Since the October 2005 report, there has been progress in a number of areas, including the reform of the judiciary.

As regards the justice system, the new penal procedure code and a legal framework for legal aid entered into force. Constitutional amendments have entrusted the prosecution service with the responsibility for leading investigations. Amendments to the Law on the Judiciary have been adopted.

Bulgaria has taken a number of measures to fight corruption. A code of ethics was adopted for the executive branch. An anti-corruption strategy for 2006-2008 was adopted. Constitutional amendments have reduced the scope of immunity of members of parliament. The Prosecutor-General presented requests for lifting the immunity of 10 members of Parliament. Five voluntarily abstained from their immunity and the immunity was lifted for a sixth one by a vote in Parliament; the other cases are still being examined. This allowed investigations into high-level corruption cases to be launched.

Bulgaria has made progress in the field of public administration, in particular with the adoption of amendments to the laws on administration and on civil servants, and a new Code of Administrative Procedure. As regards ill-treatment in custody, there has been some reduction of incidents, while conditions have improved in certain detention centres. Policy initiatives were taken for the disabled and for the mental health care system. Social support for the disabled has been increased.

However, certain outstanding issues remain to be addressed. The accountability, transparency and efficiency of the justice system need further strengthening. Further efforts are needed to consolidate implementation of the random allocation of cases throughout the country. More objective and transparent mechanisms are needed for assessing the quality of magistrates’ work. Any ambiguities regarding the independence of the judiciary need to be removed. There were bottlenecks in the pre-trial process due to procedural rules and insufficient investigators. There have been few tangible results in combating organised crime.

The structures to co-ordinate and implement the anti-corruption policy need strengthening in order to perform their roles effectively. Indictments, prosecutions, trials, convictions and dissuasive sentences remain rare in the fight against high-level corruption. Bulgaria needs to present clear evidence of results in this area.

The strategy to decentralise the administration has not been adopted yet. Bulgaria remains a country of transit and to a lesser extent a country of origin and destination for trafficking in human beings. There continue to be cases of ill-treatment of detainees. Living conditions in many child welfare and mental health care institutions need to be improved by implementing policy initiatives, and alternative care systems created. Social inclusion of the Roma minority still requires substantial efforts. Further efforts are needed to combat all forms of intolerance, particularly by fully applying existing legislation on broadcasting and other activities aiming to combat any form of racism, discrimination or xenophobia.

Bulgaria is a functioning market economy. The continuation of the current reforms should enable it to cope with competitive pressure and market forces within the Union in the near term. Bulgaria has broadly maintained macroeconomic stability and advanced structural reforms.

Progress has continued since the October 2005 report. Useful steps were taken to contain the external deficit. The privatisation process and the liberalisation and restructuring of utilities are well advanced. Some additional progress has been made in improving the business environment and in reducing non-wage labour costs.

However, the current account deficit widened and warrants continued prudent fiscal and wage policies. Deepening of structural reforms requires improving the functioning of the judicial system and further easing the regulatory burden on businesses. The regulatory framework for the labour market needs to be made more flexible.

Commitments and requirements arising from the accession negotiations
Bulgaria has reached a considerable degree of alignment with the acquis.

The October 2005 report concluded that Bulgaria would be ready by accession in a large number of areas. A number of other areas required increased efforts, and 16 areas gave rise to serious concern.

Since then, further progress has been made. Bulgaria should be ready by accession in the following additional areas if the current pace of progress is maintained: public procurement, mutual recognition of industrial product specifications; freedom to provide non-financial services; most agriculture Common Market Organisations; aviation; excise duties; taxation implementing structures; postal services liberalisation; regional policy legislation; chemicals and genetically modified organisms, noise legislation; visa policy; and customs preparations.

Progress has also been made in a number of areas, which no longer give rise to serious concern but still require increased efforts to complete preparations: the insurance sector, the protection of intellectual property rights, the paying agency for agriculture, the milk common market organisation, animal diseases control measures, veterinary border inspection posts; animal welfare, trade in live animals and animal products, veterinary aspects of public health; institutional and financial management structures for regional policy, as well as Schengen preparations and the management of the future EU external borders.

Increased efforts are also needed for: mutual recognition of professional qualifications; financial services, information society services, protection of personal data; legislation to fight money laundering; agriculture trade mechanisms; the Common market organisations on wine and alcohol and on beef; legislation in the veterinary and phyto-sanitary sector; most aspects of fisheries; sea transport; VAT, direct taxation rules; labour law, social dialogue, social inclusion, anti-discrimination policy, the European Social Fund, public health; energy market liberalisation; nuclear energy and nuclear safety, in particular the commitments to early closure and subsequent decommissioning of the reactors of the Kozloduy plant ; steel industry restructuring; electronic communications; programming, monitoring and procurement capacity for regional policy; horizontal environmental legislation, water quality, integrated pollution prevention and control, waste management; consumer protection; asylum, judicial co-operation; fight against drugs; protection of the EU’s financial interests; and the translation of the acquis into Bulgarian.

There remain six areas of serious concern, which require urgent action:

– setting up a proper integrated administration and control system (IACS) in agriculture (acquis chapter 7);

– building-up of rendering collection and treatment facilities in line with the acquis on TSE and animal by-products (acquis chapter 7);

– clearer evidence of results in investigating and prosecuting organised crime networks (acquis chapter 24);

– more effective and efficient implementation of laws for the fight against fraud and corruption (acquis chapter 24);

– intensified enforcement of anti-money laundering provisions (acquis chapter 24);

– strengthened financial control for the future use of structural and cohesion funds (acquis chapter 28).

Bulgaria and Romania have continued to make progress in their preparations for membership. In many areas the countries are generally meeting their commitments or are on track to fulfil the acquis requirements. However, a number of outstanding issues still need to be addressed. Some of these require increased efforts, and in a few cases immediate action is needed.

The Accession Treaty provides that Bulgaria and Romania will join in 2007 unless the Council decides, upon a recommendation from the Commission, to postpone the accession of either country until 2008. The Council may so decide:

– by qualified majority, if serious shortcomings have been observed in the fulfilment by Romania of one or more of a number of the specific commitments and requirements related to justice and home affairs and competition policy, listed in Annex IX to the Act of Accession, or

– by unanimity, if there is clear evidence that the state of preparations for adoption and implementation of the acquis in Bulgaria or Romania is such that there is a serious risk of either country being manifestly unprepared to meet the requirements of membership by January 1 2007 in a number of important areas.

In the light of the overall progress made by Bulgaria and Romania assessed in the accompanying Monitoring Reports and summarised in this communication, the Commission considers that Bulgaria and Romania should be prepared for membership by 1 January 2007, provided that they address a number of outstanding issues.

An impartial, independent and effective justice system properly equipped to fight corruption and organised crime is of paramount importance, as it underpins the functioning of the whole society and economy. In this regard:

– Bulgaria needs to demonstrate clear evidence of results in the fight against corruption, in particular high-level corruption, notably in terms of investigations and subsequent judicial proceedings.

– Building on progress already made, Romania needs to continue its efforts and demonstrate further results in the fight against corruption, notably in terms of further investigations and subsequent judicial proceedings.

– Bulgaria needs to further reform the judiciary, in particular to reinforce its transparency, efficiency and impartiality, and remove any ambiguity regarding its independence.

– Building on progress already made Romania needs to consolidate the implementation of the ongoing judicial reforms, and further enhance the transparency, efficiency and impartiality of the judiciary.

In addition, Bulgaria needs to:

– demonstrate clearer evidence of results in investigating and prosecuting organised crime networks; implement more effectively and efficiently laws for the fight against fraud and corruption; intensify the enforcement of anti-money laundering provisions; set up a proper integrated administration and control system (IACS) in agriculture; build up the necessary rendering collection and treatment facilities in line with the acquis on TSE and animal by-products; and strengthen financial control for the future use of structural and cohesion funds.