The deputies also called on Croatia to allow EU citizens to access its real estate market without discrimination.
The deputies adopted an amendment to the report submitted by MPs Hannes Swoboda, Jan Marinus Wiersma and Pasqualina Napoletano on behalf of the socialist faction.
The amendment reads that the Parliament welcomes the fact that Croatia may be considered a functioning market economy and that it will be able to face the competition as long as it continues to implement reforms.
The amendment draws Croatia's attention to the remaining weaknesses, such as the state's exaggerated intervention in the economy, complex rules, and the fact that the state administration halts development in the private sector and foreign investment.
The MPs also call on Croatia to allow all European citizens to access the real estate market without discrimination.
Some 30 amendments were adopted to the report compiled by the chair of the Committee on Foreign Affairs, Elmar Brok.
The Parliament says in the report that defining the nature of the EU, including its geographical borders, is of fundamental importance for the understanding of the absorption capacity concept, and asks the European Commission to submit by 31 December 2006 a report stating the principles supporting the concept. It also calls on the Commission to consider the importance of this element in the general timeline of negotiations.
The mention of geographical borders passed with a narrow majority.
The Parliament also says in the report that the standstill in the ratification of the European Constitution prevents the Union from augmenting its absorption capacity.
Deputies called on the Commission and the Council of the EU to offer close multilateral relations to European countries which currently have no membership prospects, and underlined with regard to countries whose membership prospects were recognised that it was up to them to decide if they wished to join this multilateral framework as a step on the way to full membership.
According to official EU documents, of the European countries currently outside the Union only those from the Stabilisation and Association process or the Western Balkans have European prospects, while a policy of good neighbourly relations, some form of privileged partnership, is envisoned for others, like Ukraine or Moldova.
The adopted report does not specify what the multilateral framework is supposed to be, but Brok said that apart from the policy of good neighbourly relations and full membership the EU should introduce a third option, a step towards membership or a permanent solution.