Mr President, Commissioner, ladies and gentlemen, The EU produces 20 million hectolitres of alcohol annually, of which 13 million hectolitres are of agricultural origin and the rest of the Union’s production is what is known as synthetic alcohol. The main manufacturing industries that use ethyl alcohol are the spirit drinks industry, which represents around 30% of the European alcohol market and can only use alcohol of agricultural origin, and the chemical, pharmaceutical and cosmetics industries, which represent the other 70% and which can use both agricultural and synthetic alcohol. Both types of alcohol, therefore, are competing in the same market. In the past, there have been five successive attempts by the Commission to set up a COM in alcohol, but all of these attempts have come to grief in the Council. The reasons for this failure lie in the wide variety of national systems traditionally used for alcohol in the various Member States. The main reason is that, in principle, establishing a COM would entail dismantling national aid, as set out in Article 10 of the proposal. This type of aid, linked to rural aid, however, can and should be maintained, not least because it does not distort the market in the current Europe of fifteen. The arguments in favour of a Community legal framework are to improve the functioning of the single market, to ensure fair conditions of competition between operators and to help improve transparency and knowledge of marketing flows with a view to globalisation. The global liberalisation process is the main threat to European alcohol producers. Alcohol imports from third countries are finding it increasingly easy to gain access to the EU market due to new openings arising from preferential systems, GATT tariff-cutting agreements or bilateral negotiations with specific third countries that produce a large amount of alcohol. Other factors which might affect development prospects for the European alcohol market at this time include the substantial levels of alcohol production in the applicant countries, future tariff reductions in the forthcoming WTO negotiations and a possible increase in bioethanol production for fuel in the European Union, that could significantly alter the horizon for traditional uses of European ethyl alcohol. Faced with such developments, the Council of Agricultural Ministers of 17 July 2000 asked the Commission to examine the possibility of introducing a regulatory framework for agricultural alcohol, in order to improve statistical information and market transparency, as well as introducing a regime for import and export licences, and to create an appropriate management committee for the sector. The Commission is proposing a limited scope or 'lightweight' COM, which does not involve measures under the EAGGF, but does however go further than the Council request in that, in addition to the definitions, statistics, import and export licences system, and the establishment of an appropriate management committee, the proposal also contains elements such as the possibility of establishing tariff quotas and a safeguard clause, the possibility of prohibiting or restricting inward processing arrangements and a specific provision on state aid. The problem arises from the fact that a COM can apply only to products included in Annex I of the Treaty, which means it can apply to alcohol of agricultural origin but not to synthetic alcohol. Given that the two types of alcohol compete with each other and are to a large extent interchangeable for most uses, the fact that the Commission is only intending to regulate alcohol of agricultural origin prompts questions about the purpose and value of rules supposedly designed to regulate the European alcohol market as a whole. For this reason, a problem surfaced at the time of drawing up the corresponding report on behalf of the Committee on Agriculture and Rural Development, which was, what should be done with synthetic alcohol? To add synthetic alcohol would mean having to consult the Committee on Legal Affairs and the Internal Market, given that this addition would involve amendment to the legal basis of the Commission proposal. The Committee on Legal Affairs and the Internal Market established that the dual legal basis (Articles 37 and 95) is impossible, given that the procedures that correspond to the two articles are incompatible. As a result, faced with the impossibility of amending the proposal to include synthetic alcohol, the rapporteur proposes that the Commission should put forward a new proposal to include synthetic alcohol within its scope. In this way it will be possible to regulate the whole ethyl alcohol market at Community level. You will understand why the Committee on Agriculture and Rural Development voted for this proposal unanimously. A COM is probably not the appropriate instrument, but we have to bear in mind that it is the Commission that has the power of legislative initiative. I would like to finish by asking the Commission three questions. Can you tell what stage negotiations in the Council have reached? Is the Commission intending to withdraw the proposal? If this is the case, does it intend to present another?

Political group: PPE-DE