COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(93) 389 final 
Brussels, 28 July 1993 
Proposal for a 
COUNCIL REGULATION (EEC) 
amending Regulation (EEC) No 1765/92 establishing a support 
system for producers of certain arable crops 
(presented by the Commission) 

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EXPLANATORY MEMORANDUM 
1. As a result of a complaint by the United States, a GATT panel found 
that the Community's system of granting aid for the processing of 
oilseeds did not conform to GATT provisions and had impaired the 
valve of the tariff concession (zero duty) which the Community had 
accorded the United States in If«2. 
2. A* a reeult of the decision of the GATT panel, the Commmity amendée1 
its syetem of aids to conform to the GATT prévisions. Although the 
United states acknowledged that the amended system now complied with 
CATT provisions, it was of the opinion that the 1962 concession was 
still affected. Therefore, the USA requested that the members of the 
GATT panel be reconvened. The reconvened Panel Members found that 
there was still a reduction in the value of the concession 
(impairment) and asked the Community to act rapidly to eliminate it: 
either by amending the system of internal aids, or by renegotiating 
the tariff concession on the basis of the provisions of 
Article XXVIII of the GATT. The reconvened Panel Members added "In 
the event that the dispute is not resolved expeditiously in either of 
these ways, the Contracting Parties should, if requested by the 
United states, consider further action under Article XXIII.2 of the 
General Agreement." 
3. The community chose the second approach proposed by the reconvened 
members of the GATT panel, sought and obtained authorization from the 
Contracting Parties to initiate negotiations under paragraph 4 of 
Article XXVIII of the GATT. Negotiations and consultations then got 
under way with the United states and nine other GATT contracting 
parties (Argentina, Brazil, canada, Uruguay, Poland, Sweden, India, 
Pakistan and Hungary). 
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4. In the negotiations the United States estimated that the trade losses 
caused by the reduction in the tariff concessions for oilseeds 
amounted to us$ 2 billion, US$ 1 billion of which was lost by the 
United states itself. The other contracting parties in the 
negotiations also assessed the trade losses overall at US$ 2 billion. 
These figures have been contested and rejected by the Community. 
5. As the negotiations were making little headway, the United states 
began a procedure for unilateral retaliatory measures in early 
November 1992. These measures initially involved the fixing of 
countervailing duties at 100% for imports of several agricultural 
products of Community origin with a commercial value of some 
US$ 300 million. They also involved the possibility of extending the 
range of products affected up to a maximum value of US$ 1 billion. 
The negotiations between the delegations of the Commission of the 
European Communities and the United States, conducted at ministerial 
level, resulted in an agreement which the two delegations undertook 
to submit to their respective authorities. The text of the agreement 
is set out in the "Memorandum of Understanding on oilseeds" of 
3 December 1992. 
6. As a result of this agreement, the United States terminated its 
actions against the Community ("Termination of Section 301 
Investigation and Action regarding the European Community's oilseeds 
Subsidy Regime") and cancelled the procedure relating to the 
application of retaliatory measures against the community. However, 
the case is still being monitored under Section 301 of the Trade Act 
("Notice of Monitoring pursuant to Section 306 of the Trade Act"), 
which allows the United States to take action and introduce 
retaliatory measures if it considers this necessary. 
7. Negotiations and consultations under Article XXVIII.4 of the GATT 
with nine other GATT contracting parties have not yet been finalized. 
The terms of the conclusion of these negotiations shall be dealt with 
in a separate proposal to the Council. 
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To ensure that the agreement: concluded with the United States is 
implemented in due time, so that the deadlines laid down therein can 
be met, the Commission proposed to the Council that the agreement on 
oilseeds concluded between the United States and the European 
Economic Community be formally approved on the basis of the 
Mémorandum of Understanding on Oilseeds of 3 December 1992. The 
Council gave its formal approval when meeting on 8 June 1993. 
9. This proposal represents the next step in the legislative process, 
tfce rainer «edification of ceancil Reflation (tBC) No 1765/92. 
19. Tt» proposal tables the necessary «stendmsnta to Regulation (EEC) 
He 176S/92 required to implsstent the )l—loransfrm of Understanding on 
oilseeds (see Annex 1), i.e.: 
to exclude from the benefits of the regime, the cultivation of 
'confectionery sunflowerseed' with effect from sowings for 
harvest in 1994, (the technical implementation to be managed by 
the Commission via the Management Committee procedure); 
to introduce a separate base area system - to be known as the 
Maximum Guaranteed Area - for producers benefiting from the crop 
specific oilseeds payments system which shall respect the 
principles set out in the Memorandum of understanding on oilseeds 
(the Commission shall manage the system via the Management 
Committee procedure). 
11. The proposal does not include an amendment to establish the 
corrective action within the framework of the CAP reform that would 
be required should the by-product made available from oilseeds grown 
for non-food use on set-aside land exceed 1 million tonnes of soya 
bean meal equivalents annually. The provisions of existing 
legislation allow the Community to monitor the development of this 
production. The Commission will propose the necessary amendment 
should production rise to such a level that it appears that the 
1 millon tonnes of soya bean meal equivalent threshold is likely to 
be reached. 
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12. Following the adoption by the Council of the Commission proposal to 
reform the support arrangements for the producers of arable crops, in 
June 1992, the Commission defined its estimates of the areas of 
oilseeds likely to benefit from crop specific payments. The 
Commission estimated in 1992 that in the medium term sowings would be 
no more than the Community figures, subsequently approved, in the 
Memorandum of Understanding with the USA. 
13. The general tenor of these forecasts has been confirmed by current 
estimates of sowings for harvest in 1993. 
14. However, these same estimates show disparate developments in the 
Member States. In consequence, to subdivide the Community's Maximum 
Guaranteed Area by Member state (or region) would not only go beyond 
that which is required by the Memorandum of Understanding, but would 
also be unnecessarily restrictive. For example, one may cite the 
case of Greece where only a few thousand hectares of oilseeds are 
sown. Climatic variations and in particular the availability of water 
provide significant year to year variations in sowings. To isolate 
and regulate separately such a small part of the Community's 
production would involve complications disproportionate to the 
significance of production. 
15. It might transpire that the flexibility accorded to Member states 
when establishing their regionalization plans (e.g. choice of cereals 
or oilseeds yields to calculate the compensatory payments) results in 
an unexpected increase in the sowing of oilseeds eligible for crop 
specific subsidies. If such an increase was to be of such a scale 
that the attainment of the objectives of the reform in other Member 
states and in the Community were called into question, it would be 
appropriate that adjustments in aid levels should focus on those 
Member States whose regionalization plans were at the root of the 
problem. 
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The Commission proposes that if it should be necessary to adjust the 
oilseeds aids for 1994/95, 1995/96 and 1996/97 due to the application 
of the Memorandum of Understanding, if the excess is not greater than 
5% the application should be community wide. For an excess of greater 
that this percentage, the application should focus on those Member 
States where an unexpected increase occurs. After completing a 
transitional period, this mechanism may no longer be needed. 
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COUNCIL 
COUNCIL DECISION 
of S June 1993 
concerning the conclusion of a Memorandum of. understanding on certnin oil 
between the European Economic Community sod die United States of 
America within the framework of die GATT 
(93/355/EEQ 
THE COUNCIL OF THE EUROPEAN COMMUNITIES. 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 113 
thereof. 
Having regard to the recommendation from die Commis­
sion, 
Whereas a GATT panel found that a consequence of die 
Community's support scheme for oil seeds was an impair­
ment of the value of the tariff concession which the 
Community had granted to the United States in 1962 ; 
Whereas the GATT panel consequently recommended 
that the Community should act quickly to eliminate this 
impairment; 
Whereas a mutually satisfactory agreement was reached in 
the negotiations initiated with the United States of 
America and took the form of a Memorandum of Under­
standing; 
Whereas this Memorandum of Understanding should be 
quickly given effect, so that the deadlines contained 
therein can be met, America on oil seeds in the framework of the General 
Agreement on Tariffs and Trade is hereby approved on 
behalf of the European Economic Community. 
The text of the said Memorandum is attached to this 
Article 2 
The President of the Council is hereby authorised to 
designate the person empowcied to sign the Memo­
randum of Understanding in order to bind the Com­
munity. 
This Decision shall be published in the Official Journal 
of the European Communities. 
HAS DECIDED AS FOLLOWS: Done at Luxembourg, 8 June 1993. 
Article 1 
The Memorandum of Understanding between the Euro­
pean Economic Community and the United States of For the Council 
The President 
N. HELVBG PETERSEN 
8 -
MEMORANDUM OP UNDERSTANDING ON OIL SEBDS 
1. European Community (Community) legislation for producers of rape and colza seeds, 
sunflower seeds, and soya beans is set out in Council Régulation (EBQ>No 1765/92 of 30 
June 1992. 
2. The Community shall implement the following additional adjustments to the benefits 
accruing to European producers under this programme in respect of crop specific oil seeds 
payments. 
3. (a) The Community shall not engage in any market support expenditure in respect of rape 
and colza seeds, sunflower seeds and soya beans except in accordance with the terms and 
conditions provided pursuant to the Regulation specified in paragraph 1. 
(b) The Community shall exclude from the benefits of the regime, the cultivation of 
'confectionery sunflower seed' with effect from sowings for harvest in 1994. 
4. The Community shall introduce a separate base area (SBA) for producers benefiting from the 
crop specific oil seeds payments system which shall respect the following principles: 
— progressive implementation to affect those crops planted for harvest in 1994 and sub­
sequent years, 
— in recognition of the Treaties of Accession, full implementation for Spain and Portugal 
will commence in 1995/96. 
5. The SBA system shall have the following components : 
— a Community oil seed base area shall be established for which crop specific oil seeds 
payments are made (the figures for EC-12 are set out in the Annex), 
— for a particular marketing year the applicable EC-12 oil seeds base area shall be reduced 
to reflect the annual set aside rate for arable crops fixed by the Council. In no year, 
however, shall the reduction be less than 10 % of the base. 
6. In respect of any marketing year (without prejudice to the provisions cf the corrective 
mechanism specified in Article 5 (1) (d) of Regulation (EEC) No 1765/92), crop specific oil 
seeds payments shall be subject to die following additional discipline: 
— for every 1 % of area planted benefiting from crop specific oil seeds payments in excess 
of the Community oil seed base area (after reduction in conformity with paragraph 5) the 
compensatory payments to such oil seed producers shall be reduced by 1 %, 
— any such decreases in compensatory payments applied to area planted above the SBA 
shall be applied in the same marketing year, 
— in addition, the percentage decrease in the adjusted compensatory payment shall be 
carried forward to the following marketing year, 
— however, in any year in which there is no decrease required in the compensatory 
payment (ix. area planted is equal to or below the SBA (after reduction in conformity 
with paragraph 5)) the compensatory payment in that year may return to the level of the 
base reference amount, 
— subsequent adjustments in the compensatory payment shall be applied in the manner 
described above. 
7. Should the by-products made available as a result of the cultivation of oil seeds on land set 
aside for the manufacture within the Community of products not primarily intended for 
human or animal consumption exceed one million metric tonnes annually expressed in soya 
bean meal equivalents, the Community shall take appropriate corrective action within the 
framework of the CAP reform. 
8. T~? Cj?aKi::;>ity ^hr^ gran* a (. .riff-late que'/ *oc imports of 500 G&O r- ":«";c t'--<.'i*z of ccm 
into Portugal. be$:<uiu)g .?;>. *V - IS3Z/94 nuirkc*'-'> y2'..\ The within que.;. tariu' ids shs-.!l be 
bound at Die*?, levels so £3 to ensure the* ihe quota sha!! be filkvl.. 
9. The Cjaasauasiy chs!i inctipoi; ... ±i c:,ssm?.^.*w^ -:t forth is psr^rr- -; I to C h-tein !?*. 
the Community schedule ck" <Ja;*icf,Jc rapport Tommiirneats to be ,.::.k„:..:^ to tfos Uruguay 
Round Protocol to the GATT. 
10. The United States agrees to fosego any fut&cr compensation ckim for impairment cf the 
• bindings. If cither party considers, this Agreement lias been bieachec, the Parties agree to 
undertake binding arbitration in the GATT on the issues of breach, damage'&nd remedy. 
3 December 1992 
ANNEX 
EC-12 oil seed separate base area system (') 
(Soya beans, rape and colza seeds and sunflower seeds) 
Member State/oi 
SPAIN 
Sunflower seed 
PORTUGAL 
Sunflower seed 
EC-12 
Other 1 teed 
Total 1294/95 
1411000 
122000 
3 966000 Reference yearO 
199S/9& 
and subsequent years (*) 
Hectares 
— 
~ 
5128 000 
(') Figures to be reduced to reflect the annual est aside fare for arable oops. 
f) The term 1994/5J refers to die CoouEnmity marketing y*er, Is. 60 seeds (bath winter and tpficg nm) for harvest in 
1»4. 
0 It it understood that, should the membenbip of tfes Community be expanded, this Agreement will be amended to reflect 
an increase in die tcparate bate area ia an amount no snore than die swage tad el production area cfthe seceding 
niember in the three years immediately preceding such accettion. - y -
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Proposal for a 
COUNCIL REGULATION (EEC) 
amending Regulation (EEC) No 1765/92 establishing a support 
system for producers of certain arable crops 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particular Articles 42 and 43 thereof, 
Having regard to the proposal from the commission^), 
Having regard to the opinion of the European Parliament(2), 
whereas the European Economic Community concluded an agreement, in the 
framework of the General Agreement on Tariffs and Trade, with the United 
states of America, concerning certain oilseeds; whereas the agreement took 
the form of a Memorandum of Understanding or; oilseeds approved by Council 
Decision 93/355/EEC<3); whereas it is necessary to modify Council 
Regulation (EEC) NO 1765/92<4), as last amended Regulation (EEC) 
No 1552/93(5) in order to give effect to the terms o£ at Memorandum of 
Understanding; 
Whereas Regulation (EEC) No 1765/92 could lead to an increas in sowings of 
soya beans, rape seed and colza seed and sunflower seed, so that 
adjustments should be made to the benefits accruing to producers under that 
Regulation in respect of crop-specific oilseed payments; whereas Maximum 
Guaranteed Areas should be established for those crops; whereas in the 
event of an increase in sowings of those crops above the level of the 
(1) OJ No 
(2) OJ No 
(3) OJ No L 147, 18.6.1993, p. 25. 
(4) OJ No L 181, 1.7.1992, p. 12. 
(5) OJ No L 154, 25.6.1993, p. 19. 
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Maximum Guaranteed Areas, the compensatory paymer-ts should be reduced; 
whereas the reduction in the compensatory payments should be such as to 
discourage a level of sowings in excess of the Maximum Guaranteed Areas; 
whereas the cultivation of confectionery sunflower seed should be excluded 
from the benefits of such support with effect from sowings for harvest in 
1994, 
HAS ADOPTED THIS REGULATION: 
Article 1 
Regulation (EEC) No 1765/92 is hereby amended as follows: 
1. The following subparagraphs are added at the end of Article 5(1): 
"(e) From the 1994/95 marketing year, Maximum Guaranteed Areas 
(MGA) shall be established for the crop-specific oilseed 
payments. They shall be equal in size to the areas of land 
set out in Annex IV, reduced by the rate of rotational set-
aside applicable for that marketing year, or by 10% if that 
rate is less than 10%. If those Maximum Guaranteed Areas are 
exceeded, the Commission shall reduce the final regional 
reference amounts for oilseeds in accordance with the 
provisions of subparagraphs (f) and (g). 
(f) If the area of oilseeds already determined as eligible for 
compensatory payments in any year exceeds such Maximum 
Guaranteed Areas, the Commission shall reduce, by 1% for each 
percentage point by which the Maximum Guaranteed Area is 
exceeded, the relevant final regional reference amounts for 
that year. With effect from the 1994/95 marketing year, if 
the Maximum Guaranteed Area is exceeded by more than a 
threshold percentage special rules shall apply. Up to the 
threshold percentage, the reduction of the final regional 
reference amounts shall be uniform in all Member States. 
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Beyond the threshold percentage, appropriate additional 
reductions shall apply in those Member States which have 
exceeded the average of their sowings for harvest in 1989, 
1990 and 1991, reduced by the rate referred to in 
subparagraph (e). The Commission shall, in accordance with 
the procedure laid down in Article 38 of Regulation 
136/66/EEC, establish the size and distribution of the 
appropriate reductions to be applied and shall, in 
particular, ensure that the weighted average reduction for 
the Community as a whole is equal to the percentage by which 
the Maximum Guaranteed Area has been exceeded. 
(g) The threshold percentage provided for in subparagraph (f) 
shall be 5% for the marketing years 1994/95, 1995/96 and 
1996/97. By 31 December 1996 the Commission shall present a 
report to the Council on the application of this provision, 
accompanied if appropriate by a proposal to maintain this 
mechanism for a further period. 
(h) If the compensatory payment is reduced in accordance with the 
provisions of subparagraphs (f) and (g), the Commission shall 
reduce the relevant final regional reference amounts for the 
following marketing year by the same percentage unless the 
Maximum Guaranteed Area is not exceeded in that year, in 
which case the Commission may determine that such a reduction 
shall not apply." 
2. The following paragraph is added at the end of Article 5: 
"4. Producers of confectionery sunflower seed, sown for harvest 
after 1 July 1994, shall be excluded from the benefit of the 
support provided for under the terms of this Article." 
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3. The following indent is added at the end of the first paragraph of 
Article 12: 
"- those relating to compliance with the Memorandum of Understanding 
on Oilseeds approved by the Council Decision 93/355/EEC* of 
8 June 1993 and in particular to the provisions in respect of the 
cultivation of oilseeds on set-aside land. 
rOJ No L 147, 18.6.1993, p. 25." 
4. The following annex shall be added to the Regulation: 
"Annex IV 
Areas to be taken into account for the calculation of oilseed 
Maximum Guaranteed Areas 
Member State/Oilseed 1994/1995 1995/96 and subsequent 
Area in ha. years 
Spain, sunflower 1 411 000 -
Portugal, sunflower 122 000 -
EC 12 Other 3 966 000 -
Total - 5 128 000 
Article 2 
This Regulation shall enter force on the seventh day following that of its 
publication in the official Journal of the European communities. 
It shall apply from 1 December 1993. 
This Regulation shall be binding in its entirety and shall be directly 
applicable in all Member states. 
Done at Brussels, For the Council 

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COM(93) 389 final 
DOCUMENTS 
EN 03 
Catalogue number : CB-CO-93-438-EN-C 
ISBN 92-77-58794-6 
Office for Official Publications of the European Communities 
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