EU Negotiator Comments On Malta's Accession Process

Tax-News.com, Brussels

23 July 2002

Arhi Palosuo, Chief EU Negotiator for Malta's accession process, has given an interview to MaltaMedia in which he praised Malta for the way it has conducted the negotiations. "My first impression is that Malta has embarked on a very professional exercise of negotiating the entry conditions for Malta," he said. "I think Malta is getting an excellent deal. It is one of those countries that have been able to negotiate already some unique deals that nobody else has got. I expect Malta to be among the ten countries that will finish negotiations by December. "

However, talking to Martin Debattista, Mr Palosuo said that Malta might fail to achieve its goals as regards taxation, competition policy and regional policy. He thought that the request for zero-rating of VAT on food and medicines would be unsuccessful: "The EU has stated its position as in the case of Cyprus, which has a similar tax structure as Malta, meaning also zero-rate VAT for foodstuff and some other products. We gave this transition period of 5 years to Cyprus. I know that Malta wishes more, but that will be very difficult."

Mr Palosuo also expressed strong doubts about Malta's request for a 7-year transition period for winding down its support to the Maltese shipyards. "The competition chapter is still one of the tricky ones," he said. "The main point is about giving state aid to the shipyards industry that is not competitive, and just to hand out cash to a loss-making enterprise over time is not acceptable."

Finally, Mr Palosuo poured cold water on the idea that Malta's twin island of Gozo could be given separate regional treatment. "Gozo, as part of Malta, will benefit from EU structural funds. But it is a false problem to try to get Gozo an independent territorial NUTS 2 status. This classification in the EU normally refers to a larger region with a population between 800.000 and 3 million people. Gozo, like the rest of the archipelago, will have access to EU funding if there are good projects. This is the main issue."

Still Mr. Palosuo is upbeat. "I think we have a clear plan of what we need to accomplish. We need to sit down with the Maltese negotiators and solve the problems one by one. The number of open issues is limited, we more or less know them."

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