2018 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 2018 Communication on EU Enlargement Policy

1.2 Summary of the report

As regards its ability to assume the obligations of membership, Serbia has continued to align its legislation with the EU acquis across the board. Adequate financial and human resources and sound strategic frameworks will be crucial to maintaining the pace of reforms. Serbia has a good level of preparation in areas such as company law, intellectual property, science and research, education and culture, and customs.

Normalisation of relations between Serbia and Kosovo: Serbia has yet to address the issue of re-located Serbian administrative customs structures with Kosovo denomination that operate from within Serbia, and to cease the issuance of documentation or affixing of stamps with denomination that contravenes to the related agreement.

Chapter 7: Intellectual property law

Serbia has a good level of preparation on intellectual property rightsThere was no progress in this area. The recommendations set out in 2016 have not been met.

These remain valid and Serbia should therefore, in particular:

….

→ further strengthen enforcement capacity and coordination of different stakeholders.

Concerning enforcement, the number of counterfeit and pirated goods confiscated by the Market Inspectorate increased significantly in 2016 and then dropped sharply in 2017 but the number of requests submitted to it by economic operators has increased. The number of items destroyed by the customs administration almost halved in 2016 and this trend continued in 2017. The number of software legality checks performed by the tax administration decreased slightly in 2016 and then increased in 2017. The number of indictments brought by the Public Prosecutors Office increased in 2016 and again in 2017. 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 established in October 2014 did not meet in 2016. Its three working groups were active in awareness raising activities, drafting of the revised IPR strategic framework and information exchange for IPR enforcement. Coordination among different institutions involved in IPR enforcement requires further strengthening, through adequate IT infrastructure. A revised strategic framework for IPR has yet to be adopted.

Chapter 16: Taxation

Serbia is moderately prepared in the area of taxation. Some progress was made in legislative alignment…

In the coming year, Serbia should pay particular attention to:

→ remove discrimination in the application of excise duties on imported spirits

….

Legislation on indirect taxation, adopted in December 2016 and entering into force as of January 2018 removed the discrimination in the excise duties applied to imported coffee. However, the excise duties continue to be applied on imported spirits in a discriminatory manner, in breach of the SAA. At the end of 2016, some steps were taken to further align the law on value added tax (VAT) with the acquis, as concerns the application of VAT rules to services provided to foreign persons. From December 2017, VAT for foreigners export of personal goods valued carried on their personal luggage over EUR 100 is refunded, further aligning the legislation with the acquis.

Chapter 23: Judiciary and fundamental rights

Serbia has some level of preparation to apply the acquis and European standards in this area…

In the coming year, Serbia should in particular:

® ensure an effective implementation of the national anti-corruption strategy and action plan, including by providing effective coordination and ensuring that all key institutions have adequate capacity and resources to fulfil their remits effectively;

Fight against corruption

Serbia has some level of preparation in the fight against corruption. Some progress has been achieved, especially in adopting the amendments to the Criminal Code…

In the coming year, Serbia should in particular:

→ urgently improve the operational capacity of the institutions, allowing them to correctly implement the new legislation in this area;

→ ensure a measurable impact through the effective implementation of the national anti-corruption strategy and action plan, including by providing effective coordination and sufficient resources…

Institutional framework

Prevention measures

Serbia’s institutions for preventing corruption broadly meet international standards and continue to show good potential…

In December 2017, the Law on Employees in Public Services was adopted, including provisions related to conflicts of interest for this category of public employees. Integrity plans were adopted by 1 118 public sector institutions (out of 4 285) based on institutional corruption risk assessments.

Law enforcement

There is no secure platform for electronic data exchange or communication between the prosecution service, the police, tax and other authorities. There is still no system allowing
statistical monitoring of criminal proceedings. Internal control departments continue to lack
equipment, resources and human capacity. Reform of the inspection services was initiated to increase accountability. Effective supervision and deterrent penalties in cases of wrongdoing need to be applied consistently. The (operational) independence and accountability of all investigative and judicial bodies dealing with corruption need to be strengthened. There is a delay in introducing a team of economic forensic experts in the Public Prosecutor’s Office and in other authorities as necessary.

Legal framework

The legal framework for the fight against corruption is broadly in place

Strategic framework

The implementation of several important measures in Serbia’s anti-corruption strategy and
action plan for 2013-2018, revised in June 2016, remains behind schedule. Adequate resources and human capacity to ensure their full implementation have not yet been allocated. There is a delay in extending the competences of the inter-ministerial coordination group chaired by the Prime Minister for the implementation of the national anti-corruption strategy to cover the relevant part of the action plan for Chapter 23. Furthermore, this body still does not ensure coordinated implementation of both these action plans. 

Chapter 24: Justice, freedom and security

Serbia has some level of preparation to implement the acquis on justice, freedom and security…

In the coming period, Serbia should in particular:

® implement its integrated border management strategy and action plan.

Serbia is implementing a detailed action plan which was adopted prior to the opening of the accession negotiations in this chapter in July 2016 and the country is in the process of revising its action plan with more realistic deadlines.

Schengen and external borders

The agreement on cooperation in the field of prevention and suppression of corruption at the border between the Republic Public Prosecutor’s Office, the Ministry of Internal Affairs and the Ministry of Finance was signed. 

Customs cooperation

Regional and international customs cooperation continued, including through joint actions (see also Chapter 29 — Customs union). The investigative powers of customs officers and their ability to exchange data with other agencies need to be broadened. Training and further by-laws are needed for the implementation of the Naples II Convention upon accession, in particular on hot pursuit, cross-border surveillance and controlled delivery.

Chapter 29: Customs union

Serbia is at a good level of preparation in the area of customs union. Some progress was made by streamlining some customs processes. In the coming year, Serbia should in particular: → further upgrade the customs processing system by integrating risk management; → further improve the IT system of the national customs to enable integration with the EU system.

As regards customs legislation, there is a high level of alignment with the acquis. Serbia is a member of the common transit area, applying EU rules on transit movements. Rules on customs enforcement of intellectual property rights are broadly in line with the EU acquis. The Regional Convention on Pan-Euro-Mediterranean (PEM) preferential rules of origin is applied in Serbia. The customs tariff nomenclature has been aligned with the 2017 EU Combined Nomenclature. In June 2017 Serbia ratified the Protocol to the WHO Framework Convention on Tobacco Control to Eliminate the Illicit Trade in Tobacco Products. However, legislation on duty relief, drug precursors, cultural goods, free zones, and security aspects still needs to be aligned with the acquis. Moreover, fees charged to lorries entering customs terminals to discharge customs obligations are not in line with the acquis.

The customs administration continued to strengthen its administrative and operational
capacity. Customs duty collection continued to increase by 6.8 % in 2016 and by 8.8 % in 2017. Since the successful launch of common transit operations in February 2016, the number of transit declarations issued by the customs administration has been rising by 13 % in 2016 and by 17 % in 2017. The customs administration’s new business strategy and the accompanying action plan 2017- 2020 were adopted in November and December 2017, respectively. Strategic and modern management techniques, including quality assurance and change management, are lacking. The IT strategy also needs to be updated. Work on setting up a functional, interconnected IT system progressed, but the IT division continues to lose qualified staff. A system for retaining qualified IT engineers should be established. Significant effort and investment are needed to ensure interconnectivity and interoperability with EU IT systems. The risk management system needs to be strengthened. Pre-arrival/pre-departure risk analysis should be conducted consistently and across the board and harmonised with the Union Customs Code. Work on strengthening the capacity of the customs laboratory has started, but the laboratory needs to be further equipped.

Chapter 30: External relations

Serbia is moderately prepared in the area of external relations. No progress was made in
the last year and capacity to pursue key challenges in trade policy weakened.

In the coming year, Serbia should in particular:

→ urgently remove the recently imposed export restrictions on non-hazardous waste, which are not justified under the Stabilisation and Association Agreement and which point to weaknesses in administrative capacity to implement trade policy;

→ complete its WTO accession by adopting a WTO and EU acquis-compliant law on genetically modified organisms and complete remaining bilateral market access negotiations;

→ strengthen administrative capacity in the Ministry of Trade, Tourism and Telecommunications for dealing with trade with the EU, CEFTA and WTO accession, in particular view a view to implement the multiannual action plan for the regional economic area.

…Serbia aligned its national control list of dual-use goods with the latest EU regime on exports, transfer, brokering and transit of these items in May 2017… Serbia needs to continue its efforts to join the Wassenaar Arrangement.

Serbia took important commitments at the occasion of the Western Balkans Summit in Trieste to implement a Multiannual Action Plan for the development of a Regional Economic Area (REA) in the Western Balkans. The implementation of the action plan will allow the deepening and widening of economic integration within the region, based on EU rules and standards. It is important for Serbia to play a constructive role within CEFTA to allow for the timely and smooth implementation of the REA Multiannual Action Plan.

As concerns bilateral agreements with non-EU countries, Serbia completed negotiations on further liberalisation of trade with Turkey under the existing bilateral free trade agreement. Serbia is still negotiating a free trade agreement with Ukraine…

Chapter 33: Financial and budgetary provisions

Serbia is at an early stage of preparations in this area. A group for the coordination and management of the EU’s own resources has been set up. Some progress was made in the underlying policy areas affecting the correct functioning of the own resources system. In the coming year, Serbia should, in particular;
→ take further steps to boost the administrative capacity of the coordination group and the various institutions involved in the own resources system;

→ develop the organisational and procedural links between these institutions.

There was some progress in the underlying policy areas indirectly affecting the own resources system (for progress in these areas, see chapters 16-Taxation, 18-Statistics, 29-Customs union and 32-Financial control). There was some progress towards meeting the specific administrative conditions for own resources, in particular formally establishing the coordination structure.

Regarding traditional own resources, higher collection of customs duties was recorded in 2016 and the upward trend continued in 2017…

Regarding administrative infrastructure, the capacity of the institutions in charge in the relevant policy areas needs to be further strengthened. A group for the coordination and management of own resources of the EU tasked with ensuring correct calculation, accounting, forecasting, collection, payment, control and reporting on implementation of the EU’s own resources policy and rules has been established in the Ministry of Finance.