WORLD TRADE
ORGANIZATIONG/SCM/N/48/EEC
12 November 1999
(99-4884)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Updating Notification Pursuant to Article XVI:1 of the GATT 1994
and Article 25 of the Agreement on Subsidies and
Countervailing Measures
EUROPEAN COMMUNITIES
The following communication, dated 10 November 1999, has been received from the
Permanent Delegation of the European Commission.G/SCM/N/48/EEC
Page 2
EUROPEAN COMMUNITY
TABLE OF CONTENTS
Page
I. INTRO DUCTION ................................................................................................................. ...4
A. S TRUCTURE OF NOTIFICATION ....................................................................................................4
B. P ERIOD COVERED ........................................................................................................................4
C. P RESENTATION OF NOTIFICATION ...............................................................................................4
D. S TATUS OF SUBSIDIES .................................................................................................................4
E. EUROPEAN COMMUNITY  SUBSIDIES................................................................................4
II. THE  EUROPEAN COMMUNITY ’S STRUCTURAL ACTIONS .....................................6
A. E UROPEAN REGIONAL DEVELOPMENT FUND .............................................................................7
B. E UROPEAN SOCIAL FUND............................................................................................................8
C. E UROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) –
GUIDANCE SECTION ....................................................................................................................9
III. AGRICULTURE................................................................................................................ .....11
A. GENERAL RE MARKS............................................................................................................11
B. MEAS URES ..................................................................................................................... ........11
1. Export Refunds ............................................................................................................... ........11
2. Measures on the Internal Market..........................................................................................12
C. ANALYSIS BY  SECT OR........................................................................................................13
(i) "ARABLE CROPS"  SECTOR (Cereals, oilseeds and protein plants) ....................................13
(ii) "RICE"  SECTOR............................................................................................................. ........18
(iii) "DAIRY PRODU CT" SECTOR...............................................................................................19
(iv) "OLIVE OIL” ................................................................................................................ ...........21
(v) "SUGAR" SECT OR .............................................................................................................. ...22
(vi) "BOVINE MEAT" SECTOR ...................................................................................................24
(vii) "PIGMEAT" SECTOR .......................................................................................................... ...26
(viii) "SHEEPMEAT AND GOATMEAT" SE CTOR ......................................................................27
(ix) "FRUIT AND VEGE TABLE" SE CTOR .................................................................................29
(x) "BANANAS"  SECT OR........................................................................................................... 31
(xi) "PROCESSED FRUIT AND VEGETABLES" SECTOR .......................................................31
(xii) "WINE"  SECTOR ............................................................................................................ .......33
(xiii) "TOBA CCO" SE CTOR ......................................................................................................... ...36
(xiv) "TEXTILE FIBRES" SECTOR................................................................................................38G/SCM/N/48/EEC
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(xv) "DRIED FODDE R" SECT OR..................................................................................................39
(xvi) "SEEDS"  SECTOR........................................................................................................... .......40
IV. INDUSTRY SE CTORS..........................................................................................................42
V. OTHER PROG RAMMES .....................................................................................................47
1. SME Programme ................................................................................................................ ....47
2. JEV Programme ................................................................................................................ .....49
3. FIFG and PESCA ............................................................................................................... ....50
4. Common Organization of Markets .......................................................................................52G/SCM/N/48/EEC
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I. INTRODUCTION
A. STRUCTURE OF NOTIFICATION
Subsidies in the European Community are grante d both at Community level i.e. out of the
Community budget, and by Member States.
In view of this, the notification is divided into two parts.  This first part of the notification
deals with subsidies granted by the European Community and general information on aid granted
within the Community’s territory.  The second part of this notification, circulated as addenda to this
notification, covers subsidies granted by individual  Member States.  The Member States’ notifications
cover subsidies granted at both national and sub-national level.
B. PERIOD COVERED
As far as possible, this notification relates to subsidies granted during the period covered by
the new and full notification and to subsidy programmes which are currently in force, and providesstatistical information at least up to the end of 1998.
C. P
RESENTATION OF NOTIFICATION
The information provided in this notification includes, as far as possible, all the elements
required by Article 25.3 of the Subsidies Agreement and in almost all cases follows the presentation
required by the subsidies questionnaire.  In a few cases, the presentation is different to that specifiedin the questionnaire, but all the required elements are still included.
D. S
TATUS OF SUBSIDIES
In preparing this notification, the Community has attempted to achieve the maximum
transparency with regard to aid and support measures granted within its territory.  The fact that such
aid has been notified does not, in accordance with Article 25.7 of the Subsidies Agreement, prejudgeits legal status under GATT 1994 or this Agreement, nor does it prejudge its effects under the
Agreement or the nature of the measure itself.  In view of the diverse nature of many of the
programmes notified, it may be that only part of a programme’s funding involves a subsidy element,
which may or may not be specific.  Consequently, the appearance of a programme in this notification
does not in any way imply that the whole or part of its expenditure amounts to a specific subsidy.
Furthermore, the notification does not prejudge the non-actionable nature of certain
programmes under the provisions of footnote 35 to Article 10 of the Subsidies Agreement or the non-
actionable status that a programme would have under Article 8 of the Subsidies Agreement, had it
been notified according to the provisions of Article 8.3.
E. EUROPEAN COMMUNITY SUBSIDIES
(a) Subsidies granted out of the European Community budget
In 1998, total expenditure by the European Community amounted to ECU 90.7 billion.
The two largest areas of expenditure were agriculture and structural operations, which
accounted for 44.6 per cent and 36.8 per cent of financial commitments respectively.  Another notable
area of expenditure is research, which took up 3.9 per cent of total expenditure.  All these are
described in more detail in this part of the notification.G/SCM/N/48/EEC
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(b) State aid in the Member States
The European Commission is responsible for examining all state aid granted within the
Community in order to determine its conformity with Article 92 of the EC Treaty, (and Article 95 of
the ECSC Treaty, for coal and steel products), Member States are required to notify all aid schemes to
the Commission, which may decide either not to raise any objection or open an investigationprocedure.  If the aid scheme is ultimately found not to conform to Article 92, the Commission issues
a negative decision which prevents the aid being granted.  If the Member State has already granted
such aid, the Commission can order the aid to be repaid.
Details of Member States’ aid schemes can be found in addenda to this notification.G/SCM/N/48/EEC
Page 6
II. THE  EUROPEAN COMMUNITY’S STRUCTURAL ACTIONS
INTRODUCTION
1. The Community’s structural actions (comprising the structural finds and the cohesion fund)
are intended to strengthen the economic and social cohesion of the Community, in particular by
reducing disparities between the levels of development of the various regions and the backwardness
of the least-favoured regions, including rural areas.  Revised Regulations concerning the structural
funds were adopted on 20 July 1993, and cover the period 1994-1999.   In 1998, ECU 33.5 billion was
budgeted for all structural actions, the figure for  1999 is ECU 39.0  billion.
2. The three main structural funds (European Regional Development Fund (ERDF), European
Social Fund (ESF), European Agricultural Guidance and Guarantee Fund, Guidance Section
(EAGGF) are described in detail in the attached annexes.  In addition, the funds include the Financial
Instrument for Fisheries Guidance (FIFG – see part V), which assists in the restructuring of the
fisheries sector (ECU 0.6 billion was budgeted for th is in 1998, ECU 0.50 billion in 1999).  The total
budget of the structural funds amounted to EC U 30.5 billion in 1998, and ECU 35.9 billion in 1999.
The remainder of the Community’s structural spending involves the Cohesion Fund, which is
intended to contribute to projects in the fields of  environment and Trans-European networks in the
area of transport infrastructure, and for which ECU 2.87 billion was budgeted in 1998, and
ECU 3.12 billion in 1999, plus various reserves.  Those Member States whose GDP per capita is
assessed at less than 90 per cent of the EU average (Greece, Ireland, Portugal and Spain) are eligible
to benefit.
3. Total expenditure from the structural funds (ERDF, ESF, EAGGF and FIFG) is devoted to a
number of objectives as follows, all of which are cofinanced by Member States:
Objective 1: Development and structural adjustment of the regions whose development is lagging
behind (GDP of less than 75 per cent of the Community’s average).
Objective 2: Conversion of regions seriously affected by industrial decline.
Objective 3: Combating long-term unemployment and integrating young people and those
threatened with exclusion into the labour market.
Objective 4: Facilitating the adaptation of workers, especially those threatened with
unemployment, to industrial change and to changes in production systems.
Objective 5a: Speeding up adjustment of structures in agriculture and fisheries in line with the
reform of the Common Agricultural Policy.
Objective 5b: Economic diversification of fragile rural areas.
Objective 6: Combating problems faced by thinly populated regions of the Nordic countries.
In addition, ECU 2.86 billion was budgeted for Community initiatives in 1998, ECU 4.26 billion in
1999.
4. These structural actions are required to conform strictly to the Community’s rules on the
provision of state aid (Article 92 of the EC Treaty).
5. The structural actions are notified in a spirit of transparency vis-à-vis other Members of the
WTO.  The aid involved is largely devoted to the least-developed areas of the Community, and the
great majority of it goes to finance infrastructure or to assist individuals directly, without necessarily
conferring a direct benefit to producers of goods.  Consequently, as stated at the beginning of thisG/SCM/N/48/EEC
Page 7
document, the notification of a particular fund does not prejudge the status of the aid involved.  In
particular, only a small part of structural funding is used to assist investment.
A. EUROPEAN REGIONAL DEVELOPMENT FUND
1. Title of the programme
European Regional Development Fund (ERDF)
2. Period covered by the notification
January 1998-June 1999.
3. Policy objective and/or purpose of the programme
The ERDF is intended to help redress the main regional imbalances in the Community
through participation in the development and structural adjustment of regions whose development is
lagging behind (objectives 1 and 5(b)) and in the conversion of declining industrial regions (objective
2) and as regards thinly populated Nordic regions (objective 6).
4. Background and authority for the programme
Article 130 (c) of the EC Treaty: Council Regulation (EEC) Nos. 2081/93, 2082/93 and
2083/93.
5.  Form of assistance granted – Grants from Community budget for:
- Productive investment,
- The creation or modernization of infrastructure which contributes to the development or
conversion of the regions concerned, and
- Measures to exploit the potential for internally generated development of the regions
concerned.
6. To whom and how the assistance is provided
ERDF aid is cofinanced with the Member States; the ERDF provides a minimum of 25 per
cent of the total public expenditure involved, except in objective  1 regions, where a minimum of
50 per cent applies.
Member States submit multi-annual operation programmes, covering a coherent set of
regional development measures, and are responsible for the implementation of the programme and theselection of individual projects.
As regards productive investment, the ERDF pa rticipates in financing (national) investment
aid with a regional aim.  The aid is governed by the principles of coordination adopted by the
Commission within the context of its competition policy and which, inter alia , differentiate aid
ceilings according to the levels of development of the assisted regions.
Aid is normally in the form of grants or loans.G/SCM/N/48/EEC
Page 8
7. Total expenditure under the programme
ECU 14.0 billion was budgeted for 1998, excluding Community initiatives; ECU 15.6 billion
in 1999.
8. Duration of the programme
1994-1999 (Revised Regulations)
9. Trade effects
Because the programme is designed to alleviate disparities between regions within the
Community, and because the aid is paid out on a horizontal basis, within eligible regions, it is
considered that the trade effects are minimal.
B. EUROPEAN SOCIAL FUND
1. Title of the programme
European Social Fund (ESF)
2. Period covered by the notification
1 January 1998-30 June 1999
3. Policy objective and/or purpose of the programme
The European Social Fund was set up by the EEC Treaty in 1957 to improve the employment
opportunities for workers and to help raise their living standards.  It is based on Articles 123-125,
130(a)-130(e) of the EEC treaty, according to which its main tasks are to render the employment of
workers easier and to increase geographical and occupational mobility within the Community.  It is
provided on a general basis under objectives 3 and 4, and within the other regional objectives.
4. Background and authority for the programme
Above Articles of the EC Treaty: Council Re gulations (EEC) Nos. 2081/93, 2082/93 and
2084/93.
5. Form of assistance granted – Grants from Community budget for:
- Vocational training,- Start-up aid,- Innovative measures.
6. To whom and how the assistance is provided
The ESF provides cofinanced support in Member States for vocational training, aids for
employment and innovate actions.  The aid is normally devoted to people, not to enterprises.G/SCM/N/48/EEC
Page 9
Operational programmes, once approved by th e Commission, are managed by the competent
authorities in the Member States.  Identification of individual projects is the responsibility of the
Member State.
Aid is normally in the form of grants or loans.
7. Total expenditure under the programme
ECU 8.6 billion was budgeted for 1998, excluding Community initiatives; ECU 9.6 billion for
1999.
8. Duration of the programme
1994-1999 (Revised Regulations)
9. Trade effects
Since aid is granted for the benefit of individuals, not enterprises, and is mainly directed to
less-developed regions, the ESF is not considered to have any appreciable impact on trade.
C. EUROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) – G UIDANCE
SECTION
1. Title of the programme
European Agricultural Guarantee and Guidance Fund (EAGGF) – Guidance Section
2. Period covered by the notification
1 January 1998-30 June 1999
3. Policy objective and/or purpose of the programme
(a) Speeding up the adjustment of agricultural structures in the framework of the reform
of the Common Agricultural Policy (objective 5(a));
(b) Promoting rural development and structural adjustments in regions whose
development is lagging behind, including underdeveloped agricultural regions
(objectives 1 and 5(b)).
4. Background and authority for the programme
Council Regulation (EEC) Nos. 2081/93, 2082/93 and 2085/93.  The EAGGF Guidance
Section was established in 1972.
5. Form of assistance granted – Grants from Community budget for:
(a) Adjustment of agricultural structures (objective 5(a));(b) Agricultural development measures (objectives 1 and 5(b)).G/SCM/N/48/EEC
Page 10
6. To whom and how the assistance is provided
Aid is cofinanced with the Member States on the basis of multi-annual operation programmes
based on the aims of the EAGGF Guidance Section as set out above.  The Member States are
responsible for the implementation of the programme and the selection of individual projects.
Aid is normally in the form of grants or loans.
7. Total expenditure under the programme
ECU 4.2 billion was budgeted for 1998, excluding Community initiatives; ECU 5.2 billion in
1999.
8. Duration of the programme
1994-1999 (Revised Regulations)
9. Trade effects
Because the aims of the programme it is considered that the trade effects are minimal.G/SCM/N/48/EEC
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III. AGRICULTURE
A. GENERAL REMARKS
1. The measures notified concern only products which are subject of a Common Agricultural
Policy, namely the following sectors:
- Arable crops (cereals, oilseeds, protein crops)
- Rice
- Dairy products
- Olive oil
- Sugar and isoglucose
- Bovine meat
- Pigmeat- Sheepmeat
- Goatmeat
- Fruit and vegetables and products processed from fruit and vegetables
- Bananas
- Wine- Tobacco
- Textiles fibres (cotton, fibre flax and hemp, silkworms)
- Dried fodder
- Seeds
- Hops- Eggs and poultry
- Fishery products
- Products of the agri-foodstuff industries (products “not in Annex II”)
2. The measures notified include all price support measures, and compensatory payments
introduced by the common market organizations that can involve participation rather by the Community's
financing organization or by the government of a member State, to the extend that such measure derive
from the Community regulations.
3. With respect to the total amount of aid for each sector, it should be noted that the data relate to
payments made by the European Agricultural Guidance and Guarantee Fund (EAGGF) in the course of
the budgetary year concerned.
B. MEASURES
1. Export Refunds
For certain of the sectors governed by a common market organization, the Common Agricultural
Policy provides for the possibility of granting export refunds.
The purpose of export refunds is to cover the difference between Community prices and
international trade prices in order to enable exports to be effected at international trade prices.
The refund is the same for the whole of the Community; a differential may be applied according
to destination or time (months of delivery). The amount of the refund is fixed periodically by the
Commission. The periodicity of the fixing is different for each sector because of the special
characteristics of each sector. In order to facilitate export operations, in the case of the majority of
products a system has been introduced whereby refunds can be fixed in advance. The refund is paid to the
exporter.G/SCM/N/48/EEC
Page 12
The total amount of export refunds financed by the EAGGF during the past few years, and for
each sector, is as follows:
(ECU million)  1)
Products Refunds 1995 Refunds 1996 Refunds 1997 Refunds 1998
Arable crops
RiceSugar 2)
Olive oil
Fruits and vegetablesWine
Tobacco
Dairy productsBovine meat
Pigmeat
Eggs and poultryProducts of the agri-foodstuffs
industries
Total expenditure1,129.3
     65.1       1.9
     38.2
   239.4     36.7
     35.1
2,290.21,761.0
   118.2
   200.5
   574.36,489.9   320.2
     42.6       1.6
     59.3
     98.4     40.8
       2.4
1,615.81,559.4
   101.4
   139.2
   493.9
4,475537.0
68.3
3.2
42.7
80.759.7
0
1,756.31,498.9
72.2
79.5
569.24,765429.4
49.6
2.3
24.9
58.341.2
0
1,426.7
774.5
74.5
90.7
556.1
3,528.3
1)Includes "food aid" refunds.
2)Starting with marketing year 1981/1982, the export refunds on domestic sugar have been entirely
financed out of producer contributions by producers of sugar and isoglucose and sugar beet and sugar caneproducers of the Community. The amounts represent food aid.
2. Measures on the Internal Market
1. In order to stabilise markets and assure the agricultural population of an equitable standard of
living, the Common Agricultural Policy provides, in the market organization regulations for the different
products, intervention and aid measures which vary according to the nature of the product and the special
characteristics of the market.
2. The cost of these intervention and aid measures is, as a general rule, financed by the EAGGF.
During the past few years, by product sector, they have amounted to:
(ECU million)  1)
Products Intervention
and other
payments 1995Intervention and
other payments
1996Intervention and
other payments
1997Interventionand
other payments
1998
Arable crops 1)
Rice
Sugar 2)
Olive oilFlax and hemp
Cotton
SilkwormsFruits and vegetables
Wine
TobaccoSeeds
Hops
Other plant productsDairy products
Bovine meat
Sheepmeat and goatmeatPigmeat
Fishery products
Other products 3)
Total expenditures13,924.5
         1.1
       49.7
     767.8       78.6
     797.2
         0.2  1,543.2
     820.8
     957.9       76.4
       14.3
         1.8  1,746.1
  2,256.6
  1,780.9       17.9
28.2
     342.0
25,205.216,065.6
-
       40.7
   1930.7       88.7
     762.7
         0.2  1,483.1
     737.5
  1,024.1       91.8
       24.1
-
  1,971.3
  5,237.6
  1,681.1       22.8
25.3
     366,1
31,553.416,941.5
18.1
53.2
2,167.6
106.7
800.0
0.3
1,474.6
974,0
1,004.3
92.4
13.0
-
1,347.9
5,176.6
1,424.9
406.6
21.8
368.2
32,391.717,515.8
116.4
59,4
2,241.8
108.5
761.0
0.3
1,451.2
658.8
870.3
93.3
12.8
-
1,170.0
4,386.1
1,534.9
163.2
21.2
377,5
31,483.1
1)Since 1994, expenditure on cereals, oilseeds and protein crops has been consolidated under the same
budgetary heading: "Arable crops".G/SCM/N/48/EEC
Page 13
2)Not including storage costs and the part comprising production refunds (chemical industry).
3)Dried fodder and dried vegetables; until 1994 expenditures on these was included under expenditure
on high-protein products (for dried fodder) and fruits and vegetables (for dried vegetables).
C. ANALYSIS BY SECTOR
(i) "ARABLE CROPS"  SECTOR (Cereals, oilseeds and protein plants)
This sections covers the "classical market organization for cereals as well as the
compensatory payment scheme for producers in the arable crop sector (cereals, non-fibre flax,
oilseeds and protein crops).
The common market organization for cereals
The common market organization came into force on 1 July 1967. It is now regulated by
Council Regulation (EEC) No. 1766/92 and covers the following products:
- Grain cereals: common wheat, durum wheat, barley, rye, oats, maize, buckwheat,
canary seed, millet, others;
- processed products: flours, groats and meal of wheat, malt, starch, glucose, cereal-
based preparations, bran, wheat gluten, manioc and potato starch.
The cereal marketing year runs from 1 July to 30 June.
1. Operation of the market
A. Price arrangements
The Council fixes the intervention price for cereals. At this price the intervention
agencies must, at certain periods of the year, buy in the cereals they are offered that
have the requisite quality characteristics.
There is one single intervention price for wheat, maize, and sorghum, barley, rye and
durum wheat; there is no longer an obligation to buy in feed wheat.
The intervention price is increased each month from November to May to cover storage costs
(technical and financing costs) and thus help to improve the disposal of cereals in line with marketrequirements.
The intervention price fixed by the Council for all cereals for an indefinite period is 119,19
ECU/t
B. Specific market instruments
(a) Border regime
Where the price of cereals within the Community is higher than the world price, a refund
calculated in terms of the difference may be granted on exports. If the world price exceeds the
common price, a levy may be imposed on exports.
Community food aid operations also attract refunds.G/SCM/N/48/EEC
Page 14
(b) Stocks
Two types of intervention measures are involved:
- Buying-in and subsequent operations involving public stocks: this concerns buying-in by
the intervention agencies and the related disposal operations. They give rise to technical
and financial costs and to losses or gains on sales of stocks.
- Special measures: these are measures provided for in Article 6 of the basic regulation (No
1766/92) to avoid situations in which the intervention agencies are forced to buy in
excessively large quantities of cereals. The Commission has broad discretionary powers
for the application of special measures and may, if necessary, also adopt measuresequivalent to carryover payments.
(c) Production refunds for potato and other starch
1. A production refund is paid to users of maize starch, wheat starch, barley starch or potato
starch for the production of certain non-foodstuff products which are not protected upon import by
tariffs. The principal beneficiary industry comprise s the chemical, paper and paperboard industry and
pharmaceutical sector. This refund is variable and is currently calculated so as to align prices of the
European Community raw materials to those of the world market.
2. The price and support policy for starch applies within production quotas and potatoes consists
of three measures:
- the minimum potato price: This price is equivalent to the price of cereals, in particular
maize (indicative price); the price has been decreased and set during the CAP reform at the
level of ECU 209.78 per quantity of raw material needed to produce one ton of potato
starch, as from 1 July 1995 on;
- the compensatory payment to farmers: This payment is granted to producers of potatoes
intended for starch production. It is applied to the quantities required to produce one ton
of starch, and is set at the level of ECU 86.94 per ton as from 1 July 1995 on.
Furthermore, the compensatory payment is paid within a quota limit.
- The special starch producer’s premium: this premium set at ECU 22.25 per tonne of starch
is paid to potato starch-producing undertakings for the quantity of starch corresponding to
the starch producer’s quota provided that the minimum price is paid to the farmer. It was
intended to offset certain structural disadvantages in the starch industry, in particularspecial anti-pollution investments.
(d) Other intervention
These headings cover expenditure on various measures, in particular special digressive aid for
Portuguese cereal producers.
2. Aids per hectare for arable crops and set-aside
The reform of arable crops entered into force on 1 July 1993.  It is governed by Regulation
(EEC) No 1765/92, which covers all cereals, oilseeds, protein plants and non-fibre flax seeds.
As far as cereals are concerned, the institutional prices have been substantially reduced as
from the 1993/94 marketing year to bring them closer  to world prices.  The resulting loss of income isG/SCM/N/48/EEC
Page 15
offset by a compensatory payment, paid per hectare and calculated on a regional basis to producers
sowing cereals and submitting applications, subject to certain conditions, in particular that of setting
aside land in the case of producers in the general scheme.
For oilseeds and protein crops (peas, field beans and sweet lupines), the previous support
arrangements have been abolished with the introduction of the reform or, in the case of rape,
sunflower an Soya, since the introduction of a transitional support scheme consisting of payments per
hectare from the 1992/93 marketing year. With the integration of these products into the reform,
prices dropped and oilseeds as well as protein crops are now sold on the European markets at world
prices.
1. Regionalization plan
In order to reflect the diversity of agricultu ral structures in the Community, compensatory
payments vary from region to region on the basis of the yields per hectare recorded in the past.(The
period covered is 1986/87 to 1990/91, excluding the highest and lowest year).
The Member States have to established a regionalization plan in accordance with the criteria
set out in Article 3 of Regulation (EEC) No 1765/92 which aims to define, insofar as is possible,
distinct homogeneous areas.  The average yields  may be modulated in order to take account of
possible structural differences between production regions.  The regionalization plan must, however,
guarantee that the average historical yield (fixed for a given period) of each Member State concernedis respected.
As a rule, for each area an "all cereals" yield should be applied.  On account of the sometimes
substantial differences in yield, two distinct arrangements are provided for:
- for maize a yield different from that from other cereals may be applied;
- yields for a single region may be broken down into different yields for irrigated and non-
irrigated land (mixed areas).
Even where these two exceptions are applied, however, the yield recorded for all cereals in
the relevant region during the reference period must not be exceeded.
2. Expenditure stabilization mechanism
The compensatory payment is granted only on an area not exceeding a regional base area.
This is established as the average number of hectares sown to arable crops (cereals, oilseeds andprotein plants) or, as the case may be, set aside under a public aid scheme in 1989, 1990 and 1991 in a
given region.
As with the regionalization plan, Member States are required to determine the region, which
may cover an entire Member State or several areas within a Member State. It cannot be smaller than ayield area.
A base area must be established separately for maize or irrigated crops where a yield higher
than that for other cereals is applied to these products. In addition, the compensatory payment on
irrigated areas is granted only up to a ceiling for each production area or a separate base area.
The Member States are also authorized to apply an individual base area system. However, no
Member State took up that option.G/SCM/N/48/EEC
Page 16
Production and expenditure are controlled by establishing the base areas or a ceiling in the
case of irrigated production.
If the sum of the areas in respect of which the compensatory payment is applied for (including
that on set-aside) plus the "COP" (cereals, oilseeds and protein plants) areas declared as fodder areasis greater than the regional base area, the following measures apply in the region in question:
(a) base area:
- during one and the same marketing year, the eligible area per producer is to be reduced
proportionately for all types of aid.
- during the following marketing year, producers qualifying under the general scheme
must, by way of an extraordinary measure, set aside land without receiving any
compensation;
(b) ceiling:- during one and the same marketing year, compensatory payments on irrigated areas are
reduced by 1.5 times the rate of overrun. If the overrun is equal to or greater than 10 per cent, the
yield to be used is that applicable to non-irrigated crops.
In addition, where a Member State chooses to establish production regions not corresponding
to the regional base areas and where the average yield under the regionalization plan applied in 1993
is exceeded, all compensatory payments to be paid to that Member State in respect of the following
marketing year are to be reduced in proportion to the observed overrun, except where the quantity
applied for is less than the product of the base area of the Member State multiplied by the abovementioned average yield.
3. Compensatory payment
Cereals
As the cut in cereals prices was staggered over three years, the amount of the compensatory
payment also changed over the same period.  Since the marketing year 1995/1996 the compensation
reached its full rate in the 1995/96 and it amounts to ECU 54.34  per tonne of cereals yield for the
region of production concerned.
As regards durum wheat, the alignment of its intervention price on that for other cereals has
led to an additional price cut and, consequently, a decrease in producer's incomes. For this reason, an
additional compensatory payment is paid for the area sown to durum wheat in the traditional
production areas. This supplement is set at ECU 358.6/ha until the marketing year 1998/99. This
covers both the old durum wheat aid and the part of the price cut not covered by the compensatory
payment.
Payment of the supplement was initially restricted to the number of hectares sown to durum
wheat and eligible for the old aid during the marketing years 1988/89 to 1991/92.  The producer
decides which marketing year is to serve as the reference.
Since the introduction of this additional paymen t, the system has been amended as follows:
- an extension of payment to certain areas in France, Spain, Portugal and Italy;G/SCM/N/48/EEC
Page 17
- a payment to certain non-traditional areas in France and Austria of an additional payment of
ECU 138.9/ha in respect of an area not exceeding 50.000 hectares in northern producer regions of
France and 5.000 hectares in Austria That amount reflects loss of income due solely to the fall
in the guaranteed price for durum wheat.
Oilseeds, protein plants and non-fibre flax seed
The products covered are:
- rape, sunflower, soya
- peas (excluding chick peas), beans and sweet lupines
- non-fibre flax seed.
The Community market is essentially free. Imports are free of customs duties, apart from a
low rate of customs duty on peas. Exports do not attract refunds.
Compensatory payments are granted to producers, calculated -in the case of protein plants and
flax- on a regional basis according to the historical cereals yields defined in the regionalization plan.
Compensation for rape, sunflower and soya may be regionalized either on the basis of oilseed yields,
subject to certain restrictions, or on the basis of cereal yields.
Payments are reduced where the base area is exceeded. In addition, the following 
adjustments must be made for oilseeds:
- a reduction in the compensatory payment where the maximum guaranteed area is
exceeded (Regulation (EC) No 232/94 am ending Regulation (EEC) No 1765/92);
- an adaptation of the final reference amount in cases where any variation recorded in
the market price exceeds 8 per cent of the forecast reference price.
Reference amounts
Description
Rape, sunflower and soya seed
Peas, beans and sweet lupines (1)
Non-fibre flax seed (1)1996/97
ECU 433.5/ha
ECU 78.49/t
ECU 105.1/t
(1) These amounts have to be multiplied by the regional yields for cereals to obtain the regional reference amounts.
Set-aside
Set-aside linked with aids per hectare:
(a) General scheme open to all producers:
Each producer claiming compensatory payments under the general scheme is required to set
aside a certain percentage of the land on his holding.
For the 1995/96 and 1996/97 marketing year, the set-aside obligation has been fixed at 12 and
10 per cent respectively.  For the 1998/99 marketing year the set-aside obligation has been reduced to
5 per cent.
The compensation for the set-aside obligation is fixed at ECU 68.83 multiplied by the regional
cereals yields.G/SCM/N/48/EEC
Page 18
This compensation is also payable on land voluntarily set aside in excess of the obligation,
subject however to a ceiling set by the Member State (which may not exceed the area sown to eligible
crops covered by payment applications).
However, notwithstanding that principle, producers who under Regulation (EEC) No 2328/91
have set land in excess of the area which they intend to sow to arable crops eligible for the aid and who
have not replanted such land may opt for the continuation of set-aside on all this land for a further sixty-
month period against payment of reduced aid of ECU 48.30/tonne on the area set aside in excess of the
area sown to arable crops.
Land set aside may be used for producing raw material for the manufacture of products not
directly intended for human or animal consumption.
Clause 7 of the Memorandum of Understanding on certain oilseeds between the EC and the US
stipulates that by-products may not exceed one million tonnes per annum, in terms of soya bean meal
equivalent, for animal or human consumption produced on set-aside land from rape, colza, sunflower andsoya.
Within one and the same Member State and under certain conditions, farmers may transfer set-
aside obligations to another producer.
(b) Simplified scheme, open to small producers:
Small producers are producers applying for compensatory payments for an area not exceeding
that needed to produce 92 tonnes of cereals. The yields to be taken into consideration to calculate this
tonnage are those fixed by the regionalization plan.
The simplified scheme applicable to small producers:- imposes no set-aside obligation;- provides for the grant of the compensatory payment at the rate applicable to cereals for
all areas sown to arable crops, i.e. also to oilseeds and protein plants.
(ii) "RICE"  SECTOR
On 22 December 1995, the Council formally decided to reform the common market organization
for rice.
The reform includes the following points:
(a) Intervention measures
The intervention price for paddy rice shall be reduced by 15 per cent from 351 ECU/t. for the
1996/97 marketing year to 298.35 ECU/t. for the 1999/2000 marketing year. Community rice producers
may claim compensatory payments fixed per hectare of land under rice sown which shall be
differentiated according to the yield (to/ha).
The intervention agencies are obliged to buy in any rice harvested in the Community and offered
to them, provided offers are made during the open period (April-July) and comply with certain
conditions, in particular in respect of quality and quantity.G/SCM/N/48/EEC
Page 19
The intervention buying-in price is fixed for a given standard quality.  If the quality offered
differs from the standard quality, the price is adjust by the application of price increases or reductions. It
is applicable in all the Community intervention centres fixed at the beginning of the marketing year.
The intervention price is increased each month during the open period to take some account of
warehousing and interest costs for storage of cereals in the Community.
The intervention buying-in prices fixed at the beginning of marketing years have been as follows:
(ECU/t.)
Product
Paddy rice1992/93
313,651993/94
291,021994/95
291,021995/96(1)
251,401996/97
351,001997/98
333,45
(1) As from February 1995, the prices were converted on the basis of the monetary coefficient of 1,207509.
Spanish prices have been aligned with Community prices as from marketing year 1990/91.
Portuguese prices have been aligned with Community prices from April 1993.
A national base area for each producer Member State is established:
- Spain: 104.973 ha.
- France
     - metropolitan territory:   24.500 ha.
     - French Guyana     5.500 ha.
- Greece:   24.891 ha.- Italy: 239.259 ha.
- Portugal:   34.000 ha.
In case national areas in a given year exceed one of the base areas indicated, progressive
penalties will be applied in the form of a reduction of the compensatory payments.
(b) Production refund
A production refund is paid to users of rice starch for the production of certain non-food products
that are not protected upon imports by a tariff system.  The main beneficiary industry comprises thechemical, paper and pharmaceutical sector.  The refund is variable and is currently calculated so as to
align prices of Community raw materials with the world market level.
(iii) "DAIRY PRODUCT" SECTOR
(a) Intervention measures
Each year an intervention price is fixed for butter and skimmed milk powder and the national
intervention agencies buy in, following the rules as indicated bellow, any such products of the
Community origin which comply with certain quality and packaging conditions.G/SCM/N/48/EEC
Page 20
The intervention prices fixed for the last few marketing years were as follows:
Intervention price valid for           Milk marketing year
1996/97 1997/98 1998/99
1. Butter 328.20 328.20 328.20
2. Skimmed milk powder 205.52 205.52 205.52
Under the intervention mechanism, as amended in March 1987 and to apply until the end of the
additional levy system, intervention buying-in may be limited when certain conditions are met.  SinceJuly 1987, intervention butter has been bought in under a tendering procedure. Butter is bought in at a
maximum price, which is fixed in relation with the bids received by the Commission, but not lower than
90 per cent of the full intervention price. Skimmed milk powder can only be bought between 1 March and
31 August each year.  Purchases can be suspended when the annual quantity offered reaches
109,000 tonnes.
(b) Aid to private storage
Aid for private storage of milk powder, butter and certain cheeses produced in the Union is or
may be granted:
- for top quality skimmed milk powder: only when intervention purchasing is suspended
from 1 March to 31 August and under contract;
- for butter stored for at least three months and between 15 March and 15 August; the aid
can be paid for a storage period of maximum 210 days;
- for certain cheeses : Grana Padano aged at least nine months old, Parmigiano-Reggiano
aged at least 15 months old and Provolone at least three months old.  In years where a
serious imbalance can be reduced or eliminated by seasonal storage aid can be granted
for private storage of the long-keeping cheeses Emmental and Gruyère and of certain
ewe milk cheeses.
(c) Aid for skimmed milk for animal feed
Aid is granted for skimmed milk and skimmed milk powder manufactured in the Community
and intended for animal feed.
The milk or powder must be either directly denatured or incorporated in some compound
feedingstuff intended for livestock.
(d) Aid for skimmed milk processed into casein
Aid is granted for skimmed milk produced in the Community and processed into casein,
provided both the milk and the casein produced from it comply with certain conditions.
(e) Other measures
- Measures may be taken, in years in which they are found necessary, to support the
market for long-keeping cheeses and goat’s milk cheeses, if such cheeses comply with
certain conditions.  These measures are taken, in particular, in the form of private storage
aid.G/SCM/N/48/EEC
Page 21
- When surpluses of dairy products develop, or threaten to develop, measures other than
the above may be taken to facilitate their disposal or to prevent the development of new
surpluses.  A number of measures are currently in force to facilitate butter disposal on
the Community market; inter alia , aid is granted for use in the form of concentrated
butter for cooking, incorporation in certain foodstuffs and for direct consumption bycertain categories of persons or  institutions.
- In order to encourage consumption by young people, aid is granted to Member States
which operate an aid programme for milk distributed in schools so that pupils can obtain
milk at a reduced rate.
(f) Additional levy payable by producers or purchasers of cows' milk
An additional levy was introduced in 1984 on quantities of milk exceeding those delivered in
1981 plus 1 per cent.  The Council has fixed the corresponding quantities for each Member State. In this
connection, the Council adopted a Regulation (EEC) No. 856/84 (O.J. No. L 90 of 1 April 1984) and
Regulation (EEC) No. 857/84 (same O.J.).
In the four last years, the total milk quotas quantities for EC 15 were:
(Million tonnes)
1995/96 1996/97 1997/98 1998/99
Deliveries 115.4 115.6 115.7 115.7
Direct sales 2.1 1.9 1.8 1.8
In case of non-respect of the milk quota, the levy is equal to 115 per cent of the target price for both
deliveries and direct sales.
(iv) "OLIVE OIL”
As from 1 November, 1998, the market organization system was substantially modified.
1. The public intervention system based on an intervention price fixed for a given quality and
which obliged the intervention agencies to buy in Community olive oil offered, was abolished.
Instead, a private storage system was put in place which allows market operators to store
quantities for relatively long periods if the market balance is disturbed. The quantities to withdraw
from the market and the aid to be paid are determined by tender.
2. The maximum guaranteed quantity (MGQ) of 1.35 million tonnes was increased to   1,
777.261 t and distributed among the producing Member  States. These National Guaranteed Quantities
(NGQs) are distributed as follows:
- Spain: 760. 027 t
- Greece: 419 .529 t
- France:     3 .297 t
- Italy: 543 .164 t
- Portugal:   51 .244 t
Exceeding the NGQ results to a proportionate reduction of the aid to the olive oil producers of
the Member States.  If the production is lower than the NGQ, 80 per cent of the remaining quantity iscarried over to the next marketing year and 20 per cent is distributed among those Member States
which have exceeded their NGQ.G/SCM/N/48/EEC
Page 22
3. The aid to the producers of olive oil is granted for olive oil produced in the Community from
olives harvested in the Community.  This aid is designed to contribute to establishing a fair income
for producers.  For Member States who wish, an aid to the producers of table olives can be granted.
The quantities benefiting from the aid scheme are being converted to olive oil and included in theNGQs.  The increased aid granted for small producers who were also exempted from the co-
responsibility scheme is abolished.
4. A target market price is fixed by the Council at a level permitting disposal of olive oil
production.  This price is fixed for the next three marketing years ending on 30 October 2001.
5. The Consumption Aid which was equal to the diff erence between the indicative price less the
production aid and the representative market price and which was designed to facilitate the marketing
of the Community olive oil, has been abolished as from 1 November 1998.  The representative market
price as well as the consumption aid scheme, have been abolished.
6. Export refunds are granted to permit the Community firms to export olive oil to third
countries.
The various elements mentioned above were fixed at the following levels:
(ECU/100 kg)
1996/97 1997/98 1998/99
Target price
Intervention price
Production aid
Production aid for small producersRepresentative market priceConsumption aid383.77
180.58
142.20
151.48229.50
12.07383.77
175.16
142.20
151.48229.50
12.07383.77
-
132.25
---
7. Production refund is granted for olive oil used in the manufacture of preserves (vegetables,
fish, crustaceans). The purpose of this refund is to enable beneficiaries to buy on the Community
market, at prices close to world market prices, the quality of oil they which they use most frequentlyfor their manufacturing.
The average production refunds are as follows:
(ECU/100 kg)
1996/97 1997/98 1998/99
Production refunds 67.18 61.26 44.00*
* Estimate
(v) "SUGAR" SECTOR
1. Prices
(a) Sugar
Each year, an intervention price for white sugar is fixed for the non-deficit areas of the
Community; the intervention agencies are required to buy in the sugar concerned at that price
throughout the marketing year.
Intervention prices derived from that price are also fixed for each of the deficit areas.G/SCM/N/48/EEC
Page 23
The intervention price is fixed for a standard qua lity; if the quality of sugar is different, the
price is adjusted in accordance with a scale of increases or reductions.
In addition, an intervention price derived from the intervention price for white sugar is fixed
for raw sugar of a standard quality after allowing for a uniform refining margin and national yield. In
the marketing years 1996/97, 1997/98 and 1998/99 the intervention price for white sugar amounted to
63.19 ECU/100 kg and for raw sugar to 52.37 ECU/100 kg.
(b) Beet
For beet, a basic price is fixed each year valid for a specific delivery stage and a specified
standard quality.  This price is fixed taking account of the intervention price for white sugar and of
national values representing in particular the processing margin, yield, and undertakings' receipts from
sales of molasses. In addition a minimum price is fixed for A beet (2) equal to 98 per cent of the basic
price and a minimum price for B beet  (3) equal to 68 per cent or 60.5 per cent of the basic price.
These percentages are in direct relation with the production levies charged on A sugar and B
sugar. Manufactures are required to pay at least these prices.
In addition, in areas for which a derived intervention price of white sugar has been fixed, these
minimum prices are increased by an amount representing the effects of regionalization of prices.
2. Production levies
As from 1 July 1981, the principle in force is that producers should bear the full amount of any
financial losses resulting from disposal of surplus production of Community sugar in relation toconsumption in the Community.  Practical implementation of this principle is ensured through a levy
which may be charged at a rate of up to 2 per cent of the intervention price on all production under quotas
A and B (whereas hitherto only B sugar was subject to a levy).
If this first levy does not suffice to cover the financial losses in question, then a second levy,
which initially may not exceed 30 per cent and subsequently 37.5 per cent, if necessary, of the
intervention price, is charged but only on B quota production (i.e. a total of 2 per cent plus 37.5 per cent =39.5 per cent, which represents a minimum price for beet of 60.5 per cent of the basic price).  This
possibility has been used since marketing year 1982/83. Any remaining losses not covered by these levies
have been absorbed since marketing year 1986/87 by additional levies.  These new levies were introduced
during the revisions of the quota system from 1986 to 1988, initially to absorb the accumulated negative
balance not covered during the five marketing years from 1981/82 to 1985/86, and secondly to avoid anyfurther accumulation during the five-year period (from 1986/87 to 1990/91) for which it has been decided
to extend the quota system.  Thus, for marketing years 1986/87 and 1987/88 a special absorption levy
was introduced, as well as an additional levy for the remaining three marketing years so as to absorb
annually the losses not covered by the normal production levies.  These levies are calculated by
multiplying the total amount owed by the enterprise by a factor representing the relation between the total
loss recorded and the receipts from the normal levies, i.e. the basic levy for A and B sugar and the B levy
for B sugar.  The integral self-financing system on an annual basis has been extended whenever the quota
system has been extended.
3. Reimbursement of storage costs
Provisions has been made for reimbursement of storage costs in respect of sugar produced under
quotas A and B.  The reimbursement is calculated on the basis of the intervention price for white sugar
and a standard fixed-rate interest for the whole Community.G/SCM/N/48/EEC
Page 24
(2) A beet is beet intended for processing into A sugar, i.e. into sugar included in production quota A.
(3) B beet is beet intended for processing into B sugar, i.e. into sugar included in production quota B.
It is aimed at equalising storage costs in the Community. It is a measure designed to ensure regular
disposal of sugar in the market throughout the marketing year, to prevent the sale of excessive tonnage
during the manufacturing period and in particular to avoid the offering of sugar to intervention agencies
solely in order to avoid storage costs.  This reimbursement is financed out of a levy on manufacturers,
based on the principle of equality, at the Community level, between the total sum reimbursed and the total
sum levied.
4. Intervention measures
(a) Production refunds are granted on sugar used in the chemical industry, of which 60,000
tonnes are charged to the budget, that being the quantity eligible for refunds before anew system came into effect on 1 July 1986 under which all quantities over and above
that ceiling are charged to the producers and covered by the levies they pay.
(b) Disposal aid (transport, refining) is granted on raw sugar produced in the French
overseas departments in order to ensure that it has the same conditions of refinery accessas preferential sugar (ACP countries and India).
Variable refining aid or corresponding tariff adjustment is granted on all raw sugar refined in the
Community (including, up to end June 1995, also sugar imported into Portugal and Finland with a
reduced levy) in order to maintain a refining margin that is necessary from the economic aspect and thusensure, in particular, the disposal of preferential sugar.
(vi) "BOVINE MEAT" SECTOR
1. In the bovine meat sector an intervention price is fixed each year valid for the reference quality
for slaughtered adult male bovine animals.
Market price quotations and public intervention buying-in are based on the Community scale for
classification of adult bovine carcasses.
In the last three marketing years the intervention price has been 347.50 ECU/100 kg carcass
weight.
In addition to public intervention, aid to private storage may be granted.  The amount of such aid
is:
- Either established under a tendering procedure;
- or fixed in advance on a lump sum basis.
2. Price support regime
The European Community has introduced measures to link management of the internal market
more closely to market price trends.
Under the new regime:- For the determination of buying-in prices under the tendering procedures, only offers not
exceeding market prices by more than a reasonable margin are eligible;G/SCM/N/48/EEC
Page 25
- the thresholds for the activation of intervention buying-in have been fixed as follows
(tendering procedure):
Market price as a percentage of the
intervention price equal to 347.50
ECU/100 kg. carcassUnder regular tendering
proceduresUnder safety net
Community market price
Member State market price84%
80%78%
60%
To improve fattening of bovine animals, carcasses classified as 0 quality in the Community
scale are to be excluded gradually from public intervention as from 1993.
Lastly, a premium per young male calf withdrawn from production before the age of 20 days
was granted as from April 1996. In 1998 this premium amounts to ECU 115 per young male either
dairy or non-dairy calf and ECU 80 as from December 1998 in the case of the United Kingdom.
These amounts can however be modified at any moment.
Furthermore, in 1997 and 1998 an additional early marketing premium of ECU 45 to ECU 80
were granted in the case where the veal weight is 15 per cent lower than the national average weight
registered in the past.  This premium terminated on 30 November 1998.
The reorientation measures adopted in the bovine meat sector also include a substantial
reduction in the level of price support.  This is offset by the grant of direct income support, which isnot tied to the level of production, applicable as from 1 January 1993, and subject to:
- at farm level, a density threshold in livestock units (LSU) per hectare of forage area;
and
- at Community level, a ceiling on the number of animals eligible for premium.
3. Premiums
Payment of premiums in the bovine meat sector is subject to a density requirement in LSU/ha.
of forage area, which has been fixed as follows:
In 1994: 3.0 LSU/ha.
In 1995: 2.5 LSU/ha.
From 1996: 2.0 LSU/ha.
The density requirement does not apply, however, to holdings with less than 15 LSU.In addition, a supplementary extensification premium of ECU 36.23 per eligible head may be
granted when the stocking density is lower than 1.4 LSU/ha.  As from 1997, this supplementary premium
amounts to ECU 36 and to ECU 54 when the stocking density is lower than 1.0 LSU/ha.G/SCM/N/48/EEC
Page 26
(i) Special premium for young male bovine animals
The special premium for young male bovine animals applicable to each of the age groups at
10 months and over 22 months, is set at:
ECU 90 for 1995
ECU 108.7 for 1996
ECU 135 for bulls (only at 10 months), and ECU 108.7 
for steers as from 1997
In a country where the percentage of male bovine animals slaughtered during the "off grass"
period (IX-XI) exceeds 35 per cent of the total number slaughtered during the year, an additionaldeseasonalization premium of a decreasing am ount of ECU 72.45 to ECU 18.11 per head may be
granted for bovine male animals slaughtered between 1 January and the end of May.  In 1998, farmers
in Germany, Ireland and Northern Ireland and in Sweden benefited from this measure.
(ii) Premium for the maintenance of suckler cow herds
The suckler cow premium is granted to breeders who do not deliver milk or dairy products or
whose milk production is lower than a reference quantity of 120,000 kg.
The premium is set at:
ECU 95 for 1994
ECU 120 for 1995
ECU 144.9 as from 1996
An additional premium of ECU 30.19 per cent per cow may be granted at national level (of
which ECU 24.15 are supplied by the EAGGF) particularly in regions where development in the
sector is lagging (Greece, Ireland and Northern Irel and, Portugal and certain regions of Southern Italy,
Spain and France).
4. Other provisions
For the new German Bundesländer which are still restructuring their livestock sectors, the
number of animals eligible for premium is set as follows:
- 235,316 young bovine males for the special premium;
- 306,048 eligible suckling cows;
- 1,000,000 eligible ewes.
(vii) "PIGMEAT" SECTOR
1. Each year a basic price is fixed for meat of domestic swine, presented in carcasses or half-
carcasses of a standard quality. The basic prices for the last three years has been 150.94 ECU/100 kg.
2. Intervention measures may be taken when, on the representative markets in the Community,
the average price for pig carcasses is less than 103 per cent of the basic price.
Where intervention measures are to be taken, the products for which private storage aid is to
be granted and, where appropriate, the products of a defined quality which are to be bought-in areG/SCM/N/48/EEC
Page 27
determined, and likewise the prices at which the intervention agencies are to buy-in products and the
amount of private storage aid  are fixed.
The buying-in prices for pig carcasses of standard quality may not be more than 92 per cent
nor less than 78 per cent of the basic price.
For products other than pig carcasses of standard quality, the buying-in prices are derived
taking into account differences in product value.
Public intervention has not been used since more than 20 years.
3. In order to support the pigmeat market, whic h suffers from very low prices since summer
1998, the Commission opened in September 1998 a private storage aid, as indicated in the following
summary:
Year Period Number of
weeksContracts concluded for frozen meats
(tons)Region of
application
1998 As from 28 September
1998 - 274,000 EC
Due to the improvement of the veterinary situation regarding classical Swine Fever in 1998,
the exceptional market support measures applied in several Member States came to an end.
(viii) "SHEEPMEAT AND GOATMEAT" SECTOR
The market organization for sheepmeat and goatmeat is governed by Regulation (EC)
No 2467/98.
The products covered are the following:- live animals;
- meat: fresh, chilled or frozen;
- processed products: meat and offal of sheep and goats, salted, dried or smoked,
preserved, other;
- offal
The marketing year runs from the first Monday in January to the end of the previous day of
the following year.
Expenditure in this sector accounted in 1997 for 3.5 3 per cent of total EAGGF Guarantee
expenditure.
A. Operation of the market in sheepmeat
Price arrangementsEvery year the Council fixes the basic price for fresh or chilled sheep carcasses.  It is the same
for the entire Community.
The basic price is seasonally adjusted by the Council on a proposal from the Commission, to
take account of seasonal variations on this market.G/SCM/N/48/EEC
Page 28
The institutional prices for the 1996 marketing year were fixed in the 1995/96 prices package.
For the 1997, 1998 and 1999 marketing years, the Council decided to maintain the basic price at the
level decided for the 1996 marketing year.
Price decision in ECUs
Product 1998 and 1999
(Period of application) Amounts %
ECU/t change
(9.1.1998-3.1.1999) sheepmeat and goat meat basic
price
(carcass weight) 5,040.7 0
B. Specific market instruments
Import and export arrangements
Since 30 June 1995, following the GATT arrangements, the levies, which were applied on
imports of sheepmeat were replaced by fixed duties.  The instrument for paying export refunds was
also abolished at this time.
The European Community has opened tariff quotas for imports of sheepmeat at a reduced
level of duty or at zero duty.  These concessions have been established under the Agreement on
Agriculture concluded within the framework of the Uruguay Round.
Private storage
When the Community market price and the market price of a given quotation area are less
than 90 per cent of the seasonally adjusted basic price and likely to remain so, private storage aidsmay be decided on by the Commission for the quotation area in question.
Premiums
(a) Ewe and goat premium
The loss of income, which represents the difference between the basic price and the
arithmetical mean of the market prices recorded during the marketing year, is calculated at the end of
the marketing year.  The amount of the premium pa yable per ewe is obtained by multiplying the loss
of income by the average annual production of lamb per ewe.
The Member States are authorized to pay all their producers two six-monthly advances of
30 per cent of the foreseeable amount of the premium.  The amount of the final premium is fixed at
the end of the marketing year, and the balance is paid accordingly.
In some clearly defined regions of the Community, eligibility for the premium has been
extended to she-goats. In this case, the unit am ount corresponds to 80 per cent of the ewe premium.
A distinction is made between ewes producing heavy lambs and those producing light lambs.
The calculation of the loss of income and the productivity coefficient are limited to the production of
heavy lambs.  The resulting amount is granted on ewes producing heavy lambs, while for ewes
producing light lambs the amount is reduced by 20 per cent.G/SCM/N/48/EEC
Page 29
In view of the increase in expenditure on this  sector, the Council, acting on a proposal of the
Commission, decided in June 1992 on individual quotas for the premium, each producer being able to
receive the ewe/goat premium only within the limit of the quantities received for the 1991 marketing
year (after deduction of between 1 and 3 per cent to resource a national reserve).  Where the number
of ewes in a Member State increased between 1989 and 1991, the increase would be  added to the
individual limit of each producer.
(b) premiums in less-favoured areas
In less-favoured areas, as defined in Directive 75/268/EEC, the ewe premium shall be
supplemented by a specific aid for sheep and goat amounting to ECU 6,641 per ewe producing heavy
lambs and to ECU 4,589 per ewe producing light lambs and per goat.  However from the 1998marketing year, the amount of aid for the two last categories of animals has been increased and set at
ECU 5,977.
Stabiliser
From 23 May 1988, where the total ewe number recorded for a marketing year exceeds a
maximum guaranteed quantity, the premiums are reduced by the impact on the basic price of a
coefficient representing a 1 per cent cut in the basic price for each 1 per cent tranche by which the
maximum guaranteed quantity is exceeded.  Since 1993, the stabiliser has been frozen at 7 per cent.
(ix) "FRUIT AND VEGETABLE" SECTOR
(a) Measures to promote the formation of producers' organizations
In order to encourage the formation of producers' organizations and facilitate their operation,
aid can be granted to such organizations established, on the initiative of producers, in order topromote the concentration of supply and the regularization of prices at the producer stage and to make
suitable technical means available for presenting and marketing products.
The following may be granted:- 1. During the preliminary recognition, (a) an aid to encourage the formation of the
producers’ organization and facilitate its administrative operation; (b) a specialloan to cover part of the investments required to attain recognition.
- 2. After recognition, a final assistance limited to 50 per cent (60 per cent under
certain conditions) of the actual expenditures of the operational funds, capped at
(the most) 4 per cent of the value of the marketed production.  Those funds areused to finance the operational programme of the producers’ organization as well
as market withdrawals, supplementary to those of the normal scheme.
(b) Intervention measures
For certain fruit and vegetables  (Cauliflower, tomatoes, aubergines, melons, watermelons,
apricots, peaches and nectarines, table grapes, apples, pears, lemons, oranges, mandarines,
clementines and satsumas) producer organizations  can decide to withdraw products from the market.
If such decision is taken, growers receive a Community withdrawal compensation up to a
ceiling expressed as a percentage of the marketed quantity.  After a transitional period (from 1997 to
2002), the final ceiling for this compensation will be 10 per cent (8.5 per cent for apples and pears) of
the marketed quantity for the 2002/2003 marketing year.G/SCM/N/48/EEC
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During this transitional period, a threshold for intervention is set for products liable to give
rise to a too large volume of withdrawals.  If the threshold is exceeded, the withdrawal compensation
for the next marketing year is reduced accordingly. Individual growers can benefit from this scheme
through a producer organization, for a volume not greater than 10 per cent of the growers’ marketedproduction.
(c) Special measures for citrus fruit
(i) Measures for the marketing of fresh citrus fruit
The Community participates in promotion drives organized in collaboration with
various economic operators in this sector.
(ii) Measures to encourage recourse to processing
In order to encourage processing, an aid is granted to producers’ organizations for the
quantities delivered to processors.
(d) Special measures for nuts
In order to encourage the nuts sector (almonds, hazelnuts, walnuts, pistachios and carobs) to
modernise existing production and marketing conditions, provision has been made for the following
for the benefit of organizations of nut producers:
- Special aid for their establishment;
- aid for the establishment of a working capital fund to allow storage and improve
marketing;
- aid to improve varieties and cultivation and modernise marketing under a plan to be
presented by producers' organizations;
.
- participation in promotion drives organized in collaboration with the various
economic operators in this sector.
This aid is granted to the producers' organizations only to the extent that they furnish a
substantial proportion of the funds used to promote these activities.
(e) Special measures for table apples
The Community participates in promotion drives:
- To encourage consumption of fresh apples, including research for variety
diversification;
- to encourage consumption of products processed from apples harvested in the
Community.G/SCM/N/48/EEC
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(x) "BANANAS"  SECTOR
(a) Measures to promote the formation of producers' organizations
In order to encourage the formation of producers' organizations and facilitate their operation,
aid can be granted to such organizations established on the initiative of producers, in order to promote
the concentration of supply and the control of prices at the producer stage and to provide members
with appropriate technical facilities for packing and marketing bananas.
Start-up assistance may be granted during the first five years following recognition of the
organization, amounting to 5 per cent, 5 per cent, 4 per cent, 3 per cent, and 2 per cent of the value of
the production marketed, for each successive year, provided that the actual cost of establishing andadministering the organization are not exceeded.
(b) Compensatory aid to producers
A compensatory aid is payable to all producers who are members of a recognized producers'
organization, and also to individual producers who are unable to join such an organization.  This is
limited to an annual maximum of 854,000 tonnes for all EC producers..
This compensation is calculated as the difference between a "flat-rate reference income" and
the "average production income" at ex-packing station stage obtained on the Community marketduring the relevant year for bananas produced and marketed within the Community.  In 1997, when
the reference income was 592.9 ECU/tonne ex packing station, the aid amounted to 248.1 ECU/tonne
for a total of 810.5537 tonnes.  There is also the possibility of a supplementary aid for regions, which
have experienced especially severe market circumstances.  This supplementary aid is decided on a
yearly basis.  In 1997, a supplementary aid was paid to producers in Madeira, in Portugal, andamounted to 28.2 ECU/tonne for a quantity of 27.890 tonnes.  For 1998, the reference income has
been increased to 622 ECU/t.
(xi) "PROCESSED FRUIT AND VEGETABLES" SECTOR
Production aid
(a) A system of production aid, in the form of direct aid to processors, has been established for
pineapples preserves, Community production of which is located in the French overseas departments.
The system is designed to compensate the difference between the Community price and prices
prevailing in third countries.
The grant of this aid is conditional on payment of a minimum price to pineapple producers.
(b) Since marketing year 1978/79, a Community system of production aid has been in effect for
prunes prepared from dried plums, processed tomato products and peaches in syrup.
This system was extended to William pears in syrup with effect from marketing year 1979/80.
Lastly, Community aid in respect of dried grapes and dried figs was granted for the first time
for marketing year 1981/82.
Grant of this aid is conditional on payment of a minimum price to agricultural producers.G/SCM/N/48/EEC
Page 32
The amount of the aid is set so as to compen sate the difference between the price level of
Community raw material resulting from the minimum producer price and that of third-country
products.
As from marketing year 1990/91, until 1993/94 aid per hectare of specialized dried grapes
area has been progressive in parallel with a progressive reduction of the nominal producer price,
which would affect the level of aid to be paid to processors.  As from marketing year 1994/95, there is
no more aid to processors.  The aid per hectare is granted within an area limit of 53,000 ha.
(c) In 1982 the Commission introduced a guarantee threshold for industrial tomatoes.
As from 1985, the threshold system was supplemented by a system of production quotas.
This dual system was applied until marketing year 1991/92.
For the 1992/93 marketing year the threshold system was again in force.  The Council
decided on 17 March 1993 to reintroduce, as from the 1993/1994 marketing year, the quota system as
operated during marketing years 1990/91 and 1991/92.  The system provides for a total quota of6,836,262 tonnes.
This amount is distributed as follows:- 4,585,253 tonnes for tomato concentrate;- 1,321,119 tonnes for whole peeled tomatoes;- 929,890 tonnes for other tomato-based products.
(d) As from marketing year 1990/91, aid for peaches in syrup is also granted with a threshold
limit of 582,000 tonnes in terms of net weight, for the Community.
(e) As from marketing year 1989/90, production aid has been extended to other tomato products,
peaches and pears preserved in natural fruit juice and Rocha pears.  This extension has been made
without any increase in the existing guarantee threshold and/or quota.
(f) The production quota for aid in respect of William pears in syrup has been converted into a
guarantee threshold for aid in respect of William and Rocha pears in syrup and/or natural fruit juice.
The guarantee threshold is fixed at 102,805 tonnes.
Amount of aid
Product ECU/100kg net
ECU/ha
1996/97ECU/100 kg net
ECU/ha
1997/98EURO/100 kg net
EURO/ha
1998/99
Tomato concentrate (1) 29,612 26,783 24,412
S. Marzano whole peeled tomatoes- preserved- frozen10,648 10,177 9,276
Roma whole peeled tomatoes 7,509 6,101 5,561
Non-whole tomatoes, peeled and frozen 5,256 5,024 4,579
Tomato juice (CN Heading 2002 90) (1)
- 7/8% 7,658 6,927 6,314G/SCM/N/48/EEC
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- 8/10%
- 10/12%9,190
11,2328,312
10,1597,576
9,260
Tomato juice (CN Heading 2009 50)- 4.5/5%
- 5/7%4,850
6,1274,387
5,5413,998
5,050
Tomato flakes (1) 98,537 89,123 81,232
Peaches in syrup/juice 8,663 8,128 6,065
Prunes 82,505 80,261 81,360
William pears in syrup/juice 18,087 15,532 12,517
Sultanas 2,785 2,785 2,785
Dried figs- C quality 33,552 27,986 27,757
Pineapple 166,871 153,917 144,414
(1) This aid might be increased (by at the most 5.37 per cent) at the end of the marketing year
depending on whether or not France and Portugal have used their quotas in totality.
(xii) "WINE"  SECTOR
1. Each year, before 1 August, a guide price is fixed for each type of table wine representative of
Community production. A threshold price activating an intervention mechanism, termed the
"activating price" is applicable during each wine year for each type of wine for which a guide price is
fixed. This price is applicable at the same stage as the guide price and corresponds to 92 per cent of
the latter.
Guide prices for wine year 1998/99 have been set as follows:
Type of wine
RI
RII
RIII
AI
AIIAIII(ECU/% vol./hl.)
(ECU/% vol./hl.)
(ECU/hl.)
(ECU/% vol./hl.)
(ECU/hl.)(ECU/hl.)  3,828
  3,828
62,150
  3,828
82,81094,570
As announced when prices were fixed for the preceding wine year, prices of table wines AI, RI
and RII have been fixed at the same level as in 1996/97.
2. Aid for private storage of table wines and grape must
The aim of private storage aid is to encourage wine producers to use storage to freeze existing
surplus supplies on the market for a certain period.  Private storage contracts can be concluded in cases
where the supplies of wine available at the beginning of the marketing year exceed foreseeable
requirements by four months.  Storage for must is available when long term storage for wine is decided
on.  Aid is conditional on the conclusion of storage contracts valid for a period of nine months.  Contractsmust be concluded between 16 December and 15 February.G/SCM/N/48/EEC
Page 34
3. Aid to concentrated grape must and rectified concentrated grape must used in the wine-
making
Aid is granted in respect of concentrated grape must and rectified concentrated grape must used
to increase the alcoholic strength of wines.  The amount of the aid is fixed in the light of the differencebetween the cost of enrichment by means of grape must and sucrose, respectively.
For wine year 1998/99, the aid is fixed, per degree of potential alcoholic strength by volume per
hectolitre of concentrated grape must and rectified concentrated grape must used, as follows:
- ECU 1,699 in the EC for concentrated grape must prepared from grapes originating in
the wine-growing zones C III (a) and C III (b);
- ECU 1,446 in the EC for concentrated grape must other than that referred to in the first
indent;
- ECU 2,206 in the EC for rectified concentrated grape must prepared from grapes
originating in the wine-growing zones C III (a) and C III (b) or produced outside the said
zones in facilities which began production prior to 30 June 1982, and prior to
1 January 1986 in Spain, regardless of the origin of the grapes;
- ECU 1,953 in the EC for rectified concentrated grape must other than that referred to in
the third indent.
4. Aid to grapes, grape must and concentrated grape must used for purposes other than wine-
making
In order to encourage the use of wine products of Community origin for purposes other than
wine-making, a system of aid has been established.
(a) For grapes, grape must and concentrated grape must intended for the preparation of grape juice,
the amount of the aid for wine year 1998/1999 has been fixed for the entire Community at:
- ECU 6,603 per quintal of grapes;- ECU 8,257 per hectolitre of grape must;- ECU 28,873 per hectolitre of concentrated grape must.
virtually corresponding to the level for the preceding wine year.  Only 75 per cent of the aid is paid to the
processor, the remainder being withheld to finance campaigns to promote grape juice consumption.
(b) For concentrated grape must intended for traditional preparation in the United Kingdom and
Ireland of certain products falling within CN Heading 22.06.00 ("British and Irish wines"), the amount of
the aid for wine year 1997/98 has been fixed at the same level as in the previous wine year but with the
application of the monetary coefficient, i.e. 0.2379 ECU/kg.  The product must be obtained entirely from
grapes produced in wine-growing zones C III (a) and C III (b) of the Community.
(c) For concentrated grape must used as the principal element in a group of products marketed in the
United Kingdom and in Ireland with visible instructions for preparing a beverage imitating wine ("home-
made wine"), the amount of aid has been set at the same level as in preceding wine years, i.e. ECU
0.3103/kg. of concentrated grape must used.G/SCM/N/48/EEC
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5. Distillation
(a) Preventive distillation
Where necessary, taking into account harvest forecasts or in order to improve the quality of
wines marketed, the Commission may open the possibility, in each wine year, of preventive distillation of
table wines at 65 per cent of the guide price from 1 September until a date to be determined (in most
cases until January/February).  The distillation has to take place during the wine marketing year (that
means not later than 31 August) concerned.  The quantity of table wines delivered for preventive
distillation by each producer is taken into account for discharge of obligations deriving from any
compulsory distillation subsequently decided on.  For wine year 1995/96, the eligible quantities are
limited to 12 hl. per hectare.  For Germany and Austria these quantities are limited to 2 and 3 hl. perhectare, respectively.  The Commission fixed a maximal quantity at 12.0 million hectolitre of wine for
this distillation, shared between producer Member States.
(b) Compulsory distillation
The Commission orders compulsory distillation:- When stocks exceed four months' normal requirements;  or- When market prices remain below 82 per cent of the guide price during a representative
period;
The Commission determines for each region the quantities to be delivered for compulsory
distillation in order to eliminate surpluses, and restore a normal market situation.  This volume is
allocated:
- As between the regions of the Community, grouped by Member States, pro rata  to the
production volumes in excess of a specific level for each of them, equal to a uniform
percentage of their average harvest calculated on the basis of the 1981/82, 1982/83 and
1983/84 wine years;
- in each region, among producers according to a progressive scale based on yield per
hectare which may vary with the region and taking account of past yields.
For wine marketing year 1998/99, no compulsory distillation was foreseen.
(c) Distillation at guaranteed minimum price, termed support distillation
Whenever compulsory distillation is decided on, the Commission at the same time makes
provision for distillation at a price equivalent to 82 per cent of the guide price for each type of table wine.
Even in the course of wine years during which no compulsory distillation is decided on, the
Commission may, if the market situation for table wine so requires, make provision for distillation at the
buying-in price of 82 per cent.  Distillation measures may be limited to certain table wines determined
having regard to the type concerned, or to one or more wine-producing zones.  For the marketing year
1998/99, the Commission does not foresee this measure.
(d) Compulsory distillation under system of wine deliveries
The aim is to avoid over pressing of grapes and to ensure that wine-making by-products are not
reused for the manufacture of poor quality wines.G/SCM/N/48/EEC
Page 36
The buying-in price for the products concerned has been set, for wine year 1998/99, at 26 per
cent of the guide price set for AI table wine for that wine year.
(e) Compulsory distillation of wines made from grapes normally intended for uses other than in table
wine
This measure, already established since 1976 for wines made from table grapes, has been
extended to all other cases of production surpluses likely to overburden the market for table wines (case
of Charentes products in France, of grapes intended for drying in Greece or table grapes in Italy).  The
buying-in price of the wines concerned for wine year 1997/98 is equivalent to 35 per cent of the lowest
guide price for wine year (AI white wine).
(f) Access to intervention measures
Access to price-support intervention measures is reserved to producers who have fulfilled their
obligations regarding compulsory distillation and the measures referred to under (e) and, where relevant,(f) above.  They must show proof of having fulfilled those compulsory distillation obligations in the most
recent wine year in which such distillation was decided.
6. Other support measures
(a) To the extent necessary to support the market for table wines, intervention measures may be
taken in respect of products covered by the wine regulations other than table wine.  This measure has
practically never been applied.
(b) If it is found that prices have increased in the wine market of the Community so as to be
substantially above the guide price fixed for a particular type of wine, that the situation is likely to
continue and that as a result the market is being disrupted, the necessary measures may be taken.
(c) The Council may adopt derogation measures that may be necessary to remedy any exceptional
situation resulting from natural disasters.
(xiii) "TOBACCO" SECTOR
The reform of the sector, adopted by the Council on 3 June 1992 radically changed the system
regulating tobacco, suppressing the intervention and export subsidies and the replacing target price by a
system of premium and guarantee thresholds.
The reformed market organization regulated by Council Regulation (EEC) No. 2075/92 divides
raw tobacco into eight variety groups (Flue cured, Light air cured, Dark air cured, Fire cured, Sun cured,
Basmas, Katerini, Kaba Koulak classical).
(a) Premium
- Every year, the Council fixes the premium for each of the eight variety groups.G/SCM/N/48/EEC
Page 37
The amounts of the premium for the 1998 crop were as follows:
(ECU/Kg.)
I
Flue
curedII
Light air
curedIII
Dark air
curedIV
Fire
curedV
Sun
curedVI
BasmasVII
KateriniVIII
Kaba
Koulak
2,70965 2,16748 2,16748 2,38362 2,16748 3,75415 3,18541 2,27615
- Premiums are paid directly to the tobacco producers unless the Member State opts for
payment through the first processors.
- Producers and groups of producers must have concluded a European crop contract in
order to be eligible for the premium.
- A supplementary amount to the premium is given to the northern tobacco producing
countries (France, Germany, Austria, Belg ium) to compensate for the difference in
production costs with producers of the southern Member States.  The supplementary
amount to the 1998 premium has been fixed as follows:
Varieties
Badischer Geudertheimer, Pereg, Korso
Badischer Burley E and its hybrids
Virgin D and its hybrids, Virginia and its hybrids
Paraguay and its hybrids, Dragon vert and its hybrids
Phillippin, Petit Grammont (Flobecq), Semois,
Appelterre Nijkerk
Misionero and its hybrids, Rio Grande and its hybridsEcus/kg.
0,4238
0,6786
0,3876
0,3163
0,1847
0,2016
(b) Guarantee thresholds
In 1992, the Council replaced the global guaranteed maximum quantity system by  guarantee
thresholds fixed by variety and by Member State.
The quantities produced in excess of the thresholds are not eligible for the premium.The guarantee thresholds for the 1998 crop were fixed as follows:
I II III IV V Others Total
Flue cured Light air Dark air Fire cured Sun cured VI Basmas VII Katerini VIII Kaba
cured cured Koulak
Italy 48,000 46,500 17,900 6,900 13,500 132,800
Greece 30,700 12,400 15,700 26,100 22,250 19,550 126,700
Spain 29,000 2,470 10,800 30 42,300
Portugal 5,500 1,200 6,700
France 9,000 6,600 12,000 27,600
Germany 3,000 4,500 4,500 12,000
Belgium 200 1,700 1,900
Austria 30 470 100 600
Total 125,230 74,340 46,900 6,930 29,200 26,100 22,250 19,550 350,600G/SCM/N/48/EEC
Page 38
(c) Producer groups
In order to concentrate supply and adapt it to the qualitative requirements of the market, a special
aid amounting to 10 per cent of the premium is given to producer groups when they conclude cultivation
contracts.
(xiv) "TEXTILE FIBRES" SECTOR
1. COTTON
The aid system for the production of unginned cotton production has been modified with effect
from the 1995/96 marketing year, inter alia  with the aim of improving the functioning of the stabiliser
system.  The Community aid system fixes a guide price (106.30 ECU/100 kg. as from the 1995/95marketing year) and aid equal to the difference between this price and the world market price for ginning
enterprises that they pay producers a minimum price.  If the production of unginned cotton exceeds the
guaranteed maximum quantity (GMQ) (1,031,000 tonnes), the guide price and the amount of the aid are
proportionally reduced.
In each Member State the reduction of the aid is proportional to the amount by which it exceeds
its GMQ, fixed at 782,000 tonnes for Greece and 249,000 tonnes for Spain.  This reduction (abatement) is
unlimited, but if world prices allow the cost of the aid system to be limited, it is reduced.
On 1 September 1997, when the 1997/98 marketing year began, the Commission fixed the world
market price at 40.236 ECU/100 kg., corresponding to an advance of aid of 27.1 ECU/100kg. for Spain
and 33.1 ECU/100 kg. for Greece (provisional amount). These amounts were calculated on the basis of
estimated production of around 264,000 tonnes of unginned cotton for Spain and 1,100,000 tonnes for
Greece.
2. FIBRE FLAX AND HEMP
Community regulations include the following measures:
(1) Production aid
Aid for fibre flax and hemp produced in the Community has been established in order to
give the producers concerned a fair income.  The amount of this aid is fixed each year
for every hectare sown and harvested. As from the 1997/98 marketing year, the contracts
with processors are obligatory for flax.
For hemp, the aid is given to the producer. For fibre flax, one quarter of the aid is given
to the producer of the straw flax and three quarters to the person who buys the straw to
process into fibre.  If the producer processes the straw or has it processed on his behalf,
he receives the total amount of the aid.  In addition, the Commission introduced in
November 1998 criteria on normal cultivate work by fixing a minimum yield.
Aid (ECU/ha.) Area (ha.)
 Fibre flax: 1997/98 marketing year 815.86 133,000
 Hemp: 1997/98 marketing year 716.63 23,000G/SCM/N/48/EEC
Page 39
(2) Aid for private storage of flax fibre bundle and hemp
The owners of bundle may conclude storage contracts when there is a temporary market
imbalance in order to prevent or reduce any significant drop in prices. In 1991, for
example, this condition was met and the possibility was utilized.
(3) Aid to promote the use of flax fibre bundle
Community measures have been taken since the 1980/81 marketing year to promote the
use of flax in the Community.  It was decided to include in the basic regulations the
possibility of taking measures to promote the use of flax fibre bundle as from the
1987/88 marketing year.  These measures are entirely financed by a deduction fromproduction aid.
3. SILKWORMS
Community regulations in the silkworm-rearing sector include the following measures:(a) Production aid
Aid for silkworms reared in the Community has been established in order to provide silk
producers with a fair income.  The amount of this aid is fixed annually for each box ofsilk utilized.  The aid is given to the rearer who successfully rears silkworms.
In 1997/98, aid amounting to 133.26 ECU/box was granted.
(b) Aid to improve quality
Community measures may be taken to improve the quality of silkworms and silkworm
eggs.  However, no such measure has been taken to date.
(xv) "DRIED FODDER" SECTOR
The common organization of markets in the dried fodder sector covers the following products:
dehydrated fodder, the principal leguminous vegetables, sun- dried and ground, and protein concentratesobtained from alfalfa and grass juice.
From 1 April 1995, beginning of the 1995/1996 marketing year, the Council has modified some
basic points of this sector.
Council Regulation (EC) No. 603/95 has established a system based on a flat rate aid for both
dehydrated and sun dried fodder within the limits of Maximum Guaranteed Quantities (MGQ) for both
types of fodder.
These MGQs are the following:- Dehydrated fodder: 4.412.400 tonnes- Sun-dried fodder: 443.500 tonnes
The MGQ is the sum of the National Guaranteed Quantities (NGQ).
The NGQs are the following:G/SCM/N/48/EEC
Page 40
Member States  National Guaranteed Quantities (in tonnes)
Dehydrated fodder Sun-dried fodder
UEBL 8.000 -
Denmark 334.000 -
Germany 421.000 -
Greece 32.000 5.500
Spain 1.224.000 101.000
France 1.455.000 150.000
Ireland 5.000 -
Italy 523.000 162.000
Netherlands 285.000 -
Austria 4.400 -
Portugal 5.000 25.000
Finland 3.000 -
Sweden 11.000 -
United Kingdom 102.000 -
Total 4.412.400 443.500
Within the MGQs, the amounts of the aid are:
-  Dehydrated fodder 68,83 ECU/tonne
-  Sun-dried fodder 38,64 ECU/tonne
If, in any marketing year, the quantities for which the aid is granted exceed the MGQ, the amount
of the aid is reduced as follows:
- If the excess is less or equal to 5 per cent of the corresponding MGQ, the amount of the
aid is reduced accordingly in all Member States;
- If the excess is more that 5 per cent of the corresponding MGQ, the amount of the aid
is reduced by 5 per cent in all Member States; moreover, supplementary reductionsare applied in those Member States where the eligible production exceeds the NGQ
increased by 5 per cent.
(xvi) "SEEDS"  SECTOR
Under the Community Regulations in force since 1 May 1972 and applied from 1 July 1972, a
production aid is granted for certain types of seed: rice and seeds of spelt wheat, maize and sorghum
hybrid, linseeds, leguminosae, and graminae.
When the market situation does not ensure an adequate income to the producer, an aid can be
granted. It consists of EC wide rates for each species or group of varieties. It is fixed by quintal of
produced seeds, taking into account the market situation and the prices on the external market.
Aid is fixed for two years with the possibility of modification before the start of the second year,
if the Community market is likely to be disturbed.G/SCM/N/48/EEC
Page 41
The amount of aid for the marketing years 1996/97 to 1998/2000 is as follows:
(ECU/100 kg..)
Products
1. Cereals (rice, spelt)
2. Oilseeds3. Graminae
4. Leguminosae1996/97 and 1997/98
between 11.9 and 14.3
between 17.0 and 23.5between 15.9 and 62.9
between 0 and 62.21998/99 and 1999/2000
between 14.37 and 17.27
between 20.53 and 28.38
between 19.2 and 75.95
between 0 and 75.11
"HOPS"  SECTOR
In order to ensure a fair income for hop producers, the Community regulations provide for a
system of aid per hectare.  This aid was fixed by the Council at ECU 480/ha for the harvest 1996 to 2000
included, with no distinction between the various groups of varieties and payment being made at the end
of the harvest year.  The aid comprises two amounts which existed previously, i.e. aid to producers andaid for variety conversion; for this latter, up to 20 per cent of the aid can be used.G/SCM/N/48/EEC
Page 42
IV. INDUSTRY SECTORS
(i) Community Framework Programmes in the Field of Research
There are two such framework programmes:
- The fourth framework programme of the European Community activities in the field of
research and technological development and demonstration (1994-1998);
- framework programme of Community activities in the field of research and training for
the European Atomic Energy Community (1994-1998).
1. Policy objective and purpose of the subsidy
Financial participation in Community research and technological development (R&TD)
activities during the period 1994-1998 is provided through the two above-mentioned framework
programmes.
The legal bases of these programmes are, respectively, Article 130I (Title XV) of the EU
Treaty and Article 7 of the Treaty establishing the European Atomic Energy Community.
The fourth framework programme is aimed at strengthening the scientific and technological
bases of Community industry, encouraging the development of its competitiveness and contributing to
the implementation of the other Community policies under the Treaty.  These objectives and the
activities to be undertaken are listed in Anne x III of Decision No. 1110/94/EC of the European
Parliament and of the Council of 26 April 1994 concerning the fourth framework programme of the
European Community activities in the field of research and technological development anddemonstration (1994-1998).
The framework programme on atomic energy has two parts:  nuclear fission safety and
controlled thermonuclear fusion.  The objectives and activities to be undertaken are set out in
Annex III of Decision 94/268/Euratom of 26 Ap ril 1994 concerning the framework programme of
Community activities in the field of research and training for the European Atomic Energy
Community (1994-1998).
The activities under the two programmes are pre-competitive and there is no financing of
product development.
The arrangements for implementing the two programmes are essentially the same and are
therefore described together in the following paragraph.
2. Form of subsidy
The framework programmes are implemented through specific programmes, which are the
subject of Council decisions (see reference documents).
Community support to R&TD activities is provided in the form of financing ("grants" within
the meaning of Article 25.3 of the WTO Agreement on Subsidies and Countervailing Measures)
granted to projects following an invitation for proposals and a selection procedure (Annexes II of
Decisions 1110/94/EC and 94/268/Euratom).G/SCM/N/48/EEC
Page 43
Research projects must be carried out by participants established within the Community.
They must provide for the participation of at least two partners, independent of each other, and
established in different Member States.  Partnerships may involve universities, research organizations
and firms.
The European Commission is responsible for the implementation of the programmes.
Contracts concluded by the Commission (see attached specimen contract) govern the rights and
obligations of each partner, in particular arrangem ents for the dissemination (Article 130J of the
Treaty), protection and exploitation of research results.
3. Amount and duration of subsidy
1994-1998 Programme amounts
(in millions of Ecus)Amounts decided in
1994Adaptation up to
1997Total
Fourth framework programme 11,046 833 11,879
Euratom framework programme  1,254  82   1,336
Both programmes 12,300 915 13,215
The breakdown of the total financing by specific programme appears in the Annexes I of
Decisions 1110/94/EC and 94/268/Euratom.
The amount and duration of the individual projects supported by the Community vary
considerably.  On average, in 1994, a project received financing of some ECU 400,000 for a duration
of three years and involved three or four partners.
4. Incidence on trade
The fourth R&TD framework programme concerns pre-competitive research and has no
direct impact on trade.  As a general rule, further work is necessary for the results of a R&TD project
to lead to a commercially exploitable process or product.
Furthermore, the results are shared among partners and may be made more widely available
under certain conditions, which serves the public interest.  One of the main benefits lies in
establishing links among research community partners, in particular within Europe.
The economic impact of industrially-oriented programmes can be assessed only several years
after the completion of the projects, because firms have to make further investment to develop
competitive applications.
Reference documents
Research framework-programmes (1994-1998) and their implementationThis document, dated 1995, contains all the decisions of the European Parliament and Council
establishing the two framework programmes.  Follo wing the enlargement of Europe to 15, the total
appropriation was increased slightly, while the relative share of each programme remained the same.The new amounts are given in the following decisions:
- Decision 616/96/EC of the European Parliament and of the Council of 25 March 1996
adapting Decision No. 1110/94/EC concerning  the fourth framework programme of the
European Community activities in the field of research and technological developmentG/SCM/N/48/EEC
Page 44
and demonstration (1994-1998) following the ac cession of the Republic of Austria, the
Republic of Finland and the Kingdom of Sweden to the European Union;
- Decision 96/253/Euratom of 4 March 1996 adapting Decision No. 94/268/Euratom
concerning a framework programme of Community activities in the field of researchand training for the European Atomic Energy Community (1994-1998) following the
accession of the Republic of Austria, the Republic of Finland and the Kingdom of
Sweden to the European Union.
- Following a decision in 1997 of the European Parliament and Council, the
appropriation of the fourth framework programme was increased slightly. (Decision
2535/97/EC).
(ii) Aid to the coal industry
On 1 January 1994, Commission Decision No. 3632/93/ECSC1 on the Community rules for
State aid to the coal industry entered into force and will continue to operate until the expiry of theECSC Treaty in July 2002.
Article 1 of this Decision clearly define s what is considered to be an aid:
(i) All aid to the coal industry, whether specific or general, granted by Member States or
through State resources in any form whatsoever may be considered Community aid and
hence compatible with the proper functioning of the common market only if it complies
with Articles 2 to 9.
(ii) The term "aid" covers any direct or indirect measure or support by public authorities
linked to production, marketing and external trade which, even if it is not a burden on
public budgets, gives an economic advantage to coal undertakings by reducing the costs
which they would normally have to bear.
(iii) The term "aid" also covers the allocation, for the direct or indirect benefit of the coal
industry, of the charges rendered compulsory as a result of State intervention, without
any distinction being drawn between aid granted by the State and aid granted by publicor private bodies appointed by the State to administer such aid.
(iv) The term "aid" also covers aid elements contained in financing measures taken by
Member States in respect of coal undertakings which are not regarded as risk capital
provided to a company under standard market-economy practice.
In addition to the specific criteria applicable to  each category of aid, the Decision allows aid
to be considered compatible with the proper func tioning of the common market if it helps to achieve
at least one of the following objectives:
- to make, in the light of coal prices on international markets, further progress towards
economic viability with the aim of achieving a degression of aids;
- to solve the social and regional problems created by the total or partial reductions in the
activity of production units;
- to help the coal industry adjust to environmental protection standards.
                                                     
1 OJ L 329 of 30 December 1993, p.12.G/SCM/N/48/EEC
Page 45
The Decision also contains provisions designed to make existing aid schemes more
transparent.  Article 9(7) allows for a transitiona l period not exceeding three years (which therefore
ended on 31 December 1996) after which aid would only be authorized if it was entered in the
national, regional or local public budgets of Member States or channelled through strictly equivalentmechanisms (Article 2(2)).  In addition, from the beginning of 1994, all aid received by undertakings
has to be shown together with their profit-and-loss accounts as a separate item of revenue, distinct
from turnover (Article 2(3)).
Member States intending to grant aid to coal undertakings during the period 1994 to 2002 are
required to submit to the Commission in advance a modernization, rationalization and restructuring
plan to improve the economic viability of the undertakings concerned by reducing production costs(Article 3(2)).  For undertakings unable to achieve this, aid will only be considered if they are subject
to a closure plan with a deadline occurring before the expiry of decision No. 3632/93/ECSC or, in
exceptional social and regional circumstances, if the closure occurs after the expiry of the Decision.
Aid to the coal industry under Decision 3632/93/ECSC
State aid authorized in 1997, 1996, 1995 and 1994
In ECU million
1997 1996 1995 1994
Aid to current production
Article 3 (operating aid) - 5,680.5 5,081.0 7,894.0
Article 4 (aid for the reduction of activity) - 508.2 492.0 781.6
Total - 6,188.7 5,573.0 8,675.6
ECU per tonne - 48.22 40.94 65.49
Aid not linked to current production
Article 5 (inherited liabilities) 500.7 1,337.3 2,474.5 1,812.7
Article 6 (aid for research and development) - 2.6 2.6 2.3
Article 7 (aid for environmental protection) - 0.6 0.6 0.0
Total 500.7 1,340.5 2,477.7 1,815.0
Total 500.7 7,529.3 8,050.7 10,490.6
Notes:
- 1997:  notifications have been received from all the coal producing Member States (France,
Germany, Spain and the United Kingdom).  However, at the time of writing, the Commission
has only authorized aid for the United Kingdom.
- 1994-1996:  aid authorized under temporary mech anisms permitted by Article 9(7) have been
included in Articles 3 and 4.
- 1994:  the aid under Article 3 includes an exceptional aid of DM 5,350 million
(ECU 2,779 million) to clear the debts of the German compensation fund entered under the
Third Electricity-from-Coal Law.  This was authorized under the provisions of Article 9(7).G/SCM/N/48/EEC
Page 46
Coal production and imports in the Community (EUR-15):  1994-1997
(In million tonnes)
1997* 1996 1995 1994
Community production 123.1 128.4 136.1 132.5
Imports into the Community 145.5 141.2 140.3 130.4
Total resources 268.6 269.6 276.4 262.9
* Estimation at the timeG/SCM/N/48/EEC
Page 47
V. OTHER PROGRAMMES
1. SME Programme
1. Title of the programme
Third Multi-annual Programme for Small and Medium-sized Enterprises in the European
Union
2. Period covered by the notification
1 January 1997 – 31 December 2000
3. Policy Objective and/or purpose of the programme
(a) Simplify and improve the administrative and regulatory business environment;
(b) Improve the financial environment for enterprises
(c) Help SMEs to Europeanise and internationalise their strategies;
(d) Enhance SME competitiveness and improve access to research, innovation and
training;
(e) Promote Entrepreneurship and support special target groups;
(f) Improve SME policy instruments.
4. Background and authority for the programme
Council Decision of 9 December 1996
COM (96) 591 final
5. Form of assistance granted - Grants from Community budget for
Co-financing with other sources in the public and/or private sector of events and initiatives in
pursuit of the above objectives:  Studies, seminars, training sessions, information campaigns, running
costs of instruments. Not all of the funds are disbursed through subsidies; some are used for the
procurement of services through contracts.
6. To whom and how the assistance is provided
Public, private or semi-public bodies, mainly in response to public calls for expression of
interest/calls for proposals.
7. Total expenditure under the programme
ECU 148 million over four years, of which approximately 80 per cent may be used for
subsidies and 20 per cent for administrative costs and technical assistance.
8. Duration of the programme
1 January 1997 –31 December 2000G/SCM/N/48/EEC
Page 48
9. Trade effects
Despite the fact that some actions are aimed at promoting access to new markets, the number
of SMEs capable of internationalising their activities is nevertheless small.  Consequently, the impact
on trade may be considered minimal.G/SCM/N/48/EEC
Page 49
2. JEV Programme
1. Title of the programme
The Joint European Venture (JEV) Programme
2. Period covered by the notification
1 January 1998 – 31 December 2000
3. Policy Objective and/or purpose of the programme
To provide financial contributions to small and medium-sized enterprises (SMEs) for the
setting-up of new transnational joint ventures within the European Union.
4. Background and authority for the programme
Council Decision of 19 May 1998
COM (98) 347 final
OJ L 155/43 (29.5.98)
5. Form of assistance granted - Grants from Community budget for:
The Community contribution is intended to cove r a part of the expenses incurred in the
conception and setting-up of transnational joint ventures.  The maximum contribution per project is
ECU 100,000 covering:
• Up to 50 per cent of the eligible expenses, with a maximum of ECU 50,000;
• Up to 10 per cent of the total amount of investment made in fixed assets.  Particular attention shall
be given to small enterprises with up to 100 employees.
6. To whom and how the assistance is provided
Direct support to SMEs within the European Union.  Applications are made to intermediaries,
which may be banks or other appropriate financial institutions.  The intermediaries (selected by a callfor expressions of interest) are entrusted with the evaluation of the applications and, in the event of a
favourable opinion, make recommendations to the Commission.
7. Total expenditure under the programme
The indicative amount is ECU 100 million over three years.
8. Duration of the programme
1 January 1998 –31 December 2000
9. Trade effects
The programme is aimed at stimulating joint ventures inside the European Union.  The
programme will support 1,000 to 1,200 projects over three years, of which only a small number are
likely to have an impact on trade.  Consequently, the impact on trade may be considered minimal and
largely intra-EU.G/SCM/N/48/EEC
Page 50
3. FIFG and PESCA
1. Title of the programme
Financial Instrument of Fisheries Guidance (FIFG) – structural measures in the fisheries and
aquaculture sector, and PESCA – Community Initiative concerning the Restructuring of the FisheriesSector.
2. Period covered by the notification
1994-1999.
3. Policy and/or programme objectives
Community structural measures in the fisheries and aquaculture sector and the processing and
marketing of its products.
The objectives of the instruments are the following:- To contribute to achieving a sustainable balance between fishery resources and their
exploitation.
- To strengthen the competitiveness of structures and the development of economically
viable enterprises in the sector.
- To improve market supply and the value added to fisheries and aquaculture products.- To contribute to the revitalization of areas that depend on fisheries.
4. Legal authority
Article 39, Regulation (EC) No. 3699/ 93, Regulation (EC) No. 2080/93.
5. Type of aid
Aid to fishing fleets, aquaculture, processing and marketing circuits and port facilities.
6. To whom and how the subsidy is provided
Co-financing principle and principle of regionally diversified action.Shipowners, enterprises, producer organizations, public and private bodies, professional
organizations, cooperatives, fishermen.
7. Total budget of the programme
ECU 2.7 billion   1994-99     0.6 billion ECU budgeted in 1998
8. Duration of the programme
1994-1999G/SCM/N/48/EEC
Page 51
9. Trade effects
The Community has a shortfall in fishery and aquaculture products and is a major importer of
these products from non-Community countries.  The structural aid has only a very small influence on
this situation.G/SCM/N/48/EEC
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4. Common Organization of Markets
1. Title of the measure
Common Organization of the Market in Fishery and Aquaculture Products.
2. Period covered by the notification
1994-1999.
3. Policy objectives and/or programme objectives
Stabilize the market, ensure a regular supply of high-quality products, guarantee reasonable
consumer prices and support fishermen's incomes.
4. Legal authority
Article 39, Regulation (EC) No. 3759/92.
5. Intervention mechanisms
Financial compensation, carry-over aid, autonom ous withdrawal and carry-over, private
storage aid, compensatory payment for tuna supplied to industry.
6. To whom and how the subsidy is provided
Mechanisms implemented by producers' organizations.
Beneficiaries:  fishermen belonging to such organizations.
7. Total budget of the programme
30 MECU per year.
8. Duration of the programme
Fishing years.
9. Effects on trade
None in so far as the Common Organization of Markets aims at regularizing prices and not at
artificially raising their level.
__________