3 April 2013

The establishment of a relationship between the Republic of Croatia and the European Union began after international recognition of the Republic of Croatia as an independent and autonomous state on 15 January 1992. By signing the Stabilisation and Association Agreement on 29 October 2001, the Republic of Croatia for the first time entered into a contractual relationship with the European Union. Shortly after the Republic of Croatia had received a positive opinion (avis) by the European Commission on its application for full EU membership, on 20 April 2004, Croatia was granted a status of a candidate country. The Association and Stabilisation Agreement entered into force on 1 February 2005, and was followed by an official opening of accession negotiations by the Republic of Croatia and the EU on 3 October 2005. The negotiations were closed on 30 June 2011 with the closing of the last four chapters.
On 9 December 2011 leaders from the EU and Croatia signed the accession treaty. Subject to its ratification by all EU countries and Croatia, then the country will become the 28th EU member country on 1 July 2013.
Throughout the interim period until the accession, Croatia as an acceding country will have active observer status in the European Institutions. The purpose is to allow Croatia to become familiar with the working methods of the EU institutions and to be involved in the decision-making process.


The Republic of Croatia's negotiations with the EU
Accession negotiations are the negotiations on the conditions of admission of a candidate country to the European Union and adoption of its founding treaties. The close of the accession negotiations is followed by the signing of an international treaty between the EU Member States and the candidate country, called the Accession Treaty.

Generally, the formal opening of the negotiating process is followed by analytical examination and assessment of the degree of harmonisation of the national legislation with the acquis communautaire, the process known as the screening. After the screening is completed, the decision on the opening of negotiations for individual chapters, depending on the assessed readiness of the candidate country, is made by the Member States within the Council of the European Union. With the opening of negotiations on individual chapters, the substantive phase of the negotiations begins. During that phase, conditions are negotiated under which the candidate country will adopt and implement the acquis communautaire in the respective chapter, including any transitional periods which the candidate country might have requested in the course of negotiations. After agreement has been reached between the EU and the candidate country on the individual chapter of the negotiations, and once the set benchmarks have been met, the respective chapter is considered provisionally closed.

The Negotiating Team for the Accession of the Republic of Croatia to the European Union was responsible for negotiations at an expert and technical level with EU institutions and Member States of the European Union on all negotiating chapters. It considered and adopted draft negotiating positions and submitted them to the Coordinating Committee on the Accession of the Republic of Croatia to the European Union. The Negotiating Team also reported to the State Delegation and to the Government of the Republic of Croatia on the course of the negotiations. Members of the Negotiating Team were responsible for the co-ordination of particular clusters of negotiating chapters and provided expert support to the Chief Negotiator, participated in negotiations on the basis of instructions from the Chief Negotiator, co-ordinated the work of working groups for the preparation of negotiations on individual negotiating chapters, cooperated with EU coordinators in the state administration bodies and were responsible for drafting of the negotiating positions and related reports.

Negotiating chapters within the competence of the CNB

Free Movement of Capital (Chapter 4)
After the European Commission had concluded that Croatia was prepared to open negotiations in the field of free movement of capital, negotiations on this chapter were opened at the Intergovernmental Conference on 2 October 2009 and were provisionally closed on 5 November 2010.

Financial Services (Chapter 9)
Bilateral screening for this chapter was performed on 4 and 5 May 2006 and negotiations on this chapter were opened in June 2007. The EU set five benchmarks to be fulfilled by Croatia in order to provisionally close this chapter, which primarily relate to legislative alignment with the acquis communautaire in the field of operation of credit institutions, insurance, financial market infrastructure, investment services and securities market. In addition to the Credit Institutions Act, on 26 September 2008, the Croatian Parliament also adopted the Act on Electronic Money Institutions and the Act on Settlement Finality in Payment and Financial Instruments Settlement Systems. The Act on Amendments to the Deposit Insurance Act was adopted by the Croatian Parliament on 15 October 2008, whereas the Act on Financial Conglomerates was adopted on 5 December 2008. In this way, Croatia had fulfilled all the benchmarks set for the provisional closure of negotiations on this chapter which had been done on the Intergovernmental Conference on 27 November 2009.

Economic and Monetary Policy (Chapter 17)
Negotiations on this chapter were opened in December 2006. One closing benchmark had to be fulfilled for its provisional closing, relating to the CNB legislation alignment with the EU legislation. By the entry into force of the new CNB Act in July 2008, the required alignment was achieved and, following the confirmation by the European Commission that this benchmark has been fulfilled, this negotiating chapter was provisionally closed on 19 December 2008.

Financial Control (Chapter 32)
Negotiations on this chapter were formally opened at the Intergovernmental Conference on 26 June 2007, where five closing benchmarks were set to be met by Croatia in order to close this chapter. The negotiations on this chapter were provisionally closed on 27 July 2010. The role of the Croatian National Bank in this chapter was related to the establishment and operation of the national centres for combating counterfeiting and banknotes and coins analysis.
 

European Union pre-accession funds
The Croatian National Bank was the beneficiary of the first component of the Instrument for Pre-Accession Assistance (IPA) based on the Twinning Light Project "Development of an Effective System for Fight against Counterfeiting of Banknotes and Coins in Croatia". The project officially started on 1 April 2011, and was successfully closed on 31 December 2011.

The European Central Bank, together with thirteen national central banks of the Eurosystem, on 19 January 2010 initiated a technical cooperation programme in the area of macroprudential and microprudential supervision in eight EU membership candidate and potential candidate countries (Croatia, Macedonia, Turkey, Albania, Bosnia and Herzegovina, Kosovo, Montenegro and Serbia). This programme was a part of a larger technical assistance programme entitled "Crisis Response Package". The purpose of the programme was to strengthen financial system resilience of candidate and potential candidate countries to the effects of the financial crisis over a medium term, primarily by aligning macroprudential and microprudential supervision with the newly adopted international and EU standards. The program was officially closed on 16 January 2012.
 

Croatian National Bank after EU accession
After the accession of the Republic of Croatia to the EU, the Croatian National Bank will become a part of the European System of Central Banks (ESCB). The CNB - like other central banks - will carry out the activities in order to fulfil the ESCB's tasks in accordance with the rules, instructions and guidelines of the ECB. The CNB Governor will become a member of the General Council of the ECB and a certain number of CNB employees will participate in the work of the ESCB committees.
In the next step, i.e. as at the date of introducing the euro as the official currency of the Republic of Croatia, the CNB will become a part of the Eurosystem and will transfer its powers regarding the conduct of monetary policy and foreign exchange operations, management of a part of the international reserves and payment system operations to the ECB. At the same time, as an integral part of the Eurosystem, it will participate in formulating and implementing a common monetary and foreign exchange policy. The CNB Governor will become a member of the Governing Council of the ECB. The CNB representatives will participate, to the full extent, in the operation of all the ESCB/Eurosystem structures.