2016 Report

Serbia 2016 Report Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2016 Communication on EU Enlargement Policy 

1.4. Normalisation of relations between Serbia and Kosovo*
*This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.

…Regarding the normalisation of relations with Kosovo, Serbia remained committed to the implementation of the agreements reached in the EU- facilitated dialogue. Progress was limited, also due to the electoral process in Serbia and the domestic situation in Kosovo. However, momentum was regained in August 2016 with the start of the work on the Mitrovica bridge and freedom of movement. Continued efforts are needed to implement the agreements already reached with Kosovo. The steps taken should have a positive and concrete impact on the everyday life of citizens in both Serbia and Kosovo.

….On IBM, while the interim crossing points are fully operational, there has been no progress in establishing the three permanent crossing points to be hosted by Serbia. Illegal crossing roads/ by-passes, in particular in the north of Kosovo, continue to be regularly used to smuggle substantial amounts of goods. Additional measures need to be taken by Serbia to close illegal crossings…

Chapter 7: Intellectual property law

Serbia has a good level of preparation as concerns alignment of intellectual property rights with the acquis. No progress was made. In the coming period, just as in 2015, Serbia should in particular: → further align its law on copyright, topographies of semiconductor products, patents and trademarks with the acquis, including with the IPR Enforcement Directive; → further strengthen formal coordination of different stakeholders on enforcement.

…On enforcement, the number of counterfeit and pirated goods confiscated by the Customs Administration and Market Inspectorate in 2015 was almost half the number in 2014……The IPR legislation still needs to be aligned with the Directive on the Enforcement of Intellectual Property Rights. The permanent coordination body for the enforcement of IPR became largely operational. A revised IPR strategic framework is needed.

Chapter 16 Taxation

Serbia is moderately prepared in the area of taxation. Some progress was made in aligning legislation with the acquis and in implementing the reform of the tax administration. In the coming period, Serbia should in particular:  → remove discrimination in the application of excise duties on imported spirits and coffee…

…On indirect taxation, limited steps were taken in aligning the law on Value Added Tax (VAT) and the law on excise tax with the acquis. The discriminatory application of excise stamps on imported alcohol was removed. However, excise duty continues to be applied in a discriminatory manner to imported spirits and coffee…..

Chapter 18 Statistics

Serbia is moderately prepared in statistics. Good progress was made in the past year, notably in further aligning sectoral statistics with the EU acquis.

….With regard to structural business statistics data coverage is not yet in line with the EU acquis as a number of data are not collected. Harmonization with the EU acquis on short term statistics is progressing. For transport, road, railway, inland waterways and air transport data are collected but need to be further harmonised with the EU acquis.

Chapter 23 Judiciary and fundamental rights

Serbia has achieved some level of preparation for the acquis and European standards in this area. Some progress was made by partially addressing last year’s recommendations, and in particular in standardising court practice…. The national anti-corruption strategy has so far not yielded the expected results. Corruption remains prevalent in many areas and continues to be a serious problem...In the coming year, Serbia should in particular:…. establish an initial track record of investigation, prosecution and final convictions in corruption cases, particularly in high-level ones;

As part of the ‘new approach’ to the rule of law, and in line with the negotiating framework, this chapter was opened in July 2016 after Serbia adopted a detailed action plan.

Anti-corruption policy…..Inter-institutional cooperation, between law enforcement agencies and with the prosecution service, has improved to a certain extent but requires further strengthening…. There is no secure platform for electronic data exchange or communication between the prosecution service, the police, tax and other authorities…. Internal control departments continue to lack equipment, resources and human capacity.

Effective supervision and deterrent sanctions in cases of wrongdoing need to be applied…… The human resources policy in the public administration requires reform to ensure that calls recruitment and promotion are based on merit and professional skills. Attention needs to be given to the implementation of codes of ethics and follow-up of integrity plans in the judiciary and in the public administration…. The legal framework for the fight against corruption is broadly in place but shortcomings in the criminal code remain an issue…. The law on civil servants includes provisions on a code of conduct for civil servants and monitoring mechanisms…. The action plan required for to open the rule of law chapter 23 was adopted by the government in April 2016 and implementation started. Several important measures in the anti-corruption strategy and action plan for 2013-2018 are behind schedule, e.g. setting up efficient coordination and monitoring mechanisms. Both documents have been aligned with deadlines and actions in the national action plan…. Adequate resources and human capacity to implement the strategy and action plan have not yet been allocated…. There is an urgent need to ensure better working arrangements between the Ministry of Justice and other institutions and bodies involved in combating corruption… The action plan for the public administration reform strategy includes measures to increase accountability and transparency in the public sector with a view to combating corruption, but the reform process needs to be implemented.

Chapter 24 : Justice, freedom and security

Serbia has made some level of preparation to implement the acquis on justice, freedom and security. Some progress was made in areas such as reform of the police, border controls and organised crime with the adoption in December 2015 of the first serious and organised crime threat assessment (SOCTA) in line with Europol requirements. Serbia has been affected by the refugee and migration crisis, during which it has played an active and constructive role and cooperated with neighbouring countries and Member States while managing mixed migration flows. Serbia has been actively involved in international and regional police as well as in judicial cooperation. 66 In the coming period, Serbia should in particular: ® establish an initial track record of investigation, prosecution, final conviction as well as seizure and confiscation in organised crime cases, including money laundering, human trafficking and human/migrant smuggling; ® adopt the integrated border management strategy and implementing action plan, including databases throughout the country……

Customs cooperation ….Regional and international customs cooperation continued, including through joint actions (see also chapter 29 — Customs union). Serbia needs to ensure that the IT strategy for the customs administration is fully aligned with EU legislation on the use of technology for customs purposes and smoother information exchange at the borders. The investigative 74 powers of customs officers and their ability to exchange data with other agencies at the border need to be broadened and customs posts fully staffed. Training is needed on the implementation of the Naples II Convention, in particular on hot pursuit, cross-border surveillance and controlled delivery.

Chapter 27: Environment and climate change

Serbia has achieved some level of preparation in this area. Some progress has been made in further aligning policies and legislation with the acquis, including in waste, nature protection and climate change. Serbia improved its strategic planning and set up a Green Fund, both key recommendations in 2015. In the coming period, Serbia should in particular: → enhance administrative and financial capacity by strengthening the environmental protection agency's monitoring and reporting, adequately resourcing the new environmental finance facility (Green Fund) and improving inter-institutional coordination at both central and local level…..

Chapter 28: Consumer and health protection

Serbia is moderately prepared in consumer and health protection. Some progress was made, notably with the adoption of the laws on advertising and on communicable diseases. In the coming period, Serbia should in particular: → strengthen the administrative capacity of relevant authorities for consumer protection; → strengthen the overall financial sustainability of the public health system, and in particular the public health insurance fund.

Chapter 29: Customs union

 All Member States are part of the EU customs union and follow the same customs rules and procedures. This requires legislative alignment, adequate implementing and enforcement capacity, and access to the common computerised customs systems.

Serbia is at a good level of preparation in the area of customs union. Good progress was made on transit, which included launching common transit operations with support of the New Computerised Transit System (NCTS). In the coming period, as in 2015, Serbia should in particular: → upgrade the customs declaration processing system and integrate risk management; → further improve and modernise management of the customs administration.

As regards customs legislation, the customs tariff nomenclature has been aligned with the 2016 EU Combined Nomenclature. Legislation on cash controls and cultural goods still needs to be aligned with the acquis. Legislation on customs administration and customsrelated security initiatives have yet to be implemented. 79 The customs administration continued to strengthen its administrative and operational capacity. In 2014, a 4.5 % increase in customs duty collection was achieved. Serbia acceded to the Convention on the Simplification of Formalities in Trade in Goods and the Convention on a Common Transit Procedure in February 2016. After the successful introduction of the national NCTS, Serbia launched common transit operations in February 2016. A contract for outsourced NCTS maintenance support has been concluded. A new centralised system for the management of bank guarantees is operational. The law on the customs administration has not yet been adopted and the business strategy of the customs administration needs to be renewed. Strategic and modern management techniques, including quality assurance and change management, are lacking, and the IT strategy needs to be updated. Work on setting up a functional, interconnected IT system progressed, but the IT division continues to lose competent staff. The risk management system needs to be strengthened. The customs laboratory needs to be further equipped.

Chapter 30: External relations

Serbia is moderately prepared in the area of external relations. Some progress was made by activating the EU civil protection mechanism in order to help with the influx of refugees and migrants. In the coming period, Serbia should in particular: → stop applying safeguards on selected agriculture products, which are not justified under the Stabilisation and Association Agreement and which point to weaknesses in administrative capacity to implement trade policy; → strengthen implementing capacity for export controls on dual-use goods

…Serbia aligned its national control list of dual-use goods with the latest EU regime of exports, transfer, brokering and transit of dual-use items in March. Serbia needs to continue its efforts to join the Wassenaar Arrangement, which could facilitate preparations to implement the acquis for export controls on dual-use items…..As concerns bilateral agreements with non-EU countries, Serbia is still negotiating a free trade agreement with Ukraine….

Chapter 31: Foreign, security and defence policy

Serbia is moderately prepared in foreign, security and defence policy. Serbia has partially fulfilled last year’s recommendations. Some progress was made… As regards non-proliferation, Serbia ratified the Amendment to the Convention on the Physical Protection of Nuclear Material in March. The process for collecting and destroying illegally possessed weapons and ammunition needs to be finalised and the new strategy on the control of small arms and light weapons adopted. Serbia’s ratification of the Additional Protocol to the Nuclear Non-Proliferation Treaty is still pending. Serbia’s 2008 application to join the Wassenaar Arrangement continues to be dependent on the adoption of a new law on the production and transfer of arms and military equipment…..

Chapter 33: Financial and budgetary provisions

Serbia is at an early stage of preparation with regard to financial and budgetary provisions. Some progress was made across the board as regards the underlying policy areas effecting the good function on the OR system. In the coming year, Serbia should in particular: → take further steps to boost administrative capacity and establish the institutional body that will coordinate various institutions involved in the own resources system.

There was some progress in the underlying policy areas affecting indirectly the own resources system (for progress in underlying areas, see: chapter 16 — Taxation, chapter 18 — Statistics, chapter 29 — Customs Union, chapter 32 — Financial control). There is little 84 progress in to meet the specific OR administrative conditions in the OR legislation (traditional own resources, the value added tax-based resource and gross national income-base resource). Regarding traditional own resources, improvement in the functioning of the customs administration has led to higher collection of customs duties. Regarding administrative infrastructure, the capacity of the institutions in charge in the relevant policy areas needs to be further strengthened and developed. Additional training is needed for the institutions, including customs and tax administrations. A coordinating agency tasked with ensuring correct calculation, accounting, forecasting, collection, payment, control and reporting to the EU on the implementation of the EU’s own resources rules still needs to be set up (although some first steps have been made to start recruiting staff dealing with this task).