Proposal for a Council Regulation (EC) establishing agrimonetary arrangements for the euro (98/C 224/06) COM(1998) 367 final - 98/0214(CNS)

(Submitted by the Commission on 11 June 1998)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European 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,

Having regard to the opinion of the Economic and Social Committee,

Having regard to the opinion of the Monetary Committee,

Whereas Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro (1) provides that from 1 January 1999 the currency of the Member States participating in economic and monetary union shall be the euro; whereas the agrimonetary arrangements provided for on the basis of:

- Council Regulation (ECC) No 3813/92 of 28 December 1992 on the unit of account and the conversion rates to be applied for the purposes of the common agricultural policy (2)

- Council Regulation (EC) No 724/97 of 22 April 1997 determining measures and compensation relating to appreciable revaluations that affect farm incomes (3)

essentially consist in a system of specific agricultural conversion rates different from the actual exchange rates of the currencies; whereas such a system is incompatible with the introduction of the euro; whereas agrimonetary arrangements adapted to the new situation should therefore be established;

Whereas in the present monetary situation, where the gaps between exchange rates and agricultural conversion rates are moderate, it is possible to establish a simpler agrimonetary system closer to the actual monetary situation; whereas consequently the conversion into the national currency of the non-participating Member States' prices and amounts fixed in euros in legal instruments relating to the common agricultural policy may be done with the exchange rate of the euro in those currencies; whereas such a provision has the further advantage of considerably simplifying the management of the common agricultural policy;

Whereas the rate of exchange of the euro into national currency may vary in the course of the period during which an operation is carried out; whereas the rate applicable to the amounts concerned must be determined; whereas, in general, account must be taken of the event through which the economic objective of the operation is attained; whereas the rate of exchange applied should be that of the date on which this event occurs; whereas it may be necessary to specify this operative event or to waive its application, observing certain criteria and in particular the rapidity with which currency movements are passed on;

Whereas, in cases of major currency revaluation with potential effects on prices and amounts other than direct aid, farm incomes may in certain conditions be reduced; whereas as a consequence provision could justifiably be made for temporary, degressive aid to offset the effects of revaluations, and keep pace with the development of agricultural prices in a manner compatible with the rules of the general economy;

Whereas specific rules adapted to the type of aid are required to offset the effects of major currency revaluations on the level of certain direct aids in national currency;

Whereas the arrangements for financing compensatory aid must foresee a financial contribution from the European Union and the Member State;

Whereas in the longer term the agricultural sector must adjust, like other sectors of the economy, to the monetary reality; whereas consequently a cut-off date should be set for the compensation arrangements; the setting of such a cut-off date is part of the budgetary discipline.

Whereas reason dictates that special rules be laid down for dealing with exceptional situations arising either within the European Union or on the world market and requiring immediate action to ensure that the arrangements established under the common agricultural policy operate effectively;

Whereas a Member State that is not participating in economic and monetary union must have the option of making payments for expenditure resulting from legal instruments relating to the common agricultural policy in euros rather than in national currency; whereas steps should be taken to ensure that this option does not lead to any unjustified advantage for parties making or receiving payment;

Whereas provision should be made for the possibility of interim measures to facilitate the introduction of the new agrimonetary arrangements,

HAS ADOPTED THIS REGULATION:

Article 1

For the purposes of this Regulation:

(a) 'legal instruments relating to the common agricultural policy` means:

- legal instruments based directly or indirectly on Article 43 of the Treaty, with the exception of the Common Customs Tariff and other legal instruments of customs legislation applicable to both agricultural and industrial products,

- legal instruments applicable to goods processed from agricultural products and subject to specific trade arrangements;

(b) 'participating Member States` means: the Member States which have adopted the single currency in accordance with the Treaty;

(c) 'non-participating Member States` means: the Member States which have not adopted the single currency;

(d) 'national currencies` means: the national currencies of the non-participating Member States and of third countries;

(e) 'exchange rate` means: the currency market exchange rate between the euro and national currency published in the Official Journal of the European Communities;

(f) 'appreciable revaluation` means: a situation where the annual average exchange rate is below a threshold defined as the lowest average annual exchange rate of the preceding three years and the exchange rate of 1st January 1999;

(g) 'appreciable part of a revaluation` means: the percentage by which the annual average falls short of the threshold referred to in point (f).

Article 2

1. Prices and amounts fixed in legal instruments relating to the common agricultural policy shall be expressed in euros.

2. They shall be granted or collected in euros in the participating Member States. In the other Member States, they shall be converted into their national currency by means of an exchange rate, and, without prejudice to Article 8, granted or collected in national currency.

3. However, for amounts relating to imports and for export taxes, fixed in euros by a legal instrument relating to the common agricultural policy and applicable by the Member States in national currency, the conversion rate shall be specifically equal to the rate applicable pursuant to Article 18(1) of Regulation (EEC) No 2913/92 (4).

Article 3

1. The operative event for the exchange rate shall be:

- the completion of customs import or export formalities in the case of amounts collected or granted in trade with third countries,

- the event whereby the economic objective of the operation is attained in all other cases.

2. Where the operative event as referred to in paragraph 1 has to be specified or cannot be taken into account for reasons peculiar to the market organisation or the amount in question, a specific operative event shall be determined in accordance with the procedure laid down in Article 9, taking account of the following criteria:

(a) actual applicability as soon as possible of adjustments to the exchange rate;

(b) similarity of the operative events for analogous operations carried out under different market organisations;

(c) coherence in the operative events for the various prices and amounts relating to a single market organisation;

(d) practicability and effectiveness of checks on the application of suitable exchange rates.

Article 4

1. For prices and amounts other than those referred to in Article 5, the Member State may grant compensatory aid to farmers in cases of appreciable revaluation. The payments shall be made in three successive tranches lasting twelve months each, starting in March following the month of the appreciable revaluation.

These compensatory payments shall not take the form of aid linked to production, other than production during a stipulated, prior period. They shall not favour any particular type of production or be dependent on production subsequent to the period stipulated.

2. The maximum amount of the first tranche of compensatory aid shall be established, for the Member State concerned as a whole, in accordance with the procedure laid down in Article 9, by multiplying the appreciable part of the revaluation by the flat-rate income loss determined in accordance with paragraphs 1 to 3 of the Annex.

3. The maximum amount may be reduced or cancelled if necessary, taking account of the market situation observed during the year up to the time of the appreciable revaluation.

4. No aid shall be granted for the portion of the amount calculated in accordance with paragraph 2 that does not exceed appreciable revaluation of 2,6 %.

5. The amounts paid out under the second and third tranches shall each be reduced, vis-à-vis the level of the previous tranche, by at least a third of the amount paid out in the first tranche.

The amounts paid out under the second and third tranches of compensatory aid shall be reduced or cancelled as a function of the effect on incomes of the development of exchange rates recorded until the beginning of the month preceding the first month of the relevant tranche, and taking account of the market situation observed over the same period.

6. The market situation shall be taken into account pursuant to paragraph 3 and the second subparagraph of paragraph 5 in accordance with the following criteria:

The amount of one or more tranches in one or more sectors may be reduced when it has been observed that:

(a) over the year during which an appreciable revaluation occurs or over the period between the beginning of the preceding tranche and the beginning of the month preceding the first month of the tranche concerned, the market price for the Member State concerned was on average equal to or higher than the average market prices in the Member States whose currencies had not been appreciably revalued during the same period. Market prices shall be compared using an index of base 100 for market prices in national currency or in euros.

or

(b) the relation between the dates of operative events in the sector concerned and the date of the appreciable revaluation is such that there is no justification for concluding that the revaluation had an impact throughout the period considered.

In cases where point (b) is applied, the reduction of at least one third referred to in Article 4(5) shall be calculated on the basis of the amount of the first tranche that would have been granted if point (b) had not been applied.

These criteria may be amended, in the light of experience, in accordance with the procedure laid down in Article 9.

Article 5

1. In cases where the exchange rate applicable on the date of the operative event for:

- flat-rate aid calculated per hectare or per livestock unit,

or

- a compensatory premium per sheep or goat,

or

- amounts of a structural or environmental nature

is below that applicable previously, the Member State concerned may make compensatory payments to farmers in three successive tranches lasting twelve months each, starting on the date of the operative event.

Compensatory aid must be granted in the form of an addition to the aid, premiums and amounts referred to in the first subparagraph.

2. The maximum amount of the first tranche of compensatory aid shall be established, for the Member State concerned as a whole, in accordance with the procedure laid down in Article 9, in accordance with paragraph 4 of Annex. However no payment shall be made when this amount corresponds to a revaluation of less than 0,5 %.

3. The amounts paid out under the second and third tranches shall each be reduced, vis-à-vis the level of the previous tranche, by at least a third of the amount paid out in the first tranche.

4. The amounts referred to in paragraph 3 shall be reduced or cancelled if necessary as a function of the effect on income of the development of the exchange rates recorded on the first day of the second and third tranches.

5. The provisions of this Article shall not apply to amounts to which a rate lower than the new rate was applicable during the twenty-four months immediately before the new rate took effect.

Article 6

1. The Community's contribution to financing shall be:

- 50 % of the amounts actually paid for the compensatory aid referred to in Article 4;

- 50 % of the amounts that may be granted for the compensatory aid referred to in Article 5. However, the Member State may withdraw from national participation in financing the aid.

2. For the purposes of the financing of the common agricultural policy, this contribution shall be deemed to be part of intervention intended to stabilise the agricultural markets.

Article 7

1. Where exceptional monetary practices are liable to jeopardise the application of the legal instruments relating to the common agricultural policy, the Commission shall decide upon suitable safeguard measures, which may, where necessary, derogate from the existing legal instruments relating to the common agricultural policy.

The Council and the Member States shall be notified forthwith of the measures referred to in the first subparagraph.

Any Member State may refer the Commission's decision to the Council during the three working days following that on which they are notified of safeguard measures.

The Council, acting by a qualified majority, may take a different decision within one month of notification of the measures in question.

2. Where exceptional monetary practices are liable to jeopardise the application of the legal instruments relating to the common agricultural policy, the Commission may, by virtue of the powers conferred on it by these instruments in each individual case derogate from this Regulation, in particular in the following cases:

- where a country uses abnormal exchange techniques such as multiple exchange rates or operates barter agreements,

- where countries have currencies which are not quoted on official foreign exchange markets or where the trend in such currencies is likely to create distortion in trade.

Article 8

1. If a non-participating Member State decides to pay the expenditure resulting from legal instruments relating to the common agricultural policy in euros rather than in its national currency, the Member State shall take the requisite measures to ensure:

- that amounts granted in euros are in no case larger when converted into national currency at the rate obtaining on the date of payment than the amount that would have been paid in national currency pursuant to Articles 2 and 3;

- that amounts granted in euros are in no case larger when converted into national currency at the rate obtaining on the date of payment than the amount that would have been collected in national currency pursuant to Articles 2 and 3.

2. The Member State shall notify the Commission of the measures planned before they come into effect. The measures may not take effect until the Commission has notified its agreement thereto.

Article 9

Detailed rules for the application of this Regulation shall be adopted in accordance with the procedure laid down in:

(a) Article 23 of Council Regulation (EEC) No 1766/92 (5) of 30 June 1992 on the common organisation of the market in cereals

or

(b) the corresponding articles of the other regulations on the common organisation of the markets in agricultural or fishery products,

or

(c) the corresponding articles of other Community provisions introducing a similar procedure.

Article 10

1. Where transitional measures prove necessary to facilitate the initial application of this Regulation, such measures shall be adopted by the Commission in accordance with the procedure laid down in Article 9 and shall remain applicable for the period strictly necessary to facilitate the introduction of the new arrangements.

2. Regulations (EEC) No 3813/92 and (EEC) No 724/97 are hereby repealed.

3. References to the agricultural conversion rate in legal instruments relating to the common agricultural policy shall be taken from 1 January 1999 to refer to the conversion rate irrevocably fixed by the Council in accordance with Article 109l(4) of the Treaty for national currency units, and the rate referred to in Article 2(2) and, where applicable, Article 2(3) of the present regulation for national currencies.

References to the representative market rate of the ecu in legal instruments relating to the common agricultural policy shall be taken from 1 January 1999 to refer to the rate of exchange of the euro.

References to the compensatory aid provided for in Regulation (EEC) No 3813/92 and Regulation (EC) No 724/97 shall be deemed to be references to Articles 4, 5 and 6 of this Regulation.

References to the operative events provided for in Article 6 of Regulation (EEC) No 3813/92 shall be deemed to be references to Article 3 of this Regulation.

Article 11

This Regulation shall enter into force on the seventh day following its publication in the Official Journal of the European Communities.

It shall apply from 1 January 1999.

Articles 4, 5 and 6 shall only apply to appreciable revaluations having occurred before 1 January 2002.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

(1) OJ L 139, 11.5.1998, p. 1.

(2) OJ L 387, 31.12.1992, p. 1. Last amended by Regulation (EC) No 150/95 (OJ L 22, 31.1.1995, p. 1).

(3) OJ L 108, 25.4.1997, p. 9. Amended by Regulation (EC) No 942/98 (OJ L 132, 6.5.1998, p. 1).

(4) OJ L 302, 19.10.1992, p. 1.

(5) OJ L 181, 1.7.1992, p. 21.

ANNEX

1. The flat-rate income loss referred to in Article 4(2) shall be equal to:

(a) the sum of 1 %:

- of final agricultural production of cereals including rice, sugar beet, milk and milk products and beef and veal,

and

- of the value of the quantities of products supplied under a contract imposing, in accordance with Community rules, a minimum price to the producer, for products not referred to in the first indent,

and

- of aid or premiums paid to farmers, with the exception of those referred to in Article 5;

(b) after subtraction of:

- 0,5 % of the value of intermediate consumption in the form of animal feed,

and

- the impact on tax of the reduction in gross value added at market prices resulting from the operations concerning point (a) and the preceding indent,

and

- a deduction corresponding to 1 % of forecast EAGGF expenditure on the following items:

- the full amount of flat-rate per hectare aid,

- half the amount of structural or environmental aid,

and

- 130 % of sheepmeat and goatmeat premiums.

2. The amounts referred to in the second and third indents of paragraph 1(a) shall not be taken into account when their sum is less than 0,01 % of the final agricultural production of the relevant Member State in the product sector concerned.

For the purposes of this Regulation, the product sectors correspond to the statistical aggregates identified in the economic accounts for agriculture, drawn up by Eurostat, or to groups of those aggregates, as listed below:

1. Cereals and rice

2. Sugar beet

3. Milk and milk products

4. Beef/veal

5. Oilseeds and olive oil

6. Fresh fruit and vegetables

7. Potatoes

8. Wines and musts

9. Flowers and nursery plants

10. Pigmeat

11. Sheepmeat and goatmeat

12. Eggs and poultry

13. Other

3. The flat-rate income loss shall be determined on the basis of information relating to:

(a) the economic accounts for agriculture available from Eurostat for the last calendar year ending before the date of appreciable revaluation, for the first indent of paragraph 1(a) and the first and second indents of paragraph 1(b);

(b) the budget out-turn, or, failing that, the budgets or draft budgets or preliminary draft budgets relating to:

- income for the year referred to in (a), for the second and third indents of paragraph 1(a),

- the budget year beginning during the marketing year for cereals in which the appreciable revaluation occurred, for the third indent of paragraph 1(b).

For the purposes of applying paragraph 2 in marginal cases, consideration of the information referred to in point (a) above shall also take account of the relevant figures for the preceding two years.

4. The aid referred to in Article 5(1) shall be calculated as a function of the data referred to in the first indent of point 3(b) of the present annex.