Proposal for a COUNCIL REGULATION establishing an emergency Community measure for scrapping fishing vessels

(presented by the Commission)

EXPLANATORY MEMORANDUM

One of the key goals of the Common Fisheries Policy has been to aim for a fishing fleet whose capacity is in line with available resources. However, while capacity has been somewhat reduced through the Multi-Annual Guidance Programmes (MAGPs), recent reduction targets have been very modest and increasing fleet efficiency and dwindling stocks have meant that, in some segments, the fleet still remains much too large for the size of stocks it is targeting. One of the constraints of the Community's policy, in dealing with over-capacity has been that the provision of money for the scrapping of vessels has been exclusively via the structural funds. This has not always allowed for sufficient targeting of money for decommissioning of fleets where over-capacity is particularly marked.

This emergency measure is designed to provide additional incentives to the owners of fishing vessels in order to urgently address over-capacity in fisheries where stocks are outside safe biological limits and for which multi-annual management plans have been implemented. These multiannual management plans, such as those already proposed for cod and hake, will result in severe reductions in fishing opportunities for certain segments of the fleet. In the absence of the additional measures which encourage a similar reduction in fleet size the imbalance between fleet and resources could increase significantly.

To address this imbalance, this proposal would allow Member States to offer additional money to vessel owners, severely affected by effort reductions, for scrapping of their vessels. The aim is to encourage more vessel owners to take up the offer and thus help bring the capacity of the fleet in fisheries affected by multiannual management plans in line with the available resources. The time-frame for this measure is limited to 2003-2006 in order to encourage vessel owners to decommission quickly.

In order to provide the extra scrapping premiums this proposal contains two key elements:

- firstly, it provides a derogation from the current FIFG rules to allow a 20% increase in the amount of scrapping money vessel owners will be entitled to if they are severely affected by a multiannual management plan;

- secondly, it provides, for the year 2003, a special incentive that would provide Member States with additional money required to co-finance this extra scrapping, on top of the Community budget already available through FIFG. For the years 2004 to 2006, funds for the additional scrapping requirements as laid down in this Regulation would become available by reprogramming of the Structural Funds, foreseen in their mid-term review [1].

[1] Articles 41 and 44 of Council Regulation 1260/1999 (OJ L 161 of 26.6.1999, p.1

Within current FIFG programming for 2000-2006 the money to be dedicated to decommissioning is EUR663m. The Commission estimates that the additional budget required for decommissioning for those vessels likely to be severely affected by multiannual management plans would amount to EUR271,6m.

2002/0115 (CNS) Proposal for a COUNCIL REGULATION establishing an emergency Community measure for scrapping fishing vessels

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles [36 and] 37 thereof,

Having regard to the proposal from the Commission, [2]

[2] OJ C [...]

Having regard to the opinion of the European Parliament, [3]

[3] OJ C [...]

Whereas:

(1) Council Regulation (EC) No 2792/1999 of 17 December 1999 laying down the detailed rules and arrangements regarding Community structural assistance in the fisheries sector [4] has afforded decommissioning incentives as a way of bringing about a balanced ratio of fleet capacity to available resources in the long term.

[4] OJ L 337 of 30.12.1999, p.10. Regulation as last amended by Regulation (EC) No 179/2002 (OJ L 31, 1.2.2002, p.25).

(2) Several stocks of major importance to Community fisheries are now seriously depleted. The owners of fishing vessels whose fishing opportunities have been severely reduced as a result of a multiannual management plan adopted by the Council under Council Regulation (EC) No [....] [5] [on the conservation and exploitation of fishery resources under the Common Fisheries Policy] should therefore be offered additional decommissioning incentives on top of those already provided for in Council Regulation (EC) No 2792/1999. Sufficient additional funds should be made available to Member States for this purpose.

[5] OJ L [...], [...], p. [...].

(3) Only those vessel owners who are severely affected by a multiannual management plan in Member States that have complied with appropriate fleet capacity reductions under MAGP IV provisions, should be afforded access to additional decommissioning incentives for the scrapping of fishing vessels defined by this Regulation. A reduction of 25% or more in the fishing opportunities of the vessel concerned should be regarded as an objective indicator of severe impact.

(4) The maximum amounts for the scrapping premiums laid down in Article 7 of Regulation (EC) No 2792/1999 are insufficient to enable the higher premiums to be paid.

(5) For conservation reasons the Community measure should be established as soon as possible and should be limited in time to ensure that suitable restructuring of the fleet can proceed without delay.

(6) It is necessary to ensure adequate flexibility of the distribution of the additional scrapping money to allow it to be directed to those Member States most in need, provided that they have fulfilled their obligation resulting from MAGP IV.

(7) The roles of all parties involved in the implementation of the financial measure should be clearly defined and steps taken to guarantee the transparency and equity of the procedures for the management and monitoring of the measure.

(8) Rules on the financial contributions made under this Regulation should be defined by reference to those laid down in Regulation (EC) No 2792/1999.

(9) The measures necessary for the implementation of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [6].

[6] OJ L 184, 17.7.1999, P. 23

(10) In accordance with the principle of proportionality, it is necessary and appropriate for the achievement of the basic objective of this Regulation namely, the conservation and sustainable exploitation of fisheries resources to lay down rules on the scrapping of fishing vessels. This Regulation does not go beyond what is necessary in order to achieve the objectives pursued in accordance with the third paragraph of Article 5 of the Treaty.

HAS ADOPTED THIS REGULATION:

Title I

Subject matter and eligibility

Article 1 Subject matter

An emergency Community measure to assist Member States to achieve additional reductions in fishing effort resulting from Multiannual Management plans adopted by the Council under Regulation (EC) N° [...] [7]is hereby instituted for the period from 2003 to 2006. The measure shall consist of a special incentive to provide Member States with money to co-finance their additional needs to scrap fishing vessels affected by the Multiannual Management plans. The measure shall be available solely for Member States that have achieved both overall and segment MAGP IV targets for their fleet under provisions of Council Decision 97/413/EC [8] and fortheir vessels referred to in Article 2.

[7] see footnote 5

[8] OJ L 175 of 03.07.97 , pp.27 to 32 as revised by Council Decision 2002/70/CE (OJL31 of 1.2.2002 pp. 77 to 79)

Article 2 Eligibility

Any vessel covered by a multiannual management plan adopted by the Council in accordance with Article 5 of Regulation (EC) No [..../..] [on the conservation and sustainable exploitation of fisheries resources under the Common Fisheries Policy] shall be eligible for an increased scrapping premium in accordance with Article 3 of this Regulation provided that:

(a) the vessel is also eligible for scrapping premiums under Regulation (EC) No 2792/1999,

(b) its fishing effort has had to be reduced by 25% or more as a consequence of a multiannual management plan.

Article 3 Maximum amount of increased scrapping premium

Owners of vessels may be granted public aid in respect of eligible vessels on the basis of the scales referred to in Article 7(5)(a) of Regulation (EC) No. 2792/1999, increased by 20%.

Title II

Year 2003

Article 4 Financial contribution from the Community

The Community may grant, for the year 2003, a financial contribution (hereinafter 'financial contribution') for the expenditure incurred by Member States under Article 3. The financial contribution shall be calculated in accordance with the rates set out in Table 3, Group 1 of Annex IV to Regulation (EC)No 2792/1999 [9].

[9] OJ L 337, 30.12.1999, p. 10, amended by Regulation (EC) 1451/2001, OJ L 198, 21.7.2001, p. 9.

Article 5 Forecast programmes of annual expenditure

Member States wishing to receive a financial contribution will present to the Commission by 30 June 2003 a plan of their proposed decommissioning expenditure for the year 2003, under both the 'adjustment of fishing effort' programme under Regulation (EC) No 2792/1999 and this measure. The Commission will make a provisional and indicative allocation by Member State and then proceed with the commitment of the global annual amount available in the budget for this measure, taking into account the impact of multi-annual management plans on the fleet and the proposed use of 'adjustment of fishing effort' money under Regulation (EC) No 2792/1999.

Article 6 Procedure

1. Member States shall submit their applications for the payment of the expenditure by 30 June 2004. On the basis of the applications, and the situation of each Member State in respect of the impact of multi-annual management plans and the availability of 'adjustment of fishing capacity' money under Regulation (EC) No 2792/1999, the Commission shall decide on the Community contribution to be paid to each Member State. The Commission shall pay up to 50% of the assistance on receipt of the application and the balance after certification by the authorities referred to in paragraph 2.

2. The authorities responsible for the implementation of the emergency Community measure for scrapping fishing vessels shall be the managing and paying authorities involved in structural fund measures concerning fisheries in the relevant Member State. They shall perform the functions assigned to them by Regulation (EC) No 1260/1999.

3. Except in the case of contrary provisions arising form this regulation, the provisions of Articles 33 to 39 of Regulation (EC) No 1260/1999, as well as derived legislation, are in force.

Title III

Period 2004-2006

Article 7

For the period 2004-2006 the necessary funds for financing this measure shall be made available by reprogramming of the Structural funds provided for in Articles 41 and 44 of Council Regulation (EC) No1260/1999 [10] and be programmed within the existing FIFG programmes.

[10] see footnote 1

Title IV

Implementation and entry into force

Article 8 Implementation

The detailed rules for the implementation of this Regulation shall be adopted by the Commission in accordance with the procedure laid down in Article 10(2) of Regulation (EC) No ..../.... [on the conservation and sustainable use of fisheries resources under the common fisheries policy].

Article 9 Entry into force

This Regulation shall enter into force on 1 January 2003.

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

Done at Brussels,

For the Council

The President

LEGISLATIVE FINANCIAL STATEMENT

Policy area(s): Fisheries

Activity: 110610 Community measure for scrapping of fishing vessels

Title of action: proposal for a Council Regulation establishing an emergency Community measure for scrapping fishing vessels

1. BUDGET LINE(S) + HEADING(S)

Chapter B2-2xx, mobilisation of flexibility instrument in 2003

2. OVERALL FIGURES

2.1. Total allocation for action (Part B): EUR 32 million for commitment

2.2. Period of application:

(start and expiry years)01/01/2003 - 31/12/2003

2.3. Overall multiannual estimate of expenditure:

(a) Schedule of commitment appropriations/payment appropriations (financial intervention) (see point 6.1.1)

EUR million (to three decimal places)

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(b) Technical and administrative assistance and support expenditure(see point 6.1.2)

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(c) Overall financial impact of human resources and other administrative expenditure (see points 7.2 and 7.3)

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2.4. Compatibility with financial programming and financial perspective

Proposal will entail reprogramming of the relevant heading in the financial perspective.

2.5. Financial impact on revenue:

Proposal has no financial implications (involves technical aspects regarding implementation of a measure).

(EUR million to one decimal place)

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3. BUDGET CHARACTERISTICS

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4. LEGAL BASIS

Article 37 of the Treaty.

Proposal for a Council Regulation establishing an emergency Community measure for scrapping fishing vessels.

5. DESCRIPTION AND GROUNDS

5.1. Need for Community intervention

5.1.1. Objectives pursued

Community fisheries management faces a crisis because of an unprecedented decline of the main targeted stocks; Fishing effort has to be drastically reduced to ensure biological safe fish populations; A core part of effort reduction must come from reduction of fishing capacity, i.e. reduction of the fleet. This situation has been highlighted both by the Commission's Green Paper on the Future of the CFP (chapter 3.3), and in the comprehensive consultation process that took place during 2001.

5.1.2. Measures taken in connection with ex ante evaluation

The programmes to restructure the European fishing fleet (MAGP's I-IV, FIFG) have proven insufficient. These instruments have not proved flexible enough to target money where it is most needed in the past, because of the rigidity of the programming period for the structural funds (see yearly reports by the Commission on MAPG's - COM(2001) 541 final, which is the latest available).

5.1.3. Measures taken following ex post evaluation

5.2. Action envisaged and budget intervention arrangements

The proposed emergency measure aims at balancing the widening gap between fleet size and available resources as quickly as possible; It is intended to allow additional financial incentives for scrapping, in order to ensure that, taken together, FIFG and this new measure will mobilise sufficient financial aid to meet the needs of more rapid decommissioning of fishing vessels;

The target beneficiaries are first and foremost shipowners/fishermen affected by multiannual management plans (to be decided for certain fisheries), but also others who fulfil the conditions of eligibility;

The immediate output is the uptake of the measure leading in a net reduction of the capacity of the fleet(s);

5.3. Methods of implementation

Member States wishing to receive the additional financial contribution available in 2003 will present to the Commission a plan of the decommissioning expenditure for which they are seeking extra money. They will have to show that their annual allocations of FIFG money is insufficient to achieve their scrapping targets of the year. On the basis of this information the Commission will then proceed with the commitment of the amount available.

Member States shall submit their application for payment of assistance by 30 June 2004. On the basis of the applications, the Commission shall decide on the Community contribution to be paid to each Member State.

For 2004 to 2006, funds to cover the remaining requirements will be found by reprogramming within the structural funds following the mid-term review.

6. FINANCIAL IMPACT

6.1. Total financial impact on Part B - (over the entire programming period)

6.1.1. Financial intervention [11]

[11] Foreseeable financial need for the purpose of this measure is shown in annexed tabled.

Commitments (in EUR million to three decimal places)

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6.2. Calculation of costs by measure envisaged in Part B (over the entire programming period)

Commitments (in EUR million to three decimal places)

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If necessary explain the method of calculation

Calculation of costs

The starting-point for the calculating the cost of the necessary capacity reductions is was to look at the recommended reductions in fishing effort. The number of vessels that would be affected by such reductions in fishing effort can be calculated approximately, using the fishing fleet register. By using estimates of how many of these vessels will seek scrapping aid, total demand for scrapping premiums in each Member State can be calculated. The difference between this figure and the amount already programmed for scrapping aid in each national FIFG programme indicates the need for additional financial resources from the new Scrapping Fund. The calculations are laid out below:

* The total number of vessels that would need to be removed from fishing in order to achieve the reduction in fishing mortality to be proposed in multiannual management plans is estimated at 8,592.

* The total tonnage of these vessels is 351,791 Gross Tonnes.

* Estimating an uptake of 80% of this figure (some vessels may survive with temporary laying-up) gives 281,433 Gross Tonnes that need to be scrapped.

* The cost of scrapping 281,433 GT will be EUR1,376m.

* The EU would need to contribute EUR712m.

* Currently available from FIFG programming is EUR663m.

* The requirements Member State by Member State show that some would not require any extra financing (i.e. Spain has EUR319m allocated but would require only EUR171m => net requirement EUR-148m) whereas others would (i.e. UK has EUR63m but would require EUR124m => net requirement EUR61m). It will not be possible, however, to transfer FIFG funds between Member States.

* Considering these calculations per Member State the Commission therefore estimates that the additional budget required for decommissioning for those vessels likely to be severely affected by multiannual management plans would amount to EUR271,6m.

* The amount provided for 2003 represents the estimated need for extra funding before the mid-term review and reprogramming can take place to cover the remainder.

For the purpose of this calculation it has been assumed that the oldest vessels will be scrapped first. On the basis of the premiums payable to the oldest vessels in each segment, up to the level of the tonnage to be removed, a calculation of the total cost of scrapping aid can be calculated.

It is possible that Member States may be able to transfer some of the FIFG expenditure currently ear-marked for fleet renewal in their national programme to scrapping. (The Commission will propose that aid for renewal of the fleet be strictly limited in future but it is uncertain whether the Council will agree to this amendment of FIFG rules). Should any such transfer take place, the amount of extra Community aid for scrapping could be reduced.

7. IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE

7.1. Impact on human resources

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7.2. Overall financial impact of human resources

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The amounts are total expenditure for twelve months.

7.3. Other administrative expenditure deriving from the action

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The amounts are total expenditure for twelve months.

1 Specify the type of committee and the group to which it belongs.

I. Annual total (7.2 + 7.3)

II. Duration of action

III. Total cost of action (I x II) // EUR 130 000

4 years

EUR 520 000

8. FOLLOW-UP AND EVALUATION

8.1. Follow-up arrangements

A comprehensive assessment of the state of the stocks was carried out on the bases of the most recent scientific advice provided by ICES and endorsed by STECF. The subsequent requirements for capacity reductions are shown in the annexed table.

The follow up of this action will be subject to the same rules as the programmed FIFG measures for Adjustment of fishing effort. It will be carried out by DG FISH who will also verify that the eligibility conditions of Article 2 are met by the Member States.

8.2. Arrangements and schedule for the planned evaluation

Evaluation arrangements foreseen in the FIFG regulation 2792/99 shall apply, mutatis mutandis, to this regulation. The indicators applied to measure achievement of the objectives set in this regulation shall be

- a clear slowdown in the loss of jobs in the fisheries sector;

- achievement of fishing mortality targets set for species subject to multiannual management plans;

8.3. Control Procedures

The control procedures laid down in the FIFG regulation 2792/99 shall apply, mutatis mutandis, to this regulation.

9. ANTI-FRAUD MEASURES

The anti-fraud measures are those applied in the Basic Regulation on Structural Funds 1260/99 and FIFG Regulation N° 2792/99.

Annexe : 6.1.1. Financial intervention [12]

[12] Foreseeable financial need for the purpose of this fund is shown in annexed table.

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