Proposal for a COUNCIL REGULATION (EC) amending Regulations (EEC) Nos 1785/81 on the common organization of the markets in the sugar sector and 1010/86 laying down general rules for the production refund on certain sugar products used in the chemical industry
Date: 1994-11-16
Institutions: European Commission
Subjects: chemical industry, isoglucose, production quota, production refund, sugar, sugar product

COMMISSION OF THE EUROPEAN  COMMUNITIES 

COM(94)  439 final 

Brussels,  16.11.1994 

94/0248  (CNS) 

Proposal  for  a 
COUNCIL  REGULATION  TEC) 
amending  Regulations  (EEC) Nos  1785/81  on  the  common  organization  of  the  markets  in 
the  sugar  sector  and  1010/86 laying  down  general  rules  for  the  production  refund  on 
certain  sugar  products  used  in the  chemical  industry 

(presented  by  the  Commission) 

EXPLANATORY  MEMORANDUM 

Introduction 

After  a  roll-forward  in  1994  for  the  1994/95  marketing  year,  following  two  previous 
extensions,  the  production  quota  system  provided  for  in  the  basic  regulation  for  the  sugar 
industry  (Regulation  (EEC)  No  1785/81) and its expansion  to cover the  production  of inulin 
syrup must now be re-examined  in order to define  rules to apply as from  1 July  1995. At the 
time  this  review  is  being  conducted,  the  Community  sugar  industry  also  faces  both  the 
prospect of the implementation  - from  the same date - of the GATT Agreement  on agriculture 
and  the  problem  of  supplies  to  Community  refineries,  since  the  moment  has  also  come  to 
reconsider  the whole  problem  of raw  sugar  supply  to the  refining  industry.  The  situation  on 
the  world  market  is  still  volatile  and  subject  to unpredictable  upheavals  made  worse by  the 
break  up  of the USSR  and  creation  of the  CIS, the difficulties  Cuba  is experiencing  and  the 
persistence  of  large  stocks.  At  the  same  time  the  Commission  has  taken  into  account  the 
Council's  opinion,  as  expressed  in  the  recitals  to  Regulation  (EEC)  No  1548/93(1),  that  the 
present  regime for  sugar  is such  that  it will  prevent  any  sudden  changes  in total  areas  sown 
to  sugar and that  it is therefore  possible for  these arrangements  to co-exist  for  a certain  time 
at  least  with  the  regime  for  other  arable  crops.  It  is  in  this  context  the  Commission  has 
reviewed  the  whole  subject  and  is  proposing  to  the  Council  the  adjustments  in  the  market 
organization  for  sugar which  it  deems  necessary  while  retaining  the  principal  instruments  of 
this  organization,  that  is  production  quotas  and  the  self-financing  system. 

The attached  proposal  includes the  replacement  of  Title  II  of Regulation  (EEC) No  1785/81 
"Trade  with  third  countries"  as  proposed  by  the  Commission 
in  COM(94) 414  of 
5  October  1994. 

I. 

The  production  system  -  its  nature  and  duration 

Article  23  of  Regulation  (EEC)  No  1785/81  on  the  common  organization  of  the  market  in 
sugar  provides  that  the  production  quota  system  in  this  field  is to  apply  during  the  1994/95 
marketing  year  and  that  the  Council  must  adopt  the  arrangements  to  apply  as  from  1 July 
1995 before  1 January  1995. 

In this  context,  it  should  be  remembered  that  the essential  aims  of the  quota  system  are  still 
to bring  production  into line  with  possibile  market  outlets  and,  in  respect  of  each  marketing 
year,  to  cover  through  financial  contributions  by  producers  all  the  losses  caused  by  the 
disposal  of  excess  Community  production.  Bearing  these  aims  in  mind,  it  is  still  necessary 
in  designing  the  future  quota  system  to  decide the  three  following  questions: 

Is it  necessary  for  the  production  quota  system  to  continue? 
If yes,  what  level  should  the  quotas  be  set  at? 
Is  it  necessary  to  modify  the  present  instruments  for  the  self-financing  of  the  system 
from  producers'  contributions? 

In  order  to  find  proper  answers  to  these  questions,  they  must  of  course  be  looked  at  in  the 
context  of  the  consequences  and  effects  for  the  sugar  industry  of  the  GATT  agreement  on 
agriculture  and the  enlargement  of the European  Union  to include  Austria,  Finland,  Norway 
and  Sweden. 

(i) 

O J N oL  154,  25.6.1993,  p.  10. 

A.  Continuation  of  the  production  quota  system 

1- 

Developments  on  the  world  market 

Since  1991/1992, that  is  since the  first  marketing  year  in which  the  present  quota  system in 
the Community  was renewed, the situation  on the world market has been characterised  by the 
fact  that  in  spite  of  some  recent  and  continued  improvement  in  consumption  the  overall 
surplus  has continued.  It  should  also be  noted  that  during this  period  the market  has  shrunk 
as a result  of  the  reduction  in  trade  due  in  particular  to the  declining  volume  of  developing 
country  imports.  For  this  reason  the  prices  of  raw  sugar  have  scarcely  moved  outside  the 
range  of  9-12 cents/lb. 

TABLE  1 : Trends  on  the world  sugar  market(1) 

(Raw  sugar) 

1. 
2. 
3. 
4. 
5. 

6. 

Production 
Consumption 
Balance  (1.-2.) 
Final  stocks 
Final  stocks  as a 
percentage  of 
consumption 
Price  of  raw  sugar 
on  the world  market 
(av.  spot  price NY  in  cents/lb) 

(1)Source:  F.O.  Licht. 

1991/92 

1993/94 

116.4  million  tonnes 
111.2 million  tonnes 
+  5.2  million  tonnes 
39.5  million  tonnes 

109.6  million  tonnes 
113.0 million  tonnes 
-  3.4  million  tonnes 
34.9  million  tonnes 

35.54% 

9.65 

30.9% 

10.58 

During  the  same  period  consumption  continued  to increase  at  an  annual  growth  rate of  5%, 
which  is much  lower  than  the  average  annual  rate  of  2%  in the  1980s. 

These  trends  in  consumption  have  however  been  checked  in  the  developed  countries  by 
population  trends and the state of the economy and by the substitution  of isoglucose for  sugar 
(in the USA  and Japan).  Stocks in  1993/94 remained  at  a relatively  high  level  and  certainly 
affected  prices  on  the  world  market.  However,  the  forecasts  for  1994/95  confirm  the  trend 
with  estimated  consumption  being  exceeded  by  actual  production  to  the  tune  of  about 
1  million  tonnes  in  raw value. 

In  New  York  the  spot  price  for  raw  sugar  has been  around  9.65  cents/lb  (average  1991/92) 
to  10.58  cents/lb  (average  1993/94).  The  intervention  price  for  white  sugar  in  the EC  at the 
moment of writing this memorandum  is approximately  23.79  cents/lb (before deduction of the 
production  levy) while the  support price in the United  States is on average 23.62  cents/lb  for 
white beet  sugar; producer  prices in Japan,  the other most important traditional  importer,  are 
still  much  higher  than  the  prices  in  the  States. 

In  1993/94,  in  spite  of  this  situation,  the  Community  had  no  difficulty  in  disposing  of  its 
exportable  white  sugar  excess  on  the  world  market. 

2.  Market  trends  in  the  Community 

As  a  result  of  constant  improvements  in  yields  and  the  integration  of  the  former  German 
Democratic  Republic  into  the  Community,  sugar  production  in  the  Community  reached  the 
high level  of  16.2 million tonnes of white  sugar equivalent in  1993/94. This production  level 
during  a fairly  normally  processing  year  shows that  production  capacity  in  technical  terms, 
at  both  the  farming  and  industrial  stages,  is  greater  than  17.2 million  tonnes  in  the 
Community  of Sixteen. Internal consumption is fairly  stable at around  11.9 million tonnes for 
the  Twelve  and  will  rise  to  about  13.1  million  tonnes  for  the  Sixteen. 

TABLE  2:  Trends  on the  sugar  market  in the  EC 
(in  '000 t  of white  sugar  equivalent) 

1991/92 
EUR12 

1.  Actual  production 

14 703 

2.  Production  carried  over 
from  the  preceding 
marketing  year 

1 023 

3.  Production  carried  over  to 

the  following  marketing  year 

904 

4.  C  sugar  exported 

1  573 

5.  Production  of  A  and 

B  sugar 

6.  Consumption 

7.  Balance  (5.  -  6.) 

(1) From  1 January  1995. 

13 249 

11 948 

1  301 

1993/94 
EUR12 
forecast 

16 235 

1  314 

1  258 

2  940 

13 351 

11 875 

1  476 

1994/95 
EU16 
forecast0} 

15 927 

1  258 

1  000 

1  873 

14 312 

12 957 

1  355 

Production  of  sugar  within  the  A  and  B  quotas  has been  very  stable for  some years  at  an 
average  of  13.3  million  tonnes.  This  corresponds  to  97% of the  sum  of  the  A  and  B 
quotas  granted. 

TABLE  2a:  Trends  on  the  isoglucose  market  in the  EC 
(in  tonnes  dry  matter) 

1991/92 
EUR12 

1993/94 
EUR12 

1994/95 
EU16 
forecast(1) 

1.  Production 

285  097 

287  500 

299  430 

2.  Non-quota  production 

( 1 . - 3 .) 

3.  Isoglucose  A +  B 

production 

4.  Consumption 

5.  Balance  (3. -  4.) 

(1) From  1 January  1995. 

1 

0 

285  078 

284  740 

388 

287  500 

286  500 

1  000 

299  430 

289  430 

1  000 

TABLE  2b:  Trends  on the  inulin  syrup  market  in  the  EC 
(in tonnes  of  sugar/isoglucose  equivalent) 

1993/94 
EUR  12 
estimated 

98  489 

1994/95 
EUR  16 
forecast(1) 

104  630 

104  630 

0 

1.  Production 

2.  Quota  A  production 

3.  Quota B  production 

(1) From  1 January  1995. 

3.  Conclusions 

It  may  be  seen  from  the  above  that: 

- 
- 

the present  situation  on the world  market  remains volatile in  spite of  some  improvement; 
the  prospects  for  development  in the  forseeable  future  are  uncertain; 
in  the  Community  as  elsewhere  production  capacity  is greater  than  consumption. 

In  light  of this but  also  in view  of: 

- 

- 

the European  Community's  obligation  to import  1.3  million tonnes annually  of  ACP  and 
Indian  sugar at Community  prices and 40  000 tonnes into Finland  to supply  its  refineries 
in  1995; 

the  undertakings  made by  the  European  Community  as part  of  the  GATT  agreement  on 
agriculture to  reduce  export  volumes  and  subsidies; 

- 

the  need  to  continue  to  control  guaranteed  production,  in  particular  to  meet  the 
commitments  made under  GATT, 

it is necessary  in the Commission's  opinion to keep the production  quota system  for  a  further 
period. The Commission therefore  proposes renewal  of the present production  regime for  six 
marketing years matching the transition period for the agriculture agreement mentioned above. 
The Commission  regards this  as an appropriate  period  in order to permit the  implementation 
of these  commitments  without  risking  serious  upheavals  in  the  industry. 

B.  Quota  levels 

In a world market situation as uncertain  and as difficult  to forecast  as it is, and given the state 
of the Community  sugar market, this review must focus on whether provision should be made 
for  reducing quotas or maintaining them  at their current levels. This issue  should be assessed 
in  the  overall  context  of  the  CAP  but  also  in  light  of  the  particular  situation  of  the  sugar 
industry  and  the  mechanisms  available  to  make  it  possible  to  meet  the  commitments  in  the 
agreement  on  agriculture. 

1-  The  supply  situation  in  the  EC 

TABLE 3: production under Community  guarantee and consumption in the EC taking into 
account  the  quotas  for  1994/95  and the  prospects  for  1994/95 

(in  1 000 t  of  white  sugar) 

1991/92 
EUR12 

1993/94 
EUR  12 
forecast 

1994/95 
EU16 
forecast0} 

1.  Quotas  set 

(a)  A  sugar  quotas 
(b) B  sugar  quotas 

11 187 
2 488 

11 187 
2 488 

(c) A + B sugar quotas 

13 675 

13 675 

2.  Production  achieved 

(a)  A  sugar 
(b)  B  sugar 

(c)  A  +  B  sugar 

3.  Consumption 

4.  Balance  (2.  -  3.) 

(1) From  1 January  1995. 

10 885 
2  364 

13 249 

11 948 

1  301 

10 934 
2  417 

13 351 

11 875 

1  476 

11 973 
2 609 

14 581 

11 756 
2  556 

14 312 

12 975 

1  355 

Community  production  within  the  quotas  of  the  marketing  years  since  integration  of  the 
former  GDR  has  been  fairly  stable,  as  has  consumption.  Portugal  will  continue  to  have  a 
considerable deficit,  as will Norway, which does not produce sugar. This potential  deficit  still 
represents  about  217  000  tonnes  taking  into  account  annual  imports  of  75  000  tonnes  from 
non-Community  countries  with  a  reduced  levy,  as  provided  for  in  the  accession  treaty  for 
Portugal, and of 3 000 tonnes produced in the Azores. In  1991/92,  100 000 tonnes of raw beet 
sugar  harvested  in  the  Community  was  consumed  in  Portugal.  Finland  needed  to  import 
40  000  tonnes  of  sugar  expressed  in white  equivalent  in  1995. 

2.  Conclusions 

The  Commission  cautiously  concludes that  the medium-term  prospects on the world  market 
are uncertain  since the improvement  of the fundamentals  will  not necessarily  be followed  by 
significant  and lasting effects  on prices. Taking into account the mechanisms to be introduced 
as a result  of the GATT  agriculture  agreement  in  order to  adapt  guarantees to  reduce  export 
subsidies  as  explained  in  II,  the  Commission  proposes  that  the  A  and  B  quotas  for  sugar, 
isoglucose and inulin syrup  should be maintained  at the level for the  1994/95 marketing year. 

C.  Continuation  of  the  self-financing  arrangements 

1  Principles  and  mechanisms 

The  principle  that  the  industry  itself  should  finance  the  losses  due  to  disposal  of  excess 
production  under  Community  guarantee  was  introduced  with  effect  from  the  1981/82 
marketing  year  on  a multiannual  basis. 

Since the  1986/87  marketing  year,  this  principle  has been  tightened  in  that  the  mechanisms 
(special  elimination  levy  for  1986/87  and  1987/88  and  supplementary  levy  as  from  the 
1988/89  marketing  year)  have  been  adjusted  to  make  the  principle  applicable  to  each 
marketing  year  separately. 

The  Commission  would  like  to  point  out  that  up  to  now  the  disposal  of  Community 
production  in  excess  of  quotas  has  been  financed  by  producers  (i.e.  beet  growers  and 
manufacturers)  paying a levy of 2% maximum of the white sugar intervention price applicable 
to  all  A  and  B  quota  production,  a  B  levy  of  37.5%  maximum  of  these  prices  and  only 
applicable  to  B  production  and  an  supplementary  levy  if  necessary  to  cover  losses  in  each 
marketing  year  caused  by  the  disposal  of  Community  production  in  excess  of  internal 
Community  consumption.  This system  is applied  in  full  to production  of inulin  syrup. In the 
case  of  isoglucose  the  mechanism  is  applied  by  analogy  and  only  to  the  industrial  part.  In 
addition,  if  for  all  sorts  of  reasons  a marketing  year  shows  a negative  or  positive  balance  it 
has to be carried over to the following year. This means that self-financing  has to be achieved 
by  this  cumulative  system  at  the  latest  by  the  end  of  the  period  of  application  of  the  quota 
system. 

Experience in the  1986/87 to  1993/94 marketing years has shown that the mechanisms for this 
self-financing  provided for in Articles  28 and  28a of the basic Regulation did made it possible 
to implement the Regulation  during those years. As the Court of Auditors stated in its special 
report  No  4/91  on the  operation  of the  common  organization  of the  market  in the  sugar  and 
isoglucose  sector  (OJ No  C 290  of  7 November  1991, p. 46): 

"Bearing in  mind  all  its constituent  parts the  sugar  market  is relatively  simple to control  and 
the administrative  organization in place at Community  and national  level  presents a relatively 
well-ordered  picture.  The  management  procedures  are general  competently  implemented  on 
the  strength  of  relatively  reliable  data  and  very  regular  contacts  between  Community  and 
national  departments." 

The only  comments of the Court  in this area referred  to problems of control  and it expressed 
doubts  as to the reliability  of  the  data  concerned  without  however  questioning  them: 

"Beyond  these  initial  observations,  the  Court's  analyses,  while  revealing  that  no  conclusive 
reconciliation  is feasible  within the  current  system  of accounting,  nevertheless  raised  doubts, 
especially  as  to  the  accuracy  of  the  amounts  used,  and  included  in  the  calculation  of  the 
levies,  as  regards  the  costs  of  export  refunds.  Considering  the  laborious  nature  of  these 
analyses,  on  the  one  hand,  and  in  view  of  the  importance  of  transparent,  verifiable 
management,  on the  other,  it  would  be  desirable  to  provide  for  specific  reference  to  each 

marketing  year  in the  system  for  the  declaration  of revenue  and  expenditure  by the  Member 
States.  This can  readily  be  achieved,  since the Member  States already  have this  information 
available  for  their  own  management  purposes." 

On  this  point  the  Commission  already  indicated  in  its  replies  that  it  supported  the  Court's 
suggestion  on verifying  the validity  of the industry's  self-financing,  which would  not require 
changing  the  actual  self-financing  mechanisms. 

Starting  from  the  Commission's  assumption,  i.e. that  quota  levels will  be maintained  for  the 
next  six  marketing  years,  it  is  merely  necessary  to  introduce  the  transition  to  the  new 
application  period  for  quotas. 

The mechanism  for  adapting the export  guarantees for  quota  sugar  as explained  in  section  II 
does  not  require  any  changes  to the  self-financing  mechanism. 

Self-financing  of  the  system  for  covering  storage  costs  has  been  in  place  since  1968  and 
functions  on the basis of the storage levy which makes it possible to grant a monthly  flat-rate 
reimbursement  for  storage  fees.  This  system  is  not  affected  by  the  present  proposal  since  it 
is not  limited  in time  and  the  self-financing  is continuously  assured. 

2.  Conclusions 

The  Commission  therefore  considers  that  it  is  not  necessary  to  modify  the  self-financing 
mechanism  or to  readjust  the  balance  of  it  since  the  burdens  imposed  relate  directly  to  the 
quotas  allocated,  which  the  Commission  feels  should  continue  at their  present  levels. 

II.  Reduction  in  support  (quota  and  price  guarantees) 

1.  The Commission  therefore  proposes to the Council that the levels of the A and B  quotas 
should  continue  unchanged  and that  consequently  the  distribution  of  price  and  disposal 
guarantees resulting from  the quotas for each Member State and each firm concerned and 
the  distribution  of  burdens  under  the  self-financing  regime  should  be  maintained. 
However,  it  feels  that  the  common  market  organization  for  sugar  must  accordingly 
include  appropriate  management  instruments  enabling  the  Community  to  fulfil  the 
commitments  made under the  agriculture  agreement  resulting from  the Uruguay  Round 
of  multilateral  trade  negotiations. 

2.  The  Commission  therefore  proposes  that  the  price  and  disposal  guarantees  for  sugar, 
isoglucose  and  inulin  syrup  produced  under  quota  could  be  reduced  for  one  or  more 
marketing  years  to  the  extent  necessary.  Taking  into  account  forecasts  for  production, 
imports, consumption,  storage, carryover, the exportable balance and the average loss to 
be charged to self-financing  arrangements due to export commitments for the marketing 
year  in  question,  quotas  for  firms  will  be  subject  to  a  coefficient  making  it  possible  to 
determine  the  production  volume  which  will  benefit  from  these  guarantees  within  the 
limits  of  the  maximum  exportable  volume  fixed  in  the  GATT  agriculture  Agreement. 

These coefficients  will be determined  by product so that the distribution  of the reduction 
in  guarantees  resulting  from  the  quotas  does  not  disturb  the  balance  of  existing 
guarantees,  which  are  determined  by  the  level  of  the  current  A  and  B  quotas  and  the 
costs for  each  quota under the  self-financing  system.  The balance is thus maintained  at 
Member  State  level  and  for  each  firm  in  a given  Member  State. 

3.  As  regards  the  institutional  prices,  the  Commission  thinks  that  they  could  be  adapted 
where necessary for a given marketing year when prices are set each year. An adaptation 
of this type for  the  sugar  sector  would  have to be made before  the  final  date laid  down 
in  Article  3(4)  of  the  basic  Regulation  (EEC)  No  1785/81. 

Against this background, the Commission believes that existing balances in the cane and 
sugar sector in the most remote regions as set out in the specific  programmes for those 
regions should be retained  in the  future. 

HI.  Supply to refineries  (report on the situation  of the Community  refining  industry) 

1.  Historical  background 

The refining  of raw cane sugar in Europe has a long tradition  which began even before the 
process  for  producing  sugar  from  beet  was  developed.  More recently  it  has  acquired  vital 
importance in Community trade policy with certain sugar-producing developing countries with 
which  it has particularly  close relations. After  the enlargement  of the Community  of  Six to 
the Community of Nine, imports of raw cane sugar, which had previously been regulated by 
Protocol No 8 on ACP sugar and the agreement with India, were added to sugar produced in 
the  French  overseas  departments.  The most  recent  enlargement  brings the  requirements  of 
Community refineries, i.e. including Finland, to a refining volume of  1.77 million tonnes per 
year.  This represents  14% of sugar consumption  for the Community  of Sixteen. 

Portugal's entry into the Community  resulted in measures to harmonize the price conditions 
for  raw sugar intended for  refining.  The Act of  Accession  of Portugal  also laid down that, 
during a transitional period, Portugal could import 75 000 tonnes (white sugar equivalent) of 
raw sugar originating in four ACP States (Côte d'Ivoire, Malawi, Zimbabwe and Swaziland) 
at a reduced levy and that it could also be authorized to import sugar from  third countries at 
a reduced levy if the Community supply balance showed that there were insufficient  supplies 
to adequately fulfil  the needs of the Portuguese refineries. This arrangement continued as part 
of the common market organization  for  sugar at the end of the transitional  period. 

In a declaration attached to the Act of Accession of Portugal(2), the Community undertook to 
examine  the  whole  question  of  the  supply  of  the  Community  refining  industry  and  in 
particular  that  of  the Portuguese  industry.  A  similar undertaking  has been  entered  into  for 
Finland under the terms of Article  16a(2a) of Regulation (EEC) No  1785/81 inserted by the 
Treaty  of Accession of that Member State. 

(2)  Declaration by the European Economic Community on the supplies to the sugar refining 

industry  in Portugal 
"The  Community  is  prepared  to  pay  particular  attention  to  the  supply  situation  of 
Portuguese refineries in future reviews of the common organization of the market in that 
sector.  In  addition  the  Community  is  prepared  to  carry  out,  before  the  end  of  the 
transitional period, an overall examination of the supply situation of the refining industry 
in the Community  and in particular of the Portuguese industry, on the basis of a report 
from  the Commission accompanied if necessary by proposals permitting the Council to 
decide, if need be, on the measures to be taken." 

Before  accession Portugal had been  supplied by various traditional  suppliers including certain 
ACP  States. During  negotiations  on the  accession  of  Portugal  to Lomé  III  and  negotiations 
between  the Community  and the ACP  States on Lomé  IV it was agreed to  examine  requests 
from  the  ACP  States  for  increased  preferential  access  to  the  Portuguese  market  for  ACP 
sugar(3). 

The Commission  considers that the time has finally  come to examine these two issues in  the 
context of the review of the future  production arrangements to apply from  1 July  1995. In the 
meantime the preferential  import arrangements for Portugal  have been extended until 30  June 
1995 together with the said production  arrangements, which will be extended to the four  new 
Member  States  from  1 January  1995.  During  1995  Finland  will  benefit  from 
these 
arrangements for imports of 40  000 tonnes in accordance with Article  9 of Regulation  (EEC) 
No  1785/81  as amended  by  the  Act  of  Accession  of that  country  to the  Community. 

2.  Community  raw  sugar  supplies 

The  four  Member  States  refining  raw  sugar  have  different  supply  structures.  The  raw  sugar 
imported  under Protocol  8 and under the specific  agreement  with India is in theory  available 
to  all  refiners  but  in  reality,  as  intended  from  the  beginning,  this  sugar  flows  through 
traditional  trade  channels  and  is  covered  for  the  most  part  by  long-term  contracts  between 
refineries  in  the  United  Kingdom  and  producers  in  the  ACP  States.  In  the United  Kingdom 
it  is both  used  for  supplying  refineries  and  the  source  of  between  one-third  and  one-half  of 
sugar  sold  on  this  market.  Most  sugars  from  the  French  overseas  departments  on  the  other 
hand  are  refined  in  France.  Portugal,  being  the  last  but  one  of  the  Community  refiner 
countries to join  the Community,  has only  limited  access to  such  sugar,  most  of its  supplies 
being  in  the  form  of  raw  cane  sugar  imported  from  the  four  ACP  States  mentioned  in  the 
Act  of  Accession,  third  countries  and  occasionally  in  1990/91  and  1991/92  raw  Community 
beet  sugar. 

Finland,  one  of  the  latest  countries  to  join  the  Community,  has  traditionally  obtained  its 
supplies  on the world  market. 

Available  supplies  and  their  allocation  amongst  the  refining  countries  are  set  out  for  each 
marketing year in a Community  raw sugar balance.  This balance is used to determine,  firstly, 
the quantities of raw sugar available in the FODs which could be eligible for transport aid and 
refining  aid,  broken  down  by  origin  and  place  of  refining  and,  secondly,  the  additional 
quantities  required  to  ensure  adequate  supplies  to  Portuguese  refiners  to  be  imported  from 
third  countries under Article  303 of the Act of Accession  of Portugual  and  since  1993 under 
Article  16a of  Regulation  (EEC)  No  1785/81. 

(3) 

Joint  declaration  on  sugar  in  the Portuguese  market 
" 1. The ACP and the EEC  agree,  as foreseen  in the protocol  of accession  of Portugal  to 
the  third  ACP-EEC  convention  to  continue  under  the  appropriate  provisions  of  the 
convention  and in particular  Article  168(2)(c), the examination  of requests made by  the 
ACP  States concerning  increased  preferential  access to the Portuguese  market  for  ACP 
sugar. 

2. Having regard to the review of the supply  situation on the Portuguese market in  1991, 
the  Community,  for  its  part,  undertakes  to  consult  the  ACP  States  prior  to  taking  any 
decision  bearing in mind the interests of all the traditional  ACP suppliers to that market 
and  the  request  of  the  ACP  States  submitted  to  the  Community  before  and  after  the 
accession  of  Portugal  to  the  third  ACP-EEC  convention  and  in  the  framework  of  the 
negotiations  on the  fourth  ACP-EEC  convention." 

10 

A  reduced  levy  is  fixed  for  these  latter  sugars,  for  the  75  000 tonnes  originating in  the  four 
ACP  States referred  to  in Article  16a and  for  the 40  000 tonnes  of raw  sugar  for  Finland  so 
that their producer  price equals the Community  intervention  price for  raw  sugar.  The  special 
arrangements  for  the  supply  of  raw  sugar  to Portugal  are  only  valid  until  30 June  1995  and 
for  Finland  until  31 December  1995. 

In conclusion,  there are two sources of cane  sugar which are restricted in volume but  are not 
limited  in time, i.e. sugar produced in the FODs and  sugar imported under Protocol No  8 and 
the agreement with India. Almost all this sugar is refined  in France and the United  Kingdom, 
while  Portugal  has  in  the  past  had  to  obtain  its  sugar  from  various  sources,  including  third 
countries,  imports  from  which  have  a time  limit,  as is the  case for  Finland. 

The  system  of  setting  out  in  a Community  balance  the  quantities  of  raw  sugar  available  for 
refining  in  the  Community  has  generally  worked  satisfactorily.  It  is  based  on  the  expected 
traditional  needs  of  the  refineries  concerned. 

This  allocation  has  the  result,  however,  that  the  needs  of  France  and  the  United  Kingdom, 
which  depend  respectively  on FOD or ACP preferential  sugar,  have rarely  been met for  two 
reasons. 

Sugar  production  in  the  FODs  fluctuates  considerably  because  of  natural  disasters  such  as 
hurricanes  and  drought  and  of  reductions  in  the  areas  under  sugar  cane.  In  some  years  the 
total  available  supplies  of ACP  Protocol  and  FOD  sugar  have  not  covered  the  total  refinery 
needs  of these  two Member  States. 

Another  factor  also  contributes to the  instability  of  supplies.  Where  an  ACP  State  is unable 
to fulfil  its supply  commitments the quantity  concerned  is reallocated to the other  signatories 
to  Protocol  No  8 but  part  of  the  quantity  for  refining  may  be  allocated  to  a  country  which 
normally  does not  supply  raw  sugar  for  refining  but  rather  sugar  for  direct  consumption,  or 
reallocation  may transfer  delivery  of sugar for  refining  from  one refining  country  to another, 
which  has turned  out  to the  disadvantage  of the  United  Kingdom. 

With  regard  to  Portugal  it  should  be  added  that,  from  1 July  1992,  supplies  to  the  Azores 
refinery  have  come  under  the  Poseima  programme. 

3-  New  preferential  supply  arrangements  for  the  shortfall 

Portugual  must  be  able  to  supply  its  refineries  after  expiry  of  the  special  arrangements 
introduced  on the country's accession to the Community and renewed  since then. Its refineries 
have benefited  from  investment in modern, efficient  plant and provide stable employment, and 
at  the  same  time  guarantee  supplies  of  white  sugar  at  acceptable  prices  on  the  Portuguese 
mainland  market,  which  does  not  have  its  own  sugar  production.  Similarly  refineries  in 
Finland,  the  United  Kingdom  and France  play  a prominent  role in the  supply  of white  sugar 
to their  regional  markets,  particularly  in the  case of the UK  market  and to a lesser  extent  in 
that  of  French  refineries  in  port  regions  close to  areas  of  consumption. 

The UK  refineries  are  also  of  major  importance  for  the  Community,  enabling  it to  fulfil  its 
obligation  to import and dispose  of the quantities  of  ACP  sugar laid  down  in Protocol  No  8. 
In  general  it  is  better  to  have  refineries  in  the  consumption  area  (less  cost  for  the  same 
economy  of  scale, better  response  to  market  requirements). 

Finally,  experience has demonstrated  that the  conditions  of  access to  all  available  sugar will 
have to be harmonized. Although the Portuguese refineries have always managed to meet their 
needs, supplies to the French  and UK refineries  which  only  have access to Community  sugar 
or  sugar  under  Community  control  have  not  always  been  guaranteed. 

11 

It  is not  only  a matter,  therefore,  of acknowledging  the existence of the Community  refining 
industry; the political  and economic circumstances in which it operates also point to the need 
for  permanent arrangements guaranteeing its future  by means of steady  supplies of raw  sugar 
to the  industry. 

A  new  scheme  extending  the  special  arrangements  for  Portugal  to  the  whole  of  the 
Community  must  therefore  fulfil  four  conditions.  It  must: 

1. 

2. 

3. 

4. 

harmonize throughout the Community the conditions of access to sugar for refining  from 
various  origins; 

guarantee  steady  supplies, taking account of the need of existing refineries  for  industrial 
stability; 

apply  the  system  for  determining  shortfalls  in  accordance  with  the  abovementioned 
Article  16a on the basis of a supply balance for the whole Community  and an agreement 
with  the  ACP  States  in  particular; 

determine the expected maximum traditional  needs for each Member  State concerned on 
the  basis  of  refining  data  for  the  past  and,  in  the  cases  of  Portugal  and  Finland,  the 
results  of  their  respective  accession  negotiations. 

These  four  conditions  should  be  recognized  in  the  common  organization  of  the  market  in 
sugar. 

The meeting of traditional needs should be assured at current levels for a period matching that 
proposed  for  the  system  of  production  under  quota. 

The management  of supplies to refineries  would  continue to be based on the Community  raw 
sugar  balance  and  determination  of  the  additional  quantities  required  in  light  of  the 
Community  and  preferential  sugar  available  and the  agreed  needs,  on the understanding  that 
the quantities not available for  refining to be included  in this balance would be frozen  at their 
1991/92 levels. 

The additional  quantities  required  that  are  identified  in this way  would  in  future  be  covered 
by  a special  preferential  regime with  reduced  import  duties for  raw cane sugar.  The terms of 
these arrangements for  imports of raw cane  sugar from  the ACP  States and  India would  have 
to be  fixed  under  an  agreement  with  those  countries,  as described  in  paragraph  5. 

4.  Additional  issues 

White  sugar  refined  from  raw  cane  sugar  must  be  sold  at  a  price  comparable  with  that  of 
white beet  sugar,  i.e. at a price based  on the intervention  price for  white  sugar plus a storage 
levy. For  sugar produced  in the FODs the price  paid to  raw cane sugar  suppliers is based  on 
the  intervention  price  for  raw  sugar.  The  price  of  raw  cane  sugar  imported  under  Protocol 
No  8  is based  on  a guaranteed  price  negotiated  each  year  between  the  Community  and  the 
ACP  States concerned,  which is normally  equal to the Community  intervention  price for  raw 
sugar. 

This  means  that  the  refining  margin  for  raw  cane  sugar  depends  on  the  difference  between 
the intervention  price for raw sugar and the intervention price for white sugar plus the storage 
levy.  However,  all these parameters  are fixed taking  account  solely  of production  conditions 
for  producing  white  sugar  from  beet,  which  does  not  necessarily  correspond  to  the  cost  of 
refining  raw  cane  sugar. 

In  order  to  solve  this  problem  the  Council  decided  in  1988 to  introduce  adjustment  aid  for 
the Community  preferential  raw cane sugar refining  industry.  Similar aid is also available for 
the refining  of raw cane sugar from  the overseas departments, for Community  raw beet  sugar 

12 

and  for  sugar imported  into Portugal  at the reduced  levy.  Under  current rules the  aid  can  be 
adjusted  for a given marketing year on the basis of the storage levy and/or the refining  margin 
resulting  from  the  prices  fixed  for  that  marketing  year. 

In view  of the logic  of the  system  and  experience with  it, the Commission  is of the  opinion 
that  provision  should  be made  for  automatic  adjustment  of  the  aid  in  line  with  increases  or 
reductions  in  the  storage  levy. 

In the case of shortfalls to be made up by imports from  non-member counties, the purchasing 
conditions  to be  complied  with  by  the  refineries  should  be  defined  so  as to  ensure  for  that 
industry  treatment  equivalent  to that  under  the  present  arrangements. 

5.  The ACP  issue 

At the time of Portugal's accession to the Community,  the ACP  States requested that  account 
be taken of their traditional  supply of raw sugar to Portugal  (Ivory  Coast, Malawi,  Swaziland 
and  Zimbabwe). 

Stressing this  status  of  traditional  supplier  and  invoking  their  preferential  relations with  the 
Community,  they  several  times requested  a review  of  the  supply  arrangements.  They  asked 
for  a  certain  quantity  of  raw  sugar  intended  for  the  supply  of  Portuguese  refineries  to  be 
included  in  the  Protocol  on  ACP  sugar  and  to  be  given  priority  for  the  supply  of  the 
remaining  quantities  required  under  Article  303  of  the Act  of  Accession. 

The  Community's  position  was  that  these  requests  should  be  considered  when  it  came  to 
review the arrangements  for  supplies to Portuguese  and Community  refineries,  scheduled  for 
the  end  of the  transitional  period. 

The  two  sides  failed  to  reach  an  agreement,  so  it  was  agreed  during  the  negotiations  on 
Portugal's accession to the third Lomé Convention  to continue  examining the requests of the 
ACP  States  regarding  sugar  under  the  relevant  provisions  of  the  Convention,  in  particular 
Article  130(2)(c). During  the  negotiations  for  the Lomé IV  Convention,  this agreement  was 
reaffirmed  in  the  declaration  refered  to  earlier. 

During  initial  consultations  between  the  Community  and  the  ACP  states  regarding  this 
undertaking,  the ACP  States formulated  their  request  in  the following  terms: 

"- 

include  either  in  the  Protocol  or  in  a  comparable  special  arrangement,  at  the  full 
guaranteed  price,  the  75  000  tonnes  currently  obtained  from  the  four  traditional  ACP 
suppliers; 

meet  the whole balance  of  Portugal's  refining  requirements  after  taking  due  account  of 
the interest  of the FOD  cane and EC  beet  producers,  as  established  for  any  given  year, 
by additional  quantities from  ACP signatories to the Protocol  at the full  guaranteed  price 
and  under  legally  contracted  agreements." 

While it must be acknowledged  that the four  ACP  States in question  are traditional  suppliers 
of  Portugal,  they  have  no  special  relationship  with  Portugal  warranting  an  increase  in  the 
quantities  covered  by  the  Protocol.  The  long-term  supply  contracts  they  concluded  were 
classic trade contracts which gave neither price guarantees nor other potential advantages. The 
situation  of  the  traditional  suppliers  to  Portugal  is  therefore  different  from  that  of  the 
traditional  suppliers to the United Kingdom,  who benefited  from  the guarantees laid down in 
the  Commonwealth  Sugar  Agreement  which  were  simply  confirmed  at  Community  level 
following  UK  accession. 

13 

The  Community  was therefore  justified,  during  the  negotiations  leading  up  to the  accession 
of Portugal,  in  refusing  to  increase  the  quantities  covered  by  the Protocol.  The  fact  that  the 
Act  of  Accession  provides  for  special  preference  for  the  ACP  States  in  question  in  no  way 
constitutes  a new  fact  warranting  a review  of that  position. 

Nor  does  it  seem  appropriate  in  the  case  of  Portugal  to  extend  beyond  30 June  1995  the 
provisions  granting  four  ACP  States  a  different  status  from  the  other  suppliers  under 
Article  303  in  terms  of  quantities  only. 

It  should  also  be  recalled  that  the  Council  has  said  on  several  occasions  that  it  had  no 
intention  whatsoever  of  going  beyond  the  initial  global  commitments  made  in  the  Protocol 
on  ACP  sugar  and  the  agreement  with  India. 

However,  given  the Community's  commitments towards the  ACP  States and  our  obligations 
under  the  agriculture  agreement  arrived  at  in  the  Uruguay  Round  of  multilateral  trade 
negotiations,  the  Community  should  consider  entering  into  negotiations with  those  States  to 
determine  the  terms  and  conditions  for  granting  a  preference  in  the  mechanism  used  for 
determining  the  Community  supply  quantities  which  is  similar  to  that  applied  until  now, 
making  it  possible to  apply  the  special  preferential  arrangements  mentioned  earlier. 

The  Commission  wishes, therefore,  to inform  the Council  of  its intention  to present it  in the 
very  near future  with a recommendation  under the terms of which the Commission  would  be 
authorized to conduct these negotiations with the ACP  States party to Protocol  No  8 annexed 
to the Lomé IV  Convention  and with  India.  The negotiating  guidelines could  provide  for  an 
agreement  with  the  following  features: 

a duration  of six marketing years, the  same as the Community  sugar production  regime; 

a  tariff  quota  on  a  quantity  of  raw  sugar  originating  from  these  countries  to  be 
determined  taking  into  account  the  estimated  maximum  annual  requirements  of 
Community  refineries  not met by the  Community  sugar  available  or by the  preferential 
sugar  referred  to  in  Protocol  No  8  annexed  to  the  Lomé  Convention  and  in  the 
agreement  with  India  on  sugar; 

a  minimum  purchase  price  to  be  paid  by  refineries,  which  would  be  determined  with 
reference  to the  intervention  price for  Community  raw  sugar; 

a  special  reduced  import  duty  for  quota  quantities  representing  the  preference  granted 
to  this  raw  sugar. 

An  agreement  of this type would  be  passed  without  prejudice  to the negotiations  relating  to 
the taking  over by the Community  of the undertakings to import raw sugar for  refining  made 
by  Finland  under  the  above  agriculture  agreement. 

IV.  The  C  sugar  carryover 

The  Commission  is  returning  to  this  issue  for  reasons  already  mentioned  in  the  past  in 
connection with the current regime. The market organization for  sugar, because of the binding 
system  of  production  quotas  it  introduced,  provided  from  its  inception  in  1968 for  firms  to 
decide,  in  agreement  with  beet  producers  or  sugar  cane  planters,  to  carry  over  part  of  their 
production  from  one  marketing  year  to  the  next,  which  would  then  be  considered  as 
production  of the latter marketing  year, but with  a compulsory  twelve-month  storage  period. 
The  aim  was to  enable these firms to cope with  unexpected  changes in production  from  one 
year  to  another  without  the  C sugar  produced  necessarily  having  to  be  exported  to  third 
countries regardless of world  market conditions. The C  sugar carried  over did not qualify  for 
reimbursement  of  storage  costs  under  the  Community  compensation  scheme  during  the 
compulsory  storage period. With effect  from  the  1981/82 marketing year, provision was made 
that  C  sugar  carried  over  could  qualify  for  reimbursement  of  storage  costs  under  the 

14 

Community  compensation  system  during the compulsory  storage period. After  thirteen years 
of  applying  this  reimbursement,  experience  shows  (see  the  figures  in  Table  5)  that  the 
carryover  has  been  used  since  1981/82  in  ways  which  do  not  correspond  to  the  original 
intention. 

TABLE  5  : Carryovers  of  C  sugar  ('000  tonnes) 

1976/77 
1977/78 
1978/79 
1979/80 

1981/82 
1982/83 
1983/84 
1984/85(1) 
1985/86(1) 

1986/87(1) 
1987/88(1) 
1988/89(1) 
1989/90 
1990/91 
1991/92 
1992/93 
1993/94 

31 
24 
124 
none 

991 
1  090 
214 
749 
1  021 

1  280 
1  273 
1  096 
621 
1  023 
904 
1  314 
1  258 

EUR-9 
EUR-9 
EUR-9 
EUR-9 

EUR-10 
EUR-10 
EUR-10 
EUR-10 
EUR-10 

EUR-12 
EUR-12 
EUR-12 
EUR-12 
EUR-12  (including  former  GDR) 
EUR-12  (including  former  GDR) 
EUR-12  (including  former  GDR) 
EUR-12  (including  former  GDR) 

(i) 

It  should  be  noted  that  during  these  marketing  years  the  price  of  sugar  on  the  world 
market  was  low,  which  should  have  meant  that  producers  did  not  produce  C  sugar 
simply  to  have  it  carried  over  with  storage  costs  guaranteed. 

The  Commission  regards  the  virtually  systematic  practice  of  carrying  over  substantial 
quantities  as an  encouragement  for  the production  of  C  sugar  and  an  obstacle to the  smooth 
operation  of  the  quota  arrangements.  Accordingly,  it  continues  to  believe  that  it  would  be 
desirable  to  return  to  the treatment  of  carried-over  C  sugar  which  applied  between  1968/69 
and  1980/81  and  is  therefore  proposing  that,  during  the  period  of  compulsory  storage,  the 
storage  costs  of  such  C  sugar  should  no  longer  be  reimbursed  under  the  Community 
arrangements  for  offsetting  costs.  However,  as  a  transitional  measure,  the  Commission  is 
proposing  that this rule should  be mitigated  by being applied  for the first time to  production 
in the  1996/97 marketing  year.  In the case of  sugar  produced  in the  1995/96 marketing  year 
and  carried  over to  1996/97,  storage  costs will  be reimbursed  for  the  first  six months  of  the 
twelve-month  compulsory  storage  period. 

However,  in  the  case  of  production  of  A  and  B  sugar  which  has  become  production  of 
C  sugar following the reduction of guarantees as referred  to in II.2, the Commission  considers 
that  storage  costs  should  continue  to  be  refunded  as  part  of  the  arrangements  for  the 
equalization  of  such  costs. 

V.  Arrangements  for  national  adjustment  aids  in  Italy 

The  Commission  recalls that  since the establishment  of  the market  organization  for  sugar  in 
July  1968,  the  Council  has  authorized  Italy,  subject  to  certain  conditions,  to  grant  national 
adjustment  aid  for  the  production  of  sugar  beet  and  sugar.  The justification  for  this aid  was 
the  difficulty  of  using  modern  production  methods for  the  cultivation  of  sugar beet  because 
of  the  structure  of  holdings,  the  nature  of  the  soil  and  climatic  conditions.  As  regards  the 
sugar  industry  itself,  it  needed  encouragement  to  modernize  its  productive  apparatus  and 

15 

restructure  undertakings.  Each  time  the  arrangements  for  production  quotas  have  been 
reviewed,  the  authorization  for  this  scheme  has  been  extended  in  different  forms,  most 
recently  and  in  a  scaled-down  form  until  the  1994/95  marketing  year  (at  a  rate  for  the 
marketing years  1991/92 to  1994/95 corresponding to 70% of the total financial  commitment 
in  ecus  already  allowed  for  the  1988/89  marketing  year).  This  authorization  will  terminate 
when  the  quota  regime  expires  on  30 June  1995. 

The  aid  granted  has  helped  to  improve  the  conditions  under  which  sugar  beet  is  grown 
(mechanization,  genetic  research  into  a  sugar  beet  better  suited  to  cultivation  in  the 
Mediterranean  area,  etc.)  and  encouraged  the  restructuring  and  modernization  of  sugar 
production. 

The  most  striking  example  is  the  slow  but  almost  uninterrupted  increase  since  the  1968/69 
marketing  year  in  the  difference  between  the  white-sugar  yield  per  hectare  of  sugar  beet  in 
northern Italy and the Community  average. The table below gives data for the final marketing 
years in each period when it was necessary to renew the production regime and  so extend the 
authorization  for  the  aid  scheme. 

TABLE  6 

Yields  in  white-sugar  equivalent  (tonnes/ha) 

Marketing  year 

Yields  in  Italy(1) 

EC  yields 

1968/69 
1974/75 
1979/80 
1980/81 
1985/86 
1989/90 
1990/91 
1991/92 
1992/93 
1993/94 

Northern 
Italy 

Central  and 
southern  Italy 

4.8 
6.10 
7.6 
8.10 
7.10 
8.10 
8.10 
7.7 
8.7 
7.7 

5.2 
5.0 
5.5 
6.10 
5.6 
6.10 
5.10 
5.5 
5.5 
4.7 

5.32 
5.06 
6.55 
6.46 
7.05 
7.59 
7.51 
7.30 
7.89 
8.32 

(1)  Source: 

Italian  Ministry  of  Agriculture 

Accordingly,  since  the  Italian  sugar  industry  no  longer  needs  this  aid,  having  very  largely 
accomplished  its  restructuring  especially  in  northern  Italy,  and  since  for  the  reasons  set  out 
above  Italy  should  be  allowed  to  concentrate  its  efforts  on  sugar beet  cultivation  in  order  to 
attain  the  objectives  sought  more  rapidly,  the  Commission  considers  that,  in  the  case  of 
northern  Italy,  authorization  should  be  given  for  sugar  beet  only  and  should  taper  over  the 
marketing  years  1995/96  to  1997/98  to  cease  completely  in  1998/99.  The  Commission  is 
therefore  proposing  that,  in  the  case  of  northern  Italy,  the  Council  should  renew  its 
authorization  for  the  next  three  marketing  years  and  limit  it  to  sugar  beet  alone.  The 
Commission  considers that the amount of aid should follow the degressive path on  which the 
Council  itself decided in Article  4 of Regulation  (EEC) No  1254/89, that is tapering off until 
1997/98.  Table  7 below  sets  out the  figures  relating  to the  proposed  method  of  application. 

In  the  case  of  central  and  southern  Italy,  where  the  difficulties  attendant  on  sugar  beet 
cultivation  are more  or  less  structural  in  nature  and the  restructuring  of the industry  has  not 
yet been  accomplished,  the Commission  is proposing that the Council  should  reduce the unit 
aid  for  the  1995/96  marketing  year  to  75% of  that  granted  in  1994/95,  reduce  it  further  to 
50%  for  the  1996/97  marketing  year  and  then  continue  to  authorize  aid  at  that  level 
throughout the period during which quotas are to be applied until the 2000/01 marketing year, 

16 

with the possibility  of granting  some of that aid to the  sugar beet  processing industry  in that 
part  of  Italy  since the  development  of the  region  is  acknowledged  to be  lagging  behind. 

1.  Calculation  of  national  aids  in  Italy  from  1988/89 to  1994/95  (Article  46(2)  and  (3) 

of Regulation  (EEC) No  1785/81) 

TABLE  7 

Basis  of  calculation 

(a) 

Unit  amount  of  aid  in  1988/89 per  100 kg  of  A  + B  quota  sugar: 
ECU  54.18  x 23.64% = ECU  12.81/100 kg  000%) 

(b) 

Total  financial  commitment  authorized  for  1988/89 

A  quota  sugar: 
B  quota  sugar: 

1 320  000  tonnes 
248  250  tonnes 
1  568 250 tonnes. 

Total:  1 568  250 tonnes x ECU  128.1/tonne = ECU  200  892 825. 
rounded  to ECU  200.9  million  (100%) 

Total  financial  commitment  authorized  for  each  of  the  marketing  years 
1991/92 to  1994/95:  70% of  ECU  200.9  million  = ECU  140.6  million. 

(c) 

Unit  amount  of  aid  in  1994/95  per  100 kg  of  A  + B  quota  sugar: 
ECU  140.6 million:  15 682  500  quintals  =  ECU  8.97/100  kg,  rounded  to 
ECU  9/100  kg 

2.  Calculation  of  national  aids  in  Italy  from  1995/96 

(a) 

Northern  Italy  (Italy  other  than  the  area  covered  by  (b)) 

The  amount  of  aid  for  the  1994/95  marketing  year  which,  as  stated  above,  is 
ECU  9 per  100 kg  of  sugar,  will  be  gradually  reduced  by  25% per  marketing 
year  until  it  is totally  abolished  in  1998/99. 

This  means that  the  amount  of  unit  aid  per  100 kg  of  sugar  will  be  as 
follows: 

Uniform  aid 
ECU/100  kg  of  quota  sugar 

1995/96:  6.75 
1996/97:  4.5 
1997/98:  2.25 
1998/99:  0 

(b) 

Central  and  southern  Italy  (Abruzzi  - Molise  - Apulia  -  Sardinia) 

Uniform  aid  ECU/100  kg  of  quota  sugar 

1995/96: 
1996/97: 
1997/98  to 2000/01: 

6.75 
4.5 
4.5 

17 

VI.  Other  issues:  sugar  used  to  manufacture  chemicals 

The  Commission  considers  that  the  standard  rate  of  ECU  7/100  kg  of  white  sugar  which, 
pursuant to Article  4b of Regulation  (EEC) No  1010/86, has to be deducted  in practice  from 
the production  refund  for  sugar used  for  the manufacture  of  chemical  products,  constitutes a 
serious hindrance to this utilization. It believes that after  nine years of these arrangements the 
deduction  of this standard  rate is no longer  fully justified  and  is therefore  proposing that the 
Council  allow the possibility  of reducing this deduction by a simple management  measure by 
permitting  the  Commission  to  determine  its amount  for  one  or  more  marketing  years  in  the 
light  of  production  and  consumption  in  the  Community.  The  Commission  would  not  be 
opposed  either  to  the  inclusion  of  yeast  in  the  Annex  to  Regulation  (EEC)  No  1010/86  in 
order  to increase  the  opportunities  for  the further  disposal  of  sugar. 

The  Commission  also believes  that  any  sugar  disposed  of  in  the  Community  for  use  by  the 
chemical  industry  should  be  deducted  from  the  quantities  exported  outside  the  Community. 
It  therefore  considers  that  the  self-financing  arrangements  for  this  sugar  should  no  longer 
exempt  from  production  levy  the  60  000  tonnes  provided  for  by  Article  9  of  Regulation 
(EEC)  No  1010/86. 

18 

Proposal  for  a 
COUNCIL  REGULATION  fEQ 
amending  Regulations  (EEC)  Nos  1785/81  on the  common  organization  of the  markets  in 
the  sugar  sector  and  1010/86  laying  down  general  rules  for  the  production  refund  on 
certain  sugar  products used  in the  chemical  industry 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  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, 

Having  regard  to the  opinion  of  the Economic  and  Social  Committee, 

Whereas  Article  23(5)  of  Council  Regulation  (EEC)  No  1785/81(1),  as  last  amended  by  the 
Act of Accession of Norway, Austria, Finland and  Sweden, states that the Council is to adopt, 
in accordance with the procedure laid  down  in  Article  43(2) of the Treaty,  the  arrangements 
to  apply  from  1 July  1995 to the  production  of  sugar,  isoglucose  and  inulin  syrup; 

Whereas  the  agreements  resulting  from  the  Uruguay  Round  multilateral  trade  negotiations 
have  been  approved  by  Council  Decision  ....  of  ...P\  whereas  the  agreement  on  agriculture 
(hereinafter  referred  to as "the Agreement")  provides, in particular,  for  the gradual  reduction 
of the level  of the Community's  export  support for  agricultural  products and in particular  for 
sugar under guarantee of production quotas; whereas the Agreement provides for the reduction 
of  export  support,  in  terms  of both  quantities  and  appropriations,  over  a transitional  period; 

Whereas  since  the  1986/87  marketing  year  the  common  organization  of  the  sugar  sector 
markets  has been  based,  first,  on  the  principle  of  full  financial  responsibility  on  the  part  of 
producers  for  the  losses  incurred  in  each  marketing  year  due  to  the  disposal  of  that  part  of 
Community production under quota which is surplus to the Community's internal  consumption 
and,  secondly,  on  a  differentiation  of  the  price  and  disposal  guarantees  in  line  with  the 
production  quota allocated to each undertaking; whereas, since commitments to reduce export 
support  are  to  be  implemented  over  a  transitional  period,  the  present  basic  sugar  and 
isoglucose  quantities  and  inulin  syrup  quotas  should  be  maintained  unchanged  but  with 
provision  made for  the  guarantees  pertaining  thereto to  be  adjusted  as appropriate  to  permit 
compliance  with  the  commitments  made  under  the  Agreement,  while  taking  into  account 
the  fundamental  factors  affecting  the situation  of this sector in the Community;  whereas it is 
accordingly  desirable  to  maintain  the  sector's  self-financing  arrangements  and  production 
quotas  for  a  period  corresponding  to  the  abovementioned  transitional  period,  namely  six 
marketing  years; 

Whereas  the  production  quotas  allocated  to  each  sugar  sector  undertaking  may,  in  any 
marketing  year,  give  rise,  as  a  result  of  the  relevant  consumption,  production,  importation, 
stock  and  carryover  levels,  and  the  average  loss  likely  to  be  borne  under  the  self-financing 
scheme, to  an export volume  exceeding that  set in  the Agreement;  whereas provision  should 
therefore be made for  adjustments  over one or more marketing years in the guarantees linked 
to  quotas  so that  the  Community's  commitments  can  be  met; 

(1)  O J N oL  177,  1.7.1981,  p. 4. 
(2)  OJ No  L 

19 

Whereas,  as  the  first  step  in  implementing  adjustments  to  the  guarantees,  the  difference 
recorded  for  a  given  marketing  year  between  the  Community's  exportable  volume  and  the 
amount  set  in  the  Agreement  should  be  apportioned  between  sugar,  isoglucose  and  inulin 
syrup  according  to  the  percentages  which  the  quotas  of  each  represent  in  the  total  of  the 
quotas  set  for  these three  products  in the  Community; 

Whereas this initial breakdown  by product  should then be followed  by a breakdown  between 
the  Member  States which  adjusts  the guarantees  linked  to the  quotas  assigned  to  producing 
undertakings  located  in each Member  State in a way that does not affect  the existing balance 
of  quotas  and  burden-sharing;  whereas,  to  this  end,  a  reduction  coefficient  should  be 
determined  for  each Member  State in respect of the A and B guarantees which is in line with 
the  maximum  contributions  pertaining  to  these  guarantees;  whereas  it  should  then  be  up  to 
each  Member  State  to  make  an  allocation  among  undertakings  which  takes  account  of  the 
guarantees  arising  for  each  undertaking  from  its  own  quotas; 

Whereas,  in  view  of  the  compulsory  production  quota  system  introduced  when  the  market 
organization  was set up, undertakings have from  its inception been allowed the possibility  of 
deciding, in agreement with beet and cane growers, to carry over part of their production  from 
one marketing year to the next, treating it as production of the latter with compulsory  storage 
during twelve months; whereas the  essential  aim  of this arrangement  was to allow  interested 
parties  to  cope  with  unforeseen  changes  in  production  levels  from  one  year  to  another 
without,  in  the  case  of  the  C  sugar  produced,  being  obliged  to  export  it  to  third  countries 
regardless  of  the  situation  on  the  world  market,  whereas  from  the  1981/82  marketing  year 
onwards  the  reimbursement  provided  for  under  the  Community  rules  on  equalization  of 
storage  costs  during  the  compulsory  storage  period  has  been  extended  to  C  sugar;  whereas 
over  the  thirteen  marketing  years  in  which  this  particular  rule  has  applied  the  quantities  of 
C  sugar  carried  over  have  increased  substantially  and  are  no  longer  in  keeping  with  the 
purpose of carryover indicated above; whereas the possibility  of systematic carryover of large 
volumes  under  these  terms  may  constitute  an  encouragement  to  production  of  C  sugar  and 
impede the proper operation  of the quota system; whereas in the case of C  sugar carried  over 
from  production  of  the  1996/97  marketing  year  onwards  a  return  should  be  made  to  the 
situation  existing from  1968/69 to  1980/81, namely that during the compulsory  storage period 
reimbursement  of  storage  costs under the  Community  rules  on  equalizing  these  costs  should 
no longer  apply  to C  sugar  carried  over;  whereas, however,  as a transitional  measure  for  the 
1995/96 and  1996/97 marketing years, reimbursement  of  storage costs for  C  sugar should  be 
granted  for  the  first  six  months  of  the  compulsory  storage  period;  whereas  the  grant  of  this 
reimbursement  for  sugar in respect  of which guarantees have been reduced  under  obligations 
created  by  commitments  entered  into  in  the  context  of  the  Agreement  should  not  be 
discontinued; 

Whereas Article  303 of the Act  of Accession  of  Spain  and Portugal  provided  for  preferential 
arrangements,  applying  for  seven  years  following  accession,  to  ensure  adequate  supply  of 
Portuguese  refineries  with  raw  sugar;  whereas  the  preferential  arrangement  consisted  of  a 
reduced import levy on sugar imported to this end from  certain ACP and other third countries, 
the use  of  available  raw  sugar  from  cane  and  beet  harvested  in  the  Community  covered  by 
Council  Regulation  (EEC)  No  2225/86  of  15 July  1986  laying  down  measures  for  the 
marketing  of  sugar  produced  in the  French  overseas  departments  and  for  equalization  of the 
price conditions with preferential  raw sugar(3), and the use of available preferential  raw sugar 
as defined  in Article  33 of Regulation (EEC) No  1785/81; whereas these supply  arrangements 
for  Portuguese  refineries  have  been  continued  and  incorporated  in  Regulation  (EEC) 
No  1785/81  as Article  16a; whereas they  are  also to  apply  to  Finland; 

(3)  O J N oL  194,  17.7.1986,  p.  7. 

20 

Whereas, in the Declaration  by the European  Economic  Community  on supplies to the  sugar 
refining industry in Portugal  annexed to the Final Act of the Treaty of Accession of Spain and 
Portugal,  the  Community  stated  that  it  was  prepared  to  make  an  overall  examination  of  the 
supply  situation  of  the  refining  industry  in  the  Community  and  in  Portugal  in  particular; 
whereas under the terms of paragraph  2a of Article  16a of Regulation (EEC) No  1785/81 such 
an  examination  is also to  apply  to  Finland; 

Whereas  this  examination  has  shown  the  need,  in  particular  with  the  aim  of  achieving  a 
steadier and more even flow  of supplies to refineries  throughout the Community,  to  estimate 
clearly  the  expected  maximum  traditional  requirement  of  raw  sugar  for  refining  into  white 
sugar  in  each  of  the  Member  States  concerned,  namely  Finland,  France,  Portugal  and  the 
United  Kingdom,  using  objective  reference  data  and  taking  into  account  the  quantities  of 
sugar  going  for  direct  consumption  recorded  for  the  1991/92  marketing  year;  whereas,  to 
achieve  this  aim,  the  possibility  should  be  opened  to  the  industry,  within  the  limit  of  its 
anticipated  needs,  of  gaining  access  on  certain  terms  to  all  raw  sugar  originating  in  the 
Community,  the  ACP  States  or  in  certain  other  traditional  suppliers  to  be  specified,  on  the 
basis  of  a forward  balance  and  in  a  particular  order  of  priority,  namely  Community  sugar, 
preferential  sugar  covered  by  Protocol  No  8  annexed  to  the  Fourth  ACP-EEC  Lomé 
Convention(4), and sugar imported from  ACP States or other traditional  suppliers; whereas, for 
raw  sugar  imported  from  the  ACP  States listed  in Protocol  No  8 and  from  India  other  than 
preferential  sugar  in  the  strict  sense,  a  special  preferential  arrangement  for  access  to  the 
Community  refining  market  should  be  introduced; 

Whereas  refining  is  an  important  activity  both  in  the  sugar  sector  in  general  and  in  the 
Community,  and in  particular  for  conversion  of raw  sugar into white sugar;  whereas, from  a 
technical point of view, refining produces high-quality products from  sugar cane that can meet 
market  requirements;  whereas,  moreover,  these  refineries  are  located  in  areas  of  high 
consumption;  whereas the  port-related  refining  industry  is  accordingly,  for  the  Community, 
a  valuable  complement  to  the  beet  processing  industry,  in  particular  in  Finland,  mainland 
Portugal,  the United  Kingdom  and  southern  and  western  France; 

Whereas  in  a joint  declaration  on  the  Portuguese  sugar  market  annexed  to  the  Final  Act  of 
the  Fourth  ACP-EEC  Lomé  Convention  the  ACP  States  and  the  Community  agreed  to 
continue,  under  the  relevant  provisions  of  the  Convention  and  in  particular  Article  168(2) 
thereof, the examination  of requests from  the ACP  States for  increased  preferential  access to 
the Portuguese market; whereas examination of these requests, which concern  supplies to port 
refineries  in  the  Community  as  a whole,  leads to the  conclusion  that  special  priority  access 
should be given to raw cane sugar  originating in the ACP  States party  to Protocol  No  8 and 
in India, under special agreements negotiated between the Community  and the countries party 
to  Protocol  No  8  and/or  other  countries  and  on  the  basis  of  a  Community  estimate  of 
requirements  after  utilization  for  refining  of  all  available  raw  cane  and  beet  sugar  in  the 
Community  and preferential  sugar as defined  in Article  33 of Regulation (EEC) No  1785/81; 

Whereas  up to the  1994/95 marketing  year  Community  adjustment  aid  has been  granted  for 
refining  of preferential  raw cane sugar and of raw  sugar from  cane and beet  harvested  in the 
Community; whereas up to now it has been possible to adjust this aid for any given marketing 
year  in  line with  the  storage levy  set  for  that  year  and/or  any  change  in the  refining  margin 
resulting from  the  prices  set for  the  marketing  year;  whereas  in the  light  of  experience  this 
aid should continue; whereas given the direct impact on the refining  margin of changes in the 
storage  levy  it  should  be  made  compulsory  for  the  adjustment  aid  to  be  altered  in  line with 
that  levy  in  the  case  of  refining  of  raw  sugar  covered  by  Community  price  guarantees  or 
sugar  covered  by  Article  33  of 
imported 
Regulation  (EEC)  No  1785/81; 

the  ACP  States  as  preferential 

from 

(4)  O J N o L 2 2 9,  17.8.1991, p.  1. 

21 

Whereas, for  reasons already indicated in the past, in view of its particular characteristics and 
the  dimensions  of  holdings  it  is difficult  to  apply  modern  beet  production  methods  in  Italy, 
although  the  situation  is  improving  in  the  north;  whereas  for  structural  reasons  these 
difficulties  persist in the centre and south, regions which are, moreover, recognized as lagging 
behind  in  development  and  structural  adjustment;  whereas  beet  growing  in  these  regions  is 
indispensable  in  order to  regenerate  soils with  a particularly  high  level  of  clay  and  to  avoid 
a return to monoculture; whereas Italy  should therefore  be authorized  to grant in its northern 
regions,  for  a restricted  period  of three  marketing  years up  to  1997/98, national  adjustment 
aid for beet cultivation  of a decreasing amount starting lower than the amount granted for the 
1994/95  marketing  year under the terms  of the authorization  to Italy  to grant  such  aid  given 
in Regulation  (EEC) No  1785/81,  as amended  by point  10 of Article  1 of Regulation  (EEC) 
No  305/91(5),  and  to  grant  in  its  central  and  southern  regions  such  aid  over  two  marketing 
years,  reduced  by  a  uniform  amount  from  the  level  granted  for  1994/95,  but  thereafter 
continuing  without  further  reduction  up to the  2000/01  marketing  year; 

Whereas the partial exemption from  self-financing  granted by Article 9 of Council Regulation 
(EEC)  No  1010/86(6),  as  last  amended  by  Commission  Regulation  (EEC)  No  464/91(7),  to 
sugar  used  in the  chemical  industry  should  be  discontinued; 

Whereas this Regulation should be applied under the best possible conditions; whereas, to this 
end,  certain transitional  measures  may  prove necessary;  whereas the  procedure  laid  down  in 
Article  41  of  Regulation  (EEC)  No  1785/81  should  apply  to  adoption  of  such  transitional 
measures, 

HAS  ADOPTED  THIS  REGULATION: 

Article 1 

Regulation  (EEC)  No  1785/81  is  amended  as  follows: 

1.  The  following  subparagraph  is  added  to  Article  9(3): 

"The  standard  amount  of  ECU  7  per  100  kilograms  of  white  sugar  referred  to  in 
Article  4a  of  Regulation  (EEC)  No  1010/86  may  be  reduced  up to zero."; 

2. 

In  Article  9(6),  the  fifth  indent  is replaced  by  the  following: 

"-  the conditions  for  granting  production  refunds,  the amounts of  such refunds  and the 

reduction  referred  to  in  paragraph 3;"; 

3. 

In  Article  19(3), the  first  subparagraph  is replaced  by  the  following: 

"When  the  refund  is  being  fixed,  particular  account  shall  be  taken  of  the  intervention 
price of white  sugar  and the need to establish  a balance between  the use of  Community 
basic  products  in  the  manufacture  of  processed  goods  for  export  to third  countries  and 
the  use  of  the  products  of  such  countries  brought  in  under  inward  processing 
arrangements."; 

(5) 

(6) 

(7) 

O J N o L 3 7,  9.2.1991, p.  1. 
O J N oL  94,  9.4.1986,  p. 9. 
O J N oL  54,  28.2.1991, p. 22. 

22 

4.  Article  23(1)  is replaced  by  the  following: 

"1.  Articles  24  to  32  shall  apply  in  respect  of  the  marketing  years  1995/96  to 

2000/01."; 

5.  Article  23(2)  is replaced  by  the  following: 

"2.  For  the period  referred  to in  paragraph  1 and  without  prejudice  to paragraph  4a, 
Article  24(2),  Article  25  and,  as  appropriate,  Article  24a(5),  the A  and  B  quotas 
of  undertakings  producing  sugar  or  isoglucose  shall  be  those  assigned  by  the 
Member  States for  the  1994/95  marketing  year."; 

6.  Article  23(4)  is replaced  by  the  following: 

"4.  For the  period  referred  to in  paragraph  1 and without  prejudice  to  paragraph  4a, 
the  A  and  B  quotas  of  undertakings  producing  inulin  syrup  shall  be  those 
definitively  assigned  by  the  Member  States  pursuant  to  Article  24b  for  the 
1994/95 marketing year. Articles  24 and  25 shall not apply to such undertakings."; 

7. 

The  following  paragraph  4a  is inserted  in  Article 23: 

"4a.  In  order  to  comply  with  the  commitments  entered  into by  the Community  under 
the agricultural  agreement  concluded pursuant to Article  228(2) of the Treaty, the 
guarantees  for  the  disposal  of  sugar,  isoglucose  and  inulin  syrup  produced  under 
quota  may  be  reduced  for  one  or  more  designated  marketing  years. 

For  the  purposes  of  applying  the  first  subparagraph,  for  each  marketing  year  the 
guaranteed quantity under quotas shall be laid down before  1 October on the basis 
of  forecasts  of  production,  imports,  consumption,  storage,  carryover,  exportable 
balance and average loss likely to be borne under the self-financing  scheme within 
the  meaning  of  point  (d)  of  Article  28(1).  If  these  forecasts  show  an  exportable 
balance  for  the  marketing  year  in  question  greater  than  the  maximum  laid  down 
by  the  agreement  referred  to  above,  the  guaranteed  quantity  shall  be  reduced  by 
the  difference  in  accordance  with  the  procedure  laid  down  in  Article  41.  This 
difference  shall  divided  up  between  sugar,  isoglucose  and  inulin  syrup  in 
accordance  with  the  percentage  representing  the  total  of  the  A  and  B  quotas  of 
each  product  in  the  Community.  It  shall  then  be  broken  down  by  Member  State 
and  by  product  by  applying  the  corresponding  coefficient  set  out  in  the 
table  below. 

The Member  State  shall  then  allocate the difference  to which  it is subject  among 
the  producer  undertakings  established  on  its territory  on the basis  of the  existing 
ratio between  their A quota  and their B  quota for  the  product in question  and the 
basic quantity  A and the basic quantity  B for  the Member  State or, as appropriate, 
the  sum  of the A quotas and the  sum  of the B quotas for  this product  assigned  to 
the  producer  undertakings. 

Sugar, isoglucose and inulin  syrup produced  beyond the quantity  guaranteed  shall 
be considered  as C  sugar,  C isoglucose and  C inulin  syrup within the meaning of 
either  point  (c)  in  the  second  subparagraph  of  Article  24(1)  or  point  (c)  of 
Article  24b(5),  as  appropriate. 

23 

BREAKDOWN COEFFICIENTS 

Member  State 

1 

2 

3 

Coeff.  applicable to sugar 

Coeff.  apphcable to isoglucose 

Coeff.  applicable to inulin syrup  as 

expressed  as white sugar 

in  dry matter 

sugar/isoglucose  equivalent 

A  sugar 

B  sugar 

A  isogl. 

B isogl. 

A inulin  syrup 

B inulin  syrup 

Belgium 

Denmark 

Germany  (region Art.  24) 

Germany  (region Art  24a) 

Greece 

Spain 

France (metropolitan)  (1) 

France  (ODs)(l) 

Ireland 

Italy 

Netherlands 

Portugal  (mainland) 

Portugal  (autonomous  region 

of the Azores) 

United  Kingdom 

Austria 

Sweden 

Finland 

Norway 

0.046201 

0.027206 

0.169608 

0.055204 

0.012352 

0.026459 

0.213231 

0.019298 

0.007752 

0.082491 

0.053393 

0.002323 

0.000387 

0.044297 

0.022673 

0.014327 

0.005683 

0.009920 

0.008015 

0.052188 

0.016986 

0.001235 

0.001102 

0.063239 

0.002063 

0.000775 

0.015514 

0.014083 

0.000232 

0.000039 

0.004430 

0.005292 

0.001433 

0.000568 

(1)  Pursuant to the  second  subparagraph of  Article 25(3). 

0.25547 

0.062024 

0.556265 

0.130955 

0104246 

0.024551 

0.037978 

0.166138 

0.061081 

0.059803 

0.026804 

0.029213 

0.008944 

0.017721 

0.015898 

0.014083 

0.006313 

0.006880 

0.084713 

0.022596 

0.023151 

0.002316 

0.058922 

0.013847 

0.194365 

0.045646 

The  arrangements  for  the  application  of  the  first  subparagraph,  the  reduction  in  the  guaranteed 
quantity and, where appropriate, any change in that quantity during a marketing year shall be adopted 
in  accordance with  the procedure  laid  down  in  Article  4L"; 

24 

8. 

9. 

In  Article  23(5),  the  dates  "1 January  1995"  and  "1 July  1995"  are  replaced  by 
"1 January  2001" and  "1 July  2001" respectively; 

In  the  first  indent  of  the  first  subparagraph  of  Article  24(1),  the  date  "1993/94"  is 
replaced  by  "1994/95"; 

10. 

In  Article  24(3), the  date  "1993/94" is replaced  by  "1994/95"; 

11. 

In  Article  27(2), the  second  indent  is  replaced  by  the  following: 

"-  store  such  quantity  or  quantities  for  a period  of  12 consecutive  months from  a  date 
to be determined.  For this period  storage costs for  the production  of C  sugar  carried 
over  from  the  1996/97  marketing  year  to  the  following  marketing  year  shall  no 
longer  be  reimbursed  under  Article  8. 

For  the  production  of  C  sugar  from  the  1995/96  marketing  year  carried  over to  the 
1996/97 marketing year, this reimbursement  of storage costs shall be granted by way 
of  a transitional  measure  for  the  first  six  months  of  compulsory  storage. 

Nevertheless,  for  the  production  of  A  sugar  and  B  sugar  which  has  become 
production  of  C  sugar  after  application  of  Article  23  (4a)  and  which  is  carried 
forward,  storage  costs  shall  be  reimbursed  under  the  provisions  of  Article  8."; 

12.  The  following  subparagraph  is  added  to  Article  28(1 )(e): 

"In estimating this total  loss, losses arising from  the granting  of the production  refunds 
referred  to in Article  1 of Regulation  (EEC) No  1010/86 shall be taken into account  for 
the beneficiary  basic  quantities."; 

13. 

In  Article  28(2), the  introductory  phrase  is replaced  by  the  following: 

"Before  the end of the 2000/01 marketing year and without  prejudice  to Article  23(4a), 
there  shall  be  recorded  cumulatively  for  the  1995/96 to  2000/01  marketing  years:"; 

14. 

In  Article  29(1), the  date  "1990/91"  is replaced  by  "1994/95"; 

15.  Title  IV  is replaced  by  the  following: 

"TITLE  IV 

System  of  preferential  imports 

Article  [33] 

Articles  [34],  [35]  and  [36]  shall  apply  to  cane  sugar,  hereinafter  referred  to  as 
"preferential  sugar",  falling  within  CN  code  1701,  which  originates in the  States listed 
in  Annex  II  and  which  is imported  into the  Community  under: 

(a)  Protocol  No  8 on  ACP  sugar  annexed  to the  ACP-EEC  Convention  of Lomé;* 

(b) 

the  agreement  between  the European  Economic  Community  and the Republic  of 
India  on  cane  sugar.** 

Article  [34] 

Where the quality of preferential  sugar imported pursuant to Article  [33] and  purchased 
by intervention  agencies or by  other agents appointed  by the Community  deviates  from 
the standard quality, the guaranteed  prices shall be adjusted  by means of price increases 
and  reductions. 

25 

Article  [35] 

1.  No  import  duty  shall  apply to imports of preferential  sugar pursuant to Article [33]. 

2.  Preferential  sugar  shall  enjoy  no  derogations  from  the  prohibitions  referred  to  in 

Article  (19(2)). 

Article  [36] 

1.  For  marketing  years  1995/96  to  2001/02,  adjustment  aid  shall,  as  an  intervention 
measure,  be granted  to the industry  engaged  in refining  preferential  raw  cane  sugar 
imported  for  that  purpose  into the  Community  pursuant  to  Article [33]. 

2.  The  aid  referred  to  in  paragraph  1 may  be  granted  only  in  respect  of  the  quantities 
eligible under Article  [33] which are refined  into white sugar at the refineries  referred 
to  in  Article  9(4).  The  aid  for  the  white  sugar  in  question  shall  be  ECU  0.08  per 
100 kilograms,  expressed  in white  sugar. 

3.  During  the  period  specified 

in  paragraph  1,  additional  aid  of  ECU  0.08  per 
100 kilograms,  expressed  as  white  sugar,  shall  be  granted  for  the  refining,  at  the 
refineries  referred  to  in  Article  9(4),  of  raw  cane  sugar  produced  in  the  French 
overseas  departments,  in  order  to  restore  the  price  balance  between  that  sugar  and 
preferential  sugar. 

4.  For  a particular  marketing  year,  adjustment  aid  and  additional  aid  shall  be  adjusted 

in the  light  of  the  storage  levy  fixed  for  that  year  and  previous  adjustments. 

5.  Detailed  rules  for  the  application  of  this  Article,  and  in  particular  concerning  the 
adjustments  referred  to  in  paragraph  4,  shall  be  adopted  in  accordance  with  the 
procedure  laid  down  in  Article 41. 

Article  [37] 

1.  During the period  referred  to in Article  [36], in  order to ensure adequate  supplies to 
the  Community  refineries  referred  to  in  Article  9(4),  a  reduced  rate  of  duty, 
hereinafter  referred  to as "special  duty",  shall be levied on imports of raw cane sugar 
originating in the States referred  to in Article  [33] pursuant to agreements with those 
States or with other  States within the meaning of Article  [16], hereinafter  referred  to 
as  "special  preferential  sugar"  and  subject  to  the  conditions  laid  down  therein,  and 
in  particular  the  minimum  purchasing  price to  be  paid  by  refiners. 

2.  For the purposes of paragraph  1 and without  prejudice to paragraph  5, the presumed 
maximum  supply needs per marketing year, expressed  in white sugar,  of the  refining 
industries  in: 

(a)  Finland,  amount  to  40  000 tonnes, 
(b)  metropolitan  France,  amount  to  297  000 tonnes, 
(c)  continental  Portugal,  amount  to  292  000 tonnes, 
(d) 

the United  Kingdom,  amount  to  1 130 000 tonnes. 

However,  in  the  case  of  Finland,  these  needs  amount: 

for  the  period  from  1 July  1995  to  31 December  1995,  to  the  balance  of  the 
quantities  of  raw  sugar  remaining  to  be  refined  subject  to  the  limit  laid  down 
in Article  16a, as amended by the Act of Accession of Norway, Austria, Finland 
and  Sweden; 

for  the  period  from  1 January  1996 to  30 June  1996, to  20  000 tonnes. 

26 

3.  On  the  basis  of  a  Community  forecast  supply  balance  for  raw  sugar  for  each 
marketing year or part  of a marketing year, the quantities  of raw cane sugar and raw 
beet sugar harvested in the Community with or without distinction of origin available 
to the refining  industry  shall be determined.  This balance may be revised  during the 
marketing  year. 

For  the  purposes  of  determining  these  quantities,  the  quantities  of  sugar  from  the 
French  overseas departments  and  of  preferential  sugar  for  direct  consumption  to  be 
used  in  each  balance  shall  be those  determined  for  the  1991/92  marketing year  less 
forecast  local  consumption  in  those  departments  during  the  marketing  year  in 
question. If the balance  shows that the amounts available will be insufficient  to meet 
the  maximum  needs  laid  down  in  paragraph  2,  provision  may  be  made  for  the 
Member  States concerned  to import  the  shortfall  as special  preferential  sugar under 
the arrangements for  imports at a special  rate of duty  provided  for in the  agreements 
referred  to  in  paragraph  1. 

4.  When,  after  revision,  the  forecast  of  a  shortfall  for  a given  Member  State  and  in  a 
given  marketing  year  shows  that  the  limit  of  presumed  needs  laid  down  in 
paragraph  2 for that Member  State will be exceeded, the quantity  in excess shall  not 
be entitled  to benefit  from  the preferential  arrangements  defined  in paragraph  2 if  it 
is refined  in the  same Member  State. 

5.  Where  Article  23(4a)  applies,  the  sum  of  the  maximum  needs  referred  to  in 
paragraph  2  shall  be  reduced  for  the  marketing  year  concerned  by  the  same 
percentage  reduction  applied  to  the  sum  of  the  basic  quantities  A  for  Community 
sugar  pursuant  to  the  said  paragraph  4a. 

The  reduction  of  the  maximum  needs  shall  be  apportioned  between  the  Member 
States concerned  on the basis of the relationship  existing between  the quantity  fixed 
for  each  one  of  them  in  paragraph  2  and  the  sum  of  the  quantities  fixed  in  that 
paragraph. 

6.  Detailed  rules  for  the  application  of  this  Article,  and  in  particular  concerning  the 
implementation  and management  of the agreements referred  to in paragraph  1, shall 
be  adopted  in  accordance  with  the  procedure  laid  down  in  Article 41. 

O J N oL  229,  17.8.1991, p.  1. 
**  OJ  No L  190, 22.7.1975,  p. 35." 

16. 

In  Article  46,  paragraphs  1 to  5 are  replaced  by  the  following: 

"Article  [461 

1.  Italy  shall  be authorized, under the conditions  set out in paragraphs  2 and  3, to grant 
adjustment  aid  in  the  case  referred  to  in  point  (a)  of  paragraph  2  to  producers  of 
sugar  beet  and  in  the  case  referred  to  in  point  (b)  of  paragraph  2  to  producers  of 
sugar  beet  as  well  as,  where  appropriate,  to  producers  of  sugar  in  the  region  in 
question. 

2.  The aid  referred  to in paragraph  1 may be granted  only  in respect  of the quantity  of 
sugar  produced  within  the  limit  of  the  A  and  B  quotas  of  each  sugar-producing 
undertaking. 

(a)  For  the  production  referred  to  in the  first  paragraph  in  northern  Italy,  the  unit 

amount  of  aid  may  not  exceed: 

- 
- 

in the  1995/96 marketing year, ECU  6.75 per  100 kilograms of white sugar; 
in the  1996/97 marketing  year,  ECU  4.5  per  100 kilograms  of white  sugar; 

27 

- 

in the  1997/98 marketing year, ECU  2.25 per  100 kilograms of white sugar. 

No  aid  shall  be  paid  in  northern  Italy  as from  the  1998/99  marketing  year. 

(b)  For  the  sugar  production  referred  to  in  the  first  paragraph  in  central  and 

southern  Italy,  the unit  amount  of  aid  may  not  exceed: 

- 
- 

in the  1995/96 marketing year, ECU  6.75 per  100 kilograms of white sugar; 
in the marketing  years  1996/97 to  2000/01,  ECU  4.5  per  100 kilograms  of 
white  sugar. 

3.  However,  as  regards  central  and  southern  Italy  only,  Italy  may,  depending  on  the 
marketing  year  in  question,  adjust  the  aid  referred  to  in  point  (b)  of  paragraph  2 
where this is necessitated  by  exceptional  requirements  connected  with  restructuring 
the sugar sector in that part of Italy. Pursuant to Articles  92, 93 and  94 of the Treaty, 
the  Commission  shall  assess  in  particular  whether  such  aid  is  consistent  with  the 
restructuring  plans. 

4.  For  the  purposes  of  paragraphs  1, 2 and  3: 

(a)  northern Italy  means Italy other than the regions of production  listed under (b); 
(b)  central  and  southern  Italy  means  Abruzzi,  Molise,  Apulia  and  Sardinia. 

5.  Italy  shall  notify  the  Council,  in  respect  of  each  marketing  year,  of  the  measures 
taken in application  of this Article and, in particular,  of the distribution  of the aid by 
region  and  between  producers  of  sugar  beet  and  producers  of  sugar  in  central  and 
southern  Italy." 

17. 

In  Article  [48], the  date  "30 June  1995" is replaced  by  "30 June  1996". 

Article  9 of  Regulation  (EEC) No  1010/86  is  repealed. 

Article  2 

Article  3 

This Regulation  shall  enter  into force  on the  seventh  day  following  that  of its publication  in 
the  Official  Journal  of  the European  Communities. 

It  shall  apply  from  1 July  1995. 

This Regulation  shall be binding in its entirety  and  directly  applicable in all Member  States. 

Done  at Brussels, 

For  the  Council 
The  President 

28 

F I N A N C I AL 

STATEMENT 

( C 2 3 7 0 9 4 / F E N) 

Date:  31 October  1994 

1. BUDGET HEADING: EXPENDITURE Bl-11 

APPROPRIATIONS: ECU  1 87 4 million 

REVENUE 

1000 AND 11 

ECU  861.3 million and  ECU 1 251.4 million 

2. TITLE: 

Proposal  for a Council Regulation amending Regulation  (EEC) No  1785/81 on the common organization  of  the 
markets  in the  sugar sector 

3. LEGAL BASIS: Articles  4 2 and  4 3 of the Treaty 

4. AIMS OF PROJECT: 

To  lay down the common organization  of the markets in the sugar  sector for the marketing  years from  1995/96 
to  2000/01 

5. FINANCIAL  IMPLICATIONS 

PERIOD OF 12 MONTHS 

CURRENT  FINANCIAL 

YEAR 

(95) 

5.0.  EXPENDITURE 

- CHARGED TO THE EC BUDGET 

(REFUNDS) 

-  NATIONAL  ADMINISTRATION 
-  OTHER 

5.1.  REVENUE 

- OWN RESOURCES OF THE EC 

{LEVIES/CUSTOMS  DUTIES) 

-  NATIONAL 

FOLLOWING  FINANCIAL 
YEAR 
(96) 

2  027.2 

1  677.4 

5.0.1.  ESTIMATED  EXPENDITURE 

5.1.1. ESTIMATED  REVENUE 

1  951.8 

1  581.5 

1  905.2 

1  515.4 

1 858.6 

1 449.2 

1  812.1 

1  383.2 

1997 

1998 

1999 

2000 

5.2. METHOD  OF CALCULATION: 

SEE ANNEX 

6.0. CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED  IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET?  YES 

6.1. CAN THE PROJECT BE FINANCED BY TRANSFER  BETWEEN CHAPTERS OF THE CURRENT BUDGET? 

6 . 2. 

IS  A  SUPPLEMENTARY  BUDGET  NECESSARY? 

6.3. WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? 

YES 

NO 

YES 

COMMENTS : 
Savings  from the reduction  in refund  expenditure will not create an additional margin in heading  1, since 
the reduction  in production  levies must automatically  cause a reduction  in the agriculture guideline. 

29 

ANNEX  TO  THE  FINANCIAL  STATEMENT 

A. 

1. 

EXPENDITURE 

STORAGE 

If C sugar carried  over  is ignored, the quantities which  have  received 
storage  refunds  in the EUR-12 over the  last three marketing years amount to 
7 0 million  tonnes per month, giving  an average  length of storage of  5.9 
months. 

If this ratio remains unchanged  in EUR-16, the quantity  becomes  76.4 million 
tonnes per month. 

Storage costs are therefore: 

76.4 million tonnes per month x ECU(A) 4/tonne/month  = ECU(A) 305.6 million 

To cover this expenditure, assuming that the quantity  of  sugar disposed of 
in EUR-16  is  14.13 million tonnes, will require  a storage  levy of ECU 
21.6/tonne. 

For  1995/96  only, when  1 million tonnes of carried  over C sugar will be 
stored  for nine months but financed  for only  six months, the extra cost will 
be: 

1 million tonnes  x 6 months x ECU(A) 4/tonne/month  = ECU(A) 24 million 

This means  that  for  1995/96 the storage  levy will be  increased to 
ECU(A) 23.3/tonne, provided that the balance  of C sugar  as at 30 June  1995 
to be carried  over  from the preceding marketing  year  is included. 

2. 

REFUNDS 

(a) 

Calculation  of the refund 

The  average world price over the last three years was USD  275/tonne. The 
following  traditional calculation  gives  the  level of refund  to be used: 

Intervention price: 
Storage  levy: 
Delivery  FOB: 
TOTAL  (1) 

ECU  523.3/tonne 
ECU 
21.6/tonne  (ECU 23.3/tonne  in  1995/96) 
50.0/tonne 
ECU 
ECU  594.9/tonne 

Levy USD/tonne 

275 

ECU  rate 
Quotation  in ECU(B) 
Monetary  coefficient 
Quotation  in ECU(A) 
Monetary  adjustment  for FOB 
TOTAL  (2) 

1.17647 
2 33.7 5 
1.207 

193.66 
8.59 
ECU  202.25/tonne 

(USD  1 = ECU  0.85) 

Refunds  = TOTAL(l) + TOTAL(2) = 59 4.9  - 202.25 = ECU(A) 392.6/tonne and 
ECU(A) 394.3/tonne  in 1995/96. 

30 

(b) 

Impact of the GATT 

Without wishing  to prejudge the outcome of  any  negotiations  consequent  on 
the next enlargement  and assuming the quantities  and amounts  negotiated  in 
the GATT, the theoretical maximum refunds which would enable  the  authorized 
quota to be  filled  are as follows: 

1995/96 
1996/97 
1997/98 
1998/99 
1999/2000 
2000/01 

ECU(A) 
ECU(A) 
ECU(A) 
ECU(A) 
ECU(A) 
ECU(A) 

387.6/tonne 
376,4/tonne 
364.5/tonne 
351.6/tonne 
337.6/tonne 
322.3/tonne 

In all possible  cases, the maximum theoretical  refund  is less than the 
previous  refund  of ECU  392.6/tonne. Accordingly,  to respect  budgetary 
obligations  under the GATT, authorized exports will have to be reduced  to 
the  following  levels: 

1995/96 
1996/97 
1997/98 
1998/99 
1999/2000 
2000/01 

5 3 3 .9 
4 4 2 .0 
3 4 3 .6 
2 4 5 .3 
1 4 7 .2 
0 4 8 .8 

(c) 

Calculation  of expenditure on refunds 

It is assumed  that only the whole of the A quota  for inulin  syrup will be 
used. All  the difference between the A quota of  274  000 tonnes  and  current 
consumption of  100 000 tonnes is exported under the  "GATT^ quantity 
calculated  in the previous paragraph. 

The table below  sets out the expenditure on quantities  exported  and 
distinguishes  between reexports of ACP sugar  and the  "GATT" quota. 

EXPORT REFUNDS 

1995/96 

1996/97 

1997/98 

1998/99 

1999/00 

2000/01 

QUANTITIES («000 tonnes) 

Sugar and isoglucose 
Inulin syrup 

1 359.9 
174.0 

1 268.0 
174.0 

1 169.6 
174.0 

1 071.3 

174.0 

973.2 
174.0 

874.8 
174.0 

"GATT" Total 

1 533.9 

1 442.0 

1 343.6 

1 245.3 

1 147.2 

1 048.8 

ACP 

1 620.0 

1 620.0 

1 620.0 

1 620.0 

1 620.0 

1 620.0 

Total quantity 

3  153.9 

3 062.0 

2 963.6 

2 865.3 

2 767.2 

2 668.8 

REFUND (ECU (A)/tome) 

394.3 

392.6 

392.6 

392.6 

392.6 

392.6 

COSTS (ECU(A) million/tome) 

Sugar and  isoglucose 

Inulin syrup 

536.2 

68.6 

497.8 

68.3 

459.2 

68.3 

420.6 

68.3 

382.1 

68.3 

343.5 

68.3 

"GATT" Total 

604.8 

566.1 

527.5 

488.9 

450.4 

411.8 

ACP 

Total 

COSTS (ECU(B) million/tonne) 

638.8 

636.0 

636.0 

636.0 

636.0 

636.0 

1 243.6 

1 202.1 

1 163.5 

1 124.9 

1 086.4 

1 047.8 

DR 

1.207 

1.207 

1.207 

1.207 

1.207 

1.207 

Sugar and isoglucose 

Inulin syrup 

647.2 

82.8 

600.8 

82.5 

554.2 

82.5 

507.6 

82.5 

461.1 

82.5 

414.5 

82.5 

"GATT" Total 

730.0 

683.3 

636.7 

590.1 

543.6 

497.0 

ACP 

Total 

771.0 

767.7 

767.7 

767.7 

767.7 

767.7 

1 501.0 

1 451.0 

1 404.4 

1 357.8 

1 311.3 

1 264.7 

32 

3. 

CHEMICAL  INDUSTRY 

It  is estimated  that the  quantities  in EUR-16  will  be  10 000 tonnes  greater 
than  in EUR-12  at about  210  000 tonnes. 

The  cost is: 

210  000  x ECU  [392.6  (refunds)  - 70  (allowance)]/tonne = ECU  67.7  million, 
in  1995/96: 210  000 x  (394.2  -  70) = ECU  68.1 million. 

In the event  that the 70 ECU/t  allowance  is reduced, the expenditure  for  the 
chemical  industry  should  be  revised  upwards. 

4. 

AID FOR THE DISPOSAL  (TRANSPORT  AND  REFINING) OF RAW  SUGAR  IN  THE 
FRENCH OVERSEAS  DEPARTMENTS 

The  quantity  concerned  is estimated  at  250  000 tonnes. 
The calculation  of the  aid  is  as  follows: 

Flat-rate  FOB  transport 
Sea  freight 
Storage  element* 
Quality  element 
TOTAL 

ECU(A)  13.5/tonne 
ECU(A)  25.0/tonne 
ECU(A)  9.6/tonne  (11.3  in  1995/96) 
ECU(A)  7.0/tonne 
ECU(A)  55.1/tonne  (56.8  in  1995/96) 

(1995/96): 

250  000 tonnes  x ECU(A)  55.1/tonne  = ECU(A)  13.8 million 
250  000 tonnes  x ECU(A)  56.8/tonne  = ECU(A)  14.2  million 

5. 

AID FOR THE ADJUSTMENT  OF  REFINING 

This  concerns  refined ACP  and  OD  sugar  and  covers  1.45  million tonnes. 

Aid  for  refining  is calculated  in the  same way  as  ine calculation  for 
previous  marketing years: 

Aid  of ECU(A)  0.8/tonne  for  a  levy  of  ECU(A)  40/tonne. 
For  a levy  of  ECU(A)  21.6/tonne:  0.8  +  40  - 21.6  = ECU(A)  19.2/tonne: 

(1995/96)  : 

1 450  000 tonnes  x ECU(A)  19.2/tonne  = ECU(A)  27.8  million 
1 450  000 tonnes  x ECU(A)  16.6/tonne = ECU(A) 24.1  million 

6. 

SUMMARY  OF  EXPENDITURE 

The  table  below  shows the  trend  of  expenditure  in the  sugar  sector  for  the 
financial  years  1996 to 2001. 

Storage levy - 3 months reimbursement of storage costs 
ECU(A) 21.6/tonne - 3 x ECU(A) 4/tonne. 

33 

SUMMARY  Of  EXPENDITURE 

MARKETING YEAR 

1995/96 

1996/97 

1997/98 

1998/99 

1999/00 

2000/01 

Financial year 

1996 

1997 

1998 

1999 

2000 

2001 

Refunds 

Sugar and isoglucose 
Inulin syrup 
ACP 

Total 

Storage 

536.2 

68.6 
638.8 

497.8 

68.3 
636.0 

459.2 

68.3 
636.0 

420.6 

68.3 
636.0 

382.1 

68.3 
636.0 

343.5 

68.3 
636.0 

1 243.6 

1 202.1 

1 163.5 

1 124.9 

1 086.4 

1 047.8 

329.6 

305.6 

305.6 

305.6 

305.6 

305.6 

Chemical  industry 

68.1 

67.7 

67.7 

67.7 

67.7 

67.7 

Disposal of raw sugar 

14.2 

13.8 

13.8 

13.8 

13.8 

13.8 

Aid for refinery adjustment 

24.1 

27.8 

27.8 

27.8 

27.8 

27.8 

TOTAL  (ECU million (A)) 

1 679.6 

1 617.0 

1 578.4 

1 539.8 

1  501.3 

1 462.7 

DR 

1.207 

1.207 

1.207 

1.207 

1.207 

1.207 

TOTAL  (ECU million (B)) 

2 027.2 

1 951.8 

1 905.2 

1 858.6 

1 812.1 

1 765.5 

34 

B. 

A. 

OWN RESOURCE! 

STORAGE LEVY 

Resources  from  storage  levies should be equivalent  to expenditure  on  storage 
refunds : 

ECU(A)  329.6 million  in  1996 and ECU(A) 305.6 million  in other years. 

B. 

PRODUCTION  LEVIES 

Resources  from production  levies should cover expenditure  on export  refunds 
for the Gatt quota, the production refund  for the chemical  industry  and the 
net costs  of exporting  sugar in form of non-Annex  II products. 

Sugar-related  expenditure under the budget quota  for non-Annex  II products 
provided  for  in the GATT accounts for about  35% of the total. 

ECU(A) million 

1996 

1997 

1998 

1999 

2000 

2001 

Refunds 

604 .8 

566.1 

527.5 

488.9 

450.4 

411.8 

Chemical 

industry 

68.1 

67.7 

67.7 

67.7 

67.7 

67.7 

Non-Annex  II 

187.4 

171.1 

154.9 

138.7 

122.5 

106.2 

TOTAL 

860.3 

804.9 

750.1 

695.3 

640.6 

585.7 

3. 

CUSTOMS  TARIFFS 

: 300 000 tonnes x ECU(A) 410/tonne 
Full tariff 
Reduced  tariff  : 320 000 tonnes x ECU(A) 240/tonne 

ECU(A)  123.0 million 
ECU(A)  76.8 million 
ECU(A)  199.8 million 

35 

SUWARY  OF  OUN  RESOURCES 

Financial year 

1996 

1997 

1998 

1999 

2000 

2001 

Storage levy 

329.6 

305.6 

305.6 

305.6 

305.6 

305.6 

Production levy 

860.3 

804.9 

750.1 

695.3 

640.6 

585.7 

Tariff 

199.8 

199.8 

199.8 

199.8 

199.8 

199.8 

TOTAL  (ECU(A) million) 

1 389.7 

1 310.3 

1 255.5 

1 200.7 

1 146.0 

1  091.1 

DR 

1.207 

1.207 

1.207 

1.207 

1.207 

1.207 

TOTAL  (ECU(B) million) 

1 677.4 

1 581.5 

1 515.4 

1 449.2 

1 383.2 

1 317.0 

36 

ISSN 0254-1475 

COM(94) 439 final 

DOCUMENTS 

EN 

03 

Catalogue number : CB-CO-94-544-EN-C 

ISBN 92-77-82419-0 

Office for Official Publications of the European Communities 

L-2985 Luxembourg 

37