Bosnia and Herzegovina

BOSNIA AND HERZEGOVINA

Council of Ministers

CONTRIBUTION OF BIH INSTITUTIONS TO THE REGULAR ANNUAL REPORT ON BOSNIA AND HERZEGOVINA PROGRESS IN THE EUROPEAN INTEGRATION

FOR THE PERIOD SINCE 30 SEPTEMBER 2008

Sarajevo, 04 June 2009

Directorate for European Integration TABLE OF CONTENTS

1. RELATIONS BETWEEN BOSNIA AND HERZEGOVINA AND THE EUROPEAN UNION...... 3 2. POLITICAL CRITERIA...... 5 2.1. DEMOCRACY AND RULE OF LAW...... 5 2.1.1. Constitution/Government...... 5 2.1.2. Parliament...... 7 2.1.3. Public administration...... 7 2.1.4. Civil oversight of the security forces...... 13 2.2. HUMAN RIGHTS AND PROTECTION OF MINORITIES...... 17 2.2.1. Observance of international human rights law...... 17 2.2.2. Civil and political rights...... 17 2.2.3. Economic and social rights...... 19 2.2.4. Minority rights, cultural rights and protection of minorities...... 21 2.3. REGIONAL ISSUES AND INTERNATIONAL OBLIGATIONS...... 22 2.3.1. Cooperation with ICTY...... 22 2.3.2. Regional cooperation...... 24 3. ECONOMIC CRITERIA...... 26 3.1. THE EXISTANCE OF FUNCTIONAL MARKET ECONOMY...... 26 3.1.1. Macroeconomic stability...... 26 3.1.2. Interplay of market forces...... 33 3.1.3. Free market entry and exit...... 34 3.1.4. Development of financial sector...... 35 3.2. THE CAPACITY TO COPE WITH COMPETITIVE PRESSURE AND MARKET FORCES WITHIN THE UNION...... 36 3.2.1. Human and physical capital...... 36 3.2.2. Sector and enterprise structure...... 37 3.2.3. State influence on competitiveness...... 39 3.2.4. Economic integration in EU...... 39 4. EUROPEAN STANDARDS...... 40 4.1. INTERNAL MARKET...... 40 4.1.1. Free movement of goods...... 40 4.1.2. Movement of persons, services, capital and right to establishment...... 44 4.1.3. Customs and taxation...... 46 4.1.4. Competition...... 48 4.1.5. Public procurement...... 48 4.1.6. Intellectual property...... 49 4.1.7. Employment and social policy...... 50 4.1.8. Education and research...... 51 4.1.9. World Trade Organization (WTO) related issues...... 52 4.2. SECTORAL POLICIES...... 52 4.2.1. Industry and small and medium enterprises...... 52 4.2.2. Agriculture and Fishery...... 53 4.2.3. Environment...... 57 4.2.4. Transport Policy...... 59 4.2.5 Energy...... 62 4.2.6. Information Society and Media...... 63 4.2.7. Financial Control...... 64 4.2.8 Statistics...... 65 4.3. JUSTICE, FREEDOM, SECURITY...... 66 4.3.1. Visa, border, control, asylum and migration...... 66 4.3.2. Drugs...... 74 4.3.3. Police...... 75 4.3.4. Fighting organised crime and terrorism...... 77 4.3.5.Trafficking in Human Beings...... 79 4.3.6. Protection of personal data...... 80

1. RELATIONS BETWEEN BOSNIA AND HERZEGOVINA AND THE EUROPEAN UNION

Bosnia and Herzegovina (BiH) is a potential candidate for European Union (EU) membership and participates in the Stabilization and Association Process (SAP).

Signing the Stabilization and Association Agreement (SAA) on 16 June 2008 opened a new stage in the relations between Bosnia and Herzegovina and the EU and furthered the European perspective of BiH.

The SAA provides a framework of mutual obligations in a wide range of political, economic and trade matters. Until the SSP has come into effect, i.e. until the ratification procedure has been completed, the Interim Agreement, which focuses on trade and trade-related areas, has been in force since 1 July 2008. Article 40 of the Interim report establishes the Interim Committee that supervises the implementation of the In- terim Agreement. The first meeting of the Stabilization and Association Interim Com- mittee was held on 7 October 2008 in Sarajevo. Meetings of sub-committees are held according to the fixed schedule.

So far the ratification procedure has been completed in BiH, Bulgaria, Estonia, Finland, Lithuania, Hungary, Slovakia, Slovenia, Sweden, Ireland and Denmark.

Reform Process Monitoring (RPM) has continued discussion about the areas from the Stabilization and Association Agreement that are not included in the Interim Agree- ment until the SAA has come into effect.

With a view to efficiently fulfilling obligations under the SSA, an Action Plan for the implementation of SAA and Interim Agreement is adopted at the 57th meeting held on 29 July 2008. Besides, with a view to bringing its reform priorities with European Partnership in line, the 6 October 2008 thematic session of the Council of Ministers of BiH adopted an Action Plan for the implementation of priorities under European Part- nership. On the basis of the documents above, at the 5 March 2009 session the BiH Council of Ministers adopted “The First Quarterly Review of Activities Implemented under the Action Plan for European Partnership” and „Elaboration of the Action Plan for Implementation of the Interim Agreement and SAA” and “The First Quarterly Re- port on the Situation of Obligations Fulfilled under the Interim Agreement and SAA”.

Harmonization of foreign policy positions of BiH with the EU Common Foreign and Security Policy has continued. As a potential candidate for EU membership, BiH joins statements and common positions of EU whenever invited.

The EU - BiH inter-parliamentary dialogue, attended by a delegation of the Parliamentary Assembly of BiH and European Parliament, was continued at the 11th meeting held on 21 and 22 January 2009 in Brussels.

3 An informal meeting of EU – WB ministers of foreign affairs (on the margin of EU Gymnich meeting) was held on 28 March 2009 in the Czech Republic. The EU-WB Forum of the ministers of justice and the interior was held on 6 and 7 November 2008 in Zagreb. The EU – BiH political dialogue is conducted at the ministerial level (in Troika format). A regular annual meeting attended by EU Troika and BiH Minister of Foreign Affairs was held on 29 September 2008, on the margin of UN GA.

The agreements on visa facilitation and readmission between EU and BiH are still in effect. The first European Commission assessment of the implementation of the Visa Liberalization Road Map by BiH was published on 25 November 2008. The BiH Council of Ministers discussed the assessment and adopted an Action Plan for the implementation of EC recommendations. The EC Assessment Mission for BiH finished in March 2009.

EU Council Joint Action 2009/181/CFSP of 11 March 2009 appointed Valentin Inzko a EU Special Representative to BiH (EUSR).

The November 2008 Conclusion of the EU Foreign Affairs Council repeatedly stressed an intention of EU to strongly engage in BiH and a will to take over responsibility for stronger presence in BiH after the end of mandate of the Office of High Representative.

After a significant reduction to 2,500 troops on the ground, the military mission of EU in BiH (EUFOR/Althea) has maintained its presence in BiH with a mandate to continue monitoring the compliance with the Framework Peace Agreement for BiH and helping building a safe and secure environment. The mandate of ALTHEA Operation was extended of 20 November 2008 for another 12 months by UN Security Council Resolution. In March 2009 the EU Council for General Affairs and External Relations noted that, despite the challenges of the political environment, the security situation in BiH remained stable. The Council welcomed a progress in the preparations for a possible evolution of ALTHEA Operation. The Council agreed to regularly follow these activities in order to make a decision on the future of the Operation after the requirements had been fulfilled. In this sense the Council reiterated that the possible evolution of ALTHEA Operation should take the developments in the political sphere in account.

The mandate of the EU Police Mission (EUPM) was extended until 31 December 2009 by 19 November 2007 EU Council Joint Action. EUPM will continue to focus on the fight against organized crime, support to the police reform and building a sustainable, professional and multiethnic police structure working in accordance with the European standards.

The BiH Council of Ministers1 adopted the Decision on Appointment of DIPAC, the Decision on the Manner of Appointment, Relief from Office and Rights and Responsibilities of DIPAC, the Decision on the IPA Coordination Board and the Decision on the Chairman of the IPA Coordination Board. The BiH Minister of Finance and Treasury was appointed the DIPAC.

1 At 61st meeting held on 7 October 2008 (“BiH Official Gazette“ No. 92/08 of 17 November 2008)

4 In Brussels on 24 November 2008, pursuant to the Framework Agreement on BiH Participation in Community Programmes2, the Memorandum of Understanding between EC and BiH on the BiH accession to the Seventh Framework Programme for Research, Technological Development and Technology (FP7) has signed. BiH also expressed its interest in several other programmes of the Community. In October 2008 the BiH Minister of Civil Affairs sent a letter of intent for the participation of BiH in COST and EUREKA programmes.

On 26 November 2008 BiH ratified the IPA Framework Agreement and accordingly passed amendments to the Law on the Value Added Tax exempting the contractors from European Union that provide services, construction works or equipment within IPA-funded projects from VAT, customs duties and import duties.

IPA 2009 Programming Process - a national package that was implemented in the period between December 2008 and March 2009, and 18 preliminary projects were designed. BiH draws funds from the EU „Infrastructure Project Facility“financial instrument.

BiH became a full member of the Mediterranean Programme by the 7 October 2008 EC decision and, as such, has submitted a number of projects that are in the stage of evaluation.

2. POLITICAL CRITERIA

2.1. DEMOCRACY AND RULE OF LAW

Constitution/Government

At the meeting in Prud (Odžak)3, leaders of the three political parties (SDA, SNSD and HDZ BiH) agreed on a framework platform for a change of the Constitution, which should drive in the direction of BiH Constitution amending in line with European Convention on Human Rights and Fundamental Freedoms. The goal of the understanding was to achieve five objectives and two key conditions that would lead to a transformation of OHR. They agreed that the BiH Constitution should be changed through amendments to the existing Constitution, with the expertise of international organizations to be used in the process. They agreed on the Census to be organized in 2011 with all language, nationality and religion indicators and on the solution of the status of BD. Consequently, Amendment I to the Constitution of BiH respecting BD was proposed by BiH Council of Ministers and passed by the Parliament4 and it has come into effect. This was fulfilment of one of five objectives set by the Peace Implementing Council for BiH for the closure or a transformation of the Office of the High Representative. 2 Which took effect in January 2007. 3 It was held on 8 November 2008 4 At the 76th sessions held on 12 February 2009 in Sarajevo the BiH Council of Ministers agreed on the Draft Amendment I to the Constitution of BiH respecting BD. Amendment I was passed by the House of Representatives of BiH Parliamentary Assembly at the 49th session held on 25 March 2009 and by the House of Peoples at the 27th sessions held on 26 March 2009 and was published in "BiH Official Gazette“, No 25/09

The BiH Council of Ministers adopted a Decision on the Appointment of Members of Working Group for Property Inventory5, which should finish the task within six months at the latest. The Working Group, which will make decisions by consensus, consists of two representatives from the BiH Ministry of Finance and Treasury, BiH Ministry of Justice and BiH Attorney’s General Office each, and three representatives from the Governments of the Republika Srpska (RS) and the Federation of BiH (FBiH) each and one representatives from the government of Brčko District (BD).

The BiH Statistics Agency was mandated to start official preparations for the Census for the population and apartments in BiH taking into account all elements provided for by EUROSTAT, including language, nationality and religion indicators. The BiH Council of Ministers adopted the Information Paper of the Statistics Agency of BiH6 containing a proposal to issue a conclusion about international monitoring in the Census for the population, households and apartments in BiH in 2011. It was concluded that European Commission – the Commissioner for International Relations should be asked to approve organized international monitoring of preparations for and realization of Census of the population, households and apartments in BiH in 2011, the BiH Statistics Agency being responsible for doing it. The BiH Council of Minis- ters7 adopted a Decision on the Establishment of Inter-ministerial Working Group for Drafting the Law on Census of the population, households and apartments, which has a task to prepare the draft law within 100 days at the latest and submit it to the BiH Council of Ministers. The Draft Law on Amendments to the Law on the Value Added Tax determining that the goods and services provided within IPA-funded projects are exempted from VAT was passed by the Parliament and they have come into effect 8.

The Fiscal Council of BiH has carried the Rulebook of Procedure defining in details the work of the Fiscal Council Secretariat.

With a view to establishing a structure for the SAA implementation, the BiH Council of Ministers adopted the Decision on the Establishment of the European Integration Commission within the Interim Committee for the Stabilization and Association9 and the Decision on the Establishment of Working Groups for European Integration 10, which provides for establishment of seven working groups that will work on behalf of BiH institution in the sub-committees for Stabilization and Association, and take part in work of BiH Reform Progress Monitoring (RPM). The total number of 169 members from appropriate ministries and authorities at the state and entity levels were appointed.

The BiH Council of Ministers designated some offices for the e-Government in the Council of Ministers Project. The Council of Ministers approved of the works in the conference room of the Council of Ministers for the installation and fitting of electronic equipment purchased within the „e-Government in the Council of Ministers Project“. 5 At the 85th sessions held on 29 April 2009 6 At the 75th sessions held on 5 February 2009 7 At the 73rd sessions held on 15 January 2009 8 “ BiH Official Gazette“, No. 100/08 of 16 December 2008 9 At the 4th thematic sessions held on 6 October 2009 10 At the 82nd sessions held on 2 April 2009

6 2.1.2. Parliament

The Secretariat of the BiH Parliamentary Assembly, through the BiH Civil Service Agency, recruited 7 full-time civil servants and 3 employers with secondary school diplomas. In addition, 3 members of staff were employed on special service agreement. The total number of employees hired for an indefinite period of time in the Secretariat is 122, 20 members of staff are employed for a specified period of time and 6 members of staff are employed on special service agreement, which makes 148 members of staff altogether. The number of MPs who are employed with the BiH Parliamentary Assembly is 50 out of the total number of 57 MPs.

A decision on allocation of offices to the caucuses, commissions and employees in the Secretariat is being prepared by the Joint Commission for Administrative Issues of the BiH Parliamentary Assembly. The public procurement procedure for internet network at the 1st and 4th floor of the BiH Parliamentary Assembly is under way. In addition, the selection of the best bidder for procurement of IT network at the 1st and 4th floor of the BiH Parliamentary Assembly is under way.

The text of the BiH national anthem was agreed on and the proposal was sent to the Parliament for deliberation. With regard to the entity symbols, i.e. coat of arms and national anthem, the RS Constitutional Court found the RS coat of arms unconstitutional as the vital national interests of Bosniaks were threatened, as there are no indications of this ethnic group. The national anthem was carried as the RS Constitutional Court found the national anthem did not threaten the vital national interests of Bosniaks and Croats.

2.1.3. Public administration

With regard to staffing and capacity building of the Public Administration Reform (PAR) Coordination Office, there are 35 employees (the national coordinator, 24 civil servants, five employees, five employees without prior working experience –trainees - and two employees on special service agreement). In April a vacancy for a civil service was published.

The BiH Council of Ministers approved the draft Rulebook on Amendments to the Rulebook on the Internal Structure and Job Descriptions of the Office of the Chair- man of the BiH CoM, which was proposed by the PAR Coordination Office. The Amendments to the Rulebook provide for another six officers (associates) who will work on the implementation of Action Plan 1. These tasks have been discharged by employees without prior working experience or interns.

The PAR Coordination Office has continued regular quarterly and annual monitoring of the progress in the implementation of the Public Administration Reform Strategy and Action Plan 1. The BiH Council of Ministers adopted the 2008 Annual Report on the Work of Office, the Annual Monitoring Report on the AP 1 Implementation, the first Quarterly Report on the PAR Office with recommendations and the first Quarterly Progress Report. The Office distributes the reports to BiH Council of Min- isters, the governments of the Entities and District and posts them on the web site.

The Coordination Committee for Economic Development and European Integrations has not sat in its capacity of a political coordination body of PAR. In the first Annual Report on the Work of Office the BiH Council of Ministers adopted a conclusion where a meeting of the Coordination Committee for Economic Development and European Integrations is proposed. The same conclusion recommends the introduction of the position of PAR entity coordinators as separate posts.

The operational cooperation with the coordinators appointed by the Government of FBiH, the Government of RS and the Government of BD has been improved, but still in the implementation of reform measures, especially in the drafting of entity legislation, there is inadequate coordination with the Office and among the different levels of administration.

The Steering Board of the PAR Fund that became fully operational in the preceding reporting period approved in this period the implementation of eleven reform measures to the value of BAM 7,574,278.12 (VAT on the amount is BAM 1,287,627.25). The following reform measures pertaining to all the four levels of administration: „The Centre of Government Development Scheme in BiH“, „Promotion of Rules and Procedures of Drafting the Laws, Regulations and By-laws in BiH”, „Budget Management Information System-BMIS“, ''Training of Civil Servant in Applying the Information Technologies by ECDL (European Computer Driving Licence) Standards”, „Development of the Performance Management System in the Civil Service Structures in BiH'', „Designing of the Quality Improvement Programme in the Administrative Decision-making in BiH“, „Establishment of Info Portals Network “, „ Training of Information Officers “, „ Strategic Communicating “, „ Designing and Setting of the Interoperability Framework and Data Exchange Standards “, „One Stop Shop-services to assist citizens “.

With regard to the implementation of selected reform measures from the area of Policy Designing and Coordination Capacities („The Centre of Government Development Scheme in BiH – implementation stage I“ “ and „Promotion of Rules and Procedures of Drafting the Laws, Regulations and By-laws in BiH“), on the initiative of the Office and on the basis of obligations under the PAR Strategy and Acton Plan 1, on 13 February in Banja Luka the Memorandum for Cooperation was signed by the Secretariats General of the Council of Ministers of BiH, entity governments and government of BD as a response to the requirement under European Partnership that is targeted at development and establishment of mechanisms for political, legislative and technical coordination.

The Council of Ministers adopted a by-yearly report on the implementation of „Capacity Building of BiH Strategic Planning and Policy Development “Project that is implemented by UNDP in coordination with the Office of Coordinator. The project envisages capacity building of strategic planning and policy development in the State institutions and will last till the end of 2010.

Within the BH HRMIS (introduction of a human resources management information system), the system was first installed in BD, where also the training of future users was completed. At the level of BiH the data was transferred from the earlier register

8 of civil servants and the equipment for a data centre required by BH-HRMIS was installed.

The Office of the Coordinator, UNDP BiH and the National School of Government of Great Britain implemented a pilot project titled „Improvement of Civil Service Staff Recruitment and Selection Procedure“ which was preceded by „An Analysis of Job Descriptions at the Level of FBiH“ and „Development of Capacity Frameworks in the RS“.

In the reform area of Institutional Communicating, in March 2009 the implementation of the "Establishment of Info Portals Network" measure to the value of BAM 133,000.00, which should result by the end of 2009 in training in internal communication of the information officers at the four level of government; setting up of 12 info portals and the production of four kinds of information materials of the above-mentioned centres of the executive.

The Steering Board of the PAR Fund has been fully operational since 2008 and has adopted the following: Guidelines for using funds from Public Administration Reform Fund, Finance Management Procedures in the Public Administration Reform Fund, Information on mandatory computation and payment of value added tax - VAT in Fund-funded projects, Amendments to the Rules of Procedure of the Steering Board and General Terms and Conditions of Fund-funded projects.

The Office of the Coordinator, in cooperation with the donors, has initiated Amendments to the Memorandum of Understanding on the Establishment of the PAR Fund, which, inter alia, provide for an extension of the Memorandum until the end of 2010, instead of the current expiry date – the end of 2009. The Amendments to the Memorandum will be sent to the Governments for adoption.

In FBiH, out of the total of 52 federal administrative authorities included in the „Analysis and Job Descriptions at the level of FBiH“, nine administrative authorities have improved the existing job descriptions and carried a new rulebook on internal organization, while 25 administrative authorities have submitted reports on activities taken. The Civil Service Agency of the FBiH, together with UNDP, has prepared „The Establishment of Modern Human Resources Management Departments in Ministries and Institutions of the FBiH“ project. The Office of the Coordinator has proposed that BiH, RS and BD BiH should implement the project, as a joint project, which will be funded from the PAR Fund.

The Law on Amendments to the Law on Rights of Elected Official, the Executives and Advisors in the FBiH Institutions has been passed11. The Decree on the Manner, Requirements for and Programme of Qualification Examinations for Performing Jobs of Administrative Decision-Making in the Legal Persons That Perform Public Authorities has been passed.

The FBiH House of Peoples of the Parliament12 issued a Conclusion to task the FBiH Government to prepare the Draft Law on Salaries and Remuneration in All Budgetary Users in the FBiH within 60 days (for all levels of government and companies with a

11 FBiH Official Gazette, No. 84/08 12 In December 2008

9 majority of state-owned capital). The Law on Salaries is being drafted. The FBiH Ministry of Justice appointed a working group, representatives of the Independent Trade Union of Civil Servants being among the members. The FBiH Government 13 agreed that the Agreement with the Trade Union would be signed whereas it, inter alia, committed to „after the Draft Law on Civil Service of FBiH, the Draft Law on Employees in the Civil Service in FBiH and the Draft Law on Salaries of FBiH have been prepared, send them to the Economic and Social Council of the FBiH“.

The Government has adopted the Decision on Giving Approval of the Memorandum of Understanding between the FBiH Government and the International Financial Corporation, committing to simplify the legislation and administrative procedures to create a better environment for business development. The chief administrative inspector has been appointed. After having discussed the Information Paper about the Information Technologies Situation in the Federal Administrative Authorities, the Federal Administrative Organizations and Governmental Administrative Offices, the Government has adopted conclusions to task the ministries to plan to appropriate funds for upgrading or building of the server and network structure. A conclusion has been reached that in all ministries at last one IT officers will be employed and the Secretariat General, in cooperation with other administrative authorities, will start an Internet project and preliminary designing of a project of the web portal of the FBIH Government with elements of the FBiH portal.

The 2009-2010 Social Agreement has been concluded by the FBiH Government, Employers’ Association and the Association of Independent Trade Unions of BiH. The Agreement stipulates dedication to the public administration reform, institutional and organizational streamlining, control functions strengthening and streamlining of organization of individual levels of government.

Amendments to the Decree on the Secretariat General of the FBiH Government have extended the scope of work of the Secretariat General, in accordance with „The Centre of Government Development Scheme in BiH“. A new Rulebook on Internal Structure of the Secretariat General was enacted and the Office of the FBiH Prime Minister, as a separate service within the Secretariat General, was established. Pursu- ant to the Law on Internal Audit, a post of internal auditor has been introduced. The vacant positions that were introduced by the newly defined structure of the Secretariat General of the FBiH Government have been published. Three civil servants have been recruited in the Secretariat General of the FBiH Government14, and the Federal Min- istry of Finance has been fully staffed15.

13 At the 93rd sessions held on 4 March 2009 14 Assistant Director of the Office of the FBiH Prime Minister – the Head of the Sector of Policies Coordination and Institutional Communicating, Assistant Secretary General of the FBiH Government – – the Head of the Office of the FBiH Deputy Prime Minister and Federal Minister of Culture and Sport, and Legal Officer (associate for legal affairs) in the Office of the Secretary General of the FBiH Government, who will perform part of PAR coordination related jobs. 15As part of capacity building of the Sector of Budget the following positions have been filled: Current Budget Advisor, Budget Prospects and Analyses Advisor, Macroeconomic Planning Team Leader, Macro-economic Planning Advisor, Financial Resources Management and Budget Supervision and Execution Advisor, and IT advisor in the Sector of Treasury and Internal Auditor/Advisor in the Internal Audit Unit.

10 the FBiH Government 16 has discussed the Report on the Personnel Situation in the Civil Service of FBiH submitted by the FBiH Civil Service Agency and tasked the Secretariat General of the FBiH Government and FBiH CSA to prepare an initiative for the Law on Ensuring a Proportional Ethnic Structure in the Administration and Local Self-government of BiH with a view to ensuring a proportional ethnic structure. The initiative has been sent to the BiH Council of Ministers and it will be sent to the BiH Parliamentary Assembly.

The RS National Assembly has passed a package of laws brought in line with the BiH Public Administration Reform Strategy: the Law on Government, the Law on Civil Servants, the Law on the Republican Administration17, the Law on Amendments to the Law on the Republican Administration of RS18 and the Law on the RS Administrative Inspectors19. After the Law on the RS Administrative Inspectors, the by-laws - the Rulebook on the Content and Manner of Keeping Records of Inspection Surveillance by Administrative Inspectors and the Rulebook on the Format, Appearance, Content and Manner of Issuing of Official Identity Cards of Administrative Inspectors 20.

The RS Government has adopted the Rules of Procedure of the Government21, the Decree on the Amendments to the Decree on the Secretariat General of the RS Government, the Amendments to the Rulebook on the Internal Structure and Job Descriptions of the Secretariat General of the RS Government. The Decree on the Principles of the Internal Organization, Structure and Job Descriptions in bodies of the RS Administration, the Decree on the Grades and Titles of Civil Servants, the Decree on the Posts of Employees22. New rulebooks on the structure and job descriptions are drafted in all Republican Administration authorities.

The Information Paper on Activities Taken Under the 2008 Action Plan of the RS Government and the Information Paper on the Manner of Proceeding by the Ministries While Submitting Materials for Meetings of the RS National Assembly and RS Government have been adopted. The Government has adopted conclusions to define the manner of preparation and processing of materials and submitting materials for meetings of the RS National Assembly. The Guidelines on the Manner of Proceeding by the Ministries and Other Republican Administrative Authorities Concerning Participation of the Public in Consultations About Laws That Are Drafted have been adopted23 and the 2009 Action Plan has been brought in line with the 2009 Orientation Activity Programme of the RS National Assembly. The Law on the Amendments to the Law on RS Budgetary System and the Law on the Execution of 2008 Budget have been passed.24 The Law on Electronic Document of RS25 and the Decree on the Responsible Body for Electronic Certification in the Republican

16 At the 97th sessions held on 2 April 2009 17 All the three laws were published in „RS Official Gazette”, No. 118/08 18 „RS Official Gazette“, No. 11/09 19 „RS Official Gazette”, No. 1/09 20 Both the rulebooks were published in „RS Official Gazette“, No. 20/09 21 „RS Official Gazette“, No. 10/09 22 All the three Decrees were published in „RS Official Gazette“, No. 18/09 23 „RS Official Gazette“, No. 123/08 24 Both were published in „RS Official Gazette“, No. 126/08 25 „RS Official Gazette“, No. 110/08

11 Administrative Authorities have been passed.26 The RS Government has adopted the Conclusion on Designing e-Map of RS, the Conclusion on Establishment of Central Registry of the RS Government and the Information System Security Policy of the RS Government. The 2009-2012 e-Government Strategy of the RS Government has been adopted, while the implementing regulations of the E-signature Law are drafted and the process of legalization of the use of software in the self-government bodies of the RS is under way. The RS Government27 has adopted the Conclusion to support activities on licensing the Microsoft products through Enterprise Agreement Subscription and recognition of technical support through Microsoft Premier Support. The RS National Assembly has adopted the Draft Law on Electronic Commerce. The Law on IT Line of Business, the Law on IT Security and Amendments to the Criminal Code are in preparations.

The RS Legislation Secretariat has started establishing the database of the legislation, while in 2009 the Action Plan of Government envisages new rules for drafting laws and regulations in the RS. The vacant positions of the head of PAR Department, the senior officer for the reform area of Capacity Building in Policy Designing and Coordination and the legislative officer have been filled in, which will surely advance PAR activities.

In the last quarter of 2008 BD started drafting by-laws to include the new elements related to the public administration reform (setting up a functional classification system of budgetary users, strategic budget planning, changes in bookkeeping and reporting systems). For the first time the Law on the Execution of Budget was passed for 2009. The European Integration Department28 and the European Integration Coordination Board of BD29 were established within the BD Government with a view to planning, implementing and monitoring obligations of BD in the process of European Integra- tion. The BD Government adopted the Draft Decision on Procedures of Harmoniza- tion of the BD BiH legislation with acquis communautaire, which will be discussed by the Assembly of BD BiH (follow the developments). 2009-2012 Action Plan of the public administration bodies for the fulfilment of obligations of BD in the process of European Integration in pursuance of an order of the BD BiH Mayor is being developed.

The House of Representatives of PABiH has passed the Law on Amendments to the Law on Civil Service, whereas the House of People of PABiH has passed the Law adding an amendment to introduce the concept of re-appointment, i.e. appointment of senior civil servants for a specified term of office. The two texts are being agreed on by the two Houses. The BiH Civil Service Agency (BiH CSA) has enacted a new Rulebook on the Procedure of Publishing Vacancies, Selecting the Candidates, Transferring and Appointing Civil Servants in the Event of Transfer or Taking over of Responsibilities by BiH Institutions30.

26 „RS Official Gazette“, No. 114/08 27 26 February 2009 28 In October 2008 29 30 April 2009 30 „BiH Official Gazette“, No. 27/08

12 BiH CSA has filled 19 positions with 15 civil servants and 4 employees. After the competitive procedure, the BiH Council of Ministers appointed the BiH CSA Director31.

In the last year the BiH CSA received over 3,500 job applications of civil servants and 559 civil servants and 35 senior civil servants were employed in BiH institutions. The Law on Amendments to the Law on Civil Service has shortened the recruitment procedure to the maxim so that it officially starts 20 days after a vacancy is posted on the BiH CSA internet site.

2.1.4. Civil oversight of the security forces

At the initiative of the Joint Security and Intelligence Commission for Oversight of Intelligence Security Agency BiH (OSA/OBA BiH), on 29 January 2009 PA BiH passed the Law on Amendments to the Law on Intelligence and Security Agency of BiH and the Law on Amendments to the Law on Protection of Secret Information.32

Individual Partnership Action Program of BiH (IPAP) is the most important document in the progress of BiH towards Euro-Atlantic Integration. The implementation of IPAP BiH to the extent of 85 % of obligations fulfilled out of 291 activities planned altogether proves the high success of BiH in the process of accession to NATO. The BiH Council of Ministers has adopted the Information Paper on the implementation of Action Plan for BiH Activities on joining NATO in the period 31 October 2008 -1 April 2009. The stakeholders responsible for the implementation are to ensure adequate and timely completion of planned activities for accession of BiH to NATO in the coming period. The Information Paper underlines that the Action Plan containing 24 activities is implemented in accordance with the schedule. The military part of BiH Mission to NATO in Brussels officially became operational on 1 April 2009 when representatives of the Ministry of Defence of BiH and Joint Headquarters of BiH Armed Forces were deployed to the BiH Mission to NATO in Brussels, i.e. in the partnership liaison team with the Supreme Headquarters Allied Powers Europe - SHAPE in Mons, Belgium. This means the implementation of the 26 November 2008 decision of BiH Presidency, which trigged the staffing of Military part of the BiH Mission to NATO.

2.1.5. Judicial system

The Law on Amendments to the Law on the Execution of Criminal Sanctions, Detention and Other Measures of BiH33 and the Draft Law on Amendments to the Criminal Procedure Code of BiH34 have been adopted. Amendments to the Criminal Procedure Code address the detention provisions in the way that the duration of detention has been extended. The BiH Council of Ministers35 has adopted on the Draft Law on International Legal Assistance in Criminal Matters and the Draft Law on Free Legal Aid. In regard to helping the passage of the Draft Law on International Legal Assistance in Criminal

31 At the 78th sessions held on 26 February 2009 32 „BiH Official Gazette“, No. 12/09 33 „BiH Official Gazette“, No. 37/09, 12 May 2009 34 „BiH Official Gazette“, No. 16/09 35 Adopted at the 69 the sessions of the Council of Ministers held on 18 December 2008

13 Matters by the Parliament, the BiH Council of Ministers 36 has concluded that the Ministry of Justice of BiH should convene a ministerial conference of the relevant entity ministries, and that BiH Council of Ministers should discuss and agree on the existing proposal or prepare a new text of the Law that the BiH Council of Ministers will agree on and send it to the Parliament for passage in a summary procedure. The CoM of BiH37 adopted the Proposal Law on International Legal Assistance in Criminal Matters which is submitted to the parliamentary procedure to be considered in a summary procedure, as agreed previously.

The Law on Free Legal Aid has been sent back to the BiH Council of Ministers for improvement.38

The RS National Assembly has passed amendments to the Law on Courts providing for the establishment of commercial courts in this Entity. When it comes to the prosecutor's offices, the HJPC has prepared the Draft Law on Prosecutor's Offices of the FBiH and sent it to the Federal Ministry of Justice. The HJPC is also finalizing drafting of by-laws – the Rulebook on the Internal Structure and the Rulebook on the In- ternal Organization in the Prosecutor's Offices of the FBiH. In the preceding period additional efforts were put in capacity building of the Office of Disciplinary Prosec- utor within the HJPC. The HJPC has brought its activities in line with the Strategy for the Justice Sector Reform in BiH, which was adopted in December 2008. The HJPC has been implementing an improvement of the cooperation between the police and the prosecutor's offices project that is an essential prerequisite for proper functioning of the criminal system as a whole. The project is implemented in close cooperation with EUPM. In 2008 the total number of backlog cases in BiH was reduced to 572,293 cases. The largest number of reduced cases is misdemeanour cases, which is another proof of the successful reform of misdemeanour courts. With a view to making conditions for further reduction of the backlog, the HJPC appointed 33 more judges in 2008.

Within the Backlog Reduction Project, the HJPC adopted a decision with a view to implementing a join Action Plan designed in cooperation with the Ministry of Justice of BiH and established a Working Group to solve the issue of unpaid utility bills cases and a working group for improvement of the enforcement procedure and tasked them to prepare analyses and give recommendations for specific mechanisms to be introduced for the reduction of influx of unpaid utility bills cases and prevention of the backlog- ging. At the end of 2008 the HJPC adopted a decision initiating the implementation of a pilot project which establishes the Electronic System for Unpaid Utility Bills Cases (SOKOP) that will enable electronic processing of small claims / unpaid utility bills cases and relive the courts of standard judicial proceedings in these cases. In addition, with the support of HJPC, the implementation of KODIFEL project is in the final stage, the goal of the project being digitalization of the backlog of unpaid utility bills cases (more than 900,000 cases) in the Municipal Court of Sarajevo so that they will be able to be processed further in the SOKOP.

36 At the 87th sessions held on 14 May 2009 37 On its 89th session held on 4 June 2009 38 The Draft Law on Free Legal Aid was passed at the 47th session of the House of Representatives on 4 March 2009, but it was not passed at the 27th session of the House of Peoples held on 26 March in the first reading, and was sent to the BiH Council of Ministers for improvement.

14 A computer programme for automated case management (Case Management System - CMS) was fully implemented by the HJPC in 63 out of the total of 67 courts in BiH, and in two prosecutor's offices. Developing the judicial portal – www.pravosudje.ba, the HJCP has developed the Digital Contact Management System which has launched web sites of 7 courts and forum http://forum.pravosudje.ba where the judicial community and the public may exchange opinions on various legal issues. The HJCP has organized IT training for all staff of prosecutor's offices.

A great number of disciplinary sanctions were imposed against those judges who delayed judicial proceedings without good reasons, which additionally affected the consciousness of the judiciary about the need of effective work on cases an all stages of proceedings.

Under the supervision of the HJPC the Entity Centres of Judicial and Prosecutorial Training implement annual Work Programmes and the adopted mid-term strategy in different areas (including human rights, war crimes, cooperation between the police and prosecutor's offices). The HJPC has adopted the Induction Training Programme for associates. Training materials – modules have been published to be used in Induction Training of Judicial Officers by the Centres of Judicial and Prosecutorial Training. On 31 March 2009 the Judicial Documentation Centre had 1,860 court decisions electronically, which is of great importance from the aspect of judicial practice harmonization and additional training.

The High Representative in BiH has imposed Amendments to the Law on Criminal Sanctions of the FBiH39, which have brought the law in line with the state-level law. The FBiH is preparing a completely new law that will be in line with the state-level law. Vacancies for 3 judges of the Constitutional Court of the FBiH were published and the procedure of recruitment is under way. In March 2009 the BD of BiH passed the Law on Litigation that was harmonized with the entity laws. The Criminal Procedure Code is being drafted and it will be harmonized with the state-level code.

The RS passed the Criminal Procedure Code of the RS40, and the Law on Legal Aid of the RS41. The following laws are being drafted: the Law on the Execution of Criminal Sanction of the RS, the Law on Juvenile Offenders, the Law on the Verification of Property Acquisitions.

2.1.6. Anti-corruption policy

The BiH Council of Ministers42 has adopted the Decision on the Establishment of Inter-ministerial group for drafting the following documents at the state-level: Strategy for Fighting Corruption, Action Plans for the Strategy implementation and draft laws on the establishment of bodies to fight corruption43.

39 The Decision no. 25/09 of 20 February 2009 40 „RS Official Gazette RS“, No. 119/08 41 „RS Official Gazette RS“, No. 120/08, the affective date being 1 July 2009 42 26 March 2009

15 The BiH Council of Ministers44 has adopted an Analysis of the Degree of Implementation of the Strategy for Fighting Organized Crime and Corruption designed by the Ministry of Security of BiH on the basis of reports and information given by the BiH institutions in charge of achieving the strategic goals.

The Ministry of Justice of BiH has initiated the procedure of signing the Additional Protocol to the Council of Europe Criminal Law Convention on Corruption and the 21 November 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 45.

The Draft Law on Funding Political Parties is still before the Parliament.

The Law on Conflict of Interest in State Authorities in the FBiH46 and the Law on Conflict of Interest in State Authorities in the BD of BiH47 have been passed.

Pursuant to the Law on Preventing the Conflict of Interest in State Authorities in the RS48, in the reporting period, the Republican commission to agree on the text of the Law on Conflict of Interest was established and started work on 1 March 2009.

The BiH Central Election Commission has issued decisions where the laws within its competence were violated and they are as follows: - 268 decisions have been adopted for violations of the Election Law of BiH, - 33 decisions have been adopted for violations of the Law on Funding Political Parties, - 3 decisions have been adopted for violations of the provisions of the Law on Conflict of Interest in the Institutions of BiH.

The Law on Amendments to the Criminal Procedure Code of the FBiH49 has been passed.

The Strategy for Fighting Organized Crime in the RS50 has been adopted. The Action Plan of the RS Ministry of the Interior has been adopted, and the implementation of the anti-corruption project in the RS Ministry of the Interior has been analyzed. The sub-projects are being designed for the RS institutions involved in fighting corruption. The legal barriers to fighting corruption have been removed by enacting amendments to the RS Law on Criminal Procedure Code (CPC) that provide for special investigative actions in crimes related to corruption. The RS Government51 has

43 At the 84th sessions held on 16 April 2009 the BiH Council of Ministers issued the Decision on the Establishment of the Working Group for drafting the Proposal of the Strategy of Bosnia and Herzegovina for Fighting Organized Crime, with some corrections. 44 At the 67th sessions, held on 26 November 2008 45 Bearing in mind that BiH is not a party to the OECD, accession to this Convention will be possible only after its full membership in the OECD working group on Combating Bribery of Foreign Public Officials in International Business Transactions. 46 „FBiH Official Gazette“, No. 70/08 which came into effect on 6 November 2008 47 „Brčko District BiH Official Gazette“, No. 43/08 and 47/08, which came into effect on 24 October 2008 48 „„RS Official Gazette“, No. 73/08 49 „FBiH Official Gazette“, No. 9/09 50 19 December 2008 51 At the 117th sessions of the RS Government held on 26 March 2009

16 adopted reports on the implementation of Action Plan for the implementation of the Strategy for Suppression of Corruption in the RS.

2.2. HUMAN RIGHTS AND PROTECTION OF MINORITIES

2.2.1. Observance of international human rights law

In the reporting period BiH presented the initial treaty reports to the competent UN committees. After the presentations, BiH received the concluding remarks – recommendations that are obligatory for BiH in particular fields of human rights. In 2008, with a view to implementing the recommendations, the Ministry of Human Rights and Refugees of BiH (hereafter: MHRR) prepared the 2008-2010 Framework Plan of Activities for the implementation of UN committee recommendations, which was adopted by the BiH Council of Ministers52. The Framework Plan of Activities specifies individual activities with deadlines for the realization, which the competent authorities of BiH are aware of.

2.2.2. Civil and political rights

The matter of Security Service/Prison police/guards is governed by state-level and entity Laws on the Execution of Criminal Sanctions and pursuant to the Laws, by- laws have been enacted (Rulebooks on the Security Service). The by-laws incorporate the international instruments standards governing the treatment of sentenced and detained persons53. It is important to note that all national and international governmental and non-governmental organizations and the media have unhindered access to all prisons in BiH. Besides, the convicts have the possibility of unhindered communication by phone with the community. In order to improve the work of guards and ensure legal and human treatment of prisoners and detainees they are continuously trained. The training is conducted with help and direct participation of international organizations.

The Law of BiH on the Execution of Criminal Sanctions, Detention and Other Measures provides for standards leading to cooperation, informing each other, agreeing, i.e. mutual integration. The RS has brought its Law on the Execution of Criminal Sanctions, Detention and Other Measures in line with the state-level Law. The Law on Amendments to the Law on Criminal Sanctions of the FBiH54 has been passed to bring the Law in line with the state-level Law, while a completely new law that will be in line with the state-level law is being prepared.

The training programme for prison officers in BiH at all levels of the prison system was led by the Council of Europe in cooperation with all entities of the prison system. The situation analysis and prediction of potential developments in the entire prison system was carried on by an international organization, DFID, which prepared “An

52 At the 62nd sessions held on 23 October 2008 53 European Prison Rules, the UN Standard Minimum Rules for the Treatment of Prisoners, UN Standard Minimum Rules for the Administration of Juvenile Justice, UN Principles of Medical Ethics relevant to the Role of Health Personnel, particularly Physicians, in the Protection of Prisoners and Detainees, the European Convention against Torture, Inhuman or Degrading Treatment or Punishment; European Convention on Human Rights and Fundamental Freedoms, and standards and legal approaches that the European Court of Human Rights promotes in its judgments. 54 ”F BiH Official Gazette“, No. 25/09 of 25 February 2009

17 Analysis of the Prison System Situation in BiH” and proposed three possible alternatives of developments, where the third alternative envisaging a single uniform prison system at the level of BiH proved to be the most cost-effective.

In order to further implement the Construction of the State Prison Project, in early January 2009 the Ministry of Justice of BiH received new Terms of Reference – a new Preliminary Design that should be finished in seven months, as the European Commission competent body considered that the current Terms of Reference should not be revised. The new Terms of Reference will be sent to the European Commission competent body for approval.

At the level of BiH there is a sole Detention Unit with a capacity of 20 detainees. There are 13 prisons in the Entities: 7 ones in the FBiH and 6 ones in the RS with inadequate capacities.

A prison has been opened in Kozlovac near Tuzla55. The new prison facility, which consists of two adjacent building with a capacity of 152 inmates altogether according to European prison rules (4 m2 or 10 m3 per inmate), will mean the execution of criminal sanction in one of the up-to-date facilities of the kind in the region. The prison was constructed with the funds of the FBiH Government and the Federal Ministry of Justice. The building of the Bihac Prison is being refurbished so the capacity will be extended for 24 more sentenced persons and 14 persons serving the sentence. The new prison in Orašje is expected to be finished soon. All this will extent the capacity of prisons in the FBiH by 20%. A new building of the Busovača Unit of the Tomislavgrad Prison with a capacity of 50 inmates has been finished.

In the RS Foča Prison is being refurbished, which will ensure accommodation for another 38 high security risk inmates. In Istočno Sarajevo Prison a new building has been built for the execution of juvenile imprisonment for 40 inmates. One former barracks is being converted into a prison where the District Court of Bijeljina will be moved to. The new prison will have larger capacity of the present one. Doboj Prison is also being refurbished so that its capacity will be 50-60 inmates.

The BD has a detention unit with a capacity of 45 detainees under the order of BD courts.

The RS Government has adopted a decision on the establishment of the Forensic Psychiatric Hospital of Sokolac56 according to which the Municipality of Sokolac can transfer ownership over the building to the hospital, i.e. the Ministry of Health and Social Welfare Policy of the RS without consideration. Equipment is being purchased.

In regard to review of citizenship, in the period between 1 March 2006 and 16 February 2009 the State Commission reviewed 2,894 cases and issued decisions to revoke the citizenship of BiH in 965 cases and found that there were no grounds for revoking the citizenship of BiH in 1,929 cases.

55 7 May 2009 56 23 July 2008

18 The Press Council of BiH57, as an authority in charge of media self-regulation, which operates as an institution in the entire territory of BiH and gather the major press houses in BiH, press journalists and citizens throughout BiH keeps on functioning. The Council enables the citizens to lodge complaints against incorrect and false press reporting, to have retractions and responses published in the newspaper having made the mistake, which promotes the fundamental human rights – the right to true and timely information.

2.2.3. Economic and social rights

The Council of Ministers of BiH58 has adopted on the Draft Anti-Discrimination Law.

In 2008 the BiH Gender Agency and Entity Gender Centres put efforts to establish the Fund for the Implementation of Gender Action Plan of BiH. The Terms of Reference are being designed and the Draft Joint Agreement on FIGAP funding has been prepared, which has been agreed with all donors interested in giving support to the FIGAP implementation. The BiH Gender Agency has started harmonizing the media- related legislation with the BiH Law on Gender Equality. In this connection, the legal team in the Agency has harmonized the following laws: the Law on the Public Radio and Broadcasting System of BiH, the Law on Communications of BiH, the Law on the Radio and TV System of BiH and the Law on Free Access to Information in BiH.

The RS Gender Centre has prepared the Information Paper on the situation of and Activities against family violence in the RS giving an initiative to declare 2008 and 2009 the years against domestic violence, which was adopted in a Conclusion by the RS Government.

In the area of social welfare and the protection of the family and children, the FBiH has brought the Law on Fundamentals of the Social Security, the Protection of Civil- ian Wartime Victims and the Protection of Families with Children59 in line with the BiH Law on Gender Equality.

With regard to the improvement of the situation of social welfare and the protection of children, the BiH Council of Ministers60 issued the Decision on the Establishment of the Steering Board for coordination of „Social Welfare System Strengthening and Inclusion of Children in BiH“ Project. The Project shall last for the next three years and envisages important interventions in the „system of social care of the children“, including the aspect of social security, health care and education of children, especially the children belonging to vulnerable groups.

As of academic year 2008/2009 the FBiH ensures free text books for all children in primary school from the first to fourth class and for indigent students from the fifth to the ninth class. As of academic year 2008/2009 the RS ensures free text books for all children in primary school in the first and second class. „The Manuel on Culture, Tradition and Legacy of National Minorities“has been published.

57 Established in 2000 58 At the 82nd sessions held on 2 April 2009 59 “F BiH Official Gazette”, No. 36/99 60 At the 59th sessions held on 11 September 2008

19 The RS has passed the Law on Ombudsman for Children as an independent institution that protects monitors and promotes the rights of a child.61

The F BiH has passed the Law on the Protection of Families with Children62 which came into effect on 12 March 2009 while the FBiH Government63 has adopted the Law on Ombudsman for Children and sent it to the Parliament for adoption.

The BD Government is preparing the Draft Law on the Social Security and the Protection of Children that will replace two existing laws governing the protection of children and social security and treat the matter comprehensively.

With regard to the implementation of „The Disability Policy in BiH“ adopted last year, the strategy and actions plans are being designed at the level of Entities in BiH, and they are expected to be finalized by October 2009.

The BiH Council of Ministers64 has adopted on the Proposal for Grounds for Accession to the UN Convention on the Rights of People with Disabilities and Optional Protocol, and the further procedure of ratification is being followed.

The RS has passed amendments to the Law on Professional Rehabilitation, Acquiring Qualifications and Recruitment of People with Disabilities65. Preparations for developing the strategy and actions plans for the improvement of the position of people with disabilities in the RS are in progress. In the RS there is a cross-sectoral body of the RS for help and protection of people with disabilities. Two working groups have been appointed and they have had two meetings, which has rounded up the first stage.

After having finished the procedure, the Minister of Civil Affairs of BiH66 has signed the Declaration of the Health Ministers of South-East Europe on the Long-term Programme of Cooperation and Development in Mental Health. The Declaration aims at the establishment of the Regional Centre of Mental Health of the South-East Europe Countries, to be based in BiH. Owing to the delayed signing of the Declaration, the establishment of the Centre is prolonged until June 2009.

The RS has designed the 2009-2015 Strategy for Development in Mental Health in the RS. A coordination centre for mental health centres in the RS has been established. The 2009 plan is to extend the network for another 5 mental health centres and to train the staff of all mental health centres (in cooperation with the Italian Government in CESVI Project).

The FBiH has prepared the Draft Mental Health Policy for FBiH and the plan is to have a public discussion about it and send it to the Parliament for passage that is expected in October 2009.

61 At the RS National Assembly session held on 15 October 2008 („RS Official Gazette“, No. 103/08) 62 „F BiH Official Gazette“, No. 14/09 63 At the 92nd sessions held on 24 February 2009 64 At the 76th sessions held on 12 February 2009 65 Passed on 30 January 2009 66 10. December 2008

20 BD is involved in the project of designing the people with disabilities policy in BiH. There is a mental health centre in the BD.

On 07 October 2008 BiH deposited the ratification instrument for the Revised European Social Charter with the CoE Secretary General through the BiH Permanent Mission in Strasbourg. The Charter came into effect on 1 December 2008 with all obligations the State has now according to the accepted articles of the Revised Charter. An obligation is submission of the first report by December 2010. Having ratified the Revised Charter BiH has become a full member of the European Committee of Social Rights in Strasbourg.

In late 2008 the RS passed the Strike Law67.

2.2.4. Minority rights, cultural rights and protection of minorities

Ratification of the European Charter on Regional and Minority Languages is a BiH post-accession obligation. A selection of articles that BiH is going to accept is being made. In order to discharge the task in the best possible way BiH is constantly in contact with Council of Europe relevant bodies. BiH has recognized Romany as a minority language.

The constitution of the Council of National Minorities within BiH Parliamentary Assembly has been finished successfully and the Council has been working continuously. With regard to the National Minorities Council of F BiH68, which is established to protect the rights of national minorities in the FBiH as an advisory body of the Parliament of the FBiH, the Federal Ministry of Justice has sent a public invitation to the minority group associations to nominate their representatives to the Council. The constitution of the Council has not been finished owing to disagreements of some associations about their representatives on the Council. The F BiH Government and Parliament, in cooperation with the OSCE and OHR, will take action to finalize the constitution of the Council in a short while. Pursuant to the legal provisions, the funds supporting the Council should be provided by the FBiH Parliament in its budget.

The BiH Council of Ministers69 has adopted on a Proposal for the Revised Strategy for the Implementation of Annex VII to the Dayton Peace Agreement, which will be sent to the BiH Parliamentary Assembly for adoption. The House of Representatives of the BiH Parliamentary Assembly has adopted the Proposal for the Revised Strategy for the Implementation of Annex VII to the Dayton Peace Agreement and deliberation and passage by the BIH PA House of Peoples will follow. The BiH Parliamentary As- sembly has issued a conclusion that the Ministry of Human Rights and Refugees of BiH will design 2009-2014 Action Plan for access to the rights under Annex VII, including the rights of the choice of residence, compensation for unrecoverable property and other rights.

67 „RS Official Gazette“, No. 111/08 68 According to the Law on Protection of Members of National Minorities in the Federation of Bosnia and Herzegovina ("FBiH Official Gazette“, No. 56/08) 69 At the 74th sessions held on 29 January 2009

21 The Strategy on Access to Housing in BiH with a particular focus on social housing is being designed. Social housing pilot projects are being implemented in a number of locations, which will serve to find out the best acceptable model of ensuring a permanent systemic solution for housing of vulnerable groups of people in BiH.

The BiH Council of Ministers has approved BAM 3,000,000 for the implementation of Action Plan in the area of employment, health care and housing of the Roma population. “The Action Plan for Educational Needs of Roma and Other Members of National Minorities in BiH” is being implemented intensively. The Action Plan for Educational Needs of Roma is also being revised. A working group has been appointed and the possibilities of raising funds for this project are being explored. The activities are based on the implementation of Action Plan in the area of employment, health care and housing of the Roma population. The Decision on the Establishment of the Coordination Board for Action Plan Monitoring has been implemented. The Roma Council within the BiH Council of Ministers has been working continuously.

2.3. REGIONAL ISSUES AND INTERNATIONAL OBLIGATIONS

2.3.1. Cooperation with ICTY

In order to improve BiH's cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) and arrest of all indictees at large, which is a key priority under EP, BiH CoM70 has adopted the Decision on Amendments to decision on provisional measures freezing the funds and economic assets of the fugitive ICTY indictees. With regard to setting up a database of 42 individuals banned from entering or transiting through BiH, the data has been entered and updated in the databases that are used by Border Police (BP). In this connection, in four cases two individuals have been banned from entering BiH. Transit of 26 individuals suspected of assisting the ICTY indictees, who are entered in the databases on the grounds of request by BiH competent authorities, has been recorded.

On proposal of the Ministry of Justice of BiH, the BiH CoM71 has adopted the War Crimes Prosecution Strategy. The BiH CoM 72 has adopted the Decision on the Establishment of a Supervisory Body for War Crimes Prosecution Strategy Monitoring. Representatives of the High Judicial and Prosecutorial Council of BiH, the Judicial Commission of BD and state and entity ministries have been appointed to the Supervisory Body. The Chairman and Deputy Chairman have been appointed, too.

At an initiative of the Ministry of Security of BiH, the BiH CoM 73 has adopted the Decision on the restrictive measures against entering or transiting through BiH in order to efficiently discharge the ICTY mandate. The BiH Ministry of Foreign Affairs has been tasked to ask of the EU Council the updated list of war crimes indictees and their aides ho have been arrested. This is a new decision of the Council of Ministers adopted because of conformity with the relevant EU regulations and because the earlier August 2008 decision regulating the issue has expired.

70 At the 69th sessions held on 18 December 2008 71 At the 71st sessions held on 29 December 2008 72 At the 80th sessions held on 19 March 2009 73 At the 74th sessions held on 29 January 2009

22 The BiH CoM 74 has adopted the Information Paper on ordering provisional measures, i.e. restrictive measures by the EU institutions against fugitive ICTY indictees and support network aides. The BiH CoM 75 has adopted the Information Paper about the Initiative for Signing an Agreement on Cooperation of the Prosecutor's Office of BiH with Prosecutor's Offices of the Neighbouring Countries, which will be submitted to the House of Representative of the BiH Parliamentary Assembly.

In the period between September 2008 and April 2009 Sarajevo ICTY Office did not have any requests for information exchange about ICTY indictees from SIPA and vice versa. In April 2009 SIPA and the ICTY Office had a meeting on information exchange between the two agencies about a particular case pending before ICTY.

The Ministry of the Interior of the RS has continued the activities to locate, arrest or have the remaining two fugitive ICTY indictees voluntarily surrender. The actions have been taken in cooperation with appropriate institutions of BiH, the Republic of Serbia, the Republic of Montenegro, EUFOR, NATO and ICTY investigators. There is no evidence that either of the wanted persons is in the territory of the RS. The activities to identify the support network aidees to ICTY indictees have been continued. Together with ICTY investigators, NATO and EUFOR, they have made an analysis of electronic and written documents and photographs, which were seized in the raids of buildings belonging to certain individuals. New individuals have been identified, who provided security services for one of the wanted ICTY indictees in a period of time. Five (5) individuals have been questioned about circumstances that are connected to some new information.

In this period, at the request of ICTY and the Court of BiH, five (5) buildings belonging to different individuals have been searched: 10 February 2009 (2 individuals), 12 March 2009 (1 individual) and 27 March 2009 (2 individuals). EUFOR, NATO and the RS Ministry of the Interior took part in the searches.

In the same period the authorized officials of the RS Ministry of the Interior have attended a number of meetings with representatives of War Crimes Prosecutor's Offices of Serbia, Intelligence Security Agency (OSA/OBA) of BiH, ICTY investigators and NATO and EUFOR.

Apart from the above, the RS Ministry of the Interior and the Secretariat for Relations with ICTY and War Crimes Investigations and the Republican Centre for War Crimes Investigations, in cooperation with the competent institutions of the RS and BiH:  Acted on 32 various request by the ICTY Prosecutor's Office respecting verification of information, finding facts, making interviews, sending evidence and serving summons on witnesses,  Continued cooperation with 3 defence counsel teams with a view to assisting them in defence of ICTY indictees.

2.3.2. Regional cooperation

Bilateral relations of BiH and the Republic of Croatia have remained good and characterised by official visits at the highest level. The BiH Minister of Foreign Affairs

74 At the 83rd sessions held on 9 April 2009 75 At the 76th sessions held on 12 February 2009

23 paid a return official visit to the Republic of Croatia on 16 February 2009 and had separate talks with the President of the Republic of Croatia, the Speaker of the Repub- lic of Croatia Parliament, the Prime Minister of Republic of Croatia and the Minister of Foreign Affairs and European Integration of the Republic of Croatia. At the occasion an invitation was extended to the Chairman of the BiH Council of Ministers to visit the Republic of Croatia. The President of the Republic of Croatia, Stjepan Mesić, visited BiH on 4 May 2009 and, inter alia, had meetings with the members of BiH Presidency. The Parliamentary Assembly of BiH extended an invitation to the Repub- lic of Croatia Parliament to visit BiH. BiH and the Republic of Croatia should continue strengthening the legal frameworks for mutual cooperation, expedite the procedures of conclusion and ratification of bilateral agreements, and resolving of all outstanding issues through direct contacts of appropriate ministries and other state institution, i.e. expert commissions that are specifically established to address the issues – these are conclusions unanimously agreed on at all the meetings. At the 56th regular meeting held on 23 April 2009, BiH Presidency adopted a decision on sending a letter to the President of the Republic of Croatia and the Prime Minister of Republic of Croatia about the construction of a bridge on the Peljesac peninsula and other issues of border demarcation between BiH and the Republic of Croatia, in which solving of the issues would be proposed in accordance with the UN Convention on the Law on Sea /UNCLOS/. The Letter was sent through diplomatic channels on 28 April 2009 and an answer of the Republic of Croatia is expected.

Bilateral relations of BiH and the Republic of Serbia have remained good neighbourly relations. After the 26 December 2008 visit of the Minister of Foreign Affairs of the Republic of Serbia, the President of the Republic of Serbia extended an invitation to BiH Presidency to visit the Republic of Serbia. At the 56th regular meeting held on 23 April 2009, BiH Presidency accepted the invitation of the President of the Republic of Serbia, Boris Tadić, to visit Serbia. A delegation of BiH Presidency will be headed by the Chairman of BiH Presidency, Nebojša Radmanović, and the time of visit will be decided through diplomatic channels. Economic relations of BiH and the Republic of Serbia have been constantly improving. In Belgrade, on 4 March 2009, a business forum was organized by the BiH MoFA, the Republic of Serbia MoFA, and Chambers of Foreign Trade of the two countries, which, as a specific type of negotiations and talks about future cooperation, was assessed as successful by both sides.

The resumption of negotiations about border disputes with Croatia and Serbia in the commissions already appointed has been initiated and the talks with Montenegro are in the final stage76.

With regard to bilateral relations of BiH and Montenegro, in Sarajevo on 28 October 2008 the first meting of the newly established state commissions: the State Border Commission of BiH and the State Border Commission of Montenegro was held where the work performed so far on the identification and demarcation of the state border between the countries and future activities in this area were discussed. A joint assessment was that most of the work had been done in the earlier term of office of the members of commission: the Rulebook of Procedure in the Joint Work of State Border Commissions and the Decision on the Establishment of the Body for Border Demarcation. With a view to implementing the understanding reached, a meeting was

76 More details in Chapter 4.3. Justice, feedom, securiry, in the section respecting vizas and border.

24 held in Podgorica on 19 February 2009 where the Rulebook of Procedure in the Joint Work of State Border Commissions, Instructions for the Work of Joint Body for Identification of Border Line and Designing the Border Documents and the Decision on Establishment of A Joint Body for Identification of Border Line were discussed. The State Border Commission of BiH was offered by the Montenegro side the text of Agreement on the State Border between Montenegro and BiH. At the sixth meeting the State Border Commission of BiH agreed on the text of the documents above. On 5 February 2009 a project for interception at a number of places on the border between Montenegro and BiH convenient for illegal crossings was agreed on. BiH is able to design the project, with the funds to be raised for this important job. An agreement on designating the border crossings between Montenegro and BiH and an agreement on the border belt traffic between the two countries have been prepared. Four agreements between Montenegro and BiH have been signed: the Agreement on Cooperation in Culture Matters, the Agreement on Cooperation in Education, the Agreement on Cooperation in Scientific and Technological Cooperation between the Council of Ministers of BiH and the Government of Montenegro and the Agreement on Readmission of Illegal Residents between the Council of Ministers of BiH and the Government of Montenegro.

Relations with the Republic of Macedonia are good, without any open or outstanding issues, and make a sound basis for successful and comprehensive cooperation in various areas. The President of the Republic of Macedonia visited BiH on 3 March 2009, where good relationship between the two countries was confirmed.

Relations of BiH and the Republic of Albania have continued to intensify, which was confirmed by a visit of the Chairman of the Council of Ministers of the Republic of Albania to BiH on 23 and 24 March 2009. At the occasion four bilateral agreements were signed: on citizens’ travelling from one to another country, on readmission, on customs and administrative system facilitation and cooperation in fighting crime, corruption, illegal migration and trade, organized crime and trafficking in drugs. All the agreements are in the course of ratification procedure.

Relations with Turkey are good without any outstanding issues.

BiH is actively involved in all activities for the establishment of CEFTA. In Kishinev in October 2008 a meeting of the Joint Committee was held. The process of further liberalization of the trade in agricultural products in pursuance of Article 10 of CEFTA has started. On 1 January 2009 Montenegro took over the presidency. In Brussels in late January 2009 the first round of consultations/negotiations about further liberalization of the trade in agricultural products was held. The second round was held on the margins of the meeting of Sub-committee for Agriculture and SPS in Podgorica in early April 2009. As BiH has almost completely liberalized trade in all products (except a number of products traded with Albania), it does not have additional negotiations in this round, but it is involved in the emending of the Agreement as one of the Parties to it.

3. ECONOMIC CRITERIA

25 3.1. THE EXISTANCE OF FUNCTIONAL MARKET ECONOMY

3.1.1. Macroeconomic stability

According to estimates of the Directorate of Economic Planning (DEP), in 2008 GDP of BiH rose nominally by 13.4%, and really by 5.8% and thereby amounted to BAM 24.552 billion and BAM 6,390 per capita. The official data will be published in June 2009.

In 2008 industrial production continued increasing significantly in comparison with the growth in 2007, although the seasonal movements made it lower in the FBiH in comparison with the previous quarter. The RS recorded a drastic growth in the quantity of production in the processing industry owing to the production started in the Bosanski Brod Oil Refinery. In 2008 the rate of growth of industrial production in the FBiH was 7.9% and in the RS it was 16.8%.

In March 2009 industrial production in FBiH was lower by 14.6% in comparison with the monthly average of the last year and by 5.9% in comparison with March 2008 while production in the period January-March this year was lower by 10.9% in comparison with the same period of 2008. In mining industry it was higher by 6.1% and in the processing industry it was lower by 20%. In the supply of electricity, gas and water it was higher by 1.9%. According to the main industrial groups of industrial products, in the first three months this year, in comparison with the same period of 2008, production of energy recorded a growth of 4.8%, production of intermediary products, except energy, recorded a fall of 28.6%, production of capital products recorded a fall of 32%, production of durable consumer goods recorded a fall of 34.4% and production of non-durable consumer goods recorded a fall of 3.9%.

In March 2009 industrial production in the RS was higher by 16% in comparison with the previous month and by 23.8% in comparison with March 2008 while production in the period January-March this year was higher by 13.1% in comparison with the same period of 2008. According to the economic purpose of industrial products, in the first three months this year, in comparison with the same period of 2008, production of energy recorded a growth of 36%, production of capital products recorded a growth of 110.8%, production of non-durable consumer goods recorded a growth of 2%, production of durable consumer goods recorded a fall of 28.7% and production of intermediary products recorded a fall of 45.8%.

In BiH in 2008 the prices constantly rose. At the end of the year the rise slowed down so that December recorded an annual rate of inflation of 3.8%. This fluctuation of prices caused the 2008 average annual inflation of 7.4%, which was a higher rate of inflation by 5.9 percentage points than in 2007. In December 2008 the annual rate of inflation was 3.6% and 4.0% in the RS in the FBiH, respectively. In 2008 the annual average rate of inflation was 7.2% and 7.7% in the RS in the FBiH, respectively. A great impact on declining of the global inflation pressures at the end of the year was made by the reduced demand for goods and slackening of economic activities, then, reduced transport costs, whereas food prices were not still adjusted to the reduced prices in the world market.

26 In the first three months of 2009 a steady fall in prices was recorded (by 0.1% each month) so the annual rate of inflation was in January 2.3%, in February 1.8%, in March 0.7%. At the same time in the first three months of 2009 prices rose by 1.6% in comparison with the same period of 2008. The highest rises in prices were recorded in housing and energy (6%) and food and beverages (3.4%), while transport prices fell by 9% due to the prices of oil and oil products falling down.

In 2008, the Indirect Taxation Authority collected through indirect taxation BAM 4,926 billion net, after refunding VAT and other indirect taxes, or 9.6% more than in the same period of 2007. The 2008 planned collection of indirect taxes was exceeded by 1.99%. The upward trend of revenue growth from the previous, fourth quarter, continued in the first quarter of 2009. In the second and especially in the third quarter the prices of energy, raw materials and food soared in the world market, resulting in a growth of import in BiH and thereby in all kinds of import revenues (VAT, customs duties). In the third quarter the Stabilization and Association Agreement (SAA) came into force affecting a reduction of customs revenues collected. Excise duties revenues are mostly affected by consumption. Therefore an analysis of the collection shows the influence of prices in the world market on them. In the fourth quarter the prices of oil and oil products fell, which encouraged consumption and import to some extent and gave positive results in the revenue collection, but still inadequately to have a higher growth. Less excise duties revenues were collected in all groups of excise goods than in 2007. In the fourth quarter a financial crisis occurred and recession started, so the indicators of collected revenues were lower than in the same quarter of 2007.

In the first three months of 2009, the National Account recorded a fall in collection of net indirect taxes and funds by 10% in comparison with the same period of 2008. At the same time it recorded a fall in collected net funds on the grounds of VAT and customs duties by 4.9% and 48.6%, respectively, and a rise on the grounds of excise duties by 3.6%. In March 2009 BAM 322.3 million altogether was collected from net indirect taxes and funds in the National Account (net funds to be distributed to beneficiaries), which was by BAM 5.4 million or 1.7% more than in the preceding month. When compared with March 2008 the amount of collected net funds was less by BAM 83.5 million or 2.6%. At the same time in March 2009, net BAM 191.4 million were collected on the grounds of VAT, which was less by BAM 17.8 million or 8.5% than in the preceding month. When compared with March 2008, the net collected VAT was less by BAM 65.9 million or 25.6%.

Exports of goods and services in 2008 were BAM 9.101 billion. The total amount of imports of goods and services in 2008 was BAM 17.449 billion. The foreign trade deficit was BAM 8.348 billion and the coverage of imports by exports was 52.16%. In the period January-March 2009 the total amount of exports was BAM 1.237 billion while the total amount of imports was BAM 2.793 billion. The foreign trade deficit was BAM 1.556 billion.

The significant current account deficit with prevailing trade deficit continued to be an important feature of the BiH economy in the first quarter of 2009. Declining of overall trade activities of BiH has been noticed since the fourth quarter of 2008 through a significant reduction of imports and exports. At the same time an inflow of the capital funded a major part of current account deficit. In the structure of imports and exports in the first quarter of 2009 the following groups of products are predominant: ma-

27 chines, apparatuses, mechanical and electrical devises, mineral products, leather and furs, wood and wooden products and basic metals. Given the significant reduction of both imports and exports in the first quarter of 2009, a short analysis of the groups of products that contributed to the reduction most was made. In imports in the first quarter of 2009 the following groups of products can be singled out: basic metals (13.97%), machines, apparatuses and mechanical devises (4.10%), chemical products (2.42%), leather and furs (1.08%) and wood and wooden products (1.76%). While mineral products contributed to an increase in export (2.67%), in exports the following groups of products can be singled out to have contributed to a decrease in export: machines, apparatuses and mechanical devises (5.63%), basic metals (6.40%), mineral products (4,23%) and means of transport (2.55%).

At the end of the first quarter of 2009 the total amount of public foreign debt (only in the sector of general governance of BiH) was BAM 4.35 billion and increased by BAM 134.9 million or 3.2% in comparison with the fourth quarter of 2008. The amount of BAM 1.53 billion or 35.1% of the total sum of foreign debt was owed to the World Bank-IDA, while BAM 888.5 million or 20.4% was owed to the Paris Club (the debt incurred before 1992). The total amount of foreign debt does not include BAM 1.48 billion, which have been contracted for but not used up yet, the largest amount or 37.2% pertaining to the European Investment Bank and 33.3% to the European Bank for Reconstruction and Development. We should note the fact that the total amount of public foreign debt does not include the London Club of Creditors' «optional debt» of BAM 436.5 million.

The 2009 plan is to pay off BAM 365.7 million consisting of BAM 208.8 million or 57.1% as the principle debt and about BAM 156.8 million or 42.9% in interests. In the first quarter of 2009 BAM 41.2 million was paid for foreign debts, which made about 11.3% of the entire planned amount in this year. This amount consisted of 6.8% as the principle debt and 4.5% in interests.

In the structure of creditors, most of the funds paid off in the first quarter of 2009, i.e. BAM 15.2 million, making 21.2% of the total amount of 2009 funds planned for payment of foreign debts, pertains to the World Bank – IBRD. Apart from the international institutions, governmental and nongovernmental organizations were major creditors in the foreign debts serviced in the first quarter of 2009. The debit account of governmental and nongovernmental organizations recorded in the first quarter of 2009 payment of about BAM 3.3 million or 15.8% of the total sum of planned payments of foreign debts. An important item in the payment of foreign debts in 2009 is surely private creditors with 11.5% of the total sum of planned payments. According to the information available in the first quarter of 2009, no payments of foreign debts to private creditors were registered.

In December 2008 the number of employed people in BiH was 706,088, making an increase of 9.8 % in comparison with December 2007, with 431,131 people being employed in the FBIH, 263,393 people being employed in the RS and 11,564 people being employed in the BD. The total number of unemployed people in BiH in December 2008 was 483,121 (338,643 in the FBIH, 133,074 in the RS and 11,404 in BD), the rate of registered unemployment in December 2008 being 40.6%, measured as a ratio of the unemployed in the total labour force. The 2008 rate of unemployment

28 by the ILO definition was 23.4% and, in comparison with 2007, when it was 29%, it was less by 5.6%.

The average number of the employed in BiH in the first two months of 2009 was 727,000 people, making an increase of 4.8% in comparison with the same period of 2008. The fastest growth of the employed was recorded in food and beverage establishments (14.7%), retail and wholesale (10.4%) and construction industry (12.9%). On the other hand the number of the employed in the first quarter of 2009 was 491,200 people, making a decrease of 4.5% in comparison with the first quarter of 2008. While the number of the unemployed at the annual level decreased, the first quarter recorded an increase in the number of the unemployed at the monthly basis, so that in March 2009 the number of the unemployed increased by 2% in comparison with December 2008.

The 2008 average wage in BiH was BAM 752, which was a rise of 16.6 % in comparison with the previous year. The average wage in BiH in the first two months of 2009 was BAM 787, which was a rise of 13% in comparison with the same period of 2008. The trend of wage equalization in the FBiH and the RS continued in this period.

The average pension in the first quarter of 2009 was BAM 339, which was a rise of 9.9% in comparison with the first quarter of 2008. The minimum pension in the same period in the FBiH was BAM 296 drawn by 50% pensioners in the FBiH, while in the RS the minimum pension was BAM 160 drawn by 10% pensioners in the RS.

The CBBiH total foreign exchange reserves in 2008 recorded a fall to the extent of BAM 402.8 million, i.e. at the rate of 6%. The value of total foreign exchange reserves at the end of the year was BAM 6.296 billion. The main reason was an increase in the purchase of BAM in October 2008, as a result of deposits withdrawal from the banks owing to the economic crisis indications. Reduction of foreign exchange reserves under a currency board arrangement causes monetary contraction, so the total foreign exchange reserves in a broader sense (M2) were reduced by BAM 650 million. The reserve requirements rate was reduced from 18% to 14%, in order to ensure additional liquidity of the banking system, and since November 2008 all credit lines drawn from abroad by commercial banks have been excluded from the base used for the computation of the reserve requirements rate. At the end of December 2008 differentiation of reserve requirements rates of 14% and 10% were introduced on the deposits of commercial banks, depending on the period of depositing contracted for one year and over one year. Owing to the change of reserve requirements rate, the surplus of reserves over the required minimum rose to BAM 700 million at the end of Decem- ber.

On 16 April 2009 the CBBiH Steering Board adopted new measures to free part of BiH banks' funds that could be used to fund the real part of the sector. The first measure reduces the reserve requirements rate from 10% to 7% on deposits contracted for a period over one year, about BAM 262 million to be freed. The other measure excludes the deposits meant for development programmes by governments from the base used for the computation of the reserve requirements rate. The measures come into effect on 1 May 2009.

29 The foreign exchange reserves continued to decline in the first quarter of this year, so they record an annual fall of 8.3%. They hit the bottom (of 2.3%) in the period January-December. At the end of the first three months they were BAM 6.1 billion, which is BAM 240.9 million less than in the previous year and BAM 548.6 million less than in the first quarter of the previous year. Reduction of foreign exchange reserves under a currency board arrangement causes monetary contraction, so the total foreign exchange reserves in a broader sense (M2) were reduced by BAM 291.9 million. Owing to the introduction of differentiation of reserve requirements rates as of 1 January 2009, the surplus of reserves over the required minimum rose to BAM 278.9 million.

The total credits at the end of 2008 were BAM 14.54 billion, which made an increase of BAM 2.60 billion in comparison with the end of 2007 with the following structure: private non-financial companies (46.30%), which had the largest share for the first time (95%) unlike the past years, then households (46.02%), while the government sector took only a small share (less than 1%) of the entire liabilities. A similar structure of liabilities has remained in 2009.

However, as far as in the second half of 2008 the credit expansion slackened as the result of spill of adverse effects of the world financial crises over to the BiH economy. BH banks tightened terms and conditions of credit arrangements due to higher risks in banking. In 2009 the trend has continued, so the annual rate of growth in March 2009 was lower than in 2008 by 15.3 percentage points and made 13.75% y/y, i.e. the annual rate of growth of all credits in March 2009 was -0.44% in comparison with December 2008. Slowing down of the credit growth (in March 2009 the rate of growth was negative) was recorded in two major sectors – households sector and companies sector.

At the end of the first quarter of 2009, the total deposits amounted to BAM 11.84 billion. A negative rate of deposit growth at the end of 2008 (-1.03% y/y) caused by withdrawal of deposits by business entities and individuals continued in the three months of 2009. The annual rate of fall of deposits in March 2009 was -2.77% y/y. Although at the end of the last year the situation of deposit withdrawal stabilized and the annual rate was 0.8% y/y, in 2009 the downward trend has continued, which resulted in negative rates of growth. In 2008 the company sector was not swept by the mass wave of deposit withdrawal, but in the first quarter of 2009 these deposits declined, too.

Windrowing large amounts of money by the deponents and conversion into euro trigged a large number of buying transaction in BAM and a negative balance of sale and purchase of BAM. In the first quarter of 2009 CBBiH had a negative balance of sale and purchase of BAM to the extent of BAM 281.9 million. Owing to slackening of economic activities caused by the world economic crises, the sale of BAM decreased by BAM 500 million and purchase of BAM decreased by BAM 846.3 million.

The exchange stocks continued to record a fall in the index value, which deprecated in the last quarter by over 20% in comparison with the previous quarter.

30 In the first quarter of 2009, the active rate of interest of commercial banks of BIH slightly rose in comparison with the preceding month. The average rate of interest on short-term credits given to private companies in BAMs had a steady upward trend since September 2008 and in March 2009 hit the figure of 7.53%, which made an increase of the total of 11 base points in comparison with 2008. The average rate of interest on short-term credits given to individuals in BAMs had the same trend and amounted to 9.27% in March 2009, which made an increase of the total of 14 base points in comparison with December.

The first quarter of 2009 recorded a rise in the rate of interest on long-term credits given to individuals in BAMs with a foreign currency clause and in March 2009 it amounted to 10.69%, which had been a peak since the introduction of new methodology of interest rates reporting (January 2007). In the first quarter there was a fall in the newly given long-term BAM credits with a foreign currency clause to private companies, and the rate of interest on the credits was reduced in the period by 78 base points and amounted to 7.77% in March 2009.

Real appreciation of BAM was recorded, having resulted from the nominal rise of BAM to Serbia dinar and US dollar and the difference in inflation from the euro-zone.

On 1 April 2009 the CBBiH paid BAM 119.6 million into the budget of BiH institution on the grounds of the Decision on Distribution of Part of Net Profit Made by CBBiH in 2008. In 2008 the CBBiH made a profit of 199.4 million, which is, pursuant to the Law on CBBiH, distributed between the budget of BiH institution and the general reserves of CBBiH in the proportion of 60% or BAM 119.6 million and 40% or BAM 79.8 million, respectively. On 31 March 2009 the CBBiH took over and converted the monetary gold that BiH had received pursuant to the Agreement on Succession Issues.

The first quarter of 2009 recorded significant varying in the nominal exchange rate of BAM in comparison with the preceding quarter. If we compare March with the preceding month, we will notice appreciation of BAM exchange rate to most currencies of major trade partners, except Macedonian denar, Russian ruble, Chinese yuan, Rumanian leu and Czech koruna. If we look at the changes of nominal exchange rate of BAM in comparison with the December 2008, we will notice appreciation of BAM exchange rate especially to Polish zloty (20.0%) Russian ruble (16.3%) and Hungarian forint (12.6%). US dollar, Serbian dinar and Hungarian forint varied most in the last two quarters. An analysis of data show that the index of nominal effective rate of exchange reduced in the first quarter of 2009, which is an indicator of BAM appreciation to the currencies of major trade partners in a given period. In March 2009 the nominal effective rate of exchange (measured against currencies of the twelve major BiH trade partners) was less by 0.40 and 4.24 percentage points than in February and the 2008 average, respectively. Therefore, the same trend direction of the index as in the first quarter of 2008, but at a different level, was noticed. A rise in the index of real effective rate of exchange in the last month is an indicator that depreciation of the real effective rate of exchange of BAM occurred in March 2009. Increasing index of the real effective exchange rate is an indicator for the improvement of competitiveness of the national products in the markets of the major BiH trade partners. In March 2009 REER was 12 base points above the February level and 2.08 percentage points below the 2008 average.

31 Thus, in the first quarter of 2009 a depreciation of REER occurred and it can be briefly noted that, by an analysis of March indices, a range between REER and NEER, is still present although somewhat lower - it was 94 base points in March 2009. The range is caused by discrepancies of inflation and nominal exchange rate between BiH and BiH major trade partners.

Projected internal debts of the RS on 31 March 2009 inclusive were BAM 1,461.77 million and on 31 March 2009 inclusive BAM 234.69 million of internal debts were paid while bonds to the value of BAM 283.56 million were issued. In April the RS National Assembly passed the Law on Amendments to the Law on the Determination and Manner of Payment of Internal Debts of the RS.

According to the liabilities verified so far the FBIH total internal debt amounts to BAM 1,635.7 million. In January 2009 the FBIH Government adopted the Draft Law on Amendments to the Law on the Determination and Manner of Payment of Internal Liabilities of the FBIH and sent it to the Parliament for adoption. The reason for this was partly in the need to fix a new deadline for the beginning of the issue of bonds to cover wartime claims. The old deadline was 1 January 2008 which was prolonged to 31 March 2009. In April 2009 the FBIH Government adopted the Law on Debts, Loans and Guaranties of the FBiH.

The economic crises has additionally burdened budgets of BiH institutions and entity institutions and strongly affected BiH economy, so all levels of government take actions and measures to counter and suppress its results. The Council of Ministers of BiH77 has adopted the Proposal for Measures within Competence of the Council of Ministers to Alleviate the Effects of Global Economic Crises on BiH Economy that was proposed by the Ministry of Finance and Treasury of BiH. These measures are part of a common broad package of measures that the Council of Ministers is going to implement together with entity governments. The package of 16 measures within competence of the Council of Ministers is targeted at maintenance of the banking sector stability, alleviation of consequences of the crisis in the economy and statutory engagement of all available public funds.

The RS adopted a set of laws to enable the implementation of the RS Government’s Programme of Measures to Alleviate the Effects of Global Economic Crises, which was approved by the National Assembly in February 2009. The Economic and Social Council of the FBiH prepared and the FBiH Parliament approved the Programme of Measures to Alleviate the Effects of Global Economic Crises and Improvement of Business Environment and Social Welfare Agreement for the next two years. At the 21st session held on 7 April 2009 the FBiH Parliament adopted the Draft Amendments to 2009 FBiH Budget, which now amounts to BAM 1.906 billion.

The global economic and financial crisis and a decline in public revenues resulted from it is reflected in the budgets in the first two months of 2009. The total amount of revenues in the budget of the FBiH were lower by 13% in comparison with the same period of 2008, while they are lower by 12% in the budget of the RS. Expenditures in FBiH were lower by 22% in the first quarter, as a result of an increase in the amount of salaries of 27.5% and a decrease in current transfers of 26.7%. Expenditures in the

77 At the 79th meeting held on 5 March 2009.

32 RS were higher by 8% in comparison with the preceding period, and this is, as in the FBiH, mostly a result of an increase in salaries and remuneration of about 16%.

The passage of the Law on the Fiscal Council of BiH provided for the conditions for the most important BiH fiscal authority functioning. In September 2008 the Fiscal Council of BiH held its constituting session and members were appointed. The Fiscal Council of BiH held the 7th meeting on 16 April 2009 and dedicated it to the Platform for Negotiations of the BiH Delegations with International Monetary Fund about Stand by Arrangement.

BD is currently discussing documents to establish the Investment and Development Fund targeted at the support to macroeconomic stability by giving support to projects aimed at companies in the District.

3.1.2. Interplay of market forces

The privatisation of telecom operators in the FBiH has not been carried yet and can be expected only next year, as the preparations for the sale of BH Telecom will not start before the “Policy of State-owned Capital Privatization in the FBiH with a Programme of Priority Investments” has been adopted and it is still in the parliamentary procedure. The 2009 Work Programme of the Privatization Agency of the FBiH envisages that the part of state-owned capital in 11 companies to the value of BAM one billion should be privatized in the next 15 months. In November 2008 the Law on Amendments to the Law on Privatization of Companies was passed.

The RS has finished privatization of 712 companies altogether or about 68.51% of the total value of state-owned capital. The value of the privatized state-owned capital is BAM 5,670,492,003, out of which state-owned capital to the extent of BAM 1,925,268,431 was sold through market methods. The value of non-privatized state- owned capital is BAM 2,606,756,367. The remaining state-owned capital in RS companies has been included in the portfolio of the RS Shareholding Fund. The RS Investment and Development Bank has been appointed as the administrator of the Fund and it has also the role of authorized seller.

The RS has fully implemented the revised 2006 Action Plan for the Restructuring of the Electrical Energy Sector. The passage of the Amendments to the Law on Electrical Energy of the RS in December 2008 and the passage of the Law on Energy of the RS78 continued fulfilling the obligations in this area.

In November 2008 an Agreement on Concession for 30 years between Austrian Stra- bag and the RS and the Protocol on the Construction of the First Lots of Highway Network of the RS were signed. The total investment in the Construction of Highway Network of the RS is EUR 2.9 billion. The fallowing routes will be constructed: Lak- taši – Doboj 72 km, Doboj – Jakeš 46 km (part of Vc corridor through the RS), Glam- očani – Kupres 110 km, Banja Luka – Novi Grad 71 km, Jakeš – Bijeljina 98 km.

The passage of the Law on Gas of BiH has been delayed. In the fourth quarter of 2008 two meetings of expert teams were held and the positions of the State and the entities

78 At the session of the RS National Assembly held on 14 May 2009.

33 were defined and on 6 November 2008 the Agreement of Energy Policy Principles was signed.

3.1.3. Free market entry and exit

According to the World Bank report and the “Doing Business in BiH” Memorandum on Reform, in 2008 BiH successfully completed reforms in four areas: building permits, transfer of real property, tax payment – fiscal reforms and business winding up. In business winding up, BiH has tightened the rules on professional requirements for receivers, which would in future result in a shorter duration of receivership and bankruptcy.

The FBIH is implementing the “Legislative Guillotine” Reform Project that should create a better business environment for investments, which goes in the right direction even feaster than planned, in the opinion of the World Bank. On 13 May 2009 the FBiH and the International Financial Corporation signed an agreement on cooperation in the “Legislative Guillotine” Reform Project in the F BiH. The value of the project is US dollar 750,000, and appointments to the project implementing bodies are under way.

Amendments to the FBiH Bankruptcy Procedure Law are in the Parliament - they incorporate recommendations of courts to expedite the bankruptcy proceedings. After the passage of the Profit Tax Law of the FBIH, which has been applied since January 2008, and the Rulebook on the Implementation of the Profit Tax Law introducing the tax credit, the entity double taxation has been eliminated and competitiveness, fair- ness and efficiency of legal persons have been improved by tax incentives.

A single electronic ledger of the Register of Business Entities, which has been used since the beginning of 2008, networks all competent courts in BiH and Taxation Au- thorities. Training of users, removal of shortcomings, upgrading and improvement of the software were continued in the second half of 2008.

In the period between 1 January and 31 March 2009, through the single electronic ledger of the Register of Business Entities, the FBIH received 2,805 registrations (establishment or change of details) from the 10 courts of the FBiH. Out of this number there were 443 registrations of business entities. The number of undecided cases in 2008 was 515 while in the first three months of 2009 it was 617. Out of 443 decisions, 209 decisions on establishment were issued in 3.1 days, while 234 decisions (establishment with a conclusion) were issued in 10 to 15 days on average. The average duration of registration (conclusion, amendments) in the FBiH was 14-17 days. Pro- cessing of an application in Taxation Authorities takes 2-3 days on average.

After the “Legislative Guillotine” Project has been completed at the Republic level of RS, which was assessed to be saving more than 3 million KM annually, a regulatory reform aimed at improvement of business environment continues, inter alia with the following measures: gradual introduction of the methodology of „regulations effect assessment“ in the legal system of RS; with commitments of the RS Government to reform (or cancel) at least 20 formalities (permits, consents) in the next year in order to advance the business environment, working on the Action Plan for the implementation of reforms measures from the World Bank Memorandum; initiation

34 of the “Legislative Guillotine” Project at the local level in three municipalities in RS, whereas it is in its final stage in the municipality of Banja Luka.

In the RS in December 2008 the Law on Business Companies was passed. Until the effective date of this law – 1 July 2009 – the relevant laws will be brought in line with this law and the Law on Enterprises (Companies) and Article 69 of the Law on the Notary will cease from application.

3.1.4. Development of financial sector

In the fourth quarter of 2008 in BiH, 30 banks operated, while 20 had the head offices in the FBiH and 10 had the head offices in the RS. In comparison with the previous quarter the number of banks has not changed. Looking at the structure of owners of the BIH banks, in the fourth quarter of 2008 there were changes. Postbank was recapitalized so that it shifted from the group of national banks into the group of banks with majority foreign capital. In this way, out of the total number of the banks, 21 banks are in foreign ownership, 7 banks are in national private ownership and 2 banks are in majority state ownership. According to the Deposit Insurance Agency, in the fourth quarter of 2008 24 commercial banks joined the insurance scheme. In December 2008 a decision on an increase in the insured deposit to BAM 20,000 was issued. This decision exclusively refers to natural persons’ deposits. The newly- established Development Bank of the FBiH d.d. Sarajevo, as a legal successor of the Investment Bank of the FBiH and a specialized financial institution with a goal to promote economic and overall development of the FBiH, successfully operated in the reporting period.

The total claims of commercial banks at the end of 2008 were BAM 14.56 billion, which made an increase of BAM 2.58 billion or 21.7% for the year. Long-term claims were 74.5% of the total claims of the banks in BiH. An analysis of the structure of credits by sectors shows a continued predominance of non-governmental sector, as 98.3% of the total claims pertained to the sector at the end of 2008.

In the fourth quarter of 2008 the credit expansion slackened and the average monthly growth rate was lower by 6.2% in comparison with the preceding quarter. This is a result of the diminished credit activities of the banks owing to the spill over effects of the financial crisis.

At the end of 2008 the total deposits of commercial banks were BAM 12.01 billion, which made a decrease of BAM 994.9 million or 7.6% in comparison with the end of the third quarter of 2008 or a decrease of BAM 125.2 million or 1% for the year. This is a result of deposit withdrawals by individuals, which was especially frequent in October 2008. In the structure of deposits, deposits with contracted terms and savings were predominant, with a share of 73.8%.

At the end of the fourth quarter of 2008, the ponder average of all active interest rates in BIH banks was 8.21%, which made an increase by 28 bp in comparison with September and 42 bp in comparison with the end of the fourth quarter of 2007.

In the fourth quarter of 2008, in the both stock exchanges in BiH, the downward trend of the value of index and the value of turnover, which was mostly a result of the

35 expending global financial crisis, reduced available current funds for investments and diminished interest of investors.

The fall of trading in SASE and BLSE stock exchanges was equal. Comparing the 2008 traffic in the stock exchanges with 2007, the both stock exchanges experienced a fall of 63%. At the same time, the number of securities trafficked in the SASE and BLSE reduced by 75.8% and 33.7%, respectively. In the same period, the number of transactions performed in SASE and BLSE reduced by 75.4% and 83.8% respectively.

The Strategy for Introduction of the “International Convergence of Capital Measurement And Capital Standards“ – Basel II was adopted in the FBIH and in the RS, and makes a general framework for the implementation of international standards of risk management and bank capital management. It is a framework for activities of the Banking Agency in the coming period, since the implementation of the New Framework of Bank Capital – Basel II is planned to last for 10 years and consist of three stages.

The Draft Law on the Committee for Financial Sector Coordination of the RS79 was adopted. The Law establishes a system of efficient cooperation and coordination of supervisory bodies over the financial sector of the RS (RS Commission for Securities, RS Banking Agency and RS Insurance Agency) until the final establishment of an organizationally uniform system of supervision over the financial sector of the RS.

In the reporting period the RS Commission for Securities enacted: the Rulebook on Reporting and Publishing Information on Trading in Securities and the Rulebook on Amendments to the Rulebook on Supervision over Participants in the Securities Mar- ket.

3.2. THE CAPACITY TO COPE WITH COMPETITIVE PRESSURE AND MARKET FORCES WITHIN THE UNION

3.2.1. Human and physical capital

The largest number of unemployed people is people with the third level of education (skilled workers) and, then, unskilled workers and people with secondary education follow. The smallest number of unemployed people is people with two years’ university education and then people with the first university degree follow. The share of women in the total number of the unemployed is 50.6%.

In March 2009 the FBiH Parliament adopted the Information Paper on Secondary Education in the FBiH and an Analysis of the Secondary Education Situation with a Proposal for Measures for Adjusting the Education with the Needs of Companies. The Federal Ministry of Education and Science, in cooperation with Cantonal Ministries of Education, will consider the possibility of introducing obligatory secondary school- ing in the FBIH.

Investments in science and high education in 2008 made by the Federal Ministry of Education and Science amounted to BAM 7,000,000, which is an increase of almost

79 At the session of the RS National Assembly held on 30 January 2009.

36 400% in comparison with 2003. In the RS the passage of the Law on Scientific and Research Line of Activity ensured the legal grounds for an increase of budget grants by a few percents every year since 2005. Looking at the average in the last ten years, the total funds put in science in 2008 increased by about 300% in comparison with 1999. The share of the funds put in science in the GDP is about 0.1% GDP; the statistics not following indicators in this area, so an IPA-funded project for the introduction of statistical indicators in science has been proposed. The Ministry of Civil Affairs earmarked from its 2008 budget, for the first time, BAM 500,000 to give support to researchers and institutions that take part in EU framework research and development programmes. The funds were allocated in a public competitive procedure.

In 2008 registered direct foreign investments (DFI) were BAM 396.3 million, which is an increase of 6.2% in comparison with the preceding year. Direct foreign investments in banks consist of the owner’s share and other capital. In 2008 owner’s share was about 58% of direct foreign investments, which is an increase of 28.4% in comparison with the preceding year. Other capital was 41.9% of direct foreign investments, which is a decrease of 14.2% in comparison with the preceding year.

Analysing the countries – foreign investors, Austria remained the main investor in the banking sector with BAM 230.8 million in 2008. Next to Austria, closely following in the investments in the banking sector of BiH, were Croatia and Luxemburg. The three countries made 95.2% of registered direct foreign investments in 2008. We can note that the inflow of capital from Austria decreased by 25.1% in comparison with 2007. The inflow of capital from Croatia and Luxemburg to BiH increased by 310.2% and 30.1%, respectively, including the value of retained earnings.

3.2.2. Sector and enterprise structure

The BiH Council of Ministers80 has adopted the 2009 – 2011 SME Development Strategy of BiH. After the adoption, drafting of the Law on Small and Medium Enterprises will follow.

In February 2009, the „SME Development in the FBiH“ Project was presented. One of the priorities under the four-year development program, starting with 2009, is the establishment of the SME Agency.

In March 2009 the FBIH passed the Law on Crafts and Similar Lines of Business and the Law on Amendments to the Law on Encouragement of Small Enterprises. At the same session the Decision on Encouragement of Entrepreneurship and Crafts respecting the appropriation of part of funds under "Transfer for Encouragement of Entre- preneurship and Crafts“ line of the 2009 Federation of BiH Budget for the Federal Ministry of Development, Entrepreneurship and Crafts was adopted. Funds to the extent of BAM 4.4 million shall be given by the Development Bank of the FBiH, on the revolving basis with the 7 years’ payment off time line, grace period of two years and interest rate up to 2%. The credit project is aimed at giving financial support to entities of small-scale industry having adequate production capacities or setting up new capacities, which need additional investment funds to put in fixed or working capital to start the production and provision of services, better use of the capacities, open new jobs or increase exports, which are also the criteria for eligibility for this project.

80 At the 84th session held on 16 April 2009.

37 The recovery of electricity sector in the entire territory of BiH largely gets credit for the growth of industrial production in the two entities. After a drastic fall in the production of electrical energy in 2007, the 2008 production recovered in the entire territory of BiH. According to DERK, in 2008 the production of electrical energy in BiH rose by 15% y/y on average, which was a peak of the electricity sector reached for the first time after 1991. Although the hydrology situation did not meet the expectations, better functioning of thermal power stations (without major stoppages) resulted in a better production of electrical energy in BiH. The production of thermal power stations that increased by 12.1 % led to a jump in demand for coal, where the production recorded a usually good growth of 8% at the level of BiH. All the three electricity companies producing electricity recorded a two-figure rate of production growth. The production of EPBiH, which makes more than 50% of the total production in BiH, increased by 13%, while EPRS and EPHZHB recorded an annual rate of production growth of 14.5% and 22.5 %, respectively. It is important to note that the consumption of electrical energy in BiH had an upward trend in 2008 and recorded the rate of growth of 5.5%. A jump in the production of electrical energy in BiH resulted in a sharp rise of electrical energy export.

According to DERK, EPBiH, EFT (Energy Financing Team) and EPRS had the largest share in the 2008 electrical energy exports. The total growth of electrical energy exports in the preceding year increased by over 50% in comparison with the same period of 2007, so the total money value of the 2008 electrical energy exports was BAM 660 million. Most electricity was exported to the neighbouring countries: Croatia, Montenegro and Serbia. Also electrical energy imports recorded an upward trend, which was 27% in 2008. It is important to note that EP HZHB significantly reduced electrical energy imports in comparison with the last year, so in 2008 most electrical energy was imported by Aluminijum Mostar and EFT.

The BiH Council of Ministers and German Government signed the Agreement on Fin- ancial Cooperation to the value of EUR 18 million81, aimed at funding of the energy sector in BiH. Out of the EUR 18 million, EUR 6 million is a grant of German Gov- ernment and EUR 11 million is a loan of the German Development Bank for the energy sector program, while EUR 1 million are earmarked for the establishment of the Fund for Studies and Experts. EUR 17 million for the development of energy sector will be allocated to electricity companies in BiH as part of financial reconstruction of the distribution network within the “Energy 4″ project funded by the World Bank, European Bank for Reconstruction and Development and European Investment Bank.

3.2.3. State influence on competitiveness

The Law on State Aid System of BiH has not been passed yet. In January the RS National Assembly adopted the Draft Law on State Aid in the RS.

3.2.4. Economic integration in EU

The major BiH trade partners remain the neighbouring countries and EU countries. The structure of exports and imports by trade partners in the fourth quarter was as follows:

81 22 April 2009.

38  EU 51.1% (Italy 11.6%, German 11.0%, Slovenia 6.4%)  South-East Europe 30,2% (Croatia 14.7%, Serbia 11.3%)  Other countries 18.7%

The last quarter of 2008 was characterised by significant varying of the nominal exchange rate of BAM, as a result of change of the exchange rate of euro, as the anchor currency, to the currencies of major BiH trade partners. A reduction of the nominal effective exchange rate index indicates the appreciation of BAM to the currencies of major BiH trade partners. In December 2008 the nominal effective exchange rate was less by 1.09% than in November, and it was less by 1.32% than the 2007 average. The same trend was noted in the real effective exchange rate.

All fluctuations of the exchange rate of BAM are a result of change of the exchange rate of euro, as the anchor currency, to the currencies of major BiH trade partners. If we look at fluctuations of the nominal exchange rate of US dollar, significant varying was evident in the last two quarters of 2008. After a long period of deprecation of the dollar, appreciation of dollar to BAM was rather high in the last two quarters of 2008 (except in December). If we compare December with the preceding month, appreciation of BAM exchange rate to most currencies of major BiH trade partners, except Croatian kuna, US dollar and Swiss franc, was evident. The exchange rate of Croatian kuna to BAM is still stable, while RSD appreciated against BAM since September 2008. Still depreciation of RSD and USD to BAM is still high in comparison with the base year and amounts to about 5.1% and 7.4% respectively. Fluctuations that characterized changes of the RSD exchange rate are surely a result of a set of measures of the monetary policy of the Republika Srbija taken by NBS (National Bank of Serbia), which continued in 2008.

The index of real effective rate of exchange in the first half of the year recorded depreciation, while in the second half of the year recorded appreciation was a result of slower deflation in BiH in comparison with trade partners. The real effective exchange rate reduction index was an indicator of the reduced competitiveness of the national products in the markets of the major BiH trade partners. On the basis of fluctuations of real rate of exchange of Serbian dinar, Croatian kuna and euro it can be noted that in comparison with the base year, i.e. 2005, the average prices in Serbia are higher by about 19.1% in 2008, and in European Union countries - BH trade partners they are lower by about 7.2% in comparison with 2005.

4. EUROPEAN STANDARDS

4.1. INTERNAL MARKET

4.1.1. Free movement of goods

As regards standardisation, in December 2008 the Standardisation Council was established to consist of 25 members. The BiH Standardisation Institute (BAS) has adopted 14,150 international or European standards as national standards. Out of this number 8,950 are European (EN) standards, out of which 3,474 are harmonised standards with new-approach directives, while 1.223 standards have been adopted

39 since October 2008. In late 2008 a new Technical Committee was established, the BAS/TC 45 – Agriculture, while another Technical Committee – Railways is in the phase of establishment (public invitation for tenders). BAS has taken over and monitors changes of harmonized standards with new-approach directives 82, and the directives planned to be taken over83.

Within the regional cooperation, in December 2008, BAS signed the Agreement on Professional and Technical Cooperation with the Standardisation Institute of Serbia and the text of Agreement has been agreed on by FYR Macedonia, while it is being agreed with the Standardisation Institutes of Croatia.

For capacity building purposes and joining the European and international standardisation efforts, BAS monitors and participates in the work of European and international standardisation organisations, taking part in General Assemblies84, thematic meetings85, workshops86, courses of training87 and participating in the work of technical committees88.

With regard to administrative capacities, BAS has 28 employees, out of which 6 civil servants were employed in the last quarter of 2008, and 5 more employees are planned to be employed in 2009.

As regards accreditation, the Accreditation Institute (BATA) has so far accredited 34 conformity assessment bodies, of which: 15 test laboratories, 6 calibration laboratories, 2 product-certifying bodies and 11 inspection bodies.

In October 2008, the Memorandum on Cooperation with Norwegian Accreditation (NA), was signed and on these grounds the „Support to capacity building of BATA“ Project of the value to BAM 600,000.00, which is funded by Norwegian Government, was signed. Within this project, in February 2009, two events were organized by Norwegian experts: training of leading assessors in the test laboratories and calibration laboratories according to ISO/IEC 17025 standard and pre-peer-evaluation of the management system of BAS in accordance with ISO/IEC 17011 standard. On the basis of recommendations by NA experts a revision of the documents of the

82 Directive 98/37/EC on Machines, Directive 73/23/EEC; 2006/95/EC on Low Voltage Equipment, Directive 95/16/EC on Elevators and Directive 89/336/EEC; 2004/108/EC o Electro-Magnetic Compatibility. 83 The Toy Safety Directive 88/378/EEC, the Non Automatic Weighing Instruments Directive 90/384/EEC, the Gas Appliances Directive 90/396/EEC, the Pressure Equipment Directive 97/23/ЕC, Directive 89/686/EEC on Personal Protective Equipment, Directive 94/9/EC on equipment and protective systems intended for use in potentially explosive atmospheres. 84 CEN-CENELEC, ETSI, ISO, IEC 84 TAIEX in cooperation with CEN and CENELEC „Affiliates Info Days on the European Standardization process“, Mart 2009-Brusells 85 Energy Community–Observing European Community „generally applicable standards“, February 2009- Vienna 86 ISO e-learning Course Module 3.- Adoption and Implementing International Standards –started in March 2009 – 3 Institute employees involved 87 CEN/TC 127 – Fire Safety in Buildings and CEN/TC 138- Non-destructive testing

85 86 87 88

40 management system of BAS is being made with a view to filing in September 2009 an application for the Multilateral Agreement with the European Co-operation for Accreditation (EA) on recognition of documents issued by the accredited bodies.

With regard to administrative capacities, one employee was recruited and the procedure of recruitment of three employees and one trainee is under way, while the 2009 employment plan envisages recruitment of two more full-time employees.

As regards metrology, the Metrology Council had the first meeting on 22 April 2009. In May 2009 the BiH Metrology Institute (IMBiH) became an associate member of WELMEC. IMBiH took part in EURAMET inter- comparation, and hosted the final meeting of inter- comparation evaluation. With regard to capacity building of IMBiH, the premises meant for the Laboratory for the Mass are being reconstructed, and etalon weights and ancillary equipment were recalibrated.

4 new civil servants were recruited, and, after having undergone specialist training in October 2008, 5 IMBiH experts received Technical Assessors Certificate for the participation in accreditation in accordance with the international standards. In March 2009 the Republican Institute for Standardization and Metrology of the RS recruited a technologist in precious metals and started preparations for putting the laboratory for precious metals testing in operation, the necessary equipment having been purchased in the previous reporting period.

As regards market surveillance, the Council of Ministers rendered the Decision on the Form and Content of Information on Magnetic Toys89, in order to prevent a serious risk that these magnetic toys may pose. In order to implement the Decision, the Market Surveillance Agency informed the BiH Indirect Taxation Authority, BiH Chamber of Foreign Trade, Chamber of Economy of Entities and BD to inform producers and distributors and had meetings with inspectors with a view to preparing them to perform surveillance in accordance with the decision.

The Market Surveillance Agency prepared a translation of Directive on Phthalates in Toys and Childcare Articles90, and in February 2009 started an initiative in the Ministry Of Civil Affairs of BiH to transpose it in the BiH legislation. In early November 2008 the Market Surveillance Agency became a full member of PROSAFE91.

With regard to administrative capacities, having recruited 5 additional civil servants, the Market Surveillance Agency has increased the number of employees to 16 (14 ones with university degree and 2 ones with secondary school education).

As regards conformity assessment, in June 2009 inclusive, the following three directives should be adopted: the Directive on Machines, the Directive on Low Voltage Equipment, the Directive on Elevators and the Directive on Electro-Magnetic Compatibility. In this connection, the work on their transposition was finished and public debates were held.

89 “BiH Official Gazette“, No. 02/09. 90 2005/84/EZ 91 Product Safety Enforcement Forum of Europe.

41 By the end of 2009, the following Directives are planned to be adopted: the Directive on Toy Safety92, the Directive on Non-Automatic Weighing Instruments93, the Directive on Gas Devices94, the Directive on Pressure Equipment95, the Directive on Personal Protective Gear96, the Directive on Devices for Use in Spaces Threatened by Potentially Explosive Atmosphere97.

A single system of conformity assessment and appointment of relevant bodies at the state level is in place only for oil products.

The Technical Regulations Committee of BiH that operates on the grounds of the Law on Technical Requirements for Products and Conformity Assessment98, had two meetings in the reporting period99. In order to increase efficiency of the Technical Regulations Committee of BiH and expert teams for drafting orders for the new- approach directives to be transposed in the national legislation, the meetings:  adopted amendments to the Rulebook on the Work of the Technical Regulations Committee of BiH, which increased efficiency of the Committee;  determined the principles of appointment of expert teams for drafting orders for the new-approach directives, 6 of them having been set as priority, to be transposed in the national legislation and the principle of faster and more efficient performance while drafting regulations;  appointed the leaders of expert teams for drafting orders for the 6 new-approach directives to be transposed in the national legislation by the end of 2009;  analyzed reports on the work of leaders of expert teams for transposing 4 new- approach directives, who submitted to the Committee working texts of the orders;  agreed the appearance and content of a conformity assessment sign to be placed on the products in the BiH market until BiH has joined EU. The conformity assessment sign will be cited in all orders for the new-approach directives to be transposed in the national legislation, while a CE sign will be prescribed in the orders so that it will be mandatory only as of the moment when BiH has become a full member of EU;  analyzed a proposal for the draft „Decision on Conditions and Manner of Recognition of Conformity Assessment Documents and Signs Issued Abroad“, which should be adopted by the BiH Council of Ministers on a proposal by the Minister of Foreign Trade and Economic Relations.

Pursuant to the Decision on Coordination in the Field of Quality Infrastructure 100 by the BiH Council of Ministers, three meetings of institutions at the state and entity level within whose competence the field of quality infrastructure for technical and industrial products and the field of quality infrastructure for agricultural products101 are. In the field of quality infrastructure for technical and industrial products the

92 88/387/EEC 93 90/384/EC 94 90/396/EC 95 97/23/EC 96 89/686/EC 97 94/9/EC 98 „BiH Official Gazette“, No. 45/04. 99 In late December 2008 and in mid-April 2009. 100 „BiH Official Gazette“, No. 2408 101 One regular meeting of the institutions in the field of quality infrastructure for technical industrial products and 2 meetings in the field of quality infrastructure for agricultural products.

42 preparation of the List of Authorized Entities in BiH for conformity assessment of products that will be delegated to CEFTA countries is in the final stage. In this connection, the RS Government has submitted the List of Authorized Entities in the RS, and the final List of Authorized Entities in the FBiH is expected.

With regard to administrative capacities, in order to increase efficiency of EU directives’ transposition in the national legislation, in April 2009 the Ministry of Foreign Trade and Economic Relations established the Department of Technical Regulations, where 5 incumbents will be hired.

As regards consumer protection, BiH Consumer Protection Council started functioning and has held 4 meetings so far. The BiH Council of Ministers102 adopted the “2009 State Annual Program for Consumer Protection in BiH”.

In order to promote consumer protection in BiH, the Institution of the Ombudsman for Consumer Protection enacted the Criteria in the Procedures for Alternative Deciding on Consumers' Disputes103, and the Instruction on Acting on Applications for Violations of Consumers' Rights. In this connection, Specific Reports on Economic Services of General Interest were prepared (sectors of heating, water supply and electricity and determination of gas prices), which contained recommendations in relation to consumers' rights violations found. In April 2009, Guidelines and Recommendations in the Consumers' Credit Sector were made with a view to protecting interests of consumers. The January – June 2009 Tentative Schedule of Visits to Consumers' Associations in BiH was adopted.

In 2008 in the FBiH 5 consumers' associations actively operated. The Budget of the FBiH provided BAM 70,000 for the implementation of consumer protection projects. The Information and Counselling in Consumer Protection Project was launched in late December 2008.

In 2008 in the RS the Rulebook on the Manner and Conditions of Entering Consumers' Associations in the Register and the Rulebook on Award of Grant Support to Consumers' Associations in the RS were enacted. In 2008 funds earmarked purposefully for consumers' associations amounted to BAM 100.000 KM, and the same amount is planned for 2009. In the RS there are 10 consumers' associations, and in the period October-December 2008 two projects were implemented: „Educated consumer-protected consumer“ and „Genetically Modified Organisms in the Human and Animal Diet“. The RS Government makes a Programme for Consumer Protection on a yearly basis, so the 2009 Annual Programme, which is being drafted, should be adopted by June 2009.

In order to establish regional cooperation, in December 2008, Banja Luka hosted a regional meeting on „Exchange of Lessons Learned and Strengthening of Regional Cooperation in Consumer Protection“. Governmental and non-governmental organizations from BiH, Serbia and Croatia took part in the meeting.

4.1.2. Movement of persons, services, capital and right to establishment

102 At the 85th session held on 29 April 2009. 103 „BiH Official Gazette“, No. 13/09

43 With regard to movement of persons, in January 2009 the BiH Council of Ministers adopted the Decision on Determining An Annual Quota of Work Permits for Employment of Foreigners in BiH in 2009. The RS passed the Law on Employment of Foreign and Stateless Persons104. In the FBiH the Law on Employment of Foreigners, which has been brought in line with the BiH Law on Movement and Stay of Aliens and Asylum is in the parliamentary procedure.

With regard to free provision of services, in order to promote confidence of BiH citizens in the banking system, the Law on Amendments to the Law On Deposit Insurance in Banks in BiH105 was passed. This Law increases the insured deposit in banks from BAM 7,500.00 to BAM 20.000,00. At the 29 December 2008 meeting the BiH Council of Ministers adopted the Law on Financial Leasing which was not passed by the Parliament afterwards. Pursuant to constitutionally defined competences106, the RS regulates the matter in the Law on Leasing107.

Entities Banking Agencies adopted the Strategy for Introduction of the “International Convergence of Capital Measurement And Capital Standards “ – Basel II.

In the capital market, the RS National Assembly108 adopted the Draft Law on the Committee for Financial Sector Coordination of the RS. Also the Law on Amend- ments to the Law on Securities Market in the RS109 and the Law on Voluntary Pension Funds and Pension Plans110 were adopted. The RS Commission for Securities enacted: the Rulebook on Reporting and Publishing Information on Trading in Securities111 and the Rulebook on Amendments to the Rulebook on Supervision over Participants in the Securities Market112. With approval of the ANNA Secretariat113 the Central Register of Securities designated internationally recognized ISIN codes to all securities registered in the Central Register, in accordance with ISO 6166 standard.

In the late 2008 the FBiH passed the Law on Amendments to the Law on Banking Agency of the FBiH. The 2008 Law on Leasing expanded competences of the Agency to supervision over leasing companies in the FBiH. The Law on Investment Funds in the FBiH was passed. By-laws respecting the securities market were adopted: the Rulebook on the Content of Application, the Procedure of Licensing and Requirements for Members of Management of Companies for Management114, the Rulebook on Conditions of Doing Business by Companies for Management 115, the Rulebook on the Content and Manner of Keeping the Register of Funds116, the

104 “RS Official Gazette“, No. 24/09. 105 „BiH Official Gazette“, No. 125/08. 106 RS Constitution, Article 70(1)(2) and Article 68(7), in combination with Amendment XXXII 107 “RS Official Gazette“, No. 70/07 108 30 January 2009 godine 109 “RS Official Gazette“, No. 34/09 110 “RS Official Gazette“, No. 13/09. 111 “RS Official Gazette“, No. 123/08. 112 “RS Official Gazette“, No. 118/08. 113 25 February 2009. 114 “FBiH Official Gazette“, No. 18/09. 115 “FBiH Official Gazette“, No. 18/09. 116 “FBiH Official Gazette“, No. 18/09.

44 Rulebook on Securities Issue117, the Rulebook on Specific Dealings and Limitations of Dealings in Securities118.

As regards insurance, since late 2008 the Insurance Agency has been participating in two-year Capacity Building Twining Light Project. The RS passed the law on Amendments to the Law on Insurance of Liabilities for Motor Vehicles and Other Mandatory Insurance of Liabilities119. The Law established the Informative Centre within the Insurance Agency of the RS to keep a register of motor vehicles registered in the RS, accidents and cross-border traffic120. The Rulebook on the Manner of Assessment of Balance and Non-balance Positions of Insurance Companies121, the Rulebook on the Level and Manner of Investment to Cover Technical Reserves and Minimum Guaranteed Funds of an Insurance Company122, the Rulebook on Amendments to the Rulebook on the Content of Report by an Independent Auditor on Auditing Financial and Other Reports of Insurance Companies123. The FBiH issued the Decision on Amendments to the Decision on Determination of Contributions to the Protective Fund of the FBiH in 2008124, the Rulebook on Internal Audit in Insurance Companies125 and the Rulebook on Records of Damages Claims for Non- life Insurance in Insurance Companies126.

As regards postal services, the new Law on Post Offices of BiH, which seeks to liber- alize the market of postal services in BiH, is in parliamentary procedure. In the RS the new Law on Post Offices of the RS is in procedure.

In the area of free movement of capital, the BiH Council of Ministers127 adopted the Draft Law on the Framework Foreign Currency Policy (which was not passed by Par- liament) and the Law on Amendments to the Law on the Establishment of Export and Credit Agency of BiH (which is still in parliamentary procedure). In the RS, pursuant to constitutionally defined competences 128, the National Assembly passed the Draft Law on Amendments to the Law on Foreign Currency Operations129, which bring the matter in line with Directive 88/361/EEC (Annex I), with a view to liberalization of current and capital transactions with foreign countries. The FBiH is drafting the new Law on Foreign Currency Operations.

The payment system in giro clearing and real-time gross settlement operations is placed within the Payment Systems Department of the Central Bank of BiH. A share of RTGS in the total transactions was 2.59% and recorded a rise of 0.11% in comparison with the last year, when the share in the 2008 value was higher by 1.84% and amounted to 81.51%. Although a slight rise was recorded, the numbers show that the share of RTGS in the total transactions is still rather low. A share of giro clearing a in

117 “FBiH Official Gazette“, No. 18/09. 118 “FBiH Official Gazette“, No. 18/09. 119 “RS Official Gazette“, No. 12/09. 120 whereby conformity with Directive 2000/26/EC has been achieved. 121 “RS Official Gazette“, No. 10/09. 122 “RS Official Gazette“, No. 10/09. 123 “RS Official Gazette“, No. 106/08. 124 “FBiH Official Gazette“, No. 70/08. 125 “FBiH Official Gazette“, No. 13/09. 126 “FBiH Official Gazette“, No. 13/09. 127 At the 29 December 2008 session 128 RS Constitution, Article 68, points 6,7,10 and 18. 129 In accordance with articles 61 and 62 SAA.

45 the total transactions was 97.41%, and it was 18.49% in the value. Giro clearing and real-time gross settlement operations include 31% of the number and 42% of the value of transactions in the internal traffic in BiH, while they include 69% of the number and 58% of the value of transactions within commercial banks – transactions among clients that have accounts in the same bank130

With regard to the right of establishment, in the RS in December 2008 the Law on Business Companies131 was passed. It will come into effect on 1 July 2009. The Law provides that a company may be established by a national or foreign legal or natural person under equal conditions and without discriminating measure or specific rules. Amendments to the Law on Encouragement of Development of Small and Medium Enterprises were passed132, providing that foreign citizens may establish and operate business without any discrimination, with equal rights and obligations that national entrepreneurs have133. On 1 July 2009 the Law on Real Rights in the RS comes into effect, which governs all real rights in one place (proprietary right, the rights of building, easement and servitude, possessory lien) and foreigners' property rights over imobilities in the RS. In the FBiH, in October 2008 a new version of software of the electronic registers was applied in FBiH courts. In May 2009 the FBiH and the Inter- national Financial Corporation signed an agreement on cooperation in the “Legislative Guillotine” Reform Project in the F BiH. The value of the project is US dollar 750,000, and appointments to the project implanting bodies are under way.

4.1.3. Customs and taxation

In the area of customs, 2009 BiH Customs Tariff has been aligned with the EU 2007 Combined Nomenclature and the Law on Free Zones in BiH is being drafted.

The BiH Council of Ministers134 adopted a proposal for grounds for the BiH accession to the Convention on Temporary Import – ATA KARNET and forwarded it further following the procedure.

In the area of taxation, the BiH Finance and Treasury Ministry finished the procedure of signing the Agreement on Avoidance of Double Taxation and Income Tax Evasion with the following countries: the Republic of Albania, the State of Kuwait, the Republic of Austria, the Peoples Republic of Algeria and Lithuania.

As regards indirect taxation, the BiH Council of Ministers135 agreed on the Draft Law on Amendments to the Law on the Single Account and Revenue Distribution and the of Draft Law on Amendments to the Law on the System of Indirect Taxation in BiH. The BiH Council of Ministers 136 adopted the Draft Law on Excise of BiH, which is in the parliamentary procedure now.

130 Central Bank of Bosnia and Herzegovina - ‘’2008 Annual Report’’, p. 74 – 75. 131 In accordance with following Directives: 68/151/EEC, 77/91/EEC, 78/855/EEC, 82/891/EEC, 83/349/EEC, 89/666/EEC, 89/667/EEC. It has been published in “RS Official Gazette” No. 127/08 132 “RS Official Gazette” No. 119/08 133 Article16 of the Law 134 At the 87th session held on 14 May 2009. 135 At the 86th session held on 7 May 2009. 136 At the 80th session held on 19 March 2009.

46 The Single Indirect Taxpayers Register was established to cover value-added tax (VAT) taxpayers, excise duty products, registration for foreign trade exchange and international forwarding registration. In 2008, ITA collected BAM 4.926 billion net altogether in indirect taxes, after a deduction of VAT and other IT refunds or 6.13% more than in 2007.

As regards the direct taxation, in the FBiH the Law on Personal Income Tax entered into force on 1 January 2009 and enacting of the following by-laws and laws followed: the Rulebook on the Implementation of the Law on Personal Income Tax in the FBiH, the Rulebook on the Payment of Revenues in the Budget and Extra- budgetary Revenues, the Amendments to the Law on Appropriation of Revenues in the FBiH. Pursuant to the Amendments, the Rulebook on the Manner of Filing Tax Returns and the Amendments to the Law on Contributions, the Rulebook on the Manner of Implementation of the Law on Contributions were enacted. The Fiscal Coordination Authority of the FBiH was established to include the federal minister of finance, the cantonal ministers of finance, municipal finance officers and Pension Funds directors in pursuance of the Decree on the Fiscal Coordination Authority of the FBiH 137.

In the RS, as of 1 January 2009 the Law on Personal Income Tax of the RS has been amended so that the income tax rate is 8%. Also the Law on Contributions has been amended, whereby the contributions are computed on the gross salary. The Law on Immovable Property138 has been passed to come into effect 1 January 2010, and also the Law on Games of Fortune139 has been passed. Amendments to the Law on Taxation Administration of the RS140 were passed to introduce a new system of registration, collection and control of contributions, whereby a centralized registration, control and collection of contributions at the Taxation Administration of RS, has been introduced.

BD has given an initiative in the harmonization of income and profit tax laws in the District and Entities, and a Commission has been established with the Finance Directorate of BD. The Law on Amendments to the Law on Administrative Fees141 whereby some types of fees have been abolished in pursuance of the passage of the Law on Immovable Property.

As regards administrative capacities, BiH ITA has proposed a new structure with new posts, with new organizational units to be established: Origin of Goods Group (10 posts) and Border Procedure Group (TIR and ATA KARNET) with 5 posts.

4.1.4. Competition

The Draft Law on Amendments to the Competition Law, which was adopted by the BiH Council of Ministers in late 2008, is currently in the parliamentary procedure. The Competition Council issued 55 final decisions and gave 18 expert opinions in 2008.

137 “FBiH Official Gazette“ No. 73/08. 138 “RS Official Gazette“ No. 110/08. 139 “RS Official Gazette“ No. 110/08. 140 “RS Official Gazette“ No. 34/09. 141 29 April 2009.

47 As regards the state aid, the draft Law on the State Aid System in BiH has not been passed yet. The RS National Assembly has passed the Draft Law on State Aid of the RS 142.

4.1.5. Public procurement

In order to further bring the BiH legislation with EU directives, the BiH Council of Ministers143 adopted the Draft Law on Public Procurement, which was sent into the parliamentary procedure. The Law on Amendments to the Law on Public Procurement 144, the Instruction on Amendments to the Instruction on the Implementation of the Law on Public Procurement of BiH145, the Instruction on Amendments to the Instruction on the Direct Agreement Procedure146 and the Decision on Mandatory Preferential Treatment of Domestic Goods/Services/Works in All Public Procurement Procedures.147

With regard to institutional capacities building, the Public Procurement Agency has recruited 4 more civil servants.

As regards the Procurement Review Body (PRB), in 2008 it received new 1,145 complaints, and 1,515 complaints (including a number of complaints filed in earlier years) were decided. The Parliamentary Assembly of BiH148 appointed 2 more members to the Procurement Review Body.

4.1.6. Intellectual property

The Institute for Intellectual Property of BiH has prepared draft laws governing intellectual property: the Law on Intellectual Rights and Neighbouring rights, the Law on Collective Realisation of Copyrights and Neighbouring rights, Patents Law and Draft Development Strategy of the Institute for Intellectual Property of BiH (2008- 2015).

8 international intellectual property conventions were ratified: Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks149, Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure150, Agreement Concerning the International Patent Classification151, Hague Agreement Concerning the International Registration of Industrial Design152, the Convention for the Protection of Producers of Phonograms against Unauthorised Duplications of their Phonograms153, Roma Convention for the 142 29 January 2009. 143 At 71st session held on 29 December 2008. 144 „BiH Official Gazette“, No. 12/09 145 „BiH Official Gazette“, No. 24/09 146 „BiH Official Gazette“, No. 20/09 147 „BiH Official Gazette“, No. 29/09 148 31 March 2009. 149 Came into effect on 27 January 2009. 150 Came into effect on 27 January 2009. 151 Came into effect on 27 January 2009. 152 Came into effect on 27 December 2008. 153 Coming into effect on 25 May 2009.

48 Protection of Performers, Producers of Phonograms and Broadcasting Organizations 154.

The Parliamentary assembly of BIH155 agreed on the proposals for ratification of WIPO Copyright Treaty (1996) and WIPO Performances and Phonogarmme Treaty (1996). For the time being, BiH is a full member of 18 international intellectual property conventions administered by WIPO-a156. The Institute for Intellectual Property of BiH has got a free of charge licence to translate and print WIPO publication of the «Application of intellectual property in Business», into the three official BiH languages. Five publications were printed in 3,000 copies and three WIPO comics: «Copyright», «Patent» and «Trademark» in 160,000 copies. The comics were distributed among primary and secondary school students in BiH on the occasion of marking 26 April - the World’s Day of Intellectual Property.

The Institute for Intellectual Property of BiH has ensured good working condition and Banja Luka Office has been put in place. There are 41 employees in the Institute.

Specialist training in intellectual property157 was organized for the Institute’s employees and professionals from the BiH general public concerned. A special type of specialist training of employees in the intellectual property rights enforcement agencies158 was organized. The training was organized in Mostar, Brčko, Banja Luka and Sarajevo. In cooperation with WIPO, a national seminar on the Patent Cooperation Treaty was held.

Indirect Taxation Authority brough with the Prosecutor's Office of BiH seven Reports on Probable Cause of Committed Crimes of ”illegal import and circulation of goods without Acquired Trademark” under Article 149 of the Industrial property Law of BiH, whereas, in the course of inspection surveillance the Market Inspectors of the RS confiscated 1,392 pieces of sound and image carries in pursuance of the Law on Trade159 and the Law on Inspection of the RS160.

4.1.7. Employment and social policy

In the area of employment, in 2009 the Labour and Employment Agency of BiH is the chair of the Centre of Public Employment Offices of South-East Europe, and in April 2009 it organized the Third Experts’ and the Fourth Directors’ Conference on the role of Labour Offices in the Context of Global Economic Crisis. The Protocol on Cooperation in Employment of Workers from BiH in Brodogradilište „ULJANIK“ d.d. Pula has been signed between the Labour and Employment Agency of BiH, P.I. „Zenica-Doboj Canton Employment Office ”, Zenica and „Brodo Opus“ d.o.o. Pula. The procedure of concluding an Agreement between the Republic of Slovenia and BiH on Employment of Workers from BiH in the Republic of Slovenia.

154 Coming into effect on 25 May 2009. 155 At the session held on 1 April 2009. 156 World Intellectual Property Organization 157 Trademarks, Industrial designs, protection of new plant types, topographic of integriated sets, Copyrights and Neighbouring rights, Geographical indications protection 158 Indirect Taxation Authority (Customs), Market Inspectors, Sttae Security and Investifation Agency. 159 „RS Official Gazette“, No. 06/07. 160 „RS Official Gazette“, No. 113/05.

49 The RS passed the Strike Law 161 and the Law on Economic and Social Council of the RS162, while the Draft Law on Peaceful Settlement of Labour Disputes has been submitted to the RS National Assembly for passage. In 2009 Returnees Employment Project to the value of BAM 1,000,000, the Trainees Employment Project and Employment Project for Demobilized Servicemen and Members of Large Families Without Any Member Employed to the value of BAM 5,000,000 have been launched. The RS Employment Institute is involved in designing the RS 2010-2014 Employment Strategy, in ELMO Project / a Single System of Registration, Collection and Control of Contributions in Social Security Funds and Young People Employment Project (YERP). For capacity building of the Institute, the IT building and Modernization Project is in the final stage.

In April 2009 the House of Representatives of the FBiH Parliament adopted the Draft Federation BiH 2009-2013 Employment Strategy, whereas the Law on Professional Rehabilitation, Qualification and Employment of People with Disabilities is in the parliamentary procedure. The FBiH Government adopted the Decree on the Criteria and the Manner of Establishment and Operation of Private Employment Agencies 163, while in January 2009 the Ethic Code of Employees in Public Employment Agencies in the FBiH was adopted with a view to improve the performance of the institutions operating in this area. In late 2008 the Registration Programme for the Unemployed in the FBiH, aimed at the full implementation of labour legislation, was finished. With regard to projects, the Programme of Employment and Retention of Young People in BiH, which is implemented in cooperation with UNDP and which is aimed at establishing 10 centres for intermediation in employment of young people in all cantons in the FBiH. The Promotion of Employment and Labour Mobility in the labour market (ELMO) Project is implemented in cooperation with USAID, the Law on a Single System of Registration, Collection and Control of Contributions in Social Security Funds being prepared within the project. The Project of Systemic Training of Employees in the Federal and Cantonal Employment Institutes who are actively involved in the process of designing, implementing and supervising the active employment policy is also implemented. Since November 2008 the FBiH Employment Institutes applies the quality management system ISO 9001:2000.

In late 2008 the director and deputy director of the Agency for Pharmaceuticals and Medical Devices were appointed, and the Agency started on 1 May 2009.

4.1.8. Education and research

In the area of education, the Education Ministers Conference held on 2 December 2008 resulted in the two agreements signed: the Agreement on the Establishment of the General Education Council in BiH and the Agreement on the Common Core of Comprehensive Development Programmes for Pre-school Institutions. Appointments of the members to the General Education Council are under way. Two feasibility Studies have been finished: on higher education reform and needs and prospects of adult education in BiH. Since late 2008 3 projects on the reforms of higher, secondary and general education in BiH have been implemented.

161 „RS Official Gazette“, No. 111/08. 162 „RS Official Gazette“, No. 110/08. 163 “FBiH Official Gazette“, No. 28/09.

50 The Rulebook on the Rules and Manner of Registration of Secondary Vocational Schools Unions in BiH164 has been enacted. The BiH Council of Ministers165 discussed the Information Paper about Activities on Drafting and Adopting the Rulebook on the Use of Academic Titles and Acquisition of Scientific and Professional Distinctions at the Higher Education Institutions of BiH and tasked the Ministry of Civil Affairs of BiH to prepare the Draft Law on Amendments to the Framework Law on Higher Educating in BiH, which will define in detail the body competent to enact the Rulebook on the Use of Academic Titles and Acquisition of Scientific and Professional Distinctions at the Higher Education Institutions of BiH and send it to BiH Council of Ministers for deliberation.

The BiH Council of Ministers is a member of European Quality Assurance Register for Higher Education (EQAR)166, and the procedure of the Agency for development of higher education and quality control of BiH joining the European register is under way.

In the area of science and researchers, on 24 November 2008 the Memorandum of Understanding between BiH and European Commission for the full membership in the European programme FP7 was signed, and accordingly on 23 April 2009 an informative event on FP7 project was organized, where FP7 potentials were presented. In late December 2008 a letter of intent for membership in COST and EUREKA was sent.

BiH Parliament167 passed the Framework Law on the Fundamentals and Coordinating of Internal and International Cooperation of the Scientific and Researching Line of Activity. The Law determines the main principles of the scientific and researching line of activity, coordination of institutions in charge of science and technology and provides for the establishment of BiH Science Council in BiH. A draft Strategy has been designed and the passage is expected in the coming period.

In the area of culture, the Convention on the Protection and Promotion of the Diversi- ty of Cultural Expressions was ratified by the BiH Presidency in December 2008 and the ratification instrument was deposited with UNESCO in January 2009. The BiH Strategy for Culture Matters Policy has been adopted together with the Statistical An- nex.168 BiH takes part in the three-year „Culture for Development“ Project to the value of USD 8,000,000 in cooperation with UNDP, UNICEF and UNESCO169.

With regard to administrative capacities, the Sector for Science and Culture Matters within the Ministry of Civil Affairs has recruited 2 civil servants in the Science Department (one of them is the head of the Department and National FP7 Coordinator) and three civil servants in the Culture Matters Department. All the 8 public universities have designated FP7 contact persons, appointed representatives to the FP7 programme boards and CREST and ESFRY. The Ministry of Civil Affairs Education Department recruited 3 civil servants in December 2008. 164 “BiH Official Gazette“ No. 04/09 165 At the 87th session held on 14 May 2009. 166 Decision of the BiH Council of Minister No. 108/08. 167 20 May 2009 168 “BiH Official Gazette“ No.93/08 169 The BiH Presidency Decision adopted on 28 October 2008.

51 4.1.9. World Trade Organization (WTO) related issues

With regard to the BiH accession to WTO, the sixth meeting of the Working Group on accession of BiH to World Trade Organization was held on 19 March 2009. A multi-lateral meeting on domestic incentives in agriculture and export subsidies was held on 20 March 2009, with a prior round of bilateral negotiations about access to the market of goods and services having been held. In accordance with the January 2009 conclusion of the BiH Council of Ministers, the BiH negotiating team should intensify negations with a view to finalizing them by the end of 2009. The members have encouraged BiH to make the negations, especially bilateral ones, for access to the market of goods and services faster and think that BiH has made a good progress.

4.2. SECTORAL POLICIES

4.2.1. Industry and small and medium enterprises

BiH is in the process of preparing of the two key development documents: Development Strategy BiH 2008-2013 and Social Inclusion Strategy 2008-2013. The working groups have been established and the first workshops have been held. As for the Project „Development of Industrial Policy FBiH“, it is being developed and supervised by the Commission for project development monitoring170.

RS Government171 has adopted the Action Plan for support to establishment and development of business zones in RS for the period 2009-2012. Sectoral industry strategies are in the procedure to be adopted. Export promotion strategy in RS for the period 2009-2012 is in the procedure to be adopted as well as Foreign investment promotion and development strategy in RS for the period 2009-2012.

In December 2008, the Law on Changes and Amendments of the Company Law was adopted, as well as the Law on Changes and Amendments of the Law on Public Enterprises in FBiH172. The Law on Changes and Amendments of the Company Law, inter alia, simplifies and shortens the process of registration of the companies and facilitiates the commencement of their work as well as the modifications regarding the way of organisation and registration of companies. At the end of November 2008, National Assembly of RS adopted the Law on Companies of Republika Sprska173.

The Council of Ministers174 adopted the Decision on changes and amendments of the Decision on organisation and activities of the Export Promotion Council BIH, whereby the relevant entity ministries, representatives of BD shall get involved in the work of the Council and the number of exporters' representatives will increase. There are three civil servants in the Ministry of Foreign Trade and Economic Relations BiH working on export improvement and promotion of which one has been recently employed.

170 The Commission was established by the Decision of the Ministry of Energy, Mining and Industry FBiH, „Official Gazette FBiH“, No. 64/08 dated 15.10.2008 171 At the session dated 03.04.2009. 172 „ Official Gazette FBiH“ No. 84/08 dated 25.12.2008. 173 „Official Gazette RS” No. 127/08 174 At the 85th session held on 29.04.2009.

52 In the area of small and medium enterprises, the Council of Ministers BiH175 has adopted the Strategy for small and medium enterprises development in BiH for the period 2009 – 2011. The department for small and medium entrepreneurship within MoFTER is being transformed into the Division, as it has been envisaged in the Strategy.

In March 2009, the Law on Crafts and Craft-like activities FBiH was adopted as well as the Law on changes and amendments of the Law on stimulation the small entrepreneurship development.

National Assembly RS adopted the annotated Law on stimulation the development of small and medium enterprises176. Pursuant to the Decision of the Government of RS, the Council for development of small and medium enterprises and entrepreneurship of RS has been established177.

4.2.2. Agriculture and Fishery

The Council of Ministers BiH178 made the Decision on adopting the Strategic Plan BiH for harmonisation of agriculture, food and rural development and Operative program BiH for harmonisation of agriculture, food and rural development 2008- 2011. The working groups for adopting acquis have been established within the activities of the Sub-Committee for Agriculture, Food Safety and Fishery. It comprises three specific working sub-groups according to acquis chapters 11, 12 and 13. They aim at systematic adopting of acquis in the area of agriculture, food and rural development.

For the purpose of implementation of the Law on agriculture, food and rural development in BiH for 2009, the Decision on establishment of the Office for harmonisation and coordination of the payment system is in the procedure to be adopted179. The Decision on establishment of the Committee for information coordination in agriculture has been adopted and the Committee has been established180. The Secretariat of the Committee has been established and it will be responsible for ensuring support to the work of the Committee. The Council of Ministers 181 made the Decision on establishment of the Advisory Council for agriculture, food and rural development BiH.

MoFTER BIH has established the working group for rural development aimed at providing support to MoFTER in directing and coordinating policies, measures and activities of rural development.

175 At the 84th session held on 16.04.2009. 176 „ Official Gazette RS“ No. 23/09 177 “Official Gazette RS No. 26/09 dated 07.04.2009. 178 At the 74th session held on 29.01.2009. 179 Draft Decision prepared and deliberated by the relevant institutions (BiH, entities and Brčko District BiH) and submitted to the Council of Ministries for deliberation and adoption. 180 MoFTER Minister signed the Decision on 30.03.2009. and it was published in the Official Gazette BiH No. 24/09 181 At the 85th session dated 29.04.2009

53 The Law on agricultural extension service FBiH has been prepared in accordance with the Law on Agriculture BiH. The establishment of the Registry of the households and customers is also based on the adopted FBiH Rulebook harmonised with the Law on Agriculture BiH and the Decision on establishment of harmonised registries of agricultural households and customers BiH.

RS Government passed the following laws in the reporting period: Law on Herb Health Protection182, Law on Genetically Modified Organisms183, Law on seed of agricultural herbs184, Animal Protection and Welfare Law185, Law on seedling material186, Law on Changes and Amendments of the Law on Anti-Hail protection.187

In the procedure of the RS National Assembly are Proposal Law on Wine and Brandy, the Proposal Law on Food, the Proposal Law on Reproductive Material of Forest Trees, The Proposal Law amending the Law on Fishery, the Proposal Law on Hunting, the Proposal Law on Veterinary Medicines, the Proposal Law on Chamber of Agricultural Engineers and Rural development Strategy. In addition to that, Draft Law amending the Law on Organic Food production as well as Draft Law amending the Law on Agriculture (which provides for establishment of the Agency for agricultural payments) have been prepared too.

House of Peoples of the Parliamentary Assembly FBiH188 has adopted the Draft Law on agricultural land with amendments that have been adopted by FBiH Government. The House of Representatives should decide on this amendment.

Currently, there are 15 civil servants with University degree, 5 servants with secondary education employed in the Division for agriculture, food, forestry and rural development of MoFTER BiH and 4 consultants paid by World Bank ARDP Project until the end of 2009. Following that period, MoFTER shall be under obligation to employ them. Selection of the IT consultant through ARDP Project is underway. The procedure has been initiated to hire the consultant for legal approximation and the consultant for establishment of the monitoring and evaluation system (to be approved by World Bank). Thirty-six new employees have enlarged administrative capacities of the Federation Ministry in 2008. Through the World Bank project, 7 local staff have been contracted as consultants within the WB ARDP project. In the reporting period, 13 new employees have been employed in the Ministry of Agriculture, Forestry and Water Management RS, including interns and those hired through WB ARDP project, so on 15 May 2009, Ministry has 69 employees. The two new departments have been established within the Ministry – Department for rural development, registries, monitoring and evaluation of agricultural resources management and Department for European integration.

In December 2008, in the area of fishery, BiH was officially listed as a country wherefrom the aquaculture products export was approved for the market of the

182 „ Official Gazette of RS“ No.25/09 183 “Official Gazette of RS “ No. 103/08 184 The aforementioned Law was deliberated at the 29th session of RS National Assembly held on 6.04.2009 185 „ Official Gazette of RS “ No.111/08 186 The aforementioned Law was deliberated at the 29th session of RS National Assembly held on 06.04.2009. 187 „Official Gazette RS“ No. 110/08 188 At the 22nd session held on 28 April

54 European Union. What facilitated the approval was the quality implementation of the Plan of residue monitoring for aquaculture sector that was approved by European Commission, whereby BiH was put on the list of CD 2004/432 /EC countries with the approved plan for aquaculture sector.

Collection and Processing of Statistics in the area of Agriculture

Methodology of data collection in the area of statistics in production is identical in both entities. For legal entities, data are collected through questionnaires, while for individual agricultural households data are assessed and obtained by municipality assessors. Statistics Agency BiH aggregates and publishes the data obtained from the statistics offices, publishes them for BiH and reports EUROSTAT and FAO. As for data collection, international cooperation, signing of statistics standards and methodology application are obligatory for statistics institutions of both entities. With WB ARDP Project support, the software for registry of agricultural households and customers has been provided. Also, the testing plan for registry operation is underway. The Council of Ministers BiH189 has adopted the Report for Agriculture for BiH for 2008.

Food Safety

The Law on Genetically Modified Organisms BiH has been adopted190.

The Council of Ministers BiH191 has adopted the following rulebooks: Rulebook on honey and other bee products192; Rulebook on methods for control of honey and other bee products; Rulebook on maximum allowed concentration of contaminating substances in food193; Rulebook on methods of sampling and analysis for official control of lead, cadmium, quick silver, inorganic tin, 3-monochloropropanediol and benzoic(a)pyrene concentration in food194; Rulebook on methods of sampling and analysis for official control of the concentration of dioxin polycholorized bipheniles similar to dioxins in food195; Rulebook on methods of sampling and analysis for official control of the concentration of nitrites in food196; Rulebook on methods of sampling and analysis for official control of the concentration of mikotoxines in food197; Rulebook on salt for human consumption; Rulebook on conditions to be fulfilled by the authorised testing laboratories that carry out analysis of food and procedure of authorising the laboratories.

189 At the 84th session held on 16 April 2009 190„ Official Gazette BiH“ 23/09 191 At the 76th session held on 12.02.2009. 192 harmonised with the Regulation 2001/110 193 harmonised with the Regulations 315/93, 1881/2006, 1126/2007, 629/2008 194 harmonised with the Regulation 333/2007 195 harmonised with the Regulation 1883/2006 196 harmonised with the Regulation 1882/2006 197 harmonised with the Regulation 401/2006

55 The Council of Ministers BiH198 has adopted the Rulebook on conditions of import and transportation of alive animals, products of animal origin, veterinary medicines, cattle feed and animal waste to BiH. The Council of Ministers199 has made the Decision on nomination of BiH representatives in the Panel of high-level experts for food safety in the Food and Agriculture Organisation.

Veterinary and Phitosanitary Issues

Animal Welfare Law has been adopted200 and has entered into force.

As of December 2008 up to date the following by-laws have been adopted: Decision on the changes of the Decision on the Level of Reimbursement for Issuing Certificates201; Decision on Prohibition of Import of Certain Shipments to Prevent Entry of Bluetongue Disease202 into BiH, Decision on Amendments to the Decision on Prohibition of Import of Certain Shipments to Prevent Entry of Transmissible Spongiform Encephalopathies203 into BiH; Decision on Prohibition of Import of Certain Shipments to Prevent Entry of Atypical Plague of Poultry – Newcastle Disease; Decision on Amendments to the Decision on Monitoring of Residue of Certain Substances in Live Animals and Animal Products; Decision on Redistribution of Funds from Direct Transfers to the Budget of the Veterinary Office; Decision on Amendments to the Decision on Prohibition of Import of Certain Shipments to Prevent Entry of Classical Swine Plague into BiH204; Order on Measures to Control Infectious and Parasite Diseases in Animals, their Implementation and Financing in 2009205; Rulebook206 on Maximally Allowed Quantities of Pesticides and Veterinary Medicines in Animal Products; Rulebook on Conditions of Import and Transport of Live Animals, Products and Food Items of Animal Origin, Veterinary Medicines, Cattle Food and Waste of Animal Origin in BiH207; Rulebook on the Work of the Border Veterinary Inspection; Rulebook on Measures of Brucellosis Control in Small Cattle Breeds.

The Council of Ministers of BiH208 adopted drafts to serve as a basis to hold negotiations on the Contract on Veterinary Cooperation between the Council of Ministers of BiH and the Council of Ministers of the Republic of Albania, the Contract on Veterinary Cooperation between the Council of Ministers of BiH and the Government of Montenegro, the Contract on Veterinary Cooperation between the Council of Ministers of BiH and the Government of the Republic of Macedonia and the Contract on Veterinary Cooperation between the Council of Ministers of BiH and the Government of the Republic of Serbia.

198 At the 84th session held on 16.04.2009. 199 At the 86th session held on 07.05.2009. 200 Entered into force on 08.04.2009., published in „Official Gazette BiH“, No. 25/09 201 Official Gazette of BiH No. 105/08 202 Official Gazette of BiH No. 95/08 203 Official Gazette of BiH No. 21/09 of 17.03.2009 204 at 83rd session held on 09 April 2009 205 Official Gazette of BiH No. 4/09 of 20.01.2009 206 which is harmonised with the Decrees EC 2377/90, EC 839/2008 and the Decree EC 149/2008, published in the Official Gazette of BiH No. 6/09 of 27.01.2009 207 at the session of 16.04.2009 208 at 83rd session held on 9 April 2009

56 As for the phitosanitary issues, The Council of Ministers209 has adopted the revised list of active substances used in phytopharmaceutical products, the use of which is banned in EU. Herb Protection Authority BiH has been staffed with 6 new civil servants. On 17 December 2008, 9 more vacancies were announced for civil servants and the vacancy procedure is on going.

4.2.3. Environment

Transposition of acquis

In the reporting period, BiH accepted and ratified the following agreements: Protocol on Biosafety, Cartagena Protocol along with the UN Protocol on bio-diversity210, Convention on International Trade in Endangered Species of Wild Fauna and Flora – CITES211, Bern Convention on Conservation of European Wild Species and Habitats212, Convention on Access to Information, participation of public in decision- making and access to justice in environmental matters213. Ratification of Espoo Convention (transboundary environmental impact assessment) and Stockholm Convention on POPs (Persistent Organic Pollutants) is underway

Activities to nominate the DNA (Designation National Authority) are underway in order to carry out the projects relevant for the implementation of one of the three Kyoto protocols that BiH, as a foreign signatory of the protocol, can apply. That is the Clean Development Mechanism (CDM).

The level of compliance of certain European directives with the laws relevant for environment varies at the entity level. For example, the percent of compliance of the Directive on environmental impact assessment/EIA Directive 85/337/EEC in RS is 96%, and in FBiH 87%; Environmental Information Directive (2003/4/EC) in RS 55%, and in FBiH 50%, and for the Directive such as the Directive on Strategic Environmental Impact Assessment/SEA Directive (2001/42/EC) in RS 3%, and in FBiH 0 %. In BD, the Law on Environmental Protection comprises the acquis provisions regarding the public participation in decision making in field of environment, as well as Espoo Convention transboundary impact provisions. Also, in April 2009, in BD, the set of environmental laws was adopted, including the Law on Changes and Amendments of the Law on Environmental Protection, Law on Changes and Amendments of the Law on Nature protection and Law on Changes and Amendments of the Law on Air and Law on Changes and Amendments of the Law on Waste Management.

Air Quality

In FBiH, Air Quality Protection Strategy214 defines clear goals and measures for the forthcoming period for the purpose of air quality improvement. The House of Peoples

209 At the 87th session held on 14.05.2009. 210 „ Official Gazette BiH“, International agreements, No.12/08, dated 24.12.2008. 211 „ Official Gazette BiH“, International agreements No. 11/08, dated 05.12.08. 212 „ Official Gazette BiH“, International agreements No. 08/08 dated 15.09.2008 213 „ Official Gazette BiH“, International agreements, No. 08/08 dated 15.09.2008. 214 In the form of proposal in parliamentary procedure

57 of the Parliamentary Assembly FBiH215 has adopted the Draft Law on Changes and Amendments of the Law on Air Protection.

In RS, Draft Strategy for Air Protection has been prepared with the Action Plan for air quality improvement.

Waste Management

In the area of waste management, BiH has implemented the projects funded by the World Bank loan. Preparation of the implementation of the second phase of the World Bank project is underway (construction of the future regional sanitary landfills in BiH) and synergy IPA-2008 project (development of the feasibility study for the future sanitary landfills in BiH).

Preliminary feasibility study for the implementation of the schemes of bio-hazardous waste management in BiH and development of the programme for the introduction of the medical waste management, has been made within the IPA programme. In FBiH, the regulation on medical waste management has been adopted. In BD, the tender was announced for the construction of the new sanitary landfill as well as the tender for the selection of the most appropriate location for the construction of the sanitary landfill in the area of BD.

Water Quality

In IPA funds 2007 programming, the Terms of Reference for Support to BiH Water Policy was adopted aiming at further compliance of BiH legislation with European Directives in this area. EUR 1 Million has been earmarked for the Project, and the process of selection of the contractor is underway.

Water Law is 100% compliant with the Framework Directive on Water in RS 100% and 90% compliant in FBiH. Potable Water Directive is 91% compliant in RS, and 58% compliant in FBiH. Urban Waste Water Directive is 41% compliant in RS, and 35% compliant in FBiH. Nitrate Directive is 22% compliant in RS and 11% compliant in FBiH.

Development of Water Management Strategy in FBiH is underway. It should be completed by the end of 2009.

By entering into force the Law on Republic Administration216, Water Directorate formally ceased to be operative and Water Agencies took over the responsibility for water management pursuant to Water Law. Agency for the Sava River Basin area has been established. As for the Federation BiH, there is a coordination of work between the Water Agencies and the both competent Ministries of Spatial Planning, Water Management and Forestry FBiH.

Protection of Nature

215 At the continuation of 22nd session held on 12.05.2009 216 December 2008

58 The Directive on the Conservation of Wild Birds is 4% compliant with the entity laws, and the Directive on the Conservation of Natural Habitats is 18% compliant. During 2008, the Law on Changes and Amendments of the Law on Protection of Nature was passed in RS, and the Agency for Forests has been established too. The changes of the Federation Law on Protection of Nature is in the procedure.

Activities aimed at establishment of the Division for Environment within MoFTER are underway, based on the PAR recommendation. It will be funded by IPA 2008.

4.2.4. Transport Policy

In order to improve the planning of transport infrastructure at state and entity level in light of the consistent priority setting of the transport projects along the common regional transport network of South-Eastern Europe and other internal networks, three important documents are being prepared and should be adopted: Transport Policy BiH217, Transport Strategy BiH218 and Action Plan BiH219.

Multi-annual Plan (MAP) 2009-2013 has been adopted for the development of the basic regional transport network of South-Eastern Europe. BiH participates in the implementation of two projects Support to the measures of implementation of MAP 2008-2012 of the basic regional transport network of South-Eastern Europe: Railway and Road Safety Control. These projects were launched in June 2008 and will end by November 2009. The Consultant is the company TRADEMCO.

Within SEETO support to implementation measures for Multiannual Plan of the Basic Transport Network 2008-2012, the project of Review of Transport Safety for South-Eastern Europe is being implemented, including BiH.

As for the road infrastructure development, the implementation of the project of construction of the Pan-European Corridor Vc is continued. At the end of 2008, the first loan agreements were signed with the international financial institutions (EIB and EBRD) and the loan agreement was initialled with QIF, thus ensuring the funds in amount of KM 570 Million for the four sections of the highway of total length 65 km. The two IPF projects have been approved: Project documentation for the road Foča – Šćepan polje and consulting services for the highway of the Corridor Vc (cooperation with Croatia).

The roads in both entities continue to be reconstructed.

In RS, the first phase of the construction of the highway Gradiška-Banja Luka has been completed, and the second phase of the construction (26,5 km) of the highway is underway, the total value of which is EUR 79.5 Million, funded by the loan of EBRD and EIB. The concession agreement has been signed with the company Strabag and it refers to the construction of the highway network through that entity of the total length of 430 km. EUR 5.5. Million has been earmarked from the IPA fund as a

217 Adopted by the Council of Ministers BiH and submitted to the Parliamentary Assembly BiH 218 The draft completed 219 The draft completed

59 contribution to the loan granted by EBRD for the construction of the loop Mahovljani at the road junction Banja Luka – Gradiška and Doboj – Banja Luka.

Now, Federation BiH has 31.4 km of the highway in use. At the end of 2008, the side tollbooths started to be constructed in Podlugovi and Visoko, with the «closed» payment system and project documentation is being developed for the prefabricated tollbooth Kakanj and construction of telecommunication cable installations to connect tollbooths at the distance of 37 km in the «closed» toll payment system.

In the area of the road transport, activities of connecting all stations of the technical inspection of vehicles in a single information system are in the final phase and it should be connected with the central registry of vehicles within the Agency for ID documents, records and data exchange.

The Council of Ministers BiH220 has identified the Law proposal on the transportation of hazardous substances. As for the adoption of the Law in the parliamentary procedure, The Council of Ministers BiH221 concluded that the Ministry of Transport and Communication BiH should convene the ministerial conference with the relevant entity ministers and that it should submit the agreed proposal or a new text of the Law to the Council of Ministers BiH to be established by the Council of Ministers and then submitted to the parliamentary procedure to be urgently deliberated.

In RS, the new Law on Road Transport has been adopted222 and it is in compliance with EU legislation as much as it was possible since the subject to the law is the road transport within RS. In December 2008, National Assembly RS adopted the Strategy on Transport Safety on Roads in RS for the period 2009-2013. RS Government of RS has adopted the Programme on Transport Safety on Roads in RS 2009-2013.

In the railway sector, focus is on full operativeness of the Regulatory Committee of Railways BiH and on licensing of the railway enterprises. Currently, Željeznice Federacije BiH and Željeznice RS /Translator's note: Railway public enterprises of FBiH and RS/ are integrated enterprises at entity level, which means they are simultaneously the operators and managers of the infrastructure in each respective entity. Also, the transport operates smoothly with full application of COTIF and other international regulations. Unbundling of the management of public railway infrastructure and railway service providing223 has been done; however, it has not been fully implemented.

As for the air transport, the Council of Ministers BiH224 has established the proposal Law on civil aviation and proposal Law on establishment of the Agency for providing air transport services. The aforementioned laws have been adopted in both houses; however different texts of the laws have been adopted. Parliamentary Commission has been nominated to adjust the law text.

220 At the 71st session held on 29.12.2008. 221 At the 87th session held on 14.05.2009. 222 adopted at the session of the National Assembly RS on 05.11.2008. Published in Official Gazette RS111/08 223 EU Directive 441/90 224 At the 60th session held on 25.09.2008.

60 On 3 December 2008, BiH became the full member of the Joint Aviation Authority (JAA), thus becoming an integral part of European joint aviation Authorities and therefore, it proved that it fulfilled the requirements contained in the Cyprus arrangements.

The Council of Ministers BiH has established the Proposal for initiating the procedure for joining the Seafarers Identity Documents Convention (revised) No. 185 from 2003.

As for internal navigable waterways, the Council of Ministers BiH225 has established the proposal Law on internal and marine navigation. The relevant by-laws and establishment of the Agency for navigable waterways, instruments and measures envisage the improvement of the navigation development, transport safety and unification of the regulation that will be adjusted to the rules set by Sava Commission.

Sava Commission has adopted a number of rulebooks regarding the internal navigation on the Sava River and navigable tributaries and they are harmonised with acquis. The Contract on marking the navigable part of the Sava River course falling within the responsibility of BiH (160 km) is being implemented. Sava Commission and the ministries of transport of the countries of the Sava River watershed, coordinate the actions necessary to develop the detail design and works realisation along the entire Sava River, from the mouth to the Danube up to Sisak. BiH entered negotiations with WB regarding the loan arrangement for realising works on the part of the navigable river that belongs to BiH.

Application of the results of the study on market and needs for internal water transport was incorporated into the study that was developed for all four countries of the Sava watershed through the International Commission for the Sava watershed, and its title is: Study of Rehabilitation and Development of the Water Transport and Navigable Course of the Sava River.

4.2.5 Energy

National Assembly RS226 has adopted the Law on Energy Industry. The Law on oil and oil derivatives has been adopted in RS227. Law on electrical energy FBiH has not been adopted in the House of Representatives of the Parliament FBiH, and the activities in this field are continued.

Regarding the development of the Energy Sector Strategy, the Agreement on the Energy Policy Principles stipulates that the principles for the development of the Energy Strategy BiH shall be defined after the entity strategies have been developed.

MoFTER BIH is finalising the energy database and in light of that it prepares the Memorandum of Understanding that will define the way of energy data collection by the relevant entity ministries that will submit them to MoFTER BiH.

225 At the 71st session held on 29.12.2008. 226 At the session held on 14.05.2009. 227 At the session held on 08.04.2009.

61 On 30 – 31 March 2009, Regional Energy Forum was held in Sarajevo – Investing in electrical energy production and renewable energy sources. The Forum was organised by EBRD, European Bank for Reconstruction and Development and Energy Community.

Federation Parliament adopted the Strategic Plan and Programme of energy sector development in the Federation BiH. Ministry of Industry, Energy and Mining RS is working on the Strategy of energy sector development in RS. The activities that will lead to issuing the Energy Strategy RS should end in September 2009, and the harmonisation of Strategy at the state level is predicted to be by the end of 2009.

On 6 November 2008, the Chairman of the BiH CoM and entity prime ministers signed the Agreement on the principles of energy policy thus making commitment that, inter alia, two entity governments and the Council of Ministers BiH shall har- monise and make the Law on Gas BiH. The aforementioned Agreement stipulates the following „in the area of trade and distribution of natural gas, the Parties shall agree to consider the possibility of coordination of gas network development and the terminal for liquid gas“. In light of that, within the list of priority projects of development of the gas sector, Federation Ministry of Energy, Mining and Industry proposed the project Main/transport gas pipeline Bosanski Brod – Doboj – Zenica.

BiH does not have its own natural gas resources. Therefore, the total supply relies on import only. There is still only one source and one transport pipeline. In order to provide the alternative source of supply, MoFTER signed “Ministerial Declaration on the Project of Ionic-Adriatic gas pipeline" on the most recent meeting of the Ministerial Council in Tirana on 11 December 2008. In December 2008, gas pipeline Visoko – Brnjaci was finalised.

In order to promote the use of renewable energy sources, State Regulatory Commission for Electrical Energy (DERK) stipulated 50% connection fee in the Rulebook on Connection228 for those facilities that use renewable energy sources for electric energy generation. Facilities that use hydro-energy can take advantage of this privilege in case if their installed power does not exceed 10 MW. A number of technical assistance projects have been launched aiming at developing the analysis of the current status and defining gaps in the legal and institutional framework.

BiH Presidency229 has made the Decision on accepting the Document of the Interna- tional Atomic Energy Agency – Code of conduct on the safety and security of radio- active sources, as well as Decision on BiH joining the Convention on nuclear safety and Decision on BiH joining the Amendments to the Convention on the physical protection of nuclear material. The Council of Ministers BiH230 has established the proposal for initiating the procedure of BiH joining the instrument of the International Atomic Energy Agency /IAEA/ Revised additional agreement on providing technical assistance by IAEA to the Council of Ministers BiH.

4.2.6. Information Society and Media

228 „Official Gazette BiH”, No. 95/08 dated 1 December.2008 229 At the 50th session held on 05.01.2009. 230 At the 74th session held on 29.01.2009.

62 The development of the provisions of the Law on electronic communications BiH is underway and the Decision on establishment of the working group for drafting the Law is about to be made. The working group is composed of the members of all relevant institutions at the state and entity level.

Mandate of the Council of the Regulatory Agency for Communications expired on 25 April 2009. The procedure of nomination of the new members of the Council is underway.231

The Council of Ministers of BiH232 appointed Director and Deputy Director of the Agency for ID documents, records and data exchange.

In the area of audio-visual policies and media, Rules on way and conditions of granting permit for providing audio-visual media services have been adopted as well as the Rule on way and conditions of granting permit for the distribution of RTV programme. At the beginning of 2009, the Agency commenced the process of reissuing permits for audio-visual services and distribution of RTV programme. Ratification of the European Convention on legal protection of services based on or consisting of the conditional approach, has been initiated.

On 16 January 2009, Instrument on ratification of the final acts of the Regional conference for radio links for planning the digital land radio diffuse service in the parts of the Region 1 and 3, within the frequency scope 174-230 MHz and 470-862 MHz (RRC-06), was deposited, which enabled the process of granting resources necessary for introducing the digital TV in BiH.

With regard to DTT forum, on 17 March 2009, the Council of Ministers BiH was submitted the draft Strategy for transformation of analogous into digital land radio diffusion within frequency scopes 174-230 MHz and 470-862 MHz in BiH.

In the area of telecommunications, the Agency issued a permit for providing public landline telephone services to the new alternative operator. Therefore, there are nine new active operators in the telecommunications market in BiH, in addition to the three dominant telecom operators.

In the area of licensing, the Agency issued two permits for Internet providers (ISP permits). Therefore, a total of 65 permits have been issued.

In the same period, the Agency issued two permits for network operators. Therefore, there are 71 issued permits and active network operators in total. Also, on 26 March 2009, the Agency issued three permits for UMTS technologies and services of the third generation of mobile communications to dominant operators in the industry of mobile communications in BiH. In the reporting period, five new agreements on interconnection between alternative and dominant telecom operators were signed. Therefore, there are 15 agreements in total. The Agency adopted the „Rule on rebalance model for prices of telephone conversation services“233, covering the period

231List of candidates that met the criteria of the announcement, submitted to CoM BiH for nomination. 232 At 89th session held on 04 June 2009 233 Rule No. 40/2009 in „Official Gazette BiH“, No. 22 dated 23.03.2009.

63 until 1 January 2012. Based on the relevant Decision of the Agency Council, this Rule shall be applied from 1 January 2010.

RS Government234 issued the proposal law on electronic business activities RS. In November 2008, RS Government adopted the Development Strategy for e- government of RS. (2009–2012). In May 2009, Agency for Information Society RS launched the mass campaign of „Fighting Software Piracy“, organising the conference with the topic of copyright and intellectual property protection in the domain of the information-communication technology, where the representatives of the international project Strengthening the capacities of the Institute for intellectual property in BiH participated. Agency for Information Society RS and Pošte Srpske a.d. Banja Luka signed the Memorandum on Understanding, by the implementation of which, the distribution of electronic signatures will be ensured.

4.2.7. Financial Control

National Assembly RS235 has adopted the Law on accounting and audit RS, while in FBiH the Law on accounting and audit has been adopted in the draft form236 and is in the parliamentary procedure.

At sessions of the working group for drafting the PIFC Strategy, it was agreed that the members of the working group, representing BiH and entity institutions, should draft the PIFC Strategy for their respective governments. Draft Strategy for PIFC development in the Federation BiH was finalised in February 2009 with all necessary elements including the Action Plan for Strategy implementation and it was submitted to the European Commission for their comment. The objections submitted are being analysed. On 17 March 2009, Finance Ministry RS submitted the Draft Strategy for PIFC for Repbulika Srpska to the international consultant for review. The comments are being expected.

Central Unit for Harmonisation within the Finance Ministry RS was established on 1 February 2009. Finance Ministry RS employed the head of the Central Unit for Harmonisation. The process of hiring other staff is underway in accordance with the defined structure of the Unit. The RS Auditing Institution has 53 employees.

In RS, organisational structure and posts within the internal audit in RS institutions are being changed.

Central Unit for Harmonisation in FBiH will be established as a separate department once the Rulebook on internal organisation and systematisation has been adopted within Finance Ministry FBiH. It is being prepared for adoption.

In the meantime in FBiH, all budgetary beneficiaries, whose internal audit is carried out by the Federation Finance Ministry, adopted the Rulebook on internal financial control and necessary set of internal rulebooks.

234 At the 124th session held on 08.05.2009. 235 At the 29th session held on 07.04.2009., „Official Gazette RS“ 36/09 236 House of Peoples PAFBiH adopted the draft law at the continuation of the 22nd session on 12.05.2009.

64 Intensive activities have been undertaken to strengthen the administrative capacities in the area of internal audit of the institutions in both entities.

4.2.8 Statistics

Programme of statistics research BiH for the period 2009 – 2012 was made and adopted by the Council of Ministers BiH.

Multiannual master plan of the development of national accounts through the implementation of CARDS twinning project was fully adopted by the two institutions, and RS is reserved regarding certain issues such as expenditure GDP, quarterly accounts and tables of offers and use237. Master Plan has been incorporated into the statistics programme BiH 2009-2012 and adopted by the Council of Ministers BiH. Activities have commenced for assessing GDP according to income approach for 60 professions with certain methodology improvement as compared to the existing assessment for 2007 that will be incorporated into 2008.

In the domain of the development of statistics business registry, Statistics classification of economic activities is being developed (KD BiH) 2009238, as well as Statistics classification of products according to professions (KPD BiH) 2009239. Statistics business registry is being updated and improved quality-wise.

As for the short-term business statistics, methodology for industrial production index (IPI) and industrial product price (PPI) index calculation according to European standards has been developed. Experimental calculation of IPI and PPI for BiH and the analysis of the results is being done (results should be published in the second half of the year). Methodological manuals Accommodation Capacities in Tourism and Short-term indications of distributive trade are being developed.

In the last quarter of 2008, analysis of data in the Questionnaire on household consumption in BiH in 2007 was finalised. Therefore, new data were obtained for the scope and structure of the population consumption, relative and absolute poverty in BiH as well as inputs for price statistics and national accounts.

In demographic statistics internal migrations started to be announced.

In the labour market statistics, the Questionnaire on Labour Force 2008 was carried out and the Questionnaire for 2009 is being carried out. Preparations are underway for Pilot Questionnaire for labour costs.

As for the environmental statistics, research on waste produced in production activities is underway, NACE (CD), as well as utility waste research (according to the Regulation 2150/2002/EC).

In the area of energy statistics, questionnaires have been designed and harmonised for both entities for data collection for the balance of electrical energy and heat. Also,

237 supply-use tables 238 Based on European clasification NACE Rev. 2 239 Based on European clasification of products CPA/NACE Rev. 2

65 pilot research is underway regarding the production of coal in both entities as the initial step towards the establishment of energy balance for coal.

The Council of Ministers BiH240 has adopted the Decision on preparations for census in BiH, which is the responsibility of the Statistics Agency. All planned activities were implemented from the moment when the decision was made until now and the request was sent to EC for organising and performing international monitoring. In cooperation with the entity institutes, proposal questionnaires were developed as well as the belonging methodology documents. Future Law on Census BiH shall stipulate the establishment of the Central Census Bureau BiH and the relevant draft law was submitted to the Council of Ministers BiH at the end of April 2009 for consideration.

4.3. JUSTICE, FREEDOM, SECURITY

4.3.1. Visa, border, control, asylum and migration

The Council of Ministers of BiH241 has adopted an Action Plan aimed at meeting requirements set by the recommendations of the EC in relation to the Roadmap for Visa Regime Liberalisation for Citizens of BiH. Report on the work of the Inter- Agency Working Group for the visa regime liberalisation with the EC with a review of the current situation related to the requirements of Roadmap for Visa Regime Liberalisation has been adopted too. Pursuant to the conclusions of the BiH Parliamentary Assembly House of Representatives242, all involved institutions shall make their respective plans in line with their jurisdiction, set precise deadlines for the implementation of the requirements of the Roadmap for Visa Regime Liberalisation for Citizens of BiH with the EU and will keep the Council of Minister's Inter-Agency Working Group informed on the implementation of the plans for the purpose of negotiations on the visa regime liberalisation.

In accordance with the responsibilities stipulated by the Roadmap for Visa Liberalisation, the Council of Ministers of BiH243 requested from BiH’s ministers: the Minister of Security, the Minister of Communications and Transport and the Minister of Justice to organise ministerial conferences with line ministers in each Entity and thereafter submit agreed proposals to the Council of Ministers of BiH or new texts of the Law on Border Control, Law on Arms, Law on Transport of Dangerous Materials and Law on International Legal Assistance in Criminal Matters.

The CoM of BiH244 adopted the Proposal Law on Border Control, the Proposal Law on the Control of Movement of Weapons and Military Equipment and the Proposal Law on International Legal Assistance in Criminal Matters which are submitted to the parliamentary procedure to be considered under urgent procedure, as agreed previously.

240 At the session held on 13 November 2008 241 At its 79th session held on 5 March 2009 242 From the 51st session of 15 April 2009 243 on its 87th session held on 14 May 2009 244 On its 89th session held on 4 June 2009

66 The CoM of BiH245 adopted the Decision requiring mutual harmonisation of Entity, Canton and Brčko District acts on weapons and their compliance with international acts.

At the same time, in case that the Draft Law on Prohibition of Discrimination246, which is currently in the parliamentary procedure, does not get required majority votes, the competent Ministry of Human Rights shall act in the same way as for the previous Laws.

Upon entering into force of the new Law on Movement and Stay of Aliens of BiH247, the obligation to stipulate procedures on issuing visas in the BiH diplomatic and consular network through by-laws in a more detailed manner has been determined and with that regard the following by-laws have been passed: the Rulebook on Issuing Long-Stay Visas (Visa D) and on Procedures for Issuing Such Visas248 and the Rulebook on Issuing Visas in Diplomatic and Consular Missions of BiH and Technical Issues on Conditions for Issuing Airport Transit Visa (Visa A) and Transit Visa (Visa B)249.

The Council of Ministers of BiH250 has adopted a Decision on Visas251 specifying a total of 66 countries whose citizens, holders of regular travel documents, do not need a visa to enter BiH. The Decision fully harmonises the visa regime of BiH with the, so called, White Schengen List. In addition to the countries listed on the White Schengen List, the following countries are in the free visa regime with BiH: Serbia, Montenegro, Macedonia and Turkey. Due to the reasons being justified by national interests, these countries are in the free visa regime with BiH, although they are not on the White Schengen List.

The Ministry of Civil Affairs of BiH had conducted a tender procedure for printing biometric passport books and in February 2009 it signed a contract on purchase of the books with the German Company "Bundesdruckerei". The books will have chips containing relevant information in line with the standards.

As of 30 September 2008 up to date, the Presidency of BiH has ratified the following international agreements with other countries related to visa regimes, i.e. readmission: the Agreement on Readmission of Persons with Unlawful Residence signed between the Council of Ministers of BiH and the Government of the Republic of Macedonia; the Visa Facilitation Agreement between BiH and the Kingdom of Denmark, the Visa Facilitation Agreement between BiH and the Kingdom of Norway; Visa Facilitation Agreement between BiH and Switzerland; the Agreement on Readmission of Persons Without Permission for Residence between BiH and Switzerland.

In mid March 2009 the Agreement on Mutual Travel of Citizens was signed between BiH and the Republic of Albania thus liberalising the visa regime between those two

245 At the same session 246 On its 82nd session of 2 April 2009 the Council of Ministers of BiH asserted the Draft State Law on Prohibition of Discrimination 247 Official Gazette of BiH No 36/08 248 Entered into force on 7 January 2009 (Official Gazette of BiH No. 104/08) 249 Entered into force on 12 April 2009 (Official Gazette of BiH No. 26/09) 250 At the 62nd session held on 23 October 2008 251 Entered into force on 25 December 2008 (Official Gazette of BiH No. 100/08)

67 countries. In addition to this Agreement, the Agreement on Readmission of Persons with Unlawful Stay has been signed between BiH and Albania.

BiH also signed agreements with the Government of Montenegro on return and admission of persons whose entry or stay is unlawful; the Protocols between the Ministries of Security of BiH and the Ministries of Interior and the Public Administration of Montenegro on the Implementation of the Agreement on Return and Admission of Persons With Unlawful Entry or Stay signed between the Council of Ministers of BiH and the Government of Montenegro.

BiH has initiated negotiations on the conclusion of the Agreement on Facilitated Visa Regime for Holders of Diplomatic and Service Passports with Cuba, Indonesia, Egypt, Argentina and Algeria. The Agreement on Visa Free Regime for Holders of Diplomatic and Service Passports has been signed between BiH and Brasil. The text of the Agreement on Visa Free Regime for Holders of Diplomatic and Service Passports has been agreed upon with the Republic of Moldova.

BiH has initiated negotiations on readmission with countries of origin of migrants in transit. A Joint Committee for Readmission has been established in accordance with the Agreement on Readmission between BiH and EC.

In line with the EU standards a trend of decrease in number of visas issued at border- crossings continues. In 2008, 684 visas were issued at border-crossings which amounts to 6.94% decrease as compared with 2007 when 735 visas had been issued. In the first quarter of 2009 the trend of decrease continues as for the number of issued visas at the border-crossing (47.32% decrease) as compared with the same period of 2008. Issuing of visas at border-crossings is conducted at 14 border-crossings which are connected by the Register of Certain Foreigners database.

Borders

BiH Presidency252 has adopted a Decision on Acceptance of the Agreement on Border Check-ups at Joint Border Crossings between the Council of Ministers of BiH and the Government of Montenegro, the Protocol on Joint Patrols Along the Joint State Border between the Ministry of Security of BiH and the Ministry of Interior and Public Administration of Montenegro and the Protocol on the Implementation of Joint Patrols Along the Joint State Border between the BiH Ministry of Security and Ministry of Interior of the Republic of Serbia. BiH Presidency253 has adopted a Decision on Acceptance of the Protocol on Holding Regular Meetings of Representatives of Border Police Forces at the State, Regional and Local Level signed by the Ministry of Security of BiH and the Ministry of Interior of the Republic of Serbia. The aforementioned Protocols and the Agreement were signed pursuant to the Police Cooperation Convention for Southeast Europe.

The Protocols on Secondment of Liaison Officers, the establishment of joint groups for crime prevention, the implementation of mixed patrols along the joint State border

252 At the 53rd session held on 25 February 2009 the aforementioned Agreement and Protocols were signed on 6 March 2009 in Belgrade 253 At the 31st urgent session held on 27 March 2009. The Protocol was signed on 30 March 2009 in Belgrade.

68 and the official transit across the State territory of another party aimed at acting in its own territory, signed during the previous reporting period on the basis of the Agreement on Joint Monitoring of the Border between BiH and the Republic of Croatia, have entered into force254. Based on the aforementioned implementing Protocols plans for joint patrols at the regional and local level were drafted, lists of vehicles were exchanged and labels for vehicles transiting through the territory of another State were made; in cooperation with IOM there is continuous joint training of Border Police officers of BiH and the Republic of Croatia for joint patrolling. The implementation of joint patrols has yielded first results in the prevention of smuggling various kinds of goods across the State border.

A Working Arrangement on the Establishment of Operational Cooperation between the Ministry of Security of BiH and the European Agency for management of operational cooperation at external borders of the EU members States (Frontex) has been concluded255. The BiH Council of Ministers256 adopted the Information from the Ministry of Security on the conclusion of this Working Arrangement which allows for the initiation of successful cooperation between FRONTEX and the BiH Ministry of Security as far as the implementation of the activities of this Agency is concerned.

The Training Centre for BiH Border Police is conducting trainings for 99 students of the 5th generation of cadets. Since January 2009 practical training has been conducted and in mid 2009 those students will be employed as Police Officers with the rank of a “Policeman”. The selection process for 122 students of the 6th generation of cadets has been completed and security check-ups are currently ongoing. The process of education for the 6th generation of cadets is planned to start in June 2009.

The Agreement on the Establishment of the Joint Risk Analysis Centre257 has been signed between the Ministry of Security and Border Police, the Office for Indirect Taxation, the Veterinary Office, the Office for Protection of Plants and the Service for Foreigners' Affairs. In addition to the establishment of the Joint Centre, local centres for risk analysis have been formed within each involved service. The Joint Centre is located in the premises of the BiH Border Police in Sarajevo, equipment for its work was donated by the Delegation of the European Commission in BiH and the staff of the Centre started to work in March 2009.

The Project of blocking locations suitable for illegal State border crossing with the Republic of Croatia is in its final stage. The Project identified 118 locations to be blocked, 68 of them being blocked from the BiH side. Initiatives for the development of similar projects of blockades on the borders with Serbia and Montenegro have been launched too.

254 26.01.2009 255 Signed on 3 April 2009 in Warsaw 256 At 82nd session held on 2 April 2009 257 In December 2008

69 The State Commission for the Border of BiH258 has so far held 7 working sessions where organisational, technical and other aspects important for the work of the Commission were discussed. The Council of Ministers of BiH259 adopted the Rulebook on the Work of the Commission whereas the Council of Ministers of BiH was provided with a draft decision on the appointment of members of an expert group for the documentation of the border line identification of BiH with the neighbouring countries.

The State Commission for integrated management of the BiH border has held 8 working sessions up to date, some basic organisational and technical issues have been solved including some other aspects relevant for the work of the Commission. The BiH Council of Ministers260 has adopted the Rulebook on the Work of the Commission. An adequate mechanism for the implementation and monitoring the accomplishment of the objectives set by the Action Plan for Integrated Border Management (IBM). Therefore, a national coordinator for IBM has been appointed on behalf of the Ministry of Security who is responsible for the entire coordination of the IBM Action Plan implementation with special emphasis on inter-agency cooperation; inter-agency working groups have been established and they have become operational.

The Council of Ministers of BiH261 sent a Draft Law on Amendments to the Law on Border Police of BiH to the parliamentary procedure and it has been adopted by the BiH Parliamentary Assembly House of People in the first reading.

Asylum

The Ministry of Security BiH has been entirely responsible for functioning of the Rakovica Reception Centre where seekers of international protection reside. Funding for the Centre's work, its services and rights is provided through the budget of the Ministry and partly supported by UNHCR (25% of the total amount of real needs). Financial projection for the period between 2009 and 2011 provides for total takeover of financing, particularly after the new centre in Delijaš is established.

Asylum Centre construction project in Delijaš is being implemented in accordance with the set pace. The main and executive project has been designed, it is being revised and by mid August a construction permit should be obtained (meaning that all the consents should be provided by that time). The project is divided into two parts as agreed with the EC. The Ministry of Security has started reconstruction of the existing facilities (electricity, water supply, sewerage, access road, fence and, depending on

258 The State Commission for Integrated Border Management was established by the decision of the Council of Ministers of BiH (Official Gazette of BiH 73/08) on 10 July 2008, and the mandate of the Commission is supervision of the implementation of the Integrated Border Management Strategy and preparations and implementation of the Agreement on Border Crossings and the Agreement on Frontier Trade with Neighbouring Countries, establishment of a proposal for categorisation and pre- categorisation of border-crossings as well as other activities related to border-crossings. In June 2008 the Council of Ministers formed the State Commission for Borders of BiH (Official Gazette of BiH 59/08) whose main mandate is an identification of the border line with the neighbouring countries, its identification and marking. Therefore, those are two different institutions which are not mutually connected and are not hierarchically subordinate to each other. 259 At the 83rd session held on 9 April 2009 260 At the 67th session held on 26 November 2008 261 4 March 2009

70 the remaining funds, reconstruction of facilities for accommodation according to the standards) using funds amounting to 1 million BAM allocated in the budget.

As for the adoption of by-laws in accordance with the Law on Movement and Stay of Foreigners and Asylum, a Rulebook on International Protection (Asylum) has been adopted262, whereas the Rulebook on the Work of the Asylum Centre and Monitoring of the Operations of the Centre is in the procedure of adoption.

Migrations

The Council of Ministers of BiH263 has adopted the Strategy related to immigration and asylum and the Action Plan for the period 2008-2011.

The Council of Ministers of BiH264 has adopted a decision on the appointment of the Coordination Body for Monitoring the Implementation of the Strategy on Immigration and Asylum and the Action Plan for the period 2008-1011. So far two meetings of the Coordination Body have been held and the Rulebook was adopted at the first meeting. It was agreed that the meetings of the Coordination Body would be held once a month.

In the field of migration the following bylaws have been adopted pursuant to the new Law on Movement and Stay of Foreigners and Asylum: the Rulebook on Entry and Stay of Foreigners265, the Rulebook on Monitoring and Dislocation of Foreigners from BiH266, the Rulebook on Protection of Foreigners, Victims of Trafficking in People267, the Rulebook on Reimbursement of Costs of Return and Control of Foreigners268, the Rulebook on Standards of Functioning and Other Issues Important for the Work of the Immigration Centre269, the Rulebook on Responsibilities of Transporters and Organisers of Tourist and Other Travels270, the Rulebook on Central Database on Foreigners271, the Decision on the Lowest Amount of Resources for Support of Foreigners During a Planned Stay in BiH272.

The activities on the development of the Draft Protocol on Cooperation in Efficient Implementation of the Agreement on Readmission of Persons Staying in Other Countries have been finalised by the Ministry of Security and the Federal Ministry of Interior, RS Ministry of Interior and BD Police Department aimed at the efficient implementation of the Agreement on Readmission of BiH citizens staying without permits in other countries.

As for the administrative capacities, strengthening of the Immigration Centres has been envisaged in order to enable it to gather and analyse required statistical data

262 It is being published 263 At the 66th session held on 13 November 2008 264 At the 80th session held on 19 March 2009 265 Official Gazette No. 81/08 266 Official Gazette No. 81/08 267 Official Gazette No. 90/08 268 Official Gazette No. 02/09 269 Official Gazette No. 31/08 270 Official Gazette No. 17/09 271 Official Gazette No. 25/09 272 Official Gazette No. 17/09

71 related to migrations.273 The recruitment procedure has been completed for two civil servants in the Immigration Sector274, whereas the recruitment procedure for another position in ongoing275.

With regard to collection of statistic data related to migrations, the Information on Migrations and Asylum has been drafted, which is aimed at ensuring regular and continuous reporting on the implementation of the migration policies and international protection in BiH in order to observe trends and propose timely amendments to the policies and to define migrational profile of BiH. Pursuant to the Regulation No. 862/2007 of the European Parliament and of the Council on the Community statistics on migration and international protection, the tables sent to competent bodies in charge of migration and international protection in BiH, or the data contained in the Information on Migration and Asylum are broken down by citizenship, State of birth, State of previous residence, gender, age groups, type of border in certain proceedings, types of visas, types of requests in the proceedings related to foreigners in BiH, reasons/grounds for certain decisions in proceedings related to foreigners in BiH, juveniles without escort, qualification of foreigners and the Stated which is a destination (for immigrants and returnees). Such a classification of data is defined by the new Rulebook on the Central Database on Foreigners276.

Two meetings of the Joint Committee for Readmission according to the Agreement on Readmission between BiH and EC have been held.277

BiH has completed an internal procedure necessary for initiation of negotiations on readmission agreements with countries of origin of migrants in transit (China, Afghanistan, Sri Lanka, India and Iran).

Final activities in the design of the Training Plan in Migrations 2009 – 2011 which will cover the training of civil servants, police officers and staff engaged in the immigration management in BiH.

In the period from 3 July 2008 when the Immigration Centre officially became operational, i.e. admitted its first beneficiaries, up to 11 May 2009, the Centre accommodated 258 foreigners who were ordered a measure of surveillance. In this period of time a total of 249 foreigners were dislocated from BiH. The Immigration Centre has a capacity to accommodate 40 persons and it is divided into two separate pavilions, one for men to accommodate 25 persons and one to accommodate 15 women. The Immigration Centre is managed by a total of 37 officers, 5 of them being shift leaders whereas 32 are security staff including 15 staff members of an intervention and dislocation team. Support staff employed in the Centre includes 8 staff members. The Immigration Centre is funded from the budget of the Service for Foreigners’ Affairs.

273 According to the new Rulebook on Systematization of Positions in the Ministry of Security adopted at the 83rd session of the Council of Ministers held on 09.04.2009 274 Senior Associate for the Database and Senior Associate for Training and Projects 275 Senior Associate Analysis and Strategic Planning 276 Official Gazette No. 25/09 277 Sarajevo 03.06.2008 and Brussels on 11.12.2008

72 Within the cooperation with the countries from the region on joint organisation of operative actions aimed at cutting a chain of smuggling in people, the engagement of Border Police Officers in the implementation of the regional action “Tara” needs to be emphasised; it was conducted with the assistance of local police agencies and Cantonal Ministries of Interior. Activities on the implementation of the operative action “Arkadas” continued with the objective of prevention and detection of illegal migrations, which is a direct reaction of the Border Police of BiH on the increased number of registered illegal movements of Turkish citizens across the State border.

Pursuant to the Memorandum of Understanding on the Establishment of the System for Exchanging Statistical Date on Illegal Migrations and Participation in the Regional Early Warning System signed by the competent police authorities of BiH, the Republic of Albania, the Republic of Croatia, the Republic of Macedonia, Montenegro and the Republic of Serbia, the Border Police of BiH has been appointed as the national focal point. Therefore, the Border Police of BiH has issued the Instructions on the implementation of the Memorandum. Realisation of the aforementioned activities began on 1 January 2009.

As for the inter-agency cooperation on migration, the Service for Foreigners’ Affairs has established cooperation with other State and police agencies in the period between 1 October 2008 and 30 April 2009 as far as the number of cases is concerned: the cooperation with the Border Police on 543 cases; the cooperation with Intelligence Security Agency (OSA/OBA) and SIPA on 246 cases.

The Border Police regularly monitors and processes the data on entries and exits from BiH made by citizens of the countries with high migrational risk, illegal crossings of the State border, rejected entries, admission and handover of persons on the basis of inter-state agreements, persons located upon searches, misdemeanour and criminal offences registered at the State border of BiH. During the first three months of 2009, 647 foreigners were registered whose entry to BiH was denied as they did not meet the requirements stipulated by Article 19 and 25 of the Law on Movement and Stay of Foreigners and Asylum. In the same period the number of entries and exits of persons from the countries of high migrational risk across the State border of BiH amounts to 10,397. During the first three months in 2009 64 persons were detected to be crossing the State border illegally (entry and exit).

Pursuant to the Agreement on Cooperation on Handover and Admission of Persons with Unlawful Stay signed by the Republic of Croatia, 71 persons were admitted because of unlawful entry and stay in the Republic of Croatia, 31 of them being foreign citizens and 40 BiH citizens. The structure of citizenship of illegal migrants remains unchanged and those are mainly citizens of Turkey, Serbia with personal documents of UNMIK and Macedonia.

Money laundering

The BiH Presidency278 has made a Decision on accession of BiH to the international Convention on the Prevention of Money Laundering and the Protocol.

278 at the 53rd session

73 The staffing of the Financial Intelligence Unit within SIPA during the reporting period remains the same and amounts to 62% as compared with the current staffing structure. The recruitment procedure for one State officers for the position of an advisor for international cooperation whereas three inspectors of the Department for the Pre- vention and Investigation of Criminal Offences of Money Laundering and Financing Terrorism have been assigned to the SIPA Department for Crime Investigation.

The Working Group for Combating Money Laundering and Financing Terrorist Activities has become operational279. The Council of Ministers of BiH280 adopted Pro- posal Law on the Prevention of Money Laundering and Financing Terrorist Activities which is submitted to the parliamentary procedure. In addition, the Draft Strategy for the Prevention of Money Laundering and Financing Terrorist Activities at the level of SIPA has been developed and sent to the Working Group members.

4.3.2. Drugs

The Parliamentary Assembly of BiH281 has adopted the National Strategy for Control of Narcotic Drugs, the Prevention and Combating Abuse of Narcotic Drugs in BiH. As for the Action Plan arising from the Strategy, it has been drafted and it is agreed upon with the RS Ministry of Interior and submitted to the Council of Ministers of BiH for adoption.

The Commission for Destruction of Narcotic Drugs has been established by the decision of the Council of Ministers of BiH282.

Working on the prevention and detection of the criminal offences of narcotics trafficking, SIPA has been constantly sharing data through the Interpol, whereas the international cooperation has been carried out through the SEI Centre in terms of joint operations and implementation of justified and investigative actions aimed at detection of the relevant criminal offences and their perpetrators.

During the reporting period SIPA had carried out several actions which resulted in seizure of certain quantities of narcotics and arrest of a larger number of persons who purchased and resold the seized quantity of drugs as an organised group.

In the reporting period the RS Ministry of Interior continued its activities aimed at combating unauthorised production and trade of narcotic drugs. In October 2008 actions performed in the previous period were completed and they were related to the prevention of unauthorised production and trade of narcotic drugs (Leotar, Borac- Bunker and Gradina) which had been carried out in cooperation with the Ministry of Interior of the FBiH including Police Departments from Slovenia, Croatia and Montenegro as well as Austria and Macedonia, with contribution extended by the SECI Centre. The actions resulted in breaking down many organised criminal groups which had been involved in the production and trade of narcotics as a larger number of persons were arrested.

279 Decision on the establishment of the Working Group was published in the Official Gazette of BiH No. 92/08 of 17.11.2008 280 On 89th session held on 4 June 2009 281 26.03.2009 282 28.01.2009

74 4.3.3. Police

The Law on Amendments to the Law on Police Officers has been passed,283 while the Draft Law on Amendments to the Law on the State Investigation and Protection Agency is still in the parliamentary procedure.

The Decision on a seat and work of agencies for support to the Police Structure of BiH has been made.284 The seat of the Agency for the Police Support will be in Sarajevo, the Agency for Education and Professional Development of Staff will be seated in Mostar and the Agency for Forensic Studies and Expertise will be in East Sarajevo. The Agencies have started to work. Directors and Deputy Directors of the Agency for Police Support and the Agency for Forensic Studies and Expertise have been appointed including the Deputy Director of the Agency for Police Support and the Agency for Forensic Studies and Expertise, and the Deputy Director of the Agency for Education and Professional Development of Staff, while the selection process for the position of the Director of this Agency is still in progress. The Council of Ministers of BiH285 has adopted a decision on allocation of funds from the budget reserves of the institutions of BiH and the approval of the expenditures structure of those Agencies.

As the House of Peoples of the BiH Parliamentary Assembly286 has not adopted a list of candidates for the appointment of the Chair, Deputy and members of the Independent Committee and the Committee for Complaints of Citizens287 as independent bodies of the BiH police structure, the ad hoc joint commission for the implementation of the appointment procedure of the Independent Committee and the Committee for Complaints of Citizens will reissue the vacancy announcement.

The Council of Ministers of BiH288 has adopted a decision on the establishment of the inter-agency working group for preparation of proposals for solutions for adequate and functional model of data exchange contained by the police records in BiH. Relevant institutions have appointed their representatives in the Inter-Agency Working Group. Since September 2008 SIPA has been working on detailed upgrading and development of information and communication system of the State Investigation and Protection Agency.

As for the communication systems, the activities on establishing TETRA system to accommodate the needs of SIPA have continued (the TETRA system project has been designed for the needs of the Agency including the purchase of a base station for the needs of the Regional Office in Mostar and the donation of three base stations by ICITAP is expected). In cooperation with the BiH Border Police further development of the SPIN network is being done to meet the needs of the police institutions at the State level. The activities aimed at the extension of the right to access the CIDA database to the regional offices as well as linking this database with i2 databases 283 Official Gazette of BiH No. 35/09 of 05.05. 2009 284 At the 78th session of the Council of Ministers of BiH 285 At the 85th session held on 29.04.2009 286 At the 27th session held on 26.03.2009 287 Council of Ministers of BiH has issued a decision on appointment of members of the Committee for Complains of Police Officers at the 61st session held on 7 October 2008 288 At the 78th session held on 26 February 2009

75 (iBridge donation by the ICITAP) and preparations for transfer to the 5x5x5 system. An approach for the SIPA Finance and Intelligence Department and the Department for Investigation of War Crimes with i2 databases. In addition to the aforementioned, there is intensive work being done to provide technical equipment for the Team for Computer Analysis and Forensics. In the past period forensic tools were obtained by the ICITAP and from their own resources, while the staffing of the team was strengthened and the intensive cooperation with the Prosecutor’s Office of BiH has been established. AMLS Phase III in the Finance and Intelligence Department has been completed.

The RS Government289 drafted the Law on Police Officers which provides for authorities, duties and right of police officers employed by the Ministry of Interior of RS. The Law stipulates the manner of recruitment, working conditions, ranks, promotion, disciplinary and material responsibility of police officers employed by the RS Ministry of Interior.

In cooperation with the EUPM two-month media campaign “122-your Police” was completed on the whole territory of BiH. The objective of the campaign was a promotion of a free “122” phone line for citizens of BiH and encouragement of citizens to take a more active role in combating crime.

4.3.4. Fighting organised crime and terrorism

The Parliamentary Assembly of BiH has adopted the Law on Amendments of the Criminal Procedure Code of BiH290. However, the Council of Ministers of BiH291 acknowledged the Draft Law on Adoption of the Law on Amendments of the Criminal Procedure Code of BiH which is sent292 to the Parliamentary Assembly of BiH for consideration in the urgent procedure.

The Draft Law on Witness Protection Programme in BiH has been adopted in the first reading by both Houses of the BiH Parliamentary Assembly. Comments on the aforementioned law in the second reading was postponed by the House of Representatives of the Parliamentary Assembly of BiH, therefore, the Law has been submitted to the Ministry of Justice of BiH for additional adjustments.

The BiH Presidency293 has adopted a Decision on acceptance of the Agreement on Co- operation in Fighting Crime, Particularly Terrorism, Illicit Drugs Trafficking and Or- ganised Crime entered into by the Council of Ministers of BiH and the Council of Ministers of the Republic of Albania.

The Council of Ministers of BiH294 confirmed the Draft Decision on Ratification of the Protocol against Unlawful Production and Trade of Firearms, its Parts, Components and Ammunition thus complementing to the UN Convention against transnational organised crime.

289 At the 98th session of 06.11.2008 290 On 29.01.2009 published in the Official Gazette of BiH No. 12/09. 291 At the session held on 26 March 2009 292 6 April 2009 293 At the 54th session held on 17.03.2009. The Agreement was signed on 24 March 2009 in Sarajevo 294 At the 80th session

76 The Council of Ministers of BiH295 has adopted a decision on the establishment of the Working Group for the development of the Draft Strategy of BiH on Fighting Organ- ised Crime.

Preliminary analyses have shown that the implementation of the Strategy against Ter- rorism (2006-2009) is at the satisfactory level, however, in segments of coordination of operative activities and exchange of information among relevant institutions and agencies and in the area of the terrorism prevention no satisfactory progress has been made. The biggest progress has been achieved in the are of legislation: in addition to the aforementioned Draft Amendments to the Criminal Code of BiH, a harmonisation of relevant laws pursuant to Article 33 of the Law on the Directorate for Coordination of Police Bodies and Agencies for Support to the BiH Police structures has been made as provided for by Article 33. With regard to that, the Parliamentary Assembly of BiH296 has adopted the Amendments to the Law on Police Officers and other bodies of the government of BiH.

The Draft Decision on the Establishment of the Working Group for the Development of the BiH Strategy for the Prevention and Fighting against Terrorism (2009- 2012)297 has been sent to the Ministry of Finance and Treasury of BiH and the Office for Legislation for their comments.

As for the staffing, the Department for Fighting Terrorism of the Ministry of Security of BiH has been 35% filled. In relation to the staffing situation in SIPA, the Department for Fighting Terrorism of SIPA is 100% filled whereas the Crime Investigation Department of SIPA is 68.29% staffed. The Department for Investigation and Prevention of Other Crimes is the most understaffed (66,67%) while the Department for Fighting Terrorism and Trade (ABHO) is 100% staffed.

Within the implementation of the Plan for civilian and military cooperation in case of a terrorist attack and alleviating consequences of the terrorist attack adopted in June 2008, the development of the Standard Operative Procedures is ongoing as well as the development of the Draft Memorandum on Cooperation between the Ministry of Se- curity and Ministry of Defence of BiH298, and organisation of instructive exercises to be held by the end of 2009. Projects of communications links among law enforcement agencies have been initiated to facilitate exchange of information. In addition, the project of strengthening cooperation between Prosecutor’s Office and Police is being implemented. In cooperation with UNODC and the Council of Europe a course was held in January 2009 discussing the international legal cooperation in fight against terrorism.

The Government of the FBiH299 has adopted the Report of the Working Group for analysis of regulations from the field of organised crime which points out that solutions in the general part of Criminal Codes, both the FBiH and BiH, mainly satisfy the criteria for successful fight against organised crime, with some minor improvements.

295 At 84th session held on 16.04.2009, published in the Official Gazette of BiH No. 12/09. 296 27 April 2009 297 In April 2009 298 First Draft developed in May 2009 299 15 April 2009 at the 99th session of the FBiH Government

77 The RS National Assembly300 adopted the Law on Amendments of the Law on Arms and Ammunition.

The RS Ministry of Interior, in cooperation with FBiH the Ministry of Interior and the Ministry of Interior of Slovenia, and in coordination of Europol, started the action of preventing unauthorised trade in weapons and military equipment (action West) which was completed in the course of February 2009 when 5 persons were arrested at the territory of BiH and several persons in other countries and a certain amount of weapons and plastic explosives was seized. In March 2009 an action of the FBiH Ministry of Interior was carried out in cooperation with the Police from Germany and resulted in the arrests of a person wanted for money laundering, computer crime and fraud, with the assistance of the RS Ministry of Interior. Within the Slovenian initiative Brdo-Proces, in October the RS Ministry of Interior hosted a conference on terrorism for the countries of Western Balkans, JIE and some EU members and Europol and other international organisations. At the last meeting held within this initiative held in the Check Republic in early May as organised by Eurojust, the RS Ministry of Interior was complimented for its contribution to administering the databases on persons and activities related to terrorism and different information provided by various agencies.

4.3.5. Trafficking in Human Beings

According to the new Rulebook on Internal Organisation of the Ministry of Security, the Office of the State Coordinator for Fight Against Trafficking in People and Illegal Migration in BiH transitioned into the Department for Fight Against Trafficking in People within the Sector for International Cooperation. Thereby, funds for financing the activities of the Section for Fight Against Trafficking in People have been secured from the budget of the Ministry of Security of BiH.

In 2008 the budgets of the Ministry of Security of BiH and the Ministry for Human Rights and Refugees of BiH provided for and utilised funds amounting to 230,000 BAM for the implementation of the activities under the Action Plan for Fight Against Trafficking in People, whereas the amount of 145,000 BAM was planned for 2009.

Through various project financed by the IPA, USAID, Norwegian Government, IOM and Save the Children Norway funds have been secured for the next two years in the amount of 1,100,000 EUR allocated for carrying out the activities stipulated by the Action Plan for Fight Against Trafficking in People.

During April 2009 the Report on the Situation of Trafficking in People and Illegal Immigration in BiH and the Report on the Implementation of the Action Plan for Fight Against Trafficking in People and Illegal Migration for 2008 have been finalised and submitted to the Council of Ministers of BiH for adoption.

In the period October 2008 – February 2009 four teams were formed according to the structure model of the State Agency for Investigation and Protection of BiH (SIPA) and they cover the areas of responsibilities of the SIPA Regional Offices: Sarajevo, Tuzla, Banja Luka and Mostar. Teams consisting of the representatives of relevant

300 11.3. 2009

78 institutions (competent prosecutor’s offices, law enforcement agencies, services for foreigners’ affairs, centres for social welfare, representatives of ministries of education, health and representatives of non-governmental organisations have been established. Exchange and collection of data is conducted through a uniform form for all the competent institutions, which includes all the required data to populate the database on victims of trafficking in people which is located in the Ministry for Human Rights and Refugees of BiH, whereas the second database for perpetrators of criminal offences is located in SIPA and it is also being populated with data provided through the uniform form designed to meet the needs of this database.

In the course of 2008 the Ministry of Security of BiH signed the Contract on Cooperation between the BiH Ministry of Security and Save the Children Norway, the Regional Office for Southeast Europe, Sarajevo. The implementation of the Project of the Comprehensive Approach to Providing Solutions for Child Pornography has been planned for the period of three years (from 2008 to 2010). In the first year of the Project a document called Analysis of Capacities, Procedure and Shortages in the System of Protection of Children from Child Pornography in BiH was designed. The development of the Action Plan for Improvement of the System for Protection of Children from Child Pornography is planned for 2009 including its adoption, promotion and onset of the implementation in June this year as well as donation of equipment, training etc.

In December 2008 the Ministry for Human Rights and Refugees announced a call for granting funds from the budget amounting to 30,000 BAM as a support to non- governmental organisations providing assistance to victims of trafficking in people, citizens of BiH in cooperation with the Office of the State Coordinator; in 2009 funds will be allocated to non-governmental organisations providing assistance to victims of trafficking in people (planned amount of 40,000 BAM) and donor funds have also been secured301.

The Council of Ministers of BiH302 adopted a decision on the establishment of the Commission for monitoring residential institutions providing accommodation and shelter to children, victims of violence, asylum-seekers, illegal immigrants, refugees, elderly persons, disabled persons and other institutions as required.

A Section for Operative Support to the Witness Protection Department of SIPA has been formed and it is 69% staffed.

4.3.6. Protection of personal data

In the second half of 2008 the Agency for Protection of Personal Data of BiH was registered as an administrative entity and the budget beneficiary. Budget line has been allocated to the operations of the Agency for Protection of Personal Data for 2008 amounting to 477,000 BAM, whereas for 2009 funds provided from the budget of BiH institutions required for financing the work of the Agency amount to 955.000

301 The Government of the Kingdom of Norway decided to grant funds amounting to 120,000 BAM which will contribute to the implementation of the State Action Plan. The Government of the Republic of Italy has provided funds of 250,000 EUR to the International Organisation for Migration and out of that ammount 100,000 EUR will be spent for provision of direct assistance to victims. 302 At the 66th session held on 13 November 2008

79 BAM. Also, 380 m² of the office space, office furniture, three new official vehicles, infrastructure, Internet and telephone connection, computers have been provided.

The Council of Ministers of BiH303 has given its consent for the Rulebook on Internal Organisation of the Agency which covered 45 positions (32 civil servants and 13 staff members). Currently the Agency employs 12 persons304.

The BiH Council of Ministers305 adopted the Rulebook on the manner of keeping records on collections of personal data maintained by controllers, it provides for delivery of data from the records of the Agency for Protection of Personal Data in BiH and exceptions to the obligation to report certain records. The Rulebook on the manner of keeping the data and special measures of technical protection of personal data is currently in the procedure of adoption. Acts relevant for legal and efficient work of the Agency have been adopted.

303 30.10.2008 304 Director, two assistant directors, three inspection surveillance advisors, senior associate for complaints, advisor for legal affairs, senior associate – book keeper and three employees. 305 At 87th session held on 14.5.2009