04BRUSSELS5186 / 2004-12-08 16:23:00
Embassy Brussels
                C O N F I D E N T I A L BRUSSELS 005186 
E.O. 12958: DECL: 12/08/2014 
Classified By: Rick Holtzapple, PolOff, Reasons 1.4 (B/D) 
1. (SBU) The European Commission has recommended against 
closing the competition chapter of Romania's accession 
negotiations because of concerns over state subsidies.  No 
American companies are believed to be involved in any of the 
major cases of concern.  The EU might miss its self-imposed 
deadline of the end of 2004 for concluding negotiations.  If 
the talks drag too far into 2005, it could even mean delay of 
Romania's planned EU entry date of January 2007.  END SUMMARY. 
2. (C) We spoke with Dirk Lange, the European Commission's 
Head of Unit for Romania, on December 7 about the state of 
play in Romania's accession negotiations.  Lange said that it 
was still unclear whether Romania would be able to conclude 
successfully all of its negotiations for EU accession prior 
to the December 17 European Council meeting.  Negotiations 
between the GoR and the EU's Council and Commission continue 
"nearly every day", Lange said (another session is being held 
Dec. 8), and he has "not given up hope that we can conclude 
by the end of the year." 
3. (C) Lange said that both remaining open chapters, justice 
and home affairs (JHA) and competition, were difficult.  On 
JHA, the Commission had recommended to EU Member States in 
the Council that Romania's most recent commitments on 
application of the EU's body of law (the "acquis 
communitaire") in this area was adequate and the chapter 
could be closed.  But the Council had yet to reach a final 
decision.  Competition was more difficult, and the 
Commission's most recent recommendation to the Council a 
couple of weeks ago stated this chapter was not yet ready for 
closure.  Lange explained that under candidate countries' 
"Europe Agreements" with the EU, states such as Romania were 
already obligated to conform to EU law.  But the Commission 
needed to see evidence that Bucharest was correctly applying 
it, and these concerns were not yet met, particularly in the 
field of state aid or subsidies to companies.  Lange said a 
number of specific state aid cases were of concern, involving 
both EU and non-EU companies, but he was not aware of any 
that involved U.S. firms. 
4. (C) Lange told us that some Member States had disagreed 
with the Commission's recommendation not to conclude 
accession negotiations with Romania.  He did not name any, 
but media reporting indicate that at least France and Italy 
have been pushing to let Romania in.  In the end, the Council 
could override the Commission's objections and decide to 
close the competition chapter in any case (although this is 
made more difficult politically by the fact that competition 
policy is one of the areas where the Commission has the 
greatest authority within the EU).  He could not predict how 
events would unfold in the coming days, but was sure that 
even if the negotiations were finished this month, Romania 
would be subject to very close monitoring by the Commission 
all they way up to its planned accession, alongside Bulgaria, 
in January 2007.  (NOTE:  The Accession Treaty for Romania 
and Bulgaria -- which despite suggestions from the European 
Parliament is still planned to be a single treaty -- will 
include a clause stating that if the Commission finds a 
failure to meet accession obligations, and the Council 
agrees, either country's entry to the EU could be postponed 
by up to a year. END NOTE.)  Lange added, however, that even 
if negotiations stretched into 2005 there could still be time 
to prepare, sign and ratify an Accession Treaty prior to that 
entry date. 
5. (SBU) Romanian diplomats in Brussels are putting a brave 
face on developments; expressing confidence they will finish 
negotiations prior to December 17.  But they are very 
disappointed it has come down so close to the wire.  While 
there is a strong desire among the EU-25 to finish "the 
current round" of EU expansion to 27 members this year and 
not drag the process out, many Member States also worry about 
setting any precedent for future negotiations (i.e., Turkey) 
if Romania is given too much benefit of the doubt in the 
final stages of its accession process. 

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