EUROPEAN COMMISSION Brussels, 9.11.2016 SWD(2016) 360 final COMMISSION STAFF WORKING DOCUMENT Montenegro 2016 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 2016 Communication on EU Enlargement Policy {COM(2016) 715 final} EN EN Table of Contents 1. INTRODUCTION ....................................................................................................... 4 1.1. Context .................................................................................................................. 4 1.2. Summary of the Report ......................................................................................... 4 2. POLITICAL CRITERIA .............................................................................................. 6 2.1. Democracy ............................................................................................................ 6 2.2. Public administration reform ................................................................................ 9 2.3. Rule of law .......................................................................................................... 12 2.4. Human rights and the protection of minorities ................................................... 18 2.5. Regional issues and international obligations ..................................................... 21 3. ECONOMIC CRITERIA ........................................................................................... 23 3.1. The existence of a functioning market economy ................................................ 23 3.2. The capacity to cope with competitive pressure and market forces within the Union .......................................................................................................................... 28 4. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP ...................... 31 4.1. Chapter 1: Free movement of goods ................................................................... 31 4.2. Chapter 2: Freedom of movement for workers ................................................... 32 4.3. Chapter 3: Right of establishment and freedom to provide services .................. 33 4.4. Chapter 4: Free movement of capital .................................................................. 33 4.5. Chapter 5: Public procurement ............................................................................ 34 4.6. Chapter 6: Company law ..................................................................................... 36 4.7. Chapter 7: Intellectual property law .................................................................... 36 4.8. Chapter 8: Competition policy ............................................................................ 37 4.9. Chapter 9: Financial services .............................................................................. 39 4.10. Chapter 10: Information society and media ...................................................... 40 4.11. Chapter 11: Agriculture and rural development ................................................ 40 4.12. Chapter 12: Food safety, veterinary and phytosanitary policy ......................... 41 4.13. Chapter 13: Fisheries......................................................................................... 42 4.14. Chapter 14: Transport policy ............................................................................ 42 4.15. Chapter 15: Energy ........................................................................................... 44 4.16. Chapter 16: Taxation ......................................................................................... 46 4.17. Chapter 17: Economic and monetary policy ..................................................... 47 4.18. Chapter 18: Statistics......................................................................................... 48 4.19. Chapter 19: Social policy and employment ...................................................... 49 4.20. Chapter 20: Enterprise and industrial policy ..................................................... 51 4.21. Chapter 21: Trans-European networks .............................................................. 52 4.22. Chapter 22: Regional policy and coordination of structural instruments ......... 53 4.23. Chapter 23: Judiciary and fundamental rights .................................................. 53 4.24. Chapter 24: Justice, freedom and security ........................................................ 66 4.25. Chapter 25: Science and research ..................................................................... 73 4.26. Chapter 26: Education and culture .................................................................... 74 4.27. Chapter 27: Environment and climate change .................................................. 75 4.28. Chapter 28: Consumer and health protection .................................................... 77 4.29. Chapter 29: Customs union ............................................................................... 78 4.30. Chapter 30: External relations ........................................................................... 79 4.31. Chapter 31: Foreign, security and defence policy ............................................. 80 4.32. Chapter 32: Financial control ............................................................................ 81 2 4.33. Chapter 33: Financial and budgetary provisions ............................................... 83 Annex I - Relations between the EU and Montenegro ............................................................. 85 Annex II – Statistical Annex .................................................................................................... 86 3 1 1. INTRODUCTION 1.1. Context The Stabilisation and Association Agreement between Montenegro and the EU entered into force in May 2010. The European Council granted the status of candidate country to Montenegro in December 2010. Accession negotiations were opened in June 20122. EU and NATO accession are the two key foreign policy priorities of Montenegro. In December 2015, Montenegro received an invitation to join NATO. The relevant Accession Protocol was signed in May 2016 and is currently being ratified by NATO members. Four negotiating chapters were opened during the reporting period. Holding the accession conferences was made possible also due to the progress made in the area of the rule of law, as per the requirements of the Negotiating Framework. Progress towards meeting the interim benchmarks set in the rule of law chapters will be key for further progress in the negotiations overall. 1.2. Summary of the Report Concerning the political criteria, a political agreement on the organisation of free and fair elections led to the establishment of a "government of electoral trust" in May. Despite persisting polarisation of the political environment, this has demonstrated the capacity to reach compromises between the government and parts of the opposition. The parliamentary elections of October 2016 were conducted under a substantially revised legal framework. Despite the technical delays and difficult relationships between responsible institutions, overall the election preparations were conducted in a more participatory and transparent manner. The elections were held in a competitive environment and characterised by general respect for fundamental freedoms. The relevant national authorities are expected to swiftly and transparently investigate alleged procedural irregularities, the arrests made and the temporary closure of two mobile communication platforms. There has been no political follow-up to the alleged abuse of public funds for party political purposes ("audio recordings affair"). Montenegro is moderately prepared with the reform of its public administration. Some progress has been made, notably with the adoption of the public administration reform strategy 2016-2020, the public financial management reform programme, the entry into force of the new law on salaries and the simplification of administrative procedures. However, strong political will is needed to effectively address the de-politicisation of public service and right-sizing of the state administration. The judicial system is moderately prepared. During the reporting period, Montenegro made some progress in this field. The capacity of the Judicial and Prosecutorial Council has improved. However, the new legislative framework for increasing the independence, accountability and professionalism of the judiciary, as well as the code of ethics, have not yet been fully implemented. Measures to reduce the number of pending cases and the total length of proceedings need to continue. Montenegro has achieved some level of preparation in the fight against corruption. Corruption remains prevalent in many areas and continues to be a serious problem. The Anti-Corruption 1 This report covers the period from October 2015 to September 2016. It is based on input from a variety of sources, including contributions from the government of Montenegro, the EU Member States, European Parliament reports and information from various international and non-governmental organisations. As a rule, legislation or measures which are under preparation or awaiting parliamentary approval have not been taken into account. 2 To date, 24 negotiating chapters have been opened, of which two have been provisionally closed. 4 Agency started its work in 2016. The process of institution