REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - Application of the provision of article 5.1 under g) of Regulation (CEE) nr 1765/92
COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 12. 12. 1996 COM(%) 664 final REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Application of the provision of article 5. 1 under g) of Regulation (CEE) nr 1765/92 INTRODUCTION Regulation (EC) No 232/94 (OJ L nr 30 dated February 3, 1994, p. 7) amends Regulation (EEC) No 1765/92 in order to bring it into line with the Memorandum of Understanding on oilseeds approved by Council Decision 93/355/EEC of 8 June 1993. This report is drafted in application of Article 5(1 )(g) of Regulation (EEC) No 1765/92 which lays down that the Commission must submit a report to the European Parliament and to the Council by 31 December 1996. BACKGROUND The Memorandum of Understanding on oilseeds of 3 December 1992 and the approval of that Agreement by the Council on 8 June 1993 (Decision 93/355/EEC) permitted a resolution of the dispute between the United States and the European Community on the aid arrangements for oilseeds. It should be recalled that this Agreement lost its bilateral character with the conclusion of the Agreements in Marrakesh on 15 April 1994 under the Uruguay Round multilateral negotiations. The Commission proposal for transposing the Memorandum of Understanding on oilseeds into Community law is contained in document COM(93) 389 final (28/07/1993). The proposal was the result of the undertaking made by the Commission when the Council adopted the Memorandum to propose to the Council a mechanism to ensure the equitable administration of the oilseeds base area in accordance with Regulation (EEC) No 1765/92. The proposal provided for the amendments to Regulation (EEC) No 1765/92 necessary to implement the Memorandum of Understanding on oilseeds, i. e. (point 10 of the explanatory memorandum) : to exclude from the benefits of the regime the cultivation of "confectionery sunflower seed", with effect from sowing for harvest in 1994 (the technical implementation to be managed by the Commission via the Management Committee procedure); to introduce a separate base-area system, to be known as the maximum guaranteed area, for producers benefiting from the crop-specific oilseeds payments system, respecting the principles set out in the Memorandum of Understanding on oilseeds (the Commission to manage the system by the Management Committee procedure). The Commission had previously estimated that, in the medium term, the area sown with oilseeds would be no more than the total figure for the Community referred to in the Memorandum of Understanding with the United States, but that areas in the Member States would not all develop in the same way. This led to the conclusion that a sub-division of the Community's Maximum Guaranteed Area > by Member State would not only go beyond what was required by the Memorandum of Understanding but would also be unnecessarily restrictive. The Commission therefore proposed that, should it become necessary to adjust compensatory payments for oilseeds for 1994/95, 1995/96 and 1996/97 due to implementation of the Memorandum of Understanding, if the overrun was not greater than 5% measures would be applied Community-wide. In other words, up to an overrun of 5%, the final reference amounts would be reduced by the same amount in all Member States. Above that percentage, measures would focus on producers in those Member States in which areas under oilseeds had increased most. Additional reductions would be applied in those Member States which exceeded the average area sown for harvest in 1989, 1990 and 1991 reduced by the rate of rotational set-aside for the marketing year concerned or by 10% where that rate was lower than 10%. The proposal was made on the assumption that the mechanism would only be required for a transitional period. The Commission proposal was a compromise between two opposing views. One view was that all measures should be applied on a Community-wide basis, committing the solidarity of all Community oilseed producers and maximizing the area sown with oilseeds up to the level of the MGA. The other was that measures should be applied on a Member-State basis, placing responsibility on the prcducers in each Member State, thus protecting them against any risk of penalties arising from an increase in the area sown with oilseeds in another Member State. The former view is reflected in the proposed 5% threshold and the latter in the placing of responsibility on producers in those Member States which have most increased their area sown with oilseeds. The compromise reached in the Council in December 1993, formalized by Regulation (EC) No 232/94, maintains the principal features of the Commission proposal (threshold and responsibility of the Member States). The three- marketing-year transitional period was abandoned but the compromise maintains the idea of Community solidarity, although to a lesser extent, and the responsibility of Member States and their producers, to an increased extent. APPLICATION OF THE MEASURE 1994/1995 marketing year Application of the threshold (Article 5(1 )(g)) was limited to the 1994/95 marketing year, which was also the first marketing year in which the new mechanism was applicable. The areas for which specific compensatory payments for oilseeds were applied for exceeded by 9% the maximum guaranteed area of the Community of Twelve, excluding sunflower production in Spain and Portugal. The measure did not apply to Spanish or Portuguese sunflowers, for which there was a separate maximum guaranteed area. The method of applying the threshold is set out in Annex I to Commission Regulation (EC) No 307/95 establishing corrected final regional reference amounts for producers of soya beans, rape seed, colza seed and sunflower seed for the 1994/95 marketing year (OJ No L No 36, 16. 2. 1995, p. 2). The left-hand side of the two tables given in Annex I to this report gives the basic figures for the 1994/95 marketing year and the penalties to be applied. The right-hand side of the tables shows the results of applying the Commission's original proposal. A study of the tables leads to the following conclusions: a threshold of 0% still permits equal treatment of Member States which have exceeded the reference national guaranteed area and those which have not; compensatory payments can thus be optimized; application of penalties by Member State does not permit compliance with the international commitments made, which provide for a 1% reduction in compensatory payments for each percentage point overrun of the maximum guaranteed area; this is shown by the figures for Spain, as Spanish rape and soya producers would have received a negative compensatory payment; a higher threshold, for example 5%, would have permitted a further reduction in the penalties imposed on producers in Member States exceeding their reference national guaranteed area; it must also be recognized that such a mechanism would have led to a 5% reduction in compensatory payments for producers in Member States which had not exceeded their reference national guaranteed area. 1995/96 and 1996/97 marketing years The MGA was respected in 1995/96 and it is highly unlikely that it will be exceeded in 1996/97. Compliance with the MGA over the last two marketing years is a result of the national measures that a number of Member States have applied in order to reduce the risk of an overrun of their national maximum guaranteed areas, a move to cereals caused by the level of market prices, the dissuasive effect of penalties applied in 1994/95 and the risk that penalties would be maintained for the following marketing year if the MGA were again to be exceeded. Nevertheless, in the 1995/96 and 1996/97 marketing years, oilseed producers in certain Member States will have profited from the fact that the reference national guaranteed area for oilseeds was not used up in other Member States. The straightforward division of the MGA into 15 reference national guaranteed areas, i. e. with no Community solidarity and therefore no thres+iold, would have resulted in an overrun of the reference national guaranteed area and therefore the imposition of a penalty for the 1995/96 marketing year in Spain, France, the United Kingdom and Finland, to which would have been added the penalty carried over from the previous marketing year. Furthermore, the penalties imposed would have had to have been maintained in 1996/97 for Spain, France and the United Kingdom, since the reference national guaranteed areas for those Member States have again been exceeded in 1996/97. Penalties would also have had to have been imposed on oilseed producers in Portugal and Italy. Figures for the two marketing years are given in Annex II. Conclusion The mechanism adopted allows Community solidarity, in that a Member State and its producers who have exceeded their reference national guaranteed area profit from under-utilization in other Member States. It avoids penalties disproportionate to production in certain Member States. Penalties are borne by those Member States and their producers who have not respected the reference national guaranteed area. It permits compliance with the international commitments made by the European Union and is in accord with the wishes of the Council as specified in Regulation (EEC) No 1765/92. The European Commission does not for the moment, therefore, propose to amend the provisions concerned. Area for which Crop Specific Oilseed Payment to be made MGA: EC-12 other than Spanish and Portuguese Sunflowers Crop Specific Support National MGA MGA - 1 5% Overshoot in ha Overshoot in% Reduction necessary Reduction necessary (ha equ. ) Reduction 5% (ha equ. ) Crop Specific Support remain. Overshoot ? remain. Overshoot Overshoot! in% Total Reduction Basic data wtth a 5% franchisa and no distribution of the reserve Belgium 3. 893 195 Total Reduction ("«equ. ) 195 Germany 17,11% Spain rape/soya 26,06% -11,24% TP\ 4,12% Ireland Italy Luxembourg Netherlands Portugal rape/soya 5,00% T O T AL 3. 696. 956 3. 966. 000 3. 371. 100 Yes 325. 866 9% 9% 3 3 2. 7 26 1 8 4. 8 48 3. 512. 108 Y es 332. 726 N e c e s s a ry r e d u c t i on in ha - e q u i v a l e n t s: 9,666% 332. 726 Area for which Crop Specific Oilseed Payment to be made MGA: EC-12 other than Spanish and Portuguese Sunflowers Basic Data with distribution of the reserve to have the same réduction for all crops in Spain, no change for the U. K. and the same reduction for Ireland as U. K. Basic D au with 5% franchise and distribution of the reserve to have the same reduction for a» crepe in Spain, no change for the U. K. and the same reduction for Ireland as U. K. Crop Specific Support National MGA Increase MGA total MGA - 1 5% Overshoot in ha Overshoot) in% Reduction necessary % Reduction necessary (ha equ) Reduction 5% (ha equ. ) Crop Specific Support National MGA Increase MGA total MGA - 1 5% Overshoe ? Overshoot in ha Reducten in% Total R#ducbon % Reduction necessary ("*»») Belgium 3893 5. 00% Germany 17,87% 4^ Spain rape/soya Ireland Italy Luxembourg Netherlands Portugal rape/soya 5,48% TOTAL 325. 856 9% 184. 848 3. 512. 108 Yes 147. 87» Necessary reduction in ha - equivalents: 9,666% 332. 726 ANNEX II Area for which crop specific payment is made in 1995/1996 Member state National MGA 'MGA-12% crop spec overshoot +/- in % Belgium Denmark 6. 000 5. 280 3. 898 236. 000 207. 680 119. 515 Germany 929. 000 817. 520 688. 758 Greece Spain France Ireland Italy Luxembourg Netherlands Portugal UK EC-12 Austria Finland Sweden EC-15 26. 000 22. 880 18. 809 1. 168. 000 1. 027. 840 1. 053. 875 1. 730. 000 1. 522. 400 1. 531. 706 5. 000 4. 400 2. 572 542. 000 476. 960 396. 247 2. 000 7. 000 93. 000 1. 760 6. 160 1. 422 1. 110 81. 840 78. 733 385. 000 338. 800 354. 709 5. 128. 000 4. 512. 640 4. 251. 354 147. 000 129. 360 102. 411 70. 000 61. 600 79. 725 137. 000 120. 560 94. 192 5. 482. 000 4. 824. 160 4. 527. 682 N N N N Y Y N N N N N Y N N Y N N -26,17 -42,45 -15,75 -17,79 2,53 0,61 -41,55 -16,92 -19,20 -81,98 -3,80 4,70 -5,79 -20,83 29,42 -21,87 -6,15 ? Area for which in 1996/1997 crop specific payments are to be made (art. 8. 2 du règlement (CE) n° 658/96) Member state National MGA 'MGA-10% crop spec. overshoot +/- in % Belgium 6. 000 5. 400 Denmark 236. 000 212. 400 3. 903 81. 174 Germany 929. 000 836. 100 670. 745 Greece 26. 000 23. 400 9. 994 Spain 1. 168. 000 1. 051. 200 1. 128. 086 France 1. 730. 000 1. 557. 000 1. 603. 951 Ireland 5. 000 4. 500 2. 511 Italy 542. 000 487. 800 540. 441 Luxembourg 2. 000 Netherlands 7. 000 1. 800 6. 300 Austria 147. 000 132. 300 Portugal 93. 000 Finland 70. 000 83. 700 63. 000 Sweden 137. 000 123. 300 1. 614 592 79. 826 92. 785 58. 150 60. 320 UK 385. 000 346. 500 357. 712 EC-15 5. 482. 000 4. 933. 800 4. 691. 803 N N N N Y Y N Y N N N Y N N Y N -27,73 -61,78 -19,78 -57,29 7,31 3,02 -44,20 10,79 -10,33 -90,60 -39,66 10,85 -7,70 -51,08 3,24 -4,90 9 ISSN 0254-1475 COM(96) 664 final DOCUMENTS EN 03 Catalogue number : CB-CO-96-676-EN-C ISBN 92-78-13364-7 Office for Official Publications of the European Communities L-2985 Luxembourg JO