Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 1765/92 establishing a support system for producers of certain arable crops
Date: 1993-07-28
Institutions: European Commission
Subjects: oleaginous plant, production aid, utilised agricultural area

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(93) 389 final 

Brussels, 28 July 1993 

Proposal for a 

COUNCIL REGULATION  (EEC) 

amending Regulation  (EEC) No 1765/92 establishing  a support 

system for producers of certain arable crops 

(presented by the Commission) 

- 2 -

EXPLANATORY  MEMORANDUM 

1. 

As  a result  of  a complaint  by  the United  States,  a GATT  panel  found 

that  the  Community's  system  of  granting  aid  for  the  processing  of 

oilseeds  did  not  conform  to  GATT  provisions  and  had  impaired  the 

valve  of  the  tariff  concession  (zero  duty)  which  the  Community  had 

accorded the United States in If«2. 

2. 

A* a reeult of the decision  of the GATT panel, the Commmity  amendée1 

its  syetem  of  aids  to conform  to  the GATT  prévisions.  Although  the 

United  states acknowledged  that the  amended  system now complied  with 

CATT provisions,  it was  of  the opinion  that  the  1962 concession  was 

still affected.  Therefore, the USA requested that the members of the 

GATT  panel  be  reconvened.  The  reconvened  Panel  Members  found  that 

there  was  still  a  reduction  in  the  value  of  the  concession 

(impairment) and asked  the Community  to act rapidly  to eliminate  it: 

either  by  amending  the  system  of  internal  aids, or  by  renegotiating 

the  tariff  concession  on  the  basis  of  the  provisions  of 

Article XXVIII  of  the  GATT.  The  reconvened  Panel  Members  added  "In 

the event that the dispute is not resolved expeditiously  in either of 

these  ways,  the  Contracting  Parties  should,  if  requested  by  the 

United  states,  consider  further  action  under  Article  XXIII.2  of  the 

General Agreement." 

3. 

The  community  chose  the  second  approach  proposed  by  the  reconvened 

members of the GATT panel, sought and obtained  authorization  from the 

Contracting  Parties  to  initiate  negotiations  under  paragraph  4  of 

Article  XXVIII  of the GATT.  Negotiations  and  consultations  then got 

under  way  with  the  United  states  and  nine  other  GATT  contracting 

parties  (Argentina,  Brazil,  canada,  Uruguay,  Poland,  Sweden,  India, 

Pakistan and Hungary). 

- 3 -

4. 

In the negotiations the United States estimated that the trade losses 

caused  by  the  reduction  in  the  tariff  concessions  for  oilseeds 

amounted  to  us$ 2  billion,  US$ 1 billion  of  which  was  lost  by  the 

United  states  itself.  The  other  contracting  parties  in  the 

negotiations also assessed the trade losses overall at US$ 2 billion. 

These figures have been contested and rejected by the  Community. 

5. 

As  the  negotiations  were  making  little  headway,  the  United  states 

began  a  procedure  for  unilateral  retaliatory  measures  in  early 

November  1992.  These  measures  initially  involved  the  fixing  of 

countervailing  duties  at  100%  for  imports  of  several  agricultural 

products  of  Community  origin  with  a  commercial  value  of  some 

US$ 300 million. They  also  involved  the possibility  of extending  the 

range  of  products  affected  up  to  a maximum  value  of  US$  1 billion. 

The  negotiations  between  the  delegations  of  the  Commission  of  the 

European  Communities  and the United  States, conducted  at ministerial 

level,  resulted  in  an  agreement  which  the  two  delegations  undertook 

to submit to their respective authorities.  The text of the agreement 

is  set  out  in  the  "Memorandum  of  Understanding  on  oilseeds"  of 

3 December  1992. 

6. 

As  a  result  of  this  agreement,  the  United  States  terminated  its 

actions  against  the  Community  ("Termination  of  Section  301 

Investigation  and Action regarding the European Community's  oilseeds 

Subsidy  Regime")  and  cancelled  the  procedure  relating  to  the 

application  of  retaliatory  measures  against  the community.  However, 

the case  is still being monitored  under Section  301 of the Trade Act 

("Notice  of  Monitoring  pursuant  to  Section  306  of  the  Trade  Act"), 

which  allows  the  United  States  to  take  action  and  introduce 

retaliatory measures if it considers this necessary. 

7. 

Negotiations  and  consultations  under  Article  XXVIII.4  of  the  GATT 

with nine other GATT contracting parties have not yet been  finalized. 

The terms of the conclusion of these negotiations  shall be dealt with 

in a separate proposal to the Council. 

- 4 -

To  ensure  that  the  agreement: concluded  with  the  United  States  is 

implemented  in due time, so that the deadlines  laid down therein can 

be met, the Commission proposed to the Council that the agreement on 

oilseeds  concluded  between  the  United  States  and  the  European 

Economic  Community  be  formally  approved  on  the  basis  of  the 

Mémorandum  of  Understanding  on  Oilseeds  of  3  December  1992.  The 

Council gave its formal approval when meeting on 8 June 1993. 

9. 

This  proposal  represents  the  next  step  in  the  legislative  process, 

tfce rainer «edification of ceancil Reflation  (tBC) No 1765/92. 

19.  Tt»  proposal  tables  the  necessary  «stendmsnta  to  Regulation  (EEC) 

He 176S/92  required  to  implsstent  the )l—loransfrm of  Understanding  on 

oilseeds  (see Annex  1),  i.e.: 

to  exclude  from  the  benefits  of  the  regime, the  cultivation  of 

'confectionery  sunflowerseed'  with  effect  from  sowings  for 

harvest  in  1994,  (the technical  implementation  to be managed  by 

the Commission via the Management Committee procedure); 

to  introduce  a  separate  base  area  system  -  to  be  known  as  the 

Maximum Guaranteed Area  - for producers benefiting  from the crop 

specific  oilseeds  payments  system  which  shall  respect  the 

principles set out in the Memorandum of understanding on oilseeds 

(the  Commission  shall  manage  the  system  via  the  Management 

Committee procedure). 

11.  The  proposal  does  not  include  an  amendment  to  establish  the 

corrective  action within  the  framework  of  the  CAP  reform  that would 

be required  should the by-product made available  from oilseeds  grown 

for  non-food  use  on  set-aside  land  exceed  1 million  tonnes  of  soya 

bean  meal  equivalents  annually.  The  provisions  of  existing 

legislation  allow  the  Community  to  monitor  the  development  of  this 

production.  The  Commission  will  propose  the  necessary  amendment 

should  production  rise  to  such  a  level  that  it  appears  that  the 

1 millon tonnes  of  soya  bean meal  equivalent  threshold  is  likely  to 

be reached. 

- 5 -

12.  Following  the  adoption  by  the  Council  of  the  Commission  proposal  to 

reform the support arrangements  for the producers of arable crops, in 

June  1992,  the  Commission  defined  its  estimates  of  the  areas  of 

oilseeds  likely  to  benefit  from  crop  specific  payments.  The 

Commission  estimated  in 1992 that in the medium term sowings would be 

no  more  than  the  Community  figures,  subsequently  approved,  in  the 

Memorandum of Understanding with the USA. 

13.  The  general  tenor  of  these  forecasts  has  been  confirmed  by  current 

estimates of sowings for harvest  in 1993. 

14.  However,  these  same  estimates  show  disparate  developments  in  the 

Member  States.  In consequence,  to subdivide  the Community's  Maximum 

Guaranteed  Area by Member  state  (or region) would  not only  go beyond 

that which  is required  by the Memorandum  of Understanding,  but would 

also  be  unnecessarily  restrictive.  For  example,  one  may  cite  the 

case  of  Greece  where  only  a  few  thousand  hectares  of  oilseeds  are 

sown. Climatic variations  and in particular the availability of water 

provide  significant  year  to  year  variations  in  sowings.  To  isolate 

and  regulate  separately  such  a  small  part  of  the  Community's 

production  would  involve  complications  disproportionate  to  the 

significance of production. 

15.  It  might  transpire  that  the  flexibility  accorded  to  Member  states 

when establishing  their regionalization plans  (e.g. choice of cereals 

or oilseeds yields to calculate the compensatory  payments) results in 

an  unexpected  increase  in  the  sowing  of  oilseeds  eligible  for  crop 

specific  subsidies.  If  such  an  increase  was  to  be  of  such  a  scale 

that  the  attainment  of  the  objectives  of  the  reform  in other  Member 

states  and  in  the  Community  were  called  into  question,  it  would  be 

appropriate  that  adjustments  in  aid  levels  should  focus  on  those 

Member  States  whose  regionalization  plans  were  at  the  root  of  the 

problem. 

- 6 -

The Commission proposes  that  if it should be necessary  to  adjust the 

oilseeds aids for 1994/95, 1995/96 and  1996/97 due to the application 

of the Memorandum of Understanding, if the excess is not greater than 

5% the application should be community wide. For an excess of greater 

that  this  percentage,  the  application  should  focus  on  those  Member 

States  where  an  unexpected  increase  occurs.  After  completing  a 

transitional period, this mechanism may no longer be needed. 

-  7  -

COUNCIL 

COUNCIL  DECISION 
of  S June  1993 
concerning  the  conclusion  of  a  Memorandum  of. understanding  on  certnin  oil 
between  the  European  Economic  Community  sod  die  United  States  of 

America  within  the  framework  of  die  GATT 

(93/355/EEQ 

THE  COUNCIL  OF  THE  EUROPEAN  COMMUNITIES. 

Having regard to  the  Treaty  establishing  the  European 
Economic  Community,  and  in  particular  Article  113 
thereof. 

Having regard to the recommendation from die Commis 
sion, 

Whereas a GATT panel found that a consequence of die 
Community's support scheme for oil seeds was an impair 
ment  of  the  value  of  the  tariff  concession  which  the 
Community had granted to the United States in 1962 ; 

Whereas  the  GATT  panel  consequently  recommended 
that the Community should act quickly to eliminate this 
impairment; 

Whereas a mutually satisfactory agreement was reached in 
the  negotiations  initiated  with  the  United  States  of 
America and took the form of a Memorandum of Under 
standing; 

Whereas this Memorandum  of  Understanding should be 
quickly  given  effect,  so  that  the  deadlines  contained 
therein  can  be  met, 

HAS  DECIDED  AS  FOLLOWS: 

Article  1 

The  Memorandum  of  Understanding  between  the Euro 
pean  Economic  Community  and  the  United  States  of 

America  on  oil  seeds  in  the  framework  of  the General 
Agreement on  Tariffs  and Trade  is  hereby  approved on 
behalf  of  the  European  Economic  Community. 

The  text  of  the  said  Memorandum  is  attached  to  this 

Article  2 

The  President  of  the  Council  is  hereby  authorised  to 
designate  the  person  empowcied  to  sign  the  Memo 
randum  of  Understanding  in  order  to  bind  the  Com 
munity. 

This Decision shall be published in the  Official Journal 
of  the European  Communities. 

Done  at  Luxembourg,  8  June  1993. 

For the  Council 

The  President 

N.  HELVBG  PETERSEN 

8  -

MEMORANDUM  OP  UNDERSTANDING  ON  OIL  SEBDS 

1.  European  Community  (Community)  legislation  for  producers  of  rape  and  colza  seeds, 
sunflower  seeds,  and  soya  beans  is  set  out  in  Council  Régulation  (EBQ>No  1765/92  of  30 
June  1992. 

2.  The  Community  shall  implement  the  following  additional  adjustments  to  the  benefits 
accruing  to  European  producers  under  this  programme  in  respect  of  crop specific  oil  seeds 
payments. 

3.  (a)  The  Community  shall  not  engage  in  any  market  support  expenditure  in  respect  of  rape 
and colza seeds, sunflower  seeds and soya beans except in accordance with the terms and 
conditions  provided  pursuant  to  the  Regulation  specified  in  paragraph  1. 

(b)  The  Community  shall  exclude  from  the  benefits  of  the  regime,  the  cultivation  of 

'confectionery  sunflower  seed'  with  effect  from  sowings  for  harvest  in  1994. 

4.  The  Community shall  introduce a separate base area (SBA) for producers benefiting  from  the 
crop  specific  oil  seeds  payments  system  which  shall  respect  the  following  principles: 

—  progressive  implementation  to  affect  those  crops  planted  for  harvest  in  1994  and  sub 

sequent  years, 

—  in  recognition  of  the Treaties  of  Accession,  full  implementation  for Spain  and  Portugal 

will  commence  in  1995/96. 

5.  The  SBA  system  shall  have  the  following  components : 

—  a  Community  oil  seed  base  area  shall  be  established  for  which  crop  specific  oil  seeds 

payments  are  made  (the  figures  for  EC-12  are  set  out  in  the  Annex), 

—  for a particular marketing year the  applicable  EC-12 oil  seeds base area shall  be  reduced 
to  reflect  the  annual  set  aside  rate  for  arable  crops  fixed  by  the  Council.  In  no  year, 
however,  shall  the  reduction  be  less  than  10 %  of  the  base. 

6.  In  respect  of  any  marketing  year  (without  prejudice  to  the  provisions  cf  the  corrective 
mechanism  specified  in  Article  5 (1) (d) of  Regulation  (EEC) No  1765/92), crop  specific  oil 
seeds  payments  shall  be  subject  to  die  following  additional  discipline: 

—  for every  1 % of  area planted  benefiting  from  crop specific  oil  seeds payments  in  excess 
of  the Community oil seed base area (after reduction  in conformity with paragraph 5) the 
compensatory  payments  to  such  oil  seed  producers  shall  be  reduced  by  1 %, 

—  any  such  decreases  in  compensatory  payments  applied  to  area  planted  above  the  SBA 

shall  be  applied  in  the  same  marketing  year, 

—  in  addition,  the  percentage  decrease  in  the  adjusted  compensatory  payment  shall  be 

carried  forward  to  the  following  marketing  year, 

—  however,  in  any  year  in  which  there  is  no  decrease  required  in  the  compensatory 
payment  (ix.  area  planted  is  equal  to  or  below  the  SBA  (after  reduction  in  conformity 
with  paragraph  5)) the compensatory  payment  in  that year may return to the level of  the 
base  reference  amount, 

—  subsequent  adjustments  in  the  compensatory  payment  shall  be  applied  in  the  manner 

described  above. 

7.  Should  the  by-products  made  available  as a result of  the  cultivation  of  oil  seeds on  land  set 
aside  for  the  manufacture  within  the  Community  of  products  not  primarily  intended  for 
human or animal  consumption  exceed one  million  metric tonnes annually expressed in soya 
bean  meal  equivalents,  the  Community  shall  take  appropriate  corrective  action  within  the 
framework  of  the  CAP  reform. 

-  y 

-

8. T~? Cj?aKi::;>ity ^hr^ gran* a (. .riff-late  que'/  *oc imports of 500 G&O  r-  ":«";c t'--<.'i*z of ccm 
into Portugal. be$:<uiu)g .?;>.  *V -  IS3Z/94 nuirkc*'-'> y2'..\ The within que.;. tariu' ids  shs-.!l be 
bound  at  Die*?, levels  so  £3 to  ensure  the*  ihe  quota  sha!!  be  filkvl.. 

9. The Cjaasauasiy chs!i inctipoi; ... ±i  c:,ssm?.^.*w^ -:t forth  is  psr^rr-  -; I  to C  h-tein !?*. 
the Community schedule ck" <Ja;*icf,Jc rapport Tommiirneats to be ,.::.k„:..:^ to tfos Uruguay 
Round  Protocol  to  the  GATT. 

10. The  United  States  agrees  to  fosego  any  fut&cr  compensation  ckim  for  impairment  cf  the 
• bindings. If  cither  party  considers, this Agreement  lias been  bieachec, the  Parties  agree  to 

undertake binding arbitration  in the GATT on the issues of breach, damage'&nd remedy. 

3  December  1992 

ANNEX 

EC-12  oil  seed  separate  base  area  system (') 

(Soya  beans,  rape  and  colza  seeds  and  sunflower  seeds) 

Reference  yearO 

Member State/oi 

1 teed 

1294/95 

199S/9& 
and  subsequent  years (*) 

Hectares 

SPAIN 

Sunflower  seed 

PORTUGAL 

Sunflower  seed 

EC-12 

Other 

1411000 

122000 

3 966000 

— 

~ 

Total 

5128 000 

(') Figures  to  be  reduced  to  reflect  the  annual  est  aside  fare  for  arable  oops. 
f)  The term  1994/5J refers to die CoouEnmity marketing y*er, Is.  60  seeds (bath winter and tpficg  n m)  for  harvest  in 

1»4. 

0  It it understood that, should the membenbip of tfes Community be expanded, this Agreement will be amended to  reflect 
an increase in  die tcparate bate area ia  an amount  no snore than  die swage  tad  el  production area cfthe  seceding 
niember  in  the  three  years  immediately  preceding  such  accettion. 

-  10 -

Proposal for a 

COUNCIL REGULATION  (EEC) 

amending Regulation  (EEC) No 1765/92 establishing a support 

system for producers of certain arable crops 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having  regard  to  the Treaty  establishing  the European  Economic  Community, 

and in particular Articles 42 and 43 thereof, 

Having regard to the proposal from the commission^), 

Having regard to the opinion of the European Parliament(2), 

whereas  the  European  Economic  Community  concluded  an  agreement,  in  the 

framework  of  the  General  Agreement  on  Tariffs  and  Trade, with  the  United 

states of America, concerning  certain oilseeds; whereas  the agreement took 

the  form of  a Memorandum  of Understanding  or; oilseeds  approved  by  Council 

Decision  93/355/EEC<3);  whereas  it  is  necessary  to  modify  Council 

Regulation  (EEC)  NO  1765/92<4),  as  last  amended 

Regulation  (EEC) 

No 1552/93(5)  in  order  to  give  effect  to the  terms  o£ 

at Memorandum  of 

Understanding; 

Whereas Regulation  (EEC) No 1765/92 could lead to an increas  in sowings of 

soya  beans,  rape  seed  and  colza  seed  and  sunflower  seed,  so  that 

adjustments should be made to the benefits accruing to producers under that 

Regulation  in  respect  of  crop-specific  oilseed  payments; whereas  Maximum 

Guaranteed  Areas  should  be  established  for  those  crops;  whereas  in  the 

event  of  an  increase  in  sowings  of  those  crops  above  the  level  of  the 

(1)  OJ No 
(2)  OJ No 
(3)  OJ No L 147, 18.6.1993, p. 25. 
(4)  OJ No L 181, 1.7.1992, p. 12. 
(5)  OJ No L 154, 25.6.1993, p. 19. 

-  11 -

Maximum  Guaranteed  Areas,  the  compensatory  paymer-ts  should  be  reduced; 

whereas  the  reduction  in  the  compensatory  payments  should  be  such  as  to 

discourage  a  level  of  sowings  in  excess  of  the  Maximum  Guaranteed  Areas; 

whereas  the cultivation  of confectionery  sunflower  seed  should  be excluded 

from  the benefits  of  such  support  with  effect  from  sowings  for harvest  in 

1994, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation  (EEC) No  1765/92 is hereby amended as follows: 

1. 

The following  subparagraphs are added at the end of Article 5(1): 

"(e) 

From  the  1994/95  marketing  year,  Maximum  Guaranteed  Areas 

(MGA)  shall  be  established  for  the  crop-specific  oilseed 

payments.  They  shall  be  equal  in  size  to  the  areas  of  land 

set  out  in Annex  IV,  reduced  by  the  rate  of  rotational  set-

aside  applicable  for  that  marketing  year,  or  by  10% if that 

rate is less than  10%.  If those Maximum Guaranteed Areas are 

exceeded,  the  Commission  shall  reduce  the  final  regional 

reference  amounts  for  oilseeds  in  accordance  with  the 

provisions of subparagraphs  (f) and (g). 

(f) 

If  the  area  of  oilseeds  already  determined  as  eligible  for 

compensatory  payments  in  any  year  exceeds  such  Maximum 

Guaranteed Areas, the Commission  shall reduce, by  1% for each 

percentage  point  by  which  the  Maximum  Guaranteed  Area  is 

exceeded,  the  relevant  final  regional  reference  amounts  for 

that  year.  With  effect  from  the  1994/95  marketing  year,  if 

the  Maximum  Guaranteed  Area  is  exceeded  by  more  than  a 

threshold  percentage  special  rules  shall  apply.  Up  to  the 

threshold  percentage,  the  reduction  of  the  final  regional 

reference  amounts  shall  be  uniform  in  all  Member  States. 

-  12 -

Beyond  the  threshold  percentage,  appropriate  additional 

reductions  shall  apply  in  those  Member  States  which  have 

exceeded  the  average  of  their  sowings  for  harvest  in  1989, 

1990  and  1991,  reduced  by  the  rate  referred  to  in 

subparagraph  (e). The  Commission  shall,  in  accordance  with 

the  procedure  laid  down  in  Article  38  of  Regulation 

136/66/EEC,  establish  the  size  and  distribution  of  the 

appropriate  reductions  to  be  applied  and  shall,  in 

particular,  ensure  that  the  weighted  average  reduction  for 

the Community  as a whole  is equal to the percentage  by which 

the Maximum Guaranteed Area has been exceeded. 

(g) 

The  threshold  percentage  provided  for  in  subparagraph  (f) 

shall  be  5%  for  the  marketing  years  1994/95,  1995/96  and 

1996/97. By  31  December  1996  the  Commission  shall  present  a 

report  to  the  Council  on  the  application  of  this  provision, 

accompanied  if  appropriate  by  a  proposal  to  maintain  this 

mechanism  for a further period. 

(h) 

If the compensatory  payment  is reduced in accordance with the 

provisions of subparagraphs  (f) and  (g), the Commission  shall 

reduce  the  relevant  final regional reference  amounts  for the 

following  marketing  year  by  the  same  percentage  unless  the 

Maximum  Guaranteed  Area  is  not  exceeded  in  that  year,  in 

which case the Commission may determine that such a reduction 

shall not apply." 

2. 

The following paragraph is added at the end of Article 5: 

"4. 

Producers  of  confectionery  sunflower  seed,  sown  for  harvest 

after  1 July  1994, shall be excluded  from the benefit  of the 

support provided  for under the terms of this Article." 

-  13 -

3. 

The  following  indent  is  added  at  the  end  of  the  first  paragraph  of 

Article 12: 

"-  those relating to compliance with the Memorandum of Understanding 

on  Oilseeds  approved  by  the  Council  Decision  93/355/EEC*  of 

8 June  1993 and in particular to the provisions in respect of the 

cultivation of oilseeds on set-aside land. 

rOJ No L 147, 18.6.1993, p. 25." 

4. 

The following annex shall be added to the Regulation: 

"Annex IV 

Areas to be taken into account for the calculation of oilseed 

Maximum Guaranteed Areas 

Member State/Oilseed 

1994/1995 

1995/96 and subsequent 

Area in ha. 

Spain, sunflower 

1 411 000 

Portugal, sunflower 

122 000 

EC 12 Other 

Total 

3 966 000 

- 

years 

-

-

-

5 128 000 

Article 2 

This Regulation  shall enter  force on the seventh day  following that of its 

publication in the official Journal of the European  communities. 

It shall apply from  1 December  1993. 

This  Regulation  shall  be  binding  in  its  entirety  and  shall  be  directly 

applicable in all Member states. 

Done at Brussels, 

For the Council 

-;  K --

COM(93) 389 final 

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