1.

Article 11 shall be replaced by the following: ‘Article 11 Adjustment of fishing capacity 1. Member States shall put in place measures to adjust the fishing capacity of their fleets in order to achieve a stable and enduring balance between such fishing capacity and their fishing opportunities. 2. Member States shall ensure that the reference levels expressed in GT and kW for fishing capacity as established in accordance with this Article and with Article 12 are not exceeded. 3. No exit from the fleet supported by public aid shall be permitted unless preceded by the withdrawal of the fishing licence as defined in Commission Regulation (EC) No 1281/2005 (4) and, where provided for, the fishing authorisations as defined in the relevant regulations. Without prejudice to the provisions of paragraph 6, the capacity corresponding to the licence, and where necessary to the fishing authorisations for the fisheries concerned, cannot be replaced. 4. Where public aid is granted for the withdrawal of fishing capacity that goes beyond the capacity reduction necessary to comply with the reference levels as established in accordance with this Article and with Article 12, the amount of the capacity withdrawn shall be automatically deducted from the reference levels. The reference levels thus obtained shall become the new reference levels. 5. On fishing vessels of five years of age or more, modernisation over the main deck to improve safety on board, working conditions, hygiene and product quality may increase the tonnage of the vessel, provided that such modernisation does not increase the ability of the vessel to catch fish. The reference levels, as established in accordance with this Article and with Article 12, shall be adapted accordingly. The corresponding capacity need not be taken into account for the establishment of the balance of entries and exits by Member States under Article 13. 6. From 1 January 2007, in order to improve safety on board, working conditions, hygiene and product quality, Member States shall be entitled to re-allocate to new or existing vessels the following capacity in terms of tonnage, provided such capacity does not increase the ability of the vessels to catch fish: — 4 % of the average annual tonnage withdrawn with public aid between 1 January 2003 and 31 December 2006 for the Member States that were part of the Community on 1 January 2003 and 4 % of the annual average tonnage withdrawn with public aid between 1 May 2004 and 31 December 2006 for the Member States that acceded to the Community on 1 May 2004, and — 4 % of the tonnage withdrawn from the fleet with public aid as from 1 January 2007. The reference levels, as established in accordance with this Article and Article 12 shall be adapted accordingly. The corresponding capacity need not be taken into account for the establishment of the balance of entries and exits by Member States under Article 13. Member States shall give priority to small scale coastal fisheries, within the meaning of Article 26 of Council Regulation (EC) No 1198/2006 (5), when allocating fishing capacity under this paragraph. 7. Implementing rules for the application of this Article may be adopted in accordance with the procedure laid down in Article 30(2).