2012 Report

COMMISSION STAFF WORKING DOCUMENT SERBIA 2012 PROGRESS REPORT
accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Enlargement Strategy and Main Challenges 2012-2013 {COM(2012) 600}

1.3. Relations between the EU and Serbia

 The Stabilisation and Association Agreement was signed, along with the Interim Agreement on trade and trade-related matters, in April 2008. It provides a framework of mutual commitments on a wide range of political, trade and economic issues. The Interim Agreement entered into force on 1 February 2010. At the 14 June 2010 Foreign Affairs Council, Ministers agreed to submit the Stabilisation and Association Agreement to their parliaments for ratification. The process is close to completion, with ratification still pending in only one Member State.

Serbia has built a positive track record in implementing the obligations of the Stabilisation and Association Agreement and the Interim Agreement on trade and trade-related matters. An interim committee and a number of sub-committees meet annually, to discuss topics including the internal market, competition, transit traffic, trade, customs, taxation, agriculture and fisheries. In general terms, Serbia is meeting its SAA/IA commitments in these areas and cooperation is progressing well.

Anti-corruption policy (See also Chapter 23 – Judiciary and fundamental rights)
Internal checks by the customs administration and the police have continued to result in a sizeable number of cases being investigated and penalties imposed.

4.7. Chapter 7: Intellectual property law

Some progress was registered in the field of enforcement. The Intellectual Property Office (IPO) conducted a large number of training events for government enforcement agencies and organised promotional activities for stakeholders. No solution has yet been found to the issue of the long-term financial sustainability of the IPO. The Customs Administration of Serbia developed its IT capacity for use in IPR protection. The level of counterfeit goods that it has seized has gone up. The administrative fee for submitting a request for intellectual property rights enforcement has been revoked, leading to an increase in requests. In the course of 2011, the Tax Administration was involved in launching three registers (of producers, of distributors and of software) in collaboration with IPR holders, with a view to facilitating its work and its checks. The Market Inspectorate of the Ministry of Foreign and Domestic Trade and Telecommunications was given the use of twelve warehouses across Serbia for the storage of counterfeit and pirated goods. The number of goods that it confiscated in the first half of 2012 significantly increased with respect to 2011.

4.24. Chapter 24: Justice, freedom and security

Concerning customs cooperation (see also Chapter 29 – Customs Union), some progress was achieved. The Customs Administration of Serbia (CAS) concluded agreements on international cooperation with Azerbaijan, Belarus and Georgia. Implementation of the integrated border management strategy and action plan has continued. The CAS engaged in joint cases with all agencies from neighbouring countries and continues to take an active part in international activities concerning the fight against illegal trade in goods such as narcotics, oil and cigarettes and cross-border movement control. However, Serbia still needs to align its legal framework with EU legislation on the use of technology for customs purposes and to ratify and implement the ‘Naples II’ Convention on mutual assistance and cooperation between customs administrations. Overall, Serbia is moderately advanced regarding the cooperation in the field of customs.

4.29. Chapter 29: Customs union

There has been good progress on customs legislation. The Serbian government amended the decree on customs tariff nomenclature in November 2011 with the aim of aligning it with the 2012 EU Combined Nomenclature and with the liberalisation schedule of the Interim Agreement. Serbia increased duty relief for postal packages in October 2011. However, the rules are still not fully in line with the acquis. The Law on the Customs Service remains to be established and the classification practice is to be upgraded to EU standards.

Legislation has been adopted on customs-related security initiatives, including authorized economic operators. This legislation remains to be implemented. A regulation on the application of measures for the protection of intellectual property rights was adopted. However, the Customs Administration of Serbia (CAS) still needs to utilise fully the electronic exchange of data with IPR holders. An adequate legislative framework on cultural goods is to be established. The provisions on cash control remain to be aligned with the acquis. Preparations in the area of customs legislation are on track.

There has been some progress concerning administrative and operational capacity. The CAS has continued to improve its administrative capacity to effectively enforce the customs legislation. It applied integrity procedures for customs officials and stepped up the fight against corruption. Post-clearance controls and risk analysis systems were further strengthened by adopting a strategy for post-clearance audit, systematisation of procedures and setting up of an electronic database of customs offenders. Auditing has been reinforced and the central customs administration has been authorised to carry out audits of individual customs offices. In December 2011, the State Audit Institution reported on faultless 2010 financial records for the CAS in December 2011.The coordination between CAS and the Ministry of Finance and Economy has also improved and new instructions have been issued on cooperation between the two entities. The CAS is establishing a fully functioning IT system based on interconnectivity between its various departments. Around 90% of customs declarations are submitted electronically and the concept of electronic signature introduced. However, the Customs Declaration Processing System (CDPS) should be renewed or upgraded and a properly equipped and functioning customs laboratory is needed.

In terms of trade facilitation, the CAS implements the system for exchanging pre-arrival information with Bosnia and Herzegovina, Montenegro and the former Yugoslav Republic of Macedonia. It continues to actively engage in international activities concerning the fight against illegal trade in goods (narcotics, oil and cigarettes) and cross-border movement control.

Customs procedures between Kosovo and Serbia have stabilised further since the adoption of two Belgrade-Pristina dialogue agreements on customs stamps and integrated border management (IBM). However, the situation at gates 1 and 31 remains complicated in terms of procedures to be applied. The Serbian side eventually signed the Implementation Protocol on IBM in September 2012, but it has yet to be implemented. In the meantime, the Administrative Border/Boundary Line (ABL) between Kosovo and Serbia remains vulnerable to illicit activities. Trade in goods between Serbia and Kosovo remains handled by the Serbian Tax Administration and its Special Department and not by the Serbian customs. This includes most excise goods. Customs procedures to guarantee the application of the acquis at the ABL with Kosovo have yet to be introduced.

Preparations in the area of administrative and operational capacity are on track.

Conclusion
Serbia made good progress in the area of the Customs Union with the adoption of new laws and sustained efforts to enhance its administrative capacity, in particular in the audit and postclearance sector. Coordination between the customs administration and the Ministry of the Economy and Finance in charge of customs policy needs to be further improved. Serbia also needs to ensure the proper application of the acquis at the ABL with Kosovo. Customs related security legislation should be implemented and the CDPS system renewed or upgraded.

Overall, preparations in the area of the Customs Union are well on track.