Opinion on the proposal for a Council Regulation (EC) amending Regulation (EEC) No 1785/81 on the common organization of the markets in the sugar sector and Regulation (EEC) No 1010/86 laying down general rules for the production refund on certain sugar products used in the chemical industry ()

(95/C 110/10)

On 15 December 1994 the Council decided to consult the Economic and Social Committee under Articles 43 and 198 of the Treaty establishing the European Community, on the abovementioned proposal.

The Economic and Social Committee appointed Mr Charles Pelletier as Rapporteur-General (Rules 20 and 50 of the Rules of Procedure).

At its 323rd Plenary Session (meeting of 22 February 1995), the Economic and Social Committee adopted the following Opinion by a large majority, with nineteen votes against and seven abstentions.

PRELIMINARY COMMENTS

The Committee regrets that the limited time available to analyze and consider the Commission's proposal has complicated the conditions in which it drew up its Opinion.

It also regrets that the deadline set by the Council has prevented the Section for Agriculture and Fisheries from preparing its work on this matter.

1. General comments

1.1. In the sugar and isoglucose sector, the production quota system provided for in Regulation No 1785/81 has been repeatedly extended for short periods and amended for the 1994/95 marketing year by Regulation (EEC) No 133/94 which stipulates how inulin is to be included in the quota system and the arrangements for self-financing. Since this regulation was adopted, amendments have been made both to take account of the accession of Austria, Finland and Sweden, and of Regulation (EEC) No 3290/94 implementing the GATT.

1.2. The Commission proposal does not radically alter the principles on which the organization of sugar production has been based since 1968. Essentially, the Commission is proposing:

a)

a further six-year extension of the quota system and the self-financing arrangements;

b)

a guaranteed quota adjustment mechanism which would allow the EU to meet its export commitments under the Uruguay Round Agreement on agriculture;

c)

a new rule on refining seeking to guarantee supplies to refineries to the level of their traditional needs, in line with the import commitments entered into under the Uruguay Round Agreement and with the ACP countries;

d)

various other measures which seek to reduce or abolish the financing of the C sugar carryover, national adjustment aids in Italy, and EAGGF financial support for sugar used in the chemical industry.

While reserving the right to carry out further work on this subject, the Committee approves the Commission's proposal, subject to the following comments:

2. Specific comments

2.1. In its Opinions of 25 November 1992 () and 28 April 1993 () on two successive proposed amendments of Regulation No 1785/81, the Committee had asked the Commission to submit a draft long-term Regulation in the sugar sector. For this reason it is pleased that the present proposal answers that request, thus giving producers and processors the legal certainty that they need for their cropping and investment decisions.

2.2. The Committee notes that the quota system and self-financing arrangements for the common organization of the market in sugar have guided production and helped to avoid budgetary problems. It has also divided up beet production and the refining industry among the Member States, helping employment as well as the preservation and development of the rural areas concerned thanks to lower relocation risks.

2.3. As this regime is different from others governing crops produced on a large scale, the Committee believes that it can be extended over the next six marketing years.

2.4. The Commission has proposed the possible introduction of a quota-lowering mechanism to comply with EU export commitments. The burden of these commitments are in this way passed on to the producers and processors.

2.5. The Committee observes that the Commission did not first of all attempt to secure the sale of a higher volume of Community production in this sector throughout the Union, by introducing new mechanisms and financing which encourage sugar promotion, especially for non-food uses.

2.6. The Committee accepts the quota adjustment mechanism proposed by the Commission. It does, however, ask the Council to apply it with the proviso that the Commission firstly starts to manage stocks and internal marketing vigorously.

2.7. Responding to repeated requests from refiners and the ACP countries which export sugar to the Community, the Commission is proposing new rules for refining. The Committee sees the rationale of this proposal, which gives the refining industry supply guarantees that it has not previously enjoyed, and offers the ACP countries new scope for preferential access.

2.8. However, these new guarantees are being introduced at a time when the guarantees given to beet and sugar producers are to be lowered under GATT.

2.9. Thus the Committee believes that the quotas for refining should not be set at a higher level than those proposed by the Commission.

2.10. The Committee also firmly believes that the special preferential imports should be provided exclusively by the ACP countries.

2.11. The Committee, recalling its Opinion of 25 November 1992, is adamant that, when the special tariff and minimum import prices for ACP sugar are set, Community preference should be maintained throughout the EU with regard to white sugar and raw sugar produced within the EU.

2.12. The Committee also reiterates the position that it took on 28 April 1993. It requests that it is made clear that quota transfers between different sweeteners (sugar, isoglucose and inulin) will be strictly prohibited. The Committee believes that this ban should be extended to quotas for refining and transfers between Member States in order to reduce relocation risks.

2.13. The Committee believes the carryover mechanism to be part and parcel of the quota system. Since 1981/82 it has helped to remove the consequences of variations in annual yield or fluctuating world prices, and it also ties in with the objective of stabilization of supplies from Community and world markets.

2.14. This has also always been the Council's point of view, twice rejecting the Commission's restrictive proposals in this area. The Committee now asks the Council to reject for a third time - the Commission's proposal to abolish carryover financing, since this proposal will inevitably result in the unnecessary disruption of sugar sales, both within and outside the EU. It will also lead to a loss of income across the agricultural sector.

2.15. The Committee welcomes, however, the Commission's proposal to apply carryover financing to A and B sugar which has become C sugar under pressure from GATT.

2.16. Until now, the EAGGF has financed production refunds for the use of sugar, starch or glucose in the chemical industry, up to a limit of 60 000 tonnes in the case of sugar (Article 9 of Regulation No 1010/86) and in unlimited quantities in the case of starch and glucose.

2.17. The Committee asks the Council to reject the Commission's proposed discarding of Article 9 since that would lead to total discriminatory EAGGF withdrawal from the sugar sector insofar as it concerns the chemical industry. It would also cost European growers and processors between ECU 25 and 30 million.

2.18. Since 1968, Italy has been authorized to grant national adjustment aid to its beet and sugar sector. The Commission is proposing that the Council should reduce or abolish this aid, according to the region.

2.19. The Committee wonders about the reliability of the statistics provided by the Commission in support of its proposal since official figures show a 30% difference in yield between the EU average and the most favoured regions in Italy.

It therefore calls on the Council, before taking a decision, to bear in mind that to cut or abolish such aid would inevitably result in a sharp decrease in beet crop areas and serious repercussions for jobs in the sugar industry.

Done at Brussels, 22 February 1995.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No C 377, 31. 12. 1994, p. 18.

() OJ No C 19, 25. 1. 1993.

() OJ No C 161, 14. 6. 1993.