CELEX: 51977PC0177
Language: en
Date: 1977-05-12
Title: Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 974/71 as regards the price level to be taken into consideration for the calculation of monetary compensatory amounts (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (77) 177
Vol. 1977/0072
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 ---pagebreak---    COMMISSION OF THE EUROPEAN COMMUNITIES
                                                       COM(77)177 final.
                                                       Stpa^ou^i, rm May I977.
                                                            *7 Jet ut *., k si
                                 Proposal for a
                           COUNCIL REGULATION (EEC )
               amending Regulation ( EEC ) NO 974/71 as regards
               the price level to be taken into consideration
                for the calculation of monetary compensatory
                                    amounts
                 ( submitted to the Council "by the Commission )
C0K(77 ) 177 final .
 ---pagebreak---                        EXPLANATORY MEMORANDUM
1 . On 4 February 1977 the French Government submitted to the Counoil
     and the Commission a memorandum suggesting various measures relating
     to the system for calculating monetary compensatory amounts (MCAs) •
     That memorandum proposes in particular
     (a) the advance fixing of MCAs
     (b ) certain methods for reducing the MCAs :
          - a reduction to allow for the industrial aspect of certain
            products ( sugar, butter, milk powder )
          - a reduction to allow for the fact that some production uses
            raw materials imported free of import charges ( soya)
          - a reduction by increasing the exemption of 1.5 points already
            provided for under Article 2(l)(b ) of Regulation (EEC) No 974/71
          - a reduction in respect of the special import arrangements for
            non-member countries .
    The Italian Government presented a memorandum at the discussions on
    prices for the 1977/78 marketing year . Apart from seeking a devalu­
    ation of the green lira, a request which has meanwhile been granted ,
    by the Council , the Italian Government in that memorandum requested
    that the method for calculating monetary compensatory amounts be
    reviewed, in particular where milk and milk products, beef and veal
    and pigmeat- were concerned .
2 . The advance fixing of MCAs seems to be the appropriate solution to a
    certain extent . It must be acknowledged that the situation in countries
    within the snake differs from that in countries with currencies floating
    outside the snake .
    With regard to trade with non-meraber countries this solution does not
    appear to present any major risks , and indeed has distinct advantages in
    cases where the levy or the refund is also fixed in advance . In other
    cases and in particular in intra-Community trade , the danger of speculation
    and the administrative difficulties necessitate much caution .
 ---pagebreak---      The Commission will continue its work with a view to the adoption in the
     near future , of special rules in the matter.
3 . High MCAs could create distortions of competition ( see Commission staff
    working paper SEC(76) 3702 of 18 October 1976). Moreover, MCAs in them­
    selves constitute an obstacle to trade . Any measures aimed at reducing
    MCAs as much as possible are therefore in the Community 's interest .
    The Commission recalls here the proposal which it submitted to the
    Council concerning a periodic revision of the green rates .
    Within the MCA system, it appears possible to make adjustments in
    both directions . Extending the exemption is one of the possible
    means . This could be done in one of two ways :
    - by reducing the percentage used to calculate the monetary compensatory
      amounts ,
    - or by reducing the intervention price used as a basis for the calculation .
    The advantage of the second formula, which is already used in the beef
    and veal sector, (Article 2(3 ) of Regulation (EEC) Ho 974/71 ) is that
    it is automatically applicable to countries with both strong and weak
    currencies whereas a reduction in the percentage used for calculating
    the monetary compensatory amounts can only be applied to weak currencies
    at the moment .
    However , a reduction in respect
    of the intervention price should be applied with great care . There should
   be no minimizing the risks involved for the smooth operation of the
    organization of the markets from MCAs which no longer cover the difference
    in national currencies between intervention prices applicable in two
   Member States .
    The basic products subject to intervention should therefore be dealt with
    case by case according to sector , depending on the fluidity of the market
   and the rigidity of the intervention mechanism . The attached draft
   regulation therefore proposes that the principle of such a reduction
    should henceforth be accepted, but that it should be applied in practice
   by the Commission in accordance with the Management Committee procedure .
 ---pagebreak---                                - 3 -
    With regard to processed products for which the monetary compensatory
    amount is calculated from that applicable to the basic product , a
    review of the method for calculating the derived monetary compensatory
    amount is also a means of reducing the amounts in certain cases *
     In the past , the Commission has already reviewed the derivation
    coefficients for calculating the monetary compensatory amounts in
    various sectors .   It proposes to re-examine the question in the Man­
    agement Committees .   It considers that in certain sectors adjustments
    could still.be made to reduce , to the extent strictly necessary, the
    obstacles to trade constituted by MCAs .
4 . The Commission has re-examined the matter of the special import
    arrangements for non-member countries ( ACP sugar , New Zealand butter );
    it considers that in these cases the system of MCAs should continue
    to be applied as it stands .
 ---pagebreak---                         Proposal for a
                   COUNCIL REGULATION ( EEC ) No
                    of
          amending Regulation ( EEC ) No 974/71 as regards
          the price level to "be taken into consideration
           for the calculation of monetary compensatory
                             amount s
THE COUNCIL OP THE EUROPEAN COMMUNITIES,
 Having regard to the Treaty establishing the European Economic Community,-
and in particular Articles 28, 43 and 235 thereof,
Having regard to the proposal from the Commission ,
Having regard to the opinion of the European Parliament ,
Whereas Council Regulation (EEC ) No 974/71 of 12 May 1971 on certain measures
of conjunctural policy to be taken in agriculture following the temporary
widening of the margins of fluctuation for the currencies of certain Member
       1      t            <   n   1  ■ •  f I 1 1 > n \ «« /n / 2
States , as last amended by Regulation (EEC ) No 557/76 , stipulates that
the monetary compensatory amounts must be based on the level of the support
price , a single exception being provided for in Article 2(3 ) in respect of
beef and veal ;
Whereas , however , it would appear possible to extend the scope of the
exception at present provided for by introducing the possibility of reducing
the intervention price in cases where this would be possible without causing
deflections of trade ;   whereas monetary compensatory amounts should not
defeat their purpose , which is precisely to prevent market disturbance ;
whereas it is therefore advisable , when taking decisions on the subject , to
adopt a prudent attitude and to submit them to a procedure allowing swift
action to be taken ;
  OJ No L 106 , 12.5.1971 , P«1
2 OJ No L 67, 15.3.1976, p.l
 ---pagebreak--- Whereas the introduction of a general rule of this sort enables the specific
provision relating to "beef and veal to be repealed ,
HAS ADOPTED THIS REGULATION :
                                Article 1
Article 2 ( 3 ) of Regulation (EEC ) n* 974/ 71 is anended to read as follows :
" It may "be decided that the monetary compensatory amounts are to be calcula­
  ted on the "basis of prices lower than the support prices for the products
  concerned by reference to the degree of rigidity of the intervention mecha^
  nism or by reference to the special situation of the market , in particular
  its fluidity and the level of market prices and provided that the risk of
  disturbances for the product or products in question make this possible ."
                                Article 2
This Regulation shall enter into force on the third day following its
publication in the Official Journal of the European Communities .
           This Regulation shall be binding in its entirety and directly
           applicable in all Member States .
Done at Brussels .
                                                        Por the Council
                                                          The President
 ---pagebreak---                    FINANCIAL             STATEMENT                                                                   I
                                                               –
                                                                              [ ixatz i 6.5.77
                                                                              l
                                                                                                                     j
   l. Fjnber of relevant buddet entry :                    Chap. 78
   2. Title of : roject : Proposal for a Council Regulation amending Regulation (EBC )
    No. 974/71 as regaxis the price level to be taken into consideration for the
    calculation of monetary compensatory amounts.
   3. ix           : Articles 23 , 43 ana 225 of the Treaty.
  4. A : 2s : Introducing into Regulation 974/71 the possibility of using in certain
    c^3--3 . iorfo- the calculation of KCAs , prices lower than the intervention prices,
    which would result in a reduction of KCAs .
  5. fmaschi. Implications                 ?D3 ÏH2 fUHXKTirrG TEAB  cchhs/t pivancial teas ?CLLCWISS FTBA-fCIAL TEAS
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      -CH.lasïa TO EATIC::AI. kunmsTR.                Fon-quani ifiable decrease
      -ciasgsd 70 or-si Siria: al caajps
 j.i Rrzzrzi
      -cvy             er r3 ec                       Hon-quanl ifiable increase
       ( tEVI33/7.o?C:3 DLTIEJ )
      -UATICr-Al
          kui iiarjrruai tisctaoi ^        Tua                     TEAH                    TSAS
 5.0.1 of expenditure               –      Hon-quantifiable decrease
         Kultianrual
 5«i.i fculti    annual timetable          _           ,.       , .
          rN*-                             Son-quantifiable increase
 5 .2 k£.::od of cALCiLATic-K ijjjg financial implications will depend on the actual application
  of the reduction of MCAs, which are to be fixed by the Commission after consulting
  the Management Committee . A quantitative estimate cannot consecruently be Bade
  at the moment . However, as the application of MCAs generally gives rise "to
  expenditure charged to the Guarantee Section of the EAGGP and "to a reduction of
  receipts in the form of levies under the system of own resources , a reduction of
  the MCAs applied should in principle give rise to a reduction in expenditure by
  the Guarantee Section of the EAGGP and an increase in receipts in the form of
  levies .
6,0 Can the project be financed froa appropriations entered in the                                   YI3/XZ
      r< -•.T i chapter cf current br.f t?
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"a"~"TS 1 The introduction of advance fixing of MCAs, as mentioned in the Explanatory
Memorandum, would also give rise to financial implications that are not quantifiablt .
firstly, they would depend on the rules to be laid down on the subject (e.g. the
 time limit for advance fixing) and on the attitude of operators in a given
 economic/monetary situation toward the operations (trade) to be effected. The
 overall effect of the introduction of advance fixing could be a Blight increase,
 in expenditive and a decrease in receipts in the form of levies. However, given
 certain monetary developments, the contrary could also be true. Advance fixing
 would , moreover, have favourable effects on the so called "equity" system
 (exemption from MCAs in certain monetary situations ).