The report and the clauses
About the report
Let us have a look at the structure of the report. It is divided into two parts; the first describes the state of the Polish economy. The Commission considers the economic situation to be stable and with a tendency for improvement. What concerns the Commission most is the fact that the Polish budget will not be able to absorb EU funds and needs reforming, especially as regards "Expenses". Another issue of concern is the slow pace of privatization, and the restructuring of heavy industry, energy distribution sector, and agriculture.
The second part of the report describes Poland's fulfillment of EU requirements. It is divided into 29 chapters, just like the accession negotiations. The overall message is upbeat. The European Commission found that in most negotiation areas, Poland has reached a high level of compliance with EU requirements.
Unfinished business
However, there are nine issues that cast a dark shadow on the implications of accession. The unfinished business includes:
• free movement of persons:
- mutual recognition of professional qualifications;
• fisheries:
- delay in the adoption and full implementation of legislation in the area of control systems, in particular on the use of the Vessel Monitoring System and of the operation of the Fishing Vessel Register;
• agriculture:
- establishment of Paying Agencies;
- implementation of the Integrated Administration and Control System (IACS);
- TSE and animal by-products - carcass disposal and rendering plants;
- control of the movement of animals;
- harmful plant organisms - control of potato ring rot and wart disease;
- implementation of major veterinary acts;
- public health - upgrade of agri-food establishments;
The first two problematic areas seem to be of a lesser concern, since the shortcomings concerning the free movement of persons and fisheries seem isolated and easy to eliminate. On the other hand, the seven 'agriculture' points look much more risky, especially for more than four thousand agri-food businesses.
Risky agriculture
The above seven shortcomings in the area of agriculture can be divided into two main groups: Two relating to direct subsidy distribution systems, and five veterinary and sanitary related issues.
If the first group of shortcomings has still not been dealt with by the date of accession, the victims will mainly be Polish farmers who will have to wait until the systems are fully operational to recive subsidies. The second group of delays - if not eliminated - could adversely affect not only the functioning of agri-food companies, but foodstuffs exporters as well. It is all about safeguard clauses.
If Polish legislation and administration are not prepared to fulfil the EU veterinary and sanitary requirements, the Commission could initiate action to prevent disruptions in the functioning of the internal market.
Article 38 of the Treaty of Accession allows the European Commission to apply safeguard mechanisms with reference to specific sectors of the new Member States' economies, in case a new Member State fails to implement commitments made during the accession negotiations. According to the Treaty, the clause refers to situations when the failure would upset the functioning of the internal market or would constitute an imminent risk of doing so.
The safeguard clause may be applied until the end of a period of up to three years after the date of accession. The implementation of the safeguard clause is possible even before the date of accession, and its application may be extended beyond the period of three years after the date of accession (until the relevant commitments have been fulfilled).
Therefore, if the harmonization in the field of veterinary and sanitary issues (or in any other area, but here the risk seems the highest) is not completed by the date of accession, the Commission is likely to initiate the implementation of the safeguard clause. The protective measures being applied could possibly lead to a ban on meat or milk exports to EU Member States, or sanitary controls at the borders.
The seven risky agricultural issues include the upgrade of agri-food establishments. It must be remembered that according to the Treaty of Accession, all foodstuff producers must make their establishments compliant with the hygienic and sanitary Community law requirements before May 1, 2004. During the accession negotiations, Poland obtained transition periods for those animal agricultural product producers that had presented a credible schedule of complete harmonization with EU requirements. Consequently, an Annex to the Treaty of
Accession includes:
• 56 milk establishments, which may produce both milk complying with EU requirements and (temporarily) milk that does not comply with them;
• 113 milk establishments covered by a transition period to harmonize with EU standards by 2006 at the latest; and
• 330 meat establishments covered by a transition period to harmonize with EU standards by the end of 2007 at the latest (including seven refrigeration and 40 fish processing establishments).
According to the Ministry of Agriculture and Rural Development the number of plants that have to comply with the EU requirements within six months is as follows:
• 1,400 red meat processing plants (42 percent of the total number of plants);
• 175 poultry processing plants (38 percent);
• 170 milk processing plants (41 percent);
• 89 fish processing plants (27 percent).
Grace periods
The Veterinary Inspection admits that Polish agri-food companies have been too slow with the adjustments. To prevent their shutdown, Poland negotiated grace periods for some of them in the deadlines set during the negotiations. However, the outcome of the talks is still uncertain. The general overview of the situation shows that the risk of safeguard clause implementation unfortunately cannot be excluded for the time being. According to the European Commission, a definite answer - whether good or bad - will only be known in April, 2004.
Łukasz Koliński, Consultant, EU Advisory Services at Ernst & Young
Let us have a look at the structure of the report. It is divided into two parts; the first describes the state of the Polish economy. The Commission considers the economic situation to be stable and with a tendency for improvement. What concerns the Commission most is the fact that the Polish budget will not be able to absorb EU funds and needs reforming, especially as regards "Expenses". Another issue of concern is the slow pace of privatization, and the restructuring of heavy industry, energy distribution sector, and agriculture.
The second part of the report describes Poland's fulfillment of EU requirements. It is divided into 29 chapters, just like the accession negotiations. The overall message is upbeat. The European Commission found that in most negotiation areas, Poland has reached a high level of compliance with EU requirements.
Unfinished business
However, there are nine issues that cast a dark shadow on the implications of accession. The unfinished business includes:
• free movement of persons:
- mutual recognition of professional qualifications;
• fisheries:
- delay in the adoption and full implementation of legislation in the area of control systems, in particular on the use of the Vessel Monitoring System and of the operation of the Fishing Vessel Register;
• agriculture:
- establishment of Paying Agencies;
- implementation of the Integrated Administration and Control System (IACS);
- TSE and animal by-products - carcass disposal and rendering plants;
- control of the movement of animals;
- harmful plant organisms - control of potato ring rot and wart disease;
- implementation of major veterinary acts;
- public health - upgrade of agri-food establishments;
The first two problematic areas seem to be of a lesser concern, since the shortcomings concerning the free movement of persons and fisheries seem isolated and easy to eliminate. On the other hand, the seven 'agriculture' points look much more risky, especially for more than four thousand agri-food businesses.
Risky agriculture
The above seven shortcomings in the area of agriculture can be divided into two main groups: Two relating to direct subsidy distribution systems, and five veterinary and sanitary related issues.
If the first group of shortcomings has still not been dealt with by the date of accession, the victims will mainly be Polish farmers who will have to wait until the systems are fully operational to recive subsidies. The second group of delays - if not eliminated - could adversely affect not only the functioning of agri-food companies, but foodstuffs exporters as well. It is all about safeguard clauses.
If Polish legislation and administration are not prepared to fulfil the EU veterinary and sanitary requirements, the Commission could initiate action to prevent disruptions in the functioning of the internal market.
Article 38 of the Treaty of Accession allows the European Commission to apply safeguard mechanisms with reference to specific sectors of the new Member States' economies, in case a new Member State fails to implement commitments made during the accession negotiations. According to the Treaty, the clause refers to situations when the failure would upset the functioning of the internal market or would constitute an imminent risk of doing so.
The safeguard clause may be applied until the end of a period of up to three years after the date of accession. The implementation of the safeguard clause is possible even before the date of accession, and its application may be extended beyond the period of three years after the date of accession (until the relevant commitments have been fulfilled).
Therefore, if the harmonization in the field of veterinary and sanitary issues (or in any other area, but here the risk seems the highest) is not completed by the date of accession, the Commission is likely to initiate the implementation of the safeguard clause. The protective measures being applied could possibly lead to a ban on meat or milk exports to EU Member States, or sanitary controls at the borders.
The seven risky agricultural issues include the upgrade of agri-food establishments. It must be remembered that according to the Treaty of Accession, all foodstuff producers must make their establishments compliant with the hygienic and sanitary Community law requirements before May 1, 2004. During the accession negotiations, Poland obtained transition periods for those animal agricultural product producers that had presented a credible schedule of complete harmonization with EU requirements. Consequently, an Annex to the Treaty of
Accession includes:
• 56 milk establishments, which may produce both milk complying with EU requirements and (temporarily) milk that does not comply with them;
• 113 milk establishments covered by a transition period to harmonize with EU standards by 2006 at the latest; and
• 330 meat establishments covered by a transition period to harmonize with EU standards by the end of 2007 at the latest (including seven refrigeration and 40 fish processing establishments).
According to the Ministry of Agriculture and Rural Development the number of plants that have to comply with the EU requirements within six months is as follows:
• 1,400 red meat processing plants (42 percent of the total number of plants);
• 175 poultry processing plants (38 percent);
• 170 milk processing plants (41 percent);
• 89 fish processing plants (27 percent).
Grace periods
The Veterinary Inspection admits that Polish agri-food companies have been too slow with the adjustments. To prevent their shutdown, Poland negotiated grace periods for some of them in the deadlines set during the negotiations. However, the outcome of the talks is still uncertain. The general overview of the situation shows that the risk of safeguard clause implementation unfortunately cannot be excluded for the time being. According to the European Commission, a definite answer - whether good or bad - will only be known in April, 2004.
Łukasz Koliński, Consultant, EU Advisory Services at Ernst & Young
