WRITTEN QUESTION E-3167/02

by Daniela Raschhofer (NI) to the Commission

(6 November 2002)

Subject: Subsidy fraud involving agricultural exports

An article in the 14 October 2002 issue of the Frankfurter Allgemeine Zeitung raises the possibility that there may have been large-scale abuse of the EU customs rebates for Croatia and the former Yugoslavia in connection with illegal agricultural exports. The Greek authorities have identified consignments from Croatia containing more than one third of sugar cane from the Caribbean.

This prompts the following questions:

1. Since when has the Commission been aware of these irregularities?

2. Which agricultural products apart from sugar are also affected?

3. How large are the estimated sums lost to the EU as a result of these so-called carrousel operations?

4. According to information from a member of Commissioner Patten's staff, we could also be witnessing the effects of normal economic behaviour subject to absurd rules. Does the Commission plan to revise the agreement with the Balkan states in the light of this information?

Answer given by Mr Patten on behalf of the Commission

(13 December 2002)

At the end of June 2002, the Commission published a Notice to Importers in the Official Journal informing Community operators that there was reasonable doubt as to the proper application of the preferential trade arrangements for sugar declared at import as originating in the Western Balkans countries. The Notice advises importers to take precautionary measures and informs exporters from beneficiary countries that the trade flows in question are under scrutiny, at the same time protecting the Community's financial interests. The Commission is also carrying out missions in the countries concerned in order to assess the situation. The decision to publish the Notice to Importers was taken in light of a significant increase of imports of sugar from the region during 2001 and the first half of 2002, linked to an increase of exports of sugar from the Community to the region. Other products are not concerned.

An assessment of the sums lost to the Community budget would depend on evidence of fraud, which remains limited thus far. Single cases of fraud relating to preferential origin, concerning small quantities of sugar, have been detected by the Greek authorities, and have led to collection of the corresponding customs duties.

Community trade in sugar with the Western Balkans may be based on economic rationale. Community market prices on sugar are higher than corresponding prices on sugar in the region giving rise to incentives for Balkan operators to export sugar to the Community. At the same time, Community sugar can be sold to competitive prices on the Western Balkans market due to an export refund of currently approximately EUR 450 per tonne thus generating a legitimate two-way trade.

The Council decision to unilaterally liberalize trade with the Western Balkans countries and to subsequently enshrine this liberal commitment in long-term contractual relations in Stabilisation and Association Agreements has proved vital for the economic recovery and political stabilisation of the region. It is in the Union's political and economic interest to continue to steer a stable and credible course in its relations with these countries, respecting the contractual commitments entered into by the Communities and their Member States, which form a cornerstone of the Union's policy in South Eastern Europe.