European Commission: Strategy Paper and Report 2003

Malta

The Commission has repeatedly concluded that Malta fulfils the political criteria. This was the conclusion of previous Regular Reports, and has been confirmed over the past year. Malta continues to fulfil the Copenhagen political criteria.

Malta has taken further measures to improve the quality of the civil service as well as of the judicial system.

Malta continues to respect human rights and freedoms. It has made further progress by improving its legal framework in the area of asylum, the fight against racism and the fight against trafficking in human beings.

Malta is a functioning market economy and it should be able to cope with competitive pressure and market forces within the Union.

The 1999 update of the Opinion already acknowledged the economic reform efforts undertaken by the Maltese authorities to prepare for EU accession. Since the Opinion, the Maltese authorities' commitment to the economic requirements of EU accession has been sustained.

Further improvements can be made to macroeconomic management by reducing the general government deficit and reforming public expenditure to ensure medium-term fiscal sustainability. More progress can be made on restructuring large loss-making public enterprises and public utilities. Attention should be paid to the supervision of non-performing loans in the banking sector.

Since the update of the Opinion in 1999, Malta has made considerable progress in aligning its legislation with the acquis and it has significantly improved its administrative capacity, particularly as regards free movement of goods, statistics, telecommunication, regional policy, justice and home affairs, and financial control. There has been progress, although uneven, in all other areas of the acquis.

Over the past year, Malta has made considerable legislative progress in the areas of freedom to provide services, environment and customs and further progress in other areas, particularly regarding free movement of goods, free movement of persons and statistics. It has continued to improve its administrative capacity, notably in the areas of standardisation and market surveillance, statistics, regional policy, justice and home affairs, customs and financial control. However, progress has been limited in the areas of agriculture, fisheries, transport and social policy.

Overall Malta has achieved a good degree of alignment with the acquis in many areas and is well advanced towards adequate administrative capacity to implement the acquis in many fields, although further efforts remain to be made, in particular as regards agriculture and environment. Detailed plans have been agreed, in particular in the negotiations and the Action Plans, to cover the remaining gaps.

In the field of the internal market, there has been considerable legislative progress on free movement of goods, and Malta has reached a high level of alignment with the acquis in this area. Malta must finalise the alignment of its public procurement legislation as regards the remedies system and bodies governed by public law. Its administrative capacity is broadly adequate in this area. As regards free movement of persons, there has been progress in adopting a legislative framework for the mutual recognition of professional qualifications, but alignment is still incomplete in the fields of citizens' rights and free movement of workers. Malta has continued to progress on free movement of services and capital, particularly as regards financial services and data protection, however further legislative alignment is needed in particular as regards the right of establishment and freedom to provide services. In the area of company law, there has been little progress over the past year and Malta still needs to transpose some directives on intellectual and industrial property rights in order to align fully with the acquis. As regards competition, Malta has made further progress in the enforcement of the State aid rules, but it still needs to adopt an appropriate framework for public undertakings. The compatibility of the aid granted to the shipyards needs to be ensured. The administrative capacity of the Competition Board and of the State Aid Monitoring Authority should reach a satisfactory level, provided efforts to strengthen them are continued.

In the field of taxation, Malta has achieved a high level of alignment as regards excise tax, but further alignment is needed as concerns VAT (scope of exempt transactions) and the code of conduct on direct taxation. The administrative capacity is on track to reach an adequate level as regards VAT and direct tax, but urgent efforts are needed as regards excise tax. In the area of customs, following the adoption of a new customs code, the Maltese customs legislation is now largely in line with the acquis, and the administrative capacity is on track to fulfil the requirements in this area.

As regards transport, there has been little progress over the past year, and that mainly in the field of maritime transport. Malta still has to transpose considerable parts of the acquis. Following the implementation of the Maritime Action Plan by Malta, there has been an improvement regarding maritime safety but the administrative capacity needs to be further strengthened and efforts on maritime safety need to be pursued to achieve the objective of being removed from the Paris Memorandum of Understanding black list. The Maritime Action Plan has introduced some improvements in this area. Ongoing efforts must be pursued. In the field of energy, Malta progressed in transposing the acquis, in particular as regards energy efficiency. Recent progress, in particular on the internal energy market, needs to be sustained to align Maltese legislation in this area to the acquis. Administrative capacity needs to be further strengthened.

In the area of agriculture, there has been some legislative progress, but little progress as regards the administrative capacity. Malta has still to adopt considerable parts of the agriculture acquis. The capacity to enforce the acquis remains a source of particular concern in the area of agriculture and it should be strengthened as a matter of priority. In particular Malta must improve its administrative capacity to implement the Common Agricultural Policy and the EC rural development schemes and has to upgrade inspection arrangements in the veterinary and phytosanitary fields, as well as the border inspection arrangements. Steps have been taken for the setting up of the Integrated Administrative Control System and the Paying Agency, and funds have been committed to further strengthen the administrative capacity regarding rural development. However, a comprehensive plan to strengthen the administrative capacity in this area is still lacking. Ongoing efforts to reinforce administrative capacity and to continue the dismantling of levies should be vigorously pursued. As regards fisheries, Malta also needs to finalise the alignment of its legislation with the acquis and to implement fully its plans for substantial strengthening of its administrative capacity. Current plans to strengthen the fisheries department are steps in the right direction. Substantial further efforts are still required in this regard.

Malta has made some progress in the area of social policy, mainly as regards occupational health and safety. The alignment with the acquis is insufficient in the fields of labour law and equal opportunities. Malta is on track to achieve adequate implementation capacity for occupational health and safety, provided the current efforts are pursued, but a strengthening of the capacity regarding public health is needed. There has been continued progress in the area of regional policy, where the overall framework is in place to implement the structural and cohesion funds, however Malta still needs to finalise its Single Programming Document. As regards the administrative capacity, some bodies involved in implementation need to be further strengthened. As regards the environment, there has been considerable legislative progress but Malta needs to stick to its tight schedule of alignment with the acquis. It should also significantly strengthen its administrative capacity in the field of environment, which remains very weak. It is crucial, to that purpose, that Malta implements its plan to increase the staffing of the competent bodies in this area considerably (mainly the Malta Environment and Planning Authority) and to reinforce its permitting and inspection practices. These plans need to be adhered to strictly.

Malta has reached a good level of alignment with the acquis in the field of telecommunications, although further alignment is still needed, and in culture and audio-visual policy, and its administrative capacity in these areas is broadly adequate.

In the field of justice and home affairs, there has been progress, in particular as regards the acquis on asylum, data protection, visa policy and money laundering, as well as with the adoption of a Schengen Action Plan and strengthening of the administrative capacity in the areas of border control and asylum. Malta has achieved a good level of alignment with the acquis but further progress is needed as regards immigration and judicial co-operation. The administrative capacity in this area is generally adequate, but the current plans to strengthen it in the fields of data protection, money laundering, asylum and border control need to be fully implemented.

In the field of financial control, the regulatory framework and the institutional capacity are broadly satisfactory and efforts need only focus on the finalisation of the arrangements regarding fight against fraud and protection of EC financial interests. In the statistics area, the administrative capacity is broadly adequate and Malta well on track to fully align its methodologies with EC standards, provided the current efforts continue.

Overall, provided Malta implements its plans to strengthen its administrative capacity as mentioned above, it should be able to ensure a reliable enforcement of the acquis and to participate adequately in the Union's policy-making processes. Malta's capacity to ensure sound, efficient and controllable management of EC funds is generally good and should be fully adequate once it has finalised its plans regarding the body in charge of fight against fraud and protection of EC financial interests.

In the accession negotiations, 25 chapters have been provisionally closed. Malta is generally meeting the commitments it has made in the negotiations. However delays have occurred in the areas of free movement of persons (citizens' rights and free movement of workers), fisheries (vessel monitoring, market policy), agriculture (establishment of the Paying Agency), transport (road and maritime transport) and social policy (labour law and gender equality). These issues need to be addressed.

Bearing in mind the progress achieved since the 1999 update of the Opinion, the level of alignment and administrative capacity that Malta has achieved at this point in time, and its track record in implementing the commitments it has made in the negotiations, the Commission considers that Malta will be able to assume the obligations of membership in accordance with the envisaged timeframe. In the period leading up to accession, Malta needs to continue its preparations, in line with the commitments it has made in the accession negotiations.

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