of service halls and the development
of appeal structures. The
administrative capacity
needs however to be further
strengthened,
including completion of the three level organisational structure and appeals procedures. No progress can be reported with regard to the
holding and movement directive.
The urgent priority to install an
IT system to allow for exchange of data with Member States as required by the Action Plan
needs to be addressed. Thus, the Accession Partnership priorities in the field of taxation have been only partially met. Implementation of the Action Plan is slightly delayed.
Chapter 12: Statistics
Work on
improving quality and coverage of statistics
has continued, but further efforts in
Annexes
Adherence to following conventions
and protocols
BG
CY
CZ
EE
HU
LV
LT
MT
PL
RO
SK
SI
TK
X
1997
1998
1999
2000
2001
 PDF to HTML - Convert PDF files to HTML files
1461351_0021.png
ECHR
Convention
Rights)
on
(European
Human
X
X
X
X
X
X
X
X
X
X
X
X
X
Basic data
Population (average) a)
2,433
2,410
in 1000
2,390
in 1000
2,373
M
2,355 - M
Protocol 1 (right of property)
Protocol
4
movement et al.)
(freedom
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
O
Total area
National accounts
Gross domestic product at current prices
64,589
64,589
64,589
64,589
-M
64,589 - M
To
1000 Mio Lats
3.3
3.6
3.9
4.3
4.8
A
-D
1000 Mio ECU/euro
-L
7.8
8.5
Protocol 6 (death penalty)
Protocol 7 (ne bis in idem)
European Convention for
the Prevention of Torture
European Social Charter
Revised European Social
Charter
Framework Convention for
National Minorities
ICCPR
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
O
X
X
O
X
X
X
X
X
X
X
X
X
X
O
O
X
Gross domestic product at current prices
5.0
5.4
6.2
ECU/euro
-D
E
3,300
3,600
Gross domestic product per capita b) at current prices
2,000
2,200
2,600
-A
% change over the previous year
Gross domestic product at constant prices (nat. currency)
Employment growth
8.4
1.9
6.4
4.8
0.6
4.1
2.8
-0.5
3.4
6.8
0.0
6.8
7.7
-0.1
7.8
-E
-E
O
X
X
X
X
O
O
X
X
O
X
O
O
X
X
O
X
O
O
X
X
O
O
X
X
O
Labour productivity growth
R
in Purchasing Power Standards
Gross domestic product per capita b) at current prices
Structure of production
5,200
5,600
6,100
7,000
7,700
-R
-R
% of Gross Value Added c)
5.6
27.4
4.8
62.1
4.4
23.4
6.9
65.4
4.3
19.9
7.1
68.6
4.9
18.6
6.7
69.8
4.7
18.7
6.2
70.4
X
X
X
X
X
O
X
X
X
X
X
X
O
E
- Agriculture
- Industry (excluding construction)
B
E
(International
Covenant on Civil and
Political Rights)
X
X
X
X
X
X
X
X
X
X
X
X
O
- Construction
- Services
Structure of expenditure
Im
as % of Gross Domestic Product
85.9
66.7
19.2
18.8
3.9
51.1
59.6
85.9
64.5
21.4
27.3
0.4
51.3
64.8
83.4
62.9
20.6
25.2
1.7
43.9
54.2
81.7
61.9
19.7
26.5
0.5
45.6
54.3
81.5
62.3
19.2
27.3
2.6
44.9
56.2
Te
Optional Protocol to the
ICCPR (right of individual
communication)
Second Optional Protocol to
ICCPR (death penalty)
ICESCR
X
X
X
X
X
X
X
X
X
X
X
X
O
- Final consumption expenditure
- household and NPISH
- general government
- Gross fixed capital formation
E
Im
X
X
O
O
X
O
X
X
O
X
X
X
O
D
- Stock variation d)
- Exports of goods and services
N
N
(International
Covenant on Economic,
Social
and
Cultural
rights)
X
X
X
X
X
X
X
X
X
X
X
X
O
- Imports of goods and services
Inflation rate
Consumer price index e)
Balance of payments
% change over the previous year
8.1
4.3
2.1
2.6
2.5
In
Li
M
in Mio ECU/euro
-305
-748
1,621
2,369
327
49
68
29
460
-576
-1,007
1,798
2,805
271
48
111
73
318
-599
-956
1,772
2,729
314
-44
87
57
324
-538
-1,152
2,232
3,384
479
28
106
39
442
-825g
:
:
:
:
:
:
:
198
Fe
CAT
(Convention against
Torture)
CERD
(Convention on
X
X
X
X
X
X
X
X
X
X
X
X
X
-Current account
-Trade balance
Exports of goods
La
E
X
X
X
X
X
X
X
X
X
X
X
X
O
Imports of goods
-Net services
-Net income
-Net current transfers
-of
which:
government transfers
E
the Elimination of All
Forms
of
Racial
Discrimination)
CEDAW
(Convention on
X
X
X
X
X
X
X
X
X
X
X
X
X
E
E
A
-A
- FDI (net) inflows
Public finance
General government deficit/surplus
General government debt
:
the Elimination of All
Forms of Discrimination
against Women)
Optional Protocol to the
CEDAW
CRC
(Convention on the
O
X
X
O
X
O
O
O
O
O
X
O
O
-I
in % of Gross Domestic Product
1.8
-0.7
10.6
-5.3
13.7
-2.7
13.9
-1.6p
16.0p
-C
-S
U
Financial indicators
in % of Gross Domestic Product
10.5
36.2
47.6
45.7
:
U
X
X
X
X
X
X
X
X
X
X
X
X
X
Gross foreign debt of the whole economy f)
U
Rights of the Child)
as % of exports
Gross foreign debt of the whole economy f)
20.6
70.6
111.8
100.0
:
U
Lo
Infrastructure
Railway network
37.4
in km per 1000 km²
37.4
km
37.4
37.4
37.4
Length of motorways
Industry and agriculture
Gross sales of industrial production volume indices
Gross agricultural production volume indices (in prices 1993)
Standard of living
Number of cars
Main telephone lines
Number of subscriptions to cellular mobile services
Number of Internet subscriptions
p=provisional figures
:
0
0
0
0
0
previous year=100
113.8
103.8
103.1
92.1
94.6
89.4
104.7
104.7
108.4p
105.0p
per 1000 inhabitants
178.0
306.0
31.0
:
201.0
309.0
70.0
:
221.0
307.0
117.0
:
235.0
311.0
170.0
250.0
308.0
267.0
:
a) Calculation of the CSB of Latvia based on the 2000 Population and Housing Census provisional results.
b) Figures have been calculated using the population figures from National Accounts, which may differ from those used in
demographic statistics.
c) Including FISIM.
d) These figures include changes in inventories, acquisitions less disposals of valuables and the statistical discrepancy between
the GDP and its expenditure components.
e) Changes in Methodology: PROXY HICP since 1998 (see methodological notes).
f) Series break after 1997.
g) Source: Website of the National Bank
Methodological Notes
Inflation rate
As part of the preparations for the common currency the EU Member States (MSs) have designed a new
consumer price index
in order to comply with the obligations of the EU Treaty. The aim was to produce CPIs comparable between Member States. The main task was to harmonise methodologies and coverage. The result was the Harmonised Index of Consumer Prices (HICP). A similar exercise has been started with Candidate Countries (CC). In respect to enlargement, it i s equally important that their economic performance is assessed on the basis of comparable indices. Some progress has already been made towards
adapting the new rules. Since January 1999 CCs report monthly to Eurostat so-called proxy HICPs that are based on national CPIs but adapted to the HICP coverage. They are not yet fully compliant with the HICPs of the MSs. In the table, the proxy HICPs are back-calculated to 1997 (rates from 1998).
Finance
Public finance:
The government deficit and debt statistics of the Candidate Countries are provisional, in the sense that they do not yet fully comply with EU methodological requirements. Broadly speaking, the general government deficit / surplus refers to the national accounts concept of consolidated general government net borrowing / net lending of ESA95. General government debt is defined as consolidated gross debt at end-year nominal value. The series f or Latvia are presently available from 1998 only; the 1996-97 data are an approximation derived from the IMF’s GFS methodology.
Gross foreign debt
is of the whole economy, covering both short- and long-term, but excluding equity investment and money market instruments. The source for stock of outstanding debt is OECD, while the source of GDP is Eurostat. For the ratio of gross foreign debt to exports, the national accounts definition of exports of goods and services is used (source: Eurostat). The data for 2000 are Eurostat estimates, based on joint OECD/IMF/BIS/World Bank series.
Monetary aggregates
are end-year stock data, as reported to Eurostat. Generally, M1 means notes and coin in circulation plus bank sight deposits. M2 means M1 plus savings deposits plus other short-term claims on banks. M3 means M2 plus certain placements in a less liquid or longer-term form. Not all countries produce an M3 series. Total credit means loans by resident monetary financial institutions (MFIs) to non-MFI residents.
Interest rates:
Annual average rates based on monthly series reported to Eurostat. Lending rates refer to bank lending to enterprises for over 1 year. Deposit rates refer to bank deposits with an agreed maturity of up to one year. Day-to-day money rates are overnight interbank rates.
Exchange rates:
ECU exchange rates are those that were officially notified to until 1 January 1999, when the ECU was replaced by the euro. Euro exchange rates are reference rates of the European Central Bank. The effective exchange rate index (nominal), as reported to Eurostat, is weighted by major trading partners.
Reserve assets
are end-year stock data, as reported to Eurostat. They are defined as the sum of central bank holdings of gold, foreign exchange, SDRs, reserve position in the IMF, and other claims on non-residents. Gold is valued at end-year market price.
External trade
Imports and exports (current prices).
The data is based upon the special trade system, according to which; external trade comprises goods crossing the customs border of the country. Trade data excludes direct re-exports, trade in services and trade with customs free zones as well as licences, know-how and patents. Value of external trade turnover includes the market value of the goods and the additional costs (freight, insurance etc.). The term FOB means t hat all costs incurred in course of transport up to the customs frontier are charged to the seller. The term CIF means that the purchaser pays the additional costs.
Trade Classifications.
Merchandise trade flows are using the commodity classification according to the Combined Nomenclature. Imports are recorded on CIF basis. Exports are recorded here on FOB basis.
External trade price indices.
Export unit value index is calculated using two sources of information for index calculation: the main source is customs data and other is a price data collected from manufacturing enterprises that export their products. The index is calculated according to a Laspeyre’s type formula. The base price (the average price of the previous year) is calculated as the weighted average price of the previous year.
Imports and exports with EU-15.
Data declared by the Republic of Latvia.
Demography
Net migration
. Net migration (recalculated by EUROSTAT) for year X, is: population (X+1) - population (X) - Deaths (X) + Births (X). This assumes that any change in population not attributable to births and deaths is attributable to migration. This indicator includes therefore also administrative corrections (and projection errors if the total population is based on estimates and the births and deaths on registers).
Labour force
The European Labour Force Survey is conducted in spring each year in accordance with Council Regulation (EEC) No. 577/98 of 9 March 1998. A detailed description of the sampling methods, the adjustment procedures, the definitions and the common Community coding currently used in the labour force survey is presented in the publications ‘Labour Force Survey – Methods and definitions, 1998’ and ‘Labour Force Survey in central and east European definitions, 2000’.
All definitions apply to persons aged 15 years and over, living in private households. The concepts and definitions used in the survey follow the guidelines of the International Labour Organisation. Persons carrying out obligatory military service are not included.
Persons in employment
were those who during the reference week did any work for pay or profit for at least one hour, or were not working but had jobs from which they were temporarily absent. Family workers are included.
As from 2001 (Commission Regulation (EC) No 1897/2000 of 7 September 2000),
unemployed persons
comprise persons aged 15 to 74 who were:
(a) without work during the reference week, i.e. neither had a job nor were at work (for one hour or more) in paid employment or self-employment;
(b) currently available for work, i.e. were available for paid employment or self-employment before the end of the two weeks following the reference week;
(c) actively seeking work, i.e. had taken specific steps in the four weeks period ending with the reference week to seek paid employment or self-employment or who found a job to start later, i.e. within a period of at most three months.
Comparability with results prior to 2001:
unemployment results used to refer to persons aged 15 and more. Persons who found a job to start later used to be considered as unemployed with the unique condition to have no job in the reference week; however, the new condition on time limit of at most three months is not yet applied.
Duration of unemployment
is defined as:
(a) the duration of search for a job, or
(b) the length of the period since the last job was held (if this period is shorter than the duration of search for a job).
The active population
is defined as the sum of persons in employment and unemployed persons.
Inactive persons
are those who are not classified as persons in employment nor as unemployed persons.
Employment rates
represent employed persons aged 15-64 as a percentage of the same age population.
 PDF to HTML - Convert PDF files to HTML files
1461351_0022.png
Unemployment rates
represent unemployed persons as a percentage of the active population aged 15 years and more.
Economic activity rates
represent the active population aged 15-64 as a percentage of the population of the same age.
Infrastructure
Railway network.
All railways in a given area. This does not include stretches of road or water even if rolling stock should be conveyed over such routes; e.g. by wagon-carrying trailers or ferries. Lines solely used for tourist purposes during the season are excluded as are railways constructed solely to serve mines; forests or other industrial or agricultural undertakings and which are not open to public traffic. The data considers the construction lengt h of railways.
Length of motorway.
Road, specially designed and built for motor traffic, which does not serve properties bordering on it, and which:
(a) is provided, except at special points or temporarily, with separate carriageways for the two directions of traffic, separated from each other, either by a dividing strip not intended for traffic, or exceptionally by other means;
(b) does not cross at level with any road, railway or tramway track, or footpath;
(c) is specially sign-posted as a motorway and is reserved for specific categories of road motor vehicles.
Entry and exit lanes of motorways are included irrespectively of the location of the signposts. Urban motorways are also included.
Industry and agriculture
Industrial production volume indices.
Industrial production covers mining and quarrying, manufacturing and electricity, gas, steam and water supply (according to the NACE Rev.1 Classification Sections C,D,E).
Gross agricultural production
volume indices. Is calculated in constant prices on the basis of the previous year. Indices are changed as results of methodology improvement.
Standard of living
Number of cars.
Passenger car: road motor vehicle, other than a motor cycle, intended for the carriage of passengers and designed to seat no more than nine persons (including the driver).
The term "passenger car" therefore covers microcars (need no permit to be driven), taxis and hired passenger cars, provided that they have less than ten seats. This category may also include pick-ups.
Number of main telephone lines
– number of telephone lines connecting the subscriber’s terminal equipment to the public switched network and which has a dedicated port in the telephone exchange equipment.
Sources
Total area, infrastructure, industry and agriculture, external trade, labour market, demography: National sources.
National accounts, inflation rate, balance of payment, public finance, finance: Eurostat.