31. :7. 78 Official  Journal  of the European  Communities No C 181/1 
II 
(Preparatory  Acts) 
ECONOMIC  AND  SOCIAL  COMMITTEE 
Opinion  on the amended  proposal  for a Council  Regulation  on the common  organization  of 
the market  in ethyl  alcohol  of agricultural  origin  and  laying  down  additional  provisions  for 
certain  products  containing  ethyl  alcohol 
The text  referred  to the Committee  has been  published  in Official  Journal  of the European 
Communities  No  C 309  of 31 December  1976,  page  2. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 22 December  1976,  the Council  referred  the abovementioned  proposal  to the Economic 
and Social  Committee  in accordance  with  Articles  43 and  198  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 157th 
plenary  session,  held  in Brussels  on 29 and  30 March  1978; 
The full  text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the Treaty  establishing  the European 
Economic  Community,  and  in particular  Articles  43 and 
198 thereof, 
Having  regard  to the  request  made  by the  Council  of 
the European  Communities  on 22 December  1976  for 
an opinion, 
Having  regard  to the decisions  taken  by its Bureau  on 
14 December  1976,  instructing  the Section  for Agricul-
ture to draw  up an opinion  on the matter, 
Having  regard  to the opinion  given  by the Section  for 
Agriculture  at its meeting  of 19 January  1978, 
Having  regard  to the report  submitted  by the  rappor-
teur,  Mr Bourel, 
Having  regard  to the  discussions  at its 157th  plenary 
session  on 29 and  30 March  1978  (meeting  of 30 
March  1978), HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 62 votes  to 31, with  nine  abstentions: 
1. INTRODUCTION 
1.1.1.  First  of all,  the  Committee  thinks  it should 
comment  in general  on the wisdom  of having  a market 
regime  for  ethyl  alcohol  of agricultural  origin  in the 
EEC,  for it has been  informed  that  this  has been  queried 
in some  Member  States  and  in some  trade  circles. 
1.1.2.  The  Committee  would  therefore  state  first  and 
foremost  that  it supports  the  principle  of an organiz-
ation  of the  market  in ethyl  alcohol  of agricultural 
origin.  One  of the aims  of this  organization  is to give 
short-  to medium-term  assistance  to certain  producers 
No C 181/2 Official  Journal  of the European  Communities 31.7%  78 
of some  kinds  of alcohol  and  of certain  alcoholic  bever-
ages.  This  would  be aimed  at the gradual  reduction  and 
final  elimination  of agricultural  alcohol  surpluses  other 
than  those  due  to unavoidable  seasonal  imbalances. 
1.1.3.  In  view  of the  present  state  of the  market  and 
bearing  in mind  the  case  law  established  by several 
judgments  delivered  by the  Court  of Justice  between 
December  1974  and  January  1976  on the  subject  of 
national  market  organizations,  the  absence  of a Com-
munity  regime,  the Committee  thinks,  would  inevitably 
plunge  the  alcohol  industry  into  a state  of anarchy, 
which  in the long  run  would  be highly  disadvantageous 
to producers  both  of agricultural  and  synthetic  alcohol, 
to industrial  users  of alcohol  and,  ultimately,  to con-
sumers.  Care  should  therefore  be taken  to ensure  that  a 
policy  based  on recognized  agricultural  imperatives  is as 
compatible  as possible  with  the  requirements  of the 
industrial  sector.  Care  should  therefore  be taken  to 
ensure  that  a policy  based  on recognized  agricultural 
imperatives  is as compatible  as possible  with  the  re-
quirements  of the  industrial  sector,  and  particularly 
with  the  genuine  interests  of consumers  at which  the 
common  market  ought  to aim  since  otherwise  the policy 
will in the  long  run  do more  harm  than  good  to 
European  integration. 
1.1.4.  Furthermore,  such  a state  of affairs  would  most 
certainly  lead  to growing  conflicts  between  Member 
States.  A foretaste  of this  is provided  by the  present 
situation. 
1.2.1.  The  Committee  thinks  that  an ideal  solution 
based  on theory  is impossible  in this  field,  and  there  is 
no use  regretting  this. 
1.2.2.  The  Committee  therefore  supports  the  Com-
mission  in having  taken  as the basis  for its proposal  the 
de facto  situation  in the  production  of agricultural  al-
cohol  in the  EEC  countries.  It appreciates  that  this 
approach  could  lead  to nothing  more  than  a com-
promise,  in view  of the major  differences  in the produc-
tion of alcohol  and  alcoholic  beverages  in Member 
States. 
1.3.1.  The  Committee  realizes  the twofold  requirement 
of (a)  providing  guarantees  to producers  within  the 
terms  of the Treaty  of Rome,  i.e. enabling  them,  among 
other  things,  to find  a normal  market  for  competitive 
agricultural  alcohol  within  the terms  of the Regulations 
and (b) ensuring  that  the industrial  users  of agricultural 
alcohol  have  the  freedom  needed  to pursue  their  ac-
tivities.  A Regulation  is thus  called  for,  since  fhere  is a 
Community-widg  agricultural  problem  in this  sphere. 
The agricultural  policy  adopted  with  regard  to alcohol 
must  not,  however,  be detrimental  to industry. 
1.3.2.  The  Committee  considers  that,  generally  speak-
ing, the amended  proposal  now  under  review  meets  the 
aforementioned  twofold  requirement  more  than  the first 
proposal  did.  This  general  view  will  not  prevent  a number  of suggestions  being  made  throughout  this 
opinion  for improving  the effectiveness  of the regime  as 
a whole. 
1.4.1.  Finally,  the  Committee  would  draw  the  Com-
munity  institutions'  attention  to the close  links  between 
the operation  of the market  organization  for alcohol,  as 
set out  in the proposal  under  review,  and  the  operation 
of other  market  organizations  for agricultural  products 
that may  be distilled.  The  management  of certain  of 
these  other  market  organizations  poses  some  very  dif-
ficult  problems.  The  Community  institutions  should 
therefore  display  the utmost  care  when  taking  decisions 
in these  other  sectors  so as not  to jeopardize  the proper 
operation  of the market  regime  for agricultural  alcohol. 
2. GENERAL  COMMENTS 
2.1.1.  A detailed  study  of the  Commission's  proposal 
naturally  raises  a large  number  of legitimate  questions. 
However,  the Committee  considers  that  it cannot  poss-
ibly analyze  these  questions  in detail.  This  is a job  for 
experts,  and  even  they  would  quite  understandably  have 
difficulty  in agreeing. 
2.1.2.  Consequently,  the Committee  would  like  to pick 
out a number  of important  aspects  on which  it feels 
obliged  to comment.  In adopting  this  approach,  it is 
prompted  more  by the  desire  to underline  the  main 
issues  emerging  from  an examination  of the  proposal 
than  by the wish  to resolve  technical  questions. 
2.1.3.  In  the  presentation  of its comments,  the  Com-
mittee  naturally  adheres  to the  sequence  in which  the 
subjects  are dealt  with  in the Commission's  proposal. 
2.2. Field  of application 
2.2.1.  The  Committee  stresses  the  importance  of the 
wording  of Article  1, which  lays  down  the  proposed 
Regulation's  field  of application  and,  in fact,  indicates 
the different  types  of alcohol  and  alcoholic  beverages  to 
which  the  proposal's  further  provisions  (production, 
marketing,  pricing  and  trade  regimes)  are to apply. 
2.2.2.  The  Committee  points  out  that  this  Article  lists 
a number  of Common  Customs  Tariff  headings  and 
subheadings  to be covered  by the  proposal.  These  will 
in fact  be subject  to either  (a) the  market  organization 
as such,  or (b) certain  supplementary  rules  only,  or (c) 
trade  arrangements.  Although  the  Committee  approves 
31.17.  78 Official  Journal  of the European  Communities No C 181/3 
of the reference  to the customs  nomenclature  it thinks  it 
would  be wise  also  to list  the  products  by name, 
together  with  the measures  planned  in respect  of them. 
This  would  make  the proposals  clearer  and  there  would 
be no danger  of confusion  arising. 
2.2.3.  The  Committee  calls  for a clearer  definition  of 
ethyl  alcohol  of agricultural  origin  in this  Article, 
which,  as it stands  at the moment,  merely  defines  the 
products  excluded  from  this  category.  It would  seem 
possible  to find  a solution  on the  basis  of various 
suggested  precise  definitions,  some  of which  are 
mentioned  in the Section's  report. 
2.2.4.  The  Committee  also  calls  for a careful  revision 
of the  lists  of products  in each  paragraph.  Additions 
must  be made  to these  lists,  since  otherwise  there  is a 
danger  of products  being  omitted  from  either  the 
supplementary  provisions  also  proposed  or,  more 
especially,  the trade  rules. 
2.2.5.  The  Committee  emphasizes  that  one  of the main 
reasons  why  it is asking  for this  Article  to be worded 
more  clearly  and  more  logically  is that,  at present,  it 
lists industrial  products  not in Annex  II to the Treaty  of 
Rome.  The  Committee  will  return  to this  problem 
further  on, in conjunction  with  the question  of invoking 
Article  235.  However,  it points  out  here  and  now  that, 
although  it approves  of the use  of Article  235  in some 
cases,  it has  always  urged  that,  where  this  Article  is 
invoked,  special  attention  should  be  given  to the 
drafting  of the texts.  In the difficult  domain  of alcohol, 
this need  is even  more  pressing. 
2.3. Problems  connected  with  the management  of the 
market  in agricultural  alcohol 
2.3.1.  The  Committee  thinks  that  it must  comment  on 
the main  problems  which,  in its estimation,  are likely  to 
pose  difficulties  for the management  of the Community 
market  in agricultural  alcohol.  It considers  also  that  it 
should  segregate  these  problems.  This  is of course  an 
arbitrary  approach,  for all the problems  arising  in this 
field  are clearly  linked.  However,  it does  mean  that  the 
problems  can  be dealt  with  one  after  another. 
2.3.2.  Molasses  alcohol 
2.3.2.1.  Molasses  alcohol  is excluded  from  the  draft 
Regulation's  main  provisions.  Thus,  its target  price  is to 
be fixed  separately  and  no marketing  guarantee  is to be given  for it, though  provision  may  be made  tor a mar-
keting  premium  for a period  of up to seven  years. 
2.3.2.2.  To  begin  with,  the  Committee  is aware  that 
the position  of producers  of molasses  alcohol  differs 
from  one  Member  State  to another.  Above  all, the price 
of molasses  alcohol  varies  between  countries.  Determin-
ing factors  here  are  (a) the  relationship  between  the 
earnings  from  the production  of molasses  alcohol  and 
those  from  the production  of sugar  and  (b) differences 
in the  way  in which  molasses  alcohol  is marketed.  It 
should  also  be considered  that  the Community  annually 
imports  a net amount  of 1-5  million  tonnes  of molasses 
and that  molasses  alcohol  is manufactured  by producers 
using  completely  industrial  methods. 
2.3.2.3.  Nonetheless,  the  Committee  endorses  the 
Commission's  general  plan  to make  molasses  alcohol 
competitive  with  synthetic  alcohol  within  a relatively 
short  space  of time.  A large  portion  of the production  of 
molasses  alcohol  would  then  find  an outlet  in industry, 
whose  needs  are considerable. 
2.3.2.4.  The  Committee  is therefore  not convinced  that 
the measures  proposed  by the Commission  for achieving 
this aim  are in keeping  with  the actual  market  situation. 
In its view,  steps  must  be taken  both  to prevent  molas-
ses alcohol  from  being  ousted  from  the market  and  to 
prevent  it from  swamping  the market. 
2.3.2.5.  In the  eyes  of the  Committee,  one  solution 
would  be a combination  of the following  suggestions: 
(a) It is not  normal  for  the  target  price  for  molasses 
alcohol  to be fixed  by reference  to the target  price 
for synthetic  alcohol.  These  two  products  — one  of 
which  is agricultural  in origin  and  the  other  indus-
trial — differ  fundamentally  in their  production  cost 
components.  It would  be normal  to fix this  target 
price  on the basis  of the target  price  for other  agri-
cultural  products,  particularly  cereals.  The  largest 
user of molasses  is the animal  feed  industry,  which  is 
also the largest  user  of cereals. 
If the price  of molasses  alcohol  were  to be fixed,  it is 
suggested  that  the price  of molasses  alcohol  be fixed 
within  a bracket  or as a certain  percentage  of the 
price  of alcohol  produced  from  cereals,  which  is 
also the  key  price  for  the  oral  consumption  're-
served'  sector.  This  would  also  be a way  of prevent-
ing the  equilibrium  charge  (which  is based  on the 
target  price)  from  being  too high. 
(b) The  Committee  is not  in favour  of all molasses 
alcohol  coming  under  the  system  of target  and 
guaranteed  quantities. 
No C 181/4 Official  Journal  of the European  Communities 31. 7. 78 
However,  it does  appear  justified,  in view  of the 
agricultural  alcohol  requirements  of the  'reserved' 
sectors,  to allocate  a guaranteed  quantity  (to  be 
determined)  to molasses  alcohol  deriving  from 
Community-produced  molasses,  which  could  be 
done  by reducing  the  shares  of the  market  in the 
'reserved'  sectors  of particular  alcohols  now  allo-
cated  a share  of that  market. 2.3.3.3.  It is thus  clear  to the Committee  that  the pre-
sent proposal  will  not  be able  to operate  unless  the 
Community  can  get a tighter  grip  on the wine  market. 
The proposal  allows  some  account  to be taken  of excep-
tional  distillation  made  necessary  by specific  circum-
stances  but is certainly  not capable  of tackling  structural 
over-production. 
To this  end  the Committee  considers  that  it is essen-
tial to establish  the types  of agricultural  alcohol  dis-
tilled  from  raw  materials  which,  from  an agricul-
tural  point  of view,  are  in a similar  situation  to 
molasses. 2.3.3.4.  This  being  so, the  Committee  underlines  the 
importance  of instruments  such  as the  Council  Regu-
lation  of 17 May  1976,  which  introduced  a whole  host 
of measures  for restricting  wine  production. 
In this  context,  the Committee  would  underline  its 
approval  of the  Commission's  plan  to ensure  that 
the Community  has  a competitive  molasses  alcohol 
industry  in the near  future. 
(c) For  the  same  reason,  the Committee  is also  not  in 
favour  of the transitional  measures  advocated  by the 
Commission  in Article  7. In the first  place,  the 'mar-
keting  premium'  idea  is too vague.  Above  all, how-
ever,  the  Committee  urges  that  degressive  aid  be 
given  for restructuring,  since  the aim  is to enable  the 
industry  to adapt  to new  conditions  on the market. 
2.3.2.6.  The  Committee  would  like  to point  out  here 
and now  that,  even  if the improvements  proposed  above 
are put  into  effect,  producers  of molasses  alcohol  will 
find themselves  in a situation  where  certain  sacrifices 
will have  to be made.  These  sacrifices  should  undoubt-
edly be shared  by other  types  of alcohol  whose  raw 
material  is in a position  comparable  to that  of molasses. 2.3.3.5.  The  Committee  also  points  out  that  the 
growth  in alcohol  surpluses  would  also  make  the sale  of 
alcohol  by intervention  agencies  (Article  8) problematic 
because  these  agencies  would  be obliged  to place  such 
surpluses  on the  world  market  or earmark  them  for 
'non-reserved'  uses.  Such  a situation  would  certainly 
cause  difficulties  for the  synthetic  alcohol  industry  in 
the adjustment  of its production  programmes.  Industrial 
alcohol  producers  and  consumers  have  the right  not to 
suffer  disturbance  of the market  in non-reserved  sectors 
by the  disposal  of possibly  massive  quantities  of sub-
sidized  agricultural  alcohol  in excess  of the  require-
ments  of the  agricultural  industry.  In the  interests  of 
better  adaptation,  therefore,  an attempt  should  be made 
to forecast  as accurately  as possible  the production  and 
consumption  of alcohol  produced  from  wine,  so as to 
reduce  to a minimum  the  uncertainties  in synthetic 
alcohol  production.  The  Committee  therefore  considers 
that the target  quantities  should  be based  more  on the 
estimated  sales. 
2.3.3.  Alcohol  produced  by the distillation  of wine 2.3.3.6.  Lastly,  the Committee  would  once  again  stress 
the clear  links  between  the wine  and  the alcohol  market 
regimes. 
2.3.3.1.  The  basic  idea  behind  the  Commission's 
proposal  is to liberalize  the production  of agricultural 
alcohol  and  guarantee  it a market,  though  only  for lim-
ited quantities.  A five-year  programme  with  production 
targets  is to be drawn  up for  this  purpose.  This  pro-
gramme  is to be subject  to review  after  three  years  and 
the guaranteed  quantities  fixed  annually  may  be ad-
justed  at the end  of the marketing  year  to make  allow-
ance  for the quantities  of alcohol  produced  from  wine 
in particular. 
2.3.3.2.  The  Committee  is aware  of the  difficulty  of 
including  alcohol  produced  from  wine  in such  a pro-
gramme.  It notes  that  Article  4 (4) allows  some  flexibil-
ity in fixing  the guaranteed  quantities,  but  within  the 
limits  of the target  quantities,  which  are  valid  for five 
years  and  reviewable  after  three. 2.3.4.  The  problem  of the 'reserved'  sectors 
2.3.4.1.  Inclusion  of a quantity  of molasses  alcohol  in 
the 'target'  and  'guaranteed  quantities'  system,  as pro-
posed  by  the  Committee  in paragraph  2.3.2.5  (b), 
would  naturally  mean  that  appropriate  action  would 
have  to be taken  with  regard  to the quantity  of alcohol 
provided  with  a guaranteed  outlet.  It is stated  in Article 
9 (3) that  the alcohol  requirements  of users  in the per-
fumery  and  cosmetics  industries  may  be reserved  for 
ethyl  alcohol  of agricultural  origin  for  a transitional 
period  of five  marketing  years,  for Member  States  who 
so request.  The  Committee  thinks  it is not  justified, 
however,  to opt  for.  an extension  of the 'reserved'  sec-
tors. 
31.7.  78 Official  Journal  of the European  Communities No C 181/5 
2.3.4.2.  However,  the  Committee  has  fundamental 
objections  to banning  the  use  of cheaper  alternatives 
when  these  are chemically  indistinguishable  and  of the 
same  quality  and  when,  if the consumer  needs  to know 
the origin,  this  can  be marked  on the label.  The  Com-
mittee  considers  it very  unwise  to reserve  certain  al-
cohol-using  sectors  for agricultural  alcohol  purely  in the 
interests  of ensuring  a market  for agricultural  products, 
without  thereby  advancing  the  health  or at least 
economic  interests  of consumers.  Moreover,  the  prob-
lem of over-production  of goods  costing  several  times 
more  than  necessary  cannot  sensibly  be solved  in this 
fashion. 
2.3.4.3.1.  As  for the fixing  of the selling  price  for each 
of the  'reserved'  sectors,  the  Committee  notes  firstly 
that,  as Article  10 stands  at the moment,  there  is noth-
ing to stop  the same  price  being  laid  down  for  all the 
'reserved1  sectors.  From  the  point  of view  of practical 
application  and  monitoring,  one  single  price  for all the 
'reserved'  sectors  would  most  certainly  have  numerous 
advantages.  However,  the  Committee  calls  on  the 
Council  to examine  whether  this  solution  might  not 
place  the pharmaceutical  industry  in a difficult  competi-
tive situation.  If this  were  the  case,  different  selling 
prices  ought  undoubtedly  to be envisaged. 
2.3.4.3.2.  The  Committee  would  also  point  out  that 
the selling  prices  for the 'reserved'  sectors  are notional 
prices  used  simply  to calculate  the equalization  charges 
and compensatory  payments.  These  prices,  fixed  in 
accordance  with  Article  10, apply  only  to intervention 
agencies.  Distilleries  are to remain  free  to decide  their 
own selling  prices,  above  or below  the price  fixed. 
2.3.4.3.3.  The  Committee  approves  the proposal  that 
• the  selling  prices  for  agricultural  alcohol  in the  oral 
consumption  sectors  are to be fixed  'by reference  to' the 
price  for  alcohol  obtained  from  cereals.  Nonetheless, 
the Committee  thinks  that  the wording  proposed  by the 
I Commission  is too  vague,  for users  need  objective  in-
formation  on the  price  of the  alcohol  they  are  to be 
sold.  Since  — as the Commission  itself  states  — distil-
late is obtained  mostly  from  maize,  the  Committee 
would  like  to see an explicit  reference  to the target  price 
of ethyl  alcohol  obtained  from  maize  as a price  to be 
taken  into  account.  This  does  not  alter  the  fact  that 
account  must  also  be taken  of the other  factors  of im-
portance  for  the  fixing  of prices,  such  as the  desired 
volume  of production. 
2.3.4.3.4.  Lastly,  the  Committee  thinks  that  alcohol 
sold at the  fixed  price  must  be of a certain  minimum 
quality.  It feels  that  it would  be both  desirable  and  pos-
sible  to take  neutral,  rectified  alcohol  as the basis.  This 
would  mean  that  raw  alcohol  would  have  to be rectified before  being  marketed,  and  would  ensure  that  all al-
cohols,  whatever  their  origin,  would  have  an equal 
chance  of access  to the 'reserved'  sectors.  If a provision 
of this  kind  raises  problems  in a Member  State,  tran-
sitional  measures  will  no doubt  permit  ultimate  attain-
ment  of the proposed  objective  (which  is to prevent  the 
sale of inferior  quality  alcohol). 
2.3.5.  Measures  concerning  certain  spirituous 
beverages 
2.3.5.1.  Articles  14 and  15 of the  draft  Regulation 
confront  the Committee  with  a very  difficult  problem, 
which  stems  mainly  from  the  fact  that  the  proposed 
measures  are  to apply  to industrial  products  not  in 
Annex  II to the Treaty  of Rome.  What  the Commission 
is proposing  here  is the extension,  to 'certain'  spirituous 
beverages,  of measures  introduced  for  agricultural  al-
cohol,  viz.  guaranteed  quantities  apportioned  among 
distillers,  equalization  charges  and  compensatory  pay-
ments. 
2.3.5.2.  First  of all,  the  Committee  regrets  that  it is 
impossible  to ascertain  exactly  from  the  text  which 
spirituous  beverages  these  measures  are  to apply  to. 
Furthermore,  if the equalization  charge  is to be levied  in 
certain  sectors  as a source  of financial  aid  for  other 
sectors,  it should  be indicated  precisely  which  sectors 
are meant  in both  instances.  The  Committee  therefore 
asks for the proposal  to be more  explicit  on this  point. 
2.3.5.3.  Above  all, however,  two  issues  are  raised  by 
this group  of measures  : 
(a) There  is no doubt  that  the  proposed  measures  are 
difficult  to reconcile  with  the  Treaty's  industrial 
provisions,  which  are  centred  on the  necessity  to 
establish  free  competition  between  firms.  By invok-
ing Article  235  it is, of course,  possible  to apply 
measures  of an agricultural  nature  to certain  indus-
trial sectors,  as has  been  done  here.  However,  the 
Treaty  stipulates  that  Article  235  may  be invoked 
only  if there  are no other  means  at hand  for attain-
ing the desired  objective.  It is precisely  on this  point 
that the Committee  has serious  doubts,  especially  as 
Article  40 of the EEC  Treaty  mentions  alternatives 
to common  market  organizations. 
(b) In addition,  it would  appear  that  these  Articles  will 
not ensure  the  necessary  continued  production  of 
some  grape-based  spirits,  since  Article  3 (3) states 
that the price  for alcohol  obtained  from  grapes  is to 
be fixed  at the level  of the price  for alcohol  obtained 
No C 181/6 Official  Journal  of the European  Communities 31.17.  78 
from  cereals,  although  the ratio  between  these  two 
prices  at the moment  is known  to be 4:1.  The  prob-
lem posed  by such  spirits  is, therefore,  still  to be 
solved. 
2.3.5.4.  This  being  so, the Committee  is interested  to 
learn  that,  according  to the Commission,  the spirits  for 
which  aid is likely  to be given  are the rum  produced  in 
the French  overseas  departments,  brandies  produced  by 
distilling  fruit  and  'korn'. 
The Committee  thinks  that  problems  of the same  nature 
will arise  for grape-based  spirits,  and  it will  be necessary 
to find  appropriate  solutions. 
2.3.5.5.  Since  any  aid  must  result  in a distortion  of 
competition  among  competing  spirituous  beverages,  the 
Committee  thinks  it would  be possible  and  unquestion-
ably more  clear  and  more  normal  to work  out  solutions 
for each  of the sectors  in question.  This  would  dispense 
with  the need  for these  two  Articles,  whose  application 
could  cause  serious  difficulties. 
2.3.6.  Grape-based  spirits 
2.3.6.1.  The  Committee  recognizes  that  spirits  based 
on wine  and  grape  marc  pose  particular  problems  be-
cause  of the need  to link  up the proposed  alcohol  Reg-
ulation  with  Regulation  (EEC)  No  816/70.  This  ex-
plains  why  the rules  at present  applying  to spirits  pro-
duced  from  wine  are  to be extended  to cover  those 
produced  from  grape  marc.  The  Committee  feels  that  if 
the proposal  takes  as the 'hinge  price'  for alcohol  in the 
'reserved'  sector  the price  of grain  alcohol,  which  is in 
fact a lot lower  than  the price  of alcohol  produced  from 
wine,  the  Council  must  accept  the  consequences  that 
such  a decision  will  have  for the wine  Regulation. 
2.3.6.2.  It is therefore  essential  to revise  Regulation 
(EEC)  No  816/70  so as to remove  any  inconsistency 
between  it and  the proposed  alcohol  Regulation.  Such  a 
revision  should  include  a review  of the  way  in which 
premiums  are  calculated  and  replacement  of the  'al-
cohol  price'  element  (which  is really  the Italian  price  of 
alcohol)  by the  Community  'hinge  price'.  Thus  inter-
vention  buying  of grape-based  spirits  would  become 
possible  under  a new  version  of Regulation  (EEC)  No 
816/70. 
2.3.6.3.  The  Committee  considers  that  it would  be 
very desirable  for  all the  necessary  changes  to Regu-
lation  (EEC)  No 816/70  to come  into  force  at the same 
time  as the alcohol  Regulation  and  asks  the Community institutions  to spare  no effort  to ensure  that  this  hap-
pens.  For  unless  the  two  Regulations  are  so linked, 
protective  measures  would  undoubtedly  have  to be 
taken  in respect  of the products  in question. 
2.3.6.4.  The  Committee  feels  that  at any  event  pro-
ducers  should  have  the  chance  of selling  surplus 
grape-based  spirits  into  intervention  under  the  same 
rules  as those  laid  down  for  alcohol.  Such  quantities 
would  be stored  and  re-sold  later  on request. 
2.3.7.  The  rum  question 
2.3.7.1.  The  Committee  would  point  out  that  the 
production  of rum  is of fundamental  importance  to 
agriculture  and  the  economy  in the  French  overseas 
departments  (DOM).  The  present  system  for marketing 
DOM  rum  in France  is justified  on social  grounds  in 
particular.  The  question  is how  this  system  is to be 
transposed  to the Community  level. 
2.3.7.2.  The  Committee  notes  that  the provisions  deal-
ing with  rum  are  scattered  throughout  the  proposal. 
Reference  is made  to a guaranteed  quantity  in Article 
14, an equalization  charge  in some  cases  and  a com-
pensatory  payment  in others  in Article  15,  a possible 
definition  in Article  19 and,  in particular,  to the possi-
bility  of the Council  taking  specific  measures  in Article 
29. 
2.3.7.3.  In addition,  the  Committee  notes  that  when 
the Convention  of Lome  was  being  drawn  up,  the 
special  position  of DOM  rum  prompted  the drafting  of 
Protocol  7, which  stipulated  in its opening  paragraph 
that ACP  rum,  which  is produced  at a very  low  cost, 
was to be imported  duty-free  into  the Community  'until 
the entry  into  force  of a common  organization  of the 
market  in spirits'. 
2.3.7.4.  The  Committee  therefore  considers  rhat  the 
Community  should  now  take  a special  decision  related 
to the alcohol  Regulation,  providing  an overall  solution 
to the question  of DOM  rum.  This  would  involve: 
— a Community  definition  of 'rum'  based  on  the 
French  definition,  since  France  is the  only  EEC 
country  that  produces  sugar  cane,  the  only  raw 
material  from  which  rum  is made; 
— the  immediate  application  of Article  29 in the pre-
sent proposal,  i.e.  a Council  Decision,  under  the 
Regulation,  on the  conditions  under  which  DOM 
rum should  be admitted  to the EEC  (price,  guaran-
teed quantities,  necessary  aid machinery,  etc.); 
31.17.  78 Official  Journal  of the European  Communities No C 181/7 
— the  revision  of Protocol  7 to the present  Convention 
of Lome  with  a view  to new  negotiations. 
2.3.7.5.  The  Committee  wants  all the provisions  relat-
ing to DOM  rum  to be brought  together  in one  group 
of Articles. 
2.3.7.6.  The  Committee  is perfectly  aware  that  the 
position  it is advocating  may  cause  difficulties  in some 
countries,  depending  on  the  established  customs. 
However,  it considers  that  solutions  to these  problems 
can only  be found  if a basic  and  unambiguous  stance  is 
taken  with  regard  to rum. 
2.3.8.  The  'korn'  question 
The Committee  recognizes  the difficulty  of working  out 
appropriate  rules  for 'korn',  since  this  product  distilled 
from  cereals  cannot  be precisely  classified  as either  an 
alcohol  or a spirituous  beverage.  Moreover,  it is pro-
duced  mainly  in small  distilleries  that  are  closely  linked 
with  farms. 
The Committee  feels  that  the  problems  of 'korn'  could 
be largely  resolved  if a solution  were  found  for  dis-
tinguishing  between  alcohol  and  alcoholic  drinks  in 
Article  1 of the  proposed  Regulation  whereby  'korn' 
and products  like  it were  counted  as alcohol. 
2.3.9.  The  question  of fruit  brandies 
Since  there  are a large  number  of very  small  distilleries 
in Germany  whose  total  output  is low,  the  Committee 
recommends  to the Commission  that  it try to work  out 
a solution  which  takes  into  account  the special  needs  of 
these  small  distilleries  and  which  could,  if need  be,  be 
extended  to cover  similar  distilleries  in other  Member 
States. 
2.3.10.  Intervention  contribution 
2.3.10.1.  In  the  Committee's  view,  the  intervention 
contribution  is a very  important  element  in the proposal 
under  discussion.  The  Commission's  aim  is to bring 
about  an internal  financial  balance  in the  organization 
of the alcohol  market.  To achieve  this,  the Commission 
feels,  it will  be necessary  either  to lay  down  a higher 
price  for  alcohol  (as  in the  first  proposal)  or find 
alternative  financing  if the price  of alcohol  is fixed  at a 
low level. 
2.3.10.2.  However,  the  Committee  would  point  out 
that there  „ are a number  of contradictions  in the 
machinery  proposed  : — it cannot  be said  that  the  aim  is to curb  alcohol 
production  and  consumption  when  the  basic  ar-
rangements  are  not  geared  to adapting  production 
to needs  ; 
— it is not  a question  of solidarity  to help  producers 
since  the  intervention  contribution  will  only  be 
levied  on certain  spirituous  beverages  ; 
— one  cannot  call  for a healthy  restructuring  of distil-
ling firms  and  levy  a contribution  that  will  disrupt 
their  economic  activity; 
— the  measure  will  hit  industries  that  have  proved 
their  economic  efficiency,  and  there  is no guarantee 
that the  contribution  will  not  be liable  to increase 
under  circumstances  difficult  to foresee; 
— is it normal  to levy  this  European  charge  basically 
on industrial  products  outside  the  scope  of Annex 
II, and  can  Article  235  of the Treaty  be interpreted 
in such  a sweeping  manner? 
2.3.10.3.  The  Committee  therefore  has  the  most  seri-
ous reservations  about  Article  17.  It wonders  why  an 
organized  alcohol  market  must  be self-financing,  unlike 
most  other  market  organizations,  and  this  by means  of 
a levy  basically  affecting  products  not  included  in 
Annex  II. 
2.3.10.4.  In  short,  the  Committee  considers  that  the 
Community  should  collectively  bear  the  overall  finan-
cial responsibility  for  any  Regulation  concerning  the 
alcohol  market,  as is the case  in other  agricultural  sec-
tors.  An  organized  alcohol  market  must  therefore  be 
financed  through  the  EAGGF  and  not  by an additional 
tax on spirit  consumers.  Making  the  financial  equilib-
rium  of an organized  market  in agricultural  alcohol  a 
matter  for  the  EAGGF  will  induce  the  Community  in-
stitutions  to face  up to their  political  responsibility 
when  they  have  to take  decisions  in that  field  and  in the 
field  of alcohol-producing  agricultural  products. 
The Committee  therefore  asks  that  Article  17 be de-
leted. 
2.3.11.  The  question  of control 
2.3.11.1.  The  Committee  does  not dispute  the need  for 
a minimum  of 'control'  measures  in respect  of alcohol 
and spirituous  beverages.  But  it feels  that  the term  'con-
No C 181/8 Official  Journal  of the European  Communities 31.17.  78 
trol' must  be interpreted  as checking  — which  means 
that Article  18 should  be amended  — and  that  provi-
sion must  only  be made  for such  checks  as are  abso-
lutely  indispensable  and  are not carried  out elsewhere. 
The Committee  would  point  out  that  the  English  ver-
sion of Article  18 should  be redrafted. 
2.3.11.2.  The  following  points  need  to be made  clear  : 
— in view  of the  existence  of sectors  reserved  for al-
cohols  of agricultural  origin,  it is conceivable  that 
the destination  of all alcohols  should  be checked,  as 
well as their  production  and  circulation; 
— but  it does  not  seem  necessary  to have  the  same 
degree  of checking  on the  production,  circulation 
and destination  of spirituous  beverages. 
2.3.11.3.  In the light  of these  remarks,  the Committee 
asks that  Article  18 be revised  so as to specify  the sub-
ject of the  checks  and  the  procedures  to be adopted 
which  will  have  to be different  depending  on the  pro-
duct  and  the monitoring  requirements. 
2.3.12.  Definition,  designation,  description  and  pro-
tection  of registered  designations  of origin 
2.3.12.1.  The  Committee  stresses  the extreme  import-
ance  of working  out precise  definitions  for all the prod-
ucts covered  by the  proposed  Regulation  as soon  as 
possible.  It even  thinks  that  it would  have  been  more 
logical  to start  with  this,  since  the scope  of Article  1 
could  then  have  been  made  clearer. 
2.3.12.2.  One  may  rightly  ask  what  legal  procedure 
would  be most  appropriate  for achieving  this  objective. 
On the  one  hand,  there  is a draft  Regulation  based  in 
particular  on Article  43 (management  committee  and 
qualified  majority).  On the other,  and  this  would  at all 
events  be a more  normal  procedure  for the products  not 
included  in Annex  II (spirituous  beverages),  one  could 
apply  Article  100,  which  forms  the basis  of what  has 
been  accomplished  to date  as regards  the alignment  of 
food  legislation  (Standing  Committee  on Foodstuffs  and 
unanimous  voting). 
2.3.12.3.  In the  Committee's  view,  the  following 
elements  must  be combined  : 
— maximum  effectiveness  must  be achieved  as soon  as 
possible; 
— in this  delicate  area  one  must  be  sure  that 
the national  officials  most  competent  to deal  with product  legislation  are brought  together.  This  is not 
normally  the  case  with  management  committees, 
whose  members  usually  have  more  of an economic 
background; 
— it is essential  for professionals  and  consumers  to be 
involved  in the work,  and  the Advisory  Committee 
on Foodstuffs  should  be given  a more  important 
role. 
2.3.12.4.  The  Committee  asks  that  the  detailed  rules 
for implementing  Article  19 be defined  along  the lines 
set out above. 
2.4. Trade  with  non-member  countries 
2.4.1.  As  regards  the rules  on trade  with  non-member 
countries  as indicated  in the proposed  Regulation,  the 
Committee  feels  that  it should  express  its concern  about 
three  types  of problems,  quite  apart  from  what  has been 
said earlier  regarding  rum  from  the  French  overseas 
departments. 
2.4.1.1.  It has already  been  pointed  out with  regard  to 
the scope  of the proposed  Regulation  that  some  prod-
ucts (such  as flavoured  wines)  which  at present  are 
covered  neither  by the present  proposal  nor  by the wine 
Regulation  must  be able  to benefit  from  the new  system 
of protection  against  non-EEC  produce  (variable  com-
ponent  for agricultural  protection  and  fixed  component 
for industrial  protection).  Once  again,  the  Committee 
considers  it essential  for the list of products  in Article  1 
to be revised  very  carefully,  bearing  in mind  the  ar-
rangements  concerning  external  trade,  and  that  special 
external  trade  arrangements  be set up for products  such 
as those  falling  within  heading  Nos  17.04,  18.06  and 
19.08  of the  Common  Customs  Tariff,  which,  though 
not appearing  in Annex  II to the  Treaty,  nevertheless 
use ethyl  alcohol  of agricultural  origin  within  the 
meaning  of Article  9(1). 
2.4.1.2.  The  Committee  is perfectly  aware  that  the 
Community  must  take  account  of its international 
commitments.  This  applies  both  to alcohol  and  to other 
spheres  of agriculture.  But the Committee  considers  that 
setting  up a common  market  organization  to replace  the 
various  national  schemes  which  were  in force  at the 
time  of the  previous  negotiations  constitutes  a funda-
mental  innovation  justifying  renegotiation  where  this  is 
found  necessary. 
31.17.  78 Official  Journal  of the European  Communities No C 181/9 
2.4.1.2.1.  Although  the  situation  regarding  nego-
tiations  with  the  EFT  A countries  does  not  seem  to be 
unfavourable,  this  is not  the  case  for  the  countries 
covered  by  the  so-called  Mediterranean  agreements, 
since  no precise  framework  for negotiation  is laid  down 
in any  of  the  agreements  concluded  with  these 
countries. 
2.4.1.2.2.  The  situation  is much  more  unfavourable  in 
respect  of the  countries  linked  to the  EEC  through  the 
Convention  of Lome.  Duty-free  import  has  already  been 
allowed  for products  under  subheading  No 22.09  C, for 
example.  In these  agreements  the  Community  reserved 
the right  to adapt  its market  organization.  But  the ACP 
States  will  hardly  be willing  to give  up advantages  they 
have  already  acquired. 
2.4.1.2.3.  The  Committee  is well  aware  of the political 
aspect  of this  problem.  But  it asks  the  Community  in-
stitutions  to be logical.  In an area  like  alcohol  and 
spirituous  beverages  it is clear  that  at any  moment  de-
flections  of trade  may  occur  which  could  seriously 
jeopardize  the aims  of the present  proposal. 
2.4.1.2.4.  The  Committee  therefore  expects  the 
Community  institutions,  and  particularly  the  Commis-
sion,  which  is negotiating  in the  GATT  talks,  to show 
the political  will  to renegotiate  previous  agreements 
where  this  is necessary,  not  with  the  aim  of winning 
artificial  advantages  for  the  Community  but  simply  to 
safeguard  the  ability  to operate  a Community  market 
organization.  With  this  in mind,  the Committee  would 
like to be fully  informed  about  the  effects  of the  Lome 
agreements  on each  heading  or subheading  relating  to 
alcohol  and  spirituous  beverages  so as to be able  to 
draw  conclusions  for the new  Lome  negotiations. 
2.4.1.3.  As  regards  import  and  export  arrangements, 
the Committee  is astonished  to see  that  some  of the 
procedures  which  are common  practice  in other  areas  of 
agriculture  and  food  are  not  prescribed  in absolute 
terms.  Thus,  in Article  22,  imports  or exports  'may  be 
made  conditional'  on the submission  of licences.  And  in 
Article  25 'to the  extent  necessary  ...  the  difference 
between  world  market  prices  and  prices  in the  Com-
munity  ...  may  be covered  by a refund'. 
2.4.1.3.1.  The  Committee  asks  that  these  Articles  be 
reworded  so that  the  procedures  relating  to external 
trade  in alcohol  and  spirituous  beverages  are  perfectly comparable  to those  in other  areas  where  problems  of 
the same  type  have  arisen.  Thus  Article  25 (1),  for 
instance,  should  read  'the  difference  between  ...  shall 
be covered  by a restitution  payment'. 
2.4.1.3.2.  Similarly,  with  reference  to Article  25 (2), 
the Committee  questions  the  distinction  made  between 
certain  spirituous  beverages  for  which  the  restitution 
payments  for  exports  may  be replaced  by restitution 
payments  for  production  and  other  spirituous  bever-
ages,  to which  this  arrangement  will  not  apply.  If the 
Commission  believes  that  the circumstances  in question 
may arise,  then  the  rules  must  be the  same  for  all 
spirituous  beverages,  or competition  may  be distorted. 
2.4.2.  In  order  that  the  planned  trade  arrangements 
should  operate  smoothly  and  not  cause  difficulties  at 
international  level,  it is essential  for an overall  concept 
to be worked  out  as soon  as possible  for  Community 
policy  on external  trade  in alcohol.  In particular,  these 
arrangements  must  include  fairly-balanced  import  levies 
and restitution  payment  for imports  for: 
— regulated  alcohols; 
— beverages  made  from  alcohols  of the same  nature  as 
regulated  alcohols; 
— sprirituous  beverages  which  compete  with  agricul-
tural-alcohol  beverages,  depending  on the  agricul-
tural  raw  materials  from  which  they  are made. 
2.4.3.  The  Committee  thinks  that  one  cannot  ignore  the 
commitments  entered  into  when  Denmark,  Ireland  and 
the United  Kingdom  joined  the  European  Community, 
which  derive  basically  from  Protocol  19 to the  Treaty. 
The Protocol  in question  lays  down  the  principle  of 
paying  restitution  payments  when  spirits  obtained  from 
Community  cereals,  in particular  whisky,  are  exported 
to third  countries.  It states  that  such  measures  may  be 
taken  'within  the  framework  of the  Regulation  on the 
common  organization  of the market  in cereals  or of the 
Regulation  to be adopted  on the  common  organization 
of the  market  in alcohol'.  Since  this  text  is now  five 
years  old,  the  Committee  feels  that  the  Council  of 
Ministers  should  come  to a decision  concerning  these 
products.  If no alcohol  Regulation  is in force  on 1 July 
1978,  it will  doubtless  be necessary  to think  about 
paying  the  restitution  payments  by some  other  means 
and they  should  no longer  be dependent  on the  exist-
ence  of an alcohol  regime  or Regulation.  Failing  this, 
one might  well  ask  whether  Protocol  19 should  not  be 
the subject  of a new  discussion,  since  it has  remained  a 
dead  letter  for such  a long  period. 
No C 181/10 Official  Journal  of the European  Communities 31. 7. 78 
2.5. Management  committee 
2.5.1.  The  Committee  notes  that  the proposed  Regula-
tion confers  considerable  powers  on the  management 
committee  which  is to be set up.  In its view,  these 
powers  go far  beyond  merely  managing  a common 
market  organization.  The  management  committee  will 
not only  have  to give  an opinion  on technical  imple-
menting  procedures  but,  in many  cases,  will  have  to 
pass judgement  on implementing  rules  with  considera-
ble political  implications. 
2.5.2.  The  Committee  regrets  that  in fact  nearly  all the 
Articles  (some  of which,  as pointed  out  above,  are not 
sufficiently  clear)  end  up by leaving  it to the  manage-
ment  committee  to decide  on the detailed  rules  for ap-
plying  them.  The  Committee  feels  that  in areas  of im-
portance  it would  be desirable  for the Council  to adopt 
more  specific  implementing  provisions,  so that  the 
management  committee's  terms  of reference  are clearly 
defined. 
2.5.3.  Finally,  the Committee  would  like  an advisory 
committee  to be set up when  the Regulation  comes  into 
force,  as is common  practice  in other  agricultural 
sectors.  This  committee  should  comprise  the  different 
social  and  occupational  groups  concerned  with  the 
operation  of the alcohol  market. 
3. SPECIFIC  COMMENTS 
3.1. In its general  comments  the Committee  has  made 
a number  of recommendations  for amending  or deleting 
Articles  and  there  is little  point  in repeating  these 
recommendations  here  Article  by Article. 
3.2. However,  in addition  to the issues  already  raised, 
some  Articles  pose  specific  problems  which  the  Com-
mittee  feels  duty  bound  to comment  on. 
3.3. Article  3 
3.3.1.  The  Committee  regrets  the Commission's  use of 
the term  'target  prices'  to refer  to what  in nearly  all the 
other  agricultural  Regulations  are  called  'intervention 
prices'  (i.e.  the prices  at which  the intervention  agencies 
are obliged  to buy).  It would  like  a return  to normal 
terminology. 
3.3.2.  Arf:c/e3(2) 
3.3.2.1.  The  Committee  points  out  that  there  is no 
price  laid  down  for beet  that  is to be used  for alcohol production.  It feels  that  the Council  should  fix such  a 
price,  bearing  in mind  the need  for a balance  between  it 
and the  price  of sugar  beet  under  the  Regulation  on 
sugar. 
3.3.2.2.  When  fixing  the target  price  in the case  of raw 
materials  which  either  (a) do not  come  under  an or-
ganized  market,  or (b) come  under  an organized  market 
where  there  is no fixed  price,  the price  to be taken  into 
consideration,  if there  is no market  price,  should  be one 
that covers  production  costs. 
3.3.3.  ArWe  3 (4J 
3.3.3.1.  The  Committee  recognizes  the  problems  in-
volved  in applying  this  paragraph  to small  distilleries, 
which  often  represent  an important  supplementary  ac-
tivity  for a lot of farms  in certain  Member  States.  The 
measures  which  the  Commission  has  in mind  concern 
around  35  000  small  distilleries  located  mainly  in 
Germany  and  Luxembourg.  They  would  therefore  affect 
part of the  farming  income  of many  families  which, 
generally,  have  no other  possibilities  of engaging  in 
economic  activity. 
The Committee  therefore  asks  the Commission  to take 
another  look  at its proposals  and  find  ways  of overcom-
ing this  problem.  It concedes  special  prices  may  be 
inadequate. 
The Committee  wonders  whether  the solution  might  not 
lie in combining  a system  of appropriate  special  prices 
with  measures  of a socio-structural  nature. 
3.4. Article  4 
3.4.1.  The  Committee  is aware  that  the way  in which 
'target  quantities'  are to be fixed  for alcohols  of agricul-
tural  origin  may  cause  difficulties  in Member  States 
where  a special  national  system  establishing  a measure 
of price  equilibrium  has  prevented  a certain  develop-
ment  of production.  It therefore  calls  upon  the  Com-
munity  institutions  to  look  into  the  possi-
bility,  in certain  specific  cases,  of authorizing  the  re-
placement  of unavailable  raw  materials  by other  al-
cohol-producing  products  within  the  limits  of the 
'guaranteed  quotas'  referred  to in Article  5. One  possi-
bility  would  be to allocate  to the Member  States  annual 
overall  quotas  of alcohol  made  up of sub-quotas  for 
each  type  corresponding,  within  the  guaranteed  Com-
munity  quotas,  to the amount  of raw  material  available. 
3.5. Article  5 
3.5.1.  The  Committee  points  out that  the deadline  of 1 
May  for  apportioning  the  'guaranteed  quota'  among 
31.17.  78 Official  Journal  of the European  Communities No C 181/11 
distillers  will  have  to be changed  because  of the harvest-
ing time-table  for  certain  alcohol-producing  products, 
especially  potatoes. 
3.5.2.  In general  terms  .the  Committee  feels  that  the 
Member  States  and  the Commission  should  collaborate 
closely  in the  apportionment  of 'guaranteed  quotas' 
ampng  the distillers.  In its view,  the Commission's  plans 
for restructuring  must  be approved.  But,  on the  other 
hand,  the considerable  variety  of production  structures 
(i.e. the number  of distilleries)  makes  the involvement  of 
the Member  States  vital. 
3.5.3.  However,  the  Committee  would  like  the 
Community  dimension  of this  procedure  to gradually 
supersede  the simple  juxtaposition  of national  decisions. market.  This  new  legal  situation  may  have  grave 
economic  and  social  consequences.  Even  if there  are no 
organized  Community  markets,  the products  concerned 
must  be able  to circulate  freely  in the Community. 
4.2. In addition,  it is becoming  clearer  that  the  EEC 
may have  three  new  Member  States.  All three  of these 
countries  are  major  producers  of alcohol  and  certain 
alcohol-producing  products  and  produce  them  much 
more  cheaply  than  countries  in the EEC.  It is therefore 
essential  that  the  broad  lines  of a Community  scheme 
for running  the  alcohol  market  be clearly  laid  down 
before  the countries  seeking  EEC  membership  join  the 
Community,  if only  to enable  them  to know  exactly 
where  they  stand  and  make  the necessary  adjustments. 
3.6. Article  13 
3.6.1.  The  Committee  would  draw  attention  to the 
importance  of postponements  of agricultural  pro-
duction.  It fears  that  the  'upper  limit'  referred  to in 
Article  13 (2),  which  may  be laid  down  on the  sole 
authority  of the management  committee,  could  lead  to 
discrimination  between  different  types  of agricultural 
alcohol. 
3.6.2.  The  Committee  would  like  the Council  to state 
more  clearly  in the  Regulation  what  criteria  are  to be 
used  for determining  this  upper  limit. 
3.7. Article  33 
3.7.1.  The  Committee,  like  the Commission,  considers 
that it is logical  and  fully  in keeping  with  the Treaty  of 
Rome  to abolish  the alcohol  monopolies  which  exist  in 
certain  Member  States. 4.3. It is the Committee's  duty  to point  out  that  the 
problems  involved  in organizing  a Community  alcohol 
market  cannot  be solved  merely  by regulating  those 
areas  covered  by the Commission  proposal  examined  in 
this opinion.  The  tax  policy  pursued  by the  Member 
States  may  have  much  more  effect  on what  is produced 
and how  much  is consumed  than  the prices  of the raw 
materials  used  to make  alcohol.  The  measures  at present 
being  applied  by the  Member  States  as part  of their 
domestic  fiscal  policies  have  led to glaring  distortions 
of competition  too  numerous  to list  here  (see  the 
Commission's  recent  survey  of taxes  on all forms  of 
alcohol). 
4.4. The  Committee  points  out  that  the  present  situ-
ation  of alcohol  of agricultural  origin  in the countries  of 
the Community  is already  one  of major  interference  by 
taxation.  By their  nature  alcohol  and  products  contain-
ing alcohol  are a field  in which  there  is wholesale  dis-
tortion  of  competition  between  one  country  and 
another  and  one  product  and  another. 
3.7.2.  In so far as such  a move  will  have  repercussions 
on synthetic  alcohol,  an industrial  product  not included 
in Annex  II, the  Committee  wonders  whether,  apart 
from  invoking  Article  235,  it would  not  be a good  idea 
to devote  special  attention  to this  product,  for instance 
in an appendix,  in view  of the  fact  that  the  proposed 
Regulation  is an agricultural  policy  instrument. 
4. GENERAL  CONCLUSIONS 
4.1. The  Committee  stresses  once  again  that  there  is an 
urgent  need  for the Council  to take  a decision  organiz-
ing a common  market  in ethyl  alcohol  of agricultural 
origin.  The  Court  of Justice  has ruled  that  such  alcohol 
must  be able  to circulate  freely  in the Community  by 31 
December  1977  even  if there  is no organization  of the Maintenance  of such  a situation  would  definitely  not be 
conducive  to smooth-running  management  of  the 
Community  alcohol  market. 
It is therefore  essential,  if one  is not to doom  to failure  a 
market  organization  for alcohol,  of whatever  form,  to 
harmonize  the taxation  of alcoholic  drinks,  so that  there 
may be a balance  between  them. 
4.5. Finally,  the Committee  feels  it should  point  out to 
the Council  that  amending  the Commission's  proposal 
in the light  of the suggestions  made  in this  opinion  may 
be the only  possible  way  of reaching  a compromise.  But 
it will  still  lead  to great  changes  in the Member  States. 
No C 181/12 Official  Journal  of the European  Communities 31. 7. 78 
Thus  the demarcation  between  'reserved  sector'  — even 
after  modification  — and  'unreserved  sector'  will  only 
be possible  if molasses  alcohol  is wholly  or partially 
excluded  from  the  scope  of the  Regulation.  But  the 
problems  remain!  Some  Member  States  produce  only 
molasses  alcohol!  In others,  production  of this  alcohol 
clearly  predominates. 
4.6. One  has  the impression  that  this  proposal  is in-
spired  by the desire  to satisfy  everybody,  both  the pro-
ducers  of agricultural  alcohol  and  the Member  States. 
But is this  possible?  The  Committee  thinks  that  the 
Council  cannot  avoid  making  political  choices  and  indi-
cating  what  its priorities  are.  As long  as these  political 
priorities  are not known,  the only  suggestions  that  can 
be made  are technical  ones. 
5. CLOSING  REMARKS 
To conclude,  the Committee  asked  itself  the following 
question.  If the Council  shies  away  from  making  the 
choices  implied  in adopting  the Commission's  proposal 
as amended  in the  light  of suggestions  made  in this 
Done  at Brussels,  30 March  1978. opinion,  how  is one  to avoid  the grave  consequences  of 
such  a failure  to take  decisions. 
One might  well  ask whether  in such  a situation  it would 
not be expedient  to provide  only  for  intervention  in 
respect  of raw  materials.  The  division  of the market  into 
two sectors  would  be kept  and  intervention  would  be 
governed  by the rules  of each  organized  common  mar-
ket in agricultural  raw  materials  that  can  be used  for 
making  alcohol.  Provisions  dealing  with  the appropriate 
distillation  operations  would  be contained  in each  of the 
relevant  market  organization  Regulations.  The  only 
thing  then  required  would  be general  coordination  of 
these  provisions. 
Such  a move  should,  of course,  for the same  reasons  as 
given  earlier,  be backed  up by a Community  tax policy 
regarding  alcohol. 
Any Community  policy  concerning  the  market  in al-
cohol  will  have  to bring  about  a compromise  between 
the political,  economic  and  social  interests  of the 
Member  States  based  on a long-term  view  of the mar-
ket. In the  Committee's  view,  it is essential  that  the 
Member  States  show  that  they  really  intend  to reach 
such  a compromise. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
ANNEX 
to the opinion  of the Economic  and  Social  Committee 
The following  amendments  were  rejected  during  the discussions  : 
Point  1.1.2. 
1.1.2  to read: 
'The  Committee  would  therefore  state  first  and foremost  that  it can only  support  the principle  of an 
organization  of the market  in ethyl  alcohol  of agricultural  origin  if this  does  not create  what  would 
amount  to a European  alcohol  monopoly  exercising  bureaucratic  control  over  the whole  sector  of 
agricultural  alcohol  and  the products  for which  it is used.  The  common  market  must  not inflict  on 
its consumers  the new  high  charges  on alcoholic  drinks,  drugs,  cosmetic  preparations  and  vinegar 
that the annual  rounds  of price  increases  would  probably  bring. 
31.17.  78 Official  Journal  of the European  Communities No C 181/13 
If synthetic  alcohol  is chemically  and  in quality  indistinguishable  from  alcohol  of agricultural  origin, 
the use  of this  cheaper  raw  material  should  not  be prohibited  in favour  of the agricultural  product 
which  is several  times  more  expensive.  The  proposed  system  would  not  stop  expensive  overproduc-
tion of agricultural  alcohol;  the only  difference  would  be that  the  economic  cost  of the proposed 
market  organization  would  be less  obvious.  Also,  for  the  first  time  an agricultural  Regu-
lation  would  affect  a large  proportion  of non-agricultural  products.' 
Reasons 
The proposed  protection  of the  agricultural  alcohol  markets  — both  from  the competition  of cheap 
third  country  imports  by means  of a harsh  system  of levies,  supplementary  levies  and  safeguard  clauses 
(suspension  of imports),  backed  up with  a licensing  system  involving  the deposit  of security  by licensees 
and on the  Community  internal  market  by means  of a system  of intervention,  guaranteed  quantities, 
indirect  taxing  of distilling  rights,  penalties  for exceeding  the allocated  individual  quotas  and  a new  sort 
of equalization  levies  — would  penalize  cheap  sources  of alcohol  production  and  favour  expensive 
sources.  On top  of this  would  be an elaborate  network  of inspections  and  controls  at every  stage  in the 
production  process,  which  would  even  extend  to the designations  of products,  the definitions  and  pre-
sentation  and  which  might  force  retailers  to keep  records  for inspection. 
A regimented  interventionist  system  such  as this  is inconsistent  with  market  economy  principles,  be-
cause  it would  be taking  money  out  of the consumer's  and  taxpayer's  pocket  to support  unprofitable 
industries,  encourage  much  bad  investment  and  create  new  distortions  of competition  — in short,  waste 
economic  resources  without  solving  the acute  problem  of wine  and  brandy  surpluses. 
Voting 
For: 17, against:  38, abstentions:  18. 
Pages  6 to 8, points  2.3.2.3  to 2.3.2.6  inclusive. 
Replace  by the following: 
'Nonetheless,  the Section  cannot  endorse  the Commission's  proposal  to set up an organized  market 
for alcohol  unless  it is changed,  so that: 
— molasses  alcohol  is given  the same  marketing  guarantee  as alcohol  made  from  other  agricultural 
raw materials,  through  the fixing  of target  and  guaranteed  quantities,  and 
— the  target  price  for molasses  alcohol  is laid  down  with  due  regard  for the market  price  of molas-
ses in the Community.' 
Reasons 
As the Commission's  proposal  is worded  at present,  the intention  is to create  marketing  outlets  for sur-
plus alcohol  made  from  other  agricultural  raw  materials,  especially  wine,  by cutting  back  the produc-
tion of molasses  alcohol.  But  by doing  this  there  is a risk  of causing  irreparable  harm  to molasses  al-
cohol  production,  and  from  an economic  point  of view  it does  seem  quite  unnecessary  to displace 
molasses  alcohol,  which  is the cheapest  form  of agricultural  alcohol  in the Community,  for the benefit 
of more  expensive  alcohol  made  from  other  agricultural  raw  materials.  The  Commission's  assumption 
that molasses  alcohol  can  compete  with  synthetic  alcohol  in the relatively  short  term  is unrealistic,  and 
the Commission  has  produced  no evidence  to support  its view. 
Voting 
For: 20, against:  51, abstentions:  10. 
Point  2.3.2.5. 
Substitute  the following: 
'The  Committee  is opposed  to molasses  alcohol  coming  under  the system  of target  and  guaranteed 
quantities.  In this  context  the Committee  would  underline  its approval  of the Commission's  plan  to 
ensure  that  the Community  has  a competitive  molasses  alcohol  industry  in the near  future.' 
No C 181/14 Official  Journal  of the  European  Communities 31.7.  78 
Reasons 
Under  the  Commission  proposal  (Article  6) molasses  alcohol  is excluded  from  the target  price  and 
guaranteed  market  arrangements.  This  should  remain  unchanged,  especially  as molasses  alcohol  is 
produced  using  completely  industrial  methods  and  competes  with  synthetic  alcohol  and  thanks  to low 
production  costs  is able  to maintain  its share  of the market.  There  is, therefore,  no reason  why  molasses 
alcohol  should  be included  in the support  for agricultural  alcohol.  Even  a partial  inclusion  of molasses 
alcohol  in these  support  arrangements  would  undoubtedly  further  constrict  the  scope  of synthetic 
alcohol  and  distort  competition. 
The wording  in paragraph  2.3.2.5  (b),  'all molasses  alcohol',  gives  the impression  that  some  molasses 
alcohol  should  be guaranteed  a market  in the reserved  sectors.  This  is put more  explicitly  in the follow-
ing paragraph.  To make  clear  right  away  that  molasses  alcohol  should  not be included  in the system  of 
target  and  guaranteed  quantities,  we suggest  deleting  the word  'all'  and  also  the second  and  fourth 
paragraphs.  Experience  has shown  that  guaranteeing  markets  for certain  quantities  of produce  frequently 
does  not lead  to modernization  of production  structures,  but only  to expansion  of production,  thereby 
further  accentuating  the problems  of surpluses.  If the suggested  amended  version  of paragraph  2.3.2.5  is 
accepted,  paragraphs  (a) and  (c) must  logically  also  be deleted. 
Voting 
For: 37, against:  47, abstentions:  6. 
The following  parts  of the  Section  opinion  were  replaced  by amendments  adopted  during  the  dis-
cussions: 
1.3.1.  The  Section  realizes  how  difficult  it was,  under  these  circumstances,  to draft  a proposal  which 
met the twofold  requirements  of (a) providing  guarantees,  in accordance  with  the Treaty  of Rome,  for 
producers,  who  must  be able  to sell a normal  output  of agricultural  alcohol  and  (b) ensuring  that  the 
industrial  users  of agricultural  alcohol  have  the freedom  needed  to pursue  their  activities. 
Voting 
For: 40, against:  12, abstentions:  16. 
2.3.2.5.  (b) However,  in view  of the agricultural  alcohol  requirements  of the sectors  reserved  by the 
Commission,  it would  seem  possible  to provide  a guaranteed  outlet  for molasses  alcohol.  This  would 
encourage  the modernization  of production. 
Voting 
For: a large  majority,  against:  none,  abstentions  25. 
2.3.4.1.  As  far as the composition  of the 'reserved'  sectors  is concerned,  inclusion  of a quantity  of 
molasses  alcohol  in the 'target'  and  'guaranteed  quantities'  system,  as proposed  by the Section  in para-
graph  2.3.2.5  (b),  would  naturally  affect  the Commission's  proposal.  It is stated  in Article  9 (3) that  the 
alcohol  requirements  of users  in the perfumery  and  cosmetics  industries  may  be reserved  for ethyl  al-
cohol  of agricultural  origin  for a transitional  period  of five  marketing  years,  for Member  States  who  so 
request.  The  Section  thinks  it is perfectly  justified  for the price  of the alcohol  used  by this  sector  to be as 
low as possible,  since  it is a fast-growing  industry.  If a guarantee  to this  effect  can be clearly  given  in the 
future  Regulation  on the alcohol  market,  it will  be possible  to include  the perfumery  and  cosmetics 
sector  among  those  reserved  for alcohol  of agricultural  origin.  The  line  taken  here  by the Section  is the 
only one  consistent  with  the suggestions  made  regarding  molasses  alcohol. 
Voting 
For: a large  majority,  against:  5, abstentions:  11. 
31.17.  78 Official  Journal  of the European  Communities No C 181/15 
2.3.4.2.  With  regard  to the  'reserved'  sectors,  the  Section  would  draw  the  Community  institutions' 
attention  to the fact  that  there  is no point  in stipulating  that  only  agricultural  alcohol  is to be used  for 
making  vinegar,  unless  vinegar  alone  is to be used  for  direct  and  indirect  human  consumption  and 
synthetic  acetic  acid  is barred  here.  Therefore,  for the  sake  of consistency  with  Article  9, the  draft 
Regulation  on a common  market  organization  for vinegar  currently  in preparation  must  include  a pro-
vision  to this  effect  and must  be submitted  to the Council  at the earliest  possible  opportunity,  given  that 
the most  logical  procedure  would  be for the Council  to take  a decision  on both  proposals  at the same 
time. 
Voting 
For: 32, against:  30, abstentions:  14. 
2.3.7.4.  The  Section  therefore  considers  that  the  alcohol  Regulation  should  now  provide  an overall 
solution  to the question  of DOM  rum.  This  would  involve: 
Voting 
Unanimous. 
2.3.10.5.  One  could  well  ask whether,  instead  of drafting  Article  17, the Commission  would  not  have 
been  better  advised  to suggest  that  the organized  market  be financed  out of existing  taxes  in this  field. 
Voting 
Unanimous. 
2.4.1.3.1,  2.4.1.3.2  and  2.4.3  (English  version  only): 
The words  'refund'  and  'export  refunds'  are replaced  by 'restitution  payments'. 
Voting 
Unanimous. 
N.B.:  The  explanatory  memorandum  for this  amendment  mentions  that  the words  'refund'  and  'export 
refunds'  (the  terms  used  in the Community  texts)  might  give  the impression  that  an export  sub-
sidy is involved.  This  is not the case. 
2.4.3.  If no alcohol  Regulation  is in force  on 1 July  1978,  it will  doubtless  be necessary  to think  about 
paying  the refunds  provided  for in the Regulation  on cereals. 
Voting 
Unanimous. 
4.4. It is therefore  vital  to align  taxes  on beverages  containing  alcohol.  Unless  this  is done,  any  type  of 
market  organization  will  be doomed  to failure.  Such  alignment  must  not be a purely  arithmetical  exer-
cise;  it must  seek  to arrive  gradually  at a reasonable  balance  between  the different  beverages  containing 
alcohol,  bearing  in mind  the features  of each  of the markets  concerned  and  the  fact  that  some  drinks 
may be used  as a substitute  for others. 
The Section  would  emphasize  that  alcohol  of agricultural  origin  already  carries  a heavy  tax burden  in the 
EEC  Member  States.  Moreover,  alcohol  and  products  containing  alcohol  are by their  very  nature  a field 
No C 181/16 Official  Journal  of the European  Communities 31. 7. 78 
where  one  generally  comes  across  a whole  series  of factors  which  distort  competition  between  one  coun-
try and  another  and  one  product  and  another. 
Should  such  a situation  continue,  it would  most  certainly  not  be conducive  to a harmoniously-run 
Community  alcohol  market. 
Voting 
Unanimous. 
Opinion  on the proposals  for: 
— a Council  Directive  amending  Council  Directive  72/159/EEC  of 17 April  1972  on the 
modernization  of farms 
— a Council  Directive  amending  Council  Directive  75/268/EEC  of 28 April  1975  on 
mountain  and  hill farming  and  farming  in certain  less-favoured  areas 
— a Council  Directive  amending  Council  Directive  72/160/EEC  of 17 April  1972  concern-
ing measures  to encourage  the cessation  of farming  and  the reallocation  of utilized  ag-
ricultural  area  for the purpose  of structural  improvement 
— a Council  Directive  on the  programme  to accelerate  drainage  operations  in the  less-
favoured  areas  of the West  of Ireland 
The texts  referred  to the Committee  have  been  published  in Official  Journal  of the European 
Communities  No  C 304  of 17 December  1977,  page  5. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 12  December  1977,  the  Council  referred  the  abovementioned  proposals  to the 
Economic  and  Social  Committee  in accordance  with  Articles  47 and  198  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 157th 
plenary  session,  held  in Brussels  on 29 and  30 March  1978. 
The full  text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the Treaty  establishing  the European 
Economic  Community,  and  in particular  Articles  47 and 
198 thereof, 
Having  regard  to the  request  made  by the  Council  of 
the European  Communities  on 12 December  1977  for 
an opinion, 
Having  regard  to the  decision  taken  by its Bureau  on 
13 "December  1977,  instructing  the Section  for Agricul-
ture to draw  up an opinion  on the matter, 
Having  regard  to the urgency  procedure  provided  for in 
Articles  46 and  47 of the Rules  of Procedure, Having  regard  to the opinion  issued  by the Section  at its 
meeting  on 9 March  1978, 
Having  regard  to the oral  report  made  by the rappor-
teur,  Mr Lapie, 
Having  regard  to the  discussion  at the  157th  plenary 
session  held  on 29 and  30 March  1978  (meeting  of 
29 March  1978), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by a large  majority,  with  five  votes  against  and  eight 
abstentions: