Proposal for a Council Regulation (EC) on the financing of the common agricultural policy (consolidated version)
Date: 1997-12-01
Institutions: European Commission
Subjects: EAGGF Guarantee Section, EU financing, access to EU information, codification of EU law, common agricultural policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 01.12.1997 
COM(97) 607  final 

97/0317  (CNS) 

Proposal for a 

COUNCIL REGULATION (EC) 
on the financing of the common agricultural policy 

(consolidated version) 

(presented by the Commission) 

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EXPLANATORY  MEMORANDUM 

1. 

In  the  context  of  a  people's  Europe,  the  Commission  attaches  great  importance  to 
simplifying  and  clarifying  Community  law so  as  to  make  it clearer  and  more  accessible 
to  the  ordinary  citizen,  thus  giving  him  new  opportunities  and  the  chance  to  make  use 
of  the  specific  rights  it  gives  him. 

This  aim  cannot  be  achieved  so  long as  numerous  provisions  that  have  been  amended 
several  times,  often  quite  substantially,  remain  scattered,  so  that  they  must  be  sought 
partly  in  the  original  instrument  and  partly  in  later  amending  ones.  Considerable 
research  work,  comparing  many  different  instruments,  is  thus  needed  to  identify  the 
current  rules. 

« 

For  this  reason  a  consolidation  of  rules  that  have  frequently  been  amended  is  also 
essential  if  Community  law  is  to  be  clear  and  transparent. 

2.  On  1 April  1987,  the  Commission  therefore  decided  to  instruct  its  staff  that  all  legis 
lative  measures  should  be  consolidated  after  no  more  than  ten  amendments,  stressing 
that  this was  a  minimum  requirement  and  that  departments  should  endeavour  to  con 
solidate  at  even  shorter  intervals  the  texts  for  which  they  were  responsible,  to  ensure 
that  the  Community  rules  were  clear  and  readily  understandable. 

3. 

The  Conclusions  of  the  Presidency  of  the  Edinburgh  European  Council  (December 
1992)  confirmed  this,  stressing  the  importance  of  legislative  consolidation  as  it  offers 
certainty  as  to  the  law  applicable  to  a  given  matter  at  a  given  time. 

It  must  be  undertaken  in  full  compliance  with  the  normal  Community  legislative  pro 
cedure. 

Given  that  no  changes  of  substance  may  be  made  to  the  instruments  affected  by 
legislative  consolidation.  Parliament,  the  Council  and  the  Commission  have  agreed, by 
an  interinstitutional  agreement  dated  20  December  1994,  that  an  accelerated  proce 
dure  may  be  used  for  the  fast-track  adoption  of  codification  instruments. 

4. 

The  purpose  of  this  proposal  (2)  for  legislative  consolidation  of  Council  Regulation 
(EEC)  No  729/70  of  21  April  1970  on  the  financing  of  the  common  agricultural 
policy  prepared  by  the  Legal  Service  in  conjunction  with  the  Directorate-General  VI, 
is  to  undertake  official  codification  of  this  type.  The  new  regulation  will  supersede 
the  various  regulations  incorporated  in  it  (2);  their  content  is  fully  preserved,  and 
they  arc  brought  together  with  only  such  formal  amendments  as  arc  required  by  the 
codification  exercise  itself. 

4a.  Articles  6,  6a,  6b,  6c  and  7  of  the  abovcracntioned  Regulation  (EEC)  No  729/70, 
which  specifically  concern  the  EAGGF  Guidance  Section,  have  not  been  included  in 
the  present  proposal  for  consolidation,  since  they  have  become  obsolete  for  the  follo 
wing  reasons: 

(a)  Article  11  of  Regulation  (EEC)  No  4256/88  (3)  as  amended  by  Regulation 
(EEC)  No  2085/93  states  that  'Regulation  (EEC)  No  729/70, with  the  exception 
of  Article  1 (1),  (2)  and  (3),  shall  not  apply  as  regards  the  Fund,  subject  to  the 
implementation  of  Article  15 of  Regulation  (EEC)  No  2052/88  and  Article  33 of 
Regulation  (EEC)  No  4253/88'. 

(*)  Entered  in  the  legislative  programme  for  1996. 
(2)  Sec  Part  B of  the Annex. 
(3)  Council  Regulation  of  19 December  198S laying down  provisions  for  implementing  Regulation 

(EEC)  No 2052/88 as regards  the  EAGGF  Guidance Section. 

I  2 

(b)  Article  15  of  Regulation  (EEC)  No  2052/88  (•)  and  Article  33  of  Regulation 
(EEC)  No  4253/88  (2)  are  transitional  provisions  relating  to  the  rules  for  the 
Structural  Funds  which  applied  before  the  entry  into  force  of  the  abovementio-
ncd  Regulations.  These  provisions  set  two  'cut-off'  dates:  1 January  1989  and  30 
September  1995  (3).  As  these  dates  have  now  passed,  the  transitional  period  is 
over. 

(c)  Certain  projects  are  still  'subject  to  suspension  for  judicial  reasons'  and  a  num 
ber  of  projects  decided  on  by  the  Commission  prior  to  1 January  1989  have  not 
yet  been  wound  up  (cf.  Article  10 of  Regulation  (EEC)  No  4256/88  as  amended 
by  Regulation  (EEC)  No  2085/93)  but  these  considerations  do  not  affect  the 
above  approach,  since: 

— 

— 

the  court  concerned  may,  in  accordance  with  general  principles  of  law,  rule 
on  the  facts  in  dispute  in  the  light  of  the  legislation  in  force  at  the  time  the 
legal  situation  in  question  arose,  even  if  the  said  legislation  has  in  the 
meantime  become  obsolete  or  even  been  specifically  repealed  at  a  later 
date; 

for  any  measure  for  the  reduction  or  cancellation  of  assistance  from  the 
Fund  (EAGGF  Guidance  Section), the  Commission  has been  required  since 
3  August  1993  to  use  only  Article  24  of  Regulation  (EEC)  No  4253/88, 
since  Regulation  (EEC)  No  355/77  (4)  was  repealed  in  its  entirety  on  that 
date  (date  of  entry  into  force  of  Regulation  (EEC)  No  20S5/93  amending 
Regulation  (EEC)  No  4256/88) without  any  provision  having  been  made  for 
exceptions. 

It  should  be  noted  that,  although  the  original  version  of  Article  10  (3)  of 
Regulation  (EEC)  No  4256/88 stated  that  'By way of  derogation  from  para 
graph  2  (5),  Articles  6  to  15 and  17  to  23 of  Regulation  (EEC)  No  355/77 
shall  continue  to  apply  to  projects  submitted  by the  date  of  entry  into  force 
of  the  Council  Decision  referred  to  in  paragraph  1 (6)  (...)',  the  said  Article 
10  of  Regulation  (EEC)  No  4256/88  as  amended  by  Regulation  (EEC)  No 
2085/93  no  longer  refers  to  the  continued  applicability  of  certain  provisions 
of  Regulation  (EEC)  No  355/77  to  'projects  submitted  by  the  date  of  entry 
into  force'  of  the  above mentioned  Council  Decision  (6). 

5.  This  legislative  consolidation  proposal  was  drawn  up  on  the  basis  of  a  preliminary 
consolidation,  in  all  the  official  languages,  of  Regulation  (EEC)  No  729/70  and  the 
instruments  amending  it,  carried  out  by  the  Office  for  Official  Publications  of  the 
European  Communities,  by  means  of  the  data-processing  system  referred  to  in  the 
conclusions  of  the  European  Council  meeting  at  Edinburgh.  Although  the  articles 
have  been  given  new  numbers,  the  old  numbering  has  been  retained  in  the  margin  for 
ease  of  reference;  the  correlation  between  the  old  and  new  numbers  is  shown  in  a 
table  set  out  in  the  Annex,  Part  A  to  the  consolidated  Regulation. 

(*)  Council  Regulation  of  24 June  1988 on  the tasks of  the Structural  Funds and  their  effectiveness 
and on coordination of their activities between themselves and with the operations of the European 
Investment  Bank  and  the other  existing financial  instruments. 

(2)  Council  Regulation  of  19 December  1988 laying down  provisions for  implementing  Regulation 
(EEC)  No 2052/88 as regards coordination of  the activities of the different  Structural  Funds bet 
ween themselves and with the operations of the European Investment Bank and the other existing 
financial  instruments. 

(3)  Article  15 (3)  of  Regulation  (EEC)  No 2052/88  as amended  by Regulation  (EEC)  No  2081/93 
states  that 'the  provisions referred  to in Article 3 (4) and  (5) shall lay down specific  transitional 
provisions  relating  to the  implementation of  this Article, including provisions  to ensure  (...)  that 
the grant  of  assistance  for  projects granted assistance before  1  January  1989 shall be finally con-

" eluded  no  later  than  30 September  1995'. 

(4)  Council  Regulation  of  1 February  1977 on common  measures  to  improve  the  conditions  under 

which  agricultural  products  are  processed  and  marketed. 

(5)  Paragraph  2 reads 'With effect  from  the date of entry into force of the Council Decision  referred 

to  in  paragraph  1, Council  Regulation  (EEC)  No 355/77 is hereby  repealed'. 
(6)  Regulation  (EEC)  No 866/90, which  entered  into force  on  1  January  1990. 

2a 

Proposal  for a 

COUNdL  REGULATION  (EC)  No  .J... 

of... 

on  the  financing  of  the  common  agricultural  policy 

THE  COUNCIL  OF THE  EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European 
Community,  and  in  particular  Article  43  thereof, 

Having  regard  to  the  proposal  from  the  Commission, 

Having  regard  to  the  opinion  of  the  European  Parlia 
ment  (!), 

Having  regard  to  the  opinion  of  the  Court  of  Audi 
tors  (2), 

Having  regard  to  the  opinion  of  the  Economic  and  So 
cial  Committee  (3), 

Whereas  Council  Regulation  (EEC)  No  729/70  of  21 
April  1970  on  the  financing  of  the  common  agricultural 
policy (4)  has  been  frequently  and  substantially  amen 
ded  (5);  whereas  for  reasons  of  clarity  and  rationality  the 
said  Regulation  should  be  consolidated; 
Whereas  by  means  of  Regulation  No  25 (6)  on  the  fi 
nancing  of  the  common  agricultural  policy,  the  Council 
established 
the  European  Agricultural  Guidance  and 
Guarantee  Fund  (EAGGF),  hereinafter  referred  to  as 
'the  Fund',  which  forms  part  of  the  general  budget  of 
the  European  Union;  whereas  that  Regulation  laid  down 
under  Title  I  the  principles  which  should  apply  after  the 
transitional  period; 

Whereas  at  the  single  market  stage,  in  view  of  the  fact 
that  price  systems  are  standardised  and  the  agricultural 
policy  is  a  Community  policy,  the  financial  consequences 
devolve  upon  the  Community;  whereas,  in  accordance 
with  that  principle  as  laid  down  in  Article  2  (2)  of  Re 
gulation  No  25,  refunds  on  exports  to  third  countries, 
intervention  aimed  at  stabilising  agricultural  markets, 
and  common  measures  adopted  in  order  to  achieve  the 
objectives  set  out  in  Article  39  (1)  (a)  of  the  Treaty, 
including  structural  adaptation  required  for  the  proper 
working  of  the  common  market,  are  financed  by  the 
Fund; 

1) 

2) 

3) 

0 

() 
() 
(4) 

(6) 

OJ No C... 
OJ No C... 
OJ No C... 
OJ No L 94, 28. 4.1970, p. 13. Regulation as last amended by 
Regulation (EC) No 1287/95 (OJ No L 125,8. 6.1995, p. 1). 
See Part B of the Annex. 
O J No 30,24.4.1962, p. 992/62. Regulation as last amended by 
Regulation (EEC) No 728/70 (OJ No L 94, 28. 4. 1970, p. 9). 

729/70 
(adapted) 

729/70 
(adapted) 

3. 

729/70 

4)  Whereas,  in  particular,  the  principle  should  be  main 
tained  that the Fund should  include a Guarantee Section 
for  the  expenditure  of  the: common  organisation  of  the 
agricultural  markets  and  a  Guidance  Section  for  com 
to  agricultural  structure; 
mon  expenditure  relating 
whereas  the  Commission  is  responsible  for  the adminis 
tration  of  the  Fund  and  whereas  close  co-operation  be 
tween  Member  States  and  the  Commission  is  provided 
for  within  a  Committee  for  the  European  Agricultural 
Guidance  and  Guarantee  Fund; 

1287/95 
(adapted) 

1287/95 
(adapted) 

5)  Whereas  the 

responsibility 

for  checking  the  Fund's 
Guarantee  Section  expenditure  lies,  in  the  first  place, 
with  the  Member  States, which  designate  the  authorities 
and  bodies  empowered  to  effect  expenditure;  whereas 
the  Member  States  must  carry  out  this  task  fully  and 
effectively;  whereas  the  Commission,  being  responsible 
for implementing the Community budget, must verify the 
conditions  under  which  payments  and  checks  have  been 
made;  whereas  the  Commission  can  only  finance  ex 
penditure  where  those  conditions  offer  all  necessary 
guarantees 
regarding  compliance  with  Community 
rules; whereas, in a decentralized  system of  management 
of  Community  expenditure,  it  is essential  that  the  Com 
mission,  as the  institution  responsible  for  funding,  is en 
titled  and  enabled  to  carry  out  all  checks  on  the  man 
agement  of  expenditure  it  considers  necessary  and  that 
there  should  be  full  and  effective  transparency  and  mu 
tual  assistance  between  the  Member  States  and  the 
Commission; 

6)  Whereas, during the clearance  of accounts, the Commis 
sion  is  able  to  determine  within  a  reasonable  time  the 
total  expenditure  to  be  entered  against  the  Guarantee 
Section  in  the  general  account  only  if  it  has  satisfactory 
assurance  that  the  national  controls  are  adequate  and. 
transparent  and  that  the paying agencies verify  the legal 
ity  and  regularity  of  the  payment  requests  which  they 
execute; whereas provision  should  therefore  be made  for 
the  accreditation  of  paying  agencies  by Member  States; 
whereas  in  order  to  ensure  consistency  in  the  standards 
required  for  accreditation  in  the  Member  States,  the 
Commission  provides  guidance  on  the  criteria  to be  ap 
plied; whereas,  for  that  purpose,  it  should  be  stipulated 
that  only  expenditure  effected  by  paying  agencies  ac 
credited  by  the  Member  States  should  be  financed; 
whereas,  moreover,  in  order  to  ensure  the  transparency 
of  national  controls,  in  particular  as  regards  authoriz 
ation, validation  and payment procedures, the number of 
authorities  and  bodies to which  these  responsibilities are 
delegated should, where  appropriate, be restricted taking 
account  of  the  constitutional  arrangements  of  each 
Member  State; 

7)  Whereas  decentralized  management  of  Community 
funds,  in  particular  following  reform  of  the  common 
agricultural  policy,  leads  to  the  designation  of  several 
paying  agencies;  whereas,  therefore,  where  a  Member 
State  accredits  more  than  one  paying  agency,  it  must 
designate  a single  contact  body to ensure consistency in 
the management of the funds, to provide liaison between 
the  Commission  and  the  various  accredited  paying 
agencies and to ensure that the information requested by 
the  Commission  concerning  the  operations  of  several 
paying agencies  is made  rapidly available; 

8)  Whereas  financial  resources  must  be  mobilized  by the 
Member  States  in  accordance  with  the  needs  of  their 
disbursing  agencies,  while  the  Commission  makes  ad 
vance  payments  against  the  booking  of  the  expenditure 
effected  by the  disbursing agencies; 

9)  Whereas  two  types  of  decision  should  be  established, 
one  concerning  the  clearance  of  the  accounts  of  the 
Guarantee  Section  of  the  Fund,  the  other  determining 
the consequences,  including  financial  corrections,  to be 
drawn from the results of the checks on conformity, with 
Community rules, of  the expenditures; 

10)  Whereas  the  checks  on 'conformity  and  the  ensuing 
clearance  decisions will therefore  no longer be linked to 
the  implementation  of  the  budget  in a particular finan 
cial  year;  whereas  the  maximum  period  to  which  the 
consequences  to be drawn from the checks on conform 
ity may be applied  must be determined; 

11)  Whereas the  financing  costs which might arise  from the 
mobilization of financial resources by the Member States 
could  be  shared  between  some  Member  States and the 
Community; 

12)  Whereas  measures  must  be  taken  to  prevent  and deal 
with any irregularities and to recover the amounts lost as 
a result of such irregularities or negligence; whereas the 
financial  responsibility  for  such  irregularities  or  negli 
gence  must be determined; 

13)  Whereas Community expenditure  must be made subject 
to close  supervision; whereas, in addition  to supervision 
carried  out  by  Member  States  on  their  own  initiative, 
which  remains  essential,  provision  should  be  made  for 
verification  by officials  of  the  Commission  and for  it to 
have the right to  enlist  the  help of  Member States; 

1287/95 

3183/87 
(adapted) 

1287/95 
(adapted) 

1287/95 
(adapted) 

3183/87 

729/70 

729/70 

14)  Whereas  information  technology  needs  to  be  used  as 
fully as possible  for producing  the information  to be  sent 
to  the  Commission;  whereas,  when  carrying  out  checks, 
the  Commission  must  have  full  and  immediate  access  to 
information  on  expenditure  held  in both  documents  and 
electronic  files; 

15)  Whereas  the  extent  of  Community  financing  makes  it 
necessary  for  the  European  Parliament  and  the  Council 
to  be  kept  regularly  informed  by  means  of  financial  re 
ports, 

HAS ADOPTED THIS REGULATION: 

1287/95 
(adapted) 

729/70 
(adapted) 

Article  1 

1.  The  European  Agricultural  Guidance  and  Guarantee 
Fund  (hereinafter  called  the 'Fund') shall form  part of  the 
general  budget  of  the  European  Union. 

729/70 

(adapted) 

Article 1 

It  shall  comprise  two sections: 

— 

the  Guarantee  Section; 

— 

the  Guidance  Section. 

2.  The  Guarantee  Section  shall  finance: 

(a)  refunds  on  exports  to  third  countries; 

(b) 

intervention  intended  to  stabilise  the  agricultural 
markets. 

3.  The Guidance Section shall finance common measures 
adopted  in  order  to  achieve  the  objectives  set  out  in  Ar 
ticle  39  (1)  (a)  of  the  Treaty,  including  structural  adapta 
tion  necessary  for  the  proper  working  of  the  common 
market.  However,  such  measures  shall  not  take  the  place 
of  the  activities of  the European  Investment  Bank and  the 
European  Social  Fund. 

4.  Expenditure  relating  to  administrative  costs  and  per 
sonnel  borne  by  Member  States  and  by  recipients  of  aid 
from  the  Fund  shall  not  be  taken  over by the  Fund. 

Article  2 

Article 2 

1.  Refunds  on  exports  to  third  countries,  granted  in ac 
cordance  with  the  Community  rules within  the  framework 
of  the  common  organisation  of  agricultural  markets,  shall 
be  financed  under  the  terms of Article  1 (2) (a). 

2.  The  Council,  acting  by a  qualified  majority  on  a pro 
posal  from  the  Commission,  shall,  as  far  as  is  necessary, 
adopt  the  procedure  for  financing  the  refunds  referred  to 
in paragraph  1. 

(adapted) 

Article 3 

(adapted) 

Article 3 

Intervention 

1. 
intended  to  stabilise  the  agricultural 
markets,  undertaken  according  to Community  rules within 
the  framework  of  the common  organisation  of  agricultural 
markets,  shall  be financed  under  Article  1 (2) (b). 

2.  The  Council,  acting  by a qualified  majority  on  a pro 
posal  from  the  Commission,  shall  before  1 January  1972 
lay down  the  general  rules  for  financing  such  intervention 
which  are  necessary  for  the  application  of paragraph  1. 

Article  4 

1.  Each  Member  State  shall  communicate  to  the  Com 
mission: 

(a)  details  of  the  authorities  and  bodies  it  accredits  to 
pay  the  expenditure  referred  to  in  Articles  2  and  3, 
hereinafter  referred  to  as 'paying agencies'; 

1287/95 Art. 1 (1) 
(adapted) 

Article 4 

1287/95 Art. 1 (1) 

(b)  where  more  than one paying agency is accredited, de 
tails  of  the  authority  or  body  it  charges,  first,  with 
bringing  together  the  information  to  be  supplied  to 
the Commission  and sending it the same, and, second, 
with promoting  the harmonized  application  of  Com 
munity  rules,  hereinafter  referred  to  as the  'coordi 
nating  body'. 

2.  Paying agencies shall be  authorities  and  bodies of the 
Member  States,  which,  as  regards  payments  in  the  areas 
for  which  they  are  responsible,  offer  sufficient  guarantees 
that: 

(a) 

the  admissibility  of claims  and  compliance  with Com 
munity  rules  are  checked  before  payment  is  autho 
rized, 

(b) 

the payments effected  are correctly and  fully  recorded 
in  the  accounts, and 

(c) 

the  necessary  documents  are  submitted  within  the 
time  and  in  the  form  laid  down  in  Community rules. 

3.  The  paying  agencies  must  hold  documents  justifying 
the  payments  effected  and  documents  concerning  the 
carrying  out  of  the  prescribed  administrative  and  physical 
controls.  Where  the  relevant  documents  arc  kept  by  the 
bodies  responsible  for  authorizing  the  expenditure,  those 
bodies  must  transmit  reports  to  the  paying  agency  on  the 
number  of  checks carried  out,  their  content  and  the  mea 
sures  taken  in  the  light of  the  results. 

4.  Only  expenditure  effected  by  accredited  paying 
agencies  may be  the  subject  of  Community  financing. 

5.  Each  Member State shall, taking into account  its con 
stitutional  and  institutional  structures, limit the  number of 
accredited  paying  agencies  to  the  minimum  necessary  in 
order  to  effect  the  expenditure  referred  to  in  Articles  2 
and  3  under  satisfactory  administrative  and  accounting 
conditions. 

6.  Each  Member  State  shall  communicate  to  the  Com 
mission  the  following  particulars  concerning  those  paying 
agencies: 

(a) 

their  name  and  their  statutes, 

(b) 

the  administrative,  accounting  and  internal  control 
conditions under which payments are made relating to 
the  implementation  of  Community  rules  within  the 
framework  of  the  common  agricultural  policy, 

(c) 

the  act  of  accreditation. 

The  Commission  shall  be  informed  forthwith  of  any 
change  in  those  particulars. 

1287/95 Art. 1(1) 

1287/95 Art. 1  (2) 
(adapted) 

Article 5 

7.  Where  one  or  more  of  the  conditions  for  accredit 
ation  are  not,  or  are  no  longer,  fulfilled  by an  accredited 
paying  agency, accreditation  shall  be withdrawn  ufilcss the 
paying  agency  makes  the  necessary  adjustments  within  a 
time  limit  to be fixed  in relation  to the seriousness  of  the 
problem.  The  Member  State concerned  shall  inform  the 
Commission. 

8.  The  Commission  shall  make  available  to  Member 
States, by means of advances on the provision  for expendi 
ture  effected  in a reference  period,  the  financial  resources 
.required  to cover the expenditure  referred  to  in paragraph 
1  (a). Until  the  advances are  paid,  the  resources  necessary 
to  meet  that  expenditure  shall  be  mobilized  by  the 
Member  States  in  accordance  with  the  needs  of  their  ac 
credited  paying agencies. 

9.  Detailed  rules  for  the  application  of  this Article 
shall  be  adopted  in  accordance  with  the  procedure  laid 
down  in  Article  12. 

Article  5 

1.  Member  States  shall  at  regular  intervals  transmit  to 
the  Commission  the  following  information  concerning  the 
accredited  paying agencies and coordinating bodies and re 
lating to transactions financed  by the Guarantee  Section of 
the  Fund: 

(a)  statements  of  expenditure  and  estimates  of  financial 

needs; 

(b)  annual  accounts,  accompanied  by the  information  re 
quired  for  clearance  and  an  attestation  regarding  the 
integrality,  exactitude  and  veracity  of  the  accounts 
transmitted. 

2.  The  Commission,  after  consulting  the  Fund  Commit 
tee  referred  to  in Article  10, shall  adopt  the  decisions set 
out  in  paragraphs  3, 4 and  5. 

3.  The  Commission  shall  decide  on  monthly  advances 
against  the  allocations  of  expenditure  effected  by the  ac 
credited  paying agencies. Expenditure  for October shall be 
attributed  to October  if it is effected  from  1 to  15 October 
and  to  November  if  it  is  effected  from  16 to  31  October. 
Advance payments shall be made  to the Member  State not 
later  than  the  third  working day of  the  second  month  fol 
lowing  that  in which  the  expenditure  is  effected. 

Additional  advances  may  be  made,  the  Fund  Committee 
being  informed  at  the  next  consultation; 

4.  The  Commission  shall,  before  30  April  of  the  year 
following  the  financial  year  concerned,  on  the  basis of  the 
information  referred  to  in  point  (b)  of  paragraph  1, clear 
the  accounts  of  the  paying agencies. 

1287/95 Art. 1  (2) 
(adapted) 

The  accounts clearance decision shall cover  the integrality, 
exactitude  and  veracity  of  the  accounts  submitted.  The 
decision  shall  not  prejudice  the  adoption  of  a  subsequent 
decision  pursuant  to  paragraph  5. 

5.  The  Commission  shall  decide  on  the  expenditure  to 
be  excluded  from  the  Community  financing  referred  to  in 
Articles  2  and  3  where  it  finds  that  expenditure  has  not 
been  effected  in  compliance  with  Community rules. 

Before  a  decision  to  refuse  financing  is taken,  the  results 
of the Commission's checks and the replies of the Member 
State concerned shall be notified  in writing, after which the 
two parties shall  endeavour  to reach  agreement on  the ac 
tion  to  be  taken. 

If no agreement  is reached,  the Member State  may ask for 
a  procedure  to  be  initiated  with  a  view  to  mediating  be 
tween  the  respective  positions  within  a  period  of  four 
months,  the  results  of  which  shall  be  set  out  in  a  report 
sent  to  and  examined  by  the  Commission,  before  a  deci 
sion  to  refuse  financing  is taken. 

The Commission shall evaluate the amounts to be excluded 
having  regard  in  particular  to  the  degree  of  non-com 
pliance found. The  Commission shall take into account the 
nature  and  gravity  of  the  infringement  and  the  financial 
loss suffered  by the  Community. 

A  refusal  to  finance  may  not  involve  expenditure  effected 
prior  to  twenty-four  months  preceding  the  Commission's 
written  communication  of  the  results of  those  checks to 
the  Member  State  concerned.  However, the  fifth  subpara 
graph  shall  not  apply  to  the  financial  consequences: 

(a)  of  irregularities  as referred  to  in Article  7 (2); 

(b)  concerning  national  aids, or  infringements,  for  which 
the  procedures  referred  to  in Articles  93  and  169 of 
the  Treaty  have  been  initiated. 

6.  Detailed  rules  for  the  application  of this Article  shall 
be  adopted  in  accordance with the procedure  laid down in 
Article  12. Those  rules shall cover in particular  the attesta 
tion  of  the  accounts  referred  to  in  paragraph  1 and  the 
procedures  relating  to  the  decisions  referred  to  in  para 
graphs  3, 4 and  5. 

Article  6 

1287/95 Art. 1  (3) 

Article 5a 

To  accommodate  any  difficulties  which  certain  Member 
States  might  encounter  in  setting  up  the  system  provided 
for  in  Article  4  (8),  appropriate  measures  enabling  some 
or all of  the  interest  to be charged  to the Community may 
be adopted  in accordance with  the procedure  laid down in 
Article  12. 

10 

729/70 

(adapted) 

Article  8 

Article  7 

1.  The  Member  States  shall,  in  accordance  with  national 
provisions  laid  down  by  law,  regulation  or  administrative 
action,  take  the  measures  necessary  to: 

(a)  satisfy  themselves  that  transactions  financed  by  the 
Fund  are  actually  carried  out  and  are  executed  cor 
rectly, 

(b)  prevent  and  deal  with  irregularities; 

(c) 

recover  suras  lost  as  a  result  of  irregularities  or  negli 
gence. 

The  Member  States  shall  inform  the  Commission  of  the 
measures  taken  for  those  purposes  and  in particular  of  the 
state  of  the  administrative  and  judicial  procedures. 

2. 
In  the  absence  of  total  recovery,  the  financial  conse 
quences  of  irregularities  or  negligence  shall  be  borne  by 
the  Community,  with  the  exception  of  the  consequences  of 
irregularities  or  negligence  attributable  to  administrative 
authorities  or  other  bodies  of  the  Member  States. 

The  suras  recovered  shall  be  paid  to  the  accredited  paying 
agencies  and  deducted  by  them  from  the  expenditure  fi 
nanced  by  the  Fund.  The  interest  on  sums  recovered  or 
paid  late  shall  be  paid  into  the  Fund. 

1287/95 Art.  1 (4) 

3.  The  Council,  acting  by a  qualified  majority  on  a  pro 
posal  from  the  Commission,  shall  lay  down  general  rules 
for  the  application  of  this  Article. 

729/70 

Article  8 

Article  9 

1287/95 Art.  1 (5) 
(adapted) 

1.  Member  States  shall  make  available  to  the  Commis 
sion  all  information  required  for  the  proper  working  of  the 
Fund  and  shall  take  all  suitable  measures  to  facilitate  the 
supervision  which  the  Commission  may  consider  it  necess 
ary  to  undertake  within  the  framework  of  the  management 
of  Community  financing,  including  inspections  on  the  spot. 

Member  States  shall  communicate  to  the  Commission 
provisions  laid  down  by  law,  regulation  or  administrative 
action  which  they  have  adopted  for  the  application  of  legal 
acts  of  the  Community  relating  to  the  common  agricultural 
policy  insofar  as those  acts  have  financial  consequences  for 
the  Fund. 

to  the  supervision  effected  bv 
2.  Without  prejudice 
Member  States  in  accordance  with  national  provisions  laid 
down  by  law,  regulation  or  administrative  action  and  with 
out  prejudice  to  Article  188c  of  the  Treaty,  or  to  any  in 
spection  organized  on  the  basis  of  point  (c)  of  Article  209 
of  the  Treaty,  authorized  representatives  appointed  bv  the 
Commission  to  carry out  inspections  on  the  spot  shall  have 
access  to  the  books  and  all  other  documents,  including  in 
formation  created  or  stored  in  electronic  form,  relating  to 
expenditure  financed  by  the  Fund. 

They  may  in  particular  check: 

(a)  whether  administrative  practices  are  in  accordance 

with  Community  rules; 

O 

11 

(b)  whether  the  requisite  supporting  documents exist and 
tally with  the  transactions  financed  by the  Fund; 

729/70 

(c) 

the  conditions  under  which  transactions  financed  by 
the  Fund  are  carried  out  and  checked. 

The  Commission  shall  give  due  notice  before  the  inspec 
tion  is  carried  out  to  the  Member  State  concerned  or  to 
the  Member  State  on  whose  territory  it  is  to  take  place. 
Officials  of  the  Member  State  concerned  may take part in 
the  inspection. 

At  the  request  of  the  Commission  and with the  agreement 
of  the  Member  State,  inspections  or  inquiries  concerning 
the  transactions  referred  to in this Regulation  shall be car 
ried  out  by  the  competent  authorities  of  that  Member 
State.  Officials  of  the  Commission  may also participate. 

To  make  verification  more  effective  the  Commission  may, 
with  the  agreement  of  the  Member  States  concerned,  ar 
range  for  administrative  authorities of those  States to par 
ticipate  in certain  inspections  or  inquiries. 

3.  The  Council,  acting  by a qualified  majority  on a pro 
posal  from  the  Commission,  shall,  as  far  as  is  necessary, 
lay down  general  rules  for  the  application  of  this Article. 

Article  9 

Article 10 

Before  1 July of each year, the Commission shall submit to 
the  European  Parliament  and  to  the  Council  a  financial 
report  on  the  administration  of  the  Fund  during  the  pre 
ceding  financial  year  and,  in particular,  on  the  state  of  its 
resources  and  the  nature  of  its expenditure  and  the condi 
tions  for  achieving  Community  financing. 

(adapted) 

Article  10 

The  Committee  for  the  European  Agricultural  Guidance 
and  Guarantee  Fund  (hereinafter  called  the  'Fund  Com 
mittee')  shall  assist  the  Commission  in  administering  the 
Fund,  as  laid  down  in Articles  11 to 14. 

Article  11 

The Fund  Committee shall consist of representatives of the 
Member  States  and  of  the  Commission.  Each  Member 
State  shall  be  represented  on  the  Fund  Committee  by not 
more  than  five  officials. 

The  Fund  Committee  shall  have  a  representative  of  the 
Commission  as  Chairman. 

(adapted) 

Article  U 

Article 12 

Article  12 

Article 13 

1.  Where  the  procedure  laid  down  in  this  Article  is  to 
be  followed,  the  matter  shall  be  referred  to  the  Fund 
Committee  by  the  Chairman,  either  on  his  own  initiative 
or  at  the  request  of  the  representative  of  a Member Sate. 

2.  The  representative  of  the  Commission  shall submit to 
the  Committee  a  draft  of  the  measures  to  be  taken.  The 
Committee  shall  deliver  its  opinion  on  the  draft  within  a 
time  which  the  Chairman  may  lay down  according  to  the 
urgency  of  the  matter.  The  opinion  shall  be  delivered  by 
the  majority  laid  down  in  Article  148 (2)  of  the  Treaty in 
the  case  of  decisions  which  the  Council  is  required  to 
adopt  on  a  proposal  from  the  Commission.  The  votes  of 
the  representatives  of  the  Member States within  the Com 
mittee  shall  be weighted  in the  manner set  out  in that Ar 
ticle. The  Chairman  shall  not vote. 

The  Commission  shall  adopt  measures  which  shall  be im 
mediately  applicable. However, if such measures arc not in 
accordance  with  the  Opinion  delivered  by the  Fund  Com 
mittee,  they  shall  at  once  be  communicated  by  the  Cora-
mission  to  the  Council. In  that  case,  the  Commission  may 
defer  for  not  more  than  one  month  from  the  date  of such 
communication,  application  of  the  measures  which  it  has 
adopted. 

The  Council,  acting  by a  qualified  majority,  may  adopt  a 
different  decision within  one  month. 

95/1/EC, Euratom, ECSC 

729/70 

(adapted) 

Article 13 

Article 14 

1.  The  Fund  Committee  shall  be  consulted: 

(a) 

in  cases  where  provision  is  made  for  it  to  be  con 
sulted; 

(b)  for  the assessment of the Fund's credits to be entered 
in the Commission's estimate  for  the coming  financial 
year  and,  if  necessary,  in  additional  estimates; 

(c)  on draft  proposals from  the Commission to the Coun 
cil  concerning  the  application  of  this  Regulation  and 
draft  reports  on  the  Fund  to  be  submitted  to  the 
Council. 

2.  The  Fund  Committee  may  examine  any  other  ques 
tion  referred  to  it by its Chairman  either on  his own initi 
ative  or  at  the  request  of  a  representative  of  a  Member 
State. 

It  shall  be informed  regularly of  the activities of  the Fund. 

Article  14 

Article 15 

The  Chairman  shall  convene  the  Fund  Committee. 

Secretarial  services  shall  be  provided  for  the  Fund  Com 
mittee  by the  Commission. 

The  Fund  Committee  shall  lay down  its own  rules of pro 
cedure. 

13 

Article  15 

729/70 

Article  16 

1.  The  provisions  of. Articles  4,  5,  6,  7 (2),  second  sub 
paragraph  and  8 (2),  first  subparagraph,  shall  apply  from 
the  financial  year  beginning on  16  October  1995. 

1287/95 Art. 2 
(adapted) 

2.  Refusal  to  grant  financing  as  referred  to  in  Article 
5 (5)  may  not  relate  to  expenditure  claimed  against  a  fi 
nancial  year  prior  to  16  October  1992,  but  without  preju 
dice  to  decisions  regarding  the  clearance  of  the  financial 
years  prior  to  15 June  1995. 

Article  16 

Regulation- (EEC)  No  729/70  is  hereby  repealed. 

References  to  the  repealed  Regulation  shall  be  construed 
as  references  to  this  Regulation  and  should  be  read  in ac 
cordance  with the  correlation  table  set out  in Part A  of  the 
Annex. 

Article  17 

This  Regulation  enters  into  force  on  the day of  its publica 
tion  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  Brussels  ... 

For the  Council 

Vie  President 

14 

ANNEX 

Part A 

CORRELATION  TABLE 

Regulation <EEC) No 729/70 

This Regulation 

Article 1 

Article 2 

Article 3(1) 

Article 3 (2) 

Article 3 (3) 

Article 1 

Article 2 

Article 3(1) 

Article 3 (2) 

Article  4 (1), first  subparagraph,  point  (a), first subpara 
graph 

Article 4 (1), point (a) 

Article 4 (1), first subparagraph, point (a), second subpara 
graph, first indent 

Article 4 (1), first subparagraph, point (a), second subpara 
graph, second indent 
Article 4 (1), first subparagraph, point (a), second subpara 
graph, third indent 
Article  4 (1), first  subparagraph,  point  (a), third  subpara 
graph 

Article 4 (1), first subparagraph, point (b) 

Article 4 (1), second subparagraph 

Article 4 (2) 

Article 4 (2), point (a) 

Article 4 (2), point (b) 

Article 4 (2), point (c) 

Article 4 (3) 

* ' 
Article 4 (1), point (b) 

Article 4 (4) 

Article 4 (5) 

Article 4 (3), first subparagraph, first indent 

Article 4 (6), first subparagraph, point (a) 

Article 4 (3), first subparagraph, second indent 

Article 4 (6), first subparagraph, point (b) 

Article 4 (3), first subparagraph, third indent 

Article 4 (6), first subparagraph, point (c) 

Article 4 (3), second subparagraph 

Article 4 (6), second subparagraph 

Article 4 (4) 

Article 4 (5) 

Article 4 (6) 

Article 5(1) 

Article 5 (2), introductory wording 

Article 5 (2), point (a) 

Article 4 (7) 

Article 4 (8) 

Article 4 (9) 

Article 5 (1) 

Article 5 (2) 

Article 5 (3) 

Article 5 (2), point (b), first  subparagraph 

Article 5 (4), first subparagraph 

Article 5 (2), point (b), second subparagraph 

Article 5 (4), second subparagraph, first sentence 

Article 5 (2), point (b), third subparagraph 

Article 5 (2), point (c), first  subparagraph 

Article 5 (2), point (c), second subparagraph 

Article 5 (4), second subparagraph, second sentence 

Article 5 (5), first subparagraph 

Article 5 (5), second subparagraph 

Article 5 (2), point (c), third  subparagraph 

Article 5 (5), third subparagraph 

Article 5 (2), point (c), fourth  subparagraph 

Article 5 (5), fourth  subparagraph 

Article 5 (2), point (c), fifth  subparagraph, first sentence 

Article 5 (5), fifth  subparagraph 

Article 5 (2), point (c), fifth  subparagraph, second sentence 

Article 5 (5), sixth subparagraph 

Article 5 (2), point (c), fifth  subparagraph, second sentence, 
first indent 

Article 5 (5), sixth subparagraph, point (a) 

15 

Regulation (EEC) No 729/70 

This Regulation 

Article 5 (5), sixth subparagraph, point (b) 

Article 5 (6) 

Article 6 

Article 5 (2), point (c), fifth  subparagraph, second sentence, 
second indent 
Article 5 (3) 

Article 5a 

Article 6 

Article 6a 

Article 6b 

Article 6c 

Article 7 

Article 8 (1), first subparagraph, first indent 

Article 7 (1), first subparagraph, point (a) 

Article 8 (1), first subparagraph, second indent 

Article 7 (1), first subparagraph, point (b) 

Article 8 (1), first subparagraph, third indent 

Article 7 (1), first subparagraph, point (c) 

Article 8(1), second  subparagraph 

Article 7(1), second subparagraph 

Article 8 (2) 

Article 8 (3) 

Article 9 (1) 

Article 7 (2) 

Article 7 (3) 

Article 8 (1) 

Article 9 (2), first subparagraph, first sentence 

Article 8 (2), first subparagraph 

Article 9 (2), first subparagraph, second sentence 

Article 8 (2), second subparagraph 

Article 9 (2), first subparagraph, second sentence, point (a) 

Article 8 (2), second subparagraph, point (a) 

Article 9 (2), first subparagraph, second sentence, point (b) 

Article 8 (2), second subparagraph, point (b) 

Article 9 (2), first subparagraph, second sentence, point (c) 

Article 8 (2), second subparagraph, point (c) 

Article 9 (2), second  subparagraph 

Article 9 (2), third subparagraph 

Article 9 (2), fourth  subparagraph 

Article 8 (2), third subparagraph 

Article 8 (2), fourth subparagraph 

Article 8.(2), fifth  subparagraph 

Article 9 (3) 

Article 10 

Article 11 

Article 12 (1) 

Article 12 (2) 

Article 13 (1) 

Article 13 (2) 

Article 13 (3), first subparagraph 

Article 13 (3), second subparagraph 

Article 14 

Article 15 

Article 16 (1) 

Article 16 (2) 

Article 8 (3) 

Article 9 

Article 10 

Article 11 

Article 12 (1) 

Article 12 (2), first subparagraph 

Article  12 (2), second subparagraph 

Article  12 (2), third subparagraph 

Article 13 

Article 14 

Article 15 

Article 16 

Article 17 

ANNEX 

16 

Part B 

Regulations  amending  Regulation  (EEC)  No 729/70 

Council  Regulation  (EEC)  No  1566/72 of  20 July  1972 

Council  Regulation  (EEC)  No 2788/72 of  28 December  1972 

Council  Regulation  (EEC)  No 929/79 of  8 May 1979 

Council  Regulation  (EEC)  No 3509/80 of  22 December  1980 

Council  Regulation  (EEC)  No 870/85 of  26 March  1985 

Council  Regulation  (EEC)  No 3768/85 of  20 December  1985 

Council  Regulation  (EEC)  No 3769/85 of  20 December  1985 

Council  Regulation  (EEC)  No 3183/87of  19 October  1987 

Council  Regulation  (EEC)  No 2048/88 of  24 June  1988 

Council  Regulation  (EC)  No  1287/95 of  22 May 1995 

Official  Journal 

No 

page 

date 

L167 

L295 

L117 

L367 

L95 

L362 

L362 

L304 

L185 
L125 

5 

1 

4 

87 

1 

8 

17 

1 

1 

1 

25. 7.1972 

30.12.1972 

12. 5.1979 

31.12. 1980 

2. 4.1985 

31. 12.  1985 

31. 12.  1985 

27.10.1987 

15. 7.1988 

8. 6. 1995 

17 

ISSN 0254-1475 

COM(97) 607 final 

DOCUMENTS 

EN 

03  01  06 

Catalogue number  :  CB-CO-97-619-EN-C 

ISBN  92-78-27605-7 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

4%