Commission Report (2002): Latvia

Introduction

This section addresses the question of Latvia`s ability to assume the obligations of membership -- that is, the legal and institutional framework, known as the acquis, by means of which the Union implements its objectives. Alongside an evaluation of relevant developments since the 2001 Regular Report, this section seeks to provide an overall assessment of Latvia`s ability to assume the obligations of membership, and of what remains to be done. Furthermore, it includes an evaluation of Latvia's track record since the 1997 Opinion. It also provides, for each of the negotiating chapters, a summary evaluation of the extent to which commitments made in the negotiations have been implemented, as well as an overview of transitional arrangements that have been granted.

This section is structured in accordance with the list of 29 negotiating chapters, and incorporates an assessment of Latvia`s administrative capacity to implement the acquis in its various aspects. Latvia's progress in translating the acquis into its official language is assessed in a separate section.

In December 1995, the Madrid European Council remarked on the need to create the conditions for the gradual, harmonious integration of the candidate countries, particularly through the adjustment of their administrative structures. Taking up this theme, in Agenda 2000 the Commission underlined the importance of effectively incorporating Community legislation into national legislation, and the even greater importance of implementing it properly in the field, via the appropriate administrative and judicial structures. This is an essential precondition for creating the mutual trust indispensable for future membership.

In June 2002, the Seville European Council repeated how important it was that candidate countries should continue to make progress with the implementation and effective application of the acquis, and added that candidate countries must take all necessary measures to bring their administrative and judicial capacity up to the required level. Building on the assessment of Latvia`s administrative capacity provided in the 2001 Regular Report, the present Report seeks to add further depth and detail, focusing on the main administrative structures required for implementing the various aspects of the acquis.

In its 1997 Opinion on Latvia's application for EU membership, the Commission concluded:

``Latvia has made some progress in transposing and implementing the acquis relating particularly to the single market. With considerable further effort it should become able to participate fully in the single market in the medium term. Particular efforts, including investment, will be needed to apply the acquis fully in sectors such as environment and agriculture. Strengthening of the administrative structure is indispensable if Latvia is to have the structures to apply and enforce the acquis effectively''.

In the 2001 Regular Report, the Commission found that:

``Latvia has kept up a steady pace in aligning its legislation with the acquis in most areas. The need to strengthen the administrative capacity to manage and enforce the acquis has been recognised, even though this process continues to represent considerable challenges. Efforts during the last year included both re-organisation of existing structures and the creation of several specialised bodies with a view to complying with the various requirements of the acquis.

Preparations for the Internal Market advanced further. As concerns movement of goods, the transposition of European standards accelerated, and the institutions for accreditation and standardisation have been further strengthened. The new Market Surveillance Council became operational, but the reform of the market surveillance system needs to continue. Further legislation was also adopted in the area of public procurement, but the Public Procurement Surveillance Bureau has not yet been created. In the area of free movement of persons, framework legislation on mutual recognition of professional qualifications was adopted. In the area of freedom to provide services, two new bodies, the Financial and Capital Market Commission and the Stata Data Inspectorate started to function, even though further improvements of the legislative basis of the latter will be necessary. Further legislation was also adopted concerning the movement of capital, in particular on security services and cross-border credit transfers. In the area of company law, the enforcement of legislation remains a matter of concern. Delays in the entry into force of the Commercial Code and the effective protection of intellectual and industrial property rights constitute a serious challenge. The adoption of legislation related to state aid represents an important step towards meeting requirements of competition policy; Latvia's enforcement record in this area has also developed but efforts to ensure the full implementation of anti-trust and state aids rules should continue. In the area of customs, progress was made in alignment and in upgrading the administrative structures, which were also strengthened for taxation. For both areas, the development of IT systems so as to allow for the exchange of electronic data with the Community and its member states needs to be carried forward.

Encouraging efforts were undertaken in the area of agriculture, in particular concerning veterinary and phytosanitary matters, as well as food safety. Achievements include the adoption of amendments to the Law on Agriculture, the adoption of an implementation plan for common market organisations, the entry into force of a new Law on Veterinary Medicine and the restructuring and strengthening of the administration. Important challenges still lie ahead, both in completing alignment and in introducing and upgrading the necessary structures and mechanisms, including the paying agency, the integrated administration and control system, common market organisations and inspection arrangements.

Alignment also continued for road and railways transport, and the ongoing efforts to improve maritime safety have shown some first results. A significant step in transposing the social policy and employment acquis was reached with the adoption of the Labour Code and the Law on Labour Protection. To ensure the proper implementation of legislation, the administrative capacity should be reinforced, in particular concerning occupational health and safety, including the further strengthening of the State Labour Inspectorate. Further alignment was achieved in the areas of energy and environment. For energy, this needs to continue with special emphasis on the electricity and gas directives, as well as oil stocks; for the area of environment, alignment needs to be completed as concerns access to environmental information, waste management and chemicals. Several specialised bodies were set up, including the Energy Inspectorate, the Radiation Safety Centre and the Latvian Environment Agency, and, but further efforts to upgrade the administrative structures are needed.

The transposition of most of the requirements for telecommunications is still pending. Considerable progress was made in aligning to the culture and audiovisual acquis. For justice and home affairs, progress could be noted on data protection, visas and border control, including also the adoption of a Schengen Action Plan. These efforts need to be maintained, and alignment in the areas of migration and asylum completed. Upgrading the capacity and infrastructure for border management also remains a priority. The fight against organised crime, drug trafficking, money laundering, fraud and corruption also needs to be reinforced.

As to regional policy and the co-ordination of structural instruments, the basic legislation remains to be adopted. Progress is also needed on programming, monitoring and evaluation capacities. The decision to entrust the Ministry of Finance with the future responsibility for Structural Funds represents an important step. Although further legislation on Public Internal Financial Control and external audit remains to be adopted, some advancements in this area could be noted, in particular as concerns the strengthening of the administrative structures; this process needs to continue.

Preparing its administration for EU membership remains one of the greatest challenges Latvia faces. With a view to the responsibilities Latvia will have to assume in managing and enforcing the acquis upon accession, a substantial portion of the necessary institutions and bodies have been re-structured or created. This process needs to continue, including the setting up of further new bodies and mechanisms, for example a Public Procurement Surveillance Bureau, agricultural market intervention mechanisms and the Guarantee Fund for the Protection of Employees in the Event of Insolvency of Their Employer. Furthermore, it will be vital to provide all institutions with sufficient resources to ensure the reliable implementation and enforcement of the acquis, for example, the new Public Services Regulation Commission, which will have important acquis-related regulatory responsibilities in the areas of railways, energy and telecommunications. Continued efforts will also be necessary to ensure sound, efficient and controllable management of EC funds.

Latvia has made progress on all the short-term Accession Partnership priorities. Achievements included for example the areas of free movement of goods, social policy and employment as well as environment, where the process is close to completion. All the medium-term priorities have been addressed, and progress is well underway for most of them. Major steps forward could be noted for the free movement of persons, audiovisual legislation and customs. However, work towards all priorities should continue, with particular attention on those areas where important legislation still needs to be adopted, such as energy, telecommunications, and economic and social cohesion, or the administrative structures strengthened, such as agriculture, fisheries and the control of EC funds''.

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