Report A4 by 34G2ESH

VIEWS: 13 PAGES: 289

									MALTA: National Programme for the
Adoption of the Acquis, as at January 2001




MINISTRY OF FOREIGN AFFAIRS
MALTA

1 January 2001Final Draft


DRAFT
MALTA: National Programme for the
Adoption of the Acquis




MINISTRY OF FOREIGN AFFAIRS
MALTA

August 2001

DRAFT
MINISTRY OF FOREIGN AFFAIRS                            National Programme for the
MALTA                                                       Adoption of the Acquis
                                                                      August 2001




Contents


Introduction                                                                 11
The Structure of the NPAA                                                    11
Implementation of the NPAA                                                   22

1     Political Criteria                                                     33
1.1   Democracy and the Rule of Law                                         33
1.2   Protection of Human Rights                                            55
1.3   The Executive, the Legislature and the Judiciary                      77
1.4   Anti-Corruption Measures                                            1010

2     Economic Criteria                                                  1212
2.1 Structural Reforms                                                    1515
2.2 Sectoral Reforms                                                      2020
2.3 The Copenhagen Criteria                                               2222

3     Assuming the Obligations of Membership                             2424
3.1 Internal Market                                                       2424
      3.1.1   Free Movement of Goods                                     2424
      3.1.2   Free Movement of Persons                              40403940
      3.1.3                                          Free Movement of Services50494849
      3.1.4   Free Movement of Capital                              56555455
      3.1.5   Company Law                                           64636263
      3.1.6   Competition                                           68676667
      3.1.7   Customs Union                                         74737273
3.2 Innovation                                                    81807980
      3.2.1   Education, Training and Youth                          81807980
      3.2.2   Science and Research                             85848384848484
      3.2.3   Telecommunications and Postal Sector             88878687878787
      3.2.4   Culture and Audiovisual                          95949394949494




DRAFT                                                                            i
MINISTRY OF FOREIGN AFFAIRS                                 National Programme for the
MALTA                                                            Adoption of the Acquis
                                                                 August 2001Final Draft




3.3 Economic and Fiscal Affairs                             98979697979797
      3.3.1   Taxation                                            98979697979797
      3.3.2   Economic and Monetary Union                  106105104105105105105
      3.3.3   Statistics                                   114113112113113113113
3.4 Sectoral Policies                                125124122124124124123
      3.4.1   Industry                                     125124122124124124123
      3.4.2   Agriculture                                  131130128130130130129
      3.4.3   Fisheries                                    154152150152152152151
      3.4.4   Energy                                       161159157159159159158
      3.4.5   Transport                                    166164162164164164163
      3.4.6   Small and Medium Size Enterprises            182180178180180180179
3.5 Economic and Social Cohesion                     188186184186186186185
      3.5.1   Social Policy and Employment                 188186184186186186185
      3.5.2   Regional Policy and Cohesion                 201199197199199199198
Environment and Quality of Life                      210208206208208208207
      3.6.1   Environment                                  210208206208208208207
      3.6.2   Consumer and Health Protection               237235233235235235234
3.7 Justice and Home Affairs                         241239237239239239238
3.8 External Policies                                254251249251251251251
      3.8.1   Trade and International Economic Relations   254251249251251251251
      3.8.2   Common Foreign and Security Policy           261258256258258258258
3.9 Financial Questions                              265262260262262262262
      3.9.1   Financial Control                            265262260262262262262
      3.9.2   Financial and Budgetary Matters              270267265267267267267


4 Administrative Capacity to Implement
the Acquis                  274271269271271271271
4.1   Administrative Structures and Systems274271269271271271271
4.2   Local Government                   281278276278278278278
4.3   Twinning                           282279277279279279279
4.4   Administrative and Legal Capacity 284281279281281281281

5     Summary Financial Assessment285282280282282282282


DRAFT                                                                                ii
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Introduction
During its preparation for full membership of the European Union, Malta adopted a number of
documents that analysed the various spheres of integration. In September 2000, the Government
of Malta published the first National Programme for the Adoption of Acquis (NPAA), which was
drawn up in accordance with the Accession Partnership. This set out the priority areas for the
adjustment of legislation and also determined parameters and deadlines and those responsible for
implementation.
This new version of the NPAA is an update of the 2000 document, as it incorporates the progress
attained by Malta in adopting the Acquis and in establishing the necessary administrative
capacity. It also reflects the insights and experiences gained during the past year in transposing
and implementing the Acquis in different spheres. Equally important, the document defines
Malta's development and strategic objectives and the policies, reforms and measures needed for
the realisation of these objectives in the period up to the anticipated accession of Malta to the
EU.
The realisation of this document is crucial for the future of Malta. In spite of the varying
reactions of individual sectors to a wider market and stronger competition, there is no doubt
about the positive effects of that integration triggers. The experience of Member States clearly
shows that economic integration improves development potential, accession encourages
economic development and with the entry into a larger economic sphere, prosperity increases.
Indeed, the inspiration behind the Maltese Government’s policy for membership was, and
continues to be, based on the conviction that Malta’s social, political and economic development
are best pursued within a framework of partnership and co-operation that can only be given its
full expression through membership of the European Union.

The Structure of the NPAA
The NPAA comprises the areas of structural reform and economic policy measures required in
the process towards EU membership. On this basis, an overview of the process of legislative
alignment was prepared, including the schedule for assuming membership obligations by 1
January 2003. The costs and requirements in terms of human resources and administrative
structures are also included1. In arriving at these estimates, due account was taken of Malta’s
negotiating position in the respective chapters and thus the likely bearing on the respective
administrative capacity. Coherence in the Programme was ensured by taking into account the
interdependencies and influences between individual measures and policies.
The document is structured on the basis of the Copenhagen criteria, which define the political
and economic criteria and the capacity to assume the obligations of membership, as well as the
Madrid criteria, concerning the administrative capacity to implement the Acquis.
The main chapter of the document relates to the ability to take on the membership obligations. It
contains a brief description of the current situation in each section sector and identifies the
progress achieved to date. Short and medium term priorities are defined, focusing on the

1
    With the exception of Chapter 7 (Agriculture).




DRAFT                                                                                           1
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




priorities highlighted in the Accession Partnership. Within this framework, the planned major
steps in law approximation are presented together with timetables for implementation. The
institution building measures to establish the required administrative capacity to apply the
Acquis are also determined together with financial plans where the financial needs are relevant.

Implementation of the NPAA
The implementation of the measures envisaged in the NPAA shall be closely monitored by the
Ministry of Foreign Affairs and reported to the Government periodically.
On the part of the European Commission, the annual progress report will focus on the
implementation of the plan. To this end, Malta will submit a special report on the
implementation of the NPAA to the Commission.
Regular updating of the programme will be ensured. In particular, the NPAA will be updated to
take into account changes in the Acquis. Furthermore, it is expected that the NPAA will keep
diminishing in size as tasks are completed and further alignment with the Acquis is achieved in
the interim period. The results of the updated analytical screening sessions of legislation and the
outcome of the accession negotiations will also be taken into account. When necessary,
amendments will also be made in order to align the demands originating in the NPAA with the
available budget.
Given the dynamic nature of the NPAA, the programme will be supplemented and amended as
and when occurrences take place which make updating necessary. On an annual basis, the
Government will adopt the NPAA that will comprise in an integrated manner the updating
carried out over the year. This will ensure a link between the programmes, whilst also facilitating
the inclusion of any amendments arising from the annual progress report of the European
Commission.




DRAFT                                                                                            2
      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
                                                                                    August 2001Final Draft




1     Political Criteria

1.1   Democracy and the Rule of Law
      The maximum term of Parliament is of five years and elections are held after Parliament is
      dissolved, within a three month period. General elections are based on the principle of
      proportional representation, each voter having a single transferable vote. This system was
      introduced in 1921. Plurality voting was abolished in 1939 and women were granted the right to
      vote in 1947. Since 1974 any person over 18 years of age has been eligible to vote provided he or
      she has the necessary qualifications and is registered as a voter. The Constitutional provisions
      stipulate that a person shall not be qualified to be registered as a voter unless that person is a
      citizen of Malta, has attained the age of 18 years, is of sound mind, is not under a prison sentence
      of more than one year and is resident in Malta. All voters are registered in an Electoral Register
      that must be revised and published every April and October.

      Political Parties
      There are two major political parties in Malta: the Partit Nazzjonalista (PN) and the Malta
      Labour Party (MLP). Other minor parties or movements and independent candidates have
      appeared on the scene during the last thirty years but these have had little impact on the
      electorate. Besides the two major parties, a third party contested the General Elections held on 5
      September 1998. This was the Social Justice Alliance/Alternattiva Demokratika (AGS/AD)
      which obtained 3,208 votes (no candidates elected) as against 137,037 votes for the PN (35
      candidates elected) and 124,220 votes for the MLP (30 candidates elected). A high percentage
      (95-96 per cent) of voters cast their vote although voting is not mandatory. The elections are
      keenly contested by both the individual candidates and the political parties. The media and other
      forms of communications are widely used throughout the whole electoral campaign.
      Every political party represented in Parliament has the right to nominate two party delegates to
      represent it with the Electoral Commission. These delegates have direct access to the
      Commission and its workings throughout the electoral process. They must be informed of all
      decisions taken by the Commission and have right of access to the Electoral Office and to all
      information contained therein except for medical and adoption records and security features.
      During elections the contesting political parties and independent candidates are entitled to
      nominate their own Assistant Electoral Commissioners in each polling booth to superintend the
      poll. The political parties also nominate their own counting staff who forms an integral part of
      the team appointed by the Commission for the counting of votes. The political parties oversee
      the election throughout all its different processes, such as the printing of voting documents and
      their distribution to electors, and the printing of ballot papers. The workings of the Electoral
      Commission and of the Electoral Office are rendered transparent to the greatest possible extent.

      The Electoral Commission
      The Electoral Commission is established in terms of Section 60 of the Constitution of Malta, and
      in the exercise of its functions under the Constitution it shall not be subject to the direction or




      DRAFT                                                                                             3
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




control of any person or authority. The Commission consists of a Chairman who shall be the
Chief Electoral Commissioner appointed by the Prime Minister from the public service, and a
number of members not being less than four and not being public officers, appointed by the
President acting in accordance with the advice of the Prime Minister after consultation with the
Leader of the Opposition. Presently the Commission consists of the Chairperson, who has a
casting vote on any question proposed for decision, and eight members. There is also a Secretary
to the Commission appointed by the Prime Minister.
The functions of the Commission are the conduct of elections and the revision of the boundaries
of electoral divisions.
There are currently thirteen electoral divisions each returning five Members of Parliament. The
electoral boundaries must be reviewed by the Commission at intervals of not less than two and
not more than five years. In drawing up the divisions the Commission must ensure that the
number of voters in each division at the time of review is not greater or less than the electoral
quota multiplied by the number of members to be returned, but in no case by more than five per
cent. The above-mentioned electoral quota is obtained by dividing the total electorate by the total
number of members to be returned to the House of Representatives. Consideration must also be
taken of geographical vicinity, differences in density of population and other relevant factors.
The Constitution also provides that the political party winning a majority of the vote in a general
election is guaranteed a majority of seats in Parliament.




DRAFT                                                                                            4
      MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
      MALTA                                                                       Adoption of the Acquis
                                                                                  August 2001Final Draft




1.2   Protection of Human Rights
      The Constitution of Malta has a special chapter (Chapter IV) devoted to human rights which
      comprises sections 32 to 47 (inclusive). The rights guaranteed are: the right to life, protection
      from arbitrary arrest or detention, protection from forced labour, protection from inhuman
      treatment, protection from the deprivation of property without compensation, protection of
      privacy of home or other property, the right to a fair trial, protection of freedom of worship and
      of conscience, protection of freedom of expression, protection of freedom of assembly and
      association, prohibition of deportation, protection of freedom of movement, and protection from
      discrimination on the grounds of race. These sections cannot be amended except by a two-thirds
      majority in the House of Representatives.
      These guarantees can be enforced in the Maltese Courts by means of an application before the
      First Hall of the Civil Court with the final appeal at national level going to the Constitutional
      Court. The relative procedures are inexpensive and, according to the Legal Notice in force, all
      human rights cases have to be heard as expeditiously as possible. There is also the right of
      individual petition to the European Court of Human Rights. In view of this, the need for the
      setting up of any authority or organisation for the protection of human rights is not felt. Some
      Court decisions have in particular cases led to changes in Maltese law. For example, the
      Criminal Code (Cap. 9) was amended after the Constitutional Court decided that, whatever the
      charge a person has to face, it should always be possible for the accused to ask for bail.
      Moreover, a recent decision of the First Court about the inheritance rights of illegitimate
      children born out of wedlock will bring about a change to the Civil Code (Cap. 16) currently
      governing such rights.
      Malta has ratified the European Convention for Human Rights and Fundamental Freedoms
      together with its First and its Sixth Protocols. By Act XIV of 1987, the Convention and its First
      Protocol were incorporated in Maltese Law and can be directly invoked before the local courts,
      and judgements of the European Court of Human Rights can be enforced in Malta.
      Knowledge of the Convention is widespread. The newspapers give prominence to all cases of
      human rights appearing before the local courts while several courses at the University of Malta
      include credits about human rights. Members of the Police Force have human rights as part of
      their curriculum while they are receiving formal training at the Police Academy.
      Malta has also ratified the UN Covenant on Civil and Political Rights, and the UN Protocol
      about the death penalty. Malta has also recognised the right of the UN Committee on Human
      Rights to decide on individual complaints. A translation of this Convention into Maltese is also
      available. Malta’s first report to this Committee appeared in the Encyclopaedia on Human
      Rights.
      Malta is a party to the Council of Europe and the UN Conventions against Torture. The first
      report in connection with the UN Convention was sent to the relevant Committee and was
      defended by the Government of Malta.
      Malta is a contracting party to the UN Convention on the Elimination of all forms of Racial
      Discrimination. Malta has submitted reports to this Committee on numerous occasions.




      DRAFT                                                                                           5
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Malta has ratified the Council of Europe Framework Convention for the Protection of National
Minorities though it declared that there are no national minorities in the country as the
population is a homogeneous one.
In the field of human rights, Malta has ratified the following Conventions:

Council of Europe Conventions
     Convention for the Protection of Human Rights and Fundamental Freedoms (1950),
      together with Protocol 1 (1952), Protocol 2 (1963), Protocol 3 (1963), Protocol 5 (1966),
      Protocol 6 (1950), Protocol 8 (1985), Protocol 10 (1992), Protocol 11 (1994)
     European agreement relating to persons participating in proceedings of the European
      Commission and Court of Human Rights (1969)
     European Charter for Regional or Minority Languages (signed on 5 November 1992, but
      not ratified).
     Convention for the Prevention of Torture and Inhuman or Degrading Treatment or
      Punishment (1987), together with Protocol 1 (1993) and Protocol 2 (1993).
     Framework Convention for the Protection of National Minorities (1995)

United Nations Conventions
     International Covenant on Economic, Social and Cultural Rights
     International Covenant on Civil and Political Rights
     Declaration recognising the competence of the Human Rights Committee under Article
      41 of the International Covenant on Civil and Political Rights
     Optional Protocol to the International Covenant on Civil and Political Rights
     Second Optional Protocol to the International Covenant on Civil and Political Rights
      aiming at the Abolition of the Death Penalty
     Convention Against Torture and other Cruel, Inhuman and Degrading Treatment or
      Punishment
     Declaration recognising the competence of the Committee against Torture under Articles
      21 and 22 of the Convention Against Torture and other Cruel, Inhuman and Degrading
      Treatment or Punishment
     International Convention on the Elimination of All Forms of Racial Discrimination
     Convention on the Rights of the Child
     Convention on the Elimination of All Forms of Discrimination against Women
     Convention on the Political Rights of Women
     Convention on the Nationality of Married Women
     Slavery Convention signed at Geneva on 25 September and amended by the Protocol
      done at the Headquarters of the United Nations, New York, on 7 December 1953
     Supplementary Convention on the Abolition of Slavery, the Slave Trade and Institutions
      and Practices similar to Slavery
     Convention relating to the Status of Refugees
     Protocol relating to the Status of Refugees




DRAFT                                                                                           6
      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
                                                                                    August 2001Final Draft




1.3   The Executive, the Legislature and the Judiciary
      The Maltese Constitution, which came into being with Malta’s independence in 1964, contains
      limitations on Parliamentary sovereignty. An extensive and judicially enforceable bill of rights,
      as well as judicial review of the constitutionality of legislation are incorporated therein. It sets
      limitations on governmental power and can award against its possible abuse, guaranteeing
      protection for the fundamental rights and freedoms of the individual vis-à-vis the State and
      providing for independent courts to secure that protection. Thus the Constitution is supreme over
      the government and the constitutional system provides for a system of checks and balances
      among and between the executive, the legislature and the judiciary.

      The Executive
      The President of Malta is appointed by Resolution of the House of Representatives and holds
      office for a period of five years. Except in those limited instances where he may act on his own
      deliberate judgement, the President is obliged to act in accordance with the advice of the Prime
      Minister, the Cabinet or of a Minister acting under the general authority of the Cabinet. All Bills
      approved by Parliament have to be assented to by the President but this assent may not be
      withheld.
      The administration of the Government rests with the Cabinet, which consists of the Prime
      Minister and a number of Ministers appointed from among the members of the House of
      Representatives. Ministers are collectively and individually responsible to Parliament. Presently
      there are fourteen Ministers and five Parliamentary Secretaries, the latter carrying out duties
      within the Ministry for Social Policy, the Ministry of Education, the Ministry for Economic
      Services and the Ministry for Home Affairs.

      The Legislature
      There are sixty-five Members in the present Maltese Parliament, excluding the Speaker, and
      currently thirty-five sit on the Government side. The Speaker may be appointed from within or
      from outside the House, but once appointed, the Speaker is accorded Parliamentary privileges.
      Following an early election called for 5 September 1998, the Nationalist Party was elected with a
      majority of five Parliamentary seats over the Malta Labour Party. This was the first time since
      Independence that a five-year legislature was dissolved within two years of its election.
      The legislative power of Parliament is exercised by Bills passed by it and assented to by the
      President. Laws are published in both Maltese and English and the Maltese text prevails in cases
      of conflict. Laws cannot come into force before publication in the Government Gazette. The
      legislative process is not provided for extensively in the Constitution but is rather left in the
      hands of Parliament itself. The procedure actually followed is laid down in the Standing Orders
      of the House of Representatives.
      Parliament has the power of checking the Executive so that the latter may not abuse its powers.
      Thus members of Parliament can put questions, present motions and make speeches to criticise
      any aspect of the administration. There is Parliamentary control over expenditure which is




      DRAFT                                                                                             7
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




provided for in some detail in the Constitution. It is Parliament that authorises expenditure,
although the initiative must be taken by the Executive.

The Judiciary
The Maltese Courts consist of:
The Constitutional Court that has original jurisdiction to decide upon questions as to
membership of the House of Representatives and upon references made to it relating to voting
for election of members of the House of Representatives. In its appellate jurisdiction, it hears
cases involving violation of human rights, interpretation of the Constitution and validity of laws.
The Court of Appeal which, when composed of three Judges, hears appeals from the First Hall of
the Civil Court, and when composed of one Judge, hears appeals from the Court of Magistrates.
An appeal also lies to this Court from decisions of a number of special tribunals.
The Court of Criminal Appeal which hears appeals from persons convicted by the Criminal
Court. This Court is composed of three Judges. When composed of one Judge, this Court hears
appeals from judgements delivered by the Court of Magistrates as a Court of Criminal
Judicature.
The Criminal Court which tries offences exceeding the competence of the Court of Magistrates
as a Court of Criminal Judicature. In this Court, the Judge usually sits with a jury of nine
persons, but in certain instances can sit on his own if the accused so elects.
The Civil Court: First and Second Halls. The First Hall takes cognisance of all cases of a civil
and a commercial nature exceeding the jurisdiction of the Court of Magistrates. This Court has
particular significance as it considers all applications for redress in respect of violations of
human rights and fundamental freedoms. The Second Hall is a court of voluntary jurisdiction in
matters of a civil nature.
The Court of Magistrates has both a civil and a criminal jurisdiction. As a civil court it has only
jurisdiction, limited to claims not exceeding Lm1,000. As a criminal court it is both a court of
judicature for the trial of offences under its jurisdiction and a court of inquiry in respect of
offences falling within the jurisdiction of the Criminal Court. This Court is composed of a single
Magistrate.
The Gozo Courts have both an inferior and a superior jurisdiction. In its inferior jurisdiction, this
Court is equivalent to the Court of Magistrates in Malta. In its superior jurisdiction, both civil
and commercial, this Court takes cognisance of cases in the same way as the First Hall of the
Civil Court in Malta.
The Juvenile Court consists of a Magistrate sitting in a place different from that of the Courts of
criminal jurisdiction and hearing charges or other proceedings concerning persons under 16
years of age.
Commissioners of Justice deal with infringements of the law, such as minor traffic offences and
illegal disposal of litter, which have been depenalised.




DRAFT                                                                                             8
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




The Small Claims Tribunal is composed presided overof by an Adjudicator who decides cases
involving Lm250 or less, on principles of law and equity by means of summary proceedings and
with little formality.
There are also a number of other judicial tribunals with jurisdictions on specific matters.
At present, there are seventeen Judges (including the Chief Justice), sixteen Magistrates, ten
Commissioners of Justice and four Adjudicators. In order to be appointed as a Magistrate, a
person must have practised as an advocate in Malta for a period of not less than seven years
while the qualifying period required for appointment as a Judge is twelve years.
Although appointed by the President, who acts in accordance with the advice of the Prime
Minister, Judges and Magistrates are independent of the Executive. Judges and Magistrates
enjoy security of tenure and they can only be removed by the President in the event of proved
inability to perform the functions of their office or on proved misbehaviour, upon an address by
the House of Representatives supported by the votes of not less than two-thirds of all members.
Otherwise, Judges and Magistrates retire from their office upon reaching the age of sixty-five
years and sixty years respectively. The independence of the judiciary can also be seen in the fact
that the salaries of Judges and Magistrates are a charge on the Consolidated Fund and that their
salaries and terms of office cannot be altered to their disadvantage during their tenure of office.




DRAFT                                                                                             9
      MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
      MALTA                                                                       Adoption of the Acquis
                                                                                  August 2001Final Draft




1.4   Anti-Corruption Measures
      Commission for the Administration of Justice
      The Commission for the Administration of Justice is a Constitutional body which is chaired
      presided over by the President of Malta and its members include the Chief Justice, members of
      the judiciary, the president of the Chamber of Advocates and nominees of the Prime Minister
      and the Leader of the Opposition.
      The main functions of the Commission are:
           the supervision of the workings of the Courts;
           advising the Minister responsible for Justice on matters relating to the organisation of the
            Administration of Justice; and
           the drawing up of codes of ethics for the judiciary and for members of the legal
            profession.
      The Commission, moreover, has the duty to investigate any Judge or Magistrate in connection
      with an address for removal made in the House of Representatives and report thereon to the
      Speaker of the House. The question whether the Commission has validly performed any function
      vested in it shall not be enquired into by any court.
      The Commission has a Committee for Advocates and Legal Procurators which has competence
      in all matters relating to the professional conduct of advocates and legal procurators and to the
      exercise of the legal profession in general.

      Ombudsman
      The Ombudsman Act (Cap. 385) provides for the appointment of an Ombudsman as an officer of
      Parliament, with the support of at least two-thirds of the members of the House of
      Representatives. The first Ombudsman was appointed unanimously on 31 July 1995 and started
      receiving complaints on 15 November 1995.
      The main functions of the Office are:
           to carry out independent investigations on complaints concerning acts (or omissions or
            maladministration) by public organisations, agencies with a government controlling
            interest and local councils;
           to recommend, where justified, remedial action;
           to conduct investigations on own initiative;
           to investigate any matter referred by the Prime Minister or any petition that is before any
            committee of the House of Representatives.

      Tribunal for the Investigations of Injustices
      The Tribunal for the Investigation of Injustices provides for the processing of complaints from
      1987 to 1995 (when the Ombudsman Act came into effect).
      The Tribunal takes cognisance of applications filed by persons who claim that they have
      sustained an injustice in consequence of undue distinction, exclusion or preference which has




      DRAFT                                                                                          10
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




been made or given to their prejudice, as well as any disability or restriction to which they have
been subjected by any action taken by the Government and any other body corporate established
by law. The decisions of the Tribunal are final and no appeal may be lodged therefrom. The
Tribunal is presided over by a Judge of the Superior Courts.

Permanent Commission against Corruption
The Permanent Commission against Corruption is made up of a chairman and two other
members, all appointed by the President of Malta acting in accordance with the advice of the
Prime Minister, given after consulting the Leader of the Opposition. Members of the
Commission hold office for a period of five years.
The functions of the Commission are:
     to consider alleged or suspected corrupt practices and, upon sufficient grounds for an
      investigation being found, to investigate the practices and report thereon;
     to investigate the conduct of any public officer, including any Minister or Parliamentary
      Secretary, which in the opinion of the Commission may be corrupt or may be connected
      with or may be conducive to corrupt practices and to report thereon;
     to investigate the conduct of any person who is or has been involved in the
      administration of a partnership or body in which the Government of Malta, or an
      authority of the Government of Malta, a local government authority, a statutory body, or
      a combination thereof, has a controlling interest or effective control, where such
      conduct, in the opinion of the Commission may be corrupt or connected with or
      conducive to corrupt practices, and to report thereon;
     to examine the practices and procedures of the government departments or other bodies
      mentioned in the previous paragraph in order to facilitate the discovery of any corrupt
      practices and to recommend the revision of methods of work or procedures which may
      be conducive to corrupt practices and to report thereon;
     to instruct, advise and assist any person, on his request, on ways in which corrupt
      practices may be eliminated, provided that such request may only be made by a person
      who has ministerial responsibility or who is entrusted with, or has functions relating to,
      administration of a government department or other body covered by the Act.
The Commission reports the results of every investigation to the Minister responsible for justice.

National Audit Office
The National Audit Office exercises an external financial control function of public funds. The
Office was established in 1997 by means of the Auditor General and National Audit Office Act
(Cap. 396) and is autonomous from Government. It is based on the British model and is
responsible for the external audit of central and local Governments and reports directly to
Parliament. Its mandatory objective is to provide independent information, assurance and advice
to Parliament on public finance transactions. Its examiners follow INTOSAI Auditing Standards.
The independence of the National Audit Office is entrenched in the Constitution.




DRAFT                                                                                           11
    MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
    MALTA                                                                       Adoption of the Acquis
                                                                                August 2001Final Draft




2   Economic Criteria

    Objectives
    Malta's main economic policy priorities are the achievement of a sustainable rate of economic
    growth, whilst ensuring a high level of employment, a low and stable inflation rate and
    improvements in the standard of living of Maltese households. Sustaining the competitive edge
    in international markets is a key requirement within this context. Industry, tourism, the services
    and commercial sectors, as well as financial services, are the pillars on which economic
    development is sustained.
    During recent years, the Maltese economy has been characterised by a generally stable
    macroeconomic environment. Furthermore, a wide-ranging programme of economic reforms has
    been implemented in order to liberalise the Maltese economy and modernise its underlying
    structures.
    By the end of 2001, Government will present a medium-term economic policy document that
    highlights the strategy for a sound macroeconomic environment and fiscal stability. Moreover,
    the programme of reform and restructuring of the economy will continue to be unfolded in the
    coming years. The measures and initiatives introduced in the past years will be consolidated and
    enhanced. This process, together with the measures to effectively address the public finance
    situation, should lay the foundations for sustainable economic development in the future. It will
    also enable the finalisation of the transition towards accession to the EU. Hence, the Maltese
    economy will be in a position to face the challenges and take advantage of the opportunities
    provided by EU membership.

    Macroeconomic Developments
    The Maltese economy has grown significantly in the past years, with Gross Domestic Product
    (GDP) at current market prices rising from Lm1,145 million in 1995 to an estimated Lm1,556
    million in 2000. In recent years, the rhythm of economic growth has been relatively subdued
    when compared to the early to mid-nineties. However, during 2000 the main economic
    indicators point to a pick-up in activity. Nominal GDP grew by 6.9 per cent during 2000, which
    represents a real growth rate of 4.7 per cent.
    The structural composition of the Maltese economy has been changing over the years with an
    increasing service-orientation. In fact, market service activities accounted for 48.1 per cent of
    GDP at factor cost during 2000. The gainfully occupied population stood at 136,11741,117 in
    December 2000 whilst the unemployment rate declined to 4.5.0 per cent, a low level by
    international standards. The inflation rate (as measured by the 12-month moving average for the
    Retail Price Index) has been below 2.5 per cent in recent years. The Maltese lira is tied to a
    basket of foreign currencies, with a significant Euro component.




    DRAFT                                                                                          12
 MINISTRY OF FOREIGN AFFAIRS                                                          National Programme for the
 MALTA                                                                                     Adoption of the Acquis
                                                                                           August 2001Final Draft




 Key Macroeconomic Indicators



                                                              1996       1997       1998       1999         2000

Gross Domestic Product
GDP [constant prices] (% change)                                 4.0        4.9       3.4        4.0           4.7
GDP [current prices] (Lm million)                           1,201.3    1,288.2    1,362.3   1,455.0       1,556.1
Nominal GDP per capita (Lm)                                   3,212      3,421      3,588     3,827         4,079

Share of GDP at factor cost (%)
Direct Production                                              35.5       35.7      36.2           36.1      37.1
Market Services                                                47.2       48.0      48.3           48.7      48.1
Non-market Services                                            17.3       16.3      15.5           15.2      14.8

Employment
Gainfully Occupied Population                               136,145 136,788 137,387 138,206 141,117
                                                            133,195 132,943 133,024 134,001 136,117
Unemployment Rate (% of Labour Supply)                       4.45.0  5.05.5   5.15.6  5.35.8 4.55.0

Inflation Rate
12-month moving inflation rate (%)                              2.5        3.1        2.4           2.1       2.4

Exchange Rate (average for the period)
Maltese lira against Euro                                   2.1852     2.2921     2.2957     2.3470       2.4741
Maltese lira against US Dollar                              2.7745     2.5921     2.5758     2.5032       2.2855
Maltese lira against Sterling                               1.7780     1.5825     1.5547     1.5468       1.5080

International Trade -– Balance of
Payments
Exports of goods & services (Lm million)                    1,024.8    1,072.2    1,166.8   1,292.7       1,573.5
 - Share of GDP at cmp (%)                                     85.3       83.2       85.6      88.8         101.1
Imports of goods & services (Lm million)                    1,186.4    1,173.5    1,248.1   1,371.9       1,741.3
 - Share of GDP (%)                                            98.8       91.1       91.6      94.3         111.9

Current A/C Balance (% of GDP)                                -12.2       -5.9       -6.2          -3.4     -14.5


 Note: National Accounts figures for 2000 are provisional


 Sources: National Statistics Office, Employment and Training Corporation, Central Bank of Malta




 DRAFT                                                                                                          13
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




The Maltese economy is very open, with both imports and exports being relatively large when
compared to GDP. The EU is Malta’s main trading partner, accounting for around 60 per cent
and 34 per cent of imports and exports, respectively, during 2000.
Malta has traditionally suffered a negative balance of trade. However, around 83 per cent of the
total turnover in the local manufacturing industry is directed for export, although a number of
sectors continue to rely extensively on the domestic market for their sales. The tourism industry
is an important contributor to foreign exchange earnings, with earnings from tourism
representing about 17 per cent of total exports of goods and services.




DRAFT                                                                                         14
      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
                                                                                    August 2001Final Draft




2.1   Structural Reforms
      Restoring Public Finances
      The budget deficit registered significant increases in the past years. This has resulted not only in
      a level of deficit that is not sustainable but also in a rapid expansion in the level of public debt.
      Notable developments were recorded in the public finance situation during 1999 and during the
      course of 2000. The structural deficit (i.e. when extraordinary receipts such as foreign grants and
      receipts from net asset sales are excluded from the calculation of the deficit) improved, from 8.5
      per cent of GDP in 1999, to an estimated 6.1 per cent during 2000. Nevertheless, there is a need
      to reduce further the fiscal deficit.
      To this effect, the main objective in the Government’s economic policy agenda is to restore
      stability in public finances. The Budget Speech for 1999 outlined a strategy which aims for fiscal
      consolidation within a six-year period, with the structural deficit being brought down to 3 - 4 per
      cent of GDP by 2004. This is to be achieved partly through tax reform and growth in the tax base
      as well as by means of efficiency gains in revenue collection. At the same time more effective
      controls over expenditure will be implemented, whilst efforts to improve efficiency and
      productivity levels in a number of public enterprises are also being stepped up. Furthermore,
      Government is also seeking the best way in which to address the problem of the widening
      welfare gap. The social partners are increasingly aware of the need for timely action so as to
      ensure a sustainable welfare system in the long run.
      The Budget Speech for the year 2000 presented various measures aimed to ensure that the
      restoration of stability in public finances would continue on track. These measures included the
      revision of income tax bands, adjustments in indirect taxation including Value Added Tax and
      measures to improve efficiency gains in revenue collection. The Budget Speech for 2001 also
      announced measures to continue to address the fiscal deficit. The main measures include the
      enforcement of the fringe benefits provision in tax legislation, intensification of efforts to curb
      tax evasion, adjustments in excise and import duties and the VAT tax regime, the introduction of
      benchmarking for the purpose of tax for self-employed persons and initiatives to ensure an
      efficient public service. As a result, it is expected that the structural deficit for 2001 will
      decrease to 5.0 per cent of GDP while the share of the financial deficit is expected to be of 2.5
      per cent. The Government will continue with its strategy of fiscal consolidation in the coming
      years. During 2001, Malta participated in the pre-accession fiscal surveillance procedure
      launched by the European Commission. This aims to bring the reporting, monitoring and control
      of public finances, specifically fiscal positions, in line with EU procedures.

      Privatisation
      A privatisation programme has been in place since 1988. This has significantly reduced the role
      of the Government in the economy. Today, practically all public sector direct investments
      (except for the shipyards) in the productive sectors have been privatised. Privatisation has also
      been undertaken in the banking sector, with the last of the four local credit institutions under
      state control being sold during 1999. Furthermore, in June 1998, the Government initiated the
      privatisation of the fixed-line telecommunications sector by selling 40 per cent of its equity




      DRAFT                                                                                            15
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




holding in Maltacom p.l.c. In addition, Government is also divesting its non-core operations by
outsourcing functions previously carried out by Government bodies. Public-private partnerships
are also being promoted in a number of capital projects.
This privatisation programme will continue to be unfolded in the coming years. In November
1999, a White Paper entitled “Privatisation - A strategy for the future” was published. This
document outlines the Government’s plans regarding privatisation in the coming years. An
important aim of this programme is the modernisation and increased efficiency of Government
enterprises, through the wider adoption of modern technologies, the formation of strategic
partnerships with international operators, and stronger management structures and practices, in
preparation for operation in competitive markets.
During 2000, a Privatisation Unit was set up within the Ministry of Finance with the task of
managing the privatisation process. Work, including the initiation of feasibility studies, is being
undertaken with respect to the privatisation of a number of entities in various sectors. In this
respect, the preparations for the privatisation of the Freeport have reached an advanced stage.
Other entities that are expected to be privatised include Malta International Airport plc, the
public lotto and Malta Oil Bunkering Company Ltd.

Reform of the Public Sector
Throughout the 1990s, the Government’s economic policy has emphasised the objective of
reducing the size of the public sector, whilst providing a more direct role in the Maltese economy
for private sector initiatives. Government’s policy of reducing the fiscal deficit as well as the
privatisation programme that is being implemented also contributed towards this goal.
Various measures are being undertaken to contain the number of public sector employees,
including significant control over enrolment of new staff. Meanwhile, steps to increase its
efficiency and productivity in the public sector, by emphasising the need for value for money,
are being intensified. The aim is also to provide a better service to the public. Moreover, the
reform of the public sector also encompasses the restructuring of public enterprises. Measures to
improve the efficiency in the various public entities will be stepped up. In addition, it is
Government’s intention to restructure public enterprises, with particular focus on the loss-
making entities, and to ensure that they face market discipline over the longer term. In order to
move towards a more market-oriented mechanism, the Budget Speech announced that as from 1
January 2002, a new system would be introduced for prices on oil products to be linked to
international prices.

Taxation
Various reforms were undertaken in the taxation field during recent years. In general, these
reforms were directed towards streamlining and simplifying the systems in place. Furthermore,
there has been a shift in the tax regime to an increased reliance on consumption taxes for revenue
generation.
A Value Added Tax (VAT) system was re-introduced in 1 January 1999. The Value Added Tax
Act (Cap. 406) is based on the main principles of the Sixth Directive. Further alignment with the
Acquis will be put in force by 2002.




DRAFT                                                                                           16
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




The income tax regime was reformed during the 1990s. On 1 January 1994, a final withholding
tax of 15 per cent on interest was introduced. As from 1996, all rebates, concessions and
deductions were eliminated, whilst income tax rates were sharply reduced. Moreover, the option
for a 15 per cent final withholding tax on part-time work was introduced. The income tax reform
continued to unfold in 1997 and 1998 with the full implementation of the Final Settlement
System (FSS), which replaced the Pay As You Earn system (PAYE). Apart from being more
streamlined, the FSS also has a positive impact on Government’s cash flow since the tax due is
settled on a month by month basis. The Budget Speech for 2000 announced a review of certain
income bands and other minor adjustments to the tax regime whilst as from 2001 the taxation of
fringe benefits started to be enforced. The Maltese legislation concerning the taxation of incomes
will be brought in line with the Acquis prior to accession. The duty on documents and transfers
was brought fully in line with the Acquis as from 2000.
Although the Excise Duty Act (Cap. 382) is broadly based on EU legislation, there are certain
areas where some degree of harmonisation is required. The Budget Speech for 2000 announced
that the exemption on excise duty on alcoholic beverages that are processed locally would be
revoked with immediate effect. Furthermore, as announced in the Budget Speech for 2001, the
method of computing excise on alcoholic beverages, beer and machine-made tobacco applied
within the EU started to be implemented.
A key priority in Government’s taxation policy is improving tax enforcement and bringing
previously unrecorded economic activity within the tax net. A tax enforcement programme is
being unfolded in line with long-term policies on taxation. The ongoing restructuring of the
process of collecting taxes due to Government is focusing on the introduction of stricter
discipline on the taxpayers to pay their dues. This includes the imposition of interest on
outstanding payments, which was reflected in positive results in income tax revenue during
1999. The Budget Speech for 2001 announced the introduction of benchmarks with respect to
taxation on the self-employed related to total sales and to profits. Furthermore, the Tax
Compliance Unit is expected to contribute significantly to improvements in tax enforcement and
to reduce tax evasion. The Unit will be provided with the necessary human resources and the
information technology infrastructure and will become fully operational in 2001.

Exchange Control Liberalisation
The Maltese Government is proceeding with a gradual and prudent liberalisation of foreign
currency transactions. Over the past few years, various liberalisation measures for foreign
currency transactions came into force. An important development was the notification by the
Government in November 1994 to the International Monetary Fund that Malta had accepted the
obligations of Article VIII of the Fund’s Articles of Agreement. This strengthened the credibility
of the Maltese economy in the international markets.
Furthermore, in the Budget Speech for 2000, Government outlined its three-year programme for
the liberalisation of capital movements. All remaining exchange controls are expected to be
removed by the end of the year 2002, save mainly restrictions on land ownership by non-
residents. In implementing this programme, due account will be taken of the effect on the
economy and the financial system. Liberalisation measures will be announced in advance and




DRAFT                                                                                          17
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




will be effective at the beginning of the following year. The first batch of measures entered into
force in the beginning of 2000.
In the Budget Speech for 2001, additional measures were introduced with the intention of further
liberalising the exchange control regime. These included an increase in the limit allowed for
travel purposes, for overseas investments in real estate and portfolios as well as the funds which
residents may hold in a foreign currency current (demand) account held with local credit
institutions.

Exchange Rate Strategy
The external value of the Maltese lira is determined on the basis of a basket of currencies,
comprising the Euro, Pound Sterling and US dollar, with the respective weights being around 56
per cent, 22 per cent and 22 per cent. This fixed exchange arrangement has been in force for a
long period of time. This approach facilitates the implementation of Malta’s future exchange rate
strategy. Malta will continue to pursue a fixed exchange rate policy.

Monetary Policy
During the 1990s, various reform measures were implemented in the area of monetary policy. As
from November 1995, interest rates on bank lending were practically liberalised. Due to legal
requirements, this was effected by the widening of the margin on the Central Bank discount rate.
In addition, the responsibility for the direct implementation of monetary policy and the authority
and responsibility to determine the level of lending interest rates were transferred to the Central
Bank of Malta (CBM). The range of monetary policy tools available to the Central Bank was
also widened. During 2001, the Central Bank removed the provisions dealing with the maximum
rate of interest charged on loans and advances for the purchase of a residential unit utilised for
the purchaser’s own use. The last remaining controls on interest rates were thus removed. The
legislative amendments that were introduced have given new autonomy to the Central Bank, and
enabled it to conduct a pro-active monetary policy via open market transactions and interest
rates, rather than through the use of direct controls.
In the coming years, further measures will be implemented in line with Government’s
commitment to strengthen the role of the Central Bank in the conduct of monetary policy, as well
as to achieve compliance with the Acquis. In particular, the independence of the Central Bank
will be strengthened and price stability will be established as the main objective of monetary
policy. The Central Bank will continue to use the exchange rate as the nominal anchor (its
intermediate target) for monetary policy. The Central Bank will continue to align its monetary
policy with that of the Eurosystem.

Financial Sector
A primary goal of the Maltese Government has been to develop Malta as an international
financial services centre. In addition, various steps were taken to liberalise the financial sector.
The role of the state in the banking sector has been significantly reduced. At present, none of the
credit institutions in Malta is under state control. Furthermore, the presence in Malta of a leading




DRAFT                                                                                            18
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




global bank should will contribute to the development of new financial instruments and to boost
efficiency in the banking sector, for the general benefit of the Maltese economy.
The Budget Speech for 1995 announced a comprehensive and integrated set of laws for the
financial sector which was implemented in the following months. The Malta Financial Services
Centre (MFSC) was established, whilst modern regulatory concepts and supervisory practices
based on the relevant EU directives were introduced. Moreover, EU standards were adopted in
the prevention of money laundering and insider dealing. The legal distinction between offshore
and onshore status for companies registered in Malta which are engaged in international business
operations was eliminated. No new offshore companies can be registered in Malta and the
number of existing companies is being phased out. Furthermore, during 1998, legislation was
implemented to create a sound regulatory environment in the insurance sector. The Government
is committed to promote further development in the financial sector in the coming years. The
MFSC is reviewing the current legislative framework in view of the continuous changes that are
being experienced internationally, whilst ensuring conformity with the EU Acquis. The
promotion of electronic commerce will be intensified and the legislative and regulatory
infrastructure for this sector will be introduced.
In the early nineties, a capital market was set up whilst a fully functioning money market was
established in 1995. Domestic financial markets are expected to continue to develop in the
coming years, in line with the liberalisation of capital markets and with the implementation of
the government’s privatisation policy. The new regulations providing for the listing of alternative
companies should also help to speed up the momentum of financial activity.
Furthermore, the financial supervisory system will continue to be strengthened, particularly in
view of the liberalisation of the capital account regime. The remaining EU directives on banking
and supervisory practices that are not yet in force in Malta will be brought into effect by
December 2002. A deposit insurance scheme in line with EU requirements will also be
introduced.




DRAFT                                                                                           19
      MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
      MALTA                                                                        Adoption of the Acquis
                                                                                   August 2001Final Draft




2.2   Sectoral Reforms
      Manufacturing
      Government’s strategic overview of future industrial development in Malta and the principal
      issues that are implied have been put forward in a White Paper “Prosperity in Change:
      Challenges and Opportunities for Industry” which was published in December 1999. Following
      due consultation with the social partners on this White Paper, an industrial policy document will
      be defined during 2001.
      In manufacturing industry, promoting competitiveness is a key principle of the Government’s
      industrial policy. All levies on imported industrial products will be removed by 1 January 2003,
      except those on agricultural and some agro-industry products, the removal of which has to form
      an integral part of the accession negotiations in view of the inclusion of the Maltese agricultural
      sector in the Common Agricultural Policy (CAP). Levies on a number of products were removed
      on 1 October 1999 and 1 January 2000. Furthermore, on 1 January 2001, the levy on a range of
      imported products was reduced by 20 per cent.
      Action is being taken to promote the restructuring of local industry to enhance its
      competitiveness. The Institute for the Promotion of Small Enterprise (IPSE) launched its basic
      Programmes of Assistance during July 1999 and it has also introduced a new programme which
      provides additional enhanced assistance to eligible companies wishing to embark on
      restructuring, with a view to alleviating the impact of the immediate removal of levies.
      Programmes aimed to promote networking, subcontracting and strategic business alliances were
      also launched. Other programmes will be launched during the coming years. IPSE is also
      commissioning sector reports so as to help establish the impact of both the removal of levies and
      the adoption of the Acquis on the operations of local manufacturing enterprises. Furthermore, in
      the coming years, various measures will also be taken to improve the conditions for enterprise
      creation and development, with particular focus on small and medium sized enterprises.
      In order to improve the attractiveness of the Maltese Islands to foreign investors, and to be more
      in line with EU principles, the package of incentives which was launched in 1988 under the
      Industrial Development Act (IDA) (Cap. 325) has been reviewed and renamed as the Business
      Promotion Act (BPA). The incentives included previously under the IDA, and which enforced a
      distinction between export-oriented companies and those primarily geared towards servicing the
      domestic market, are being gradually phased out and new ones introduced which benefit target
      sectors and target companies. These incentives are primarily earmarked to promote sector with
      comparatively high value-added. This package of incentives also promotes small and medium-
      sized enterprises and employment.

      Shipbuilding and Shiprepair
      The current strategy for the Malta Drydocks Corporation and the Malta Shipbuilding Co. Ltd. is
      to attain long-term commercial viability on the strength of their comparative advantages,
      particularly their highly skilled labour force. Schemes and operational practices designed to
      improve productivity are being unfolded. Nevertheless, it is expected that the process leading to




      DRAFT                                                                                           20
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




the alignment to the Acquis as regards state aid to the shipyards will require a transition period
beyond accession.

Tourism
Tourism constitutes a pillar of the domestic economy and will continue to be developed in the
coming years within the parameters of environmental, social and economic sustainability. During
1999, in an endeavour towards a comprehensive and integrated approach in the industry, the
Malta Tourism Authority (MTA) was established by the Malta Travel and Tourism Services Act
(Cap. 409). Provision was made for greater and more direct participation by the private sector in
national planning and development of the industry. The Authority’s role includes the planning
and regulation of the tourism industry, together with the promotion of the Maltese Islands as
tourist destinations. Within this context, the Malta Tourism Authority is focussing more strongly
on the implementation of its wider remitmarketing and advertising tools presently employed will
be reviewed.
Tourist arrivals during 2000 exceeded the 1.2 million mark and this is expected to be achieved
also during 2001. Important goals in the tourism strategy are the diversification of markets and
the achievement of a wide spread in arrivals throughout the year. Efforts will be concentrated to
ensure that the number of arrivals will also be reflected in improvements in the number of days
stayed and in foreign earnings per capita, in order to maximise the contribution of the industry to
the Maltese economy. Furthermore, development in the tourism industry in the coming years will
be centred on cultural and incentivethematic, niche and conference tourism, whilst the positive
performance of the cruise liner industry in recent years will be consolidated and improved.

Freeport Activities
Significant investment has been undertaken to develop the Freeport facilities, to create a
transhipment hub in Malta and thus exploit the strategic position in the Mediterranean. Positive
developments have been registered in this area and the second terminal is now fully operational.
Efforts in this sector over the coming years will focus on sustaining this export service and in
particular to ensuring that the systems operated at the Freeport can compete with the efficiency
and productivity levels which are found in other neighbouring ports. Preparations for the
privatisation of the Freeport have reached an advanced stage.




DRAFT                                                                                           21
      MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
      MALTA                                                                       Adoption of the Acquis
                                                                                  August 2001Final Draft




2.3   The Copenhagen Criteria
      Existence of a Functioning Market Economy
      Malta has a functioning market economy and it has taken various steps in order to prepare its
      economy for accession to the EU. Various liberalisation measures have been undertaken over the
      past years and this thrust will be maintained in the coming years, in particular with the
      dismantling of the import levy regime and with the liberalisation of the capital account.
      In line with these efforts, the administrative, legislative and regulatory framework in which
      economic actors operate is being strengthened. Malta has an enforceable legal system and
      property rights are well established. Furthermore, the legislation on competitive trade and
      consumer protection, which is broadly based on the relevant EU policies, has been in force since
      January 1996. Steps are being taken to strengthen the competition and consumer protection
      legislation, in light of the experience gained in the past years and also to achieve further
      alignment with the Acquis. In fact, various amendments to the Competition Act (Cap. 379) have
      passed through Parliament in November 2000.
      Malta also has a developed financial sector and at present none of the commercial banking
      institutions in Malta is are under state control. The banking regulations are modelled on the
      relevant EU directives, whilst legislation on bankruptcy and on money laundering is in place.
      Malta has a tradition of prudential banking supervision carried out by the Central Bank, and
      accountancy legislation obliges corporations in Malta to prepare their financial statements on the
      basis of international accounting principles. Further steps will be taken in the coming years to
      strengthen and consolidate the existing regime in this area.
      During 2000, there were positive economic indicators. The unemployment rate and the inflation
      rate are relatively low. On the other hand, although the structural budget deficit has declined
      during 2000, it remains at a relatively high level. The measures that are being taken to restore
      fiscal sustainability should ensure that the targets for reducing the deficit, as set out in
      Government’s six-year programme, are achieved. There is consensus among the social partners
      for the need to reduce the budget deficit and this should facilitate the restoration of
      macroeconomic stability over the medium term.

      Capacity to Cope with Competitive Pressure and Market Forces
      The existence of a functioning market economy and the achievement of macroeconomic stability
      over the coming years are important basis for Malta’s fulfilment of this criterion. However, the
      restructuring of the manufacturing industry is the key determinant in the capacity of the Maltese
      economy to cope with competitive pressure and market forces within the Union. There is
      agreement among all the social partners in Malta for the need for restructuring in order to
      compete in a more liberalised trade environment. The establishment of a number of programmes
      of assistance will enable the manufacturing industry to restructure effectively. Furthermore,
      efforts are being taken in order to improve the attractiveness of Malta as a location for foreign
      direct investment and a new package of incentives has been designed. Thus, the domestic
      manufacturing base will be strengthened and industry will be able to face the challenges inherent
      in a competitive global environment.




      DRAFT                                                                                          22
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




Increasing the competitiveness of the domestic economy also entails the privatisation and
restructuring of state enterprises. The privatisation programme will continue to be unfolded over
the coming years. Efforts to improve efficiency and productivity of public companies will be
stepped up, in the light of the ultimate objective of subjecting them to market discipline.
With these measures and in particular by continued industrial restructuring, Malta should be able
to cope with the competitive pressures and market forces within the Union.




DRAFT                                                                                         23
        MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
        MALTA                                                                       Adoption of the Acquis
                                                                                    August 2001Final Draft




3       Assuming the Obligations of Membership

3.1     Internal Market
3.1.1   Free Movement of Goods

        I. GENERAL PROVISIONS
        This section deals with horizontal issues in the context of free movement of goods and centres
        around the removal of quantitative restrictions and measures having equivalent effect, price
        control and other related aspects such as return of cultural objects and arms control, as well as
        notification of national measures derogating from the principle of free movement of goods
        (Decision 3052/95).

        A. Current Status

        Import and Export Control
        Current import/export legislation does not fully comply with the Acquis due to the presence of
        licensing procedures on various commodities including import/export bans on a few
        commodities. Import licensing will be retained for implementing any Community quantitative
        restrictions and/or surveillance measures that may be in force on the date of Malta’s accession to
        the EU.
        Current export restrictions include those on weapons, firearms and ammunition, antiquities,
        cultural objects and Maltese stone. Controls on weapons, firearms and ammunition as well as
        antiquities and cultural objects fall under the existing Acquis.
        For environmental reasons it is envisaged that import restrictions be maintained on detergents
        containing perborates in line with Article 30 of the Treaty. The current import restrictions on
        beverages in containers and the current export restrictions on Maltese stone are discussed under
        Section 3.6.1 (Environment).

        Price Control
        A The system of price control on the sale of commodities includes the setting of maximum
        margins of profit as well as the regulation of prices through price orders on certain essential
        commodities. Amendments to the Competition Act (Cap. 379) were adopted by Parliament in
        November 2000. These amendments provide for the application of interim measures with regard
        to fixing maximum prices on essential goods and services. New legislation to replace the
        Supplies and Services Act (Cap. 117) and the Sale of Commodities (Control) Regulations 1972
        (LN 21/72) is being drafted. The main scope of this legislation is to adjust the present price
        control system to become more in line with Community practices in this area, as well as to
        transpose Directive 70/50/EEC.




        DRAFT                                                                                          24
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




Removal of Levies
The Malta Government by Legal Notice (LN123/99) issued in terms of the Local Manufactures
(Promotion) Act (Cap. 336) set a timetable for the removal of levies on imported manufactured
products. This timetable envisages that all levies will be removed by 1 January 2003, except
those on agricultural and some agro-industry products, the removal of which has to form an
integral part of the accession negotiations in view of the inclusion of the Maltese agricultural
sector in the CAP.
Levies on the first and second lists of products were removed in October 1999 and January 2000
respectively. Furthermore, as regards the third list of products, the existing levies have been
reduced by 20 per cent on 1 January 2001.

B. Short Term Priorities (2001)

Removal of Levies

a) Implement the removal of levies on the third list of products, as set out in the Legal
   Notice (LN123/99).

Import and Export Control
a) An Arms Act to replace the Arms Ordinance (Cap. 66) will be adopted by Parliament by
   the fourth quarter of 2001. This Act will transpose Directive 91/477/EEC (control on the
   acquisition and possession of weapons).

b) A Heritage Act to replace the Antiquities (Protection) Act (Cap. 54) will be adopted by
   Parliament by the first quarter of 2001. This Act will transpose Directive 93/7/EEC
   (regulation of trade in national cultural treasures).



C. Medium Term Priorities (2002)

Import Control
a)   Retain import licensing control and/or introduce import authorisations as permissible by the
     Acquis, mainly in relation to:
        Species of wild fauna and flora (CITES Convention Regulation 338/97);
        Whales or other cetacean products for commercial purposes (Regulation 348/81);
        Leghold traps, pelts and related goods (Regulation 3254/91);
        Skins of certain seal pups and derivatives (Directive 83/129/EEC);
        Certain dangerous chemicals (Regulation 2455/92);
        Shipment of Waste (Regulation 259/93);
        Batteries (Directive 91/157);
        Packaging (Directive 94/62);
        Nuclear and other sensitive products not subject to free movement of goods within the
         Community (Art 30 and Regulation 3381/94);




DRAFT                                                                                         25
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




      Substances that deplete the ozone layer (Regulation 3093/94);
      Drugs precursors (Regulation 3677/90 and 3769/92 and Directive 109/92);
      Weapons, firearms, ammunition (Directive 91/477/EEC) and explosives (Directive
       93/15/EEC);
      Products affected by UN Security Council or Community sanctions;
      Certain textile/clothing and steel products from specified third countries subject to EC
       quotas.
b)   The new Arms Act will enter into force by the fourth quarter of 2002.
Export Control
a)   Retain export licensing control in line with EC binding acts, mainly in relation to:
       Species of wild fauna and flora (CITES Convention Regulation 338/97);
       Certain dangerous chemicals (Regulation 2455/92);
       Substances that deplete the ozone layer (Regulation 3093/94);
       Drugs precursors (Regulation 3677/90 and 3769/92 and Directive 109/92);
       Weapons, firearms, ammunitions (Directive 91/477/EEC) and explosives (Directive
        93/15/EEC);
      Products affected by UN Security Council or Community sanctions;
      Dual-use goods (Regulation 1334/2000) The issue concerning dual-use goods is also
        discussed in Section 3.8.1 (Trade and International Economic Relations) and Section
        3.8.2 (Common Foreign and Security Policy);
      Shipment of Waste (Regulation 259/93);
      National treasures of artistic historical or archaeological value;
      Cultural goods (Regulations 391/92 and 752/93).
b)   The new Heritage Act will enter into force on accession. The Act provides for the setting up
     of a Superintendent Directorate, an Operating Agency, a Committee of Guarantee and the
     National Heritage Database. AThe National Heritage Database will be set up by the
     Museums Department to allow for the management and regulation of the movement of
     national cultural treasures.
Price Control
a)   The Supplies and Services Act (Cap. 117) and the Sale of Commodities (Control)
     Regulations (LN21/72) will be amended by the third quarter of 2002 to transpose Directive
     70/50/EEC (abolition of measures that have an effect equivalent to quantitative restrictions
     on imports). Existing price controls will be adjusted in line with Directive 70/50/EEC on
     accession.
Removal of Levies
a)   The removal of levies will continue in line with Legal Notice (LN123/99).

D. Institution Building Needs
Laws, regulations and administrative measures affecting free movement of goods primarily fall
under the administrative competence of the Ministry for Economic Services. No additional staff
would be required to implement the Acquis in this area, although appropriate training is
envisaged.




DRAFT                                                                                            26
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




E. Financial Requirements

                                                                                             Lm000
Area of Activity                                                    2001        2002         Total

Ministry for Economic Services
Commerce Division                    Recurrent                         -            -            -
                                     Capital                           -            -            -
                                     Training                         40           30           70
                                     Total                            40           30           70


II. PUBLIC PROCUREMENT

A. Current Status
The Department of Contracts is responsible for the co-ordination of the procurement procedures
to be followed by Government Departments and corporations. Since 1966 Malta has had a
Contracts Committee (now known as the General Contracts Committee), which examines and
makes recommendations on all proposed awards of contracts and assists the Director of
Contracts in the execution of his duties. The Public Service (Procurement) Regulations (LN
70/96), which were issued in August 1996, consolidated the various directives regarding public
procurement that had been issued over the years.
Malta is already well in line with the essential requirements of the Acquis with regard to the
basic adjudication criteria given that the tendering system is open and non-discriminatory. In
practice, a number of the required principles are already applied by virtue of guidelines or other
notices issued from time to time by the Department of Contracts. Furthermore, services fall
within the scope of these Regulations. There is a fair playing field in tendering for both local and
foreign bidders. However, refinements to the legislation would eventually be required, for
instance as regards tendering periods, publication in the Official Journal of the European
Communities, conformity of the information to be contained in the tender documents to the
prescribed model format and reference to European standards for a tender’s technical
specifications. The introduction of an effective reporting system to facilitate the collection of
data and the transmission of information eventually required for publication in the Official
Journal and for perusal by the Commission services is being studied. The preparation and the
issue of information regarding proposed administrative instructions to Government Departments,
public authorities and Local Councils to ensure that the eventual alignment of their procurement
procedures with the Acquis will be carried out smoothly is also being examined.
Insofar as the position of bodies governed by public law is concerned, the Public Service
(Procurement) Regulations 1996 enable the Minister of Finance to direct that certain bodies
governed by public law follow these Regulations. In fact, a number of corporations or authorities
which have been set up by Act of Parliament have already been directed to process tenders
(estimated to be in excess of Lm20,000) through the Department of Contracts and therefore the
provisions of the present Regulations are already being applied in their case. However, the




DRAFT                                                                                            27
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Regulations do not currently apply to other bodies, such as authorities governed by public law,
‘public undertakings’ as defined in the Utilities Directive and Local Councils.
The public authorities and undertakings which are obliged to apply the EU Procurement
Directives and which as yet do not have their procurement regulated by the Public Service
(Procurement) Regulations are being identified.
In the case of entities involved in oil exploration, the only reference to the procurement of
material is found in the Model Production Sharing Contract (1997). Although the Model is not a
legal instrument, it is used as a point of departure in the negotiations of contracts with oil
companies. Training and employment of personnel is governed by the Petroleum (Production)
Act (Cap. 156). In this area, some adjustments are required to ensure full compliance with the
relevant Acquis. This is discussed under Section 3.4 (Energy).
With regard to review procedures, these are regulated by an established Procedure for
Complaints whereby tenderers can contest a recommendation for the award of a contract if they
consider that their interests have been infringed. An aggrieved tenderer can file a notice of
objection at any stage of the adjudication process. The decision of the Director of Contracts after
the public hearing is final and is made public. In his ruling, the Director must give full reasons
and arguments on which his ruling has been based. Any final decision by the Director of
Contracts can be contested in Court by the parties involved. Modifications to this review
procedure are, however, required to bring it in line with the Acquis. The means whereby the
present review system will be enhanced, so as to ensure full conformity with the Acquis when
tenders above the relevant thresholds are involved, have been identified. The intention is to
create an appellate board headed by a legal person who would otherwise qualify for appointment
as a magistrate (having practised the legal profession for a minimum of seven years). Such
appeals will be heard against decisions taken according to the present procedure and which the
aggrieved tenderer opts to contest further.

B. Short Term Priorities (2001)
a)   Revise the Public Service (Procurement) Regulations to incorporate all the elements to
     conform to the Acquis for contracts valued in excess of the thresholds.
c)b) Consolidate the various components of the procedure into one comprehensive document to           Formatted: Bullets and Numbering
     ensure greater visibility and prompt access by prospective tenderers from EU Member
     States.
d)c) Amend the enabling laws and regulations and ensure adherence by all Government
     Departments.
e)d) Align the judicial review procedure to that required by the Acquis through the setting up of
     an independent and autonomous Public Contracts Appeal Board. This new procedure will
     apply to all tenders exceeding Lm20,000 in value.
f)e) Amend the legislation pertaining to the procurement procedures of entities operating in the
     water, energy, transport and telecommunications sectors.




DRAFT                                                                                           28
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




C. Medium Term Priorities (2002)
a) Local councils as well as public authorities undertakings shall become subject to the Public
   Service (Procurement) Regulations on accession.
b) Attain compliance regarding the provisions in the Acquis concerning public service contracts
   and the agreements to which the EU is party, by 1 January 2003.

D. Institution Building Needs
The activities of the Department of Contracts will be extended to cater for the additional
requirements of the EU policy in this area.
Area of Activity                                                  2001       2002         Total

Ministry of Finance
Department of Contracts
                                    Senior                            -          1            1
                                    Middle                            -          3            3
                                    Other                             -          -            -
                                    Total                             -          4            4


E. Financial Requirements
                                                                                          Lm000
Area of Activity                                                  2001       2002         Total

Ministry of Finance
Department of Contracts             Recurrent                         -         25           25
                                    Capital                           -          -            -
                                    Training                          -          5            5
                                    Total                             -         30           30



III. STANDARDS

A. Current Status
The Malta Standards Authority Act (Cap. 419) was re-enactedapproved by Parliament in July
2000, primarily to establish the voluntary nature of a standard as distinguished from a technical
regulation, application of that is mandatory. The principle of a system of functionally
independent Directorates has now been legally established through Cap 419. Co-ordination of
these separate Directorates takes place through the central organisation (Council through CEO).
A Market Surveillance Directorate has been set up within the Economic Policy Division in the
Ministry for Economic Services. The Directorate is to be assisted by a Market Surveillance
Committee appointed by the Prime Minister. All product groups, which are not subject to pre-




DRAFT                                                                                         29
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




market authorisation procedures, will fall within the scope of the market surveillance system.
This includes all products covered by the New Approach as well as Old Approach products such
as foodstuffs and cosmetic products. The new Product Safety Act (Cap. 427) encompasses the
Market Surveillance Directorate and the functions of the Market Surveillance Director as well as
the powers assigned to the Director of Consumer Affairs within the Consumer and Competition
Division. The Product Safety Act empowers the Director of Consumer Affairs to issue public
statements regarding unsafe products, take samples of offending goods, conduct criminal
proceedings, accept written undertakings in lieu of prosecuting and withdraw unsafe products
from the market. The Act also incorporates a number of provisions including the introduction of
an export ban as well as the extension of the general product safety requirements to include
products offered during the course of a service. The Act will also introduce enabling powers for
future ministerial regulation in a number of identified areas.
The MFSA is affiliate member of CEN and CENELEC besides being corresponding member of
ISO and associate member of IEC. Furthermore during 2000, the MSA was accepted as full
member of ETSI.
Drafts for the Metrology Act (which will repeal the Weights and Measures Ordinance Cap. 39)
and the Accreditation Act have been prepared.

Motor Vehicles
No motor vehicle Directives have been transposed so far and there are no equivalent pre-market
measures in Maltese law. Furthermore, Malta is not a signatory of the 1958 UN-ECE
Agreement, which laid down the principle of mutual recognition of approvals granted by
Contracting Parties on the basis of harmonised regulations concerning motor vehicle equipment
and parts.

Foodstuffs
Most of the Directives relating to foodstuffs have already been transposed and a substantial
number have already been implemented as Regulations or Mandatory Orders.
The local equivalent to the Directive on Official Control of Foodstuffs is the Food, Drugs and
Drinking Water Act, 1972 (Cap. 231). However, this Act does not provide for a structured
programme of inspections in respect of food premises. Inspections are being carried out on a
risk assessment basis. Furthermore, there are no provisions on the recognition of testing
laboratories or for adequately trained personnel engaged in food control.
The Labelling and Presentation of Foodstuffs Regulations (LN65/92) provides for the labelling
and presentation of foodstuffs, lot marketing and nutrition labelling. Maltese legislation
regarding colours in foodstuffs, flavourings and extraction solvents (LN89/94, LN256/93) is in
line with the Acquis.
Sweeteners Regulations (LN268/00) under the Food, Drugs and Drinking Water Act was
published in the Government Gazette. LN247/00 (Erucic Acid Regulations) has also been
published.. Work is still going on as regards full compliance with respect to the Infant Formulae
and Follow-On Formulae. The Processed Cereal Based Foods and other foods for Infants and




DRAFT                                                                                         30
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Young Children and Foods for Use in Energy-restricted Diets for Weight Reduction Regulations
transpose the relevant Directives
The Food Hygiene Regulations provide for most of the requirements of EU Directive
93/43/EEC. However, amendments are required in respect of most regulations. The
implementation of HACCP, its auditing and the compilation of voluntary guides are not provided
for by present Maltese legislation. The New Food Safety Act had its first reading in Parliament
during 2000. Subsidiary legislation under this Act will provide for the introduction of HACCP.
The Acquis on foodstuffs (horizontal and vertical measures) will be adopted by accession.
Malta has requestsed to continue to use the term “evaporated milk” to denote unsweetened
condensed milk containing, by weight, at least 9 per cent fat and 31 per cent total milk solids and
certain other terms in respect of certain categories of chocolate products, as permitted by the
relevant Directives for the UK and Ireland.

Chemicals
The provisions of the various Directives on dangerous substances and preparations have not yet
been transposed into Maltese law. Detailed internal regulations control the importation and use
of certain chemical products. The Detergents and Related Products Order (LN240/00)
transposing Directive 73/404/EEC (detergents) was published in 2000 and entered into force on
1 January 2001.

Pharmaceuticals
The current infrastructure, policies and legislative framework regarding medicinal products in
Malta needs significant upgrading to fully comply with the EU Directives and Regulations
governing medicinal products. However, the Health Division through the Government
Pharmaceutical Services (GPS) has already carried out a number of initiatives in this area, which
will be sustained over the next few years in order to implement the necessary changes.
Compliance with the Acquis requires the full registration of all the products on the Maltese
market and that products already granted a provisional marketing authorisation would have to be
reviewed in line with EU registration procedures. Furthermore, full registration necessitates the
prior evaluation of all products. Given the complexity of the task and the large number of
products involved, this will involve a long period of time. Any new medicinal products placed
on the local market after 1 January 2003 will be registered in line with EU requirements.
However, it is envisaged that aA transition period may be requiredhas been requested for the
licensing and implementation of pharmacovigilance of medicinal products for human use since
on accession, the provisionally licensed medicinal products registered prior to 1 January 2003
will have to be reviewed and fully registered according to EU requirements.
Malta is a participant in the WHO Certification Scheme on the Quality of Pharmaceutical
Products Moving in International Commerce. Imported drugs must be covered by a Certificate of
Pharmaceutical Product (CPP) issued by the competent Health Authority of the country licensing
the products. In the case of locally manufactured products there is no system to control the
marketing of such products and no marketing authorisations are required for the placing of these
medicinal products on the market in Malta.




DRAFT                                                                                           31
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Administrative measures have been taken to start compiling a list of products marketed in Malta.
The validity of the Certificate of a Pharmaceutical Product (CPP) has been extended to 1 January
2003, for all imported products marketed by currently licensed wholesale dealers. Local
manufacturers will be required to provide more detailed information about their products. This
initiative forms the basis of the provisional registration scheme to be initiated by the Health
Division. This system is earmarked as a temporary measure until evaluation of all products can
be completed.
Persons and/or companies involved in wholesale dealing of medicinal products require a license
issued by the Department of Public Health. All wholesale dealers are required to nominate a
qualified person (pharmacist).
Manufacturing of medicinal products requires a separate license issued by the Department of
Public Health. Regular inspections are carried out to ensure Good Manufacturing Practice.
Current legislation requires that a managing apothecary is responsible for such an activity.
However, standards for Good Marketing Practice are not stipulated in Maltese law.
The Department of Veterinary Services has established the procedure of authorising veterinary
medicinals on the consideration of a summary dossier and assessment report of an EU Member
State. No authorisation is being given to veterinary medicinals that are not already authorised by
an EU Member State. Regulation (EC) 2377/90 (maximum residue limits of veterinary
medicinal products in foodstuffs of animal origin) is already in effect (LN162/98).

Cosmetics
Existing Maltese legislation in this area (dating back to 1983) contains most of the provisions of
the relevant Directive but needs to be updated to reflect amendments made since that date. A
Legal Notice (LN204/00) concerning Cosmetic Products has been published. This transposes
Directives 76/768/EEC, 95/17/EC, 96/335/EC, 80/90/EEC, 82/434/EEC, 83/514/EEC,
85/490/EEC, 93/73/EEC, 95/32/EC and 96/45/EC.

Legal Metrology and Pre-Packaging
No Directives have been transposed so far. The Metrology Act, which will replace the Weights
and Measures Ordinance, has been drafted.

Electrical Risk and Electrical Equipment
In Malta, this field is regulated by the following secondary legislation issued by virtue of the
Quality Control (Export, Imports and Local Goods) Act (Cap. 225) - the Low Voltage Electrical
Equipment Order (LN23/99), the Electromagnetic Compatibility Order (LN24/99) and the
Equipment and Protective Systems for use in potentially Explosive Atmospheres Order
(LN107/99). These Legal Notices transpose completely the corresponding EU Directives, i.e.
73/23/EEC, 89/336/EEC (both as amended) and 94/9/EEC respectively. Furthermore, the
Electrical Accessories Order (LN14/91) is kept in force due to the fact that specific safety
requirements on plugs, sockets and related accessories are as yet not harmonised throughout the
EU. The principle of the New Approach Directives – self-certification or type-approval and the
issue of certificate by Notified/Competent Bodies (those listed in the Official Journal) is




DRAFT                                                                                          32
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




reflected in the above mentioned local legislation. The competent body is the Ministry for
Economic Services.

Consumers (Toys)
Maltese legislation in the field of Toys consists of the Safety of Toys Order (LN16/96), which is
a direct transposition of Directive 88/378/EEC as amended. Again, the principle of the New
Approach Directives and the issue of certificate by a Notified Body are reflected in the existing
legislation. The competent body is the Ministry for Economic Services.

Other Product Groups
Maltese legislation covering Appliances Burning Gaseous Fuels, Personal Protective Equipment
and Simple Pressure Vessels is in line with the Acquis. In fact, LN52/96, LN122/98 and
LN229/98 are direct transpositions of Directives 90/396/EEC, 89/686/EEC and 87/404/EEC,
respectively. Furthermore, the following Legal Notices were published during 2000 and entered
into force on 1 January 2001: LN183/00 (Wood in the Rough Order), LN184/00 (Crystal Glass
Order), LN/182/00 (Footwear Order) and LN185/00 (Textile Names Order. LnN185/00 also
transposes Directive 96/73/EEC (Quantitative Analysis of binary textile fibre mixtures) and
Directive 73/44/EEC (Directive analysis of ternary fibre mixtures). Furthermore, LN122/98
transposes Directive 89/686/EEC (personal protective equipment).
Again, the principle of the New Approach Directives and the issue of certificates by a Notified
Body are reflected in the existing legislation. The competent body is the Ministry for Economic
Services.

Horizontal and Procedural Measures
Currently, Maltese legislation in the field of the General Principles of the New and Global
Approach does not reflect all the elements required in these principles. With the amendments to
the Malta Standards Authority Act, (Cap. 187), the process of adoption of voluntary standards
will be completely in line with the Acquis. Furthermore, a draft regulation (secondary
legislation) establishing the notification procedure contained in Directive 98/34/EC, to be issued
by virtue of the amended Malta Standards Authority Act (Cap. 187), is already being discussed.
The Malta Standards Authority will act as the EU Notification Point in this regard. The
competent body is also the Malta Standards Authority. A network system to co-ordinate and
facilitate exchange of information is currently being developed. This network will establish a
sound system of notification to the Commission and member states on all draft standards and
technical regulations and to pass on all notifications emanating from other member states to the
pertinent local authorities for their comments.
Consumer involvement in standardisation, as required by Council Resolution of 4 November
1988, is assured by the appointment of the Director of Consumer Affairs as an ex officio member
of the MSA Council. Furthermore, all draft standards and technical regulations are routinely
circulated to all interested parties, including consumer organisations. The MSA also attaches
importance to its participation in information programmes targeted at the consumer.




DRAFT                                                                                          33
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




The Authority published its first official catalogue, comprising over five thousand CEN
standards in October 2000. CENELEC membership is subject to the IEC membership, the latter
having been accepted on 15 March 2000.
During 2000, a series of consultation meetings were organised with the business sector regarding
the new legislation being enacted in the area of standards. Other information measures concerned
the impact on the construction industry, awareness on product safety, CE marking and quality
systems in general, metrology and accreditation.
In the field of data interchange between administrations, the Electronic Mail for the Government
of Malta (EGM) project was initiated in March 1995 and now supports more than 3000 users
located within Ministries, Departments, schools, hospitals, clinics and police stations. Local
Councils will be on-line in the near future. The competent body is the Central Information
Management Unit (CIMU) within the Office of the Prime Minister.

B. Short Term Priorities (2001)
a) MSA to become a full member of CEN and CENELEC.
b)    A second version of the catalogue comprising approximately 3,000 CENELEC standards is
     to be published in 2001.
c) Establish the MSA as the EU Notification Point.
d) Enact a Medicines Act during 2001. This Act will transpose Directive 65/65/EEC
   (priorietary medicinal products) as well as its amendments, except for those provisions on
   licensing and implementation of pharmacovigilance of medical products for human use for
   which a transitional period is being requested. It will also transpose Directive 91/356/EEC
   (good manufacturing practice) and Directive 92/25/EEC (wholesale distribution). A number
   of requirements under the latter are already being observed.
e) The Veterinary Services Act and the Animal Welfare Act will be adopted by Parliament
   during 2001.
f) The following subsidiary legislation will be adopted during 2001:
      Notification Procedures as amended;
      Medical Devices (93/42/EEC);
      Active Implantable Medical Devices (90/385/EEC);
      In-vitro Diagnostic medical devices (98/79/EC);
g)   Adopt the Accreditation Act and the Food Safety Act during 2001. The new Accreditation
     Act will regulate the accreditation of testing, monitoring and certifying bodies in Malta,
     defining the necessary specific rules of procedure to guarantee mutual recognition of
     Maltese and foreign testing and monitoring reports as well as certifying bodies. The role of
     accreditation in Malta will be to act as the last level of control of the competence of
     accredited conformity assessment bodies.




DRAFT                                                                                          34
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




h) Provision of information in the field of technical standards and regulations (Directive
   98/34/EC).
i)   Adopt the following subsidiary legislation:
      Machinery (98/37/EC);
      New hot-water boilers fired with liquid or gaseous fluids (efficiency requirements)
       (92/42/EEC);
      Explosives for civil uses (93/15/EEC);
      Energy efficiency requirements for household electric refrigerators, freezers and
       combinations thereof (96/57/EC);
      Construction Products (89/106/EEC);
      Foods and food ingredients treated with ionising radiation (99/2/EEC and 99/3/EEC);
      Recreational craft (94/25/EC);
      Foodstuffs intended for particular nutritional uses (89/398/EEC);
      Transposition of the Acquis on preserved milk, lactoproteins and natural mineral waters
       through the adoption of legislation under the new Products Safety Act;
      Chocolate and Cocoa Products (00/36/EEC). Products conforming to Directive
       73/241/EEC will be permitted until the third quarter of 2003;
      Coffee extracts and chicory extracts (99/4/EEC);
      Initiate the implementation of Cosmetics Products Order (LN204/00);
      Amendments of the Labelling and Presentation of Foodstuffs and Regulations (LN65/92)
       to incorporate those provisions regarding the quantitative declaration of ingredients;
      Amendments to the materials in Contact with Foodstuffs Regulations (LN4/96) to fully
       transpose the Acquis in this area;
      Adopt the Metrology Act (80/181/EEC) (units of measurement).
j)   Establish an independent national accreditation body in line with EN45000, through the Act
     of Parliament, in order to ensure the proper implementation of the Internal Market
     Directives.
k) Set up a system of market surveillance, monitoring and effective enforcement, in order to
   check compliance, as required by the system of conformity assessment procedures
   introduced through the EU Global Approach. Whilst the function of regulation will be the
   responsibility of the Minister concerned, Enforcement will be the function of the relevant
   Departments and Monitoring will be carried out by the pertinent authorities dealing with
   consumer affairs and competition issues. Surveillance will be a function of the Market
   Surveillance Directorate within the Ministry for Economic Services, whilst a Market
   Surveillance Committee will also be established.




DRAFT                                                                                         35
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




l)   Upgrade the National Laboratory so as to ensure that it is capable of carrying out tests to
     assess the conformity of products to national and international standards as required by the
     Acquis, by 1 January 2002. MSA is expected to achieve full membership in CEN and
     CENELEC by the fourth quarter of 2001.
m) Introduce a system of provisional licensing for medicinal products to be place on the local
   market.
n) Separate the regulatory and operational functions of the Government Pharmaceutical
   services. The regulatory and licensing functions will be assigned to the Medicines
   Authority.
o) Strengthen the inspection system based on risk assessment currently used by the Food Safety
   Branch and apply it to all food inspections. The Port Health Services relating to food import
   controls will also be improved.
p) Ensure progress as regards food safety levels in the agricultural, fisheries and veterinary
   sectors and in the level of hygiene achieved in Maltese farms, in parallel with the
   improvement of food safety levels in certain sectors of the food industry

C. Medium Term Priorities (2002)
b)a) Enact Veterinary Pharmaceuticals subsidiary legislation (81/851/EEC, 90/667/EEC,                Formatted: Bullets and Numbering
     92/74/EEC, 81/852/EEC, 91/412/EEC);
c)b) The following subsidiary legislation will be adopted:
      High Speed Rail System (96/48/EC);
      All Motor Vehicles Directives;
      Lifts (95/16/EC);
      Radio Equipment and Telecommunications Terminal Equipment and mutual recognition
       of their conformity (1999/05/EC);
      Chemicals;
      Non Automatic Weighing Instruments (90/384/EEC);
      Other Metrology and Pre-Packaging Directives;
      Food Hygiene Directive (93/43/EEC);
      Pressure Vessels and Pressure Equipment (97/23/EC);
      Subsidiary legislation under the new Product Safety Act will be adopted gradually to
       fully transpose the Acquis on dangerous substances and preparations, limitations,
       fertilisers and explosives.
c) Set up a national metrology service, which will be capable of meeting all the requirements of
   the Directives under the Metrology and Pre-Packaging section of the Acquis as well as
   provide support for all other technical Directives. Seek gradual affiliation/membership in
   International Metrological Organisations such as BIPM and EUROMET.




DRAFT                                                                                          36
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




d) The new infrastructure for market surveillance embracing regulatory, policy, programme,
   standards, accreditation certification, operational and enforcement elements will be in place
   by the fourth quarter of 2002.
e) Set up a national metrology service, which will be capable of meeting all the requirements of
   the Directives under the Metrology and Pre-Packaging section of the Acquis as well as
   provide support for all other technical Directives. Seek gradual affiliation/membership in
   International Metrological Organisations such as BIPM, OIML, IMEKO, WELMEC and
   EUROMET.
f) The facilities of the National Laboratory to be enhanced to allow for improved testing of
   materials in contact with foods, mycotoxins and pesticide residues.
g) License and certify all pharmaceutical manufacturers in order to comply with EU GMP
   standards;
h) The Malta Standards Authority will seek membership to the European Co-operation for
   Accreditation (EA MLA) by 2002;
i)   Continue with and finalise the implementation of Cosmetics Products Order (LN204/00);
j)   Gradually introduce HACCP type systems in the local food industry, starting with those
     posing the highest risk (poultry and meat processors, dairy industry, eggs, etc.).

D. Institution Building Needs
The staff complement of the pertinent Ministries and authorities will be consolidated and
increased in order to permit the said entities to carry out a number of new functions which will
be assigned to them and also to ensure that an effective separation of roles is established.
Training is also envisaged whilst investment in equipment is also required in order to provide
testing data required by the surveillance and enforcement authorities. Technical assistance will
be required, particularly in the areas concerning veterinary services and pharmaceuticals.
The institutional building needs concerning surveillance and consumer related matters are being
included under section 3.6.2 Consumer and Health Protection.

Area of Activity                                                 2001        2002         Total

Ministry for Economic Services
Malta Standards Authority           Senior                           -           -            -
                                    Middle                           3           2            5
                                    Other                            -           -            -
                                    Total                            3           2            5

National Laboratory                 Senior                           -           -            -
                                    Middle                           -           3            3
                                    Other                            -           -            -
                                    Total                            -           3            3




DRAFT                                                                                         37
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




Area of Activity                             2001      2002         Total

Ministry of Agriculture and
Fisheries
Department of Veterinary
Services                         Senior        -            -           -
                                 Middle        3            -           3
                                 Other         -            -           -
                                 Total         3            -           3

Ministry of Health
                                 Senior         2          1            3
                                 Middle         4          5            9
                                 Other          4          2            6
                                 Total         10          8           18




E. Financial Requirements
                                                                    Lm000
Area of Activity                             2001      2002         Total

Ministry for Economic Services
Malta Standards Authority        Recurrent     30         60          90
                                 Capital      200        200         400
                                 Training       -         10          10
                                 Total        230        270         500

National Laboratory              Recurrent      -         15          15
                                 Capital      750        250       1,000
                                 Training       5          5          10
                                 Total        755        270       1,025




Ministry of Agriculture and
Fisheries
Department of Veterinary
Services                         Recurrent     20         20        6040
                                 Capital       25         25        7550




DRAFT                                                                   38
MINISTRY OF FOREIGN AFFAIRS                  National Programme for the
MALTA                                             Adoption of the Acquis
                                                  August 2001Final Draft




                              Training       -          -           -
                              Total         45         45       13590

                                                              Lm000
Area of Activity                          2001      2002        Total

Ministry of Health
                              Recurrent    300        400         700
                              Capital      100          -         100
                              Training      50         50         100
                              Total        450        450       90810




DRAFT                                                                39
        MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
        MALTA                                                                       Adoption of the Acquis
                                                                                    August 2001Final Draft




3.1.2   Free Movement of Persons

        A. Current Status

        Free Movement of Workers
        The Immigration Act (Cap. 217) regulates, amongst other things, matters relating to the issuing
        of employment licences to foreigners. Section 11 of the Act states that no person shall exercise
        any profession or occupation or hold any appointment or be employed by any other person or
        engage in any business in Malta without a licence from the pertinent authority. Foreign nationals
        are as a result allowed to work (and reside together with their dependants) in Malta during the
        term of that work permit. Such permits are issued at the request of the employer who has been
        unsuccessful in his efforts to fill a particular post with a Maltese citizen. If approved, such
        permits are issued for a determined period and for a specific purpose and are usually subject to
        the condition that the expatriate gives intensive training to his Maltese understudy. Work
        permits can be renewed, subject to an application being made by the employer of the foreign
        person justifying the request. Work permits can also be issued to a foreign investor who has set
        up a company in Malta and is involved in the running of his own company, or to a foreign
        investor who has made a substantial investment in a local organisation and wishes to occupy a
        senior position within it.
        The Employment and Training Services Act (Cap. 343) is in line with EU Regulation 1612/68 as
        it does not specifically limit the number of foreigners that employers can take on and it does not
        expressly discriminate against expatriates. The Act, particularly Sections 13 and 15 thereof,
        obliges the Corporation to refer, amongst other things, persons for employment according to
        their registration priority. When it comes to parastatal companies, the said Act requires them to
        refer their vacancies to the Employment and Training Corporation or through a public
        examination duly advertised in the Government Gazette. However, administrative criteria restrict
        foreigners from registering as unemployed unless they are married to Maltese citizens.
        Training grants given under the Industrial Development Act (Cap. 325) do not discriminate
        against foreign nationals. Moreover, the Employment and Training Services Act (Cap. 343) does
        not discriminate against foreign nationals in the provision of vocational training services.
        However, with regard to access to vocational training, it has been the practice not to allow
        foreign nationals to participate in courses and apprenticeships run by the Corporation.
        Members of the family, of nationals of EU member states who have been granted an employment
        licence, at present also require an employment licence to be able to work in MaltaWith regard to
        the employment of members of the families of nationals of EU Member States, their position is
        similar to that of the employment licence holder. With regard to education and training the
        Employment and Training Services Act (Cap. 343) does not preclude children of foreigners from
        being admitted to apprenticeship and vocational training courses.
        The Employment and Training Corporation finds no difficulty in joining the EURES (European
        Employment Services) network.




        DRAFT                                                                                          40
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Amendments to the Immigration Act (Cap. 217) would be required to transpose the EU
Directives in the area of free movement of workers.
Malta has indicated that during the consideration of this chapter by the accession conference
Malta will wish to Malta may wish to discuss the mechanisms that will be adopted to safeguard
the sustainable implementation of the provisions of the Acquis relating to the freedom of
movement of workers taking into consideration the disruption of the labour market in Malta in
the event of a high inflow of workers following accession.

Mutual Recognition of Professional Qualifications
In Malta at present some sixty-four professional activities falling under the portfolios of nine
Ministries have been identified as requiring professional qualifications. Of these, fifty-nine
professions fall under the general system. On particular sectoral professions, one notes that:
Advocates and Legal Procurators are required to be Maltese citizens and to possess the
academic qualifications necessary from the University of Malta. Professional training for a year
with a warrant holder is required before being granted a warrant to practice in Court. An
examination for the warrant is held by an appropriate examining board composed of two Judges.
Architects and Civil Engineers (Periti) are covered by the Architecture and Civil Engineering
Professionals (Periti) Act (Cap. 390) and require a warrant in order to practise their profession in
Malta. Such warrant is granted upon the recommendation of a specialist board known as the
‘Periti’ Warrants Board which is appointed in terms of the Architecture and Civil Engineering
Professionals (Periti) Act (Cap. 390). The warrant can be issued to Maltese citizens and persons
otherwise permitted to work in Malta under any law. This is followed by specific criteria that
must be satisfied before such warrant is granted. The Board will also take into consideration for
the granting of the warrant, both academic qualifications obtained overseas as well as a period of
training carried out overseas.
Medical and Para-medical Professions are covered by the Medical and Kindred Professions
Ordinance (Cap. 31) and the Department of Health Constitution Ordinance (Cap. 94). These two
laws regulate registration of professionals, the regulatory bodies and sanctioning mechanisms.
Training and education of all health care professionals is the remit of the University of Malta and
the Institute of Health Care that are regulated by the Education Act (Cap. 327) as well as by the
Statutes of the University of Malta. The existing administrative set-up within the Ministry of
Health that regulates health care professionals is made up of four statutory bodies as required by
the Medical and Kindred Professions Ordinance. These are the Medical Council, Pharmacy
Board, Nursing and Midwifery Board, and Board of the Professions Supplementary to Medicine.
One of the main functions of these statutory bodies is to maintain a Register for the health care
professions. These are either issued with a warrant by the President of Malta or else satisfy the
established educational and training prerequisites set up by the University of Malta/Institute of
Health Care. These regulatory bodies have the power to take disciplinary steps following any
illegal or unethical behaviour by the registered professionals. Foreigners may be allowed to
practise their profession in Malta in any of the indicated medical or para-medical activities,
provided they have the recognised qualifications, are accepted to be so registered in the relevant
register by the pertinent Board appointed as supervisory body for such purposes in terms of the
law, are issued with the required licence or permit to practise their profession by the competent




DRAFT                                                                                            41
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




authority in Malta in terms of the Medical and Kindred Professions Ordinance and obtain an
employment permit to work in Malta in terms of the Immigration Act (Cap. 217).
The Health Care Professions Act is expected to become the primary legislative framework
regulating health care professionals except veterinary surgeons. The Act has already been given
a first reading in Parliament, and a second draft has been circulated for consultation amongst
interested parties. The Health Care Professions Act will align Maltese legislation with Directive
93/16/EEC (free movement of doctors and the mutual recognition of their qualifications),
Directive 78/686/EEC (mutual recognition of the formal qualifications of practitioners of
dentistry), Directive 78/687/EEC (co-ordination of provisions in respect of the activities of
dental practitioners), Directive 85/432/EEC (co-ordination of provisions in respect of the
activities in the field of pharmacy), Directive 85/433/EEC (mutual recognition of the formal
qualifications in the field of pharmacy), Directive 80/154/EEC (mutual recognition of the formal
midwifery qualifications), Directive 80/155 (co-ordination of provisions in respect of the
activities of midwives), Directive 77/452/EEC (mutual recognition of the formal qualifications
of nurses responsible for general care) and Directive 77/453/EEC (co-ordination of provisions in
respect of the activities of nurses responsible for general care).
Academic training requirements for health care professions, currently laid down by the
Education Act (Cap. 327) and its subsidiary legislation are in line with the Acquis, except for the
practical training period required for doctors and pharmacists. A programme for structured
vocational training for general medical practitioners has been formulated after discussions with
interested parties had taken place. As regards specialised training needs, detailed training
programmes that conform to the EU Directives and UEMS guidelines are being drawn up in
collaboration with the various specialist associations. The training requirements for all health
care professions will be regulated by the Health Care Professions Act. Local training
requirements, commencing after the fourth quarter of 2002, for undergraduate and post-graduate
levels provided by the Faculty of Medicine and Surgery, the Faculty of Dentistry and the
Institute of Health Care within the University of Malta will be conducted in line with the Acquis.
The Health Care Professions Act will also provide for the recognition by the relevant regulatory
body by the University of Malta of the one-year pre-registration practical training period
(housemanship) for doctors in line with Directive 93/16/EEC and for a mandatory six-month in-
service training period for pharmacists in line with Directive 85/433/EEC. All health care
professionals whose training was completed or commenced prior to the date of accession will be
guaranteed acquired rights. Such persons will include health care professionals who have had to
interrupt their career prior to accession. Malta is interested to participate as observers on the
Advisory Committees on Training.
Maltese veterinary surgeons receive their training overseas, as training in veterinary surgery is
not available in Malta. Veterinary surgeons are required to hold a warrant to practise their
profession in Malta. The Medical and Kindred Professions Ordinance (Cap. 31) currently
regulates the profession of veterinary surgeon. Practitioners are required to register with the
Medical Council.
The Teaching Profession is regulated by the Education Act (Cap. 327). Appointment of teachers
in the primary and secondary sectors is subject to a probationary period of one year, and
applicants must be citizens of Malta and in possession of a Permanent Teacher’s Warrant.




DRAFT                                                                                           42
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Moreover, they must be in possession of an Ordinary Level Malta Matriculation Secondary
Education Certificate in Maltese, English Language and Mathematics. Degrees and certificates
awarded by foreign universities and higher educational institutions are accepted, provided they
are recognised by the Malta Equivalence Information Centre of the University of Malta. The
issuing of Teacher’s Warrants is regulated by the Education Act (Cap. 327). The Warrant Board
may also issue a Temporary Warrant, as provided under Section 10 of the said Act. An expatriate
who is offered a teaching employment would require a work permit and approval to practise the
profession from the Education Division.
Supervisory bodies which oversee the recognition of pertinent qualifications and professional
education and training already exist. The National Vocational Professional and Vocational
Council and the NARIC were set up in October 2000The Malta Professional and Vocational
Qualifications Council was set up on 25 October 2000. The Malta National Academic
Recognition Information Centre was to be established by the first quarter of 2001. However, the
administrative infrastructure responsible for the issuing of warrants, licences and permits
required to practise professional activities in Malta needs to be upgraded and the relevant
provisions of law amended to comply with the requirements of the EU General System
Directives on mutual recognition of professional qualifications as well as the pertinent sectoral
Directives.

Citizenship of Other Countries
The right to vote is governed by the General Elections Act (Cap. 354) and the Local Councils
Act (Cap. 363). However, Article 54 of the Constitution disqualifies any person who is not a
citizen of Malta from being a member of the House of Representatives. Article 57 of the
Constitution states that a person shall only be qualified to be registered as voter in a general
election if he or she is a citizen of Malta. The Local Councils Act states that every citizen of
Malta whose name appears on the electoral register is entitled to vote at elections of Local
Councils. Persons who are not citizens of Malta are also entitled to vote at elections of Local
Councils provided they are citizens of a country that is a member of the Council of Europe and
grants to Maltese citizens reciprocal voting rights in local elections. So far citizens of the United
Kingdom of Great Britain and Northern Ireland have the right to vote in Local Elections in Malta
since Maltese citizens have reciprocal voting rights in the United Kingdom. Malta will grant
voting rights for Local Council elections to citizens of other EU countries that will give such
reciprocal rights to Maltese citizens before accession. The list of countries, other than Malta,
whose citizens can vote in elections of Local Councils can be extended by regulations issued by
the Minister responsible for Local Councils. Malta is therefore already in a position to
implement the Acquis in this area and will, in any case, bring the pertinent legislation into effect
on accession.
Malta is a party to the European Convention for the Protection of Human Rights and
Fundamental Freedoms (1950). Article 3 of the First Protocol to this Convention, provided for in
the European Convention Act (Cap. 319), provides for the right to vote as a fundamental human
right.
The administrative infrastructure of the departments responsible for the issue of passports and
visas will be able to effect the necessary changes to comply with the EU formats by accession.




DRAFT                                                                                            43
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




An order for the printing of a new stock of passports has been issued. These new passports will
be as similar as possible to those issued by EU countries. No legislative changes are anticipated.

Right of Residence
The right of residence in Malta is regulated by the Immigration Act (Cap. 217). Section 7 of the
Act states that the Prime Minister responsible for immigration may, subject to such conditions as
he may deem proper to establish, issue a residence permit to any person who makes an
application for retirement, settlement or an indefinite stay in Malta. Subject to the provisions of
the Act, a residence permit confers on the person to whom it is issued the right to land and to
remain permanently or indefinitely in Malta. Permanent Residence Permits are issued to persons
who have an annual income equivalent to Lm10,000 or a capital equivalent to Lm150,000. The
said person will not be allowed to exercise any occupation or profession, or hold appointments,
seek employment, or engage in any form of business in Malta. Persons who are granted an
employment licence to work in Malta have their passports endorsed with the duration of the
licence granted and no other permit is required to cover their residence locally. The passports of
the dependants of a person who is granted an employment licence are usually endorsed with the
same validity period as that of the licence holder.
Section 6 of the Immigration Act empowers the Principal Immigration Officer to grant leave to
land or leave to remain (temporary residence) to any person arriving in Malta, under such
conditions and for such period as may be deemed proper to establish. Such permits may also be
extended at the discretion of the said officer under the conditions previously imposed or other
conditions as he deems appropriate.
The Immigration Act would need to be amended in order to make it compatible with EU
Directives relating to the right of employment and residence in Malta of a national of a Member
State.

Co-ordination of Social Security Systems
The Social Security Act (Cap. 318) provides for both contributory and non-contributory benefits.
The non-contributory scheme provides for means-tested pensions, allowances and assistance to
Maltese citizens. The contributory scheme provides for pensions, allowances, and other benefits
to insured persons, irrespective of their nationality, who satisfy contribution conditions. This is
the scheme which effectively ensures that every gainfully occupied person in Malta, whether in
an employed, self-employed, or self-occupied capacity is insured against specific contingencies
that may arise as a consequence of (i) unemployment (ii) sickness (iii) injury (iv)
invalidity/disablement (v) retirement (vi) widowhood. The nationality of the employer/employee
has no bearing on the insurability status of the insured person. The determining factor is whether
such employment is “insurable employment” which the Act defines as any employment in Malta
under any contract of service, or in the case of employment outside Malta, where the employer
has a place of business in Malta. Contributory pensions in respect of retirement or widowhood
may be claimed by the beneficiaries who are resident abroad. Section 314 of the Act provides
that the Minister for Social Policy may by order give effect to reciprocal agreements.
In 1989 Malta ratified the Council of Europe’s “European Social Charter”. As a result nationals
of contracting parties who are legally resident in Malta are entitled to social security benefits if




DRAFT                                                                                            44
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




they satisfy entitlement conditions. All Member States of the EU have ratified the European
Social Charter. Through regulations (LN204/99), with effect from 1 January 1999, the provisions
of the Social Security Act (Cap. 318) apply to nationals of the countries parties to the European
Social Charter and who have their ordinary residence in Malta.
Malta has for over forty years been implementing a bilateral agreement with the UK which has
been revised regularly since 1996. In addition Malta has also two other similar agreements with
Canada and Australia. These Agreements and the administrative arrangements attached thereto
take into account the fundamental principles of EC Regulations 1408/71 and 574/72. A
reciprocal agreement with the Government of the Netherlands has been finalised and is expected
to be ratified by the second quarter of 2001. Draft agreements were also referred to the
Government of the Republic of Germany and Greece. A similar draft agreement was also
referred to Slovenia.
Health care services are provided free of charge to all Maltese nationals and to foreign nationals
who are insured under the Social Security Act. Information was obtained from a number of EU
countries but further assistance is required in order to develop appropriate bilateral agreements.
Technical assistance is also being sought from EU Member States. Data collection on foreign
patients was also carried out.
Malta will have to ensure that the principle of equal treatment as envisaged under Regulation
1408/71 is sufficiently reflected and this means that appropriate changes to the conditions for
acquiring the rights deriving from insurance under Maltese law will have to be made.

B. Short Term Priorities (2001)
a) The existing legal and administrative bodies concerned with the overseeing of professional
   education and training and the recognition of qualifications shall be strengthened and given
   more autonomy.
b) Conclude bilateral agreements with some of the EU Member States in the field of social
   security to facilitate the implementation of relevant EU directives and regulations. (Ongoing)
c) Set up a unit within the Ministry of Education to assist Maltese and EU citizens by providing
   information related to the general system Directives.
d) Set up a unit within the Department of Social Security of the Ministry for Social Policy to
   implement the Acquis in the field of social security.
e) Revise existing bilateral agreements and devise new agreements on health matters with EU
   Member States.
f) Set up a unit within the Ministry of Health to handle requests for health care and the
   processing of reimbursement procedures.
g) Adopt subsidiary legislation under the Social Security Act (Cap. 318) to implement the
   provisions of Regulation (EEC) 1408/71 (application for social security schemes to
   employed persons and their families moving within the Community) and Regulation (EEC)
   574/72 (fixing the procedures for implementing Regulation (EEC) 1408/71 and the decisions




DRAFT                                                                                          45
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




     thereunder). The Health Care Professions Act should be enacted by the second quarter of
     2001.
h) The Veterinary Services Act will be adopted by Parliament. This will regulate the veterinary
   surgeons profession and will also transpose Directive 78/1026/EEC (mutual recognition of
   the formal qualifications in veterinary medicine) and Directive 78/1027 (co-ordination of
   provisions in respect of the activities of veterinary surgeons).
i)   A system of structured vocational training programme should commence by the fourth
     quarter of 2001.
j)   The respective Ministries or regulatory bodies will carry out an assessment of the
     professional qualifications in line with Directives 89/48 and 92/51 by the fourth quarter of
     2001. A national co-ordinator will be appointed by the first quarter of 2001.
k) Establish a register of specialists in the medical field, in accordance with EU Directives.
l)   Setting up of prior communication and consultation procedures on migration policies in
     relation to non-Member States by end of 2001.

C. Medium Term Priorities (2002)
a) Amend the Immigration Act (Cap. 217) by the second quarter of 2002. These amendments
   will enter into force on accession. They will grant citizens of the European Union the right to
   seek employment, work and reside in Malta. These amendments will also implement
   Regulation (EEC) 1612/68 (free movement of workers) as well as its amendment, Regulation
   (EEC) 1251/70 (right of workers to remain in the territory of a member state after having
   been employed in that state), Directive 68/360/EEC (abolition of restriction of movement
   and residence within the community for workers of the member states and their families),
   Directive 72/194/EEC (co-ordination of special measures justified on grounds of public
   policy, public security and public health). These amendments will also transpose Directive
   90/364/EEC (right of residence), Directive 90/365/EEC (right of residence of employees and
   self-employed persons who have ceased their occupational activity), Directive 93/96/EEC
   (right of residence for students), Directive 73/148/EEC (abolition of restrictions of
   movement and residence for the purposes of establishment and provision of services), and
   Directive 64/221/EEC (co-ordination of special measures concerning the movement and
   residence of foreign nationals which are justified on grounds of public policy, public security
   or public health).
b) On accession, EU nationals will be able to participate in the training schemes organised by
   the ETC and may notify their intention to work in Malta through the Employment and
   Training Corporation.
c) Introduce new format for passport and visas to correspond with those of the EU by end of
   2002. Align the Visa policy with that of the EU by the date of accession. This is also
   discussed under Section 3.7 (Justice and Home Affairs).
d) Transpose Directive 89/48/EEC (general system for the recognition of higher-education
   diplomas awarded on completion of professional education and training of at least three
   years’ duration) and Directive 92/51/EEC (second general system for the recognition of




DRAFT                                                                                            46
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




     professional education and training to supplement Directive 89/48/EEC) by the second
     quarter of 2002.
e) Amend, by the second quarter of 2002, the Code of Organisation and Civil Procedure, to
   bring it in line with Directive 77/249/EEC (effective exercise by lawyers of freedom to
   provide services) and Directive 98/5/EC (facilitating the practice of the profession of lawyer
   on a permanent basis in a member state other than that in which the qualification was
   obtained).
f) Amend the Architecture and Civil Engineering Professionals (Periti) Act (Cap. 390) to bring
   it in line with Directive 85/384/EEC (mutual recognition of qualifications in architecture,
   and measures to facilitate the effective exercise of the right of establishment and freedom to
   provide services).
g) The Health Care Professions Act will enter into force upon accession.
h) Set up, by the third quarter of 2002, Specialist Accreditation Committees for the formal
   recognition of training in the field
i)   Enact new legislation to transpose Directive 93/109/EEC (right to vote and stand as a
     candidate in election to the European Parliament). This new legislation will be adopted by
     the second quarter of 2002 and will enter into force on accession.
j)Employment and Training Corporation to participate fully in EURES by end 2002.                    Formatted: Bullets and Numbering

k)j) Set up autonomous competent body responsible for the issue of teacher’s warrants by end
     2002.

D. Institution Building Needs

Mutual Recognition of Qualifications
The implementation of the Acquis would require a number of changes to the present structures
responsible for recognition of qualifications to make them compatible with the EU General
Systems, namely Council Directives No 89/48/EEC and 92/51/EEC. Nine Ministries have been
identified as being affected by the Directives:- the Ministry for Home Affairs, Ministry of
Health, Ministry of Education, Ministry of Justice and Local Government, Ministry of
Environment, Ministry of Transport and Communications, Ministry of Tourism, Ministry of
Finance and the Ministry for Economic Services. However, it is not envisaged that new staff will
be required with the exception of the Ministry of Health that has identified the necessity for 5
full-time Registrars and appropriate clerical support to be recruited for the regulatory bodies..

Free Movement of Workers
The necessary administrative arrangements concerning compliance with the Acquis in this area is
expected to be brought about through adjustments to the existing systems and procedures.
Consequently no new staff is earmarked to be recruited for this purpose, although some training
may be required. The main organisations that are expected to be affected by these arrangements
are the Immigration Section of the Police Department (including border control units), the
Department of for Citizenship and Expatriate Affairs, the Department of Industrial and




DRAFT                                                                                         47
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Employment Relations, the Department of Social Security and the Employment and Training
Corporation.
The question of upgrading at immigration and border controls is dealt with also under Section
3.7 (Justice and Home Affairs).

Co-ordination of Social Security Systems
The Department of Social Security is already equipped to tackle the effects of adjustments that
might be needed in this area. However, some organisational adjustments would be necessary to
effectively implement the Acquis. Technical training and additional staff will also be required.
The Health Division also needs to set up a unit that will be responsible for the administration of
reimbursement and billing for health care.

Area of Activity                                                  2001        2002         Total

Ministry for Social Policy
                                     Senior                           -           -            -
                                     Middle                           3           3            6
                                     Other                            -           -            -
                                     Total                            3           3            6

Ministry of Health
                                     Senior                           -           1            1
                                     Middle                           2           3            5
                                     Other                            -           -            -
                                     Total                            2           4            6



E. Financial Requirements
                                                                                           Lm000
Area of Activity                                                  2001        2002         Total

Ministry for Social Policy
                                     Recurrent                       20          35           55
                                     Capital                          -           -            -
                                     Training                         -           5            5
                                     Total                           20          40           60

Ministry of Health
                                     Recurrent                       40          60         100
                                     Capital                         10           -          10
                                     Training                        10           5          15




DRAFT                                                                                          48
MINISTRY OF FOREIGN AFFAIRS            National Programme for the
MALTA                                       Adoption of the Acquis
                                            August 2001Final Draft




                              Total   60         65         125




DRAFT                                                          49
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.1.3   Free Movement of Services

        A. Current Status

        Banking
        Malta’s current banking legislation, which came into force in 1994, is very much in line with the
        EU Acquis. Banking operations are governed by the Banking Act (Cap. 371) and eight related
        Directives. Other legislation that is relevant to the operations of credit institutions includes the
        Professional Secrecy Act (Cap. 377) and the Central Bank of Malta Act (Cap. 204). Quasi-
        banking operations, representing the additional activities listed in the Second Council Banking
        Directive, can also be undertaken separately by non-bank financial institutions in terms of the
        Financial Institutions Act (Cap. 376).
        The Banking Act (Cap. 371) has been generally aligned with the Acquis, particularly the First
        and Second Banking Directives, and covers co-operation between the supervisory authorities and
        bodies of the Community, protection of confidential information with the necessary gateways for
        the lifting of such confidentiality where necessary (for instance, suspected money laundering
        activities) and licensing criteria. The Act and related Directives are also to a large extent
        harmonised with the Basle Principles for Effective Banking Supervision.
        The required minimum own funds figure for banks is Lm2 million. Current licensing criteria are
        largely compliant with those applied by the EU. The Central Bank of Malta is the competent
        authority as regards licensing. The Licensing Directive (BD/01) issued under the Banking Act
        stipulates that the criteria applied to the establishment of a branch of a bank regulated in an EU
        Member State are less onerous. This is due to the reliance placed on the regulatory authority of
        that state and the similarity of Maltese law to the Acquis.
        Supplementary legislation in the form of Banking Directives has incorporated almost all the
        corresponding EU Directives to the banking sector, covering areas such as licensing of credit
        institutions, large exposures, own funds of credit institutions, solvency of credit institutions,
        liquidity of credit institutions and capital adequacy of credit institutions. Nevertheless, some
        amendments still need to be carried out to the Banking Act and to the Banking Directives in
        order to make the Maltese regime fully compliant with the Acquis. The amendments to the Act
        will need to be approved by Parliament whilst amendments to the Banking Directives can be
        introduced and implemented by the Competent authority in exercise of its powers in terms of the
        Banking Act. The major part of the necessary amendments falls within the latter category.
        Furthermore, currently, Malta has no deposit protection scheme in place. Initial work on such a
        scheme has already been undertaken by the Central Bank in conjunction with the Malta
        Commercial Banks' Association.
        Amendments are also required for Maltese legislation to be brought in line with the full
        requirements of the Second Banking Directive. These mostly concern the single passport,
        freedom to provide services and the recognition of netting of financial transactions in bankruptcy
        procedures.




        DRAFT                                                                                            50
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Investment Services
The Investment Services Act (Cap. 370) has established a comprehensive regulatory framework
for Investment Services and Collective Investment Schemes. This Act authorises the Minister of
Finance to issue regulations and also vests the Ccompetent authority with powers to issue
Investment Services Guidelines which bind licence holders. Within this structure, it is now easier
to achieve full implementation of the Acquis in this area.

Insurance
The Insurance Business Act (Cap. 403) and the Insurance Brokers and Other Intermediaries Act
(Cap. 404) provide the framework for the regulation of business of insurance in or from Malta.
The Acts establish a system of professional regulation ensuring a high standard of conduct and
guaranteeing protection to policyholders. These laws are administered by the Malta Financial
Services Centre (MFSC).
Both Acts contain provisions that empower the Minister of Finance to make regulations and
authorise the competent authority to issue Insurance Directives and Insurance Intermediaries
Directives. The latter were issued in August 1999 and May 1999, respectively. A number of
Legal Notices were issued in June 2000 to incorporate the prudential provisions of the Acquis
into Maltese Law. The provisions will come into effect in January 2001. The adoption of these
regulations and directives will achieve significant alignment with the relevant parts of the
Acquis.
The requirement for motor vehicles to be covered by third party insurance is regulated under the
Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap. 104). The Ordinance, which is
administered by the Commissioner of Police, is largely in conformity with the Acquis.

Stock Exchange
The Malta Stock Exchange is responsible for Malta’s listed securities market and is regulated by
the Malta Stock Exchange Act (Cap. 345) and the Malta Stock Exchange Bye-laws issued
thereunder.
Bye-laws have been issued, providing for the licensing of stockbrokers and approval of
accredited representatives and financial intermediaries, the Stockbrokers’ Code of Conduct, the
approval of stockbroking firms, trading and settlement procedures, the Central Securities
Depository, the requirements for admission to official listing on the Exchange, the Compensation
Fund, amalgamation of listed companies, the listing requirements applying to collective
investment schemes, and the listing requirements for admission to the Alternative Companies
List.
The Bye-laws are largely compliant with the Acquis, particularly as regards the conditions for the
admission of securities to official stock exchange listing (Directive 79/279/EEC), the
requirements to be satisfied in the drawing up, scrutiny and distribution of the listing particulars
to be published for the admission of securities to official stock exchange listing (Directive
80/390/EEC), the information to be published on a regular basis by companies the shares of
which have been admitted to official stock exchange listing (Directive 82/121/EEC) and
investor-compensation schemes (Directive 97/9/EC). Furthermore, on 24 July 1995, a




DRAFT                                                                                            51
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Compensation Fund was set up, which is administered by the Council of the Stock Exchange, in
order to ensure the security of Exchange transactions in the event of financial difficulties of any
member to meet his obligations towards the investing public.

Non-Financial Services
Non-financial services comprise the freedom to provide services in diverse areas, including
craftsmen, traders, farmers as well as commercial agency agreements. In general, Maltese
legislation is not in conflict with the Acquis. Indeed, with some minor exceptions, the laws and
regulations of Malta do not discriminate on the basis of nationality for the purpose of provision
of services or establishment. However, there exist established administrative procedures that
effectively limit the establishment and provision of services by non-Maltese nationals. The
implications of fully adhering to the requirements of the Acquis are being assessed.
In the case of natural persons, a work permit is required for non-nationals in terms of the
Immigration Act (Cap. 217). In addition, a trading licence is required for specified sectors.
Legal persons require exchange control authorisation, subject to clearance by the Department of
Trade, without prejudice to any trading licence which may be required.
As from 1 January 2000, the scrutiny and authorisation of applications by non-residents to invest
in local companies was transferred from the Central Bank of Malta to the Malta Financial
Services Centre.
The authority to issue most trading licences of either a fixed or a public place has been vested
within the powers of the Commissioner of Police since 1854, when the Code of Police Laws
(Cap. 10) was enacted. This legislation empowers the Commissioner to issue licences to ‘open or
keep shops for the sale of wares and merchandise, whether by wholesale or retail, or for the
exercise of any art or trade therein, or for the exercise of the trade of hawker or peddler.’
Other authorities empowered to issue trading licences in their respective areas include the
Consul for Goldsmiths and Silversmiths, the Department of Health, Enemalta Corporation, the
Gaming Board, Malta Maritime Authority, Malta Tourism Authority, Public Transport Authority
and the Wireless Telegraphy Department.
Licences are generally issued in terms of administrative policies that include norms for their
transfer, as well as for amendments and other requirements. In general, when licences are
premises-based no qualifications, professional or otherwise, are requested by the police for the
exercise of a particular trade or activity.
In view of certain specific characteristics of the economy a number of business activities are
restricted in number or scope. A number of safeguards and exceptions justified by a general
interest do not allow unlimited enlargement of specific commercial sectors. Due to certain
criteria and necessities, it is reasonable to retain present limitations on the establishment of
certain lines of business. Studies are periodically carried out so as to establish the extent to
which existing activities would be allowed to grow.
Regarding Council Directive 63/261/EEC of 2 April 1963 laying down detailed provisions for
the attainment of freedom of establishment in agriculture in the territory of another Member
State, it should be noted that all acquisition of immovable property by non-residents is restricted




DRAFT                                                                                           52
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




by the Immovable Property (Acquisition by Non-Residents) Act (Cap. 246).             This area is
discussed under Section 3.1.4 (Free Movement of Capital) of this document.
As regards the definition of agricultural land in this Act, this differs slightly from that in the
Directives. Furthermore, a Legal Notice (LN83/81) issued under the Agricultural and Fishing
Industries (Financial Assistance) Act (Cap. 146), which provides financial assistance to farmers,
fishermen and herdsmen of Maltese nationality, is not in line with the Acquis.
Regarding commercial agency agreements, the agent/principal relationship in Malta is governed
by the Commercial Code (Cap. 13), which is well-entrenched in the local economy. The Code
makes provisions for the relationship between the principal and the agent, questions concerning
remuneration, principal/agent’s rights and obligations and the drawing up of the contract. The
Commercial Code is in general compliant with the Commercial Agents Directive, although
amendments are required as regards the periods of notification and the
indemnification/compensation schemes.

B. Short Term Priorities (2001)

Non-Financial Services
a) Following the enactment of appropriate legislation, trading licences will be issued by the
   Commerce Division within the Ministry for Economic Services, the Malta Tourism
   Authority, the Department of Health, the Malta Maritime Authority, the Public Transport
   Authority, the Malta Financial Services Centre and Enemalta Corporation. These authorities
   will also regulate the transfer of licenses and amendments thereto. The Police will remain
   responsible for licenses concerning arms and ammunition and explosives.
b) Introduce a one-stop shop system whereby Local Councils will serve as the calling place for
   the receipt of applications for licenses, their eventual delivery and annual renewal. Local
   Councils will also deal with monitoring by traders with respect to compliance with the
   conditions in their respective licenses.

C. Medium Term Priorities (2002)

Banking
a)   Set up the legal and administrative structure for a Deposit Protection Scheme, with full
     implementation taking place by the end of 2002.
c)b) Enact the necessary legislative changes for the introduction of the right of establishment      Formatted: Bullets and Numbering
     (single passport) and the freedom to provide services by December 2002. These will be
     brought in force upon accession.

Investment Services
     a) Enact all the necessary legislation and implement it on programmed basis, with full
        compliance with the following Directives expected during by end 2002, including the
        introduction of the provisions regarding the Single License and home supervision,
        which will be fully brought into force upon accession:




DRAFT                                                                                          53
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




     85/611 : UCITS
     89/298 : Co-ordinating the requirements for the drawing up, scrutiny and distribution of
      the prospectus to be published when transferable securities are offered to the public
     93/22 : Investment Services
     97/9 : Investor Compensation
     93/6 and 98/31 : Capital Adequacy
Insurance
a) Continue the legislative drafting process so as to achieve alignment, in particular with regard
   to the introduction of the Single Authorisation and home state supervision. Carry out
   implementation and fully transpose the Directives referred to under Short Term Priorities
   above. The following Directives will also be fully transposed by end 2002 and will be
   brought into force upon accession:
     76/580: ECU Directive
     84/641: Tourist Assistance Directive
     87/344: Legal Expenses Insurance Directive
     98/78: Third Motor Insurance Directive
c)b) Continue a comprehensive compliance programme, including on-site inspections and                Formatted: Bullets and Numbering
     completion of detailed returns to the MFSC, to ensure that license holders are full compliant
     with the provisions of the law.
Stock Exchange
a) Amend and implement the Malta Stock Exchange Bye-laws so as to ensure full
   compliance with the relevant Acquis, particularly as regards the information to be
   published when a major holding in a listed company is acquired or disposed of (Directive
   88/627/EEC).
Non-Financial Services
a) Implement the legislation for the adoption of a system of certification.
b) Legal Notice (LN83/81) issued under the Agricultural and Fishing Industries (Financial
   Assistance) Act (Cap. 146) will be amended so that upon accession, its provisions will apply
   to all EU nationals who satisfy the requisite criteria.
d)c)Implement the required amendments to achieve compliance with the Commercial Agents               Formatted: Bullets and Numbering
    Directive by end 2002, following discussions with the constituted bodies and other interested
    parties.

D. Institutional Building Needs
It is not envisaged that new recruitment will be required to implement the Acquis in the areas
concerning banking, investment services, insurance and matters related to the stock exchange.
With regard to non-financial services, the main institutions already exist to implement and
administer policies relating to trading licences. However, the Commerce Division within the




DRAFT                                                                                          54
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Ministry for Economic Services will be strengthened in order to be in a better position to meet its
new mandate.
Supporting services related to this area that are earmarked to be offered by Local Councils are
not expected to require additional staff.
Existing institutions will also administer the required certification in the case of an individual
who has practised an activity in Malta for which the possession of general, commercial or
professional knowledge is required in another Member State, and for which no such requirement
exists in Malta.

Area of Activity                                                   2001        2002         Total

Ministry for Economic Services
Commerce Division                    Senior                            -            -
                                     Middle                            2            -           2
                                     Other                             -            -
                                     Total                             2            -           2

E. Financial Requirements
                                                                                            Lm000
Area of Activity                                                   2001        2002         Total

Ministry for Economic Services
Commerce Division                    Recurrent                        10          10           20
                                     Capital                           -           -            -
                                     Training                          -           -            -
                                     Total                            10          10           20




DRAFT                                                                                           55
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.1.4   Free Movement of Capital

        A. Current Status
        Exchange controls, which cover both external current and capital transactions, are regulated by
        the Exchange Control Act (Cap. 233). Under the legislation the Minister of Finance has been
        granted powers to introduce controls or to relax or remove such controls. The Central Bank was
        appointed agent of the Minister and is thus responsible for administering the controls. The main
        legislation has undergone only minor amendments but a number of legal notices were issued by
        the Minister of Finance over the years. In addition, the Central Bank, acting as agent of the
        Minister of Finance, has issued a large number of exchange control circulars to the credit
        institutions and certain other financial institutions which, as authorised dealers under the Act,
        were permitted to execute foreign exchange transactions within the specific terms of the
        authority that was delegated to them by the Central Bank. The circulars regulate transactions that
        the authorised dealers are permitted to undertake under the Act.
        Over the past years, the Maltese Government has proceeded with a gradual and prudent
        liberalisation of foreign currency transactions and various liberalisation measures came into
        force. Almost all restrictions on current payments were removed in 1994 when Malta accepted
        the obligations of Article VIII of the IMF’ s Articles of Agreement.
        All remaining controls on current payments were removed on 1 January 2000. Furthermore,
        procedures for the remittance of funds overseas have been simplified by delegating authority for
        most transactions to the authorised dealers. Certain current transactions particularly those
        involving cash gifts and travel related allowances are subject to quantitative restrictions. With
        effect from 2000, these limits were raised significantly. These limits were raised again with
        effect from 1 January 2001. All remaining quantitative restrictions on current payments will be
        lifted by the end of 2002.
        These measures were announced in the Budget Speech for 2000, which also outlined
        Government’s three-year programme for the liberalisation of capital controls. The first batch of
        measures entered into force as from 1 January 2000. A second package of liberalisation measures
        came into effect in the beginning of 2001. The remaining controls will be phased out by the first
        quarter of 2002, save those provisions concerning the acquisition of real estate by non residents
        for which a derogation period is beinghas been requested. It is envisaged that in In order to take
        account of evolving legislation in this area, Malta will request has also requested that the date of
        accession be considered as the applicable date of the standstill clause to maintain existing
        restrictions on capital movements vis-à-vis third countries as laid out in Article 57 of the EU
        Treaty. Throughout this period, it will be ensured that the measures that will be implemented
        will not have a negative impact on the economy and on the financial system. The first batch of
        measures entered into force as from 1 January 2000, whilst the second group of measures entered
        into force as from January 2001.




        DRAFT                                                                                            56
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Capital movements: non-resident flows
Non-resident flows (except in the case of direct investment) are to a large extent liberalised,
provided funds emanate from external sources or from locally-generated funds which are eligible
to be transferred abroad.
As regards portfolio investment, non-residents may freely acquire financial products offered by
the banks and other financial institutions. They can also invest in bonds and equity quoted on the
Stock Exchange. This notwithstanding, in the case of primary issues of Treasury Bills, the
Minister of Finance has the power to declare that a public tender of Treasury Bills is not open to
application by non-residents. However, so far such restrictions have never been introduced.
There are no restrictions on the repatriation of funds; documentary evidence must however be
presented to the remitting bank, that is the authorised dealer, before payment can be effected.
In the case of direct investment by non-residents for the setting up of local companies, as from 1
January 2000, the responsibility to authorise such applications has been transferred from the
Central Bank to the Malta Financial Services Centre (MFSC). Direct investment by non-
residents in local registered companies is now fully liberalised, subject to any regulations issued
by Government on the freedom of establishment and the freedom to provide services. Malta is
currently consolidating and reviewing its legislation, procedures and policies to facilitate both
inward and outward direct investment. Administrative procedures for all investors will be
simplified and rendered transparent through the introduction of a one stop shop system. Malta
will phase out current applicable restrictions on direct investments by accession except for those
sectors for which special arrangements are to be negotiated. The pertinent issues in this regard
are discussed under Section 3.1.3 (Free Movement of Services).
International trading companies, which are owned entirely by non-resident shareholders (with
the possible exception of one share) and carry out their activities outside Malta, require a
specific exchange control exemption from the Central Bank upon registration. This is
automatically granted. However, when local nominee companies do not represent shareholders in
such companies, an appropriate status report has to be obtained by the Central Bank before the
exemption is granted.
In the case of non-resident individuals who intend to carry out business activities in Malta as sole
traders or self employed, these have to obtain the necessary work permit from the authorities
before they can undertake a direct investment transaction in Malta. This is discussed under
Section 3.1.2 (Free Movement of Persons) and Section 3.1.3 (Free Movement of Services).
Direct investment in real estate by non-residents is regulated by the Immovable Property
(Acquisition by Non-residents) Act (Cap. 246), and administered by the Ministry of Finance.
The Central Bank is involved only when the non-resident wishes to dispose of the property and
repatriate the proceeds of the sale. The controls in force under the Act are primarily intended to
prohibit speculation in the buying and selling of property. Under this Act non-residents may be
allowed to purchase immovable property in Malta provided that the said property is used: (i) as a
personal residence for the applicant and his family; (ii) for a purpose approved by Government;
(iii) for an approved industrial or tourist project or for a purpose which is considered beneficial
to the development of the Maltese economy; (iv) under certain conditions stipulated by the
Minister of Finance. The legislation continues to be revised from time to time to make it more




DRAFT                                                                                            57
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




liberal and Malta will phase out current applicable restrictions on real estate acquisition by the
date of accession, except where derogations are being requested. Malta will require a permanent
derogation with respect to the free movement of capital for secondary residence purposes and for
the acquisition of real estate for speculative purposes.
There are no restrictions on financial loans and credits to non-residents when the borrowing is
denominated in foreign currency. Non-residents are also permitted to borrow in domestic
currency as long as the purpose of the borrowing is to finance an economic activity in Malta. As
from 2001, loan facilities may also be provided for any other purpose including the purchase of
securities in the local capital market as large as such facilities have a maturity of over one year.
Loans by residents to non-residents are liberalised completely as long as such lending is for
maturity periods of over one year. Lending by residents to non-residents for shorter maturities
requires the approval of the Central Bank.

Capital movements: resident flows
Direct investment overseas by residents were fully liberalised as from 1 January 2000.
Investment by residents in real estate overseas is permitted up to a limit of Lm150,000.
As far as portfolio investment is concerned, resident individuals as well as non-financial
corporations are permitted to invest in financial assets up to Lm30,000 per annum. Within this
limit residents may invest in any type of financial assets and with no restrictions on the maturity
periods of such investments. Portfolio investment by insurance companies has been fully
liberalised as from 2000, subject to the prudential controls established by the MFSC in terms of
the Insurance Business Act (Cap. 403).
As from 1 January 2000, locally registered companies are permitted to list their securities on
foreign capital markets.
Borrowing by residents from overseas was liberalised completely as from 2001, as long as such
borrowing is for maturity periods of over one year. Borrowing for shorter maturities requires the
approval of the Central Bank. With regards to operations in current accounts in foreign currency,
resident persons can open such accounts with local banks up to a limit of Lm10,000 (credit
balance). In certain exceptional cases, companies which derive their earnings from export
oriented activities may be permitted to open current accounts in foreign currency with foreign
financial institutions. Residents are permitted to open foreign currency savings and term deposit
accounts with both resident and non-resident institutions up to the investment allowance limit.
Export oriented companies can maintain foreign currency savings and time deposit accounts with
local banks for a period of one year. Retail outlets and bodies corporate are permitted to maintain
foreign currency savings and time deposit accounts (with local banks) up to a limit of Lm10,000.
The limitations on the time period permitted for the deferment of trade credits which are granted
to residents by non-residents was removed as from 2000. Residents may retain up to LM10,000
in foreign currency.
There are no restrictions on sureties and guarantees and related instruments as long as these are
not conditional on the provision of a counter guarantee by the resident in favour of the non-
resident.




DRAFT                                                                                            58
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Specific classes of insurance are now permitted and declared as a foreign investment
Residents are allowed to enter into life assurance contracts with non-resident institutions as long
as the contracts are denominated in Maltese liri and the insurance company providing the
assurance policy has been granted a licence to carry out such operations in Malta. Exchange
control permission is required for non-resident companies to transfer (through local licensed
agents or representative branches) abroad the premiums they receive on life assurance policies
provided to residents. Residents may repatriate, through local credit financial institutions , funds
invested overseas without their need to submit declarations that such funds were registered with
the exchange control authorities.
Payments abroad in respect of legacies and inheritances are already fully liberalised as long as
supporting documentation is submitted to the authorised dealer. There are no limits on the
amount that may be transferred overseas for emigration purposes. However the specific approval
of the Central Bank is required before the transfer of funds by the emigrating resident can be
effected. Payments by residents in respect of endowments to bona fide foreign institutions are
liberalised and transposed by residents in respect of down payments. This is automatically
granted upon the submission of the related documentary evidence.
Issues of Preferential Treatment/MFN
Malta has ratified a small number of bilateral agreements containing references to investments.
The agreements contain provisions on non-discrimination as regards compensation of losses and
repatriation of investment and on the free transferability of funds. These agreements do not pose
any problems for Malta to comply with the Acquis.
Taxation of Capital and Capital Income
Malta’s tax regime with respect to the free movement of capital and payments is in line with the
Acquis, except as regards the tax on dividends on foreign shares by Maltese residents. Taxation
is also dealt with under Section 3.3.1 (Taxation).

Payment Systems
In terms of section 36, of the Central Bank of Malta Act (Cap. 204), the Central Bank is
empowered “to promote the establishment of a bank clearing system and provide facilities
thereof.” Draft amendments to Section 36 of the Central Bank of Malta Act have been presented
to Parliament and given a first reading in September 2000. The Malta Clearing-House was set up
to deal mainly with the settlement of cheques. The Clearing House Committee is responsible for
overseeing the workings of the clearing house. It has a regulatory role, and establishes the rules
and regulations of how the Clearing-House is to conduct its functions.
With regard to the finality of payment, it is the “zero hour” rule which remains in force in Malta.
This rule would have to be amended since a payment effected within real time gross settlements
system (RTGS) would be considered as irrevocable and final.
At present the domestic payment system in Malta operates around the Central Bank’s accounting
system which is on a real time basis and uses SWIFT as the delivery system for payment
messages. The SWIFT infrastructure has been in place for a number of years and all the payment
systems of the banking institutions are linked through SWIFT.




DRAFT                                                                                            59
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




Discussions for the installation of a payments system, which should provide a high standard of
cross border payment facilities, are also under way. An Executive Payments System Taskforce
composed of members of the Central Bank and representatives of the commercial banks has been
set up to formulate rules and regulations for the payments system. This Taskforce will be
responsible for the management of the payments system infrastructure in Malta, and for
preparing Malta’s contribution to the payments “Blue Book” pages that will in time be discussed
with the European Central Bank (ECB). Meanwhile a Payments System User Group was set up
to accelerate progress towards the standardisation of payment flows within the banking system
and to eliminate the paper settlement of further categories. Further functionality has been added
to Real Time Gross Settlement System (RTGS) with straight through processing of high value
inter-bank settlements via the SWIFT network.
These amendments will empower the Central bank to oversee and regulate domestic payments
systems as well as the transactions involved therein, be they domestic or cross border. These
amendments will empower the Central bank to issue Directives to ensure that Malta is able to
comply in full with the EU Directive on settlement finality in payment and securities settlement
systems (98/26/EC) and the one on cross borders credit transfers (97/5/EC).

Prevention of Money Laundering
Maltese legislation on the prevention of money laundering (both the primary and secondary
legislation), including measures and provisions for safeguarding the financial system, is in
general in compliance with the Acquis. This has been confirmed through a mutual evaluation
exercise undertaken by the Select Committee of Experts on the Evaluation of Anti-Money
Laundering Measures (PC-R-EV) of the Council of Europe in September 1998. Malta is a
member of this Committee.
The primary legislation that provides for the prevention of money laundering in Malta is the
Prevention of Money Laundering Act (Cap. 373). This Act has rendered the act of money
laundering a criminal offence. The list of predicate crimes contemplated by the law itself has
been widened to an extent that it now refers to a quasi all crime concept. The Act defines money
laundering in terms of the EU Directive based on the Vienna Convention 1988.
The Act provides for the issue of an investigation order that could be further strengthened by an
attachment order that would freeze a suspected person’s property during the course of an
investigation. Seizure and confiscation of property are provided for upon conviction.
The crime of money laundering for which a person can be found guilty and convicted
independently of the predicate offence is punishable by a fine not exceeding Lm1 million or 14
years imprisonment or both.
The Act also empowers the Minister of Finance to make regulations applicable to bank and non-
bank financial institutions to prevent the financial system to be used as a vehicle to launder
money. The Minister of Finance can extend such regulations to other undertakings or
professions, which could be used as vehicles by the launderer to legitimise criminal or illicit
money.
Secondary legislation consists of the Prevention of Money Laundering Regulations that came
into force in December 1994. These Regulations apply to all the components of the financial




DRAFT                                                                                         60
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




sector and have been recently extended to the gaming sector. The obligations imposed on
persons subject to these Regulations include procedures for identification, record keeping,
reporting of suspicious transactions and staff training. In August 2000, the regulations relating to
the Prevention of Money Laundering were amended.
Reporting procedures require the appointment of a Money Laundering Reporting Officer who
would be responsible for internal reporting and recommendations for disclosure of information
of suspicious transactions to a Police Officer not below the rank of Inspector. The Regulations
provide full exoneration from the duty of professional secrecy in bona fide disclosure of
information. Non compliance with the Regulations carries a fine not exceeding Lm20,000 or
two years imprisonment or both.
Other relevant legislation that provides measures for combating money laundering includes the
Medical and Kindred Professions Ordinance (Cap. 31) and the Dangerous Drugs Ordinance
(Cap. 101). All financial legislation includes gateways for the lifting of confidentiality in the
event of disclosure of suspicions of money laundering activities.
The regulatory authorities have issued guidance notes on best practice principles to be followed
by the financial sector in compliance with their obligations under the Regulations.
a)   Furthermore, in December 1999, the Central Bank of Malta instructed all credit institutions
     to close any remaining bearer accounts by 30 June 2000. Account holders had the option to
     transfer balances to named accounts or withdraw funds upon identification. Funds from
     unclaimed accounts will only be released to the presenter of the passbook, upon the normal
     identification procedures in terms of LN195/94 adopted under the Prevention of the Money
     Laundering Act. Moreover, as the issue of the nominee regime is still not included in the
     Regulations, in December 2000, as an interim measure, banks were issued with a directive
     by the Central Bank requiring them to identify ultimate beneficiaries when opening
     accounts for companies with a nominee shareholding.

B. Short Term Priorities (2001)

Capital Movements
a)   Continue to unfold the programme to unfold liberalise capital movements.
b)   To counter the loss of data, presently available through the administration of exchange
     controls which enables the statistical agencies in Malta to obtain accurate information on
     balance of payments transactions, external debt and the international investment position,
     the Central bank will oblige residents carrying out external transactions to report details on
     such transactions to the Central bank.
Taxation of Capital and Capital Income
a)Achieve alignment as regards the
b)a) tAchieve alignment as regards the tax on dividends on foreign shares owned by Maltese
    residents by the second quarter of 2001.




DRAFT                                                                                            61
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Payments System
a) Amendments to section 36 of the central bank of Malta Act (Cap. 204) will be affected by
   the second quarter of 2001.
b) Directives will be issued by the second quarter of 2001 to achieve alignment with respect to
   cross-border credit transfers and settlement finality in payments and securities settlement
   systems
c) Develop further the payment system incorporating all participants in the financial sector so
   that payments are effected in real time and with a minimum of delay. The Central Bank’s
   accounting system, which already operates on a real time basis, will continue to be
   developed around the SWIFT system as the core of the RTGS.
d) Until Malta implements a fully automated RTGS system, the banking sector will standardise
   the various payment instruments so as to dematerialise as much as possible paper-based
   transactions. It is therefore expected that eventually a large amount of retail payments will be
   effected by electronic means.

Prevention of Money Laundering Measures
a)   The Malta Financial Services Centre and the Malta Stock Exchange will issue interim
     instructions to other license holders in the financial services section (besides banks) to
     require them to identify ultimate beneficiaries when opening accounts for companies with a
     nominee shareholding. These measures will apply until the Prevention of Money
     Laundering Regulations are revised to extend to the nominee regime issue.
b)   Anti-money laundering measures will be further upgraded to comply with the proposed
     revision of the EU Prevention of Money Laundering Directive 91/308. This entails the
     establishment of a Financial Intelligence Unit complemented by the strengthening of the law
     enforcement regime as regards money laundering.
d)c) The necessary statutory provisions will be implemented so that the regulations will be           Formatted: Bullets and Numbering
     extended to other undertakings and professions as appropriate.

C. Medium Term Priorities (2002)
a) Complete the programme of liberalisation of exchange controls.
b) All remaining exchange controls will be removed by 2002, save restrictions on the
   acquisition of real estate by non-residents for which Malta has requested a special
   arrangement.
Capital Movements
a) Introduce amendments to the Exchange Control Act (Cap. 233) to include specific safeguard
   clauses to cater for any possible balance of payments crisis.




DRAFT                                                                                           62
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




D. Institution Building Needs
The Exchange Control Department within the Central Bank will be restructured so that it will in
future focus on the collection and retention of statistical information relevant to the compilation
of balance of payments data. It is not envisaged that additional resources will be required.
Other institutions responsible for the implementation of the Acquis are the Ministry of Finance,
the authorised dealers (credit institutions) and the Malta Financial Services Centre (MFSC). The
further liberalisation of capital flows is not expected to necessitate additional staffing
requirements.
The systemic monitoring of the Acquis could be effectively carried out without increasing the
workforce of the Central Bank of Malta. However technical assistance may be required to
establish a domestic RTGS system that would eventually have to be inter-linked with TARGET
and for the development of a securities settlement system.
The responsibility to monitor, upgrade, develop and implement the various anti-money
laundering provisions in Malta is mainly shared between the Office of the Attorney General, the
law enforcement agency (the Malta Police) and the financial sector regulatory bodies. These are
represented on the ad hoc Joint Steering Committee that analyses and makes recommendations
in this area. Although the necessary structure exists, it is envisaged that technical assistance may
be required. Furthermore, a Financial Intelligence Unit (FIU) is in the process of being
established at the Ministry of Finance. The legal basis of the unit will be provided by subsidiary
legislation under the Prevention of Money Laundering Act (Cap. 373) which will be adopted in
2001 at which time the unit will be formally set up and functioning at full capacity. The pertinent
requirements in these areas are being identified under Section 3.7 (Justice and Home Affairs).


E. Financial Requirements
                                                                                             Lm000
Area of Activity                                       2000         2001        2002         Total

Ministry of Finance
Central Bank of Malta *              Recurrent              -           -           -           -
                                     Capital                -           -         150         150
                                     Training               -           -           -           -
                                     Total                  -           -         150         150



(*) To be disbursed from own funds.




DRAFT                                                                                            63
        MINISTRY OF FOREIGN AFFAIRS                                          National Programme for the
        MALTA                                                                     Adoption of the Acquis
                                                                                  August 2001Final Draft




3.1.5   Company Law

        A. Current Status

        General Framework
        The main piece of Maltese legislation which regulates limited liability companies and other
        commercial partnerships is the Companies Act (Cap. 386). This Act incorporates all the relevant
        rules governing commercial partnerships. The provisions of the Act are broadly in line with the
        EU company law harmonisation directives. The requirements of Council Directives 68/151 (on
        public disclosure), 78/855 (mergers), 82/891 (divisions), and 89/667 (single member private
        companies) have all been fully transposed in the provisions of the Companies Act (Cap. 386).
        The only exception relates to Council Directive 78/855 and 82/891 on the safeguarding of
        employee rights in the event of transfer of undertakings, business or parts of business. These
        provisions will be transposed through amendments to the Conditions of Employment
        (Regulations) Act (Cap.135) which will be adopted by the second quarter of 2002.
        Council Directive 77/91 (on the raising, maintenance and alteration of capital of public
        companies), 78/660 (accounts), 83/349 (consolidated accounts), and 89/666 (branch disclosure
        requirements) are to a large extent incorporated in the provisions of the Companies Act (Cap.
        386). Amendments are necessary to acquire full adherence with the Directives.
        Council Directive 84/253 on statutory auditors is implemented mainly in the Accountancy
        Profession Act (Cap. 281). Some articles of the directive have however been incorporated in the
        Companies Act (Cap. 386). National legislation incorporates to a large extent the provisions
        contained in this directive. However, minor amendments are necessary for full transposition.
        The provisions of the Council Regulation 2137/85 on European Economic Interest Grouping
        (EEIG) have not yet been transposed into Maltese legislation. This will be done by regulations,
        under the powers granted by section 425(3) of the Companies Act (Cap. 386), which already
        make provision for the formation, constitution and regulation of economic interest groupings.
        This will take place during the fourth quarter of 2001.
        The legal distinction between offshore and onshore status for companies registered in Malta
        which are engaged in international business operations has been eliminated. No new offshore
        company can be registered in Malta whilst existing offshore companies are being phased out.

        Intellectual Property Rights
        Malta is a member of:
               the World Intellectual Property Organisation (WIPO);
               the Paris Convention for the Protection of Industrial Property;
               the Berne Convention for the Protection of Literary and Artistic Works;
               the Universal Copyright Convention (UCC); and
               a signatory to the World Trade Organisation (WTO) Agreement on Trade-related
                Aspects of Intellectual Property Rights (TRIPS).




        DRAFT                                                                                        64
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Malta implemented the pertinent provisions of the WTO TRIPS Agreement in 2000.
New legislation on copyright, patents and trademarks has been enacted during the first part of
2000. The Copyright Act (Cap. 196) which came into force on 14 August 2000, reflects all the
provisions of the Acquis in this area. Council Directive 87/54 (legal protection of topographies of
semiconductor products), Council Directive 91/250 (legal protection of computer programmes),
Council Directive 92/100 (rental rights related to copyright in the field of intellectual property),
Council Decision 93/16 (extension of the legal protection of topographies of semiconductor
products to persons from the United States of America and certain territories), Council Directive
93/98 (term of protection of copyright and certain related rights), Council Decision 94/700
(extension of the legal protection of topographies of semiconductor products to persons from
Canada), Council Decision 94/824 (extension of the legal protection of topographies of
semiconductor products to persons from a Member of the World Trade Organisation), Council
Decision 96/644 (extension of the legal protection of topographies of semiconductor products to
persons from the Isle of Man) and European Parliament and Council Directive 96/9 (legal
protection of databases) have been fully transposed in the provisions of the Copyright Act (Cap.
196). The only exception relates to the provisions on inter-member cable retransmission
contained in Council Directive 93/83 concerning Satellite Broadcasting and Cable
Retransmission.
The Trademarks Act (Cap. 416) came into force on 1 January 2001 and transposes Council
Directive 89/104 to approximate the laws of the Member States relating to trademarks and is in
line with TRIPS. The Act also makes provisions allowing for regulations to be made to extend
the effect of the Community Trademark regime to Malta upon accession. The Patents Act (Cap.
417) incorporates the principal substantive provisions of the European Patent Convention (EPC)
and is in line with TRIPS. Moreover, the Intellectual Property Rights (Cross-Border Measures)
Act (Cap. 414) was enacted in the first months of 2000 and is expected to come into force by the
end of February 2001. This Act reflects the provisions of Council Regulations 3295/94 and
1367/95. The enforcement of these measures is being carried out by the Customs Department.

Legislation is being drafted to enable Malta to accede to the Lugano Convention on the
Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters.

B. Short Term Priorities (2001)

General Framework
a) Subsidiary legislation under the Companies Act (Cap. 386) will be adopted by the fourth
   quarter of 2001 to reflect the provisions of Council Regulation 2137/85 on European
   Economic Interest Grouping (EEIG).
b) Amendments to the Companies Act (Cap. 386) will be adopted by Parliament during the
   second quarter of 2001 to transpose fully Council Directives 77/91 (raising, maintenance and
   alteration of capital of public companies), 78/660 (accounts), 83/349 (consolidated accounts)
   and 89/666 (branch disclosure requirements).
c) Amend the Accountancy Profession Act (Cap. 281) to be in full conformity with the Eight
   Directive (84/253/EEC).




DRAFT                                                                                            65
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




C. Medium Term Priorities (2002)

General Framework
a)   The provisions of Council Directive 78/855 on the safeguarding of employee rights in the
     event of transfer of undertakings, business or parts of business will be transposed through
     amendments to the Conditions of Employment (Regulations) Act (Cap.135) which will be
     adopted by the second quarter of 2002.
b) The Commercial Partnership Ordinance (Cap. 168), which currently regulates offshore
   companies, will be replaced by the fourth quarter of 2002 to bring all companies registered
   in Malta under the Companies Act which will be in conformity with EU company law
   directives.

Intellectual Property Rights
a) Council Regulation 40/94 on the Community Trademark will be applied on accession in
   conjunction with measures to safeguard pre-existing trademarks registered under current
   legislation in Malta.
b) The Community principle of exhaustion of intellectual property rights will be applied upon
   accession.
c) Legislation transposing Council Directive 93/83 relating to inter-Member State cable
   retransmission will be adopted by the fourth quarter of 2002 and will enter into force on
   accession.
d) Legislation transposing European Parliament and Council Directive 98/71 on the Legal
   Protection of Designs will be adopted by the fourth quarter of 2002.
e) Legislation transposing European Parliament and Council Directive 98/44 on the Legal
   Protection of Biotechnological Inventions will be adopted by the fourth quarter of 2002.
f) Malta will accede to the Brussels Convention on the Jurisdiction and Enforcement of
   Judgements in Civil and Commercial Matters and the Rome Convention on the Law
   Applicable to Contractual Obligations upon accession.
g) Legislation reflecting the provisions of Council Regulations 1768/92 and 1610/96 regarding
   supplementary protection certificates for medicinal and plant protection products will be
   adopted by the fourth quarter of 2002.
h) Necessary action will be taken to ensure that Malta accedes to both the European Patent
   Convention (EPC) and the Patent Co-operation Treaty (PCT) upon accession to the
   European Union. Action will also be initiated by the first quarter of 2002, with the view of
   acceding to the Protocol to the Madrid Agreement on the International Registration of
   Marks, the Hague Agreement on the International Registration of Designs, the WIPO
   Copyright Treaty and the WIPO Performances and Phonograms Treaty by the date of
   accession to the European Union.
i)   The Roche-Boler type provision, which exists in the Patents Act, will be removed upon
     accession.




DRAFT                                                                                         66
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




D. Institution Building Needs

General Framework
The Registry of Companies, which is an integral part of the Malta Financial Services Centre, has
the necessary structure to implement and enforce the Acquis.

Intellectual Property Rights
The Industrial Property Office, the Customs Department and the Police Economic Crimes Unit
are responsible for the enforcement of intellectual property rights.
The resources of the Industrial Property Office are being strengthened further in order to enable
it to fulfil the increase in workload and responsibilities
The Customs Department and the Malta Police liase closely in the fight against counterfeit and
pirated goods. These departments are being strengthened through additional resources and
training. The pertinent requirements in these areas are being identified under Section 3.1.7
(Customs Union) and Section 3.7 (Justice and Home Affairs) respectively.


Area of Activity                                      2000        2001        2002        Total

Ministry for Economic Services
Industrial Property Office          Senior                -          1            -           1
                                    Middle                -          2            -           2
                                    Other                 -          -            -           -
                                    Total                 -          3            -           3



E. Financial Requirements
                                                                                         Lm000
Area of Activity                                      2000        2001        2002        Total

Ministry for Economic Services
Industrial Property Office          Recurrent             -         15          15           30
                                    Capital               -         20           -           20
                                    Training              -          3           3            6
                                    Total                 -         38          18           56




DRAFT                                                                                         67
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.1.6   Competition

        A. Current Status
        Malta’s regime regulating competition is the Competition Act (Cap. 379), enacted in December
        1994, together with four Legal Notices published on 31 July 1996 which provide for block
        exemption of certain categories of exclusive agreements. The Act was largely modelled on EU
        legislation and the basic rules adopted by the EU on competition, namely Articles 81 and 82 of
        the Treaty, are almost identical to Sections 5 and 9 respectively of the Competition Act (Cap.
        379)
        Indeed, Section 5 contains a general prohibition against restrictive agreements entered into
        between commercial undertakings, decisions by associations of undertakings and concerted
        practices among undertakings, having the object or effect of restricting, distorting or preventing
        competition. This provision is directed at both horizontal agreements and vertical agreements.
        Moreover, Section 9 prohibits the abuse of a dominant position. The conduct of firms having a
        position of strength in the market will be subject to scrutiny in order to ensure that no abuse is
        taking place. An undertaking which alone or in concert with others has a share of at least 40 per
        cent of the relevant market shall always be deemed to be in a dominant position although a share
        below 40 per cent of the relevant market may still be considered to be in a dominant position.
        The Competition Act (Cap. 379) also contains provisions on Negative Clearance which can be
        granted by the Director of the Office of Fair Competition to ensure that an agreement does not
        infringe Section 5 of this Act. Certain agreements which would be unlawful under Section 5
        could be granted an Individual Exemption by the Commission for Fair Trading under Section 7
        of the Act. An exemption may be granted if the Commission considers that such a notified
        agreement merits an exemption from the prohibition on grounds that it contributes towards
        improving production or distribution of goods or to promoting economic progress and provided
        it allows consumers a fair share of the resulting benefit and it does not eliminate or substantially
        reduce competition. An application for individual exemption must be submitted to the
        Commission through the Director of the Office for Fair Competition.
        Various amendments to the Competition Act (Cap. 379) have passed through Parliament in
        November 2000. The amendments reflect the experience gained over the past years and seek to
        further align the Act with the Acquis. The main amendments envisage more power being vested
        in the Office of Fair Competition (OFC) in order to be in a better position to stop infringements
        effectively.
        Section 8 of the Act also empowers the Minister responsible for Trade to issue Block Exemption
        Regulations by means of which he may exempt from the provisions of Section 5, categories of
        agreements the beneficial effects of which are considered to outweigh their anti-competitive
        detriments. These regulations are largely based on the EC block exemptions. The drafting of
        block exemptions based on the EU Vertical Restraints Regulations has also started. These
        regulations shall be replacing the present block exemptions on their expiry on 31 October 2001.
        A separate block exemption on exclusive purchasing agreements in respect of beer and




        DRAFT                                                                                            68
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




beverages consumed on premises has been issued, which is also based on the EC Exclusive
Purchasing Block Exemption.
The Competition Act (Cap. 379) was amended to reflect the experience gained over the past
years and to further align the Act with the Acquis. These amendments are expected to enter into
force shortly. The amendments strengthen the power of the Director of the office for Fair
Competition making it possible for him to intervene more efficiently to stop an infringement.
Undertakings are also being given the possibility of appealing against the Director’s decision in
front of the Commission for Fair Trading. These amendments also reviewed the price order
regime of Section 11 of the Act to better reflect the Acquis, whilst taking into account the
specific realities of the domestic small economy.

Public Undertakings
In terms of Section 30, the provisions of the Act do not apply to any Government department or
to any body corporate established by law or to any company or other partnership in which
Government, directly or indirectly, holds a controlling interest except where specifically exempt
by a Legal Notice. The following trading public undertakings have been declared to be subject
to the provisions of the Competition Act - Hotel Management Services Company Limited,
Kalaxlokk Company Limited, Kordin Grain Terminal Company Limited, Malta Government
Investments Company Limited, Malta University Services Company Limited. The amendments
to the Competition Act changed Section 30 so that all public undertakings became subject to the
provisions of the Act, unless they are specifically exempted.

Institutional Set-up
The Competition Act (Cap. 379) establishes two institutions responsible for investigating and
adjudicating upon cases of infringement of the Act:
The Office for Fair Competition (OFC) carries out an investigative function in respect of
competition cases and monitors the market forces and commercial and trade practices. It initiates
investigations either on its own initiative, at the request in writing of a complainant, at the
request of the Commission for Fair Trading or at the request of the Minister responsible for
Trade. After an investigation is carried out, the Office will draw up a reasoned report and refer it
to the Commission for Fair Trading for its final decision. In order to promote knowledge of how
undertakings and complainants can have recourse to the Office of Fair Competition and to instil
more awareness of Competition Law, the office has started to hold meetings with special interest
groups which aim to explain the recent amendments to the Competition Act.
The Commission for Fair Trading is an independent judicial body chaired by a Magistrate and
enjoys the powers vested in the Civil Court. Procedures before the Commission are commenced
by a request in writing made by the Director, or by an undertaking or by a complainant through
the Director. Meetings of the Commission are held in camera and are not subject to appeal. The
Commission may grant individual exemptions from the prohibition of Section 5 and has the
power to order interim measures to suspend immediately restrictive practices or abuses of
dominant positions which are being investigated if it is urgently necessary to avoid a situation
likely to cause serious, immediate and irreparable harm to the interests of any undertaking or the
general economic interest.




DRAFT                                                                                            69
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Mergers
At present, there is no specific legislation regulating mergers from a competition law aspect...
The first draft is expected to be finalised by the end of this year. Mergers have been controlled
mainly under Section 9 of the Competition Act (Cap. 379) in so far as a merger may serve to
strengthen an already existing dominant position held by one or more of the participating
undertakings. Mandatory notification of such mergers is required under Section 10 of the Act
which obliges an undertaking which has reason to believe that any action it may take constitutes
an abuse of a dominant position to notify such action to the Director of Fair Competition before
proceeding with such action. However the drafting of regulations dealing specifically with
mergers has been initiated.

Monopolies
A number of state monopolies exist offering general public services, such as in the water,
electricity and postal sectors. Since these monopolies, are owned and controlled by Government,
they have not been subject to the Competition Act by virtue of Section 30 of the said Act.
However, this situation has changed with the amendments to the Competition Act (Cap. 379).
Furthermore, private companies granted monopoly rights by Government, such as the mobile
phone operator, are subject to the local competition rules.

Public Awareness
Meetings with special interest groups have started being held in order to promote knowledge of
how undertakings and complaints can have recourse to the office of Fair Competition and to
explain the recent amendments to the Competition Act. The publicity campaign shall be
intensified with the coming into force of the said Competition Act.

State Aid
The intervention by the State is generally aimed at supporting general economic growth,
encouraging investment and industrial development, addressing regional issues, restructuring
firms in difficulty, subsidising payment by consumers of goods and services, and facilitating the
implementation of social policy objectives (such as care for the elderly and education).
Generally, aid granted takes the form of various fiscal and non-fiscal instruments such as cash
grants, exemptions, loans and guarantees. These are granted by virtue of legislation, agreements
or contracts with the beneficiaries such as in the case of ship subsidy schemes and the agro-
industry sector.
The scenario at present includes the following assistance to:
The shipbuilding and ship-repairing industries by means of grants for the purchase of
equipment, training schemes, engagement of foreign expertise and subsidies on value added. For
the purposes of applying Council Regulation (EC) 1540/98 of 29 June 1998 establishing new
rules on aid to shipbuilding, Malta requests has requested a transitional period of seven years. A
similar transitional period is also requested for aid granted to the ship repair sector.




DRAFT                                                                                          70
MINISTRY OF FOREIGN AFFAIRS                                                National Programme for the
MALTA                                                                           Adoption of the Acquis
                                                                                August 2001Final Draft




The agricultural sector by means of schemes to provide subsidised interest on loans for the
purchase of farming machinery and related equipment, the construction of water reservoirs and
greenhouses;
The fisheries sector by means of schemes to provide subsidised interest on loans for the purchase
of fishing vessels and related equipment;
The production and distribution of water resources by means of an annual subvention to assist in
the capital investment for the purchase and installation of equipment, the development of
necessary infrastructure and to meet other costs;
The tourism sector by means of incentives related to package tours sold by UK operators under
the Tour Operators Support Scheme (TOSS). A detailed document on the need to request a
transitional period of eighteen months has been requestd with regard to for this scheme. has
been drawn up and sent to the EU.
The manufacturing sector by means of a package of incentives under the Industrial Development
Act (Cap. 325) administered by the Malta Development Corporation. Extensive amendments to
the Industrial Development Act arewere to be adopted by Parliament in January 2001, changing
the name of the Act to the Business Promotion Act (Act no. of 2001). The Business Promotion
Act iswill be in line with the Acquis and incentives linked to exports will no longer be provided.
It is an enabling Act providing incentives to target enterprises which have a high value added and
a potential for the creation of jobs.
A State Aid Monitoring Board was established on 30 June 2000 within the Ministry for
Economic Services with the main objective being to monitor and review existing and new state
aid granted by the Government in order to ascertain its compatibility with the Acquis and the
current practices in the EU. In this regard, work has already been initiated on the compilation of
a list of state aids in Malta.
TIt is envisaged that a transitional periods have been requestedwill be required for those
enterprises eligible for aid granted by virtue of the Industrial Development Act (Cap. 325) and
the Malta Freeport Act (Cap. 334) to allow these enterprises to continue to enjoy these benefits
until their stipulated date of expiry, in light of the legitimate expectations created in this respect.
A transitional period is also envisaged to be required in respect of the Tour Operators Support
Scheme. Furthermore, A transition period has also been requested to allow for aid that is
currently being granted to the shipbuilding and ship repair sectors to be brought into alignment
with the Acquis as regards the pertinent aid that is currently granted to the shipbuilding and ship
repair sectors would also require a transitional period beyond accession.

B. Short Term Priorities (2001)
a) Finalise drafting of local block exemptions regulations based on the new general block
   exemption regulation issued by the Commission in December 1999 (Commission Regulation
   (EC) 2790/1999). The new local block exemptions will come into force on 1 November
   2001.
b) Finalise the first draft of merger regulations by end 2001.
c) Intensify the public awareness campaign on the amended Competition Act (Cap. 379).




DRAFT                                                                                              71
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




State Aid
a) The Malta Development Corporation will adjust its internal aid-approval processes to be in
   line with Community policy on state aid and will introduce appropriate systems and
   procedures for aid intensity assessment.
b) The State Aid Monitoring Board which will reach its full capacity by the second quarter of
   2001 will review and monitor existing and new state aid granted by Government in order to
   ascertain that it is in line with the Acquis and the current practices in the EU Member States.
   The state aid inventory covering aid granted in 1999 will be finalised and presented to the
   Commission during 2001.



C. Medium Term Priorities (2002)
a) A regime on specific merger control will be adopted by the second quarter of 2002. The            Formatted: Bullets and Numbering
   specific realities of the domestic economy will be taken into consideration in determining
   both the turnover thresholds as well as the actual implementation of these regulations.
b) Other Community exemptions which do not feature under Maltese legislation will be
   adopted by the fourth quarter 2002.
c     By end 2002, certain agreements in the agricultural sector in Malta will become exempted
     from the provisions of the Competition Act (Cap. 379) as provided for under EU regulations.
     .
d With the exception of the energy sector, the operations of the state trading monopolies of a
  commercial character will be adjusted by the fourth quarter of 2002 in order to bring them
  into conformity with the provisions of Article 31 of the Treaty.

State Aid
a)    Phase out most state aid schemes that do not comply with the Acquis and with other
      international commitments.

D. Institution Building Needs
The Office of Fair Competition will be strengthened further through the engagement of
professional resources in order to consolidate its position to perform the task of ensuring
appropriate levels of competition in the economy and to effectively implement the requirements
of the Acquis. The IT base shall also be expanded whilst further collaboration with similar anti-
trust authorities in EU Member States will be pursued.

State Aid Monitoring Board
The state aid body will be provided with the necessary resources in order to perform all technical
works related to the preparation of reports and inventories of state aid. Steps are being taken in
order to recruit technical staff with the Board. It will also solicit expert support in drawing up




DRAFT                                                                                          72
MINISTRY OF FOREIGN AFFAIRS                                      National Programme for the
MALTA                                                                 Adoption of the Acquis
                                                                      August 2001Final Draft




position opinions and proposals regarding the formulation and implementation of state aid
policy.


Area of Activity                                 2000       2001        2002         Total

Ministry for Economic Services
Office for Fair Competition      Senior              -          1            -           1
                                 Middle              3          5            -           8
                                 Other               -          -            -           -
                                 Total               3          6            -           9

State Aid Monitoring Board       Senior              -          1            -           1
                                 Middle              2          -            -           2
                                 Other               -          -            -           -
                                 Total               2          1            -           3



E. Financial Requirements

                                                                                    Lm000
Area of Activity                                 2000       2001        2002         Total

Ministry for Economic Services
Office for Fair Competition      Recurrent          15        50           50         115
                                 Capital             -        10           10          20
                                 Training            -         5            5          10
                                 Total              15        65           65         145

State Aid Monitoring Board       Recurrent          10        20           20           50
                                 Capital             -         -            -            -
                                 Training            -         5            -            5
                                 Total              10        25           20           55




DRAFT                                                                                    73
        MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
        MALTA                                                                       Adoption of the Acquis
                                                                                    August 2001Final Draft




3.1.7   Customs Union

        A. Current Status
        Although current Maltese Customs legislation reflects and provides for many of the basic
        principles and procedures contained in the Community Customs Code, it does not fully comply
        with the Acquis. However, substantial progress has been made in the alignment of Malta's
        Customs legislation with the Acquis. The Intellectual Property Rights (Cross-Border Measures)
        Act (Cap. 414) enacted in February 2000 reflects the Community regulations on measures to be
        taken by customs authorities in respect of counterfeit and pirated goods, and is also in line with
        TRIPS. However, the Act does not include the amendments made by Regulation (EC) 2549/99,
        which mostly concerns the Community Trademark. The relevant amendments will become
        applicable on accession. The WTO Agreement on Customs Valuation (GATT) was
        implemented on 1 January 2000 by Act XIX of 1999, which amended the Import Duties Act
        (Cap. 337). The new legislation reflects to a great extent the provisions on valuation of the
        Community Customs Code and its Implementing Regulation. Only the provisions regarding the
        valuation of carrier media and minimum values on used cars and motorcycles remain to be
        aligned.
        The legal provisions concerning customs matters are largely found in the Import Duties Act
        (Cap. 337), the Customs Ordinance (Cap. 37) and the Customs Regulations of 1957. There are
        plans to consolidate these legal provisions into a Customs Code, which will be modelled on the
        Community Customs Code.
        The consolidated Customs Code will introduce provisions on customs debts, repayment and
        remission of duties and appeals. Moreover, it will provide for a system of appeals from
        decisions of the Customs, authorities on the application of the customs legislation. Provisions on
        transit procedures will also be introduced through the consolidated Customs Code. Community
        common commercial policy measures related to preferences, quotas, ceilings and suspensions
        will be implemented on accession.
        Maltese legislation does not provide for simplified procedures as such. Amendments to the
        Customs legislation introducing a number of new customs procedures have been implemented as
        from January 2001. In addition, legislation on post-clearance examination of declarations was
        introduced on 1 January 2000 by Act XIX of 1999.
        Work on other provisions covering areas such as processing under customs control, free zones
        and customs warehouses is at an advanced stage and these would be brought into effect at a later
        stage.
        Maltese legislation does not provide for simplified procedures as such. In this regard the extent
        and modalities under which they may be introduced are being assessed. Malta is a member of the
        Harmonised System Convention and the 7th and 8th digit of the 1996 version of the Combined
        Nomenclature have been incorporated in the Maltese Tariff. The Maltese Customs Tariff based
        on the year 2000 version of the Combined Nomenclature and the Integrated Tariff for Year 2000
        entered into force on 1 February 2000. The Integrated Tariff of Malta, version 2000, was
        published on 6 April 2000.




        DRAFT                                                                                          74
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Whilst goods of EU origin are not subject to import duties, imports into Malta originating in
non-EU countries are currently subject to import duties. As from 1 January 2001 rates of import
duties were amended to move closer towards those in the Common External Tariff. The
Common External Tariff (CET) will be implemented fully on accession. Moreover, exemptions
from import duties are granted under specific legislation, including the Industrial Development
Act (Cap. 325) for imports of raw materials, plant and machinery. The state aid element of
customs duties relief is dealt with under section 3.1.6 (Competition).
Although the Single Administrative Document (SAD) is not used in Malta, the Customs
authorities rely on the ASYCUDA format that is based on the United Nations layout. It has been
confirmed that the present version of ASYCUDA can generate the SAD and as such the SAD
could be introduced after due training about its use is provided to customs officials and traders.
Malta is signatory to various conventions on the temporary admission of goods namely the
Temporary Admissions Convention (ATA), the Fairs and Exhibitions Convention, the
Professional Equipment Convention, the Samples and Advertising Materials Convention, the
Seafarers Convention, the Touring Convention, the Additional Protocol to the Towing
Convention, the Private Road Vehicles Convention and the Aircraft and Pleasure Boats
Convention. Malta has also become signatory to the Istanbul Convention which consolidates the
above-mentioned conventions on the temporary admission of goods on 11 December 2000.
A Binding Tariff Information System has beenwas introduced in April 2000 in a legal form
through the publication of a legal notice (LN66/00) whose provisions are in line with EU
practice.
Currently, certificates of non-preferential origin are issued by the Chamber of Commerce. The
Customs’ authorities are closely monitoring the WTO harmonisation of non-preferential rules of
origin. The WTO non-preferential regime will start being applied as soon as the WTO
Harmonisation Work Programme comes to an end. Malta will apply the EU preferential rules of
origin in relation to third countries on accession. There is no system of Binding Origin
Information as required by the WTO Agreement on Rules of Origin. However, this matter will
be addressed and a Binding Origin Information system will be set up as soon as clear non-
preferential rules of origin are adopted when the harmonisation exercise being carried out by the
WCO on behalf of WTO will have been finalised
The Antiquities (Protection) Act (Cap. 54) is partially in line with the relevant Acquis. The Act
requires export duty to be paid on cultural heritage items.
Malta ratified the United Nations Convention against the Illicit Traffic in Narcotic Drugs and
Psychotropic Substances (1988) in 1996. Article 12 of this Convention provides for the setting
up of a monitoring system for trade in precursors in line with Regulation (EEC) 3677/90 and
Regulation (EEC) 3769/92.
The Dangerous Drugs Ordinance (Cap. 101) sets up a system of external trade control similar to
the Community regime. The Ordinance provides for import and export authorisations, licences
for the removal of precursors in transit and diversion certificates. These controls apply vis-à-vis
all third countries including the European Union. The Act does not identify sensitive destinations
for precursors. Part XI of the Customs Ordinance contains provisions for criminal liability and
penalties with respect to illicit trafficking of precursors.




DRAFT                                                                                           75
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Current legislation on the control of imports of dangerous chemicals and dual use goods is not
fully in line with the Acquis. Malta ratified the Chemical Weapons Convention on 28th April
1997. The Customs Department currently co-ordinates with the National Authority for the
Implementation of the Chemical Weapons Convention. Issues concerning dual-use goods are
discussed under Section 3.8 (External Policies), whilst issues relating to dangerous chemicals are
discussed under Section 3.6.1 (Environment)
The Customs Ordinance (Cap 37) will be amended with Bill 70 of 9 May 2000 concerning
Action Against Fraud Relating to Containers which is now at committee stage in Parliament.
A significant part of the levies collected under the Local Manufactures' (Promotion) Act (Cap.
336) will be phased out as established by Legal Notice (LN123/99). This issue is further
discussed in Section 3.1.1 (Free Movement of Goods) and Section 3.4.2 (Agriculture).

Organisational Considerations
The Customs Department within the Ministry of Finance is the main administrative structure
responsible for the implementation and enforcement of the Acquis on Customs Union. The
Customs Department is aware that a significant amount of progress is needed to be able to deal
with new procedures and responsibilities. The Customs Department is reviewing its current
structures and determining related training needs.
The Maltese Customs Department already possesses a number of administrative and operational
structures to enable it to meet its obligations in terms of the relevant legislation. It has also
introduced operational procedures based on principles adopted in the Community.
Training of staff is considered an ongoing process and a number of in-house training
opportunities on different subjects are made available to various sectors of staff within the
Department throughout the year. Foreign training opportunities are also tapped, particularly
those concerning enforcement procedures in specific fields such as the illicit trafficking in drugs,
radioactive materials and protected species, commercial fraud, offences against intellectual
property rights as well as risk analysis and management techniques.
Nevertheless, the human resources capabilities at Customs need to be consolidated and upgraded
especially in areas such as post clearance audit, systems of tariff quotas, ceilings and
suspensions, procedures not yet adopted, counterfeit/pirated goods, dual purpose goods, the
common agricultural policy, transit and in more onerous border controls consequent to Malta
becoming part of the external border of the Community.
In October 1999, the Maltese Customs Administration undertook a gap analysis based on the
Customs Blueprints. This was followed up by a needs analysis. A Business Change
Management Plan was formulated in January 2000 and submitted to the Commission. This plan
will be financed through the national budget and pre-accession funds. A draft Code of Ethics was
also prepared and an internal audit unit within the Customs Department was set up in August
2000. ImplementionImplementation of the Business Change Management Plan started on 1
January 2001.
A Pre-Accession Unit (PAU) was set up within the Ministry of Finance to manage the Business
Change Management Plan in connection with the modernisation and upgrading of the operational




DRAFT                                                                                            76
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




capacity of the Customs and Taxation Departments. Two project managers, one for the Customs
Department and one for the taxation Departments, have been recruited to manage the
implementation of the strategy for accession. The overall implementing authority will be the
Ministry of Finance through a Project Steering Committee composed of a representative of the
European Commission and the Director Generals of the Operations, Customs, Value Added Tax
and Inland Revenue Departments. The PAU will report to the Project Steering Committee and
will be assisted by short-term technical experts in specific areas.
The post of a Director (EU Matters) was established recently and the incumbent's main tasks will
be to co-ordinate and monitor all EU-oriented activities during the pre-accession period, to help
establish the necessary structures within the Customs Department, to maintain contact with
entities involved with Malta's accession to the EU and to ensure that staff and traders are duly
trained.
Preparatory work has started on the setting up of a Common Agricultural Policy (CAP) Unit,
within the Customs Department, to deal with the Customs related aspects of the Common
Agriculture and Fisheries Policies. The unit will manage the Community’s common external
tariff in respect to agricultural and fisheries products and implement the provisions relating to
trade mechanisms in the CAP. The Ministry of Agriculture and Fisheries will be responsible for
the management of export refunds.
Co-operation with other enforcement agencies, both local and foreign, is an integral part of the
brief of the Maltese Customs authorities. The Customs Department is represented on the national
drug intelligence structures, is a member of MARINFO Sud (which comprises a number of
countries on the Mediterranean littoral) and has access to the SCENT system of the EU. The
Customs Department is participating in the Customs 2002 Programme.
Procedures leading towards the signing of agreements on mutual administrative assistance on
customs matters with France, and the United States of America are in an advanced stage.
Agreements on mutual administrative assistance on customs matters have been concluded and
signed with Italy and the United Kingdom. The signing of a similar agreement with the EU is
also being pursued and the matter was raised during the meeting of the EU-Malta Co-operation
Committee on Customs Matters in June 2000.
A Work Programme on EU Customs Legislation training has been finalised with Eurocustoms
and funds under the Fourth Financial Protocol are being utilised to finance the activities under
the Programme which commenced during October 2000.

Computerisation
The ASYCUDA Version 2.7 became operational in 1993 and has since been used for the
processing of import and export declarations. The system has upgraded procedures for the
processing of documents and has served as a basis for the quick collection of statistics.
Meanwhile, ASYCUDA Version ++ has been identified as the potential successor to the present
system.
At present Customs also operate an in-house built "Risk Analysis and Intelligence Database"
(RAID) System at the Customs Airfreight Section and at Hal Far Groupage Bonds Complex.




DRAFT                                                                                         77
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Other small computerised systems developed in-house are in place to serve the needs of
particular stations or sections.

B. Short Term Priorities (2001)
a) A consolidated Customs Code based on the EU Customs Code will be adopted and enter into
   force by end 2001. It will also provide for a system of appeals from decisions of the
   custom’s authorities on the application of the customs legislation. This will introduce
   provisions on transit procedures.
b) Align provisions on custom debts, repayments and remission of duties and appeals by fourth
   quarter of 2001.
c) Introduce provisions for entry procedures and on the placing of goods under customs
   procedures by the fourth quarter of 2001.
d) A simplified procedure system is being redesigned in order to provide for trade facilitation.
   The system and the relevant legislation will be adopted by the third quarter of 2001.
e) Align legislation on free zones, free warehouses and simplified procedures by the third
   quarter of 2001.
f) Subsidiary legislation under the Import duties Act (Cap. 337) will be adopted to introduce
   inward processing, outward processing, processing under customs control and customs’
   warehouses in line with the EU Customs Code.
g) A communication plan will be drawn up to ensure uniform interpretation by Customs
   personnel and users of customs services. A quality service charter will also be introduced
   Internal communication channels will be reviewed and defined by the fourth quarter of 2001.
h) The Customs, VAT and Inland Revenue Departments will develop an IT investment policy
   including disaster recovery and a strategic plan including disaster recovery and security
   policy and procedures. Modern technology to facilitate the enforcement of these measures
   will be introduced and the infrastructure for the transit system will also be set up. The
   effective use of resources to secure efficient business performance will be prioritised. The
   related plans and policies will be completed by end 2001.
i)   The Import Duties Act (Cap. 337) grants relief from custom duties to a number of items and
     is partially in line with Council Regulation 918/83. For items on which relief is granted by
     the Act but not by the Council Regulation, the Act will be brought fully in line with the
     Regulation during 2001.
j)   Replace the Antiques (Protection) Act (Cap. 54) with new Heritage Act and set up a
     National Heritage Database. The database will be set up by the Museums Department to
     allow for the management and regulation of the movement of national cultural treasures.
     The issue of export of culture of goods is further discussed in Section 3.1.1 (Free Movement
     of Goods).
k) A training unit will be set up, whose functions will include the drawing up of a pre-accession
   training programme by the fourth quarter of 2001 to prepare Customs personnel and traders




DRAFT                                                                                          78
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




     in the use of new IT systems and in the introduction and implementation of new operational
     provisions, systems, procedures and EU Policies. (Ongoing)
l)   A performance management system will be in place by the fourth quarter of 2001.
m) Align legislation on the control of dual use goods to be in line with the Acquis by 2001.
n) Adopt the amendments to the Customs Ordinance (Cap. 37) to reflect the provisions of
   Decision 187/85/EEC concerning action against fraud relating to containers.
o) A memorandum of understanding between the Customs Department’s laboratory and the
   National Standards Laboratory set up under the Malta Standards Authority will be signed.
   This memorandum will constitute a formal contractual partnership determining the functions
   to be retained by the Customs laboratory. It will also guarantee that the National Standards
   Laboratory will carry out any necessary analytical work beyond the capabilities of the
   Customs laboratory.
p) Investigation and enforcement policies in line with the Acquis will be developed by the third
   quarter of 2001. Further training and the use of modern technical equipment, including IT,
   will enhance enforcement measures. A number of intelligence teams will be established by
   the second quarter of 2001.
q) A draft Code of Ethics will be published. Information meetings and training will commence
   following the publication of this Code of Ethics. The internal audit unit within the Customs
   Department will reach full capacity by the fourth quarter of 2001. The Customs Department
   together with the Value Added Tax Department and the Inland Revenue Department will
   develop an IT investment policy and a strategic plan including an IT disaster recovery
   securing policies and procedures by the end of 2001.

C. Medium Term Priorities (2002)
a) Malta will apply the EU’s preferential rules of origin in relation to third countries upon
   accession.
b) The CAP unit at Customs will be operational in 2002.
c) Align the customs regime with the Common External Tariff (CET) upon accession.
d) The items on which relief from customs duties is granted by Council Regulation 918/93 but
   not by the Import Duties Act (Cap 337) will be granted relief from customs duties upon
   accession.
e) Install the IT infrastructure necessary to manage the customs and indirect taxation provisions
   of the internal market by mid-2002.
f) Continue to provide training for staff and traders in the use of new IT systems and in the
   implementation of new operational provisions, systems, procedures and EU policies.
g) Improve the operational capacity of customs in terms of Business Change Management Plan
   based on the analysis of the Customs Blueprints, by end 2002.
h) The provisions concerning the Community Trademark will be adopted upon accession.




DRAFT                                                                                          79
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




i)   Set up border inspection posts by 2002.
j)   Valuation of carrier media will be aligned with the Acquis by the first quarter of 2002.
k) Minimum values on used motor vehicles and motor cycles will be aligned by 1 January
   2003.
As regards precursors, the provisions of Regulation (EEC) 3677/90 and Regulation (EEC)
3769/92 will apply to Malta on accession.

D. Institution Building Needs
In order to operate efficiently and effectively as an EU customs administration, the Customs
Department will be consolidated. It is envisaged that a number of units will be strengthened
whilst new units will be established in order to meet new responsibilities. Nevertheless, it is not
envisaged that this will involve a substantial increase in staff, as the necessary structure can be
largely attained through deployment of existing personnel.
Participation in specific training programmes and fora shall also be actively pursued in order to
build the necessary capacity to implement the requirements of the Acquis.
The changes relating to this area are also integrated in the holistic tax change management
programme, which features under section 3.3.1 Taxation.


Area of Activity                                                    2001        2002         Total

Ministry of Finance
Customs Department                    Senior                            -           -            -
                                      Middle                            2           5            7
                                      Other                             -           -            -
                                      Total                             2           5            7


E. Financial Requirements
                                                                                            Lm000
Area of Activity                                                    2001        2002         Total

Ministry of Finance
Customs Department                    Recurrent                       10           45            55
                                      Capital                        250            -           250
                                      Training                         -           10            10
                                      Total                          260           55           315




DRAFT                                                                                            80
        MINISTRY OF FOREIGN AFFAIRS                                                National Programme for the
        MALTA                                                                           Adoption of the Acquis
                                                                                        August 2001Final Draft




3.2     Innovation
3.2.1   Education, Training and Youth

        A. Current Status
        The present system in Malta concerning education, training and youth does not pose any
        substantial difficulties to achieve full alignment with the Acquis. Indeed, most of the relevant EU
        recommendations, directives, conclusions and resolutions in these areas have already been
        adopted.
        As a member of the Council of Europe since 19645, Malta has long followed policies similar to
        those of the EU Member States in the field of education. Consequently, Malta is aligned with the
        principles provided by EU Resolutions, Declarations, Conclusions, and Recommendations
        (including equality of opportunity, gender equality, illiteracy, safety in schools). Maltese
        legislation and practice are also generally in line with the Acquis.
        The four main areas of the Acquis that require particular attention are:
             Council Directive of 25 July 1977 on the education of the children of migrant workers
              (77/486/EEC).
             The free circulation of persons and the principle of non-discrimination on grounds of
              nationality (93/96/EEC).
             Facilities for access to and participation in vocational training measures, especially for
              women.
             Participation in the Community Programmes in the field of education, training and
              youth.

        Draft amendments to the Education Act (Cap. 327), which address the equality of treatment in
        higher education and the question of the education of children of migrant workers, have been
        completed.
        With regards to in-service training for teachers and matters relating to guidance and counselling,
        Maltese legislation is in line with the Acquis and the respective Recommendations are being
        implemented by the Education Division.
        The University of Malta has in place quality assurance structures.
        The Malta College for Applied Arts, Science and Technology has beenwas established in on 11
        August 2000. This incorporates a number of institutes addressing particular areas of vocational
        training at the post-secondary level, namely electronic engineering, information and
        communication technology, applied sciencesbuilding and construction, business and commerce,
        applied arts and design and community maritime servicesstudies.
        The changes required in the teaching of technology related subjects at the secondary education
        level have been duly examined and technology education has now been introduced in schools to
        support and complement the function of the new vocational college at a lower level.




        DRAFT                                                                                              81
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




The National Malta Vocational and Professional and Vocational Qualifications Council was set
up in on 25 October 2000 following the entering into force of the Malta Professional and
Vocational Qualifications Regulations, 2000 (LN215/00). These regulations seek to will also
help to ensure transparency of qualifications and certification.
In July 1999, Malta formally informed the EU on of its intention to participate in Leonardo,
Socrates and Youth for Europe Programmes. The EU responded favourably to this request and in
autumn 1999, Malta and the EU agreed on the financial implications of Malta's participation in
these programmes. Malta was also invited for information meetings of these programmes and an
intensive information campaign on Socrates and Leonardo was undertaken in the first half of
2000.
In January 2000, the European Union Programmes Unit (EUPU) was established within the
Ministry of Education, in order to facilitate Malta's participation in EU programmes. The EUPU
has delegated to the Malta Council for Science and Technology (MCST) is the Government
agency responsible for the management and co-ordination of Malta’s the administration
concerning Malta's participation in the fifth Framework RTD Programme. During 2000, Malta
concluded its negotiations for Malta's participation in Leonardo, Socrates and Youth and the
Association Agreement was initialled in June 2000. The formal signing of this Association
Agreement took place in September 2000.
In 2000, Malta is started participating in Leonardo and Socrates, while in 2001, it will start
participating in the Fifth Framework Programme and Youth. It is also planned for Malta towill
participate in Culture 2000 as soon as possible. Malta isese schools are also participating in the
Comenius programme. The response by University students, vocational education students,
teachers and workers to opportunities to participate in Erasmus and Leonardo Mobility projects
was very significantencouraging.
The education authorities will continue with their active participationparticipate actively in the
European Training Foundation. Malta is participating in the European Centre for the
Development of Vocational Training (CEDEFOP) as an observer.
Preparatory work has beenwas finalised on the Implementation of the Principles of European
Pathways. This includes the issuing of the European Training Document. Malta has requested to
participate in the system which is presently open only to EU member states.

B. Short Term Priorities (2001)
a)   Amend the Education Act to implement Directive 77/486/EEC (The Education of Children
     of Migrant Workers) and to remove discrimination on the grounds of nationality by the
     second quarter of 2001. These amendments will be brought into force prior to accession.
b)   The Employment and Training Corporation (ETC) will take the necessary action to
     implement the principles of European Pathways, including the issuing of the Europass
     Training Document.
c)   Finalise the draft Amendments to existing relevant legal notices.
d)   Participate as observers in the European Centre for the Development of Vocational
     Training. (Ongoing)




DRAFT                                                                                            82
MINISTRY OF FOREIGN AFFAIRS                                          National Programme for the
MALTA                                                                     Adoption of the Acquis
                                                                          August 2001Final Draft




C. Medium Term Priorities (2002)
a) Issue relevant Legal Notices discussed under Section 3.1.2 (Free Movement of Persons).
b) Equality of treatment in higher education will be implemented, upon accession, between
   Maltese and EU nationals.

D. Institution Building Needs
The infrastructure to implement the Acquis is in place, with the exception of certain areas
concerning vocational training and education and the issue of professional warrants.
In view of Malta's participation in the EU educational programmes, the European Union
Programmes Unit (EUPU) has beenwas established on 28 January 2000. This Unit acts as a
national mechanism aimed at ensuring a co-ordinated approach to the management of the
Community's Education and Training Programmes, inter alia Socrates, Leonardo da Vinci and
the Youth Community Action Programme.
The Malta Professional and Vocational Qualifications Council has been set up.



Area of Activity                                                2001        2002         Total

Ministry of Education
National Vocational
Qualifications Council             Senior                           1            -           1
                                   Middle                           1            -           1
                                   Other                            -            -           -
                                   Total                            2            -           2

Participation in EU Programmes     Senior                           -           -1          -1
                                   Middle                           3           -1          34
                                   Other                            1           -3          14
                                   Total                            4           -5          49



E. Financial Requirements
The costs for the participation in EU Educational Programmes (Leonardo, Socrates, and
Community Youth Action Programme) for the coming six years have already been estimated and
funds provided. In the Budget Estimates for 2000, the Ministry of Education has beenwas
allocated LM175,000 for this purpose.




DRAFT                                                                                        83
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




                                                                    Lm000
Area of Activity                             2001      2002         Total

Ministry of Education
National Vocational
Qualifications Council           Recurrent     10         10           20
                                 Capital        -          -            -
                                 Training       -          -            -
                                 Total         10         10           20

Participation in EU Programmes   Recurrent      -          -           -
                                 Capital        -          -           -
                                 Training     303        224         527
                                 Total        303        224         527




DRAFT                                                                   84
        MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
        MALTA                                                                       Adoption of the Acquis
                                                                                    August 2001Final Draft




3.2.2   Science and Research

        A. Current Statusk
        The Ministry of Education has the responsibility for science and technology. In fulfilling this
        task, the Ministry is advised by the Malta Council for Science and Technology (MCST), which
        is an independent board of high level experts drawn from the private and public sectors as well
        as academia. The MCST is responsible for formulating and co-ordinating national science and j
        technology policy, which task it implements through the Foundation for Science and
        Technology, an independent public body formally established in 1995.
        The broad objectives of Malta's science and technology policy are defined in the MCST's
        National Science and Technology Policy Document, which was adopted in 1994. This document
        is supported and updated by sectoral policy documents, in particular the Review of the National
        Strategy for Information Technology that was drawn up in 1997. The functions of the
        Foundation for Science and Technology are detailed in a specific charter endorsed in 1995. The
        Foundation fulfils its functions through a process of networking, pooling resources from the
        private and public sectors and academia, and by promoting the concept of integrated resources
        management. The general principles guiding Malta's science and technology policy are:
             promoting sustainable development by investing in an indigenous science and
              technology base;
             spearheading a rapid and strategic science and technology penetration in all sectors, led
              by a considerable stimulus from above, combined with a diffused bottom-up approach;
             integrated resource management through networking and public-private sector
              partnerships;
             promoting the training and mobility of researchers;
             development of international science and technology links and access to the global
              knowledge base;
             increased university-industry links and networking;
             co-operation between MCST and the Institute for the Promotion of Small Enterprise Ltd
              (IPSE) and the Malta Development Corporation (MDC) to promote Foreign Direct
              Investment (FDI) and joint science and technology ventures; and
             co-operation between MCST, IPSE, MDC, METCO and the Malta Business Bureau to
              promote the participation of the private sector in the Fifth Framework Programme.
        Moreover, joint public-private sector research and development ventures are being promoted.
        The general objectives of science and technology policy in Malta are in line with the Acquis.
        The Acquis relating to science and research does not require transposition into the national legal
        order or particular implementation and enforcement measures. The implementation of the Acquis
        primarily concerns participation in the relevant Research and Technological Development (RTD)
        framework programmes.
        Malta has a good record of participation in a number of EU science and technology programmes
        including Avicenne and the Fourth Framework Programme. Maltese research organisations have




        DRAFT                                                                                           85
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




participated in six Avicenne projects and a total of fourteen Fourth Framework Programme
projects (seven in the First Activity areas and seven under the INCO Programme).
In the case of the Fifth Framework Programme (FP5), Malta has submitted two proposals under
the 1999 INCO Call for Pre-Accession Countries. Maltese research organisations have also been
involved in project proposals under the FP5 Thematic Programmes and the INCO-MED and
INCO-DEV Programmes. In April 2000November 1999 the Maltese Cabinet took the decision to
seek Associated membership of the Fifth Framework Programme, Malta and the Government
subsequently formally expressed its interest in becoming fully associated to the Fifth Framework
Programme. this regard. Malta became fully associated with the Fifth Framework Programme
with effect from January 2001.
Malta now is actively participating in the Fifth Framework Programme. Malta is currently
participating, as a full member, in three COST actions and is seekingsought to become a full
member of a fourth action. Malta is also active at the Euro-Mediterranean level through regular
participation in the meetings of the Euro-Mediterranean Monitoring Committee for Research and
Technological Development. In a wider international context, Malta is actively involved in a
number of intergovernmental organisations, including UNESCO, the Commonwealth Science
Council and the International Atomic Energy Agency. Measures are being taken to encourage
bilateral links, including science and technology agreements and multilateral links.

B. Short Term Priorities (2001)
a)   Develop sectoral networks to provide policy advice on areas of national interest.

C. Medium Term Priorities (2002)
a) Establish the national science and technology information resourcing through the setting up
   of an information resource and scientific databank.
b) Establish an updated strategy for the unfolding of Malta's science and technology policy.
c) Establish appropriate systems to ensure a holistic and focused approach in national
   expenditure on R&D.

D. Institution Building Needs
The Ministry of Education is responsible for the national science and technology policy whilst
the Malta Council for Science and Technology (MCST) is the government agency responsible
for the management of Malta's participation in the Fifth Framework Programme. The main
organisational infrastructure necessary to implement the Acquis is in place and only minor
additional capacity is required.

Area of Activity                                                   2001        2002        Total

Ministry of Education
Science & Technology                 Senior                           -            -           -
                                     Middle                           1            -           1




DRAFT                                                                                          86
MINISTRY OF FOREIGN AFFAIRS                                   National Programme for the
MALTA                                                              Adoption of the Acquis
                                                                   August 2001Final Draft




                                   Other                      1         -             1
                                   Total                      2         -             2
Area of Activity                                           2001      2002         Total

Participation in EU Programmes     Senior                    -            -           -
                                   Middle                    1            -           1
                                   Other                     1            -           1
                                   Total                     2            -           2



E. Financial Requirements
                                                                                  Lm000
Area of Activity                                           2001      2002         Total

Ministry of Education
Science & Technology               Recurrent                 10         10           20
                                   Capital                    -          -            -
                                   Training                   -          -            -
                                   Total                      -          -            -

Participation in EU Programmes         Recurrent              -          -           -
                                       Capital                -          -           -
                                       Training *           507        662       1,169
                                       Total                507        662       1,169
(*) Includes participation in Fifth Framework Programme.




DRAFT                                                                                 87
        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                     August 2001Final Draft




3.2.3   Telecommunications and Postal Sector

        A. Current Status

        B. Telecommunications
        The field of telecommunications in Malta is regulated by the Wireless Telegraphy Ordinance
        (Cap. 49) and by the Telecommunications (Regulation) Act (Cap. 399). Furthermore, the Malta
        Communications Authority Act (Cap. 418) was approved by Parliament in July 2000.
        With the enactment of the Telecommunications (Regulation) Act (Cap. 399), the Office of the
        Telecommunications Regulator was established. Maltacom p.l.c. was set up in December 1997 to
        replace Telemalta Corporation, a parastatal body which exercised exclusive rights and acted as
        regulator over all telecommunications services. In June 1998, the Government sold 40 per cent of
        its equity holding in Maltacom p.l.c... Further subsidiary legislation and notices have been issued
        as follows:
               Rate Mechanism (LN332/98)
               Telecommunications (Universal Service Obligations) Regulations (LN216/98)
               Telecommunications Appeal Board (Jurisdiction) Regulations (LN217/98)
               Telecommunications Appeals Board (Rules of Procedure) Regulations (LN218/98)
               Telecommunications Apparatus (Standards) Regulations (LN219/98)
               Fees for Type Approval of Telecommunications Equipment (LN220/98)
               Authorised Providers (Provision of Information) (LN278/98)
               Internet and Other Data Networks (Service Providers) Regulations (LN170/99)

        The responsibility for telecommunications regulation rests with the Ministry for Transport and
        Communications whilst the ownership function of the state in relation to the public network
        operator Maltacom p.l.c. is exercised by the Ministry for Economic Services. The Ministry of
        Finance deals with issues related to privatisation.
        With the enactment of the Malta Communications Authority Act (Cap. 418), the
        Telecommunications (Regulation) Act (Cap. 399) was amended. The Malta Communications
        Authority was established to oversee and regulate development of communication services and
        technologies. The functions of the Malta Communications Authority with regards to
        communication services include the following:
               regulation, monitoring and review of communication services;
               granting and refusal of operating licences;
               fixing of rate mechanism;
               setting out of standards of communications services;
               advise the minister on policy formulation;
               formulation and implementation of policies;
               ensure fair competition; and
               regulate and secure interconnectivity.




        DRAFT                                                                                           88
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




The Authority is also responsible to ensure freedom of communication and also to ensure non-
discrimination and equality of treatment in matters related to communications services.
Communications services as defined in the Act, include telecommunications, postal services,
data protection, electronic commerce and Internet services.
The Malta Communications Authority Act (Cap. 418), which aims to strengthen the regulatory
framework, provides for further alignment with the Acquis. Furthermore, the Act provides for the
establishment of the following three Directorates within the Authority:
     Directorate for Telecommunications with responsibility for the regulation of all matters
      relating to telecommunications;
     Directorate for Data Protection with responsibility for the regulation of all matters
      relating to data protection;
     Directorate for Information and Other Systems with responsibility for the regulation of
      all matters relating to electronic commerce as well as information and other systems.

The Chairman and Chief Executive of the Authority took office in January 2001 and recruitment
of personnel is underway.

The amendments to the Telecommunications (Regulation) Act (Cap. 399) brought the Act in line
with the Acquis. Furthermore, draft subsidiary legislation has been prepared to meet the
requirements of the Acquis on the regulatory framework, including transparency obligations,
interconnection, universal service obligations, data protection, numbering and number portability
and carrier pre-selection. A revised numbering plan is currently being drawn up. Nomination of
Competent Authority Regulations (LN 280/00) came into force in December 2000, implementing
regulatory requirements under Directive 90/388/EEC and Directive 97/13/EC on a common
framework for general authorisations and individual licenses.
The Telecommunications (Regulation) Act (Cap 399) provides for interconnection. However,
this was not completely in line with the Acquis and the main point of divergence related to the
costing method. Interconnection (Obligation and Rates) Regulations, 2000 (LN243/00) issued
under this Act came into force on 28 November 2000. This subsidiary legislation provides for
full implementation of the Acquis with regard to mobile and personal communications, including
aspects related to interconnection charges, the obligation to negotiate interconnection
agreements, the nature of interconnection contracts, the accounting system, forecasts and
routing.
Telecommunications Service (Modification and Provisions in respect of a Joint venture and
Shareholders Agreements) Regulations, 2000 (LN 248/00) came into force in December 2000.
This Legal Notice implements the liberalisation requirements under Directives 90/388/EEC and
96/19/EC with regard to the implementation of full competition in the telecommunications
market.
Telecommunications and Wireless Telegraphy Fees (Modalities of Payment) Regulations, 2000
(LN 236/00) came into force in November 2000.
Amendments to the Telecommunications (Regulation) Act have been drafted and are designed to
render the licensing regime more objective, non-discriminatory, proportionate and transparent. It




DRAFT                                                                                         89
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




is expected that the amendments are approved by Parliament in 2001. Telecommunications
Services (General) Regulations (LN151/00) have been issued under the above Act. These
provide for the cost orientation of tariffs. These provisions have not yet come into force. The
Legal Notice also provides for Long Range Incremental Cost Accounting Systems. These have
come into force.
The procedures for the granting and refusal of applications include provisions for the right of
appeal. The right of appeal to the Telecommunications Appeals Board is granted both to an
applicant whose application for licence has been refused as well as to any person who has made
submissions to the regulator in respect of any application. Decisions of the Telecommunications
Appeals Board are in turn subject to an appeal to the Court of Appeals on questions of law.
The Wireless Telegraphy Ordinance (Cap. 49) lays down a general licensing requirement for the
manufacture, purchase, sale or possession of wireless telegraphy equipment. The Wireless
Telegraphy Department also deals with type approval of equipment, maintenance of technical
standards and frequency spectrum management.
The frequency bands recommended by the EU to be reserved for certain specific types of
telecommunications services have been reserved accordingly. In the case of UMTS bands, the
regulator has taken the necessary action to reserve the appropriate frequency bands for the
UMTS service as required by the Acquis.
Malta is a full member of the European Telecommunications Standard Institute (ETSI) and its
standards have been adopted with regard to ONP, mobile voice telephony and satellite services.
The equipment of Maltacom p.l.c. the main operator, is in conformity with EU standards.
Malta's existing radiopaging system is based on POCSAG. The frequency bands outlined in the
Commission Decision 98/522/EC have been reserved. ISDN services were launched in March
2000, whilst ADSL services were introduced in July 2000.
The telecommunications sector will be liberalised by the fourth quarter of 2002 and detailed
liberalisation time frames are set out for the different categories of telecommunications services.
No exclusive privileges may be granted or shall have effect beyond the 31 December 2002. In
fact Order of Cessation of Exclusive Privileges (LN191/00) was published on 3 October 2000
and deemed to have come in force on 19 September 2000, to provide for the removal of
monopolies.
All telecommunications services, other than fixed telephony, mobile telephony, international
gateway and cable television, have been liberalised during 2000. At the same time, Maltacom
p.l.c. will cease to be exempt from the Competition Act, so that all market players will become
subject to the rules of competition law. Maltacom p.l.c. will bewas licensed to enter the mobile
telephony market on 1 December 2000. Because of the change in the mobile operating scenario,
Maltacom p.l.c. is required to dispose of its shares in Vodafone Malta Limited (which previously
held an exclusive license) within six months from the date when its subsidiary first provides
mobile telephony services. Telecommunications Services (Modification of Maltacom plc and
Vodafone Malta Limited Licenses) Regulations, 2000 (LN 195/00) were issued to remove
monopolies. The second license for GSM mobile telephony started operating on 1 December
2000.The issue of a licence for a third operator in mobile telephony will be considered in 2003
and hence a third license would not be expected to be in place before 1 January 2005. The cable




DRAFT                                                                                           90
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




television market will be liberalised on 1 June 2001. International gateway services, including
those for data services, will be liberalised on 1 January 2003. Fixed telephony services will be
liberalised on 1 January 2003.
The provision of Internet services has been liberalised since 1995 and thirteen Internet service
operators provide services on the basis of a ten-year licence. Internet service providers are still
required to use Maltacom's international gateway, until this is liberalised on 1 January 2003. The
Internet and Other Data Networks (Service Providers) Regulations 1999 have been modified in
order to provide that the open access obligations will become operative only when a company
achieves a dominant position in the market for Internet access services. The Malta Internet
Exchange Regulations, 2000 (LN 203/00) came into force in December 2000. The Legal Notice
implements the liberalisation and interconnection requirements under Directive 90/388/EEC and
Directive 96/19/EC with regard to the implementation of full competition in the
telecommunications market.
The Telecommunications (Regulation) Act (Cap. 399) provides for protection against the misuse
of data in certain instances and stipulates the penalties for infringement. A White Paper on the
Legislative Framework for Information Practices was published during 2000. The proposed
legislative framework comprises an Electronic Commerce Bill, a Data Protection Bill and a
Computer Misuse Bill. The first two bills provide for the transposition of the entire Acquis
relating to data protection and electronic signatures, whilst the third is intended to provide the
penal framework necessary to prevent and fight computer-related offences. The Electronic
Commerce Act (Cap. 426), incorporating provisions dealing with computer misuse, was
published in January 2001 and will come into force in the second quarter of 2001. The Data
Protection Bill has received its second reading in Parliament. The areas of information society
and data protection are discussed further under Section 3.1.3 (Free Movement of Services).

Postal Sector
Postal services are regulated by the Post Office Act (Cap. 254). Subsidiary legislation also
includes the Inland Post Regulations (LN35/85), the Overseas Post Regulations (LN65/89) and
the Inland Post (Amendment) Regulations (LN14/97). The Post Office Act provides for the
suspension of the monopoly of the post-office and for the licensing of private services. The Post
Office Act (Cap. 254) and the current set-up in the postal sector are not fully aligned with the
Acquis. Amendments to the Post Office Act are being drafted.
Maltapost p.l.c. is the postal entity licensed by the Government of Malta to operate postal
services on commercial lines, although it also fulfils an important socio-economic role. It is a
public liability company with the majority of its shareholding owned by Government. Maltapost
was granted an exclusive operating license on 1 May 1998 to:
     provide a postal conveyance service, from one place to another, whether by land, sea or
      by air, for all postal articles;
     perform all incidental service of receiving, collecting, dispatching and delivering postal
      articles; and
     provide other services related to its core business activities.




DRAFT                                                                                           91
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Various courier and express parcel operators such as TNT, DHL and UPS have been exercising
their trade in Malta for a number of years now, although these are not covered by licence.
As from 1998, the operational responsibilities in respect of postal services were divested from
the Post Master General, who retained only regulatory functions. The regulation of postal
services now rests with the Malta Communications Authority within the Ministry for Transport
and Communications whilst the operational functions are handled by Maltapost p.l.c., the
universal service provider. Government shareholding in Maltapost falls within the remit of the
Ministry for Economic Services.
Maltapost needs to be reorganised in order to meet the competitive challenges ensuing from EU
membership, and to this effect, a Strategic Plan, 5-year Business Plan and Operating Plan for
fiscal year 2000 have been drawn up.

B. Short Term Priorities (2001)

Telecommunications
a)   Liberalise the cable television market on 1 June 2001.
b)   Continue to strengthen the regulatory structures, which will reach full capacity by the
     second quarter of 2001.
c)   Achieve compliance with the Acquis as regards interconnection by the third quarter of 2001.
d)   Achieve full compliance with the Acquis as regards issues relating to numbering by the third
     quarter of 2001.
e)   The common European emergency number service (112) will be in place by the fourth
     quarter of 2001.

Postal Sector
Restructure Maltapost in order to facilitate alignment with the three main areas of the Acquis in
this sector, namely:
      access to other service providers, under the same conditions, and ensuring inter-
       operability with Member States in the coming years;
      standards for service based on performance/quality measurement parameters; and
      prices for each service are to be related to the average cost of that service.
a) Amend the Post Office Act to enable the further liberalisation of the sector. The Bill
   amending this Act is expected to come into force by the fourth quarter of 2001
     b).                                                                                               Formatted: Bullets and Numbering

Strengthen the regulatory structures for the postal sector, to reach full capacity by the second       Formatted: Bullets and Numbering
quarter of 2001
c) .




DRAFT                                                                                            92
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




d)Introduce a new EU compliant post code system.                                                     Formatted: Bullets and Numbering


C. Medium Term Priorities (2002)

Telecommunications
a) Implement tariff re-balancing as required by the Acquis by the second quarter of 2002.
b) Liberalise international gateway services, including those for data services, on 1 January
   2003.
c) Liberalise fixed telephony services on 1 January 2003.

D. Institution Building Needs
The creation of the Malta Communications Authority under the Malta Communications
Authority Act allows for the building of the necessary administrative capacity in this sector. The
Authority will oversee and regulate the development of communication services (including
postal services) and technologies in Malta.



Area of Activity                                                  2001        2002         Total

Ministry for Transport and
Communications
                                     Senior                           -            -           -
                                     Middle                           1            -           1
                                     Other                            -            -           -
                                     Total                            1            -           1

Malta Communications Authority       Senior                           2            -           2
                                     Middle                           8            -           8
                                     Other                            1            -           1
                                     Total                           11            -          11


E. Financial Requirements
                                                                                           Lm000
Area of Activity                                                  2001        2002         Total

Ministry for Transport and
Communications
                                     Recurrent                       10          10           20
                                     Capital                          -           -            -
                                     Training                        15          15           30




DRAFT                                                                                          93
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




                                 Total         25         25           50

Area of Activity                             2001      2002         Total

Malta Communications Authority   Recurrent     80         80         160
                                 Capital        -          -           -
                                 Training      20         20          40
                                 Total        100        100         200




DRAFT                                                                   94
        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                     August 2001Final Draft




3.2.4   Culture and Audiovisual

        A. Current Status

        Culture
        The Acquis on Culture consists mainly of Resolutions, Council Conclusions and
        Recommendations. Thus, the main component of the Acquis in this area does not require
        transposition into national legislation. There are no foreseeable problems for Malta to accept the
        Acquis in this field.
        The current EU cultural programmes are open to Malta as a participating partner country. The
        Maltese authorities are therefore closely following developments concerning the new generation
        programme Culture 2000, with the aim of full participation in the years to come. The necessary
        structures for Culture 2000 have been set up but are not yet operational. Malta has indicated its
        readiness to participate in Culture 2000.
        Malta has an open culture policy that also gives due importance to European culture. Thus active
        steps are taken to promote international cultural co-operation with the EU Member States and
        other countries. Moreover, the preservation of traditional arts is one of the primary aims of
        Malta’s cultural policy. To complement this stance, the law on the protection of rights
        originating from artistic productions is already in place and is duly enforced. The right of free
        access to culture and of expression of creativity has long been established.
        The legislation concerning museums in Malta is in line with the Acquis. However, due
        consideration is given to the upgrading of the efficiency and effectiveness of local structures. To
        this effect new legislation is being drafted to set up a National Culture Heritage Database and a
        system whereby training in heritage skills are enhanced.
        A departmental draft of a National Heritage Act has been prepared and the Maltese Government
        is carrying out consultations regarding the setting up of a National Heritage Database by the
        Museums Department to assist the Government in the management and regulation of the
        movement of national cultural treasures.
        A National Culture Policy document is being formulated. The first draft has been completed and
        it is currently being analysed by Ministry officials.
        The Public Libraries Ordinance (Cap. 92) and the National Archives Act (Cap. 339) govern the
        operation of Malta’s Libraries and Archives. These laws are compliant with the requirements of
        the Acquis. Action is being taken to improve the physical structures of libraries and the national
        archives to better secure the preservation of documents.

        Audiovisual
        The audiovisual field in Malta consists primarily of the broadcasting sector.
        Malta’s broadcasting landscape is mainly regulated through the Broadcasting Act (Cap. 350).
        The Act was developed on the basis of the 1989 Television Without Frontiers Directive and the
        Council of Europe Convention on Transfontier Television. Malta ratified the Council of Europe




        DRAFT                                                                                           95
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Convention on Transfrontier Television in 1993. Malta became a state party to the protocol
amending the European Convention on Transfrontier Television on 1 October 2000 by automatic
procedure.
The Broadcasting (Amendment) Act which came into force on 11 July 2000 amended the
Broadcasting Act (Cap. 350) in order to bring it into line with the Acquis. The amendments to
the Act strengthen the effectiveness of the Broadcasting Authority by introducing a system
whereby administrative sanctions will replace the current penal sanctions in respect of offences
by broadcasters. The actions of the Authority in this regard will be subject to judicial review.
The Broadcasting Authority is responsible for the implementation and enforcement of
broadcasting legislation. The Authority is an independent Constitutional body whose funding is
guaranteed by law. It has been an active member of the European Broadcasting Union and of the
Commonwealth Broadcasting Association for many years. The Authority is also a member of the
European Institute for the Media and a founder member of the European Platform of Regulatory
Authorities (EPRA), which was set up during a conference held in Malta in 1995.
Malta has extensive facilities for the provision of services to the film industry. In the field of
audiovisual production, Malta is committed to continue to foster the development of a film
industry. In this regard, the pertinent authorities are exploring the best modalities to enable
Malta’s effective participation in the MEDIA programme.
Consultations were held with regard to the commitments on audiovisual policy within the
framework of the World Trade Organisation. These consultations resolved the outstanding issues
arising during accession negotiations. Furthermore, the following subsidiary legislation came
into force by the end of 2000:
      Broadcasting (Jurisdiction and European Co-Operation) Regulations, 2000, (LN158/00)
       with the exception of Article 5, regarding the Broadcasting of European works.
      Code for Advertisements and Sponsorships, 2000 (LN159/00)
      Code for the Protection of Minors, 2000 (LN160/00)
      Code for the Investigation and Determination of Complaints (LN161/00)
      Special Administartive Procedure Regulations (LN162/00)
      Broadcasting Act (Amendment of the fFifth sSchedule) rRegulations, 2000 (LN164/00)
These brought into effective the provisions of Directive 89/552/EEC as amended by Directive
97/36/EC as well as the Council of Europe Convention on Trans-frontier Television and its
amending Protocol.

B. Short Term Priorities (2001)

Culture
a)   Enact the Heritage Act during 2001.
b)   The National Cultural Heritage Database will be in its initial operational phase. (Ongoing)




DRAFT                                                                                          96
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




C. Medium Term Priorities (2002)
Culture
a) The Heritage Act will come into force upon before accession.

Audiovisual
a)   The Television Without Frontiers Directive is being implemented with the exception of
     those elements in the Directive relating to the parts on the broadcasting of European works,
     which will come into force when other international obligations permit or by the date of
     accession, whichever is earlier.


D. Institution Building Needs
The structures necessary for the operation of Culture 2000 have been set up. The administration
of the Culture 2000 programme lies within the EU Programmes Unit. The role of a national focal
point is to provide interested parties with technical assistance in the areas of project formulation
and overseas partner identification.
The amendments to the Broadcasting Act, have strengthened the effectiveness of the
Broadcasting Authority by introducing a system whereby administrative sanctions have replaced
the penal sanctions used previously in respect of offences by broadcasters.


Area of Activity                                                    2001        2002         Total

Ministry of Education
                                     Senior                             -            -           -
                                     Middle                             2            -           2
                                     Other                              -            -           -
                                     Total                              2            -           2



E. Financial Requirements
                                                                                             Lm000
Area of Activity                                                    2001        2002         Total

Ministry of Education
                                     Recurrent                        10           10           20
                                     Capital                           -            -            -
                                     Training *                       25           25           50
                                     Total                            35           35           70


(*) Includes participation in Culture 2000.




DRAFT                                                                                            97
        MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
        MALTA                                                                      Adoption of the Acquis
                                                                                   August 2001Final Draft




3.3     Economic and Fiscal Affairs
3.3.1   Taxation

        A. Current Status

        Value Added Tax
        Value Added Tax (VAT) was re-introduced for the second time in Malta in January 1999, and
        the system has now been working with significant results. The taxpayers’ previous knowledge of
        the VAT system following its first introduction in January 1995 was an important factor in the
        smooth running of the present system.
        The change from the short-lived Customs and Excise Tax (CET) to the VAT regime has
        progressed as planned. The operations of the new VAT system has steadily gathered momentum
        and has provided a significantly higher tax yield.
        The operational capacity of the VAT Department has been enhanced, through various projects
        including:
             the recruitment of an additional number of VAT Inspectors/Auditors
             the appointment of seven Assistant Directors to be responsible for the various sections
              within the Department
             the provision of a training programme for all the VAT Inspectors/Auditors
             the implementation of a coherent enforcement strategic plan
             the setting up of appropriate IT applications for use in the collection of tax arrears
             the creation of additional office space within the same departmental building
             the setting up of a one-stop-shop customer service area and a quality service charter
        Other measures being taken by the VAT Department include the development of IT programmes
        for risk management and tax collection. Moreover, it has also linked its IT system with the VIES
        system and a central liaison office to ensure direct co-operation between the VAT Department
        and the VAT authorities in the respective member states. Work on the implementation of the
        VIES system will be completed by the second quarter of 2002. Various training programmes
        were provided to the VAT Department personnel. Moreover, an Internal Audit Unit, a Fiscal
        Audit Unit, an Audit Review Section, a Risk Management Unit and a Customer Care Section
        have been set up.
        As regards legislation, the Value Added Tax Act (Cap. 406) is based on the main principles of
        the Sixth Directive so that it is basically already harmonised with the Directive. The main
        exceptions are the following:
             The definition of “Taxable Scope” in the Act excludes exempt supplies and exempt
              importation.
             The distinction between the supply of goods and the supply of services as provided in the
              Act may not be exhaustive enough.
             A more specific definition regarding importation particularly as regards supply of all
              types of contract work is required.




        DRAFT                                                                                         98
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




     The provisions concerning the place of supply with respect to the provision of
      intellectual services to non-taxable persons established outside the country of the
      supplier in another Member State.
     Certain supplies by public authorities that are generally treated as exempt supplies under
      the Act are treated as taxable supplies under Annex D to the Directive.
     Certain supplies which are zero-rated under the Act are exempt without credit or taxable
      (albeit they may be taxable at the reduced rate) under Annex H to the Directive. Under
      the Directive, zero-rated supplies are limited to exports and certain related services, but
      their range is wider under the Act.
     Certain supplies that are treated as exempt supplies under the Act are taxable under
      Annex D or Annex H to the Directive.
     The definition of taxable value in the Value Added Tax Act is not in line as regards the
      inclusion with Article 11 of the Sixth Directive in the taxable amount of subsidies that
      are directly linked to the price of a supply.
     The existing refund schemes under Section 75(h) of the Value Added Tax Act are not in
      line with the Acquis. Under the Act, a taxable person established in any Member State
      and incurring input tax in Malta cannot deduct input tax unless he is registered in Malta
      under the Act. However, the Act already contains provisions that enable reciprocal
      agreements to be made with any other state.
     The Act provides for the setting up of a Small Businesses Scheme, but the relevant
      threshold level is not similar to that established by the Directive.
     There is no special Scheme for Farmers under the Act, although farmers in Malta may
      benefit from the provisions relating to the Small Businesses Scheme.
     Maltese legislation does not provide for a special scheme for gold as an investment, as
      does Directive 98/80/EC of 12 October 1988.
     A Second-Hand Goods Scheme is provided for under the Act that is similar to that
      provided for under the Directive. However, the Scheme does not specifically provide for
      works of art, collectors’ items and antiques.
     Transitional provisions and simplification procedures are missing under the Act as they
      are applicable only to Member States.
     Under the Act, VAT on imports is charged and collected by the Comptroller of Customs
      on behalf of the Commissioner of VAT at the Customs border.
     The Value Added Tax does not include the supply of telecommunication services and the
      hiring out of movable tangible property other than all forms of transport, as provided in
      Article 9(2) of the Sixth Directive on the supply of services.
     The definition of the place of supply with respect to transport services, does not refer to
      the place where the transport takes place, having regard to the distance covered.
     The Value Added Tax Act needs to be amended in order to comply with the Community
      Acquis on the provisions for the right of deduction on input VAT in respect of the rental
      of certain accommodation, including business premises. Ongoing adjustment for
      immovable property and capital goods in cases where the status of business or non-
      business is changed needs to be introduced




DRAFT                                                                                         99
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




With effect from 23 November 1999 and 1 January 2000 respectively, motor vehicle fuel (petrol
and diesel oil) and fixed-line telephony had their exempt status terminated and were made
taxable at the full rate of 15 per cent, in line with the Acquis.
With effect from 1 January 2001, health, welfare and education services are no longer exempt
with credit, but their status has been changed to exempt without credit, whilst meals in canteens
had their exempt status terminated and were made taxable at 15 per cent.
Furthermore under the Scheme for Travel Agents the profit margins on travel abroad has been
made taxable at 15 per cent.
Provisions regarding the refund of VAT to persons enjoying diplomatic status have been enacted
through LN 215/99 (Value Added Tax Act, 1998). LN 11/00 (Value added Tax Act, 1998),
involving changes following the amendments to the Customs Integrated Tariff, was also enacted.
The changes required in the VAT legislation in respect of the treatment of certain supplies which
are exempt with credit or exempt without credit under the Act can be effected by issuing the
relevant legal notices. No changes are required in the main Act in this respect. On the other hand,
such changes are deemed to have important social implications so that it is envisaged thatand a
number of special arrangements are requiredhave been requested. Furthermore it is envisaged
that special arrangements may be required Malta has requested to keep a higher ceiling than that
defined in Article 24 of the Sixth Directive 77/388/EEC with respect to the special scheme for
small undertakings. The Value Added Tax Act (Cap. 406) allows the tax exemption of taxable
persons whose annual turnover is less than 37,000 Euros in the case of traders, a maximum of
25,000 Euros in the case of service providers with a high value added and a maximum of 15,000
Euros in the case of service providers with a low value added.

Direct Taxation
Income Tax in respect of individuals and legal entities (including companies) is levied and
collected under the Income Tax Act (Cap. 123) and the Income Tax Management Act (Cap.
372).
The Acquis in the area of direct taxation covers three Directives and the Arbitration Convention.
The Directives and the Convention provide for a mechanism that applies on the basis of
reciprocity and, therefore, they are not expected to enter into force prior to accession. However,
Maltese tax legislation is already in line with the “parent/subsidiary” Directive and partially
conforms to the “mergers” Directive. In addition, company law in Malta does not permit cross-
border mergers. Moreover, the tax treaties that Malta has concluded with eleven EU Member
States, contain provisions that are very similar to those found in the Arbitration Convention
(Convention 90/436/EEC).
Business taxation will have to be assessed on its possible impact on unfair competition and in
particular on the location of business. As regards mutual assistance, on accession there would be
a need to implement the appropriate arrangements for administrative co-operation and mutual
assistance between Member States. Currently, information may be exchanged under the relevant
provisions of the tax treaties that Malta has concluded with EU Member States.




DRAFT                                                                                          100
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




Malta respects the principles underlying the Council Conclusions (98/C2/01) on the code of
conduct for business taxation and is monitoring closely the relevant developments in this sector.
In common with member states, Malta has undertaken to refrain from introducing any new
regime which may be construed as constituting harmful tax practices within the meaning of the
code of conduct. No legislation was enacted that goes against these principles during the last
year. The OECD has excluded Malta from its published list of jurisdictions it considers to be tax
havens following Malta’s commitment to a programme of effective exchange of information in
tax matters, transparency and the elimination of any aspects of the regimes for financial and
other services that attract business with no substantial domestic activity.
Efforts are being concentrated on enhancing tax collection systems and bringing previously
unrecorded economic activity within the tax net. In 1999 the Inland Revenue Department
introduced a mandatory self-assessment system for all categories of taxpayers. The majority of
individual taxpayers, mostly pensioners and employees may now file a simple declaration
instead of the annual tax returns. The new measures enable the collection and the administrative
processes to be managed with less manpower and lower skills so that trained personnel could be
free to concentrate on the investigative and more technical functions of the department. These
measures facilitate addressing the problem of tax evasion and tax avoidance in a more effective
manner. Moreover the application of the newly-introduced penalties for late filing of returns and
for incorrect declarations of income should also contribute to higher compliance by taxpayers.
In 2000, the Inland Revenue Department introduced new legislative and administrative measures
in line with its programme for better enforcement and higher compliance level by the taxpaying
population that was initiated in 1999 with the implementation of the self-assessment system.
Such measures included the introduction of new regulations for the payment of provisional tax
payments by companies and self-employed persons (LN 48/00), and the development of a
computerised Workflow Management System. The latter is expected to be implemented in 2001
and will manage and control unstructured documents in a more efficient and timely manner.
Moreover, there has recently been the setting up of a Tax Audit Unit for the verification and in-
depth examination of returns submitted under the self-assessment system. The tax officials on
audits will be assisted by a computerised system that is being specifically developed for the
purpose of identifying tax payers that could be evading tax. Furthermore, a Tax Compliance Unit
was set up in September 2000 to facilitate further the efforts of the Inland Revenue Department
in its endeavour to become more efficient and effective.

Duty on Documents and Transfers
With effect from 1 January 2000, the duty of 10 cents for every twenty five Malta liri or part
thereof of the real value of the share or stock, chargeable under the Duty on Documents and
Transfers Act (Cap. 364) on the allotment of any newly issued share or stock of a limited
liability company, was removed. Malta’s position with regard to indirect taxes on the raising of
capital is hence now fully aligned with the Acquis.
Excise Duty
The Excise Duty Act (Cap. 382), which replaced a number of excise laws, came into effect on 1
January, 1995. This Act introduced the same excise duties applicable to both imported and
locally produced goods. It is broadly based on EU legislation but there are certain areas where




DRAFT                                                                                        101
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




some degree of harmonisation with EU legislation is required. These include issues such as
certain definitions, documentation covering the movement of goods, movement of goods without
suspension, movement verification and other procedures that do not apply to the present
circumstances. The Spirits Ordinance (Cap. 41) complements the Excise Duty Act (Cap. 382)
where alcohol and alcoholic beverages are concerned. It also regulates the importation and
operation of distilleries or stills. Following amendments which came into effect on 20
November 2000, the Excise Duty Act (Cap. 382) is in line with the Acquis with respect to the
definition of excise goods and the relative tax structures. The Customs Department is the
authority responsible for he collection of excise duties. The Department is taking steps to set up
a decentralised computerised system regarding excise registration details in order to be able to
interface with the System for Exchange of Excise Details (SEED). The Customs Department
will achieve full harmonisation with regard to procedures and operational facilities applicable to
traders. A special administrative unit for co-operation with member states in relation to excise
duties and the collection of customs duties will be set up by the second quarter of 2002.
The amendments to the Excise Duty Act introduced a positive rate of duty for beer whilst a new
definition of wine linked to the alcohol strength was also introduced ensuring that wine with an
alcoholic strength exceeding 18 per cent and sparkling wine with an alcoholic strength
exceeding 15 per cent will be classified and taxed as intermediate products. A positive rate of
duty was also introduced for all other products covered under Directive 92/83/EEC
(harmonisation of the structures of excise duties on alcohol and alcoholic beverages) in line with
the corresponding minimum levels stipulated by the Acquis. The changes to the relative Act also
provided for the rate of taxation with regard to spirits to be taxed per hectolitre of pure alcohol.
With effect from 23 November 1999, the excise duty on cigarettes had been increased to levels
above the minimum requirements of the Acquis. The 2000 amendments to the Excise Duty Act
also introduced a single mixed specific/ad valorem rate for cigarettes, meeting the required
minimum level of 57% irrespective of other length. Furthermore, these amendments provide for
a new definition of cigarettes, currently falling under a specific heading number of the Customs
Tariff as well as a new definition for tobacco products, other than cigarettes, in line with the
broader definitions of Community legislation. A new taxation rate for cigars, cheroots, cigarillos
and pipe tobacco was also introduced in line with the Acquis.
LN 163/99 (Excise Duty Act; Cap.382), concerning the mode of assessing volumes of mineral
oils at observed temperatures for the purpose of calculating excise duty, had brought the relevant
legislation in line with the Acquis. The amendments to the Act which entered into force in
November 2000 amended the excise duty scheme for mineral oils to include fuel oils and
methane. The rates of taxation for petrol were revised to ensure a higher tax rate on leaded
petrol. Moreover, a new rate of duty for mineral oils used for specific purposes was introduced,
which will provide for a wider application of fiscal markings.
The Excise Duty Act provides a basic framework for the circulation of excisable goods and is
broadly in line with the provisions of Directive 92/12/EEC (general arrangements for products
subject to excise duty). The 2000 amendments to the Excise Duty Act will allow for the free
movement of excisable goods and the respective excise duties and refunds. The Accompanying
Administrative Document in line with Regulation (EEC) 3649/92 (document for intra-
Community movement of products subject to excise duty) will be introduced. A control system




DRAFT                                                                                           102
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




to enable tax administration bodies to determine the receipt of products subject to excise duty by
the consignee and for which the duty has been paid will be implemented. This system will form
the basis of the excise duty refund system. A tax warehouse system will be introduced in line
with the requirements of Directive 92/12/EEC.

B. Short Term Priorities (2001)
a)    Continue with the alignment of the alignment of VAT legislation regarding the treatment of
     certain supplies.
b) Implement a tax enforcement programme in line with long-term policies.

C. Medium Term Priorities (2002)

Value Added Tax
c)a) Continue the alignment of VAT legislation regarding the treatment of certain supplies which     Formatted: Bullets and Numbering
     are currently exempt with credit or exempt without credit, save for those for which a special
     arrangement is being requested.
d)b)Compliance with the Acquis could be achieved with respect to certain special schemes in the
    VAT legislation.
e)c) Implement certain refinements in the national VAT legislation concerning the scope of tax,
     the distinction between the supply of goods and the supply of services and the definition of
     importation by 2002.
f)d) Achieve alignment with the Acquis as regards Mutual Assistance and Administrative Co-
     operation. Work on the implementation of the VIES system will be completed by the second
     quarter of 2002.
g)e)The existing refund schemes under Section 75(h) of the Value Added Tax Act will be
    removed from the scope of the Act by the fourth quarter of 2002.

Direct Taxation
a) Review any features in existing legislation that may be identified as not being compatible
   with the Code of Conduct for business taxation, with a view to aligning them with the Code.
   The Code is not legally binding, but developments in this area will be closely monitored.
b) The Income Tax Act will be amended by the second quarter of 2002, to ensure that, on
   accession, Malta will be able to exchange information with all Member States of the EU.
   However, Malta has always honoured its commitments relating to requests for information
   made under tax treaties.
c) Achieve full alignment with the Mergers Directive by the second quarter of 2002, but since
   this Directive applies only on the basis of reciprocity, compliance will be implemented upon
   accession.
d) Accede to Convention 90/436/EEC on accession.




DRAFT                                                                                         103
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Excise Duty
a)   Develop a decentralised computerised system regarding excise registration details as
     provided in EU Directives.
c)b) Finalise the harmonisation of the Excise Duty Act (Cap. 382) as regards provisions relating     Formatted: Bullets and Numbering
     to general arrangements on and the holding movement and monitoring of products subject to
     excise duties.
d)c) Achieve full harmonisation as regards certain ad hoc procedures and operational facilities to
     traders and mutual assistance and administrative co-operation where excise duties and direct
     recovery of claims from EU Member States are concerned (upon accession).

D. Institution Building Needs
In order to meet the requirements of EU membership, the administrative capacity of the revenue
Departments of the Ministry of Finance will be strengthened within the framework of the Fiscal
Blueprints exercise. A Business Change Management Plan has been drawn up forming the basis
of a project of wide-ranging technical assistance from the Commission (Tax and Customs
Change Management Project). The plan will be implemented gradually and is expected to be
completed by the fourth quarter of 2002.


Area of Activity                                                  2001        2002         Total

Ministry of Finance
VAT Department                       Senior                           -           1            1
                                     Middle                           2           2            4
                                     Other                            -           -            -
                                     Total                            2           3            5

Customs Department                   Senior                           -           -            -
                                     Middle                           1           1            2
                                     Other                            -           -            -
                                     Total                            1           1            2


E. Financial Requirements
                                                                                           Lm000
Area of Activity                                                    2001        2002       Total

Ministry of Finance
Tax Change Management Plan           Recurrent                         -         100          100
                                     Capital                         665         396        1,061
                                     Training                          -           -            -
                                     Total                           665         496        1,161




DRAFT                                                                                         104
MINISTRY OF FOREIGN AFFAIRS                 National Programme for the
MALTA                                            Adoption of the Acquis
                                                 August 2001Final Draft




                                                                Lm000
Area of Activity                          2001      2002        Total

VAT Department                Recurrent     10         25           35
                              Capital        -          -            -
                              Training       -          5            5
                              Total         10         30           40

Customs Department            Recurrent     5          10           15
                              Capital       -           -            -
                              Training      -           5            5
                              Total         5          15           20




DRAFT                                                              105
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.3.2   Economic and Monetary Union

        A. Current Status

        Achievement of the Maastricht Convergence Criteria
        The Maastricht convergence criteria are of paramount interest to candidate countries that will
        eventually join the Economic and Monetary Union following accession. The criteria focus on the
        convergence of inflation, fiscal performance, interest rates and exchange rates.
        One of the criteria limits the rate of inflation to not more than 1.5 percentage points above the
        average of the three best performing Member States in terms of price stability. This limit stood at
        2.8 per cent in 2000. Price inflation in Malta has fallen from 3.1 per cent in 1997 to 2.4 per cent
        in December 2000, and is now below the present limit established under the inflation criterion.
        The fiscal performance criteria focus on the fiscal deficit and government debt as percentages of
        GDP. The fiscal deficit to GDP ratio in Malta was estimated at some 6.0 per cent at the end of
        2000, being above the 3 per cent ceiling stipulated by the convergence criteria. The government
        debt to GDP ratio stands at around 59 per cent, compared to the 60 per cent maximum limit
        established by the criteria. Malta is following a medium-term programme to bring the deficit to a
        sustainable level.
        According to the Maastricht criteria, long term interest rates cannot be more than two percentage
        points above the average long term rates of the three best performing Member States in terms of
        price stability. In Malta long term interest rates, at around 7 per cent are presently below the
        maximum limit allowed.
        Malta is not yet able to fulfil the exchange rate criterion as it cannot participate in the ERM prior
        to accession. However, one notes that the external value of the Maltese lira is determined on the
        basis of a basket of currencies, with the Euro as an important component. This has generally kept
        the Maltese lira relatively stable against the Euro.

        Legislative Issues
        The main issue in this regard is the independence of the Central Bank of Malta and the
        declaration that the primary objective of the Central Bank is price stability. In this regard, the
        Central Bank of Malta has set up an internal committee chaired by the Deputy Governor to
        review the Central Bank of Malta Act and recommend changes in order to strengthen the
        independence of the Central Bank and bring Malta's legislation in line with EU membership
        requirements and make it compatible with European Central Bank (ECB) requirements. Draft
        amendments to the Central Bank of Malta Act have been presented to Parliament and given a
        first reading in September 2000.
        Furthermore there should be no monetary financing of public deficits nor privileged access to
        credit by public sector institutions. To this effect the Minister of Finance issued a Legal Notice
        (LN224/99) that amended Section 27 of the Central Bank of Malta Act (Cap. 204). This had the
        effect of abolishing the "Ways and Means" advances to the Government with the result that the
        Government cannot make use of overdraft facilities at the Central Bank any more. Although the




        DRAFT                                                                                           106
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Government had not borrowed directly through this facility since the beginning of 1995, this
amendment underlines Government's commitment towards a more appropriate conduct of
monetary policy.
No difficulties are expected in relation to legislation in the monetary field with potential impact
on the Eurosystem's operations. All the types of instruments currently used by the ECB in its
monetary operations are generally covered by local banking and financial legislation. Collateral
arrangements may have to be examined more closely to ensure that these are consistent with EU
requirements.
In terms of legislation ensuring the conditions for a sound banking system and financial stability,
the domestic commercial banking system has undergone substantial changes and reforms to bring
it in line with EU standards and practices over the past few years. In this regard, a new Banking
Act (Cap. 371) was introduced in 1994 based on EU recommendations and Directives. Bank
licensing conditions are consistent with those issued by the EU while a capital market and a fully
functioning money market have been in place for a number of years. Prudential banking
supervision is undertaken by the Central Bank and the accountancy legislation obliges companies
in Malta to prepare their financial statements on the basis of international accounting principles.
In an effort to strengthen the financial supervisory system through better co-ordination between
the competent authorities, the Central Bank of Malta has set up a Financial Stability Office.
Moreover the report on the setting up of Financial Intelligence Unit has been finalised.
Almost all EU Directives in the banking field have been adopted. Thus prudential supervision
arrangements are in line with those of the EU with supervision being carried out on a
consolidated basis. However, arrangements still have to be made when the consolidation of a
banking group involves subsidiaries which are being supervised by the MFSC. Banking
directives based on the EU's Own Funds and Solvency Ratio and Large Exposures Directives
have been implemented. A banking directive on the presentation of financial statements
modelled on the EU Directive on annual accounts was also issued, while a capital adequacy
directive based on the EU Directive is being implemented in stages.
Legislation on money laundering has been enacted and related regulations were introduced
which addressed the financial system in clear terms and imposed broad obligations of
identification, record keeping, training and reporting of suspicious transactions in line with the
EU Directive.
A deposit guarantee scheme had not yet been established in Malta but a task force made up of
members of the Central Bank and the credit institutions was set up to study ways of introducing
such a scheme in the near future. The preparation of a plan to introduce a deposit insurance
scheme is presently at an advanced stage.

Monetary Policy Strategy
Monetary Policy is formulated and implemented in a liberalised financial market environment by
the Central Bank of Malta in terms of the Central Bank of Malta Act (Cap. 204) and is based on
open-market operations. Price stability is one of the important objectives for the Central Bank of
Malta in the conduct of monetary policy, although it is not defined as its main objective. The
Central Bank uses the exchange rate as the nominal anchor (the intermediate target) for its




DRAFT                                                                                          107
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




monetary policy. This will facilitate a move to the ECB's monetary strategy. In April 2000, the
Central Bank of Malta removed the provision relating to the maximum rate of interest that banks
could charge on loans and advances on residential units by an amendment of Central Bank of
Malta Notice No. 1 on Interest Rates. This amendment abolished all effective limits on interest
rates. The amendments to the Central Bank of Malta Act will abolish the practice of setting
interest rates administratively. Furthermore, capital controls are being gradually phased out. This
implies that the Central Bank's monetary policy will be increasingly oriented toward that of the
Euro area.

Exchange Rate Strategy
Upon accession a country's exchange rate policy will become a matter of common interest and in
this context joining ERM2 before adopting the Euro is a requirement. Over the last decade, the
value of the Maltese lira against the ECU/Euro has remained generally stable while interest rates
have converged to comparable Euro zone rates. Malta's policy orientation is to participate in
ERM2 as soon as possible after membership.
Malta already has the advantage of having had a fixed exchange arrangement for a long period of
years. The Maltese lira is fixed to a currency basket consisting of the Euro (with a weight of
around 56 per cent), the US dollar (with a weight of around 22 per cent) and the pound sterling
(with a weight of around 22 per cent).

Financial Statistics
Work concerning the classification system of Government financial statistics in order to bring it
into line with that of the European System of Accounts (ESA 1995) has advanced and a new
Chart of Accounts for Government finance transactions has been finalised. Compatible statistical
data on the government sector will become available from 2001 onwards. Government functions
on COFOG have also been classified. Moreover, preparatory work was initiated by the National
Statistics Office (Ministry for Economic Services) on the introduction of the Harmonised Index
of Consumer Prices (HICP).
The Central Bank is responsible for compiling monetary and banking statistics. It carries out this
task according to IMF standards and practices. These are generally consistent with the
requirements of the ECB. The Central Bank's present reporting system for banking statistics,
however, does not conform with the standard reporting forms introduced by the ECB for national
central banks. Consequently, the bank reporting system in Malta will have to be amended and
new reporting forms introduced. To this end, the Central Bank has set up an internal task force to
review these reporting forms so that a new reporting system can be put in place. Since the
effective implementation of this task necessitates the co-operation and co-ordination of banks
and financial institutions in Malta, which are the reporting institutions, a committee has been set
up composed of representatives of the banks and financial institutions to discuss and implement
the changes. In this regard the Central Bank has also set up an internal committee to look into
the IT aspects of the financial data reporting system. The Central Bank of Malta took initial steps
and has already drafted a plan to put in place systems that will enable it to transmit statistical
data electronically to the European Central Bank and international agencies. Since the credit




DRAFT                                                                                          108
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




institutions will also be expected to gradually install similar systems, the Central Bank is liasing
with them as regards the implementation of these systems.
The Central Bank is also active in the area of balance of payments statistics. The Central Bank
compiles a monthly statement of foreign exchange flows through the banking system. These
figures are published regularly in the Central Bank's publications together with a commentary.
The Central Bank is also actively involved with the National Statistics Office in the compilation
of a quarterly balance of payments statement based on an accruals system. These figures are also
published regularly in the Central Bank's publications together with an analysis. The Central
Bank has enhanced its liaison with the European Central Bank on balance of payments matters.
Emphasis is now placed on compilation of balance of payments on an accrual rather than on a
cash or settlement basis.

Financial Infrastructure
In Malta, money and capital markets, including an active inter-bank market, are established. A
foreign exchange market involving the Central Bank and the credit institutions also operates
daily. All these markets function satisfactorily despite the small volumes transacted.
Consultations with regards to ways of liberalising the market-making function in the capital
market have already been made with various financial institutions. Moreover, steps have been
taken to eventually dematerialise Treasury Bills and introduce an electronic paperless system. A
Financial Markets Committee, with representatives from the Central Bank of Malta and the other
local banks, was set up to provide a forum for discussion and operational transparency.
Overnight marginal lending facility was brought more in line with ESCB standards.
Discussions for the installation of a payments system, which should provide a high standard of
cross border payment facilities, are also under way. An Executive Payments System Taskforce
composed of members of the Central Bank and the commercial banks has been set up to
formulate rules and regulations for the payments system. This taskforce is responsible for the
management of the payment system infrastructure in Malta, and for preparing Malta's
contribution to the payments "Blue Book" pages that will in time be discussed with the ECB. A
Payment System User Group was set up to accelerate progress towards the standardisation of
payment flows within the banking system and to eliminate the paper settlement of further
categories.
Further functionality has been added to the Real Time Gross Settlement System (RTGS) with
straight through processing of high value inter-bank settlements via the SWIFT network. The
SWIFT infrastructure has been in place for a number of years and all the payment systems of the
banking institutions are linked through SWIFT. During 2000, the accounting system has been
upgraded to a payment and settlement system providing real time settlement through the Central
Bank.

B. Short Term Priorities (2001)

Achievement of the Maastricht Convergence Criteria
a) Government's economic strategy will remain geared towards the achievement of
   macroeconomic stability and the Maastricht criteria




DRAFT                                                                                           109
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




b) Fiscal policy will continue to be aimed at reducing the deficit to below 4 per cent by 2004.
   The fiscal deficit will be reduced further from around 6 per cent of GDP in 2000 to about 5
   per cent of GDP in 2001. The level of government debt is expected to remain below the
   maximum limit of 60 per cent of GDP.
c) Malta will participate in the pre-accession fiscal surveillance procedure which has been
   launched by the Commission and will submit annual notifications of public deficits and debt
   levels as they fall due according to EU methodology. The first notification will be submitted
   in the second quarter of 2001. A report on pre-accession economic programme detailing the
   macroeconomic stability and fiscal position will be prepared by October 2001. The report
   will be updated annually.
d) The Central Bank will continue to pursue price stability as the main objective of monetary
   policy. It will be responsible for the formulation and implementation of monetary measures.
   With the easing of capital controls the Bank's monetary policy will be influenced
   substantially by the monetary policy stance of the Eurosystem (Ongoing).
Legislative Issues
a) The amendments to the Central Bank of Malta Act (Cap. 204) are expected to be approved
   by Parliament by the second quarter of 2001.
b) Local banking and financial legislation will be examined to ensure that there are no legal
   barriers to the use of such instruments in line with ESCB practices, particularly where
   collateral arrangements are concerned. The pertinent legislation is to be drafted in 2001.
c) The preparation of a plan to introduce a deposit insurance scheme is intended to be finalised
   in February 2001. The scheme is expected to be introduced in September 2001.
Monetary Policy Strategy
a) The Central Bank will continue to use the exchange rate as the nominal anchor (its
   intermediate target) for monetary policy.
Exchange Rate Strategy
a) Malta will continue to pursue a fixed exchange rate policy.

Financial Statistics
a) The Central Bank is expected to enhance its liaison with banks regarding the implementation
   of the necessary software systems for the electronic transmission of statistical data to the
   European Central Bank and other international agencies.
b) The Central Bank in conjunction with the National Statistics Office would be in a position to
   provide, on a monthly basis, balance of payments statistics with more expanded coverage
   based on direct reporting by companies (DRC) and surveys.
c) The financial and economic policy analysis capabilities of the Ministry of Finance and the
   Ministry for Economic Services will be further strengthened.




DRAFT                                                                                        110
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




d) Statistical data on the Government sector in line with Eurostat requirements will become
   available.
e) The finalisation of the necessary groundwork for the introduction of the Harmonised Index
   of Consumer Prices (HICP) will take place in the second quarter of 2001 and the HICP will
   be in place by the fourth quarter of 2001.
Economic Statistics
a) Testing of software related to the new classification base for government revenue and
   expenditure transactions in line with the ESA’95 classification is to be completed by mid-
   February. Subsequently standard reporting on live data will be done in this classification.
   Specifications for specific reports are being drawn up for installation and testing by June
   2001.

C. Medium Term Priorities (2002)

Achievement of the Maastricht Convergence Criteria
a) An appropriate fiscal stance will be maintained over this period so that the 3-4 per cent (of
   GDP) target is attained prior to or just after EU accession. In view of this stance and the
   implementation of the privatisation programme the level of government debt is expected to be
   kept under control and should remain below the maximum limit of 60 per cent of GDP. The
   Government will also start to take into account the obligations of the EU's Growth and
   Stability Pact in formulating its fiscal policy.

Legislative Issues
a)   All legislative changes to strengthen the independence of the Central Bank and bring the
     Bank's legislation in line with the requirements of the ESCB statutes will be completed by
     end 2002.
b)   All monetary policy instruments used by the Central Bank will bear the same features of
     those used by the ESCB. The operational procedures adopted by the ESCB will also be
     implemented at the Central Bank.
c)   The financial system will continue to be strengthened to ensure that it is sound and stable.
     All EU directives on banking and supervisory practices will be brought into effect. A
     deposit insurance scheme in line with EU requirements will also be in place by end 2002.

Monetary and Exchange Rate Policies
a)   Monetary policy will have price stability as its ultimate objective and will continue to be
     aligned with that of the Eurosystem.
b)   Interest rates will be totally liberalised, following the adoption of an appropriate usury
     protection law.
c)   Enhance statutory independence of the Central Bank of Malta and align with the Treaty on
     the Statute of the European System of Central Banks.




DRAFT                                                                                        111
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




Financial Statistics
a) Appropriate electronic systems and the related software will be in place in all reporting
   institutions so that such information is transmitted in electronic format to the Central Bank
   and from the Central Bank to the ECB.

Financial Infrastructure
a)   Further steps will be taken to ensure the smooth functioning of the financial markets. All
     remaining legal barriers will be removed and all practices brought in line with those
     recommended by the ECB.
b)   The Central Bank will transfer its market-making role in the capital market to a financial
     institution or group of financial institutions willing to assume this function.
c)   Encourage the development of more sophisticated financial products and hedging
     instruments, which will become available in the forward market for foreign exchange and
     the derivatives market.
d)   With regard to the payment system, an appropriate RTGS will be in place and this will link
     all the systems of the banking institutions and the Stock Exchange into one network. The
     domestic RTGS will then be linked to the Eurosystem's TARGET system.

D. Institution Building Needs
The main institutions responsible for the implementation of the Acquis in this area are the
Central Bank of Malta, Ministry of Finance, Economic Policy Division (Ministry for Economic
Services), and the National Statistics Office (Ministry for Economic Services). The adoption
and implementation of the Acquis as far as EMU is concerned can be adequately undertaken
through these existing institutions.
Economic policy is co-ordinated by the Economic Policy Division within the Ministry for
Economic Services, which has the capacity to analyse and formulate economic policy options for
Government. On the other hand, the Ministry of Finance is responsible for budgetary planning
and forecasting. The Ministry of Finance and the Economic Policy Division (Ministry for
Economic Services) will strengthen their professional human resource capabilities in order to be
in a position to provide the EU Commission with regular reports and forecasts on the Maltese
economy and on the fiscal position. This would enable the Maltese authorities to participate in
the pre-accession fiscal surveillance procedure which has been launched by the Commission and
will eventually comply with the reporting procedures under the Excessive Deficit Procedure and
the Stability and Growth Pact.
The Central Bank will also be involved in the preparations for EMU both in the period prior to
accession and also in the period from accession to the adoption of the single currency.

The National Statistics Office (Ministry for Economic Services) was provided with additional
funding to implement the necessary systems and methodological changes in statistics. This
issue is discussed under Section 3.3.3 (Statistics).




DRAFT                                                                                        112
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




Area of Activity                             2001      2002         Total

Ministry of Finance
                                 Senior        -            -           -
                                 Middle        2            -           2
                                 Other         -            -           -
                                 Total         2            -           2

Ministry for Economic Services
Economic Policy Division         Senior        -           -            -
                                 Middle        1           1            2
                                 Other         -           -            -
                                 Total         1           1            2



E. Financial Requirements
                                                                    Lm000
Area of Activity                             2001      2002         Total

Ministry of Finance
                                 Recurrent     10         15         325
                                 Capital        -          -           -
                                 Training       5          -           5
                                 Total         15         15          30

Ministry for Economic Services
Economic Policy Division         Recurrent      5         15           20
                                 Capital        -          -            -
                                 Training      20         20           40
                                 Total         25        305           55




DRAFT                                                                  113
        MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
        MALTA                                                                          Adoption of the Acquis
                                                                                       August 2001Final Draft




3.3.3   Statistics

        A. Current Status

        General
        The National Statistics Office of Malta (NSO) is an independent government office, established
        by virtue of the Statistics Act (Cap. 142). The legislation needs requires updating in order to
        reflect; latest developments in the statistical field and thereby bring it in line with statistical
        legislation in the EU. In this regard, the legal instruments for the adoption of the latest principles
        in statistics were passed by Parliament in October 2000 through Act XXIV of 2000 establishing
        the Malta Statistics Authority. This Act was prepared with the assistance of Eurostat's Legal
        Advisor.
        During both the pre-accession and in particular in the post-accession period, the NSO will have
        to undertake new legally-based reporting obligations to Eurostat. These obligations include the
        transmission to Eurostat of statistical output that is produced by organisations outside the NSO.
        Indeed the NSO will be held accountable for the reliability and integrity of this material as well.
        Various statistical classifications have already been adopted. The NSO is already using the
        Nomenclature of (Economic) Activity Classification in the EU (NACE), the Combined
        Nomenclature, the Classification of Products by Activity (CPA) and the Geonom classifications.
        NACE has been adopted by the NSO in business statistics, in the business register, in foreign
        trade statistics, the Labour Force Survey and other statistical compilations. Other statistics
        producing institutions outside the NSO are adopting NACE. In addition, the national statistical
        classification for economic activity is being adopted by other statistics-producing institutions
        outside the NSO. The Classification of Products by Activity (CPA) had been adopted in foreign
        trade statistics and the industrial survey in September 2000, and was being introduced in the
        National Accounts sector. Work on the adoption of CPA in other statistical areas has also been
        concluded. The classification of the types of construction is at an advanced stage of
        implementation. A Maltese classification for foreign trade (11500 items) derived from the
        European Combined Nomenclature (CN) (10500 items) has been in place since 1995. The
        GEONOM has been implemented in all NSO statistical compilations requiring a geographical
        breakdown. The NSO also implemented the UN ISO3166 as well as the LOCODE for
        international ports and airports. In addition to the above, the NSO adopted a Maltese
        Geographical Code which is fully integrated with the international geographical structure. In this
        context a NUTS classification for the Maltese Islands has also been devised.

        Business Statistics
        The NSO is already producing statistics on the manufacturing and construction sectors. A
        business register was started in 1998 and completed in June 2000. It is currently undergoing
        routine maintenance. Apart from manufacturing and construction, the NSO is now surveying the
        wholesale and retail trades as well as hotels, restaurants and travel agencies. Although insurance
        services statistics are already available, these are not entirely harmonised with the requirements
        of the Acquis. Preparatory work on the alignment of the data collection has also been carried out




        DRAFT                                                                                            114
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




in 2000 in respect of insurance and financial intermediation. The same applies to statistics on
financial intermediation. Harmonised data collection commenced at the beginning of 2001.
As from January 2000, the NSO introduced its short-term indicators programme on
manufacturing and construction. Infrastructural work in respect of short term indicators for the
wholesale and retail sectors has been carried out. Actual data collection started as from January
2001.

Economic Statistics
In a number of areas, Malta’s economic statistics are not in line with the Acquis, but steps are
being taken to achieve alignment. The project of adopting the European System of Accounts
(ESA) 1995 for GNP compilation purposes was started in 1998. This includes the
reclassification of all Government finances transactions and the compilation of a new chart of
accounts which were finalised in 2000. Data collection according to the new and harmonised
chart of accounts for Government Finance transactions has been initiated in January 2001. The
preparation of the non-financial accounts in accordance with ESA 1995 were at an advantaged
stage by the end of 2000. COFOG was adopted by the end of September 2000. With the
assistance of a Eurostat-appointed expert the NSO reviewed its GDP deflation procedures. The
NSO has also undertaken a project in connection with the exhaustiveness of its GDP estimates.
Substantial research work has already been carried out on estimates of certain illegal activities,
including the drugs trade, prostitution, the transport of illegal immigrants and the trade in pirated
audio-visual material.
The NSO joined the European Comparison Programme for Purchasing Power Parity (PPP)
purposes in September 1999. A catch-up programme was agreed with Eurostat. The programme
covered a period of about seven months ending in April 2000. During this period the NSO
carried out an intensive data collection process. The NSO has achieved the set objectives and
Malta is now fully in line with the requirements of the Acquis.
Malta is not in line with the requirements concerning the compilation of the Harmonised Index
of Consumer Prices (HICP). In the first part of the year 2000, the NSO concentrated on the
Household Budgetary Survey, which will eventually serve as a basis for the HICP. Subsequently,
COICOP classification is being used in this survey. Work on the Household Budgetary Survey
continued as scheduled and was finalised in March 2001. Arrangements are being made for the
eventual introduction of the HICP.
The Maltese trade statistics system is fully aligned with the requirements of the EU. However, in
view of the elimination of customs barriers, the INTRASTAT trade statistics system for intra-EU
trade statistics compilation purposes will have to be introduced. The present system based on
customs documentation is considered adequate for the provision of statistics on trade with extra-
EU countries. The NSO provided Eurostat with its trade statistics data. This data is now being
transmitted to Eurostat through STADIUM. Arrangements have also been made for the NSO to
be linked to the COMEXT database. The NSO has sought technical assistance from a Eurostat
proposed expert on the eventual adoption of INTRASTAT. A report was finalised by the end of
2000.




DRAFT                                                                                           115
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




As from 2000, the balance of international payments of Malta is being compiled, presented and
published in accordance with the fifth edition of the Balance of Payments Manual of the
International Monetary Fund. The data is being published on a quarterly basis within three
months of the end of the reference quarter. In addition to the above, it is being compiled in
conformity with Eurostat’s recommendations. In the very near future, Malta’s balance of
payments data will be transmitted to Eurostat using the GESMES/CB platform. This area is also
discussed under Section 3.3.2 (Economic and Monetary Union).

Financial Statistics
The Central Bank’s Committee on Financial Statistics, of which the NSO is a member, discussed
the changes to the existing banking questionnaires in the light of the European Central Bank’s
(ECB) requirements. A methodological manual on the local situation is in an advanced stage of
preparation and was sent to the ECB. Work is being undertaken on the classification of bank
loans and advances according to NACE. The Central Bank has begun submitting monetary and
financial statistics to Eurostat on a quarterly basis. Eurostat was also furnished with monetary
and financial statistics for the period 1993 to 1999. Evaluation work is being carried out on the
introduction of GESMES/CB for the electronic transmission of monetary and financial data to
Eurostat. The Central Bank is also making the necessary preparations for the harmonization of
local legislation with EU requirements. This area is also discussed in Section 3.3.2 (Economic
and Monetary Union).

Tourism Statistics
Compliance with the Acquis must be achieved in the field of tourism statistics. All the
infrastructure work for the introduction of ongoing tourism surveys at the exit points has now
been finalised. Surveys at the Malta International Airport were introduced in October 2000. All
the preparatory work for the introduction of the accommodation survey was carried out. This
latter survey, which is an internet-based survey in line with Government’s policy of e-
Government, started delivery of data as from January 2001. In addition to this, the NSO is
currently carrying out its domestic tourism survey alongside with the household budgetary
survey.
Tourism surveys have also been introduced last October at the Malta International Airport.
Presently, the NSO has two parallel systems in place for the collection of tourism statistics,
which are the embarkation card system and the survey based system. Results from the survey-
based system are already available for evaluation purposes. Hence, the phasing out of the
embarkation card system is proceeding according to plans.
Furthermore, the NSO has drawn up the required questionnaires for the collection of statistics on
hotels, restaurants and travel agencies. The NSO started the process of collection of statistics by
the fourth quarter of 2000, and has reached full compliance with the requirements of the Acquis
in this area.

Social Statistics
The NSO is already producing a good range of social statistics including those of a demographic,
health and educational nature. Data on foreign workers in Malta is already available. Statistics




DRAFT                                                                                          116
MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                               August 2001Final Draft




on traffic accidents are available as well. However, the requirements of the Acquis in migration,
the structure of the labour force and earnings, health and safety at work as well as in the areas of
further training are not fully complied with. The NSO reviewed its current methodology for
population projections with the assistance of a Eurostat-appointed expert. The current
projections were certified to be in accordance with international practices in the field. Actions
are being taken to strengthen current migration statistics.
A labour force survey that incorporated all of Eurostat’s recommendations and the latest Acquis
on the area was carried out in May 2000. The NSO is now fully in line with the requirements of
the Acquis in this area.
Data of earnings and labour costs data from administrative records is now available. In this
project the NSO worked in collaboration with the Social Security and the Inland Revenue
dDepartments. Additional data on earnings and labour costs are being made available through
the Household Budgetary Survey and the Labour Force Survey. In addition to the above, the
NSO has already prepared the necessary questionnaire for the undertaking of a proper Earnings
and Labour Costs Survey. The Department of Social Security in collaboration with the NSO is
adopting Eurostat’s recommendation on the compilation of statistics on health, safety and
accidents at work. The Health Information Unit of the Ministry of Health also undertook further
work on the harmonisation of our health statistics with those of the European Statistics on
Accidents at Work (ESAW). The Health Division (and the Health Information Unit) has
finalized the Medium Term Programme for the years 2000-1 with the World Health
Organisation. This envisages the development of an annual public health report and the
development of a National Health Interview Survey. The Health Information Unit is in the
process of setting up a Health Survey Unit. However, in general Malta can supply all the
required health-related data.
The NSO is co-ordinating an inter-departmental working group on income, poverty and social
exclusion. This working group is reviewing the work that has been carried out elsewhere in this
area as well as an evaluation of the available data sources for similar work in Malta.
A partial time use survey was carried out by the Department of Women in Society. This survey is
currently being processed and analysed.
The NSO is in a position to satisfy all data requirements in the field of housing statistics.
A joint NSO-Department of Social Security task force conducted work on the adoption of the
recommendations contained in the ESSPROS manual of 1996 and the recommendations were
adopted in 2000. The relative accounts are currently being compiled.

Education and Vocational Training Statistics
The education statistics produced by the NSO are in accordance with Eurostat requirements.
Notwithstanding, a joint NSO-Education department working group has started working on the
strengthening of the current statistical programme. In addition, a Continuous Vocational
Training Survey was carried out last year. Its results are were being processed for eventual
submission to Eurostat this year. Particular attention is being given to educational finance.




DRAFT                                                                                            117
MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                               August 2001Final Draft




Transport of Goods Statistics
The statistics on the transport of goods by air and by sea in general satisfy the requirements of
the Acquis, but this is not the case as regards data on the transport of goods by road, whilst rail
transport is not applicable in the case of Malta. Air and sea transport statistics are available and
fully harmonised with EU requirements. Road accident statistics are also as required by the
Acquis. In mid-1998, the NSO undertook a project in transport statistics with the assistance of
Eurostat, with the aim of complying fully with the relevant EU directives in this area.
Preparatory work was carried out for the first pilot road transport survey. The actual survey is
expected to be carried out before the end of the second quarter of this year.

Energy Statistics
In the course of April and May 2000, the relevant statistics Acquis on the energy sector was
reviewed and proper questionnaires were drawn up. The NSO has already satisfied most of the
requirements indicated in the energy statistics module.

Land-Use and Agriculture and Fisheries Statistics
Although the available statistics on the Maltese agriculture and fisheries sectors are substantial,
new statistical programmes that specifically provide the data required by the Acquis are required.
Steps are being taken to move towards increased compliance in this area. Furthermore, three
initiatives have been taken by the NSO in collaboration with the Department of Agriculture and
Fisheries. Firstly, a specialised Agriculture and Fisheries statistics unit has been set up within the
NSO to bring together all the available statistics on this sector and new statistical enquiries on
land use and the livestock sector have been launched. Secondly, a GIS-based land-use
information project has been initiated. Finally, the Department of Fisheries in collaboration with
the NSO and the Food and Agriculture Organisation (FAO) have undertaken a joint project
whose objectives are the provision of fisheries statistics as required by the Acquis.
In March/April 2000, the NSO took aerial photographs of the whole country for land use/cover
and agricultural statistics purposes. These photographs are now being processed and analysed.
The relevant results are being stored on digitised maps that are available at the NSO. In this
area, Malta fully satisfies the requirements of the Acquis. In addition, physical surveys were
taken in respect of areas under vines and other fruit trees. The collected information is being
digitised, together with information collected in respect of pig and cattle farms. Additional
information to be digitised is being collected in respect of goats and sheep.
The NSO has established an extensive register of all agricultural enterprises. This register
provides detailed information on the type and structure of agricultural holdings in the country.
Information from this register is now being stored into a GIS-based Agricultural Information
System known as AGRISTAT. The NSO already satisfies most of the requirements of the
Acquis in this area.
Between November 1999 and March 2000, the NSO compiled a comprehensive vineyard
register. All the areas under vines have been properly surveyed and are now being digitised.
Therefore in this area, the NSO is entirely in line with the requirements of the statistics Acquis.




DRAFT                                                                                            118
MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                               August 2001Final Draft




Sectoral censuses were undertaken in respect of vines, fruit trees, pigs, cattle and other livestock.
Production data was also collected from these censuses. Additional production statistics were
collected from other sectoral surveys. The typology and structure of Malta’s agricultural sector
has been properly mapped out and supported with the required statistics. A pilot farm
accountancy data collection survey was started in 2000.
A comprehensive census of all fruit-growing areas has been carried out. Continuous updating of
the survey is currently underway. All information is being stored in a GIS database.
The NSO already compiles Economic Accounts of Agriculture (EAA) that are largely in line
with Eurostat requirements. It also collects data on agricultural output prices and has started the
required compilation of an agricultural price index, which will be updated on a regular basis.
Data on agricultural labour is also available. However, the NSO is now participating in a
Eurostat-sponsored project on these areas within the PHARE context. Consequently, annual
work units (full time equivalents for labour) in respect of agriculture were completed and
submitted to Eurostat.
Crop production statistics are available. In this area, the NSO has made substantial progress
towards satisfying the requirements of the statistics Acquis.
The NSO has completed a porcine census in April 2000. In this area the NSO is now in
complete compliance with the requirements of the Acquis. In May 2000, the NSO started its
bovine and goats/sheep census. The bovine census was finalised during 2000, whilst the goat
and sheep census is still being compiled. In this area the NSO will also be fully in line with the
requirements of the Acquis. In the course of these censuses the NSO is collecting data on farm
facilities and management. All the above-mentioned data is being entered into a GIS database.
Malta’s animal production statistics are substantially in line with the requirements of the Acquis.

Regional Statistics
In Malta, statistics on a locality or regional level are compiled in certain areas such as
population, education, labour, health and a range of other social statistics and agriculture and
fisheries statistics. Economic accounts, tourism statistics, price statistics, business statistics and
trade-related data are not available on a regional or locality basis. Moreover, current data
compilations in these areas are not carried out on a regional or local level. However, the
situation will improve with the introduction of the Business Register, the new Business Statistics
Surveys, the programme of short-term indicators, and the tourism and accommodation surveys
amongst others.
Furthermore, a NUTS geographical classification for Malta has been compiled and submitted to
Eurostat together with land area and population data. A regional data collection programme
statistics, in accordance with the proposed NUTS classification was started. Except for GDP
data, most of the other available statistics are being compiled on a regional basis.

Culture and Audiovisual Statistics
In April and May 2000, the NSO reviewed the culture statistics area and consulted Eurostat in
order to establish the current state-of-affairs in this statistical domain. A task force is was




DRAFT                                                                                            119
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




working on this area. Questionnaires dealing with theatres, libraries, museums, musical groups
and theatre groups have been drawn up and sent out for data collection purposes. Work wais
currently underway on the preparation of questionnaires in respect of orchestras,
radio/television, the cinema and the publishing industry. These questionnaires were sent out by
the end of June 2000 and t. The NSO has also started an intensive culture data collection from
administrative sources.      The culture data collection programme is inclusive of the
recommendations on the collection of expenditure on and employment in cultural activities.
This part of the programme takes into account national accounting requirements as well. A
cultural participation survey, Kultura 2000, was carried out. and I its results are now being
processed.
The NSO already collects statistics in respect of several audio-visual services. In April 2000, the
NSO commissioned a study on the structure of the audio-visual industry in Malta. The
collection of a wide array of audio-visual statistics was expanded in the course of 2000 following
a detailed review of the sector. These statistics are being compiled in the context of a widened
programme for cultural statistics.

Environmental Statistics
The environment statistics programme that is being co-ordinated by the NSO is still in its early
phases and the statistical output only partially meets the requirements of the Acquis. Inter-
departmental working groups on environment statistics were established in respect of land use,
water, energy and a number of other environment related areas including air emissions and air
transport. In this area, the NSO is also collaborating with other local public and private sector
institutions and in addition, synergies can be obtained with the Agriculture and Fisheries
programme area.
Steps have been taken to set up a proper Environment Statistics Unit. Staff and equipment are
being made available to this unit. An outline statistical programme for the Environment
Statistics Unit within the NSO was drawn up. Data collection in this difficult area is proceeding
according to plan and will be widened and reinforced further during 2001. Actions to this effect
have already been taken through the issue of an Office of the Prime Minister (OPM) circular for
the compilation of Environment Protection Expenditure Accounts. With the assistance of the
Eurostat, the NSO has immediately started training its staff members in the collection and
compilation of environment statistics. Staff members from the Environmental Statistics Unit
participated in a training seminar on water statistics. The NSO filled in the Eurostat
environmental questionnaire in respect of the second quarter of 2000. In April, Blue Plan
experts evaluated the environmental data collected by the NSO during a mission to the office.
After receiving further feedback on the collected data, the NSO will be in a position to fill on-
line questionnaires on Eurostat’s CIRCA system. The NSO participated in the CAMP project on
sustainable environment indicators.

Research and Development Statistics
Although substantial statistics in this area are already available, no consistent R&D statistics
programme is in place. In the course of 2000 the necessary preparatory work for the collection
and compilation of research and development statistics was carried out. The necessary human




DRAFT                                                                                          120
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




and technical infrastructure is now in place. Moreover, the available data can be extensively
supplemented by new information that will be made available through other data collection
initiatives within the national statistical programme.
A working group comprised of representatives from the NSO, the Malta Council for Science and
Technology and the Industrial Property Office has been set up in order to discuss and co-ordinate
the work that needs to be carried out in this area. Patents data is available in line with
international requirements. A survey for the collection of R&D and Innovation Statistics has
been launched.
The available statistics are being supplemented by a data collection exercise that has been
launched among information services providers, including cable television, line/mobile
telephone and internet service providers.

Technical Assistance
Arrangements for the availability of technical support have been made in the Malta-Eurostat
Agreement on Statistical Co-operation. An amount of Euro 511,000 has been made available for
such assistance, which covers technical assistance (48 per cent), statistical training (29 per cent)
and Acquisition of equipment and other operational expenditures (23 per cent).

B. Short Term Priorities (2001)

General
a) Improve the administrative and co-ordinating capacity of the NSO in order to enable it to
   undertake the necessary co-ordination functions of the national statistical system.
b) Carry out work on the adoption of the Prodcom.
c) Ensure the adoption of any other classifications not specifically indicated by directive but
   which feature in any other methodologies as approved by Eurostat.
d) Issue a Legal Notice on the adoption of harmonised statistical classifications.

Business Statistics
a) Introduce new surveys covering the services sectors.

Economic Statistics
a) Implement the system of classification of Government finance transactions across
   Government.
b) Continue with the compilation of the non-financial accounts in accordance with ESA 1995.
c) Continue the Household Budgetary Survey, whose results will be used for the compilation of
   the required weights for the Harmonised Index of Consumer Prices (HICP). Introduce the
   Harmonised Index of Consumer Prices (HICP) in 2001.
d) The implementation plan for INTRASTAT will be reviewed and pilot tests will be carried
   out in 2001.




DRAFT                                                                                           121
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




e) Continue with the phasing out of the embarkation card system for tourism statistics.

Social Statistics
a) Carry out comprehensive work in the area of health and safety in collaboration with the
   Health and Safety Authority.
b) Undertake proper earnings and labour costs survey during 2001 to supplement the
   information that is collected through other enquiries like the Household Budgetary Survey
   and the Labour Force Survey .

Transport of Goods Statistics
a)   Introduce surveys on transport of goods by road in 2001.
Energy Statistics
a)   The NSO will continue to carry out work in order to satisfy all the requirements indicated in
     the energy statistics modules.

Land-Use and Agriculture and Fisheries Statistics
a) Continue the measures concerning the GIS based land-use information project, the
   improvement of crop production, livestock and animal production statistics and the
   collection of data on the structure and typology of agricultural holdings.
b) Finalise the goat and sheep census.
c) Carry out a poultry census.
d) The results of the pilot farm accountancy data collection survey will be available.

Regional Statistics
a)   Establish a consistent and ongoing regional statistics programme.
Culture and Audiovisual Statistics
a)   The report on the structure of the audiovisual industry in Malta will be continued in 2001.

Environmental Statistics
a)   Start a regular data collection and compilation programme for environment in 2001.
Research and Development Statistics
a) Actual survey work in the area of Research and Development statistics in Malta will be
   carried out in 2001 in the context of an EU-wide programme for the collection of such
   statistics.




DRAFT                                                                                           122
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




C. Medium Term Priorities (2002)

General
a) Continue work on the adoption of the Prodcom during 2002.

Economic Statistics
a) Adopt ESA 1995 by 2002.
b) Continue pilot testing of INTRASTAT during 2002. Introduce fully this system prior to
   accession when the current documentation system is removed.

Social Statistics
a) Continue to introduce surveys on the structure and distribution of earnings, where necessary,
   to supplement the information that will be collected through other enquiries like the
   Household Budgetary Survey and the Labour Force Survey.
Energy Statistics
a) Compliance with the Acquis is expected to be reached by the second quarter of 2002.

D. Institution Building Needs
The professional resource base of the NSO will be enhanced through the recruitment of
additional professional staff. Support staff will also be recruited in order to cater for the surveys
and other fieldwork that will be undertaken.
Staff members are participating regularly in Eurostat workshops and working groups on the
adoption of the statistics Acquis. Other staff members are attending statistics courses at the TES
institute and other training courses being organised in the context of Medstat. In addition to this
the NSO is availing itself of technical assistance in (a) statistical classifications (b) national
accounting (c) agriculture and fisheries statistics (d) Purchasing Power Parities (e) the
Harmonised Index of Consumer Prices (f) international trade – ’Intrastat’ and ’Extrastat’ (g)
tourism statistics (h) environment statistics, (i) transport statistics and (j) business statistics.
Moreover, new software will be introduced, while others will have to be modified.

Area of Activity                                                    2001         2002        Total

Ministry for Economic Services
National Statistics Office            Senior                            -            -           -
                                      Middle                            2            -           2
                                      Other                             -            -           -
                                      Total                             2            -           2




DRAFT                                                                                           123
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




E. Financial Requirements
                                                                    Lm000
Area of Activity                             2001      2002         Total

Ministry for Economic Services
National Statistics Office       Recurrent    350        350         700
                                 Capital       65         65         130
                                 Training      70         70         140
                                 Total        485        485         970




DRAFT                                                                  124
        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                     August 2001Final Draft




3.4     Sectoral Policies
3.4.1   Industry

        A. Current Status

        Profile of manufacturing industry
        The share of manufacturing in total economic output has marginally increased from 24.3 per cent
        in 1994 to 24.4 per cent in 2000. It remains one of the main pillars of the domestic economy,
        with manufacturing employment accounting for 22.7 per cent of the gainfully occupied
        population, whilst the share of manufacturing exports in total exports of goods and services
        stood at 61.7 per cent in 2000.
        There have been notable changes in the structure of the domestic manufacturing industry over
        the years, with a consistent shedding of workers particularly from the clothing and footwear
        sector, whilst others, particularly those producing electrical and non-electrical machinery as well
        as rubber products, have sharply increased the number of employees.
        There exists a clear dichotomy in the domestic manufacturing industry between those firms
        which are competing in international markets and the generally smaller domestic-owned
        companies which are still operating in the protected local market. In an increasingly more open
        trade environment, particularly with the dismantling of the protective levies, the local-oriented
        firms face a number of real challenges in the quest for competitiveness. The issue of levies is
        discussed under Section 3.1.1 (Free Movement of Goods) and Section 3.4.2 (Agriculture)
        There is agreement among all the social partners in Malta for the need for restructuring in order
        for the industry to face the challenges inherent in a competitive global environment. Indeed, with
        the necessary support measures and mechanisms, further liberalisation will be an important
        driving force to foster greater competitiveness and efficiency.

        Framework of Malta's Industrial Policy
        The promotion of the competitiveness of industry is one of the most important constituent
        elements of Government's policy for industrial development in Malta. It is recognised that
        export-led growth together with the fostering of local entrepreneurship are the basis for
        productivity gains. The way forward for Malta's manufacturing industry will be based on
        attracting additional investment, expanding export activity, developing high value added sectors
        and generating new employment opportunities. Another important aspect is the promotion of
        joint ventures, particularly where such ventures promote the transfer of technology and the
        modernisation of established enterprises.
        A White Paper "Prosperity in Change: Challenges and Opportunities for Industry" based on
        Article 157 of the Treaty, was presented to and discussed in the Malta Council for Economic
        Development. The White Paper presents the Government’s strategic overview of future
        industrial development in Malta and seeks to identify the principal issues that are implied.




        DRAFT                                                                                          125
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Concepts presented in the White Paper were applied in the formulation of the Business
Promotion Act (Cap. 325) and the draft legal Notice appertaining thereto.
 Encouraging innovation and extending skills, both in terms of research and development and in
the widespread take-up of new technology, is an important principle of Malta's industrial policy.
The attraction of flows of foreign capital to supplement domestic sources of capital for
investment is another priority. Furthermore, Government's trade strategy aims to create fairer
international rules and to increase access to and develop both new and existing markets. The
Government is also committed to ensure that Malta captures the benefits of the information
economy. Education and training are other important issues for Malta's industrial policy and in
particular the need to achieve high levels of competence and skill, including in the technological
field. Government is also working on the modernisation of the public sector in order to maintain
synergy with the restructuring process underway in private enterprise. A small business policy
which reduces the burden of regulation and red tape, cuts the cost of compliance, accelerates the
reform of government rules and regulations, and improves access to remedies against unfair
business practices, is being formulated.
Other important areas which also impinge upon the manufacturing industry comprise an
industrial relations policy which is based on a recognition of the mutual interests between
employers and employees; reform of Malta's financial system; a competition policy which opens
up the markets within the framework of the domestic market size realities; standards, which
provide a genuine pathway towards international competitiveness; an environment policy
earmarked to protect and sustain Malta's environment; and a commitment to restore, improve and
extend the infrastructure. The issue of standards is discussed in detail in Section 3.1.1 (Free
Movement of Goods).

Industrial Restructuring
Action is being taken to promote the restructuring of local industry to enhance its
competitiveness. The Institute for the Promotion of Small Enterprise (IPSE) has been established
to facilitate the restructuring of local manufacturing enterprises in view of the removal of levies
and the possible impact of EU legislation on their operating systems, and to assist in the
formation and growth of small manufacturing enterprises. IPSE launched its basic Programmes
of Assistance during July 1999: the "Small is Beautiful" programme (which targets restructuring
enterprises which employ up to five workers as well as new start-ups and micro enterprises
wishing to grow up to 15 employees); "Choosing to Compete" (which targets restructuring
enterprises which employ more than five workers and which are primarily domestic market
oriented) and "Going for Growth" (which targets restructuring enterprises which employ more
than five workers and which although they export more than 50 per cent of their sales turnover
still depend on the local market for profitability). IPSE has also introduced the "Fast Track"
programme which seeks to offer eligible enterprises wishing to embark on a restructuring
exercise, additional enhanced assistance with a view to alleviate the impact of the immediate
removal of levies. In March 2000, IPSE launched the 'Partners in Business' Initiatives: Business
Network which promotes networking, Business Connect which involves subcontracting between
larger and smaller enterprises, and the 'Business Links' initiative which encourages local
enterprises eligible for IPSE's programmes of assistance to seek and form strategic business
alliances with foreign enterprises.




DRAFT                                                                                          126
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




IPSE is also commissioning sector reports so as to help establish the impact of both the removal
of levies and the adoption of the Acquis on the operations of local manufacturing enterprises.
These studies will eventually lead to the development of additional assistance programmes
targeting specific industrial sectors. A study for the furniture sector commissioned by IPSE has
been finalised and published in early 2000. As a result of this study, an Action Plan has been
drawn up so as to help implement the recommendations for public sector measures in order to
support the initiatives that need to be implemented by the enterprises themselves to help them
restructure. The report regarding the study on the Printing Sector has reached its final stages
while more studies are being undertaken within the Building Sector. These studies concern the
Basic Metals and Non-Mineral products. In order to put the local sector on a sustainable
competitive basis, IPSE has also commissioned studies concerning the Micro Enterprises, the
Wine Sector and the Food and Vegetables Processing Industry. The latter two reports were
commissioned by IPSE in collaboration with the Ministry for Agriculture and Fisheries. This
should intensify the process to determine a strategy for the agro-industrial sector.
At a micro level, IPSE Ltd is assisting the individual enterprises to undertake a comprehensive
planning process leading to a restructuring/business plan. IPSE will also agree to support the
implementation of acceptable plans within the established programmes of assistance.
At an intermediate level, IPSE is encouraging the enhancement of collaboration between
enterprises with various initiatives, including consortia, co-operatives and trade associations.
Members of staff at IPSE have taken formal training in offering broker services and have access
to technology (software and structured systems) facilitating the delivery of such services.
During 2000, IPSE Ltd made substantial progress in the setting up of the first Business
Incubation Centre (BIC) to the island. A strategic document was approved and works to finalise
the infrastructure for the centre at Kordin are being completed.
The Business Resource Centre has been launched and is in a position to offer its services,
namely, various supporting services to entrepreneurs.

Foreign Direct Investment
Government considers foreign direct investment not merely as a source of investment, but as an
important means of injecting new technologies and operational practices into Malta. The Malta
Development Corporation (MDC) administers a package of incentives which are offered to its
clients, mainly through the Industrial Development Act (Cap. 325). The review of the incentives
granted under this Act were completed during the year 2000 and this culminated in the
preparation of the Business Promotion Act that was approved by Parliament in January 2001. By
virtue of the Business Promotion Act and Legal Notice issued in terms thereof, a number of
sectors were selected on the basis of value added. Firms in these sectors receive the most
beneficial incentives including an investment tax credit that rewards investment in physical and
human capital In respects of other sectors, tax benefits reward value added increases that are
achieved by the firm mostly through physical and human capital. Section 7 of the Business
Promotion Act strengthens investment allowances for these other sectors.




DRAFT                                                                                        127
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




The Malta Development Corporation is in the process of setting up a system, in collaboration
with the State Aid Monitoring Board, in order to ensure that all assistance given will be fully
compliant under EU rules.

Shipyards
The current strategy for the shipyards is for these two enterprises to achieve commercial viability
on the strength of their comparative advantage, particularly their highly skilled labour force.
Programmes for the shipyards' development are being formulated to identify new market
opportunities, introduce the latest technologies and fully develop the work force through training
and re-training and increased internal mobility.

Privatisation
The upgrading of competitiveness for the domestic manufacturing industry also entails the issue
of privatisation. A privatisation programme has been in place since 1988, which has significantly
reduced the role of the Government in the economy. Practically all public sector direct
investments (except for the shipyards) in the productive sectors have been privatised.
Privatisation has also been undertaken in other sectors of the economy, which also impinge on
the performance of the manufacturing industry. Today, none of the credit institutions in Malta is
under state control. Furthermore, in June 1998, the Government initiated the privatisation of the
fixed-line telecommunications sector by selling 40 per cent of its equity holding in Maltacom
p.l.c...
In November 1999, a White Paper entitled "Privatisation - A strategy for the future" was
published. This document outlines the Government's plans regarding privatisation in the five
years to 2005. The objectives of the privatisation programme are the modernisation and
increased efficiency of Government enterprises and the improvement of competitiveness of the
Maltese economy. This will be achieved through the wider adoption of modern technologies, the
formation of strategic partnerships with international operators, and stronger management
structures and practices, in preparation for operation in competitive markets. A privatisation unit
responsible for the management of the privatisation programme has also been set up.
The privatisation programme is being implemented, in line with the published White Paper on
privatisation.

European Coal and Steel Community
The Acquis referring to the European Coal and Steel Community is not of direct relevance to
Malta. However, any regulatory regime which may still be in force by the end of 2002 will be
adopted to bring Malta in line with the obligations set out in the Acquis.




DRAFT                                                                                          128
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




B. Short Term Priorities (2001)

Industrial Policy Document

a) Adopt the industrial policy document based on the White Paper “Prosperity in Change:
   Challenges and Opportunities for Industry.”

Industrial Restructuring
a) IPSE will officially launch the first Business Incubation Centre in Malta
b) Enhance the efforts by IPSE to assist in the restructuring of manufacturing enterprises.
   Increase significantly the number of enterprises covered by its programmes of assistance.
c) IPSE will continue to commission studies on sectors as necessary and will embark on the
   implementation of recommendations arising from such studies, in order to put the local
   sector on a sustainable competitive basis.

Foreign Direct Investment
a)   The new incentive package for industry will be in force.

Privatisation
a) Continue to unfold the privatisation programme.
b) Mediterranean Offshore Bunkering Company Limited, Kordin Grain Terminal, Lotto
   Department, Malta International Airport and Bank Of Valletta are expected to be privatised
   by the last quarter of 2001.

Education and Training
a)   The Government also plans to make maximum use of the training opportunities provided for
     by EU programmes in respect of vocational and other training, in order to ensure that the
     labour market is prepared for the outcome of the process of industrial restructuring.

Infrastructural Requirements
a) Undertake measures to ensure that infrastructural facilities are maintained and continuously
   updated in the light of increasing demand or technological developments. At the same time,
   Government will aim to improve efficiency of infrastructural services so as to avoid
   unnecessary costs to industry. (Ongoing)

C. Medium Term Priorities (2002)

Privatisation
a) Further unfold the privatisation programme.




DRAFT                                                                                        129
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




European Coal and Steel Community
a)   Any regulatory regime referring to the European Coal and Steel Community which may still
     be in force by the end of 2002 will be adopted to bring Malta in line with the obligations set
     out in the Acquis.

D. Institution Building Needs
The Ministry for Economic Services is responsible for the formulation of the national industrial
strategy. The institutional arrangement responsible for the management of the privatisation
programme has been established through the setting up of the Privatisation Unit within the
Ministry of Finance.
The necessary infrastructure to implement the Acquis is basically in place and only minor
additional capacity building is necessary. Moreover, a restructuring exercise is underway in the
relevant institutions to enhance their capacity to meet the responsibilities explicit and implicit in
EU membership. In fact, following the operations review in the Ministry for Economic Services,
the Business Promotion Division has been established in order to provide a more focused and co-
ordinated approach to the business community through the services offered by the Malta
Development Corporation (MDC), Malta External Trade Corporation (METCO) and the Institute
for the Promotion of Small Enterprises (IPSE).



Area of Activity                                                    2001         2002        Total

Ministry for Economic Services
                                      Senior                            1            -           1
                                      Middle                            1            -           1
                                      Other                             -            -           -
                                      Total                             2            -           2


E. Financial Requirements
                                                                                             Lm000
Area of Activity                                                     2001         2002       Total

Ministry for Economic Services
                                      Recurrent                         15          15           30
                                      Capital                            -           -            -
                                      Training                           5           -            5
                                      Total                             20          15           35




DRAFT                                                                                           130
        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                     August 2001Final Draft




3.4.2   Agriculture

        A. Current Status
        The contribution of agriculture to the GDP in Malta is comparable to the average of the
        European Union. Agriculture’s share in GDP has been declining in view of the relatively high
        rates of total GDP growth since the 1980s, and presently stands at some 2.5 per cent.
        The overall objectives of Government's agriculture policy are:
              To provide high quality Maltese produce, ensuring a balance between a varied and
               wholesome basket, at reasonable consumer prices on the one hand, and providing an
               adequate and just income for the farmers, herdsmen and fishermen on the other.
              To contribute towards the preservation and the enhancement of the rural environment.
        Malta intends to work towards accession through the adoption of the following steps:
        a)   Harmonisation of the legislative instruments with the Acquis.
        c)b) Restructuring of the Department of Agriculture with the necessary increase in the staff          Formatted: Bullets and Numbering
             complement and other resources to enable the Department to support the sector and promote
             rural development.
        e)c) Examine the introduction of appropriate support mechanisms in line with the Common
             Agricultural Policy (CAP) to gradually replace current systems.
        The development of agriculture in Malta is constrained by its natural and geographical
        characteristics, which are not conducive to a higher rate of development. The smallness of the
        local market does not contribute towards crop or livestock enterprise specialisation as an
        alternative. These considerations as well as the pressure of urbanisation clearly indicate that
        Maltese agriculture operates in highly less favoured conditions for agricultural production. The
        small size of the islands, the natural attributes, market constraints and high population density,
        indicate the limited production capacity of agriculture, the limited range of products that can be
        produced and the poor conditions for high capital intensity. In addition, the peripheral situation
        of Malta heightens its disadvantaged status by way of transport bottlenecks and extra costs.
        Malta faces a number of major constraints restricting its competitiveness in agriculture and agro-
        industry. The first one is related to the opportunity cost of land. Agriculture is a land intensive
        economic activity and the economic rental value of land in Malta puts it at a disadvantage vis-à-
        vis other Mediterranean competitors countries where land scarcity tends to be less of a major
        problem.
        A second constraint lies in the scarcity of water. With half of its water supply originating from
        desalination, Malta is faced with penalising costs of producing water. Sewage treatment helps to
        alleviate to some extent this problem by producing second-class water as a by-product of the
        process.
        Agriculture tends to be a labour-intensive activity. This characteristic is all the more true in
        Malta where farming is on a small scale and low capital oriented. In countries with a low




        DRAFT                                                                                          131
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




opportunity cost of labour, labour intensity is more an advantage than a constraint. But it is not
the prevalent situation in Malta, where the rate of unemployment is around 4.4 per cent.
In such a scenario, there are foreseeable constraints for Maltese agriculture to attain the high
productivity standards which are achieved elsewhere in Europe. Higher productivity can never
offset the three structural constraints of land, water and labour costs. In view spite of this,
agriculture remains an important sector from a national development perspective. Firstly the
farming community constitutes an important component of Malta’s social structure and fabric.
Secondly, the farming sector contributes in no small way to the maintenance and enhancement of
Malta’s rural landscape. Thirdly, in view of Malta’s island status, in the periphery of the
production centres of Europe, agriculture affords a limited but vital source of food security
particularly in emergencies and possible disruption of supplies from overseas.
Malta is self-sufficient in fresh vegetables, processed tomatoes, eggs, poultry, pork, fresh milk
and fresh milk products. Malta is not a producer of cereals, sugar, hops, rice, butter, cheese,
milk powder, mutton mutton, tobacco and lamb. Malta has a low self-sufficiency in wine grapes,
fresh fruits and beef. Malta’s only agricultural export of significance is spring crop potatoes.
No tariff quotas on imported agricultural products are imposed by Malta. Import licensing is only
used to ensure that imports meet health, food safety and environmental considerations. No
specific import licence is required but a phytosanitary or veterinary certificate may be needed.
Moreover, with the exception of Medigrain Ltd. (which deals in grains and cereals), there is no
state trading in the sector.
Currently, levies are applicable to the agricultural and agro-food sectors (primarily included in
chapters 1 to 24 of the levy tariff), which are considered sectors to which particular specific
attention should be given. Products in these categories generally enjoy restricted access to the
EU market and are excluded from the benefits of the CAP pending Malta’s formal accession to
the EU. Such levies will be phased out according to an appropriate schedule that would be
determined during negotiations. This is required to ensure that the livelihood of farmers would
be secured by the measures contemplated by the reformed CAP and the specific support
measures that are envisaged to be necessary for Malta.
These safeguards coupled with appropriate measures are considered as an integral part of
Malta’s endeavour towards the liberalisation of imported food and agricultural products from the
EU and the adoption of the Common External Tariff. The adoption of the internal prices of
several commodities could have a direct bearing on domestic costs and may affect negatively
Malta’s international competitiveness in the industrial and tourism sectors. In view of this,
specific supply arrangements are required to enable Malta to source products at international
market prices through the exemption from customs duties on products imported from third
countries and/or specific support for specific Community products.
Given the current CAP regime, Malta would not benefit from a number of CAP measures since
these products cannot be produced in Malta in view of the small size of farms, serious
competition for land use and limited linkages between the food industry and agriculture.
Specific supply arrangements may therefore be required to address the disadvantages of
operating in a small, fragmented and peripheral island.




DRAFT                                                                                         132
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




In preparation for the gradual implementation of the relevant CAP mechanisms, an exercise has
been initiated carried out through an FAO/TCP project to calculate the Domestic Resource Cost
(DRC) involved in producing a number of products, important for the Maltese agricultural
sector, and to compare the DRC with the value of imported products. On the basis of the DRC
estimates, the gap between Malta’s agricultural policy and the EU’s CAP would behas been
analysed. Appropriate time-frames and policy measures required to bridge the gap would have
also been determined and evaluated. Preliminary calculations show that Malta suffers a
comparative disadvantage in the most important agricultural produce.
One notes that an assessment of the definition of less favoured areas adopted by Regulation EEC
950/97 seems to indicate that the whole of the Maltese islands may be considered as less
favoured areas for aAgricultural Pproduction purposes.
The Farmers’ Registration System at the Department of Agriculture can form the basis for the
Integrated Administration and Control System (IACS). A pilot Geographical Information
System (GIS) based project for the recording of holdings is being undertaken. This
comprehensive database reporting system is being constructed on existing systems operated by
the Planning Authority and the Lands Registry.
Market information is collected effectively for fresh fruit and vegetables, pork, beef, milk and
fish. Market information on forage, eggs, poultry and rabbits is scanty although the Department
of Agriculture is working closely with the National Statistics Office in order to address this
matter.
Preparatory work for an area payment scheme for arable crops in line with Regulation
(EC)1251/99 (support system for producers of certain arable crops) is underway. The current
base area for arable crops is 4,500 hectares. Malta will apply the provisions of Article 6(7) of
this Regulation so that local producers be considered as small producers and that the Maltese
Islands be considered as the local market.
Farm accountancy data is being collected and will be made available by end 2001. A pilot study
on Farm Accountancy Data Network (FADN) involving a representative sample on of
approximately 65 farmers was carriedwill be out by the National Statistics Office during the
period February to May 2001. A copy of the document entitled about the“ Ssetting up of a farm
accountancy Data Network (FADN) including the results of the pilot study, and in line with EU
Requirements, was will be submitted to the Commission in July 2001 by the third quarter 2001
to create the basis for a fully fledged FADN. Malta will be in a position to operate the FADN
(Regulation (EEC) 79/65 and its amendments) by accession.
The Department of Veterinary Services manages databases on livestock farms and movement of
animals. Detailed records are kept for swine and for cattle, sheep and goats. All swine are
identified by ear tattoo, while cattle, sheep and goats are identified by ear tags or electronically.
Detailed information on vineyards is being collected through a physical survey and through
remote sensing. About 70 per cent of the wine produced in Malta is made from imported grapes.
Such wine would be classified as common table wine under current EU legislation. A new Wine
Act has been draftedwill be adopted by parliament by the fourth quarter 2001. The
Administrative structure of the Ministry for Agriculture and Fisheries need to be strengthened in
order to be able to fulfil the requirements of the Acquis. During 2000, the National Statistics




DRAFT                                                                                           133
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Office in collaboration with the Department of Agriculture and Fisheries carried out a survey of
the land used for vine cultivation, taking into account the variety of vines and their age. This
survey will be the basis of Malta’s submission to the EU’s annual Survey of wine production.
The results of this survey were will be submitted to the Commission in July the third quarter of
2001.
The CAP Unit to be set up at the Customs Department will be responsible for implementing the
tariff quotas and for carrying out surveillance of imports and inter-trade of agricultural products
through documentary and physical controls.
A Producers’ Organisations Bill will be adopted by Parliament by the fourth quarter of 2001.
An Act for the recognition and role description of the producers’ Phytosanitary organisations is
being drafted.
The Plant Health Division within the Department of Agriculture is the designated authority for
the national regulatory system for Phytosanitary matters. This Division operates the measures
identified under the Agriculture (Plant Protection) Act (Cap. 195) which regulates the
importation of certain plants from different origins. The Division has (a) to ascertain that
importation of plants be as disease free as technically possible and (b) that it must be furnished
with the necessary instruments in order to manage and control any possible spread of plant pests
or disease.
 A new Plant Quarantine Act has been drafted. This new Act will enable the Minister responsible
for agriculture to enact subsidiary legislation in line with the relative Directives of the Acquis.
The Division is also responsible for the management of the Pesticides (Control of Importation,
Sale and Use) Act (Cap. 192). A new Pesticides (Control) Act has also been adopted by
Parliament in March 2001. This new Act enables this Division to implement this part of the
Acquis. It provides for the control of plant protection products as well as biocides. The
provisions of the Animal Food and Feeding Stuffs Act (Cap. 183) are not yet operative. New
legislative measures are being drafted to comply with Community legislation. A preliminary
draft of the Seeds and Plant Act was completed during the year 2000.
The Agriculture (Plant Protection) Act constitutes the main legislation regulating harmful
organisms. Malta is a party to the International Plant Protection Convention.
Regular surveys on the plant health status of the Maltese islands are carried out whilst advisory
services are provided to farmers on disease prevention, integrated pest management, application
of plant protection products as well as on fertiliser application and irrigation techniques. Malta
is an active member of EPPO and reports interceptions and disease outbreaks to this
organisation. In order to ensure the appropriate monitoring and control of the maximum residues
limits in plants for human consumption, initial sampling and testing of vegetables for Maximum
Residue Levels was carried out during the year 2000
Malta enforces a strict regulatory framework to control the importation and spread of organisms
harmful to plants and plant products. Malta’s geographical size and insularity permits the
adoption of this regulatory framework. Recent surveys have shown that the Plum Pox virus and
the Citrus Tristeza virus do not exist in Malta. The agricultural infrastructure in Malta, whereby
holdings are divided into very small parcels of land with little or no boundaries between fertile




DRAFT                                                                                          134
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




land and built up areas, underlines the need for a policy of strict control on the importation and
use of pesticides. The use of biological active agents of particular risk to human and animal
health as well as the environment are banned. Malta requests to continue to maintain this policy
of strict control and use according to established criteria.
Malta will endeavour to align itself with the maximum residue levels (MRLs) of pesticides in
line with the Acquis by accession.
In order to implement the Acquis in this area, the existing human resources and equipment are
being consolidated and enhanced. During 2000, visits by to Malta by TAIEX experts provided
recommendations on how to strengthen the administrative, technical and physical resources
necessary to implement the Acquis.
A new diagnostic laboratory at the Plant Biotechnology Centre was also completed during the
year 2000. The aim of this lab is to specialise on the Diagnosis of viruses, viroids and
mycoplasma-like organisms using serological and molecular biology techniques. A study was
also conducted to assess the physical resources required to upgrade two other existing
laboratories to meet the requirements for the identification and diagnosis of other harmful
organisms required for compliance with the EU secondary legislation.
A new Seeds and Plants Act will be adopted by Parliament by the second quarter of 2002. A new
Plant Quarantine Act will be adopted by the fourth quarter of 2001.
The Patents Act (Cap. 417) protects plant varieties under a patent system. Malta is a party to
TRIPS which allows for the protection of plant varieties under both the patent system and the
plant variety right system. Consultations are underway with the Commission to establish a sui
generis system taking into account Malta’s particular situation.
A transitional period may will be requested in respect of the conditions and arrangements for
approving and registering certain establishments and intermediaries operating in the animal feed,
to allow the restructuring of feed mill establishments.
A transitional period will be requested Malta requests a transitional period of five years with
regard to Article 2(2) of Regulation (EC) 2201/96 on production aid for individual producers.
Malta wishes to be granted a protected zone status in line with Directive 2000/29/EEC for the
Maltese Islands with respect to Citrus Tristeza Virus, Plum Pox Virus and Colorado Beetle.
A derogation will may be requested with respect to the evaluation of active substances contained
in plant protection products and biocides. It is envisaged that the results of pesticides’ brands
evaluation tests carried out in other Member States would be recognised.
A derogation will be requested with respect to Malta requests a derogation from Regulation
(EEC) 1764/86 (minimum quality requirements for tomato-based products eligible for
production aid) and its amendments with regard to those provisions relating to the content of
tomato products.
A derogation will be requested with respect to Malta requests a derogation from Regulation
(EC)504/97 (detailed rules for application of Regulation (EC) 2201/96) and its amendments with
regard to those provisions relating to the content of tomato products.




DRAFT                                                                                         135
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




A derogation will be requested with respect to A derogation is being requested with respect to
Article 12 concerning the stocking density requirements of Regulation (EC) 3493/90 (granting
of premiums to sheepmeat and goatmeat producers).
It is envisionaged that the prohibition to place on the market and use of certain plant protection
products and biocides would be maintained.

Forestry
In the Maltese islands, the total afforested area covers about 32 hectares or only 0.1 per cent of
the total surface area. The present structure of the Urban and Rural Landscaping Unit of the
Department of Agriculture, which is the administrative set-up for the implementation of the
policy on tree planting, would have to be strengthened in order to adhere to Regulation
requirements. Land use is regulated by the Structure Plan which is enforced by the Planning
Authority. Most afforested areas are within rural conservation zones and a number of important
areas are also protected through conservation orders. The Department of Agriculture runs a
forestry nursery and maintains afforested sites. Regulations on tree protection under the
Environment Protection Act (Cap. 348), Trees and Woodlands (Protection) Regulations
(LN12/01) were will be adopted in early the first quarter of 2001. In collaboration with various
other entities, the Urban and Rural Landscaping Unit operates various landscaping schemes.
The unit maintains parks and gardens on behalf of a number of Local Councils, under a service
contract agreement.
A national multiannualmultiannual programme covering the objectives laid down in the Acquis
including conservation of endemic species and endangered species shall be prepared as part of a
Rural Development Programme.
The maintenance of the typical Mediterranean maquis is of special importance. Malta is an             Formatted
active member of Sylva Mediterranea, the European Ministerial forest initiative and
EUFORGEN.

Veterinary Medicine and Zootechnics
Malta’s veterinary policy is conditioned by its specific geophysical and demographic constraints
and the impact which these have on other policies including infrastructure, industry and
environment.
Due to its densely livestock populated area, the absence of natural barriers within its confines
and special bilateral country guarantees, Malta has limited the imports of live animals, other then
hatching eggs, and the internal movement of animals to safeguard its minimal disease status in
most species. Malta is free from all OIE list A diseases and from a number of OIE list B diseases
including Brucellosis, Tubercolosis, Aujesky’s Disease, Rabies, Trichinellosis, Maedi-visna,
Blue Tongue and Transmissable Gastroenteritis.
Malta imposes strict animal health controls on the importation of live animals and animal
products. Experience has proved that the close proximity and indirect contact of many of the
cattle and pig farms make it practically impossible to contain spread of exotic infectious diseases
once they have entered the Maltese Islands.




DRAFT                                                                                          136
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




The Veterinary Service falls within the administrative framework of the Ministry of Agriculture
and Fisheries. Its responsibilities are widespread, from animal health and welfare to public
health, and as such falls under the legal responsibilities of both the Ministry of Agriculture and
Fisheries and that of the Ministry of Health. The veterinary service activities cover animal
health, animal welfare, food of animal origin, food processing establishments, import/export
controls and certification, animal identification and livestock informatics. All these activities
fall within the rules, regulations and laws as laid down by the under mentioned aActs:
       Veterinary Service Ordinance (Cap. 96)
       Prevention of Disease Ordinance (Cap. 36)
       Food, Drugs and Drinking Water Act (Cap. 231)
       Medical and Kindred Professions Ordinance (Cap. 31)
The Veterinary Service Ordinance lists the duties of the veterinary surgeons employed by the
Government and lays down the duty of any veterinary surgeon to report the occurrence of any
epizootic disease. The Veterinary Services Ordinance in combination with the Prevention of
Disease Ordinance provide the essential, though not full, legal framework to harmonise local
legislation with the EU Animal Health provisions especially in (i) the setting up of ‘Contingency
Plans’ for the control of any exotic disease; (ii) animal movement control; (iii) disease
eradication programmes; (iv) conditions, nature and amount of compensation payable in disease
controls; (v) import and quarantining of animals; (vi) declaring area as free from disease; (vii)
protecting animals during transport.
The issue of warrants and ethical behaviour of practising veterinary surgeons is covered by the
Medical and Kindred Professions Ordinance (Cap. 31). As this legislation relates more to the
medical and kindred profession, a Veterinary Services Act will be enacted to regularise the
Veterinary Profession, in line with EU 78/1026 and EU 78/1027. Subsidiary legislation under
this Act will implement the provisions of the veterinary Acquis.
The study on veterinary mechanisms in order to explore the possibility of establishing an
appropriate organisation structure to manage veterinary and food matters in a holistic manner has
been completed and the new structure of the Veterinary Services has beenwill be included in the
first draft of the Veterinary Services Act in 2001. Food Safety will be the
responsibiltyresponsibility of a single competent authority, with all the processes involved in the
pool chain being covered, in line with the “stable to table” principle.
Border Inspection Points (BIPs) have been identified and stakeholders are being consulted.
MAFF DEFRA (UK) is assisting by a Mmini Ttwinning project and an agreement has been
reached to train local personnel at UK’s BIP’s.
The administrative capacity regarding the import, production, storage, trade, use and
authorisation of Vveterinary Mmedicinals is fully implemented and the collection of data
(dossiers) is in an advanced stage. Agreement reached with UK and Ireland’s competent
authorities for country to country mutual recognition and for the provision of summary of
assessment reports. Legislation would be implemented following the adoption of the Veterinary
(Framework) Act 2001.
The veterinary public health activity is carried out mainly under the realm of the Ministry of
Health. Over the past years, the veterinary services have been upgrading and managing the




DRAFT                                                                                          137
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




public health legislation to conform to that of the EU mainly the Meat Residue Legislation and
the accompanying programmes for testing (LN162/98); the prohibition of use of certain
hormones, thyrostatics, BST and antimicorrobials (LN142/98); and the Poultry Slaughter Houses
Regulations (LN93/95). The Malta Veterinary Services databases are in the process of being
tested and it is expected that the whole system would be fully operational by third fourth quarter
of 2001. Malta signed will sign the ANIMO contract with EUROCOM in January 2001 and shall
be on line as soon as Member States approve.
The existing regulations and facilities regarding slaughter houses and processing plants are being
reviewed in order to ensure that all establishments meet EU levels.
The Food, Drugs and Drinking Water Act, the Food Hygiene Regulations (LN 73/69) and the
Meat Regulations (LN 15/77) provide controls on the placing on the market of red meat and
fishery products. The new Veterinary Services aAct will transpose Directive 72/461/EEC (health
problems effecting intra-community trade in fresh meat) and Directive 92/118/EEC (animal
health and public health requirements governing trade).
The current meat residue programme is in line with EU requirements. The new Veterinary
Services Act will provide for the legal basis for this programme and for measures to be taken in
the event of infringement.
The importation of both live animals and animal products is at present controlled by import
licences. The conditions in force, in most instances, are stricter than those of the EU due to (a)
the lack of bilateral guarantees and (b) the country being a Densely Populated Livestock Area
posing in itself a particular high risk of major disease epidemics. In fact, it is a local policy to
allow imports only from countries that are free from diseases as compared to the EU stand that
allows imports from regions within countries that are free from disease.
The Prevention of Disease oOrdinance is in line with the provisions of Directive 82/394/EEC
(notification of annual diseases within the Community). The new Veterinary Services Act will
provide for the requirements to notify the Community and Member States and will contain a list
of all EU diseases as an annex to the Act.
For a number of years, Malta has enforced through regulations (LN151/89 and LN86/80), the
identification of all animals, dairy and pigs. Any animal slaughtered is identified and traced
easily to the farm origin.
Malta does not have an industry for the production of egg products, nor an industry of live,
bivalve molluscs.
Veterinary public health legislation in relation to aquaculture products has been drafted and is
awaiting the approval of the Council of Health.was issued in LN255 of 2000.
The welfare of animals is covered by the Code of Police Laws (Cap. 10) and the Dogs Act (Cap.
312). The legislative responsibility for the welfare of animals is being transferred from the Police
Force to the Veterinary Service and legislation is being prepared in line with the Acquis. The
Animal Welfare Act was drafted and its adoption by Parliament is expected by second quarter
2001 whereas subsidiary legislation is expected to be enforced by mid 2002. Malta is a party to
the Council of Europe Convention for the keeping of Animals for Farming Purposes. Moreover,




DRAFT                                                                                           138
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Malta would be in a position to be a signatory to the Council of Europe Animal Welfare
Conventions as soon as the Animal Welfare Act is adopted by Parliament.
The Prevention of Disease Ordinance and its subsidiary legislation and the Importation (Control)
Regulations constitute the primary legislation regulating animal health and trade in live animals,
semen, ova and embryos.
The Breeding Stock Regulations (LN50/97), the Hatcheries Regulations (LN51/97) and the
Poultry Chicks and Hatching Eggs (Importation) Regulations (LN48/97) are in line with
Directive 90/539/EEC (poultry and hatching eggs).
The Animal Food and Feeding Stuffs Act (Cap. 183) will need to be reviewed and amended to
cover all the requirements as laid down by the EU Animal Nutrition Directives. The
feedingstuffs regime shall fall under the Veterinary Services (Framework) Act 2001.
Zootechnics includes tasks within the scope of genealogy, control of production, selection and
reproduction mainly governed in Malta by the Cattle Breeding Ordinance (Cap. 97) as well as
subsidiary legislation (LN86/80). Although the current legislation does not fully conform to the
Acquis, both the Dairy and Pig Co-operatives are endeavouring to harmonise with EU practices.
At the government level, it is envisaged that appropriate structures will be established with
regards to both swine and dairy breeding. This would ensure a co-ordinated approach in data
gathering, assessment of animals, control of production and the marking of animals, thus
providing an audit of the submissions made by the Breeders’ Organisation. Zootechnical
legislation is being covered under the Veterinary Services (Framework) Act 2001 and shall be
enforced by subsidiary legislation by second quarter 2002.
Malta has a small unit of grand parent porcine stock and is starting special breeding programmes
to maintain the genetics of the Maltese goat, the Maltese sheep and local drought bovines.
The provisions of Articles 8 and 11 of Directive 92/46/EEC will be applied to retain the general
and particular requirements for the manufacture of milk-based products withy traditional
characteristics, which are varieties of Gbejna and Rkotta. It is envisaged that transitional periods
may be requested in respect of health problems effecting intra-Community trade in fresh meat,
meat products and the production and placing on the market of minced meat preparations, to
allow the restructuring of cutting, de-boning and processing establishments. Transitional periods
may also be requested as regards health problems effecting trade in fresh poultry meat and the
production and placing on the market of rabbit meat and farmed game meat, to allow the
implementation of self-controls and restructuring of slaughtering and cutting establishments.
Transitional periods may also be requested in respects of the production and placing on the
market of milk and milk based products, to allow the upgrading and restructuring of farms and
dairies and the control of mastitis in the herds, and in respect of minimum standards for the
protection of pigs and laying hens kept in battery cages, to allow the restructuring of farms and
the control of stock density on units.
A derogation may be requested in respect of the minimum number of samples for eggs and milk
for the monitoring of certain substances and residues thereof. Malta is also requesting to utilise
other Member States’ accredited laboratories for the testing and monitoring of certain substances
and residues.




DRAFT                                                                                           139
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Furthermore, a derogation may be requested for the use of incineration and controlled dumping
of high and low risk materials other then rendering.
Malta also wishes to maintain its current safeguard measures with respect to the import of live
animals and products from other Member States and third countries.
                                                                                                       Formatted: Bullets and Numbering
C.B.Short Term Priorities (2001)

Horizontal Issues
a) The Special Market Policy Programme for Maltese Agriculture which aims at grouping
   together all those interventions that will allow local production to survive in the rules of a
   single market, while enhancing their role in producing multi-functional externalities will be
   submitted to the Commission by the third quarter of 2001.
b) The Paying Agency within the Ministry for Agriculture and Fisheries will be responsible for
   the authorisation of claims, execution for payments, control and information mechanisms,
   filing and storage of documents and data. The Paying Agency will also administer
   intervention actions, export refunds as well as advances and clearance of accounts. The
   Paying Agency will reach full capacity by the fourth quarter of 2002.

Common Market Organisations
a) A time table for the gradual dismantling of levies in this sector, subject to the application of
   appropriate systems that will replace the protection being provided to agriculture by these
   levies were applicable, will be submitted to the Commission by the third quarter of 2001.
b) A list of vine varieties in line with Article 19 of Regulation (EC) 1493/99 will be submitted
   to the Commission by the fourth quarter of 2001.
c) A CAP unit within the Customs Department of the Ministry of Finance will be set up by the
   fourth quarter of 2001.
d) A Producer’s Organisations Unit within the Ministry for Agriculture and Fisheries will also
   be set up by the third quarter of 2001.
e) Draft A rRural dDevelopment pProgramme, valuing due account of the Acquis in this area
   will be drafted by the first quarter of 2002.
f) The Malta Standards Authority will publish standards of fresh fruit and vegetables. These
   will publish standards of fresh fruit and vegetables. These will be enforced gradually by
   accession. The Ministry for Agriculture and Fisheries will draw up a code of good
   agricultural practice.
g) Standards for eggs and poultry will be adopted. They will enter into force by accession.
h) Adopt a new Veterinary Services Act by the second quarter of 2001.
i)   Adopt an act for the recognition and role description of the producers’ organisations.




DRAFT                                                                                           140
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




j)   A Wine Regulation Board within the Ministry for Agriculture and Fisheries will be set up by
     the fourth quarter of 2001.

Veterinary Medicine and Zootechnics
a) The local veterinary diagnostic laboratory would be operational and appropriately equipped,
   and be G.L.P certified by end the fourth quarter of 2001. The veterinary authorities shall
   explore the possibilities of twinning with other EU reference laboratories to ensure
   compliance with the AcquisAcquis, in situations where diagnosis, monitoring and other            Formatted
   testing cannot be carried out in Malta due to cost-effectiveness considerations.
b) Legislation on animal nutrition would be adopted by late 2001, following due consultations
   by interested parties.
c) A newA new Animal Welfare Act will be adopted by the second quarter of 2001, while a
   new The Veterinary Services (Framework) Act and a new Food Safety Act will be adopted
   by Parliament by the second quarter of 2001 and fourth quarter of 2001 respectively.
d) A costing exercise as regards the financing of veterinary inspection and controls of animal
   products will be completed by the fourth second quarter of 20021.
e) Malta will become signatory to all Council of Europe Animal Welfare Conventions by the
   fourth second quarter of 20012002.
a) A Hazard Analysis Critical control Point System (HACCP) study which has been
   commissioned and will be finalised by the second quarter of 2001.
b) Laboratotry facilities will be set up by the fourth quarter of 2001 to monitor meat residues
   mainly veterinary medicinals and diagnose animal diseases.
c) Legislation transposing Directive 93/23/EEC (statistical surveys to be carried out in pig
   production) and Directive 76/630/EEC (surveys of pig production to be made by member
   states) will be adopted and enter into force by the fourth quarter of 2001. Malta will apply
   the provisions of Article 1 of Directive 93/23/EEC which allows countries with less then
   three million pigs to carry out only one survey of pig production per year.

Phytosanitary
d) The new Plant Quarantine Act will provide for the setting up of a certification scheme which
   will be in place by the fourth quarter of 2001. The Act will transpose Directive 2000/29/EEC
   (protective measures against the introduction into the Community of organisms harmful to
   plants or plant products or against their spread within the Community) except where requests
   for special arrangements are beingto be made.
e) Subsidiary legislation under the new Plant Quarantine Act transposing Directive 93/50/EEC
   (official register), Directive 92/90/EEC (obligations to which producers and importers of
   plants, plant products, or other objects are subject and establishing details for their
   registration) and Directive 92/105/EEC (degree of standardisation for plant passports) will
   be adopted and enter into force by the fourth quarter of 2001. Further subsidiary legislation
   transposing Directive 69/464/EEC (control of Potato Wart Disease). Directive 69/645/EEC




DRAFT                                                                                        141
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




     (control of Potato Cyst Eelworm), Directive 69/466/EEC (control of San Jose’ Scale),
     Directive74/647/EEC (control of carnation leaf rollers), Directive 93/85/EEC (control of
     potato ring rot), Decision 97/647/EEC (detection and identification of Pseudomonas
     solancearum (Smith) Smith in potatoes), Directive 98/57/EC (control of Ralstonia
     solancearum (Smith) Yabuuchi et al.), Decision 96/301/EC (additional measures against the
     dissemination of Pseudomonas solanacearum (Smith) as regards Egypt), and Decision
     2000/58/EC (additional measures against the dissemination of Bursaphelencus xyliphilus
     (Steiner et Buhrer) Nickle et al.) will be adopted and enter into force by the fourth quarter of
     2001.
f) Subsidiary legislation under the new Plant Quarantine Act transposing Directive 98/22 (plant
   health checks in the Community at inspection posts), Directive 94/3/EC (notification of
   interception of a harmful organism from third countries), Directive 92/70/EEC (recognising
   protected zones exposed to particular plant health risks), Directive 92/76/EEC (recognising
   protected zones exposed to particular health care risks), Directive 93/51/EEC (movements of
   certain plants, plant products or other objects through a protected zone) will be adopted by
   the fourth quarter of 2001 and will enter into force on accession.
g) Subsidiary legislation under the new Plant Quarantine Act transposing Directive 92/33/EEC
   (marketing of vegetable propogating and planting material, other then seed), Directive
   93/64/EEC (multiplication material of fruit trees) and Directive 68/193/EEC (multiplication
   material of vines) will be adopted and enter into force by the fourth quarter of 2001.
h) Subsidiary legislation under the new Pesticides Control Act transposing Directive 91/414
   (placing of plant protection products on the market), Directive 98/8/EC (placing of biocidal
   products on the market), Directive 97/57/EEC (establishing Annex VI to Directive
   91/414/EEC), Directive 79/117/EEC (placing on the market and use of plant protection
   products containing certain active substances), Directive 90/642/EEC (maximum levels for
   pesticides residues in and on certain products of plant origin, including fruit and vegetables),
   Directive 79/700 (official control of pesticide in and on fruit and vegetables), Directive
   86/362/EEC (fixing of maximum levels for pesticide residues in and on cereals) and
   Directive 86/363/EEC (fixing of maximum levels for pesticide residues in and on foodstuffs
   of animal origin) will be adopted and enter into force by the fourth quarter of 2001.
i)   The Food , Drugs and Drinking Water Act constitutes the primary legislation regulating
     plant hygiene in Malta. A new Food safety Act will be adopted by parliament by the fourth
     quarter of 2001.
j)   Filling up of posts of senior human resources in the plant health administration.
k) Intensify the sampling and testing for pesticides residues.




DRAFT                                                                                           142
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




                                                                                                     Formatted: Bullets and Numbering
D.C.Medium Term Priorities (2002)

Horizontal Issues
a) A precise time table indicating the administrative and financial adjustments necessary to
   fully implement the provisions of regulation (EC) 1260/99 will be completed by the second
   quarter of 2002.
b) Regulation (EEC) 2078/92 (agricultural production methods), Regulation (EEC) 3508/92
   (establishing an integrated administration and control system for certain community aid
   schemes) and Regulation (EEC) 3887/92 (laying down detailed rules for Regulation (EEC)
   3508/92) will be in place by the third quarter of 2002directly applicable upon accession.
   Funds have also been allocated under the pre accession programme to ensure a fully
   functioning IACS by the date of accession.
c) The Agricultural land register that is being kept by the Department of Agriculture within the
   Ministry of Agriculture and Fisheries is being updated and will be incorporated in a
   computerised system by the fourth quarter of 2002.
d) Regulation (EEC) 3719/88 (common detailed rules for the application of the system of
   imporgt and export licences and advance fixing certificates for agricultural products) and its
   amendments will become directly applicable to Malta on accession.
e) Regulation (EEC) 800/99 (repealing Regulation (EEC) 3665/87) (common detailed rules for
   the application of the system of export refunds on agricultural products) and its amendments,
   Regulation (EEC) 1618/81 (fixing the basic products which do not qualify for advance
   payment of export refunds) and its amendments, Regulation (EEC) 2185.87 (repayment of
   export refunds for certain agricultural products exported in the form of certain goods not
   covered by Annex II to the Treaty and the charging of accession compensatory amounts) and
   its amendments, Regulation (EEC) 615/98 (rules of application for the export refunds
   arrangement as regards the welfare of live bovine animals during transport) and Regulation
   386/90 (monitoring carried out at the time of export of agricultural products receiving
   refunds or other amounts) and its amendments will become directly applicable to Malta on
   accession.
f) Regulation (EEC) 1200/89 (rules for the application of export levies and charges on
   agricultural products) will become directly applicable to Malta on accession.
g) Regulation (EEC) 2220/85 (rules for the application of the system of securities for
   agricultural products) will become directly applicable to Malta upon accession.
h) Regulation (EEC) 3846/87 (agricultural product nomenclature for export refunds) and its
   amendments will become directly applicable to Malta on accession.
i)   Regulation 2081/92 and Regulation (EEC) 2082/92 (certificates of specific character for
     agricultural products and foodstuffs) will become directly applicable to Malta on accession.
j)   Malta is a party to the international Agreement on Trade Related Aspects of Intellectual
     property Rights (TRIPS). Malta will sign international agreements on designation of origin
     and geographical indications by accession.




DRAFT                                                                                         143
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




k) Regulation (EEC) 2092/91 (organic production of agricultural products and indications
   referrinfg thereto on agricultural products and foodstuffs) will become directly applicable to
   Malta on accession.
l)   Legislation transposing Decision 85/377/EEC (Community typology for agricultural
     holdings) and Decision 90/36/EEC (fixing the agro-economic trend coefficient to be used for
     defining the European size unit) will be adopted by the second quarter of 2002 and will enter
     into force by the fourth quarter of 2002.
m) Regulation (EEC)2237/77 (form of farm return to b used for the purposes of determining
   incomes from agricultural holdings), Regulation (EEC) 1859/82 (selection of returning
   holdings for the purpose of determining of agricultural holdings) and Regulation (EC) 22/98
   (standard fee per farm return for the 1998 accounting year of the FADN) will become
   directly applicable to Malta on accession.
n) Regulation (EEC) 3448/93 (trade arrangements applicable to certain goods resulting from
   the processing of agricultural products), Regulation (EEC) 1416/96 (supply of common
   wheat as food aid) and Regulation (EC) 1460/96 (implementing the preferential trade
   arrangements applicable to certain goods resulting from the processing of agricultural
   products) will become directly applicable to Malta on accession.
o) Regulation (EEC) 827/68 (common organisation of the market in certain products listed in
   Annex II the Treaty – ‘Solde’) and other regulations relating to the free distribution of food,
   time limits, radioactivity, ultra-peripheral regions and smaller Aegean islands will become
   directly applicable to Malta on accession.
p) An Internal Audit Department will be set up within the Paying Agency to execute the
   financial audit function including the control of payment eligibility by the third quarter of
   2002.
q) The administrative infrastructure of the Malta Standards Authority is being strengthened and
   will reach full capacity by the fourth quarter of 2002. The Malta Standards Authority will be
   responsible for geographical indications, designations of origin and certificates of specific
   character. It will also assist producers’ organisations in establishing the necessary self
   regulatory mechanisms required for the protection of quality and geographical designations.
r) The administrative capacity of the Department of Agriculture within the Ministry for
   Agriculture and Fisheries is being strengthened and will reach full capacity by the second
   quarter of 2002.
s) The Department of Agriculture within the Ministry for Agriculture and Fisheries will be
   responsible for the control of imports of organic products from third countries. the necessary
   structures to implement the Acquis in this area will be in place by the fourth quarter of 2002.
t)   The CAP Unit within the Customs Department of the Ministry of Finance will reach full
     capacity by the second quarter of 2002.
u) A unit for the administration of state aid will be set up within the Ministry for Agriculture
   and Fisheries by the first quarter of 2002. This unit will co-operate closely with the State Aid




DRAFT                                                                                          144
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




     Monitoring Board within the Ministry for Economic Services to ensure compatibility with
     the Acquis on state aids.

Common Market Organisations
a) Regulation (EEC) 1766/92 (common organisation of the market in cereals) and its
   amendments and Regulation (EC) 1577/96 (specific measure in respect of certain grain
   legumes) will become directly applicable to Malta on accession.
b) Regulation (EC) 1251/99 (support system for producers of certain (support system for
   certain producers of arable crops) and its implementing Regulation (EC) 2461/99 (rules for
   the application of Regulation (EC) 1251/1999 as regards the use of land set aside for the
   production of raw materials), Regulation (EC) 1868/94 (quota system in relation tot he
   production of potato starch) and its amendments and Regulation (EEC) 1722/93 (rules for
   the application of Regulation (EEC) 1766/92 and (EEC) 1418/76 concerning production
   refunds in the cereals and rice sectors respectively) will become directly applicable to Malta
   on accession.
c) Cold storage facilities to enhance the marketing facilities for fruit and vegetables will be set
   up and an electronic point –of – sale system to enhance market information will be
   introduced by the fourth quarter of 2002.
d) Regulation (EC) 2201/96 (common organisation of the markets in processed foods and
   vegetable products) will become directly applicable to Malta on accession.
e) Regulation (EEC) 1764/86 (minimum quality requirements for tomato based products
   eligible for production aid) and Regulation (EC) 504/97 (detailed rules for application of
   Regulation (EC) 2201/96) except for the any requests that may be being made in Section
   Cthis regard, will become directly applicable to Malta on accession.
f) Subsidiary legislation under the Product Safety Act (Cap. 427) to provide standards for
   processed agricultural products will be adopted and enter into force by the second quarter of
   2002. Further subsidiary legislation to provide for minimum quality requirements of raw
   materials used by the processing industry will be adopted by the second quarter of 2002 and
   will enter into force by the fourth quarter of 2002.
g) Regulation (EEC) 3072/95 (common organisation of the market in rice) and its amendments
   will become directly applicable upon accession.
h) Subsidiary legislation under the Product Safety Act (Cap. 4270 to provide for quality and
   marketing standards for wine and wine products will be adopted and enter into force by the
   second quarter of 2002.
i)   Regulation (EEC)1576/89 (rules on the definition, description, presentation of spirit drinks)
     and its amendments and Regulation (EEC) 1601/91 (rules on the definition, description,
     presentation of aromatised wines, aromatised wine – based drinks and aromatised wine –
     product cocktails) will become directly applicable to Malta on accession.
j)   Regulation (EEC) 404/93 and its amendments will become directly applicable to maltaMalta
     on accession.




DRAFT                                                                                          145
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




k) Subsidiary legislation under the Product Safety Act (Cap. 427) implementing the provisions
   of Regulation (EEC) 315/68 (standards for flowering bulbs, corns and tubers per variety) and
   its amendments, Regulation (EEC) 316/68 (standards for fresh cut flowers and fresh
   ornamental foliage) and regulation Regulation (EEC) 234/68 (common organisation of the
   market in live trees and other plants, bulbs, roots and the like, cut flowers and ornamental
   foliage) and its amendments will be adopted and enter into force by the second quarter of
   2002.
l)   Regulation (EEC) 2075/92 (common organisation of the market in raw tobacco) and its
     amendments will become directly applicable to Malta on accession.
m) Regulation (EC) 2597/97 (common organisation of the market in milk and milk products for
   drinking milk), Regulation (EC) 1255/99 (repealing Regulation (EEC) 804/68) (common
   organsiationorganisation of markets in milk and milk products) and Regulation 1256/99
   (amending Regulation 3950/92 on the establishment of an additional levy in the milk and
   milk product sector, except for any requests that may be made in this regardexcept for the
   requests that are being made in Section C, will become directly applicable to Malta on
   accession.
n) Malta will gradually introduce a system of premiums adapted to reflect the local situation by
   the fourth quarter of 2002. It will also set up an inspection control system. An information
   system for the control of premium payments will be in place by the fourth quarter of 2002.
o) Regulation (EC) 2467/98 (repealing Regulation (EEC) 3013/89) (common organisation of
   the market in sheepmeat and goatmeat), Regulation (EEC) 2137/92 (Community scale for the
   classification of carcasses of ovine animals and determining the Community standard quality
   of fresh or chilled sheep carcasses and extending Regulation (EEC) 338/91) and Regulation
   (EC) 1481/96 (amending Regulation (EEC) 2921/95 laying down detailed rules for
   compensation for reductions in certain agricultural conversion rates) will become directly
   applicable to maltaMalta on accession.
p) Regulation (EC) 2759/75 (common organisation of the market in pigmeat), except for any
   requests that may be made in this regardexcept from the requests being made in Section C,
   will become directly applicable to Malta on accession.
q) Regulation (EEC) 2806/79 (exchange between the member states and the Commission of
   certain information concerning pigmeat and repealing Regulation (EEC) 2330/74) will
   become directly applicable to Malta on accession.
r) Subsidiary legislation under the Product Safety |Act (Cap. 427 implementing the provisions
   of regulation (EC)1906/90 (certain marketing standards for poultry) and regulation (EEC)
   1907/90 (certain marketing standards for poultry) and Regulation (EEC) 1907/90 (certain
   marketing standards for eggs) will be adopted and enter into force by the second quarter of
   2002.
s) Regulation (EEC) 27771/75 (common organisation of the egg market) and Regulation (EEC)
   2777/75 (common organisation of the market in poultry meat0) will become directly
   applicable to Malta on accession.




DRAFT                                                                                        146
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




t)   Regulation (EEC) 2300/97 (rules to implement Regulation (EEC) 1221/97 laying down
     general rules for the application of measures to improve the production and marketing of
     honey) and Regulation (EEC) 2783/75 (common system of trade for ovalbumin and
     lactalbumin) will become directly applicable to Malta on accession.
u) An Agricultural Export promotion Board will be in place by the third quarter of 2002.
v) The laboratory of the Consumer and Competition Division within the Ministry for Economic
   Services will be accredited to carry out analytical work on alcohol and spirits by the fourth
   quarter of 2002.

Rural Development
a) The Rural Development Unit within the Ministry for Agriculture and Fisheries will reach
   full capacity by the fourth quarter of 2002.
b) A Rural Development Programme in line with the provisions of Regulation (EC) 1257/99
   (support for rural development from the EAGGF) will be drafted by the first quarter of 2002.
c) Regulation (EC) 1257/99 and Regulation (EC)1260/99 (provisions of structural funds) will
   become directly applicable to Malta on accession.
d) The new Wine Act will come into force upon accession, thus bringing complete alignment

Forestry
a)   A national plan for the protection of trees against fire shall be drawn up prior to accession.

Veterinary Medicine and Zootechnics
a) Subsidiary legislation under the new Food Safety Act transposing Directive 93/43/EEC
   (hygiene of foodstuffs) will be adopted and enter into force by the fourth quarter of 2002.
   This subsidiary legislation will provide for the introduction of the Hazard Analysis Critical
   Control Point System (HACCP)The HACCP (control at critical points) system would be
   adopted by end 2001.
b) Adoption of the law on livestock breeding under a new Livestock Breeding Act, to be
   enforced by the year 2002.
c) A new incineration plant will be in place by the fourth quarter of 2002.
d) Subsidiary legislation under the new Veterinary Services Act to fully transpose Directive
   90/425/EEC (veterinary and zootechnical checks applicable in intra-Community trade in
   certain live animals and products) and Directive 89/662/EEC (veterinary checks in intra-
   Community trade) will be adopted and enter into force by the first quarter of 2002.
e) The new Veterinary Services Act to provide for the health control systems of the internal
   market and trade emanating from third countries. Subsidiary legislation under the Act will be
   adopted and enter into force by the first quarter of 2002 to provide for the current
   administrative procedures on health control systems.




DRAFT                                                                                           147
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




f) Subsidiary legislation under the new Veterinary Services Act to implement the provisions of
   Regulation (EEC) 820/97/EEC (identification and registration of bovine animals and
   regarding the labelling of beef and beef products) will be adopted and enter into force by the
   first quarter of 2002. This Regulation will provide for the inspection at destination,
   registration of dealers, recording of health certificates, advance arrival reporting of animals
   and animal by-products and disease notification to trading partners.
g) Subsidiary legislation under the Veterinary Services Act to fully transpose Directive
   96/93/EEC (certification of animals and animal products) will be adopted and enter into
   force by the first quarter of 2002.
h) Subsidiary legislation under the new Veterinary Services Act to fully transpose Directive
   91/496/EEC (organisation of veterinary checks on animals entering the Community from
   third countries) and Directive 90/675/EEC (organisation of veterinary checks on products
   entering the Community from third countries) will be adopted by the first quarter of 2002
   and will enter into force when Malta will be considered an ‘entry point’ for Community
   Trade.
i)   Border inspection posts in line with Directive 91/496/EEC will be in place by the fourth
     quarter of 2002.
j)   Subsidiary legislation under the new Veterinary Services Act transposing Directive
     92/438/EEC (computerisation of veterinary import procedures) will be adopted and enter
     into force by the first quarter of 2002, following the competition of the SHIFT Project by
     the European Commission.
k) Subsidiary legislation under the new Veterinary Services Act to fully transpose Directive
   89/608/EEC (mutual assistance between the administrative authorities of the member states
   and co-operation between the latter and the Commission to ensure the correct application of
   legislation on veterinary and zootechnical matters) will be adopted and enter into force by
   the first quarter of 2002. He ADNS prototype will be introduced following its approval by
   the Commission.
l)   Amendments to the Fees (Abattoir and veterinary Services) Regulations (LN68/86|) which
     provide for the partial financing of veterinary inspections and control s of animal products,
     will be adopted and enter into force by the first quarter of 2002 to fully transpose Directive
     85/73/EEC (financing of health inspections and controls of fresh meat and poultry meat).
m) Subsidiary legislation under the new Veterinary Services Act transposing Directive
   85/511/EEC (foot and mouth disease) and its amendments, Directive 80/217/EEC (classical
   swine fever), Directive 92/35/EEC (African horse sickness), Directive 92/40/EEC (avian
   influenza), Directive 92/66/EEC (Newcastle disease), Directive 93/53/EEC (certain fish
   diseases), Directive 95/70/EC (certain diseases affecting bivalve molluscs) and Directive
   92/119/EEC (certain animal diseases and specific measures relating to swine vesicular
   disease) will be adopted and enter into force by the first quarter of 2002. The current
   contingency plans for foot and mouth disease and Newcastle disease are being updated and
   will be finalised by the second quarter of 2002. The plans for African horse sickness,
   classical swine fever and avian influwenza are being drafted and will be finalised by the
   fourth quarter of 2002.




DRAFT                                                                                          148
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




n) Subsidiary legislation under the Veterinary Services Act transposing Directive 64/432/EEC
   (animal health problems affecting intra-Community trade in bovine animals and swine),
   Directive 91/68/EEC (animal health conditions governing intra-Community trade in ovine
   and caprine animals) Directive 90/426/EEC (animal health conditions governing the
   movement and import from third countries of equidae), Directive 91/67/EEC (animal health
   conditions governing the placing on the market of aquaculture animals and products),
   Directive 88/407/EEC (animal health requirements applicable to intra-Community trade in
   and imports of deep frozen semen of bovine species), Directive 90/429/EEC (semen of
   domestic animals of the porcine species), Directive 92/65/EEC (animal health requirements
   governing trade in and imports into the Community of animals, semen, ova and embryos not
   subject to animal health requirements laid down in specific Community rules referred to on
   Annex A(I) to Directive 90/425/EEC) will be adopted and enter into force by the first quarter
   of 2002.
o) Subsidiary legislation under the new Veterinary Services Act transposing Directive
   91/494/EEC (trade of fresh poultry meat), Directive 92/45/EEC (trade in wild game),
   Directive 80/215/EEC (trade in meat products) and Directive 91/495/EEC (trade in rabbit
   meat) will be adopted and enter into force by the first quarter of 2002.
p) Subsidiary legislation under the new veterinary Services Act to fully transpose Directive
   92/46/EEC (health rules for the production and placing on the market of raw milk, heat-
   treated milk and milk-based products) will be adopted and enter into force by the first
   quarter of 2002, except where requestsrequests for transitional periods are being made.
q) Subsidiary legislation under the new Veterinary Services Act transposing Directive
   89/437/EEC (hygiene and health problems effecting the production and the placing on the
   market of egg products will be adopted and enter into force by the first quarter of 2002.
r) Subsidiary legislation under the new Veterinary Services Act transposing Directive
   92/45/EEC (killing of wild game and the placing on the market of wild game meat) will be
   adopted and enter into force by the first quarter of 2002.
s) Further subsidiary legislation transposing Directive 64/433/EEC (health problems effecting
   intra-Community trade in fresh meat), Directive 91/495/EEC (public health and animal
   health problems affecting the production and placing on the market of rabbit meat and
   farmed game meat), Directive 94/65/EEC (production and placing on the market of minced
   meat and meat preparations), Directive 92/46/EEC (health rules for the production and
   placing on the market of raw milk, heat treated milk based products), Directive 77/99/EEC
   (health problems affecting intra-Community trade in meat products) and Directive
   71/118/EEC (health problems affecting trade in fresh poultry meat) will be adopted and enter
   into force by the first quarter of 2002, except where transitional periods are being requested.
t)   The Fish Packaging and Processing Establishments Regulations (LN255/00) will be
     amended by the second quarter of 2002 to provide for the control of imports from third
     countries.
u) Subsidiary legislation under the new Veterinary Services Act transposing Directive
   91/492/EEC (live bivalve molluscs) and Directive 92/48/EEC (fishery products caught on
   board certain vessels) will be adopted and enter into force by the first quarter of 2002.




DRAFT                                                                                         149
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




v) Subsidiary legislation under the new Veterinary Services Act to transpose Directive
   96/22/EEC (prohibition on the use in stockfarming of certain substances having a hormonal
   or thyrostatic action and of B-agonists), Directive 96/23/EEC (measures to monitor certain
   substances and residues thereof in live animals and animal products) and Decision
   97/747/EC (monitoring of certain substances and residues), will be adopted and enter into
   force by the first quarter of 2002, except where requests for transitional periods are being
   made..
w) Subsidiary legislation under the new Veterinary Services Act transposing Decision
   90/218/EEC (administration of Bovine Somatotrophin) will be adopted and enter into force
   by the first quarter of 2002. The administration of Bovine Somatotrophin is prohibited in
   mMalta through the Importation (control) Regulations.
x) Subsidiary legislation under the new Veterinary Services Act transposing Directive
   92/117/EEC (protection against specified zoonoses and specified zoonotic agents in animals
   products of animal origins in order to prevent outbreaks of food-borne infections and
   intoxications) and Directive 90/167/EEC (preparation , placing on the market and use of
   medicating feedingstuffs in the Community) of the Prevention of Disease Ordinance, will,
   except for the requests being made for transitional periods,, be adopted and enter into force
   by the first quarter of 2002.
y) Animal waste in Malta is disposed of by incineration and controlled dumping. Subsidiary
   legislation under the new Veterinary Services Act transposing Directive 90/667/EEC
   (veterinary rules for the disposal and processing of animal waste, for its placing on the
   market and for the prevention of pathogens in feedstuffs of animal or fish origin and
   amending Directive 90/425/EEC) will, except for the requests for transitional periods being
   made in, be adopted and enter into force by the first quarter of 2002.
z) Subsidiary legislation under the new Veterinary Services Act transposing Directive
   72/462/EEC (health and veterinary inspection problems upon importation of bovine animals
   and swine and fresh meat from third countries), Directive 89/556/EEC (animal health
   conditions governing intra-Community trade and importation from third countries of
   conditions governing intra-Community in and importation from third countries of embryos of
   domestic animals of bovine species), Directive 77/96/EEC (examination for trichinae
   ([trichinella spiralis]) upon importation from third countries of fresh meat derived from
   domestic swine) and Decision 95/408/EEC (conditions for drawing up for an interim period,
   provisional lists of third country establishments from which member states are authorised to
   import certain products of animal origin, fishery products or live bivalve molluscs) will be
   adopted and enter into force by the second quarter of 2002.
aa) Subsidiary legislation under the new Animal Welfare Act transposing Directive 91/628/EEC
    (protection of animals during transport), Decision 88/306/EEC (protection of animals for
    slaughter), Decision 78/923/EEC (protection of animals kept for farming purposes),
    Directive 91/629/EEC (minimum standards for the protection of calves) and Directive
    86/609/EEC (keeping of laboratory animals) will be adopted and enter into force by the first
    quarter of 2002.




DRAFT                                                                                        150
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




bb) Subsidiary legislation under the new Veterinary Services Act to fully transpose Decision
    90/424/EEC (expenditure in the veterinary field) will be adopted by the first quarter of 2002
    and will enter into force on accession. With respect to Article 48 of the Directive,
    Community reference laboratories are being contacted due to the high risks involved in the
    manipulation of live viruses in Malta.
cc) Subsidiary legislation under the new Veterinary Services Act transposing Directive
    77/504/EEC (bovine species), Decision 88/661/EEC (porcine species), Directive
    89/361/EEC (pure-bred breeding sheep and goat), Directive 90/427/EEC (equidae), Directive
    90/428/EEC (equidae and the competitions), Directive 91/174/EEC (zootechnical and
    pedigree requirements) and Directive 94/28/EEC (zootechnical and genealogical conditions
    applicable to imports from third countries of animals, their semen, ova and embryos) will be
    adopted and enter into force by the first quarter of 2002.
Phytosanitary
a) Continuation of the strengthening of the administrative capacity to fully harmonise with the
   Acquis.
b) A new Seeds and Plant Act will be adopted by Parliament by the second quarter of 2002.
   This will regulate the quality of seeds and plants and will include provisions for a seed
   catalogue in line with the EU common catalogue of varieties (Directive 72/180/EEC).
c) Subsidiary legislation under the Veterinary Services Act transposing Directive 70/524/EEC
   (additives in feeding-stuffs), Directive 99/29/EEC (undesirable substances and products in
   animal nutrition), Directive 70/373/EEC (methods of sampling and analysis of feeding
   stuffs), Directive 96/25/EEC (circulation of feed materials) and Directive 79/373/EEC
   (marketing of compound feedingstuffs) will be adopted and enter into force by the second
   quarter of 2002.
d) Subsidiary legislation under the new Seeds and Plants Act transposing Directive 66/400/EEC
   (marketing of beet seed), Directive 66/401/EEC (fodder plant seed) and its amendments.
   Directive 66/402/EEC (cereal seed) and its amendments, Directive 66/403/EEC (seed
   potatoes) and its amendments, Directive 68/193/EEC (material for the vegetative
   propagation of the vine) and its amendments Directive 70/458/EEC (vegetable seed) and its
   amendments, Directive 74/649/EEC (material for the vegetative propagation of the vine
   produced in third countries), Directive 92/33/EEC (vegetable propagating and planting
   material, other then seed), Directive 92/34/EEC (fruit plant propagating material and fruit
   plants intended for fruit production), Directive 93/91/EEC (schedules indicating the
   conditions to be met by vegetable propagating and planting material), Directive 99/105/EEC
   (marketing of forest reproductive material), Directive 69/208/EEC (marketing of seed of oil
   and fibre plants) and Directive 98/56/EC (propagating material of ornamental plants) will be
   adopted by the second quarter of 2002 and will enter into force by the fourth quarter of 2002.
e) Further subsidiary legislation transposing Directive 70/457/EEC (common catalogue of
   varieties of agricultural plant species) and its amendments, Directive 72/168/EEC
   (inspecting vegetable varieties), Directive 72/169/EEC (inspecting vine varieties) and its
   amendments, Directive 72/180/EEC (examining agricultural varieties), Directive 93/17/EEC
   (Community grades of basic seeds potatoes), Directive 93/48/EEC (conditions to be met by




DRAFT                                                                                        151
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




    fruit plant propagating material and fruit plants), Directive 93/49/EEC (condition to be met
    by ornamental plant propagating material and ornamental plants) and its amendments,
    Directive 93/61/EEC (conditions to be met by vegetable propagating and planting material,
    other then seed), Directive 93/62/EEC (supervision and monitoring of suppliers and
    establishments), Directive 93/64/EEC (supervision and monitoring of sup[pliers and
    establishments) Directive 93/78/EEC (implementing provisions for lists of varieties of
    ornamental plant propagating material and ornamental plants), Directive 93/79/EEC
    (implementing provisions for lists of varieties of fruit plants propagating material and fruit
    plant), Directive 99/66 EEC (requirements as to the labels and other document made out by
    the supplier) and Directive 99/68/EEC (additional provisions for lists of varieties of
    ornamental plants as kept by suppliers) will be adopted by the second quarter of 2002 and
    will enter into force by the fourth quarter of 2002.
f) Legislation transposing the Biotech Directive 98/44/EEC (legal protection of
   biotechnological inventions) will be adopted by the fourth quarter of 2002. Regulation (EC)
   2100/94 (Community plant variety rights) will become directly applicable upon accession.
g) Subsidiary legislation under the new Food and Safety Act transposing Directive 98/53/EC
   (sampling methods and the methods of analysis for the official control of the level of
   contaminants in foodstuffs) will be adopted by the second quarter of 2002 and will enter into
   force by the fourth quarter of 2002.
h) Regulation (EC) 194/97 (setting maximum levels for certain contaminants in foodstuffs)
   will become directly applicable on accession.

D. Institution Building Needs

Area of Activity                                      2000        2001        2002         Total

Ministry of Agriculture and
Fisheries                                                                                   tbd
                                    Senior
                                    Middle
                                    Other
                                    Total



E. Financial Requirement
                                                                                           Lm000
Area of Activity                                                  2001       2002          Total

Ministry of Agriculture and
Fisheries                                                                                    tbd
                                    Recurrent




DRAFT                                                                                         152
MINISTRY OF FOREIGN AFFAIRS              National Programme for the
MALTA                                         Adoption of the Acquis
                                              August 2001Final Draft




                              Capital
                              Training
                              Total




DRAFT                                                           153
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.4.3   Fisheries

        A. Current Status
        Malta has a coastline of 179km in the central Mediterranean. In 2000, some 987,294 kilograms
        of fish with a market value of Lm1.85 million where landed. In addition the value of aquaculture
        products reached around Lm2.19 million. The fisheries sector has, like agriculture, its multi-
        functional characteristics particularly in view of its value in Maltese traditional social and
        cultural aspects. It provides a typical seascape in the main fishing villages which in itself is a
        tourist attraction. As an island which largely depends on tourism, the availability of fresh fish,
        particularly species that are typical to Malta, is of utmost importance.
        In general the Maltese fishing fleet may be categorised as an artisanal fleet. In fact there are only
        370 people registered as professional fishermen owning some 284 vessels some of which are
        quite small. The average age of the fleet is around twenty years old. A further 1500 boats are
        owned by part-time fishermen. They are of various dimensions and differ substantially in shape,
        size, gear utilised, and effective hours spent in fishing activities. Both professional and amateur
        fishermen fish in coastal waters and other areas. However the larger part of fish landings
        originates from the high seas. It is normal practice for amateur fishermen to participate together
        with professional fishermen in fisheries that are managed by the Department of Fisheries and
        Aquaculture. Sport fishermen also participate in fishing activities outside territorial waters.
        Malta has never tied down the size and power of a boat to its range of activities. With the
        assistance of COPEMED, the Department of Fisheries and Acquaculture is in the process of
        renewing all the data of the Fleet Register so that the Maltese register will meet the requirements
        of Council Regulation 3690/93. The databank will also provide inputs for statistics submissions
        to Eurostat.
        The landings that are registered, approximately 1,000 tonnes per year, are short from the actual
        catches. The marketing system and actual structure are old and, in order to meet the requirements
        of the Acquis a new structure needs to be set up and a new concept in the marketing system has
        to be adopted.
        Aquaculture was introduced in 1992 and now has an annual production of about 2,000 metric
        tonnes. Local fish farmers are obliged to export 95 per cent of their production. The major part
        of this production is exported to EU Member States at a very low profit margin, in view of the
        present 15 per cent customs tariff applied on the exported product. Several non-EU countries are
        benefiting from exemptions of the common external tariff. The substantial investment made in
        this industry by the private sector needs to be safeguarded.
        Malta has placed its instrument of acceptance for the Establishment of the General Fisheries
        Commission for the Mediterranean (GFCM).
        Malta envisages the needhas requested to continue to maintain the fisheries conservation zone
        within the 25 nautical miles in order to safeguard stocks. This zone was established in 1971 to
        manage the fishing effort and maintain resources at sustainable levels. Recently, the Scientific
        Advisory Committee of the GFCM acknowledged that the scientific evidence available confirms
        that the shelf of the Maltese Islands should be regarded as an independent Management Unit.




        DRAFT                                                                                           154
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Moreover, the shelf constitutes the main offshore area where spawning occurs for a significant
proportion of demersal shelf resources and some deepwater species.
Recent scientific research shows that Malta's waters are low in productivity, making the
ecosystem very fragile. For this reason, any increase in the fishing effort within this 25 nautical
miles conservation zone will be detrimental to fishing stocks. Hence, a derogation from the
principle of equal access to Community waters for all Community vessels may be requested has
been requested in order to continue to manage the twenty five nautical miles conservation zone.

Major Structural Constraints in Fisheries
Maltese fisheries are artisanal and for the greater majority tap highly migratory fish stocks such
as lampuki, tuna and swordfish. Sedentary and demersal stocks are limited because of a very
small continental shelf area. The consequent unreliability of fish landings are not conducive for
heavier investment in this sector. The imbued cultural set-up of the average Maltese fisherman
has further constrained him to remain tied to the traditional mode of his fishing activity.

Overall Objectives and Policy Foundations
The overall objectives for fisheries are included in the objectives for agriculture under Section
3.4.2 (Agriculture). In addition, in line with international trends for the sustainability of fish
stocks and the safeguarding of the marine environment, the Department of Fisheries and
Aquaculture adopts strict fisheries management policies.

Internal Price Policy and State Aid
Market forces determine the price of fresh fish. There is no form of price intervention and the
limited aid to the fishing industry does not exceed 5 per cent of the value of the landed product.
Aid is granted for the modification of fishing vessels, improvement of port facilities, and on the
expenditure incurred on diesel used by fishermen. Aid is also granted in the form of a refund to
co-operatives for their marketing expenses under the fish-marketing scheme. Some storage
facilities are provided although no storage aid is given. Malta will be able to comply with the
Acquis on state aid for fisheries.

Structural Measures
The Community's structural measures are designed to assist in the restructuring of fishing fleets
and in improving the processing and marketing of fish. The main instrument of the policy is the
FIFG. Malta is drawing up a multi-annualmultiannual programme for the development of the
fisheries, aquaculture and ancillary sectors. The programme will include fleet modernisation,
upgrading of berthing facilities, the restructuring of fish processing plants, and improvements in
the retail outlets and fish-mongering systems. The multi-annualmultiannual programme is being
drawn up along the lines set out in the FIFG regulations.
It is envisaged that Malta would require that Financial Instrument for Fisheries Guidance (FIFG)
funds would be made available upon accession. However, a waiver from the applicable age and
tonnage limits of fleets under FIFG assistance may be has been requested.




DRAFT                                                                                          155
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Import and Export Policy
Imported fish and fish products are exempted from any customs duty, landing tariff or value
added tax.
Malta exports approximately 30 per cent of its tuna landings to Japan. It also exports 95 per cent
of its aquaculture fish mostly to EU countries. It is relevant to note that, whereas Malta does not
impose any tariffs on fish originating from the European Union, all exports of Maltese fishery
products entering the European Union are subjected to a 15 per cent Common External Tariff
even though all the raw material, including fry and feed, used by the aquaculture industry is
imported from the EU. All import duties applicable by the Community on Maltese fisheries
products are expected to be dismantled.
Malta will adjust, by accession, its import and export policy to conform to the Community's trade
regime on fish and fisheries products both for inter-community trade and for trade with non-
member countries.

Agreements with Third Countries
Malta does not have bilateral agreements on fisheries or on trade in fisheries products.
Malta holds observer status in the International Commission for the Conservation of Atlantic
Tunas (ICCAT). Malta will become a full member on accession (as part of the EU). Malta's
present catch quota will need to be included in the global EU quota.

Standards
Appropriate fish marketing standards need to be established in line with the Acquis. The Malta
Standards Authority will play an important role in this regard as discussed under Section 3.1.1
(Free Movement of Goods). The health authorities and the veterinary authorities share
responsibility for public health.

Vessel Monitoring System and Legislative Issues
The Acquis requires that Malta establishes a satellite based vessel monitoring system. This
system, which is obligatory for vessels with a length in excess of 20 metres, will be introduced
by the second quarter of 2001.
The Fisheries Conservation and Management Act (Cap. 425) has been adopted. The Act
conforms to the Community's basic fisheries legislation on management of resources and control.
It provides for the adoption of subsidiary legislation to cover all aspects of the fisheries Acquis
In addition, a Fishing Fleet subsidiary legislation in the area of management and control of
resources, has been adopted. This provides, inter alia, for the collection of data, licensing of
fishermen, maintaining a fishing fleet register and the submission of data to Eurostat. Subsidiary
legislation governing the Malta Fish Marketing Centre has been drafted. The first version of an
electronic accounting system for the Marketing Centre is also being introduced. This system will
be tested and assessed when the fish marketing system moves to a direct real time debiting
system instead of the maximum 30-day crediting system utilised today.




DRAFT                                                                                          156
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Common Market Organisation
The legislation for the establishment of Producers’ Organisations has been given a first reading
in Parliament. Appropriate training will be provided to the existing co-operatives to function as
producers’ organisation/s in order to qualify for recognition. This issue is discussed under
Section 3.4.2 (Agriculture)
For the full implementation of the common organisation of the market in fishery and aquaculture
products it will be necessary for Malta to be able to benefit from the market withdrawal
provisions applicable to Community fishermen from the date of accession, by the addition of
various species of fish to the list contained in Annex I A of Council Regulation 3759/92.

Institutional Set-up
As in the case of agriculture, the Ministry of Agriculture and Fisheries is the main institution
responsible for the implementation of Malta's fisheries policy measures. The Department of
Fisheries and Aquaculture is responsible for:
     the provision of marketing facilities;
     the regulation of the marketing processes;
     the assistance in the institutional/logistical operation and management of the markets;
      the management of the fleet register and the registration of professional and amateur
      fishermen;
     the management of the lampuki traditional fishery;
     the licensing of fishing gear and the implementation of various conservation measures;
     the running of the National Aquaculture Centre;
     the monitoring of fish farms; and
     export certification.

The Malta Maritime Authority, which falls under the Ministry of Transport and
Communications, is responsible for the management of ports and berthing facilities and the
international mercantile vessel register.
The Maritime Squadron of the Armed Forces of Malta patrols the Maltese contiguous zone and
coastal areas. The Department for the Protection of the Environment manages marine parks and
reserves, protects endangered species and monitors marine pollution. The Department of Health
and the Department of Veterinary Services is responsible for public health issues whilst the
Customs Authorities regulate international trade. The CAP Unit to be set up at the Customs
Department will be responsible for implementing the tariff quotas and for carrying out
surveillance of imports and of fish and fisheries products through documentary and physical
controls.
In conjunction with COPMED of FAO and Plymouth University UK, the Department of
Fisheries and Aquaculture is introducing a two year diploma course leading to a Higher National
Diploma in Fisheries Studies. Students finishing this course will have the opportunity to
continue reading for a degree in Fisheries Studies. The first intake of Fisheries Officers to form
part of the Fisheries Monitoring Centre is envisaged after the end of this Diploma course in




DRAFT                                                                                         157
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




October 2002. This will facilitate the training of the necessary qualified personnel that will be
able to meet the new responsibilities in fisheries monitoring and control.

B. Short Term Priorities (2001)

Fisheries Management and Control
a) The catch assessment programme will be fully operational in 2001.
b) Malta will upgrade the present Sales Notice and Catch Data Systems to conform with the
   Acquis in 2001.
c) The Fishing Fleet subsidiary legislation will institutionalise the Catch Logbook for every
   fishing vessel with a length in excess of 10 metres. The logbook will become compulsory by
   the fourth quarter of 2001.
d) The Fishing Fleet subsidiary legislation will also specifically provide for the establishment
   of a satellite-based Vessel Monitoring System for all fishing craft with a length over 20
   metres. The system will be introduced by the second quarter of 2001.

Multi-AnnualMultiannual Programme
a) The multi-annualmultiannual guidance programme (MAGP) for the development of the
   fisheries, aquaculture and ancillary sectors will be completed.

C. Medium Term Priorities (2002)

Legislation
a) Malta intends to ratify the UN agreement relating to the Conservation and Management of
   Straggling and Highly Migratory Fish Stocks by the fourth quarter of 2002.
b) Fish marketing subsidiary legislation will be adopted by the first quarter of 2002 to regulate
   the withdrawal from the market of fisheries products and provide for carry over and private
   storage aid.
c) Fishing Gear subsidiary legislation covering all gear types as well as regulating tuna fishing
   will be adopted by the fourth quarter of 2002.
d) Fish standards subsidiary legislation will vbe adopted by the first quarter of 2002.

Fisheries Management and Control
a) The Department of Fisheries and Aquaculture already acts as a Fisheries Monitoring Centre.
   This aspect of its services will be upgraded by the fourth quarter of 2002 to carry out the
   activities required by the Acquis in this area.

Import and Export Policy
a) Malta will adjust, by accession, its import and export policies to conform to the Community's
   trade regime on fish and fisheries products.




DRAFT                                                                                          158
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




b) The Common Agricultural Policy (CAP) Unit at the Department of Customs, which will be
   operational by the second quarter of 2002, will implement the tariff quotas and carry out the
   surveillance on imports and inter-trade through documentary and physical controls.

Fisheries Agreements
a)   Malta intends to ratify the UN agreement relating to the Conservation and Management of
     Straddling and Highly Migratory Fish Stocks by the last quarter of 2002.

Fish Marketing Centre
b) The present location of the existing wholesale fish market and the requirements of the
   fishing sector itself necessitate a new suitable structure fully equipped and located in an
   adequate site so as to meet the standards required. In order to implement fully the
   Community’s marketing regulations Malta will upgrade the fish marketing facilities, by the
   fourth quarter of 2002, to meet the required standards. The new fish marketing centre will
   cater for fresh captured fish, fresh local aquaculture products, and fresh/frozen products from
   any other source.
Port Facilities
a) The berthing facilities for fishing vessels is expected to be extended and in certain cases
   upgraded. The construction of sheltered areas at Marsascala, Marsaxlokk, St. Paul's Bay and
   Marsalforn have to be considered, though not necessarily to be provided contemporaneously.
   The one at Marsaxlokk, which is the main fishing port, is expected to be completed by
   October 2002.

Fish Farms
a)   The situation facing this sector will be assessed with a view to ensuringe sustainability.

Improvement to Hawking Equipment
a) Fish retailing outlets and fish-mongering systems have to be upgraded to ensure adherence to
   public health requirements. This process will have to be introduced gradually.

Fleet Modernisation Programme
a)   In order for Maltese fishermen to be competitive with regard to their EU counterparts, it
     will be necessary to establish a fleet modernisation programme. Malta considers that it
     qualifies for assistance under the Financial Instrument for Fisheries Guidance (FIFG).

D. Institution Building Needs
The Department of Fisheries and Aquaculture will be re-organised in order to enable the
effective implementation of the Acquis concerning the Common Fisheries Policy. Professional
staff will be recruited whilst the staff complement engaged on maintaining the fisheries
conservation zone will also be strengthened. The two-year course in fisheries studies will train
the pertinent personnel and will contribute towards the upgrading of the Fisheries Monitoring
Centre.




DRAFT                                                                                             159
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Area of Activity                                                 2001         2002         Total

Ministry of Agriculture and
Fisheries
Department of Fisheries and
Aquaculture                         Senior                            4            -           4
                                    Middle                            -            -           -
                                    Other                            16            -          16
                                    Total                            20            -          20


E. Financial Requirements
                                                                                           Lm000
                                                                 2001         2002         Total
Ministry of Agriculture and
Fisheries
Department of Fisheries and
Aquaculture                         Recurrent                        115        120         235
                                    Capital *                         70          -          70
                                    Training                           -          -           -
                                    Total                            185        120         305


(*) Including expenditure concerning the vessel monitoring system.




DRAFT                                                                                         160
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.4.4   Energy

        A. Current Status
        The principal primary legislation relating to energy is the Enemalta Act (Cap. 272). Under this
        Act, Enemalta Corporation is granted a de facto monopoly for the generation, transmission and
        distribution of electricity and for the importation, storage and distribution of petroleum products
        including LPG gas. At presentUntil the enactment of the Malta Resources Authority Act (Cap.
        423), in September 2000, authorisation by Enemalta Corporation was is required to carry out
        these activities. These responsibilities have now been assumed by the Malta Resources
        Authority. The only exception concerns the importation, storage and distribution of fuels to be
        used exclusively for the purpose of bunkering. The latter is controlled by the Bunkering (Fuels)
        Tax Act (Cap. 381) and subsidiary legislation entitled Dangerous Cargo Ships, Marine Terminals
        and Facilities and Bunkering Regulations (LN1/96) where such activities are subject to a licence
        granted by the Malta Maritime Authority. A transitional period may be has been requestired with
        regard to the adjustment of the operations of the state trading monopoly in the importation,
        stocking and sales of petroleum products as required by Article 31 of the Treaty.
        In September 2000, the Malta Resources Authority Act (Cap. 423) was approved by Parliament.
        The Board of the Authority has been appointed. This enabling Act ensures the separation of
        regulatory functions from service provision functions and will allows for subsidiary legislation to
        be issued to implement the Acquis in the energy sector. The Malta Resources Authority will
        takehas taken responsibility ofor all regulatory functions, drafting of subsidiary legislation for
        the sector, fuel crisis management strategy and cost adjusted pricing policy for fuels. It will also
        be responsible for Malta’s participation in Community energy programmes including SAVE II
        and ALTENER.
        The various regulations, decisions and policies related to the subject of energy were contained in
        a single document. The Malta Council for Science and Technology (MCST) drafted a national
        energy policy document. The responsibility will be passed to the Malta Resources Authority for
        its implementation and updating. This document presents a consolidated framework for decisions
        and administrative structures on energy matters. It follows the general policies of the EU with
        particular reference to the Maltese situation, and cover such areas as energy saving and
        efficiency, and renewable and alternative sources of energy. The Malta Council for Science and
        Technology (MCST) has also been instrumental in providing input in drafting the energy
        conservation aspects of the new building regulations.
        The Malta Standards Authority is in the process of issuing Mandatory Orders on a wide
        spectrum of areas, including those related to energy. The Product Safety Act (Cap. 427) was
        enacted in the fourth quarter of 2001and subsidiary legislation is being drafted by the Malta
        Standards Authority. The Bill constitutes the framework legislation enabling the issuing of
        mandatory orders by the Malta Standards Authority, including those dealing with energy
        efficiency rating of appliances included in the Acquis on energy. The Quality Control (Exports,
        Imports and Local Goods) Act (Cap. 225)was repealed by the Product Safety Act (Cap. 427).
        Malta fulfills the criteria which define a ‘small isolated system’ under Directive 96/92/EC
        concerning common rules for the internal markets in electricity. The splitting of the transmission




        DRAFT                                                                                           161
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




and dispatching, and distribution functions would create substantial problems in the context of
the small size of Malta. Consequently, Malta will implement Directive 96/92/EC by the fourth
quarter of 2002 and will apply the provisions of Article 24 with regard to Chapter IV
(Transmission System Operation), Chapter V (Distribution System Operation), Chapter VI
(Unbundling and Transparency of Accounts) and Chapter VII (Organisation of Access to the
System)
Malta is fully dependent on imported petroleum for its fuel needs. Coal for power production
was phased out some years ago for environmental reasons, while there are no natural gas
pipelines or other facilities directly connecting Malta to a source of supply. Security of supply
of the petroleum importation is therefore of primary importance. There are however no specific
laws on the subject except for the obligation of Enemalta to provide for all reasonable needs of
fuel. There are also no specific laws related to fuel shortage crises. Enemalta is at present
carrying out a storage tank building programme in order to enhance its position on fuel stocks.
AIt is envisaged that a transition al period mayhas been requested in respect of the Acquis on the
maintenance of minimum stocks of crude oil and / or petroleum products. The finalisation of
plans for fuel stock building to meet the 90 days obligation are also to be carried out by the
Malta Resources Authority.
Malta does not use nuclear energy for power generation and there are no plans for future
development of nuclear energy. Malta’s position with regard to nuclear safeguards is being
studied.
Oil exploration is at present governed by the Petroleum (Production) Act (Cap. 156) and the
Continental Shelf Act (Cap. 194). Amendments to the Petroleum (Production) Act were adopted
in September 2000 to bring it in line with Directive 94/22/EC for the conditions for granting and
using authorisations for the prospection, exploration and production of hydrocarbons by the
fourth qauuarter of 2002 and will apply the provisions of article 24 with regard to transmission
system operation, distribution system operation, unbundling and transpeareancy of accounts and
organisation of access to the system. A public service obligation will be imposed on Enemalta
Corporation in line with the Directive. The amendments came in force on 1 January 2001.
Amendments have been made to the Model Production Sharing Contract on which the
exploration and production contracts with oil companies are based. These amendments bring it in
line with Directive 93/38/EC on the procurement of supplies, works and service contracts.
International commitments include the Nuclear Weapons Non Proliferation Treaty which was
signed and ratified by Malta and accession to the agreement with the International Atomic
Energy Agency on nuclear safeguards. Malta has also signed the final Act of the Energy Charter
Conference which deals mainly with trade related measures in the energy field.

B. Short Term Priorities (2001)
a) Issue appropriate regulations concerning the provision of statistical data on electricity prices,
   suppliers and on the importers and users of fuels. These regulations will be issued by the
   Malta Statistics Authority. They will form part of the licence conditions to be issued by the
   Malta Resources Authority.




DRAFT                                                                                           162
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




b) Introduce gradually new Building Regulations that make adequate provisions for energy
   saving and contribute towards the attainment of better energy conservation characteristics in
   buildings.
c) The energy authorities will explore the possibility of participating in relevant aspects of the
   multi-annualmultiannual framework programme, the ETAP programme, and the Synergy
   programme as appropriate.
d) Ratify the Energy Charter Treaty and the Energy Charter Protocol by the first quarter of
   2001.
e) The Malta Resource Authority will finalise the plans for fuel stock building.
f) Enemalta Corporation will commence its restructuring programme.
g) The Malta Resources Authority will become fully operational by the first quarter of 2001 .
h) The revised Model Production Sharing Contract in full compliance with the Acquis will be
   enforced during 2001.
i)   The National Energy Policy Document will be finalised by the MCST, Ministry for
     Education.
j)   The obligations to provide for statistical information under Directive 90/377/EC
     (transparency of gas and electricity prices charged to industrial end-users), regulation (EC)
     736/96 and Regulation (EC) 2386/96 (investment projects of interest to the Community in
     the petroleum, natural gas and electricity sectors), Regulation (EC) 2964/95 (registration of
     crude oil imports and deliveries in the Community), Decision 1999/280/EC and Decision
     1999/566/EC (information and consultation on crude oil supply costs and the consumer
     prices of petroleum products) will be met by the fourth quarter of 2001 through subsidiary
     legislation under the Malta Statistics Authority Act (Act XXIV of 2000)

C. Medium Term Priorities (2002)

Liberalisation of the Electricity Supply Industry
a) Adopt the Electricity Directive and take measures to promote an appropriate competitive
   market in electricity. Public service obligations will be imposed. The appropriate regulatory
   mechanisms will be put in place through the Malta Resources Authority to avoid abuse of a
   dominant position. The Directive will be introduced taking into account Malta’s specific
   position as a small isolated system.
b) The Enemalta Corporation’s distribution function will be independent from its generation
   and other functions, and act as a System Operator, with the obligation to act in a fair manner
   in dealing with generating companies and system users, while the generation function will be
   open to competition.




DRAFT                                                                                         163
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Transposition of Directive 90/30/EC concerning Common Rules for an Internal Market in
Natural Gas
a) Transposition of this Directive, though not at present relevant to Malta, will be carried out
   for the purpose of alignment with the Acquis during 2002. Malta will qualify as an emergent
   market and be eligible for certain derogations described in the Directive.

Other Matters
a) The Malta Standards Authority will issue mandatory standards orders on energy rating
   appliances.
b) Although the Directive on transit of natural gas through grids is not a present relevant to
   Malta, it shall be transposed by end 2002 for the purpose of alignment with the Acquis.
c) Sign the IAEA Additional Protocol on the amplification of the reporting and accountancy
   procedures in the nuclear safeguards agreement.
d) The Malta Resources Authority will issue specific regulations on emergency actions in case
   of a crisis leading to fuel shortages.
e) The phased-in implementation of the Oil Stocks Directive will get under way.
f) The Malta Resources Authority will issue specific legislation on the protection against
   dumped imports from countries not members of the European Coal and Steel Community.
g) Subsidiary legislation will be adopted by the second quarter of 2002 and will enter into force
   by the fourth quarter of 2002 to implement Directive79/531/EECec (indication of labelling
   of the energy consumption of household appliances), Directive 92/42/EEC (efficiency
   required for new hot-water boilers fired with liquid gaseous fuels), Directive 92/75/EEC
   (indication by labelling and standard product information of the consumption of energy and
   other resources by household appliances), Directive 94/2/EC (energy labelling of household
   electric refrigerators, freezers and combinations), Directive 95/12/EC (energy labelling of
   household washing machines), Directive 95/13/EC (energy labelling of household electric
   tumble dryers), Directive 96/57/EC (energy efficiency requirements for household electric
   refrigerators, freezers and combinations thereof.), Directive 97/17/EcC (energy labelling of
   household dishwashers) and Directive 98/11/EC (energy labelling of household lamps).

D. Institution Building Needs
It is not envisaged that new recruitment will be required to implement the Acquis in this area as
the institutions already exist to implement and administer policies relating to the energy sector.
However, some training concerning the application of the Acquis may be required.

E. Financial Requirements
                                                                                             Lm000
Area of Activity                                                  2001          2002        Total




DRAFT                                                                                           164
MINISTRY OF FOREIGN AFFAIRS                      National Programme for the
MALTA                                                 Adoption of the Acquis
                                                      August 2001Final Draft




Ministry for Transport and
Communications
                              Recurrent      -             -            -
                              Capital        -             -            -
                              Training       -            10           10
                              Total          -            10           10

                                                                     Lm000
Area of Activity                          2001          2002        Total

Ministry for Economic
Services
                              Recurrent      -              -           -
                              Capital        -              -           -
                              Training       -              5           5
                              Total          -              5           5




DRAFT                                                                   165
        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                     August 2001Final Draft




3.4.5   Transport

        A. Current Status

        Land Transport
        In the absence of alternative forms of land based transport, such as railway and inland waterway,
        all transport within the Maltese Islands has traditionally developed as being road based.
        Furthermore all international freight transport handled by Malta forms part of a combined
        transport operation (road-sea / road-air). All aspects of road-based transport are regulated a]nd
        administered by the following main organisations: Licensing and Testing Department, Malta
        Police Force, Public Transport Authority, Roads Department, Traffic Control Board, and Local
        Councils. Responsibility for all aspects of land transport will be consolidated under a single
        entity, the Malta Transport Authority. Amendments to the Public Transport Authority Act (Cap.
        332) passed through parliament during the third quarter 2000. This Act gives provision for the
        setting up of the new Malta Transport Authority which will be responsible for all modes of land
        transport. This new Transport Authority brings together the Public Transport Authority, the
        Licensing and Testing Department, Roads Department and Traffic Control Board, and thus
        improve the integration and co-ordination of transport policy and provision. The new Malta
        Transport Authority shall assume additional responsibilities in the field of freight transport, the
        carriage of dangerous goods by road, transport research, data collection and policy development,
        and in administration of international land transport activities. The Chairman and the Board of
        Directors of the Authority are currently being identified.
        The land transport sector in Malta is currently governed by the following legislation, regulations
        and conventions:
        Main Legislation:
               Code of Police Laws (Cap. 10)
               Fees Ordinance (Cap. 35)
               Traffic Regulation Ordinance (Cap. 65)
               Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap. 104)
               Cargo Clearance and Transport Act (Cap. 203)
               Public Transport (Regulation of Employment) Act (Cap. 214)
               Malta Summer Time Act (Cap. 230)
               Public Transport Authority Act (Cap. 332)
               Environmental Protection Act (Cap. 348)
               Motor Vehicles Registration Tax Act (Cap. 368)
        Subsidiary Legislation:
               Motor Tractors Regulations, 1979
               Environmental Protection (Preventive and Remedial Measures) Regulations, 1994
               Motor Vehicles Regulations, 1994
               Motor Vehicles (Wearing of Seat Belts) Regulations, 1995
               Environment Protection (Control of Substance Depleting the Ozone Layer) Regulations,




        DRAFT                                                                                          166
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




        1995
       Deposit of Wastes and Rubble (Fees) Regulations, 1997
       Ratification of Chemical Weapons Convention, 1997
       Public Transport (Scheduled and Unscheduled Transport Services) Regulations, 1997
       Summer Time Order, 1997
       Motor Vehicle Roadworthiness Test Regulations, 1998
       Motor Vehicles Registration Tax (Amendment) Act, 1999 (Cap. 368)
       Motor Vehicles (Tariffs of Fares) (Amendment) Regulations, 1999


Conventions:
     Agreement between the Government of Malta and the Government of the Republic of
      Italy on International Carriage by Roads (signed on 12 February 1987).

The Roads Department is the principal authority with responsibilities for road infrastructure
management and administration. The road network in Malta comprises approximately 1,600
kilometres of primary and secondary roads. The primary roads account for some 300 kilometres
of the network and are subdivided into arterial and distributor roads. Arterial and distributor
roads provide strategic access between towns and villages whilst the secondary roads (Access
and Access-only) constitute the remaining 1,300 kilometres of road network. Currently, work on
the restoration and formation of the road network is being continued in order to facilitate better
traffic circulation, encourage modal transfer from local access roads to arterial roads and
improve road safety. The pertinent authorities are also undertaking a comprehensive road
classification and signage programme in order to establish suitable routes for large and heavy
vehicles within Malta. The work on the restoration of the strategic road network includes also
the establishment of a road classification system based on maximum vehicle weights and
dimensions.
Malta has also actively participated in the EU’s Transport Infrastructure Needs Assessment
(TINA). Statistical information has been extracted from the Vehicle Registration Database
concerning over 12 tonnes gross laden weight. The same exercise is currently being repeated for
vehicles over 6 tonnes gross laden weight.
Malta has one of the highest per capita vehicle ownership levels in Europe. In 2000, there were
246,825 registered motor vehicles in Malta and Gozo. International carriage of passengers and
freight by road has developed relatively slowly over the last 15 years, reflecting Malta’s
geographical characteristics. The regulation of national and international road transport has been
undertaken by the Licensing and Testing Department the Public Transport Authority and the
Traffic Control Board. Furthermore the collection collation of supply data on national freight
haulage activities for market analysis is nearly completed.
The registration of resident freight hauliers presently engaged in that occupation is currently
being carried out. This is being done in order to establish those hauliers that have gained
professional competence through experience. Moreover, the census and declaration of vehicles
by weight and engine type that are used in international road freight transport operation has been
carried out.




DRAFT                                                                                         167
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Access to the market of goods and passenger transport services is implemented through the Italy-
Malta bilateral transport agreement. This provides for concessions to Italian road passenger and
freight operators to enter Maltese territory as part of an international journey, and similarly to
Maltese operators. Negotiations have been held with the Italian Government on a new bilateral
road transport agreement and the issues of authorisation quotes was discussed. Similar
agreements which may be concluded with member states before accession will lapse on
accession. Specific local operators licences exist for the clearance of goods from airport and
seaport customs areas and local operators permits for the operation of regular, special regular,
shuttle and occasional passenger services on national territory.
The new Public Transport Directorate shall be the competent authority responsible for checking
and issuing international documentation for passenger transport, whilst the Licensing and testing
Directorate shall continue in its current role of being the competent authority responsible for
issuing international road freight transport.
Annual road-licence taxes in respect of goods vehicles weighing more than twelve tonnes are not
harmonised with the minima rates required by Directive 99/62. Malta currently applies a system
of user charges imposed on non resident hauliers. A transitional period may be required has been
requested with regard to harmonisation of road taxes on Maltese registered vehicles operating
internationally. Malta may apply the provisions of Article 6(3a) of Directive 99/62/EEC
(charging of heavy goods vehicles for the use of certain infrastructure) in respect of applying
minimum rates of tax applied to nationally in operating vehicles.
Checks and controls are currently carried out on road transport at Malta’s seaport frontiers.
These are not in line with Council Regulation 4060/89. Malta complies in practice with
Regulation (EC) 2411/98 (recognition in intra-Community traffic of the distinguishing sign of
the member). Malta will apply this regulation on accession.
Malta’s social legislation is not harmonised with Council Regulation 3820/85. However, grounds
for exemption under the provisions of Article 13/1/h are applicable to Malta in the case of
national operation. Social legislation in respect of international transport by road is not in line
with the Acquis in respect of minimum driving ages, driving, rest and break periods and on the
use of recording equipment in certain vehicles. The amendments to the Motor Vehicles
Regulations (LN 128/94) to increase the minimum age limits in international road haulage and
passenger transport from 19 years to 21 years have been drafted. Malta is not presently a
signatory to the European Agreement concerning the work of crews of vehicles engaged in
international road transport (AETR). Legislation concerning admission to the occupation of road
haulage operator and passenger transport operator is partially harmonised with Council
Directives 96/26 and 98/76 as regards conditions of good repute, appropriate financial standing
and professional competence.
A special arrangement may be required has been requested in respect of roadside checks due to
the negligible number of international hauliers from other member states driving on the roads.
Legislation in respect of tyre tread depths is fully compliant with the Acquis. The Motor
Vehicles (Roadworthiness Test) Regulations (LN 126/99) introduced a phasing-in programme to
transpose Directive 96/96/EC (roadworthiness tests for motor vehicles and their trailers). This
programme which commenced in October 1999. Continue the phasing in programme of




DRAFT                                                                                          168
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




roadworthiness testing. A transitional period may be required has been requested for the
obligatory testing of the general condition of vehicles.
Legislation and current practices in respect of the issuing of driving licenses, the wearing of seat
belts, maximum dimensions and weights of vehicles are partially harmonised with Community
legislation. No legislation exists in connection with the equipping of certain motor vehicles with
recording equipment and speed limitation devices. A transitional period may be required has
been requested as regards installation and use of speed limitation devices for certain categories
of motor vehicles in the Community with respect to retrofitting. The Malta Police Force is
discussing with the UK Department of Environment, Transport and Regions regarding the
technical assistance needed in to upgrade the current system of road accident recording and
adopt standard variables. Malta is not, at present, a signatory of the Agreement on the
International Carriage of Passengers by means of Occasional Coach and Bus Services (ASOR).
Local legislation regarding the carriage of dangerous goods by road is highly fragmented and is
generally not harmonised with the ADR Convention. However, the process of setting up a
licensing and regulating agency within the Transport Authority for the issuing and checking of
community Authorisations and ASOR Waybills is nearly completed and procedures relating to
CARE road accident data collection and collation...
The provision of a regular national bus service in Malta is in line with Regulation (EEC)
1191/69 (obligations inherent in the concept of a public service transport by rail, road and inland
waterway on public service obligations) and Regulation (EEC) 1107/70 (granting of aids for
transport by rail, road and inland waterway).

Maritime Transport
In the field of maritime transport, Malta is in line with Decision 77/587/EEC (consultation
procedure in shipping matters and on action relating to such matters in international
organisations), Decision 78/774/EEC (cargo shipping), Decision 83/573/EEC (counter-measures
in the field of international merchant shipping), Decision 87/475/EEC maritime transport
between Italy and Algeria), Decision 89/246/EEC (activities of certain third countries in the field
of cargo shipping), Regulation (EEC) 4055/86 (freedom to provide services to maritime
transport), Regulation (EEC) 4057/86 (unfair pricing practices in maritime transport) and
Regulation (EEC) 4058/86 (co-ordinated action to safeguard free access to cargoes in ocean
trades). Related provisions in existing maritime co-operation agreements between Malta and
other states are limited to the promotion and facilitation of use of each other’s vessels. These
agreements do not affect the right of third countries in the participation of such trade. The
overall national ports policy focuses on the provision of safe maritime services within the two
major ports in accordance with the requirements of the local economy whilst maximising on
existing resources by way of co-ordinating the ports’ responses to potential new traffic
opportunities. Since the establishment of the Malta Maritime Authority (MMA) in 1991, Malta’s
maritime legislation has been brought into line with international standards, particularly those
adopted by the International Maritime Organisation (IMO), and with international practices and
Codes whilst reflecting better the realities of the maritime industry. Thus, most of the recently
enacted legislation is already in line with EU Directives. The MMA is an observer member of
the European Sea Ports Organisation. Moreover, over the past years the Authority participated
in EU environmental projects such as the ECO-Project for European ports financed under the




DRAFT                                                                                           169
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Fourth Framework Programme and the Marine Environmental Risk Management System for the
ports in Malta through financial assistance under the EU Life Programme. Further private
participation in port activities is being instilled, by facilitating private investment in the ports.
The carriage of goods and passengers between the Maltese islands and the organi
sation organisation of various port services, such as pilotage, mooring and towage are carried
out in a monopolistic framework. Port work is executed within a monopolistic set up
notwithstanding the fact that terminal operators use their own employees for the handling of
heavy plant. Malta depends upon timely and regular maritime connections with a small number
of Mediterranean ports for the specialised transport of certain vital equipment and a significant
part of the supply of fresh and frozen produce. For many years the national shipping line, Sea
Malta Co. Ltd. has been the provider of last resort of these maritime connections, even if the
service was uneconomical. Special measures in the form of financial or other support may from
time to time be required to ensure the continuation of these services. International maritime
services are already delivered within a competitive environment. Carriage of passengers and
cargo to Gozo is carried out exclusively by Gozo Channel Co.ltd. This service will operate on
the basis of a public service obligation imposed on Gozo Channel Co. Ltd in the general
economic interest in line with Regulation (EEC) 3577/92 on maritime cabotage. There are no
maritime transport restrictions to the carriage of goods or passengers in international trade
between Malta and third countries. In addition no restriction applies with regard to specific
companies . Malta has no cargo sharing agreements with other countries and is not a party to the
United Nations Convention on a Code of Conduct for Liner Conferences. There will be no
significant problems to align with the Acquis as regards freedom to provide international
maritime services and in respect of external relations in this field.
Malta’s main activity in the field of merchant shipping relates to the shipping register which,
with over 27 million gross tonnage, is the fourth largest in the world. During this last decade this
sector has developed at a fast rate. It now constitutes an important sector and it has important
links with Malta’s wide range of maritime services and the service industry, which are crucial for
Malta’s economic viability. The Maltese Government is committed to further growth, but only
through quality. The Merchant Shipping Directorate within the Malta Maritime Authority is
responsible for this area. The Directorate carries out nearly all the functions of a Flag State
Administration and it is also responsible for Port State control.
The Port of Valletta Strategic Development Plan which covers competition issues in this field
was finalised on 15 December 1999. The impact assessment for the implementation of The Port
of Valletta Strategic Development Plan has been completed and is being implemented by
transposing the relative EU Acquis into local legislation.
The Dangerous Cargo Ships, Marine Terminals and Facilities and Bunkering Regulations (1996)
are broadly in line with Directive 93/75/EEC (reporting requirements for vessels bound for or
leaving Community ports and carrying dangerous and polluting goods) and its amendments.
The Marine Department within the Ports Directorate is currently upgrading its operations to
establish a sound inspectorate for monitoring the handling of dangerous goods on ships and at
marine terminals, for the protection of the marine environment and for the regulation of all
maritime transport. The dDepartment is also responsible for the handling carriage and reporting
systems of dangerous goods by ships and port authorities as specified by Directive 93/75/EEC




DRAFT                                                                                           170
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




(requirements for vessels bound for or leaving Community ports and carrying dangerous or
polluting goods) and for the implementation of safety rules for passenger vessels and roll-on /
roll-off ferries in terms of Regulation (EC) 3051/95 (safety management of roll-on / roll-off
passenger ferries) and Directive 98/18 (safety rules and standards for passenger ships).
The primary legislation in the merchant shipping sector is the Merchant Shipping Act (Cap. 234)
and the subsidiary legislation made in terms of the Act. The Oil Pollution (Liability and
Compensation) Act (Cap. 351) was enacted on 14 December 1999. On 26 January 2000 Malta
ratified the 1992 Protocols to the CLC and Fund Conventions and at the same time denounced
the original 1969 CLC Convention and the 1971 Fund Convention. These entered into force in
January 2001. A small number of other laws govern particular aspects of the shipping industry.
Although current practices and legislation are generally in line with EU standards, certain
legislation, particularly the Merchant Shipping Act (Cap. 234) and regulations made thereunder,
were not fully harmonised with the Acquis. The amendments to the Merchant Shipping Act have
been approved by Parliament and were brought into force (except the provision relating to
Directive 94/57 ship inspection and survey organisations and for the relevant activities of
maritime administrations) on the 1st January 2001. Since the setting up of the Malta Maritime
Authority, considerable progress has been made with regards to the organisation and
implementation aspects in this area. However, the implementation and enforcement roles of the
Merchant Shipping Directorate need to be strengthened. To this effect, training of human
resources is being undertaken. The new provisions as well as regulations that would be issued
thereunder, would bring Maltese legislation in line with the Acquis particularly with regards to
maritime safety and would enable Malta to accede to other international maritime conventions
such as ILO Convention No 147. The drafting of the necessary legislation in respect of port
safety and environmental considerations has been completed in respect of Regulation 2978/94.
To be able to implement Directive 93/75 the authority is seeking technical assistance in order to
upgrade its administrative capacity to implement this Directive.

Air Transport
The primary legislation in this area comprises the following:
     The Civil Aviation Act (Cap. 232) which regulates civil aviation.
     The Civil Aviation (Air Operator’s Certificates) Act (Cap. 218) which provides for the
      issue, variation, suspension and revocation of air operator’s certificates to companies
      operating aircraft for the purpose of public transport.
     The Eurocontrol Act (Cap. 333) which provides for Malta’s membership in Eurocontrol.
     The Civil Aviation (Security) Act (Cap. 353) which gives effect to the Tokyo 1963,
      Hague 1970, Montreal 1971 and Montreal Protocol 1988 Conventions.
There is also the following secondary legislation in force:
     The Air Navigation Order -as amended, which gives effect to certain ICAO standards
      (LN176/90)
     The Civil Aviation (Exemption from Air Service Licence) Order 1993, which allows
      dry-leased Maltese registered aircraft operations under the lessee’s AOC (LN72/93)
     The Civil Aviation (Investigation of Accidents) Regulations (GN31/56)
     The Carriage by Air Order 1953 which adopts the Warsaw Convention on air carrier




DRAFT                                                                                        171
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




        liability (GN562/53).
Malta signed the Montreal convention on Air Carrier Liability in 1999. A draft legislation that
will bring Maltese legislation in line with the Acquis through the amendments of the Civil
Aviation Act (Cap. 232) has been prepared. Furthermore, a first draft legal notice relating to
aircraft accident investigation, bringing alignment with the Acquis, has also been prepared.
Legislation with respect to the operation of noisy aircraft (Directives 92/14, 80/51,89/629), Code
of Conduct for Computer Reservations (Regulation 2299/89), Rules for Denied Boarding
Compensation (Regulation 295/91), ATC Equipment (Directive 93/65) and Eurocontrol
Standards (Directive 97/15) has also been drafted. Airmalta p.l.c. already applies the denied
boarding compensation scheme for passengers whose journey originates in the EU.
As from 1 May 1998, the services previously provided by the Department of Civil Aviation
(DCA) were taken over by Malta International Airport p.l.c., and the Department has retained
only a regulatory role. The regulatory responsibilities of the DCA comprise overseeing the
operations of Malta International Airport p.l.c., which include airport and air navigation services,
and those of Maltese aircraft operators. It is also responsible for the licensing of flight crew,
aircraft maintenance engineers and air traffic controllers. In addition, the Department registers
and certifies aircraft for airworthiness purposes, approves maintenance organisations and
certifies aircraft operators.
The Department is responsible for the regulation and development of air transport and negotiates
bilateral air service agreements with other States, and grants traffic rights to foreign operators.
Malta has been a member of ICAO since 1964, of ECAC since 1978, of EUROCONTROL since
1990 and from the 29 June 1999 it has been accepted as a full member of the Joint Aviation
Authorities. Malta has been upgraded to Category 1 status by the FAA following an International
Aviation Safety Assessment. Consequently, aviation legislation conforms to ICAO and JAA
standards/requirements.
Malta’s aviation legislation relating to the harmonisation of technical requirements and
administrative procedures is already in line with that of the EU. Although in practice Malta
complies with EU legislation concerning the definition and use of compatible technical
specifications for the procurement and use of air traffic management equipment and systems,
appropriate legislation needs to be enacted. Work is in hand on draft legislation to achieve
alignment with Directive 93/65 on ATC Equipment and Directive 97/15 on Eurocontrol
Standards.
With regard to its safety oversight management, the Department of Civil Aviation follows the
standards and practices of the International Civil Aviation Organisation (ICAO) and of the
European Joint Aviation Authorities (JAA).
In view of the additional regulatory responsibilities, the DCA has strengthened its organisation
through the employment and services of specialised technical staff. With respect to the oversight
aerodrome service providers, one Operations Officer has completed his training and is now
working full time in the Department. Oversight of aircraft and aircraft operators, and the air
navigation services oversight.




DRAFT                                                                                           172
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




At present, there are no block exemptions issued under the Competition Act (Cap. 379) for
specific areas and practices such as for schedule co-ordination and slot allocation, as provided by
the Acquis, since the operators concerned are Government-owned entities which have been
exempted from the provisions of this Act. Competition issues relating to public undertakings are
discussed under Section 3.1.6 (Competition).
As regards market access, a liberal policy is already adopted with respect to the operation of non-
scheduled flights to Malta. However, Malta is not in line with the “third liberalisation” package
as regards Malta originating commercial non-scheduled flights. Malta has concluded 55 bilateral
air service agreements including agreements with all the EU member states. On accession, air
services between Malta and third countries will remain subject to the bilateral regime system of
Air Services Agreements which would be negotiated on the basis of reciprocity, but the
agreements will be amended where necessary to ensure compliance with EU obligations. The
adoption of the third package may require the restructuring of Air Malta p.l.c., the national
airline.
Moreover, in the area of liberalisation of air transport services, the procedure used to licence air
transport undertakings under the Civil Aviation Act (Cap. 232) and the provisions concerning the
nationality of who can register and operate aircraft in Malta under the Air Navigation Order are
not in line with the Acquis.

B. Short Term Priorities (2001)
Land Transport
a) Amend the Motor Vehicles Regulation (LN 128/94) by the first quarter of 2001 to transpose
   Directive 91/439/EEC (driving licenses) and to provide for the introduction of the credit card
   format for driving licenses.
     Continue the work on the restoration of the strategic road network (ongoing).
     Comply with the Community system of accounts relating to road infrastructure.
     Conclude a new bilateral road transport agreement with Italy to remove quotas on market
      access.
b) Malta will apply the provisions of Article 13 (1h) of Regulation (EEC) 3820/85 (social
   legislation relating to road transport) to retain the existing minimum age for the issuing of
   driving licenses with respect to passenger transport vehicles with more then eight seats
   operating exclusively on national territory as provided for in Article 6 (1c) of Directive
   91/439.
c) Amend the Motor Vehicles Regulations (LN128/94) to facilitate the official recognition of
   distinguishing sign of motor vehicles that are registered in Member States, and to incorporate
   the maximum weights and dimensions of motor vehicles stipulated in Council Directive
   96/53.
d) The new Malta Transport Authority will be fully operational.




DRAFT                                                                                           173
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




e) Administrative provisions by the Malta Transport Authority will be introduced to develop a
   comprehensive data bank as foreseen in Regulation (EEC) 3916/90 (measures to be taken in
   the event of a crisis in the market in the carriage of goods by road).
f) Amendments to the Cargo Clearance and Transport Act (Cap. 203) will be adopted to bring
   the Act fully in line with Regulation (EEC) 4058/89 (fixing of rates for the carriage of goods
   by road).
g) The Motor Vehicles Regulations (LN 128/94) will be amended in line with Regulation
   (EEC) 684/92 (common rules for the international carriage of passengers by coach and bus).
   These amendments will enter into force on accession.
h) Malta will be in a position to adopt the European Agreement concerning the Work of Crews
   of Vehicles engaged in International Road Transport (AETR).
i)   The Motor Vehicles Regulations (1994) will be amended by the fourth quarter of 2001 in
     line with Regulation (EEC) 684/92 (common rules for the international carriage of
     passengers by coach and bus). These amendments will enter into force on accession.
j)   Malta will participate in the PACT Programme established by Regulation (EC) 2196/98
     (financial assistance for actions of an innovative nature to promote combines transport)
     provided that this will be extended beyond 2001.
k) The Motor Vehicles (Roadworthiness Test) Regulations (1998) introduced a phasing-in
   programme to transpose Directive 96/96 EC (roadworthiness tests for motor vehicles and
   their trailers). This programme which commenced in October 1999 will be completed by the
   first quarter of 2005. (ongoing)

Maritime Transport
a) The Dangerous Cargo Ships, Marine terminals and Facilities and Bunkering regulations
   (1996) will be amended to achieve full compliance with Directive 93/75/EEC. The Pilotage
   and Mooring Regulations (1975) will be amended to introduce a tariff differential in favour
   of tankers with segregated ballast tanks.
b) New Port Craft Regulations under the Malta Maritime Authority Act (Cap. 352) will be
   published transposing Directive 98/41/EC (registration of persons sailing on board passenger
   ships), Directive 98/18 (safety rules and standards for passenger ships) and will implement
   Regulation (EC) 3051/95 (safety management of roll-on/ roll-off passenger ferries) as its
   amendments. Those provisions of Directive 98/41/EC which will not have already been
   transposed by the New Ports Craft Regulations, will be adopted through subsidiary
   legislation under the Merchant Shipping Act.
c) Full compliance with the latest amendments to the STCW. (International Convention on
   Standards of Training Certification and Watchkeeping for Seafarers) as provided for by
   Directive 94/58/EC will be attained.
d) The provisions of Directive 99/35/EC (mandatory surveys for the safe operation of regular
   roll-on/ roll-off ferry and high-speed passenger craft services) will be transposed through
   subsidiary legislation under the Merchant Shipping Act (Cap. 234).




DRAFT                                                                                        174
MINISTRY OF FOREIGN AFFAIRS                                          National Programme for the
MALTA                                                                     Adoption of the Acquis
                                                                          August 2001Final Draft




e) Finalise an action plan to review the current practices work methods and resources of the
   Merchant Shipping Directorate to ensure that it further strengthens its enforcement role.

Air Transport
a)    New Accident Investigations Regulations (investigation of civil aviation accidents and
     incidents) under the Civil Aviation Act will be issued to transpose Directive 94/56.
b) New subsidiary legislation under the Civil Aviation Act will be adopted to transpose
   Directive 93/65/EEC (definition and use of compatible technical specifications for the
   procurement of air-traffic management equipment and systems) and Directive 97/15/EC
   (Eurocontrol standards).
c) The Air Navigation (Noise Certification and Operation of Aeroplane) Order transposing
   Directive 92/14/ EEC (operation of aeroplanes covered by Part II, Chapter 2 Volume I of
   Annex 16 to the Convention on International Civil Aviation), Directive 89/629/EEC (noise
   emission. from subsonic aircraft) and Directive 80/51/EEC (limitation of noise emissions
   from subsonic aircraft) will be adopted by the first quarter of 2001.
d) The new Computerised Reservation System Act will be adopted to allow for the
   implementation of Regulation 2299/89 (code of conduct for computerised reservation
   systems).

e) Subsidiary legislation will be adopted to comply with Directive 93/65 (ATC Equipment) and
   Directive 97/15 (Eurocontrol Standards).
                                                                                                   Formatted: Bullets and Numbering
D.B. Medium Term Priorities (2002)
Horizontal Issues
a) Malta’s policy in the field of Ttrans-European Ttransport nNetworks (TEN-T) will be in
   line with Regulation (EC) 2236/95 (financial aid in the field of trans-European networks) on
   accession.
b) Malta will bring its accounting system for expenditure on infrastructure in line with
   Regulation (EEC) 1108/70 by the first quarter of 2002.
c) Necessary action will be taken by the fourth quarter of 2002 to ensure that Malta will
   comply on accession with the Agreement between the European Economic Community and
   the Confederation of Switzerland and the Agreement between the European Economic
   Community and the Republic of Slovenia and the former Yugoslav Republic of Macedonia
   in the field of transport.

Land Transport
a) Enact new legislation to adopt Community format competence condition for new entrants to
   the sector.
b) Licenses for commercial haulage operations from airport and seaport customs areas will be
   amended in accordance with the relevant competition provisions.




DRAFT                                                                                       175
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




c) Remove the Road Circulation fee currently levied on non-resident haulage operators on
   entering the country.
d) Introduce separate channels at seaport frontiers for Community registered road transport.
e) Introduce an ‘Operator’s Licence’ based on Community model criteria of financial standing
   and good conduct to those road haulage and passenger transport operators currently engaged
   in the occupation. ‘Grandfather Rights’ with regards tot he condition of professional
   competence shall be taken into consideration.
f) The Malta Transport Authority will establish the necessary administrative procedures,
   courses and certification procedures in respect of the professional competence condition for
   new entrants to the sector.
g) The Motor Tractors Regulations(LN 50/79) will be amended by the fourth quarter of 2002 to
   transpose Directive 99/62/EC (charging of heavy goods vehicles for the use of certain
   infrastructure) except for the provisions on the harmonisation of road taxes on Maltese
   registered vehicles operating internationally for which a transitional period is being
   requested.
h) Amend the Motor Vehicle (Wearing of Seat Belts) Regulation (LN129/95) to provide for the
   use of rear seat belts the provisions of child safety.
i)   New legislation will be adopted to transpose Directive 94/55/EC (transport of dangerous
     goods by road), Directive 94/50/EC (uniform procedures for checks on the Transport of
     dangerous goods by road) and Directive 96/35/EC (appointment and vocational qualification
     of safety advisors for the transport of dangerous goods by road, rail and inland waterway).
     Malta will adhere to the European Agreement concerning the International Carriage of
     Goods by Road by the fourth quarter of 2002.
j)   The Motor Vehicles Regulations (LN128/94) will be amended in line with Regulation (EEC)
     3118/93 (conditions under which non-resident carriers may operate national road haulage
     services).
k) Provisions will be introduced by the Malta Transport Authority in line with Regulation
   (EEC) 4060/89 (elimination of controls performed at the frontiers of member states in the
   field of road and inland waterway transport) and Regulation (EEC) 3912/92 (controls carried
   out within the Community in the field of road and inland waterway transport in respect of
   means of transport registered or put into circulation in a third country).
l)   The Motor Vehicles Regulations (LN128/94) will be amended in line with Regulation (EEC)
     3821/85 (recording equipment in road transport). Malta will apply the provisions of Article
     3(2) of the Regulation with respect to existing vehicles operating exclusively on the national
     territory.
m) The Motor Vehicles Regulations (LN128/94) will be amended to transpose Directive
   92/6/EEC (installation and use of speed limitation devices for certain categories of vehicles)
   except for the provisions on retrofitting for which a transitional period may be requested.




DRAFT                                                                                          176
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




n) Continue to implement the roadworthiness test. Tyres will be subject to the test by the end of
   2002,. This programme which commenced in October 1999 will be completed by the first
   quarter of 2005.
o) The Roads Department will finalise to exercise classifying the arterial and distributor road
   network in order to facilitate the installation of appropriate road signage indicating the
   maximum weight and dimensions of vehicles permissible on such roads.
p) The Motor Vehicles Regulations (1994) will be amended to introduce new legal
   requirements on driving times and rest periods for vehicles engaged in international
   operations in line with Regulation (EEC) 3820/85 (social legislation relating to road
   transport). Malta will apply the provisions of Article 13 (1h) of the regulation with respect
   to vehicles restricted to operations on national territory.
q) The Motor Vehicle Regulations (LN 128/94) will be amended to impose checks on
   international transport at operators’ premises in line with Directive 88/599/EEC (standard
   checking procedures for the implementation of Regulation (EEC) 3820/85 on the
   harmonisation of certain social legislation relating to road transport and Regulation (EEC)
   3821/85 on recording equipment in road transport). Malta will apply the provisions of
   Article 13(1h) of Regulation (EEC) 3820/85 and Article 3(2) of Regulation (EEC) 3821/85
   to operators restricted to the national territory.
r) The Motor Vehicles Regulations (LN128/94) will be amended to transpose Directive
   96/26/EC (access to the profession of road haulage and passenger transport operators for
   national and international transport) as well as its amendments, which include Directive
   98/76/EC.
s) Malta will participate in PACT established by Regulation (EC)2196/98 (financial assistance
   for actions of an innovative nature to promote combined transport), provided that this is
   extended beyond 2001.

Maritime Transport
a) It is envisaged that the Ports Directorate of the Malta Maritime Authority will adopt the role
   of a regulator and a landlord authority, with port services being provided by a number of
   independent contractors, who shall be subject to monitoring and regulation by the Authority.
   Within this context, the Authority will set up the essential mechanisms to allow for the
   effective execution of its regulatory functions. The Ports Directorate will reach full capacity
   by the first quarter of 2002.
b) The Malta Maritime Authority will put into place the necessary technical and human
   resources required to implement the legislative framework in respect of safety and
   environment protection.
c) The Merchant Shipping Directorate within Malta Maritime Authority will strive to ensure
   that the required resources and organisational mechanisms are in place to enforce the local
   EU harmonised related legislation and to effectively execute its regulatory function. The
   Directorate will reach full capacity by the fourth quarter of 2002.




DRAFT                                                                                         177
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




d) Consolidate all services related to the international aspect of shipping normally associated
   with a Flag State Administration and Flag State Control within the Merchant Shipping
   Directorate.
e) Subsidiary legislation under the Merchant Shipping Act (Cap. 234) providing for ownership
   or charter of vessels by EU nationals will be published by the end of 2002 and enter into
   force on accession.
f) The First Schedule of the Merchant Shipping Act (Cap. 234) will be amended through
   Regulations issued under the same Act to bring it into line with the Treaty provisions on free
   movement of workers.
g) Malta will amend its existing tonnage tax system through subsidiary legislation under the
   Merchant Shipping Act by the second quarter of 2002, to be fully in line with the
   Community guidelines on state aid to maritime transport.
h) The relationship between the Malta Maritime Authority and the classification societies will
   be replaced by a more detailed agreement based on the relative IMO guidelines.
i)   Subsidiary legislation under the Merchant Shipping Act (Cap. 234) will be amended in line
     with Regulation (EEC) 613/91 and Regulation 2158/93 on the transfer of ships between
     registers in the EU.
j)   Subsidiary legislation transposing Directive 92/29/EEC (minimum safety and health
     requirements for improved medical treatment on board vessels) will be adopted and enter
     into force by the first quarter of 2002.
k) Amendments to the Merchant Shipping Act (Cap. 234) transposing Directive 94/57/EC (ship
   inspection and survey organisations and for the relevant activities of maritime
   administrations) as well as its amendments and will enter into force by the second quarter of
   2002.
l)   Subsidiary legislation under the Merchant Shipping Act (Cap. 234) will be adopted by the
     fourth quarter of 2002 to fully transpose the requirements of Directive 95/21/EC (port state
     control).
m) Subsidiary Legislation under the Merchant Shipping Act transposing Directive 96/40/EC
   (common model for an identity card for inspectors carrying out port state control) and
   Directive 96/98/EC (marine equipment) will be adopted.
n) Malta will adopt the Torremolinos Protocol referred to in Directive 97/70/EC (safety regime
   for fishing vessels of 24 metres in length and over) as well as its amendments.
o) Directive 79/115/EEC (pilotage of vessels by deep-sea pilots in the North Sea and English
   Channel) is not geographically applicable to Maltese Ports. With respect to ships registered
   under the Malta flag and trading in the areas referred to therein, Malta will apply the
   provisions of this Directive by the fourth quarter of 2002.
p) Subsidiary legislation under the Merchant Shipping Act transposing Directive 99/63/EC
   (organisation of working time of seafarers) and Directive 99/95/EC (provisions in respect of




DRAFT                                                                                         178
MINISTRY OF FOREIGN AFFAIRS                                                National Programme for the
MALTA                                                                           Adoption of the Acquis
                                                                                August 2001Final Draft




     seafarers’ hours on board ships calling at Community ports) will be adopted and enter into
     force.

Air Transport
a) Legislation transposing Directive 96/67/EC (ground-handling markets at Community airport)
   will be adopted and will enter into force on accession.
b) Legislation will be passed to provide for Personnel Licensing as per Directive 91/670/EC,
   and will enter into force upon accession.
c) Malta will comply with Regulation (EEC) 925/99 (hushkitted aircraft) on accession.
d) The Civil Aviation Department is expected to reach full capacity by the first quarter of 2002.
e) The Civil Aviation Act will be amended by Parliament to allow the implementation of
   Regulation (EEC) 2407/92 (licensing of air carriers). Regulation (EEC) 2408/92 (access to
   intra Community routes), Regulation (EEC) 2409/92 (fares and rates for air services) and
   regulation (EEC) 95/93 (allocation of slots at Community airports) will be implemented on
   accession.
f) The Civil Aviation (Denied Boarding Compensation) Regulation will implement Regulation
   (EEC) 295/91 (denied boarding compensation system in scheduled air transport) by the
   second quarter of 2002.
g) The provisions of Regulation 2027/97/EC (air carrier liability in the event of accidents) will
   enter into force on accession.
h) Directive 80/50/EEC (consultation procedure on relations between member states and third
   countries in the field of air transport and on action relating to such matters within
   international organisations) will enter into force on accession.
i)   Airmalta plc and its subsidiaries will be subject to the full rules of competition and in line
     with Regulation (EEC) 2407/92 (licensing of air carriers), Regulation (EEC) 2408/92 (access
     for Community air carriers to intra-community air routes) and Regulation (EEC) 2409/92 (on
     fares and rates for air services) when it starts participating in all aspects of the Third Package
     on accession.

D. Institution Building Needs
New personnel will be required to strengthen the Malta Transport Authority and the Department
of Civil Aviation in order to meet the pertinent responsibilities. The training of staff is also
envisaged whilst specific technical assistance may be required.
In order to be in a better position to implement the Acquis, the Malta Maritime Authority will
strengthen its Ports and Merchant Shipping Directorates. It is envisaged that there will be
additional recruitment of staff, including specialised personnel. Moreover, appropriate training
will be undertaken whilst new investment in information technology would also be required.




DRAFT                                                                                             179
MINISTRY OF FOREIGN AFFAIRS                National Programme for the
MALTA                                           Adoption of the Acquis
                                                August 2001Final Draft




Area of Activity                        2001      2002         Total

Ministry for Transport and
Communications
Public Transport Authority     Senior     -            -           -
                               Middle     5            -           5
                               Other      -            -           -
                               Total      5            -           5

Department of Licensing &
Testing                        Senior     -            -           -
                               Middle     2            -           2
                               Other      6            -           6
                               Total      8            -           8

Department of Roads            Senior     -            -           -
                               Middle     6            -           6
                               Other      -            -           -
                               Total      6            -           6

Department of Civil Aviation   Senior     -            -           -
                               Middle     5            -           5
                               Other      -            -           -
                               Total      5            -           5

Malta Maritime Authority       Senior      -          -            -
                               Middle     12         12           24
                               Other       -          -            -
                               Total      12         12           24




DRAFT                                                             180
MINISTRY OF FOREIGN AFFAIRS                      National Programme for the
MALTA                                                 Adoption of the Acquis
                                                      August 2001Final Draft




E. Financial Requirements
                                                                     Lm000
Area of Activity                              2001      2002         Total

Ministry for Transport and
Communications
Public Transport Authority        Recurrent     30         30           60
                                  Capital        -          -            -
                                  Training      10          -           10
                                  Total         40         30           70

Department of Licensing &
Testing                           Recurrent    150        110         260
                                  Capital        -          -           -
                                  Training      10          -          10
                                  Total        160        110         270

Department of Roads               Recurrent     50         50         100
                                  Capital       50         50         100
                                  Training      30         15          45
                                  Total        130        115         245

Department of Civil Aviation      Recurrent     35         35          70
                                  Capital        -          -           -
                                  Training      30         20          50
                                  Total         65         55         120

Malta Maritime Authority *        Recurrent    481        581       1,062
                                  Capital       13         10          23
                                  Training      49         49          98
                                  Total        543        640       1,183

(*) To be disbursed from own funds.




DRAFT                                                                   181
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.4.6   Small and Medium Size Enterprises

        A. Current Status
        One of the characteristics of the Maltese economy is the relatively large number of
        establishments employing a small number of employees. Indeed, on the basis of employment
        levels, out of a total of 24,340 enterprises, only 47 establishments employed more than 200
        persons in December 1999. Moreover, some 94.6 per cent of total establishments were
        categorised as micro enterprises, 4.3 per cent as small enterprises whilst the share of medium-
        sized firms amounted to 0.9 per cent.
        At a sector level, most of the micro units, about 60 per cent, fall within the services sectors. In
        particular, there is a strong representation of micro enterprises in the wholesale and retail trade,
        transport, community and business services, personal services and the catering and recreation
        business sub-sectors. The agriculture and fisheries industry practically consists only of very
        small firms. The share of micro enterprises in construction stood at 96.9 per cent, whilst there
        were 64 small, 8 medium-sized and 1 large establishment. In manufacturing, micro firms
        accounted to around 93.1 per cent of the total. The manufacturing industry consisted of 19 large
        establishments, 74 medium-sized enterprises and 319 small firms, whilst there were 3,763 micro
        firms.

        Policy Initiatives
        Small and Medium-s Sized Enterprises (SMEs) are of key importance in Government's economic
        policy agenda. SME policy is directed mainly to ensure that SMEs make an important
        contribution to the overall economic and social development of the Maltese Islands. Thus,
        Government is aiming for a thriving SME sector which is supported by a pro-SME business
        environment. Efforts are being undertaken so that the public sector is understanding and co-
        operative on the special needs of SMEs. It is considered necessary that SMEs are internationally
        competitive whilst at the same time ensuring that they operate on a fair playing field with other
        operators. In this manner, the contribution of SMEs to output generation and job creation would
        be improved.
        A comprehensive strategy for the development of SMEs and the crafts sector, introducing a
        number of initiatives and programmes to provide support for SMEs and to promote enterprise is
        being implemented.
        In this regard, the Small Business Efficiency Unit was established within the Ministry for
        Economic Services with a mandate to focus on the needs of the small business and the self-
        employed. Moreover, the Malta Crafts Council Act (Cap. 421) was enacted in July 2000 and
        came into force in November 2000 to encourage, promote and provide an appropriate regulatory
        framework for the crafts sector. This legislation sets up the Malta Crafts Council which aims to
        encourage artisans and promote the development of craft industry enterprises. Members have
        been appointed to the Malta Crafts Council and the first meeting was convened during the first
        week of February 2001. Furthermore, a policy document charting a strategy for entrepreneurship
        development has been recently presented to Cabinet as a draft wWhite pPaper and is expected to




        DRAFT                                                                                           182
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




be published by the first quarter of 2001. The document outlines the main principles
underpinning entrepreneurship promotion and development.
The Institute for the Promotion of Small Enterprises Ltd (IPSE) has been set up so as to
encourage and facilitate manufacturing SMEs growth and development. Programmes have been
designed and launched specifically earmarked to assist SMEs. In particular, the Enterprise
Formation and Growth Programme ("Small is Beautiful") is particularly focused on the needs of
micro enterprises. IPSE is also undertaking other measures including an extensive training
programme in business planning and related areas and the introduction of the concept of
Bbusiness Iincubation through a comprehensive strategy, in support of new business start-ups.
As a matter of fact, during the year 2000, IPSE made a substantial progress in the setting up of
the first Business Incubator Centre on the island. This centre is expected to be in a position to
accommodate its first clients by the second quarter of the year 2001. Other forms of assistance
which have been designed by IPSE to support SMEs involve the provision of market
intelligence, enhancing management, product development and productive/delivery capabilities,
environment protection, promoting innovation, upgrading human resources, export marketing,
finance as well as generic support programmes.
In addition, as part of the industrial restructuring process, IPSE also provides assistance to
manufacturing enterprises that are mainly SMEs. Extensive amendments to the Industrial
Development Act (Cap. 325) were adopted by Parliament in January 2001, changing the name of
the legislation to the Business Promotion Act.
Malta benefits from participation in Mediterranean Partnership events and from Community
initiatives such as the Euro-Info Correspondence Centre and BC-NET. Malta based enterprises
also participate in business co-operation events such as INTERPRISE and Europartenariat. This
participation is co-ordinated by the Malta Externalport Trade Corporation Ltd (METCO), which
offers services in international trade promotion and trade information to enterprises. It also
assists enterprises to establish new business contacts abroad and to identify possible joint
venture opportunities.
The Business Promotion Act is an enabling Act to provide incentives to target enterprises which
have a high value added and a potential for the creation of jobs. It facilitates the implementation
of incentive schemes and other measures targeting small businesses. The Act also serves
additional legal protection for small businesses in their dealings with large firms and with public
enterprises.
Furthermore, training programmes earmarked to encourage and promote entrepreneurship are
being undertaken. These are organised by the Employment and Training Corporation as well as
by the University of Malta.

Definition of SMEs
Although in Malta there is no uniform definition of SMEs, a number of agencies have
established operational guidelines. These guidelines are generally in conformity with the
requirements of the Acquis.
In particular, the Malta Development Corporation (MDC) has adopted a definition for small
enterprises for the purpose of both the Industrial Development Act (Cap. 325) and the Small




DRAFT                                                                                          183
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Enterprises (Loan Guarantee) Act (Cap. 397). The definitions incorporate aspects relating to
employment levels, balance sheet totals and the level of turnover. It is pertinent to note that the
Business Promotion Act, which was adopted by Parliament in January 2001 has replaced the
Industrial Development Act.
Another guideline to define small enterprises has been adopted by IPSE for the Enterprise
Formation and Growth Programme. In this case, qualifying small companies are defined as those
that employ 15 or less workers.

Access to Finance
SMEs face various obstacles as regards access to finance. In particular, the low availability of
funds for Maltese SMEs is limiting the number of small business start-ups, the capacity of
currently uncompetitive enterprises to restructure and the growth of appropriate technology and
innovation in small companies.
Within this context, in 1997, the Small Enterprises (Loan Guarantee) Act (Cap. 397) was passed
by Parliament. The aim of this Act is to encourage the establishment of new small enterprises
and the expansion of existing ones through the provision of loan guarantees by the MDC. In
particular, small enterprises are assisted through such loan guarantees in cases where
conventional finance is unavailable due to lack of adequate security. Each assisted loan is subject
to a limit of Lm21,000, with the Corporation guaranteeing up to 60 per cent of the total
outstanding loan balance due, or 70 per cent in cases when the assisted loan is granted to a small
enterprise which has been established for at least three years.
Another related measure is the Export Credit Guarantee Scheme, which provides export credit
insurance and related support to Maltese exporters in the manufacturing industry. The Malta
Export Credit Insurance Company Ltd. was established in 1990 to run this scheme. In this way,
exporters are protected against the risk of non-payment. The ultimate aim is to help Maltese
exporters gain footholds in various overseas markets and strengthen their position in existing
ones.
The Loan Guarantee Scheme, which is managed by IPSE, also aims to improve SMEs' access to
finance. A special fund is being set up in order to enable IPSE to issue guarantees to financial
institutions on behalf of approved projects under the various programmes of assistance being
offered by IPSE.
Furthermore, the Malta Stock Exchange has issued Bye-Laws providing for alternative company
listing. This provides an additional source of finance, for small enterprises, particularly those
which have potential to grow.

Co-operative Societies
Malta's social economy includes co-operative societies which are regulated through the Co-
operative Societies Act (Cap. 278). The provisions of the Act are very much in line with the
principles of the Acquis. Extensive consultations were held on the amendments to the Act
proposed by the Co-operatives Board. A revised draft of the proposed amendments is expected to
be submitted by the Llegal Ssub Ccommittee of the Co-operatives Board, by the first quarter of
2001, such that it will be fully in line with the Acquis on Company Law.




DRAFT                                                                                          184
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Promotion of Tourism
As far as the elements of the Acquis under this Section which deal with tourism are concerned,
the policy of the Government of Malta is in line with the Acquis, the only pending issue being
the implementation of the Acquis in the field of statistics. The National Statistics Office,
however, envisages no difficulty in implementing this part of the Acquis by the date of accession.
In fact, Malta has already begun to implement an ongoing sample survey at departure points
through participation in EUROSTAT, called TOURSTAT. This issue is discussed under Section
3.3.3 (Statistics)
In addition, subsidiary legislation on Travel Package (LN157/00) has been issued and will come
into force by the second last quarter of 2001. Moreover, subsidiary legislation on Timeshare
LN269/00 were published in December 2000 and will come in force during the second last
quarter of 2001.

B. Short Term Priorities (2001)

a) Issue a policy document that charts a strategy for entrepreneurship development.
b) The Co-operative Societies Act (Cap. 278) will be updated to bring it in line with the Acquis
   on Company Law.
c) Continue with the programmes and initiatives which are earmarked to consolidate Malta's
   competitive advantage in the face of a more liberalised trade environment. This will include:
     Specific financial and technical support for the small business sector.
     Increased provision of training and information services.
     Institutional support to encourage participation in programmes and initiatives.
     Identification and introduction of appropriate schemes earmarked to support specific
      target groups.
     Development of appropriate infrastructure projects.

d) Malta plans to participate in the Fourth Multiannual Programme for Entreprise and
   Entrepreneurship in particular SMEs during 2001.

e) The Malta Tourism Authority is actively discussing the possibility to enhance
   tourismpreparing to take over and implement all the functions of the Act.

f) Align legislation with regard to the definition of small and medium sized entreprises.



C. Medium Term Priorities (2002)
a) Continue with the programmes and initiatives (outlined in Section B) which are earmarked to
   consolidate Malta's competitive advantage in the face of a more liberalised trade
   environment.




DRAFT                                                                                         185
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




b) Malta will continue participating in the Multiannual Programme for Enterprise and
   Entrepreneurship, in particular SMEs.

D. Institution Building Needs
The Ministry for Economic Services is mainly responsible for policies on small and medium size
business (SMEs) and the self employed. Most of the necessary administrative capacity to cover
the Acquis in this area is in place.
The rationale and scope of the main entities which support SMEs i.e. the Malta Development
Corporation (MDC), the Institute for the Promotion of Small Enterprise (IPSE) and the Malta
External Trade Corporation (METCO) were being reviewed in order to consolidate their
activities and attain increased synergies and effectiveness. In this regard a Business Promotion
Division was formed within the Ministry for Economic Services, incorporating these enterprises
together with the Malta Investment Management Company Ltd. (MIMCOL). The Malta
Enterprise Board was launched in the first quarter of 2001 to provide leadership for this
Division.
Moreover, the Small Business Efficiency Unit has been established in order to provide a better
focus on the needs of small businesses and the self-employed, and to serve as a one-stop-shop for
small businesses. Its structure is being consolidated within the Commerce Division (Ministry for
Economic Services) in order to attain the necessary synergies in this area.
The Minister for Tourism is responsible for the establishment is responsible for the relevant
policy framework whilst the Malta Tourism Authority advises the Government on the planning
and development of this sector. The National Statistics Office is the primary source of data on
tourism.


Area of Activity                                                  2001        2002        Total

Ministry for Tourism
                                    Senior                           -            -           -
                                    Middle                           1            -           1
                                    Other                            -            -           -
                                    Total                            1            -           1




E. Financial Requirements
                                                                                          Lm000
Area of Activity                                                  2001        2002        Total

Ministry for Tourism
                                    Recurrent                       10          10           20
                                    Capital                          -           -            -




DRAFT                                                                                        186
MINISTRY OF FOREIGN AFFAIRS                                        National Programme for the
MALTA                                                                   Adoption of the Acquis
                                                                        August 2001Final Draft




                                  Training                        -           -            -
                                  Total                          10          10           20


                                                                                    Lm000
Area of Activity                                              2001        2002        Total

Ministry for Economic Services
Participation in EU
Programmes (*)                    Recurrent                     150         150         300
                                  Capital                         -           -           -
                                  Training                        -           -           -
                                  Total                         150         150         300

Commerce Division                 Recurrent                      10          10           20
                                  Capital                         -           -            -
                                  Training                        -           -            -
                                  Total                          10          10           20

Institute for the Promotion of
Small Enterprises                 Recurrent                      30          30           60
                                  Capital                         -           -            -
                                  Training                        -           -            -
                                  Total                          30          30           60



(*) Includes participation in 4 th Multi-AnnualMultiannual Programme for SMEs




DRAFT                                                                                     187
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.5     Economic and Social Cohesion
3.5.1   Social Policy and Employment
        This Section concerns the following parts of the Acquis which involve both binding and non-
        binding aspects: labour law, social dialogue, occupational health and safety, equality of
        treatment, racism, employment issues, European Social Fund, disabled persons and public
        health. Co-ordination of social security is dealt with under Section 3.1.2 (Free Movement of
        Persons).

        A. Current Status

        Labour Law
        The primary labour legislation in Malta comprises the following:
        The Conditions of Employment (Regulation) Act (Cap. 135). This Act provides for the
        appointment of a Labour Board (which makes recommendations on national minimum standard
        conditions of employment); the setting up of Wages Councils (which submit proposals
        concerning the regulation of the conditions of employment of particular categories of
        employees); general minimum standards of conditions of employment (such as contracts of
        service, including termination of employment, protection of wages, the grant of vacation leave,
        the grant of maternity leave); and the setting up of a labour inspectorate to monitor non-
        compliance and to ensure enforcement of legal requirements
        The Industrial Relations Act (Cap. 266). The Act provides for the status, registration and conduct
        of trade unions and employers’ associations, for restrictions on their legal liability and for union
        membership; and the settlement of trade disputes, including provisions for the establishment and
        operation of an Industrial Tribunal.
        There also exists an extensive range of secondary labour legislation in the form of National
        Standard Orders and Wage Regulation Orders, including the Part-time Employment National
        Standard Order, 1996.
        The above-mentioned legislative framework provides partial compliance with existing EU labour
        legislation, specifically in relation to:
             Council Directive 98/50/EC relating to the safeguarding of employee’s rights in the
              event of transfers of undertakings, businesses or parts of businesses;
             Council Directive 91/533/EEC on the employer’s obligation to inform employees of the
              conditions applicable to the contract or employment relationship;
             Council Directive 97/81/EC concerning the Framework Agreement on part-time work
              concluded by UNICE, CEEP and the ETUC;
             Council Directive 93/104/EC concerning certain aspects of the organisation of working
              time; and
             Council Directive 96/71/EC concerning the posting of workers in the framework of the
              provision of services.




        DRAFT                                                                                           188
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Drafting of amendments to the Conditions of Employment (Regulation) Act and new subsidiary
legislation under this Act is at an advanced stage. AIt is envisaged that a transition al period will
be required has been requested in respect of certain aspects of in the Acquis concerning
organisation of working time.

Social Dialogue
Malta already has a well-established system of social dialogue, which operates through various
mechanisms. Malta is an active member of the International Labour Organisation (ILO) and has
ratified several ILO Conventions. The Malta Council for Economic Development (MCED)
provides a forum for broadly based consultation between all social partners regarding major
national policy issues. The Government provides the required funding to enable the Council to
function and maintain an executive secretariat.
Furthermore, representatives of the social partners are appointed on the Board of various
Government entities, including those in the employment and social domain. The MCED has been
consulted and will continue to be consulted on legislative drafts relating to the employment and
social Acquis. The Occupational Health and Safety Authority Act (Cap. 367) also provides for
the appointment of representatives of the social partners on the Board of the Authority.
Legislation will be enacted to enhance the role of MCED, not only by providing a legal
framework under which it will operate in order to strengthen its tripartite consultation process,
but also by setting up a commission for civil society within its structure. The MCED will become
the Malta Council for Economic and Social Development (MCESD). This will be an Advisory
body to provide a forum for consultation and social dialogue between social partners and, where
necessary, with organisations of civil society. It will also be entrusted with the task of advising
Government on issues relating to the sustainable economic and social development of Malta.
Consultations on the proposed legislation are in progress.
In addition, autonomous bipartite social dialogue takes place on an ongoing basis at enterprise
level in the negotiation of collective agreements, including those in the public administration and
state enterprises. In certain public sector enterprises, a representative of the workers is appointed
as a Director on the Board of Management.
A unit which includes representatives from the Employment and Training Corporation (ETC),
the Institute for the Promotion of Small Enterprises (IPSE) and the Malta Development
Corporation (MDC) was set up as an early warning system in the event of collective
redundancies. The unit reports to the Ministry for Economic Services. The ETC is currently
discussing the possibility of a tripartite protocol on the issue with the social partners.
The concept of social dialogue has also been extended to the EU accession process, in particular
through the Malta-EU Screening and Action Committee (MEUSAC) and the Euro-Assistance
Co-ordination Task Force (ACT). Furthermore, Malta is willing to participate in the proceedings
of the Standing Committee on Employment and in the Sectoral Dialogue Committee promoting
dialogue between the social partners at European level.




DRAFT                                                                                           189
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Occupational Health and Safety
The Occupational Health and Safety (Promotion) Act (Cap. 367) established a national
Commission for the Promotion of Occupational Health and Safety. This Act repealed the
Factories Ordinance of 1940, but retained all regulations previously issued under the Ordinance.
The various general principles established in virtue of this Act, as well as those arising from the
Regulations, provide partial compliance with a number of EU Directives in this area, namely:
     Council Directive 89/391/EEC on the introduction of measures to encourage
      improvements in the safety and health of workers at work;
     Council Directive 89/655/EEC concerning the minimum safety and health requirements
      for the use of work equipment by workers at work;
     Council Directive 89/656/EEC on the minimum health and safety requirements for the
      use by workers of personal protective equipment at the workplace;
     Council Directive 94/33/EC on the protection of young people at work;
     Council Directive 92/85/EEC on the introduction of measures to encourage
      improvements in the safety and health at work of pregnant workers and workers who
      have recently given birth or are breast feeding; and
     Council Directive 82/130/EEC on the approximation of the laws of the Member States
      concerning electrical equipment for use in potentially explosive atmospheres in mines
      susceptible to firedamp.

Furthermore the following Regulations have been published during 2000:
     Signs at Work Places Regulations implementing Directive 92/58/EEC.
     Protection of Maternity at Work Places Regulations, implementing Directive 92/85/EEC.
     The Protection of Young Persons at Work Places Regulations transposing Directive
      94/33/EEC.

The Signs at Work Places Regulations came into force on 1 July 2000 whilst the Protection of
Maternity at Workplaces Regulations entered into force on 1 January 2001.
Moreover, the Minimum Health and Safety Requirements for the Workplace transposing
Directive 89/654/EEC was enacted on 11 April 2000 (LN64/2000).
Workplace (Confined Spaces) Regulations, Protection from Carcinogens Regulations have been
drafted and forwarded to the Commission for the Promotion of Occupational Health and Safety.
In addition, the Minimum Health and Safety Requirements for Work with Display Screen
Equipment Regulations, 2000, transposing the relative Directive have been published during
2000.
The drafting of the General hHealth and sSafety Provisions at Workplaces Regulations is at an
advanced stage. These regulations will transpose the provisions of Directive 91/383/EEC which
are not covered by the Occupational Health and safety Authority act. The model through which it
would be ensured that the legal provisions concerning the worker’s Health and Safety
representatives would guarantee effective and meaningful participation by workers is being
considered.




DRAFT                                                                                          190
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




In order to further consolidate the infrastructural set-up in this area, the Occupational Health and
Safety Authority Act (Cap. 367), was enacted during 2000. The Act provides for the
establishment of an Occupational Health and Safety Authority which will, in turn, propose,
implement and enforce occupational health and safety legislation and standards. The Act also
transposes various provisions of the Framework Directive 89/391/EEC.
AIt is envisaged that a transitional period will be required has been requested in respect of
certain aspects of the health and safety provisions of the Acquis concerning exposure to noise at
work, use of work equipment and temporary or mobile construction sites.
The Occupational Health and Safety Unit has also prepared guidelines for the handling of
Asbestos Containing Material, which are given as a precondition to be followed in granting
authorisation for such works to commence. These guidelines transpose in part the relevant
Directive.
The Ministry for Social Policy and the Occupational Health and Safety Unit actively participated
in the European Week for Safety and Health, which last year focused on Mmusculoskeletal
Ddisorders. A week-long campaign was launched, which included the publication of the results
of a study made earlier by the Occupational Health and Safety Unit, a day seminar, the setting up
of billboards, distribution of flyers and television spots.

Equality of Treatment
Following a 1991 amendment, the principle of equality of treatment for women and men as
regards all economic, social, cultural, civil, and political rights, and in particular on matters
related to work and employment, is enshrined in the Constitution of Malta.
Moreover, a Minimum Weekly Wage National Standard Order (LN42/76), established that
wages payable to a female employee shall not be less than those payable to a male employee in
respect of equal work or work of equal value.
The Commission for the Advancement of Women which was set up in 1989, provides the
infrastructural set up to meet the requirements of the Acquis. The Department for Women in
Society acts as the executive secretariat of the Commission.
In the Ppublic Sservice, a number of measures have been introduced which are intended to
facilitate the reconciliation of work and family responsibilities.
Furthermore, the Workplace (Protection of Maternity) Regulations (LN72/96) forbid the
exposure of pregnant women to hazardous agents at their workplace.
A draft of the Gender Equality Act is being prepared. This will transpose the Acquis on the
Equality of Treatment between Men and Women, including Directive 97/80/EC on the Burden of
Proof in Cases of Discrimination Based on Sex. A White Paper is expected to be published in
2001 before the draft Bill is presented to Parliament.
The New Gender Equality Act will prohibit any form of direct or indirect discrimination based
on sex. Furthermore, it will provide for necessary measures to ensure that it shall be for the
respondent to prove before a competent authority that there had been no breach of the principle




DRAFT                                                                                           191
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




of equal treatment in alleged cases of discrimination based on sex in line with the provisions of
Directive 97/80/EC.
The Gender Equality Act will include provisions to prohibit any discrimination whatsoever on
the grounds of sex in the conditions , including selection criteria, for access to all jobs, whatever
the sector or branch of activity or level in the organisational structure. It will also prohibit any
discrimination on the grounds of sex with regard to access to all types and levels of vocational
guidance, vocational training, advanced vocational training and retraining in line with the
provisions of Directive 76/207/EEC. The Act will transpose Directive 86/613/EEC and will
include measures to enable persons, who consider themselves discriminated against through the
non application of the principle of equal treatment in following self-employed activities, to
pursue their claims.

Racism
The Maltese population does not include any racial minorities and there have so far not been any
significant problems associated with racism/xenophobia. The Constitution of Malta (Section 45)
prohibits discriminatory treatment on the basis of race, place of origin, political opinions, colour,
creed or sex.
Moreover, on 27 May 1971, Malta ratified and acceded to the UN International Convention on
the Elimination of All Forms of Racial Discrimination. On 10 February 1998 Malta ratified the
European Framework Convention for the Protection of National Minorities and, on 5 November
1992, Malta signed the Charter for Regional or Minority Languages.
Malta is willing to participate in the activities of the European Monitoring Centre on Racism and
Xenophobia.

Employment
The Employment and Training Corporation (ETC) does not discriminate on grounds of gender,
age and disabilities. However, with regard to the indication of gender preferences in advertised
job vacancies, the current situation is not in line with the Acquis.
The current activities of the Employment and Training Corporation as well other pertinent
organisations in this area, including the Institute for the Promotion of Small Enterprise (IPSE),
Malta Development Corporation (MDC) and the Education Department, in general follow the
provisions in a number of Recommendations/Resolutions, namely:
     Commission Recommendation 87/567/EEC on vocational training for women;
     Council Resolution of 7 June 1984 on action to combat unemployment amongst women;
     Council Resolution of 18 December 1979 on linked work and training for young persons;
     Council Resolution of 7 June 1984 on the contribution of local employment initiatives to
      combating unemployment;
     Council Resolution of 19 December 1984 on action to combat long-term unemployment;
     Resolution of the Council and of the representatives of the Governments of the Member
      States, meeting within the Council of 29 June 1995 on the employment of older workers;
     86/379/EEC Council Recommendation of 24 July 1986 on the employment of disabled
      people in the community; and




DRAFT                                                                                           192
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




     Council Resolution of 29 May 1970 on action to assist the long term unemployed.
The planned areas of action for the ETC will attain compliance with the relevant provisions in
the Acquis.
The ETC has drafted an outline for a National Human Resources Development Policy. It will
propose various active labour market measures and will promote the elimination of all instances
of gender discrimination in employment.
Moreover, the Employment and Training Corporation has completed the final version of the
Labour Market Background Study Report and it will be sent to the Commission shortly. In the
meantime, the Employment and Training Corporation is also working together with the
Commission, on the Joint Employment Policy Review. It is also currently devising new
employment and training schemes based on the European Employment Strategy and Guidelines.
The Corporation is reviewing the Employment and Training Services Act (Cap. 343) to bring it
in line with the EURES project. The ETC is considering what services it can offer to Maltese
persons wishing to take up employment in EU countries, particularly regarding information on
and conditions in the host country. ETC will begin a training programme for its staff in this
regard.
ETC is already displaying job vacancies on the Internet.

European Social Fund
The institutional framework to deal with matters related to the European Social Fund will be
established within the Ministry for Social Policy. This issue is discussed under Section 3.5.2
(Regional Policy and Cohesion).

Disabled Persons
The area of the Acquis relating to disabled persons does not comprise any firm and binding rules
but only general guidelines and recommendations, the majority of which have already been
implemented by Malta. The Equal Opportunities (Persons with Disability) Act (Cap. 413)
provides for closer compliance with a number of recommendations. In particular, this Act, which
was enacted in January 2000 implements the following parts of the Social Policy Acquis:
Council Recommendation 86/379/EEC on the employment of disabled people in the Community;
Resolution of the Council and of the representatives of the Governments of the Member States
meeting within the Council of 20 December 1996 on equality for people with disabilities;
Conclusions of the Council of 12 June 1989 on the employment of disabled people in the
Community. The Act prohibits discrimination against persons with disability in all spheres of
life. Part V, Section 2 of the Act came into force on 10 February 2000. An Equal Opportunities
Unit within the National Commission Persons with Disability has been set up. All the other
provisions of the Act came into force on 10 October 2000.
In order to implement the provisions of the Equal Opportunities Act, the Commission has
adopted a three-pronged approach: raising public awareness, establishing a formal Complaints
Unit (the Equal Opportunities Unit) and developing formal procedures for investigating and
following up complaints regarding acts of discrimination on the basis of disability.




DRAFT                                                                                        193
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




The educational system in Malta aims at providing inclusive education at all levels to persons
with disabilities and persons who are socially disadvantaged.
In the field of Public Awareness, throughout Disability Week (26 Nov-3 Dec) the Commission
published and distributed various leaflets in Maltese and English explaining the aims and
provisions of the Act and advising clients on the procedure for registering a complaint. Use was
also made of other media, namely TV clips, the Commission’s biannual newsletter INDAQS
(Equal), and electronically.
The Equal Opportunities Unit is co-ordinated by a disabled, female member of staff in keeping
with the Commission’s policy of being an equal opportunities employer.
A Complaints Form was developed to help clients identify the salient points of their particular
experience of discrimination. The Commission also offers a service to help clients fill in forms
and to formulate any necessary written material. The Unit has been receiving and investigating
complaints since January 2000 and has been actively pursuing equitable solutions since 1
October 2000.

Public Health
The existing legislation does not comply fully with the EU directives relating to labelling of
tobacco, the maximum tar yield of cigarettes and the advertising and sponsorship of tobacco
products. Current regulations ban smoking in several public places but do not comply fully with
the list of places specified in Council Resolution 89C 189/01. Amendments to the Tobacco
Smoking Control Act, 1996 (Cap. 315) to transpose the Acquis concerning the labelling of
tobacco products and the maximum tar yield of cigarettes have been drafted. The outcome of the
Proposal for a Directive of the European Parliament and of the Council adopting measures for
the harmonisation and approximation of the laws, regulations or administrative provisions of the
Member States regarding the manufacture, presentation and sale of tobacco products is awaited
before enactment of the relevant amendments.
Action is already being taken in other areas of public health covered by the Acquis. Policies and
systems for the prevention and treatment of sexually transmitted infections are being upgraded.
A clinic for sexually transmitted infections has been set up. The Disease Surveillance Branch is
responsible for epidemiological surveillance and control of communicable diseases. Moreover,
the Department of Health Promotion is implementing programmes on health promotion,
information, education and training and combating cancer. The Department of Health
Information also has a number of national programmes on health monitoring, which have been
developed in recent years. A Committee has also been set up to draft a national policy on
sexually transmitted infections. Whilst there is no requirement for legislation to be amended or
enacted in these areas, the current actions need to be strengthened in order to comply fully with
the requirements of the Acquis.
Malta is willing to participate in current and future programmes to combat drug deppendence,
AIDS or other communicable diseases. Malta currently enjoys observer status in the Committee
Meetings of the Network for the Epidemiological Surveillance and Control of Communicable
Diseases.




DRAFT                                                                                        194
MINISTRY OF FOREIGN AFFAIRS                                         National Programme for the
MALTA                                                                    Adoption of the Acquis
                                                                         August 2001Final Draft




B. Short Term Priorities (2001)

Labour Law
a) Directive 91/383 (fixed duration employment) will be adopted and will enter into force
   during the fourth quarter of 2001.
b) The Conditions of Employment Regulation Act, 1952 (Cap. 135) and the Industrial Relations
   Act, 1976 (Cap. 266) will be amended to achieve compliance with the Acquis, and the
   following Directives will be adopted during the fourth quarter of 2001 and will enter into
   force during the second quarter of 2002:
       Council Directive 98/59/EC (Collective Redundancies)
       Council Directive 77/187/EEC (Transfer of Undertakings)
       Council Directive 98/50/EEC (Amending 77/187 Transfer of Undertakings)
       Council Directive 91/533/EEC (Obligation to inform employees of conditions applicable
        to contract of employment)
       Council Directive 94/45/EC (European Works Council)
       Council Directive 96/71/EC (Posting of Workers)
       Council Directive 99/70/EEC (Fixed Term Work)
       Council Directive 97/81/EC (Part- time Work)
       Council Directive 80/987/EC (Protection of Employees in case of insolvency of the
        Employer)
       Directive 96/34/EC (Parental Leave)

c) Amendments to the Conditions of Employment (Regulation) Act will also transpose
   Directive 93/104 (Working Time).
Social Dialogue
a) Adopt a new Act to set up the legal framework for the MCESD by the second quarter of
   2001.

Occupational Health and Safety
a) The General Health and Safety Provisions at Work Places Regulations will enter into force
   by the fourth quarter of 2001.
b) The Minimum Health and Safety Requirements for Work with Display Screen Equipment
   Regulations implementing Directive 90/270 (display screen equipment) will enter into force
   by the third quarter of 2001.
c) The following Directives will be transposed under the Occupational Health and Safety
   Authority Act:
     Council Directive 89/655 on work equipment
     Council Directive 86/188 on exposure to noise
     Council Directive 92/57 on temporary or mobile construction sites




DRAFT                                                                                      195
MINISTRY OF FOREIGN AFFAIRS                                        National Programme for the
MALTA                                                                   Adoption of the Acquis
                                                                        August 2001Final Draft




      Council Directive 90/269 on manual handling of loads

Employment
a) The National Human Resources Development Policy will be completed by the third quarter
   of 2001.
t)   Any remaining forms of gender discrimination will be eliminated, in line with Council
     Directive 76/207/EEC, within the context of the National Human Resources Development
     Policy.

Racism
a) Enact amendments to the Criminal Code (Cap. 9) that would render an act of racial
   discrimination a criminal offence.

Disabled Persons
a) The Persons with Disability (Employment) Act (Cap. 210) will be monitored and appropriate
   amendments will be recommended in the light of changes which will be brought about by the
   Equal Opportunities (Persons with Disability) Act.

Public health
a) Amend the Tobacco (Smoking Control) Act (Cap. 315) in order to transpose Directive
   89/622/EEC (labelling of tobacco products), Directive 90/239/EEC (maximum tar yield of
   cigarettes). These amendments will be adopted by the fourth quarter of 2001.

C. Medium Term Priorities (2002)

Labour Law
a) The amendments to the Conditions of Employment Regulation Act (Cap. 135) and the
   Industrial Relations Act (Cap. 266) will enter into force during 2002, except where a
   transitional period is being requested.
b) Directive 99/63/EEC (Working Time of Seafarers) will be adopted in the second quarter of
   2002 and will enter into force in the fourth quarter of 2002 by means of subsidiary
   legislation to the Merchant Shipping Act (Cap. 234).

Occupational Health and Safety
a) The Protection of Young Persons at Workplaces Regulations, 2000, will come into force on
   1 January 2002.
b) Legal Notice 64/2000 on Minimum Health and Safety at Workplaces Regulations will come
   into force in two years from the date of publication (i.e. in 2002) for new workplaces and
   upon accession for existing workplaces.
c) The following Directives would be adopted during the second quarter of 2002 and will enter
   into force in the fourth quarter of 2002:




DRAFT                                                                                     196
MINISTRY OF FOREIGN AFFAIRS                                        National Programme for the
MALTA                                                                   Adoption of the Acquis
                                                                        August 2001Final Draft




     Council Directive 90/394/EEC on exposure to carcinogens;
     Council Directives 97/42/EEC and 99/38/EEC amending Directive 90/394/EEC;
     Council Directive 80/1107/EEC on the protection of workers from the risks related to
      exposure to chemical, physical and biological agents at work;
     Council Directive 89/656/EEC on the minimum health and safety requirements for the
      use by workers of personal protective equipment at the workplace;
     Council Directive 82/130/EEC on the approximation of the laws of the Member States
      concerning electrical equipment for use in potentially explosive atmospheres in mines
      susceptible to firedamp;
     Council Directive 88/642/EEC on the protection of workers from the risks related to
      exposure to chemical, physical and biological agents at work;
     Council Directive 88/364/EEC on the protection of workers by the banning of certain
      specified agents and / or certain work activities;
     Council Directive 78/610/EEC on the approximation of the laws, regulations and
      administrative provisions of the Member States on the protection of the health of
      workers exposed to vinyl chloride monomer;
     Council Directive 82/605/EEC on the protection of workers from the risks related to
      exposure to metallic lead and its ionic compounds at work;
     Council Directive 83/477/EEC on the protection of workers from the risks related to
      exposure to asbestos at work;
     Commission Directive 91/322/EEC on establishing indicative limit values by
      implementing Council Directive 80/1107/EEC;
     Commission Directive 96/94/EC on establishing indicative limit values by implementing
      Council Directive 80/1107/EEC;
     Council Directive 90/679/EEC on the protection of workers from risks related to
      exposure to biological agents at work;
     Council Directives 95/30 EEC, 97/59/EEC and 97/65/EEC adapting to technical progress
      Directive 90/679/EEC;
     Council Directive 93/88/EEC on the protection of workers from risks related to exposure
      to biological agents at work;
     Council Directive 92/91/EEC concerning the minimum requirements for improving the
      safety and health protection of workers in the mineral-extracting industries through
      drilling;
     Council Directive 92/104/EEC on the minimum requirements for improving the safety
      and health protection of workers in surface and underground mineral-extracting
      industries;
     Council Directive 93/103/EC concerning the minimum safety and health requirements
      for work on board fishing vessels;
     Council directive 92/29/EEC on the minimum safety and health requirements for
      improved medical treatment on board vessels; and
     Council Directive 98/24/EC on the protection of the health and safety of workers from
      the risks related to chemical agents at work.
    d) The legislation concerning manual handling of loads (Directive 90/269) will enter into
        force by the fourth quarter of 2002.




DRAFT                                                                                     197
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Equality of Treatment
a) The Gender Equality Act which will transpose the Acquis on Equality of Treatment between
   Men and Women, namely, 76/207/EC (Equal Treatment Regarding Access to Employment)
   and 86/613/EEC (Equal Treatment in a Self-Employed Capacity) as well as Directive
   97/80/EC on the Burden of Proof in cases of discrimination based on sex, will be enacted by
   the first quarter of 2002 and will enter into force by the fourth quarter of 2002.

b) The following Directives will be implemented, through amendments to the Conditions of
   Employment (Regulation) Act (Cap. 135) and the Social Security Act (Cap.318), in 2002:
     75/117/EEC (Equal Pay)
     79/7/EEC (Social Security)
     86/378/EEC (Occupational Social Security Schemes)
     aspects of 86/613/EEC (Equal Treatment in a Self Employed Capacity)
Employment
a) The adoption by the first quarter of 2002 of the Gender Equality Act will bring the issue of
   gender preferences indicated in advertised job vacancies in line with Directive 76/207/EEC
   (equal treatment for men and women as regard access to employment, vocational training
   and promotion and working conditions.)

Public Health
a) The amendments to the Tobacco (Smoking Control) Act will enter into force by the
   fourth quarter of 2002.

b) The possibility of participating in the Community programmes in respect of public health
   will be explored.

D. Institution Building Needs
The required institutional framework concerning labour law is essentially already in place as the
Department of Industrial and Employment Relations has an Inspectorate and Enforcement
Section and an Industrial Tribunal is in operation. The Department will continue to strengthen its
administrative capacity. External assistance concerning the transposition of legislation is
envisaged.
The establishment of the Occupational Health and Safety Authority provides the necessary
framework concerning this area of the Acquis. The recruitment of professional and technical
personnel is expected to take place during the 2001-2002 period, whilst specialised training will
be provided. The Authority will be housed in appropriate premises.
With regards to public health programmes, local professionals will be trained in developing
counselling skills in the areas of AIDS and certain other communicable diseases. Training of
staff and strengthening of information technology will be required at the Disease Surveillance
Branch. Furthermore, the system relating to health surveys and monitoring will be upgraded.




DRAFT                                                                                         198
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




Area of Activity                             2001      2002         Total

Ministry for Social Policy
Department of Industrial and
Employment Relations             Senior        -           -            -
                                 Middle        1           -            1
                                 Other         3           3            6
                                 Total         4           3            7

Occupational Health and Safety
Authority                        Senior         5          -            5
                                 Middle        15         12           27
                                 Other          5          3            8
                                 Total         25         15           40

Ministry of Health
Public Health Programmes         Senior        -           -            -
                                 Middle        5           4            9
                                 Other         -           -            -
                                 Total         5           4            9
E. Financial Requirements
                                                                    Lm000
Area of Activity                             2001      2002         Total

Ministry for Social Policy
Department of Industrial and
Employment Relations             Recurrent    120        140         260
                                 Capital        -          -           -
                                 Training      25         25          50
                                 Total        145        165         310

Occupational Health and Safety
Authority                        Recurrent    185        270         455
                                 Capital      300         50         350
                                 Training     100         60         160
                                 Total        585        380         965

Department of Women in Society   Recurrent      -           -            -




DRAFT                                                                  199
MINISTRY OF FOREIGN AFFAIRS                  National Programme for the
MALTA                                             Adoption of the Acquis
                                                  August 2001Final Draft




                              Capital        -          -            -
                              Training      10         10           20
                              Total         10         10           20

                                                              Lm000
Area of Activity                          2001      2002        Total

Participation in EURES
Project                       Recurrent     30         30           60
                              Capital        -          -            -
                              Training       -          -            -
                              Total         30         30           60

Ministry of Health
Public Health Programmes      Recurrent     70        100         170
                              Capital       25         25          50
                              Training      30         20          50
                              Total        125        145         270




DRAFT                                                               200
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.5.2   Regional Policy and Cohesion

        A. Current Status
        The success of Malta’s ability to use EU funds effectively and efficiently will depend primarily
        on its administrative capacity to fulfil the mandatory criteria of programming, inter-ministerial
        co-ordination, partnership, evaluation, monitoring, reporting, financial control and budgetary
        provisions as defined by the regulations. Drafts of the Special Preparatory Programme (SPP) on
        institutional building aimed at reinforcing the administrative capacity of the public sector to
        manage the structural and cohesion funds have been presented to the Commission.

        Territorial Organisation and Eligibility
        Malta considers that on accession it will be eligible for support from all the Structural Funds,
        namely the European Regional Development Fund (ERDF), the European Social Fund (ESF), the
        European Agricultural Guidance and Guarantee Fund (EAGGF) and the Financial Instrument for
        Fisheries Guidance (FIFG) under Objective 1, as well as the Cohesion Fund. Malta will also
        participate in all Community Initiatives, Innovative Actions and the Technical Assistance
        allocation. As a maritime border area, Malta should be eligible for Interreg IIIA, both within
        internal and external borders. Consequently, Malta requests that its maritime borders be included
        in the relevant regulation for the purpose of Interreg IIIA. Malta will also participate in Interreg
        strands B and C.
        Most statistics are already being compiled on a regional basis except for GDP. Statistical
        indicators on a regional basis have been provided to Eurostat. Malta is participating in the
        European Comparison Programme for the compilation of Purchasing Power Parities (PPP).
        Malta’s preliminary PPP was finalised in May 2000. A NUTS classification for the Maltese
        Islands has also been devised. The entire country will constitute a single unit at NUTS I level.
        The proposed classification at NUTS levels II and III is in line with the regulations (LN153/940)
        issued under the Local Councils Act (Cap. 363) which divide Malta into three regions: Malta
        Majjistral, Malta Xlokk and Gozo. Six districts: South Eastern, Southern Harbour, Northern
        Harbour, Western, Northern and Gozo and Comino are classified at NUTS level IV. The 68 local
        councils are classified at NUTS level V.

        Programming and Co-ordination
        Current practices consist mainly of the three year rolling business plans, prepared by the
        planning units within line Ministries and which include information on all Government
        programmes and projects in hand for that period together with an indication of allocation of
        funds on a cost-centre basis. Business plans are consolidated by the Ministry of Finance and co-
        ordinated within a five year programme. Subsequently, they are used as a basis for the
        Government’s annual budget.
        The individual projects emanating from the programmes are prepared by the line Ministries and
        documentation includes information on the objectives, technical considerations, costs and
        economic impact. The Economic Policy Division within the Ministry for Economic Services
        provides input to development policy documents from an economic perspective. An environment




        DRAFT                                                                                           201
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




impact assessment is also submitted in the case of projects deemed to have a significant
environmental impact, before a project is considered for approval. Project documents are
submitted to Cabinet for consideration. Ad hoc Inter-Ministerial Committees are set up to co-
ordinate the implementation of such projects. The Ministry for Gozo has regional co-ordination
responsibilities for Government programmes and projects in Gozo.
The Development Planning Act (Cap. 356) governs land use. A 20-year integrative structure
plan, and subsidiary local and subject plans are prepared for land-use and spatial planning. The
preparation of these plans involves a process of wide consultation. A review of the Structural
Plan is currently being undertaken. This new Plan will draw upon the European Spatial
Development Perspective and take cognisance of the fundamental role of European policy in this
respect.
The Government has set up a new framework for regional policy and co-ordination of structural
instruments. The framework respects the mandates of Ministries with regards to their explicit or
implicit sectoral responsibility, consolidating and building on existing competencies, while
expanding the traditional role of the social partners.
At a political level, the Cabinet Committee on Policy and Priorities will set strategic priorities
and ensure overall policy co-ordination.
A Regional Policy Directorate within the Office of the Prime Minister will be set up by the first
quarter of 2001. This Directorate will provide the necessary advice and direction for the co-
ordination of structural instruments and will service the Inter-Ministerial Committee on Regional
Policy. The Directorate will also be responsible for inter-agency co-operation at all stages of
programme development including programming, monitoring, evaluation and reporting. The
administrative infrastructure will be operational by the first quarter of 2001.
The Inter-Ministerial Committee appointed by the Prime Minister will be responsible for
ensuring the necessary inter-agency co-operation in programme development, monitoring and co-
ordination. The Inter-Ministerial Committee will be the operational tool of the Regional Policy
Directorate to achieve inter-ministerial co-ordination and will act as the overall monitoring
committee of the Community Support Framework (CSF) and the Single Programming Document
(SPD).
The Economic Policy Division in consultation with the Ministry of Finance will be responsible
for the drafting of the plan required in terms of Regulation (EC) 1260/99. The Economic Policy
Division together with the Regional Policy Directorate will develop programme initiatives
congruent with Government priorities as set out by the Cabinet in line with the Regulation. The
plan will also include public expenditure estimates to be committed by Government in respect of
the co-financing obligations emanating under both the Structural and Cohesion Funds. The plan
will be finalised by the first quarter of 2002.
The Economic Policy Division in consultation with the Regional Policy Directorate will be
responsible for the day-to-day management of the European Regional Fund (ERDF).
The Ministry for Social Policy will be responsible for the European Social Fund (ESF).




DRAFT                                                                                         202
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




The Ministry for Agriculture and Fisheries will be responsible for the Financial Instrument for
Fisheries Guidance (FIFG) and the European Agricultural Guidance and Guarantee Fund
(EAGGF).
The Ministry for Gozo will be responsible for the day-to-day management of funds allocated to
Gozo and the implementation of programmes and projects affecting Gozo.
The Cohesion Fund will be managed by the same framework of administrative structures set up
in respect of the Structural Funds. The Ministry for Transport and Communications and the
Ministry for the Environment will be responsible for transport infrastructure projects and
environmental projects respectively. The Ministry for Gozo will remain responsible for those
aspects of regional policy affecting Gozo.
The Economic Policy Division within the Ministry for Economic Services together with the
Regional Policy Directorate within the Office of the Prime Minister will be the focal points for
the Interreg Initiative. The implementation and management of projects will be the responsibility
of line Ministries.
The Ministry for Agricultural and Fisheries will be responsible for the management of the
Leader+ Initiative.
The Ministry for Social Policy will be responsible for the EQUAL Initiative.
The Ministry for the Environment will be responsible for the management of the URBAN
Initiative.
The Ministry for Gozo will remain responsible for co-ordinating and implementing those aspects
concerning Community Initiatives affecting Gozo.

Partnership
There are different levels of partnership between Ministries, government departments, public
authorities and corporations and the Local Councils. Local Councils have specific
responsibilities in terms of the Local Councils Act (Cap 363). Government bodies (particularly
the Local Councils Department within the Ministry for Justice and Local Government) are
required to assist the Councils in the execution of their functions. Local Councils have
consultation rights in a number of specific areas and also generally in matters which affect their
localities and populations. Ministries and public authorities may also delegate any of their
functions to Local Councils. Mayors and Councillors meet regularly in plenary as well as on a
regional basis.
Gozo has always had its own administrative structure within the public service. A separate
Ministry for Gozo is in place, being responsible for co-ordinating the functions of Government
as well as promoting the economic, social and cultural development of the Island.
Consultation with the economic and social partners takes place through the Malta Council for
Economic Development (MCED) and the Euro Assistance Co-Ordination ordination Task Force
(ACT). The latter will be reconstituted in light of statutory changes to the current MCED.




DRAFT                                                                                         203
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Evaluation, Monitoring and Reporting
Environmental Impact Assessments are considered to be one form of ex-ante evaluation.
Quantity and quality surveys are regularly conducted to ensure that works are progressing and
carried out according to contract specifications. In 1999 the Ministry of the Environment
(having the overall responsibility for the Works Division) has set up a co-ordination unit within
the Works Division to this effect. Certification is carried out upon completion of each project.
The certifying body states that works and services have been completed according to
specifications. Permanent and ad hoc committees in line Ministries are in place to monitor the
implementation of specific projects.
A post-completion audit is not obligatory for government projects. However, some
infrastructural works may be referred to the Auditor General to conduct a select or complete cost
audit on part or on the whole of the project. Any amendments required in order to achieve a
more systematic implementation of post project evaluation and post-completion audit may be
introduced through administrative instruments.
The Economic Policy Division within the Ministry for Economic Services has the capability to
carry out the monitoring of programmes by reference to detailed indicators, including economic
indicators as required by the Regulations. It has also exposure in carrying out ex-ante and ex-
post project evaluation using shadow pricing and other criteria in connection with specific
projects. The Division is also exploring the use of the HERMES and HERMIN models that are
used in Member States to evaluate the impact of the structural funds. Training in the area of
evaluation is being undertaken.
Progressive implementation reports are submitted in the case of multi-annualmultiannual
assistance coming from international organisations, however the general practice of reporting
(internal and public) is not exhaustive of Article 37 of Council Regulation 1260/99.
Under the new framework for regional policy, overall monitoring and reporting of the
programmes co-funded by the Structural Funds and the Cohesion Fund will be the joint
responsibility of the Inter-Ministerial Committee on Regional Policy. The Regional Policy
Directorate will act as a secretariat and will be responsible for the finalisation of the necessary
reports in line with Regulation (EC) 1260/99. Technical monitoring and reporting will remain
the responsibility of the line Ministries whilst monitoring and reporting obligations on financial
and accounting matters will continue to be the responsibility of the Ministry of Finance.
Ex-ante evaluation will be carried out according to a set of established criteria and the necessary
Ministries and agencies will be involved in carrying out this function. The draft SPP addresses
the issue of evaluation.

Financial Control and Budgetary Provisions
Chapter IX of the Constitution,T the Financial Administration and Audit Act (Cap. 174), the
General Financial Regulations (LN40/66), the Auditor General and National Audit Office Act
(Cap. 396), the Public Service (Procurement) Regulations (LN70/96), and Ministry of Finance
Directives and Chapter IX of the Constitution constitute the principal legislation governing
financial control in Malta.




DRAFT                                                                                          204
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




External financial control is exercised by the National Audit Office (NAO) and whose
independence from Government is entrenched in the C*onstitution. The NAO reports directly to
Parliament. The International Organisation of Supreme Audit Institutions (INTOSAI) Standards
are used as guidelines for the functions of the NAO. With respect to the application of INTOSAI
standards, audit examiners have been provided with training on some particular areas such as
Statistics, systems-based audit and internal controls. Meanwhile, a comprehensive audit manual
is being prepared whilst a Code of Ethics is complete and is being reviewed before distribution
to audit staff.
The Public Accounts Committee represents Parliamentary scrutiny of all public expenditure.
Ex-ante financial control is primarily exercised by the Financial Control Unit within each
Ministry.
Internal financial control is exercised by the internal audit units located in the line Ministries.
The units are responsible for compliance / substantive testing and systems audits of the financial
control systems within Government under the overall direction of the Internal Audit Directorate
(IAD) within the Office of the Prime Minister. This Directorate has been set up to function, inter
alia, as a domestic interlocutor with DG Audit. The IAD is strengthening and expanding its
human resource capabilities. Additional training and information technology facilities have been
provided. Drafts of the General Internal Audit Board (GIAB) and IAD Charters, the Internal
Audit Function Document and the new Internal Audit Manual were submitted for consideration
by the GIAB.
A Departmental Accounting System is used for the recording and controlling of public
accounting. This system handles the operational activities and data entry integrated controls
based on financial legislation. This reporting system has been implemented across all Ministries
and Departments and ensures an effective audit trail.
The Maltese budget reflects payments expected to be effected in that financial year to which the
budget refers. The Consolidated Fund provides for a system of accounting and control for the
collection of revenue and the administration of allocated expenditure. The three year rolling
business plan is an administrative multi-annualmultiannual instrument. Administrative changes
will be introduced to provide for separate commitments within the Government budget and to
ensure the separation of EU funds from national resources with regard to presentation,
accounting and controlling purposes.
Issues relating to financial control and related provisions are discussed under Section 3.9.1
(Financial Control) and Section 3.9.2 (Financial and Budgetary Matters).

Coherence with Community Policies
Public procurement is regulated by the Public Service (Procurement) Regulations (LN70/96)
which are broadly in line with the requirements of the Acquis. This issue is further discussed in
Section 3.1.1 (Free Movement of Goods). An independent State Aid Monitoring Board was set
up in June 2000 within the Ministry for Economic Services, to monitor and review existing and
new state aid granted by the Government, on the basis of criteria arising from the application of
EC Treaty law, Commission practice and case law. The Board provides expert opinions,
positions and proposals for the formulation and implementation of state aid policy.




DRAFT                                                                                          205
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




B. Short Term Priorities (2001)
a) Provide complete regional policy statistical data according to EU methodology.
b) Establish the necessary administrative infrastructure within Government that will ensure an
   effective implementation and absorption of regional funds.
c) Further training for public sector officials in matters concerning programming and
   evaluation techniques. (ongoing)
d) Establish and implement appropriate systems in order to ensure accountability and
   transparency in the use of funds. (ongoing)
e) During 2001, the Maltese Authorities and the EU Commission will determine the approach
   framework that will be adopted for the performance of responsibilities under EDIS.
f) A Code of Ethics will be distributed to audit staff during 2001.
g) Setting up of the Regional Policy Directorate within the Office of the Prime Minister. It will
   act as the overall managing authority in line with Article 9 (n) of Regulation (EC) 1260/99
   (general provisions on the Structural Funds) and will have the overall responsibility for
   programming, project selection and negotiation of the Community Support Framework
   (CSF) and the Single Programming Document (SPD) with the Commission.
h) Updating of internal audit manual inline with EU standards and guidelines.
i)   Strengthening of the internal audit function within Line Ministries. The new Internal Audit
     Manual will be adopted in 2001.
j)   Adoption of legislation on MCESD (Malta Council for Economic and Social Development)
     (Partnership Dimension).
k) Adoption and entry into force of subsidiary legislation transposing EC Directive 85/337.
l)   Full compliance with Acquis on Public Procurement.
m) The GIAB and IAD Charters and the Internal Audit Function Document.
n) An assessment of Malta’s transport infrastructure requirements on the lines of Transport
   Infrastructure Needs Assessment (TINA) will be finalised during 2001.
o) Malta will submit its programme of economic convergence in line with Regulation (EC)
   1264/99 (Cohesion Fund).
p) The Special Preparatory Programme on Regional Policy will be finalised.

C. Medium Term Priorities (2002)
a) Develop a national plan for economic and social cohesion as required by Regulation (EC)
   1260/99 by the first quarter of 2002. This will include priority needs together with the
   strategy, the planned action priorities, their specific goals and the related indicative financial
   resources.




DRAFT                                                                                           206
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




b) As regards protection of EU financial interests, legislation will be adopted to implement EC
   Regulations EC/2988/95, EC/2185/96, EC/1073/99 and EC/1074/99.
c) Adoption and entry into force of legislation transposing the Acquis on issues pertaining to
   equal opportunities.
Local Councils as well as public authorities and undertakings will become subject to the Public
Service (Procurement) Regulations on accession.

D. Institution Building Needs
The implementation of the programmes and projects financed by the funds will be in the hands
of the line Ministries. In order to ensure effective implementation, appropriate structures and
systems are being established in order to manage and co-ordinate the relevant structural and
cohesion funds. There will also be a small team of technical experts in the field of development
planning and programme/project development. Technical assistance and appropriate training in
this area is also envisaged.


Area of Activity                                                 2001        2002         Total

Office of the Prime Minister
Regional Policy Directorate         Senior                           1           2            3
                                    Middle                           5           3            8
                                    Other                            -           -            -
                                    Total                            6           5           11

Ministry for Social Policy
                                    Senior                           1           -            1
                                    Middle                           -           1            1
                                    Other                            -           1            1
                                    Total                            1           2            3

Ministry for the Environment
                                    Senior                           1           -            1
                                    Middle                           -           1            1
                                    Other                            -           1            1
                                    Total                            1           2            3

Ministry for Transport and
Communications
                                    Senior                           -           1            1
                                    Middle                           -           1            1
                                    Other                            -           1            1
                                    Total                            -           3            3




DRAFT                                                                                        207
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




Area of Activity                             2001      2002         Total

Ministry for Economic Services
                                 Senior        1           -            1
                                 Middle        -           3            3
                                 Other         -           -            -
                                 Total         1           3            4

Ministry for Agriculture and
Fisheries                        Senior         -          1            1
                                 Middle         -          1            1
                                 Other          -          1            1
                                 Total          -          3            3

Ministry for Gozo
                                 Senior         -          1            1
                                 Middle         -          1            1
                                 OtheOther      -          1            1
                                 r
                                 Total          -          3            3


E. Financial Requirements
                                                                    Lm000
                                             2001      2002         Total
Office of the Prime Minister
Regional Policy Directorate      Recurrent     40         75         115
                                 Capital        -          -           -
                                 Training*      5         40          40
                                 Total         45        115         160

Ministry for Social Policy
                                 Recurrent     5          20           25
                                 Capital       -           5            5
                                 Training      -           5            5
                                 Total         5          30           35

Ministry for the Environment
                                 Recurrent     5          20           25
                                 Capital       -           5            5
                                 Training      -           3            3
                                 Total         5          28           33




DRAFT                                                                  208
MINISTRY OF FOREIGN AFFAIRS                      National Programme for the
MALTA                                                 Adoption of the Acquis
                                                      August 2001Final Draft




                                                                     Lm000
                                              2001      2002         Total
Ministry for Transport and
Communications
                                  Recurrent      -         15           15
                                  Capital        -          5            5
                                  Training       -          3            3
                                  Total          -         23           23

Ministry for Economic Services
                                  Recurrent     5          25           30
                                  Capital       -           5            5
                                  Training      -          10           10
                                  Total         5          40           45

Ministry for Agriculture and
Fisheries                         Recurrent      -         15           15
                                  Capital        -          5            5
                                  Training       -          5            5
                                  Total          -         25           25

Ministry for Gozo
                                  Recurrent      -         15           15
                                  Capital        -          5            5
                                  Training       -          3            3
                                  Total          -         23           23




* including pre-accession funds




DRAFT                                                                   209
        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                     August 2001Final Draft




        Environment and Quality of Life
3.6.1   Environment

        A. Current Status

        Legislative Framework
        The necessary legal framework for the adoption of the EU Environmental Acquis, including that
        relating to waste management, industrial pollution control and risk management, air quality and
        water quality will be provided through a new Act which will replace the Environment Protection
        Act (Cap. 348). This is expected to be enacted by the second quarter of 2001. The Act will also
        provide for the setting up of an autonomous authority that shall act as the competent authority as
        envisaged in the environmental Acquis. Moreover, the legislative framework in the environment
        sector also incorporates the Malta Resource Authority Act (Cap. 423) which was enacted in
        September 2000. This Act ensures the separation of the regulatory functions from service
        provision functions and allows for subsidiary legislation to be issued to implement the Acquis
        with regard to water services. This is discussed further under Section 3.4.4 (Energy)
        The legislation regulating environment in Malta also includes the Development Planning Act
        (Cap. 356), the Occupational Health and Safety Authority Act (Cap. 424) and the Product Safety
        Act (Cap. 427). Furthermore a new Veterinary Services Act and a new Animal Welfare Act are
        expected to be enacted in 2001 whereas a new Public Health Act will be adopted by the first
        quarter of 2002.
        Horizontal
        The present Environment Protection Act (Cap. 348), the Development Planning Act (Cap. 356)
        and the approved national strategic planning framework (Structure Plan for the Maltese Islands,
        1990) mandate the preparations of environmental impact assessments for certain development
        proposals. Access to environmental information, although not fully covered by legislation
        already exists in practice. The Development Planning Act already provides for the requirements
        that application reports, development permits, environmental statements and planning-related
        documents are made available to the public. In 1999, the Ministry for the Environment published
        a State of the Environment Report for 1998. Similar reports will be issued periodically.
        Malta’s environmental policy will ensure that its scarce resources are used prudently and in a
        rational way in line with Article 174 of the Treaty. In this regard, the quarrying of Maltese stone
        is already strictly regulated and subject to environmental impact assessments that give due
        consideration to operational and economic needs, quantity and purpose of use. Within this
        context, Malta will continue to conserve this scarce natural resource, also maintaining export
        controls.



        International Co-operation
        Malta is party to the international co-operation segment of the Acquis with the following
        exceptions:




        DRAFT                                                                                          210
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




     The Bonn Convention on the Conservation of Migratory Species of Wild Animals;
     The Protocol concerning the control of Emissions of Nitrogen Oxides or their
      transboundary fluxes (Protocol to the 1979 LRTAP Convention); and
     The Convention on Biological Diversity.
The obligations arising from the Conventions and Protocols which are part of the environment
Acquis and to which Malta is already a party have generally been transposed into national
legislation through subsidiary legislation and Legal Notices.
Malta has ratified the Basle Convention on the Transboundary Movement of Hazardous Waste in
June 2000. Decision 97/640/EC (amendments to the Basle Convention as laid down in Decision
III/1 of the Conference of the Parties) was transposed by the Control of Transboundary
Movement of Toxic and other Substances Regulations (LN205/00).
The Convention on International Trade in Endangered Species of Wild Animals is implemented
through Legal Notice (LN19/92) as subsequently amended. Malta has a very good record in the
application of this Convention and the only issue concerns species (or derivatives thereof) in
transit. In fact whereas the EU deals with such species in the same manner as it deals with all
imported goods, in Malta such goods are not deemed to have been imported. Another
administrative requirement will be the adoption of the Community documentation.
The Berne Convention on the Conservation of European Wildlife and Habitats is implemented
by the Filfla Natural Reserve Act (Cap. 323), the Development Planning Act (Cap. 356) and by
regulations issued under the present Environment Protection Act (Cap. 348) including
LN144/93, LN150/93, LN215/97 and LN106/98 in connection with the protection of Birds and
Wild Rabbits; LN77/92 in relation to the protection of reptiles; LN77/92 as amended, in
connection with the protection of Mammals, the Fungus Rock Nature Reserve Regulations (LN
22/92), the Reptiles Protection Regulations (LN76/92), the Hunting Licences Regulations (LN
145/93), the Rubble Walls and Rural Sructures Structures (Conservation and Maintenance)
Regulations (LN160/97), the Motor Vehicles (Offroading) Regulations (LN196/97), and the
Trade in Species of Flora and Fauna Regulations (LN19/92). However, Malta has a number of
exceptions and reservations which are permissible under the Convention but which are not in
line with the Birds and the Habitats Directives and with other areas of the Acquis implementing
this Convention (relating to species and to the spring hunting season). The Berne Convention
also requires the protection of habitat types for species listed in the appendices. Through the
scheduling process, the Planning Authority has afforded protection to all saline marshlands,
coastal wetlands, coastal cliffs of Malta, several valleys, sand dunes, clay slopes, rocky shores,
garigue areas, woodland areas and trees.
The Protocol to the Barcelona Convention for the Protection of the Mediterranean Sea against
Pollution from Land-based Sources is partially implemented by LN8/93, which regulates liquid
wastes discharged into the sewage system. The legal obligations imposed by this Protocol are
still not wholly covered because discharges of sewage directly into the marine environment are
still not regulated.
Malta is a party to the Barcelona Convention concerning Mediterranean Special Protected Areas.
This is also implemented.




DRAFT                                                                                         211
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




The Protocol to the Barcelona Convention concerning Mediterranean Specially Protected Areas
is provided for under the Planning Authority’s Structure Plan which includes thirteen policies for
the establishment and management of Marine Conservation Areas (MCAs). The Planning
Authority can designate and establish MCAs under the Development Planning Act (Cap. 356)
(DPA).
With regards to Marine Conservation Areas, fourteen candidate MCAs have already been
identified in the Structure Plan of 1990. Two areas have already been surveyed and a third is
being surveyed currently. Designation will be by means of a Government Notice under the
Development Planning Act (Cap. 356) as per the scheduling procedures and the establishment of
Urban Conservation Areas.
The Vienna Convention on the Protection of the Ozone Layer and the Montreal Protocol on
Substances that Deplete the Ozone Layer (including the London Amendments) are implemented
by LN133/95. However, Malta has not ratified the Copenhagen Amendments to the Montreal
Protocol. Issues that need to be addressed primarily relate to products that are used in agriculture
and which need to be substituted.
Malta became a member of the European Environment Agency in October 2000. Parliament
effected the necessary ratification by resolution of 14 February 2001. It is already participating
in the meetings of the European Environment Agency Management Board. As regards the
Conventions listed below, Malta will become party to them upon accession as a member state of
the EU:
     The Bonn Convention on the Conservation of Migratory Species of Wild Animals;
     The protocol concerning the control of Emissions of Nitrogen Oxides or their
      transboundary fluxes (protocol to the 1979 LRTAP Convention)
Malta has participated in LIFE third Countries since 1993. Malta will participate in the other two
strands of the LIFE programme on accession.

Air Quality Legislation
The main legislation in this area is the Clean Air Act (Cap. 200). The Regulations issued under
this Act include the Dark Smoke (Permitted Periods) Regulations (LN28/69) and the Dark
Smoke Permitted Periods (Vessels) Regulations (LN30/69), which generally regulate the
emissions of dark smoke. There are also some provisions with respect to emissions of noxious
vapours in the Code of Police Laws (Cap. 10).
The new Environment Protection Act (Cap. 348) will enable the adoption of more definite
regulations that will embrace all the provisions of the EU Directives on air quality, in particular
provisions relating to the Framework Directive (96/62/EEC) and Directive 99/30/EEC (limit
values for sulphur dioxide, nitrogen dioxide and oxides of nitrogen, particulate matter and lead
in ambient air). The technical drafting regarding air pollution regulations has been completed.
Furthermore, on 1 January 2001, the lead content of imported petrol was reduced from 0.4g/litre
to 0.15g/litre.
The National Air Monitoring Programme was upgraded through the acquisition of appropriate
monitoring and sampling of equipment. This programme is being further consolidated through an




DRAFT                                                                                           212
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




extensive network of sulphur dioxide, BTX and ozone diffusion tubes. The Environment
Protection Department has so far compiled the 1990 and 1994 CORINAIR inventories and is
currently compiling the 1997 inventory. The monitoring of sulphur dioxide is currently
conducted in various localities.
A transition period may be required, with respect to the phasing out of leaded petrol, the control
of Volatile Organic Compounds (VOCs) emissions resulting from the storage of petrol and its
distribution from terminals to service stations; and the control of emissions from large
combustion plans.

Water Quality Legislation
Draft regulations relating to water are already being drafted. At present, national legislation to
enable the transposition of the Urban Wastewater Directive (91/271/EEC), is only partly
compliant. The Sewer Discharge Control Regulations (LN8/93) establish a permitting system
for the discharge of waste waters into the sewerage system on the basis of limit values found in
the schedules of these regulations, and which are the same as (or more stringent than) those
established under Lists I and II of EU Directive (76/464/EEC). However, specific provisions to
control the discharge of waste water into the marine environment would be required. The Malta
Resources Authority Act (Cap. 423) also provides for the regulation of the treatment, storage,
disposal, use or re-use, as appropriate of sewage, waste water, sludge and storm water run-off,
the provisions of adequate systems of public sewerage, the re-use of treated effluent and the
proper and fit disposal of sewerage.
Concerning the control of discharges of dangerous substances into the marine environment
(Directive 76/464/EEC), there are no industries in Malta that directly discharge mercury (as
identified in Directives 82/176/EEC and 84/156/EEC), cadmium (Directive 83/513/EEC) or
hexachlorohexane (Directive 84/491/EEC), or other substances as identified by the Acquis
(Directives 86/280/EEC, 88/464/EEC, and 90/415/EEC). Discharges from industry in Malta are
currently released into the main sewer and are therefore regulated by the Sewer Discharge
Control Regulations (LN8/93). However, these regulations would need to be amended
accordingly to bring them in line with the Acquis. The Malta Resources Authority Act (Cap. 423)
provides for the regulation of the proper disposal of waste water. A transitional period may be
required to implement fully Directive 76/464/EEC.
National legislation also needs to be formulated to transpose the provisions of the Bathing Water
Quality Directive (76/160/EEC). The Department of Public Health conducts extensive
monitoring of Maltese coastal waters vis-à-vis microbiological parameters while the
Environment Protection Department is responsible for monitoring the physio-chemical
parameters as indicated in the Directive. The latter programme monitors 36 different sites. The
bathing water quality programme has been extended by including physio-chemical parameters.
Regarding the provisions relating to drinking water intended for human consumption (Directive
98/83/EEC), the existing legislation identifies the Department of Health as the local designated
authority. The Food, Drugs and Drinking Water Act (Cap. 231) ensures that water intended for
human consumption is wholesome and that water supplies intended for human consumption are
protected. However, the existing legislation needs to be amended to take into account the
provisions of the Acquis. Monitoring programmes have been in place for a long time and are




DRAFT                                                                                         213
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




conducted by the Department of Public Health and the Water Services Corporation. These tests
need to be upgraded to include all the parameters listed in Annex A,B & C of Annex I to
Directive 98/83/EEC. A transitional period may be requested with regards to certain aspects of
this Directive.
A study has been conducted by the Water Services Corporation on the quality of drinking water
supplied to consumers, particularly for those parameters that are not routinely monitored by the
Corporation and the Department of Health. The first part of this study was completed during
2000, whilst further monitoring work is being carried out.
No particular problems are envisaged regarding surface water intended for abstraction for
drinking purposes (as per Directives 75/440/EEC, 79/869/EEC and 77/795/EEC) nor that
concerning the quality of fresh waters needing protection to support fish life (Directive
78/659/EEC). However, legislation would need to be adopted to transpose provisions relating to
the protection of ground water against pollution.
Legislation to effectively regulate the pollution of the marine environment by hydrocarbons will
also be required. This issue will be addressed in the National Marine Contingency Plan that is
being prepared by the Environment Protection Department.
A study concerning the disposal of sewage generated by ships reaching the ports has been
commissioned.
It is envisaged that a transitional period may be required to implement fully the Urban
Wastewater Directive (91/271/EEC), through the implementation of the Sewerage Master Plan
which has been prepared. Identification and implementation of the necessary infrastructure to
bring the collection, treatment and disposal of waste water in line with the EU Directives is one
of the Plan’s main objectives. Two consultancy contracts related to this Plan have been issued.
Pre-accession assistance is required to implement the necessary infrastructural projects.

Industrial Pollution Control and Risk Management Legislation
National legislation with respect to industrial pollution (as per Directive 96/61/EEC), the Major
Accidents Directive and the Asbestos Directive is being drafted. With regards to the Integrated
Pollution Prevention and Control (IPPC) Directive, there is currently in place a licensing system
which is monitored under the Code of Police Laws (Cap.10). Several government entities have
their own permitting system, such as licences for pharmacies and clinics that are issued by the
Department of Health under the Medical and Kindred Professions Ordinance (Cap. 31) or the
discharge permits to industrial concerns issued by the Drainage Department by virtue of the
Sewer Discharge Control Regulations (LN8/93). These may need to be reviewed in order to
determine adherence with the Acquis. Some of the provisions of the IPPC directive relate to land-
use issues, development control and Environmental Impact Assessments and are catered for in
the Development Planning Act (Cap. 356) and the local planning system. A transitional period
would be required to implement Directive 96/81/EEC (IPPC) due to the transitional periods
being requested with respect to the water quality Acquis. A transitional period may also be
required in respect of Directive 88/609/EEC (limitation of emissions from large combustion
plants).




DRAFT                                                                                        214
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




A transitional period may be required to implement Major Accident Hazards Directive
(96/82/EEC). This will involve the relocation of the present gas bottling plant. However, with
respect to the control of accidents from maritime activities and terminals, regulations have
already been issued by the Malta Maritime Authority, namely the Dangerous Cargo Ship, Marine
Terminal and Bunkering Facilities Regulations.
The Occupational Health and Safety Authority (OHSA) will be the regulatory authority as
regards Directive 96/82/EEC (major accidents), acting in conjunction with the Civil Protection
Department and the Environmental Protection Agency. The OHSA (on behalf of and together
with other agencies) will receive notifications and assess the policies and reports sent in by the
operators as well as be responsible for inspection and exchange of information with the
Commission. The Civil Protection Department will be primarily involved in the drawing up of
emergency plans.
No particular problems are envisaged concerning the voluntary schemes such as those envisaged
by Council Regulation 1836/93EEC and the Council Decisions regarding the Eco-Management
and Audit Scheme EMAS. These may be covered by the Malta Standards Authority. Legislation
concerning the ISO140001:1991 is already in place. However, regulations will need to be issued
with respect to the eco-labelling scheme. The Malta Standards Authority Act (Cap. 419) provides
a legal framework for the recognition of the eco-label as a conformity mark.
There is no legislation controlling emissions from large industrial plants. However, the new
Environment Protection Act (Cap. 348) envisages the possible introduction of appropriate
regulations concerning emissions of certain pollutants into the air from large plants. A
programme will be drawn up to reduce the total annual emissions of sulphur dioxide and
nitrogen oxide taking into consideration the substantial changes in electricity demands since
1980. There are a number of provisions under existing legislation in Malta that restrict the use of
asbestos, namely: (i) the regulations that prohibit the importation of asbestos fibres (LN129/94);
(ii) Part II Section 35 of the Factories (Health, Safety and Welfare) Regulations (LN52/86); and
(iii) the Disposal of Wastes and Rubble Fees Regulations (LN128/97).

Legislation in the area of chemicals
New regulations would be needed to reflect the requirements relating to the prevention and
reduction of environmental pollution by asbestos (Directive 87/217/EEC); administrative
provisions relating to the classification, packaging and labelling of dangerous substances
(Directive 67/548/EEC and amendments); on biocides and with respect to the importation and
exportation of certain dangerous chemicals (EEC Regulation 2455/92), to give a legal basis for
the Prior Informed Consent procedures. National legislation concerning the export and import of
ozone depleting substances is already in force but this would need to be modified to include the
control of equipment utilising such substances. Technical drafts of regulations to comply with
the Acquis on chemicals have been completed. It is envisaeged that the baseline to calculate
reduction levels of hydrochloro-flourocarbons to implement Regulation (EC) 2037/00 (ozone
depleting substances be that of 2001. A transitional period may be required to implement
Regulation EC (2037/00) and Decision 94/68/EEC (conclusion of the amendments to the
Montreal Protocol of substances that deplete the ozone layer) to allow the phasing out of methyl
bromide.




DRAFT                                                                                          215
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Waste Management
The main legislation in the area of waste management is the Environment Protection Act (Cap.
348).
In February 2000, the Ministry for the Environment published the Solid Waste Management
Consultation Document identifying the options available for managing waste in Malta.
Moreover, in June 2000, experts commissioned by DG Environment submitted their report on
Solid Waste Management in Malta. The report assessed the current waste management policy
and procedures, the implementation and enforcement capacity including a survey of existing
installations, a cost assessment in the field of waste including cost recovery and a legal gap
assessment.
Another important legislative instrument is the Development Planning Act (Cap. 356). Legal
Notices have been drafted to achieve compliance with Directives 78/176/EEC, 82/883/EEC,
92/112/EEC, 89/492/EEC, 89/369/EEC, 96/302/EEC, 97/283/EEC, 76/43/EEC, 94/3/EC,
94/904/EC, 86/278/EEC and 97/129/EC. These will be issued following the enactment of the
new Environment Protection Act. Specifications for packaging materials are also being drafted.
Municipal waste is collected on a daily basis from every household. There is a voluntary system
for dry battery collection. Most waste is disposed of by open landfilling, with the rest being
composted. There is a nominal fee for the deposit of waste at the landfill. There is some interest
in separate collection of fractions. However, the small size of the island makes the recycling of
certain waste fractions not feasible, and waste recovery is essentially dependent on export.
Current waste management legislation and practices may need to be consolidated and enhanced,
in order to reflect better the Acquis requirements. Appropriate policy instruments need to be
explored and identified in order to encourage waste minimisation, reuse and where possible,
recycling (including composting).
The hierarchy of management options for waste that cannot be avoided, reused or recycled as
provided in the Acquis, is considered as particularly applicable to Malta, in view of its small size,
the fact that it is an island, and the high density of the population. The pollution potential of any
form of landfill and the issue of land availability makes landfilling particularly unsuitable for
Malta.
Current practices with respect to the management of health-care waste, as well as slaughterhouse
waste do not conform to the Acquis. The Health Division will utilise non-burn technologies as an
alternative to current practices. Port waste and the management of slaughterhouse waste needs
further consideration.
The Basle Convention on the transboundary movement of waste, which Malta has ratified in
June 2000 is important since it is not envisaged that Malta would ever be self-sufficient with
respect to the management of small quantities of particularly hazardous waste. LN205/2000 was
issued transposing the obligations of the Basle Convention (259/93/575/EC, 94/74/EC).
Appropriate mechanisms must be established for the handling of lubricating oils, which need to
be separately collected and managed. Moreover, a study is being undertaken to determine a
sustainable solution for the treatment and re-use of sludge that would be produced by the urban
waste water treatment plants.




DRAFT                                                                                           216
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




The level and extent of involvement of the private sector in the running of waste management
facilities and in the setting up of separate collection and material recovery schemes are being
determined. In this regard, specialised companies may be set up to collect and recover (or export)
packaging waste. However, Malta’s geographical circumstances, the high population density, the
impact of tourism and the difficulties to achieve economies of scale in recovery and recycling of
waste determine the manner in which the full implications of the Packaging and Packaging
Waste Directive can be implemented. Experience has shown that re-use is the best means to
protect Malta’s fragile environment. To this effect Malta may request to maintain its existing
beverage container packaging regime. Furthermore, Malta may request to negotiate targets for
the recovery and recycling of packaging and packaging waste which reflects its particular
constraints and its current re-use policies. Malta may also request a transitional period pending
the establishment of a solid waste management collection and disposal infrastructure.

Trade in Species of Wild Flora and Fauna
Malta is a party to the Convention on International Trade in Endangered Species of Wild Fauna
and Flora (CITES). The local regulations in this area are very close to EU Regulations and only
minor adjustments are needed to achieve conformity with them. The necessary amendments to
the present regulations, for example with respect to the control of species in transit, can only be
possible after the publication of the new Environment Protection Act.

Conservation of wild flora and fauna and their natural habitat (Berne Convention)
The European Union directive adopts the Convention on the Conservation of European Wildlife
and Natural Habitats. Malta is also a party to this Convention, but a reservation was made at time
of accession to allow the trapping of finches in autumn. A further reservation was made when
new species were added. Another reservation was made on ratifying the new amendments,
regarding a number of marine species which are harvested. Subsequently an exception was made
to allow the trapping of birds in spring, and to allow the harvesting of marine species to which
no reservation was made at time of acceptance.
Through the exceptions that were made, a report has to be sent to the Convention’s Secretariat
outlining the number of licences given and the number of species taken. This data is presently
being forwarded to the Environment Protection Department by the Commissioner of Police who
obtains it at the time of renewal of licences. Similar reporting requirements apply with regards to
the marine species, although the administrative structures that exist for these purposes within the
Department of Fisheries need to be strengthened.
There are no local regulations for the harvesting of marine species that are listed in the
Convention Appendix III.

Conservation of Migratory Species of Wild Animals (Bonn Convention)
Malta is not a party to this Convention and neither is it a party to the many agreements that were
finalised under this convention. Nevertheless, most of the local regulations are in line with the
obligations of this Convention. Legal provisions are already in place both with regard to avian
species and other migratory fauna.




DRAFT                                                                                          217
MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                               August 2001Final Draft




Directive for the Protection of Birds
The domestic regulations published under the Environment Protection Act (Cap. 348) are not in
line with the obligations of this Directive. The main divergences concern some bird species that
are protected under the EU Directive and which are either not covered in Malta or can be hunted
outside open seasons established by the EU Directive. However, under the Development
Planning Act (Cap. 356), a number of bird habitats have been afforded protection. The Structure
Plan (policies RCO 11:4 and RCO 13) also provides for the protection of bird habitats or areas of
ornithological interest. The Planning Authority has recently commissioned a study to identify the
important coastal bird habitats in view of the Coastal Zone Management Subject Plan.
Points which the local present regulations do not fully cover, include:
     Provisions to be able to control the introduction of species;
     Protection of the habitat of birds, which are subject of special conservation measures;
     Conditions for the taking of birds which can only be taken in Member States, and of
      birds which can be sold, conditions for the transport for sale, keeping for sale and the
      offering for sale of live or dead birds and any readily recognisable part or derivatives of
      such birds.
Measures will be taken to maintain on accession the traditional patterns of hunting and trapping
which have evolved as a result of Malta’s particular bio-geographical circumstances.

Habitat Directive
The present legislation is partly compliant vis-à-vis certain species. With respect to the different
types of habitats listed in this Directive, the Development Planning Act (Cap. 356), through the
scheduling procedures, already honours parts of the Directive relating to habitat protection.
Current procedures and subsidiary legislation is also partly compliant with respect to habitat
types. Malta wishes to add species of flora and fauna to the list contained in Annex II of
Directive 92/43/EEC (Conservation of natural habitats of wild fauna and flora).

Genetically Modified Organisms (GMOs)
In Malta there is almost no specific legislation on the subject. Although it is generally known
that GMOs might be utilised as crops (including cereals), these being imported as seeds or
products, there is no listing or definite list of products entering the country.
The Occupational Health and Safety Authority Act (Cap. 424) provides for appropriate measures
to protect the health of workers from any risks arising from activities using GMOs. The
Workplace (Protection of Young Persons) Regulations (LN 91/96) prohibits young people from
being exposed to GMOs that can cause severe human diseases. There exist a number of legal
instruments whereby the main provisions may be partially transposed into local legislation.
In January 2001 a report compiled by scientific consultants and foreign specialists was finalised
in order to help the competent authority in the formulation of its policies in this area.
Noise
Currently there is no Maltese legislation related to determining noise levels while no equivalent
pre-market measures exist. The Product Safety Act (Cap 427) was enacted on 1 March 2000 and




DRAFT                                                                                            218
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




replaced the Quality Control (Exports, Imports and Local Goods) Act (Cap. 255). The Product
Safety Act allows subsidiary legislation transposing the Noise directives to be issued.

Nuclear Safety and Radiation Protection
Although Malta does not have its own specific radiation protection legislation, administrative
measures are in place to implement the requirements of Title II, Chapter 3 of the Euratom Treaty
on information in the event of a nuclear accident and on the protection against the dangers
arising from ionising radiation.
The necessary legislation would have to be enacted in order to transpose the requirements of
Directive 96/29/EEC.
With regards to the transport of radioactive substances and waste, the Maltese Government has
unequivocal statutory powers within its existing legal framework, to conduct a monitoring
programme. The main legislation that provide the authority to stop ships and inspect cargoes are
the Malta Maritime Authority Act (Cap. 352), Customs Ordinance (Cap. 37), Malta Police
Ordinance (Cap. 164) and the Armed Forces Act (Cap. 220). There are also provisions for the
proper reporting systems, in line with International Standards. Furthermore the Control of
Transboundary Movement of Toxic and other Substances Regulations (LN 205/00) empower
officials appointed by the Environment Protection Department to inspect any ships and to
request the seizure of any vessels containing dangerous substances. The Present Environment
Protection Act (Cap. 348) provides that Government has to take all preventive and remedial
measures to protect the environment. The Malta Maritime Authority, under the Malta Maritime
Authority Act (Cap. 352) is empowered to prevent and control pollution caused by oil or other
substances in any part or any approaches thereto. The Government can issue regulations to
secure public safety under the Emergency Powers Act (Cap. 178)
Maltese Law, under the Dangerous Cargo Ships Regulations (LN 1/96), requires that all ships
discharging cargo through any port, including the Malta Freeport, must present a Package
Certificate (1966 Port Regulations) to the authorities prior to arrival in Maltese Territorial waters
within a 12-mile limit. Any cargo, which is not listed, or is falsely listed on the Survey Report, is
deemed to be illicit.
The administrative provisions of Regulation 1493/93/EURATOM (shipments of radioactive
substances between member States) were implemented in the year 2000. This system is expected
to be integrated with the EU mechanism upon accession.
Radioactive waste is classified as hazardous waste by regulations (LN128/97), thus subjecting it
to specific administrative procedures. Moreover, the discharge of any prohibited effluent
(including radioactive substances and wastes), from any trade premises into the public sewerage
system is prohibited by regulations (LN8/93). The Territorial Waters and Contigious Zone Act
(Cap. 226) provides that nuclear powered ships and ships carrying nuclear substances or any
other dangerous substances may be required to seek prior unformed consent and authorisation
from the Malta Maritime Authority when effecting passage through Maltese territorial waters. In
1996 Malta signed the protocol on the Prevention of the Mediterranean Sea by the
Transboundary Movement of Hazardous Waste and their Disposal.




DRAFT                                                                                           219
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




The Civil Protection Department is committed by legislation to draw up contingency plans. Since
expert knowledge is required, assistance has already been requested from the International
Atomic Energy Agency.

Civil Protection
The main purpose of the Civil Protection Act (Cap. 411) is to respond and contribute to the
protection of persons, environment and property in the event of a national or technological
disaster. It also establishes a Civil Protection Department and an Assistance and Rescue Force.
This Act, which was adopted in November 1999, facilitates the implementation of the Acquis
related to civil protection.
The functions of the Civil Protection Department are to:
     prepare contingency plans to respond to a disaster as well as to natural, industrial and
      other emergencies;
     organise and co-ordinate training facilities and courses for personnel;
     establish the infrastructural set-up required to ensure co-ordination between the various
      departments of Government, local councils and NGOs;
     carry out vulnerability and risk assessment studies;
     promote public awareness of civil protection issues; and
     maintain an assistance and rescue force.

The Civil Protection Department is already prepared to forward and receive information through
its Control Room.
The Civil Protection Department is committed by legislation to draw up contingency plans.


B. Short Term Priorities (2001)
Legislative Framework

a) The Environment Protection Act (Cap. 348) constitutes the primary legislation regulating
   environment in Malta. A new Act to replace the Environment Protection Act will be
   adopted by Parliament by the second quarter of 2001.
b) An autonomous authority will be responsible by the third quarter of 2001 for implementing
   most of the environment Acquis. This authority will have the licensing and enforcing powers
   in the areas of waste management, nature protection, industrial pollution control and risk
   management, chemicals and genetically and modified organisms. Directorates within the
   authority will be responsible for habitats and species conservation, pollution control and
   abatement, waste management policy and regulation as well as inspection and enforcement.
   This authority will also take over the current responsibilities of the Environment Protection
   Department within the Ministry for the Environment.
c) Enact a new Veterinary Services Act and a new Animal Welfare Act.




DRAFT                                                                                        220
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Horizontal
a) Subsidiary legislation under the Development Planning Act to fully transpose Directive
   85/337/EEC (assessment of the effects of certain public and private projects on the
   environment) and its amendment will be adopted and enter into force.
b) Amendments to the Development Planning Act will be adopted by Parliament by the second
   quarter of the year 2001. These amendments will enhance public access to information and
   thus enable wider participation in policy preparation and increasing public awareness.
c) Subsidiary legislation under the new Environment Protection Act to fully transpose Directive
   90/313/EEC (freedom of access to information on the environment) will be adopted and
   enter into force by the third quarter of 2001.
d) As regards reporting, subsidiary legislation under the new Environment Protection Act will
   be adopted and enter into force as from the third quarter of 2001 and the fourth quarter of
   2002.

International Co-operation
a) Subsidiary legislation under the new Environment Protection Act to fully transpose Decision
   88/540/EEC regarding the Montreal Protocol will be adopted and enter into force by the
   fourth quarter of 2001.

Air Quality Legislation
a) Subsidiary legislation under the new Environment Protection Act transposing Directive
   96/62/EC (ambient air quality assessment and management) and Directive 99/30/EEC
   (repealed Directive 80/779/EEC, Directive 82/884/EEC and Directive 85/203) (limit values
   for sulphur dioxide, nitrogen dioxide and oxides of nitrogen, particulate matter and lead in
   ambient air) will be adopted and enter into force by the fourth quarter of 2001.
b) Subsidiary legislation under the new Environment Protection Act transposing Directive
   80/779/EEC (air quality limit values and guide values for sulphur dioxide and suspended
   particulates) will be adopted and enter into force by the fourth quarter of 2001.
c) Subsidiary legislation under the new Environment Protection Act transposing Directive
   82/884/EEC (limit value for lead in the air) will be adopted and enter into force by the fourth
   quarter of 2001.
d) Subsidiary legislation under the new Environment Protection Act transposing Directive
   85/203/EEC (air quality standards for nitrogen dioxide) will be adopted and enter into force
   by the fourth quarter of 2001.
e) Subsidiary legislation under the new Environment Protection Act transposing Directive
   92/72/EEC (air pollution by ozone) will be adopted and enter into force by the fourth quarter
   of 2001.
f) Another sulphur dioxide monitor and other auto-analytical instrumentation will be installed
   by the fourth quarter of 2001.




DRAFT                                                                                         221
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




g) Subsidiary legislation under the new Environment Protection Act transposing Directive
   97/68/EEC (emission of gaseous and particulate pollutants from internal combustion engines
   to be installed in non road mobile machinery) will be adopted and enter into force by the
   fourth quarter of 2001.
h) The monitoring of ambient air lead levels in line with Directive 99/30/EEC will be initiated
   during the third quarter of 2001 following the conclusions of a preliminary assessment of air
   quality.
i)   An auto-analytical chemiluminescence unit provides measurements of ambient air levels of
     nitrogen oxides and the passive tube sampling network provides monthly averages of
     ambient air levels of nitrogen oxide. Another auto-analytical nitrogen dioxide monitor and
     other auto analytical instrumentation will be installed by the fourth quarter of 2001.
j)   Another auto-analytical ozone monitor and other auto-analytical instrumentation will be
     installed by the fourth quarter of 2001.
k) The Malta Transport Authority will be the competent authority responsible for type approval
   certification accompanying mobile machinery. The Authority, which was established in
   August 2000, will reach full capacity by the fourth quarter of 2001.
Water Quality
a) Amendments to the Sewer Discharge Control Regulations to fully transpose Directive
   93/481/EEC (formats for the presentation of national programmes as foreseen by Article 17
   of directive 91/271/EEC) will be adopted and enter into force by the fourth quarter of 2001.
b) Subsidiary legislation under the new Environment Protection Act transposing Directive
   91/676/EEC (protection of waters against pollution caused by nitrates from agricultural
   sources) will be adopted by the fourth quarter of 2001.
c) Subsidiary legislation under the new Environment Protection Act and amendments to the
   Sewer Discharge Control Regulations will be adopted and enter into force by the fourth
   quarter of 2001 to transpose Directive 82/176/EEC (mercury discharges by the chlor-alkali
   electrolysis industry), Directive 83/513/EEC (cadmium discharges), Directive 84/156/EEC
   (mercury discharges by sectors other then the chlor-alkali electrolysis industry), Directive
   84/491/EEC (discharges of hexachlorocyclohexane), Directive 86/280 (discharges of certain
   dangerous substances included in List 1 of the Annex to Directive 76/464/EEC), Directive
   88/347/EEC (amending Annex II to Directive 86/280/EEC) and Directive 90/415 (amending
   Annex II to Directive 86/280/EEC)
d) Subsidiary legislation under the new Environment Protection Act transposing Directive
   75/440/EEC (quality required of surface water intended for the abstraction of drinking water
   in the member states), Directive 77/795/EEC (exchange of information on the quality of
   surface fresh water in the Community) and Directive 79/869/EEC (measurement and
   frequencies of sampling and analysis of surface water) will be adopted and enter into force
   by the third quarter of 2001.
e) Subsidiary legislation under the new Environment Protection act transposing Directive
   78/659/EEC (quality of fresh waters needing protection or improvement in order to support




DRAFT                                                                                        222
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




    fish life) and Directive 79/923/EEC (quality required of shellfish waters) will be adopted and
    enter into force by the third quarter of 2001.
f) The Department of Public Health will be issuing the necessary tenders by 2001 to procure all
   the monitoring equipment required to upgrade its microbiological monitoring programme.
g) The Malta Resources Authority will establish a monitoring programme by the fourth quarter
   of 2001 to ensure quality groundwater.
Industrial Pollution Control and Risk Management
a) The Environment Protection Department within the Ministry for the Environment will
   establish regulations and codes of practice and other systems of control in air, water,
   chemicals and industrial risks. The Department will also establish an IPPC Committee by
   the first quarter of 2001.
b) The accreditation directorate within the Malta Standards Authority based on the principles
   laid down in the EN45000 standards will be established by the fourth quarter of 2001 to
   ensure a functional accreditation system in Malta. This will certify activities including
   environmental verifiers.
c) Administrative measures in line with Decision 99/314/EEC (questionnaire relating to
   Directive 96/82/EC) will be in place by the third quarter of 2001.
d) Subsidiary legislation under the new Environment Protection Act transposing Directive
   99/13/EEC (limitation of emissions of volatile organic compounds due to the use of organic
   solvents in certain activities and installations) will be adopted and enter into force by the
   fourth quarter of 2001.
Waste Management
a) Subsidiary legislation under the new Environmental Protection Act transposing Directive
   96/302/EEC (format into which information is to be provided pursuant to Article 8 (3) of
   Directive 91/689/EEC) and Directive 94/904/EEC (list of hazardous waste pursuant to
   Article 1 (4) of directive 91/689/EEC) will be adopted and enter into force by the fourth
   quarter of 2001.
b) Subsidiary legislation under the new Environment Protection Act transposing Directive
   91/689/EEC (hazardous waste) will, be adopted and enter into force by the fourth quarter of
   2001.
c) Subsidiary legislation under the new Environment Protection Act to fully transpose Directive
   75/442/EEC (waste) and its amendments will, be adopted and enter into force.
d) As regards the Acquis on batteries and accumulators, (Cap. 427) subsidiary legislation under
   the Product Safety Act (Cap. 427) introducing provisions regulating labelling and prohibited
   material will be adopted and enter into force.
e) Subsidiary legislation under the new Environment Protection Act implementing the
   provisions of Regulation (EEC) 259/93 (supervision and control of shipments of waste),
   Decision 99/412/EEC (questionnaire for the reporting obligation of member states pursuant
   to Article 41 (2) of Regulation (EEC) 259/93), Decision 94/575/EEC (control procedure




DRAFT                                                                                         223
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




     under Regulation (EEC) 259/93 as regards certain shipment of waste to certain non-OECD
     countries) and Decision 94/774/EEC (standard consignment note referred to in Regulation
     (EEC) 259/93) will be adopted and enter into force by fourth quarter of 2001.
f) A legal transposition plan will be compiled by the second quarter of 2001, following the
   finalisation of the Integrated Solid Waste Management Strategy Plan for Malta. This plan
   will provide the time frames for the issuing of new subsidiary legislation to transpose the
   Acquis in this area.
g) The incinerator at St Luke’s Hospital will be replaced by a thermal treatment facility by the
   fourth quarter of 2001. A clinical waste treatment unit will be set up by the fourth quarter of
   2001.
h) Subsidiary legislation under the new Environment Protection Act transposing Directive
   78/176/EEC (waste from the titanium dioxide industry), Directive 82/883/EEC (surveillance
   and monitoring of environments concerned by waste from the titanium dioxide industry) and
   Directive 92/112/EEC (harmonising the programmes for the reduction and eventual
   elimination of pollution caused by waste from the titanium dioxide industry) will be adopted
   and enter into force by the third quarter of 2001.
i)   Subsidiary legislation under the new Environment Protection Act transposing Directive
     89/369/EEC (prevention of air pollution from new municipal waste incineration plants) and
     Directive 89/429/EEC (reduction of air pollution from existing municipal waste-incineration
     plants) will be adopted and enter into force by the fourth quarter of 2001.
j)   Subsidiary legislation under the Product Safety Act transposing Decision 97/129/EEC
     (identification system for packaging materials pursuant to Directive 94/62/EC) will be
     adopted and enter into force by the fourth quarter of 2001.
Nature Protection
a) The Trade in Species of Flora and Fauna Regulations partly transpose the provisions of
   Regulation (EC) 1968/99 (suspending the introduction into the Community of specimens of
   certain species of wild fauna and flora). Subsidiary legislation under the new Environment
   Protection Act to implement the provisions of this Regulation will be adopted and enter into
   force by the third quarter of 2001.
c) Subsidiary legislation under the new Environment Protection Act to implement the
   provisions of Regulation (EC) 338/97 (protection of species of wild fauna and flora by
   regulating trade therein), Regulation (EC) 2473/98 (specimens of certain species of wild
   fauna and flora), Regulation (EC) 2307/97 (protection of species of wild fauna and flora by
   regulating trade therein), Regulation (EC) 939/97 (rules concerning the implementation of
   Regulation (EC) 338/97) and its amendment, Regulation (EC) 2551/97 (suspending the
   introduction into the Community of specimens of certain species of wild fauna and flora),
   Regulation (EEC) 3254/91 (prohibiting the use of leghold traps), Directive 83/129 EEC
   (importation into Member States of skin of certain seal pups and products derived
   therefrom), Decision 35/97/EEC (certification of pelts and goods covered by Regulation
   (EEC) 3254/91) and Decision 97/602/EEC (list referred to in the second subparagraph of




DRAFT                                                                                         224
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




    Article 3(1) of Regulation (EEC) 3254/91 and in Article 1(1a) of Regulation (EC) 35/97)
    will be adopted and enter into force by the third quarter of 2001.
c) Malta will accede to the Bonn Convention by the second quarter of 2001.
Chemicals and GMOs
a) A chemicals co-ordination unit will be set up by the fourth quarter of 2001 within the
   Foodstuffs, Chemicals and Cosmetics Directorate of the Malta Standards Authority.
b) Subsidiary legislation under the Product Safety Act to implement the provisions of
   Regulation (EEC) 793/93 (evaluation and control of the risks of existing substances),
   Regulation (EEC) 1488/94 (assessment of risks to men and the environment of existing
   substances in accordance with Regulation (EEC) 793/93), Regulation (EEC) 1179/94/EEC
   (first list of priority substances as foreseen under Regulation (EEC) 793/93), Regulation
   (EEC) 2268/95 (second list of priority substances as foreseen under Regulation (EEC)
   793/93), Regulation (EEC) 142/97 (delivery of information about certain existing substances
   as foreseen under Regulation (EEC) 793/93), Regulation (EEC) 143/97 (third list of priority
   substances as foreseen under Regulation (EEC)793/93), Regulation (EEC) 2161/99 (further
   testing requirements on the importers or manufactures of a certain priority substances as
   foreseen under Regulation (EEC)793/93) will be adopted and enter into force by the second
   quarter of 2001.
c) Subsidiary legislation under the new Environment Protection Act and the Product Safety Act
   to implement the provisions of Regulation (EEC) 2455/92 (export and import of certain
   dangerous chemicals will be adopted and enter into force by the third quarter of 2001.
d) Subsidiary legislation under the Product Safety Act (Cap. 427) transposing Directive
   67/548/EEC (classification, packaging and labelling of dangerous substances), Directive
   98/8/EEC (biocidal products), Directive 84/449/EEC (technical progress for the sixth time of
   Directive 67/548/EEC), Directive 93/67/EEC (assessment of risks to man and the
   environment of substances notified in accordance with Directive 67/548/EEC), Directive
   93/72/EEC (technical progress for the nineteenth time of Directive 67/548/EEC), Directive
   93/90/EEC (list of substances referred to in Article 13(1) (5th indent) Directive 67/548/EEC)
   and Directive 85/71/EEC (list of chemical substances notified pursuant to Directive
   67/548/EEC) will be adopted and enter into force by the second quarter of 2001.
e) The Accreditation Act is expected to be enacted by the year 2001. This will make possible
   the accreditation of laboratories with respect to GMO’s. It will also enable the adoption of
   the GP-Management Audit Scheme regulations and other regulations related to the Eco-
   Labelling Directive.
f) Subsidiary legislation under the new Environment Protection Act will be adopted and enter
   into force by the fourth quarter of 2001 to provide for emissions of asbestos into the air and
   discharges into water in line with Directive 87/217/EEC (prevention and reduction of
   environmental pollution by asbestos).
g) The Reptiles (Protection) Regulations (LN76/92), the Marine Mammals (Protection)
   Regulations (LN77/92) and the Flora and Fauna Protection Regulations (LN49/93) provide a
   permit system for certain wild animals in line with Directive 86/609/EEC (protection of




DRAFT                                                                                        225
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




    animals used for experimental and other scientific purposes). Subsidiary legislation to fully
    transpose this Directive will be adopted and enter into force by the fourth quarter of 2001,
    following the entry into force of the Animal Welfare Act which is expected to be adopted by
    parliament by the first quarter of 2001.
h) Subsidiary legislation under the New Environment Protection Act to fully transpose
   Decision 88/540/EEC (Vienna Convention on protection of ozone layer) will be adopted and
   enter into force by end 2001.
Noise
a) The Motor Vehicles Construction Plant and Equipment Technical Committee will be set up
   by the fourth quarter of 2001 within the Consumer and Industrial Goods Directorate of the
   Malta Standards Authority. This committee will be responsible for the implementation of
   Directive 00/14/EC (noise emission in the environment by equipment for use outdoors),
   whilst the Consumer and Competition Division of the Ministry for Economic Services,
   assisted by the technical committee of the Malta Standards Authority, will be responsible for
   the enforcement of this Directive.
Nuclear Safety and Radiation Protection
a) A technical advisory board will be set up within the Ministry for the Environment by the
   fourth quarter of 2001 to advise the respective departments on the setting of standards,
   guidance documents and codes of practice, acceptance of qualifications and liaision with
   foreign specialist institutions. The board will be composed of representatives from the
   Environment Protection Department within the Ministry for the Environment, the
   Department of Health within the Ministry of Health, the Occupational Health and Safety
   Authority, the scientific community and the private and public sectors. Foreign expertise
   will be sought to assist the regulatory authorities to fully implement the Acquis in this area.
b) Subsidiary legislation under the new Environment Protection Act to fully transpose Directive
   92/3/EURATOM (supervision and control of shipments of radioactive waste between
   member states and into and out of the community) and Directive 93/552/EURATOM
   (standard document for the supervision and control of shipments of radioactive waste
   referred to in Directive 92/3/Euratom) will be adopted and enter into force by the fourth
   quarter of 2001.
c) As regards radio-active contamination of foodstuffs, the Food, Drugs and Drinking Water
   Act (Cap. 231) empowers the Department of Public Health to control foodstuffs. This Act,
   will be replaced by a new Food Safety Act by the fourth quarter of 2001.


Climate Change
a) Malta will ratify the Kyoto Protocol by the fourth quarter of 2001.
Civil Protection
a) The single European Emergency call number (112) will be operational by the fourth quarter
   of 2001.




DRAFT                                                                                           226
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




C. Medium Term Priorities (2002)

Legislative Framework
a) Enact a new Public Health Act.
International Co-operation
a) As regards, the Protocol concerning Specially Protected Areas and Biological Diversity in
   the Mediterranean (Barcelona Convention) (Decision 99/800/EC), subsidiary legislation
   under the Fisheries Management and Conservation Act (Cap. 425) on exploited marine
   species will be adopted and enter into force by the second quarter of 2002.
b) Malta will ratify the European Convention for the Protection of Vertebrate Animals used for
   Experimental and other Scientific Purposes (Decision 99/575/EC) by the second quarter of
   2002. Subsidiary legislation under the Animal Welfare Act transposing the requirements of
   this Convention will be adopted by the second quarter of 2002 and will enter into force by
   the fourth quarter of 2002.

Air Quality Legislation
a)   Subsidiary legislation under the new Environment Protection Act transposing Directive
     98/70/EC (quality of petrol and diesel fuels) will be adopted by the second quarter of 2002
     and will enter into force by the fourth quarter of 2002, except for those provisions relating
     to leaded petrol for which a transitional period may be requested.
b)   Subject to the requests for transitional periods, implement and enforce legislation
     concerning the control of emissions of air pollutants, Air Quality Framework Directive, and
     those relating to the sulphur dioxide, ozone, lead and nitrogen dioxide directives.
c)   Subsidiary legislation under the new Environment Protection Act transposing Directive
     93/12/EEC (sulphur content of certain liquid fuels) and Directive 99/32/EEC (reduction in
     the sulphur content of certain liquid fuels and amending Directive 93/12/EEC) will be
     adopted by the second quarter of 2002 and will enter into force by the fourth quarter of
     2002.
d)   Subsidiary legislation under the new Environment Protection Act transposing Directive
     94/63/EC (volatile organic compound emissions resulting from the storage and distribution
     of petrol) will be adopted by the second quarter of 2002 and will enter into force by the
     fourth quarter of 2002, except for Article 5 on the road tanker fleet for which a transitional
     period may be requested.
Water Quality
a) The action programme required to be in line with the Directive required on pollution caused
   by nitrates (91/676/EEC) will be completed
b) Full compliance with the Bathing water Quality Directive will be attained by end 2002.




DRAFT                                                                                          227
MINISTRY OF FOREIGN AFFAIRS                                          National Programme for the
MALTA                                                                     Adoption of the Acquis
                                                                          August 2001Final Draft




c) Subsidiary legislation under the new Public Health Act to fully transpose Directive
   76/160/EEC (bathing water) will be adopted by the second quarter of 2002 and will enter
   into force by the fourth quarter of 2002.
d) Subsidiary legislation under the new Public Health Act transposing Directive 98/83/EEC
   (quality of water intended for human consumption) will, except for the limited requests
   being madethat may be made in Section Cthis regard, be adopted by the second quarter of
   2002 and will enter into force by the fourth quarter of 2002.
e) Subsidiary legislation under the Malta Resources Authority Act (Cap. 423) transposing
   Directive 80/68/EEC (protection of groundwater against pollution caused by certain
   dangerous substances) will be adopted and enter into force by the second quarter of 2002
f) The Environment Protection Department within the Ministry for the Environment will be
   responsible for implementing the Acquis in this area. An authorisation system (dangerous
   substances in the aquatic environment) on the discharge of treatment plants and other land-
   based sources will be set up by the second quarter of 2002.
Industrial Pollution and Risk Management Legislation
a) Subsidiary legislation under the new Environment Protection Act transposing Directive
   96/61/EEC will be in place by end 2007 in line with the Directive. An integrated approach
   for issuing permits for new installations will be adopted and enter into force by the fourth
   quarter of 2002 except where requests for special arrangements are beingmay be made.
b) Further subsidiary legislation under the new Environment Protection Act transposing
   Decision 99/391/EEC (questionnaire relating to Directive 96/61/EC) will be adopted and
   enter into force by the second quarter of 2002.
c) Regulations for the transposition of the Integrated Pollution Prevention and Control
   Directive will be adopted by end 2002.
d) Regulations with respect to the Major Accidents Directive will be fully implemented by end
   2002, except where a transitional period is beingmay be requested.
e) Subsidiary legislation under the new Environment Protection Act transposing Directive
   88/609/EEC, will except for the requests being made for special arrangements, be adopted
   and enter into force by the second quarter of 2002.
f) Subsidiary legislation under the Malta Standards Authority Act (Cap. 419) to implement the
   provisions of Regulation (EEC) 1836/93 (voluntary participation by companies in the
   industrial sector in a Community eco-management and audit scheme), Decision 97/265/EEC
   (recognition of the international standard ISO 14001:1996 and the European standard EN
   ISO 14001:1996, establishing specification for environmental management systems, in
   accordance with Article 12 of Regulation (EEC) (1836/93) and Decision 97/264/EEC
   (recognition of certification procedures in accordance with Article 12 of Regulation
   (EEC)1836/93) will be adopted and enter into force by the second quarter of 2002
g) Subsidiary legislation under the Malta Standards Authority Act (Cap. 419) implementing the
   provisions of Regulation 880/92/EEC (Community eco-label award scheme), Decision
   98/488/EEC (soil improvers), Decision 94/924/EEC (toilet paper), Decision 94/925/EEC




DRAFT                                                                                       228
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




    (kitchen rolls), Decision 96/461/EEC (washing machines), Decision 96/703/EEC
    (refrigerators), Decision 98/94/EEC (tissue-paper products), Decision 93/326/EEC
    (guidelines for the fixing of costs and fees), Decision 93/517/EEC (standard contract),
    Decision 94/10/EEC (standard summary), Decision 99/178/EEC (textile products), Decision
    98/634/EEC (bed mattresses), Decision 99/10/EEC (paints and varnishes), Decision
    98/178/EEC (textile products), Decision 99/179/EEC (footwear), Decision 99/205/EEC
    (personal computers), Decision99/427/EEC (dishwashers), Decision 99/476/EEC (laundry
    detergents), Decision 99/554/EEC (copying paper), Decision 99/568/EEC (light bulbs),
    Decision 99/698/EEC (portable computers) will be adopted by the second quarter of 2002
    and will enter into force by the fourth quarter of 2002.

Waste Management
a) Subsidiary legislation under the new Environment Protection Act transposing Directive
   94/67/EEC (incineration of hazardous waste) and Directive 97/283/EEC (measurement
   methods to determine the mass concentration of dioxins and furans in atmospheric emissions
   in accordance with Article 7(2) of Directive 94/67/EC) will be adopted by the second quarter
   of 2002 and will enter into force by the fourth quarter of 2002.
b) The Environment Protection Department is the authority responsible for compiling and
   regularly updating inventories of equipment containing PCBs and PCTs. The Department
   will establish a labelling system for PCBs and PCTs by the first quarter of 2002. It will also
   draw up plans by the second quarter of 2002.
c) Subsidiary legislation under the new Environment Protection act to fully transpose Directive
   96/59/EEC (disposal of polychlorinated biphenyls (PCB) and polychlorinated terphenyls
   (PCT) will be adopted by the second quarter of 2002 and will enter into force by the fourth
   quarter of 2002.
d) Subsidiary legislation under the new Environment Protection act transposing Directive
   75/439/EEC (disposal of waste oils) will be adopted and enter into force by the second
   quarter of 2002.
e) Subsidiary legislation under the new Environment Protection Act transposing Directive
   91/157/EEC (batteries and accumulators containing certain dangerous substances) and
   Directive 93/86/EEC (adapting to the technical progress of Directive 91/157/EEC) will be
   adopted and enter into force by the second quarter of 2002.
f) Subsidiary legislation under the new Environment Protection Act transposing Directive
   86/278/EEC (protection of the environment) will be adopted and enter into force by the
   second quarter of 2002.
g) Subsidiary legislation under the new Environment Protection Act transposing Decision
   97/138/EEC (formats relating to the database system pursuant to Directive 94/62/EC) and
   Decision 99/177/EEC (conditions for a derogation for plastic crates and plastic pellets in
   relation to the heavy metal concentration levels established in Directive 94/62/EC) will be
   adopted by the second quarter of 2002 and will enter into force by the fourth quarter of 2002.




DRAFT                                                                                        229
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




h) Subsidiary legislation under the new Environment Protection Act transposing Directive
   94/62/EEC (Packaging and Packaging Waste), will be adopted by the second quarter of 2002
   and will enter into force by the fourth quarter of 2002, except where special arrangements
   are beingmay be requested.
i)   Subsidiary legislation under the new Environment Protection Act transposing Directive
     99/31/EEC (landfill of waste) will be adopted by the second quarter of 2002. Malta will start
     separating hazardous from non-hazardous waste by end 2002. The necessary measures
     required to be in line with Directive 75/442/EEC (waste) and its amendments will be in place
     by the fourth quarter of 2002.
j)   An incineration plant to dispose of animal waste will be installed by the fourth quarter of
     2002.
k) The existing incinerator that is currently used to dispose of waste generated from vessels that
   are undergoing repairs in the harbour, will be closed down by the fourth quarter of 2002.
l)   An authorisation system on the discharge of treatment plants and other land-based sources
     will be set up by the second quarter of 2002.
Nature Protection
a) Subsidiary legislation under the Animal Welfare Act transposing Directive 99/22/EEC
   (keeping of wild animals in zoos) will be adopted by the second quarter of 2002 and will
   enter into force by the fourth quarter of 2002.
b) Subsidiary legislation under the new Environment Protection Act to fully transpose Directive
   92/43/EEC and Decision 97/266/EEC (site information format for proposed Natura 2000
   sites) will be adopted by the second quarter of 2002 and will enter into force by the fourth
   quarter of 2002. In line with Article 22(b) of Directive 92/43/EEC and other international
   conventions, Malta will, due to its particular insular conditions, continue to control the
   introduction of alien species.

Chemicals and Genetically Modified Organisms
a) Implement the Prior Informed Consent Directive by end 2002.
b) Regulations in respect of classification, packaging and labelling of dangerous substances and
   biocides will be implemented by 2002.
c) It is envisaged that an education campaign on GMOs aimed at the general public will be
   designed and implemented, with particular reference to consumers. (Ongoing)
d) Training of government employees who are to implement the Directives will be also
   organised. (Ongoing)
e) A Biosafety Co-Ordinance Committee will be set up within the Ministry for the Environment
   by the second quarter of 2002. This committee will be composed of representatives from the
   Environment Protection Department, the Ministry of Health, the Ministry for Agriculture
   and Fisheries, the Occupational Health and safety Authority and a representative from the
   scientific community. A sub-committee will also be set up by the second quarter of 2002 to




DRAFT                                                                                         230
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




     assist the Biosafety Co-ordinating Committee by collecting data on the contained use of
     GMMs GMOs in line with Directive 90/219/EEC (contained use of genetically modified
     micro organisms) and its amendments. An ad hoc scientific committee will also be set up
     by the second quarter of 2002 to discuss issues in line with Directive 90/220/EEC (deliberate
     release into the environment of genetically modified organism) and its amendment.
f) Subsidiary legislation under the Occupational Health and Safety Authority Act. (Cap. 424)
   will be adopted by the second quarter of 2002 and will enter into force by the fourth quarter
   of 2002 to provide for the handling of asbestos.
g) Subsidiary legislation under the new Environment Protection Act transposing Directive
   90/220/EEC (deliberate release into the environment of genetically modified organisms) and
   its amendment will be adopted by the second quarter of 2002 and will enter into force by the
   fourth quarter of 2002. Due to its geophysical, environmental and demographic
   characteristics, Malta will take the necessary measures to ensure that the implementation of
   this Directive, in particular the deliberate release in GMOs into the environment for research
   and development purposes, will not have an adverse effect on human health and the
   environment.
h) Subsidiary legislation under the new Environment Protection Act to fully transpose Directive
   90/219/EEC (contained use of genetically modified micro-organisms) and its amendments
   and Decision 91/488/EEC (guidelines for classification referred to in Article 4 of Directive
   90/219/EEC) will be adopted by the second quarter of 2002 and will enter into force by the
   fourth quarter of 2002.
i)   Subsidiary legislation under the new Environment Protection Act implementing the
     provisions of Regulation (EC) 2037/00 (repealed Regulation (EC) 3093/94/EEC) (ozone
     depleting substances) will be adopted by the second quarter of 2002. Malta will phase out
     the use of chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) by the fourth
     quarter of 2008 in line with the provisions of the Regulation.
j)   Subsidiary legislation under the New Environment Protection Act will be adopted by the
     second quarter of 2002 and will enter into force by the fourth quarter of 2002. This
     subsidiary legislation will fully transpose Decision 91/274/EEC (list of community
     legislation referred to in Article 10 of Directive 90/220/EEC), Decision 93/596/EEC
     (summary notification information format referred to in Article 9 of Directive 90/220/EEC),
     and its amendment Decision 92/146/EEC (summary notification of information format
     referred to in Article 12 of Directive 90/220/EEC), Decision 93/584/EEC (criteria for the
     simplified procedure considering the deliberate release into the environment of genetically
     modified plants pursuant to Article 6(5) of Directive 90/220/EEC), Decision 94/730/EC
     (establishing procedures for the deliberate release into the environment of genetically
     modified plants pursuant to Article 6(5) Directive 90/220/EEC), Decision 93/572/EEC
     (genetically modified organisms pursuant to Article 13 of Directive 90/220/EEC), Decision
     94/385/EC (genetically modified organism, seed of herbicide-resistant tobacco variety ITB
     1000 OX, pursuant to Article 13 of Directive 90/220/EEC), Decision 94/505/EC (amending
     the Decision of 18 December 1992 concerning the placing on the market of a GMO
     containing product, the vaccine Nobi-Porvac Aujeszky live pursuant to article 13 of
     Directive 90/220/EEC), Decision 96/158/EC (genetically modified organism, hybrid




DRAFT                                                                                         231
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




     herbicide tolerant swede-raoe rape seeds pursuant to Directive 90/220/EEC), Decision
     97/392/EC (genetically modified swede rape pursuant to Directive 90/220/EEC), Decision
     96/281/EC (genetically modified soya beans with increased tolerance to the herbicide
     glyphosate pursuant to Directive 90/220/EEC), Decision 96/424/EC (genetically modified
     male sterile chicory with partial tolerance to the herbicide glufosinate ammonium pursuant to
     Directive 90/220/EEC), Decision 97/98/EC (placing on the market of genetically modified
     maize with the combined modification for insecticidal properties conferred by the Bt-
     endotoxin gene and increased tolerance to the herbicide glufosinate ammonium pursuant to
     Directive 90/220/EEC), Decision 97/393/EC (placing on the market of genetically modified
     swede rape pursuant to Directive 90/220/EEC) and Decision 97/549/Ec EC (T102-test
     pursuant to Directive 90/220/EEC)

Noise
a)   Subsidiary legislation under the Product Safety Act (Cap. 427) transposing Directive
     00/14/EC (noise environment by equipment for use outdoors) (repealing Directive
     79/113/EEC (noise emission of construction plant and equipment), Directive 84/532/EEC
     (provisions for construction plant and equipment), Directive 84/533/EEC (permissible
     sound power level of compressors), Directive 84/534/EEC (tower cranes), Directive
     84/535/EEC (welding generators), Directive 84/536/EEC (power generators), Directive
     84/537/EEC (powered hand-held concrete-breakers and picks), Directive 84/538/EEC
     (lawnmowers), Directive 86/662/EEC (hydraulic excavators, dozers, loaders and excavator-
     loaders) and Directive 86/594/EEC (airborne noise emitted by household appliances) by 2
     January 2002) will be adopted by the second quarter of 2002 and will enter into force by the
     fourth quarter of 2002.
Nuclear Safety and Radiation Protection
a) Subsidiary legislation under the Occupational Health and Safety Authority Act (Cap. 427),
   the new Environment Protection Act and the new Public Health Act transposing Directive
   96/29/EURATOM (basic safety standards for the protection of the health of workers and the
   general public against the dangers arising from ionising radiation) will be adopted by the
   second quarter of 2002 and will enter into force by the fourth quarter of 2002.
b) Subsidiary legislation under the Civil Protection Act and the new Environment Protection
   Act transposing Directive 89/618/ EURATOM (informing the general public about health
   protection measures to be applied and steps to be taken in the event of a radiological
   emergency) will be adopted by the second quarter of 2002 and will enter into force by the
   fourth quarter of 2002.
c) Subsidiary legislation under the Civil Protection Act (Cap. 411) and the new Environment
   Protection Act transposing Decision 87/600/EURATOM (early exchange of information in
   the event of a radiological emergency) will be adopted and enter into force by the second
   quarter of 2002.
d) Subsidiary legislation under the new Public Health Act transposing Directive
   97/43/EURATOM (health protection of individuals against the dangers of ionising radiation




DRAFT                                                                                         232
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




    in relation to medical exposure and repealing Directive 84/466/Euratom) will be adopted by
    the second quarter of 2002 and will enter into force by the fourth quarter of 2002.
e) Subsidiary legislation under the Occupational Health and Safety Authority act transposing
   Directive 90/641/EURATOM (operational protection of outside workers exposed to the risk
   of ionising radiation during their activities in controlled areas) will be adopted by the second
   quarter of 2002 and will enter into force by the fourth quarter of 2002.
f) Subsidiary legislation under the new Food Safety Act implementing the provisions of
   Regulation (EURATOM) 3954/87 (maximum permitted levels of radioactive contamination
   of foodstuffs and of feeding stuffs following a nuclear accident), Regulation (EURTOM)
   944/89 (maximum permitted levels of radioactive contamination in minor foodstuffs
   following a nuclear accident) and Regulation (EURATOM) 2219/89 (special conditions for
   exporting foodstuffs and feeding stuffs following a nuclear accident) will be adopted and
   enter into force by the second quarter of 2002.
g) Subsidiary legislation under the Veterinary Services Act (Cap. 96) implementing the
   provisions of Regulation 770/90/EURATOM (maximum permitted levels of radioactive
   contamination of feedingstuffs following a nuclear accident), Regulation (EEC) 737/90
   (imports of agricultural products originating in third countries following the accident at the
   Chernobyl nuclear power-station), Regulation (EEC) 1661/99 (rules for the application of
   Regulation (EEC) 737/90), Regulation (EC) 727/97 (list of products excluded form the
   application of Regulation (EEC) 737/90) and Regulation (EEC)1983/88 (imports of
   agricultural products originating in third countries following the accident at the Chernobyl
   nuclear power-station) will be adopted by the second quarter of 2002 and will enter into
   force by the fourth quarter of 2002.
h) A contingency plan in line with Directive 89/618/ EURATOM (informing the general public
   about health protection measures to be applied and steps to be taken in the event of a
   radiological emergency) will be drawn up by the Civil Protection Department within the
   Ministry for Home Affairs by the fourth quarter of 2002.
Climate Change
a) Malta will adopt policies and strategies for reducing green house gas emissions by the fourth
   quarter of 2002.
b) Subsidiary legislation under the new Environment Protection Act transposing Decision
   93/389/EEC (monitoring mechanism of Community CO2 and other greenhouse gas
   emissions) will be adopted by the second quarter of 2002 and will enter into force by the
   fourth quarter of 2002, subject to the outcome of the National Communication and the
   classification of current issues which were still unresolved at the United Nations Framework
   Convention on Climate Change (UNFCCC) COP6. The National Communication which is
   being financed by the Global Environment Fund is required in fulfilment of the UNFCCC
   and will be finalised by the second quarter of 2002.




DRAFT                                                                                          233
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




D. Institution Building Needs
The Ministry for the Environment is the principal competent authority responsible for the Acquis
in this area. However, the responsibility for effective implementation of the Acquis requirements
will be shared with several other governmental agencies, particularly the Agriculture
Department, the Department of Public Health, the Drainage Department, the Civil Protection
Department, the Planning Authority, the Malta Standards Authority, the Malta Resources
Authority and the Malta Maritime Authority.
Apart from consolidating and strengthening existing structures, appropriate co-ordinating
systems and procedures will be established in order to ensure effectiveness in dealing with the
different aspects of the Acquis in this area. Moreover, appropriate training is also envisaged.
The full implications of confiscated and seized specimens have to be fully determined, because
although some of the departments involved have the necessary infrastructure to cater for such
confiscated and seized specimens, other departments do not have such housing facilities, nor the
necessary qualified personnel and resources to cater for the maintenance of such flora and fauna.
Some of these issues are outlined under Section 3.4.2 (Agriculture).


Area of Activity                                                  2001        2002        Total

Ministry for the Environment
Environment Protection
Department                          Senior                           -           -            -
                                    Middle                           8           3           11
                                    Other                            2           2            4
                                    Total                           10           5           15

Drainage Department                 Senior                           -           -            -
                                    Middle                           2           3            5
                                    Other                            -           -            -
                                    Total                            2           3            5

Ministry for Home Affairs

Planning Authority                  Senior                           -           -            -
                                    Middle                           4           2            6
                                    Other                            2           -            2
                                    Total                            6           2            8




DRAFT                                                                                        234
MINISTRY OF FOREIGN AFFAIRS                   National Programme for the
MALTA                                              Adoption of the Acquis
                                                   August 2001Final Draft




Area of Activity                           2001      2002         Total

Ministry of Agriculture and
Fisheries                                     -          -            -
Department of Agriculture      Senior         -          -            -
                               Middle         -          3            3
                               Other          -          -            -
                               Total          -          3            3

Ministry of Health
Environmental Health Branch    Senior        -            -           -
                               Middle        7            -           7
                               Other         -            -           -
                               Total         7            -           7

Waste Management               Senior        -            -           -
                               Middle        3            -           3
                               Other         -            -           -
                               Total         3            -           3

Nuclear Safety                 Senior        -            -           -
                               Middle        3            -           3
                               Other         -            -           -
                               Total         3            -           3



E. Financial Requirements
                                                                  Lm000
Area of Activity                           2001       2002        Total

Ministry for the Environment
Environment Protection
Department                     Recurrent    100         100          200
                               Capital      200         100          300
                               Training      20          20           40
                               Total        320         220          540

Drainage Department            Recurrent     10          30           40
                               Capital        -           -            -
                               Training       -           5            5
                               Total         10          35           45




DRAFT                                                                235
MINISTRY OF FOREIGN AFFAIRS                 National Programme for the
MALTA                                            Adoption of the Acquis
                                                 August 2001Final Draft




                                                             Lm000
Area of Activity                          2001      2002       Total

Ministry for Home Affairs
Civil Protection Department   Recurrent     -           -            -
                              Capital      20          30           50
                              Training      -           -            -
                              Total        20          30           50

Planning Authority            Recurrent    25          25           50
                              Capital      50          50          100
                              Training     10          10           20
                              Total        85          85          170

Ministry of Agriculture and
Fisheries
Department of Agriculture     Recurrent    20          20           40
                              Capital      50           -           50
                              Training     15          15           30
                              Total        85          35          120

Ministry of Health
                              Recurrent   100         200          300
                              Capital     100          50          150
                              Training     30          30           60
                              Total       230         280          510




DRAFT                                                              236
        MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
        MALTA                                                                      Adoption of the Acquis
                                                                                   August 2001Final Draft




3.6.2   Consumer and Health Protection

        A. Current Status
        The main piece of Maltese legislation, which directly protects the general interests of the
        consumer, is the Consumer Affairs Act (Cap. 378). Its principal aim is to establish and regulate
        the role of the Department for Consumer Affairs, the Consumer Affairs Council and the
        Consumer Claims Tribunal. Other laws, which relate to some aspect of consumer protection
        include the Door-to-Door Salesman Act (Cap. 317), the Trade Descriptions Act (Cap. 313) and
        the Weights and Measures Ordinance (Cap. 39).
        The Consumer Affairs (Amendment) Act (Act XXVI of 2000) enacted in October 2000 and
        came into force in January 2001. This Act incorporates the EU consumer protection Directives
        on misleading advertising (EEC 84/450), comparative advertising (EEC 97/55) and doorstep
        selling. These were brought into force in January 2001. The Act also incorporates Directive
        98/27/EC on injunctions to protect consumer interests, which will come into force in 2001.
        During the year 2000, Articles 1-14, 43, 48-55,94-110 (excluding 94(1)(a) of Clause 15 as well
        as Clauses 17 & 18), were brought into force (LN267/00). The Consumer Claims Tribunal
        (Amendments) also amended the fees payable in the Tribunal in view of increase in competence
        of the said Tribunal(LN2284/00). Furthermore it also includes the legislation to fully transpose
        Directives regarding product liability (EEC 85/374), unfair contract terms (EEC 93/13), the sale
        of consumer goods and associated guarantees (EEC 99/44). The Consumers Affairs
        (Amendment) Act also includes enabling provisions regarding consumers credit legislation.
        Draft regulations regarding distance selling were prepared during the last quarter of 2000 Draft
        new law and new regulations were also prepared during the fourth quarter of 2000 regarding
        price indications. The Quality Control (exports, Imports and Local Goods) Act (Cap. 225) was
        repealed by the Product Safety Act (Act V of 2001). The Dangerous Imitations Directive was
        issued under this Act and adopted in January 2001.
        Subsidiary legislation on Package Travel and Package Holidays and Package Tours Regulations
        2000 that were modelled on Council Directive 90/314/EEC were published in the third quarter of
        2000. The Protection of Buyers in Contracts for Time Sharing of Immovable Property
        Regulations, based on Council Directive 94/47/EC was published in November 2000. These
        Legal Notices will be brought into force by the second last quarter of 2001.
        The full implementation of the provisions of the Product Safety Directive require the creation of
        new structures and training. Hence the implementation of this Directive will be introduced in a
        series of programmed stages in order to ensure capability of enforcement. During 2000,
        following the operations review of the Ministry of Economic Services, the necessary structures
        were established. In July 2000, the parliament approved an Act to amend the Malta
        Standardisation Act (Cap. 187). These amendments ensure separation of incompatible roles ,
        namely involvement in legislation, enforcement and market surveillance, and bring the Act in
        line with the Acquis. The Malta Standards Authority(MSA) was reorganised through a series of
        functionally independent Directorates, thus ensuring that the Risk Assessment (advisory)
        component is covered.




        DRAFT                                                                                        237
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




Units were established during the year 2000 in the areas of certification services, metrology,
standardisation and notification.
The Consumer and Competition Division was established within the Ministry for Economic
Services ensuring that the Risk Management (enforcement) component is adequately covered.
The establishment of the Market Surveillance Directorate within the Economic Policy Division
of the Ministry for Economic Services covers the co-ordination and auditing functions.



B. Short Term Priorities (2001)
a) The provisions on misleading advertising , consumer advertising and doorstep selling will
   enter into force in the first quarter of 2001.
b) The provisions implementing the Injunctions Directive will enter into force during 2001.
c) The Package Travel and Timeshare Directives will be brought into force by the second last
   quarter of 2001.
d) Enforcement aspects related to package travel and timeshare will be dealt with by the Malta
   Tourism Authority (Enforcement Directorate), which will achieve full capacity by the
   second first quarter of 20012.
e) The Product safety Act is expected to be published in the near future.
f) The structures that have been established within the Ministry for Economic Services will be
   fully consolidated during 2001

C. Medium Term Priorities (2002)
a) The relevant legislative measures to comply with the Directives on product liability, unfair
   contract terms, the sale of consumer goods and associated guarantees, consumer credit,
   distance selling and price indication will enter into force by the second quarter of 2002.
b)   The legislation and regulations necessary to comply with the Directives on dangerous
     imitations and general product safety will enter into force by the fourth quarter of 2002.
c)   Implement a comprehensive educational and informative programme to increase consumer
     awareness.

D. Institution Building Needs
An extensive Operations Review within the Ministry for Economic Services has been carried out
in order to establish the necessary elements for the effective implementation and enforcement of
the Acquis. As a result, a Market Surveillance Directorate was established within the Economic
Policy Division of the Ministry, which will have the overall responsibility for the co-ordination
of Market Surveillance activities across Government, the development of an annual programme
and a year-end review of all surveillance activities. A Surveillance Committee will also be
established. The Directorate is in the process of recruiting the necessary technical staff.




DRAFT                                                                                        238
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Following the Operations Review, the Consumer and Competition Division was established.
This Division is largely the main administrative structure responsible for the implementation and
enforcement of consumer protection legislation. It will also be responsible for the enforcement of
the Product Safety legislation. On the other hand, the Ministry for Tourism and the Malta
Tourism Authority (MTA) are the competent authorities to implement and enforce the new
regulations on package travel and timeshare. The Enforcement Directorate of MTA is being
strengthened. The Malta Standards Authority (Establishment of Directorates) order, 2000 CLN
213/00) which was published in October 2000 provides for the setting up of three functionally
independent directorates within the MSA - the Consumer and Industrial Goods, the Foodstuffs,
Chemicals and Cosmetics and the Standardisation Directorates. A Metrology Directorate and an
Accreditation Direectorate will be set up during 2001.



Area of Activity                                                  2001        2002         Total

Ministry for Tourism
                                     Senior                           -            -           -
                                     Middle                           1            -           1
                                     Other                            -            -           -
                                     Total                            1            -           1

Ministry for Economic Services
Market Surveillance Directorate      Senior                           3            -           3
                                     Middle                           2            -           2
                                     Other                            -            -           -
                                     Total                            5            -           5

Consumer Affairs                     Senior                           -            -           -
                                     Middle                           4            -           4
                                     Other                            -            -           -
                                     Total                            4            -           4



E. Financial Requirements
                                                                                           Lm000
Area of Activity                                                  2001        2002         Total

Ministry for Tourism
                                     Recurrent                       10          10           20
                                     Capital                          -           -            -
                                     Training                         -           -            -
                                     Total                           10          10           20




DRAFT                                                                                         239
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




Ministry for Economic Services
Market Surveillance Directorate     Recurrent                       60             75         135
                                    Capital                          5              -           5
                                    Training *                      30             30          60
                                    Total                           95            105         200

Consumer Affairs                    Recurrent                       30             30           60
                                    Capital                          -              -            -
                                    Training                        10              5           15
                                    Total                           40             35           75

(*) Mainly representing training assistance under pre-accession funds.




DRAFT                                                                                           240
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




3.7 Justice and Home Affairs


A. Current Status

Justice
Malta has always, within its capacity, co-operated fully in the field of Justice and is striving to
amplify this co-operation by adopting EU legislation into its domestic law.
In the field of Judicial Co-operation in Criminal Matters, Malta has already ratified the following
Conventions:
     European Convention on Extradition (Paris, 13 December 1957)
     European Convention on Mutual Assistance in Criminal Matters (Strasbourg,
      20 April 1959)
     Convention on the Transfer of Sentenced Persons (Strasbourg, 21 March 1983)
These Conventions came into force in 17 June 1996, 1 June 1994 and on 1 July 1991
respectively.
In November 1999 Malta ratified the European Convention of 8 November 1990 on Money
Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, relating to Organised
organised Crimecrime, Fraud fraud and Corruptioncorruption, which is also relevant for judicial
co-operation in penal matters. This Convention came into force in the first quarter of 2000.
In 1999, Parliament enacted legislation enabling Malta to ratify the following Conventions
relevant to Judicial Co-operation in Civil Matters:
     Convention on the Civil Aspects of International Child Abduction (The Hague, October
      1980);
     European Convention on Recognition and Enforcement of Decisions Concerning
      Custody of Children and on Restoration of Custody of Children (Luxembourg, May
      1980).
These Conventions came into force in 2000. Conventions relating to Judicial Co-operation in
Civil Matters will be signed after the necessary amendments of Maltese legislation are approved
by Parliament. A draft of the necessary legislation is being prepared.
The Additional Protocols to the European Convention on Extradition together with the
Additional Protocol to the European Convention on Mutual Legal Assistance in Criminal matters
were signed on 20 November 2000. The former was also ratified in November 2000.
Amendments to the Interpretation Act (Cap. 249) were adopted to be in conformity with the
provisions on the Convention on Extradition between the Member States of the EU (1996).
Malta has ratified the Convention on the Transfer of Sentenced persons (1983) and the European
Convention on Mutual Assistance in Criminal Matters (1959). Malta seeks to participate in the




DRAFT                                                                                          241
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




exchange of liaison magistrates. As from the fourth quarter of 2000, Malta started to participate
as an observer in certain activities of the European Judicial Network.
Government is also studying the possibility of Malta becoming a member of the Council of
Europe Agreement regarding the Group of States Against Corruption (GRECO).
The Ministry of Justice has organised introductory courses on the nature of EU legislation and
legal structures and the application of such legislation at national level. These courses were held
for the legal staff within the Attorney General’s Office in August 2000 and for the Judiciary in
September 2000. Plans are underway to organise additional courses on specialised subjects.
Malta is proposing that Article 42 of the Convention on Jurisdiction, Recognition and
Enforcement of Judgements on Matrimonial Matters (1998) be extended to Malta, as has been
done for Portugal, Italy and Spain in view of the agreement between Malta and the Holy See of
1993 and the Second Additional Protocol of 1995.

Home Affairs
Malta is generally well equipped to take on the responsibilities and obligations of full EU
membership in the areas relating to Home Affairs with regards to both its organisational as well
as its legislative aspects. Furthermore, Malta is taking steps to make the necessary adjustments
in areas which are not fully in line with the requirements of the Acquis. Consultations with
various interested bodies (including UNHCR and the EU Commission) on the Refugee law have
been concluded and the necessary legislation regarding refugees and asylum seekers has been
enacted (Refugees Act (Cap.420). Administrative structures related to refugees legislation are
being set up. The Refugees Commissioner as well as the Chairman and members of the Appeals
Board were selected. They are expected to be appointed as soon as Refugees Law comes into
effect. The regulations emanating from the Act regarding the procedures of the Appeals Board,
the process of application, identification of applicants and other matters have been drafted.
Furthermore, the European Convention on Money Laundering, Search, Seizure and Confiscation
of the Proceeds of Crime was signed by Malta on 5 November 1998 and ratified on 19 November
1999. This Convention came into force in the first quarter of 2000.
The Malta Citizenship (Amendment) Act (Act IV of 2000) has made important changes to
Malta’s legislation. It permits foreigners marrying Maltese nationals to apply for Maltese
citizenship after five years living together as married couple or, if separated, upon proof that they
had lived together for at least five years.
Malta has already taken other positive initiatives in the recent past to update its laws and
administrative set-ups and co-operate regionally and internationally in combating economic
offences, organised crime and illegal trafficking in drugs. In this regard, enactment of the Money
Laundering Act (Cap. 373) and the Security Services Act (Cap. 318) and the various
amendments to the Dangerous Drugs Ordinance (Cap. 101) and the Medical and Kindred
Professions Ordinance (Cap. 31) achieved compliance with ratified conventions and agreements
and in particular with the 1988 UN Vienna Convention on Illicit Drug Trafficking to which
Malta acceded in 1996. Furthermore, the Dangerous Drugs Ordinance has been amended and on
14 September 2000, the Council of Europe Agreement on Illicit Trafficking by Sea was signed.




DRAFT                                                                                           242
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Malta has also ratified a number of other important agreements, including the International
Opium Convention (The Hague, 1912), Single Convention on Narcotic Drugs (New York, 1961),
Convention on Psychotropic Substances (Vienna 1971), and the Protocol Amending the Single
Convention on Narcotic Drugs (Geneva 1972).
Malta is a party to the European Convention on the Suppression of Terrorism (1977) and on 13
December 2000, Malta signed the United Nations Convention Against Transnational Organised
Crime (2000).
Malta has made representations to EUROPOL for possible co-operation with this organisation
through a bilateral agreement prior to accession. This bilateral agreement would give Malta an
observer status until membership.
In the fight against drugs and organised crime Malta has also signed a number of bilateral
agreements with the following countries: Egypt, France, Italy, Libya, Russia, Spain, Israel,
Cyprus, Turkey, Slovakia and Hungary. Moreover, a Readmission Agreement has been
concluded with Italy and is expected to be formally signed in 2001. Negotiations are still in
progress with a number of other countries to sign similar agreements. Active co-operation in this
matter also exists with a number of international organisations including, Interpol and the DEA
as well as with various police forces in countries with which Malta has concluded bilateral
agreements. The National Drugs Intelligence Unit has been participating in the UN HONLEA
conferences and those of the Pompidou Group of the Council of Europe.
Internally, Malta’s policy for combating drug trafficking and abuse aims at prevention and law
enforcement, whilst internationally it aims at co-operating with other countries and international
organisations. The agencies directly concerned are the Police Force, the Security Service
(including the National Drugs Intelligence Unit), the Customs Department and the Armed
Forces. The National Drugs Intelligence Unit (NDIU) is the central agency which collates,
evaluates and analyses the information received from various sources and disseminates
intelligence packages to the other enforcement agencies. This function has been taken over by
the Security Service which has also absorbed the NDIU. The Police Department includes an
Economic Crimes Unit and a Drugs Squad, both of which are very active and co-operate
internally between themselves and other police units and also with other related enforcement
agencies such as Customs and the Armed Forces of Malta (AFM). In recent years human
resources have been considerably increased and upgraded, but would need to be further boosted
in view of the obligations emanating out of EU membership. Training of staff and upgrading of
services and equipment for the Malta Security Service has been provided. The co-ordination
between Police and AFM is being enhanced. The Malta Police have participated in a number of
horizontal EU programmes/projects, including OISIN, MEDA 1, and FALCONE. Malta will
participate also in GROITUS and STOP programmes. Malta also wishes to participate in the
STOP and ODYSSEUS Programmes before accession.
Malta will become a party to the Convention and Protocols on the protection of the European
Communities Financial Interests on accession. Fraud is already considered as an offence under
the Criminal Code (Cap. 9).
Malta agrees with the principles of the Schengen Acquis and on accession Malta intends to fully
participate in the Schengen Information System. A project group has been set up which, with the




DRAFT                                                                                         243
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




possible assistance and expertise of EU Member States, will be responsible for the identification
of the requirements in relation to the Schengen Information System as well as other issues
relating to the harmonisation of visas, residence and work permits. At present, the Maltese
Authorities are working with French officials on matters relating to the Schengen Acquis. In June
2000, French immigration experts visited Malta to advise the Malta Police on the requirements
of Schengen. These contacts are being maintained and further exchanges are expected in future.
Furthermore, Malta International Airport has prepared a detailed feasibility study on the
implications of the implementation of the Schengen Agreement at the Airport. The Malta
Maritime Authority is carrying out a similar exercise with respect to seaports.
As regards firearms and ammunition, the drafting of a new Arms Act replacing the Arms
Ordinance (Cap. 66) and incorporating a number of requirements under the Schengen Agreement
is at an advanced stage.As regards firearms and ammunition, the drafting of an updated law
amending the Arms Ordinance (Cap. 66) and incorporating a number of requirements under the
Schengen Agreement is at an advanced stage.
The Act on refugees and asylum seekers includes the creation appointment of a Refugee
Commissioner to examine applications for refugee status and a separate Refugee Appeals Board.
The law provides also for procedures relating to applications for refugee status, the prohibition
of refoulement, treatment of asylum seekers, rights of refugees, children or young persons in
need of care and resettlement of refugees. The legislation brings Malta in line with international
obligations under the Geneva Convention on Refugees. The provisions of the Dublin Convention
determining the state responsible for examining applications for asylum lodged in one of the
member states will enter into force on accession.
One of the main issues arising as a result of the enactment of a law on refugees is the question of
resettlement of refugees. Under the existing system both the question of recognition of refugee
status and the consequent resettlement obligations are to be dealt with by UNHCR regional
office in Rome and which is represented in Malta by the Migrant’s Commission, an NGO. This
would no longer be the case once the Refugee Law comes into force as such responsibilities and
obligations will be assumed by the Maltese Government. Given the Islands’ geographic position,
its smallness, and its economic and demographic situations the problem could develop into a
major area of concern in the future, especially in consequence of a possible large surge in the
number of asylum seekers following some regional political crisis. In this regard, it is envisaged
that assistance from the EU would be required.
Malta has a visa abolition agreement with a number of countries, which include most members
of the Council of Europe. Malta would have to align itself with the EU common visa policy on
accession. This is not considered as presenting particular difficulties as in large areas Malta’s
policies on visa are already at par with those of the EU. Embarkation cards are no longer
required for both Maltese and non-Maltese nationals. Disembarkation cards continue to be
required by non-Maltese nationals. No particular problems are anticipated with regards to the
elimination of the need by EU nationals to fill in disembarkation cards on arrival to Malta and
the establishment of an EU Channel at border controls by the time of accession.
The passport system has been upgraded and now includes several new security features including
digitised images and machine-readable passports.




DRAFT                                                                                          244
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




As from 2000, representatives of the Ministry for Home Affairs started participating in CIREA
and CIREFI thus taking part in discussions with Member States and other Applicant States on
issues relating to immigration and asylum.
The pertinent issues relating to free movement of persons are dealt with under Section 3.1.2
(Free Movement of Persons).
Malta is a party to the European Convention for the Protection of Human Rights and
Fundamental Freedoms (1950), the UN Convention on the Elimination of All Forms of Racial
Discrimination (1966), the European Convention on the Prevention of Torture and Inhuman or
Degrading Treatment or Punishment (1987), the UN Convention on the Rights of the Child
(1989) and Protocol 6 concerning the Abolition of the Death Penalty of 1983.

Customs Mutual Assistance and Administrative Co-operation
The Customs Department abides by the provisions of the Professional Secrecy Act (Cap. 377)
where the transmission of data is concerned. The legal basis in this area will be strengthened
with the enactment of the forthcoming data protection legislation being discussed in Parliament.
Issues relating to data protection are discussed under Section 3.1.3 (Free Movement of Services).
The Customs Investigations Branch is presently guided by the Recommendation for Mutual
Administrative Assistance which was issued by the Customs Co-operation Council. The Customs
Investigations Branch together with the constituted bodies have been studying in detail the
possibility for Malta acceding the Nairobi Convention. This would place exchange of
information between Customs administrations on a legal basis. In Accordance with Article 18 of
this Convention, Malta will be acceding to the Convention and all the Annexes with the
exception of Annexes V and VII. Other areas in which the Customs Department is involved in
the exchange of information is through the CIS, MARINFO Sud and Scent Systems. At a
national level, co-operation between Customs, Police and AFM has also been enhanced with the
introduction of the National Drug Intelligence UnitMalta Security Services.
Malta has also signed an agreement with Italy on Mutual Assistance for the Prevention,
Investigation and Repression of Customs Offences on 11 April 2000. A Memorandum of
Understanding with the United Kingdom on Mutual Administrative Assistance between the two
countries’ Customs administrations was signed on 27 June 2000. Malta ratified the International
Convention on Mutual Administrative Assistance for the Prevention, Investigation and
Repression of Customs Offences (1977) in 2000.

Data Protection and Information Society
Although no specific legislation on data protection is presently available, a draft Data Protection
and Privacy Bill has been completed. This takes account of the main provisions of the Acquis in
this field and is primarily based on the Swedish Personal Data Act (1998). In addition, an
Electronic Communications and Transactions Bill, based on the proposed Electronic Signature
Directive, the Directive on Certain Legal Aspects on Electronic Commerce and the UNCITRAL
Model Law, as well as a Computer Misuse Bill, which takes into consideration the Conditional
Access Directive, have been drafted. These three Draft Bills were published as part of a White
Paper on information practices that was issued in May 2000.




DRAFT                                                                                          245
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




With regard to the information society directives, compliance will be attained through policy and
administrative changes. It is not envisaged that new legislation will be required in this area.
There is no legislation restricting the standards used by Internet service providers. An annual
license is required for registration purposes. The Maltese Government has already put in place a
fully fledged IT network system that includes all government departments and Local Councils.

B. Short Term Priorities (2001)

Justice
a) An Act to enable Government to ratify a number of conventions on judicial co-operation in
   civil matters will be adopted by Parliament. The Act will refer to the Convention on the
   Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters
   (1965), the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters
   (1970), the Convention on International Access to Justice (1980) and the Convention on
   Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters (1988). The
   Act will also enable Malta to accede to the EU Convention on the Service in the Member
   States of Judicial and Extrajudicial Documents in Civil or Commercial Matters (1997) and
   the Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial
   Matters (1968).
b) The legislative amendments to extend the scope of the Criminal Code dealing with bribery of
   officials in Government Service, in order to include provisions relating to bribery of officials
   of both foreign Governments and international organisations will be submitted for
   Parliament’s approval. This will be followed by the ratification of the relative Organisation
   for Economic Co-operation and Development (OECD) and Council of Europe Conventions,
   which is envisaged to be made by mid 2001.
c) Amendments to he Criminal Code (Cap. 9) will be adopted by Parliament by the second
   quarter of 2001 and will enter into force by the third quarter of 2001. These amendments will
   also make provision for a simplified extradition procedure in line with the Convention in line
   with the Convention on Simplified Extradition Procedures between the Member States of the
   European Union (1995). These amendments will also bring Maltese legislation in line with
   the Joint Action of 29 December 1998, making it a criminal offence to participate in a
   criminal organisation in the member states of the European Union. The amendments will
   also provide for the Joint Action of 15 July 1996 concerning action to combat racism and
   xenophobia. (This is discussed under Section 3.5.1(Social Policy and Employment)).
d) Continue the training programme on EU Legislation and Legal Procedures for the Judiciary
   and for the personnel at the Attorney General’s Office.(Ongoing)
e) Maltese legislation is broadly in line with the requirements of the Civil Law Convention on
   Corruption (1999). Amendments to the Civil Code (Cap. 16) will be adopted by the fourth
   quarter of 2001 to bring the Act fully in line with the provisions of this Convention.
f) Ratify the Additional Protocol to the European Convention on Mutual Legal assistance in
   Criminal Matters.




DRAFT                                                                                          246
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




Home Affairs
a)Ratification of the Europe Agreement on Illicit Trafficking by Sea.
b)a)The White Paper concerning the new firearms legislation is expected to be issued in the           Formatted: Bullets and Numbering
    second quarter of 2001. The Arms Act will be adopted in order to replace the Arms
    Ordinance (Cap. 66).
c)b)Finalise a co-operation agreement with Sweden in the fight against organised crime and drug
    trafficking.
d)c)The Refugees Act (Cap. 420) will enter into force by the second quarter of 2001.
e)d)Malta will lift the geographical reservation made on accession to the Geneva Convention by
    the second quarter of 2001, following the setting up of the necessary administrative
    structures provided for in the Refugees Act.
f)e) Subsidiary legislation under the Refugees Act covering the application for a declaration of a
     refugee status, the procedures for identification and fingerprinting of applicants for asylum
     and the procedures relating to the Refugees Appeals Board will be adopted and will enter
     into force by the second quarter of 2001.
g)f) A reception centre for asylum seekers will be set up by the second quarter of 2001. The
     Ministry for Home Affairs is working in conjunction with the Emigrants’ Commission,
     currently the non-governmental organisation dealing with asylum seekers and refugees, in
     the preparations for the setting up of this centre.
Data Protection and Information Society
a) A Data Protection Act providing for the protection of individuals against the violation of
   their privacy and personal integrity by the processing of personal data will be adopted by
   Parliament. Sign the Convention by the Protection of Individuals with regard to the
   Automatic Processing of Personal data (1981).

C. Medium Term Priorities (2002)

Justice
a)   European Convention on the International Validity of Criminal Judgements (The Hague,
     1970) and the European Convention on the Transfer of Proceedings in Criminal Matters
     (Strasbourg, 1972) and the Convention on Jurisdiction, Applicable Law, recognition,
     Enforcement and Co-operation in respect of Parental Responsibility and Measures for the
     protection of Children (1996) will be acceded to in line with the Member States. Malta will
     also adhere to other Conventions, Protocols and Joint Actions with immediate effect while
     others need minor amendments in Maltese legislation. However, almost invariably there
     exist no constitutional problems to accede to the Conventions included in the Justice area of
     the Acquis.
b)   Malta agrees with the principles embodied in the Draft Criminal Law Convention, although
     these are not already contained in Maltese legislation. Amendments will consequently be




DRAFT                                                                                          247
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




     made in order to implement the provisions concerned. The Monetary authorities in Malta
     have also been acquainted with the requirements of this Convention.
c)   Legislation will be adopted by Parliament by the second quarter of 2002 and will enter into
     force on accession This legislation will enable Malta’s ratification of the Convention
     between the Member States on the Transfer of Proceedings in Criminal Matters (1990) and
     of the Convention between Member States on the Enforcement of Foreign Criminal
     Sentences (1991).
d)   During 2002, amendments will be made, where necessary, to bring domestic legislation in
     line with the provisions of the Conventions which Malta can accede only upon accession.
     Maltese law is already compliant with many provisions of the said Conventions.
e)   Malta will be in line with the Convention on the Law Applicable to Contractual Obligations
     (1980), the Joint action concerning measures protecting against the effects of the extra-
     territorial application of legislation adopted by a third country and actions based thereon or
     resulting therefrom (1996), the Convention abolishing the legislation of Documents in
     Member States of the European Communities (1987) and the Convention between the
     Member States of the European Communities on the Simplification of Procedures for the
     Recovery of Maintenance Payments (1990) by the fourth quarter of 2002 following
     amendments to existing legislation.
f)   The necessary legislation to fully implement the Joint Action as regards money laundering        Formatted: Bullets and Numbering
     will be adopted by the second quarter of 2002 and will enter into force by the fourth quarter
     of 2002.
g)   Amendments to the law on extradition will be adopted by the second quarter of 2002 and
     will enter into force by the fourth quarter of 2002.
h)   Subsidiary legislation under the Traffic Regulation Ordinance (Cap. 65) will be adopted by
     the fourth quarter of 2002 to implement the provisions of the Convention on Driving
     Disqualifications (1998). Malta will accede to this Convention on accession.
i)   The Central Bank of Malta Act (Cap. 204) will be amended by Parliament by the third
     quarter of 2002 in line with Council Resolution of 28 May 1999 on increasing protection by
     penal sanctions against counterfeiting in connection with the introduction of the Euro.
     These amendments will enter into force on accession.
j)   Ratify the Automatic Processing of Personal Data Convention (1981) by the fourth quarter         Formatted: Bullets and Numbering
     of 2002.

Home Affairs
a)k) Progressively adopt common EU visa policy, leading to full compliance by accession.              Formatted: Bullets and Numbering

b)l) The new Arms legislation will enter into force in 2002.
c)m) Continue to sign new bi-lateral agreements with other countries on co-operation in the fight
     against organised crime and drug trafficking. Continue to achieve closer Police co-operation
     through the conclusion of a bilateral agreement with EUROPOL and participation in
     CIREFI. Most initiatives concerning the strengthening of the branches/ agencies involved in




DRAFT                                                                                          248
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




     the fight against illegal immigration, organised crime and drug trafficking will be in place
     by 2002.
d)Enact and implement the necessary legislation concerning Schengen border controls, visas,
    work and residence permits, and family reunification. This will be carried out by means of
    amendments to the Immigration Act, which will be enacted during 2002 and brought into
    effect upon accession.
j)   The necessary legislation to fully implement the Joint Action as regards money laundering
     will be adopted by the second quarter of 2002 and will enter into force by the fourth quarter
     of 2002.
f)Amendments to the law on extradition will be adopted by the second quarter of 2002 and will          Formatted: Bullets and Numbering
    enter into force by the fourth quarter of 2002.
g)Subsidiary legislation under the Traffic Regulation Ordinance (Cap. 65) will be adopted by
    the fourth quarter of 2002 to implement the provisions of the Convention on Driving
    Disqualifications (1998). Malta will accede to this Convention on accession.
h)The Central Bank of Malta Act (Cap. 204) will be amended by Parliament by the third quarter
    of 2002 in line with Council Resolution of 28 May 1999 on increasing protection by penal
    sanctions against counterfeiting in connection with the introduction of the Euro. These
    amendments will enter into force on accession.
i)n) Ratify the Automatic Processing of Personal Data Convention (1981) by the fourth quarter
     of 2002.

Customs Mutual Assistance and Administrative Co-operation
a) Design and implement an appropriate IT strategy that would enable the necessary
   participation in mutual assistance and administrative co-operation. Technical assistance will
   be required.
b) Establish a post-clearance audit system on a legal basis in order to strengthen the anti-fraud
   operations by Customs.


Data Protection and Information Society
b)a) As information technology is developing at an exponential rate, it is difficult to portray with   Formatted: Bullets and Numbering
     certainty the medium term priorities. Nevertheless, the Government is directed towards
     keeping the following at the fore of its IT strategy:
      attain Government On Line to allow for the more effective delivery of its services;
      establish a regulatory framework that allows for technology neutrality and technology
       evolution thereby ensuring that the private sector in Malta will optimise technology as a
       prime contributor to Malta’s economy – particularly vis-à-vis electronic commerce and
       trading;
      establish an information technology infrastructure that is inter-operable and consistent;
       and




DRAFT                                                                                           249
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




     leverage the existing IT investment for effective management information in the design
      of policies and programmes.
Explore the possibility to participate in the development of directives on related IT matters
promulgated by the European Commission, in order to attain an information economy and an
information society.


D. Institution Building Needs

Justice
A Specialised Unit is being set up within the Justice Ministry to act as a Central Authority to
deal with the exigencies of various Conventions. Moreover, the professional complement of the
Ministry and the Attorney General's Office will be extended in order to effectively transpose and
implement the Acquis in this area.
Training is required for the judiciary, the personnel at the Attorney General’s Office and Courts
of Justice personnel.

Home Affairs
Technical and expert assistance will be required in view of the specialised organisational
structures that are required to implement the Acquis and in particular that concerning Schengen.
The Ministry for Home Affairs is expected to absorb within the departments/organisations
falling within its sphere of responsibilities most of the new institutional initiatives emanating out
of the implementation of the Acquis. However, there are certain areas where new set-ups have to
be created while others have to be completely reorganised or enhanced to take on the new
responsibilities expected of them. Specialised training in some areas is also envisaged.

Data Protection and Information Society
Following the enactment of the Data Protection and Privacy Bill, an appropriate supervisory
authority will be established.

Area of Activity                                                    2001         2002        Total

Office of the Prime Minister
Data Protection                       Senior                            -            1           1
                                      Middle                            4            2           6
                                      Other                             -            1           1
                                      Total                             4            4           8

Ministry for Home Affairs
Police                                Senior                            2            -           2
                                      Middle                            5            2           7
                                      Other                             5            8          13




DRAFT                                                                                           250
MINISTRY OF FOREIGN AFFAIRS                    National Programme for the
MALTA                                               Adoption of the Acquis
                                                    August 2001Final Draft




                                Total         12         10           22

Boarder Control                 Senior         -          -            -
                                Middle         5          5           10
                                Other          8          5           13
                                Total         13         10           23

Civil Protection                Senior         1          -            1
                                Middle         2          1            3
                                Other          7          5           12
                                Total         10          6           16

Office of the Refugee
Commissioner                    Senior         2         -             2
                                Middle         4         2             6
                                Other          4         -             4
                                Total         10         2           12
Area of Activity                            2001      2002         Total

Ministry of Justice and Local
Government
                                Senior         3           -           3
                                Middle        15           -          15
                                Other          3           -           3
                                Total         21           -          21



E. Financial Requirements
                                                                   Lm000
Area of Activity                            2001       2002        Total

Office of the Prime Minister
Data Protection                 Recurrent     20          70           90
                                Capital        -          10           10
                                Training       -          10           10
                                Total         20          90          110

Ministry for Home Affairs
Police                          Recurrent     60         100          160
                                Capital        -           -            -
                                Training      10          10           20
                                Total         70         110          180




DRAFT                                                                 251
MINISTRY OF FOREIGN AFFAIRS                  National Programme for the
MALTA                                             Adoption of the Acquis
                                                  August 2001Final Draft




Boarder Control               Recurrent     100        150          250
                              Capital (*)   200        220          420
                              Training       20         10           30
                              Total         320        380          700

Civil Protection              Recurrent      70        110          180
                              Capital         -          -            -
                              Training        5          5           10
                              Total          75        115          190




DRAFT                                                               252
MINISTRY OF FOREIGN AFFAIRS                    National Programme for the
MALTA                                               Adoption of the Acquis
                                                    August 2001Final Draft




                                                                   Lm000

Area of Activity                             2001      2002         Total

Ministry for Home Affairs
Office of the Refugee
Commissioner                     Recurrent    75         100          175
                                 Capital      40           -           40
                                 Training     15          10           25
                                 Total       130         110          240

Ministry of Justice and Local
Government
                                 Recurrent   200         220          420
                                 Capital       -           -            -
                                 Training     45          40           85
                                 Total       245         260          505

Courts of Justice and Judicial   Recurrent      -          -            -
                                 Capital        -          -            -
                                 Training      50         75          125
                                 Total         50         75          125




DRAFT                                                                 253
        MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
        MALTA                                                                       Adoption of the Acquis
                                                                                    August 2001Final Draft




        3.8 External Policies


3.8.1   Trade and International Economic Relations

        A. Current Status
        The field of external relations in Malta involves a number of Ministries, the most pertinent being
        the Ministry of Foreign Affairs, the Ministry for Economic Services and the Ministry of Finance.
        Other Ministries are involved in specific issues.

        Bilateral Issues
        Malta's external trade relations are primarily governed by the Malta EEC-Association Agreement
        and subsequent trade Protocols. Malta's other bilateral trade agreements with third countries do
        not provide for any form of preferential treatment. The same applies to other bilateral
        agreements that Malta has with third counties. Bilateral agreements with both EU members and
        third countries cover a wide range of subject matters, such as air services, social security,
        tourism, visa abolition and cultural co-operation. Malta's economic and commercial relations
        have been enhanced by agreements in trade, double taxation and investment protection. Other
        agreements relating to drug trafficking, money laundering as well as technical and scientific
        agreements have been signed. Malta has conducted a study on its bilateral agreements with third
        countries in order to verify whether they are in line with the Acquis. Minor amendments have to
        be made to some Investment Guarantee Agreements that are in force. Upon accession, Malta
        intends to adopt all the EU's preferential trade agreements with third countries and become party
        to the European Economic Area Agreement, the Europe Agreements still in force, as well as all
        the other agreements including Mutual mutual Recognition recognition agreements.

        WTO
        Malta is a founder member of the WTO, currently enjoying the status of a developing country,
        which status will be renounced upon Malta's membership to the European Union. Malta will
        adhere to those WTO agreements to which it is not yet party. Malta has acceded to the WTO
        Agreement on Trade in Civil Aircraft in December 2000. The Import Duties Act (Cap. 337) was
        amended by LN 259/00 to rule into account the elimination of customs duty on the products
        covered by the Agreement.
        In December 1997, Malta made commitments on banking and financial services in addition to
        the commitments that it had already made in some areas of insurance, tourism, travel related
        services and maritime transport. A WTO/ GATS working group comprising officials from the
        Ministry of Foreign Affairs and the Ministry for Economic Services has been created and has
        been meeting regularly since September 2000. Malta is undergoing an intensive exercise to
        formulate a timetable for the progressive alignment with the EC's schedule of specific
        commitments under General Agreement on Trade in Services (GATS) and intends to complete
        this process by the fourth quarter of 2002. The Commission has offered technical assistance in
        this regard. Malta regularly participates in co-ordination meetings organised by the EU on WTO




        DRAFT                                                                                         254
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




issues both in Geneva and in Brussels and is supporting the Union’s efforts to launch a new
round of trade negotiations within the framework of the WTO.
The Intellectual Property Rights (Cross Border Measures) Act was enacted in February 2000 in
order to implement provisions emanating from the WTO TRIPS Agreement.
Malta intends to accede to the WTO plurilateral agreements.
Imports into Malta of textiles and steel are not subject to quotas or surveillance measures. In the
first two stages of integration under the WTO Agreement on Textile and Clothing (ATC), Malta
kept close to the Community's integration schedules. Malta will use the third stage of the ATC to
further align its list of integrated products. In this respect, Malta has drafted a schedule of ATC
commitments that is compatible with the Community schedule and has consulted with the
Commission on this schedule. Malta’s schedule will be submitted to the WTO by the first quarter
of 2001.
Matters relating to the WTO fall under the responsibilities of the Ministry for Economic Services
and the Ministry for Foreign Affairs. Close liaison is maintained with other Ministries as
required.

Multilateral Relations
Malta is a member of the Council of Europe, the Organisation for Security and Co-operation in
Europe and the United Nations (UN). Malta is a party to a large number of UN and other
international conventions including the UN Convention of the Law of the Sea. Malta is an active
participant in the Euro-Mediterranean Partnership. Malta accepts and applies the fundamental
principles of human rights forming part of or expressed in the UN, the Council of Europe and
other international instruments, as integrated in the EU Treaties and in the Community's
agreements with third countries.

Generalised System of Preferences
Malta is a beneficiary of the Generalised System of Preferences (GSP) schemes of the following
countries: the USA, Canada, Australia, New Zealand, Japan, the Czech Republic, the Russian
Federation, the Slovak Republic, Switzerland and Norway. Not all products are eligible for a
reduction or a complete elimination of the import duty included in the GSP scheme of tariff
preferences and the product coverage differs from scheme to scheme. Most industrial products
benefit from preferential treatment while agricultural products tend to have more limited tariff
advantages.

Commercial Policy Instruments
The Import Duties Act (Cap. 337) lays down provisions for import duties and the importation of
goods. It includes the Customs Tariff, which uses the World Customs Organisation (WCO)
nomenclature. The WTO system of valuation has recently been largely incorporated into this
Act, except for the section on minimum values relating to a range of motor vehicles. Malta
obtained a reservation from WTO to retain officially established minimum values on a limited
and transitional basis.




DRAFT                                                                                          255
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Since Malta has no trade agreement involving tariff preferences with any country other than the
European Union, no measure of the relevant Acquis exists in Maltese law. In addition, no
measures exist regarding tariff quotas, tariff ceilings and procedures to regulate outward
processing. Moreover, the Importation (Control) Regulations (LN48/69) do not currently include
control on textile products and steel, which are the main spheres of quantitative import
restrictions established by the EU. Currently, Malta has no anti-dumping, countervailing (anti-
subsidy) or safeguard measures legislation. Upon accession Malta will adopt the Community's
system of quotas and surveillance measures and tariff quotas.
Malta does not have non-preferential rules of origin regime. Non-preferential origin certificates
are issued by the Chamber of Commerce and the Malta Federation of Industries on set criteria,
mainly based on a change in Tariff heading and value added. Advice is sought from the Customs
Department when necessary. Malta has been following closely developments within the
WTO/WCO as regards the exercise of harmonising the non-preferential rules of origin regime,
with Customs Officials participating regularly in meetings held in Brussels. Preferential rules of
origin apply to trade between the EU and Malta as laid down in Protocol 2 to the Malta-EU
Association Agreement.

Dual-Use Goods
The Export (Control) Regulations (GN668/48) do not cover the control of exports of dual-use
goods. There is currently no officially appointed body dealing with dual-use goods. Subsidiary
legislation is being drafted in order to provide for the necessary mechanism concerning the
export of dual-use goods and ensure alignment by the fourth quarter of 2001. Bilateral technical
advice has been received in the last quarter of the year 2000 on strengthening the administrative
capacity in the field of export controls. This issue is discussed under Section 3.8.2 (Common
Foreign and Security Policy) and also Section 3.1.1 (Free Movement of Goods).

Export Credits
The Malta Export Credit Insurance Company Ltd. (MECI) presently provides export credit
insurance to Maltese exporters in the manufacturing industry, by providing short-term credit
insurance not exceeding 180 days.

Sanctions
With regards to UN Security Council sanctions, Malta's policy is one of strict adherence. Malta
has also imposed most sanctions imposed by the EU against third countries. Since the
introduction of the political dialogue in 1999, Malta has adhered to EU sanctions imposed on the
Federal Republic of Yugoslavia, Indonesia, Burma, Ethiopia and Eritrea by virtue of various
corresponding measures. Alignment with UN sanctions was implemented through the United
Nations (Security Council Sanctions) Act (Cap. 365). In order to widen the scope of the legal
basis, an amendment to this Act was approved by Parliament on 23 February 2000 to include
adherence with measures outside the UN framework which are in Malta's national or
international interests and which cannot be catered for by other legal instruments. The amended
Act has henceforth become known as the National Interest (Enabling Powers) Act. This issue is
also discussed under Section 3.8.2 (Common Foreign and Security Policy). During 2000, Malta




DRAFT                                                                                         256
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




removed the sanctions on the supply and sale of petroleum products to the Federal Republic of
Yugoslavia (LN 230/00) in line with the EU’s decision to lift its sanctions.

Development Aid and Humanitarian Assistance
Malta offers development and technical assistance through International Organisations of which
it is a contributing and active member and has bilateral economic and technical co-operation
agreements with some non-EU states. Malta does not offer programmes of financial or technical
assistance to developing countries nor does it grant trade preferences to developing countries.
On the multilateral level Malta offers development assistance through the UNDP and the
Commonwealth, where it contributes to the Commonwealth Fund and the Third Country
Programme of the Commonwealth Fund. The Third Country Programme includes training
programmes in a wide array of fields. In 1998 Malta made voluntary contributions towards
humanitarian crises, the International Emergency Food Reserve, and the World Food
Programme.
On the bilateral level, Malta has agreements with a number of countries that cover co-operation
in the field of education and through which Malta offers a number of scholarships. Malta also
makes a contribution to the Mediterranean Academy for Diplomatic Studies (a joint venture with
Switzerland) which offers graduate and post-graduate courses to students mainly from
developing countries.
Malta will remain committed to development assistance to the best of its ability. Upon
membership, Malta will become a member of the European Investment Bank and will contribute
to the European Development Fund.
Maltese non-government organisations (NGOs) provide development and humanitarian aid both
in terms of financial assistance and in kind. The Government will encourage the establishment of
a National Committee of NGOs working in the field of development and humanitarian aid, which
will participate in the work of the European Liaison Committee of NGOs.


B. Short Term Priorities (2001)

Bilateral Issues
a) Bring Investment Guarantee Agreements in line with the Acquis.

WTO
a) Finalise the exercise to formulate a timetable for the progressive alignment with the EU's
   schedule of specific commitments under GATS.
b) Malta will use the third stage of integration of the WTO Agreement on Textiles and Clothing
   to further align its list of integrated products with that of the European Community.
c) Strengthen the institutional set-ups at the Ministry for Economic Services and the Ministry
   for Foreign Affairs and undertake specialised training on WTO matters for professional
   staff.




DRAFT                                                                                        257
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Commercial Policy Instruments
a) Identify the implications of Malta's adoption of the diagonal cumulation system on rules of
   origin which is being applied between the EU, EFTA and several applicant countries which
   are in the process of negotiating accession to the EU.

Dual–Use Goods
a)   Legislative alignment in the area of dual-use goods will be achieved by the fourth quarter of
     2001.

C. Medium Term Priorities (2002)

Bilateral Issues
a) Adopt upon accession the EU's bilateral agreements with third countries including
   Preferential Agreements, the European Economic Area Agreements still in force at the time,
   and the Euro-Mediterranean Agreements.

WTO
a) Malta intends to complete the process of alignment with the EU Schedule of Specific
   Commitments under GATS by the fourth quarter of 2002.
b) Malta will adhere to the plurilateral WTO Agreements on Government Procurement and on
   Trade in Information Technology by the fourth quarter of 2002.

c) Malta will adopt Protocol 28 of the Agreement on the European on intellectual property
   upon accession.Protocol 28 of the Agreement on the European Economic Area on
   intellectual property upon accession

d) Malta will adopt the bilateral agreements concluded by the EC in the WTO framework in the
   areas of government procurement and telecommunications upon accession.

e) Upon accession to the EU Malta will renounce its developing country status within the
   WTO.
Generalised System of Preferences
a)   Upon accession Malta's status under the General System of Preferences (GSP) would
     change and it would also become a donor of the EU's GSP Scheme and would start
     extending non-reciprocal trade preferences to developing countries and least developed
     countries.

Commercial Policy Instruments
a) Align the customs regime with the Common External Tariff (CET) upon accession. This is
   discussed under Section 3.1.7 (Customs Union).




DRAFT                                                                                         258
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




b) Upon accession Malta will adopt the Community’s system of quantitative restrictions,
   surveillance measures and tariff quotas.

Export Credits
a) Amend the Insurance Business Act (Cap. 403) in order to be able to adopt the Directives and
   Regulations dealing with Export Credits by means of regulations.
Dual-Use Goods
a) By 2002 Malta will have the appropriate monitoring body in place to oversee the export of
   all dual-use goods.
Negative Measures
a) The necessary structure ensuring co-ordination between the Ministry of Foreign Affairs and
   the other Ministries involved will be enhanced to cater for the application of EU negative
   measures on a regular basis.

D. Institution Building Needs
The institutional and administrative capacity of a number of Ministries, in particular the Ministry
for Economic Services and the Ministry of Foreign Affairs, will be strengthened to fulfil the
responsibilities ensuing from EU membership, and to ensure adequate participation in technical
meetings. Specialised training and technical assistance will also be required.
Following an Operations Review in the Ministry for Economic Services, an International
Economic Relations Directorate is being set up in the Economic Policy Division of the Ministry.



Area of Activity                                                   2001        2002         Total

Ministry of Finance
                                     Senior                            -            -           -
                                     Middle                            1            -           1
                                     Other                             -            -           -
                                     Total                             1            -           1

Ministry for Economic Services
Economic Policy Division             Senior                            1            -           1
                                     Middle                            1            -           1
                                     Other                             -            -           -
                                     Total                             2            -           2

Ministry of Foreign Affairs
                                     Senior                            -            -           -
                                     Middle                            2            -           2




DRAFT                                                                                          259
MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                     August 2001Final Draft




                                 Other         -            -           -
                                 Total         2            -           2
E. Financial Requirements
                                                                    Lm000
Area of Activity                             2001      2002         Total

Ministry of Finance
                                 Recurrent     5           7           12
                                 Capital       -           -            -
                                 Training      -           5            5
                                 Total         5          12           17

Ministry for Economic Services
Economic Policy Division         Recurrent     20         22           42
                                 Capital        -          -            -
                                 Training       5          5           10
                                 Total         25         27           52

Ministry of Foreign Affairs
                                 Recurrent     17         17           34
                                 Capital        -          -            -
                                 Training       -          -            -
                                 Total         17         17           34




DRAFT                                                                  260
        MINISTRY OF FOREIGN AFFAIRS                                                National Programme for the
        MALTA                                                                           Adoption of the Acquis
                                                                                        August 2001Final Draft




3.8.2   Common Foreign and Security Policy

        A. Current Status
        Malta is aware that adherence to the Common Foreign and Security Policy (CFSP) principally
        implies compliance with joint actions and common positions adopted by the Council in the
        implementation of common strategies decided upon by the European Council. This does not give
        rise to difficulties given that Malta's foreign policy is, to a large degree, already aligned with that
        of the European Union. Malta will therefore be able to apply the provisions of the CFSP fully
        upon accession.
        Voting patterns of Malta in the United Nations are already almost completely in line with those
        of the European Union. In fact, during the United Nations General Assembly held between
        September and December 2000, Malta's voting pattern coincided with that of the EU in 96 per
        cent of the cases. Furthermore, Malta has always strictly complied with measures and actions
        decided by the UN Security Council. Alignment with UN sanctions takes place via the United
        Nations (Security Council Sanctions) Act (Cap. 365). In order to widen the scope of the legal
        basis, an amendment to this Act was approved by Parliament on 23 February 2000 to include
        adherence with measures outside the UN framework which are in Malta's national or
        international interests and which cannot be catered for by other legal instruments. The amended
        Act is known as the National Interest (Enabling Powers) Act. The Sanctions (Monitoring Board)
        Regulations, 2000 (LN187/00) issued under this Act have reconstituted the Sanctions Committee
        to administer, oversee and generally co-ordinate matters related to Malta’s adherence to negative
        measures. As from 2001, the Sanctions Committee has started to reconvene formally.
        Malta is committed to further progressive alignment of its foreign policy as evidenced by its
        adherence to the measures imposed on the Federal Republic of Yugoslavia during the Kosovo
        crisis and to sanctions imposed on Indonesia, Burma, Ethiopia and Eritrea by virtue of various
        corresponding measures. Malta has also removed the sanctions on the supply and sale of
        petroleum products to the Federal Republic of Yugoslavia during 2000, in line with the EU’s
        decision to lift its sanctions.
        Now that Malta is involved in the political dialogue as a result of the decision taken at the
        General Affairs Council, the appropriate mechanism is available to ensure a more systematic
        alignment. Alignment is taking place with EU declarations issued by the Council Secretariat in
        Brussels, with statements in the UN framework in both New York and Geneva, and with
        statements made in the OSCE framework in Vienna. Nearly all requests for alignment made to
        date have had a positive response. Malta is also attending political dialogue meetings at the level
        of Foreign Ministers, Political Directors and European Correspondents, and at working group
        level. It is also participating in the European Conference.
        A communications link between Valletta and the Malta Mission on one side, and the Council
        Secretariat on the other has been installed as part of the Associates Communications Network
        (U3 Mail), and is now functioning satisfactorily.




        DRAFT                                                                                             261
MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                              August 2001Final Draft




In the areas of dual-use goods and the code of conduct on arms exports, in addition to being a
party to the relative international Treaties, the present legislative framework and working
mechanism needs to be upgraded for better control and monitoring. Technical assistance has
been obtained from the UK authorities on the required legislation and the setting up of the
appropriate mechanisms for the export control of dual-use goods.
As regards dual-use goods, Malta needs to have a mechanism in place guaranteeing a stricter
measure of control on the exports of goods that can be used for both civil and military purposes.
No legislation yet exists which is specific to the subject. The main piece of legislation relates to
the Export Control Regulations and the goods to which export controls and licenses apply do not
include the type of goods listed in the relevant Acquis. However, subsidiary legislation to
provide for the necessary mechanisms concerning the export of dual-use goods is being drafted.
It is envisaged that this will also cover licensing requirements for arms exports. This is also
discussed under Section 3.1.1 (Free Movement of Goods) and Section 3.8.1 (Trade and
International Economic Relations).
Regarding the code of conduct on arms exports, Malta does not manufacture or export arms,
including conventional weapons and military equipment. Malta has formally aligned itself with
the criteria and principles contained in the Code of Conduct on Arms Exports.
Malta recognises the importance of the evolving European security architecture. Malta's
participation in the European Security and Defence Policy (ESDP) that is in the process of being
elaborated can only be evaluated against the backdrop of the precise modalities devised in this
respect as well as the situation as it relates to neutral states already members of the European
Union. As matters are developing in the light of the entry into force of the Amsterdam Treaty
and pursuant to the Conclusions of the Cologne and Helsinki European Councils, Malta does not
anticipate problems in this respect.
In November 2000, Malta announced its intention to provide the opportunity for volunteers from
the Armed Forces of Malta to participate in the Headline Goal of the EDSP. The Maltese
contingent will be deployed jointly with troops from Italy.

B. Short Term Priorities (2001)
a) Legislative alignment in the area of dual-use goods will be achieved by the fourth quarter of
   2001.
b) Full compliance as regards the Code of Conduct on Arms Exports will be achieved by the
   fourth quarter of 2001.
c) Monitor developments concerning the European Security and Defence Policy (ESDP).

C. Medium Term Priorities (2002)
a) By 2002 Malta will have the appropriate monitoring body in place to oversee the export of
   all dual-use goods.
b) Continue to monitor developments concerning the European Security and Defence Policy
   (ESDP).




DRAFT                                                                                           262
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




c) The necessary structure ensuring co-ordination between the Ministry of Foreign Affairs and
   the other Ministries involved will be enhanced to cater for the application of EU negative
   measures on a regular basis.

D. Institution Building Needs
Malta has a set-up intended to satisfy its obligations under the Chemical Weapons Convention.
The mechanism currently used to co-ordinate with the National Authority for the Implementation
of the Chemical Weapons Convention may be extended as a basis for future adherence to the
EU's dual-use regime. By the first quarter of 2002, Malta will have the appropriate monitoring
body in place to oversee the export of all goods encompassed by the dual-use regime.
The appropriate measures will be taken in order to consolidate the existing control mechanism
on arms export, in line with the requirements of the Code of Conduct on Arms Exports. Full
capacity will be achieved by the fourth quarter of 2001.
The National Interest (Enabling Powers) Act (Cap. 365) provides the basis for the
implementation of negative measures introduced by the EU. The necessary structure ensuring co-
ordination between the Ministry of Foreign Affairs and the other Ministries involved already
exists by virtue of the application of United Nations sanctions, and will be enhanced to cater for
the Acquis in this area.


Area of Activity                                                  2001        2002         Total

Office of the Prime Minister
Defence                              Senior                           -            -           -
                                     Middle                           1            -           1
                                     Other                            -            -           -
                                     Total                            1            -           1

Ministry for Economic Services
Dual-Use Goods                       Senior                           1           -            1
                                     Middle                           -           1            1
                                     Other                            -           -            -
                                     Total                            1           1            2

Ministry for Foreign Affairs
                                     Senior                            -          1            1
                                     Middle                            -          -            -
                                     Other                             -          -            -
                                     Total                             -          1            1




DRAFT                                                                                         263
MINISTRY OF FOREIGN AFFAIRS                                National Programme for the
MALTA                                                           Adoption of the Acquis
                                                                August 2001Final Draft




E. Financial Requirements

                                                                               Lm000
Area of Activity                                        2001      2002         Total

Office of the Prime Minister
Defence                          Recurrent                25         25           50
                                 Capital                   -          -            -
                                 Training                  5          5           10
                                 Total                    30         30           60

Ministry for Economic Services
Dual-Use Goods                   Recurrent                5          15           20
                                 Capital                  -           -            -
                                 Training                 -           -            -
                                 Total                    5          15           20

Ministry for Foreign Affairs *
                                 Recurrent                20         30           50
                                 Capital                   -          -            -
                                 Training                  -          -            -
                                 Total                    20         30           50

(*) Includes Associates Communications Network (ACN).




DRAFT                                                                             264
        MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
        MALTA                                                                       Adoption of the Acquis
                                                                                    August 2001Final Draft




3.9     Financial Questions
3.9.1   Financial Control

        A. Current Status
        The operational and legal framework covering financial control is provided by the Financial
        Administration and Audit Act (Cap. 174), General Financial Regulations (LN40/66), the Auditor
        General and National Audit Office Act (Cap. 396), Public Service (Procurement) Regulations
        (LN70/96), Ministry of Finance Directives that are issued from time to time as well as Chapter
        IX of the Constitution. This legislation together with the directives provides comprehensive
        safeguards and protection for the proper collection and disbursement of public funds including
        those originating from foreign (multilateral and bilateral) sources.

        External Audit
        External financial control is exercised by the National Audit Office (NAO). The Office, which
        is autonomous from Government, was established in 1997 by means of the Auditor General and
        National Audit Office Act (Cap. 396). The NAO is based on the British model and is responsible
        for the external audit of central and local Governments and reports directly to Parliament. Its
        mandatory objective is to provide independent information, assurance and advice to Parliament
        on public finance transactions. Its examiners follow INTOSAI Auditing Standards. The
        independence of the National Audit Office is entrenched in the Constitution. The Regularity,
        Value for Money and Special Audits Units have been set up separately within the Office The
        regularity, value-for-money and investigating sections have been set up separately from each
        other within the office.
        The legal and organisational framework of the NAO is largely compatible with the Resolution
        concerning the Functioning of Supreme Audit Institution in the Context of European Integration,
        which was approved at the 1999 Prague meeting of the Presidents of SAIs of the EU countries
        and the European Court of Auditors.

        Internal Audit
        The internal audit function became operational in 1994. Moreover, during 2000 the Internal
        Audit Directorate (IAD) was established within the Cabinet's Secretariat of the Office of the
        Prime Minister. The Directorate will be the national contact point with DG Audit in respect of
        internal control and internal audit. It is also earmarked to act as an anti-fraud unit in matters
        concerning EU funds. Internal auditors are located in individual ministries with each unit
        reporting directly to the respective Permanent Secretary and to the IAD so as to ensure functional
        independence. These units are responsible for compliance/substantive testing and systems audits
        of the financial control systems within Government. The General Internal Audit Board (GIAB)
        provides strategic directives to the IAD and ensures the harmonisation of internal audit standards
        and quality within the various Ministries.
        The ex-ante control function is exercised by the financial control units in the spending centres.
        This function covers commitments, tendering and contracting procedures as well as




        DRAFT                                                                                         265
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




disbursements. The current internal audit function is being strengthened further to achieve the
efficiency and comparability with EU standards and practices.
At present, there is no legislative backing for the internal audit function. Instead, the internal
audit function is backed by an Internal Audit Manual which is based on standards and guidelines
of the Institute of Internal Auditors, and Canadian and UK internal audit manuals.

Audit Trail in Government Accounting System
A Departmental Accounting System (DAS) is used for recording and controlling public
accounting. This system handles the operational activities and data entry integrated controls
based on financial legislation. This reporting system has been implemented across all Ministries
and Departments to ensure an effective audit trial.

Protection of EU Financial Interests
Malta has ratified the European Convention on Money Laundering (1990). Malta’s reservations
to this Convention are being examined in the light of the Joint Action of 3 December 1998 on
money laundering as well as the identification, tracing, freezing, seizing and confiscation of
instrumentalities and the proceeds from crime.
Malta introduced comprehensive anti-money laundering legislation in 1994 through the
enactment of the Prevention of Money Laundering Act (Cap. 373) and subsidiary legislation.
The position in Malta goes further in scope than the requirements of the Acquis as, with the
adoption of the Gaming Act Regulations (LN 193/98) under the Gaming Act (Cap. 400), the
prevention of money laundering was extended to casinos. The Financial Intelligence Unit which
is being established within the Ministry of Finance will strengthen the existing infrastructure
relating to the prevention of money laundering. This issue is also discussed under Section 3.1.4
(Free Movement of Capital).
The Permanent Commission Against Corruption, established by the Permanent Commission
Against Corruption Act (Cap. 326) is entrusted with the investigation of alleged or suspected
corrupt practices of any public officer including Ministers and Parliamentary Secretaries. This
includes persons who are or have been engaged in any statutory or other body where
Government has a controlling interest.
An International Relations Directorate was set up within the Ministry of Finance during the
second half of 2000. It will be involved in the monitoring of all EU Funds directed to Malta,
including the Structural Funds and the Cohesion Fund. Progress has also been registered in the
introduction of a National Fund Management as well as the setting up of the necessary structures
within the Directorate and other Ministries.

Control Measures Relating to Own Resources
The Value Added Tax (VAT) Act (Cap. 406) follows the basic principles of the Acquis. It
provides for effective tax collection and enforcement by empowering the Commissioner of VAT
to make his/her own assessments and impose additional tax in the default cases contemplated by
the Act and to make on the spot inspections to ensure compliance with the provisions of the Act.
The Act provides for the maintenance of VAT records and the provision of tax invoices by




DRAFT                                                                                         266
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




taxable persons in the course of their economic activities. Legal prosecutions against taxable
persons for the recovery of tax and additional tax is provided for.
The Excise Duty Act (Cap. 382) follows the general principles of the Acquis on excise duty. The
Seventh Schedule of the Act provides for the keeping of records and accounts, the control of
release of goods subject to excise duty from Customs’ bonds and the imposition of the payment
of security for purposes of safeguarding the payment of excise duty. In cases of non-payment of
duty the Act provides for the prosecution of criminal action.
The Customs Ordinance (Cap. 37) provides for the prevention of smuggling, the importation of
prohibited goods, illicit trade and other criminal activities or contraventions against customs
legislation. It also provides for offences and penalties and for the forfeiture of such goods
without prejudice to any action which may be taken in virtue of any other provisions of law.
Offenders are liable to a fine or to imprisonment subject to the application of all other relevant
provisions of the Criminal Code (Cap. 9).

B. Short Term Priorities (2001)
a) Development and consolidation of the professions and institutions related to internal
   financial control.
b) Introduce a re-engineered manual for internal audit in line with EU standards and guidelines
   as well as those of the Institute of Internal Auditing, the International Federation of
   Accounting (IFAC) and evolving international practices. The manual will also provide for
   the new additional responsibilities of the Internal Audit Directorate.
c) The human and other resources of the International Relations Directorate will be
   strengthened further. The National Fund Management and the necessary structures will be
   put into place.
d) Amendments to the Civil Code (Cap.16) will be carried out to bring it in line with the
   requirements of the Civil Law Convention on Corruption (1999).
e) Subsidiary legislation will be adopted under the Prevention of Money Laundering Act (Cap.
   273) to provide the legal basis for the setting up of the Financial Intelligence Unit which will
   be formally set up and operating.
f) Introduction of a system of deferred payment with respect to customs duties.
g) In the area of external financial control, an audit manual for personnel audit examiners is
   beingwill be compiled and a . A Code of Ethics Professional Conduct will be completed and
   adopted during 2001.
h) The legislative amendments to extend the scope of the Criminal Code dealing with bribery of
   officials in Government service, in order to include provisions relating to bribery of officials
   of both foreign Governments and international organisations, will be submitted for
   Parliament’s approval. This will be followed by the ratification of the relative Organization
   for Economic Co-operation and Development (OECD) and Council of Europe Conventions,
   which is envisaged to be made by mid-2001.




DRAFT                                                                                          267
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




C. Medium Term Priorities (2002)
a) Development and consolidation of the professions and institutions related to external
   financial control.
b) Appropriate legislation will be enacted to ensure the implementation of EU law, particularly
   Council Regulations 2988/95 (protection of the EC financial interests) and 2185/96 (on the
   spot checks and inspections carried out by the Commission in order to protect the EC
   financial interests against fraud and other irregularities), regarding the introduction of
   administrative checks, measures and penalties. Commission-appointed inspectors will be
   given access to all relevant information in line with Regulation (EC) 2185/96, Regulation
   (EC) 1073/99 and Regulation (EC) 1074/99 on investigations conducted by the European
   Anti-Fraud Office.
c) During 2002, amendments will be made, where necessary, to bring domestic legislation in
   line with the provisions of the Conventions which Malta can accede to only upon accession,
   in particular the Convention and Protocols on the Protection of the EC’s Financial Interests.
   Maltese law is already compliant with many provisions of the said Conventions.

d) The necessary legislation to fully implement the Joint Action of 3 December 1998 on money
   laundering will be adopted and enter into force.


D. Institution Building Needs
Institutions responsible for the implementation of the Acquis in this area are the Cabinet Office
within the Office of the Prime Minister, the Ministry of Finance and the National Audit Office.
No new institutions will be necessary. However, additional professional staff will be required
and the provision of appropriate training is envisaged.


Area of Activity                                                  2001        2002        Total

Office of the Prime Minister
Internal Audit                      Senior                           2            -           2
                                    Middle                           5            -           5
                                    Other                            -            -           -
                                    Total                            7            -           7

Ministry of Finance
                                    Senior                           1            -           1
                                    Middle                           3            -           3
                                    Other                            -            -           -
                                    Total                            4            -           4




DRAFT                                                                                        268
MINISTRY OF FOREIGN AFFAIRS                   National Programme for the
MALTA                                              Adoption of the Acquis
                                                   August 2001Final Draft




Area of Activity                           2001      2002         Total

Parliament
National Audit Office          Senior         -           -           -
                               Middle         6           -           6
                               Other          4           -           4
                               Total         10           -          10


E. Financial Requirements
                                                                  Lm000
Area of Activity                           2001      2002         Total

Office of the Prime Minister
Internal Audit                 Recurrent     50         50         100
                               Capital        -          -           -
                               Training      10          5          15
                               Total         60         55         115

Ministry of Finance
                               Recurrent     20         30           50
                               Capital        -          -            -
                               Training       5          5           10
                               Total         25         35           60

Parliament
National Audit Office          Recurrent     70         90         160
                               Capital        -          -           -
                               Training      30         10          40
                               Total        100        100         200




DRAFT                                                                269
        MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
        MALTA                                                                         Adoption of the Acquis
                                                                                      August 2001Final Draft




3.9.2   Financial and Budgetary Matters

        A. Current Status
        In Malta, the rules and regulations governing public budgetary provisions are contained in the
        Financial Administration and Audit Act (Cap. 174) and the General Financial Regulations
        (LN40/66). Both pieces of legislation specify the budgetary organisational framework of
        government’s revenue and expenditure, as well as the system of public accounting and the
        methods underlying the recording and controlling of revenue and expenditure. This legislative
        framework is currently undergoing a re-appraisal exercise so as to conceptualise a new cohesive
        set of rules and regulations, which will eventually support both the expected change to accruals-
        based public accounting as well as introducing total transparency of government operations
        through a system of performance-related management.
        It is envisaged that a request will be required for transitory corrective measures, similar to those
        granted at previous enlargements, to take account of a possible deterioration in the net budgetary
        position of Malta vis-à-vis the EU budget which could arise when Malta starts contributing to the
        Community’s Own Resources on accession.

        Planning and Budgeting
        Malta’s budget is appropriated annually. However, administratively, there exists a rolling
        Business Planning cycle spanning over a three-year period. Moreover, in 1998, together with the
        presentation of the budgetary estimates in Parliament, Government has also tabled a six-year
        (19994-20004) planning scenario showing Government’s expected financial position in terms of
        its predicted revenue and expenditure initiatives for the medium-term.

        Budgetary Fund Management
        Management of the budget is regulated through the Consolidated Fund (the National Fund),
        which provides the vehicle for accounting and controlling the administration of allocated
        expenditure and the collection of revenue. Public financial legislation also provides for the
        operation of other Funds to accommodate revenue and expenditure which is not strictly of a
        public nature. However, all government transactions are accounted for within the Public
        Account held at the Central Bank of Malta.
        Moreover, the Maltese government is effectively managing its cash flow requirements through
        Treasury Bills which do not feature in the Consolidated Account.
        The Budget itself is approved in cash amounts, though these cash amounts may in certain cases
        include commitments made in the previous year. However, if there are commitments included,
        these are not distinguished separately from the expenditure that will arise and be paid in the
        budget year. Similarly, revenue collected in any one particular year includes receipts pertaining
        to previous years.
        A recent amendment to the General Financial Regulations (LN40/66) allows unutilised amounts
        of approved expenditure for which a commitment has been made, and which would otherwise
        lapse at the end of the current financial year, to be transferred to a “Below-the-Line” account




        DRAFT                                                                                           270
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




held within the Treasury Accounting System, to be used in the subsequent year. Such an amount
would have to be used for the original purpose it had been voted for. Indeed, there are no
reserves in Malta’s public budgetary systems, except for the existence of a Contingencies Fund
which has a nominal value only.
Though this system of Fund accounting is still expected to form the nucleus of budget
management, it is envisaged that administrative changes might have to be implemented, once
Malta adopts the European System of Accounting (ESA) reporting framework.

Reinforcement of Evaluation Approaches
With respect to inventory control, the Departments are updating their databases so as to conform
with the latest standing procedures. Moreover, a draft paper on the control of debtors and
creditors has been finalised.

Public Accounting
The reform of the Public Chart of Accounts which ensures compliance with the European
System of Accounting has been initiated. This provides for the inclusion of separate
commitments within the government budget. It also includes the separation of EU funds from the
national resources as regards both the presentation within the budget, as well as for accounting
and controlling purposes.
Government accounting is organised under a simplified Chart of Accounts representing all items
of public revenue and expenditure. A consolidation system exists within the Treasury
Accounting System, which is updated on a real time basis. A Departmental Accounting System
is used for the recording and controlling of public accounting. Efficient reporting generated by
DAS at various stages of the accounting procedure ensures an effective audit trail. Draft
standards for an accruals based system as well as tender specifications for the provision of
training in this area have been completed.

Financial and Budgetary Control
Under Maltese legislation, the separation of roles of authorising officer, accounting officer, and
financial controller are not as clearly separated as provided in the Acquis. The amended
Financial Administration and Audit Act (Cap. 174) will define the separate roles of authorising
officer, accounting officer and financial controller.
A more performance-related approach in public financial management, where pre-determined
outcomes will determine the extent of input resource requirements, is being studied.
Therefore, Malta’s budgets are established within a framework that is very much in line with EU
practices. Any remaining alignment is not expected to present difficulties.

B. Short Term Priorities (2001)
a)   Standards supporting the new accounting system will be adopted during 2001.
b)   Tender for the provision of training concerning the new accounting system will be issued
     during 2001.




DRAFT                                                                                         271
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




c)   The National Audit Office is expected to approve submit its opinion on a draft paper on the
     control of Debtors and Creditors during 2001.

C. Medium Term Priorities (2002)
a)   Introduce value-for-money practices within all government agencies.
b)   Identify and apply appropriate public management output performance systems in different
     government departments and agencies.
d)c) Offices of Review will be fully operational in all Government Ministries. These are              Formatted: Bullets and Numbering
     discussed under Section 4.1 (Administrative Structures and Systems).
e)d) Finalisation of the last phases required, including amendements to the Financial
     Administration and Audit Act, prior to the introduction of the Government accruals
     accounting system. The accrual-based accounting methodology will be completed in full by
     2005.
f)e) Enact the pertinent legislation to attain full adherence to the Acquis by end 2002.
g)f) A committee within the Ministry of Finance chaired by the Director of the International
     Relations Directorate, will be set up during 2002 to coordinate the collection of the
     Community’s Own Resources. The committee will also be responsible for determining the
     value added tax and the gross Gross national National product Product proportion of
     Malta’s contribution to such resources and for the reporting required in this area.


D. Institution Building Needs
Malta already possesses the main legislative and administrative structures that are capable to
effectively implement and monitor the Acquis in this area. Therefore, no new structures are
required. However, it is envisaged that existing structures have to be strengthened through
suitably qualified staff and appropriate training.


Area of Activity                                                    2001        2002        Total

Ministry of Finance
                                     Senior                            -            -           -
                                     Middle                            2            2           4
                                     Other                             -            -           -
                                     Total                             2            2           4




DRAFT                                                                                          272
MINISTRY OF FOREIGN AFFAIRS                                   National Programme for the
MALTA                                                              Adoption of the Acquis
                                                                   August 2001Final Draft




E. Financial Requirements
                                                                                  Lm000
Area of Activity                                          2001       2002         Total

Ministry of Finance
                                Recurrent                   10          25          35
                                Capital                    500       1,000       1,500
                                Training                    10           5          15
                                Total                      520      1, 030       1,550


The cost to introduce the new accounting system Government-wide is estimated at around
Lm1LM1.5 million.




DRAFT                                                                                273
      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
                                                                                    August 2001Final Draft




4     Administrative Capacity to Implement the Acquis

4.1   Administrative Structures and Systems
      The Government of Malta commissioned a review of its administrative structures in 1988. The
      purpose of that review was to critically examine the role, organisation and operation of the entire
      machinery of government.
      More specifically, the Public Service Reform Commission (PSRC) was directed to “examine the
      Public Service and to recommend means by which the Service can efficiently respond to the
      changing needs for effective government”.
      The PSRC proposed restoring the institutional fabric of public service, building its
      administrative capacity, and safeguarding employee rights with an emphasis on staff
      development.
      Since then, several initiatives were taken to improve the administrative capacity of the Public
      Service. The initiatives outlined in this document are a follow-up to those already taken between
      1990 and 1998, and are intended to facilitate the implementation of the Acquis to EU standards
      across the whole Public Service.
      As indicated in Chapter 3 of this Programme, the various Government structures and institutions
      will be strengthened as necessary. Moreover, new structures may be established to manage new
      areas and activities directly arising from the Acquis. This Section therefore focuses mainly on
      centrally driven initiatives which will impact all ministries and departments and which are
      required to strengthen Malta’s administrative capacity to implement the Acquis.

      Allocation of Responsibilities
      Responsibility for the implementation of Government’s mandate rests with various Government
      Ministries and Departments that make up the Public Service.
      Most functions have a corresponding line department, although certain aspects of human
      resource management, for example the recruitment of staff, human resources policy, conditions
      of employment and collective bargaining are managed centrally by the Management and
      Personnel Office within the Office of the Prime Minister. At Ministerial level, responsibility for
      the implementation of corporate policies (for example Finance, IT) rests with Directors of
      Corporate Services and Directors of Finance and Administration.
      Some Institutions of Government have their roots in local legislation: for example, the
      establishment of a Public Service Commission, which is the autonomous body responsible for
      the making of appointments in the Public Service, is entrenched in the Constitution of Malta.
      Other institutions are enacted by law as statutory corporations, authorities or as limited liability
      companies.




      DRAFT                                                                                           274
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




The Grading Structure
Employees in the Public Services are classified into 20 salary scales subdivided into 4
categories: A, B, C and D. Category A includes Scales 1 to 5 and represents Top Management,
category B includes Scales 6 to 9 and represents Senior to Middle Management, category C
includes Scales 10 to 14 and represents the Technical, Executive and Supervisory Grades and
category D includes Scales 15 to 20 and represents the Tradesmen and Industrial grades.

Top Structures
Positions above the grade of Senior Principal are those of Assistant Director, Director, Director
General, and Permanent Secretary. Incumbents of these positions generally constitute the
management structure of the Public Service. Appointments to these positions are usually on the
basis of a three-year performance contract.

Legal and Administrative Framework
The rights and obligations common to all categories of public officers and the procedure to be
followed in appointing, dismissing and disciplining public officers are entrenched in the
Constitution of Malta and the Public Service Commission Regulations. Moreover, policies and
directives affecting public officers are incorporated in a manual known as the ESTACODE,
while a Code of Ethics for Employees in the Public Sector provides a framework of standards of
correct behaviour expected of public officers.
As far as the institutional framework is concerned, the law provides for the appointment of an
Ombudsman, whose role is to investigate complaints, including those lodged by public officers,
regarding any action taken by persons or other authorities in the exercise of their functions.
Recourse can also be made by public officers to the Constitutional Court (for example in cases
concerning infringements of human rights) and the ordinary courts for the resolution of disputes.
The remedies available through the courts are normally those contemplated for civil law
disputes. These would include the possibility of protection through the issue of warrants of
prohibitory injunction and other warrants pending the hearing of a case, and the award of
damages. The Ombudsman may also recommend orders of specific performance (for example
promotion, employment or reinstatement). In such cases, prior approval by the Public Service
Commission is required before such orders could be implemented.
The allocation of Ministerial portfolios and responsibility for Government Departments,
authorities and other organisations is as follows:

Office of the Prime Minister
Armed Forces, Oil Exploration, Public Service, Information, Government Information
Technology Services, Government Printing Press




DRAFT                                                                                        275
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Ministry for Social Policy
Social Security, Family and Social Welfare, the Elderly, Women in Society, Housing, Industrial
Relations, Labour, Employment and Training, Co-operative Systems, Housing Construction and
Maintenance, Parliamentary Affairs

Ministry of Education
Education, Science and Technology Policy, Libraries and Archives, Museums, the Arts, Theatres
and Mediterranean Conference Centre, Public Broadcasting Services, Youth, Sport

Ministry of Finance
Budget Office, Accountant General’s Office, Inland Revenue, Customs and Excise, Indirect
Taxation, Public Lotto, Central Bank, Malta Financial Services Centre, Malta Stock Exchange,
Contracts

Ministry for the Environment
Environment, Drainage, Public Cleansing and Waste, Capital Construction Projects, Works

Ministry of Tourism
Tourism, Malta Tourism Authority

Ministry for Transport and Communications
Civil Aviation, Malta Maritime Authority, Public Transport Authority, Traffic Planning, Arterial
and Distributor Roads, Vehicle Licensing and Inspectorate, Postal Services Regulator, Wireless
Telegraphy, Telecommunications Regulator

Ministry for Economic Services
Small Business and the Self Employed, Industry, Malta Development Corporation, Institute for
the Promotion of Small Enterprises, Malta Freeport Corporation, Economic Development Policy,
Technical Assistance, Statistics, Import and Export Trade, Consumer Protection, Competition
Policy, Government Investments, Air Malta p.l.c., Maltacom p.l.c., Malta International Airport
p.l.c., Drydocks and Shipbuilding, Water Services Corporation, Enemalta Corporation, Industrial
Property, Malta Standards Authority, Malta Export Trade CorporationTCO.

Ministry for Home Affairs
Police, Immigration, Airport Security, Civil Protection, Prisons, Passports, ID Cards, Citizenship
and Expatriate Affairs, Planning Authority, Land, Joint Office, Notary to Government, Public
Registry, Land Registry

Ministry for Agriculture and Fisheries
Agriculture, Horticulture, Fisheries, Aquaculture




DRAFT                                                                                         276
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




Ministry for Gozo
Gozo Affairs

Ministry for Health
Health

Ministry for Justice and Local Government
Attorney General’s Office, Courts of Justice, Justice, Local Government, Quality Service
Charters

Ministry of Foreign Affairs
Relations with European Union, Relations with Foreign and Commonwealth Countries,
Relations with International Institutions

Capacity Building Process of Corporate Services
The capacity building of Corporate Services Directorates has been identified as one of the key
activities currently being undertaken as part of the Public Service change programme. The
Directorates of Corporate Services were set up in 1993, one in each Ministry, to provide support
to line departments in policy and planning, financial management, human resource management,
customer care and public relations, office services, information technology and internal audit.
The Corporate Services Department is a key component in the drive towards quality services and
customer focus. It is responsible for HR Management and Development, Finance, and Business
Planning, and, therefore, supports client-centred initiatives within the Ministry.
The capacity building process is also in synchrony with the decentralisation of duties and
responsibilities from the centre, that is from the Ministry of Finance and the Management and
Personnel Office (MPO) to the respective Directorates of Corporate Services, once these have
been consolidated. The MPO is responsible for HR policy and planning, training and staff
development policy, employee relations, resourcing and industrial relations. It consists of four
departments, Policy and Planning, Staff Development Organisation (SDO), Employee Relations,
and Resourcing, and is headed by a Director General. In the medium term, all the casework
relating to HR will eventually be devolved to these Directorates.
As a result, the MPO’s role will focus more on HR Policy rather than implementation. It will be
mainly concerned with formulating policies and procedures that will then be implemented by
Departments of Corporate Services (DCSs) with the support of the MPO itself. The MPO will
also provide advice to DCSs on different aspects of HR Policies. This process has already
started in the case of external training (through the SDO) and disciplinary procedures (through
the Employee Relations Department).
The role of MPO vis-à-vis the ministries will, therefore, be that of policy formulator, mentor and
monitor. The MPO itself, will therefore, have to restructure in order to take on this new role
which is substantially different from how it operates today. It is the intention, indeed the
determined goal, of MPO to free itself from the day-to-day administration and to focus on the




DRAFT                                                                                         277
MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                            August 2001Final Draft




more substantive issues, such as industrial relations, policy development and analysis, and
information management.
In the short term, and in order to support the capacity building process, the MPO, through the
SDO, will embark on a modular programme aimed at establishing good practice in Finance, HR
Management and Development and Information Resource Management, developing participants’
analytical and corporate skills in an increasingly demanding environment. This initiative will
also help DCSs implement changes within their departments. The methodology to be used in
this modular programme will be a mix of case work, work-based assignments and individual and
group feedback.

Office of Review
Another important initiative being undertaken to strengthen the administrative capacity of the
Public Service is the setting up of an Office of Review within each Ministry to lead the process
of change and to implement identified initiatives. The Office of Review will be required to
develop and implement, along with senior management, action plans to address operational
processes, systems, and the legal and organisational framework. Offices of Review will be
established in all Ministries.
A senior person will be appointed to head the Office of Review as Change Manager on a full-
time basis. The Office of Review will report directly to the Ministry’s Permanent Secretary
who, in turn, will be accountable to the Public Service Change Committee consisting of a
Cabinet Minister, the Head of the Public Service, and other change protagonists. The EU desk
officers and the Customer Care desk officers in the Ministries will form part of the Review
Offices.
In essence, the role of the Office of Review in each Ministry is to (i) plan, monitor and evaluate
the programme of change and project submissions of line departments to ensure that they are
consistent with the overall vision and objectives of the Ministry (ii) monitor and control the
implementation of the capital and recurrent programmes, and (iii) plan and evaluate the
organisational and human resource development of the Ministry.
The Office of Review will be resourced by staff from within the Ministry who will undergo
specialised training to enable them to fulfil the required roles and responsibilities.

Public Service Bill
A draft Public Service Bill has been drawn up and is currently being considered by Government.
The Bill is directed towards:
     focusing the role of the Public Service on its core business of policy development and
      formulation, and regulation where appropriate, and migrating execution and operations
      towards executive agencies;
     decentralising management decisions and authority to Heads as far as possible;
     redefining organisations in terms of positions;
     establishing tenure based appointments to the Public Service as the norm in order to
      underpin the Public Service as a career based institution whilst at the same time allowing
      for task specific based employment;




DRAFT                                                                                         278
MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                           August 2001Final Draft




     reinforcing the institutional ethos of the Public Service by identifying the values that it
      should adhere to; and
     defining the roles and responsibilities of Ministers, Permanent Secretaries and Heads.
The Bill is premised on the experience of the past decade in Public Service reform and on the
experience of other public services elsewhere. The Bill, therefore, departs from the current set-
up to present a new conceptual framework for the Public Service that will enable it to focus on
and meet current and future challenges.

Improving Management Information Systems
Information systems are increasingly supporting ministerial and departmental business needs. In
effect, the Public Service has also established information systems in the principal areas of its
business, namely Human Resource Management and Payroll, Finance (Departmental Accounting
System) and Procurement.
Further investment in IT in the short to medium term is being guided by an Information Systems
Strategic Plan (ISSP) drawing on the experience of the Public Service and at the same time
proposing new systems to meet the specific needs of departments.
The ISSP (1999-2001) also concluded that existing systems and the IT infrastructure itself are
not being fully utilised. To address this problem, a Central Information Management Unit
(CIMU) was set up in early 1999 to recommend good practice in information management in the
Public Service and to assist Heads of Department to maximise the efficient and effective use of
existing and proposed IT systems.

Staff Training and Development
Much of the current activity in training and development stems from the needs of ministries,
departments and individuals. However, greater emphasis is being placed on the measurement of
the effect of training. Ministries and departments are becoming increasingly oriented towards
achieving results and so much effort is being devoted by the Staff Development Organisation
(the central agency responsible for training policy) to developing both managerial and technical
skills.
The SDO has also delegated external training initiatives to departments. This has led to a much
greater diversity of training solutions.
There is also a growing awareness that government organisations, like any others, can only
achieve success through their people, and that particularly in times of change an even greater
flexibility is required in terms of the skills, knowledge and attributes that an individual
contributes. This has tended to raise the status of the training and development function in the
Public Service.
Much is being done across the Public Service (with the help of the recently set-up Institute of
Public Administration and Management at the University of Malta) to ensure that senior officials
are equipped with the skills, experience and capabilities they need now and in the future. The
SDO has a formal Senior Management Development Programme in place already. This
programme is being held on a regular basis and plays an increasingly important part in the




DRAFT                                                                                        279
MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                             August 2001Final Draft




development of senior officials. It is also the intention of the SDO to develop in the year 2000 a
competency model for senior management that would serve as a benchmark to measure standards
of good practice, performance, and development needs.
Another important development is the identification of ‘external’ training needs and the plans
being made across the Public Service to support internal and external training initiatives over the
short to medium term.
In 2000, training and development activities will support Public Service initiatives such as the
Quality Service Charters, the delegation of disciplinary procedures, further investment in
Information Technology, and measures aimed at improving managerial and organisation
effectiveness.
In the medium term, it is envisaged that specialised training for officials directly involved in EU
matters be provided. Contacts have already been made with institutions such as HAUS, the
Finnish Institute of Public Management and the Centre for European Studies in Strasbourg,
France to seek partners and expertise on EU Training. The ‘New Partners in EU’ seminar, an
activity organised jointly with HAUS, will be held in Malta in the year 2001. The SDO also
selects and sponsors officials for three-month attachments to the European Commission and for
MBA scholarships.

Quality Service Charters
Quality Service Charters in Government departments have been introduced and as at end 1999 a
total of 25 Service Charters were launched. The introduction of Quality Service Charters reflect
the Government’s commitment to higher standards of service to the public.
This initiative has also played a part in emphasising the citizen’s right to expect a reasonable
level of good service from Public Service employees and has given added weight to the
importance of achieving high quality results first time round. Through the use of appropriate
information technology and support, it is also increasingly becoming possible to develop further
the concept of a one-stop-shop in the provision of public sector services.
Departments that guarantee quality services are awarded a Charter Mark. The aim of the award
is to promote high standards of information, openness, courtesy and helpfulness.
Further Quality Service Charters will be introduced in the short to medium term. This initiative,
however, is a five year programme of reform intended to raise the standards of public services
and make them more responsive to their users. The Charter initiative will eventually cover a
very wide range of services premised on principles of standards, openness, courtesy, helpfulness,
and value for money.
Essential to the success of this initiative is the long-term commitment of the Charter Support
Unit and that of the front line staff who have to deliver the improvements with the same level of
resources. The Charter initiative is in that sense resource-neutral. It involves reorientating and
resetting priorities, not the injection of additional funds.




DRAFT                                                                                          280
      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
                                                                                    August 2001Final Draft




4.2   Local Government
      Although the Constitution of Malta makes various references to local government, for historical
      reasons the Constitution does not provide either for local or regional authorities. There are a total
      of sixty-eight Local Councils (fifty-four in Malta and fourteen in Gozo) and they are regulated
      by the Local Councils Act (Cap. 363). This Act is in line with the European Charter of Local
      Self-Government which has been signed and ratified by the Government of Malta.
      Each Local Council is a statutory local government authority having a distinct legal personality
      and capable of entering into contracts, of suing and being sued, and of doing all such things and
      entering into such transactions as are incidental or conducive to the exercise and performance of
      its functions as are allowed by the relative Act.
      Local Council elections for 22 or 23 localities (depending on the year) are held every March,
      such that every Council is voted in for a period of three years. The number of Councillors for