EU Standards On Agriculture

EUROPEAN UNION STANDARDS FOR
STATE REGULATION OF AGRICULTURE

Legal Memorandum

December 2012

EUROPEAN UNION STANDARDS FOR STATE REGULATION OF AGRICULTURE

Executive Summary

The purpose of this memorandum is to provide an overview of the
agricultural standards and institutions that states are required to implement to
accede to the European Union and to present policy options for their
implementation in Bosnia and Herzegovina (BiH).

To proceed with EU accession, Bosnia and Herzegovina will be required to
implement the EUs Common Agricultural Policy (CAP), which sets standards for
participation in the common agricultural market. In implementing the CAP, the
EU has placed particular emphasis on: (1) the development of a unified
administrative structure; (2) data collection; (3) subsidy administration; (4) food
safety; (5) veterinary and phytosanitary (plant health) policies; and (6) rural
development. Despite modest progress, the EU has assessed that BiHs efforts to
implement the CAP are impaired by weak coordination and enforcement
mechanisms.

This memorandum presents three policy options that could facilitate BiHs
progress towards achieving these standards. First, BiH could constitutionally
transfer control over agriculture to the state. Constitutional reform would ensure
stable and permanent change, but may be politically difficult to achieve. Second,
BiH could create a state-level Ministry of Agriculture without constitutional
reform, by obtaining the consent of the Entities. This solution would facilitate
uniformity and efficiency of agricultural policies, but also face political hurdles.
Third, BiH could expand the existing coordination mechanisms of the Ministry of
Foreign Trade and Economic Relations (MoFTER). This approach may prove
more politically viable than the alternatives, but may also be less effective in
ensuring CAP compliance. All three policies would require a political consensus
in BiH that EU accession justifies transferring certain powers to the state.
EU Standards for Regulation of Agriculture, December 2012

TABLE OF CONTENTS

Statement of Purpose 1

Introduction 1

The Common Agricultural Policy (CAP) 2

CAP Standards and Implementation in BiH 4
Unified Administrative Structure 4
Data Collection 6
Steps to implement EU data collection standards 8
Subsidies 8
Steps to implement EU standards on agricultural subsidies 10
Food Safety 10
Steps to implement EU standards on food safety 12
Veterinary and Phytosanitary Policies 12
Steps to implement EU veterinary and phytosanitary policies 13
Rural Development 13
Steps to implement EU standards for rural development 14

Policy Options to Achieve CAP Compliance 15
Constitutional Reform 15
Establishment of a Ministry of Agriculture 16
Expansion of Existing Coordination Structures 17

Conclusion 18

Annexes 19

INDEX OF ABBREVIATIONS

APA Accredited Paying Agency
BiH Bosnia and Herzegovina
CAP Common Agricultural Policy of the European Union
CMEF Common Monitoring and Evaluation Framework
EAFRD European Agricultural Fund for Rural Development
EU European Union
FADN Farm Accountancy Data Network
FBiH Federation of Bosnia and Herzegovina
FSA Food Safety Agency
GMO Genetically Modified Organisms
IACS Integrated Administration and Control System
MoA Ministry of Agriculture
MoFTER Ministry of Foreign Trade and Economic Relations
RS Republika Srpska


1

EUROPEAN UNION STANDARDS FOR STATE REGULATION OF AGRICULTURE

Statement of Purpose

The purpose of this memorandum is to provide an overview of the
agricultural standards and institutions that states are required to implement to
accede to the European Union and to present policy options for their
implementation in Bosnia and Herzegovina (BiH).

Introduction

In order to accede to the European Union (EU), states must adopt and
effectively implement the acquis communitaire (acquis), which refers to the entire
body of European law.
1
Chapter 11 of the acquis contains the EUs Common
Agricultural Policy (CAP), which regulates the European market for agricultural
products.
2

Nearly all components of the CAP demand strong state agricultural
institutions and coordination mechanisms. Some components, such as data
collection, explicitly require states to designate a single competent authority to
oversee implementation. Other components, such as food safety, require high
levels of policy coordination and harmonization throughout the state.

States often must strengthen their agricultural policy institutions in order to
comply with the CAP. To accomplish this, states can: (1) constitutionally grant
power over agricultural policy to the state; (2) legislatively empower a central
agency to control agricultural policy; or (3) create strong state institutions and
coordination mechanisms, while allowing sub-state units substantial authority over
agricultural policy.

The EU concluded in 2012 that BiH had made little progress in complying
with the CAP, in part due to decentralized and uncoordinated agricultural policies.
3

The BiH Constitution grants control of agriculture to BiHs Entities, the Republika

1
European Council, Santa Maria da Feira European Council 19-20 June 2000: Conclusions of the Presidency, 16
(2000), available at http://www.europarl.europa.eu/summits/fei1_en.htm.
2
Emil Erjavec and Dragi Dimitrievski, EU Common Agricultural Policy and Accession Tasks for Western Balkans
Countries, in WESTERN BALKAN AGRICULTURE AND EUROPEAN INTEGRATION 1, 2 available at
http://www.agroedu.net/basic/publication/English.pdf#page=6.
3
European Commission, Commission Staff Working Paper, Bosnia and Herzegovina 2012 Progress Report, 43
(Oct. 10, 2012), available at
http://ec.europa.eu/enlargement/pdf/key_documents/2012/package/ba_rapport_2012_en.pdf.

2

Srpska (RS) and the Federation of Bosnia and Herzegovina (FBiH).
4
Currently,
inter-Entity coordination is limited.
5
In addition, the EU noted that the states
political elites lack a shared vision on the overall direction and future of BiH.
6
For
EU accession, BiH needs political will and functional institutions at all levels with
an effective coordination mechanisms on EU matters.
7

This memorandum provides an overview of the agricultural standards and
institutions that Bosnia and Herzegovina (BiH) will be required to implement to
accede to the European Union. It begins with a discussion of the EUs CAP and
goes on to elaborate on CAP standards and their implementation in BiH. It
concludes with policy options to achieve CAP compliance.

The Common Agricultural Policy (CAP)

The Common Agricultural Policy (CAP) regulates the market for
agricultural products in the EU.
8
Since its adoption, the single market and
reduction of technical barriers to trade have significantly increased European trade
in food products.
9

The goals of the CAP shift over time in accordance with regional needs.
10

Since the late 1990s, the CAP has promoted the competitiveness of European
agriculture by assisting farmers in tailoring their production to market demand,
diversifying, and improving product marketing.
11

4
BOSNIA AND HERZEGOVINA CONST. art. 3(3)(a) (1995), available at
http://www.ohr.int/dpa/default.asp?content_id=372.
5
(Oct. 10, 2012).
6
European Commission, Commission Staff Working Paper, Bosnia and Herzegovina 2012 Progress Report, 4 (Oct.
10, 2012).
7
European Commission, Commission Staff Working Paper, Bosnia and Herzegovina 2011 Progress Report, 4 (Oct.
12, 2011), available at http://ec.europa.eu/enlargement/pdf/key_documents/2011/package/ba_rapport_2011_en.pdf.
8
European Union, Common Agricultural Policy, available at http://www.eurunion.org/eu/Agriculture/Common-
Agricultural-Policy.html.
9
Bruno Henry de Frahan and Mark Vancauteren, Harmonisation of food regulations and trade in the Single Market:
evidence from disaggregated data, 33 EUROPEAN REVIEW OF AGRICULTURAL ECONOMICS, 337, 337-360 (2006).
10
Originally the goals of the CAP were laid out in Article 33 of the Treaty of the European Union (TEU) and
included: increasing agricultural productivity, ensuring a fair standard of living for the agricultural community,
stabilizing markets, assuring the availability of supplies, and ensuring that supplies reach consumers at reasonable
prices. These goals have widely been achieved in the last decades, which has led the EU to focus on new goals. See
Gerritt Meester, Future development and policies, in EU POLICY FOR AGRICULTURE, FOOD AND RURAL AREAS 403,
403 (Arie Oskam, Gerrit Meester and Huib Silvis, eds., 2010).
11
European Commission, The Common Agricultural Policy Explained, 7, available at
http://ec.europa.eu/agriculture/publi/capexplained/cap_en.pdf.

3

Price of agricultural products in Estonia after its EU accession in 2004:
Kristina Toming points out that, contrary to prior expectations in
Estonia that the adoption of the EUs CAP would lead to an increase in
prices for imported as well as domestically produced food stuffs, this
did not occur in the expected extend. Studies predicted a price increase
of 100-200 percent for sugar, milk products, butter, and beef. The
actual increases amounted to only fractions of these estimates. Between
April 2004 and May 2005, the price of milk decreased by 5.7 percent,
butter increased by 22 percent, beef increased by 4.6 percent, and sugar
increased by 115.6 percent.
12

Increasingly, the CAP also focuses on factors such as food quality, animal
welfare, environmental impact, and agricultural sustainability.
13
The CAP will be
reformed by 2013 to accommodate the recent enlargement of the EU,
14

environmental and climate pressures,
15
and budgetary constraints.
16
The most
recent proposals for the CAP after 2012 focus on three priorities: viable food
production, sustainable management of natural resources, and balanced
development of rural areas throughout the EU.
17

The CAP has two pillars, which are formulated by the EU and implemented
by the member states.
18
The first pillar addresses agriculture markets, particularly
farmer and product subsidies.
19
The second pillar focuses on sustainable rural
development through infrastructure and environmental improvements.
20
The first
pillar is entirely funded from the EU budget, while the EU and the Member States

12
Kristina Toming, The Price Impact of Adopting the Common Agricultural Policy in Estonia, p. 46, available at:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=892032.
13
Gerritt Meester, Future development and policies, in EU POLICY FOR AGRICULTURE, FOOD AND RURAL AREAS
403, 403. Arie Oskam and Arjen van Witteloostuijn, Agriculture and the food chain, in EU POLICY FOR
AGRICULTURE, FOOD AND RURAL AREAS 149, 162 (Arie Oskam, Gerrit Meester and Huib Silvis, eds., 2010).
14
Gerritt Meester, Future development and policies, in EU POLICY FOR AGRICULTURE, FOOD AND RURAL AREAS
403, 405-407 (Arie Oskam, Gerrit Meester and Huib Silvis, eds., 2010).
15
European Commission, Working Paper, Executive Summary of the Impact Assessment: Common Agricultural
Policy towards 2020, 2, available at http://ec.europa.eu/agriculture/analysis/perspec/cap-2020/impact-
assessment/summary_en.pdf.
16
Emil Erjavec and Dragi Dimitrievski, EU Common Agricultural Policy and Accession Tasks for Western Balkans
Countries, in WESTERN BALKAN AGRICULTURE AND EUROPEAN INTEGRATION 1, 3 (2004).
17
European Commission, The Common Agricultural Policy and Agriculture in Europe Frequently Asked
Questions (June 11, 2012), available at http://ec.europa.eu/agriculture/faq/index_en.htm.
18
European Commission, Agriculture and Rural Development, 4, available at
http://www.un.org/esa/agenda21/natlinfo/countr/ec/agriculture.pdf.
19
Daniele Moro and Paolo Sckokai, The impact of pillar I support on farm choices, PAPER PREPARED FOR THE
122ND EAAE SEMINAR, 1, available at http://ageconsearch.umn.edu.
20
European Commission, Agriculture and Rural Development, 5-6.

4

jointly finance the second pillar. Most funds go to direct income support for
farmers, conditioned on their compliance with environmental and product quality
rules.
21

CAP Standards and Implementation in BiH

In 2004, the European Commission issued a Functional Review of the
Agricultural Sector in BiH. This comprehensive report analyzed the structure,
competencies, and resources of BiHs agricultural institutions and provided
recommendations to increase sector efficiency.
22
Since 2004, the European
Commission has published annual progress reports that discuss the current status of
BiHs agricultural institutions and regulatory framework.
23

The EUs Progress Reports have recently focused on six areas of CAP
implementation: (1) the development of a unified administrative structure; (2) data
collection; (3) subsidies; (4) food safety; (5) veterinary and phytosanitary (plant
health) policies; and (6) rural development. The standards and recommendations
relating to these areas are explored below.

Unified Administrative Structure

Implementation of the CAP requires states to create and maintain an
appropriate statewide administrative structure. States have discretion to designate
any agency as the competent authority to administer CAP requirements.
24
In
practice, most states designate the Ministry of Agriculture or a similar state entity
as the competent authority.

21
CAPs budget is spent in 3 different ways: income support for farmers (70%), rural development (20%), and
market support (less than 10%). European Commission, The Common Agricultural Policy and Agriculture in
Europe Frequently Asked Questions (June 11, 2012).
22
European Commission, Functional Review of the Agricultural Sector in BiH (Oct. 2004), available at
http://www.esiweb.org/enlargement/wp-content/uploads/2010/03/agriculture-functional-review_bih_2004.pdf.
23
European Commission, Citizen's Summary: Potential New EU countries Progress Towards Membership,
(2010), available at:
http://ec.europa.eu/enlargement/pdf/key_documents/2011/package/citizens_summary_2011_en.pdf.
24
European Commission, Screening Report: Turkey, Chapter 11 Agriculture and Rural Development, 2 (Sept. 7,
2006), available
at http://ec.europa.eu/enlargement/pdf/turkey/screening_reports/screening_report_11_tr_internet_en.pdf.

5

The necessity of functioning administrative structures:
Author Jerzy Wilkin argues that efficient and quick absorption of
EU support requires adequate institutional capacity. Moreover, he
claims that further institution building is necessary for a complete
implementation of CAP, which has in some instances been delayed.
The lack of necessary institutional capacity may have direct
negative consequences for farmers. For instance, due to institutional
problems, EU payments to farmers in Hungary were delayed.
Dissatisfaction with the implementation of the CAP led to massive
demonstrations by farmers on the streets of Budapest.
25

In BiH, agricultural policy is largely set by the Entities, though some
progress has been made towards unifying the administrative structure. In 2001, the
Entities signed a Memorandum of Understanding that pledged to harmonize
policies, guard against unfair competition, establish a trade information center, and
cooperate in establishing authorized laboratories.
26

BiH also expanded the role of the Ministry of Foreign Trade and Economic
Relations (MoFTER) in the 2008 Law on Agriculture, Food and Rural
Development (2008 Law).
27
This legislation was expressly drafted to address the
CAP directives,
28
and instructs MoFTER to ensure the harmonization of Entity
agricultural policies.
29
The 2008 Law also established several state institutions
necessary for the implementation of the CAP, such as the BiH Veterinary Office
and Office for Harmonization and Coordination of Payment Systems.
30

25
Jerzy Wilkin, Agriculture in new Member States expectations and lessons learned, 10, 7 (Sept. 2007), available
at http://ageconsearch.umn.edu/bitstream/8529/1/sp07wi01.pdf.
26
European Commission, Functional Review of the Agricultural Sector in BiH, 17 (Oct. 2004).
27
Law on Agriculture, Food and Rural Development (May 15, 2008), available at
http://www.agrowebcee.net/fileadmin/content/agroweb_ba/files/Country_profile/M/BH_Law_on_Agriculture_Food
_and_Rural_Development.pdf. For additional information on how the BiH Law on Agriculture, Food and Rural
Development implements the CAP, see Annex A.
28
It aims specifically at defin[ing] the framework and mechanisms required to prepare for association with, and
accession to, the European Union, and the law makes multiple references to compliance with EU standards and
policies. The objectives of the BiH agricultural policy are set forth in Article 4 and include ensuring harmonization
& integration of the sector within the EU & global market place. The policy measures in the agricultural sector are
divided into two categories, in clear reference to the two pillars of the CAP: agricultural market support and rural
development (Article 5). See Law on Agriculture, Food and Rural Development, arts. 1, 4, 5 (May 15, 2008).
29
Law on Agriculture, Food and Rural Development, arts. 6(2), 7 (May 15, 2008).
30
Law on Agriculture, Food and Rural Development, art. 10 (May 15, 2008).

6

In order to accelerate implementation, the 2008 Law set deadlines for the
enactment of regulations and the establishment of institutions.
31
Although most of
these deadlines occurred one year after the 2008 Laws entry into force, only
modest progress has been made.
32
While the Office for Payment Harmonization
was established, as of October 2012, it lacked the necessary staff to carry out its
functions.
33
In addition, the BiH Veterinary Office does not have sufficient powers
to act as the central competent authority, and implementing legislation and a state-
strategy for rural development are still pending.
34

Data Collection

The CAP also requires states to provide detailed agricultural and farm
income data. States must establish agencies to coordinate statistics, including a
liaison agency and a national committee for the EU-wide Farm Accountancy Data
Network (FADN).
35
In light of these requirements, the EU has urged BiH to
improve its collection of reliable and standardized agricultural data.

First, the EU has emphasized the need for greater accuracy in BiHs
agricultural reports. After the EU questioned the reliability of BiHs agricultural
reports in 2007 and 2008,
36
BiH conducted farm structure surveys in 2009 and
2010 in an effort to enhance data accuracy.
37
The EU has also recommended that
BiH conduct a comprehensive agricultural census to provide reliable data on land
holdings.
38
While the 2012 Law on Census of Population, Households and
Dwellings in BiH allows for the collection of data on agricultural holdings in order

31
Law on Agriculture, Food and Rural Development, art. 25 (May 15, 2008).
32
European Commission, Commission Staff Working Paper, Bosnia and Herzegovina 2012 Progress Report, 43-44
(Oct. 10, 2012).
33
(Oct. 10, 2012).
34
(Oct. 10, 2012).
35
European Commission, Guide to the Main Administrative Structures Required for Implementing the Acquis, 37
(2005), available at
http://ec.europa.eu/enlargement/pdf/enlargement_process/accession_process/how_does_a_country_join_the_eu/neg
otiations_croatia_turkey/adminstructures_version_may05_35_ch_public_en.pdf.
36
European Commission, Commission Staff Working Document, Bosnia and Herzegovina 2009 Progress Report, 46
(Oct. 14, 2009), available at http://ec.europa.eu/enlargement/pdf/key_documents/2009/ba_rapport_2009_en.pdf.
37
(Nov. 9, 2010), available at
http://ec.europa.eu/enlargement/pdf/key_documents/2010/package/ba_rapport_2010_en.pdf; European Commission,
Commission Staff Working Paper, Bosnia and Herzegovina 2011 Progress Report, 51 (Oct. 12, 2011).
38
(Nov. 9, 2010).

7

to establish an address list for the agricultural census,
39
BiH has yet to adopt the
Law on the Agricultural Census.
40
Moreover, while the Census on Population,
Households and Dwellings is slated for April 2013, experts suspect that it may be
delayed.
41

Second, the EU has urged BiH to standardize agricultural data throughout
the state. Specifically, the EU has called for the adoption of an Integrated
Administration and Control System (IACS) that will harmonize farm registration
data.
42
An IACS assigns an alphanumeric ID to each land parcel and tracks the
status of aid applications.
43

A major challenge in the standardization of agricultural data is the lack of
cooperation between the Entities, which have separate statistical agencies. The EU
has called for the adoption of an Agricultural Information Strategy to harmonize
Entity data collection methods and calculations. Although a committee for the
coordination of agricultural information was established in 2008,
44
it has made
little progress. Some municipalities have agreed to an action plan that would
develop an FADN, but this is not universal across BiH, and therefore would not
satisfy the EUs requirement.
45
As of October 2012, no Agricultural Information
Strategy had been adopted.
46

39
Law on Census of Population, Households and Dwellings in Bosnia and Herzegovina in 2013, art. 9 (Feb. 3,
2012), available at http://www.fzs.ba/Dem/Popis/Zakon%20o%20popisu-en.pdf.
40
(Oct. 10, 2012).
41
Balkan Insight, Bosnia Census Might Be Postponed, Experts Predict (Nov. 20, 2012), available at
http://www.balkaninsight.com/en/article/bosnian-2013-census-might-be-postponed.
42
(2005).
43
European Commission, Guide to the Main Administrative Structures Required for Implementing the Acquis,
(2005).
44
(Oct. 14, 2009).
45
(Nov. 9, 2010).
46
(Oct. 10, 2012).

8

Steps to implement EU data collection standards:

(1) Adopt an Integrated Administration and Control System for farm
registration data.
(2) Conduct an Agricultural Census.
(3) Adopt an Agricultural Information Strategy to harmonize data
collection between the Entities.

Subsidies

The EU has emphasized two areas of reform for BiHs subsidy system: (1)
the basis for determining subsidies, and (2) the administration of payments.

First, the CAP has recently shifted its emphasis from production-based
subsidies to the single payment scheme, and single area payment scheme.
47

The new system calculates subsidies based on the amount of land owned by each
farmer, and adjusts this figure based on the farmers compliance with EU standards
on environmental protection, animal welfare, and product quality.
48
Because
production levels currently determine BiHs agricultural subsidy payments,
49
BiH
will need to alter the basis of its subsidy calculations in order to comply with the
CAP.

Pre-accession investment of candidate states:
The EU Functional Review of the Agricultural Sector in BiH
pointed out that Slovenia, which acceded in 2004, spent annual
subsidies of some 300 ! per hectare in the pre-accession period in the
agricultural sector. According to the report, this spending reflects not
only the importance Slovenia gives to the agricultural sector, but also
Slovenias ability to acquire and administer EU pre-accession funds. In
contrast, Latvia, which also acceded in 2004, still had problems in
2002/2003 with regard to supporting the agricultural sector, resulting in
only some 21 ! per ha per year. Compared with these benchmarking

47
European Commission, Single Farm Payment (May 6, 2011), available at
http://europa.eu/legislation_summaries/agriculture/general_framework/ag0003_en.htm.
48
European Commission, Single Farm Payment (May 6, 2011).
49
(Oct. 10, 2012).

9

countries, BiH ranks lowest with only 16,4 ! per year per ha.
The EU Commission concluded that, in the pre-accession phase,
Candidate Countries have to first invest considerable sums from their
national budgets in order to become institutionally prepared for EU
accession.
50

Second, the CAP requires states to process subsidies through a single
payment system.
51
This system can either consist of a single Accredited Paying
Agency (APA), or multiple APAs that liaise with the EU through a single
coordinating body.
52
To become accredited, each APA must fulfill criteria set
forth in Regulation (EC) No. 885/2006, relating to internal environment, control
activities, information and communication, and monitoring.
53

The role of an APA is to process CAP subsidy transfers through an IACS.
54

This involves maintaining a computerized database that tracks aid applications and
verifies farmer identification and holdings.
55
The APA also conducts on-the-spot
inspections to verify farmers compliance with the requirement that they keep their
land in good agricultural and environmental condition.
56
States are required to
designate public or private entities as certification bodies, to monitor each
APAs accounting, management and control systems.
57

The EU has indicated that BiH will need to substantially harmonize its
subsidy payment system in order to comply with the CAP.
58
FBiHs Ministry of
Agriculture coordinates subsidy distribution with cantonal and municipal
agriculture agencies.
59
Subsidies are administered chiefly through the cantons,
with levels of support varying greatly between cantons based on the priority

50
European Commission, Functional Review of the Agricultural Sector in BiH, 104, 107 (Oct. 2004).
51
European Commission, Integrated Administration and Control System (IACS) (Jul. 10, 2011), available at
http://ec.europa.eu/agriculture/direct-support/iacs/index_en.htm.
52
European Commission, Fact Sheet: Managing the Agriculture Budget Wisely, 5 (2007), available at
http://ec.europa.eu/agriculture/publi/fact/clear/2007_en.pdf.
53
European Commission, Fact Sheet: Managing the Agriculture Budget Wisely, 5 (2007).
54
European Commission, Integrated Administration and Control System (IACS) (Jul. 10, 2011).
55
Council Regulation 73/2009, 2009 O.J. (L 211) 7 (EC), available at http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:030:0016:0016:EN:PDF.
56
Council Regulation 73/2009, 2009 O.J. (L 211) 7 (EC).
57
Europa, Financing the Common Agricultural Policy (October 9, 2009), available at
http://europa.eu/legislation_summaries/agriculture/general_framework/l11096_en.htm.
58
See European Commission, Commission Staff Working Paper, Bosnia and Herzegovina 2011 Progress Report
(Oct. 12, 2011).
59
European Commission, Functional Review of the Agricultural Sector in BiH, 53 (Oct. 2004),.

10

accorded to agriculture and each cantons financial situation.
60
In the RS, the
Ministry of Agriculture receives subsidy applications and collaborates with
municipal agencies.
61
The EU has described both systems as inefficient, despite
recent attempts to increase personnel.
62

In June 2009, the parliament adopted a decision to create the Office for
Payment Harmonization, which would set the stage for development of a state-
level institution for the harmonization of the Entity-level support measures and
allow for gradual alignment with the acquis.
63
As previously mentioned, while the
Office for Payment Harmonization was established, it lacks the necessary staff to
carry out its functions.
64
As of October 2012, a state-level harmonization plan has
yet to be implemented.
65

Steps to implement EU standards on agricultural subsidies:

(1) Adopt a Single Payment Scheme to calculate subsidies.
(2) Designate one or more Accredited Payment Agencies.
(3) Implement an Integrated Administration and Control System to track
and process payments.
(4) Designate certification bodies to monitor the APA(s).

Food Safety

Food safety is a CAP priority due to its role in public health and
international trade. As set forth in the CAP, states must have appropriate
administrative structures to implement EU laws on food hygiene, inspection and
control requirements.
66
Second, the CAP requires states to establish a Rapid Alert
System for Food and Feed, which consists of an official contact point and
computer network system that enables fast exchange of information on food and

60
61
European Commission, Functional Review of the Agricultural Sector in BiH, 31-32 (Oct. 2004).
62
European Commission, Functional Review of the Agricultural Sector in BiH (Oct. 2004); European Commission,
Commission Staff Working Paper, Bosnia and Herzegovina 2011 Progress Report, 43 (Oct. 12, 2011).
63
(Oct. 14, 2009).
64
(Oct. 10, 2012).
65
(Oct. 10, 2012).
66
(2005).

11

feed emergencies (e.g., when a product must be urgently removed from the
market).
67
Third, states must enforce the EUs traceability and labeling
requirements for genetically modified organisms (GMOs), in particular the
designation of a competent authority to regulate marketing of food that contains
GMOs.
68
Fourth, states must approve and regulate facilities that irradiate
foodstuffs, including the methods used to detect radiation.
69

BiH has made modest progress in implementing this aspect of the CAP. The
state parliament adopted the State Food Safety Law in 2004 and established the
Food Safety Agency (FSA) in 2006.
70
Despite these steps, however, the 2012
Progress Report identified gaps in BiHs implementation. For instance, a
laboratory capacity strategy to cover analysis of samples in line with the official
controls on food and feed chains still needs to be drawn up.
71
In addition, while
BiH did adopt implementing legislation on residues of pesticides and radioactive
contamination, reference laboratories for monitoring residue remain to be
designated.
72

Another obstacle to implementing the CAP food safety standards is that the
responsibilities for food safety remain disjointed at the state and Entity levels.
73

BiHs decentralized structure and weak FSA have led to inconsistent standards
with respect to safety measures, including ionizing radiation requirements, quick-
frozen foodstuffs regulation, and food contamination monitoring.
74
As the
European Commission has previously noted, these different standards impede

67
(2005).
68
European Commission, Guide to the Main Administrative Structures Required for Implementing the Acquis, 43-44
(2005).
69
(2005).
70
USDA Foreign Agricultural Service, Bosnia and Herzegovina Food and Agricultural Import Regulations and
Standards Narrative, 3 (July 29, 2009), available at
http://gain.fas.usda.gov/recent%20gain%20publications/food%20and%20agricultural%20import%20regulations%20
and%20standards%20-%20narrative_sarajevo_bosnia%20and%20herzegovina_7-29-2009.pdf.
71
(Oct. 10, 2012).
72
(Oct. 10, 2012).
73
(Oct. 10, 2012).
74
(Oct. 12, 2011).

12

coherent nation-wide infrastructure and have a negative impact on agricultural
trade.
75

Steps to implement EU standards on food safety:

(1) Create a Rapid Alert System for food safety emergencies.
(2) Establish a labeling regime for GMOs.
(3) Adopt a regulatory regime for facilities that irradiate food.

Veterinary and Phytosanitary Policies

The acquis requires states to carefully monitor animal and plant health.
Specifically, the state must designate competent authorities to enforce (1) on-site
inspections of farming facilities, (2) non-discriminatory inspections during
transport, at borders, and at destination points, and (3) laboratory testing systems.
76

Competent authorities must also maintain emergency funds for disease control and
oversee official veterinarians and inspectors.
77

BiH has already designated competent authorities: the Veterinary Office of
BiH
78
and the Administration of BiH for Plant Health Protection.
79
EU Progress
Reports have praised these developments, but noted continuing problems in both
veterinary and phytosanitary policy, particularly with regard to the alignment of
legislation with the acquis.
80

In the veterinary sector, the European Commission has urged more controls
on the distribution and use of veterinary medicine,
81
accreditation of veterinary

75
(Oct. 14, 2009); See also European Commission, Commission Staff Working Paper, Bosnia and Herzegovina 2011
Progress Report, 43 (Oct. 12, 2011).
76
(2005).
77
European Commission, Guide to the Main Administrative Structures Required for Implementing the Acquis, 45-46
(2005).
78
Ministry of Foreign Trade and Economic Relations, Veterinary Office of Bosnia and Herzegovina Basic
Information, available at http://www.vet.gov.ba/?q=en/node/133.
79
European Union, Administration of Bosnia and Herzegovina for Plant Health Protection Brochure, available at
http://eufitobh.com/sites/default/files/FITO-brosura-eng.pdf.
80
(Oct. 12, 2011).
81
(Oct. 12, 2011).

13

diagnostic laboratories,
82
and more funding for the state residue control plan.
83
In
the phytosanitary sector, the 2011 Report urged more regulation of plant product
facilities, plant passports, organisms harmful to plants, and GMOs.
84
Of note,
progress was made between 2011 and 2012 with regard to phytosanitary checks at
boarder crossings due to the introduction of uniform lists of plants and plant
products subject to health inspections.
85

Steps to implement EU veterinary and phytosanitary policies:
(1) Designate a competent authority to oversee implementation.
(2) Establish operational inspections, laboratory testing, and regulatory
regimes.

Rural Development

The EU Progress Reports have increasingly focused on rural development.
While BiH has taken some steps toward meeting EU expectations for rural
development, as previously mentioned, it has not yet adopted a statewide rural
development strategy.
86

In order to receive investments from the European Agriculture Fund for
Rural Development (EAFRD), which composes 20% of CAP allocations, states
must first designate competent authorities that can design, implement, manage and
evaluate rural development programs, and control financial flows.
87
The
competent authorities must develop a National Strategy Plan to improve

82
(Nov. 9, 2010); See also European Commission, Commission Staff Working Paper, Bosnia and Herzegovina 2012
Progress Report, 43 (Oct. 10, 2012).
83
(Oct. 12, 2011).
84
(Oct. 12, 2011).
85
(Oct. 12, 2011).
86
(Oct. 12, 2011).
87
Europa, European Agricultural Fund for Rural Development (EAFRD) (May 1, 2012), available at
http://europa.eu/legislation_summaries/agriculture/general_framework/l60032_en.htm; Council Regulation
1698/2005, art. 74, 75, 2005 O.J. (L 277) 1 (EC), available at http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:277:0001:0040:EN:PDF; European Commission, Guide to
the Main Administrative Structures Required for Implementing the Acquis, 40 (2005).

14

agricultural competitiveness, the environment, and general welfare in rural areas.
88

States must also develop an effective rural credit scheme.
89
In addition, states must
establish monitoring committees to assess the effectiveness of rural development
projects.
90
The monitoring committee(s) may develop its own rules of procedure,
but must evaluate programs in accordance with the Common Monitoring and
Evaluation Framework (CMEF).
91

In BiH, a state-level strategic plan was put in place in 2009, but it has not
been implemented.
92
While MoFTER appointed working groups on the payment
agent and managing authority for rural credit programs, little progress has been
made.
93
Although the Office on Payment Harmonization was established, it lacks
the staff to carry out its tasks.
94
As of October 2012, no other progress has been
reported.
95

Steps to implement EU standards for rural development:
(1) Designate a competent authority or authorities.
(2) Develop a National Strategy Plan.
(3) Establish a rural credit scheme.
(4) Designate monitoring committees to assess policy effectiveness.

88
Council Regulation 1698/2005, art. 11, 2005 O.J. (L 277) 1 (EC).
89
(Oct. 14, 2009); European Commission, Commission Staff Working Document, Bosnia and Herzegovina 2010
Progress Report, 45 (Nov. 9, 2010).
90
(2005); Council Regulation 1698/2005, art. 78, 2005 O.J. (L 277) 1 (EC).
91
European Commission, Directorate General for Agriculture and Rural Development, Rural Development 2007-
2013 Handbook On Common Monitoring and Evaluation Framework, 40 (2006), available
athttp://ec.europa.eu/agriculture/rurdev/eval/index_en.htm; Council Regulation 1698/2005, art. 78,80, 2005 O.J. (L
277) 1 (EC).
92
(Oct. 10, 2012).
93
(Nov. 9, 2010).
94
(Oct. 10, 2012).
95
(Oct. 10, 2012).

15

Policy Options to Achieve CAP Compliance

Implementation of the CAP requires the strengthening of agricultural policy
coordination and implementation mechanisms. States may address this by (1)
constitutionally granting competence for agriculture to the state; (2) legislatively
establishing a statewide agency with authority over agriculture; (3) strengthening
coordination mechanisms while allowing sub-state units substantial control over
agriculture. In BiH, where the current constitution grants control over agriculture
to the Entities, possible options include: (1) constitutional reform to place
agricultural competencies at the state level; (2) the establishment of a statewide
Ministry of Agriculture with the consent of the Entities; or (3) the strengthening of
existing agricultural institutions and enforcement mechanisms within the
framework of the MoFTER. Effectively implemented, each of these options would
enable the designation of a competent authority to oversee CAP implementation.

Constitutional Reform

One possible option is to constitutionally transfer control over agriculture
from the Entities to the state. This approach may offer significant benefits. First,
centralizing control over agriculture would ensure statewide uniformity in
agricultural policy, and enable more efficient management. A single state-level
point of contact between the EU and BiH would also simplify communication and
prevent duplication. Second, a constitutional amendment might stabilize
agriculture institutions and agencies more effectively than ordinary legislation. For
instance, this approach may minimize the effects of future political conflicts on
agricultural policy and CAP implementation. Further, such a structure may help to
streamline decision-making and the implementation of legislation.

Despite these benefits, constitutional reform may face political hurdles.
Constitutional reforms require a two-thirds majority in parliament to pass, which is
difficult to achieve in a divided political system.
96
In 2006, the parliament failed to
pass a package of constitutional reforms
97
that included the creation of a state
Ministry of Agriculture (albeit by only two votes).
98

96
BOSNIA AND HERZEGOVINA CONST. art. 10(2) (1995).
97
Balkan Investigative Reporting Network, Bosnia: Constitution Reform Setback (Jan. 25, 2007), available at
http://birn.eu.com/en/67/10/2141/.
98
Roberto Belloni, STATE BUILDING AND INTERNATIONAL INTERVENTION IN BOSNIA 165 (2008).

16

Establishment of a State Ministry of Agriculture

The constitution of BiH grants control over agriculture to the Entities, but
stipulates that they may agree to transfer this competence to the state and establish
a statewide Ministry of Agriculture.
99
The EU assessed and endorsed this step in
its 2004 Functional Review of the Agricultural Sector in BiH.
100

Administrative structure in federally organized member states:
The 2004 EU Functional Review of the Agricultural Sector in
BiH noted that even federally organized EU Member States have a state
level Ministry of Agriculture. According to the report, Austria, as a
highly federalized country, implements EU regulations and other norms
exclusively through federal institutions the Government and the
Parliament while the administration of rural support programs and
other support measures are primarily managed by lower level executive
layers.
Both Austria and Germany apply the overruling principle,
which ensures that State laws overrule Lnder laws; additionally, for
certain areas (including agriculture) competitive legislation reserves
competencies for State level execution if needed and agreed upon by the
inferior Lnder level.
101

This approach may offer many of the same benefits as constitutional reform,
namely uniformity and efficiency. The EU has repeatedly advocated for this
reform, which several existing member states successfully used to implement the
CAP regime.
102

However, this approach may provide less stability than a constitutional
reform, as the Entities may attempt to reassert their authority or revoke their
consent. This option may also present practical challenges. The establishment of a
state-level Ministry would weaken the current political power of the Entities.
Under BiH law, the success of this option depends on Entity consent to the

99
BOSNIA AND HERZEGOVINA CONST. art. 3(5) (1995).
100
European Commission, Functional Review of the Agricultural Sector in BiH, p. 8 (Oct. 2004). For a possible
structure and staffing of a Ministry of Agriculture for BiH, see Annex B.
101
102

17

curtailment of their powers, and continued cooperation as the Ministry implements
reforms.

Expansion of Existing Coordination Structures

A third possible option is to expand and strengthen the existing Ministry of
Foreign Trade and Economic Relations (MoFTER). The EU has suggested that
this approach may suffice to comply with the CAP. The 2011 Progress Report
acknowledged the difficulty of creating a Ministry of Agriculture in BiH, and
advocates for, strengthening the state-level administrative capacity and co-
ordination structures.
103
This language suggests that BiH may be able to fulfill
the CAP requirements by strengthening existing institutions rather than creating a
new agency.

Because this approach allows the Entities to retain substantial authority over
agricultural policy, it may not produce as much uniformity and efficiency as the
alternatives. However, this approach may prove more politically viable. The
Entities demonstrated a basic commitment to cooperation in the 2001
Memorandum of Understanding.
104
In addition, in enacting the 2008 Law on
Agriculture, Food and Rural Development, the state demonstrated its willingness
to expand MoFTERs mandate in order to fulfill the CAP.
105
However, the
effective implementation and any expansion of this law will require sustained
efforts and strong political will by all parties.

These policy options to achieve CAP compliance all involve the
strengthening of state powers. While constitutional reform or the creation of a
Ministry of Agriculture would likely provide the most stable and permanent
change, they may also be difficult to achieve politically. The third option, an
expansion of the MoFTERs competencies, may be more politically feasible than
the alternatives, but may also prove less effective in facilitating CAP compliance.

103
Interview with the EU Commission with a specific query as to why the 2011 report makes no mention of a state-
level Ministry of Agriculture, see Annex C.
104
In the 2001 Memorandum of Understanding, the two Entity Ministries of Agriculture agreed to contribute to the
BiH market of agricultural products, harmonize taxes for the trade of agricultural products, work on protection of
agricultural products from unfair competition, start with the establishment of a trade information center, harmonize
laws on the BiH level with EU regulations, harmonize the legislation of the two Entities, contribute to the
strengthening of the BiH administrations, and cooperate on the establishment of authorized laboratories. See
105
Law on Agriculture, Food and Rural Development (May 15, 2008).

18

Conclusion

Implementation of the CAP is an important and challenging part of the EU
accession process. EU standards for agricultural products will likely remain high
and possibly become stricter as the focus shifts to environmental and social goals.

Although the EU does not demand a specific institutional framework,
successful implementation requires strong coordination and enforcement
mechanisms. This memorandum has outline three possible policy approaches that
could facilitate BiHs attainment of the CAP standards: (1) constitutional reform to
permanently shift control over agriculture to the state; (2) the creation of a Ministry
of Agriculture through non-constitutional means; and (3) the strengthening of the
MoFTERs mandate and enforcement capacity. Regardless of the option that BiH
pursues, effective implementation of the CAP requires popular and political
consensus that EU accession justifies transferring certain powers to the state.

19

Annex A EU requirements addressed by the BiH Law on Agriculture, Food
and Rural Development

a. Unification

It should be noted that the law does not establish a typical federal centralized
agency. It mainly establishes mechanisms for coordination and makes all state,
entities, canton and municipal authorities responsible for ensuring harmonization
of their policies, programs, and regulations.

According to Article 6, MoFTERs responsibilities include ensuring that all
sector policies, legislation, programs, and measures undertaken at all levels of
administration in BiH conform with the laws objectives. The competences of
MoFTER are set forth in Article 7. They include defining the framework for agro-
economic policies in cooperation with the competent bodies of the Entities,
ensuring the effective harmonization, coordination, implementation and monitoring
of the BiH strategies and action plans, ensuring the establishment and coordination
of all necessary institutions and other bodies, and producing annual reports on the
state of the sector. Of note, the Law does not provide for enforcement mechanisms
to ensure compliance.

The competences of the Entities are laid out in Article 8, and include
defining, managing and implementing specific sector strategies, agro-economic
policies, programs, and measures within the territories of entities, as well as
ensuring alignment of their strategies, action plans, policies, programs, laws, and
other legislation in accordance with BiH defined frameworks. The wording used
in the description of the competences of the entities, when compared to that used
for the competences of the MoFTER, suggests that the locus for decision making
in regards to the policies will remain at the entity level. The entities primarily
define the policies while MoFTER defines the policy framework.

Article 18 establishes an advisory council in order to ensure an effective
consultative mechanism, representation, coordination and legitimacy of decision-
making within the agriculture, food and rural development sector, with a mandate
to provide opinions, recommendations and advice that should be considered by
MoFTER. The Council shall be composed of fifteen experts proposed by
MoFTER, with the consent of the entities.


20

Under the law, MoFTER will also be responsible for guidance and
supervision of the administrative organizations created by the law within the
Ministry, described below (Article 18).

b. Data collection and reporting to the EU

MoFTERs obligations include coordinating the establishment and
development of unified registers (Farm, Client, Animal Identification and Land
Parcel Identification registers Article 14), establishing an integrated database
system to link registry data and other relevant information systems (Article 15), an
Agriculture Information Coordination Board (Article 16), an Agriculture Market
Information Service (Article 17) and a BiH Monitoring and Evaluation system for
the sector (Article 22).

c. Subsidies

The law creates the BiH Office for Harmonization and Coordination of
Payment Systems (Article 10) and charges MoFTER with the responsibility for the
consistency, transparency, and coordination of the payment system (Article13).

d. Food safety

The BiH Law on Food, enacted in 2004, had already established a Food
Safety Agency. According to the BiH Law on Agriculture, Food and Rural
Development, the MoFTER will interact with the Food Safety Agency in the
development of food safety legislation and regulation, risk management, and crisis
management. The MoFTER, the Food Safety Agency and other responsible
Ministries (not specified by the law) shall be responsible for jointly developing and
submitting proposals to ensure the gradual separation of competencies for risk
management and risk assessment of food safety at state level. (Article 11)

The law also creates the BiH Plant Health Protection Administration and
focuses on the development, by the MoFTER, of a cost effective and efficient
laboratory systems for reference laboratories and other testing bodies. The
MoFTER shall also coordinate the accreditation of relevant laboratories and define
minimum requirements for quality of services provided by Laboratories. (Articles
10 and 20)


21

e. Veterinary/Phytosanitary measures

The law creates the BiH Veterinary Office within the MoFTER (Article 10).
The law, however, does not expressly set out its competences. As mentioned
above, the MoFTER will be responsible for developing the laboratory system
(Article 20).

f. Rural development

Article 12 provides that the BiH Strategic Plan shall define the rural
development policy for BiH. It shall establish mechanisms for monitoring and
evaluation, and will set out a framework for financial requirements and procedures
for usage of funds. The BiH Strategic Plan for Rural Development shall be drafted
by an Inter-Ministerial Commission (the composition of which shall be decided by
the Ministry and relevant bodies of Entities and Brcko District) and adopted by the
BiH parliament.

The MoFTER shall establish an organizational Unit for rural development
coordination to ensure effective harmonization and coordination in implementation
of the BiH Strategic Plan and prepare progress reports on rural development
policies (Article 12).


22

Annex B Recommended Structure & Staffing of a State Ministry of
Agriculture for BiH developed by the European Commission

Source: European Commission, Functional Review of the Agricultural Sector in BiH (Oct. 2004),
available at http://www.esiweb.org/enlargement/wp-content/uploads/2010/03/agriculture-
functional-review_bih_2004.pdf.


23

Annex C - Inquiry addressed to the European Commission regarding the
missing reference to a Ministry of Agriculture in the 2011 BiH Progress
Report

Question posed:

The 2011 Progress Report on Bosnia and Herzegovina does not call for the
creation of a state-level Ministry of Agriculture for BiH. The previous Progress
Reports included such a call.
What is the reason for this change in language?
Thank you very much,
[Omitted]

This question was submitted on 12 October 2011 using the official online form
through which questions can be submitted to the European Commission
concerning agriculture and enlargement:
http://ec.europa.eu/agriculture/contact/infoform_en.htm.

(See the answer on the following page)


24

Answer received:

From:
[EC staff member]
To: [Omitted]
Subject: FW: Reply to agri-info - Progress Report on Bosnia and
Herzegovina 2011 - State-level Ministry of Agriculture for BiH
Date: 28.10.2011, 17:07

Please find below the reply to your email dated 12 October 2011
Ares(2011)1085750_ concerning the above mentioned subject.

Dear [Omitted],
Whereas the existence of a strong State-level co-ordination entity in
agricultural sector in Bosnia and Herzegovina remains a priority for
the Commission, 2011 Progress report does not in the current political
situation call explicitly for the establishment of a State-level Ministry
of Agriculture for BiH. Instead the 2011 Progress report underlines
the importance of strengthening the State-level administrative
capacity and co-ordination structures and the implementation of the
State-level strategic plan and the harmonisation programme for
agriculture, food and rural development.
Furthermore, the European Commission will continue encouraging
authorities in BiH to build up necessary State-level administrative
structures in order to have better co-ordination of agricultural policies.
Best regards,
[EC staff member]

European Commission
DG AGRI B.2. - Enlargement
[Address details omitted]

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