European Commission: Strategy Paper and Report 2003

Slovakia

Whereas the 1997 Opinion and the 1998 Regular Report concluded that Slovakia did not fulfil the political criteria, the 1999 Regular Report came, for the first time, to a positive evaluation in this respect. Since that time, the country has made considerable progress in further consolidating and deepening the stability of its institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities. This has been confirmed over the past year. Slovakia continues to fulfil the Copenhagen criteria.

Progress was achieved with regard to the structure and functioning of the administration, notably by setting up a Civil Service Office and building up decentralised, regional administrations. Delays have occurred in implementing the Civil Service Law. The proper functioning of the self-administration may be hampered, as the transfer of competencies from state to regional level is not going hand in hand with fiscal decentralisation.

Further important steps were taken to strengthen the independence of the judiciary. In particular, further key legislation was adopted and a Judicial Council was set up. The new legislation and institutions should be used to the full, so as to guarantee the judiciary's professional impartiality and political neutrality.

Some progress can be noticed in the fight against corruption, which remains a cause for serious concern, notably by further implementing the relevant action plans and drawing codes of ethics for the public sector. These efforts must be continued.

Slovakia continues to respect human rights and freedoms.

In particular, legislation and administration was reinforced to fight trafficking in human beings. A new Asylum Act was adopted, providing, inter alia, for the establishment of an independent body to act as the second instance in the asylum procedure.

Considerable efforts were made in further developing and putting into practice approaches to protect minority rights. In particular, the Office of the Government Plenipotentiary for Roma affairs was strengthened and the relevant strategy enhanced and financial means increased. These efforts must be continued and reinforced as a matter of priority, to effectively combat discrimination and improve the living conditions of the Roma community. The adoption of comprehensive anti-discrimination legislation would be an important step forward in this regard.

The 1997 Opinion already acknowledged the reform efforts undertaken by the Slovak authorities to transform their economy. Since the Opinion, and against a challenging international economic environment, economic performance has improved.

Macroeconomic stability has been achieved, reforms have accelerated while the Slovak authorities' commitment to the economic requirements of EU accession has been sustained.

Hence, it is concluded that the Slovak Republic is a functioning market economy. The continuation of its current reform path should enable the Slovak Republic to cope with competitive pressure and market forces within the Union.

Improvements can be made to the macroeconomic situation, which requires urgent measures to reduce both the fiscal and current account deficits. Expenditure reforms, in particular in the health and pension area and as regards subsidies and guarantees, are essential. The unemployment problem necessitates a whole range of structural reforms, including the elimination of disincentive effects in the social protection system and a more flexible labour legislation. Supervision of the financial sector can be further strengthened. The effective implementation of the legal framework for a market economy needs to be further enhanced.

Since the Opinion, Slovakia has made very good progress in legislative alignment and, increasingly, in strengthening administrative capacity. Structural weaknesses, which persist in a number of areas like company law, transport policy, environment and financial control, have been continuously remedied to a large extent.

Over the past year, Slovakia has further advanced in aligning with the acquis and strengthening its administrative capacity. Particular progress has been achieved in the areas of free movement of goods, freedom to provide services, agriculture, transport, energy, environment, and justice and home affairs. Sectors, in which only limited progress was made in the reporting period include regional policy and co-ordination of structural instruments.

Overall, Slovakia has achieved a high degree of alignment with the acquis in many areas and is reasonably well advanced towards reaching adequate administrative capacity to implement the acquis in a considerable number of fields, although further efforts remain to be made. Detailed plans have been agreed, in particular in the negotiations and in the Action Plan, to cover the remaining gaps.

Concerning the internal market, Slovakia has achieved a good degree of alignment and is relatively well advanced in having appropriate administrative capacities in place. As regards free movement of goods, alignment is largely complete and administrative capacity broadly in place. Slovakia's standardisation and accreditation bodies function well. The focus needs to be put on the outstanding transposition of the foodstuffs acquis and the strengthening of the related administrative structures. In particular, an appropriate market surveillance infrastructure still needs to be fully set up and structures for public procurement need to be reinforced. In the area of freedom of movement of persons, where preparations are generally well advanced, legislation for the mutual recognition of qualification, in particular, must be completed and the administrative capacities for the future co-ordination of the social security systems need to be reinforced. Concerning freedom to provide services, good progress has been achieved in the field of financial services over the past year. Despite an advanced level in this area, Slovakia needs to concentrate its efforts on completing alignment, notably in the insurance sector, and strengthening the administrative structures, in particular with respect to financial supervision. Alignment in the area of free movement of capital is well andvanced; Slovakia needs to focus, in particular, on reinforcing administrative capacities to fight money laundering.

As regards company law, Slovakia has reached a good level of alignment and is relatively well advanced in terms of administrative preparations. Over the past year, legislative progress can be particularly noted in the field of trademarks, design and patents. Administrative structures to combat piracy and counterfeiting need to be reinforced. Concerning competition policy, a good level of alignment has been achieved, and operational administrative structures put in place. Over the past year, a considerable track record of enforcement in the State aid area has been built up. However, in the steel sector, state aid granted in Slovakia is not compatible with Protocol 2 of the Europe Agreement. Administrative capacities in this field, as well as in the area of anti-trust, however, need to be further reinforced.

As regards agriculture, Slovakia is advanced in transposition and implementation of the acquis. Over the past year, in particular, good legislative alignment has been achieved in the phytosanitary and veterinary area. Administrative strengthening requires further attention. Efforts are required for the construction and proper functioning of the Border Inspection Posts and food processing establishments need to be upgraded. Serious efforts are needed to ensure that a fully functional Integrated Administration and Control System (IACS) is put in place. A timetable has been drawn up to remedy the identified shortcomings for the IACS.

Legislative alignment and administrative preparation in the area of energy are advanced. Overall administrative capacities need to be further strengthened. As regards nuclear energy, Slovakia has committed itself to close the two Bohunice V1 reactors by 2006 and 2008 respectively. Slovakia should refine its project pipeline to ensure satisfactory projects for the decommissioning of the two reactors. In transport policy, Slovakia has aligned with the acquis to a considerable extent and significant steps have been undertaken to strengthen the administrative capacities. Alignment, in particular in the area of rail transport and inland waterways, needs to be completed. Co-ordination between the different ministries and bodies involved in this sector has to be improved.

With respect to taxation, Slovakia has reached a good level of alignment and the reform of its tax administration is ongoing. Alignment both in the areas of direct and indirect taxation remains to be completed. Modernisation and strengthening of the tax administration needs to be reinforced as the general tax collection remains weak. Slovakia has a comprehensive and consistent reform agenda in place to address the identified shortcomings. As regards customs union, Slovakia has completed its legislative alignment and has, in principle, developed and reinforced the necessary administrative capacity. Attention should continue to be paid to the enforcement of the transposed legislation. Considerable efforts on IT systems to allow for the exchange of electronic data with the European Community and its Member States have been made in the taxation and customs areas, but these still require further work.

Alignment in the area of telecommunications and information technologies has reached a high level and administrative structures are being put in place, though completion of legislative alignment and further strengthening of administrative structures as well as proper separation of regulatory and operational functions are needed. The evaluation of the economic implications of full implementation of the universal service acquis is awaited.

In the field of social policy and employment, Slovakia is advanced in terms of legislative alignment. Administrative structures are mostly in place, but require further strengthening. There is a particular need to co-ordinate the supervision and enforcement of the transposed health and safety acquis. Administrative preparations for the future management of the European Social Fund need to be reinforced.

Slovakia has aligned with the acquis in the area of regional policy and co-ordination of structural instruments but effective administrative structures are only in place to a limited extent. Over the past year, the management structures and paying authority for the implementation of the Structural Funds and Cohesion Fund have been designated. A clear definition of the final implementation structure, however, is missing. There is a substantial need to reinforce the administrative capacities in this area. The technical preparation of projects eligible for Community funding has to be considerably improved. The remaining administrative weaknesses have been identified in the commitments made in the framework of the negotiations as well as in the Action Plan, and the necessary steps are being taken to remedy these shortcomings. Ongoing efforts need to be substantially stepped up.

Concerning the environment, Slovakia is advanced in alignment with the acquis and in having the necessary administrative capacity to implement it. Slovakia has recently increased its environmental investment significantly. Efforts need to focus now on finalising transposition, in particular in the area of Integrated Pollution Prevention and on implementation in the area of Control and Discharge of Dangerous Substances, as well as on strengthening administrative capacities. As regards consumer protection, legislative alignment and administrative strengthening is advanced but not yet completed.

With respect to co-operation in the fields of justice and home affairs, Slovakia is to a considerable extent aligned with the acquis and administrative structures are generally in place. Implementation of the Schengen Action Plan is progressing well. The focus needs now to shift to strengthening implementation of the transposed acquis and to further reinforcing administrative capacities, in particular in the areas of border control and the fight against illegal immigration and crime.

As regards financial control, Slovakia is advanced with regard to legislative alignment and the necessary institutional structures are being put in place. It needs to pay attention to strengthening and building up the necessary administrative capacity, notably in the area of public internal financial control. Concrete actions have been planned and are being implemented to remedy the identified shortcomings. Efforts should be stepped up.

Concerning the administrative capacity, Slovakia has largely achieved a sufficient, though still rather fragile, capacity to ensure effective implementation and enforcement of the acquis, notably in the area of the internal market and the various Community policies. Slovakia needs to ensure the full operation of the administrative structures, in particular with a view to guaranteeing the uniform and predictable implementation of the acquis. Particularly close attention is required regarding the structures necessary to implement that part of the acquis which will be applicable only upon accession, in particular as regards sound and efficient management of EC funds.

In the accession negotiations, 27 chapters have been provisionally closed. Slovakia is generally meeting the commitments it has made in the negotiations.

Bearing in mind the progress achieved since the Opinion, the level of alignment and administrative capacity that Slovakia 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 Slovakia will be able to assume the obligations of membership in accordance with the envisaged timeframe. In the period leading up to accession, Slovakia needs to continue its preparations, in line with the commitments it has made in the accession negotiations.

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