STATEMENT BY MR RICHARD CACHIA CARUANA, CHAIRMAN, CORE NEGOTIATING GROUP, AT THE SIXTH MEETING OF THE ACCESSION CONFERENCE AT DEPUTY LEVEL

The negotiating conference is today marking another important step in Malta's accession process. Four further chapters are being opened, two of which are ready for provisional closure. A third chapter, opened earlier this year, is also ready for closure.

The three chapters which are being proposed for provisional closure are the ones dealing with Free Movement of Goods, Freedom to Provide Services and Energy Policy.

The Goods chapter is one of the more complex chapters we have so far managed to bring to provisional closure. It is a key chapter in terms of the operations of the internal market. It covers an extensive acquis, both in terms of the number of directives and regulations as well as in terms of substance. The implementation of this acquis calls for a significant amount of work in both legislative as well as administrative terms. For one part of this acquis, that dealing with the renewal of marketing authorisations for pharmaceutical products we needed to negotiate a four year transitional period.

The negotiations on this chapter over the last four months have been detailed and intensive and their successful conclusion is a source of particular satisfaction. Besides the agreement on the transition period, an understanding has also been reached on measures which respond to existing Maltese consumer preferences by allowing the continuation of the unrestricted use within Malta of the terms ‘milk chocolate', ‘evaporated milk' and ‘low fat evaporated milk'.

In order to ensure the continued proper functioning of the internal market when Malta becomes a member of the Union, the Maltese Government has set itself a gradual but carefully thought-out and realistic timetable for the setting up of new structures or the strengthening of existing ones in the areas that fall under this chapter. This is clearly demonstrated in the information we have provided on the programme of action we have put in place regarding standardisation, as well as on the manner in which we propose to organise ourselves on horizontal and procedural measures, including New Approach and sectoral legislation, to ensure the timely transposition and effective implementation of the acquis.

Malta is pleased to see the provisional closure of negotiations on the Services chapter, in such a short period following its opening earlier under the Swedish Presidency. This chapter, which is underpinned by the principles of freedom of establishment and freedom to provide services, constitutes one of the fundamental pillars that govern the Single Market. Thus Malta participates in the fostering of the right conditions that would enable all the Member States of an enlarged Union to enjoy these two fundamental freedoms.

The discussions on this chapter were facilitated by the fact that Malta's legislation and practices in the area of banking and financial services were put in place in recent years and already reflect the legislation and practices applicable in Member States. On the basis of this legislation and practice, as further developed as we move towards EU membership, Malta expects to deepen and enhance its role as a modern, efficient and attractive centre for financial services. Malta can already boast of fully-fledged and effective supervisory authorities for the banking, insurance and securities' sectors which carry out continuous off-site and risk-based on-site examinations to ensure an efficient and well-supervised financial sector.

The third chapter we are closing today concerns Energy Policy. Malta has shown that it is preparing itself well to adopt and implement the acquis in this chapter. Malta now has in place the Malta Resources Authority which provides the set-up for the regulator in the energy sector. Just last month, Malta ratified the Energy Charter Treaty and related protocols. We are also in the process of finalising our national energy policy. All along, developments in the internal energy market are being monitored.

In the Energy chapter we have requested one transitional period, until the end of 2006, to allow the required 90 day minimum stocks of crude oil and/or petroleum products to be built up. Given that Malta has no indigenous energy sources, and therefore depends heavily on imported fuels and also that 50% of Malta's water requirements are provided by desalination, which absorbs 11% of the total electricity generated, the importance of holding sufficient fuel stocks is therefore evident. We estimate that a total outlay of Lm21 million (Euros 52 million) is needed to fully implement the requirements in this area. This amount is being staggered over a six-year period commencing in 2001 and ending in 2006.

In the area of electricity, Malta plans to apply, after accession, for certain derogations under the Electricity Directive as a ‘small isolated system'.

The two chapters we are opening today are the ones relating to Environment and to Customs Union.

Malta's environmental policy is of necessity conditioned by its specific geophysical and demographic constraints and the impact which these constraints have on other policies including infrastructure, industry, agriculture and social affairs.

The overall land surface area of the Maltese Islands amounts to 316 square kilometres and its population approximates 388,000. This means that Malta's population density currently stands at 1,200 persons per square kilometre which is about eight times the current EU average. This figure does not take into account the arrival of over 1.2 million tourists each year. Population density is set to increase in the coming years, with the total population size projected to increase over the coming years.

Given the limited surface area and population density of the Maltese Islands, land use is a pressing environmental concern. Particular effort has to be made to conserve Malta's few natural resources, its abundant archaeological sites and the diminishing area of agricultural land from the constant pressures of urbanisation and infrastructural development. Malta's agricultural sector contributes to a large extent to the maintenance and enhancement of the country's fragile eco-system and rural landscape. In the last 50 years agricultural land has decreased in total surface area from 54% to 35% of the country and currently amounts to less than 11,000 hectares. During the same period the built-up area has increased in total surface area from 7% to 21%, which is approximately three times the current EU average.

The requests for special arrangements being made by Malta under this chapter are underpinned by our commitment to a sustainable environmental policy which, in keeping with the aims of the EU acquis, will lead to better quality of life for present and future generations.

Malta's requests mainly concern waste management, water and air quality – all areas which require heavy investment and long-term planning and for which both pre-accession assistance, and the assistance from the structural and cohesion funds to which Malta will become eligible on accession, are of vital importance.

Malta has put waste management as a priority on its environmental agenda. With the help of a consultant appointed by the EC Commission, Malta will very shortly finalise an integrated waste management strategy which will be fully compliant with the EU acquis. In this area, we are requesting a three year transition period with respect to the Packaging and Packaging Waste Directive. Malta is also requesting to maintain its existing beverage container packaging regime since this has, in practice, proved to be an effective measure in reducing packaging waste.

In the area of water quality Malta is requesting three transition periods - a six year transition period in relation to urban waste-water treatment, a six year transition period in relation to pollution caused by certain dangerous substances discharged into the aquatic environment and a three year transition period for the implementation of requirements concerning nitrates and other chemicals.

In the area of air quality Malta is requesting three transitional periods - a transition period of three years with regard to the phasing-out of leaded petrol, a two year period for the implementation of requirements concerning volatile organic compound emissions resulting from the storage and distribution of petrol and a three year period for the limiting of emissions from large combustion plants.

Malta has just published its new Environment Protection Bill. Following a period of public consultation, this will be discussed by Parliament. The main thrust of this law is to achieve a balance between the effective safeguarding of the environment and the development needs of the country. It is envisaged that this new law will create a National Commission for Sustainable Development under the chairmanship of the Prime Minister. The law also envisages the setting up of an Environment Fund as another practical means of implementing the "polluter pays" principle.

Earlier this year Malta completed all the ratification procedures which will enable it to become a member of the European Environment Agency (EEA). In view of its commitment to comply with the environmental acquis communautaire, Malta will soon embark upon a Directive-specific cost compliance exercise, funded through its pre-accession financial instrument.

The last chapter on the agenda today is the one relating to Customs Union. A lot of work has already been completed on this chapter and we expect that its opening today will lead to provisional closure in the near future. Malta has not requested any transition periods or special arrangements under this chapter. We are putting into effect the legislative changes which are required to bring us into full conformity with the acquis, and we are also actively enhancing and updating our already well established administrative structures in order to ensure our full capacity to implement all our commitments in this area. It is useful to note that an important part of Malta's pre-accession allocation for the year 2000 is being used in this area.

In our view, the main issue which is still not resolved under this chapter, that relating to customs duty relief, has implications which go well beyond the scope of this chapter and is therefore better considered under the Competition chapter. The question of customs duty relief appears to be one which should lend itself to a resolution at the technical level without undue difficulty. However, we do not consider it either appropriate or practical to consider the same issue under two different chapters. On the understanding, which underpins all our negotiations, that individual chapters are considered only provisionally closed until all the chapters are dealt with, we hope that the issue of duty relief will be considered elsewhere.

A related consideration holds for the issue of levies on agricultural and agricultural products. In the Union's common position the point is made that the process of the lifting of these levies needs to be evaluated under this chapter. In our view the lifting of agricultural levies is an integral part of our negotiations on the application of the Common Agricultural Policy - a subject which can only be discussed in all its relevant aspects under the Agriculture chapter. Here again we therefore believe that the provisional closure of the chapter on Customs Union should proceed while the relevant negotiations on levies are conducted in the appropriate place.

With the completion of today's agenda Malta will have opened 25 chapters and provisionally closed 16. We expect that at the Ministerial session in June up to three more chapters will be opened for negotiations, thus leaving only the Agriculture chapter to be opened as early as possible under the Belgian presidency.

The results which have been achieved so far are encouraging, especially when one takes into account the significant amount of work which has also been done with respect to other chapters and which, for one reason or another, has not yet come to fruition. I am thinking in particular of the chapters relating to Free Movement of Persons, Transport and Social Policy. With regards to the chapter on Justice and Home Affairs, we are disappointed at the fact that this chapter could not be opened during today's session, despite the efforts we made in providing all requested additional information.

In our understanding of the situation there are no substantive outstanding issues on the Justice and Home Affairs chapter as far as Malta is concerned and the only reason why this chapter has not yet reached the opening stage relates to matters which primarily concern the Union's own internal deliberations. We hope that this process will be completed soon and that the negotiations on this chapter will continue in the spirit of the principle of differentiation which has underpinned all the negotiations so far.

Over the coming weeks we will be continuing our intensive work with the Commission services and representatives of Member States both on the outstanding issues in the negotiations as well as on the monitoring aspects of our implementation of the acquis. In this context I wish to note that a meeting of the Malta/EU Association committee will be held in Malta on the 9 July to assess progress in the implementation of the Accession Partnership. This meeting will be immediately followed by a round of technical consultations with the Commission, the second such round which is being held this year.

As the Swedish presidency draws to its close we can take satisfaction in the fact that Malta has moved significantly closer to its objective of becoming a member of the European Union at the next enlargement. I wish to express my appreciation to the Swedish presidency for its important contribution in this regard.

I also wish to take this opportunity once again to express our appreciation for the co-operation and support we continue to receive from the Commission Services, in particular the members of the Malta Team in DG Enlargement, as well as from officials of Member States.