CELEX: 51991PC0339(01)
Language: en
Date: 1991-10-24
Title: Proposal for a COUNCIL REGULATION ( EEC ) on the common organization of the market in raw tobacco

CŒvlvlISSION OF THE EUROPEAN COMvïUNITIES
                                       C0M(91) 339 final
                                       Brussels, 24 October 1991
                       Proposal for a
                  COUNCIL REGULATION (EEC)
          on the common organization of the market
                        in raw tobacco
                        Proposal for a
                  COUNCIL REGULATION (EEC)
  fixing the premiums for leaf tobacco by group of tobacco
   varieties and the processing quotas allocated by group
              of varieties and by Member State
                (presented by the Commission)
 ---pagebreak---                                            - 2 -
                               EXPLANATORY MEMORANDUM
                   REFORM OF THE TOBACCO MARKET ORGANISATION
Some 200,000 holdings with an average production area of 1 hectare each are
producing annually around 400,000 tonnes of leaf tobacco in the Community.
Production takes place mainly in Italy (49%), Greece (31%) and to a lesser
extent in Spain (10%), France (7%), Germany, Portugal and Belgium (3%).
Overall   consumption    in the Community      stands at 600,000 tonnes of baled
tobacco, of which 72% is imported.          Out of an annual 350,000 tonnes baled
tobacco   production,     165,000   tonnes   are   consumed     in   the  Community   and
185,000 tonnes 53% or are exported.
Support   for the tobacco sector        is not   in conflict with the Commission's
policy, which    aims to combat smoking        for public health        reasons.   Ending
tobacco    production   would    not   necessarily     bring   about    a   reduction  in
cigarette    consumption.     In  that    event,   the   manufacturers     would   simply
obtain supplies from non-member countries.
As   long as demand    for tobacco exists       it  is reasonable      that the product
should be supplied and supported at producer level in the Community.                Apart
from the market aspect, the socio-economic position                of tobacco producers
who are    located  in the least developed parts of the Community and often
have few economic alternatives, requires that worthwhile support continues
to be available.     On the other hand the emphasis in the support system must
be on encouraging varieties usually of low yield, that can find a place in
 the market.
 In the proposals     for prices and related measures            (1991/92) (C0M(91) 72
final),   the Commission     announced     a change     in the    basic   tobacco market
mechanism to permit its implementation for the 1992 harvest. The Commission
 is presenting    this  proposal     in advance    to allow     economic    operators  to
adjust to the new rules of the market organisation.
 ---pagebreak---                                            - 3 -
The  tobacco    sector    presents   great   technical    complexity.   To  take   this
situation    into account,     the Commission     staff  asked   a group of   external
experts   to   prepare    a  report   analysing    the   functioning   of  the   market
organization    and presenting     possible    improvements. This    report   has been
very  valuable     to   the   Commission    staff   in  preparing   this   reform.   In
addition the background of a general reform of the CAP and of multilateral
négociations has been taken into consideration.
The cost of the market organization for tobacco rose by 27% from 1988 to
1990, despite the introduction of a stabiliser.             This increase   is largely
due  to an expansion       in the production of       low-value varieties    for which
there   is no outlet on the Community market and which are exported              to the
world market    at prices which are below the premiums and refunds paid on
them - in effect at        negative prices.     The present system does not permit
these problems to be avoided mainly because             it  is based on a series of
maximum guaranteed quantities, each being subject to a butoir of 15% and of
premiums linked to 34 varieties, many of which are indistinguishable after
the tobacco has been processed.        This allows producers to claim the highest
available premium and to minimise the effectiveness of the MGQ.                (For one
variety, production exceeded the MGQ by as much as 1000% but the maximum
reduction    in the    price and premium      under   the stabiliser system     is only
15%.)
To solve these problems the attached proposals comprise:
       a regrouping of varieties-,
       a temporary system of quotas;
       measures    to    strengthen    the   role   of   producers   and   to   convert
       production to varieties which are easier to market.
SUMMARY OF THE PROPOSALS
The proposals     for   the tobacco market     organisation    fall under   three main
headings, namely      premium, production control and production conversion.
 ---pagebreak---                                     - 4 -
1. Premium
   A premium Is to be paid to the producer by the first processor when
   the tobacco is purchased. The EAGGF will         immediately reimburse this
   amount  to the processor. A system of guaranteed            advance   payments
   based on quantities under contract may be established. The level of
   the premium is to be fixed for five groups of varieties according to
   the type of curing, i.e. flue-cured, light-air cured, dark-air cured,
   sun-cured and fire-cured and for three aromatic oriental varieties,
   i.e. Basma, Katerini and Kaba Koulak classic.
   These premium arrangements      cover the period      from the 1992 harvest
   to the 1996 harvest.
2. Production control
   A  cultivation   contract  between    the producer    and  the processor    is
   compulsory for the payment of the production aid.
   A maximum threshold of 340,000 tonnes divided between the different
   groups is introduced. The level of the threshold corresponds to the
   1987 Commission proposal when the stabilizers were introduced.
   To ensure   that  this threshold     is complied with a quota system        is
   established for the 1992 to 1996 harvests. Initially the quotas are
   distributed   among   the   processors    on   the   basis   of   the  average
   quantities   processed    over   the   past    three   years.    However,  the
   particular situation of certain speculative productions is taken into
   account during this distribution. This transitional period when the
   quotas are distributed to the processors will serve to prepare the
   measures   required   for   the  subsequent     distribution    of  quotas  to
   producers under satisfactory conditions.
3. Production conversion
   A  specific   aid  of  10%   is paid    to   the  producers'    group   if the
   cultivation contract    is signed between a processor and a producers'
   group.
 ---pagebreak---                                  - 5 -
An extensive research programme permits the identification of low-tar
varieties of tobacco (less harmful). The budget for this programme is
obtained from an advance deduction from the production aid.
There   is provision    for specific   programmes   for  the conversion of
Tsebelia and Mavra production to a higher-quality tobacco or to some
other agricultural product. The cost of this programme is calculated
taking into account the amount paid previously as a premium for those
var iet ies.
To   ensure  the   uniform   implementation   of  Community   rules   in the
tobacco sector, specific national agencies are created with Community
financial support up to a maximum level of 50 %.
 If measures   are   necessary  to  facilitate   the   transition   from the
previous system to the new one, appropriate measure are to be decided
by the Commission by the management committee procedure.
As   regards  the    system  of  premiums   and  production    control,  the
appended Regulation simply lays down the temporary framework applying
until the 1996 harvest.
Before   1 April    1995, the Commission    will   present  to  the Council
proposals concerning the premium and production control to apply from
the 1997 harvest.
As soon as possible the Commission will also submit a proposal for a
Regulation on inter-trade organizations and agreements in the tobacco
 industry.
This reform will have no impact on SMEs.
 ---pagebreak---                                     - 6-
                               Proposal for a
                         COUNCIL REGULATION (EEC)
                on the common organization of the market
                               in raw tobacco
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,
Having regard to the opinion of the Economic and Social Committee,
Whereas   the  operation   and   development   of   the   common  market   for
agricultural products must be accompanied by the establishment of a
common   agricultural   policy,    to   include   in   particular   a   common
organization of markets, which may take various forms depending on the
product;
Whereas it is the purpose of the common agricultural policy to achieve
the objectives of Article 39 of the Treaty, and, in particular in the
raw tobacco sector, the stabilization of markets and a fair standard of
living   for  the   agricultural    population   concerned;    whereas   these
objectives may be achieved by adapting resources to requirements, in
particular by means of a quality policy;
 ---pagebreak---                                    - 7 -
Whereas the present situation on the tobacco market, on which supply
does not correspond to demand, calls for a substantial overhaul of the
Community arrangements which have governed the market hitherto, while
ensuring  the   continuation   of  tobacco  growing  by   the  traditional
producers;   whereas such an overhaul requires simplification of the
market management mechanisms, limitation of production in line with the
requirements of the market and the demands of the budget, and stronger
means of control to ensure that the management mechanisms fully achieve
the objectives of the common market organization;
Whereas tobacco varieties can be classified in groups according to
cultivation technique and production costs, taking account of the
descriptions used in international trade;
Whereas competition on the tobacco market calls for some support of
tobacco production; whereas such support should be based on a premium
system allowing the disposal of tobacco in the Community;
Whereas the premium system can be managed efficiently by means of
cultivation   contracts  between   growers  and  first   processors   which
guarantee stable outlets to the growers and regular supplies to the
processor; whereas payment of a sum equivalent to the premium by the
processor to the producer at the time of delivery of the tobacco
covered  by   the  contract, subject to compliance with       the quality
requirements, provides    support   for the growers while     facilitating
management of the premium system;
Whereas,   in  order  to   limit  Community  tobacco   production   and  to
discourage the production of varieties which are not readily disposed
of, a maximum global guarantee threshold should be laid down for the
Community and divided annually into specific guarantee thresholds for
each group of varieties;
 ---pagebreak---                                        - 8 -
Whereas,   to    ensure  that   the  guarantee   thresholds     are    observed,   a
processing    quota   system   must   be  instituted    for   a   limited    period;
whereas, for a transitional period, the Member States must allocate,
within   the    guarantee   thresholds,    processing    quotas     to   the   firms
concerned, applying the Community rules laid down for the purpose to
ensure fair allocation on the basis of the quantities processed in the
past,  but   disregarding    any   abnormal production      levels; whereas      the
necessary measures will be taken to permit subsequent allocation of the
quotas to the producers, under satisfactory conditions;
Whereas   it   is   indispensable   that   first  processors     do   not  conclude
cultivation contracts for quantities exceeding the processing quotas
allocated    to   them;   whereas   reimbursement    of   the   premium    must   be
limited   to   an  amount   corresponding    to no more than the         processing
quota;
Whereas   provision     should   be   made   initially    for   the    premium   and
production limitation systems to run until 1996 so that they can be
reviewed   in    the  light  of   experience   and  possibly     adapted    for  the
subsequent period;
Whereas measures      to orientate production      can help to       stabilize   the
tobacco market and improve the quality of production;            whereas specific
aid will enable producer groups to contribute towards the improvement
of the organization and orientation of production;            whereas a research
programme financed with the proceeds of a deduction from the premium
will enable tobacco growing to be brought more closely into line with
Community requirements as regards public health;             whereas, lastly,      a
conversion    programme    for  growers   of Mavra    and   Tsebelia    tobacco   is
necessary because of the importance of these varieties for the economy
of certain Community regions;
Whereas the establishment of a single market requires a single system
 of trade at the external frontiers;
 ---pagebreak---                                       - 9
Whereas quantitative restrictions at the Community's external frontiers
can    be    dispensed   with;    whereas,    however,   should    exceptional
circumstances arise, in order not to leave the Community market without
protection against any disturbance, the Community          should be able to
take all the necessary measures without delay;
Whereas unforeseen market circumstances may necessitate the adoption by
the Commission of exceptional market support measures;
Whereas the achievement of a single market would be jeopardized by the
grant   of  certain   aid;   whereas   the Treaty   provisions  governing  the
appraisal of aid granted by Member States and the prohibition of aid
incompatible with the common market should be applied to the tobacco
sector;
Whereas,    in  accordance   with   Council  Regulation   (EEC) No 729/70   of
21 April 1970 on the financing of the common agricultural policy(^),
as   last  amended   by  Regulation     (EEC) No  2048/88( 2 ), the  Community
should bear financial responsibility for expenditure incurred by Member
States pursuant to this Regulation;
Whereas experience shows that more stringent controls in the tobacco
 sector are essential;     whereas in appropriate cases certain supervisory
powers could be assigned to an independent supervisory agency in order
 to deal with the specific requirements of the tobacco market;
 (1)    OJ No L 94, 28.4.1970, p. 13.
 (2)    OJ No L 185, 15.7.1988, p. 1.
 ---pagebreak---                                  - 10 -
Whereas  the  common  organization   of   the  tobacco  market   must  take
account, simultaneously and appropriately, of the objectives laid down
in Articles 39 and 110 of the Treaty;
Whereas  the transition   from the arrangements     instituted  by  Council
Regulation (EEC) No 727/70 of 21 April 1970 on the common organization
of the market in raw tobacco( 3 ), as last amended by Regulation      (EEC)
            4
No 1737/91( ) to the arrangements provided for herein must take place
in the best possible    conditions;   whereas transitional measures     may
prove necessary to ensure this;     whereas the new arrangements should
not become fully applicable until after the 1992 harvest,
HAS ADOPTED THIS REGULATION:
                                Article 1
The common organization of the market in raw tobacco shall comprise
rules on:
- a premium system;
- measures to orientate and limit production;
- arrangements for trade with third countries.
The common organization shall cover raw or unmanufactured tobacco and
tobacco   refuse   falling   within    heading   2401   of   the   Combined
Nomenclature.
 (3) OJ No L 94, 28.4.1970, p. 1.
 (4) OJ No L 163, 26.6.1991, p. 11.
 ---pagebreak---                                         - 11 -
                                    Article 2
Raw tobacco varieties shall be classified in the following groups:
(a)    flue-cured:
           tobacco   dried    in  ovens      with  controlled air  circulation,
           temperature and humidity;
(b)    light air-cured
           tobacco dried in the air under cover, not left to ferment;
 (c)   dark air-cured
           tobacco   dried    in  the      air  under  cover, left  to  ferment
           naturally before being marketed;
 (d)   sun-cured
           tobacco dried in the sun;
 (e)   fire-cured
           tobacco dried by fire;
 (f)   Basma (sun-cured);
 (g)   Katerini (sun-cured);
 (h)   Kaba-Koulak (classic) (sun-cured).
The varieties in each group are listed in the Annex.
                                       TITLE I
                                 PREMIUM SYSTEM
                                     Article 3
 From the 1992 harvest until the 1996 harvest a premium system shall be
 applied.  The amount of the premium shall be the same for the tobacco
 varieties in each of the various groups.
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 ---pagebreak---                                      - 12 -
The purpose    of  the premium    shall be to      supplement   the  incomes   of
producers   whose   products  correspond     to  market   requirements   and   to
facilitate the disposal of tobacco produced in the Community.
                                   Article 4
1.    In accordance with the procedure laid down in Article 43(2) of
      the Treaty, the Council shall fix the amount of the premium for
      each    tobacco  harvest, taking      particular   account   of  past   and
      foreseeable possibilities for the disposal of the various types
      of   tobacco,   under   normal    conditions   of   competition,   on   the
      Community and world markets.
2.    The amount of the premium shall be fixed:
 (a)  per    kilogram   of   leaf    tobacco    not   having   undergone    first
      processing and market preparation;
 (b)  for each raw tobacco group.
                                   Article 5
Granting of the premium shall be subject to the following conditions:
 (a)  the tobacco must come from a production area specified for the
      variety concerned;
 (b)   quality requirements must be fulfilled;
 (c)   the   leaf  tobacco   must   be   delivered   by  the  producer   to   the
       premises of the first processor under a cultivation contract;
 (d)   any other requirements to be laid down must be fulfilled.
 ---pagebreak---                                  - 13 -
                               Article 6
1.    Cultivation contracts shall comprise:
      an undertaking by the first processor to pay to the grower, in
      addition to the purchase price, a sum equal to the premium at the
      time of delivery for the quantity under contract and actually
      delivered;
      an undertaking by the grower to deliver to the premises of the
      first   processor  raw  tobacco   corresponding   to   the  quality
      requirements.
2.    The competent body shall reimburse the amount of the premium to
      the first processor against presentation of proof that the grower
      has delivered the tobacco and that the amount referred        to in
      paragraph 1 has been paid.
                               Article 7
Detailed rules for the application of this Title shall be adopted in
accordance with the procedure laid down in Article 23.
They shall comprise:
      delimitation of the production areas for each variety;
      quality requirements for delivered tobacco;
      additional points to be included in the cultivation contract and
      the final date for its conclusion;
      the obligation for the first processor to provide a security if
      he   requests  an  advance,  and   the  conditions   governing  the
      provision and release of the said security;
      specific conditions for the grant of the premium in cases where
      the cultivation contract is concluded with a group of producers;
-     measures to be taken in the event of failure of the grower or
      first processor to fulfil his statutory obligations.
 ---pagebreak---                                     - 14 -
                                   TITLE II
                      SYSTEM OF PRODUCTION LIMITATION
                                  Article 8
A maximum global guarantee threshold for the Community is hereby fixed
at 340 000 tonnes of raw leaf tobacco per harvest.
Every year, within this limit, the Council shall fix, in accordance
with the procedure laid down in Article 43(2) of the Treaty, a specific
guarantee  threshold    for each   group of varieties, taking    particular
account   of   market    conditions   and   socio-economic   and   agronomic
conditions in the production areas concerned.
                                  Article 9
1.    To ensure observance of the guarantee thresholds         a system of
      processing quotas is hereby instituted for the harvests of 1992
      to 1996.
2.    Each   harvest,   in  accordance  with  the  procedure  laid  down  in
      Article 43(2) of the Treaty, the Council shall allocate among the
      producer Member States the quantities available for each group of
      varieties.
3.    On the basis of the quantities allocated pursuant to paragraph 2
      and without prejudice to the application of paragraph 4, Member
      States shall distribute processing quotas on a transitional basis
      for the    1992 and 1993 harvests among the first processors in
      proportion    to the average quantities delivered      for  processing
      during the three years preceding the year of harvest, broken down
      by group of varieties. The procedure for allocating processing
      quotas for the subsequent harvests shall not be affected by this
      allocation.
      First processors who start business after the beginning of the
      reference    period  shall obtain    a quantity  proportional   to the
      average quantity delivered for processing during their period of
      business.
 ---pagebreak---                                  - 15 -
      Where appropriate, production shall be taken into account only
      within the limit of the processing quota allocated during the
      years taken into consideration.
      For first processors which begin business in the year of harvest,
      Member States shall reserve 2% of the total quantities available
      to them by group of varieties. Within this percentage, the said
      first processors shall obtain a quantity not exceeding 70% of
      their processing capacity, provided that they offer adequate
      guarantees as to the efficiency and long-term viability of their
      business.
4.    When the processing quotas are allocated as provided for in
      paragraph  3,  no account shall be taken in particular, when
      calculating the reference production, of any quantities of raw
      tobacco produced in excess of the maximum guaranteed quantities
      applicable under Regulation (EEC) No 727/70.
                               Article 10
A  first  processor  may  not   conclude  cultivation contracts  or  be
reimbursed the amount of the premium for quantities exceeding the
processing quota allocated to him.
                               Article 11
Detailed rules for the application of this Title shall be adopted in
accordance with the procedure laid down in Article 23. They shall
include the adjustments, as provided for in Article 9(4), in the method
of distribution of the quotas and the preconditions for applying the
quotas at the level of the producers, in particular in relation to
their previous situations.
 ---pagebreak---                                - 16 -
                             TITLE III
                 MEASURES TO ORIENTATE PRODUCTION
                             Article 12
1. In order to concentrate supply and adapt it to the qualitative
   requirements of the market, specific aid equivalent to 10% of the
   premium   shall   be  granted   where  cultivation  contracts  are
   concluded between a first processor and a recognized group of
   producers and where the deliveries covered by such contracts
   account for the entire output of the members of the group.
2. Specific aid shall be paid to the producers' group for the
   purpose   of   improving  the   organization  and  orientation  of
   production.
3. Detailed rules for the application of this Article shall be
   adopted by the Commission in accordance with the procedure laid
   down in Article 23. They shall include:
        the definition of producers' groups eligible for specific
        aid;
   -    the conditions for recognizing producers' groups;
        the use to which specific aid may be put.
                             Article 13
1. A Community Fund for tobacco research and information shall be
   set up.    It shall be financed from the proceeds of a deduction
   not exceeding 1% from the premium at the time of payment.
2. The Fund shall finance and coordinate programmes of research and
    information to promote greater knowledge of the harmful effects
   of tobacco and the appropriate preventive and curative measures
   relevant to such effects and to orientate Community tobacco
   production towards the least harmful varieties and qualities.
3. Detailed rules for the application of this Article shall be
    adopted in accordance with the procedure laid down in Article 23.
 ---pagebreak---                                    - 17 -
                                 Article 14
A three-year programme for the conversion of plantations of Mavra and
Tsebelia tobacco to varieties more in line with market requirements or
to other   agricultural  crops   shall be   adopted  by the Commission    in
accordance with the procedure laid down in Article 23.        The programme
shall be launched immediately after the 1992 harvest.       It may comprise
specific measures to compensate growers for any loss of income due to
the conversion.
                                  TITLE IV
                        TRADE WITH THIRD COUNTRIES
                                 Article 15
Except where this Regulation provides otherwise or where the Commission
adopts   a derogation  in accordance with     the procedure   laid  down  in
Article   23, the  following   shall be prohibited    in trade with    third
countries:
 (a)   the  collection  of  any  charge with   an effect   equivalent  to  a
       customs duty;
 (b)   the application of any quantitative restriction or measure with
       equivalent effect.
                                 Article 16
 1.    If, by reason of imports or exports,     the Community market in one
       or more of the products referred to in Article 1 suffers or is
       liable to suffer serious disturbance which may        jeopardize the
       objectives of Article 39 of the Treaty, appropriate measures may
       be taken   in respect   of trade with third     countries until   the
       disturbance or threat of disturbance has ceased.
 ---pagebreak---                                     - 18 -
2.     If  the   situation   referred   to   in  paragraph  1   arises,   the
       Commission shall, at the request of a Member State or on its own
       initiative, decide    on the   necessary measures, which     shall  be
       notified to the Member States and be immediately applicable.        If
       the Commission receives a request from a Member State it shall
       take a decision thereon within 24 hours after receipt of the
       request.
3.     The measures   taken by the Commission may       be referred   to the
       Council by any Member State within three working days of the date
       of notification.    The Council shall meet without delay.       It may
       amend or repeal the measure in question by a qualified majority.
                                   TITLE V
                    GENERAL AND TRANSITIONAL PROVISIONS
                                 Article 17
In order    to deal with unforeseen market       circumstances,   exceptional
support measures may be taken in accordance with the procedure laid
down in Article 23.     The scope and duration of such measures may not
exceed that which is strictly necessary to support the market.
                                  Article 18
Except where this Regulation provides otherwise, Articles 92, 93 and 94
of the Treaty shall apply to production of and trade in the products
 referred to in Article 1.
                                  Article 19
 Expenditure   incurred  pursuant    to  Title  III  shall  be   regarded   as
 expenditure within the meaning of Article 1(2) of Regulation (EEC) No
 729/70.
 ---pagebreak---                                  - 19 -
                              Article 20
1. Member States shall take all the necessary measures to ensure
   compliance with the Community provisions concerning raw tobacco.
   To this end they shall notify to the Commission, within six
   months after the adoption of this Regulation, the arrangements
   they   intend   to   make   for  the   purposes  of  management   and
   supervision.    Within three months after such notification the
   Commission shall approve the arrangements or ask for adjustments.
   Where adjustments are required the Member State shall make them
   at   the   earliest   opportunity.   Any  modification   of  national
   arrangements shall be notified without delay by the Member States
   to the Commission and examined by it in accordance with the same
   procedure.
2. Each producer Member State shall set up, in accordance with its
   legal system, a specific agency to carry out certain checks in
   connection with the Community arrangements for tobacco.
3. The agency shall be given complete administrative autonomy.        It
   shall be given full powers by the Member State concerned to carry
   out the tasks assigned to it.
   Its staff shall be sufficient in number and level of training to
   accomplish the tasks specified.
4. Before the beginning of each marketing year, the Member State
   concerned shall, acting on a proposal from the agency, draw up
   and send to the Commission a budget estimate and work schedule to
   ensure correct application of the premium system.      The Commission
   may    ask    the   Member    State,   without   prejudice   to   the
    responsibilities of the latter, to make any change in the budget
    estimate    or   work    schedule   that   it   deems   appropriate.
 ---pagebreak---                                  - 20 -
   Persons designated by the Commission may at any time monitor any
   of the work carried out by the agency.
   The agency shall submit to the Member State and the Commission
   regular  reports   on  the work which     it has    carried   out.   Such
   reports   must   mention    any  problems    encountered     and,   where
   appropriate,   suggestions    as  to  how   to  improve    the   checking
   arrangements.
5. 50% of actual expenditure by the agency shall be chargeable to
   the general budget of the European Communities,           the remainder
   being covered by the Member State concerned.
6. The annual amount representing the actual expenditure referred to
   in paragraph 5 shall be decided upon by the Commission on the
   basis of the particulars provided by the Member States concerned.
   The amount shall be granted when the Commission is satisfied that
   the agency has been set up and is performing the work assigned to
   it. In order to facilitate the setting up and operation of the
   agency, the amount in question may be paid in advance in the form
   of instalments during the year in question, in accordance with
   the agency's annual budget, the latter being drawn up with the
   agreement of the Member State and the Commission before the end
   of October of each following year.
7. Member States shall take the necessary measures to ensure that
   the inspection officers designated pursuant to paragraphs 2 to 4:
       have   access   to  the   production,   processing    and   marketing
       premises,
   -    can examine accounting data and other documents relevant to
       the checking procedure, and make copies or take extracts from
       them,
   -    can ask for any relevant information.
8. Detailed   rules  for  the   application   of  this   Article   shall  be
   adopted by the Commission in accordance with the procedure laid
   down in Article 23.
 ---pagebreak---                                    - 21 -
                                Article 21
Member States and the Commission shall send each other any information
necessary for the application of this Regulation.          Detailed rules for
the sending and dissemination of such information shall be adopted in
accordance with the procedure laid down in Article 23.
                                Article 22
A Management Committee for Tobacco (hereinafter called "the Committee")
shall   be established,  consisting    of   representatives     of   the   Member
States and presided over by a representative of the Commission.
                                 Article 23
1.    The   representative   of   the   Commission    shall    submit     to    the
      Committee a draft of the measures to be taken.             The Committee
      shall deliver its opinion on the draft within a time limit which
      the chairman may lay down according to the urgency of the matter.
      The opinion   shall be delivered      by the majority       laid   down    in
      Article 148(2) of the Treaty in the case of decisions which the
      Council is required to adopt on a proposal from the Commission.
      The votes of the representatives of the Member States within the
       committee  shall  be  weighted    in  the   manner    set   out   in   that
      Article.    The chairman shall not vote.
 2.    The   Commission   shall    adopt    measures     which     shall     apply
       immediately. However, if these measures are not           in accordance
       with the opinion of the committee, they shall be communicated by
       the Commission to the Council.     In that event the Commission may
       defer application of the measures which         it has decided        for a
       period  of  not  more   than   one   month   from   the   date    of    such
       communication.
 3.    The Council, acting by a qualified majority, may take a different
       decision  within  the  time    limit   referred   to   in   paragraph     2.
 ---pagebreak---                                   - 22 -
                                Article 24
The Committee may consider any other matter raised by its chairman,
either on his initiative or at the request of the representative of a
Member State.
                                Article 25
This Regulation must be applied in such a way that account is taken,
simultaneously  and  appropriately,   of   the  objectives   laid down  in
Articles 39 and 110 of the Treaty.
                                Article 26
Before  1 April  1995 the Commission    shall  submit  a proposal to the
Council concerning the arrangements provided for in Titles I and II for
application  after the   1997 harvest.   The Council   shall act on this
proposal in accordance with the procedure laid down in Article 43(2) of
the Treaty.
                                Article 27
Where   transitional   measures   prove   necessary   to   facilitate  the
transition from the arrangements set up by Regulation (EEC) No 727/70
to those laid down in this Regulation, such measures shall be adopted
in accordance with the procedure laid down in Article 23.
                                Article 28
Regulation (EEC) No 727/70 is hereby repealed with effect from the 1992
harvest.
                                Article 29
This Regulation shall enter into force on 1 January 1992.
 It shall apply from the 1992 harvest.
 ---pagebreak---                                  - 23 -
This  Regulation  shall  be  binding    in its  entirety  and directly
applicable in all Member States.
Done at Brussels,                           For the Council
                                            The President
 ---pagebreak---                                    24 -
                                 ANNEX
                  Classification of tobacco varieties
I.   Flue-cured
     Virginia
     Virgin D and hybrids thereof
     Bright
II.  Light air-cured
     Burley
     Badischer Burley and hybrids thereof
     Maryland
III. Dark air-cured
     Paraguay and hybrids thereof
     Dragon Vert and hybrids thereof
     Philippin
     Petit Grammont (Flobecq)
     Semois
     Appelterre
     Nijkerk
     Misionero and hybrids thereof
     Rio Grande and hybrids thereof
     Forchheimer Havanna lie
     Nostrano del Brenta
     Resistente 142
     Goyano
     Badischer Geudertheimer and its hybrids, Pereg, Korso
      Beneventano
      Brasile Selvaggio and similar varieties
      Fermented Burley
      Havana
 ---pagebreak---                                 - 25 -
IV.   Fire-cured
      Kentucky and hybrids
      Moro di Cori
      Salento
V.    Sun-cured
      Xanthi-Yaka
      Perustitza
      Samsun
      Erzegovina and similar varieties
      Myrodata, Smyrna, Trapezous and Phi 1
      Kaba Koulak (non-classic)
      Z ichnomyrodata
      Tsebelia
      Mavra
VI.   Basmas
VII.  Katerini and similar varieties
VIII. Kaba Koulak (classic)
      Elassona
 ---pagebreak---                                                         - 26 -
       FINANCIAL                      S TATEMENT
                                                                        DATE:
1. BUDGET HEADING: 17                                                   APPROPRIATIONS: ECU 1 341 million
2. TITLE:
      Oounci I Regulation on the cannon organization of the market in raw tobacco
3. LEGAL BASIS:
      Articles 42 and 43 of the Treaty
4. AIMS OF PROJECT:
      To reform the market organization in raw tobacco
                                      Period of 12 months   Current Financial Year   Following Financial Year
5. FINANCIAL IMPLICATIONS                 ECU mi 11 ion     (1991) ECU mi 11 ion     (1992) ECU mi 11 ion
5.0 EXPENDITURE
       - CHARGED TO THE EC BUDGET
       - (REFUNDS/ INTERVENT ION)
       - NATIONAL ADMINISTRATION
       - OTHER
5.1 REVENUE
       - Om RESOURCES OF THE EC
          (LEVIES/CUSTOMS DUTIES)
       - NATIONAL
                                           1993                  1994               1995              1996
5.0.1 ESTIMATED EXPENDITURE
5.1.1 ESTIMATED REVENUE                    930,9                930,9               930,9             902,9
5.2 METHOD OF CALCULATION:
        See detaiIs in Annex
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET?
                                                                                                          YES
 6 . 1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET?
                                                                                                          YES
 6.2 IS A SUPPLEMENTARY BUDGET NECESSARY?
                                                                                                              ND
 6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY?
                                                                                                          YES
 OBSERVATIONS:
 The budgets for 1993 to 1996 must also take account of the residual expenditure arising frcm the operation
 of the present market organization in line with point V of the Annex.
 ---pagebreak---                                                  - 27 -
                                                 ANNEX
       COST PER MARKETING YEAR OF THE MARKET ORGANIZATION IN RAW TOBACCO
I.     COST OF PREMIUMS
                        Flue-  Light     Dark      Fire- Sun-    Basmas    Katerini   K. Koulak Total
                        cured  air-      air-      cured cured
                               cured     cured
     Premiums (1)
     ECU ( A ) / t       2 500  2 000      2 000   2 200  2 000    3 300     2 800       2 000
     Quota
     (tonnes)           91 800 72 500    53 900    9 900 39 500  25 800     21 800      24 800  340 000
     DR                  1,153  1,143      1,155   1,143  1,129    1,119     1,119        1,119
     Cost
     ECU m (B)          264,5  165,7       124,5    24,9  89,2     95,3       68,3       55,5    887,9
   (1) Including the 10X Increase.
        It should be noted that an amount equal to no more than 1% of the cost
       of the premiums, i.e. ECU 9 million, will be withheld to finance a
       Community fund for research and information on the tobacco sector.
I I.    COST OF CONVERSION OF MAVRA AND TSEBELIA
       Production of these two varieties will switch from an MGQ of
       26 500 tonnes (1991) to a quota of 14 000 tonnes. Compensation at the
        level of the proposed premiums, i.e. ECU 2 OOO/t for the 12 500
       tonnes, will be granted for the first three years:
       12 500 t x ECU 2 000 (A)/t x 1,119 (DR) - ECU 28,0 million.
M l . COST OF CONTROL AGENCY
       Article 20(5) and (6) states that 50% of expenditure for the agency is
       to come from the general budget of the Community. Expenditure is
       fixed annually on the basis of information provided by the Member
       States concerned.
        In the light of experience with the olive oil control agency, an
        indicative amount of ECU 30 million, 50% of which is to be defrayed by
       the Community, has been decided.
IV.    TOTAL EXPENDITURE
                                                                        (ECU mi I I ion (B))
                                      1993        1994        1995         1996        1997
          Premiums                    887,9       887,9       887,9        887,9       887,9
          Conversion                   28.0         28,0       28,0             0            0
          C o n t r o l agency         15,0         15,0       15,0         15,0         15,0
          TOTAL                       930,9       930,9       930,9        902,9       902,9
 ---pagebreak---                                  - 28 -
V. REMARKS
   In view of the time necessary for the payment of the premiums, refunds
   and intervention costs under the present market organization, the
   budgets for 1993 to 1996 should take account of the remaining
   expenditure arising from the operation of the present market
   organization as follows:
                                                   (ECU million (B))
                        1993      1994      1995      1996       1997
     Premiums            120        60        20      p.m.          0
     Refunds              40        10       p.m.       0           0
     Intervent ion       130        70        30      p.m.          0
     TOTAL               290       140        50      p.m.          0
 ---pagebreak---                                       - 29 -
                               EXPLANATORY MEMORANDUM
             Fixing of premiums and processing quotas for leaf tobacco
                                from the 1992 harvest
In accordance with its undertaking, the Commission has submitted a new basic
Regulation on the common organization of the market in tobacco for the 1992
harvest. The Regulation provides for a system of premiums and measures to
control and convert production.
It provides that the Council is to fix each year the premiums on leaf tobacco
and the annual allocation of the processing quota.
The premiums proposed for the 1992 harvest were established taking account in
part icular of:
     the premiums granted in the past;
     the grouping of varieties into groups of varieties according to the drying
     system;
     the differences in production costs according to the group of varieties;
     the converting of production to groups of varieties most sought after on the
     market.
The allocation of the processing quotas among groups of varieties and among the
Member States was established taking account in particular of:
     the production of each group of varieties in the various producer countries
     as observed in the past, not including quantities in excess of the maximum
     guaranteed quantities;
     the requirements of European industry,
     the trend in consumption in Europe-,
     the trend in demand on the world market for certain aromatic varieties.
The fixing by the Council of the premiums and processing quotas at a
sufficiently early stage enables operators to determine their economic strategy
 in full knowledge of the circumstances.
 ---pagebreak---                                  - 30 -
                             Proposal for a
                        COUNCIL REGULATION (EEC)
        fixing the premiums for leaf tobacco by group of tobacco
         varieties and the processing quotas allocated by group
                    of varieties and by Member State
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having   regard  to  the  Treaty  establishing   the   European Economic
Community,
Having regard to Council Regulation (EEC) No        of            on the
common organization of the market in raw tobacco, and in particular
Articles 4(1) and 9(2) thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the European Parliament,
Having regard to the opinion of the Economic and Social Committee,
Whereas, when the premiums for raw tobacco are fixed, account should be
taken of the objectives of the common agricultural policy; whereas the
common agricultural policy aims in particular to guarantee a fair
standard of living for the farming community and to ensure supplies at
reasonable prices to consumers; whereas the premiums must take account
in particular of past and foreseeable possibilities of disposal of the
various tobacco varieties under normal conditions of competition;
 ---pagebreak---                                    - 31 -
Whereas  Article   9(2) of  Regulation   (EEC) No         provides  for  the
annual  allocation   of processing quotas    for each group of     varieties
among the producer Member States; whereas those quotas should be fixed
for the 1992 harvest taking account in particular of market conditions
and the socio-economic and agricultural circumstances of the production
areas concerned,
HAS ADOPTED THIS REGULATION:
                                 Article 1
For  the   1992  harvest,  the  premium    referred   to in  Article   4  of
Regulation   (EEC) No         for each   group of    raw tobacco   varieties
shall be as set out in Annex I hereto.
                                 Article 2
For the 1992 harvest, the processing quotas referred to in Article 9 of
Regulation   (EEC) No        by group of varieties and by Member       State
shall be as set out in Annex II hereto.
                                 Article 3
This Regulation shall enter into force on the day of 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,                               For the Council
                                                The President
 ---pagebreak---                                             - 32 -
                                            ANNEX I
                        Premiums for leaf tobacco from the 1992 harvest
Premium Flue-   Light      Dark     Fire-    Sun-    Basmas  Katerini    Kaba
(ECU)   cured air-cured   air-cured cured    cured                      Koulak
ECU/kg  2,273   1,818       1,818    2,000   1,818   3,000      2,545   1,818
 ---pagebreak---                                        - 33 -
                                    ANNEX I I
           ALLOCATION OF PROCESSING QUOTAS BY MEMBER STATE AND BY
            GROUP OF TOBACCO VARIETIES IN TONNES OF LEAF TOBACCO
         Flue-    Light    Dark      Fire-  Sun-           Other             Total
         cured  air-cured air-cured  cured  cured Basmas Katerini K. Koulak (tonnes)
ITALY    43600    43600     17800     9900  14900                            129800
GREECE   12900    12900                     24600  25800   21800    24800    122800
SPAIN    22800     4000     13800                                             40600
PORTUGAL  4000     2000                                                        6000
FRANCE    6000     4000     17000                                             27000
GERMANY   2500     6000      3500                                             12000
BELGIUM                      1800                                              1800
         91800    72500     53900     9900  39500  25800   21800    24800    340000
 ---pagebreak---                                                          - 34 -
      FINANCIAL                       STÂTEME
                                                                          DATE:
1. BUDGET HEADING: 171                                                    APPROPRIATIONS: ECU 1 107 mi 11 ion
                                                                                          (1992 PDB)
2. TITLE:
     Council Regulation fixing the premiums for leaf tobacco by group of tobacco varieties and the processing
     quotas a I located by group of varieties and by Member State.
3. LEGAL BASIS:
     Counci I Regulation on the cannon organization of the market in raw tobacco.
4. AIMS OF PROJECT:
     To fix the premiums and allocate the               quotas.
                                     Period of 12 months     Current Financial Year    Following Financial Year
5.    FINANCIAL IMPLICATIONS                                          1991                       1992
                                          ECU mi 11 ion            ECU mi 11 ion               ECU mi 11 ion
5 . 0 EXPENDITURE
      - CHARGED TO THE EC BUDGET           887,9
      - (REFUNDS/INTERVENT ION)
      - NATIONAL ADMINISTRATION
      - OTHER
                                          1993                   1994                1995                1996
5.0.1 ESTIMATED EXPENDITURE               887,9                  p.m.
5.1.1 ESTIMATED REVENUE
5.2 METHOO OF CALCULATION:
      See calculation in financial sheet acoonpanying the Council Regulation on the cannon organization of the
      market in raw tobacco.
£.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET?
                                                                                                             YES
6 . 1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET?
                                                                                                             YES
6.2 IS A SUPPLEMENTARY BUDGET NECESSARY?
                                                                                                                 ND
6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY?
                                                                                                             YES
OBSERVATIONS:
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM (91) 339 final
                                                      DOCUMENTS
EN                                                                              03
                               Catalogue number : CB-CO-91-449-EN-C
                                                             ISBN 92-77-76617-4
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