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Chapter 3 - Freedom to provide services
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   December 2004

Background

The acquis in this chapter relates to:

  • Article 43 EC on the freedom of establishment and Article 49 EC on the freedom to provide services.

  • Financial services:

    1. Banking
    2. Insurance
    3. Investment services and securities markets

The acquis in this sector lays down the minimum requirements for the different types of institutions in order to create a uniform minimum standard based on the following principles: minimal harmonisation of the authorisation conditions and the prudential rules, home country control and single licence, mutual recognition of national supervisory standards.

  • A directive on the protection of personal data and the free movement of such data.
  • Directives on the freedom of establishment and the freedom to provide services for craftsmen, traders and farmers.
  • A directive on self employed commercial agents.
  • Information Society directives on the provision of information in the field of technical standards and regulations and of rules, and on the legal protection of services on conditional access.

Horizontal issues

Links with other chapters

This chapter is closely linked to a number of others, but most specifically to the free movement of capital and free movement of persons. For those candidates that have negotiated or requested restrictions on capital movements, transitional arrangements could have a direct impact on the Treaty-based right of establishment and freedom to provide services. In the context of the agreement to maintain restrictions on the free movement of persons, Germany and Austria may apply protective measures in certain sensitive service sectors, mainly construction and cleaning.

Administrative capacity and monitoring

In this chapter, in addition to the process of alignment with the acquis, the establishment of an effective regulatory infrastructure is particularly important, in order to implement the acquis and ensure an efficient and well-supervised financial sector. The Commission, in close cooperation with Member States, is therefore monitoring very closely the supervisory arrangements for financial services in the candidate countries.

State of play

Although also Bulgaria and Romania began the process of transposing and applying the acquis in this chapter some time ago, also in the framework of the Europe Agreements, a significant amount of work remains to be done, both in the complex area of financial services and the primary Treaty provisions on right of establishment and freedom to provide services. The progress achieved varies between the candidates, being more advanced in those countries which made an early start to economic and financial reforms and the process of harmonisation with the acquis.

In the accession negotiations the chapter was provisionally closed with 12 candidates, of which all except for Bulgaria and Romania are Member States since 1 May 2004: Poland and Slovenia during the 2nd half of 2000; Hungary, Czech Republic, Estonia, Cyprus, Slovakia, Lithuania, Latvia and Malta during the 1st half of 2001, in line with the road map set out in the Commission's Enlargement Strategy Paper 2000. The chapter was definitely closed in December 2002 for Poland, Slovenia, Hungary, Czech Republic, Estonia, Cyprus, Slovakia, Lithuania, Latvia and Malta. For Bulgaria the chapter was provisionally closed during the second half of 2001 and definitely closed in December 2004, while for Romania it was provisionally closed in September 2004 and definitely closed in December 2004. For several of these countries, transitional periods up to 5 years have been agreed, e.g., for reaching minimum levels of guarantees for banking deposits or investor protection. A number of new Member States have been accorded, in line with existing Member States, exemption from the banking acquis for very small institutions e.g. credit unions. The state of play country by country is given below.

Compliance with the acquis

The latest assessment of each candidate country’s compliance with the acquis under this chapter heading, can be found in the 2004 Regular Reports and in the Comprehensive Monitoring Reports, available at:
http://ec.europa.eu/enlargement/archives/key_documents/reports_2004_en.htm.

Country by country

Bulgaria

  • Chapter opened: January 2001
  • Status: closed in December 2004 (provisionally closed in November 2001)
  • Transitional arrangements: Lower level of investor compensation until end-2009

Cyprus (New Member State)

  • Chapter opened: July 1999
  • Status: Closed December 2002 (provisionally closed in May 2001)
  • Transitional arrangements: Exclusion of co-operative credit and savings societies until end-2007.

Czech Republic (New Member State)

  • Chapter opened: July 1999
  • Status: Closed December 2002 (provisionally closed in March 2001)
  • Transitional arrangements: None

Estonia (New Member State)

  • Chapter opened: August 1999
  • Status: Closed December 2002 (provisionally closed in March 2001)
  • Transitional arrangements: Lower levels of bank deposit guarantee and investor compensation until end-2007.

Hungary (New Member State)

  • Chapter opened: July 1999
  • Status: Closed December 2002 (provisionally closed in February 2001)
  • Transitional arrangements: Exclusion of two specialised banks; lower level of investor compensation until end-2007.

Latvia (New Member State)

  • Chapter opened: August 2000
  • Status: Closed December 2002 (provisionally closed in June 2001)
  • Transitional arrangements: Exclusion of credit unions; lower levels of bank deposit guarantee and investor compensation until end-2007.

Lithuania (New Member State)

  • Chapter opened: July 2000
  • Status: Closed December 2002 (provisionally closed in June 2001)
  • Transitional arrangements: Exclusion of credit unions; lower levels of bank deposit guarantee and investor compensation until end-2007.

Malta (New Member State)

  • Chapter opened: January 2001
  • Status: Closed December 2002 (provisionally closed in May 2001)
  • Transitional arrangements: none.

Poland (New Member State)

  • Chapter opened: July 1999
  • Status: Closed December 2002 (provisionally closed in November 2000)
  • Transitional arrangements: Exclusion of credit unions and a specialised bank; lower level of investor compensation until end-2007.

Romania

  • Chapter opened: December 2002
  • Status: closed in December 2004 (provisionally closed in September 2004 (on deputy level))
  • Transitional arrangements: Lower level of investor compensation until end-2011.

Slovakia (New Member State)

  • Chapter opened: July 2000
  • Status: Closed December 2002 (provisionally closed in May 2001)
  • Transitional arrangements: Lower level of investor compensation until end-2006.

Slovenia (New Member State)

  • Chapter opened: July 1999
  • Status: Closed December 2002 (provisionally closed in November 2000)
  • Transitional arrangements: Lower level of capital requirements for savings and loan undertakings until end-2004.
Updated: 17/12/2004
 
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