Monitoring report on the state of preparedness for EU membership of Bulgaria and Romania

Contents
	Introduction
	Summary of monitoring fidings
	Bulgaria
	Romania
	Safeguards and other measures
	Tools applicable to all Member States
	Tools based on the Accession Treaty
	Accopmanying measures foreseen for the accession of Bulgaria and Romania
	Judiciary and the fight against corruption
	Agricultural funds
	Food safety
	Aviation safety
	Conclusion
	Country Annex Bulgaria
	country Annex Romania

1. THE ISSUES HIGHLIGHTED IN THE CONCLUSION OF THE MAY REPORT WHICH NEEDED FURTHER ACTION

1.1 Political criteria

Justice system

Further progress has been made in reforming the justice system. The implementation of the national Strategy and Action Plan on justice reform has continued. In May 2006 a Law on Mediation was adopted that provides for a system of alternative dispute resolution. A mediation council will be established to oversee the implementation of the law. A fundamental review of the Civil Code and Criminal Code as well as both associated procedural codes has been started by the Ministry of Justice, the Superior Council of the Magistracy, practising judges and prosecutors, lawyers and foreign experts. It should be completed by the third quarter of 2007. The number of cases pending before the civil section of the High Court has fallen from 6126 at the end of February 2006 to 5160 in September.

In July 2006 the General Prosecutor of Romania, together with the heads of the Romanian Intelligence Service, the Foreign Intelligence Service and the Directorate General for Intelligence and Internal Protection resigned following the disappearance and subsequent flight from the country of a defendant in a terrorism trial. Judicial Inspectors have launched a preliminary investigation into the actions of the prosecutors and judges involved.

The Superior Council of the Magistracy (CSM) has started to rank the complexity of the various types of cases handled by courts and to measure the average time spent on them in order to assist the courts in managing the human resources of the justice system more efficiently. A pilot project has started in 17 courts in which clerks will be permitted to carry out additional administrative duties currently performed by judges to reduce judges' workloads. In June the CSM proposed improvements to the legislation on disciplinary sanctions for judges. This aims to ensure that those being investigated cannot take early retirement to escape sanction and to prevent them from continuing to pronounce on cases after the CSM has taken an initial decision to remove them from office.

The CSM's Action Plan is being implemented on schedule and the following measures have been taken: firstly, internal rules have been adopted that prevent Council members from voting in disciplinary matters that affects their court or prosecution office; secondly, steps have been taken to ensure a more consistent interpretation and application of the law; thirdly, more objective criteria have been provided for the promotion of judges and prosecutors; and fourthly, new objective criteria have been established for the recruitment of staff to the Inspection Department and applied in the selection of three new judicial inspectors.

In May 2006 Parliament ratified the contract to refurbish 25 courts. The Palace of Justice in Bucharest was reopened in August and now houses the Bucharest Court of Appeal and a local court. The deployment of modern information technology and communications equipment in the justice system has continued and by July 2006 all courts were interconnected via a secure network. The extension of this network to all prosecutor's offices is underway. The Case Documentation and Management System software is operational in 152 of Romania's 237 courts and in 40 of its 235 prosecutor's offices. Local Area Networks have been established in 82% of courts and 90% of prosecutor's offices. Since July 2006 all courts and prosecutor's offices have had online access to legislation and case law.

However, certain concerns persist.

A consistent interpretation and application of the law at all levels of courts throughout the country has not yet been fully ensured. Five of the fourteen elected CSM members continue to face a potential conflict of interest in inspection matters as they hold leading positions in courts or prosecution offices. The objectivity of the overwhelming majority of current inspectors is not sufficiently guaranteed. New inspectors should be recruited, according to the new procedure, in order to reduce the number of vacancies and to increase the regional representation amongst inspectors. The CSM has not yet addressed the issue that unethical behaviour by individual members Of the CSM negatively affects the reputation of the Council as a collective body. No new legislation for a framework of legal aid has been adopted yet. No new General Prosecutor has been appointed yet. No steps have yet been taken to address the Public Ministry's serious managerial shortcomings such as the very uneven distribution of workloads, lack of relevant ongoing training and inability to collect statistics. This issue will have to be addressed as a priority.

Overall, progress continues in the reform of the justice system, especially in strengthening its administrative capacity. Further efforts are needed to ensure a more consistent interpretation and application of the law in order to create legal certainty. While the Superior Council of the Magistracy has started to address some of the key issues facing the justice system through its newly-adopted Action Plan, concerns about potential conflicts of interest and ethics continue with regard to some Council members. Steps should also be taken to address managerial weaknesses in the Public Ministry.

Anti-corruption measures

Romania has continued to make progress in fighting corruption. The implementation of the national Strategy and Action Plan for fighting corruption has continued. In June 2006 amendments to the Criminal Code were adopted introducing the criminal liability of legal persons. In July new legislation was adopted tightening the rules on the financing of political parties.
The quantity and quality of non-partisan investigations into allegations of high-level corruption have continued to increase. The National Anti-Corruption Directorate (DNA) launched investigations in three new cases of high-level corruption involving a former member of Parliament, leading figure from local government and senior civil servant. DNA indicted seven people for cases of high-level corruption, four of whom were politicians from the ruling coalition, two from the opposition and one high-profile business person. DNA has also indicted five judges and is investigating two further judges. Since March 2006, DNA indicted a total of 199 suspects and the courts issued initial convictions against 87 defendants and 82 final convictions in cases initiated by DNA. The qualitative improvement of DNA's investigations has continued as is demonstrated by the reopening of cases which had been closed under the previous management team and by the launch of new investigations into long-standing public procurement scandals. The anti-corruption framework has become more effective as more DNA investigations are launched on the basis of information provided by public control bodies. In May DNA was allocated an additional 56 posts.

The Directorate General for Anti-Corruption (DGA) within the Ministry of Administration and Interior now has 298 staff working at national and local levels. Since May DGA has conducted preliminary investigations into 615 persons and passed all these files to the competent prosecution service, which resulted in 157 indictments. DGA also conducted integrity tests that uncovered corruption within the Ministry. In May and June the National Customs Authority conducted 42 controls of its staff, including those based on public complaints, and consequently disciplined 41 staff and sent one file to DNA for further criminal investigation. In September, various joint actions between DGA and DNA have resulted in further arrests of among others 30 customs officers as well as various other public officials, underlining the good co-operation established between both anti-corruption bodies.

Two national campaigns have been started to increase awareness among the public and civil servants including the judiciary of the negative consequences of corruption.

However, certain concerns persist.

There needs to be a clear political willingness of all political actors to demonstrate the sustainability and irreversibility of the recent positive progress in the fight against corruption. In the Parliament there have been some attempts to reduce the effectiveness of the proposed National Integrity Agency during the passage of the Draft Law through Parliament, which Romania committed to adopt in the national Strategy and Action Plan against corruption.

In the Parliament there has also been an attempt to change the nomination procedure for both the General Prosecutor of Romania and the Head of the National Anti-Corruption Directorate, which would bring additional legal and institutional uncertainty to the anti-corruption framework. The reforms led by the Ministry of Justice and DNA need to be complemented by sustained efforts from all other executive agencies, the legislature and the judiciary. Co-operation between the two specialised prosecution services needs to be further improved in cases of high-level corruption and organised crime. It is still not ensured that all judges have sufficient specialist knowledge to hear and judge complex cases of financial and economic crime. So far, there have not been any final convictions in high-level corruption cases stemming from the new investigations launched by DNA in September 2005. Corruption remains a general concern. Certain sectors such as health care, education and local government are particularly vulnerable.

Overall, progress continues to be made in fighting corruption, particularly in launching criminal investigations and concluding indictments. Further indictments, trials, final convictions of the guilty and dissuasive sentences in high-level cases are needed to ensure the sustainability and irreversibility of the recent progress. All political actors need to demonstrate their commitment to a serious and effective fight against corruption and ensure that no one is perceived to be above the law. Once an effective Integrity Agency has been established and co-operation between prosecutors working on corruption and organised crime cases has been improved there is a need to ensure stability in the legal and institutional anti-corruption framework.

1.2 Acquis criteria

Accreditation of paying agencies

Progress has been made recently with regard to the setting-up of the paying agencies. The contract with the IT Company for developing the IT software applications was signed on 15 July and the work commenced end of July. A detailed plan for the work has been established. Further IT hardware equipment has been installed. Additional staff has been recruited and trainings have commenced.

However, certain concerns persist.

A number of issues remain to be addressed with regard to the paying agencies relating to the implementation in due time of a proper IT system, to the adequacy of staffing, equipment and office premises as well as to the incompleteness of the majority of management and control procedures.

Overall, there is still a real risk that the paying agencies will not be functioning properly by the time of accession.

Integrated Administration and Control System (IACS)

Progress has been made recently with regard to the setting-up of the IACS. The contract with the IT Company for developing the IACS IT software applications was signed on 15 July and the work commenced end of July. A detailed plan for the work has been established and the Farm register module has been developed. The Farmers' register contains information on the majority of farmers and further progress has been made with regard to establishing the link between the Farmers' Register and the Land Parcel Identification System/Geographical Information System (LPIS/GIS). Additional resources have been provided for the work relating to the setting-up of the LPIS/GIS, which have speeded up the work.
However, certain concerns persist.

A certain number of issues remain to be addressed relating to the implementation in due time of a proper IACS IT system, to the tight timetable for completing the Land Parcel Identification System/Geographical Information System (LPIS/GIS) and its quality. Moreover, for on-the-spot checks additional staff has to be recruited and trained, the equipment has to be purchased and the procedure manuals have to be completed.

Overall, there is still a real risk that IACS will not be functioning properly by the time of accession. Reinforced efforts sustained over the whole period available before the introduction of the system will still need to be deployed in order to ensure the operability of the IACS.

TSE and animal by-products

Romania has made good progress with regard to the collection and treatment of dead animals and animal products (TSE). Tendering contracts for collection, disposal and treatment of animal by-products have been signed with a Hungaro-Romanian consortium. The future organisation of the rendering system, as of January 2007, has been defined. The existing three rendering plants located in Popesti, Coldea and Dej will be upgraded to handle animal by-products in compliance with EU norms. A detailed programme for restructuring and modernising each establishment was agreed between the veterinary authorities and the consortium. Animal waste of risk category 1 and 2 (high risk material) will be treated only in Coldea whereas the plants in Popesti and Dej will process animal waste of risk category 3 (low risk material). Two incineration units will treat the waste issued from the Coldea plant. The setting up of 21 intermediate collection plants and means of transport is foreseen in the consortium's programme. The consortium has also committed to incinerate most of the stock of meat and bone meal.

Furthermore, the consortium intends to build four new rendering plants to progressively replace the current plants. A commission for coordination of the creation of an EU compliant rendering system in Romania was created in June 2006. Each county authority has nominated someone to supervise the development of the rendering system.

However, certain concerns persist.

The deadlines for modernisation and construction of the rendering plants foreseen by the end of November 2006 are very tight with regard to ensuring the approval by the Romanian veterinary authorities and its notification to the Commission. In addition, the same concern applies to the timing of the construction and/or the upgrading of the intermediate collection plants as well as to the timing of the acquisition of means of transport.

Tax administration - interconnectivity with IT systems

Romania has made significant progress in preparing for the VAT Information Exchange System (VIES), VAT on e-services (VoES) and Excise Movement Control System (EMCS). The Romanian Ministry of Public Finance has taken ownership of the system implementation with projects team. Romania has successfully passed the conformance tests of the VIES and the EMCS applications, thus meeting its obligations in this area. The development of VoES is on track to be fully functioning upon accession, provided that Romania maintains the current pace of progress.

2. OTHER ISSUES WHICH NEEDED FURTHER PROGRESS IN MAY 2006

This section assesses Romania's progress with regard to the issues of the political, economic criteria and the acquis areas which were still outstanding in the May report.

2.1 Political criteria

Public administration reform

Progress has been made in the area of public administration reform. Two key laws were adopted by Parliament in July. The first is the law on local public finance, the second is the law on Civil Servants, amending the Civil Service Statute The former completes the legal framework for decentralisation. Work continues to ensure the transfer of competences from central government to the most appropriate sub-national level. Timetables and procedures are being drawn up to decentralise responsibilities and resource management, including finances. The decentralisation process is now taking off.

The amended law on civil servants aims for administrative decentralisation. It also improves the recruitment procedure and defines the rights and responsibilities of civil servants. In addition, it intends to define career structures and procedures for recruiting high-level civil servants, and to de-politicise the service.

Some progress has been made in improving policy formulation. The role of the General Secretariat of the Government has been defined. The government has drawn up a handbook on impact assessment methodology, as well as a comprehensive methodology for strategic planning at the level of ministries and General Secretariat of the Government. The latter includes measures to provide authorities with a clear and comprehensive framework for the elaboration and coordination of public policies, with an active involvement of civil society.

However, certain concerns persist.

Drafting of a new law on Unitary Pay for civil servants, to complement the new Civil Service Statute, is likely to be further delayed. The Government continues to rely on Emergency Ordinances to adopt laws (105 were approved between February and July 2006). This bypasses the Parliament's legislative and oversight role and should be limited to exceptional circumstances.

Trafficking in human beings

The 2006-2010 Strategy and Action Plan to fight against trafficking in human beings was adopted in August 2006. Progress has been made in filling vacancies within the National Agency for Preventing Human Trafficking and monitoring the assistance offered to victims. Eight regional offices and an IT system to register returned victims so that they can be assisted will be established. A partly state-funded programme is planned to provide victims with the medical, psychological and legal assistance they require. So far in 2006 , a total of 130 victims were assisted in either state-run or NGO centres or at home. In May 2006, 45 cases of trafficking were detected involving 91 traffickers, 15 of which were arrested.

However, certain concerns persist.

Further efforts are needed to improve the facilitation of victims' social reintegration. There are still 16 vacancies in the Agency from a total staff of 34. An enhanced budget reflecting the responsibilities given the Agency has not yet been adopted. The IT system needed to register returned victims is not yet operational and there are few measures to assist the social reintegration of victims.

Ill-treatment in custody and prison conditions

Progress has been made in improving detention conditions. The Romanian police has refurbished six detention facilities and closed one. During May and June the police conducted inspections of the pre-trial detention conditions in nine counties and five police stations in Bucharest. No human rights violations or infringements of procedural norms such as holding those on pre-trial detention and convicted prisoners in the same cell were found. Three complaints of ill treatment by police officers were received by the Central Directorate for Criminal Prosecution. Subsequent investigations concluded that these had no merit. In June 2006 a Law on the enforcement of criminal penalties was adopted that provides for a differentiated detention regime in prisons (maximum security, closed, semi-open and open). The Law also facilitates improvements in prison conditions and strengthens oversight by judges over sentences served.

However, certain concerns persist.

There continue to be some reports of ill treatment by law enforcement and prison service staff, including the excessive use of force. Judicial review of such complaints remains rare and there have been no sanctions since May. The efforts to relocate persons in preventive custody from police stations basements to more appropriate locations need to continue.

Child protection

As regards child protection, further progress has been made. The authorities have continued to implement the 2005 legislation on children's rights and adoption. This has brought Romania's legislation in line with the UN Convention on the Rights of the Child and on a par with the Member States, The number of institutionalised children continued to decrease. Living conditions in the remaining institutions have improved substantially and are now generally of a good standard. Many children have been reunited with their family or go into foster care with trained persons. Furthermore, the action plan aiming at assisting mothers in order to prevent them from abandoning their new born baby, needs to be carefully implemented. As for children with a handicap, the Romanian authorities have installed a working group which will closely examine the living conditions of these children in placement centres, hospitals and boarding schools, with a view to improving these conditions.

Disability and mental health

Limited progress has been made. The action plan on implementing the mental health reform strategy 2006—2009 was adopted in May 2006. A National Centre for Mental Health was established in August 2006 to coordinate the mental health reform. Recruitment of social workers to monitor the respect of human rights in psychiatric institutions has continued and should be urgently completed. In the field of disability, de-institutionalisation process has continued. The National Authority for People with disabilities has recently allocated funds to NGOs for setting up services for disabled persons. 18 social services are under preparation, such as for training and professional integration, respite care centres and protected dwellings.

However, certain concerns persist.

As regards disability, promotion of quality services for disabled persons, i.e. creation of community-based alternative services as well as increased access to employment and education, now need to become a clear priority. In the field of mental health, although some steps have been taken to tackle the most urgent challenges, more work is needed to abolish the excess occupancy in some psychiatric institutions, and to ensure sufficient staff and treatment. In order to ensure due implementation of the mental health reform, this work needs to be part of an overall approach and a continuous monitoring effort.

Property restitution

As regards property restitution, some progress has been made. The legislation has been modified to streamline the regime of establishment and payments of compensations. However, the processing of claims remains slow.

Protection and integration of minorities

In the field of protection of minorities, only limited progress can be reported. The draft law on the statute of national minorities and setting up the principles of equality and non-discrimination and multi-culturalism, is still being discussed in parliament. This legislative process needs to be followed closely.The new National Employment Plan which was approved in August 2006 provides targeted action for minorities, including Roma. The law on preventing and sanctioning all forms of discrimination has been amended to meet EU standards related to the independence of the National Council for Combating Discrimination. The administrative capacity of the National Agency for Roma has improved as regional offices are being developed. The Agency has also begun implementing community development projects which could make a significant and long lasting contribution to improving the situation of Roma.
However, certain concerns persist.

Implementation is slow. Social inclusion of the Roma minority remains a structural problem. Overall living conditions are still inadequate. Employment measures should be further developed and implemented. Adequate resources for Roma strategies and policies are not always ensured, especially at the local level. The Romanian authorities do not yet demonstrate at all levels that a zero-tolerance policy on racism against Roma is applied.

There are still cases of institutional violence against and assaulting of Roma, such as police raids and evictions in Roma communities, without providing them with alternative accommodation. Generally, the level of awareness of the Roma situation and of the government strategy for Roma, especially in the local communities which are responsible for the evictions, is low. Local authorities should be supported to develop community development projects and bring solutions to the problems of legality of Roma settlements or others. The institutional framework for the implementation of the national strategy for Roma is not yet sufficiently effective and it tends to diminish the capacity decision-making capacity of the National Agency for Roma and representatives of the Roma population to participate effectively in decision-making in relevant areas. Romania's preparations in this area should be stepped up immediately and continued after accession.

2.2 Economic criteria

Macroeconomic stability and policy mix

The May 2006 Report reconfirmed it is a functioning market economy and concluded that more appropriate fiscal, monetary and wage policies had been adopted. Since that report, there has been progress in the following areas: The general government budget exhibited a surplus of 1.5% of GDP for the first six months of 2006. The disinflation process continued. The central bank tightened minimum reserve requirements and moderately increased the policy interest rate in view of inflationary pressures and risks. Real wage growth was largely covered by productivity growth.

However, certain concerns persist.

Fiscal policy was considerably relaxed as the deficit target for 2006 of originally 0.5% of GDP was revised upwards to 0.9% in April and to 2.5% in June. Budgeted expenditures were increased by nearly 3.5% of GDP, of which 0.4% of GDP is for higher public wages. This pro-cyclical policy deviates from the medium-term fiscal policy earlier presented by Romania. It creates a higher risk of exceeding the 3% of GDP reference value for the budget deficit in the future. Inflation developments give little assurance that the target for 2006 will be met. The looser fiscal policy and surging credit growth worsen prospects for reaching next year's inflation target.

Expenditure reform and tax compliance

The May 2006 Report concluded that public expenditure reform and tax compliance had to be advanced and tax revenue should be strengthened. Since that report, there has been progress in the following areas: the collection of income tax as well as VAT revenues; amendments to the fiscal code broadened the tax base and improved the structure of tax rates.

However, certain concerns persist.

The relaxation of the expenditure policy was not accompanied by steps to improve the prioritisation of government expenditure and the capacity to implement large public investment projects. Only around half of the additional spending was earmarked for investment. Public sector wages, subsidies and the government's purchases of goods and services increased by 1.1% of GDP. Pension reform remains to be fully adopted by the Parliament. Further improvements in tax collection and compliance remain necessary to improve fiscal sustainability.

Privatisation and industrial restructuring

The May 2006 Report concluded reconfirmed it is a functioning market economy that deepening of structural reforms notably required the continued restructuring of the energy, mining and transport sectors and progress in implementing the privatisation programme. Since that report, there has been some progress. The total number of companies with a state share fell slightly. Four majority state-owned companies in the portfolio of the privatisation agency (AVAS) were privatised or went into liquidation. The adjustment of energy prices in line with cost developments continued. Mine closures and adjustment of employment continued under the mining restructuring programme.

However, certain concerns persist.

Privatisation achievements continued to fall short of government targets and the process was generally slow across the banking, energy and defence sectors. There are still instances of State-owned companies (Tractorul Brasov is a case in point) where continued assistance from the State is preferred to liquidation. The target of divesting five large industrial companies before the end of March 2006 has still not been met. In order to strengthen competition within the internal market, the gap between international and domestic producers' gas prices should be narrowed.

Business environment

The May 2006 report concluded that new payment arrears were still accumulating and that the bankruptcy framework still suffered from shortcomings. Since that report, there has been some progress: The total amount of tax arrears fell and new arrears accumulated more slowly. Large tax debtors were increasingly faced with bankruptcy or forced execution procedures. Bill collection rates in the energy sector slightly improved. A high number of new insolvency cases were registered, the number of solved cases rose and more cases were solved quickly. Large tax debtors were increasingly faced with bankruptcy or forced execution procedures. Bill collection rates in the energy sector slightly increased.
However, certain concerns persist.

Total and new tax arrears remain substantial, incurred in particular by state-owned companies. The government resumed its practice of large debt cancellations by deciding to erase debts of more than 1 % of GDP of a main energy supplier without presenting convincing restructuring measures. Unpaid bills remain endemic in the energy sector. In order to create a level playing field for business, financial discipline should be strengthened and further progress in the functioning of the judiciary is required.

2.3 Acquis criteria

This section assesses developments in the acquis areas which 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, Romania is now on track.
- Secondly the areas where further improvement is needed and where Romania's
preparations should continue.

2.3.1 Areas in which preparations are now on track

Chapter 1 Free movement of goods

Progress has been made in the field of horizontal and procedural measures, in
particular as regards the administrative capacity in the accreditation sector. The statute of the Romanian accreditation body has been improved, staff recruitment and training have been carried out and documentation has been prepared or finalised to regain the status as a signatory of the Multilateral Agreement on Cooperation for Accreditation for quality management systems and product certification bodies. Overall, Romania has made satisfactory progress in the above-mentioned area of free movement of goods.

Chapter 2 Free movement of persons

Romania has made good progress through adoption by the Parliament of legislation aiming at transposing the acquis on the citizens' rights Union's citizens and their family members to move and reside freely within the territory of the Member States and through amendment of legislation in order to ensure that non-Romanian EU nationals receive the same treatment as the Romanian nationals on access to education and education fees. The acquis on electoral rights has not yet been transposed, Romania's preparations in this area should continue in the remaining months.

Chapter 3 Freedom to provide services

Good progress has been made with identifying barriers to the right of establishment and the freedom to provide services and removing incompatibilities with the EC Treaty. Romania has now a legal framework in place which allows the provision of services in a temporary manner by persons of the European Community and the European Economic Area without the need to obtain further licences.

Chapter 6 Competition policy

Romania has continued to make good progress in the area of state aid enforcement. The quality and independence of the Competition Council's assessment of state aid measures and their analysis remains satisfactory. Romania advanced in establishing state aid discipline to an extent that public authorities and industry are now aware of their respective rights and obligations, even if the behaviour of state aid grantors (particularly the Ministry of Public Finance) needs to be improved. State aids in the form of tax exemptions to the National Lottery constitute a case in point. Efforts need to continue to conclude the assessment of aid measures in favour of major companies in need of restructuring.

As regards state aid to the steel industry, the Romanian authorities cooperated closely with the Commission on the implementation of the National steel restructuring programme. Romania continued to observe its commitments not to authorise any aid to steel plants in the National restructuring programme.

However, strengthened efforts are needed to ensure steel companies' return to long-term viability at the end of the restructuring period. Restructuring aid granted to steel companies outside the National Restructuring Programme has been recovered.

Chapter 7 Agriculture

In most areas, progress has been made. The administrative capacity (staff and subsequent training) of most of the common market organisations has been reinforced. A number of manuals of procedures have been prepared or finalised. In the specific sectors, the main progress to mention are: the formal approval of 128 intervention centres for cereals; the formal approval of 288 milk purchasers, the establishment by Government of the methodology for individual milk quota allocation and the national reserve set up; in the meat sector the legal framework for carcass classification was completed and the pig carcass classification system started to operate. The vineyard register is now designed to be compatible with the Integrated Administration and Control System (IACS).

On veterinary issues, the National Agency for Amelioration and Reproduction in zootechnics is now operational. As regards veterinary control system in the internal market, the system of identification of animals and registration of their movements had been set up. The bovine database is operational. However, the management of the database must be substantially improved which implies the reinforcement of the administrative capacity of the veterinary authorities. Construction works for the eight border inspections posts (BIPs) are well advanced. Staff is being trained. According to the Romanian time schedules, all BIPs should be operational in October 2006.

Chapter 8 Fisheries

Romania has made good progress in the chapter of fisheries through the adoption of an emergency ordinance clarifying the management of the structural funds. The National Company for Fisheries Resources Management will subsequently not be anymore considered as an intermediate body for implementing EU funds. Preparations for the national strategic programme and the operational programme are well advanced. The overall administrative capacity of the National Agency for Fisheries and Aquaculture has been strengthened.

Chapter 10 Taxation

In the field of direct taxation, Romania has largely completed the transposition of the Directives concerning indirect taxes on the raising of capital, mergers, parent-subsidiary, interest and royalties and savings. However, several aspects need to be corrected before accession. The Fiscal Code has also completed alignment in the field of administrative cooperation and mutual assistance Romania has also abolished all duty-free shops at all its land borders. Provided that the amendments are adopted, Romania will therefore be ready for accession in this area.

Progress has been made with regard to indirect taxation. The new Fiscal Code completes alignment in this field, by transposing the provisions related to intra-community movements for all the harmonised product categories and the Energy Directive. Romania has also reached the minimum levels of duties for energy products (except for leaded petrol and heavy fuel oil), alcoholic products and tobacco products and has introduced the reduced excise duty rate (50%) for small fruit growers' personal consumption. In the field of VAT, the new Fiscal Code, which will enter into force on 1 January 2007, eliminates the remaining discrepancies with the acquis and introduces the intra-Community regime. However, the Fiscal Code has introduced legislation on car taxation which is incompatible with the EC Treaty and the Jurisprudence of the European Court of Justice.

Chapter 18 Education and Training

As regards the Community programmes it has been decided to delegate the management of the future Youth in action programme to a joint National Agency for Lifelong Learning and Youth in Action programmes. This should be followed by appropriate action to ensure the merging takes place in good conditions. A tripartite protocol is envisaged between the Ministry of Education and Research, the National Youth Authority and the National Agency to ensure coordination and monitoring, and guarantee the transparent and correct use of funds.

Chapter 21 Regional policy

Good progress has been made regarding the institutional structures (administrative capacity). Romania has largely fulfilled the recruitment and training plans. Formalising the delegation of tasks from managing authorities to intermediate bodies has started. Some action has been taken on coordination procedures. Project pipeline preparation has advanced well for most of the sectors.

Good progress was also made with regard to monitoring and evaluation as the setting up the Single Management Information System has progressed according to schedule. Evaluation capacity has been further developed through setting up evaluation units, drafting evaluation strategy, training and raising awareness.

Nevertheless, efforts at capacity building at all levels will need to be reinforced to ensure the full absorption of EU funds while respecting the acquis. Project selection procedures and implementation, in particular, will need close attention to ensure that problems evident with the pre-accession funds are not continued.

Chapter 22 Environment

Good progress can be noted as regards administrative capacity in general. Staff recruitment and training have been carried out. The division of responsibilities between different levels of the environment administration has been improved. However, the advisory role of the Ministry and the National Environmental Agency towards regional and local agencies remains to be strengthened. The remaining job vacancies be filled in before accession and training needs to be continued in order to ensure appropriate quantity and quality of staff.

In the field of horizontal legislation, legislative alignment is completed as re gards public participation and access to justice and implementation must proceed without delay.

In the field of waste management, full transposition has been reached. The administrative capacity has been strengthened and particularly the regional level is now better equipped to deal with the implementation of the waste acquis. Drafts of Regional waste management plans have been finalised. Other important preparatory steps have been taken to implement the directives on landfills, packaging waste and waste from electrical and electronic equipment. However, guidance and advisory functions from the national level should be improved.

Concerning water quality, legal transposition has been completed. The monitoring of water quality has been established according to the parameters and frequencies as defined by the acquis. Other important implementation steps have been taken including the identification of catchments areas for drinking water and a new inventory for establishment of collection systems and waste water treatment. Investments in the water infrastructure have continued and a new financial strategy has been elaborated.

In the field of industrial pollution, good progress can be noted in the permitting process subject to the Integrated Pollution Prevention and Control (IPPC) directive. As of 31 August 2006, 549 applications out of the total of now 607, which require a permit, have been submitted with 272 permits issued. The water licensing process has been harmonised with the IPPC permitting procedures so that there is no longer a risk of delays in this process. However, it remains important that the outstanding permits are issued in time without reducing the quality.

Chapter 24 Co-operation in the field of justice and home affairs

Progress has also been made in police co-operation and the fight against organised

crime. More than 1,000 new staff has been recruited by the national police, the majority of whom will be deployed in frontline public order roles. New patrol cars have been purchased to increase the ability of the police to cover remote rural areas. The capacity to fight organised crime has also been enhanced as additional IT equipment and software have been deployed. The forensic laboratory has received new equipment to perform DNA analysis.

In the fight against drugs, staffing levels within the National Anti-Drugs Agency have increased to over 95% of the Romanian target and 7 counselling centres across the country were refurbished. Since May until 26 June approximately 20kg of drugs were seized including almost 2kg of heroin and over 1800 ecstasy pills. In addition, over 63kg and 440 litres of precursor chemicals used in drug production were seized.

In the area of judicial co-operation in civil and criminal matters, online guides for judges and prosecutors have been published that describe the procedures to be followed after accession. Preparations continue for Romania's integration in the European Judicial Networks and the relevant training institutes have conducted training in this area.

Chapter 28 Financial control

Romania has adopted an overall strategy for the development of public internal financial control in accordance with international standards and EU best practice. Its implementation is advancing and in compliance with the acquis. Preventive financial control is being progressively integrated into the sphere of managerial responsibility.

As far as control over structural action expenditure is concerned, the Agencies for implementing pre-accession ISPA funds are fully operational and the Extended Decentralised Information System (EDIS) accreditation of the entire ISPA system in Romania has been granted. This is proof that Romania has arrived at a satisfactory control over structural action expenditure. However, for the Phare pre-accession funds the finalised EDIS audit still requires further action from Romania in order for the accreditation to be granted before the end of the year.

2.3.2. Areas in which further progress is still needed

Chapter 1 Free movement of goods

Some positive developments can be reported in the field of old approach legislation as regards the control of cultivation, production and marketing of GMOs. Romania has completed the transposition of the food safety legislation. The regulatory framework necessary to set up a system of registration and control of GMO crops is in place including a ban on cultivation of GM soya as of accession.

However, certain concerns persist. The enforcement of the legal framework needs significant improvement. In particular, preparations for a well-defined control system have to be stepped up in order to ensure that the entire genetically modified (GM) soybean harvest in 2006 is accounted for, sent to processing factories and labelled and traced according to EC requirements. Romania does not yet ensure that GM seeds stored at farms are under full control and will not be used for cultivation after accession. Laboratories for food and feed and for seed quality are not yet fully operational. The Romanian authorities need to ensure a practical and efficient implementation of the GMO action plan, which was elaborated in June 2006.

Chapter 3 Freedom to provide services

Romania has made efforts in the banking sector to transpose the new capital requirement rules for credit institutions and investment firms into its national legislation. However, the extracts of the draft legislation provided by the Romanian authorities still do not allow the Commission's services to ascertain whether Romania would correctly and completely transpose the new capital requirements for credit institutions and investment firms.

As regards the insurance sector, increased efforts have been noted in the field of motor insurance both in terms of reducing the number of uninsured vehicles and the strengthening of administrative capacity.

The institutions required by the Motor Insurance Directives are now operational. The Street Victims Fund is responsible for managing the Information Centre, the Guarantee Fund and the Compensation Body. A reinsurance scheme for the Street Victims Fund is in the process of being concluded. Furthermore, the Green Card Bureau is now financially independent. The main challenge for Romania 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 before accession in order to allow the Romanian 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 Romanian vehicles will still be required after the accession date and that compensation of victims of road accidents by compensation bodies will not or only partly be provided as foreseen by Article 6 of that Directive.

Chapter 4 Free movement of capital

In the area of fighting money laundering, some progress has been made. The National Office for preventing and combating money laundering has issued regulations to address shortcomings linked to preventing and combating money laundering and terrorism financing, know-your-customer standards and internal control for non-financial reporting entities that are not subject to the prudential supervision of the existing supervisory authorities.

However, further efforts are still required to arrive at a more satisfactory level of enforcement and implementation of the legal framework, particularly in respect of the awareness of reporting entities outside the financial sector and supervision of these reporting entities. There remains a need for additional staff in the National Office for the Prevention and Control of Money Laundering, especially financial analysts, to increase the National Office's operational capacity. Efforts from all law enforcement agencies, the Financial Intelligence Unit and the court system are required to improve the enforcement of anti-money laundering and terrorist financing legislation.

Chapter 5 Company law

While Romania made general progress in the field of intellectual and industrial property rights (IPR), further efforts are still required in the area of copyrights. Implementing measures concerning biotechnological inventions have been notified. Preparations for the setting up of the necessary infrastructure for processing Supplementary Protection Certificate applications are underway. Furthermore, the Romanian authorities provided clarification with regard to collecting societies. Concerning enforcement, the Romanian authorities have stepped up their efforts to reduce intellectual property-related crime and to improve cooperation between institutions and with the private sector. However, the Copyright Act is not yet fully in line with the acquis as regards the exclusion of certain TV programmes from the obligation to pay royalties and an overall limitation on payment of neighbouring rights.

Chapter 7 Agriculture

The Paying and Intervention Agency has taken over the responsibility for trade mechanisms and an inter-institutional cooperation protocol was signed between the agency and the National Customs Authority for the management of import/export certificates. Cooperation with the National Sanitary Veterinary and Food Safety Authority has improved. Manuals of procedures have been prepared. However, the necessary legislation in the field of trade mechanisms is not yet available. There is a risk that the relevant staff will not be fully operational in this area upon accession.

No development can be reported as regards quality policy where inspection services need to be strengthened. While the control system for animal nutrition is in place, it is not yet sufficiently implemented. In the area of veterinary public health, particular attention should be devoted to complete the set up to treat non-compliant raw milk upon accession. As regards trade in live animals and animal products and animal disease control, Romania has submitted a global plan for monitoring, control and eradication of classical swine fever. However the overall monitoring and control capacities of the veterinary services should be considerably strengthened.

Chapter 10 Taxation

In the area of administrative capacity, some progress has been made. A number of actions (legislative and operational) are underway to improve the tax collection rate. The tax collection rate, while remaining at low levels, has shown improvements in excess of what could be explained only by cyclical conditions.

However, certain concerns persist.

The operational capacity of the National Agency for Fiscal Administration, whilst increasing slowly, is still in need of significant improvement. Its collection and control capacity remains weak, and whilst the tax collection rate as a percentage of GDP has improved slightly; the actual results of the recent actions are mixed. For instance, much of the increase in VAT collection can be attributed to a higher collection rates at import.

Romania needs to sustain and further its efforts to ensure an adequate level of tax compliance and collection, in order to improve the administrative capacity of its tax administration if it is to complete preparation in this area.

Chapter 13 Social policy and employment

There has been some progress on the legislative front, in particular as regards health and safety at work. However, legal alignment still needs to be completed swiftly in the areas of labour law and equal treatment of women and men. Particular attention needs to be paid to completing transposition in the field of public health, such as communicable diseases, tobacco advertising and blood and tissues. Efforts need to be maintained to achieve full implementation and enforcement of the legislation and to further strengthen the administrative capacity in these areas.

Although representativity of the Economic and Social Council has been improved through an increase of the number of its members, efforts need to continue in view of improving social dialogue in general, particularly in order to promote the weak bipartite dialogue, clarify representativity criteria and solve the outstanding issues of fragmentation and insufficient capacity of social partner organisations. Further efforts are also necessary to improve the health status of the population and access to health and health care, especially at regional level and among poorer socio-economic groups and minorities.

Although considerable progress has been made in the preparations for the European Social Fund, they need to be accelerated, mainly by increasing administrative capacity and the project pipeline preparation.

In the area of social inclusion, efforts need to continue to improve the situation of vulnerable groups, such as the Roma, and promote their full integration into society.

Chapter 15 Industrial policy

Little progress was made with the regard to privatisation and restructuring. Romania's preparations in this area should continue in the remaining months. (See also the economic section)

Chapter 20 Culture and Audiovisual policy

In the area of audiovisual policy, the recently adopted amendments to the Law on cinematography fail to guarantee an effective application of the principle of non-discrimination on grounds of nationality. Swift action is now needed to ensure that the principle of non-discrimination on grounds of nationality is truly incorporated into the Law on cinematography before accession, thereby fully aligning this legislation with the acquis. Romania's preparations in this area should continue in the remaining months.

Chapter 21 Regional policy

The definition of payment and certification circuits is in process on financial management and control.
However, certain concerns persist.

The procedures remain to be tested under the coordination of the certifying authority. Co-financing mechanisms are still to be streamlined within the operational programmes in order to clarify the burden for final beneficiaries. Romania has not yet put the established ex-ante control system for public procurement in operation. Needs for specialised training (financial management, public procurement, project appraisal etc) remain be addressed.

Chapter 22 Environment

Concerning nature protection, preparations for the Natura 2000 network have been stepped up. However, certain concerns persist. The tight time schedule for the final steps of the compilation of the national list of Natura 2000 sites including the public consultation process represents a major challenge. Sufficient administrative capacity to manage this process needs to be established without delay.

Chapter 24 Justice and home affairs

As regards the Schengen acquis and the management of the future EU external border, some progress has been made. The Schengen Action Plan was updated in May 2006 and continues to be implemented on schedule. In June Romania's Border Police attained full staffing along the future EU external border. The Government also approved a plan to implement Romania's national Schengen Information System in June. Tenders were launched for the Black Sea radar surveillance system as well as parts of the mobile communication system to be used in the integrated border management system. In August Romania signed an agreement on the state border regime with Bulgaria that covered co-operation and mutual assistance on border control issues.

However, certain issues persist.

The threat at the Romanian borders from trafficking in human beings, illegal migration and smuggling remains high. Ongoing efforts will be required to make the integrated border management system fully operational by 2009 as planned. Training needs to be provided to all the recently-recruited border guards to ensure they can provide a high level of control at the border and some additional staff are still needed within the Border Police.

Concerning the implementation of the fight against money laundering, certain issues remain to be addressed (See chapter 4).
In the area of the fight against fraud and corruption, there have been seven further indictments for high-level corruption (see political criterion).

However certain concerns persist.

There is a lack of clear information at the borders in certain key languages (notably Turkish) and fines imposed on truck drivers do not always have a clear legal basis so the amount actually requested can in practice vary considerably. Criminal trials, convictions and dissuasive sentences for those found guilty are needed to ensure the irreversibility of the fight against corruption.

Chapter 28 Financial control

Certain concerns persist as regards the following areas of this chapter.

Further efforts are still required to ensure implementation of Romania's strategy for public internal financial control. In the domain of external audit, a new organic law for the Court of Accounts, in conformity with Romania's 2003 constitutional amendments (and making a reference to the sound financial independence of the Court), has still not been adopted yet. The Court, as a supreme audit institution, needs to be further strengthened, making sure that the institution's structure, leadership and activity are not politically influenced. The current situation does not ensure that the Court can exercise its audit functions in full independence, neutrality and at the highest professional standards.

3. TRANSLATION OF THE ACQUIS INTO ROMANIAN

Romania has yet to translate about 8 % of the acquis (around 7 000 pages) and to revise about 12 % (around 11 500 pages). Taken together with the situation at other stages of production (proofreading, correction, finalisation by the institutions' legal revisers) this means that some 47 % of the total number of pages (that is, about 44 000 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. Romania is invited to step up its efforts towards achieving this goal.