2. 4. 80 Official  Journal  of the European  Communities No C 83/1 
II 
(Preparatory  Acts) 
ECONOMIC  AND  SOCIAL  COMMITTEE 
Opinion  on the proposal  for a Council  Regulation  laying  down  the trade  arrangements 
applicable  to certain  goods  resulting  from  the processing  of agricultural  products 
The text  referred  to the Committee  has not yet been  published  in the Official  Journal 
of the European  Communities. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 8 August  1979  the Council  referred  the abovementioned  proposal  to the Economic 
and Social  Committee  in accordance  with  Article  43 of the Treaty  establishing  the 
European  Economic  Community. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 
174th  plenary  session  held  in Brussels  on 12 and 13 December  1979. 
The full text of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the Treaty  establishing  the Euro-
pean  Economic  Community,  and  in particular  Arti-
cle 43 thereof, 
Having  regard  to the request  made  by the Council 
of the European  Communities  on 8 August  1979  for 
an opinion, Having  regard  to the opinion  issued  by the Section 
for Agriculture  at its meeting  held  on 29 November 
1979, 
Having  regard  to the discussions  at its 174th  plenary 
session  held  on 12 and 13 December  1979  (meeting 
of 13 December  1979), 
Having  regard  to the decision  taken  by its Bureau 
on 25 September  1979  instructing  the Section  for 
Agriculture  to prepare  the Committee's  work  on the 
matter, 
Having  regard  to the oral  report  submitted  by the 
rapporteur,  Mr Zinkin, HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 45 votes  to seven  with  14 abstentions: 
The Committee  approves  the proposals  of the Com-
mission  with  the following  observations: 
No C 83/2 Official  Journal  of the European  Communities 2. 4. 80 
General 
1.1. The  price  of agricultural  products  in the Com-
munity  is, in general,  higher  than  world  prices. 
Moreover,  protection  to agriculture  is mainly  pro-
vided,  not by fixed  tariffs,  but by levies  which  vary 
with  the level  of world  prices. 1.5. The  Committee  recognizes  that  there  are rea-
sons  for many  of these  anomalies.  Removing  some 
of them  would  be expensive,  and  budgetary  con-
straints  are severe.  Introducing  new  customs  head-
ings into  the system  would  require  difficult  negotia-
tions  with  the Community's  trading  partners.  Some 
of the  omissions  are  because  the  differences 
between  world  and  Community  prices  are small  or 
the ingredient  is present  in negligible  quantities. 
Nevertheless,  on principle  these  anomalies  are inde-
fensible,  and  the  Committee  would  like  to see  the 
most  glaring  of them  phased  out as soon  as possible. 
1.2. If the food-processing  industries  of the Com-
munity  are  to be able  to compete  with  industries 
outside  the Community  which  are able  to buy  their 
agricultural  ingredients  at world  prices,  a system  is 
required  which  will  compensate  them,  by import 
levies  and  export  restitutions,  for the higher  prices 
they have  to pay.  This  system  cannot  be a fixed  tar-
iff, because  the difference  between  Community  and 
world  prices  is constantly  changing,  though  a fixed 
tariff  is used  for any  protection  which  it is desired  to 
give them,  as distinct  from  compensation  for  the 
particular  difference  in costs. 
1.3. Ideally,  the  system  should  compensate  for 
these  differences  exactly.  The  importer  of processed 
food  should  pay  the  exact  equivalent  of the  levies 
on the  ingredients  his processed  product  contains, 
the exporter  should  get a corresponding  refund. 
1.4. In  practice,  there  are many  anomalies.  Export 
refunds  are based  on the  formulae  for the products 
concerned;  import  levies  are based  on broad  bands 
of assumed  composition,  because  it would  often  be 
difficult  to obtain  the formulae  and  impracticable  to 
do an analysis  in every  case.  The  charges  on imports 
do not  cover  all leviable  products,  but  only  those 
included  in Article  2 of Regulation  (EEC)  No 1059/ 
69 nor  do they  cover  all products  which  contain 
some  of these  ingredients,  but  only  those  listed  in 
the Annex  to the  Regulation.  Aromatized  and 
liqueur  wines  (although  they  get  refunds  on their 
sugar  content),  whisky  and  gin,  for  example,  are 
conspicuously  absent  from  that  list and  there  is no 
provision  for  products  made  from  fruit  or vegeta-
bles.  Equally,  the refunds  on exports  do not  cover 
all products;  thus,  no refund  can  be claimed  on the 
milk  in cream  of tomato  soup,  and  there  is a specific 
exclusion  for the ingredients  from  which  the alcohol 
is made  for  drinks  under  heading  No  22.09  of the 
Common  Customs  Tariff. 1.6. The  system  is put under  further  strain  because 
MCA  are  charged  (or paid)  on the  same  items  and 
compositions  as are used  for assessing  import  levies, 
although  these  were  not decided  with  MCA  in mind. 
The Committee  regards  this  as one  more  reason  to 
hope  for the early  disappearance  of MCA. 
1.7. The  Commission  has  made  three  connected 
proposals  to the Council,  the one  now  under  consid-
eration,  COM(79)  427  final,  on which  a separate 
opinion  has  been  written  and  COM(79)  504  final  on 
export  refunds,  which  has  not  been,  and  was  not 
required  to be, referred  to the Economic  and  Social 
Committee. 
1.8. The  present  proposal,  like  the other  two,  codi-
fies the  amendments  made  to the  Regulation  hith-
erto,  simplifies  the wording  in places  and  makes  cer-
tain changes  which  experience  has  shown  to be 
desirable.  These  are  discussed  in detail  under  the 
relevant  articles;  in general  the Committee  approves 
of what  the Commission  is trying  to do. 
1.9. The  Commission  is preparing  practical  notes 
as a guide  to trade  and  industry  on how  to comply 
with  the regulations.  The  Committee  welcomes  this 
initiative,  the  previous  notes  of 1971  proved  most 
useful.  The  publication  should  be in loose-leaf  and 
should  give  all the  relevant  rules  (allowable  ingre-
dients,  restitutions,  variable  components  and  MCA) 
for each  non-Annex  II product  under  the  appro-
priate  Common  Customs  Tariff  heading.  This  would 
be of particular  assistance  to the smaller  firms.  The 
notes  should  include  examples  showing  how  the 
regulations  are applied.  They  should  be drawn  up in 
consultation  with  industry  as in the past. 
Official  Journal  of the European  Communities  No  C 83/3 2. 4. 80 
2. The  Commission's  proposal 
2.1. The  main  change  proposed  by the  Commis-
sion is the addition  of eggs  to the list  of basic  pro-
ducts  in Article  2. This  is because  traders  have 
found  a way  of importing  eggs  into  the Community 
in effect  levy-free  by mixing  49 % of powdered  eggs 
with  51 % of flour  and  then  separate  them  out.  The 
levy consequent  on the inclusion  of eggs  in Article  2 
has been  confined  to products  coming  under  Com-
mon  Customs  Tariff  heading  Nos  19.02  and  21.07, 
since  these  are  where  the  loophole  has  been 
exploited. 3. Detailed  provisions 
3.1. Article  1 (c) 
This  has  been  modified  to make  clear  exactly  what 
substitutes  are  covered.  There  has,  for  example, 
been  the  problem  of the import  of coffee  substitute 
made  of coffee  and  roasted  figs  into  the  United 
Kingdom  from  Austria.  It has  been  argued  that  the 
roasted  figs  (which  come  from  Italy  and  benefit 
from  an export  refund)  were  an additive,  not  a sub-
stitute  for the usual  roasted  barley. 
3.2. Article  2 (d) 
The Commission  is considering  adding  an Article  2 
(d) to assimilate  the treatment  of isoglucose  to that 
of sugar.  The  Committee  supports  this  idea. 
Done  at Brussels,  13 December  1979. 
The Chairman 
of the Economic  and  Social  Committee 
Raffaele  VANNI 
ANNEX 
to the opinion  of the Economic  and  Social  Committee 
Rejected  amendment 
The following  amendment  was  rejected  during  discussions: 
Point  2.1.  The  following  paragraph  should  be added: 
'The  Committee  considers  that  the proposal  is premature  as, so far,  there  have  only  been  very 
few cases  of such  imports.  If they  were  to become  more  frequent,  the  proposal  could  be 
accepted.' 
Reasons 
1. This  proposal  is identical  to the compromise  proposal  made  by the rapporteur  at the Agricul-
ture Section  meeting  on 29 November  1979.  On this  occasion  the proposal  was  rejected,  in a vote 
by name,  by 20 votes  to 10, with  nine  abstentions.