REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on SIMPLIFICATION OF AGRICULTURAL LEGISLATION

TABLE OF CONTENTS

1. Introduction

2. Initiatives within the Commission to increase clarity, transparency and access to agricultural legislation

2.1. Internal guidelines for simplification

2.2. Informal consolidation of agricultural legislation

2.3. Reduction of number of regulations

3. Horizontal actions on simplification

3.1. Small farmers' Scheme

3.2. New guidelines for state aids

3.3. Promotion of agricultural products

3.4. Integrated administration and control system (IACS)

3.5. Trade Mechanisms

3.6. Prices Package

4. Market measures taken or proposed by the Commission to simplify the CAP since the last report

4.1. Arable crops

4.1.1. Cereals

4.1.2. Direct aid

4.2. Wine

4.3. Flax and hemp

4.4. Cotton

4.5. Meat

4.6. Milk and milk products.

4.7. Fruit and vegetables.

4.8. Rice

4.9. Sugar

5. Proposals from the paying agencies and measures taken by the Commission to implement them

5.1. Procedure followed

5.2. Overview of the result of the exercise

6. Other simplification measures

6.1. Follow up to Council conclusions from 23 October 2000

6.2. Working group

7. Conclusion

1. Introduction

In April 1999 the Commission presented a first report to the European Parliament and the Council on its efforts to simplify agricultural legislation. The purpose of this report is to provide information on the progress made since then.

Over the last few years the Commission has made simplification one of the guiding principles in its deliberations on the Common Agricultural Policy (CAP).

Both the European Parliament and the Council have expressed their support for this work at several occasions. In a resolution in 2000, the European Parliament called on the Commission to present without delay proposals aimed at simplifying Community legislative and implementing provisions within the CAP, in order to guarantee transparency and efficiency. The Council, for its part, reaffirmed its commitment to the objective of simplifying the management of the CAP at its meeting on 23 October 2000.

In its work to simplify the CAP the Commission has chosen to focus on the following aspects:

(1) making agricultural legislation as clear, transparent and easily accessible as possible and

(2) reducing the administrative workload that the CAP imposes on farmers and on others concerned, as well as on national and Community authorities, to only what is strictly necessary.

Simple, clear legislation is vital for sound and efficient management of limited resources, both human and financial. The more ambiguous and complex the rules, the more difficult and costly - in terms of administrative and human resources - will they be to implement, to manage and to control and the more scope will there be for fraud. That is why simplification is important both to increase the cost effectiveness of the CAP and to reduce the risk of errors and fraud. Furthermore, in the present budgetary context it is clear that the Commission for its part cannot agree simplification which would to any substantial degree increase expenditure or the risk of fraud or abuse. In this respect, the importance of not weakening the efficiency of the control systems, in particular the Integrated Administration and Control System, shall be stressed.

In the past, simplification has very often consisted of trying to remove sources of difficulty and complication after the publication of a regulation. In future, however, we need to ensure that the objective of simplification is already fully taken into account during the decision-making process, and that this process results in legislation, which is simple from the outset and does not require corrective action afterwards. The Commission, for its part, will make even greater efforts in this respect. All Institutions involved in the legislative process need, however, to be aware of their responsibility in achieving this objective.

As this report will show, from April 1999, when the first Report on simplification was adopted, important progress has been made in the efforts to simplify the CAP.

The Council has already adopted some of the Commission proposals advanced in 1999, especially in the framework of the last CAP reform. For instance, in Rural Development important simplification was achieved in 1999 by means of a single regulatory framework [1], which replaced the previous nine regulations. The reduction to three of the number of objectives for structural measures also reflects simplification. In the wine sector the Regulation to establish a new Common Market Organisation was adopted on 17 May 1999 by the Agricultural Council and entered into force on 1 August 2000. This regulation and the accompanying application rules adopted during 2000 are further developed below. In other fields, efforts have been made in order to ensure that proposals respect simplification purposes and objectives.

[1] Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations; Commission Regulation (EC) No 1750/1999 of 23 July 1999 laying down detailed rules for the application of Council Regulation (EC) No 1257/1999 on support for rural development from the EAGGF; Commission Regulation (EC) No 2603/1999 of 9 December 1999 laying down rules for the transition to the rural development support provided for by Council Regulation (EC) No 1257/1999

The simplification resulting from this exercise did not go however as far as the Commission would have wished and it is thus aware that much more needs still to be done.

In addition to the initiatives taken in the framework of the last CAP reform, the Commission has also undertaken specific initiatives intended to bring about simplification of administrative processes and to reduce burdens on farmers. For instance, the Commission adopted recently a proposal that will greatly simplify the system of applying for and paying aids to small farmers: the "Small Farmers' Scheme".

2. Initiatives within the Commission to increase clarity, transparency and access to agricultural legislation

The following actions have been taken:

2.1. Internal guidelines for simplification

If substantial simplification of the CAP is to be achieved, the process must begin at the point where proposals for new or amended legislation are first under consideration. To help the Commission services with their efforts to make agricultural legislative proposals as clear and simple as possible, internal guidelines for simplification have been drawn up by DG Agriculture.. The guidelines form part of the resolve to make sure that the new agricultural legislation is as simple and clear as possible from the outset.

2.2. Informal consolidation of agricultural legislation

In the 1999 report on simplification the Commission described its project to consolidate agricultural legislation in all official languages of the EU. The project had been launched early that year. Because of the frequency of amendments to agricultural legislation, and in order to facilitate access to it, modifications to legal acts are integrated into the basic texts so that a single and updated version of the text can be consulted. The informally consolidated versions are available on the Internet for the general public. Although not legally binding, the consolidated versions substantially facilitate the search for rules in force for those concerned by the CAP.

By the end of 2000 around 500 agricultural acts have been consolidated and made available on the EUR-LEX web site (http://europa.eu.int/comm/agriculture/consleg/index_en.htm).

2.3. Reduction of number of regulations

Simplification was one of the objectives of Agenda 2000. Reforms in the different sectors have required a substantial amount of work to reduce not only the volume of agricultural legislation but also the adminitrative workload it imposses. In drafting the new regulations for the reformed common organisations of markets, efforts have been made in order to have a single Council regulation for each sector.

When a problem has been proved to be common for several sectors, efforts are also made to introduce a common provision in the various regulations governing these sectors.

3. Horizontal actions on simplification

3.1. Small farmers' Scheme

In order to reduce the administrative burden, in particular for farmers receiving small amounts of direct aid, the Commission proposed in December 2000 that a simplified system for paying such aids be established for a trial period [2]. The scheme - hereafter called the "Small Farmers' Scheme" - should also bring about substantial simplification for the national administrations responsible for paying and controlling the aids. The administrative cost of processing an application, making the payment and carrying out the necessary controls can be considerable in relation to the amounts paid, particularly when these amounts are small.

[2] COM(2000) 841.

The maximum payment available to farmers under this scheme will be limited to EUR 1 000 per year during the trial period. A farmer entering the scheme will have the right to remain within it from the year in which he applies for participation in the scheme until the end of the trial period in 2005.

The proposed simplified scheme should be open to farmers who have already received direct aid during a reference period, which is proposed to be three years. Farmers who wish to join the scheme would make one single application when they enter the scheme and receive one global payment per year, covering all the direct aids covered by the scheme.

The annual global payment will be based on the amount of the direct payments the farmer has received during the reference period, i.e. the three years preceding his application, subject to a maximum amount of EUR 1 000. The payment should be the highest of the simple average of the three years or the payment received in the most recent year. Once it has been established, the amount will be paid until the end of the trial period, provided that the farmer still fulfils the conditions for the simplified scheme.

The conditions should be as simple as possible. A pre-condition is that the farmer has previously applied for and received direct aid, so the scheme does not attract farmers who have not already applied for direct aids. Applicants need to have received aid under at least one of the support schemes included in the Small Farmers' Scheme during each of the three years preceding the year of application. Access to the scheme should be voluntary.

The Commission will assess the effects of the scheme during the third year of the trial period and make appropriated proposals.

3.2. New guidelines for state aids

The new Community guidelines for state aids in the agricultural sector from February 2000 [3] replace and consolidate a great variety of other frameworks, guidelines and Commission working documents and practices. They result in greater transparency and facilitate the tasks of the competent authorities.

[3] Community Guidelines for State aid in the agriculture sector (OJ C 28, 1.2.2000, p. 2).

3.3. Promotion of agricultural products

The Commission has recently adopted a proposal for a Council Regulation [4] on information provision and promotion for agricultural products. This proposal aims at harmonising and simplifying the various current promotion schemes (up to twelve) so as to increase their effectiveness and make their management more transparent.

[4] COM(2000) 538 final.

3.4. Integrated administration and control system (IACS)

One of the aims of amendments, which have recently been introduced to the Council [5] and Commission [6] IACS regulations, is to clarify certain areas of these regulations.

[5] Council Regulation (EC) No 1593/2000.

[6] Commission Regulation (EC) No 2801/1999.

A newly introduced Geographic Information System for the identification of parcels will facilitate the control of parcels of land. At the level of Commission regulation a clause was introduced to encourage Member States to introduce business-based checks, i.e. to check as many measures as possible during a single control visit. This should reduce the burden on farmers, who would thus not be subjected to multiple checks during the same year for different measures.

Recent reforms of different schemes make reference to the IACS instruments of control. It therefore can be said that there is a clear move towards one single administration and control scheme instead of having various different provisions for different schemes.

In the near future, work on a codification of the Commission IACS regulation is envisaged.

3.5. Trade Mechanisms

Provisions concerning trade mechanisms had been repeatedly and substantially amended, therefore, on the occasion of fresh amendments various regulations have been recast for the sake of clarity besides introducing some simplification measures. That was the case of the horizontal regulation on export refunds [7] which was consolidated in 1999 following to a large extend the suggestions of the Paying Agencies. Rules concerning export and import licences, export destination codes and the system of securities have undergone a similar simplification process.

[7] Commission regulation EC No 800/1999 laying down common detailed rules for the application of the system of export refunds on agricultural products (OJ L 102, 17.4.1999, p. 11).

The horizontal regulation on import and export licences (EEC) No 3719/88 has been amended many times, in some cases substantially. In the interests of clarity and administrative efficiency these rules have been consolidated in a single text, Commission Regulation (EC) No 1291/2000( [8]). The new regulation implies substantial simplification that will ease the administrative burden for both the trade and the national administrations concerned. Among the most important modifications:

[8] OJ L 152, 24.6.2000, p. 1.

- definition of the person who can use the certificate: the customs declaration must be made by the named holder or, where applicable, the transferee of the license or certificate or their representative (Article 24),

- Member States may introduce a simplified procedure which avoids the physical transmission of licences, and therefore the risk of losing these documents (Article 25),

- fixing, for each product, of the maximum quantity up to which a licence or certificate is not required (Annex III to the Regulation),

- the amount below which a security on a licence is not required has been increased from EUR 5 to 60.

A simplified system for indicating destinations in the fixing of export refunds has applied since September 2000 [9]. This new single system which replaces the different and complex systems used in different sectors up to now, will reduce the risk of misunderstanding and error. Furthermore it will facilitate electronic exchange of data and information between the Commission and Member States, and therefore reduces expenses.

[9] Regulation (EC) No 2605/1999.

Commission Regulation EC No 1932/1999 amended Regulation (EEC) No 2220/85 laying down common detailed rules for the application of the system of securities for agricultural products. This new regulation includes:

- a simpler procedure for forwarding information to the Commission by Member states,

- a simplification of interest calculations in certain cases,

- the amount below which a security is not required has been increased from EUR 100 to 500.

As regards physical checks, Commission Regulation (EC) No 2655/1999 has introduced important simplification measures by means of reducing a certain number of physical checks and analysis, improving at the same time the effectiveness of the controls.

3.6. Prices Package

The adoption of the farm prices package for 2000/01 reflected the multiannual approach set out in Agenda 2000 and the previous reforms. This provides farmers with a more stable framework to plan their production. The yearly fixing of institutional prices and amounts affects now only a few sectors.

4. Market measures taken or proposed by the Commission to simplify the CAP since the last report

In the framework of Agenda 2000, new regulations for the common organisation of the markets (COM) for arable crops and for rural development introduced important elements of simplification.

Other reforms adopted or proposed more recently have brought or will bring about simplification of agricultural legislation in a number of market sectors.

4.1. Arable crops

4.1.1. Cereals

Cereals intervention regime has been codified in a single new regulation [10] that settles down the procedures for taking over of cereals and lays down methods of analysis for determining the quality. The price increases or reductions by which the intervention price is increased or decreased shall be expressed in euro, and not in percentages as in the past.

[10] Commission Regulation (EC) No 824/2000 of 19 April 2000 establishing procedures for the taking-over of cereals by intervention agencies and laying down methods of analysis for determining the quality of cereals (OJ L 100, 20.4.2000).

4.1.2. Direct aid

In the reform of the arable crops [11], simplification measures notably included the rules concerning penalties, the abolition of extraordinary set-aside and individual base areas and the streamlining of compensatory payments for oilseeds.

[11] Common organisation of the market of cereals: Council Regulation (EC) No 1253/1999, amending Regulation (EEC) No 1766/92 on the common organisation of the market of cereals and repealing Regulation (EEC) No 2731/75 fixing standard qualities for common wheat, rye, barley, maize and durum wheat. Support system for producers of certain arable crops: Regulation (EC) No 1251/1999. Quota system for the production of potato starch: Regulation (EC) No 1252/1999.

The Commission adopted the implementing regulation for the sector, Regulation (EC) No 2316/1999 [12] which replaced seven existing regulations.

[12] Commission Regulation (EC) No 2316/1999, of 22 October 1999, laying down detailed rules for the application of Council Regulation (EC) No 1251/1999 establishing a support system for producers of certain arable crops.

4.2. Wine

The common organisation of the market in wine is among the most complex and broadest within the common agricultural policy. This is due to the fact that this COM covers not only the traditional measures within COMs (prices, intervention, trade, etc.) but also other more technical matters, specific to the wine sector (i.e. provisions concerning production, trade, labelling and protection of traditional terms and oenological practices). The regulation establishing a new common organisation of the market in wine adopted on 17 May 1999 by the Agricultural Council entered into force on 1 August 2000 [13]. It represents a significant legislative simplification as it replaced 23 existing Council regulations that often contained an excessive level of detail.

[13] Council Regulation (EC) No 1493/1999.

Of the policies and measures featuring in the new COM, there are notable examples of simplification:

- the inclusion of both table wines and quality wines produced in specified regions in the COM (quality wines were previously the subject of a separate Council Regulation),

- a clear framework for managing production potential,

- basic principles of a system for restructuring and conversion: Member States are responsible for the plans themselves,

- rationalisation of distillation measures, including the removal of obsolete measures, such as obligatory and support distillation,

- removal of the complicated system of Guide Prices as the basis for market measures, in favour of the explicit inclusion of buying-in prices (increased transparency),

- basic principles for authorised Community oenological practices and processes are established, with lists of the main oenological practices and processes and their limits and conditions. With the exception of certain limits, the Commission rather than the Council will be responsible for fixing and changes to the limits, in addition to application rules.

The four main Commission implementing regulations introduced to date have replaced 36 existing Commission Regulations [14]. Pending the introduction of further implementing regulations, notably for labelling, controls and trade with third countries, certain Council Regulations or provisions of Council Regulations have been retained for transitional periods. The reform has led to a substantial codification of wine regulations. At the same time, the new implementing regulations intended to outline simpler frameworks for production potential, market mechanisms, oenological practises and quality wine. However, in some cases the implementing regulations contain very detailed rules.

[14] Commission Regulation (EC) No 1227/2000 of 31 May 2000 laying down detailed rules for the application of Council Regulation (EC) No 1493/1999 on the common organisation of the market in wine, as regards production potential.

In the case of all the implementing regulations, wherever information is required, it is intended that this information will appear on Internet. This will enable easier updating of information and, as such, is a positive example of legislative as well as administrative simplification.

4.3. Flax and hemp

In July 2000, the Council [15] adopted the reform of the fibre flax and hemp sector proposed by the Commission.

[15] Council Regulation (EC) No 1673/2000 of 27 July 2000 on the common organisation of the markets in flax and hemp grown for fibre (OJ L 193 , 29.7.2000, p. 16).

From a simplification point of view, it means that, with regard to direct aid to producers, these crops are integrated into the arable crop system as from the 2001/02 marketing year. This implies that a single aid application per year will allow producers to obtain the area payments including flax and hemp, compared to the three declarations per year provided for under the present flax and hemp regime.

In addition the requirements for entitlement to the support system are simplified as far as producers are concerned. For instance, the minimum straw yield requirements are withdrawn.

Furthermore, the number of Council regulations has been reduced since the private storage scheme as well as the promotion scheme for fibre flax (which was financed by withholding a percentage of the aid) have been both abolished.

4.4. Cotton

The Commission adopted in December 1999 a proposal to reform the existing cotton regime. The objective of the proposal is to have a new framework in place, which takes account of environmental concerns and which keeps budgetary expenditure under control. The proposed measures will not only simplify the conditions for fixing and granting aid, they will also bring the legislative provisions for production aid together in one single Council regulation.

4.5. Meat

A number of simplification measures have been taken in the meat sector during 2000, for example:

- in the beef sector, as far as the slaughter-premium scheme is concerned, Member States with a computerised database may provide that information on the slaughter of animals forwarded to the competent authorities by slaughterhouses shall be regarded as applications on behalf of the producers; the same system may apply to the special premium, additional payments and the deseasonalisation premium (when paid at slaughter); Member States may allow farmers to opt for simplified application of the extensification premium,

- the export refund nomenclature for processed beef has been significantly simplified, 47 highly technical and complex product lines being reduced to 8,

- in the sheep sector, a simplification concerning the transfer of premium rights which was requested by the UK and supported by other Member has been introduced [16]. An evaluation of the sheep regime has just been completed and DG AGRI services are presently examining the perspectives for possible amendments and simplification to the sector,

[16] Regulation (EEC) No 3567/92 has been amended by Regulation (EC) No 1311/2000.

- in line with the approach followed by other sectors in Agenda 2000, the basic prices for pigmeat and sheepmeat will no longer be fixed annually but in the respective basic regulations without specific time limits,

- the procedures for "immediate" export licences for pigmeat, eggs and poultry-meat have been simplified and aligned with the licence system in the beef sector.

4.6. Milk and milk products

Following the adoption of a new basic regulation in the milk sector, a substantial number of consequential amendments to Commission implementing regulations were required. Rather than amending existing Regulations, this opportunity was used to codify large parts of the legislation in the dairy sector. This codification served to reduce the number of regulations, simplify administrative procedures and harmonise administrative and control procedures between different schemes.

In particular, Commission Regulation (EC) No 2771/1999 [17] as regards private and public storage of butter and cream will replace four existing regulations and Commission Regulation (EC) No 2799/1999 [18] on aid measures for skimmed milk and skimmed milk powder used as animal feed will replace six existing regulations. Further simplification will be achieved in the near future by means of a recently adopted regulation regrouping all analytical and evaluation methods to be used for control purposes in the milk sector and by a new regulation regarding private and public storage of skimmed milk powder.

[17] Commission Regulation (EC) No 2771/1999 of 16 December 1999 laying down detailed rules for the application of Council Regulation (EC) No 1255/1999 as regards intervention on the market in butter and cream.

[18] Commission Regulation (EC) No 2799/1999 of 17 December 1999 laying down detailed rules for applying Regulation (EC) No 1255/1999 as regards the grant of aid for skimmed milk and skimmed-milk powder intended for animal feed and the sale of such skimmed-milk powder.

At an administrative level, considerable efforts have been made to promote the use of electronic data transmission for the exchange of information. This led to a significant reduction of the administrative burden for the administrations involved.

4.7. Fruit and vegetables

The proposal to amend the common organisation of the market for fruit and vegetables, including processed fruit and vegetables, aims to rationalise and simplify the arrangements and to adapt the relevant production thresholds. It will simplify and stabilise the support scheme for producer organisations and improve the management of export refunds for fresh fruit and vegetables.

As in the milk sector, data transmission for the exchange of information has been rationalised and simplified.

4.8. Rice

Under the Commission proposal of June 2000, rice will be integrated into the arable crop system. Major advantages in terms of simplification should result from this integration.

4.9. Sugar

In October 2000 the Commission adopted a proposal for a regulation in the sugar COM. The future new regulation is intended to abrogate or replace at least 12 current regulations. It will also abolish the obligation of keeping certain minimum stocks as well as the reimbursement of the storage costs. The simplification programme of the sugar legislation will be permanently monitored, especially in the framework of the implementing regulations.

5. Proposals from the paying agencies and measures taken by the Commission to implement them

5.1. Procedure followed

Following an invitation from DG AGRI in May 1997, the Member States' Paying Agencies submitted proposals for legislative or administrative simplification during the autumn of that year. These proposals were assembled into a document which was distributed in February 1998 to all the Directorates of DG AGRI for examination, and follow-up.

After a suitable interval to allow the units concerned to take appropriate action, and to take into account the recent reform activities, a Commission staff working document has been prepared [SEC(2000) 1775]. This working document has been submitted to the Council in October 2000 with the intention of informing it and the original authors of the proposals of the results of their contributions to the ongoing simplification work.

5.2. Overview of the result of the exercise

In total the paper contains more than 200 proposals, of which over 100 have been acted upon, i.e. fully or partly adopted or have given rise to other action.

Most of the proposals acted upon concerned measures taken in relation to Agenda 2000 and other reforms or e.g. in connection with codification. They are, in general, well known already by the Member States. Some of the proposals adopted were also taken into account in drawing up DG AGRI guidelines on simplification.

Around 80 proposals have been not been taken over by the services of DG AGRI; the reasons for the rejection of proposals have been that, according to the competent unit, the proposal:

- would not imply real simplification, or

- would entail additional expenditure, or

- would risk reducing controls or even lead to a risk of fraud or abuse, or

- has been regarded as a political issue rather than an administrative or a legislative simplification, and therefore falls outside the scope of this exercise.

Around 30 proposals are still under examination or consideration. Proposals under examination or consideration vary a lot, some of them being relatively advanced, others only in an early state of examination.

The rest of the proposals are awaiting further clarification or discussion or falling under national competence.

6. Other simplification measures

The Commission would like to take this opportunity to inform the Council and the European Parliament of some measures under preparation.

6.1. Follow up to Council conclusions from 23 October 2000

Simplification was one of the points on the agenda for Council meeting of 23 October 2000. Following certain proposals for simplification of procedures that have been presented by Member States, the Member of the Commission responsible for agriculture said the Commission was ready to seriously consider some of them, such as:

- a relaxation of the rules concerning the minimum area for obligatory set-aside along watercourses and permanent lakes, in the interest of environmental protection, provided that it does not lead to additional expenditure for the community budget,

- the possibility for Member States to take into account traditional aspects of the landscape, such as hedges and low walls, in declared areas,

- clarification of the rules on non-application of sanctions in cases where an error in a farmer's declaration is to his own detriment,

- a single control inspection per farm rather than multiple inspections for each aid scheme separately.

6.2. Working group

During the Agriculture Council meeting of 23 October 2000, the Member of the Commission responsible for agriculture expressed the intention of setting up an "ad hoc working group" to analyse proposals concerning simplification of agricultural legislation. The purpose of the group is to provide a forum for discussion and consultation with the Member States on simplification proposals. Findings, conclusions and proposals from the group will be presented to the appropriate bodies for decision.

The working group held its first meeting on 11 December 2000.

7. Conclusion

As this report has shown, a large number of simplification measures have been taken or proposed by the Commission in the last eighteen months. Some of these measures have amounted to substantial reforms of a common organisation of the markets such as the one concerning the flax and hemp sector, or implementation of such a reform, as in the wine sector. A number of proposed reforms contain important elements of simplification. This is the case for the proposals concerning sugar, rice and fruit and vegetables in particular. The proposed Small Farmers' Scheme is a new and innovative way to reduce the administrative burden, first and foremost for farmers but also for the national administrations in the Member States.

Other measures have simplified certain detailed rules or the practical application of such rules, within an unchanged policy framework. Examples of this are the measures taken in the cereals, meat and milk sectors. A third category of simplification measures is represented by those taken to increase clarity, transparency, and accessibility of the agricultural legislation.

In spite of the progress made it is clear that much more need to be done.