Europaudvalget 2003-04
EUU Alm.del Bilag 180
Offentligt
Comprehensive monitoring report
on
Latvia’s
preparations for membership
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A.
B.
INTRODUCTION ................................................................................................................................ 3
ECONOMIC ISSUES ........................................................................................................................... 5
1.
Economic developments............................................................................................................ 5
2.
Implementation of recommendations for improvements ........................................................... 7
COMMITMENTS AND REQUIREMENTS ARISING FROM THE ACCESSION
NEGOTIATIONS ................................................................................................................................. 9
1.
Administrative and judicial capacity ....................................................................................... 11
Public administration............................................................................................................... 11
Judicial capacity ...................................................................................................................... 12
Anti-corruption measures ........................................................................................................ 14
Translation of the acquis into Latvian ..................................................................................... 16
2.
The chapters of the acquis ....................................................................................................... 17
Chapter 1: Free movement of goods ....................................................................... 17
Chapter 2: Free movement of persons .................................................................... 18
Chapter 3: Freedom to provide services ................................................................. 20
Chapter 4: Free movement of capital ...................................................................... 21
Chapter 5: Company law......................................................................................... 22
Chapter 6: Competition Policy................................................................................ 23
Chapter 7: Agriculture ............................................................................................ 24
Chapter 8: Fisheries ................................................................................................ 28
Chapter 9: Transport ............................................................................................... 29
Chapter 10: Taxation .............................................................................................. 31
Chapter 11: Economic and monetary union ............................................................ 33
Chapter 12: Statistics .............................................................................................. 33
Chapter 13: Social policy and employment ............................................................ 34
Chapter 14: Energy ................................................................................................. 36
Chapter 15: Industrial policy .................................................................................. 38
Chapter 16: Small and Medium-sized Enterprises .................................................. 38
Chapter 17: Science and research ........................................................................... 38
Chapter 18: Education and training ........................................................................ 39
Chapter 19: Telecommunications and information technologies ............................ 39
Chapter 20: Culture and audio-visual policy........................................................... 40
Chapter 21: Regional policy and co-ordination of structural instruments............... 40
Chapter 22: Environment........................................................................................ 43
Chapter 23: Consumer and health protection.......................................................... 45
Chapter 24: Justice and home affairs ...................................................................... 46
Chapter 25: Customs Union.................................................................................... 50
Chapter 26: External relations ................................................................................ 51
Chapter 27: Common foreign and security policy .................................................. 52
Chapter 28: Financial control.................................................................................. 53
Chapter 29: Financial and budgetary provisions..................................................... 54
CONCLUSION ................................................................................................................................... 56
C.
D.
STATISTICAL ANNEX .............................................................................................................................. 58
2
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A.
I
NTRODUCTION
The accession negotiations with Latvia were successfully concluded on 13 December
2002 and the Treaty of Accession was signed on 16 April 2003. In a referendum held on
20 September 2003, a majority of Latvians expressed their support for membership of the
European Union. Following ratification of the Treaty of Accession, Latvia will join the
EU on 1 May 2004.
In its Strategy Paper “Towards the enlarged Union”, which accompanied the 2002
Regular Reports, the Commission stated that:
“Acceding countries need to implement the acquis by the date of accession, except in
cases where transitional arrangements have been agreed. Commitments undertaken
in the negotiations must be fully met before accession. The Regular Reports point to
a number of areas where further improvements need to be made in the context of the
political and economic criteria and in relationship to the adoption, implementation
and enforcement of the acquis. These should be vigorously pursued. In order to
analyse progress and to facilitate successful membership of the European Union, the
Commission will regularly monitor this and report to Council. The Commission will
produce six months before the envisaged date of accession a comprehensive
monitoring report for the Council and the European Parliament.”
The Copenhagen European Council in December 2002 concluded that:
“Monitoring up to accession of the commitments undertaken will give further
guidance to the acceding states in their efforts to assume responsibilities of
membership and will give the necessary assurance to current Member States.”
and the Thessaloniki European Council in June 2003 stated that:
“…the ten acceding States are encouraged to keep up their efforts so that they are
fully prepared to assume the obligations of membership by accession. This also
includes the necessary translation of the Community acquis. With a view to making a
success of enlargement, the monitoring of these preparations has been intensified on
the basis of reports submitted regularly by the Commission.”
As the accession date of 1 May 2004 draws closer, this report presents a comprehensive
state of play of the findings of the regular monitoring carried out by the Commission,
building upon the findings of the 2002 Regular Report for Latvia. The report contains
two main parts.
The first part deals with economic issues. It describes briefly economic developments in
Latvia, and then goes on to assess the implementation of the necessary economic reforms
in the areas highlighted in the conclusions of the 2002 Regular Report for Latvia as being
in need of further improvements.
The second part gives an overview of where Latvia stands in implementing all
commitments and requirements arising from the accession negotiations for each
acquis
chapter, both in terms of legislation and from the perspective of implementing structures,
including administrative capacity and enforcement. In view of their importance for the
implementation and enforcement of the
acquis,
the overall state of readiness of the public
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administration and the judicial system and the development of effective anti-corruption
measures are assessed in an introductory section to this part.
This report reflects the situation at the end of September 2003. It records decisions
actually taken, legislation actually adopted, measures actually implemented and structures
actually in place and functioning by that date.
For each chapter of the
acquis,
this report identifies the areas in which Latvia is expected
to be, or is already, in a position to implement the acquis and the areas where further
action is still needed. Where relevant, the report also points out issues where lagging or
deficient preparations are a cause of serious concern. This assessment starts from the
premise that Latvia must be fully prepared for membership from the date of accession. In
cases where transitional arrangements have been agreed in the accession negotiations,
their effect on Latvia’s obligations is duly reflected in the assessment.
Numerous sources of information have been used to compile this report. Latvia was
invited to provide information on its state of preparedness. The Report also draws on
information provided by Latvia within the framework of the Association Agreement and
the accession negotiations, as well as on peer reviews that have taken place to assess its
administrative capacity in specific areas. Council deliberations and European Parliament
reports and resolutions have been taken into account in drafting it.
1
Where relevant, the
Commission has also drawn on assessments made by various international organisations
such as the Council of Europe, the OSCE and the international financial institutions, and
by non-governmental organisations.
1
For the European Parliament the rapporteur is Mrs Elisabeth Schroedter.
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B.
E
CONOMIC ISSUES
In its 2002 Regular Report, the Commission concluded that
“Latvia is a functioning market economy and that the continuation of its current
reform path should enable Latvia to cope with competitive pressure and market
forces within the Union.
Improvements can be made to the functioning of the labour markets, in particular by
active labour market measures in favour of disadvantaged groups, reinforcing public
and private infrastructure necessary for the mobility of the workforce and further
reforms to the educational system. Fiscal policy has to maintain a prudent approach,
also in view of the high current account deficit. In addition, improving the general
business environment and strengthening the administrative and judicial capacity
would support a more broad-based private sector development.”
The principal purpose of this part of the Comprehensive Monitoring Report is to assess
the implementation of recommendations for improvements in the areas identified in last
year’s Regular Report. The focus is on the change since last year and not on the overall
degree of functioning of the market economy or degree of competitiveness. The
assessment can be found in Section 2. Section 1 briefly describes recent economic
developments in Latvia including the continuation of the reform path since last year’s
Report.
1.
Economic developments
Economic activity has remained firm despite a weak external environment.
GDP growth
remained strong at 6.1% in 2002 and accelerated further to 8.8% in the first quarter of
2003 year-on-year. Private consumption and gross fixed capital formation were
particularly robust and became the driving factors for growth, while export growth was
relatively high and outpaced import growth. Despite high private consumption growth,
inflation decreased to 2% in 2002, as inflation in Latvia’s major trading partners was low
and lower prices in mobile communication services contributed to attenuating domestic
pressures. Inflation picked up to 2.5% in April 2003, driven by higher prices of consumer
goods. High growth has contributed to lower unemployment, which decreased from
12.8% in December 2001 to 11.6% in December 2002
2
, and the employment rate was
60.4% in 2002, but upward pressures from enterprise and rural restructuring are expected
to remain. The current account deficit decreased to 7.7% of GDP, but remains at a
relatively high level. Because the savings-investment balance is likely to be under
pressure from high private consumption growth and investment requirements,
guaranteeing external sustainability in the medium term remains a point of concern.
Financing the current account deficit in 2002 was not problematic, as net inflows of
foreign direct investment showed strong growth and financed about 60% of the deficit.
The decreasing path of fiscal consolidation was interrupted in 2002, when the general
government deficit increased to 3%. The general government debt remains relatively low
at 15.2% of GDP in 2002. Monetary conditions remained supportive to the exchange rate
peg and contributed positively to macroeconomic stability. Interest rates have broadly
2
Data according to Labour Force Survey for the last quarter of the year.
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followed developments in interest rates of the economies represented in the basket which,
together with high banking competition, led to rapid credit growth. Very strong credit
growth and a large share of non-resident deposits in the banking sector stress the need to
closely monitor developments in this area.
Latvia
Real GDP growth rate
Inflation rate
- annual average
- December-on-
December
Unemployment rate
- LFS definition
General government
budget balance
Current account balance
per cent
per cent
per cent
per cent
per cent of
GDP
per cent of
GDP
million
ECU/Euro
Per cent
of exports
of goods
and
services
million
ECU/Euro
Per cent
of GDP
445
198
410
b
233 Jan.-
July
b
2.7
14.3
-0.7
-10.7
-576
28.4
3
14.0
-5.3
-9.7
-599
47.5
1.7
13.7
-2.7
-6.9
-538
87.5
3.2
12.8
-1.6
-9.6
-825
104.3
1.5
12.8
-3.0 p
-7.7 p
-697
:
b
Main Economic Trends
1998
1999
2000
4.8
4.3
2.8
2.1
6.8
2.6
2001
7.9
2.5
2002
6.1
2.0
2003
latest
6.2 Q2
2.3
August
a
3.4
August
-420 Jan.-
July
b
Gross foreign debt of the
whole economy
- debt export ratio
792
5.9
1 297
5.7
3 104
5.7
3 984
2.3
:
4.6 p
Foreign direct investment
in flow
- balance of payments
data
million
318
352
ECU/Euro
Sources: Eurostat. National sources. OECD external Debt Statistics
a
Moving 12 months average rate of change.
b
Source: Website of the National Bank.
P= provisional figures
The economic reform path has been sustained.
The privatisation process continued, albeit
with some controversies, with the sale of the shipping company (LASCO) and the
remaining government stakes in Latvijas Gaze and Krajbanka. The government expects
to complete the sale of remaining shares in Ventspils Nafta and Lattelekom, though
several problems have caused delays. Restructuring plans are being put in place for
public enterprises which are not expected to be privatised such as Latvenergo and the
railway company. The tariff system for public utilities services is being overhauled to
reflect more cost-recovery mechanisms and open the markets to higher competition,
although competition is still low. The pension reform is being implemented as foreseen,
setting the grounds for a more sustainable pension system. The land market reform is
well advanced. Significant problems remain in the agricultural sector, which continues to
be dominated by small farms where productivity remains very low. A number of active
labour market initiatives have been put in place and are producing satisfactory results, but
further efforts are necessary to decrease structural unemployment and regional disparities
in terms of income and unemployment. Despite increased efforts, more focus is needed
on developing entrepreneurship and innovation activities and decreasing corruption.
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Main Indicators of Economic Structure in 2002
Population (average)
GDP per head
a
Thousand
PPS
Per cent of EU average
2,339
35
4.7
15.3
26.2
46.4
45.5
2288
978
5.8
Share of agriculture 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
d
Long term unemployment rate
Source: Eurostat
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 2001.
d
Data refer to 2000.
b
Per Cent
Per Cent
Per Cent
Per Cent
Per Cent
Million Euro
Euro per head
Per Cent of labour force
2.
Implementation of recommendations for improvements
Positive developments have taken place as regards active
labour market
policies, but
several structural rigidities remain.
Improvements have been made since last year’s
Report in several areas identified in the EU-Latvia Joint Assessment of Employment
Policy Priorities and the subsequent progress reports. Good progress has been achieved
concerning the preparation of initiatives to increase working opportunities for the young
unemployed and to improve the skills of the aged and disabled unemployed. Labour
mobility remains low despite very large regional income and unemployment disparities.
Reinforcing public and private infrastructure is necessary for the mobility of the
workforce, but the lack of appropriate skills in remote areas also hinders mobility.
Further efforts are needed in adapting the educational system to the current demand for
skills. Improving skills in IT, marketing, management and languages should allow Latvia
to develop more value added activities and to keep the present good trend of productivity
growth. Despite high GDP growth rates in the last years, employment growth has been
relatively low. More focus is needed on developing local entrepreneurship and innovation
activities and recent initiatives in this area need to be strengthened. In addition, the
scarcity of links between enterprises and universities is perceived by the business
community as a major problem hindering economic dynamism and entrepreneurship.
Fiscal policy
turned into a more expansionary phase in 2002.
The general government
deficit increased to 3% of GDP in 2002, up from 1.6% in 2001. The level was
significantly above the initial targets set by the government in 2002. Higher expenditure
reflected supplementary spending by main ministries approved at the end of the year, as
well as a higher than expected deficit of local government and significant wage increases
in the public sector. Revenues increased along the lines of high GDP growth, induced by
high personal, corporate income and social taxes, although it was not sufficient to fully
offset the increase in expenditure. In the period January-May 2003, revenues increased by
an estimated 8.9% over the same period of last year, underpinned by strong GDP growth
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and better tax administration, whereas expenditure increased by 4.6%. While revenues
were higher than originally planned, expenditure developed very much according to
budget plans, leading to a slight surplus of the general government balance in May. In
view of these developments, the government decided to amend the budget in June 2003.
The amendments entail additional expenditure, most of which will be spent on the
teacher wage reform, subsidies of agricultural production, grants for investment of local
governments and the financing of the healthcare sector. The original deficit target for this
year, about 3% of GDP, is expected to be maintained. The robust domestic demand and
the high current account deficit raise concerns about the suitability of the present fiscal
policy. Recent tax cuts and higher expenditure related to wages, the health system and
investment needs are likely to constrain fiscal consolidation in the medium term. More
discipline could be exercised on the borrowing of local governments, and avoiding
budget amendments that entail additional expenditure would allow the central
government finances to reap the benefits of the current high growth rates. A less pro-
cyclical fiscal stance would be more supportive to macroeconomic and external
sustainability.
Overall, appropriate conditions to attract foreign investment have been established, but
the
environment for the creation of new enterprises
remains somewhat problematic.
Some progress has been made in improving
administrative and judicial
capacity as
regards to the business community.
Several initiatives have been taken to improve the
situation. The Development Agency has set up an action plan to reduce barriers to
creating new business, with greater focus on small local enterprises and particular
attention to venture capital and the creation of a credit guarantee agency for SMEs.
Following the positive experience with the Foreign Investors Council, which discusses
with the government developments in the business environment and regulatory
framework, the Ministry of Economic Affairs has recently set up an advisory council to
discuss entrepreneurship issues. The council tries to bring together representatives of
different business associations in co-ordination with the government, creating a common
interest for business. Other recent initiatives include parliament’s approval of state
financing for consultancy projects for entrepreneurship, under which 50% of such
consultancy costs will be financed by the state. As regards administrative and judicial
capacity, funds and personnel within the Ministry of Economic Affairs are being
increased to deal with the business environment. While steps have been taken to improve
judicial capacity, judicial reform, including the establishment of a professional court
administration and administrative courts, has only started.
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C.
C
OMMITMENTS
NEGOTIATIONS
AND
REQUIREMENTS
ARISING
FROM
THE
ACCESSION
As we approach the actual date of accession and the entry into force of the mutual rights
and obligations enshrined in the Treaty of Accession, it is necessary to focus efforts on
ensuring that Latvia is fully prepared in all areas of the
acquis
from the start of its
membership. In other words, Latvia must meet its commitments and requirements arising
from the accession negotiations.
In the 2002 Regular Report on Latvia, the Commission found that:
“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.”
As regards the administrative capacity to implement the acquis, the overall findings were
as follows:
“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.”
As part of its continuous monitoring, the Commission services addressed two letters to
Latvia in March and June 2003 expressing concern over its preparedness in the field of
capital movements within the chapter on free movement of capital, the maritime sector
within the transport policy chapter, administrative capacity within the taxation chapter,
the reform of the judiciary, including legislation, implementation structures and training
within the chapter on justice and home affairs, computerisation and IT interconnectivity
within the customs union chapter and the alignment and implementation structures in the
area of structural action expenditure within the financial control chapter, and calling for
urgent action to remedy these shortcomings.
In order to give further guidance to Latvia in its preparation efforts and to give the
necessary assurance to current Member States and other future Member States, this part
of the comprehensive monitoring report, in Section 2, gives an overview of where Latvia
currently stands in implementing all commitments and requirements arising from the
accession negotiations for each of the 29 chapters of the
acquis.
It covers the whole body
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of the
acquis,
on a chapter-by-chapter basis, both in terms of legislation and from the
perspective of implementing structures, including administrative capacity and
enforcement.
The principal commitment undertaken by Latvia in the accession negotiations is to be
fully prepared for membership in all areas by the date of accession. In a number of areas,
however, commitments were made to put in place and implement the acquis according to
specific timetables even before accession. This report examines the extent to which these
commitments have been met, and where delays have occurred, but the principal focus of
the assessment remains the requirement that Latvia must be fully prepared as from
accession. Naturally, in cases where transitional arrangements have been agreed, their
effect on Latvia’s obligations is duly reflected in the assessment. For each chapter, a
conclusion is provided, which is structured in the following way. On the other hand, it
should be underlined that, in order for Latvia to make effective use of its eligibility for
Community structural funds from 1 January 2004, the relevant acquis in areas such as
public procurement, state aid and environmental protection will need to be fully respected
from 1 January 2004 in relation to the implementation of structural funds actions
3
.
Firstly,
it identifies those areas where Latvia is essentially meeting the commitments and
requirements arising from the accession negotiations and is expected to be, or is already,
in a position to implement the acquis from accession. This does not exclude the
possibility that certain actions are still to be taken, but these should under foreseeable
circumstances not pose particular difficulties.
In a
second
paragraph, the assessment identifies any areas where important further action
is still needed in order to complete preparations for membership. In some cases these
preparations are ongoing, but enhanced efforts or quicker progress may be called for.
These are issues which can still be remedied taking into account the accession date of 1
May 2004 but which require the special attention of the authorities.
Thirdly,
where relevant, the assessment also identifies issues that are of serious concern.
These are areas where serious shortcomings exist which are likely to persist after
accession unless immediate remedial action is taken. These issues require the urgent
attention of the authorities. In view of their importance for the implementation and
enforcement of the
acquis,
the
overall
state of readiness of the public administration and
the judicial system and the development of effective anti-corruption measures, together
with the question of the translation of the acquis into Latvian, are evaluated in a separate
Section 1.
3
See also the Commission Communication "on the implementation of commitments undertaken by the
acceding countries in the context of accession negotiations on Chapter 21 - Regional policy and
coordination of structural instuments" of 16 July 2003 (COM(2003) 433 final).
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1.
Administrative and judicial capacity
Public administration
Implementation of the reform of the public administration has continued. With the entry
into force of the Framework Law on Public Administration in January 2003, which is to
be fully implemented by January 2005, the horizontal policy framework is being put in
place.
The State Chancellery, now responsible for strategic planning and horizontal
coordination of government policy, has become fully functioning. The Secretariat for the
Special Minister for Administrative Reform has been wound up and the State
Chancellery now plays a leading role, not only in personnel policy development, but also
in implementation of the Civil Service Law, development of a unified pay system and
implementation of the Public Agency Law as well as supervision of training under the
School of Public Administration. Accordingly, the tasks of the Civil Service
Administration, under the supervision of the Prime Minister, have been reduced to
personnel policy co-ordination and control of the civil service.
The present unclear set-up involving both the Civil Service Administration and the State
Chancellery should not be allowed to hamper the necessary development of a strong civil
service management. Clear and transparent rules and practices for promotion and career
development based on merit and open competition are still needed.
The legal base for the status of civil servants has been established and the
implementation of the Civil Service Law has continued with a view to ensuring adequate
independence of the civil service, open recruitment and performance appraisal
procedures. However, some recent amendments to civil service legislation regarding
concentration of civil service management in the centre of the government, together with
the Disciplinary Liability Law and other legal acts, are seen to carry some risk of
reintroducing politically biased practices in civil service management against the
background of a still fragile civil service framework.
The implementation of the new salary system, the so-called unified civil service pay
system, met with particular difficulties notably regarding qualification categories, and
was therefore suspended. In order to address the current problems, the process is now
being reviewed with a view to providing transparent and competitive remuneration in the
public sector, starting with increasing salaries in the most problematic sectors. More
resolute decision-making is now needed in order to put the process back on track.
With the adoption of the Law on Administrative Procedure in October 2001, the legal
base for administrative action and decision-making was defined and efforts of the
administration to implement the law are encouraging. The law, which should ensure legal
certainty, transparency and accountability of administrative actions through an appeal
system, will finally come into force in February 2004. However, some further
clarifications are required, for example concerning the judicial review of administrative
acts. Generally, mechanisms to ensure better quality legislation should be strengthened,
including through training. The strategic policy and budget planning system has started in
some key ministries.
Regarding the transformation of state agencies into public agencies in the context of the
implementation of the Law on Agencies, new legislation was adopted to re-examine the
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situation of each agency (about 70 out of 170 agencies in total) with a view to
establishing their final status. This work, now falling under the State Chancellery, needs
to be continued and carried out more consistently in order to achieve the objective of
more transparency and accountability to government structures.
As concerns training, a well-organised training system for civil servants has been put in
place. In 2002, nearly 12 000 civil servants attended training courses at the Latvian
School of Public Administration. Training priorities included EU law, institutions and
policies; administrative procedures; labour rights; performance assessment; conflict of
interests; legal drafting and internal control.
The administrative territorial reform, which started in 1998, is advancing at a slow pace.
The originally envisaged creation of 102 larger sized local governments has been revised
with a view to decrease their number further. Alternative proposals are now being
discussed with the local governments concerned.
The principles of the EU coordination were redefined in June 2003 with a view to
accession. Under the supervision of the government, the Ministry of Foreign Affairs
assumes a central role in the co-ordination system and ensures continuity of Latvia’s
positions at different stages of the EU decision-making process. It is responsible for the
circulation of information and documentation related to the EU. Line ministries are fully
responsible for handling EU matters within their respective policy areas.
Judicial capacity
The new government recognised the need for the reform of the judiciary as a priority, and
some steps have been taken to strengthen the effectiveness and independence of the
judicial system, including preparation of legislation, enforcement of court decisions,
modernisation of courts, training of judges, and the adoption of an additional budget in
2003, primarily to cover salary increases for judges and court staff. Latvia needs,
however, to take urgent action to ensure continued and effective implementation of the
reform.
The two pieces of legislation which are most important for improving the functioning of
the judiciary, the new Criminal Procedure Law and the Law on Judicial Power, are still
pending. A comprehensive draft new Law on Judicial Power, aimed at improving the
efficiency and independence of the judicial system, was finally not adopted, but some of
the envisaged improvements were made already in separate steps.
Regrettably, the draft Criminal Procedure Law, aimed at simplifying and modernising the
criminal procedure, including court proceedings, reducing the backlog of court cases,
speeding up the consideration of juvenile cases, and extending the use of alternative
penalties, is still pending. It is essential to adopt this law without further delay. With the
entry into force of the Law on Sworn Court Bailiffs in January 2003, a professional court
bailiff institution (101 members) has been established to provide more efficient
enforcement of court decisions.
A thorough reform of the judicial administration is scheduled to start in January 2004.
The reform entails a transfer of administrative functions from the Ministry of Justice to a
Court Administration, supervised by a Judicial Council, to strengthen the independence
and efficiency of the court system. The concept regarding the Court Administration,
adopted in August 2003, entails the establishment of specialised administrative courts.
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The necessary legislative basis for the reform, the new Law on Judicial Power, that
provides for the establishment of the Judicial Council and the division of powers between
Courts, the Council and the Ministry of Justice, as well as implementing regulations are,
however, still pending and its implementation requires further strengthening of
administrative capacities. Latvia needs therefore to pay urgent attention to the adoption of
this legislation and to the establishment of the related implementation structures,
including training.
The entry into force of the Administrative Procedure Law (adopted in 2001) was delayed
to February 2004, mainly due to the need to provide for premises and equipment for new
administrative courts together with the recruitment and training of new administrative
court judges.
In order to address the independence of the judicial system, amendments to the previous
Law on Judicial Power, adopted in June 2003, introduced a timetable for gradually
raising judges’ remuneration, starting from July 2003 (until 2006), when they will be
several times higher than before the reform, e.g. LVL 720 (€ 1 137) for a newly appointed
judge, compared to LVL 269 (€ 425) today.
It will be important now to keep up the work and implement duly the commitments
undertaken in order to increase the standing of the profession and the judicial system as a
whole. In this context, efforts to establish and implement a strategy to increase
transparency for selection, appointment as well as consistent professional development of
judges need to be continued.
The situation regarding pending cases has improved. The number of criminal cases went
down to 4 423 in July 2003 (compared to 5 062 in July 2002) and 19 003 civil court cases
were pending as of July 2003 (compared to 22 829 in July 2002. The hearing of juvenile
cases slightly speeded up in 2002.
The implementation of a training policy for judges and other legal professions has
continued, mainly through the Judicial Training Centre. A series of specialised training
courses on EU law, human rights, corruption, cybercrimes, customs law, drug-related
crimes and international judicial cooperation took place. The training of judges and other
legal professions, especially in EC law and human rights issues, continues to depend
largely on pre-accession and international support. In order to improve qualifications in
these fields and to increase capacity to enforce the
acquis
upon accession, training needs
to be intensified and adequate funding from the state budget secured. A long term
training strategy for the judiciary should also be developed.
The development of the computerised Uniform Court Information System has been
finalised and computerisation of the courts was completed in August 2003. It is now
important to ensure that the criminal management system is fully implemented and that
an administrative case management system is developed.
In the field of legal aid, planned legislative measures have been delayed. It is important to
complete the legal framework to improve citizens' access to justice and to ensure
adequate funding of legal aid.
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Anti-corruption measures
While a number of measures have been taken, the level of corruption still remains a
concern in Latvia. However, the current Government remains strongly committed to
further combating corruption. In order to increase the effectiveness of the anti-corruption
policy, legislation has been improved and the institutional set-up has been clarified and
consolidated through the establishment of a central Corruption Prevention and
Combating Bureau (CPCB), fully operational since February 2003. This process should
be continued in order to reach tangible results.
In January 2003, a new strategy for preventing and combating corruption was prepared by
the newly established CPCB in co-operation with other governmental institutions and
NGOs. The aim of the document was to serve as a policy document to increase public
confidence. It is now important to complete work to define specific tasks, allocate
responsibilities and set implementation timetables.
Some steps have been taken to improve legislation, in particular to empower the CPCB to
carry out investigative functions on all corruption cases in the public sector, income and
asset declaration by public officials. In addition, in June 2003, amendments to the Public
Procurement Law and Administrative Violations Code were adopted. The new rules on
procurement provide that all disputed tenders in public procurement are submitted to the
CPCB for investigation. Moreover, amendments to the Administrative Violations Code
introduced administrative liability for violations of the law on political party financing,
and authorised the CPCB to impose on political parties fines up to LVL 10 000
(€ 15 798).
Further legislative developments are required. In particular, amendments to criminal law,
establishing liability of legal persons, are essential to complete the legislative basis for
efficient anti-corruption policies. So far, however, no time frame for drafting and
adoption of these amendments has been set.
The work of the CPCB has been considerably strengthened both in terms of funding and
human resources. Its budget was increased fivefold compared to the year 2002. At
present, there are 110 employees, and the number of staff could exceed 120 by the end of
2003. All employees of the Bureau have been trained on anti-corruption issues within a
special programme prepared in co-operation with the School of Public Administration.
While the setting-up of the Bureau is considered to be a very ambitious project among
similar bodies, the CPCB's structure and staffing is, however, still under development. It
is now important to ensure stability at management level, including appointment of the
Head of the Bureau. The Bureau remains vulnerable due to a lack of professionalism in
some areas, a stretched budget, a heavy workload, and high expectations from society and
other state institutions.
The CPCB has initiated five criminal cases against high ranking officials, namely, for
violations of public procurement procedure, for fraud, and for bribery. The Bureau has
also asked the courts to suspend the activities of 11 political parties for not submitting
financial declarations, and started a thorough examination of 85 cases in the field of
public procurement and conflicts of interests. More than 440 claims, enquires and
proposals have been received from different institutions and individuals so far.
Several steps to tackle conflicts of interest in law enforcement agencies, State Revenue
Service and other public administration bodies have been taken. A series of in-house
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investigations have been launched, resulting in the resignation or dismissal of several
senior officials in the Ministry of the Interior, the police and the State Revenue Service.
At ‘street’ level, anti-corruption measures have mainly focused on eradicating corruption
and related crimes, such as smuggling, by police officers and customs officials. Increases
in excise tax revenues suggest that smuggling of excise goods might have indeed
decreased in 2003.
It is important to establish efficient and smooth co-operation mechanisms between the
other institutions involved in the fight against corruption, including the State Police,
Financial Police of the State Revenue Service, State Audit Office and the Prosecutor
Office.
The creation of a Parliamentary Commission on oversight of corruption prevention and
organised crime combating, is a positive signal. Moreover, the Commission has taken
leadership of the oversight of the Bureau and of the promotion of several laws, such as
the law on lobbying, political party finance and the establishment of an ombudsman.
Implementation of anti-corruption plans and codes of ethics has continued within the
various state institutions such as the customs and police services. In customs, anti-
corruption measures include, inter alia, double checking decisions made by officials
occupying positions with a high risk of corruption, rotation of customs officers, and the
promotion of electronic declarations of goods (10.75 % of all declarations in 2002). 110
customs officials were punished as a result of internal audits in 2002. Both customs and
the police have organised training on corruption-related topics. More generally, the
Latvian School of Public Administration organised training in 2002 for a total of 1 345
civil servants on issues such as prevention of corruption, conflicts of interest, and ethics
in the public sector.
In order to reduce corruption risk among judges, the budget for salaries increased by
more than LVL 1 million (€ 1 579 780). Training on the code of ethics was carried out
for 50 judges. 160 judges were trained in anti-corruption issues and transparency in
courts was increased with the establishment of the court information internet portal.
While public awareness is generally rising, continued efforts are needed to increase
awareness among the law enforcement bodies, the business sector and the community in
general. Continued attention should be paid to training of public officials, in central and
local agencies, including specific measures to minimise the risk of corruption
opportunities in the public procurement area.
Latvia continues to participate in the Council of Europe Group of States against
Corruption (GRECO). Following GRECO’s evaluation report of May 2002, Latvia can
be regarded as having implemented eight out of the 15 specific recommendations made
by GRECO. While the respective long-term tasks have been included in the national
programme for preventing and combating corruption, Latvia needs to continue work
concerning recommendations such as strengthening the anti-corruption power of the State
Revenue Service regarding banking institutions, enforcing respective legislation
particularly regarding investigations, monitoring of police actions, strengthening of co-
operation and co-ordination role of the Prosecutor General Office, awareness raising
about the witness protection programme, reinforcing efforts in the field of public
procurement at all levels and establishing of guidelines for lifting of immunity by
Parliament, including of judges. Latvia is to present a report to GRECO on the
implementation of the recommendations before end of 2003.
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Latvia has ratified the relevant Council of Europe Conventions, with the exception of the
Civil Law Convention on Corruption which was approved by the government in October
2002). Latvia participates in the Baltic Anti-Corruption Initiative (BACI), which is
supported by the OECD Secretariat.
Translation of the acquis into Latvian
In accordance with Articles 2 and 58 of the Act of Accession, all acts adopted by the
Union’s institutions and the European Central Bank prior to accession become applicable
to the new Member States and are to be published in the Official Journal of the European
Union in the new official languages. While the EU institutions take responsibility for the
final revision of the translations and of their publication, it falls to the acceding states to
produce the translations and to ensure a thorough legal and linguistic revision.
The performance of the Latvian authorities responsible for translation the acquis has been
constantly improving since the finalisation process started. Both the numbers of acts
provided for finalisation as well as the numbers of acts finalised by the EU institutions
seem to be within a safe range according to the Commission’s schedule. The production
of finalised texts has been impeded by an evolving terminology, but is approaching the
figure of 30%. Even though it is vital to keep a vigilant approach to the evolution of the
present trend, prospects are reasonably encouraging. Latvian legal terminology has
undergone a major change over recent months. However, a stable phase seems to have
been attained with the collaboration of all the major partners concerned, including the
Latvian Academy of Sciences.
The present flow must be at least maintained to ensure the timely publication of the
Special Edition of the Official Journal in Latvian by accession.
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2.
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 acquis chapters.
Accordingly, this section opens with an assessment of the acquis relating to the
cornerstones of the internal market which are known as the “four freedoms”, and
continues with a systematic review of 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.
Chapter 1: Free movement of goods
The principle of the free movement of goods implies that products must be traded freely
from one part of the Union to another. In a number of sectors, this general principle is
supplemented with a harmonised regulatory framework, following the “old approach”
(imposing precise product specifications) or the “new approach” (imposing general
product requirements). The transposition of harmonised European product legislation
represents the vast majority of the content of this chapter. In addition, efficient
administrative capacity to apply horizontal and procedural measures in areas such as
standardisation, certification and market surveillance is essential. This chapter also
covers detailed EC rules on public procurement, requiring specialised implementing
bodies.
The
horizontal and procedural measures
necessary for the administration of the
Community product acquis in the new approach sector are in place. Legislation has been
transposed and is in line with the acquis. The implementation structures for
standardisation, metrology, accreditation, conformity assessment and market surveillance
are all in place. Training programmes being carried out by these bodies should ensure
their operational efficiency by the date of accession. Latvia’s standardisation body
applied for CEN and CENELEC membership and expects to be member by the end of
2003.
Latvia has transposed all of the
sectoral legislation
under the
new approach
and in
general the legislative transposition has been found to be in line with the acquis.
As regards the
old approach
directives, Latvia has transposed most of the
acquis
in these
product sectors following the adoption of legislation aiming at alignment in the areas of
legal metrology and pre-packaging, chemicals, cosmetics, motor vehicles, glass, textiles,
footwear and wood. Transposition of the
acquis
on pharmaceutical products for human
and veterinary use remains partial. Latvia has taken the steps necessary to ensure the
creation, reinforcement, and operational capacity of the institutions required to manage
the
acquis
regarding the sectors covered by old approach directives. Having recognised
that the identification of "new" chemical substances on its market is a matter of priority,
Latvia should provide for the appropriate notification of such substances in accordance
with the
acquis.
As regards foodstuffs, Latvia needs to further transpose the foodstuffs
acquis
adopted
from 2001 onwards. Latvia also still needs to transpose legislation on irradiation. The
legislation in the field of particular nutritional uses, contact materials and official control
need to be further amended. Further attention is required as regards the strengthening of
administrative capacity, in particular inspection activity should be increased, adequate
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sampling programmes should be developed and performed, and new analytical methods
should be implemented. Latvia has made adequate progress in its preparation for future
membership of the Rapid Alert System for Foodstuffs and Feed. More efforts are needed
to ensure appropriate control of genetically modified and novel food. Latvia needs to
proceed to implementing the action plan for implementing Hazard Analysis Critical
Control Points (HACCP) principles. Particularly important is the training of inspectors to
audit the implementation of HACCP principles and the establishment of Guides to Good
Hygiene Practice. Aspects of food safety are also covered under
Chapter 7 – Agriculture.
In the field of
public procurement,
Latvia's legislation is largely in line with the acquis.
The amendments, which entered into force in July 2003, brought significant progress to
the legislation covering classical sectors. However, some additional adjustments are still
required, notably with respect to thresholds and several exceptions. The legislation
covering utilities also needs to be amended, in particular as regards coverage and
publicity. The Procurement Supervision Bureau has been established and is operational.
However, administrative structures need to be further strengthened in order to comply
with the requirements of the
acquis.
In the
non-harmonised area,
the screening of Latvian legislation possibly in
contradiction with the principle of free movement of goods is ongoing. This screening
must be completed and the identified barriers must be removed, in particular as regards
the licensing systems applicable to alcohol, tobacco products and fuel. Latvia still has to
implement the principle of mutual recognition. The
acquis
as regards arms control has
largely been transposed, even if some clarifications are still needed. The
acquis
regarding
cultural heritage objects has been transposed with the adoption of the regulation on the
return of unlawfully exported art and antique. Latvia still has to implement the EU rules
on control of product safety at external borders and efforts in this area will have to be
stepped up to ensure an effective system of safety controls as of accession.
Conclusion
Latvia is essentially meeting the requirements for membership as regards the
horizontal
and procedural measures
necessary for the implementation of Community legislation in
the new approach sectors and the
new approach sectoral legislation.
Once the
remaining work is completed, Latvia should be in a position to implement this
acquis
from accession.
Latvia is partially meeting the requirements in respect of the
old approach sectoral
legislation, public procurement
and the
non-harmonised area.
Certain aspects of the
old approach legislation must still be transposed, in particular as regards foodstuffs.
Additional efforts should be made to provisionally notify "new" chemical substances
prior to accession so as to ensure the continued marketing of such substances. Latvia
must pay particular attention to abolishing the identified barriers to trade and to
completing the alignment with EC rules on public procurement. Enhanced efforts are also
needed to ensure the implementation and enforcement of the principle of mutual
recognition.
Chapter 2: Free movement of persons
The acquis under this chapter provides for non-discriminatory treatment of workers who
are legally employed in a country other than their country of origin. This includes the
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possibility of cumulating or transferring social security rights, which requires
administrative cooperation between Member States. In order to facilitate the practice of
certain professions, the acquis under free movement of persons also includes specific
rules concerning mutual recognition of qualifications and diplomas; for certain
professions a harmonised training curriculum must be followed to be able to use the
professional title. Furthermore, this area also covers the residence and voting rights of
EU citizens in any Member State.
In the field of
mutual recognition of professional qualifications,
Latvia’s legislation is
not in line with the
acquis.
Legislation on the general system of recognition remains to be
amended. Moreover, further legislative work is necessary in the form of the adoption of
implementing regulations. The implementation of the relevant sectoral legislation on the
recognition of qualifications of doctors, dentists, general care nurses, midwives,
veterinary surgeons, pharmacists and architects is deficient and urgently needs to be
improved. Furthermore, legislation concerning lawyers and commercial agents also
shows substantial shortcomings. The necessary implementing administrative structures
are in place but need to be strengthened.
In the area of
citizens’ rights
legislative alignment has been largely completed, except on
legislation on the right to participate in municipal and European Parliament elections.
The main administrative structures for implementation are in place.
As for
free movement of workers
a transitional arrangement has been agreed. For the
first two years following accession, current Member States will apply national measures,
or bilateral agreements, to regulate the access of workers from Latvia to their labour
markets. These arrangements may continue up to a maximum of seven years. Legislative
requirements on language proficiency and their implementation must be in full respect of
the principles of justified interests, proportionality and non-discrimination and can only
be applied in very exceptional circumstances, on a case by case basis. Latvia’s legislation
in the area of free movement is in line with the
acquis.
With regard to
co-ordination of social security systems
no transposition into national
legislation is needed to achieve alignment with the
acquis,
but appropriate administrative
capacity needs to be ensured.
Conclusion
Latvia is essentially meeting the commitments and requirements in the area of
citizens’
rights, free movement of workers
and
co-ordination of social security systems.
Some
adjustments need to be made as soon as possible to the legislation on foreigners to allow
EU citizens to participate in municipal and European elections of June 2004. The
ongoing measures to ensure adequate administrative capacity in these areas should
continue.
The requirements relating to the
mutual recognition of professional qualifications
are
only partially met. In order to complete preparations for membership in this area, Latvia
must substantially enhance its efforts to implement the relevant legislation as regards
pharmacists and architects. Latvia also has to reinforce its administrative capacity to
implement the
acquis
on mutual recognition of qualifications.
The implementation of the legislation on the general system directives, lawyers,
commercial agents, and on mutual recognition and minimum standards of training for the
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healthcare professions is substantially deficient and gives rise to serious concern. Unless
immediate remedial action is taken across an important and extensive range of issues,
Latvia will not meet the requirements for membership in this area.
Chapter 3: Freedom to provide services
Under this chapter, Member States must ensure that the right of establishment and the
freedom to provide services anywhere in the EU is not hampered by national legislation.
In some sectors, the
acquis
prescribes harmonised rules which must be respected if the
internal market is to function; this concerns mainly the financial sector (banking,
insurance, investment services and securities markets) but also some specific professions
(craftsmen, traders, farmers, commercial agents). Harmonised rules concerning personal
data protection and certain information society services must also be respected.
In the field of the
right of establishment and the freedom to provide non-financial
services,
Latvia needs to complete the screening for obstacles caused by legal and
administrative restrictions, and those obstacles identified must be removed upon
accession in order to comply with the principle of free provision of services. In this
context, amendments to the Law on security services remain to be adopted. The
distinction between economic operators providing services temporarily in Latvia and
those established permanently should be reflected in the Latvian legislation in order to
ensure the free provision of cross-border services.
In the field of financial services, Latvia has completed the legislative alignment with the
acquis
in the
banking sector.
Latvia has committed itself to ensuring full application of
the
acquis
in respect of deposit-guarantee schemes by the end of 2007, in accordance
with the transitional arrangement it has been granted.
As regards the
insurance sector,
core-provisions on life and non-life insurance are
transposed. Latvia must still adopt the legislation on reinsurance and insurance against
civil liability for inland motor vehicles. The procedure for Latvia becoming a signatory of
the ‘green card’ Multilateral Guarantee Agreement, as foreseen in the 1
st
motor vehicle
directive, still needs to be finalised and efforts should be made to cope with the
responsibilities linked to this status.
In the field of
investment services and securities markets,
Latvia still has to transpose
substantial parts of the Investment Services directive, as well as one of the recent
directives on Undertakings for Collective Investment in Transferable Securities. Further
legislative amendments are still needed, in particular regarding the transposition of the
acquis
on settlement finality in payment and securities settlement systems. Latvia has
committed itself to ensuring the full application of the
acquis
in respect of investor
compensation schemes by the end of 2007, in accordance with the transitional
arrangement it has been granted. The Financial and Capital Market Commission
essentially has the required infrastructure and human resources to deal with the
acquis-
related tasks as a unified autonomous supervisory authority for the financial sector. The
directive on financial collateral remains to be transposed.
Concerning the
protection of personal data and the free movement of such data,
the
recent amendments to the law on personal data protection only tackled a limited number
of outstanding issues. Latvian legislation is thus not in line with the respective
acquis
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regarding important data protection provisions. The lack of sufficient independence needs
still to be addressed.
As regards
information-society services,
Latvia’s legislation is broadly in line with the
acquis.
However, the more recent
acquis
on electronic commerce and transparency
remains to be transposed and implemented before accession. The administrative structure
still needs to be established, and the human resources necessary for effective
implementation and enforcement of the
acquis
need to be allocated.
Conclusion
Latvia is essentially meeting the requirements for membership and is expected to be in a
position to implement the
acquis
in the area of
banking
by the time of accession. It
should complete preparations in this sector.
Latvia is partially meeting the requirements for accession in the areas of
insurance,
investment services and securities markets,
as well as in the field of
the protection of
personal data
and
information-society services.
In order to complete preparations for
membership, a number of major directives remain to be properly transposed in these
areas. This work must now be accelerated. Enhanced efforts are also needed to remove all
administrative and legal restrictions on the
right of establishment and the freedom to
provide non-financial services.
Chapter 4: Free movement of capital
Under this chapter, Member States must remove all restrictions in national law on the
movement of capital between themselves, but also with third countries (with some
exceptions) and adopt EU rules to guarantee the proper functioning of cross-border
payments and transfers of all forms of capital. The acquis under this chapter also includes
harmonised rules on payments systems and the fight against money laundering, requiring
adequate enforcement capacity.
In the area of
capital movements and payments,
Latvia is to a large extent in line with
the
acquis,
but a few further measures remain to be taken. It still has to remove
restrictions concerning citizenship and language requirements in the Law on security
services. With regard to two funds administering the compulsory civil liability insurance
for motor vehicles, Latvia still needs to adopt the legislation on investment conditions in
order to comply with the
acquis.
Latvia must liberalise the real estate transactions not
covered by transitional arrangements and adopt the necessary amendments to bring the
regime of taxation of companies’ dividends in line with the
acquis.
A new law dealing
with privatisation has been adopted.
In accordance with an agreed transitional arrangement, Latvia will remove restrictions on
the acquisition of agricultural land and forests by EU nationals and by EU companies by
May 2011 at the latest.
In the field of
payment systems,
Latvia is completing its legislative alignment while
most of the implementing structures are in place and function adequately.
In the area of
fight against money laundering,
Latvia is in line with the
acquis.
In terms
of implementing structures, the financial intelligence unit has to continue to be further
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strengthened both in terms of staff and equipment, especially to maintain the security of
data and premises (see
also chapter 24 – Justice and home affairs).
Conclusion
Latvia is essentially meeting the requirements for membership and should be in a position
to implement the
acquis
in the area of
payment systems
and the
fight against money
laundering
from accession. A limited number of specific issues will still need to be
addressed in these areas before accession. Latvia must continue to reinforce its
administrative capacity to implement the
acquis
on money laundering.
The commitments and requirements in the area of
capital movements and payments
have been partially met. In order to complete preparations for membership, Latvia has to
eliminate all remaining restrictions to free movement of capital.
Chapter 5: Company law
Under this chapter, Member States must adopt and apply harmonised rules required for
the proper operation of companies in the internal market. They concern five legislative
fields: company law in the strict sense, accounting law, intellectual property rights,
industrial property rights, and the recognition and enforcement of judgements in civil and
commercial matters as well as of contractual obligations.
In the field of
company law
as such, Latvia’s legislation is largely in line with the
acquis.
Latvia committed itself to alignment with the
acquis
by 1 January 2003, but
delays have occurred as regards inter alia the implementation of the Commercial Law
including smooth completion of the re-registration process. As regards administrative
capacity, further efforts are still needed. Co-operation between the State Enterprise
Register, the State Revenue Service, the State Insolvency Agency and Law enforcement
institutions needs to be strengthened.
With regard to
accounting,
Latvia’s legislation is largely in line with the
acquis.
However, further amendments to the Law on annual accounts of undertakings and to the
Law on consolidated annual accounts remain to be adopted to allow fair value
accounting, including derivatives in consolidated and individual annual accounts. The
administrative structures are adequate.
In the field of
protection of intellectual and industrial property rights (IPR),
on
copyright and related rights Latvia's legislation is meeting the majority of the
commitments. However, important parts of the recent directive on copyright in the
information society remain to be transposed. The
acquis
on the legal protection of
designs and on the legal protection of biotechnological inventions remains to be
transposed.
Specific transitional rules will apply in relation to pharmaceutical product patents,
involving the non-application of Community exhaustion to certain exports from Latvia,
as regards the granting of supplementary protection certificates for medicinal and plant
protection products, and in relation to the extension of registered or pending Community
trademarks to the territory of Latvia.
As regards enforcement of IPR, administrative structures are in place but need to be
strengthened. Training especially of judges and prosecutors needs to be intensified.
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Staffing has been increased and training carried out, but there remains a lack of resources.
Further efforts are needed especially to cope with the high levels of piracy in the sectors
of music, videos and software. Better co-ordination among enforcement bodies (in
particular customs, police and the judiciary) needs to be pursued. The new Law on
Criminal Procedure, which should help to make judicial enforcement in IPR-related cases
more effective, still needs to be adopted.
The
Regulation replacing the Brussels Convention
on mutual recognition and
enforcement of foreign judgements in civil and commercial matters will be directly
applicable upon accession, and accession to the
Rome Convention
will only be possible
upon accession. Latvia should designate the relevant courts or other authorities to ensure
swift implementation of these provisions
(see also Chapter 24 - Justice and home
affairs).
Conclusion
Latvia is essentially meeting the requirements for membership, and is expected to be by
accession in a position to implement the
acquis,
in the areas of
company law
and
accounting,
and the
Regulation replacing the Brussels Convention
and the
Rome
Convention.
The transposition of the company law and accounting
acquis
will need to be
completed.
The majority of commitments and requirements arising from the accession negotiations
in the field of the
protection of intellectual and industrial property rights
have been
met. Further legislative adjustments are required in respect of copyright and related
rights, and in particular with respect to the information society rules. Although the
legislation is mostly in line, enhanced efforts must be made to strengthen enforcement of
intellectual and industrial property rights. Better co-ordination among enforcement bodies
is required, training of enforcement bodies is needed (mainly, customs, police and
judiciary) and the efficient functioning of the judiciary should be given particular
attention.
Chapter 6: Competition Policy
The competition
acquis
covers both anti-trust and state aid control policies. It includes
rules and procedures to fight anti-competitive behaviour by companies (restrictive
agreements between undertakings and abuse of dominant position), and to prevent
governments from granting state aid which distorts competition in the Internal Market.
Generally, the competition rules are directly applicable in the whole Union, and Member
States must fully co-operate with the Commission on the enforcement of these rules.
In the
anti-trust
sector, Latvia has adopted legislation containing the main principles of
Community anti-trust rules as regards restrictive agreements, abuse of dominant position
and merger control. However, further implementing legislation still needs to be adopted,
primarily in relation to the policy represented by the three EC block exemptions for
vertical and horizontal agreements. Preparations should also be made for the application
of the EU's new procedural regulation.
Latvia has the necessary implementing structure in place. However, priority needs to
continue to be given to increasing the level of resources of the Competition Council,
including its investigative Competition Bureau. Efforts must be stepped up to enhance
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the competence of staff, as well as to decrease its turnover rate. The proper functioning
and independence of the Council in its decision-making capacity must still be ensured
(including the appointment of all five members). Further efforts are needed to raise
awareness of anti-trust rules of all market participants and to build up a credible and
transparent competition culture. Special training for judges should be further developed.
The enforcement record is generally satisfactory. However, in order to ensure further
strengthening, priority needs to be given to cases, which most seriously distort
competition. Furthermore, more deterrent sanctions should be imposed.
In the field of
state aid,
Latvia has adopted state aid rules covering the main principles of
the
acquis.
A new State aid control Law has entered into force taking into account recent
developments of the
acquis.
As regards the legislation on Special Economic Zones and
Free Ports, Latvia has made further amendments to its legislation bringing it closer in line
with the
acquis.
The necessary implementing structures are in place, and the State Aid
Surveillance Commission and its secretariat, the State Aid Control Department of the
Ministry of Finance, are functioning well. Further efforts are needed to raise awareness of
state aid rules among all market participants and aid grantors. Latvia must also pay
further attention to training the judiciary.
The enforcement record is generally satisfactory. Latvia should continue to ensure that all
aid measures are monitored and controlled.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the
state-aid
area and is expected to be in a position to
implement this
acquis
from accession. In completing preparations for membership,
Latvia must continue to develop a track record of proper application and enforcement of
state aid legislation.
Latvia is meeting the majority of the commitments and requirements in the area of
anti-
trust.
In order to complete preparations for membership, Latvia must step up its efforts to
strengthen the administrative structures needed to implement the anti-trust acquis more
effectively. Latvia should complete the legislative fine-tuning that will enable such
strengthening of the enforcement record.
Chapter 7: Agriculture
The agriculture chapter covers a large number of binding rules, many of which are
directly applicable. The proper application of these rules and their effective enforcement
by an efficient public administration are essential for the functioning of the common
agricultural policy. This includes the setting up of management systems such as a Paying
Agency and the Integrated Administration and Control System, which are covered under
”horizontal issues” below, and also the capacity to implement rural development actions.
The acceding countries must be ready to be integrated into the common market
organisations for a range of agricultural products, including arable crops, fruits and
vegetables, and meat. Finally, this chapter covers detailed rules in the veterinary field,
which are essential for safeguarding animal health and food safety in the internal market,
as well as in the phytosanitary field, including issues such as seed quality, harmful
organisms and plant protection products.
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Horizontal issues
The Rural Support Service has been assigned, formally, as a
Paying Agency
to be
responsible for the administration of national and EU support to rural areas, agriculture
and forestry. A substantial amount of work remains to be done (such as agreements with
delegated bodies, written procedures, development of IT systems) if Latvia is to have a
functioning Paying Agency by the date of accession.
With regard to the
Integrated Administration and Control System
(IACS), Latvia has
made good progress so far, but much remains to be done if Latvia is to have a fully
functioning IACS by accession. Particular attention should be given to ensuring that the
IT software is ready according to the timetable.
The legal framework concerning
trade mechanisms
still needs to be adopted. The main
administrative institutions concerned are the Rural Support Service, the Customs Board
and the Food and Veterinary Service. Administrative structures and procedures remain to
be completed. Accelerated efforts are required in the customs field.
The administrative structures concerning
quality policy
have been put in place. The Food
and Veterinary Service is expected to perform the state supervision and handling of
organic farming
food. Latvia has met the commitments and requirements arising from
the accession negotiations in the area of
Farm Accountancy Data Network
(FADN) and
is expected to have implemented the FADN by accession.
State aid
measures in the field of agriculture remain to be brought in line with the acquis
at the time of accession.
As concerns direct payments to farmers, the Latvian government has decided to
implement the single area payment scheme (SAPS) in the first years after accession.
Common market organisations (CMOs)
The Rural Support Service is responsible for implementing the
acquis
in the field of
arable crops.
Further progress is required on intervention centres and private storage.
Most implementing legislation for marketing standards of
fruit and vegetables
has been
adopted. However, legislation on the control of EU marketing standards and on
procedures for the recognition of producers' organisations as well as control of
operational fund remains to be adopted. The mechanisms for reporting entry prices
remain to be set up.
Legislation concerning
sugar
has been transposed partly. Further rules are necessary for
full harmonisation of the quota system, in particular the super levy and the
communication system. A national quota system has been established (2000). The
structures responsible for the administration of the common market organisation have
been designated but need further upgrading for proper management of the CMO.
Procedures for the different mechanisms of the CMO of sugar are established to a limited
extent. Inter-professional agreements need to be developed.
In the area of
wine and alcohol,
the CMO for wine remains to be fully set up. Legislation
regarding “champagnised wines” remains to be brought in line with the
acquis.
Legislation on labelling of wines has to come into force. Ex officio protection remains to
be ensured effectively.
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The implementing legislation for the main mechanisms of the common market
organisation for
milk,
including the allocation and administration of milk quotas, remains
to be adopted. Most mechanisms of the common market organisation for milk and milk
products as well as the quota system remain to be put into place. The Rural Support
Service is to be the main body responsible for the implementation of the common market
organisation together with the Breeding Information Data Processing Centre managing
mainly the milk quota system. The system has to cover all producers and the direct sellers
need to be identified and covered. There is a need to develop an information system
accessible to all participants.
Legislation remains to be adopted in the
beefmeat and sheepmeat
sector. In particular,
the adoption of legislation on carcass classification and its practical implementation has
been significantly delayed. Price reporting cannot be correctly implemented as long as
carcass classification is not carried out according to EU requirements. Concerning
pigmeat,
administrative structures for carcass classification and the price reporting
system remains to be put into place by the date of accession.
As far as
eggs and poultry
are concerned, administrative structures regarding marketing
standards, price reporting, and the reporting of production statistics remain to be put into
place by the date of accession.
Rural development
Some implementation procedures for rural development measures remain to be
completed. The Rural Support Service will be responsible for the administration of all
EU financed rural development. Additional staff has been recruited, both centrally and in
the regional offices to reinforce those already operating the SAPARD programme. The
formal draft rural development plan for EAGGF Guarantee expenditure has been
submitted to the Commission.
Veterinary and phytosanitary issues
A special effort needs to be made as regards legislative alignment in the veterinary field
as the level of transposition to date is relatively low.
The transposition of legislation on transmissible spongiphorme encephalopathies (TSEs)
and
animal by-products
has been partly achieved. TSE surveillance is not yet in
compliance; in particular, testing remains insufficient. The removal of SRM is close to
compliance. The collection and treatment of animal waste still not in compliance, mainly
because there is no system for the collection of cadavers and the rendering and
incineration plant are not yet in place. There is a total feed ban in place but is not yet
properly controlled.
The transposition of legislation on the
veterinary control system in the internal
market
has been largely adopted but some significant adjustments are still required.
Administrative structures need to be strengthened. Latvia has not joined the computerised
network linking veterinary authorities, ANIMO. The legislation transposing the
acquis
concerning the identification and registration of animals is in place with the exception of
sanctions and control issues. The bovine ID and registration database is in place. The
transposition of the
acquis
on the financing of veterinary inspections and controls has
been partially achieved. Implementation has not taken place yet. As regards veterinary
checks on third country imports and rules for imports, legislation concerning intra-
community trade and imports from third countries remains to be finalised. Only two
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Border Inspection Posts (no ports included) are foreseen to be in compliance by the date
of accession.
Some legislation still needs to be transposed in the area of
animal disease control
measures. Latvia has joined the Animal Disease Notification System (ADNS). The
contingency plans for classical swine fever, foot and mouth disease, Newcastle disease
and avian influenza have been provided. Legislation on
trade in live animals and
animal products
remains to be transposed
Legislation on
public health
protection has been largely transposed, except in the poultry
meat and egg products sectors. Latvia has been granted a transitional arrangement until
January 2005 for 29 fish processing establishments and 11 milk processing
establishments and until January 2006 for 77 meat establishments. Products from these
establishments will be restricted to the national market. The review plan on upgrading the
establishments has been provided, however the situation of certain establishments needs
to be reassessed. The system of raw milk quality control is not in full compliance with
EU requirements.
The
acquis
concerning
common measures
(including zoonoses) has been transposed
both for zoonoses and residues. Attention must be given to improving the implementation
of controls in relation to residues and veterinary medicinal products. The diagnostic
methods applied to all samples at animal level collected for monitoring purposes should
be adjusted to comply with international recognised methods and standards.
Important elements of EU legislation have not yet been transposed in the area of
animal
welfare,
notably the height of battery cages, space allowances for laying hens and the
tethering of calves. The administrative structures and the necessary capacity are in place
both at central and local levels. Stunning remains to be improved. Further training in the
application of the new legislation is also needed.
In the field of
zootechnics,
the monitoring of transposition needs to be completed. The
maintenance of herd books by breeding organisations or specific ministries/departments
has also to be monitored.
Despite the fact that the law on animal feeding stuffs is already in force, some parts of the
acquis
on
animal nutrition
remain to be transposed and fully implemented.
The transposition of
phytosanitary
legislation is at a rather advanced stage although it is
not complete. In the field of quality of seeds and propagating material, the legislation that
has been transposed remains to be implemented. The national seed-testing laboratory has
been accredited by the International Seed Testing Association. Concerning harmful
organisms (plant health), the legislation that remains to be transposed concerns the
protected zones and the notification of interceptions. The registration of operators has
been finalised. For plant protection products, the legislation concerning maximum
residue limits remains to be transposed.
Latvia has to ensure that international veterinary and phytosanitary agreements are
brought into compliance with the EU
acquis
by accession.
A new Food Council with representatives from several ministries now has a co-
ordinating role in relation to food safety issues. Aspects of food safety are also covered in
Chapter 1.
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Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations, among the horizontal issues as regards
quality policy
and
organic farming,
the
Farm Accountancy Data Network
(FADN) and
state aid;
among
the common market organisations (CMOs) as regards
arable crops, fruit and
vegetables, wine, sheep and pigmeat
and
eggs and poultry;
and as regards
rural
development.
In the veterinary field, the requirements are essentially met as regards
zootechnics
and
animal nutrition.
Subject to good progress being maintained in these
areas, Latvia should be in a position to implement the
acquis
from accession.
Latvia is partially meeting the commitments and requirements for membership as regards
the horizontal issues of the
Paying Agency,
the
Integrated Administration and
Control System
(IACS),
trade mechanisms,
the CMOs for
sugar, milk
and
beefmeat,;
in the veterinary field as regards
veterinary control systems in the internal market,
public health protection
(for the upgrading of agri-food establishments),
trade in live
animals and animal product, animal disease control measures, common measures,
animal welfare
and
phytosanitary issues.
In the area of beefmeat, significant efforts
still need to be made in order to rapidly adopt and implement the necessary legislation
and to correctly implement price reporting. Unless efforts are accelerated in these areas,
there is a risk that functioning systems will not be in place by accession.
There are serious concerns about Latvia’s preparations in the area of
TSEs and animal
by-products
as regards the setting up of a system of collection of cadavers and the
building of rendering and incineration plants. Substantial additional efforts are urgently
needed in this area. Unless immediate remedial action is taken, Latvia will not be in a
position to implement the
acquis
in this area by the date of accession.
Chapter 8: Fisheries
The
acquis
on fisheries consists of regulations, which do not require transposition into
national legislation. However, it requires the introduction of measures to prepare the
administration and the operators for participation in the Common Fisheries Policy (in the
areas of market policy, resource and fleet management, inspection and control, structural
actions and state aid). In some cases, existing fisheries agreements or conventions with
third countries or international organisations need to be adapted.
In the field of
resource and fleet management and inspection and control,
the Law on
Fisheries has been amended in line with the
acquis.
Legislation on commercial fishing is
in line with the
acquis
although some amendments to the implementing legislation on
resource management and inspection and control of fishing are still needed. Legislation
on fleet registration and safety requirements has not yet been adopted. A fishing vessel
registration database has been established at the National Board of Fisheries. The data on
fishing vessels with fishing licences, operating in the Baltic Sea (currently 197 vessels)
and high seas (9 vessels) for commercial purposes, is available. The rate of the re-
measurement of fishing vessels is currently 37%, but re-measurement should be
completed upon accession. As agreed in the accession negotiations, there will be a
specific management regime for the Gulf of Riga. Enhancement of administrative
capacity continues while current staffing levels and co-ordination among the various
institutions are not yet satisfactory. This is particularly relevant as regards human
resources available for control and enforcement. The control system is too dependent on a
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category of staff (landing controllers) with inadequate powers of enforcement. Control
equipment is lacking. The satellite monitoring of fishing vessels is in place and the
Fishing Vessels Monitoring Centre (FMC) is operational. According to the latest figures,
all vessels above 24 metres in length are equipped with satellite tracking devices (Vessel
monitoring System or VMS). The integrated control and information system in fisheries
(ICIS) has been established and is operational. However, routines for the collection of
data need to be improved.
In the area of
structural actions,
the chapter on fisheries in the Latvian Single
Programming Document (Development Plan) has been submitted to the European
Commission. Additional staff needs to be allocated to the Rural Support Service of the
Agriculture Ministry for the administration of the Financial Instrument for Fisheries
Guidance (FIFG).
Regarding
market policy,
the amendments to the Food Circulation Monitoring Law are
in line with the
acquis.
The implementing legislation stipulating the recognition criteria,
the recognition procedure and control of operations of producer groups, together with the
legislation concerning marketing standards, fishery freshness, size criteria and
aquaculture remains to be transposed. The administrative structures in the area of
producers’ organisations have not yet been established.
As regards
state aid
to the fisheries sector, Latvia allocates aid with the annual state
support programme for agriculture. The aid measures have to be brought into conformity
with the
acquis
by accession.
Concerning
international fisheries agreements,
Latvia has reached a solution with
Estonia, Lithuania and Russia on the division of the block quotas of the North Atlantic
Fisheries Organisation (NAFO). Latvia has not yet withdrawn from the International
Baltic Sea Fisheries Commission (IBSFC).
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations, and is expected to be in a position to implement the
acquis,
in the
area of
structural actions, state aid
and
international fisheries agreements.
However,
some adjustment is needed in order to reach an adequate level of administrative capacity
in the area of structural actions.
Latvia is meeting the majority of the commitments and requirements for membership in
the area of
market policy.
Attention must be given to the adoption of implementing
legislation related to the creation of producers’ organisations. As regards
resource and
fleet management, and inspection and control
Latvia is partially meeting the
commitments and requirements. In particular, enhanced efforts are required in the
adoption of the legislation on fleet registration and safety requirements. Special attention
must be given to the strengthening of the system of control of landings and follow-up on
infringements.
Chapter 9: Transport
EC transport legislation aims at improving the functioning of the Internal Market by
promoting efficient and environment- and user-friendly transport services. The transport
acquis
covers the sectors of road transport, railways, aviation, maritime transport and
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inland waterways. Member States are required to adopt and implement legislation
concerning technical and safety standards as well as social standards. In order to further
develop the European Single Transport Market, EC legislation also includes rules on
market liberalisation. An important aspect of EC maritime policy is the establishment of
Union-wide maritime safety standards.
As far as the
trans-European transport networks
are concerned, the necessary
administrative capacity (in both qualitative and quantitative terms) needs to be reinforced
beyond its present level in order to prepare for the significant investments that will be
needed in transport infrastructure .
Within the land transport sector, the transposition of the
road transport
acquis
continues. The framework legislation has been transposed. Some implementing
legislation, especially in the social and technical fields, remains to be adopted. Two
transition periods have been granted to Latvia in this area. The installation of tachographs
for vehicles registered before January 2001 and operating exclusively on the domestic
market is to be accomplished before January 2005, and the introduction of the financial
standing criterion for domestic road transport operators needs to be completed by January
2007. Latvia has agreed to a transitional arrangement put forward by the EU concerning
gradual reciprocal access to the cabotage market in the road haulage sector (for a
maximum duration of five years). Administrative capacity is essentially good, although
improvement is required in several areas such as roadside technical inspections,
dangerous goods transport and social regulations. However, as regards roadside checks
and roadside enforcement, Latvia still has to implement its concept on control in road
transport. In particular the staffing structures and the co-ordinating role of the Ministry of
Transport need to be clarified, and adequate numbers of specialist roadside units need to
be put in place.
In the field of
rail transport,
transposition is taking place according to schedule, but the
interoperability
acquis
remains to be transposed and existing legislation needs to be
modified regarding charges, cross-subsidy and licensing. In the framework of the ongoing
reorganisation process, the capacity of the Railway Inspectorate and the Railway
Administration, as well as the relevant department of the Ministry of Transport, should be
strengthened further. However, in particular as regards track access charging and capacity
allocation, procedures and task allocation should be reviewed and training of staff should
be pursued. The independence of the infrastructure allocation and charging function
remains to be ensured.
On
inland waterway transport,
legislative alignment is completed. Administrative
structures in this area are in place and satisfactory.
In the area of
air transport,
the relevant legislation has been transposed and is essentially
in line with the
acquis,
but some modifications are needed, notably with regard to ground
handling. Implementing legislation is still being adopted. Administrative capacity needs
further strengthening. Full membership of the Joint Aviation Authorities remains to be
achieved through the implementation of the Action Plan. Enhanced efforts are needed in
order to become a full member before accession as required by the
acquis
and
irrespective of the setting up of the European Aviation Safety Agency (EASA).
In the field of
maritime transport,
framework legislation is now in place and in line
with the
acquis.
However, the adoption of implementing legislation remains to be
completed, notably as regards Flag State and Port State control, Vessel Traffic
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Management Information System (VTMIS), system of mandatory surveys for the safe
operation of regular ro-ro ferry and high-speed passenger craft services, marine
equipment and fishing vessels The reinforcement and reorganisation of the maritime
administration must be pursued and must lead to a more effective oversight of the work
of classification societies, to an upgrading of Port State Control and to a better division of
tasks between the Maritime Department and the Maritime Administration. According to
statistics for 2002 under the Paris Memorandum of Understanding, the percentage of
Latvian flag vessels detained following Port State control was 6.25%. This compares
with an average for EU-flagged vessels of 3.5% in 2002. The Latvian flag has now been
moved from the black list to the grey list of the Paris MOU.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the areas of
trans-european transport networks, road
transport, rail transport, inland waterway transport
and
maritime transport,
and
Latvia is expected to be in a position to implement the
acquis
in these areas from the time
of accession, provided that the current pace of progress is maintained. In completing
preparations for membership, Latvia must complete the transposition of the railway
acquis,
in particular as regards interoperability. In the areas of road and maritime
transport, Latvia needs to adopt implementing legislation and further reinforce its
administrative capacity.
Latvia is meeting the majority of the commitments and requirements arising from the
accession negotiations in the area of
air transport.
Latvia needs to strengthen
administrative capacity and enhanced efforts are required in order to become a full
member of the Joint Aviation Authorities before accession.
Chapter 10: Taxation
The acquis on taxation largely covers indirect taxation, as concerns VAT (value-added
tax) and excise duties. It lays down definitions and principles of VAT. Excise duties on
mineral oils, tobacco products and alcoholic beverages are regulated at EU level as
concerns the structure of the duty, the level of minimum rates and the holding and
movement of excisable goods. As concerns direct taxation, the acquis covers some
aspects of corporate taxes and aims mainly at removing obstacles to cross-border
activities between enterprises. Finally, the Community legislation in the area of
administrative co-operation and mutual assistance provides tools to prevent intra-
Community tax evasion and tax avoidance on both direct and indirect taxation.
In the area of indirect taxation, with regard to
VAT
Latvia should align its definition of
taxable persons as concerns public authorities and the place of taxation, introduce the
special scheme for investment gold and align the special scheme for second-hand goods.
Latvia needs to pay particular attention to the transposition of the intra-Community
regime. It should also eliminate the numerous and significant discrepancies existing in
respect of the scope of exempt transactions and reduced VAT rate, except in the areas
where it has obtained transitional periods (see below). Furthermore, Latvia needs to align
the discrepancies concerning the provisions for gifts of minor value, freight services, and
the right of deduction for capital goods.
Transitional periods were granted as concerns the exemption from VAT rate on the
supply of heat energy for private households (until 31 December 2004), and the
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application of simplified procedures for charging VAT on timber transactions (for one
year after accession). Latvia has also been granted derogations as concerns the continued
application of a VAT registration and exemption threshold of € 17857 VAT for small and
medium-sized enterprises, and the application of a VAT exemptions on international
passenger transport, and on services supplied by authors, artists and performers. As
regards the necessary administrative structures, Latvia should accelerate its efforts to
modernise and enhance the efficiency of the State Revenue Service, which suffers from a
lack of human resources, in particular as concerns control and audit functions. Priority
should be given to improving staff policy and to enhancing the collection, control and
audit functions. Latvia’s implementation capacity is seriously hampered by delays in
information technology and interconnectivity (see below).
As concerns
excise duties,
in order to complete alignment Latvia should align the
structure of the rate on beer, the scope of exemptions, the duty rates on mineral oils and
tobacco products, introduce the provisions for travellers’ allowances, and extend the
suspension movement regime to intra-community transactions. Latvia also has to
eliminate some remaining discrepancies with the
acquis,
concerning the definition of
alcoholic products, certain mineral oils, and cigars and cigarillos. The gradual increase of
excise duties on cigarettes is proceeding according to schedule, in order to reach the
minimum rate level on 31 December 2009, as agreed in the accession negotiations. Latvia
has taken the necessary steps to put into place the required administrative structures to
apply and implement effectively the
acquis
in the area of excises.
In the area of
direct taxation,
Latvia needs to transpose the directives on interests and
royalties and on the taxation of savings income. In order to comply with the principles the
Code of Conduct for Business Taxation, Latvia should improve transparency of its
legislation on special economic zones and free ports. The necessary administrative
capacity is in place, however it needs to be further strengthened especially regarding
control and audit functions.
On
administrative co-operation and mutual assistance,
further steps need to be taken.
A Central Liaison Office (CLO) was set up and is in the process of being staffed. The
Excise Liaison Office (ELO) remains to be established. As concerns the setting up of
information technology system, Latvia has recently procured an external VAT
information exchange system (VIES) system, trying to limit previously accumulated
delays. However, continued serious concerns remain that the Latvian VIES system could
not be fully operational by the date of accession. The main reasons are that the systems
implementation has not started during the reference period and the system procured is not
yet fully tested. Latvia must focus urgent attention on accelerating efforts in this area.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations on
excise duties
and
direct taxation
and is expected to be ready
to implement the
acquis
as of accession. Latvia needs to adopt legislation to complete
alignment in these areas, as well as to strengthen its tax administration.
In the area of
VAT,
Latvia is partially meeting its commitments. Latvia must urgently
accelerate its efforts to align its legislation. Unless significant additional efforts are made
there is a risk that Latvia will not be in a position to fully implement the acquis in this
area. Particular attention must be given to the full alignment of the scope of exempt
transactions and the reduced rates, as well as to the introduction of the intra-Community
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regime. As for administrative capacity, Latvia must accelerate efforts to modernise its
structures, in particular as concerns collection, control and audit functions and personnel
policy.
In the area of
administrative co-operation and mutual assistance
there remain serious
concern as regard the implementation of the information technology systems, and in
particular the interconnectivity to the VIES system, by accession. Latvia must focus
urgent attention on accelerating efforts in this area.
Chapter 11: Economic and monetary union
EC legislation on Economic and Monetary Union (EMU) contains specific rules ensuring
the independence of central banks in Member States, prohibiting indirect financing of the
state by the central bank, and disallowing privileged access of the public sector to
financial institutions. These rules must be transposed into the national legislation, despite
the fact that Latvia will not yet adopt the euro as a currency from accession. EMU policy
also includes the co-ordination of exchange rate and economic policies, adherence to the
stability and growth pact and the statutes of the European System of Central Banks.
In the area of
prohibition of direct financing of the public sector
Latvia has met the
commitments and requirements arising from the accession negotiations, and is in a
position to implement the relevant acquis as from the date of accession.
In the area of
prohibition of privileged access of the public sector to financial
institutions,
Latvia has met the commitments and requirements arising from the
accession negotiations, and is in a position to implement the relevant acquis as from the
date of accession, since the rules of investment of pension capital abroad included in the
Law on Private Pension Funds were amended.
In the field of
independence of the national central bank,
legislation is in place and in
line with the
acquis.
However, the issue of personal independence of members of the
central bank remains to be solved. A possibility of judicial review about the decision of
dismissing members of the decision making bodies – dealing with ESCB related tasks -
should be provided for. The necessary administrative structures are in place and function
adequately.
Conclusion
Latvia has met the commitments and requirements arising from the accession
negotiations concerning the
prohibition of direct financing of the public sector
and the
prohibition of privileged access of the public sector to financial institutions
and will
be in a position to implement this acquis from accession. Latvia is essentially meeting the
requirements arising from the negotiations in the area of
independence of the national
central bank
and is expected to be able to implement the acquis as of accession. Latvia
should adopt one final amendment to the Central Bank Law concerning the personal
independence of its members.
Chapter 12: Statistics
The
acquis
in the field of statistics requires adoption of basic principles such as
impartiality, reliability, transparency, confidentiality of individual data and dissemination
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of official statistics. It also covers methodology, classifications and procedures for data
collection in various areas such as statistical infrastructure, macro-economic and price
statistics, business statistics, transport statistics, external trade statistics, demographic and
social statistics, agricultural statistics and regional statistics. The focal point of the
statistical system of a country is the National Statistical Institute, which acts as the
reference point for the methodology, production and dissemination of statistical
information.
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
statistics
and is expected to be in a position to
implement the
acquis
as from accession. However, Latvia still needs to improve the
quality and the timeliness of data in certain domains such as national accounts,
government finance statistics, data on income and living conditions. Furthermore, Latvia
needs to enlarge its production of regional data.
Chapter 13: Social policy and employment
The
acquis
in the social field includes minimum standards in fields such as labour law,
equal treatment of women and men in employment and social security, and health and
safety at work. Specific binding rules have also been developed in public health (on
tobacco control and surveillance and control of communicable diseases) and recently also
with respect to non-discrimination on grounds of racial or ethnic origin, religion or belief,
disability, age or sexual orientation. The European Social Fund (ESF) is the main
financial tool through which the EU supports the implementation of its Employment
Strategy and contributes to social inclusion efforts (implementation rules are covered
under Chapter 21, which deals with all structural instruments). The acceding countries
are expected to be able to participate in social dialogue at European level, and in the EU
policy processes in the areas of employment, social inclusion and social protection.
The transposition of the
acquis
in the area of
labour law
has been completed to a large
extent, except in the area of working time for mobile workers in civil aviation. Some
minor gaps remain in transposition concerning collective redundancies, working time,
young people at work and working time for seafarers. Transposition of the new
acquis
concerning involvement of workers in the European Company and information and
consultation of workers is foreseen after accession. An Insolvency Administration has
been set up, combining the functions of the guarantee fund and supervision of insolvency
processes.
Latvia has to a large extent transposed the
acquis
in the field of
equal treatment of
women and men,
although some legal adjustments will still be needed before accession,
such as the removal of overprotection of women against night work. The pensionable age
for male and female civil servants will have to be equalised upon accession, when the
pension scheme constitutes pay within the meaning of the Treaty and EC case law.
Implementing structures are largely in place, especially since the establishment of a
Gender Equality Council, a co-ordination and advisory body. However, further sustained
efforts are needed to enforce efficient co-ordination of gender equality measures.
In the area of
health and safety at work,
most of the legislation has been transposed.
Nevertheless, transposition remains to be completed regarding indicative occupational
exposure limit values (chemical agents at work). Latvia obtained three transition
arrangements relating to the use of work equipment until the end of June 2004, to the
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workplace until the end of December 2004 and to display screen equipment until the end
of December 2004. The State Labour Inspectorate needs further strengthening in terms of
staffing, salaries, training and technical facilities. The risk assessment system needs to be
further developed and more emphasis should be put on collective preventive measures. In
addition, enforcement and sanctions by the Labour Inspectorate should be made more
efficient.
As regards
social dialogue,
the administrative capacity of both the social partners and the
Government should be strengthened. The bipartite social dialogue needs to be promoted.
Conclusion of collective agreements needs to be facilitated.
In the field of
public health,
the legislative transposition of the
acquis
remains to be
completed in the fields of tobacco and communicable diseases. New legislation, in
particular rules on communicable diseases notification, surveillance and reporting forms,
is required. The list of diseases to be notified, should be revised to include all diseases
listed in EU legislation and should include also EU case definitions. Further efforts are
necessary to ensure the capacity needed to be incorporated into the Community
communicable disease surveillance and control structures. The reform of the public
health system needs to continue, also in order to improve the health status of the
population, which is much lower than the EU average and to ensure adequate resources
for health. The situation with regard to some communicable diseases also gives rise to
concern. The establishment of the Health Ministry in January 2003 can be considered as a
positive development in this context.
Concerning
employment policy,
efforts are needed to effectively implement the
priorities identified in the Joint Assessment of the Employment Priorities (JAP), in
particular education, training and lifelong learning systems as well as the strengthening of
activation and prevention. Particular attention should also be given to ensure that tax and
benefit systems are supportive to job creation and to taking up jobs, as well as to
integrating ethnic minorities. Further efforts are needed to strengthen administrative
capacity for policy planning and delivery and on resource allocation.
As regards the future establishment of the
European Social Fund (ESF),
the national
regulation specifying responsibilities and tasks as well as delegating the tasks to different
institutions was adopted in September 2003. The administrative capacity and institutional
building of the Managing and Paying Authority as well as line ministries and
intermediate bodies need to be ensured and strengthened. Inter-ministerial co-operation
needs to be reinforced. Control provisions as to the ESF need to be ensured at all levels
of management. Preparations for participation in the transnational operations of the
EQUAL initiative need to be intensified.
The Commission and Latvia are finalising the Joint Memorandum on Social Inclusion
(JIM), which identifies key challenges and possible policy orientations for promoting
social inclusion.
On this basis, an integrated strategy and a National Action Plan on
social inclusion will have to be developed. Analytical work and social statistics systems
on poverty and social exclusion should continue to be developed in line with the EU
commonly agreed indicators on social inclusion.
The on-going reforms in the area of
social protection
should continue.
Latvia has incorporated some
anti-discrimination
provisions in its new Labour Law.
However, important shortcomings subsists with regard to the full transposition of the
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acquis.
Moreover, the Equality Body required by the
acquis
needs to be established. In
this context, Latvia is strongly encouraged to promote integration of the Russian minority
by, in particular, continuing to accelerate the speed of naturalisation procedures, and by
taking other proactive measures to increase the rate of naturalisation. It is also expected
to ensure sufficient flexibility regarding transition to bilingual education in minority
schools, and to ensure that at all levels the implementation of the language law respects
the principle of justified public interest and proportionality, as well as Latvia’s
international obligations.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the areas of
labour law, equal treatment of women and men,
health and safety, social dialogue, employment policy, social inclusion
and
social
protection
and is expected to be in a position to implement this
acquis
as from
accession. As regards employment policy, the effective implementation of the priorities
identified in the Joint Assessment Paper is necessary to prepare for full participation in
the European Employment Strategy.
Latvia is partially meeting the requirements for membership in the areas of
public
health, European Social Fund
and
anti-discrimination.
In order to complete
preparations for membership, Latvia needs to transpose the
acquis
on tobacco and
communicable diseases and ensure that the planned capacity building measures are being
implemented. With regard to European Social Fund, including EQUAL, while
considerable progress has been achieved during the last few months, further efforts are
urgently needed in order to strengthen the administrative capacity for management,
implementation, monitoring, audit and control at both national and regional level. In the
area of anti-discrimination, equal treatment legislation remains to be fully transposed.
Chapter 14: Energy
EU energy policy objectives include the improvement of competitiveness, security of
energy supplies and the protection of the environment. The energy
acquis
consists of
rules and policies, notably regarding competition and state aids (including in the coal
sector), the internal energy market (for example, opening up of the electricity and gas
markets, promotion of renewable energy sources, crisis management and oil stock
security obligations), nuclear energy and energy efficiency. This chapter also covers
important aspects of the safety of nuclear installations.
With respect to
security of supply,
and in particular oil stocks, both framework and
implementing legislation are in place. Building up of oil stocks is taking place in
accordance with the transitional arrangement Latvia has been granted, namely to reach
the 90 days of oil stocks required by the acquis by the end of 2009. Efforts should be
sustained. The administrative capacity required is in place (the State Revenue Service and
the Energy Department) but these need to confirm themselves in their role.
In the field of
competitiveness and the internal energy market
(electricity and gas)
framework legislation, the Energy Law, is in place and is partially in line with the
acquis.
It must be amended with a sense of priority. Implementing legislation is partially in place
and must be completed. Issues such as third party access and the definition of eligible
customers need particular attention. Restructuring of the electricity company
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“Latvenergo” remains to be completed. The Energy Regulator (Public Utilities
Commission) is in place but needs further strengthening. Remaining gas and electricity
price distortions need to be removed; further delays need to be avoided. The market
opening is taking place in line with commitments made in the negotiations. In the
electricity sector approximately 20% of the market is opened up, while in the case of gas
Latvia plans to seek a derogation, under the directive, as a non-connected area. Latvia
should transpose the recently adopted electricity and gas directives in line with the
timetable foreseen by the acquis.
In the area of
energy efficiency and renewable energy,
legislative alignment has been
largely completed, except with regard to the newest acquis, which should be transposed
according to the timetables laid down in the directives. The administrative structures are
in place but need to be strengthened. A National Energy Efficiency Strategy is being
implemented since the year 2000, addressing both energy efficiency and renewable
energy issues.
In the field of
nuclear energy and nuclear safety,
Latvia meets the commitments and
requirements arising from the accession negotiations and is in a position to implement the
Euratom
acquis
as from the date of accession. During the accession negotiations, Latvia
committed itself to providing additional information on measures taken to implement the
recommendations of the June 2001 Council Report on Nuclear Safety in the Context of
Enlargement. Latvia provided such information in November 2001. In June and
September 2003, Latvia submitted additional information covering recent progress made
in various fields of nuclear safety, including
inter alia
legislation, the Radiation Safety
Centre, the radioactive waste management agency RAPA, the administrative capacity and
staffing of the nuclear regulatory authority, the new radioactive waste strategy and the
strategy for the decommissioning of the Salaspils reactor. Latvia should continue to pay
attention to further strengthening the capacity of its newly established radioactive waste
management agency RAPA.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations as regards
security of supply, energy efficiency and renewable
energy
and
nuclear energy and nuclear safety
and is expected to be in a position to
implement the
acquis
in these areas from accession. Latvia needs to progressively build
up oil stocks in line with the schedule agreed during the negotiations. In addition, Latvia
must complete alignment by adopting legislation as regards the 2002
acquis
on energy
efficiency and renewable energy. It also needs to continue to further strengthen
administrative capacity in the energy sector including in particular the radioactive waste
management agency.
Latvia is meeting the majority of the commitments and requirements in the area of
competitiveness and the internal energy market
(electricity and gas). In order to
complete preparations for membership, Latvia must focus on the adoption of the
amendments to the Energy Law, adopt the necessary implementing legislation, and
ensure the opening up of the markets in line with the schedules agreed during the
negotiations. Latvia needs to remove remaining electricity and gas price distortions.
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Chapter 15: Industrial policy
EC industrial policy seeks to enhance industrial competitiveness and rates of
employment, whilst operating in markets open to international competition. Its aim is to
speed up adjustment to structural change, encouraging an environment favourable to
initiative and to the development of undertakings throughout the Community. EC
industrial policy mainly consists of policy principles and horizontal and sectoral
industrial policy communications.
Latvia’s
industrial strategy
essentially complies with the concepts and principles of EC
industrial policy, i.e. it is market-based, stable and predictable. The industrial policy
guidelines should be further implemented. The necessary administrative structures in this
area are in place, but are still weak. Strategic analysis and planning capacity needs to be
substantially enhanced and co-operation with industry stepped up.
In the area of
privatisation and restructuring,
the implementation of the restructuring
policy in a manner that conforms to the competition and state aid
acquis
remains an area
for special attention so as to create efficient and competitive firms. The necessary
administrative structures in this area are in place, but are still weak.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the
industrial policy
chapter and is expected to be able to
implement the
acquis
as of accession. Latvia should continue to strengthen administrative
capacities.
Chapter 16: Small and Medium-sized Enterprises
SME policy aims to improve the formulation and co-ordination of enterprise policy
across the internal market with a view to supporting the development of SMEs. In doing
so, it seeks to improve the overall business environment in which SMEs operate. SME
policy consists largely of consultation fora and Community programmes, as well as of
communications, recommendations and exchanges of best practices.
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations relating to
small and medium-sized enterprises.
Alignment with
the new Commission recommendation on the SME definition should be carried out.
Latvia should further strengthen the institutions involved in designing and implementing
enterprise policy. The implementation of the European Charter for Small Enterprises
should be maintained.
Chapter 17: Science and research
Due to its specificity, the
acquis
in the field of science and research does not require any
transposition in the national legal order. However, the necessary implementing capacity
needs to be created to allow for effective participation in activities under the Framework
Programmes in the field of research.
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Latvia has met the commitments and requirements arising from the accession
negotiations in the area of
science and research
and will be in a position to implement
the
acquis
as from accession.
Chapter 18: Education and training
Education, training and youth is primarily the competence of the Member States. The
Community's
acquis
consists of a directive on education of the children of migrant
workers, and of action programmes and recommendations. The necessary implementing
capacity needs to be in place to allow for effective participation in the Community
programmes related to this chapter (Leonardo da Vinci, Socrates and Youth).
Latvia has met the commitments and requirements for membership in the area of
Community programmes,
and will be in a position to implement this
acquis
from
accession. The implementing capacity for Community programmes will need to be
enhanced to benefit from additional allocations for decentralised actions following
accession.
In the area of
education of children of migrant workers,
due implementation of the
acquis
needs to be ensured.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
education and training
and is expected to be in a
position to implement this
acquis
from accession. Efforts to implement the
acquis
on
education of children of migrant workers should continue.
Chapter 19: Telecommunications and information technologies
The acquis in the field of telecommunications consists mainly of the 1998 regulatory
framework and a 2000 regulation, and is aimed at the elimination of obstacles to the
effective operation of the single market in telecommunications services and networks,
and the achievement of universally available modern services. A new regulatory
framework on electronic communications was adopted in 2002 and must be
implemented. As regards postal services, the objective is to implement the single market
by opening up the sector to competition in a gradual and controlled way, within a
regulatory framework which assures a universal service (1997 and 2002 acquis).
In the field of
telecommunications,
Latvia’s framework legislation is in line with the
1998 – 2000
acquis.
The 2002
acquis
remains to be transposed. Implementing legislation
remains to be adopted in accordance with an established work plan. While competition in
the market has begun, following market opening in January, approved fixed
interconnection prices have to become oriented towards cost on the basis of long run
average incremental cost methodology. Local loop unbundling needs to be implemented.
Moreover, fixed network modernisation and price re-balancing should be continued.
While the necessary administrative structures in this area are in place, resources are too
limited and full separation of regulatory and operational functions as required has not yet
been achieved.
In the area of
postal services,
Latvia’s legislative alignment remains to be completed,
inter alia
regarding the license regime, universal service providers, requirements for tariff
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principles, transparency and separation of accounts for service providers and standards
for quality monitoring for postal services. Administrative capacity in this sector needs to
be further strengthened including through further staffing and training. The 2002 acquis
remains to be fully transposed and implemented.
Conclusion
Latvia is partially meeting the commitments and requirements arising from the accession
negotiations in the
telecommunications
and
postal services
areas. Enhanced efforts are
required in order to transpose and implement the
acquis
in the telecommunication field,
inter alia
by setting reasonable terms for interconnection and by putting in place local
loop unbundling. In order to complete preparations for membership, enhanced efforts
must also be made with regard to the transposition of the
acquis
in the postal services
sector. Latvia must ensure correct application of the universal service
acquis.
The
effectiveness and independence of the common regulator needs to be ensured.
Chapter 20: Culture and audio-visual policy
The culture and audio-visual policy chapter requires legislative alignment with the
Television without Frontiers directive and contains the community programmes Culture
2000, Media Plus and Media Training. Alignment with the Television without Frontiers
directive creates the conditions for the free movement of television broadcasts within the
Community. It implies basic common requirements concerning advertising; the
protection of minors and public order; and the promotion of European works.
Concerning
audiovisual policy,
Latvia adopted amendments to its Radio and Television
Law related to major events, the broadcast of music by broadcasters under Latvian
jurisdiction, the broadcast of in-house production by public broadcasters and the
strengthening of sanctioning powers of the National Broadcasting Council. These
amendments complete legislative alignment, except on the broadcast of in-house
production by public broadcasters.
Latvia meets the requirements for participation in Community activities in the field of
culture.
Conclusion
Latvia has met the commitments and requirements arising from the accession
negotiations in the field of
culture.
Latvia is essentially meeting the commitments and
requirements arising from accession negotiations in the field of
audiovisual policy
and is
expected to be in a position to implement the
acquis
as of accession. Attention should be
given to the issue of in-house production by the public service broadcaster.
Chapter 21: Regional policy and co-ordination of structural
instruments
The
acquis
under this chapter consists mostly of regulations, which do not require
transposition into national legislation. They define the rules for drawing up, approving
and implementing Structural Funds programmes and Cohesion Fund actions. These
programmes are negotiated and agreed with the Commission, but implementation is the
responsibility of the Member States. It is essential that Member States respect
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Community legislationin general, for example in the areas of public procurement,
competition and environment, when selecting and implementing projects, and have the
necessary institutional structures in place to ensure implementation in a sound and cost-
effective manner from the point of view of both management and financial control.
The
territorial organisation
at the NUTS 2 level has been agreed between Latvia and
the Commission. For the NUTS 3 level, Latvia has proposed to modify the existing
classification. Discussions on this point will not affect the implementation of the
structural instruments.
The essential features of the
legislative framework
are in place. The Act on Budget and
Financial Management allows for multi-annual budget programming with a view to
providing national co-financing for Structural and Cohesion Funds, and allows for
flexibility to adjust the financial tables to changing circumstances. The Act authorises the
Minister of Finance to increase the annual appropriations of the State budget in the case
of transfers between priorities and funds.
The legislative framework for financial control and compliance with other Community
policies is monitored in other chapters. However, in order for Latvia to make effective
use of its eligibility for structural funds from 1 January 2004, the relevant
acquis
in areas
such as public procurement, state aid and environmental protection will need to be fully
respected from that date. Urgent efforts are needed particularly in the area of public
procurement.
The
institutional structures
for the preparation and implementation of the Structural and
Cohesion Funds have been approved in September 2003. The Ministry of Finance has
been nominated as Managing Authority of the Single Programming Document (SPD).
The new Government decision of September 2003, clarifies the roles and tasks of the
Managing Authority, the different line ministries and the intermediate bodies. The
decision also nominates as intermediate bodies the “Central Finance and Contracting
Unit”, the “State Employment Service”, the “Rural Support Service” and the
“Professional Education Development Programme Agency”. This decision should now be
implemented without delay.
The separation of functions between the Managing and the Paying Authority needs to be
ensured and the internal distribution of tasks in the Ministry of Finance remains to be
formalised. In addition, some further clarifications on the tasks of different levels of the
implementation system are needed at the level of the Single Programming Document.
Structural funds related policy and operational co-ordination among the various
ministries requires strengthening. It is expected that the new unit structure of the
Ministry of Finance will improve inter-ministerial co-ordination.
The department within the Paying Authority that will perform the certification of
expenditure to the Commission has not yet been designated. In addition, an adequate
assurance of certification of expenditure and of separation between the certification and
approval functions must be ensured.
Internal audit units have been established in all line ministries, but not yet in the Central
Finance and Contracting Unit, which is a designated Intermediate Body. An overall audit
strategy needs to be established in order to allow links between system audits and sample
checks.
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The implementation of the human resource development plan for the Structural Funds
has been delayed due to the slow process in the setting up of the implementation system
and due to difficulty in recruiting new staff. Even though staffing levels in the Managing
Authority and the other relevant institutions are being raised, further efforts should be
made so as to ensure that adequate implementation capacity is established.
As regards
programming,
the Single Programming Document was submitted in March
2003. The official negotiations were finalised in October 2003. The programme
complement is still to be submitted. The final ex-ante evaluation of the SPD, carried out
by an independent consultant, was submitted in June.
Efforts have been made to involve stakeholders in the preparation of the programme in
application of the partnership principle. The SPD working groups included central and
regional administrations, business and social partners, chambers of commerce, etc. Other
groups and NGOs were encouraged to participate in the working groups, and public
discussions were organised during September 2002.
The Managing Authority is in charge of evaluation. A monitoring committee, including
members of the bodies involved in implementation as well as representatives of regional
and local authorities, social and economic partners and NGOs, will be set up. A single
computerised information system for monitoring Structural Fund implementation is being
set up. A cause for concern is the fact that the development of the monitoring system is at
a preliminary stage.
Considerable and sustained efforts are needed to establish a pipeline of projects that are
ready to be implemented in technical and financial terms so as to enable Latvia to benefit
fully from Community funds as soon as the programme starts.
Arrangements have been made for
financial management and control.
Internal audit
units have been established in all line ministries, but not yet in the Central Finance and
Contracting Unit. The role of these units in carrying out the regulatory requirements of
sample checks (5% and 15% on-the-spot checks) and the systems audits should be
clarified. Separation between the internal audit function and the management check
should be ensured. An overall audit strategy needs to be established in order to allow
links between systems audits, the work of internal audit units and sample checks. Steps
must be taken to ensure that the tasks of the new financial control unit, to be established
in the Ministry of Finance as a winding-up body, does not overlap with, nor decrease the
efficiency of, the control mechanisms.
Conclusion
Latvia is essentially meeting the requirements for membership in relation to
territorial
organisation
and
programming
for the implementation of actions under the Structural
and Cohesion Funds. Provided the further work programme is carried out as envisaged,
Latvia should be in a position to meet all requirements in these areas by the start of the
programme. As regards programming, Latvia needs to focus on establishing an adequate
pipeline of well-prepared projects and setting up a functioning monitoring system.
Latvia is only partially meeting the commitments and requirements arising from the
accession negotiations in relation to
legislative framework, institutional structures
and
financial management and control.
Latvia must complete implementation of legislation
on public procurement and to make sure that final beneficiaries will be in a position to
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effectively apply the rules and procedures resulting from the new law in the framework of
the Structural Funds in order to benefit from Community funding from 1 January 2004.
Concerning institutional structures, Latvia need to clearly define the tasks of the bodies
involved in the implementation structure. Continued efforts are needed to ensure proper
organisation, effective co-ordination and an adequate level of trained staff in the various
authorities involved. Particular attention must be paid to finalising arrangements for
internal audit and ensuring proper separation between the audit function and management
controls.
Chapter 22: Environment
Community environment policy aims to promote sustainable development and protect the
environment for present and future generations, and is based on the integration of
environmental protection into other Community policies, preventive action, the polluter
pays principle, fighting environmental damage at source, and shared responsibility. The
acquis
comprises over 200 legal acts covering horizontal legislation, water and air
pollution, management of waste and chemicals, biotechnology, nature protection,
industrial pollution and risk management, noise, and radiation protection. Ensuring
compliance with the
acquis
requires significant investments, but also brings significant
benefits for public health and reduces costly damage to forests, buildings, landscapes and
fisheries. A strong and well-equipped administration at national, regional and local level
is imperative for the application and enforcement of the environment
acquis.
Horizontal legislation
is in place and is in line with the
acquis,
except for the recent
acquis
on strategic environmental impact assessment, which needs to be transposed and
implemented by July 2004 in line with the Directive. The relevant administrative
capacities are in place and function adequately.
In the
air quality
sector, legislation is in place and is in line with the
acquis,
except for
the sulphur content of liquid fuels and the recent
acquis
on ozone. Administrative
capacities are in place and function adequately. Air quality plans and programmes need to
be completed by accession. As regards volatile organic compound emissions from the
storage and distribution of petrol, a transitional arrangement until 31 December 2008,
with intermediate targets, has been agreed for certain installations in Latvia.
In the field of
waste management,
legislation is in place and is in line with the
acquis,
except for the recent
acquis
on end-of-life vehicles, which needs to be transposed by
accession. The administrative capacities are in place and function, but continued attention
needs to be paid to staffing at regional environmental boards. The permit and de-
registration systems for end-of-life vehicles and the inventory of PCB/PCT need to be
established at the latest by accession. The permitting of storage of hazardous waste for
less than 12 months also need to be completed by accession. The establishment of waste
collection systems and recovery and disposal facilities needs to continue, including the
construction of hazardous waste and asbestos landfills by the end of 2004. Transitional
arrangements, until 31 December 2007 for packaging waste and until 31 December 2004
for the temporary storage of hazardous waste under waste landfill, with intermediate
targets, have been agreed.
In the area of
water quality,
legislation is in place and is in line with the
acquis,
except
for implementing regulations concerning the recent framework
acquis
on water, which
remain to be adopted by accession. Administrative capacities are in place and function,
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but require continuous attention, especially as regards drinking water. Programmes for
nitrates and discharges of dangerous substances need to be finalised and adopted. Permits
for discharges need to be reviewed and issued by accession. As regards urban waste water
and drinking water, transitional arrangements until 31 December 2015, with intermediate
targets, have been agreed.
In the field of
nature protection,
legislation is in place and is in line with the
acquis,
except for implementing legislation which remains to be completed as regards habitats
and birds (amendments to the hunting regulations). Administrative capacities are in place
and function. Further efforts are needed to finalise the preparation of a list of proposed
sites of Community interest and the designation of special protection areas by accession,
and to apply the relevant protection measures by accession. Close attention needs to be
paid to ensuring proper consultation while avoiding delays.
As regards
industrial pollution and risk management,
legislation is in place and is in
line with the
acquis.
Permits need to continue to be issued and complied with for
installations subject to the rules on integrated pollution prevention and control (IPPC)
according to the
acquis
deadlines (until October 2007). Administrative capacities are in
place and function adequately. As regards IPPC, a transitional arrangement until 31
December 2010 has been agreed for certain installations in Latvia.
The legislation concerning
chemicals and genetically modified organisms
(GMOs) has
been transposed and is in line with the
acquis,
except for the recent
acquis
on the
deliberate release into the environment of GMOs, which needs to be transposed by
accession. Administrative capacities are in place and function, but as regards GMOs there
appears to be a shortage of resources. Authorisation procedures for biocides need to be
established, a competent authority designated and a notification procedure for GMOs set
up by accession. Co-ordination between the organisations involved needs to continue to
be enhanced.
Transposition of the
acquis
on
noise
is proceeding according to schedule and the
legislation is in line with the
acquis,
except for the recent
acquis
on ambient noise, which
needs to be completed at the latest by July 2004 in line with the Directive. Testing and
notified bodies need to be approved.
On
nuclear safety and radiation protection,
legislative alignment has been completed
and is in line with the
acquis.
Administrative capacities in this area are in place and
function adequately. As regards medical exposure, a transitional arrangement until 31
December 2005 has been agreed.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations and is expected to be in a position to implement the
acquis
in all
areas of
environment
policy by accession. Latvia needs to finalise the legal alignment as
regards the following areas: horizontal legislation, air quality, waste management, water
quality, nature protection, genetically modified organisms and noise. It needs to complete
air quality plans and programmes. Moreover, Latvia must pay particular attention to
implementation in the water sector, especially as regards drinking water quality, complete
authorisations for discharges of dangerous substances, and finalise the necessary
programmes. Administrative capacity for waste management, especially at regional
environmental boards, requires particular attention, including hazardous waste
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management. The establishment of waste collection systems and recovery and disposal
facilities needs to continue. In addition, Latvia must make further efforts to finalise its
lists of proposed nature protection sites and special bird protection areas. In this context,
close attention needs to be paid to ensuring proper consultation while avoiding delays. On
industrial pollution, permits for IPPC installations need to be issued and complied with
according to
acquis
deadlines. Authorisation procedures for biocides need to be
established.
Chapter 23: Consumer and health protection
The
acquis
covers protection of the economic interests of consumers (concerning
misleading and comparative advertisement, price indication, consumer credit, unfair
contract terms, distance and doorstep selling, package travel, timeshare, injunctions for
the protection of consumers’ interests, and certain aspects of the sale of consumer goods
and associated guarantees) as well as the general safety of goods (liability for defective
products, dangerous imitations and general product safety). Recently adopted legislation
includes rules on general product safety and distance marketing of consumer financial
services. The acceding countries need to effectively enforce the
acquis
through
appropriate judicial and administrative systems, including market surveillance and a role
for consumer organisations.
With regard to
safety-related measures,
Latvian legislation is in line with the acquis
with the exception of the revised directive on general product safety, which still has to be
transposed. The administrative structures are in place, but need to be strengthened in
terms of both financial and human resources.
Market surveillance
relating to general
product safety is partly developed. Latvia has created the relevant policy and management
structures. However, a market surveillance information system still needs to be promoted.
Moreover, the capacity of the main bodies in charge of market surveillance activities
needs to be further developed and their co-ordination improved. These structures need
also to be strengthened in terms of both financial and human resources. The capability for
testing the safety of consumer products falling under the scope of the general product
safety directive could be improved.
As regards
non-safety related measures,
Latvia has transposed the legislation although
the alignment with the
acquis,
in particular regarding consumer credit remains to be
confirmed. Enforcement activities relating to the protection of the economic interests of
consumers are partly developed. The administrative structures in terms of both financial
and human resources need to be further developed and strengthened, also with regard to
arbitration bodies, which play an important role in solving consumer cases.
With regard to
consumer organisations,
their role needs to be further promoted in order
to allow them to provide a more effective input into the development and implementation
of consumer policy. Consumer organisations should also be more actively involved in
developing consumer product safety standards. Consumer information and education
need to be further promoted. Consumers and businesses in Latvia also need to be made
more aware of their rights and responsibilities.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the areas of
safety-related legislation
and
consumer
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organisations
and is expected to be in a position to implement this
acquis
as from
accession. Latvia needs to complete alignment of the
acquis
of the revised general
product safety directive.
Latvia is meeting the majority of the requirements for membership in the area of
market
surveillance
and
non-safety related measures.
In order to complete preparations for
membership, Latvia needs to improve market surveillance to ensure the proper
enforcement of legislation on safety and non-safety related measures including by
strengthening the administrative capacity and structures. Latvia should also complete
alignment in the non-safety-related area.
Chapter 24: Justice and home affairs
The most developed part of this chapter is the Schengen acquis, which entails the lifting
of internal border controls. However, much of this acquis will not apply to the acceding
countries upon accession, but only after a later separate Council Decision. The Schengen
Implementation Action Plan aims at preparing this on the basis of a credible schedule for
the introduction of the Schengen provisions. Binding rules which must be put in place as
from accession include part of the rules on visas, rules on external borders and the acquis
on migration, asylum, police co-operation, combating organised crime, fight against
terrorism, fraud and corruption and drugs, customs co-operation as well as human rights
legal instruments. On issues such as border control, illegal migration, drugs trafficking
and money laundering, organised crime, police and judicial co-operation, data protection
and the mutual recognition of court judgements, acceding countries need to be equipped
to meet adequate standards of administrative capacity. The establishment of an
independent, reliable and efficient judiciary and police organisation are also of paramount
importance.
Preparation with regard to Schengen provisions (Schengen
Action Plan)
relevant to
accession is still satisfactory, but efforts will be needed after accession to prepare for the
lifting of internal borders and full implementation of the Schengen
acquis
on the basis of
a further decision to be taken by the Council. The separation of traffic at air- and seaports
should be subject to further monitoring. The preparation for integration into the Schengen
Information System (SIS) II is still at a preliminary stage, in terms of the development of
national applications. The establishment of an SIS and SIRENE bureau as well as the
development of the necessary information technology infrastructure and national registers
continue according to set timetables.
In the field of
data protection,
Latvia needs to complete its legislative alignment to
ensure full institutional autonomy and further strengthen the independence of the
supervisory authority. The responsible body, the Data State Inspectorate, started its
operations in 2001 and has been strengthened through increased resources. However,
inter-agency co-operation should be further enhanced.
Latvia has continued to advance on
visa policy
and its legislation is broadly in line with
the EU visa
acquis.
Latvia has aligned with the
acquis
regarding countries with EU visa
obligations. However, Latvia still has to align its policy with the acquis as regards EU
visa-free travel arrangements in relation to 18 countries. Regarding visa issuing
procedures, Latvia is largely in line with the
acquis,
but some implementation legislation
remains to be adopted. As regards implementation and administrative capacity, a national
visa register has been established and the Unified Visa Info System, including databases
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for invitations and entry prohibitions, is operational on-line at all embassies, consulates
and border control points. Efforts are still needed to continue improvements in
infrastructure, recruitment of staff and training. At all diplomatic and consular missions,
the technical and human resource capacity to detect forged and falsified documents
should continue to be strengthened.
As regards the management of the future
external borders,
Latvia has in general aligned
its legislation on border control and border surveillance. Negotiations on border co-
operation agreements with neighbouring countries are ongoing with the Russian
Federation. The border crossing agreement with Belarus entered into force in January
2003, but demarcation works need to be done on the Belarus side. There is no progress
on the conclusion of a demarcation agreement with Russia. Implementation of Latvia’s
Integrated Border Management Strategy and the relevant parts of its Schengen Action
Plan are ongoing. The recruitment of staff and the allocation of sufficient financial means
to fully implement both plans remain important. However, particular attention is needed
to enhance inter-institutional co-operation, to define the necessary implementation
structures, to draft co-operation instructions, notably between customs and border guards
and to ensure implementation of inter-agency agreements. Latvia is in the process of
upgrading its equipment for border surveillance, including sea borders and the
construction and renovation of border posts at Latvia’s eastern border. However,
continued attention is needed regarding the development of its infrastructure and the
putting into place of the necessary equipment.
In the area of
migration,
legislative alignment has been completed, except with regard to
carrier liability. Latvia has taken action to conclude readmission agreements, and is
encouraged to sign and ratify outstanding agreements with Member States, candidates
countries, and third countries including Belarus and the Russian Federation.
Administrative structures are essentially in place, but require further strengthening,
including the provision of adequate financial resources. An area of particular concern is
the need to improve detention conditions at the Olaine Centre for illegal migration.
Urgent priority should be given to the implementation of the reconstruction project for
the improvement of conditions at the Olaine Centre and to ensure the allocation of
sufficient financial resources. This project should also include a review of detention
procedures.
In the field of
asylum,
Latvia’s legislation is broadly aligned with the
acquis.
Attention
needs to be paid to completing alignment with regard to the implementing regulations of
the Asylum Law in the area of appeals under accelerated procedures, exclusion and
cessation grounds and minimum guarantees for asylum procedures ("non-refoulement").
Latvia should also implement outstanding amendments to the Asylum Law necessary for
full alignment with the Dublin Regulation, particularly regarding procedures for
considering applications between Member States. In order to ensure adequate
implementation, the administrative capacity of the Office for Citizenship and Migration
Affairs and the related bodies concerned, should be further improved, including through
training. Elaboration of strategies and instructions for internal co-operation in dealing
with applications also remain important. Latvia should also accelerate its analytical and
organisational measures for active participation in EURODAC. Preparations for the
establishment of National Access Points for Dublinet and EURODAC need to be
accelerated urgently and the necessary resources provided in order to ensure
implementation by accession.
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In the area of
police co-operation and combating organised crime,
efforts are still
required to ensure that Latvia has an accountable, reliable and fully co-ordinated police
organisation by accession. Continued attention is needed to improve co-operation and co-
ordination between the police and the prosecuting and judicial bodies. Information
sharing and the development of joint analytical capabilities, particularly in the field of
combating economic and organised crime, need to be considerably improved and
sufficient means allocated. International co-operation is being established and supported
by co-operation agreements, however, the liaison officer post in Moscow is currently
vacant and should be filled. The signing of an agreement with Europol is still pending.
Once signed, attention should be paid to the timely preparation of national procedures in
order to ensure the swift ratification of the Europol Convention upon accession to the
EU. Some legislative measures are still necessary to ratify the Protocol against trafficking
of persons of the UN Convention against transnational organised crime. The Protocol
against the Illicit Manufacturing of and Trafficking in Firearms, their Parts, Components
and Ammunition has not yet been signed. While the state police (criminal police and
Drug Enforcement Bureau) was reorganised, salaries increased and equipment provided,
further strengthening is necessary, particularly in order to improve the state police
analytical capacity and to fight IT crime, money laundering, smuggling and other forms
of serious crime. Training should be further developed covering specific skills, such as
surveillance, high-tech crime and financial investigations as well as general courses on
investigative techniques. Inter-agency co-operation needs to be enhanced further, in
particular between such bodies as the economic police, financial police, the Financial
Intelligence Unit, the Corruption Prevention and Combating Bureau, customs and border
guards.
In the
fight against terrorism,
Latvia has ratified the most important Conventions in this
area, in particular the 1999 International Convention for the Suppression of the Financing
of Terrorism. Latvia should accelerate its preparatory efforts in order to accede to the
Convention on Mutual Assistance in Criminal Matters between the EU Member States
(2000) upon accession.
As regards the
fight against fraud and corruption,
Latvia’s legislation is largely
aligned with the
acquis.
Further amendments are necessary for full alignment with the
1995 Convention on the Protection of the European Communities’ Financial Interest and
its Protocols. The respective amendments to the Criminal Law and the Law on
Prevention of Laundering of Proceeds Derived from Criminal Activity are still pending.
Full alignment with the Council Framework Decisions on the protection of the euro
against counterfeiting should be ensured. Latvia has yet to designate a National Central
Office, dealing notably with banknote and coin analysis. Latvia should implement the
anti-corruption strategy, including the fight against high-level corruption, but still needs
to develop stable management and it should continue to increase its staffing and needs to
develop its investigation capabilities. The National Corruption Prevention Programme
needs to be adopted, particularly in order to clarify the tasks and responsibilities of the
relevant institutions. As regards corruption, see also
Section C.1. — Administrative and
judicial capacity.
On the
fight against drugs,
Latvia has completed its legislative measures and has
established a National Strategy, but the action plan regarding the Latvian Drug Control
and Drug Abuse Strategy still needs to be elaborated and adopted. Further improvements
in implementation are required, including establishing the necessary administrative
capacity and the allocation of sufficient financial resources. The Drug Enforcement
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Bureau has been integrated into the Organised Crime Enforcement Department of the
state police, with the aim of reinforcing the relatively weak institutional framework for
drug co-ordination and recognising the link between drug trafficking and organised
crime. The infrastructure of the National Focal Point for future co-operation with the
European Monitoring Centre for Drugs and Drug Addiction needs to be strengthened,
legally and financially. The lack of drug seizures at the borders remains a critical area of
concern, and greater targeting of drug trafficking by customs and border guards is
required together with the allocation of increased resources. Inter-agency co-operation
and co-ordination, especially between customs, border guards and state police needs to be
strengthened and the necessary regulations implemented.
Latvia needs to complete its legislative alignment with the
acquis
on
money laundering
regarding reporting of suspicious transactions. A Financial Intelligence Unit is in place,
but training on money laundering issues for judges and public prosecutors as well as
reporting institutions and bodies should continue (see
also Chapter 4 – Free movement of
capital).
With regard to
customs co-operation,
Latvia is in the process of aligning its legislation.
Inter-agency co-operation is provided for as well as co-operation with businesses on the
basis of memoranda of understanding. However, inter-agency co-operation needs to be
further improved, partly through new legislation. Implementation of the training strategy
regarding controlled deliveries, drug searches, cross-border surveillance, hot pursuit and
joint investigation teams should continue. Efforts should also continue to establish the
Customs Information System by accession.
In the area of
judicial co-operation in civil and criminal matters
legislative alignment
is ongoing and Latvia should be ready by accession to accede and apply the relevant
instruments. Particular attention should be paid to alignment with the Council Framework
Decision of 13 June 2002 on the European arrest warrant and the surrender procedure
between Member States. Administrative structures for direct contacts between competent
judicial authorities are in place, but need to be further strengthened. Further training on
judicial co-operation should be provided to judges and other relevant staff, as part of a
more systematic long-term training strategy.
As regards the
reform of the judiciary
in general, a detailed analysis is provided in
Section C.1. — Administrative and judicial capacity.
All the
human rights legal instruments
under the justice and home affairs
acquis
have
been ratified by Latvia.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations and is expected to be able to implement by accession the acquis in
the areas of the
Schengen Action Plan, visa policy, external borders, police co-
operation and combating organised crime, the fight against money laundering,
and
terrorism, customs co-operation, judicial co-operation in civil and criminal and
human rights legal instruments.
Latvia is partially meeting the commitments and requirements for membership in relation
to
data protection, migration, asylum,
the
fight against fraud and corruption
and
drugs.
In order to complete preparations for accession, Latvia needs to adopt and
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implement the necessary legislation. Overall, inter-agency co-operation needs to be
improved and co-ordination structures to be strengthened. Particular attention must be
given to the technical and organisational preparations necessary to implement
EURODAC and Dublin II, including sufficient budget.
Chapter 25: Customs Union
The Customs Union
acquis
consists almost exclusively of legislation which is directly
binding on the Member States and does not require transposition into national law. It
includes the Community’s Customs Code and its implementing provisions; the
Combined Nomenclature, Common Customs Tariff and provisions on tariff
classification, customs duty reliefs, duty suspensions and certain tariff quotas; and other
provisions such as those on customs control of counterfeit and pirated goods, drugs
precursors and cultural goods and on mutual administrative assistance in customs matters
as well as Community agreements in the areas concerned, including transit. Member
States must ensure that the necessary enforcement capacities, including links to the
relevant EC computerised customs systems, are in place.
Latvia’s
customs legislation
is largely aligned with the
acquis
up to 2001.
Implementation of the remaining provisions will take place upon accession, when the EC
customs legislation becomes directly applicable. National provisions superseded by the
acquis are to be repealed at the time of accession and agreements on mutual
administrative assistance in customs matters are to be amended as necessary.
Concerning
administrative and operational capacity,
a functioning customs
administration is in place; however, serious concerns exist as regards the possibility for
Latvia of completing computerisation requirements by the time of accession. The Latvian
authorities should pay particular attention to the further restructuring and streamlining of
the territorial customs organisation and should implement their plans for reorganisation
as a result of accession, when the volume of customs work decreases owing to the
conversion of external to internal trade. The customs authorities should continue to co-
operate with other enforcement bodies as well as with partners in the Member States.
Preparation for the application of measures and provisions that will be introduced only at
the time of accession should be continued, in particular by means of further training. To
avoid problems in the enlarged Community, progress is still urgently required in the IT
area, to implement the Customs IT strategy within the deadlines set. Currently, the
number of staff in the business and IT teams is still too limited, despite successful efforts
to create a quality management team. Qualified staff from the regional customs offices
must be dedicated to the interconnectivity projects, particularly in setting up business
rules, for testing periods, and for deployment training. The fully deployed computerised
entry-processing system has yet to be upgraded to an EC-compatible version, in particular
to link it, at the very least, to the Master tariff system by the date of accession. Latvia
must urgently accelerate the setting up of the computerised transit system, where delays
have occurred, in order to be able to meet its commitments as a Member State. In
particular, no slippage to the current planning must occur as regards the procurement of
equipment for the national transit offices.
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Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
customs legislation.
Concerning
operational and administrative capacity,
serious concerns remain in the
area of computerisation and interconnectivity, where significant delays endanger the
correct operation of the transit system, with effects for the entire Community as well as
partner countries in the Common Transit System. The Latvian authorities must take
urgent action to ensure the necessary transfer of knowledge and experience by the time of
accession to enable them to avoid disrupting the operation of the customs union. The
computerised transit system must be made operational, including connection to traders, in
time for accession. The number of specialised staff must be increased significantly,
particularly for a short-term period of testing and deployment training. The existing
computerised entry-processing system must be upgraded to an EC-compatible version
that can be linked at least to the Master tariff system by the date of accession. Unless
immediate remedial action is taken, Latvia will not meet the requirements for
membership in this area and there is a serious risk of disruption of the smooth operation
of Community systems at the time of accession.
Chapter 26: External relations
The main element in this chapter, the common commercial policy, is made up of directly
binding EU legislation which does not require transposition into national law. The
acceding countries were requested to align before accession with the
acquis
on dual-use
goods and, where applicable, export credits. Acceding countries committed themselves to
ensure compatibility with the
acquis
of their bilateral agreements with third countries. In
the area of humanitarian aid and development policy, countries need to ensure the
capacity to participate in the EC’s development and humanitarian policies.
The administrative structures for dealing with the issues related to the
common
commercial policy
are in place and sufficient.
Latvia has co-ordinated its positions and policies with the Commission with regard to the
Doha Development Agenda. Latvia should continue close co-ordination and co-operation
with the Commission, mainly in order to carry on preparing the convergence of its GATS
commitments and Most Favoured Nation exemptions into the EU ones (consolidation EU
25), to be finalised upon accession. Latvia has used its third stage of integration to further
align its list of integrated products under the Agreement on Textiles and Clothing with
the Community, although some discrepancies remain.
On trade in dual-use goods, Latvia has reached a high degree of alignment with the
acquis.
However, further alignment, in particular regarding the list of dual-use items,
needs to be achieved, as export control regimes continue to adopt decisions, which the
EU integrates into its legislation. Membership in all export control regimes is a crucial
factor enabling implementation of export controls by Latvia. Based on the Thessaloniki
Action Plan to support the acceding countries’ membership in export control regimes, the
EU supports Latvia’s accession to the regimes to which it has already applied but is not
yet a member. Full alignment as regards the Community general export authorisation can
only take place upon accession.
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Currently Latvia does not provide medium and long term export credits; should it start
doing so, requirements of the
acquis
will need to be strictly followed. Administrative
structures are in place and satisfactory
Latvia needs to confirm that all
bilateral agreements with third countries
which it
wishes to maintain after accession are compatible with its EC obligations and take further
steps to terminate or renegotiate those international agreements that are found to be
incompatible with the
acquis.
Following the successful signature of the Memorandum of
Understanding regarding the bilateral investment treaty (BIT) between Latvia and the
USA, Latvia must ensure swift ratification of the Additional Protocols to the BIT, which
were also signed with the US, in order for the adaptations to enter into force by the date
of its accession to the EU. Among other agreements, the Foreign Investment Protection
Agreement with Canada also needs to be brought into conformity with the
acquis.
In the area of
humanitarian aid and development policy,
Latvia has to pursue the
shaping of a development policy in line with EU principles, in particular with regard to
the guidelines laid down by the OECD Development Assistance Committee as well as the
commitments and objectives that Latvia has approved in the context of the UN and other
international organisations. Administrative structures are in place and satisfactory,
although they have not yet been involved in humanitarian aid measures.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations and is expected to be able to implement the
acquis
on the
common commercial policy
and
humanitarian aid and development policy.
Latvia is meeting the majority of the commitments and requirements for membership in
relation to
bilateral agreements with third countries.
In order to complete preparations
in this area, Latvia must take decisive steps towards renegotiating or terminating its
bilateral agreements to make sure that they are compatible with the
acquis
upon
accession.
Chapter 27: Common foreign and security policy
The
acquis
related to the common foreign and security policy (CFSP) is essentially based
either on legally binding international agreements or on political agreements to conduct
political dialogue in the framework of CFSP, to align with EU statements, and to apply
sanctions and restrictive measures where required.
Latvia has the required administrative capacity to participate in the
political dialogue.
However, with regard to alignment with
EU sanctions and restrictive measures,
statements, declarations and démarches,
Latvia still needs to adjust its legislation in
relation to the introduction and withdrawal of economic sanctions including freezing of
assets to enforce EU restrictive measures. The administrative structures required in this
area in Latvia are essentially in place and satisfactory.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the chapter on the
common foreign and security policy,
and is
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expected to be able to participate in the political dialogue and to align with EU
statements, sanctions and restrictive measures by accession. Legislation on economic
sanctions still needs to be adopted.
Chapter 28: Financial control
The acquis under this chapter consists mostly of general, internationally agreed and EU-
compliant principles of public internal financial control that need to be transposed into
the control and audit systems of the entire public sector. In particular, the acquis requires
the existence of adequate ex ante financial control and functionally independent internal
audit systems; an independent external audit of the public internal financial control
systems in the public sector; an appropriate financial control mechanism for EU pre-
accession funding and future structural action expenditure; and arrangements on the
protection of EC financial interests. In addition, an anti-fraud co-ordination service,
capable of co-operating with the Commission’s Anti-fraud Office OLAF at an
operational level, is to be designated.
In the area of
public internal financial control,
Latvia has put the framework legislation
in place, in line with the
acquis.
Implementing legislation has to be brought into line with
the framework legislation. A Code of Ethics for auditors remains to be adopted. The
establishment of all public internal financial control -related organisational structures
(Central Harmonisation Unit and internal audit capabilities) has been completed. The
newly set-up internal audit units are staffed with well-trained and experienced personnel,
while a continuous training programme for internal auditors has been developed and is
well on track.
In the field of
external audit,
framework legislation has been adopted and is in line with
the
acquis.
Implementing legislation has only been partially adopted, as the State Audit
Office (SAO) needs to continue to incorporate international audit standards into its
current work. The financial independence of the SAO is only partially ensured. Budget
proposals should be presented directly to Parliament to further improve financial
independence.
As regards
control over structural action expenditure,
framework and implementing
legislation in Latvia have only partially been adopted. Internal audit units have been
established in all ISPA bodies, but audit trails for EC funds and mechanisms for rapid
recovery of lost EC funds remain to be further developed. The necessary administrative
capacity to manage the pre-accession and future structural funds remains to be
substantially reinforced in order to fully meet the requirements for financial control and
internal audit. In particular, recruitment of additional staff for the pre-accession funds,
and for the Structural and Cohesion Funds, should be reinforced and accompanied by
training measures. Latvia needs to accelerate efforts to implement the extended
decentralised implementation system (EDIS) for ISPA and PHARE.
In the area of the
protection of EC financial interests,
Latvia needs to develop further
the framework and implementing legislation, in particular with a view to defining the
powers of the anti-fraud co-ordination service (AFCOS). In 2002, Latvia designated the
Ministry of Finance’s Internal Audit Co-ordination and Methodology Division as the
Latvian AFCOS, but the definitive location of the AFCOS and its competencies and
relations with other relevant institutions and bodies need to be clarified. The necessary
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administrative capacity to implement effective co-operation with OLAF through the anti-
fraud co-ordinating service needs to be ensured.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from accession
negotiations in the area of
public internal financial control
and is expected to be in a
position to implement the
acquis
in this field from accession. In the area of public
internal financial control, attention should be given to bringing implementing legislation
in line with the legal framework and to adopting a harmonised Code of Ethics.
Latvia is meeting the majority of the commitments and requirements arising from
accession negotiations in the area of
external audit, control over structural action
expenditure
and
protection of EC financial interests.
Preparations need to be speeded
up to complete implementing legislation for external audit and to implement international
auditing standards. The independence and operational capacity of the State Audit Office
need to be further improved. Urgent attention must also be paid to completing framework
and implementing legislation and to substantially reinforcing the administrative structures
and capacity in the area of control over structural action expenditure. Considerably
enhanced efforts must also be made to complete the extended decentralised
implementation system before accession. In the field of protection of EC financial
interests, legislation needs to be further aligned with the acquis. A definitive decision on
the location and competencies of the anti-fraud co-ordinating service is required, and the
necessary administrative capacity needs to be put in place.
Chapter 29: Financial and budgetary provisions
Chapter 29 covers the rules concerning the financial resources necessary for the funding
of the EC budget (‘own resources’). These own resources are made up mainly from
contributions from Member States based on 1) traditional own resources from customs
and agricultural duties and sugar levies, 2) a resource based on VAT and 3) a resource
based on the level of gross national income (GNI). Member States must ensure the
creation of appropriate administrative capacity to adequately co-ordinate and ensure the
correct calculation, collection, payment and control of own resources and reporting to the
EU for implementation of the own resources rules.
As regards the
traditional own resources (TOR),
a national reporting system on cases
of fraud and irregularity has been established in Latvia, but the system remains to be
tailored to the Commission’s reporting system OWNRES. For the administration of sugar
levies a working group has been set up and responsibilities defined, but the final
organisation and procedure are still to be formalised. For A and B accounts, the final
procedures and systems to prepare these accounts in line with the EC system are not yet
established. IT developments and other improvements in the field of customs clearance
and accounting as well as the reliability of data transmission between various systems
remain necessary. It should be noted that any delays in fully and accurately applying EC
customs rules will impact on the accuracy of TOR calculations.
Considerable efforts are required by Latvia for the correct calculation of the
VAT-based
resource,
in particular concerning the calculation of the weighted average rate in
accordance with ESA95.
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For the calculation of the
GNI resource,
analysis and improvement of calculation
methods in different fields of national accounts are under way, but continued efforts are
needed by Latvia to further improve the quality and reliability of the national accounts
and GNI calculations in line with ESA95, including their exhaustiveness.
With the establishment of a permanent own resources system co-ordination unit in the
Ministry of Finance in April 2003, all institutions necessary for application of the own
resources system in Latvia exist.
Conclusion
Latvia is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
financial and budgetary provisions,
and is
expected to be in a position by accession to implement the relevant
acquis.
Latvia should
now focus attention on further improving the calculation of the VAT-based resource and
the reliability of GNI statistics, completing the procedures and systems for the A and B
accounts and the procedures for sugar levies, and finalising procedures for sending
reports on cases of fraud and irregularity to the Commission through the OWNRES
system.
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D.
C
ONCLUSION
Economic activity has remained firm despite a weak external environment. The economic
reform path has been sustained.
As regards the areas, where last year’s report suggested improvements, some progress has
been made, but challenges remain. Positive developments have taken place as regards
active labour market policies, but several structural rigidities remain. Fiscal policy turned
into a more expansionary phase in 2002. Overall, appropriate conditions to attract foreign
investment have been established, but the environment for the creation of new enterprises
remains somewhat problematic. Some progress has been made in improving
administrative and judicial capacity as regards to the business community.
As regards overall administrative and judicial capacity, sufficient conditions are in place
for the implementation of the
acquis
by the Latvian public administration and judiciary,
but there is room for further improvements. In the field of public administration, it is
important to harmonise the civil service management structure on the basis of transparent
rules and practices in staff matters, and to reinforce accountability of public agencies.
Particular attention needs to be paid to the reform of the judiciary, and in particular the
completion of the legislative framework, especially the urgent need to adopt the new Law
on Judicial Power, as well as the Law on Criminal Procedure, and to the implementation
of legislation on Court administration. The fight against corruption should continue to
receive high priority. In particular, further efforts are needed to complete the legislative
basis and to consolidate the new Anti-Corruption Bureau.
As regards the implementation of the
acquis
in specific policy areas, the findings of this
report are set out below.
Firstly, it should be noted that Latvia has reached a
high level of alignment with the
acquis
in most policy areas.
It is expected to be in a position to implement the
acquis
as required in the following
areas by accession : horizontal and procedural measures, new approach legislation in the
free movement of goods
chapter; citizens’ rights, free movement of workers and co-
ordination of social security systems, in terms of
free movement of persons;
the banking
sector in the area of
freedom to provide services;
payment systems and the fight against
money laundering related to the
free movement of capital; company law
and accounting;
and state aid rules in
competition policy.
In the area of
agriculture,
Latvia is expected to
be in a position by accession to implement the
acquis
in some horizontal areas, in most
common market organisations, in rural development, and in some veterinary issues,
notably zootechnics and animal nutrition; and in
fisheries,
in the areas of structural
actions, state aid and international agreements.
Latvia is also expected to be in a position to implement the acquis by accession in : most
areas of the
transport
sector; excise duties and direct
taxation; economic and monetary
union; statistics;
most areas of
social policy and employment;
most areas in the
energy
sector;
industrial policy; small and medium-sized enterprises; science and research;
education and training; culture and audio-visual policy;
programming in relation to
regional policy and co-ordination of structural instruments;
the
environment
chapter;
safety-related measures and consumer organisations in terms of
consumer and health
protection;
most aspects of
justice and home affairs; customs
legislation; the common
commercial policy, humanitarian aid and development policy in the
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acquis;
common foreign and security policy;
public internal
financial control;
and
financial and budgetary provisions.
Secondly, in certain areas Latvia partially meets the commitments and requirements and
needs to make
enhanced efforts
in order to complete its preparations for accession.
This includes the old approach sectoral legislation on the
free movement of goods,
as well
as public procurement and the non-harmonised area; in the area of
free movement of
services,
the fields of insurance, investment services and securities markets, the
protection of personal data and information society services, and the right of
establishment and the freedom to provide non-financial services; in the fields of
free
movement of capital,
the remaining restrictions regarding capital movements and
payments; within the area of
company law,
the protection of intellectual and industrial
property rights; and anti-trust rules in
competition policy.
In the
agriculture
area it
concerns the Paying Agency, the Integrated Administration and Control System and
trade mechanisms, the common market organisations for milk, sugar and beefmeat, the
veterinary control system, public health in agri-food establishments, trade in live animals
and animal products, animal disease control, common measures including residues,
animal welfare and phytosanitary issues; and resource and fleet management and
inspection and control, and market policy in the
fisheries
area.
This also includes the fields of: air
transport;
VAT, including administrative capacity, in
taxation;
public health, the European Social Fund, and anti-discrimination in the area of
social policy and employment;
competitiveness and the internal
energy
market;
telecommunications and information technologies,
including the postal services sector;
legislative framework, financial management and control as well as institutional
structures regarding
regional policy and co-ordination of structural instruments;
market
surveillance and non-safety measures in the area of
consumer and health protection;
data
protection, migration, asylum, the fight against fraud and corruption, and drugs in the
area of
justice and home affairs; external relations,
as regards bilateral agreements with
third countries; and external audit, control over structural action expenditure and the
protection of EC financial interests in the area of
financial control.
Thirdly, Latvia must take immediate and decisive action to address four issues of
serious
concern
in four chapters of the
acquis
if it is to be ready by the date of accession.
This concerns the field of
free movement of persons,
relating to Latvia’s preparations for
the general system of mutual recognition of qualifications and the mutual recognition and
training for certain professions, including in the healthcare sector. It also concerns the
field of
agriculture,
regarding the area of TSE (transmissible spongiform
encephalopathies) and animal by-products. It concerns
taxation
as regards administrative
co-operation and mutual assistance in the field of VAT, in particular the interconnectivity
system. Finally, it concerns administrative and operational capacity in the
customs union
area, as regards certain information technology systems.
57
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S
TATISTICAL ANNEX
1998
Basic data
Population (average) a)
Total area
National accounts
Gross domestic product at current prices
Gross domestic product at current prices
Gross domestic product per capita b) at current
prices
Gross domestic product at constant prices (nat.
currency)
Employment growth
Labour productivity growth
Unit labour cost growth
Gross domestic product per capita b) at current
prices
GDP per capita b) at current prices in PPS
Labour productivity (GDP per person employed
in PPS)
Structure of production
- Agriculture
- Industry (excluding construction)
- Construction
- Services
Structure of expenditure
- Final consumption expenditure
- household and NPISH
- general government
- Gross fixed capital formation
- Stock variation d)
- Exports of goods and services
- Imports of goods and services
Inflation rate
Consumer price index
3.6
5.4
2,300
2,410
64,589
1999
2,390
64,589
2000
in 1000
2,373
in km²
64,589
2001
2,355
64,589
2002
2,339
64,589
1000 Mio Lats
3.9
6.2
2,600
4.3
7.8
3,300
4.8
8.6
3,700
5.2
8.9
3,800
1000 Mio ECU/euro
in ECU/Euro
% change over the previous year
4.8
-0.3
5.0
-3.6
5,600
2.8
-1.8
4.7
-2.5
6,100
6.8
-2.9
10.1
-7.2
7,000
2.2
5.6
-1.8
7,800
7.9
6.1
2.7
3.3
-0.4
8,500
in Purchasing Power Standards
in % of EU-15 average
28
29
28
31
31
34
34
37
35
37
% of Gross Value Added c)
4.4
23.4
6.9
65.4
85.9
64.5
21.4
27.3
0.4
51.3
64.8
4.3
19.9
7.1
68.6
83.4
62.9
20.5
25.2
1.7
43.9
54.2
4.9
18.6
6.7
69.8
81.7
61.9
19.7
26.5
0.5
45.6
54.3
4.8
18.7
6.1
70.3
81.4
62.1
19.3
27.0
2.8
44.4
55.6
4.7
18.6
6.1
70.6
82.2
62.7
19.4
26.4
2.1
45.5
56.1
as % of Gross Domestic Product
% change over the previous year
4.3
2.1
2.6
2.5
2.0
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1998
Balance of payments
-Current account
-Trade balance
Exports of goods
Imports of goods
-Net services
-Net income
-Net current transfers
-
of which: government transfers
- FDI (net) inflows
Public finance
General government deficit/surplus
General government debt
Financial indicators
Gross foreign debt of the whole economy
Gross foreign debt of the whole economy
Monetary aggregates
- M1
- M2
- M3
Total credit
Average short-term interest rates
- Day-to-day money rate
- Lending rate
- Deposit rate
ECU/EUR exchange rates
- Average of period
- End of period
- Effective exchange rate index
Reserve assets
-Reserve assets (including gold)
-Reserve assets (excluding gold)
External trade d)
Trade balance
Exports
Imports
Terms of trade
Exports with EU-15
Imports with EU-15
-1,230
1,619
2,849
101.9
56.6
55.3
687
624
0.660
0.665
203.8
4.4
12.9
7.3
0.9
1.0
1.4
1.1
-576
-1,007
1,798
2,805
271
48
111
73
318
1999
-599
-956
1,772
2,729
314
-44
87
57
352
2000
-538
-1,152
2,232
3,384
479
28
106
39
445
2001
-825
-1,516
2,485
4,001
557
49
88
27
198
2002
-697 e)
:
:
:
:
:
:
:
410 e)
in Mio ECU/euro
in % of Gross Domestic Product
-0.7
10.6
-5.3
13.7
-2.7
13.9
-1.6
15.7
-3.0p
15.2p
in % of Gross Domestic Product
14.6
20.9
39.9
46.4
as % of exports
28.4
47.5
1.0
1.2
1.7
1.5
4.8
13.1
6.7
0.626
0.588
87.5
1.3
1.5
2.2
2.0
3.0
10.2
7.4
0.559
0.576
104.3
1.5
1.9
2.8
2.9
5.2
10.2
6.9
0.560
0.556
316.5
1,381
1,304
:
:
1.7
2.2
3.0
3.5
3.0
8.3
5.7
0.581
0.614
309.2
1,263
1,184
1000 Mio ECU/euro
% per annum
(1ECU/euro=..Lats)
1993=100
287.7
316.3
Mio ECU/euro
907
836
987
915
Mio ECU/euro
-1,144
1,612
2,756
101.8
62.5
54.5
-1,435
2,023
3,458
92.5
64.6
52.4
-1,688
2,243
3,931
100.9
61.2
52.6
-1,873
2,425
4,298
97.1
60.4
53.0
previous year=100
as % of total
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1998
Demography
Natural growth rate
Net migration rate (including corrections)
Infant mortality rate
Life expectancy :
Males:
Females:
Labour market (Labour Force Survey)
Economic activity rate (15-64)
Employment rate (15-64), total
Employment rate (15-64), males
Employment rate (15-64), females
Employment rate of older workers (55-64)
Average employment by NACE branches
- Agriculture and forestry
- Industry (excluding construction)
- Construction
- Services
Unemployment rate, total
Unemployment rate, males
Unemployment rate, females
Unemployment rate of persons < 25 years
Long-term unemployment rate
Social cohesion
Inequality of income distribution
Early school-leavers
Population in jobless households (persons aged
0-65)
Standard of living
Number of cars
Main telephone lines
Number of subscriptions to cellular mobile
services
Infrastructure
Railway network
Length of motorways
37.4
0
201.0
309.0
70.0
:
14.5
19.0
21.5
5.5
53.9
14.3
15.0
13.6
27.0
7.8
70.1
59.9
65.1
55.1
36.3
64.1
75.5
-6.6
-2.4
15.0
1999
-5.6
-1.7
11.3
64.9
76.2
2000
-5.1
-2.3
10.4
at birth
64.9
76.0
2001
-5.7
-2.2
11.0
65.2
76.6
2002
-5.3
-0.8
9.8
65.5p
77.0p
per 1000 of population
per 1000 live-births
% of population
68.4
58.8
64.1
53.9
36.6
17.5
19.7
6.1
56.8
14.0
14.3
13.6
23.5
7.5
67.1
57.5
61.5
53.8
36.0
14.9
20.8
6.0
58.3
13.7
14.4
12.9
21.3
8.2
68.0
58.6
61.9
55.7
36.9
15.1
19.6
6.7
58.6
12.8
14.1
11.6
22.9
7.4
69.8
60.4
64.3
56.8
41.7
15.3
19.3
6.2
59.1
12.8
13.7
11.8
25.6
5.8
as % of the total population of the same age group
in % of total
% of labour force
ratio of top quintile to lowest quintile
5.4
:
15.4
5.1
:
15.9
5.5
:
:
14.0
:
19.5
11.7
% of population aged 18-24
% of population aged 0-65
per 1000 inhabitants
221.0
307.0
117.0
235.0
311.0
170.0
250.0
308.0
267.0
266.0
301.0
393.0
in km per 1000 km²
37.4
km
0
0
0
0
37.4
37.4
37.4
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1998
Industry and agriculture
Industrial production volume indices
Gross agricultural production volume indices (in
prices 1993)
Innovation and research
Spending on Human
expenditure on education)
Resources
(public
6.07
103.1
92.1
1999
94.6
89.4
2000
104.7
102.8
2001
109.2
106.6
2002
105.8p
104.1p
previous year=100
as % of GDP
6.28
5.86
5.90E
:
as % of GDP
Gross domestic expenditure on Research &
Development
Level of Internet access - households
Environment
Total greenhouse gases emissions
Energy intensity of the economy
Share of renewable energy
Modal split of freight transport
p=provisional figures
E=estimated data
:
0.45
0.40
0.48
0.44
:
per 1000 inhabitants
:
:
2.3
:
tonnes CO2 equivalent per capita
39.0
817.3
68.2
24.0
36.5
935.0
45.5
25.4
34.1
840.7
47.7
26.5
:
:
:
27.4
:
:
:
:
kg of oil equivalent per 1000 euro of GDP
as % of total electricity consumption
as % of total freight transport
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) Source: Website of the National Bank
Methodological Notes
Inflation rate
For
details
please
refer
to
the
following
link
to
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/ecobac_ir.htm
Finance
Public finance:
The general government deficit / surplus refers to the national accounts concept of
consolidated general government net borrowing / net lending (EDP B.9) of ESA95. General government
debt is defined as consolidated gross debt at end-year nominal value.
External trade
Imports and exports (current prices).
The data is based upon the special trade system. Trade Classification:
Trade in goods are recorded using the commodity classification according to the Combined Nomenclature.
Imports are recorded on CIF basis, exports on FOB basis.
Imports and exports with EU-15.
Data declared by Latvia.
Labour market
Indicators are harmonised annual figures with the exception of average employment by NACE branches
and unemployment rate of persons < 25 years, which are for the 2
nd
quarter of the respective year. The
results are based on the European Union Labour Force Survey (LFS). The EU LFS is conducted on a
quarterly basis in accordance with Council Regulation (EEC) No. 577/98 of 9 March 1998.
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1465021_0062.png
For
details
please
refer
to
the
following
link
on
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/emploi.htm
Social cohesion
For
details
please
refer
to
the
following
link
on
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/socohe.htm
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
are calculated in constant prices on the basis of the previous
year. Indices are changed as results of methodology improvement.
Innovation and research
For
details
please
refer
to
the
following
link
to
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/innore.htm
Environment
For
details
please
refer
to
the
following
link
to
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/enviro.htm
Sources:
Total area, External trade, Demography, Standard of living, Infrastructure, Industry and agriculture:
National sources. Other indicators: Eurostat.
62