1.6.2001 Official Journal of the European Communities L 1483 COUNCIL REGULATION (EC) No 1051/2001 of 22 May 2001 on production aid for cotton THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Protocol 4 on cotton ('), annexed to the Act of Accession of Greece, and in particular the paragraph 6 thereof, Having regard to the proposal from the Commission (%), Having regard to the opinion of the European Parliament (%), Having regard to the opinion of the Economic and Social Committee (%), Whereas: (1)  Examination of the operation of the aid scheme provided for in paragraph 11 of Protocol 4 annexed to the Act of Accession of Greece reveals a need to main- tain the existing arrangements for cotton, but with certain adjustments. (2)  The measures relating to cotton are laid down in Protocol 4, Council Regulation (EC) No 1554/95 of 29 June 1995 laying down the general rules for the system of aid for cotton and repealing Regulation (EEC) No 2169/81 (°) and Council Regulation (EEC) No 1964/87 of 2 July 1987 adjusting the system of aid for cotton introduced by Protocol 4 annexed to the Act of Acces- sion of Greece (°). The arrangements provided for in Protocol 4 should be maintained, particularly the poss- ibility for the Council to adjust the scheme, and, in the interests of simplification, all the implementing meas- ures needed for the grant of the aid should be brought together in a single Council Regulation. (3)  Paragraph 6 of Protocol 4 stipulates that the necessary measures for implementing the scheme for cotton must be adopted. The production aid provided for in para- graph 3 of Protocol 4 is currently based on a system, in the framework of guaranteed national quantities, that guarantees a minimum price to producers and, through the aid paid to ginning undertakings, makes up the () OJ L 291, 19.11.1979, p. 174. Protocol as last amended by Regula- tion (EC) No 1050/2001. (see p. 1 of this Official Journal). A Proposlition of 13 December 1999 (not yet published in the Official Journal). (*) Opinion delivered on 15 February 2001 (not yet published in the Official Journal). (% O] C 140, 18.5.2000, p. 33. () OJ L 148, 30.6.1995, p. 48. Regulation as last amended by Regula- tion (EC) No 1419/98 (O] L 190, 4.7.1998, p. 4) (®) OJ L 184, 30.6.1995, p. 14. Regulation as last amended by Regula- tion (EC) No 1553/95 (O] L 148, 30.6.1995, p. 45). ) difference between the guide price and the world market price. In the light of experience, the foundations of the system and its various components should be main- tained. The guide price, the minimum price payable to produ- cers and the guaranteed national quantities should be fixed at levels that maintain the balance achieved between crops and enable operators to run medium- term production and processing programmes. The provisions for determining the world market price for unginned cotton should be maintained. This price may be established on the basis of the relationship between the price for ginned cotton and the price calcu- lated for unginned cotton. When calculating the price of ginned cotton, account should be taken of offers made on the world market and of quotations on those exchanges that are important for international trade. The current mechanism, whereby when a certain production quantity is exceeded the guide price is reduced proportionately in the Member States respon- sible for the overrun, should be maintained in order to ensure that penalties are applied fairly. However, the reduction in the guide price may be limited provided that, taking account in particular of the average world market price, a certain level of expenditure is not exceeded. The consequences of the guaranteed national quantities mechanism must be applied to both the minimum price and the aid. The percentage reduction in the guide price which now applies, equal to half the overrun in the national guaran- teed quantity, may under certain circumstances threaten budgetary discipline. That percentage should therefore be increased from a certain production threshold. To ensure that the system is balanced, the production aid should henceforth be paid in full to beneficiaries, without prejudice to the various reductions provided for by the Community rules. The current state of production structures is such that the aid has to be granted to ginning undertakings, which pay producers a price at least equal to the minimum price and an advance on that price, and which accept certain conditions regarding checks on the quantities eligible for aid.