COMMISSION STAFF WORKING DOCUMENT
                                                      SERBIA
                                          2014 PROGRESS 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

                     Enlargement Strategy and Main Challenges 2014-2015
                                          {COM(2014) 700 final

 

http://ec.europa.eu/enlargement/pdf/key_documents/2014/20140108-serbia-progress-report_en.pdf

 

....Serbia participates in the following EU programmes: the Seventh Research Framework Programme, Progress, the Competitiveness and Innovation Framework Programme, Culture, Safer Internet, Lifelong Learning, Europe for Citizens, Customs and Fiscalis......

 

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.

 

….As concerns the north of Kosovo, a development fund has been set up to collect revenue at the northern crossing points. It has received over € 2.9 million to date, but its board has yet to decide on its use….
…..Implementation of other agreements has continued, albeit at a slower pace. Regarding IBM, the six joint interim crossing points have continued to be operational and technical agreements on the exact locations and on draft layouts of the permanent IBM crossing points were reached. However, illegal crossing roads/ by-passes, in particular in the north of Kosovo, continue to be regularly used to smuggle substantial amounts of goods, as reported by EULEX. Additional measures need to be taken by Serbia to stop illegal crossings.
….Overall, Serbia and Kosovo have remained engaged in the dialogue and committed to the implementation of the April 2013 First agreement of principles governing the normalisation of relations and other agreements reached in the dialogue, leading to irreversible changes on the ground. However, progress has slowed down. Early general elections were held in both Serbia and Kosovo. New momentum needs to be generated to tackle key outstanding issues and open a new phase in the normalisation of relations. Progress in this area remains essential for advancing the European future of both Serbia and Kosovo.
….Regional cooperation and good neighbourly relations form an essential part of Serbia’s process of moving towards the EU. Serbia has continued to actively participate in regional initiatives, such as the South-East Europe Cooperation Process, the Regional Cooperation Council and the Central European Free Trade Agreement.
 

 4.7. Chapter 7: Intellectual property law

…..As concerns enforcement, the number of requests received by the customs administration for protection of intellectual property rights increased from 205 in 2012 to 244 in 2013….. It confiscated 127 000 counterfeited and pirated products in 2013 compared to 138 000 in 2013….
…..Further alignment of legislation with the Directive on Enforcement of Intellectual Property Rights needs to be ensured. A formal coordination  mechanism for effective IPR enforcement is still missing. There are still delays in the implementation of the national IPR strategy and action plan 2011-2015…..

Conclusion
Little progress was made in the area of intellectual property law. Formal coordination between different stakeholders has yet to begin with a view to ensuring more effective enforcement. Overall, alignment in the area of intellectual property law is advanced.

4.14. Chapter 14: Transport policy

…..As regards rail transport….Protocols on cooperation were signed between all the relevant border services and railway companies of Serbia and Montenegro…..The River Information Services for the Danube and Sava rivers require upgrading with a remote aid to navigation (ATON) monitoring and reaction system. …..

Conclusion
Some progress was made in the area of transport policy, particularly on road, rail, inland waterways and aviation. Further strengthening of administrative capacity is required, in particular for enforcement and inspection. Access to the railway market has yet to be achieved. Overall, Serbia is moderately advanced in its alignment with the acquis in the area of transport policy.

4.16. Chapter 16: Taxation

....In the area of indirect taxation, the reduced value added tax (VAT) rate was increased in December 2013 from 8 to 10 %, while some items (e.g. IT equipment) passed from the reduced to the standard 20 % rate. Regarding excises, legislation on rates, movement and control, excise warehouses, storage and the concept of taxpayer remains to be aligned. The same applies to current rules and exemptions on specific energy resources. Finally, imported spirits remain taxed at higher level than comparable spirits which are frequently produced in Serbia.

Conclusion
….Serbia should continue to align its rules concerning excise goods, including on imported spirits, with those in the acquis…..Overall, preparations in the area of taxation are moderately advanced.

 

4.23. Chapter 23: Judiciary and fundamental rights

 Anti-corruption policy

…..Implementation of the strategy and action plan for 2013-2018 has yet to mirror the strong political impetus to fight corruption. Several measures have been delayed. An efficient mechanism for monitoring implementation of the anti-corruption strategy and action plan needs to be ensured. Adequate resources and human capacities for implementation of the Strategy and action plan need to be allocated…… Transparency of public procurement procedures has improved with the use of the upgraded public procurement portal. New requirements introduced by the Law on Public Procurement and the national strategy and action plan for the fight against corruption remain to be fully implemented. Comprehensive risk analyses for areas vulnerable to corruption such as health, construction, privatisation and education, justice and law enforcement are needed.……Internal control departments lack equipment, resources and human capacity….
.... Law enforcement bodies and prosecution need to become more proactive. Lack of internal capacity and expertise in financial investigations and asset recovery, together with a lack of technical equipment for special investigative measures, hamper the effectiveness of investigations. Interinstitutional cooperation between law enforcement agencies has improved to a certain extent, but needs to be developed further. The independence of all investigative and judicial bodies dealing with investigations into corruption needs to be strengthened….
…..…The comprehensive review of the criminal code being conducted to ensure that corruption and economic crimes are precisely defined and can be effectively investigated and processed needs to be completed without delay. The criminal code needs further amendment in this respect….
…As regards access to information and protection of personal data…The legal framework remains to be fully aligned with EU standards. Video surveillance, biometrics, the security of data on the internet, and the processing and protection of sensitive data, especially by some new professions such as bailiffs or notaries as well as direct marketing, must comply with EU data protection legislation. The power to acquire data from electronic communications in criminal cases remains to be brought in line with data protection rules. No progress was made in adopting the action plan to protect personal data.

Conclusion
Limited progress was made in the area of the judiciary and fundamental rights…..Despite strong political impetus to fight corruption, corruption remains prevalent in many areas and continues to be a serious cause of concern. The implementation of the strategy on the fight against corruption has not yet yielded concrete results……Recent strengthening of institutional coordination and leadership, including the setting-up of a monitoring mechanism, has yet to produce effective results.….The legal framework on data protection remains to be aligned with the EU acquis.

 

4.24. Chapter 24: Justice, freedom and security

.....Serbian authorities continued to be proactive overall with regard to fighting irregular migration…..Better coordination is required among all institutions involved in tackling irregular migration, in particular at local level.…..As regards external borders and Schengen, ……A risk analysis system has yet to be established in order to enhance control of the borders. Inter-agency cooperation between the bodies operating at the borders needs to improve as there is a lack of coordination between border police, customs and phytosanitary services. The activities of the coordinating body for implementing the Integrated Border Management need to be strengthened…… The unimpeded cross-border traffic through unauthorised alternative crossing places — in particular with Bosnia and Herzegovina — remains an issue that needs to be urgently addressed. All border crossing points need to be connected to the Interpol database and the smaller crossing points modernized…..
…..As part of the dialogue on the implementation of the IBM protocol, all six interim IBM BCPs with Serbia/Kosovo are operational and technical agreements on the exact locations and on draft layouts of the permanent IBM crossing points were reached….
...Good international and regional cooperation in the field of drugs…. However, the operational capacity of police and customs needs to be stepped up….. A solid track record of drugs seizures remains to be established….
…..Concerning customs cooperation (see also Chapter 29 — Customs union), Serbia’s customs administration continues to cooperate with agencies from neighbouring countries and to take part in international activities concerning the fight against illegal trade in and smuggling of narcotics, oil and cigarettes. The investigative powers of the custom officers and the scope for exchanging data with other agencies at the border need to be broadened.

Conclusion
Overall, Serbia made limited progress in the area of justice, freedom and security. Migration management and asylum policies need to be significantly and urgently strengthened and asylum procedures need to be streamlined…..A risk analysis system has to be established in order to enhance control of the border. Additional efforts are needed to increase the interagency cooperation between the services operating at the country’s borders. Across the board, efforts are needed to align with the EU acquis, to increase efficiency, foster specialisation and ensure better operational cooperation between the judiciary, law enforcement and non-law-enforcement bodies.


4.27. Chapter 27: Environment and climate change

….As regards nature protection, legislation implementing the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) has been updated to include protected species listings. Important seizures of illegally traded endangered species were made. The capacity of the CITES unit and that of enforcement agencies needs to be enhanced to keep up with the challenges of illegal wildlife trade….

…..Regarding climate change…. An implementing law was adopted in December on reducing consumption of ozone-depleting substances, establishing a licensing and reporting system and a recovery and recycling scheme in accordance with the Montreal Protocol and relevant EU legislation. Legislation on fluorinated greenhouse gas management and on conditions for issuing licences to import and export such gases entered into force in January.

Conclusion
….Efforts under way to strengthen inspection and enforcement need to be accompanied by the removal of inconsistencies and gaps in legislation that prevent effective enforcement…..

 

4.28. Chapter 28: Consumer and health protection

…..In the area of tobacco control, amendments were made to the Law on Tobacco, focusing on measures against illicit tobacco trade and labelling of tobacco products, and on increasing the relevant fines. No progress was made in the preparation of a new strategy and action plan on Tobacco control.

Conclusion

There has been some progress in the area of consumer and health protection. The new law on consumer protection has been adopted. The overall financial sustainability of the public health system needs to be strengthened. Overall, preparations in these areas remain moderately advanced……

 
 4.29. Chapter 29: Customs union

As regards customs legislation, the customs tariff nomenclature was aligned with the 2014 EU Combined Nomenclature and the liberalisation schedule under the Stabilisation and Association Agreement implemented in November 2013. However, the Law on the Customs Service remains to be adopted. In the framework of CEFTA, since April 2014, Serbia, Albania, Montenegro and the former Yugoslav Republic of Macedonia started applying the regional Convention on Pan-Euro-Med Preferential Rules of Origin. The legislation on cash controls, cultural goods and duty relief on imports of new production equipment needs to be aligned with the acquis. Legislation on customs-related security initiatives and authorised economic operators remains to be implemented.

As regards administrative and operational capacity, the customs administration continued to strengthen its administrative capacity for effective enforcement of customs legislation. Integrity procedures for customs officials were applied by initiating 25 disciplinary procedures against 30 customs officers for serious violation of official duty and completing another 22 disciplinary procedures. The number of companies making use of simplified customs or approved exporter procedures increased. Work to establish a functioning interconnected IT system has started. Intelligence messages are exchanged with other state bodies and international organisations. In 2013, around 65 % of right holders used customs’ web application to submit their requests for protection of intellectual property rights. A new centralised system for the management of bank guarantees has been established and the core IT system is being reorganised from a decentralised to a centralised system, enabling the implementation of the New Computerised Transit System (NCTS) upon accession to the Common Transit Convention, as planned for 1 June 2015. The customs declaration processing system needs to be upgraded and the customs laboratory further equipped. The administration improved communication with the public.

In June 2014, Serbia and Moldova signed an Agreement on Cooperation and Mutual Assistance.
In 2013, in technical dialogue between Serbia and Kosovo, the parties agreed to automatically exchange electronic pre-arrival data related to customs declarations for consignments intended to cross the administrative border/boundary line. The collection of customs duties started at the joint crossing points between Serbia and Kosovo in December 2013. As part of the dialogue on the implementation of the IBM protocol, all six interim IBM BCPs with Serbia/Kosovo are operational and technical agreements on the exact locations and on draft layouts of the permanent IBM crossing points were reached. However, the administrative border/boundary line between Kosovo and Serbia remains vulnerable to illicit activities.

Conclusion

There has been some progress in the area of the customs union. However, further efforts are needed to complete alignment in a number of key areas. The customs administration is steadily strengthening its administrative capacity, but further efforts are needed. The customs declaration processing system remains to be upgraded. Overall, preparations in the area of the customs union are on track.

 
4.30. Chapter 30: External relations

…..The Law on Trade in Dual-Use Goods, adopted in November 2013, further aligned procedures and controls with the relevant acquis. Two rulebooks were adopted later in February. They ensured further coherence with regard to the acquis on trade in dual-use goods. Serbia would benefit from joining some of the international bodies in charge of overseeing the national export control systems (the ‘Multilateral Export Control Regimes’)….

…..As concerns bilateral agreements with third countries, Serbia is negotiating a free trade agreement (FTA) with Ukraine…..

Conclusion
Limited progress has been made in the field of external relations. Preparations for accession to the WTO are well advanced but move slowly in the final phase. Overall, preparations in the area of external relations are moderately advanced.
 
4.31. Chapter 31: Foreign, security and defence policy

….Regarding non-proliferation, in October 2013 Serbia adopted a new law on dual-use goods, partially fulfilling the preconditions for joining the Wassenaar Arrangement on export controls for conventional arms and dual-use goods and technologies. Its 2008 application to join the Wassenaar Arrangement now remains dependent on the adoption of a new law on trade of arms and military equipment. The ratification of the Additional Protocol to the Nuclear Non-Proliferation Treaty is still pending. Serbia signed the UN Arms Trade Treaty in August 2013….. 

Conclusion
…. Legislation on the tracking mechanism for the implementation of EU restrictive measures has yet to be adopted. Overall, preparations in this field are on track.
 
4.33. Chapter 33: Financial and budgetary provisions

There were no developments in the areas of traditional own resources, the value added tax-based resource and the gross national income-based resource. (For developments in the underlying policy areas, see Chapters 16 — Taxation; 18 — Statistics; 29 — Customs union; and 32 —Financial control.)

As regards administrative infrastructure, administrative capacity of the institutions in charge in the policy areas affecting the correcting application of the own resources rules needs to be further strengthened and developed. The coordinating agency necessary to ensure correct calculation, accounting, forecasting, collection, payment and control of own resources still needs to be established. Instruments to fight and reduce tax evasion and fraud and to reduce the informal economy need to be further developed and strengthened.

Conclusion

No progress can be reported on financial and budgetary provisions. The coordinating body required under the own resources scheme still needs to be established. Overall, preparations in this area are at a very early stage.

 

   

http://ec.europa.eu/enlargement/pdf/key_documents/2014/20140108-serbia-progress-report_en.pdf


 

 
 
 

 
 

 

FROM THE EUROPEAN COMMISSION'S PROGRESS REPORT ON SERBIA

 

Brussels, 16.10.2013

SWD(2013) 412 final

 

COMMISSION STAFF WORKING DOCUMENT
SERBIA
2013 PROGRESS REPORT

Accompanying the document
COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL
Enlargement Strategy and Main Challenges 2013-2014
{COM(2013) 700 final}


1.4. Normalisation of relations between Serbia and Kosovo (page 5)
…On IBM, joint interim crossing points have been opened on all six border gates and are up and
running. December’s agreement on the protection of religious and cultural heritage sites is being  mplemented. Implementation of the agreement on liaison arrangements started in June.
The two sides have also agreed to start collecting customs duties and to set up a fund for the development of northern Kosovo…
Direct high-level contacts and regular contacts at operational level continue to facilitate  ooperation, e.g. in the fight against organised crime…

2.3. Regional issues and international obligations (pages 11, 13)

…A joint contact centre for police and customs cooperation was opened in December…

4.7. Chapter 7: Intellectual property law (page 25)

…The customs administration introduced a web application for electronic exchange of information with right holders. Seizures of counterfeit goods decreased over the reporting period…

…There is still no formal coordination mechanism between the institutions in charge of IPR protection. Implementation of the national IPR strategy and action plan 2011-2015 has been delayed…

…The participation of economic operators and consumers in the prevention of counterfeiting and piracy remains limited…

Conclusion
Limited progress was made in the area of intellectual property law. Enforcement was improved, although formal coordination between stakeholders and effective implementation of the national IPR strategy remain to be ensured. The changes to the law on copyright regarding fee collection and exemptions constitute a step backwards in alignment to the EU acquis. Overall, alignment in the area of intellectual property law is advanced.

4.24. Chapter 24: Justice, freedom and security (pages 49, 50, 52)

…In the area of external borders and Schengen, the Integrated Border Management (IBM) strategy was revised in November to enhance the capacity of the coordination body for its implementation. Serbia has continued to improve the infrastructure and equipment at border crossing points by completing the installation of an immigration and case management system and increasing operational field equipment (special cameras, scanners, fingerprint capturing devices and detection devices)…Operational coordination between border police, customs and phytosanitary services needs to be improved. The connectivity of the databases from and to the biometric devices needs to be enhanced in order to support the operations of the Border Police. Analytical, communication, procedural, training and technical capabilities need to be strengthened in order to effectively counter irregular migration. Human resources’ risk analysis capacities need to be enhanced….

…Overall, Serbia continues to be moderately advanced on border management…

…As regards cooperation in the field of drugs, a new strategy for the period 2013-2020 has yet to be finalised…The country is on the main Balkans drug trafficking routes and continued and sustained efforts are needed by all involved law enforcement relevant agencies, including the customs administration, to detect and seize narcotics at the borders…
Overall, Serbia is moderately advanced regarding cooperation in the field of drugs.

Concerning customs cooperation (See also Chapter 29 — Customs union), Serbia’s customs administration engaged in joint cases with 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. Overall, Serbia is moderately advanced regarding the cooperation in the field of customs.

4.29. Chapter 29: Customs union (page 57)

As regards customs legislation, the Customs Law was amended in November and was further aligned with the acquis and with national legislation, particularly with some provisions of the Budget System Law. The Serbian government amended the decree on customs tariff nomenclature in November with the aim of aligning it with the 2013 EU Combined Nomenclature and with the liberalisation schedule under the Interim Agreement.

Further harmonisation is needed in the field of customs legislation. The Law on the Customs Service remains to be adopted. An adequate legislative framework on cultural goods is missing. The provisions on cash control have yet to be aligned with the acquis. The same goes for duty relief on imports of new production equipment. Legislation on customs-related security initiatives and authorised economic operators has yet to be implemented. The Serbian parliament ratified the Pan-Euro-Med Convention on Rules of Origin.

As regards administrative and operational capacity, the Customs Administration (CAS) has continued to improve its administrative capacity to effectively enforce the customs legislation. It continued to apply integrity procedures for customs officials and to step up the fight against corruption. Post-clearance controls and risk analysis systems are implemented following the two respective strategies. Simplification of customs procedures continued and the number of companies making use of such procedures increased. Coordination between the CAS and the Ministry of Finance and Economy is strengthening. The CAS is aiming to establish a functioning IT system based on interconnectivity between various departments. Over 95% of customs declarations are submitted electronically and the concept of electronic signature has been introduced. About 17% of declarations are subject to documentary or physical inspections. The electronic application for the protection of Intellectual Property Rights is used by around 45% of the rights holders. In terms of trade facilitation, the electronic system for exchanging pre-arrival information with Bosnia and Herzegovina, Montenegro and the former Yugoslav Republic of Macedonia is functioning well.

A new border crossing on the Serbia-Hungarian border was opened in May. A big challenge remains the upgrading of the customs declaration processing system (CDPS) and the customs laboratory.

Customs procedures between Kosovo and Serbia have further progressed with the opening of joint interim crossing points in December 2012 and January 2013 at six locations, including the two crossing points in northern Kosovo, as per the IBM agreement. The establishment of these co-located crossing points has allowed daily cooperation between both administrations and regular exchange of information. On 17 January, both parties concluded an agreement for the restoration of customs controls at the two crossing points (gates 1 and 31). In the meantime, the administrative border/boundary line between Kosovo and Serbia remains vulnerable to illicit activities.

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

Conclusion
There has been some progress in the area of the customs union. The Customs Law and legislation on the tariff nomenclature were further aligned with the acquis. The CDPS system needs to be renewed or upgraded. Overall, preparations in the area of the customs union are well on track.

4.30. Chapter 30: External relations (page 58)

…As concerns bilateral agreements with third countries, Serbia is currently negotiating a free
trade agreement (FTA) with Ukraine. Serbia’s trade arrangements with the Russian Federation, Belarus and Kazakhstan were harmonised, since the three countries form a customs union…Serbia signed the Pan-Euro-Mediterranean (PEM) Convention on Rules of Origin in November…

4.33. Chapter 33: Financial and budgetary provisions (page 60)

There were no developments in the areas of traditional own resources, the VAT resource
and GNI resource.
(For progress in the underlying policy areas, see Chapter 16 — Taxation; Chapter 18 — Statistics; Chapter 29 — Customs union; and Chapter 32 — Financial control).

As concerns the administrative infrastructure, administrative capacity in the relevant policy areas needs to be strengthened. A coordinating body to ensure correct calculation, accounting, forecasting, collection, payment and control of own resources has yet to be established. The body is also required for reporting to the EU on the implementation of the own resources rules. Instruments to fight and reduce tax evasion and fraud and to reduce the informal economy also need to be further developed.

Conclusion
No progress has been made with regard to financial and budgetary provisions. A coordinating body to ensure correct calculation, accounting, forecasting, collection, payment and control of own resources has yet to be established. Overall, preparations in this field are at an early stage.

 

 

 

 

FROM THE EUROPEAN COMMISSION'S PROGRESS REPORT ON SERBIA

 

EUROPEAN COMMISSION


                                                      Brussels, 10.10.2012
                                                            SWD(2012) 333


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.

 


 

 

ANALYTICAL REPORT
Commission Opinion on Serbia's application for membership of
the European Union 3.29. Chapter 29: Customs Union

The EU acquis in this sector consists of the Community Customs Code and its implementing provisions, the EU's Combined Nomenclature (CN), the Common Customs Tariff including trade preferences, tariff quotas and tariff suspensions and other customs-related legislation outside the scope of the Customs Code. Member States must ensure that the necessary implementing and enforcement capacity, including links to the relevant EU computerized customs systems (tariff-related systems, NCTS, ECS, ICS, etc.) are in place. The customs authorities must also ensure adequate capacity to implement and enforce special rules laid down in related areas of the EU acquis such as on external trade, health and security.

The Interim Agreement establishes a free-trade area with the EU and the progressive removal of customs duties on a wide range of products. It places an obligation on Serbia to adopt the Combined Nomenclature. It also provides for administrative cooperation on customs matters and lays down rules of origin which have to be observed in order for EU and Serbian operators to benefit from the trade preferences. In addition, it paves the way for gradual approximation of the Serbian customs legislation to the EU acquis.

In terms of customs legislation, Serbian law is largely aligned with the EU acquis. The Customs Law adopted in March 2010 is basically harmonised with the EU Customs Code. In January 2011, the relevant implementing legislation entered into force. The Combined Nomenclature (CN) is applied and the classification rules are largely in line with the EU acquis. However, classification practice, including decisions on binding tariff information, is still to be upgraded to EU standards.

In June 2011 Serbia also abolished administrative customs fees for regular activities, thereby bringing the system into line with the requirements of the Interim Agreement and the EU acquis. Preferential tariff quotas are managed by the Information System of Customs Services (ISCS) on a first-come, first-served principle on a daily basis. The country does not apply erga omnes tariff quotas or tariff ceilings and lacks an automated system for collecting statistics. The system of autonomous suspensions and tariff quotas needs to be brought into line with the provisions applied in the EU.

Serbia implements preferential rules of origin and methods of administrative cooperation that largely reflect those used by the EU in its free-trade agreements. Furthermore, it applies diagonal cumulation with the EU and other countries subject to the European Union Stabilisation and Association Process. The status of approved exporter also exists. Serbia complies with EU law on customs value.

The national legislation on duty relief is well harmonised with the EU acquis, but some discrepancies still exist, notably the rules on duty relief for equipment imported by, and for, passengers or the monetary threshold for duty relief and the rates for simplified declaration.

Serbia is observer in the Common Transit Convention and intends to join it once all the legal and technical requirements are met. The Customs Administration needs to encourage further use of simplified customs procedures in the framework of specific authorisations.
The legislation on customs-related security initiatives, including authorised economic operators, has been adopted, but implementing provisions are missing. Post-clearance controls and the risk analysis systems have been relatively successful over the last year, but need to be used more frequently for systematic planning and execution of ex-post controls. The risk analysis capacity is also hampered by an insufficient IT system and lack of strategy. Customs perform a high percentage of physical controls but is not producing proportionate findings. Risk analysis and management need to be changed to a thematic system targeting risk control, similar to the system applied in the EU, supported by an adequate IT application.

In line with the requirements of the Interim Agreement, the Customs Administration of Serbia (CAS) has made efforts to reach the EU level of protection of intellectual property rights (IPR). It has substantially tightened up the control procedures at the border and should now further reinforce effective means of enforcement. On drug precursors, Serbia has put in place a system for pre-export notification, while on cultural goods Serbia still has to adopt legislation and apply controls in line with the EU requirements. The provisions on cash control do not meet the requirements of the EU legislation.

Concerning administrative and operational capacity, the CAS has been continually strengthening its administrative capacity for effective enforcement of customs legislation. It is well-organised and implements sound procedures and working methods allowing the competent staff to enforce the customs and related legislation sufficiently. However, there are still room for improvement. A properly equipped and functioning customs laboratory is missing and the overall operational capacity needs to be strengthened to ensure further enforcement of legislation (for example, on IPR and safety The coordination between the Ministry of Finance and the CAS needs to be better streamlined. In 2010, the CAS, in cooperation with the World Customs Organisation, initiated a pilot project on strengthening the integrity of customs officials and stepping up the fight against corruption. However, further efforts are needed in fields such as office management, the performance appraisal system, ethics and training. Moreover, the audit resources need to be reinforced and the central customs administration should be allowed to carry out audits.

In December 2010 the Customs Administration adopted a business strategy for 2011-2015. A customs IT strategy was adopted in early autumn 2011. The CAS currently uses the Information System of Customs Services (ISCS). There are plans to merge the ISCS with the Integrated Customs Tariff TARIS. Although around 90% of customs declarations are submitted electronically, data exchange for customs formalities is only partially processed through the IT system. In general, Serbia has progressed on customs computerisation and is planning future interconnectivity with EU customs IT systems. However, further upgrading of the customs IT systems is needed.

Serbia joined the Customs 2013 Programme in April 2009 and has participated regularly in activities under it ever since. Through the conclusion of agreements on international cooperation, the customs authorities share information with other foreign institutions. In terms of trade facilitation, the customs administration formalised procedures for exchanging prearrival information with neighbouring countries. Implementation of the integrated border management strategy and action plan continued (see also Chapter 24 – Justice, freedom and security ).

The customs procedures and formalities to guarantee correct application of the EU acquis need to be applied at the administrative boundary line (ABL) between Kosovo and Serbia, in particular at gates 1 and 31 to the north of Kosovo. At the ABL, insufficient controls create the risk of VAT carrousels, fraud with excises, illicit trade and imports without paying customs duties. Serbia needs to prevent this illicit trade in a way that respects that Kosovo is a separate customs territory. Impact of the modifications to VAT refund rules adopted in September 2011 in this respect as regards oil and oil derivatives, will have to be assessed.

The agreement on accepting the Kosovo customs stamps needs to be implemented in full compliance with CEFTA rules.

Conclusion

The customs legislation is almost fully aligned with the EU acquis. The obligations stemming from the Interim Agreement are being met well. The administrative and operational capacity of the Serbian Customs Administration is good. It has the administrative structures and adequate resources to implement and enforce the customs legislation and make sure that procedures and working methods are implemented effectively. However, in order to be able to address the future challenges, the Customs Adminitration will need to be reinforced, notably to increase post-clearance controls based on risk analysis, expand use of simplified procedures for reliable economic operators, step up use of the guarantee management system and upgrade interconnectivity and interoperability with the EU IT systems. Customs procedures to guarantee correct application of the EU acquis at the ABL with Kosovo have to be introduced.

Overall, Serbia is already well on the way to meeting the EU acquis and remains committed to reforms in the area of customs. If it continues its efforts, Serbia should, in the medium term, have the capacity to comply with the requirements of the EU acquis in the field of customs.

 

______________________________________________________
 1 Regarding customs cooperation, the customs administration is established as an administrative authority within the Ministry of Finance. Serbia is currently implementing 20 bilateral agreements on mutual administrative assistance in the customs field, including with neighbouring countries. Technical arrangements on electronic exchange of customs data via the Electronic Exchange of Data System were established with the customs administrations of Bosnia and Herzegovina, Montenegro and the former Yugoslav Republic of Macedonia. In April 2010 Serbia and Bulgaria signed an agreement on establishing and operating a joint contact centre for police and customs cooperation. However, Serbia needs to align with the EU legislation on use of technology for customs purposes and to ratify and then implement the 'Naples II' Convention on mutual assistance and cooperation between customs administrations.

 


  

 



 

 

Cefta Trade Portal

 

All rights reserved 2009 © Republic of Serbia - Ministry of Finance and Economy - Customs Administration