Proposal for a Council Regulation amending Regulation (EEC) No 3813/92 on the unit of account and the conversion rates to be applied for the purposes of the common agricultural policy
Date: 1996-02-12
Institutions: European Commission
Subjects: agri-monetary policy, agricultural product, common agricultural policy, euro, representative rate

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  12.02.1996 
COM(96) 40  final 

96/0037 (CNS) 

Proposal for a 

COUNCIL REGULATION (EC ) 

amending  Regulation  (EEC) No 3813/92 on the unit  of account  and the conversion 

rates to  be applied  for  the purposes of the common  agricultural  policy 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

Amounts  fixed  in  ecus and  collected  or  applied  in national  currency  for  the  importing  of 

agricultural  products  are  converted  using  different  rates  depending  on  the  legal  basis  of 

the'instrument  fixing  the  amount  in  question.  As  a  result  there  are  numerous  economic 

inconsistencies  and  much  red  tape,  which  leads  to  mistakes  and  a  lack  of  legal  safety. 

1. 

Legally  speaking, amounts  in national  currency  expressed  in ecus  in  Commission 

Regulation  (EC) No  3009/95 of 22 December  1995 amending  Annex  I to  Council 

Regulation (EEC) No 2658/87 on the tariff  and statistical nomenclature  and on the 

Common  Customs Tariff1,  referred  to hereinafter  as "Regulation  CN/CCT", are in 

principle  to  be  converted  into  national  currency  using  the  rate  provided  for  in 

Article  18  of  Council  Regulation  (EEC)  No  2913/92  of  12  October  1992 

establishing  the  Community  Customs Code2.  Generally,  that  rate  remains  for  one 

year  the  rate  in  force  on  1 October  of  the  preceding  year. 

Before  1 July  1995  and  the  introduction,  pursuant  to  the  GATT  Agreements,  of 

a  large  number  of  import  charges  expressed  in  ecus,  this  system  created  no 

difficulties  since  most  customs  duties  subject  thereto  were  expressed  in  fact  as 

percentages of values in national currencies and therefore  did not generally  require 

conversion. 

As  from  1 July  1995,  given  the  existence  of  many  import  charges  in  ecus,  the 

year-long  fixing  of the rate  in Article  18 of the  Customs Code could have  created 

significant  market  distortion.  As  a  consequence,  the  Commission  presented  a 

proposal  to  Parliament  and  the  Council  for  a  Regulation3  amending  the  Customs 

Code  to  introduce  a  monthly  rate  from  1  July  1W>. 

Pending  that  date. 

Commission Regulation (EC) No  1482/954 introduces a transitional  derogation  for 

almost  all  agricultural  products,  replacing  the  annual  rate  by  a  monthly  rate, 

subsequently  referred  to  as  the  "monthly  customs  rate". 

OJNo  L319, 30.12.1995, p. I. 
OJ No L 302, 19.10.1992, p. 1. 
COM (95) 335 final. 
OJNo L 145, 29.6.1995, p. 43. 

The  monthly  customs rate for the agricultural  products concerned  applies  in place 

of  the  rate  provided  for  in  Article  18 of  the  Customs  Code  and  thus  in  so  far  as 

the  latter  is  applicable. 

However,  pursuant  to  Article  1  of  the  Customs  Code,  the  rate  provided  for  in 

Article  18 thereof  is to apply  without prejudice  to special  rules laid  down  in  other 

fields. 

Thus  the application  of the agricultural  regulations with  regard  to conversion  rates 

takes  precedence  over  the  rate  determined  pursuant  to  Article  18 of  the  Customs 

Code  in  the  case  of  amounts  fixed  in  ecus  in  legal  instruments  relating  to  the 

common agricultural  policy  (CAP), as defined  in Article  1(a) of Regulation  (EEC) 

No  3813/925: 

"  — 

legal  instruments  based  directly  or  indirectly  on  Article  43  of  the  EEC 

Treaty,  with  the exception  of the  Common  Customs Tariff  and  other  legal 

instruments  of  customs  legislation  applicable  to  both  agricultural  and 

industrial  products, 

legal  instruments applicable to goods processed  from  agricultural  products 

and  subject  to  specific  trade  arrangements". 

By  virtue  of  that  derogation,  which  is  based  on  Article  1 of  the  Customs  Code, 

all  amounts  in  ecus  fixed  in  legal  instruments  relating  to  the  CAP  must  be 

converted in accordance with the agricultural regulations, i.e. using the agricultural 

conversion  rate,  except  where  explicitly  provided  for  otherwise 

in 

those 

regulations. 

Lastly,  as  a  general  rule  and  expressed  in  very  simple  terms,  amounts  fixed  in 

legal  instruments  based  on  Article  43  of the  Treaty  are  to  be  converted  using  the 

agricultural  conversion  rate  while  amounts  fixed  in  other  legal  instruments,  and 

in  particular  most  of  those  in  Regulation  CN/CCT, are  to  be  converted  using  the 

monthly  customs  rate. 

O J No  L  387,  31.12.1992,  p.  1. 

2. 

The  monetary  gaps  between  the  daily  rate  for  the  ecu  on  the  one  hand  and  the 

agricultural  conversion  rate  or  the  monthly  customs  rate  on  the  other  hand  are 

relatively small since the correcting factor applicable to the agricultural conversion 
rate under  the  "switchover" mechanism  was abolished  on  1 February  19956. 

In the first six  months of operation  of the  system of  monthly  customs rates, i.e. 

between  1 July  and 31 December  1995, the gaps recorded  were as  follows: 

the average gaps for the monthly customs rate were between - 0.284% and 

i  1.129%  depending  on  the  currency  and  95%  of  the  daily  gaps  fell 

between  - 0.348% and  +1.411%; 

the average gaps for the agricultural conversion rate were between-0.179% 

and + 5.167%o depending  on the  currency  and  95% of the daily gaps  fell 

between  - 0.248%» and + 5.489%. 

For  95% of  the  days  in  the  period  under  examination  and  most  currencies,  the 

difference  between the agricultural  conversion rate and the monthly  customs rate 

remained  below  2.5%.  It  substantially  exceeded  that  figure  in  Denmark,  Italy, 

Sweden  and  Finland,  standing  in the  latter  two  Member  States at the  maximum 

recorded,  i.e. around  4% on average. 

Naturally  these results relate to the short term  but overall  they  reflect  the extent 

of  the  differences  between  the  two  systems,  which  by  design  should  always 

remain  below  5% on  average  over  several  months,  whatever  the  Member  State 

concerned. 

3. 

The  difficulties  created  by  the  dual  conversion  system  are  very  numerous  and 

could  increase  still  further  in  the  future,  in  the  wake  of  new  regulations  and 

amendments  to  existing  legal  instruments.  They  involve  the  appearance  of 

economic  inconsistencies  and  excessive  administrative  and  legal  complications. 

Regulation  (EC) No  150/95 (OJ No  L 22, 31.1.1995, p. 1). 

4 

The  mistakes  which  must  inevitably  ensue  are likely  to be financially  detrimental 

to  the  operators  concerned,  to  the  Member  States  and  to  the  Community  budget. 

A  few  examples,  which  are  far  from  exhaustive,  illustrate  the  problems  arising: 

The amounts in Regulation CN/CCT are to be converted  using the monthly 

customs  rate  except  in  the case  of certain  cheeses  and  WTO  tariff  quotas, 

to which  the agricultural  conversion  rate applies.  However,  in the  case  of 

some  of  those  quotas,  e.g.  for  bananas,  there  are  agricultural  derogations 

from  the  agri-monetary  arrangements,  which  re-trigger  the  use  of  the 

monthly  customs  rate  after  four  successive  derogations. 

The  duty  of  ECU  7.80,  which  rose  to  ECU  9.419  from  1 February  1995, 

applicable  to  imports  of  olive  oil  from  Tunisia  within  a  quota  of  46  000 

tonnes  was  fixed  in  Council  Regulation  (EC)  No  287/947.  The  latter's 

legal  basis  is  Article  113  of  the  Treaty  and  Article  36  of  Council 

Regulation  136/66/EEC, which  is itself based on  Articles 42  and  43 of the 

Treaty;  it  is  therefore  a  legal  instrument  relating  to  the  CAP  since  it  is 

indirectly  based  on  Article  43  of  the  Treaty.  Following  a  fairly  complex 

legal  analysis, the  agricultural  conversion  rate has  proved  to  be  applicable 

to  the  amount  in  question. 

Charges  on  imports  of  bran,  sharps  and  other  residues  from  Algeria, 

Morocco  and  Tunisia are determined  by  Commission  Regulation  (EC) No 

1710/958,  which  is  a  legal  instrument  relating  to  the  CAP.  The  monthly 

customs  rate  applies  to  the  duty  set  out  in  Regulation  CN/CCT  on  these 

products.  It  must  be reduced  by  60%, which  implies  the  use  of  the  same 

rate,  and  then  reduced  by  ECU  7.25, to  which the  agricultural  conversion 

rate  applies. 

OJNo  L 39,  10.2.1994, p. 1. 
OJNo  L  163,  14.7.1995, p. 1. 

The  reduced  duties  fixed  at  the  beginning  of  December  1995  for  a 

particular category of rice amounted to ECU 602.52, which is, rightly, less 

than  the  conventional  duty  of  ECU  611.  Since  the  reduced  duty  is 

expressed in national currency using the agricultural conversion rate while 

the  conventional  duty  is converted  using  the  monthly  customs  rate,  as a 

result  the  reduced  duty  during  the  period  in  question  is  higher  than  the 

conventional  duty  in  11 national  currencies out of  15. 

4. 

The  aim  of  the  Commission  proposal  is  to  introduce  greater  transparency  and 

economic consistency into the import arrangements.  The relevant measures must 

necessarily  be  taken  at  Community  level  to  ensure  uniform  application  of  the 

CAP.  The  administrative  simplifications  they  entail  are  beneficial  for  the 

management  of  small and medium-sized  enterprises. 

Since the examples given  are not isolated  cases with  potential  one-off  solutions, 

entailing further  legal complications the legal bases for  which would  in any case 

have to be established, a single conversion rate should be applied  to all amounts 

relating to imports which must be expressed in national  currency.  This therefore 

covers  import  charges  as  well  as  the  amounts  required  for  determining  tariff 

classifications  and  securities to be lodged. 

The use of  a single conversion  rate  could theoretically  be contemplated  through 

the generalized use of the agricultural conversion rate.  However, this would entail 

applying the rate in areas not covered  by the CAP, without the bases on which it 

is determined  in the agri-monetary  arrangements.  Such generalized use would be 

pointless and  could create  further  difficulties  in other  fields. 

The only solution to the problem therefore  lies in the use of the monthly  customs 

rate  to  convert  all  amounts  relating  to  imports.  This  is  implied  in  the 

determination  of  an  agricultural  conversion  rate  equal,  in  the particular  case, to 

the  rate  applicable  under  Article  18  of  the  Customs  Code,  which  is  without 

prejudice to the provisions on methods for calculating the amounts in question in 

ecus or  the possibilities of exceptional  measures which  certain  special  situations 

may require. 

The  proposal  avoids  risks  of  disputes  but  does  entail  a  loss  affecting  the 
Community's  own  resources,  estimated  at  less  than  \:,C\)  10  million  per  year, 

assuming  the  dual  conversion  rate  system  could  have  been  applied  without  any 

error. 

It  is  without  prejudice  to  the  application  of  the  agricultural  conversion  rate  in 

connection  with  exports,  which  is  closely  bound  up  with  the  arrangements 

applicable  to common prices fixed in ecus. 

Proposal  for  a 

COUNCIL REGULATION  (EC) No  ..../.. 

of  amending Regulation (EEC) No 3813/92 on the unit of account  and the conversion 

rates to be applied  for  the purposes of the common  agricultural  policy 

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 Commission1, 

Having regard to the opinion  of the European  Parliament2, 

Whereas different  conversion  rates apply  to amounts established  in ecus and  applicable 

in  national  currency  relating  to imports of agricultural  products, depending on the  legal 

instruments fixing  such amounts; whereas, except where explicit  derogations  apply, the 

relevant  amounts fixed by  a legal  instrument relating to be common agricultural  policy 
within  the  meaning  of  Article  1(a)  of  Council  Regulation  (EEC)  No  3813/923,  as  last 
amended by Regulation (EC) No  150/954, are to be expressed in national currency using 

the  agricultural  conversion  rates;  whereas  the  other  amounts  in  question  are  to  be 

converted using the rate applicable under Article  18(1) of Council Regulation (EEC) No 
2913/92 of  12 October  1992 establishing the Community Customs Code5, as amended by 

the Act of Accession of Austria,  Finland  and  Sweden; 

Whereas  the  existence  of  two  systems  for  converting  amounts  relating  to  imports  of 

agricultural  products  leads  to  economic  inconsistencies  and  considerable  red  tape; 

whereas,  save  in  exceptional  or  very  special  cases,  the  same  conversion  rate  as  that 

OJNo 
OJNo 
OJNoL387,  31.12.1992, p. 1. 
OJ No  L 22, 31.1.1995, p. 1. 
OJNo  L 302,  19.10.1992, p. 1. 

applicable  to  amounts  collected  on  imports of  agricultural  or  non-agricultural  products 

must  be  used  where  they  are  fixed  by  a  legal  instrument  not  relating  to  the  common 

agricultural  policy; 

Whereas the measures required  must necessarily  be taken  at Community  level; whereas 

they  fall  within  an  area  of  exclusive  Community  competence  and  seek  to  achieve  the 

uniform  application  of the common  agricultural  policy, 

HAS ADOPTED THIS  REGULATION: 

Article 1 

Regulation (EEC) No  3813/92 is hereby  amended as  follows: 

1. 

In Article 3(1), the words "Subject to the derogations referred  to in paragraphs 2 

and  3" are  replaced  by:  "Without  prejudice  to  the  derogations  provided  for  in 

paragraphs 2, 3 and 4". 

2. 

The following  paragraph  is added to Article 3: 

"4.  Without  prejudice  to paragraph  2 and  Article  5,  in  the  case  of  amounts 

relating  to  imports  fixed  in  ecus  by  a  legal  instrument  relating  to  the 

common agricultural policy and applicable by the Member States in their 

national  currencies, the agricultural  conversion  rate shall be equal, in the 

case in question, to the rate applicable to the products concerned pursuant 

to  Article  18(1) of  Regulation  (EEC)  No 2913/92." 

3. 

The first subparagraph  of Article 6(2a)  is replaced  by the  following: 

"2a.  As regards amounts fixed in advance in ecus and  amounts established in 

ecus under  an invitation to tender with the exception  of those referred  to 

in Article 3(4), the agricultural  conversion rate may be fixed in advance." 

Article 2 

This  Regulation  shall enter  into force on the seventh day  following  its publication  in the 

Official Journal of the European Communities. 

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

Member  States. 

Done at  ...  , 

For the Council 

The  President 

10 

FINANCIAL  STATEMENT 

BUDGET  HEADING:  Article  100 

APPROPRIATIONS: 
ECU  864 million 

2. 

TITLE: 
Proposal  for  a Council  Regulation  amending  Regulation  (EEC) No 3813/92  on  the unit  of account  and the conversion 
rates to be applied  for  the purposes of the common  agricultural  policy 

LEGAL  BASIS: 
Articles 42 and 43 of the Treaty 

AIMS: 
To  use a single conversion  rate for  import  charges 

FINANCIAL  IMPLICATIONS: 

5.0. 

EXPENDITURE 
- CHARGED  TO THE EC  BUDGET 

(REFUNDS/INTERVENTION) 

- NATIONAL  AUTHORITIES 
- OTHER 

5.1. 

REVENUE 
- OWN  RESOURCES  OF THE EC 
(LEVIES/CUSTOMS  DUTIES) 

-  NATIONAL 

PERIOD OF  12 
MONTHS 

(ECU  million) 

CURRENT 
FINANCIAL 
YEAR 
(96) 
(ECU  million) 

FOLLOWING 
FINANCIAL 
YEAR 
(97) 
(ECU  million) 

-3 

1998 

1999 

2000 

2001 

5.0.1. 
5.1.1. 

5.2. 

6.0. 

6.1. 

6.2. 

6.3. 

ESTIMATED  EXPENDITURE 
ESTIMATED  REVENUE 

METHOD  OF  CALCULATION: 
Estimated  quantities  for  1996 of the principal  imports  affected  by the measure  multiplied  by the average duty  levied in 
ECU/tonne  for  each  category  of products and multiplied  by the difference  between  the agricultural  conversion  rate and 
the monthly  customs  rate on  1 January  1996 

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

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

WILL  A SUPPLEMENTARY  BUDGET  BE NECESSARY? 

WILL  FUTURE  BUDGET  APPROPRIATIONS  BE  NECESSARY? 

YES/NO 

YES/NO 

YES/NO 

YES/NO 

OBSERVATIONS 

44 

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COM(96) 40 final 

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