COMMUNICATION FROM THE COMMISSION TO THE COUNCIL - Goods not covered by Annex I to the Treaty Temporary flat-rate reduction of refunds

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL

Goods not covered by Annex I to the Treaty - Temporary flat-rate reduction of refunds

The purpose of this communication is to inform the Council that, despite the three unfavourable opinions delivered by the joint management Committee on milk and milk products, cereals and sugar on 25 November 1999 (milk products: 5 votes in favour, 15 abstentions, 67 votes against; cereals: 72 votes against, 15 abstentions; sugar: 20 abstentions, 67 votes against), the Commission has decided to adopt, by means of regulations (EC) No 2533/1999, No 2534/1999, No 2535/1999, a temporary flat-rate reduction of 4.5% in the rate of refunds for agricultural products exported in the form of goods not covered by Annex I.

(1) The European Council in Berlin decided to place a ceiling, as from the budget year 2000, on spending under the EAGGF guarantee section, at a level well below the agricultural guideline.

(2) Thus, for the budget year 2000 the ceiling for overall spending under the EAGGF guarantee section is EUR 41 738 million (of which EUR 37 352 million for conventional EAGGF guarantee section spending), which is well below the guideline for the year in question (EUR 46 549 million: see Annex 1).

(3) Consequently, in its letter of amendment to the preliminary draft budget for the year 2000 the Commission puts appropriation requirements for export refunds for goods not covered by Annex I to the Treaty at EUR 560 million.

(4) Current forecasts for the year 2000 are about EUR 578 million (due to the general increase in refund levels compared with 1999). In addition, this figure does not take account of a possible upturn in the Russian market and/or the Asian market.

(5) A saving of EUR 18 million must therefore be made for the budget year 2000.

(6) In its Communication to the Council adopted on 24 November, the Commission indicated the problem which will be caused in the medium and long term by placing a ceiling on expenditure on non-Annex I refunds, and proposed a global approach involving the introduction of several economy measures.

(7) In any event, it will be impossible to implement these measures until the second half of the budget year at the earliest.

(8) In addition, the Commission estimates the time lag between export and the payment of non-Annex I refunds to be three months. Accordingly, a reduced rate applied on the day of export will have only a delayed effect on the budget (even more delayed where refund rates are fixed in advance).

(9) To make an immediate saving of EUR 18 million over the period 16 October 1999 to 15 October 2000, the Commission, aware that reduced refund rates would not affect the budget until 1 February 2000, has taken the initiative of proposing a general and temporary flat-rate reduction of 4.5%. This reduction has been in application since 1 November 1999, following the joint Committee's failure to deliver an opinion on 28 October 1999.

(10) Since then, two new factors have complicated the situation: firstly, the budget for non-Annex I refunds has been reduced to EUR 557 million; secondly, prices have continued to fall on the world markets, notably for sugar and cereals, forcing the Commission to maintain and increase refund rates beyond what was forecast.

(11) Article 4(1) of Commission Regulation (EC) No 1222/94 stipulates that "The rate of refund shall be fixed for each month...". The opinions of the relevant management Committees ought therefore to be sought each month regarding the fixing of rates. Given the circumstances, the Commission proposed maintaining the temporary flat-rate reduction of 4.5% for the three types of product (milk products, cereals, sugar). This proposal was put to the joint management Committee for milk products, cereals and sugar on 25 November 1999 for an opinion, and received an unfavourable opinion (see above).

(12) In view of the circumstances, the Commission has decided to adopt and apply the regulations (EC) No 2533/1999, No 2534/1999, No 2535/1999 as from 1 December 1999. This decision must be communicated to the Council in accordance with Article 23(3) of Council Regulation (EC) No 1766/92 on the common organisation of the market in cereals and the corresponding Articles of Council Regulation (EEC) No 804/68 (milk and milk products) and Council Regulation (EC) No 2038/1999 (sugar).

ANNEX 1

Budget year 2000: Appropriation requirements from the EAGGF Guarantee Section

Million Euro

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(1) Expenditure or appropriations covered by EAGGF Guarantee in 1999 but subdivided according to the nomenclature proposed for 2000.

(2) Including appropriations entered in B0 - 40 (reserve and provision).

(3) SAPARD expenditure is also to be financed within the guideline (EUR 529 million).

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