26-09-2006
Monitoring report on the state of preparedness for EU membership of Bulgaria and Romania
1. THE ISSUES HIGHLIGHTED IN THE CONCLUSION OF THE MAY 2006 REPORT WHICH NEEDED FURTHER ACTION
1.1 Political criteria
Justice system
Bulgaria has continued to make progress in reforming its justice system. The National Assembly has tabled amendments to the Constitution to remove ambiguities concerning the independence of the judiciary and the accountability of the judicial system.
In June 2006, the Supreme Judicial Council adopted a regulation on the competitive examination and evaluation of magistrates in accordance with the Judicial System Act. This act regulates the criteria and procedure for the evaluation of the professional and ethical qualities of magistrates. It stipulates that competitions are carried out for each post. The IT system for random allocation of cases to judges is now available in the great majority of courts. Efforts towards further strengthening IT systems in the judiciary continued. Training organised by the National Institute of Justice continued smoothly.
A number of changes have been recently introduced in penal procedures. The transfer of responsibility from investigating magistrates (Sledovateli) to police investigators (Dosnateli) proceeded smoothly. Prosecutors have started to take over leadership of investigations in the pre-trial phase. A newly established working group monitors the functioning of the new penal procedure code. It aims to collect information about the practical implementation of the new code and to identify possible problems. The fast track procedure has speeded up penal procedures in a number of cases. Management structures in the prosecution office have been improved and efforts have been made to strengthen the accountability and responsibility of individual prosecutors. The specialised department' Countering Organised Crime and Corruption1 has been further strengthened and now counts close to 80 trained prosecutors. This enhanced the effectiveness of the fight against organised crime and corruption within the judicial system.
The Prosecutor General has extended deadlines which were close to expiry for dealing with a large backlog of investigations. The internal inspectorate at the Supreme Cassation Prosecution's Office fighting misconduct by magistrates has been strengthened. In May 2006, the management board of the Association of Prosecutors in Bulgaria requested all members of the association to publish their annual declaration of income and property to submit to the National Audit Office in accordance with the Law on Disclosure of Personal Assets of High-Ranking Officials. The General Prosecution office has published the results of the first stage of an audit on the Prosecution Service. They included serious cases of unprofessional behaviour of prosecutors having closed cases without a solid justification. Disciplinary measures against those responsible have been initiated.
Preparations have started for the implementation of the Administrative Procedure Code. Training measures are under development and preparations for the entrance examination for 315 administrative judges have started. The initial experience with the new system of legal aid is positive. A sufficient number of accredited lawyers and an adequate budget had been made available. The implementation of the Law on Private Enforcement Agents continued and the first private bailiffs have been appointed.
However, certain concerns persist.
The necessary amendments to the Constitution to remove ambiguities concerning the independence of the judiciary and the accountability of the judicial system need to be adopted.
The composition and functioning of the Supreme Judicial Council still give rise to concern. Members of the Supreme Judicial Council continue their other professional activities (in most cases as heads of courts or prosecution offices) and therefore cannot devote their effort full-time. Decision making on disciplinary measures by the Supreme Judicial Council has often been slow. There are no legal provisions to suspend magistrates who are under internal disciplinary investigation. A magistrate who is a member of the Supreme Judicial Council and is found to have committed a disciplinary offence cannot be dismissed from the Council. Therefore, concern remains regarding the ability of the Supreme Judicial Council to act as a credible and leading body to promote the highest ethical standards throughout the Bulgarian justice system. Following the adoption of the regulation on competitive examination for and evaluation of magistrates, efforts need to continue to ensure it is rigorously applied.
So far, the monitoring mechanism of the new penal procedure code is rather ineffective. The mechanism needs to be better known and used by magistrates, especially in local courts. Most difficulties regarding the implementation of the new penal procedure code relate to its too cumbersome procedures, unrealistic deadlines for the investigation of serious crimes and for scheduling case hearings and, finally, legal restrictions for giving evidence in court by police officers. Furthermore, there is still a backlog of cases initiated under the previous penal procedure code.
As regards the pre-trial phase, more training is needed for police investigators. An internal audit in the Public Prosecution Office revealed a number of breaches regarding the legality of decisions and the respect of deadlines. In some cases prosecutors were found to have set aside cases without justification. The serious shortcomings in the audit on the functioning of the Prosecution Office now need to be properly addressed by the responsible authorities with sustainable measures ensuring in all cases accountable and professional behaviour of prosecutors. Software for random allocation of cases to prosecutors, similar to the one already in place for judges, needs to be developed to ensure impartiality. The staff needs to be recruited so that these courts can be operational as foreseen from 1 March 2007.
There are major delays in the adoption of the new Civil Procedure Code. The new Law on Private Enforcement Agents has not yet substantially improved the execution of judgements. The process of recruiting private bailiffs is not yet complete and training is at an early stage. The anti-corruption departments in the Supreme Judicial Council and in the Prosecution services need to be reinforced and to be protected from undue influence.
Overall, some progress has taken place since May. However, as indicated, a number of important issues still need further improvement.
Anti-corruption measures
Bulgaria has continued to make progress in the fight against corruption. As part of the programme for the implementation of the strategy for transparent governance and for preventing and counteracting corruption, amendments to the 'law on the publication of the assets of persons occupying high public positions', were adopted in August 2006. They will enter into force in January 2007. The law now authorises the National Audit Office with support of other public bodies to carry out inspections to confirm the accuracy of declarations submitted to the National Audit Office by persons occupying high public positions. Furthermore, the recent amendments widened the range of persons obliged to declare their assets. All ministers have published their asset declarations on the internet.
Amendments to the Law on Political Parties were adopted in August 2006. These amendments stipulate that members of the governing and controlling bodies of the political parties have to declare all their domestic and foreign assets, income and expenditure to the National Audit Office. Political parties have to name their donors as well as the type and value of donations. Furthermore, political parties now also have to submit to the National Audit Office a list of (non-profit) bodies in which their senior members participate. In September 2006, the National Audit Office made public the results of a detailed audit of the financial activities and the management of the property of political parties.
In accordance with the Law on the Administration, inspectorates directly subordinated to the Minister have been established in all ministries and most state agencies. These inspectorates may propose disciplinary or legal measures against staff in case of misconduct. A 'Chief Inspectorate' has been established in the Council of Ministers which reports to the Prime Minister. It is in charge of coordinating and assisting the activities of the ministerial inspectorates. The Chief Inspectorate is the secretariat of the Anti-Corruption Commission. The Commission's staff has now been increased. Contact points for receiving reports of corruption have been established in many state bodies. A plan for conducting anti-corruption training for about 50,000 officials at all levels of the administration has been drawn up. Various other preventive measures have been taken. These include hotlines and complaint boxes as well as simplified procedures for the citizen to address local authorities. Within the border police arrangements have been made to reduce the risk of corruption through random changes in working hours and places of work. The vetting of staff as well as training and the introduction of preventive measures and good practice are underway within the Ministry of the Interior. There continues to be a more pro-active attitude of the Prosecutor General in terms of requests for lifting immunity of members of Parliament. Since May 2006, immunities from two Members of Parliament were lifted.
Bulgaria has ratified the UN convention against corruption. Amendments to the Law on the Professional Organisations of Physicians and Dentists were adopted in August 2006 aiming at heavier sanctions for breaches of professional ethics.
However, certain concerns persist.
The secretariat to the Anti-corruption Commission is not yet fully operational. Coordination of the anti-corruption strategy remains incomplete and the bodies involved are too dispersed.
Arrangements for encouraging whistle blowing are still inadequate. The inspectorates within the public administration are not yet sufficiently independent and their institutional competences need to be strenghened. In addition, the anonymity of messages cannot always be ensured as phone numbers can be registered. Regarding disciplinary sanctions due to allegations of corrupt activity, no complete and reliable statistics have been provided as to the nature of the offences and the punishments. Tax collecting agencies, customs and Road Executive Agency as well as veterinary inspection services and local government are particularly susceptible to corruptive practices. Additional steps are needed to prevent corruption at border crossing points, including awareness campaigns for truck drivers and frequent users. Border crossing point arrangements need further revision in order to enhance efficiency and accelerate procedures.
So far, few concrete results have emerged from the investigation and prosecution of corruption cases. As regards high level corruption, there are still very few indictments and convictions relating to senior figures and little information about the level of sanctions. Very few investigations of alleged unethical behaviour of magistrates have led to prosecutions and convictions. Overall, a certain amount of progress has taken place since the May Report. However, as indicated above a number of important issues still remain to be addressed.
1.2 Acquis criteria
Fight against organised crime, fraud and corruption
Bulgaria has made progress in police co-operation and combating organised crime. The new Penal Procedure Code has been implemented. It includes new investigation techniques for combating organised crime and the recruitment and training of police officers with investigative powers. The Chief Directorate for Combating Organised Crime (CDCOC) is now staffed with the highly qualified personnel. In July 2006, the Law on the enactment, adoption and execution of decisions for freezing property or evidence has been adopted, implementing the Council decision on the execution of orders freezing property or evidence in the EU.
Co-operation with neighbouring countries and EU Member States in dismantling international criminal networks has continued. The fight against organised crime has gained more political attention and some law enforcement agencies have been more active in this field. Some successful actions have been registered against criminal networks dealing with trafficking in human beings, drugs and counterfeiting currencies, in some cases in cooperation with EU Member States. Several measures have been taken to uncover links between law enforcement bodies and organised crime groups. Witness protection schemes are partly operational. Agreements for cooperation on witness protection had been concluded with the former Yugoslav Republic of Macedonia and the United States of America.
However, certain concerns persist.
As regards the new Penal Procedure Code, there are shortcomings, as outlined in the judicial reform section. In addition, the number of specialised staff conducting police investigations needs to be further raised and more training of the police investigators is necessary. Data protection and the treatment of confidential information are not always adequate, which hampers international co-operation. A modern and consistent system of crime statistics, allowing Bulgaria to monitor and analyse the current situation and trends more closely, needs to be established.
Contract killings of persons rarely result in successful investigations and prosecutions. Illegal possession of firearms remains a problem. The number of cases prosecuted successfully related to trafficking of human beings, drug smuggling, money laundering, counterfeiting of goods, currency and documents, is still low.
Organised crime continues to be a problem. Co-operation needs to be enhanced between the CDCOC and financial institutions, Europol and the relevant services abroad. Bulgarian law provides the legal tools necessary for the investigation and prosecution of organised crime. However, this has yet to yield significant results.
Overall, certain mechanisms had been put into place which should facilitate the fight against organised crime. However, there are still insufficient tangible results in investigating and prosecuting organised crime cases.
Money laundering
Bulgaria has made some progress in the fight against money laundering. Legislation on money laundering is now largely in line with the acquis. In June 2006, the Law on Measures against Money Laundering was amended to reflect fully the requirements of the second EU Anti-Money Laundering Directive. The revised recommendations of the Financial Action Task Force on the prevention of money laundering and terrorist financing have also been taken into account. Furthermore, various initiatives have been taken with the aim of improving enforcement and co-operation between law enforcement agencies: training of investigators and prosecutors, new organisational structures within the police and the prosecutor's office and improvement of inter-agency coordination within the enforcement agencies.
Positive developments can also be reported concerning responses to international requests for cooperation and operations against money laundering activities by foreign nationals. The Financial Intelligence Agency continues to be an adequate administrative body analysing suspicious transaction reports.
However, certain concerns persist.
Effective implementation of legislation remains rather limited, with an absence of tangible results in terms of enforcement and prosecution. Awareness campaigns for all entities susceptible to risk of money laundering need to be carried out and their (supervisory) capacity needs to be increased. The effectiveness of the fight against money laundering continues to be seriously hampered by corruption and organised crime.
Overall, Bulgaria has made some progress in this area. Bulgaria still needs to demonstrate its ability to deliver tangible results in terms of enforcement and prosecution of cases of money laundering.
Integrated Administration and Control System (IACS)
Good progress has been made lately with regard to the setting-up the Integrated Administration Control System (IACS). An IACS IT software system has been developed and it is currently being tested and the IT hardware has been installed. A detailed plan in respect of on-the-spot checks has been established; staff has been recruited and trained, equipment purchased and the procedure manuals established. Significant additional resources have been provided for the work relating to the setting-up of the Land Parcel Identification System/Geographical Information System (LPIS/GIS), which have speeded up considerably the work.
However, certain concerns persist.
As a result of the tight timetable for completing the Land Parcel Identification System/Geographical Information System (LPIS/GIS) and the quality of the work carried out could be at a risk. Moreover, there are delays in the establishment of the link between the Fanners' register and the LPIS/GIS. Overall, there is still a risk that IACS will not be functioning properly by the time of accession. Sustained and in certain areas reinforced efforts will need to be deployed in order to ensure the operability of the IACS.
TSE and animal by-products
Considerable progress has also been noted for the collection and treatment of dead animals and animal by-products (risk category 1, 2 and 3). Bulgaria has established EU-compliant technical capacities for rendering. It has also foreseen the necessary collection system of this material from the farms or plants and means for the efficient supervision of the disposal procedure. The disposal of the rendering product meat and bone meal is intended to be done by co-incineration. The other rendering product fat is used in the rendering plants as fuel replacements.
The current two rendering plants are situated very close to each other in the north east of Bulgaria. Although the currently available rendering capacity is sufficient, Bulgaria still plans to build a third plant to ensure a more even distribution of rendering capacity over the country and to use modern equipment. As regards low risk material (category 3) material plants have the choice to send those products either to the rendering plants or to plants registered or approved to deal with such material in compliance with the EU requirements and procedures. Bulgaria has compiled an inventory of all existing plants involved in the trade and further processing of category 3 materials. All of those existing plants were inspected and registered or approved respectively.
However, certain concerns persist.
Bulgaria still needs to improve all of the enforcement aspects and to continue carrying out systematic (cross) checks at all levels including the introduction of Health Hazard Critical Control Point (HACCP) system. Overall, there is risk that the rendering system will not be fully operational upon accession.
Financial control over structural action expenditure
Good progress was made with regard to the Extended Decentralised Implementation System (EDIS) accreditation process for the pre-accession financial instruments Phare and ISPA. Bulgaria has taken specific measures such as adopting a government decision for the appointment of additional monitors in the relevant institutions; it has continued its recruitment process and has run intensive training programmes for staff in key relevant areas. A memorandum of understanding was signed between the Ministry of Finance and relevant line ministries, which should improve cooperation and enable an accelerated Phare and ISPA EDIS accreditation.
Bulgaria now needs to continue intensively its efforts by completing its on-going recruitment and training process and by carrying out an additional comprehensive training programme for experts from the implementing agencies on the national procurement legislation and procedures and by preparing relevant additional manuals.
The current pace of preparations should enable the completion of ISPA EDIS accreditation by the end of the year for some of the implementing bodies concerned but at least in one case, accreditation will not be recommended. As regards the Phare EDIS accreditation process, additional efforts are needed if the target is to be achieved.
2. OTHER ISSUES WHICH NEEDED FURTHER PROGRESS IN MAY 2006
2.1 Political criteria
Trafficking in human beings
Progress has been made in this area. Continuous cooperation with Member States to fight trafficking of human beings has led to the dismantling of one network. In August 2006, the penal code was amended and now also defines the trafficking pregnant women aiming at trade in babies as a specific crime.
However, certain concerns persist.
No functional office has been made available to the National Anti-Trafficking Commission. Its secretary resigned in July 2006. Bulgaria remains a country of transit and origin for the trafficking of human beings. Trafficking of new born babies involving pregnant women giving birth abroad has not been halted. The absence of reliable registration mechanisms leads to a lack of clear information on trafficked persons and the number of missing persons. The implementation of the Law on Bulgarian Identification Documents remains incomplete. The implementation of the witness protection programme has been limited. Bulgaria has not yet signed the Council of Europe Convention on the Fight against Trafficking in Human Beings. Overall, limited progress has been made with regard to trafficking in human beings.
Til-treatment in custody and prison conditions
The issues outlined in the May Report in the areas of prison conditions, treatment and respect of obligations under international conventions in detention centres and prisons, remain to be addressed.
Child protection
There has been progress in the area of child protection. In May 2006, a specialised unit at the Inspectorate at the Social Assistance Agency was set up to supervise and monitor the institutions for elderly people and children. In June 2006, monitoring of the programme 'Assistants of people with disabilities' started. In this framework, training for parents with children with disabilities is also taking place. The rules for implementation of the Law on Social Assistance were amended to enhance the development of alternative services for children. Monitoring of homes for children with disabilities continued.
However, certain concerns persist.
In many institutions, living and sanitary conditions remain at a very low level. The established specialised unit in the Inspectorate at the Social Assistance Agency needs to be further developed in order to carry out a satisfactory level of monitoring. Provisions have to be taken to address the results of that monitoring appropriately.
Disability and mental health care
Limited progress has been made. Certain steps have been taken, in particular with the aim of improving transparency on the breakdown of responsibilities between the Ministries of Health and Labour and Social Affairs.
However, certain concerns persist.
There is a need to enhance the Agency for Disabled Persons as the institution responsible for planning and implementing the national disability policy. Substantial efforts are still needed to ensure the improvement of living conditions in institutions. In addition, efforts are needed to ensure the prevention of further institutionalisation and the realisation of the actions set out in the National Action Plan for Implementation of the Mental Health Policy of Bulgaria 2004-2012. The existing projects and priorities do not sufficiently meet the needs of the people in the institutions.
Protection and integration of minorities
Some progress has been made with regard to the integration of Roma. A programme for Roma literacy and occupational training 'From Social Aid to Employment' was launched in May 2006. It aims at providing basic occupational training for jobless Roma. Furthermore, members of the Roma community were employed under this programme, mainly in infrastructure upgrading.
In May 2006, a coordinator of the Decade of Roma Inclusion 2005-2015 was assigned. Bulgaria has taken over the chairmanship over the Decade of Roma Inclusion for one year. Regular monitoring meetings are organised in order to review the implementation of this programme. The administrative capacity of the Commission for Protection against Discrimination has been strengthened by recruiting additional staff. The implementation of vocational and other training measures for vulnerable groups has continued. Further training was provided to officials of the Directorate Ethnic and Demographic Issues.
However, certain concerns persist.
The job profiles and budget for the assistant teachers have not been conclusively defined. Measures to integrate Roma children in schools have to be further enhanced to cover higher education. The health status of the Roma population is low and outbreaks of diseases caused by poverty or lacking hygiene are frequent. Many Roma continue to have limited access to healthcare services. Efforts to include vulnerable groups, in particular Roma, in the labour market need to be further enhanced.
The administrative capacity of the National Council for Cooperation on Ethnic and Demographic Issues remains weak, particularly on the regional level. The governmental approach to non-registered settlements of mainly Roma community has led to tensions. Forced evictions further increased those tensions. Further efforts are needed to combat all forms of intolerance, particularly by fully applying existing legislation on broadcasting and other activities aiming to combat any form of racism, discrimination or xenophobia.
2.2 Economic criteria
Macroeconomic stability and current account deficit
The May 2006 Report reconfirmed it is a functioning market economy and concluded that continued prudent fiscal and wage policies were warranted in view of the widening current account deficit. There has been progress in the following areas. Fiscal policy remained tight and the general government surplus reached 3.6% of the forecasted GDP in the first seven months of 2006. Real wages rose by 1.5%, year-on-year, in the first half of 2006, and thus less than productivity. Merchandise export growth accelerated to around 30% in the first half of 2006 and was higher than import growth. As a result, the trade deficit started to decrease slightly in May and reached 21.0% of GDP until the end of June. In line with the lower trade deficit, the current account deficit also declined in June for the first time in more than a year. Net FDI inflows continue to cover around 75% of the current account deficit.
However, certain outstanding issues remain to be addressed. The current account deficit remains high and widened further from 11.8% at the end of 2005 to 14.3% in the 12 months to June 2006. This was largely due to lower incomes from tourism, substantially lower current transfers and a lower surplus in the income balance. Tight macroeconomic policies therefore need to be maintained to contain the high external deficit.
Privatisation and industrial restructuring
The May 2006 Report concluded that the privatisation process and the liberalisation and restructuring of utilities were well advanced. There has been further progress in the following areas. The privatisation process has regained momentum. The sale of the river shipping company and the thermal power plant in Varna were completed. Sales procedures for the privatisation of some district heating companies were started. The tender procedure for the sale of Bulgaria Air was launched in June. The liberalisation of the energy market continued with a lowering of thresholds for direct contracts between larger customers and suppliers.
However, certain outstanding issues remain to be addressed. The privatisation process as foreseen by the government has to be completed. The privatisation strategy for the maritime shipping company is still being revised by the Council of Ministers. The unbundling of the National Electricity Company and Bulgargas and the liberalisation of the gas and electricity markets remain to be completed until accession. Efforts to improve the financial situation of the railway companies need to continue.
Business environment
The May 2006 Report concluded that further improvements in the functioning of the judicial system and further easing of the regulatory burden on businesses were required. There has been limited progress in the following areas. The draft civil procedure code has been submitted to Parliament in May. Amendments to the insolvency legislation were adopted in May. In June, the Council for Economic Growth adopted an Action Plan on better regulation, including a survey of the most problematic regulations currently in place.
However, certain outstanding issues remain to be addressed. The Commercial Register Law needs to be fully implemented and the electronic commercial register needs to become fully operational. Efforts need to continue to ease the regulatory burden and to target in particular those regulations that create the greatest barriers to doing business. Regulatory impact assessments need to be implemented more systematically. The functioning of the administrative and judicial systems needs to be improved further.
Labour market flexibility
The May 2006 Report concluded that the regulatory framework for the labour market needed to be made more flexible. There has been some progress in the following areas. Amendments to the Labour Code in May have made working time arrangements slightly more flexible. For employees working under a special contract to perform additional work, the maximum weekly working time has been raised to 48 hours. If they give their written consent, these workers are also allowed to work longer hours. Moreover, the maximum reference period for the calculation of average weekly working hours has been increased to six months in certain cases.
However, certain outstanding issues remain to be addressed. Provisions in the Labour Code on working time and fixed-term work remain rather restrictive. As a principle, normal overtime work remains prohibited except for certain specific cases. Seniority bonuses have still not been integrated into the regular pay scale. A comprehensive reform of the education system remains crucial to address bottlenecks in the labour market.
2.3 Acquis criteria
This section assesses developments in the acquis areas wliich required increased efforts in May 2006 according to two categories.
- Firstly, the areas where significant progress has been made and where, provided
current momentum is maintained, Bulgaria's preparations are now on track.
— Secondly the areas where further progress is still needed and where Bulgaria's
preparations should continue.
2.3.1. Areas in which preparations are now on track
Chapter 2 Free movement of persons
In the field of mutual recognition of professional qualifications, the Law on Health was amended in July 2006 and the strengthening of administrative capacity continues, both in terms of training and further development of appropriate administrative structures. Progress can also be noted as regards health professions (doctors, general care nurses, dentists, pharmacists and midwives), the co-ordination of training and the automatic mutual recognition of qualifications, for which ordinances were adopted in August 2006. Bulgaria needs to ensure that the legislation mentioned above is correctly implemented.
Chapter 3 Freedom to provide services
In the field of banking, the Law on the Supplementary Supervision of Financial Conglomerates and the Law on Credit Institutions were adopted in July 2006. The Law on Bank Deposit Guarantee was also amended in July 2006. Bulgaria still needs to complete the transposition of the new EU capital requirement rules for credit institutions and investment firms.
In the field of investment services and securities markets, the Amendment to the Law on Public Offering of Securities and the Law on Insider Dealing and Manipulation of the Securities Market were approved by the Council in July 2006 and submitted to the Parliament for adoption. In the area of the information society, the Law on electronic commerce was adopted. Bulgaria has made good progress in the areas of banking, investment services and securities markets, as well as the information society.
Chapter 7 Agriculture
Bulgaria has made progress in some areas of agriculture. The setting up of the Paying Agency, the awareness and expertise on trade mechanisms and the establishment of the common market organisations on wine and alcohol, beef and milk progressed. Likewise, substantial progress has been observed in the veterinary sector, in particular on the aspects of trade in live animals and animal products, common measures including zoonoses and animal welfare. For the latter, detailed analyses have been carried out as regards enforcement of the EU standards. Corresponding projects for Community support have been elaborated. Bulgaria has made good progress in the above areas.
Chapter 8 Fisheries
With regard to inspection and control, the EU legal requirements for catch registration and for keeping logbooks have been transposed and are enforced. In the context of resource and fleet management substantial progress has been achieved on the satellite based fishing vessel monitoring system which is expected to be operational for all vessels concerned by accession. With regard to the preparations for Bulgaria's participation in the EU structural action fisheries fund and the market policy , Bulgaria has taken significant steps to improve the administrative capacity and the relations with the fishing industry. Furthermore, a draft national strategic plan has been presented to the Commission.
Chapter 9 Transport
In the field of maritime transport, some progress can be noted. The updated strategy for privatisation of Navybulgar was submitted to Parliament in August. Until the independence of inspections is guaranteed by the finalisation of the privatisation process, all inspections except those under International Ship and Port Facility Security Code and the International Safety Management code and the issuance of documents for safe manning of ships are carried out by classification societies. By accession, these inspections may only be carried out by classification societies recognised by the EU.
Chapter 10 Taxation
Bulgaria has made substantial progress in the areas of Value Added Tax (VAT). In the area of VAT, the new Law on VAT was adopted in July 2006. It contains in particular provisions for the transposition of the intra-Community regime. In the field of IT intercormectivity, Bulgaria continues to be on track and efforts should be sustained with regard to the timely completion of the VAT on E-services system.
1.1 Political criteria
Justice system
Bulgaria has continued to make progress in reforming its justice system. The National Assembly has tabled amendments to the Constitution to remove ambiguities concerning the independence of the judiciary and the accountability of the judicial system.
In June 2006, the Supreme Judicial Council adopted a regulation on the competitive examination and evaluation of magistrates in accordance with the Judicial System Act. This act regulates the criteria and procedure for the evaluation of the professional and ethical qualities of magistrates. It stipulates that competitions are carried out for each post. The IT system for random allocation of cases to judges is now available in the great majority of courts. Efforts towards further strengthening IT systems in the judiciary continued. Training organised by the National Institute of Justice continued smoothly.
A number of changes have been recently introduced in penal procedures. The transfer of responsibility from investigating magistrates (Sledovateli) to police investigators (Dosnateli) proceeded smoothly. Prosecutors have started to take over leadership of investigations in the pre-trial phase. A newly established working group monitors the functioning of the new penal procedure code. It aims to collect information about the practical implementation of the new code and to identify possible problems. The fast track procedure has speeded up penal procedures in a number of cases. Management structures in the prosecution office have been improved and efforts have been made to strengthen the accountability and responsibility of individual prosecutors. The specialised department' Countering Organised Crime and Corruption1 has been further strengthened and now counts close to 80 trained prosecutors. This enhanced the effectiveness of the fight against organised crime and corruption within the judicial system.
The Prosecutor General has extended deadlines which were close to expiry for dealing with a large backlog of investigations. The internal inspectorate at the Supreme Cassation Prosecution's Office fighting misconduct by magistrates has been strengthened. In May 2006, the management board of the Association of Prosecutors in Bulgaria requested all members of the association to publish their annual declaration of income and property to submit to the National Audit Office in accordance with the Law on Disclosure of Personal Assets of High-Ranking Officials. The General Prosecution office has published the results of the first stage of an audit on the Prosecution Service. They included serious cases of unprofessional behaviour of prosecutors having closed cases without a solid justification. Disciplinary measures against those responsible have been initiated.
Preparations have started for the implementation of the Administrative Procedure Code. Training measures are under development and preparations for the entrance examination for 315 administrative judges have started. The initial experience with the new system of legal aid is positive. A sufficient number of accredited lawyers and an adequate budget had been made available. The implementation of the Law on Private Enforcement Agents continued and the first private bailiffs have been appointed.
However, certain concerns persist.
The necessary amendments to the Constitution to remove ambiguities concerning the independence of the judiciary and the accountability of the judicial system need to be adopted.
The composition and functioning of the Supreme Judicial Council still give rise to concern. Members of the Supreme Judicial Council continue their other professional activities (in most cases as heads of courts or prosecution offices) and therefore cannot devote their effort full-time. Decision making on disciplinary measures by the Supreme Judicial Council has often been slow. There are no legal provisions to suspend magistrates who are under internal disciplinary investigation. A magistrate who is a member of the Supreme Judicial Council and is found to have committed a disciplinary offence cannot be dismissed from the Council. Therefore, concern remains regarding the ability of the Supreme Judicial Council to act as a credible and leading body to promote the highest ethical standards throughout the Bulgarian justice system. Following the adoption of the regulation on competitive examination for and evaluation of magistrates, efforts need to continue to ensure it is rigorously applied.
So far, the monitoring mechanism of the new penal procedure code is rather ineffective. The mechanism needs to be better known and used by magistrates, especially in local courts. Most difficulties regarding the implementation of the new penal procedure code relate to its too cumbersome procedures, unrealistic deadlines for the investigation of serious crimes and for scheduling case hearings and, finally, legal restrictions for giving evidence in court by police officers. Furthermore, there is still a backlog of cases initiated under the previous penal procedure code.
As regards the pre-trial phase, more training is needed for police investigators. An internal audit in the Public Prosecution Office revealed a number of breaches regarding the legality of decisions and the respect of deadlines. In some cases prosecutors were found to have set aside cases without justification. The serious shortcomings in the audit on the functioning of the Prosecution Office now need to be properly addressed by the responsible authorities with sustainable measures ensuring in all cases accountable and professional behaviour of prosecutors. Software for random allocation of cases to prosecutors, similar to the one already in place for judges, needs to be developed to ensure impartiality. The staff needs to be recruited so that these courts can be operational as foreseen from 1 March 2007.
There are major delays in the adoption of the new Civil Procedure Code. The new Law on Private Enforcement Agents has not yet substantially improved the execution of judgements. The process of recruiting private bailiffs is not yet complete and training is at an early stage. The anti-corruption departments in the Supreme Judicial Council and in the Prosecution services need to be reinforced and to be protected from undue influence.
Overall, some progress has taken place since May. However, as indicated, a number of important issues still need further improvement.
Anti-corruption measures
Bulgaria has continued to make progress in the fight against corruption. As part of the programme for the implementation of the strategy for transparent governance and for preventing and counteracting corruption, amendments to the 'law on the publication of the assets of persons occupying high public positions', were adopted in August 2006. They will enter into force in January 2007. The law now authorises the National Audit Office with support of other public bodies to carry out inspections to confirm the accuracy of declarations submitted to the National Audit Office by persons occupying high public positions. Furthermore, the recent amendments widened the range of persons obliged to declare their assets. All ministers have published their asset declarations on the internet.
Amendments to the Law on Political Parties were adopted in August 2006. These amendments stipulate that members of the governing and controlling bodies of the political parties have to declare all their domestic and foreign assets, income and expenditure to the National Audit Office. Political parties have to name their donors as well as the type and value of donations. Furthermore, political parties now also have to submit to the National Audit Office a list of (non-profit) bodies in which their senior members participate. In September 2006, the National Audit Office made public the results of a detailed audit of the financial activities and the management of the property of political parties.
In accordance with the Law on the Administration, inspectorates directly subordinated to the Minister have been established in all ministries and most state agencies. These inspectorates may propose disciplinary or legal measures against staff in case of misconduct. A 'Chief Inspectorate' has been established in the Council of Ministers which reports to the Prime Minister. It is in charge of coordinating and assisting the activities of the ministerial inspectorates. The Chief Inspectorate is the secretariat of the Anti-Corruption Commission. The Commission's staff has now been increased. Contact points for receiving reports of corruption have been established in many state bodies. A plan for conducting anti-corruption training for about 50,000 officials at all levels of the administration has been drawn up. Various other preventive measures have been taken. These include hotlines and complaint boxes as well as simplified procedures for the citizen to address local authorities. Within the border police arrangements have been made to reduce the risk of corruption through random changes in working hours and places of work. The vetting of staff as well as training and the introduction of preventive measures and good practice are underway within the Ministry of the Interior. There continues to be a more pro-active attitude of the Prosecutor General in terms of requests for lifting immunity of members of Parliament. Since May 2006, immunities from two Members of Parliament were lifted.
Bulgaria has ratified the UN convention against corruption. Amendments to the Law on the Professional Organisations of Physicians and Dentists were adopted in August 2006 aiming at heavier sanctions for breaches of professional ethics.
However, certain concerns persist.
The secretariat to the Anti-corruption Commission is not yet fully operational. Coordination of the anti-corruption strategy remains incomplete and the bodies involved are too dispersed.
Arrangements for encouraging whistle blowing are still inadequate. The inspectorates within the public administration are not yet sufficiently independent and their institutional competences need to be strenghened. In addition, the anonymity of messages cannot always be ensured as phone numbers can be registered. Regarding disciplinary sanctions due to allegations of corrupt activity, no complete and reliable statistics have been provided as to the nature of the offences and the punishments. Tax collecting agencies, customs and Road Executive Agency as well as veterinary inspection services and local government are particularly susceptible to corruptive practices. Additional steps are needed to prevent corruption at border crossing points, including awareness campaigns for truck drivers and frequent users. Border crossing point arrangements need further revision in order to enhance efficiency and accelerate procedures.
So far, few concrete results have emerged from the investigation and prosecution of corruption cases. As regards high level corruption, there are still very few indictments and convictions relating to senior figures and little information about the level of sanctions. Very few investigations of alleged unethical behaviour of magistrates have led to prosecutions and convictions. Overall, a certain amount of progress has taken place since the May Report. However, as indicated above a number of important issues still remain to be addressed.
1.2 Acquis criteria
Fight against organised crime, fraud and corruption
Bulgaria has made progress in police co-operation and combating organised crime. The new Penal Procedure Code has been implemented. It includes new investigation techniques for combating organised crime and the recruitment and training of police officers with investigative powers. The Chief Directorate for Combating Organised Crime (CDCOC) is now staffed with the highly qualified personnel. In July 2006, the Law on the enactment, adoption and execution of decisions for freezing property or evidence has been adopted, implementing the Council decision on the execution of orders freezing property or evidence in the EU.
Co-operation with neighbouring countries and EU Member States in dismantling international criminal networks has continued. The fight against organised crime has gained more political attention and some law enforcement agencies have been more active in this field. Some successful actions have been registered against criminal networks dealing with trafficking in human beings, drugs and counterfeiting currencies, in some cases in cooperation with EU Member States. Several measures have been taken to uncover links between law enforcement bodies and organised crime groups. Witness protection schemes are partly operational. Agreements for cooperation on witness protection had been concluded with the former Yugoslav Republic of Macedonia and the United States of America.
However, certain concerns persist.
As regards the new Penal Procedure Code, there are shortcomings, as outlined in the judicial reform section. In addition, the number of specialised staff conducting police investigations needs to be further raised and more training of the police investigators is necessary. Data protection and the treatment of confidential information are not always adequate, which hampers international co-operation. A modern and consistent system of crime statistics, allowing Bulgaria to monitor and analyse the current situation and trends more closely, needs to be established.
Contract killings of persons rarely result in successful investigations and prosecutions. Illegal possession of firearms remains a problem. The number of cases prosecuted successfully related to trafficking of human beings, drug smuggling, money laundering, counterfeiting of goods, currency and documents, is still low.
Organised crime continues to be a problem. Co-operation needs to be enhanced between the CDCOC and financial institutions, Europol and the relevant services abroad. Bulgarian law provides the legal tools necessary for the investigation and prosecution of organised crime. However, this has yet to yield significant results.
Overall, certain mechanisms had been put into place which should facilitate the fight against organised crime. However, there are still insufficient tangible results in investigating and prosecuting organised crime cases.
Money laundering
Bulgaria has made some progress in the fight against money laundering. Legislation on money laundering is now largely in line with the acquis. In June 2006, the Law on Measures against Money Laundering was amended to reflect fully the requirements of the second EU Anti-Money Laundering Directive. The revised recommendations of the Financial Action Task Force on the prevention of money laundering and terrorist financing have also been taken into account. Furthermore, various initiatives have been taken with the aim of improving enforcement and co-operation between law enforcement agencies: training of investigators and prosecutors, new organisational structures within the police and the prosecutor's office and improvement of inter-agency coordination within the enforcement agencies.
Positive developments can also be reported concerning responses to international requests for cooperation and operations against money laundering activities by foreign nationals. The Financial Intelligence Agency continues to be an adequate administrative body analysing suspicious transaction reports.
However, certain concerns persist.
Effective implementation of legislation remains rather limited, with an absence of tangible results in terms of enforcement and prosecution. Awareness campaigns for all entities susceptible to risk of money laundering need to be carried out and their (supervisory) capacity needs to be increased. The effectiveness of the fight against money laundering continues to be seriously hampered by corruption and organised crime.
Overall, Bulgaria has made some progress in this area. Bulgaria still needs to demonstrate its ability to deliver tangible results in terms of enforcement and prosecution of cases of money laundering.
Integrated Administration and Control System (IACS)
Good progress has been made lately with regard to the setting-up the Integrated Administration Control System (IACS). An IACS IT software system has been developed and it is currently being tested and the IT hardware has been installed. A detailed plan in respect of on-the-spot checks has been established; staff has been recruited and trained, equipment purchased and the procedure manuals established. Significant additional resources have been provided for the work relating to the setting-up of the Land Parcel Identification System/Geographical Information System (LPIS/GIS), which have speeded up considerably the work.
However, certain concerns persist.
As a result of the tight timetable for completing the Land Parcel Identification System/Geographical Information System (LPIS/GIS) and the quality of the work carried out could be at a risk. Moreover, there are delays in the establishment of the link between the Fanners' register and the LPIS/GIS. Overall, there is still a risk that IACS will not be functioning properly by the time of accession. Sustained and in certain areas reinforced efforts will need to be deployed in order to ensure the operability of the IACS.
TSE and animal by-products
Considerable progress has also been noted for the collection and treatment of dead animals and animal by-products (risk category 1, 2 and 3). Bulgaria has established EU-compliant technical capacities for rendering. It has also foreseen the necessary collection system of this material from the farms or plants and means for the efficient supervision of the disposal procedure. The disposal of the rendering product meat and bone meal is intended to be done by co-incineration. The other rendering product fat is used in the rendering plants as fuel replacements.
The current two rendering plants are situated very close to each other in the north east of Bulgaria. Although the currently available rendering capacity is sufficient, Bulgaria still plans to build a third plant to ensure a more even distribution of rendering capacity over the country and to use modern equipment. As regards low risk material (category 3) material plants have the choice to send those products either to the rendering plants or to plants registered or approved to deal with such material in compliance with the EU requirements and procedures. Bulgaria has compiled an inventory of all existing plants involved in the trade and further processing of category 3 materials. All of those existing plants were inspected and registered or approved respectively.
However, certain concerns persist.
Bulgaria still needs to improve all of the enforcement aspects and to continue carrying out systematic (cross) checks at all levels including the introduction of Health Hazard Critical Control Point (HACCP) system. Overall, there is risk that the rendering system will not be fully operational upon accession.
Financial control over structural action expenditure
Good progress was made with regard to the Extended Decentralised Implementation System (EDIS) accreditation process for the pre-accession financial instruments Phare and ISPA. Bulgaria has taken specific measures such as adopting a government decision for the appointment of additional monitors in the relevant institutions; it has continued its recruitment process and has run intensive training programmes for staff in key relevant areas. A memorandum of understanding was signed between the Ministry of Finance and relevant line ministries, which should improve cooperation and enable an accelerated Phare and ISPA EDIS accreditation.
Bulgaria now needs to continue intensively its efforts by completing its on-going recruitment and training process and by carrying out an additional comprehensive training programme for experts from the implementing agencies on the national procurement legislation and procedures and by preparing relevant additional manuals.
The current pace of preparations should enable the completion of ISPA EDIS accreditation by the end of the year for some of the implementing bodies concerned but at least in one case, accreditation will not be recommended. As regards the Phare EDIS accreditation process, additional efforts are needed if the target is to be achieved.
2. OTHER ISSUES WHICH NEEDED FURTHER PROGRESS IN MAY 2006
2.1 Political criteria
Trafficking in human beings
Progress has been made in this area. Continuous cooperation with Member States to fight trafficking of human beings has led to the dismantling of one network. In August 2006, the penal code was amended and now also defines the trafficking pregnant women aiming at trade in babies as a specific crime.
However, certain concerns persist.
No functional office has been made available to the National Anti-Trafficking Commission. Its secretary resigned in July 2006. Bulgaria remains a country of transit and origin for the trafficking of human beings. Trafficking of new born babies involving pregnant women giving birth abroad has not been halted. The absence of reliable registration mechanisms leads to a lack of clear information on trafficked persons and the number of missing persons. The implementation of the Law on Bulgarian Identification Documents remains incomplete. The implementation of the witness protection programme has been limited. Bulgaria has not yet signed the Council of Europe Convention on the Fight against Trafficking in Human Beings. Overall, limited progress has been made with regard to trafficking in human beings.
Til-treatment in custody and prison conditions
The issues outlined in the May Report in the areas of prison conditions, treatment and respect of obligations under international conventions in detention centres and prisons, remain to be addressed.
Child protection
There has been progress in the area of child protection. In May 2006, a specialised unit at the Inspectorate at the Social Assistance Agency was set up to supervise and monitor the institutions for elderly people and children. In June 2006, monitoring of the programme 'Assistants of people with disabilities' started. In this framework, training for parents with children with disabilities is also taking place. The rules for implementation of the Law on Social Assistance were amended to enhance the development of alternative services for children. Monitoring of homes for children with disabilities continued.
However, certain concerns persist.
In many institutions, living and sanitary conditions remain at a very low level. The established specialised unit in the Inspectorate at the Social Assistance Agency needs to be further developed in order to carry out a satisfactory level of monitoring. Provisions have to be taken to address the results of that monitoring appropriately.
Disability and mental health care
Limited progress has been made. Certain steps have been taken, in particular with the aim of improving transparency on the breakdown of responsibilities between the Ministries of Health and Labour and Social Affairs.
However, certain concerns persist.
There is a need to enhance the Agency for Disabled Persons as the institution responsible for planning and implementing the national disability policy. Substantial efforts are still needed to ensure the improvement of living conditions in institutions. In addition, efforts are needed to ensure the prevention of further institutionalisation and the realisation of the actions set out in the National Action Plan for Implementation of the Mental Health Policy of Bulgaria 2004-2012. The existing projects and priorities do not sufficiently meet the needs of the people in the institutions.
Protection and integration of minorities
Some progress has been made with regard to the integration of Roma. A programme for Roma literacy and occupational training 'From Social Aid to Employment' was launched in May 2006. It aims at providing basic occupational training for jobless Roma. Furthermore, members of the Roma community were employed under this programme, mainly in infrastructure upgrading.
In May 2006, a coordinator of the Decade of Roma Inclusion 2005-2015 was assigned. Bulgaria has taken over the chairmanship over the Decade of Roma Inclusion for one year. Regular monitoring meetings are organised in order to review the implementation of this programme. The administrative capacity of the Commission for Protection against Discrimination has been strengthened by recruiting additional staff. The implementation of vocational and other training measures for vulnerable groups has continued. Further training was provided to officials of the Directorate Ethnic and Demographic Issues.
However, certain concerns persist.
The job profiles and budget for the assistant teachers have not been conclusively defined. Measures to integrate Roma children in schools have to be further enhanced to cover higher education. The health status of the Roma population is low and outbreaks of diseases caused by poverty or lacking hygiene are frequent. Many Roma continue to have limited access to healthcare services. Efforts to include vulnerable groups, in particular Roma, in the labour market need to be further enhanced.
The administrative capacity of the National Council for Cooperation on Ethnic and Demographic Issues remains weak, particularly on the regional level. The governmental approach to non-registered settlements of mainly Roma community has led to tensions. Forced evictions further increased those tensions. Further efforts are needed to combat all forms of intolerance, particularly by fully applying existing legislation on broadcasting and other activities aiming to combat any form of racism, discrimination or xenophobia.
2.2 Economic criteria
Macroeconomic stability and current account deficit
The May 2006 Report reconfirmed it is a functioning market economy and concluded that continued prudent fiscal and wage policies were warranted in view of the widening current account deficit. There has been progress in the following areas. Fiscal policy remained tight and the general government surplus reached 3.6% of the forecasted GDP in the first seven months of 2006. Real wages rose by 1.5%, year-on-year, in the first half of 2006, and thus less than productivity. Merchandise export growth accelerated to around 30% in the first half of 2006 and was higher than import growth. As a result, the trade deficit started to decrease slightly in May and reached 21.0% of GDP until the end of June. In line with the lower trade deficit, the current account deficit also declined in June for the first time in more than a year. Net FDI inflows continue to cover around 75% of the current account deficit.
However, certain outstanding issues remain to be addressed. The current account deficit remains high and widened further from 11.8% at the end of 2005 to 14.3% in the 12 months to June 2006. This was largely due to lower incomes from tourism, substantially lower current transfers and a lower surplus in the income balance. Tight macroeconomic policies therefore need to be maintained to contain the high external deficit.
Privatisation and industrial restructuring
The May 2006 Report concluded that the privatisation process and the liberalisation and restructuring of utilities were well advanced. There has been further progress in the following areas. The privatisation process has regained momentum. The sale of the river shipping company and the thermal power plant in Varna were completed. Sales procedures for the privatisation of some district heating companies were started. The tender procedure for the sale of Bulgaria Air was launched in June. The liberalisation of the energy market continued with a lowering of thresholds for direct contracts between larger customers and suppliers.
However, certain outstanding issues remain to be addressed. The privatisation process as foreseen by the government has to be completed. The privatisation strategy for the maritime shipping company is still being revised by the Council of Ministers. The unbundling of the National Electricity Company and Bulgargas and the liberalisation of the gas and electricity markets remain to be completed until accession. Efforts to improve the financial situation of the railway companies need to continue.
Business environment
The May 2006 Report concluded that further improvements in the functioning of the judicial system and further easing of the regulatory burden on businesses were required. There has been limited progress in the following areas. The draft civil procedure code has been submitted to Parliament in May. Amendments to the insolvency legislation were adopted in May. In June, the Council for Economic Growth adopted an Action Plan on better regulation, including a survey of the most problematic regulations currently in place.
However, certain outstanding issues remain to be addressed. The Commercial Register Law needs to be fully implemented and the electronic commercial register needs to become fully operational. Efforts need to continue to ease the regulatory burden and to target in particular those regulations that create the greatest barriers to doing business. Regulatory impact assessments need to be implemented more systematically. The functioning of the administrative and judicial systems needs to be improved further.
Labour market flexibility
The May 2006 Report concluded that the regulatory framework for the labour market needed to be made more flexible. There has been some progress in the following areas. Amendments to the Labour Code in May have made working time arrangements slightly more flexible. For employees working under a special contract to perform additional work, the maximum weekly working time has been raised to 48 hours. If they give their written consent, these workers are also allowed to work longer hours. Moreover, the maximum reference period for the calculation of average weekly working hours has been increased to six months in certain cases.
However, certain outstanding issues remain to be addressed. Provisions in the Labour Code on working time and fixed-term work remain rather restrictive. As a principle, normal overtime work remains prohibited except for certain specific cases. Seniority bonuses have still not been integrated into the regular pay scale. A comprehensive reform of the education system remains crucial to address bottlenecks in the labour market.
2.3 Acquis criteria
This section assesses developments in the acquis areas wliich required increased efforts in May 2006 according to two categories.
- Firstly, the areas where significant progress has been made and where, provided
current momentum is maintained, Bulgaria's preparations are now on track.
— Secondly the areas where further progress is still needed and where Bulgaria's
preparations should continue.
2.3.1. Areas in which preparations are now on track
Chapter 2 Free movement of persons
In the field of mutual recognition of professional qualifications, the Law on Health was amended in July 2006 and the strengthening of administrative capacity continues, both in terms of training and further development of appropriate administrative structures. Progress can also be noted as regards health professions (doctors, general care nurses, dentists, pharmacists and midwives), the co-ordination of training and the automatic mutual recognition of qualifications, for which ordinances were adopted in August 2006. Bulgaria needs to ensure that the legislation mentioned above is correctly implemented.
Chapter 3 Freedom to provide services
In the field of banking, the Law on the Supplementary Supervision of Financial Conglomerates and the Law on Credit Institutions were adopted in July 2006. The Law on Bank Deposit Guarantee was also amended in July 2006. Bulgaria still needs to complete the transposition of the new EU capital requirement rules for credit institutions and investment firms.
In the field of investment services and securities markets, the Amendment to the Law on Public Offering of Securities and the Law on Insider Dealing and Manipulation of the Securities Market were approved by the Council in July 2006 and submitted to the Parliament for adoption. In the area of the information society, the Law on electronic commerce was adopted. Bulgaria has made good progress in the areas of banking, investment services and securities markets, as well as the information society.
Chapter 7 Agriculture
Bulgaria has made progress in some areas of agriculture. The setting up of the Paying Agency, the awareness and expertise on trade mechanisms and the establishment of the common market organisations on wine and alcohol, beef and milk progressed. Likewise, substantial progress has been observed in the veterinary sector, in particular on the aspects of trade in live animals and animal products, common measures including zoonoses and animal welfare. For the latter, detailed analyses have been carried out as regards enforcement of the EU standards. Corresponding projects for Community support have been elaborated. Bulgaria has made good progress in the above areas.
Chapter 8 Fisheries
With regard to inspection and control, the EU legal requirements for catch registration and for keeping logbooks have been transposed and are enforced. In the context of resource and fleet management substantial progress has been achieved on the satellite based fishing vessel monitoring system which is expected to be operational for all vessels concerned by accession. With regard to the preparations for Bulgaria's participation in the EU structural action fisheries fund and the market policy , Bulgaria has taken significant steps to improve the administrative capacity and the relations with the fishing industry. Furthermore, a draft national strategic plan has been presented to the Commission.
Chapter 9 Transport
In the field of maritime transport, some progress can be noted. The updated strategy for privatisation of Navybulgar was submitted to Parliament in August. Until the independence of inspections is guaranteed by the finalisation of the privatisation process, all inspections except those under International Ship and Port Facility Security Code and the International Safety Management code and the issuance of documents for safe manning of ships are carried out by classification societies. By accession, these inspections may only be carried out by classification societies recognised by the EU.
Chapter 10 Taxation
Bulgaria has made substantial progress in the areas of Value Added Tax (VAT). In the area of VAT, the new Law on VAT was adopted in July 2006. It contains in particular provisions for the transposition of the intra-Community regime. In the field of IT intercormectivity, Bulgaria continues to be on track and efforts should be sustained with regard to the timely completion of the VAT on E-services system.
Chapter 13 Employment and social policy
Bulgaria has made good progress in the area of labour law. The Labour Code was amended in May 2006 with a view to the acquis, particularly as regards the directives on collective redundancies, transfer of undertakings, part-time work, fixed-term work, employer insolvency, working time, written information on individual employment conditions and protection of young people at work. Further acts were adopted aiming at the transposition of the Directive on Posting of Workers and the directives supplementing the European Company and European Cooperative Society Statutes, the Directive on Information and Consultation and the European Works Councils Directive. Therefore, most of the shortcomings have been corrected. However, the administrative capacity and internal control mechanisms of the Labour Inspectorate need to be further enhanced to guarantee effective, even-handed application of the acquis in this area.
Significant progress has been made on the preparations for managing the European Social Fund (ESF), particularly in relation to the training of civil servants and further recruitment of staff.
Chapter 21 Regional policy
With regard to the institutional structures (administrative capacity), Bulgaria has made good progress with the continued implementation of recruitment plans across the different concerned bodies. The increased salaries for civil servants involved in administering EU funds have facilitated the recruitment of qualified staff. Substantial training has been given to ensure an effective implementation of the Structural Funds.
In the area of monitoring and evaluation, good progress has been achieved with the completion of the basic pilot system for the Management and Information System. Initial training has started and a comprehensive training programme for all end users has been elaborated. Evaluation units have been established in a number of managing authorities. Nether the less, capacity building at all levels will need to be reinforced to insure the full absorption of EU funds while respecting the acquis. Moreover, project selection procedures and implementation will need close attention.
Chapter 22 Environment
Bulgaria has made good progress in the area of nuclear safety and radiation protection. Staff numbers at the Nuclear Regulatory Agency have increased, now including experts in charge of aspects relating to medical exposure.
Chapter 23 Consumer and health protection
Considerable progress has been made in this chapter. The legal alignment of the Bulgarian legislation with the acquis in both safety related and non-safety related areas has progressed substantially through the adoption of the Consumer Credit Law and through amendments to the Law on Consumer Protection. New secondary legislation includes the support mechanism for the consumer organisations and statutory rules for the Commission on Consumer Protection. A draft law on distance marketing of consumer financial services has been elaborated but still requires the approval of the Bulgarian government and adoption by the Parliament.
Additional staffing and training of both the policy-making body and the enforcement bodies has taken place. This has improved market surveillance by establishing the Commission of Consumer Protection (CCP) and the Council on Coordination and Exchange of Information. The latter is in charge of bringing together the CCP with the other three major market surveillance authorities. The active participation in the EU Rapid Alert System for Non-Food Products and intensified inspections with administrative follow up, indicate adequate market surveillance. 12% of all inspections carried out resulted in issuing administrative acts or the withdrawal of products from the market in eight cases.
The formation of an effective consumer movement continued with the provision of financial resources to eleven Bulgarian consumer organisations and substantial training of their staff. These NGOs have been formally involved in market surveillance since the signature of a Memorandum of Joint Activity with the CCP. A campaign has stalled to inform the public about the objectives and mechanisms of consumer protection.
Chapter 24 Cooperation in the field of justice and home affairs
In the field of asylum, the administrative capacity of the Agency for Refugees has been adequately strengthened.
In the area of judicial cooperation in civil and criminal matters, the Agreement on the Privileges and Immunities of the International Criminal Court and the Council of Europe Convention to Prevent Terrorism have been ratified. As regards the quality of international judicial co-operation in penal matters, the Law on Issuing, Adoption and Execution of Decisions for Securing Property or Evidence, issued by the EU Member States was adopted in July 2006. Bulgaria has made good progress in these areas.
2.3.2. Areas in which further progress is still needed
Chapter 3 Freedom to provide services
In the field of insurance, amendments to the Code on Insurance were adopted in June 2006, which provide for an obligatory re-insurance cover that the Guarantee Fund must subscribe.
However, many vehicles with invalid plates still circulate in Bulgaria. The re-insurance programme of the Guarantee Fund has not yet been carried out. The main challenge remains the signature of the Multilateral Agreement under the aegis of the Council of Bureaux as well as the Agreement between compensation bodies and guarantee funds in order to allow the Bulgarian vehicles to circulate throughout the EU without border checks on motor third party liability (MTPL) policies and to ensure the full applicability of the 4th Motor Insurance Directive. There is consequently a risk that border checks on MTPL policies of Bulgarian vehicles will still be required after accession and that compensation of victims of road accidents by compensation bodies will not or only partly provided as foreseen by Article 6 of that directive.
Building on the progress made since May 2006, Bulgaria's preparation in the area of insurance should continue in the remaining months.
Chapter 3 Freedom to provide services
In the field of insurance, amendments to the Code on Insurance were adopted in June 2006, which provide for an obligatory re-insurance cover that the Guarantee Fund must subscribe.
However, many vehicles with invalid plates still circulate in Bulgaria. The re-insurance programme of the Guarantee Fund has not yet been carried out. The main challenge remains the signature of the Multilateral Agreement under the aegis of the Council of Bureaux as well as the Agreement between compensation bodies and guarantee funds in order to allow the Bulgarian vehicles to circulate throughout the EU without border checks on motor third party liability (MTPL) policies and to ensure the full applicability of the 4th Motor Insurance Directive. There is consequently a risk that border checks on MTPL policies of Bulgarian vehicles will still be required after accession and that compensation of victims of road accidents by compensation bodies will not or only partly provided as foreseen by Article 6 of that directive.
Building on the progress made since May 2006, Bulgaria's preparation in the area of insurance should continue in the remaining months.
As regards the proteetion of persona! data, Bulgaria's legislation is not yet aligned with the acquis. Amendments to the Law on Personal Data Protection are still under preparation and recruitment of additional staff for the Commission for Data Protection is still not completed. The lack of budgetary independence and the functioning of the registration and notification scheme need to be tackled. The activity as regards enforcement and handling complaints needs to be enhanced and effective action by the supervisory authority in determining the use of the resources and powers already at its disposal.
Chapter 4 Free movement of capital
In the area of money laundering, progress has been made with the amendment of the Law on Measures against Money Laundering, which largely reflects the requirements of the second EU Anti-Money Laundering Directive and to align Bulgarian law with the revised recommendations of the Financial Action Task Force on the prevention of money laundering and terrorist financing. Bulgaria needs to demonstrate that it can achieve tangible results in terms of enforcement and prosecution of cases of money laundering. (See also chapter 1.2)
Chapter 5 Company law
Bulgaria has made progress in the field of protection of intellectual and industrial property rights (IPR). Amendments to the Law on patents were adopted in July 2006 and amendments to the Law on Trade Marks and Geographical Indications and to the Law on Industrial Design were adopted in August 2006. A major awareness raising conference was organised with the assistance of the World Intellectual Property Organisation and the European Commission in Rousse in May. A national public awareness campaign in the electronic media started in August 2006. The Council on IPR protection has met twice. Meetings with IP-related industry associations have also been held. Training sessions involved relevant ministries, the patent office, prosecutors, as well as customs officers. IP-related crime remains a continuing threat and poses a real challenge to Bulgaria. The country should ensure compliance of users of protected subject matter, such as cable operators, with their obligations to pay royalties. In respect of the recently amended Bulgarian patent law, concerns have arisen regarding some amendments that lead to a reduction of the terms of interim protection schemes for pharmaceutical products. This has in some cases curtailed acquired rights.
Chapter 7 Agriculture
As for the veterinary control systems in the internal market, Bulgaria still has to finalise the infrastructure (border inspection posts) and procedures for checks on live animals and products of animal origin introduced from third countries, to set up an effective control system for participation in the internal market and to demonstrate the real time - online multi-user operation of the databases for the identification, registration and movement control for the relevant life stock species (traceability). Measures on the control of animal diseases are needed to ensure that the country is free from classical swine fever. Finally, as regards public health, Bulgaria still has to set up the repartition of compliant raw milk between milk establishments in the dairy sector.
Chapter 9 Transport
In the area of air transport, joint inspections by the European Aviation Safety Agency (EASA) and the Joint Aviation Authorities (JAA) have revealed significant and persistent shortcomings in the administrative capacity of the Bulgarian Civil Aviation Authority to ensure the necessary safety oversight, to implement the Community requirements on certification, of airworthiness and maintenance of aircraft and to ensure that the large fleet designed in the Commonwealth of Independent States can meet these requirements.
In order to comply with the relevant EU aviation safety rules, Bulgaria urgently needs to submit a corrective action plan and implement it within a strict timetable, in close cooperation with, and under guidance from EASA to redress all safety shortcomings. EASA will then have to verify the implementation of this plan by means of another inspection before Bulgaria's accession.
Chapter 10 Taxation
In the areas of direct taxation and mutual assistance, no progress can be reported, as the relevant legislative acts are still not adopted by Parliament. Bulgaria still needs to abolish tax free shops for incoming travellers.
Chapter 13 Social policy and employment
As regards public health, further legal alignment is under preparation in the field of blood and blood products as well as for tissues and cells to complete acquis alignment. The EU requirements concerning traceability and notification of serious adverse reactions and events have been transposed. The administrative capacity of relevant executive agencies has been slightly strengthened. Inspections of the current network of specialised institutes are being carried out on a regular basis, followed up by administrative acts or sanctions where necessary.
As regards access to healthcare, child welfare and handling of the elderly, persons with disabilities, substantial efforts are still needed to ensure that living conditions in institutions are improved, that institutionalisation is reduced and that the actions set out in the "National Action plan for the implementation of the Mental Health policy of Bulgaria 2004 - 2012" are realised. Despite some progress since May 2006 in the area of social dialogue, the bipartite dialogue has not been sufficiently strengthened and the need for more capacity building is still an outstanding issue. The representativeness criteria need to be applied in an impartial way for all social partner organisations. Participation in the tripartite dialogue must be restricted to social partner organisations with a social mandate. Bulgaria needs to step up its preparations in this field.
In the area of social inclusion, several issues remain to be addressed. Bulgaria needs to continue its analytical work and the development of social statistics on poverty and social exclusion in line with the EU indicators on social inclusion. Efforts to improve the situation of vulnerable groups, in particular Roma, and to promote their full integration into society need to continue.
Bulgaria has made some progress in the area of anti-discrimination. However, the administrative capacity of the Commission for Protection against Discrimination needs to be enhanced. Efforts to ensure effective implementation of the Framework Programme for Equal Integration of Roma in Bulgarian society have been insufficient.
Chapter 14 Energy
With regard to the competitiveness and the internal energy market, limited progress has been made. The overall opening of the electricity and gas market is progressing, however, continued efforts are needed in order to complete the restructuring of the electricity and gas companies NEK and Bulgargas. Also, Bulgaria needs to abolish the existing import/export monopolies by accession, as foreseen in its Energy Law.
In the area of nuclear energy and nuclear safety some progress has been made. The Bulgarian Authorities have established a viable decommissioning strategy to meet their commitments regarding the early closure and subsequent decommissioning of units 1 -4 of Kozloduy Nuclear Power Plant.
However, efforts need to continue, in the implementation of the proposed actions. The operational and administrative actions required for the implementation of this strategy, especially approval by the Nuclear Regulator of licence alteration for units 1&2 permitting preparatory activities for decommissioning and dismantling, as well as issuance of a "zero power" licence for units 3&4, remain be finalised. They are needed to implement consequently the revised strategy guaranteeing the irreversible closure of all four units of the power plant.
Chapter 15 Industrial policy
In the area of privatisation and restructuring, progress has been made. (See also the economic section.) However, little progress has been achieved with regard to the restructuring of the steel industry. Bulgaria has applied for an extension of the restructuring period until 2008. It has accepted to extend until 2008 the possibility of reclaiming state aid if conditions are not met.
Chapter 19 Electronic communications and information technologies
Certain key issues still remain to be addressed in electronic communications and information technologies . The adoption of the new primary law transposing the 2002 acquis and subsequent secondary legislation is still underway. The imposition of appropriate regulatory measures on mobile wholesale prices and application of effective cost accounting systems has not taken place yet. These measures ensure the accuracy and fairness of pricing obligations in interconnection, unbundling, access and retail voice services. In addition, the National Regulatory Authority should be given enhanced capacity and full independence to carry out its regulatory tasks. Bulgaria's preparations remain insufficient to reach compliance with the EU regulatory framework by accession.
Chapter 21 Regional policy and coordination of structural instruments
Programming is progressing as scheduled. However, more progress is needed with regard to the establishment of an adequate pipeline of well-prepared projects. Bulgaria risks not having prepared enough projects upon accession and may hence not be in a position to fully absorb its financial allocation under the Structural Funds.
Results with regard to the establishment and functioning of a sound and efficient financial management and control system remain to be proven in particular in respect of internal audit units which carried out limited work and have not achieved adequate standard. Progress was made with the hiring and training of people but complex recruitment and training plans still need to be completed. Procedural manuals are available in draft format. These manuals need to be finalised rapidly and training on them being carried out. Procedures need to be tested and routine being established. While ex-ante control teams have been established in all managing authorities, the proper implementation of public procurement procedures in this context need to be demonstrated.
Chapter 22: Environment
No specific actions have been taken as regards the public awareness and involvement in the areas of Integrated Pollution Prevention and Control (IPPC) and NATURA 2000 in the area of horizontal legislation. Financial resources for the creation of a publicly available register for Environmental Impact Assessment have been set aside. However, the register has not yet been established.
For waste management, the recruitment of staff for the regional level has made little progress. The development of an integrated network of disposal installations lacks attention.
Concerning water quality, the amendment to the Law on Water for full alignment with the EU Water Framework Directive needs to be adopted.
However, certain concerns persist.
Further strengthening of the administrative capacity has yet to be achieved in terms of human resources, laboratories and equipment, in particular at regional level.
As for IPPC and risk management, progress has been made. The total number of integrated permits so far has increased to 108 out of a total of 230 to be granted by the end of October 2007. For the other installations, the procedures have been opened. However, the process of issuing the remaining permits and enforcing all of the permits needs to be continued in order to conclude this process in time.
Regarding air quality transposition is lagging behind. An increased effort is still needed to fully transpose the remaining air Directives (ambient air, national emissions ceiling, emissions trading, sulphur content of liquid fuels).
Substantial efforts are needed as regards progress -as scheduled- in terms of implementation of measures in these areas.
Chapter 24 Cooperation in the field of justice and home affairs
As regards the preparations for applying the Schengen acquis and the management of the future EU external border, progress has been registered. Following the implementation of the strategy and action plan on Integrated Border Management, in May 2006 joint investigation teams were deployed in the border zone and in June 2006 joint mobile teams of customs and border police officials were initiated in the border zone. There are currently 13 of these teams in operation. In June 2006, Bulgaria adopted an Action Plan to prepare for joining SIS II at a later stage after accession. Preparations to join Schengen after accession are broadly on track, but Bulgaria will need to demonstrate also in practice that its preparatory work are wholly focussed on SIS II and not on SIS I+. The recruitment of additional staff continued: 137 of the foreseen 200 extra border police officers for 2006 have been recruited. In July 2006, the principle 'one desk payment' has been introduced as a pilot project at the Lesovo BCP on the Bulgarian-Turkish border, but this now needs to extended throughout the borders of Bulgaria to reduce the risk of corrupt practices at the border. In August 2006, the Bulgarian border police and the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union FRONTEX signed a co¬operation agreement. Also in August, an agreement on the state border regime, co¬operation and mutual aid on border issues was signed with Romania. In the period May-September 2006, 220 persons have been apprehended at the Bulgarian state border while 499 have been refused entry at border crossing points.
Bulgaria's borders remain very vulnerable with regard to trafficking of human beings and goods and investments in modern equipment and well trained staff should continue in view of ensuring a high level of control.
In the fight against drugs, the administrative capacity of the National Focal Point within the European Monitoring Centre for Drugs and Drugs Addictions has not been strengthened. Bulgaria continues to be a major transit country for the smuggling of drugs. Effective implementation of anti-drugs measures remains a challenge. Since May 2006 close to 180 kg heroine, 30 kg hashish and over 200 kg amphetamines as well as small quantities of marihuana, ecstasy and cocaine were seized at the Bulgarian borders.
For information on data protection, see chapter 3. Chapter 28 Financial control
As regards the protection of EU financial interests, some improvements have been observed in the fight against fraud. The anti-fraud strategy and its action plan has been improved and the activities have been implemented in practice up to now. A new central unit has been created within the AFCOS in July to enhance the capacity of coordination of relevant national bodies and cooperation with OLAF in the fight against fraud and the protection of the financial interests of the EU. The proper functioning of the central unit and the full cooperation of the relevant national bodies within the structure will now have to ensure the efficient protection of the EU financial interests.
3. TRANSLATION OF THE ACQUIS INTO BULGARIAN
Bulgaria has yet to translate about 1.4 % of the acquis (around 1 360 pages) and to revise about 16 % (around 15 000 pages). Taken together with the situation at other stages of production (proofreading, correction, finalisation by the institutions' legal revisers) this means that some 51 % of the total number of pages (that is, about 48 000 pages) have not yet been prepared for the Special Edition of the Official Journal which will be published from the date of enlargement.
It is of utmost importance that the acquis is fully translated and revised prior to accession in order to ensure legal certainty of secondary legislation. Bulgaria is invited to step up its efforts towards achieving this goal.
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