EN Official Journal of the European Union C 107/33

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation (EU) No …/… of the European Parliament and of the Council laying down specific measures for agriculture in the outermost regions of the Union’

COM(2010) 498 final — 2010/0256 (COD)

2011/C 107/07

Rapporteur: José María ESPUNY MOYANO

On 7 October and 19 September 2010 respectively the European Parliament and the Council decided to consult the European Economic and Social Committee, under Articles 43(2) and 304 of the Treaty on the Functioning of the European Union, on the

Proposal for a Regulation (EU) No …/… of the European Parliament and of the Council laying down specific measures for agriculture in the outermost regions of the Union

COM(2010) 498 final.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 3 February 2011.

At its 469th plenary session, held on 16 and 17 February 2011 (meeting of 17 February 2011), the European Economic and Social Committee adopted the following opinion by 182 votes to nine with eleven abstentions.

1. Conclusions and recommendations

1.1 The Committee proposes that Article 349 of the Treaty on the Functioning of the European Union be included as a legal basis, together with Articles 42(1) and 43(2), as the reference to the articles of the CAP alone is insufficient to ensure that tailored measures can be adopted for the outermost regions of the European Union.

1.2 The Committee considers that the reference to ‘volumes’ in Article 18(2)e) should be deleted, and that the wording of Article 18(2)e) in relation to Article 18(4) should be clarified to ensure the programming of the measures and actions is sufficiently flexible. ‘Volumes’ should be replaced with a reference to the financial statement for each measure, and the reference to ceilings for each action should be deleted, as the ceilings would be decided as part of the overall measure.

1.3 The Committee considers that the measure on the preservation of the landscape and traditional features of agricultural land and the conservation of stone walls supporting terraces should be extended to other outermost regions so that they can benefit from the flexibility that Madeira currently has as regards the duplication of funds on maximum annual amounts eligible for European Union aid, as set out in Annex I to Regulation (EC) No 1628/2005.

1.4 The Committee considers that a new point should be added to Article 22, ensuring that large companies located in the outermost regions are exempt from the ban on receiving state aid for taking out agricultural insurance policies.

1.5 The Committee calls for an increase in funding for the banana sector through the Programmes of Options Specifically Relating to Remoteness and Insularity (POSEI Programmes). This would cushion the negative impact that the scheduled reduction in the tariff on banana imports into the EU is having on the income of EU producers.

1.6 The Committee considers that the specific supply arrangements should be designed for each region in accordance with local agricultural production, the development of which should not be limited by aid for supply which is too excessive for products which are also produced locally

2. Introduction

2.1 The outermost regions of the EU benefit from specific treatment, as set out in Article 349 of the Treaty on the Functioning of the European Union. This Article states that taking into account the special characteristics and constraints of these regions, specific measures are to be adopted. These aim, in particular, to lay down the conditions of application of the Treaties to those regions, including common policies. Currently, nine regions belonging to three Member States are listed under Article 349 of the TFEU: — Guadeloupe, French Guyana, Martinique, Reunion, Saint-Barthélemy and Saint-Martin (France); — the Azores and Madeira (Portugal); — the Canary Islands (Spain).

2.2 As regards the Common Agricultural Policy (CAP), the outermost regions benefit from specific measures included in the POSEI programmes, the main instruments of which are as follows: — measures to Support Local Production (SLP); — the Specific Supply Arrangements (SSA), aiming to mitigate the costs for the supply of certain essential foodstuffs; — accompanying measures which focus on adapting the CAP to the specific characteristics of the outermost regions.

2.3 Specific measures for agriculture in the outermost regions were first introduced in 1991 for the French overseas departments (POSEIDOM) and in 1992 for the Canaries (POSEICAN), the Azores and Madeira (POSEIMA). In 2001, there was a reform of the POSEI scheme which amended the SSA and changed the way SSA aid was calculated. The reform also introduced new SLP measures and modified existing ones.

2.4 In 2006 a significant reform was made to the POSEI: the previous three regulations were replaced by a single text, Council Regulation (EC) No 247/2006. This Regulation adopted a new programming approach, decentralising the process of designing, modifying, managing and monitoring POSEI programmes by passing on these responsibilities to the competent authorities in the Member States. The new system introduced a higher level of flexibility in managing the programmes that was more adapted to local needs, and simplified the procedures for their modification. The 2003 CAP reform on direct support schemes for farmers also influenced the reform of the POSEI scheme, as the 2003 CAP reform had ensured agriculture in the outermost regions was exempt from the application of the modulation and the decoupling of aid, thereby taking into account its specific characteristics.

2.5 Following its adoption, Council Regulation (EC) No 247/2006 was modified several times to take into account the 2006 sugar and banana reforms, the Health Check (transferring to POSEI the budget corresponding to direct support measures previously managed under Council Regulation (EC) No 1782/2003) as well as other transfers of direct aid in 2007 and 2008.

2.6 Currently, it could be said that the POSEI programmes are the equivalent of the first pillar of the CAP for the outermost regions, and that there is a need to ensure the measures are maintained and have adequate funding.

3. Gist of the Commission proposal

3.1 This modification to Council Regulation No 247/2006 was required to cater for recent changes in legislation, and in particular the entry into force of the Lisbon Treaty which brought the co-decision procedure into the Common Agricultural Policy. The Lisbon Treaty makes a clear distinction between, on the one hand, the powers delegated to the Commission to adopt non-legislative acts (delegated acts) of general application in order to supplement or amend certain non-essential elements of a legislative act, as set out in Article 290, and, on the other, those conferred upon the Commission to adopt implementing acts as referred to in Article 219.

3.2 This amendment to the Regulation aims to recast and restructure the Regulation in the interests of clarity and transparency so that it reflects more effectively the reality of the POSEI agricultural scheme.

3.3 The new Regulation is more explicit in setting out the POSEI scheme's main objectives and highlights the central role of the POSEI programmes. It also includes certain measures on programming to ensure greater flexibility in adapting programmes to meet the needs of the outermost regions.

3.4 The Regulation proposes a set of very specific amendments: — The possibility of re-dispatching products which have been processed locally using basic products which have benefited from the specific supply arrangements, without the benefit being reimbursed, will now also apply to the French overseas departments. — The ceiling for financing for the specific supply arrangements for France and Portugal's outermost regions will be increased, without any increase to the total budget envelope. — It will be compulsory to indicate in the programmes how the aid amounts for measures to assist local agricultural products are defined.

3.5 The Regulation also specifies that the specific supply arrangements should be designed for each region in accordance with local agricultural production, the development of which should not be limited by aid for supply which is too excessive for products which are also produced locally.

3.6 The proposal for the new Regulation does not affect the sources of funding or the intensity of Community support: changes have been made to the structure of the Regulation but no significant changes have been made to the content.

4. General comments

4.1 In the outermost regions, agriculture represents a large part of the local economy, particularly in terms of jobs, and also supports the local agri-food industry, which accounts for the bulk of industrial production in these regions.

4.2 Agricultural production in the outermost regions is extremely fragile however, mainly because of the problems created by their remoteness, the size and fragmented nature of local markets, poor climate conditions, the small size of holdings and low crop diversity. Taken together, these factors mean that production in the outermost regions is significantly less competitive than in mainland Europe. Local agriculture is heavily dependent on the outside world both for the supply of inputs and to sell its products, yet it is very isolated from the sources of supply and markets.

4.3 In most of the outermost regions, agricultural production is sharply split between production for export and production to supply local markets. However, production intended for export has to compete with other countries in the world market (the Mediterranean, Latin America, etc.) which also sell to mainland Europe, with increasingly favourable conditions of access and lower costs, due to the gradual liberalisation of the trade of agricultural products in the EU.

4.4 The EU banana sector is an example of a worrying trend: the gradual removal of protection for the outermost regions' main export products. The European Union signed a multilateral agreement on the banana trade at the World Trade Organisation on 15 December 2009. The agreement reduced the tariff to EUR 176 per tonne, decreasing to EUR 114 per tonne between 2017 and 2019. In addition, Association Agreements have been signed with Colombia, Peru and countries in Central America, and are likely to be signed in the near future with Ecuador. These Association Agreements establish an even greater tariff reduction: a tariff of only EUR 75 per tonne will be in force from 2020.

4.5 The 2006 reform of the POSEI scheme was positive in that it ensured the scheme was better adapted to the specific characteristics of agriculture in the outermost regions: national and regional authorities were given more responsibility for designing programmes, meaning that stakeholders could be involved much more directly in defining support measures.

4.6 The proposed amendment brings the measures of the Regulation more into line with the current operation of the scheme and ensures that there is greater flexibility for adapting the programmes to meet the needs of each region.

4.7 As far as alignment with the Treaty of Lisbon is concerned, the Commission has tried hard to determine the distribution of delegated acts and implementing acts. The idea is to avoid changing the measures currently in force to ensure the current system can continue to operate. The proposal is somewhat premature however, because all the information on the subject is not yet available: the regulation setting out the new comitology procedure has not yet been issued.

5. Specific comments

5.1 Currently, the POSEI Regulation has a dual legal basis: the two TFEU articles on the CAP (formerly articles 36 and 37) and the specific article on the outermost regions (formerly Article 299(2)). However, in the proposal to amend the Regulation, the legal basis is restricted to the new articles 42 and 43(2) on the CAP: the new Article 349 on the outermost regions is not included. Solely referring to the CAP articles is not sufficient to ensure that tailored measures can be adopted for the outermost regions, as the specific article provides a legal basis for all provisions dealing with the exceptional circumstances in the outermost regions.

5.2 Article 18 proposes new measures and sets out the elements that the POSEI programmes presented by the national competent authorities must contain. However, some of these provisions could be misinterpreted. Section e) of Article 18(2) should be deleted because it is not clear and is superfluous as it repeats what is stated in Article 18(4): the conditions for aid and products have to be established in any case for each action. The fact that ‘volumes’ is listed as a compulsory element is more confusing than helpful as each measure consists of various actions, so practically speaking there is no point in referring to volumes when describing the overall measure. In Article 18(4), having to define a ceiling for each action is not necessary and makes the process of managing the programme less flexible, as the individual aid and the beneficiaries of the action have to be stated anyway.

5.3 In some outermost regions there is also a need to encourage the conservation of the landscape and traditional features of farm land, particularly the conservation of stone walls supporting terraces: maintaining the traditional landscape and ensuring that land is properly preserved is essential due to the difficult terrain and the nature of the soil. Therefore, in Article 21(1), the flexibility that Madeira currently enjoys as regards the doubling of the maximum annual amounts eligible for European Union aid (as set out in Annex I to Regulation (EC) No 1628/2005) should be extended to other outermost regions.

5.4 Group insurance policies, which must be taken out by an entire sector, are particularly important for some outermost regions. The fact that large businesses are not able to use state aid to sign up to group insurance policies makes insurance premiums more expensive for small and medium-sized producers and renders the insurance system less sustainable. There is a need to take into account the fact that the outermost regions consist of small areas of land and that for some of these regions, specific lines of insurance apply to their crops. It would therefore make sense to encourage the whole of each sub-sector to sign up to the relevant group insurance policy.

5.5 The tariff reduction established in Geneva in the multilateral agreement on the banana trade is already having a negative impact on the sales price of bananas and is therefore hitting EU producers hard. This negative impact will be exacerbated by the additional tariff reduction established in the bilateral agreements signed with Andean and Central American countries. In order to cushion the sharp drop in the competitiveness of the EU banana sector which has been caused by the significant reduction in tariffs, it is essential that compensatory measures are introduced that will minimise the negative impact: an increase in funding for the banana sector through the POSEI Programmes is required to ensure that the income of EU producers can be maintained.