Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, as regards the support scheme for cotton COM(2007) 701 final — 2007/0242 (CNS)
Date: 2008-02-14
Institutions: European Economic and Social Committee
Subjects: aid system, aid to agriculture, common agricultural policy, cotton, production aid

25.6.2008

EN

Official Journal of the European Union

C 162/83

Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation
amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes
under the common agricultural policy and establishing certain support schemes for farmers, as
regards the support scheme for cotton

COM(2007) 701 final — 2007/0242 (CNS)

(2008/C 162/17)

On 4 December 2007, the Council decided to consult the European Economic and Social Committee, under
Article 37 of the Treaty establishing the European Community, on the

Proposal for a Council Regulation amending Regulation (EC) No 1782/2003 establishing common rules for direct
support schemes under the common agricultural policy and establishing certain support schemes for farmers, as regards
the support scheme for cotton

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing
the Committee's work on the subject, adopted its opinion on 22 January 2008. The rapporteur was Mr
Narro Sánchez.

At its 442nd plenary session, held on 13 and 14 February 2008 (meeting of 14 February 2008), the Euro-
pean Economic and Social Committee adopted the following opinion by 141 votes to 33 with
13 abstentions.

1. Conclusions and recommendations

1.1
The new support scheme for cotton will come into force
on 1 January 2008. The Council of Ministers must adopt a deci-
sion as swiftly as possible in order to prevent uncertainty
among farmers regarding the applicable legal framework for the
next marketing year.

1.2
The EESC stresses that the partial 65 % decoupling rate
laid down in the annulled regulation, which remains unchanged
in the Commission proposal, is an inefficient way to maintain
production of the crop in the cotton-growing areas of the EU.
The high labour intensity, high production costs, volatility of
world prices and various other factors prevent the Commission
proposal from being an effective way to stop this crop from
disappearing.

1.3
The EESC considers that the system that was in force
before the 2004 reform, which was based on production aid,
ensured the viability of farms throughout the regions of the EU
where cotton is grown. However, the EESC is aware of the
impossibility of returning to the previous scheme due to the
new policy orientation of
the CAP and the international
commitments made by the EU in the context of the World
Trade Organisation.

The EESC points out that there are differences in produc-
1.4
tion between Greece and Spain. At present,
it is difficult to
conceive of a homogeneous support system that could be
applied equally to both countries. As a result of this difference,
the Committee calls for maximum flexibility to be brought to
the cotton support scheme by dint of the subsidiarity principle,
which has guided the most recent sectoral reforms of CMOs in
the wine and fruit and vegetable sectors. Every Member State
should be able to apply the necessary subsidiarity in order to
find the best solution for their producing areas.

In order to maintain a high degree of decoupling of
1.5
support, a transitional period should be set up to allow for
gradual adaptation to greater levels of decoupling. Moreover, a
high percentage of coupled support cannot alone guarantee that

to harvest and the concept of

including the
cotton production will be sustained. Nor will
requirement
‘sound and fair
merchantable quality’ ensure that the production levels regis-
tered prior to the reform are maintained; as a result, eligibility
conditions must be incorporated which include quantitative
criteria relating to the volume of production achieved.

that

the product,

to the quality of

The EESC points out

the new system should
1.6
promote a commitment
in
contrast to the current system, which is causing a considerable
reduction in quality and making it difficult to sell European
cotton. Cotton is a product used for textiles, and must meet the
needs of an industry exposed to tough competition. It is there-
fore essential
the factors for high-quality
production are present. Moreover, efforts should be made to
ease the introduction of new alternative technologies, integrated
production systems
and eco-friendly production wherever
feasible.

to ensure that all

2. General remarks

2.1
The cotton support scheme dates back to 1980, when
Greece joined the European Community. The scheme was then
extended to the two countries which joined in 1986, Spain and
Portugal. The cotton sector was based on a system of ‘deficiency
payments’, whereby support was granted for cotton processors
who had paid a minimum price to cotton producers. The
system was changed in 2000 when guaranteed maximum quan-
tities were brought in, along with new environmental require-
ments.

the Council of

In April 2004,

the European Union
2.2
adopted a new support scheme for cotton,
inspired by the
guiding principles of the 2003 CAP reform, decoupling produc-
tion-related aid. This was intended to bring the decoupled
payment to around 65 %, while coupled aid would increase to
35 %. The reform, which came into force on 1 January 2006,
did not allow for any modification to the percentages of this
partial decoupling.

C 162/84

EN

Official Journal of the European Union

25.6.2008

2.3
On 7 September 2006, in an unprecedented decision, in
the context of an appeal brought by the Kingdom of Spain, the
European Court of Justice annulled the cotton support scheme
approved in 2004 owing to its infringement of the principle of
proportionality, which meant that, under the Treaty on Euro-
pean Union, the actions proposed by the reform of the Com-
munity cotton scheme were considered disproportionate to the
aims pursued. The Commission had not taken into account
labour costs when calculating the foreseeable profitability of
cotton growing, nor had it considered the impact of the reform
on the situation of the cotton-ginning sector. The Court of
Justice suspended the annulment of the reform until a new
proposal was put forward by the Commission.

2.4
During the drafting of the new proposal, the Commis-
sion carried out two studies on the environmental and socio-
economic impact of cotton production.
In conjunction with
these studies, various working meetings were held with repre-
sentatives from the sector, along with a public hearing.

2.5
Lastly (and to the great puzzlement of the sector), on 9
November 2007 the Commission presented a new proposal for
the reform of the cotton support scheme that was almost iden-
tical to the current one — i.e. partial decoupling with 65 % of
payments unlinked from crop production and the remaining
35 % coupled to production. The EESC considers that
the
Commission's proposal should be brought more closely into
line with the different production situations in Greece and
Spain.

The current cotton support scheme has witnessed a clear
2.6
drop in production, reduction in revenue and the resulting
gradual abandonment of the sector in various cotton-growing
areas. In its opinion on the reform of 2004, the EESC warned
the Commission of the significant reduction that partial decou-
pling would have in cotton-growing areas.

In the EU, production is concentrated almost exclusively
2.7
in certain areas of two Mediterranean countries — Greece and
Spain. Greece is Europe's main cotton producer with around
380.000 hectares of land devoted to the crop, while the area
under cotton in Spain totalled around 63 000 hectares in 2007.
Portugal no longer grows cotton, and Bulgaria produces a very
small amount. On the whole, cotton is grown in particularly
depressed areas with few alternatives for employment. These
regions are still covered by the convergence objective for 2007-
2013.

2.8
In Greece, the area under cotton has decreased by 11 %
and production figures have dropped proportionately due to
adverse climate conditions and, essentially, to the implementa-
tion of the 2004 reform.

2.9
In Spain, the effects of the current system have led to
much more radical changes in the sector than in Greece. In
Andalusia, Spain's main cotton-producing region, the sector has

lost 30 % of its surface area and 65 % of production in only
two marketing years, with harvested cotton dropping from
347 000 tonnes in 2004 to 130 000 tonnes in 2007. In the
last two years, 30 % of producers have abandoned the crop.
This drop in production makes it unfeasible in the short term
for much of the industry to survive in Spain, and this will have
a substantial impact on employment in the ginning industries
and the use of labour in production.

In the light of

2.10
the EESC calls on the
the above,
Commission to bring more flexibility to its proposal so as to
give the Member States,
through the subsidiarity principle,
greater room for manœuvre.

2.11
The introduction of any degree of decoupling in the
cotton sector will lead to widespread restructuring within the
sector. The ginning industry will have to deal with substantial
changes in order to adapt to the new situation, and will need
the financial support of the Commission in order to restructure
so that it can continue to maintain employment in cotton-
growing areas. Financial support should be earmarked for the
ginning industry to enable it to bear the costs of abandoning
this activity and taking up other economic activities which
would secure jobs. The conversion measures included in the last
reform of the sugar CMO could serve as inspiration in this area.

3. Specific comments

and

promote

high-quality

3.1
The EESC fully agrees with the Commission regarding
the importance of the tasks to be assigned to inter-branch orga-
nisations: to coordinate product marketing, draw up standard
contracts
production.
However, the form these organisations have to take under the
current system and the lack of integration with other measures
has meant that they have carried little weight over the two years
that the regime has been in effect and their activity is limited to
ensuring their members' access to additional aid.
in
Spain,
there is only one inter-branch organisation covering
10 000 hectares of cotton crops.

Indeed,

cotton

In October 2008,

the European Commission is

3.2
to
publish a green paper on the implementation of quality policy
in the EU. Therefore, the related legislative proposals will not be
recently
before 2009. The Commission has
presented
announced its intention to consider the inclusion of cotton in
Annex I to Council Regulation No 510/2006 on the protection
of geographical indications and designations of origin.

3.3
The inclusion of cotton in the abovementioned protec-
tion scheme could be a useful tool for many producers seeking
to increase the added value of their production in order to meet
the challenges of a highly competitive open market and bring in
a fair income from the markets. The Commission should extend
the regulation to cotton by emergency procedure.

25.6.2008

EN

Official Journal of the European Union

C 162/85

3.4
Proper certification of country of origin and European
quality controls can help to bring to Community cotton produc-
tion the added value sought by all European initiatives in the
field. However, as the EU is a net importer of cotton, controls
on imports need to be improved and strengthened. Cotton
should therefore be included in the list of products eligible for
information and promotion measures, although this will not in
itself provide a solution for the sector.

The EESC supports all

3.5
the Commission's proposals
designed to improve the quality of cotton. In recent years the
sector has made great environmental progress by supporting
integrated production systems, agri-environmental aid and eco-
friendly production. There has been an increase in integrated
production systems in Spain, accompanied by application of
In 2008 Greece will adopt a law
environmental measures.

governing integrated production systems. The new regime must
provide incentives for such initiatives.

The EU should help its cotton sector to adapt to using

3.6
new technological innovations.

3.7
The EU is a net importer of cotton; Community cotton
production only accounts for 2 % of the cotton consumed in
the world, and is a long way from the major cotton producing
countries (USA, China, India, etc.). As a result, the EU is not
involved in setting international prices for this raw material, and
Community support
for cotton producers does not distort
competition. The Commission should therefore defend the Euro-
pean cotton sector when this is called into question in multilat-
eral forums such as the World Trade Organisation.

Brussels, 14 February 2008.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the
European Parliament and of the Council on the contained use of genetically modified micro-organ-
isms (Recast)

COM(2007) 736 final — 2007/0259 (COD)

(2008/C 162/18)

On 10 January 2008 the Council decided to consult the European Economic and Social Committee, under
Article 175 of the Treaty establishing the European Community, on the

Proposal for a Directive of the European Parliament and of the Council on the contained use of genetically modified
micro-organisms (Recast)

Since the Committee unreservedly endorses the contents of the proposal and has already set out its views
on the subject in its earlier opinions CESE 1235/1988, adopted on 24 November 1988 (1), and CESE
887/1996, adopted on 10 July 1996 (2), it decided, at its 442nd plenary session, held on 13 and 14 February
2008 (meeting of 13 February), by 133 votes to 2 with 3 abstentions to issue an opinion endorsing the
proposal and to refer to the position it had taken in the above-mentioned documents.

Brussels, 13 February 2008.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(1) Opinion of the Economic and Social Committee on the proposal for a Council Directive on the contained use of

genetically modified micro-organisms — COM(1988) 160 final (OJ C 23 of 30.1.1989, p. 45).

(2) Opinion of

the Economic and Social Committee on the proposal

for a Council Directive amending Directive
90/219/EEC on the contained use of genetically modified micro-organisms — COM(1995) 640 final (OJ C 295 of
7.10.1996, p. 52).