Council Regulation (EC) No 2799/98 of 15 December 1998 establishing agrimonetary arrangements for the euro
Date: 1998-12-15
Institutions: Council of the European Union
Subjects: European Monetary System, agri-monetary policy, common agricultural policy, exchange rate, national currency, representative rate

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 2799/98

of 15 December 1998

establishing agrimonetary arrangements for the euro

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Articles 42 and 43 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parlia-
ment (2),

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

Having
Committee (4),

regard to

the

opinion of

the Monetary

(1) Whereas Council Regulation (EC) No 974/98 of 3
the euro (5)
May 1998 on the introduction of
provides that from 1 January 1999 the currency of
the Member States participating in economic and
monetary union shall be the euro; whereas the agri-
monetary arrangements provided for on the basis
of:

— Council Regulation (EEC) No 3813/92 of 28
December 1992 on the unit of account and the
conversion rates to be applied for the purposes
of the common agricultural policy (6);

— Council Regulation (EC) No 1527/95 of 29
June 1995 regulating compensation for reduc-
tions in the agricultural conversion rates of
certain national currencies (7);

— Council Regulation (EC) No 2990/95 of 18
December 1995 regulating compensation for

(1) OJ C 224, 17. 7. 1998, p. 15.
(2) OJ C 328, 26. 10. 1998.
(3) Opinion delivered on 9 September 1998 (not yet published in

the Official Journal).

(4) Opinion delivered on 30 September 1998 (not yet published

in the Official Journal).

(5) OJ L 139, 11. 5. 1998, p. 1.
(6) OJ L 387, 31. 12. 1992, p. 1. Regulation as last amended by
Regulation (EC) No 150/95 (OJ L 22, 31. 1. 1995, p. 1).

(7) OJ L 148, 30. 6. 1995, p. 1.

appreciable
conversion rates before 1 January 1997 (8);

reductions

in the

agricultural

— Council Regulation (EC) No 724/97 of 22 April
1997 determining measures and compensation
relating to appreciable revaluations that affect
farm incomes (9)

essentially consist in a system of specific agricul-
tural conversion rates different
from the actual
exchange rates of the currencies; whereas such a
system is incompatible with the introduction of the
euro; whereas agrimonetary arrangements adapted
to the new situation should therefore be established
and the Regulations laying down the former agri-
monetary arrangements should be repealed;

it

(2) Whereas in the present monetary situation, where
the gaps between exchange rates and agricultural
conversion rates are moderate,
is possible to
establish a simpler agrimonetary system closer to
the actual monetary situation; whereas conse-
quently the conversion into the national currency
of the non-participating Member States prices and
amounts fixed in euro in legal instruments relating
to the common agricultural policy may be done
with the exchange rate of the euro in those curren-
cies; whereas such a provision has the further
advantage of considerably simplifying the manage-
ment of the common agricultural policy;

(3) Whereas the rate of exchange of the euro into
national currency may vary in the course of the
period during which an operation is carried out;
whereas
amounts
applicable
concerned must be determined; whereas in general
account must be taken of the event through which
the economic objective of the operation is attained;

to the

rate

the

(8) OJ L 312, 23. 12. 1995, p. 7. Regulation as amended by
Regulation (EC) No 1451/96 (OJ L 187, 26. 7. 1996, p. 1).
(9) OJ L 108, 25. 4. 1997, p. 9. Regulation as amended by Regu-

lation (EC) No 942/98 (OJ L 132, 6. 5. 1998, p. 1).

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whereas the rate of exchange applied should be
that of the date on which this event occurs; whereas
it may be necessary to specify this operative event
or to waive its application, observing certain criteria
and in particular the rapidity with which currency
movements are passed on;

(4) Whereas,

in cases of major currency revaluation
with potential effects on prices and amounts other
than direct aid, farm incomes may in certain condi-
tions be reduced; whereas as a consequence provi-
sion could justifiably be made for
temporary,
degressive aid to offset the effects of revaluations,
and keep pace with the development of agricultural
prices in a manner compatible with the rules of the
general economy;

(5) Whereas specific rules adapted to the type of aid
are required to offset the effects of major currency
revaluations on the level of certain direct aids in
national currency;

(6) Whereas the arrangements for financing compens-
atory aid must provide for a financial contribution
from the European Union and the Member State;

(7) Whereas in the longer term the agricultural sector
must adjust, like other sectors of the economy, to
the monetary reality; whereas consequently a
cut-off date should be set for the compensation
arrangements; whereas the setting of such a cut-off
date is part of the budgetary discipline;

(8) Whereas reason dictates that special rules be laid
down for dealing with exceptional situations arising
either within the European Union or on the world
market and requiring immediate action to ensure
that
the
common agricultural policy operate effectively;

established under

arrangements

the

HAS ADOPTED THIS REGULATION:

Article 1

For the purposes of this Regulation:

(a)

‘legal instruments relating to the common agricultural
policy' means:

— legal instruments based directly or indirectly on
Article 43 of the Treaty, with the exception of the
Common Customs Tariff and other legal instru-
ments of customs legislation applicable to both
agricultural and industrial products,

— legal

instruments applicable to goods processed
from agricultural products and subject to specific
trade arrangements;

the Member
‘participating Member States' means:
States which have adopted the single currency in
accordance with the Treaty;

‘non-participating Member States' means: the Member
States which have not adopted the single currency;

‘national currencies' means: the national currencies of
the non-participating Member States and of
third
countries;

‘exchange rate' means: the currency market exchange
rate between the euro and national currency;

‘appreciable revaluation' means: a situation where the
annual average exchange rate is below a threshold
defined as the lowest average annual conversion rate
applied during the preceding three years and the
exchange rate of 1 January 1999;

the
‘appreciable part of
percentage by which the annual average falls short of
the threshold referred to in point (f).

revaluation' means:

a

(b)

(c)

(d)

(e)

(f)

(g)

Article 2

Prices and amounts

1.
instruments
relating to the common agricultural policy shall be
expressed in euro.

fixed in legal

(9) Whereas a Member State that is not participating in
economic and monetary union must have the
option of making payments
expenditure
for
resulting from legal
instruments relating to the
common agricultural policy in euro rather than in
national currency; whereas steps should be taken to
ensure that this option does not lead to any unjusti-
fied advantage for parties making or
receiving
payment;

2.
They shall be granted or collected in euro in the
participating Member States. In the other Member States,
they shall be converted into their national currency by
means of an exchange rate, and, without prejudice to
Article 8, granted or collected in national currency.

3. However, for amounts relating to imports and for
export taxes, fixed in euro by a legal instrument relating
to the common agricultural policy and applicable by the
Member States in national currency, the conversion rate
shall be specifically equal to the rate applicable pursuant
to Article 18(1) of Regulation (EEC) No 2913/92 (1).

(10) Whereas provision should be made for the poss-
ibility of interim measures to facilitate the intro-
duction of the new agrimonetary arrangements,

(1) OJ L 302, 19. 10. 1992, p. 1. Regulation as last amended by
Regulation (EC) No 82/97 of the European Parliament and of
the Council (OJ L 17, 21. 1. 1997, p. 1).

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Article 3

1.

The operative event for the exchange rate shall be:

— the completion of customs import or export formal-
ities in the case of amounts collected or granted in
trade with third countries,

— the event whereby the economic objective of

the

operation is attained in all other cases.

2. Where the operative event as referred to in paragraph
1 has to be specified or cannot be taken into account for
reasons peculiar to the market organisation or the amount
in question, a specific operative event shall be determined
in accordance with the procedure laid down in Article 9,
taking account of the following criteria:

(a) actual applicability as soon as possible of adjustments

to the exchange rate;

(b) similarity of the operative events for analogous opera-
tions carried out under different market organisations;

(c) coherence in the operative events for the various
prices and amounts relating to a single market organ-
isation;

(d) practicability and effectiveness of checks on the

application of suitable exchange rates.

Article 4

1.
For prices and amounts other than those referred to
in Article 5, the Member State may grant compensatory
aid to farmers in cases of appreciable revaluation. The
payments shall be made in three successive tranches
lasting twelve months each, starting in March following
the month of the appreciable revaluation.

These compensatory payments shall not take the form of
aid linked to production, other than production during a
stipulated, prior period. They shall not favour any partic-
ular type of production or be dependent on production
subsequent to the period stipulated.

the first

The maximum amount of

2.
tranche of
compensatory aid shall be established, for the Member
State concerned as a whole, in accordance with the pro-
cedure laid down in Article 9, by multiplying the appre-
ciable part of the revaluation by the flat-rate income loss
determined in accordance with points 1 to 3 of
the
Annex.

3.
The maximum amount of the first tranche shall be
reduced or cancelled where appropriate, taking account of
the market situation observed during the year up to the
time of the appreciable revaluation.

4. No aid shall be granted for the portion of
the
amount calculated in accordance with paragraph 2 that
does not exceed appreciable revaluation of 2,6 %.

the second and third
The amounts paid out under
tranches shall be reduced or cancelled as a function of the
effect on incomes of the development of exchange rates
recorded until the beginning of the month preceding the
first month of the relevant tranche, and taking account of
the market situation observed over the same period.

6.
The market situation shall be taken into account
pursuant to paragraph 3 and the second subparagraph of
paragraph 5 in accordance with the following criteria:

The amount of one or more tranches in one or more
sectors may be reduced when it has been observed that:

(a) over the year during which an appreciable revaluation
occurs or over the period between the beginning of
the preceding tranche and the beginning of
the
month preceding the first month of
the tranche
concerned, the market price for the Member State
concerned was on average equal to or higher than the
average market prices in the Member States whose
currencies had not been appreciably revalued during
the same period. Market prices shall be compared
using an index of base 100 for market prices in
national currency or in euro,

or

(b) the relation between the dates of operative events in
the sector concerned and the date of the appreciable
revaluation is such that there is no justification for
concluding that
the revaluation had an impact
throughout the period considered.

In cases where point (b) is applied, the reduction of at
least one third referred to in Article 4(5) shall be calcu-
lated on the basis of the amount of the first tranche that
would have been granted if point
(b) had not been
applied.

These criteria may be amended, in the light of experi-
in accordance with the procedure laid down in
ence,
Article 9.

Article 5

In cases where the exchange rate applicable on the

1.
date of the operative event for:

— flat-rate aid calculated per hectare or per livestock

unit,

or

— a compensatory premium per sheep or goat,

or

— amounts of a structural or environmental nature

The amounts paid out under the second and third
5.
tranches shall each be reduced, vis-(cid:133)-vis the level of the
previous tranche, by at least a third of the amount paid
out in the first tranche.

is below that applicable previously, the Member State
concerned may make compensatory payments to farmers
in three successive tranches lasting twelve months each,
starting on the date of the operative event.

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Compensatory aid must be granted in the form of an
addition to the aid, premiums and amounts referred to in
the first subparagraph.

conferred on it by these instruments in each individual
case derogate from this Regulation, in particular in the
following cases:

the first

The maximum amount of

2.
tranche of
compensatory aid shall be established, for the Member
State concerned as a whole, in accordance with the pro-
cedure laid down in Article 9, in accordance with point 4
of the Annex. However, the Member State may waive the
grant of the compensatory aid when this amount cor-
responds to a reduction of less than 0,5 %.

3.
The amounts paid out under the second and third
tranches shall each be reduced, vis-(cid:133)-vis the level of the
previous tranche, by at least a third of the amount paid
out in the first tranche.

4.
The amounts referred to in paragraph 3 shall be
reduced or cancelled if necessary as a function of the
effect on income of the development of the exchange
rates recorded on the first day of the second and third
tranches.

5.
This Article shall not apply to amounts to which a
rate lower than the new rate was applicable during the
twenty-four months immediately before the new rate took
effect.

Article 6

1.

The Community’s contribution to financing shall be:

— 50 % of the amounts actually paid for the compens-

atory aid referred to in Article 4,

— 50 % of the amounts that may be granted for the
compensatory aid referred to in Article 5. However,
the Member State may withdraw from national parti-
cipation in financing the aid.

2.
For the purposes of the financing of the common
agricultural policy, this contribution shall be deemed to
be part of intervention intended to stabilise the agricul-
tural markets.

— where a country uses abnormal exchange techniques
such as multiple exchange rates or operates barter
agreements,

— where countries have currencies which are not quoted
on official foreign exchange markets or where the
trend in such currencies is likely to create distortion
in trade.

Article 8

1.
If a non-participating Member State decides to pay
the expenditure resulting from legal instruments relating
to the common agricultural policy in euro rather than in
its national currency the Member State shall take such
kind of measures that the use of the euro does not provide
a systematic advantage compared with the use of national
currency.

2.
The Member State shall notify the Commission of
the measures planned before they come into effect. The
measures may not take effect until the Commission has
notified its agreement thereto.

Article 9

Detailed rules for the application of this Regulation shall
be adopted in accordance with the procedure laid down
in:

(a) Article 23 of Council Regulation (EEC) No 1766/92
of 30 June 1992 on the common organisation of the
market in cereals (1),

or

(b) the corresponding articles of the other regulations on
the common organisation of the markets in agricul-
tural or fishery products,

Article 7

or

1. Where exceptional monetary practices concerning
the national currency are liable to jeopardise the applica-
tion of the legal instruments relating to the common
agricultural policy, the Commission shall decide upon
suitable safeguard measures, which may, where necessary,
derogate from the existing legal instruments relating to
the common agricultural policy.

The Council and the Member States shall be notified
forthwith of the measures referred to in the first subpara-
graph.

Any Member State may refer the Commission’s decision
to the Council during the three working days following
that on which they are notified of safeguard measures.

The Council, acting by a qualified majority, may take a
different decision within one month of notification of the
measures in question.

2. Where exceptional monetary practices concerning a
national currency are liable to jeopardise the application
of the legal instruments relating to the common agricul-
tural policy, the Commission may, by virtue of the powers

(c) the corresponding articles of other Community provi-

sions introducing a similar procedure.

Article 10

1. Where transitional measures prove necessary to facil-
itate the initial application of this Regulation, such meas-
ures shall be adopted by the Commission in accordance
with the procedure laid down in Article 9 and shall
remain applicable for the period strictly necessary to facil-
itate the introduction of the new arrangements.

2. Regulations (EEC) No 3813/92,
(EC) No 1527/95,
(EC) No 2990/95 and (EC) No 724/97 are hereby
repealed.

3. References to the agricultural conversion rate in legal
instruments relating to the common agricultural policy

(1) OJ L 181, 1. 7. 1992, p. 21. Regulation as last amended by
Commission Regulation (EC) No 923/96 (OJ L 126, 24. 5.
1996, p. 37).

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shall be taken from 1 January 1999 to refer to the conver-
sion rate irrevocably fixed by the Council in accordance
with Article 109l(4) of the Treaty for national currency
units, and the rate referred to in Article 2(2) and, where
applicable, Article 2(3) of this Regulation for national
currencies.

References to the representative market rate of the ecu in
legal
instruments relating to the common agricultural
policy shall be taken from 1 January 1999 to refer to the
rate of exchange of the euro.

References to the compensatory aid provided for in Regu-
lation (EEC) No 3813/92 and Regulation (EC) No 724/97
shall be deemed to be references to Articles 4, 5 and 6 of
this Regulation.

References to the operative events provided for in Article
6 of Regulation (EEC) No 3813/92 shall be deemed to be
references to Article 3 of this Regulation.

Article 11

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

It shall apply from 1 January 1999.

Articles 4, 5 and 6 shall only apply to appreciable revalu-
ations having occurred before 1 January 2002.

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

Done at Brussels, 15 December 1998.

For the Council

The President

W. MOLTERER

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ANNEX

1. The flat-rate income loss referred to in Article 4(2) of the Regulation is to be equal to:

(a)

the sum of 1 %:

— of final agricultural production of cereals including rice, sugar beet, milk and milk products

and beef and veal, and

— of the value of the quantities of products supplied under a contract imposing, in accordance
with Community rules, a minimum price to the producer, for products not referred to in the
first indent, and

— of aid or premiums paid to farmers, with the exception of those referred to in Article 5 of the

Regulation;

(b) after subtraction of:

— 0,5 % of the value of intermediate consumption in the form of animal feed, and

— the impact on tax of the reduction in gross value added at market prices resulting from the

operations concerning point (a) and the preceding indent, and

— a deduction corresponding to 1 % of forecast EAGGF expenditure on the following items:

— the full amount of flat-rate per hectare aid,

— half the amount of structural or environmental aid, and

— 130 % of sheepmeat and goatmeat premiums.

2. The amounts referred to in the second and third indents of point 1(a) are not to be taken into
account when their sum is less than 0,01 % of the final agricultural production of the relevant
Member State in the product sector concerned.

For the purposes of this Regulation, the product sectors correspond to the statistical aggregates
identified in the economic accounts for agriculture, drawn up by Eurostat, or to groups of those
aggregates, as listed below:

1. Cereals and rice

2. Sugar beet

3. Milk and milk products

4. Beef/veal

5. Oilseeds and olive oil

6. Fresh fruit and vegetables

7. Potatoes

8. Wines and musts

9. Flowers and nursery plants

10. Pigmeat

11. Sheepmeat and goatmeat

12. Eggs and poultry

13. Other.

3. The flat-rate income loss is to be determined on the basis of information relating to:

(a) the economic accounts for agriculture available from Eurostat for the last calendar year ending
before the date of appreciable revaluation, for the first indent of point 1(a) and the first and
second indents of point 1(b);

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(b) the budget outturn, or, failing that, the budgets or draft budgets or preliminary draft budgets

relating to:

— income for the year referred to in (a), for the second and third indents of point 1(a),

— the budget year beginning during the marketing year for cereals in which the appreciable

revaluation occurred, for the third indent of point 1(b).

For the purposes of applying point 2 in marginal cases, consideration of the information referred to
in point (a) above will take account of the relevant figures for the preceding two years also.

4. The aid referred to in Article 5(1) of the Regulation will be calculated as a function of the data

referred to in the first indent of point 3(b) of this Annex.