WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/EU/11 
5 April 2012 
 (12-1838) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed By CANADA1 regarding the New and Full 
Notification of the EUROPEAN UNION2 
 
 
 The following communication, dated 23 March 2012, is being circulated at the request of the Delegation of the European Union. 
 
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 Question 1:  Common Agricultural Policy (CAP) – page 9 
 
Could the EU confirm that future CAP refo rm (that is currently being debated and 
considered) will continue along the track started by the Health Check reform?   
 Reply 
 
 The reform proposals published in October 2011 are a confirmation of the trend towards 
market orientation of the CAP which has continued since the reforms of the early 1990s.  The scope 
of the current CAP reform covers a new decoupled direct payments scheme providing more balanced 
distribution between farmers and between Member States, a streamlined single Common Market 
Organisation providing safety net in times of cris is, and a more targeted and efficient rural 
development policy.   The reformed CAP will contribute better to de veloping intelligent, sustainable and inclusive 
growth through its response to the new economic, social, environmental and technological challenges 
facing the society.   
Question 2:  European Agricultural Guarantee Fund – page 11  
 
 The notification indicates that 76% of the support provided under the EAGF "had no or 
at most minimally trade distorting effects".  Could the EU provide additional details on how 
they arrived at this conclusion for 76% of EAGF support?  Could the EU provide data to 
substantiate this conclusion?   
Reply 
  The same approach is followed as in previous  EU notifications.  The data used for the 
calculation is included in the table on page 13 which presents spending under the 
                                                      
1 G/SCM/Q2/EU/2.   
2 G/SCM/N/220/EEC.   G/SCM/Q2/EU/11 
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  European Agricultural Guarantee Fund (EAGF) in 2008, 2009 and 2010.  The amount relative to non-
trade distorting direct aids corresponding to 2010 accounts for 76% of the overall spending under the 
EAGF in 2010.  We note that this information is provided along with the notification guidelines in the 
document G/SCM/6 as well as with the provisions of article 25.3.(v) of the ASCM.  
 
Question 3:  Export Subsidies – page 13 
  The notification indicates either static or  declining export refunds (EAGF payments) 
from 2008 to 2010 in all sectors, with the exception of dairy products where a significant increase is observed.  Further, from 2008 to 20120 a significant increase in intervention 
measures (EAGF budget) in the dairy products sect or is observed.  Could the EU provide an 
explanation for this increased suppo rt to the dairy products sector?   Does the EU anticipate that 
these high levels of export refunds and interven tions for dairy products will continue in the 
future?  Also, can the EU provide additional deta ils on the type of non-Annex 1 products that 
obtained export subsidies? 
 
Reply 
  The increase in EAGF payments for dairy products in the period 2008-2010 was due to 
measures introduced in order to deal with the 2008- 2009 severe dairy crisis.  One consequence of the 
crisis was a relatively significant public interventi on buying-in, especially of skimmed milk powder, 
in order to support the falling prices and to stabilise the market balance.  Quantities that were bought 
into intervention in 2009 amounted at 76 367 t of butter and 256 982 t of SMP.  At the time of the crisis, the EU also reintroduced export refunds fo r dairy products for a brief and temporary period 
which ended in November 2009 (please refer to Regulation 1113/2009 of 19 November 2009).  The 
EU would like to underline that no export refunds or public intervention buying-in has taken place 
since the crisis in 2009.  
  Apart from the measures described above, an exceptional market support measure was 
launched in EU budget year 2010 on the basis of article 187 of the single CMO Regulation (EC) 
1234/2007 in order to support dairy farmers who we re severely affected by the collapse of world 
market prices.  The spending under this measure amounted to EUR 300 mln and it is included in the 
expenditure on dairy products in 2010 in the table on page 14 of EU's SCM notification 
G/SCM/N/220/EEC.   The EU grants exports subsidies on incorporat ed products according to its commitment as laid 
down its CXL schedule in Part IV - Section II.  The products that may attract export subsidy are 
defined in the annex of Part IV - Section II notab ly under paragraph 19 'incorporated products'.  
Furthermore, Commission Regulation (EU) No 578/2010 of 29 June 2010 laid down common detailed 
rules for the application of the system of granting export refunds on incorporated products.  
Question 4:  Cereals – page 14 
 
 The notification states that the Commission may decide to modify the ceilings for cereals 
"if the market situation so requires".  Could the EU elaborate on criteria for determining these 
situations and how the ceilings fo r cereals would be modified?   
 
Reply 
  The reform of the CAP in the context of the 2008 "Health Check" continued the market 
orientation of the CAP, with market intervention measures being further limited and taking on the role 
of a safety net.  For public intervention, the auto matic buying-in of maize, barley, sorghum and durum 
wheat was removed.  The Commission can deci de to introduce buying-in for these cereals "if the  G/SCM/Q2/EU/11 
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  market situation ... so requires".   While this trigger is not de fined, Article 13 (3) of Council 
Regulation (EC) 1234/2007 needs to be read fully i.e. "if the market situation and, in particular, the 
development of market prices, so requires" .  In the event that the Commission should decide to resort 
to buying-in for the aforementioned cereals, such buying-in would take place on the basis of tendering 
procedures.  
 Question 5:  Sugar – page 16   Could the EU describe the impact that the surplus levy and voluntary restructuring 
scheme has had on reducing the amount of excess sugar and sugar production capacity in the 
EU?  Could the EU explain what plans there are going forward?  
 
Reply 
  As a result of the 2006 reform of the sugar sect or, the total sugar production quota in the EU 
was reduced from 17,444,537 tonnes for the EU-25 in 2005 to 13,336741 tonnes for the EU-27 
in 2010, and the capacity of the industry has reduced accordingly.   As far as future policy developments are c oncerned, Canada will note that the CAP post-2013 
reform is currently under preparation.  The European Commission's legi slative proposals were 
published on 12 October 2011 and they are now in the process of inter-institutio nal negotiations with 
the European Parliament and the Council of the European Union.   
 
Question 6:  Fruits and Vegetables – page 19   Could the EU provide additional backgr ound on the Producer Organizations, with 
regards to the number of Producer Organizatio ns and the types of fruits and vegetables 
associated with a Producer Organization, their legislative foundations, who can join and the 
application process? 
 
Reply 
 
 There were 1,632 Producer Organisations (POs) in 2009, which is the latest year for which 
final data is available.  For the types of pro ducts produced and marketed by POs please refer to 
Annex I part IX of Regulation (EC) No 1234/2007.    The legal base for the Producer Organisations in the fruit and vegetables sector is 
Regulation (EC) No 1234/2007 of 22 Octobe r 2007 establishing a common organisation of 
agricultural markets and on specific provisions  for certain agricultural products (Single 
CMO Regulation).    Please refer to article 122(a) of the above-m entioned regulation for the provisions on the 
application process and to articles 125a and b for rules of association and recognition of producer 
organisations. 
  The EU also refers Canada to EU notification G/AG/N/EEC/69 which presents the 2007 reform of the fruit and vegetables sector.  Question 7:  Milk and dairy products – page 27 
 
 The notification states that the Commission  may adopt exceptional support measures for 
milk and milk products for the affected market to take account of restrictions on intra-EU and 
third-country trade which may result from th e application of measures for combating the G/SCM/Q2/EU/11 
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  spread of diseases in animals.  Could the EU elaborate on what these measures could be?  If 
such support has been granted, could the EU ex plain the particular circumstances?  Could the 
EU confirm whether any partial financing woul d be comparable to that provided for other 
livestock?   
 Reply 
 
 The exceptional support measures for milk and milk products referred to on page 27 of 
EU notification G/SCM/N/220/EEC are covered by article 44 of Regulation (EC) No 1234/2007.  
According to this article, the " European Commission may adopt exceptional support measures for the 
affected market in order to ta ke account of restrictions on intra- Community and third-country trade 
which may result from the application of measu res for combating the spread of diseases in animals ".   
  The measures shall be taken at the request of the Member State concerned and they may be taken only if the Member State has taken health and veterinary measures quickly to stamp out the 
disease, and only to the extent and for the duration stri ctly necessary to support the market concerned.  
Article 44 has not been applied for the dairy sector.   The EU co-financing rate is provided for in  article 46 of Regulation (EC) 1234/2007 and 
reads as follows: 
 
Article 46 
Financing 
 
1. For exceptional measures ref erred to in Articles 44 and 45, the Community shall provide 
part-financing equivalent to 50 % of the expenditu re borne by Member States. However, with regard 
to the beef and veal, milk and milk products, pigmeat and sheepmeat and goatmeat sectors, the 
Community shall provide part-financin g equivalent to 60 % of such expenditure when combating foot-
and-mouth disease.  2. Member States shall ensure that, where produ cers contribute to the expenditure borne by 
Member States, this does not result in distortion of competition between producers in different 
Member States. 
 Question 8:  Direct aids – page 31    The notification indicates that payments under the Single Payment Scheme (SPS) are 
independent of what and whether a farmer produces and therefore calls these payments 
"decoupled income support" (Section IV.C.3.1).  The Single Area Payment Scheme (SAPS) is 
also called a "decoupled support scheme", a pparently because the scheme does not require 
production (Section IV.C.3.2).  Decoupling of supp ort is also discussed in Section IV.A.1.  Given 
that another WTO agreement (the Agreement on Agriculture) stipulates criteria that a payment must meet in order to fall under the headin g "decoupled income support", could the EU 
elaborate on how it plans to address the po tential confusion arising from its labelling 
conventions?  Specifically, what does the EU  mean by "decoupled" and "decoupling"?  
 
Reply 
 
 The EU would like to refer Canada to EU 's domestic support notifications under the 
Agreement on Agriculture. In particular please see EU's DS:2 notification G/AG/N/EEC/58 of 
24 February 2009 which notifies the 2003 reform of  the CAP which introduced the Single Payment 
Scheme and the Single Area Payment Scheme.     G/SCM/Q2/EU/11 
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  Question 9:  Direct aid – page 31 
  The notification indicates that support fo r a number of regimes, including crop areas 
payments, supplementary aid for durum wheat, pr oduction aid for seeds, beef special premium, 
etc. were to be abolished by either 1 January 2010, or 1 January 2012 at the latest.  Could the 
EU confirm that this has taken place?  
Reply 
  The EU confirms that this has taken place.   
 
Question 10:  Environment and countryside – page 48 
 
 Could the EU elaborate on the types of voluntary commitments, beyond those stipulated 
in mandatory EU regulations, whereby farmers would be eligible for agri-environment 
payments?   
  Could the EU elaborate on the types of voluntary commitments, beyond those stipulated in mandatory EU regulations, whereby farmers would be eligible for animal welfare payments?   
 
Reply 
  Agri-environmental payments are granted to farmers who make on a voluntary basis agri-
environmental commitments and they cover onl y those commitments going beyond the relevant 
mandatory standards established pursuant to Artic les 5 and 6 of and in Annexes II and III to 
Regulation (EC) 73/2009 as well as minimum requireme nts for fertiliser and plant protection product 
use and other relevant mandatory requirements estab lished by national legislation and identified in the 
programme.    Animal welfare payments are granted to farmers who make on a voluntary basis animal welfare commitments.  They cover only those co mmitments going beyond the relevant mandatory 
standards established pursuant to Article 5 of and Annex II to Regulation (EC) No 73/2009 and other 
relevant mandatory requirements es tablished by national legislation and identified in the programme.  
 
Question 11:   Community Framework Programmes in the Field of Research – page 52 
 
 Could the European Union indicate how much money – of the total amount specified on 
page 54 – was allocated to the "aeronautic and sp ace" priority theme (as identified in Decision 
N° 1513/2002/EC of June 27 2002)? 
 
Reply 
  Answer will be submitted shortly.  
 
Question 12:  European Energy Recovery Programme – page 58 
 
 Could the European Union indicate who has benefited from this subsidy and what the 
eligibility criteria are?  Could the EU elaborate on  the potential trade effects of this support?   G/SCM/Q2/EU/11 
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  Reply 
 
 The Regulation n° 663/2099 established a progr amme to aid economic recovery by granting 
Union financial to projects in the field of ener gy so called the European Energy Programme for 
Recovery. 
  
 The eligibility criteria required that proposals to  be eligible to receive financial aid should 
implement projects listed in the part A of the annex of the above mentioned Re gulation.  In addition, 
proposals had to be submitted by one or several Memb er States, acting jointly or by private or public 
undertakings, or international organisations with the agreement of the Member States directly 
concerned by the project in question.  
  The beneficiaries are the transmission system operators (TSO) in each Member States or by project promoters who are implementing the projects.  
 The Regulation establishes that Community fu nding should not unduly distort competition of 
the functioning of the internal market.  At this st age of implementation of the programme the potential 
trade effects of this support has been assessed.  
Question 13:  European Fisheries Fund (EFF) – page 61 
 
 The notification states that "The Community  has a shortfall in fishery and aquaculture 
products and is a major importer of these pr oducts from non-Community countries.  The 
structural aid has only a very small influence on this situation".  Could the European Union 
elaborate on the potential trade effects from the European Fisheries Fund?  The total budget for 
this fund for 2007 to 2013 is 4.3 billion EUR.  Was an analysis/study completed on the effects on 
global trade (e.g., competitiveness, prices, stocks)?  
  Could the EU specify how much aid the fi sh processing sector has received to date?  
Was an analysis done on the trade effects the aid could have between the EU and third 
countries' processing sectors? 
 Reply 
 
 The EU Commission has carried out a numbe r of studies and assessments related to the 
implementation of the European Fisheries Fund (EFF).   One in particular, titled "Interim evaluation of 
the European Fisheries Fund (2007-2013), Final re port - February 2011" incl udes detailed information 
on aid provided in the context of this Fund, including on aid to the fish processing sector (see table on 
page 64).   The study can be found at the following web address:    http://ec.europa.eu/fisheries/documentati on/studies/eff_interim_evaluation_en.pdf  
 
 Concerning the other issues raised in the question, namely the EFF's potential trade effects and analysis/study on the effects on global trade (e .g., competitiveness, prices, stocks), they have not 
been specifically addressed in the context of the EFF.   Rather, they have been covered in a detailed 
study on the "EU's supply and marketing of fishery a nd aquaculture in fish products", carried out in 
2009, in the context of the impact assessment work  for the reform of the Common Fisheries Policy.  
The study provides detailed information on the EU's  trade in fish products, including on prices, 
EU production (per sub-sector) vis-à-vis imports, possi ble interactions of policy instruments (such as 
the EFF) with trade flows, impacts of trade on fish stocks, etc.   G/SCM/Q2/EU/11 
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   A summary, in English, of the study on the EU's supply and marketing of fishery and 
aquaculture in fish products can be  found at the following web address: 
  http://ec.europa.eu/fisheries/documentation/ studies/study_market/fap_exec_summary_en.pdf  
 
 The full text of the study, in French, is available at the following web address: 
  http://ec.europa.eu/fisheries/documentati on/studies/study_market/fap_part2_fr.pdf  
 
Question 14:  Common Organisation of the Mark ets in Fishery and Aquaculture Products – 
page 63  
 Regarding the Common Organisation of the Market in Fishery and Aquaculture 
Products, could the European Union explain what are the "other specific handicaps'' that are eligible for compensatory payments?  Could th e EU be more specific regarding aid mechanisms 
for the policy objectives of stabilizing the market, and guaranteeing reasonable consumer 
prices? 
 
Reply 
 
 The "other specific handicaps", referred to in  the context of a compensation regime (Council 
Regulation (EC) 791/2007) for marketing of fish products in a number of EU's outermost regions, 
relate to the remoteness, insularity, small size, difficult topography and clim ate, economic dependence 
on a few products, the permanence and combination of  which severely restrain the development of 
these regions. 
 
 With regard to the mechanisms for the policy objectives of stabilizing the market, and 
guaranteeing reasonable consumer pric es detailed information is ava ilable on the EU's web pages on 
the "Common Organisation of Markets":   http://ec.europa.eu/fisherie s/cfp/market/index_en.htm  
 
  
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