WORLD TRADE
ORGANIZATIONG/SCM/N/71/EEC
18 December 2001
(01-6181)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full 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 29 October 2001, has been received from the Permanent
Delegation of the European Commission.G/SCM/N/71/EEC
Page 2
EUROPEAN COMMUNITY
TABLE OF CONTENTS
Page
I. INTRODUCTION 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. E UROPEAN COMMUNITY SUBSIDIES ...........................................................................................4
II. THE EUROPEAN COMMUNITY’S STRUCTURAL ACTIONS 5
INTRODUCTION ............................................................................................................................5
A. E UROPEAN REGIONAL DEVELOPMENT FUND .............................................................................6
B. E UROPEAN SOCIAL FUND............................................................................................................7
C. E UROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) –
GUIDANCE SECTION ....................................................................................................................8
D. E UROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) –
GUARANTEE SECTION .................................................................................................................9
E. C OMMON AGRICULTURE POLICY -ACCOMPANYING MEASURES ...............................................10
EUROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) –
GUARANTEE SECTION ...............................................................................................................10
III. AGRICULTURE 11
A. G ENERAL REMARKS ..................................................................................................................11
B. M EASURES ............................................................................................................................... .12
1. Export Refunds 12
2. Measures on the Internal Market 12
C. A NALYSIS BY SECTOR ...............................................................................................................13
1. "ARABLE CROPS" - SECTOR (Cereals, oilseeds, linseed, protein plants and
set-aside) 13
2. "RICE"  SECTOR 18
3. "DAIRY PRODUCT" SECTOR 20
4. "OLIVE OIL” 21
5. "SUGAR" SECTOR 23
6. "BOVINE MEAT" SECTOR 247. "PIGMEAT" SECTOR 26G/SCM/N/71/EEC
Page 3
8. "SHEEPMEAT AND GOATMEAT" SECTOR 27
9. "FRUIT AND VEGETABLE" SECTOR 29
10. "BANANAS"  SECTOR 30
11. "PROCESSED FRUIT AND VEGETABLES" SECTOR 31
12. "WINE"  SECTOR 3313. "TOBACCO" SECTOR 35
14. "TEXTILE FIBRES" SECTOR 36
15. "DRIED FODDER" SECTOR 38
16. "SEEDS"  SECTOR 39
IV. INDUSTRY SECTORS 40
A. Community framework programmes in the field of research 40
B. Aid to the coal industry 42
V. OTHER PROGRAMMES 44
A. SME Programme 44
B. JEV Programme 45
C. FIFG 46
D. Common Organization of Markets in Fishery and Aquaculture Products 47G/SCM/N/71/EEC
Page 4
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 2000.
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 Agreement on Subsidies and Countervailing Measures and in almost
all cases follows the presentation required by the subsidies questionnaire.  In a few cases, thepresentation is different to that specified in 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 suchaid has been notified does not, in accordance with Article 25.7 of the Agreement on Subsidies and
Countervailing Measures, prejudge its 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 aprogramme in this notification does not in any way imply that the whole or part of its expenditure
amounts to a specific subsidy.
E. E
UROPEAN COMMUNITY SUBSIDIES
(a) Subsidies granted out of the European Community budget
In 2000, total expenditure by the European Community amounted to EUR 93.3 billion.
The two largest areas of expenditure were agriculture and structural operations, which
accounted for 43.9 per cent and 35.2 per cent of financial commitments respectively.  Another notablearea 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/71/EEC
Page 5
(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.
II. THE EUROPEAN COMMUNITY’S STRUCTURAL ACTIONS
I
NTRODUCTION
1. The Community’s structural actions (comprising the Structural Funds 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.  Revised Regulations concerning the Structural Funds were adopted on
21 June 1999, and cover the period 2000-2006. The annual budget for this period is € 29.6 billion at2001 prices.
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 below.  In addition, the funds include the Financial Instrument forFisheries Guidance (FIFG), which assists in the rest ructuring of the fisheries sector with an annual
budget currently around € 160 million.
The final component of EU structural spending is the Cohesion Fund, which is intended to
contribute to projects in the fields of environment and transport infrastructure, with an annual budgetof €2.6 billion.  Eligibility is reserved for Member  States whose GDP per capita is less than 90 per
cent of the EU average (currently Greece, Ireland, Portugal and Spain).
3. The Structural Funds (ERDF, ESF, EAGGF and FIFG) are devoted to the following
objectives, 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 EU average).
Objective 2: Economic and social conversion of areas facing structural difficulties
Objective 3: The adaptation and the modernisation of national policies and systems of
education, training and employment. It is entirely financed by the ESF.
In addition, € 1.5 billion per annum is set aside for Community initiatives in the fields of
deprived urban areas, interregional co-operation, rural development and equal opportunities.
4. These structural actions are required to conform strictly to the Community’s rules on the
provision of state aid (Article 87 of the EU Treaty).
5. The structural actions are notified in a spirit of transparency. The aid involved is largely
devoted to the least-developed areas of the EU, and the great majority of it goes to finance
infrastructure or to assist individuals directly, without necessarily benefiting commercial enterprises.
Consequently, as stated at the beginning of this document, the notification of a particular fund doesG/SCM/N/71/EEC
Page 6
not prejudge the status of the aid involved.  In addition, only a relatively small part of the Structural
Funds are used to assist private investment.
A. EUROPEAN REGIONAL DEVELOPMENT FUND
1. Title of the programme
European Regional Development Fund (ERDF)
2. Period covered by the notification
2000
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 (Objective 1) and in the economic and social conversion of areas facing structuraldifficulties (Objective 2).
4. Background and authority for the programme
Articles 158 and 160 of the EU Treaty: C ouncil Regulation (EC) Nos. 1260/1999 and
1783/1999.
5. Form of assistance granted – Grants from Community budget for:
ERDF resources are mainly used to cofinance:
• productive investment leading to the creation or maintenance of jobs;
• infrastructure;
• local development initiatives and the business activities of small and medium-sized
enterprises.
6. To whom and how the assistance is provided
ERDF aid is cofinanced by 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 the
selection 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 , set aid ceilings on
investments in firms. This ceiling has been reduced in the current period to 15 per cent of total eligible
costs, except in Objective 1 regions where the rate is 35 per cent.
Aid is normally in the form of grants or loans.G/SCM/N/71/EEC
Page 7
7. Total expenditure under the programme
The exact allocation of funding between the ERDF, ESF and EAGGF has not yet been
decided. Purely as an indication, the ERDF has historically tended to account for a little over half of
the total for the three Funds (currently € 27 billion).
8. Duration of the programme
2000-2006
9. Trade effects
Because the Fund is designed to alleviate disp arities 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. E UROPEAN SOCIAL FUND
1. Title of the programme
European Social Fund (ESF)
2. Period covered by the notification
2000
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 146-148,
158-162 of the EEC treaty, according to which its main tasks are to render the employment of workers
easier by improving their geographical and occupational mobility and to increase economic and social
cohesion within the Community.  It is provided on a general basis under objective 3, and within theother two regional objectives.
4. Background and authority for the programme
Above Articles of the EC Treaty: Council Regu lations (EC) No.  1260/1999  as well as
Parliament and Council Regulations (EC) Nos. 1783/1999 and 1784/1999.5.
5. Form of assistance granted – Grants from Community budget for:
- Vocational training,- Employment aids and aids for self-employment,- Development of new sources of employment.
6. To whom and how the assistance is provided
The ESF provides co-financed support in Member States for vocational training, aids for
employment and innovative actions.  The aid is normally devoted to people, not to enterprises. G/SCM/N/71/EEC
Page 8
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
EUR 7.0 billion for 2000, excluding Community initiatives
8. Duration of the programme
2000-2006
9. Trade effects
Since aid is granted for the benefit of individuals, not enterprises, in order to promote active
labour market policies and social cohesion, the ESF is not considered to have any appreciable impact
on trade.
C. E UROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) – G UIDANCE
SECTION
1. Title of the programme
European Agriculture and Guidance Fund (EAGGF)-Guidance section.
2. Period covered by the notification
1 January 2000-31 December 2000
3. Policy objective and/ or purpose of the programme.
(a) Promoting rural development and structural adjustments in regions whose development
is lagging behind, including underdeveloped agricultural regions, (Objective 1).
(b) Speeding up the adjustment of agriculture structures in the framework of the reform of
the Common Agriculture Policy.
4. Background and authority for the programme.
Council Regulations (EEC) Nos. 1260/99 and 1257/99. The Guidance section was established
in 1972.
5. Form of assistance granted-Grants from Community budget for:
Rural development measures and adjustment of agricultural structures.
6. To whom and how the assistance is provided.
Aid is co-financed with the Member States and implemented through  multi-annual
programmes based on the aims of the EAGGF Guidance section as indicated above. The MemberG/SCM/N/71/EEC
Page 9
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.
EUR 2.66 billion was budgeted for 2000, excluding the  Community Initiatives.
8. Duration of the programme.
2000-2006
9. Trade effects.
Given the aims of the programme it is considered that the trade effects are minimal.
D.E UROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) – G UARANTEE
SECTION
1. Title of the programme
Rural development plans. European Agriculture and Guidance Fund (EAGGF)-Guarantee
section.
2. Period covered by the notification
1 January 2000-31 December 2000
3. Policy objective and/ or purpose of the programme.
(a) Promoting rural development and structural adjustments outside Objective 1 regions.(b) Speeding up the adjustment of agriculture structures in the framework of the reform of
the Common Agriculture Policy.
4. Background and authority for the programme.
Council Regulation 1257/99.
5. Form of assistance granted-Grants from Community budget for:
Agricultural development measures and adjustment of agricultural structures outside
objective 1 regions.
6. To whom and how the assistance is provided.
Aid is co-financed with the Member States and implemented through multi-annual operation
programmes based on the aims of the EAGGF Guarantee section as indicated above.  The Member
States are responsible for the implementation of the programme and the selection of individualprojects.G/SCM/N/71/EEC
Page 10
Aid is normally in the form of grants or loans.
7. Total expenditure under the programme.
EUR 2.6 billion was budgeted for 2000.
8. Duration of the programme.
2000-2006
9. Trade effects.
Given the aims of the programme it is considered that the trade effects are minimal.
E. COMMON AGRICULTURAL POLICY-ACCOMPANYING MEASURES
EUROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF)-
GUARANTEE SECTION
1. Title of the programme
Accompanying Measures of the Rural Development Programmes.  European Agriculture and
Guidance Fund (EAGGF)-Guarantee section
2. Period covered by the notification.
1 January 2000-31 December 2000
3. Policy objective and/ or purpose of the programme.
To support the following measures throughout  the whole EU:(a) Early retirement
(b) Agroenvironmental  measures.
(c) Afforestation of agricultural land
(d) Compensatory allowances for  less-favoured areas.
4. Background and authority for the programme.
Council Regulation (EEC) No 1257/99.
5. Form of assistance granted-Grants from Community budget for:
(a) Early retirement for  abandoning  agricultural activity
(b) Grants to compensate per income foregone and additional costs resulting from 
agri-environment commitments.
(c)  Grants for planting trees on agriculture land
(d) Area payments to compensate less productivity in agriculture due to climatic 
or geographic limitations .G/SCM/N/71/EEC
Page 11
6. To whom and how the assistance is provided.
Aid is co-financed with the Member States on the basis of multi-annual operation
programmes based on the aims of the EAGGF Guarantee section as indicated above. The Member
States are responsible for the implementation of the programme and the selection of individualprojects.
Aid is normally in the form of grants or loans.
7. Total expenditure under the programme.
EUR 1.7 billion was budgeted for 2000.
8. Duration of the programme.
2000-2006
9. Trade effects.
Given the aims of the programme it is considered that the trade effects are minimal.
III. AGRICULTURE
A. GENERAL REMARKS
1. The measures notified concern only products that are subject of a Common Agricultural
Policy, namely the following sectors:
- Arable crops (cereals, oilseeds, linseed, protein crops and set-aside)
- 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 I”)
2. The measures notified include all price support measures, and direct payments introduced by
the common market organisations that can involve pa rticipation rather by the Community's financingG/SCM/N/71/EEC
Page 12
organisation 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 thecourse of the budgetary year concerned.
B. MEASURES
1. Export Refunds
For certain of the sectors governed by a common market organisation, 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 theCommission.  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.
The total amount of export refunds financed by the EAGGF in 2000 is as follows:
(EAGGF budgetary period-EUR million)
Products Refunds
2000
Arable cropsSugar
1
Olive oil
Fruits and vegetables
Wine
Other sectors
Dairy products
Bovine meatPigmeat , Eggs and poultry
Non Annex I Products
Total expenditure823.6
   0 -
   0.2
     46.1
     21.5
38.4
1,671.0
   661.3
348.2
   572.2
4182.5
1 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.
2. Measures on the Internal Market
In order to stabilise markets and assure the agricultural population of an equitable standard of
living, the Common Agricultural Policy provides, in the market organisation regulations for thedifferent products, intervention and aid measures that vary according to the nature of the product and
the special characteristics of the market.G/SCM/N/71/EEC
Page 13
The cost of these intervention and aid measures is, as a general rule, financed by the EAGGF.
During the year 2000, by product sector, they have amounted to:
(EAGGF budgetary period-EUR million) 1)
Products Intervention
2000
Arable cropsSugar
2
Rice
Olive oil
Flax and hemp
Cotton
SilkwormsFruits and vegetables
Wine
Tobacco
Seeds
HopsDairy products
Bovine meat
Sheepmeat and goatmeat
Pigmeat, eggs and poultry
Fishery productsOther products
3
Total expenditures15,839.5
25,1
228,5
 2,209,9
136,4
            991,4
         0.5  1,505.2
     744.0
     987.7
       109.6
       12.6
 873.3
  3,878.3
  1,735.6
       87.0
9.4
     381.3
29,755.30
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
1. "ARABLE CROPS" - SECTOR (Cereals, oilseeds, linseed, protein plants and set-aside)
This section covers the "classical market organisation for cereals as well as the compensatory
payment scheme for producers in the arable crop sect or (cereals, non-fibre flax, oilseeds, protein crops
and set-aside).
The common market organisation for cereals
The common market organisation 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.G/SCM/N/71/EEC
Page 14
(a) Operation of the market
(i) Price arrangements
The Council fixes the intervention price for cere als. At this price the intervention agencies
must, at certain periods of the year, buy in the cereals they are offered that have the requisite qualitycharacteristics.
One single intervention price is valid for the following cereals: wheat, maize, 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 at EUR110,25/t, for 2000/2001 and
from 2001/2002 onwards at EUR101,31/t  for an indefinite period. The monthly increment is
EUR 1,00/t/month for 2000/2001 and EU R 0,93/t/month from 2001/2002 onwards.
(ii). Specific market instruments
-) 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 reaches a level which disrupt or threatens to disrupt
the availability of supply on the Commission market, appropriate measures
such as export levies may be taken.
Community food aid operations also attract refunds.
-) Stocks
Two types of intervention measures are involved:
1. 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.
2. 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 measures equivalent to carryoverpayments.
(iii) 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 comprises the chemical, paper and paperboard industryG/SCM/N/71/EEC
Page 15
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 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 at the
level of EUR194.05 per quantity of raw material needed to produce one
ton of potato starch, as from 1 July 2000 (from 1.7.2001 EUR 178.31);
- the 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 EUR 98.74 per ton as
from 1 July 2000 and at EUR 110.54 from 1 July 2001. Furthermore, the
payment occurs within a quota limit.
- the special starch producer’s premium:  This premium set at EUR 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 offsetcertain structural disadvantages in the starch industry.
(iv) Other intervention
These headings cover expenditure on various measures, in particular special
digressive aid for Portuguese cereal producers.
(b) Aids per hectare for arable crops and set-aside
The reform of arable crops entered into force on 1 July 1993.  Since 2000, it is governed by
Regulation (EEC) No 1251/99, which covers all cereals, oilseeds, protein plants, non-fibre flax seeds
(or linseed) and set-aside.  From 2001 onwards also fibre flax and hemp are included.
As far as cereals are concerned, the institutional prices have been gradually reduced as from
the 1993/94 marketing year to bring them closer to world prices.  The resulting loss of income is
offset partly by an area payment, paid per hectare and calculated on a regional basis to producers
sowing arable crops and submitting applications, subject to certain conditions, in particular that of
setting aside land in the case of producers submitting requests for more than the equivalent of 92 tons.
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 and 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.
Regionalization plan
In order to reflect the diversity of agricultu ral structures in the Community, area 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).G/SCM/N/71/EEC
Page 16
The Member States have established a regionalisation plan in accordance with the criteria set
out in Article 3 of Regulation (EC) No 1251/99 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 concerned is
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.
Expenditure stabilization mechanism
The area payment is granted only for an area not exceeding a regional base area.  This is
established as the average number of hectares sown to arable crops (cereals, oilseeds and protein
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 regionalisation plan, Member States are required to determine the region, which
may cover an entire Member State or several areas wi thin a Member State.  It cannot be smaller than a
production region.
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 area payment on irrigated areas
is granted only up to a separate base area.
Production and expenditure are controlled by the establishment of these base areas.
If the sum of the areas in respect of which the area payment is applied for (including that on
set-aside) plus the "COP" (cereals, oilseeds and protein plants) areas declared as fodder areas is
greater than the regional base area during one and the same marketing year, the eligible area perproducer is to be reduced proportionately for all types of aid.
In addition, where a Member State chooses to establish production regions that do not
correspond 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 ofthe 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
above mentioned average yield.G/SCM/N/71/EEC
Page 17
(c) Area payment
Cereals
As the cut in cereal prices was staggered over three years, the amount of the compensatory
payment also changed over the same period.  For the period 1995/1999 the compensation amounted toEUR 54.34/t of historical cereals yield for the re gion of production concerned.  For 2000 and 2001
campaigns the amount is increased to EUR 58,67/t and EUR 63/t. taken into account partly the
intervention price reduction.
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 area payment is paid for the area sown to durum wheat in the traditional production areas.This supplement is set at a fixed amount of EUR 358.60/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 hectares sown to durum wheat and
eligible for the old aid during the marketing years 1988/89 to 1991/92 for each producer.  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;
- a payment to certain non-traditional areas in France and Austria of an additional
payment of EUR 138.90/ha in respect of an area not exceeding a fixed area in
northern producer regions of France, Germany, Northern Italy, in regions of Spain notcovered by the traditional areas an the UK.  That amount reflects loss of income due
solely to the fall in the guaranteed price for durum wheat.
As from 1999/2000, this system of individual ri ghts has been replaced by a MGA (Maximum
Guaranteed Area) system.  One MGA exists per Member State and per zone (traditional, non-
traditional).  The total of all MGA's reaches 3.2 million hectares.  The supplementary aid for
traditional zones was cut to EUR 344.50/ha (not to be regionalized).
Oilseeds
The products covered are rape, sunflower and soya.
The Community market is essentially free. Imports are free of customs duties and exports do
not attract refunds
From the 2002/2003 marketing years onwards, area payments are granted to producers,
calculated on a regional basis according to the historical yields defined in the regionalisation plan,excluding maize where maize is treated separately.  The basis amount is identical to the amount for
cereals, grass silage and set-aside (EUR 63/t).  For the 2000/2001 marketing year the basis amount is
EUR 81,74/t and for the 2001/2002 marketing years EUR 72,37/t.  During this transition period, these
amounts can be multiplied with the historical oilseeds yield of the existing regionalisation plans,
multiplied with 1,95.G/SCM/N/71/EEC
Page 18
Payments are reduced where the base area is exceeded.  A reduction in the compensatory
payment must be made during the transition period where the maximum guaranteed area is exceeded
(Regulation (EC) No 1251/);
Protein crops and linseed
The products covered are:
- peas (excluding chick peas), beans and sweet lupines
- non-fibre flax seed
The Community market is essentially free. Imports are free of customs duties and exports do
not attract refunds.
Area payments are granted to producers, calculated on a regional basis according to the
historical yields defined in the regionalisation plan excluding maize where maize is treated separately.
Basic amounts
Description
Peas, beans and sweet lupines (1)
Non-fibre flax seed (1)2000/2001
EUR 72,5/t
EUR 88,26/t
(1) These amounts have to be multiplied by the regional yields for cereals to obtain the regional reference
amounts. While the basis amounts for peas, beans and lupines will remain unchanged, the amount fornon-fibre flax seed will be EUR 75,63/t for 2001/2002 and EUR 63/t from 2002/2003 onwards.
Set-aside
Set-aside is linked with the area payments for arable crops.
Each producer claiming area payments except small producers may require to set aside a
minimum 10 per cent of the land,, for which payments are claimed.
The area payment for the set-aside obligation is fixed at the same level as for cereals (EUR 58,67
in 2000 and EUR 63 from 2001 onwards multiplied by the regional cereal yields).
This area aid is also payable on land voluntarily set aside in excess of the obligation, subject
however to a ceiling set by the Member State.
Land set aside may be used for producing raw material for the manufacture of products not
directly intended for human or animal consumption. 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-asideland from rape, colza, sunflower and soya.
2. "RICE"  SECTOR
On 22 December 1995, the Council formally decided to reform the common market organization
for rice.
The reform includes the following points:G/SCM/N/71/EEC
Page 19
(a) Intervention measures
The intervention price for paddy rice shall be reduced by 15 per cent from 351.00 EUR/t. for the
1996/97 marketing year to 298.35 EUR/t. for the 2000/2001 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 (tons/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.
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.  Itis applicable in all the Community intervention centres fixed at the beginning of the marketing year.
The real 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:
(EUR/t.)
Product
Paddyrice1993/94
291,021994/95
291,021995/96
(1)
351,411996/97
351,001997/98
333,451998/99
315,901999/00
298,352000/01
298,35
(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:          - traditional zones   22,330 ha
          - other     2,561 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 the
chemical, 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.G/SCM/N/71/EEC
Page 20
3. "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 below, any such products of the Communityorigin which comply with certain quality and packaging conditions.
The intervention prices fixed for the last few marketing years were as follows:
Intervention price valid
for1997/98 1998/99 1999/00 2000/01
1. Butter 328.20 328.20 328.20 328.20
2. Skimmed milk powder 205.52 205.52 205.52 205.52
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. Since
July 1987, intervention butter has been bought in under a tendering procedure.  Butter is bought in at a
maximum price that is fixed in relation with the bids received by the Commission, but not lower than90 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 the market situation justifies the aid;
- 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.G/SCM/N/71/EEC
Page 21
(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.
- 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 theCommunity market; inter alia , aid is granted for use in the form of concentrated butter for
cooking, incorporation in certain foodstuffs and for direct consumption by certain 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.  The
current rules are fixed by Regulation (EEC) No. 3950/92 (OJ L405 of 31.12.92) lastly amended by
Regulation (EC) N° 603/2001 (OJ L89 of 29.03.2001).
In the four last years, the total milk quota quantities for EC 15 were:
    (million tonnes)
2000/01 1996/97 1997/98 1998/99 1999/00
Deliveries 117.0 115.6 115.7 115.7 116.0
Direct sales 1.4 1.9 1.8 1.8 1.5
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, i.e. EUR 35.627/100 kg
4. "OLIVE OIL”
As from 1 November 1998, the market organisation system was substantially modified.
1. The public intervention system based on an intervention price fixed for a given quality
and that obliged the intervention agencies to buy in Community olive oil offered, was
abolished.
Instead, a private storage system was put in place that 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.G/SCM/N/71/EEC
Page 22
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 ofthe remaining quantity is carried over to the next marketing year and 20 per cent is
distributed among those Member States which have exceeded their NGQ.
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 toestablishing 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 the NGQs.  The increased aid granted for
small producers who were also exempted from the co-responsibility scheme is abolished.
4. The Council fixes a target market price at a level that permits disposal of olive oil
production. This price is fixed for the three marketing years ending on 30 October 2001.
5. The Consumption Aid which was equal to the difference between the indicative price
less the production aid and the representative market price and which was designed tofacilitate 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:
      (EUR / 100 kg)
2000/01 1997/98 1998/99 1999/2000
Target price
Intervention price
Production aidProduction aid for small producers
Representative market price
Consumption aid383.77
-
132.25
-
-
-383.77
175.16
142.20151.48
229.50
12.07383.77
-
132.25
-
-
-383.77
-
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 that they use most frequently for their manufacturing.G/SCM/N/71/EEC
Page 23
The average production refunds are as follows:
       (EUR /100 kg)
2000/01 1997/98 1998/99 1999/2000
Production refunds 44.00* 61.26 44.00 44.00
* Estimate
5. "SUGAR" SECTOR
(a) Prices
(i) 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.The intervention price is fixed for a standard quality; 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 - 1999/2000 and 2000/01 –2005/06 the intervention price for white sugar amounted to 63.19 EUR/100 kg and for
raw sugar to 52.37 EUR/100 kg (Reg. 1260/2001 OJ L 178 of 30.6.2001).
(ii) 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 Bbeet (3) equal to 68 per cent or 60.5 per cent of the basic price.
(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 productionquota B.
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.
(b) 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 to
consumption in the Community.  Practical implementation of this principle is ensured through a levyG/SCM/N/71/EEC
Page 24
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 is not enough to cover the financial losses in question, a second levy, that initially
may not exceed 30 per cent and subsequently 37.5 per cent, if necessary, of the intervention price, ischarged.  This levy is only charged on B quota production (i.e. a total of 2 per cent plus 37.5 per cent =
39.5 per cent, that 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.  Firstly to absorb the accumulated
negative balance not covered during the five marketing years from 1981/82 to 1985/86, and secondly to
avoid any further accumulation during the five-year period (from 1986/87 to 1990/91) for which it hasbeen decided to extend the quota system.  Thus, for the 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 thetotal loss recorded and the receipts from the normal levies, i.e. the basic levy for A and B sugar and the Blevy for B sugar.  The integral self-financing system on an annual basis has been extended whenever the
quota system has been extended.
(c) 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 rate for the whole Community.  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 particularto 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.
(d) Intervention measures
(i) Production refunds are granted on sugar used in the chemical industry, of which
60,000 tonnes are charged to the budget.  That is the quantity eligible for refunds before
a new 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.
(ii) 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 access
as preferential sugar (ACP countries and India).
Either a variable refining aid or a corresponding tariff adjustment is granted on all raw
preferential and special preferential sugar refined in the Community in order to maintain a competitiverefining margin.
6. "BOVINE MEAT" SECTOR
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.G/SCM/N/71/EEC
Page 25
In the marketing year 2000/01 the intervention price has been 342.20 EUR/100 kg carcass
weight and in 2001/02 301.30 EUR/100kg.
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.
(a) Price support regime
The European Community has introduced meas ures to link management of the internal
market more closely to market price trends (Reg.1254/1999).
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;
- 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
EUR/100 kg. CarcassUnder regular tendering
proceduresUnder safety net
Community market price
Member State market price84%
80%78%
60%
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 is
not 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.
(b) 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 2000: 2.0 LSU/ha.
In 2002: 1.9 LSU/ha.
From 2003: 1.8 LSU/ha.
The density requirement does not apply, however, to holdings with less than 15 LSU.
In addition, a supplementary extensification premium of EUR 36.23 per eligible head may be
granted when the stocking density is lower than 1.4 LSU/ha.  As from 1997, this supplementaryG/SCM/N/71/EEC
Page 26
premium amounts to EUR 36.00 and to EUR 54.00 when the stocking density is lower than 1,0
LSU/ha.
(i) Special premium for young male bovine animals
The special premium for young male bovine animals applicable to each of the age
groups at 9 months and over 21 months, is set at the following linea:
Bulls: EUR 160 for 2000, EUR 175 for 2001 and EUR 210 for 2002
Steers: EUR 122 for 2000, EUR 136 for 2001 and EUR 150 for 2002
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 additional deseasonalization premium of a decreasing amount of EUR 72.45 to
EUR18.11 per head may be granted for bovine male animals slaughtered.  In 2000,
farmers in Denmark and Germany benefited from this measure at the full rate and in
Ireland and Northern Ireland at 60 per cent of the above amounts.
(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:EUR 163.00 for 2000, EUR 182.00 for 2001 and EUR 144.90 in 2002
An additional premium of EUR 50 per cow may be granted at national level particularly
in regions where development in the sector is lagging (Greece, Ireland and Northern
Ireland, Portugal and certain regions of Southern Italy, Spain and France).
(iii) Slaughter Premium
The slaughter premium for calves (1-7 months) is set at:
EUR 17 in 2000, EUR 33 in 2001 and 50 in 2002.
The slaughter premium for adult cattle ( 8 months and more) is set at:
EUR 27 in 2000, EUR 53 in 2001 and EUR 80 in 2002.
7. "PIGMEAT" SECTOR
A basic price is fixed for meat of domestic swine, presented in carcasses or half carcasses of a
standard quality. The basic prices stands at 150.94 EUR/100 kg (Reg. 2759/75).
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.
Intervention measures are taken in form of private storage aid which is granted to operators
storing pigmeat on their own expense for 3 to 6 months..
Public intervention is also provided for in the basic Regulation (EEC) No. 2759/75 but has
not been used since more than 20 years.G/SCM/N/71/EEC
Page 27
8. "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 2000 for 3.7 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.
The institutional prices for the 1997 marketing year were fixed in the 1996/97 prices package.
For the 1998 and the following marketing years, the Co uncil decided to maintain the basic price at the
level decided for the 1997 marketing year.
Price decision in EUR
Product 2000 and 2001
(Period of application) Amounts %
EUR/t Change
(1.1.2000-6.1.2002) 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.G/SCM/N/71/EEC
Page 28
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 aids
may be decided on by the Commission for the quotation area in question.
Premiums
(i) 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 payable perewe 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 thefinal 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 amount corresponds to 80 per cent ofthe 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.
In view of the increase in expenditure on this sector, the Council, acting on a proposal
of the Commission, decided in June 1992 on an individual limit on guarantees.  Each
producer could receive the ewe/goat premium only within the limit of the quantities of
its own individual quota.
(ii) Premiums in less-favoured areas
Stabiliser
This stabiliser applies from 23 May 1988; it implies a 7 per cent reduction on the
basic price.G/SCM/N/71/EEC
Page 29
9. "FRUIT AND VEGETABLE" SECTOR
(a) Measures to promote the formation of producers' organizations
In order to encourage the formation of producer organisations and facilitate their operation,
aid can be granted to such organisations established on the initiative of producers.  Theseorganisations are to promote 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 preliminary recognition, (a) an aid to encourage the formation of the producer
organisation and facilitate its administrative operation; (b) a special loan to cover partof 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 expenditure of the operational funds, capped at (the most)
4.1 per cent of the value of the marketed production of each PO.  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 organisations ca n 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.
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 schemethrough a producer organisation, for a volume not greater than 10 per cent of the growers’ marketed
production.
(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 producer organisations for the
quantities delivered to processors.G/SCM/N/71/EEC
Page 30
(d) Special measures for nuts
In order to encourage the nut 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 organisations 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 modernize marketing under a plan to be
presented by producers' organizations;
.
- Participation in promotion drives organised in collaboration with the various economic
operators in this sector.
This aid is granted to the producers' organisations 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.
10. "BANANAS"  SECTOR
(a) Measures to promote the formation of producers' organisations
In order to encourage the formation of producers' organisations and facilitate their operation,
aid can be granted to such organisations established on the initiative of producers.  Theseorganizations are 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 ofthe production marketed, for each successive year, provided that the actual cost of establishing and
administering the organization are not exceeded.
(b) Compensatory aid to producers
A compensatory aid is payable to all producers who are members of a recognised producers'
organisation, 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 market
during the relevant years for bananas produced and marketed within the Community.  In 1999, when
the reference income was EUR 640.30/tonne ex packing station, the aid amounted toG/SCM/N/71/EEC
Page 31
EUR 296.90/tonne for a total of 729304 tonnes.  There is also the possibility of a supplementary aid
for regions that have experienced especially severe market circumstances.  This supplementary aid is
decided on a yearly basis. In 1999 a supplementary aid was paid to producers in Madeira (EUR 49.9/t
for 21,770 tons), Martinique (EUR 44.9/t for 258,501 tons) and Guadeloupe (EUR 84.5/t for 83,508
tons).
11. "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 syst em 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.
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 specialised dried grapes
area has been progressive in parallel with a progressive reduction of the nominal producerprice 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
of 6,836,262 tonnes.
This amount is distributed as follows:- 4,585,253 tonnes for tomato concentrate;G/SCM/N/71/EEC
Page 32
- 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 EURO/100 kg net
EURO/ha
2000/01EURO/100 kg net
EURO/ha
1998/99EURO/100 kg net
EURO/ha
1999/2000
Tomato concentrate (1) 17.178 24.412 21.619
S. Marzano whole peeled tomatoes- preserved- frozen6.258 9.276 8.215
Roma whole peeled tomatoes 4.604 5.561 5.794
Non-whole tomatoes, peeled and
frozen3.913 4.579 4.925
Tomato juice (CN Heading 2002 90)
(1)
- 7/8%
- 8/10%- 10/12%4.443
5.331
6.5166.314
7.576
9.2605.591
6.709
8.201
Tomato juice (CN Heading 2009 50)- 4.5/5%
- 5/7%2.814
3.5543.998
5.0503.541
4.473
Tomato flakes (1) 57.162 81.232 71.940
Peaches in syrup/juice 4.134 6.065 6.103
Prunes 68.389 81.360 79.976
William pears in syrup/juice 11.348 12.517 11.886
Raisins 2.787 2.785 2.785
Dried figs- C quality 28.630 27.757 29.335
Pineapple 111.927 144.414 140.026
(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 quotas are used in totality (+1,8 per cent in 2000/2001).G/SCM/N/71/EEC
Page 33
12. "WINE"  SECTOR
On 1 August 2000 the reform of the common organisation on the market in wine entered into
force (Council Regulation (CE) no 1493/99).
The main changes, compared to the former market organisation, concern the abolishment of
any guide prices and a reshaping of distillation measures. The general structure of the market support
measures, which is aid for private storage of wine and must, distillation of wine and aid for the use of
grape must remained unchanged. The concrete im plementing provisions for the market mechanisms
are laid down in Commission Regulation (EC) no 1623/2000
Furthermore the structural measures in the wine sector have been reinforced under the reform
by introducing a scheme for restructuring and conversion. The concrete implementing provisions for
the structural measures are laid down in Commission Regulation (EC) no 1227/2000
(a) Market measures(i) Aid for private storage of table wines and grape must
The measure aims to encourage wine producers to use storage in order to assure continued
supply during the whole marketing year. The aid is fixed per hl of product and per day. For the
2000/2001 marketing year it was set at 0,01544 € for table wine, 0,01837 € for grape must and
0,06152 € for concentrated and rectified grape must.
(ii) Distillation
-) Compulsory Distillation : Within the former package of compulsory distillation measures
only two carried forward under the reform. These are:
- Distillation of by-products of wine-making
The aim of this distillation scheme is to avoid overpressing of grapes and thus
manufacture of poor quality wines. The price to be paid by the distillers to producers for
the marc, wine lees or wine delivered was 0,995 €/%vol/hl. Distillers received a
Community aid varying between 0,2777 € / % vol/ hl and 0,6279 € / % vol/ hl
depending on the type of product they distil.
- Distillation of wine from dual purpose grapes:
This measure relates to wines from grapes intended at the same time for wine making
and for other purposes (case of grapes used for wine spirits produced in the FrenchCharentes region, of grapes intended for drying in Greece or table grapes in Italy). In
order not to overburden the market for table wines, all quantities of these wines
exceeding the quantities traditionally vinified have to be distilled. The minimum price
to be paid to the producers of the wines concerned was set at 1.340 €/%vol/hl.
Distillers received a Community aid varying between 0,6401 € / % vol/ hl and 0,7 728 €
/ % vol/ hl depending on the type of product they distil
-) Voluntary Distillation
There are two measures that are both new ones. They are intended to allow a more
flexible and targeted response to the actual market situation
- Distillation into drinkable alcohol:G/SCM/N/71/EEC
Page 34
The first voluntary measure is a distillation scheme for table wines to facilitate
delivery of the traditional drinkable wine alcohol market. The price to be paid to
wine producers was fixed at 2.488 €/% vol/hl. The Community aid offered to
distillers ranged between 1.751 € / % vol/ hl and 1.884 € / % vol/ hl, againdepending on the type of product. In addition, distillers can receive an aid for the
storage of alcohol, which was set at 0,0336 € per hl of product and per day.
- Crisis distillation
Crisis distillation may be opened "if there is an exceptional case of market
disturbance caused by serious surpluses and /or problems of quality". Themeasure can be limited to certain categories of wine or certain areas of
production but may also include quality wine. During the marketing year
2000/2001 the measure was applied several times. Prices to be paid for producers
varied between 1.723 € / % vol/ hl and 2.105 € / % vol/ hl, the Community aid
for distillers between 2.090€ / % vol/ hl and 2.473 € / % vol/ hl
(iii) Aid for the use of grape must
-) Aid to grape must used in the wine-making process
Aid is granted in respect of concentrated grape must and rectified concentrated grape must
used to increase the alcoholic strength of wines. It shall compensate the difference between
the cost of enrichment by means of grape must and sucrose, respectively. For the wine year
2000/2001, the aid was fixed, per degree of potential alcoholic strength per hectolitre as
follows:
- for concentrated grape must prepared from grapes originating in the wine-growing
zones C III (a) and C III 1.699 €, and prepared from grapes originating in other zones
1.446 €;
- for rectified concentrated grape must prepared from grapes originating in the wine-
growing zones C III (a) and C III 2.206 € and prepared from grapes originating in other
zones 1.953 €.
-) Aid for the manufacture of grape juice
Aid is granted for grapes, grape must and concentrated grape must intended for
manufacturing grape juice or, newly introduced under the reform, for manufacturing othercomestible products from such grape juice. The amount of the aid for the wine year
2000/2001 has been fixed at 4.952  € per 100 kg of grapes; 6.193 € per hectolitre of grape
must and at 21.655 € per hectolitre of concentrated grape must produced.
-) Aid for the preparation of certain products falling within CN Heading 22.06.00 in the United
Kingdom and Ireland ("British and Irish wines")
The amount of aid for these preparations which are traditional in the United Kingdom and
Ireland has been fixed at 0,2379 €/kg of concentrated grape must used. The product must be
obtained entirely from grapes produced in wine-growing zones C III (a) and C III (b).
-) Aid for the preparation of certain products enabling the consumer to obtain therefrom a
beverage in imitation of wine ("home-made wine")G/SCM/N/71/EEC
Page 35
The amount of aid for these preparations, which are also traditional in the United Kingdom
and Ireland, has been fixed at 0,3103 €/kg of the product obtained.
Access to all these support measures is reserved to producers who have fulfilled their
obligations regarding compulsory distillation
(b) Structural measures(i) Abandonment premiums
Premiums for permanent abandonment of vineyards have been maintained. Member States
may determine the eligible areas and conditions for the implementation of this measureincluding the amount of the premium. EU legislation sets maximum amounts for financing at
Community level.
(ii) Restructuring and conversion
In order to assist further the adaptation of supp ly to market needs a scheme for restructuring
and conversion of production potential, both in terms of quality and quantity, was introduced
under the reform. Member States have to determine the regions, types of production eligible
and the amounts of these aids. Wine producers receive up to 50 per cent of the restructuring
or conversion costs (75 per cent in regions under Objective 1 of the Structural Funds) pluscompensation for the temporary income loss for a maximum of three years.
13. "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 bya system of premium and guarantee thresholds.
The reformed market organisation 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.
The amounts of the premium for the 1999, 2000 and 2001 crop were as follows:
                   (EUR /Kg.)
I
Flue
curedII
Light air
curedIII
Dark air
curedIV
Fire curedV
Sun
curedVI
BasmasVII
KateriniVIII
Kaba
Koulak
2.98062 2.38423 2.38423 2.62199 2.38423 4.12957 3.50395 2.50377
- 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.G/SCM/N/71/EEC
Page 36
- A supplementary amount to the premium is given to the northern tobacco producing
countries (France, Germany, Austria, Belgium) to compensate for the difference in
production costs with producers of the southern Member States.  The supplementary
amount to the 1999 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,
AppelterreEUR/kg.
0.5509
0.8822
0.50390.4112
0.4112
0.4112
(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 2000 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 48500 47,000 17,900 6,965 10,100 1,500 131,965
Greece 32,660 12,400 6,900 26,460 25,910 19,890 124,220
Spain 29,000 2,470 10,800 30 42,300
Portugal 5,500 1,200 6,700
France 9,500 6,600 11,158 26,758
Germany 3,000 4,125 4,500 11,625
Belgium 191 1,662 1,853
Austria 30 446 100 576
Total 127,960 74,432 46,120 6,995 17,000 26,460 27 410 19,890 345,999
c) Producer groups
In order to concentrate supply and adapt it to the qualitative requirements of the market, a
special aid amounting to 2 per cent of the premium is given to producer groups when they conclude
cultivation contracts.
14. "TEXTILE FIBRES" SECTOR
(a) 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
stabilizer system.  The Community aid system fi xes a guide price (106.30 EUR/100 kg. as from theG/SCM/N/71/EEC
Page 37
1995/95 marketing year) and an 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 2000, when the 2000/2001 marketing year began, the Commission fixed the
world market price at 37.255 EUR/100 kg., correspon ding to an advance of aid of 43.5 EUR/100kg
for Spain and 24.5 EUR/100 kg for Greece (provisi onal amount).  These amounts were calculated on
the basis of estimated production of around 320,000 tonnes of unginned cotton for Spain and
1,250,000 tonnes for Greece.
(b) FIBRE FLAX AND HEMP
Community regulations include the following measures:(i) 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 and the 1998/99 marketing
year, the contracts with processors are respectively obligatory for flax and hemp.
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 (EUR/ha.) Area (ha.)
Fibre flax: 2000/2001
marketing year795.46 106,000
Hemp: 2000/2001 marketing
year646.31 20,000
(ii) 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 utilised.
(iii) 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 regulationsthe 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 from
production aid.G/SCM/N/71/EEC
Page 38
(iv) In November 1999, the Commission proposed a radical reform of the aid scheme
regime. The reform is structured around two proposals. The first would include flax
and hemp in the general aid scheme for arable crops, aligning the aid per hectare with
aid rates for linseed. The second would introduce supplementary assistance in theform of processing aid for straw and distinguishing between high quality long fibre
flax and low quality short fibre flax and hemp.  The rarely used measures for private
storage and promotion should be abolished.  The reform is to enter into force on the 1
July 2000.
(c) SILKWORMS
Community regulations in the silkworm-rearing sector include the following measures:(i) 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
of silk utilised.  The aid is given to the rearer who successfully rears silkworms.
In 1997/98, aid amounting to 133.26 EUR/box was granted.
In the context of 2000/2001 package prices, the Commission has continued the multi-
annual approach followed for Agenda 2000 and previous reforms by fixing an amount
for the sector for an undefined period.
(ii) 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.
15. "DRIED FODDER" SECTOR
The common organisation of markets in the dried fodder sector covers the following products:
dehydrated fodder, the principal leguminous vegetables, sun- dried and ground, and protein
concentrates obtained 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: 4,412,000 tonnes- Sun-dried fodder: 443,500 tonnesThe MGQ is the sum of the National Guaranteed Quantities (NGQ).G/SCM/N/71/EEC
Page 39
The NGQs are the following:
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 EUR/tonne
-  Sun-dried fodder 38,64 EUR/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 reductions are
applied in those Member States where the eligible production exceeds the NGQ
increased by 5 per cent.
16.  "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/71/EEC
Page 40
The amount of aid for the marketing years 1996/97 to 2000/01 is as follows:
                       (EUR/100 kg..)
Products
1. Cereals (rice, spelt)
2. Oilseeds
3. Graminae4. Leguminosae1996/97 and 1997/98
between 11.90 and 14.30
between 17.00 and 23.50
between 15.90 and 62.90
between 0 and 62.201998/99 and 1999/2000
between 14.37 and 17.27
between 20.53 and 28.38
between 19.20 and 75.95
between 0 and 75.11 2000/01
between 14.37 and 17.27
between 20.53 and 28.38
between 21.13 and 83.56
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.  The Council fixed the aid at EUR 480.00/ha for the harvest 1996 to 2000included, 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 and aid for variety conversion; for this latter, up to 20 per cent of the aid can be used.
IV. INDUSTRY SECTORS
A. C
OMMUNITY FRAMEWORK PROGRAMMES IN THE FIELD OF RESEARCH
There are two such framework programmes:
- The fifth framework programme of the European Community for research,
technological development and demonstration activities (1998-2002)
- The fifth framework programme of the European Atomic Energy Community
(EURATOM) for research and training activities ( 1998-2002).
1. Policy objective and purpose of the subsidy
Financial participation in Community research and technological development (RTD)
activities during the period 1998-2002 is provided through the two above-mentioned frameworkprogrammes.
The legal bases of these programmes are, respectively, Article 166 of the EU Treaty and
Article 7 of the Treaty establishing the European Atomic Energy Community.
The fifth 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 the Treaty and in the decision adopting the framework
programme (Decision N° 182/1999/EC of 22 December 1998).
The framework programme of the European Atomic Energy Community has two main parts:
nuclear fission and controlled thermonuclear fusion.  The objectives and activities to be undertaken
are set out in the Decision 1999/64/Eura tom of 22 December 1998 of the Council.G/SCM/N/71/EEC
Page 41
The activities under the two framework programmes are either fundamental research,
industrial research or pre-competitive development. Financing of product development is excluded.
The arrangements for implementing the two framework 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
Community support to RTD 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 an evaluation procedure with
independent experts and selection procedure
Research projects  are carried out by participants established within the Community.  Non
Community participants whose country has signed an association agreement with the Communitymay participate with Community funding to a fifth framework programme research project . Non
Community participants whose country has not signed an association agreement with the Community
may participate without Community funding to a fifth framework programme research project
Research projects 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 organisations 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 andobligations of each partner, in particular arrangements for the dissemination protection and
exploitation of research results (Article 167 of the Treaty).
3. Amount and duration of subsidy
1998-2002 framework programme Total amounts
(in millions of Euros)
 Fifth framework programme of the European
Community  for research, technologicaldevelopment and demonstration activities13 700
Fifth framework programme of the European
Atomic Energy Community (EURATOM)1 260
total both programmes 14 960
4. Incidence on trade
The fifth RTD framework programmes  have no direct impact on trade.  As a general rule,
further work is always necessary for the results of a RTD 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, within Europe but also with non-EU countries.G/SCM/N/71/EEC
Page 42
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.
B. 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 the
ECSC 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 public
or 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.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 equivalent
mechanisms (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)).
                                                     
1 OJ L 329 of 30 December 1993, p.12.G/SCM/N/71/EEC
Page 43
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, inexceptional 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 1994 – 2000
(in ECU/EUR million) 1994 1995 1996 1997 1998 1999 2000
Germany
- operating aid*
- aid for the reduction of activity**
- other***4845.8
0.0
181.44784.2
0.0
106.75361.8
0.0
104.73280.5
1637.7
412.02667.2
1606.8
513.42612.4
1613.4
380.41963.1
1572.3
1063.2
Spain
- operating aid*
- aid for the reduction of activity**- other***249.1
499.9205.6298.8
501.3255.3310.3
462.8255.1285.4
419.1363.8355.6
403.2400.5327.8
399.6343.9292.7
405.6422.8
France- operating aid*- aid for the reduction of activity**
- other***0.0
298.0
614.80.0
56.9
612.30.0
87.6
592.30.0
371.1
585.10.0
383.7
614.90.0
354.3
630.40.0
389.6
620.6
Portugal
- operating aid*
- aid for the reduction of activity**
- other***0.0
1.8
3.60.0
0.0
0.90.0
0.0
0.90.0
0.0
0.00.0
0.0
0.00.0
0.0
0.00.0
0.0
0.0
United Kingdom
- operating aid*
- aid for the reduction of activity**- other***20.1
0.0
870.00.0
0.0
1622.80.0
0.0
512.80.0
0.0
512.30.0
0.0
1317.20.0
0.00.0142.9
EU TOTAL
- operating aid*- aid for the reduction of activity**
- other***5115.0
799.7
1875.45081.0
558.1
2595.75673.4
550.4
1465.83565.9
2427.9
1861.63022.7
2393.7
2846.02940.3
2367.2
1354.72398.6
2367.5
2107.6
Aid in EUR/ECU per tonne
- operating aid*
- aid for the reduction of activity**68.31
71.9042.57
53.3551.33
51.3035.73
135.7634.56
152.0934.33
153.5133.86
157.73
*: Aid granted pursuant to Articl e 3 of Decision No 3632/93/ECSC.
**: Aid granted pursuant to Articl e 4 of Decision No 3632/93/ECSC.
***: Inherited liabilities pursuant to Decision No 2064/86/ECSC and aid granted pursuant to
Articles 5, 6 and 7 of Decision No 3632/93/ECSC.
Source: Proposal for a Council Regulation on State aid to the coal industry COM(2001) 423 final of
25.07.2001
Coal production and imports in the Community (EUR-15):  1994-2001
(In million tonnes)
2001* 2000 1999 1998 1997 1996 1995 1994
Community
production  82.0   86.7 100.0 108.3 121.9 126.7 136.1 132.5
Imports into the
Community166.3 164.6 151.0 151.8 147.0 138.4 140.3 130.4
Sources: Eurostat; Commission’s report on Solid Fuels in the Community in 2000 and the Outlook for
2001.* EstimateG/SCM/N/71/EEC
Page 44
V. OTHER PROGRAMMES
A. SME P ROGRAMME
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
EUR 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/71/EEC
Page 45
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.
B. JEV P ROGRAMME
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
EUR 100,000 covering:
• Up to 50 per cent of the eligible expenses, with a maximum of EUR 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 call
for expressions of interest) are entrusted with the evaluation of the applications and, in the event of afavourable opinion, make recommendations to the Commission.
7. Total expenditure under the programme
The indicative amount is EUR 100 million over three years.
8. Duration of the programme
1 January 1998 –31 December 2000G/SCM/N/71/EEC
Page 46
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 andlargely intra-EU.
C. FIFG
1. Title of the programme
Financial Instrument of Fisheries Guidance (FIFG) – structural measures in the fisheries and
aquaculture sector.
2. Period covered by the notification
2000-2006
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
Articles 32, 33, 158, 159 and 161 of the EC Treaty, Regulation (EC).1260/99, Regulation
(EC) 2792/99.
5. Type of aid
Aid to fishing fleets, aquaculture, processing and marketing circuits,  port facilities and socio-
economic measures.
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.G/SCM/N/71/EEC
Page 47
7. Total budget of the programme
Objective 1 Regions: 2000-2006: EUR  2.6 bil lion (0.403 billion EUR budgeted in 2000)
Other Regions: 2000-2006 : EUR 1.1 billion  (0.161 billion EUR budgeted in 2000)
8. Duration of the programme
2000-2006
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.
D. C OMMON ORGANIZATION OF MARKETS IN FISHERY AND AQUACULTURE PRODUCTS .
1. Title of the measure
Common Organization of the Market in Fishery and Aquaculture Products.
2. Period covered by the notification
2000
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
Articles 32, 33 and 34 of the EC Treaty, Regulation (EC) No. 3759/92.and Regulation (EC)
No. 104/2000
5. Intervention mechanisms
Financial compensation, carry-over aid, autonomous 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
13.8 MEURR budgeted in 2000G/SCM/N/71/EEC
Page 48
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.
__________