Special Report No 18/98 concerning the Community measures to encourage the creation of joint enterprises in the fisheries sector accompanied by the replies of the Commission (Pursuant to Article 188c (4), second subparagraph, of the EC Treaty)
Date: 1998-10-07
Institutions: European Court of Auditors
Subjects: EU aid, aid system, common fisheries policy, company law, group of companies, report

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I

(Information)

COURT  OF  AUDITORS

SPECIAL  REPORT  No  18/98

concerning  the  Community  measures  to  encourage  the  creation  of  joint  enterprises  in  the
fisheries  sector  accompanied  by  the  replies  of  the  Commission

(Pursuant  to  Article  188c  (4),  second  subparagraph,  of  the  EC  Treaty)

(98/C  393/01)

TABLE  OF  CONTENTS

Paragraph
reference

Page

EXECUTIVE  SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 — 8

DESCRIPTION  OF  THE  AUDITED  ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . .

9 — 20

Regulatory  Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9 — 20

BUDGETARY  RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

RESULTS  OF  THE  AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 — 54

Management  in  the  Member  States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 — 42

Calculation  of  the  Vessel  Tonnage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 — 25

Suitability  of  Aided  Vessels  to  the  Planned  Fishery  Operations . . . . . . . . .

26 — 27

Vessels Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28

Non-Recovery  of  Community  Aid  for  Construction  and  Modernisation . .

29 — 33

The  Bona  Fides  of  Particular  Joint  Enterprises . . . . . . . . . . . . . . . . . . . . . .

34 — 36

Modifications  of  Joint  Enterprise  Projects . . . . . . . . . . . . . . . . . . . . . . . . . .

37 — 38

Grant-Aided  Vessels  Lost  in  Maritime  Accidents . . . . . . . . . . . . . . . . . . . . .

39 — 42

Management  by  the  Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43 — 54

General

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation  of  Aid  Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43

44

Evaluation  of  Vessel  Tonnage  Information . . . . . . . . . . . . . . . . . . . . . . . . . .

45 — 46

The  Community  Register  of  the  Fishing  Fleet . . . . . . . . . . . . . . . . . . . . . . .

47 — 50

Evaluation  of  the  Activity  Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51 — 52

Evaluation  of  Maritime  Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Controls  on  the  spot

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53

54

3

4

4

4

6

6

6

6

7

7

7

8

8

9

9

9

9

9

10

10

10

11

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Paragraph
reference

Page

IMPACT  AND  EFFICIENCY  OF  THE  MEASURE . . . . . . . . . . . . . . . . . . . . . . .

55 — 60

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61 — 64

Tables  1-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Replies  of  the  Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

11

13

18

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EXECUTIVE  SUMMARY  OF  SPECIAL  REPORT  CONCERNING  THE  COMMUNITY  MEASURES
TO  ENCOURAGE  THE  CREATION  OF  JOINT  ENTERPRISES  IN  THE  FISHERIES  SECTOR

The  joint  enterprise  scheme  was  introduced  in  1990  by  the  Council  to  contribute  towards  the
reduction  of  the  Community  fishing  fleet,  total  capacity  of  which  amounted  to  2,3  million
tonnes at the time, by helping to seek viable alternatives for the affected fishing vessels. To date,
188  projects  have  been  approved  resulting  in  the  removal  from  the  Community  fishing  register
of  290  vessels  representing  a  capacity  of  113 710  tonnes,  at  a  cost  of  ECU  298  million.

Implementation  of  the  scheme  has  been  characterised  by  the  following  failures:

(a)  Aid  has  been  miscalculated  because  vessels  have  been  measured  according  to  different

methods  (see  paragraphs  22-25).

(b) Deadlines  for  carrying  out  repairs  and  adaptations  were  not  established  in  the  decisions

approving  the  aid  (see  paragraphs  26-27).

(c)  Aid was approved for vessels which were not active and were therefore ineligible (see point

28).

(d) Community aid previously paid for the construction or modernisation of the vessels included
in the joint enterprises was not always recovered as required, due either to the refusal of the
Member State to apply the provisions of the regulations or to weaknesses in the monitoring
procedures  (see  paragraphs  29-33).

(e)  In certain cases, the viability of the joint enterprise projects was not supported by adequate

agreements  between  the  partners  (see  paragraph  36).

(f)  Aid  was  paid  in  respect  of  vessels  sunk  without  investigation,  either  by  the  Member  States
or  the  Commission,  of  the  circumstances  surrounding  the  accidents;  despite  the  non
compliance by the beneficiaries with their obligations, no procedure has been launched with
a  view  to  recover  or  cancel  the  aid  (see  paragraphs  39-42  and  53).

(g)  Community aid for joint enterprises projects is equivalent to twice the aid for the export of
the  vessel  concerned.  Therefore,  the  fulfilment  by  the  beneficiaries  of  their  obligations  to
keep the vessels in activity and to supply fish to the EU market for a minimum time period
should  have  been  secured  by  appropriate  guarantees  (see  paragraphs  59-60).

To  sum  up,  the  audit  revealed  that  more  rigorous  management  of  the  scheme  by  the
Commission  and  the  Member  States  is  necessary  to  ensure  sound  financial  management.

The  Commission  should  review  its  monitoring  and  control  procedures  and  proceed  to  the
recovery  of  misused  EU  grants  (paragraphs  23,  28,  31-33,  37-38,  41-42).

Concerning  the  effectiveness  of  the  measure  it  was  noted  that:

(a)  of  the  overall  reduction  of  the  fleet  capacity  since  the  measure  was  adopted,  one  third
(113 710 tonnes) can be attributed to the measure. However, it has had practically no effect
on  the  overall  fishing  activity  in  Community  waters  as  evidenced  by  the  stability  in  annual
fish  landings  (see  paragraph  57);

(b) about  90 %  of  the  vessels  relating  to  the  projects  examined  were  already  fishing  in
third-country  waters;  nevertheless,  the  consequences  of  redeployment  for  the  International
Fisheries  Agreements  (IFA’s)  negociated  by  the  EU  were  not  evaluated  (paragraph  58).

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INTRODUCTION

1. From  1983,  the  Council  in  a  series  of  successive
Multiannual  Guidance  Programmes  (MAGP)  set  targets
for  substantial  reductions  in  the  fishing  fleets  of  the
Member  States,  because  of  capacity  largely  in  excess  of
the  available  fishery  resources.  In  the  latest  MAGP  IV,
the  Council,  in  April  1997,  introduced  a  requirement  for
further  cuts  in  the  fishing  effort  of  up  to  30 %,  to  be
implemented  during  the  period  from  1  January  1997  to
31  December  2001 (1).

2. The  Community  has  contributed  to  the  reduction  of
the  fishing  fleets  set  out  in  the  MAGP  by  granting
assistance  to  projects  for  the  permanent  withdrawal  of
capacity,  by  the  scrapping  of  the  vessel,  its  permanent
transfer to a third country or alternatively the permanent
re-assignment  of  the  vessel  to  uses  other  than  fishing.  In
1993,  the  Court  adopted  a  special  report  on  the
implementation  of  the  measures  for  the  restructuring,
modernisation  and  adaptation  of  fishing  fleets  in  the
Community (2);  a  follow-up  of  this  special  report  was
presented  in  the  1996  Annual  Report (3).

the 

creation 

towards 

contributing 

fishing  activity  and 

3. The  ultimate  objective  of  the  MAGP  is  to  protect
Community  fishery  resources  from  over-exploitation,
of
thereby 
securing
economically  viable 
employment  prospects  in  the  sector  in  the  medium  to
long  term  (see  Table  1).  The  creation  of  the  joint
enterprises  can  contribute  to  this  objective.  In  this
respect, it must be considered that for each sea-going job
there  are  about  four  land-based  jobs  in  both  upstream
(shipbuilding  and  maintenance)  and  downstream  sectors
(processing  and  marketing  of 
fisheries  products).
Furthermore, fishing activities are regionally concentrated
and  may  represent  a  key  element  in  terms  of  production
and  income (4).

International  Fisheries  Agreements  (IFAs)  in  order  to
obtain  fishing  rights  for  its  vessels  in  the  waters  of  these
countries.

6. An  additional  measure  is  the  joint  enterprise  scheme,
introduced  in  1990  by  Council  Regulation  (EEC)  No
3944/90  modifying  Council  Regulation 
(EEC)  No
4028/86 (5),  whereby  Community  aid  is  provided  to
Community  shipowners  who  agree  to  the  permanent
transfer  of  their  vessel  to  a  third  country  by  setting  up
enterprises  with  nationals  of  this  country,  thus  losing
their  right,  in  respect  of  the  vessel  in  question,  to  fish  in
Community  fishing  grounds,  or  to  use  fishing  rights
obtained  by  means  of  IFAs  negociated  and  financed  by
the  EU.

7. The  beneficiaries  who  establish  such  enterprises
undertake  to  offer  fish  supplies  from  the  joint  enterprise
to  the  Community  market  on  a  priority  basis.

8. From  1991  to  1997,  total  financial  aid  of  298  Mio
ECU  has  been  granted  to  188  joint  enterprise  projects
(see  Table  4).  During  1997,  the  Court  examined  the
implementation  of  the  joint  enterprise  aid  scheme  in
Greece, Spain, France, Italy and Portugal, which together
account  for  95 %  of  all  Community  aid  provided  under
the  measure.  The  audit  involved  an  examination  of  the
administrative and control procedures put in place by the
Commission  and  the  Member  States.  A  total  of  50
projects  approved  under  the  measure,  representing  some
33 %  of  total  Community  financial  support,  were
examined in terms of legality and regularity as well as the
soundness  of  the  financial  management  (see  Table  5).

DESCRIPTION  OF  THE  AUDITED  ACTIVITIES

4. The European Union (EU) market is a net importer of
fishery  products  (see  Table  2  and  Table  3).

Regulatory  Framework

In these conditions, one of the solutions envisaged for
5.
the fishery sector was the implementation of measures to
encourage  the  redeployment  of  fishing  vessels  to  the
waters of third countries. When, in the 1980’s, a growing
number  of  third  countries  declared  200  miles  Exclusive
Economic  Zones  (EEZ),  the  Community  negotiated  the

(1)  Council  Decision  97/413/EC  of  26  June  1997  (OJ  L  175,
3.7.1997,  p.  27),  and  Commission  Decision  98/119/EC  to
98/131/EC  of  16  December  1997  (OJ  L  39,  12.2.1998,  p.
1).

(2)  Special  Report  No  3/93  (OJ  C  2,  4.1.1994).
(3)  OJ  C  348,  18.11.1997.
(4)  Special  Report  No  3/93,  paragraph  1.2.

(EEC)  No  3944/90,  which
9. Council  Regulation 
modified  Council  Regulation 
(EEC)  No  4028/86,
introduced  the  joint  enterprise  aid  scheme  in  1990.
Similar  national  measures  had  existed  in  Spain  and
Portugal  for  some  10  years  before  their  accession  to  the
Community in 1986. The measure was first implemented
during  the  period  1991-1993  through  the  application  of
Commission  Regulation  (EEC)  No  1956/91 (6).  The
measure was directly managed by the Commission in that
it  received  the  applications  for  the  individual  projects,

(5)  Council Regulation (EEC) No 3944/90 of 20 December 1990
(OJ  L  380,  31.12.1990,  p.  1),  amending  Council  Regulation
(EEC)  No  4028/86  of  18  December  1986  (OJ  L  376,
31.12.1986,  p.  7).

(6)  OJ  L  181,  8.7.1991,  p.  1.

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selected the projects to be granted Community financing,
paid  the  aid  directly  to  the  beneficiaries  and  was
responsible  for  the  monitoring  and  follow-up  of  the
projects.  This  system  still  applies  to  projects  approved  at
that  time  but  not  yet  completed.

(b) third  countries  offering  satisfactory  guarantees  for
Community  investments  and  which  have  significant
fisheries  resources  of  interest  to  the  Community
market.

10. Council  Regulation  (EEC)  No  3944/90  defined  a
joint enterprise as ‘a company incorporated under private
law comprising one or more Community shipowners and
one  or  more  partners  from  a  third  country  with  which
the  Community  maintains  relations,  associated  under  a
joint  enterprise  agreement  set  up  for  the  purpose  of
exploiting  and,  where  appropriate,  using  the  fishery
resources  of  waters  falling  within  the  sovereignty  and/or
jurisdiction  of  such  third  country,  primary  consideration
being  given  to  the  supply  of  the  Community  market’ (7).

11.
In  order  to  be  eligible  for  Community  aid,  vessels
must have a minimum length of 12 metres, be technically
suitable  for  the  fishing  operations  planned,  have  been  in
(with  certain
operation 
exemptions) (8),  fly  the  flag  of  a  Member  State  and  be
registered  in  a  Community  port.  The  vessels  are  to  be
transferred  definitively  to  the  third  country  concerned  by
the  joint  enterprise.

five  years 

for  more 

than 

12. The  financial  aid  may  consist  of:

(a) a  capital  subsidy  granted  in  one  or  more  instalments;

and/or

(b) a  reduction  in  the  interest  rate  charged  on  loans
finance

international 

granted  by  national  or 
institutions;  and/or

(c) a  capital  contribution  towards  the  formation  of
the

guarantee 
implementation  of  the  joint  enterprise  in  question.

loans  contracted 

funds 

for 

for 

14. Applications  for  payment  must  be  made  to  the
Commission via the Member States authorities which are
required  to  give  an  opinion  on  the  validity  of  the  claim
and  to  retain  appropriate  supporting  documentation.

15. Periodic  reports  on  the  activities  of  the 
joint
enterprise,  including  copies  of  its  accounts  and  of  the
official  documents  relating  to  the  fishing,  landing  and
transhipment  operations,  must  be  submitted  by  the
beneficiaries  to  the  Commission  every  12  months  for  the
first  three  consecutive  years  of  operations.

16. With the adoption of Council Regulations (EEC) No
2080/93 (9)  and  (EC)  No  3699/93 (10),  the  management
and  financing  of  the  joint  enterprises  has  been  integrated
into  the  Financial  Instrument  for  Fisheries  Guidance
(FIFG). Consequently, in accordance with the subsidiarity
principle,  Member  States  are  now  responsible  for  the
selection  of  projects  to  be  financed  within  the  limits  of
their  global  allocations  set  out  in  their  corresponding
Operational  Programmes.  Member  States  are  also
the  administration  and  control  of
responsible 
projects,  including  making  payments  to  the  beneficiaries
and 
approved  projects.  The
Commission’s  role,  once  Operational  Programmes  have
been  approved,  has  been  limited  to  participation  in  the
Monitoring  Committees  and  to  the  payment  of  global
advances to the Member States, on the basis of approved
financial  plans  and  declarations  of  Member  States.

follow-up  of 

the 

for 

As  with  the  other  measures  for  the  permanent  reduction
of  fishing  capacity,  the  amount  of  Community  aid  is
established  on  the  basis  of  the  age  and  capacity  of  the
vessel,  measured  in  terms  of  Gross  Registered  Tonnage
(GRT).  Member  States  were  required  to  pay  an  amount
of  between  20 %  and  50 %  of  the  Community  financial
contribution.

13. Priority  is  to  be  given  to  projects  involving:

(a)  vessels  which  are  active 

in  heavily  exploited
Community  waters,  or  in  non-Community  waters
where  access  to  fisheries  resources  is  difficult;

In  accordance  with 

the 
the  Community  Structural  Funds, 

subsidiarity  principle
17.
governing 
the
regulatory  provisions  under  the  FIFG  are  less  detailed
than  those  previously  applicable  under  the  provisions  of
Council  Regulation  (EEC)  No  4028/86.  The  amount  of
the  aid  is  still  determined  on  the  age  and  the  tonnage  of
the  vessel,  but  the  tonnage  is  now  measured  either  in
GRT  or  in  GT  (Gross  Tonnage);  Member  States  have  to
contribute at least 25 % of the total public aid in respect
of  projects  approved  in  Objective  1  regions,  and  at  least
50 %  in  respect  of  projects  approved  in  other  regions.

18. Since  1993  the  joint  enterprise  aid  scheme  has  been
introduced into the so-called ‘second generation’ IFAs. To
date,  however,  such  projects  (31  vessels  transferred  until
the  end  of  1997)  have  only  been  implemented  in  the

(7)  Article  21  bis  of  Council  Regulation  (EEC)  No  4028/86,  as

amended  by  Council  Regulation  (EEC)  No  3944/90.

(8)  Article 21 ter, paragraph 2, of Council Regulation (EEC) No

4028/86,  as  amended.

(9)  OJ  L  193,  31.7.1993,  p.  1.
(10) OJ  L  346,  31.12.1993,  p.  1.

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context  of  the  agreement  with  Argentina,  which  was
approved  by  Council  Regulation  (EEC)  No  3447/93 (11).
Administrative  and  control  procedures  for  such  projects
involve  the  submission  of  proposals  to  the  Commission
by  the  Member  States,  the  selection  of  projects  for
financing  by  a  EU-Argentina  joint  committee  and  their
subsequent  approval  by  the  Commission  and  by  the
Argentinian  authorities.  The  joint  committee  is  also
charged  with  controlling 
the  projects  and  with
supervising  the  use  of  the  financial  assistance.

RESULTS  OF  THE  AUDIT

Management  in  the  Member  States

Calculation  of  the  Vessel  Tonnage

19.
In  respect  of  the  joint  enterprise  projects  approved
under  the  agreement,  Community  aid,  determined  on  the
basis  of  the  tonnage,  measured  in  GRT,  and  the  age  of
the  vessel,  has  been  increased  by  20 %  compared  with
the aid payable under Regulation (EEC) No 4028/86 and
the  aid  payable  under
by  30 %  compared  with 
Regulation  (EC)  No  3699/93.  The  Community  pays,  via
the  Argentinian  authorities,  a  further  amount  of  aid
granted  as  working  capital  to  the  joint  enterprises  and
equivalent 
the
Community  shipowner.  No  co-financing  by  Member
States  is  foreseen  under  the  agreement.

the  amount  paid 

to  15 %  of 

to 

20. The  audit  covered  each  of  the  three  management
systems. The aid granted under each of them is set out in
Table  4.

BUDGETARY  RESOURCES

21. As shown in Table 4, total financial aid of ECU 298
million  has  been  granted  for  the  period  1991-1997  to
188  joint  enterprise  projects,  of  which  ECU  234  million
have  been  paid.  Under  Regulation  (EEC)  No  4028/86,
the  appropriations  are  allocated  on  budget  heading
B2-1 100  (Objective  1  regions),  irrespective  of  the  region
concerned.  This  allocation  has  already  been  criticised  on
several occasions by the Court (12). The projects approved
under  Regulation  (EC)  No  3699/93  are  financed  under
budget  heading  B2-1 100  for  Objective  1  regions  and
budget  heading  B2-1 101  for  Objective  5a  regions.
regulations,
According 
commitments  and  payments  are  made  by  annual
instalments. The amounts actually paid for the individual
projects  are  only  detailed  in  the  annual  implementation
the
reports  submitted  by 
to 
Commission (13).  The  EU-Argentinia  agreement 
is
financed  on  budget  heading  B7-8 000  (International
Fisheries  Agreements).

the  Member  States 

Structural  Funds 

the 

to 

(11) OJ  L  318,  20.12.1993,  p.  1.
(12) Annual report concerning the financial year 1996, paragraph

9.4  (OJ  C  348,  18.11.1997,  p.  221).

the  key  elements  determining 

22. The  registered  tonnage  of  the  vessels,  which  is  one
the  amount  of
of 
Community  aid,  may  be  expressed  either  in  GRT  (as
established  by  the  Convention  for  a  uniform  system  of
tonnage  measurement  of  ships,  signed  in  Oslo  in  1947)
or  in  GT  (as  established  by  the  Convention  on  tonnage
measurement  of  ships,  concluded  in  London  in  1969).
There is an important difference between the two units of
measurement,  with  GT  being  established  on  the  basis  of
the  total  volume  of  the  vessel,  whereas  the  GRT
measurement  is  less,  since  it  excludes  certain  spaces
which  are  deemed  to  be  non-productive.

It  was  found  that  significant  confusion  arose  in  the
23.
Member States between GT and GRT measurements: as a
result, for projects SM/GR/3/91, SM/IT/2/94, SM/IT/3/94
and  ARG/IT/SM/20-94,  GT  measurements  were  taken  as
GRT  measurements,  which  resulted  in  the  approval  of  a
higher  amount  of  aid.  The  Commission,  in  coordination
with the Member States, should re-examine these projects
with  a  view  to  establishing  the  corresponding  GRT
measurements,  modifying  the  decisions  granting  the  aid
and  recovering  the  overpayments  which  occurred.

24. The  problem  was  compounded  in  certain  instances
because  national  measurement  methods  which  were
different from both GRT and GT were accepted as being
equivalent to GRT. The Court has already observed that,
in  the  Community,  many  heterogeneous  measuring  units
are  still  used (14);  in  fact,  certain  Member  States  such  as
the  Oslo
Spain,  Portugal  and 
Convention, but applied nationally-adopted measurement
methods  (e.g.  the  Moorsom  Ton)  until  the  methods
foreseen  in  the  London  Convention  were  adopted  by  the
EU.

Italy  never  signed 

25.
In  the  Community  register  of  the  fishing  fleet,  the
national  measuring  units  are  filed  separately  from  GRT
and  GT,  but,  when  approving  the  aid,  these  national
measurement  methods  have  been  assimilated  to  GRT.
However, the audit did not always provide assurance that
they  are  equivalent  to  GRT;  for  example,  the  excluded
spaces  permitted  by  the  Italian  regulation  are  smaller

(13) Article 2 of Commission Regulation (EC) No 1796/95 of 25

(14) Annual  Report  concerning 

the 

financial  year  1996,

July  1995  (OJ  L  174,  26.7.1995,  p.  11).

paragraphs  9.35-9.36.

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than those allowed by the Oslo Convention, with the risk
that  the  tonnage  measured  on  the  basis  of  this  national
regulation  is  bigger  than  GRT  and  so  is  the  aid  granted.

Non-Recovery  of  Community  Aid  for  Construction  and
Modernisation

Suitability  of  Aided  Vessels  for  the  Planned  Fishery
Operations

important 

requirement  of 

26. An 
the  governing
regulations  is  that  the  aided  vessels  must  be  technically
suitable  for  the  planned  fishery  operations.  In  reality,
significant  adaptations  may  be  required  and,  in  the  case
of the numerous old vessels grant-aided, major overhauls
may  be  necessary  to  provide  navigational  security  and
economical  viability  after  redeployment.

the 

repairs 

27. The  audit  showed  that  in  every  Member  State  and
even in cases where the vessels concerned were over 30 or
even  45  years  old  (projects  SM/IT/3/93,  SM/PO/5/91,
SM/PO/FIFG/542, 
and
SM/PO/8/93), 
adaptations  needed  before  the  redeployment  were  not
specified  and  the  necessary  financing  arrangements  were
not  indicated  in  the  projects  submitted  for  approval.
Moreover,  no  precise  deadline  for  adaptation  had  been
established.  In  the  case  of  project  SM/PO/FIFG/542,  the
vessel  proved  to  be  unsuitable  for  the  planned  fishing
activities  subsequent  to  its  transfer  to  the  new  fishing
grounds  leading  to  technical  and  financial  difficulties  for
the  grant-aided  joint  enterprise.

Vessels Eligibility

for 

the  aid (15).  The  reason 

28. Another  key  condition  is  that  the  vessels  approved
for  Community  aid  should  be  active  at  the  time
of  approval  of 
this
condition  is  to  ensure  that  the  measure  would  have  a
positive  effect  on  the  real  fishing  capacity,  rather  than
on  the  theoretical  but  unused  capacity.  In  Spain,
however,  it  was  noted  in  respect  of  certain  projects
(projects  SM/ES/12/91,  ARG/SM/ES/25-94,  ARG/SM/
ARG/SM/ES/33-95,
ES/26-94, 
ARG/SM/ES/ 34-95, ARG/SM/ES/53-96), that at the date
of  their  approval,  the  vessels  in  question  had  been
inactive for a considerable period of time, tied up in port,
due  either  to  owners’  financial  difficulties  or  to  legal
proceedings against them. The related expenditure is ECU
16,7  million.

ARG/SM/ES/28-94, 

29. Article 38 of Council Regulation (EEC) No 4028/86
stipulates  that  vessels  which  have  benefitted  from
Community  aid  cannot  be  sold  outside  the  Community
during  a  period  of  ten  years  in  the  case  of  aid  for
construction  and  five  years  in  the  case  of  aid  for
modernisation. A similar restriction was already included
in  the  regulation  previously  in  force (16).  Consequently,
when a vessel which has received such Community aid is
exported,  the  aid  must,  in  principle,  be  recovered.  With
the  adoption  of  the  FIFG  in  1993,  the  concept  of  the
recovery  of  such  aid  pro  rata  temporis  was  explicitly
incorporated 
Community
regulation (17).

governing 

into 

the 

to  a  given 

30. As  the  Court  has  previously  pointed  out (18),  the
Commission  does  not  yet  dispose  of  an  appropriate
interface  between  its  databases  allowing  it  to  detect  all
the
the  assistance  granted 
circumstances,  its  management  and  control  systems  are
inadequate  to  determine  if  aid  for  construction  and
modernisation  has  been  paid  and  should  be  recovered  in
respect  of  individual  vessels  included  in  joint  enterprise
agreements. In fact, to this end the Commission still relies
on  voluntary  declaration  either  by  the  Member  State  or
the  beneficiary.

ship. 

In 

(EEC)  No  4028/86  and 

31. The  Spanish  authorities  consider  that  the  recovery
procedure  should  not  be  applied  to  vessels  exported,
before  the  above  mentioned  deadlines,  in  the  context  of
joint  enterprises  approved  under  the  provisions  of
the
Council  Regulation 
agreement  with  Argentina,  on  the  grounds  that  such  a
provision  was  not  expressly 
the
procedures  relating  to  joint  enterprises  were  adopted.
Because  of  the  lack  of  specific  details  at  the  Commission
concerning prior assistance granted to vessels grant-aided
under  these  joint  enterprise  projects,  the  total  amount  to
be  recovered  could  not  be  established.

included  when 

32.
In  France  (SM/FR/2/91),  two  of  the  three  vessels
included  in  a  joint  enterprise  (see  also  paragraph  37),
which  had  received  Community  aid  amounting  to  ECU
2,3  million  for  construction  and  modernisation  between
1987  and  1992,  were  exported  in  1992  without  a  pro
rata  temporis  recovery  of  that  aid.

33. The non-recovery of previously paid Community aid
in the case of Spanish and French projects gives rise to an

(15) Article 21 ter, paragraph 2 of Council Regulation (EEC) No
4028/86;  Article  2,  paragraph  3  of  Commission  Regulation
(EEC) No 1956/91 of 21 June 1991 (OJ L 181, 8.7.1991, p.
1); point 1.2.(a) of Annex III to Council Regulation (EC) No
3699/93  of  21  December  1993  (OJ  L  366,  31.12.1993,  p.
1).

(16) Article  16  of  Council  Regulation  (EEC)  No  2908/83  of  4

October  1983  (OJ  L  290,  22.10.1983,  p.  1).

(17) Point  1.2.(b)  of  Annex  III  to  Council  Regulation  (EC)  No

3699/93.
(18) Annual 

report  concerning 

the 

financial  year  1996,

paragraphs  9.39-9.40.

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unequal  application  of  Community  regulations,  since  a
pro  rata  temporis  recovery  of  the  aid,  under  similar
circumstances,  has  been  made  for  Greek  and  Italian
projects.  These  inconsistencies  in  the  application  of  the
provisions  of  Community  regulations  should  oblige  the
Commission  to  review  all  the  joint  enterprise  projects
approved,  particularly  for  Spain  and  France,  in  order  to
determine  cases  where  such  recoveries  are  necessary.

The Bona Fides of  Particular  Joint  Enterprises

In 

accordance  with  Community 

regulatory
34.
provisions,  the 
joint  enterprise  must  be  established
between  one  or  more  Community  shipowners  and  a
national  of  the  third  country  where  the  vessel 
is
exported (19).  The  joint  enterprise  should  be  a  bona  fide
commercial  arrangement,  economically  and  financially
viable  and  offering  reasonable  assurances  that  the  vessels
transferred  will  continue  to  have  access  to  that  third
country’s territorial waters for the foreseeable future. The
audit  revealed  the  instances  set  out  below  where  such
conditions  were  not  present,  either  at  the  date  of  the
approval  of  the  project  or  in  the  initial  years  of  activity.

less 

joint  enterprise 

than  one  year  after 

35. For  one  project  in  Spain  (ARG/ES/SM/53-96),  for
which  an  amount  of  ECU  2,5  million  was  granted,  the
Community shipowner had become the sole proprietor of
its
the 
constitution.  In  another  project  (ARG/IT/SM/20-94),
involving  Community  aid  totalling  some  ECU  2  million,
the Community partner had increased his participation to
more  than  98 %,  before  the  payment  of  the  balance  of
the  aid.  In  both  instances  only  the  form,  not  the
substance  of  a  joint  enterprise,  can  be  said  to  have
existed.  No  deadline  was  set  to  re-establish  the  joint
enterprise  by  associating  another  local  partner,  nor  were
steps  taken  to  cancel  the  aid.

State 

and  Member 

36. The  Commission 
files
(SM/IT/2/91,  SM/GR/3/91,  SM/GR/8/92,  SM/GR/10/92,
SM/GR/3/93,  SM/PO/FIFG/542)  provided  no  evidence
that adequate capital contributions had been made by the
partners to ensure the viability of the joint enterprises. In
practice,  the  EU  partner  makes  available  to  the  joint
enterprise  its  only  tangible  asset,  namely  the  vessel
transferred.  The  acquisition  of  the  asset  by  the  joint
enterprises  is  normally  financed  by  a  debt  due  to  the  EU
partner, which has to be serviced in priority to any other

the 

from 

net  returns 
joint  enterprises.  The  main
disadvantage of these procedures is that the third country
partner does not commit himself financially to the success
of  the  joint  enterprise.

Modifications  of  Joint  Enterprise  Projects

37. The  approved  joint  enterprise  arrangements  were
sometimes  changed  without  notification  to  or  the
approval of the Commission. In a case detected in France
(SM/FR/2/91), the joint enterprise involved the transfer to
Senegal  of  three  vessels,  belonging  to  two  Community
shipowners.  After  the  first  year  of  operations,  when  it
became  evident  that  the  project  was  not  as  successful  as
envisaged,  one  of  the  vessels  was  sold  to  a  third  party
while  the  two  remaining  were  transferred  to  a  new  joint
enterprise  in  Peru.  While  the  details  of  the  establishment
of  a  new  joint  enterprise  were  communicated  to  the
Commission  prior  to  the  payment  of  the  balance  of
Community  aid,  there  was  no  official  approval  of  the
revised  arrangements.  The  sale  of  the  third  vessel  was
never 
the  Commission.  The
Commission should reexamine this project (aid paid ECU
4,4  million)  and  determine  the  amount  that  should  be
recovered.

communicated 

to 

In the case of a joint enterprise in Angola, involving
38.
(project
both  Spanish  and  Portuguese  beneficiaries 
SM/ES/17/91-SM/PO/1/91),  a  number  of 
important
inconsistencies  and  non-respect  of  the  conditions  for
Community  aid  were  noted.  In  this  case,  a  Spanish  and
Portuguese  shipowner  each  presented  a  proposal  to
participate 
joint  enterprise  to  their  respective
national  authorities,  each  party  seeking  Community  aid
in  respect  of  the  vessels  included  in  the  joint  enterprise.
An  audit  of  the  two  files  revealed  that:

in  a 

(a)  the joint enterprise accounts presented by each of the
participants  to  their  respective  national  authorities
showed  material  differences  as  regards  the  carrying
values  of  assets  as  well  as  the  reported  operating
results;

(b) the  joint  enterprise  had  been  dissolved  by  mutual
agreement  between  the  participants,  following  the
sinking  of  one  of  the  vessels,  but  no  decision
modifying  the  original  project  was  adopted;

(c)  the  remaining  vessels  were  transferred  to  other  joint
the

the  prior  approval  of 

enterprises  without 
Commission.

(19) Article  21  bis  of  Council  Regulation  (EEC)  No  4028/86;
Article  9  paragraph  3  of  Council  Regulation  No  3699/93;
Article  2  (e)  of  the  agreement  with  Argentina.

The  Community  aid  involved  (ECU  2,7  million)  should
be recovered to the extent that the beneficiaries have not
fulfilled  their  commitments.

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Grant-Aided  Vessels  lost  in  Maritime  Accidents

Portuguese 

beneficiaries 

39. During  the  audit  it  was  noted  that  six  vessels,  five
concerning 
(SM/PO/2/91,
SM/PO/7/91,  SM/PO/8/92,  SM/PO/4/93,  PO/2.1.SG/
1265/1/95)  and  one  a  Spanish  project  (SM/ES/17/91),
were  subsequently  lost  in  maritime  accidents.  Project
SM/PO/2/91  had  already  been  fully  paid  before  the
sinking, which occurred in April 1996. At the time of the
Court’s  audit,  the  national  authorities  were  unable  to
trace  the  whereabouts  of  the  beneficiary  and  the
Commission  was  unaware  of  the  sinking.  Only  one
activity  report  had  been  sent  by  the  beneficiary  in  1994.

40. For the other projects, the sinkings occurred prior to
the  payment  of  the  balance  of  Community  aid.  The  full
amount  outstanding  was  paid  for  projects  SM/PO/7/91
and SM/ES/17/91. At the time of the audit, a decision on
the  payment  of  the  balance  of  aid  was  still  outstanding
for 
and
projects 
PO/2.1.SG/1265/1/95.

SM/PO/8/92, 

SM/PO/4/93 

41. The  Community  aid  is  granted  under  the  condition
that a fishing activity is to be maintained by the vessel for
a  minimum  period  of  three  years.  The  risk  that  a  vessel
may  sink  or  suffer  an  accident  must  be  carried  by  the
joint  enterprise, 
in  which  the  EU  partner  has,  by
definition,  a  significant  influence.  Sound  management
considerations  should  have  obliged  the  EU  partner  to
ensure  that:

scheme  in  the  Member  States.  However,  many  of  these
weaknesses  have  occurred  because  of  the  failure  by  the
Commission  services  to  adequately  control  and  monitor
the  implementation  of  the  measure.  Furthermore,  the
Commission failed to take corrective action even in cases
where 
the
non-application of the regulatory provisions, as instanced
when the Spanish authorities indicated their intention not
to recover previously paid Community aid (see paragraph
31).  The  audit  revealed:

subsequently 

informed 

it  was 

of 

(a)  inadequate  evaluations  of  aid  applications  prior  to

approving  Community  aid;

(b) a failure to clarify the very basis of calculating the aid
the

standardisation  of 

payable,  namely 
measurement  of  the  vessels;

the 

(c)  persistent 

inaccuracies  and  omissions 

in 

the

Community  register  of  the  fishing  fleet;

(d) lack  of  follow-up  of  activity  reports;

(e)  a  failure  to 

investigate  cases  thoroughly  where
Community-aided  vessels  had  been  lost  in  maritime
accidents;

(f)  a  complete  absence  of  visits  to  the  Member  States  to

verify  data  presented  by  beneficiaries.

(a)  the  vessel  is  covered  by  an  adequate  insurance

contract,  and

Evaluation  of  aid  applications

(b) in  case  of  an  accident,  the  joint  enterprise  will  fulfil
its  commitments  towards  the  Community  as  required
by  the  regulations,  by  either  replacing  the  vessel  or
reimbursing  the  aid  pro  rata  temporis.

42. No  evidence  was  found  in  five  of  the  six  cases  that
compensation  for  the  lost  vessels  was  paid  by  the
insurance  companies.  Moreover,  although  none  of  the
vessels had been replaced in order to ensure the minimum
three-year  fishing  activity,  no  decision  to  recover  the  aid
from the beneficiaries has been taken by the Commission
and/or  the  national  authorities  concerned.

Management  by  the  Commission

General

43. The  preceding  paragraphs 
illustrate  significant
weaknesses in the management of the joint enterprise aid

to 

accorded 

44. A  more  comprehensive  evaluation  of  applications
prior  to  the  approval  of  joint  enterprises,  with  greater
supporting  documentation
attention 
presented,  would  have  highlighted  anomalies 
in
applications,  such  as  discrepancies  in  registered  tonnages
(see  paragraphs  22-25),  lack  of  current  fishing  activities
(see  paragraph  28),  and  lack  of  indication  of  a  deadline,
and  of  financing  for  refitting  and  adaptation  of  the
vessels  (see  paragraphs  26-27).  The  audit  revealed  errors
and omissions which careful analysis, at Member State or
Commission  level,  should  have  detected.

Evaluation  of  vessel  tonnage  information

in 

serious 

shortcoming 

45. A 
the  Commission’s
management  of  the  measure  was  the  failure  to  identify
inaccurate  tonnage  measurement  data  of  grant-aided
vessels. This resulted in the miscalculation of the amount
of  aid  paid  for  projects  SM/GR/3/91,  SM/IT/2/94,
SM/IT/3/94  and  ARG/IT/SM/20-94  (see  paragraph  23).

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46. Regulations  have  been  adopted  stipulating  that  all
vessels  must  have  a  GT  measurement  certificate  by  2003
or  by  1995,  if  they  are  more  than  24  m  in  length (20).  In
fact,  heterogeneous  measuring  units  have  traditionally
been  used  in  the  different  Member  States (21).  The
Commission  has  simply  assimilated 
these  national
measuring  units  to  GRT  but  its  files  do  not  provide  any
evidence  of 
this  assimilation.
Appropriate  conversion  coefficients  should,  therefore,
have  been  applied  to  determine  the  correct  rate  of  aid.

the  correctness  of 

The  Community  register  of  the  fishing  fleet

47. The  Community  register  of  the  fishing  fleet  is
intended  to  contain  the  key  updated  information  on  all
the  Community  fishing  vessels.  This  should  allow  the
Commission to check data transmitted in the project files.
However,  as  the  Court  has  already  observed (22),  a
number  of  inaccuracies  and  omissions  still  exist  in  this
essential  Commission  management 
tool.  The  audit
revealed cases for which the measurement data contained
in the Community register were inaccurate or incomplete.
A  significant  number  of  errors  in  the  national  fleet
registers,  for  instance  concerning  the  utilisation  of  GRT
and  GT,  were 
the
Community  fleet  register.

subsequently 

transcribed 

into 

48.
Italy,  in  particular,  has  encountered  considerable
problems  in  the  implementation  and  management  of  its
national  fleet  register,  which  is  still  not  compatible  with
the Community register. The most recent communication
of  the  Italian  authorities  was  in  August  1995  and  the
information  furnished  was  deemed  to  be  inaccurate  by
the  Commission (23).  As  a  consequence,  the  condition
that  Community  aid  should  be  paid  only  after  the
definitive cancellation of the vessels from the Community
register (24)  was  not  respected  by  projects  SM/IT/3/93,
SM/IT/2/94, 
and
ARG/IT/SM/20-94,  with  aid  totalling  10,568  Mio  ECU.

SM/IT/3/94, 

SM/IT/6/94 

49.
In  the  case  of  Greece,  Spain  and  Portugal,  there
were  also  some  delays  before  vessels,  already  transferred
to  third  countries,  were  cancelled  from  the  register.

(20) Council  Regulation 

(EC)  No  3259/94 

(OJ  L  339,
29.12.1994, p. 11), modifying Council Regulation (EEC) No
2930/86  (OJ  L  274,  25.9.1986,  p.  1);  Commission  Decision
95/84/EC  (OJ  L  67,  25.3.1995,  p.  33).
report  concerning 

financial  year  1996,

the 

(21) Annual 

paragraphs  9.35-9.36.

(22) Annual 

report  concerning 

the 

financial  year  1996,

paragraphs  9.29-9.33.

(23) COM(96)  305  final.
(24) Article  5,  paragraph  1  of  Commission  Regulation  (EEC)  No

1956/91.

50. Given  its  management  and  control  responsibilities
the  Commission  should  ensure,  in  coordination  with  the
national  authorities,  that  the  procedures  for  recording
and  communicating 
the  national
information 
authorities  are  reliable,  accurate  and  timely.

from 

Evaluation  of  the  activity  reports

In  order  to  monitor  the  operation  of  grant-aided
51.
fishing vessels, activity reports must be transmitted to the
Commission  for  a  minimum  period  of  three  years.  Such
reports  are  essential  to  verify, 
inter  alia,  that  the
Community-aided  joint  enterprise  continues  to  operate.
Despite  their  importance,  no  sanctions  are  foreseen  in
cases  where  shipowners  fail  to  respect  this  requirement,
nor has the Commission taken steps to ensure compliance
with the regulations. Even when the reports are received,
no  analysis  is  routinely  undertaken  of  the  accounts  of
joint  enterprises  and  the  technical  data  contained  in  the
reports 
landings,  exports  etc.).  No
comparisons are made between the results declared in the
activity reports and the planned results. A more thorough
examination of these reports would have brought to light
cases identified in the present report where the conditions
for  the  receipt  of  Community  aid  have  not  been
respected.

(e.g.  catches, 

the  Commission  nor 

52. The three-year activity rule, provided for in Council
Regulation (EEC) No 4028/86, was reproduced under the
in  all  the  Member  States  examined,  except
FIFG 
Portugal.  The  Portuguese 
implementation  regulation
provides  that  only  one  report,  covering  the  first  year  of
activity,  must  be  submitted.  In  the  absence  of  such
reports,  neither 
the  national
authorities have the means to monitor the activities of the
joint enterprises. In such circumstances, a joint enterprise
constituted  by  a  Portuguese  beneficiary  could  be
dissolved immediately after the payment of the balance of
the  aid,  the  national  authorities  and  the  Commission  not
being  in  a  position  to  demand  the  reimbursement  of  the
aid.  The  Commission 
that
beneficiaries  throughout  the  Community  are  treated
equally.

should  have  ensured 

Evaluation  of  maritime  accidents

If  grant-aided 

fishing  vessels  sink  within 

53.
the
minimum  three  year  operational  period,  an  evaluation  of
associated  insurance  claims  —  particularly,  if  rejected  —
could  provide  the  Commission  with  useful  information
for  making  its  own  assessment  of  the  circumstances
surrounding  a  sinking.  However,  even  when  there  was  a

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balance  of  aid  to  be  paid  in  respect  of  a  boat  which  had
sunk,  the  Commission  has  never  sought  information
about  the  outcome  of  possible  insurance  claims  (see  also
paragraphs  39-42).

in  return  for  ever  diminishing  fishing  possibilities.  The
Court has already drawn attention to the escalating costs
of  IFAs (25).

Controls  on  the  spot

54. The  Commission  services  have  undertaken  very  few
verification  visits  to  the  Member  States  to  establish  the
reliability  of  data  transferred  and,  by  means  of  visits  to
beneficiaries,  the  reality  of  proposed  projects.

the  aid 

for  exporting 

59. The  aid  paid  is  exactly  the  same  for  both  the
scrapping  measure  and  for  the  joint  enterprise,  and  these
are  double 
the  vessel,  or
re-assigning  it  to  uses  other  than  fishing.  In  the  case  of
scrapping,  the  shipowner  is  compensated  for  the  loss  of
the  asset,  whereas,  in  the  case  of  a  joint  enterprise  the
asset  remains  intact  and  the  shipowner  retains  the
possibility  of  continuing  to  benefit  from  the  associated
income  stream.  Thus,  while  the  overall  objectives  of  the
joint  enterprises  arrangements  may  be  valid, 
the
incentives  offered  are  over-generous  relative  to  the
available  alternatives.  Furthermore,  under  the  present
arrangements  there  are  inadequate  guarantees  to  ensure
that the significant Community financial resources, which
the  joint  enterprise  scheme  requires,  are  protected.

IMPACT  AND  EFFICIENCY  OF  THE  MEASURE

55. The  principal  objective  of  the 
joint  enterprise
measure  is  to  diminish  the  capacity  of  the  Community
fleet, thereby contributing towards the establishment of a
better  balance  between  available  resources  and  fishing
activities. Community aid is given, therefore, in return for
the  removal  of  the  aided  vessel  from  the  Community
fishing  register  and  its  incorporation  into  the  fishing
register  of  a  third  country.

60. The payment of capital grants to shipowners cannot
be  considered  the  most  effective  way  to  ensure  that  aid
was used for the purposes of continuing fishing activities.
The other, unused, regulatory options, an interest subsidy
or  a  capital  contribution  towards  the  formation  of
guarantee  funds,  would  have  better  ensured  that  the
ongoing  fishing  activities  of  the  joint  enterprise  could  be
monitored  and  controlled  as  required  by  the  regulations.

56. During  the  implementation  of  MAGP  from  1991  to
1997, 
represent
approximately  36 %  of  the  total  capacity  reduction  of
some  300 000  tonnes  (see  Table  6).

joint  enterprise  arrangements 

the 

CONCLUSION

57. However,  the  results  are  less  impressive  than  they
seem.  About  90 %  of  the  vessels  for  the  projects  audited
were  already  fishing  outside  Community  waters  and  had
little  prospect  of  operating  within  Community  waters.
Their  definitive  removal  from  the  Community  register
has, therefore, had practically no effect on fishing activity
in  Community  waters.  Furthermore,  EU  fish  landings
have  been  stable  (see  Table  2).  Overall,  the 
joint
enterprises scheme is an expensive option, compared with
export, for removing vessels from the Community fishing
register.

61. The  major  failures  detected  were  due,  in  no  small
measure,  to  poor  monitoring  and  control  procedures  by
the  Member  States  and  the  Commission  (see  paragraphs
22-42  and  43-54).  In  particular,  the  Community  fleet
register still needs significant improvement in order to be
completely reliable (see paragraphs 47-50). Because of the
high  rate  of  aid  payable,  which  is  equivalent  to  the  rate
payable  for  the  scrapping  of  the  vessel  and  frequently
represents  a  multiple  of  the  insured  value  of  the  vessel,
the Community financial interest, that the vessel performs
its  fishing  activities  in  compliance  with  the  regulations,
should  have  been  adequately  protected  (see  point  59).

in 

there 

is  no 

evidence 

58. Furthermore, 
the
Commission  files  that,  after  the  redeployment  of  the
vessels,  their  fishing  rights  under  IFAs  have  been
reallocated  to  other  EU  vessels,  or  that  a  corresponding
reduction  in  the  amounts  paid  by  the  EU  budget  to  the
third  countries concerned under such  IFAs was  obtained.
Indeed  the  available  evidence  suggests  that  the  successive
IFAs  result  in  increasing  expenditure  by  the  Community

62. The  Commission  should  take  immediate  steps  to
review  its  monitoring  and  control  procedures  and,  in
instances  such  as  those  stated 
in  this  report  (see
paragraphs  23,  28,  31-33,  37-38,  41-42),  it  should

(25) Annual  Report  concerning  the  financial  year  1992  (OJ  C

309,  16.11.1993).

C  393/12

EN

Official  Journal  of  the  European  Communities

16.12.98

proceed 
to 
appropriate.

the 

recovery  of  EU  grants,  where

obligations  to  maintain  activity  and  supply  to  the  EU
market  for  the  minimum  period  required.

63. As  managed  to  date  by  the  Commission  and  the
Member  States,  the  payment  of  a  capital  grant  to  the
shipowner  is  not  the  most  effective  means  of  supporting
the  joint  enterprise  activities.  The  other  options  provided
by  the  regulations,  but  never  implemented  up  to  now  —
an  interest  subsidy  or  a  capital  contribution  towards  the
formation of a guarantee fund — would better ensure the
protection  of  the  Community  financial  interests  (see
paragraph  60).  If  capital  grants  should  continue  to  be
paid,  the  Commission  should  take  the  necessary  steps  in
order  to  ensure  that  the  beneficiaries  provide  sufficient
their
guarantees 

(e.g.  bank  guarantees) 

to  cover 

64. Although  the  measure  has  contributed  to  one  third
of  the  reduction  of  the  Community  fishing  fleet  since
1991,  some  90 %  of  the  vessels  included  in  the  projects
audited  were  already  fishing  outside  Community  waters
and  had  little  prospect  of  operating  within  Community
waters  in  the  future.  The  removal  from  the  Community
register has, therefore, had practically no effect on fishing
in  Community  waters.  Furthermore,  EU  fish  landings
have  been  stable  (see  paragraph  57).  No  evidence  was
found  in  the  Commission  files  that,  in  the  context  of  the
IFAs,  the  redeployment  of  these  vessels  has  led  to  a
reallocation of their fishing rights to other EU vessels, or
to  a  reduction  of  the  expenditure  paid  by  the  EU  budget
to  the  third  countries  (see  paragraph  58).

This  report  was  adopted  by  the  Court  of  Auditors  in  Luxembourg  at  its  meeting  of  7  October
1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

16.12.98

EN

Official  Journal  of  the  European  Communities

C  393/13

Table  1

Direct  employment  in  the  fisheries  sector  (1990-1995)

Member  State

1990

1991

1992

1993

1994

1995

Belgium (1)
Denmark (2)
Germany (3)
Greece (4)
Spain
France
Ireland (5)
Italy (6)
Netherlands (7)
Portugal (8)
United  Kingdom (9)

845
6 945
4 812
39 124
87 351
32 622
7 905
41 429
3 502
40 610
24 230

818
6 682
4 291
40 164
84 838
30 953
7 910
39 171
3 932
38 745
23 820

762
7 277
4 377
40 164
82 299
29 588
7 805
45 620
2 876
36 337
23 410

720
5 491
4 142
40 164
79 369
28 306
7 700
45 000
2 834
34 454
23 000

652
5 275
4 979
40 164
77 962
27 598
7 700
45 000
2 796
31 721
20 766

624
5 055
4 979
40 164
75 009
26 879
5 500
45 000
2 752
30 937
19 928

Variation
1995/1990

−26,15 %
−27,21 %
3,47 %
2,66 %
−14,13 %
−17,60 %
−30,42 %
8,62 %
−21,42 %
−23,82 %
−17,75 %

EUR-12

288 530

281 324

280 515

271 180

264 613

256 827

−10,99 %

Finland (10)
Sweden (11)

3 046
3 823

2 884
3 549

2 739
3 275

2 750
3 000

2 372
3 500

2 792
3 400

−8,34 %
−11,06 %

EUR  15

295 399

287 757

286 529

276 930

270 485

263 019

−10,96 %

Source:  DG  XIV,  OCDE  (fishermen  employed  full-  and  part-time  unless  otherwise  stated).
(1)  Source:  Belgian  Ministry  of  Agriculture  1986-1993.
(2)  Source:  Danish  Ministry  of  Fisheries  for  1990,  1991  and  1992.
(3)  Source:  German  Ministry  of  Agriculture  for  1994.

1994  figures  for  1995.

(4)  Source:  Greek  National  Statistical  Service,  Agricultural  statistics.

1991  figures  for  1992-1995.

(5)  Sources: 1991  Report,  SEC(91)  2288  final.

Regional  socio-economic  study  in  the  fishing  industry  —  DG  XIV  for  1991.
Figures  for  1990  and  1992  estimated  by  linear  interpolation.

(6)  Source:  ISTAT  1989-1992,  1993  figures  for  1994-1995.
(7)  Source:  Regional  socio-economic  study  in  the  fishing  industry  —  DG  XIV  for  1990.

Produktschap  Vis  for  1994-1995  (1995  provisional).

(8)  Source:  Ministry  of  Agriculture,  Rural  Development  and  Fisheries.

FAO  for  1995.

(9)  Source:  Regional  socio-economic  study  in  the  fishing  industry  —  DG  XIV  for  1990.

Figures  for  1991  and  1992  estimated  by  linear  interpolation.

(10)  Source:  Statistical  Yearbook  of  Finland  for  1992.

OECD  for  1994,  professional  sea-fishermen  only.
(11)  1991  and  1992  figures  estimated  by  linear  interpolation.

Table  2

Total  landings

Q:  1 000  tonne
V:  ECU  million

Member  State

Belgium  (1)
Denmark
Germany
Greece
Spain (2)
Finland
France
Ireland
Italy
Netherlands
Portugal (3)
Sweden (4)
United  Kingdom

1990

1991

1992

1993

1994

1995

Q

V

Q

V

Q

V

Q

V

Q

V

Q

V

37,5
1 458,5
215,4
154,2
887,9 (5)
74,0 (5)

529,8
183,6
337,0
538,0 (5)
309,7 (5)
240,7
610,4 (5)

83,7
443,4
156,3
500,0
1 831,2 (5)
33,7 (5)

882,8
74,2
1 257,0

465,0 (5)
400,0
117,9
547,9 (5)

36,3
1 728,0 (5)
253,9
159,4
787,3 (5)
60,2 (5)

524,0
159,2 (5)
368,4
462,0 (5)
306,8 (5)
227,9
639,6 (5)

90,5
460,0 (5)
181,4
527,8
1 798,2 (5)
29,0 (5)

880,3
119,9 (5)

1 307,4

488,0 (5)
400,0
119,3
600,5 (5)

33,4
1 930,0 (5)
265,5
179,2 (6)
842,0 (5)
79,1 (5)

506,9
167,0 (5)
566,7 (6)
412,7 (5)
295,7
300,9
458,0 (5)

75,4
426,2 (5)
153,7
593,4 (7)
1 794,3 (5)
24,7 (5)

848,8
115,5 (5)
2 011,1 (7)
429,6 (5)
400,0
98,8
522,1 (5)

32,3
1 593,0 (5)
258,5
179,2 (8)
795,3 (5)
83,6 (5)

528,0
222,6 (5)
405,1
474,4 (5)
289,0
335,7
678,6 (5)

76,2
338,9 (5)
147,2
593,4 (8)
1 510,0 (5)
21,6 (5)

845,7
108,1 (5)

1 208,7

441,8 (5)
400,0
81,1
544,5 (5)

30,2
1 872,7
248,6
191,0 (5)

1 291,6
103,4
867,8 (5)
297,2
413,9
480,2 (5)
247,5 (5)
376,0
874,9

75,5
383,8
292,1
379,9 (5)

1 700,9
25,0
1 229,4 (5)
136,0
1 168,1

437,9 (5)
319,7 (7)
91,2
721,9

35,6
1 998,4
276,5
158,9 (5)

1 462,2
133,1
868,4 (5)
378,5
413,9 (9)
462,6 (5)
247,5 (9)
379,0
912,6

92,1
412,0
283,8 (5)
341,1 (5)

1 965,5
22,6
1 255,3 (5)
141,3
1 168,1 (9)
417,0 (5)
319,7 (9)
94,0
711,7

EUR-12
EUR-15

5 262,1
5 576,8

6 641,6
6 793,1

5 424,8
5 713,0

6 854,1
7 002,3

5 657,1
6 037,1

7 370,1
7 493,6

5 456,0
5 875,3

6 214,5
6 317,2

6 815,6
7 295,0

6 845,2
6 961,4

7 215,2
7 727,3

7 107,7
7 224,2

Source:  DG  XIV,  OCDE  unless  otherwise  stated.
(1)  Source:  Ministe`re  de  l’Agriculture  belge.
(2)  Source:  Ministerio  de  Agricultura,  Pesca  y  Alimentacion  1990-1993.
(3)  Source:  Recursos  da  pesca  —  Se´ria  Estatistica  for  Q  1990,1991,1994;  DG  XIV  for  V  1990.
(4)  Source:  SCB  Statistics  Sweden  1990-1993.
(5)  Only  national  landings  in  home  ports.
(6)  Source:  Eurostat  catches.
(7)  Estimation
(8)  Data  of  1992.
(9)  Data  of  1994.

C

3
9
3
1
4

/

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

1
6
.
1
2
.
9
8

 
 
 
 
 
 
16.12.98

EN

Official  Journal  of  the  European  Communities

C  393/15

Table  3

External  trade

Imports

Exports

Balance

Q

V

Q

V

Q

V

Q:  1 000  tonne
V:  ECU  million

1986
1987
1988
1989
1990
1991
1992
1993
1994
EUR-15  1995
EUR-15  1996

3 322
3 613
3 548
3 991
4 160
3 998
4 096
4 020
4 723
4 303
4 324

4 593
5 294
5 917
6 390
6 925
7 698
7 655
7 064
8 124
8 271
8 646

1 306
1 237
1 239
1 328
1 220
1 302
1 432
1 478
1 593
1 584
1 509

1 266
1 363
1 372
1 462
1 352
1 471
1 420
1 454
1 682
1 630
1 695

−2 016
−2 376
−2 309
−2 663
−2 940
−2 696
−2 664
−2 542
−3 130
−2 719
−2 815

−3 327
−3 931
−4 545
−4 928
−5 573
−6 227
−6 235
−5 610
−6 442
−6 641
−6 951

Source:  DG  XIV,  Eurostat-Comext.
Imports:  Value  cif.
Exports:  Value  fob.
All  fishery  products  (including  meal,  oil,  waste,  etc.).

C  393/16

EN

Official  Journal  of  the  European  Communities

16.12.98

Table  4

Joint  enterprise  projects  financed  (1991-30.6.1998)

Member  State

No
Vessels

No
Projects

GRT

(million
ECU) (1)

(a)

(b)

(c)

(d)

(e)

(million
ECU) (2)

(%)

(g)/(e)
(%)

(g)

(h)

(i)

(%)

(f)

Aid  approved

Aid paid

Joint  Enterprises  projects  approved  under  Regelation  (EEC)  No  4028/86 (3)

Denmark
Greece
Spain
France
Italy
Portugal

Total

1
12
39
5
11
15

83

4
17
86
10
25
20

614
4 642
28 316
3 454
9 332
5 375

1 %
9 %
55 %
7 %
18 %
10 %

3,32
14,47
85,84
10,53
24,91
13,29

2
9
56
7
16
9

3,32
12,59
62,76
9,15
18,01
12,57

3
11
53
8
15
11

162

51 733

100 %

152,36

100

118,4

100

Joint  Enterprises  projects  approved  under  the  Argentina  Agreement  (Regulation  (EEC)  No  3447/93)

Germany
Greece
Spain
Italy
Netherlands
United  Kingdom

Denmark
Greece
Spain
Italy
Portugal

Germany
Denmark
Greece
Spain
France
Italy
Netherlands
Portugal
United  Kingdom

Total

Total

Total

2
1
22
1
1
2

29

2
1
23
1
2
2

31

3 138
436
20 845
1 298
779
524

12 %
2 %
77 %
5 %
3 %
2 %

9,19
2,25
58,4
2,02
4,26
3,20

12
3
74
3
5
4

7,35
0
52,62
1,64
0
0

12
0
85
3
0
0

27 020

100 %

79,32

100

61,61

100

Joint  enterprises  approved  under  FIFG  (Regulation  (EC)  No  3699/93)

1
5
43
7
20

76

2
2
18
104
5
19
1
35
2

188

1
6
59
10
21

97

2
5
24
168
10
36
2
41
2

250
1 900
24 431
2 721
5 655

1 %
5 %
70 %
8 %
16 %

0,46
4,00
48,00
4,32
9,50

1
6
72
7
14

0,37
0
48,00
0
5,90

1
0
88
0
11

34 957

100 %

66,28

100

54,27

100

Totals  per  Member  State

3 138
864
6 978
73 592
3454
13 351
779
11 030
524

12 %
1 %
6 %
65 %
3 %
12 %
1 %
10 %
0 %

9,19
3,78
20,72
192,24
10,53
31,25
4,26
22,79
3,2

3
1
7
65
4
10
1
8
1

7,35
3,69
12,59
163,38
9,15
19,65
0
18,47
0

3
2
5
70
4
8
0
8
0

290

113 710 

100 %

297,96

100

234,28

100

100
87
73
87
72
95

78

80
0
90
81
0
0

78

80
0
100
0
62

82

80
98
61
85
87
63
0
81
0

79

Source:  DG  XIV/D2,  SINCOM,  Annual  execution  reports  FIFG.
(1)  Sources:  SINCOM,  internal  listings  and  Member  States  Annual  execution  reports.
(2)  Sources:  SINCOM  and  Member  States  Annual  execution  reports.
(3)  Projects  approved  in  1994,  financed  by  FIFG,  included.

16.12.98

EN

Official  Journal  of  the  European  Communities

C  393/17

Table  5

Data  on  joint  enterprise  projects  financed  and  examined

Member  State

No  Projects

No  Vessels

GRT

Aid  approved
(million  ECU)

Aid paid
(million  ECU)

Total Exam. % Total Exam. % Total

Exam. % Total

Exam. % Total

Exam. %

Germany
Denmark
Greece
Spain
France
Italy
Netherlands
Portugal
United  Kingdom

Sources:  SINCOM;  DG  XIV.

2
2
18
104
5
19
1
35
2

0
0
8
21
1
9
0
11
0

2
0
5
0
44
24
20 168
10
20
36
47
2
0
41
31
2
0

0
0
12
31
3
17
0
14
0

3 138
864
6 978

0
0
0
0
50
3 731
18 73 592 19 179
1 240
30
3 454
5 474
47 13 351
0
779
8 009
34 11 030
0
524

0

0

9,19
3,78

0
0
0
0
53
20,72 10,67
26 192,24 54,63
3,68
10,53
36
8,8
31,25
41
0
0
4,26
22,79 11,07
73
0
0

3,2

0
7,35
0
0
3,69
0
51
9,91
12,59
28 163,38 47,63
3,68
9,15
35
8,80
19,65
28
0
0
0
8,44
18,54
49
0
0
0

0
0
79
29
40
45
0
46
0

Total

188

50

27 290

77

27 11 310 37 633

33 297,96 88,85

30 234,35 78,46

33

Table  6

Evolution  of  Community  Fishing  Fleet  Tonnage

Member  State

1991

1997

Difference

%

Reduction  due
to  JE (*)

%

(a)

(b)

(c)=(b)–(a)

(d)=(c)/(a)

(e)

(f)=(e)/(c)

(Tonnage)

Belgium
Denmark
Germany
Greece
Spain
France
Ireland
Italy
Netherlands
Portugal
U.K.

27 732
117 949
92 775
129 474
788 232
198 801
56 236
274 063
174 274
183 306
252 601

22 880
98 551
72 910
114 587
604 901
196 001
58 502
260 603
177 196
123 220
253 924

−4 852
−19 398
−19 865
−14 887
−183 331
−2 800
2 266
−13 460
2 922
−60 086
1 323

−17
−16
−21
−11
−23
−1
4
−5
2
−33
1

—
−864
−3 138
−6 978
−73 592
−3 454
—
−13 351
−779
−11 030
−524

0
4
16
47
40
123
0
99
0
18
0

EUR-12  Total

2 295 443

1 983 275

−312 168

−14

−113 710

36

Source:  DG  XIV,  Statistical  Bulletins,  D2.

(*)  GRT  at  the  moment  of  approval  of  aid.

JE  =  Joint  enterprises.

C  393/18

EN

Official  Journal  of  the  European  Communities

16.12.98

REPLIES  OF  THE  COMMISSION

EXECUTIVE  SUMMARY  OF  SPECIAL  REPORT  CONCERNING  THE  COMMUNITY  MEASURES  TO
ENCOURAGE  THE  CREATION  OF  JOINT  ENTERPRISES  IN  THE  FISHERIES  SECTOR

Most  of  the  gaps  and  shortcomings  noted  in  the  application  of  the  rules  have  already  been  described  in  a
1995  report  by  the  Directorate-General  for  Fisheries.  The  Commission  has  begun  to  take  steps  to  solve
these  problems.

The  Commission  would  stress  that,  despite  the  problems  encountered  in  implementing  the  measures,  the
joint-enterprise  scheme  has  proved  very  useful  in  dealing  with  the  problems  of  the  Community  fleet  in  the
1990s.  Joint  enterprises  have  contributed  to:

—  reducing the capacity of the Community fleet; they account for one third of the total reduction recorded

between  1991  and  1997,  as  the  Court  of  Auditors  points  out,

—  solving  the  problems  of  access  to  third-country  resources  encountered  by  Community  shipowners,

—  consolidating stable and lasting cooperation between the Community and the third countries with which

it  has  relations  in  the  fisheries  sector,

—  preserving  at  least  some  of  the  jobs  on  board  the  transferred  vessels  and  in  allied  activities,

—  supplying  the  Community  market  and  thereby  reducing  the  Community’s  dependence  on  outside

supplies.

In  view  of  this  contribution  to  the  structural  adjustment  of  the  European  Union’s  fishing
capacity,  the  new  Financial  Instrument  for  Fisheries  Guidance  (FIFG)  rules  will  continue  to
provide for setting up joint enterprises. With this in mind, the Commission has embarked upon
an evaluation of the joint-enterprise scheme as a whole, including the joint enterprises financed
in  the  framework  of  the  agreement  with  Argentina.

A common approach will be introduced to ensure that the scheme remains consistent with and
complementary  to  the  policy  on  fisheries  agreements.  Joint  enterprises  constitute  an  instrument
for  the  development  of  the  fishing  industry  in  the  third  countries  with  which  the  Community
has  reached  an  agreement;  moreover,  a  fisheries  agreement  provides  an  appropriate  legal
framework  for  the  monitoring  of  joint  enterprise  projects  and  activities.

When  drawing  up  the  new  FIFG  rules,  the  Commission  will  reinforce  the  legal  framework
for:

—  conditions  to  be  met  when  a  joint  enterprise  is  set  up,

—  guarantees  required  of  the  beneficiary  depending  on  the  Community  premium,

—  monitoring  and  inspection  arrangements.

In the framework of the present rules, the Commission has reminded the Member States of their
obligations for the management and monitoring of joint-enterprise projects; it has also launched
several  measures  to  reinforce  monitoring  by  its  own  departments  (setting  up  a  database,
checking  national  methods  of  measurement,  intensifying  controls).

16.12.98

EN

Official  Journal  of  the  European  Communities

C  393/19

Finally, in the cases mentioned by the Court, the Commission is making all necessary checks on
discrepancies in vessel tonnage, construction and modernisation aid, changes to joint-enterprise
projects and sinking of vessels. The Commission will if necessary recover any amounts wrongly
paid.

DESCRIPTION  OF  THE  AUDITED  ACTIVITIES

Regulatory  Framework

9. While  it  is  true  that  the  joint-enterprise  aid  scheme
under  Regulation  (EEC)  No  4028/86  has  been  directly
managed  by  the  Commission,  it  should  be  pointed  out
that  management  has  been  based  on  prior  processing  by
the  Member  States,  which  make  a  preliminary
classification  of  projects,  approve  the  principle  of
information
financing  and  certify  the  truth  of  the 
transmitted  by  applicants  with  their  aid  applications  and
applications  for  payment.

18. The  procedure  described  under  point  9  also  applies
to  the  management  of  join  enterprises  in  the  framework
of  the  agreement  with  Argentina,  except  for  the  final
selection  of  projects,  which  is  up  to  the  EC/Argentina
joint  committee.

BUDGETARY  RESOURCES

21. As  pointed  out  in  the  Commission’s  reply  to  point
9.4  of  the  1996  annual  report,  it  was  the  budgetary
authority that decided to group together all payments for
measures  with  the  same  aims  so  as  to  keep  down  the
number  of  budget  headings.

RESULTS  OF  THE  AUDIT

Management  in  the  Member  States

Calculation  of  the  vessel  tonnage

23. For  project  SM/GR/3/91,  after  a  request  from  the
Greek  authorities,  the  beneficiary  has  agreed  to  see  that
his  vessel  is  measured  in  GRT  so  that  the  amount  of  aid
can  be  properly  calculated,  and  any  overpayment
recovered.

For  the  three  Italian  vessels,  the  Commission  has
contacted  the  authorities  with  a  view  to  carrying  out  the
necessary  checks  and  to  solving  the  problems  arising.  If
necessary, 
any
overpayments.

the  Commission  will 

recover 

24.-25.
In  order  to  solve  the  problem  of  non-standard
methods  of  measurement  the  Commission  has  signed  a
contract  with  an  expert  institute  which  will  verify  the
working methods of the national measurers and establish
a  report  on  how  measurement  is  carried  out  in  the
Member  States.  The  expert  Institute  will  deliver  this
report  by  mid-1999.

In  the  light  of  the  recommendations  of  this  report  the
Commission  will  take  the  initiative  in  proposing  possible
eliminating
additional 
non-standard  measurement.

steps  with 

view 

the 

to 

Re-measurement  of  all  vessels  in  GT,  in  accordance  with
Regulation (EEC) No 2930/86 as amended by Regulation
(EC)  No  3259/94,  is  in  fact  progressing  satisfactorily  in
most  Member  States.  The  Commission  has  recently
reminded  Member  States  where  sufficient  progress  has
not  been  made  about  their  obligations.  The  Commission
is  considering  the  possibility  of  legal  action  and  has  sent
letters of formal notice to five Member States concerning
this  subject.

Suitability  of  aided  vessels  for  the  planned  fishery
operations

26.-27. Applicants  under  the  joint-enterprise  aid  scheme
must  specify  the  conditions  of  access  to  the  fishing
in  the  documents  they  send  the  national
grounds 
authorities,  and  in  particular  indicate  whether  their
vessels are technically adapted to the operations planned.
When  the  application  for  aid  is  submitted,  the  Member
States  check  the  accuracy  of  this  information.

The  fact  that  work  is  carried  out  on  a  vessel  does  not
necessarily imply that it was technically unsuitable for the
fishing  operations  planned  when  the  joint  enterprise  was
set up. Vessels are regularly serviced, and when a vessel is
to  be  redeployed,  this  regular  maintenance  provides  an
opportunity  for  any  transformations  required  to  adapt
them  better  to  the  special  conditions  of  the  new  fishing
their  productivity  or  upgrade
grounds, 
equipment  for  processing  catches.

increase 

When  the  new  rules  are  drawn  up  for  the  FIFG,  the
Commission will consider the possibility of requiring that
the  details  of  the  work  to  be  carried  out  and  the  time
limit  on  completing  it  should  be  specified  when  the
application  is  submitted.

C  393/20

EN

Official  Journal  of  the  European  Communities

16.12.98

Vessel eligibility

temporis 
recovery, 
conciliation  meeting  with  them.

the  Commission  will  hold  a

28. The  joint-enterprise  aid  scheme  gives  priority  for
in
financial 
non-Community  waters  where  access  to  resources  is
difficult.

assistance 

operating 

vessels 

to 

Some  vessels  have  been  obliged  to  interrupt  their  fishing
activities  temporarily  after  encountering  problems  in
non-Community  waters  (Namibian  and  NAFO  waters)
where  they  had  been  fishing  in  the  early  1990s.  This
temporary  interruption  did  not  affect  the  status  of  the
vessels  as  active  vessels.

Indeed,  the  Commission  has  done  its  best  to  find  fishing
grounds  for  these  vessels  in  the  framework  of  the
EC/Argentina  agreement.  Negotiation  of  the  agreement
and subsequent implementing procedures were completed
only  at  the  end  of  1994.  The  vessels  concerned  benefited
from  the  measures  from  1995.

In  the  circumstances,  the  Commission  is  not  planning  to
recover  the  aid.

33. As  soon  as  the  database  mentioned  in  point  30  is
operational,  the  Commission,  after  exhaustively  checking
all  the  data  and  reaching  agreement  with  the  national
authorities  in  all  the  countries  concerned,  will  proceed
with  recovery  of  amounts  due.

The  bona  fides  of  particular  joint  enterprises

35. Community rules in force do not specify a minimum
holding  by  any  of  the  partners,  but  they  specify  that  the
Commission  may  grant  priority  to  projects  where  several
Community  shipowners  hold  a  majority  of  the  equity  of
the  enterprise.

joint
The  percentage  holdings  of  partners 
enterprise, and the minimum duration of the holding, will
be  considered  when  new  rules  are  drawn  up  for  the
FIFG.

the 

in 

Non-recovery  of  Community  aid  for  construction  and
modernisation

The  Commission 
the
is  examining 
Argentinian  partner’s  participation  in  the  joint  enterprise
involved  in  project  ARG/ES/SM/53-96.

the  matter  of 

30. A  new  database  of  all  the  construction  and
modernisation  aid  granted  since  1983,  by  vessel,  is  being
set  up.

the  database  will  be  compared
The  content  of 
periodically  with  the  fleet  register  to  check  that  the
vessels  concerned  remained  active  during  the  period
required  by  the  rules.

Results  will  be  available  from  the  end  of  1998.

31. The  Commission  does  not  agree  with  the  Spanish
authorities,  who  take  the  view  that  the  principle  of
recovery  pro  rata  temporis  does  not  apply  to  vessels
having  received  aid  under  the  joint-enterprise  scheme  in
the framework of Regulation (EEC) No 4028/86 and the
agreement  with  Argentina.

The Spanish authorities have agreed to the Commission’s
suggestion  of  holding  a  technical  meeting  on  this
matter.

32. The  Commission  has  contacted  the  beneficiary,
owner  of  the  two  vessels  in  question,  with  a  request  for
repayment  of  Community  aid  amounting 
to  FRF
7 667 740.

36. The  viability  of  the  joint  enterprise  is  examined  by
the  national  authorities  before  the  application  for
assistance  is  sent  to  the  Commission.

Partners’  contributions  of  assets  to  the  joint  enterprise
may  be  in  kind.  The  Community  partner  contributes  the
vessel,  and  the  third-country  partner  contributes  the
fishing licence.

The possibility of fixing a compulsory contribution to the
capital of the joint enterprise will be considered when the
new  FIFG  rules  are  drawn  up.

Modifications  of  joint-enterprise  projects

37. Taking  the  view  that  the  recipient  had  duly
substantiated  the  pressing  reasons  for  the  change  in
operating  conditions,  the  Commission  agreed  to  the
transfer  to  Peru  of  the  two  vessels.  In  the  circumstances,
considering  that  the  joint  enterprise  was  continuing  its
fishing  activities,  Community  aid  was  not  called  into
question.

However,  in  view  of  the  reservations  expressed  by  the
French  authorities  regarding  the  principle  of  pro  rata

The  Commission  has  contacted  the  beneficiary  to  clarify
the  situation  of  the  third  vessel  and  will  take  the
appropriate  decisions  in  the  light  of  the  rules  in  force.

16.12.98

EN

Official  Journal  of  the  European  Communities

C  393/21

38. The  Commission  has  asked 
the  authorities
concerned for an explanation. It will take the appropriate
decisions  in  the  light  of  the  rules  in  force.

46. The  Commission  has  already  replied  to  the  Court’s
observations  in  its  reply  to  points  24  and  25.

Grant-aided  vessels  lost  in  maritime  accidents

The  Community  fishing-vessel  register

39.-42. The Commission has sent several requests to the
national authorities for information on the circumstances
of  the  sinking  of  these  vessels,  and  in  particular  on
insurance cover.

The  Commission  considers  all  cases  of  sinking  of  vessels
as  soon  as  it  is  informed  of  an  accident;  it  takes  the
required  measures.

The  Commission  agrees  with  the  Court.  When  the  new
rules  are  drawn  up  for  the  FIFG,  the  Commission  will
check  whether  it  can  impose  a  requirement  for  an
insurance  contract  to  cover  each  vessel  transferred  to  a
joint enterprise, and will define financial arrangements in
case  of  accident.

Management  by  the  Commission

Evaluation  of  aid  applications

44. Most  of  the  conditions  which  must  be  fulfilled  by
vessels  for  them  to  be  eligible  for  the  joint-enterprise  aid
scheme must be checked by the national authorities when
they  examine  the  applications  lodged  by  recipients.

Checking of the information sent by the Member States is
mainly  done  at  on-the-spot  inspections.

to 

to  9.33) 

(points  9.29 

the  Commission’s  reply 

47. Since 
the  Court’s
observations  on  the  fishing-vessel  register  in  its  1996
report 
situation  has
considerably improved as a result of the bilateral contacts
between  the  Commission  and  the  Member  States  to
establish  the  multiannual  guidance  programmes  for
1997-2001  and  as  a  result  of  the  joint  control/structural
missions  undertaken  by  Commission  staff  to  ensure
efficient  implementation  of  these  programmes.

the 

48. As  regards  Italy,  a  working  group  has  been  set  up
between  the  Commission  and  the  Italian  authorities,
whose  terms  of  reference  are  to  review  and  update  the
data  in  the  Italian  fleet  register  from  1  January  1992
onwards.  The  working  group  will  also  examine
compatibility  between  the  data  in  the  fleet  register  and
those  provided  by  Italy 
its
multiannual  guidance  programme  1992-96.  The  working
group  will  complete  its  work  by  31  December  1998.

in  the  framework  of 

49. The  delay  in  removing  the  transferred  vessels  from
the  Community  vessel  register  was  due  to  administrative
procedures;  the  vessels  had  been  duly  removed  from  the
national register.

Depending  on  the  means  available  to  the  Commission,  it
is  planned  to  intensify  checks  on  the  joint-enterprise
scheme  in  1998.

The  Commission  has  reminded  the  Member  States  of
their  obligation  to  notify  changes  in  their  national
registers immediately.

The Commission has called the Member States’ attention
to  the  improvement  in  the  management  and  monitoring
of joint-enterprise projects. The matter will also be raised
at  control  coordination  meetings,  which  have  recently
been 
introduced  between  the  Commission  and  the
Member  States,  to  that  priority  can  be  given  to  checking
joint  enterprise  projects.

Evaluation  of  vessel  tonnage  information

45. The certification of vessel tonnage is a matter for the
Member  States.

The new draft Regulation on the Community fishing fleet
register  provides  for  very  short  deadlines  for  Member
States  to  notify  data.

50.
In relation to the implementation of the multiannual
guidance  programmes  for  the  period  1997-2001  and  the
revision of the legislation on the Community fishing fleet
register  the  Commission  has  repeatedly  reminded  the
Member  States  about  their  obligations  to  communicate
the  required  information.

The  Commission  will  ask 
Italian
authorities for fuller information on the cases referred to.
(See  also  point  23.)

the  Greek  and 

In  the  future  implementing  regulation  for  the  Financial
Instrument  for  Fisheries  Guidance,  the  Commission  will
propose  tighter  rules  on  failure  by  the  Member  States  to
comply  with  the  reporting  requirements.

C  393/22

EN

Official  Journal  of  the  European  Communities

16.12.98

Evaluation  of  activity  reports

those  who  were  finding  it  difficult  to  gain  access  to
third-country  resources.

51. The  Commission 
Member  States  to  request  any  missing  reports.

systematically 

contacts 

the

The reports are examined periodically by the Commission
so  as  to  take  stock  of  the  measure.  A  random  sample  is
taken  for  checking  in  depth.

The  Commission  has  also  decided  to  make  an  overall
evaluation of the joint-enterprise scheme; the procedure is
now  being  launched.  An  evaluation  of  international
fisheries  agreements,  including  joint  enterprises  financed
in  the  framework  of  the  agreement  with  Argentina,  is
under  way  at  the  moment.

52. The  Commission  has  drawn 
at
Monitoring  Committee  meetings  in  Portugal,  to  the  need
for  Portuguese 
introduce  a  provision
requiring  aid  recipients  to  present  three  annual  reports.

legislation  to 

attention, 

The  scheme  is  therefore  advantageous  both  as  a  solution
to  the  problem  of  the  vessels,  which  are  definitively
excluded 
the
for 
from  Community  waters,  and 
Community  market,  which  they  continue  to  supply.

The  stability  of  EU  fish  landings  is  due  to  technical
progress,  which  gives  rise  to  continuous  gains 
in
fishing-fleet  productivity.

It  is  true  that  the  joint-enterprise  scheme  is  a  more
expensive  option  than  export,  but  it  is  justified  by  major
advantages:  security  of  supply  on  Community  markets,
conservation  of  at  least  some  of  the  jobs  on  the  vessels
and  in  allied  activities  in  the  home  port  (victualling,
unloading,  vessel  maintenance,  etc.).

The  Portuguese  authorities  are  at  present  adapting  the
law  to  take  account  of  the  Commission’s  request.

The level of the Community premium to joint enterprises
will be reconsidered when the new FIFG rules are drawn
up.

Evaluation  of  maritime  accidents

53. The  Commission’s  reply  to  this  observation  will  be
found  under  point  42.

Controls  on  the  spot

54. When  aid  applications  are  sent  to  the  Community,
the  national  authorities  certify  that  the  vessel  fulfils  the
conditions  required  under  the  rules.

On-the-spot  controls,  which  the  Commission  undertook
in  the  framework  of  structural  policy  on  fisheries,  were
intended  mainly 
involving  physical
for  projects 
installations  such  as  buildings  or  aquaculture  plant.

However,  the  Commission  has  already  planned  more
intensive  on-the-spot  controls 
joint
enterprises  in  Spain,  Portugal,  Italy  and  Greece.

in  1998 

for 

58. On  the  basis  of  the  information  at  its  disposal,  the
Commission, along with the Member States, ensures that
vessels  leaving  the  agreements  are  replaced.

Financial  compensation  is  renegotiated  with  the  third
countries concerned when the agreements are renewed, as
a function of the fishing opportunities provided, requests
from  the  Member  States  and  actual  utilisation  in  the
lifetime  of  the  previous  agreement.

The  question  of  vessels  withdrawn 
fisheries
agreements  to  set  up  joint  enterprises  will  be  considered
when the new FIFG rules are drawn up, and will also be
taken  into  consideration  after  the  current  evaluation  of
fisheries agreements.

from 

59. As  mentioned  in  point  57,  the  advantages  of  the
scheme are commensurate with the Community premium
to  joint  enterprises.

The  guarantees  required  of  the  recipient, 
including
payment  arrangements,  will  be  examined  when  the  new
FIFG  rules  are  drawn  up.

IMPACT  AND  EFFICIENCY  OF  THE  MEASURE

57.
In  the  framework  of  restructuring  the  Community
fleet, the joint-enterprise scheme has provided new fishing
opportunities  for  Community  fishermen,  in  particular

60. The  various  possible  forms  of  financial  assistance,
and  the  means  to  encourage  their  use,  will  be  considered
when  the  new  FIFG  rules  are  drawn  up.

16.12.98

EN

Official  Journal  of  the  European  Communities

C  393/23

CONCLUSION

Commission  will  make  all  necessary  checks  and  recover
any  sums  wrongly  paid.

61. The  Member  States  certify  the  accuracy  of  the  data
sent  by  the  beneficiary.

Measures  to  intensify  checks  on  the  joint-enterprise
scheme  were  taken  in  1998,  as  far  as  Commission
resources  allowed.

Moreover,  the  Commission  has  drawn  the  attention  of
the  Member  States  to  the  need  for  better  management
and  monitoring  of  joint-enterprise  projects.

The  Commission  has  already  taken  measures  to  improve
the  Community  fishing-vessel  register,  and  has  reminded
the  Member  States  of  their  obligations.

63. The  various  possible  forms  of  financial  assistance,
along  with  ways  of  encouraging  recourse  to  them  and  of
guaranteeing  continuity  of  activities  and  of  Community
market  supply,  will  be  examined  when  the  new  FIFG
rules  are  drawn  up.

64. The joint-enterprise scheme has solved the problems
of  access  to  third-country  resources  encountered  by
Community  vessels.  Such  vessels,  which  can  no  longer
in
return 
third-country  waters  and  continue 
the
Community  market.

to  Community  waters,  now 

fish 
to  supply 

freely 

Inspection  and  monitoring  arrangements,  and  guarantees
to be required of beneficiaries, will be examined when the
new  FIFG  rules  are  drawn  up.

Landings  from  Community  waters  are  stable  because  of
technical  progress,  which  is  continually  increasing  the
productivity  of  fishing  fleets.

62. The  Commission  has  already  taken  measures  to
improve  controls  on 
joint  enterprise  scheme,
including  the  development  of  a  computer  programme  to
identify  vessels  that  have  already  received  Community
aid;  preliminary  results  will  be  available  at  the  end  of
1998.

the 

On  the  questions  of  discrepancies  in  vessel  tonnage,
in
construction  and  modernisation  aid, 
joint-enterprise  projects  and  sinking  of  vessels,  the

changes 

As  far  as  possible,  vessels  withdrawn  from  fisheries
agreements  are  replaced,  and  financial  compensation  is
renegotiated  when  the  agreements  are  renewed.

The  question  of  vessels  withdrawn 
fisheries
agreements  to  set  up  joint  enterprises  will  be  considered
when the new FIFG rules are drawn up, and will also be
taken  into  consideration  after  the  current  evaluation  of
fisheries agreements.

from