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All Roads Lead to the EU: Serbia - Implementation Issues and Practical Problems

All Roads Lead to the EU: Serbia - Implementation Issues and Practical Problems

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While public perception in Serbia on joining the EU has generally been positive, according to Karanovic & Partners Senior Partner Dragan Karanovic, “recent research suggests that the overall enthusiasm of the public has taken a slight decrease, establishing a polarized, almost fifty-fifty view towards EU accession.”

Karanovic says that, since 2019, “the negotiations are somewhat stuck on geo-politics questions and the slow-moving judiciary, rule of law, and freedom of speech reforms.” The COVID-19 pandemic has further dampened the tempo, he says, “and created a stalemate on the Serbian path to European integration. Nevertheless, the strategic goal is still in place – Serbia remains committed to EU accession.” Out of a total of 35 chapters, 18 have been opened so far, and only two have been temporarily closed, according to Zivkovic Samardzic Partner Uros Djordjevic. He agrees that negotiations have slowed down of late, with “no new negotiation chapters opened in 2020.” He reports that in 2021 “Serbia switched to a new methodology by which the negotiating chapters are grouped into six clusters.” While Cluster 1, containing all previously opened chapters, was opened in 2021, “no new chapters have been opened in 2021 either,” according to Djordjevic.

He notes that, according to the October 19, 2021, Report of the European Commission, several key areas have been marked as requiring redoubled efforts: agriculture and rural development, the justice system and fundamental rights, freedom and security, the environment and climate change, and financial control.

Karanovic says that EU policy makers’ recommendations are generally well accepted in Serbia and the approach when addressing the relevant issues has shown some progress. “Where we go from here hinges on preparing adequate implementation strategies, with realistic goals and progress monitoring. The future political setting could also be a great or a poor catalyst for change.” Both Djordjevic and Karanovic agree that the current 2025 target for EU accession is more aspirational than anything. “Right now, this prediction serves more as an encouragement to fast track the existing issues, rather than a realistic deadline, Karanovic says. Djordjevic notes that, while a motion to change that goal to 2030 was not approved (during the October 2021 EU Western Balkan Summit), “taking into account what little progress has been made in closing the currently opened chapters, 2030 would be a more realistic date for the accession.”

Harmonization vs. Implementation

“Harmonization of laws predominantly occurred in previously unregulated areas,” according to Djordjevic, “with the passing of new laws modeled on EU legislation.” He highlights legislative progress in the following areas: protection of business secrets, patent law, the technical requirements for products and conformity assessment, organ transplantation, human cells and tissue, and gender equality, all in 2021; trademarks, digital goods, in 2020; export and import of dual-use goods, protection of users of financial services in distance contracting, both in 2019; maritime travel and confiscation of criminal property, both in 2018; and transfusion medicine and bio-medically assisted fertilization, in 2017. “However, the practical application of those harmonized laws is still lacking,” he says.

“Serbia had a steady tempo in EU-harmonized legislative activity in the past five years,” Karanovic says. According to him, harmonization was undertaken in two streams: “by implementing harmonized laws in areas for which chapters had been opened, and by anticipating weaknesses in legislation for still closed chapters, to get a jump start for those chapters, once unlocked.”

He highlights progress on anti-trust and anti-monopoly legislation, whereby the Serbian Commission for the Protection of Competition is active in harmonizing practices “by using EU institutions’ interpretative instruments.” Djordjevic agrees yet notes that Serbia “still has to ensure systematic compliance with notification and standstill obligations for all state aid measures as well as develop solid track records on the application of competition law and the Law on State Aid Control.”

Karanovic mentions a new consumer protection law, progress on data protection (with only the EU updates introduced after 2018 left to implement), and the “implemented provisions on access to information of public importance, in line with European standards, a great step towards a democratic and transparent society.”

He says “considerable progress can also be seen on green energy, sustainability, and climate legislation, with Serbia adopting a package of energy laws and a comprehensive climate law. The European Commission considers the opening benchmarks to have been met and recommended the opening of the respective accession cluster.” However, Djordjevic is concerned that the recent “efforts to harmonize the laws governing different aspects of environmental protection have been largely formal, without any practical effects.” He is more optimistic about the newly adopted Trade Law: “it was also one of the highlights of harmonization, where terms like e-shop and e-platform were found for the first time, and the most common forms of e-commerce were recognized and defined, including sales through platforms connecting consumers and merchants and dropshipping.”

Rising Standards

The European Commission’s opinion is that limited progress (of a purely formal nature) has been made in some key areas, Djordjevic says. “According to the EC, the essential effect or ‘track record’ is not yet visible when it comes to electoral conditions, the functioning of democratic institutions, the fight against corruption, organized crime, or freedom of expression,” he notes. “First on the legislative to-do list is the highly anticipated constitutional and judiciary law reform aimed at establishing and strengthening the independence of the judiciary,” Karanovic agrees. He says that crucial alignment work is also expected on capital movement, financial services, food and medicine safety, and healthcare – “as these seem to be the areas where adequate protective mechanisms lack the most.” He further lists copyright and related rights, consumer protection, state aid, whistle-blower, and border control legislation as some of the areas where careful harmonization will have to be undertaken.

“Public procurement is an important ongoing issue as well,” according to Karanovic, “with noticeable changes for the transparency and digitalization of the process. In 2021, the European Commission evaluated Serbia as moderately prepared.” While Djordjevic agrees, he says “Serbia still needs to ensure further alignment,” particularly on public-private partnerships and concessions, publicly funded projects, and intergovernmental agreements with third countries.

Finally, Karanovic also mentions that several EU-harmonized laws are in the National Assembly’s pipeline, regarding trade and company law, electronic media, and biocides, among others. As he sees it, the work may not slow down, “as EU policy is constantly expanding and making the to-do list longer every day. Thus, the standards are only rising higher for each aspiring EU membership candidate.”

Key Issues

“All these laws are important milestones and serve as stable routers in each of the respective areas,” according to Karanovic. He thinks the “most noticeable (and desirable) wind of change will likely be brought on by updates regarding the freedom of movement of people, capital, goods, and services.” He expects that such changes will introduce Serbia to the EU’s single market as an equal, opening vast growth possibilities. He concedes that “the true difficulties do not lie with the introduction of harmonized laws into Serbian legislation, but with their proper implementation.”

Chapter 27 on the environment and climate change is, according to Djordjevic, “certainly the most important area which requires harmonization, due to its sheer scale and the real-world impact it has on the daily lives of Serbian citizens.” He says the problems here are not purely legislative in nature, but rather practical and economical ones. He points out that, “currently, Serbia treats only 10% percent of its wastewater, with Belgrade and Novi Sad discharging wastewater directly into the Sava and Danube rivers. Only 7% of communal waste is currently being recycled, while the EU target for 2020 was 50%. Only 0.7% of GDP is invested in environmental protection, while most CEE countries invest around 2% of their GDP.”

“To appreciate the scope of the work required for complete harmonization, it is worth pointing out that an estimated EUR 15 billion will need to be invested before closing Chapter 27,” Djordjevic concludes.

This Article was originally published in Issue 8.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.