In its report on the screening of legislation on freedom of the movement of capital sent to the Council in late July, the EC proposed that Croatia be given two benchmarks for opening talks on that matter.
The first benchmark requires Croatia to draw up an action plan for the fight against money laundering, and the second refers to the implementation of the Stabilisation and Association Agreement (SAA), which regulates trade in real estate with regard to foreign nationals.
Under Article 60 of the SAA Croatia is obliged to liberalise its real estate market for foreign nationals within three years from entry into force of the SAA, or until 2009. Until that time, foreign nationals have the right to acquire real estate in Croatia in line with the principle of reciprocity.
After the screening for every chapter, the EC makes a report proposing the opening of talks without additional criteria or introduction of benchmarks.
The proposal is sent to the Council of the EU. The Council's task force for enlargement discusses the proposal first, and the proposal is then sent to the Committee of Permanent Representatives of the member-countries (COREPER), which makes the final decision.
The so-called benchmark is a new instrument used by the EU in the negotiating process. This mechanism was not institutionalised or used as a condition for the start of talks in the previous enlargement round, but rather for closing talks on individual chapters of the acquis communautaire.
Criteria used by the EU in the negotiating process can be divided in two groups, the first being action plans and the second the fulfilment of obligations arising from the SAA.
Croatia has so far been given benchmarks for the opening of talks on four chapters and it has not been given any additional conditions for three chapters. So far, one chapter has been provisionally closed.
Croatian negotiating circles would not comment on the proposal, saying that it was an internal document that was still being discussed and of which they had not been officially notified.