Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) on the common organization of the market in wine` () (1999/C 101/14)

On 20 July 1998 the Commission decided to consult the Economic and Social Committee, under Articles 43 and 198 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 8 January 1999. The rapporteur was Mr Kienle.

At its 360th plenary session on 27 and 28 January 1999 (meeting of 27 January), the Economic and Social Committee adopted the following opinion by 108 votes to 2, with 2 abstentions.

1. Preliminary remarks

1.1. The ESC is pleased that on 16 July 1998 the Commission submitted a new proposal for the reform of the wine common market organization, which is to be adopted as part of Agenda 2000. The proposal differs fundamentally from the Commission proposal of 11 May 1994.

1.2. In its opinions of 24 February 1994 () and 22 February 1995 () the ESC called for a new analysis of the market situation and for the new situation to be taken into account by GATT decisions. The ESC is pleased to see that the Commission has acceded to both these requests in its new proposal. The important changes that have taken place in the European wine sector in recent years are due, as the Commission says, to adjustments being made to the common market organization, to grubbing-up measures, to cyclical factors and to climatic conditions, but also, in the ESC's view, to the wine industry's overriding concern for quality.

1.3. The ESC points out that among the CCEE countries are some major wine producers and trading partners who will push up the EU's wine-growing potential by around 400 000 hectares. This should be taken into account when reforming the wine market.

1.4. The Commission proposes that the new regulation should come into force on 1 August 2000, as part of the Agenda 2000 agricultural reform package. The ESC supports this time scale and calls upon all the interests concerned to hold their discussions in good time, so that the regulation can come into force on the date scheduled.

2. Aims of the reform

2.1. In recognizing the special nature of the wine sector when reforming the common market organization for wine, the Commission mentions seven broad aims that, taken together, are to make the wine sector more competitive in the long term:

- maintaining improved balance between supply and demand on the Community market, allowing producers to take advantage of expanding markets;

- enabling the sector to become more competitive in the longer term;

- eliminating the availability of intervention as an artificial outlet for surplus production;

- continuing to maintain all traditional outlets for potable alcohol and vine-based products;

- accommodating regional diversity;

- formalizing the potential role of producers and interbranch (or equivalent) organizations; and

- considerably simplifying legislation.

The ESC supports these aims and intentions but thinks too little account is taken of the demand for wine and vine-based products. Today there are many scientific surveys available that set out the health advantages of drinking wine in moderation and the dangers of abuse. The ESC therefore recommends that information about these scientific findings be included as an additional aim of the reform.

2.2. To improve the transparency of European wine law and simplify regulations, the Commission has proposed that 23 Council regulations be combined in the basic wine market regulation. The ESC welcomes this courageous effort to simplify EU wine law and make it more systematic. However, it feels the Commission's management committee (Article 75) has been given too much authority that exceeds the granting of technical powers of implementation. It therefore advocates, as it did in its earlier opinion on the Agenda 2000 agricultural proposals (), that the basic rules should continue to be enacted in the Council regulation. The ESC also thinks working groups should be set up in order to involve experts in the sector in the enactment of implementing provisions.

2.3. The Commission notes in the explanatory memorandum to its proposal that more responsibility will be delegated to the Member States, in the interests of subsidiarity. The ESC welcomes this intention but thinks that further incorporation of the subsidiarity principle into the proposed measures is both possible and desirable.

3. Proposed measures

3.1. Title II: Wine-growing potential

This section sets out the conditions for the use and exploitation of the EU's wine-growing potential. Instruments include restrictions on new plantings, the regulation of re-plantings, reserves for planting rights, bonus payments for the final abandonment of vineyards, and restructuring measures.

3.1.1. The ESC's general view here is that the regulations do not target the desired objective of deregulation, less bureaucracy and the principle of subsidiarity. It calls for a fundamental simplification of the rules in this title.

3.1.2. In view of supply and demand trends, the ESC is convinced that complete liberalization of planting within the framework of the EU wine market organization is not yet feasible. It therefore suggests that the ban on planting should continue until 2005/2006. The Commission's proposed deadline of 2010 is rejected as being too long-term. Authorizations to plant vines within the suggested period are only to be permitted to those who have a new planting or replanting right.

3.1.3. The ESC proposes that until 2005/2006 the Member States should only grant new planting rights to producers for wine products intended for marketing if they are to be used for producing a quality wine psr or table wine described by means of a geographical indication where it has been recognized that the production of the wine in question is far below demand. The Commission's proposed deadline of 31 July 2003 is considered to be too short and requires there to be proper timing between a ban on planting and derogations.

3.1.4. The ESC recommends that the Member States should send a communication to the Commission each year on the development of wine-growing potential. The Commission should submit a report in 2004/2005 on the development of wine-growing potential in the EU and on experience acquired from the planting regulations. Only then can a decision be taken in good time on whether to continue or change the planting regulation.

3.1.5. The ESC would point out that in some wine-growing areas replanting rights are lapsing through non-use. To avoid this happening as far as possible, the Commission should try and find some organizational solutions, in collaboration with the Member States and the regions. In the interests of ecology and the maintenance of European vineyards the ESC suggests that the validity of replanting rights be extended from 8 to 12 years. It feels that it should be left to the Member States to decide whether growers can exercise their replanting rights throughout this period or whether these rights should be transferred to a regional or national reserve if they have not been used after a certain time (e.g. eight years).

3.1.6. The ESC thinks the Member States should be empowered to create planting-right reserves and regulate the transferring and using-up of reserves or the preferential supplying of certain holdings from reserves in accordance with their national or regional structures and requirements. It feels this must be regulated in the interests of subsidiarity by the EU Member States and the EU's wine-growing regions.

3.1.7. In order to prevent an undesirable extension of wine-growing potential, the ESC suggests that between the years 2000 and 2005 the Member States should be able to grant new planting rights equal to 1 % of their total area under vines. This percentage can be increased to 2 % in cases where, because of unusable replanting rights or extensive grubbing-up, the area under vines in a Member State or region has declined to the level it was during the period 1995-2000.

3.1.8. The ESC is pleased that the Commission has corrected its grubbing-up policy. Since implementation is subject to the management committee procedure, an assessment of the new regulations is only possible if implementing provisions are laid down by the Commission.

3.1.9. The ESC is pleased that the Commission is proposing restructuring measures for vineyards in order to make European wine producers more competitive. In addition to these measures, a market and quality-geared renewal of old vineyards should also be encouraged. The ESC considers that adequate funds must be made available for this key element in the reform proposal and that these should be engaged in accordance with the vineyard shares in the EU Member States. It is the responsibility of the Member States to decide which reconversion programmes are chosen in their wine-growing areas. The ESC sees producers' organizations as being very important in developing and implementing reconversion measures.

3.1.10. The ESC feels that the proposed measures are insufficient. Improving competitiveness also involves measures to give a new boost to the bar trade, registration and marketing structures. It feels that the Commission's proposal to incorporate restructuring of the bar trade and marketing into the horizontal structural measures of Agenda 2000 is insufficient. The ESC points to the Commission's express declaration that specific measures are necessary because of the characteristics of the wine sector.

3.1.11. The ESC advocates an EU programme to help wine-growers operating under disadvantaged conditions, and particularly hillside vineyards. This should be in keeping with the socio-economic, ecological and cultural significance of wine-growing in disadvantaged areas.

3.1.12. The ESC stresses the importance of properly maintained vineyard registers in the organization of the European wine market. They should be a precondition for receiving new planting rights and for participation in structural and reconversion measures, as well as the support measures in Title III.

3.2. Title III: Market mechanisms

Through its proposals, the Commission wants to 'eliminate intervention measures as an artificial outlet for surplus production`. At the same time it wants to maintain all traditional outlets for potable alcohol and vine-based products.

3.2.1. The ESC is pleased that the Commission has planned to simplify intervention measures, in line with the ESC's own wishes.

3.2.2. The ESC supports the retention of private storage aid.

3.2.3. It is true that the Commission proposal takes account of the regular supplying of the market in potable spirits as an important traditional outlet for wine and wine products. All the same, a further investigation should be carried out, in collaboration with independent experts, to see whether the quantities provided for here actually correspond to needs.

3.2.4. The scheduled crisis distillation to provide cyclical support for the market does not contain the information necessary to assess the efficiency of such a measure. The ESC therefore proposes that the Commission should explain exactly how it intends to support the market in crisis situations. Cyclical protection is particularly necessary as a preventive measure, with proper funding and covering sufficient quantities to stabilize the market.

3.3. Title IV: Producer organizations and interbranch organizations

The Commission suggests detailed conditions for recognizing producer and interbranch organizations

3.3.1. In its opinion of 22 February 1995 the ESC said that a general framework regulation for producer and interbranch organizations should be adopted. The Commission has now submitted a highly detailed proposal for producer organizations and interbranch organizations similar to that adopted for fruit and vegetables. The ESC would point out that the wine sector differs fundamentally from the fruit and vegetable sector. It therefore asks that more account be taken of the very great structural differences between Member States.

3.3.2. The ESC sees the priority task of the producer organizations as being in the area of improving structures on the producer market. A specific regulatory framework should be created for the wine sector describing tasks and responsibilities in the wine market organization, since the horizontal provisions for producer communities are to be scrapped in Agenda 2000. A transfer of powers that are generally binding even on non-members should not be envisaged.

3.3.3. However, the ESC suggests that the rules for interbranch organizations should be more generally binding. An enabling framework should be created for all the different organizational structures in the sector that would make possible the enactment of generally binding rules for the market organization in one or more EU regions. The Member States should be allowed to recognize representative organizational structures in the sector.

3.4. Title V: Oenological processes and practices and product specifications; description, designation, presentation and protection

As regards quality objectives, the Commission proposes to regulate traditional oenological processes in the wine market organization in a reliable manner, with technical questions being dealt with in future in the management committee. The rules on description and presentation are to be completely revamped, set out more clearly and simplified, and the ESC attaches particular importance here to the provision of comprehensive product information.

3.4.1. The ESC is pleased that account will be taken, in oenological processes and production conditions, of the different locations, climates and weather conditions within European wine-producing regions, in line with the ESC opinion of 22 February 1995. However, it feels that the Commission should be allowed to appoint branch advisory committees to examine new oenological processes before they can be authorized under the management committee procedure.

3.4.2. The ESC is pleased that its call has been taken up for a thorough overhaul of EU law on designations and an abolition of the principle of banning anything that is not explicitly allowed. However, as the Commission is proposing to make the whole reform subject to the management committee procedure, the ESC calls upon the Commission to put its proposals for revamping the law on designations on the table as soon as possible and work together in a spirit of cooperation with all the circles concerned. Here too, branch advisory committees should be made responsible for examining proposals.

3.5. Title VI: Quality wine produced in specified regions

Under the Commission's proposal the rules on quality wine psr, which up to now have been grouped together in a special regulation, are to be incorporated into the wine market organization and the rules on yields are to be modified.

3.5.1. In its opinion of 22 February 1995 the ESC has already rejected the Commission's proposals for restricting the room for manoeuvre for regulating the yield per hectare, on the grounds that this would be contrary to the principle of subsidiarity.

3.5.2. The ESC asks the Commission instead to present proposals for promoting sales of quality wine psr on the international market. In this connection it regrets that the measures suggested in the 1994 proposal for information campaigns extolling the virtues of quality products are no longer contained in the Commission proposal and are obviously to be included in horizontal regulations. Because of the special features of wine as a product, the ESC expressly advocates independent information programmes to support a policy of improving quality.

3.6. Title VII: Trade with third countries

The Commission points out in its explanatory memorandum that its proposals seek to take the action necessary as a result of the conclusion of the WTO agreement.

3.6.1. The ESC regrets that the Commission proposal contains no specific measures for boosting competitiveness in international trade. However, this is absolutely essential, because third-country production is being expanded and their exports have risen sharply.

3.6.2. Allowing third-country musts and wine bases to be used for the production of wine products in the EU would place the European wine industry at a considerable disadvantage. The ESC would draw attention to the dangers of abuse and therefore rejects any such authorization, as long as the abuse and monitoring problems are unresolved. The 'Europeanization` of non-EU products would lead to an unacceptable misleading of consumers and to major economic disadvantages for EU wine-growers.

3.6.3. The ESC calls upon the Commission to set up an external trade council. The task of this council would be to recommend additional measures to be taken by the EU to promote exports of wine-sector products, and in particular to:

- safeguard the identity of European wines, especially by protecting designations of origin and traditional descriptions;

- expanding market access;

- take action to promote, upgrade and provide information about wine-sector products; and

- step up the Commission's involvement in specific international bodies.

Appropriate budget resources (external trade fund) should be provided for the implementation of an active external trade policy.

4. Conclusions

4.1. The ESC would point out that wine-growing is an essential part of European life and culture and has a great tradition in the individual wine-producing areas. In wine-growing regions other industries, such as luxury food, tourism and crafts, are dependent on the existence of the wine industry. Wine-growing areas are in every way unique cultural landscapes that must be nurtured by wine-growers through environmentally-friendly management practices. Any reform of the wine market organization must take account of this economic and cultural background in order to promote the way of life, society, infrastructure, environment and economy of wine-growing areas.

4.2. The ESC renews its demands to get really serious about deregulation and cutting red tape, transposing subsidiarity into reality and strengthening self-regulating forces in the economy.

4.3. The ESC calls upon the Commission to revise the reform proposal thoroughly so that all those involved can put into effect a future-oriented and dynamic market policy through ambitious measures.

4.4. For this reason the ESC calls upon all the circles involved to crack on with the discussions on the reform proposal so that the reform can be concluded in the first quarter of 1999 as part of Agenda 2000. This is also necessary in order to prepare the impending accession of major wine producers among the CCEE countries.

Brussels, 27 January 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

() OJ C 271, 31.8.1998, p. 21.

() OJ C 133, 16.5.1994, p. 22.

() OJ C 110, 2.5.1995, p. 30.

() OJ C 407, 28.12.1998, p. 35.