CELEX: 51998PC0283
Language: en
Date: 1998-05-06
Title: Proposal for a Council Regulation (EC) amending Council Regulation (EC) No 1554/95 laying down the general rules for the system of aid for cotton and repealing Regulation (EEC) No 2169/81

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  Brussels, 06.05.1998
                                                  COM(1998) 283 final
                                   Proposal for a
                          COUNCIL REGULATION (EC)
amending Council Regulation (EC) No 1554/95 laying down the general rules for the
       system of aid for cotton and repealing Regulation (EEC) No 2169/81
                          (presented by the Commission)
 ---pagebreak---  ---pagebreak---                         EXPLANATORY MEMORANDUM
1.   INTRODUCTION
1.1. In response to the Council's invitation in June 1997, the Commission's report on
Greek requests in the cotton sector (COM(98) 10 final) examined the following four
specific requests, leaving all other aspects of the current aid scheme unchanged:
- payment of the aid directly to producers;
- a regionalised system of penalties;
- increasing the production estimate by 7.5%;
- creating a legal framework for reviewing the production estimate during the marketing
year.
1.2. The requested amendments were examined keeping in mind the objective of
maintaining or, where possible, strengthening the effectiveness of the existing control
arrangements. The Court of Auditors has repeatedly shown in its annual reports that the
market organisation for cotton has serious inspection problems.
2.    PROPOSED MEASURES
Now that the Council has examined the report, the Commission proposes:
2.1. to encourage contract ginning by private or associated ginners on behalf of producer
groups and to specify how the minimum price will be paid to members in such
circumstances;
2.2. to improve the production forecasts, which are currently made before 1 October so
that advance aid payments can be paid from 16 October. It is proposed to review the
production estimate at a date by which a good deal of the unginned cotton has usually
been placed in supervised storage, or during the second half of the month of November.
The percentage increase applied to the reviewed production estimate when the advances
are calculated would be lower than 15% to take account of the improved reliability of the
 forecast.
 1   OJ C 309, 16.11.1993, p. 1
     OJ C 340, 17.11.1996, p. 1.
                                              J.
 ---pagebreak---                                         Proposal for a
                              COUNCIL REGULATION (EC) N°
                                              of
   amending Council Regulation (EC) No 1554/95 laying down the general rules for the
            system of aid for cotton and repealing Regulation (EEC) No 2169/81
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
 Having regard to the Act of Accession of Greece^ and in particular paragraph 9 of
 Protocol 4 on cotton, as last amended by Regulation (EC) No 1553/951,
 Having regard to the proposal from the Commission,
 Whereas paragraph 3 of Protocol 4 provides for production aid to be granted through
 cotton ginning undertakings; whereas when such undertakings buy unginned cotton they
pass the aid on to producers by paying a price at least equal to the minimum price
 referred to in paragraph 8a of Protocol 4; whereas these undertakings may also gin cotton
 for third parties;
 Whereas Article 7(l)(b) of Council Regulation (EC) No 1554/952, as amended by
 Regulation (EC) No 1584/96 , provides that where a ginning undertaking gins cotton on
behalf of an individual producer or a producer associated with that undertaking, a
statement must be submitted giving details of how the aid is passed on to the producers;
whereas the notion of associated producers should be replaced by that of producer
groups, and the conditions to be met by groups in such cases should be laid down to
ensure that the aid is passed on, particularly through payment of the minimum price to its
members;
Whereas Article 8 of Regulation (EC) No 1554/95 provides for the estimated production
of unginned cotton to be fixed before 1 October for the purpose of calculating the amount
of the advance; whereas in order to improve initial harvest forecasts and ensure that the
amount paid in advance is as close as possible to the final amount of aid due, the
1
     OJL 148, 30.06.95, p. 45.
2
     OJ L 148, 30.06.95, p. 48.
3
     OJ L 206, 16.08.96, p. 16.
 ---pagebreak--- Whereas Article 8 of Regulation (EC) No 1554/95 provides for the estimated production
of unginned cotton to be fixed before 1 October for the purpose of calculating the amount
of the advance; whereas in order to improve initial harvest forecasts and ensure that the
amount paid in advance is as close as possible to the final amount of aid due, the
production estimate should be revised at a date by which a large proportion of the
unginned cotton harvest has already been placed in supervised storage; whereas the
increased reliability of such a revised estimate would require application of a percentage
increase of less than 15% when calculating the resulting advance, without this causing
any risks for the budget; whereas the advances paid prior to the revised estimate should
be adjusted, taking account of the administrative costs of applying the new mechanism,
HAS ADOPTED THIS REGULATION:
                                            Article 1
Regulation (EC) No 1554/95 is amended as follows:
1.     Article 5(3) is replaced by the following:
"3.      Entitlement to the aid shall be acquired when the cotton is ginned. However, aid
         may be paid in advance from 16 October following the start of the marketing year
         when the unginned cotton enters the cotton ginning undertaking, provided that an
         adequate security has been lodged. The amount of the advance shall be calculated
         in accordance with paragraph 3 a.
         Any aid balance outstanding shall be paid once the actual quantity produced has
         been determined and any adjustment to the aid referred to in Article 2 of
         Regulation (EEC) No 1964/878 has been made. It shall be paid before the end of
         the marketing year, at the latest."
2.     The following paragraph is inserted:
 "3a.    The level of the advance per 100 kg of unginned cotton shall be equal to the guide
         price minus the world price and reduced further by an amount calculated using the
 7
   JO n° LI 84 du 3.07.87, p. 14.
 8
   OJL 184, 3.7.87, p. 14.
                                                 V
 ---pagebreak---          method provided for in Article 6, but replacing actual production by the estimated
         production of unginned cotton fixed in accordance with Article 8(1) plus 15 %.
     From 16 December following the start of the marketing year, the amount of the aid
         referred to in the first subparagraph shall be replaced by a revised amount
         calculated using the same method but based on the revised production estimate
         for unginned cotton fixed in accordance with Article 8(2), plus at least 7.5%.
         Advances paid between 16 October and 15 December shall be increased
         accordingly, except where the difference between the two amounts is less than
         ECU 1/100 kg."
3.   Article 7 is replaced by the following:
«Article 7
1.       Without prejudice to paragraph 2, aid shall be granted only to those cotton
         ginning undertakings which apply for it and which:
(a) have submitted a contract stipulating payment to the producer of a price at least equal
to the minimum price referred to in Article 8a of Protocol 4 and containing a clause
specifying that:
     - in the event of application of Article 2(3) and/or (4) of Regulation (EEC) No
     1964/87, the agreed price shall be adjusted in consequence of the effect of the
     application of that Article upon the aid,
      - in the event of a difference between the duality of the cotton delivered and the
      standard quality, as referred to in paragraph 8 of Protocol 4, the price agreed will be
      adjusted proportionally by common consent between the contracting parties;
b) keep stock accounts on ginned and unginned cotton that satisfy requirements to be laid
down, so that entitlement to the aid can be checked;
c) provide the other supporting documents needed for checking entitlement to the aid;
d) furnish proof that the cotton delivered under the contract has been the subject of the
declaration of area sown referred to in Article 8.
                                                 r
 ---pagebreak--- 2. Aid shall be granted only to those cotton ginning undertakings which apply for it and
'which gin cotton on behalf of an individual producer or a producer group meeting the
criteria laid down in the third subparagraph of paragraph 4 of Protocol 4, provided such
undertakings:
a) satisfy the conditions referred to in paragraph 1(b) and (c);
b) have submitted a statement giving details of the conditions under which the ginning is
carried out and how the aid is administered;
c) undertake to pass on the aid to the individual producers ciy where applicable, the
producer groups concerned;
d) furnish proof that the cotton referred to in the statement referred to in point (b) has
been the subject of the declaration of area sown referred to in Article 8.
e) furnish proof that producer groups are obliged to provide for and comply with a clause
equivalent to the one in paragraph 1(a) and an undertaking by such groups to keep and
produce supporting documents concerning payment of the minimum price.
3. Failure to comply with the clause or undertaking referred to in paragraph 2(e) by a
producer group having ginning carried out on its behalf shall be considered a failure to
meet the criteria referred to in the third subparagraph of paragraph 4 of Protocol 4."
4.    Article 8 is replaced by the following:
 "Article 8
"1. Before 1 October, the estimated production of unginned cotton referred to in the first
subparagraph of Article 5 (3a) shall be drawn up using the procedure referred to in
Article 11(1), account being taken of crop estimates.
In order to draw up these estimates, a system of declarations of the areas sown shall be
established.
2. Before 1 December, the revised estimate of produo'on cf unginned cotton referred te
in the second subparagraph of Article 5 (3a) shall \e drawn up using the procedure
referred to in Article 11(1), account being taken of the progress of the harvest."
                                               C
 ---pagebreak---                                         Article 2
This Regulation shall enter into force on the third day following its publication in the
Official Journal of the European Communities. It shall apply from 1 September 1998.
This Regulation shall be binding in its entirety and directly applicable in all Member
States.
Done at                                                           For the Council
                                            9-
 ---pagebreak---                                  Financial Statement
 1 .BUDGET HEADING:                   Bl-141                                         APPROPRIATIONS: ECU 757 million
2.TTTLE:
Proposal for a Council Regulation amending Regulation (EC) No 1554/95 laying down the general rules for the system of aid for
         cotton and repealing Regulation (EEC) No 2169/81
3.LEGAL BASIS:               Article 39 of the Treaty establishing the European Community
4.AIMS OF PROJECT:
In response to the Council's invitation in June 1997, the Commission has examined the Greek requests in the cotton sector
         (COM(98) 10 final). It now proposes:
         to encourage contract ginning on behalf of producer groups.
         to ensure that the advance paid is closer to the final amount of aid due.
5.FINANCIAL IMPLICATIONS                                           Period of         CURRENT               FOLLOWING
                                                                  12 months      FINANCIAL YEAR          FINANCIAL YEAR
                                                                                        (98)                . (99)
5.0EXPENDITURE
         _ CHARGED TO THE EC BUDGET
           (REFUNDS/INTERVENTION)
         - NATIONAL ADMINISTRATION
         -OTHER
5.1      REVENUE
         - OWN RESOURCES OF THE EC
           (LEVIES/CUSTOMS DUTIES)
         - NATIONAL
                                                                    2000           2001            2002              2003
5.0.1 ESTIMATED EXPENDITURE
5.1.1 ESTIMATED REVENUE
5.2 METHOD OF CALCULATION:
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE
         CURRENT BUDGET?
                                                                                                             YES/NO
6.1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET?
                                                                                                                      YES/NO
6.2 IS A SUPPLEMENTARY BUDGET NECESSARY?                                                                              ¥£&NQ
6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY?                                                                   YES/NO
OBSERVATIONS:
The new provisions proposed are technical amendments without any financial implications.
The review of the calculation of advances on the basis of production estimated at a later date and a percentage increase of less
than 15% should not cause any risk of wrong payments. The n;w system for calculating advance payments does not change the
total amount of the aid for cotton.
                                                                          r
 ---pagebreak---                                                                    ISSN 0254-1475
                                                            COM(98) 283 final
                                              DOCUMENTS
EN                                                            03 01 15 10
                                    Catalogue number : CB-C0-98-292-EN-C
                                                             ISBN 92-78-35561-5
Office for Official Publications of the European Communities
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