Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation amending Regulations (EEC) No 2759/75, (EEC) No 2771/75, (EEC) No 2777/75, (EC) No 1254/1999, (EC) No 1255/1999 and (EC) No 2529/2001 as regards exceptional market support measures (COM(2004) 712 final — 2004/0254 (CNS))
Date: 2005-02-09
Institutions: European Economic and Social Committee
Subjects: EU Member State, EU financing, State aid, animal disease, co-financing, common agricultural policy, common organisation of markets

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EN

Official Journal of the European Union

8.9.2005

Opinion of the European Economic and Social Committee on the Proposal for a Council Regu-
lation amending Regulations (EEC) No 2759/75, (EEC) No 2771/75, (EEC) No 2777/75, (EC) No
1254/1999, (EC) No 1255/1999 and (EC) No 2529/2001 as regards exceptional market support
measures

(COM(2004) 712 final — 2004/0254 (CNS))

(2005/C 221/10)

On 3 December 2004 the Council decided to consult the European Economic and Social Committee,
under Article 37 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing
the Committee's work on the subject, adopted its opinion on 13 January 2005. The rapporteur was Mr
Leif E. Nielsen.

At its 414th plenary session held on 9 and 10 February 2005 (meeting of 9 February), the European
Economic and Social Committee adopted the following opinion by 135 votes with 6 abstentions:

1. Background

The outbreak of such serious infectious diseases as
1.1
Bovine Spongiform Encephalopathy (BSE), Foot and Mouth
Disease (FMD), Classical Swine Fever
(CSF) and Newcastle
Disease (ND) among domestic livestock has resulted in repeated
crises on the markets for animal products in the EU. When
there is an outbreak of such epizootic diseases, among the
measures taken are the slaughtering of animals and restrictions
on trade, with the aim of preventing the outbreak from
spreading further. As a general rule the costs involved in eradi-
cating epizootic diseases are financed by the Veterinary Fund,
with 50 % of the funds coming from the Member States.

1.2
In addition, there is a strain on the markets in the
products concerned, not least as a result of sales bans and
restricted areas being introduced. The rules for the markets in
pigmeat, eggs, poultrymeat, beef and veal, milk and milk
products, and sheepmeat and goatmeat therefore include facil-
ities for introducing measures to support the market in such
situations. Before such exceptional measures are applied, it is a
precondition that the Member States concerned have intro-
duced the veterinary measures necessary to stamp out epizootic
diseases. Moreover, measures to relieve the market situation are
only introduced for the time that support
for the market
concerned is strictly necessary.

The exceptional measures concerned, which are taken
1.3
by the Commission using the management committee proce-
dure, were originally implemented with full Community finan-
cing, as was the case for CSF at the end of the 1980s and the
beginning of the 1990s. In 1992, national co-financing was
used for the first time in connection with CSF. Because it was
not clear what the rate should be, in 1994 the Commission
introduced provisions that clearly specified a figure of 70 %
financing by the Community for a maximum number of

animals. Later on, the same rate was applied in the beef and
veal sector when combating BSE and FMD. Since 2001, the
national co-financing rate has been 50 % since the requirement
from the European Court of Auditors that there should be
parallelism between co-financing under the Veterinary Fund
and the co-financing of market measures.

1.4
Following a request from Germany, the Court of Justice
ruled in 2003 that Commission had no authority to set a
national co-financing rate of 30 % in a case involving the rules
in connection with BSE (1). The
on the buying-up of beef
Commission therefore has no authority to continue the practice
hitherto and so it is proposed that in future a national co-finan-
cing rate of 50 % should be specified in the market organisa-
tions for pigmeat, eggs, poultrymeat, beef and veal, milk and
for sheepmeat and goatmeat regarding both internal market
measures and sales on non-EU markets.

2. General comments

2.1
It is regrettable that since 1992 the Commission and the
Member States have not respected the hitherto applicable
general principle of full Community financing for measures
forming part of the so-called ‘first pillar’ of the Common Agri-
cultural Policy,
including measures implemented within the
framework of the common market organisations. It is in the
nature of things that by adopting the current proposal the
Council may deviate from this principle, which it adopted
itself. But because of the ruling of the Court of Justice in this
matter, the Commission cannot deviate from Council decisions
without express authorisation, even if it does so with the co-
operation of the Member States in the relevant management
committees.

(1) Judgment of 30.9.2003 in case C-239/01, Collection of Decisions

2003 p. I-10333

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2.2
Depending on the extent and duration of epizootic
diseases, the measures taken may result in considerable costs
being incurred, which to a very large extent must be covered
by public funds. The question of allocating costs between the
EU and the Member States is closely linked with that of finan-
cial solidarity between the Member States. In cases of national
co-financing some Member States might be more willing and
able to cover such expenditure than others. Some Member
States might pass the costs on directly or indirectly to busi-
nesses, which, as became clear during the BSE crisis, may lead
to considerable distortions of competition.

2.3
According to the Commission the Member States will
make a bigger effort to combat and prevent livestock diseases,
if there is national co-financing. Although the EESC can under-
stand this argument,
it cannot be ruled out that sometimes
demand will delay decisions or make their adoption more diffi-
cult, thus hindering the implementation of effective counter-
measures.

2.4
The EESC can also understand the Commission's argu-
ment that the proposal will imply a continuation of the prac-
tice that has been followed since 1992 and ensure parallelism
between veterinary fund and market organisation measures.

2.5
However, the EESC feels that expenditure on exceptional
measures in connection with the market organisations as
originally laid down by the Council is based on joint responsi-

Brussels, 9 February 2005.

bility and financial solidarity. In the EESC's view, any violation
of this principle would create a risk of the Member States
adopting different approaches to the fight against epizootic
diseases, which, despite effective monitoring and preventive
measures, can break out by chance and without warning. The
consequences for the market would also affect other Member
States. Moreover, there is a risk that national co-financing here
will have a knock-on effect on other areas, bringing with it the
the Common Agri-
danger of
cultural Policy.

further re-nationalisation of

If, despite this, there is still support for the Commission
2.6
it would be administratively burdensome — and
proposal,
essentially unjustified — if the financial contribution under this
rule was dealt with under the Treaty's provisions regarding
state aids. The Commission's proposal for exemption from the
notification procedure should therefore have applied from the
outset.

3. Conclusion

The EESC wishes to maintain the principle of full Com-
3.1
munity solidarity for exceptional measures under the rules
applying to market organisations, and therefore rejects the
Commission's proposal for 50 % co-financing by the Member
States.

The president

of the European Economic and Social Committee

Anne-Marie SIGMUND