Report from the Commission on the implementation of the measures provided for in Council Regulation (EC) No 2328/2003 of 22 December 2003 introducing a scheme to compensate for the additional costs incurred in the marketing of certain fishery products from the Azores, Madeira, the Canary Islands, and the French departments of Guiana and Réunion, as a result of those regions’ remoteness {SEC(2006)1528}
Date: 2006-11-30
Institutions: European Commission
Subjects: Azores, Canary Islands, French Guiana, Madeira, Réunion, fishery product, peripheral region, sales aid

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.11.2006 
COM(2006)734 final 

REPORT FROM THE COMMISSION 

on the implementation of the measures provided for in Council Regulation (EC) No 
2328/2003 of 22 December 2003 introducing a scheme to compensate for the additional 
costs incurred in the marketing of certain fishery products from the Azores, Madeira, 
the Canary Islands, and the French departments of Guiana and Réunion, as a result of 
those regions’ remoteness 

{SEC(2006)1528} 

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INTRODUCTION 

The  present  report  is  made  in  response  to  Article  12  of  Council  Regulation  (EC)  No 
2328/2003 of 22 December 2003 introducing a scheme to compensate for the additional costs 
incurred in the marketing of certain fishery products from the Azores, Madeira, the Canary 
Islands  and  the  French  departments  of  Guiana  and  Reunion,  as  a  result  of  those  regions' 
remoteness1. It requires of the Commission to report to the European Parliament, the Council 
and  the  European  Economic  and  Social  Committee  on  the  implementation  of  the  measures 
provided  for  in  this  Regulation,  accompanied,  if  necessary,  by  proposals  for  appropriate 
adjustments needed to achieve the objectives laid down in this Regulation by 1 June 2006 at 
the latest.  

The  present  report  is  based  on  the  information  available  in  the  Commission  and  on  the 
findings  of  a  study  on  the  "Structural  aspects  of  the  Common  Fisheries  Policy  in  the 
outermost  regions"  conducted  by  Ernst  &  Young  and  Associates  (hereinafter  referred  to  as 
'the study') which became available by mid September 2006. The main objective of the study 
was to analyse the specific problems and needs of the fisheries sector in the outermost regions 
and to provide recommendations, on how to maximise the efficiency of Community support.  

The report describes the nature and way of working of the aid scheme, provides information 
on its application, gives an assessment of the impact of the scheme on the fisheries sector in 
the  outermost  regions  concerned  and  finally  outlines  the  prospects  for  further  Community 
action in that area. The report is accompanied by a Communication Staff Working Document 
(hereinafter referred as "the Working Document") containing the annexes to this report. 

1. 

THE  COMPENSATION  SCHEME  FOR  THE  MARKETING  OF  CERTAIN  FISHERY  
PRODUCTS – ITS NATURE AND WAY OF WORKING 

1.1. 

Objective of the compensation scheme  

Due to their remoteness, insularity and isolated situation, small size and difficult topography 
and  climate,  the  Community’s  outermost  regions2  are  lagging  behind  in  socio-economic 
terms. Their economic dependence on a small number of products, their limited markets, their 
dual  nature  as  both  Community  regions  and  territories  situated  in  an  environment  of 
developing countries affect the economic and social fabric of these regions. This applies also 
to  the  fisheries  sector  which  shows  limited  absorption  capacity  on  the  local  markets  and 
additional  transport  costs  to  the  mainland  of  Europe  entailing  permanent  constraints  on  the 
profitability of basic investments and on the sustainable exploitation of fisheries resources. 

This is why the Community decided to assist producers of fishery products in the outermost 
regions in integrating better in the internal market. A scheme was introduced as from 1992 to 
offset the extra costs of transporting fisheries products to distant mainland European markets 
for the benefit of the outermost regions which was progressively extended from the Azores, 
Madeira, the Canary Islands to the French territories of Guiana (from 1994 on) and Reunion 

1 
2 

OJ L 345, 31.12.2003, p. 34.  
The regions identified by Article 299(2) of the Treaty are the French overseas departments, the Azores, 
Madeira and the Canary Islands. 

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(from 1998 on). This should allow for comparable conditions for their marketing activities to 
those prevailing for the economic operators in mainland Europe. The last renewal of the aid 
scheme occurred in 2003 by Regulation (EC) No 2328/2003. It expires on 31 December 2006. 

1.2. 

The  main  features  of  the  current  scheme  (2003-2006)  as  laid  down  by  Council 
Regulation (EC) N° 2328/20033 

1.2.1.  Beneficiaries and recipients: 

The scheme applies to five out of the seven outermost regions, i.e. the Azores, Madeira, the 
Canary  Islands  and  the  French  departments  of  Guiana  and  Réunion.  The  recipients  of  the 
compensation are the producers, the owners or operators of vessels registered in the ports of 
those regions and operating therein or associations of such operators, and the operators in the 
processing  and  marketing  sector  or  associations  of  such  operators,  who  incur  the  additional 
costs in marketing the products concerned as a result of the remoteness of those regions.  

1.2.2.  The compensation: 

The Regulation defines the list of eligible species and fishery products per region. Across all 
five  outermost  regions  the  scheme  covers  17  segments.  It  fixes  for  each  region  a  specific 
amount of compensation per tonne of fishery product and the maximum total quantity of the 
eligible species or fishery product per year for which the compensation can be paid. The table 
in Annex I of the Working Document provides an overview of the amounts and quantities for 
compensation per region.  

Overall, as a result of the fixed compensation amounts and quantities, the total annual funding 
per region can reach: 

Total funding in €/year  

% of overall envelope for the 
compensation scheme 

Outermost region 

2.909.992 

1.374.000 

5.884.076 

4.003.500 

865.200 

14.996.768 

19,4 

9,1 

39,2 

26,7 

5,6 

Azores 

Madeira 

Canary Islands 

Guiana 

Réunion  

100,0 

Total 

1.2.3.  Adjustment of amounts and quantities – Modulation 

The  regulation  foresees  two  possibilities  for  adjustments  in  order  to  take  into  account  the 
varying catch levels and the actual marketing conditions in the Member States. 

3 

Although Article 9 of Regulation (EC) No 2328/2003 foresees the adoption of implementing rules such 
rules have never been established.  

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– 

– 

A Member State may adjust the quantities set for the various species or fish products 
within a region and between its regions provided the Commission does not raise any 
objection within four weeks of the notification of such a request. Such modification 
must neither increase the overall annual funding per Member State nor the amounts 
of compensation per tonne of species or fishery product. 

The Commission may adjust the quantities and amounts set for the different species 
or fish products. Such a modulation may be carried out within a region, between the 
regions of a Member State or between different Member States and within the overall 
funding available for the scheme. 

Both types of adjustment have to be duly justified and take account of all the relevant factors, 
in  particular  the  biological  characteristics  of  the  species,  changes  in  additional  costs  and 
qualitative and quantitative aspects of production and marketing. 

The  modulation  rules  apply  also  to  requests  relating  to  the  previous  compensation  scheme 
under  Regulation  (EC)  No  1587/98  on  which  no  decision  has  been  taken  before  1  January 
20034. 

1.2.4.  The financial management of the compensation scheme 

The  compensation  scheme  is  classified  as  an  intervention  intended  to  stabilise  the  markets 
within the meaning of Article 2 of Council Regulation (EC) No 1258/1999 on the financing of 
the  common  agricultural  policy5.  Consequently,  the  source  of  Community  funding  is  the 
Guarantee  section  of  the  European  Agricultural  Guidance  and  Guarantee  Fund  (EAGGF). 
Under  this  fund,  around  60  million  €  were  earmarked  for  the  compensation  scheme  for  the 
period 2003 to 2006, i.e. more exactly 14,997 million € appropriations per year. 

The  financial  implementation  of  the  scheme  follows  the  shared  management  model  applied 
for the Guarantee section of the EAGGF with the delegation of tasks to the Member States. 
The  Commission  reimburses  the  expenditure  incurred  (pre-financed)  by  the  Member  States 
upon their declaration. 

2. 

THE  COMPENSATION  SCHEME  FOR  THE  MARKETING  OF  CERTAIN  FISHERY  
PRODUCTS–ITS APPLICATION SINCE 20036 

2.1. 

Application of modulation  

The  Member  States  have  used  the  possibility  to  adjust  eligible  quantities  (=  modulation) 
foreseen under the current aid scheme to a varying degree up to now. Whilst Spain did so far 
not use this possibility, France used it several times in respect of Guiana and Réunion. Also 

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6 

On a request submitted by the Azores in May 2002 to double the compensation for demersal species the 
Commission did not take a decision as the request was uniquely motivated by absorbing funds and not 
by the relevant factors. 
OJ L 160, 26.6.1999, p. 103. 
Due  to  the  lack  of  reporting  requirements  for  Member  States  on  the  application  of  the  compensation 
scheme the information available at the Commission results mainly from the financial execution and the 
requests  for  modulation.  The  other  information  presented  under  this  chapter  is  taken  from  the  above 
mentioned study on the "Structural aspects of the Common Fisheries Policy in the outermost regions". 

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Portugal  applied  this  possibility  several  times  for  each  of  its  outermost  regions,  Azores  and 
Madeira. All the requestsreceived at the time of issuing the present report were accepted by 
the Commission. The below table summarises the requests made for the years 2003 to 2005. 
Up to now no modulation request has been received for the year 2006.  

Table 1: 

Modulation requests submitted and accepted for the years 2003 to 2005 

Guiana 

Reunion 

Azores 

Madeira 

Year 2003 

Year 2004 

Year 2005 

Industrial shrimp:  
Increase from 
3.300 t to 3.424 t 

White fish 
marketed fresh: 
Decrease from 100 
to 3 t 

White fish 
marketed frozen:  
Decrease from 500 
t to 38 t  

Industrial  shrimp: 
Decrease 
from 
3.300 t to 3.215 t 

White fish 
marketed fresh: 
Decrease from 
100 t to 2 t 

White fish 
marketed frozen: 
Decrease from 
500 t to 56.5 t 

Industrial  shrimp: 
from 
Decrease 
3.300 t to 2.854 t 

White fish 
marketed fresh: 
Decrease from 
100 t to 6 t 

White 
marketed 
Decrease 
500 t to 55 t 

fish 
frozen: 
from 

swordfish, 
Tuna, 
marlin, 
sailfish, 
dolphin  fish,  shark
Increase  from  618 
t to 770 t 

Species for 
marketing fresh: 
Increase from 
2.000 t to 2.489 t 

Small pelagic 
and deep-sea 
species for 
freezing or 
processing: 
Decrease from 
1.554 to 48 t 

swordfish, 
Tuna, 
marlin, 
sailfish, 
dolphin fish, shark:
Increase  from  618 
t to 928.5 t 

Species for 
marketing fresh: 
Increase from 
2.000 t to 2.501 t 

Small pelagic 
and deep-sea 
species for 
freezing or 
processing: 
Decrease from 
1.554 to 12 t 

Tuna, 
swordfish, 
sailfish, 
marlin, 
dolphin fish, shark:
Increase  from  618 
t to 1.209 t 

Species for 
marketing fresh: 
Increase from 
2,000 t to 2,401 t 

pelagic 
deep-sea 
for 
or 

Small 
and 
species 
freezing 
processing: 
Decrease 
1,554 to 322 t 

from 

Black scabbard fish:
Increase from 1.600 
t to 1.817 t 

Tuna:  
Decrease from 
4.000 t to 3.998 t 

Aquaculture 
products:  
Decrease from 50 t 
to 0 t 

Black scabbard fish:
Increase from 1.600 
t to 1.686 t 

Tuna:  
Increase from 4.000 
t to 4.072 t 

Aquaculture 
products:  
Decrease  from  50  t 
to 11,73 t 

Whereas the requests of France entailed modulation of quantities between the two outermost 
regions Guiana and Réunion, the modulation requests made by Portugal where made for each 
region separately within the envelopes for the Azores and Madeira. 

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The  second  possibility  for  modulation,  i.e.  the  adjustment  of  quantities  and  amounts  for 
compensation  by  the  Commission  upon  information  by  Member  States  has  however  never 
needed to be applied since the entry into force of the current scheme [see footnote 4]. 

2.2. 

Financial and physical execution 

The following table shows the payments in € made by the Commission for the calendar years 
2003, 2004 and 2005 upon declarations received by the Member States concerned including 
May 2006 expenditure. 

Table 2:  Financial execution 2003 – 2005  

2003 

% of 
available 
funding* 

2004 

2005 

% of 
available 
funding* 

% of 
available 
funding* 

– 

Canary  

5.449.043 

93,2 

5.453.490 

93,3 

- 

0,0 

Spain 
Islands 

Guiana 
Reunion  

3.651.301 
865.200 

96,3
80,3 

3.568.709
1.299.991 

100,0
100,0 

3.139.615 
865.200 

France Total:  

4.516.501 

92,8 

4.868.700 

100,0 

4.004.815 

Portugal Total: 

2.980.959 

69,6 

2.455.808 

57,3 

93.911 

86,5
100,0 

82,3 

2,2 

Total:  

12.946.139 

86,3  12.777.999 

85,2 

4.098726 

27,3 

* after modulation 

As  Member  States  are  still  submitting  expenditure  declarations  concerning  the  past  years, 
including for 2003 the table does not present the final state of execution of the compensation 
scheme.  Taking  into  consideration  the  past  rhythm  of  expenditure  declarations  by  Member 
States it is expected that the payments for the calendar years 2005 and 2006 will achieve more 
or less the same level as in the years 2003 and 2004, i.e. more than 85 % of the total eligible 
funding. For the year 2006, only Portugal has declared expenditure of 2.019.442 €, i.e. almost 
half of the annual envelope for Portugal.  

The table in Annex II of the Working Document provides a slightly more detailed picture. It 
shows  the  quantities  supported  and  their  share  in  maximum  eligible  quantities  and  funding 
after  modulation,  if  applied.  However,  this  picture  is  not  complete  as  the  Member  States' 
declarations do not always provide the necessary breakdown in fish product and species. That 
is  the  case  in  particular  for  Portugal  where  only  the  declarations  for  2006  provide  such  a 
breakdown. For the other regions the declarations for 2005 and 2006 are only partly available.  

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3. 

THE  COMPENSATION  SCHEME  FOR  THE  MARKETING  OF  CERTAIN  FISHERY  
PRODUCTS – ASSESSMENT OF ITS APPLICATION AND ITS IMPACT ON THE FISHERIES 
SECTOR IN THE OUTERMOST REGIONS 

3.1. 

Financial  and  physical  execution  –  pertinence  of  eligible  quantities  and 
compensation amounts  

3.1.1.  Pertinence  of  eligible  species  and  fishery  products  and  of  maximum  eligible 

quantities 

The  lists  and  amounts  of  eligible  species  and  fishery  products  is  a  result  of  historical 
developments since the inception of the compensation scheme in 1992. Consequently, the list 
of  eligible  species  and  fishery  products  established  by  Regulation  (EC)  No  2328/2003  does 
not  always  reflect  the  marketing  reality  of  the  outermost  regions  which  depends  on  the 
fluctuation  in  captures  and  stocks  and  of  market  demands.  Some  products  like  skipjack 
marketed by sea in the Canary Islands or white fish in Guiana have not at all or hardly been 
used  for  the  marketing  on  the  European  mainland  under  this  scheme  by  now.  For  other 
products, the marketing activity has been underestimated.  

However, the possibility to adjust quantities has certainly facilitated the application and up-
take  of  the  compensation  scheme.  This  is  in  particular  the  case  for  France  which  could 
maximise  the  utilisation  of  the  scheme  by  modulating  not  only  eligible  quantities  but  also 
shifting funding between Réunion and Guiana within the total annual funding for France. For 
Portugal,  such  a  statement  is  somehow  more  difficult  to  make  as  the  necessary  data  per 
product  are  not  available.  According  to  the  study,  also  for  Portugal  the  modulation  was 
conducive  to  a  better  utilisation  of  the  compensation  scheme.  However,  also  the  Canary 
Islands/Spain shows an execution beyond 90% without ever adjusting quantities. 

As a consequence, compared to the execution under previous schemes with a high fluctuation 
in the use of quantities and the absorption of funds between years and regions, the application 
of  the  current  scheme  has  stabilised  and  become  more  regular  in  terms  of  use  of  eligible 
quantities and available funds, a trend which is expected to continue for the remaining period. 
However,  despite  the  possibility  to  modulate  still  a  certain  amount  of  quantities  and  funds 
remain unused.  

The pertinence of eligible fishery products needs to be looked at also from two other angles:  

Under current rules the Commission has no assurance that the assisted fishery products have 
been  caught,  landed  and  marketed  in  accordance  with  the  rules  of  the  Common  Fisheries 
Policy. There is no requirement that conservation and management rules or grading standards 
and  traceability  provisions  have  to  be  respected  for  the  purpose  of  the  scheme  nor  would 
products  originating  from  illegal  and  unreported  fisheries  be  excluded  from  support.  Nor  is 
there a provision to ensure that the compensation does not result in an increased pressure on 
biologically sensitive stocks. Such a situation is difficult to defend.  

The  present  regime  does  not  limit  support  to  fishery  products  originating  from  products 
caught locally but allows compensation for fishery products made out of imported fish. In the 
latter  case  the  compensation  is  entirely  granted  to  the  processing  enterprise  whereas  in  the 
first  case  the  compensation  is  usually  shared  between  the  processor  (20%)  and  the 
fishermen/shipowner  (80%).  It  is  clear  that  for  some  industries  imports  are  necessary  for 
economies of scale and to use the full capacity of the enterprise. However, in such cases the 

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value added for the local fishing sector appears to be more limited than in the case of locally 
caught products. 

3.1.2.  Pertinence of compensation amounts  

It  is  recalled  that  the  main  objective  of  the  aid  scheme  is  to  compensate  for  the  additional 
costs arising from the need to transport products from the outermost regions to the European 
mainland.  

The  development  of  the  compensation  amounts  since  1992  as  laid  down  in  different 
consecutive  regulations  shows  that  the  amounts  have  remained  quite  stable  with  slight 
adjustments up or down (e.g. decrease from 185 €/t in 1992-1993 to 177 €/t in 2003-2006 for 
tuna  delivered  to  the  local  canning  industry  in  the  Azores,  increase  from  898  €/  in  1994  to 
1.100  €/t  in  2003-2006  for  shrimp  in  Guiana)  for  most  products  and  regions.  However,  the 
case  is  different  for  the  Canary  Islands  where  compensation  amounts  under  the  current 
scheme are up to nine times higher than compared to previous schemes. The determination of 
amounts seemed to follow more a logic to absorb available funds in view of reduced eligible 
quantities following the end of the Marocco agreement. 

There  is  a  high  variation  in  compensation  amounts  according  to  products  and  regions.  The 
lowest compensation occurs for small pelagics in the Azores at 148€/t up to 1.400 €/t for big 
pelagics  in  Réunion.  Even  between  similar  segments  compensation  varies  between  regions 
with 177€/t in the Azores, 230 €/t in Madeira for tuna delivered to the local canning industry 
and 950€/t for tuna marketed by air and 500 €/t tuna marketed by the sea in the raw state in 
the Canary Islands. 

The data available at the Community level do not permit to verify whether the compensation 
is  at  an  appropriate  level  and  which  type  of  additional  costs  it  is  covering.  Whereas  the 
additional costs arising from the transport to the European mainland (transport by air or sea, 
storage and transit costs linked to the transport) are the most pertinent in view of the objective 
of the aid scheme and are also the easiest costs to verify, there are other types of additional 
costs  arising  from  the  remoteness  of  the  outermost  regions,  such  as  higher  costs  of 
investments  or  higher  operational  costs  for  production  and  processing.  They  are  also  more 
difficult  to  appraise.  On  the  other  hand  certain  costs  could  be  lower  than  on  the  European 
mainland. 

The study does not make a new assessment of additional costs of each product and product 
chain but compiles information from different sources, such as a study in 2000 (Megapesca) 
up-dated  by  using  an  inflation  rate,  public  administration  or  private  enterprises.  This 
compilation  shows  that  the  assessment  of  additional  costs  and  consequently  of  the  need  for 
compensation  varies  strongly  according  to  the  source  of  information  and  which  type  of 
additional costs has been considered. Across all information sources used by the study, on an 
average, the compensation is at around 60% of the additional costs. However compensation 
varies  widely  between  40%  (small  pelagics  and  deep-sea  species  in  the  Azores)  and  169  % 
(for skipjack marketed by sea in the Canary Islands). If broken down to the individual species 
within the segments the variation is even more pronounced. In relation to the market value (= 
sales price) the compensation level varies between 3% (tuna in the Azores) and 30% (some 
aquaculture products in the Canary Islands). 

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Despite  that  variation,  some  general  conclusions  can  be  deducted:  First,  compensation  for 
products  marketed  frozen  and  by  sea  is  higher  than  for  products  marketed  fresh  and  by  air. 
Second,  the  compensation  level  varies  also  according  to  the  origin  of  the  raw  material/fish 
caught. Thus, for tuna in Madeira and the Azores, the compensation is higher for tuna caught 
by the regional fleet than for imported tuna. 

The  study  also  points  to  some  cases  where  the  aid  scheme  is  not  used  for  its  purpose  to 
compensate  handicaps  linked  to  the  remote  situation  but  as  a  global  subsidy  to  keep 
enterprises  afloat.  Thus,  it  can  have  a  perverse  effect  on  the  commercial  dynamism  and 
competitiveness  of  an  enterprise.  This  appears  particularly  to  be  the  case,  when  the 
compensation level is exceeding 20% of the market value of the product. 

Moreover, it seems that there are types of public intervention in some outermost regions like 
fiscal deductions or national or Community aid schemes (FIFG) which intervene directly or 
indirectly  in  the  compensation  of  additional  costs.  Thus,  there  is  the  risk  of  of 
overcompensation  resulting  from  cumulating  the  compensation  with  other  types  of  public 
intervention. 

3.2. 

Socio-economic  impact  of  the  compensation  on  the  fisheries  sector  in  the 
outermost regions 

Whilst  no  quantitative  impact  indicators  are  available  across  all  the  outermost  regions 
concerned, e.g. on the maintenance and creation of activities and employment, it appears to be 
justified to say that the scheme fosters the conditions, under which economic operators in the 
sector  can  continue  trading  resulting  in  socio-economic  benefits  for  the  local  communities. 
The  continued  existence  of  a  fisheries  sector  guarantees  jobs  in  regions  where  alternative 
employment  is  limited.  The  fishery  products  covered  by  the  scheme  do  account  for  a 
significant share of the exports from the outermost regions. This simulates local production, 
processing and marketing activities. 

The  results  of  the  study  show,  that,  overall,  the  compensation  scheme  has  allowed  the 
fisheries sector to face increasing competition on the common market which is being opened 
more and more to third countries and to the ACP countries in particular. The  compensation 
policy results in economies of scale and in a considerable financial income for the respective 
beneficiaries and allows them to compete at equal cost with companies in mainland Europe. 
The  scheme  has  allowed  the  recipients  to  maintain  a  market  share  that  competition  would 
otherwise have seized.  

The  compensation  scheme  has  also  facilitated  the  development  and  the  consolidation  of 
certain activities. The aquaculture sector in the Canary Islands for instance produces mainly 
for the mainland market and has largely benefited from the scheme. The same is the case for 
the tuna canning industry in the Azores, tuna loins and black scabbardfish in Madeira and the 
shrimp  industry  in  Guiana.  As  a  consequence,  employment  has  been  stabilised  or  even 
increased.  

It should however, not be denied that the recurrent use of compensatory measures bears the 
risk  to  create  an  economic  dependence  which  hampers  the  managerial  capacity  or  the 
innovative  potential.  This  seems  to  be  the  case  for  shrimps  from  Guyana  which  could  be 
marketed better and consequently attract higher prices. It could even be the case that certain 
export  activities  are  artificially  maintained  or  even  developed  whilst  profitable  foreign 

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markets (e.g. in Japan and the United States) are not sufficiently explored and local markets 
neglected. 

4. 

CONCLUSIONS AND OUTLOOK 

Throughout  its  operation,  the  compensation  scheme  has  brought  lasting  stability  which  has 
allowed the economic players concerned to operate under conditions similar to those enjoyed 
by  their  counterparts  on  the  European  mainland.  The  scheme  has  made  a  contribution  to 
maintaining  employment  in  regions  where  there  are  few  other  opportunities.  The  benefits 
these operators have derived from the scheme have enabled the various sectors concerned to 
maintain an adequate level of output and development.  

The conditions giving rise to the additional costs will hardly change in the short term, since 
they derive from the very nature of the outermost regions and the particular situation of their 
fishery sector. Therefore consideration should be given to continue the scheme, thus ensuring 
that the goals for which it was established continue to be properly attained. This would also 
be  in  line  with  the  Commission's  commitment  given  in  its  Communication  on  a  stronger 
partnership  for  the  outermost  regions  of  26.5.2004  (COM(2004)  343  final)  which  identifies 
the reduction of the additional costs in the outermost regions as one of the main priorities of 
the Union's activities to help these regions to overcome the problems resulting of their remote 
situation.  

In view of the need for strategic vision for the sector, it is suggested to continue the scheme at 
the same funding level for the period 2007-2013. This would also be in line with the duration 
of measures under article 11 of the European Regional Development Fund7. A review will be 
made,  inter  alia  in  the  light  of  the  reform  of  the  Common  Market  Organisation  for  fishery 
products. 

However,  the  assessment  in  the  present  report  and  the  study  findings  call  for  a  number  of 
adjustments. They should allow for: 

•  More pertinence but also flexibility in view of the specific marketing needs and realities in 

the outermost regions by  

– 

– 

allowing  Member  states  to  determine  and  adjust  for  their  regions  eligible 
fishery  products  and  their  quantities  and  to  fix  the  respective  compensation 
amounts within an annual allocation of funds for the regions concerned of the 
Member State , based on allocations in the current scheme;  

basing  compensation  amounts  mainly  on  the  additional  costs  arising  from 
transport  to  the  European  mainland.  This  would  also  allow  to  refocus  the 
scheme on its main objective;  

7 

Regulation (EC) n° 1080/2006 of the European Parliament and the Council on the European Regional 
Development Fund (OJ L 210 of 31.7.2006, p. 1) 

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•  Better justification and harmonisation of support by 

– 

introducing  safeguards  to  avoid  unjustified  levels  of  compensation,  in 
particular  by  limiting  the  compensation  to  a  share  of  transportation  and  other 
related  costs,  and  taking  into  consideration  other  types  of  public  intervention 
having an effect on the level of additional costs; 

•  The achievement of the objective of the scheme in compliance with the Common Fisheries 

Policy by 

– 

– 

defining clearer eligibility conditions for recipients and products, in particular 
by excluding support for products incompatible with the rules of the Common 
Fisheries Policy or derived from imported products, 

ensuring  that  the  compensation  does  not  result  in  an  increased  pressure  on 
biologically sensitive stocks; 

– 

concentrating support on economically viable recipients; 

•  Simple  administration  by  proportional  requirements  with  regard  to  the  necessary 

procedures; 

•  Better accountability by introducing regular reporting by Member States. 

These adjustments would address the main shortcomings that emerged in the implementation 
of the scheme and improve the efficiency, transparency and effectiveness of its functioning. 
They would also meet most of the recommendations of the study (Annex III of the Working 
Document  refers).  The  study  further  recommended  the  possible  establishment  of  a  positive 
list of additional costs and an evaluation of their level, with a view to ensure full transparency 
in  the  application  of  the  principles  of  compensation  for  additional  costs.  Such  an  approach 
would however not only need further analysis and thus time before a concrete proposal could 
be made, but it would also make the scheme more rigid and complicated with the risk that not 
all  the  specificities  of  the  outermost  regions  are  reflected  from  the  beginning  or  that  they 
would change over time. It does also not appear justified to envisage the national or regional 
co-financing  of  the  scheme.  This  recommendation  is  mainly  motivated  by  increasing  the 
overall  budget.  However,  the  foreseen  adjustments,  including  the  condition  to  concentrate 
support on economically viable recipients, are supposed to allow anyhow for a more efficient 
and focused application of the scheme and a higher accountability by the Member States. 

However,  the  scheme  will  need  to  be  adjusted  in  order  to  implement  the  new  financial 
management system adopted for market expenditure for the fishery sector under the European 
Agricultural Guarantee Fund (EAGF), i.e. direct centralised management. 

The proposal for a regulation continuing the compensation scheme for the outermost regions 
accompanying this report sets out the details for the suggested amendments. 

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