CELEX: 51984PC0092
Language: en
Date: 1984-02-27 00:00:00
Title: Recommendation for a COUNCIL DECISION authorizing the Commission to open negotiations with Portugal for the conclusion of an agreement in the form of an exchange of letters on specific financial aid to improve agricultural structures in Portugal (submitted to the Council by the Commission)

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COM (84) 092
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 ---pagebreak---                                                               COM( 84) 92   final
      COMMISSION                                               Brussels, 27 february 1984
        OF THE
EUROPEAN COMMUNITIES                                           FOR OFFICIAL USE ONLY
    General Secretariat
                                     Recommendation for a
                                       COUNCIL DECISION
         authorizing the Commission to open negotiations with Portugal for the
             conclusion of an agreement in the form of an exchange of letters
                on specific financial aid to improve agricultural structures
                                          in Portugal
                         (submitted to the Council by the Commission)
      COM (84) 92 final
 ---pagebreak--- I.   BACKGROUND
                                                          1
1.   In a Communication to the Council dated 12 June 1980    the Commission, in
response to a Portuguese request, proposed that Portugal's path, towards accession
should be smoothed by means of various initiatives a-'ri measures similar to f c s e
which would be carried out after accession through the facilities available to
all Member States.   At the time, the Commission drew particular attention to the
shortcomings of Portugal's regional and agricultural structures, which were
Liable to pose serious problems once the country became a member - the isolated
regions, structurally backward farming sector and high level of agricultural
imports, swelling the trade deficit.
2.   On 3 December 1980, pursuant to a Council Decision dated 7 October 1980,
the Community signed an Agreement with Portugal on pr e- acc es sio n aid.
The Agreement provided for an overall financial package of 275 million ECU,
150 million ECU in the form of EIB own-resources loans and 125 million ECU in
grant form.   Of the grant aid, 100 million ECU was earm ark ed for cooperation projects
or programmes relating to agriculture, small businesses, regional infrastructure
and vocational training.   The money was to ue committed between 1 January 1981
and the date of Portugal's entry into the Community.
1
  C0MC80)280 final.
 ---pagebreak---                                               - 2 -
3.   The Portuguese authorities set :aside 23 million ECU of the 100 million           ECU
grant aid to finance agricultural projects.           Projects accounting for the
full amount have already been submitted to the Community; some have been
approved, others are still in the appraisal pipeline.
4.   Pursuant to a Portuguese request, Council Decisions dated 21 June and
17 October 1983 and a Decision of the EIB's Boar            of Governors dated
19 August 1983 accorded Portugal an extension of           ire-access ion aid in the
form of 75 million ECU of EIB loan?, valid from i              ; 1983 to 30 June 1984.
11.   SUPPLEMENTARY PRE-ACC ES SIO N ATD FOR PORTUGUESE A G R I C U LTJRE
5.   Portugal has repeatedly empha 1» , . *. vd the need for coordinated measures
in the run-up to accession to improve the or ga niz at ion of its agricultural
markets, step up production standards and rationalize farm structures. It
has also pointed to the need for institutional and planning reforms.
The shortcomings of Portugal's farm sector make it essential that the
                                                                                1
pre-accession aid operation should be not only continued but expanded
between now and accession. ( Ana the new-style tr ansition period for
                                !
1
  See the Commission's interim o p i n i o n of 8 February 1983 (C0M(83)74 final,
  pc^e 6 ) .
 ---pagebreak---                                         - 3 -
the agricultural sector has been devised precisely to cope with the need
to bring the country's agricultural structures into line with the Community's
within five years of accession.    In practice the two-stage transition period
which is envisaged depends on preparations getting under way in Portugal
as soon as possible, well before the accession date.
                                                               I
6.   In a Communication to the Council dated 22 July 1983 on guidelines and
                                                                        1
proposals concerning the transition period for Po rtuguese agriculture,
the Commission proposed that a further 50 million ECU of pre-accession aid
be accorded, to be used solely for the continuation of existing operations
or the inauguration of new agricultural projects.
7.   At the 16th session of the Conference at ministerial level, which took
place in Brussels on 23 January this year, the Council endorsed the
Commission's broad approach to pre-accession aid in the following statement
                         2
to the Portuguese side:
"The Community has already pointed out in its previous statements on
agriculture that:
    it is encouraging the· Pprtuguese authorities in the steps they are taking,
    in view of the di screpancies between the Portuguese agricultural system
    and the Community system, which involve making the maximum number of
    adjustments to their system prior to accession, in order to facilitate
    the integration of Portuguese agriculture into the Community system and
    hence to derive op timum benefit as from accession from the adoption and
    implementation of the acquis comm u nautaire as regards the common
    agricultural policy, particularly in respect of structures;
1
2C0M(83)310  final.
  C0NF.-P/6/84, 26 January 1984.
 ---pagebreak---                                       -4-
-  it would accordingly be advisable to intensify these efforts both during
   the period still to elapse until accession, and after accession.
The Community has, particularly by means of the system of pre-accession a i d ,
already made a contribution to the work begun to this end in Portugal.     Given
the magnitude of the objectives to be achieved in the agricultural sphere
with regard to structures, it considers however, that the efforts which have
been undertaken in this respect need to be expanded.
The Community is accordingly prepared to continue pr e-accession aid to
Portugal for agriculture on the basis of a programme of priority structural
intervention which could be implemented during the period prior to accession,
details to be worked out subsequently by mutual agreement.
The Community reserves the right to decide on the amount and financial
conditions for granting this new pre-accession aid once the Commission
proposals have been examined.   It would however like to draw the attention
of the Portuguese delegation straight away to the fact that, in implementing
this aid, particular attention ought to be paid to certain problems peculiar
to Portugal which have been pi npointed in the accessi on negotiations and
to the need for due account to be taken, when drawing up the aforementioned
programme, of the aims of cohesion of an enlarged Community."
III.   PROPOSED USE OF SUPPLEMENTARY AID FOR AG RICULTURE
8.   The further 50 million ECU of pre-accession aid proposed by the Commission
is designed as a bridge between existing operations and what the Community
is going to have to do for Portugal as from accession to provide its
agriculture with the infrastructure and structural organisation it needs to
facilitate its integration into the common agricultural policy.
 ---pagebreak---                                         - 5 -
While it is important, therefore, that current operati on s should not be
broken off, it is just as vital that they should be coordinated to ensure
that their objectives:
(a)     are compatible with the basic principles of the common agricultural
        policy, with particular reference to the latest guidelines laid down
        for it, while at the same time taking into account the special situation
        of Portugal's farm sector;
(b)     follow on from the goals perviously set for pr e-accession aid and those
        defined in connection with the Commission's proposals for the specific
                                                1
        programme to be undertaken in Portugal.   The need for continuity will
        call for a financial contribution from the Community in keeping with
        the scale of operations required as accession approaches.
9.     In the Commission's view, if projects are to meet the criteria of compatibility
and continuity indicated above they should be set within the following broad,
framework of operations.
9.1. Agricultural advisory services
In its Communication to the Council dated 12 October 1983 on further guidelines
                                                                                   2
and proposals concerning the development of agricultural structures in Portugal,
the Commission took the view that part of the pre-acc es sio n aid should be
devoted to the development of advisory services before the accession date,
since, as it pointed out, it is advisory work which must pave the way for
the success of the specific programme, and is thus a precondition for it.
1
  C0M(83)357 final.
2
  C0 MC 83)587 final.
 ---pagebreak---                                      - 6 -
 9.2.    Infrastructure measures
 Projects under this heading will include the sort of schemes which, once
 Portugal is a member, would be covered by Regu lat io n (EEC) No 355/77 on
 common measures to improve the conditions under which agricultural
products are processed and marketed.
More specifically, they will involve:
- the creation of marketing facilities for beef and veal, sheepmeat,
   cereals and fruit and vegetables;
- provision of more slaughterhouses (for beef and veal, sheepmeat and
   poultry);
- the development of storage capacity for cereals, wine, olive oil and
   seeds, and cold stores for meat;                       ’
- the setting up of grading and packing centres for eggs and seeds, and
   grading stations for fruit and vegetables.
9.3.    Measures to develop the “ cooperative spirit" among farmers and
        staff involved in the marketing o f agricultural produce
What is envisaged is something more than simply a system of aids to
encourage the formation of producer groups within the meaning of the
Community rules;    the aim is to encourage co operation and the pooling
of resources in a country where holdings are small, crops fragmented,
farming en te rprises not sufficiently complementary, and marketing
facilities poor.
In some sectors a cooperative movement is beginni ng to get off the ground,
but it still falls well short of what is desirab le simply to enable
Portugal to compete fairly with procedures in the present me mb er States.
 ---pagebreak---                                        - 7 -
Consequently, measures should not be confined to sectors in which
producer groups are important (olive oil) if not essential (fruit and
vegetables), but should e x t e n d to all branches of agricultural activity
which either have a long-term survival pr oblem (cereals, oilseeds, milk,
livestock) or could be developed in line with the objectives of the
present common agricultural policy (protein crops and certain fruits and
vegetables).
9.4.   Research
In its widest sense this covers not only scientific research in the
laboratory but also practical research in the field, in the form of
pilot projects and field tests.        The main need here is for projects
concerning livestock farming (including zo otechnics), seeds (fodder and
other crops), cultivation methods (for cereals, legumes and protein crops)
and the raising of standards e.g. in milk and milk products.
9.5.   Veterinary measures
There is an urgent need in Portugal to put in hand without delay a
campaign to eradicate bovine tuberculosis and brucellosis, along the
lines of that un dertaken in the present Community.
More also needs to be done to control African Swine Fever.        The Community
should step up its contribution to the existing operation,       as Portugal
currently lacks the money to implement measures on the necessary scale.
1Council Decision No 80/877/EEC on financial aid from the Community for
 the eradication of African Swine Fever in Portugal.
 ---pagebreak---                                       - 8 -
Finally, a special effort needs to be made to build up veterinary
inspection services, which are currently hampered not by any staff
shortage but simply by the lack of facilities.
9.6.     Statistical services
In this field, work needs to be undertaken to follow up the Farm Accountancy
Data Network (FADN) and agricultural market information service (SIMA)
projects scheduled under the first instalment of pre-accession aid.        As
those are horizontal projects, the next lot of measures should address the
more sectoral aspects of statistical services, with particular reference
to sectors where price mo nitoring is crucial to the proper functioning of
the market orga niz at ion (e.g. pigmeat, fruit and vegetables).
9.7.     Training of ad mi nistrative staff
If the common or ga niz at ion of the markets is to function properly, a sound
ad ministrative infrastructure is needed.      In Portugal this need is
pa rt icularly pressing in sectors whére it is pr oposed to apply the
acquis communautaire as from accession.
                                                                         1
As the Commission pointed out in a communication dated 22 July 1983,
while the lack of proper administrative in fr astructure is not an
absolute bar to the operation of market me chanisms, it could so upset
the fu nctioning of the common market orga niz at ion s as to harm the interests
of Portuguese producers and users or consumers alike.
1
  COM C83)310 final, 22 July 1983.
 ---pagebreak---                                        - 9 -
However, while priority should g o to the sectors scheduled for "conventional"
transition arrangements, the problem is to a great extent general, and
specific measures in this field are bound also to ease the gradual
introduction of Community rules in the sectors where a phased transition
is planned.
9.8.    Priority measures identified during the accession negotiations
In its statement at the ministerial session of the negotiating conference
on 23 January      the Community drew the Po rtuguese delegation's attention
to the fact that in implementing the supplem en tar y pre-accession aid
particular attention should be given to a number of specific problems in
Portugal which had been identified during the ne gotiations, and to the
need to take proper account, in formulating a programme of urgent
structural measures, of the objectives of f u rt her in g the cohesion of
the enlarged Community.
We must therefore provide for priority measures to remedy agricultural
structural defects linked to the specific problems referred to.
IV.     RE CO MMENDATION FOR A DECISION
The Commission accordingly confirms the proposal set out in its
                                  2
Communication of 22 July 1983 and invites the Council to agree to a
special 50 million ECU package of grant aid de signed to supplement the
existing pr e- acc es sio n aid in bringing about structural improvements in
Portugal's agriculture.        It is therefore sending the Council a
recommendation (Annex I) t o secure the nego tia ti ng directives it needs to
1
  CONF-P/6/84, 26 January 1984.
2
  C0M(83)310 final, 22 July 1983, p. 22, § 5.3.3.
 ---pagebreak---                                   - 10 -
conclude an agreement with Portugal to provide it with specific financial
aid to improve agricultural structures.   The agreement would be in the
form of an exchange of letters, a draft of which is at Annex II.
 ---pagebreak---                                                                            Annex I
                                    Recommendation for a
                                      COUNCIL DECISION
             authorizing the Commission to open ne go t i a t i o n s with
        Portugal for the conclusion of an agreement in the form of an
            exchange of letters on specific financial aid to improve
                            agricultural structures in Portugal
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty es ta bli sh ing the European Economic Community,
Having regard to the Re co mme nd ati on from the Commission,
Whereas the p r e - acc es sio n aid currently available as the Community's
contribution to the fina nci ng of specific measures to help Portugal
adapt its agricultural structures in view of its a c ce ssi on to the
European Communities will be committed in full in 1984;
Whereas the Community has stated          that  it is
prepared  to continue pr e- acc es sio n aid to Portugal for agriculture on the
basis of a programme of priority structural intervention which could be
implemented during the period prior to accession, de tails to be worked out
subsequently by mutual a g re eme nt ,
HAS DECIDED AS FOLLOWS:
                                         Sole article
The Commission is hereby au thorized to open ne go tia ti ons for the conclusion
of an agreement in the form of an exchange of letters concerning the
implementation of specific financial aid to improve agricultural structures
in Portugal.
 ---pagebreak---                                          - 2 -
The Commission shall conduct the negotiations in consultation   with
representatives of the Member States and in accordance with the
directives annexed hereto.
Done at                                             For the Counci L
                                                    The President
 ---pagebreak---                                                                           ANNEX
 1.   The Community shall ex ce ptionally contribute on the terms specified
 hereafter to the financing of specific operations u n de rta ke n by the
 Portuguese Government in order to improve agricultural structures and thus
 facilitate the application of Community rules to Po rtugal's agriculture.
 2.    For the purposes specified in paragraph 1, the sum of 50 million ECU
may be committed in the form of grants from the Community budget to
finance structural improvement projects in Portugal's agricultural sector.
No new financial commitment of any portion of this sum may be made after
the date of accession.
3.    The 50 million ECU provided for in paragraph 2 shall be used to
finance or pa rt -finance projects and programmes involving measures in
fields including:
- advisory services
- infrastructure
- development of the cooperative spirit among farmers and staff
    involved in the marketi ng of agricultural produce
- research
- animal health and ve terinary services
- statistical services
- training of a d m i n is tr ati ve personnel
- specific problems identified during negotiations.
4.    In the selection of technical assistance measures particular
co nsideration shall be given to projects likely to facilitate Portugal's
adoption of the acquis c o m m u n a u t a i r e .
5.    The Community's financial contribution to the projects or programmes
de fined in paragraph 3 may not exceed 70% of their total cost.       However, it
may cover the full cost of technical assistance operations.
 ---pagebreak---                                              - 2 -
 6.  Community aid shall be used to cover expenditure necessarily incurred
 in carrying out approved projects, programmes (including study,
 engineering consultancy and technical assistance costs) or operations.
 It may not be used to cover adminis tr ati ve or ma in t e n a n c e costs.
7.   Community aid for the implementation of capital projects or cooperation
projects or programmes may, with Portugal's consent, take the form of
cofinancing.
8.   The following are eligible for Community aid:        (a) the Portuguese State;
 (b) with the approval of the Po rtuguese State, public or private
undertakings having their registered place of business or being established
in Portugal;   (c) with the approval of the Portuguese State and as part of
cooperation projects or programmes, or technical a s si sta nc e operations,
private individuals.
9.   The Portuguese State or, with its approval, other aid recipients as
specified in paragraph 8, shall submit their ap pl ications for aid to the
Commission of the European Communities.
Examination of the el igibility of projects, programmes           or  op erations shall
be carried out by the Community with a view to p r ep ari ng Portugal for
accession, having regard to the mutual interests of the two parties.
The Community shall appraise ap pl ica ti ons for financing in collaboration
with the Portuguese State and the recipients and shall inform them of the
decision taken on such applications.
10.   The implementation, ma nagement and ma in tenance of schemes financed
under this agreement shall be the responsibility of the Portuguese State or
other recipients, as specified in paragraph 8.
The Community shall ensure that the aid it grants is used for the
purposes agreed and to the best economic advantage.
 ---pagebreak---                                           - 3 -
11.  Participation in tendering procedures and other procedures for the award
of contracts eligible for financing shall be open on equal terms to all
natural and legal persons of Portugal or of a Member State of the Community.
12.  The fiscal and customs arrangements applied by Portugal in respect of
contracts awarded for the impleme nt ati on of projects, programmes or operations
financed under this Agreement shall be at Least as fa vourable as those
applied in respect of other international organizations.
13.  The Portuguese authorities shall give all nece ssa ry aid and assistance
to Community re pr esentatives for the purposes of impl eme nt ing this
Agreement.
14.  Aid implementation may be reviewed by the Joint Committee referred to
in Article 32 of the Agreement between the European Economic Community and
the Portuguese Republic signed on 22 July 1972.
15.  This Agreement shall enter into force on the first day of the month
following the mutual noti fic at ion by the Parties of the completion of
the procedures necessary to that end.
 ---pagebreak---                                                             ANNEX I I
                                  DRAFT
                               AGREEMENT
           in the form of an exchange of letters between
           the EEC and the Portuguese Republic co ncerning
           the implementation of specific financial aid
           to improve agricultural structures in Portugal
                              Letter No 1
Si r,
On...................         the European Economic Community decided
to grant the Portuguese Republic financial aid in order to undertake,
with a view to Portugal's accession to the European Communities,
measures of common interest aimed at improving agricultural
structures and thus facilitating the ap pl ication of the common
agricultural policy in Portugal.
At the negotiations held in Brussels on . . . . . . . . . .   the delegations
of the Community and of the Portuguese Republic agreed on the terms
and d e ta ile d arrangements for implementing this aid, which are set
out in the annex to this letter.
I should be obliged if you would acknowledge receipt of this letter
and its annexes and confirm that your Government is in agreement
with their contents.
Please accept, Sir, the assurance of my highest consideration.
                                  On behalf of the Council of the
                                      European Communities
 ---pagebreak---                                           Letter No 2
Si r,
I have the honour to acknowledge receipt of your letter of today's
date, ac companied by two annexes, which reads as follows:
"On . . . . . . . . . . . . . the European Economic Community decided to
grant the Portuguese Republic financial aid in order to undertake,
with a view to Portugal's accession to the European Communities,
measures of common interest aimed at improving agricultural
structures and thus facilitating the ap plication of the common
agricultural policy in Portugal.
At the ne go tia ti ons held in Brussels on . . . . . . . . . . . . .  the
delegations of the Community and of the Portuguese Republic agreed
on the terms and detailed arrangements for im pl eme nt ing this aid,
which are set out in the annex to this letter.
I should be obliged if you would acknowledge receipt of this
tetter and its annexes and confirm that your Government is in
agreement with their contents."
I have the honour to confirm that my Government is in agreement
with the contents of your letter and of its annexes.
Please accept, Sir, the assurance of my highest consideration.
                                                  For the Government of
                                                  the Port ugu es e Republic
 ---pagebreak---                                    FINANCIAL MEMORANDUM
1.  Number of relevant budget heading
    Entry under Article 960 (financial Coop era ti on with Portugal):
    heading No 9602 - Portugal:                specific aid to improve agricultural
    structures
2.  Legal basis
    Article 235 of the EEC Treaty
3.  Proposed C l a s s i f i c a t i o n
    Compulsory e x p e n d i t u r e
4.  Description and justification of operati on
     Financing of projects and programmes of common interest in the
    agricultural sector.                Financing of technical assistance
    operations.
 5.  Nature of ex penditure and method of ca lculation
     5.1.   Grant
     5.2.   Amount set as a lump sum
 6.  Financial implications for operating appropr ia tio ns
     6.1.   Timetable for commitment and payment a p p r o p r i a t i o n s :
                                  Commitment ap pr opriation     Payment appropriation
                1985                     50 million ECU            25 mi llion ECU
                1986                                               25 million ECU
     6. 2.  70% (100% for technical assistance)
 7,  Comments
     None
 8.   Financial implications for adminis tr ati ve ap pr opr ia tio ns
     None