Special Report No 8/2004 on the Commission's management and supervision of the measures to control foot-and-mouth disease and of the related expenditure, together with the Commission's replies
Date: 2005-03-03
Institutions: European Court of Auditors
Subjects: European Commission, European Court of Auditors, administration of the Institutions, disease prevention, foot-and-mouth disease, indemnification, interinstitutional relations (EU), report, veterinary inspection

3.3.2005

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Official Journal of the European Union

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I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 8/2004

on the Commission’s management and supervision of the measures to
control foot-and-mouth disease and of the related expenditure, together
with the Commission’s replies

(presented under Article 248(4) second subparagraph EC)

(2005/C 54/01)

CONTENTS

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Main characteristics of measures to prevent and control FMD . . . . . . . . . . . . . . . . . . . . .

Impact on the budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Court’s audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

COMMISSION ACTION BEFORE THE CRISIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Analytical method not sufficiently up-to-date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commission supervision was insufficient in some respects and deficiencies in the regula-
tions were not remedied in time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transposition of Community directives into national law not systematically verified
for compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Health and veterinary checks at Union frontiers well supervised but certain risks not
adequately covered by regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Delays in imposing controls and banning the use of catering waste for animal feed

Insufficient checks and criteria for Member States’ contingency plans . . . . . . . . . . .

Incomplete identification and inadequate tracing of animals of FMD sensitive
species . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Uncorrected deficiencies in the ANIMO system before the crisis . . . . . . . . . . . . . . .

Restrictions on animal movements throughout Member States’ territories . . . . . . . .

COMMISSION ACTION DURING THE CRISIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effective supervision by the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deficiencies in control arrangements and in the implementation of them in the Member
States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paragraph

Page

I-VII

1-15

1-5

6-7

8-11

12-15

16-43

16-20

21-43

22-23

24-25

26-28

29-34

35-37

38-41

42-43

44-58

44-45

46-58

3

4

4

5

5

8

9

9

10

10

11

11

12

13

14

14

15

15

15

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Reduced veterinary services

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

48-49

Paragraph

Insufficient incentive for immediate notification of disease and compliance with ani-
mal movement restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Delays in culling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

COMMISSION ACTION CONCERNING THE REIMBURSEMENT SYSTEM . . . . . . . . . . . . . . .

No Commission proposals for directives on procedures and calculation of compensation
for farmers by Member States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Variations in compensation systems and lack of uniformity in valuations . . . . . . . .

Established cases of double payments of animal premiums . . . . . . . . . . . . . . . . . . .

Variations in slaughter premium payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rules and procedures governing eligibility of Member States’ expenditure for Community
reimbursement were defined late . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Delays in reimbursing Member States’ expenditure . . . . . . . . . . . . . . . . . . . . . . . . .

Cofinancing rates aligned in the pig sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Farmers do not contribute to Community financing of the control system . . . . . . . . . . .

50-56

57-58

59-89

60-73

62-66

67-71

72-73

74-83

82-83

84-85

86-89

COMMISSION MANAGEMENT AFTER THE CRISIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

90-100

Action in the veterinary field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

90-97

Action in the financial field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

98-100

CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101-106

The Commission’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

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18

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21

21

23

23

23

24

24

25

25

27

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SUMMARY

I.
The need to complete the single market and promote trade in livestock in general made it essential for
the Community to establish a common policy for preventing and controlling foot-and-mouth disease (FMD).
As from 1992, therefore, it extended to all Member States the ban on preventive vaccination of livestock
against the disease and introduced a complex system of prevention and control with the aim of both restrict-
ing the introduction of the virus and preventing it from spreading throughout the territory of the Community.
In the event of an epidemic, contaminated animals were to be slaughtered, the carcasses destroyed, and pre-
mises and equipment disinfected. All the expenditure defrayed by Member States in this connection would then
become partially reimbursable from an emergency veterinary fund set up within the EAGGF Guarantee Section.

Following the 2001 crisis Member States requested reimbursement of 1 616 million euro from the
II.
emergency veterinary fund. That cost, combined with the scale of the outbreak, was the motivation for the
Court’s audit. The audit had three objectives: to ascertain, firstly, whether the analytical method used by the
Commission as the basis for the strategy for eradicating the disease was up-to-date; secondly, whether the strat-
egy had been implemented effectively; and thirdly, whether the system for reimbursing to Member States
expenditure on compensating farmers and slaughtering their animals was adequate, rapid and non-
discriminatory. In as far as some of the lessons learned from previous epidemics might be relevant to the strat-
egy for preventing and controlling FMD, the Court examined Commission action before, during and after
the crisis.

The report makes the point that, before the 2001 crisis, the Commission had not revised its strategy in

III.
the light of changes in risk factors.

IV.
It also shows that in the absence of comprehensive evaluation and inspections by the Commission
before 2001, some weaknesses in the prevention and control arrangements were not corrected in time, es-
pecially as regards protective measures at borders, animal feed, contingency plans, sheep identification, and
the messaging system concerning livestock movements between Member States (ANIMO). Parliament criti-
cised the Commission for failing to review Member States’ contingency plans before the crisis, but acknowl-
edged that the Commission acted very positively during it (1). At the time of the crisis the Commission did, in
fact, identify very quickly the weaknesses of the arrangements and their implementation in the Member States,
as regards the number of veterinarians, disease notification and rapid culling, but it was too late to remedy
them. More particularly, the Court observed that the effectiveness of the arrangements that had been intro-
duced relied heavily on farmers notifying the disease immediately and complying with movement restrictions.

V.
The audit showed that the Community financing system could be further improved. The compen-
sation paid to farmers by Member States was not always adequately defined at Community level, even though
it was reimbursed at a rate of 60 % of the amount accepted as eligible by the Commission. In the absence of a
better-defined Community framework Member States were able to introduce a variety of systems that gave rise
to variations in the treatment of farmers within the Community.

VI.
Since then, the recent revision of the Community regulations has remedied many omissions. Never-
theless, the financial framework was not revised and the Community measures are still minimal in terms of
the notification of the disease, supervision of farms and speed of culling. There is thus a risk that Member
States’ application of these measures could once again prove to be insufficient to contain a future epidemic,
and yet still give rise to Community reimbursement.

VII.
The Court recommends that the Commission update its evaluations and analyses of the strategy at a
time when there is no crisis. It is in favour of examining ways of including farmers in the control system, to
induce them to notify the disease rapidly and to comply with movement restrictions. Lastly, it calls on the
Commission to clarify the financial framework as applied to epidemics of animal disease and, as far as pos-
sible, to reduce financial risk to the Community budget.

(1)

European Parliament resolution adopted on 17 December 2002, paragraph 54.

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INTRODUCTION

Background

1.
Foot-and-mouth disease (FMD) is a disease of animals,
harmless to humans, but highly contagious among cloven-footed
animals. It can destroy the food sources and means of subsistence
of farmers in less developed countries virtually overnight because
it affects many cloven-footed species, including cattle, pigs and
sheep. The virus can be transmitted by direct contact between ani-
mals and through animal feed, by indirect contact with various
vectors, such as vehicles or people, and may even be spread by
wind-borne transmission. The mortality rate among infected
adult animals is low. Most animals recover within three to four
weeks, but they are nevertheless still severely affected: the growth
of young animals is retarded, the abortion rate increases and milk
production declines significantly, and permanently. Countries
that are free of the disease are obliged to put security measures in
place, in order to protect themselves against the virus and avoid
embargoes on their exports of animal products.

2.
The completion of the internal market within the Commu-
nity was planned for January 1993. Consequently, since the free
movement of animals and agricultural products is a fundamental
aspect of the common organisation of markets, the rules on trade
in animals and animal products within the Community had to be
harmonised. That also required the establishment of a common
policy for preventing and controlling FMD. In a 1989 report on
Member States’ policies for controlling FMD (2), the Commission
noted that some Member States that did not practise preventive
vaccination of livestock (3) could impose restrictions on trade in
animals with Community partners that did vaccinate. The restric-
tions were justified by the fact that even though vaccinated ani-
mals appear clinically normal they may be carrying the virus.

3.
In order to remove veterinary and similar obstacles to the
development of intra-Community trade in animals and animal
products the Commission considered health regulations appli-
cable to international trade in animals and animal products, such

(2)

(3)

Report from the Commission to the Council on a study carried out
by the Commission on policies currently applied by Member States
in the control of foot-and-mouth disease, Commission of the Euro-
pean Communities, SEC (89) 1731 final, 18 October 1989.
Preventive vaccination should not be confused with emergency vac-
cination; the latter is possible if an outbreak occurs. Two different
policies were being applied in 1988: eight Member States (Belgium,
Germany, Spain, France, Italy, Luxembourg, Netherlands, Portugal)
vaccinated livestock as a precautionary measure, followed by partial
or total stamping out of contaminated animals if the disease
occurred. The other Member States (Denmark, Greece, Ireland and
the United Kingdom) did not carry out preventive vaccination and
eradicated all animals in the event of an FMD outbreak.

as those laid down by the Office international des Epizooties
(OIE) (4). Under its rules, if there were an outbreak of FMD, return
to unrestricted trading conditions would be much faster if a
stamping-out policy were applied (three months) than if any kind
of vaccination were used (12 to 24 months).

4.
Because of these commercial considerations, the same
Commission report concluded that the adoption of a non-
vaccination policy was preferable to a policy of preventive vacci-
nation. This was why the stamping-out policy was supplemented
at Community level, in 1990 (5), by the ban on preventive vacci-
nation and by prohibition of imports of vaccinated animals into
Community territory. However, it was still possible to vaccinate,
but only as an emergency measure when the presence of FMD
had been confirmed and there was a danger of large-scale spread
of the disease.

5.
Since the adoption of this new strategy there have been
several outbreaks in the Union, in Italy in 1993 (57 outbreaks)
and in Greece, in 1994, 1996 and 2000 (95, 39 and 14 out-
breaks respectively). Epidemics have occurred in neighbouring
areas (Albania, Macedonia, Kosovo, Algeria, Georgia, Armenia,
Azerbaijan, Turkey and Iran). In addition, on 21 February 2001,
an unprecedented crisis hit the United Kingdom and lasted for a
period of 10 months. There were 2 034 outbreaks of infection
extending to 10 124 farms and leading to the slaughter of some
four million animals (6). In addition, more than two million ani-
mals were slaughtered because of the welfare problems that
arose when they were confined to farms following movement
restrictions (7). It was not possible to contain FMD to the United
Kingdom: it spread, on 13 March 2001 to France (two out-
breaks), on 20 March 2001 to Ireland (one outbreak), and on
21 March to the Netherlands (26 outbreaks). The United King-
dom had to apply slaughter measures until September 2001. In
January 2002 it was able to recover the status of an FMD-free
country that did not practise vaccination, which allowed it to
start trading again.

(5)

(4) An intergovernmental organisation set up in 1924. The World
Trade Agreement recognises the OIE standards as a reference for
international animal health rules.
Council Directive 90/423/EEC of 26 June 1990 amending Directive
85/511/EEC introducing Community measures for the control of
foot-and-mouth disease, Directive 64/432/EEC on animal health
problems affecting intra-Community trade in bovine animals and
swine and Directive 72/462/EEC on health and veterinary inspec-
tion upon importation of bovine animals and swine and fresh or
meat products from third countries (OJ L 224, 18.8.1990, p. 13).
Statistics on foot-and-mouth disease, DEFRA, United Kingdom,
12 December 2002.
Livestock Welfare Disposal Scheme, state aid introduced by the United
Kingdom on 22 March 2001, administered by the Rural Payments
Agency and accepted by the Commission.

(6)

(7)

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Main characteristics of measures to prevent and control FMD

FMD (10). The Directive was adopted by the Council on 29 Sep-
tember 2003 (11).

6.
A complex set of prevention and control measures aims to
limit the risk of the virus being introduced into the Community
territory and spreading (see Box 1). The prevention and control
measures are provided for in Community directives (8). The Mem-
ber States are responsible for bringing them into force and apply-
ing the rules derived from them. The Commission, on the other
hand, is responsible for checking that the Community provisions
are implemented by the Member States. The Commission also
supports non-member countries’ efforts to control and eradicate
epidemics of animal diseases. At the Commission the Directorate-
General for Health and Consumer Protection is responsible for
the direct management and control of Community veterinary
expenditure (9).

Box 1

Community measures for prevention and
control of FMD

The system of prevention focuses on collaboration with international
organisations and substantial support for neighbouring countries in
combating the disease, on veterinary, zootechnical and health
controls on stock farming and meat in the Union and at its frontiers,
the drafting of contingency plans by the Member States, with the
resources needed to counteract any crisis that might arise, and systems
for identifying and tracing animals.

The control system relies on immediate notification of the disease,
introduction of restrictions on movements of people and animals, the
launch of epidemiological inquiries to identify animals suspected of
being contaminated, and on Member States applying their
contingency plans and implementing the necessary culls, followed by
destruction of the carcases and disinfection of contaminated premises
and materials.

7.
posal

After the 2001 crisis the Commission presented a pro-
for a directive modifying the system for controlling

(8)

Council Directives 90/423/EEC and 85/511/EEC of 18 November
1985 introducing Community measures for the control of foot-and-
mouth disease (OJ L 315, 26.11.1985, p. 11).

(9) Although the Community reimbursement for veterinary expenditure
incurred by the Member States is booked to the EAGGF Guarantee
Section, it is treated as a grant. For that reason it is not subject to the
procedure for clearing Member States’ accounts, nor does it involve
the bodies that certify their paying agencies’ accounts. Instead, it is
subject
to direct management and financial control by the
Directorate-General for Health and Consumer Protection.

Impact on the budget

8.
The conditions applicable to the Community financial
contribution to the expenditure for eradicating certain serious
contagious animal diseases, including FMD, were laid down in
1990 by the Council (12). The contribution is compulsory if the
Member States have implemented the prescribed Community
measures and takes the form of reimbursement, at a rate of 60 %,
of FMD expenditure incurred by Member States in compensating
farmers for the slaughter and destruction of animals and disinfec-
tion of premises and equipment. It is entered in the budget (13),
under the heading of ‘Emergency fund for veterinary complaints
and other animal contaminations which are a risk to public
health’ (14).

Following the adoption of the new strategy the appropria-
9.
tions for the Fund, for all animal diseases together, were increased
fourfold in 1999 and were doubled in 2000, reaching a grand
total of 978,1 million euro for financial years 2001, 2002 and
2003 (15), mainly due to the 2001 FMD crisis. For the 2001 crisis
alone the overall total expenditure declared by Member States for
compensation for slaughter and destruction of animals as well as
disinfecting of farms and equipment was around 2 693,4 million
euro, of which 1 616 million euro was claimed for Community
reimbursement. The total declared for slaughter compensation
alone was 1 775,1 million euro, of which 1 065,2 million was
claimed for reimbursement (see Table).

(10) Proposal for a Council Directive on Community measures for the
foot-and-mouth disease and amending Directive

control of
92/46/EEC, COM (2002) 736 final, 13 December 2002.

(11) Council Directive 2003/85/EC of 29 September 2003 on Commu-
nity measures for the control of foot-and-mouth disease repealing
Directive 85/511/EEC and Decisions 89/531/EEC and 91/665/EEC
and amending Directive 92/46/EEC (OJ L 306, 22.11.2003, p. 1).
(12) Council Decision 90/424/EEC of 26 June 1990 on expenditure in

the veterinary field (OJ L 224, 18.8.1990, p. 19).

(13) The item in question is heading B1-332. The budget classification
was changed for 2004. The emergency fund is now included in
Article 17 04 03 of the budget.

(14) This does not cover bovine spongiform encephalopathy (BSE).
(15) The annual budget of the emergency veterinary fund rose from five
million euro between 1995 and 1998 to 20 million euro in 1999,
before reaching a total of 41 million euro for financial years 2000
and 2001. The FMD crisis necessitated a transfer of 400 million euro
in addition to the initial appropriations of 41 million for the Fund
for 2001, a supplement of almost 10 times the initial amount. For
financial years 2001, 2002 and 2003, the final appropriations
entered in the budget reached a total of 978,1 million euro.

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3.3.2005

EN

Official Journal of the European Union

C 54/7

Following its decisions to grant aid (16) in connection
10.
with FMD, the Commission allowed payments to Member States
for a total of 433,5 (17) million euro for slaughter expenditure
and 32,1 million euro for other costs, bringing the total Commu-
nity reimbursement to 465,6 million euro at 31 December 2003
(see Diagram 1).

The Commission has not yet completed its review of
11.
Member States’ expenditure and reimbursed the balances due as
compensation for this 2001 expenditure (except in the cases of
France and Ireland). As a consequence, the budget appropriations
available for the emergency veterinary fund were under-utilised
by more than 48 % for financial years 2001 to 2003 (see
Diagram 2).

Diagram 1

Total payments from Emergency Veterinary Fund at 31 December 2003

based on final appropriations entered in budgets 2001, 2002 and 2003

(1) FMD 2001: foot and mouth disease in year 2001.
NB:
The payment of around 17 million euro in 2001 for avian influenza has not been included under the heading ‘Other diseases’ as it was funded
from carry-overs of appropriations from 2000.
Expenditure of around 2,5 million euro for FMD in Greece in year 2000 has been included in ‘Other diseases’.
Source: Commission

(16) Commission Decisions 2001/646/EC (OJ L 228, 24.8.2001, P. 24),
2001/652/EC (OJ L 230, 28.8.2001, p.8), 2001/653/EC (OJ L 230,
28.8.2001, p. 12) and 2001/654/EC (OJ L 230, 28.8.2001, p. 16)
concerning a financial contribution towards the eradication of foot-
and-mouth disease in France, Ireland, Netherlands and United King-
dom.

(17) Payments made as of 31 December 2003.

C 54/8

EN

Official Journal of the European Union

3.3.2005

Use of Emergency Veterinary Fund budget for years 2001, 2002 and 2003

Diagram 2

(1) FMD 2001: foot-and-mouth disease in year 2001.
(2) Commitments for ‘Other animal diseases’: 114,38 million euro.
(3) Payments for ‘Other animal diseases’: 36,2 million euro.
NB:
Payment appropriations do not include carryovers of appropriations of around 17 million euro from year 2000.
Around 2,5 million euro has been included under the heading ‘Other diseases’for FMD expenditure for year 2000 in Greece.
Source: Commission.

The Court’s audit

Following the classical swine fever and bovine spongi-
12.
form encephalopathy (BSE) crises, the Court examined the Com-
munity measures to control these animal diseases (18).

In view of the scale of the FMD crisis and the cost to the
13.
budget the Court decided to carry out a new audit with the objec-
tive of establishing whether:

(a)

(b)

the analytical method followed by the Commission in deter-
mining the strategy for preventing and controlling FMD was
sufficiently up-to-date;

the Commission, on the basis of its checks and appraisals,
had presented adaptations to the Community strategy to the
Council;

(c)

the system introduced by the Commission for reimbursing
Member States’ expenditure was adequate,
rapid and
non-discriminatory.

14.
In order to answer these questions, the Court assessed the
Commission’s action in the light of the latter’s analytical meth-
ods, its supervision of Member States’ implementation of the
Community measures and any proposals that it made for adapt-
ing the Community regulations. In as far as some of the lessons
learned from previous epidemics might be relevant to the strat-
egy for preventing and controlling FMD, the Court first examined
the Commission’s action before and during the crisis. It then stud-
ied the reimbursement system, especially in the light of its previ-
ous recommendations. This examination was confined to the
expenditure on compensation for the slaughter of animals (19).
Lastly, the Court undertook a review of the lessons learned by the
Commission after the 2001 crisis.

(18) Annual Report concerning the financial year 1995 (OJ C 340,
12.11.1996, p. 1). Special Report No 19/98 concerning the Com-
munity financing of certain measures taken as a result of the BSE cri-
sis (OJ C 383, 9.12.1998, p. 1). Special Report No 1/2000 on clas-
sical swine fever (OJ C 85, 23.3.2000, p. 1). Special Report No
14/2001. Follow-up to Special Report No 19/98 on BSE (OJ C 324,
20.11.2001, p. 1).

(19) As long as the Commission has not completed its negotiations with
the Member States and adopted a final decision on the reimburse-
ment to be granted, the Court will not be able to give an opinion
either on other FMD expenditure in connection with the disposal of
carcases and the disinfecting of premises and equipment or on the
Commission’s financial controls.

3.3.2005

EN

Official Journal of the European Union

C 54/9

The audit work was carried out at the Commission and
15.
in Member States affected by FMD (France, Ireland, the Nether-
lands and the United Kingdom) (20). The audit visits were mainly
to the agriculture ministries responsible for the health and veteri-
nary aspects and their regional offices (21). Account has been
taken in this report of work by the authorities visited and by the
European Parliament and the International Conference on Con-
trol and Prevention of Foot-and-Mouth Disease and other public
inquiries carried out in the Member States (22).

of the two possible alternatives. The Commission projected the
costs over a period of 10 years (from 1993 to 2002) according
to three different scenarios for the scale of the crises. For the non-
vaccination policy it used an intermediate scenario with 13 epi-
demics of 20 outbreaks. The estimated cost over the same period
was 35 million euro. The estimate for the cost of the optimistic
scenario, on the other hand, was 0,3 million euro, and that for the
worst scenario was 955 million euro.

COMMISSION ACTION BEFORE THE CRISIS

Analytical method not sufficiently up-to-date

17.
Moreover, the main emphasis of the 1989 report was on
commercial considerations and consideration of budgetary and
agricultural costs and profits, without taking into account the
wider social and environmental costs.

In the 1989 report (23) mentioned above (see paragraph
16.
2), the Commission carried out a cost-benefit analysis of the vari-
ous policies followed by the Member States in controlling FMD
(policy of preventive vaccination, or policy of systematic slaugh-
ter), with a view to defining the strategy to be followed at Com-
munity level. In particular, it assessed the risk of FMD occurring
in the Community if one or other of the two policies were to be
applied from 1992 onwards, together with the economic effects

(20) Three of the audit visits were carried out jointly with Commission

staff.

(22)

(21) Beneficiaries and valuers who had established the value of the
slaughtered animals were also interviewed. The Office international
des epizooties (OIE) in Paris, Pirbright Laboratory and the National
Audit Office (NAO) in London were also visited.
International Conference on Control and Prevention of Foot-and-mouth dis-
ease, Final Report, organised by the Belgian EU Presidency, European
Commission, Netherlands
and United Kingdom, Brussels,
12-13 December 2001;
The 2001 Outbreak of Foot-and-Mouth Disease, Report by the Comptrol-
ler and Auditor General, 21 June 2002, The Stationery Office,
London;
Rapport d’information n° 405 by J-P Émorine of the French Senate,
adopted at the Senate meeting of 21 June 2001;
Foot-and-mouth disease 2001: Lessons to be Learned, Inquiry Report by
Dr Iain Anderson CBE, July 2002, The Stationery Office, London;
Infectious diseases in livestock, The Royal Society, July 2002;
Response to the Reports of the Foot-and-mouth disease Inquiries,
HM Government with the Welsh Assembly Government, Novem-
ber 2002;
European Parliament resolution of 17 December 2002 on measures
to control foot-and-mouth disease in the European Union in 2001
and future measures to prevent and control animal diseases in the
European Union, and Report of the Temporary Committee on foot-
and-mouth
document No
A5-0405/2002.

Parliament,

European

disease,

(23) Report from the Commission to the Council on a study carried out by the
Commission on policies currently applied by Member States in the control
of foot-and-mouth disease, Commission of the European Communi-
ties, SEC (89) 1731 final, 18 October 1989.

18.
Because of the nature of the animal disease epidemics
that occurred in the Union before 2001, the Commission was
unaware of the need to check whether the Community arrange-
ments were viable. There had, in fact, been three epidemics that
involved more than 20 outbreaks (the maximum possible in the
scenario used by the Commission), but on the other hand, there
had only been four crises in eight years (compared with thirteen
in ten years according to the same scenario). On the other hand,
a number of risks conducive to the spread of the virus had
increased since 1993: the number of livestock movements had
increased (24) with the completion of the single market, the num-
ber of abattoirs had fallen (25), leading to increased concentrations
of animals and an enhanced risk of infection, while stocking den-
sities, particularly of sheep, goats and pigs, had soared (26). In Feb-
ruary 1998 the FAO (27) drew the attention of the 33 Member
States of the European Commission for the Control of Foot-and-
Mouth Disease to the fact that, at any time, ‘Europe may face fur-
ther devastating animal disease epidemics due to long-distance
transport of animals and increasingly dense livestock units’ (28).

(24)

In the case of cattle, there are movements involving around three
million head per year.

(25) The number of abattoirs in the United Kingdom fell from 1 400 in

1990 to 400 in 1999.

(26) Between 1987 and 1997 the density of pigs per farm had more than
tripled in Ireland, and increased by more than 50 % in the Nether-
lands, the United Kingdom and France. The density of sheep per
holding had also increased substantially in Spain, Ireland and the
United Kingdom in particular, where it reached almost 500 head per
holding, four times higher than the average density for the Union
(137,9 head per holding). The stocking density for goats increased
likewise over the period, especially in Greece, Spain, France, Italy
and the Netherlands. (Structure of agricultural holdings Historic
results — Surveys from 1966/1967 to 1997 — Final version: Octo-
ber 2000 Eurostat, p. 88, 89 and 92).

(27) United Nations Food and Agriculture Organisation.
(28) FAO press release 98/05.

C 54/10

EN

Official Journal of the European Union

3.3.2005

Moreover, the swine fever epidemic in 1997/1998 had
19.
generated significant costs for the Community (29), Member
States and producers. In the light of that experience, the Commis-
sion itself judged the anti-FMD measures provided for in Direc-
tive 85/511/EEC incomplete (30). Based on expert opinion the
Commission then began to revise the Directive, but its work was
interrupted when the disease broke out in the United Kingdom on
20 February 2001.

20.
The strategy has not been fully evaluated by the Commis-
sion since its adoption in 1990. Furthermore, the Commission
has not submitted a report to the Council and the Parliament
every three years on the conditions of application of Decision
90/424/EEC concerning Community eradication measures and
the financial aid granted for that purpose (31). Neither has it
updated the study of Member States’ veterinary services carried
out by the Directorate-General for Agriculture in 1992, even
though the updated study would have enabled it to check whether
they were in an adequate state to ensure that the strategy suc-
ceeded (see paragraphs 48 to 49)

Commission supervision was insufficient in some respects and
deficiencies in the regulations were not remedied in time

law, and secondly,

21.
In normal times Commission supervision of health and
veterinary aspects essentially takes two forms: firstly, its staff in
Brussels verify that directives have been incorporated into
national
inspectors from the Health and
Veterinary Office (HVO) in Dublin (32) carry out on-site inspec-
tions. In the period preceding the 2001 crisis the inspections
required by the regulations should have focused, in the Court’s
opinion, on the essential measures for preventing and controlling
FMD that are defined in Community directives and with the trans-
position of them into the national law of the Member States.
Those measures include:

(a) veterinary and health checks at frontiers in the case of

imports of animals and animal products;

(b) checks on animal feed in order to avoid contamination of

animals or animal products;

(29) A total of 650,5 million euro was charged to the Community bud-
get for 1997 and 1998. Court Special Report No 1/2000, para-
graph 1.

(30) COM (2002) 736 final of 13 December 2002, p. 4.
(31) Article 43a of Decision 90/424/EEC requires the Commission to
submit a report on the conditions of its application to the Parlia-
ment and the Council every three years.

(32) Directorate F of the Directorate-General for Health and Consumer

Protection.

(c) drawing-up of contingency plans by the Member States to
ensure that human resources, equipment and adequate
organisation can be drawn upon, should a crisis arise;

(d)

the drawing-up by Member States of systems for identifying
and tracking animal movements and a system of messages
between Member States (ANIMO), all of which are essential
for tracing and slaughtering contaminated animals quickly.

Transposition of Community directives into national law
not systematically verified for compliance

The Commission verifies quasi systematically the formal
22.
transposition of legislation by Member States within the time
allowed by Community directives. Compliance tests, on the other
hand, are not operated systematically. In practice they are only
carried out when there are HVO inspections (33) in Member
States, or following complaints by third parties. The risks of non-
compliant transposition are thus high and may still exist now.

23.
The Commission has addressed to the Member States a
large number of warnings for not transposing directives in time.
When the national measures adopted were communicated the
Commission archived the files, without checking them for com-
pliance. Consequently, no infringement file has ever been opened
by the Commission as far as non-compliance is concerned. As
regards the directive on animal identification, and identification
of sheep in particular, which Member States were to transpose by
1 January 1995, the Commission had sent warnings to Member
States for not communicating national measures between 1993
and 1996. Between 1994 and 1997 it archived the files, follow-
ing formal transposition of the Community law in the Member
States, without making a compliance check. During the 2001 cri-
sis, however, the HVO pointed out that in all the Member States
affected by FMD (apart from the Netherlands) there were signifi-
cant omissions regarding the Directive and they had had a nega-
tive impact on the spread of
the epidemic in 2001 (see
paragraph 35).

(33) During on-site visits the HVO also checks that the national trans-
posing measures are effective and makes recommendations for the
attention of the Commission if, amongst other things, it considers
that the national measures are not in accordance with Community
norms.

3.3.2005

EN

Official Journal of the European Union

C 54/11

Health and veterinary checks at Union frontiers well
supervised but certain risks not adequately covered by
regulations

in Member States ’ checks on the treatment of waste used for ani-
mal feed. In so doing it brought to light the risks associated with
this type of feedstuff, but partly only after the crisis.

24.
The HVO carried out numerous health and veterinary
checks at Member States’ border inspection posts (BIPs) in order
to check that only products that met the Community standards
for animal health and food safety entered the Community terri-
tory through the BIPs. In cases where deficiencies were found the
Commission temporarily suspended BIPs’ approval, and in order
to have the suspensions lifted Member States were fairly quick to
take the corrective action required by the HVO, for example, pro-
viding additional personnel, stepping up veterinary controls,
improving hygiene in installations and equipment, strengthening
the systems for recording batches introduced, veterinary certifi-
cates and registers.

25.
Even though it is impossible to provide total protection
against external sources of contamination, there were neverthe-
less a number of shortcomings in the Community regulations at
the time of the crisis. They mainly concerned border-protection,
especially as regards the carriage of foodstuffs by travellers and
the possibility of storing in free zones products that did not com-
ply with Community regulations (see paragraph 91(a)). Before the
crisis the Commission had proposed that introduction into the
Community territory be limited to products of animal origin,
which meet European animal health standards, but the proposal
was only adopted in 2002 (34). Not until November 2002, after
the crisis, did the Commission propose reinforcing controls on
imports of products of animal origin intended for personal con-
sumption. The Decision was adopted in December 2002 (35).

Delays in imposing controls and banning the use of catering
waste for animal feed

The risks associated with this type of animal feed had
27.
already been illustrated however in 1997/1998, when there was
an outbreak of swine fever in Germany as a consequence of using
for pig food catering waste and swill that had been inadequately
treated and thus infringed Community legislation. For that rea-
son some Member States had forbidden the use of catering waste
on their territory before the 2001 FMD crisis, even if the waste
had been treated (France and the Netherlands). Others (Germany
and the United Kingdom) had not done so. At the Community
level, the use of processed catering waste in pig feed was still legal
in February 2001 (36), despite the Commission’s proposals.

28.
In the United Kingdom the farm where the crisis origi-
nated was licensed to feed catering waste to pigs, provided that it
had been treated. In practice the farmer collected catering waste
from restaurants, hotels, schools and an armed forces establish-
ment in the vicinity, and stored it outside the farm before send-
ing it to two processing establishments close to the farm. Once it
had been treated the catering waste was given to the pigs. How-
ever, inspections carried out by the Ministry after the start of the
outbreak revealed the presence of abnormal waste in the feeding
troughs, clearly demonstrating that the waste had not been
adequately treated (37). The exact provenance of the pan-Asiatic
O type virus could not be established with certainty. The possi-
bility of the virus having entered via BIPs was more or less ruled
out and suspicion fell on illegal shipments of products presented
as non-food imports for wholesale outlets or for sale to restau-
rants or canteens (38).

26.
The HVO inspections concerning animal feed were car-
ried out late, partly after the crisis. The HVO highlighted the gaps

(34) Council Directive 2002/99/EC of 16 December 2002 laying down
the animal health rules governing the production, processing, dis-
tribution and introduction of products of animal origin for human
consumption (OJ L 18, 23.1.2003, p. 11).

(35) Commission Decision 2002/995/EC of 9 December 2002 laying
down interim safeguard measures with regard to imports of prod-
ucts of animal origin for personal consumption (OJ L 353,
30.12.2002, p. 1).

(36) The Commission presented a proposal to the Parliament and the
Council concerning a ban on the use of catering waste and swill in
animal feed (COM (2000) 574) in 2000, but it was not adopted until
2002 (Regulation (EC) No 1774/2002, OJ L 273, 10.10.2002, p. 1).
In January 2001, just before the crisis, it also presented a proposal
for a ban on the use of catering waste as pig feed, but it was not
adopted until 23 October 2001. Council Directive 2001/89/EC of
23 October 2001 on Community measures for the control of clas-
sical swine fever (OJ L 316, 1.12.2001, p. 5).

(37) Origin of the UK foot-and-mouth disease epidemic in 2001, Department
for Environment, Food and Rural Affairs (DEFRA), June 2002.
(38) Foot-and-mouth disease 2001: Lessons to be Learned Inquiry, p. 47.

C 54/12

EN

Official Journal of the European Union

3.3.2005

Insufficient checks and criteria for Member States’
contingency plans

(e)

the system for recruiting valuers in an emergency and the
general principles for remunerating them;

29.
In 1990 the Council (39) called on the Member States to
draw up contingency plans setting out the action to be taken if
an outbreak of FMD occurred. The plans were to facilitate access
to the plant, equipment, personnel and all other appropriate
materials necessary for the rapid and efficient eradication of an
outbreak. The Commission was to lay down the criteria to be
applied in drawing up the plans, examine them in order to deter-
mine whether they provided a feasible means of achieving the
desired objective, and suggest to the Member States where they
could be amended. The Council had provided for the possibility
of supplementing or amending the plans later, to take account of
any changes in the situation.

30.
In 1991 the Commission laid down the minimum crite-
ria to be met by Member States’ contingency plans (40). The aim
of the criteria was to ensure that the contingency plans allowed
rapid mobilisation of the resources needed to eradicate the dis-
ease quickly and efficiently in the event of an outbreak of FMD.
Although the Commission required the Member States to estab-
lish a basic crisis management structure such as emergency units,
local emergency centres and personnel responsible for emergency
measures, the Court noted that some important information and
conditions for controlling the disease and for efficient financial
and administrative organisation had not been required by the
Commission at the time, including:

(a) details of personnel and resources needed for different sce-
narios (optimistic, intermediate and pessimistic) and how the
personnel and resources were to be mobilised;

(b) a review of contingency plans in the light of experience and
circulation of them to farmers, together with regular simula-
tion exercises;

(c)

the criteria in excess of which emergency vaccination would
be used;

(f)

the farmer compensation system and its use before or after
culling.

The Commission has not revised these criteria since
31.
1991. It adopted Member States’ plans between 1993 and 1995.
During that process, however, the Commission confined itself to
making documentary checks, with no on-the-spot checks of the
effectiveness of the described measures. Contrary to the Commis-
sion’s reply to paragraph 33, its 1995 Guidelines for the prepa-
ration of contingency plans (41) only required the Member States
to have sufficient veterinary staff to deal with up to 10 outbreaks
of disease at any one time, and did not ask them to provide for
the number of staff to be increased as a function of the epidemi-
ogical situation. Moreover, the first on-the-spot inspections of
these plans by the Commission (HVO) in the Member States
affected by FMD only took place at the end of 2001 and during
the 2002 year, after the crisis. The Parliament also pointed out
that, before the crisis, the Commission did not ‘review the Mem-
ber States’ contingency plans within an appropriate period’. It
went on to say, ‘At the time of the 2001 crisis – apart from the
assessments in connection with the approval of the contingency
plans – [the Commission] had still not reviewed the implemen-
tation either of the UK’s contingency plan or of those of the Neth-
erlands or France’ (42).

32.
As a consequence the Member States’ plans, although
adopted by the Commission, could not be adapted to a crisis that
was unprecedented and on a scale that was difficult to imagine.
The plans had not provided adequately for the worst scenario,
made no provision for stepping up the resources to counteract it
and did not provide the necessary administrative and financial
organisation.

(d)

information on the established procedures for recording the
number of animals slaughtered, their value, payments made
and cross-checks with existing veterinary and animal identi-
fication databases;

(39) Directive 90/423/EEC.
(40) Commission Decision 91/42/EEC of 8 January 1991 laying down
the criteria to be applied when drawing up contingency plans for the
control of foot-and-mouth disease, in application of Article 5 of
Council Directive 90/423/EEC (OJ L 23, 29.1.1991, p. 29).

(41) Guidelines for the preparation of contingency plans for epidemic
diseases, paragraph 6.12: ‘Each Member State should ensure that it
has immediately available sufficient trained staff to deal with, at any
time, up to 10 outbreaks of disease and to properly maintain sur-
veillance in the 3 km radius protection zone associated with each. It
has been estimated that a trained veterinarian can visit and examine
stock at no more than five holdings on one day if he/she properly
undertakes the required disinfection procedures at each place.’
(42) European Parliament, Resolution adopted on 17 December 2002,

paragraph 54.

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For example, the plan submitted to the Commission by
33.
the United Kingdom had not been substantially reviewed since its
adoption in 1991. In line with the Commission’s guidelines it did
not make provision for a pessimistic scenario (43) and even in the
national plan, the basis for plans at local level, the scenario only
covered up to ten outbreaks at any one time (44), without estab-
lishing any procedures for rapidly increasing the resources needed
to handle culling and destruction. There was no mention of any
system for recruiting valuers in an emergency, nor the general
principles for paying them. The plan had not been issued to farm-
ers or farmers’ representatives. In France the plan made it possible
to deal successfully with the two outbreaks that occurred simul-
taneously, but there was no provision for the increased resources
needed to deal with a more pessimistic scenario. The Irish con-
tingency plan envisaged dealing with ten outbreaks at any one
time. Only the Netherlands had learned from the swine fever cri-
sis and had provided for the necessary resources to be increased
to deal with its 26 outbreaks by introducing emergency vaccina-
tion as soon as the resources were found to be insufficient to
carry out culling immediately.

34.
The Commission’s internal audit showed that the Direc-
torate General for Health and Consumer Protection, which is con-
stantly being confronted with crises in the animal sector, had
introduced standardised routines, which were judged effective,
but these working procedures had not been documented. More-
over, crisis management materials and manuals were not avail-
able. Although the Commission responded rapidly during the cri-
sis (see paragraph 44), the Court considers that good groundwork
by the Commission, especially from the point of view of the
financial arrangements for the reimbursement to be granted to
Member States (see paragraphs 74 to 81), would have made it
possible to avoid some of the problems encountered during
the 2001 crisis.

Incomplete identification and inadequate tracing of animals
of FMD-sensitive species

35.
At Community level there is a compulsory system for
identifying and registering cattle individually (45). However, the

(43) The 2001 Outbreak of Foot-and-Mouth Disease, Report by the Comptrol-
ler and Auditor General, 21 June 2002, The Stationery Office, Lon-
don, p. 4, section 2, third paragraph: ‘The plans were based on the
most likely scenario and other scenarios were not considered. In line
with European Commission guidance, the Department’s plans were
based on the supposition that there would not be more than
10 infected premises at any one time’.

(44) The 2001 Outbreak of Foot-and-Mouth Disease, Report by the Comptrol-
ler and Auditor General, 21 June 2002, The Stationery Office, Lon-
don, paragraph 2.30.

(45) Regulation (EC) No 1760/2000 of the European Parliament and of
the Council (OJ L 204, 11.8.2000, p.1) established a system for
identifying and registering bovine animals individually.

Court noted that the system could not guarantee the traceability
of cattle moved between Member States or between Member
States and third countries. This covers around three million head
per year (around 4 % of the total herd). In addition, there are still
some weaknesses in its implementation in the Member States (46).
In the case of sheep (the species mainly affected by the 2001 cri-
sis) and pigs, identification was compulsory from 1 January 1995
until November 2003, but only for batches of animals (47). Dur-
ing the crisis the HVO pointed out that the system of batch iden-
tification had been poorly applied in three out of the four Mem-
ber States affected by FMD (48).

36.
The fact that Community regulations did not require
sheep to be identified individually, and that there were also short-
comings in the system of batch identification, hampered the trac-
ing of animals that were suspected of being infected and so
delayed their slaughter. In the United Kingdom sheep that should
have been slaughtered were not killed, so adding to the risk of the
virus spreading.

(46) Special report No 6/2004 of the Court of Auditors on the organi-
sation of the system for the Identification and registration of bovine
animals in the European Union (OJ C 29, 4.2.2005, p. 1).

(47) Council Directive 92/102/EEC of 27 November 1992 concerning
the identification and registration of animals (OJ L 355, 5.12.1992,
p. 32). Individual identification of sheep was made compulsory by
Council Directive 2003/85/EC (OJ L 306, 22.11.2003, p. 1). Com-
mission Decision 2000/678/EC required the Member States to
establish a database of pig holdings and movements of pigs.
(48) The HVO’s report on the audit visit to Ireland from 14-17 May 2001
said that before the FMD outbreak Council Directive 92/102/EEC
had not been implemented in Ireland as far as sheep and goat iden-
tification was concerned.
See also the HVO’s final report following an inspection visit to the
United Kingdom from 12 to 16 March, pp. 9 and 10, ‘Council Direc-
tive 92/102/EEC requires identification of small ruminants (sheep
and goats) as to their holding of origin (although not on an indi-
vidual basis). This Directive should have been transposed into
national legislation by 1 January 1995. Official identification of
small ruminants in UK, by means of an ear tag bearing the registra-
tion number of the holding of birth, has only been compulsory for
animals born since 1 January 2001 (the date upon which the Direc-
tive was actually transposed for these animals in the UK). In the
absence of an official tagging system, a mixture of unofficial perma-
nent means of identification and temporary identification is used.
The vast majority of animals moving through markets are marked
with coloured dyes. There is no compulsory requirement for sheep
to be accompanied by any form of official documentation during
routine movements’;
See also the HVO’s report on its inspection in France from 2 to
6 April 2001, which stated that the national emergency centre (the
FMD unit), together with the local emergency centres, had made a
great effort to trace animals, both inside and outside France (…).
Their efforts had been compromised by (a) the weaknesses in the
controls at various levels, (b) the incomplete implementation of
Council Directive 92/102/EEC (presence of small unregistered flocks
with unidentified animals and (c) unavailable, missing or defective
information in the ANIMO system.

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The Community rules (49) also allowed Member States
37.
not to include on the compulsory list (which they are required to
compile and update) of all farms in their territory holding ani-
mals, small holdings with a maximum of three sheep or goats for
which the farmers do not claim premiums. In the Netherlands, for
example, the responsible authority discovered in the course of the
epidemic that 18 000 small holdings or individuals with only a
very small number of animals were neither registered nor known,
constituting an additional risk that it might not be possible to
trace in time all the animals that had to be slaughtered. The HVO
found the same problem in France.

Uncorrected deficiencies in the ANIMO system before
the crisis

In 1990, the Community rules (50) introduced a comput-
38.
erised system linking veterinary authorities, one of the main aims
being to facilitate exchange of information on animal movements
between the competent authorities of the regions of origin and
the responsible authorities in the Member State of destination.
This system is called ANIMO (51). The Commission developed the
model message to be transmitted by this system in 1991 (52).

39.
Before the 2001 crisis the HVO had already pointed out
that the ANIMO messages contained no mention of the transit
points used during the transport of animals between a Member
State of consignment and a Member State of destination. The
farm of origin did not appear in the model message either. The
Court, too, had already drawn attention to the deficiencies of the
system, in its special report on classical swine fever (53). Despite
the HVO and the Court advocating changes to the regulations on
these points, the Commission had not proposed any revision of
the ANIMO system.

(49) Council Directive 90/425/EEC of 26 June 1990 concerning veteri-
nary and zootechnical checks applicable in intra-Community trade
in certain live animals and products with a view to the completion
of the internal market, Article 18 (OJ L 224, 18.8.1990, p. 29).

(50) Directive 90/425/EEC, article 20.
(51) The ANIMO system was introduced in 1990 following the abolition
of veterinary controls within the Union. It concerns all animals (not
just cattle) and animal products. The system is based on the sending
of messages from the veterinary unit of origin to the unit of desti-
nation. The messages give only the total number of animals per cat-
egory being moved, without mentioning the individual identifica-
tions of the animals.

(52) Commission Decision 91/637/EEC of 3 December 1991 establish-
ing the model for the message to be transmitted by means of the
computerised network ’ANIMO’ (OJ L 343, 13.12.1991, p. 46).
(53) Special Report No 1/2000 concerning classical swine fever, para-

graph 29.

During the 2001 crisis, following the confirmation of the
40.
first outbreak in the United Kingdom, the other Member States
did indeed need to trace the sheep that they had imported from
that country over the previous month, in order to be able to
increase surveillance of animals that were potentially carrying the
virus. It was crucial to know the holding of origin of the animals
and the transit points. However, the ANIMO messages did not
always contain this essential information.

41.
During the 2001 crisis these two omissions caused delays
in locating and slaughtering animals suspected of being contami-
nated (see Box 2). The ministry of agriculture in the Netherlands
told the Court that compulsory details of transit points would
have made control of the disease much more effective, especially
during the critical initial phase of the crisis.

Box 2

Court identified problems with tracing animals

During the crisis the authorities in the United Kingdom experienced
problems in tracing the farms of origin for sheep exported to other
Member States and determining whether the sheep were from
contaminated farms, because that information was not given in the
ANIMO messages. It was only possible for them to establish the link
after an interval of between six and sixteen days after confirmation
that the farms of origin were contaminated. On account of this they
were not able to give Member States that had imported sheep timely
warning of the risk of infection. Due to the lack of adequate
information the Member States of destination had to carry out
preventive culling of all sheep identified as having been imported
from the United Kingdom, as it was impossible to differentiate
between suspect sheep and others.
The absence of a trail for the sheep was evidence of the difficulties
experienced by the responsible authorities in France in tracing the
French farms that were the ultimate destination of sheep imported
from the United Kingdom. Furthermore, the ministry was not sure
that all the imported sheep had been slaughtered, which meant that
there was still a potential risk of contamination. In the Netherlands,
because of the absence of details of transit points in the ANIMO
messages, it took a day to trace animals from Ireland. The animals
had transited via a stopping point close to the farm in France
(Mayenne) which, three weeks later, was found to be the site of an
outbreak, following the importation of infected British sheep. The
time taken to find the documents delayed precautionary action.

Restrictions on animal movements throughout Member
States’ territories

42.
Directive 85/511/EEC requires immediate imposition of
restrictions on animal movements in protection and surveillance
areas of a minimum radius of 10 km around infected farms, in
order to limit the risks of an epidemic spreading. These measures
were implemented in the United Kingdom, but the restrictions
alone could not contain the spread of the epidemic in view of the
extent of contamination before the first outbreak had even been
detected.

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In the United Kingdom a nationwide ban on animal
43.
movements was not introduced until three days after the epi-
demic had been officially confirmed. On the basis of Article 10(4)
of Directive 90/425/EEC the Commission, for its part, adopted
Decision 2001/190/EC, banning movements of animals in Mem-
ber States other than the United Kingdom. According to the NAO
report, another 62 premises were believed to have been infected
in seven other counties in the interval between confirmation of
the first outbreak and the introduction of the ban on livestock
movements in the United Kingdom (54), with an increase in the
scale of the epidemic (and, therefore, its cost) which university
epidemiologists estimated to be twice what it would have been
had restrictions been imposed on the same day that the disease
was confirmed (55).

COMMISSION ACTION DURING THE CRISIS

Effective supervision by the Commission

44.
Commission staff were available 24 hours a day through-
out the crisis. The Commission was able to take the necessary
emergency measures promptly by, for example, notifying Mem-
ber States of the existence of the disease, carrying out surveillance
measures which included the slaughter of sheep imported before
the crisis started, closing markets, etc. Many of the decisions taken
by the Commission in the veterinary area during the crisis were
deemed by the Member States to have been timely and
appropriate.

Comparisons of the dates of inspections carried out by
45.
the HVO and crises arising show that, as far as the crisis itself was
concerned, the HVO succeeded in carrying out inspections at the
opportune time, even if it meant postponing other planned visits
to later dates. Normal procedures were speeded up during the cri-
sis and HVO inspection reports were available within two months
of its consideration of the comments of other departments of the
Directorate General for Health and Consumer Protection and the
replies from Member States.

Deficiencies in control arrangements and in the implementation
of them in the Member States

46.
Some deficiencies which the HVO had found in the con-
trol arrangements in the United Kingdom (the country most
affected by the crisis) could not, however, be dealt with promptly,

(54) See The 2001 Outbreak of Foot-and-Mouth Disease, Report by the Comp-
troller and Auditor General, 21 June 2002, p. 14, paragraph 1.8,
‘Between confirmation and a national movement ban being imposed
on 23 February another 62 premises are believed to have been
infected’.

(55) Foot-and-Mouth Disease 2001: Lessons to be Learned Inquiry Report, Dr
Iain Anderson quoting Professor Woolhouse of Edinburgh Univer-
sity, p. 60.

because they required fundamental revision of the measures in
question by the Commission and the Member States. These defi-
ciencies merit attention because, in fact, they potentially concern
other Member States. The main ones are:

(a) a significant shortage of government vets,

(b)

the effectiveness of the control arrangements relied on farm-
ers notifying the disease immediately,

(c)

in some cases, unacceptable delays in identifying suspected
cases, confirming them and slaughtering and disposing of the
animals in question (56).

During the audit the Court also identified shortcomings

47.
similar to those found by the HVO. They are described below.

Reduced veterinary services

In its 1989 report the Commission said (57) that the suc-
48.
cess of abandoning preventive vaccination depended on the avail-
ability of a finely-tuned system of government veterinary super-
vision. Although the Council instituted a series of disease controls
that qualified for Community funding, there was no Community
funding for veterinary controls on non-endemic diseases, and
FMD was, therefore, excluded. After the 2001 crisis, which
brought to light the general decrease in the number of govern-
ment vets, the European Parliament (58) and the international
conference in December 2001 (59) raised the question of epide-
miological monitoring of livestock and the funding of it as an
effective means of preventing the disease. As yet there has been
no Community-level response to this question which, in actual
fact, concerns all animal diseases.

(56) See the conclusions in the HVO’s final report following its inspec-
tion in the United Kingdom from 12 to 16 March 2001: ‘In some
cases, there had been unacceptable delays in dealing with infected
premises, from the identification of suspect disease, through to its
confirmation, and the slaughter and disposal of animals. These have
not only led to an increased risk of spread of the disease, but also
undermined public confidence in the slaughter programme.’
(57) Report on the policies of the Member States in the control of foot-

and-mouth disease, paragraph 4.10.

(58) European Parliament, Resolution 2002/2153, on foot-and-mouth
the future

disease-lessons to be learmed and proposals for
(A5-0405/2002), paragraphs 99 and 100.
International Conference on Control and Prevention of Foot-and-
mouth disease, Brussels 12 and 13 December 2001, Final Report,
paragraph 3.1 of the conclusions and recommendations.

(59)

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Cumbria was the region most affected by FMD and has
49.
four million sheep, more than 880 000 cattle and 170 000 pigs.
In that region the number of government vets went down from
27 in 1967 to only nine in 2001 (60). Statistics show (61) that the
United Kingdom had 9,5 government vets per million animals
(cattle, sheep and pigs), compared with an average of more than
20 vets per million animals for the other Member States. Due to
the reduction in the number of government vets in the United
Kingdom and the delay in calling up additional manpower (62),
the effectiveness of measures to control the epidemic was signifi-
cantly reduced. The NAO noted (63) that until April 2001 the
increase in the number of government vets employed in the
United Kingdom during the crisis lagged behind the increase in
the number of infected premises. Hence the culling delays
described in paragraphs 57 and 58 and Box 3.

Insufficient incentive for immediate notification of disease
and compliance with animal movement restrictions

50.
Immediate notification of the disease is fundamental to
rapid eradication. The aim of the Community regulations is to
ensure both that farmers notify the disease to the responsible
supervisory authority and, similarly, that the Member State noti-
fies it to the Commission. In the first case Directive 85/511/EEC
requires Member States to ensure that they are notified of any sus-
pected or actual cases of FMD immediately.

51.
Paradoxically, although the success of Community con-
trol of FMD actually relies substantially on farmers themselves, as
they are the first people able to note the physical condition of
their livestock and to notify any diseases in the herd, the Com-
munity regulations did not require Member States to involve
farmers in disease control, consult them over contingency plans,
provide them with information about the nature of different ani-
mal diseases and immediate action to be taken, make them aware
of their responsibilities or encourage them by some other means
to notify the disease quickly.

the responsible authority in the United Kingdom of the infection
among the livestock. The disease was detected approximately one
month after its appearance in another region, by which time,
according to estimates made since then, there were already
57 contaminated holdings (64). In the meantime (between 1 Feb-
ruary 2001 and 21 February 2001), however, 49 796 head of
livestock had been exported to the other Member States, increas-
ing the risk of the epidemic spreading beyond the frontiers of the
United Kingdom.

As regards the Member State’s notification to the Com-
53.
mission and the other Member States, it was essential that the lat-
ter be notified as early as possible during the crisis, so that they
could take the necessary precautions. This compulsory notifica-
tion of the disease by the Member State concerned to the Com-
mission and the other Member States is, moreover, a require-
ment (65). In the case of the first outbreak, however, it only has to
be effected within 24 hours of the disease being confirmed on the
basis of a test that is carried out by a specified national laboratory
on samples taken from the animals. This interval of 24 hours can
thus be added to the time needed for carrying out the tests, even
though scientific confirmation has been obtained.

54.
In order to offset this disadvantage the Council (66) gave
the Commission the option of establishing a warning system,
allowing any Member State affected by an epidemic to alert the
Commission and the other Member States quickly to the occur-
rence of an outbreak of FMD. On 20 February, five hours after the
national reference laboratory had officially confirmed the disease,
the United Kingdom, in accordance with the provisions of the
Community regulations, notified the Commission of the existence
of the first outbreak, thus demonstrating that the 24-hour period
allowed by the regulations could be shortened, given modern
methods of communication. The Commission then immediately
informed the veterinary services in the other Member States and,
on the following day, stopped exports from the United Kingdom.
In the intervening period around 287 pigs were still exported
from Northern Ireland to the Irish Republic, before the export ban
was actually implemented, at 17.00 hours on 21 February.

52.
Following a detailed epidemiological enquiry national
reference laboratory experts took the view that a certain livestock
unit was the origin of the 2001 epidemic, but it had not informed

55.
Prompt notification is essential if FMD is to be contained.
Farmers’ observance of animal movement restrictions is equally
important. Member States found that in some cases these aspects
had been disregarded in their territories and took action against
the farmers concerned in the courts.

(60)

Inquiry into Infectious Diseases in Livestock, The Royal Society, visits to
Cumbria and Galloway 1 and 2 November 2001.

(61) Eurostat and Royal College of Veterinary Surgeons, year 2000.
(62) Foot-and-Mouth Disease 2001: Lessons to be Learned Inquiry, Dr Iain

Anderson, sections 9.2, 9.7 and 9.8.

(63) The 2001 outbreak of Foot-and-Mouth Disease, Report by the Comptrol-
ler and Auditor General, National Audit Office, United Kingdom,
14 June 2002, p. 52, paragraph 3.37.

(64) Origin of the UK foot-and-mouth disease epidemic in 2001, DEFRA,

United Kingdom, June 2002.

(65) Council Directive 82/894/EEC (OJ L 378, 31.12.1982, p. 58),
Article 3(1) requires Member States to notify the Commission and
the Member States within 24 hours of an established primary out-
break on their territory of any of the diseases listed in Annex I to the
Directive.

(66) Council Directive 90/423/EEC.

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In the United Kingdom and France farmers who did not
56.
notify the disease or respect the animal movement restrictions
were taken to court by the Member States concerned and were
fined. These farmers were entitled to full compensation because
the Community provisions did not make the payment of com-
pensation conditional on compliance with essential aspects of the
control provisions, such as disease notification and observance of
movement restrictions (67). The absence of such provisions made
it possible for the Member States to claim back from the Com-
mission the amounts that they had paid to those farmers (see
paragraph 77).

In the other Member States, on the other hand, slaughter took place
as soon as an outbreak was suspected, before the final results of labo-
ratory tests were received. In the Netherlands, France and Ireland pre-
ventive culls were carried out, especially in the case of sheep imported
from the United Kingdom.
In the United Kingdom animals were killed after they had been val-
ued and after the valuation had been accepted by the farmer, thus
delaying slaughter of infected animals. In France, on the other hand,
animals were valued after slaughter, so as not to delay eradication of
the infection.

Delays in culling

57.
In order to be entitled to Community reimbursement
Member States must immediately slaughter infected animals, as
required by Directive 85/511/EEC, as soon as the disease is offi-
cially confirmed. Immediate slaughter is essential, to prevent the
spread of the virus.

58.
In the case of secondary outbreaks, however, the Com-
munity regulations allow, but do not require, Member States to
slaughter animals, if the epidemic spreads, as soon as clinical
symptoms of the disease are detected by an official veterinarian.
Furthermore, they do not require animals to be culled before they
have been valued and the relevant administrative procedures
completed. In consequence culling was more or less rapid accord-
ing to the practice of the Member State and the veterinary
resources available (see Box 3), thereby increasing the risk of the
epidemic spreading.

COMMISSION ACTION CONCERNING THE REIMBURSEMENT
SYSTEM

59.
Before the crisis the Court and the discharge authorities
had already made recommendations to the Commission, some of
them coinciding with the HVO findings mentioned in paragraph
46. In the financial area the Commission did not take advantage
of the recommendations made by the Court in 1996, nor those
made by the discharge authority in connection with classical
swine fever and BSE - it did not adapt them to the FMD situation
(see Box 4).

Box 3

Culling delays in Member States

Box 4

Commission follow-up to previous recommendations by
the Court and the discharge authority

In the United Kingdom, as allowed by the Community regulations,
the responsible authority waited for laboratory confirmation of
infection before culling the animals from the first outbreak: in the
meantime three other outbreaks had occurred. In the case of the first
100 outbreaks the interval between confirmation of contamination
and slaughter was, in most instances, more than 24 hours and could
be up to seven days. The United Kingdom subsequently took the
appearance of clinical symptoms as the basis for culling. In 78 % of
such cases subsequent tests confirmed the vets’ diagnosis (see NAO
report, Table 38, p. 63).

(67) Only the Netherlands had made provision for up to 100 % of the
compensation paid to farmers to be deducted if health or veterinary
regulations had been infringed. The infringements in question were
failure to comply with animal identification systems (75 %) and
hygiene rules (18 %) and obstructing the killing of vaccinated ani-
mals, they did not concern notification and compliance with move-
ment restrictions. However in view of the difficulties suffered by the
persons concerned, the Dutch authorities cancelled the penalties ex
post facto.

Clarify the rules and procedures relating to eligibility of Member
States’ expenditure and compensation payments to farmers (Special
Report No 1/2000, paragraph 80): in reply to the follow-up to the
Court’s 1995 Annual Report the Commission undertook to address
directives to the Member States on compensation procedures and
calculation of the amounts involved; this was not done.

support measures

Align the cofinancing rates applicable to veterinary measures and
market
(Special Report No 1/2000,
paragraph 79); the Commission undertook to do this for classical
swine fever; however, the cofinancing rates still vary according to the
nature of the animal disease.

Submit to the Council a proposal for reviewing the regulations so as
to increase the contributions from owners of intensive pig units to
measures to combat the disease (Special Report No 1/2000,
paragraph 81): the Commission carried out a comparative study of
other forms of financing but did nothing towards the introduction of
systems in the Member States involving farmers’ contributions for
FMD.

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No Commission proposals for directives on procedures and
calculation of compensation for farmers by Member States

the absence of any definition of compensation from Member
States to farmers which prevails in the area of FMD. It was in fact
the absence of any framework for compensation that made pos-
sible the inconsistencies and inequalities of treatment meted out
to farmers according to their geographical location and/or the
slaughter method chosen, as described below.

60.
The rules (68) give the Commission the task of adopting
the necessary implementing measures as regards the special Com-
munity financial contribution for eradicating FMD. It makes the
Community reimbursement of expenditure to Member States
conditional on ‘adequate compensation of the livestock farmers’,
but without specifying the meaning of the expression. In Decem-
ber 2000 the Council (69) made the Commission alone respon-
sible for direct management of this expenditure. Paradoxically,
although the Commission undertook to present directives con-
taining the arrangements for compensating farmers in the Mem-
ber States, it considers that it is not legally competent to do so.
The regulations are incomplete as a consequence, in as far as the
Commission has not presented the directives. On the basis of the
current legal arrangements the Commission confines itself to
determining whether Member States’ expenditure is eligible for
Community reimbursement, without providing the framework
for their calculation of the compensation to be paid to their
farmers.

Variations in compensation systems and lack of uniformity
in valuations

The compensation for direct losses by farmers, i.e. the
62.
gross value of slaughtered livestock, was not set in advance
(except in the Netherlands). This meant that Member States had
to set it during the crisis, when some price references were
unavailable because markets were closed. Most Member States
drew up price grids for use as a reference by the official valuers
responsible for valuing animals, but without instructing that the
figures were upper limits. Price references were unavailable for
some categories of animals.

61.
On the other hand, in the context of compulsory slaugh-
ter of cattle affected by BSE (70), the Commission set limits on the
amount of compensation to be paid to farmers by the Member
States (71). The latter are authorised to pay the objective current
market value for each animal, established on the basis of a sys-
tem of objective individual evaluation approved by them. Even if
this system does not entirely meet the wish for a harmonised, fair
it is still preferable to
and economic compensation system,

As regards indirect losses (72) there was no compensation
63.
in three Member States (Ireland, Netherlands, United Kingdom),
leaving farmers without resources for at least three weeks after
animals had been slaughtered, while the farm was being decon-
taminated. In France, on the other hand, the losses were reim-
bursed to farmers by the French authorities, who considered that
the expression ‘adequate compensation’ for farmers ought to
cover all losses (animals and income). However, the Commission
did not accept them for reimbursement.

(70)

(68) Council Decision 90/424/EEC, Articles 3 and 11(2).
(69) Council Decision 2001/12/EC of 19 December 2000 amending
Decision 90/424/EEC on expenditure in the veterinary field (OJ L 3,
6.1.2001, p. 27).
In the case of BSE the compensation payments to farmers for com-
pulsory slaughter of cattle are still managed by the Directorate-
General for Agriculture. The division of responsibilities for animal
disease management between the Directorate General for Health and
Consumer Protection and the Directorate General for Agriculture is
due to historical reasons. Transferring the compulsory selective
slaughter programmes from ‘Guarantee — markets’ to ‘Guarantee —
veterinary’ has been mentioned, but the associated manpower prob-
lems within the Commission have yet to be resolved.

(71) Commission Regulation (EC) No 164/97 (OJ L 29, 8.1.1997, p. 1).
This Regulation is based on Article 37 of the Treaty, concerning the
common agricultural policy, and on Council Decision 90/424/EEC
on expenditure in the veterinary field.

64.
The contracts concluded by Member States with valuers
varied and the instructions for valuers were inadequate in some
cases. In the absence of instructions from the Commission to
Member States about cattle valuations, the bovine identification

(72) Farmers were not permitted to restock farms for three weeks after
animals had been culled and premises decontaminated. During that
period they had no income.

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system (73), which contains important data relating to the value
of animals (breed, age, sex), was not used by valuers to determine
cattle values, leaving them a good deal of latitude. The identity of
cattle was not included in the valuation forms and there was no
trace of valuations having been reviewed by senior valuers or by
the ministry.

The systems adopted by Member States are described

65.
in Box 5.

In the absence of detailed Community regulations the
66.
systems introduced in the Member States resulted in lack of uni-
formity in the compensation to farmers. In the United Kingdom
the NAO, like the Commission and the Court, detected animal
values that were higher than the values at the beginning of the cri-
sis. Additional payments totalling 4,2 million euro relative to the
initial valuation of the animals were granted to some farmers
(France, Ireland, United Kingdom). In other cases the compensa-
tion was reduced (Netherlands). The average compensation paid
to farmers was noticeably higher in the United Kingdom for cattle
and sheep than in the other Member States, while in France it was
higher for pigs (see Box 6 and Diagram 3).

Box 5

Compensation systems introduced by Member States

The compensation system chosen by the United Kingdom, Ireland
and the Netherlands was based on the value of the animals, excluding
indirect
thus
supplementing the animal value by around 30 %.

losses, whereas France

included

latter,

the

In the United Kingdom the system fluctuated between one where
valuers alone assessed the value of the animals and a mixed system
where farmers could opt for either a valuation based on a standard
rate card or a value set by the valuers. The standard rate card did not
include price references for all categories of animals and had no upper
limits. After a very strong rise in valuation figures use of the standard
rate card was abandoned. Valuers were not given precise guidelines,
and instructions on including outstanding animal premiums in the
compensation figure were imprecise, leading to variations in the
practices followed.

In Ireland the responsible authority produced a monthly list of precise
prices for all categories of cattle. In the case of sheep, on the other
hand, the price grid established by the responsible authority was
incomplete and provided no upper limits.

In the Netherlands the reference price grid was set in advance by the
responsible authority and the valuation procedures to be followed had
already been laid down in the contingency plan. This was a
contributory factor
in achieving more precise and uniform
assessments of animal value.

In France a flat-rate scale had been set for sheep, but for other
categories of animal the inadequacy of the national framework
allowed prefectures to opt for various systems.

(73) The cattle registration and identification system comprises ear tags
and passports identifying cattle individually, individual registers kept
on every farm, and computer databases set up by the Member States.
The database must provide at any time the identity numbers of all
the cattle present on a holding, together with all movements of all
cattle from birth. Despite the weaknesses detected in the application
of the system (see Special Report No 6/2004 on the cattle identifi-
cation and registration system), it would have been possible for lists
of cattle present on farms to be printed and used by vets and valuers
to verify animals’ history, slaughter them and establish their value.

Box 6

Compensation paid by Member States

In the United Kingdom the compensation paid was high: the
National Audit Office reported that the standard rate card used to
value animals during part of the crisis was based on the highest prices
prevailing just before the crisis. The contracts that were concluded
with the valuers tied their remuneration to the estimated value of the
animals, with the inherent risk that the estimated value (and,
therefore, the compensation paid) would be unduly increased. The
Commission has calculated that the average compensation paid for
cattle was more than twice their value, more than 2,5 times value for
sheep and almost twice value for pigs, resulting in an over-valuation
(811,7 million euro) of the amount declared by the responsible
authority.

In the case of France the Commission estimated that 1,1 million euro
of the amount declared was attributable to the over-valuation of
animals, mainly because the compensation included indirect losses
and the valuations for pigs were too high.

In Ireland and the United Kingdom additional amounts (0,5 million
euro and 1,7 million euro respectively) were paid to farmers who
disputed valuations, but the amount of compensation paid was not
cut in cases where the responsible authority found the valuation too
high. In France the flat-rate scale for sheep was revised upwards,
adding almost two million euro to the compensation for destroying
carcasses.

In the Netherlands the ministry decided to reduce the compensation
for infected animals by 50 % of their value. As a consequence farmers
received 50 % of the value of infected animals and 100 % of the value
of other animals, all on the same farm. A price grid was drawn up
in advance and used as a valuation guide.

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Average compensation paid per head for different categories of animals slaughtered in 2001

Diagram 3

Exchange rate: 1 euro = 0,62380 pound sterling (on 3 December 2001)
Source:
FR/ Claims for reimbursement (5 October 2001 and 6 December 2002).
IRL/ Claim for reimbursement (6 February 2002).
NL/ Claim for reimbursement (April 2002).
UK/ Claims for reimbursement (December 2001 and 26 February 2003) plus Northern Ireland claim for reimbursement.

Established cases of double payments of animal premiums

67.
Five months after the start of the FMD crisis, when Mem-
ber States had already begun to award compensation, the Com-
mission drew up a regulation of derogation (74) concerning Mem-
ber States’ payment of the Community per capita animal and
slaughter premiums under market support measures (75). The
Regulation authorised Member States to pay the premiums to
farmers, in addition to the FMD compensation, without their hav-
ing to comply with the conditions governing retention of animals
on the farm which are necessary for control purposes under nor-
mal circumstances (identification and counting of the animals).

(74) Commission Regulation (EC) No 1458/2001 (OJ L 194,18.7.2001,
p. 4). This Regulation was drawn up by the Directorate-General for
Agriculture.

(75) The regulations on animal premiums (Council Regulation (EC)
No 1254/1999 (OJ L 160, 26.6.1999, p. 21) and the Commission
implementing Regulation (EC) No 2342/1999 (OJ L 281,
4.11.1999, p. 30) for cattle and Council Regulation (EC) No
2467/98 (OJ L 312, 20.11.1998, p. 1) for sheep), which are market
support measures, were drafted by the Directorate-General for Agri-
culture and administered by them. The premiums are granted to
farmers holding cattle and sheep, provided that certain retention
periods are observed.

68.
However, when it drafted the derogation Regulation the
Commission did not take into account the selling practices that
normally apply, particularly in Ireland and the United Kingdom,
whereby the sale price of animals includes the amount of any ani-
mal premiums still outstanding from which the next buyer might
benefit. In actual fact, valuers in Ireland and the United Kingdom
followed the usual practice and, taking the view that adequate
compensation for farmers ought to include any premiums still
due to the farmers, they included them in the livestock valuations
for FMD compensation purposes. The Commission, however,
omitted to take this practice into consideration and did not
instruct Member States to refrain from paying animal premiums
subsequently if they had already been included in the FMD
compensation.

69.
After granting farmers FMD compensation the Member
States applied the derogating Regulation and then proceeded to
pay any animal premiums that were still due. Given that Ireland
and the United Kingdom had already included the amount of
some of these premiums in the FMD compensation previously
paid to farmers, this meant that some farmers were able to col-
lect the amount of premium twice.

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In practice the animal valuation forms only gave an over-
70.
all amount, without distinguishing between the premiums and
the intrinsic value of the animals, so that it was difficult for an
auditor to set a precise figure on the extent of double payments.
However, given that valuers had been instructed to include the
amount of the premiums in the livestock valuations and that
some of them had given direct confirmation of the inclusion, the
Court was able to estimate that the total for animal premiums (76)
paid to the United Kingdom in duplication of those included in
the FMD compensation could be of the order of 10 million
pounds sterling (more than 16 million euro) (77).

71.
In Ireland as well, the Court identified cattle premiums
that had been paid in addition to compensation, but the amounts
were smaller (78). In France some prefectures included bovine pre-
miums in the compensation, others did not. The agriculture min-
istry in the Netherlands, on the other hand, told the Court that it
had not included any premiums in the FMD compensation.

Variations in slaughter premium payments

however, after the Court’s audit visit. In the United Kingdom the
premiums were not paid, in order to avoid possible duplication
with the FMD compensation, which already included them. In
France the question did not arise because contaminated animals
were not slaughtered at abattoirs, and so slaughtering premiums
were not paid either.

Rules and procedures governing eligibility of Member States’
expenditure for Community reimbursement were defined late

74.
Under Decision 90/424/EEC the Commission, with the
help of the Standing Veterinary Committee (80), is responsible for
laying down procedures for implementing the Community finan-
cial contribution to Member States’ expenditure. The Commis-
sion, again with the Committee’s help, is also responsible for
defining the nature of any additional measures that might be
needed to eradicate an outbreak of disease, and the nature of the
resultant Community financial contribution.

72.
Still in the context of market support measures, provi-
sion for payment of a slaughtering premium for cattle is included
in a Council Regulation (79) requiring an abattoir certificate to
confirm that the animal has been slaughtered. This Regulation,
however, does not specify the nature of the slaughtering, i.e.
whether it is for purposes of human consumption (EAGGF Guar-
antee Section - market support) or on health grounds (EAGGF
Guarantee Section - veterinary). Depending on the interpretation
it was possible for the slaughter premium to be paid in addition
to the FMD compensation, but only to a small minority of farm-
ers whose contaminated animals were slaughtered at an abattoir.
This led to inequality in the treatment of farmers within Member
States, according to where slaughter took place.

75.
Before the crisis, the Commission had not made any pro-
posals for procedures for implementing the Community financial
contribution, despite the undertaking it had given earlier in
response to the follow-up of the Court’s 1995 Annual Report, ‘to
issue guidelines to the Member States concerning both proce-
dures and the calculation of compensation with regard to Com-
munity co-financing of veterinary measures’ (see Box 4). Neither
had it provided Member States with details of the nature of the
supporting documents that they would need to keep if their
expenditure was to be allowed for Community reimbursement. In
this way it deprived itself of resources that were important for its
own checks.

73.
When questioned on the subject by one of the Member
States the Commission did not resolve the matter, and did not
give a reply on the interpretation to be adopted before the dead-
line of 30 June 2002 set by the regulations for payment of the
2001 slaughter premiums. As a result the Member States adopted
differing decisions, leading to inequalities of treatment among
farmers. The Netherlands, where a significant part of the culling
was carried out in abattoirs, did not pay slaughter premiums to
farmers in addition to FMD compensation, thereby making a sav-
ing for the Community budget of some 3,5 million euro. On the
other hand, in Ireland, where part of the culling was also carried
out in abattoirs, the premiums were paid; they were recovered,

(76) Cattle and ewe premiums.
(77) The official rate used by the Commission (1 euro = 0,62380 pounds
sterling) is the rate for December 2001, the date when the United
Kingdom submitted its request for reimbursement.

(78) A total of around 800 animals, corresponding to a sum total of

38 000 euro.

(79) Council Regulation (EC) No 1254/1999.

76.
Six months after the start of the crisis it informed the
Member States (81) that it would only reimburse compensation
for animals ‘at the value the animals had immediately before they
became affected’, whereas all the Member States concerned had
already paid a substantial part of the compensation to farmers,
using different methods (see paragraphs 62 to 66). Furthermore,
it did not say how the value would be determined, nor the docu-
ments on which it would be based.

(80) The Committee was set up by Council Decision 68/361/EEC
(OJ L 255, 18.10.1968, p. 23) and gives an opinion on the Com-
mission’s draft proposals on action to be taken.

(81) The Member States were notified virtually at the end of the epidemic,

namely:
— for Ireland: Decision 2001/646/EC,
— for France: Decision 2001/653/EC,
— for the Netherlands: Decision 2001/652/EC,
— for the United Kingdom: Decision 2001/654/EC.

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Similarly, in the absence of Commission instructions, the
77.
Member States’ requests for reimbursement included compensa-
tion paid to farmers who had not complied with national provi-
sions implementing the Community directives on notification
and movement restrictions (some 972 876 euro in the United
Kingdom and 58 769 euro in France, see paragraph 56).

Protective culling by Member States where there had been no out-
breaks (Belgium, Germany, Spain and Portugal): the decision was
not adopted by the Commission until August 2003, almost two
years after the end of the crisis (83).

Decisions on the financing of associated costs, with details of the
information to be supplied to the Commission (veterinary costs,
destruction costs, disinfecting costs): were not adopted until
2003 (84).

78.
In the absence of Commission guidelines on the checks
to be carried out by Member States and the supporting informa-
tion to be kept, the beneficiary files examined on the spot were
incomplete: in many cases slaughter certificates were missing,
cross-checks of the number of cattle identified in the national
databases against the number of cattle slaughtered had either not
been carried out or revealed numerous discrepancies in most of
the Member States audited. Even though many of these shortcom-
ings can be attributed to the scale of the crisis, fuller contingency
plans (see paragraphs 30 to 32) and more precise Commission
criteria could have reduced the importance of them. For the other
categories of animals, which were not recorded because the Com-
munity regulations provided for individual identification only in
the case of cattle (82), it was not possible to obtain assurance as
to the reliability of the number declared.

79.
After the crisis the Commission specified the eligibility
criteria mentioned in Decision 90/424/EEC, together with the
necessary documents for obtaining Community reimbursement
(see Box 7). As the Commission itself said, in its reply to this para-
graph, it had not made any substantial changes to the eligibility
rules contained in Decision 90/424/EEC since 1990. The decision
in question is not sufficiently precise and can be interpreted in
various ways.

The Community contributes to Member States’ expendi-
80.
ture on condition that they have immediately implemented Com-
munity measures such as isolating holdings as soon as disease is
suspected, combined with slaughter of all animals, destruction of
the carcases and cleansing and disinfecting of premises as soon as
the disease has been confirmed officially (85). However, the finan-
cial reports which, according to its decisions granting financial
assistance to Member States, the Commission requires in order to
determine the reimbursement due, only contain part of the infor-
mation needed for assessing the eligibility of the expenditure
mentioned in Council Decision 90/424/EEC (86).

81.
Member States submitted numerous amendments to
reimbursement claims. The claims varied widely and, again, con-
tained numerous errors, so that Commission staff were obliged to
final
extend their checks and,
reimbursements.

to delay their

therefore,

Box 7

Criteria and documents needed for reimbursement
to take place were specified ex post facto

Protective culling in the Member States that had imported sheep from
the United Kingdom the month before the crisis: in France there was
reimbursement for the animals slaughtered, even though there was no
Commission decision on the reimbursement.

Partial protective culling around outbreaks in Ireland, France and the
United Kingdom (3 km slaughter zone in Cumbria gave rise to
expenditure to a sum total of
some 112,3 million euro);
reimbursement decisions were adopted by the Commission in July
2002 for France, in December 2003 for the United Kingdom and
Ireland and, at the time when this report was being drafted, were still
being finalised in the case of the Netherlands.

(82) Regulation (EC) No 1760/2000.

(83) Commission Decisions 2003/619/EC (OJ L 216, 28.8.2003, p. 42),
2003/620/EC (OJ L 216, 28.8.2003, p. 45), 2003/621/EC (OJ L 216,
28.8.2003, p. 48) and 2003/622/EC (OJ L 216, 28.8.2003, p. 53),
concerning a financial contribution by the Community towards the
precautionary measures against FMD taken by Belgium, Germany,
Spain and Portugal.

(84) The Commission did not adopt the decisions on reimbursement of
expenditure to Member States for related costs, destruction, disin-
fection and cleansing until 14 March 2003 for the Netherlands
(Decision 2003/182/EC (OJ L 71, 15.3.2003, p. 19)), France
(Decision 2003/183/EC (OJ L 71, 15.3.2003, p. 22)), Ireland (Deci-
sion 2003/184/EC (OJ L 71, 15.3.2003, p. 25)) and 24 September
2003 for the United Kingdom (Decision 2003/676/G (OJ L 249,
1.10.2003, p. 45)).

(85) Decision 90/424/EEC, Article 3(2).
(86) The information required of Member States in the framework of
either Council Directive 82/894/EEC (OJ L 378, 31.12.1982, p. 58)
or the Commission decisions granting support does not mention the
dates on which outbreaks are confirmed, the introduction of move-
ment restrictions, slaughter, destruction of carcases, cleansing and
disinfection. The dates are needed for assessing the promptness of
the measures taken by Member States.

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Delays in reimbursing Member States’ expenditure

Farmers do not contribute to Community financing of the
control system

82.
Due to the variety of compensation systems adopted by
the Member States (see paragraphs 62 to 73) and the amend-
ments to reimbursement claims submitted by Member States, the
Commission’s task of identifying within reimbursement claims
the eligible value of each animal, or, at least, each category of ani-
mal, proved to be complex. Added to this was the lack of assur-
ance as to exactly how many animals had been culled.

83.
This was why, as of 1 October 2003, more than two
years after the end of the epidemic, neither Ireland, the Nether-
lands nor the United Kingdom had received any Community
reimbursements, even though as a general rule farmers had
received compensation within three months, after the culls
in 2001.

Cofinancing rates aligned in the pig sector

In its reply to the Court’s Special report on classical swine
86.
fever (87), the Commission recognised that ‘producers should
share greater responsibility for the financial aspects of the eradi-
cation of animal diseases’ and said that it intended ‘to evaluate the
possibility of supporting the Member States in establishing these
schemes, in the framework of the revision of Community legis-
lation on these issues’. The Commission has not made any pro-
posals for such support, neither for classical swine fever nor
for FMD.

87.
No-one in this branch of agriculture (neither farmers
affected by the epidemic nor those unaffected) contributes to
Community eradication costs, although, as a study carried out by
a university on behalf of the Ministry of Agriculture in Ireland
shows (88), some of them, namely farmers who were unaffected
by movement restrictions or slaughter measures, were able to
benefit from price rises. The study quantified agriculture-related
benefits in Ireland as some 107 million euro for 2001, essentially
due to the increase in the volume and prices of exports to the
United Kingdom.

84.
Council Decision 90/424/EEC specifies that the Commu-
nity contribution is equal to 60 % of the eligible costs incurred by
the Member State in controlling FMD (see Table).

85.
Management and specific regulations concerning reim-
bursement rates and compensation payable to farmers continue
to be divided between the Directorate General for Health and
Consumer Protection and the Directorate General for Agriculture:
the Directorate General for Health and Consumer Protection
handles the compensation for most animal diseases, with the
exception of compensation for cattle slaughtered because of
transmissible spongiform encephalopathy (TSE), which is still
managed by the Directorate General for Agriculture. Even though
the reimbursement rates applied by the Directorate General for
Agriculture and the Directorate General for Health and Consumer
Protection have been aligned for the pig sector, this does not
apply for FMD and TSE: the rate is 60 % for FMD, while for TSE
it is 70 %. For other animal diseases, including swine fever, it is
50 %. It follows that the reimbursement rates for the same cat-
egories of animal vary according to the disease that was the rea-
son for slaughtering. The Court was unable to find the reason for
these variations in the rates, which have been in force since 1996.

88.
However, some initiatives were taken in some Member
States independently of the Commission, by either the public sec-
tor or the agricultural sector in question, partly with a view to
reducing or supplementing the national expenditure on eradica-
tion. In the Netherlands, following the classical swine fever crisis,
an animal health fund was set up, to pay compensation in the
event of an epidemic. It is funded from three sources: farmers, the
European budget (where relevant) and the Dutch agriculture bud-
get. The majority of contributions come from farmers. A similar
system is currently under study in the United Kingdom. In France
farmers who are members of animal health associations (groupe-
ments de défense sanitaire) voluntarily set up equalisation funds to
compensate members who, in times of crisis, incur losses as a
result of measures restricting animal movements if there is no
Community reimbursement to compensate for such losses (89).

(87) Special Report No 1/2000, paragraph 81.
(88) Economic evaluation of foot-and-mouth disease, Department of Agricul-
ture, Food and Rural Development, Ireland, March 2002, carried out
by Trinity College, University of Dublin.

(89) Systems of insurance have also been developed in Spain and

Germany.

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There are thus interesting initiatives of various kinds
89.
under development in the Member States. There is a risk that
without a Community framework they may create inequality
between farmers. Moreover, although some of these initiatives
may result in a reduction of Member States’ contributions to the
system for controlling disease, none of them offers any guarantee
that the cost to the Community can be reduced.

Complementary measures were adopted at the same

91.
time, to reinforce the prevention and control measures:

(a) as regards border controls, additional precautions were
adopted by the Commission after the crisis, reinforcing
checks on travellers’ luggage and providing information to
travellers (94);

COMMISSION MANAGEMENT AFTER THE CRISIS

Action in the veterinary field

(b) on the basis of earlier Commission proposals, a ban on the
warehousing in free zones of products that do not meet
Community veterinary requirements was adopted after the
crisis (95);

In December 2002 the Commission presented a new
90.
proposal for a directive. It was adopted by the Council in Septem-
ber 2003 (90) and made important amendments to the incom-
plete measures of Directive 85/511/EEC, in particular:

(c) as regards animal feed, the Commission had already pro-
posed a generalised ban on the use of kitchen waste and swill
before the crisis (96); it succeeded in obtaining the adoption
of its proposals at EU level;

(a) without prejudicing the policy that has been in force since
1992, which gives priority to slaughtering animals contami-
nated by the virus, the new Directive puts forward emer-
gency vaccination as an important means of controlling an
epidemic of animal disease and lays down conditions for the
possible marketing of meat from animals vaccinated on
Union territory during an outbreak of animal disease;

(b)

it extends the Community requirements as regards contin-
gency plans and requires Member States to review them every
five years in the light of real-time alert exercises (91); for their
part, most of the Member States had already revised their
plans in the light of the experience gained during the crisis;

(c)

it gives five separate criteria, any of which may be used as the
basis for declaring an outbreak of FMD on a holding (92); this
should help to set preventive measures in motion more
quickly;

(d)

it requires the Member States to introduce systems of penal-
ties to be applied in cases of infringement of the national
provisions adopted pursuant to Community directives (93);

(e)

it requires Member States to provide information about the
dates on which the Community measures were implemented.
This should enable the Commission to determine the extent
to which Community reimbursement is due.

(d) after the crisis the Commission introduced a proposal for
individual identification of sheep (97), which was adopted in
December 2003 (98).

However, the measures adopted thus far have not taken
92.
some aspects sufficiently into account and remain minimal in
these respects:

(a)

the desirability of farmers’ notifying the disease quickly has
not been reinforced by means of incentive measures or by
imposing conditions on the payment of compensation to
them;

(b)

the time allowed for Member States to notify the Commis-
sion of the first outbreak has not been reduced and is still
24 hours from confirmation of the disease, whereas experi-
ence showed that this time could be shortened;

(c)

slaughter of animals is compulsory as soon as an outbreak is
confirmed. Confirmation is now being obtained more
quickly, but there is nothing to say that slaughter must be
effected immediately, before the administrative procedures
relating to valuation of the animals have been completed.

(90) Council Directive 2003/85/EC.
(91) See Directive 2003/85/EC, Article 72(10).
(92) See Directive 2003/85/EC, Article 2 and Annex I.
(93) Article 86 of Directive 2003/85/EC requires Member States to lay
down rules on penalties. Penalties must be effective, proportionate
and dissuasive.

(94) Decision 2002/995/EC.
(95) Council Directive 2002/99/EC.
(96) Regulation (EC) No 1774/2002 .
(97) COM (2002) 729 final of 13 December 2002.
(98) Council Regulation (EC) No 21/2004 of 17 December 2003 estab-
lishing a system for the identification and registration of ovine and
caprine animals (OJ L 5, 9.1.2004, p. 8).

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Moreover, as was the case for classical swine fever (99),
93.
the Commission has not updated its initial study, even though
some of the data that were missing at the time have become avail-
able since the 2001 crisis (100). The cost/benefit analysis of the
new Community strategy of using emergency vaccination and
authorising consumption of meat from animals vaccinated on
European territory has not been updated, despite the changes
introduced by the Office International des Epizooties (see para-
graph 3) concerning the time limits for resuming commercial
activities after an epidemic.

94.
In 2002 the Office actually reduced the time limit for
resuming commercial activity from 12 months to six where vac-
cination is used during a crisis. In terms of commercial conse-
quences this has narrowed the difference between vaccination, on
the one hand, and a policy of stamping out and no vaccination
on the other (in the latter case the time limit is only three months).
This is a significant factor, in as far as the policy change that has
been made at Community level gives emergency vaccination
more importance than it had before.

95.
At the time of the audit the Court pointed out that a
number of countries, some of which had concluded veterinary
agreements with the Community, continued to block exports
from the EU after the countries concerned had recovered their
disease-free status (101).

In addition, the Commission has still not updated its
97.
study on Member States’ veterinary services. Despite the recom-
mendations of the Parliament (102) (and of the international con-
ference), that Member States introduce regular farm inspections,
the Commission has not, so far, presented any proposals encour-
aging Member States to introduce such a system.

Action in the financial field

In a memorandum of April 2002 (103), the Spanish Presi-
98.
dency of the Council stated that agricultural
insurance pro-
grammes in the livestock farming sector could provide an alter-
native solution to the mechanisms that are currently covered by
the Emergency Fund. Following that memorandum, and earlier
recommendations by the Court and the discharge authority (see
paragraph 59 and Box 4), the Commission, in January 2003,
ordered a study on insurance against the risks associated with ani-
mal diseases.

99.
The study highlighted the inconsistencies of the current
system and was clearly in favour of generalised introduction in
the Member States of financial systems managed by farmers
themselves, with their own financial contributions, to encourage
them to participate in disease control. In the case of compensa-
tion for indirect losses, the study suggested introducing a system
of voluntary insurance between farmers in the form of a mutual
fund of some kind.

Due to the recency of this study (May 2003), the Com-
100.
mission has not yet proposed amendments to the current system
and has not laid down implementing procedures for the financial
contribution to Member States’ expenditure.

96.
The Commission, however, has not quantified the
Community-level cost of export bans. There is a risk of bans
becoming more significant if the EU pursues emergency vaccina-
tion, because of the risk that third countries that do not vaccinate
may be reluctant to accept exports from zones that do.

(99) Special Report No 1/2000, paragraph 82.
(100) The 2001 Outbreak of Foot-and-Mouth Disease, Report by the Comptrol-
ler and Auditor General, 21 June 2002, The Stationery Office, Lon-
don, paragraphs 1.23 to 1.29. For example, the estimate of losses to
tourism is now available. In the case of the 2001 crisis they were val-
ued at between 4 500 and 5 400 million pounds sterling for the
United Kingdom alone (between 7 213 and 8 656 million euro at
December 2001 rates).

(101) The restrictions on exports from Member States were lifted very
slowly and some were still in place. The Netherlands, for example,
was still having difficulties with exports to the USA in September
2002, even though it had officially recovered the status of FMD-free
country one year earlier. Similar problems were found in France, Ire-
land and the United Kingdom.

CONCLUSIONS AND RECOMMENDATIONS

101.
The need to complete the single market led the Com-
munity to ban preventive vaccination of livestock against FMD.
At the time the choice was justified by commercial considerations
and it was assumed that the counterpart would be a system of dis-
ease prevention and control that would make it possible to
recover FMD-free status rapidly. The Community accordingly
introduced prevention and control arrangements which effec-
tively take into account the risks associated with the free move-
ment of animals and animal products and seek to limit the risk of
the virus being introduced into Community territory, as well as
the risk of its becoming widespread throughout Community ter-
ritory (see paragraph 6).

(102) Report on the proposal for a Council Directive on Community mea-
sures for the control of foot-and-mouth disease and amending
Directive 92/426/EEC, European Parliament, doc. A5-0141/2003.

(103) Doc. 6270/02/AGRI 33.

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In the nature of things such arrangements cannot be
102.
completely effective under all circumstances, but in the absence
of full and timely appraisals and checks by the Commission some
of the shortcomings of the arrangements, and deficiencies in their
implementation by the Member States, could not be corrected in
time. The omissions of the Community regulations were not cor-
rected before the 2001 crisis, although some Commission pro-
posals predated the crisis (see paragraphs 18 to 43). During the
2001 crisis the Commission was confronted with a large-scale
epidemic, but quickly identified the shortcomings of the preven-
tion and control arrangements and their implementation by some
of the Member States, especially as regards the number of gov-
ernment vets and systems for notifying the disease and imple-
menting culls. However, it was impossible to rectify these short-
comings immediately (see paragraphs 48 to 58) They were a
contributory factor in the increased financial cost of the 2001
epidemic. Moreover one Member State had its disease-free status
officially withdrawn for 11 months under the OIE animal health
code, while the Union, for all practical purposes, lost that status
for over a year in that its exports were blocked by non-member
countries.

103.
The audit revealed that the effectiveness of the control
arrangements relied heavily on farmers notifying the disease
immediately and complying with movement restrictions.

104.
The Court also found that the system of funding could
be further improved: the scope of compensation and reimburse-
ment is poorly defined, some Member States have still not been
reimbursed, and treatment of farmers varies, depending on the
location of the holding or the method of slaughter (see para-
graphs 60 to 73). The rules and procedures governing the eligi-
bility of Member States’ expenditure for Community reimburse-
ment were laid down at a late stage (see paragraphs 74 to 83).
Following Commission checks, payments for the United King-
dom and France were reduced by 58,1 % and 2,7 %, i.e. 573,2 mil-
lion euro and 0,1 million euro respectively.

Since then, the Council and the Commission have rem-
105.
edied many of the omissions in the legislation (see paragraphs 90
and 91). The texts adopted are clear evidence that the Commis-
sion has learnt, and is still learning, from the experience acquired
during the crisis. Some of the weaknesses persist nevertheless, and
threaten to compromise the effectiveness of Community disease
prevention and control. This is particularly true as regards sur-
veillance programmes, notification of FMD, and rapid culling (see
paragraph 92). Community regulations now require Member
States to put in place penalties for non-compliance with the
national rules implementing Community directives. They do not,
however, include incentives to encourage farmers to participate
actively in prevention and control. In particular, farmers do not
make a direct contribution to the Community funding for pre-
vention and control arrangements. Moreover, the funding system
has still not been revised. In spite of these omissions the current
arrangements may give rise to reimbursements to Member States,
leaving a substantial persistent financial risk to the Community
budget.

106.
recommends:

On the basis of

the above findings

the Court

(a) outside crisis periods, regular evaluation of the prevention
and control arrangements and increased supervision of their
implementation;

(b) a study of ways of involving farmers more closely in rapid
notification of disease and compliance with movement
restrictions;

(c)

clarification of the financial framework applicable to epidem-
ics of animal disease, combined with maximum reduction of
the financial risks to the Community budget.

This report was adopted by the Court of Auditors in Luxembourg on 21 July 2004.

For the Court of Auditors
Juan Manuel FABRA VALLÉS
President

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THE COMMISSIONS REPLIES

SUMMARY

I.
Directive 90/423/EEC, amending Directive 85/511/EEC on
control measures for FMD, sets up a comprehensive system for
the prevention, control and eradication of the disease.

While banning prophylactic vaccination for technical and eco-
nomic reasons, the Directive introduced contingency planning for
FMD and a system of antigen reserves to cater for the possibility
of emergency vaccination, and modified other animal health leg-
islation in order to prevent the spread of the disase.

III.
In 1990 the Commission defined the overall strategy of
the Community as follows: ‘Maintain the FMD- and infection-free
status of
the Community without practising prophylactic
vaccination’.

As far as an assessment of the Commission’s action before the cri-
sis is concerned, the report of the British National Audit Office on
FMD notes under 9c: ‘if contingency plans were not sufficient to
deal with an outbreak on this scale, it is unrealistic to expect that
any could have coped with all the problems and difficulties that
arose or that the authorities could have forecast the unprec-
edented nature of the 2001 outbreak’.

Whilst at the time of FMD crisis in 2001 not all measures in
preparation were ready for implementation, due credit or
acknowledgement as regards the progress which has been
achieved by the Commission since the establishment of the single
market in 1993 is not given in the present report.

IV.
The Commission is constantly analysing the animal
health situation in Member States and third countries and in par-
ticular has taken measures addressing the points raised by the
Court as follows:

(a) The controls by the Commission in Member States

This strategy has since been supported by Member States, the
European Parliament and the relevant industries. It is science-
based, operates on established international standards and bal-
ances the risk of virus introduction with the technical and eco-
nomical possibilities to react to the occurrence of the disease.

The Commission’s veterinary inspection services carried out mis-
sions in Member States in relation to the implementation of Com-
munity legislation with regard to control measures for major epi-
demic diseases.

Furthermore, the Commission feels that, although this strategy is
not formally updated, it incorporates enough regular scientific
information to be operational (1).

(1) Following the outbreaks of FMD in Italy and Greece, to which the
Court refers below, the Commission together with the Member States
analysed in the Standing Veterinary Committee the epidemiological
situation and the effects of the control measures applied; based on the
output of working groups involving all Member States, a report was
prepared in 1998 outlining the principles of a future FMD control
policy. The Scientific Committee also prepared a report on emergency
vaccination in 1999. Each year the Commission coordinates the posi-
tion of Member States in the General Session of the OIE, including
positions on the FMD chapter of the Animal Health Code. Member
States, together with the Commission as observer, discuss biannually
the FMD situation in the world and Europe within the framework of
the European Commission for the Control of FMD at the FAO. Tak-
ing into account the experience of past crises Council Directive
2001/89/EC summarised the lessons to be learned from the classical
swine fever epidemic in parts of the EC in 1996/97 and provided
ample opportunity to discuss key strategies for the control and eradi-
cation of major infectious livestock diseases. More recently, and in the
light of the 2001 outbreak, the Community strategy defined in 1990
was unanimously reconfirmed by the International Conference in
December 2001, by the Resolution of the EP in December 2002, in
the Commission proposal for a new Directive submitted to the Coun-
cil in December 2002, and finally by the Council adopting Directive
2003/85/EC following an opinion of the European Parliament, the
European Economic and Social Committee, and the Committee of the
Regions.

(b) Provisions for the prevention and control of FMD

FMD is an exotic disease as regards the Community. In order to
prevent the introduction of the virus, the Commission has estab-
lished a system of import conditions and controls. In addition, the
Commission in cooperation with international organisations sup-
ports neighbouring countries in their efforts to control and eradi-
cate the disease.

The provisions of Directive 85/511/EEC together with specific
measures adopted by Comitology facilitated the eradication of
FMD in 2001.

(c) Protection of borders

There were strict rules in place before the 2001 outbreak. Some
of these provisions were reinforced during or shortly after the
2001 crisis.

(d) Swill feeding

In 1980 feeding of swill to pigs was prohibited, unless such swill
was collected, processed and provided under specific conditions
authorised and controlled by the competent authorities.

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(e) Contingency planning

The inspection of the implementation of the approved contin-
gency plans had started before the crisis.

(f)

Identification of small ruminants

Identification of small ruminants allowing the tracing of the hold-
ing of origin was already regulated by Directive 92/102/EEC.

(g) ANIMO system

The ANIMO system was very useful for the initial tracing of ani-
mals that had been dispatched from the United Kingdom to other
Member States during a period of three weeks preceding the
detection of the first outbreak. The problems encountered relate
to primarily to the rapid movement and re-certification of fatten-
ing sheep.

(h) Compliance with movement restrictions

Movement restrictions imposed in accordance with Community
and national legislation on disease control measures must be
enforced by the Member State concerned.

The Commission’s response and the decisions taken during the
crisis were deemed to be prompt and appropriate.

The Commission invites the Court to consider the declarations of
the Council during the crisis, as well as the conclusions of the
International Conference on the prevention and control of FMD
held on 12 and 13 December 2001 in Brussels.

Furthermore, the European Parliament’s Resolution of 17 Decem-
ber 2002, which endorses the modified report mentioned in foot-
note (1), acknowledges in §53: ‘The Commission responded to the
crisis immediately and took the necessary decisions. In the course
of the crisis, it promptly adapted and documented its decisions on
the basis of the opinions of the standing committee in the light
of the events. No shortcomings have been identified in the Com-
mission’s management of the crisis. The high quality of the Com-
mission’s work in controlling the crisis has also been expressly
stressed by the national veterinary authorities of Member States
concerned’.

V.
The Commission does not have legal authority to harmo-
nise at Community level the indemnification paid by Member
States to their livestock farmers in the event of an epidemic.

However, the Commission took care to harmonise the conditions
for Community reimbursement of Member States, under which
the amounts presented by the Member States were reduced by
EUR 583 million (of a total of EUR 1 051 million).

VI.
Financial framework: since 2002, the Commission has
been working on reviewing the arrangements for Community
cofunding so that, inter alia, improper overstatement of the value
of animals, to which farmers in the United Kingdom were par-
ticularly prone during the crisis, could be curbed and the bur-
geoning costs of eradicating diseases reined in. A proposal to this
effect will be made soon.

From the veterinary point of view, it is important to note that:

First of all, there is no alternative to the system of notification of
diseases. The EU standards comply with international standards,

Secondly, livestock holdings are under veterinary supervision and
this supervision is being increased by stricter requirements for
animal welfare, on-farm investigations to ensure compliance with
public health requirements (food-chain approach) and in the con-
text of disease eradication or control programmes.

Finally, the Commission has taken a number of measures to
strengthen further controls on the movement of animals.

Community legislation on animal health in general and disease
control measures in particular allows the Member States to imple-
ment the most appropriate measures for rapid eradication of the
disease concerned. The measures laid down are minimum mea-
sures that may be or in other cases must be supplemented accord-
ing to the epidemiological situation.

The Commission wishes to point out that a large part of the over-
all costs of an epidemic, including all indirect costs, is borne by
the affected Member State.

VII.
With regard to the general control strategy for major
infectious diseases there are no alternative strategies to the mea-
sures currently provided for in Community legislation. These
measures aim at disease eradication while providing sufficient
flexibility with regard to the instruments employed. The control
measures for CSF in wild boar and for bluetongue are examples
of this flexible approach.

(1) Report on measures to control foot-and-mouth disease in the Euro-
pean Union in 2001 and future measures to prevent and control ani-
mal diseases in the European Union – European Parliament report of
28 November 2002 (FINAL A5-0405/2002).

By placing more emphasis on emergency vaccination in the event
of major epidemic diseases (CSF, bluetongue, AHS, FMD) Com-
munity legislation provides for the instruments to limit the direct
costs of disease control measures.

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Decision 90/424/EEC provides a sensible incentive for producers
to notify animals showing suspicious clinical signs at the earliest
opportunity (see also paragraph 92). In addition, there are penal
measures to be taken by Member States in cases of non-
compliance with control measures.

In agreement with the request of the European Parliament, the
Commission launched a study on existing compensation schemes
in Member States and received the final report in October 2003.
As a matter of follow-up and based on dedicated budget arrange-
ments, a further study should provide exact expert estimates and
calculations to carry out an impact assessment. These will be dis-
cussed with the Chief Veterinary Officers in September 2004 and
will be presented to the International Conference on the preven-
tion and control of infectious animal diseases in December 2004.

Guidelines on the nature and scale of eligible expenditure are cur-
rently being adopted in order to clarify the financial framework
and reduce the risks for the Community budget.

INTRODUCTION

2.
In preparation for the single market, the Council adopted
Directives 89/662/EEC and 90/425/EEC laying down the veteri-
nary controls on intra-Community trade in products of animal
origin and live animals.

The harmonised rules for the control of FMD in Member
4.
States adopted in 1985 (Directive 85/511/EEC) contributed to the
eradication of FMD in the 12 Member States by the end of the
1980s. From that time onwards FMD has been an exotic disease
for the EC and prophylactic vaccination was no longer a realistic
option, as it would have been a complete lottery to select the
appropriate vaccine strain given the multitude of serotypes and
strains of the FMD virus.

The introduction of the ‘non-vaccination’ policy was accompa-
nied by a range of measures including improved movement con-
trols, better protection of borders, import requirements, a system
of compensation, a system of antigen reserves for the formula-
tion of vaccines and capacity building for laboratories and also
support measures to neighbouring third countries.

The Commission considers that the management of the
5.
outbreaks reported in various Member States during the
years 1993 to 2001 documents the efficiency of the measures
adopted by the Commission and the Member States.

In the context of the disease control measures relating to the
2 034 confirmed outbreaks of FMD in the United Kingdom, the
animals of over 8 000 premises were killed and destroyed as dan-
gerous contacts, contiguous or on suspicion.

The 2001 FMD epidemic had a significant impact on animal hus-
bandry in the whole of the EC in spite of taking all possible mea-
sures to continue trade in safe products with the affected Mem-
ber States and commencing for the United Kingdom a carefully
operated phasing out of the restrictions in October 2001, well
before it was recognised as free of the disease by the OIE in Jan-
uary 2002 (see also paragraph 102).

In accordance with these Directives, veterinary controls at
national borders were abolished. However, animals move from
one Member State to another under clearly established conditions
to be certified by an official veterinarian at the place of dispatch.
All necessary and harmonised guarantees are provided at the
place of departure and controls en route or at destination are car-
ried out in a non-discriminatory way.

The Commission wishes to clarify that the outbreaks in France (a
total of two outbreaks, the first of which was detected on
13 March 2001) and the outbreaks in the Netherlands (a total of
26 outbreaks, the first of which was detected on 21 March 2001)
are related to the movement of incubating sheep from the United
Kingdom prior to the adoption of Decision 2001/145/EC.

3.
As vaccination prevents disease rather than infection, wait-
ing periods are necessary to confirm the absence of circulating
virus. The waiting periods established by the OIE reflect the
progress made in developing techniques to detect infected ani-
mals in a vaccinated population.

Until specific discriminatory tests were mentioned for the first
time in the Manual of Standards of the OIE published in August
2001, longer waiting periods were necessary to detect remaining
infection through close contact of receptive, i.e. unvaccinated sen-
tinel animals, with vaccinated potentially virus-carrying animals.

6.
The Commission agrees with the observations of the Court
that Community legislation provides a comprehensive system of
measures to prevent the introduction of FMD virus onto EU
territory.

The agreement with the European Commission for the Control of
FMD Disease of the UN with its headquarters at the FAO in Rome
and the formalised operation of the Trust Fund maintained in
support of that organisation is an impressive example for the sup-
port of control measures in neighbouring third countries.

Directive 2003/85/EC does not modify the main prin-

7.
ciples of the control measures.

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Various additional measures were also adopted by the Council,
reinforcing identification and traceability of animals, exchange of
information, and controls on introduction of products of animal
origin, and the Commission adopted Decisions to support the
FMD-control measures in neighbouring countries.

Social and environmental issues had been included in the
17.
Community policy only following the Treaty of Maastricht in
1992, and could therefore not have been included explicitly in a
study carried out prior to that date.

Furthermore, the stocks of antigen for vaccine formulation have
been updated and further research on FMD has been supported.

However, the report reflects on certain direct social consequences
and on the effects of the non-vaccination policy on vaccine pro-
duction plants, laboratories and veterinarians.

In the first sentence of this comment, the Court refers to
9.
the total resources under the budget heading (for all diseases,
including FMD). In the remainder of its comment, the Court
analyses expenditure by the Member States on FMD. The two
sums are not comparable and must be dealt with separately.

The underspend is entirely related to the year 2002, for
11.
which EUR 400 million were entered in the budget. However,
only EUR 50,8 million were committed because the United King-
dom, which should have been the main beneficiary, was unable
to submit its request for reimbursement of the operational costs
until 2003. The time taken for the Commission to conduct its
checks is a result of the intensive nature of its audit, which
resulted in applications for EUR 583 million of the total of
EUR 1 051 million being rejected.

COMMISSION ACTION BEFORE THE CRISIS

As regard environmental measures,
subsequently.

they were harmonised

18.
The actions taken by the Commission in relation to
imports of live susceptible animals and their products were effec-
tive in restricting virus introduction into the Community and
contact between the virus and susceptible animals. This may be
attributed in particular to the tightened import conditions and
controls and the support for third countries to control FMD.

The outbreaks in Greece occurred under extensive holding con-
ditions, as most of the outbreaks did in 1993 in Italy. FMD is an
exotic disease and the incursion is related to illegal or accidental
introduction through human activities. The Commission
responded to the increase in trade in animals related to the
completion of the single market by proposing in particular har-
monisation of the trade rules for live animals (1) by including the
conditions for assembly centres, dealers and transporters.

The ban on prophylactic vaccination came into force on
16.
1 January 1992. However, most Member States that had practised
prophylactic vaccination ceased doing so during 1991.

Animals intended for export to a third country are accompanied
during their journey on EU territory by an animal health certifi-
cate for animals for slaughter.

The central case scenario described in the 1989 report estimates,
for a 10-year period without vaccination, i.e. 1993 to 2002, a
total of 273 outbreaks, with 13 primary outbreaks related to
unknown sources and 20 secondary outbreaks for each primary
outbreak.

Animals of susceptible species originating in and coming from
third countries are subject to the animal health conditions for
imports and the required controls at approved veterinary border
inspection posts.

The best case scenario is based on 13 primary outbreaks related
to unknown sources without subsequent secondary infection.

The worst case scenario describes, for a 10-year period without
vaccination, a total of 1 963 outbreaks resulting from the above
13 primary outbreaks and 150 secondary outbreaks for each
of them.

19.
The measures provided for in Directive 85/511/EEC have
been considered incomplete in so far as that they do not detail in
advance the treatment and handling of various animal products
and the complete exit strategy following an outbreak. However,
the measures described in the case of suspicion or confirmation
are the minimum measures to be taken to eradicate an outbreak
and these measures were successfully implemented in the past
and are recognised by international trading partners and the OIE.

(1) For sheep and goats (Directive 91/68/EEC) and for other biungulates

(Directive 92/65/EEC).

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The strategy review started in 1998 when Council Direc-
20.
tive 2001/89/EC was being prepared in the wake of the classical
swine fever epidemic in 1996/1997 and was continued in 2002
in particular under a proposal for a new Directive on FMD
(2003/85/EC, COM(2002) 736 Final). This strategy was con-
firmed by all the Member States and the Parliament. Even though
a formal report was not produced, all the decisions relating to the
financial contributions to the various veterinary activities were
subject to the opinion of the Standing Committee on the Food
Chain and Animal Health and were approved by the Commission
and published in the Official Journal. The various decisions relat-
ing to the Community contribution to eradicating FMD were
therefore discussed in all transparency in the said Committee.
Management of veterinary appropriations is also discussed in the
Council and the budgetary guidelines are debated regularly as well.

Since the mid-1990s the FVO has carried out a large number of
inspection missions, in particular in the Member States, which
included assessments of the competent authorities and their abil-
ity to implement Community veterinary legislation.

Regulatory checks of essential measures were made and

21.
specific reports produced:

(a) veterinary and health checks at borders on imports of ani-
mals and animal products were dealt with in FVO
report 9001/02 on inspections carried out in 2000, 2001
and 2002;

(b) checks on animal feed intended to prevent contamination of
animals or animal products were covered by FVO report
9007/02 on inspections carried out in 2001 after the crisis
broke out;

(c)

the Member States’ contingency plans for mobilising
adequate human, material and organisational resources in
the event of a crisis breaking out were covered by FVO
report 9502/03 on inspections carried out in 1999-2002;

It is difficult to envisage a systematic check of compli-
22.
ance of all national transposing legislation with the Community
directives, given the scale of the Community legislation to be
checked.

However, the Commission carries out its tasks of surveillance and
monitoring with the instruments at its disposal.

During its missions, the FVO checks whether those elements of
EU legislation that are relevant to the mission’s objectives have
been transposed. The recently adopted provisions of Regulation
(EC) No 882/2004 on official controls performed to ensure veri-
fication of compliance with feed and food law, animal health and
animal welfare rules establish a new legal framework whereby the
role of the Commission’s departments is more focused on ascer-
taining that appropriate and reliable controls systems are in place
and effectively managed at Member State level.

FVO inspections are not the Commission’s only source of infor-
mation on potential infringements of Community legislation, in
particular with regard to infringement procedures referred to in
Article 226 of the Treaty. A fair number of infringement proce-
dures are initiated following complaints submitted or on the
Commission’s own initiative.

Occasionally, the Commission also decides to institute infringe-
ment proceedings on its own initiative on the basis of informa-
tion which has come to its notice, regardless of the source.

23.
The Commission deems it to be entirely in keeping with
existing provisions and procedures for an infringement file,
opened as a result of inadequate transposal of a directive, to be
closed once the shortcoming has been remedied by the Member
State in receipt of the letter of formal notice. The closing of files
opened following non-transposal of legislation does not, of
course, prevent compliance of national provisions with Commu-
nity directives being examined or a subsequent procedure being
opened.

(d) a report on the Commission’s preliminary study on the intro-
duction of the TRACES system covered the Member States’
identification and tracing systems for animal movements and
a Member State information system (ANIMO), which were
essential for locating and rapidly slaughtering contaminated
animals.

24.
Between 1998 and 2000, the FVO carried out 47 mis-
sions in relation to veterinary Border Inspection Posts (BIPs) in the
reports are available on the website
Member States. All
(www.europa.eu.int/comm/food/fs/inspections/index_en.html).

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Concerning the incompleteness of its legislation existing
25.
in 2001, notably in relation to passenger luggage and free ware-
houses, the Commission makes the following point: Council
Directive 90/675/EEC introduced, in modification of the Com-
mission’s proposal, provisions for controls on the storage of
non-EC standard products of animal origin in free warehouses
and free zones. Thereby the veterinary services in the Member
States obtained the possibility to carry out checks on these ware-
houses that existed before, but exclusively under the control of
customs services. Consequently, Directive 97/78/EC, which
replaced Directive 90/675/EEC in the light of the development of
the single market, took over the provisions on controls over free
warehouses and free zones. Commission Decision 2000/571/EC
laid down the methods of veterinary checks for products from
third countries destined for introduction into free zones, free
warehouses, customs warehouses or operators supplying cross
border means of sea transport.

The risks from swill feeding were addressed on various
27.
occasions, in the CSF legislation and not least in the context of
inspections on the control and supervision of swill feeding which
were carried out in relation to CSF in Germany as early as 1994.
One of the conclusions at that time was to gradually phase out
the on-farm heat treatment. This concept of separating the treat-
ment of the swill from the feeding was confirmed by adopting
Decision 2003/328/EC.

Decision 91/42/EEC allows the Commission to adopt
30.
recommendations and explanatory notes on the criteria to be
applied when drawing up contingency plans.

Directive 90/675/EEC also modified Directive 72/462/EEC to the
effect that the general rule requiring all products imported to
comply with EC standards was deleted. According to Article
1(2)(c) of Directive 72/462/EEC quantities larger than 1 kg of
meat and meat products transported in the personal luggage of
travellers must be fully heat-treated. Article 16 of Directive
97/78/EC allows derogation from the veterinary controls for
small quantities of products of animal origin for personal con-
sumption that originate in third countries listed for such imports,
but does not exclude customs controls to verify these facts.

Guidelines for the preparation of contingency plans for epidemic
diseases were made available to all Member States in 1995,
supplemented specifically for FMD in 1998. The latter document
includes a requirement for different scenarios, including the worst
case, taking into account the specific risk factors and other char-
acteristics of the Member State.

In 2000 the Commission proposed to the Council a Directive
(COM(2000) 438),
adopted as Council Directive
2002/99/EC, that requires all products introduced onto Commu-
nity territory to comply with the Community animal health
requirements, regardless of the customs procedure.

later

(a) Contingency plans are based on a risk assessment in relation
to both virus incursion and subsequent spread. They are
assessed during real-time exercises conducted by the Mem-
ber States.

26.
Catering waste from international means of transport
was banned by Directive 72/462/EEC and Directive 90/675/EEC.

In accordance with Directive 80/217/EEC, the feeding of swill to
pigs was forbidden, unless such swill was properly treated under
authorisation.

In the Decision and the Guidelines the Commission could
not indicate to the Member States the number of personnel
required to comply with the plans, as it then had little author-
ity, especially in the field of animal health, and therefore
scarce expertise to interfere with the organisation of admin-
istrative action by the Member States when issues of police,
public order and civil liberties were involved.

There is no evidence that the feeding of swill in compliance with
Community rules has ever caused an outbreak of either CSF or
FMD. Illegal swill feeding is, however, by its very nature hard to
control.

(b) Missions have been carried out since 1999 to investigate the
implementation of the contingency plans. These inspections
were carried out in application of Decision 91/42/EEC and
the aforementioned Guidelines which address such points as
propagation of the plan to the national farming community
and regular exercises.

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(c) Article 13(3) of Directive 85/511/EEC provided that a deci-
sion on emergency vaccination may be taken by the Com-
mission in collaboration with the Member State concerned
(Committee procedure) ‘when FMD is confirmed and threat-
ens to become extensive’. Such a decision would specify the
conditions under which emergency vaccination would be
carried out. In addition, the decision to introduce emergency
vaccination around an outbreak could be taken by the
affected Member State following notification to the Commis-
sion, provided that basic Community interests would not be
endangered and these national measures would be reviewed
in the Standing Veterinary Committee and harmonised by
Commission decision.

Contingency plans are to be considered as implementing
31.
legislation. The measures provided for in the plans may have a
serious impact on the economic and social situation of the rural
community and the national economy as a whole. Until evalu-
ated against harmonised criteria and formally approved they can
neither be implemented nor tested. Real-time alert exercises can-
not be easily carried out within a short time-span.

In addition, the European Commission for the Control of FMD at
the FAO, of which all Member States are members and to which
the Commission contributes financially, carried out an evaluation
of the contingency plans in 1999.

Work on laying down criteria at Community level started in
1991 and continued in 1999. In 2001 all the criteria were
used to assess whether it was advisable to carry out emer-
gency vaccination in the Member States requesting it.

Directive 2003/85/EC requires preparations to be made for
vaccination after the first confirmed outbreak, but for it to be
initiated depending on the epidemiological situation and
only if there is more than one outbreak. This Directive also
provides guidance for the decision-making process on emer-
gency vaccination, based on the report of the Scientific Com-
mittee of 1999.

An exceptional situation in Member States should not be

32.
taken as indicative of potential FMD outbreaks.

33.
The contingency plan for FMD of the United Kingdom
may have changed little during the years following its adoption.
However, by the end of 2000 the United Kingdom was reviewing
certain aspects of its contingency planning in the light of the
experience with CSF (1).

The recommendation by the Commission in 1995 was that any
veterinary service had to provide the capacity for the instant con-
trol of 10 (2) simultaneous outbreaks, with an option to expand
should the epidemiological situation so require.

(d)

In the case of suspicion, Directive 85/511/EEC required a
census of all animals on the holding in question by species
and category, already dead, infected or liable to be infected
or contaminated to be prepared and kept up to date, in order
to take account of animals born and animals dying. Only
these figures are important for the control of the disease.

The preliminary results of an Expert Elicitation Workshop on the
risk of introduction of FMD to Europe were discussed at the meet-
ing of the Research Group of the European Commission for the
Control of FMD at the FAO in 2000. This report estimated the
risk of virus introduction into the islands and the northern Mem-
ber States of the EU as very remote.

records available on the holding or

However,
in a
central/veterinary database in accordance with Community
systems for the identification and registration of animals
should be consulted and cross checked.

(e) The need to incorporate livestock valuers in the local disease
control centres is laid down in document VI/5211/95.

(f) At the end of 2003 the Commission sent a questionnaire to
the Member States and to the accession countries on the sys-
tem for recruiting assessors, the general principles governing
their remuneration and a system for compensating livestock
farmers.

It is important to note that the situation in the United Kingdom,
with infection already seeded in more than 50 premises prior to
the confirmation of the first outbreak, cannot be compared with
the situation in other affected Member States that had a sufficient
period of warning.

35.
The current practice of identifying bovine animals should
ensure traceability of these animals both on national territory and
in intra-Community trade. Animals intended for export to third
countries are accompanied to the exit point by an animal health
certificate established for bovine animals for slaughter. If such
animals were to be re-imported they would be subject to the
established import requirements which include a mandatory resi-
dence in the approved country of dispatch as well as pre-export
isolation and testing verified by appropriate veterinary
certification.

(1) FMD 2001-Lessons to be Learned Inquiry Report (p. 34)
(2) Document VI/5211/95 point 6.12.

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Traceability of bovine animals in third countries is therefore of
concern to the Commission as far as the approval of third coun-
tries for exports are concerned, but is from an animal health point
of view not a Community responsibility.

Identification of sheep and goats is one of the aspects to be con-
trolled by the FVO during specific missions for the eradication of
B. melitensis. However, the United Kingdom, Ireland and the Neth-
erlands are free of B. melitensis throughout their territories and
have therefore been spared from such missions.

Difficulties have been encountered in relation to triangular trade
in fattening sheep forwarded from the Member State of first des-
tination to another and accompanied by a new certificate recorded
in a new ANIMO message. Clarification of such movements
required close cooperation between Member States. This problem
is related to the particular trade conditions for fattening sheep
that had not provided for a mandatory residence before dis-
patched to another Member State. Directive 2003/50/EC
addressed this problem by introducing a residence and stand-still
period prior to dispatch to another Member State.

Identification of sheep and goats allowing the tracing
the holding of origin was already being regulated by

36.
of
Directive 92/102/EEC.

In other cases tracing of sheep was hampered when the sheep
originating in the United Kingdom had been moved under
national conditions from the holding of destination indicated in
the ANIMO message to another holding within the same
Member State.

Following difficult discussions in the Council and the European
Parliament, in 2003 the Council adopted Regulation (EC) No
21/2004 which requires individual identification of sheep and
goats and record keeping on the registered farms.

37.
In accordance with Directive 92/102/EEC sheep, goats
and pigs were identified as a group so as to allow tracing of the
holding of origin. Article 3(2) of that Directive provides for a
derogation in relation to small holdings keeping not more than
three animals of the ovine or caprine species or one pig, provided
that any such animal was subject to the controls laid down by leg-
islation prior to movement. Regulation (EC) No 21/2004 with-
drew this derogation in relation to sheep and goats.

38 and 39.
The ANIMO system as a management tool oper-
ated by the Member States was developed prior to the Internet
period. The amount of information exchanged was therefore lim-
ited to the essentially necessary information.

The Commission has taken steps to permanently include
41.
information on the transit through staging points in the messages
issued by the new TRACES computer system, integrating the
functions of the ANIMO and SHIFT systems into a single archi-
tecture (Decision 2004/292/EC of 30 March 2004). In addition,
the sanitary conditions for the operation of staging points were
strengthened by the introduction of a sanitary break with com-
pulsory disinfection between the occupation by subsequent
consignments (Decision 2003/483/EC and Regulation (EC)
No 1040/2003).

The question of a transport ban on a large part
42 and 43.
or indeed the entire territory of a Member State is already an
extremely serious restriction of animal health policy, having wide-
ranging consequences for public order and civil liberties. It is
applied by the Member State under the responsibility of the com-
petent authorities. The Commission did adopt Decision
2001/190/EC of 8 March 2001 which introduced EC-wide restric-
tions on the movement of susceptible animals within and between
Member States other than the United Kingdom, and which had
the above-mentioned effects.

As a consequence of the technical developments the Commission
adopted Decision 2003/24/EC laying down that the TRACES
computer system was to be developed, integrating the functions
of the ANIMO and SHIFT systems into a single architecture. Con-
sequently, the necessary resources were mobilised and the Com-
mission adopted Decision 2004/292/EC of 30 March 2004
on the introduction of the TRACES system and amending
Decision 92/486/EEC.

On 19 February 2001 the disease was noticed in sows at the abat-
toir in Essex and subsequently confirmed on 20 February 2001.
Tracing to source farms led on 21 February 2001 to the conclu-
sion that the abattoir was contaminated before these animals had
arrived. Also, about 600 holdings that had supplied slaughter
pigs, first of all swill-feeders, and their respective contacts had to
be visited.

40.
Following the first outbreak in the United Kingdom in
2001, the information stored in the existing ANIMO system was
made immediately available to Member States of potential desti-
nation and was subsequently completed.

On 23 February 2001 the disease was reported in cattle on a
holding from where sheep had been sent to a big livestock mar-
ket days before. The national movement ban was immediately
introduced.

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Movement of mainly sheep before the detection of the disease
and the installation of movement restrictions accounts for nine
out of 12 of the major geographical groups of outbreaks. Eight
out of the nine areas, which account for 89 % of the outbreaks
diagnosed by 15 June 2001, were infected before the first case of
FMD was diagnosed.

However, during and after missions to affected Member States,
the FVO informed the relevant Commission departments imme-
diately about important and relevant findings, notably through
direct contact and back-to-office reports. The completion of the
reports within two months of the end of the mission is therefore
only a formal aspect taking into account the need for careful
preparation of the reports intended to be published on the
Internet.

The minimum requirements described in Article 9 of Directive
85/511/EEC, which aim to prevent airborne spread or spread
through fomites of the FMD virus, have been effective in the con-
text of the outbreaks in other Member States to which the Court
referred previously and also in relation to more isolated outbreaks
in the United Kingdom.

By contrast with the scientific studies carried out afterwards on
archive data of the 2001 epidemic, the competent authorities had
to operate at the time of the first outbreaks on a much less com-
plete set of information.

43.

The NAO report reads on page 14:

‘Between confirmation and a national movement ban being
imposed on 23 February 2001 another 62 premises are believed
to have been infected, involving another seven counties.’

The NAO in its report on page 56 point 3.53 explains the con-
cerns of the department to introduce on 20 February 2001 on the
basis of existing epidemiological evidence a nationwide move-
ment ban. Such a drastic measure, with far-reaching conse-
quences for stranded animals and feed supply, was considered dis-
proportionate, as the disease at that stage existed only in pigs and
the pig industry does not tend to move animals through markets.

The NAO also makes it clear that the conclusions quoted by the
Court were based on a developing model and that data had been
subsequently improved.

46.

(b) Compulsory notification of any suspicion of a major
infectious disease is an internationally accepted measure,
which has for technical reasons no alternative and is
required and regulated by Community legislation.

The responsibility of the food chain operators, includ-
ing livestock keepers, has been clarified in Article 17 of
Regulation (EC) No 178/2002 which was based on a
Commission proposal (COM(2000) 716 Final) and was
reconfirmed by both the European Parliament and the
Council when adopting Regulation (EC) No 882/2004
of 29 April 2004 on official controls performed to
ensure the verification of compliance with feed and food
law, animal health and animal welfare rules.

(c) FMD is usually a disease with clear clinical symptoms in
cattle and pigs but may go unobserved in small rumi-
nants. An initial negative result in a laboratory test
requires complementary investigations. The report of
the NAO (p. 61) details the steps taken by the United
Kingdom authorities in March 2001 to accelerate the
diagnosis and to shorten the report-to-killing delays.

Killing on clinical grounds has been practised from the
very beginning but was formalised on 15 March when
up to 50 new outbreaks per day threatened to over-
whelm the capacities of both the veterinary services and
their laboratory back-up. Shortly after killing on suspi-
cion and the contiguous cull were instituted.

COMMISSION ACTION DURING THE CRISIS

44.
The responsible services in the Commission have been
and are available 24/24 not only during crisis situations, as can
be gathered from the rapid response to the notification of the first
outbreak.

48.
The Court rightly observed that the Commission sup-
ports a range of programmes for the control and eradication in
Member States of both viral and non-viral infectious diseases in
livestock and notably of zoonotic diseases and those previously
included in list A of the OIE.

45.
The Commission agrees with the Court that during the
crisis the procedures for completing a mission report had been
accelerated.

In addition, some Member States have been granted additional
guarantees in relation to viral diseases and these guarantees
require additional on-farm surveillance.

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Also Community legislation on animal welfare requires the
appropriate level of veterinary supervision and inspections on
farms and Member States are obliged to report about the results
of their controls.

For the success of the measures to be taken in the case of
51.
FMD, rapid notification of suspicions is essential, and farmers
must be trained in disease recognition as part of contingency
planning.

Furthermore, in accordance with the health legislation on milk
production (Directive 92/46/EEC), farms producing milk must
comply with specific animal health conditions and hygiene stan-
dards. Article 3 of Regulation (EC) No 882/2004 of the European
Parliament and the Council on official feed and food controls pro-
vides for official controls on all levels of the food chain.

The establishment of measures such as the imposition of penal
sanctions in case of failure to notify, or enquiries and public order
restrictions affecting private property, were hardly conceivable at
Community level under the legal framework then applicable.

Article 3.8.1.3 of the OIE Terrestrial Animal Health Code pro-
vides for Guidelines for the discontinuation of specific surveil-
lance after recognition of freedom from infection:

A country that has been recognised as free from infection in
accordance with the provisions of the Terrestrial Code may dis-
continue specific surveillance while maintaining the infection-free
status, provided that:

Consultation with the various bodies, organisations and other
stakeholders involved in the control of a possible disease outbreak
is carried out in the preparation of contingency plans and the
Commission prepared suitable guidelines well in advance of the
outbreak.

(a)

it is a notifiable disease;

(b) an early detection system is in place;

Commission Decision 91/42/EEC requires the drawing-up of con-
tingency plans in such a way that would in particular allow rapid
contact of persons and organisations directly or indirectly
involved. Contingency plans must be exercised to maintain and
develop skills in field and administration procedures.

(c) measures to prevent disease/infection introduction are in

place;

(d) vaccination against the disease is not applied;

(e)

infection is known not to be established in wildlife.

Given the short incubation period of FMD, surveillance on hold-
ings cannot prevent an outbreak, as it is not feasible to have an
official or authorised veterinarian permanently on-farm. It is for
this reason that the keeper of the animals and any other person
in charge of the animals is responsible for notifying any suspi-
cion of a contagious disease. As part of contingency planning,
these persons have to be trained to recognise the key diseases.

The number of official veterinarians should be compared
49.
not only to the total number of livestock, but more importantly
to the number of holdings, as most of the diseases in question are
herd diseases rather than affecting individual animals, and the
contacts between holdings. Such estimates must also consider the
general animal health situation in the country and the progress
made in infrastructure, logistics, communication, education of
farmers and first and foremost the capability to recruit additional
staff in case of emergency. The number of official veterinarians in
the United Kingdom was based on the minimum requirements
for FMD contingency planning.

In the case of a suspected or confirmed outbreak the keeper of
livestock is instructed by the official veterinarian on the measures
to be taken in order to prevent the spread of disease. These mea-
sures are of a general nature laid down in national law in trans-
position of relevant Community law and of a specific nature
depending on prevailing circumstances and outlined in the con-
tingency plans.

52.
While early notification of suspicious cases is essential to
control the spread of FMD, the disease does not in each and every
case produce clearly detectable clinical symptoms and farmers
have different levels of training and skill in detecting them. It is a
challenge for the veterinary profession to work with a biological
system embedded in a diversity of social, cultural and economic
circumstances. Community legislation therefore provides for a
cascade of measures to ensure that the spread of major infectious
livestock diseases is avoided or at least minimised. The official vet-
erinarian at the slaughterhouse who carries out the ante-mortem
inspection is therefore an essential element in detecting diseases
in livestock.

Where a person in charge of animals wilfully fails to report sus-
picious signs of disease, he or she is subject to the punishment
provided for in the respective national legislation.

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Community legislation requires an immediate notifica-
53.
tion of any suspicion of FMD by the livestock keeper to the
authorities. Equally, Article 4 of Directive 85/511/EEC requires
the suspect holding to be placed immediately under restrictions
and an epidemiological investigation to be started in order to rule
out or confirm the presence of the disease and to trace dangerous
contacts. In such cases, a negative result in the initial screening
test is the most complicated as this requires time-consuming
complementary investigations until a definitive diagnosis can be
established. The measures applied to suspect holdings may be
extended to other holdings likely to be infected or contaminated.

The notification of the confirmed outbreak to the Commission
and the other Member States, and indeed the OIE, is a secondary
step. It is an internationally accepted standard to notify other
countries within 24 hours.

The United Kingdom authorities informed the Commission
before the final results of the ultimate proof, the virus isolation,
had become available.

A carefully established diagnosis is essential to justify severe mea-
sures such as stamping out and large-scale movement restrictions.

Each year, several dozen suspicions of FMD are notified to the
competent authorities in the Member States. Such reporting is
strongly encouraged by both the Member States and the Commis-
sion. Measures taken in relation to such suspicions must be pro-
portionate. It is unrealistic to shut down the entire livestock
industry each time a suspicion is reported.

With the adoption of the ‘non-vaccination’ policy a sys-
56.
tem of compensation for animals killed for disease control pur-
poses was established. This system was introduced because the
keeper of animals was, in the interest of the farming community
and the national and Community economy, no longer in a posi-
tion to apply all available instruments for the protection of the
herd, such as prophylactic vaccination.

At the same time this system of compensation set an incentive for
swift notification by excluding from compensation animals that
had died from the disease prior to notification.

58.
Article 5(3) of Directive 85/511/EEC allows exemption
from the taking of samples from animals in a secondary outbreak
which has an epidemiological link to a confirmed outbreak for
which such samples had already been taken. In other words, in
such cases the diagnosis may be established on clinical grounds.

The stamping-out policy applies to all confirmed outbreaks and,
in accordance with the contingency plans, to animals suspected
of being infected or contaminated (Article 3(2) of Decision
90/424/EEC).

With regard to the organisation of administrative procedures
related to the destruction, evaluation and compensation of herds,
the Member States should remain entitled to organise themselves
according to the requirements of their national legal order con-
cerning administrative police and its interaction with the protec-
tion of private property and civil rights.

54.
The Commission, using its standard procedures, reacted
promptly and according to the legislation using the most direct
and modern communication technology.

The Commission informed the Member States within less than
one hour of the outbreak notification and adopted the appropri-
ate safeguard measures within less than 24 hours.

COMMISSION ACTION CONCERNING THE REIMBURSEMENT
SYSTEM

59 and 60.
The Commission shares the Court’s view that
more precise instructions should be given to the Member States
on reimbursement of indemnification expenditure. Such instruc-
tions are currently being drawn up and a draft regulation laying
down expenditure eligible for Community funding will be pre-
sented to the Member States soon.

In addition the United Kingdom, in accordance with Community
legislation had stopped certifying and/or permitting exports of
live animals and their products to other Member States.

For all market support measures adopted in the pig meat sector
since the special report No 1/2000, the Commission has applied
the same rate of co-funding (50 %) as for veterinary measures.

The Irish authorities suspended imports of susceptible animals
and their products on 21 February 2001 and informed the Com-
mission thereof at 15.42. The Irish authorities also traced all ani-
mals introduced from the United Kingdom into Ireland and
ordered their killing.

Although there was no working document or formal code of
practice on the rules and procedures on eligibility, the Member
States had already been given the essential information on slaugh-
tering. In particular, the financing decision stipulated that only
compulsory slaughtering would be eligible for Community
reimbursement.

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The financing decisions also clarified that only the ‘market’ value
of the animals was eligible for Community funding. As far as the
specific issue of indemnification of livestock farmers is concerned,
the situation is very different from one Member State to another.
There is no question of a single sum for a type of animal consti-
tuting adequate compensation for farmers whose animals have
been slaughtered.

The Commission points out that it does not have the legal author-
ity to harmonise the national indemnification systems in the
event of an epidemic.

61.
There were four Commission Regulations governing the
United Kingdom, Portugal, France and Ireland on the compensa-
tion system laid down under measures for monitoring and eradi-
cating bovine spongiform encephalitis (BSE) for animals slaugh-
tered under the selective reform provided for by a Member State
eradication plan and approved by the Commission. The same
principles regarding the compensation system were enshrined in
all four Regulations, including Regulation (EC) No 164/97 on
France.

As regards animals which have contracted BSE, the Commission
emphasises that indemnification of the owners is not covered by
the emergency fund (Articles 3, 4, 6 and 11) of Decision
90/424/EEC (1).

62.
It is firstly up to the Member States to decide on com-
pensation depending on actual market conditions. Recent deci-
sions on the Community contribution to costs incurred by Mem-
ber States stipulated the level of indemnification eligible for
Community funding. Only the market value of the animal imme-
diately prior to slaughtering is eligible for Community funding.

63.
Adequate compensation was defined as the market value
of animals immediately before slaughtering; the losses of income
mentioned are therefore not eligible for Community funding and
any such applications were rejected.

(EC) No

and Article

The cattle database established in accordance with
64.
Regulation
of
1760/2000
Directive 64/432/EEC is an important tool for tracing the move-
ment of animals, but is of limited value for valuation purposes.
While it provides information on the age, sex, colour or breed
and the identification code of the mother, it does not provide
information whether or not an animal is a purebred breeding ani-
mal entered in a herd book. The Commission proposal to include
the herd-book status was not adopted by the Member States.

14

(1) The principle of transfer of the ‘Market guarantee’ to ‘Veterinary guar-
antee’ of the selective compulsory slaughtering programmes will take
effect on 1 January 2005.

The Commission has no legal authority to harmonise the
66.
Member States’ systems for indemnification of livestock farmers
nor do the Member States want them to be harmonised.

The differences in the Member States noted by the Court were
also noted by the Commission during its in situ checks and are the
result of the choices made by the Member States. The Commis-
sion made appropriate financial adjustments for any irregulari-
ties having an impact on the Community budget, as detailed
below.

The Commission takes care to preserve the principle of equal
treatment of the Member States in all its co-funding decisions.

The fact that the decisions are subject to the opinion of the Stand-
ing Committee on the Food Chain and Animal Health helps to
ensure that this is the case.

The exemptions granted by Regulation (EC)
67 to 71.
No 1458/2001 adopted on 17 July 2001 on the application of
premium schemes are to be seen in the light of the principle that
the direct payment system is designed to compensate for the
effects on producers’ income of the progressive reduction of the
level of market support introduced by the Agenda 2000 reform.
The Commission therefore holds that the premiums may be
granted to the producer irrespective of any other circumstances
linked to the health situation of animals in the Member States.

The Member States affected by the FMD epidemic asked for
exemptions to be adopted from the end of April 2001.

In response to these requests, the Commission found that the pro-
ducers were unable to meet certain obligations under the regula-
tions establishing the premium schemes because of measures
which restricted the movements of animals in certain regions,
adopted under the provisions for combating the spread of the
FMD epidemic.

The Commission granted a temporary exemption from certain
rules applicable in normal circumstances, especially with regard
to the holding of animals. A series of proposals was put before
the Beef Management Committee in mid-May, on which it finally
gave a favourable opinion on 29 June 2001.

The process of adopting Regulation (EC) No 1458/2001 hence
took two months from the time when the Commission was asked
to take action.

As direct payments can be granted under these circumstances, the
Commission feels that it is up to the Member States to ensure,
during accompanying or subsequent checks of amounts set in
another context for indemnification of producers in compliance
with veterinary provisions, that producers do not receive the pre-
miums twice.

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The Commission considers that, under such circumstances it
would in future be advisable to include, either in the rules gov-
erning direct payments or in the veterinary decisions conferring
entitlement to indemnification, a clause to guarantee that no
double payments are made and to place the responsibility for this
clearly in the hands of the Member States.

Council Decision 90/424/EC affords only limited legal
74.
scope for establishing the arrangements for the Community to
contribute to expenditure incurred by the Member State. To this
effect, any draft regulation prepared by the Commission laying
down rules for eligibility for Community financing must have
Council Regulation (EC) No 1258/1999 as its legal basis.

Nevertheless, as part of its task of disease management, the Com-
mission has taken the necessary measures to limit the impact of
over-assessment of the price of animals on the Community bud-
get. Following in situ checks, the average correction rate for the
United Kingdom, France, the Netherlands and Ireland was 55 %
or EUR 583 million of a total requested of 1 051 million.

The draft decision laying down rules for eligibility to
75.
Community financing of emergency action and combating FMD
comprises an annex setting out the supporting documents to be
provided on request by the competent supervisory authorities.

72 and 73.
The system of direct payments, including the
slaughtering premium, is designed to compensate for the effect
on producers’ income of the gradual reduction of the level of mar-
ket support introduced by the Agenda 2000 reform. The Com-
mission took the view that there was good reason for granting a
premium for animals slaughtered to combat FMD, if the regula-
tory conditions for granting the premium were met and the ani-
mals were slaughtered in a slaughterhouse.

The regulations in force do not make the application for a slaugh-
tering premium contingent upon veterinary acceptance or the
animal’s destination and,
fitness for human
consumption.

in particular,

The scope of these regulations was confirmed on several occa-
sions, particularly by the Beef Management Committee at the
time of the adoption of Regulation (EC) No 2777/2000 on excep-
tional measures to support the beef market (purchase for destruc-
tion system).

It was communicated in June 2001 to the authorities of the Neth-
erlands in response to their question on the eligibility for the pre-
mium of animals slaughtered in the course of a FMD epidemic
and was confirmed in February 2004 to the Netherlands Minister
of Agriculture, specifying that the premium could be granted for
animals slaughtered in a slaughterhouse as long as the sum of the
premium was neither included in the evaluation of animals for
the purposes of veterinary compensation nor paid on that count,
in order to prevent double payment. The procedure followed and
the decisions notified were intended not to be detrimental to the
interests of the beneficiaries.

Article 9 of Council Regulation (EC) No 1258/1999 is applicable
with respect to supporting documents, as is pointed out specifi-
cally in each veterinary co-financing decision. The Member States
therefore know what information they need to provide and sub-
stantiate when checks are carried out.

The examples quoted by the Court, which were also noted by the
Commission during its in situ audits, do not really indicate a prob-
lem in defining supporting documents, but highlight the poor
quality of them in certain Member States. Any consistencies deter-
mined are, as a rule, the result of inadequate administrative
organisation by the Member States at the time of the epidemic.

As the Commission has not yet had any problems of access to
administrative information with the Member States and each
national administrative system and each epidemic is different, it
would appear difficult to draw up a priori an exhaustive list of
supporting documents to be provided. Having said that, the Com-
mission did have a problem with access to the data held by live-
stock farmers (operating registers, invoices for the purchase of
slaughtered animals, etc.) during its checks. This point will be
clarified legally with the Member States with a view to future
Community reimbursement.

76.
In general, the Member States are familiar with the idea
of indemnifying animals ‘at their value prior to being contami-
nated’, as it had already been used previously for funding
purposes.

Under the regulations in force, the slaughtering premium may be
paid beyond the deadline in duly substantiated exceptional cases.

The Member States did not therefore ask the Commission for any
clarification on this notion during the epidemic.

The information supplied by the Netherlands Agricultural Ser-
vices show that of 1 278 holdings affected, 791 had the animals
slaughtered in a slaughterhouse.

The Commission would like to emphasise that it did give
for
to Member States on how to apply

77.
instructions
reimbursement.

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Also, Article 55 of Regulation (EC) No 882/2004 obliges Mem-
ber States to lay down rules on sanctions applicable to infringe-
ments of feed and food law and other Community provisions
relating to the protection of animal health and welfare, and to
take all measures necessary to ensure that they are implemented.
The sanctions provided for must be effective, proportionate and
dissuasive.

In its proposal for a Regulation on feed and food controls
(COM(2003) 52), failures to comply with the restrictions imposed
by the authorities on the movement of animals or products were
listed as criminal offences (Annex VI, Point 7 (b)). These pro-
visions were not maintained by the Council and the European
Parliament.

The Commission has not received any complaints about the
late decisions mentioned by the Court.

(ii) The Commission has not appreciably changed the eligibility
rules, since the costs incurred for preventive slaughter have
always been regarded as eligible for Community funding, as
they were crucial in combating the epidemic.

The same applies to partial preventive slaughter of the dif-
ferent species.

In the event of an outbreak it is only important to know
78.
which animals of susceptible species are on the holding in order
to apply the measures correctly and in particular to prevent or
detect illegal movement of potentially infected or contaminated
animals.

Community funding for preventive slaughter carried out by
the Member States where no outbreaks occurred is not
obligatory. The funding provided for by the four decisions is
based on Article 5(3) of Decision 90/424/EEC.

Therefore, in the case of a suspected or confirmed outbreak Direc-
tive 85/511/EEC requires the competent authorities to carry out
a census of all animals on the holding, including the animals that
died from the disease. These inventories must be kept up-to-date,
which cannot be always ensured by other data bases.

(iii) Finally, priority was given by both the Member States and the
Commission to Community financing of indemnification of
livestock farmers. It was not until 27 February 2003 that the
United Kingdom was able to present a provisional request for
reimbursement of operational
in addition to
indemnification.

costs

The shortcomings identified by the Court are not the result of a
lack of guidance by the Commission but by the administrative
disorganisation attributable to the Member States, which can be
accounted for to some extent by the circumstances of the crisis.

Detailed information on outbreaks is available in the

80.
ADNS data base.

The Commission does not share the Court’s view that the
laid down in

reimbursement were not

for

79.
arrangements
good time.

The Member States also regularly reported to the Standing Com-
mittee the measures that they had taken to combat the disease.

(i) The Commission has not changed the eligibility rules appre-

ciably since Decision 90/424/EC was adopted.

The model for applying for reimbursement and the infor-
81.
mation required have been standardised since the swine fever epi-
demic in 1997. The model was not included in the annex of the
specific financing decisions but was communicated directly to the
Member States.

The Commission’s specific financing decisions were always
adopted as soon as it was technically possible, i.e. when the
Commission had received an application for co-funding, the
statement of expenditure supplied by the Member State was
sufficiently reliable and the budgetary authority had made
provision for financial cover for the funding.

82.
This problem was noted by the Commission. However,
when it was not possible to obtain an adequate guarantee as to
the number of animals for which indemnification had actually
been paid, DG SANCO applied a flat-rate financial adjustment in
order to cover the financial risk incurred by the Commission.

Financing decisions also require time to be taken to study the
Member States’ financial forecasts, which are often unreliable
or imprecise during epidemics, and a favourable vote by the
Member States in the veterinary committee followed by for-
mal adoption by the Commission.

83.
Given the scale and diversity of the expenditure pre-
sented, the Commission takes the view that the periods for checks
are reasonable.

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Moreover, the Court’s statement relates only to payment of the
balance. In fact, sizable advances were paid to the Member States
after the financing decisions were adopted. These were paid in
2002 (EUR 355 million to the United Kingdom on 22 February
2002, EUR 3,3 million to France on 14 March 2002, EUR 2,7 mil-
lion to Ireland on 1 March 2002 and EUR 39 million to the Neth-
erlands on 26 February 2002). These EUR 400 million represent
around 86 % of the total finally paid out.

The reimbursement rates for veterinary expenditure were

85.
established by a Council decision.

In the past, there was a discrepancy between the rates applied by
DG SANCO and DG AGRI in the pig sector. Since the swine fever
epidemic in 1997, the rates have been harmonised and set at a
co-funding rate of 50 %.

86.
Since its first report in 1999 on ‘Income Insurance in
the Commission has conducted a
European Agriculture’,
follow-up study on ‘Financing risk for livestock epidemics’ that
includes an analysis of current practices in Member States and
outlines possible solutions for the future. It appears from that
study that there is no simple solution to this complex issue. The
complexity of the economic problems posed by animal diseases
and the ways of facing the related risks is confirmed by studies
done by international organisations such as the OECD and by
recent experiences in other countries of the world which have
been struck by FMD, BSE or avian influenza.

However, consultations and EU supported research on these mat-
ters continue with a view to establishing the sound scientific basis
which is necessary to draft a proposal to amend Council Decision
90/424/EEC that can be supported by the EU legislator.

87 and 88.
In several Member States, there are arrangements
for livestock farmers to make compulsory contributions to a fund
which is designed to cover the costs of eradication of animal dis-
eases. The Commission does not think that, on the whole, the sec-
tor is profiting from an epidemic.

These profits mainly result from an increase in the volume of
meat exports to the United Kingdom and the remainder of the
European Union and an increase in market prices due to falling
production in the United Kingdom. The part played by the wind-
fall effect after the crisis is impossible to assess.

COMMISSION MANAGEMENT AFTER THE CRISIS

90.
On several occasions the Commission has described the
new FMD control Directive 2003/85/EC as a prudent reform of
the measures in place in 2001. This Directive does not change the
main principles of the control measures.

(a) Emergency vaccination was provided for

in Directive
85/511/EEC. However, the absence of a pre-defined exit
strategy, the uncertainty about the future of the vaccinated
animals and their products, and the consequences for inter-
national trade discouraged Member States from simply hav-
ing recourse to emergency vaccination.

Council Directive 2003/85/EC shifts the emphasis on emer-
gency vaccination from an instrument of last resort more to
the forefront of the control measures and reflects the techni-
cal developments in laboratory diagnosis and the regulatory
modifications made to the OIE Animal Health Code.

(b) The provisions on contingency planning included in Direc-
tive 2003/85/EC are by and large based on the recommen-
dations provided for in the guidelines developed in 1995
and 1998. (Documents VI/5211/95 andVI/6319/98 – Rev.1).

The new requirements for contingency planning request also
that account be taken of a worst case scenario which is
defined not only by the natural course of the disease but also
by the intentional release of FMD virus.

(c) As clarified in point 58, diagnosing FMD on clinical grounds
in conjunction with an epidemiological link to a confirmed
outbreak was already provided for in Article 5(3) of Direc-
tive 85/511/EEC. Based on the experience in 2001, Directive
2003/85/EC included this option in the definition of an out-
break. In this respect the outbreak definition in Directive
2003/85/EC is different from the definition provided for in
the OIE Animal Health Code.

However, in practice, a reasonable clinical diagnosis of FMD,
even in the context of an ongoing outbreak, may only be
established in animals of certain susceptible species that dis-
play clear clinical signs.

89.
There is no equal treatment for breeders in all aspects
throughout the Community. Tax policies remain the responsibil-
ity of the Member States.

In 2001 the Commission was acting on the basis of Decision
90/424/EEC.

(d) Article 4(3) of Directive 90/425/EEC already requires Mem-
ber States to take the appropriate measures to penalise any
infringement of veterinary legislation in relation to trade by
natural or legal persons. However, the Council refused to
reinforce further Community provisions on sanctions in case
of violation of Community law, as laid down in Article 55 of
Regulation (EC) No 882/2004.

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(e) As indicated in paragraph 80, the obligation to notify out-
breaks through the system of ADNS is laid down in Direc-
tive 82/894/EEC, which also specifies the details of the
required information.

92. (a)

In its proposal for Regulation (EC) No 882/2004 on offi-
cial feed and food controls (COM(2003) 52), adopted on
29 April 2004, the Commission sought to reinforce the
consequences of failure to notify a suspicion of an ani-
mal disease by qualifying it as a criminal offence leading
to penal sanctions. The European Parliament and the
Council have declined such reinforcement
in this
provision.

Member States shall lay down the rules on sanctions
applicable to infringements of feed and food law and
other Community provisions relating to the protection
of animal health and welfare and shall take all measures
necessary to ensure that they are implemented. The
sanctions provided for must be effective, proportionate
and dissuasive.

Furthermore, Articles 3(2) and 11(4) of Council Deci-
sion 90/424/EEC clearly set incentives for early notifi-
cation and conditions for compensation. In particular it
provides for compensation for animals slaughtered or
killed for disease control purposes. It is in the economic
interest of the farmer to notify possible disease as early
as possible because any animals that die before notifica-
tion are not eligible for compensation. These consider-
ations are also included in the compensation schemes of
certain Member States.

(b) This requirement is in line with international standards.

Setting a shorter deadline would only be meaningful to
the extent that it would become possible to punish
intentional delays. However, it is necessary to acknowl-
edge that outbreaks may occur under various condi-
tions,
poor
remote
communication.

areas with

including

in

It is important to take account of the real situation,
where the notification of any suspicion to the compe-
tent authorities has to be done immediately. These
authorities have to take the necessary steps according to
the legislation immediately, and thereby to prevent or at
least limit the spread of disease.

(c) Although it is advisable to slaughter the animals quickly,
the need for supporting documents on the amounts to
be reimbursed make it necessary to compile a detailed
financial inventory. Rapid and decisive action is essen-
tial to the success of the measures. However, a detailed
inventory of the animals of susceptible species was
required in Articles 4 and 5 of Directive 85/511/EEC
required in Article 4(3)(a) of Directive
and is
2003/85/EC.

A cost-benefit analysis is particularly useful only if there
93.
are alternative strategies. As the EU is recognised as free of FMD
and infection, prophylactic vaccination is not a realistic option
because of the many different strains and types of the virus and
the exorbitant costs. Directive 2003/85/EC does not change the
principles of the control policy. A cost-benefit analysis as a
follow-up to the one carried out in 1989 was therefore consid-
ered unnecessary.

However, conservative estimates only of the costs for the vaccines
in case of pan-vaccination of the livestock population registered
in the EU in 2001 amount to EUR 150 to 250 million per year.
Were the costs for the administration of the vaccines included,
this amount could easily double. These estimates do not take
account of possible restrictions on exports from Member States,
the increase in imports of animal products from countries vacci-
nating, the disruption of the single market if some Member States
would not agree to prophylactic vaccination and the costs of the
number of outbreaks still occurring despite vaccination.

The economic impact analysis carried out before submitting the
proposal for a new Directive estimated Commission expenditure
for maintaining the disease free status and preparing for an emer-
gency at about EUR 4 million per year.

The control measures under Directive 2003/85/EC allow the
Member States to use all available and proportionate measures to
eradicate the disease as quickly as possible. Such measures could
allow the coexistence of pre-emptive killing and emergency
vaccination.

94.
The most recent modifications made to the FMD Chap-
ter in the OIE Animal Health Code helped the Commission and
the Member States to adapt the Community control measures.
However, the scientific basis for this move of the OIE comes by
and large from the research carried out in Europe and supported
by the Commission. It is worth comparing the report of the Sci-
entific Committee of 1999 on emergency vaccination with the
current OIE recommendation to acknowledge its pioneering
character.

The Commission made numerous interventions in mul-
forums to promote the principles of

95.
tilateral and bilateral
regionalisation.

The regionalisation policy dates back to Directive 72/462/EEC
and has been at the heart of EC import and trade policy ever since.

The fact that, in an outbreak situation, certain third countries do
not recognise the regionalisation proposed by the Commission
and impose unjustified restrictions on trade suggests that these
commercial
primarily motivated
restrictions
considerations.

are

by

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For the Commission and the Member States there are no
96.
realistic alternatives to the current provisions. In order to mini-
mise the risks of economic sanctions in case of outbreaks of FMD,
Directive 2003/85/EC provides the Member States with a maxi-
mum of flexibility as regards the control instruments employed
to eradicate the disease quickly.

Under B2004, a specific budget heading 17 01 04 04 is intended
to fund a pilot study on a ‘Financing model incorporating the
risks of diseases affecting cattle’. The purpose of this follow-up
study is to obtain expert estimates and calculations in order to
complete an impact assessment.

Moreover, the decision on emergency vaccination will in future
be influenced by considerations such as Community legislation
on the protection of the environment, on animal welfare and also,
very importantly, the lack of public acceptance for the mass kill-
ing of animals.

It is envisaged to discuss the issue with the Chief Veterinary Offic-
ers in September and to present initial results of this study at the
International Conference on the prevention and control of infec-
tious diseases organised by the Netherlands Presidency in Decem-
ber 2004.

To limit the detrimental impact of international sanctions, the
Community has therefore promoted the concept of regionalisa-
tion for many years, and not least since its study of 1989, both in
the framework of the OIE and of veterinary agreements with
important trade partners.

CONCLUSIONS AND RECOMMENDATIONS

Member States are regularly visited by the inspectors of
97.
the FVO and relevant aspects of the implementation of Commu-
nity veterinary legislation are evaluated. The final version of the
mission reports is then published on the Internet.

The introduction of the ‘non-vaccination’ policy was
101.
accompanied by a range of measures including improved move-
ment controls, better protection of borders, import requirements,
a system of compensation, a system of antigen reserves for the
formulation of vaccines and capacity building for laboratories and
also support measures to neighbouring third countries.

Article 3 of Regulation (EC) No 882/2004 of the European Par-
liament and the Council on official feed and food controls pro-
vides for official controls on all levels of the food chain.

In addition and in line with the request of the European Parlia-
ment, Member States are called on to ensure in the context of
their contingency planning that farmers are familiar with and are
applying the general rules on disease control and biosecurity.

98.
The Commission had already alerted the Member States
to the issue of agricultural insurance when it presented the Coun-
cil Presidency’s memorandum in 2002.

102.
The Commission considers that the legal provisions in
place in 2001 were sufficient to keep O1-PanAsia FMD virus out
of the Community.

There are limits to the extent that the Commission can interfere
with the Member States’ authority in matters of police and admin-
istrative organisation, which are attributed to the nature of the
competences vested to the Community.

99.
The Commission explained its activities in relation to a
critical review of the provisions currently contained in Decision
90/424/EEC in its reply to point 86.

The Commission, with its critical analysis of mission findings and
its determination to constantly improve both legislation and its
implementation, considers that even more surveillance and super-
vision on its part could not have limited the impact of the 2001
outbreak.

The Commission is aware of the conclusions of the study on cur-
rent animal health insurance practices in Member States. How-
ever, the Commission cannot prioritise one suggested solution
before all aspects of any possible new system for the compensa-
tion of livestock farmers have been considered, including, for
example, the implications for competition.

100.
The Commission has arranged for the translation of the
study into one more official language in order to supply a copy
of the study to the veterinary services in the Member States for
reflection.

The 2001 FMD epidemic had a significant impact on animal hus-
bandry in the whole of the EC in spite of taking all possible mea-
sures to continue trade in safe products, for example certain meat
and milk products and a whole range of animal by-products, with
the affected Member States and commencing for the United King-
dom, but similarly for the Netherlands, a carefully operated
phasing-out of the restrictions in October 2001, for example
fresh pig meat from the East Anglia pig areas followed gradually
by other products as a consequence of the progress made in the
completion of the post-outbreak surveillance.

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In ‘application’ of the OIE code a country may regain its previous
disease- and infection-free status ‘three months after the last case
where a stamping-out policy and serological surveillance are
applied….’ With the last outbreak in the United Kingdom in Sep-
tember 2001 and the first meeting of the appropriate Commis-
sion of the OIE in January 2002, the United Kingdom was recog-
nised as free of the disease by the OIE at the earliest opportunity.
The other three Member States affected by FMD also regained
their free status within three months of the last outbreak or the
slaughter of the last vaccinated animals respectively.

The system of direct payments, including the slaughtering pre-
mium, is designed to compensate for the effect on producers’
income of the gradual reduction of the level of market support
introduced by the Agenda 2000 reform. The Commission always
took the view that, first, the premium could be granted to pro-
ducers irrespective of the state of health of their livestock and,
second, that there was good reason for granting the premium for
animals slaughtered to combat FMD, if the regulatory conditions
for granting the premium were met and the animals were slaugh-
tered in a slaughterhouse.

Despite some initial problems with certain trade partners the
regionalisation of the EU on the basis of Member States was
quickly re-installed and trade resumed from Member States not
affected by the disease. The EU as a whole was therefore not
blocked for all products for a period of 12 months.

103.
Council Decision 90/424/EEC clearly relates the com-
pensation for farmers to the animals that had been killed for dis-
ease control purposes. This requirement encourages farmers to
report the disease as early as possible for financial reasons.
Timely, adequate and fair compensation is therefore essential to
ensure cooperation of the farming community.

Farmers are also sanctioned if they disobey veterinary restrictions
on movement of animals and products, and the basic provisions
for Member States imposing such sanctions are laid down for in
vertical and horizontal Community legislation.

104.
The Commission shares the Court’s view that even
more precise directives to the Member States are required for
shouldering the burden of indemnification expenditure. Such
directives are currently being drafted. A draft regulation formal-
ising the arrangements for granting Community co-funding will
be presented to the Member States soon. At present, all the files
have been closed except for the one relating to operating costs in
the United Kingdom (for which the application for reimburse-
ment was presented only in 2003) and corresponding reimburse-
ments were made as soon as the financial checks, which were
intensified owing to the amounts involved and the complexity of
the file, had been completed. The results of these checks were that
applications for almost EUR 583 million, or 55 % of the total,
were rejected without prompting any dispute with the Member
States. The discrepancies ascertained by the Court are a result of
the Member States’ practices which the Commission has no legal
authority to harmonise. On the other hand, the Commission has
been scrupulous in ensuring that reimbursements to the Member
States are corrected if necessary in order to ensure that they are
treated equally. Moreover, it is stated under point 70 that any
accumulation of premiums and indemnifications should be pro-
hibited explicitly.

105.
The Commission holds that it has learned the financial
lessons of each disease, first by establishing an increasingly pre-
cise framework for eligible expenditure and now by looking at
ways to simplify the rules.

Although the Council has decided that the Member States should
benefit from Community financial support to eradicate the dis-
ease, this does not alter the fact that the specific financing deci-
sions adopted by the Commission after receiving a request for
reimbursement (the general framework is mentioned in Council
Decision 90/424/EC) point out that this is contingent on the
planned action being taken immediately, such as isolation of the
holding from the time of suspicion and, following official confir-
mation of the disease:

— slaughter of animals of susceptible species,

— their destruction,

— destruction of contaminated feed or materials,

— cleaning, disinfestation and disinfection of the holding and

equipment,

— setting up of protection zones.

Moreover, on the strength of the experience gained in the classi-
cal swine fever epidemic in the Netherlands in 1997 (and, a pos-
teriori, the positive judgment delivered by the Court of Justice at
the end of 2003 in the case between the Commission and the
Netherlands authorities on the financial corrections made to the
request for reimbursement) and its desire to protect Community
financial interests, the Commission deliberately laid down more
stringent criteria for eligibility of expenditure in the financing
decisions applicable to FMD.

These criteria were approved by the States concerned through the
Standing Committee on the Food Chain and Animal Health.

Nevertheless, the Commission also learned the lessons of moni-
toring expenditure on FMD.

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As it is always at pains to protect the Community’s financial inter-
ests and also to simplify monitoring for both the Commission
and the Member States, the Commission will shortly present a
draft regulation laying down the expenditure that is eligible for
Community funding.

106.

(a) As control strategies must be scrutinised on a regular
basis, Article 72(10) of Council Directive 2003/85/EC
contains specific provisions on contingency planning,
real-time exercises and in particular reporting to the
Commission about the main findings of these exer-
cises and the necessary adjustments to the contingency
plans.

In addition, the Commission is following closely the
FMD situation in the world and the development of
the relevant chapter in the OIE Animal Health Code.
Commission funding of major research projects on
FMD has been agreed in recent months and this will
contribute to the development of the legislation where
necessary.

(b) The Commission considers that the appropriate legal
provisions guaranteeing fair and timely compensation
are in place to encourage early notification of suspi-
cions and that Member States are bound and economi-
cally motivated to enforce the restrictions necessary to
contain and eradicate the disease.

(c) As indicated above, the Commission will shortly
present a draft regulation laying down expenditure
that is eligible for Community funding.

The ban on export of live animals and their products
was introduced on 21 February 2001.

The United Kingdom had therefore some initial prob-
lems to provide all the information to recipient Mem-
ber States for the exports of sheep before that date in
relation to holdings of origin that were subsequently,
given an incubation period of about a fortnight, iden-
tified as outbreaks.

By adopting Decision 2001/190/EC on 8 March 2001,
the Commission approved the measures already taken
by the Member States, including the pre-emptive kill-
ing of all sheep imported from the United Kingdom
between 1 and 21 February 2001. The problems relat-
ing to the tracing of these animals were thereby solved.

The first outbreak was confirmed on 20 February
2001 at the abattoir in Essex. On 21 February 2001
the second outbreak was confirmed on the farm next
to the abattoir and on 22 February another outbreak,
both related to the movement of animals from the
slaughterhouse to the farm and subsequent contacts.
All these outbreaks have per se no epidemiological
importance with regard to the 2001 FMD epidemic, as
they were marginal and dead-end events.