TEXT PROPOSED BY THE COMMISSION AMENDMENTS BY PARLIAMENT

Amendment 1

Proposal for a regulation — amending act Recital 2

(2) By judgement of the Court of Justice of the European Communities of 7 September 2006 in case C-310/04 Chapter 10a of Title IV of Regulation (EC) No 1782/2003 was annulled for breach of the principle of proportionality, in particular with reference to the circumstance that ‘the Council, the author of Regulation (EC) No 864/2004, [had] not shown before the Court that in adopting the new cotton support scheme established by that regulation it actually exercised its discretion, involving the taking into consideration of all the relevant factors and circumstances of the case, including all the labour costs linked to cotton growing and the viability of the ginning undertakings, which it was necessary to take into account for assessing the profitability of that crop’ and that the Court had not been enabled ‘to ascertain whether the Community legislature [had been] able, without exceeding the bounds of the broad discretion it enjoys in the matter, to reach the conclusion that fixing the amount of the specific aid for cotton at 35 % of the total existing aid under the previous support scheme would suffice to guarantee the objective set out in recital 5 in the preamble to Regulation (EC) No 864/2004, namely to ensure the profitability and hence the continuation of that crop, an objective reflecting that laid down in paragraph 2 of Protocol 4’. The Court also ordered that the effects of the annulment be suspended until the adoption, within a reasonable time, of a new regulation. (2) By judgment of the Court of Justice of the European Communities of 7 September 2006 in case C-310/04 Chapter 10a of Title IV of Regulation (EC) No 1782/2003 was annsulled for breach of the principle of proportionality, in particular with reference to the circumstance that ‘the Council, the author of Regulation (EC) No 864/2004, [had] not shown before the Court that in adopting the new cotton support scheme established by that regulation it actually exercised its discretion, involving the taking into consideration of all the relevant factors and circumstances of the case, including all the labour costs linked to cotton growing and the viability of the ginning undertakings, which it was necessary to take into account for assessing the profitability of that crop’ and that the Court had not been enabled ‘to ascertain whether the Community legislature [had been] able, without exceeding the bounds of the broad discretion it enjoys in the matter, to reach the conclusion that fixing the amount of the specific aid for cotton at 35 % of the total existing aid under the previous support scheme would suffice to guarantee the objective set out in recital 5 in the preamble to Regulation (EC) No 864/2004, namely to ensure’ that the amount of the specific aid for cotton is calculated in such a way as to create economic conditions which will enable cotton growing to continue in the regions suited to that crop and prevent the replacement of cotton by other crops.

Amendment 2

Proposal for a regulation — amending act Recital 3

(3) A new scheme of specific payment for cotton needs to be adopted in conformity with the Court's judgement in case C-310/04. (3) A new scheme of specific payment for cotton needs to be adopted in conformity with the Court's judgment in case C-310/04 which, pursuant to the description given in that judgment and to the objective formulated in recital 5 to Regulation (EC) No 864/2004, will lead to profitability and enable cotton growing to continue on a sustainable basis.

Amendment 3

Proposal for a regulation — amending act Recital 3a (new)

(3a) Cotton is grown mainly in regions whose gross domestic product is amongst the lowest in the European Union and whose economy is closely linked to agriculture. In such regions, cotton growing and the ginning industry which supports it are prime sources of income and employment, accounting in certain cases for over 80 % of activity in the area in which they are established. Furthermore, soil conditions in certain areas are such that, from an agronomic point of view, no alternative crop can be established in the short term.

Amendment 4

Proposal for a regulation — amending act Recital 3b (new)

(3b) The current cotton-aid scheme is highly specific in nature. Its roots lie in the Acts of Accession of Greece, Spain and Portugal, and certain of its objectives are to support cotton production in certain regions of the Community which are dependent on that crop, to provide the producers concerned with a fair income and to stabilise the market.

Amendment 5

Proposal for a regulation — amending act Recital 4

(4) The new scheme should meet the objectives, set out in paragraph 2 of Protocol No 4 on cotton to the Act of Accession of Greece (‘Protocol 4’), to support the production of cotton in regions of the Community where it is important for the agricultural economy, to permit the producers concerned to earn a fair income, and to stabilise the market by structural improvements at the level of supply and marketing. (4) The new scheme should meet the objectives, set out in paragraph 2 of Protocol No 4 on cotton to the Act of Accession of Greece (‘Protocol 4’), to support the production of cotton in regions of the Community where it is important for the agricultural economy and the social structure , to provide the producers concerned with a fair income, and to stabilise the market by structural improvements at the level of supply and marketing.

Amendment 6

Proposal for a regulation — amending act Recital 5

(5) All the relevant factors and circumstances pertaining to the specific situation of the cotton sector, including all the elements necessary to assess the profitability of that crop, should be taken into consideration. To this end , an evaluation and consultation process was launched: two studies were carried out on the socio-economic and on the environmental impact on the cotton sector in the Community of the future cotton support scheme and specific seminars and an Internet consultation were organised with stakeholders. (5) All the relevant factors and circumstances pertaining to the specific situation of the cotton sector, including all the elements necessary to assess the profitability of that crop, should be taken into consideration. Cotton is grown in regions which still quality as convergence-objective regions for the period 2007 to 2013 and which have an essentially agricultural economy with few alternative crops. Furthermore, cotton-growing and the associated agri-industry are a major source of employment and wealth in those areas. Hence an evaluation and consultation process was launched: two studies were carried out on the socio-economic and on the environmental impact on the cotton sector in the Community of the future cotton support scheme and specific seminars and an Internet consultation were organised with stakeholders.

Amendment 7

Proposal for a regulation — amending act Recital 6

(6) The de-coupling of direct producer support and the introduction of the single payment scheme are essential elements in the process of reforming the common agricultural policy (CAP) aimed at moving away from a policy of price and production support to a policy of farmer income support . Regulation (EC) No 1782/2003 introduced those elements for several agricultural products. (6) Regulation (EC) No 1782/2003 introduced the de-coupling of direct producer support and a single-payment scheme for several agricultural products.

Amendment 8

Proposal for a regulation — amending act Recital 8

(8) A complete integration in the single payment scheme of the support scheme in the cotton sector is likely to bring a significant risk of production disruption to the cotton producer regions of the Community. Part of the support should therefore continue to be linked to the cultivation of cotton through a crop-specific payment per eligible hectare. Its amount should be calculated in such a way so as to achieve the objectives set out in paragraph 2 of Protocol 4 while also bring the cotton scheme into the mainstream of the CAP reform process and simplification. To that end, in the light of the evaluation carried out, it is justified that the total available aid per hectare per Member State is set at 35 % of the national share of the aid that went indirectly to the producers. Such a rate allows the cotton sector to move towards long-term viability, promotes the sustainable development of the cotton-producing regions and ensures a fair income to farmers. (8) A complete integration in the single payment scheme of the support scheme in the cotton sector is likely to bring a significant risk of production disruption to the cotton producer regions of the Community. Part of the support should therefore continue to be linked to the cultivation of cotton through a crop-specific payment per eligible hectare. Its amount should be calculated in such a way so as to achieve the objectives set out in paragraph 2 of Protocol 4 while also bring the cotton scheme into the mainstream of the CAP reform process and simplification. To that end, in the light of the evaluation carried out, it is justified that the total available aid per hectare per Member State is set in line with the Member State's wishes and at no lower than 35 % of the national share of the aid that went indirectly to the producers, in line with the principle of subsidiarity . Such a rate allows the cotton sector to move towards long-term viability, promotes the sustainable development of the cotton-producing regions and ensures a fair income to farmers.

Amendment 9

Proposal for a regulation — amending act Recital 9

(9) The remaining 65 % of the national share of the aid that went indirectly to the producers should be available for the single payment scheme. (9) The remaining percentage of the national share of the aid that went indirectly to the producers ( which would be between 20 % and 65 % ) should be available for the single payment scheme.

Amendment 10

Proposal for a regulation — amending act Recital 10

(10) For environmental reasons, a base area per Member State should be established in order to limit the areas sown under cotton . In addition, the eligible areas should be restricted to those authorised by the Member States. (10) A base cultivation area per Member State should be established, with priority to be given to traditional growing areas in order to ensure that cotton growing continues in areas in which cotton production is of particular importance to the agricultural economy . In addition, the eligible areas should be restricted to those authorised by the Member States.

Amendment 11

Proposal for a regulation — amending act Recital 10a (new)

(10a) The extent and, therefore, the amount of coupled aid granted to farmers should be adjusted on the basis of information concerning the current situation, whilst maintaining the sector's financial neutrality.

Amendment 12

Proposal for a regulation — amending act Recital 10b (new)

(10b) Since there are few possible substitutes for cotton growing, aid schemes must be introduced to ensure that it is profitable and that it continues in the Union's producer regions. For this reason, the Member States should be able to increase coupled aid in cases where the area under cultivation is smaller than the base production areas (although such action must be financially neutral and a ceiling must be established for the amount of aid paid to farmers).

Amendment 13

Proposal for a regulation — amending act Recital 11

(11) In order to meet the needs of the ginning industry eligibility for the aid should be related to a minimum quality of cotton actually harvested. (11) In accordance with the principle of subsidiarity, Member States should set the level of coupled aid between the abovementioned limits, and should also establish the minimum quality of cotton actually harvested, so that farmers can avail themselves of that aid.

Amendment 14

Proposal for a regulation — amending act Recital 11a (new)

(11a) In view of the downward trend in the Member States' cotton production, the ginning industry has entered a restructuring process which should be accompanied by appropriate support measures designed to ensure that units which are forced to redirect their production activity experience a smooth transition. For this reason, a restructuring fund, financed out of the budget for the support scheme for cotton, could be set up.

Amendment 15

Proposal for a regulation — amending act Recital 12a (new)

(12a) Being able to adopt support measures that will boost competitiveness is becoming important. Those measures should be defined and financed by the Community. It is up to the Member States to choose the measures they consider effective and well-suited to the nature of their respective regions and to incorporate them into their national support programmes.

Amendment 16

Proposal for a regulation — amending act Recital 12b (new)

(12b) National support programmes should be financed mainly from funds transferred pursuant to Article 69 of Regulation (EC) No 1782/2003 and from non-absorbed funds originally earmarked as coupled aid.

Amendment 17

Proposal for a regulation — amending act Recital 12c (new)

(12c) The financing of national support programmes should be provided by means of a percentage of coupled support and by appropriations that, owing to the reduction in the area of land used for growing to less than the size of the base area, are not used as coupled support, so as to preserve the sector's financial neutrality.

Amendment 18

Proposal for a regulation — amending act Recital 12d (new)

(12d) The measures that may come under the national support programmes should include those aimed at restructuring varieties, modernising production in order to boost the competitiveness of the cotton sector, supporting environmentally friendly growing methods, and promoting research focused on the creation of varieties of improved quality, along with promotion measures and measures designed to modernise ginning plants.

Amendment 19

Proposal for a regulation — amending act Recital 12e (new)

(12e) In order to encourage the production of high-quality cotton, a quality premium should be established under the national support programmes. That premium should be linked to the financing of the measure aimed at improving the quality of cotton and granted to farmers who develop a product of exceptional quality, in line with criteria laid down by the Member State in question, in order to improve production as regards quality and to boost the competitiveness of Community cotton.

Amendment 20

Proposal for a regulation — amending act Recital 12f (new)

(12f) On the basis of Regulation (EC) No 864/2004, which is being repealed, it has been proposed that the sum of EUR 22 million (representing 2,74 % of the aid) be transferred to the second pillar and be focused on the restructuring of cotton-producing regions. In order to make the best use of the appropriations for the sector, it would be advisable for that amount to be transferred to the first pillar and to be incorporated into the financing of the national support programmes.

Amendment 21

Proposal for a regulation — amending act Recital 13a (new)

(13a) The provisions concerning cotton should remain in force until 2013.

Amendment 22

Proposal for a regulation — amending act Recital 13b (new)

(13b) In the period since the reform of the cotton sector approved in 2004 and annulled by the Court in case C-310/04, production has decreased considerably and all of the parties involved have consequently suffered damage, which should be duly assessed in order to enable compensation for the losses incurred to be awarded.

Amendment 23

Proposal for a regulation — amending act Recital 13c (new)

(13c) In order to facilitate the transition from the previously established cotton-aid scheme to the scheme established under this Regulation, it is necessary to adopt measures for the restructuring of the ginning sector.

Amendment 24

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110a — paragraph 1a (new)

A percentage of the aid may be used for measures which promote the sustainability of the sector based on specialised programmes under national schemes submitted by the producer Member States and approved in accordance with the management procedure. Such programmes may include crisis prevention and management policies as well as measures to enhance the sustainability of the sector which are not covered by rural development.

Amendment 25

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110b — paragraph 2a (new)

2a Producer Member States may lay down additional terms and conditions relating to the sowing, growing, harvesting and delivery of cotton to ginning industries with a view to enabling cotton growing to continue in production areas and to prevent it from being replaced by other crops.

Amendment 26

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110c — paragraph 1 — indent 2

— Greece: 370 000 ha, — Greece: 270 000 ha,

Amendment 38

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110c — paragraph 2 — introductory wording

2. The amount of the aid per eligible hectare shall be as follows: 2. The amount of the aid per eligible hectare, corresponding to 35 %, as a minimum, of the total payment to the farmer, shall be as follows:

Amendment 27

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110c — paragraph 2 — indent 2

— Greece: EUR 594 for 300 000 hectares and EUR 342,85 for the remaining 70 000 hectares, — Greece: EUR 750 upwards,

Amendment 28

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110c — paragraph 3 — subparagraph 2

However, for Greece the proportionate reduction shall be applied in respect of the amount of the aid fixed for the part of the national base area composed of the 70 000 hectares in order to respect the global amount of EUR 202,2 million. deleted

Amendment 29

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110c — paragraph 3a (new)

3a. Where the admissible cotton area in a given Member State is smaller than the base area laid down in paragraph 1, the aid referred to in paragraph 2 for that Member State shall be increased in proportion to the base area which has not been covered, up to a ceiling established by means of the procedure referred to in Article 144. Any saving brought about by a fall in production shall be allocated to the national support programmes.

Amendment 30

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110d — paragraph 1 — indent 5a (new)

— adopting measures for the management of market crises.

Amendment 31

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110ea (new) — paragraph 1

Article 110ea National support programmes 1. National support programmes shall be established for the purpose of improving competitiveness. The Community shall determine and shall finance the eligible actions. The Member States shall select whatever package of measures they consider effective and which is best suited to their regional characteristics. That package could include a restructuring fund for the ginning industry.

Amendment 32

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110 ea (new) — paragraph 2

2. The national support programmes shall be financed by means of a minimum basic rate of 1 % of the overall amount of coupled support. Appropriations unused under coupled support due to the reduction in growing areas to less than the size of the base area of the Member State in question shall be added to this amount.

Amendment 33

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110ea (new) — paragraph 3

3. The national support programmes shall include the sum earmarked for the restructuring of cotton-producing regions, which comes to EUR 22 million (i.e. 2,74 % of aid) and which had been transferred to the second pillar.

Amendment 34

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110 ea (new) — paragraph 4

4. At the Member States' discretion, measures may be financed under the national support programmes that aim to offset the effects of a possible fall in production and to restructure varieties, along with measures to modernise production in order to improve the competitiveness of the product. Support shall be granted for environmentally friendly growing methods in order to ensure a more rational use of water resources and to minimise the use of plant-health products, research aimed at creating varieties of improved quality shall be encouraged and restructuring and the modernisation of ginning plants shall be promoted. Member States may grant a quality premium to farmers who develop a product of exceptional quality, on the basis of specific criteria laid down by the Member States.

Amendment 35

Proposal for a regulation — amending act Article 1 — point 1 Regulation (EC) No 1782/2003 Article 110ea (new) — paragraph 5

5. Policies to forecast, mitigate and combat the effects of climate change on cotton-producing regions may be funded under the national support programmes.

Amendment 36

Proposal for a regulation — amending act Article 1 — point 1a (new) Regulation (EC) No 1782/2003 Article 143d

(1a) Article 143d shall be deleted.

Amendment 37

Proposal for a regulation — amending act Article 1 — point 1b (new) Regulation (EC) No 1782/2003 Article 155a