Commission Regulation (EC) No 1145/2008 of 18 November 2008 laying down detailed rules for implementing Council Regulation (EC) No 637/2008 as regards the national restructuring programmes for the cotton sector
Date: 2008-11-18
Institutions: European Commission
Subjects: aid for restructuring, aid recipient, aid to agriculture, cotton, production aid

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COMMISSION REGULATION (EC) No 1145/2008

of 18 November 2008

laying down detailed rules for implementing Council Regulation (EC) No 637/2008 as regards the
national restructuring programmes for the cotton sector

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 637/2008 of
23 June 2008 amending Regulation (EC) No 1782/2003 and
establishing national restructuring programmes for the cotton
sector (1), and in particular Article 9 thereof,

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

Chapter 2 of Regulation (EC) No 637/2008 contains
provisions on restructuring programmes to be decided
at Member State level to finance specific measures to
assist the cotton sector. It is appropriate to fill out that
framework by enacting implementing rules.

It should be laid down which elements the restructuring
programmes to be submitted by the Member States must
contain. Furthermore, rules should be specified as regards
changes to the restructuring programmes, so that they
can be adjusted to take account of any new conditions
which could have not been foreseen when they were
initially presented.

the
To ensure proper monitoring and evaluation of
is necessary to require
it
restructuring programmes
submission of evaluation reports, which shall consist of
detailed operational and financial information regarding
the implementation of the restructuring programme.

It should furthermore be ensured that all stakeholders
have access to the information related to the restruc­
turing programmes.

There should be minimum requirements to manage the
attribution and payment of support. Also, payment of
one or more advances should be made possible for
measures which are likely to concern considerable expen­
diture.

Provisions should be laid down with regard to the obli­
gation of Member States to control expenditure, specifi­
cally with regard to timing and nature of the on-the-spot
checks of the dismantling and investment measures. To

(1) OJ L 178, 5.7.2008, p. 1.

protect the financial interests of the Community specific
rules for recoveries of undue payments and penalties are
also necessary. To this end, Council Regulation (EC) No
1290/2005 of 21 June 2005 on the financing of the
common agricultural policy (2) and Commission Regu­
lation (EC) No 796/2004 of 21 April 2004 laying
down detailed rules for the implementation of cross-
compliance, modulation and the integrated administra­
tion and control system provided for in Council Regu­
lation (EC) No 1782/2003 establishing common rules for
direct support schemes under the common agricultural
for
policy and establishing certain support
farmers (3) should be applicable.

schemes

As regards full and permanent dismantling of ginning
facilities, as provided for in Article 7(1)(a) of Regulation
(EC) No 637/2008, it is necessary to define in detail the
criteria that make up dismantling. Whereas it is proper
for Member States to decide the amount of aid to be
granted for dismantling on the basis of objective and
non-discriminatory criteria, a maximum level needs to
be established in order to avoid overcompensation.

is necessary to exactly define the support

for the
It
improvement in the processing of cotton, provided for
in Article 7(1)(b) of Regulation (EC) No 637/2008 on aid
for investments in the ginning industry and to determine
expenditure. Also, a maximum Community
eligible
contribution must be laid down in order to ensure
financial participation as well as commitment of
the
beneficiaries in the investment.

As regards support for farmers participating in quality
schemes for cotton, provided for in Article 7(1)(c) of
is necessary to
Regulation (EC) No 637/2008,
to
identify the relevant Community quality schemes,
establish the criteria for national quality schemes,
to
determine the level of the aid and the eligible costs.

it

to ensure

complementarity between the
In order
promotion measures referred to in Article 7(1)(d) of
Regulation (EC) No 637/2008 and the rules concerning
information and promotion actions
established by
Council Regulation (EC) No 3/2008 of 17 December
promotion
2007
measures
internal
market and in third countries (4) detailed requirements
for
the promotion of quality products
should be laid down, in particular as regards beneficiaries
and eligible activities.

provision
agricultural products on the

information

support

and

for

for

on

(7)

(8)

(9)

(10)

(2) OJ L 209, 11.8.2005, p. 1.
(3) OJ L 141, 30.4.2004, p. 18.
(4) OJ L 3, 5.1.2008, p. 1.

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(11) As regards aid to machinery contractors, as provided for
in Article 7(1)(e) of Regulation (EC) No 637/2008 a
precise definition of
the aid needs to be laid down.
Member States should decide the amount of aid to be
granted on the basis of objective and non-discriminatory
criteria, however, a maximum level needs to be estab­
lished in order to avoid overcompensation.

(12)

The measures provided for in this Regulation are in
accordance with the opinion of
the Management
Committee for the Common Organisation of Agricultural
Markets,

HAS ADOPTED THIS REGULATION:

CHAPTER I

GENERAL RULES

Article 1

Scope

This Regulation lays down implementing rules concerning
national restructuring programmes under Regulation (EC) No
637/2008, containing the five eligible measures provided for
in Article 7 of that Regulation.

Article 2

Content of restructuring programmes

Restructuring programmes submitted by Member States in
accordance with Article 4(1) of Regulation (EC) No 637/2008,
shall consist of the following elements:

(a) a detailed description of the measures proposed as well as

their quantifiable objectives;

(b) the results of consultations held as provided for in the
subparagraph of Article 4(1) of Regulation

second
(EC) No 637/2008;

(c) an appraisal showing the expected technical, economic,

environmental and social impact;

(d) a description of the ginning facilities in the Member State
concerned and use of their capacity since 2005, in case of
inclusion in the restructuring programme of the measures
referred to in Article 7(1)(a) and (b) of Regulation (EC) No
637/2008;

(e) a schedule for implementing each of the measures;

allocation fixed in Article 5(1) of Regulation (EC) No
637/2008;

(g) the criteria and quantitative indicators to be used for moni­
toring and evaluation of the measure of the restructuring
programme as well as the steps taken to ensure that the
programmes are implemented appropriately and effectively;

(h) the designation of

authorities
responsible for implementing the programme.

competent

and bodies

Article 3

Changes of restructuring programmes

Changes of restructuring programmes, as referred in Article 4(3)
of Regulation (EC) No 637/2008, shall not be submitted more
than once per year.

indicate clearly and precisely
The modified programmes shall
the proposed changes, the reasons for these changes and their
financial consequences, and shall include, if applicable, a revised
version of the financial table following the model provided for
in the Annex to this Regulation.

resulting

from modification of

Expenditure
restructuring
programmes shall be eligible from the date of the submission
of the revised programme to the Commission. Member States
shall bear the responsibility for expenditure between the date on
which their modified restructuring programme is received by
the Commission and the date of its applicability in accordance
with the second subparagraph of Article 4(2) of Regulation
(EC) No 637/2008.

Article 4

Reporting and evaluation

1. Member States shall submit to the Commission a report
on the implementation of the restructuring programme with the
submission of each new restructuring programme, except of the
first restructuring programme submitted in 2009 as referred to
in Article 4(1) of Regulation (EC) No 637/2008.

The report submitted under paragraph 1 of this Article
2.
and that submitted with the communication requesting ter­
mination of the programme as referred to in Article 5(2) of
Regulation (EC) No 637/2008 shall:

(a)

for which Community
list and describe the measures
assistance
programmes was
granted, for each of the years of the programming period
concerned;

restructuring

under

the

(f) a general financial table, following the model provided for
in the Annex to this Regulation, showing the resources to
be deployed and the envisaged allocation of the resources
between the measures in accordance with the budgetary

(b) if applicable, describe any changes to the restructuring
programme, the reasons therefore and its implications for
the future;

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(c) describe the results achieved with each measure, in light of
in the restructuring

set out

the quantifiable objectives
programme;

(d) contain a statement of expenditure by financial year already
incurred in the programming period which will in no case
overshoot the limit of the total financial amount allocated
to the Member State pursuant to Article 5(1) of Regulation
(EC) No 637/2008;

(e) support

forecasts for expenditure until
implementation of

the end of
the
foreseen period of
the restructuring
programme, up to the limit of the total financial amount
allocated to the Member State pursuant in Article 5(1) of
Regulation (EC) No 637/2008;

(f)

if applicable, contain an analysis of the involvements of
other Community funds and their conformity with the
aids financed by the restructuring programme.

3. Member States shall record the details of all restructuring
programmes, whether or not amended, and of all measures
carried out under those programmes.

For the measures referred to in Article 7(1), points (a), (b),
2.
(d), and (e) of Regulation (EC) No 637/2008, Member States
may pay the beneficiary one or more advances. The combined
level of all advances shall not be higher than 75 % of the
eligible expenditure.

The payment of an advance shall be subject to the lodging of a
security of an amount equal to 120 % of the amount of the
advance concerned.

The securities shall be released provided that the measures have
been completed and the controls, as referred to in Article 7,
have been carried out.

the fourth year following the year of

3.
All payments referred to in paragraphs 1 and 2 that relate
to a particular application shall be made at the latest by 30 June
the deadline for
of
laid
submission of
down in Article 4(1) of Regulation (EC) No 637/2008.
Payments in the first year of the first programming period
shall be made from 16 October 2009.

restructuring programmes as

the draft

Article 5

Public access to information on restructuring programmes

4. Member States shall
implementation of this Article.

lay down specific rules for

the

Member States shall make the restructuring programme,
modifications,
report on the
programme,
programme, publicly available on a website.

its
implementation of
the
legislation concerning this

and any national

the

Article 6

Requirements for application and payment

1. Member States shall for each measure contained in their
restructuring programme and listed in Article 7(1) of Regulation
(EC) No 637/2008:

(a) determine the elements to be contained in an application

for support;

(b) set the start date and end date of the period for lodging an

application;

and non-discriminatory

(c) approve valid and complete applications on the basis of
into
objective
account the financial resources available within the annual
ceilings provided for in Article 5(1) of Regulation (EC) No
637/2008;

criteria,

taking

Article 7

Monitoring and control

1.
Notwithstanding the control obligations referred to in
Regulation (EC) No 1290/2005, Member States shall monitor,
control and verify the implementation of
the restructuring
programme as has become applicable.

For the measures referred to in Article 7(1), points (a) and (b) of
Regulation (EC) No 637/2008, the Member States shall inspect
on the spot each factory and production site which receives
support under
the restructuring programme before a final
payment is made, to check that all conditions for obtaining
the aid have been met.

With regard to the measure referred to in Article 7(1), point (a)
of Regulation (EC) No 637/2008 an on-the-spot inspection shall
be carried out on all relevant factory and production sites at the
latest three months after the expiry of the one year period
referred to in Article 10(1)(b) of this Regulation to verify that
the requirements of that paragraph have been met.

(d) pay the eligible support, or the remaining eligible support in
case an advance has been paid, after completion of the
measure and execution of controls as
referred to in
Article 7 of this Regulation.

2.
For each on-the-spot inspection a report shall be estab­
lished within one month, fully describing the work undertaken,
the main findings
follow-up action required.
Specifically, the inspection reports shall:

and any

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(a) contain information regarding the beneficiary and the
the

to inspection as well as

production site subject
persons present;

itself of the Member States or of another authority concerned
and the error could not reasonably be detected by the bene­
ficiary and the beneficiary for his part acted in good faith.

(b) state whether notice of the visit was given to the beneficiary

and, if so, the period of advance notice;

(c) state the requirements and standards subject to inspection;

If the non-compliance has been committed intentionally
4.
or as a result of grave negligence,
the beneficiary shall be
required to pay an amount equal to 30 % of the amount to
be recovered under Article 8.

(d) describe the nature and extent of the checks carried out;

(e) contain the findings;

(f) contain the elements in relation to which non-compliances

are found;

CHAPTER II

ELIGIBLE MEASURES

SECTION 1

Dismantling of ginning facilities

Article 10

Scope

(g) contain an evaluation providing an assessment of

the
importance of
the non-compliance in respect of each
element on the basis of, among others, its severity, extent,
degree of permanence and history.

1.
Full and permanent dismantling of ginning facilities as
referred to in Article 7(1)(a) of Regulation (EC) No 637/2008
shall require:

The beneficiary shall be informed of any non-compliance found.

(a)

the definitive and total cessation of the ginning of cotton in
the factory or factories concerned;

Article 8

Recovery of undue payments

Undue payments shall be recovered, with interest,
from the
beneficiaries concerned. The rules fixed in Article 73 of Regu­
lation (EC) No 796/2004 shall apply mutatis mutandis.

Implementation of administrative penalties and recovery of
unduly paid amounts are without prejudice to communication
of irregularities to the Commission pursuant to Commission
Regulation (EC) No 1848/2006 (1).

Article 9

Penalties

1.
If a beneficiary does not comply with one or more
conditions for obtaining the aid under the measures of the
restructuring programme,
shall be required to pay an
amount equal to 10 % of the amount to be recovered under
Article 8.

it

2.
The penalties to be imposed pursuant to paragraph 1 shall
not be imposed if the undertaking can demonstrate, to the
satisfaction of the competent authority, that non-compliance
is due to force majeure and if it has clearly identified the non-
compliance in writing and in due time to the competent
authority.

(b) the dismantling of all ginning equipment thereof, and the
removal of the ginning equipment from the site or sites,
within one year of the approval of the application by the
Member State;

(c)

the definitive exclusion of
cotton processing in the Community, by:

the ginning equipment

from

(i) removal of equipment to a third country;

(ii) guaranteed application of equipment in another sector;

or

(iii) destruction of equipment;

(d) the restoring of the good environmental conditions of the
factory site or sites and the facilitation of redeployment of
the workforce; and

(e)

the written commitment not to use the production site or
sites for the ginning of cotton during a period of 10 years.

3.
The penalties referred to in paragraph 1 shall not apply if
the payment was made by error of the competent authorities

(1) OJ L 355, 15.12.2006, p. 56.

Ginning equipment means all specific equipment used for the
transformation of unginned cotton into ginned cotton and its
by-products, including feeders, dryers, cleaners, stick machines,
gins, condensers, lint cleaners and bale presses.

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2. Member States may impose additional requirements with
regard to dismantling as referred to in paragraph 1.

value of the asset, and excluding other costs connected with
lessor’s margin,
the leasing contract,
interest
refinancing costs, overheads and insurance charges;

such as

The ginning facilities referred to in paragraph 1 need to be

3.
in good working condition for an application to be eligible.

4.
Factory buildings and sites may continue to be used for
activities unrelated to cotton production, processing or trade.

Article 11

Community contribution

1. Member States shall decide, on the basis of objective and
non-discriminatory criteria, the amount of aid to be granted
under the measure referred to in Article 10.

2.
The aid per ginning factory shall be limited to a maximum
amount of EUR 100 per tonne of unginned cotton for the
quantity of cotton processed in that factory, which has been
eligible for support under Chapter V of Council Regulation
(EC) No 1051/2001 (1), in the marketing year 2005/06.

SECTION 2

Investments in the ginning industry

Article 12

Scope

Support for the measure referred to in Article 7(1)(b) of Regu­
lation (EC) No 637/2008 shall be granted for tangible or
intangible investments which improve the overall performance
of the enterprise and concern:

(a)

the processing and/or marketing of cotton; and/or

(b) the development of new processes and technologies linked

to cotton.

Article 13

Eligible expenditure

The supported investments shall respect the Community

1.
standards applicable to the investment concerned.

2.

Eligible expenditure shall be:

(a)

the improvement of immovable property;

(b) the purchase or lease purchase of new machinery and
equipment, including computer software up to the market

(1) OJ L 148, 1.6.2001, p. 3. Regulation repealed by Regulation (EC) No
1782/2003 (OJ L 270, 21.10.2003, p. 1) as from 31 December
2005.

(c) general costs linked to expenditure referred to in points (a)
and (b), such as fees of architects and engineers and consul­
tation fees, feasibility studies, the acquisition of patent rights
and licences.

3.
Costs for the development of new processes and tech­
nologies as referred to in Article 12 shall concern preparatory
operations, such as design, process or technology development
and tests and tangible and/or intangible investments related to
them, before the use of the newly developed processes and
technologies for commercial purposes.

Simple replacement

4.
expenditure.

investments

shall not be eligible

Article 14

Community contribution

1.
The Community contribution for support referred to in
Article 12 shall be limited to the following maximum aid rates:

(a) 50 % in regions

in
accordance with Council Regulation (EC) No 1083/2006 (2);

classified as convergence

regions

(b) 40 % in regions other than convergence regions.

Support shall not be granted to the firms in difficulty
2.
within the meaning of Section 2.1 of the Community guidelines
on State aid for rescuing and restructuring firms in difficulty (3).

Article 72 of Council Regulation (EC) No 1698/2005 (4)
3.
shall apply mutatis mutandis to support referred to in Article 12.

SECTION 3

Participation of farmers in cotton quality schemes

Article 15

Scope

Support for the measure referred to in Article 7(1)(c) of Regu­
lation (EC) No 637/2008 shall:

(a) be granted for Community quality schemes for cotton estab­
lished under Council Regulation (EC) No 834/2007 (5), or
Council Regulation (EC) No 510/2006 (6), or quality
schemes recognised by the Member States;

(2) OJ L 210, 31.7.2006, p. 25.
(3) OJ C 244, 1.10.2004, p. 2.
(4) OJ L 277, 21.10.2005, p. 1.
(5) OJ L 189, 20.7.2007, p. 1.
(6) OJ L 93, 31.3.2006, p. 12.

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(b) be granted as an annual incentive payment whose level shall
be determined according to the level of the fixed costs
arising from participation in supported schemes,
for a
maximum duration of four years.

that quality scheme shall not be taken into account in calcu­
lating the amount of support in the framework of an agri-
environment measure to support organic farming.

Schemes whose sole purpose is to provide a higher level of
control of respect of obligatory standards under Community
or national
law shall not be eligible for support under this
section.

For the purpose of point (b) of the first subparagraph of
4.
Article 15, ‘fixed costs’ means the costs incurred for entering a
supported quality scheme and the annual contribution for par­
ticipating in that scheme,
including, where necessary, expen­
diture on checks required to verify compliance with the speci­
fications of the scheme.

Article 16

Eligibility criteria

Article 17

Community contribution

1.
To be eligible for support, quality schemes recognised by
Member States, as referred to in point (a) of the first subpara­
graph of Article 15, shall comply with the following criteria:

Support
for the measure referred to in Article 15 shall be
limited to a maximum amount of EUR 3 000 per holding per
year.

(a)

the specificity of the final product under such schemes shall
be derived from detailed obligations on farming and
processing methods that guarantee:

(i) specific characteristics including the production process;

or

SECTION 4

Information and promotion

Article 18

Scope

(ii) a quality of the final product

beyond the
regards plant health or environmental protection;

commercial

commodity

that goes significantly
as

standards

(b) the schemes involve binding product specifications and
compliance with those specifications shall be verified by
an independent inspection body;

(c)

the schemes shall be open to all producers;

(d) the schemes shall be transparent and assure complete trace­

ability of the products;

(e)

the schemes shall respond to current and foreseeable market
opportunities.

2.
Support may be granted to farmers participating in a
quality scheme only if the quality product has been officially
recognised under
the
Community schemes or quality schemes
recognised by a
Member State, as provided for in point (a) of the first subpara­
graph of Article 15.

the Regulations and provisions of

As regards the quality schemes established under Regulation
(EC) No 510/2006, support may only be granted in respect
of names registered in the Community register.

3. Where support for participation in a quality scheme under
Regulation (EC) No 834/2007 is included in a restructuring
programme, the fixed costs resulting from the participation in

Support for the measure referred to in Article 7(1)(d) of
1.
Regulation (EC) No 637/2008 shall concern cotton covered by
the quality schemes referred to in Article 15 and products
mainly produced with this cotton.

Information and promotion activities supported under

2.
Regulation (EC) No 3/2008 shall not qualify for support.

Article 19

Eligible activities

1.
The information and promotion activities eligible for
support shall be activities designed to induce consumers to
buy cotton covered by quality schemes included in Article 15,
or products mainly produced with this cotton.

Such activities shall draw attention to the specific features or
the products concerned, notably the quality,
advantages of
specific production methods, and respect for the environment
linked to the quality scheme concerned, and may include the
dissemination of scientific and technical knowledge about those
products. Such activities shall include, in particular, the organis­
ation of, and/or participation in, fairs and exhibitions, similar
public relations exercises and advertising via the different
channels of communication or at the points of sale.

Only information, promotion and advertising activities in

2.
the internal market shall be eligible for support.

Such activities shall not incite consumers to buy a product due
to its particular origin, except
for products covered by the
quality scheme introduced by Regulation (EC) No 510/2006.
The origin of a product may nevertheless be
indicated
provided the mention of
the origin is subordinate to the
main message.

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Activities related to the promotion of commercial brands shall
not be eligible for support.

and non-discriminatory criteria, for the losses incurred including
the loss of value of specialised harvest machinery, which can
not be used for other purposes.

3. When activities referred to in paragraph 1 concern a
product included in the Community quality schemes established
under Regulation (EC) No 834/2007 or Regulation (EC) No
510/2006,
the Community logo provided for under those
schemes shall appear on information, promotion and/or adver­
tising material.

4.
The Member States shall ensure that all draft information,
promotion and advertising materials drawn up in the context of
a supported activity comply with Community legislation. To
that end, beneficiaries shall transmit such draft materials to
the competent authority of the Member State.

Article 22

Community contribution

1. Member States shall determine the level of aid to be
granted under the measure referred to in Article 21. This aid
shall not exceed the losses incurred and shall be limited to a
maximum amount of EUR 10 per tonne for the quantity of
unginned cotton harvested under contract in the marketing year
2005/06, that was delivered to a ginning factory subject to
dismantling as provided for in Article 10.

Article 20

Community contribution

2. Member States shall ensure the beneficiaries of the support
comply with the criteria listed in Article 7(2)(d) of Regulation
(EC) No 637/2008.

Support
limited to 70 % of the cost of the activity.

for the measure referred to in Article 18 shall be

SECTION 5

Aid to machinery contractors

Article 21

Scope

CHAPTER III

FINAL PROVISIONS

Article 23

Entry into force and application

This Regulation shall enter into force on the third day following
its publication in the Official Journal of the European Union.

Aid for the measure referred to in Article 7(1)(e) of Regulation
(EC) No 637/2008 shall be granted on the basis of objective

It shall apply from 1 January 2009.

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

Done at Brussels, 18 November 2008.

For the Commission

Mariann FISCHER BOEL
Member of the Commission

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ANNEX

General financial table for the restructuring programme under Article 7 of Regulation (EC) No 637/2008

(1 000 EUR)

Member State:

Date of communication:

Amended table: Yes/No

If Yes, number:

Financial year

Measures

Regulation (EC) No 637/2008

Year 1
(2010)

Year 2
(2011)

Year 3
(2012)

Year 4
(2013)

Total

Dismantling

Investments

Article 7(1)(a)

Article 7(1)(b)

Quality schemes

Article 7(1)(c)

Information and promotion Article 7(1)(d)

Machinery contractors

Article 7(1)(e)

Total