COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 06.05.1998 
COM(1998) 283 final 
Proposal for a 
COUNCIL REGULATION (EC) 
amending Council Regulation (EC) No 1554/95 laying down the general rules for the 
system of aid for cotton and repealing Regulation (EEC) No 2169/81 
(presented by the Commission) 

EXPLANATORY MEMORANDUM 
1. INTRODUCTION 
1.1. In response to the Council's invitation in June 1997, the Commission's report on 
Greek requests in the cotton sector (COM(98) 10 final) examined the following four 
specific requests, leaving all other aspects of the current aid scheme unchanged: 
- payment of the aid directly to producers; 
- a regionalised system of penalties; 
- increasing the production estimate by 7.5%; 
- creating a legal framework for reviewing the production estimate during the marketing 
year. 
1.2. The requested amendments were examined keeping in mind the objective of 
maintaining or, where possible, strengthening the effectiveness of the existing control 
arrangements. The Court of Auditors has repeatedly shown in its annual reports that the 
market organisation for cotton has serious inspection problems. 
2. PROPOSED MEASURES 
Now that the Council has examined the report, the Commission proposes: 
2.1. to encourage contract ginning by private or associated ginners on behalf of producer 
groups and to specify how the minimum price will be paid to members in such 
circumstances; 
2.2. to improve the production forecasts, which are currently made before 1 October so 
that advance aid payments can be paid from 16 October. It is proposed to review the 
production estimate at a date by which a good deal of the unginned cotton has usually 
been placed in supervised storage, or during the second half of the month of November. 
The percentage increase applied to the reviewed production estimate when the advances 
are calculated would be lower than 15% to take account of the improved reliability of the 
forecast. 
1 OJ C 309, 16.11.1993, p. 1 
OJ C 340, 17.11.1996, p. 1. 
J. 
Proposal for a 
COUNCIL REGULATION (EC) N° 
of 
amending Council Regulation (EC) No 1554/95 laying down the general rules for the 
system of aid for cotton and repealing Regulation (EEC) No 2169/81 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to the Act of Accession of Greece^ and in particular paragraph 9 of 
Protocol 4 on cotton, as last amended by Regulation (EC) No 1553/951, 
Having regard to the proposal from the Commission, 
Whereas paragraph 3 of Protocol 4 provides for production aid to be granted through 
cotton ginning undertakings; whereas when such undertakings buy unginned cotton they 
pass the aid on to producers by paying a price at least equal to the minimum price 
referred to in paragraph 8a of Protocol 4; whereas these undertakings may also gin cotton 
for third parties; 
Whereas Article 7(l)(b) of Council Regulation (EC) No 1554/952, as amended by 
Regulation (EC) No 1584/96 , provides that where a ginning undertaking gins cotton on 
behalf of an individual producer or a producer associated with that undertaking, a 
statement must be submitted giving details of how the aid is passed on to the producers; 
whereas the notion of associated producers should be replaced by that of producer 
groups, and the conditions to be met by groups in such cases should be laid down to 
ensure that the aid is passed on, particularly through payment of the minimum price to its 
members; 
Whereas Article 8 of Regulation (EC) No 1554/95 provides for the estimated production 
of unginned cotton to be fixed before 1 October for the purpose of calculating the amount 
of the advance; whereas in order to improve initial harvest forecasts and ensure that the 
amount paid in advance is as close as possible to the final amount of aid due, the 
1 OJL 148, 30.06.95, p. 45. 
2 OJ L 148, 30.06.95, p. 48. 
3 OJ L 206, 16.08.96, p. 16. 
Whereas Article 8 of Regulation (EC) No 1554/95 provides for the estimated production 
of unginned cotton to be fixed before 1 October for the purpose of calculating the amount 
of the advance; whereas in order to improve initial harvest forecasts and ensure that the 
amount paid in advance is as close as possible to the final amount of aid due, the 
production estimate should be revised at a date by which a large proportion of the 
unginned cotton harvest has already been placed in supervised storage; whereas the 
increased reliability of such a revised estimate would require application of a percentage 
increase of less than 15% when calculating the resulting advance, without this causing 
any risks for the budget; whereas the advances paid prior to the revised estimate should 
be adjusted, taking account of the administrative costs of applying the new mechanism, 
HAS ADOPTED THIS REGULATION: 
Article 1 
Regulation (EC) No 1554/95 is amended as follows: 
1. Article 5(3) is replaced by the following: 
"3. Entitlement to the aid shall be acquired when the cotton is ginned. However, aid 
may be paid in advance from 16 October following the start of the marketing year 
when the unginned cotton enters the cotton ginning undertaking, provided that an 
adequate security has been lodged. The amount of the advance shall be calculated 
in accordance with paragraph 3 a. 
Any aid balance outstanding shall be paid once the actual quantity produced has 
been determined and any adjustment to the aid referred to in Article 2 of 
Regulation (EEC) No 1964/878 has been made. It shall be paid before the end of 
the marketing year, at the latest." 
2. The following paragraph is inserted: 
"3a. The level of the advance per 100 kg of unginned cotton shall be equal to the guide 
price minus the world price and reduced further by an amount calculated using the 
7 JO n° LI 84 du 3.07.87, p. 14. 
8 OJL 184, 3.7.87, p. 14. 
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method provided for in Article 6, but replacing actual production by the estimated 
production of unginned cotton fixed in accordance with Article 8(1) plus 15 %. 
From 16 December following the start of the marketing year, the amount of the aid 
referred to in the first subparagraph shall be replaced by a revised amount 
calculated using the same method but based on the revised production estimate 
for unginned cotton fixed in accordance with Article 8(2), plus at least 7.5%. 
Advances paid between 16 October and 15 December shall be increased 
accordingly, except where the difference between the two amounts is less than 
ECU 1/100 kg." 
3. Article 7 is replaced by the following: 
«Article 7 
1. Without prejudice to paragraph 2, aid shall be granted only to those cotton 
ginning undertakings which apply for it and which: 
(a) have submitted a contract stipulating payment to the producer of a price at least equal 
to the minimum price referred to in Article 8a of Protocol 4 and containing a clause 
specifying that: 
- in the event of application of Article 2(3) and/or (4) of Regulation (EEC) No 
1964/87, the agreed price shall be adjusted in consequence of the effect of the 
application of that Article upon the aid, 
- in the event of a difference between the duality of the cotton delivered and the 
standard quality, as referred to in paragraph 8 of Protocol 4, the price agreed will be 
adjusted proportionally by common consent between the contracting parties; 
b) keep stock accounts on ginned and unginned cotton that satisfy requirements to be laid 
down, so that entitlement to the aid can be checked; 
c) provide the other supporting documents needed for checking entitlement to the aid; 
d) furnish proof that the cotton delivered under the contract has been the subject of the 
declaration of area sown referred to in Article 8. 
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2. Aid shall be granted only to those cotton ginning undertakings which apply for it and 
'which gin cotton on behalf of an individual producer or a producer group meeting the 
criteria laid down in the third subparagraph of paragraph 4 of Protocol 4, provided such 
undertakings: 
a) satisfy the conditions referred to in paragraph 1(b) and (c); 
b) have submitted a statement giving details of the conditions under which the ginning is 
carried out and how the aid is administered; 
c) undertake to pass on the aid to the individual producers ciy where applicable, the 
producer groups concerned; 
d) furnish proof that the cotton referred to in the statement referred to in point (b) has 
been the subject of the declaration of area sown referred to in Article 8. 
e) furnish proof that producer groups are obliged to provide for and comply with a clause 
equivalent to the one in paragraph 1(a) and an undertaking by such groups to keep and 
produce supporting documents concerning payment of the minimum price. 
3. Failure to comply with the clause or undertaking referred to in paragraph 2(e) by a 
producer group having ginning carried out on its behalf shall be considered a failure to 
meet the criteria referred to in the third subparagraph of paragraph 4 of Protocol 4." 
4. Article 8 is replaced by the following: 
"Article 8 
"1. Before 1 October, the estimated production of unginned cotton referred to in the first 
subparagraph of Article 5 (3a) shall be drawn up using the procedure referred to in 
Article 11(1), account being taken of crop estimates. 
In order to draw up these estimates, a system of declarations of the areas sown shall be 
established. 
2. Before 1 December, the revised estimate of produo'on cf unginned cotton referred te 
in the second subparagraph of Article 5 (3a) shall \e drawn up using the procedure 
referred to in Article 11(1), account being taken of the progress of the harvest." 
C 
Article 2 
This Regulation shall enter into force on the third day following its publication in the 
Official Journal of the European Communities. It shall apply from 1 September 1998. 
This Regulation shall be binding in its entirety and directly applicable in all Member 
States. 
Done at For the Council 
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Financial Statement 
1 .BUDGET HEADING: Bl-141 APPROPRIATIONS: ECU 757 million 
2.TTTLE: 
Proposal for a Council Regulation amending Regulation (EC) No 1554/95 laying down the general rules for the system of aid for 
cotton and repealing Regulation (EEC) No 2169/81 
3.LEGAL BASIS: Article 39 of the Treaty establishing the European Community 
4.AIMS OF PROJECT: 
In response to the Council's invitation in June 1997, the Commission has examined the Greek requests in the cotton sector 
(COM(98) 10 final). It now proposes: 
to encourage contract ginning on behalf of producer groups. 
to ensure that the advance paid is closer to the final amount of aid due. 
5.FINANCIAL IMPLICATIONS Period of 
12 months CURRENT 
FINANCIAL YEAR 
(98) FOLLOWING 
FINANCIAL YEAR 
. (99) 
5.0EXPENDITURE 
_ CHARGED TO THE EC BUDGET 
(REFUNDS/INTERVENTION) 
- NATIONAL ADMINISTRATION 
-OTHER 
5.1 REVENUE 
- OWN RESOURCES OF THE EC 
(LEVIES/CUSTOMS DUTIES) 
- NATIONAL 
2000 2001 2002 2003 
5.0.1 ESTIMATED EXPENDITURE 
5.1.1 ESTIMATED REVENUE 
5.2 METHOD OF CALCULATION: 
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE 
CURRENT BUDGET? 
YES/NO 
6.1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET? 
YES/NO 
6.2 IS A SUPPLEMENTARY BUDGET NECESSARY? ¥£&NQ 
6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? YES/NO 
OBSERVATIONS: 
The new provisions proposed are technical amendments without any financial implications. 
The review of the calculation of advances on the basis of production estimated at a later date and a percentage increase of less 
than 15% should not cause any risk of wrong payments. The n;w system for calculating advance payments does not change the 
total amount of the aid for cotton. 
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ISSN 0254-1475 
COM(98) 283 final 
DOCUMENTS 
EN 03 01 15 10 
Catalogue number : CB-C0-98-292-EN-C 
ISBN 92-78-35561-5 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
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