ARCHIVES HISTORIQUES
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DOCUMENTS "COM"
COM(76)195
Vol.1976/0061

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(76)195 final.
Brussels.28April1976.
I
G
Proposal fora
COUNCIL REGULATION (EEC)
amending themethodofcalculating monetary compensatory amounts
^Proposalfora
\ ,COUNCIL REGULATION (EEC)
fixinganewexchangeratetobeappliedtothe
ItalianLiraforagricultural purposes andamending
Regulation ,(EEC)No557/76
(submittedtotheCouncilbytheCommission )
/
COK(76)195final.

EXPLANATORY MEMORANDUM
/
1.Themovement ofexchangeratesintheCommunity sincethebeginning of
March1976has"broughtaboutanextremely disturbing situation mainly
connected ,withthedepreciation ofthepoundandtheItalianlira.
Themonetary compensatory amountsatpresentapplicable tothedepreciated
currencies (theothershavenotchanged)are:
Product
Member
State\;Products whosenew
marketing yearhas
alreadybegun(milk,
beefandveal,
pigmeat,products
coveredby
Regulation (EEC)No
1059/69Products whosenew
marketing yearhas
notyetbegmn,
untilthedateof
commencement of
thatmarketing
year(cereals,
eggsandpoultry,
wineandsugar)Exception for
commonwheat
until1July
1976(Regulation
(EEC)No2638/75
Italy 20.827.6 ]
(UnitedKingdom 17.4 17.4 24.7
IIreland13.4 15.6 18.3
IPrance 2.6 2.6
2.Thissituation hasseriousdisadvantages .Itresultsinwidelydivergent
pricelevelsintheMemberStates,thedifferences reachingabout35$*
Furthermore ,inviewofthevolumeofimportsintothetwocountries inquestion,
ItalyandtheUnitedKingdom,itresultsinconsiderable expenditure forthe
Community ,sincethecompensatory amountspayablebythetwoMemberStatesare
bornebytheEAGGF(seefinancialeffects).
Themaintenance ofexistingpricelevelsintheseMemberStatesbymeans
ofthemonetarycompensatory amounts,althoughtosomeextentafactor
makingforstability ,isalso,fromanotheraspect,asourceofimbalance .
Ifthecompensatory amountsremainedpermanently atsuchhighlevels,the
riskofdistortion wouldundoubtedly arise.

3.Thepersistence of"thissituation canendanger thecommonagricultural
policy.Itistherefore necessary toputinhandimmediately anumberof
measures todealwiththeabovementioned difficulties ,thesemeasures may
bedividedintothreesections :
(a)application ofArticle2aofReflation (EEC)No974/71
Article2alaysdamthattheexporting MemberStatemay("byagreement with
theimporting MemberState)paythemonetarycompensatory amountwhichthe
lattermustgrantonimports.Thatprovision would "beappliedinthe
UnitedKingdomandItaly.Owingtotheuseoftheconversion rateapplicable
underthe"budget("doublerate"device),thismeasureresultsinareduction
intheCommunity *sliabilities intermsofunitsofaccount.
ThissystemwasappliedtoexportsfromallMemberStatestoItalyfrom
June1973toJanuary1974*Furthermore ,from1971 "to1973»anothersystem
wasappliedwherebytheexporting MemberStategrantedallthecompensatory
amountsarisingfromtheposition ofitscurrency andthatoftheimporting
MemberState.Inaddition ,thecompensatory amountspayableundertheaccession
procedure arealsograntedatthetimeofexport.
ThiscategoryofmeasurescanbeappliedunderRegulation (EEC)No974/71for1976.
(b)MeasuresrelatingtotheItalianlira
(i)devaluation ofthe"green"lira.Thismeasureisthesubjectofthe
attached secondproposal foraregulation .
(ii)Apartfromthereduction inthemonetarycompensatory amountswhich
suchdevaluation producers ,afurtherreduction intheseamounts
maybeobtained (andthatistheaimofthisproposal )by
introducing a"corrective factor".Thiswouldbelikethe
"exemption "of1.5pointsalreadyinforce(thelastsubparagraph
ofArticle2(l)(b)ofRegulation (EEC)No974/71)appliedtothe
differences calculated inaccordance withthenormalrulesfor
calculating themonetary compensatory amounts.Thelevelofthe
corrective factormaybedetermined bytakingintoconsideration
theadvantage fortradeintheimporting MemberStateofthefact
thatthepriceofthegoods,ishenceforth diminished bytheincidence of
theapplication ofArticle2areferredtounder(a)above.
Itisproposedthatthisfactorshouldbefixedataflatrateof
2points.

»3-
Forproducts forwhlah themarketing yearhasnotyeths^-n ,
inparticular sugar ,cereals ajideggsandpoultry ,theeconomic
effect ofthedevaluation oftheliramaybeanticipated V
increasing ,temporarily until thebeginning ofthemarketing
yearinquestion ,thecorrective factor from2to4points .
However ,nocorrective factor willapply inthewinesector
until 16December ,inviewofthepresent market situation .
TheCouncil would atthattimetakeadecision onthematter .
(c)Measures relating to.
IntheUnited Kingdom acorrective factor would alsobe .appliedmoraer to
reduce themonetary compensatory amount ;thisfactor would besofixed tha-
consumer prices would notbeaffected ,having regard t?theadvantage for
trade inthatState ,andaccordingly fortheconsumer ^rice ,ofthetact
thattheprice ofthegoods ishenceforth diminished bytheincidence of.e
application ofArticle 2(a)referred tounder (a)above ;
TheCommission willsubmit itsproposal orally totheCouncil .
4.Themeasures provided forinthisproposal entail aderogation fromthe
normal system ofcompensatory amounts ;theymusttherefore beadopted m
accordance withtheprocedure laiddowninArticle 43'and235oftheTreaty ,
i.e.after consultation oftheEuropean Parliament .
Owing totheurgency ofthematter ,however ,itappears necessary toadopt
these measures provisionally onthebasis ofArticle 103oftheTreaty and
therefore without consulting theParliament -andpossibly toadopt them
later ,anddefinitively ,inaccordance withthenormal procedure .

Proposal fora
COUNCILREGULATION (EEC)
amending themethodofcalculating -
monetary compensatory amounts
THECOUNCIL OPTHEEUROPEAN COMMUNITIES ,
HavingregardtotheTreatyestablishing theEuropean Economic Community ,
andinparticular Article 103thereof,
Havingregardtotheproposal fromtheCommission ,
WhereasCouncilRegulation (EEC)NO974/71of12May1971oncertainmeasures
ofconjunctural policytohetakeninagriculture following thetemporary
widening ofthemarginsoffluctuation forthecurrencies ofcertain Member
States^^,aslastamended "byRegulation (EEC)NO557/7^^\introduced
monetary compensatory amountsforwhichitdetermines themethodofcalculation
Whereasthecurrentsituation ismarked "byaconsiderable weakness ofcertain
currencies ,resulting inveryhighmonetary compensatory amounts,whereasthe
persistence ofthissituation canendanger thecommonagricultural policy;
Whereasitisconsequently necessary toimplement measures immediately todeal
withthissituation ;whereasitispossibletothisendtoreducethemonetary
compensatory amountsbyintroducing ,inrespectofthecurrencies ofthose
MemberStateswhichareespecially affected,afactortocorrecttherate
whichisusedasthebasisofcalculation ofthesaidamounts;
WhereasCouncilRegulation (EEC)No/l6,of ,provides
fordevaluation ofabout6%intherepresentative rateofthelira,totake
effectinprincipleatthebeginning ofthemarketing year;whereasitwould
appearappropriate ,inordertolessentheeffectofthisdevaluation onthe
Italianeconomy,toprovideforatransitional increaseinthecorrective
factoruntilthedevaluation takeseffect;
(1)OJNoL106,12.5.1971 ,p.1
(2)OJNoL67,12.3.1976,p.1

Whereas itisneoesaary ,however ,."toexclude wine -temporarily from the
application ofthecorrective fac\or inItaly because ofthepresent
market situation ,
HASADOPTED THIS REGULATION : ■'
Article 1
1.Therate serving asthebasis ofcalculation ofthemonetary compensatory
amounts arising from application ofArticle 2(l)ofRegulation (EEC)No974/71
shall hereduced bythefollowing corrective factors :
(a)2points forItaly ,
(b) points fortheUnited Kingdom .
2.However inItaly ,thecorrective factor shall beraised to4points in
respect ofthesugar sector until 30June 1976 andinrespect ofthecereals ,
eggs andpoultry ,meat sectors until 31July 1976#
Article 2
1.Article 1shall notapply tothemonetary compensatory amounts valid in
Italy forwine.'
2.TheCouncil ,acting byaqualified majority onaproposal from the
Commission ,shall before 16December 1976 decide onthecorrective factor
tobeapplied tothis product inItaly .
Article 3
This Regulation shall enter into force on3May1976 .
This Regulation shall bebinding initsentirety anddirectly applicable
inall Member States .
Done atBrussels , Por the Commission
The President

Financial repercussions of"theagri-monetary
measures proposed fortheLiraandSterling
A.Introduction
PursuanttoArticle7ofRegulation (EEC)Ho974/71»"theexpenditure
andreceipts fromtheapplication ofmonetary compensatory amountsare
financedinfull "bytheCommunity .Suchexpenditure andreceipts ,in
particular inconnection withpreparatory workonbudgets andin
estimating thefinancial incidence isevaluated bymultiplying thetrade
assumptions (valueforcustomspurposes)withthepercentages ofMCA
tobeappliedforthevariouscurrencies .Sincethechangesinthe
representative rateslaiddowninCouncilRegulation (EEC)ITo557/76
comeintoforceatthebeginning ofthemarketing years ,forthedifferent
products thepercentages appliedtotheMCAwillatanygiventimediffer
fromproducttoproduct.

-2-
B.Forecast ofexpenditure onmonetary compensatory amounts under
the1976 "budgetassuming nochangeintherules.
Thechangesintheexchangeratesoftheliraand£sterling have
! considerably increased thepercentages ofMCAappliedinrespectof
! thesecurrencies .Expenditure hasthus "beenconsiderably increased .
Theattachedtableshowsthechangesinthesepercentages andthe
appropriations fortheMCA'sinthe1976budgetandtheestimated
i
expenditure for197°ifthereisnochangeintherulesorthemonetary
situation .
Percentage appliedinMCA' Budgetappropriations
forMCA(Chapt.J6)
260.7M.ua,ofwhich
thefollowing amounts
areearmarked forthe
currencies inquestionForecast ofexpendi­
tureassuming no
changeintherules
andthemonetary
situation ,asat
mid-April 1976Currency assumed
inthe
budgetbeginnmg
of1976mid-
April
1976
Bfrs/Lfrs +2 +2+1.4to2.0 +10.1 +8.1
FI +2 +2+1.4to2.0 +27.0 +29.9
DM +10 +10+7.5to10.0 -34.3 -29.0
£st.-8-6.4to13.il-17.4to24.7 +264.8 +461.0
Irish£-2.4-4.8to7.2-13.4to18.3 -I6.9 -67.8
Lira -20.8to27.6 +286.9
FF 2.6 -43.6
Dlr
Total 260.7 745.5
3 3
Rounded :745M.ua
(l)Asmentionedintheintroduction ,
sectortosectoraccording tothethepercentages ofMCAappliedvaryfrom
dateonwhicheachmarketing yearbegins.

-3-
m
C.Financial incidence ofthe "orcoosed measures
!•Measures concerning MCA
(a)tobedecided "bytheCouncil ,.
(inM.ua
Incidence on
1976 budget 12-month
period
Introduction ofacorrective factor toreduce
thepercentage ofMCAapplied to:
-the lira
-£sterling (including theeffecis ofthe
MCA'sintrade between theUKandIreland )-22
I
I-41
_ *
Amendment oftherepresentative rate ofthelira :
-leading toareduction ofabout 7*3$ inthe
MCAappliedI
-75 -139
–leading toincreased expenditure inrespect
ofthe "double rate " +8 +75
(b)tobedecided bytheCommission under the
Management Committee procedure1
Byjoint agreement ,theexporting Member
State also grants MCAfortheimporting
Member State (Italy andtheUnited
Kingdom ).Thesavings arise from the
absence ofthe effect ofthe double
rate onsuch expenditure -110 -350
TOTAL -199 -455
f
Itshould beobserved that there isanelement ofuncertinaty inthese
calculations with respect tothelaginpayments .Particularly inthecase
ofoneMember State ,this lagcanonly beroughly estimated .Introducing
thepayment ofMCAs bytheexporting Member State will lead toasmall lag
inpayment with anaccelerating effect forwhich anallowance hasbeen made in
the calculations .
D. Conclusion
Changes mthemonetary situation have ledtoaconsiderable increase in
expenditure onMCAwhich atthepresent time canbeestimated at745M.ua
■under the1976 budget instead ofthe260M.ua included when thebudget
wasestablished .Theproposed measures will reduce expenditure under this
heading inthe1976 budget byabout 200M.ua .(nothaving taken into account
theintroduction ofacorrective factor formonetary compensatory amounts
applicable intheUnited Kingdom .
*Theintroduction ofacorrective factor forthe£sterling will involve
savings ofabout 25M.ua perpercentage point ofmonetary compensatory amount
notapplied (period 12months ).

EXPLANATORY MMORAM)UM
>.
CouncilRegulation (EEC)No557/76of15March19^6ontheexchange
ratestobeappliedinagriculture (OJNoL67,1§.3.1976,P*l)
fixedtherepresentative rateapplicable since15March1976f°r"the
ItalianliraforMilk,BeefandVeal,PigmeatandProductsfalling
withinthescopeofRegulation (EEC)No1059/69(0JNoL141of
12.6.1969 ,p.l).
Inrecentweeks,however,theItalianlirahasdepreciated considerably ,
resulting inamonetary compensatory amountcalculated actually on
thebasisofarateof20,8.Itistherefore advisable toamendthe
representative rateofthatcurrencytobringitmoreintolinewith
thepresenteconomic situation .Thenewrateshouldbedetermined
havingregardbothtoitseffectuponpricelevelsinItalyandtothe
desirability ofreducing monetary compensatory amounts.Therepresentative
rateoftheItalianlirashouldconsequently bereducedby6.023$.
Thefollowing tableshowstheeffectsoftheproposed measure.
oldrate newrate
(6.023%
deval.)1 effects on
prices themonetary
compensatory amounts^^
Lit100-0.110497 u.a.Lit100-= +6.409% old22.27
0.103842 u.,a.
1u.a.=Lit905*000 ;I1u.a.=
Lit963.000 : new14*91
(l)calculated onthebasisofthepricesrecordedduringtheperiodfrom
14to20April1976.

VI-H–1
Proposal fora
COUNCIL REGULATION (EEC)
fixinganewexchangerateto"beapplied
totheItalianLiraforagricultural purposes
•andamendingRegulation (EEC)N°557/76
THECOUNCIL OPTHEEUROPEAN COMMUNITIES ,
HavingregardtotheTreatyestablishing theEuropean Economic Community ,
HavingregardtoCouncilRegulation N°129onthevalueoftheunitofaccount
andtheexchangeratesto"beappliedforthepurposes ofthecommonagricultural
policy(l),aslastamended "byRegulation (EEG)N°2543/73(2),andinparticular
Article 3thereof,
Havingregardtotheproposal fromtheCommission ,
WhereasCouncilRegulation (EEC)N°557/76of15March1976ontheexchange
ratesto"beappliedinagriculture andrepealingRegulation (EEC)N°475/75(3),
asamended "byRegulation (EEC)N°650/76(4)»fixedarepresentative ratefor
theItalianLira;whereasthemovement oftheItalianLiraindicates theadvi­
sability offixinganewrepresentative ratewhichreflects morecloselythe
presenteconomicsituation ;whereasitwouldbeappropriate tobringitinto
forceinprinciple onthedatesonwhichapricechangeoccurs ;
WhereastheMonetary Committee willbeconsulted andwhereas,inviewofthe
urgencyofthematter,theproposed measures shouldbeadoptedunderthe
conditions laiddowninArticle3(2)ofRegulation N°129,
HASADOPTED THISREGULATION :
Article 1
InArticle2(l)ofRegulation (EEC)N°557/76,point(f)isamendedasfollows s
"(j°)fortheItalianLira:
Lit100=O.IO3842unitofaccount
(1)OJN0106,30.10.1962 ,p.2553/62
(2)OJN°L263,19.9.1973 ,p.1
(3)OJN°L67,15.3.1976 ,p.1
(4)OJN°L79,25.3.1976,?.1 ./.

Article 2
Thefollowing paragraphisaddedtoArticle2ofRegulation (EEC)N°557/76*
"3.However,therepresentative rateoftheItalianLirashall "beapplied j
(a)fromthedatesshownin(a),(t>)and(c)oftheparagraph 2forthe
products mentioned therein ;
(t>)fromthe"beginingofthe1976/77marketingyearfortheotherproducts
forwhichthemarketing yearhasnotcommenced "by3Key1976 ;
(c)from3May1976inallothercases."
Article 3
ThisRegulation shallenterintoforceonthedayofitspublication inthe
Official JournalpftheEuropean Communities .
ThisRegulation shall "be"bindinginitsentirety anddirectlyapplicable in
allMemberStates.
DoneatBrussels . FortheCouncil,