[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 4.7.2007

COM(2007) 372 final

2007/0138 (CNS)

Proposal for a

COUNCIL REGULATION

on the common organisation of the market in wine and amending certain Regulations

(presented by the Commission) {SEC(2007) 893}{SEC(2007) 894}

EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

The European Union (EU) is the world's leading producer, consumer, exporter and importer of wine. In 2006, EU-27 wine production accounts for 5% of the total value of the EU's agricultural production. In terms of quality, its reputation is recognised worldwide. The wine sector in the EU represents a vital economic activity, especially as regards employment and export revenue.

However, EU wine consumption has fallen significantly and steadily over the past decades and, despite a recent recovery, the volume of wine exported from the Community since 1996 has been increasing at a much slower rate than imports. The deterioration of the balance between supply and demand in the wine sector and the increasing challenges inherent in a European and international wine market are putting producers' price and income under pressure. Nevertheless many wine producers are competitive and others are capable of becoming competitive.

As stated in its Communication "Towards a sustainable European wine sector" of 22 June 2006[1], the European Commission is of the opinion that a fundamental reform of the common market organisation (CMO) for wine is necessary in order to replace cost-inefficient policy tools by a more sustainable and coherent legal framework. The aim is to ensure a better value for money using the current budget allocated (around EUR 1.3 billion), which is about 3% of the total for agriculture.

The current CMO is set out in Council Regulation (EC) No 1493/1999 of 17 May 1999. The adoption of the proposal will lead to the repeal of existing legislation. Also based on the Treaty establishing the European Community and in particular Articles 36 and 37, the proposed regulation when adopted will enter into force on 1 August 2008 and falls under the exclusive competence of the Community. However, many measures to be funded under this proposal will allow Member States to tackle the specific situations of their wine producing regions in accordance with the subsidiarity principle.

In keeping with the Commission's commitments on better legislation, the proposal is accompanied by an updated analysis of the economic, social and environmental aspects of the problems linked to the CMO and of the impact, advantages and drawbacks of the proposal in relation to these issues. It also takes account of the results of the debates conducted both with stakeholders and national authorities and within the Community institutions.

This draft regulation represents a Commission initiative as part of the continuing common agricultural policy (CAP) reforms of 2003 for arable crops and livestock[2], 2004 for olive oil, tobacco and cotton[3], and 2006 for sugar[4], and the proposed reform for fruit and vegetables of January 2007, which cover all the main sectors except wine. It also takes into account Community policies on sustainable development, agreed at the Göteborg European Council, on greater competitiveness in the relaunched Lisbon Strategy, and on Simplification and Better Regulation for the CAP.

2. CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT

- Use of external expertise

To prepare the ground for the reform of the wine CMO, an ex-post evaluation of the current regime has been financed by the Commission and conducted by a consortium of European academics. The evaluation report was published in November 2004 and is available on the Commission website[5].

In addition, when making the medium-term forecasts of the wine market the Commission submitted its assumptions, methodology and results to a panel of academics specialised in the wine economy from France, Spain, Italy and Germany.

- Wine seminar

To give stakeholders an opportunity to put forward their opinions and ideas on the present situation and future prospects of the wine sector, a seminar entitled “Challenges and opportunities for European wines” was held on 16 February 2006. This seminar was attended by more than one hundred people representing a wide range of interested parties[6].

- Commission Communication and impact assessment

In June 2006, drawing its first conclusions from the debate, the Commission adopted a Communication to the Council and the European Parliament considering four possible options for the reform of the CMO. The Commission invited all the stakeholders to participate in an open debate on the future wine CMO, and announced that it would propose a reform of the wine CMO on the basis of these discussions.

Taking into account the situation of the sector and the policy objectives to be achieved, the Commission considered four possible options for the reform of the wine CMO. Three of these options – to maintain the status quo, to reform the wine CMO along the lines of the CAP reform model and to pursue complete deregulation – do not provide adequate answers to the problems, the needs and the particularities of the wine sector.

The Commission carried out an impact assessment listed in the Work Programme; the report is available on the Commission website[7].

- European institutions

From July to October 2006, intense discussions took place within the Council, in particular during three meetings of the Agriculture and Fisheries Council.

In December 2006, both the European Economic and Social Committee and the Committee of the Regions adopted their reports on the wine reform.

In February 2007, the European Parliament adopted its own initiative report on the Communication.

- Stakeholders' consultation

The Commission held a wide range of meetings with stakeholders and discussions took place within the Advisory Group on Wine.

In addition, to ensure direct and concrete dialogue with the European wine sector, the Commissioner for Agriculture and Rural Development has visited many of the different vine-growing regions throughout the European Union since February 2006.

- Main concerns expressed

During all these debates held since the adoption of the Commission Communication, Member States and many stakeholders have had the opportunity to express their concerns. Even if diverging views were expressed, the following concerns are largely shared by many of them:

- the urgent need for extensive reform in the light of the Commission's economic analysis, diagnosis of problems and objectives for reform,

- the social and economic risks arising from too rapid and too widespread grubbing-up,

- the urgent need to enhance wine marketing and promotion,

- the risk for quality if the bans on imported musts for vinification and on wine coupage between EU wines and imported wines were to be lifted.

Non wine-producing countries stressed the need to introduce more cost-efficient and consumer-oriented measures.

The above-mentioned concerns have been duly taken into account by the Commission in the present proposal.

3. LEGAL ELEMENTS OF THE PROPOSAL

- Objectives of the reform

The identified objectives of this reform are to:

- increase the competitiveness of the EU's wine producers; strengthen the reputation of EU quality wine as the best in the world; recover old markets and win new ones in the EU and worldwide;

- create a wine regime that operates through clear, simple rules – effective rules that balance supply and demand;

- create a wine regime that preserves the best traditions of EU wine production, reinforces the social fabric of many rural areas, and ensures that all production respects the environment.

The new EU wine policy should also give due consideration to the increased concerns of society as regards health and consumer protection, the need for World Trade Organisation (WTO) compatibility and consistency with the reformed CAP, first and second pillar and conformity with the financial perspectives.

Finally, it has to be pointed out that this proposal has been drawn up in light of the Commission proposal for a Council Regulation establishing a common organisation of agricultural markets. Some provisions of a horizontal nature have been updated, simplified and streamlined so that the wine CMO can be easily incorporated into that single CMO in due course.

- Summary of the proposed measures

Recognising the problems and the potential of the sector and its particularities, and following the in-depth analysis in the Impact Assessment, the Commission considers that there is a need to keep a specific wine CMO which must, without doubt, be fundamentally reformed.

The challenge is to adapt the production structure and regulatory framework in the interest of a sustainable and competitive European wine industry with long-term prospects while, at the same time, ensuring that budgetary means are used in the most cost-effective manner. This will entail abolishing from day one, all the measures which have proved to be inefficient, namely support for by-product distillation, potable alcohol and dual-purpose grape distillation as well as private storage support and export refunds. Aid for must in relation to enrichment, introduced to compensate additional costs when comparing enrichment with sugar, will be abolished in line with the introduction of a ban on the use of sugar for enrichment. The crisis distillation measure will be replaced by two crisis management measures introduced in the national envelope menu.

An important feature of the far-reaching reform will be to make the new wine CMO WTO-friendly. Thus, current trade-distorting ("Amber Box") intervention measures will be eliminated, and where internal support measures continue to exist, preference will be given to "Green Box" measures.

The proposed approach consists of two phases: the first phase from 2008 to 2013 involves restoring market balance while helping those who cannot compete to leave the sector with dignity. Throughout the period new measures will be introduced to improve competitiveness, including, in a second phase, the abolition of planting rights as from 1 January 2014.

3.1. Renewed, simplified and more straightforward regulatory measures

Fewer constraints for producers

The system of planting rights restrictions will be extended from 2010 to 2013.

Then, from 1 January 2014 onwards planting of vines will be free in order to improve competitiveness. The purpose is to allow competitive wine producers to expand their production in order to recover old markets and win new ones in the EU and in third countries. However, new market realities and Member States' competences regarding access to protected designation of origin or Geographical Indication status, for example area delimitation, setting of maximum yields and other stricter rules on production, processing and labelling, combined with the end of the systematic distillation safety net will de facto limit the number of hectares and avoid excessive production. Any new production decision will fully reflect the producers' capacity to find economic outlets for their products.

More adaptable oenological practices with :

- the transfer from the Council to the Commission of the responsibility for approving new or modifying existing oenological practices, including taking over the acquis except for enrichment and acidification;

- the assessment by the Commission of the oenological practices adopted by the International Organisation of Vine and Wine (OIV) and subsequent incorporation into a Commission regulation;

- the authorisation of the use in the EU of oenological practices already agreed internationally for making wine to export to those destinations;

- the deletion of the minimum natural alcohol requirement of wine.

Clearer, more coherent and consequently more market-oriented wine classification and labelling :

The concept of EU quality wines is based on a geographical origin approach (quality wine produced in a specified region). The EU wants to confirm, adapt, promote and enhance this concept worldwide.

The quality policy will be made clearer, simpler, more transparent and thus more effective, by:

- establishing a clear framework for wines with Geographical Indication (GI) consistent with the horizontal quality policy (Council Regulation (EC) No 510/2006). Wines with GI will be further divided into wines with a protected geographical indication (PGI) and wines with a protected designation of origin (PDO). A procedure for registration and protection of GIs will be established;

- maintaining the ban on over-pressing of grapes in order to ensure wine quality, to be applied under the subsidiarity principle;

- expanding the role of the interprofessional organisations in order to be able to control and manage the quality of the wine produced in their territories. Control instruments are reinforced as well, in particular for the production of " vin de cépage ".

The Commission proposes to simplify the labelling provisions by setting up a single legal framework applying to all the different categories of wine and particulars relating to them. It will respond to the needs of consumers and be more consistent with the wine quality policy. In particular, this involves:

- the transfer of competence from the Council to the Commission;

- the use of a single legal tool for all wines by complementing the rules in the horizontal labelling Directive 2000/13/EC as appropriate to meet the particular needs of the wine sector as regards compulsory and optional labelling;

- improving the flexibility of the labelling policy, in taking into account the WTO policies, by removing the distinction between the rules on labelling wines with and without protected designations of origin or geographical indications, most importantly facilitating the indication of vine variety and vintage on wines without protected designation of origin or geographical indication respecting proper traceability requirements;

- ensuring consumer information and protection, fully informing them of the origin of the product through appropriate labelling rules on traceability.

3.2. Setting national envelopes to allow Member States to improve their specific situation

According to the financial statement, the overall budget allocated to this type of measures will vary from EUR 623 million in 2009 to EUR 830 million from 2015 onwards.

Out of it, a budget envelope will be made available to each wine-producing Member State, calculated according to three objective criteria, namely shares in area, production and historical expenditure with the following respective weight: one fourth, one fourth and a half, except for the promotion part where the weight will be a half for the share in area and a half for the share in production.

Using their envelope, every Member State will be allowed to finance measures, according to its preference, from a given menu including:

- new support for promotion in the third countries;

- the vineyard restructuring/conversion scheme;

- new support for green harvest;

- new crisis management measures, i.e. insurance against natural disasters and administrative costs of setting up a sector-specific mutual fund.

Its use will be subject to certain common rules, including minimum environmental rules applied through the principles of cross-compliance, in order to avoid distortion of competition, and subject to the notification of the specific national programme to the Commission.

3.3. Building a more sustainable sector by using more Rural Development measures

Many measures already forming part of the Rural Development Regulation[8] and inserted in the programmes adopted by the Member States could be of interest for the wine sector as they could provide significant encouragement and benefit for vine growers, processors and traders. Among other things:

- setting up of young farmers and investments in technical facilities and marketing improvements;

- vocational training;

- information and promotion support for producers' organisations after entering a quality scheme;

- agri-environment support to cover additional costs and income foregone in providing and maintaining vinescapes/cultural landscapes;

- early retirement: to be granted eventually to farmers who decide to stop all commercial farming activity definitively for the purpose of transferring the holding to other farmers.

The abolition of the use of sugar will force some wine producers who have traditionally used sugar for enrichment to make investments to introduce the use of must for enrichment. Under rural development it will be possible for Member States to provide investment support to wine producers who have to change from the use of sugar for enrichment to the use of must.

As the 2007–2013 Rural Development planning process is in progress, and in order to encourage these measures, a transfer of funds between budget headings (market and direct payments on the one hand and Rural Development on the other hand) will be necessary and would be earmarked for the wine producing regions in line with what was done in two other sectors (tobacco and cotton).

The transferred budget will vary from EUR 100 million in 2009 to EUR 400 million from 2014 onwards. As the Rural Development plans will already have been adopted, Member States will have the opportunity to adapt them so that they can play an important role in the economic welfare of wine sector stakeholders in the future and in preserving the environment in the vine-growing regions.

3.4. Making the consumer better informed about European wines

Several stakeholders, in particular during the 16 February 2006 Seminar, underlined the need for increased emphasis on wine marketing and wine promotion. The Commission intends to pursue with vigour a responsible promotion and information policy. All available opportunities in Community legislation should be used and some new ones created in order to carry out:

- new promotion projects outside the EU using national envelopes with an ambitious and earmarked budget of EUR 120 million, about 9% of the budget allocated to the sector. Those measures will be co-financed at 50% by the Community budget;

- enhanced promotion projects using rural development funds for producers' organisations entering quality schemes;

- new information campaigns on responsible/moderate wine consumption will also be financed within the EU using the horizontal legal framework for promotion with an increased co-financing rate (set at 60%). The current information campaign on European Geographical Indication classification will also be enhanced. For this purpose, Council Regulation (EC) No 2826/2000 will be amended and more funds will be made available.

3.5. Preventing environmental risks

The production and marketing of wine should take full account of environmental concerns, from cultivation practices to processing methods. The Commission intends to ensure that the reform of the wine regime improves the environmental impact of vine growing and winemaking, particularly as regards soil erosion and contamination, the use of plant protection products, and waste management.

In order to achieve this, the Commission proposes:

- the eligibility of all wine areas to participate in the Single Payment Scheme means that for more and more producers the cross-compliance rules will be compulsory;

- the automatic introduction of grubbed-up areas in the Single Payment Scheme means that the cross-compliance rules will be compulsory for those areas;

- a minimum environmental requirement will be attached to the grubbing-up premium to avoid land degradation as well as to the restructuring and green harvesting measures funded by the national envelopes;

- the establishment of an acceptable minimum level of environmental care in the wine making process;

- an increase of funds in Rural Development programmes, for example under axis 2, providing for support measures to improve the environment and the countryside.

3.6. Granting alternatives to less competitive producers

Even if many producers are already competitive or will improve their competitiveness thanks to the new measures proposed in the reform, some of them are currently in a very difficult situation. Their income is often already negative and they will be hard pressed to avoid bankruptcies in an increasingly competitive market. In order to offer them a way out of the sector with dignity, a definitive abandonment regime must be maintained.

Vine growers should be free to choose to grub up or not. However, to avoid social and/or environmental problems, Member States will be allowed to limit grubbing-up in mountains and steep slopes vineyards as well as in regions under specific environmental constraints and/or to discontinue grubbing-up if the total grubbed-up area cumulated exceeds 10% of their vine area.

The grubbing-up premium will be increased and set at an attractive level. To encourage uptake from year 1, a decreasing scale will be set for the premium over the remaining period of planting restrictions. The budget allocated will make it possible to grub up around 200 000 ha in the EU over a five-year period. This is the area corresponding to the part of the structural surplus to be eliminated taking into account the recent trade improvements together with the positive effects on market balance expected from the other measures proposed, in particular the end of enrichment with sugar, promotion, green harvesting and Rural Development support.

The agricultural area formerly used for vine growing, once grubbed up, will qualify as an eligible area under the Single Payment Scheme and be granted the average regional decoupled direct payment.

3.7. Trade with third countries

Bearing in mind that the WTO negotiations are still ongoing and that their outcome remains unknown, the reform proposal does not touch on the current legal framework relating to external trade with the exception of export refunds.

However, for wine, the impact and the role of export refunds have been analysed. Their economic impact has considerably decreased. Indeed, exports with refunds represent less than 15% of total exports in volume. The value of export refunds represents 3.4% of the value of the products eligible for export refunds. It has therefore been considered that better use can be made of the funds allocated to this instrument, in part on promotion, and it is proposed to abolish export refunds.

3.8. Enhancing CAP coherence, simplification and full compliance with the Community legislation

E xtension of the eligibility of all wine areas to participate in the Single Payment Scheme is a significant step designated to offer wine producers a high degree of flexibility and ensure that they are treated on an equal footing with other farmers. For this purpose Council Regulation (EC) No 1782/2003 will be amended.

The proposal provides for simplification of legislation, simplification of administrative procedures for public authorities (EU, national or regional) and simplification of administrative procedures for private parties. For example, the administrative simplification resulting from the abolition of the market measures and of the planting rights from 2014 represents a considerable advantage of the proposed reform. Simplification and electronic transmission of accompanying documents should also be encouraged.

Irrespective of the removal of the planting restrictions, economic operators and Member States have to comply with existing Community legislation regarding so-called irregular vineyards and illicit vineyards. Compliance with these rules is crucial to the functioning of the CMO. If the rules are not observed, the Commission will (continue to) take appropriate measures in the framework of the clearance of accounts procedures or, if necessary, initiate infringement procedures under Article 226 of the Treaty.

4. BUDGETARY IMPLICATION

The impact of the proposed reform does not increase costs with respect to the recent level of EUR 1.3 billion devoted to the sector. This budget will be used:

- in the new CMO for national envelopes including promotion to third counties on the one hand and for grubbing-up on the other hand,

- to allow transfer to Rural Development measures for wine producing regions, and

- to allow transfer to the single payment scheme according to the areas grubbed-up.

It is expected that the changes and innovations in the regime will lead to the budget being used more efficiently.

In addition, funds to be used for information on the internal market about wines with a protected designation of origin or geographical indication, variety wines and responsible consumption will be increased by EUR 3 million.

TABLE OF CONTENTS

TITLE I INTRODUCTORY PROVISIONS 23

TITLE II – SUPPORT MEASURES 24

Chapter I Support programmes 24

Section 1 Introductory provisions 24

Section 2 Support programmes 25

Section 3 Specific support measures 27

Section 4 General provisions 30

Chapter II Financial transfer 31

TITLE III – REGULATORY MEASURES 31

Chapter I General rules 31

Chapter II Oenological practices and restrictions 32

Chapter III Designations of origin and geographical indications 35

Section 1 Scope and definitions 35

Section 2 Application for protection 36

Section 3 Procedure conferring protection 37

Section 4 Specific cases 39

Section 5 Protection and control 40

Section 6 General provisions 44

Chapter IV Labelling 44

Chapter V Producer and sectoral organisations 46

TITLE IV – TRADE WITH THIRD COUNTRIES 50

Chapter I Common provisions 50

Chapter II Import and export licences 50

Chapter III Safeguard measures 52

Chapter IV Rules applying to imports 54

TITLE V – PRODUCTION POTENTIAL 56

Chapter I Unlawful plantings 56

Chapter II Transitional planting right regime 58

Chapter III Grubbing-up scheme 62

TITLE VI – GENERAL PROVISIONS 65

TITLE VII – TRANSITIONAL AND FINAL PROVISIONS 69

Chapter I Amendments 69

Chapter II Transitional and final provisions 71

2007/0138 (CNS)

Proposal for a

COUNCIL REGULATION

on the common organisation of the market in wine and amending certain Regulations

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 36 and 37 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

(1) The current regime applicable to the wine sector is laid down in Council Regulation (EC) No 1493/1999 of 17 May 1999 on the common organisation of the market in wine[9].

(2) Wine consumption in the Community has been steadily diminishing and the volume of wine exported from the Community since 1996 has been increasing at a much slower rate than the respective imports. This has led to a deterioration of the balance between supply and demand which in turn puts producers’ prices and incomes under pressure.

(3) Not all the instruments currently included in Regulation (EC) No 1493/1999 have proved effective in steering the sector towards a competitive and sustainable development. The market mechanism measures, such as crisis distillation, have proved cost-inefficient to the extent that they have encouraged structural surpluses without requiring improvements in the relevant competitive structures. Moreover, some of the existing regulatory measures have unduly constrained the activities of competitive producers.

(4) In other words, the current legal framework does not appear to enable to attain, in a sustainable manner, the objectives set out in Article 33 of the Treaty and in particular stabilising the wine market and ensuring a fair standard of living for the agricultural community concerned.

(5) In the light of the experience gained it is therefore appropriate to fundamentally change the Community regime applying to the wine sector with a view to achieving the following objectives: increasing the competitiveness of the Community’s wine producers; strengthening the reputation of Community quality wine as the best in the world; recovering old markets and winning new ones in the Community and worldwide; creating a wine regime that operates through clear, simple and effective rules that balance supply and demand; creating a wine regime that preserves the best traditions of Community wine production, reinforcing the social fabric of many rural areas, and ensuring that all production respects the environment. It is therefore appropriate to repeal Regulation (EC) No 1493/1999 and to replace it by this new Regulation.

(6) This Regulation has been preceded by an evaluation and consultation process to better identify and target the needs of the wine sector. An external evaluation report was commissioned and published in November 2004. To give stakeholders an opportunity to express their opinions, the Commission organised a seminar on 16 February 2006. A communication from the Commission “Towards a sustainable European wine sector” was published on 22 June 2006[10] along with an Impact Assessment listing a number of options for a reform of the sector.

(7) From July to November 2006, discussions took place at Council level. In December 2006, the European Economic and Social Committee and the Committee of the Regions adopted reports on the proposed wine reform options as set out in the communication from the Commission. On 15 February 2007, the European Parliament adopted its own-initiative report on the communication outlining conclusions which have been taken into account in this Regulation.

(8) Council Regulation (EC) No ... establishing a common organisation of agricultural markets (“single common market organisation”) should eventually cover the wine sector as well. The single common market organisation includes provisions of a horizontal nature, in particular on trade with third countries, competition rules, controls and penalties, exchange of information between the Commission and the Member States. To allow for easy future incorporation into the single common market organisation, the provisions of this Regulation dealing with the said horizontal issues should be aligned as much as possible on those contained in the single common market organisation.

(9) It is important to provide for support measures which are liable to strengthen competitive structures. While those measures should be financed and defined by the Community it should be left to Member States to select the right mix for the needs of their respective constituencies, taking regional particularities into account, where necessary, as well as to integrate them into national support programmes. Member States should be responsible for the implementation of such programmes.

(10) The financial key to allocating the funds for the national support programmes among Member States should be based on the historical share of the wine budget as the main criterion, the area planted with vines and the historical production.

(11) One key measure in such programmes should be the promotion and marketing of Community wines in third countries and a certain budget amount should be reserved for that measure. Restructuring and conversion activities should continue to be covered on account of their positive structural effects on the sector. Preventive instruments such as harvest insurance, mutual funds and green harvesting should be eligible for support under the support programmes so as to encourage a responsible approach to crisis situations.

(12) The financing of the eligible measures by the Community should, where practicable, be dependent on compliance by the producers concerned with certain environmental rules in force. Where non-compliance is detected it should give rise to corresponding reductions in payments.

(13) Support to the sector should also come from structural measures under Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)[11].

(14) The following measures in pursuant to Regulation (EC) No 1698/2005 should be of interest for the wine sector: setting up of young farmers and investments in technical facilities and marketing improvements, vocational training, information and promotion support for producers’ organisations after entering quality scheme, agri-environment support, early retirement to be granted to farmers who decide to stop all commercial farming activity definitively for the purpose of transferring the holding to other farmers.

(15) In order to increase the financial means available under Regulation (EC) No 1698/2005, a gradual transfer of funds to the budget under that Regulation should be put into place.

(16) Certain regulatory measures should apply in the wine sector, in particular for reasons of health, quality and consumer expectations.

(17) Member States should continue to be responsible for classifying the wine grape varieties from which wine may be made on their territories. Certain wine grape varieties should be excluded.

(18) Certain products covered by this Regulation should be marketed in the Community in accordance with specific a classification of grapevine products and the corresponding specifications.

(19) Products covered by this Regulation should be produced in accordance with certain rules on oenological practices and restrictions, which guarantee that health concerns as well as consumer expectations as regards quality and production methods are met. For reasons of flexibility, the Commission should be given the responsibility for keeping those practices updated and approving new ones except in the politically sensitive areas of enrichment and acidification, for which the Council should remain competent as regards changes.

(20) Increasing the alcohol content of wine should be subject to certain limits and should, where applied, be carried out by adding concentrated and rectified grape must to wine. The addition of sucrose to wine should no longer be allowed.

(21) In view of the poor quality of wine obtained from over-pressing, this practice should be prohibited.

(22) In order to meet the international standards in this field, the Commission should generally base itself on the oenological practices approved by the International Organisation of Vine and Wine (OIV). These standards should also apply to Community wines to be exported regardless of more restrictive rules which may be applicable in the Community so as to not hamper Community producers in foreign markets.

(23) Coupage of a wine originating in a third country with a Community wine and coupage between wines originating in third countries should continue to be prohibited in the Community. By the same token, certain types of grape must, grape juice and fresh grapes originating in third countries should not be turned into wine or added to wine in the territory of the Community.

(24) The concept of quality wines in the Community is based inter alia on the specific characteristics attributable to the wine’s geographical origin. Such wines are identified for consumers via protected designations of origin and geographical indications although the current system is not fully developed in this respect. In order to allow for a transparent and more elaborate framework underpinning the claim to quality by the products concerned, a regime should be established under which applications for a designation of origin or a geographical indication are examined in line with the approach followed under the Community’s horizontal quality policy applicable to foodstuffs other than wine and spirits in Council Regulation (EC) No 510/2006 of 20 March 2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs[12].

(25) In order to preserve the particular quality characteristics of wines with a designation of origin or a geographical indication, Member States should be allowed to apply more stringent rules in that respect.

(26) To qualify for protection in the Community, designations of origin and geographical indications should be recognised and registered at Community level. To ensure that the respective names meet the conditions laid down by this Regulation, applications should be examined by the national authorities of the Member State concerned, subject to compliance with minimum common provisions, including a national objection procedure. The Commission should subsequently scrutinize these decisions to ensure that applications satisfy the conditions laid down by this Regulation and that the approach is uniform across the Member States.

(27) Protection should be open to designations of origin and geographical indications of third countries where these are protected in their country of origin.

(28) The registration procedure should enable any natural or legal person having a legitimate interest in a Member State or a third country to exercise their rights by notifying their objections.

(29) Registered designations of origin and geographical indications should enjoy protection against uses which unduly take advantage of the reputation that compliant products command. So as to promote fair competition and not to mislead consumers, this protection should also affect products and services not covered by this Regulation, including those not found in Annex I to the Treaty.

(30) Procedures should be provided for permitting amendment of product specifications after protection, and cancellation of the designation of origin or geographical indication, in particular if compliance with the corresponding product specification is no longer ensured.

(31) The designations of origin and geographical indications protected on Community territory should be subject to controls, where possible in consistence with Regulation (EC) No 882/2004 of the European Parliament and of the Council of 29 April 2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules[13], including a system of checks to ensure compliance with the product specifications of the wines concerned.

(32) Member States should be authorised to charge a fee to cover the costs incurred.

(33) Existing designations of origin and geographical indications in the Community should for reasons of legal certainty be exempt from the application of the new examination procedure. The Member States concerned should, however, provide the Commission with the basic information and acts under which they have been recognised at national level failing which they should lose their protection as designations of origin or geographical indications. The scope for cancellation of existing designations of origin and geographical indications should be limited for reasons of legal certainty.

(34) Protecting geographical names as designations of origin or geographical indications at national level should no longer be possible.

(35) The description, designation and presentation of products covered by this Regulation can have significant effects on their marketability. Differences between the laws of the Member States on the labelling of wine products may impede the smooth functioning of the internal market.

(36) Rules should therefore be laid down which take into account the legitimate interests of consumers and producers. For this reason, Community rules concerning labelling are appropriate.

(37) These rules should provide for the obligatory use of certain terms so as to identify the product in accordance with the sales categories and provide consumers with certain important items of information. The use of certain other optional pieces of information should also be addressed in the Community framework.

(38) Save as otherwise provided, labelling rules in the wine sector should be complementary to those laid down in Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs[14], which apply horizontally. Experience has shown that a differentiation in terms of labelling rules according to the category of wine product is not expedient. The rules should apply to all the different categories of wine, including imported products. In particular, they should allow the indication of a wine grape variety and a vintage on wines without a designation of origin or a geographical indication, subject to requirements concerning the veracity of the labelling and the respective monitoring.

(39) The existence and formation of producers’ organisations continue to have the potential to contribute to the attainment of the needs of the wine sector as defined at Community level. Their usefulness should lie in the scope and efficiency of the services they offer to their members. The same holds true for inter-branch organisations. Member States should therefore recognise organisations which meet certain requirements defined at Community level.

(40) In order to improve the operation of the market for wines with a designation of origin or a geographical indication, Member States should be able to implement decisions taken by inter-branch organisations. The scope of such decisions should, however, exclude practices which could distort competition.

(41) The creation of a single Community market involves the introduction of a trading system at the external borders of the Community. This should include import duties and should, in principle, stabilise the Community market. The trading system should be based on the Community’s international obligations, in particular those flowing from the World Trade Organisation (WTO) agreements.

(42) Monitoring trade flows is above all a matter of management which should be addressed in a flexible way. Accordingly, a decision on the introduction of licence requirements should be taken by the Commission taking account of the need for import and export licences for managing the markets concerned and, in particular, for monitoring the imports of the products in question. General conditions concerning such licences should, however, be laid down in this Regulation.

(43) Where provision is made for import and export licences, the lodging of a security should be required in order to guarantee that the transactions for which such licences are granted are carried out.

(44) The import duty system makes it possible to dispense with all other protective measures at the external borders of the Community. The internal market and duty mechanism could, in exceptional circumstances, prove to be inadequate. In such cases, in order not to leave the Community market without defence against disturbances that might ensue, the Community should be able to take all necessary measures without delay. Such measures should comply with the international commitments of the Community.

(45) In order to prevent or counteract adverse effects on the Community market which could result more particularly from imports of grape juice and grape must products, such imports should be subject to payment of an additional duty, if certain conditions are fulfilled.

(46) To ensure the proper functioning of the market in wine and, in particular, avoid market disturbances, the possibility of prohibiting the use of inward and outward processing arrangements should be provided for. In order for this type of market management instrument to be successful, it usually needs to be applied without major delays. The Commission should therefore be entrusted with the relevant powers.

(47) Products imported from third countries should be subject to the Community rules on product categories, labelling and designations of origin and geographical indications. They should be accompanied by an analysis report.

(48) It is appropriate, under certain conditions, to confer on the Commission the power to open and administer tariff quotas resulting from international agreements concluded in accordance with the Treaty or from other acts of the Council.

(49) The surplus production of wine in the Community has been made worse as a result of violations of the transitional prohibition on new plantings. A significant number of unlawful plantings exist in the Community, which constitutes a source of unfair competition and exacerbates the problems of the sector.

(50) As regards the unlawful areas, differentiation should be made between those planted before and after 1 September 1998, in so far as the producers’ obligations towards the areas are concerned.

(51) So far, unlawful areas from before 1 September 1998 are not subject to any grubbing-up obligation. The producers concerned should be obliged to regularise them against payment of a fee. If the areas concerned are not regularised by 31 December 2009, producers should be under an obligation to grub up the areas concerned at their own expense. Non-compliance with this mandatory grubbing-up should entail penalty payments.

(52) Those areas which have been planted in violation of the relevant prohibition after 1 September 1998 should be grubbed up, this being the sanction laid down in Regulation (EC) No 1493/1999. Non-compliance with this mandatory grubbing-up should entail penalty payments.

(53) Pending the implementation of the regularisation and grubbing-up measures, wine from areas planted in violation of the prohibition and not regularised in accordance with Regulation (EC) No 1493/1999, should not be put on the market other than for distillation at the expense of the producer concerned. The presentation of distillation contracts by producers should ensure better monitoring of this rule than was the case until now.

(54) While the transitional prohibition on new plantings has had some effect on the balance between supply and demand in the wine market, it has at the same time created an obstacle for competitive producers who wish to respond flexibly to increased demand.

(55) As a market balance has not yet been found, and as the accompanying measures such as the grubbing-up scheme need time to take effect, it is expedient to keep the prohibition on new plantings in place until 31 December 2013, at which juncture, however, it should de definitely lifted in order to permit competitive producers to respond freely to market conditions.

(56) The existing permission for new planting of areas intended for graft nurseries, land consolidation and compulsory purchase as well as wine-growing experiments has proved not to unduly disturb the wine market and should therefore be continued subject to the necessary controls.

(57) Replanting rights should continue to be awarded where producers undertake to grub up equivalent areas planted with vines as the net effect of such plantings on production tends to be nil.

(58) Furthermore, it should be possible for Member States to authorise the transfer of replanting rights to another holding, subject to strict controls, provided that this transfer is in pursuit of quality, concerns the areas intended for graft nurseries or is connected with the transfer of part of the holding. These transfers should be maintained within the same Member State.

(59) In order to improve the management of wine-growing potential and to promote the efficient use of planting rights and thus to further mitigate the effect of the transitional restriction on plantings, the systems of national or regional reserves should continue to exist.

(60) Member States should keep broad discretion in the management of the reserves, subject to the necessary controls, so as to permit them to better align the use of the rights to plant such reserves with local needs. This should include the opportunity to purchase planting rights, to fund the reserve and to sell planting rights from the reserve. To this end, Member States should continue to be allowed not to apply the reserve system, provided that they can prove that they already have an efficient system of managing planting rights.

(61) The grant of specific benefits to young wine producers may facilitate not only their establishment but also the structural adjustment of their holdings after their initial establishment, and such producers should therefore be eligible for the grant of rights from the reserves free of charge.

(62) To ensure that resources are used in the most efficient manner and to better align supply with demand, planting rights should be used by their holders within a reasonable time. Failing that, they should be allocated or reallocated to the reserves. For the same reasons, rights in the reserves should be awarded within a reasonable time.

(63) Production in Member States where wine production is below 25 000 hectolitres per year does not seriously affect the market balance. Those Member States should therefore be exempt from the transitional prohibition on new plantings but should also not have access to the grubbing-up scheme.

(64) As a further accompanying measure aimed at creating a sector which is attuned to market conditions a grubbing-up scheme should be introduced. Where producers consider that the conditions in certain areas are not conducive to viable production, they should be given the option of cutting their costs and permanently withdrawing these areas from wine production and should be enabled either to pursue alternative activities on the relevant parcels of land or to retire from agricultural production altogether.

(65) Experience has shown that to leave it to Member States to allow grubbing-up against payment of a premium risks rendering the measure and the attendant effects on supply ineffective. Therefore, in contrast to the current regime, producers should generally be eligible for entering the grubbing-up scheme and have the sole right to decide whether to apply. In return, they should be granted a premium per hectare of grubbed up vines.

(66) Member States should be able to fix, on the basis of objective criteria, the specific levels of the grubbing-up premium within certain scales determined by the Commission.

(67) In order to guarantee the responsible treatment of the grubbed-up areas, entitlement to the premium should be dependent on compliance by the producers concerned with the applicable environmental rules. Where non-compliance is detected it should give rise to a commensurate reduction of the grubbing-up premium.

(68) To avoid environmental problems, Member States should be able to exclude grubbing-up in mountain and steep slope areas and in case of environmental concerns in accordance with specific conditions. Member States should be able to discontinue grubbing-up where the total grubbed-up area has reached 10% of their areas planted with vines.

(69) The agricultural area formerly used for vine growing, once grubbed up, should qualify as an eligible area under the Single Payment Scheme and be granted the average regional decoupled direct payment which for budgetary reasons, should not exceed EUR 350/ha.

(70) The proper working of the single market would be jeopardised by the granting of national aids. The provisions of the Treaty governing State aids should therefore apply to the products covered by the common market organisation for wine. However, the provisions on the grubbing-up premium and certain measures under the support programmes should not by themselves preclude the granting of national aid for the same purposes.

(71) For a better management of wine-growing potential, it is desirable that Member States communicate to the Commission an inventory of their production potential. This information should be based on the existing vineyard register. To encourage Member States to communicate the inventory, support for restructuring and conversion should be limited to those Member States which have communicated the inventory.

(72) So that the information necessary for making the relevant policy and administrative choices is available, producers of grapes for wine making, of must and of wine should submit harvest declarations. Member States should be able to require merchants of grapes for winemaking to declare each year the quantities marketed from the latest harvest. Producers of must and wine, and merchants other than retailers, should declare their stocks of must and wine.

(73) In order to provide for a satisfactory level of traceability of the products concerned, in particular in the interest of consumer protection, provision should be made for all the products covered by this Regulation to have an accompanying document when circulating within the Community.

(74) The measures necessary for implementing of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission[15].

(75) Expenditure incurred by the Member States as a result of the obligations arising from the application of this Regulation should be financed by the Community in accordance with Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy[16].

(76) The Member States and the Commission should keep each other supplied with the information necessary for applying this Regulation.

(77) To guarantee compliance with the obligations laid down by this Regulation there is a need for controls and the application of penalties in the event of non-compliance with such obligations. The power to set up the corresponding rules including those concerning the recovery of undue payments and the reporting obligations of the Member States, should therefore be conferred on the Commission.

(78) Member States’ authorities should be responsible for ensuring compliance with this Regulation and arrangements should be made so that the Commission is able to monitor and ensure such compliance.

(79) To make provision for the incorporation of the wine sector into the Single Payment Scheme, all actively cultivated wine-growing areas should be made eligible for the Single Payment Scheme provided for in Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers[17].

(80) Wine growers in Bulgaria, the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Romania, Slovenia and Slovakia should benefit from the introduction of the wine component in the Single Payment Scheme under the same conditions as wine growers in the Community as constituted at 30 April 2004. Therefore, the wine component in the Single Payment Scheme should not be subject to the application of the schedule of increments provided for in Article 143a of Regulation (EC) No 1782/2003.

(81) Council Regulations (EC) No 2702/1999 of 14 December 1999 on measures to provide information on, and to promote, agricultural products in third countries[18], Council Regulation (EC) No 2826/2000 of 19 December 2000 on information and promotion actions for agricultural products on the internal market[19] and Regulation (EC) No 1782/2003 should be amended accordingly.

(82) The change from the arrangements in Regulation (EC) No 1493/1999 and the other Regulations in the wine sector to those in this Regulation could give rise to difficulties which are not dealt with in this Regulation. In order to deal with that eventuality, provision should be made for the Commission to adopt the necessary transitional measures. The Commission should also be authorised to solve specific practical problems,

HAS ADOPTED THIS REGULATION:

TITLE I INTRODUCTORY PROVISIONS

Article 1 Subject matter and scope

1. This Regulation lays down specific rules applying to the production and marketing of the following products:

CN code | Description |

0806 10 90 | Fresh grapes other than table grapes |

2009 61 2009 69 | Grape juice (including grape must) |

2204 30 92 2204 30 94 2204 30 96 2204 30 98 | Other grape musts, other than those in fermentation or with fermentation arrested otherwise than by the addition of alcohol |

2204 | Wine of fresh grapes, including fortified wines; grape must other than that of heading 2009, excluding other grape must of subheadings 2204 30 92, 2204 30 94, 2204 30 96 and 2204 30 98 |

2206 00 10 | Piquette |

2209 00 11 | Wine vinegar |

2209 00 19 |

2307 00 11 | Wine lees |

2307 00 19 |

2308 90 11 | Grape marc |

2308 90 19 |

2. Concerning the products referred to in paragraph 1, this Regulation provides for:

(a) support measures,

(b) regulatory measures,

(c) rules on trade with third countries,

(d) rules governing production potential.

Article 2 Definitions

For the purposes of this Regulation, the definitions laid down in Annex I shall apply.

TITLE II SUPPORT MEASURES

Chapter I Support programmes

Section 1Introductory provisions

ARTICLE 3 Scope

This Chapter lays down the rules governing the attribution of Community funds to Member States and the use of those funds by Member States through national support programmes (hereinafter “support programmes”) to finance specific support measures to assist the wine sector.

Article 4 Compatibility and consistency

1. Support programmes shall comply with Community law and shall be consistent with the activities, policies and priorities of the Community.

2. Member States shall be responsible for the support programmes and ensure that they are drawn up and implemented in an objective manner, taking into account the economic situation of the producers concerned and the need to avoid unjustified unequal treatment between producers.

3. No support shall be granted:

(a) for research projects and measures to support research projects;

(b) for measures covered by Regulation (EC) No 1698/2005.

Section 2Support programmes

ARTICLE 5 Submission of support programmes

1. Each producer Member State referred to in Annex II shall, for the first time by 30 April 2008, submit to the Commission a draft five-year support programme containing measures in accordance with this Chapter.

The support measures shall be drawn up at the geographical level which the Member States deem most appropriate. Before being submitted to the Commission the support programme shall be subject to consultation with the competent authorities and organisations at the appropriate territorial level.

Each Member State shall submit one single draft programme which may accommodate regional particularities.

2. Support programmes shall become applicable three months after their submission to the Commission.

However, if the submitted programme does not comply with the conditions laid down in this Chapter, the Commission shall inform the Member State thereof. In such case, the Member State shall submit a revised programme to the Commission. The revised programme shall become applicable two months after its notification unless an incompatibility persists in which case this subparagraph shall apply.

3. Paragraph 2 shall apply mutatis mutandis to changes in respect of support programmes submitted by Member States.

Article 6 Content of support programmes

Support programmes shall consist of the following elements:

(a) a detailed description of the measures proposed as well as their quantified objectives;

(b) the results of consultations held;

(c) an appraisal showing the expected technical, economic, environmental and social impact;

(d) a schedule for implementing the measures;

(e) a general financing table showing the resources to be deployed and the envisaged indicative allocation of the resources between the measures in accordance with ceilings provided for in Annex II;

(f) proof of compatibility and consistency between the various measures of the programme;

(g) the criteria and quantitative indicators to be used for monitoring and evaluation as well as the steps taken to ensure that the programmes are implemented appropriately and effectively;

(h) the criteria and indicators to be used for verifying that the support programmes are submitted and implemented in an objective manner, taking into account the economic situation of the producers concerned and the need to avoid unjustified unequal treatment between producers;

(i) the provisions for checks and penalties;

(j) the designation of competent authorities and bodies responsible for implementing the programme.

Article 7 Eligible measures

Support programmes shall contain measures of promotion on third-country markets in accordance with Article 9.

They shall also contain at least one of the following measures:

(a) restructuring and conversion of vineyards;

(b) green harvesting;

(c) mutual funds;

(d) harvest insurance.

Article 8 General rules concerning support programmes

1. The allocation of the available Community funds as well as the budgetary limits are provided in Annex II.

2. Community support shall only relate to eligible expenditure incurred after the submission of the relevant support programme as referred to in Article 5(1).

3. Member States shall not contribute to the costs of measures (co-)financed by the Community under the support programmes.

4. By way of derogation from paragraph 3, Member States may grant national aid in accordance with the relevant Community rules on State aid for the measures referred to in Articles 9 and 13.

The maximum aid rate as laid down in the relevant Community rules on State aids shall apply to the global public (co-)financing including both Community and national funds.

Section 3 SPECIFIC SUPPORT MEASURES

Article 9 Promotion on third-country markets

1. Support under this Article shall cover information or promotion measures concerning Community wines in third countries, thereby improving their competitiveness in those countries.

2. The measures referred to in paragraph 1 shall relate to wines with a protected designation of origin or geographical indication or wines with an indication of the wine grape variety.

3. The measures referred to in paragraph 1 may consist of:

(a) public relations, promotional or publicity measures, in particular highlighting the advantages of the Community products, especially in terms of quality, food safety or environmental friendliness;

(b) participation at events, fairs or exhibitions of international importance;

(c) information campaigns, in particular on the Community systems covering designations of origin, geographical indications and organic production;

(d) studies of new markets, necessary for the expansion of market outlets;

(e) studies to evaluate the results of the promotional and information measures.

4. The Community contribution to promotion activities shall not exceed 50% of the eligible expenditure.

5. Member States shall reserve at least the Community funds laid down in Annex II for the promotion measure on third-country markets. Funds thus reserved shall not be available for other measures.

Article 10 Restructuring and conversion of vineyards

1. The objective of measures relating to the restructuring and conversion of vineyards shall be to increase the competitiveness of wine producers.

2. Restructuring and conversion of vineyards shall be supported in accordance with this Article only if Member States submit the inventory of their production potential in accordance with Article 100.

3. Support for restructuring and conversion of vineyards may cover one or more of the following activities:

(a) varietal conversion, including by means of grafting-on;

(b) relocation of vineyards;

(c) improvements to vineyard management techniques.

The normal renewal of vineyards which have come to the end of their natural life shall not be supported.

4. Support for restructuring and conversion of vineyards shall take the following forms:

(a) compensation of producers for the loss of revenue due to the implementation of the measure;

(b) contribution to the costs of restructuring and conversion.

5. Compensation of producers for the loss of revenue as referred to in paragraph 4(a) may cover up to 100% of the relevant loss and take either of the following forms:

(a) notwithstanding the provisions of Chapter II of Title V, the permission for the co-existence of both old and new vines for a fixed period which shall not exceed three years, until the end of the transitional regime concerning planting rights, that is 31 December 2013, at the latest;

(b) financial compensation.

6. The Community contribution to the actual costs of restructuring and conversion of vineyards shall not exceed 50%. In regions classified as convergence regions in accordance with Regulation (EC) No 1083/2006, the Community contribution to the costs of restructuring and conversion shall not exceed 75%.

Article 11 Green harvesting

1. For the purposes of this Article, green harvesting means the total destruction or removal of grape bunches while still in their immature stage, thereby reducing the yield of the relevant parcel to zero.

2. Support for green harvesting shall contribute to restoring the balance of supply and demand in the market in wine in the Community in order to prevent market crises.

3. Support for green harvesting may be granted as compensation in the form of a flat rate payment per hectare to be determined by the Member State concerned.

The payment shall not exceed 50% of the sum of the direct costs of the destruction or removal of grape bunches and the loss of revenue related to the destruction or removal of grape bunches.

4. Member States concerned shall establish a system based on objective criteria to ensure that the green harvesting measure does not lead to compensation of individual wine producers in excess of the ceilings referred to in the second subparagraph of paragraph 3.

Article 12 Mutual funds

1. Support for the setting-up of mutual funds shall provide assistance to producers seeking to insure themselves against market fluctuations.

2. Support for the setting-up of mutual funds may be granted in the form of temporary and degressive aid to cover the administrative costs of the funds.

Article 13 Harvest insurance

1. Support for harvest insurance shall contribute to safeguarding producers’ incomes where these are affected by natural disasters, climatic events, diseases or pest infestations.

2. Support for harvest insurance may be granted in the form of a financial Community contribution which must not exceed:

(a) 80% of the cost of the insurance premiums paid for by producers for insurance against losses as a result of climatic events which can be assimilated to natural disasters;

(b) 50% of the cost of the insurance premiums paid for by producers for insurance against:

- losses referred to in point (a) and against other losses caused by climatic events;

- losses caused by animal or plant diseases or pest infestations.

3. Support for harvest insurance may only be granted if the insurance payments concerned do not compensate producers for more than 100% of the income loss suffered, taking into account any compensation the producers obtain from other support schemes related to the insured risk.

4. Support for harvest insurance shall not distort competition in the insurance market.

Article 14 Cross-compliance

Where farmers are found to not have complied on their holding, at any time during five years from payment under the support programmes for restructuring and conversion or at any time during one year from payment under the support programmes for green harvesting, with the statutory management requirements and the good agricultural and environmental condition referred to in Articles 3 to 7 of Regulation (EC) No 1782/2003, the amount of the payment shall, where non-compliance is the result of an action or omission directly imputable to the farmer, be reduced or cancelled, partially or wholly depending on the severity, extent, permanence and repetition of the non-compliance, and the farmer shall, where applicable, be ordered to reimburse it in accordance with the conditions set out in the said provisions.

Rules shall be determined in accordance with the procedure referred to in Article 144(2) of Regulation (EC) No 1782/2003 as regards partial or whole reduction or recovery of the support by the Member State concerned.

Section 4General provisions

ARTICLE 15 Reporting and evaluation

1. Each year, Member States shall submit to the Commission not later than 1 March a report on the implementation of the measures provided for in their support programmes during the previous year.

Those reports shall list and describe the measures for which Community assistance under the support programmes was granted and shall in particular provide details on the implementation of the promotion measure referred to in Article 9.

2. Member States shall submit to the Commission not later than 1 March 2011 and, a second time, not later than 1 March 2014 an evaluation of the costs and benefits of the support programmes as well as an indication of how to increase their efficiency.

The Commission shall, by 31 December 2011 at the latest, submit a report to the European Parliament and the Council on the implementation of the promotion measure referred to in Article 9.

Article 16 Implementing rules

Detailed rules for the implementation of this Chapter shall be adopted in accordance with the procedure referred to in Article 104(1).

Those rules may in particular include:

(a) the format of presentation of the support programmes;

(b) rules concerning changes to support programmes after they have become applicable;

(c) detailed rules for the implementation of the measures provided for in Articles 9 to 13;

(d) the conditions under which assistance through Community funds is to be communicated and publicised;

(e) details on reporting.

Chapter II Financial transfer

Article 17 Financial transfer to rural development

1. As from the budget year 2009, the amounts fixed in paragraph 2, based on historical expenditure under Regulation (EC) No 1493/1999 for intervention to regulate agricultural markets as referred to in Article 3(1)(b) of Regulation (EC) No 1290/2005, shall be available as additional Community funds for measures in wine-producing regions under the rural development programming financed under Regulation (EC) No 1698/2005.

2. The following amounts shall be available in the given calendar years:

- 2009: EUR 100 million,

- 2010: EUR 150 million,

- 2011: EUR 250 million,

- 2012: EUR 300 million,

- 2013: EUR 350 million,

- from 2014 onwards: EUR 400 million.

3. The amounts set in paragraph 2 shall be allocated among Member States in accordance with Annex III.

TITLE III REGULATORY MEASURES

Chapter I General rules

Article 18 Classification of wine grape varieties

1. Member States shall classify which wine grape varieties may be planted, replanted or grafted on their territories.

The classified varieties shall belong to the Vitis vinifera or come from a cross between this species and other species of the genus Vitis .

2. Member States shall not classify the following wine grape varieties:

(a) Noah;

(b) Othello;

(c) Isabelle;

(d) Jacquez;

(e) Clinton;

(f) Herbemont.

3. The planting, replanting or grafting of non-classified wine grape varieties shall only be allowed for scientific research and experimental purposes.

4. Existing areas planted with non-classified wine grape varieties shall be grubbed up, save where the production of these areas is intended exclusively for the consumption by the wine producer’s family.

5. Member States shall take the necessary measures to check compliance by producers with paragraphs 3 and 4.

6. Where wine grape varieties are deleted from the classification, grubbing-up of these varieties shall take place within 15 years of their deletion.

Article 19 Production and marketing

1. Products listed in Annex IV and produced in the Community shall be made from wine grapes of the varieties listed in the classifications drawn up by Member States in accordance with the first subparagraph of Article 18(1).

2. A designation for a category of a grapevine product as provided for in Annex IV may only be used in the Community for the marketing of a product which conforms to the corresponding conditions laid down in that Annex.

The Commission may decide to add categories of grapevine products to the ones listed in Annex IV.

3. Except for bottled wine in respect of which there is evidence that bottling was performed prior to 1 September 1971, wine produced from wine grape varieties listed in the classifications drawn up in accordance with the first subparagraph of Article 18(1) but not conforming to one of the categories laid down in Annex IV shall be used only for consumption by individual wine producers’ families, for the production of wine vinegar or for distillation.

Chapter II Oenological practices and restrictions

Article 20 Scope

This Chapter lays down the authorised oenological practices and the applicable restrictions as well as the procedure whereby the Commission may decide on practices and restrictions applying to the production and commercialisation of products covered by this Regulation.

Article 21 Oenological practices and restrictions

1. Only oenological practices authorised under Community law shall be used in the production in the Community of products covered by this Regulation.

The first subparagraph shall not apply to:

(a) grape juice and concentrated grape juice;

(b) grape must and concentrated grape must intended for the preparation of grape juice.

2. Authorised oenological practices shall only be used for the purposes of ensuring proper vinification, proper preservation or proper refinement of the product.

3. Products covered by this Regulation shall be produced in the Community in accordance with the relevant restrictions laid down in Annex VI.

4. Products covered by this Regulation, which have undergone unauthorised Community or, where applicable, unauthorised national oenological practices or which contravene the restrictions laid down in Annex VI, shall not be marketed in the Community.

5. However, the oenological practices and restrictions recognised by the International Organisation of Vine and Wine (OIV), and not the authorised Community oenological practices and restrictions, shall apply to products covered by this Regulation which are produced for export.

Producers shall report such production to Member States, which shall check compliance with the export requirement.

Article 22 Stricter oenological practices decided by Member States

Member States may limit or exclude the use of certain oenological practices for wines authorised under Community law produced in their territory with a view to reinforcing the preservation of the essential characteristics of wines with a protected designation of origin or protected geographical indication and of sparkling wines and liqueur wines.

Member States shall communicate those limitations and exclusions to the Commission, which shall bring them to the attention of the other Member States.

Article 23 Authorisation of oenological practices and restrictions

1. Except for the oenological practices concerning enrichment, acidification and de-acidification listed in Annex V and the restrictions listed in Annex VI, the authorisation of oenological practices and restrictions as regards the production and conservation of products covered by this Regulation shall be decided in accordance with the procedure referred to in Article 104(1).

2. Member States may allow the experimental use of unauthorised oenological practices under conditions to be determined in accordance with the procedure referred to in Article 104(1).

Article 24 Authorisation criteria

When authorising oenological practices in accordance with the procedure referred to in Article 104(1), the Commission shall:

(a) base itself on the oenological practises recognised by the OIV as well as on the results of experimental use of as of yet unauthorised oenological practices;

(b) take into account the protection of human health;

(c) take into account possible risks of consumers being misled due to their established expectations and perceptions, having regard to the availability and feasibility of informational means to exclude such risks;

(d) allow the preservation of the natural and essential characteristics of the wine and not cause a substantial change in the composition of the product concerned;

(e) ensure an acceptable minimum level of environmental care;

(f) respect the general rules concerning oenological practices and restrictions laid down respectively in Annexes III and IV.

Article 25 Methods of analysis

The methods of analysis for determining the composition of the products covered by this Regulation and the rules whereby it may be established whether these products have undergone processes contrary to the authorised oenological practices shall be those recognised and published by the OIV. Where there are no methods and rules recognised by the OIV, and where no relevant Community methods and rules exist, such methods and rules shall be adopted in accordance with the procedure referred to in Article 104(1).

Article 26 Implementing rules

Detailed rules for the implementation of this Chapter and Annexes III and IV shall be adopted in accordance with the procedure referred to in Article 104(1).

Those rules may in particular include:

(a) authorised oenological practices and restrictions concerning sparkling wines;

(b) authorised oenological practices and restrictions concerning liqueur wines;

(c) subject to point C of Annex VI, provisions regulating the blending and coupage of musts and wines;

(d) where Community rules on that matter do not exist, the purity and identification specification of substances used in oenological practices;

(e) administrative rules for carrying out the oenological practices authorised;

(f) the conditions governing the holding, circulation and the use of products not complying with Article 21 and possible exemptions from the requirements of that Article, as well as the establishment of criteria for the purpose of avoiding hardship in individual cases;

(g) the conditions under which Member States may authorise the holding, circulation and use of products not complying with this Chapter other than Article 21, or with provisions implementing this Chapter.

Chapter IIIDesignations of origin and geographical indications

Section 1Scope and definitions

ARTICLE 27 Designations of origin and geographical indications

1. For the purposes of this Regulation, the following definitions shall apply:

(a) "designation of origin” means the name of a region, a specific place or, in exceptional cases, a country used to describe a wine, a liqueur wine, a sparkling wine, an aerated sparkling wine, a semi sparkling wine or a wine of overripe grapes that complies with the following requirements:

(i) its quality and characteristics are essentially or exclusively due to a particular geographical environment with its inherent natural and human factors;

(ii) the grapes from which it is produced come exclusively from this geographical area;

(iii) it is obtained from vine varieties belonging to Vitis vinifera .

(b) “geographical indication” means an indication referring to a region, a specific place or, in exceptional cases, a country, used to describe a wine, a liqueur wine, a sparkling wine, an aerated sparkling wine, a semi sparkling wine or a wine of overripe grapes which complies with the following requirements:

(i) its quality, characteristics or reputation are essentially attributable to its geographical origin;

(ii) at least 85% of the grapes used for its production come exclusively from this geographical area;

(iii) it is obtained from vine varieties belonging to Vitis vinifera or a cross between the Vitis vinifera species and other species of the genus Vitis .

2. Traditional names shall be considered as a designation of origin where they:

(a) designate a wine;

(b) refer to a geographical name;

(c) fulfil the conditions referred to in points (i) to (iii) of paragraph 1(a).

3. Designations of origin and geographical indications, including those relating to geographical areas in third countries, shall be eligible for protection in the Community in accordance with the rules laid down in this Chapter.

Section 2Application for PROTECTION

ARTICLE 28 Content of applications for protection

1. Applications for protection of names as designations of origin or geographical indications shall include a technical file containing:

(a) the name to be protected;

(b) the name and address of the applicant;

(c) a product specification as referred to in paragraph 2;

(d) a single document summarising the product specification referred to in paragraph 2.

2. The product specification shall enable interested parties to verify the relevant conditions of production of the designation of origin or geographical indication.

It shall consist of:

(a) a description of the wine and its principal physical, chemical, microbiological and organoleptic characteristics;

(b) where applicable, the specific oenological practices used to make the wine;

(c) the demarcation of the geographical area concerned;

(d) the maximum yields per hectare;

(e) an indication of the vine variety or varieties the wine is obtained from;

(f) the details bearing out the link with the quality, the reputation or the characteristics and the geographical environment or the geographical origin;

(g) applicable requirements laid down by Community, national or, where applicable, inter-branch organisations’ provisions, which shall in any case be compatible with Community law in general;

(h) the name and address of the authorities or bodies verifying compliance with the provisions of the product specification and their specific tasks.

Article 29 Application for protection relating to a geographical area in a third country

1. Where the application for protection concerns a geographical area in a third country, it shall contain in addition to the elements provided for in Article 28 proof that the name in question is protected in its country of origin.

2. The application shall be sent to the Commission, either directly from the applicant or via the authorities of the third country concerned.

3. The application for protection shall be filed in one of the official languages of the Community or accompanied by a certified translation into one of those languages.

Article 30 Applicants

1. Any interested group of producers, or in exceptional cases a single producer, may apply for the protection of a designation of origin or geographical indication. Other interested parties may participate in the application.

2. Producers may lodge an application for protection only for wines which they produce.

3. In the case of a name designating a trans-border geographical area or a traditional name connected to a trans-border geographical area, a joint application may be lodged.

SECTION 3 PROCEDURE CONFERRING PROTECTION

ARTICLE 31 Preliminary national procedure

1. Applications for protection of a designation of origin or a geographical indication of wines in accordance with Article 27 originating in the Community shall be subject to a preliminary national procedure in accordance with this Article.

2. The application for protection shall be filed with the Member State in which territory the designation of origin or geographical indication originates.

3. The Member State shall examine the application for protection as to whether it meets the conditions set out in this Chapter.

The Member State shall carry out a national procedure ensuring adequate publication of the application and providing for a period of at least two months from the date of publication within which any natural or legal person having a legitimate interest and established or resident on its territory may object to the proposed protection by lodging a duly substantiated statement with the Member State.

4. If the Member State considers that the designation of origin or geographical indication does not meet the relevant requirements, including the eventuality that it is incompatible with Community law in general, it shall reject the application.

5. If the Member State considers that the relevant requirements are met, it shall take a favourable decision by which it may provide for transitional national protection with effect from the date on which an application for protection is lodged with the Commission in accordance with paragraph 7. The Member State shall publish the single document and the product specification on the Internet.

6. The Member State shall ensure that the decisions referred to in paragraphs 5 are made public and that any natural or legal person in the Member State having a legitimate interest has a means of appeal.

7. In respect of any favourable decision as referred to in paragraph 5, the Member States concerned shall forward to the Commission an application for protection containing:

(a) the name and address of the applicant;

(b) the single document referred to in Article 28(1)(d);

(c) a declaration by the Member State that it considers that the application lodged by the applicant meets the conditions of this Regulation;

(d) the reference of publication referred to in paragraph 6.

These documents shall be forwarded in one of the official languages of the institutions of the European Union or accompanied by a certified translation into one of those languages.

8. The transitional national protection referred to in paragraph 5 shall cease on the date on which the Commission takes a decision pursuant to Article 34.

9. Member States shall introduce the laws, regulations or administrative provisions necessary to comply with this Article not later than 1 August 2009.

Article 32 Scrutiny by the Commission

1. The Commission shall make the date of submission of the application for protection of the designation of origin or geographical indication public.

2. The Commission shall examine whether the applications for protection referred to in Article 31(7) meet the conditions laid down in this Chapter.

3. Where the Commission considers that the conditions laid down in this Chapter are met, it shall publish in the Official Journal of the European Union the single document referred to in Article 28(1)(d) and the reference to the publication of the product specification referred to in Article 31(5).

Where this is not the case, it shall be decided, in accordance with the procedure referred to in Article 104(1), to reject the application.

Article 33 Objection procedure

Within two months from the date of publication provided for in the first subparagraph of Article 32(3), any Member State or third country, or any natural or legal person having a legitimate interest, established or resident in a Member State other than that applying for the protection or in a third country, may object to the proposed protection by lodging a duly substantiated statement with the Commission.

In the case of natural or legal persons established or resident in a third country, such statement shall be lodged, either directly or via the authorities of the third country concerned, within the time limit of two months referred to in the first paragraph.

Article 34 Decision on protection

On the basis of the information available to the Commission, it shall be decided, in accordance with the procedure referred to in Article 104(1), to either confer protection on the designation of origin or geographical indication which meets the conditions laid down in this Chapter and is in general compatible with Community law, or to reject the application where those conditions are not satisfied.

Section 4Specific cases

ARTICLE 35 Homonyms

1. A name which is homonymous with a protected designation of origin or geographical indication shall be eligible for protection as a designation of origin or geographical indication, provided it is sufficiently differentiated from the protected name so as to ensure that consumers are not misled as to the true geographical origin of the wines in question.

2. Save as otherwise provided for in Commission implementing rules, where a wine grape variety contains or consists of a protected designation of origin or geographical indication the name of the wine grape variety shall not be used for purposes of labelling the products covered by this Regulation.

Article 36 Grounds for refusal of protection

1. Names that have become generic shall not be protected as a designation of origin or geographical indication.

For the purposes of this Regulation, a ”name that has become generic“ means the name of a wine which, although it relates to the place or the region where this product was originally produced or marketed, has become the common name of a wine in the Community.

To establish whether or not a name has become generic, account shall be taken of all relevant factors, in particular:

(a) the existing situation in the Community, notably in areas of consumption;

(b) the relevant national or Community legal provisions.

2. A name shall not be protected as a designation of origin or geographical indication where, in the light of a trademark’s reputation and renown, protection is liable to mislead the consumer as to the true identity of the wine.

Article 37 Relationship with trademarks

1. Where a designation of origin or a geographical indication is protected under this Regulation, the registration of a trademark corresponding to one of the situations referred to in Article 38(2) and relating to a product falling under one of the categories listed in Annex IV shall be refused if the application for registration of the trademark is submitted after the date of submission of the application for protection of the designation of origin or geographical indication to the Commission and the designation of origin or geographical indication is subsequently protected.

Trademarks registered in breach of the first subparagraph shall be invalidated.

2. Without prejudice to Article 36(2), a trademark the use of which corresponds to one of the situations referred to in Article 38(2), which has been applied for, registered or established by use, if that possibility is provided for by the legislation concerned, in the territory of the Community before the date on which the application for protection of the designation of origin or geographical indication is submitted to the Commission, may continue to be used and renewed notwithstanding the protection of a designation of origin or geographical indication, provided that no grounds for the trademark’s invalidity or revocation exist as specified by Council Directive 89/104/EEC[20] or Council Regulation (EC) No 40/94[21].

In such cases the use of the designation of origin or geographical indication shall be permitted alongside the relevant trademarks.

SECTION 5 PROTECTION AND CONTROL

ARTICLE 38 Protection

1. Protected designations of origins and geographical indications may be used by any operator marketing a wine which has been produced in conformity with the corresponding product specification.

2. Protected designations of origins and geographical indications and the wines using those protected names in conformity with the product specification shall be protected against:

(a) any direct or indirect commercial use of a protected name:

- by comparable products not compliant with the product specification of the protected name, or

- in so far as such use exploits the reputation of a designation of origin or a geographical indication;

(b) any misuse, imitation or evocation, even if the true origin of the product or service is indicated or if the protected name is translated or accompanied by an expression such as ‘style’, ‘type’, ‘method’, ‘as produced in’, ‘imitation’, ‘flavour’, ‘like’ or similar;

(c) any other false or misleading indication as to the provenance, origin, nature or essential qualities of the product, on the inner or outer packaging, advertising material or documents relating to the wine product concerned, and the packing of the product in a container liable to convey a false impression as to its origin;

(d) any other practice liable to mislead the consumer as to the true origin of the product.

3. Protected designations of origin or protected geographical indications shall not become generic in the Community within the meaning of Article 36(1).

4. Member States shall take the steps necessary to stop unlawful use of protected designations of origin and geographical indications as referred to in paragraph 2.

Article 39 Register

The Commission shall establish and maintain an electronic register of protected designations of origin and geographical indications for wine which shall be publicly accessible.

Article 40 Competent control bodies

1. Member States shall designate the competent authority or authorities responsible for controls in respect of the obligations established by this Chapter in accordance with Regulation (EC) No 882/2004. Member States may designate inter-branch organisations for those controls if they offer adequate guarantees of objectivity and impartiality.

2. Member States shall ensure that any operator complying with this Chapter is covered by a system of controls.

3. Member States shall inform the Commission about the authorities or organisations referred to in paragraph 1. The Commission shall make their names and addresses public and update them periodically.

Article 41 Verification of compliance with specifications

1. In respect of protected designations of origin and geographical indications relating to a geographical area within the Community, annual verification of compliance with the product specification, during the production and during or after conditioning of the wine, shall be ensured by:

(a) one or more of the authorities or organisations referred to in Article 40, or

(b) one or more control bodies within the meaning of Article 2 of Regulation (EC) No 882/2004 operating as a product certification body.

The costs of such verification shall be borne by the operators subject to it.

2. In respect of protected designations of origin and geographical indications relating to a geographical area in a third country, annual verification of compliance with the product specification, during the production and during or after conditioning of the wine, shall be ensured by:

(a) one or more public authorities designated by the third country, or

(b) one or more certification bodies, or

(c) one or more inter-branch organisations.

3. The certification bodies referred to in paragraphs 1(b) and 2(b) of this Article shall comply with, and from 1 May 2010 be accredited in accordance with, the European standard EN 45011 or ISO/IEC Guide 65 (General requirements for bodies operating product certification systems).

4. Where the bodies referred to in paragraphs 1(a) and 2(a) and 2(c) of this Article, verify compliance with the product specification, they shall offer adequate guarantees of objectivity and impartiality, and have at their disposal the qualified staff and resources needed to carry out their tasks.

Article 42 Amendments to product specifications

1. An applicant satisfying the conditions of Article 30 may apply for approval of an amendment to the product specification of a protected designation of origin or geographical indication, in particular to take account of developments in scientific and technical knowledge or to redefine the geographical area referred to in point (c) of the second subparagraph of Article 28(2). Applications shall describe and give reasons for the amendments requested.

2. Where the proposed amendment involves one or more amendments to the single document referred to in Article 28(1)(d), Articles 31 to 34 shall apply mutatis mutandis to the amendment application. However, if the proposed amendment is only minor, it shall be decided, in accordance with the procedure referred to in Article 104(1), whether to approve the application without following the procedure laid down in Articles 32(2) and 33 and in the case of approval, the Commission shall proceed to publication of the elements referred to in Article 32(3).

3. Where the proposed amendment does not involve any change to the single document, the following rules shall apply:

(a) where the geographical area is in a given Member State, that Member State shall express its position on the amendment and, if it is in favour, shall publish the amended product specification and inform the Commission of the amendments approved and the reasons for them;

(b) where the geographical area is in a third country, the Commission shall determine whether to approve the proposed amendment.

Article 43 Cancellation

It may be decided, in accordance with the procedure referred to in Article 104(1), at the initiative of the Commission or at a duly substantiated request of a Member State, of a third country or of a natural or legal person having a legitimate interest, to cancel the protection of a designation of origin or a geographical indication if compliance with the corresponding product specification is no longer ensured.

Articles 31 to 34 shall apply mutatis mutandis .

Article 44 Existing protected wines names

1. Wine names, which are protected in accordance with Article 54 of Regulation (EC) No 1493/1999 and Article 28 of Regulation (EC) No 753/2002, shall automatically be protected under this Regulation. The Commission shall list them in the register provided for in Article 39.

2. Member States shall, in respect of the designations of origin and geographical indications referred to in paragraph 1, transmit to the Commission:

(a) the technical files as provided for in Article 28(1);

(b) the national decision indicating their validity.

3. Names referred to in paragraph 1, for which the information referred to in paragraph 2 is not submitted by 31 December 2010, shall lose protection under this Regulation. The Commission shall take the corresponding formal step of removing such names from the register provided for in Article 39.

4. By way of derogation from Article 43, it may be decided, until 31 December 2013, at the initiative of the Commission and in accordance with the procedure referred to in Article 104(1), to cancel protection of designations of origin or geographical indications referred to in paragraph 1 of this Article if they do not meet the relevant conditions for protection.

Section 6General provisions

ARTICLE 45 Implementing rules

Detailed rules for the implementation of this Chapter shall be adopted in accordance with the procedure referred to in Article 104(1).

Those rules may in particular include derogations from the applicability of the rules laid down in this Chapter for pending applications for protection of designations of origin or geographical indications.

Article 46 Fees

Member States may charge a fee to cover their costs, including those incurred in examining applications for protection, statements of objections, applications for amendments and requests for cancellations under this Regulation.

Chapter IVLabelling

Article 47 Definition

For the purposes of this Regulation “labelling” means any words, particulars, trademarks, brand name, pictorial matter or symbol placed on any packaging, document, notice, label, ring or collar accompanying or referring to a given product.

Article 48 Applicability of horizontal rules

Save as otherwise provided for in this Regulation, Directive 2000/13/EC, Council Directive 89/396/EEC[22], Council Directive 75/106/EEC[23] and Directive 89/104/EEC shall apply to the labelling of products falling within their scopes.

Article 49