eunbil · GT0N1614 · 2006-07-14 00:00:00 — wine sector is the most important worldwide: The EU is the first wine producer in the world (of vine areas and of wine production), the first consumer () and the main actor in the international trade (at the same time the first exporter and the first importer). Wine production plays a primary role in the agricultural activity of most wine-producing Member States: it represents around of the value of the agricultural production in , , , , and , and a less in . The importance of wine production within the economic activity is even greater at regional and local level: for certain regions, the value of wine production exceeds or even of the total agricultural production, and those percentages can be even higher, when considering more restricted geographical areas. The wine CMO, which was established in 1962, is one of the largest and most complex in the common agricultural policy. This is because it covers not only the issues that many market organisations deal with, such as price, intervention and trade, but also issues specific to the wine industry (provisions concerning the production, transport and processing of wine products and wine-making practices. The CMO has been reformed many times, the last time in 1999. The wine CMO is one of the last sectors, which did not undergo the CAP reform process of 2003-2005. Its instruments do not seem adequate any longer in the context of the new global market situation, in particular to wine production and marketing to the needs of the demand. Currently, the wine sector experiences a critical situation in the most important markets: on the one hand harvests are often abundant, on the other hand wine consumption is progressively declining and the trade balance deteriorating (strong increase in the imports from third countries and stagnation of exports). This results in an alarming accumulation of wine stocks and in the decline of market prices. The reform of the CMO aims therefore at setting provisions to achieve a better balance between supply and demand and to improve the competitiveness of wine produced in the Community, but also to ensure that EU wine production is sustainable and to preserve the authenticity and the traditional character of the product. On the other hand, health concerns linked to excessive alcohol consumption within certain sectors of society, and in particular young people, can be increasing observed. In this context, DG SANCO has started an impact assessment on alcohol policy. If the timetable of the two exercises makes it possible, it would be appropriate to take into account the results of the abovementioned impact assessment in that concerning the wine reform. Stages in the work of the wine steering group The stages in the work of the wine steering group should follow the pattern set out in the communication and guidelines on impact assessment, taking also into account the experience acquired with the previous impact assessments in the context of the reform of common market organisations in sugar and tobacco. 3.1 Analysis of problems "The first question in the process of impact assessment concerns the identification and analysis of the problem or problems in one or more domains. These are described in economic, social and environmental terms." To identify and analyse the main problems of the wine sector, the following documents will help provide basic information to the Group: the independent evaluation of the CMO completed in in the framework of the evaluation programme of the common agricultural policy; the independent evaluation on the environmental impact of the CMOs of permanent crops, which is being finalised; the Commission report to Parliament and management of rights ; an internal economic report on the situation of the wine market, which is being finalised; an internal report on the in wine, which is being finalised; The identification of the main problems to deal with in the impact assessment will be completed during the phase of consultation (point 4). 3.2 Identifying the objectives "On the basis of the analysis of the problems, the objectives of the action will be expressed in terms of the results expected by a given date." In the framework of the wide political strategies of Union (strategy and strategy for the sustainable development) and of the orientations of the reformed CAP, the Group will try to identify the specific objectives of the wine sector (market equilibrium, improvement of competitiveness, combination of tradition and innovation, etc.), always taking into account the constraints linked to the international commitments and the financial perspectives of the Union. 3.3 Identifying the options "Alternative means or instruments for achieving the objectives should always be considered from the initial stages of formulating proposals. The principles of subsidiarity and proportionality must also be taken into account and considered all through the impact analysis process. The analysis must always include the "no policy change" scenario as a point of reference for comparison with other options." will have to choose a set of options, which could potentially reach the objectives of the reform, and which are sufficiently differentiated to express the different views about the future of the sector, thus encouraging the impact assessment of a wide range of possibilities. These options have to take into account the general approach adopted in 2003 for the CAP reform, the specificities of the wine sector and the international agreements of the Union with third countries. With a view to presenting more integrated proposals at Commission level, the group could consider the assistance that other Commission policies and instruments might bring to achieving these objectives or to alleviating the costs of the reform for the different parties concerned. 3.4 Analysing the impacts "For the policy option retained, and where possible for selected alternatives all relevant positive and negative impacts should be examined and reported on in the impact analysis, with a specific emphasis on their environmental, economic and social dimensions. This process has two stages: first the relevant impacts are identified ("screening"), then they are assessed in qualitative, quantitative and/or monetary terms ("scoping")." The directorates-general participating in the ISG will be invited to examine the impact of the different reform options for the wine CMO on their area of competence. Besides the three dimensions mentioned in the orientations on impact assessments (environmental, economic and social), other domains have to be considered, e.g. regional policy, public health. 3.5 Comparing the options "After having analysed the corresponding impacts, the next step consists in comparing the impacts in order to allow the evaluation of strengths and weaknesses of each policy option. This can allow drawing the conclusion that one option is superior to the others. However, it is important to stress that the final decision on whether, and how, to proceed is political." 3.6 Monitoring and ex-post evaluation "The impact assessment should identify any possible difficulties in implementing the options assessed and describe how these will be taken into account, for example in the choice of implementation periods or the gradual phasing-in of a measure. The subsequent ongoing or ex-post evaluations will follow the rules of the Communication on Evaluation, i.e. an overall ex-post or interim evaluation at a periodicity not exceeding six years, depending on the nature of each activity" "The purpose of the extended impact assessment is to. consult with interested parties and competent experts. to supplement and validate data collection . and to allow a debate on the wider issues." First of all, the Group will benefit from the results of the evaluation of the CMO. Furthermore, the process of identifying the problems and the impact assessment of the options will be deepened in the context of a large stakeholders consultation, which will take place during the month of February 2006, with the participation of dozens of experts representing all stakeholders interested to the reform of the wine sector (producers, retailers, consumers, public health operators, local administrators of producing regions, etc.). Constitution of the : working plan and approval of the mandate. Presentation of the wine market January 2006 Description of the wine CMO Critical analysis of the CMO measures 16 February 2006 Participation of the to the "stakeholders" consultation February - 2006 Analysing the problems, defining the objectives, identifying the impacts, outlining draft options Defining the specific contribution - Preparation and discussion of the specific contributions Discussion and approval of the impact assessment report - 2006 Inter-service consultation and adoption of the Communication by the Commission. Mid-term forecasts for the EU-27 wine sector to 2010-11 The table below represents the summary market balance of the EU-27 wine sector to the year 2010-11, as forecast by DG , on the assumption of an unchanged policy framework and based on a "normal year" in terms of wine production. On the basis of different assumptions regarding the evolution in vine areas, wine yields, consumption trend and trade balance, three alternative scenarios are built: "average" (or "most likely"), "low surplus" (or "most optimistic"), and "high surplus" (or "most pessimistic"). For each of the three scenarios, the market balance, defined as the difference between the total availability and the total use of wine production, is estimated. Two alternative market balance indicators are calculated, which differ in the way they consider the volumes of wine distilled in the context of the potable alcohol distillation. In the SURPLUS 1, those volumes are considered as a production surplus rather than a real market outlet, whereas in SURPLUS 2, they are regarded as a market outlet of wine production and therefore deducted from the production surplus. Table 4: Supply balance for the EU-27 wine sector at the horizon 2010-11 Regression analysis between average annual prices of table wine and wine stocks Option 1: Status quo Option 2: Profound reform of the CMO Option 3: Reform along CAP reform lines Option 4: Complete deregulation Impacts on agricultural incomes Summary results of a model-farm approach on table wine farms in some EU regions Variation of agricultural income (FNVA/AWU) in % Source: DG - FADN FNVA/AWU in the second year after the reform Source: DG - FADN Source: DG - FADN AWU Annual Working Unit CAP Common Agricultural Policy CMO Common Market Organisation DG for Agriculture and Rural Development EAGGF European Agricultural Guidance and PGI Protected Geographical Indications QWpsr Quality Wine produced in specified regions RD Rural Development SPS Single Payment Scheme TBT Technical Barriers to Trade TRIPS Trade-related aspects of Intellectual Property rights TW Table Wine UAA Utilised Agricultural Area WMP Wine Making practices WTO . The list of participants to the wine seminar is available on Commission website: . The conclusions of the wine seminar "Challenges and opportunities for European wines" are on the webpage: . Provisional data for 2005/2006. Source: farm structure survey 2000 (2003 for some new Member States). World vine area statistics include table grape vines. Source: available data for FR, ES, IT, MT, EL, PT, and SI. Source: available data for FR, ES, IT, MT, EL, PT, and SI. details on the economy of the wine sector can be found in the corresponding report published in 2006: . Total wine production = vinified production + production of grape musts and juices. The vinified production does not include grape musts and juices. other uses = , liqueur wines, vinegar, aromatic wines and distillation of by-products (the last one being considered as a quality measure). details on the wine CMO can be found in the corresponding report published in 2006: . Communication from the Commission to and crisis management in agriculture, COM(2005) 74 final. The enrichment of wine in Community, , EUR report 13239, 1991. The weighting factor used is the total wine production in the different Member States. Different types of regression model have been tested (linear, exponential) and the results are very similar. Farm net value added = Total farm output + Balance current subsidies and taxes - Intermediate consumption - Depreciation. The enrichment of wine in Community, , 1990. Source: Farm Structure Survey. Although 2003 was pre-enlargement, data are for EU-25. What land use for sustainable agriculture?, European Commission, DG . COM(2005) 531 final of 25 October 2005. Regulation (EC) No 1493/1999 of 17 1999 (OJ L 179 of , p. COM(2002) 276 of 05.06.2002 and SEC (2005) 791 of 15 2005. "is compulsory for all items of a cross-cutting nature. to provide specialised inputs and to bring a wider perspective to the process . making it also easier to reach agreement during the Inter-Service Consultation. INNOVA report, . COM(2004) 161 final of . 10851/06 ADD 2 br DG B I EN