2020 Report

1.2 Summary of the report

As regards its ability to assume the obligations of membership, Serbia stepped up its work to align legislation with the EU acquis in the economic and internal market chapters. The country made good progress in economic areas such as company law, intellectual property law, competition and financial services.

Regarding the normalisation of relations with Kosovo (page 52.): Interim IBM common crossing points with Kosovo continue to be operational. There was no progress in establishing the six permanent IBM common crossing points between Serbia and Kosovo as stipulated in the IBM agreement in the context of the EU-facilitated Belgrade-Pristina Dialogue (see under Normalisation of relations between Serbia and Kosovo). Additional measures need to be taken to prevent irregular crossings and criminal activities, including corruption.

Chapter 7: Intellectual property law

Serbia has a good level of preparation on intellectual property rights. There was good progress with the adoption of the amendments to the law on copyright and related rights and to the law on the protection of topographies of semiconductor products, as well as the adoption of the law on trademarks.

In the coming year, Serbia should in particular: →strengthen enforcement, by improving capacities and further increasing coordination of different stakeholders

 

….Concerning enforcement, The number of customs officers specialised in intellectual property protection further decreased from 14 in 2018 to 13 in 2019. Continuing the last year's trend, the number of items detained by the customs administration fell substantially in 2019, while the number of items destroyed increased significantly in 2019….. Legislation aiming at full harmonisation with the EU directive on the enforcement of intellectual property rights is still pending. The Government decision on the permanent coordination body for the enforcement of intellectual property rights was amended in September 2019, so the body could operate and manage enforcement more efficiently. The renewed coordination body met four times in during the reporting period, after a long break. However, further meetings were delayed due to the COVID-19 crisis. The implementation of the goals under the strategic framework for intellectual property rights for 2018-2022 should be continued, mainly focusing on stakeholder coordination and awareness raising activities.

Chapter 16: Taxation

Serbia is moderately prepared in the area of taxation. Some progress was made with the ratification of the OECD Convention on mutual administrative assistance in tax matters (MAC) as well as on further reform of the tax administration. Last year’s recommendations were thus partially implemented.

In the coming year, Serbia should in particular: →remove discrimination in the application of excise duties on imported spirits….

….In the area of indirect taxation, amendments to the law on VAT were adopted in October 2019. Some of these amendments, such as. those concerning the calculation of VAT for supplies involving vouchers, or those on lowering the threshold for VAT refund to foreign travellers, are aimed at further aligning with the EU legislation. The VAT law was also amended to exempt goods used in the construction of infrastructure of public interest. Specific and ad valorem excise duties continue to be applied on tobacco products and the minimum is set twice a year. Excise duties on fuels are only partly harmonised with the EU acquis….

Chapter 23: Judiciary and fundamental rights

Serbia has some level of preparation to apply the EU acquis and the European standards in this area. Very limited progress was made overall….Overall, corruption remains an issue of concern….

Fight against corruption

Serbia has some level of preparation in the fight against corruption. Limited progress has been made in implementing last year’s recommendations.

Serbia should:…  effectively implement the law on the prevention of corruption in line with the EU acquis, international agreements and Council of Europe’s Group of States against Corruption (GRECO) recommendations, in order to strengthen the agency’s role as a key institution in a more effective fight against corruption;  adopt a new anti-corruption strategy underpinned by a credible and realistic action plan as well as an effective coordination mechanism.

Institutional framework

Prevention measures

The situation in the sectors particularly vulnerable to corruption (i.e. sectors where there is substantial public expenditure involved, or alternatively sectors where there is direct contact with the public) remains largely unchanged. These include public procurement, infrastructure projects, healthcare, education, construction and spatial planning, and public companies. There are still no tangible improvements in relation to the transparency and corruption risk assessments and mitigation in these fields.

Legal framework

Serbia is a party to all international anti-corruption conventions. The legal framework for the fight against corruption is broadly in place. The law on the prevention of corruption enters into force in September 2020….

 

Chapter 24: Justice, freedom and security

Serbia has some level of preparation to implement the EU acquis on justice, freedom and security. Some progress was made on last year’s recommendations…It also continued to effectively implement the integrated border management strategy and its action plan.

In the coming period, Serbia should in particular: ... continue increasing border controls, especially border surveillance including identification and registration measures in full respect of fundamental rights, and increase efforts to detect and prevent smuggling of migrants…

Schengen and external borders

Institutional set-up and legal alignment

…The agreement on cooperation in the field of integrated border management and the protocol on the exchange of data and information between the services involved in integrated border management (IBM) were signed.

Implementation and enforcement capacity

Serbia has made further progress in implementing its IBM strategy and its related action plan. Joint controls were introduced at the border crossing point Preševo-Tabanovce at the border with North Macedonia. Equipment and infrastructure at border crossing points was improved in Bajmok, Gostun, Kotroman, Sot, Nakovo and Morava Airport. Video surveillance was improved at some at border crossing points and traffic-monitoring cameras were installed, which provide citizens with real time information on the situation at border crossings. An electronic information exchange platform to be used by all IBM agencies is being set up.

All aspects of customs cooperation are now covered under Chapter 29 – Customs Union

 

Chapter 29: Customs union

Serbia is at a good level of preparation in the area of customs union. Limited progress was made on the adoption of several by-laws to the customs law and to the law on customs services. However, further efforts are needed to fully address last years’ recommendations, which therefore remain valid.

In the coming year, Serbia should in particular:

→further upgrade the customs processing system by integrating risk management;

→further develop the IT system of the national customs to enable integration with the EU systems.

 

Serbia’s customs legislation remains largely aligned with the EU acquis. The customs law and the law on customs service, adopted in December 2018, entered into force in June 2019. Related implementing legislation, aimed at further alignment with the EU acquis, has been adopted, including that on duty relief in April 2019. Serbia also took a number of measures to align with the EU acquis on drug precursors.

Serbia is a party to the Common Transit Convention, applying EU rules on transit movements. Rules on customs enforcement of intellectual property rights remain broadly in line with the EU acquis. The Regional Convention on Pan-Euro-Mediterranean preferential rules of origin is applied in Serbia. Serbia’s customs tariff nomenclature for 2019 was harmonised with the EU combined nomenclature, while legislation to align with the nomenclature for 2020 was adopted in December 2019.

Legislation on cultural goods, free zones, and security aspects still needs to be aligned with the EU acquis. Fees are still charged on lorries entering customs terminals to discharge customs obligations, which is not in line with the SAA obligations.

Concerning administrative and operational capacity, customs duty collection increased by 10.8% in 2019. The customs administration’s development plan for customs e-systems was adopted in February 2020, aiming to ensure integration with the EU system. The 2020-2024 customs administration’s business plan was also adopted in February.

Work is also ongoing on strengthening the risk management system. It is important that Serbia carries out pre-arrival/pre-departure risk-based analysis including food-safety checks consistently and across the board, and in harmonisation with the EU Customs Code. Despite ongoing work, the customs laboratory remains under-equipped.

In terms of fight against tobacco smuggling, Serbia is a party to the Protocol to Eliminate Illicit Trade in Tobacco Products since 2017, but the information on the implementation of the Protocol is still pending. Additional measures are needed to further strengthen the administrative capacity for tobacco control. 113

In the context of the outbreak of the COVID-19 pandemic, seven border crossings with neigboring countries were designated as ‘green lane’ border crossings to ensure the smooth and prioritised passage of essential goods. The initiative follows a proposal by the CEFTA Secretariat and the Secretariat of the Transport Community of 25 March 2020, based on the European Commission Communication of 23 March 2020. The green lane border crossings include 24/7 operations, including phytosanitary procedures, and electronic pre-arrival information through the System of Electronic Exchange of Data (SEED). The introduction of green lanes proved to be efficient as difficulties and long waiting hours experienced at border crossings in the early stages of the pandemic were reduced to below the target of 12 hours, although still exceeding the European Commission’s recommended limit of 15 minutes.

 

Chapter 30: External relations

Serbia remains moderately prepared in the area of external relations. Some progress was made on the 2019 recommendation concerning the Regional Economic Area (REA) as Serbia started with the implementation of CEFTA Additional Protocol (AP) 5 on Trade Facilitation and ratified CEFTA AP 6 on Trade in Services. The capacity to pursue key challenges in trade policy needs to be strengthened further. The 2019 recommendation on World Trade Organisation (WTO) accession remains valid.

In the coming year, Serbia should in particular:

→complete accession to the WTO by adopting an amended law on genetically modified organisms and complete remaining bilateral market access negotiations;

→further strengthen the administrative capacity of the Ministry of Trade, Tourism and Telecommunications for handling trade with the EU, CEFTA and WTO accession;

→implement actions under the multiannual action plan for the development of REA, in particular: ensure the full implementation of CEFTA AP 5 on Trade Facilitation; implement CEFTA AP 6 on Trade in Services; negotiate and conclude CEFTA AP 7 on Dispute Settlement; and adopt regional standards for International Investment Agreements and pursue the implementation of the individual reform action plan on investment.

 

The amendments to the law on dual use goods entered into force in November 2019. With this, Serbia abolished import control of dual use items while retaining export controls in accordance with the relevant EU legislation. In April 2019, Serbia adopted the national control list of dual-use goods aimed at fully aligning with the EU’s 2018 Regulation on setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items. The national control list of arms and military equipment, aligned with the Common Military List, was adopted in May 2019. Serbia’s 2009 application to join the Wassenaar Arrangement is still under consideration, as well as the 2017 application to the Australia Group….Serbia continued its participation in CEFTA. The ongoing efforts in implementing AP 5 should continue, in particular based on the decisions of the CEFTA Joint Committee on authorised economic operators, fruits and vegetables, and risk management strategy for customs. Serbia ratified AP 6 on Trade in Service in February 2020 and should now proceed with its implementation….Regarding bilateral agreements with third countries, Serbia signed a free trade agreement (FTA) with the Eurasian Economic Union (EAEU) on 25 October 2019. The agreement was ratified in February 2020 but will enter into force only once ratified by all parties. Serbia had pre-existing FTAs with three members of the EAEU (Russia, Belarus and Kazakhstan), thus expanding the agreement only to Armenia and Kyrgyzstan. The scope of the agreement is widened through minimally extended tariff concessions on goods, an annex on rules of origin and new provisions on dispute settlement. The FTA includes an exit clause, which guarantees that Serbia can denounce the agreement upon accession to the EU. The negotiations of a free trade agreement with Ukraine are ongoing….

 

Chapter 33: Financial and budgetary provisions

Serbia has some level of preparation concerning the specific administrative conditions for own resources. The group for the coordination and management of the EU’s own resources is operational. Some progress was made in terms of preparatory work for the implementation of the previous report’s recommendations and within the underlying policy areas affecting the correct functioning of the own resources system.

The previous report’s recommendations remain largely valid also for the coming period. Serbia should in particular:

→ take further steps to strengthen the administrative capacity of the coordination group and institutions involved in the own resources system;

→ develop the organisational and procedural links between these institutions;

→ step up preparations to meet the specific administrative conditions for own resources, as laid down in the own resources regulations.

 

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).

 

Regarding traditional own resources (TOR), the customs legislation remains largely aligned with the EU acquis. The customs law and the law on customs service adopted in December 2018 entered into force in June 2019. Serbia’s Customs Administration has procedures in place to ensure that cases of fraud and irregularities are reported to the national authorities. However, reporting is manual and it remains to be seen whether the national reporting can serve OWNRES purposes. Customs continued the simulation of TOR accounts in 2019. Control of activities is carried out by several departments in the customs administration, including its internal audit department, as well as the external audit carried out by the SAI….Regarding administrative infrastructure, the capacity of the institutions in the relevant policy areas needs to be further strengthened. The 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 the implementation of the EU’s own resources policy and rules needs to be better staffed (currently it has only one employee) and supported to fulfil its coordination tasks. Also, the organisational and procedural links between the institutions involved in own resources should be developed.

 

https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/serbia_report_2020.pdf