Proposal for a Council Regulation (EC) amending Regulations (EEC) No 1785/81 on the common organization of the markets in the sugar sector and (EEC) No 1010/86 laying down general rules for the production refund on certain sugar products used in the chemical industry (94/C 377/15) COM(94) 439 final - 94/0248(CNS)

(Submitted by the Commission on 8 December 1994)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 42 and 43 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Economic and Social Committee,

Whereas Article 23 (5) of Council Regulation (EEC) No 1785/81 (1), as last amended by the Act of Accession of Norway, Austria, Finland and Sweden, states that the Council is to adopt, in accordance with the procedure laid down in Article 43 (2) of the Treaty, the arrangements to apply from 1 July 1995 to the production of sugar, isoglucose and inulin syrup;

Whereas the agreements resulting from the Uruguay Round multilateral trade negotiations have been approved by Council Decision . . . of . . .; whereas the agreement on agriculture (hereinafter referred to as 'the Agreement`) provides, in particular, for the gradual reduction of the level of the Community's export support for agricultural products and in particular for sugar under guarantee of production quotas; whereas the Agreement provides for the reduction of export support, in terms of both quantities and appropriations, over a transitional period;

Whereas since the 1986/87 marketing year the common organization of the sugar sector markets has been based, first, on the principle of full financial responsibility on the part of producers for the losses incurred in each marketing year due to the disposal of that part of Community production under quota which is surplus to the Community's internal consumption and, secondly, on a differentiation of the price and disposal guarantees in line with the production quota allocated to each undertaking; whereas, since commitments to reduce export support are to be implemented over a transitional period, the present basic sugar and isoglucose quantities and inulin syrup quotas should be maintained unchanged but with provision made for the guarantees pertaining thereto to be adjusted as appropriate to permit compliance with the commitments made under the Agreement, while taking into account the fundamental factors affecting the situation of this sector in the Community; whereas it is accordingly desirable to maintain the sector's self-financing arrangements and production quotas for a period corresponding to the abovementioned transitional period, namely six marketing years;

Whereas the production quotas allocated to each sugar sector undertaking may, in any marketing year, give rise, as a result of the relevant consumption, production, importation, stock and carry over levels, and the average loss likely to be borne under the self-financing scheme, to an export volume exceeding that set in the Agreement; whereas provision should therefore be made for adjustments over one or more marketing years in the guarantees linked to quotas so that the Community's commitments can be met;

Whereas, as the first step in implementing adjustments to the guarantees, the difference recorded for a given marketing year between the Community's exportable volume and the amount set in the Agreement should be apportioned between sugar, isoglucose and inulin syrup according to the percentages which the quotas of each represent in the total of the quotas set for these three products in the Community;

Whereas this initial breakdown by product should then be followed by a breakdown between the Member States which adjusts the guarantees linked to the quotas assigned to producing undertakings located in each Member State in a way that does not affect the existing balance of quotas and burden-sharing; whereas, to this end, a reduction coefficient should be determined for each Member State in respect of the A and B guarantees which is in line with the maximum contributions pertaining to these guarantees; whereas it should then be up to each Member State to make an allocation among undertakings which takes account of the guarantees arising for each undertaking from its own quotas;

Whereas, in view of the compulsory production quota system introduced when the market organization was set up, undertakings have from its inception been allowed the possibility of deciding, in agreement with beet and cane growers, to carry over part of their production from one marketing year to the next, treating it as production of the latter with compulsory storage during 12 months; whereas the essential aim of this arrangement was to allow interested parties to cope with unforeseen changes in production levels from one year to another without, in the case of the C sugar produced, being obliged to export it to third countries regardless of the situation on the world market; whereas from the 1981/82 marketing year onwards the reimbursement provided for under the Community rules on equalization of storage costs during the compulsory storage period has been extended to C sugar; whereas over the 13 marketing years in which this particular rule has applied the quantities of C sugar carried over have increased substantially and are no longer in keeping with the purpose of carry over indicated above; whereas the possibility of systematic carry over of large volumes under these terms may constitute an encouragement to production of C sugar and impede the proper operation of the quota system; whereas in the case of C sugar carried over from production of the 1996/97 marketing year onwards a return should be made to the situation existing from 1968/69 to 1980/81, namely that during the compulsory storage period reimbursement of storage costs under the Community rules on equalizing these costs should no longer apply to C sugar carried over; whereas, however, as a transitional measure for the 1995/96 and 1996/97 marketing years, reimbursement of storage costs for C sugar should be granted for the first six months of the compulsory storage period; whereas the grant of this reimbursement for sugar in respect of which guarantees have been reduced under obligations created by commitments entered into in the context of the Agreement should not be discontinued;

Whereas Article 303 of the Act of Accession of Spain and Portugal provided for preferential arrangements, applying for seven years following accession, to ensure adequate supply of Portuguese refineries with raw sugar, whereas the preferential arrangement consisted of a reduced import levy on sugar imported to this end from certain ACP and other third countries the use of available raw sugar from cane and beet harvested in the Community covered by Council Regulation (EEC) No 2225/86 of 15 July 1986 laying down measures for the marketing of sugar produced in the French overseas departments and for equalization of the price conditions with preferential raw sugar (2), and the use of available preferential raw sugar as defined in Article 33 of Regulation (EEC) No 1785/81; whereas these supply arrangements for Portuguese refineries have been continued and incorporated in Regulation (EEC) No 1785/81 as Article 16a; whereas they are also to apply to Finland;

Whereas, in the Declaration by the European Community on supplies to the sugar refining industry in Portugal annexed to the Final Act of the Treaty of Accession of Spain and Portugal, the Community stated that it was prepared to make an overall examination of the supply situation of the refining industry in the Community and in Portugal in particular; whereas under the terms of paragraph 2a of Article 16a of Regulation (EEC) No 1785/81 such an examination is also to apply to Finland;

Whereas this examination has shown the need, in particular with the aim of achieving a steadier and more even flow of supplies to refineries throughout the Community, to estimate clearly the expected maximum traditional requirement of raw sugar for refining into white sugar in each of the Member States concerned, namely Finland, France, Portugal and the United Kingdom, using objective reference data and taking into account the quantities of sugar going for direct consumption recorded for the 1991/92 marketing year; whereas, to achieve this aim, the possibility should be opened to the industry, within the limit of its anticipated needs, of gaining access on certain terms to all raw sugar originating in the Community, the ACP States or in certain other traditional suppliers to be specified, on the basis of a forward balance and in a particular order of priority, namely Community sugar, preferential sugar covered by Protocol 8 annexed to the Fourth ACP-EEC Lomé Convention (3), and sugar imported from ACP-States or other traditional suppliers; whereas, for raw sugar imported from the ACP States listed in Protocol 8 and from India other than preferential sugar in the strict sense, a special preferential sugar in the strict sense, a special preferential arrangement for access to the Community refining market should be introduced;

Whereas refining is an important activity both in the sugar sector in general and in the Community, and in particular for conversion of raw sugar into white sugar; whereas, from a technical point of view, refining produces high-quality products from sugar cane that can meet market requirements; whereas, moreover, these refineries are located in areas of high consumption; whereas the port-related refining industry is accordingly, for the Community, a valuable complement to the beet processing industry, in particular in Finland, mainland Portugal, the United Kingdom and southern and western France;

Whereas in a Joint Declaration on the Portuguese sugar market annexed to the Final Act of the Fourth ACP-EEC Lomé Convention the ACP States and the Community agreed to continue, under the relevant provisions of the Convention and in particular Article 168 (2) thereof, the examination of requests from the ACP States for increased preferential access to the Portuguese market; whereas examination of these requests, which concern supplies to port refineries in the Community as a whole, leads to the conclusion that special priority access should be given to raw cane sugar originating in the ACP States party to Protocol 8 and in India, under special agreements negotiated between the Community and the countries party to Protocol 8 and/or other countries and on the basis of a Community estimate of requirements after utilization for refining of all available raw cane and beet sugar in the Community and preferential sugar as defined in Article 33 of Regulation (EEC) No 1785/81;

Whereas up to the 1994/95 marketing year Community adjustment aid has been granted for refining of preferential raw cane sugar and of raw sugar from cane and beet harvested in the Community; whereas up to now it has been possible to adjust this aid for any given marketing year in line with the storage levy set for that year and/or any change in the refining margin resulting from the prices set for the marketing year; whereas in the light of experience this aid should continue; whereas given the direct impact on the refining margin of changes in the storage levy it should be made compulsory for the adjustment aid to be altered in line with that levy in the case of refining of raw sugar covered by Community price guarantees or imported from the ACP States as preferential sugar covered by Article 33 of Regulation (EEC) No 1785/81;

Whereas, for reasons already indicated in the past, in view of its particular characteristics and the dimensions of holdings it is difficult to apply modern beet production methods in Italy, although the situation is improving in the north; whereas for structural reasons these difficulties persist in the centre and south, regions which are, moreover, recognized as lagging behind in development and structural adjustment; whereas beet growing in these regions is indispensable in order to regenerate soils with a particularly high level of clay and to avoid a return to monoculture; whereas Italy should therefore be authorized to grant in its northern regions, for a restricted period of three marketing years up to 1997/98, national adjustment aid for beet cultivation of a decreasing amount starting lower than the amount granted for the 1994/95 marketing year under the terms of the authorization to Italy to grant such aid given in Regulation (EEC) No 1785/81, as amended by point 10 of Article 1 of Regulation (EEC) No 305/91 (4), and to grant in its central and southern regions such aid over two marketing years, reduced by a uniform amount from the level granted for 1994/95, but thereafter continuing without further reduction up to the 2000/01 marketing year;

Whereas the partial exemption from self-financing granted by Article 9 of Council Regulation (EEC) No 1010/86 (5), as last amended by Commission Regulation (EEC) No 464/91 (6), to sugar used in the chemical industry should be discontinued;

Whereas this Regulation should be applied under the best possible conditions; whereas, to this end, certain transitional measures may prove necessary; whereas the procedure laid down in Article 41 of Regulation (EEC) No 1785/81 should apply to adoption of such transitional measures,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EEC) No 1785/81 is amended as follows:

1. The following subparagraph is added to Article 9 (3):

'The standard amount of ECU 7 per 100 kilograms of white sugar referred to in Article 4a of Regulation (EEC) No 1010/86 may be reduced up to zero.`

2. In Article 9 (6), the fifth indent is replaced by the following:

'- the conditions for granting production refunds, the amounts of such refunds and the reduction referred to in paragraph 3,`

3. In Article 19 (3), the first subparagraph is replaced by the following:

'When the refund is being fixed, particular account shall be taken of the intervention price of white sugar and the need to establish a balance between the use of Community basic products in the manufacture of processed goods for export to third countries and the use of the products of such countries brought in under inward processing arrangements`.

4. Article 23 (1) is replaced by the following:

'1. Articles 24 to 32 shall apply in respect of the marketing years 1995/96 to 2000/01.`

5. Article 23 (2) is replaced by the following:

'2. For the period referred to in paragraph 1 and without prejudice to paragraph 4a, Article 24 (2), Article 25 and, as appropriate, Article 24a (5), the A and B quotas of undertakings producing sugar or isoglucose shall be those assigned by the Member States for the 1994/95 marketing year.`

6. Article 23 (4) is replaced by the following:

'4. For the period referred to in paragraph 1 and without prejudice to paragraph 4a, the A and B quotas of undertakings producing inulin syrup shall be those definitively assigned by the Member States pursuant to Article 24b for the 1994/95 marketing year. Article 24 and 25 shall not apply to such undertakings.`

7. The following paragraph 4a is inserted in Article 23:

'4a. In order to comply with the commitments entered into by the Community under the agricultural agreement concluded pursuant to Article 228 (2) of the Treaty, the guarantees for the disposal of sugar, isoglucose and inulin syrup produced under quota may be reduced for one or more designated marketing years.

For the purposes of applying the first subparagraph, for each marketing year the guaranteed quantity under quotas shall be laid down before 1 October on the basis of forecasts of production, imports, consumption, storage, carry over, exportable balance and average loss likely to be borne under the self-financing scheme within the meaning of point (d) of Article 28 (1). If these forecasts show an exportable balance for the marketing year in question greater than the maximum laid down by the agreement referred to above, the guaranteed quantity shall be reduced by the difference in accordance with the procedure laid down in Article 41. This difference shall be divided up between sugar, isoglucose and inulin syrup in accordance with the percentage representing the total of the A and B quotas of each product in the Community. It shall then be broken down by Member State and by product by applying the corresponding coefficient set out in the table below.

The Member State shall then allocate the difference to which it is subject among the producer undertakings established on its territory on the basis of the existing ratio between their A quota and their B quota for the product in question and the basic quantity A and the basic quantity B for the Member State or, as appropriate, the sum of the A quotas and the sum of the B quotas for this product assigned to the producer undertakings.

Sugar, isoglucose and inulin syrup produced beyond the quantity guaranteed shall be considered as C sugar, C isoglucose and C inulin syrup within the meaning of either point (c) in the second subparagraph of Article 24 (1) or point (c) of Article 24b (5), as appropriate.

>TABLE>

The arrangements for the application of the first subparagraph, the reduction in the guaranteed quantity and, where appropriate, any change in that quantity during a marketing year shall be adopted in accordance with the procedure laid down in Article 41.`

8. In Article 23 (5), the dates '1 January 1995` and '1 July 1995` are replaced by '1 January 2001` and '1 July 2001` respectively.

9. In the first indent of the first subparagraph of Article 24 (1), the date '1993/94` is replaced by '1994/95`.

10. In Article 24 (3), the date '1993/94` is replaced by '1994/95`.

11. In Article 27 (2), the second indent is replaced by the following:

'- store such quantity or quantities for a period of 12 consecutive months from a date to be determined. For this period storage costs for the production of C sugar carried over from the 1996/97 marketing year to the following marketing year shall no longer be reimbursed pursuant to Article 8.

For the production of C sugar from the 1995/96 marketing year carried over to the 1996/97 marketing year, this reimbursement of storage costs shall be granted by way of a transitional measure for the first six months of compulsory storage.

Nevertheless, for the production of A sugar and B sugar which has become production of C sugar after application of Article 23 (4a) and which is carried forward, storage costs shall be reimbursed under the provisions of Article 8`.

12. The following subparagraph is added to Article 28 (1) (e):

'In estimating this total loss, losses arising from the granting of the production refunds referred to in Article 1 of Regulation (EEC) No 1010/86 shall be taken into account for the beneficiary basic quantities.`

13. In Article 28 (2), the introductory phrase is replaced by the following:

'Before the end of the 2000/01 marketing year and without prejudice to Article 23 (4a), there shall be recorded cumulatively for the 1995/96 to 2000/01 marketing years:`

14. In Article 29 (1), the date '1990/91` is replaced by '1994/95`.

15. Title IV is replaced by the following:

'TITLE IV System of preferential imports Article 33 Articles 34, 35 and 36 shall apply to cane sugar, hereinafter referred to as "preferential sugar", falling within CN code 1701, which originates in the States listed in Annex II and which is imported into the Community under: (a) Protocol 8 on ACP sugar annexed to the ACP-EEC Convention of Lomé (*); (b) the agreement between the European Community and the Republic of India on cane sugar (**). Article 34 Where the quality of preferential sugar imported pursuant to Article 33 and purchased by intervention agencies or by other agents appointed by the Community deviates from the standard quality, the guaranteed prices shall be adjusted by means of price increases and reductions. Article 35 1. No import duty shall apply to imports of preferential sugar pursuant to Article 33. 2. Preferential sugar shall enjoy no derogations from the prohibitions referred to in Article 19 (2). Article 36 1. For marketing years 1995/96 to 2001/02, adjustment aid shall, as an intervention measure, be granted to the industry engaged in refining preferential raw cane sugar imported for that purpose into the Community pursuant to Article 33. 2. The aid referred to in paragraph 1 may be granted only in respect of the quantities eligible pursuant to Article 33 which are refined into white sugar at the refineries referred to in Article 9 (4). The aid for the white sugar in question shall be ECU 0,08 per 100 kilograms, expressed in white sugar. 3. During the period specified in paragraph 1, additional aid of ECU 0,08 per 100 kilograms, expressed as white sugar, shall be granted for the refining, at the refineries referred to in Article 9 (4), of raw cane sugar produced in the French overseas departments, in order to restore the price balance between that sugar and preferential sugar. 4. For a particular marketing year, adjustment aid and additional aid shall be adjusted in the light of the storage levy fixed for that year and previous adjustments. 5. Detailed rules for the application of this Article, and in particular concerning the adjustments referred to in paragraph 4, shall be adopted in accordance with the procedure laid down in Article 41. Article 37 1. During the period referred to in Article 36, in order to ensure adequate supplies to the Community refineries referred to in Article 9 (4), a reduced rate of duty, hereinafter referred to as "special duty", shall be levied on imports of raw cane sugar originating in the States referred to in Article 33 pursuant to agreements with those States or with other States within the meaning of Article 16, hereinafter referred to as "special preferential sugar" and subject to the conditions laid down therein, and in particular the minimum purchasing price to be paid by refiners. 2. For the purposes of paragraph 1 and without prejudice to paragraph 5, the presumed maximum supply needs per marketing year, expressed in white sugar, of the refining industries in: (a) Finland, amount to 40 000 tonnes; (b) metropolitan France, amount to 297 000 tonnes; (c) continental Portugal, amount to 292 000 tonnes; (d) the United Kingdom, amount to 1 130 000 tonnes. However, in the case of Finland, these needs amount: - for the period from 1 July to 31 December 1995, to the balance of the quantities of raw sugar remaining to be refined subject to the limit laid down in Article 16a, as amended by the Act of Accession of Norway, Austria, Finland and Sweden, - for the period from 1 January to 30 June 1996, to 20 000 tonnes. 3. On the basis of a Community forecast supply balance for raw sugar for each marketing year or part of a marketing year, the quantities of raw cane sugar and raw beet sugar harvested in the Community with or without distinction of origin available to the refining industry shall be determined. This balance may be revised during the marketing year. For the purposes of determining these quantities, the quantities of sugar from the French overseas departments and of preferential sugar for direct consumption to be used in each balance shall be those determined for the 1991/92 marketing year less forecast local consumption in those departments during the marketing year in question. If the balance shows that the amounts available will be insufficient to meet the maximum needs laid down in paragraph 2, provision may be made for the Member States concerned to import the shortfall as special preferential sugar under the arrangements for imports at a special rate of duty provided for in the agreements referred to in paragraph 1. 4. When, after revision, the forecast of a shortfall for a given Member State and in a given marketing year shows that the limit of presumed needs laid down in paragraph 2 for that Member State will be exceeded, the quantity in excess shall not be entitled to benefit from the preferential arrangements defined in paragraph 2 if it is refined in the same Member State. 5. Where Article 23 (4a) applies, the sum of the maximum needs referred to in paragraph 2 shall be reduced for the marketing year concerned by the same percentage reduction applied to the sum of the basic quantities A for Community sugar pursuant to the said paragraph 4a. The reduction of the maximum needs shall be apportioned between the Member States concerned on the basis of the relationship existing between the quantity fixed for each one of them in paragraph 2 and the sum of the quantities fixed in that paragraph. 6. Detailed rules for the application of this Article, and in particular concerning the implementation and management of the agreements referred to in paragraph 1, shall be adopted in accordance with the procedure laid down in Article 41. (*) OJ No L 229, 17. 8. 1991, p. 1. (**) OJ No L 190, 22. 7. 1975, p. 35.` 16. In Article 46, paragraphs 1 to 5 are replaced by the following: 'Article 46 1. Italy shall be authorized, under the conditions set out in paragraphs 2 and 3, to grant adjustment aid in the case referred to in point (a) of paragraph 2 to producers of sugar beet and in the case referred to in point (b) of paragraph 2 to producers of sugar beet as well as, where appropriate, to producers of sugar in the region in question. 2. The aid referred to in paragraph 1 may be granted only in respect of the quantity of sugar produced within the limit of the A and B quotas of each sugar-producing undertaking. (a) For the production referred to in the first paragraph in northern Italy, the unit amount of aid may not exceed: - in the 1995/96 marketing year, ECU 6,75 per 100 kilograms of white sugar, - in the 1996/97 marketing year, ECU 4,5 per 100 kilograms of white sugar, - in the 1997/98 marketing year, ECU 2,25 per 100 kilograms of white sugar. No aid shall be paid in northern Italy as from the 1998/99 marketing year. (b) For the sugar production referred to in the first paragraph in central and southern Italy, the unit amount of aid may not exceed: - in the 1995/96 marketing year, ECU 6,75 per 100 kilograms of white sugar, - in the marketing years 1996/97 to 2000/01, ECU 4,5 per 100 kilograms of white sugar. 3. However, as regards central and southern Italy only, Italy may, depending on the marketing year in question, adjust the aid referred to in point (b) of paragraph 2 where this is necessitated by exceptional requirements connected with restructuring the sugar sector in that part of Italy. Pursuant to Articles 92, 93 and 94 of the Treaty, the Commission shall assess in particular whether such aid is consistent with the restructuring plans. 4. For the purposes of paragraphs 1, 2 and 3: (a) northern Italy means Italy other than the regions of production listed under (b); (b) central and southern Italy means Abruzzi, Molise, Apulia and Sardinia. 5. Italy shall notify the Council, in respect of each marketing year, of the measures taken in application of this Article and, in particular, of the distribution of the aid by region and between producers of sugar beet and producers of sugar in central and southern Italy.` 17. In Article 48, the date '30 June 1995` is replaced by '30 June 1996`.

Article 2

Article 9 of Regulation (EEC) No 1010/86 is repealed.

Article 3

This Regulation shall enter into force on the seventh day following that of its publication in the Official Journal of the European Communities.

It shall apply from 1 July 1995.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

(1) OJ No L 177, 1. 7. 1981, p. 4.

(2) OJ No L 194, 17. 7. 1986, p. 7.

(3) OJ No L 229, 17. 8. 1991, p. 1.

(4) OJ No L 37, 9. 2. 1991, p. 1.

(5) OJ No L 94, 9. 4. 1986, p. 9.

(6) OJ No L 54, 28. 2. 1991, p. 22.