COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(90) 73 final 
Brussels, 20 February 1990 
Proposal for a 
COUNCIL REGULATION (EEC) 
amending Regulations (EEC) No 1676/85 and (EEC) No 1677/85 In 
regard to the conversion rates and monetary compensatory amounts 
to be applied for the purposes of the common agricultural policy 
(presented by the Commission) 
m&: 
Czrry'W 
EXPLANATORY MEMORANDUM 
1. Under the agrlmonetary arrangements certain conversion rates are used 
between the ecu and the national currencies and it is possible to 
introduce exceptions to these. 
in view of the development of the financial tools available to 
traders and the rapidity with which they can be used it is proposed 
to extend the possibility of recourse to rates closer to reality as 
soon as the risk of distortion of the agricultural market of monetary 
origin becomes apparent. 
In addition to avoid any danger of disparity of treatment between the 
Member States it would be possible to specify the exchange rates to 
be used for common agricultural policy (CAP) purposes between the 
Member States currencies and those of non-member countries. 
2. For the "floating" currencies, I.e. those not observing the European 
Monetary System 2.25% margin of fluctuation the market rate 
applicable for common agricultural policy purposes is calculated from 
the trend of the currency against the central rates of the eight 
"fixed" currencies respecting the margin of fluctuation of exchange 
rates. 
In view of the increasing use of the ecu it is proposed to adjust the 
rules to Introduce direct use of the ecu rates for determining the 
these market rates of the "floating" currencies and calculating the 
dependent amounts. 
3. The present provisions on systematic dismantling of the monetary 
compensatory amounts (MCAs) In the pigmeat sector specify adjustments 
of the agricultural conversion rate within very strict limits. This 
restriction leads to frequent economically unjustified changes of the 
MCAs and moreover does not always allow the maximum gap of 8 points 
agreed between the pigmeat MCAs and the cereal MCAs to be respected. 
It Is proposed to relax the rules on determination of the conversion 
rate for pigmeat in order to resolve this problem in the dismantling 
of the pigmeat MCAs. 
4. It Is proposed to take the opportunity to make a few minor 
clarifying changes in the wording of the Regulations. 
- 3 -
Proposal for a 
COUNCIL REGULATION (EEC) 
amending Regulations (EEC) No 1676/85 and (EEC) No 1677/85 
In regard to the conversion rates and monetary compensatory amounts 
to be applied for the purposes of the common agricultural policy 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particular Article 43 thereof, 
Having regard to the proposal from the Commission^), 
Having regard to the opinion of the European Par I lament<2>, 
Whereas Council Regulation (EEC) No 1676/85(3), as last amended by 
Regulation (EEC) No 1636/87<4), set the conversion rates to be applied for 
the purposes of the common agricultural policy; whereas Articles 2 (4) and 
3 (2) of that Regulation make provision for derogations whereby conversion 
rates corresponding more closely to economic reality can be used; whereas 
the rules on the making of the derogations should be adjusted In order to 
take account of various specific situations; 
Whereas, in order to improve the clarity of the provisions concerned, 
European Monetary System ECU quotations should be used directly for 
calculation of the market rates referred to in Article 3(1) of that 
Regulation and Article 6(1) should be made more precise; 
(1) OJ No C 
(2) OJ No C 
(3) OJ No L 164, 24.6.1985, p. 1. 
(4) OJ No L 153, 13.6.1987, p. 1. 
- 4 -
Whereas the method of calculation of the gap defined In Article 5(2)(b) of 
Council Regulation (EEC) No 1677/85(5), as last amended by Regulation 
(EEC) No 1889/87<6), and of the conversion rate referred to in Article 
10(1) of that Regulation should be altered to take account of the market 
rate defined In Article 3(1) of Regulation (EEC) No 1676/85; 
Whereas the provisions of 6a(2) of Regulation (EEC) No 1677/85 prevent 
within certain limits the creation of monetary compensatory amounts in the 
pigmeat sector; whereas experience Indicates that these provisions should 
be more accurately targeted, 
HAS ADOPTED THIS REGULATION: 
Article 1 
Regulation (EEC) No 1676/85 is hereby amended as follows: 
1. Article 2(4) Is replaced by the following: 
"4. Derogation may be made from the agricultural conversion rate in 
accordance with the procedure laid down In Article 10(2), to permit the 
use of conversion rates corresponding more closely to economic 
reality and to prevent a risk of market distortion of monetary 
origin." 
(5) OJ No L 164, 24.6.1986, p. 6. 
(6) OJ No L 182, 30.7.1987, p. 1. 
- 5 -
2. The last Indent in Article 3(1) is replaced by the following: 
for the other currencies, on the basis of an average of the ECU 
rates published in the Official Journal of the European 
Communities, Series C, over a period to be determined in 
accordance with the procedure laid down in Article 12." 
3. Article 3(2) Is replaced by the following: 
"2. Derogation may be made from paragraph 1, in accordance with the 
procedure laid down in Article 10(2), In order to permit the use 
of conversion rates corresponding more closely to economic reality 
and to prevent a risk of market distortion of monetary origin." 
4. The following paragraph Is added to Article 3: 
"3. A specific conversion rate close to economic reality may be 
determined In accordance with the procedure laid down in Article 
12 for conversion into a Member State's national currency of 
amounts expressed in the national currency of a non-member 
country." 
5. In Article 6 (1) the words "if they satisfy the following conditions" 
are replaced by "if all of the following conditions are met". 
Article 2 
Regulation (EEC) No 1677/85 is hereby amended as follows: 
1. Point(b) in the second subparagraph of Article 5 (2) is replaced by the 
fol lowing: 
"(b) in respect of Member States other than those referred to In (a), 
to the percentage difference for the currency of the Member State 
concerned between: 
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the agricultural conversion rate 
and 
the average of the ECU rates published In the Official Journal of 
the European Communities, Series C, over a period to be determined 
in accordance with the procedure laid down in Article 12." 
2. Point (2) in Article 6a is replaced by the following: 
"(2) in accordance with the procedure laid down In Article 12, the 
agricultural conversion rate of a Member State shall be adjusted 
so as to avoid the application of monetary compensatory amounts. 
Such adjustment must, however: 
- not bring about a situation where, for the Member State 
concerned, the difference between the real monetary gap 
applicable in the pigmeat sector, on the one hand, and that 
applicable in the cereals sector, on the other, exceeds eight 
percentage points, 
- reduce the risk of adjustments of the monetary compensatory 
amounts which are both frequent and economically unjustified." 
3. The last subparagraph of Article 10 (1) is replaced by the following: 
"The monetary compensatory amount shall be converted using the 
bilateral rates resulting from the central rates or, as appropriate, 
the average rates referred to In the second indent of Article 5 (2) 
(b)." 
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Article 3 
This Regulation shall enter into force on the third day following that of 
its publication In the Official Journal of the European Communities. 
Article 1, point 2 and Article 2, point 1 shall be applicable from [Monday] 
1990. 
This Regulation shall be binding In its entirety and directly applicable in 
a 11 Member States. 
Done at Brussels, For the Council 
- 8 
FINANCIAL STATEMENT (PMDN/EN/1076) 
DATE: 25 JANUARY 1990 
1. BUDGET HEADINS: Chapter 28 and Chapter 100 
+ refund posts Chapter 28-ECU 136 ml 11 Ion 
Chapter 100-ECU 1 152,8 mi 11 ion 
2. TITLC; Council Regulation amending Regulations (EEC) Nos. 1676/85 and 1677/85 on the conversion rates and 
the inanetary compensatory amounts to be applied for the purposes of the cannon agricultural 
policy. 
3. LEGAL BASiS: Article 43 of the Treaty 
4. Ai^6 OF PROJECT: 
- On the one hand, to use the ecu as the basis of reference to determine the market rates of 'floating' 
currencies and to calculate the amounts C*ipendlng thereon; 
-On the other hand, to limit the possibilities of determining the agricultural conversion rate for 
pigneat. 
5. FINANCIAL IMPLICATIONS 
5.0 EXPENDITURE 
- CHflfiGED TO THE EC BUDGET 
- (REFUNDS/XXXXXXXXXXXX) 
- NATIONAL ADMINISTRATION 
-OTHER 
5.1 REVERE 
- OWN RESOURCES OF THE EC 
(LEVIES/XXXXXXXXXXXXXX) 
-NATIONAL Period of 12 months 
p.m. 
p.m. Current Financial Year 
1990 
p.m. 
p.m. Following Financial Year 
1991 
p.m. 
p.m. 
1992 
5.0.1 ESTIMATED EXPFJOITURE 
5.1.1 ESTIMATED REVENUE 1993 1994 1995 
5.2 METHOD OF CALOJLATION: 
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET? 
6.1 CAN ThE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET? 
6.2 IS A SUPPLEMENTARY BUDGET hCCESSARY? 
6.3 WILL FUTURE BUDGET APPROPRIATIONS BE htCESSARY? 
CBSEEVATiONS: 
Thase adjustments have no fundamental Impact as regards the calculation of the MCAs but bas lea 11 y oonstltute 
an administrative slmolifIcatlon. 
ISSN 02S44475 
COM (90) 73 final 
DOCUMENTS 
EN °3 
Catalogue number : CB-CO-90-099-EN-C 
ISBN 92-77-57965-X 
Office for Official Publications of the European Communities 
L-2985 Luxembourg