SPEECH ON NEGOTIATING EU MEMBERSHIP: THE VIEW FROM MALTA BY RICHARD CACHIA CARUANA, CHAIRMAN, CORE NEGOTIATING GROUP, AT THE ?STATE OF THE NEGOTIATIONS? CONFERENCE

My colleague has just given you an insight into the wider context within which Malta's accession negotiations are developing; the facts and figures, so to speak, of this challenging project of enlargement that involves fifteen member states of the European Union and twelve candidate countries including Malta.

It is indeed a European process, touching as it does upon the destiny of a whole continent.

Today we are discussing the state of the accession negotiations, at a point where the prospect of conclusion is already within sight, at least for the most advanced candidates. As far as Malta is concerned we are quite satisfied with the manner in which our discussions are progressing, both in terms of timing as well as of substance. The indications are that we can, and will, be included in the first enlargement, in the company of other candidate countries, even those who had the advantage of starting their negotiations earlier than we did.

One point I feel I should underline, at the very outset, is that the accession negotiations are not an adversarial exercise, but rather one where co-operation and a sharing of objectives is paramount. It is understood that Malta, and indeed any other candidate state, is seeking membership in the conviction that EU membership ensures a more secure and prosperous future for its citizens. As a result we seek membership on the best possible terms. We certainly do not seek membership at any cost.

It is in the interest of existing member states, as much as it is of candidate countries, that in joining the Union new members will be in a position to start making their own direct contribution to the further development of the common European endeavour.

I propose to briefly address some of the more specific aspects of Malta's negotiations, and in particular those areas where we are seeking to secure transitional or special arrangements to suit our particular requirements.

Some of our requests are of a purely technical nature. These concern issues where Malta needs more time for the proper implementation of certain measures. In some cases this is because of the costs involved in the implementation process; in other cases it is important to first create the necessary infrastructure and to provide adequate training to specialised personnel.

We must, however, recognise that some measures have a significant socio-economic or socio-political aspect to them and, therefore, however necessary or desirable they may be in their own right, they require a period of adjustment or reform before they can be fully implemented.

There are also some areas where Malta will need to ensure that the accession process caters for its specific characteristics or particular situation. I am here thinking especially of the constraints arising from our size and our limited resource endowment, which have a critical impact on such aspects as land use, agriculture as well as environment protection.

In this context the discussion that must be held to determine Malta's status as a recipient of the European Union's Structural and Cohesion Funds constitutes an important aspect of the negotiations themselves. For this purpose a series of exercises are being undertaken to determine Malta's classification in the framework of the European Union's Regional Policy.

Data analysed by Eurostat already shows that Malta's Purchasing Power Parity stands at 53% of the current European Union average. This suggests that upon accession Malta will qualify for Objective 1 status under the EU Structural Funds, and that we will therefore be able to benefit from the most extensive form of assistance available through these funds.

I shall now proceed to consider some of the specific requests that have been made.

In the area of Free Movement of Goods, a transition period of four years is being sought for the licensing of medicinal products for human use since, upon accession, the provisionally licensed medicinal products registered prior to 1 January 2003 will have to be reviewed and fully registered according to EU requirements.

In the Transport chapter the Union has made it clear that it has a particular interest in the area of Maritime Safety. We have also made it clear that, with the fifth largest fleet registration in the world, Malta is also particularly interested in promoting maritime safety through international cooperation. We are, however, not seeking any special arrangements or transition periods in this area although we feel that some transitional arrangements are necessary in the road transport sector.

The Social Policy and Employment chapter aims to improve the living and working conditions of European citizens, as well as to promote employment opportunities for all. Malta is already in the process of introducing significant reforms in this sector aimed at raising standards and increasing prosperity. In a few cases transition periods, ranging from one to four years, are being sought both in the area of labour legislation, as well as in the area of health and safety.

These concern four EU directives in particular:

- the organisation of working time

- exposure to noise

- use of work equipment

- temporary or mobile construction sites.

In order to prepare ourselves properly for these measures, it is necessary to allow sufficient time for the necessary investment to be made in infrastructure, training and equipment both on the part of industry, as well as on the part of Government, which will be ensuring the proper implementation of this crucial area of the social legislation.

I would now like to turn to some of the more critical issues being discussed in Malta's accession negotiations. These concern issues which have a socio-economic or socio-political impact or where we feel that essential aspects of Maltese life or traditions must be safeguarded.

The Free Movement of Persons, one of the four key freedoms determining the European Single Market, is one of the few areas which the views and negotiating positions of governments, both in member states as much as in applicant countries, are largely driven by perceptions and attitudes generated at the grass roots. This was also the case in those previous enlargements where the applicants also had a level of economic development visibly lower than the existing average inside the community – that of Greece, Portugal and Spain.

From the side of most candidate countries, where the level of economic development is lower than that prevailing inside the community, and where, unlike the case of the 1995 EFTA enlargement, the state of economic integration with the Community is still relatively low, the possibility of free movement within wider and more industrialised markets is indeed one of the more concrete and positive aspects of membership - an aspect which can be readily grasped at popular level.

On the side of member states the opposite considerations apply. There is a widely held belief that if complete free movement of workers were guaranteed immediately upon enlargement there would be a sudden influx of migrants. It is feared that large sections of the labour markets in some member states, especially in areas where unemployment is high, would not be able to cope with this influx. At a time when unemployment is still generally high throughout the Union, and where the present enlargement will bring together countries where income levels, both in nominal as well as in real terms, are very unequal, the popular resistance against an immediate dismantling of barriers is very real and is having a significant effect on the governments of some member states.

The irony is that studies on the subject conducted both by the Commission and academic institutions suggest that this is fundamentally a non-issue. The example is given of the Greek, Portuguese and Spanish enlargements, where the transitional and safeguard measures imposed at the time eventually turned out to be of minor if not insignificant impact - both in terms of the medium to long term economic and other benefits which accrued to the new members after accession, as well as in terms of the additional migratory pressures which were generated throughout the Union.

In its own particular way, and for its own very particular reasons Malta shares both some aspects of the fears in member states, as well as some aspects of the expectations in candidate countries. In this spirit we are proposing that the Accession Conference should discuss the mechanisms that may be adopted to safeguard the sustainable implementation of the provisions of the acquis relating to the freedom of movement of workers while at the same time taking into account the popular perceptions in this issue.

Among the issues dealt with under Free Movement of Capital, another of the four key freedoms, is the acquisition of real estate. While the European Union Treaties prohibit any restrictions on capital movements within the Union, Malta feels that it has a specific case to make in this regard in view of its size and population density.

There is no doubt that with over 20% of our land having been developed, we are justified in seeking to manage and conserve this resource with caution and foresight. It is sufficient to note that The Netherlands, which has the highest population density in the European Union, has a mere 5% of its land area under development! In our case we feel that it is absolutely necessary that the acquisition of property be regulated in some manner.

Among the requests being made in the Competition chapter, the one that has received most coverage is that dealing with state aid granted to the shipbuilding and ship repair industries, where Malta is asking for a seven-year transition period for the reform and restructuring of the Yards. Naturally this adjustment must occur within a framework that makes specific allowances for the socio-economic implications of this process.

In the accession negotiations the Maltese Government has made clear its commitment to continue assisting the Maltese ship repairing and shipbuilding industries in becoming economically viable within a reasonable period of time. We are convinced that the expertise available in our yards, as evidenced by a number of recent contracts, can ensure the achievement of this objective.

Indeed European Union membership will serve to enhance the opportunities available to the Yards. A lucrative contract recently awarded to Malta Drydocks, was subsequently lost because of state aid offered by a European Union member state, aid which was permitted because the competing Yard – ours – was not from a European Union member state.

A conscious effort has been made to place this issue outside the wider EU membership debate, since there is no doubt that the desire to make this industry viable is one that is shared across the board.

In the Fisheries sector, Malta is negotiating arrangements which would ensure the maintenance of a 25 nautical mile conservation zone around our shores. This fisheries conservation zone was established in 1971 to guarantee the sustainability of the marine environment and the species inhabiting it. This practice, and indeed Malta's request, is supported by ample scientific evidence gathered by the Scientific Advisory Committee of the FAO General Fisheries Council for the Mediterranean. This research shows that the continental shelf issuing from the Maltese Islands should be considered a separate management unit.

Moreover it has been shown that Malta's waters are low in productivity, which makes the ecosystem particularly fragile. For this reason we are insisting that the fishing effort in this area should be managed very carefully, in the way that this has been done since 1971.

In the Taxation sector Malta wants to negotiate exemptions in the area of VAT. The request for exempt status concerns certain categories of products, services and other supplies. We are basing our case on the fact that similar exemptions already exist within certain member states. In view of the sensitivity with which EU member states look at taxation matters we expect the negotiations to be particularly tough on this issue.

Environment and Agriculture are two wide ranging and complex sectors, not only for Malta but also for the other candidate states. Furthermore the agriculture chapter is also the area where there is the highest level of controversy and debate within the Union itself.

Our most recently submitted Negotiating Position is that concerning Environment. In this chapter Malta has made requests that are both of a socio-political and of a technical nature. I wish to draw attention to some of these requests.

Malta will, for instance, be asking for a transition period for the full implementation of the EU legislation requiring the phasing out of leaded fuel. A transition period is also required for the setting-up of an integrated solid waste management, collection and disposal infrastructure.

Malta is requesting another transition period to improve the quality of water intended for human consumption in order to reach the rigorous standards applied by the European Union.

It will be appreciated that all these measures require considerable investment. While we would all agree that the standards enshrined in European Union legislation and practice contribute to the greater good of all, the resources of any individual candidate country, including Malta, are too limited to permit the quantum leap required within a restricted period of time.

There is, furthermore, the expectation that once we become members the process of adjustment to the Environment acquis will be assisted not only by the structural and cohesion funds, but also by the experience and expertise available within the Union itself.

There should be no doubt as to our commitment for implementation, even if we cannot promise to have every single aspect in place in time for accession. One thing should remain at the forefront of our minds – the environment is not something that belongs to us, it is ours on trust and irrespective of any consideration, none of us are proud of something like Maghtab.

But all is not bleak on the Maltese environmental scene. Malta has an existing beverage container-packaging regime which is probably in advance of that existing in many European countries. We are requesting that this regime be maintained, even though it is not strictly in line with current EU legislation.

In the context of the birds directive, which falls within the environment acquis, our negotiating position is that, within the framework of EU legislation, Malta will take measures to maintain on accession the traditional patterns of hunting and trapping which have evolved as a result of Malta's particular biogeographical circumstances. It is important to note in this context that our hunters and environmentalists are working together to ensure a proper balance in our negotiating position.

Notwithstanding Malta's restricted agriculture, this remains an essential part of the Maltese lifestyle in more ways than one. First of all there are the special Maltese products that we are used to and which should not only be protected but even better promoted upon membership. Then there is the rural aspect of our Islands, which our agriculture is critical in preserving. Thirdly, there are the environmental considerations that, as Malta gets more crowded, become more and more relevant.

Since agriculture is a land-intensive economic activity, Malta's evident dearth in this regard is a major handicap. Costs are inevitably higher than they are in other Mediterranean countries, where this scarcity is certainly not as evident. Water, on the other hand, is a problem throughout our region, but since Malta has no significant water sources or rivers, we are particularly dependent on alternative sources.

For these reasons, in the Negotiating Position that is still being finalised, we intend to propose a special package for Maltese farming. It will be a package that takes all of the elements referred to above into account and which will address the very specific needs of Malta in this sector.

Our requests will concentrate on the need to ensure that appropriate alternatives are identified to our present highly protected system in order to safeguard the livelihood of our farmers, enhance the choices available to consumers and permit us to operate successfully in a more demand-driven, quality-oriented and internationally competitive environment. It will also be necessary to take account of Malta's insular and peripheral geographic situation.

Naturally the European Union itself faces a lengthy internal debate on this issue, with the prospect of serious complications and distortions to the existing

Common Agricultural Policy budget arising out of the accession of the larger candidates from Central Europe. We are however intent on negotiating an arrangement that will accommodate and benefit Maltese agriculture and agro-industry.

In considering the special arrangements we are seeking in the accession negotiations, we should consider ourselves fortunate in having had for several years a functioning market economy and a democratic political system. This means that we have shared the principles upon which the European Union is founded and this is reflected in the way we have legislated and the way we conduct our business.

We are driven in these negotiations by the firm belief that membership of the EU will lead to greater prosperity, increased employment, improved social conditions, and better standards of consumer choice, as well as a safer and greener environment for the Maltese people. Our traditions and culture will benefit from one of the central pillars of the European Union – that there is strength in diversity. The Maltese language will be strengthened and will become better known, as has occurred with all the smaller languages in the European Union.

Perhaps most importantly, membership will allow us to sit around the table when the crucial decisions are being taken in Europe, decisions that are today affecting us anyway, even while we are on the outside.