MALTA National Programme for the

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					MALTA: National Programme for the
Adoption of the Acquis, as at January 2002




MINISTRY OF FOREIGN AFFAIRS
MALTA

Final Draft
MINISTRY OF FOREIGN AFFAIRS                          National Programme for the
MALTA                                                     Adoption of the Acquis
                                                                  FINAL DRAFT




Contents


Introduction                                                                 1
The Structure of the NPAA                                                    1
Implementation of the NPAA                                                   2

1     Political Criteria                                                     3
1.1   Democracy and the Rule of Law                                         3
1.2   Protection of Human Rights                                            5
1.3   The Executive, the Legislature and the Judiciary                      8
1.4   Anti-Corruption Measures                                             11

2     Economic Criteria                                                    14
2.1 The Copenhagen Criteria                                                25

3     Assuming the Obligations of Membership                               27
3.1 Internal Market                                                        27
      3.1.1   Free Movement of Goods                                         27
      3.1.2   Free Movement of Persons                                       44
      3.1.3   Free Movement of Services                                      54
      3.1.4   Free Movement of Capital                                       61
      3.1.5   Company Law                                                    69
      3.1.6   Competition                                                    73
      3.1.7   Customs Union                                                  79
3.2 Innovation                                                             86
      3.2.1   Education, Training and Youth                                 86
      3.2.2   Science and Research                                          90
      3.2.3   Telecommunications and Postal Sector                          94
      3.2.4   Culture and Audiovisual                                      103
3.3 Economic and Fiscal Affairs                                          108
      3.3.1   Taxation                                                     108
      3.3.2   Economic and Monetary Union                                  117
      3.3.3   Statistics                                                   126




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MINISTRY OF FOREIGN AFFAIRS                                National Programme for the
MALTA                                                           Adoption of the Acquis
                                                                            Final Draft




3.4 Sectoral Policies                                                           136
      3.4.1   Industry                                                            136
      3.4.2   Agriculture                                                         142
      3.4.3   Fisheries                                                           175
      3.4.4   Energy                                                              183
      3.4.5   Transport                                                           188
      3.4.6   Small and Medium Size Enterprises                                   203
3.5 Economic and Social Cohesion                                                208
      3.5.1   Social Policy and Employment                                        208
      3.5.2   Regional Policy and Cohesion                                        221
3.6 Environment and Quality of Life                                             230
      3.6.1   Environment                                                         230
      3.6.2   Consumer and Health Protection                                      251
3.7 Justice and Home Affairs                                                    255
3.8 External Policies                                                           267
      3.8.1   Trade and International Economic Relations                          267
      3.8.2   Common Foreign and Security Policy                                  274
3.9 Financial Questions                                                         278
      3.9.1   Financial Control                                                   278
      3.9.2   Financial and Budgetary Matters                                     284


4     Administrative Capacity to Implement the Acquis289
4.1   Administrative Structures and Systems                                     289
4.2   Local Government                                                          297
4.3   Twinning                                                                  298
4.4   Administrative and Legal Capacity                                         301

5     Summary Financial Assessment                                             302




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




Introduction
During its preparations for 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. An updated version of the NPAA was issued in 2001.
This document further updates the NPAA to January 2002, and incorporates the progress made by
Malta in adopting the acquis and in establishing the necessary administrative capacity. It also
reflects the insights and experiences gained 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 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 included.
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 sector and identifies the progress
achieved to date. Short term priorities are defined, focusing on the 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




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MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                                       Final Draft




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.




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      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
                                                                                                Final 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 control




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




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.




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      MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
      MALTA                                                                        Adoption of the Acquis
                                                                                               Final 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 children born out of wedlock will bring about a change to the Civil Code (Cap.
      16) currently governing such rights.
      The Criminal Code (Amendment) Act was published as Bill No. 28 on 26 June 2001 following
      public consultation on the White Paper published in November 2000. The amendments aim at
      enhancing the provisions dealing with the fight against racism and xenophobia, by criminalising
      racist behaviour. Up to now such behaviour could give rise only to a right of redress in constitutional
      human rights actions based on Chapter IV of the Constitution and article 14 of the European
      Convention on Human Rights. The Bill enhances Malta‟s capacity to implement the EU Joint Action
      of 1996 concerning action to combat racism and xenophobia. Racial hatred, which is defined as
      anything that is planned to stir up hatred against persons on the basis of race, nationality or ethnic
      origin, will be considered a criminal offence. This covers threatening abusive or insulting words or
      behaviour or displays in any written form.
      The Equal Opportunities (Persons with Disability) Act (Cap. 413) came into force on October 2000.
      It prohibits discrimination against persons with disability on the basis of physical and/or mental
      impairments and formally sets up and gives a legal identity to the National Commission for Persons
      with Disability.
      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




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




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.
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.
Following the adoption of the Refugees Act in 2000, Government has set up the Refugees
Commission to handle applications by asylum seekers and the Commissioner for Refugees has been
appointed. Appeals will be heard by the Refugee Appeals Board, composed of three persons. In the
wake of the entry into force of the Refugees Act, Malta has, in December 2001, also lifted the
geographical reservation to the 1951 UN Convention on the Status of Refugees.
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




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MINISTRY OF FOREIGN AFFAIRS                                        National Programme for the
MALTA                                                                   Adoption of the Acquis
                                                                                    Final Draft




     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

ILO Convention
     ILO Convention 182 and Recommendation 190 concerning the Prohibition and Immediate
      Action for the Elimination of the Worst Forms of Child Labour




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      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
                                                                                                Final 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 Constitution of Malta was amended in April 2001, entrenching the system of local government.
      It is now stipulated that the "territory of Malta shall be divided into such number of localities as may
      by law be from time to time determined, each locality to be administered by a Local Council elected
      by the residents of the locality and established and operating in terms of such law as may from time
      to time be in force."

      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.




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




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 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.




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




The Small Claims Tribunal is presided over 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 eighteen Judges (including the Chief Justice), fifteen Magistrates, ten
Commissioners of Justice and six 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.
A Code of Ethics for members of the judiciary was launched in May 2001 by the Commission for
the Administration of Justice. This code consists of twenty-eight rules regulating the conduct of
judges and magistrates. The code effectively gave a concrete form to rules already practised by the
judiciary.




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      MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
      MALTA                                                                        Adoption of the Acquis
                                                                                               Final 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 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 been made or
      given to their prejudice, as well as any disability or restriction to which they have been subjected by




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




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.

Amendments to the Criminal Code
The Criminal Code (Amendment) Act published as Bill No. 28 on 26 June 2001 and currently
before Parliament will extend existing provisions on corruption to include the bribery of officials




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MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                                       Final Draft




of foreign Governments and international organisations, and will take into account the Council of
Europe Criminal Law Convention on Corruption (1999) and other related EU instruments.




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    MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
    MALTA                                                                        Adoption of the Acquis
                                                                                             Final Draft




2   Economic Criteria
    Objectives
    Malta‟s main economic 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.

    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
    further liberalise the Maltese economy and modernise its underlying structures. In the Budget
    Speech for 2002, Government announced a series of new measures intended to complement the
    deficit reduction plan initiated in 1999. The measures and initiatives introduced in the past years
    will be consolidated whilst, in certain areas, the momentum of change will be accelerated.

    The programme of reform and restructuring of the economy will continue to be unfolded in the
    coming years. This process, together with measures to effectively address the public finance
    situation, should continue to build the foundations for sustainable economic development in the
    future. It will also enable the Maltese economy to 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 Lm1,201 million in 1996 to Lm1,561 million in 2000.
    Average yearly nominal GDP growth during the five years to 2000 stood at approximately 6 per
    cent compared to the 9 per cent growth rate registered in the first five years of the 1990s.
    Nominal GDP grew by 7.2 per cent during 2000, which represents a real growth rate of 5.3 per
    cent. The rate of growth of GDP at current market prices during the first nine months of 2001
    stood at 4.4 per cent.

    The structural composition of the Maltese economy changed dramatically in the early nineties
    with an increasing emphasis on service-orientation. Market services accounted for around 48 per
    cent of GDP at factor cost during 2000. The gainfully occupied population stood at 136,117 in
    December 2000, whilst the unemployment rate dropped to 5.0 per cent. The inflation rate (as
    measured by the 12-month moving average for the Retail Price Index) stood at 2.9 per cent in
    December 2000. The rate of inflation in Malta compares favourably with the rates of inflation in
    most industrialised countries. The Maltese lira is tied to a basket of foreign currencies, with the
    Euro representing a significant component.




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




Key Macroeconomic Indicators


                                             1996      1997      1998          1999        2000

Gross Domestic Product
GDP at constant market prices (% change)     4.0       4.9       3.4           4.1         5.3
GDP at current market prices (Lm million)    1,201     1,288     1,362         1,456       1,561
Nominal GDP per capita (Lm)                  3,212     3,421     3,599         3,830       4,080

Share in GDP at factor cost (%)
Direct Production                            35.5      35.7      36.2          36.1        37.0
Market Services                              47.2      48.0      48.3          48.8        48.2
Non-market Services                          17.3      16.3      15.5          15.1        14.8

Employment
Gainfully Occupied Population                133,195   132,943   133,024       134,001     136,117
Unemployment Rate (% of Labour Supply)       5.0       5.5       5.6           5.8         5.0

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 and services (Lm million)   1,025     1,072     1,167         1,293       1,572
- Share of GDP at cmp (%)                    85.3      83.2      85.6          88.8        100.7
Imports of goods and services (Lm million)   1,186     1,174     1,248         1,372       1,742
 - Share of GDP at cmp (%)                   98.8      91.1      91.6          94.2        111.6

Current A/C Balance (% of GDP at cmp)        -12.2     -5.9      -6.2          -3.4        -14.8


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




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      MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
      MALTA                                                                        Adoption of the Acquis
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      The Maltese economy is characterised by a high degree of openness. The EU is Malta‟s main
      trading partner, and in 2000 accounted for around 60.0 per cent and 32.9 per cent of imports and
      exports, respectively.

      Malta has traditionally suffered a negative trade balance. Around 80 per cent of the total turnover
      in the local manufacturing industry is directed for export, although a number of sub-sectors
      continue to rely extensively on the domestic market for their sales. Part of the trade deficit is
      compensated for by the foreign exchange earnings of the tourism industry which represent 17 per
      cent of total exports of goods and services.


2.1   Structural Reforms
      Restoring Public Finances
      The increases registered in the budget deficit for a number of resulted not only in unsustainable
      deficit levels but also in a rapid expansion in public debt and servicing costs. In 1999,
      Government embarked on a six-year programme aimed at reducing the deficit to 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 several attempts are being made in order to increase
      the productivity levels of the public sector.

      Projections for the six-year plan to reduce the budget deficit have been surpassed. Indeed, the
      plan projected a deficit of Lm121.6 million, or 7.7 per cent of GDP for 2000, yet the actual
      outturn amounted to Lm85.2 million or 5.5 per cent of GDP. Due to the results achieved so far,
      updated projections show that the deficit in 2004 is projected to fall to 2.5 per cent of GDP.

      Privatisation
      Malta‟s privatisation drive can be traced back to 1988. As a result achievements, today the role of
      the Government in the economy has been significantly reduced. Still, Government plans to divest
      more high quality assets mainly to strategic investors and is being guided by a White Paper
      published in 2000. Negotiations are underway to transfer Government‟s shares in Kordin Grain
      Terminal, a State enterprise responsible for the storage of grains. The Government is planning to
      restructure the operations of the yacht marinas during 2002 with the objective of auctioning
      berthing facilities among interested bidders. Today, practically all Government direct investments
      in the productive sector (with the exception of the shipyards) have been privatised.

      In the services sector, the Government partially privatised Maltacom - the fixed-line
      telecommunications operator - by selling 40 per cent of its equity holding. In 1999, Government
      shareholding in a major credit institutions were sold to an international bank thus heralding the
      end of state control in this important sector of the Maltese economy. Government intends to sell
      its remaining stake in Bank of Valletta and Maltacom by 2002. Moreover plans to partially
      privatise Malta International Airport are underway.

      The privatisation of Public Lotto is also proceeding and Government is expected to receive an
      up-front payment together with an annual return for seven years equal to the current yield from




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




the annual license and tax from profits. The Lotteries and Gaming Authority was established as
the new regulator.

Furthermore, Government is divesting its non-core operations by outsourcing functions
previously carried out by public sector controlled bodies.

Taxation
Reforms undertaken in the taxation field were aimed at 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.

The Value Added Tax Act (CAP 406) introduced in 1 January 1999, is fully operational. It is
based on the main principles of the Sixth Directive. Further alignment with the acquis is
envisaged.

The income tax regime was radically 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 monthly basis.

In 2000, a review of certain income tax bands and other minor adjustments to the tax regime were
announced, whilst in 2001 the taxation of fringe benefits started to be enforced. In view of the
fiscal targets achieved during the course of 2001 a revision was announced in the tax-bands for
married couples opting for a joint declaration of income. Moreover tax on a number of fringe
benefits was removed. 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. In 1999, the exemption on excise duty on
alcoholic beverages processed locally was revoked. The announcement of new excise duties of
cigarettes and hand-rolled tobacco in the 2002 Budget brought the excise duty regime in line with
the acquis.

A key priority in Government‟s taxation policy is the improvement of 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 timely payment of taxes.

Furthermore, the Tax Compliance Unit is expected to contribute significantly to improvements in
tax enforcement and to reduce tax evasion. Studies to determine the level of economic activity of




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




nineteen service sectors are being carried out. The benchmarks will be used by the Unit to
identify cases of tax evasion. Moreover, the Unit will be equipped with data warehousing
software aimed at establishing the reliability of tax declarations.

Reform in the Social Security System
Demographic changes, a deteriorating welfare gap and the expansionary influence on
expectations of welfare recipients generated by higher living standards are the main factors
necessitating a review of the existing welfare system.

This review is being conceived within the context of the need to modernise the Maltese economy
and maximising its potential for economic growth through the channeling of more funds to the
productive sectors. The reform in the welfare system is also in line with Government‟s aim at
consolidating public finances, while at the same time ensuring that transfers are focussed on the
needy.

In 1998, Government increased the employees‟ contributory rate from 8.3 per cent to 10 per cent
of the basic wage over a two-year period. At the same time the National Commission for Welfare
Reform was set up with the aim of proposing a framework of systematic reforms in the social
security system.

Moreover, Government is proposing that all social security contributions will be apportioned
between health care insurance and pensions. All other remaining benefits will be provided from
the Consolidated Fund. Government will continue to pay half of all the contributions collected in
the following way:

- contributions related to health care insurance would go towards financing the cost for health
    care and care for the elderly;
- contributions related to pensions will go towards financing contributory pensions and other
    related benefits.

The proposed changes will pave the way for any future reform initiatives in the area of pensions
and health insurance. In this regard, it is being proposed that persons covered by an approved
private health insurance scheme will pay towards their health costs from this private insurance.
Depending on circumstances, insurers‟ contributions towards the Government scheme will be
reduced over a number of years, ending their liability for such contributions.

Reform of the Public Sector
Throughout the 1990s, the Government‟s economic policy emphasised the need to reduce the size
of the public sector, whilst providing private sector initiatives a more direct role in the Maltese
economy. Government‟s policy of reducing the fiscal deficit as well as the privatisation
programme that is being implemented also contribute towards this goal. Measures to contain the
number of public sector employees, including significant control over enrolment of new staff,
were undertaken.

Meanwhile, steps to increase public sector efficiency and productivity are envisaged. The reform
of the public sector has been on the agenda for a number of years. Government adopted a new




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




dimension in 2001 to its public sector reform programme through the introduction of Private
Public Partnerships (PPPs). The objective of the PPPs is to combine the resources of the private
and public sectors to carry out infrastructural works. In particular, private sector management
expertise and public sector labour resources and finance will be combined to carry out specific
infrastructural projects.

In the past few years the public sector has been gradually improving its structures in order to
provide more efficient services as well as to ensure accountability to the public. During 2001, the
pace of reforms was accelerated, in part due to the technical and financial assistance provided by
the EU. On its part the Government is devoting some of its financial resources in providing
training to public service employees as well as in upgrading institutions which provide a public
service. The programme, spread over four years, is being implemented in various areas including
health and safety at work, educational and research programmes, quality standards in consumer
goods, the maritime sector, environment and agriculture.

Industrial Relations
A White Paper proposing changes to the Conditions of Employment Regulations Act (CERA)
and the Industrial Relations Act (IRA) was published in 2001. The White Paper was the result of
extensive social dialogue between the social partners started in 1992 within the former Malta
Council for Economic Development (MCED).

The Employment Relations Act (ERA) which is to substitute the CERA includes a number of
changes to the minimum applicable conditions of employment such as overtime, maternity leave,
parental leave and reduced hours. Better conditions of employment for part-time employees are
envisaged. The proposed ERA recognises the provisions of the Occupational Health and Safety
Authority Act (Cap. 424) and any regulations thereunder as conditions of employment. The Act
also provides for more protection against discrimination and abuse of conditions of employment,
including the ill treatment and abuse of foreign workers and sexual harassment. The setting up of
a guarantee fund to be utilised in cases of employer insolvency is also being proposed. The new
ERA guarantees the right of employees to minimum information on basic employment
conditions, whilst the probationary period is to be increased to six months. Other proposals
include the regulation of collective redundancies and the legitimisation of less favourable
conditions of employment in cases of enterprises facing financial difficulties.

Meanwhile, the new IRA includes the following main changes:
- Definition of union recognition for collective bargaining and trade disputes;
- Consideration of a number of sectors as providing essential services;
- The right of appeal on a point of law in cases involving unfair dismissals and the rights and
   conditions of work granted by ERA except cases referred to the Industrial Tribunal.

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 came in 1994 when the
Government notified the International Monetary Fund (IMF) that Malta had accepted the
obligations of Article VIII of the Fund‟s Articles of Agreement. As a result of this decision,




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




Malta became, from an IMF perspective, a developed economy. 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 aimed at removing most controls on capital transactions
by the date of EU accession.

The first phase, which commenced in 2000, focused on the relaxation of restrictions on inward
and outward investment of a long-term nature, in particular direct investment. At the same time,
however, a limited number of liberalisation measures involving transactions of a medium to
short-term nature were also introduced.

A second liberalisation phase was introduced in 2001. This included further relaxation of controls
on outward investment in real estate, higher ceilings on the amount that residents may invest in
portfolio assets abroad and the liberalisation of lending/borrowing transactions between residents
and non-residents where the maturity period exceeds one year. Controls on certain types of short-
term capital transactions were also relaxed, such as the amount that residents may maintain in a
foreign currency current account with local credit institutions.

Further exchange control liberalisation earmarked for 2002 are intended to further relax the
quantitative limits on current payments and to remove restrictions on a number of capital
transactions. These include:

   - a further increase in the limit allowed for travel purposes and foreign currency purchases;
   - the removal of all quantitative limits on investment by residents in real estate overseas;
   - an increase in foreign portfolio investment allowance for residents;
   - an increase in the limit allowed in investments in foreign currency by fund investment
       schemes (SICAVs);
   - an increase in the limit on foreign currency balances held by residents (including foreign
       currency accounts);
   - allowed listing of locally registered fund management companies‟ securities on recognised
       international capital markets;
   - liberalisation of the granting of guarantees by residents in favour of non-residents and the
       removal of restrictions of certificate transfer;

As part of this liberalisation process it will be necessary to review the legislation regulating
exchange controls which was enacted in 1972. This legislation has undergone very little change
over the years because liberalisation measures have mostly been introduced through legal notices.
A committee was set up to make recommendations on new legislation to establish a modern
administrative framework.

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, respectively. The relative weights in the currency basket
were last adjusted in December 1999 to reflect trade flows. The Central Bank will continue to




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




assess the composition of the Maltese lira basket to ensure that the weights allocated to the
various currencies reflect Malta‟s trade patterns and broader economic developments and to
ensure that the objective of price stability can be maintained.

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 when the Central
Bank widened the margins on its 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. The range of monetary
policy tools available to the Central Bank was also widened. The legislative amendments that
were introduced gave new autonomy to the 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.

The primary objective of the Central Bank‟s monetary policy is the maintenance of price
stability. The Central Bank seeks to achieve this goal by pegging the exchange rate of the
Maltese lira to a basket of currencies. In this way, the Bank limits imported inflation which is a
key concern in an extremely open economy.

In line with its commitment to strengthen the Central Bank‟s role in the conduct of monetary
policy, Government has prepared changes to the Central Bank of Malta Act, which will be
presented to Parliament in the first quarter of 2002. The amendments are aimed at formally
establishing price stability as the Central Bank‟s primary objective, increasing its independence
and ensuring that Government deficits cannot be financed directly by the Bank. The amendments
will also give the Bank a key role in overseeing the payments system, whilst reinforcing its
ability to collect monetary and other statistics. Given that the Bank already conducts monetary
policy autonomously, and that it has refrained from participating in the primary market for
Government paper for some time, these amendments are unlikely to result in major changes to
the way the Bank operates in practice.

Financial Sector
A primary goal of Government in the last decade has been to develop an international financial
services centre. Various steps were taken to liberalise the financial sector. In the early nineties, a
capital market was set up with the establishment of the Malta Stock Exchange (MSE). A fully
functioning money market was established in 1995. The domestic financial market is 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 effectively channel funds to productive
sectors of the economy and to speed up the momentum of financial activity.

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
global bank should contribute to the development of new financial instruments and to boost
efficiency in the banking sector for the general benefit of the Maltese economy.




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      MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
      MALTA                                                                         Adoption of the Acquis
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      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 will be brought into effect by December 2002.
      A deposit insurance scheme in line with EU requirements will also be introduced.

      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, legislation was implemented in 1998 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 while
      the legislative and regulatory infrastructure for this sector is being introduced.

      As from 1 January 2002, the MFSC has been appointed as the competent authority to regulate
      and supervise credit and financial institutions. This created a single regulator in financial
      services.


2.2   Sectoral Reforms
      Agriculture and Agro-Industry
      The current situation in the local agricultural sector is not sustainable, and Government is
      committed to assist this sector. As a result of the protectionist policy, the agricultural and agro-
      industry sectors lagged behind in terms of investment renewal and the application of new
      technology resulting in a negative impact on quality enhancement.

      Government is planning a radical reform of its agricultural policy leading to long-term
      sustainability. This would include a gradual dismantling of the remaining levies accompanied by
      transfers to farmers that would guarantee them a fair income. Financial assistance to farmers and
      herdsmen for agricultural development and conservation of the countryside will also be provided.

      Manufacturing
      Government‟s strategic view of future industrial development in Malta are delineated in a White
      Paper “Prosperity in Change: Challenges and Opportunities for Industry” which was published in
      December 1999. Following consultation with the social partners on this White Paper, an
      industrial policy for Malta will be formally launched in the coming months.




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




In order to improve the attractiveness of Malta to foreign investors and to be more in line with
international obligations, the package of incentives which was launched in 1988 under the
Industrial Development Act (Cap. 325), was reviewed and renamed the Business Promotion Act
(BPA). The aim of this Act is to promote industries that demonstrate growth and employment
potential. Unlike its predecessor, it does not have export as the criterion for assistance. In line
with WTO requirements, export-based incentives on new investment have been eliminated.
Under the BPA a number of tax incentives related to type of activity, value added, investment
and research and development initiatives were introduced. Other non-tax incentives were also
provided. These include the provision of industrial buildings, soft loans, subsidised interest rates,
loan guarantees, exemption from import duties, training assistance, provision of work permits
and other incentives for job creation. The new incentive package came in force in November
2000.

The gradual dismantling of the levy structure on imported industrial goods is proceeding
according to the time-table set out in LN 123 of 1999. Since 1999, 177 levies were removed.
Another 392 levies had their rates reduced by 20 per cent on 1 January 2001 and a further 30 per
cent reduction became effective as from beginning 2002. By 1 January 2003 all remaining levies
involved in this process will be removed. The removal of levies will not only imply lower prices
for consumers but will also serve as an incentive for local producers to compete with foreign
producers on both quality and price of goods produced domestically. Levies on agriculture and
agro-industry products are excluded from this schedule in the wake of their intrinsic link with the
reform process earmarked for agriculture.

The restructuring of local industry to enhance competitiveness is an ongoing process and it has
been in place for over 4 years. The Institute for the Promotion of Small Enterprise (IPSE)
launched its main programmes of assistance during July 1999. IPSE also provides 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 at promoting networking,
subcontracting and strategic business alliances were launched in March 2000. Other programmes
are intended to be launched in the near future.

IPSE is also commissioning sector reports 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, various measures will be taken in the coming years to improve the conditions for
enterprise creation and development, with particular focus on small and medium sized
enterprises.

Government has also set up a Secretariat within the Ministry for Economic Services to provide a
specific focus on entrepreneurial policy and to facilitate the operations of the self-employed
sector.

Shipbuilding and Ship Repair
The current strategy for the shipyards is to attain long-term commercial viability on the strength
of their comparative advantages, particularly their highly skilled labour force. The Task Force set
up by Government in 2001 has submitted a restructuring plan for the sector. The plan of action
envisages a reduction in the workforce complement from 3,550 to some 1,600 and includes




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




various voluntary and early retirement schemes as well as programmes for training or support to
retirees to seek alternative employment or business opportunities.

The action plan included a business plan as well as practices designed to improve productivity to
be implemented over the medium term. The aim is to have a shipyard with a more efficient core
ship repair section and other, very product-focused operations. Malta has specifically requested
that the alignment to the acquis on state aid in this area require a transition period.

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.

Tourist arrivals average around 1.2 million a year with the majority visiting Malta during April-
October period. 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 in
ensuring improvements in the number of days stayed and foreign earnings per capita. This is
expected to increase the contribution of the industry to the Maltese economy. Furthermore,
development in the tourism industry in the coming years will be centred on cultural, thematic and
conference tourism, whilst the positive performance of the cruise liner industry will be
consolidated and improved. In order to provide support to the tourism industry, some of the
incentives included in the Business Promotion Act are extended to operators in tourism.

In 1999, the Malta Tourism Authority (MTA) was established under the Malta Travel and
Tourism Services Act (Cap. 409). The Act allows more direct participation by the private sector
in national planning and development of the sector in an endeavour towards a comprehensive and
integrated approach in the industry. MTA‟s role includes the planning and regulation of the
tourism industry, together with the promotion of the Maltese Islands as a tourist destination.
Within this context, the Government provided MTA with a budget of around Lm32 million
spread over 4 years to finance marketing, advertising and promotional campaigns aimed at
attracting more inbound tourists.

In order to maintain Malta‟s competitive position and improve the local tourist product, the Malta
Tourism Authority launched its first Strategic Plan covering the 2000-2002 period. The
underlying principle of this Plan is the achievement of sustainability through a wide spread of
arrivals throughout the year and higher foreign earnings per capita.


Freeport Activities
Significant investment has been undertaken to develop the Freeport facilities into a transshipment
hub and to exploit Malta‟s 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 ensure that
the systems operated at the Freeport can compete with the efficiency and productivity levels
which are found in neighbouring ports. Preparations for the privatisation of the Freeport are in
their final stages.




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      MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
      MALTA                                                                        Adoption of the Acquis
                                                                                               Final Draft




2.1   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 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.




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final 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.




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        MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
        MALTA                                                                          Adoption of the Acquis
                                                                                                   Final 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, which include import/export bans on a number of commodities. These import
        and export licensing procedures are currently in the process of being streamlined in line with the
        acquis. 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.
        As part of the ongoing process of adopting the acquis through the abolishing of import licensing
        procedures, the Importation (Control) (Amendment) Regulations (LN 87/01), issued under the
        Supplies and Services Act (Cap. 117) were published on 17 April 2001and became effective on 18
        April 2001. This legislation removed a group of products from import licensing control including
        gas and electric generators, electric generating sets, gas regulators, gas pressure instruments and
        apparatus, oil and fuel bowsers and refuse collecting vehicles. This process will be completed by the
        fourth quarter of 2002 to ensure that all import and export licensing that is not compatible with the
        acquis will be phased out completely.
        Controls on weapons, firearms and ammunition as well as antiquities and cultural objects will be in
        line with those allowed by the 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 the section on Environment.
        The Malta Crafts Council, established by the Malta Crafts Council Act (Cap. 421), was brought into
        force on 21 November 2000 to encourage, promote and regulate crafts, in particular crafts forming
        part of Malta‟s cultural heritage. An appropriate system for the certification of the genuineness of
        Maltese craft products, materials and process was launched on 13 July 2001. The Registration of
        Craftsmen and Entrepreneurs (Malta Crafts Council) Regulations, 2001 (LN 157/01) and Maltese
        Craft (Constitution) Order, 2001 (LN 158/01) regulating the registration of craftsmen and
        entrepreneurs with the Malta Crafts Council entered into force on 1 July 2001.




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




The proposed Heritage Act was published as Bill No. 137 on 14 August 2001. The Bill provides for
the setting up of a Superintendent Directorate, an Operating Agency, a Committee of Guarantee and
the National Heritage Database and will transpose Directive 93/7/EEC (regulation of trade in
national cultural treasures). The proposed Heritage Act will be enacted and come into force in 2002.
The first trial run of the National Heritage Database, using the Geographical Information System
(GIS) was held in April 2001.

Price Control
The current 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 and will be in line with Community practices in this area.

Removal of Levies
The Malta Government by Legal Notice (LN 123/99) 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, second and third list of products were removed in October 1999, January 2000
and January 2001 respectively.

B. Short Term Priorities

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 (Regulation 1334/2000 as amended by 2432/2000);
        Chemicals under Schedule 1 of the Chemical Weapons Convention;
        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




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




        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 be adopted and 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 3911/92and 752/93).
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).

C. 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.




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




D. 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 within the Ministry of Finance 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.
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.
The revised Public Contracts Regulations, 2002 have been finalised and are currently under review.
These new Regulations will include appropriate annexes listing the Public Authorities and the Public
Undertakings, which will be obliged to adhere to EU Procurement Directives. Entities that fall under
the EU definition of “Public Undertaking” or “Body governed by Public Law” may immediately be
required to adhere to harmonised Regulations rather than go through the primary stage of adhering to
the current Regulations. The regulations include modifications enabling adherence with the acquis
including 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, as well as the




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




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.
The harmonised Regulations cater for the granting of the necessary authority to the Director of
Contracts and his Department to provide pre-contractual remedies to aggrieved tenderers. The
remedies to be provided are those required in the acquis and will lay the basis for the setting up of
the new Public Contracts Appeals Board. The Appeals Board will substitute the Director of
Contracts and the General Contracts Committee in the determination of complaints submitted by
bidders with regard to the actual award of a contract or in the case of the disqualification of any
tender in the first two stages of the Three Package Tendering Procedure. The appellate board will be
composed of three competent persons to be appointed by the Prime Minister. Such appeals will be
heard against decisions taken according to the present procedure and which the aggrieved tenderer
opts to contest further.
Current review procedures 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. The parties involved can contest any final decision by the Director of Contracts in
Court. Tenderers will retain this right when the Public Contracts Appeals Board is set up. 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) 2001 and brought this area in
full compliance with the acquis.

B. Short Term Priorities
a) Adopt the Public Contracts Regulations 2002 that will incorporate all the elements necessary for
conformity with the acquis for contracts valued in excess of the thresholds. The Regulations will
consolidate the various components of the procedure into one comprehensive document to ensure
greater visibility and prompt access by prospective tenderers from EU Member States. The new
regulations will de facto:
i) Ensure adherence by all Government Departments and other contracting entities.
ii) 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
contracts exceeding Lm20,000 in value.
iii) Ensure that Local councils as well as public authorities undertakings shall become subject to the
harmonised Public Service (Procurement) Regulations on accession.

C. 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.




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
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Area of Activity                                              2001        2002         Total

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



D. 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-enacted by Parliament on 18 July 2000,
primarily to establish the voluntary nature of a standard as distinguished from a mandatory technical
regulation. The principle of a system of functionally independent Directorates has now been legally
established through this Act.
The first three functionally independent Directorates are the Consumer and Industrial Goods
Directorate, the Foodstuffs, Chemicals and Cosmetics Directorate and the Standardisation
Directorate. LN 312 of December 2001 established the Metrology Directorate and LN 313 of
December 2001 established the Accreditation Directorate, thus completing the restructuring exercise
within the Malta Standards Authority (MSA) that commenced following the re-enactment of the
Malta Standards Authority Act. These set-ups ensure the functional separation of the MSA‟s various
roles and protect each Directorate‟s independence in areas of decision-making and finance. Co-
ordination of these separate Directorates takes place through the MSA‟s central organisation via the
MSA‟s Chief Executive Officer.
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-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




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
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cosmetic products. The Product Safety Act (Cap. 427) encompasses 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 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 MSA attained full membership of CENELEC from 1 October 2002 and became a full member
of CEN as from 1 January 2002 besides being a full member of ISO and a corresponding member of
IEC. Furthermore during in November 2000, the MSA was accepted as full member of ETSI.
A Draft of the Metrology Act (which will repeal the Weights and Measures Ordinance (Cap. 39) has
been prepared and is being vetted by Attorney General‟s Office.
The Procedure for the Provision of Information in the Field of Technical Standards and Regulations
and of Rules of Information Society Services Regulations, 2001 (LN 65/01), was issued on 30
March 2001 under the Malta Standards Authority Act, and transposed the provisions of the Directive
98/34/EC, as amended by Directive 98/48/EC. This legal notice came into force on 1 April 2001.
The Veterinary Services Act (Cap. 437) transposes all the veterinary acquis except for animal
welfare and was adopted by Parliament on 6 November 2001. The Departmental drafts of the
subsidiary legislation to be issued under the new Act are in the process of being completed.
The Animal Welfare Act (Cap. 439) was adopted by Parliament on 5 December 2001. The
Departmental draft of the subsidiary legislation to be issued under the new Act has also been
completed.
Phase 1 of the upgrade of the National Laboratory has been completed. This process brought about
the installation, commissioning and utilisation of equipment purchased through EU funding. As a
result, all tests to assess the conformity of products to national and international standards will be
carried out accordingly. The upgrading of the National Laboratory will be continued with Phase 2 of
the project.
Motor Vehicles
The Product Safety Act (Cap. 427), replacing the Quality Control (Exports, Imports and Local
Goods) Act (Cap. 225) was adopted by Parliament on 9 February 2001 and came into force on 1
March 2001 (LN 33/01). This Act and its subsidiary legislation will transpose the acquis in this area
by the first quarter of 2002.
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




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




assessment basis. Furthermore, there are no provisions on the recognition of testing laboratories or
for adequately trained personnel engaged in food control.
The Labelling, Presentation and Advertising of Foodstuffs Regulations (LN 5/2002) fully
implements the provisions of the acquis regarding the labelling and presentation of foodstuffs, lot
marketing and foodstuffs for particular nutritional uses. The Nutritional Labelling Regulations (LN
247/1998) implement Community provisions on nutrition labelling. Maltese legislation regarding
colours in foodstuffs, flavourings and extraction solvents (LN107/95, LN257/98 and LN25/99
respectively) is in line with the acquis.
The Sweeteners Regulations (LN 268/00) under the Food, Drugs and Drinking Water Act was
published in the Government Gazette. LN247/00 (Erucic Acid Regulations) has also been published.
The Processed Cereal Based Foods and other foods for Infants and Young Children Regulations (LN
258/98) and the Foods for Use in Energy-restricted Diets for Weight Reduction Regulations (LN
1/99) transpose the relevant Directives. The Infant Formulae and Follow-up Formulae Regulations
(LN 249/98) transpose the provisions of the acquis regarding the composition and labelling of infant
follow-up on formulae. The Dietary Foods for Special Medical Purposes Regulations, 2001 (LN
309/01) transposing Directive 99/21/EC (dietary foods for special medical purposes) came into force
on 1 January 2002.
The Food Hygiene Regulations provide for most of the requirements of 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 draft Food Safety Act has been published as Bill No. 90 on 10 September 2001. It
reflects the „Food Safety Strategy for the Maltese Islands‟ framework document which was
forwarded to the Commission on 24 April 2001. The Bill is undergoing second reading in
Parliament. 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 requested successfully 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.
The Irradiation of Foods Regulations, 2001 (LN 61/01) issued under the Food, Drugs and Drinking
Water Act (Cap. 231) transposing Directives 99/2/EEC and 99/3/EEC (foods and food ingredients
treated with ionising radiation) came into force on 16 April 2001.
The Coffee and Chicory Extracts Regulations, 2001 (LN 132/01) issued under the Product Safety
Act(Cap.427) transpose Directive 99/4/EEC (coffee extracts and chicory extracts) (repealing
Directive 77/436/EEC by 13 September 2001), came into force on 13 September 2001.
The Permitted Food Additives Regulations, 2001(LN 310/01) issued under the Food, Drugs and
Drinking Water Act (Cap. 231) transposing Directive 95/2/EC (food additives other than colours and
sweeteners) including all amendments up to and including Directive 2001/5/EC came into force on 1
January 2002. These Regulations also transpose the provisions of Directive 67/427/EEC on
preservatives for citrus fruit, Directive 78/663/EEC on purity criteria for gelling agents and
emulsifiers. Directive 96/77/EC (including amendments up to and including Directive 2000/63/EC
on purity criteria for additives and Directive 81/712/EEC on methods of analysis for food additives.




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MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
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The Additives in Food Regulations (LN 89/94) transposes the provisions of the framework Directive
89/107/EEC.
The Natural Mineral Waters, 2001 (LN 311/01) issued under the Food, Drugs and Drinking Water
Act (Cap. 231) transposing Directive 80/777/EC (exploitation and marketing of natural mineral)
came into force on 1 January 2002.
The Cocoa and Chocolate Products Regulations, 2001 (LN 317/01) issued under the Product Safety
Act (Cap. 427) transposing Directive 00/36/EC (chocolate and cocoa products) will come came into
force on 3 August 2003. (Products conforming to Directive 73/241/EEC will be permitted until the
third quarter of 2003).
The Materials in Contact with Foodstuffs Regulations (LN 4/96) fully transposes the acquis.
Amendments are currently being updated to refer to the Council of Europe recommendations in non-
harmonised areas. The first draft is at an advanced stage and shall be published in 2002.
Draft regulations on contaminants in foodstuffs have been concluded. These regulations would
implement the provisions of the framework Regulation 315/93 and the detailed provisions in
Regulation 466/201. They will also contain provisions on tin and arsenic in foodstuffs, which are
not covered by Community legislation.
Chemicals
The provisions of most of the various Directives on dangerous substances and preparations have not
yet been transposed into Maltese law.
The Asbestos Products (Labelling) Regulations 2001 (LN 60/01) implements the relevant provisions
of Directive 76/769/EEC. The Dangerous Substances and Preparations (Restrictions) Regulations,
2001 (LN 152/01) came into force on 1 July 2001 and implement the remaining provisions of
Directive 76/769/EEC.
The Dangerous Substances and Preparations Regulations, 2001 (LN 163/01) transposing Directive
99/54/EC were published on 6 July 2001 and will come into force on 30 July 2002.
Directive 67/548/EEC has been transposed by the Dangerous Substances and Preparations
(Notification) Regulations, 2001 (LN 318 of 2001) which will come into force on 1 January 2002,
with the exception of those provisions which are only relevant to the Member States and the Internal
Market. There are no chemical substances on the Maltese market which, have not also been placed
on the Community market and Malta intends to maintain this position until accession.
The Detergents and Related Products Order (LN 240/00) transposing Directive 73/404/EEC
(detergents) was published in 2000 and entered into force on 1 January 2001.
The Fertilisers Regulations, 2001 (LN 165/01) transposing Directive 76/116/EEC (fertilisers) and
Directive 77/535/EEC (sampling and analysis for fertilisers) were published and entered into force
on 6 July 2001.
Pharmaceuticals
The current infrastructure, policies and legislative framework regarding medicinal products in Malta
are being upgraded to fully comply with the EU Directives and Regulations governing medicinal
products. However, the Health Division through the Government Pharmaceutical Services (GPS) has




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MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
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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.
As part of the process of reorganisation that is underway in the Health Division, the Government
Pharmaceutical Services (GPS) have been restructured to separate the regulatory from the
operational functions. Those functions previously carried out by the Medicines Regulatory Affairs
Unit (MRAU) within the GPS, have been taken up by a task force set up within the Health Division
of Malta. The task force is now known as the Medicines Regulatory Unit (MRU). The duties carried
out by the MRU include the verification of Certificates of Pharmaceutical Products (CPP),
pharmacovigilance issues and the inspection of pharmacies, pharmaceutical wholesale dealers and
manufacturers.
The members of the MRU are also involved in a number of projects including:
 Drafting of the new Medicines Act, including subsidiary legislation.
 Marketing Authorisation of medicinal products.
 Creation of a website, and addressing of IT issues and electronic document management.
 Quality Issues and Pharmacy Standards.
 Advertising, Borderline Issues and Point of Sale.
 Licensing of Wholesale Dealers.
 Narcotics and Psychotropic Control (as part of Inspections).
 Post-licensing surveillance.
 European Pharmacopoeia Commission, in which Malta has gained observer status with the
   approval of the Public Health Committee on 22 December 2000.
 Various other projects are in the pipeline.

Currently, the Medical and Kindred Professions Ordinance (Cap. 31), the Food, Drugs and Drinking
Water Act (Cap. 231) and the Dispensaries (Licensing) Regulations (LN31/94) constitute the
primary legislation regulating pharmaceuticals in Malta. Since this legislation partially transposes
the relevant sections of the acquis communautaire, the new Medicines Act will fully transpose the
EU directives and regulations in this area. The Medicines Act has been drafted and is expected to
pass through Parliament during the first quarter 2002.

The current system for the regulation of medicinal products to be placed on the Maltese market is
based on the WHO certification scheme for pharmaceuticals moving in International Commerce.
This necessitates the validation of a Certificate of Pharmaceutical Product (CPP) issued by the
competent Health Authority of the country in which the product is licensed. In the case of locally
manufactured products there is currently no system to control the marketing of such products and no
marketing authorisations are required for the placing of these medicinal products on the Maltese
market. However, EU directives and regulations stipulate that all medicinal products must be
evaluated for their safety, quality and efficacy through a set of detailed documents collectively
known as a dossier before being placed on the market. Due to the large amount of medicinal
products currently available on the market (approximately 6000 products), Malta negotiated for and
managed to obtain a four-year transitional period after date of accession, for the registration of
medicinal products for human use and implementation of pharmacovigilance issues.




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




To this end, a new system for the registration of medicinal products of the Maltese market has been
launched. The launch of the marketing authorisation project took place during November 2001. An
official information document and a seminar was disseminated among the different stakeholders,
explaining the strategy to be adopted for the marketing authorisation of medicinal products in the
local market. Furthermore, preliminary information was requested from potential applicants for
market authorisations through a questionnaire, which was prepared and sent out to local
manufacturers and wholesale dealers.

As of September 2002, all medicinal products currently registered with the MRU will require a
provisional marketing license (PMA) to circulate in the local market. For those products marketed in
EU and EEA countries, a PMA will be granted upon submission of a valid CPP, a Summary of
Product Characteristics (SPC), a copy of the official package insert and packaging of the product.
For those products marketed in third countries, which included locally manufactured products, a
PMA will be granted upon submission of an EU-type dossier. Eventually, all medicinal products on
the local market will be issued with a Marketing Authorisation (MA). Following accession, it is
expected that the Mutual Recognition Procedure will be mainly used for those products already
licensed in EU and EEA countries. Any new medicinal product placed on the local market after 1
January 2003 will be registered in line with EU requirements.

The Ministry of Health has set up a negotiating team to conclude the contract with the UK
Department of Health on behalf of the Medicines Control Agency. This will assist the MRU and, in
future, the Medicines Authority, in the following activities:
     Assessment of dossiers for locally manufactured medicinal products;
     Good Manufacturing Practice (GMP) inspections of local manufacturing sites;
     Training in Good Distribution Practice (GDP) and in Quality Issues for staff of MRU;
     Access to RAMA (Remote Access to Marketing Authorisation);
     Training in Pharmacovigilance for staff members of MRU;
     Inclusion of Malta on the Rapid Alert list for adverse effect reporting;
Three members of MCA staff to provide expertise regarding the organisational structure and staffing
to be adopted by the Medicines Authority, to be funded through TAIEX by the EU Commission.

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. Currently,
standards for Good Manufacturing Practice are not stipulated in Maltese law. However, these
standards, together with Good Distribution Practice, Good Clinical Practice and Good Laboratory
practice will be included in subsidiary legislation of the new Medicines Act.

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 (LN 162/98).




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




Cosmetics
A Legal Notice (LN 204/00) concerning Cosmetic Products came into force on 1 January 2001, fully
transposing 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.
The previous regulations issued under the Food, Drugs And Drinking Water Act (Cap. 231) were
repealed. Pre-market authorisation requirements have been removed. All products must comply with
the provisions of the acquis regarding prohibited and restricted ingredients. Local manufacturers will
comply with the new labelling and notification requirements including the INCI nomenclature by 1
July 2002. Products containing ingredients or combinations of ingredients tested on animals will be
prohibited after 30 June 2002.

Legal Metrology and Pre-Packaging
Transposition of Legal Metrology Directives is in hand. The Metrology Act, which will replace the
Weights and Measures Ordinance, is being vetted by the Attorney General‟s Office and will be
presented to Parliament by the end of the first quarter 2002.

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 (LN 23/99), the Electromagnetic Compatibility Order (LN 24/99) and the Equipment and
Protective Systems for use in potentially Explosive Atmospheres Order (LN 107/99). These Legal
Notices transpose completely the corresponding EU Directives, that is,. 73/23/EEC, 89/336/EEC
(both as amended) and 94/9/EEC respectively. Furthermore, the Electrical Accessories Order (LN
14/91) 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 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 (LN 16/96), which is a
direct transposition of Directive 88/378/EEC as amended. 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, LN 52/96, LN 122/98 and LN 229/98 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: LN 183/00 (Wood in the Rough Order), LN 184/00 (Crystal Glass Order), LN 182/00
(Footwear Order) and LN.185/00 (Textile Names Order. LN 185/00 also transposes Directive




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MINISTRY OF FOREIGN AFFAIRS                                           National Programme for the
MALTA                                                                      Adoption of the Acquis
                                                                                       Final Draft




96/73/EEC (Quantitative Analysis of binary textile fibre mixtures) and Directive 73/44/EEC
(Directive analysis of ternary fibre mixtures).
The Active Implantable Medical Devices Regulations (LN 66/01) and the Medical Devices
Regulations (LN 67/01) issued under the Product Safety Act (Cap. 427), transposing 90/385/EEC,
as amended by 93/68/EEC came into force on 1 October 2001.
The Construction Products Regulations (LN 270/ 01) issued under the Product Safety Act (Cap.
427), transposing Directive 89/106/EC, were published on 2 November 2001, and will come into
force on 1 July 2002. Furthermore, these regulations fully transpose all the acquis related to the
application of Article 20(2) of Directive 89/106/EEC. The Construction Products Expert Group to be
established by the first quarter 2002, under the Consumer and Industrial Goods Directorate of the
MSA, will act as the Maltese Technical Approval Body for this sector, and will seek membership of
EOTA by the end of the second quarter 2002.
The Lifts Regulations (LN 249/01) issued under the Product Safety Act (Cap.427) transposing
Directive 95/16/EC, were published on 26 October 2001, and will come into effect as from 1 July
2002.
The Machinery Regulations (LN 250/01) issued under the Product Safety Act (Cap. 427),
transposing Directive 98/37/EC, were published on 26 October 2001, and will come into force as
from 1 July 2002. The recreational Crafts Regulation (LN 231/01) issued under the Product Safety
Act (Cap. 427), transposing Directive 94/25/EC, was published on 28 September 2001, and will
come into effect on 1 July 2002.
The Radio Equipment and Telecommunications Terminal Equipment and the Mutual Recognition of
their Conformity Regulations, (LN 329 of 2001) issued under the Product Safety Act (Cap. 427)
were published on 28 December 2001.
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
reflects all the elements required in these principles. With the amendments to the Malta Standards
Authority Act the process of adoption of voluntary standards has been completed in line with the
acquis. The Procedure for the Provision of Information in the field of Technical Standards and
Regulations and of Rules of Information Society Services Regulations, 2001 (LN 65/01), issued
under the Malta Standards Authority Act transposing Directive 98/34/EC (provision of information
in the field of technical standards and regulations) and its amendments, was issued on 30 March
2001 and came into force on 1 April 2001.
The Authority is now established as the central notification point for this purpose as well as for
World Trade Organisation (WTO) obligations. The MSA acts as the EU Notification Point in this
regard. The competent body is also the MSA. A network system to co-ordinate and facilitate
exchange of information has been developed. This network establishes a sound system of
notification to the Commission and member states on all draft standards and technical regulations
and will pass on all notifications emanating from other member states to the pertinent local
authorities for their comments.




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




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.
The Authority published its first official catalogue, comprising over five thousand CEN standards in
October 2000. The second version of the catalogue comprising approximately 4000 CENELEC and
ETSI standards was published between February and November 2001and came into force on 1
January 2001.
During 2000 and 2001 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
a)   Enact the Food Safety Act.
b)   Enact a Medicines Act during 2002. This Act will transpose Directive 65/65/EEC
     (proprietary 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.
c)   Ministry of Health will conclude a contract with the UK Department of Health on
     behalf of the Medicines Control Agency. Finalisation on this contract is envisaged
     to take place during the second quarter 2002.
d)   Enact the Metrology Act.
e)   Enact Veterinary Pharmaceuticals subsidiary legislation (81/851/EEC, 90/667/EEC,
     92/74/EEC, 81/852/EEC, 91/412/EEC).
f)   The following subsidiary legislation will be adopted:
        High Speed Rail System (96/48/EC);
        All Motor Vehicles Directives;
        Foodstuffs intended for particular nutritional uses (89/398/EEC);
        Amendments to the existing Processed Cereal-based Foods and other foods for Infants
         and Young Children Regulations (LN 258/98) and incorporating the provisions of




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




         Directive 99/50/EC;
        Amendments of the Labelling and Presentation of Foodstuffs and Regulations (LN
         65/92) to incorporate those provisions regarding the quantitative declaration on
         ingredients;
        Transposition of the acquis on preserved milk, and lactoproteins through the adoption
         of legislation under the Product Safety Act;
        In vitro Diagnostic medical Devices (98/79/EC);
        New hot water boilers fired with liquid or gaseous fluids (efficiency requirements)
         (92/42/EEC);
        Energy efficiency requirements for household electric refrigerators, freezers and
         combinations thereof (96/57/EC);
        Explosives for civil uses Directive 93/15/EEC
        Noise emission in the environment by equipment for use outdoors Directive
         2000/14/EC.
        Cableway installations designed to carry persons (2000/9/EC)
        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);
g)   The basis for the legal metrology service will be established, which will develop the
     capability to meet all the metrology and pre-packaging requirements of the acquis as well as
     provide support for all other technical Directives. Membership will be sought in WELMEC,
     which is the European Co-operation in Legal Metrology. Partnership ties with European
     National Metrology Institutes will be consolidated in setting up the National Reference
     Standard Laboratories, which are to be funded through an EU project. Tendering for the
     necessary equipment for both the National Laboratories and the Legal Metrology Service will
     be underway by the second quarter of 2002. Malta Standards Authority has been a
     corresponding member of EUROMET since February 2001.
h)   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.
i)   Complete Phase 2 of the upgrade of the National Laboratory through purchasing of more
     equipment, installation of equipment and upgrading of facilities by the end of December 2002.
j)   The facilities of the National Laboratory to be enhanced to allow for improved testing of
     materials in contact with foods, mycotoxins and pesticide residues.
k)   License and certify all pharmaceutical manufacturers in order to comply with EU GMP
     standards;




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




l)    The MSA will seek membership to the European Co-operation for Accreditation (EA) and to
      eventually be prepared to sign MLA‟s by the last quarter 2002;
m)    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.).
n)    Introduce a system of provisional licensing for medicinal products to be placed on the local
      market.
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
      improvements of food safety levels in certain sectors of the food industry.

C. 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 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




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MINISTRY OF FOREIGN AFFAIRS                         National Programme for the
MALTA                                                    Adoption of the Acquis
                                                                     Final 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



D. 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            40
                              Capital        25       25            50
                              Training       -        -             -
                              Total          45       45            90




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




        Area of Activity                                               2001        2002         Total

        Ministry of Health
                                             Recurrent                 300         400          700
                                             Capital                   100         -            100
                                             Training                  50          50           100
                                             Total                     450         450          900


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 hire 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. The Act requires parastatal companies 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 Business Promotion 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. With regard to
        access to vocational training, it has been the practice thus far not to allow foreign nationals to
        participate in courses and apprenticeships run by the Corporation. However 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.




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




The position of members of families of nationals of EU member states is similar with regards to
employment to that of the employment licence holder. On 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 is already compliant with the EURES network. It has its
own website (www.etc.org.mt) where job vacancies are listed according to industry, region or
occupation. Job seekers are also given the facility to submit their c.v. which after validation, will be
made available to employers. The website also gives information on other services provided by the
corporation such as courses and programmes aimed at people with special needs. In May 2001 the
Employment and Training Corporation completed a training programme for its Employment
Advisers based on in-depth interviewing and career guidance and also covering interpersonal and
communication skills. The EURES advisers that have been selected will be receiving further
training in the United Kingdom during the second quarter of 2002.
The new Immigration Act, and related regulations, will transpose the EU Directives in the area of
free movement of workers.
This new Act will grant citizens of the European Union the right to seek employment, work and
reside in Malta. It 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) and Directive 72/194/EEC (co-ordination of special measures justified on grounds of
public policy, public security and public health).
Malta has negotiated a seven year period from the date of accession during which Malta may apply
safeguards on the right of EU workers to seek work in Malta. Restrictions may be imposed
unilaterally by Malta in urgent and exceptional cases where the inflow of EU workers puts a strain
on the local labour market or parts of it. After the seven year period, in the event of a
disproportionate influx of EU workers, Malta will be able to seek a remedy through the EU
institutions.
Mutual Recognition of Professional Qualifications
In Malta, there are currently sixty-four professional activities falling under the portfolios of nine
Ministries that have been identified as requiring professional qualifications. Of these, fifty-nine
professions fall under the general system. Supervisory bodies which oversee the recognition of pertinent
qualifications and professional education and training already exist. The Malta Professional and
Vocational Qualifications Council was set up on 25 October 2000 to develop and implement a
coherent framework of competence based vocational qualifications which are not already regulated
by other professional bodies. The Malta National Academic Recognition Information Centre was set
up in January 2001 and a national co-ordinator was appointed. 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. On particular sectoral
professions, one notes that:




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




Advocates and Legal Procurators are required to be Maltese citizens and to possess academic
qualifications approved by 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. 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 takes place under 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 periods 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 the registration of professionals, the regulatory bodies and sanctioning mechanisms.
These will be replaced by a Health Care Professions Act in 2002. This Act will allow for automatic
recognition for those countries with which Malta has or will have an agreement e.g. European Union
member states in the future, where foreigners will have the right to practice. For other countries,
applicants will have to qualify in a proficiency and linguistic assessment and fulfil all the conditions
required to practice in Malta.
Training and education of all health care professionals is the remit of the University of Malta and the
Institute of Health Care both of which are regulated by the Statutes of the University of Malta as
well as by the Education Act (Cap. 327). 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, the Pharmacy Board,
the Nursing and Midwifery Board, and the 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. The four regulatory bodies within the
Ministry of Health which regulate the Medical, Pharmacy, Nursing and Midwifery professions as
well as professions supplementary to medicine will be responsible for assessing the equivalence of
professional qualifications obtained in the EU member states and for registering these professions.
Full capacity will be achieved by the fourth quarter of 2002. Professions regulatory bodies are to be
strengthened by the recruitment of full-time council registrars by the second quarter of 2002. New
premises for the professional regulatory bodies outside the Ministry of Health have been set up.
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 authority in Malta in terms of the Medical and Kindred Professions




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




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 Health Care Professions Act is expected
to be adopted by the second quarter of 2002. 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. A vocational training programme for General Practitioners in
line with the acquis was designed after consultations were held with the Medical Association of
Malta and the Maltese College of Family Doctors. Trainers for General Practitioners need to be
recruited. Training is expected to commence in the third quarter of 2002. It will be undertaken
through the Department of Family Medicine which was set up within the Faculty of Medicine and
Surgery. 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. Specialist Accreditation Committees will be set up. Advice and assistance will be
obtained from the Specialist Training Authority in the United Kingdom. These structures will be in
place by the third quarter of 2002. 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 of the one-year pre-registration practical training period
(housemanship) for doctors in line with Directive 93/16/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 Veterinary Services Act, which now regulates the profession of veterinary surgeons, was
enacted by Parliament on 9 November 2001 and transposes Directive 78/1026/EEC (mutual




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




recognition of the formal qualifications in veterinary medicine) and Directive 78/1027 (co-ordination
of provisions in respect of the activities of veterinary surgeons).
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. 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 also regulated by the Education Act (Cap. 327). The Warrant Board may issue a temporary
warrant, as provided under Section 10 of the said Act. An expatriate who is offered a teaching
position would require a work permit, and approval to practise the profession from the Education
Division.

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 a 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.

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 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 enter 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




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




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 enter
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 new Immigration Act will be 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 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 134 of the Act provides that the Minister for Social Policy may, by
order, give effect to reciprocal agreements. The non-contributory scheme provides for means-tested
pensions, allowances and assistance to Maltese citizens.
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 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 who are party to the European
Social Charter and who have their ordinary residence in Malta.
Malta has for over forty years been implementing a bilateral social security 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 was signed on
11September 2001. Draft agreements were also referred to the Governments of the Republic of
Germany and Greece. And a similar draft agreement was also referred to Slovenia.




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




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
as to the practice in their countries but further assistance is required in order to develop appropriate
bilateral agreements. Technical assistance has been sought from EU member states. A unit to handle
requests for health care and the processing of reimbursement procedures has been set up within the
main hospital (St. Luke‟s). This unit will achieve full strength following the necessary training in
the relevant procedures. Technical assistance for the provision of such training has been sought
from the United Kingdom.
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 will have to be made to the
conditions for acquiring the rights deriving from health insurance under Maltese law.

The Department of Industrial and Employment Relations has been identified as the competent
public authority which will be responsible for the implementation of the provisions of Directive
96/71 EEC (Posting of Workers), through its Inspectorate and Enforcement Section.

B. Short Term Priorities
a) 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)

b) 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.

c) Revise existing bilateral agreements and devise new agreements on health matters with EU
    member states.

d) 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 thereunder). The Health Care Professions Act should be
   enacted by the fourth quarter of 2002.

e) A system of structured vocational training for general practitioners should commence by the
    third quarter of 2002.

f) Establish a register of specialists in the medical field, in accordance with EU Directives by
   December 2002.

g) The new Immigration Act will enter into force on accession. It will provide the basic
   principles relating to the free movement of persons, migration and border control, in line with
   the requirements of the EU acquis. Subsequently regulations that will provide the details for
   the implementation of the principles incorporated in the main Act will be made. This new
   legislation will grant citizens of the European Union the right to seek employment, work and




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




     reside in Malta. The new Act and related regulations 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). It 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).

g) 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
   professional education and training to supplement Directive 89/48/EEC) by the second
   quarter of 2002.

h) Amend 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).

i)   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).

j) The Health Care Professions Act will be adopted by second quarter 2002. Free
   movement will enter into force upon accession.

k) Set up Specialist Accreditation Committees for the formal recognition of training in the field
   by the third quarter of 2002.

l)   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.




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




C. 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 for
Citizenship and Expatriate Affairs, the Department of Industrial and 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.

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




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MINISTRY OF FOREIGN AFFAIRS                  National Programme for the
MALTA                                             Adoption of the Acquis
                                                              Final Draft




Area of Activity                          2001      2002         Total

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



D. 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
                              Total        60          65          125




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        MINISTRY OF FOREIGN AFFAIRS                                                National Programme for the
        MALTA                                                                           Adoption of the Acquis
                                                                                                    Final 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 Directives issued under this Act (Cap.
        371). Other legislation that is relevant to the operations of credit institutions includes the
        Professional Secrecy Act (Cap. 377), the Malta Financial Services Centre Act (Cap.330) 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. It 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. While 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, Malta has no deposit protection
        scheme in place at the moment. Work on such a scheme has already been undertaken by the Central
        Bank in conjunction with the Malta Commercial Banks' Association, and the required legislation is
        to be enacted during 2002, with the scheme to commence functioning in the same year.
        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. These
        will be enacted during 2002, though some provisions can only be brought into effect upon accession.




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
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By virtue of the Banking Act (Appointment of Competent Authority) Order made under the Banking
Act (LN325 of 2001) the Malta Financial Services Centre became the sole competent authority
responsible for banking with effect from 1 January 2002.

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 competent 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 the 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 Intermediaries Directives and Insurance
Directives. The latter were issued in May 1999 and in August 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 came 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




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




(Directive 97/9/EC). Furthermore, on 24 July 1995, a 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.
In the case of natural persons, a work permit is required for non-nationals to work in Malta 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 Commerce
Division within the Ministry for Economic Services, 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.‟ However, following the
enactment of the Trading Licences Act (Cap. 441) on 21 December 2001 the present regulatory
competence of the Commissioner of Police is being transferred to the Commerce Division.
However, the Police will remain responsible for licences concerning arms, ammunition and
explosives.
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 rules
for their transfer, as well as for amendments and other requirements. In general, when licences are
premises-based no qualifications, professional or otherwise, are presently requested by the police for
the exercise of a particular trade or activity. This will change with the coming into force of Article
28 of the Trading Licences Act (Cap. 441) which inter alia empowers the Minister responsible for
Commerce to establish by regulations the qualifications that a person carrying out a commercial
activity may be required to possess.




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




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 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.
The Malta Professional and Vocational Qualifications Council (MPVQC) was set up on 25 October
2000 following the entry into force of the Malta Professional and Vocational Qualifications
Regulations, 2000 (LN215/00). These regulations seek to ensure transparency of qualifications and
certification.

Data Protection

A Data Protection Act (Cap. 440) was enacted on the 14 December 2001 and will come into
effect in January 2002. This Act has been drawn up in compliance with the acquis and with
regular consultations having taken place between the Maltese authorities and the Commission.


B. Short Term Priorities

Financial Services

Banking
a) The legal and administrative structure for a Deposit Protection Scheme will be set up, with full
   implementation taking place by the fourth quarter of 2002.
b) The necessary legislative changes for the introduction of the right of establishment (single
   passport) and the freedom to provide services will be made by the fourth quarter of 2002. These
   will be brought in force upon accession.

Investment Services
a) The necessary legislation will be enacted and implemented on a programmed basis, in full
   compliance with the following Directives:
       Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws,
        regulations and administrative provisions relating to undertakings for collective
        investment in transferable securities (UCITS)




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
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                                                                                         Final Draft




       Council Directive 89/298/EEC of 17 April 1989 coordinating the requirements for the
        drawing-up, scrutiny and distribution of the prospectus to be published when transferable
        securities are offered to the public
       Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities
        field
       Directive 97/9/EC of the European Parliament and of the Council of the 3 March 1997 on
        investor compensation schemes
       Council Directive 93/6/EEC of 15 March 1993 on the capital adequacy of investments
        firms and credit institutions
       Directive 98/31/EC of the European Parliament and of the Council of 1 June 1998
        amending Council Directive 93/6/EEC on the capital adequacy of investment firms and
        credit institutions.
       It is expected that enactment and implementation of this legislation will be in place by the
        fourth quarter of 2002 including the introduction of the provisions regarding the single
        license and home supervision, which will be brought fully into force upon accession.
Insurance
a) The legislative drafting process will continue so as to achieve alignment, in particular with
   regard to the introduction of the single authorisation and home state supervision. The following
   Directives will also be fully transposed by end 2002 and will be brought into force upon
   accession:
      Council Directive 76/580/EEC of 29 June 1976 amending Directive 73/239/EEC on the
       coordination of laws, regulations and administrative provisions relating to the taking up
       and pursuit of the business of direct insurance other than life assurance
    Council Directive 84/641/EEC of 10 December 1984 amending, particularly as regards
       tourist assistance, the First Directive (73/239/EEC) on the co-ordination of laws, regulations
       and administrative provisions relating to the taking-up and pursuit of the business of direct
       insurance other than life assurance
    Council Directive 87/344/EEC of 22 June 1987 on the co-ordination of laws, regulations and
       administrative provisions relating to legal expenses insurance
    Directive 98/78/EC of the European Parliament and of the Council of the 27 October
       1998 on the supplementary supervision of insurance undertakings in an insurance group.
b) A comprehensive compliance programme, including on-site inspections and completion of
   detailed returns to the MFSC will be continued, to ensure that license holders are fully compliant
   with the provisions of the law.

Stock Exchange
a) The Malta Stock Exchange Bye-laws will be amended and implemented 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) The Trading Licences Act (Cap.441) and regulations made under its authority will be brought
   into effect by the end of the first quarter of 2002.




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




b) Local Councils will monitor traders with respect to compliance with the conditions in their
   respective licences.
c) Legal Notice 83/81 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) The necessary amendments to the Commercial Code (Cap.13) will be enacted and implemented
   to achieve compliance with the Commercial Agents Directive by end of the third quarter of
   2002, following discussions with constituted bodies and other interested parties.
Data Protection and Information Society
a) The Convention for the Protection of Individuals with regard to the Automatic Processing of
   Personal data (1981) will be ratified. Government is directed towards keeping the following
   goals 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;
       leverage the existing IT investment for effective management information in the design of
        policies and programmes.
b) 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 will be explored.

C. 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
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.




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MINISTRY OF FOREIGN AFFAIRS                     National Programme for the
MALTA                                                Adoption of the Acquis
                                                                 Final Draft




Area of Activity                             2001      2002         Total

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

D. 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




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        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                                 Final 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). This legislation empowers the Minister of Finance to introduce
        controls or to relax or remove such controls altogether. The Central Bank was appointed agent of the
        Minister and is thus responsible for administering the controls. The principal Act 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 credit institutions and certain other financial institutions
        which, as authorised dealers under the Act, are permitted to execute foreign exchange transactions
        within the specific terms of the authority 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 have come 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. These limits were
        raised significantly in 2000, again in 2001, and further still with effect from 1 January 2002. 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, whilst a third with effect from 1 January 2002. The remaining controls will
        be removed by accession, except for the provisions relating to the acquisition of real estate by third-
        country nationals which will be retained in accordance with Article 57 of the Treaty on European
        Union, and the acquisition of second homes by EU nationals to the extent of the permanent
        arrangement negotiated by Malta in the Intergovernmental Conference on Accession.
        Malta obtained a permanent derogation to retain certain restrictions on the acquisition of immovable
        property by foreigners, even after EU membership. EU citizens seeking to purchase a secondary
        residence in Malta will still require to apply for a permit and satisfy the current restrictions.

        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




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




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 progressing towards eventual fuller liberalisation, 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 liberal and Malta
will phase out current applicable restrictions on real estate acquisition by the date of accession,
except to the extent of the special arrangement negotiated in the Intergovernmental Conference on
Accession. Malta also intended to retain existing restrictions on the acquisition of real estate by third
country nationals as permitted under Article 57 of the Treaty on European Union. Amendments to
the legislation currently in force to take into account the derogation negotiated is being prepared.
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,




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MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
MALTA                                                                        Adoption of the Acquis
                                                                                         Final Draft




loan facilities may also be provided for any other purpose including the purchase of securities in the
local capital market as long 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.
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




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




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.
Further liberalisation of the capital account was announced in the 2002 Budget. These measures,
which came into effect on 1 January 2002 include the removal of limits on purchase of property
overseas, an increase in the portfolio investment allowance to Lm50,000 per annum, an increase in
the maximum permissible foreign exchange holdings of SICAVs denominated in Lm, an increase in
the maximum amount of permissible foreign cash holdings to Lm15,000, an increase in the amount
of foreign currency residents may hold in demand/savings/time deposits, the removal of restrictions
on the granting of guarantees by residents in favour of non-residents and on the physical transfer of
certificates of ownership in respect of shares and securities.
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. Taxation is 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 were given a first reading in the House
of Representatives 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 the 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.




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MINISTRY OF FOREIGN AFFAIRS                                                National Programme for the
MALTA                                                                           Adoption of the Acquis
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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). The provisions of the
Recommendation on electronic payments instruments (97/489/EC) will also be incorporated in the
Directives.

Prevention of Money Laundering
Maltese legislation on the prevention of money laundering (both 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 and currently holds
its Chairmanship.
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 offences has now been considerably expanded
and now incorporates practically all serious crimes. The Act defines money laundering in terms of
the EU Directive based on the 1988 Vienna Convention.
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 for the legitimisation of funds originating from criminal or illicit activities.




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MINISTRY OF FOREIGN AFFAIRS                                            National Programme for the
MALTA                                                                       Adoption of the Acquis
                                                                                        Final Draft




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 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.
The Act was amended in December 2001 with the enactment of Act XXXI to provide for the
creation of a Financial Intelligence Analysis Unit (FIAU), which is expected to be fully functioning
within the first quarter of 2002. The Unit shall be responsible to receive, analyse and disseminate
information, including suspicious transactions reports and to require information directly from the
financial and non-financial sector without the need for a court order.
Reporting procedures in institutions to which the law applies require the appointment of a Money
Laundering Reporting Officer who is 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. The Regulations will require further amendment upon
the coming into force of Act XXXI of 2001 setting up the FIAU.
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.

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, since the issue of the nominee regime was still not included in the Regulations, as an
interim measure, banks and other financial services providers were issued with a directive in
early 2001 by the Central Bank, the Malta Financial Services Centre and the Malta Stock
Exchange as applicable requiring them to identify ultimate beneficiaries when opening accounts
or undertaking transactions for companies with a nominee shareholding.

B. Short Term Priorities

Capital Movements
a) Continue to unfold the programme to 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




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MINISTRY OF FOREIGN AFFAIRS                                               National Programme for the
MALTA                                                                          Adoption of the Acquis
                                                                                           Final Draft




   will oblige residents carrying out external transactions to report details on such transactions to the
   Central Bank.

Payments System
a) Amendments to section 36 of the Central Bank of Malta Act (Cap. 204) will be enacted and
   brought into force by the second quarter of 2002.
b) Directives will be issued by the second quarter of 2002 to achieve alignment with respect to
   cross-border credit transfers, electronic payments instruments, 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) 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 establishment of a Financial
   Intelligence Analysis Unit complemented by the strengthening of the law enforcement regime
   will help to fulfil the obligations under the Directive.
b) The necessary statutory provisions will be implemented so that the regulations will be extended
   to other undertakings and professions as appropriate.
Complete the programme of liberalisation of exchange controls.
a) Most remaining exchange controls will be removed in 2002, save restrictions on the acquisition
   of real estate by non-residents for which Malta has obtained a special arrangement, as well as
   existing restrictions on acquisitions by Third country nationals as permitted by Article 57 of the
   Treaty.

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.


C. Institution Building Needs
The Balance of Payments Department (formerly styled the Exchange Control Department) at the
Central Bank will be further restructured so that it will 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.




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




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 systematic 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. Furthermore, Act XXXI of 2001, which of amended the Prevention of Money Laundering
Act (Cap. 373) provides the legal basis for the creation of a Financial Intelligence Analysis Unit
which will assume all responsibilities within the anti-money laundering measures infrastructure.
This unit will be formally set up and functioning at full capacity within the first quarter of 2002. The
pertinent requirements in these areas are being identified under Section 3.7 (Justice and Home
Affairs).


D. Financial Requirements
                                                                                                Lm000
Area of Activity                                                    2001        2002         Total

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


(*) To be disbursed from own funds.




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        MINISTRY OF FOREIGN AFFAIRS                                             National Programme for the
        MALTA                                                                        Adoption of the Acquis
                                                                                                 Final 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 during 2002Council 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). Minor amendments necessary to acquire full adherence with the
        Directives have been drafted and the relative bill is expected to be published in the second quarter of
        2002.
        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. The minor amendments required have been drafted.
        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 2002.
        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).




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MALTA                                                                        Adoption of the Acquis
                                                                                         Final 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 came into force in 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. Customs officials continuously work with administrative law
enforcement Police who are directly involved in the enforcement of intellectual property rights with
respect to products, which have been released on the market. Furthermore inspections are being
continuously carried out in various localities.

B. Short Term Priorities

General Framework
a) Subsidiary legislation under the Companies Act (Cap. 386) will be adopted by 2002 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 in 2002 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) Amendments will be made to the Accountancy Profession Act (Cap. 281) and subsidiary
   legislation will be published, so that Maltese legislation will be in full conformity with the
   Eighth Company Law Directive (84/253/EEC)




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MINISTRY OF FOREIGN AFFAIRS                                              National Programme for the
MALTA                                                                         Adoption of the Acquis
                                                                                          Final Draft




d) 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 during
   2002.
e) 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 in line 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.




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C. 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 have been further strengthened further in order to
enable it to fulfil the increase in workload and responsibilities
The Customs Department and the Malta Police liaise closely in the fight against counterfeit and
pirated goods. These departments are being continuously 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



D. 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




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3.1.6   Competition

        A. Current Status

        Antitrust
        Competition between undertakings is regulated by the Competition Act (Cap. 379) of 1994 (as
        amended in November 2000), and the Vertical Agreements and Concerted Practices (Block
        Exemptions) Regulations, 2001 (LN 271 of 2001) which came into force on 1 November 2001. The
        Legal Notice replaces the old block exemption regulations and reflects the provisions of
        Commission Regulation (EC) 2790/1999. The Act itself is largely modelled on EU legislation.
        Articles 5 and 9 of the Act are practically identical to the basic rules adopted by the EU on antitrust,
        namely Articles 81 and 82 of the Treaty.
        Article 5 of the Act 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.
        Article 9 of the Act 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.
        The Competition Act (Cap. 379) was amended by Act XXVIII of 2000 which was enacted on 24
        November 2000 and entered into force on 1 October 2001 by virtue of LN 240 of 2001. The
        amendments reflect the experience gained over the past years and seek to further align the Act with
        the acquis.
        In these amendments, the definitions of „undertaking‟, „dominant position‟ and „relevant market‟
        have been redrafted in order to align them better with the interpretation of the European Commission
        and European Court of Justice. The Act specifically excludes from the prohibition in Article 5(1) de
        minimis agreements, ie. agreements, decisions and any concerted practices between undertakings,
        which do not have an appreciable effect on the relevant market. The article is in line with the 1997
        Commission Notice on agreements of minor importance. Prior to amendment, de minimis agreements
        had to be notified to the Commission for Fair Trading in order to be granted an individual exemption.

        Article 9 has been amended to introduce the concept of the rebuttable presumption of dominance.
        Under the previous legislation, an undertaking with a market share of 40% was always considered to
        be in a dominant position. The same article was amended to make the concept of collective
        dominance clearer.

        The Director of the Office for Fair Competition can now grant individual exemptions. This function
        previously fell within the remit of the Commission for Fair Trading.

        The Minister is empowered to issue regulations under the Act, with specific reference to merger
        control, and also with regard to the exemption of certain agreements in the agriculture and fisheries
        sectors on the basis of Commission Regulation 49/62.




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Article 11 concerning price orders has been deleted. The Director of the Office for Fair Competition
can now issue „interim orders‟ to establish maximum prices of goods or services in certain specific
circumstances when it is found that restrictive practices are taking place which are harmful to the
general economic interest.

Institutional Set-up established by the Competition 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 or at the request
of the Minister responsible for commerce. After an investigation is carried out, the Office will issue
a cease and desist order on the undertaking investigated if a minor infringement results. In the case
of serious infringements the OFC will draw up a reasoned report and refer it to the Commission for
Fair Trading for its final decision.

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 initiated by a request in
writing made by the Director, or by an undertaking or by a complainant through the Director. The
Commission may grant individual exemptions from the prohibition of Article 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.

The amendments strengthen the power of the Director of the Office for Fair Competition making it
possible for him to intervene more efficiently in stopping an infringement. The role of the Director is
no longer limited to a purely investigative one. Apart from being able to grant individual exemptions,
he may now also issue cease and desist orders, interim orders and may also impose compromise
penalties or arrive at extinction of criminal liablity fines with the concurrence of the Commission.

The role of the Commission is now more judicial in nature. It may hear appeals from all decisions
taken by the Director. There is now a possibility of appeal from the Commission‟s decisions.

Block exemptions
The new block exemption on vertical restraints ie, the Vertical Agreements and Concerted Practices
(Block Exemptions) Regulations, 2001 (LN 271 of 2001) has replaced the four block exemptions
regarding exclusive purchasing, exclusive beer and beverage purchasing, exclusive distribution and
franchising agreements, which expired at the end of October 2000. The new block exemption reflects
the Commission Block Exemption Regulation (EC) No 2790/1999 on the application of Article 81(3)
of the Treaty to categories of vertical agreements and concerted practices.

Other Community block exemptions that currently do not feature under Maltese legislation will be
adopted by the beginning of 2003. These are, however, still taken into consideration by the local
competition authorities by virtue of paragraph 14 of the Schedule to the Competition Act.

Public Undertakings
Article 30 of the Competition Act now subjects public undertakings, which were previously




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exempted from the legislation, to the provisions of the Act, with the exception of those which the
Minister may declare to be exempt by legal notice. LN 241 of 2001 published in October 2001 now
only exempts a very small number of undertakings from the provisions of the Act.

Mergers
Currently, there is no specific legislation regulating mergers from a competition law aspect. The first
draft of this legislation was finalised in December 2001. Mergers have been controlled mainly under
Article 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 Article 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.

Monopolies
There are currently in existence a number of state monopolies offering general public services,
including 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 LN 241 of 2001.
Private companies granted monopoly rights by Government are subject to the local competition
rules.
There are currently two state trading monopolies, namely Medigrain Ltd., which deals with the
importation and distribution of grains, and Enemalta Ltd. which imports, stocks and sells
petroleum products. Medigrain Ltd., which is currently state-owned, sources wheat, barley and
maize for food security purposes. It periodically issues calls for tenders for the importation of
grains to ensure minimum stock levels. The importation of wheat will be brought in line with the
provisions of Article 31 of the EC Treaty by the fourth quarter of 2002. The energy sector in
Malta is supplied by Enemalta Corporation, a publicly owned undertaking. Malta is requesting a
transitional period until the end of 2005 with regard to the adjustment of the operations of the
state trading monopoly in the importation, stocking and sales of petroleum products. Fuels for
bunkering activities are excluded because this sector has already been liberalised.

Public Awareness
In order to promote knowledge of how undertakings and complainants can have recourse to the
Office for Fair Competition and to instill more awareness of Competition Law, the Office has been
holding meetings with special interest groups with the aim of explaining the recent amendments to
the Competition Act and related legislation.
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




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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 has requested a transitional period of seven years. A similar transitional period is
also requested for aid granted to the ship repair sector;
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 intended for human consumption 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 transitional period of eighteen months has been
requested with regard to this scheme;
The manufacturing sector by means of a package of incentives under the Industrial Development
Act (Cap. 325) administered by the Malta Development Corporation. This Act has been amended by
Act IV of 2001 which was enacted in January 2001 and came into effect retrospectively on 1
November 2000 by virtue of Legal Notice 135 of 2001 which was published on 12 June 2001. The
Industrial Development Act was amended extensively by Act IV of 2000, and renamed the
Business Promotion Act. Legal Notice 135 of 2001 also introduces new incentives and
contains provisions whereby companies currently benefiting from any of the export -
related incentives in terms of the Industrial Development Act, may waive their rights to
such incentives and start benefiting from the new incentives under the Business Promotion
Act. Incentives linked to exports will no longer be provided. The Business Promotion Act is an
enabling Act providing incentives to target enterprises which have a high value added and a potential
for the creation of jobs.
The Malta Development Corporation is adjusting its internal aid-approval processes to be in line
with Community policy on state aid and is introducing appropriate systems and procedures for aid
intensity assessment. Transitional periods have been requested 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.
State Aid Monitoring Board
A State Aid Monitoring Board was established administratively on 30 June 2000 within the Ministry
for Economic Services. Its main functions are 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. The above-mentioned amendments to the Industrial Development Act (Cap.




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325), provide legislative backing to the State Aid Monitoring Board. The first annual report covering
the year 1999 was submitted on 27 September 2001.

B. Short-term Priorities

Antitrust
a) A regime on specific merger control will come into force in the second quarter of 2002. The
   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) Block Exemption Regulation (EC) No 2658/2000 of 29 November 2000 on specialisation
   agreements, Block Exemption Regulation (EC) No 2659/2000 of 29 November 2000 on research
   and development agreements, and Commission Regulation (EC) No 240/96 of 31 January 1996
   on the application of Article 85(3) of the Treaty to certain categories of technology transfer
   agreements will be adopted by the first half of 2002. Other Community block exemptions that
   currently do not feature under Maltese legislation, will be adopted by the beginning of 2003.
   These are however still taken into consideration by the local competition authorities, by virtue of
   paragraph 14 of the schedule to the Competition Act which provides that in the interpretation of
   the Act, the Commission for Fair Trading shall have recourse to the acquis.

c) By the fourth quarter 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) The operational and regulatory aspects of Medigrain Ltd. will be separated by the second quarter
   of 2002. The importation of wheat will be brought in line with the provisions of Article 31 of the
   EC Treaty by the fourth quarter of 2002. Malta is requesting a transitional period until the end of
   2005 with regard to the adjustment of the operations of the energy state trading monopoly in the
   importation, stocking and sales of petroleum products.

State Aid
a) State aid schemes that do not comply with the acquis and with other international commitments
   will be phased out.
b) The rules of procedure of the Board will be published by legal notice by the second quarter of
   2002.
c) A specific 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 Monitoring Board to ensure compatibility with the acquis.

C. 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.




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On the other hand, the State Aid Monitoring Board will continue to be provided with the necessary
resources in order to carry out its mandate. It will also solicit external support as necessary in
conducting its business.

Area of Activity                                                2001        2002         Total

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

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



D. Financial Requirements

                                                                                            Lm000
Area of Activity                                                2001        2002         Total

Ministry for Economic Services
Office for Fair Competition        Recurrent                       50          50          100
                                   Capital                         10          10           20
                                   Training                         5           5           10
                                   Total                           65          65          130

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




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3.1.7   Customs Union

        A. Current Status
        Although Maltese Customs legislation reflected and provided for many of the basic principles and
        procedures contained in the Community Customs Code, it did not fully comply with the acquis.
        However, substantial progress has been made in the alignment of Malta's Customs legislation with
        the acquis. A consolidated Customs Code that reflects the provisions of the Community Customs
        Code (Regulation (EEC) 2913/92) has been published as Bill No 144 of 27 November 2001 and is
        currently being discussed in Parliament. It will enter into force in January 2002. The provisions of
        Regulation (EEC) 2454/93 (EEC) (implementation of Regulation (EEC) 2913/92) are being
        published as guidelines and distributed to economic operators in order to familiarise and train staff
        dealing with customs procedures and entrepreneurs on their correct implementation. The provisions
        of Regulation 2454/93 as amended by Regulation (EC) 993/2001, will be issued as subsidiary
        legislation by the second quarter of 2002. This process will start as soon as the new Customs Code
        has been enacted.
        Bill No 144 includes provisions regarding simplified procedures, free zones and free warehouses,
        transit, customs debt, repayment and remission of duties and appeals, entry procedures and placing
        of goods under customs procedure, export, re-export and end use will all be covered by the new
        Customs Code. Community common commercial policy measures related to preferences, quotas,
        ceilings and suspensions will be implemented on accession.
        The provisions of the Community Customs Code (Regulation (EEC) 2913/92) regarding the Single
        Administrative Document (SAD), inward processing, outward processing, processing under customs
        control and customs warehouses have been applied locally since January 2001. The Customs
        Department has registered a positive track record in implementing these customs procedures.
        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 (to be aligned by the first
        quarter of 2002) and minimum values on used cars and motorcycles remain to be aligned.
        Legislation on post-clearance examination of declarations was introduced on 1 January 2000 by Act
        XIX of 1999.
        Malta is a member of the Harmonised System Convention. The 2002 version of the Maltese
        Customs Tariff will be published during the first quarter of 2002. This will reflect the revised 2002
        Harmonised System at the sixth digit level and the 2002 Combined Nomenclature at the eight digit
        level. A Binding Tariff Information System was introduced in April 2000 by legal notice
        (LN66/00).While 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 and 1 January
        2002, 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,




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exemptions from import duties are granted under specific legislation, including the Industrial
Development Act (Cap. 325) and Malta Freeports Act (Cap 334) for imports of raw materials, plant
and machinery. [Malta is requesting a transitional period in this regard.] 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).
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 currently no system of Binding Origin
Information as required by the WTO Agreement on Rules of Origin. This system is however being
provided for in the new Customs Code, subject to developments at WTO level on non-preferential
rules. The system will start being implemented as soon as the new Customs Code enters into force in
so far as EU-Malta preferential rules are concerned The proposed Heritage Act which is to replace
the Antiquities (Protection) Act (Cap. 54) was published as Bill No. 137 on 14 August 2001.It is
currently being discussed by parliament and should be enacted in the first quarter of 2002. The Bill
transposes Directive 93/7/EEC. A first trial run on the electronic National Heritage Database, took
place in April 2001.
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. Imports of precursors are controlled by the Anti-Drug
Squad of the Malta Customs with all imports being noted and then monitored in collaboration with
the trader. The Customs Department, through the Investigations Branch, also participates in the
Customs Enforcement Network (C.E.N.) of the World Customs Organisation through the electronic
input of information and data into the system for analysis and distribution by the Regional
Intelligence Liaison Office (Western Europe) of the same Organisation.
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 relating to dangerous chemicals are discussed under Section 3.6.1
(Environment).The National Interest (Enabling Powers) Act (Cap. 365) incorporates the control of
dual-use goods. Subsidiary legislation drafted under the National Interest (Enabling Powers) Act
(Cap. 365) transposes Regulation 1334/00 fully. It will enter into force on 1 January 2002. 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. Malta became signatory to the Istanbul
Convention on 11 December 2000.

The amendments to the Customs Ordinance (Cap. 37) transposing the provisions of Decision
187/85/EEC (action against fraud relating to containers) were adopted by Parliament and entered
into force on 2 April 2001.




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Imports of precursors are monitored by the Anti Drug Squad of the Malta Customs with all imports
being noted and then controlled in collaboration with the trader. Most of these controls are in the
form of book control.
The Customs Department, through the Investigations Branch, also participates in the Customs
Enforcement Network (C.E.N.) of the World Customs Organisation through electronic input of
information and data into the system for analysis and distribution by the Regional Intelligence
Liaison Office - Western Europe, of the same Organisation. All members of the European Union are
members of the World Customs Organisation.

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 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. In October and November 2001 two UK
consultants visited the Department on a project for the review of the organisation structure of the
Department. A study on the recommendations submitted by the consultants is being carried out by
the Department, in view of the second phase of the project. Training of staff is 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.
The human resources capabilities at Customs are being 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 is being financed
through the national budget and pre-accession funds. Implementation of the Business Change
Management Plan started on 1 January 2001.
The Pre-Accession Unit (PAU) within the Ministry of Finance manages the Business Change
Management Plan in connection with the modernisation and upgrading of the operational capacity of
the Customs and Taxation Departments. Two project managers, one for the Customs Department
and one for the Taxation Departments are managing the implementation of the strategy for
accession. The overall implementing authority is 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 reports to
the Project Steering Committee and is assisted by short-term technical experts in specific areas.
The Director (EU Matters) at the Department of Customs co-ordinates and monitors 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.




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A training unit was set up within the Customs Department of the Ministry of Finance in January
2001. The unit has drawn up a pre-accession training programme to prepare Customs personnel for
the introduction and implementation of new systems and procedures. A CAP Unit within Customs
has been set up. The Department is currently co-ordinating with the Agriculture Department to
ensure successful implementation and set out clear definition of roles. Two training activities on the
customs aspects of CAP were held in Malta by Austrian and Irish experts. Maltese Officials have
also been on study visits to Austria and Ireland. Six months before Malta's accession the necessary
training on the application of relevant EU regulations and legislation will be carried out to customs
staff (e.g. records to be kept, examination of goods etc).
Internal communication channels are enhanced by the holding of information meetings and training
activities for staff. Representatives of users of the Customs service are invited to attend when
appropriate. The Department publishes Guidelines on Customs legislation and procedures. The
biggest project in this area is the installation of the E-Vita module for internal and external use as a
means of communication and information. This forms part of the Customs IT Project with the
Danish Company INTEGRIS.
The Customs Department is negotiating a contract with the Malta National Laboratory in order to
complement and enhance the services offered by the Customs Laboratory. It is envisaged that the
contract be signed in January 2002.
A Memorandum of Understanding with Sea Malta Company Ltd. (one of the major local shipping
lines) will be signed in January 2002 in order to increase co-operation between customs authorities
and this company especially in the area of possible traffic in illicit goods. This concerns mainly the
forwarding of information on any suspect activities by Sea Malta Company Ltd. to the Customs
Department.
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 co-operates closely with the Malta
Police and the Armed Forces although there are no Memoranda of Understanding. Seminars and
workshops for these three entities are currently being held to instil a better understanding of their
respective functions and to increase co-operation at operational level. The Customs Department is
represented on the national drug intelligence structures, and 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.
Agreements on mutual administrative assistance on customs matters with France, the United States
of America, Italy and the United Kingdom have been signed. A similar agreement has been initialled
with the EU.
Funds under the Fourth EU-Malta Financial Protocol are being utilised to finance a project with the
Eurocustoms Consortium. The objective of the project was to align Maltese Customs legislation with
the acquis and to ensure the effective and efficient implementation of the new legislation. The
consultants provided by Eurocustoms have assisted and advised the Customs Department in drafting
the necessary amendments to customs legislation in line with the Community Customs Code. They
also assisted the Department in assessing the changes required in its administration to implement the
provisions of the acquis through the organisation of seminars, conferences, workshops, study visits
and training sessions. The project also covers the legal and institutional measures necessary to
ensure the proper collection and control of future EU own resources as well as to ensure the proper
management of those Community policies which will be managed by the Customs Department, in




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particular the Common Agriculture Policy. The project, which is also linked to the Customs
Blueprints on which the Business Change Management Plan is based, was finalised at the end 2001.
An internal audit unit within the Customs Department was set up in August 2000 and has reached
full capacity. A Code of Conduct and Ethics for Customs Employees was published and distributed
to employees in March 2001. All staff have attended seminars after the publication of this Code. In-
line managers are aware of their responsibilities in this area.
Investigation and enforcement policies in line with the acquis have been developed. A number of
intelligence teams have also been established. Activities in this area are provided for in the work
programme drawn up to implement the Business Change Management Plan. Developments will
continue to take place in view of the recommendations in the above-mentioned report by British
experts on the review of organisational structures.
A performance management system is in place and a Quality Service Charter for the Customs
Department is being prepared. The charter will be finalised in June 2002

Computerisation
The plans to migrate to ASYCUDA ++ have been discarded in the absence of UNCTAD‟s
commitment to finalise the whole project within the established timeframes.
The Customs Department is now focusing on the system being used by the Danish Customs which
provides for all EU IT interconnectivity requirements as well as other advanced functions such as
risk management and selectivity and a data warehouse. A draft document for an IT strategy was
drawn up by the Customs Department and sent to the Commission in July 2001.
A contract with a Danish Company was signed in December 2001. The programme has started being
implemented and will be fully completed in June 2003.
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. Other
small computerised systems developed in-house are in place to serve the needs of particular stations
or sections.

B. Short Term Priorities
a) A consolidated Customs Code based on the EU Customs Code will be adopted and enter into
   force in January 2002.
b) The provisions of Regulation (EEC) 2454/93 (EEC) (implementation of Regulation (EEC)
   2913/92) are being published as guidelines and distributed to economic operators in order to
   familiarise and train staff dealing with customs procedures and entrepreneurs on their correct
   implementation. The provisions of the Implementing Regulation, including the amendments
   made by Regulation (EC) 993/2001, will be issued as subsidiary legislation by the second
   quarter of 2002. This process will start as soon as the new Customs Code has been enacted.
c) The Antiques (Protection) Act (Cap. 54) will be replaced by the new Heritage Act which will be
   enacted during the first quarter 2002.
d) Valuation of carrier media will be aligned with the acquis by the first quarter of 2002.




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e) Minimum values on used motor vehicles and motor cycles will be removed by the third quarter
   of 2002.
f) The provisions concerning the Community Trademark will be adopted upon accession.
g) Malta will apply the EU‟s preferential rules of origin in relation to third countries upon
   accession.
h) As regards precursors, the provisions of Regulation (EEC) 3677/90 and Regulation (EEC)
   3769/92 will apply to Malta on accession
i)   The customs regime will be aligned with the Common External Tariff (CET) upon accession.
j)   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
k) The operational capacity of customs in terms of Business Change Management Plan based on
   the analysis of the Customs Blueprints will be improved by end 2002.
l)   The CAP unit at Customs will be operational in 2002.
m) Border inspection posts will be set up by 2002.
n) 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.
o) 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.
p) The IT infrastructure necessary to manage the customs and indirect taxation provisions of the
   internal market will be installed by mid-2002.
q) 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 will be provided on an ongoing
   basis.
r) The Customs Department will sign a contract with the Malta National Laboratory in January
   2002.
s) A Memorandum of Understanding with Sea Malta Company Ltd, (one of the major local
   shipping lines) will be signed in January 2002.
t)   Quality Service Charter will be finalised in June 2002.

C. 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.




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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


D. 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




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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 1965, 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. The Ministry is seeking technical assistance in order to acquire further information on
        the implications of these amendments.
        With regard 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 Arts, Science and Technology was established 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,
        building and construction, business and commerce, art and design and maritime studies.
        The changes required in the teaching of technology related subjects at the secondary education level
        have been duly examined and technology education has been introduced in schools to support and
        complement the function of the new vocational college at a lower level.
        The Malta Professional and Vocational Qualifications Council (MPVQC) was set up on 25 October
        2000 following the entry into force of the Malta Professional and Vocational Qualifications




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Regulations, 2000 (LN215/00). These regulations seek to ensure transparency of qualifications and
certification.
In July 1999, Malta formally informed the EU 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 cost of Malta's participation in these programmes. Malta was
invited for information meetings of these programmes and an intensive information campaign on
Socrates and Leonardo was undertaken in the first half of 2000 and on Youth in the beginning of
2001.
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 inter alia Socrates,
Leonardo, „Youth‟, the Fifth Framework Programme, and in future, Culture 2000. 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 started participating in Leonardo and Socrates, while in 2001, it started participating
in the Fifth Framework Programme and Youth. Maltese schools are 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 actions and projects is
very encouraging. Malta is also actively participating in all the other actions that fall under the
Socrates programme, Gruntvig, Minerva and Lingua. Local Non-Governmental Organisations have
successfully submitted and participated in a number of Actions within the youth Programme. The
youth Co-ordinating Committee is continuously working on information and publicity campaigns.
As a result interest in all the Actions is increasing.
The education authorities participate actively in the European Training Foundation and represent
Malta on the ETF Governing Board. Malta is participating in the European Centre for the
Development of Vocational Training (CEDEFOP) as an observer.
Preparatory work was finalised on the Implementation of the Principles of European Pathways. This
includes the issuing of the European Training Document. Malta requested to participate in the
system which is presently open only to EU member states.
In January 2001 Malta set up the Network of National Academic Recognition Information Centre
(NARIC) within the Ministry of Education to promote transparency of qualifications and
certification. A national co-ordinator was also appointed.
The Ministry of Education has set up a Committee to organise the consultation process and the
drawing up of a national plan of action on the Memorandum of Lifelong Learning. Malta has
submitted its National Report to the Commission and will soon be embarking on the second phase,
which will establish a National Commission on Lifelong Learning, made up of representatives of
major stakeholder categories.




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B. Short Term Priorities
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 2002. These amendments will be brought into force upon 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)   The draft amendments to existing relevant legal notices will be finalised.
d)   Equality of treatment in higher education will be implemented, upon accession, between
     Maltese and EU nationals.

C. 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) was 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. Ten Professional and
Vocational Standards Development Boards have been set up by the MPVQC, as provided by
LN215/00. The Board consists of the teaching/training institutions and industrial/commercial
establishments.



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            4
                                     Other                             1            3            4
                                     Total                             4            5            9




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D. 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.


                                                                                       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




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3.2.2   Science and Research

        A. Current Status
        The Ministry of Education has the responsibility for science and technology. In fulfilling this role,
        the Ministry is advised by the Malta Council for Science and Technology (MCST), 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 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 National Strategy for Information
        Technology (1994) and its Review ( 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 of 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 EU‟s Fifth Framework Programme for
              Research, Technological Development and Demonstration (FP5).
        Moreover, joint public-private sector research and development ventures are being promoted and
        developed on an on-going process. In the last few months, work has proceeded on a feasibility
        study to set up an Innovation Relay Centre (IRC) for Malta. The IRC Malta will facilitate the
        development of such ventures and is also expected to stimulate public- private sector research
        collaborations.

        The general objectives of science and technology policy in Malta are in line with the acquis.
        In order to develop further the sector for an effective integration of Malta into the European
        Research Area and establish an updated strategy for Malta‟s science and technology policy, the
        Malta Council for Science and Technology is working on two major policy-related initiatives,




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namely the National R&D Audit and Technology Foresight Exercise. By identifying the strengths
and weaknesses of the R&D system, the National R&D Audit will provide the basis for developing
and implementing an R&D capacity-building strategy, involving strategies for strengthening the
R&D and innovation set-up, and through an effective national R&D and innovation policy. The
quantitative side of the R&D Audit is being carried out through the National Statistics Office (NSO).
In 2001, MCST and NSO collaborated on the launch of the Community Innovation Survey III. The
results of this survey are currently being processed by the NSO, which will shortly be launching
further surveys relating to R&D. An information resource and scientific databank is being set up to
promote national science and technology information resourcing.
The Foresight Exercise has started with the approval of a MCST project, entitled eFORESEE
(Exchange of Relevant Foresight Experiences among Small Enlargement Countries), under the FP5
IHP STRATA The kick-off meeting for the eFORESEE Project will take place in Malta between 11-
12 February 2002. The acquis relating to science and research does not require transposition into the
national legal system or particular implementation and enforcement measures. The implementation
of the acquis primarily involves 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
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 submitted proposals under the 1999
INCO Call for Pre-Accession Countries and the INCO Mediterranean and INCO Developing
Countries calls. Maltese research organisations have also been involved in project proposals under
the FP5 INCO-MED and INCO-DEV Programmes. In November 1999 the Maltese Cabinet took the
decision to seek Association with the Fifth Framework Programme for Research, Technological
Development and Demonstration (RTD), and the Government subsequently formally expressed its
interest in this regard. Malta became fully associated with the Fifth Framework Programme with
effect from 1 March 2001.
Malta is now participating successfully in a number of projects within the Fifth Framework
Programme for RTD. The MCST has reinforced the national FP5 information distribution network,
particularly through increased interaction between the National Contact Points (NCPs), assistant
NCPs and interested entities and researchers in different sectors. Malta is also currently
participating, as a full member, in a substantial number of COST actions.
Malta is 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.




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B. Short Term Priorities
a) Develop sectoral networks to provide policy advice on areas of national interest.
b) Establish the national science and technology information resourcing through the setting up of an
   information resource and scientific databank.
c) Establish an updated strategy for the unfolding of Malta's science and technology policy.
d) Establish appropriate systems to ensure a holistic and focused approach in national expenditure
   on R&D.

C. 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 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
                                     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




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D. Financial Requirements
                                                                                     Lm000
Area of Activity                                           2001      2002         Total

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

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




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3.2.3   Telecommunications and Postal Sector

        A. Current Status
        Telecommunications
        Telecommunications in Malta are regulated by the Wireless Telegraphy Ordinance (Cap. 49), by the
        Telecommunications (Regulation) Act 1997 (Cap. 399), and by the Malta Communications
        Authority Act, (Cap. 418).
        The following key subsidiary legislation was issued under the Telecommunications (Regulation) Act
        between 1998 and 2000. Key legislation regulating the sector and the legislation enacted in 2001 is
        discussed in the body of this paper.
               Notice of coming into force Telecommunications (Regulation) Act, 1997 (LN 236/97)
               Telemalta Corporation Act, Notice of Repeal (LN 237/97)
               Telecommunications Regulatory Order, 1997 (LN 241/97)
               Rate Mechanism to be applied to certain Telecommunications Services (LN332/97)
               Telecommunications Appeal Board (Jurisdiction) Regulations (LN217/98)
               Telecommunications Appeals Board (Rules of Procedure) Regulations (LN218/98)
               Authorised Providers (Provision of Information) (LN278/98)
               Internet and Other Data Networks (Service Providers) Regulations (LN170/99) –amended
                by LN223/00
               Nomination of Competent Authority (LN137/00) (Nominated the Director of Wireless
                Telegraphy, as the Competent Authority for the regulation of communication services in
                Malta)
               Telecommunications Services (General) Regulations, 2000 (LN151/00)
               Order of cessation of exclusive privileges (LN191/00)
               Telecommunications Services (Modification of Maltacom p.l.c. and Vodafone Malta
                Limited Licences) Regulations, 2000 (LN 195/00)
               Telecommunications and Wireless Telegraphy Fees (Modalities of Payment)
                Regulations, 2000 (LN 236/00)
               Interconnection (Obligation and Rates) Regulations, 2000 (LN 243/00)
               Malta Internet Exchange Regulations, 2000 (LN 263/00)
               Nomination of Competent Authority Regulations (Nominated the Malta
                Communications Authority as the competent authority for the regulation of
                communications in Malta). (LN 280/00)

        Chronologically, the following have been the major developments since 1997.

        1997     Telemalta Corporation, a public, statutory entity providing telecommunications
                 services (other than mobile telephony services, internet service provision and cable
                 television services) on an exclusive basis in Malta ceased operating when the
                 Telemalta Corporation Act was repealed. Maltacom p.l.c., then a fully government
                 owned enterprise, took over the business of Telemalta Corporation.
        1997     The regulatory functions up till then assumed by Telemalta Corporation were vested




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         in the Director (Wireless Telegraphy) by virtue of LN 241/1997. Thus regulatory
         and service delivery functions were separated.
1998     Maltacom p.l.c. was granted a 25-year telecommunication operating license with
         exclusive rights to provide telecommunications services until 2010.
1998     In June 1998, the Government sold 40 per cent of its equity holding in Maltacom
         p.l.c.
2000     The Malta Communications Authority Act (Act 18/2000) was enacted on 1 August
         2000. The Authority started formal operations on the 1 January 2001, taking over
         regulatory responsibilities from the previous competent authority (the Director
         Wireless Telegraphy).
2000     The National Plan for the Reform of the Telecommunications Sector, which sets the
         timetable for the liberalisation for the Maltese telecommunications sector, was
         brought into force by virtue of Act XVIII of 2000. The sector at the time comprised:
         Maltacom p.l.c. – Fixed telephony services and systems operator holding an
         exclusive operating license for all telecommunications services other than mobile
         telephony, internet service provision and cable television until 2010.
         Vodafone (Malta) Ltd – Mobile telephony operator, present in Malta since 1988,
         when it was granted a 20-year monopoly.
         Melita cable p.l.c., a cable television service provider, present since 1991, when it
         was granted a monopoly until 2006.
2000     Maltacom p.l.c. was licensed to provide telecommunications services on a non-
         exclusive basis, except for fixed telephony and international gateway services were
         it retained its exclusive rights until 31 December 2002.
2000     Vodafone (Malta) Ltd‟s monopoly in mobile telephony services was curtailed with
         effect from December 2000 with the granting of a license to provide the same
         services to Mobisle Communications Ltd.
2001     On 1 June 2001 the cable television market was liberalized and the exclusive rights
         granted to Melita cable p.l.c. were terminated.

The National Plan for the Reform of the Telecommunications Sector in Malta provides that a third
operator in mobile telephony may be considered in 2003 but is not expected to be awarded a licence
before 1 January 2005.
The telecommunications sector will be completely liberalised by the fourth quarter of 2002. No
exclusive privileges may be granted or shall have effect beyond 31 December 2002.
The responsibility for telecommunications policy formulation rests with the Ministry for Transport
and Communications. The Ministry for Economic Services carries responsibility for overseeing
Government‟s ownership interests in Maltacom p.l.c. The Ministry of Finance deals with issues
related to privatisation.
The Malta Communications Authority Act (Cap. 418) introduced substantial amendments to the
Telecommunications (Regulation) Act (Cap. 399) in order to provide for the regulatory powers




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appropriate to a liberalised environment. The Act established the Malta Communications Authority
(MCA) with the mandate to oversee and regulate development of communication services and
technologies in a liberalised environment. Communications services as defined in the Act, include
telecommunications, postal services, electronic commerce and Internet services. The functions of
MCA include the regulation, monitoring and review of communication services; the granting and
refusal of operating licences; the fixing of the rate mechanism; the setting out of standards of
communications services; advising the Minister on policy formulation; policy implementation;
ensuring fair competition; and regulating and securing interconnectivity.
The Authority is also responsible for ensuring freedom of communication, non-discrimination and
equality of treatment in matters related to communications services.
The Chairman and Chief Executive of MCA took office in January 2001. The MCA is currently
building its complement and has recruited various professionals in the legal, finance, policy and
technical areas. Its current complement stands at 13. On 1 November 2001 MCA launched a
website to facilitate access to information.
The Telecommunications (Regulation) Act (Cap. 399) as amended is in line with the acquis. It
implements regulatory requirements under Directive 90/388/EEC and Directive 97/13/EC on a
common framework for general authorisations and individual licences in the field of
telecommunications services. The telecommunications Services (General) Regulations, 2000
(LN151/00) is the key set of regulations which set out the regulatory framework, and provide for,
interconnection obligations, universal service obligations, numbering and number portability and
carrier selection and pre-selection, directory services, accounting systems, dominant market
positions, quality services targets, tariff controls, emergency services, data protection, billing,
reporting obligations and dispute resolution.
The following regulations contained in Legal Notice 151/2000 are not yet in force:
    o   Regulation 16 on interconnection charges
    o   Regulations 21 to 23 on number portability
    o   Regulation 24 dealing with carrier selection and pre-selection
    o   Regulations 30 to 32 dealing with tariff controls.
The Telecommunication Services (General) Regulations, 2000 (LN151/00) repealed the 1998
Universal Service Obligations (USO) Regulations (LN216/98). The new Regulations provide a
simpler and more flexible method for regulating universal service obligations. Presently, Malta does
not have a USO fund. The MCA will be issuing a consultation document on the subject in the first
quarter of 2002.
The Telecommunications Services (General) Regulations, 2000 (LN151/00) made provision for
MCA to introduce a new numbering plan. The Authority commissioned a report on the
implementation of a new numbering plan which report was approved at the end of May 2001. The
new numbering scheme is in place as of 1 November 2001, and will be running parallel with the old
numbering system for a period of six months.
MCA has ensured operator capacity for implementation of the European emergency number service
(112), which became operational on 1 June 2001. The necessary legal procedure is in place through




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legal notices LN151/00 and LN182/01, issued under the Telecommunications (Regulation) Act
(Cap.399).
Subsidiary legislation issued under the Telecommunications (Regulation) Act (Cap. 399) to provide
for interconnectivity was as follows:
    1. Interconnection (Obligation and Rates) Regulations, 2000 (LN243/00) which came into
       force on 28 November 2000;
    2. The Malta Internet Exchange Regulations, 2000 LN263/00), which came into effect on 19
       December 2000, and
    3. Regulations 10 to 16 of the Telecommunications Services (General) Regulations, 2000
       (LN151/00).
As a result of the above legislation, the acquis on 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 has been
implemented.
The Telecommunications Service (Modification and Provisions in respect of a Joint venture and
Shareholders Agreements) Regulations, 2000 (LN 248/00) came into force on 5 December 2000
implementing the liberalisation requirements under Directives 90/388/EEC and 96/19/EC.
Telecommunications and Wireless Telegraphy Fees (Modalities of Payment) Regulations, 2000 (LN
236/00) issued under the Fees Ordinance (Cap. 35) came into force on 21 November 2000.
Provisions for the cost orientation of tariffs, and improved tariff controls and mechanisms were
introduced as amendments to article 19 of the Telecommunications (Regulation) Act (Cap. 399) and
also under the Telecommunications Services (General) Regulations (LN151/00). Provisions for
Long-Range Incremental Cost Accounting Systems have also been issued and are in force.
Procedures for the granting and refusal of applications include provisions for the right of appeal to
the Telecommunications Appeals Board. The right of appeal is granted to applicants whose bids for
licences have been refused as well as to any person who made submissions to the regulator in respect
of an application. Decisions of the Telecommunications Appeals Board are subject to appeal under
the Court of Appeal (inferior jurisdiction) 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, as in the case of UMTS bands, have been reserved accordingly.
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.
ISDN services were launched in March 2000 by Maltacom p.l.c., whilst ADSL services were
launched by Maltacom p.l.c. in July 2000. Broadband cable internet was launched by Melita Cable
p.l.c. in October 2000.




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In the last quarter of 2000 and the first quarter of 2001, a number of legal instruments were put into
force in order to implement the National Plan for the Reform of the Telecommunications Sector and
to modify existing licences in line with the newly liberalised environment. The Order of cessation of
exclusive privileges (LN191/00) came in force on 19 September 2000 to terminate exclusive
privileges to provide telecommunications services granted to Maltacom p.l.c. other than those for
fixed telephony and international gateway services. The Order also terminated all exclusive
privileges granted to Vodafone Malta Limited in the provision of mobile telephony services.
On being granted a licence to operate in the mobile telephony market as a second licensee on 1
December 2000 Maltacom p.l.c. was required to dispose of its shareholding in Vodafone Malta
Limited within six months from the date Maltacom‟s subsidiary started providing mobile telephony
services.
The Telecommunications Services (Modification of Maltacom p.l.c. and Vodafone Malta Limited
Licences) Regulations, 2000 (LN195/00) were issued to amend existing licences for these services to
ensure conformity with the liberalised environment.
On 1 October 2001 subsidiaries of Maltacom p.l.c. ceased to be exempt from the Competition Act
and are thus subject to the rules of competition as per Legal Notice 241/2001. Maltacom p.l.c.
continues to be exempt from the Competition Act.
Paging and related services were liberalised on 1 March 2001. Legal Notice 46 of 2001 „Order of
Cessation of Exclusive Privileges‟ (LN46/01) removed the rights to the exclusive provision of
paging and related services acquired by Telepage Ltd.
Malta's existing radiopaging system is based on POCSAG. The frequency bands outlined in the
Commission Decision 98/522/EC have been reserved.
The Order of cessation of exclusive privileges (LN47/01) terminated exclusive privileges granted to
Melita Cable p.l.c for the provision of cable television services with effect from 1 June 2001.
The Cable Systems (General) Regulations, (LN167/01) regulating this market came into effect on 4
March 2001 by virtue of LN191/01.
The Telecommunications Service (Modification of Radio Tracking System and Services Licence)
Regulations, 2001 (LN48/01), the Telecommunications Service (Modification of Radio Paging
System Agreements and Licences) Regulations, 2001 (LN49/01), and the Telecommunications
Service (Modification of Cable System Agreement and Licences) Regulations, 2001
(LN50/2001)modified existing agreements and licences systems for the respective services to
remove exclusivity privileges.
License fees for the provision of international data services were established by legal notice
International Data Services (Fees) Regulations, 2001 (LN195/01).

The provision of access to internet and other data networks was exempted form the exclusivity rights
at the time granted to Telemalta Corporation by virtue of an Order by the Prime Minister dated 2
October 1995. At that time, operators in the market were required to obtain a licence from the
Director of Wireless Telegraphy. Internet Service Providers are required to use Maltacom's
international gateway, which service will be liberalised on 1 January 2003. They are now licensed
by the Malta Communications Authority under legal notice 170 of 1999, the Internet and Other Data




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Networks (Service Providers) Regulations, 1999. The Internet and Other Data Networks (Service
Providers) (Amendment) Regulations 2000, (LN223/00), which amended the previous set of
regulations, came into effect on 27 October 2000 to provide that the open access obligations will
become operative only when a company achieves a dominant position in the market.
The Malta Internet Exchange Regulations, 2000 (LN203/00) came into effect in December 2000 to
provide for local interconnectivity between Internet service providers.
The following legal notice was issued under the Product Safety Act (Cap. 427) on 28 December
2001:
The radio equipment and telecommunications terminal equipment and the mutual recognition of
their conformity regulations, 2001 (LN329/01). These regulations are in conformity with Directive
99/05/EC.

The Wireless Telegraphy Department is responsible for administering the provisions of these
regulations with respect to radio equipment. The Malta Communications Authority is responsible
for administering the provisions with respect to telecommunications terminal equipment.
Data Protection and Electronic Commerce
The Telecommunications (Regulation) Act (Cap. 399) provides for protection against misuse of data
and stipulates the penalties for infringements. A White Paper on the Legislative Framework for
Information Practices was published during 2000. Following consultations with DG Internal
Market, Parliament approved the Data Protection Act XXVI of 2001 transposing the acquis relating
to data protection.
The Electronic Commerce Act (Cap. 426) provides for the regulation of services related to electronic
signatures and providing the penal framework to prevent and fight computer-related offences. The
Act was published on 8 January 2001 and is in line with Directive 1999/93/EC on a Community
framework for electronic signatures and Directive 2000/31/EC on certain legal aspects of
information society services, in particular electronic commerce, in the Internal Market.

E-Government
The Government adopted the eGovernment Vision and Strategy document in January 2001 setting
up an ad hoc Project Team, based in the Office of the Prime Minister, to carry out tasks defined in
the strategy. These include the restructuring of the Government web sites on the basis of
interoperability and accessibility standards, and the launching of a number of flag-bearer projects,
many of which are inspired by the eEurope plan.
The eGovernment programme involves several parties including the Central Information
Management Unit (CIMU), the Management Efficiency Unit (MEU), the Malta Information
Technology & Training Services (MITTS) Ltd., which are the responsibility of the Office of the
Prime Minister, and the Ministry for Justice and Local Government. A national Information Society
and Economy Commission, called the eMalta Commission, set up under the aegis of the Ministry for
Justice and Local Government, was formally launched on 19 April 2001. The eMalta Commission
was set up to drive the identification, promotion and co-ordination of the initiatives required for the
attainment of an Information Society and Economy in Malta.




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Malta was represented during the eGovernment Conference of 29/30 November 2001.
Information Society
Malta participated in the meetings of the Joint High Level Committee on Information Society
(JHLC) held in May and October 2001. Malta endorsed the finalised eEurope+ Action Plan that was
launched at the Gothenburg Summit in June 2001. The areas of information society and data
protection are discussed further under Section 3.1.3 (Free Movement of Services).

Postal Service
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 regulates the administration of the
post office, establishing the functions respectively of the Postmaster-General and of the postal
operator. The Post Office Act (Cap. 254) and the current set-up in the postal sector are not fully
aligned with the acquis. Proposed amendments to the Post Office Act (Cap. 254) were published as
Bill No. 102 on 10 July 2001 and it is currently at Committee Stage in Parliament.
Maltapost p.l.c. is a public liability company with majority shareholding owned by government. It
was granted an exclusive operating licence in May 1998 to provide a postal conveyance service by
land, sea or air, perform all incidental services of receiving, collecting, dispatching and delivering
postal articles; and provide other services related to its core business activities.
Courier and express parcel services are not covered by licence.
Government commissioned three strategy papers for Maltapost in order to meet the competitive
challenges of a liberalised market. As a result of these studies, Maltapost is implementing a
Strategic Plan, a 5-year Business Plan and an Operating Plan.
At present the regulation of postal services rests with the Postmaster-General. The Bill currently
under consideration proposes that this regulatory function be assumed by the Malta Communications
Authority (MCA) within the Ministry for Transport and Communications whilst the operational
functions are handled by Maltapost p.l.c. Government shareholding in Maltapost falls within the
remit of the Ministry for Economic Services.

B. Short Term Priorities

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) Article 16 of LN151/00 dealing with interconnectivity charges to subscribers will come into
   force by accession.
Electronic Commerce
a) The Electronic Commerce Act (Cap. 426) will come into force by the fourth quarter of 2002.




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Postal Sector
a)   Restructure Maltapost to facilitate alignment with the three areas of the acquis:
      access to other service providers, under the same conditions, and ensuring inter-operability
       with member states;
      standards based on performance/quality measurement parameters; and
      prices for each service are to be related to the average cost of that service.
b) Adopt the amendments to the Post Office Act (254) to enable the further liberalisation of the
   sector. Bill No.102 is expected to come into force by the second quarter of 2002;
c) Strengthen the regulatory structures for the postal sector, to reach full capacity by the second
   quarter of 2002.
a) Continue the implementation of the Strategic Plan, the 5-year Business Plan and the Operating
   Plan.

C. Institution Building Needs
MCA is effectively overseeing and regulating the development of communication services and
technologies in Malta. Following the adoption of the amended Post Office Act, the MCA will
assume full regulatory responsibility for Postal Services.

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




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D. Financial Requirements
                                                                   Lm000
Area of Activity                             2001      2002         Total

Ministry for Transport and
Communications
                                 Recurrent    10          10           20
                                 Capital       -           -            -
                                 Training     15          15           30
                                 Total        25          25           50

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




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3.2.4   Culture and Audiovisual

        A. Current Status

        Culture
        The Maltese authorities have closely followed developments concerning the new generation
        programme Culture 2000, with the aim of full participation once the necessary legal arrangements
        have been put in place. The necessary structures for Culture 2000 have been set up and the
        Framework Agreement on participation in Community programmes was signed on 19 December
        2001. While the framework agreement does away with the need to negotiate on each Community
        programme the fact that Malta‟s participation is not envisaged in the Culture 2000 programme
        constitutes a legal obstacle.
        Malta has an open culture policy that also gives due importance to European culture. As a result
        Malta promotes international cultural co-operation with 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 enforced. The right of free access to culture and the 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 and setting up of local structures, such as a Superintendence Directorate, an
        Operating Agency, a Committee of Guarantee and a National Heritage Database.
        Malta has committed itself to adopt a new Heritage Act, published as Bill No.137 on 14 August
        2001. By virtue of a legal notice, this Bill will enable the Government to implement the provisions
        of Directive 93/7/EEC (regulation of trade in national cultural treasures). The Directive includes an
        annex that contains a heterogeneous list of objects that could be classified as national treasures. In
        line with the requirements of this Directive, a National Heritage Database is in the process of being
        set up. This issue is further discussed under the Free Movement of Goods Chapter.
        A National Culture Policy document was published, on 30 August 2001, as a White Paper for public
        consultation. A Fact-and-Trends Report for the Council of Europe was completed in December
        2001 on the basis of the Cultural Policy document.
         An Act to provide for the Malta Council for Culture and the Arts was published as Bill No. 138 on
        31 August 2001. It is expected to be enacted in the first quarter of 2002. The Bill schedules entities
        for the purpose of funding or subsidising for the organisation of cultural and artistic programmes as
        well as for administering and managing assets or undertakings of a cultural nature.
        The Report „Strategija ghal-Lingwa Nazzjonali‟(Strategy for the National Language) drafted by the
        Maltese Language Board was endorsed by government in September 2001.
        The National Culture Policy Document and the Strategy for the National Language proposed the
        setting up of Il-Kunsill Nazzjonali ta‟ l-Ilsien Malti (The National Council for the Maltese
        Language) to promote the evolution of the Maltese language, as part of the Euro-Mediterranean




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initiative to identify and consolidate ethnic languages. Public consultation was wound up on 2
February 2002. A bill is being drafted.
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.

Audio-Visual
The audio-visual 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 Transfrontier Television. Malta ratified the Council of Europe Convention
on Transfrontier Television in 1993. Malta became a state party to the Protocol amending the
European Convention on Transfrontier Television (ETS 171) 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) to bring it in line with the acquis. The amendments to the Act
strengthen the effectiveness of the Broadcasting Authority by introducing a system whereby
administrative sanctions replace the current penal sanctions in respect of offences by broadcasters.
The actions of the Authority in this regard are 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 audio-
visual 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 Plus programme.
The Government is planning to launch a set of fiscal and financial incentives for the film industry in
Malta. These incentives will provide tax credits to foreign producers shooting in Malta as well as
tax breaks to those investing in the necessary infrastructure and equipment used by the film and
television industry.
Consultations were held with regard to the commitments on audio-visual policy within the
framework of the World Trade Organisation. These consultations resolved the outstanding issues
arising during accession negotiations, namely the benefit that EU member states enjoy with the
World Trade Organisation, which gives preference to domestic productions.
Furthermore, the following subsidiary legislation was issued under the Broadcasting Act (Cap. 350)
bringing into effect 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:-




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   Broadcasting Act (Substitution of Third Schedule) (Code for Advertisements and Sponsorships)
    Regulations 2000 (LN159/00) was published on 29 August 2000 and came into force on 1
    September 2000;
   Broadcasting Code for the Protection of Minors, 2000 (LN160/00) was published on 29 August
    2000 and came into force on 1 September 2000;
   Code for the Investigation and Determination of Complaints (LN161/00) was published on 29
    August 2000 and came into force on 1 September 2000;
   Special Administrative Procedure Regulations, 2000 (LN162/00) was published on 29 August
    2000 and came into force on 1 September 2000;
   Broadcasting Act (Amendment of Fifth Schedule) Regulations, 2000 (LN164/00) was published
    on 29 August 2000 and came into force on 1 September 2000;
   Broadcasting (Jurisdiction and European Co-operation) Regulations, 2000 (LN158/00) dated 29
    August 2000 came into force through LN260/00 and were subsequently amended by LN258/00
    on 15 December 2000;
   Broadcasting (Jurisdiction and European Co-operation) Regulations, 2000 (Notice of coming
    into force) (LN260/00) was published and came into force on 15 December 2000, with the
    exception of the parts relating to the broadcasting of European works (i.e. Article 5) which will
    come into force on accession, taking into account Malta‟s international obligations;
   The Dubbing of Tapes Regulations, published as Ln245/00 on 1 December 2000 has replaced
    LN163/00, published 29 August 2000;
   Amendment to the Code for the Investigation and Determination of Complaints (LN3/01) was
    issued under the Broadcasting Act (Cap. 350) and published on 5 January 2001;
   Fees payable on the Filing of Judicial Acts in connection with Appeals Regulations, 2001
    (LN106/01), issued under the Broadcasting Act (Cap. 350) on 30 April 2001, came into force on
    1 May 2001;
   Broadcasting Act (Substitution of Third Schedule) (Code for Advertisements, Teleshopping and
    Sponsorships) Regulations, 2001. Legal Notice 245/01 was published on 19 October 2001. It
    replaced the previous Third Schedule of the Broadcasting Act (Cap.350).
   The Broadcasting Authority has published the list of major events in terms of the powers
    conferred by sub-regulation (1) of regulation 6 of the Broadcasting (Jurisdiction and
    European Co-operation) Regulations, 2000. The said list was published on 30 October in the
    Government Gazette Notice 900 of 2001.

The Malta Statistics Authority Act (Cap. 422), providing for the establishment of a Statistics
Authority, was enacted by Parliament on 3 October 2000. It came into force on 1 March 2001 by
virtue of LN26/01. The Act enables the publishing of the relevant statistical information on
Broadcasting and Audio-visual works.




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B. Short Term Priorities

Culture
a) The Heritage Act will be adopted and come into force in the first quarter of 2002.
b) The National Cultural Heritage Database is operational. (Ongoing)
c) New legislation for the setting up of a National Council for the Maltese Language will be enacted
   by the end of 2002.

Audio-Visual
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.
b) The Malta Film Commission will publish a set of guidelines giving procedures to be followed to
   facilitate matters. These codes of practice would cover various areas such as environment,
   customs, work-permits, set buildings, and employment of minors and other matters.
c) Malta will assess in further detail the means to best exploit its participation in the Media Plus
   programme.


C. Institution Building Needs
The structures necessary for the operation of Culture 2000 have been set up. The administration of
the Culture 2000 programme is the responsibility of the EU Programmes Unit within the Ministry of
Education. 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 enactment of the new Heritage Act and the Malta Council for Culture and the Arts Act will
facilitate initiatives to ensure proper management of cultural heritage. Non-governmental
organizations and the private sector will be increasingly involved in the preservation and
enhancement of heritage.
The first trial run on the electronic National Heritage Database, using the Geographical Information
System (GIS) of the Planning Authority, took place in April 2001. The Museums Department and
the Planning Authority signed an agreement in November 2001, for the establishment of a nation-
wide heritage database-sharing system.
The amendments to the Broadcasting Act (Cap.350) have further 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 committed by broadcasters.




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Area of Activity                                  2001      2002         Total

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



D. 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.




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3.3     Economic and Fiscal Affairs
3.3.1   Taxation

        A. Current Status

        Value Added Tax
        Value Added Tax (VAT) was re-introduced in Malta in January 1999, and the system is now
        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 progressed as
        planned. The new VAT system has become strongly established, gathered momentum and has
        provided a significantly higher tax yield.
        The operational capacity of the VAT Department has been enhanced, through various projects
        including:
        i. the recruitment of an additional number of VAT Inspectors/Auditors to a complement of 52
        ii. the appointment of seven Assistant Directors to be responsible for the various sections within the
        Department
        iii. the provision of a training programme for all the VAT Inspectors/Auditors
        iv. the implementation of a coherent enforcement strategic plan the setting up of appropriate IT
        applications for use in the collection of tax arrears
        v. the creation of additional office space within the same departmental building
        vi. the setting up of a one-stop-shop customer service area and the launching of a quality service
        charter
        vii. Platform migration of the current VAT system has been started
        viii. IT applications for (a) debt management and (b) sifting of risk taxpayers (for audit
        investigation) installed
        ix. Draft Manual of VAT Control Methodology for use by Department‟s officials concluded. To be
        distributed to staff by March 2002.
        x. A comprehensive analysis of the existing VAT legislation (Legal Comments) has been drafted and
        is under review by Senior Management of the VAT Department.
        xi. The participation of Malta in the FISCALIS Programme, intended to improve the indirect
        taxation systems of the internal market has been accepted on a provisional basis. Maltese officials
        have participated as „experts‟ in the seminars held since the third and fourth quarter of 2000. This
        enables the Maltese revenue departments to establish a working link with the Programme until the
        establishment of an appropriate legal basis would permit full participation.




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IT applications for (a) first phase of Business Audit Trail has been installed (b) Department Web-site
including general information about the VAT Department was launched (http.www.vat.gov.mt) on
10th October 2001 (c ) Web-site includes facility for electronic ordering of fiscal receipts and for
registration of business operators without the need of having to go personally to the VAT
Department (d) Requirements specifications for Debt Management System (Phase 2) have been
finalised and system is in the process of development.
xii. Booklet of Frequently Asked Questions and Answers about VAT was published and distributed
to staff. It was also made available to taxpayers. It is also shown on the Department‟s web-site.
xiii. Procedures to identify EU Experts to assist with the setting-up of the VAT Information
Exchange System (VIES) and the Central Liaison Office (CLO) have been concluded through a
Twinning Light programme. The twinning light covenant and accompanying documents have been
sent to Brussels for approval by the EU Commission and signature by the Belgian Tax
Administration, whose proposal was selected following the launching of a request for assistance.
xiv. An additional Appeals Board was set-up in November 2001 bringing the total number of
Appeals Boards to six.
xv. EU experts have visited Malta to start and carry out a range of activities under the BCMP and
submitted preliminary, (sometimes final) reports concerning:
        (i)      Development of a Personnel; Planning system, training needs assessment and job
                 descriptions;
        (ii)     Review of the Operations of the VAT Appeals Boards;
        (iii)    Delivery of Training Courses to VAT Inspectors on the Methodology for routine
                 VAT visits in November/December 2001;
        (iv)     Development of Internal Audit Unit; (v) Drafting and finalisation of separate Codes
                 of Ethics for the VAT and Inland Revenue Departments;
        (v)      Development of an enhanced strategy and improved procedures for debt collection;
        (vi)     Drafting of amendments to the VAT Act to bring it in line with the single market
                 concept;
        (vii)    E-Government and electronic lodgement of returns and payments,
        (viii)   Set-up of a Research (Intelligence) Unit.

Other measures being taken by the VAT Department include the development of VAT IT
programmes to interface with the EU VIES System. Moreover it is also envisaged to set up 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 December 2002. In this respect a Twinning Light contract for the implementation for VIES in the
setting up of CLO was signed in January 2002 with the Belgian Tax Administration. 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:




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     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.
     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 the same as 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.
     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




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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. under the Scheme for Travel
Agents the profit margins on travel abroad have been made taxable at 15 per cent in line with Article
26 at the EU Sixth Directive.
The supply of food by a canteen situated in a work or study area and exclusively supplied to workers
and students therein was made taxable at the full rate with effect from 1 January 2001 by Legal
Notice 274 of 2000 of 22 December 2000.
The supply of services by the Malta Maritime Authority was made taxable at the full rate in line with
the Sixth Directive with effect from 1 January 2001 by Legal Notice 171 of 2001 published on 13
July 2001.
Legislation (Legal Notice 170/2001) to bring existing legislation regarding refund schemes for first
dwellings, weddings, funerals and ordination to the priesthood was published on 13 th July 2001.
Such schemes were abolished with effect from 1 January 2001. Legislation (Legal Notice 233 of
2001) to change the status of the supply of gold by the Central Bank from exempt with credit to
taxable at the standard rate in line with the Sixth Directive was published on 2 October 2001.
Legislation to change the status of Services falling under the First Schedule to the Investment
Services Act from exempt with credit to exempt without credit in line with the Sixth Directive was
published on 2 October 2001 (Legal Notice 233 of 2001).
A special scheme for second hand goods, works of art, collectors‟ items and antiques was introduced
by subsidiary legislation (Legal Notice 234 of 2001) published on 2 October 2001 to bring existing
legislation in line with Article 26 of the EU Sixth Directive.
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 and a number of special arrangements
have been requested. Furthermore 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 Euro 37,000 in the case of traders, a maximum of Euro 25,000 in
the case of service providers with a high value added and a maximum of Euro 15,000 in the case of
service providers with a low value added.




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A first draft including amendments to the existing VAT legislation to make it conform with the
EU Sixth Directive is expected to be delivered by mid-March 2002 by two experts who have
been contracted to carry out this exercise.

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. The Directives and the
Convention are:
-   the Merger Directive;
-   the Parent and Subsidiary Directive;
-   the Mutual Assistance Directive; and
-   the Convention on the elimination of double taxation in connection with the adjustment of
    profits of associated enterprises (the Arbitration Convention).
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. 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. 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).
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. Business
taxation will have to be assessed on its possible impact on unfair competition and in particular on the
location of business. 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




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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 fact the compliance rate for the
submission of returns and the payment of the tax due increased to over 90% during these last 3
years.
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. to manage and control unstructured documents in a more efficient
and timely manner. The first phase of this system was implemented in 2001. Moreover a Tax Audit
Unit was set up in January 2000 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 has been specifically developed for the purpose of identifying tax payers that could be
evading tax. The department will be strengthening this unit by the recruitment of more officers in
2002. 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. In
2001 the department continued with its reform programme. New regulations for the valuation of
fringe benefits (LN 125/01) have been introduced. Action has also been initiated for the
introduction of on-line services through the internet including the lodgement of returns.

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 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 the 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




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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 per cent irrespective of 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, issued under the 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 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

Value Added Tax
a) Continue the alignment of VAT legislation regarding the treatment of certain supplies which are
   currently exempt with credit or exempt without credit, save for those for which a special
   arrangement is being requested. No further amendments are to be made.




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b) Amend certain special schemes in the VAT legislation to ensure compliance with the acquis.
   Amended, except for retailers scheme which is under negotiation.
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.
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 fourth
   quarter of 2002.
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 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.

Excise Duty
a)   Develop a decentralised computerised system regarding excise registration details as provided
     in EU Directives.
b)   Finalise the harmonisation of the Excise Duty Act (Cap. 382) as regards provisions relating to
     general arrangements on and the holding movement and monitoring of products subject to
     excise duties.
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).

C. 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




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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

D. 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

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




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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
        3.6% per cent in December 2001. Price inflation in Malta was at 2. 94 per cent in December 2001
        and is 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 5 per cent at the end of 2001, this
        being above the 3 per cent ceiling stipulated by the convergence criteria. Government debt to
        GDP ratio stands at around 63 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. Presently, in Malta, long-term interest rates at just over 6 per cent are below the
        maximum limit allowed.
        Malta is not yet able to fulfil the exchange rate criterion, as it cannot participate in the Exchange
        Rate Mechanism (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.
        During 2001, Malta submitted its first Notification and Pre-Accession Economic Programme
        (PEP) under the Fiscal Surveillance Procedure. The Central Bank of Malta (CBM) contributed
        its assistance to the Ministry of Finance in the compilation of the two reports. The Maltese
        authorities will be submitting further Notifications and PEP reports annually on dates appointed
        by the Ecofin Council.

        Legislative Issues
        The main issue in this regard is the independence of the CBM and the declaration that the
        primary objective of CBM is price stability. In 2000, CBM set up an internal committee chaired
        by the Deputy Governor to review the Central Bank of Malta Act (Cap. 204) and recommend
        changes which strengthen the independence of the CBM, thereby bringing Malta's legislation in
        line with European Central Bank (ECB) requirements. In drawing up the proposed amendments
        to the Central Bank of Malta Act (Cap. 204), account was also taken of the additional flexibility,
        which the CBM would require in terms of policy instruments at its disposal. In drawing up these
        amendments, account has also been taken of EU requirements on payments system and the
        provision of collateral. This represents an important step towards ensuring the smooth




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functioning of financial markets and bringing the local policy framework further in line with the
European System of Central Banks (ESCB).
Draft amendments to the Central Bank of Malta Act (Cap. 204) were presented to Parliament and
given a first reading in September 2000. Since then the Committee continued to meet regularly
and to consult the Ministry of Finance and the Malta Financial Services Centre (MFSC) on
subsequent amendments. To this end, a presentation on the amendments proposed in connection
with the Central Bank of Malta Act (Cap. 204) was made to Cabinet in November 2001. The
draft legislation was approved by Cabinet and was forwarded to the Attorney General‟s Office
for review prior to being presented to Parliament for a second reading.
The acquis prohibits monetary financing of public deficits and privileged access to credit by
public sector institutions. To this effect the Minister of Finance issued Legal Notice 224/99 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 CBM any more. This amendment
underlines Government's commitment towards the establishment of an independent Central Bank
with total responsibility for 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. As stated
above, the drafting of the legislation which would be necessary to bring collateral arrangements
further in line with EU requirements has already been initiated through the proposed amendments
to the Central Bank of Malta Act (Cap. 204) which also provide for netting under bankruptcy and
finality of payment within the payments system which will be regulated by the CBM. Collateral
arrangements that have a more general legal applicability are also being examined more closely.
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, the 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 system have been in place for a number of years.

The banking regulatory and supervisory responsibilities, which were previously vested in the
CBM, have been transferred to MFSC with effect from 1 January 2002. It is expected that the
regulatory function currently vested in the Malta Stock Exchange (MSE) will also be transferred
to MFSC during 2002. The MFSC functions as an autonomous single regulator with overall
responsibility for the regulation and supervision of the financial sector. To this end the legal
formalities which should bring this decision into effect were finalised during the last quarter of
2001. Together with the new Banking Directive on the supervision of credit institutions on a
consolidated basis that was introduced earlier during the year, the MFSC‟s appointment as a
single financial regulator in Malta is expected to contribute to the supervision of banking groups
which include non-bank subsidiaries. It is also expected to enable the CBM and the MSE to
concentrate on their core functions.




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In an effort to strengthen the financial supervisory system through better co-ordination between
the competent authorities, the CBM has set up a Financial Stability Office during 2001. This has
been upgraded to a Financial Stability Division as from 1 January 2002.
A Financial Intelligence Analysis Unit (FIAU) has now been established. The legal basis of the
Unit has been provided by Act XXXI of 2001, which amended the Prevention of Money
Laundering Act (Cap. 373). The Unit is expected to commence its operations during the first
quarter of 2002. The pertinent requirements in these areas are being identified under Section 3.7
(Justice and Home Affairs).

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. 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. A capital
adequacy directive which is based on the EU Directive has been fully introduced. During 2001,
the CBM issued a Directive on Credit and Country Risk Provisioning and a Directive on the
Supervision of Credit Institutions on a Consolidated Basis, thereby bringing the local banking
regulatory framework almost fully in line with comparable EU banking regulations. The
Directive on Loan-Loss Provisioning, entered into force earlier in 2001. Banks, however, were
given the option to fully implement this Directive by the end of 2003 according to a pre-agreed
programme with the Competent Authority.
It is expected, that these Directives will continue to be updated regularly to implement the
remaining provisions of EU Directives in this field and incorporate any new standards which the
EU may adopt in the future. To this end another committee was set up in 2001 to propose
amendments to the Banking Act (Cap. 371), which would enable the Competent Authority to
achieve further compliance with EU banking regulatory standards, including those relating to e-
money institutions, and to bring the Act further in line with market trends. The amendments that
are being proposed in connection with the Banking Act (Cap. 371) in fact already include new
provisions which would enable the establishment of a Deposit Protection Scheme.
A deposit protection scheme has not yet been established in Malta but a task force made up of
members from the CBM 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 protection scheme
was finalised during the first quarter of 2001. A working group with representatives from CBM
and the local banking sector was established to propose draft regulations for such a scheme. The
drafting of these regulations has now been completed and a legal notice giving effect to these
regulations is expected to be issued during the first quarter of 2002.




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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.
Money laundering regulations were re-amended in the fourth quarter of 2000 to permit
recognition of other jurisdictions, which adhere to international standards in this area.

Monetary Policy Strategy
Monetary Policy is formulated and implemented in a liberalised financial market environment by
the CBM in terms of the Central Bank of Malta Act (Cap. 204) and is largely implemented
through open-market operations. Price stability is expected to be defined as the CBM‟s main
objective. The CBM uses the exchange rate as the nominal anchor (the intermediate target) for its
monetary policy. This will facilitate a move to the ECB's monetary strategy. In April 2000, the
CBM 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 practically abolished all effective controls on interest rates.
The amendments to the Central Bank of Malta Act (Cap. 204) will abolish the practice of setting
interest rates administratively. Furthermore, capital controls are being gradually phased out. This
implies that the CBM'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 ERM 2 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
ERM 2 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). The CBM will consider increasing the weight of the Euro
within the basket at the appropriate time.

Financial Statistics
As from 1 January 2001, the Treasury Department within the Ministry of Finance put in place a
new Chart of Accounts. Data on government financial transactions of revenue and expenditure is
being captured at source according to the ESA‟95 classification. The financial statistical data
emerging from the new Chart of Accounts is deemed to be satisfactory, although it will continue
to be monitored. Standard and specific reporting facilities have been put in place.
The National Statistics Office (NSO) is working on the adoption of the Harmonised Index of
Consumer Prices (HICP). The basic infrastructure has been completed, while the collection of
actual prices from the market will commence as from 1 January 2002. During the first quarter of
2002 NSO will start furnishing Eurostat with figures compiled under HICP.
The CBM 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




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the ECB. The CBM‟s present reporting system for banking statistics, however, does not yet
conform to the standard reporting forms introduced by the ECB for national central banks.
Consequently, the bank reporting system in Malta will need to be amended and new reporting
forms introduced. For this purpose, the CBM has set up a task force that includes members of the
MFSC and the CBM‟s IT Department 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 made up of representatives of the banks, financial institutions and
regulatory and statistical agencies has been set up to discuss and implement the changes. The
CBM 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 ECB. Since the credit institutions will also be
expected to gradually install similar systems, the CBM is liasing with them as regards the
implementation of these systems. The CBM also contributed to the chapter on Malta‟s financial
statistics which was published in the ECB‟s Methodological Manual on Money and Banking
Statistics in the Accession Countries. (The latter describes the organisation and methods of
compilation of monetary and banking statistics in accession countries). The CBM also
contributed to the ECB‟s Manual on Bond Markets and Long-Term Interest Rates in Accession
Countries, which is to be published in 2002.
The CBM is also active in the area of balance of payments and international investment position
(IIP) statistics. CBM compiles a monthly statement of foreign exchange flows through the local
banking system. These figures are an important source of data for the accruals-based balance of
payments statistics, which is compiled by NSO and which is also published by the CBM in its
Quarterly Review. In fact the CBM is actively involved with NSO in the joint compilation of the
quarterly balance of payments data.
CBM has also liased more closely with the ECB regarding the latter‟s requirements on balance of
payments and IIP statistics. In this regard, the Bank is also contributing to the compilation of the
country‟s financial account, the international investment position and official debt (local and
foreign) statistics according to EU standards. Meanwhile, the CBM and NSO are collaborating
between them in order to establish a direct reporting data collection system for balance of
payments and IIP statistics, which is based on international statistical practice. The CBM and
NSO have contributed to the chapter on Malta‟s balance of payments which will be published in
the ECB‟s Manual Accession Countries: Balance of Payments Statistics, International
Investment Position and Statistical Methods. (The latter describes the balance of payments
systems, compilation methodology and adherence to international standards in accession
countries).

Financial Infrastructure
Money and capital markets, including an active inter-bank market, are established in Malta. A
foreign exchange market involving CBM and the credit institutions also operates daily. These
markets function satisfactorily despite the small volumes transacted. CBM has also initiated
consultations to encourage financial institutions and other competent entities to provide market-
making facilities for Government securities. One credit institution is in fact already participating
in the capital market in this capacity. In the meantime, CBM has started to monitor the
implications of this development for the smooth functioning of financial markets with a view to
facilitate the process whereby other entities would also fulfil a market-making role. Moreover,




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steps have been taken to eventually dematerialise treasury bills and introduce an electronic
paperless system. A Financial Markets Committee, with representatives from the CBM and other
local banks, was set up to provide a forum for discussion and operational transparency. The
overnight marginal lending facility, which is provided by the CBM, 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 from the CBM and the commercial banks have been set up to formulate
rules and regulations for the payments system. The drafting of the rules and regulations covering
the operations of payments system are at an advanced stage. This taskforce is responsible for the
management of the payment system infrastructure in Malta, and for preparing Malta's
contribution to the ECB‟s "Blue Book" on payments systems in accession countries. The
Payment System User Group which was set up in 2000 continued to meet regularly to discuss
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 2001, the accounting system at the CBM
was upgraded to a payment and settlement system providing real time settlement.

B. Short Term Priorities (2002)

Achievement of the Maastricht Convergence Criteria
a) Government's economic strategy will remain geared towards the achievement of
   macroeconomic stability and the Maastricht criteria. 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 5 per cent of GDP in 2001 to 4.5 per cent in 2002. The level of public debt is
   expected to fall below the maximum limit of 60 per cent of GDP by 2004. Government will
   also start to take into account the obligations of the EU's Growth and Stability Pact in
   formulating its fiscal policy.
b) Malta will continue to participate in the pre-accession fiscal surveillance procedure, which
   was launched by the Commission and will submit annual notifications of public deficits and
   debt levels as they fall due according to EU methodology. The second notification on the pre-
   accession fiscal surveillance will be submitted by the end of March of 2002. Malta will also
   be preparing its second PEP detailing its medium-term financial objectives and structural
   priorities.
Legislative Issues
a) All legislative changes to strengthen the independence of the CBM and bring the Bank's
    legislation in line with the requirements of the ESCB statutes are expected to be completed
    by the first quarter of 2002.




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b) The range of monetary policy instruments and the operational procedures presently adopted
   by the CBM are expected to be reviewed systematically to reflect, as much as possible, those
   recommended by the ECB for accession countries
c) Local banking and financial legislation will continue to 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 expected to be
   finalised in 2002. The financial system will continue to be strengthened to ensure that it is
   sound and stable. Any remaining provisions within EU directives on banking and supervisory
   practices will be brought into effect. A deposit protection scheme in line with EU
   requirements is also expected to be in place by the end of 2002.
Monetary Policy Strategy
a) Monetary policy will have price stability as its main objective and will continue to be aligned
   with that of the Eurosystem. CBM will continue to use the exchange rate as the nominal
   anchor for monetary policy. With the easing of capital controls the Bank‟s monetary policy
   will be influenced substantially by the monetary policy stance of the Eurosystem.
b) Interest rates will be totally liberalised, once the amendments to the Central Bank of
   Malta Act (Cap. 204) come into effect and an appropriate usury protection law is
   adopted.
Exchange Rate Strategy
a) Malta will continue to pursue a fixed exchange rate policy.

Financial Statistics
a) The CBM 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 ECB and
   other international agencies. 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 CBM and from CBM to the ECB.
b) The CBM in conjunction with NSO will be in a position to provide, on a monthly basis,
   balance of payments statistics with more expanded coverage.
c) The financial and the economic policy analysis capabilities within the Ministry of Finance
   and the Ministry for Economic Services will be further strengthened.
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 HICP took place in
   the second quarter of 2001 and the HICP will be in place by the first quarter of 2002.
Financial Infrastructure
a) Any remaining legal barriers, which can hinder the smooth functioning of financial markets,
   will be removed and where applicable, all practices will be brought in line with those
   recommended by the ECB by the end of 2002.




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b) The CBM will continue to encourage financial institutions and other competent entities to
   assume market-making functions for Government securities. It will review this role in light of
   developments, and will gradually reduce its pivotal role in this area.
c) The CBM will also continue to encourage the development of the financial sector, with
   particular emphasis on the development of more sophisticated financial products and hedging
   instruments, as well as the forward market for foreign exchange and derivatives.
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.

C. Institution Building Needs
The main institutions responsible for the implementation of the acquis in this area are the CBM,
the Ministry of Finance, the Economic Policy Division (EPD) within the Ministry for Economic
Services, and NSO. The adoption and implementation of the acquis can be adequately undertaken
through these existing institutions.
Economic policy is co-ordinated by the EPD, 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 EPD will
strengthen their professional human resource capabilities in order to be in a position to provide
the European Commission with regular reports and forecasts on the Maltese economy and on the
fiscal position. This will enable the Maltese authorities to participate in the pre-accession fiscal
surveillance procedure and will eventually comply with the reporting procedures under the
Excessive Deficit Procedure and the Stability and Growth Pact.
The CBM will also be involved in the preparations for EMU both in the pre-accession period and
also after accession up to the adoption of the single currency.
The NSO 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).

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




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D. Financial Requirements
                                                                    Lm000
Area of Activity                             2001      2002         Total

Ministry of Finance
                                 Recurrent    10          15           25
                                 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          35           60




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3.3.3   Statistics

        A. Current Status

        General
        The Malta Statistics Authority Act (Cap. 422), providing for the establishment of a Statistics
        Authority was enacted by Parliament on 3 October 2000 and came into force on 1 March 2001.
        The Act established the National Statistics Office as an autonomous and independent institution.
        The legislation has been updated in order to reflect the latest developments in the statistical field
        and thereby has brought it in line with statistical legislation in the EU.
        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 the 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
        and is enforceable under the Act.

        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 has been routinely
        monitored since and data on the Business Register project was submitted to Eurostat in June
        2001. Apart from manufacturing and construction, the NSO is now surveying the wholesale and
        retail trades as well as hotels, restaurants and travel agencies.




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Although insurance services statistics are already available, these are not entirely harmonised
with the requirements of the acquis. The NSO has started surveying all the insurance companies
and all the financial intermediaries.
Preparatory work on the alignment of the data collection has also been carried out 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.
New surveys covering the services sectors have been conducted according to the work plan of
the NSO.

Economic Statistics
The reclassification exercise of all Government finance transactions in accordance with ESA 95
has been completed. Work on the modification of the relevant Treasury Department software
was finalised by the end of September 2000. The first non-financial national accounts in
accordance with ESA 1995 have been compiled.
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 activities currently not captured by GDP estimates.
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 achieved the set objectives
and Malta is now fully in line with the requirements of the acquis. Eurostat published the GDP
in Purchasing Power Standards for Malta on 15 May 2001.
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 Survey serves as a basis for the HICP. Currently, COICOP
classification is being used in this Survey. Work on the Household Budgetary Survey continued
as scheduled and was finalised in April 2001. The framework for the analysis of the Survey and
the adoption of HICP) have been completed.
The Maltese trade statistics system is fully aligned with the requirements of the EU. However, in
view of the elimination of customs barriers, work for the introduction of the INTRASTAT trade
statistics system for intra-EU trade statistics compilation purposes has been 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




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technical assistance from a Eurostat proposed expert on the eventual adoption of INTRASTAT.
A report was finalised by the end of 2000. The implementation plan for the introduction of
INFRASTAT, which was introduced in February 2001, was evaluated and the necessary
infrastructure for its introduction set up. A pilot test will be carried out in 2002.
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 and is being 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 and completed on the introduction of GESMES/CB for the electronic transmission of
monetary and financial data to Eurostat. The transmission of data is already in place. The
Central Bank is also making the necessary preparations for the harmonisation of local legislation
with EU requirements. This area is also discussed in Section 3.3.2 (Economic and Monetary
Union).

Tourism Statistics
All the infrastructure work for the introduction of ongoing tourism surveys at the exit points has
now been finalised and 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. Surveys on inbound tourism have been adopted and data is being generated on a
monthly basis.
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.
A Domestic Tourism Survey alongside the Household Budgetary Survey is being carried out.
The monthly collective accommodation survey, styled ACCOMSTAT, was launched in January
2001. This survey is internet based.




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The NSO is in full compliance with the requirements of the acquis in gathering statistics related
to hotels, restaurants and travel agencies. It 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 as well as statistics on
traffic accidents are available. The 1999 and 2000 data on health, safety and accidents at work
has been published. 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 now
fully complied with. The requirements of the acquis on migration, the labour force, health and
safety at work as well as in areas of further training are now complied with. Although earnings
statistics are available, full compliance with the acquis is expected to be achieved in 2002.
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) finalised 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. In general Malta can supply all the required health-related data.
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
was carried out in May 2000, a second followed in December 2000. As from 2001, the
household survey measuring the labour force situation is being carried out on a quarterly basis.
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 available. In this project
the NSO worked in collaboration with the Social Security and the Inland Revenue Departments.
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 had
prepared the necessary questionnaire for the undertaking of a proper Earnings and Labour Costs
Survey. This, however, has been rescheduled to 2002 for logistical reasons. Data on earnings
and labour costs is available from other statistical programmes like the Labour Force Survey, the
Continuous Vocational Training Survey, the Business Register and the Structural Business
Statistics and Short-term Business Statistics programmes.




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The Short-term Business Statistics programme is in place. Surveys on the following sectors are
being carried out on a regular basis:
B. Mining and Quarrying
C. Manufacturing
D. Water and Energy
E. Building Completion and Installation
F. Construction
- Wholesale and Retail Trade
G. Hotels and Restaurants
H. Land Transport
I. Air Transport
J. Water Transport
K. Supporting and Auxiliary Transport
L. Computer and Related Activities
M. Post and Telecommunications
N. Other Business Activities
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 overseas 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
was published by the Department of Women in Society.
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. Surveys carried out among
the various non-government organisations providing welfare services to households in order to
collect additional data for this project are completed. Malta is at an advanced stage of
compliance. With respect to Housing statistics the National Statistics Office is in a position to
satisfy all data requirements.

Education and Vocational Training Statistics
The education statistics produced by the NSO are in accordance with Eurostat requirements. A
joint NSO-Education Department working group is evaluating methodology on strengthening
the current statistical programme. A Continuous Vocational Training Survey was carried out for
the first time in 2000 and its results were published in October 2001.
The NSO compiled an Education Expenditure Account for the first time, which Account it
submitted to Eurostat. Malta is now in line with the requirements of the acquis.

Transport of Goods Statistics
The statistics on the transport of goods by air and 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 for Malta. Air and sea transport statistics are available and fully




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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. Preparatory work was carried
out for the first pilot road transport survey. The actual survey on transport of goods by road was
carried out in 2001 and the data is being finalised for publication.

Energy Statistics
The NSO reviewed the acquis on the energy sector between April and May 2000 and drew up
questionnaires. The NSO published the results of the questionnaires. The indications are that the
statistics acquis on the energy sector are now satisfied.

Land-Use and Agriculture and Fisheries Statistics
Although the available statistics on Maltese agriculture and fisheries sectors are substantial, new
statistical programmes have been identified to provide further data as required by the acquis.
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. First, 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 and the measures concerning the project continually
monitored. 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 on the basis of the acquis.
The NSO is following all developments in the field of agricultural statistics. Through
participation in EUROSTAT working groups and programmes, the NSO can keep abreast with
developments in this field.
In March/April 2000, the NSO took aerial photographs of the Maltese Islands for land use/cover
and agricultural statistics purposes. The photographs were processed and analysed. The
relevant results are stored on digitised maps and are available at the NSO.
Data on pig and castle farms was also collected and digitised, while information on goat and
sheep is being collected.
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 satisfies the requirements of the acquis in this area.
An agricultural census based on personal interviews was undertaken in November 2001.
Between November 1999 and March 2000, the NSO surveyed all agricultural areas under vines
and compiled a comprehensive vineyard register. The information in the register is now
digitised. The NSO is entirely in line with the requirements of the acquis.
In addition physical surveys were taken in respect of areas under vines and other fruit trees. The
information collected is being digitised.




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Sectoral censuses were undertaken in respect of vines, fruit trees, pigs, cattle and other
livestock. Production data was collected from these censuses. Agricultural statistics on pig
farms was published on 5 June 2001. The data includes number of farms by type of activity and
categorised by farm size, population by farm size, pig population by region, number of farms
categorised by pig population. All information is being stored in a GIS database.
The typology and structure of Malta‟s agricultural sector has been properly mapped out and
supported with the required statistics. The Farm Accountancy Network (FADN) pilot survey
launched in December 2000 has been completed and the results are available.
A comprehensive census of all fruit-growing areas has been carried out and is in an advanced
stage of completion. Field-workers are surveying all the areas in question while collecting data
that is required by the acquis.
The NSO already compiles Economic Accounts of Agriculture (EAA) that are in line with
Eurostat requirements. It also collects data on agricultural output prices and has started the
required compilation of an agricultural price index. The basic weighting frame for the input
price index was finalised in early November 2000 with the help of a Eurostat-appointed expert.
The Economic Accounts for Agriculture were completed and the relevant data was submitted to
Eurostat.
Feedback on Agricultural Labour Input, submitted to a Eurostat-appointed expert for evaluation
purposes, has been received. Another visit from a Eurostat appointed expert is expected.
The bovine and goats/sheep census was completed in July 2000.The poultry census was not
required because it was covered by the Census of Agriculture that was carried out in November
2001.
Data on agricultural labour is available. The NSO is now participating in a Eurostat- NSO
project on agricultural b 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 made substantial progress towards
satisfying the requirements of the acquis.
The NSO completed a porcine census in April 2000 and is now in compliance with the
requirements of the acquis. In May 2000, the NSO started a bovine and goats/sheep census. The
bovine census was finalised during 2000, whilst the goat and sheep census was completed in
2001. Data, however, on the cattle, goat and sheep censuses has not been published yet. In the
course of these censuses the NSO collected data on farm facilities and management. Statistics
from these censuses is being entered into a GIS database.
Malta‟s animal production statistics are substantially in line with the requirements of the acquis.
The results from the data collection process on fish landing statistics for the December 2000
quarter were published on 5 February 2001. Data on farm facilities has been entered into a
database. Aquaculture statistics are available.




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Regional Statistics
Statistics on population, education, labour, health and a range of other social statistics together
with agriculture and fisheries are available on regional basis. Other statistics such as economic
accounts, tourism, prices, business statistics and trade-related data are not available on a
regional basis. Moreover, current data compilations in these areas are not carried out on a
regional basis. 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 was 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 culture statistics area and consulted Eurostat to
establish the current state-of-affairs. Questionnaires on theatres, libraries, museums, musical
groups and theatre groups have been drawn up and sent out for data collection purposes.
Questionnaires on orchestras, radio/television, the cinema and the publishing industry were sent
out by the end of June 2000. The information is processed but not published yet. Data on the
cinema is available but has not been published yet for reasons of confidentiality. Data on music
and book publishing is about to be published. The museums and historical sites release was
published on 1 June 2001. The Radio and Television Broadcasting Release was published on 1
August 2001. The results from the survey on libraries were published on 10 April 2001.
The NSO started an intensive data collection on culture from administrative sources. The data
collection programme includes information on expenditure and employment statistics. This part
of the programme takes into account national accounting requirements as well. A cultural
participation survey, styled KULTURA 2000 was carried out and the results were published in
November 2001.
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 audio-visual statistics was expanded in the course of 2000 and continued in 2001 following a
detailed review of the sector. Data on the audio-visual industry was published in 2001. These
statistics are being compiled in the context of a widened programme for cultural statistics.

Environmental Statistics
The NSO set up an Environment Statistics Unit in 2001. The Staff was trained in the collection and
compilation of environment statistics with the assistance of Plan Bleu, a regional activity centre
concerned with sustainable development in the Mediterranean. The environment statistics will be
available early in 2002. The NSO has responded to the Eurostat environment questionnaire and work
on the publication of environment statistics is at an advanced stage of completion. The NSO
participated also in the CAMP project on sustainable environment indicators.




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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. 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.

Research and Development Statistics
The necessary preparatory work for the collection and compilation of research and development
statistics was carried out during 2000. The necessary human and technical infrastructure is now
in place. Moreover, the available data can be extensively supplemented by new information that
is made available through other data collection initiatives within the national statistical
programme.
A working group comprised of representatives from the NSO, Malta Council for Science and
Technology and Industrial Property Office has been set up 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
and actual survey work was carried out in 2001 in the context of an EU-wide programme for the
collection of such statistics.
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).
Information Society
The NSO published the developments in the Information Society Sector on 3 April 2001.
Comparisons were drawn with the EU member states and the central European candidate countries.
These comparisons were based on 1998 and 1999 data.
The third release from the Information Society series were published on 23 July 2001. Certain
comparisons have been made with EU member states and candidate countries.

B. Short Term Priorities

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

Economic Statistics
a) Adopt ESA 1995 during 2002.




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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.

C. 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

D. 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




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3.4     Sectoral Policies
3.4.1   Industry

        A. Current Status

        Profile of manufacturing industry
        The share of manufacturing in total economic output amount to some 25 per cent. It remains one
        of the main pillars of the domestic economy, with manufacturing employment accounting for 23.3
        per cent of the totally gainful occupied according to September 2001 figures published by the
        National Statistics Office., whilst the share of manufacturing exports in total exports of goods and
        services stood at provisionally 55.1 per cent from Jan to Sept 2001.
        There have been notable changes in the structure of the domestic manufacturing industry over the
        years, with a consistent shedding of labour 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.
        During the first quarter of 2002, the Ministry for Economic Services will publish the national
        industrial policy, charting a strategy for enterprise promotion and development. This document
        emphasises, inter alia, the need for restructuring to enable the industry to face the challenges
        inherent in a competitive global environment and the importance of investment. As levies
        (excluding those relating to agricultural products and agro industry) will be fully dismantled by
        2003, greater competitiveness and efficiency, coupled with the necessary support measures and
        mechanisms, will spur domestic economic activity to become more internationally oriented.

        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.
        The Business Promotion Act (Cap.325) was enacted in January 2001 and replaced the Industrial
        Development Act (Cap.325). The legislation includes a small business section to facilitate the
        implementation of incentive schemes and other measures targeting small businesses.




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Encouraging innovation and extending skills, both in terms of research and development and in
the widespread use of new technology, are important aspects of Malta‟s industrial policy.
Attracting foreign direct investment to supplement domestic sources of capital for investment is
another priority. Furthermore, the Government‟s trade strategy is to instil 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 information technology. 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, especially 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. The government adopted a
Small Business Policy to reduce the burden of regulation and red tape, cuts the cost of
compliance, accelerates the reform of government rules and regulations, and improve access to
remedies against unfair business practices. To this end, a Small Business Unit within MES has
been created.
Other important policy areas which also affect manufacturing industry include an industrial
relations policy based on a recognition of the mutual interests between employers and employees;
reform of Malta‟s financial system; the introduction of a competition policy to open up markets to
fair trade; the introduction of standards, which provide a genuine pathway to international
competitiveness; an environment policy aimed to protect and sustain Malta‟s environment; and a
commitment to restore, improve and extend the country‟s infrastructure. The issue of standards is
discussed in detail in Section 3.1.1 (Free Movement of Goods).

Industrial Restructuring
Industrial development can only flourish if it becomes oriented towards, international markets.
Over time, the government envisages Maltese industry to become increasingly export-oriented.
This requires the promotion of a market-oriented culture and adaptation to emerging global
business scenarios. The message implied in the government‟s statement on industrial policy is
that restructuring must take place in parallel with trade liberalisation in order to enable domestic
operators, mainly small and medium sized enterprises, to successfully meet the new challenges in
regional and global markets. The SME restructuring process is envisaged to comprise three
sequential phases, that is, the changing of business culture, the re-orientation to strategic markets
and the building of the right technical capabilities.
The Institute for the Promotion of Small Enterprise (IPSE) is committed to the provision of
adequate support in the restructuring process both as a result of globalisation and in view of the
possible impact of EU legislation on the operations of local firms. IPSE also assists in the growth
of small manufacturing enterprises. In the process of moving industrial policy further away from
a protectionist philosophy to a market-driven culture, most of the levies on imported products are
being removed in accordance with a programme that commenced in October 1999. All levies on
industrial goods will be removed by January 2003, except those on agricultural and some agro-
industrial products.
IPSE also embarked on a number of detailed sectoral studies to develop additional assistance
programmes for these sectors. Studies on the printing sector and the furniture sector have been
published. A sector report on the wine industry has been finalised. Sectoral studies dealing with




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basic metals and non-mineral products, micro-enterprises, processing fruits and vegetables are at
an advanced stage. A report on the jewellery sector funded under the Fifth Framework Program –
Innovation and SMEs horizontal programme – is currently under way. At a micro level, IPSE is
assisting individual enterprises to undertake a comprehensive planning process leading to a
restructuring/business plan.
At an intermediate level, IPSE is encouraging the enhancement of collaboration between
enterprises and various entities, including consortia, co-operatives and trade associations. IPSE
staff have been trained to offer broker services and technology (software and structured systems)
development to facilitate such collaboration.
The Business Incubation Centre was set up in 2001 to encourage entrepreneurship and to review
and make recommendations to IPSE‟s Board of Directors on such matters as eligibility criteria,
and other services to be offered.
The Malta Council for Economic and Social Development (MCESD) Act (Cap. 431) was enacted
by Parliament in June 2001 MCESD is a tripartite forum and its role is to discuss and submit
recommendations to Government on issues of national economic or social nature.

Foreign Direct Investment
Government considers foreign direct investment as an important means of introducing new
technologies and operational practices in Malta. The Malta Development Corporation (MDC)
administers a package of incentives mainly through the application of the Business Promotion Act
(Cap. 325). The objective of this Act is to encourage the establishment of new businesses and the
expansion of existing ones, and to make ancillary agreements in relation thereto. By virtue of this
Act, a number of sectors were selected on the basis of value added, with firms operating in these
sectors receiving the most beneficial incentives including investment tax credits for employment
of physical and human capital.
MDC in collaboration with the State Aid Monitoring Board, is in the process of setting up a
system to ensure that all assistance under this Act will be fully compliant with the acquis.

Shipyards
The current strategy for the shipyards is for them 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 increased internal
mobility.
In December 2001 Government adopted a report on the restructuring of the shipyards. The report
contains a proposal to reduce the combined 3,500 workforce at the two shipyards by more than
half. Other reports show the launching of four voluntary early retirement schemes, over a number
of years. The reports highlight the importance of a new operating company and new organisation
structures for both shipyards. A shipyards training institute would be set up to train workers and
an apprenticeship training scheme would also be launched. Government is currently discussing
this report with the Unions and representatives from the Malta Drydocks and the Malta
Shipbuilding Company.




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Privatisation
A privatisation programme has been in place since 1988 which has significantly reduced the role
of the Government in the provision of commercial services.
A White Paper entitled “Privatisation – A strategy for the future” was published in 1999 outlining
the Government‟s plans on privatisation over a five-year time-frame. The objectives of the
privatisation programme include the modernisation and increased efficiency of government
controlled commercial enterprises and the provision of services at a more efficient level. This
will be achieved through the adoption of modern technologies, the formation of strategic
partnerships with international operators, and stronger management structures and practices. A
privatisation unit responsible for the management of the privatisation programme was set up.
The privatisation programme includes the sale of government shareholding in Malta International
Airport, Bank of Valletta and Kordin Grain Terminal. It also includes the lease of management
of Public Lotto and the lease of operations of Malta Freeport Terminal. Government reviewed
offers and established short lists of bidders for each sale. Negotiations are under way to finalise
bids.

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 acquis.
Education and Training
The Government also plans to make maximum use of the training opportunities provided under
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.
The government has entrusted the Employment and Training Centre with the task of drafting a
national policy and strategy for the development of Malta‟s human resources. The aims to
construct a policy framework and a strategy within which the providers of educational and
training services, in both the public and non- governmental sectors, can co-ordinate their effort
towards attaining national learning targets. The industrial policy will play an important role in
identifying some of these learning targets.
The Malta Council for Science and Technology (MCST) is the agency in charge of Malta‟s Fifth
Framework Programme for Research and Technical Development. Malta provides LM 1 million
as its contribution to the FP5, which is an annual contribution. The 2002 contribution has already
been provided for in the national financial estimates. Funding opportunities will be enhanced
following EU membership. MCST is promoting the setting up of an Innovation Relay Centre. The
Innovation Relay Centre in partnership with IPSE Ltd, MDC and METCO should benefit the
local industrial community to enhance efforts on the commercialisation of technologies.




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B. Short Term Priorities
Industrial Restructuring
a) Enhance efforts to assist IPSE in the restructuring of manufacturing enterprises. Increase
    significantly the number of enterprises covered by its programmes of assistance.
b) 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.
Enterprise Development

a) Seek Malta‟s participation in the Fourth Multi-annual Programme for SMEs.
Privatisation
a) Continue to unfold the privatisation programme as planned.

Education and Training
a) 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 to avoid unnecessary
   costs to industry.

C. 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 in place and only minor additional
capacity building is necessary.

Area of Activity                                                 2001        2002         Total

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




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D. 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




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3.4.2   Agriculture

        A. Current Status
        Agriculture plays a wide multifunctional role in the Maltese islands and contributes to the
        maintenance and enhancement of Malta‟s fragile rural landscape with substantial impact on both
        tourism and the quality of life. It provides the basis of local environment and a range of local foods
        which constitute an integral part of the identity of the local population. Though small, Malta‟s
        agricultural sector constitutes an important component of Malta‟s social structure.
        The contribution of agriculture to 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, while providing an adequate and just
               income for the farmers and herdsmen on the other.
              To contribute towards the preservation and the enhancement of the rural environment.
        Malta is working towards accession through the adoption of the following steps:
        a)   Harmonisation of the legislative instruments with the acquis.
        b)   Restructuring of the Ministry of Agriculture and Fisheries (MAF) with the necessary increase in
             the staff complement and other resources to enable the Ministry to support the sector and
             promote rural development.
        c)   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 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. 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. 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 countries where land scarcity tends to be less of a major problem. The high
        degree of land fragmentation has also led to the average farm size decreasing to under one hectare,
        further limiting economies of scale.




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A second constraint lies in the scarcity of water. With over half its water supply originating from
desalination, Malta is faced with penalising costs of producing water. There are also few water
catchment areas resulting in a loss of rainwater which could otherwise be used for irrigation
purposes. Sewage treatment helps to alleviate this problem to some extent 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 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 4.5 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 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.
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 (except for fodder), sugar, hops, rice, butter,
cheese, milk powder, 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 license 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 will 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. Thus in order to enable farmers and food processors to integrate themselves
gradually with the working of the CAP measures, Malta has requested the adoption of a special
market policy programme for Maltese agriculture for a number of its agricultural products.
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 particularly in the industrial and tourism sectors. In view of this, Malta is seeking
specific supply arrangements to source products at international market prices through the exemption




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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
are therefore required to address the disadvantages of operating in a small, fragmented and peripheral
island.
Malta imports 50,000 tonnes of bread-making wheat annually, 15,000 tonnes of which is soft wheat
of European origin and the remaining 35,000 tonnes of which is hard wheat (NS / DNS). Malta also
imports 70,000 tonnes of maize (yellow corn number two) and 55,000 tonnes of feed barley of
European origin. Prices are fixed ex-silo and kept stable through a price stabilisation fund. Animal
feed prices and traditional Maltese bread prices have a maximum price order.
Specific supply arrangements are therefore required to address the disadvantages of operating in a
small, fragmented and peripheral island. These arrangements will assist in maintaining existing trade
flows and contain any inflationary pressure which would arise if EU internal prices prevail. The
special supply arrangements requested on wheat will enable Malta to maintain the specific
characteristics of its traditional bread.
A number of specific support measures for a number of agricultural activities are necessary for
stock-farming and animal products as well as crop products due to the specific conditions of Maltese
agriculture. The peripheral and geographical situation of the Maltese islands, the limited economies
of scale as well as the high production costs make it difficult for Maltese producers to benefit from
the financial opportunities provided for by the EU. Specific support measures are thereby necessary
to acknowledge these obstacles, support Maltese agriculture as well as maintain the environmental,
ecological and social balance of the Maltese islands.
In preparation for the gradual implementation of the relevant CAP mechanisms, an exercise has been
carried out through an FAO/TCP project to calculate the Domestic Resource Cost (DRC) involved in
producing a number of products, 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 has
been analysed. Appropriate time frames and policy measures required to bridge the gap 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 (improving the efficiency of agricultural structures) seems to indicate that the whole of the
Maltese islands may be considered as less favoured areas for agricultural production purposes. In
fact, Malta has requested that all its agricultural land be recognised as a less-favoured area due to the
severe handicaps and structural problems of agricultural land in Malta. In this respect, Malta wishes
to negotiate the classification criteria with regard to its status as a less-favoured area. Malta has also
requested that its farmers receive higher compensatory payments than the maxima indicated in
Article 15 of Regulation (EC) 1257/99 (support for rural development from the EAGGF). It has also
requested to have areas recognised as subject to environmental constraints. This will enable the
Maltese islands to ensure continued agricultural land use, maintain a viable rural community as well
as safeguard a sustainable agricultural system. It will also enable Malta to redress environmental




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degradation in areas with environmental restrictions and ensure environmental requirements. In
particular, this will address agriculture in Gozo, which requires special consideration and incentives
in order to conserve its typical structure.
The Farmers‟ Registration System at the Department of Agriculture can form the basis for the
Integrated Administration and Control System (IACS). A project manager for the IACS project was
appointed in March 2001 within the Ministry for Agriculture and Fisheries. The preparations for a
one-year twinning arrangement for a pre-accession advisor on the project are in their final stages. An
Italian and British consortium has also been selected as a twinning partner for the IACS project.
Malta has digitised all fields on ortophotos. From the data delivered, area and perimeters of digitised
land parcels can be extracted. The Ministry for Agriculture and Fisheries is studying the possibility
of enhancing the present GIS system at the Land and Water Use Section to bring it in line with EU-
IACS requirements. In this regard, derogation from tendering procedures for the development of the
GIS system has been accepted by the Commission. Recruitment of Agricultural Officers within the
IACS Unit is currently underway.
Market information is collected effectively for fresh fruit and vegetables, pork, beef, milk and fish.
The Department of Agriculture is working closely with the National Statistics Office in order to
improve market information on forage, eggs, poultry and rabbits. The National Statistics Office has
undertaken an Agriculture Census between 22 October 2001 and 11 November 2001, to collect
detailed information about Malta‟s agricultural sector. A total of about 13,000 farmers and breeders
were asked to supply information. Data gathered was about size, type of agricultural land being
farmed, greenhouses, vegetable and fruit crops being produced, animal farms, machinery and
equipment as well as other investments. The results of the Census will be published by the first
quarter of 2002.
Malta heavily depends on the importation of grain for one of its staple foods, traditional Maltese
bread. Its livestock sector is also entirely dependent on balanced feed manufactured from imported
maize and feed barley. Medigrain Ltd., which is currently state-owned, sources wheat, barley and
maize for food security purposes. It periodically issues calls for tenders for the importation of grains
to ensure minimum stock levels. The operational and regulatory aspects of Medigrain Ltd., will be
separated by the second quarter of 2002.
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. Malta has requested a supplement to the aid provisions of this Regulation on a
maximum area of 4,500 hectares to ensure roughage availability for ruminant livestock and rabbits.
A Farm Accountancy Data Network (FADN) Pilot Project involving a representative sample of
approximately 65 farmers was carried out by the National Statistics Office during the period
February to May 2001. A copy of the document entitled “Setting up of a Farm Accountancy Data
Network (FADN) in line with EU Requirements”, which includes the results of the pilot study, was
submitted to the Commission in July 2001. Malta will be in a position to operate the FADN
(Regulation (EEC) 79/65 and its amendments) by accession. An FADN Committee was established
in December 2001 and includes representatives of the Ministry for Agriculture and Fisheries, the
National Statistics Office, the Institute of Agriculture within the University of Malta.




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The Department of Veterinary Services, soon to be renamed as the Food and Veterinary Regulation
Division, manages databases on livestock farms and movement of animals. Detailed records are kept
for swine and for cattle, sheep and goats while another database has been set up to cover all species
other than rabbits, including batch identification of broilers, layers and aquaculture fish. All swine
are identified by ear tattoo, while cattle, sheep and goats are identified by ear tags or electronically.
Presently, area under vines amounts to approximately 320 hectares, fragmented into pocket-sized
vineyards ranging from 0.1 to 20 hectares. The smaller vineyards, which usually grow indigenous
varieties, total 220 hectares whereas the larger vineyards, which cultivate the international varieties,
total 100 hectares. Detailed information on vineyards is collected through a physical survey and
through remote sensing.
The main local varieties are the white Girgentina and the black Gellewza. These are very much
adaptable to local cultivation conditions and give relatively high yields in the form of medium to
large fruit with low skin area to juice ratio. They have low sugar accumulation potential under
traditional management practices and produce light wines. Maltese legislation permits chaptalisation
(enrichment) due to the low natural sugar accumulation in these varieties and provides for the
addition of sucrose, concentrated grape must or rectified concentrated grape must in amounts which
are established on a yearly basis depending on climatic conditions, but not exceeding 3% volume.
The international varieties primarily include Chardonnay, Cabernet Sauvignon, Cabernet Franc,
Merlot, Syrah, Grenache and Carignan.
Vineyards contribute to Malta‟s environment and landscape providing greenery during the hot and
arid summer months. Vines also assist in preventing soil erosion particularly in slopes. Viticulture
provides support to about 1,000 farmers and wineries employ about 350 persons.
Malta has a self-sufficiency ratio in wine of 30% in value terms. Only 30% of wine is produced from
locally-grown grapes. Malta imports approximately 6,000 tonnes of grapes or grape must for
utilisation by the wineries producing quality wines for local consumption.
A new Wine Act (Cap. 436) was adopted by Parliament on 23 October 2001. The administrative
structure of the Ministry for Agriculture and Fisheries is being strengthened in order to be able to
fulfil the requirements of the wine acquis.
During 2000, the National Statistics Office in collaboration with the Department of Agriculture
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 submitted to the Commission in July 2001. A list of vine
varieties in line with Article 19 of Regulation (EC) 1493/99 (common organisation of market in
wine) has been completed and will be submitted to the Commission in the first quarter of 2002.
A study to ascertain the competitiveness of the wine industry in Malta was carried out by the
Institute for the Promotion of Small Enterprise (IPSE).
Malta has requested to maintain the policy and programme to increase the total land area of
vineyards to the traditional 1,000 hectares with regard to Title II of Regulation (EC) 1493/99
(common organisation of market in wine) in order to cater for the existing market for local quality
wine. This will also enable producers to grow more grapes for the production of quality wines
produced in a specific region as well as to satisfy the present demand for such quality wines. Malta‟s




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traditional vineyards covered 1,000 hectares in the 1950s. Production techniques introduced in the
past in response to increasing tourist demand for low quality wine led to the decline in the demand
for local grapes. Recent changes in consumer preferences have led to a change in production
techniques. Malta currently serves this demand by producing most of its quality wine from imported
grapes. Malta has also requested to maintain its current minimum natural alcoholic strength of wine
produced from indigenous varieties at 8% with an allowable increase in the natural alcoholic strength
(enrichment) not exceeding 3% volume with regard to Annex V of Regulation (EC) 1493/99 in order
to maintain its indigenous varieties and biodiversity.
The CAP Unit within the Customs Department was set up in November 2001. It will be responsible
for issuing, administering and managing import and export licences and securities, managing tariff
quotas and the movement of intervention products and verifying the use and/or destination of
intervention products. The Ministry for Agriculture and Fisheries will make available a number of
officers to assist the Customs Department in this task and will continue to provide the necessary back
up through its qualified officers. The Veterinary Services Department will be responsible for
veterinary checks for animal welfare purposes. In March 2001, the Customs Department in
collaboration with the Austrian Customs held a training seminar on the „Customs role in the
Common Agricultural Policy Trade Mechanism‟. Officials from the Ministry for Agriculture and
Fisheries also attended the seminar and in October 2001, the Customs Department in collaboration
with the Irish Customs organised a training exercise on the legal and organisational system of the
CAP. These exercises were followed by study visits to Ireland.
A call for applications for the post of Manager within the Paying Agency, to be set up within the
Ministry for Agriculture and Fisheries, was issued in November 2001. The Manager will be recruited
by the first quarter of 2002 in order to initiate all the plans required for the setting-up of the whole
structure (logistics, human resources, electronic data processing system, procedures, controls and
data security) of the Paying Agency. The Paying Agency will be responsible for public storage
accounting, EAGGF Guarantee budget, co-ordinating bodies and internal audit, monthly returns,
annual declarations and clearance of accounts. It will also be responsible for the authorisation of
claims, execution of payments, accounting for payments, control and information mechanisms as
well as 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.
The Trademarks Act (Cap. 416) provides for collective and certificate marks in line with the acquis
in this area. Protection of geographical indications is accorded under collective and certificate marks.
The Malta Standards Authority Act (Cap. 419) also recognises community and national symbols
relating to geographical or quality indications as conformity marks. The Act also provides for the
protection of conformity marks against unauthorised or fraudulent use. Malta is a party to the
International Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).
There is no legislation covering organic farming in Malta. Some growers claim that they practice
organic farming but there is no price distinction between organic and non-organic produce.
Due to the lack of acceptable organic matter, good quality water, technical know-how as well as
wind drifts of pesticides, organic farming application in Malta is difficult. A re-orientation towards
organic farming is contingent on a policy framework integrated to an emerging strategy of




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supporting marginal farmers as well as enhancing local produce for domestic and foreign markets.
This policy framework will promote sustainability.
Fruit and vegetables are an important component of Maltese agriculture. Malta produces
approximately 65% of its annual needs in value terms. The total annual production is approximately
72,000 tonnes of vegetables and 6,000 tonnes of fruit. Vegetable production includes cauliflower,
cabbages, tomatoes, salad vegetables, vegetable marrows, onions and cultivated mushrooms. Fruit
production includes nectarines, peaches, strawberries, melons and watermelons.
A Producers‟ Organisations Act has been drafted and will be adopted by Parliament in the first
quarter of 2002. In order to encourage and support the development of producers‟ organisations,
Malta has requested that aid provided for in Article 14(7) of Regulation (EC) 2200/96 (common
organisation of the markets for fruit and vegetables) be also applicable to Malta. Funds have been
allocated to the Ministry for Agriculture and Fisheries in the 2001 budget for assistance in the setting
up and recognition of these organisations.
The main processed fruits and vegetables in Malta are processed tomatoes, vegetables preserved in
brine (including capers), vegetables preserved in vinegar (including capers and pickles), preserved
vegetables (including canned mushrooms, canned peas and canned butter beans), fruit juices and
preserved fruits (including canned peaches, canned pears, canned pineapple and canned fruit
cocktail). The most important line of production is tomato products. Malta has a low self-sufficiency
ratio of processed fruit and vegetables amounting to approximately 19% in value terms.
Tomato production has a long tradition in Malta as very few alternative crops can be grown under
existing climatic conditions, especially during the summer period. Due to these conditions and low
mechanisation, tomato yield is rather low. Malta currently has an area of approximately 600 hectares
of agricultural land for tomato cultivation, yielding an average of 15,000 tonnes per annum. This
production is not sufficient to meet local and export demand. Malta does not intend to increase the
area of cultivation of tomatoes but aims to significantly improve the yield to make production more
economically viable.
There are two major processors of tomatoes. The tomato processing industry is characterised by
under utilisation of plant and equipment and small production runs due to the very small size of the
domestic market. The demand for local processed tomato products in Malta is expected to fall upon
Malta‟s accession to the European Union and the industry will need to enter new markets to absorb
its increased production levels.
Tomatoes destined for processing have a minimum price order which varies according to production
forecasts and past trends.
Malta has requested a national processing threshold of 50,000 tonnes of fresh tomatoes intended for
processing to be added to the current single Community threshold with regard to Article 6 of
Regulation (EC) 2201/96 (common organisation of markets in processed fruit and vegetable
products) and its amendments to ensure the sustainability of tomatoes cultivation. Malta has also
requested a transitional period of five years with regard to Article 2(2) of the same Regulation on
production aid for individual producers.
 Two derogations have been requested with respect to Regulation (EEC) 1764/86 (minimum quality
requirements for tomato-based products eligible for production aid) and its amendments and




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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 due to the
ingredients used in Maltese processed tomato products which have become traditional to Malta.
Local milk production provides 39% of Malta‟s milk equivalent requirements. Cows milk production
amounts to 35% whereas the remaining 4% is produced by sheep and goats. Almost all cows‟ milk
and some of the goats‟ milk is delivered to dairies, whereas all sheep‟s milk and most goats‟ milk is
used for farmhouse cheeselet production. Milk delivered to dairies is covered by a quota. A quota
mechanism has been in operation since 1956. The current quota was set in 1980 on the basis of the
herd population (50%) and the production of fresh milk (50%). The quota has been increasing on a
yearly basis to reflect the increase in the sale of fresh milk and fresh milk products. The quota level
increased from 25,000 tonnes in 1980 to approximately 40,000 tonnes in 2000. Each producer has
his own individual share of the quota. The quota is increased by an additional amount between
March and October in order to equate demand and supply throughout the year.
There are no commitments with the WTO with regard to export subsidies on milk and milk products.
There is a policy to limit the herd size due to environmental constraints and the limited availability of
farm area and locally produced forage crops. In order to meet the local demand, producers are
continuously striving to increase the yield per cow, which currently stands at an average of 5,000
kilos per cow per year.
Malta Dairy Products Ltd. is the only milk processor on the island. It is owned by the Milk
Producers‟ Co-operative Society Ltd. (70%) and the Malta Development Corporation (30%). Part of
the annual increase in the quota is distributed by the Dairy Producers‟ Co-operative to its members
on a pro rata basis. Small producers, producing less than 25 kilos per day, are given a higher
proportion of this quota increase. Two prices prevail, one within the quota, Lm0.16 per kilo, and one
outside the quota. The minimum fat content of milk is 2.5%.
Malta has requested a national quota of 45,000 tonnes of milk to be added to the current EU quota
levels with regard to Article 3 of Regulation (EC) 3950/92 (additional levy in the milk and milk
product sector) and Article 16 of Regulation (EC) 1255/99 (common organisation of markets in milk
and milk products) and its amendments in order to safeguard the milk sector in Malta and supply
local consumers and tourists with a fresh supply of milk and milk products.
Furthermore, it wishes to maintain its current minimum 2.5% milk fat content with regard to Article
3(b) of Regulation 2597/97 (common organisation of the market in milk and milk products for
drinking milk) due to the prevailing natural constraints in dairy production, consumer preferences as
well as nutritional requirements.
The main breed of cattle in Malta is the black and white Holstein / Fresian. Milk and beef production
is carried out through mixed rearing in semi-covered yards. Nutrition consists of whole-wheat crop
and balanced feeds with zero grazing. There are two public abattoirs on the Maltese islands. The
average age of beef and heifers at slaughter is eighteen months. Malta produces approximately 16%
of its annual beef consumption. Total beef consumption during 1999 in carcass weight equivalent
was only 10,000 tonnes, 1,590 tonnes of which were produced locally while 8,410 tonnes were
imported.




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Market intervention to support the dairy industry mainly takes place for cow meat. This intervention
scheme, which costs approximately Lm450,000 was introduced due to the low international beef
prices and subsidies provided by the Exporting countries as well as the BSE crisis which took place
during the last twelve months. The scheme, which is currently being phased out, was initially
introduced to safeguard the health status and productivity level of the national dairy herd.
A derogation has also been requested from Article 12 on stocking density requirements of
Regulation (EC) 1254/99 (common organisation of market of beef and veal) due to the limited land
availability for dairy production. Malta has also requested to benefit from suckler cow premiums
with regard to Article 6(4) of this Regulation in order to support the dairy industry due to the
prevailing unfavourable conditions in Malta.
A genetic improvement project is being implemented to safeguard the Maltese breeds of goat and
sheep. The demand for the Maltese goat throughout the Mediterranean region is high due to its
resilience and high milk yields. Malta is also promoting the local Nubian breed of sheep.
Malta has requested for the ewe premium provided for in Regulation (EC) 2467/98 (common
organisation of the market in sheepmeat and goatmeat) to be also granted to Maltese producers
rearing goats and that producers holding a minimum of three ewes/she-goats be eligible for the
annual payment of the ewe premium and the supplementary payment for producers in less favoured
areas under Regulation (EEC) 3493/90 (granting of premiums to sheepmeat and goatmeat
producers). Many families in Malta tend to keep approximately three ewes or nanny goats to produce
fresh cheese for their own consumption and to provide some extra income for the family.
Pigmeat production is one of the most important agricultural activities in Malta. Malta has a high
self-sufficiency ratio in this sector, amounting to approximately 80% in value terms.
All pigs born are monitored by means of ear tattooing. The tattooing enables trace-back from the
slaughter-line to the farm of origin. In 1999, the number of pigs slaughtered reached 124,556 with a
value of Lm8.8 million. Approximately 80% of the total pork is slaughtered at the public abattoir.
Pig production is controlled via a slaughter quota system which currently stands at 2,450 pigs per
week, with an average weight of 86 kilos. Each farm holding is allocated, on the basis of capacity, a
yearly slaughtering quota.
Over 70% of pigs slaughtered are graded A1 which is the equivalent to the European Union SEU.
Approximately 17% are graded A2 which is the equivalent to the European Union R; approximately
6.3% are graded A3 which is the equivalent to the European Union O; approximately 3% are graded
B which is the equivalent to the European Union P; and 3% are graded C which are over or
underweight pigs with high back-fats. The grading of pig carcasses is carried out with an ultrasonic
probe and hot weight terminal.
The total annual production of pigmeat averages 10,500 tonnes carcass weight which, until recently,
was sufficient to meet the local processing and consumer demand.
Pigmeat for each respective grade of carcass has a minimum price order with an average price of
Lm0.825 per kilo. The most superior grade fetches a price of Lm0.84 per kilo.
The Pig Producers‟ Co-operative, which operates on the same lines of a producers‟ organisation,
markets all the pigs produced. The co-operative incorporates all pig producers and markets all the




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pigs produced. This co-operative was set up following the outbreak of African Swine Fever (ASF) in
1979 when Malta, with the assistance of the European Community, managed to re-build the sector.
Prior to the outbreak of African Swine Fever, a free production system was practised and Malta does
not wish to revert back to that system. Malta acknowledges that the sector has to be restructured. All
pig farms in Malta are family units. There are no farms owned by large commercial enterprises.
The Swine Keeping Regulations (LN86/80) regulates the pig sector. Each farm and its operators are
licensed. All movements of animals are controlled through the issue of transport documents. The
distribution of gilts and boars for breeding purposes is regulated by the Co-operative so as to prevent
structural surfaces or market shortfalls.
A reference quantity of 135,200 slaughtered pigs per annum to safeguard the present health status of
the pig population and to limit potential environmental hazards has been requested.
Malta has a high self-sufficiency ratio in the eggs and poultry sector, amounting to approximately
85%. Malta produces 1.5 million broiler hatching eggs per annum and imports another 6.2 million.
There are 3 hatcheries in Malta with a hatching capacity of 9 million chicks per annum. There are
281 broiler poultry farms, 63 layer farms and 83 farms which are both broiler and layer poultry
farms. All eggs in Malta originate from caged hens.
There are 11 approved slaughterhouses. Malta produces approximately 7,000 tonnes of whole
chicken and chicken parts per annum and imports approximately 900 tonnes of poultry meat and
poultry products per annum. Malta produces approximately 6,000 tonnes of fresh eggs per annum
and imports approximately 50 tonnes of frozen whole eggs and frozen egg yolk, mainly for the
manufacture of mayonnaise and the confectionery sector.
Malta is self-sufficient in rabbit meat production. Malta produces approximately 2,660 tonnes of
rabbit meat per annum. Rabbit production is primarily a cottage industry and highly fragmented. The
parent stock is imported from Italy, France and Spain. There are also locally reared commercial
rabbits and pure breeds. The breeds reared in Malta are the New Zealand White, California and
hybrids.
There are five relatively large rabbit farms in Malta each with approximately 500 to 1,000 does.
There are also approximately 5,000 small units with less than 20 does.
There are three slaughterhouses. No grading and labelling take place. Local production is sufficient
for local needs. The consumption of rabbit meat is estimated at 9 kilos per capita per annum.

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 Department of Agriculture, soon to be renamed as the Agriculture Services
and Rural Development Division plays a key role in Malta‟s recently launched afforestation
programmes. 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. The Trees and
Woodlands (Protection) Regulations (LN12/01) under the Environment Protection Act (Cap. 348)
were adopted on 31 January 2001, for the preservation of existing woodland and trees. In




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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 multiannual programme covering the objectives laid down in the acquis including
conservation of endemic species and endangered species will be prepared as part of the Rural
Development Programme which is being drafted.
The maintenance of the typical Mediterranean maquis is of special importance. Malta is an active
member of Sylva Mediterranea, the European Ministerial forest initiative, and EUFORGEN.
Veterinary
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 dense livestock population, 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,
Tuberculosis, Aujeszky‟s Disease, Rabies, Trichinellosis, Maedi-visna, Blue Tongue and
Transmissible Gastroenteritis.
Malta imposes strict animal health controls on the importation of live animals and animal products.
Experience has proven 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.
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 (DPLA) 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 Ordinance (Cap. 36) is in line with the provisions of Directive
82/894/EEC (notification of animal diseases within the Community). The Veterinary Services Act
(Cap. 437) provides for the requirements to notify the Community and Member States and contains a
list of all EU diseases as an annex to the Act.
The Department of Veterinary Services soon to be renamed as the Food and Veterinary Regulation
Division, 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. Veterinary services activities cover animal health, animal welfare, food of
animal origin, food processing establishments, import/export controls and certification, animal
identification and livestock informatics.
The Veterinary Services Act (Cap. 437), which transposes all the veterinary acquis except for animal
welfare, was adopted by Parliament on 6 November 2001. The departmental drafts of the subsidiary




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legislation to be issued under the Act are in the process of being completed. The Act regularises the
veterinary profession, in line with Directive 78/1026/EEC (mutual recognition of diplomas,
certificates and other evidence of formal qualifications in veterinary medicine, including measures to
facilitate the effective exercise of the right of establishment and freedom to provide services) and
Directive 78/1027/EEC (co-ordination of provisions laid down by Law, Regulation or
Administrative Action in respect of the activities of veterinary surgeons) and covers the issue of
warrants and ethical behaviour of practising veterinary surgeons.
The Animal Welfare Act (Cap. 439) was adopted by Parliament on 5 December 2001. The
departmental drafts of the subsidiary legislation to be issued under the new Act have also been
completed.
Malta is a party to the Council of Europe Convention for the keeping of Animals for Farming
Purposes. With the adoption of the Animal Welfare Act (Cap. 439), Malta is in a position to become
a signatory to the Council of Europe Animal Welfare Conventions.
Food safety will be the responsibility of a single competent authority, with all the processes involved
in the pool chain being covered, in line with the “stable to table” principle. These include primary
food production (agriculture and veterinary aspects), industrial processes, storage, distribution and
retailing. Its remit will encompass risk management and nutritional issues. The proposed Food
Safety Act, which was published as a Bill on 10 September 2001, reflects the „Food Safety Strategy
for the Maltese Islands‟ framework document, which was forwarded to the Commission on 26 April
2001.
A risk analysis and a Hazard Analysis Critical Control Point System (HACCP) study have been
completed.
The Veterinary Services Department within the Ministry for Agriculture and Fisheries has completed
the procedures for participation in the ANIMO system and the database is in place. The database
will begin to function during the first quarter of 2002. This system ensures the distinction between
intra-Community trade and trade from third countries. This distinction is further enhanced through
the current import licensing system as well as the customs‟ entry controls. The contract with
Eurocom was signed in January 2001 and the server is in place. The preparation for the SHIFT
system is included in the programme for the implementation of EU requirements, which is currently
being finalised. Malta has received the prototype for the SHIFT database and is currently preparing
comments to transmit to the Commission.
The International Sanitary function within the Veterinary Services Department will be responsible
for the enforcement of control systems in the internal market and the control of imports from Third
countries.
The costing exercise as regards the financing of veterinary inspection and controls of animal
products has been completed.
Measures are being taken to strengthen the current controls at the site of origin, with regard to non-
discriminatory spot-checks during transportation and at destination and to safeguard member states
from products coming from Malta affected by disease.




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Provisions empowering the Veterinary Services Department to take swift action as required within
the internal market control systems are contained in the Veterinary Services Act (Cap. 437), the
Animal Welfare Act (Cap. 439) and the respective subsidiary legislation under these Acts.
Malta has an effective system of animal identification and registration. The identification system and
registration of animals was introduced in 1988 to eradicate brucellosis (bovine, caprine, swine) and
tuberculosis. The database for all livestock identification was completed on 30 June 2001. EU
compliant ear tags have started to substitute those currently in use.
The identification of bovine animals in line with EU requirements is in the process of being initiated
and will be finalised by the fourth quarter of 2002.
All goats and sheep are identified at the age of three months by plastic/metal ear tags. All breeding
animals, namely gilts, sows and boars have a permanent ear tattoo to individually identify each and
every breeding animal. The ear tattoo is applied within three weeks of birth. All fattening pigs that
are born in commercial units carry a tattoo to identify the farm where they were born and the month
of birth.
A database for bovine, sheep, goats, pigs and poultry is in place. A parallel database to cover all
species, other than rabbits, has been set up. This database includes batch identification of broilers,
layers and aquaculture fish. Individual registers, in line with IACS, on each holding are also
expected to be set up, although current legislation does not allow animal movement without the
„pink‟ form which includes animal identification, details of origin, destination as well as veterinary
authorisation. Veterinary authorisations are then entered into the Veterinary Services Department
database.
Provisions to ensure registration of animal movements and registration of imported live animals are
being provided under the Veterinary Services Act (Cap. 437) and its respective subsidiary
legislation.
In line with the provisions of Regulation (EC) 1760/2000 (establishing a system for the identification
and registration of bovine animals and regarding the labelling of beef and beef products and
repealing Regulation (EC) 820/97), Malta does not intend to use animal passports for national trade
purposes, as all bovine animal movements are already subject to control. However, passports
including all the required information for any bovine animal movement to another member state will
be provided. This information will be provided through the ANIMO system.
Live animals, other than birds and fish, can only be landed at two sites in Malta: the Malta
International Airport at Luqa and the Valletta Grand Harbour. There are no holdings (lairages) for
large animals, including horses, at the Malta International Airport. The site at the Valletta Grand
Harbour, however, has been used as a landing, staging and quarantine post for all animals coming
from both EU member states and third countries. Birds and fish coming from EU member states are
landed at both the Malta International Airport and the Valletta Grand Harbour. Birds and fish from
third countries are normally landed at the Malta International Airport.
A programme for the implementation of EU requirements, including the selection of sites for the
Border Inspection Posts (BIP) facilities, is currently being finalised. This programme will ensure that
veterinary inspections at the future external borders of Malta will be carried out in line with the
acquis. An evaluation of trade flows is also being carried out in order to establish the size and nature




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of the veterinary BIP required. This evaluation will be finalised by the first quarter of 2002. BIPs
will be located at the Valletta Grand Harbour, Marsaxlokk‟s Freeport and the Malta International
Airport at Luqa by the fourth quarter of 2002. These posts will be provided with equipped small
laboratories in line with the requirements of Directive 98/22/EC (plant health checks in the
Community at inspection points).
The BIP facility at the Malta International Airport will be of an adequate size handling
approximately one hundred consignments per year. The main traffic consists of hatching eggs from
Israel and Egypt and crustaceans from the US and Canada. Building of the BIP at the Malta
International Airport will commence during the third quarter of 2002.
The live animal BIP at the Valletta Grand Harbour will be established next to the current quarantine
station. A large animal quarantine area is due to be upgraded by the first quarter of 2002. That part of
the facility, which will not be used for the BIP (80% of the facility), will be maintained. It will be
cordoned off with a solid wall to separate all traffic, including materials and waste disposal. Plans for
the building of the BIP at the Malta Freeport have been drawn up and tenders are in the process of
being drafted.
The financing of controls covers the financing of veterinary checks entering from third countries at
BIP and the financing of veterinary inspections of abattoirs, cutting plants and other processing of
animal products.
Currently, fees for checks of local activity are not applied. This is due to the high costs of production
borne by producers due to Malta‟s limitations in producing feeds / forage as well as the high costs of
feed imports.
The amendments to the Fees (Abattoir and Veterinary Services) Regulations (LN68/86), which 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), are currently being
drafted.
A study on the financing of checks at BIP has been completed. A copy of this study was submitted to
the Commission in September 2001. The financing of checks at BIP requires only minor adjustments
as fees are already being applied. A study on veterinary inspections is currently being completed.
The Veterinary Services Department holds a special account for the collection of fees and the
utilisation of self-funding. The full fees applied by the EU will be implemented by the third quarter
of 2002.
The current contingency plans for foot and mouth disease and Newcastle disease have been updated.
The plans are currently being screened by a TAIEX consultant. Malta is setting up a single
contingency plan to cover most diseases. This plan will be supplemented by codes of practices for
each disease. The plans for African horse sickness, classical swine fever, avian influenza and blue
tongue are being drafted and will be finalised by the fourth quarter of 2002.
The Prevention of Disease Ordinance (Cap. 36) provides for the requirements to notify the relevant
competent authority of the presence or suspected presence of certain diseases. The Veterinary
Services Act (Cap. 437) contains a list of the OIE list A diseases as well as a list of other diseases
which have a high negative effect on Malta‟s economy namely brucellosis and tuberculosis.




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It is an established procedure in Malta to inform the European Commission as well as the respective
member states with which trade is carried out of any notifiable disease provided in the acquis. The
information required by Article 3(1) of Directive 82/894/EEC (notification of animal diseases within
the Community) will be communicated to the Commission and EU member states by fax and/or e-
mail. The Animal Disease Notification is in place. The surveillance for the now eradicated
brucellosis (bovine, caprine, swine) and tuberculosis is ongoing. A surveillance programme for a
number of diseases was initiated in September 2001. A copy of the technical and administrative
provisions for the implementation of the Animal Disease Surveillance Programme was also
submitted to the Commission in September 2001. This programme, which is expected to be finalised
by the third quarter of 2002, covers a number of diseases including blue tongue. Another surveillance
programme including diseases such as Aujeszky‟s is being financed from local sources.
The Laboratory Services function within the Department of Veterinary Services is being upgraded to
third category. This will enable the Laboratory Services to handle diagnostic operations involving
the use of live viruses.
Agreements with Pirbright and CVL Weybridge have been reached so as to provide the necessary
testing facilities for List A diseases and some List B diseases when tests are not feasible to be carried
out in Malta. These laboratories have been selected due to daily flight connections between Malta
and the UK as well as the commitment by these laboratories to collect samples directly from the
airport. The contractual agreements have been drafted but the administrative procedures have been
postponed following the foot and mouth disease outbreaks in the UK. The agreements are expected
to be signed by the first quarter of 2002.
The setting up of laboratory facilities to monitor meat residues mainly veterinary medicines and
diagnose animal diseases is on schedule. The relevant tenders have been issued and awarded.
An International Atomic Energy Agency (IAEA) project is being carried out. The Laboratory
Services function is twinning with the Northern Ireland Veterinary Service Division Laboratory for
residue analysis. It has been decided that due to the well-known expertise of this laboratory, direct
order will be contracted on the majority of analyses.
Malta applies all the measures necessary for the export of live animals and products of animal origin
to the EU. This is ensured by the fact that no local customs clearance is given prior to the approval of
the Veterinary Services Department. The Animal Health and Welfare function and the Veterinary
Public Health function within the Veterinary Services Department are the competent authorities
responsible to ensure this. The International Sanitary function within the Veterinary Services
Department is the competent authority responsible for co-ordinating such activities and ensuring the
proper implementation thereof.
Local bovines, porcines, caprines and ovines already have a form of identification. This facilitates
the carrying out of identity checks especially with regard to clinical inspections and certifications.
Malta‟s trade with the EU with regard to live animals is negligible. The main export of products is
that of fresh fish of aquaculture origin. Limited amounts of bovine hides are also exported to an EU
member state for tanning purposes.
Malta will ensure the separation of animals of different health status during transport from the site of
origin to the destination in cases when trade is carried out.




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A database containing a facsimile of health certificates is being set up in line with the requirements
of the acquis. Only veterinarians are authorised to sign and issue sanitary certificates. Any breach of
this activity may lead to the withdrawal of warrants.
A database containing information on animal identification, movements as well as health and testing
was set up during the third quarter of 2001. This database, which is monitored by the International
Sanitary Function, facilitates the issuing of the relevant health certificates.
Malta does not have any assembly centres or markets for live animals. The current animal
transportation facilities in Malta are adequate for the short distances covered on the island. However,
these facilities are not adequate for the longer distances, which would have to be covered for intra-
Community trade. The process of registration of transporters and dealers will take place during the
first and second quarters of 2002. Full compliance with the acquis in this area will be achieved by
the third quarter of 2002.
Malta does not have any international bilateral agreements in the veterinary field. Malta is only
bound by international multilateral conventions such as the World Trade Organisation (WTO), the
Office International des Epizooties (OIE) and the Food and Agriculture Organisation (FAO).

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).
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 (health rules for the production and
placing on the market of raw milk, heat-treated milk and milk-based products) will be applied to
retain the general and particular requirements for the manufacture of milk-based products with
traditional characteristics, which are varieties of Gbejna and Rkotta. A transitional period has been
requested for 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. A
derogation has been 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.
A transitional period has been requested in respect of health problems affecting 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. A
transitional period has also been requested as regards health problems affecting 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. A
transitional period has been requested 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
units.
Furthermore, a derogation has been requested for the use of incineration and controlled dumping of
high and low risk materials other then rendering.




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Malta also wishes to maintain its current safeguard measures on imports of live animals and products
from member states and Third countries.
Phytosanitary
The Plant Health Department within the Ministry for Agriculture and Fisheries is the designated
authority for the national regulatory system for phytosanitary matters. The Department 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 to manage and control any possible spread of plant pests or
disease.
The Pesticides Control Act (Cap. 430) was adopted by Parliament on 20 March 2001. The Act
entered into force on 1 August 2001. The Act provides for the control of plant protection products as
well as biocides. Drafts of new subsidiary legislation to be issued under the Act have been completed
and are currently being reviewed to take into account the new acquis issued during 2000. The first
batch of subsidiary legislation under the Pesticides Control Act (Cap. 430) transposes 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) has been completed and is being reviewed to
take into account new acquis issued during 2000.
A national regulatory system for the authorisation of plant protection products is already in place.
This system will be strengthened through a twinning project, which will take place in 2002. This
twinning project will also incorporate the evaluation and registration of plant protection products.
Malta does not have the facilities, equipment and other resources required to carry out the evaluation
trials and tests necessary for the placing on the market of plant protection products. Currently,
pesticides‟ residues analysis on food crops is carried out abroad. The facilities for pesticides‟ residue
analysis will be in place by the first quarter of 2002 at the national laboratory. However, Malta has
requested that the results of pesticides‟ brands evaluation tests carried out in other member states be
recognised. The Malta Standardisation Authority will be the competent authority responsible to
establish the maximum residue levels (MRLs) of all crops. A national pesticides‟ residues
monitoring and control programme is currently being drawn up by the Plant Health Department.
This programme will be in place by the first quarter of 2002.
To ensure the appropriate monitoring and control of the MRLs in plants for human consumption,
initial sampling and testing of vegetables for MRLs was carried out during the years 2000/2001.
Malta intends to adopt the MRLs of those member states that have a diet similar to the Maltese
national diet. The Maltese diet is a combination of the northern European diet and the southern
European (Mediterranean) diet. The MRLs will be adjusted following the establishment of the
national diet, which is currently being drawn up. Malta will endeavour to align itself with the MRLs
of pesticides in line with the acquis by accession.




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The Plant Quarantine Act (Cap. 433) was adopted by Parliament on 17 July 2001. The Act entered
into force on 1 September 2001. This Act enables the Minister responsible for Agriculture to enact
subsidiary legislation in line with the relative Directives of the acquis. Drafts of subsidiary
legislation to be issued under the Act have been completed and are currently being reviewed to take
into account the new acquis issued during 2000.
Malta enforces a strict regulatory framework to control the importation and spread of organisms
harmful to plants and plant products. There are no known harmful organisms existing in Malta that
do not already exist in other European countries. Due to its insularity, Malta enjoys advantages in
controlling the migration of harmful organisms. Approximately 95% of imports of plants and plant
products come from EU member states. Recent surveys have confirmed 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 land
and built-up areas, underlines the need for a policy of strict control on the importation and use of
pesticides. It is an established practice to request additional declarations on the phytosanitary
certificates to prevent the introduction of quarantine organisms such as Wart Disease, San Jose‟
Scale and Fireblight. Regular surveys on the plant health status of the Maltese islands are carried out
whilst advisory services are provided to growers on disease prevention, integrated pest management,
application of plant protection products as well as on fertiliser application and irrigation techniques.
With the programme envisaged for capacity building in the phytosanitary sector, the number of
surveys for pests and diseases will be increased. A certification scheme has been set up and is
currently being tested. Details on the working of the certification scheme will be issued in subsidiary
legislation under the Plant Quarantine Act (Cap. 433).
The Plant Quarantine Act (Cap. 433) 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 have
been made.
The first batch of subsidiary legislation under the Plant Quarantine Act (Cap. 433) 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), Directive 92/105/EEC (degree of standardisation for plant passports), Directive
69/464/EEC (control of Potato Wart Disease). Directive 69/645/EEC (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.), 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) has been completed and is being reviewed to take into account new acquis issued
during 2000.




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The Plant Quarantine Act (Cap. 433) mandates that any quarantine organism identified by third
parties must be notified to the plant health authorities. The Act also empowers plant quarantine
inspectors to search premises on suspicion of the presence of harmful organisms. It also empowers
inspectors to seize and destroy any crop that is deemed to be of risk to the spread of harmful
organisms.
Currently, interceptions of quarantine organisms and disease outbreaks are being reported to the
plant health authorities of the exporting country and to the European Plant Protection Organisation,
of which Malta is a member.
The Food, Drugs and Drinking Water Act (Cap. 231) constitutes the primary legislation regulating
plant hygiene in Malta. It is proposed that the new Food Safety Act will completely replace the
Food, Drugs and Drinking Water Act (Cap. 231). The proposed Food Safety Act is currently at
Committee stage in Parliament.
A new diagnostic laboratory at the Plant Biotechnology Centre was also completed during 2000. The
aim of this laboratory is to specialise in the diagnosis of bacteria, viruses and virus-like organisms,
viroids and phytoplasma 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 EU secondary legislation.
All acquis dealing with quality of seeds and plants will be transposed through subsidiary legislation
under the Plant Quarantine Act (Cap. 433). The provisions for a seed catalogue in line with the EU
common catalogue of varieties (Directive 72/180/EEC) will also be issued as subsidiary legislation
under the Plant Quarantine Act (Cap. 433) by the third quarter of 2002. A twinning project
commenced in November 2001 to finalise the draft subsidiary legislation to transpose the acquis on
seeds and plants.
The seed-testing laboratory in line with the specifications of the International Seed Testing
Association is currently being set up. The plans for the building of the laboratory have been drawn
up and the issuing of a tender for the construction of the laboratory has been approved. The
laboratory will be equipped with all the equipment required to carry out all tests on seeds.
A certification system for the production of certified stone fruit trees (Prunus) is in place. The
rootstocks are micro-propagated in a local laboratory whereas the scions are derived from mother
blocks kept under constant supervision in a local nursery.
The Patents Act (Cap. 417) protects plant varieties under a patent system. Malta is a party to the
Agreement on Trade-Related Aspects of Intellectual Property Rights (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
consideration Malta‟s particular situation. Consultations are also underway on the setting up of a
Plant Variety Registration Office to provide plant varieties with sui generis protection.
Given that Malta can no longer protect plant varieties under a patent system in line with the
provisions of the Biotech Directive 98/44/EC (legal protection of biotechnological inventions), Malta
is currently considering two options: the Greece and Luxembourg opt-out where any requests for
plant variety protection are referred to the Community‟s Office to be protected under the Community




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plant variety rights system; and a sui generis system in parallel with the Community plant variety
rights system that would protect plant varieties exclusively for the Maltese islands. A cost-benefit
analysis on the setting up of the sui generis system is currently being carried out.
With respect to Border Inspection Posts, an exercise is currently being carried out to categorise the
various plants and plant products imported, and to register the respective normal point of entry in
Malta so that the facilities at the Border Inspection Posts will be established to cater for these needs.
Measures are being taken to ensure the prevention of the introduction into and spread of harmful
organisms in Malta and within the Community on accession.
A transitional period is being 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 is being requested 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 has been requested with respect to the evaluation of active substances contained in
plant protection products and biocides, although the Department of Plant Health is reviewing this
request as Malta might be in a position to carry out such tests. It is envisaged that the results of
pesticides‟ brands evaluation tests carried out in other member states would be recognised.
Malta intends to exempt from official registration and regular official examination all „small
producers‟ in line with the provisions of Article 6(7) of Directive 2000/29/EC (repealing Directive
77/93/EEC and its amendments) (protective measures against the introduction into the Community
of organisms harmful to plants or plant products and against their spread within the Community).
Small producers will be examined at random, except in cases when there is cause for concern. A
small producer is defined as a part-time producer whose main income or primary occupation does
not derive from the production of plants or plant material. Small producers usually sell their produce
locally, in village feasts, local societies or clubs as well as charitable organisations. Small producers
would not be able to trade their produce in other member states unless they are officially registered.
It is envisaged that the list of the prohibited pesticides to be placed on the market would be revised.
Malta does not have any international bilateral agreements in the phytosanitary field. Malta is only
bound by international multilateral conventions such as WTO, the International Plant Protection
Convention (IPPC) and FAO.

B. Short Term Priorities

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 first quarter of 2002.




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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.
c) The CAP Unit within the Customs Department of the Ministry of Finance will reach full
   capacity by the second quarter of 2002.
d) A precise timetable indicating the administrative and financial adjustments necessary to fully
   implement the provisions of regulation (EC) 1260/99 (general provisions on the Structural
   Funds) will be completed by the second quarter of 2002.
e) 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 directly applicable upon accession. Funds have also been allocated under the
   pre-accession programme to ensure a fully functioning IACS by the date of accession.
f) 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.
g) Regulation (EEC) 3719/88 (common detailed rules for the application of the system of import
   and export licences and advance fixing certificates for agricultural products) and its amendments
   will become directly applicable to Malta on accession.
h) 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.
i)   Regulation (EEC) 1200/89 (rules for the application of export levies and charges on agricultural
     products) will become directly applicable to Malta on accession.
j)   Regulation (EEC) 2220/85 (rules for the application of the system of securities for agricultural
     products) will become directly applicable to Malta upon accession.
k) Regulation (EEC) 3846/87 (agricultural product nomenclature for export refunds) and its
   amendments will become directly applicable to Malta on accession.
l)   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.




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m) Malta will submit an indicative list of traditional names of such products by the second quarter
   of 2002 to enable the producers thereof to benefit on accession from the provisions of Regulation
   (EEC) 2081/92 (protection of geographical indications and designations of origin for agricultural
   products and foodstuffs) and its amendments
n) Regulation (EEC) 2081/92 and Regulation (EEC) 2082/92 (certificates of specific character for
   agricultural products and foodstuffs) will become directly applicable to Malta on accession.
o) Regulation (EEC) 2092/91 (organic production of agricultural products and indications referring
   thereto on agricultural products and foodstuffs) will become directly applicable to Malta on
   accession.
p) 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.
q) Regulation (EEC) 2237/77 (form of farm return to be 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.
r) 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.
s) 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.
t)   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.
u) 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.
v) The administrative capacity of the Department of Agriculture, soon to be renamed as the
   Agriculture Services and Rural Development Division, is being strengthened and will reach full
   capacity by the fourth quarter of 2002.
w) 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.




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

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 first quarter of 2002.
b) The operational and regulatory aspects of Medigrain Ltd., will be separated by the second
   quarter of 2002. A timetable for the abolition of the monopoly will be adopted by the first
   quarter of 2002.
c) A list of vine varieties in line with Article 19 of Regulation (EC) 1493/99 will be submitted to
   the Commission by the first quarter of 2002.
d) A Producer‟s Organisations Unit within the Ministry for Agriculture and Fisheries will also be
   set up by the third quarter of 2002.
e) The Malta Standards Authority will publish marketing and quality standards of fresh fruit and
   vegetables under the Product Safety Act (Cap. 427). These will be enforced gradually by
   accession. The Ministry for Agriculture and Fisheries will draw up a code of good agricultural
   practice.
f) Standards for eggs and poultry will be adopted and enter into force by the second quarter of
   2002.
g) An Act for the recognition and role description of the producers‟ organisations will be enacted
   by the first quarter of 2002.
h) A Wine Regulation Board within the Ministry for Agriculture and Fisheries will be set up by the
   first quarter of 2002.
i)   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.
j)   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.
k) 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.




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l)   Regulation (EC) 2200/96 (common organisation of markets for fruit and vegetables) will become
     directly applicable to Malta on accession.
m) Subsidiary legislation under the Product Safety Act (Cap. 427) to provide for marketing and
   quality standards of fruit and vegetables will be adopted and enter into force by the second
   quarter of 2002. The number of products covered will be increased gradually, so as to ensure that
   by accession all products will comply with EU marketing standards.
n) Regulation (EC) 2201/96 (common organisation of the markets in processed foods and vegetable
   products) will become directly applicable to Malta on accession.
o) 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 any requests that have been made in this regard, will become directly
   applicable to Malta on accession.
p) 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.
q) Regulation (EEC) 3072/95 (common organisation of the market in rice) and its amendments will
   become directly applicable upon accession.
r) Subsidiary legislation under the Product Safety Act (Cap. 427) 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.
s) 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.
t)   Regulation (EEC) 404/93 (common organisation of markets in bananas) and its amendments will
     become directly applicable to Malta on accession.
u) 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 (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.
v) Regulation (EEC) 2075/92 (common organisation of the market in raw tobacco) and its
   amendments will become directly applicable to Malta on accession.
w) Regulation (EEC) 1785/81 (common organisation of the markets in the sugar sector) will
   become directly applicable to Malta on accession.




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x) Regulation (EEC) 1696/71 (common organisation of the market in hops) will become directly
   applicable to Malta on accession.
y) Regulation (EEC) 2358/71 and Regulation (EEC) 1119/79 (special provisions for the
   implementation of the system of import licences for seeds) will become directly applicable to
   Malta on accession.
z) Regulation (EEC) 1308/70 (common organisation of the market in flax and hemp), Regulation
   (EEC) 619/71 (rules for granting aid for flax and hemp) and Regulation (EEC) 845/72 (measures
   to encourage silkworm rearing) and Regulation (EEC) 1201/89 (rules implementing the system
   of aid for cotton) and its amendments will become directly applicable to Malta on accession
aa) 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
    organisation 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 regard, will become directly applicable
    to Malta on accession.
bb) Regulations (EEC) 136/66 (common organisation of the market in oils and fats) and its
    amendments will become directly applicable to Malta on accession.
cc) 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.
dd) 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 Malta on
    accession.
ee) Regulation (EC) 2759/75 (common organisation of the market in pigmeat), except for any
    requests that may be made in this regard, will become directly applicable to Malta on accession.
ff) 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.
gg) 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 first quarter of 2002. Malta will apply the provisions
    of Article 1 of Directive 93/23/EEC which allows countries with less than three million pigs to
    carry out only one survey of pig production per year.
hh) 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




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    (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.
ii) Regulation (EEC) 2771/75 (common organisation of the egg market) and Regulation (EEC)
    2777/75 (common organisation of the market in poultry meat) will become directly applicable to
    Malta on accession.
jj) 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.
kk) An Agricultural Export Promotion Board will be in place by the third quarter of 2002.
ll) 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. The institutional build-up for the Rural Development Unit
   has been initiated. Full details will emerge from the Rural Development Programme.
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) Setting up of the necessary institutional structures for the implementation of Structural Funds
   and the Leader Community Initiative (Article 20(1c) of Regulation (EC) 1260/99).

Forestry
a) A national plan for the protection of trees against fire shall be drawn up prior to accession
b) Regulation (EEC) 2080/92 (Community aid scheme for forestry measures in agriculture),
   Regulation (EEC) 1615/89 (European Forestry Information and Communication System),
   Regulation (EEC) 4256/88 (implementing Regulation (EEC) 2052/88 on EAGGF Guidance
   section), Regulation (EEC) 2158/92 (protection of the Community‟s forests against fires),
   Regulation (EEC) 3528/86 (protection of the Community‟s forests against atmospheric pollution)
   and Regulation (EEC) 867/90 (improving the processing and marketing conditions for forestry
   products) will become directly applicable to Malta on accession.

Veterinary
a) Adoption of the Food Safety Act.
b) Malta will become signatory to all Council of Europe Animal Welfare Conventions by
   the second quarter of 2002.




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c) 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).
d) A new incineration plant will be in place by the fourth quarter of 2002.
e) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
f) The Veterinary Services Act (Cap. 437) 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 second quarter of 2002 to provide for the current
   administrative procedures on health control systems.
g) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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
   second 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.
h) Subsidiary legislation under the Veterinary Services Act (Cap. 437) to transpose Directive
   96/93/EEC (certification of animals and animal products) will be adopted and enter into force by
   the second quarter of 2002.
i)   Subsidiary legislation under the Veterinary Services Act (Cap. 437) to 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 second quarter of 2002 and will enter
     into force when Malta will be considered an „entry point‟ for Community trade.
j)   Border Inspection Posts in line with Directive 91/496/EEC will be in place by the fourth quarter
     of 2002.
k) Subsidiary legislation under the Veterinary Services Act (Cap. 437) transposing Directive
   92/438/EEC (computerisation of veterinary import procedures) will be adopted and enter into
   force by the second quarter of 2002, following the completion of the SHIFT Project by the
   European Commission.
l)   Subsidiary legislation under the Veterinary Services Act (Cap. 437) to 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
     second quarter of 2002. The ADNS prototype is in place.
m) Amendments to the Fees (Abattoir and Veterinary Services) Regulations (LN68/86) which
   provide for the partial financing of veterinary inspections and controls of animal products, will




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     be adopted and enter into force by the second quarter of 2002 to transpose Directive 85/73/EEC
     (financing of health inspections and controls of fresh meat and poultry meat).
n) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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
   influenza are being drafted and will be finalised by the fourth quarter of 2002.
o) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
p) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
q) Subsidiary legislation under the Veterinary Services Act (Cap. 437) to 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 second quarter of
   2002, except where requests for transitional periods are being made.
r) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
s) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
t)   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




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    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 second quarter of 2002,
    except where transitional periods are being requested.
u) 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.
v) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
w) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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
   second quarter of 2002, except where requests for transitional periods are being made.
x) Currently the administration of Bovine Somatotrophin is prohibited in Malta through the
   Importation (Control) Regulations. Subsidiary legislation under the Veterinary Services Act
   (Cap. 437) transposing Decision 90/218/EEC (administration of Bovine Somatotrophin) will be
   adopted and enter into force by the second quarter of 2002.
y) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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
   second quarter of 2002.
z) Animal waste in Malta is disposed of by incineration and controlled dumping. Subsidiary
   legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
aa) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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




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    origin, fishery products or live bivalve molluscs) will be adopted and enter into force by the
    second quarter of 2002.
bb) Subsidiary legislation under the Animal Welfare Act (Cap. 439) 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 second
    quarter of 2002.
cc) Subsidiary legislation under the Veterinary Services Act (Cap. 437) transposing Decision
    90/424/EEC (expenditure in the veterinary field) will be adopted by the second 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.
dd) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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 second quarter of 2002.
Phytosanitary
a) Continuation of the strengthening of the administrative capacity to fully harmonise with the
   acquis.
b) Subsidiary legislation under the Veterinary Services Act (Cap. 437) 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.
c) Subsidiary legislation under the Plant Quarantine Act (Cap. 433) 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.




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d) 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 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 suppliers 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.
e) 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.
f) Subsidiary legislation under the Food 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.
g) Regulation (EC) 194/97 (setting maximum levels for certain contaminants in foodstuffs) will
   become directly applicable on accession.


C. Institution Building Needs

The Ministry for Agriculture and Fisheries is currently undergoing a re-organisation of its functions
to enhance its administrative capacity and enable the Ministry to fulfil its obligations in terms of the
acquis. The main thrust of this restructuring involves the identification and re-organisation of
functions and programmes taking into consideration the requirements and obligations arising from
the acquis on agriculture as well as the implementation, management and control of the Common
Agricultural Policy (CAP).
One of the main elements of this restructuring is the separation of the regulatory and service delivery
functions of the Ministry for Agriculture and Fisheries. The new Agricultural Services and Rural
Development Division will have a service delivery-based function whilst the new Food and
Veterinary Regulation Division will be responsible for the regulatory function. The new Fisheries
Conservation and Control Division will maintain the current functions and specialist expertise of the
Fisheries and Aquaculture Department with a clear distinction between its regulatory and operational
functions.




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The three Directors General for the Agricultural Services and Rural Development Division, the Food
and Veterinary Regulation Division and the Fisheries Conservation and Control Division have been
appointed. There is also a Director General responsible for Special Projects. The restructuring of the
Ministry is expected to be completed by the second quarter of 2002.
The Ministry‟s re-organisation will enable it to perform its various functions of policy making,
regulation and control, service delivery and research and development more efficiently and
effectively.


Area of Activity                                                      2001         2002         Total

Ministry for Agriculture and
Fisheries
Department of Agriculture and Rural     Senior                            -            1               1
Development Services
                                        Middle                           3           14            17
                                        Other                            -           13            13
                                        Total                            3           28            31

Department of Corporate Services        Senior                            -            1               1
(Paying Agency)
                                        Middle                            -            -               -
                                        Other                             -            -               -
                                        Total                             -            1               1

Department of Policy and Planning – Senior                               1             0               1
Integrated Administration and
Control Systems (IACS)
                                    Middle                               0             7            7
                                    Other                                4             0            4
                                    Total                                5             7           12




D. Financial Requirements
                                                                                              Lm000
Area of Activity                                                      2001         2002        Total

Ministry of Agriculture
Department of Agriculture and Rural                                     24          178           202
Development Services                    Recurrent
                                        Capital                          3           25            28
                                        Training                         -            5             5
                                        Total                           27          208           235




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Area of Activity                                2001        2002         Total

Department of Corporate Services
(Paying Agency)                     Recurrent      -           9             9
                                    Capital        -           1             1
                                    Training       -           -             -
                                    Total          -          10            10

Department of Policy and Planning   Recurrent    19           46            65
– Integrated Administration and
Control Systems (IACS)
                                    Capital      10            5            15
                                    Training      -            -             -
                                    Total        29           51            80




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3.4.3   Fisheries

        A. Current Status
        Malta has a coastline of 179km in the central Mediterranean. In 2000, some 1,000 tonnes of fish
        with a market value of Lm1.85 million were landed. In addition the value of aquaculture products
        reached around Lm2.19 million. The fisheries sector has, like agriculture, its multifunctional
        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.
        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 1,500 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 Aquaculture has renewed all the
        data of the Maltese Fleet Register, which now meets the requirements of Council Regulation
        3690/93. The databank also provides inputs for statistical submissions to Eurostat. The fishing fleet
        register is continuously being updated and the electronic licensing system is functioning.
        Registered landings may not reflect total actual catches. The total catch is recorded on the basis of
        fish landed at the Fish Wholesale Market Centre. It is an accepted practice for fishermen to sell their
        catch directly to the public, bypassing the fish market centre.
        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 by the EU. Non-EU countries are benefiting from exemptions of the
        common external tariff. New arrangements came into effect from January 2002 as explained under
        „Import and Export Policy‟. 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). On 14 December 1999 Malta deposited to the Food
        and Agriculture Organisation (FAO) the Instrument of Acceptance of the amendment to the
        Agreement establishing the General Fisheries Commission for the Mediterranean with a view to
        establishing an autonomous budget for that organisation.
        Malta 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




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should be regarded as an independent Management Unit. Moreover, the shelf constitutes the main
offshore area where spawning occurs for a significant proportion of demersal shelf resources and
some deepwater species.

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 is not conducive for heavier
investment in this sector. Social factors associated with the local industry further constrained the
traditional mode of 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 multiannual 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 multiannual 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. Malta requested in its Negotiating Position Paper on
Fisheries (CONF-M 36/00) a waiver from the applicable age and tonnage limits of fleets under FIFG
assistance.
However, Article 11 of Regulation (EC) 2792/99 (rules and arrangements regarding Community
structural assistance in the fisheries sector) states that vessels under 12 metres in length will be
eligible for a premium, partly financed under Financial Instrument for Fisheries Guidance (FIFG),
for the development or modernisation of fishing activities. There are 1,643 vessels of the Maltese




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fishing fleet which are under 12 metres in length. These vessels are therefore able to submit projects
aimed at the improvement or modernisation under FIFG.
In this context, Malta is withdrawing its request for a waiver from the applicable age and tonnage
limits of fleets under FIFG assistance.

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 landings mostly as Tuna 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 EU, all exports of Maltese fishery products
entering the EU are subjected to a 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 will be dismantled.
Negotiations on the liberalisation of fish and fisheries products were held in Malta on 23 April 2001.
Agreement was reached on two different packages: aquaculture (i.e. sea bass and sea bream) on the
one hand and wild fish species on the other. The result will be a staggered liberalisation of all fish
and fishery products, with the exception of sea bass and sea bream and their products, starting with
one third reduction starting from January 2002. As from January 2003 there would be a further one-
third reduction. Total free trade will be achieved in January 2004. Agreement reached on
aquaculture is as follows:
-   Implementation of agreement starts with the first quota fixed at 1,500 tonnes with 7.5% duty as
    from January 2002;
-   the tariff quota will increase to 1,750 tonnes with 0% duty as from January 2003;
-   full free trade with no tariff quota on sea bream and sea bass under HS Code heading 0302 will
    start as from January 2004.
The Exchange of Letters was signed on 19 December 2001. Malta will adjust its import and export
policy by accession 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.
Malta has initiated the process of ratification to the UN agreement relating to the Conservation and
Management of Straddling and Highly Migratory Fish Stocks by the fourth quarter of 2002. Malta
acceded to this agreement on 9 November 2001.




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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 and the veterinary authorities share responsibility for public
health.

Vessel Monitoring System and Legislative Issues
The acquis requires that Malta establish a satellite-based vessel monitoring system(VMS). The
Fishing Fleet Regulations will provide for the installation of a satellite-based VMS on board eligible
boats. This system, which is obligatory for vessels with a length in excess of 24 metres, will be fully
operational by the second quarter of 2002.
The Fisheries Conservation and Management Act (Cap. 425) was adopted by Parliament and came
into force on 4 June 2001 by virtue of Legal Notice 120 of 2001. 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, Fishing Fleet subsidiary legislation in the area of management and control of resources,
is being drafted, and will be adopted by the second quarter of 2002. 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.

Common Market Organisation
The legislation for the establishment of Producer Organisations has been redrafted. The Producer
Organisations legislation will be enacted in the first quarter of 2002. Appropriate training will be
provided to the existing co-operatives to function as producer organisation/s in order to qualify for
recognition. This issue is discussed under Section 3.4.2 (Agriculture).
In its Negotiating Position Paper on Chapter 8 (CONF-M 36/00), Malta requested the addition of a
list of species of fish to the list contained in Annex I A of Regulation 3759/92 in order to benefit
from the market withdrawal provisions applicable to Community fishermen from the date of
accession.

Institutional Set-up
The Department of Fisheries and Aquaculture is responsible for the implementation of Malta‟s
fisheries policy measures. These include: 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 Malta Centre for Fisheries
Sciences, formerly known as the National Aquaculture Centre; the monitoring of fish farms; and
export certification.




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The Malta Maritime Authority, in the Ministry for 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, being set up at the Customs Department, will implement the tariff quotas and carry
out surveillance on imports and exports, and inter-Community trade through documentary and
physical controls. The Ministry for Agriculture and Fisheries will be the Paying Agency and will
issue import and export licences.
In conjunction with the COPEMED project of FAO and Plymouth University UK, the Department of
Fisheries and Aquaculture has introduced a two-year diploma course leading to a Higher National
Diploma in Fisheries Studies. The course syllabus and prospectus have been approved by Plymouth
University and accepted by EDEXEL in London, which acts as an external quality surveyor. A
course co-ordinator was employed by the Department in July 2000. 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 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.
Fisheries Management and Control
 In May 2001, a pilot project was initiated to establish a catch assessment scheme through a dual
approach by census, sampling and survey methods. The catch assessment scheme for the collection
of fish catch and effort data became fully operational in the fourth quarter of 2001 in line with the
acquis.
The demo software to upgrade the Sales Note has been tested and will be operational by the first
quarter of 2002.

B. Short Term Priorities

Legislation
a) Malta intends to ratify the UN agreement relating to the Conservation and Management of
   Straddling and Highly Migratory Fish Stocks by the fourth quarter of 2002. Malta acceded to
   this agreement on 9 November 2001.
b) Fishing Fleet subsidiary legislation will be adopted by the second quarter of 2002.
c) Fish marketing subsidiary legislation will be adopted by the fourth quarter of 2002 to regulate
   the sale of fish. It will also cover the withdrawal from the market of fisheries products and
   provide for carry over and private storage aid.




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d) Fishing Gear subsidiary legislation covering all gear types as well as regulating tuna fishing will
   be adopted by the second quarter of 2002, and will enter into force by the fourth quarter of 2002.
e) Fish standards subsidiary legislation will be adopted and enter into force by the fourth quarter of
   2002.
C. The Producer Organisations legislation will be enacted in the first quarter of 2002. Subsidiary
   legislation regulating the Fisheries Producer Organisation will be adopted in the third quarter of
   2002.

Fisheries Management and Control
D. The Department of Fisheries and Aquaculture already acts as a Fisheries Monitoring Centre.
   Additional trained officers will also be recruited and tracking systems will be established by the
   fourth quarter of 2002 to fulfil its obligations.
E. The Fishing Fleet subsidiary legislation will require fishing vessels with a length in excess of 10
   metres to maintain a Catch Logbook. The logbook will become compulsory by the second
   quarter of 2002.
F. The Fishing Fleet subsidiary legislation will also specifically provide for the establishment of a
   satellite-based Vessel Monitoring System for all fishing craft over 24 metres in length overall.
   The system will be fully operational by the second quarter of 2002.
G. Malta will upgrade the present Sales Note to conform to the acquis.

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.
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 fourth quarter of 2002.

Fish Marketing Centre
a) In order to implement fully the Community‟s marketing regulations Malta will upgrade the fish
   wholesale market facilities, by the fourth quarter of 2002, to meet the required standards. The
   centre will cater for captured fresh fish, fresh local aquaculture fish, and fresh/frozen fish from
   any other source. Specifications for upgrading the fish marketing facilities have been prepared.
   The project will be completed by the fourth quarter of 2002.




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Port Facilities
a) The berthing facilities for fishing vessels are expected to be extended and in certain cases
   upgraded. The facilities at Marsaxlokk, the main fishing port, are expected to be completed by
   October 2002.

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

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

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

Multiannual Guidance Programme
a) The multiannual guidance programme (MAGP) for the development of the fisheries, aquaculture
   and ancillary sectors will be completed by the end of the first quarter of 2002.

C. Institution Building Needs
The Department of Fisheries and Aquaculture is being re-organised to enable the effective
implementation of the acquis. More professional staff will be recruited whilst the staff complement
engaged on maintaining the fisheries conservation zone will also be strengthened. Personnel
completing the two-year course in fisheries studies will join the Department after completion of the
course.
The Department recruited the following three consultants during 2001: an icthyopothologist in
January 2001; a scientific and technical advisor on fish nutrition in April 2001; and a scientific and
technical advisor on broodstock technology in April 2001.
The Fisheries Board was established in terms of article 5 of the Fisheries Conservation and
Management Act 2001. The Government Gazette of 2 November 2001 No. 17,157 published the
Fisheries Board, as it will be composed for the period ending 31 July 2004.
The CAP Unit within the Department of Customs will reach full capacity by the second quarter of
2002. In preparation for its role in the Common Agricultural Policy(CAP) and the Common
Fisheries Policy(CFP) the Customs Department is developing the operational structure of this Unit.
The personnel are being trained both locally and abroad.
The CAP Unit will seek technical assistance from the Department of Fisheries and Aquaculture to
identify and verify the Combined Nomenclature (CN) codes.




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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


D. 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.




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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. Until the enactment of the Malta Resources Authority Act (Cap. 423) in
        September 2000, authorisation by Enemalta Corporation was required to carry out these activities.
        These responsibilities have now been assumed by the Energy Directorate within the Malta
        Resources Authority. In September 2000, the Malta Resources Authority Act (Cap. 423) was
        approved by Parliament. It entered into force in February 2001. This enabling Act ensures the
        separation of regulatory functions from service provision functions and allows for subsidiary
        legislation to be issued to implement the acquis in the energy sector. The Board of the Authority has
        been appointed and recruitment of staff is underway.
        The Malta Resources Authority has taken responsibility for 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 the Community Energy Framework
        programme. The Malta Resources Authority is currently exploring the possibilities of participating
        in this programme.
        The Malta Council for Science and Technology (MCST) drafted a national energy policy document.
        The responsibility for the national energy policy document has been 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 covers 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) entered into force on 1
        March 2001 and subsidiary legislation is being drafted by the Malta Standards Authority. The Act
        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 fulfils the criteria which define a „small isolated system‟ under Directive 96/92/EC
        concerning common rules for the internal market in electricity. The splitting of the transmission 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). A public service obligation
        will be imposed on Enemalta Corporation in line with the Directive.




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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.
A transition period has been requested in respect of the acquis on the maintenance of minimum
stocks of crude oil and / or petroleum products. The Malta Resources Authority has finalised plans
for fuel stock building to meet the 90 days obligation which have been accepted by the Commission
services.
Malta does not use nuclear energy for power generation and there are no plans for future
development of nuclear energy. Malta will sign the IAEA Additional Protocol on the amplification
of the reporting and accountancy procedures in the IAEA safeguards agreement by the fourth
quarter 2002. A project proposal on dosimetry and quality assurance for use of nuclear energy in
medical practice has been submitted to the IAEA for vetting.
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. The amendments
entered into 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 and ratified the final Act of the Energy Charter
Conference, the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects
and the Amendments to the Trade-Related Aspects of the Energy Charter Treaty. Officials from the
Energy Directorate within the Malta Resources Authority regularly attend meetings organised by the
Energy Charter Secretariat.
The Malta Statistics Authority Act (Cap. 422), providing for the establishment of a Statistics
Authority, was enacted by Parliament on 3 October 2000 and came into force on 1 March 2001. The
Act establishes the National Statistics Office (NSO) as an autonomous and independent institution.
The NSO has compiled and distributed appropriate questionnaires for the collection of energy
statistics. Data is being collected for analysis and for publication purposes to fulfill 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).




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B. Short Term Priorities
a) The Malta Resources Authority will become fully operational by the first quarter of 2002.
b) The National Energy Policy Document will be finalised by the Malta Resources Authority by
   the first quarter 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. These regulatory mechanisms include the establishment of licensing
   conditions and obligations of Enemalta Corporation as the sole distribution system operator, the
   adoption of an objective, transparent and non-discriminatory procedure for the provision of
   access to the system and specifications on those consumers that will have the legal capacity to
   negotiate the contract for their electricity in accordance with conditions for market access. The
   Directive will be introduced taking into account Malta‟s specific position as a small isolated
   system.
b) Enemalta Corporation will commence its restructuring programme. 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.

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.
b) Although Directive 91/296/EEC on transit of natural gas through grids is not at present relevant
   to Malta, it shall be transposed by the fourth quarter of 2002 for the purpose of alignment with
   the acquis.
Other Matters
a) Sign the IAEA Additional Protocol on the amplification of the reporting and accountancy
   procedures in the nuclear safeguards agreement.
b) The Malta Resources Authority will issue specific regulations on emergency actions in case of a
   crisis leading to fuel shortages.
c) The phased-in implementation of the Oil Stocks Directive will get under way.
d) 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.
e) 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/EEC (indication of labelling of the




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    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/EC (energy labelling of household dishwashers) and
    Directive 98/11/EC (energy labelling of household lamps).
f) Introduce gradually during 2002 new building regulations that make adequate provisions for
   energy saving and contribute towards the attainment of better energy conservation
   characteristics in buildings.

C. Institution Building Needs
The Malta Resources Authority is the responsible authority to regulate, monitor and license all
practices, operations and activities relating to energy, water and mineral resources. The Authority is
currently in the process of recruiting a Chief Executive Officer, legal services, a financial controller
and other support staff that will all contribute towards the adoption and implementation of the
acquis in the energy sector. The Malta Resources Authority will be fully operational during the first
quarter of 2002. Some training concerning the application of the acquis may be required.
                   Area of Activity                                 2001           2002         Total

Ministry of the Environment
                                      Senior                             -             5             -
                                      Middle                             -            12             5
                                      Other                              -            25             -
                                      Total                              -             -             5


D. Financial Requirements
                                                                                                Lm000
Area of Activity                                                    2001           2002         Total

Ministry of the Environment
                                      Recurrent                         -           229           229
                                      Capital                           -             -             -
                                      Training                          -             -             -
                                      Total                             -           229           229




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Area of Activity                             2001          2002         Total

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




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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. All aspects of
        land transport are now regulated and administered by the Malta Transport Authority, the Malta
        Police Force, and the Local Councils. The Malta Transport Authority set up in the third quarter 2001
        comprises four Directorates, namely, the Roads Directorate, the Licensing and Testing Directorate,
        the Public Transport Directorate and the Traffic Management Directorate.
        The main objective of the Malta Transport Authority is the improvement of the integration and co-
        ordination of transport policy and provision. The Malta Transport Authority has assumed additional
        responsibilities in the field of freight transport, the carriage of dangerous goods by road, transport
        research, data collection and policy development, and in the administration of international land
        transport activities. The Chairman and the Board of Directors of the Authority were appointed in
        June 2001, and the Authority began functioning during the third quarter of 2001.
        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)
               Malta 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,
                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




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      Motor Vehicle Roadworthiness Test Regulations, 1998
      Motor Vehicles Registration Tax (Amendment) Act, 1999 (Cap. 368)
      Motor Vehicles (Tariffs of Fares) (Amendment) Regulations, 1999

     Road transport conventions:
      Convention on Road Traffic, Geneva 1949 (succession by Malta 1966)
      Convention on the taxation of road vehicles for private use in international traffic, Geneva
       1956 (accession by Malta 1966)
      Customs convention on the temporary importation of private road vehicles, New York 1957
       (succession by Malta 1966)
      Customs convention on the international transport of goods under cover of TIR Carnets,
       Geneva 1959 (accession by Malta 1978)
      Customs convention on the international transport of goods under cover of TIR Carnets,
       Geneva 1975 (accession by Malta 1977)
      Convention on customs treatment of pool containers used in international transport, Geneva
       1994 (accession by Malta 1995)

A Transport Infrastructure Needs Assessment (TINA) involving road, maritime and air transport
sectors commenced in the second quarter of 2001. A progress report of the assessment has been
issued and the study is now entering the consultation phase with the Commission, which should be
completed by the end of February 2002.
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. The Roads Directorate, in consultation with the Traffic Management
Directorate, is continuing work on the restoration and formation of the road network in order to
facilitate better traffic circulation, encourage modal transfer from local access roads to arterial roads
and improve road safety. The road classification and signage programme that establishes the
strategic routes for large and heavy vehicles within Malta (180 kilometres of Arterial and Distributor
roads) has been completed for Route 1 (Birzebbuga to Cirkewwa).
Legislation amending the Motor Vehicles Regulations of 1994, has been drafted to introduce the
Community‟s maximum vehicle weights and dimensions. Following legal assistance that was given
to the Malta Transport Authority between January and November 2001, administrative procedures
are now being established for setting up an accounting system for expenditure on transport
infrastructure. The Licensing and Testing Directorate (LTD), as from 2001, introduced legal and
administrative procedures for the introduction of the acquis concerning motor vehicle driving
licences. All new, replacement and renewed driving licences issued in 2001 were of the EU credit
card format type. The LTD has now taken over full responsibility for the acquis concerning the
carriage of goods by road. During the year, various statistical data and operational information have
been collected in order to facilitate the incremental implementation of EU minima new road taxes on
heavy goods vehicles (the first stage of which commenced in January 2002) and the introduction of
the operators‟ license. A survey has also been completed by the National Office of Statistics that is
in line with the requirements of Council Regulation 1172/98 (on statistical returns in respect of the




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carriage of goods by road) which shall be used for the formulation of required statistics regarding the
carriage of goods by road by Maltese registered vehicles.
Administrative preparations have also been carried out with Motor Vehicle Test Stations for the
introduction of Phase II of the Motor Vehicle (Roadworthiness Testing) Regulations 1998. As from
1 January 2002, the tyres and wheels and general items of all motor vehicles have been tested for
compliance with Council Directive 96/96/EC on the approximation of the laws of the Member States
relating to roadworthiness tests for motor vehicles and their trailers. Technical assistance has been
given to the Licensing and Testing Directorate by the UK Department for Transport, Local
Government and Regions in the field of carriage of dangerous goods by road. Training Courses for
drivers of dangerous goods vehicles and safety advisors of road transport undertakings have been
organised. Technical staff in the LTD have also been involved in a fact-finding mission to Geneva
regarding the installation and usage on certain vehicles of tachograph devices. The Public Transport
Directorate has received technical assistance by Faedselsstyrelsen (the Danish agency for Road
Safety and Transport) in the administration and enforcement procedures in respect of the acquis in
the field of international passenger transport.
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. Discussions were held in 2001 between Maltese and Italian authorities
regarding the renewal of the 1987 Italy-Malta bilateral road transport agreement.
The transport chapter was provisionally closed in accession negotiations in October 2001, with four
requests for transition periods being accepted. A two year transitional period was granted with
regard to harmonisation of road taxes on Maltese registered heavy goods vehicles operating
internationally, and a three year transitional period for all nationally operating vehicles (with the
possibility for Malta, as a Member State, to apply to the Commission for the maintenance of reduced
road tax levels for socio-economic reasons). A third transition period of two years was granted for
nationally operating motor vehicles for the roadworthiness testing of vehicle suspension and general
conditions. The fourth transition period of three years was given for the retrofitting of speed
limitation devices to certain nationally operating vehicles.
An administrative agreement was also reached with regard to the practical implementation of
roadside checks as established by Directive 88/599/EEC whereby, given the negligible numbers of
internationally operating vehicles that circulate on Maltese roads each day, such checks shall be
carried out at the quayside rather than the roadside.
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
Since the establishment of the Malta Maritime Authority (MMA) in 1991, Malta‟s maritime
practices were brought in line with international standards and codes, particularly those adopted by
the International Maritime Organisation (IMO). Thus, most of the recently enacted legislation is




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already in line with EU Directives. Since Malta is a member of the IMO, MMA officials actively
participate in the deliberations of this organisation. Malta is also a member of the International
Labour Organisation and the MMA closely follows the maritime activities of this organisation. The
MMA is also an observer member of the European Sea Ports Organisation and participates in
various EU initiatives and research projects.
In the field of international 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.
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. Notwithstanding the
above, Malta, being an island on the periphery of the EU, depends heavily upon timely and regular
maritime connections with neighbouring Mediterranean ports for the transport of vital cargoes. 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. Government intends to impose a
public service obligation contract on Sea Malta Co Ltd. as from June 2002 to ensure the continuation
of these life-link services. The initial contract shall be for a period of five years, after which a
tendering procedure for the award of this contract shall be carried out.
In respect of local maritime transport, the carriage of passengers and cargo to the Sister Island of
Gozo is carried out exclusively by Gozo Channel Co. Ltd. This service will operate on the basis of a
five-year period public service obligation contract imposed, as from June 2002, on the latter
company in the general economic interest in line with Regulation (EEC) 3577/92 on maritime
cabotage. On expiration of the initial contract the award of subsequent contracts shall take place
after a tendering procedure.
Within the port sector, the overall national ports policy focuses on the provision of efficient and 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. Further private participation in port activities is being encouraged
by facilitating private investment in the ports through a number of port concessions and other
privatisation initiatives. The Government has also taken the initiative to establish a Ports
Consultative Council to draw up recommendations for the establishment of a formal and
comprehensive National Ports Policy and on the implementation of the necessary reforms to the
ports institutional framework.




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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 and to improving the
quality of ships on its register. 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 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.412) was enacted on 14 December 1999. On 6 January 2000 Malta ratified the 1992
Protocols to the International Convention on Civil Liability for Oil pollution damage (CLC) and
Fund Conventions and at the same time denounced the original 1969 CLC Convention and the 1971
Fund Convention. These entered into force for Malta on 6 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 enacted by Parliament and were brought into
force on 1 January 2001. The new provisions of the Merchant Shipping Act (Cap234) together with
regulations to 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 IMO and ILO
conventions.
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. Progress in the area has
continued in recent years, however, further strengthening of the implementation and enforcement
roles of the Merchant Shipping Directorate is required. To this effect, training of human resources is
being undertaken.
The following maritime subsidiary legislation was published in 2001:
a) The Pilotage and Mooring Regulations (1975) have been amended to introduce a tariff
   differential in favour of tankers with segregated ballast tanks through (LN137/2001) in
   accordance with Regulation 2978/94/EEC (on implementation of the IMO Resolution A747(18)
   on the application of tonnage measurement of ballast spaces in segregated ballast oil tankers;
b) Compliance with the latest amendments to the STCW Convention (International Convention on
   Standards of Training Certification and Watchkeeping for Seafarers) as provided for by
   Directive 94/58/EC, has been achieved through the Merchant Shipping (AB&EDH Certificates)
   Regulations 2001(LN196/2001) and the Merchant Shipping (Training and Certification)
   Regulations 2001(LN197/2001), which came into force on 31 August 2001.
c) The Merchant Shipping (Medical Examination) Regulations 2001(LN207/2001) were
   promulgated to satisfy ILO Convention 73 and ILO Convention 147 requirements. The
   Merchant Shipping (Provisions & Water) Regulations 2001(LN206/2001), also satisfying ILO
   Convention 147 requirements, replacing the existing provisions and water regulations.




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    Moreover, the Merchant Shipping (Employment of Young Persons) Regulations 2001
    (LN68/2001) were published and entered into force in March 2001.
The instrument of ratification to Convention No.147 and its 1996 Protocol will be deposited with the
ILO in January 2002.
An action plan was adopted in 2001 to review the current practices, work methods and
resources of the Merchant Shipping Directorate and to ensure that it further strengthens its
enforcement role. The Maritime Action Plan is intended to serve as a blueprint for the
alignment and implementation of the maritime transport acquis.
In line with its commitments in the Action Plan, the Malta Maritime Authority has
provided for the recruitment of additional staff, and more office space as part of the
restructuring of the Merchant Shipping Directorate. The upgrading of the Nautical School
to an Institute for Maritime Studies was partly meant to address the problem of a shortage
of qualified personnel in the long term. Preparations are in hand for the procurement of
new computer software to be followed by other components of a fleet management system.
A „significant wave height‟ study, and a „monitoring and reporting system for vessels‟, are
part of a project included under the Pre-Accession 2002 funding programme. Assistance
from EU Member States in setting up the necessary infrastructure and procedures for the
carriage of dangerous goods and of ship wastes in our ports, are also part of this project.

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 the regulation of
safety of domestic maritime transport in terms of Directive 93/75/EEC (requirements for
vessels bound for or leaving Community ports and carrying dangerous or polluting goods);
Directive 59/00/EEC on Waste Reception Facilities, Regulation(EC) 3051/95 on safety
management of roll-on / roll-off passenger ferries; and Directive 98/18/EEC on safety rules
and standards for passenger ships.

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;
     The Code of Conduct for Computerised Reservation Systems Act XIX of 2001 to allow for
      the implementation of Regulation 2299/89.
The following subsidiary legislation is also in force:
     The Air Navigation Order as amended, which gives effect to certain ICAO standards




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       (LN176/90);
      The Civil Aviation (Exemption from Air Service License) Order 1993, which allows dry-
       leased Maltese registered aircraft operations under the lessee‟s AOC (LN72/93);
      The Civil Aviation (Investigation of Accidents) Regulations (LN31/56);
      The Carriage by Air Order 1953 which adopts the Warsaw Convention on Air Carrier
       Liability (LN562/53);
      The Civil Aviation (Denied Boarding Compensation) Regulations 2001 (LN 78/2001) which
       came into force in 1November 2001, and which are in line with Council Regulation
       295/91/EEC;
      The Air Navigation (Noise Certification and Operation of Aircraft) Order 2001, (LN162 of
       2001) was issued in July 2001 and will come into force in the second quarter of 2002,
       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);
      The Definition and Use of Compatible Technical Specifications for the Procurement of Air
       Traffic Management Equipment and Systems Regulations 2001 (LN161/2001) were issued
       in July 2001 and 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).
Malta signed the Montreal convention on Air Carrier Liability in 1999. 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 draft legal notice relating to aircraft accident
investigation, in line with the acquis, has also been prepared. While the Denied Boarding
Compensation Regulations legally came into effect in November 2001, Airmalta p.l.c. has in fact
applied the denied boarding compensation scheme for passengers whose journey originates in the
EU for some time.
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, 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 1979, of EUROCONTROL since
1989 and of the Joint Aviation Authorities since 1999. Malta has been classified as Category 1 status
by the FAA following an International Aviation Safety Assessment. Consequently, aviation
legislation conforms to ICAO and JAA standards/requirements.




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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 complied
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 had
to be enacted. 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. 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 requires 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 license air
transport undertakings under the Civil Aviation Act (Cap. 232) and the provisions concerning the
nationality of those who may register and operate aircraft in Malta under the Air Navigation Order
are not in line with the acquis. The relevant amendments will be made to rectify the situation upon
accession.

B. Short Term Priorities
Horizontal Issues
a) Malta‟s policy in the field of Trans-European Transport Networks (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.




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Land Transport
a) The Motor Vehicles Regulation (LN 128/94) will transpose Directive 91/439/EEC
   (driving licences) and provide for the introduction of the credit card format for driving
   licences.
      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) The draft legislation to 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, is undergoing technical vetting prior to
   publication in the first quarter of 2002.
c) The new Malta Transport Authority will be fully operational.
d) 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). For this purpose the Licensing
   and Testing Directorate has collected information and is compiling a comprehensive database on
   the national and international freight haulage. The National Statistics Office have carried out a
   complete survey of freight haulage activities in line with Council Regulation 1172/98 on
   statistical returns of goods carried by road.
e) 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).
f) 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.
g) Malta will be in a position to adopt the European Agreement concerning the Work of Crews of
   Vehicles engaged in International Road Transport (AETR).
h) The re-drafting of the Motor Vehicles Regulations (1994) is underway to bring legislation in line
   with Regulation (EEC) 684/92 (common rules for the international carriage of passengers by
   coach and bus). Further amendments will be adopted by the second quarter of 2002 to provide
   for administrative provisions, in line with Regulation (EEC) 2121/98 on the application of
   Regulation 684/92. These amendments will enter into force on accession.
i)   Malta will participate in the PACT Programme (Pilot Actions for Combined Transport)
     established by Regulation (EC) 2196/98 (financial assistance for actions of an innovative nature
     to promote combined transport) provided that this would be extended beyond 2001.
j)   The Motor Vehicles (Roadworthiness Test) Regulations (1998) introduced a phasing-in
     programme to transpose Directive 96/96EC (roadworthiness tests for motor vehicles and their




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     trailers). This programme which commenced in October 1999 will be completed by the first
     quarter of 2005 (ongoing). Tyres will be subject to the test by the end of 2002.
k) Licences for commercial haulage operations from airport and seaport customs areas will be
   amended in accordance with the relevant competition provisions.
l)   The Road Circulation fee currently levied on non-resident haulage operators on entering the
     country will be removed.
m) Separate channels at seaport frontiers for Community registered road transport will be
   introduced.
n) An „Operator‟s License‟ based on Community model criteria of financial standing and good
   conduct to those road haulage and passenger transport operators currently engaged in the
   occupation will be introduced. „Grandfather Rights‟ with regards to the condition of professional
   competence shall be taken into consideration.
o) The Malta Transport Authority will establish the necessary administrative procedures, courses
   and certification procedures in respect of the professional competence requirements for new
   entrants to the sector.
p) 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 has been granted.
q) Amend the Motor Vehicle (Wearing of Seat Belts) Regulation (LN129/95) to provide for the use
   of rear seat belts in order to implement the provisions of Council Directive 91/439 on the
   approximation of the laws of Member States relating to the compulsory use of safety belts in
   vehicles less than 3.5 tonnes.
r) New subsidiary 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.
s) 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).
t)   Administrative 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).
u) 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.




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v) 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 has been granted.
w) The Roads Department will finalise the exercise of 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.
x) 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). Since roadside checks
   are not feasible in Malta due to the negligible number (an average of two trucks per day) of
   international operators driving on Maltese roads, the requirements of Article 3 on regular
   roadside checks as per Directive 88/599/EEC will therefore be achieved through the
   implementation of the required checking procedures at the quayside. As regards the Maltese
   registered international hauliers, the required checking procedures will be carried out at their
   premises. Malta will apply the provisions of Article 13 (1h) of the Regulation with respect to
   vehicles restricted to operations on national territory.
y) 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.
z) 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.

Maritime Transport
a) New Port Commercial Vessels Regulations under the Malta Maritime Authority Act (Cap. 352)
   will be published transposing 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) and its amendments.
b) New Regulations under the Merchant Shipping Act are being drafted to comply with Directive
   98/41/EC on the registration of persons sailing on board passenger vessels. They will come into
   force by the first quarter 2002.
c) 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).
d) 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




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     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.
e) 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.
f) 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.
g) 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.
h) 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
i)   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.
j)   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 and Directive
     94/57/EEC (ship inspection and survey organisations and for the relevant activities of maritime
     administrations).
k) 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.
l)   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.
m) Subsidiary legislation under the Merchant Shipping Act (Cap. 234) transposing Directive
   94/57/EC (ship inspection and survey organisations and for the relevant activities of maritime
   administrations) will enter into force by the second quarter of 2002.
n) 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)
o) 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.
p) 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.
q) 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




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    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.
r) Subsidiary legislation under the Merchant Shipping Act transposing Directive 99/63/EC
   (organisation of working time of seafarers) will be adopted by the second quarter 2002 and come
   into force upon accession. Directive 99/95/EC (provisions in respect of seafarers‟ hours on board
   ships calling at Community ports) will be adopted and enter into force upon accession.

Air Transport
a) The Civil Aviation Department has reached full capacity except for the Flight Operations
   Inspectorate where a second flight inspector has still to be recruited.
b) New Accident Investigations Regulations (investigation of civil aviation accidents and incidents)
   under the Civil Aviation Act will be issued to transpose Directive 94/56/EEC establishing the
   fundamental principles governing the investigation of civil aviation accident and incident.
c) Legislation transposing Directive 96/67/EC (ground-handling markets at Community airport)
   will be adopted and will enter into force upon accession.
d) Legislation will be passed to provide for Personnel Licensing as per Directive 91/670/EC, and
   will enter into force upon accession.
e) The Civil Aviation Act will be amended 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 upon accession.
f) The provisions of Regulation 2027/97/EC (air carrier liability in the event of accidents) will
   enter into force upon accession.
g) 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 upon accession.
h) Airmalta p.l.c. 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 upon accession.

C. Institution Building Needs
New personnel and staff training will be required to strengthen the Malta Transport Authority and
the Department of Civil Aviation.




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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 as will new investment in information technology.


                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




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D. 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.




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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 2000. 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 consists only of very small firms, whereas well over
        90 per cent of firms in the construction and manufacturing sectors are classified as micro units.
        The legislative and administrative frameworks supporting industrial policy, have been adapted to
        enable local industry meet the challenges of new global market conditions. Government policy
        underlines the need to enhance, facilitate and stimulate the development of the entrepreneurial and
        innovative culture. Malta endorses the European Charter for SMEs and is actively following its
        underlying philosophy and objectives.

        Definition of SMEs

        The Business Promotion Act (Cap. 325) defines medium sized enterprises as those having less
        than 250 employees and a turnover not exceeding Euro 40 million or a total asset value not
        exceeding Euro 70 million. Small enterprises are defined as those having less than 50 employees
        and a turnover not exceeding Euro 7 million or a balance sheet value not exceeding Euro 5
        million.

        Policy Initiatives
        Malta‟s secondary and tertiary sectors are composed mainly of small and medium-sized enterprises
        (SMEs) and these are therefore of key importance in government‟s economic policy agenda. In view
        of their important contribution to the overall economic and social development of the community,
        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 takes more into consideration 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. Government
        industrial policy charts a strategy for entrepreneurship promotion and development and envisages,
        inter alia, a drive towards increased international competitiveness in the consistent pursuit of
        additional value creation and enhancement. The important objectives in this area include:
           creating and sustaining conditions conducive to the establishment of SMEs;
           creating conditions to improve the production capabilities and competitiveness of SMEs;
           giving direct assistance to entrepreneurs producing goods and services mainly for the local
            market to restructure and improve their production capabilities and competitiveness.




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The Business Promotion Act provides the principal legal basis for a comprehensive strategy for the
development of SMEs and the crafts sector in Malta.
The Institute for the Promotion of Small Enterprises (IPSE) is one of the organisations forming part
of the Ministry for Economic Services. It was set up to encourage and facilitate the growth and
development of manufacturing SMEs and assist in the restructuring of their operations to ensure,
inter alia, their survival in the new world market. The promotion of entrepreneurship is an integral
part of its mission. Programmes have been designed and launched specifically earmarked to assist
SMEs. As an intrinsic part of its strategy to assist manufacturing companies restructure their
operations, IPSE has also commissioned a number of sectoral studies, each focusing on a specific
industrial sector. IPSE is also undertaking other measures including an extensive training
programme in business planning and related areas and the introduction of the concept of business
incubation through a comprehensive strategy in support of new business start-ups.
The Business Incubation Centre was set up in 2001 to encourage entrepreneurship and innovate
projects. An advisory committee was also established to review and make recommendations to
IPSE‟s Board of Directors on such matters as eligibility criteria, and other services to be offered.
Other forms of assistance which have been designed by IPSE to support SMEs involve the provision
of market intelligence, management enhancement, product development and productive/delivery
capabilities, environment protection, promotion of innovation, upgrading human resources, export
marketing, (in collaboration with METCO) finance as well as generic support programmes. IPSE has
also launched a Business Resource Centre offering services to assist clients in their establishment of
business contacts and business research.
Another initiative was the establishment of the Small Business and Crafts Directorate within the
Commerce Division, Ministry for Economic Services, which provides services and support to local
small and micro enterprises and to the crafts sector. This Directorate provides a better focus on the
needs of small businesses and the self-employed, stimulates entrepreneurship and offers a 24 hour
Call Centre Service to act as a one stop shop for complaints, queries and information on the
provision of government services to the business community.
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.
Malta is participating in the European Union‟s CC BEST (Business Environment Simplification
Task Force) initiative for candidate countries. Malta also benefits from participation in
Mediterranean Partnership events and from other Union initiatives.
Malta based enterprises also participate in business co-operation events such as INTERPRISE and
Europartenariat. This participation is co-ordinated by the Malta External 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.




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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.

Access to Finance
SMEs face various obstacles as regards access to finance, in particular, the low availability of funds
for start-ups, the capacity of currently uncompetitive enterprises to restructure and the growth of
appropriate technology and innovation in small companies.
Within this context, the Small Enterprises (Loan Guarantee) Act (Cap. 397) was passed by
Parliament in 1997. 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 MDC. In particular,
small enterprises are assisted through 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 MDC 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. established in 1990 runs 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.
IPSE offers assistance for start-up operations through counselling and financial assistance, including
a generous Loan Guarantee Scheme that facilitates the enterprise‟s access to capital. The Business
Incubation Centre, also set up by IPSE, provides a complete range of business facilities including
premises at subsidised rent to start-up enterprises in a number of sectors. Other forms of assistance
deal with, inter alia, the information and communication technologies, mechanical and electrical
design, renewable energy sources and biotechnology.
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. A new Co-operatives Societies Act (Cap. 442) which was passed by
Parliament in December 2001 is in line with the acquis on Company Law.

Promotion of Tourism
The Malta Travel and Tourism Services Act of 1999 enabled the setting up of the Malta Tourism
Authority (MTA). The MTA Strategic Plan for the years 2000-2002 is a guiding document providing
strategies which have been translated into a set of key programmes operated by the Authority‟s
various directorates. The objective of this document is to develop a sustainable tourism industry




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which necessitates an ongoing process of direction, motivation, co-operation and consultation with
all the operators and stakeholders in the industry.
In January 2001, the National Statistics Office launched its monthly collective accommodation
survey styled ACCOMSTAT.
Subsidiary legislation on Package Travel (LN157/00) and on Timeshare Buyer Protection
(LN269/00), made under the Malta Travel and Tourism Services Act (Cap 409), have now come into
force, transposing Council Directive 90/314/EEC of 13 June 1990 on package travel, package
holidays and package tours, and Directive 94/47/EC of the European Parliament and the Council of
26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to
the purchase of the right to use immovable properties on a time-share basis.

B. Short Term Priorities
a) 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.

b) Ensure effective participation in the Multi-annual Programme for SMEs.

C. Institution Building Needs
The rationale and scope of the main entities which support SMEs i.e. MDC, IPSE and METCO are
under review in order to consolidate their activities and attain increased synergies and effectiveness.
The Ministry for Tourism is responsible for the establishment of the relevant policy framework
whilst the MTA advises 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




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D. Financial Requirements
                                                                                          Lm000
Area of Activity                                                   2001      2002         Total

Ministry for Tourism
                                   Recurrent                        10          10           20
                                   Capital                           -           -            -
                                   Training                          -           -            -
                                   Total                            10          10           20

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 4th Multiannual Programme for SMEs




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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.




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The draft bill of the new Employment Relations Act (ERA) and subsidiary legislation, which will
replace the current Conditions of Employment (Regulations) Act (CERA) and transposing labour
related acquis was published through a White Paper in December 2001
With respect to Directive 93/104/EC concerning the organisation of working time, Malta and the EU
agreed that the transitional period requested under Article 6 (2) of the Directive, is limited to a
number of sub-sectors, and will apply until 31 July 2004. The agreement also covers a request for an
additional transitional period to cover existing collective agreements in the sub-sectors, where these
agreements contain clauses relevant for Article 6(2) of the Directive with a validity beyond July
2004. The collective agreements, which would still be in force at the expiring date of the requested
transitional period, would remain in force until 31 December 2004.
The transitional period was requested to provide for additional time for the sub-sectors to replace the
status of overtime from a mandatory obligation, at the request of the employer, to a discretionary and
voluntary decision by the employee. The transitional period will enable the sub-sectors to sustain the
continuity of operations while adapting to the requirements of the acquis. It will also mitigate the
potential impact on the demand for skilled labour and on the flexibility of the existing production
systems.
Social Dialogue
The Malta Council for Economic and Social Development Act (Cap. 431) was enacted on 4 June
2001 and replaced the Malta Council for Economic Development (MCED) with the Malta Council
for Economic and Social Development (MCESD). The members of the Council were appointed on
24 August 2001 and the first meeting was held on 10 September 2001. The MCESD is entrusted
with the task of advising Government on issues relating to the sustainable economic and social
development of Malta.
A Committee for Civil Society was set up within the MCESD. This Committee includes
representatives from key national civil society organisations on a permanent basis. It is structured to
encompass all civil society organisations as and when necessary. The Committee acts as an advisory
body providing a forum for consultation and social dialogue between social partners and
organisations of civil society.
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). 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.




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Occupational Health and Safety
The Occupational Health and Safety Authority Act 2000 (Cap 424) was published in November
2000, with part III of the Act being brought into effect during the second quarter of 2001. This Part
deals with the establishment of a tripartite Authority, its functions and its conduct. The rest of the
Act will be brought into force on 29 January 2002 (L.N. 9/2002). This Act transposes a number of
provisions found in the Framework Directive, particularly with regards to the general principles of
prevention, the establishment of Workers‟ Representatives, and the general duties of employers.
A number of regulations issued under the preceding Act and / or under the Factories Ordinance of
1940, transpose a number of provisions found in diverse Directives; however all such regulations
will be re-issued under the Occupational Health and Safety Authority Act 2000 (OHS Authority
Act), amended as necessary.
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:
   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 LN 211/2000 came into force on 1 July 2000 whilst the
Protection of Maternity at Workplaces Regulations LN 92/2000 entered into force on 1 January
2001.
Moreover, the Minimum Health and Safety Requirements for the Workplace Regulations
(LN64/2000) transposing Directive 89/654/EEC were enacted on 11 April 2000.
Workplace (Confined Spaces) Regulations, Protection from Carcinogens Regulations have been
drafted and forwarded to the Occupational Health and Safety Authority (OHSA).




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The General Health and Safety Provisions at Workplaces Regulations have been drafted and are
currently being vetted. These regulations will transpose the provisions of Directive 91/383/EEC
which are not covered by the OHS Authority Act. The regulations should ensure the effective and
meaningful participation by workers in their health and safety at work.
In its negotiations, Malta requested three transitional periods in the Occupational Health and Safety
field. The first request was a transitional period until the beginning of 2006 to apply the Use of Work
Equipment Directive 89/655/EEC to allow local industry sufficient time to phase in any investment
needed to upgrade any equipment that is not in line with EU safety standards. In addition, the
transition period would allow time for the necessary training that is required both within individual
companies as well as within the national authorities that will be enforcing this law. Malta also
requested a transitional period in the Noise at Work Directive 86/188/EEC until the beginning of
2004 to allow sufficient time for adjustment both within individual companies as well as for the
government agency that will be enforcing these standards. Malta‟s third request was a transitional
period until the beginning of 2004 to apply the Temporary and Mobile Construction Sites Directives
92/57/EEC. However, the provisions concerning the responsibility of the employer to carry out risk
assessments, to train employees and to give all the necessary information will be in place by 2003.
All three requests were granted during negotiations.
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 Council Directive 83/477/EEC.
A twinning project for the allocation of pre-accession funds to support the effective implementation
of Occupational Health and Safety legislation has been approved by the Commission and discussions
started in October 2001. The Authority has selected the Twinning proposal submitted by the United
Kingdom/Ireland. The Covenant has been finalised and was forwarded to the Commission Steering
Committee through the EC Delegation in Malta on 8 December 2001. The project was approved by
the Commission, and will start on the 29 January 2002. The main objectives of the project concern
institution building, including training of the OHSA Officers, and purchase of IT and monitoring
equipment, and training and information activities for the social partners related to occupational
health and safety.

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 public service, a number of measures have been introduced which are intended to facilitate the
reconciliation of work and family responsibilities.




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The draft of the Gender Equality Act was completed in February 2001 and is currently being vetted.
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 the first quarter of 2002 before the draft Bill is presented to
Parliament. The Act will be adopted and will enter into force by the fourth quarter of 2002.
The New Gender Equality Act will prohibit any form of direct or indirect discrimination based on
gender. Furthermore, it will provide for necessary measures to ensure that it shall be for the
respondent to prove before the competent authority that there had been no breach of the principle 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 gender in the conditions of work, including the selection criteria and 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 gender 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.
Amendments to the Criminal Code (Cap. 9) were published first as a White Paper in November
2000, and then as a Bill in June 2001. The amendments will be adopted in the first quarter of 2002.
These amendments will enhance the provisions dealing with the fight against racism and xenophobia
and will also provide for the Joint Action of 15 July 1996 concerning action to combat racism and
xenophobia. Racial hatred, which is defined as anything that is planned to stir up hatred against
persons on the basis of race, nationality or ethnic origin, will be considered a criminal offence. This
offence carries a maximum penalty of eighteen months imprisonment. The proposed amendments
will also confer new rights on victims of crime, including the right to attend all sittings of criminal
proceedings against the accused, and the right to legal assistance in the Law Courts.
Malta is willing to participate in the activities of the European Monitoring Centre on Racism and
Xenophobia.




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Employment
The ETC does not discriminate on grounds of gender, age or disability. 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 ETC as well other pertinent organisations in this area, including the
IPSE, 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
   Council Resolution of 29 May 1970 on action to assist the long term unemployed.
The ETC is drafting a National Human Resources Development Policy. ETC is also drafting an
Action Plan for Gender Equality in Employment and Training. The latter will propose various
active labour market measures and will promote the elimination of all instances of gender
discrimination in employment.
Moreover, ETC completed the final version of the Labour Market Background Study Report and has
forwarded it to the Commission. ETC, together with the Commission, completed the Joint
Assessment of the Employment Policy Priorities which was signed by the Minister for Social Policy
and the Commissioner for Social Affairs and Employment on 26 October 2001. 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. 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
has appointed three officers to function as Euroadvisors. Training will be provided for these officers.
ETC is already displaying job vacancies on the Internet.

European Social Fund
A special preparatory committee has been set up within the Ministry for Social Policy to deal with
matters related to the European Social Fund (ESF). This committee, chaired by the Permanent
Secretary of the Ministry, is composed of officials from various Ministries as well as officials from
ETC and a representative of the Staff Development Organisation of the Office of the Prime Minister.
This committee has been given the mandate to design the required administrative framework for the




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ESF and to ensure capacity building for its eventual programming and implementation. It will also
be responsible for raising awareness of the opportunities and procedures related to ESF support. The
Office of Review within the Ministry for Social Policy will be responsible for the management of
the ESF. The Director of the Office of Review, appointed on 18 April 2001, is assisted by an EU
Co-ordinator. A European Social Fund Manager will be recruited by the first quarter of 2002. Two
additional officers will be recruited by accession.

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
in 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.
The educational system in Malta aims at providing inclusive education at all levels to persons with
disabilities and persons who are socially disadvantaged.
The Equal Opportunities Unit has developed a Complaints Form 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 new Tobacco Smoking Control Act is
expected to be adopted by the first quarter of 2002. 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 working group has been set up to draft a




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National Sexual Health Policy for Malta. A clinic for the treatment of sexually transmitted infections
has been set up.
The Disease Surveillance Branch is responsible for epidemiological surveillance and control of
communicable diseases. Maltese health authorities have participated in various international
conferences and training sessions in Member States, on public health. The subjects included disease
surveillance methods and involvement with EU communicable networks. Public Officials also
participated in the European Programme for Intervention Epidemiology, to strengthen the
surveillance capacity of infectious diseases in EU Member States and at community level. Malta is
participating in current programmes to combat drug dependence, AIDS and other communicable
diseases. Malta currently enjoys observer status in the Committee Meetings of the Network for the
Epidemiological Surveillance and Control of Communicable Diseases.
The Department of Health Promotion is implementing programmes on health promotion,
information, education and training and how to combat cancer. It has also concluded a Health
Appraisal exercise in collaboration with WHO. Implementation of this exercise will lead to greater
intersectoral working for health and introduce the concept of health impact assessment in Malta.
The Department of Health Information also has a number of national programmes on health
monitoring, which have been developed in recent years. Malta has requested to participate in Health
Monitoring Programmes in 2002, in particular to establish EU health indicators, select relevant
information and data for exchange, and establish systems for implementation.
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.
The Department of Health Information also participates as third party in the EuroHIS project as a
result of a special agreement entered into between the EU and the World Health Organisation. The
World Health Organisation provides support to Malta through the medium-term programme. As
part of the EuroHIS project, Malta is conducting the first National Interview Survey. Field work in
this regard began in the fourth quarter of 2001.

B. Short Term Priorities

Labour Law
a) Directive 91/383 (fixed duration employment) will be adopted and will enter into force during
   the first quarter of 2002.
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 enter into force during 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)




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       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 (Cap. 135) will also transpose
   Directive 93/104 (Working Time). These amendments, together with those to the Industrial
   Relations Act (Cap. 266) will enter into force during 2002, except where a transitional period
   has been granted.
d) 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 following Regulations will enter into force by the first quarter of 2002:
        Occupational Health and Safety Appeals Board (Procedural) Regulations;
        Work Place (First Aid) Regulations, transposing part of the Framework Directive
         83/391/EEC;
        Work Place (Minimum Health and Safety Requirements) Regulations, transposing Council
         Directive 89/654/EEC). These regulations will come into effect on the date of publication for
         workplaces used for the first time after the date of publication, and on 1 January 2003 for
         other workplaces already in use;
        Work Place (Provision of Health and / or Safety Signs) Regulations, transposing Directive
         92/58/EEC);
        Minimum Health and Safety Requirements for Work with Display Screen Equipment,
         transposing Directive 90/270/EEC);
        Protection of Maternity at Work Places Regulations, 2002, transposing Directive 92/85/EEC;
        General Provisions for Health and Safety at Work Places Regulations, transposing the
         Framework Directive 83/391/EEC;
        Protection of Young Persons at Work Places Regulations, transposing Directive
         94/33/EEC.

b) The following Directives will be transposed under the Occupational Health and Safety Authority
   Act (CAP 424) in accordance with the agreements reached in their regard during accession
   negotiations:
        Council Directive 89/655/EEC on work equipment
        Council Directive 86/188/EEC on exposure to noise
        Council Directive 92/57/EEC on temporary or mobile construction sites.




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c) The Protection of Young Persons at Workplaces Regulations, 2002, will come into force during
   the second quarter of 2002 transposing Directive 94/33/EEC.
d) The Minimum Health and Safety at Workplaces Regulations will come into force on the date of
    publication for workplaces used for the first time and on 1 January 2003 in the case of existing
    workplaces.
e) The following subsidiary legislation adopting the following Directives will be issued during the
   second quarter of 2002 and will enter into force in the fourth quarter of 2002:
     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




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       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.

f) The legislation concerning manual handling of loads (Directive 90/269) will enter into force
   by the fourth quarter of 2002.

Equality of Treatment
a) The Gender Equality Act which will transpose the acquis on Equality of Treatment between
   Men and Women, namely, Directive 76/207/EC (Equal Treatment Regarding Access to
   Employment) and Directive 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 the fourth
   quarter of 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
C. The enactment 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.)
Racism
a) Enact amendments to the Criminal Code (Cap. 9) that would render an act of racial
   discrimination a criminal offence.

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 first quarter of 2002.
b) The amendments to the Tobacco (Smoking Control) Act will enter into force by the fourth
   quarter of 2002.
c) Malta will start participating in the new Public Health Programme that was adopted in December
   2001 as soon as it is launched.




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d) The Health Interview Survey will be finalised by the third quarter of 2002.

C. Institution Building Needs
The required institutional framework concerning labour law is essentially in place. The Department
of Industrial and Employment Relations has an Inspectorate and Enforcement Section as well as an
Industrial Tribunal. The administrative capacity of this Department is being strengthened. A number
of Employment Relations Officers have been engaged in the Inspectorate and Enforcement Section.
Interviews were also held for the engagement of a number of Economics Officers to monitor
developments in the acquis and assist in their adoption.
The Occupational Health and Safety Authority will recruit and train professional and technical
personnel during 2002.
A European Social Fund Manager will be recruited by the first quarter of 2002. Two additional
officers will be recruited by accession.
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. Health care
professionals were trained on EU guidelines on HIV pre-test counselling in a three day seminar
which was held at the end of 2001. The Disease Surveillance Branch within the Department of
Public Health is in the process of employing additional Medical Officers to strengthen the Disease
Surveillance function. A call for applications was issued in the fourth quarter of 2001. There were
two applicants but the posts remained unfilled. Another call for applications will be issued during
2002.


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                            -             -            -




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                                 Total         5            4            9



D. 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     -           -            -
                                 Capital       -           -            -
                                 Training     10          10           20
                                 Total        10          10           20

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




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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. Malta‟s Special Preparatory Programme (SPP) on institutional
        building aimed at reinforcing the administrative capacity of the public sector to manage the
        structural and cohesion funds will start implementation in February 2002. The programme is being
        implemented through a twinning arrangement with Spain and is being co-financed by Malta‟s pre-
        accession funds (Pre-accession programme 2001).

        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 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.




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At a political level, the Cabinet Committee on Economic Development will set strategic priorities
and ensure overall policy co-ordination.
A Regional Policy Directorate within the Office of the Prime Minister was set up in 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 Directorate
currently consists of 6 officials and 3 support staff. An additional three officers are expected to join
in February 2002 (interviews were held on 14 December 2002 and 4 January 2002. All officials are
university graduates – the majority holding also a masters degree in European studies, business
management or economics. A call for application has also been issued for an assistant director. The
Directorate will continue recruiting staff on an annual basis in 2002 and 2003 and should reach a full
complement of 18 officials by accession. The Regional Policy Directorate is supported by the Inter-
Ministerial Committee on Regional Policy (IMC). 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 Malta‟s Single Programming Document (SPD).
The Regional Policy Directorate has been designated as the Managing Authority in terms of article
9 (n) of EC Regulation 1260/99. The Directorate will also manage directly the European Regional
Development Fund (ERDF) and ensure co-ordination of projects financed under the cohesion fund.
The Economic Policy Division of the Ministry for Economic Services in consultation with the
Ministry of Finance and the Regional Policy Directorate is responsible for the drafting of the plan
required in terms of Regulation (EC) 1260/99. The plan will address Malta‟s development from
2003 – 2006 and it 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 second quarter of 2002
The Regional Policy Directorate will select the elements of the Plan identified by Government for
structural /cohesion funds co-financing and will be responsible for the drafting of Malta‟s Single
Programming Document (SPD). Work on Malta‟s SPD is expected to start in the third quarter of
2002. Technical assistance is foreseen under Malta‟s SPP.
The Ministry for Social Policy will be responsible for the day-to-day management of the European
Social Fund (ESF).
The Ministry for Agriculture and Fisheries will be responsible for the day-to-day management of 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 Regional Policy Directorate will be the focal point for INTERREG initiatives.
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.




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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 and Social Development (MCESD)
The Social and Economic Partners and the relevant NGOs have been invited to take part in the
sectoral working groups working on the development plan. The draft plan will be submitted to
MCESD for consultation prior to being finalised.
Evaluation
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.
The Economic Policy within the Ministry for Economic Services is responsible for the ex-ante
evaluation of the National Development Plan. An analysis of the strengths, weaknesses and
potential, at micro and macro level, will be integrated into the programming process in order to
provide the rationale for the strategy of the National Development Plan (NDP). The SWOT
workshop with respect to the NDP will take place in February 2002.
The Ministry for the Environment and the Ministry for Social Policy will provide the ex-ante
evaluation of the situations on environment and equal opportunities respectively (as per article 41
(b) and (c) of EC Regulation 1260/99. The Regional Policy Directorate will ensure that results are
integrated into the programming process.
The Regional Policy Directorate will be the Commission‟s counterpart for ex-post evaluation
purposes in terms of article 43 of EC Regulation 1260/99. While the Regional Policy Directorate




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intends to build a basic in-house capacity for designing and monitoring evaluation, ex-post
evaluation programmes and projects, will, in general, be contracted to independent assessors.
Two training programmes on evaluation of socio-economic programmes are lined up for January and
February 2002. These are being co-financed by EU funds and will be facilitated by the Centre
d‟Evaluation Europeen of Lyon. In addition the SPP also includes a training component on
evaluation issues.
Monitoring and Reporting
Progressive implementation reports are submitted in the case of multiannual 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 (IMC) on Regional Policy and the Regional Policy Directorate. The Regional
Policy Directorate acts as a secretariat to the IMC and will be responsible for the finalisation of the
necessary reports in line with Regulation (EC) 1260/99. Technical monitoring and reporting will
(internally) 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.

Financial Control and Budgetary Provisions
The Ministry of Finance will act as the Paying Authority in terms of article 9 (o) of EC
Regulation 1260/99.

Chapter IX of the Constitution, 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 constitute
the principal legislation governing financial control in Malta. A new Public Finance Management
Act will be adopted by Parliament at the end of the second quarter of 2002. This new Act will
provide for an accrual-based public accounting methodology and multi-annual budgeting, amongst
others.
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-annual 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.




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External financial control is exercised by the National Audit Office (NAO) whose independence
from Government is entrenched in the Constitution. 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. Since 2001 a Code of Ethics guides NAO personnel with
the purpose of protecting the integrity of their public office. At the end of 2001 an external audit
manual was also completed and is to be used by audit examiners for guidance in their audit work.
The regularity, value-for-money and investigating sections have been set up separately from each
other within the office.
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 and Investigations
Directorate (IAID) within the Office of the Prime Minister. This Directorate has been set up to
function, inter alia, as a domestic interlocutor with DG Audit and DG OLAF. The IAID is
strengthening and expanding its human resource capabilities. Legislation will be adopted by the
second quarter of 2002 to implement EC Regulations 2988/95 and 2185/96Issues 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. The Regulations have been amended in line
with 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.
The new Gender Equality Act will be adopted by Parliament by the first quarter of 2002 and will
enter into force by the fourth quarter of 2002.
The new Environment Impact Assessment Regulations transposing Directive 85/337/EEC are now in
force.

B. Short Term Priorities
a) Agree with the Commission on Malta‟s territorial organisation.




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b) Finalise and adopt the legislation on financial control (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) Finalise and adopt the new Public Finance Management Act.
d) Full compliance with the acquis on Public Procurement.
e) Adoption and entry into force of legislation transposing the acquis on issues pertaining to equal
   opportunities.
f) Implementation of the Special Preparatory Programme (twinning project with Spain). The SPP‟s
   main objective is to strengthen Malta‟s administrative capacity for implementation of the
   structural funds. The SPP also includes technical assistance in the areas of programming,
   monitoring, evaluation and reporting.
g) Finalisation of the National Development Plan and the start of the drafting of the SPD.
h) Implementation of the Extended Decentralised Implementation System (EDIS) for pre-accession
   fund programmes. This is expected to include and environment infrastructural project – pre-
   accession programme 2003 (similar to the ISPA projects submitted by the PHARE countries) in
   order to test the systems that have been set up.
i)   Updating of internal audit manual in line with EU standards and guidelines.
j)   Strengthening of the internal audit function within Line Ministries.
k) The finalisation (agreement with the Commission) of Malta‟s Transport Infrastructure Needs
   Assessment (TINA)
l)   Malta will submit its programme of economic convergence in line with Regulation (EC)
     1264/99 (Cohesion Fund)
m) The preparation of a project pipe-line. This includes the commissioning of feasibility studies and
   environment impact assessments for the projects identified under the TINA studies (pre-
   accession programmes 2002 and 2003)
n) More active involvement in Interreg projects. The Regional Policy Directorate is currently
   following very closely Interreg initiatives being prepared by its neighbouring countries and is
   participating in co-ordination meetings. Discussions will start with the Commission in order to
   find appropriate funding for Malta‟s participation.

C. 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.




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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

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
                                 Other       -           1            1
                                 Total       -           3            3




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

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




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                                  Training   -          3            3
                                  Total      -         23           23

* including pre-accession funds




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3.6     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 nature protection, waste management, industrial pollution control and risk management,
        air quality and water quality is provided through the enactment of the Environment Protection Act,
        2001 (Cap. 435) which was published and entered into force on 18 September 2001. The Act also
        provides 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). This is discussed further under Section 3.4.4 (Energy).
        The legislation regulating the environment in Malta includes the Development Planning Act (Cap.
        356), the Occupational Health and Safety Authority Act (Cap. 424) (discussed under section 3.5.1.:
        Social Policy and Employment) and the Product Safety Act (Cap. 427) (discussed under section
        3.1.1.: Free Movement of Goods. Furthermore the Veterinary Services Act (Cap. 437) which was
        adopted on 6 November 2001, will enter into force in the first quarter of 2002. The Animal Welfare
        Act (Cap. 439) was adopted on 5 December 2001 and will enter into force in the first quarter of
        2002. A new Public Health Act will be adopted by the second quarter of 2002.
        Horizontal
        The present Environment Protection Act, 2001 (Cap.435), 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 with significant impact on the environment. The Environment Impact Assessment
        Regulations (LN 204/01) have been adopted and entered into force on 11 September 2001 under the
        Development Planning Act (Cap. 356), (except for Sections 35-42, which will enter into force by the
        fourth quarter of 2002).
        Subsidiary legislation (LN217/01) under the new Environment Protection Act, 2001 (Cap. 435) to
        fully transpose Directive 90/313/EEC (freedom of access to the environment) was adopted in
        September 2001.
        Moreover, the Development Planning Act also requires that application reports, development
        permits, environmental statements and planning-related documents be 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




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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 exception of the
Protocol concerning the Control of Emissions of Nitrogen Oxides or their Transboundary fluxes
(Protocol to the 1979 LRTAP Convention). Malta will become a party to this Protocol upon
accession as a member state of the EU.
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.
Malta has ratified the Basle Convention on the Transboundary Movement of Hazardous Waste and
other wastes in June 2000. The obligations arising under this Convention are transposed by the
Environment Protection (Control of Transboundary Movement of Toxic and other Substances)
Regulations, 2000 (LN205/00).
The Convention on International Trade in Endangered Species of Wild Animals is transposed
through Legal Notice 19/92 and its amendments. Malta has a very good track record in the
application of this Convention and the only outstanding issue concerns the control of species (or
derivatives thereof) in transit. Another administrative requirement will be the adoption of the
Community documentation.
The Bern Convention on the Conservation of European Wildlife and Natural Habitats is
implemented by the Filfla Natural Reserve Act (Cap. 323), the Development Planning Act (Cap.
356) and by regulations issued under the Environment Protection Act, 1991 (Cap. 348) including
LN144/93, LN150/93, LN215/97, LN106/98 and LN 1/2002 in connection with the protection of
Birds and Wild Rabbits; LN76/92 in relation to the protection of reptiles, LN77/92 as amended, in
connection with the protection of marine mammals, LN 49/93 and its amendments in connection
with other flora and fauna, the Fungus Rock Nature Reserve Regulations (LN 22/92) and the
Selmunett Islands Nature Reserve Regulations (LN 25/93). Other legislation includes the Hunting
Licences Regulations (LN 145/93), the Rubble Walls and Rural Structures (Conservation and
Maintenance) Regulations (LN160/97), the Motor Vehicles (Offroading) Regulations (LN196/97),
and the Flora and Fauna Protection Regulations, 1993 (LN 49/1993) as amended.
Malta, however has 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. The reservations relate to the trapping of a number of birds in
autumn, while the exceptions also relate to trapping of birds in spring and the harvesting of some
marine species. The latter reservation will not be availed of as soon as regulations for the harvesting
of marine species are published. The Bern Convention also requires the protection of habitat types
for species listed in the appendices. The Planning Authority protects several saline marshlands,
coastal wetlands, coastal cliffs, valleys, sand dunes, clay slopes, rocky shores, garigue areas,
woodland areas and trees through the scheduling process.
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




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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 in the
process of being regulated.
Malta is a party to the Protocol concerning Specially Protected Areas and Biological Diversity in the
Mediterranean of the Barcelona Convention. This was also implemented under various
aforementioned regulations issued under the Environment Protection Act, 1991(Cap. 348). The new
Environment Protection Act, 2001 (Cap. 435) gives the Minister for the Environment the power to
designate marine protected areas The Structure Plan for the Maltese Islands includes thirteen policies
for the establishment and management of marine conservation areas. It also identified fourteen
candidate marine conservation areas: five of these have already been surveyed.
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.
Pending issues that need to be addressed primarily relate to products that are currently used in
agriculture and for which substitutes need to be found.
Malta ratified the Kyoto Protocol on 9 November 2001.
Malta became a member of the European Environment Agency in October 2000. Parliament effected
the necessary ratification by resolution of 14 February 2001. Malta is already participating in the
meetings of the European Environment Agency Management Board.
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
Before the enactment of the new Environment Protection Act, 2001 (Cap. 435), main legislation in
this area was the Clean Air Act (Cap. 200) and its subsidiary legislation: the Dark Smoke (Permitted
Periods) Regulations (LN28/69) and the Dark Smoke Permitted Periods (Vessels) Regulations
(LN30/69), regulating the emissions of dark smoke. Other provisions with respect to emissions of
noxious vapours are found in the Code of Police Laws (Cap. 10).
The new Environment Protection Act, 2001 (Cap.435) enables the adoption of all regulations on air
quality under the acquis. The following legal notices were published on 18 September 2001:
Control of Volatile Organic Compound Emissions (Storage and Distribution of Petrol from
   Terminals to Service Stations) Regulations, 2001 (LN 214/01)
Air Pollution by Ozone Regulations, 2001 (LN 215/01)
Ambient Air Quality Assessment and Management Regulations, 2001 (LN 216/01)
Quality of Petrol and Diesel Fuels Regulations, 2001 (LN 222/01)
Limit Values for Nitrogen Dioxide, Sulphur Dioxide and Oxides of Nitrogen, Particulate Matter and
   Lead in Ambient Air Regulations, 2001 (LN 224/01)
Measures against the Emission of Gaseous and Particulate Pollutants from Internal Combustion
   Engines (Non-Road Mobile Machinery), 2001 (LN 229/01).




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The National Air Monitoring Programme was upgraded through the acquisition of appropriate
monitoring and sampling equipment. Monitoring for Air Quality parameters is currently conducted
as follows:
Continuous monitoring using a mobile unit equipped with analysers for carbon monoxide, nitrogen
   oxides, sulphur dioxide, particulate matter (PM10) and ozone.
Passive diffusion tubes in over 30 localities in Malta and Gozo for monitoring levels of benzene,
    toluene, xylene, ethyl benzene, sulphur dioxide, nitrogen dioxide and ozone.
Monitoring for lead in air will commence by the end of first quarter 2002.
Tenders have also been issued for the procurement of passive diffusion tubes and for the
procurement of other auto-analytical equipment.
 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 and
other pollutant gases is currently conducted in various localities.
A tender was issued by the Environment Protection Department for an auto-analytical nitrogen
dioxide monitor and other auto analytical instrumentation. The department has commissioned a
consultant to carry out a preliminary assessment of data and recommend procedures for additional
monitoring.
A transitional period has been requested with respect to the control of Volatile Organic Compounds
(VOCs) emissions resulting from the storage of petrol and its distribution from terminals to service
stations (Directive 94/63/EC).
Water Quality
A Sewerage Master Plan has been prepared with the purpose of identifying and implementing the
necessary infrastructure to bring the collection, treatment and disposal of waste water in line with
EU Directives. Pre-accession assistance is being sought to implement the necessary infrastructural
projects.
The Sewer Discharge Control Regulations (LN8/93) establish a permit system for the discharge of
waste waters into the sewerage system on the basis of limit values which are the same as (or more
stringent than) those established under Lists I and II of EU Directive 76/464/EEC (on pollution
caused by certain dangerous substances discharged into the aquatic environment).
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 Directives 86/280/EEC, 88/464/EEC, and
90/415/EEC. Discharges from industry are currently released into the main sewer and are therefore
regulated by LN8/93. The Environment Protection Act, 2001 (Cap. 435) enables the adoption of
Regulations that embrace the provisions of the Directive 76/464/EC and its daughter Directives. The
following legislation was published on 18 September 2001:

Pollution Caused by Certain Dangerous Substances Discharged into the Aquatic Environment
    Regulations, 2001 (LN 213/01)




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Limit Values and Quality Objectives for Hexachlorocyclohexane Discharges Regulations, 2001
   (LN 218/01)
Limit Values and Quality Objectives for Mercury Discharges by Sectors other than the Chlor-
   Alkali Electrolysis Industry Regulations, 2001 (LN 219/01)
Limit Values and Quality Objectives for Mercury Discharges by the Chlor-Alkali Electrolysis
   Industry, 2001 (LN 220/01)
Limit Values and Quality Objectives for Cadmium Discharges Regulations, 2001 (LN 221/01)
Limit Values and Quality Objectives for Discharges of Certain Dangerous substances into the
   Aquatic Environment Regulations. 2001 (LN 227/01).

Subsidiary legislation transposing Directive 91/271/EC (urban wastewater) was published in
December 2001 as the Urban Waste Water Treatment Regulations, 2001 (LN 340/01).
The Protection of Waters against Pollution caused by Nitrates from Agricultural Sources
Regulations, 2001 (LN 343/01) transposing Directive 91/676/EEC (protection of waters against
pollution caused by nitrates from agricultural sources) were adopted in December 2001.

The Malta Resources Authority Act (Cap. 423) provides for the regulation of the proper disposal of
waste water. It 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, ensures for the provisions of
adequate systems of public sewerage, the re-use of treated effluent and the proper and fit disposal of
sewerage.
Subsidiary legislation transposing Directive 76/160/EEC (on the quality of bathing water) is
currently being drafted. The Department of Public Health, however, already 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. A total of 36 different sites are currently being monitored within the latter water
quality programme.
The Food, Drugs and Drinking Water Act (Cap. 231) ensures that water intended for human
consumption is potable and that water supplies intended for human consumption are protected. The
Department of Health regulates all provisions relating to drinking water intended for human
consumption (Directive 98/83/EEC). Subsidiary legislation under the new Public Health Act
transposing this Directive will, except for the requests for a transitional period made, be adopted by
the second quarter of 2002 and will enter into force by the fourth quarter of 2002.
The Public Health Department has been monitoring drinking water on a regular basis for at least ten
years. This involves sampling of public taps in all 64 localities. The Department tests drinking water
for sodium, chlorides, salinity, fluorides, nitrates as well as the main microbiological parameters as
indicated in the Directive. The Environmental Health Branch maintains a database of water quality
data and the information is available on request.
The Water Services Corporation also conducts check and audit monitoring at consumers‟ taps for
micro-biological, chemical and indicator parameters according to Directive 98/83/EC. Results are
published in the Corporation‟s Annual Report. Additional tests are carried out at service reservoirs
and groundwater and desalination sources.




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Directive 75/440/EEC (on surface water intended for abstraction for drinking purposes) was
transposed through The Quality required of Surface Water intended for the Abstraction of Drinking
Water Regulations, 2001 (LN339/01) in December 2001.
Directive 78/659/EEC (on the quality of fresh waters needing protection to support fish life) was
transposed through The Quality of Fresh Waters supporting Fish Life (Protection and Improvement)
Regulations, 2001 (LN 342/01) in December 2001.

Industrial Pollution Control and Risk Management Legislation
The following subsidiary legislation under the Environment Protection Act, 2001 (Cap. 435) was
published in September 2001:
Combating of Air Pollution from Industrial Plants Regulations, 2001 (LN 211/01)
Limitation of Emissions of Volatile Organic Compounds Regulations, 2001 (LN 225/01)
Pollution prevention and control is regulated under the Code of Police Laws (Cap. 10) through a
licensing system. The Department of Health under the Medical and Kindred Professions Ordinance
(Cap. 31) issues licences for pharmacies and clinics while the Drainage Department by virtue of the
Sewer Discharge Control Regulations (LN8/93) issues discharge permits to industrial concerns.
The IPPC Committee was set up in September 2001. It is chaired by the Director of the Environment
Protection Department and includes representatives of the following entities: the Planning Authority,
the Drainage Department, the Malta Resources Authority, the Health Division, the Department of
Veterinary Services, the Commissioner of Police and the Works Division.
Provisions under the IPPC Directive relating to land-use, development control and environmental
impact assessments are catered for in the Development Planning Act (Cap. 356).
Subsidiary legislation under the Environment Protection Act, 2001 (Cap. 435) transposing Directive
96/61/EEC (integrated pollution prevention and control) will be adopted by the second quarter of
2002.
Implementation of Directive 96/82/EEC (control of major accident hazards) requires the relocation
of the present gas bottling plant. The relocation of the Gas Bottling Plant from its current location at
Qajjenza to Benghisa (behind the Freeport Terminals) will be accelerated and completed by 1
January 2004. It is now the set objective of Enemalta Corporation to conclude its technical
assessments and design of the new plant in the shortest possible time, and to proceed with its permit
application with the Planning Authority. Subsidiary legislation will be adopted under the
Occupational Health and Safety Authority Act (Cap. 424) by the first quarter of 2002 to transpose
this Directive. The Occupational Health and Safety Authority (OHSA) will be the regulatory
authority in conjunction with the Civil Protection Department and the Environmental Protection
Agency. OHSA (on behalf of and together with other agencies) will receive notifications, assess
policies, and review submitted reports by operators. It will be responsible for inspection and
exchange of information with the Commission. The Civil Protection Department will be primarily
responsible for issues relating to Emergency Plans.
The Malta Standards Authority Act (Cap. 419) already provides the necessary legal framework of
the eventual operation of the schemes envisaged under Council Regulation 1836/93EEC (Eco-




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Management and Audit Scheme: EMAS). The ISO14001: 1991 Standard on environmental
management systems has already been adopted as a Maltese National Standard by the MSA.
The accreditation directorate within the Malta Standards Authority based on the principles laid down
in the EN45000 standards was established in January 2002.
Legislation controlling emissions from large industrial plants under the Environment Protection Act,
2001 (Cap. 435) transposing Directive 88/609/EEC will be adopted by the second quarter of 2002. A
transitional period of three years is being requested for the implementation of this Directive.
Chemicals and Genetically Modified Organisms
The Prevention and Reduction of Environmental Pollution by Asbestos Regulations (LN228/01)
transposing Directive 87/217/EEC (prevention and reduction of environmental pollution by
asbestos) were adopted under the Environment Protection Act, 2001 (Cap. 435) in September 2001.
The Dangerous Substances (Notifications) Regulations, 2001 (LN318/01) were issued in December
2001 under the Product Safety Act (Cap. 427). These Regulations transpose Directive 67/548/EEC
(classification, packaging and labelling of dangerous substances), and amending Directives:
84/449/EEC (technical progress on Directive 67/548/EC), Directive 93/67/EEC (assessment of
risks), Directive 93/72/EEC (technical progress) on Directive 67/548/EC), Directive 93/90/EEC (list
of substances referred to in Article 13(1) (5th indent) and Directive 85/71/EEC (list of chemical
substances).
Malta requested to use 2001 as the baseline year for the calculation of the reduction levels of
hydrochloroflourocarbons to implement Regulation (EC) 2037/00 (ozone depleting substances). The
Vienna Convention on the Protection of the Ozone Layer and the Montreal Protocol on Substances
Depleting the Ozone Layer Regulations, 2001 (LN 226/01) were issued in September 2001 under the
Environment Protection Act, 2001 (Cap. 435) to incorporate the provisions of the Vienna
Convention on the Protection of the Ozone Layer and the Montreal Protocol on Substances
Depleting the Ozone Layer into Maltese law.
The Market Surveillance Directorate (supported by various technical committees from the Malta
Standards Authority) within the Ministry for Economic Services will be responsible to implement
the acquis regarding dangerous chemicals. The Directorate will co-ordinate the activities of other
surveillance authorities concerned with product control and will carry out, on a regular basis, a
technical and administrative audit. It is envisaged that the Directorate will reach full capacity by the
third quarter of 2002.
The Chemicals Co-ordinating Centre within the Foodstuffs, Chemicals and Cosmetics Directorate of
the Malta Standards Authority will act as a notification point to the authorities for the placing on the
market of certain dangerous substances and preparations. It will establish a notification and warning
system between the various enforcement agencies and will establish a national database of chemical
products transiting through, produced or entering Malta. On accession, the unit will cater for Malta‟s
responsibilities to notify the European Commission and member states about such chemicals. It will
control the placing of chemicals entering via Malta on the Community market and it will be
responsible for networking with European information exchange systems.
The Chemicals Co-ordinating Centre will co-operate with the competent authority responsible for
the environment, the Department of Health within the Ministry of Health, the Department of




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Agriculture within the Ministry for Agriculture and Fisheries, the Department of Police within the
Ministry for Home Affairs, the Consumer and Competition Division within the Ministry for
Economic Services and the Occupational Health and Safety Authority. The technical committee on
chemicals will be set up to advise the Foodstuffs, Chemicals and Cosmetics Directorate within the
Malta Standards Authority.
The national accreditation body of the Malta Standards Authority will be responsible for the
provisions on good laboratory practice.
GMOs
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. However, there exists almost
no specific local legislation on the subject.
In January 2001 a report compiled by scientific consultants was finalised in order to help the
competent authority in the formulation of its policies in this area.
Waste Management
Subsidiary legislation under the Environment Protection Act, 2001 (Cap. 435) was published in
September 2001:
The Sludge (Use in agriculture) Regulations, 2001 (LN 212/01) transpose the provisions of Directive
   86/278/EEC (on the protection of the environment when sewage sludge is used in agriculture).
The Waste from Titanium Dioxide Regulations, 2001 (LN 223/01) transpose the provisions of
   Directive 78/179/EEC (on waste from the titanium dioxide industry), Directive 82/883/EEC (on
   surveillance and monitoring of environments concerned by waste from the titanium dioxide
   industry) and Directive 92/112/EC (on harmonising the programmes for the reduction and
   eventual elimination of pollution).
Subsidiary legislation under the Environment Protection Act, 2001 (Cap. 435) was published in
December 2001:
The Waste Management (Incineration) Regulations, 2001 (LN 336/01) transpose the provisions of
   Directive 2000/76/EC (on the incineration of waste).
The Waste Management (Permit and Control) Regulations, 2001 (LN 337/01) transpose the
   provisions of Directive 75/442/EEC (on waste), Directive 91/689/EEC (on hazardous waste) and
   Commission Decision 2000/532/EC (establishing a list of wastes and subsequent amendments).

The Ministry for the Environment published a draft Integrated Solid Waste Management Strategy in
July 2001 for public consultation. The Government approved the final document in October 2001.
An Integrated National Implementation Plan for waste management will be prepared by the first
quarter of 2002. On the basis of the Integrated Solid Waste Management Strategy Plan, a cost
approximation exercise on the adoption of the EU environment acquis has been commissioned
giving priority to the cost of establishing a waste management implementation plan.




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Municipal Solid waste is collected on a daily basis. Most of this category of waste is disposed of by
open landfilling, with the rest being mechanically separated and composted. There is a nominal fee
for the deposit of waste at the landfill. There is a voluntary system for dry battery collection.
Initiatives coming mainly from the private sector for activities for the recycling of scrap iron,
aluminium, plastic, paper and cardboard and glass are encouraged. 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 are being consolidated and enhanced.
Appropriate policy instruments which are now included in the Waste Strategy Document will be
implemented in order to encourage waste minimisation, reuse and where possible, recycling
(including composting).
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 in future resort to non-burn
technologies as an alternative to current practices. A tender for the purchase of non-burn technology
for the management of waste at St. Luke‟s Hospital is in the final stages of adjudication. A Waste
Manager has been recruited.

Draft tender documents have been prepared for the supply of a National Incinerator to deal with
animal waste including fallen animals.

A study concerning the disposal of sewage generated by ships reaching the ports will be
commissioned. This study is part of a proposal submitted for EU funding under the Pre-Accession
funds.
Malta ratified the Basle Convention on the Transboundary Movement of Waste in June 2000. The
Treaty obligations were transposed under the Environment Protection Act, 1991 (Cap. 348), in The
Control of Transboundary Movement of Toxic and other Substances Regulations, 2000 (LN205/00).
Malta‟s geography, 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 has
requested to maintain its existing beverage container packaging regime. Furthermore, Malta
requested to negotiate targets for the recovery and recycling of packaging and packaging waste
which reflect its particular constraints and its current re-use policies. Malta requested a transitional
period of three years from the application of the Directive to provide sufficient time to establish a
solid waste management collection and disposal infrastructure.
Nature Protection
The Importation of Skins of Certain Seal Pups and Derived Products Regulations, 2001 (LN 335/01)
transposing Directive 83/129/EC (on importation into member states of skins of certain seal pups
and products) was adopted under the new Environment Protection Act, 2001 (Cap. 435) in
December 2001.




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Malta is a party to the Convention on International Trade in Endangered Species of Wild Fauna and
Flora (CITES). Minor changes in domestic regulations are required for full compliance with the
acquis. The changes will be made before accession.
Malta signed the Convention on the Conservation of European Wildlife and Natural Habitats with a
number of reservations. These are the trapping of birds in spring, the trapping of finches and other
species in autumn and the harvesting of marine species.
Regulations for the harvesting of a number of marine species that are listed in Appendix III of the
Convention still need to be drawn up.
Malta is a party to the Bonn Convention on the Conservation of Migratory Species of Wild Animals.
A number of Nature Reserves, mainly for the protection of birds habitats, have been set up under the
Environment Protection Act. The Structure Plan (policies RCO 11:4 and RCO 13) provides for the
protection of bird habitats or areas of ornithological interest. A number of bird habitats have been
afforded protection as bird sanctuaries under LN 144/93 of the Environment Protection Act (Cap.
348), as nature reserves by virtue of the Filfla Natural Reserve Act (Cap. 323) and by other
regulations issued under the Environment Protection Act, 1991 (Cap. 348) namely the Fungus Rock
Nature Reserve Regulations (LN 22/92) and the Selmunett Islands Nature Reserve Regulations (LN
25/93), as well as through the scheduling process of the Development Planning Act (Cap. 356). The
Planning Authority commissioned a study to identify the important coastal bird habitats as part of
the formulation of the Coastal Zone Management Strategy prepared as part of the review of the
Structure Plan for the Maltese Islands.
A compliance unit made up of representatives from the Environment Protection Department and the
Planning Authority was set up in December 2001. The objective of this unit is to co-ordinate the
monitoring, studying and drafting of the necessary requirements arising from the provisions of
Directive 79/409/EEC (on wild birds).
Measures will be taken on accession to maintain the traditional patterns of hunting and trapping
which have evolved as a result of Malta‟s particular biological-geographical circumstances.
Malta has expressed its wish to add species of flora and fauna to the list contained in Annexes II, IV
and V of Directive 92/43/EEC (Conservation of natural habitats of wild fauna and flora).
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
replaced the Quality Control (Exports, Imports and Local Goods) Act (Cap. 255). Subsidiary
legislation under this Act to transpose the acquis on noise will enter into force by the fourth quarter
of 2002.

Nuclear Safety and Radiation Protection
Although Malta does not have specific legislation on radiation protection, administrative measures
are in place to implement the requirements of Title II, Chapter 3 of the Euratom Treaty.
The Malta Maritime Authority Act (Cap. 352) requires the prevention and control of pollution
caused by oil or other substances in any part of the island or any approaches thereto. The




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Government can issue regulations to secure public safety under the Emergency Powers Act (Cap.
178). Existing legislation permits the Government to conduct a monitoring programme on the
transport of radioactive substances and waste. The Malta Maritime Authority Act (Cap. 352), the
Customs Ordinance (Cap. 37), the Malta Police Ordinance (Cap. 164) and the Armed Forces Act
(Cap. 220) allow the authorities to stop ships and inspect cargoes. There are also provisions for
reporting systems in line with International Standards. Furthermore the Control of Transboundary
Movement of Toxic and other Substances Regulations (LN 205/00) empower officials from the
Environment Protection Department to inspect ships and to request the seizure of any vessels
containing dangerous substances.
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.
LN128/97 classifies radioactive waste as hazardous waste, thus subject 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 Contiguous 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 authorisation from the Malta Maritime Authority when effecting passage
through Maltese territorial waters. In 1996 Malta signed the Protocol on the Prevention of Pollution
of the Mediterranean Sea by the Transboundary Movement of Hazardous Waste and their Disposal.
The necessary legislation to transpose the requirements of Directive 96/29/EEC (Basic Safety
Standards) will enter into force by the fourth quarter of 2002. A Radiation Protection Board will be
set up under the Radiation Protection Board Regulations which will transpose the Basic Safety
Standard Directive by the third quarter of 2002. The Board will be composed of representatives
from the Occupational Health and Safety Authority, the Competent Authority for environment
protection, the Public Health Department and the Civil Protection Department. It will be chaired by
each entity in rotation and will be backed by a core of technical and support staff. It will be the sole
regulatory authority in matters relating to nuclear safety and radiation protection, including
notification procedures, authorisations, exclusions and exemptions of practices. The regulations will
enter into force by the fourth quarter of 2002.
In the past two years, Malta actively sought the assistance of the International Atomic Energy
Agency (IAEA) to enable it to build up the necessary infrastructure to implement the nuclear safety
and radiation protection acquis. Malta is also currently involved in 14 Regional Projects for Europe
for the period 2001/2002, as part of the assistance offered by the Department for Technical Co-
operation of the IAEA.
The Supervision and Control of Shipments of Radioactive Waste Regulations, 2001 (LN 338/01)
were adopted under the new Environment Protection Act, 2001 (Cap. 435) in December 2001.
Subsidiary legislation to transpose the acquis on nuclear safety and radioactive protection will be in
place by the fourth quarter of 2002.




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Civil Protection
Under the Civil Protection Act (Cap. 411) the Government established a Civil Protection
Department and an Assistance and Rescue Force to protect persons, the environment and property in
the event of a national or technological disaster.
The legislation requires the Civil Protection Department to draw up contingency plans. The
National Marine Contingency Plan has been developed and is currently being reviewed by the
Environment Protection Department with all interested parties.
Climate Change
The Environment Protection Department has commissioned the Physics Department of the
University of Malta to draw up a national programme to reduce and monitor greenhouse gas
emissions, produce inventories and report on carbon dioxide and other related gases.
Malta will adopt policies and strategies to address greenhouse gas emissions by the fourth quarter of
2002. The Kyoto Protocol was ratified in November 2001.

B. Short Term Priorities
Legislative Framework
a) Enact a new Public Health Act by the second quarter of 2002.

Horizontal
a) Subsidiary legislation under the Development Planning Act to transpose Directive 85/337/EEC
   (assessment of the effects of certain public and private projects on the environment) and its
   amendment has been adopted and entered into force on 11 September 2001 with the exception of
   Part V (registration of consultants) which will enter into force by the end of 2002.
b) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) to transpose
   Directives 91/692/EC, 92/446/EC, 94/741/EC, 96/511/EC, 97/622/EC (reporting directives) will
   be adopted by the fourth quarter of 2002.

c) The National Commission for Sustainable Development will be set up by the first quarter of 2002

International Co-operation
a) 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 (Cap. 439) transposing the requirements of
   this Convention will be adopted by the second quarter of 2002.
Air Quality Legislation
a) Auto-analytical instrumentation will be installed by second quarter of 2002. Monitoring of lead in
   air will commence by the end of first quarter 2002 in line with Council Directive 99/30/EC.




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b) The Malta Transport Authority, which was established in August 2000, and which is responsible
   for type approval certification accompanying mobile machinery, will reach full capacity by the
   second quarter of 2002.
c) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) 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 is being requested.
Water Quality
a) A Code of Good Agricultural Practice is expected to be completed by the fourth quarter of 2002.
b) The Department of Public Health has ordered the monitoring equipment required to upgrade its
   microbiological monitoring programme.
c) An Authorisation System with respect to Dangerous Substances in the Aquatic Environment will
   be set up by the by the fourth quarter of 2002.
d) Subsidiary legislation under the new Public Health Act to 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.
e) Subsidiary legislation under the new Public Health Act transposing Directive 98/83/EEC
   (quality of water intended for human consumption) will be adopted by the second quarter of
   2002 and will enter into force by the fourth quarter of 2002, except for the requests for a
   transitional period made.
f) 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.
Industrial Pollution Control and Risk Management
a) Subsidiary legislation under the Environment Protection Act, 2001 (Cap. 435) transposing
   Directive 96/61/EEC (integrated pollution prevention and control) will be adopted by the second
   quarter of 2002.
b) Further subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435)
   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) Subsidiary legislation transposing Directive 96/82/EC (major accident hazards) will be adopted
   under the Occupational Health and Safety Authority Act (Cap. 424) by the first quarter of 2002.
d) Council Regulation 1836/93EEC, which will be adopted and enter into force by the second
   quarter of 2002 under the Malta Standards Authority Act (Cap. 419). The Council Decisions
   regarding the Eco-Management and Audit Scheme EMAS will enter into force under the same
   Act by the fourth quarter of 2002. Legislation concerning ISO14001:1991 is already in place.
   Subsidiary legislation with respect to the eco-labelling scheme (Regulation 880/92/EEC) will




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     also be adopted under the Malta Standards Authority Act (Cap. 419) by the fourth quarter of
     2002.
e) Regulations transposing Directive 88/609/EEC will be adopted by the second quarter of 2002. A
   transitional period of three years has been requested in respect of the implementation of this
   Directive.
f) The Chemicals Control Co-ordinating Centre will be set up by the Malta Standards Authority
   within the Food, Chemicals and Cosmetics Directorate by the first quarter of 2002.
Waste Management
a) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) transposing
   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) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) 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.
c) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) transposing
   Directive 75/439/EEC (disposal of waste oils) will be adopted and enter into force by the second
   quarter of 2002.
d) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) 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.
e) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) 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.
f) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) 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 have been requested.
g) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) transposing
   Directive 99/31/EEC (landfill of waste) will be adopted by the second quarter of 2002.
h) An Integrated Solid Waste Management Implementation Plan for Malta will be finalised by the
   first quarter of 2002.
i)   A tender for the purchase of new non-burn technology for the management of waste at St Luke‟s
     Hospital is in the final stages of adjudication. The process is expected to be completed by the
     second quarter of 2002.




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Nature Protection
a) Subsidiary legislation under the Animal Welfare Act (Cap. 439) 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, 2001 (Cap. 435) 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.
Chemicals and GMOs
a) An education campaign on GMOs will be designed and implemented.
b) 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 assist the
   Biosafety Co-ordinating Committee in the collection of data on the contained use of 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 2001/18/EC (on the deliberate release into the
   environment of genetically modified organisms and repealing Council Directive 90/220/EEC).
c) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) transposing
   Directive 2001/18/EC (on the deliberate release into the environment of genetically modified
   organisms and repealing Council Directive 90/220/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, 2001 (Cap. 435) to 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.
e) Subsidiary legislation under the New Environment Protection Act, 2001 (Cap. 435) will be
   adopted by the second quarter of 2002 and will enter into force by the fourth quarter of 2002.
   This will transpose:
f) Decision 91/274/EEC (list of community legislation referred to in Article 10 of Directive
   90/220/EEC)
g) 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)
h) 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)




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i) 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)
j) Decision 93/572/EEC (genetically modified organisms pursuant to Article 13 of Directive
   90/220/EEC)
k) 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)
l) 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)
m) Decision 96/158/EC (genetically modified organism, hybrid herbicide tolerant swede-rape seeds
   pursuant to Directive 90/220/EEC)
n) Decision 97/392/EC (genetically modified swede rape pursuant to Directive 90/220/EEC)
o) Decision 96/281/EC (genetically modified soya beans with increased tolerance to the herbicide
   glyphosate pursuant to Directive 90/220/EEC)
p) Decision 96/424/EC (genetically modified male sterile chicory with partial tolerance to the
   herbicide glufosinate ammonium pursuant to Directive 90/220/EEC)
q) 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)
r) Decision 97/393/EC (placing on the market of genetically modified swede rape pursuant to
   Directive 90/220/EEC)
s) Decision 97/549/EC (T102-test pursuant to Directive 90/220/EEC).
t)   Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435)
     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.
u) 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 (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
   directly applicable upon accession.
v) Subsidiary legislation under the new Environment Protection Act, 2001 (Cap. 435) 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 first quarter
   of 2002.




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w) Subsidiary legislation transposing Directive 98/8 (biocidal products) will be adopted under the
   Pesticides Control Act (Cap. 430) by the second quarter of 2002.
x) The Reptiles (Protection) Regulations (LN76/92), the Marine Mammals (Protection) Regulations
   (LN77/92 as amended) and the Flora and Fauna Protection Regulations (LN49/93 as amended)
   provide a permit system for certain wild animals in line with Directive 86/609/EEC (protection
   of animals used for experimental and other scientific purposes). Subsidiary legislation to fully
   transpose this Directive will be adopted and enter into force by the first quarter of 2001, under
   the Animal Welfare Act (Cap. 439).
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 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) will be adopted under the Product Safety Act,
   2001 (Cap. 427) by the fourth quarter of 2002.
b) The Motor Vehicles Construction Plant and Equipment Technical Committee will be set up by
    the second quarter of 2002 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) The Environment Protection Department will strengthen its administrative infrastructure by the
   second quarter of 2002 to implement the acquis with respect to shipments of radioactive waste.
b) Subsidiary legislation under the Occupational Health and Safety Authority Act (Cap. 427), the
   new Environment Protection Act, 2001 (Cap. 435) 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
   third quarter of 2002 and will enter into force by the fourth quarter of 2002.
c) Subsidiary legislation under the Civil Protection Act and the new Environment Protection Act,
   2001 (Cap.435) 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.
d) 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




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    radiological emergency) will be drawn up by the Civil Protection Department within the
    Ministry for Home Affairs by the fourth quarter of 2002.
e) Administrative measures implementing Decision 87/600/EURATOM (early exchange of
   information in the event of a radiological emergency) will be in place by the second quarter of
   2002.
f) Subsidiary legislation under the new Public Health Act transposing Directive 97/43/EURATOM
   (health protection of individuals against the dangers of ionising radiation in relation to medical
   exposure and repealing Directive 84/466/EURATOM) will be adopted by the third quarter of
   2002 and will enter into force by the fourth quarter of 2002.
g) 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 third quarter
   of 2002 and will enter into force by the fourth quarter of 2002.
h) Administrative measures will be in place by the fourth quarter of 2002 to implement the
   provisions of Regulation (EURATOM) 3954/87 (maximum permitted levels of radioactive
   contamination of foodstuffs and of feeding stuffs following a nuclear accident), Regulation
   (EURATOM) 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), k) Measures
   implementing 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 in place by the fourth quarter of 2002.
Climate Change
a) Malta will adopt policies and strategies to address green house gas emissions 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.




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Civil Protection

a) The single European Emergency call number (112) will be operational by the second quarter
   of 2002.

C. Institution Building Needs
The Ministry for the Environment is currently the principal competent authority responsible for the
acquis in this area. However, the responsibility for effective implementation of the legislation will
be shared with several other governmental agencies, particularly the Department of Agriculture, the
Department of Public Health, the Drainage Department, the Civil Protection Department, the
Planning Authority, the Malta Standards Authority, the Malta Resources Authority, the Malta
Maritime Authority and the Market Surveillance Directorate.
On 1 March 2002, the Planning Authority (within the Ministry of Home Affairs), which is to be re-
designated as the Malta Environmental Planning Authority, will take over as the permanent
competent authority in terms of the Environment Protection Act.
The designation of an effective existing Authority will allow a consolidation of resources available
for environmental regulation. The shift of Ministerial responsibility for environmental regulation
will further distinguish the operational and infrastructural aspects from the regulatory aspects
relating to the implementation of the environment acquis. Such strategy will also assist in
streamlining the monitoring and enforcement aspects of the acquis. The Malta Environmental
Planning Authority will have two directorates: the Planning Directorate and the Environment
Protection Directorate. The Planning Directorate is the one currently operating within the Planning
Authority while the Environment Protection Directorate will include employees currently at the
Environment Protection Department.
The administrative capacity of the Environment Protection Directorate (which is to absorb the
functions of the current Environment Protection Department) is being strengthened by the
recruitment of additional personnel. An Operations Review to determine the administrative
requirements necessary of the Pollution Control Section within the Environment Protection
Department for the implementation of the environment acquis as well as international conventions
and protocols has been finalised by the Management Efficiency Unit within the Office of the Prime
Minister. Job descriptions for the positions identified have also been completed. A similar exercise is
currently being carried out to determine the administrative requirements necessary for the
implementation of the acquis relating to horizontal issues, nature protection and waste management.
The Ministry for the Environment has submitted a project entitled “Establishing the Institutional
Capacity in the Environment Sector” for funding under the 2002 pre-accession programme. The
Project Fiche was submitted to the Commission in October 2001. This project, which will
commence by the third quarter of 2002, comprises a twinning arrangement, two technical assistance
projects as well as one supply project.
With respect to the Control of Alien Species, the full implications of confiscated and seized
specimens still have to be determined. Some of the departments involved have the necessary
infrastructure to cater for such confiscated and seized specimens, other departments have neither




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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

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                             -             -            -




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                               Total         3            -            3



D. 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

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




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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 (Cap. 378) was 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 injunctions to protect
        consumer interests (98/27/EC). The Consumer Claims Tribunal (Amendments) Regulations
        (LN2284/00) also amended the fees payable in the Tribunal in view of increase in competence of the
        said Tribunal. 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.
        Directive EEC 85/577 on doorstep selling is incorporated in the Doorstep Contracts Act (Cap.317)
        which came into force in January 2001.
        The Product Safety Act (Cap. 427) was published in February 2001 and came into force on 1 March
        2001. The Act repeals and replaces the Quality Control (Exports, Imports and Local Goods) Act
        (Cap.225) and transposes Directive (92/59/EEC) on General Product Safety.
        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 on 1 March 2001.
        The Package Travel and Timeshare Directives were brought into force during the last quarter of
        2001. The Package Travel, Package Holidays and Package Tours Regulations 2000 (LN 157/00)
        were brought into force on 1 November 2001 by Legal Notice 258 of 2001. The Protection of
        Buyers in Contracts for Time Sharing of Immovable Property Regulations 2000 (LN 269/00)
        became effective on 1 December 2001, through Legal Notice 269/00. Both sets of regulations were
        issued under the Malta Travel and Tourism Services Act (Cap. 409).
        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 first quarter of 2002.
        The Head of the Enforcement Directorate of the Malta Tourism Authority was appointed. One
        Director, one manager and eight Senior Enforcement Executives have been recruited. The
        Directorate was authorised to inspect hotels and accommodation facilities by virtue of the Hotels and
        Catering Establishment Act, 1976 (Cap. 197) and the Guest Houses and Holiday Furnished Premises
        Act, 1974 (Cap. 240).




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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 within the Ministry of Economic Services, the necessary structures were
established. In July 2000, Parliament repealed and re-enacted the Malta Standardisation Act (Cap.
187) by adopting the Malta Standards Authority Act (Cap. 419). The amendments made to the
original Act 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.
During 2000, units were established within the Malta Standards Authority, which falls under the
responsibility of the Ministry for Economic Services, to cater for services of certification, metrology,
standardisation and notification. The metrological services will be operational by the first quarter
2002, when the Metrology Act is enacted.
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
a) The provisions implementing the Injunctions Directive came into force during 2001, except
   those concerning unfair contract terms. The latter provisions will come into force by mid-2002.
b) The structures that have been established within the Ministry for Economic Services will be
   fully consolidated during the first quarter of 2002 when the Consumer and Competition Division
   will reach full capacity.
c) 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, and price
   indication will enter into force by the second quarter of 2002. The Distance Selling Regulations,
   2001 (LN/186/01) published under the Consumer Affairs Act (Cap. 378) on 21 August 2001,
   entered into force on 4 September 2001 by virtue of Legal Notice 203 of 2001. A departmental
   draft on price indication regulations has been completed and will be published, under the
   Consumer Affairs Act, by the first quarter 2002.
d) The Consumer Credit legislation is being drafted. This legislation will be enacted by the second
   quarter of 2002.
e)   The implementation of a comprehensive educational and informative programme to increase
     consumer awareness will be strengthened through a call for applications that will be issued
     for the posts of Head Public Relations Unit and Information officer by the first quarter 2002.




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C. 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, establishing and periodically updating sectoral
surveillance programmes in respect of all categories of products and risks, and also periodically
reviewing and assessing the functioning of the control activities and their effectiveness. A
Surveillance Committee will also be established. The Directorate is in the process of recruiting the
necessary technical staff.

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 Directorate 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                            2            3            5
                                     Middle                            2            2            4
                                     Other                             -            -            -
                                     Total                             4            5            9

Consumer Affairs                     Senior                            -            -            -
                                     Middle                            4            -            4
                                     Other                             -            -            -
                                     Total                             4            -            4




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D. Financial Requirements
                                                                                                Lm000
Area of Activity                                                  2001          2002         Total

Ministry for Tourism
                                    Recurrent                        10            10           20
                                    Capital                           -             -            -
                                    Training                          -             -            -
                                    Total                            10            10           20

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.




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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 and building the
necessary administrative capacity.
In the field of Judicial Co-operation in Criminal Matters, Malta ratified these 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 on 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
crime, fraud and corruption, which is also relevant for judicial co-operation in penal matters. This
Convention came into force in the first quarter of 2000.
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 were also ratified in November 2000 and came into effect on 18
December 2001.
Amendments to the Interpretation Act (Cap. 249) were adopted to be in conformity with the
provisions of the Convention on Extradition between the Member States of the EU (1996).
Malta ratified the Convention on the Transfer of Sentenced persons (1983) and the European
Convention on Mutual Assistance in Criminal Matters (1959). As from the fourth quarter of 2000,
Malta started to participate as an observer in certain activities of the European Judicial Network.
Government has acceded to the Council of Europe Agreement regarding the Group of States
Against Corruption (GRECO) on May 25, 2001.
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 to Maltese legislation are approved by
Parliament. A draft of the necessary legislation is being prepared.
Malta is proposing that Article 42 of the Convention on Jurisdiction, Recognition and Enforcement
of Judgements on Matrimonial Matters (1998) as well as article 40 of Council Regulation 1347/2000




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on jurisdiction and the recognition and enforcement of judgements in matrimonial matters and in
matters of parental responsibility for children of both spouses 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.tthe
The Ministry of Justice has organised introductory courses on 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. In
January 2001, another seminar on research facilities regarding the European Union was organised
for the members of the Judiciary, the legal staff at the Attorney General‟s Office, and for senior law
students. The Chamber of Advocates was also invited for this seminar. Plans are underway to
organise additional courses on specialised subjects. The Ministry is currently making other
arrangements for the training of the judiciary both through the pre-accession funds as well as
through bilateral technical assistance from the United Kingdom. A contract was signed in 2001 with
the European Institute of Public Administration (EIPA) for a „train the trainers‟ course for judges
which is taking place under the PHARE programme. In the last quarter of 2001, two judges visited
the Courts in the UK, on an attachment basis, for sittings related to cases involving EU legislation
and for related research. Other contacts were made with the French Embassy during 2001 with the
aim of exploring possibilities of bilateral assistance with France.
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.
The Central Bank of Malta Act (Cap. 204) already makes provision against counterfeiting of
currency, including the Euro.

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.
The necessary legislation regarding refugees and asylum seekers has been enacted as the Refugees
Act (Cap.420) and was brought into effect on 1 October 2001. The Refugees Act includes the
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 and treatment of asylum seekers, rights of refugees, children or
young persons in need of care. 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.
Subsidiary legislation under the Refugees Act was made and this was brought into effect on the 29
October 2001. It comprises the following:




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   the Refugees Appeals Board (Procedures) Regulations (LN252/01) (brought into effect by
    LN255/01)
   the Asylum Procedures (Application for a Declaration) Regulations (LN253/01) (brought into
    effect by LN256/01)
   the Asylum Procedures (Means of Facilitating Identification of Applicant) Regulations
    (LN254/01) (brought into effect by LN257/01)
The geographical reservation which Malta had made under the 1951 Geneva Convention was
removed on the 13 December 2001. On the same date, Malta lifted fourteen out of the seventeen
reservations it made in 1971. As a first step, Malta brought the Social Security (UN Convention
relating to the Status of Refugees) Order 2001 (LN 291/01) into force on 1 October 2001.
The necessary administrative capacity in relation to asylum is now in place. A Refugees
Commissioner was appointed during 2001 and the Refugee Appeals Board was also set up. The
Refugees Commissioner is assisted by a complement of three trained and qualified staff. Efforts are
being made to increase the number of staff at this Office. Training under the auspices of the
UNHCR was provided to all key players in the asylum process. Training for police border control
personnel has also been provided by experts from the immigration departments of two Member
States.
About 200 Refugee Travel Documents have been given to recognised refugees. These travel
documents were issued in full compliance with the 1951 Refugees Convention. The applications for
refugee status and other procedures have also been made and are now in use. The Office of the
Advocate of Legal Aid is responsible for providing free legal aid to asylum seekers at the appeals
stage. A seminar for these advocates was organised in May 2001 under the auspices of UNHCR.
A reception centre for asylum seekers is in the final stages of preparation and is expected to become
operational during the first quarter of 2002. The Social Security (UN Convention relating to the
Status of Refugees) Order came into effect in October 2001. This Order states that the provisions of
the Social Security Act shall apply to refugees who, in terms of the provisions of the Refugees Act,
are given refugee status.
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 previous system both the question of recognition of refugee
status and the consequent resettlement arrangements were dealt with by the UNHCR regional office
in Rome which was represented in Malta by the Migrant‟s Commission, an NGO. With the coming
into force of the Refugees Act this is no longer the case and such responsibilities and obligations
have been 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.
The Malta Citizenship (Amendment) Act (Act IV of 2000) has made important changes to Malta‟s
legislation with the intention of counteracting marriages of convenience. It permits foreigners
marrying Maltese nationals to apply for Maltese citizenship only after five years living together as a
married couple or, if separated, upon proof that they had lived together for at least five years.




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Administrative arrangements are being introduced at the Marriage Registry in order to ensure, as far
as possible, that marriages contracted therein are bona fide marriages.
Malta agrees with the principles of the Schengen acquis and, upon its accession to the EU, Malta
will form part of the Schengen Information System II, once this is operational in other states and
once the opportunity is given. A Schengen project team was set up in November 2000 which, with
the assistance and expertise of EU Member States, is responsible for the identification of the
requirements in relation to the Schengen Information System as well as all other issues relating to
the Schengen acquis. In fact the Project Team prepared an action plan on the implementation of the
Schengen acquis in April 2001 and this Action Plan was supplemented by a more detailed one in
October 2001. The Project Team also drew up a project fiche which served as the basis for a project
on border control and asylum that will take place between 2002 and 2003. The project will be led by
the United Kingdom with Spain as a partner and will involve the presence of a UK Pre-Accession
Adviser in Malta throughout its duration. The covenant for the twinning project is currently being
finalised and implementation is due to start in the first quarter of 2002.
In June 2000, French immigration experts visited Malta to advise the Malta Police on the
requirements of Schengen. In December 2001, a course on the Schengen acquis and its
implementation was delivered by a French expert on the subject in Malta. These bilateral contacts
with Member States 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 Maltese Government and the
Malta Maritime Authority have, on the 21 November 2001 entered into an agreement with a private
consortium to take over the management and administration of the passenger handling facilities.
The consortium is committed that the new passenger terminals – one dedicated to ferry operations
and the other to cruise activities – shall be constructed by 2005 and shall comply with Schengen
requirements.
Border control and its enhancement is an ongoing process in Malta. Additional personnel have been
deployed in field operations at the Immigration branch of the Malta Police and a list of equipment
required for border control and the three stages of document examination has been finalised.
Preparations for the initiation of the tendering process are already underway. This equipment will be
purchased within the framework of the twinning project mentioned above.
Malta has a visa abolition agreement with a number of countries, which include most members of
the Council of Europe. Malta is committed 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. Government has now established a timetable
intended to align Malta‟s visa policy with that of the European Union. It is planned that countries
that will be affected by this policy will be given a six months‟ notice of the change in Malta‟s visa
policy.
A readmission agreement has been concluded with Italy and was signed on the 8 December 2001.
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




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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. All passports issued by the Passport Office are now
machine-readable and include several new security features such as digitised images.
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 candidate countries on issues
relating to immigration and asylum.
Malta has taken 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), 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
conventions and agreements and in particular with the 1988 UN Vienna Convention on Illicit Drug
Trafficking to which Malta acceded in 1996. Furthermore, following amendments to the Dangerous
Drugs Ordinance the Council of Europe Agreement on Illicit Trafficking by Sea was signed on the
14 September 2000.
The fight against illicit drug trafficking constitutes a high priority for the Maltese Government. The
Government‟s strategy on drugs is based on two main aims namely the fight against drug trafficking
and criminality, as well as prevention through social and educational programmes. In accordance
with this prioritisation, the Ministry for Social Policy has finalised (with a view to eventual
publication) a Prevalence Study which was carried out with the aim of arriving at an estimate of the
extent and nature of addiction in Malta. The report on the evaluation of the various drug services that
are available, whether public or non-Governmental has also been finalised. In addition, Malta
ratified a number of other important agreements, including the International Opium Convention (The
Hague, 1912), the Single Convention on Narcotic Drugs (New York, 1961), the Convention on
Psychotropic Substances (Vienna 1971), and the Protocol Amending the Single Convention on
Narcotic Drugs (Geneva 1972).
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, the
Customs Department and the Armed Forces. The Security Service, that has absorbed the former
NDIU (National Drugs Intelligence Unit), is the central agency which collates, evaluates and
analyses the information received from various sources and disseminates intelligence packages to
the other enforcement agencies. 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,
and this process will continue in view of the obligations emanating from EU membership. Training
of staff and upgrading of services and equipment for the Malta Security Services has been provided.
Following the enactment of Act XXXI of December 2001 which has made amendments to the
prevention of Money Laundering Act (1994), the Financial Intelligence Analysis Unit has been
established. The FIU will have a Governing Board and a Director, who will be appointed shortly.




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The premises and most of the infrastructure for the FIU are already available. Apart from the
Director, the Unit will have three additional staff as well as a Police Liaison Officer who will be
nominated by the Commissioner of Police. It is foreseen that the Unit will be fully operational within
the first quarter of 2002 by which time the Unit will apply for membership of the Egmont Group
during its forthcoming June 2002 Plenary in Monaco.
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. The Data Protection Act is now in place and as
soon as related regulations are completed, the process for the conclusion of an agreement with
Europol will continue. A White Paper encompassing reforms to the 1960 Malta Police Ordinance
was published in August 2001. Interested parties were invited to submit their views and comments
on this White Paper that includes provisions for a witness and victim protection programme as well
as measures concerning individuals who co-operate with the judicial process. The views received
were evaluated and are being incorporated in a document to be later published as a Bill.
Malta has signed bilateral agreements on organised crime with the following countries: China,
Cyprus, Egypt, France, Greece, Hungary, Israel, Italy, Libya, Russia, Slovakia, Spain, Sweden,
Tunisia and Turkey. A co-operation agreement with Albania is expected to be signed in February
2002.
Negotiations are still in progress with a number of other countries to sign similar agreements and in
some cases these are expected to be finalised in the near future. Active co-operation in this matter
also exists with a number of international organisations including Interpol as well as with various
police forces in countries with which Malta has concluded bilateral agreements
The pertinent issues relating to free movement of persons are dealt with under Section 3.1.2 (Free
Movement of Persons).

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 is now being strengthened with the
enactment of the Data Protection Act in December 2001. 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 on Mutual Administrative Assistance for the
Prevention, Investigation and Repression of Customs Offences (1977). 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




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between Customs, Police and Armed Forces of Malta has also been enhanced with the introduction
of the Malta Security Services.
Malta will accede to the 1997 Convention on mutual assistance and co-operation between customs
administrations and the 1995 convention on the use of information technology for customs purposes
upon accession although the necessary preparations for accession to these conventions are being
made.
Malta has 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.
An agreement on mutual assistance and co-operation was initialled with OLAF in October 2001.

Data Protection
A Data Protection Act was enacted on 14 December 2001 and will come into effect in the first
quarter of 2002. This Act has been drawn up in compliance with the acquis and with regular
consultations having taken place between the Maltese authorities, the Commission and Europol.

B. Short Term Priorities

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 during 2002. 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 Criminal Code amendments have been drafted and have currently reached committee stage
   in Parliament. These amendments deal with the following matters:
         Provisions to bring Maltese legislation in line with the Convention of the 26 July 1995 on
          the Protection of the European Communities‟ Financial Interests as well as its protocols
         Provisions to bring Maltese legislation in line with the Council of Europe Criminal Law
          Convention on Corruption (1999)
         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. This will be followed by the
          ratification of the relative Organisation for Economic Co-operation and Development
          (OECD) and Council of Europe Conventions.
         Provisions to bring Maltese legislation in line with article 1 of the Joint Action of 3




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        December 1998 on money laundering, the identification, detection, freezing or seizure of the
        instruments and proceeds of crime.
       Provisions to bring Maltese legislation in line with the Convention of 26 May 1997 on the
        fight against corruption involving officials of the European Communities or officials of
        Member States of the European Union.
       Provisions for the offence of trafficking in human beings for illegal immigration and other
        purposes.
       Provisions to bring Maltese legislation in line with the Joint Action of 29 December 1998
        making it a criminal offence to participate in a criminal organisation.
       Provisions to bring Maltese legislation in line with the Joint Action of 15 July 1996
        concerning action to combat racism and xenophobia.
       Provisions to bring Maltese legislation in line with the Convention of the 10 March 1995 on
        Simplified Extradition Procedures between the Member States of the European Union.
       It is foreseen that these amendments will be enacted by the first quarter of 2002.
c) The training programme on EU Legislation and Legal Procedures for the Judiciary and for the
   personnel at the Attorney General‟s Office.(Ongoing)
d) 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 during 2002 to
   bring the Act fully in line with the provisions of this Convention
e) Malta will ratify the Additional Protocol to the European Convention on Mutual Legal
   assistance in Criminal Matters. The 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.
f) 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).
g) 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 legalisation 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.




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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)   Malta will ratify the Automatic Processing of Personal Data Convention (1981) by the fourth
     quarter of 2002.
Home Affairs
a) A draft Arms Act has been prepared and is being finalised by the Ministry for Home Affairs. It
   is planned that a White Paper incorporating this draft will be published during the first quarter of
   2002. The draft is expected to be discussed by Parliament during 2002 and be adopted by the
   fourth quarter of 2002.
b) Malta will progressively adopt the common EU visa policy, leading to full compliance by
   accession.
c) New bilateral agreements with other countries on co-operation in the fight against organised
   crime and drug trafficking will be signed, and continued and closer Police co-operation will be
   sought through the conclusion of a bilateral agreement with EUROPOL.
d) The necessary legislation concerning Schengen border controls, visas, work and residence
   permits, and family reunification will be enacted and implemented. A new Immigration Act,
   substituting the current law, will be enacted by the end of 2002 and brought into effect upon
   accession.

Customs Mutual Assistance and Administrative Co-operation
a) The design and implementation of an appropriate IT strategy that would enable the necessary
   participation in mutual assistance and administrative co-operation will be continued.
Financial Intelligence Analysis Unit
a) This Unit will be set up and operational within the first quarter of 2002.


C. 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. The exercise is being undertaken by virtue of the
Attorney General and Counsel for the Republic (Constitution of Office)(Amendment) Bill which
is currently being debated in Parliament and which has for its main purpose the separation of the
civil functions of the Attorney General from his current prosecuting functions to be undertaken
by a Prosecutor General. The re-organised office of the Advocate General will also include the
said Central Authority, and the Law Drafting and Translation Unit which will also be responsible
for the translation of the acquis. Moreover, the professional complement of the Ministry and the
Advocate General's Office will be extended in order to effectively transpose and implement the
acquis in this area.




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Training is required for the judiciary, the personnel at the Attorney General‟s Office and Courts
of Justice personnel. As explained in section A above, the Ministry of Justice has organised
introductory courses on EU legislation and legal structures and the application of such
legislation at national level for the staff at the Attorney General‟s office and for the judiciary. It
is foreseen that such training will be continued.
Home Affairs
Technical and expert assistance will be required in view of the specialised organisational structures
that have to be set-up to implement the acquis and in particular that concerning Schengen. These
include the setting up, within the Malta Police Force, of the SIRENE Office, the Data Protection
Branch, the Document Examination Office and the Europol Office. Other structures, such as the
Aliens Office (presently the Immigration Branch) and the Information Technology Unit, both within
the Malta Police Force as well, have to be completely reorganised or enhanced to take on the new
responsibilities expected of them. Specialised training in some of the above areas is envisaged
particularly within the framework of the twinning Project 'Strengthening Malta's capacity in Border
Control and the Area of Asylum' that will involve the presence of a UK Pre-Accession Adviser in
Malta.

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
                                       Total                             12           10           22

Border 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




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                                Total          10           6          16

Office of the Refugee
Commissioner                    Senior          2           -           2
                                Middle          4           2           6
                                Other           4           -           4
                                Total          10           2          12

Ministry of Justice and Local
Government
                                Senior          3           -           3
                                Middle         15           -          15
                                Other           3           -           3
                                Total          21           -          21



D. 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

Border 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




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                                                                   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




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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. In fact, Malta has taken all the necessary steps to ensure that all
        Investment Guarantee Agreements signed with third countries are in line with the acquis. 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 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. A Workshop on the EU‟s
        GATS Commitments took place in Malta in March 2001, during which experts from the Community
        discussed most of the aspects of the EU‟s commitments in services with Maltese Government




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officials. Malta regularly participates in co-ordination meetings organised by the EU on WTO 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. The Copyright Act (Act
XIII of 2000), the Patents Act (Act VII of 2000) and the Trademarks Act (Act XVI of 2000) were
also enacted in 2000 in line with the acquis, taking on board the relevant 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 used the third stage of the ATC to further
align its list of integrated products with those of the Community. In this respect, Malta consulted
with the Commission during the preparation of its proposal for the third stage of integration, which
was submitted to the WTO in February 2001.
Malta obtained observer status on the WTO Committee on Government Procurement in May 2001,
following a request made to this effect. At present Malta is consulting with the Commission
regarding its draft offer for the WTO Agreement on Government Procurement. 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: Canada, Australia, New Zealand, Japan, the Czech Republic, the Russian Federation,
Bulgaria, 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,




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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.
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 Dual-Use Items (Export Control) Regulations, 2001 (L.N. 268 0f 2001) were issued on 1
November 2001 under the National Interest (Enabling Powers) Act (Cap. 365). The Regulations
provide for the necessary authorisation mechanism concerning the export of dual-use goods in line
with Council Regulation (EC) 1334/2000. They came into force on 1 January 2002. The appropriate
monitoring mechanism to oversee the export of all dual-use goods has been in place since 1 January
2002. A Dual-Use Goods and Community Trade Unit within the Commerce Division in the Ministry
for Economic Services was set up in early 2001 to implement the above regulations especially in
relation to the processing of authorisations for the export of dual-use items.
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, 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




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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 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.
During 2001, the United Nations Sanctions (Taliban) (Amendment) Regulations, 2001 (LN 22/01)
issued under the National Interest (Enabling Powers) Act (Cap. 365), implemented UN Security
Resolution 1333 of 19 December 2000 in line with Council Common Position 2001/154/CFSP of 26
February 2001 concerning additional restrictive measures against the Taliban and pursuant to UN
Security Council Resolution 1333 (2000), as amended by Council Common Position
2001/771/CFSP of 5 November 2001.
Malta aligned itself with all the EU positions taken in the aftermath of the September 11 attacks in
the United States. Various Government Notices were issued listing the individuals and entities
identified by the UN Taliban Sanctions Committee for the purpose of freezing funds and financial
assets. The Maltese authorities directed all financial and credit institutions to scrutinise their records
and to provide any information which may be related to the individuals and entities in question.
Through the Repeal of United Nations Sanctions (Ethiopia and Eritrea) Regulations, 1999
(LN187/01), issued under the National Interest (Enabling Powers) Act (Cap. 365), Malta removed
the prohibition on the sale or supply of arms and related material to Ethiopia and Eritrea, as foreseen
in UN Security Council Resolution 1298 (2000) in line with Council Common Position
2001/215/CFSP as regards the embargo on arms for Ethiopia and Eritrea.
The United Nations (Federal Republic of Yugoslavia and Kosovo) Regulations, 2001 (LN 259/01)
implemented UN Security Council Resolution 1367 (2001) in line with Council Common Position
2001/719/CFSP of 8 October 2001 amending Common Positions 96/184/CFSP and 98/240/CFSP,
by terminating the prohibition on the sale or supply of arms to the Federal Republic of Yugoslavia.
Administrative measures were also taken pursuant to Malta‟s alignment with Council Common
Position 2001/155/CFSP of 26 February 2001 on the maintenance of specific restrictive measures
directed against Mr. Milosevic and persons associated with him to implement the visa ban
concerned.

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.




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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.
To date, Malta has no formal development aid policy, and it provides humanitarian assistance on a
case-by-case basis. The Armed Forces of Malta undertook three humanitarian missions to Kosovo
during 2000, transporting material given as humanitarian aid by Maltese NGOs. During 2000, other
humanitarian aid was given to Albania by the Malta Community Chest Fund (a Presidential Fund).
The Government of Malta has over the years made cash contributions to alleviate hardship caused by
natural catastrophes around the world. Typically, in February 2001, a financial contribution was
made towards the earthquake victims in India and El Salvador.
Malta will remain committed to development assistance to the best of its ability. Upon accession,
Malta will become a member of the European Investment Bank and will contribute to the European
Development Fund. It will also participate in the work of the Committees dealing with development
aid at a European level.
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

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, pursuant to the foreseen consultations
   with the European Commission in this area.
b) Continue to 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.
c) Malta will adhere to the plurilateral WTO Agreements on Government Procurement and on
   Trade in Information Technology by the fourth quarter of 2002.
d) Malta will adopt Protocol 28 of the Agreement on the European Economic Area on intellectual
   property upon accession.
e) Malta will adopt the bilateral agreements concluded by the EC in the WTO framework in the
   areas of government procurement and telecommunications upon accession.




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f) Upon accession to the EU Malta will renounce its developing country status within the WTO.

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. As from 2002, this Pan-European System of
   diagonal cumulation system has also been extended to the Euromediterranean countries.
b) Align the customs regime with the Common External Tariff (CET) upon accession. This is
   discussed under Section 3.1.7 (Customs Union).
c) Upon accession Malta will adopt the Community‟s system of quantitative restrictions,
   surveillance measures and tariff quotas.
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.

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.
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.

C. 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




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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
                                 Other         -            -            -
                                 Total         2            -            2

D. 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




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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 56th United Nations General Assembly held between
        September and December 2001, Malta's voting coincidence with common EU positions was 95.71%
        per cent in plenary and 100 per cent in all the committees. Furthermore, Malta has always strictly
        complied with measures and actions decided by the UN Security Council. Alignment with UN
        sanctions took 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,
        as well as on Burma, and 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.
        During 2001, the United Nations Sanctions (Taliban) (Amendment) Regulations, 2001 (LN 22/01)
        issued under the National Interest (Enabling Powers) Act (Cap. 365), implemented UN Security
        Resolution 1333 of 19 December 2000 in line with Council Common Position 2001/154/CFSP of 26
        February 2001 concerning additional restrictive measures against the Taliban and pursuant to UN
        Security Council Resolution 1333 (2000), as amended by Council Common Position
        2001/771/CFSP of 5 November 2001.
        Malta has also stepped up its actions in pursuit of effective implementation of anti-terrorism
        measures, including compliance with Security Council Resolution 1373 and the ratification of the
        relevant conventions. Malta aligned itself with all the EU positions taken in the aftermath of the
        September 11 attacks in the United States. Various Government Notices were issued listing the
        individuals and entities identified by the UN Taliban Sanctions Committee for the purpose of
        freezing funds and financial assets. The Maltese authorities directed all financial and credit
        institutions to scrutinise their records and to provide any information which may be related to the
        individuals and entities in question.




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Through the Repeal of United Nations Sanctions (Ethiopia and Eritrea) Regulations, 1999
(LN187/01), issued under the National Interest (Enabling Powers) Act (Cap. 365), Malta removed
the prohibition on the sale or supply of arms and related material to Ethiopia and Eritrea, as foreseen
in UN Security Council Resolution 1298 (2000) in line with Council Common Position
2001/215/CFSP as regards the embargo on arms for Ethiopia and Eritrea.
The United Nations (Federal Republic of Yugoslavia and Kosovo) Regulations, 2001 (LN 259/01)
implemented UN Security Council Resolution 1367 (2001) in line with Council Common Position
2001/719/CFSP of 8 October 2001 amending Common Positions 96/184/CFSP and 98/240/CFSP,
by terminating the prohibition on the sale or supply of arms to the Federal Republic of Yugoslavia.
Administrative measures were also taken pursuant to Malta‟s alignment with Council Common
Position 2001/155/CFSP of 26 February 2001 on the maintenance of specific restrictive measures
directed against Mr. Milosevic and persons associated with him to implement the visa ban
concerned.
As a result of the ongoing political dialogue between Malta and the European Union, the appropriate
mechanism is available to ensure systematic alignment with EU positions. 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.
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 has
been 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
governing export control.
As regards dual-use goods, the Dual-Use Items (Export Control) Regulations, 2001 (L.N. 268 of
2001) were issued on 1 November 2001 under the National Interest (Enabling Powers) Act (Cap.
365). The Regulations provide for the necessary authorisation mechanism concerning the export of
dual-use goods in line with Council Regulation (EC) 1334/2000. They came into force on 1 January
2002. 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, although Malta does not manufacture or export
arms, including conventional weapons and military equipment, the Military Equipment (Export
Control) Regulations, 2001 (L.N. 269 of 2001) were issued on 1 November 2001 under the National
Interest (Enabling Powers) Act (Cap. 365) to cover any exports of military equipment that features
on the common list adopted by the Council on 13 June 2000. Given that Malta had formally aligned
itself with the criteria and principles contained in the Code of Conduct on Arms Exports, Malta will
be guided by the Code of Conduct in determining any applications for export licences. To this end, a




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“Guide to the issue of licences for the export of arms based on the European Union Code of
Conduct” is being circulated to the entities concerned as an administrative document.
A Dual-Use Goods and Community Trade Unit within the Commerce Division in the Ministry for
Economic Services was set up in early 2001 to implement the above regulations especially in
relation to the processing of authorisations for the export of dual-use items and military equipment.
The appropriate monitoring mechanism to oversee the export of dual-use goods and military
equipment has been in place since 1 January 2002.
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. Maltese military personnel are undergoing specialised
courses and field-training for the Petersberg tasks. The Armed Forces of Malta aim to have the
required number of volunteers fully trained and equipped for the Petersberg Tasks by the end of
2003.

B. Short Term Priorities
a) Monitor developments concerning the European Security and Defence Policy (ESDP).
b) 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.

C. Institution Building Needs
Malta has a set-up intended to satisfy its obligations under the Chemical Weapons Convention. In
addition, a Dual-Use Goods and Community Trade Unit has been set up within the Commerce
Division of the Ministry for Economic Services. The human resources for this Unit were deployed
from existing resources within the Ministry for Economic Services. The appropriate monitoring
mechanism in place to oversee the export of dual-use goods and military equipment has been in
place since 1 January 2002.
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.




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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


D. 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).




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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 et), 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. 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.
        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. A three year rolling business
        plan operates as an administrative multi-annual 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 for presentation, accounting and controlling
        purposes.
        Reforms in public finance management are expected to be enshrined in a new Public Finance
        Management Act which will replace the current Financial Administration and Audit Act. The
        principal Act will be supported by subsidiary legislation that will provide, among others, for public
        contracting, accounting standards, asset management, debit and credit control, financial control
        arising out of international obligations, and sanctions for financial misconduct. This new Act will
        also provide for an accrual-based public accounting methodology and multi-annual budgeting. It is
        expected that this legislative package will be approved by Cabinet, submitted to the Attorney
        General's Office for review and put on Government's legislative programme for enactment by the
        second quarter of 2002.
        External Audit
        External financial control is exercised by the National Audit Office (NAO). The Office, which is
        autonomous from Government, was established in 1997 under 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. Since 2001 a Code of
        Ethics guides NAO personnel with the purpose of protecting the integrity of their public office. At
        the end of 2001 an external audit manual has also been completed and is to be used by audit
        examiners for guidance in their audit work. The independence of the NAO is entrenched in the
        Constitution. The regularity, value-for-money and investigating sections have been set up separately
        from each other within the office.




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The legal and organisational framework of the NAO is largely compatible with the Resolution
concerning the Functioning of Supreme Audit Institutions 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
and Investigations Directorate (IAID) was established within the Cabinet Secretariat of the Office of
the Prime Minister. Functional independence is the keystone of this Directorate which, as its name
implies, performs not only the public Internal Audit function but also an investigative function.
These functions are performed by the two distinct and separate Units forming the Directorate, viz.
the Compliance and Operations Unit and the Special Assignments Unit, both under the sole
responsibility of the Director, Internal Audit and Investigations. The Compliance and Operations
Unit is organised into teams of auditors undertaking internal audit work in individual Ministries and
reporting directly to the respective Permanent Secretary and to the IAID. These internal audit teams
are responsible for compliance/substantive testing and systems audits of the financial control
systems within government. The IAID is the national contact point for DG Audit in respect of
internal control and internal audit. Malta signed and extended the agreement with DG Budget on
Public Internal Financial Control co-operation on internal control audit and inspections in October
2001.
The second unit of the IAID, the Special Assignments Unit, is responsible for government-wide
assignments and administrative financial investigations. It performs an anti-fraud co-ordinating
function even in matters concerning EU funds and, therefore, serves as the European Anti-Fraud
Office (OLAF)‟s interlocutor for purposes of protecting the financial interests of the EU.
The General Internal Audit Board (GIAB) provides strategic directives to the IAID and ensures the
harmonisation of internal audit standards and quality within the various Ministries.
The internal audit function has been provided with a new administrative, regulatory package
consisting in Charters for both IAID and GIAB, an Internal Audit and Investigations Function
Document and an Internal Audit and Investigations Manual. Government has also taken the decision
to provide a legislative basis for the Internal Audit and Investigative function. Formal legislation will
therefore establish and delineate the functions, powers and responsibilities of the IAID in this and
other respects.
The ex-ante control function is exercised by financial control units in the spending centres. This
function covers commitments, tendering and contracting procedures as well as disbursements.

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.




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Protection of EU Financial Interests
The new legislation providing the legal basis for the public financial control function of the IAID
will also establish its role in the protection of EU funds and the legal basis for its relations with the
EU Commission in respect of on-the-spot inspections carried out on the request or initiative of the
latter. It will therefore also formalise the role, powers and responsibilities of the IAID as Malta‟s
national interlocutor for DG OLAF.
This legislation, which will be adopted by the second quarter of 2002 together with the provisions of
the proposed Public Finance Management Act mentioned above, will introduce the necessary
administrative checks, measures and penalties for the protection of EU financial interests in line with
Regulation (EC) 2988/95. It will also permit access to Commission-appointed inspectors 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.
A twinning project is to start in October 2002 to strengthen the capacity of the IAID with respect to
anti-fraud activities and in particular to consolidate its co-operation with OLAF. Moreover,
approval has been received to attach four members of the IAID on a stage basis with DG Budget,
DG Internal Audit Services and DG OLAF during the fourth quarter of 2002.
Furthermore other legislative amendments will extend the scope of the Criminal Code early in 2002
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 European
Communities‟ Financial Interests. Maltese law is already compliant with many provisions of the said
Conventions. These amendments will, inter alia, extend the Criminal Code provisions dealing with
bribery of officials in government service to include provisions relating to bribery of officials of both
foreign governments and international organisations, increase the punishments to which fraud
offences are liable in such a way that in all cases of serious fraud the offences will be extraditable
and introduce new provisions in the Code providing for the criminal liability of legal persons for
offences of corruption (active and passive), money laundering and fraud. These amendments are
presently in a Bill in Committee stage and will be passed by Parliament by the first quarter of 2002.
This will be followed by the ratification of the relative Organisation for Economic Co-operation and
Development (OECD) and Council of Europe Conventions, envisaged before mid-2002.
Malta has ratified the European Convention on Money Laundering (1990). A new law amending the
Criminal Code, presently in Bill form (Bill No.28 of 2001), is being considered by Parliament. Once
enacted it will enable Malta to modify its reservations to this Convention thereby approximating
Malta‟s anti-money laundering law to those of the member states in the light of the Joint Action of 3
December 1998 adopted by the Council of the European Union on money laundering as well as the
identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds from
crime. This Bill will be passed by Parliament by the first quarter of 2002.
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




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laundering. Amending legislation has been adopted under the Prevention of Money Laundering Act
(Cap. 273) to provide the legal basis for the setting up of this Unit.
These issues are also discussed under Chapter 24 (Justice and Home Affairs) and Chapter 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 manages and monitors all EU funds directed to Malta, including, eventually, the
Structural Fund and the Cohesion Fund. A National Fund Management Unit, specifically catering for
all EU funding operations, as well as the necessary structures have been set up 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 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
Fifth 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
a) The human and other resources of the International Relations Directorate will be strengthened
   further.
b) 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).




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c) Introduction of a system of deferred payment with respect to customs duties after completing the
   required Customs administrative adaptations to operate the system.
d) Legislative amendments will be adopted by the first quarter of 2002 to extend the scope of the
   Criminal Code dealing with fraud and bribery of officials in Government service, in order to
   bring national 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. This will be followed by the ratification of the relative Organisation for Economic
   Co-operation and Development (OECD) and Council of Europe Conventions, envisaged to be
   effected before mid-2002.
e) In the area of external financial control, the implementation of the conclusions drawn from a
   revision, carried out during 2001, of the organisation chart of the National Audit Office, will
   continue. Recruitment in semi-senior and senior level grades (Audit Manager, Principal Auditor
   and Senior Auditor) will continue during 2002 until full complement is reached in these grades.
   1 Audit Manager, 8 Principal Auditors and 10 Senior Auditors are planned to be recruited (or
   promoted from existing staff). New recruits at this level will hold professional qualifications, in
   line with NAO policy. NAO audit examiners undergo continuous training, in line with the NAO
   Training Programme, to improve their auditing skills and competencies. The NAO will also
   continue to actively participate in the Liaison Officers and Working Group Meetings of the
   Supreme Audit Institutions of EU Applicant Countries in order to share experiences and
   improve audit methodologies and practices.
f) 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.
g) The necessary legislation to fully implement the Joint Action of 3 December 1998 on money
   laundering will be adopted and enter into force by first quarter of 2002.

C. 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 and appropriate training
will be required.




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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

Parliament
National Audit Office          Senior        -            -           -
                               Middle        6            -           6
                               Other         4            -           4
                               Total        10            -          10


D. 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




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3.9.2   Financial and Budgetary Matters

        A. Current Status
        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. Reforms in public finance management are expected to
        be enshrined in a new Public Finance Management Act which will replace the current Financial
        Administration and Audit Act. The principal Act will be supported by subsidiary legislation that
        will provide, among others, for public contracting, accounting standards, asset management, debt
        and credit control, financial control arising out of international obligations and sanctions for
        financial misconduct. It is expected that this legislative package will be approved by Cabinet,
        submitted to the Attorney General's Office for review and put on Government's legislative
        programme for enactment by the second quarter of 2002.
        A task force was set up in 1999 to oversee the introduction and implementation of the accrual-based
        accounting system according to a defined implementation project plan. The accrual based accounting
        system is envisaged to be in place in all government departments by the end of 2005. The
        Government Accrual Accounting Standards and Guidelines have been compiled and accrual
        accounting training is already being provided to public officers.
        Malta submitted a request 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 a three-year period. In 1998 the Government tabled, on the presentation of
        the budgetary estimates in Parliament, a six-year (1999-2004) planning scenario showing
        Government‟s expected financial position in terms of its projected revenue and expenditure
        initiatives for the medium-term. These projections have since reached half-way during their life-span
        and have, therefore, been revisited in November 2001.

        Budgetary Fund Management
        All revenues and other moneys raised or received by Malta, not being revenues or other moneys
        payable into some other fund being established under any law in force for a specific purpose, is,
        unless Parliament otherwise provides, to be paid into and from one Consolidated Fund.
        Moneys are only withdrawn from the Consolidated Fund to meet expenditure that is charged upon
        the Fund by the Constitution, or by the Appropriation Act, or any other law for the time being in
        force in Malta.




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All government transactions are accounted for within the Public Account held at the Central Bank of
Malta.
Government effectively meets its monetary liquidity requirements through the issue of Treasury
Bills.
Budgetary income and expenditure are accounted for on a cash basis and are recorded in the
financial year when these are received or effected. The Budget itself therefore is appropriated on a
cash basis, though these cash amounts may in certain cases include commitments made in the
previous year. However, if commitments are included these are not distinguished separately from the
expenditure that will arise and be paid in a financial year. Similarly, revenue collected in any one
particular year normally includes revenue which was due in arrears.
A recent amendment to the General Financial Regulations (LN40/66) allows in special
circumstances for unutilised amounts of approved expenditure, for which a commitment has been
made, which was awaiting certification and which would have been otherwise paid but for the lapse
of the current financial year, to be transferred to a “Below-the-Line” account held within the
Treasury Accounting System, for payment to be effected 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 with an
authorised capital only.
This system of Fund accounting still forms the nucleus of budget management, although
administrative changes have been implemented on the adoption of the European System of
Accounting (ESA) reporting framework.

Reinforcement of Evaluation Approaches
With respect to inventory control, the Departments are updating their databases to conform with the
latest standing procedures. Debtors and Creditors management procedures were issued to
Departments in September 2001 and will be implemented throughout 2002.
Public Accounting
The Public Chart of Accounts which ensures compliance with the European System of Accounting
has been reformed. The ESA-compliant classification of Government transactions of revenue and
expenditure and a new Chart of Accounts together with the COFOG classification for government
functions have been in use since 1 January 2001. Commitments are now being included separately
within the government budget. EU funds are also being presented separately from the national
resources within the budget, and are being treated separately 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. An electronic Departmental Accounting System
(DAS) 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. The
Government Accrual Accounting Standards are now complete but will need to be regularly
maintained by the Policy & Planning Directorate, while accrual accounting training commenced in




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October 2001. Trial financial statements under accrual accounting rules are to be issued by 31
December 2002. In the meantime the necessary amendments to the Departmental Accounting
System are being taken in hand.
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 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. A first draft including amendments to the existing VAT
legislation to make it conform with the EU Sixth Directive is expected to be delivered in the first
quarter of 2002 by two experts who have been contracted to carry out this exercise. It is expected
that the new legislation will be adopted by Parliament by the fourth quarter of 2002.
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. Amendments to the Excise Duty Act will be adopted
in various stages so that by the fourth quarter of 2002 full compliance with the acquis will have been
achieved.
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). A consolidated Customs Code, in line with the acquis, has been completed.
Furthermore, legislation is being introduced by virtue of a series of amendments to existing laws to
bring customs legislation in line with the acquis.
A Working Group within the Ministry of Finance, co-ordinated by the Director General responsible
for Financial Administration, is building the necessary administrative capacity to compile, calculate,
and collect Malta's eventual contribution to the Communities' Own Resources upon accession. The
Working Group is made up of the key players involved in the process, i.e. the Department of
Customs, the Department of Agriculture, the VAT Department, the National Statistics Office and the
Economic Planning Division. There are other players such as the Budget Office and the Treasury
Department taking part as observers. The National Authorising Officer within the International
Relations Directorate at the Ministry of Finance will be responsible for the eventual crediting of the
EU Commission's Account at the Central Bank of Malta with the national contribution to the
European Union‟s Own Resources.




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Financial and Budgetary Control
Roles, functions and responsibilities will be clearly defined under the new Public Finance
Management Act.
A more performance-related approach in public financial management, where pre-determined
outcomes will determine the extent of input resource requirements, will also be provided for.
Therefore, Malta‟s budgets are established within a framework that is very much in line with EU
practices.

B. Short Term Priorities
a) Introduce further value-for-money practices within all government agencies.
b) Identify and apply appropriate public management output performance systems in different
   government departments and agencies.
c) Offices of Review will be fully operational in all Government Ministries. These are discussed
   under Section 4.1 (Administrative Structures and Systems).
d) Finalisation of the last preparative phases, including the introduction of appropriate provisions in
   the new law on Public Finance Management, prior to the introduction of the Government
   accruals accounting system. The accrual-based accounting methodology will be completed in
   full by 2005.
e) Adopt by the second quarter of 2002 the new Public Finance Management Act, thereby ensuring
   complete agreement with the acquis.
f) Continue, on the part of the Working Group set up within the Ministry of Finance, to set up the
   administrative capacity for the calculation and collection of the Own Resources and for the
   reporting and transfer of information required in this area. The International Relations
   Directorate within the same Ministry will be responsible for effecting payment.

C. Institution Building Needs
Malta already possesses the main legislative and administrative structures that are capable of
effectively implementing and monitoring 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




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D. 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 LM1.5
million.




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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 the 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 Section 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 are being established to manage new areas
      and activities directly arising from the acquis. This Section therefore focuses mainly on centrally
      driven initiatives which will impact on 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, within some large departments, with 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.

      The Grading Structure
      Employees in the Public Service are classified into 20 salary scales subdivided into 4 categories: A,
      B, C and D.




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      Category A, representing top management, includes officers in Scales 1 to 5;
      Category B, representing middle management, includes officers in Scales 6 to 10;
      Category C includes employees in Scales 11 to 15 and represents technical, executive and
      supervisory grades; and
      Category D includes employees in Scales 16 to 20 and represents tradesmen and industrial
      grades.

Top Structures
The senior management structure of the Public Service consists of the following levels:
      Permanent Secretary
      Director General
      Director
      Assistant Director
Public officers are appointed to senior management positions on the basis of renewable performance
agreements lasting for three years (five years in the case of Assistant Directors). At the end of this
period a senior manager has to reapply for his or her position in competition with other applicants.
Reappointment is not guaranteed and depends on performance.

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:




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Office of the Prime Minister
Armed Forces, Oil Exploration, Public Service, Information, Government Information Technology
Services, Government Printing Press, E.U. Regional Policy, Internal Audit and Investigations, Malta
Council for Economic and Social Development
Ministry for Social Policy
Social Security, Family and Social Welfare, the Elderly and Community Services, Women in
Society, Housing, Industrial Relations, Labour, Employment and Training, Co-operative Systems,
Housing Construction and Maintenance, Parliamentary Affairs, Occupational Health and Safety
Ministry of Education
Education, Science and Technology Policy, Libraries and Archives, Museums, the Arts, Theatres
and Mediterranean Conference Centre, Public Broadcasting Services, Culture, 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, Malta
Resources Authority
Ministry of Tourism
Tourism, Malta Tourism Authority
Ministry for Transport and Communications
Civil Aviation, Malta Maritime Authority, Malta Transport Authority, Traffic Planning, Arterial and
Distributory 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 Corporation
Ministry for Home Affairs
Police, Immigration, Refugee Affairs, 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




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Agriculture, Horticulture, Fisheries, Aquaculture, Veterinary Services
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,
Data Protection
Ministry of Foreign Affairs
Relations with European Union, Relations with Foreign and Commonwealth Countries, Relations
with International Institutions

Capacity-Building in Corporate Services Departments
The development of the capacity of Corporate Services Departments is 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 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 synchronised 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 Departments of Corporate Services, once these have been
consolidated. The MPO is responsible for HR policy and planning, training and staff development
policy, employee relations, recruitment 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 the Corporate Services Departments in Ministries.
As a result, the MPO's role is changing and 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 is being moulded into that of policy formulator, mentor and
monitor. The MPO itself, is therefore, having to restructure in order to take on this new role which is
substantially different from how it has operated. It is the intention, indeed the determined goal, of




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MPO to free itself from the day-to-day administration and to focus on the more substantive issues,
such as industrial relations, policy development and analysis, and information management.
In order to support the capacity building process, the MPO, through the SDO, has embarked 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 is intended to assist DCSs
to implement changes within their departments. The methodology that is being used in this modular
programme is a mix of case work, work-based assignments and individual and group feedback.

Office of Review
Another important initiative that has been taken to strengthen the administrative capacity of the
Public Service is the establishment of Offices of Review within most line Ministries. Each Office of
Review is a change management unit which oversees change initiatives within the respective
Ministry and subordinate Departments. The remit of the Office of Review extends to EU
harmonisation initiatives; measures arising from Public Service change initiatives such as the
Quality Service Charter programme or Electronic Government; and initiatives specific to the
Ministry concerned.
Each Office of Review is headed by a Director who reports to the Permanent Secretary of the
Ministry. In addition to the Director, each Office of Review includes an EU Co-ordinator and a
Customer Care Co-ordinator as well as additional support staff.
The core role of the Office of Review is to monitor the progress of change initiatives on the
Permanent Secretary's behalf to ensure that the Ministry is meeting its commitments; to provide
regular status reports to the Permanent Secretary and higher authorities; and to intervene as
necessary to deal with any problems or obstacles that may affect the implementation of change
projects. The Office of Review may also have direct responsibility for the implementation of certain
initiatives. Permanent Secretaries are required to account for progress to a Cabinet Committee in
relation to EU-related projects and to a Public Service Change Committee (consisting of a Cabinet
Minister, the Head of the Public Service and other protagonists of change) in relation to Public
Service change initiatives. Offices of Review provide support to Permanent Secretaries in fulfilling
this obligation.

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 of Department              as far as
      possible;
      redefining organisations in terms of positions;




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      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;
      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. The
Public Service has also established information systems in its core management functions, namely
human resource management and payroll, finance (Departmental Accounting System) and
Procurement.
Investment in IT has been guided by an Information Systems Strategic Plan (ISSP) for 1999–2001 as
well as a White Paper on Electronic Government which was issued in October 2000. It is the
Government‟s intention to make possible remote delivery of as many public services as possible,
both via the Internet and other avenues such as call centres or Local Council offices. Plans for the
development of e-Government are under way with the selection of a strategic partner to provide
technological inputs in January 2002.
Following a recommendation in the 1999–2001 ISSP, a Central Information Management Unit
(CIMU) was set up within the Office of the Prime Minister in early 1999 to provide a strategic
direction for the further development of information technology within Government, to develop
common IT standards, and to foster good practice in information management within the Public
Service. CIMU is the central driver of the e-Government initiative. In addition, Information
Management Officers have also been appointed within most Ministries to improve Ministries‟
capacity to manage information effectively and exploit IT.
The development of a new ISSP has been taken in hand.

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.




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MALTA                                                                          Adoption of the Acquis
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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 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 development of senior officials.
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.
Training and development activities will continue to 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 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 2001 a
total of 36 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-sto