CELEX: 51993PC0389
Language: en
Date: 1993-07-28
Title: Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 1765/92 establishing a support system for producers of certain arable crops

COMMISSION OF THE EUROPEAN COMMUNITIES
                                           COM(93) 389 final
                                           Brussels, 28 July 1993
                         Proposal for a
                   COUNCIL REGULATION (EEC)
 amending Regulation (EEC) No 1765/92 establishing a support
         system for producers of certain arable crops
                 (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                    - 2 -
                         EXPLANATORY MEMORANDUM
1. As a result of a complaint by the United States, a GATT panel found
   that the Community's    system of granting aid for the processing of
   oilseeds did not conform to GATT provisions and had impaired the
   valve of the tariff concession (zero duty) which the Community had
   accorded the United States in If«2.
2. A* a reeult of the decision of the GATT panel, the Commmity amendée1
   its syetem of aids to conform to the GATT prévisions.       Although the
   United states acknowledged that the amended system now complied with
   CATT provisions, it was of the opinion that the 1962 concession was
   still affected.   Therefore, the USA requested that the members of the
   GATT panel be reconvened. The reconvened Panel Members found that
   there  was   still  a   reduction    in  the  value   of the   concession
   (impairment) and asked the Community to act rapidly to eliminate it:
   either by amending the system of internal aids, or by renegotiating
   the   tariff   concession    on    the  basis   of   the  provisions   of
   Article XXVIII of the GATT.      The reconvened Panel Members added "In
   the event that the dispute is not resolved expeditiously in either of
   these ways, the Contracting       Parties  should,  if requested  by the
   United states, consider further action under Article XXIII.2 of the
   General Agreement."
3. The community chose the second approach proposed by the reconvened
   members of the GATT panel, sought and obtained authorization from the
   Contracting  Parties to initiate negotiations under paragraph        4 of
   Article XXVIII of the GATT.     Negotiations and consultations then got
   under way with the United states and nine other GATT contracting
   parties (Argentina, Brazil, canada, Uruguay, Poland, Sweden, India,
   Pakistan and Hungary).
 ---pagebreak---                                        - 3 -
4. In the negotiations the United States estimated that the trade losses
   caused   by   the   reduction     in  the   tariff   concessions    for   oilseeds
   amounted to us$ 2 billion, US$ 1 billion of which was lost by the
   United    states     itself.     The   other    contracting    parties     in   the
   negotiations also assessed the trade losses overall at US$ 2 billion.
   These figures have been contested and rejected by the Community.
5. As the negotiations were making little headway, the United states
   began   a   procedure    for    unilateral    retaliatory   measures     in   early
   November    1992. These      measures    initially    involved    the   fixing   of
   countervailing     duties at 100% for imports of several agricultural
   products    of   Community     origin   with    a  commercial     value   of   some
   US$ 300 million. They also involved the possibility of extending the
   range of products affected up to a maximum value of US$ 1 billion.
   The negotiations between the delegations of the               Commission of the
   European Communities and the United States, conducted at ministerial
   level, resulted in an agreement which the two delegations undertook
   to submit to their respective authorities.            The text of the agreement
   is  set   out   in the    "Memorandum     of   Understanding    on  oilseeds" of
   3 December 1992.
6. As a result      of this agreement,        the United    States terminated      its
   actions     against    the    Community      ("Termination     of    Section    301
   Investigation and Action regarding the European Community's               oilseeds
   Subsidy    Regime")     and   cancelled     the   procedure    relating    to   the
   application of retaliatory measures against the community.                However,
   the case is still being monitored under Section 301 of the Trade Act
   ("Notice of Monitoring pursuant to Section 306 of the Trade Act"),
   which   allows     the   United     States   to   take   action    and   introduce
   retaliatory measures if it considers this necessary.
7. Negotiations    and consultations under Article XXVIII.4 of the GATT
   with nine other GATT contracting parties have not yet been finalized.
   The terms of the conclusion of these negotiations shall be dealt with
   in a separate proposal to the Council.
 ---pagebreak---                                      - 4 -
    To ensure that the agreement: concluded with the United States is
    implemented in due time, so that the deadlines laid down therein can
    be met, the Commission proposed to the Council that the agreement on
    oilseeds   concluded   between    the   United    States   and   the    European
    Economic    Community  be   formally     approved    on   the   basis    of   the
    Mémorandum of Understanding       on Oilseeds of       3 December     1992. The
    Council gave its formal approval when meeting on 8 June 1993.
9.  This proposal represents the next step in the legislative process,
    tfcerainer«edification of ceancil Reflation (tBC) No 1765/92.
19. Tt» proposal    tables the necessary       «stendmsnta to Regulation        (EEC)
    He 176S/92 required to implsstent the )l—loransfrm of Understanding on
    oilseeds    (see Annex 1), i.e.:
         to exclude from the benefits of the regime, the cultivation of
         'confectionery   sunflowerseed'      with   effect    from    sowings    for
         harvest in 1994, (the technical implementation to be managed by
         the Commission via the Management Committee procedure);
         to introduce a separate base area system - to be known as the
         Maximum Guaranteed Area - for producers benefiting from the crop
         specific   oilseeds   payments    system    which    shall    respect    the
         principles set out in the Memorandum of understanding on oilseeds
         (the  Commission   shall   manage    the   system   via   the   Management
         Committee procedure).
11. The   proposal   does   not  include     an   amendment    to   establish     the
    corrective action within the framework of the CAP reform that would
    be required should the by-product made available from oilseeds grown
    for non-food use on set-aside land exceed 1 million tonnes of soya
    bean    meal   equivalents    annually.     The    provisions     of    existing
    legislation allow the Community to monitor the development of this
    production.    The  Commission    will   propose    the  necessary     amendment
    should production rise to such a level that it appears that the
    1 millon tonnes of soya bean meal equivalent threshold is likely to
    be reached.
 ---pagebreak---                                      - 5 -
12. Following the adoption by the Council of the Commission proposal to
    reform the support arrangements for the producers of arable crops, in
    June  1992, the Commission     defined    its estimates    of the areas of
    oilseeds   likely   to   benefit    from    crop   specific   payments.  The
    Commission estimated in 1992 that in the medium term sowings would be
    no more than the Community       figures, subsequently approved, in the
    Memorandum of Understanding with the USA.
13. The general tenor of these forecasts has been confirmed by current
    estimates of sowings for harvest in 1993.
14. However, these    same estimates    show disparate     developments   in the
    Member States.    In consequence, to subdivide the Community's Maximum
    Guaranteed Area by Member state (or region) would not only go beyond
    that which is required by the Memorandum of Understanding, but would
    also be unnecessarily     restrictive.     For example, one may cite the
    case of Greece where only a few thousand hectares of oilseeds are
    sown. Climatic variations and in particular the availability of water
    provide significant year to year variations in sowings. To isolate
    and  regulate   separately    such   a   small   part  of   the  Community's
    production   would   involve    complications     disproportionate   to  the
    significance of production.
15. It might transpire that the flexibility accorded to Member states
    when establishing their regionalization plans (e.g. choice of cereals
    or oilseeds yields to calculate the compensatory payments) results in
    an unexpected increase in the sowing of oilseeds eligible for crop
    specific subsidies. If such an increase was to be of such a scale
    that the attainment of the objectives of the reform in other Member
    states and in the Community were called into question, it would be
    appropriate that adjustments      in aid levels should       focus on those
    Member States whose regionalization plans were at the root of the
    problem.
 ---pagebreak---                               - 6 -
The Commission proposes that if it should be necessary to adjust the
oilseeds aids for 1994/95, 1995/96 and 1996/97 due to the application
of the Memorandum of Understanding, if the excess is not greater than
5% the application should be community wide. For an excess of greater
that this percentage, the application should focus on those Member
States  where  an  unexpected  increase occurs.  After  completing  a
transitional period, this mechanism may no longer be needed.
 ---pagebreak---                                                           - 7 -
                                                COUNCIL
                                              COUNCIL DECISION
                                                 of S June 1993
               concerning the conclusion of a Memorandum of. understanding on certnin oil
                      between the European Economic Community sod die United States of
                                   America within the framework of die GATT
                                                   (93/355/EEQ
THE COUNCIL OF THE EUROPEAN COMMUNITIES.                    America on oil seeds in the framework of the General
                                                            Agreement on Tariffs and Trade is hereby approved on
Having regard to the Treaty establishing the European       behalf of the European Economic Community.
Economic Community, and in particular Article 113
thereof.
                                                            The text of the said Memorandum is attached to this
Havingregardto therecommendationfrom die Commis-
sion,
Whereas a GATT panel found that a consequence of die
Community's support scheme for oil seeds was an impair-
ment of the value of the tariff concession which the                                Article 2
Community had granted to the United States in 1962 ;
Whereas the GATT panel consequently recommended             The President of the Council is hereby authorised to
that the Community should act quickly to eliminate this     designate the person empowcied to sign the Memo-
impairment;                                                 randum of Understanding in order to bind the Com-
                                                            munity.
Whereas a mutually satisfactory agreement wasreachedin
the negotiations initiated with the United States of
                                                            This Decision shall be published in the Official Journal
America and took the form of a Memorandum of Under-
                                                            of the European Communities.
standing;
Whereas this Memorandum of Understanding should be
quickly given effect, so that the deadlines contained
therein can be met,
                                                            Done at Luxembourg, 8 June 1993.
HAS DECIDED AS FOLLOWS:
                        Article 1                                                       For the Council
The Memorandum of Understanding between the Euro-                                         The President
pean Economic Community and the United States of                                    N. HELVBG PETERSEN
 ---pagebreak---                                                  8 -
              MEMORANDUM OP UNDERSTANDING O N OIL SEBDS
1. European Community (Community) legislation for producers of rape and colza seeds,
   sunflower seeds, and soya beans is set out in Council Régulation (EBQ>No 1765/92 of 30
   June 1992.
2. The Community shall implement the following additional adjustments to the benefits
   accruing to European producers under this programme in respect of crop specific oil seeds
   payments.
3. (a) The Community shall not engage in any market support expenditure in respect of rape
        and colza seeds, sunflower seeds and soya beans except in accordance with the terms and
        conditions provided pursuant to the Regulation specified in paragraph 1.
   (b) The Community shall exclude from the benefits of the regime, the cultivation of
        'confectionery sunflower seed' with effect from sowings for harvest in 1994.
4. The Community shall introduce a separate base area (SBA) for producers benefiting from the
   crop specific oil seeds payments system which shall respect the following principles:
   — progressive implementation to affect those crops planted for harvest in 1994 and sub-
        sequent years,
   — in recognition of the Treaties of Accession, full implementation for Spain and Portugal
        will commence in 1995/96.
5. The SBA system shall have the following components :
    — a Community oil seed base area shall be established for which crop specific oil seeds
        payments are made (the figures for EC-12 are set out in the Annex),
    — for a particular marketing year the applicable EC-12 oil seeds base area shall be reduced
        to reflect the annual set aside rate for arable crops fixed by the Council. In no year,
         however, shall the reduction be less than 10 % of the base.
6. In respect of any marketing year (without prejudice to the provisions cf the corrective
    mechanism specified in Article 5 (1) (d) of Regulation (EEC) No 1765/92), crop specific oil
    seeds payments shall be subject to die following additional discipline:
    — for every 1 % of area planted benefiting from crop specific oil seeds payments in excess
        of the Community oil seed base area (after reduction in conformity with paragraph 5) the
        compensatory payments to such oil seed producers shall be reduced by 1 %,
    — any such decreases in compensatory payments applied to area planted above the SBA
        shall be applied in the same marketing year,
    — in addition, the percentage decrease in the adjusted compensatory payment shall be
        carried forward to the following marketing year,
    — however, in any year in which there is no decrease required in the compensatory
        payment (ix. area planted is equal to or below the SBA (after reduction in conformity
        with paragraph 5)) the compensatory payment in that year may return to the level of the
        base reference amount,
    — subsequent adjustments in the compensatory payment shall be applied in the manner
        described above.
7. Should the by-products made available as a result of the cultivation of oil seeds on land set
    aside for the manufacture within the Community of products not primarily intended for
    human or animal consumption exceed one million metric tonnes annually expressed in soya
    bean meal equivalents, the Community shall take appropriate corrective action within the
    framework of the CAP reform.
 ---pagebreak---                                                                -   y   -
  8. T~? Cj?aKi::;>ity ^hr^ gran* a (. .riff-late que'/ *oc imports of 500 G&O r- ":«";c t'--<.'i*z of ccm
       into Portugal. be$:<uiu)g .?;>. *V - IS3Z/94 nuirkc*'-'> y2'..\ The within que.;. tariu' ids shs-.!l be
       bound at Die*?, levels so £3 to ensure the* ihe quota sha!! be filkvl..
  9. The Cjaasauasiy chs!i inctipoi; ... ± i c:,ssm?.^.*w^ -:t forth is psr^rr- -; I to C h-tein !?*.
       the Community schedule ck" <Ja;*icf,Jc rapport Tommiirneats to be ,.::.k„:..:^ to tfos Uruguay
       Round Protocol to the GATT.
10. The United States agrees to fosego any fut&cr compensation ckim for impairment cf the
     • bindings. If cither party considers, this Agreement lias been bieachec, the Parties agree to
       undertake binding arbitration in the GATT on the issues of breach, damage'&nd remedy.
3 December 1992
                                                        ANNEX
                                  EC-12 oil seed separate base area system (')
                             (Soya beans, rape and colza seeds and sunflower seeds)
                                                                         Reference yearO
          Member State/oi 1 teed                         1294/95                               199S/9&
                                                                                        and subsequent years (*)
                                                                             Hectares
SPAIN
    Sunflower seed                                      1411000                                  —
PORTUGAL
    Sunflower seed                                        122000                                 ~
EC-12
    Other                                              3 966000
                                Total                                                         5128 000
(') Figures to be reduced to reflect the annual est aside fare for arable oops.
f) The term 1994/5J refers to die CoouEnmity marketing y*er, Is. 60 seeds (bath winter and tpficg n m ) for harvest in
    1»4.
0 It it understood that, should the membenbip of tfes Community be expanded, this Agreement will be amended to reflect
    an increase in die tcparate bate area ia an amount no snore than die swage tad el production area cfthe seceding
    niember in the three years immediately preceding such accettion.
 ---pagebreak---                                        - 10 -
                                  Proposal for a
                             COUNCIL REGULATION (EEC)
         amending Regulation (EEC) No 1765/92 establishing a support
                  system for producers of certain arable crops
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
and in particular Articles 42 and 43 thereof,
Having regard to the proposal from the commission^),
Having regard to the opinion of the European Parliament(2),
whereas the European Economic Community concluded an agreement, in the
framework of the General Agreement on Tariffs and Trade, with the United
states of America, concerning certain oilseeds; whereas the agreement took
the form of a Memorandum of Understanding or; oilseeds approved by Council
Decision   93/355/EEC<3);     whereas   it   is   necessary  to   modify   Council
                                   4
Regulation    (EEC) NO    1765/92< ),   as   last  amended       Regulation  (EEC)
            5
No 1552/93( ) in order to give effect to the terms o£            at Memorandum of
Understanding;
Whereas Regulation (EEC) No 1765/92 could lead to an increas         in sowings of
soya  beans,    rape   seed   and  colza   seed   and  sunflower   seed,  so  that
adjustments should be made to the benefits accruing to producers under that
Regulation in respect of crop-specific oilseed payments; whereas Maximum
Guaranteed Areas should be established         for those crops; whereas in the
event of an increase in sowings of those crops above the level of the
(1)  OJ No
(2)  OJ No
(3)  OJ No L 147, 18.6.1993, p. 25.
(4)  OJ No L 181, 1.7.1992, p. 12.
(5)  OJ No L 154, 25.6.1993, p. 19.
 ---pagebreak---                                       - 11 -
Maximum Guaranteed   Areas, the compensatory       paymer-ts should     be   reduced;
whereas the reduction in the compensatory payments should be such as to
discourage a level of sowings in excess of the Maximum Guaranteed Areas;
whereas the cultivation of confectionery sunflower seed should be excluded
from the benefits of such support with effect from sowings for harvest in
1994,
HAS ADOPTED THIS REGULATION:
                                    Article 1
Regulation (EEC) No 1765/92 is hereby amended as follows:
1.    The following subparagraphs are added at the end of Article 5(1):
      "(e)    From the   1994/95 marketing year, Maximum Guaranteed Areas
              (MGA)  shall   be established     for   the  crop-specific      oilseed
              payments. They shall be equal in size to the areas of land
              set out in Annex IV, reduced by the rate of rotational set-
              aside applicable for that marketing year, or by 10% if that
              rate is less than 10%.     If those Maximum Guaranteed Areas are
              exceeded,  the    Commission   shall reduce     the   final   regional
              reference   amounts    for   oilseeds    in   accordance     with   the
              provisions of subparagraphs (f) and (g).
       (f)    If the area of oilseeds already determined as eligible for
              compensatory    payments   in   any   year   exceeds    such    Maximum
              Guaranteed Areas, the Commission shall reduce, by 1% for each
              percentage   point by which      the Maximum Guaranteed        Area is
              exceeded, the relevant final regional reference amounts for
              that year. With effect from the 1994/95 marketing year, if
              the  Maximum   Guaranteed    Area   is  exceeded    by  more    than  a
              threshold percentage special rules shall apply.             Up to the
              threshold  percentage, the reduction of the final regional
              reference  amounts    shall be uniform      in all Member       States.
 ---pagebreak---                                   - 12 -
           Beyond   the   threshold   percentage,     appropriate    additional
           reductions   shall apply   in those Member       States which    have
           exceeded the average of their sowings for harvest in 1989,
           1990   and   1991,   reduced    by   the    rate   referred   to   in
           subparagraph   (e). The Commission shall, in accordance with
           the   procedure   laid   down    in   Article    38   of  Regulation
           136/66/EEC,   establish   the    size   and   distribution   of   the
           appropriate    reductions    to    be   applied     and  shall,    in
           particular, ensure that the weighted average reduction for
           the Community as a whole is equal to the percentage by which
           the Maximum Guaranteed Area has been exceeded.
    (g)    The threshold percentage provided        for in subparagraph      (f)
           shall be 5% for the marketing years           1994/95, 1995/96 and
           1996/97. By 31 December 1996 the Commission shall present a
           report to the Council on the application of this provision,
           accompanied   if appropriate by a proposal to maintain this
           mechanism for a further period.
    (h)    If the compensatory payment is reduced in accordance with the
           provisions of subparagraphs (f) and (g), the Commission shall
           reduce the relevant final regional reference amounts for the
           following marketing year by the same percentage unless the
           Maximum Guaranteed Area      is not exceeded      in that year, in
           which case the Commission may determine that such a reduction
           shall not apply."
2. The following paragraph is added at the end of Article 5:
   "4.     Producers of confectionery sunflower seed, sown for harvest
            after 1 July 1994, shall be excluded from the benefit of the
            support provided for under the terms of this Article."
 ---pagebreak---                                       - 13 -
 3.    The following indent is added at the end of the first paragraph of
       Article 12:
       "-   those relating to compliance with the Memorandum of Understanding
            on  Oilseeds  approved  by  the  Council  Decision  93/355/EEC* of
            8 June 1993 and in particular to the provisions in respect of the
            cultivation of oilseeds on set-aside land.
        r
         OJ No L 147, 18.6.1993, p. 25."
4.     The following annex shall be added to the Regulation:
                                    "Annex IV
Areas to be taken into account for the calculation of oilseed
Maximum Guaranteed Areas
   Member State/Oilseed           1994/1995    1995/96 and subsequent
   Area in ha.                                          years
   Spain, sunflower             1 411 000                  -
   Portugal, sunflower            122 000                  -
   EC 12 Other                  3 966 000                  -
   Total                            -                  5 128 000
                                    Article 2
This Regulation shall enter force on the seventh day following that of its
publication in the official Journal of the European communities.
It shall apply from 1 December 1993.
This Regulation shall be     binding in its entirety and shall be directly
applicable in all Member states.
Done at Brussels,                                   For the Council
 ---pagebreak---  ---pagebreak---                                                     -; K - -
                                                               COM(93) 389 final
                                                       DOCUMENTS
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                                 Catalogue number : CB-CO-93-438-EN-C
                                                             ISBN 92-77-58794-6
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