COMMISSION STAFF WORKING PAPER - REPORT ON THE RECOVERY OF EXPORT REFUNDS FOR LIVE ANIMALS IN 2002

1. Introduction

In their joint declaration of 22 November 2001 on the recovery of export refunds for beef and veal, Parliament and the Council requested the Commission to submit to the budgetary authority by 31 May an annual report on the implementation of and compliance with Community legislation and, in particular, on the recovery of refunds in the event of a failure to comply with Commission Regulation (EC) No 615/98 of 18 March 1998 laying down specific detailed rules of application for the export refund arrangements as regards the welfare of live bovine animals during transport [1]. Parliament and the Council issued another joint declaration along the same lines on 25 November 2002.

[1] OJ L 82, 19.3.1998, p. 19.

The Commission responded to this request by sending to the budgetary authority, in December 2002, an interim report covering part of 2002 and the preceding years (1 September 1998 to 30 June 2002). This new report incorporates information on the application of Regulation (EC) No 615/98 during 2002 as a whole and, in particular, on the refusal and recovery of refunds. In addition, the statistical tables included in the interim report are supplemented by the following data: the amount of refunds paid, the number of export declarations with refunds, the number of animals exported with refunds, and the reasons for refusing and recovering refunds. Following the adoption of the new Regulation (EC) No 639/2003 (see point 4.1), Member States are now required to communicate all this information to the Commission. Furthermore, this report surveys the legislative amendments introduced in the early months of 2003.

2. Commission Regulation (EC) No 615/98 of 18 March 1998 laying down specific detailed rules of application for the export refund arrangements as regards the welfare of live bovine animals during transport

Article 33(9) of Council Regulation (EC) No 1254/1999 of 17 May 1999 on the common organisation of the market in beef and veal [2] subjects the payment of refunds for exports of live animals to compliance with Community legislation concerning animal welfare and, in particular, the protection of animals during transport. Regulation (EC) No 615/98 has laid down specific detailed rules of application for the export refund arrangements in this sector in order to ensure compliance with legislation concerning animal welfare in the framework of export refunds arrangements. Refunds are paid providing the provisions of that Regulation and those of Council Directive 91/628/EEC of 19 November 1991 on the protection of animals during transport [3], as last amended by Directive 95/29/EC [4], are respected during transport to the place where the animals are first unloaded in the third country of final destination.

[2] OJ L 160, 26.6.1999, p. 21.

[3] OJ L 340, 11.12.1991, p. 17.

[4] OJ L 148, 30.6.1995, p. 52.

The Regulation establishes a system of checks and provides for financial consequences for exporters who fail to comply with the provisions on the transport of animals. The checks and the financial consequences relate to the payment of the refund. They apply without prejudice to the checks provided for by Directive 91/628/EEC.

Checks are carried out at three points:

At the point of exit from the Community (Article 2): before the animals leave Community territory, the official veterinarian must check that they and the means of transport are fit for the journey in the light of Directive 91/628/EEC. The veterinarian must also check that provisions have been made for the care of the animals during the journey in accordance with the Directive.

In the third country of transit where the means of transport is changed (Article 4): where the means of transport is changed in a third country of transit, the Member State where the export declaration was accepted must ensure that checks are carried out on the change without prior warning to the exporter or his or her representative. The checks are based on a risk analysis.

In the third country of final destination (Articles 3 and 4): the purpose of these checks is to determine, on the basis of the general condition of the animals leaving the means of transport at the place of the first unloading in the third country of final destination, whether they have been transported in accordance with Directive 91/628/EEC. The checks are carried out where there has been a change of means of transport in a third country of transit or where the veterinarian at the exit point considers them necessary. The Member State where the export declaration was accepted must ensure that checks are carried out without prior warning to the exporter or his or her representative on the basis of a risk analysis (Article 4).

The competent official veterinarian is responsible for checks at the exit point and enters his or her comments on the document that proves the animals have left the Community customs territory, either the T5 control document or the appropriate national document. Checks in third countries are carried out by veterinarians employed by international control and supervisory agencies, approved for this purpose by a Member State or by the Commission, or by an official agency of a Member State. The veterinarians must draw up an inspection report. The T5 control document, or the national document, and the inspection reports are sent to the paying agencies who take them into account when deciding whether to pay refunds, reject applications or, where appropriate, apply penalties.

The financial consequences for exporters who fail to comply with the provisions on the transport of animals are as follows:

Non-payment of the refund (Article 5(3)): the refund is not paid for animals that die during transport or for animals for which the competent authority considers that Directive 91/628/EEC was not complied with. To that end, the competent authority must take account of the documents concerning checks or of any other element concerning compliance with the provisions of the Regulation and the Directive.

Reduction of the refund (Article 5(4)): where the number of animals for which no refund is paid amounts to more than 3% of the total number indicated in the accepted export declaration, provided it is at least two animals, or where it is more than five animals, the refund is further reduced by an amount equal to the amount of refund not paid. Animals for which the exporter proves that death was not the result of non-compliance with the provisions on the protection of animals are not taken into account.

Recovery of refunds paid unduly, including, where appropriate, the reduction referred to in Article 5(4), where it is established after payment of the refund that the provisions on the protection of animals during transport have not been complied with (Article 5(7)).

These financial consequences for the exporter fall within the area of responsibility of the competent authorities of the Member State where the export declaration was accepted.

Where Member States do not correctly apply the provisions on the payment of refunds, financial corrections may be adopted under the clearance of accounts procedure.

It must be stressed that the rates of refund [5] for the export of live animals to which Regulation (EC) No 615/98 applies have decreased greatly since 1995. The rate of refund for the export of breeding animals has fallen from EUR95/100 kg in 1995 to EUR53/100 kg. The rate for slaughter animals has fallen from EUR90/100 kg in 1995 to EUR41/100 kg.

[5] Refund rates are expressed in terms of live weight.

The amounts of refund paid for the export of live animals was EUR92.2 million in 1999* and EUR110.8 million in 2000*. The outbreak of the BSE crisis in November 2000 greatly reduced exports of live animals and consequently the payment of refunds in 2001*, which amounted to only EUR40.5 million.

There was some increase in 2002*: EUR55 730 418.74. The breakdown by Member State is as follows:

Amounts of export refunds for live bovine animal exports paid in 2002* - in EUR

DK // EUR539 768.76

D // EUR18 248 364.96

E // EUR6 353 867.38

F // EUR21 455 871.25

IRL // EUR4 681 772.65

I // EUR532 343.17

NL // EUR1 796 709.18

A // EUR1 998 597.72

S // EUR123 123.67

TOTAL // EUR55 730 418.74

* EAGGF financial year

Belgium, Greece, Luxembourg, Portugal, Finland and the United Kingdom did not pay any refunds for the export of live animals in 2002.

3. Application of Regulation (EC) No 615/98 in 2002

3.1. Information transmitted by the Member States

Since 2000, the Commission has asked Member States to send annual data on the amounts of refund refused or recovered. Tables I and II in the Annex give the figures sent by the Member States prior to 28 February 2003. For 2002, Member States provided the following details:

a) The number of export declarations accepted for live animals and the number of live animals exported with refunds (Table I)

Germany exported the greatest number of animals with refunds in 2002, accounting for 47.4% of the total of 245 763 with 116 562 head. France came next with 72 145 head (29.3%), followed by Ireland with 31 678 head (12.8%). Germany and France combined represent 87,4% of the total number of export declarations accepted (6 635). Ireland is a special case since all the export operations were carried out by large ships and the number of export declarations accepted was accordingly very small (27).

b) The number of export declarations for which payment of the refund was refused in full or in part and the number of animals for which payment of the refund was refused (Table I)

Member States refused to pay the refund in full or in part in the case of 294 xport declarations. The total number of animals for which payment of the refund was refused amounts to 2 047, i.e. 0.83% of the total number of animals exported with refunds. Germany refused to pay the refund for 1 268 head, i.e. 1.08% of the number of animals which it exported with refunds. Austria refused to pay the refund for 272 head (5.3%). In France, payment of the refund was refused for 491 head (0.6%). In Denmark, Ireland, Italy and Sweden, no refunds were refused.

c) The number of export declarations for which the refund was recovered in full or in part and the number of animals for which the refund was recovered, including those for which recovery relates to operations carried out prior to the period concerned (Table I)

Member States recovered refunds in full or in part in the case of 79 export declarations. The total number of animals for which the refund was recovered amounts to 1 869, i.e. 0.76% of the total number of animals exported with refunds. The majority (96.7%) are accounted for by Germany, which recovered refunds for 1 809 head, i.e. 1.5% of the number of animals which it exported with refunds. In Denmark, France, Italy, Austria and Sweden, no refunds were recovered. In the case of France and Austria, no payments were recovered because the authorities in these Member States do not pay refunds in advance: the refund is paid once the competent authority has received all the information relating to the transport.

The total number of export declarations for which the refund was refused or recovered in full or in part amounts to 373, i.e. 5.6% of the total number of export declarations for live bovine animals accepted in 2002.

The total number of bovine animals for which the refund was refused or recovered amounts to 3 916, i.e. 1.6% of the total number of bovine animals exported with refunds in 2002.

d) The reasons for refusal and recovery of refunds for these animals

The Member States communicated the following information to the Commission:

Germany:

Reasons for refusal:

-infringements of transport standards recorded by the police and veterinary services,

-result of the check referred to in Article 4 unsatisfactory [6];

[6] Check carried out by the Member State in which the export declaration was accepted after the animals left the Community on account of a change in the means of transport or at the time of unloading in the third country of final destination without prior warning to the exporter or his or her representative. The consignments to be checked are selected on the basis of a risk analysis.

Reasons for recovery:

-ships failed to comply with the provisions on the transport of live animals.

Spain:

Reasons for refusal:

-animals died during transport (10 animals),

-no AGREX certificate (1 animal);

Reasons for recovery:

-animals died during transport (9 animals).

France:

Reasons for refusal:

-animals died before the point of exit from the EU customs territory,

-absence or inaccuracy of particulars relating to the veterinary check at the exit point on the T5 or national document proving that the animals left the EU customs territory,

-animals not loaded after the check at the exit point,

-animals died during transport.

Ireland:

Reasons for recovery:

-animals died during transport (29 animals).

Pays-Bas:

Reasons for refusal:

-declaration of pure breed incomplete (1 animal),

-wrong product code (4 animals);

Reasons for recovery:

-animals not released for free circulation (9 animals),

-animal returned (1 animal),

-exporter failed to submit a written declaration concerning the number of animals released for free circulation in respect of one animal [7],

[7] The third subparagraph of Article 5(2) requires the exporter to declare in writing the number of live animals which were released for free circulation in the third country of final destination where the refund does not vary according to destination.

-no proof of release for consumption (11 animals);

Austria:

Reasons for refusal:

-check referred to in Article 3 [8] not carried out despite a change in the means of transport in a third country (30 animals),

[8] Check carried out by a control and supervisory agency or by an agency of a Member State at the place of the first unloading in the third country of final destination. It is performed where there has been a change of means of transport in a third country of transit or where the veterinarian at the point of exit from the Community has requested such a check.

-result of the check referred to in Article 3 unsatisfactory (30 animals),

-no gender separation (31 animals),

-animals in poor condition (21 animals),

-maximum duration of transport exceeded (62 animals),

-check referred to in Article 4 prevented by importer (98 animals).

e) The amounts in EUR of refunds refused or recovered, including recovered amounts relating to operations carried out prior to the period concerned (Table II)

Member States refused to pay a total of EUR332 636.86, i.e. 0.6% of the overall amount of refunds paid for the export of bovine animals in 2002 (EUR55 730 418.74). France refused payment of EUR195 707, i.e. 0.9% of the amount which it paid (EUR21 455 871.25). It was followed by Austria, which refused payment of EUR90 092, i.e. 4.5% of the amount which it paid (EUR1 998 597.72). These two Member States do not recover refunds, because they do not pay them in advance. All unpaid amounts are therefore deemed to be refusals.

Refunds recovered by the Member States totalled EUR514 036.86, i.e. 0.9% of the overall amount paid, including an amount of EUR499 650.96 recovered by Germany.

Refunds refused and recovered totalled EUR846 673.72, i.e. 1.5% of the amount of export refunds for bovine animals paid in 2002.

f) The number of export declarations and the amounts concerned for which the recovery procedure is under way (Table II)

Recovery procedures are under way in respect of 61 export declarations in Germany and 4 export declarations in Ireland.

The total amount of refunds in the process of recovery is EUR453 454.64, of which EUR443 770 is accounted for by Germany and EUR9 684.64 by Ireland.

3.2. Clearance of accounts by the Commission

The relevant Commission departments visited the Member States between October 2000 and February 2001 as part of the EAGGF clearance of accounts procedure in order to check the application of Regulation (EC) No 615/98 and the correct use of Community funds as regards the payment of refunds for the export of bovine animals. Visits planned to importer third countries were cancelled following the outbreak of BSE and the suspension of exports.

The Member States are responsible for the application of Regulation (EC) No 615/98 and for the payment of refunds for the export of live animals. The findings of these inspection visits revealed certain shortcomings in the application of the legislation by the competent national authorities.

On the basis of the findings of the inspection visits, the Commission has finished the dialogues provided for in the rules with the Member States mainly concerned and is finalising the EAGGF clearance of accounts procedure.

4. Reinforcement of legislation

4.1. Regulation (EC) No 639/2003

As announced in the Communication from the Commission to the Council and the European Parliament: Mid-term Review of the Common Agricultural Policy [9], the Commission has strengthened existing legislation and, on 9 April 2003, adopted Commission Regulation (EC) No 639/2003 of 9 April 2003 laying down detailed rules pursuant to Council Regulation (EC) No 1254/1999 as regards requirements for the granting of export refunds related to the welfare of live bovine animals during transport [10]. This instrument replaces Regulation (EC) No 615/98 and will apply to export declarations accepted from 1 October 2003.

[9] COM(2002) 394 final

[10] OJ L 93, 10.4.2003, p. 10.

The principal amendments are as follows:

a) Reinforcement of veterinary checks on transport and animals: checks at the place where there is a change of means of transport in a third country and at the place of the first unloading in the third country of final destination are to be compulsory for all transport. These checks are to be carried out by the official agencies of Member States or by control and supervisory agencies approved as from 1 January 2004 in accordance with the new standards applicable to refunds. After each check (at the exit point from the Community customs territory, at any place where there is a change of means of transport in a third country and at the place of the first unloading in the third country of final destination), the veterinarian must complete reports, models of which are annexed to the new Regulation.

b) Reinforcement of penalties: the refund is not paid for animals which gave birth or aborted during transport. It is reduced if the percentage of animals for which no export refund is paid amounts to more than 1 % of the number endorsed in the accepted export declaration, compared with 3% previously. A new penalty is introduced whereby the entire refund is forfeited if the number of animals for which no refund is paid amounts to more than 5% of the number endorsed in the accepted export declaration or 10 animals, but at least 2% of the number endorsed in the accepted export declaration.

c) Communication of information by the Member States: the obligation to submit the information on the application of Regulation (EC) No 615/98 which has been requested from Member States since 2000 and has been used in drawing up this report is now in the new Regulation. In addition, Member States have an opportunity to make any comments which they consider relevant to the application of this new Regulation. Member States must send this information to the Commission by 31 March of each year.

4.2. Regulation (EC) No 118/2003 [11]

[11] OJ L 20, 24.1.2003, p. 3.

A Regulation reducing the number of cases in which a refund may be granted for the export of live bovine animals came into force on 3 February 2003. This Regulation significantly streamlines the arrangements by abolishing 26 instances in which export refunds were paid for categories of live animals with insignificant trade with third countries. Since 3 February, export refunds have no longer been paid for animals intended for slaughter, except in the case of third countries which traditionally import them for cultural and/or religious reasons. In addition, where pure-bred breeding animals are concerned, in order to prevent any abuse, export refunds is limited to female animals of a maximum of 30 months of age. This decision will lead to a substantial reduction in the number of cases qualifying for a refund on the export of live animals.

ANNEX

Table I : Information on export declarations accepted in 2002 and on the animals concerned

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Table II : Information on the amounts of refunds refused or recovered in 2002

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