WRITTEN QUESTION E-0453/96 by Philippe-Armand Martin (UPE) to the Commission (29 February 1996)

Subject: Structural policies/wine sector: criteria to be respected for entitlement to Community (EAGGF) and national investment aid in the context of the sectoral plan for wines

In the previous 'sectoral plan for wines' (Decision 90/342 ((OJ L 163, 29.6.1990, p. 71. ))), national and Community table wines were excluded from the scope of EAGGF investment aid. This exclusion was not renewed for the 1994-1999 period (Decision 94/173 ((OJ L 79, 23.3.1994, p. 29. ))). However, the Commission reintroduced it in its Communication 94/C 189/04 ((OJ C 189, 12.7.1994, p. 5. )), stating that 'any subsequent change...will be the subject of a publication in the Official Journal of the European Communities...as soon as preparatory work...has been completed'.

1. Does the Commission agree that the fact that, two years after the introduction of the 'sectoral plan for wines' for the 1994-1999 period, the criteria for investment aid have not yet been established is a source of considerable legal uncertainty for people working in this sector?

2. The Marrakesh agreements virtually abolished the measures protecting Community table wine against wines from third countries, whose price at landed cost is now 20 to 30% below that of equivalent Community products. All that remains is a 'commercial' customs duty of ECU 12 per hectolitre for wine in bulk.

Excluding national and Community table wines from entitlement to investment aid, which is the only means of resisting this competition, will eventually mean eliminating them 'de facto' from the market and relocating production. Is the Commission aware of this?

3. Large-scale table wine producers and merchants in the Member States are in urgent need of a decision which will enable them to cover the cost of quality enhancement. Will the Commission be able to publish such a decision before...the completion of the 'sectoral plan for wines' for the 1994-1999 period?

Answer given by Mr Fischler on behalf of the Commission (19 March 1996)

As laid down in Article 8(2) of Regulation (EEC) No 866/90, ((OJ No L 91, 6.4.1990. )) the selection criteria for investment aimed at improving the conditions for processing and marketing the agricultural and forestry products listed in the Annex to Commission Decision 90/342/EEC ((OJ No L 163, 29.6.1990. )) were established in accordance with the guidelines of the Community policies, and in particular the common agricultural policy.

In the wine sector, where table wines were concerned, the only investment that could not be financed was that concerning the collection of grapes and vinification for the production of table wines not routinely sold under the name of a geographical unit smaller than the Member State.

The reform of the common agricultural policy made it necessary to adapt the selection criteria: Commission Decision 90/342/EEC was therefore repealed by Decision 94/173/EEC. ((OJ No L 79, 23.3.1994. ))

Though the debate about the reform of the common organization of the wine market is still under way, the new criteria in principle exclude all investment, but give a restrictive list of exceptions. The structural situation of the sector made a restrictive approach inevitable. The criteria could obviously be reviewed, if need be, to take account of decisions taken within the framework of the reformed common market organization.

Among the investments admitted by way of exception, table wines nevertheless remain eligible for aid under projects:

- to regroup undertakings or producer groups for the purpose of restructuring processing capacity, provided the new processing capacity is at least 20% less than the total pre-existing capacity abandoned in the region where the reform of wine-growing is planned;

- to protect the environment, prevent pollution, dispose of waste and recover packaging or containers;

- promoted by bodies primarily comprising producers and other economic operators for the purpose of improving quality control or reducing wine yields, which further the restructuring of the sector; such investment is not subject to the 20% rule.

The requirement that such investment be promoted by bodies associating different links in the chain is intended to limit eligibility for investment aid under a sectoral approach involving the different trades concerned, since this is the approach that dictates economic and commercial success in today's wine market.

The two decisions concerning selection criteria form a continuum and cannot possibly lead to legal uncertainty for those in the trade wishing to obtain aid from the EAGGF.

The sectoral restrictions of the Decisions in question were introduced following a study of representative markets in the Community; they are applied by the Commission when evaluating the benefits to the Community of any official aid, national or Community, connected with investment in this field. The Commission's aim in doing so is to ensure that the common agricultural policy is consistent with policy on state aid and avoid encouraging investment that, for structural reasons, is not in the Community interest.

This practice was the subject of a study carried out with the Member States, which gave rise to a Commission communication entitled 'Guidelines for state aid in connection with investments in the processing and marketing of agricultural products' announcing that the sectoral restrictions laid down in Commission Decision 94/173/EC would apply to state aid from 1 January 1996. ((OJ No C 29, 2.2.1996. ))

Since that Decision was published, Commission communications regarding state aid for investments in the processing and marketing of agricultural products have extended to state aid the application of the sectoral restrictions provided for in Decisions 90/342/EEC or 94/173/EEC, whichever are more advantageous. ((OJ No C 189, 12.7.1994. )) ((OJ No C 71, 23.3.1995. ))

While it is true that the contracting parties have, in the framework of the Uruguay Round, undertaken to reduce internal support and export subsidies, they have also undertaken to facilitate market access. Thus the Community has committed itself to abandoning the system of reference prices for wine imports. This option was chosen because the lack of a minimum import price was thought much less harmful to the Community than the minimum import requirements that accompany the alternative, which was tarification.

The Commission understands the Honourable Member's concern at the reduction in the level of protection afforded to the Community wine market and the possible consequences. As regards imports of wine from non-member countries at prices undercutting those of Community producers, it has to be pointed out that the Community wine market is currently in an unusual situation. Poor harvests in the Community have brought a substantial rise in prices for Community table wines and created additional demand for cheap imports. At the same time, the Community - with a trade surplus of 9-10 million hectolitres - is the world's leading wine exporter and cannot refuse other countries access to its market. The new GATT agreements do, however, give the Community the wherewithal to compete more effectively and increase its market share in non-member countries.

For this reason, table wines will continue to be eligible for investment aid in the circumstances laid out above.