EUROPEAN COMMISSION Brussels, 29.5.2019 SWD(2019) 218 final COMMISSION STAFF WORKING DOCUMENT North Macedonia 2019 Report Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2019 Communication on EU Enlargement Policy {COM(2019) 260 final} EN EN Table of Contents 1 INTRODUCTION .................................................................................................... 3 1.1 Context ............................................................................................................... 3 1.2. Summary of the report ............................................................................................... 3 2. FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS........................................................................................................ 6 2.1. Functioning of democratic institutions and Public Administration Reform ............. 6 2.1.1. Democracy .............................................................................................................. 6 2.1.2 Public administration reform ............................................................................ 10 2.2 Rule of law and fundamental rights ................................................................. 14 2.2.1 Chapter 23: Judiciary and fundamental rights .................................................. 14 2.2.2 Chapter 24: Justice, freedom and security........................................................ 33 3. FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND COMPETITIVENESS ...... 45 3.1. The existence of a functioning market economy ..................................................... 45 3.2. The capacity to cope with competitive pressure and market forces within the Union .......................................................................................................................... 51 4 GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION ...................... 53 5. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP ............. 55 5.1 Chapter 1: Free movement of goods ................................................................ 55 5.2 Chapter 2: Freedom of movement for workers ................................................ 57 5.3 Chapter 3: Right of establishment and freedom to provide services ................ 58 5.4 Chapter 4: Free movement of capital ............................................................... 59 5.5 Chapter 5: Public procurement ......................................................................... 60 5.6 Chapter 6: Company law .................................................................................. 62 5.7 Chapter 7: Intellectual property law ................................................................. 62 5.8 Chapter 8: Competition policy ......................................................................... 63 5.9 Chapter 9: Financial services ........................................................................... 65 5.10 Chapter 10: Information society and media ..................................................... 66 5.11 Chapter 11: Agriculture and rural development ............................................... 68 5.12 Chapter 12: Food safety, veterinary and phytosanitary policy ......................... 69 5.13 Chapter 13: Fisheries ........................................................................................ 71 5.14 Chapter 14: Transport policy ............................................................................ 71 5.15 Chapter 15: Energy ........................................................................................... 73 5.16 Chapter 16: Taxation ........................................................................................ 75 1 5.17 Chapter 17: Economic and monetary policy .................................................... 76 5.18 Chapter 18: Statistics ........................................................................................ 77 5.19 Chapter 19: Social policy and employment ..................................................... 78 5.20 Chapter 20: Enterprise and industrial policy .................................................... 81 5.21 Chapter 21: Trans-European networks ............................................................. 82 5.22 Chapter 22: Regional policy and coordination of structural instruments ......... 83 5.25 Chapter 25: Science and research ..................................................................... 84 5.26 Chapter 26: Education and culture ................................................................... 85 5.27 Chapter 27: Environment and climate change ................................................. 87 5.28 Chapter 28: Consumer and health protection ................................................... 89 5.29 Chapter 29: Customs union .............................................................................. 91 5.30 Chapter 30: External relations .......................................................................... 92 5.31 Chapter 31: Foreign, security and defence policy ............................................ 94 5.32 Chapter 32: Financial Control .......................................................................... 95 5.33 Chapter 33: Financial and budgetary provisions .............................................. 97 ANNEX I – RELATIONS BETWEEN THE EU AND NORTH MACEDONIA......... 99 ANNEX II – STATISTICAL ANNEX ........................................................................ 100 2 1 INTRODUCTION 1.1 Context The Stabilisation and Association Agreement (SAA) between the Republic of North Macedonia and the EU entered into force in April 2004. The passage to the second stage of the SAA, which the Commission had proposed in 2009, took place during the reporting period. Since 2009, the Commission has recommended to the Council to open accession negotiations with North Macedonia, a candidate country since 2005. In light of the progress achieved in previous years, in April 2018 the Commission repeated its unconditional recommendation to open accession negotiations. In June 2018, the Council set out the path towards opening accession negotiations in June 2019. The Commission has continued to thoroughly monitor the reforms set in the Council Conclusions and EU-related reforms across all sectors. North Macedonia has continued to deepen the reform momentum, delivering tangible results in the key areas identified in the June 2018 Council Conclusions. Good neighbourly relations have also been significantly strengthened. The entry into force in February 2019 of the historic agreement with Greece (also called the ‘Prespa agreement’) was a major breakthrough and sets an example of reconciliation for the region and beyond. 1.2. Summary of the report1 Concerning the political criteria, North Macedonia has continued to maintain a steady pace of implementation of EU reforms throughout the reporting period. The government has taken steps to restore checks and balances, and to strengthen democracy and the rule of law. The country has continued to undergo fundamental changes in an inclusive and open political atmosphere. The country has continued to deliver tangible results in key areas identified in the Council Conclusions such as the judiciary, fight against corruption and organised crime, intelligence services reform and public administration. The culture of compromise in the political landscape has improved by the government’s efforts to reach out to all stakeholders, including the opposition and civil society, in an inclusive and transparent manner. Following the signature of the historic agreement reached with Greece in June 2018 (also known as the ‘Prespa agreement’), a consultative referendum was organised in September 2018, whereby an overwhelming majority of voters who cast their ballots supported EU and NATO membership by accepting the Prespa agreement. The presidential elections were well organised and the fundamental freedoms were respected, allowing the citizens to make informed choices between the candidates. The Parliament has improved its performance as a forum for constructive political dialogue and enhanced its oversight and legislative functions, including by limiting the use of fast-track procedures. The inter-ethnic situation remained calm overall, despite some occasional tensions. The government pursued its commitment to increase trust among communities. The Ohrid Framework Agreement, which ended the 2001 conflict and provides the framework for preserving the multi-ethnic character of the society, is mentioned in the preamble of the Constitution and continued to be implemented. 1 This report covers the period from March 2018 to March 2019. It is based on input from a variety of sources, including contributions from the government of North Macedonia, the EU Member States, European Parliament reports and information from various international and non-governmental organisations. 3 The climate in which civil society organisations operate has continued to improve. Civil society continued to play a constructive role in supporting democratic processes. Strategic documents have been adopted, providing guidance on the cooperation between government and civil society. Both governmental and non-governmental actors should aim at a meaningful consultation process. On intelligence services reform, North Macedonia has made good progress. Following the reform of the system for interception