CELEX: 51988DC0290
Language: en
Date: 1988-07-07
Title: PRELIMINAR Y DRAFT GENERAL BUDGET of the European Communities for the financial year 1989

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (88) 290
Vol. 1988/0102
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
l'ouverture au public des archives historiques de la Communauté économique européenne et de
la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, p. 1) modifié en dernier
lieu par le règlement (UE) 2015/496 du Conseil du 17 mars 2015 (JO L79 du 25. 3.2015, p. 1), ce
dossier est ouvert au public. Le cas échéant, les documents classifiés présents dans ce dossier
ont été déclassifiés conformément à l'article 5 dudit règlement ou sont considérés déclassifiés
conformément aux articles 26(3) et 59(2) de la décision (UE, Euratom) 2015/444 de la
Commission du 13 mars 2015 concernant les règles de sécurité aux fins de la protection des
informations classifiées de l'Union européenne.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning
the opening to the public of the historical archives of the European Economic Community and the
European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as last amended by Council
Regulation (EU) 2015/496 of 17 March 2015 (OJ L 79, 27.3.2015, p. 1), this file is open to the
public. Where necessary, classified documents in this file have been declassified in conformity
with Article 5 of the aforementioned regulation or are considered declassified in conformity with
Articles (26.3) and 59(2) of the Commission Decision (EU, Euratom) 2015/444 of 13 March 2015
on the security rules for protecting EU classified information.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar
1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und
der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
der Öffentlichkeit zugänglich. Soweit erforderlich, wurden die Verschlusssachen in diesem Akt in
Übereinstimmung mit Artikel 5 der genannten Verordnung freigegeben; beziehungsweise werden
sie auf Grundlage von Artikel 26(3) und 59(2) der Entscheidung der Kommission (EU, Euratom)
2015/444 vom      13.   März 2015     über die   Sicherheitsvorschriften für den Schutz von  EU-
Verschlusssachen als herabgestuft angesehen.
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
DOCU                                            PS
PRELIMINARY DRAFT
GENERAL BUDGET
of the European Communities
for the financial year 1989
WORKING DOCUMENT
SECTION III - COMMISSION
Detailed analysis of the budget headings
Administrative appropriations (Titles 1, 2 , 3 and 10 of Section III , Part A)
Operating appropriations (Titles 1 and 2 of Section III , Part B )
                                                     /\
                                                                       4
                                                                      <. i     \ .x - \
                                                    f^-7                        V'.'
 COM(88)290 final - EN
 ---pagebreak---      Preliminary draft general budget, 1989           1
     EUROPEAN COMMUNITIES
     (ECSC - EEC - EURATOM)
   PRELIMINARY DRAFT
      GENERAL BUDGET
of the European Communities
  for the financial year 1989
         WORKING DOCUMENT
     SECTION III - COMMISSION
     Detailed analysis of the budget headings
           Administrative appropriations
   (Titles 1 , 2 , 3 and 10 of Section III , Part A )
               Operating appropriations
       (Titles 1 and 2 of Section III , Part B )
     COM(88 ) 290 final - EN
 ---pagebreak--- In this document all amounts are quoted in ECUs, except where otherwise in­
dicated.
For technical reasons the decimal point is represented by a comma in both
the text and the tables. The words ‘token entry’ in the tables are represented
by ‘p.m.’.
 ---pagebreak---              Preliminary draft general budget, 1989 3
DETAILED ANALYSIS OF THE BUDGET HEADINGS
 ---pagebreak---                                      Preliminary draft general budget, 1989                     5
CONTENTS
                                                                                             Page
EXPENDITURE
Section III A  Staff and administrative expenditure .                                           9
Title 1        Expenditure relating to persons working with the institution .                  11
Title 2        Buildings, equipment and miscellaneous operating expenditure .                  37
Title 3        Expenditure resulting from special functions carried out by the institution .   75
Title 10       Other expenditure .                                                             97
Section III B  Operating appropriations .                                                     101
Titles 1 and 2 European Agricultural Guidance and Guarantee Fund - Guarantee Section .        101
 ---pagebreak--- 6                                          Preliminary draft general budget, 1989
                                  Conversion of national currencies into ECU
1 . For the estimates of own resources from agricultural levies and sugar levies and for EAGGF Guarantee
expenditure, national currencies have been converted into ECU at the central rates, except for those currencies
not participating in the EMS mechanism or enjoying a wide margin of fluctuation (drachma, lira, pound sterling,
peseta and escudo), for which market rates have been used.
       Value of 1 ECU in national currency                           Value of 1000 national currency units in ECU
       BFR/ LFR          43,1749                                     BFR/ LFR           23,1616
       DKR                7,9301                                      DKR              126,102
       DM                 2,06647                                     DM               483,917
       DR               164,682                                      DR                  6,07231
       ESC              168,654                                      ESC                 5,92930
       FF                 6,96727                                     FF               143,528
       HFL                2,32143                                    HFL               430,769
       IRL                0,773                                      IRL             1 293,66
       LIT            1 517,82                                       LIT                 0,65884
       PTA              140,023                                      PTA                 7,14168
       U KL               0,693802                                   UKL            1441,33
2. For the estimates of the other own resources and for expenditure other than EAGGF Guarantee, national
currencies have been converted into ECU at the rates obtaining on 1 February 1988 .
       Value of 1 ECU in national currency                           Value of 1000 national currency units in ECU
       BFR/ LFR          43,1553                                     BFR/ LFR           23,1721
       DKR                7,90744                                    DKR               126,463
       DM                 2,06618                                    DM                483,985
       DR               164,58                                       DR                  6,07607
       ESC              168,632                                      ESC                 5,93007
       FF                 6,96355                                    FF                143,605
       HFL                2,32012                                    HFL               431,012
       IRL                0,776607                                   IRL             1 287,65
       LIT            1 520,72                                       LIT                 0,657583
       PTA              139,942                                      PTA                 7,14582
       UKL                0,694724                                   UKL             1 439,42
 ---pagebreak--- Preliminary draft general budget, 1989
  EXPENDITURE
 ---pagebreak---                                            Preliminary draft general budget, 1989                               9
                  Section III A – Staff and administrative expenditure
                                                        SUMMARY
                                             Compulsory expenditure   Non-compulsory expenditure     Total
Title 1
Expenditure relating to persons working
with the institution                            186 524 000                   819 855 000        1 006 379 000
Title 2
Administrative expenditure                        1 110 000                   284 987 500          286 097 500
Title 3
Expenditure resulting from special func¬
tions carried out by the institution                                          133 136 548          133 136 548
                                     Total      187 634 000                 1 237 979 048        1 425 613 048
Percentage change 1988 / 89                         + 13,9                        + 11,9               +   12,1
Compulsory / non-compulsory expendi ¬
ture                                                  13,16                         86,84                100
 ---pagebreak---                                        Preliminary draft general budget, 1989                                      11
         TITLE 1 - EXPENDITURE RELATING TO PERSONS WORKING WITH
                                              THE INSTITUTION
                                                      SUMMARY
                                                                     Appropriations Appropriations Percentage
Chapter/                                                                authorized     requested    change
Article/                           Heading                               for 1988       for 1989     (2 : 1 )
  Item
                                                                             1              2             3
 10      Members of the institution                                     5 860 000        7 638 000    -I-    30,34
 11      Staff in active employment                                  637 074 853      696 641 000     +       9,35
 13      Mission expenses                                             14 620 000       16 854 000     +      15,28
 14      Socio-medical infrastructure                                   3 114 000        3 290 000    +       5,65
 15      Staff exchanges                                                4 405 000      10 114 000     +     129,60
 16      Expenditure on social welfare                                    589 000          706 000    +      19,86
 17      Entertainment expenses                                           701 000          840 000    +      19,83
                                               11 to 17 – Subtotal   666 363 853      736 083 000     +      10,46
 18      Sta/f serving in countries outside the Community             68 954 500       83 772 000     +      21,49
                             Non-compulsory expenditure – Total      735 318 353      819 855 000     +      11,50
 12      Pensions, allowances and miscellaneous contributions        164 000 000      186 524 000     +      13,73
                                  Compulsory expenditure – Total     164 000 000      186 524 000     +      13,73
                                                  Title Al – Total   899 318 353    1 006 379 000     +      11,90
 ---pagebreak---  12                                              Preliminary draft general budget, 1989
                 ESTIMA TES FOR THE ADJUSTMENT OF REMUNERA TIONS IN 1988 AND 1989
                                   Council          Effective       Rate                  Budgetary                        Entry in
        Reference period           Decision            from         in %                repercussions                    the budget
                                                                                           for 1989
A. Decision to be taken
     before 31 . 12. 1988
I.   Purchasing power
     (a) 1.7 . 1986-30.6.1987                       1.7.1987        + 0,3      Over 12 months
                                                                                + 0,3 %
     (b) 1.7 . 1987-30.6.1988      Dec. 88          1.7.1988        + 1,6      Over 12 months                  Under the relevant
                                                                                + 1,6%                         articles / items in Chapters
                                                                                                               10, 11 , 12 and 18
11 . Weighting
     (a) 1 . 7.-31 . 12 . 1987     June 88         1 . 1 . 1988      0
     (b) 1 . 1.-30. 6 . 1988       Dec. 88         1.7 . 1988       + 2,0      Over 12 months
                                                                                + 2,0 %
B.   Decision to be taken
     before 31 . 12. 1989
I.   Purchasing power
     1.7 . 1988-30 . 6 . 1989      Dec. 89         1.7 . 1989       + 1,2      Over 6 months                   Under Articles 109 , 119 ,
                                                                                + 1,2%                          129 and 189
                                                                               which corresponds
                                                                               to + 0,6 %
                                                                               applied to approps
                                                                               for 12 months
11 . Weighting
     (a) 1 . 7.-31 . 12 . 1988     June 89         1 . 1 . 1989      0
     (b) 1 . 1.-30. 6. 1989       Dec . 89         1 . 7 . 1989     + 2,4      Over 6 months
                                                                                + 2,4 %
                                                                               which corresponds
                                                                               to + 1,2%
                                                                               applied to approps
                                                                               for 12 months
NB. The rate of increase of the weighting refers to Brussels and Luxembourg. It varies for other places of employment.
 ---pagebreak---                                          Preliminary draft general budget, 1989                                     13
                         CHAPTER 10 - MEMBERS OF THE INSTITUTION
                                                       SUMMARY
                                                                       Appropriations  Appropriations Percentage
   Article/  Sub-
                                                                          authorized     requested     change
                                            Title                          for 1988       for 1989      (2:1 )
    Item     item
                                                                               1              2           3
    1000              Basic salaries                                      2 361 000        2 503 000      +     6,0
    1001              Residence allowances                                  354 000          375 000      +     5,9
    1002              Family allowances                                     247 000          162 000      - 34,4
    1003              Representation allowances                             121 000          128 000      +     5,8
    101               Accident and sickness insurance and other
                      social security charges
             50       –   Members                                            99 000            86 000     -    13,1
             51       – Pensions and temporary allowances                    25 000            72 000     + 188,0
    102               Temporary allowances                                   56 000          564 000      + 907,1
    1030              Retirement pensions                                 1 149 000        1 632 000      +    42,0
    1031              Invalidity pensions                                    49 000            49 000             0
    1032              Survivors' pensions                                   386 000          416 000      +     7,8
    104               Mission expenses                                      907 000        1 040 000      +    14,7
    1050              Travel expenses (including members of the
                      family)                                                    p.m .         10 000            +
    1051              Installation and resettlement allowances                   p.m .       401 000             +
    1052              Removal expenses                                           p.m .         85 000            +
    1090              Weightings
             50       –   Members                                                   0               0             0
             51       – Pensions and temporary allowances                    13 000             8 000     - 38,5
    1091              Provisional appropriation                              93 000          107 000      +    15,1
                                                               Total      5 860 000        7 638 000      +    30,3
1 . Type of expenditure
Expenditure to be charged to this chapter covers :
– emoluments, allowances, family allowances and the institution’s contribution to accident and sickness in­
     surance and other social security charges for members of the Commission ;
– temporary allowances and family allowances to former members of the Commission ;
– retirement, invalidity and survivors’ pensions to former members of the Commission or persons entitled
     under them ;
– allowances and expenses on entering and leaving the service ;
– members’ mission expenses.
2. Method of calculation and explanation of changes
The appropriations entered take account of:
– beneficiaries’ entitlement under the current scale of emoluments ;
– foreseeable changes up to the end of the 1989 financial year, particularly in connection with the appoint­
     ment of the new Commission ;
– any adjustments to emoluments approved by the Council in 1988 and 1989.
 ---pagebreak---  14                                    Preliminary draft general budget, 1989
The increase in appropriations is based on the assumption that the Commission will be renewed in its entirety,
i.e. taking into account 13 months’ salary and the related temporary allowances.
It should be pointed out that the impact of any adjustments approved in 1988 is included in the appropriations
for the various items and articles. However, the impact of any changes approved in 1989 is centralized in Arti­
cle 109 .
It should also be noted that the appropriation entered in that article is to be used solely for transfers to cover
additional requirements in other articles of Chapter 10 arising out of a Council decision dealing specifically with
remunerations.
 ---pagebreak---                                         Preliminary draft general budget, 1989                                          15
                         CHAPTER 1 1 - STAFF IN ACTIVE EMPFOYMENT
                                                      SUMMARY
                                                                      Appropriations    Appropriations  Percentage
Chapter/                                                                 authorized       requested      change
Article /                           Heading                                for 1988        for 1989       (2 : 1 )
  Item
                                                                                1              2             3
 1100     Basic salaries                                              459 330 853        493 076 000       +       7,35
 1101     Family allowances                                            46 681 500         52 789 000       +     13,08
 1102     Expatriation allowances                                      56 605 000         62 487 000       +     10,39
 1103     Secretarial allowances                                         3 165 000          3 199 000      +       1,07
 1104     Staff for management of Funds                                           p.m .           p.m .               –
 1110     Auxiliary staff                                                2 623 000          7 296 000      +   178,75
 1111     Auxiliary interpreters                                                9 000            9 000                 0
 1112     Local staff                                                    3 141 000          3 140 000      –
                                                                                                                   0,03
 1113     Special advisers                                                  105 000           170 000      +    61,90
 112      Further training, language courses, etc.                       1 855 000          2 942 000      +    58,60
 1130     Insurance against sickness                                   12 193 000          13 313 000      +       9,19
 1131     Insurance against accidents                                   3 027 000           3 698 000      +    22,17
 1132     Unemployment insurance for temporary staff                        152 000           167 000      +       9,87
 1133     Pension rights for temporary staff                                501 000           497 000      –
                                                                                                                   0,80
 1140     Birth and death grants                                              75 000           90 000      +    20,00
 1141     Annual leave travel expenses                                  6 916 000           7 829 000      +    13,20
 1142     Rent and transport allowances                                         2 000            5 000     +   150,00
 1143     Fixed entertainment allowances                                    326 000           115 000     –
                                                                                                                64,72
 1144     Fixed local travel allowances                                     1 1 1 000         141 000      +    27,03
 1145     Allowance for accounting officers and imprest
          administrators                                                      62 500           68 000      +       8,80
 1147     Allowances for shiftwork etc.                                     501 000           527 000      +       5,19
 1149     Other allowances and repayments                                     27 000           32 000      +    18,52
 115      Overtime                                                       1 932 000          2 101 000      +       8,75
 1170     Freelance JICS interpreters                                       313 000           950 000      + 203,51
 1171     Other freelance interpreters                                  3 104 000           3 212 000      +       3,48
 1172     JICS conference technicians                                       129 000           129 000                 0
 1173     Other conference technicians                                        16 000            13 000    –
                                                                                                                18,75
 1174     Freelance proofreaders                                              80 000          130 000      +    62,50
 1175     Other services                                                5 223 000           6 903 000      +    32,17
 1180     Expenditure on recruitment                                     1 709 000          2 566 000      +    50,15
 1181     Travel expenses                                                   622 000           805 000      +    29,42
 1182     Installation, resettlement and transfer allowances            6 774 000           7 123 000      +       5,15
 1183     Removal expenses                                              5 174 000           5 886 000     +     13,76
 1184     Daily subsistence allowances                                  3 830 000           4 201 000     +       9,69
 1190     Weightings                                                        539 000                  0    -
                                                                                                               100
 1191     Provisional appropriations                                   10 221 000         1 1 032 000     +       7,93
                                                             Total    637 074 853        696 641 000      +       9,35
 ---pagebreak---  16                                      Preliminary draft general budget, 1989
1 . Type of expenditure
Article 110 – Salaries, payments, allowances and reimbursement of expenses for officials and temporary staff
This appropriation covers the salaries and allowances df the permanent and temporary staff holding posts on
the establishment plan. Supply Agency staff and staff posted outside the Community are excluded.
Article 111 – Remuneration of other staff and payment for other services
This appropriation is to cover :
– the salaries of auxiliary staff, auxiliary interpreters and local staff;
– fees to special advisers.
Article 112 – Further training
This appropriation is to cover :
– further training and retraining for staff (language courses, courses to improve professional skills, informa­
     tion courses on modern methods, seminars and courses in computer training);
– expenditure on the analysis of the operation and structure of departments ;
– staff information .
Article 113 – Insurance against sickness, accidents and occupational disease, unemployment insurance and main¬
tenance ofpension rights
This appropriation is to cover :
– the institution’s contributions to insurance against sickness, accidents, occupational disease and unem­
     ployment, as provided for under Articles 72 and 73 of the Staff Regulations ;
– the institution’s contribution to the unemployment fund for temporary staff;
– payments by the institution to constitute or maintain pension rights for temporary staff in their country
     of origin.
Article 114 – Miscellaneous allowances and grants
This appropriation is to cover :
– the various allowances payable to officials and temporary staff under the Staff Regulations.
Article 115 – Overtime
This appropriation is to cover the flat-rate allowances and payments at hourly rates for overtime worked by offi­
cials, auxiliary staff and local staff who could not be given compensatory leave.
Article 117 – Supplementary services
This appropriation is to cover :
– the services provided by freelance interpreters and conference technicians ;
– the cost of hiring agency staff and sending translation, reproduction and typing work to be done outside ;
– the cost of computerization for producing budget documents for the Commission’s own requirements and
     for submission to the budgetary authority.
 ---pagebreak---                                              Preliminary draft general budget, 1989                                   17
Article 118 – Miscellaneous expenditure on recruitment
This appropriation is to cover expenditure arising from recruitment procedures : the cost of organizing competi­
tions and inviting candidates and the payment of allowances on entry into the service or transfer, etc.
Article 119 – Appropriation to cover adjustments to the remuneration of officials and other staff
The appropriation under Item 1 190 is to cover the cost of applying weightings in the various places of employ­
ment .
The appropriation under Item 1191 is purely provisional and may not be used until it has been transferred to
other articles or items in accordance with the procedure laid down in the Financial Regulation. It is to cover the
cost of any adjustments to remuneration approved by the Council in the course of the year. No expenditure is
charged to this item.
2. Method of calculation and explanation of request
  Article/
                                                                                                          Amount
   Item
   1100       Basic salaries
              The calculation is based on :
              (a) the level of salary entitlement of serving staff by reference to the basic salary scale
                    applicable since 1 July 1987 (based on payments in February 1988 and the
                    establishment plan in the 1987 budget)                                                415 210414
              (b) step increments still due in 1988                                                          5 554 767
              (c) step increments due in 1989                                                                4 132 507
              (d) posts vacant at 28 February 1988 for which the required appropriations have been
                    calculated on the basis of a classification in step 2                                  28 609 716
              (e) amounts required to remunerate the holders of the 274 new posts approved by the
                    Council in the draft budget for 1988                                                   10666 384
              (f) amounts required to remunerate the 422 new posts created by Parliament's
                    amendments ( 1988 budget procedure)                                                    16 427 789
              (g) amounts required to renumerate the holders of the 198 new posts requested for
                    1989 (six months)                                                                        3 853 913
              (h) amounts required as a result of the upgrading of 75 posts ( 12 months)                        76 739
              (i) appropriations for the conversion of 66 posts (eight months)                               1 712 850
              (j) any salary adjustments to be approved by the Council in 1988 (a sum to cover the
                    cost of any adjustments approved in 1989 is entered under Article 119)                 18 677 358
                                                                                                    Total 504 922 151
              To take account of the budgetary climate and the resulting constraints, the
              Commission has decided on a reduction of                                                     1 1 846 485
                                                                                                    Total 493 075 666
              Notes :
              ( ' ) Some 2 840 000 ECU from restaurant receipts available for reuse has been entered
                    under this item .
              (2) The reduction of 1 1 846 485 ECU is increased by a reduction in the total of the
                    sub-items which are calculated as a percentage of Item 1100. The total value of the
                    reduction is 15 735 094 ECU .
 ---pagebreak--- 20                                      Preliminary draft general budget, 1989
Continued
 Article/
                                                                                                               Amount
    Item
   1180   Miscellaneous expenditure on recruitment
          Organization of competitions
          – continuation of competitions started in 1988                                                            550 000
          – competitions planned for 1989                                                                         1 320 000
          – other operations                                                                                        130 000
                                                                                                     Subtotal     2 000 000
          Convening and engagement of candidates
          Estimated amount                                                                                          565 618
                                                                                                         Total    2 565 618
   1181   Travel expenses
          The number of those entitled to the reimbursement of travel expenses takes account of
          the various movements during the year : retirements, estimated number of transfers,
          recruitments and reoccupation of vacated posts                                                            804 705
   1182   Installation , resettlement and transfer allowances
          The number of those entitled to these allowances takes account of the various
          movements during the year : retirements, estimated number of transfers , recruitments
          and reoccupation of vacated posts
          The amounts payable are :
          – two months' basic salary for an official entitled to the household allowance
          – one month's basic salary for an official not entitled to the household allowance
          The calculation is based on an average allowance of 1,3 months                                          7 123 153
   1183   Removal expenses
          The number of those entitled to the reimbursement of removal expenses takes account
          of the various movements during the year : retirements, estimated number of transfers ,
          recruitments and reoccupation of vacant posts.
          The average cost of a removal is 4 382,4 ECU , an increase of 20 % on the average cost
          in 1987                                                                                                 5 885 563
   1184   Daily subsistence allowances
          The number of those entitled to these allowances takes account of the various
          movements during the year : retirements , estimated number of transfers, recruitments
          and reoccupation of vacant posts. The rate of the allowance, fixed by the Council ,
          varies in value and period of application by grade and category and according to
          whether or not the recipient is entitled to the household allowance                                     4201 215
   1190   Weightings
          This appropriation is to cover expenditure arising from the application of a weighting
          other than 100 ( Brussels and Luxembourg) in certain places of employment
          The estimate is based on payments in February 1988                                                              0
   119    Provisional appropriations
          The parameters for increases to cover decisions to be taken by the Council in 1989 are
          applied to Items 1 100, 1101 , 1 102 , 1 103 , 1110, 1111 , 1 130, 1131 , 1 132, 1 147 , Article
          1 15 and Items 1 182 and 1 184                                                                        1 1 032 425
 ---pagebreak---                                               Preliminary draft general budget, 1989                                     21
                CHAPTER 12 - PENSIONS, SEVERANCE GRANTS, ALLOWANCES
                                   AND MISCELLANEOUS CONTRIBUTIONS
                                                           SUMMARY
                                                                            Appropriations Appropriations Percentage
  Chapter/                                                                     authorized    requested     change
   Article/                              Heading                                for 1988      for 1989      (2 : 1 )
    Item
                                                                                    1             2            3
    120       Pensions
    1200      Retirement pensions                                            51 800 000      59 143 000       + 14,98
    1201      Invalidity pensions                                            45 102 000      50 067 000       + 11,01
    1202      Survivors' pensions                                            21 900 000      23 840 000       +      8,86
    1203      Severance grants                                                 5 078 000       3 961 000      - 22,00
    121       Allowances for staff assigned non-active status, retired
              in the interests of the service, dismissed or whose
              service is terminated
    1210      Allowances for staff retired in the interests of the
              service
              (Articles 41 and 50 of the Staff Regulations)                    4 680 000       4 415 000      - 5,66
    1213      Voluntary termination of service (Accession II)
              ( Regulation No 2150/ 82)                                          820 000         719 000      - 12,32
    1214      Voluntary termination of service ( Research II)
              ( Regulation No 1679/ 85)                                        6 182 000       5 485 000      - 11,27
    1215      Voluntary termination of service (Accession III)
              ( Regulation No 3518 / 85)                                     18 924 000      23 772 000       + 25,62
    1216      Voluntary termination of service (Temporary staff)
              ( Regulation No 2274/ 87)                                              p.m .     2 278 000               +
    1217      Voluntary termination of service ( Research III)
              ( Regulation No ..../..)                                                 _       1 559 000               +
    123       Insurance against sickness                                       3 887 000       4 622 000      + 18,91
    1290      Weightings                                                       2 827 000       3 424 000      + 21,12
    1291      Appropriations for adjustments to pensions and
              allowances                                                       2 800 000       3 239 000      + 15,68
                                                                   Total    164 000 000     186 524 000       + 13,73
1 . Type of expenditure
The Commission is responsible for paying the retirement pensions of former permanent and temporary staff of
all the institutions of the European Communities, including those paid from the research and investment appro­
priations. Consequently, no appropriation of this type appears in any other section of the budget.
Chapter 12 also contains appropriations to cover allowances paid to Commission officials retired in the interests
of the service or to take account of the requirements arising from the accession of the new Member States to the
Communities.
It also incorporates provisional appropriations to cover the effects of any adjustments to pensions or allowances
which the Council may decide in the course of the year.
 ---pagebreak--- 22                                       Preliminary draft general budget, 1989
2. Method of calculation and explanation of changes
(a) Number of recipients
                                                           Number             Anticipated changes        Number
   Item                      Heading                           at
                                                         31 . 12 . 1987      in 1988        in 1989    31 . 12 . 1989
   1200    Retirement pensions                                1 542             77                170       1 789
   1201    Invalidity pensions                                1 428            180                216       1 824
   1202    Survivors' pensions                                1 354            118                123       1 595
   1203    Severance grants                                                                       228          228
   1210    Allowances for staff retired in the
           interests of the service
           ( Articles 41 and 50 of the Staff
           Regulations)                                            52            3                   2           57
   1213    Voluntary termination of service
           ( Accession II )
           ( Regulation No 2150/ 82)                               12         - 2                    0           10
   1214    Voluntary termination of service
           ( Research II )
           ( Regulation No 1679 / 85 )                            119         - 1                 - 5           113
   1215    Voluntary termination of service
           ( Accession III )
           ( Regulation No 3518/ 85 )                            264           216                  35         515
   1216    Voluntary termination of service
           (Temporary staff)
           ( Regulation No 2274/ 87)                               32           32                  36          100
   1217    Voluntary termination of service
           ( Research III )
           ( Regulation No ..../..)                                 0            0                100           100
 ---pagebreak---                                              Preliminary draft general budget, 1989                                          23
(b) Calculation of appropriation
                                                    Commission                Other institutions
  Article /                                  Antici ¬                       New           Application               Rounded
   Item
                      Heading                                 Mise .                                      Total
                                                                                                                      total
                                           pated cost                  requirements         of 1988
                                        at 31 . 12 . 1988 expenditure     in 1989         parameters
   1200     Retirement pensions           48 122 863        2 512401     8 074 337            433 173  59 142 774  59 143 000
   1201     Invalidity pensions           39 472 116        2 448 458    7 419 579            727 118  50 067 263  50 067 000
   1202     Survivors' pensions           18 774 279          852 711    4 063 920            149 276  23 840 186  23 840 000
   1203     Severance grants                                1 772 098                      2 189 062    3 961 160   3 961 000
   1210     Allowances for staff
            retired in the interests of
            the service
            ( Articles 41 and 50 of
            the Staff Regulations)          3 990 880         424 562                                   4 415 442   4 415 000
   1213     Voluntary retirement
            (Accession II )
            ( Regulation No 2150/ 82 )        718 938                                                     718 938     719 000
   1214     Voluntary retirement
            ( Research II )
            ( Regulation No 1679 / 85 )     5 485 300                                                   5 485 300   5 485 000
   1215     Voluntary retirement
            ( Accession III )
            ( Regulation No 3518 / 85 )   23 336 184          436 307                                  23 772 491  23 772 000
   1216     Voluntary retirement
            (Temporary staff)
            ( Regulation No 2274/ 87 )      2 052 545         225 279                                   2 277 824   2 278 000
   1217     Voluntary retirement
            ( Research III )
            ( Regulation No ..../..)                        1 559 055                                   1 559 055   1 559 000
   123      Insurance against
            sickness                        3 830 23 1        228 387       528 061            35 358   4 622 037   4 622 000
   1290     Weightings                      2 837 208          169 175      391 157            26 191   3 423 732   3 424 000
   1291     Appropriations for
            adjustments to pensions
            and allowances                  2 843 932                       394 796                     3 238 728   3 239 000
                                  Total 151 464 476        10 628 433   20 871 842         3 560 178  186 524 929 166 524 000
 ---pagebreak--- 24                                       Preliminary draft general budget, 1989
              CHAPTER 13          - EXPENDITURE RELATING TO MISSIONS AND
                                                  DUTY TRAVEL
                                                     SUMMARY
                                                                       Appropriations Appropriations Percentage
 Chapter/                                                                 authorized    requested     change
   Article /                         Heading                               for 1988      for 1989      (2 : 1 )
    Item
                                                                               1             2            3
    130      Mission expenses for staff                                  14 620 000      16 854 000      + 15,28
                                                              Total     14 620 000      16 854 000       + 15,28
1 . Type of expenditure
The appropriation in Article 130 is to cover the reimbursement or payment of the costs of transport, accommo­
dation and meals incurred by officials on mission.
2. Method of calculation and explanation of changes
The appropriations requested assume an average rise in the cost of living of about 4 %, and also take account
of the increase in the number of officials .
 ---pagebreak---                                          Preliminary draft general budget, 1989                                        25
                       CHAPTER 14 - SOCIO-MEDICAL INFRASTRUCTURE
                                                     SUMMARY
                                                                       Appropriations Appropriations    Percentage
  Chapter/                                                                authorized    requested         change
   Article/                         Heading                                for 1988      for 1989         (2 : 1 )
    Item
                                                                               1             2               3
    140      Restaurants and canteens
    1400     Running costs                                                  479 000         677 000        + 41,34
    1401     Routine conversion of equipment                                 90 000         301 000        + 234,44
    1402     Exceptional conversion of equipment                            650 000               0        - 100
    141      Medical service
    1410     General running costs                                        1 376 000       1 745 000        +    26,82
    1411     General medical equipment                                      278 000         279 000        +       0,36
    142      Health checks                                                  241 000         288 000        +     19,50
                                                              Total       3 114 000       3 290 000        +       5,65
1 . Type of expenditure
Article 140 – Restaurants and canteens
This appropriation is to cover :
– operating costs of restaurants and canteens, contracts for the maintenance of facilities, routine replace­
     ment of existing equipment and purchase of new equipment,
– routine conversion and replacement of equipment,
– exceptional conversion and replacement of equipment.
Article 141 – Medical service
This appropriation is to cover :
– freelance doctors’ fees,
– cost of checkups and special examinations,
– consumables (dressings, medicines, etc.),
– special equipment and fittings,
– administrative costs of the Invalidity Committee,
– conversion and replacement of medical equipment.
Article 142 – Health checks
This appropriation is to cover the cost of medical surveillance for staff exposed to radiation in the course of their
work.
 ---pagebreak--- 26                                       Preliminary draft general budget, 1989
2. Method of calculation and explanation of changes
  Article /
                                                                                            Amount
    Item
    140     Restaurants and canteens
   1400     General running costs
            – running costs                                                                     367 000
            – maintenance contracts (parts and labour)                                          109 000
            – maintenance and repair costs                                                       83 000
            – miscellaneous purchases                                                            30 000
            – operation of new equipment                                                         88 000
                                                                                     Total      677 000
   1401     Routine conversion of equipment
            –  Brussels :
               2 groups of refrigerators                                                         46 000
               3 dishwaters                                                                      68 000
               2 steam ovens                                                                     43 000
               various equipment for the Berlaymont-1 kitchen                                     17 000
               miscellaneous small appliances                                                    37 000
            – Luxembourg :
               kitchen equipment ( pressure cookers, pans, etc. )                                39 000
               restaurants equipment (coffee machines, miscellaneous)                            32 000
               equipment for staff shop                                                           19 000
                                                                                     Total      301 000
   1402     Exceptional conversion of equipment                                                        0
    141     Medical service
   1410     General running costs ( Brussels and Luxembourg)
            – freelance doctors                                                                 691 000
            – annual checkups                                                                   192 000
            – Invalidity Committee                                                               72 000
            – supplies                                                                           47 000
            – running costs                                                                     126 000
                                                                                     Total    1 128 000
            General running costs JRC-Ispra
            –  freelance doctors                                                                 90 000
            – annual checkups                                                                      3 000
            – Invalidity Committee                                                               13 000
            – supplies                                                                           84 000
            – running costs                                                                     170 000
                                                                                     Total      360 000
            General running costs – other centres + information offices
            – freelance doctors                                                                  71 000
            – annual checkups                                                                   148 000
            – Invalidity Committee                                                               21 000
            – supplies                                                                             3 000
            – running costs                                                                      14 000
                                                                                     Total      257 000
                                                                                Grand total   1 745 000
 ---pagebreak---                                         Preliminary draft general budget, 1989                                 27
Continued
 Article /                                                                                          Amount
  Item
  1411     General medical equipment
           –   Brussels
               Purchase of various items,                                                                22 000
               computerization of the laboratory                                                         58 000
               protein electrophoresis system                                                            42 000
           – Luxembourg : purchase of various items                                                      25 000
                                                                                              Total     147 000
           Medical equipment JRC-lspra
           Automatic X-ray analyser/developer, microscope, monitor leasing                              105 000
           Medical equipment – other centres
           purchase of various items                                                                     27 000
                                                                                              Total    279 000
  142      Health checks
           DG XVI1-F ( Euratom Safeguards)
           The appropriation was calculated on the basis of the number of inspectors , the cost of
           exceptional checks in the event of exposure to radiation , the requisite equipment and
           any administrative expenses                                                                  131 000
           DG XI ( Personnel and Administration )
           The appropriation is to cover expenditure incurred in connection with health checks
           for staff exposed to radiation in the research establishments.
           The calculation is based on the number of medical checks carried out on research
           establishment staff                                                                          157 000
                                                                                              Total    288 000
 ---pagebreak--- 28                                         Preliminary draft general budget, 1989
               CHAPTER 15 - EXCHANGES OF CIVIL SERVANTS AND EXPERTS
                                                        SUMMARY
                                                                             Appropriations   Appropriations Percentage
  Chapter/                                                                     authorized        requested    change
   Article/                            Heading                                  for 1988          for 1989     (2 : 1 )
    Item
                                                                                    1                 2           3
    150      Travel and subsistence expenses for national experts
             seconded to Commission departments                                2 700 000           6 347 000    + 135,07
    1520     National and international civil servants and private
             sector staff seconded to Commission departments                     998 000           3 173 000    + 217,94
    1521     Commission officials seconded to national and
             international civil services                                        707 000             594 000    -     15,98
                                                                  Total        4 405 000         10 114 000     + 129,60
1 . Type of expenditure
This appropriation covers the travel and subsistence expenses of national experts either seconded to Commission
departments or called in for brief consultations to assist Commission officials, particularly in the drafting of pro­
posals for Council directives on harmonization in certain sectors of the Commission’s activities. This appropria­
tion also covers experts’ mission expenses.
2. Method of calculation and explanation of changes
   Article/
                                                                                                             Amount
    Item
     150      National experts seconded
              Based on 213 man-years (including travel and mission expenses),                                   5 547 000
              plus the repayment of the salaries of 20 experts in their country of origin                         813 000
                                                                                                    Total       6 360 000
    1520      National civil servants
              Based on 107 man-years (including travel and mission expenses),                                   2 773 000
              to which the repayment of the salaries of 10 civil servants in their country of origin
              must be added                                                                                       387 000
                                                                                                    Total       3 160 000
    1521      Commission officials
              The appropriation requested is based on a figure of 44 recipients
              It covers the daily subsistence allowance and mission expenses                                      594 000
 ---pagebreak---                                              Preliminary draft general budget, 1989                                      29
                        CHAPTER 16 – EXPENDITURE ON SOCIAL WELFARE
                                                           SUMMARY
                                                                           Appropriations  Appropriations  Percentage
 Chapter/                                                                     authorized     requested      change
   Article/                              Heading                               for 1988       for 1989       (2 : 1 )
    Item
                                                                                   1              2             3
    160      Special assistance grants                                           20 000            20 000             0
    161      Social contacts between staff                                      205 000          251 000       + 22,44
    162      Other welfare expenditure                                          364 000          435 000       + 19,51
    163      Interinstitutional welfare services                                     p.m .           p.m .              –
                                                                    Total       589 000          706 000       + 19,86
1 . Type of expenditure
Chapter 16 covers expenditure on social welfare, which includes financial assistance which may be given to offi­
cials, expenditure on promoting relations between staff of various nationalities, nurseries, child-minding centres
and children’s holiday camps. Certain staff welfare measures are also covered (including home helps and legal ad­
vice).
2 . Method of calculation and explanation of changes
   Article/
                                                                                                           Amount
    Item
    160       Special assistance grants
              Estimated amount                                                                                    20 000
    161       Social contacts between staff
              Brussels : cultural , sports and social activities                                                  78 000
                         subsidy for Europa Club , Overijse                                                     105 000
              Luxembourg : cultural , sports and social activities                                                37 000
                              management of Fitness Centre                                                        13 000-
              Information offices                                                                                 18 000
                                                                                               Total           251 000
     162      Other welfare expenditure
              Brussels : reception and assistance                                                               124 500
                         activities organized for children of staff                                            237 500
              Luxembourg : reception and assistance                                                               20 000
                              activities organized for children of staff                                          53 000
                                                                                               Total           435 000
     163      Interinstitutional welfare services                                                                    p.m .
 ---pagebreak--- 30                                        Preliminary draft general budget, 1989
              CHAPTER         17     -     ENTERTAINMENT               AND        REPRESENTATION
                                                      EXPENSES
                                                       SUMMARY
                                                                        Appropriations Appropriations Percentage
 Chapter/                                                                  authorized    requested     change
   Article /                          Heading                               for 1988      for 1989      (2 : 1 )
    Item
                                                                                1             2            3
    1700     Entertainment and representation expenses for
             members of the institution                                      370 000         400 000      +      8,11
    1701     Entertainment and representation expenses for staff             331 000         440 000      + 32,93
                                                               Total         701 000         840 000      + 19,83
1 . Type of expenditure
The appropriations are to cover expenses necessarily incurred by Members and authorized officials of the Com­
mission in the performance of their duty to represent the Commission in the interests of the service and in the
course of their work .
2 . Method of calculation and explanation of changes
The appropriation requested is the same as the amount initially requested for 1988 , with an increase to cover the
rise in prices.
 ---pagebreak---                                                   Preliminary draft general budget, 1989                                                      31
                      CHAPTER 18 - STAFF SERVING IN COUNTRIES OUTSIDE THE
                                                    EUROPEAN COMMUNITY
                                                                  SUMMARY
                                                                        Appropriations authorized for 1988           Appropria¬
                                                                                                                          tions    Percentage
    Article                         Heading                            Total        DAD head ¬      DAD outside        requested    change
                                                                                      quarters       Community          for 1989
      180       Salaries, allowances and repayment of
                expenses for officials and temporary
                staff                                                52 649 500       3 626 000      49 023 500       58 060 000   +     18,43
      181       Remuneration of other staff and
                payment for other services                           16 682 000           975 000     15 707 000      19 056 000   +     21,32
      182       Further training                                          46 000            1 000         45 000 ‘      2 290 000  + 4 988,89
      183       Miscellaneous expenditure on
                recruitment                                                9 000                0          9 000            50 000 +    455,56
      184       Entertainment and representation
                expenses                                                451 000             9 000        442 000          578 000  +     30,77
      185       Mission expenses                                      2 117 000           134 000      1 983 000        2 697 000  +     36,01
      189       Provisional appropriations                            1 812 000            67 000      1 745 000        1 041 000  –
                                                                                                                                         40,34
                                                       Total         73 766 500       4 812 000      68 954 500       83 772 000   +     21,49
                                                          A. INTRODUCTION
1 . The expenditure to be covered by the appropriations requested for Chapters A 18 and A 28 is estimated at
129 774 000 ECU in 1989 . Any comparison between this amount and the corresponding appropriations entered
in the 1988 budget should allow for the changes introduced in the 1989 preliminary draft.
(a) The expenditure relating to persons employed by the EAC who have not been appointed officials, estima­
      ted at 30 % in the 1988 budget, accounts in 1989 for only 0,928 % of the total expenditure on the activities finan­
      ced prior to 1987 by the appropriations entered in Chapter B 98 (Operation of Commission delegations in de­
      veloping countries).
(b) Staff and administrative expenditure for the departments of the Directorate for the Administration of De­
      legations located in Brussels was covered in 1988 by the appropriations entered in Chapters A 18 and A 28 .
      In the 1989 budget, the appropriations entered in these two chapters cover only the expenditure relating to
      the delegations proper.
2. Overall summary of changes to 1988 appropriations
                                Title /
                                                                                1988 budget                    Updated 1988 appropriations
                               Chapter                                   Amount                   %              Amount                %
Chapter 18                                                               58 872 000               53,2           68 954 500            62,3
Chapter 28                                                               30 003 500               27,1           34 743 100            31,4
                                                    Subtotal             88 875 500               80,3         ¡03 697 600              93,7
Other headings
- Title A 1                                                                       -                 -
                                                                                                                  4 812 000              4,3
- Title A 2                                                                       –                 –
                                                                                                                   1 313 000             1,2
                                                    Subtotal                      –                 –              6 125 000             5,5
                                            Part A – Total               88 875 500               80,3         109 822 600             99,2
Chapter B 98                                                             21 850 000 ( ‘ )         19,7               902 900 (2)         0,8
                                                 Grand total            110 725 500              100,0         110 725 500            100,0
( ' ) This amount represents 30 % of the appropriation of 72 836 000 ECU entered in the 1988 budget for the operation of the Commission
       delegations in developing countries and included in the total amount of 1 10 725 000 ECU ; the appropriations to cover expenditure by the
       delegations in the other non-member countries total 37 889 500 ECU .
(2) This amount corresponds to 0,9 % of the appropriation of 72 836 000 ECU .
 ---pagebreak--- 32                                       Preliminary draft general budget, 1989
3. Details of changes in appropriations for the departments of the Directorate for the Administration of Delegations
located in Brussels
                             Increases                                                   Reductions
          Article / Item                  Amount                      Article / Item                 Amount
            1100                         3 434 000                               180                3 626 000
            1101                           368 000                               181                  975 000
            1102                           435 000                               182                    1 000
            1103                            23 000                               184                    9 000
            112                               1 000                             185                   134 000
            1130                            93 000                               189                   67 000
            1131                            25 000
            1132                              1 000
            1133                              4 000
            1141                            55 000
            1143                              1 000
            1144                              1 000
            1147                              4 000
            115                              15 000
            1180                             18 000
            1181                              5 000
            1182                            49 000
            1183                            41 000
            1184                            29 000
            1191                            67 000
            1301                           134 000
            1701                              9 000
             Title I - Total             4 812 000                        Title 1 – Total           4 812 000
             Title 2 – Total             1 313 000                        Title 2 - Total           1 313 000
                    Grand total          6 125 000                               Grand total        6 125 000
                                          B. GENERAL DESCRIPTION
In July 1987 the Commission decided, in the interests of efficiency, to incorporate all the staff working in coun­
tries outside the Community into a single unit, the Directorate for the Administration of Delegations and Infor­
mation Offices .
With effect from the 1988 financial year, in a bid to ensure greater budget transparency, expenditure relating to
staff working outside the Community is contained in two chapters in Part A of the general budget : A 18 ( Staff
serving in countries outside the European Community) and A 28 ( Buildings, equipment and miscellaneous ope­
rating expenditure in countries outside the European Community).
By grouping expenditure in this way it is possible to present a more accurate picture of the particular nature of
staff and administrative expenditure outside the Community. It means that expenditure derives from the presence
of an official in a delegation or external office, which entails a whole series of costs specific to non-Community
countries : special allowances, accommodation , official cars, local staff, etc. (see Annex X to the Staff Regula­
tions).
In addition, the costs of certain rights enjoyed by all Commission staff under the Staff Regulations are consider­
ably higher as a result of the distances involved. This is true, for instance, for travel expenses in connection with
annual leave and removal costs.
Allowance is made for this in the method of calculation , which is based on the experience of the European Asso­
ciation for Cooperation ( EAC) in managing Chapter B 98 (Operation of Commission delegations in developing
countries).
 ---pagebreak---                                                     Preliminary draft general budget, 1989                                     33
This method applies the principle of the average cost of employing an official outside the Community, broken
down among the various budget articles. The average cost quoted here is based on actual expenditure in 1986,
increased by application of the adjustment parameters used in the 1987, 1988 and 1989 budgets.
The amounts entered against each budget heading are broken down, as far as possible, on the same basis.
(a) Cost in 1989 with staff at levels on 1.1 . 1988. This represents the equivalent in 1989 terms of administra­
    tive spending in 1988 , disregarding any specific measures implemented in 1988 .
    The figure is obtained by multiplying the number of staff by the average cost for the country in respect of
    the heading in question. The average cost covers routine expenditure.
    The number of staff in the Directorate for the Administration of Delegations and Information Offices (DAD)
    at 1 January 1988 was 539, broken down as follows :
    – Headquarters :            88
    – SEM countries :           38
    – ACP countries :         275
    – LAA countries :         275
    – Europe :                  29.
    This breakdown is indicative and may change subject to management requirements, local events or any other
    developments. The 539 posts feature in the Commission’s establishment plan.
(b) Cost of specific measures
    In addition to day-to-day expenditure, a certain number of specific measures not relating to the routine ope­
    ration of the delegations may prove necessary. These may be completed in one financial year or spread over
    several years. In order to avoid overestimating day-to-day running costs, they must be identified separately
    when calculating and applying the average cost.
The amount of appropriations required in 1989 with the same number ofstaff obtained by adding together (a)
and (b).
(c) Cost of change in staff levels
    The following changes are anticipated in relation to the situation at 1 January 1988
    – Headquarters :          - 88
    – SEM countries :             –
    – ACP countries :         + 10
    – LAA countries :         + 12
    – Europe :                + 8
       Total                  - 58
    This breakdown is purely an estimate.
    The reduction by 88 posts of the staff complement at headquarters is in fact simply a transfer of the correspon­
    ding staff and appropriations from Chapters A 18 and A 28 to other chapters in Titles A 1 and A 2. It does
    not, therefore, result in a net saving to the budget.
    The increase of 30 posts is to allow for the opening of five delegations (two of which are currently suboffices),
    the setting-up of six suboffices and staff increases in two delegations.
The total appropriations required in 1989 are obtained by adding together (a), (b) and (c).
                          Staff levels at 1 . 1 . 1988          Percentage        Specific   Change in        Appropriations
      Article          1988 cost               1989 cost          change         measures    staff levels   requested for 1989
                                                   (a)                              (b)          ( C)
       180           52 649 500               55 940 000         +    6,25        2 500 000   - 380 000           58 060 000
       181            16 682 000              17 877 000         +    7,16        1 000 000      179 000          19 056 000
       182                 46 000                        0       - 100            2 290 000               0        2 290 000
       183                  9 000                        0       - 100               50 000               0           50 000
       184                451 000                  557 000       +   23,50                 0      21 000             578 000
       185             2 117 000                2 662 000        +   25,74                 0      35 000           2 697 000
       189              1 812 000                1 048 000       -   42,16                 0 -      7 000          1 041 000
            Total    73 766 500               78 084 000         +    5,85        5 840 000  - 152 000           83 772 000
 ---pagebreak--- 34                                          Preliminary draft general budget, 1989
                C. METHOD OF CALCULA TION AND EXPLANA TION OF CHANGES
ARTICLE 180 - SALARIES , ALLOWANCES AND REPAYMENT OF EXPENSES FOR OFFICIALS AND
                       TEMPORARY STAFF
– Cost with staff at levels on 1 . 1 . 1988                                                         55 940 000
– Specific measures                                                                                  2 500 000
   This amount is to cover the cost of transitional measures in the context of the establishment
   of former EAC staff.
– Change in staff levels                                                                            - 380 000
   This amount corresponds to the reduction by 88 posts of staff levels at headquarters and the
   increase of 30 posts outside the Community.
                                                                                              Total 58 060 000
ARTICLE 181 - REMUNERATION OF OTHER STAFF AND PAYMENT FOR OTHER SERVICES
– Cost with staff at levels on 1 . 1 . 1988                                                         17 877 000
   This amount covers renumeration and related costs (including adjustments to allow for the
   cost of living and social legislation in the different countries ) in respect of the 1 376 posts
   for local staff, and payment for short-term back-up services (temps , auxiliaries, etc.).
– Specific measures                                                                                  1 000 000
   This is to cover the cost of standardizing the renumeration of local staff of the same
   category , as there is considerable disparity between local staff carrying out the same tasks ,
   depending on their geographical location and their status ( local Commission staff or local
   EAC staff).
– Change in staff levels                                                                               179 000
   This is to cover the increase in the number of local staff serving outside the Community in
   line with the increase in the number of officials in non-Community countries.
                                                                                              Total 19 056 000
ARTICLE 182 - FURTHER TRAINING
   Specific measures                                                                                 2 290 000
   The Commission has taken the necessary step of computerizing its delegations , the vast
   majority of which still keep manual accounts. The object of the operation , started in 1988 ,
   is to equip each delegation with two MS-DOS personal computers , whose use requires a
   basic knowledge of dataprocessing. In view of the rotation of staff serving outside the
   Community, it was deemed desirable to extend the training which this involves to include
   the local staff in the delegations. The cost of training has been estimated at 1 870 000 ECU .
   It has also proved necessary to provide administrative attachés , who are responsible for
   administrative management and accounts ( keeping the imprest accounts ) in the delegations ,
   with a certain amount of training and information , with particular reference to the
   Financial Regulation and the various administrative procedures used in the Commission .
   The training will be targeted mainly at the former EAC delegations which do not have staff
   experienced in Commission administrative and financial procedures . Experience in the
   EAC has shown that the most effective way of organizing this training is to hold a course
   lasting about two weeks at the DAD headquarters in Brussels for the administrative attachés
   concerned . The cost has been estimated at some 300 000 ECU .
   A further 120 000 ECU is earmarked for miscellaneous training operations ( further training,
   retraining, etc. ).
                                                                                              Total  2 290 000
 ---pagebreak---                                             Preliminary draft general budget, 1989                          35
ARTICLE 183 - MISCELLANEOUS EXPENDITURE ON RECRUITMENT
An appropriation is needed to cover the costs of recruiting local staff. The amount requested is an estimated
figure of 50 000 ECU and is shown under specific measures.
ARTICLE 184 - ENTERTAINMENT AND REPRESENTATION EXPENSES
– Cost with staff at levels on 1 . 1 . 1988                                                            557 000
– Change in staff levels                                                                                21 000
   The small increase (given with 30 new posts requested for the delegations) must be viewed
    in the light of the transfer of the corresponding appropriations for the DAD headquarters
                                                                                           Total       578 000
ARTICLE 185 – MISSION EXPENSES
– Cost with staff at levels on 1.1 . 1988                                                            2 662 000
– Change in staff levels                                                                                35 000
    This amount corresponds to the reduction by 88 posts of staff levels at headquarters and the
    increase of 30 posts outside the Community.
                                                                                           Total     2 697 000
ARTICLE 189 - PROVISIONAL APPROPRI ATIONS
The adjustment parameters for the decisions to be taken by the Council in 1989 are applied to Article 180.
 ---pagebreak---                                                Preliminary draft general budget, 1989                                        37
                       TITLE 2 - BUILDINGS, EQUIPMENT AND MISCELLANEOUS
                                               OPERATING EXPENDITURE
                                                           SUMMARY
                                                                             Appropriations    Appropriations Percentage
   Chapter/                                                                     authorized       requested     change
     Article /                            Heading                               for 1988 ( ' )    for 1989      (2 : 1 )
                                                                                     1                2            3
      20        Investments in immovable property, rental of buildings
                and associated costs                                         105 474 600        114 108 000       +      8,19
      21        Expenditure on data processing                                34 896 000         37 357 000       +      7,05
      22        Movable property and associated costs                         16 199 900         22 048 500       + 36,10
      23        Current administrative expenditure                              9 733 400        1 1 592 000      + 19,10
      24        Postal charges and telecommunications                         24 032 900         30 604 000       + 27,34
      25        Expenditure on formal and other meetings                       19 367 000        21 570 000       + 11,38
      26        Expenditure on studies, surveys and consultations               2 054 000          2 816 000      + 37,10
      28        Buildings, equipment and miscellaneous operating
                expenditure in countries outside the European
                Community                                                     34 743 100         46 002 000       + 32,41
      29        Building, equipment and miscellaneous operating
                expenditure – Shared-cost action                                                        p.m .              _
                                                          Title 2 - Total    246 500 900        286 097 500       + 16,06
( ' ) Including 50 000 ECU entered in Chapter 100.
 ---pagebreak--- 40                                      Preliminary draft general budget, 1989
Article 205 – Security and surveillance of buildings
As in the case of Item A 2040, the increase of 1 1 % is accounted for by work on the new Breydel building and
day nursery in Brussels and the computer premises in Luxembourg.
Article 209 – Other expenditure on buildings
The appropriation mainly covers management charges, refuse disposal, cleaning of septic tanks and disinfection
and the cost of signs, consultants’ reports and technical assistance for major alterations.
The increase is largely accounted for by the new buildings and the major alterations to the computer premises.
ARTICLES 206 to 208 - CONSTRUCTION AND ACQUISITION OF BUILDINGS
ARTICLE 206 - ACQUISITION OF IMMOVABLE PROPERTY
1988   – Appropriations authorized                                                                              p.m .
1989   – Appropriations requested                                                                          3 708 000
Percentage change                                                                                                 +
Type of expenditure and method of calculation
The appropriation requested is to cover the acquisition of the new Breydel building. This building has a total sur­
face area of 55 000 m 2 and will house some 1 300 staff.
Under the contract signed in 1986, which the Commission sent to the Council on 5 May 1986 (6704/ 86 – FIN
169), the Commission has to pay a fixed annual amount for 20 years, after which it will own the building.
The total cost on 1 February 1986 was BFR 2 465 million . The final price will be calculated when the building
is provisionally accepted in August 1989 when the rate of interest will also be fixed.
The request is based on a cost of BFR 2 500 million and a rate of interest of 10 %, i.e. annual instalments of BFR
293 600 000 (around 7 million ECU). Since the Breydel building is to be occupied from August, half an annual
instalment is requested plus the legal fees.
As the partitioning and finishing work is expected to take around three or four months, it will not be possible
to move into the offices until the end of 1989 .
ARTICLE 207 - CONSTRUCTION OF BUILDINGS
1988   – Appropriations authorized                                                                           511 000
1989   – Appropriations requested                                                                               p.m .
Percentage change                                                                                             - 100
Work on the Loi 120 building will end in 1988.
 ---pagebreak---                                        Preliminary draft general budget, 1989                                 41
ARTICLE 208 - OTHER EXPENDITURE PRELIMINARY TO THE CONSTRUCTION OF BUILDINGS
                   OR TO THE ACQUISITION OF IMMOVABLE PROPERTY
1988   – Appropriations authorized                                                                          p.m .
1989   – Appropriations requested                                                                         50 000
Percentage change                                                                                             +
Type of expenditure and method of calculation
The appropriation requested is to cover four consultants’ reports preliminary to acquisition or construction of
the following buildings :
– Orban (housing of all the translation divisions in a complex incorporating the current Orban building
   and a new building to be constructed) – building of around 48 000 m2 for some 1 000 persons ;
– the new day nursery ;
– The Breydel building.
These reports are both financial (examination of prices and overruns) and technical (consulting engineer and
architect to examine the structures, dividing walls, limits to the property, plans, etc.).
 ---pagebreak--- 42                                         Preliminary draft general budget, 1989
                          CHAPTER 21 - EXPENDITURE ON DATA PROCESSING
                                                         SUMMARY
                                                                           Appropriations  Appropriations      Percentage
  Chapter/                                                                    authorized     requested           change
  Article/                             Heading                                 for 1988       for 1989           (2 : 1 )
    Item
                                                                                   1              2                 3
.  210         Computer Centre operations                                    14 500 000      16 065 000            + 10,79
   211         Computer network                                              13 000 000      14 000 000            + 7,69
   212         Services of computer staff                                     1 344 000        1 000 000           - 25,60
   213         Computer operations handled outside                              896 000          650 000           - 27,46
   214         Analysis and programming handled outside                       4 141 000        4 278 000           + 3,31
   215         Document analysis handled outside                              1 015 000        1 180 000           + 16,26
   216         Celex distribution                                                    p.m .       184 000                  +
                                                                Total       34 896 000 ;     37 357 000            + 7,05
INTRODUCTION TO THE EXPLANATORY NOTES CONCERNING EXPENDITURE ON
                                           DATA PROCESSING FOR 1989
As in previous years, the data processing budget is based on the Commission’s five-year data-processing plan.
It is financed under Chapter 21 , Item 2204 (Electronic office equipment) and Item 2410 (Telecommunications),
as shown in the summary table below :
       Chapter/Article/Item               Appropriations                Appropriations                  Percentage
                                            for 1988                  requested for 1989                  change
               21                          34 896 000                    37 357 000                    + 7,05
              2204                          8 576 000                    10 552 000                    + 23,04
              2410                         16 621 900                    23 745 000                    + 42,85
                           Total          60 093 900                     71 654 000                    + 19,24
Before giving the explanations for individual headings, a few general remarks should be made.
In the interests of rationalization and efficiency the Commission is undergoing heavy computerization. Over 50 %
of the staff use computerized aids in their work and the average growth rate of services to users between 1982
and 1987 was 30% a year.
In addition to this rapid development, the Commission’s new priorities as regards restructuring the Funds, com­
pleting the internal market and extending its international relations are all having their impact on data-proces-
sing investments.
The Commission obtained some additional posts in 1988 and is requesting further posts in 1989. Half of these
additional staff will have to be equipped with computer aids immediately. The need to redesign old applications
in the light of the new priorities also entails additional requirements for development.
The translation service is also having to face growing demand and is endeavouring to meet this by rapid invest­
ment in electronic office equipment (see Item 2204).
These are the main reasons for the increase in the budget request for 1989. Computerization is an essential invest­
ment in order to boost the productivity of all the Commission’s resources.
 ---pagebreak---                                          Preliminary draft general budget, 1989                                      43
The summary table of appropriations requested in 1988 and 1989 also shows that the highest increase is in tele­
communications (see Item 2204). This large rise is due partly to the growth in traffic but mainly to investments in
cabling and the installation of electronic office networks and to the expenditure entailed by the creation of a tele­
communications centre and the installation of two videoconference studios.
By contrast, the increase in Chapter A 21 is rather modest compared with the other headings in Title 2, mainly
because the savings achieved in the past few years (in particular the replacement of outside services by new posts)
continue to bear fruit. However, it will not be possible to maintain data-processing growth with a relatively stable
budget in the future. The increase between 1988 and 1989 is 7,05 %, which breaks down as follows : 4,8 % for nor­
mal developments under the plan, 0,7 % for staff increases and 1,5 % for operations arising from the Commis-
sion’s new priorities, for which additional resources were allocated in 1988 under the letter of amendment.
ARTICLE 210 - COMPUTER CENTRE OPERATIONS
1988    – Appropriations authorized                                                                          14 500 000
1989    – Appropriations requested                                                                           16 065 000
Percentage change                                                                                               + 10,79
1 . Type of expenditure
This appropriation is to cover the following expenditure :
– Operation of the Computer Centre in Luxembourg, which covers the leasing and maintenance of the
     ICL, Siemens, Amdahl and Bull computers, together with their operating systems and peripherals, and the
     purchase of supporting equipment, supplies and documentation.
– The acquisition of software packages for which the Computer Centre provides user support. These pack­
     ages, usually produced by companies independent from hardware manufacturers, are to handle the manage­
     ment of such things as large data bases, statistical systems, and accounting or administration applications.
2 . Method of calculation and explanation of changes
Calculations are based on current commitments (leasing and maintenance contracts for computers and other
equipment), in addition to which there are new purchases in line with the normal expansion of applications. The
computing power available will increase by about 20 % and storage capacity will rise by 17 %, while the increase
in appropriations is kept to 10,8 %. The fact that this increase is larger than the average for the chapter is due
to the slowdown of the fall in mainframe prices and the substantial rise is software costs.
ARTICLE 211 - COMPUTER NETWORKS
1988    – Appropriations authorized                                                                          13 000 000
1989    – Appropriations requested                                                                           14 000 000
Percentage change                                                                                                + 7,69
1 . Type of expenditure
This appropriation is to cover the costs involved in the procurement, leasing and maintenance of local computers,
work stations, data transmission equipment and accompanying software. It also covers the purchase of associated
equipment, software, supplies and documentation.
2. Method of calculation and explanation of changes
The increase for 1989 is in line with the average for the chapter and reflects normal growth to cover both current
contracts in respect of distributed data processing and continued installation of individual work stations and net­
work equipment.
 ---pagebreak--- 44                                       Preliminary draft general budget, 1989
ARTICLE 212 - SERVICES OF COMPUTER STAFF
1988   – Appropriations authorized                                                                       1 344 000
1989   – Appropriations requested                                                                        1 000 000
Percentage change                                                                                         - 25,60
1 . Type of expenditure
This appropriation is to cover specific technical assistance for limited periods to meet temporary overloads.
2. Method of calculation and explanation of changes
The appropriation is down by 25,6 % as a result of savings achieved through staff increases in the Informatics
Directorate.
ARTICLE 213 - COMPUTER OPERATIONS HANDLED OUTSIDE
1988   – Appropriations authorized                                                                         896 000
1989   – Appropriations requested                                                                          650 000
Percentage change                                                                                          - 27,46
1. Type of expenditure
This appropriation is to cover the cost of data input work which departments cannot handle in-house at the mo­
ment. It also covers the cost of interrogating external data bases.
2. Method of calculation and explanation of changes
The appropriation is down by 27,5 % as a result of the reduction in work handled outside following the transfer
of service bureau operations to in-house staff.
ARTICLE 214 - ANALYSIS, PROGRAMMING, PRELIMINARY ANALYSIS AND SPECIAL PROJECTS
                    HANDLED OUTSIDE
1988   – Appropriations authorized                                                                       4 141 000
1989   – Appropriations requested                                                                        4 278 000
Percentage change                                                                                           + 3,31
1 . Type of expenditure
This appropriation is to cover applications development under subcontract and the acquisition of detailed
knowledge of handling new software tools to modernize existing applications. It also covers the acquisition of
knowledge and expertise in the fields of quality, security, technology and data-processing management through
work commissioned from outside or done under subcontract.
2. Method of calculation and explanation of changes
The appropriation shows a rise of 3,31 %, only about half the average for the chapter. This is due to the savings
made in the past, the effects of which are still being felt.
 ---pagebreak---                                          Preliminary draft general budget, 1989                                     45
ARTICLE 215 - DOCUMENT ANALYSIS HANDLED OUTSIDE
1988   – Appropriations authorized                                                                           1 015 000
1989   – Appropriations requested                                                                            1 180 000
Percentage change                                                                                              + 16,26
1 . Type of expenditure
This appropriation is to cover the systematic preparation of texts for input into the Commission’s data bases.
2. Method of calculation and explanation of changes
The increase is relatively high for two reasons : the main one is the inevitable increase in the volume of documents
to be handled as a result of the growth of the Commission’s activities (about 12 %); the remaining 4 % is accounted
for by the fact that some of the operations previously financed under Item 2130 are now charged to this article.
ARTICLE 216 - CELEX DISTRIBUTION
1988   – Appropriations authorized                                                                                p.m .
1989   – Appropriations requested                                                                              184 000
Percentage change                                                                                                   +
1 . Type of expenditure
The appropriation is to cover the cost of promoting and distributing the data bases both in-house and outside.
It complements the finance provided under Article 215 .
2. Method of calculation and explanation of changes
In 1988 this appropriation was included in Articles 215 and 213 .
In 1987 expenditure amounted to 339 717 ECU. The provision of permanent posts has made it possible to bring
this figure down to the level of the appropriation requested .
 ---pagebreak--- 46                                             Preliminary draft general budget, 1989
                    CHAPTER 22 - MOVABLE PROPERTY AND ASSOCIATED COSTS
                                                            SUMMARY
                                                                             Appropriations    Appropriations Percentage
                                                                                authorized       requested     change
     Article     Item                           Heading                         for 1988 ( ' )    for 1989      (2 : 1 )
                                                                                      1               2             3
     220                  Technical installations and electronic office
                          equipment
                2200       New purchases                                           731 000         1 169 000     +    59,92
                2201      Replacements                                             321 000           547 000     +    70,40
                2202      Hire                                                          p.m .               0              –
                2203      Maintenance, use and repair                              372 000           397 000     +       6,72
                2204      Electronic office equipment                            8 576 000        10 552 000     +    23,04
                                                                    Total      10 000 000        12 665 000      +    26,65
     221                  Furniture
                2210      New purchases                                          1 501 000         3 364 000     + 124,12
                2211      Replacement                                              654 000           953 000     +    45,72
                2212      Hire                                                       2 000              2 000            0
                2213      Maintenance, use and repair                              169 000           251 000     +    48,52
                                                                    Total       2 326 000          4 570 000     +    96,47
     223                  Vehicles
                2230      New purchases                                             99 200           121 000     +    21,98
                2231      Replacement                                              275 500           430 000     +     56,08
                2232      Hire                                                     165 000           176 000     +       6,67
                2233      Maintenance, use and repair                              773 000           808 000     +       4,53
                                                                    Total        1 312 700         1 535 000     +     16,93
     225                  Library
                2250      Library stocks, purchase of books                        499 200           533 000     +       6,77
                2251      Special library, documentation and
                          reproduction equipment                                    25 000             27 000    +       8,00
                2252      Subscriptions to newspapers and periodicals              967 000         1 043 000     +       7,86
                2253      Subscriptions to news agencies                           389 000           406 000     4-      4,37
                2254      Binding and upkeep of library books                      128 000           139 500     +       8,98
                2255      Subscriptions to viewdata services                        56 000             61 000    +       8,93
                2256      Eurodicautom                                             497 000         1 069 000     + 115,09
                                                                    Total       2 561 200          3 278 500     +    28,01
                                                              Grand Total      16 199 900        22 048 500      +    36,10
( ' ) Including 25 000 ECU entered in Chapter 100.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                   47
ARTICLE 220 - TECHNICAL INSTALLATIONS AND ELECTRONIC OFFICE EQUIPMENT
1 . Breakdown by item
                                               2200         2201         2202      2203         2204          220
                                           New purchases  Replace­       Hire     Mainte­    Electronic      Total
                                                            ments                 nance     office equip.
Brussels                                       832 000      427 000            0   248 000    7 292 000    8 799 000
Luxembourg                                     184 000       42 000                 74 000             0     300 000
Information offices                             56 000       25 000            0    48 000      654 000      783 000
DAD – Headquarters                              24 000       28 000                 11 000      358 000      421 000
New posts 1988 – Council                         8 000        7 000            0     4 000       93 000      112 000
        Total with same number of staff      1 104 000      529 000            0   385 000   8 397 000    10 415 000
New posts 1988 – Parliament                     23 000       18 000            0    10 000      248 000      299 000
New posts 1989                                  12 000             0                      0       57 000      69 000
New Information Offices                         30 000             0           0     2 000      150 000      182 000
New operations                                       0             0           0          0   1 700 000    1 700 000
     Total appropriations requested for
                                   1989      1 169 000      547 000            0   397 000  10 552 000    12 665 000
    Appropriations authorized for 1988         731 000      321 000         p.m .  372 000    8 576 000   10 000 000
                      Percentage change        + 59,92      + 70,40           –
                                                                                    + 6,72      + 23,04      + 26,65
2. Type of expenditure and method of calculation
ITEM 2200 - NEW PURCHASES - TECHNICAL EQUIPMENT AND INSTALLATIONS
This appropriation is for the purchase of:
– Brussels : shelving (400 000 ECU), microfiche filing cabinets (80 000 ECU), interpreting and sound equip­
     ment (250 000 ECU), notice boards, planners, trolleys, special cupboards, etc. ( 100 000 ECU);
– Luxembourg: interpreting and sound equipment (25 000 ECU), four paternoster-type cabinets(’ )
     (28 000 ECU), compactus shelving(2) (80 000 ECU), radiators, receiving perforators, electric collators
     ( 50 000 ECU);
– Information Offices: shelving and filing systems (31 000 ECU), audio-visual equipment (25 000 ECU),
     equipment for new offices (30 000 ECU).
ITEM 2201 - REPLACEMENT OF TECHNICAL EQUIPMENT AND INSTALLATIONS
The appropriation is to cover :
– Brussels : replacement of simultaneous interpreting installations (3 rooms in CCAB) (300 000 ECU), and
     of audio-visual equipment, elevators, radiators and shelving ( 120 000 ECU);
– Luxembourg: replacement of an elevator ( 17 000 ECU), a binding machine, folding machine, receiving
     perforator and massicot (26 000 ECU), and of audio-visual equipment ( 14 000 ECU);
– Information Offices : replacement of audio-visual equipment ( 15 000 ECU), and of a franking machine
     and filing equipment ( 14 000 ECU).
ITEM 2203 - MAINTENANCE
The increase in expenditure on maintenance and repairs is the result of a rise in the price of the services and the
ageing of the machines, making more frequent repairs necessary.
(' ) Electronic filing system which moves up and down on rails.
(2) Filing system which moves sideways on rails.
 ---pagebreak--- 48                                       Preliminary draft general budget, 1989
ITEM 2204 - ELECTRONIC OFFICE EQUIPMENT
The appropriation requested is to cover the programme for the purchase, hire and maintenance of electronic
office equipment in accordance with the Commission’s data-processing plan. This covers stand-alone or multi-
station equipment and, where still required in spite of the introduction of the new technology, traditional
equipment such as photocopiers, telecopiers, typewriters, calculators, reader-printers, etc.
The list, which is not exhaustive, includes control units, storage units, connection equipment and related soft­
ware, together with associated supplies and documentation.
Since the technology used in electronic office equipment and local computers is the same, expenditure on some
equipment may be charged either to Article 220 or to Article 211 , depending on its intended purpose.
This item is affected more than others by the increase in staff numbers. In addition, particular efforts are under
way to speed up the introduction of electronic office equipment in the translation divisions (Sysling programme),
a move which is expected to increase productivity by 8 %. The programme, which is spread over three years
( 1989/90/91 ) and represents an investment of 8 million ECU, should provide the capacity of 60 translation units
and 160 typing units.
If the Commission cannot make this investment, it will have to request the additional staff indicated above
(costing around 10 million ECU per year).
The allocation for 1989 represents an increase of 23,04% on the 1988 figure.
ARTICLE 221 - FURNITURE
1 . Breakdown by item
                                            2210            2211             2212             2213            221
                                            New            Replace­          Hire           Mainte­          Total
                                         purchases          ments                            nance
Brussels                                  1 272 000          743 000            1 000          156 000      2 172 000
Luxembourg                                  237 000          137 000                0           56 000        430 000
Information Offices                           48 000          23 000            1 000           27 000         99 000
DAD – Headquarters                           127 000          24 000                0            4 000        155 000
New posts 1988 – Council                      37 000           7 000                0            2 000         46 000
    Total with same number of staff       1 721 000          934 000            2 000         245 000       2 902 000
New posts 1988 – Parliament                   98 000          19 000                0            5 000        122 000
New posts 1989                              545 000                 0               0                0        545 000
New Information Offices                       20 000                0               0            1 000         21000
New operations                              980 000                 0               0                0        980 000
 Total appropriations requested for
                               1989       3 364 000          953 000            2 000         251 000       4 570 000
      Appropriations authorized for
                               1988       1 501 000          654 000            2 000          169 000      2 326 000
                  Percentage change       + 124,12          + 45,72                 0         + 48,52         + 96,47
2. Type of expenditure and method of calculation
While it is true that the increase in appropriations for this article is considerable, it should be borne in mind that
the appropriations for furniture have failed in recent years to keep pace with the increase in staff numbers,
although they are linked for the most part with the creation of new posts and the acquisition of new office space.
It must be remembered that only a token entry was made for these items in the 1985 budget, with the result that
large increases have been required in subsequent years. The requests for 1989, therefore, are designed to help
make up the accumulated backlog.
Furthermore, these items relate not only to office furniture, but also to ergonomic furniture, the fitting-out of
entrance halls, furniture for the nurseries and day-care centres, restaurants and cafeterias, conference rooms,
notice boards, etc.
With regard to new purchases, the appropriation is to cover :
 Brussels
 – shelving (250 000 ECU), cupboards and mail sorting boxes (600 000 ECU), fitting-out of restaurant/cafe­
     teria ( 120 000 ECU) and foyers ( 10 000 ECU) in the new Breydel building ;
 ---pagebreak---                                          Preliminary draft general budget, 1989                                    49
 – furniture for the new nursery (20 000 ECU);
– ergonomic furniture and furniture connected with dataprocessing, additional furniture for 1988 new buil­
     dings (1 200 000 ECU);
– chairs for conférence rooms (30 000 ECU);
– furniture in connection with 198 new posts in 1989 (cost according to grade) (545 000 ECU);
– additional furniture for 1988 new posts (98 000 ECU).
Luxembourg
– complete fitting-out or additional furniture, ergonomic chairs ( 148 000 ECU);
– fitting-out of workshops (44 000 ECU);
– microfiche cabinets ( 10 000 ECU);
– filing equipment for archives in Wagner Building (30 000 ECU).
Information Offices
– furniture connected with the extension of the premises in Athens, Berlin, Bonn, Edinburgh, Madrid and
     Paris (48 000 ECU);
– fitting-out of new Offices in Germany and Italy (20 000 ECU).
The requests for 1989 for Item 2210 are 24% up on expenditure for 1987 (2 707 491 ECU).
The situation with regard to replacements is equally critical, and cannot be resolved overnight. Because of the
shortage of appropriations, the furniture purchased in recent years has been towards the lower end of the range
and has consequently proved less robust. This fact, combined with the shortage of appropriations available for
replacements, means that considerable problems can be expected in the years to come.
The furniture for which replacements are being sought in 1989 is between 16 and 28 years old. By way of informa­
tion , chairs have an average life of 7 years, tables and desks 10 years, and cupboards and filing cabinets 13 years.
Given that these averages, drawn up by the committee on the withdrawal of furniture from use, are already excee­
ded , a minimum amount at least should be allocated to Items 22 1 1 and 2213 .
ARTICLE 223 - VEHICLES
1 . Breakdown by item
                                            2230            2231            2232          2233             223
                                            New         Replacements        Hire       Maintenance        Total
                                          purchases                                     and repair
Brussels                                      24 000        308 000          149 000       633 000       1 114 000
Luxembourg                                    18 000          58 000          12 000        48 000         136 000
Information Offices                           22 000          31 000           5 000        84 000         142 000
DAD – Headquarters                                  0          8 000               0               0         8 000
New posts 1988 – Council                       1 000           7 000           2 000        10 000          20 000
    Total with same number of staff           65 000        412 000         168 000        775 000       1 420 000
New posts 1988 – Parliament                    3 000          18 000           6 000        27 000          54 000
New posts 1989                                13 000               0               0               0        13 000
New Information Offices                       40 000               0           2 000         6 000          48 000
New operations                                      0              0               0               0             0
 Total appropriations requested for
                               1989          121 000        430 000          176 000       808 000       1 535 000
      Appropriations authorized for
                               1988           99 200        275 500          165 000       773 000       1 312 700
                 Percentage change          + 21,98         + 56,08           + 6,67        + 4,53         + 16,93
2. Type of expenditure and method of calculation
 ITEM 2230 - NEW PURCHASES - VEHICLES
 Brussels : purchase of a breakdown lorry. Cost of use (including depreciation) estimated at 3 500 ECU per year.
 Savings on breakdown costs estimated at 25 000 ECU per annum (the requests for Item 2233 take these savings
into account).
 ---pagebreak--- 50                                       Preliminary draft general budget, 1989
 Luxembourg: purchase of an additional official car to cope with the increased workload in DG XVII (nuclear
inspections).
 Information Offices : purchase of a motorcycle in Madrid and a second official car in Rome, purchase of vehicles
for the new Offices in Germany and Italy.
The effect of the new posts in 1989 is shown under this item , but the appropriations are to cover the whole of
Article 223 .
ITEM 2231 - REPLACEMENT OF VEHICLES
Brussels : replacement of 10 official cars for the Members of the Commission (replacement in 1989), 2 Director-
General’s cars, 4 official cars dating from between 1981 and 1986 which will have covered between 1 10 000 km
and 200 000 km by 1 January 1989 , and one van dating from 1974 which has covered 550 000 km .
Luxembourg : replacement of two Director-General’s cars and two official cars dating from between 1982 and
1985 which have covered between 100 000 km and 150 000 km .
Information Offices : replacement of three official cars in Belfast, Bonn and Copenhagen, dating from 1982 and
1984, which had covered between 80 000 km and 140 000 km at 31 December 1987 .
This gives a total of 24 vehicles to be replaced out of a fleet of 140 ; from the point of view of maximum economic
efficiency, it would be desirable to replace 33 .
ITEM 2232 - HIRE OF VEHICLES
Given that outturn in 1987 was 175 691 ECU, and the request for 1989 is 176 000 ECU, there is no increase for
this item .
ITEM 2233 - MAINTENANCE AND REPAIR OF VEHICLES
The increase for this item is largely due to the fact that maintenance and repair costs will be high for a number
of vehicles which should ideally be replaced.
ARTICLE 225 - DOCUMENTATION AND LIBRARY EXPENDITURE
1 . Breakdown by item
                               2250        2251         2252        2253       2254        2255        256      225
                              Non-      Equipment    Subscrip¬   Subscrip¬   Costs of   Viewdata      Euro-    Total
                            periodical                tions to      tions    binding     services   dicautom
                              works                 newspapers    to news
                                                        and      agencies
                                                    periodicals
Brussels                      375 000      26 000     821 000     343 000     104 000      58 000     47 000  1 774 000
Luxembourg                      83 000           0      90 000            0    14 500            0 1 000 000  1 187 500
Information Offices             40 000           0      89 000      42 000     13 000            0          0   184 000
DAD – Headquarters               2 000           0             0          0         0            0          0      2 000
New posts 1988 –
Council                          7 000           0       9 000        4 000     2 000        1 000      5 000    28 000
Total with same number
                   of staff   507 000      26 000   1 009 000     389 000    133 500       59 000  1 052 000  3 175 500
New posts 1988 –
Parliament                      18 000           0      23 000      12 000      4 000       2 000      14 000    73 000
New posts 1989                   4 000       1 000       5 000        3 000     1 000            0      3 000    17 000
New Information Offices          4 000           0       6 000        2 000     1 000            0          0    13 000
New operations                        0          0             0          0         0            0          0          0
      Total appropriations
        requested for 1989    533 000      27 000   1 043 000     406 000    139 500       61 000  1 069 000  3 278 500
            Appropriations
       authorized for 1988    499 200      25 000     967 000     389 000    128 000       56 000    497 000  2 561 200
        Percentage change       + 6,77     + 8,00       + 7,86     + 4,37      + 8,98     + 8,93   + 115,09     + 28,01
 ---pagebreak---                                           Preliminary draft general budget, 1989                                51
2. Type of expenditure and method of calculation
ITEM 2250 - LIBRARY STOCKS , PURCHASE OF BOOKS
The appropriation is to cover the following expenditure :
Brussels/Luxembourg – Central libraries :
– subscriptions to updatings (1 800), directories (850) and railway timetables (360);
– new publications (4 500);
– dictionaries (1 400).
Information Offices: updatings and new publications for the existing Offices and the new Offices in Germany
and Italy .
ITEM 2252 - SUBSCRIPTIONS TO NEWSPAPERS AND PERIODICALS
In Brussels and Luxembourg, appropriations are to cover :
– 970 subscriptions to newspapers (300 000 ECU);
– 3 300 subscriptions to periodicals (343 000 ECU);
– subscriptions to scientific and technical publications (300 000 ECU), hitherto charged to Article B 754.
In the Information Offices, the renewal of existing subscriptions (86 000 ECU), and new subcriptions for the
present Offices and the new Offices in Germany and Italy (9 000 ECU).
ITEM 2253 - SUBSCRIPTIONS TO NEWS AGENCIES
The appropriation requested is to cover expenditure in connection with contracts for teleprinter services and with
information bulletins.
ITEM 2256 - MULTILINGUAL TERMINOLOGY BASE EURODICAUTOM
Eurodicautom is a terminology data base designed to assist the Commission’s translation departments and those
of the other Community institutions in their work.
The amount requested for 1989 is explained by the fact that the terminology relating to the Community’s various
fields of activity has to be covered in all the official working languages. New terminological requirements are
being created by the completion of the internal market and the implementation of certain directives (invitations
to tender DG III , Einecs(‘ ), DG XI), as well as by programmes such as Eureka, Esprit, Eurotra,(2) etc.
In addition, the Commission’s policy of opening up its data bases means that a certain amount of programming
and consolidation is necessary to ensure that data are distributed correctly.
 ( ' ) European inventory of existing commercial chemical substances.
 (2) Specific programme for the creation of a machine translation system of advanced design.
 ---pagebreak--- 52                                  Preliminary draft general budget, 1989
               CHAPTER 23 - CURRENT ADMINISTRATIVE EXPENDITURE
                                                  SUMMARY
                                                                  Appropriations  Appropriations  Percentage
                                                                     authorized     requested      change
  Article Item                       Heading                          for 1988       for 1989       (2 : 1 )
                                                                          1              2             3
   230           Stationery and office supplies
          2300   Stationery and office supplies                      5 094 400        6 164 000       + 21,00
   232           Financial charges
          2320   Bank charges                                          700 000          800 000       + 14,29
          2329   Other financial charges                                      –               –                –
                                                 Article – total       700 000          800 000       + 14,29
   233           Legal expenses                                        650 000        1 000 000       + 53,85
   234           Damages
          2340   Damages                                               100 000          110 000       + 10,00
          2341   Compensation                                                 –               –                –
                                                 Article – total       100 000          110 000       + 10,00
   235           Other operating expenditure
          2350   Miscellaneous insurance                               110 000          132 000       + 20,00
          2351   Uniforms and working clothes                          192 000          256 000       + 33,33
          2352   Internal meetings – miscellaneous costs               138 000          155 000       + 12,32
          2353   Handling. Departmental removals                     2 180 000        2 121 000       - 2,71
          2359   Other operating expenditure                            39 000            42 000         + 7,69
                                                 Article – total     2 659 000        2 706 000       +      1,77
   239           Services rendered between institutions
          2390   Office for Official Publications                             –               –                –
          2391   Joint Interpreting Service                            530 000          812 000       + 53,21
          2392   Commission (MLTS)                                          p.m .           p.m .              –
                                                 Article – total       530 000          812 000       + 53,21
                                                          Total      9 733 400      11 592 000        + 19,10
                                 I
 ---pagebreak---                                          Preliminary draft general budget, 1989                                    53
ARTICLE 230 - STATIONERY AND OFFICE SUPPLIES
1 . Breakdown
                                                    A 2300
                                               Stationery and
                                                office supplies
Brussels                                               4 937 000
Luxembourg                                               492 000
Information Offices                                      362 000
DAD – Headquarters                                        91 000
New posts 1988 – Council                                  63 000
       Total with same number of staff                 5 945 000
New posts 1988 – Parliament                              170 000
New posts 1989                                            39 000
New Information Offices                                   10 000
New operations                                                  0
    Total appropriations requested for
                                  1989                 6 164 000
   Appropriations authorized for 1988                  5 094 400
                    Percentage change                    + 21,00
2. Type of expenditure and method of calculation
The minimum amount considered necessary in 1988 was 5 894 000 ECU. The 1989 amount therefore represents
an increase of 4,58 %.
The size of this item is linked directly to the normal rise in prices, wider use of electronic office equipment (and
therefore of specific products such as ribbons, printer daisies, and fan-fold paper and forms) and the increase
in staff numbers (new officials requiring basic office supplies).
ARTICLE 232 - FINANCIAL CHARGES
1988   – Appropriations authorized                                                                           700 000
1989   – Appropriations requested                                                                            800 000
Percentage change                                                                                            + 14,29
2. Type of expenditure and method of calculation
ITEM 2320 - BANK CHARGES
Commission, discount charges, various costs. The amount is based on an estimate of the foreseeable development
from actual expenditure in 1987
ITEM 2329 - OTHER FINANCIAL CHARGES
A token entry has been made for this item. If necessary, an appropriation will be allocated by the means provided
in the Financial Regulation.
 ---pagebreak--- 54                                      Preliminary draft general budget, 1989
ARTICLE 233 - LEGAL EXPENSES
 1988   – Appropriations authorized                                                                         650 000
1989    – Appropriations requested                                                                        1 000 000
Percentage change                                                                                           + 53,85
1 . Type of expenditure
This appropriation is to cover the expenditure resulting from preliminary legal proceedings and employment of
the services of barristers or of other experts as counsel to the Commission.
It is also intended to cover costs which may be awarded against the Commission by the Court of Justice or other
courts .
The Legal Service uses outside lawyers only :
(a) when there is no lawyer on the team dealing with the case whose main language is the language in which
     the case is being conducted and it is not advisable to use another member of the Legal Service because of the
     technicalities of the case ;
(b) in certain cases involving staff;
(c) in steel, competition and agriculture cases ;
(d) in cases in national courts in an attempt to keep down the fees of its own lawyers.
2. Method of calculation and explanation of changes
The estimated increase in expenditure is based on the increase in a number of legal proceedings (infringements,
aids, etc.) and the increase in lawyers’ fees.
ARTICLE 234 - DAMAGES
1988    – Appropriations authorized                                                                         100 000
1989    – Appropriations requested                                                                          110 000
Percentage change                                                                                           + 10,00
Type of expenditure and method of calculation
ITEM 2340 - DAMAGES
This appropriation is to cover damages and the cost of settling claims against the Commission (civil liability).
As the pattern of expenditure in this sphere is of necessity unpredictable, the appropriations will, if necessary,
be supplemented by means of a transfer.
ITEM 2341 - COMPENSATION
A token entry has been made for this article. If necessary, an appropriation will be allocated by the means
provided in the Financial Regulation.
 ---pagebreak---                                        Preliminary draft general budget, 1989                                           55
ARTICLE 235 - OTHER OPERATING EXPENDITURE
1 . Breakdown by item
                                            2350           2351           2352          2353        2359         235
                                       Miscellaneous                    Internal    Departmental    Other       Total
                                                         Uniforms
                                         insurance                     meetings       removals    operating
                                                                                                 expenditure
Brussels                                    127 000        186 000        125 000     1 762 000      32 000   2 232 000
Luxembourg                                         0        44 000         15 000       209 000       2 000     270 000
Information Offices                                0         11 000         5 000        52 000       5 000      73 000
DAD – Headquarters                                 0              0         1 000              0           0       1000
New posts 1988 – Council                      1 000           3 000         2 000        23 000        1 000     30 000
       Total with same number of staff      128 000        244 000       148 000      2 046 000      40 000   2 606 000
New posts 1988 – Parliament                   3 000           8 000         5 000        61 000            0     77 000
New posts 1989                                1 000           2 000         1 000        14 000        1 000      19 000
New Information Offices                            0          2 000         1 000              0       1 000       4 000
New operations                                     0              0              0             0           0           0
    Total appropriations requested for
                                  1989      132 000        256 000        155 000     2 121 000      42 000   2 706 000
   Appropriations authorized for 1988       110 000        192 000        138 000     2 180 000      39 000   2 659 000
                    Percentage change      + 20,00         + 33,33       + 12,32         - 2,71      + 7,69      + 1,77
2. Type of expenditure and method of calculation
ITEM 2350 - MISCELLANEOUS INSURANCE
Expenditure on this item in 1987 totalled 100 000 ECU (initial appropriation 80 000 ECU). The forecast for 1988
is 123 000 ECU (appropriation 1 10 000 ECU). The increase in real terms therefore totals 7,32 %.
This item covers all-risk insurance (interpreting, photosetting, telephone, computing facilities, etc.), theft, acci­
dent (occasional staff, language teachers), civil liability, financial liability of accounting officers, etc.
ITEM 2351 - UNIFORMS AND WORKING CLOTHES
According to its internal Rules of Procedure, the Commission must provide uniforms and working clothes to
various categories of staff, such as messengers, drivers and staff working in print shops.
The outturn for this item in 1987 was 232 964 ECU. The forecast for 1988 is 232 000 ECU (appropriation 192 000).
The request for 1989 therefore represents a rise of 10%.
ITEM 2352 - INTERNAL MEETINGS
This appropriation covers expenditure relating to the coffee served at meetings of the institution’s departments
and the snacks and drinks served when the Commission works away from headquarters (e.g. in Strasbourg). It
represents a rise of 0,53 % over expenditure in 1987.
ITEM 2353 - HANDLING. DEPARTMENTAL REMOVALS
This request for appropriations represents current removal and handling costs and costs relating to the occu­
pation of new buildings.
ITEM 2359 - OTHER OPERATING EXPENDITURE
The cost of medals for officials with 20 years’ service is charged to this item.
 ---pagebreak--- 56                                      Preliminary draft general budget, 1989
ARTICLE 239 - SERVICES RENDERED BETWEEN INSTITUTIONS
ITEM 2390 - SERVICES RENDERED BY THE OFFICE FOR OFFICIAL PUBLICATIONS ( PRO-
                 FORMA APPROPRIATION )
1988   – Appropriations authorized                                                                    (20 472 071 )
1989   – Appropriations requested                                                                     (22 030 857 )
Percentage change                                                                                          (+ 7,6)
Type of expenditure and method of calculation
The amounts entered represent the value of the services rendered by the Office for Official Publications for the
Commission ; they are merely a guide. The actual appropriations for the Office are shown in Article 342 .
ITEM 2391 - JOINT INTERPRETING SERVICE
1988   – Appropriations authorized                                                                         530 000
1989   – Appropriations requested                                                                          812 000
Percentage change                                                                                          + 53,21
Type of expenditure and method of calculation
The Commission’s interpreters service meetings held by Parliament at the Commission’s places of employment
and vice versa. Each institution pays for the services provided by the other.
The appropriation has been determined on the strength of experience in recent financial years ; namely , the pro­
vision of Parliament staff for use by the Commission totalling around 2 000 interpreter-days at 401 ECU . Servi­
ces provided in previous years totalled :
       1982           1 297 interpreter-days
       1983           1 094 interpreter-days
       1984           1 983 interpreter-days
       1985           1 301 interpreter-days
       1986           1 071 interpreter-days
       1987 .         1 341 interpreter-days
The increase in the number of interpreter-days is explained by the fact that elections to Parliament will be held
in 1989, so that there will be more scope for using Parliament’s interpreters at Commission meetings.
ITEM 2392 - SERVICES SUPPLIED BY THE COMMISSION ( MEDIUM - AND LONG-TERM
                TRANSLATION SERVICE ) TO THE OFFICE FOR OFFICIAL PUBLICATIONS
1988   – Appropriations authorized                                                                            p.m .
1989   – Appropriations requested                                                                             p.m .
Percentage change                                                                                               -
Type of expenditure and method of calculation
Under the terms of the agreement concluded on 8 December 1972, with effect from 1 January 1973 , between the
Commission and the Office for Official Publications, concerning attachment to the Office of the Medium - and
Long-Term Translation Service, the Commission undertook to place at the disposal of the Office translation staff
employed at Luxembourg, as shown in the Commission’s establishment plan .
 ---pagebreak---                                                Preliminary draft general budget; 1989                                             57
                  CHAPTER 24 - POSTAL CHARGES AND TELECOMMUNICATIONS
                                                           SUMMARY
                                                                                Appropriations   Appropriations        Percentage
   Chapter/                                                                       authorized       requested            change
     Article/                             Heading                                 for 1988 Í 1 )    for 1989             (2 : 1 )
      Item
                                                                                       1                2                   3
      240        Postage and delivery charges                                     7 411 000          6 859 000              - 7,45
      241       Telephone, telegraph , telex and television charges              16 621 900        23 745 000              + 42,85
                                                                    Total        24 032 900        30 604 000              + 27,34
( ! ) Including 5 000 ECU entered in Chapter 100.
                                                                               \
ARTICLE 240 - POSTAGE AND DELIVERY CHARGES
ARTICLE 241 - TELEPHONE, TELEGRAPH, TELEX AND TELEVISION CHARGES
1 . Breakdown by Article
                                                                            240                                  241
                                                                       Postage and                  Telephone, telegraph , telex
                                                                     delivery charges                  and television charges
Brussels                                                                 4 857 000                             19 820 000
Luxembourg                                                                 470 000                                       0
Information Offices                                                      1 155 000                                985 000
DAD – Headquarters                                                          23 000                                 70 000
New posts 1988 – Council                                                    78 000                                191 000
                        Total with same number of staff                  6 583 000                            21 066 000
New posts 1988 – Parliament                                                208 000                                511 000
New posts 1989                                                              48 000                                118 000
New Information Offices                                                     20 000                                 50 000
 New operations                                                                    0                            2 000 000
               Total appropriations requested for 1989                   6 859 000                            23 745 000
                    Appropriations authorized for 1988                   7 411 000                             16 621 900
                                      Percentage change                     - 7,45                                + 42,85
2. Type of expenditure and method of calculation
 Article 240 – Postage and delivery charges
 As a result of the Commission’s efforts in recent years to contain distribution costs by means of strict management
 measures, the appropriations requested for 1989 are 7,45 % lower than in 1988 .
 This item also covers the cost of the subcontracted shuttle service linking the Commission buildings.
 ---pagebreak--- 58                                       Preliminary draft general budget, 1989
           /
Article 241 – Telephone, telegraph, telex and television charges
These appropriations cover :
– subscriptions to public télécommunications networks ;
– call costs ;
– installation of telecommunications equipment, including cabling in buildings ;
– purchase and maintenance of téléphoné exchange infrastructure.
In 1988 a new telecommunications centre will be installed to manage all incoming and outgoing Commission
traffic. This centre, which forms a key part of the data-processing architecture, is essential to handle traffic which
would otherwise get out of control and generate expenditure well in excess of the cost of the centre itself.
The installation of two videoconference studios, one in Brussels and one in Luxembourg, is planned for 1989
and 1990. These will permit videoconferences between the two sites and also afford access to the European net­
work. The investment (720 000 ECU for one studio) will yield a number of advantages :
– reduction in the number of missions and accordingly savings in money and time ;
– the possibility of organizing brief meetings to improve the flow of information, explain Commission
    guidelines and instructions to departments and facilitate exchanges between geographically separated depart­
    ments .
A major factor in the growth of the telecommunications budget is new cabling in offices. The present telephone
cabling used to connect terminals does not permit technological progress. Initially, a local area network to
operate the Commission’s data-processing architecture is a matter of urgency for only the best-prepared
Directorates-General but will later be needed by all Directorates-General ; since departmental removals cannot
be foreseen, all Commission premises must be cabled. The total cost is about 10 million ECU and the lifespan
will be at least 10 years. This gives an annual cost of about 1 million ECU or 50 ECU per office, which is small
in relation to total office automation costs . This work must be carried out between 1988 and 1991 . In 1989 it is
intended to cable the Jean Monnet building in Luxembourg, the Breydel building being constructed in Brussels
(3 000 windows) and the IMCO building (Informatics Directorate).
Investments carried out in recent years have entailed increased use of networks and higher expenditure which,
by its nature, is difficult to control. A user who has a work station generates an increasing amount of traffic for
the consultation of data bases, electronic mail and the transfer of files to the Computer Centre in Luxembourg.
The accession of Spain and Portugal and the closer relations with countries outside the Community have
generated increased telephone traffic.
All these factors produce an increase of 42,85 %, including a major investment effort. The fruits of these efforts
in 1989 and 1990 will be reaped in 1991 with a relative drop of around 20%.
The Informatics Directorate has drawn up an action programme to achieve savings in telephone calls. The action
will include :
– improved management of expenditure ;
– collaboration with the Assistants to Directors-General to provide a better picture of consumption ;
– measures to give all members of staff a sense of responsibility concerning the use of the telephone.
At the same time the RTT has been contacted with a view to securing better operating conditions.
 ---pagebreak---                                                 Preliminary draft general budget, 1989                                      59
                         CHAPTER 25 - EXPENDITURE ON FORMAL AND OTHER
                                                             MEETINGS
                                                              SUMMARY
                                                                              Appropriations Appropriations  Percentage
   Chapter/                                                                      authorized    requested      change
     Article/                               Heading                             for 1988 (■)  for 1989 ( ' )   (2 : 1 )
      Item
                                                                                      1             2             3
      250         Meetings in general                                            7 728 000       8 497 000       +      9,95
      251        Committee meetings                                              8 163 000       9 033 000       + 10,66
      252         ECSC committees                                                1 218 000       1 448 000       + 18,88
      253         Bodies specializing in industrial safety                         430 000         550 000       + 27,91
      254         European Youth Forum                                             695 000         730 000       +      5,04
      255         Miscellaneous expenditure on the organization of, and
                 participation in, conferences, congresses and meetings            906 000       1 077 000       + 18,87
      256        Cost of preliminary consultation meetings with trade
                 union representatives                                             227 000         235 000       +      3,52
                                                        Chapter 25 – Total     19 367 000      21 570 000        + 11,38
( ' ) Including any appropriations entered in Chapter 100.
ARTICLE 250 - MEETINGS IN GENERAL
1 . Breakdown
                                                            250
                                                     Meetings in general
Brussels                                                     7 722 000
Luxembourg                                                             0
Information Offices                                                    0
DAD – Headquarters                                                     0
New posts 1988 – Council                                         77 000
           Total with same number of staff                   7 799 000
New posts 1988 – Parliament                                     242 000
New posts 1989                                                   56 000
New Information Offices                                                0
New operations                                                  400 000
       Total appropriations requested for
                                       1989                  8 497 000
      Appropriations authorized for 1988                     7 728 000
                        Percentage change                        + 9,95
2. Type of expenditure and method of calculation
 The appropriation is to cover :
 – travelling expenses, subsistence allowances and travelling time allowances of experts called to meetings
       and consultants ;
 – expenses arising from these meetings not covered by the existing infrastructure (for example, hire of meet­
       ing rooms, interpreting equipment, etc.).
 ---pagebreak--- 60                                       Preliminary draft general budget, 1989
The appropriation is calculated on the basis of the number of meetings planned, experts convened and con­
sultants, and the daily allowances, travelling time allowances and travelling expenses of experts and consultants,
taking into account their country of origin.
It also takes into account likely changes to cover inflation and increases in the allowances (as a result of the new
mission allowances coming into force in 1988 – cost estimated at 3 %), travelling expenses and hotel and restau­
rant prices.
An appropriation of 400 000 ECU is also requested for the conduct and monitoring of GATT negotiations
(Uruguay Round).
If this is excluded, the amount requested is only 4.77 % more than in 1988.
ARTICLE 251 - COMMITTEE MEETINGS
1 . Breakdown by item
                                                     2510                      2511                    251
                                              Committees whose              Committees                Total
                                                 consultation          whose consultation
                                                is compulsory           is not compulsory
Brussels                                           6 677 000                 1 559 000              8 236 000
Luxembourg                                                  0                        0                      0
Information Offices                                         0                        0                      0
DAD – Headquarters                                          0                        0                      0
New posts 1988 – Council                              76 000                    16 000                 92 000
        Total with same number of staff            6 753 000                 1 575 000              8 328 000
New posts 1988 – Parliament                          204 000                    44 000                248 000
New posts 1989                                        47 000                    10 000                 57 000
New Information Offices                                     0                        0                      0
New operations                                       400 000                         0                400 000
     Total appropriations requested for
                                   1989            7 404 000                 1 629 000              9 033 000
    Appropriations authorized for 1988             6 431 000                 1 732 000              8 163 000
                     Percentage change               + 15,13                    - 5,95               + 10,66
2. Type of expenditure and method of calculation
ITEMS 2510 and 2511 - EXPENDITURE ON MEETING OF COMMITTEES
– whose consultation is compulsory in the procedure for drafting Community legislation ;
– whose consultation is not compulsory in the procedure for drafting Community legislation.
The committees are set up either under the Treaty, or by Council or Commission regulations. The list of commit­
tees is given in an annex to Section III A (Commission) of the general budget.
The appropriation is to cover travelling expenses, subsistence allowances and travelling time allowances of ex­
perts called to meetings. It also covers expenses arising from these meetings not covered by the existing infrastruc­
ture .
The appropriation is calculated on the basis of the number of meetings planned and persons convened, and the
daily allowances, travelling time allowances and travelling expenses of these persons, taking into account their
country of origin.
The effect of the increase in mission allowances, to which daily subsistence allowances are linked, is estimated
at 2 %.
At Item 2510 an appropriation of 400 000 ECU is requested for GATT negotiations (Uruguay Round).
If this is excluded, the appropriation requested is 5,76% more than in 1988.
 ---pagebreak---                                        Preliminary draft general budget, 1989                                61
ARTICLE 252 - ECSC COMMITTEES
1 . Breakdown by item
                                                Item 2520                 Item 2521            Article 252
                                                  ECSC                       Other                Total
                                               Consultative                 ECSC
                                               Committee                 Committees
Brussels                                                  0                  838 000              838 000
Luxembourg                                         553 000                          0             553 000
Information Offices                                       0                         0                    0
DAD – Headquarters                                        0                         0                    0
New posts 1988 – Council                             7 000                    12 000               19 000
       Total with same number of staff             560 000                   850 000            1 410 000
New posts 1988 – Parliament                               0                   31 000               31 000
New posts 1989                                            0                    7 000                 7 000
New Information Offices                     ‘             0                         0                    0
New operations                                            0                         0                    0
    Total appropriations requested for
                                  1989             560 000                   888 000            1 448 000
   Appropriations authorized for 1988              541 000                   677 000            1 218 000
                    Percentage change               + 3,51                  + 31,17               + 18,88
2. Type of expenditue and method of calculation
ITEM 2520 - ECSC CONSULTATIVE COMMITTEE
This appropriation is to cover the cost of organizing meetings of the Committee and the entertainment and
representation costs incurred by the Chairman in the performance of his duties.
On the assumption that the number of meetings will be the same as in the previous year, the appropriation
requested has been kept at the same level.
ITEM 2521 - OTHER ECSC COMMITTEES
This appropriation is to cover the cost of organizing meetings of committees and working parties concerned with
ECSC matters, in particular Articles 46, 54 and 55 of the Treaty. The meetings are a statutory obligation.
Actual expenditure in 1987 was 966 248 ECU and expenditure in 1988 is estimated at 850 000 ECU.
 ---pagebreak--- 62                                        Preliminary draft general budget, 1989
ARTICLE 253 - BODIES SPECIALIZING IN INDUSTRIAL SAFETY AT WORK
1. Breakdown by item
                                                   Item 2530                  Item 2531           Article 253
                                                 Mines Safety          Advisory Committee on        Total
                                                  and Health         Safety, Hygiene and Health
                                                  Commission             Protection at Work
Brussels                                                    0                          0                    0
Luxembourg                                            298 000                    248 000            546 000
Information Offices                                         o' .                       0                    0
DAD – Headquarters                                          0                          0                    0
New posts 1988 – Council                                2 000                      2 000                4 000
    Total appropriations requested for
                                   1989               300 000                    250 000            550 000
    Appropriations authorized for 1988                290 000                    140 000            430 000
                     Percentage change                  + 3,4                     + 78,6            + 27,91
2. Type of expenditure and method of calculation
The appropriation is to cover travelling expenses, subsistence allowances and other expenses of members and
experts, secretariat and publishing costs and the expenses incurred in respect of practical tests on prevention,
rescue, and safety equipment and safety campaigns.
Following the Council Resolution of 21 December 1987 (OJ No C 28, 3. 2. 1988), the Commission’s proposals
to the Council on safety, hygiene and health at work are sent to the Committee for its opinion. The Commission’s
new programme includes a significant extension of its work in this area.
ARTICLE 254 - EUROPEAN YOUTH FORUM
1988    – Appropriations authorized                                                                           695 000
1989    – Appropriations requested                                                                            730 000
Percentage change                                                                                              + 5,04
1 . References
– Commission Decisions of 28 January 1972 (COM(72) 65 final), 27 April 1973 (COM(73) 36 final) and
 . 26 February 1975 (COM(75) 27 final). Original proposal submitted to the Council on 29 May 1973 and new
     proposal on 7 March 1975. At its meeting on 29 June 1976, the Council decided to accede to the wishes of
     the Commission and Parliament by providing inital funding from the budget.
– The European Youth Forum is an international non-profit-making association which is subject to Belgian
     law. It acts as a political platform for youth organizations in their relations with the Community institutions
     and seeks to increase participation by young people in Community activities and give them a greater part to
     play in fostering mutual understanding and protecting equal rights.
2. Type of expenditure
This appropriation is to cover the expenditure of the European Youth Forum :
– running costs of the permanent secretariat (staff, rental of offices and conference rooms, miscellaneous
     expenses);
– travelling, subsistence and incidental expenses of delegates to meetings of the Forum ;
– costs associated with the meetings if not covered by the secretariat’s existing facilities.
 ---pagebreak---                                                     Preliminary draft general budget, 1989                                         63
3. Method of calculation and explanation of changes
Expenditure was calculated as follows :
                                                                                                      1988             1989
Administration
Salaries, social security ( ')                                                                          271 135          300 100
Insurance                                                                                                 2 273             1 800
Rent                                                                                                     22 727           23 800
Postage, telephone                                                                                       22 727           23 900
Office supplies                                                                                          10 227            10 800
Office equipment                                                                                         20 454           39 000
Other running costs                                                                                       7 047             9 600
                                                                                    Subtotal            356 590          409 000
Activities
General meeting
Executive Committee and Standing Committee                                                             262 614           239 000
Preparatory and follow-up groups
Information , publications, contacts with the Council and Parliament                                     62 160           63 000
Visits and travel                                                                                        13 636            19 000
                                                                                    Subtotal            338 410          321 000
                                                                                      Total            695 000          730 000
( ' ) Staff expenditure is calculated for a staff complement of 6 – 3 category A and 3 category C.
ARTICLE 255 - MISCELLANEOUS EXPENDITURE ON THE ORGANIZATION OF, AND PARTICI­
                          PATION IN, CONFERENCES, CONGRESSES AND MEETINGS
1 . Breakdown by item
                                                    Item 2550         Item 2551          Item 2552       Item 2553    Article 255
                                                Conferences and    Participation by  ECSC conferences   Conferences     Total
                                                    congresses     the institutions    and congresses  of controllers
                                                organized by the    in congresses                      and managers
                                                   institutions
Brussels                                               252 000           342 000                   0        250 000      844 000
Luxembourg                                                     0                 0                 0                0            0
Information Offices                                            0                 0                 0                0            0
DAD – Headquarters                                             0                 0                 0                0            0
New posts 1988 – Council                                  5 000             3 000                  0                0       8 000
      Total with same number of staff                  257 000           345 000                   0        250 000      852 000
New posts 1988 – Parliament                              13 000             7 000                  0                0      20 000
New posts 1989                                            3 000             2 000                  0               0        5 000
New Information Offices                                        0                 0                 0               0             0
New operations                                                 0         200 000                   0               0     200 000
 Total appropriations requested for
                                      1989             273 000           554 000                   0        250 000    1 077 000
       Appropriations authorized for
                                      1988             383 000           273 000                   0        250 000      906 000
                     Percentage change                 - 28,72          + 102,93                  -                0     + 18,87
 ---pagebreak--- 64                                        Preliminary draft general budget, 1989
2. Type of expenditure and method of calculation
ITEM 2550 - CONFERENCES AND CONGRESSES ORGANIZED BY THE INSTITUTION
The appropriation is intended to cover all expenditure connected with the organizing of conferences, congresses
and meetings except for certain expenditure relating to existing infrastructure and the payment of conference
interpreters.
The appropriation requested is the sum of the estimated expenditure for each event, and includes :
– travelling and subsistence expenses calculated on the basis of the number of participants and their coun­
    tries of origin ;
– the place where the event is organized ;
– other expenses.
In 1989, it is planned to organize the following events :
Employment, social affairs and education
– conference on the impact on families of completion of the single European market                           50 000
Agriculture
– seminars for olive oil control agencies                                                                    45 000
– training seminars for national BALM controllers                                                            36 000
– seminar on the non-food use of agricultural and forestry products and subproducts                          13 000
– seminar on the use of remote sensing to improve agricultural statistics with particular
    reference to EAGGF expenditure                                                                            9 000
– two meetings in a Member State in a place near to agricultural holdings with leading wheat
    exporters and importers in other agricultural sectors                                                    30 000
                                                                                                            133 000
Regional policy
– seminar on the experiences of a number of Member States on introduction of the business
    and innovation centres                                                                                   30 000
Energy
– conference on the gasification of coal                                                                     15 000
– conference on energy in Europe                                                                             15 000
– Esarda symposium ( Safeguards and nuclear material management)                                             30 000
                                                                                                             60 000
ITEM 2551 - COST OF THE INSTITUTION’S PARTICIPATION IN CONFERENCES , CONGRESSES
                  AND MEETINGS
This appropriation is to cover all or part of the costs relating to the Commission’s participation in conferences,
congresses and meetings.
The estimates are the total of the amounts which the Commission intends to earmark for the various conferences
in view of their importance and interest.
An appropriation of 200 000 ECU is also requested for the Commission’s participation in the GATT negotiations
( Uruguay Round).
 ---pagebreak---                                           Preliminary draft general budget, 1989                              65
In 1989, it is planned to help finance the following events
External relations
– participation in the GATT negotiations ( Uruguay Round)                                               200 000
Economic and financial affairs
– conference on hyperinflation , past and present                                                        10 000
– European meeting on economic policy                                                                    25 000
                                                                                                         35 000
Employment, social affairs and education
– seminar on the welfare of dependent old people                                                         50 000
Development
– participation in the annual ACP/ EEC meeting between employers and workers organized
    by the Economic and Social Committee                                                                 30 000
– participation in the first consultation meeting organized by the ACP/ EEC Council on
    developing the role of small businesses                                                              20 000
– participation in the meetings of the ad hoc ACP/ EEC Joint Committee                                   20 000
                                                                                                          70 000
Personnel and administration
– part-sessions of the European Parliament
– European Councils                                                                                      30 000
Telecommunications, information industries and innovation
– conferences, seminars and exhibitions on research policy                                              150 000
Credit and investment
– ECSC training meeting                                                                                    5 000
In addition to these scheduled events, the Commission may be requested to participate at short notice in other
events. Under one or other of its policies, the Commission may be required to support congresses, conferences
or meetings organized too late to be included in the estimates.
The amount requested reflects the experience of recent years.
ARTICLE 256 - COST OF PRELIMINARY CONSULTATION MEETINGS WITH TRADE UNION
                     REPRESENTATIVES
1988    – Appropriations authorized                                                                     227 000
1989    – Appropriations requested                                                                      235 000
Percentage change                                                                                        + 3,52
1 . Reference
This appropriation stems from the Commission’s freedom to manage its internal affairs. The preliminary consul­
tation meetings between representatives of European trade unions, with a view to helping them form their
opinions and harmonize their position regarding the development of Community policies, make a considerable
contribution to the Commission’s work .
 ---pagebreak--- 66                                     Preliminary draft general budget, 1989
2. Type of expenditure
The appropriation is intended to cover the travel and subsistence costs of delegates invited to meetings.
The purpose of consultation meetings is to hear the views of trade unions.
Such meetings can have significant and useful results only if they are prepared by a broad exchange of views
among trade unions, that is, by a meeting at which national confederations can become acquainted with the
problem and adopt a common position within their European organization.
These meetings save time and avoid misunderstandings and hence assist the trade union organizations to adopt
their positions, which are in turn of great assistance to the Commission .
3 . Method of calculation and explanation of changes
In view of the need to increase the number of preliminary consultation meetings with the trade unions in order
to hear the ideas and proposals of the two sides of industry concerning the economic and social problems of our
times and given the rise in public transport fares, the appropriations authorized in 1988 should be increased by
3,52%.
 ---pagebreak---                                                 Preliminary draft general budget, 1989                                  67
                      CHAPTER 26 - EXPENDITURE ON STUDIES, SURVEYS AND
                                                        CONSULTATIONS
                                                            SUMMARY
                                                                              Appropriations Appropriations  Percentage
   Chapter/                                                                      authorized    requested      change
     Article/                               Heading                             for 1988 (*)  for 1989 ( ' )   (2 : 1 )
      Item
                                                                                      1             2             3
      260       Studies and consultations                                        1 776 000       2 316 000       + 30,4
      262       Studies and consultations relating to competition                  278 000         500 000       + 79,9
                                                                     Total       2 054 000       2 816 000       + 37,1
( ' ) Including any appropriations entered in Chapter 100.
ARTICLE 260 - STUDIES AND CONSULTATIONS
1 . Type of expenditure
Appropriations for specialized studies contracted out to highly qualified experts if the Commission does not have
suitable staff available to carry out such studies.
These appropriations can also be used to purchase completed studies or subscriptions to specialist research insti­
tutes .
2 . Method of calculation
The ‘allocation’ appropriations, on which the budgetary authority places a ceiling, are to enable the Commission
to carry out its tasks and determine the priorities necessary in view of the limited funds available.
An appropriation of 400 000 ECU is requested for the conduct and monitoring of the GATT negotiations
(Uruguay Round).
If this is excluded, the increase is 7,88 % over the 1988 figure and 5,05 % over that for 1987.
ARTICLE 262 - STUDIES AND CONSULTATIONS RELATING TO COMPETITION
Type of expenditure and method of calculation
This appropriation is to finance studies of sectors and markets in the Member States and their development from
the point of view of concentration and competition.
 In order to carry out the tasks provided for in Articles 85 and 86 of the EEC Treaty the Commission must have
detailed information on the situation of the markets in Member States so that it can take action against dealings
or operations which would contravene the competition rules applying to undertakings.
The growth in expenditure is connected with the increase in the Commission’s activities arising from the adoption
by the Council of regulations on shipping and air transport, merger control, know-how licensing and franchising.
 ---pagebreak--- 68                                          Preliminary draft general budget, 1989
                CHAPTER 28 - BUILDINGS, EQUIPMENT AND MISCELLANEOUS
                    OPERATING EXPENDITURE IN COUNTRIES OUTSIDE THE
                                              EUROPEAN COMMUNITY
                                                              Appropriations authorized for 1988       Appropria­
  Article                      Title                                                                       tions    Percentage
                                                             Chap.       DAD head¬      DAD outside   requested for  change
                                                               28          quarters     Community          1989
    280      Rent and other charges on buildings           21 608 100        567 000     21 041 100    22 798 000    +     8,35
    281      Construction and acquisition of
             buildings                                                                                   2 000 000           +
    282      Office furniture and equipment                 3 072 000        557 000      2 515 000      5 208 000   +   107,08
    283      Vehicles                                       3 815 000           8 000     3 807 000      5 783 000   +    51,90
    284      Documentation and library
             expenditure                                      249 000           2 000        247 000       300 000   _
                                                                                                                          21,46
    285      Stationery and office supplies                   627 000         88 000         539 000       631 000   +    17,07
    286      Other administrative expenditure                 837 000           1 000        836 000     1 335 000   +    59,69
    287      Furniture and fittings for residential
             accommodation                                  1 686 000               0      1 686 000     3 088 000   +    83,16
    288      Postage and telecommunications                 4 162 000         90 000      4 072 000      4 559 000   +    11,96
    289      Publications and information                         p.m .          p.m .          p.m .      300 000            +
                                                 Total     36 056 100      1 313 000     34 743 100    46 002 000    +    32,41
                                                    A. INTRODUCTION
1 . The expenditure to be covered by the appropriations requested for Chapters A 18 and A 28 is estimated at
129 774 000 ECU in 1989. Any comparison between this amount and the corresponding appropriations entered
in the 1988 budget should allow for the changes introduced in the 1989 preliminary draft.
(a) the expenditure relating to persons employed by the EAC who have not been appointed officials, esti­
     mated at 30 % in the 1988 budget, accounts in 1989 for only 0,928 % of the total expenditure on the activities
     financed prior to 1987 by the appropriations entered in Chapter B 98 (Operation of Commission delegations
     in developing countries).
(b) Staff and administrative expenditure for the departments of the Directorate for the Administration of De­
     legations located in Brussels was covered in 1988 by the appropriations entered in Chapters A 18 and A 28.
     In the 1989 budget, the appropriations entered in these two chapters cover only the expenditure relating to
     the delegations proper.
 ---pagebreak---                                                   Preliminary draft general budget, 1989                                                     69
2. Overall summary of changes to 1988 appropriations
                                                                              1988 budget                    Updated 1988 appropriations
                            Title/Chapter                               Amount                   %              Amount                %
Chapter 18                                                                58 872 000              53,2             68 954 500         62,3
Chapter 28                                                                30 003 500              27,1             34 970 000         31,6
                                                    Subtotal              88 875 500              80,3           103 924 500           93,9
Other headings
- Title A 1                                                                                                         4 812 000           4,3
- Title A 2                                                                          –              –
                                                                                                                     1 313 000          1,2
                                                    Subtotal                         –              –
                                                                                                                     6 125 000          5,5
                                            Part A – Total                88 875 500              80,3           110 049 500          99,4
Chapter B 98                                                           21 850 OOO(' )             19,7              676 000(2)          0,6
                                                       Total             110 725 500             100,0
                                                                                                                 110 725 500         100,0
( ' ) This amount represents 30 % of the appropriation of 72 836 000 ECU entered in the 1988 budget for the operation of the Commission
      delegations in developing countries and included in the total amount of 1 10 725 000 ECU ; the appropriations to cover expenditure by the
      delegations in the other non-member countries total 37 889 500 ECU .
(2) This amount corresponds to 0,9 % of the appropriation of 72 836 000 ECU.
3. Details of changes in appropriations for the departments of the Directorate for the Administration of Delegations
located in Brussels
                                  Increases                                                             Reductions
             Article / Item                        Amount                            Article/ ltem                         Amount
                200                                  371 000                                  280                            567 000
                201                                    2 000                                  282                            557 000
                202                                   37 000                                  283                              8 000
                203                                   72 000                                  284                              2 000
                204                                   31 000                                  285                             88 000
                205                                   53 000                                  286                              1 000
                209                                     1 000                                 288                             90 000
                2200                                  23 000
                2201                                  27 000
                2203                                  10 000
                2204                                 346 000
                2210                                 123 000
                2211                                  24 000
                2213                                   4 000
                2231                                   8 000
                2250                                   2 000
                230                                   88 000
                2352                                    1 000
                240                                   22 000
                241                                   68 000
                 Title 2 - Total                   1 313 000                             Title 2 - Total                   1 313 000
                 Title 1 - Total                   4 812 000                             Title 1 - Total                  4 812 000
                        Grand total                6 125 000                                    Grand total               6 125 000
 ---pagebreak---  70                                                 Preliminary draft general budget, 1989
                  B. METHOD OF CALCULATION AND EXPLANATION OF CHANGES
                                                                SUMMARY
                            Staff levels 1 . 1 . 1988            Percentage       Specific   Change in      Appropriations
       Article
                        1988 costs              1989 costs        change         measures    staff levels     requested
                                                                                                               for 1989
        Posts                  539                      539                                          - 88               481
                                                                                                     + 30
         280           21 608 100              21 993 000               1,78               0     805 000        22 798 000
         281                  p.m .                        0              -
                                                                                  2 000 000               0      2 000 000
         282             3 072 000               3 330 000              8,40      2 250 000  - 372 000           5 208 000
         283             3 815 000               5 468 000            43,33                0     315 000         5 783 000
         284               249 000                    2 000        - 99,20          300 000  -      2 000           300 000
         285               627 000                 678 000              8,13               0 -    47 000            631 000
         286               837 000               1 266 000            51,25                0      69 000          1 335 000
         287             1 686 000               2 911 000            72,66                0     177 000         3 088 000
         288             4 162 000               4 375 000              5,12               0     184 000         4 559 000
         289                       0                       0              –
                                                                                    300 000               0         300 000
                       36 056 100              40 023 000             11,00       4 850 000    1 129 000        46 002 000
ARTICLE 280 - RENT AND OTHER CHARGES ON BUILDINGS
– Cost with staff at levels on 1 . 1 . 1988                                                                         21 993 000
– Changes in staff levels                                                                                              805 000
    This amount is to cover the cost of the rents corresponding to the reduction by 88 posts of
    staff levels at headquarters and the addition of 30 posts outside the Community.
                                                                                              Total                 22 798 000
ARTICLE 281 - CONSTRUCTION AND ACQUISITION OF BUILDINGS
Rents in a number of African and Asian countries are extremely high, and the cost of acquiring a building (pur­
chase or construction) can often be equivalent to only seven or eight years’ rent. The appropriation entered here
is to enable the Commission to take advantage of interesting offers which might arise and thus put into practice
the buildings policy pursued by the EAC in the ACP countries.
The amount of 2 000 000 ECU is an estimate .
ARTICLE 282 - FURNITURE AND OFFICE EQUIPMENT
– Cost with staff at levels on 1 . 1 . 1988                                                                          3 330 000
– Specific measures                                                                                                  2 250 000
    The Commission has begun the necessary task of computerizing the delegations , the vast
     majority of which still keep manual accounts . The operation , which began in 1988 , is
     designed to equip each delegation with two MS-DOS personal computers.
    The amount is to cover the purchase, transport and installation of some 150 personal
     computers (including software and peripherals).
– Changes in staff levels                                                                                           - 372 000
     The reduction is due to the fact that data-processing costs per official are appreciably
     higher at the headquarters of the DAD , which has been computerized for several years, than
     in the delegations, where computerization is still in the early stages .
                                                                                              Total                  5 208 000
 ---pagebreak---                                             Preliminary draft general budget, 1989                               71
ARTICLE 283 - VEHICLES
– Cost with staff at levels on 1 . 1 . 1988                                                               5 468 000
– Changes in staff levels                                                                                   315 000
                                                                                            Total
                                                                                                          5 783 000
ARTICLE 284 - DOCUMENTATION AND LIBRARY EXPENDITURE
As in 1988, action needs to be taken in this sphere. The appropriation requested is estimated at 300 000 ECU and
relates to specific measures. It represents a 20% increase in relation to the appropriations for 1988.
ARTICLE 285 - STATIONERY AND OFFICE SUPPLIES
– Cost with staff at levels on 1 . 1 . 1988                                                                 678 000
– Specific measures                                                                                               0
– Changes in staff levels                                                                                -   47 000
    The reduction is due to the transfer of the appropriations connected with the 88 posts in the
    DAD headquarters from Chapters A 18 and A 28 to the corresponding general chapters in
    Titles A 1 and A 2 . This is not offset by the increase of 30 posts outside the Community,
    although average costs are higher than at headquarters.
                                                                                            Total           631 000
ARTICLE 286 - OTHER ADMINISTRATIVE EXPENDITURE
– Cost with staff at levels on 1 . 1 . 1988                                                               1 266 000
– Specific measures                                                                                               0
– Changes in staff levels                                                                                    69 000
                                                                                            Total         1 335 000
ARTICLE 287 - FURNITURE AND FITTINGS FOR RESIDENTIAL ACCOMMODATION
– Cost with staff at levels on 1 . 1 . 1988                                                               2 911 000
– Specific measures                                                                                               0
– Changes in staff levels                                                                                   177 000
                                                                                            Total         3 088 000
ARTICLE 288 - POSTAGE AND TELECOMMUNICATIONS
– Cost with staff at levels on 1 . 1 . 1988                                                               4 375 000
– Specific measures                                                                                               0
– Changes in staff levels                                                                                   184 000
                                                                                            Total         4 559 000
 ---pagebreak--- 72                                 Preliminary draft general budget , 1989
ARTICLE 289 - PUBLICATIONS AND INFORMATION
The amount requested is to cover the costs of an information campaign for the public and the media in the
delegations outside the Community which do not have an Information Office.
 ---pagebreak---                                        Preliminary draft general budget, 1989                                      73
              CHAPTER 29 - BUILDINGS , EQUIPMENT AND MISCELLANEOUS
                     OPERATING EXPENDITURE - SHARED-COST ACTION
                                                    SUMMARY
                                                                      Appropriations Appropriations    Percentage
 Chapter/                                                               authorized     requested        change
  Article/                         Heading                               for 1988       for 1989         (2 : 1 )
   Item
                                                                             1              2               3
   290      Management of shared-cost action                                    _
                                                                                              p.m .               _
                                                            Total               -
                                                                                               p.m .              -
This appropriation is to cover the cost of buildings and equipment as well as miscellaneous administrative ex­
penditure in respect of shared-cost action. The staff expenditure for such action – like the operating expenditure
– is charged to Chapter 73 ( Research and investment). Appropriations will be entered when new operations are
launched.
 ---pagebreak---                                                 Preliminary draft general budget, 1989                                       75
                 TITLE 3 - EXPENDITURE RESULTING FROM SPECIAL FUNCTIONS
                                         CARRIED OUT BY THE INSTITUTION
                                                            SUMMARY
                                                                              Appropriations   Appropriations  Percentage
   Chapter/                                                                      authorized      requested      change
     Article /                              Heading                             for 1988 ( ' )  for 1989 ( ' )   (2 : 1 )
      Item
                                                                                      1              2              3
      30        Subsidies for balancing budgets                                  5 346 300        4 637 005          - 13,3
      32        Youth and education                                            63 529 701        67 184 136           +   5,8
      34        Publications                                                   54 137 441        58 637 407           +   8,3
      35        Surveys and methods of analysis in the field of
                economics                                                        2 550 200        2 678 000           +   5,0
                                                                     Total    125 563 642       133 136 548          +    6,0
( l ) Including any appropriations entered in Chapter 100.
 ---pagebreak--- 76                                            Preliminary draft general budget, 1989
                        CHAPTER 30 - SUBSIDIES FOR BALANCING BUDGETS
                                                           SUMMARY
                                                                            Appropriations   Appropriations   Percentage
  Chapter/                                                                     authorized      requested       change
   Article/                               Heading                              for 1988 ( ')  for 1989 ( ‘)     (2 : 1 )
    Item
                                                                                    1               2              3
    300        Euratom subsidy for the operation of the Supply
               Agency                                                           1 794 300        1 876 355        +      4,6
    301        Subsidy for the operation of the Community Business
               Cooperation Centre                                                      –                  _                _
    302        Europe-Latin America Institute                                     800 000          300 000        - 62,5
    303        Subsidies for certain activities of non-governmental
               organizations pursuing humanitarian aims and
               promoting human rights                                             795 000          795 000                  0
    304        Subsidies to European movements                                    770 000          700 000        -      9,1
    305        Participation in the organization of congresses and
               occasional meetings                                                102 000          105 000  .     +       2,9
    307        Subsidies to higher education institutions                         435 000          450 000        +       3,5
    308        Establishment of a European institute for research on
               Eastern Europe                                                     100 000             p.m .       - 100
    309        Other subsidies                                                    550 000          410 650        - 25,3
                                                                    Total      5 346 300         4 637 005        - 13,3
(') Including any appropriations entered in Chapter 100.
ARTICLE 300 - EURATOM SUBSIDY FOR THE OPERATION OF THE SUPPLY AGENCY
1988      – Appropriations authorized                                                                              1 794 300
1989      – Appropriations requested                                                                               1 876 355
Percentage change                                                                                                        + 4,6
1 . References
– Articles 52 to 54 of the EAEC Treaty.
– The Statutes of the Euratom Supply Agency (OJ No 27, 6.12.1958, p. 534) state :
                                                            ‘Article VI
                                                           CHARGES
       1 . The Agency shall make a charge, the proceeds of which shall be used solely to defray its operating ex­
       penses.
       2. The charge shall be made on transactions in which the Agency takes part by exercising its right of option
       or its exclusive right to conclude supply contracts.
       3. The rate of charge shall be fixed in such a way as to defray the operating expenses of the Agency.
       4. The rate of charge and the methods whereby it is to be assessed and collected shall, after consultation with
       the Council, be fixed by the Commission acting on a proposal from the Director-General, who shall obtain
       beforehand the opinion of the Advisory Committee referred to in Article X.’
 ---pagebreak---                                           Preliminary draft general budget, 1989                                     77
The Council (23rd session of the EAEC Council on 1 and 2 February 1960), consulted on the rate of charge and
the methods whereby it was to be assessed and collected by the Agency,
       ‘proposes unanimously that the Commission postpone, not only the levying of the charge, but also the actual
       introduction of the said charge’ .
Faced with this attitude on the part of the Council, the President of the Commission stated
       ‘that the unanimous nature of this consultation will have a decisive effect on the acts of his institution’ .
Nevertheless, the Commission drew the attention of the Council
       ‘to the consequences that a decision to postpone the introduction of the charge would have for the budget
       of the Community.
       The appropriations needed to ensure normal operation of the Agency would be entered in the Community
       budget in the section referring to the Commission.’
2. Type of expenditure
The appropriation entered is a subsidy intended to balance the Agency’s revenue side against the Agency expen­
diture figures shown in the statement of estimates.
3. Method of calculation and explanation of changes
The appropriation for the Agency is entered as two amounts, i.e. :
– Item 3000 : the subsidy allowing for the effect of any salary adjustments to be made by the Council in
      1988 ;
– Item 3009 : the effects of any salary adjustments to be made by the Council in 1989 are all covered by
     this item. The appropriation will be transferred to Item 3000 as required by the Council decisions.
ARTICLE 301 - SUBSIDY FOR THE OPERATION OF THE COMMUNITY BUSINESS COOPERATION
                     CENTRE
1988     – Appropriations authorized                                                             -
1989     – Appropriations requested                                                              -
Percentage change                                                                                -
Following the setting-up of the Small and Medium-sized Enterprises Task Force, which is now responsible for
the activities of the Business Cooperation Centre, there is no longer any need for a specific appropriation for
the operation of the Centre. The expenditure generated by these activities is included in the current expenditure
of Commission departments.
ARTICLE 302 - EUROPE-LATIN AMERICA INSTITUTE
1988     – Appropriations authorized                                                                          800 000
 1989    – Appropriations requested                                                                           300 000
Percentage change                                                                                              - 62,5
Type of expenditure
This appropriation represents the subsidy deemed necessary in 1988 for the operation of the Europe-Latin
America Institute.
 It is planned that the Institute and its branch in Latin America will also be supported by funds from other public
bodies , donations and own resources .
 ---pagebreak--- 78                                        Preliminary draft general budget, 1989
ARTICLE 303 – SUBSIDIES FOR CERTAIN ACTIVITIES OF NON-GOVERNMENTAL ORGANIZA¬
                      TIONS PURSUING HUMANITARIAN AIMS AND PROMOTING HUMAN RIGHTS
1988   – Appropriations authorized                                                                        795 000
1989   – Appropriations requested                                                                         795 000
Percentage change                                                                                               0
1 . Reference
The Commission takes a formal decision, case by case, on the utilization of this appropriation, which allows aid
to be granted to non-governmental organizations pursuing humanitarian aims and promoting human rights, and
to associations of political refugees from eastern Europe.
2. Type of expenditure
The subsidies must be used to attain the objectives for which they are awarded. The recipients must undertake
to allow the auditing departments to examine the use of the funds put at their disposal.
3. Method of calculation and explanation of changes
The increase offsets the effects of inflation.
ARTICLE 304 - SUBSIDIES TO ORGANIZATIONS ADVANCING THE IDEA OF EUROPE
1988   – Appropriations authorized                                                                        770 000
1989   – Appropriations requested                                                                         700 000
Percentage change                                                                                           - 9,1
1 . Reference
The Commission takes a formal decision, case by case, on the utilization of this appropriation, which allows aid
to be granted to groups, movements, circles or activities of a European nature.
2. Type of expenditure
The subsidies must be used to attain the objectives for which they are awarded. The recipients must undertake
to allow the auditing departments to examine the use of the funds put at their disposal.
3. Method of calculation and explanation of changes
Expenditure from this Article covers subsidies to organizations such as the European Movement, political move­
ments of various shades, the Council of European Municipalities, and so on. These organizations form a direct
link between the Community institutions and the ordinary citizen. The increase reflects the average growth in the
cost of living ; these subsidies also serve to ensure the material existence of the recipient bodies.
 ---pagebreak---                                         Preliminary draft general budget, 1989                                      79
ARTICLE 305 - PARTICIPATION IN THE ORGANIZATION OF CONGRESSES AND OCCASIONAL
                    MEETINGS
1988   – Appropriations authorized                                                                             102 000
1989   – Appropriations requested                                                                              105 000
Percentage change                                                                                                + 2,9
Type of expenditure and method of calculation
The Commission takes a formal decision, case by case, on the utilization of this appropriation, which covers sub­
sidies towards the expenditure incurred by contributions or participation in organizing congresses, occasional
meetings, activities of a European or a scientific character of value to the Community.
The recipients must undertake to allow the auditing departments to examine the use of the funds put at their dis­
posal.
The expenditure is determined by the number, value and importance of the applications received by the Com­
mission in the course of the financial year. More and more applications are coming in from all Member States.
ARTICLE 307 - SUBSIDIES TO HIGHER EDUCATION INSTITUTIONS
1988   – Appropriations authorized                                                                             435 000
1989   – Appropriations requested                                                                              450 000
Percentage change                                                                                                + 3,5
1 . Reference
This appropriation stems from the Commission’s freedom to manage its internal affairs. The Commission takes
formal decisions, case by case, on its utilization.
The appropriation covers the Commission’s financial contributions to the College of Europe, the European Insti­
tute of Public Administration and institutions of higher education in the Member States which run programmes
on European integration.
2. Description
(a) European Institute of Public Administration, Maastricht
The European Institute of Public Administration in Maastricht was set up as a foundation under Dutch law on
6 March 1981 .
The Member States represented on the Board and the Commission have been contributing to the Institute’s fi­
nancing since 1983 . The objective of the Institute is to provide teaching in European affairs to civil servants from
local, regional, national and Community administrations.
(b) Other institutions of higher education
Any institution of higher education in a Community country which offers a programme of studies or teaching
of interest to European integration may submit an application for a single specific subsidy. Such grants, approved
case by case, are in accordance with the quality of the programme and budgetary funds available.
 ---pagebreak--- 80                                      Preliminary draft general budget, 1989
3. Type of expenditure
(a) European Institute of Public Administration
The appropriation is to cover the Commission’s contribution to the Institute’s running costs, primarily with a
view to enabling it to procure the services of leading academics, nationals of Member States not yet represented
on the Board .
(b) Other institutions of higher education
Subsidies granted are to be used in the spirit in which they were intended . The recipients must undertake to allow
the auditing departments to examine the use of the funds put at their disposal .
4. Method of calculation and explanation of changes
(a) European Institute of Public Administration
The Institute is financed by the Netherlands and the other Member States of the Community which have a seat
on the Board and by the Commission.
(b) Other institutions of higher education
The accession of Spain and Portugal is leading to the introduction or expansion of European integration pro­
grammes in institutions of higher education in these countries.
ARTICLE 308 - ESTABLISHMENT OF A EUROPEAN INSTITUTE FOR RESEARCH ON EASTERN
                    EUROPE
1988   – Appropriations authorized                                                                             100 000
1989   – Appropriations requested                                                                                 p.m .
Percentage change                                                                                               - 100
Reference
European Parliament amendment – 1987 budget, based on a resolution of 6 October 1986.
ARTICLE 309 - OTHER SUBSIDIES
1988   – Appropriations authorized                                                                            550 000
1989   – Appropriations requested                                                                             410 650
Percentage change                                                                                              - 25,3
1 . Reference
In managing its internal affairs the Commission adopts formal decisions on a case-by-case basis.
2 . Type of expenditure
This appropriation is intended to cover various specific subsidies which by their nature are not related to the other
measures referred to in the other articles and items of Chapter A 30.
 ---pagebreak---                                          Preliminary draft general budget, 1989                 81
3. Method of calculation and explanation of changes
Subsidies granted in 1988 and proposed for 1989 :
                                                                                  1988    1989
Secretariat-General
International Press Centre                                                       83 700 100 000
Centre for European Policy Studies                                               41 800  80 000
Jean Monnet Year                                                                250 000      -
DG IX
Association of Former Officials of the European Communities                      12 100  16 000
Europe House in Val Duchesse International Club , Château-Ste- Anne                  –    4 650
DG X
Journalists in Europe                                                           162 400 210 000
                                                                       Total    550 000 410 650
 ---pagebreak--- 82                                              Preliminary draft general budget, 1989
                                    CHAPTER 32 - YOUTH AND EDUCATION
                                                             SUMMARY
                                                                              Appropriations    Appropriations  Percentage
   Chapter/                                                                      authorized       requested      change
     Article/                               Heading                              for 1988 ( ' )  for 1989 ( ' )   (2 : 1 )
      Item
                                                                                      I                2             3
      320       Cost of organizing graduate traineeships with the
                institution                                                       1 536 000         1 700 000         + 10,7
      321       Training and further training for conference
                interpreters                                                        351 000           368 000         + 4,8
      322       Support for international non-governmental youth
                organizations                                                       350 000           315 000         - 10,0
      323       Grants for pupils from emigrant families in four
                European high schools in the Community                              270 000           285 000         +    5,6
      324       European University Institute, Florence                          2 120 000          2 516 000         + 18,7
      325       College of Europe, Bruges                                           175 000           300 000         + 71,4
      326       European Schools and other educational establishments          58 727 701         61 700 136          +    5,1
                                                                     Total     63 529 701         67 184 136          +    5,8
( ' ) Including any appropriations entered in Chapter 100.
ARTICLE 320 - COST OF ORGANIZING GRADUATE TRAINEESHIPS WITH THE INSTITUTION
1988       – Appropriations authorized                                                                               1 536 000
1989       – Appropriations requested                                                                                1 700 000
Percentage change                                                                                                        + 10,7
1 . Reference
Commission Decision of 16 March 1976 on provisions relating to the organization of in-service training.
2. Type of expenditure
Periods of administrative training lasting three to five months are organized for university graduates under
30 years of age. Similar training is arranged for interpreters and translators holding the required qualifications
in order to facilitate recruitment. Short fact-finding visits are also arranged for civil servants from the Member
States.
The appropriation is for the payment of grants to trainees and accident and sickness insurance during training.
It also covers travel expenses before and after training and any travel organized as part of the trainee information
programme.
The Commission pays a daily subsistence allowance for national civil servants on short fact-finding visits unless
this allowance is paid by the government department.
 ---pagebreak---                                            Preliminary draft general budget, 1989                         83
3. Method of calculation and explanation of changes
The appropriation requested breaks down as follows :
1 . Traineeships for administrators, translators and interpreters
1.1     Traineeships (460 x 5 months x 541 ECU)                                                   1 244 300
1.2     Supplement for married trainees                                                               14 900
1.3     Insurance                                                                                     42 400
1.4     Transport costs                                                                              170 000
1.5     Other expenses                                                                                13 600
                                                                                Total Section 1  1 485 200
2. Short fact-finding visits by civil servants from the Member States
        Number :                      around 620
        Length of stay :              2 to 10 days
–       Mission expenses                                                                               6 800
–       Miscellaneous (documentation , reception , welcome, meals)                                    29 500
                                                                                Total Section 2       36 300
3. Traineeships for interpreters
–       Number of trainees (270 trainee months)                                                     145 000
–       Supplement for married trainees                                                                2 100
–       Insurance                                                                                      6 100
–       Transport costs                                                                               23 300
–       Other expenses                                                                                 2 000
                                                                                Total Section 3     178 500
                                                                              Article – Total   1 700 000
ARTICLE 321 - TRAINING AND FURTHER TRAINING FOR CONFERENCE INTERPRETERS
1988   – Appropriations authorized                                                                  351 000
1989   – Appropriations requested                                                                   368 000
Percentage change                                                                                      + 4,8
 ---pagebreak--- 84                                        Preliminary draft general budget, 1989
Type of expenditure
This appropriation is to enable the Commission :
– to make a financial contribution to programmes organized within the Standing Conference of the Direc­
     tors of University Translation and Interpreting Institutes (Ciuti) or at suitable higher-education establish­
     ments or postgraduate colleges, for the training of conference interpreters ;
– to award study grants to interpreters to enable them, particularly by attending courses, to improve their
     skills, especially by learning additional working languages. The grants cover travel and subsistence expenses
     and enrolment fees at universities .
ARTICLE 322 - SUPPORT FOR INTERNATIONAL NON-GOVERNMENTAL YOUTH                                         ORGANIZ­
                      ATIONS
1988    – Appropriations authorized                                                                         350 000
1989    – Appropriations requested                                                                          315 000
Percentage change                                                                                            - 10,0
1 . Reference
Parliament Resolution of 28 February 1972.
Formal Commission decisions will be taken on a case-by-case basis.
2. Type of expenditure
Support to international non-governmental youth organizations. The recipients must undertake to allow the
auditing departments to examine the use of the funds put at their disposal.
ARTICLE 323 - GRANTS FOR PUPILS FROM EMIGRANT FAMILIES IN FOUR EUROPEAN HIGH
                      SCHOOLS IN THE COMMUNITY
1988    – Appropriations authorized                                                                         270 000
1989    – Appropriations requested                                                                          285 000
Percentage change                                                                                             + 5,6
1 . Type of expenditure
This appropriation is for subsidies for emigrant schools in the European Community that are maintained by pri­
vate sponsors ( Hungarians, Latvians, Estonians, Ukrainians) with the purpose of also making grants to children
wishing to maintain ties with their native country who will therefore work actively to spread the European idea.
2. Method of calculation and explanation of changes
The Commission takes formal decisions, case by case, on the granting of subsidies.
The 1989 appropriations have been calculated with reference to those for 1988 .
 ---pagebreak---                                         Preliminary draft general budget, 1989                                      85
ARTICLE 324 - EUROPEAN UNIVERSITY INSTITUTE, FLORENCE
ITEM 3240 - SUBSIDY FOR THE EUROPEAN UNIVERSITY INSTITUTE, FLORENCE
1988   – Appropriations authorized                                                                             900 000
1989   – Appropriations requested                                                                              943 000
Percentage change                                                                                                + 4,8
1 . Type of expenditure
This appropriation is to cover from the general budget the expenditure for the academic running of the Institute.
2. Method of calculation
The appropriation requested breaks down as follows :                1989                                         1988
Research library                                                  236 000                                     236 000
Research publications                                              78 000                                      78 000
Language service                                                   93 000                                      93 000
Computer research service                                         263 000                                     236 000
European policy summer school                                      42 000                                      42 000
European policy research unit                                     131 000                                     115 000
European cultural research unit                                   100 000                                     100 000
                                                                  943 000                                     900 000
ITEM 3241 - FINANCIAL CONTRIBUTION TO                        RESEARCH        PROJECTS AT THE EUROPEAN
                UNIVERSITY INSTITUTE, FLORENCE
1988   – Appropriations authorized                                                                           1 000 000
1989   – Appropriations requested                                                                            1 100 000
Percentage change                                                                                               + 10,0
1 . Type of expenditure
Financial contribution to the research projects undertaken at the European University Institute, Florence, fi­
nancing of 30 ‘Jean Monnet’ scholarships for qualified researchers awarded by the Institute and full financing
of two ‘Jean Monnet’ chairs .
2. Method of calculation and explanation of changes
(a) Financial contribution to research projects (300 000 ECU)
The appropriation is used to pay specialized research workers, fees for outside assistance, the cost of organizing
seminars, meetings and conferences, missions connected with projects and secretariat expenses.
The importance of a number of the Institute’s research projects to the Community has led the Commission to
cooperate actively with the Institute since 1979, particularly with regard to the choice of subjects suitable for stu­
dy. This cooperation will be gradually strengthened, although the independence of the Institute will be safeguar­
ded .
(b) Scholarships for qualified researchers (570 000 ECU)
The appropriation requested should enable the Institute to continue to award, in addition to research scholarships
awarded by the Member States, around 30 scholarships for qualified researchers (average cost per month :
 1 580 ECU).
 ---pagebreak--- 86                                          Preliminary draft general budget, 1989
(c) Financing of two ‘Jean Monnet' chairs (230 000 ECU)
The appropriation requested will be used to finance two Community chairs for the full 12 months of the 1989
financial year. These chairs will be devoted essentially to teaching and research in specific areas of European
integration.
ITEM 3242 - HISTORICAL RECORDS OF THE COMMUNITIES
1988     – Appropriations authorized                                                                            220 000
1989     – Appropriations requested                                                                             398 000
Percentage change                                                                                                + 80,9
1 . Type of expenditure
The appropriation is to cover the expenditure (staff and administrative costs) incurred by the European Univer­
sity Institute in managing the historical records.
2. Method of calculation and explanation of changes
The appropriation was determined on the basis of the following foreseeable expenditure :
                                                                                        1988               1989
–    staff (8 in categories A, B , C and D)                                           323 000            215 000
–    building charges and miscellaneous running costs                                  93 000             77 000
–    equipment, data-processing, library                                               80 000             90 000
–    salary deductions                                                             -   33 000         -   22 000
– balance carried over                                                             -   65 000         - 140 000
                                                     Commission contribution          398 000            220 000
                                                                                                            New Item
ITEM 3243 - TRAINEESHIPS FOR RESEARCHERS PREPARING THESES
1988     – Appropriations authorized                                                                                 -
1989     – Appropriations requested                                                                              75 000
Percentage change                                                                                                    +
1 . Type of expenditure
Payment of a training allowance to researchers seconded to the Institute (with the agreement of their own univer­
sity) to prepare theses on subjects covered in the Institute’s work programme and particularly in relation to the de­
velopment of European union .
2. Method of calculation
It is proposed that 20 researchers be accepted in 1 989 for a period of three to four months. The training allowance
would total 835 ECU per month plus payment of the travelling expenses between the place of origin and Florence.
 ---pagebreak---                                               Preliminary draft general budget, 1989                                                  87
                                                                                                   Former Article 307 (in part)
ARTICLE 325 - COLLEGE OF EUROPE, BRUGES
1988       – Appropriations authorized                                                                                          175 000
1989       – Appropriations requested                                                                                          300 000
Percentage change                                                                                                                + 71,4
1 . Type of expenditure
The foundation of the College of Europe in 1949 was a direct consequence of the Hague Congress. Its aim is to
equip young university graduates of all nationalities to deal with the problems posed by the economic and politi­
cal unification of Europe by means of intensive studies in law, economics and administrative sciences, not at the
level of a single country, but at that of Europe. The 1987/88 intake comprised 180 students from 21 countries.
The Administrative Council of the College of Europe is composed of representatives of the States and institutions
which contribute to its budget. The Community has been helping finance the College since 1953 ( Robert Schu­
man Chair of European Economy, Bruges Week)
2. Method of calculation and explanation of changes
Until 1988 the community subsidy was charged to Article 307 (Subsidies to higher education institutions).
The appropriation is to cover the Commission’s financial contribution to the College’s operating costs, in support
of the European teaching being offered there. The increase in the contribution corresponds to the College’s
budgetary imbalance, which arose following the reduction in the subsidy granted by the Belgian State, the main
contributor.
ARTICLE 326 - EUROPEAN SCHOOLS AND OTHER EDUCATIONAL ESTABLISHMENTS
                                                             SUMMARY
                                                                                 Appropriations     Appropriations       Percentage
  Chapter/                                                                          authorized         requested
     Article
                Item                           Heading                                                                    change
                                                                                      1988 ( l )         1989 ( 2)
     326        3260        Brussels I and II                                     23 159 513           23 664 872            +    2,18
                3261        Luxembourg                                            1 1 362 000           12 054 893           +    6,10
                3262        Mol                                                     4 404 559            4 543 768           +    3,16
                3263        Varèse                                                  6 587 144            6 528 811           - 0,89
                3264        Karlsruhe, Munich                                       5 241 570            5 745 327           +    9,61
                3265        Bergen                                                  3 576 390            3 874 523           +    8,34
                3266        Culham                                                  2 918 945            3 359 461           + 15,09
                3267        Running costs of the Board of Governors of
                            the European Schools                                    1 477 580             1 806 481          + 22,26
                3268        Other educational establishments                                     0          122 000                  +
                                                                       Total      58 727 701           61 700 136            +   5,06
( ' ) Including 10 000 000 ECU entered in Chapter 100.
(2) The amount of appropriations requested is a provisional estimate pending the meeting of the Board of Governors on 26 and 27 August
       1988 .
 ---pagebreak--- 88                                     Preliminary dra ft general budget, 1989
1 . Type of expenditure
The budgets of the European Schools are adopted, in so far as they concern it, by the Board of Governors, which
consists of the delegations of the 12 Member States (education, finance, foreign affairs), the representative of the
European Patent Office and the Commission representative. The Board of Governors submits the budgets to the
competent authorities of the European Communities in accordance with Article 7 of the Protocol of 13 April
1962 .
The budgets of European Schools cover :
– expenditure relating to remuneration of all staff;
– running costs ;
– the running costs of the Board of Governors and its secretariat.
Full-time teachers seconded to the Schools by the Member States continue to be paid in their countries of origin .
Their salaries are calculated by the European Schools on the basis of the regulations for members of the teaching
staff drawn up by the Board of Governors and are charged entirely as expenditure ; the teachers are paid the diffe­
rence between the latter and their national salaries , which are entered in the accounts as revenue from the Mem­
ber States.
Item A 3268 (Other educational establishments) is for children who, on serious educational grounds certified by
a European School headmaster, are not or are no longer admitted to a European School. The same applies to
children whose parents are employed in delegations and information offices and who have to attend schools with
which agreements are sought.
There was no allocation to this item in 1988, but since it is the institutions’ duty to treat their staff fairly, the Com­
mission is obliged to request that appropriations be transferred in 1988 and that 122 000 ECU be entered in the
1989 budget.
 ---pagebreak---                                                    Preliminary draft general budget, 1989                                                           89
                                                 CHAPTER 34 - PUBLICATIONS
                                                                   SUMMARY
                                                                                         Appropriations    Appropriations           Percentage
   Chapter/                                                                                 authorized         requested              change
     Article/                                  Heading                                      for 198S ( ' )    for 1989 ( ' )           (2 : 1 )
       Item
                                                                                                 1                  2                     3
      340         Official Journal                                                         23 220 000          24 805 000                + 6,83
      341         Publications                                                              2 229 000            2 454 864               + 10,13
      342         Publications Office                                                      28 688 441          31 377 543                +      9,37
                                                                              Total        54 137 441          58 637 407                +      8,31
( ' ) Including any appropriations entered in Chapter 100.
ARTICLE 340 - OFFICIAL JOURNAL
1988       – Appropriations authorized                                                                                                  23 220 000
1989       – Appropriations requested                                                                                                   24 805 000
Percentage change                                                                                                                             + 6,83
1 . Type of expenditure
The appropriation is to cover the cost of publishing the acts and texts which are the responsibility of the Com­
mission and includes :
–       printing and carriage of the Official Journal and the tables of contents (monthly and annual);
–       publication of a register of Community legal instruments ;
–       preparation of computer tapes for the computerized documentation system for Community law (Celex);
–       microfilming the Official Journal ;
–       publication of a collection of the agreements concluded by the European Communities.
2. Method of calculation and explanation of changes
2. 1 . Official Journal
A. Printing costs
        Printing costs for the Official Journal are now calculated more analytically. Costs vary depending on the se­
        ries (L or C) and also on the degree of computerization. The S series is dealt with separately (Part B). The table
        of average prices per page and per series for the L and C series is as follows :
                                                                                                                            Average cost
                 Year                                    L                                   C                                L-C(' )
            1986                                       86,95                              122,08                               97,67
            1987                                       96,50                              116,84                              101,05
            1988 (estimated)                           95,86                              134,59                              106,15
            1989 (forecast)                           102,59                              135,91                              112,02
 ( 1 ) In calculating the average price for the two series, account was also taken of the number of pages per series, as set out in table B.
 ---pagebreak--- 90                                                 Preliminary draft general budget, 1989
As the table shows, the increase in price per page for the L and C series is relatively small, thanks to modernization
and computerization of the production process. The average price will be only 5,5 % up on the preceding year,
which is close to the maximum rate of increase authorized for the next budget.
B. Number of pages
      For 1989 the number of pages/language for the L and C series should rise to 33 023, as indicated below :
                                              Number
                                                                                                               Commission share
                                                                                Total
               Series
                                           pages/language                   9 languages                   %                   Number of pages
                  L                            20 509                         184 581                   66,67                      123 060
                  C                            12514                          112 626                   43,14                        48 587
                             Total             33 023                         297 207                   57,75                      171 647
                                                                                                      (average)
C. Amount to be earmarked for 1989
                                                      Cost                           Number of pages                           Total
               Series
                                                       (a)                                  (b)                              (a ) x(b)
                  L                                 102,59                              123 060                            12 624 725
                  C                                 135,91                               48 587                             6 603 460
                            Total                   112,02                             171 647                             19 228 285
                                                                                                     Rounded total :       19 228 000 ECU
2.2. Budget documents
Expenditure for 1989 has been estimated as follows :
                                                  Preliminary
                  Institution
                                                      draft
                                                                         Draft           Final adoption       Teletab ( ' )             Total
Parliament                                                                                 556 548           34 777                   591 325
Council                                                               565 473                                34 777                   600 250
Commission                                       1 211 035                                                   34 777                 1 245 812
                                    Total       1 211 035            565 473              556 548            104 331               2 437 387
( ' ) Each institution involved in the process bears one third of the cost.
The Commission’s share 1989 is therefore 1 245 812 ECU, giving a round figure of:                                                1 200 000 ECU
2.3 . Official Journal index and register
2.3.1 . Official Journal index
This includes the printing of tables and Eurovoc.
(a) Tables
      The alphabetical and methodological tables serve as a guide to the OJ and appear monthly and annually.
(b) Eurovoc
      Since January 1984 the OJ alphabetical tables have been indexed with the help of the Eurovoc (European vo­
      cabulary) multilingual thesaurus, which, combined with data-processing techniques, is rationalizing the
      tables and facilitating documentary research.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                      91
2.3.2. Register
The register makes Community law better known, containing as it does all the instruments valid for any length
of time and providing lawyers and businessmen with a year-end picture of the state of Community law in any
given area. It was specifically requested by the Member States, some of which had found investigations of this
kind extremely difficult.
2.3.3 . Printing costs (6.3.1 + 6.3.2)
The OJ index is now produced by computer, which means that the basic composition can be reutilized and costs
reduced to 16,89 ECU/page. The total number of pages for all the institutions is 84 528 , for an overall cost of
 1 427 678 ECU, of which 71% is borne by the Commission (1 013 652 ECU, giving a round figure of
 1 000 000 ECU).
Publication of the register concerns the Council and the Commission only. The cost (817 091 ECU) is shared on
the basis of the number of items each institution has. The Commission has some 30 000 items x 16,89 ECU,
giving a total of 506 700 ECU (500 000 ECU in round figures).
                                                           Total : 1 000 000 ECU + 500 000 ECU =           1 500 000 ECU
2.4. Electronic publishing
Electronic publishing covers all material on an electronic base, including the magnetic tapes that are supplied
to feed data bases such as Celex (Community legislation).
For safety’s sake two copies of these tapes are kept.
Expenditure under this heading for 1988 has been calculated as follows :
– Number of printed pages of OJ (all series together and index) for all the institutions :
                                                                         508 167 x 3,74 ECU/page =         1 900 545 ECU
The Commission’s share amounts to 72,46%, for which a sum of 1 377 135 ECU should be provided, rounded
down to :
                                                                                                           1 300 000 ECU
2.5 . Microfiche edition
Microfiching involves the production of masters (with shots per language and titles), a number of duplicates (sets
per language) and jacketing operations.
This is a market catering for a clientele that does not want the OJ in its printed form and is mainly interested
in a limited number of sectors (lawyers specializing in competition, etc.). If they do not want to take out a
subscription to a data bank, for a modest sum, customers can invest in a small reader and thus have immediately
to hand all the texts they require for their business or research.
The cost of microfiching the OJ has been estimated for 1988 at roughly 129 279 ECU for all the institutions
(346 704 pages at an average cost of 0,3729 ECU per page), of which 59,65 % is borne by the Commission, that
is 77 111 ECU, which is 26,66 % down on the figure for 1988 (estimate : 105 000 ECU). This gives a round figure
of :
                                                                                                              77 000 ECU
2.6. Computerization
The introduction of new technology has already reduced the cost of producing the Official Journal. The rate of
increase of the average cost in ECU/page has thus been kept well below inflation , even though printers are usu­
ally particularly sensitive to this, since, apart from salaries, their raw materials are film , paper and energy.
By way of example, between 1979 and 1987, the consumer price index in Luxembourg increased by 43,5 %. In
the same period, the unit price of the Official Journal rose by only 34%.
The following achievements should be noted :
– electronic storage of standard texts, restricting input to the variable parts only ;
– reuse of existing texts or parts of texts, even if the format has to be changed or they come from other
     printers, using the Formex protocol developed by the Publications Office ;
 ---pagebreak--- 92                                               Preliminary draft general budget, 1989
– conversion of whole publications into data bases, from which subsequent versions are extracted and auto­
      matically compiled following the input of new data (budget);
– creation of single data bases from which various publications covering a wide area can be extracted
      (Taric, Harmonized System, Combined Nomenclature);
– a new system for handling agricultural instruments, allowing new regulations to be published and consoli­
      dated versions to be produced at the same time (system likely to be extended to cover other areas);
– handling and automatic retrieval of instruments relating to MCAs.
Expenditure has been estimated at 1 591 350 ECU for all the institutions for 1989. The Commission’s contribution
has been estimated at 1 000 000 ECU, or 62,83 %, while its average contribution is 72,63 % :
                                                                                             Round figure : 1 000 000 ECU
2.7. Postage for Official Journal
In 1986 postal charges in Luxembourg rose by 130%.
According to the Publications Office, expenditure can be expected to rise to 2 000 000 ECU for all the institutions,
of which 1 452 400 ECU (72,63 %) will be borne by the Commission :                           Round figure : 1 400 000 ECU
2.8 . Packaging
To speed up dispatch of the OJ , in particular to the 12 capitals of the Member States, packaging (including wrap­
ping) is done by the printers provided they have the necessary facilities. This saves time and cuts out an extra
handling stage at the Publications Office. It must also be remembered that successive enlargements have in­
creased the proportion of distant destinations from 4/9 to 7/ 12. Greater distances have led to the OJ being dis­
patched by night, which is more expensive than by day. The Court of Justice considers that an instrument is pub­
lished on Community territory when the OJ is displayed in all the official languages in the Publications Office in
Luxembourg, dispatch completed. It is therefore vital that the OJs should be dispatched without delay.
The cost of this operation to the Commission is estimated at 72,63 % of the total (roughly 1 700 000 ECU), that
is 1 234 710 ECU .
Of this expenditure the Commission will bear :                                               Round figure : 1 100 000 ECU
Summary of Commission’s share of expenditure for 1989
                                                                                                         9 languages
(a) Official Journal                                                                                    19 228 000
(b) Printing of tables, Eurovoc and Register of Community legal
      instruments                                                                                         1 500 000
(c)   Budget documents                                                                                    1 200 000
(d)   Electronic publishing                                                                               1 300 000
(e)   Microfilming of Official Journal                                                                       77 000
( f)  Computerization                                                                                     1 000 000
(g)   Collection of agreements concluded by the European Communities
(h)   Postage for Official Journal                                                                        1 400 000
(i)   Packaging                                                                                           1 100 000
                                                                     Total expenditure                  26 805 000
                                                          Revenue from OJ sales ( ' )                     2 000 000
Appropriations requested                                                                                24 805 000
( ' ) In accordance with Article 22 of the Financial Regulation this revenue will be reused.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                     93
ARTICLE 341 - PUBLICATIONS
   Article/                                                              Appropriations  Appropriations   Percentage
    Item
                                       Heading                              authorized      requested       change
                                                                             for 1988        for 1989     1989/ 1988
    3410       General publications                                         2 040 000         2 255 864       + 10,58
    3412       Expenditure on publicity and promotion of
              publications                                                    189 000           199 000       +   5,29
                                                                Total       2 229 000         2 454 864       + 10,13
1 . Type of expenditure and method of calculation
The appropriation is to cover all expenditure relating to the traditional publications of the Commission other
than the Official Journal and the publications connected with implementing certain specific policies, expenditure
on which is chargeable to operating appropriations :
– publications provided for in the treaties and regulations,
– periodicals published by the Commission,
– brochures and publications relating to the dissemination of technical and economic information.
This expenditure also includes :
– production costs,
– the costs arising from preparatory work, revising and editing,
– expenditure on publicity and promotion for all Commission publications.
200 000 ECU has been added to cover expenditure connected with the printing of technical reports (costs related
to ECSC social and technical research), recorded hitherto in the ECSC operating budget as costs relating to
research projects.
ARTICLE 342 - OFFICE FOR OFFICIAL PUBLICATIONS OF THE EUROPEAN COMMUNITIES
1988     – Appropriations authorized                                                                         28 688 441
1989     – Appropriations requested                                                                          31 377 543
Percentage change                                                                                                + 9,37
1 . Type of expenditure
The amount entered covers all the financial needs of the Publications Office.
The details appear in an annex to Section III A (Commission) of the general budget, in the form of a statement
of revenue and expenditure.
The staff authorized for the Publications Office can be seen in Annex I to the establishment plan of the Commis­
sion.
2. Method of calculation and explanation of changes
(a) The calculation of the appropriation for the Publications Office – approved by its Management Board,
     made up of the Secretaries-General of the institutions – corresponds, as regards :
 – Title 1 (Expenditure relating to persons working with the institution) to the same rules and assumptions
     described for Commission staff ;
 – Title 2 (Buildings, equipment and miscellaneous operating expenditure) to the requirements estimated for
     1988, taking account of the special situation of the Office for Official Publications (a department at the service
     of all the Community institutions), and Title 3 (Expenditure on publications).
 ---pagebreak--- 94                                               Preliminary draft general budget, 1989
(b) Establishment plan
                                                 Authorized
                                                                                     New posts                 Total 1989
            Category                              for 1988
                                                                                      for 1989                (permanent)
                                                (permanent)
                A                                     16                                  1                        17   -
                B                                   188                                  15                      203
                C                                   122                                   6                       128
                D                                    70                                   6                        76
                            Total                   396                                  28                      424
(c) Summary of appropriations
                                                                                                    1988                1989
Title 1
Expenditure relating to persons working with the institution                                   16 537 241       17 865 400
Title 2
Buildings, equipment and miscellaneous operating expenditure                                   12 071 200       13 392 143 (')
Title 3
Expenditure resulting from special functions carried out by the institution                        80 000          120 000
                                                                                   Total
                                                                                               28 688 441      31 377 543
(') Including 110 000 ECU, representing a 0,38% increase, simply transferred from the Commission’s budget to the Office’s budget and
    therefore not affecting the overall budget total (rent for the Meis building).
 ---pagebreak---                                                 Preliminary draft general budget, 1989                                     95
                   CHAPTER 35 - SURVEYS AND METHODS OF ANALYSIS IN THE
                                                       ECONOMIC FIELD
                                                            SUMMARY
                                                                              Appropriations Appropriations  Percentage
   Chapter/                                                                      authorized    requested      change
     Article/                               Heading                             for 1988 (*)  for 1989 ( ' )   (2 : 1 )
      Item
                                                                                      1             2             3
      350       Harmonized European economic surveys                             2 550 200       2 678 000           + 5,0
                                                                     Total       2 550 200       2 678 000           + 5,0
( ' ) Including any appropriations entered in Chapter 100.
ARTICLE 350 - HARMONIZED EUROPEAN ECONOMIC SURVEYS
1988       – Appropriations authorized                                                                            2 550 200
1989       – Appropriations requested                                                                             2 678 000
Percentage change                                                                                                       + 5,0
1 . Reference
These recurrent studies have been going on for many years pursuant to :
(a)    decisions taken by the Commission on 15 November 1961
–      the monthly Community business survey (since 1962);
–      the survey of capital investment (since 1966);
–      the building industry survey (since 1963);
–      the survey on the services sector ;
(b) the Council Decision of 15 September 1970
– the EEC consumer survey (since 1972).
Published periodically, these five surveys are based on polls carried out with the aid of specialist national institu­
tes using harmonized questionnaires to establish opinions and to assess future trends of economic factors in the
areas listed above, the purpose being to diagnose and forecast the economic situation with a view to the proposals
on the broad lines of economic policy which the Commission presents to the Council.
2. Type of expenditure
Details of the expenditure are as follows :
 – for the surveys under (a) above :
       Commission contribution to the marginal costs incurred in adapting the data supplied by national institutes
       to EEC requirements ;
 ---pagebreak--- 96                                         Preliminary draft general budget, 1989
– for the survey under (b) above :
    full refund to the national institutes of the costs of the survey carried out for the EEC .
3. Method of calculation
The method of calculation varies according to the survey. The Commission is requesting the following appropria­
tions :
– monthly Community business survey                                                                         718 000
– survey of capital investment                                                                              161 000
– building industry survey                                                                                  218 000
    The proportion of costs covered by the Commission contribution varies from country to
    country according to the degree of harmonization and the scope of the survey : the number
    of undertakings and industries surveyed , size of samples, computer costs, paper costs, wages
    and salaries, printing costs, correspondence, etc.
– EEC consumer survey                                                                                     1 112 000
– survey on the services sector                                                                             224 000
– one-off economic surveys                                                                                  140 000
– setting-up of a data bank                                                                                 105 000
                                                                                            Total         2 678 000
The increase is attributable to the rise in estimated costs, the additional amounts required to harmonize the sur­
veys, the extension of certain harmonized surveys to cover the new Member States and the need to provide an ad­
ditional 105 000 ECU for the setting-up of a data bank – for use in all the Commission departments and, possi­
bly, outside – and for the computerized processing of the findings of the surveys and their publication .
 ---pagebreak---                                                Preliminary draft general budget, 1989                                             97
                                         TITLE 10 – OTHER EXPENDITURE
                                                              SUMMARY
                                                                                  Appropriations     Appropriations   Percentage
  Chapter/                                                                           authorized          requested     change
  Article/                                Heading                                     for 1988            for 1989      (2 : 1 )
    Item
                                                                                          1                  2             3
    100      Provisional appropriations                                                p.m. ( ' )               p.m .            –
    101      Contingency reserve                                                       p.m .                    p.m .            -
    102      Reserve for ECU conversion rates                                          p.m .                    p.m .            –
                                                                       Total           p.m .                    p.m .            -
(■) The amount entered for this chapter in 1988 has been allocated among the various headings concerned .
 ---pagebreak--- 98                                              Preliminary draft general budget, 1989
                              CHAPTER 100 - PROVISIONAL APPROPRI ATIONS
 1988     – Appropriations authorized                                                                                   ( 10 100 000) ( ' )
1989      – Appropriations requested                                                                                             p.m .
Percentage change                                                                                                                      -
( l ) This amount is indicated for information purposes, In this document the appropriations in question are incorporated in the figures
      under the headings for which they are earmarked.
1 . Reference
Article 15(4) of the Financial Regulation of 21 December 1977 , which states : ‘Each section of the budget may
include a chapter in respect of provisional appropriations and a “contingency reserve” chapter. The appropria­
tions entered in these chapters may be used only by means of transfer in accordance with the procedure laid
down in Article 21.’
2. Type
This is not an ordinary budget heading to which expenditure may be booked. It is a reserve made up of a series
of amounts specifically earmarked for certain headings. These appropriations cannot be used until transferred
by the budgetary authority under the second, third, fourth or fifth subparagraphs of Article 2 1 (2) of the Financial
Regulation of 21 December 1977.
3. Method of calculation
In the introduction to Volume 7 of the preliminary draft budget for 1979, the Commission defined its criteria
for the inclusion of new policies in the budget :
‘The Commission is therefore duty-bound to define its policy on this point precisely, particularly as regards new
policies which will have financial consequences. The Commission’s doctrine is based on the following three
principles, for those cases where the Council first has to lay down the legal basis for the implementation of a given
item of expenditure :
– appropriations are entered under a budget heading when a Commission proposal has been accepted or, if
      a Commission proposal has been submitted by 15 June, when there is every likelihood of it being adopted
      by 31 December in view of the tenor of the earlier discussions in the Community’s institutions ;
– a token entry is made under the appropriate budget heading in Section III and an appropriation entered
      under Chapter 100 when a Commission proposal has not yet been adopted but there is every reason to believe
      that it will be adopted during the next financial year. The amount of the appropriation depends on the date
      when the policy concerned is expected to come into force ;
– a budget heading is simply given a token entry when a new policy is under discussion in the Commu-
      nity’s institutions but has not yet been embodied in the form of an official Commission proposal for a regula­
      tion , or where, when such a proposal has been made, it is not yet possible to cost the policy and it is therefore
      inadvisable to set aside appropriations and thereby unnecessarily increase the amount of own resources that
      have to be levied.’
 ---pagebreak---                                        Preliminary draft general budget, 1989                                99
                              CHAPTER 101 - CONTINGENCY RESERVE
1988    – Appropriations authorized                                                                        p.m .
1989    – Appropriations requested                                                                         p.m .
Percentage change                                                                                            -
1 . Reference
Article 15(4) of the Financial Regulation of 21 December 1977, which states : ‘Each section of the budget may
include a chapter in respect of provisional appropriations and a “contingency reserve” chapter. The appropria­
tions entered in these chapters may be used only by means of transfer in accordance with the procedure laid
down in Article 21.’
2. Type
This is not an ordinary budget heading to which expenditure may be booked. It is a reserve intended to meet ex­
penditure which was not foreseen when the budget was established. The appropriation can be used only for trans­
fers to other chapters under the procedure laid down in the Financial Regulation.
3 . Method of calculation
See Chapter 101 of Section III B.
 ---pagebreak---  100                                   Preliminary draft general budget, 1989
                      CHAPTER 102 - RESERVE TO COVER ANY SHORTFALL
                       IN APPROPRIATIONS CONVERTED INTO NATIONAL
                          CURRENCIES RESULTING FROM DIFFERENCES
                      BETWEEN THE ECU CONVERSION RATES USED WHEN
                       THE BUDGET IS DRAWN UP AND THE CONVERSION
                                 RATES OBTAINING AT THE TIME OF
                                             IMPLEMENTATION
1988   – Appropriations authorized                                                                            p.m .
1989   – Appropriations requested                                                                             p.m.
Percentage change                                                                                               –
1 . Reference
Article 10 of the Financial Regulation of 21 December 1977.
2. Type
This is not an ordinary budget heading to which expenditure may be booked. It is a reserve which may, if
required, be transferred to headings in Titles 1 to 3 if the appropriations authorized turn out to be insufficient
as a result of differences between the ECU conversion rates used when the budget was established and the rates
of conversion into national currencies obtaining at the time of implementation.
3. Method of calculation
No accurate calculation can be made, since it would involve predicting currency fluctuations between the date
on which the budget was established and the date of implementation.
 ---pagebreak---                                                 Preliminary draft general budget, 1989                        101
                          Section III B – Operating appropriations
              TITLES 1 AND 2 - EUROPEAN AGRICULTURAL GUIDANCE AND
                                GUARANTEE FUND - GUARANTEE SECTION
                                             ECU/national currency conversion rates
For the purposes of EAGGF Guarantee Section expenditure amounts in ECU have been converted into national
currency using the central rates, except for those currencies not participating in the EMS mechanism or enjoying
a wide margin of fluctuation (drachma, lira, pound sterling, peseta, escudo), for which market rates have been
used .
            Value of 1 ECU in national currency
            BFR / LFR             43,325
            DKR                     7,92187
            DM                      2,07001
            DR                   166,205
            ESC                  169,744
            FF                      7,04047
            H FL                    2,32603
            IRL                     0,774611
            LIT                1 533,43
            PTA                  139,257
            UKL                     0,672483
 ---pagebreak---  102                                      Preliminary draft general budget, 1989
                                    CHAPTER 10 - CEREALS AND RICE
A. THE MARKET IN CEREALS
The cereals market organization began operation on 1 July 1967. It is governed by Regulation (EEC) No 2727/75
(as last amended by Regulation (EEC) No 1097/88) and covers the following products :
– grain : common wheat, durum wheat, barley, rye, oats, maize, other ;
– processed products: flour, wheat groats and meal, malt, starches, glucose, cereal products, brans, wheat
     gluten, manioc roots.
The marketing year runs from 1 July to 30 June.
Expenditure on cereals has varied substantially from year to year, primarily as a result of world price fluctuations,
generally accounting for between 10 and 25 % of total EAGGF Guarantee expenditure ( 18,4% in 1987).
1. Economic background
Community cereals production ( ' ) accounts for about 10 % of world production and consists of three main pro­
ducts : common wheat, barley and maize. Production shows a distinct upward trend : for EUR 10 it rose from
70 million t in 1960 to 124 million t in 1983 and 151 million t in 1984, an all-time record, and then fell to around
139 million t in 1985 , 135 million t in 1986 and 131,5 million t in 1987 as a result of the bad weather. For EUR 12
the production figures were 160 million tin 1985 and 153 million tin 1986, and 1987.
About 60 % of the cereals consumed are in feedingstuffs, the remainder being for human consumption (about
26 %) and industrial uses.
The percentage of Community cereals used for animal feed is under strong pressure from cereal substitutes im­
ported at zero or low duties – principally manioc and maize-gluten-based products.
The total quantity of cereals used for animal feed reached a record level of 74,8 million t in 1973 /74. Since then
it has fluctuated between 69 and 73 million t with a slight tendency to drop. The estimate for 1985/86 is 71,5 mil­
lion t. In the Community of Twelve, the consumption of cereals by livestock totalled 87,4 million t in 1985/86
and 85,6 million t in 1986/ 87 .
Imports of cereal substitutes (Annex D to Regulation (EEC) No 2727/75) into the Community of Twelve totalled
13,3 million t in 1984, 14,8 million t in 1985 and 15 million t in 1986. The degree of self-sufficiency varies consi­
derably from year to year, depending on the weather. In 1984/85, the figure for all cereals was 129,6 % for the
Community of Twelve, and in 1985/86 the rate was 1 13,7 %.
2. Operation of the market
2.1 . Price arrangements
The Council fixes three types of price for cereals each year :
(a) Intervention price: The intervention agencies must, at certain periods of the year and when the market price
is below the intervention price for at least two weeks, buy in at the intervention price all the cereals they are
offered that have the requisite quality characteristics. The cereals are bought in at 94 % of the intervention price
concerned.
Intervention prices are set for common wheat, maize, barley, sorghum, rye and durum wheat.
(b) The target price .- These prices are derived from the intervention prices and are fixed for the same cereals. This
is the price which the market organization aims to ensure, in particular by protection at the frontiers of the Com­
munity.
                                                                I
(c) The thresholdprice is fixed by the Commission on the basis of the target price. It governs import arrangements,
since it represents the theoretical minimum entry price.
The target, intervention and threshold prices are increased each month to cover storage costs and interest charges
generated because demand, unlike supply, tends to be fairly constant all the year round.
 (') Including durum wheat but excluding rice.
 ---pagebreak---                                           Preliminary draft general budget, 1989                                     103
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
If the world price is lower than the Community threshold price, a levy equal to the difference between the
threshold price and the cif price is charged on imports.
Where the price of cereals within the Community is higher than the world price, a refund calculated in terms of
the difference is granted on exports. If the world price exceeds the common price, a levy may be imposed on ex­
ports.
Community food aid operations also attract refunds. The costs are included in Chapter 29.
2.2.2. Storage
Three types of intervention measures are involved :
– Buying-in and subsequent operations involving public stocks
    This concerns buying-in by the intervention agencies and the related disposal operations. They give rise to
    technical and financial costs and to losses or gains on sales of stocks.
– Carryover payments
    In order to ease the transition from one marketing year to the next, provision may be made for payments for
    common wheat, durum wheat, rye and barley in stock at the end of the marketing year. In view of the structu­
    ral surpluses in the Community and the general budget situation, the Commission has since 1985 /86 ceased to
    propose this measure.
– Special measures
    These are measures provided for in Article 8 of the basic regulation, and they include private storage, the aim
    being to avoid situations in which the intervention agencies are forced to buy in excessively large quantities
    of cereals. In the last few years they have not been used.
2.2.3 . Production refunds
These refunds consist of aids for the starch-using industries to enable them to compete against imported starch-
based products bought at world market prices. Up to 1 July 1989, starch manufacturers still qualify for a degres-
sive refund to help them adjust to the new arrangements which came into force on 1 July 1986.
2.2.4. Aid for the production of durum wheat
This aid, which is fixed by the Council, was introduced to support production in the traditional growing areas
and for qualities suitable for the manufacture of pasta products. It is fixed per hectare harvested.
2.2.5. Co-responsibility levy
From the 1986/87 marketing year a co-responsibility levy has been imposed on cereals grown in the Community,
for a twofold purpose : to expand the Community’s outlets and to give producers an indication of the market situa­
tion. The level is in theory set on the basis of non-subsidized use of cereals on the internal market, adjusted for im­
ports of cereal substitutes.
The Council decided to fix the rate of the levy for the first year of application ( 1986/87) at 3 % of the intervention
price for common wheat applicable during the first month of the marketing year. The same rate was maintained
for 1987/88. In accordance with the conclusions of the Brussels European Council, the Council of Ministers of
Agriculture has decided to introduce, from 1988/89 onwards, a co-responsibility levy (also 3 % of the intervention
price) chargeable on a provisional basis. If, at the end of the marketing year, it emerges that the harvest does not
exceed 160 million t or that it exceeds this figure by less than 3 %, the provisional levy will be refunded in its
entirety or pro rata.
Small producers benefit from a direct aid scheme. The total aid amount set for 1986/87 was 120 million ECU.
The same amount was allocated for 1987/ 88. For 1988/89, the Commission proposes that the total amount of
the aid be increased to 220 million ECU.
 ---pagebreak---  104                                         Preliminary draft general budget, 1989
2.3 . Prices and premiums
                                                                                                                       ( ECU/1)
                                                                                          1987 / 88           1988 / 89
A. Prices
 1 . Target prices
      – Durum wheat                                                                          357,70              334,91
      – Common wheat                                                                         256,10              250,30
      – Barley , rye, maize, sorghum                                                         233,80              228,00
2.    Intervention prices
      – Durum wheat ( EUR 10)                                                                291,59              276,34
                           (Spain)                                                           219,78              219,78
      – Common wheat
            – common single ( EUR 10)                                                        179,44              179,44
                               ( Spain)                                                      173,72              179,44
      – Barley, sorghum ( EUR 10)                                                            170,47              170,47
                             (Spain )                                                        158,85              161,17
      - Rye ( EUR 10)                                                                        170,47              170,47
                (Spain)                                                                      160,95              162,58
      - Maize ( EUR 10)                                                                      179,44              179,44
                  ( Spain)                                                                   173,72              179,44
B. Premiums ( ' )
      – Aid for the production of durum wheat ( EUR 10)                                      121,80              137,05
                                                   (Spain )                                   33,85                54,49
 C. Special increases
      – breadmaking quality common wheat                                                        3,59                3,59
      – breadmaking quality rye                                                                 8,87                8,97
D. Monthly increases
      – durum wheat                                                                             2,70                2,03
      – other cereals                                                                           2,00                 1,50
( ' ) ECU /ha.
3. Appropriations for 1989
3.1 . Recent trends
                                                                                                                (million ECU)
       Item /                                                                           1987            1988         1989
      Article
                                               Heading                                                             estimate
                                                                                    expenditure       approps
          a                                        b                                     c               d             e
        1000        Refunds on common wheat and common wheat flour                   1 661,8         1 363        1 835
        1001        Refunds on barley and malt                                         819,1           820        1 022
        1002        Refunds on durum wheat and durum wheat flour, groats and
                    meal                                                               179,6           374          378
        1003        Refunds on other cereals                                           410,2           107           170
        100         Refunds on cereals                                               3 070,6         2 664        3 415
 ---pagebreak---                                                   Preliminary draft general budget, 1989                                                105
 Continued
                                                                                                                             (million ECU)
        Item /                                                                                   1987            1988            1989
                                                    Heading
       Article                                                                               expenditure       approps         estimate
           a                                            b                                          c               d               e
         1010      Carryover payments                                                             p.m .           p.m .           p.m .
         1011      Technical costs of public storage                                            213,9           338             387
         1012       Financial costs of public storage                                            132,4          152               88
         1013      Other public storage costs                                                   588,0           876               64
         1014      Depreciation of cereal stocks                                                   –            300           1 674
         1019      Other intervention storage                                                       2,9           p.m .           p.m .
         101        Intervention storage of cereals                                             937,2         1 666           2 213
         1020      Production aid for durum wheat                                               256,2           290              349
         1021      Production refunds for potato starch                                           54,2            94               98
         1022      Other production refunds                                                      181,3          348              355
         1023      Premium for incorporation of cereals in feed                                    –               –
                                                                                                                                  p.m .
         1029      Other intervention                                                             p.m .           42               94
         102        Intervention other than storage of cereals                                  491,7            774             896
         1030      Co-responsibility levy                                                    - 378,7         - 814           -    652
         1031      Aid to small producers                                                         16,9            75              123
         1032      Additional co-responsibility levy                                               –               -
                                                                                                                             -    652
     ■   1033      Reimbursement of additional co-responsibility levy                              -               -
                                                                                                                                  p.m .
         103        Co-responsibility levy and aid to small producers                        - 361,8         - 739           - 1 181
                                                                        Cereals – Total       4 137,7         4 365(‘ )       5 343
                   Expenditure on the cereals sector as a % of total EAGGF
                   Guarantee Section expenditure                                                  18,0            15,2             19,0
( ' ) Not counting 750 million ECU entered in Chapter 8 for the depreciation of old stocks of cereals, which brings the total to 5115 mil¬
       lion ECU, or 17,8 % of total appropriations.
B. THE MARKET IN RICE
The common organization of the market in rice, brought into force on 1 September 1967 and currently governed
by Regulation ( EEC) No 1418/76, as last amended by Regulation (EEC) No 3990/87, covers the following pro­
ducts :
– grain : paddy rice, husked rice, semi-milled or wholly milled rice and broken rice ;
– processed products: rice flour, flaked rice, rice groats and meal, other.
The marketing year runs from 1 September to 31 August.
Expenditure on rice accounts on average for between 0,2 and 0,5 % of total EAGGF Guarantee spending (0,3 %
in 1986).
 I. Economic background
According to the latest estimates rice production in the Community rose with the accession of Spain to 1,10 mil­
lion t of wholly milled rice in 1987/88.
Gross human consumption of rice is estimated at 1,14 million t.
An import volume of 370 000 1 and an export volume of 320 000 1 are expected (wholly milled rice).
 ---pagebreak---  106                                     Preliminary draft general budget, 1989
2. Operation of the market
2.1 . Price arrangements
The Council fixes two types of price for rice each year :
(a) The intervention price: This is a single price for the whole Community. The intervention agencies have to buy
in at 94% of this price all the paddy rice offered to them. For 1987/88 the Council has limited intervention to
the period December to July.
(b) The target price: This is fixed for husked rice, based on the normal remuneration to be paid to growers. It is
derived from the intervention price for paddy rice.
The threshold price is fixed by the Commission on the basis of the target price. It serves as a reference for arrange­
ments for importation from non-member countries (levies).
These prices, like the corresponding ones for cereals, are increased monthly to take account of the storage costs
incurred by private storers and to spread sales to the market over the marketing year.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
An import levy is fixed for each type of rice, equal to the difference between the cif price and the threshold price.
The Commission, after consulting the Management Committee, fixes the amount of the export refunds, in the
light of prices on the world market compared with those in the Community. If the world price exceeds the Com­
munity price, a levy may be imposed on exports.
Community food aid operations also attract refunds.                                                               '
2.2.2. Storage
Storage proper: This is effected at the intervention price in compliance with the quality and quantity requirements
defined by regulations.
Carryover payments : The purpose of this measure is to prevent very large quantities from being offered to inter­
vention agencies before the intervention price for the following year has come into force ; the new intervention
price is generally lower than the preceding price plus the accumulated monthly increases. For 1987/88 no pay­
ment is proposed.
2.2.3 . Production refunds
These are to enable the starch industry and the brewing industry to use Community broken rice on competitive
terms. During a transitional period up to 1 July 1989, these arrangements remain in force with degressive
amounts. The new arrangements introduced on 1 July 1986 limit the refund to rice starch used by the processing
industry.
2.2.4. Subsidy for the delivery of Community rice to Reunion
The purpose of this measure is to improve the rice supply situation on the island of Reunion.
2.2.5 . Conversion aid
In order to switch a proportion of Community rice production to varieties (Indica type) which are in greater de­
mand in certain Member States that do not themselves grow rice, from the 1987/88 marketing year a conversion
aid is being introduced to compensate for the lower income per hectare. It will be paid for a limited period and
will be dependent on a satisfactory market response. The amount was fixed at 330 ECU/ha for 1987/88. For
 1988/89, the Commission proposes that this amount be maintained.
 ---pagebreak---                                               Preliminary draft general budget, 1989                                                  107
2.3 . Prices
                                                                                                                                  (ECU/t)
                                                                                                   1987 / 88             1988 / 89
Target price
– husked rice                                                                                        548,37                 549,85
Intervention price
– paddy rice ( EUR 10)                                                                               314,19                 314,19
                   (Spain)                                                                           259,76                 270,64
3. Appropriations for 1989
3.1 . Recent trends
                                                                                                                           (million ECU)
       Item /                                                                                   1987             1988           1989
                                                 Heading
      Article                                                                                expenditure       approps       estimate
          a                                         b                                             c                d              e
        1040        Refunds on rice                                                             95,0            58             66
        1041        Intervention for rice                                                        4,0             17            19
        104         Rice – Total                                                                99,0             75            85
                    Expenditure on the rice sector as a % of total EAGGF
                    Guarantee Section expenditure                                                0,4              0,3            0,3
       10                                       Chapter 10 – Cereals and rice – Total        4 236,6         4 440 ( ' )   5 428
                    Expenditure on cereals and rice as a % of total EAGGF
                    Guarantee Section expenditure                                               18,4             15,4          19,3
( ' ) 5 190 million ECU, or 18,0% of total appropriations including the appropriations entered in Chapter 8 for the depreciation of old
      stocks of cereals (750 million ECU).
 ---pagebreak---  108                                       Preliminary draft general budget, 1989
                                CHAPTER 11 - SUGAR AND ISOGLUCOSE
The sugar market organization began operation on 1 July 1968 and was extended to cover isoglucose in 1977.
It is governed by Regulation (EEC) No 1785/81 and covers the following products : beet, cane, sugar, pulps, mo­
lasses, isoglucose, and products of secondary processing of sugar. The Regulation was last amended by Regula­
tion (EEC) No 1107/88.
The marketing year runs from 1 July to 30 June.
Expenditure on the sugar sector varies greatly from one year to another, depending largely on the product’s
widely fluctuating world prices. In 1987, expenditure accounted for 8,9 % of total EAGGF Guarantee spending,
all borne by producers except for the part corresponding to preferential imports.
1 . Economic background
For some years now, Community sugar production has been very abundant, as a result, so far, of excellent yields
and favourable weather conditions. In 1986 production totalled 14,1 million t. The estimate for 1987 is 13,12 mil­
lion t, because of the reduction in area and the drop in yields.
Human consumption in the Community of Twelve stands at about 10,9 million t.
In 1986/87, 150 000 1 of white sugar were used in the chemical industry. Each year the Community imports
1,3 million t of preferential sugar under the Agreement with the ACP countries, the OCTs and India, and is
required to export an equivalent quantity of Community-produced white sugar.
The degree of self-sufficiency for 1986 was 130,4 % after the accession of Spain and Portugal ( 135,2 % in 1985).
It is higher, however, when account is taken of preferential sugar imports.
2. Operation of the market
2.1 . Production quotas
Guarantees regarding prices and disposal are differentiated by reference to quantities allocated to the various
undertakings. The present arrangements cover the five years from 1986/87 to 1990/91 . The contributions levied
on producers should cover all the costs incurred on the disposal of surpluses of Community sugar, so that, in
practice, the only net expenditure charged to the Community budget will be that relating to the export of a quan­
tity of sugar equivalent to the preferential imports.
Producers’ contributions are of two kinds :
– production levies,
– a storage levy.
2.1.1 . Production levies
These levies are designed to cover market support expenditure other than storage expenditure and the cost of
exporting a quantity equivalent to preferential sugar imports. It operates as follows :
The sugar and isoglucose are subject to the following quota system, which is applicable to the sugar produced
by each undertaking and is differentiated as follows :
– A sugar : production within the A quota,
– B sugar : production exceeding the A quota but within the B quota,
– C sugar : production exceeding the sum of the A and B quotas or production of an undertaking not alio-
                  cated quotas.
To temper the effects of annual variations in production, some or all of the production exceeding the A quota
may be carried over to the following marketing year(' ), up to a maximum quantity corresponding to 20 % of the
undertaking’s A quota.
No C sugar may be disposed of within the Community. It has to be exported direct, without further processing,
onto the world market without qualifying for an export refund.
( ' ) The carryover arrangements are governed by Article 27 of Regulation (EEC) No 1785/81 , which provides that the
      quantity being carried over must be notified to the Member State concerned by 1 February and that the companies
      concerned must undertake to store this quantity for a 12-month period.
 ---pagebreak---                                             Preliminary draft general budget, 1989                                  109
The A and B quotas represent the quantity of sugar which the undertaking may produce and sell directly on the
Community market ; however, market support expenditure in respect of these two quotas is covered by a basic
levy which may amount to 2 % of the intervention price for white sugar and is applicable to all the A and B sugar
produced. Should expenditure exceed the yield from the levy, the balance must be covered by an additional levy
(the B levy) on production under the B quota. This additional levy must not exceed 37,5 % of the intervention
price for white sugar.
2.1.2. Storage levy
The undertakings also pay a storage levy to offset the reimbursement of storage costs for A and B sugar under
the Community’s equalization scheme.
2.1.3 . Special measures
2. 1.3.1 . Elimination levy
The purpose of this special measure, which was introduced on 1 July 1986, is to eliminate over the five-year
period 1986/87 to 1990/91 , at the rate of 80 million ECU per year, the deficit of 400 million ECU that had built
up by the end of the period 1981 /82 to 1985/86 during which the quota system was applied. It is set for each Mem­
ber State as an amount in ECU per 100 kg of white sugar equivalent.
2. 1.3.2. Special elimination levy
The purpose of this special measure is to eliminate completely the deficit of 227 million ECU accumulated in
1986/ 87 , i.e. that part of the total loss not covered by the product of the basic and B production levies applicable
to that year. The levy is calculated for each undertaking which produces sugar or isoglucose by means of a coeffi­
cient representing the ratio between the total loss and the receipts from the production levies.
The Commission has proposed to the Council that a special elimination levy be introduced again to eliminate
in the same way the estimated deficit of 236 million ECU for the 1987 /88 marketing year. It has also proposed
that the basic Regulation make provision for the fixing of such an additional levy for each of the last three years
for which the existing arrangements apply.
2.2 . Price arrangements
Each year the Council fixes two categories of price :
– beet prices,
– sugar prices.
2.2.1 . Beet prices
(a) Basic price : It is fixed in the light of the intervention price for white sugar and fixed values representing the
processing margin, the yield, the undertakings’ receipts from sales of molasses and, where appropriate, the cost
incurred in delivering beet to undertakings.
(b) Minimum price: Each year, minimum prices are fixed for A beet and B beet (that is, any beet processed into
A sugar or B sugar respectively).
The minimum price for A beet is equal to 98 % of the basic price for beet, whilst the minimum price for B beet
is equal to 60,5 % of the said basic price as the B levy has been set at its maximum rate of 37,5 % for several
marketing years.
For areas for which a derived intervention price for white sugar is fixed, the minimum prices for A beet and B
beet are increased by an amount equal to the difference between the derived intervention price for the area in
question and the intervention price, such amount being adjusted by the coefficient 1,30.
When purchasing beet intended for processing into sugar, sugar manufacturers are required to pay at least a mini­
mum price adjusted by price increases or reductions to allow for deviations from the standard quality.
Where agreements within the trade have been approved by the Member State concerned, the two-tier minimum
price system may be replaced by a single price (the so-called ‘mixed price’), which represents a weighted average
of the two minimum prices. This option is at present seldom used in the Community except in Belgium and the
Netherlands .
2.2.2 . Sugar prices
(a) Target price : This price is fixed each year for white sugar of the standard quality to which the intervention
price applies, unpacked, ex-factory, loaded onto a means of transport chosen by the purchaser.
It is about 5 % higher than the intervention price.
 ---pagebreak---  110                                       Preliminary draft general budget, 1989
(b) Intervention price: Each year an intervention price for white sugar of standard quality is fixed for the non-
deficit areas, whilst a derived intervention price is fixed for each of the deficit areas (currently Italy and the
United Kingdom and Ireland).
An intervention price for raw sugar is also fixed annually on the basis of the intervention price for white sugar,
taking account of flat-rate amounts for processing and yield.
(c) Threshold price: Each year the Council fixes a threshold price for white sugar, raw sugar and molasses.
The threshold price for white sugar is equal to the target price plus the costs, calculated at a flat rate, of transport
from the Community area having the largest surplus to the most distant deficit consumption area in the Commu­
nity, with account being taken of the storage levy.
The threshold price for raw sugar is derived from that for white sugar, taking account of flat-rate amounts for
processing and yield.
The threshold prices are intended to guarantee Community preference (import levies).
2.3 . Spécifie market instruments
2.3.1 . Import and export arrangements
Imports are subject to a levy when the world price is lower than the Community threshold price. Imports of
preferential sugar cannot attract levies.
Refunds may be granted on exports when the world price is lower than the Community price. If the Community
price is lower than the world price, as was the case from April 1980 until May 1981 , an export levy is charged.
2.3.2 . Storage
Public storage: The intervention agencies are required to buy in all sugar offered at the intervention price. After
being bought in , the sugar remains in storage in the refinery’s storerooms and silos, with the offerers assuming
responsibility for it.
Reimbursement of storage costs : Specialized traders and manufacturers are reimbursed, at fixed rates, the cost
of storing their sugar, such compensation being financed by the levy which producers pay when disposal takes
place .
2.3.3 . Production refunds
The purpose of these refunds is to enable sugar to compete on balanced terms with starch as regards the manu­
facture of certain chemical products and to make this use of sugar competitive with sale on the world market.
2.3.4. Measures to aid the disposal of raw sugar
These are subsidies towards the shipping and refining costs incurred in respect of sugar from the French overseas
departments refined in ‘pure’ refineries in the Community. They may, in order to ensure that those refineries ob­
tain sufficient supplies, also be granted for raw beet sugar.
2.4. Prices fixed
                                                                                                                     (ECU/t)
                                                                                      1987 / 88             1 988 /89 ( 1 )
Basic price for beet ( EUR 10)                                                          40,89                  40,89
                     ( Spain)                                                           47,98                  47,98
                     ( Portugal )                                                       43,72                  43,72
Target price for white sugar ( EUR 10)                                                 570,30                 570,30
Intervention price for white sugar ( EUR 10)                                           541,80                 541,80
                                   ( Spain)                                            627,80                 627,80
                                   ( Portugal )                                        510,00                 518,80
( ' ) Proposed.
 ---pagebreak---                                           Preliminary draft general budget, 1989                                    111
3. Appropriations for 1989
3.1 . Recent trends
                                                                                                         (million ECU)
      Item /                                                                         1987         1988       1989
                                             Heading                                                       estimate
     Article                                                                      expenditure   approps
         a                                      b                                      c            d           e
       110      Refunds on sugar and isoglucose                                   1 515,8     1 394      1 463
       1110     Reimbursement of storage costs                                      466,4       512        522
       1111     Public storage                                                        2,6          1           1
       1112     Refunds on sugar used in the chemical industry                       33,4        79          84
       1113     Measures to aid the disposal of raw sugar                            15,3        24         26
       1114     Sugar import subsidies                                                0            p.m .      p.m .
       1115     Depreciation of sugar stocks                                            -
                                                                                                   p.m .      p.m .
       1119     Other intervention                                                    2,1          p.m .      3
       111      Intervention for sugar                                              519,8       616        636
      11                                      Sugar and isoglucose sector – Total 2 035,6     2 010      2 099
                Expenditure on sector as a % of total EAGGF Guarantee
                Section                                                               8,9          7,0        7,4
 ---pagebreak---  112                                     Preliminary draft general budget, 1989
                                       CHAPTER 12 - OILS AND FATS
A. OLIVE OIL
The olive oil market organization began operation on 10 November 1966. The basic regulation is Regulation
No 136/66/ EEC, as last amended by Regulation (EEC) No 1098/88. It covers the following products : olives,
olive oil, whether crude or refined, and olive residues.
The marketing year runs from 1 November to 31 October.
Expenditure on olive oil accounted for 5,0% of total EAGGF Guarantee spending in 1987.
1 . Economic background
Community production in a normal year accounts for about 80 % of world production. The Community’s pro­
duction in 1986/87 amounted to around 1 333 000 1. The estimate for 1987 / 88 is about 1 630 000 1.
Consumption is greatly influenced by the difference between the consumer prices of olive oil and seed oil. To
make olive oil more competitive, a system of consumption aid was introduced with effect from 1 April 1979, and
consumption, which had fallen quite sharply in the Nine, has picked up slightly. The aid applications for 1985/ 86
concerned a total of about 506 000 1, and a figure of around 560 000 1 is forecast for 1986/87.
The degree of self-sufficiency will be around 117% in terms of quantity, but the Community may still have to
import some quality oil. The Community was the largest importer of olive oil in the world, but the trend in im­
ports is downward since Greece, Spain and Portugal joined (from 108 000 1 in 1980/81 to 47 000 1 in 1986/87).
Exports (about 146 000 1 in 1986/87), will rise to about 200 000 1 for the Community of Twelve in 1987/88.
2. Operation of the market
2.1 . Price arrangements
Each year the following types of price are fixed for olive oil :
(a) The production target price (Council): This is the price considered desirable with the aim of providing a fair
income for producers, having regard to the need to maintain the volume of Community production.
(b) The representative market price (Council): Its level must enable the olive oil produced to be sold under normal
conditions, having regard to the effect of the prices of competing products on the price of olive oil. This price
is subject to adjustment by the Commission during the marketing year if there are substantial changes in the fac­
tors taken into consideration for fixing it.
(c) The intervention price (Council): This is the price at which the intervention agencies have to buy in the quanti­
ties of standard-quality olive oil offered by producers.
The threshold price is fixed by the Commission so that the selling price of imported olive oil at the Community
frontiers is the same as the representative market price.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
Where the cif price of olive oil imported from non-member countries is less than the threshold price, an import
levy equal to the difference between the two prices is charged.
However, a special procedure for fixing the levy has been in force since 1976. Whenever offers recorded on the
world market are not such as to give a proper indication of the real market trend, the levy can be fixed by
tendering procedure.
A refund is granted on exports to make up the difference between the Community market price and the world
price where the latter is lower. Refunds may also be fixed by tender.
 ---pagebreak---                                              Preliminary draft general budget, 1989                                    113
2.2.2. Storage
The Community olive oil bought in by the intervention agencies in the last four months of the marketing year
is stored. In order to even out the effects of the irregular harvests, the Council may decide that the intervention
agencies will build up a buffer stock. It may also be decided that recognized producer groups will be allowed
to conclude storage contracts for the oil they market.
2.2.3 . Production aid
This is fixed by the Council. Its purpose is to help producers attain a fair income. The maximum quantity for
which aid is paid at the full amount is set at 1 350 000 1 for the Community of Twelve. The aid is reduced propor­
tionately if that quantity is exceeded.
The following are eligible :
– olive-growers who are members of producer groups recognized pursuant to Regulation (EEC) No 136/66,
     on the basis of the quantity of oil actually produced, provided that this exceeds 200 kg ;
– other olive-growers, on the basis of the number and production potential of the olive trees they cultivate,
     and of their yields fixed at a standard rate, on condition that the olives grown have actually been harvested.
However, a certain percentage fixed by the Council is deducted from the aid, to finance the establishment of a
register of olive cultivation in each of the producer Member States pursuant to Regulation (EEC) No 154/75 .
From 1987/88 the aid payable to small producers will be greater than that paid to other producers.
2.2.4. Consumption aid
This is granted in respect of olive oil produced in the Community when the production target price minus the
production aid exceeds the representative market price. It is equal to the difference between the two amounts.
The sum of the production aid and the consumption aid is thus equal to the difference between the production
target price and the representative market price.
Consumption aid will be introduced in Spain and Portugal with effect from 1 January 1991 .
2.2.5 . Production refunds
These are granted to facilitate the sale of olive oil to the canning industry.
2.3 . Prices and aids fixed
                                                                                                                   (ECU/t)
                                                                                       1987 / 88          1988 / 89
Production target price (EUR 12)                                                         3 225,6            3 225,6
Intervention price (EUR 10)                                                              2 162,4            2 162,4
                     (Spain)                                                             1 395,1            1 550,1
                     (Portugal)                                                          2 011,2            2 037,9
Production aid (EUR 10)                                                                    709,5              709,5
                 (Spain)                                                                   208,3              271,0
                 ( Portugal)                                                               141,9              212,9
Increase in aid for small producers ( EUR 10)                                              100,0              108,1
                                      (Spain)                                                11,2               23,3
                                      ( Portugal)                                            11,2               23,3
B. OILSEEDS
I. RAPE AND SUNFLOWER
The rape and sunflower market organization began operation on 1 July 1967. It is governed by basic Regulation
No 136/66/EEC, as last amended by Regulation (EEC) No 1098/88, and covers the following products : rape
and sunflower seeds .
 ---pagebreak---  114                                      Preliminary draft general budget, 1989
The marketing year for rape runs from 1 July to 30 June, and for sunflower from 1 August to 31 July.
Expenditure on oilseeds has increased considerably in recent years. In 1987, it accounted for 8,2% of total
EAGGF Guarantee spending.
1. Economic background
Community production of rape in 1987 amounted to 5,9 million t, or 2,3 million t more than in 1986. Sunflower
production totalled 3,8 million t in 1987, compared with 3,1 million t in 1986.
For the purposes of consumption, oilseeds are processed into two products, one being the traditional product
of oil for human consumption, the other being oilcake for animal feeding. Consumption of oil and cake (of Com­
munity origin and imported) in 1986/87 breaks down as follows : rapeseed oil 1,1 million t ; sunflower oil 1,4 mil­
lion t ; rapeseed cake 3 million t ; sunflower cake 2,4 million t.
The Community’s own production of oilseeds covers only a very small part of its total requirements of oil and
cake. Its degree of self-sufficiency in 1985 /86 was 45,2 % for oil (excluding olive oil) and 12,1 % for cake.
2. Operation of the market
2.1 . Price arrangements
The Council fixes two prices for oilseeds for each marketing year :
(a) Targetprice .- This is intended to ensure producers a fair income and to keep production at an appropriate level.
(b) Intervention price: This price is to guarantee producers sales outlets at a price as close as possible to the target
price, having regard to market variations.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
As there is no threshold price for oilseeds, imports are not subject to levies.
Exports of oilseeds to non-member countries are eligible for a refund, the amount of which is not more than the
difference between the Community price and the world price.
2.2.2. Storage
Where required by the market situation, the intervention agencies must buy in the quantities offered to them at
the intervention price.
2.2.3 . Production aid
Since oilseeds from non-member countries are imported at zero duty, production aid is granted because the mar­
ket price could not guarantee producers a fair income. Aid representing the difference between the target price
and the world price is granted directly at the seed processing stage.
2.2.4. Maximum guaranteed quantities
Under these arrangements, maximum guaranteed quantities are fixed by the Council for a given marketing year,
for rapeseed and for sunflower seed. The grant of the total amounts of the aid is guaranteed for those quantities.
If production, as estimated no later than two months after the beginning of the marketing year, exceeds the
maximum guaranteed quantity for the seeds and the marketing year concerned the aid payable is reduced by
the equivalent of the incidence, on the target price, of a coefficient reflecting the overrun. The buying-in price
is then reduced by the same amount as the aid.
For 1988/89, the reduction in the target price is 0,45 % for each 1 % by which the maximum guaranteed quantity
is exceeded. For 1988/89 the maximum guaranteed quantities for the Community of Ten are 4,5 million t for
rapeseed and 2,0 million t for sunflower seed. The maximum guaranteed quantities for rapeseed and sunflower
seed are 10 000 1 and 1,411 million t in the case of Spain and 1 300 1 and 62 900 1 in the case of Portugal.
 ---pagebreak---                                             Preliminary draft general budget, 1989                                   115
 2.3 . Prices fixed
                                                                                                                  (ECU/1)
                                                                                       1987/ 88           1988 /89
 Rape
 – target price (EUR 10)                                                                  450,2               450,2
                 (Spain)                                                                  402,6               408,6
                 ( Portugal)                                                              450,2               450,2
 – basic intervention price (EUR 10)                                                      407,6              407,6
                             (Spain)                                                      360,0               366,0
                             ( Portugal)                                                  407,6              407,6
 – premium for double-zero seed                                                             25,0               25,0
 Sunflower
 – target price ( EUR 10)                                                                 583,5              583,5
                 (Spain)                                                                  445,5              462,8
                 (Portugal)                                                               583,5              583,5
 – basic intervention price (EUR 10)                                                      534,7              534,7
                             (Spain)                                                      396,7              414,0
                             ( Portugal)                                                  534,7              534,7
II . OTHER OILSEEDS
1 . Soya beans
This sector is governed by Regulation (EEC) No 1614/79 laying down special measures in respect of soya beans,
repealed and replaced by Regulation ( EEC) No 1491 /85 .
The marketing year runs from 1 September to 31 August, as from 1984/85 .
 1.1 . Economic background
Between 1983 and 1987 production in the Community rose from 89 000 1 to 1 700 000 1, the increase in area and
production being particularly marked in Italy.
1 .2. Operation of the market
1.2.1 . Price arrangements
The Council fixes two prices for soya beans every year :
(a) Guide price : This is the price it is considered desirable to attain on average during the marketing year, having
regard to market requirements.
(b) Minimum price : This is the price that purchasers must guarantee to producers in order to be eligible for pro­
duction aid .
1.2.2. Spécifie market instruments
Production aid: Aid is granted to persons buying soya beans from producers provided that not less than the mini­
mum price is paid. The amount of aid is fixed regularly by the Commission and is equal to the difference between
the guide price and the world market price.
Maximum guaranteed quantity : The arrangements are similar to those for rapeseed and sunflower seed (cf. para­
graph 2.2.4 of Part I above). The maximum guaranteed quantity for 1988/89 for the Community of Twelve is
1,3 million t.
 ---pagebreak---  116                                   Preliminary draft general budget, 1989
 1.3 . Prices fixed
                                                                                                                ( ECU/t)
                                                                                   1987 / 88           1988 / 89
Guide price ( EUR 10)                                                                  558,5               558,5
                (Spain )                                                               427,1               443,5
                ( Portugal)                                                            558,5               558,5
Minimum price ( EUR 10)                                                                489,4               489,4
                    ( Spain)                                                           358,0               374,4
                    ( Portugal)                                                        489,4               489,4
2 . Flax seed
This sector is governed by Regulation ( EEC) No 569/76 laying down special measures in respect of flax seed.
2. 1 . Economic background
The flax crop, which occupies about 70 000 ha, represents a very small part of the Community’s utilized agricul­
tural area and of the world flax growing area (5,0 million ha producing 2,9 million t in 1986). Production in 1987
amounted to about 79 000 1 .
On the other hand, requirements are considerable : in 1986 imports totalled 476 000 1 of seed, 7 600 1 of oil and
381 000 1 of oilcake, but the yield of the Community flax crop is insufficient, as compared with other oilseed
crops.
2.2. Operation of the market
2.2.1 . Price arrangements
Each year the Council fixes a guide price which represents the price which will provide the producer with a fair
income, having regard to Community requirements.
2.2.2. Spécifie market instruments
Production aidforflax .see*/: This special aid is paid to producers of seed from fibre flax or seed flax. It is equal
to the difference between the guide price and the world price, where the guide price is the higher.
2.3 . Prices fixed
                                                                                                                (ECU/t)
                                                                                   1987 / 88           1988 / 89
Guide price ( EUR 10)                                                                  554,1               554,1
                ( Spain)                                                               477,7               487,3
                ( Portugal )                                                           554,1               554,1
 ---pagebreak---                                            Preliminary draft general budget, 1989                                   117
C. APPROPRIATIONS FOR 1989
1 . Recent trends
The latest known figures for appropriations and expenditure and the proposals for appropriations for 1989 are
as follows :
                                                                                                         (million ECU)
     Item /                                                                          1987         1988       1989
                                             Heading
     Article                                                                      expenditure   approps    estimate
        a                                        b                                     c            d           e
      120      Refunds on olive oil                                                  23,2         82,0     118
      1210     Production aid                                                       560,7       664,0      681
      1211     Schemes related to production                                         16,9         54,0       55
      121      Production aid and schemes related to production                     577,6        718,0      736
      1220     Consumption aid                                                      437,6       366,0      450
      1221     Schemes related to consumption                                         1,5         49,0       20
      122      Consumption aid and schemes related to consumption                   439,2       415,0      470
      1230     Technical costs of public storage                                     28,6         42,0       47
      1231     Financial costs of public storage                                     23,9         33,0       45
      1232     Other public storage costs                                             8,7         23,0   -     1
      1233     Depreciation of public stocks                                           -
                                                                                                   p.m .      6
      1239     Other storage measures                                                 0,0           –        21
      123      Storage measures for olive oil                                        61,2         98,0     118
      124      Other measures for olive oil                                          38,0         52,0       42
      120                                                Olive oil sector – Total 1 139,2     1 365,0    1 484
               Expenditure on olive oil as % of total EAGGF Guarantee
               expenditure                                                            5,0          5,0        5,3
      125      Refunds on oilseeds                                                   64,0       441,0        98
      1260     Production aid for rapeseed                                        1 239,0     1 188,0    1 534
      1261     Production aid for sunflower seed                                    949,7     1 016,0    1 117
      1262     Production aid for soya beans                                        405,3       564,0      582
      1263     Production aid for flax seed                                          29,7         30,0       51
      1269     Other aid                                                              0,0          p.m .      p.m .
      126      Production aid for oilseeds                                        2 623,8     2 798,0    3 284
      1270     Technical costs of public storage                                       –            –
                                                                                                              p.m .
      1271     Financial costs of public storage                                       –            –
                                                                                                              p.m .
      1272     Other public storage costs                                              –            –
                                                                                                              p.m .
      1273     Depreciation of public stocks                                           –            –
                                                                                                              p.m .
      127      Storage measures for oilseeds                                        - 0,4       - 3,0         p.m .
      128       Other measures for oilseeds                                           0,0          p.m .      p.m .
                                                          Oilseeds sector – Total 2 687,4     3 236,0    3 382
               Expenditure on oilseeds as % of total EAGGF Guarantee
               expenditure                                                           11,7         11,8       12,0
      12                                                   Oils and fats – Total  3 826,6     4 601,0    4 866
               Chapter as % of EAGGF Guarantee total                                 16,7         16,7       17,3
 ---pagebreak---  118                                      Preliminary draft general budget, 1989
                                      CHAPTER 13 - PROTEIN PLANTS
A. PEAS, FIELD BEANS AND SWEET LUPINS
Peas, field beans and sweet lupins are covered by Regulation (EEC) No 1431 /82, as last amended by Regulation
( EEC) No 1104/88. The products covered are :
– peas, except chick peas, dried ;
– field beans, dried ;
– sweet lupins.
The marketing year runs from 1 July to 30 June.
Expenditure in this sector represented about 2,0 % of total EAGGF Guarantee Section expenditure in 1987 .
1 . Economic background
Production of peas, field beans and sweet lupins qualifying for Community aid for processing into feed has been
about 2,7 million t. The quantity used for human consumption and qualifying for aid is about 0,2 million t. The
self-sufficiency rate is very low as demand for protein feed for animals is extremely high.
2. Operation of the market
2.1 . Price arrangements
Each year the Council fixes three prices :
(a) Minimum price: This is the price purchasers must guarantee producers in order to be eligible for production
aid .
(b) Activating threshold price: This is fixed at a level ensuring that protein plants to be used for animal feeding
can compete with imported soya cake, while producers are assured of a fair income.
(c) Guide price : This price is fixed at a level ensuring that protein plants to be used for human consumption can
compete with the same products imported at reduced duty.
These prices are subject to monthly increases.
2.2. Market instruments
2.2.1 . Production aid
(a) in respect ofprotein plantsfor animalfeed: This aid is granted to processors to make their products competitive
with imported soya cake. The aid becomes payable as soon as the world market price drops below the activating
threshold price. In the case of peas and field beans it is equal to 45 % of the difference between the activating
threshold price and the world market price for soya cake whilst in the case of sweet lupins it is equal to 60 % of
the difference .
(b) in respect ofprotein plants for human consumption : This aid was introduced as from the 1982/83 marketing
year because of the problems facing the production of peas and field beans for human consumption as a result
of the import of the same products from non-member countries at reduced duty.
When the average world market price for imported competitive products falls below the guide price, aid equal
to the difference between the two prices is to be granted for products harvested in the Community and used for
human consumption.
2.2.2. Maximum guaranteed quantity
The Council fixes a maximum guaranteed quantity every three marketing years. The granting of the total amounts
of the aids is guaranteed for this quantity. Where production as estimated before the end of the second month
of the marketing year exceeds the maximum guaranteed quantity, the amount of the aid is reduced for the
marketing year in question :
– in the case of peas and field beans, by the incidence of a coefficient reflecting such excess on the guide
     price for these products ;
– in the case of sweet lupins, by the incidence of a coefficient reflecting such excess on the minimum price
     for these products plus the difference between the guide price and the minimum price for peas.
For 1988/ 89, the coefficient is equal to 0,45 % for each production tranche of 1 % of the maximum guaranteed
quantity which, over and above the said quantity, is attained by the estimated production . The maximum gua­
ranteed quantity is fixed at 3,5 million t.
 ---pagebreak---                                         Preliminary draft general budget, 1989                                    119
2.3 . Prices fixed
                                                                                                               (ECU/t)
                                                                                     1987 / 88        1988 / 89
Minimum price
– peas ( EUR 12)                                                                         257,7            257,7
– field beans (EUR 12)                                                                   248,6            248,6
– sweet lupins ( EUR 10)                                                                 289,0            289,0
                   (Spain)                                                               271,9            276,4
                   ( Portugal)                                                           289,0            289,0
Activating price
– peas and field beans (EUR 12)                                                          447,6            447,6
– sweet lupins ( EUR 10)                                                                 430,5            430,5
                   (Spain)                                                               404,3            409,5
                   ( Portugal)                                                           430,5            430,5
Guide price (EUR 12)                                                                     295,2            295,2
B. DRIED FODDER
The market organization for dried fodder began operation on 1 June 1978 (1 July 1978 for sun-dried fodder). It
is governed by Regulation (EEC) No 1117/78, as last amended by Regulation (EEC) No 3996/87.
The products covered are :
– dehydrated products : lucerne, clover and lupins, dehydrated by artificial heat-drying ;
– other products : meal obtained from sun-dried legumes and proteins from green fodder.
The Community measures applicable to dehydrated potatoes were suspended on 30 June 1984.
The marketing year runs from 1 May to 30 April.
Expenditure in this sector represented about 0,8 % of total EAGGF Guarantee Section expenditure in 1987 .
1 . Economic background
Community production of dehydrated fodder is around 1,5 million tonnes in the Community of Twelve. Sun-
dried fodder production totals about 0,5 million t.
Protein requirements for animal feed necessitate substantial imports from non-member countries.
2. Operation of the market
2 . 1 . Price arrangements
Each year the Council fixes the guide price which takes into account the price which the fodder producer would
have to receive if he is to be discouraged from growing other crops and the cost of processing green fodder.
2.2. Market instruments
2.2.1 . Supplementary aid
This is fixed every month by the Commission on the basis of the difference between the guide price and the world
market price. It is equal to 100% of the difference in the case of dehydrated fodder and protein concentrates.
 In the case of fodder otherwise dried and milled, the aid for dehydrated fodder is reduced by 43 ECU/tonne.
 ---pagebreak--- 120                                          Preliminary draft general budget, 1989
2.3 . Prices fixed
                                                                                                                        (ECU/I)
                                                                                            1987 / 88          1988 / 89
Guide price ( EUR 10)                                                                          178,92             178,92
               (Spain)                                                                         156,86             161,27
               ( Portugal)                                                                     178,92             178,92
C. APPROPRIATIONS FOR 1989
1 . Recent trends
The latest known figures for expenditure and appropriations and the proposals for appropriations for 1988 are
as follows :
                                                                                                                 (million ECU)
      Item /                                                                             1987           1988          1989
                                                Heading                                                            estimate
     Article                                                                          expenditure     approps
         a                                         b                                       c              d             e
       130        Production aid for peas and field beans                               419,4         502          537
       131        Production aid for dried fodder                                       167,3         182          204
       132        Production aid for lupins                                               0,5            4             2
       139        Other measures                                                          0              p.m .         p.m .
      13                                                Protein plants sector – Total   587,2         688          743
                  Chapter as % of EAGGF Guarantee total                                   2,6            2,4           2,6
 ---pagebreak---                                           Preliminary draft general budget, 1989                                      121
                         CHAPTER 14 - TEXTILE PLANTS AND SILKWORMS
A. FIBRE FLAX AND HEMP
The fibre flax and hemp market organization began operation on 1 August 1970 under basic Regulation (EEC)
No 1308/70, as last amended by Regulation ( EEC) No 3995/87.
The following products are covered : straw and fibres of flax and of hemp.
The marketing year runs from 1 August to 31 July. Expenditure in this sector represented about 0,1 % of total
EAGGF Guarantee spending in 1987.
1 . Economie background
Production of flax straw in 1986 amounted to 403 000 1 ; production of fibre totalled 75 800 1. Paper hemp is
having difficulty in maintaining its position.
Demand for flax fibres which has recovered over the past few years, mainly because of their successful use in
the clothing sector, appears not to have further increased in 1986 and 1987 .
The Community does not produce enough medium-quality and low-quality fibres and is therefore obliged to im­
port. On the other hand, it supplies the whole world with fibres of good and superior quality.
2. Operation of the market
2.1 . Spécifie market instruments
2.1.1 . Aid at a standard rate per hectare
Two rates of aid are fixed every year by the Council, one for fibre flax and the other for hemp. They are based
on the volume of production required, market outlets, world market prices and foreseeable changes in any of
these factors. Aid is granted per hectare harvested. A proportion of the aid per hectare for fibre flax is not granted
to the industry itself but is withheld in order to finance a programme for increasing the use of flax and finding
new market outlets.
2.1.2. Private storage aid
In the event of a temporary imbalance on the market, the Commission may decide to grant private storage aid
to enable holders of fibres to conclude storage contracts.
2.2. Aids fixed
                                                                                                                 (ECU/ha)
                                                                                    1987 / 88             1988 / 89
Aid for fibre flax ( EUR 10)                                                          355,09                355,09
                   (Spain and Portugal)                                                101,46                152,19
      amount of which withheld in order to promote disposal of flax products
      ( EUR 10)                                                                         35,51                 35,51
      (Spain and Portugal)                                                              10,15                 15,22
Aid for hemp ( EUR 10)                                                                322,48                322,48
                (Spain and Portugal)                                                    92,14                138,21
B. COTTON
Although it is not listed in Annex II to the Treaty, Protocol No 4 to the Act of Accession of Greece recognizes
that cotton is an agricultural crop. This Protocol was amended by Protocol No 14 attached to the Act of Accession
of Spain and Portugal.
The system provided for in Protocol No 4 came into effect on 1 August 1981 .
The product covered is unginned cotton.
 ---pagebreak---  122                                    Preliminary draft general budget, 1989
The marketing year runs from 1 September to 31 August.
Expenditure in respect of cotton production represented about 1 ,2 % of EAGGF Guarantee spending for 1987.
1 . Economic background
Community production, confined almost exclusively to Greece and Spain, totalled 829 000 1 of unginned cotton
in 1987, compared with 948 000 1 in 1986.
The Community’s spinning capacity far exceeds its fibre production capacity and it imports very large quantities
of fibres (1 054 000 1 in 1986 against 813 000 1 in 1985); exports are very low (24 000 1 in 1986).
2. Operation of the market
2.1 . Price arrangements
Every year the Council fixes two prices :
(a) Guide price: This is the price which will provide the producer with a fair income.
(b) Minimum price: This is the price to be paid to the producer by ginning undertakings if they are to be eligible
for aid.
2.2. Spécifie market instruments
2.2.1 . Aid for production of ginned cotton
This aid is fixed periodically by the Commission on the basis of the difference between the guide price and the
world market price. Aid is granted to ginning undertakings provided they pay not less than the minimum price
to producers. The full amount of aid is paid only in respect of a certain volume of production, laid down by the
Council (752 000 1 for the Community of Twelve). If this volume is exceeded, the guide price and consequently
the aid is decreased for all producers. This arrangement is intended to discourage undue expansion of Commu­
nity production.
2.3 . Prices fixed
                                                                                                              (ECU/I)
                                                                                   1987 / 88          1988/ 89
Guide price (ginned cotton)                                                            960,2             960,2
Guide price (unginned cotton)                                                          912,3             912,3
Minimum price
C. SILKWORMS
The silkworms market organization began operation on 1 July 1972 under Regulation (EEC) No 845/72.
The marketing year runs from 1 April to 3 1 March.
1 . Economic background
In 1986 Community production totalled 153 1 of cocoons from 6 000 boxes. Production rose markedly in 1984
compared with 1983 in both Greece and Italy but it did not rise any further subsequently.
2. Operation of the market
2.1 . Spécifie market instruments
2.1.1 . Aid per box
Aid per box of silkworm seed is granted with the object of encouraging silkworm rearing. The aid is intended
to help ensure a fair income for silkworm rearers, having regard to the market situation for cocoons and raw silk,
foreseeable market trends and import policy.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                         123
2.2. Aid fixed
                                                                                                                 (ECU/box)
                                                                                         1987 / 88          1988 / 89
Aid per box of silk seed ( EUR 10)                                                          112,00             112,00
                          ( Spain and Portugal )                                             31,60              47,68
D. APPROPRIATIONS FOR 1989
1 . Recent trends
                                                                                                              (million ECU)
     Item /                                                                           1987           1988          1989
                                              Heading
     Article                                                                       expenditure     approps      estimate
        a                                        b                                      c              d             e
      1400     Production aid for fibre flax                                          20,0          21            24
      1401     Specific measures                                                       0,5            6             3
      1402     Production aid for hemp                                                 0,6            2             2
      1409     Other measures                                                          0              2             3
      140       Total flax and hemp                                                   21.2          31            32
      141      Colton                                                                284.7         416          500
      142      Silkworms                                                               0.5            1             1
      149      Other                                                                   0              p.m .         p.m .
      14                               Textile plants and silkworms sector – Total   306,4         448          533
               Sector as % of EAGGF Guarantee total                                    1,3            1,6           1,9
 ---pagebreak---  124                                       Preliminary draft general budget, 1989
                                  CHAPTER 15 - FRUIT AND VEGETABLES
A. FRESH FRUIT AND VEGETABLES
The gradual establishment of a fruit and vegetables market organization was provided for in Regulation No 23
of 4 April 1962. This was replaced by Regulation (EEC) No 1035/72 on the common organization of the market
in fruit and vegetables, which came into force on 1 June 1972, as last amended by Regulation (EEC) No 1 17/88.
There are a dumber of regulations introducing special measures :
– Regulation (EEC) No 251 1 /69 laying down inter alia special measures for improving the production and
     marketing of Community citrus fruits, as last amended by Regulation (EEC) No 3130/86 ;
– Regulation (EEC) No 2601 /69 laying down special measures to encourage the processing of certain va­
     rieties of oranges, as last amended by Regulation (EEC) No 3391 /87 ;
– Regulation (EEC) No 1035/77 laying down special measures to encourage the marketing of products pro­
     cessed from lemons, as last amended by Regulation (EEC) No 1353 /86.
The market organization covers products falling within the following heading Nos of the Combined Nomencla­
ture :
– Vegetables : 0702 00 to 0708 and 0709, with the exception of headings Nos 0709 60 91 , 0709 60 95 ,
     0709 60 99, 0709 90 3 1 , 0709 90 39 and 0709 90 60 ;
– Fruit : 0802 (with the exception of heading No 0802 90 30), 0804 20 10, 0805 , 0806 10 11 , 0806 10 15,
     0806 10 19, 0807 to 0810 and ex 0813 50 30 (mixtures exclusively of nuts of heading Nos 0801 and 0802).
Quality standards are fixed for a number of these products and normally comprise four classes : Extra, I, II and
under certain circumstances III .
The marketing year differs from product to product.
Expenditure on fresh fruit and vegetables was 2,6 % of total EAGGF Guarantee spending in 1987.
1 . Economie background
Community production (EUR 12) of fruit harvested in 1986 ( ') was 30,8 million t, 6% more than in 1985. Pro­
duction of vegetables was down on 1985 (–5 %) at 40,7 million t.
Consumption of fruit (not including Portugal) in 1985/86 came to 32,6 million t, including 10,1 million t of citrus
fruit. Consumption of vegetables was 41,6 million t. Nearly all fruit and vegetable consumption (about 88 %) is
human consumption.
The self-sufficiency rate (not including Portugal) in vegetables was 106 % in 1985/86, in non-citrus fruit 86 % and
in citrus fruit 76 %.
Trade with countries outside the Community is fairly small :
– imports in 1986 : 2,6 million t of fruit (of which 1,5 million t of citrus fruit) and 0,6 million t of vegetables ;
– exports : 1,4 million t of fruit and 0,5 million t of vegetables.
2. Operation of the market
2.1 . Price arrangements
For each marketing year, the Council fixes two types of price for the products considered important in determi­
ning producers’ incomes : peaches, pears, apples, table grapes, oranges, mandarins, lemons, cauliflowers, toma­
toes, aubergines, apricots, clementimes, satsumas and nectarines.
(a) Basic price .- This is fixed for each product, taking account of market prices over the three preceding years and
the need to contribute to supporting producers’ incomes. It is used to calculate buying-in prices.
(b) Buying-in price: This price is set at between 30 % and 65 % of the basic price according to product.
There are two further types of price derived from the above ‘institutional’ prices :
– Withdrawal price
     This is derived from the basic price and the buying-in price and is the price below which producer organiza­
     tions do not offer their members’ products for sale ; they are paid compensation instead. The arrangement is
     currently confined to the above basic products, and the price guarantees to producers that part of the normal
(' ) Production figures are by calendar year, consumption figures by marketing year.
 ---pagebreak---                                             Preliminary draft general budget, 1989                                    125
      price they need to cover costs and labour. Withdrawal prices may not exceed the buying-in price for quality
      classes II or III plus 10 % of the basic price.
– Public buying-in price
      Should a serious crisis occur on the market, intervention agencies may buy in surplus products at a price not
      exceeding the buying-in price, adjusted for quality class II (or, if appropriate, quality class III), provided the
      products meet the standards set for this class, plus other adjustments where appropriate depending on the pro­
      ducts being bought in.
(c) Reference price: The reference prices, set by the Commission, are minimum entry prices for a number of pro­
ducts exposed to competitive pressure from imports. Except for certain citrus fruits, which are eligible for finan­
cial compensation and are subject to a special price-fixing system, reference prices are based on the arithmetic
mean of production prices in the Member States in the preceding three marketing years, taking account both of
changes in production costs in the fruit and vegetables sector and of a sum representing the cost of transporting
the products from the area of production to centres of consumption in the Community.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
In the case of imports, for each product concerned and for each place of origin , the entry price determined daily
from the market prices recorded on representative markets in the Community is compared with the reference
price. If the market price is below the reference price, a countervailing charge is payable.
To facilitate exports, export refunds generally designed to make up the difference between the internal price and
the world market price may be granted.
2.2.2. Withdrawal operations
Where producer organizations have been unable to sell part of their production and have therefore paid compen­
sation to producers, they receive financial compensation from the EAGGF. This compensation is equal to that
paid to producers (which may not exceed withdrawal prices), minus net receipts obtained from the produce with­
drawn from the market.
Financial compensation may also be paid in the case of public buying-in. The Community will be granting com­
pensation for only part of the cost of withdrawals in Spain during the first stage. No compensation is to be grant­
ed for withdrawals in Portugal during the transitional period.
For tomatoes, mandarins, clementines, satsumas and nectarines there is a threshold for withdrawals. If the quan­
tities withdrawn from the market in a single marketing year exceed the threshold, the buying-in price for the sub­
sequent year is reduced progressively by 1 %, up to a maximum reduction of 20 %. A threshold is also applied to
withdrawals in Spain. However, the arrangements for the transitional stage call for a special threshold to be fixed
for Spain.
2.2.3 . Financial compensation for promotion of orange and mandarin sales
This takes the form of marketing premiums paid to sellers by each producing Member State (reimbursable by
the EAGGF), with the aim of increasing sales in the Community by assisting marketing operations. These
premiums apply to Community oranges and mandarins of quality classes Extra and I sold on Community import
markets outside the producing country. Since 1982 a closer link has been made between payment of the premiums
and the restructuring of plantations, for which EAGGF Guidance support is available under Regulation (EEC)
 No 1204/ 82.
2.2.4. Financial compensation to support processing of lemons and certain varieties of oranges
 Premiums are paid to processors to assist the marketing of Community citrus fruit by ensuring regular supplies
to the Community processing industry thus helping disposal of the fruit. Supply contracts between producers and
 processors are based on a minimum price fixed before the start of each marketing year.
 2.3 . Prices fixed
 For the 1988/89 marketing year, Commission has proposed freezing institutional prices and marketing premiums
 for oranges and mandarins at their 1987/ 88 level.
 ---pagebreak---  124                                       Preliminary draft general budget, 1989
                                  CHAPTER 15 - FRUIT AND VEGETABLES
A. FRESH FRUIT AND VEGETABLES
The gradual establishment of a fruit and vegetables market organization was provided for in Regulation No 23
of 4 April 1962. This was replaced by Regulation (EEC) No 1035/72 on the common organization of the market
in fruit and vegetables, which came into force on 1 June 1972, as last amended by Regulation (EEC) No 1 17/88.
There are a Humber of regulations introducing special measures :
– Regulation (EEC) No 251 1 /69 laying down inter alia special measures for improving the production and
     marketing of Community citrus fruits, as last amended by Regulation (EEC) No 3 130/86 ;
– Regulation (EEC) No 2601 /69 laying down special measures to encourage the processing of certain va­
     rieties of oranges, as last amended by Regulation (EEC) No 3391 /87 ;
– Regulation (EEC) No 1035/77 laying down special measures to encourage the marketing of products pro­
     cessed from lemons, as last amended by Regulation (EEC) No 1353/86.
The market organization covers products falling within the following heading Nos of the Combined Nomencla­
ture :
– Vegetables : 0702 00 to 0708 and 0709, with the exception of headings Nos 0709 60 91 , 0709 60 95,
     0709 60 99, 0709 90 31 , 0709 90 39 and 0709 90 60 ;
– Fruit : 0802 (with the exception of heading No 0802 90 30), 0804 20 10, 0805, 0806 10 11 , 0806 10 15,
     0806 10 19, 0807 to 0810 and ex 0813 50 30 (mixtures exclusively of nuts of heading Nos 0801 and 0802).
Quality standards are fixed for a number of these products and normally comprise four classes : Extra, I, II and
under certain circumstances III.
The marketing year differs from product to product.
Expenditure on fresh fruit and vegetables was 2,6 % of total EAGGF Guarantee spending in 1987.
1 . Economie background
Community production (EUR 12) of fruit harvested in 1986 ( ') was 30,8 million t, 6 % more than in 1985. Pro­
duction of vegetables was down on 1985 (–5 %) at 40,7 million t.
Consumption of fruit (not including Portugal) in 1985/86 came to 32,6 million t, including 10,1 million t of citrus
fruit. Consumption of vegetables was 41,6 million t. Nearly all fruit and vegetable consumption (about 88 %) is
human consumption.
The self-sufficiency rate (not including Portugal) in vegetables was 106 % in 1985/86, in non-citrus fruit 86 % and
in citrus fruit 76 %.
Trade with countries outside the Community is fairly small :
– imports in 1986 : 2,6 million t of fruit (of which 1,5 million t of citrus fruit) and 0,6 million t of vegetables ;
– exports : 1,4 million t of fruit and 0,5 million t of vegetables.
2. Operation of the market
2.1 . Price arrangements
For each marketing year, the Council fixes two types of price for the products considered important in determi­
ning producers’ incomes : peaches, pears, apples, table grapes, oranges, mandarins, lemons, cauliflowers, toma­
toes, aubergines, apricots, clementimes, satsumas and nectarines.
(a) Basic price .- This is fixed for each product, taking account of market prices over the three preceding years and
the need to contribute to supporting producers’ incomes. It is used to calculate buying-in prices.
(b) Buying-in price: This price is set at between 30 % and 65 % of the basic price according to product.
There are two further types of price derived from the above ‘institutional’ prices :
– Withdrawal price
     This is derived from the basic price and the buying-in price and is the price below which producer organiza­
     tions do not offer their members’ products for sale ; they are paid compensation instead. The arrangement is
     currently confined to the above basic products, and the price guarantees to producers that part of the normal
(') Production figures are by calendar year, consumption figures by marketing year.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                    125
     price they need to cover costs and labour. Withdrawal prices may not exceed the buying-in price for quality
     classes II or III plus 10 % of the basic price.
– Public buying-in price
     Should a serious crisis occur on the market, intervention agencies may buy in surplus products at a price not
     exceeding the buying-in price, adjusted for quality class II (or, if appropriate, quality class III), provided the
     products meet the standards set for this class, plus other adjustments where appropriate depending on the pro­
     ducts being bought in.
(c) Reference price: The reference prices, set by the Commission, are minimum entry prices for a number of pro­
ducts exposed to competitive pressure from imports. Except for certain citrus fruits, which are eligible for finan­
cial compensation and are subject to a special price-fixing system, reference prices are based on the arithmetic
mean of production prices in the Member States in the preceding three marketing years, taking account both of
changes in production costs in the fruit and vegetables sector and of a sum representing the cost of transporting
the products from the area of production to centres of consumption in the Community.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
In the case of imports, for each product concerned and for each place of origin , the entry price determined daily
from the market prices recorded on representative markets in the Community is compared with the reference
price. If the market price is below the reference price, a countervailing charge is payable.
To facilitate exports, export refunds generally designed to make up the difference between the internal price and
the world market price may be granted.
2.2.2 . Withdrawal operations
Where producer organizations have been unable to sell part of their production and have therefore paid compen­
sation to producers, they receive financial compensation from the EAGGF. This compensation is equal to that
paid to producers (which may not exceed withdrawal prices), minus net receipts obtained from the produce with­
drawn from the market.
Financial compensation may also be paid in the case of public buying-in. The Community will be granting com­
pensation for only part of the cost of withdrawals in Spain during the first stage. No compensation is to be grant­
ed for withdrawals in Portugal during the transitional period.
For tomatoes, mandarins, clementines, satsumas and nectarines there is a threshold for withdrawals. If the quan­
tities withdrawn from the market in a single marketing year exceed the threshold, the buying-in price for the sub­
sequent year is reduced progressively by 1 %, up to a maximum reduction of 20 %. A threshold is also applied to
withdrawals in Spain. However, the arrangements for the transitional stage call for a special threshold to be fixed
for Spain .
2.2.3 . Financial compensation for promotion of orange and mandarin sales
This takes the form of marketing premiums paid to sellers by each producing Member State (reimbursable by
the EAGGF), with the aim of increasing sales in the Community by assisting marketing operations. These
premiums apply to Community oranges and mandarins of quality classes Extra and I sold on Community import
markets outside the producing country. Since 1982 a closer link has been made between payment of the premiums
and the restructuring of plantations, for which EAGGF Guidance support is available under Regulation ( EEC)
No 1204/ 82 .
2.2.4. Financial compensation to support processing of lemons and certain varieties of oranges
Premiums are paid to processors to assist the marketing of Community citrus fruit by ensuring regular supplies
to the Community processing industry thus helping disposal of the fruit. Supply contracts between producers and
processors are based on a minimum price fixed before the start of each marketing year.
2.3 . Prices fixed
 For the 1988/89 marketing year, Commission has proposed freezing institutional prices and marketing premiums
 for oranges and mandarins at their 1987/88 level.
 ---pagebreak---  126                                    Preliminary draft general budget, 1989
B. PROCESSED FRUIT AND VEGETABLES
The processed fruit and vegetables market organization began operation in 1968. It is governed by Regulation
(EEC) No 426/86, as last amended by Regulation ( EEC) No 3909/87.
Regulation (EEC) No 525/77 introduced a system of production aid for tinned pineapple.
The common organization covers the following products : frozen, dehydrated and preserved vegetables ; frozen,
dried and preserved fruit, fruit paste, fruit juices and others.
Expenditure on products processed from fruit and vegetables came to 1,7 % of total EAGGF Guarantee spending
in 1986.
1 . Economie background
Production of processed fruit and vegetables eligible for production aid dropped by about 28 % between 1985
and 1986, in particular because of tomato-based preserves. This drop is only 5 % if the Twelve’s production in
1986 is compared with the figure for the Ten in 1985 .
External trade in 1986 underwent opposing trends :
– imports rose from 1,7 million t in 1985 to 2,0 million t in 1986,
– exports fell from 1,5 million t in 1985 to 1,3 million t in 1986.
2. Operation of the market
2. 1 . Spécifie market instruments
2.1.1 . External trade arrangements
To facilitate exports, export refunds making up the difference between the Community price and the world mar­
ket price may be granted.
A minimum price at the frontier has been introduced for dried grapes. The Commission has proposed to the
Council that a minimum import price system be introduced for cherries also.
2.1.2. Aid for processed fruit and vegetables
The Council introduced this scheme in 1978 as part of a general policy for the Mediterranean areas. The aid
scheme was necessary because of the difference between prices of Community products and those of imported
products ; the aim is to ensure adequate incomes for producers of fresh fruit and vegetables by means of a mini­
mum price which the processor must undertake to pay to producers to qualify for the aid.
The Commission fixes minimum prices each year under the management committee procedure. Prices are fixed
by product before the start of the marketing year, taking account of the minimum price of the previous marketing
year and the movement in the basic prices for fresh products, as well as the need to ensure normal sales of fresh
products to the various end-users.
The scheme covers tomato products, peaches, pears and cherries in syrup, prunes and (since the accession of
Greece) dried figs and dried grapes.
The amount of aid is set each year by the Commission to bridge the difference between the level of Community
prices (taking into account the minimum price to be paid to producers) and prices for products of non-member
countries or, where imports do not attain a representative volume, prices based on intra-Community trade and
prospects on the Community market. The aid is granted on the net finished product and calculated on the basis
of the raw material used. The proposal to introduce a minimum import price for cherries (cf. 2.1.1 .) is linked to
the discontinuation of production aid for cherries in syrup.
2.1.3 . Production aid for tinned pineapple
This is designed to help the industry to maintain competitive prices in relation to prices charged by the main non-
Community producing countries, while ensuring adequate returns for producers of fresh pineapple ; production
aid is granted to processors who undertake to pay producers at least the minimum price fixed each year.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                   127
 2.1.4. Guarantee threshold
 Since the 1984/85 marketing year :
 (a) A guarantee threshold has been fixed for each marketing year at a quantity of processed tomato products cor­
 responding to 4 700 000 1 of fresh tomatoes. The volume is divided up as follows :
 – 2 987 850 1 for the manufacture of tomato concentrate ;
 – 1 307 1 50 1 for the manufacture of whole peeled tomatoes ;
 – 405 000 1 for the manufacture of other processed tomato products.
To determine whether the threshold has been exceeded, an average is taken of the quantities produced in the three
marketing years preceding the year of the relevant aid-fixing.
 If the overall ceiling is exceeded, the aid for each tomato-based product is reduced in the fourth year in line with
the excess over the threshold and in proportion for each product according to the amount by which the quantity
fixed for it is exceeded .
(b) A guarantee threshold has been fixed for each marketing year at a quantity of processed dried grapes corre­
sponding to 70 000 1 of unprocessed currants and 93 000 t of unprocessed sultanas. Following undertakings given
to the Council in connection with the compromise on the prices package for 1987/88, the Commission will pro­
pose that dried grapes of the moscatel varieties be included in the production aid system and the guarantee
threshold system in respect of a quantity of 3 500 1 of unprocessed dried grapes.
If the threshold is exceeded by an amount calculated from the average quantity produced over the preceding three
marketing years, the minimum price to be paid to producers is reduced in line with that amount in the fourth
year.
2.1.5. Limits to the quantities aided
Since the introduction of production aid, the granting of such aid for Williams pears in syrup and cherries in
syrup has been limited to a fixed quantity. Currently these quantities are 102 305 t for Williams pears and 79 554 1
for cherries in syrup. They have been increased to take account of Spanish and Portuguese production.
For the three marketing years beginning in 1985/86, aid for processed tomato products is limited to the quantities
fixed as a guarantee threshold. Since these arrangements cease at the end of 1987/88, the Commission is propo­
sing the necessary measures before the beginning of 1988/89. The Act of Accession laid down specific quotas of
tomato-based products for Spain and Portugal and restricted the aid for peaches processed in Spain to 80 000 1 of
net product.
2.2. Prices fixed
The change in minimum prices and aids for 1988/89 will be decided by the Commission for each product before
the beginning of the relevant marketing year under the management committee procedure.
C. APPROPRIATIONS FOR 1989
1 . Recent trends
The latest expenditure recorded and the appropriations proposed are as follows :
                                                                                                         (million ECU)
      Item /                                                                          1987       1988        1989
     Article
                                             Heading
                                                                                  expenditure approps      estimate
         a                                      b                                       c         d            e
       1500     Export refunds on fresh fruit and vegetables                         52,3       63          66
       1501     Compensation for withdrawals , buying-in and free distribution      417,3     310          375
       1502     Compensation to promote Community citrus fruits                      22,4       32          30
       1503     Compensation to encourage processing of citrus fruits                93,3      116         102
       1509     Other intervention                                                     0,6       p.m .        p.m .
       150      Fresh fruit and vegetables                                          586,0     531          573
 ---pagebreak--- 128                                    Preliminary draft general budget, 1989
Continued
                                                                                                       (million ECU)
    Item /                                                                          1987        1988       1989
                                          Heading
    Article                                                                     expenditure   approps    estimate
       a                                     b                                        c           d          e
     1510   Export refunds on processed fruit and vegetables                       14,5        14          15
     1511   Production aid for tomato-based products                              209,7       325        373
     1512   Production aid for fruit-based products                               149,7       209        214
     1513   Aid for tinned pineapple                                                 7,2       12          12
     1519   Other intervention                                                       0           p.m .      p.m .
     151    Processed fruit and vegetables                                        381,1       560        614
    15                                      Fruit and vegetables sector – Total   967,1     1 091      1 187
            Sector as % of EAGGF Guarantee total                                     4,2         3,8        4,2
 ---pagebreak---                                         Preliminary draft general budget, 1989                                129
                                    CHAPTER 16 – WINE PRODUCTS
In Regulation No 24 of 4 April 1962 the Council made provision for the progressive establishment of a wine mar­
ket organization. The basic regulation finally adopted is Regulation (EEC) No 822/87 .
It now covers the following products :
– grape juice and must, with or without added sugar ;
– grape must, in fermentation or with fermentation arrested ; wine of fresh grapes ;
– fresh grapes other than table grapes ;
– wine vinegar ;
– others .
The marketing year runs from 1 September to 31 August.
Expenditure on wine varies quite considerably from one year to the next owing to fluctuations in pro­
duction. In normal years it accounts for between 2,5 and 5,5 % of the EAGGF Guarantee total. It accounted for
2,9 % of EAGGF expenditure in 1986 and 3,35 % in 1987.
1 . Economic background
Production in the Community of Eleven in 1986/ 87 was 202 million hi , 60 % of world production. The upward
trend in overall wine production recorded in the Community was confirmed by the 1987 harvest ( 1984 harvest :
182 million hi, 1985 harvest : 176 million hi, 1986 harvest : 202 million hi, 1987 harvest : 174 million hi).
During 1986/87 the internal market accounted for 188 million hi of consumption (i.e. a fall of 12% compared
with 1985/86), of which 131 million hi were used for human consumption, the remainder being sent for dis­
tillation. The corresponding figures for 1985/86 were 165 million hi .and 124 million hi respectively.
The degree of self-sufficiency has exceeded 100% for several years.
Enlargement has not brought about any increase in the wine production surplus ; the situation on the Spanish
market is in fact fairly comparable with that in the Community. However, yields from Spanish vineyards, which
are relatively low compared with the yields from Community vineyards, may be expected to improve.
Surplus quantities of wine were distilled and resulted in overproduction of alcohol. At the end of the 1986/87
wine year, stocks of alcohol of vinous origin amounted to some 5,9 million hi.
As regards trade, the Community of Eleven imported 2,7 million hi of wine in 1986/ 87 and exported 11,5 mil­
lion hi. Imports are tending downwards, whereas the export trend is less clear. It was upwards from 1975/76,
mainly because of the expansion of Italian exports. However, there has been a slight downturn over the last two
marketing years, mainly because of a fall in exports to the Soviet Union.
2. Operation of the market
2. 1 . The types of table wine
For the purposes of the price system , table wines are divided into several types :
(a) Red table wines :
 – Type R I : red table wine, other than of type R III, of an actual alcoholic strength by volume of not less
      than 10 % vol and not more than 12 % vol ;
 – Type R II : red table wine, other than of type R III , of an actual alcoholic strength by volume of not less
      than 12,5 % vol and not more than 15 % vol ;
 – Type R III : red table wine obtained from vine varieties of the Portugieser type.
(b) White table wines :
 – Type A I : white table wine, other than of types A II and A III , of an actual alcoholic strength by volume
      of not less than 10 % vol and not more than 13 % vol ;
 – Type A II : white table wine obtained from vine varieties of the Sylvaner type or of the Miiller-Thurgau
      type ;
 – Type A III : white table wine obtained from vine varieties of the Riesling type.
 ---pagebreak---  130                                     Preliminary draft general budget, 1989
2.2. Price arrangements
Each year the Council fixes a guide price for each type of table wine.
The guide price is fixed for each type of table wine at a level which ensures a fair income for producers, on
the basis of the average of prices recorded during the two preceding marketing years and the trend of prices
during the current marketing year.
The activating price is the threshold for activating the intervention mechanism and corresponds, for each type
of table wine, to 92 % of the guide price (Article 28 of Regulation No 822/87).
The Commission establishes two types of price :
(a) Representative price: Every week in respect of each type of wine the Commission determines an average pro­
ducer price for each representative market and a Community representative price equal to the weighted mean of
the average prices.
(b) Reference price: Every year the Commission fixes a reference price for a number of products. This is calculated
on the basis of the guide price and acts as protection at the Community frontier since it represents the minimum
entry price of imported wines.
2.3. Spécifie market instruments
2.3.1 . Import and export arrangements
There is no restriction on imports from non-member countries, which pay customs duties according to the al­
coholic strength of the products. If the reference price is not reached, a countervailing charge is applied, unless
special agreements have been made with non-member countries under which they comply with the reference
price.
Refunds may be paid to facilitate exports. They may vary according to intended use/destination.
2.3.2. Private storage aid for table wine and grape must (Article 32)
The aim is to freeze existing supplies on the market for a certain period by encouraging winegrowers to store their
products in return for aid :
There are two possibilities for concluding private storage contracts :
– long-term contracts :
     These contracts may be concluded for wine whenever, at the beginning of the marketing year, supplies
     available exceed foreseeable requirements by at least four months. As regards musts, such contracts may be
     concluded when long-term storage for wines is decided on. Aid is conditional on the conclusion of storage
     contracts valid for a period of nine months for wine. The contracts must be concluded between 16 December
     and 1 5 February. In the case of musts, they expire automatically on 1 5 September.
– four-month contracts, supplementing long-term contracts (Article 42):
     This possibility is available when long-term contracts expire whenever market prices fail to match the acti­
     vating price for three successive weeks. This facility may be combined with the distillation supplementary
     to long-term storage contracts (price support guarantee).
2.3.3. Re-storage aid (Article 34)
This assists winegrowers carrying heavy stocks to clear their cellars before harvesting begins, by storing the
available wine elsewhere in return for aid granted optionally at the Commission’s discretion.
2.3.4. Aid for the use of must (Articles 45 and 46a)
This aid is intended to improve the competitive position of must produced in the EEC. It is granted for :
– the production of grape juice from grape must and from concentrated grape must,
– the production of ‘British’, ‘Irish’ and ‘home-made’ wines from grape must and from concentrated grape
     must,
– the use of concentrated grape must to enrich certain wines.
The amount of the aid is fixed annually before 31 August for the following wine year. During the 1985 /86 to
 1989/90 wine years, part of it will be used for the organization of promotional campaigns for grape juice.
For the wine years 1988/89 to 1990/91 there is also to be aid for the use of concentrated grape must in livestock
feeding. The amount of the aid may not be more than that paid for preventive distillation.
 ---pagebreak---                                           Preliminary draft general budget, 1989                                    131
2.3.5 . Distillation
In the case of all distillation reserved for producers there is a guaranteed minimum purchase price for the wine
delivered to distillers. Where a distiller supplies proof that the minimum price has been paid, he receives aid to
dispose of the alcohol produced or, in the case of compulsory distillation, he may deliver his alcohol to an inter­
vention agency, which then receives financial compensation for taking over the alcohol.
The purchase price of wine for each type of distillation (except those referred to in Articles 35 and 36) will hence­
forth be reduced to take account of the economic advantage obtained by producers who have enriched their har­
vest with sucrose or concentrated must on which the aid provided for in Article 45 has been paid (Article 44).
2.3.5. 1 . Voluntary distillation
– Distillation supplementary to long-term storage contracts (price support guarantee, Article 42)
The aim is to guarantee winegrowers that their wine will not be disposed of at a price below the activating price
provided that they have concluded long-term storage contracts.
If it is observed at the end of the marketing year that representative market prices have failed to match the
activating price for at least three successive weeks, wines under long-term contracts or some of such wines may
be distilled at a price close to the activating price valid when the storage contracts were concluded. A maximum
of 18 % of production may be distilled.
– Préventive distillation (Article 38)
The Commission may introduce preventive distillation at the start of each wine year, at 65 % of the guide price
for each table wine. For wines suitable for yielding table wine the price is 65 % of the AI guide price.
– Support distillation (Article 41 )                                                                       \
This is in part a variation on the old exceptional distillation. Producers of table wine receive a minimum guaran­
teed price of 82 % of the guide price for each type of wine, provided they comply with the provisions of the com­
mon organization of the market in wine (compulsory distillation, by-product deliveries for distillation, etc.).
In a wine year during which compulsory distillation has been introduced, the Commission will ensure automatic
access to distillation at the guaranteed price.
If compulsory distillation has not had to be introduced, the Commission may, if necessary, authorize distillation
at the guaranteed price.
The quantities to be distilled may not exceed 6,2 million hi without the Council’s authorization.
In order to maintain the guaranteed price, appropriate measures other than distillation may be resorted to.
2.3 . 5 .2. Compulsory distillation
– Compulsory distillation of the by-products of winemaking (marcs and lees, Article 35)
These compulsory distillation measures are intended to prevent the overpressing of marcs and lees and the mar­
keting of inferior-quality wines with a low natural alcohol content.
– Compulsory distillation of wines other than table wines (Article 36)
This distillation measure applies to surplus wine in the Cognac area, to wines made from table grapes or from
grapes for drying, etc.
 – Compulsory distillation of table wines (Article 39)
This is decided upon by the Commission :
(a) when the availabilities recorded at the beginning of the wine year exceed normal utilization by more than
      four months ; or
(b) when production exceeds normal utilization by more than 9 % ; or
(c) when the weighted average of the representative prices of all types of table wine at the beginning of a
      wine year is below 82 % of the guide price.
The total quantity to be distilled is shared among the various production regions of the Community, grouped
by Member State, on the basis of the difference recorded between production in the region during the wine year
 in question and 85 % of the average production in that region for 1981 /82, 1982/83 and 1983/84. Each producer
 legally so obliged distills a certain quantity according to his yield, taking into account the different yields in the
 various production regions of the Community.
 ---pagebreak---  132                                   Preliminary draft general budget, 1989
The quantities delivered for preventive distillation by a given producer may be deducted from the quantities to
be delivered for compulsory distillation by that producer.
2.3.6. Marketing of alcohol offered for intervention
For wine delivered for Community distillation, distillers are eligible for aid to help market the alcohol produced.
In cases of compulsory distillation, distillers may either receive aid or deliver the alcohol produced to an inter­
vention agency.
Net financial losses on alcohol taken over under Article 39 (compulsory distillation of table wine) are borne in
full by the EAGGF (Article 37).
The marketing of alcohol taken over under Articles 35 and 36 must not disturb the Community market in alcohol
and spirituous beverages. If necessary, the alcohol will be marketed in other sectors, in particular the fuel sector.
Any additional costs in excess of the financial compensation will also be borne by the EAGGF (Article 37).
2.3.7. Measures to expand the market (Article 49)
The Commission may adopt such measures where necessary.
2.3.8. Search for new outlets (Article 48)
Schemes to identify and develop outlets other than distillation may be undertaken in the wine years 1985/86 to
1988/89 ; financing of these schemes by the Guarantee Section can be restricted to part of the cost only, with a
ceiling of 500 000 ECU/year.
2.3.9. Permanent abandonnant premiums in respect of areas under vines (Régulation replacing Régulation [EEC]
No 777/85)
The aim is to reduce vine-growing potential by reinforcing existing structural measures. All areas under vines
are eligible. The amount of the premiums varies, according to yield, from 10 to 200 ECU/ha. For the 1988/89
and 1989/90 wine years, the Community contribution to abandonment premiums will be drawn 50 % from gua­
rantee appropriations and 50 % from guidance appropriations.
2.3.10. Other measures (Article 51 )
Measures in respect of products other than table wine may be taken if necessary to support the table wine market.
For example, the Council has decided to grant special storage aid for quality wine of the 1982 vintage.
2.4. Prices fixed
These are guide prices (the activating prices being 92 % of the guide prices).
                                                                                     1987/88           1988 / 89
RI     (EUR 10)(')                                                                        3,35               3,35
       (Spain)O)                                                                          2,28               2,49
R II   (EUR 10)(‘)                                                                        3,35               3,35
       (Spain)O)                                                                          2,28               2,49
R III  (EUR 10)(2)                                                                       52,23             52,23
       (Spain)0)                                                                         35,55             38,89
AI     (EUR 10)0)                                                                         3,11               3,11
       (Spain)O )                                                                         2,11               2,31
A II   (EUR 10)(2)                                                                      69,60              69,60
       (Spain)0)                                                                        47,32              51,78
A III  (EUR 10)(2)                                                                      79,49              79,49
       (Spain)0)                                                                         54,05             59,14
(' ) ECU/degree/hl.
(2) ECU/hl.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                      133
3. Appropriations for 1989
3.1 . Recent trends
                                                                                                            (million ECU)
      Item /                                                                          1987            1988       1989
                                              Heading
     Article                                                                       expenditure      approps   estimate
         a                                       b                                      c              d           e
       160      Refunds on wine products                                              20,4           36         39
       1610     Intervention storage of wine and grape must                           57,2           66         71
       1611     Distillation of wine                                                 508,0          665       568
       1612     Compulsory distillation of the by-products of winemaking              91,4           99         88
       161      Intervention for wine products                                       656,6          830        727
                                                                                   '           •
       1620     Technical costs                                                                                   8
       1621     Financial costs                                                        7,0       ■ 352            9
       1622     Other costs                                                                                   157
       1623     Depreciation of alcohol stocks                                                      250       287
       162      Taking over of alcohol from compulsory distillation                    7,0          602       461
       163      Aid for the use of must                                              112,8          179       184
       164      Permanent abandonment premiums in respect of areas under vines         0               1        72
       165      Other intervention                                                     3,5            11        12
       16                                                      Wine sector – Total   800,3        1 659     1495
                Total as % of EAGGF Guarantee total                                    3,5             5,8        5,3
 ---pagebreak---  134                                     Preliminary draft general budget, 1989
                                          CHAPTER 17 - TOBACCO
The tobacco market organization began operation on 29 April 1970 under the basic Regulation (EEC)
No 727/70, as last amended by Regulation (EEC) No 1114/88.
It applies to all Community raw tobacco. The 34 raw tobacco varieties are subdivided into several types :
– dark air cured : e.g. Paraguay,
– fire-cured : e.g. Kentucky,
– light air cured : e.g. Burley,
– flue-cured : e.g. Bright,
– sun-cured : e.g. Erzegovina ;
– special : e.g. Round Tip.
Expenditure on tobacco accounted for about 3,5 % of total EAGGF Guarantee spending in 1987.
There is no marketing year for raw tobacco. Tobacco is sometimes marketed years after it is harvested.
1 . Economic background
The Community of Twelve produced 387 000 1 of leaf tobacco in 1987, i.e. slightly more than in 1986. The area
under tobacco (219 400 ha) was slightly down on 1986.
Tobacco consumption, which is largely dependent on the consumption of cigarettes (86 % of the total), has
stabilized in recent years in the Community of Twelve.
The Community of Twelve’s degree of self-sufficiency is about 50 %.
As far as trade is concerned, exports totalled 132 500 1 in 1986 for the Community of Twelve, compared with
 130 000 1 in 1985 for the Community of Ten. Virginia flue-cured tobacco accounts for about 51 % of imports,
which totalled about 456 000 1 in 1986 for the Community of Twelve (436 000 1 in 1985 for the Community of
Ten).
2. Operation of the market
2.1 . Price arrangements
Each year the Council fixes two categories of prices for the 34 varieties covered by the market organization, these
prices being for a reference quality :
(a) The norm price: This is fixed on the basis of the norm price valid for the previous crop, at a level which reflects
the need to guide production along appropriate lines while at the same time improving quality and ensuring a
fair income for growers.
(b) The intervention price: This is the price at which the intervention agencies must buy in the tobacco which is
offered to them by growers. It is equal to 85 % of the corresponding norm price, except where ‘market control’
measures are applied, when the intervention price may be reduced for the relevant varieties. The intervention
price is fixed for both leaf and baled tobacco. For baled tobacco, the costs of first processing and market prepa­
ration are added and the price is known as the ‘derived intervention price’.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
The Common Customs Tariff affords only limited protection at the frontiers in respect of imports. The system
of premiums tends to compensate for the difference between the purchase price of Community tobacco and the
cost of imported tobacco.
As regards exports, refunds are granted, if necessary, to cover the difference between the world price and Com­
munity prices.
 ---pagebreak---                                             Preliminary draft general budget, 1989                                  135
2.2.2 . Storage
The intervention agencies must buy in tobacco meeting the minimum quality requirements at the intervention
price whenever such tobacco is offered to them. The intervention price is adjusted where appropriate by applying
the scales of increases and reductions fixed for each variety for qualities not corresponding to the reference qua­
lity. If, however, the quantities of baled tobacco offered by a primary processing undertaking exceed by 25 % the
equivalent of the quantities of leaf tobacco of Community origin handled by that undertaking, such quantities
are bought in at a derived intervention price minus 1 0 %.
2.2.3 . Premiums
Premiums are paid to the initial purchasers of tobacco when they purchase their supplies in the Community.
The aim of these premiums is to ensure some preference for Community tobaccos over imported tobaccos and
to guarantee the producer a price near the norm price.
For each Community tobacco variety the premium is based on the difference between the Community cost price
and the average price of imported tobaccos, calculated on the basis of the purchase price on the world market
plus transport costs and customs duties. Compared with the previous harvest the variation in premiums for the
1988 harvest is from + 2% to –8 %, depending on variety.
2.3 . Prices fixed
For the 1988 crop the variation in the norm price of the various tobaccos ranges from 0 to –8 % compared with
1987, depending on variety.
3. Appropriations for 1989
3.1 . Recent trends
                                                                                                         (million ECU)
      Item /                                                                           1987      1988        1989
     Article
                                                Heading                                                    estimate
                                                                                   expenditure approps
         a                                         b                                     c         d            e
       170       Refunds on tobacco                                                   43,1      47           48
       171       Premiums on tobacco                                                 733,9     834         868
       1720      Technical costs of public storage                                    16,3      27           10
       1721      Financial costs of public storage                                      1,5       3            1
       1722      Other public storage costs                                             8,7     27            8
       1723      Depreciation of tobacco stocks                                          -      10          21
       172       Intervention storage of tobacco                                      26,5      67           40
       173       Other intervention in respect of tobacco                               0        p.m .        p.m .
       17                                                  Tobacco sector – Total    803,6     948         956
                 Tobacco sector as a % of EAGGF Guarantee total                         3,5       3,3         3,4
 ---pagebreak---  136                                    Preliminary draft general budget, 1989
                           CHAPTER 18 - OTHER SECTORS OR PRODUCTS
A. ARTICLE 180 - SEEDS
The seed market organization began operation on 1 July 1972 with the introduction of the basic Regulation
(EEC) No 2358/71 , as last amended by Regulation (EEC) No 3997/87.
It covers the following products for sowing : rice and spelt, dried leguminous vegetables, hybrid maize and
sorghum, oilseeds and oleaginous fruit, seeds, fruit and spores for sowing.
The marketing year runs from 1 July to 30 June.
The expenditure on seeds was around 0,18% of the EAGGF Guarantee spending in 1987.
I. Economie background
Seed production in 1986 was as follows : 0,38 million t of fodder-plant seed, 0,7 million t of rice seed and spelt
and 0,14 million t of flax and hemp seed.
Demand for fodder-plant seed is estimated at 0,35 million t ; production of cereal seed and of oilseeds is in line
with demand on the Community market.
As a whole the EEC is about 1 10 % self-sufficient, although there is a shortfall in respect of certain products, a
factor which thus encourages continued trade with non-member countries.
2. Operation of the market
2.1 . Price arrangements
The Council does not fix prices for the seed sector, but only rates of aid to producers.
The Commission, on the other hand, fixes a reference price for each type of hybrid maize and sorghum for
sowing. It is based on the free-at-frontier prices recorded over the last three marketing years and not including
abnormally low prices.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
In the case of imports of seeds other than hybrid maize the only protection at frontiers is the application of the
Common Customs Tariff. In addition , appropriate measures may be applied in trade with non-member countries
if the market is experiencing serious disturbances (protective clause). There is also a system of import licences
issued against security.
In the case of hybrid maize and sorghum for sowing, a free-at-frontier offer price is established for each country
of origin for each type of hybrid for which a reference price is fixed. In the case of hybrid maize, where the free-
at-frontier price plus the customs duty is lower than the reference price, there is a countervailing charge which is
equal to the difference between these prices, although within the limits of the duty bound under GATT (4 %).
There is also provision for the introduction of appropriate measures applicable in trade with non-member coun­
tries if the market in one of the products in question is experiencing or is threatened with serious disturbances as a
result of exports.
2.2.2. Aid to producers
When the market and price situation do not ensure a fair income for producers aid may be granted to them. It
consists of a standard amount for each species or group of varieties. It is fixed per quintal of seeds produced,
taking into account the market situation (balance between the volume of production and marketing prospects)
and the price of products on non-Community markets.
The aid is fixed for two years (following and subsequent marketing years) with the possibility of changing the
rate for the subsequent marketing year before it begins if the EEC market is likely to be disturbed.
 ---pagebreak---                                         Preliminary draft general budget, 1989                                  137
2.3 . Aids fixed
                                                                                                        (ECU/100 kg)
                                     Type                                                      1989/90-1990/91
Rice                                                                                               16,1
Spelt                                                                                              12,1
Monoecious hemp                                                                                    17,2
Fibre flax                                                                                         23,8
Seed flax                                                                                          18,8
Grasses                                                                                         16,1-70,2
Legumes                                                                                         16,8-59,5
B. ARTICLE 181 - HOPS
The hop market organization began operation on 1 August 1971 with the adoption of the basic Regulation (EEC)
No 1696/71 , as last amended by Regulation ( EEC) No 3998/87 .
It covers the following products : hops (cones and lupulin), hop powder, vegetable saps and extracts of hops.
The marketing year runs from 1 September to 31 August.
The appropriation for the sector is very small (about 0,07 % of the total EAGGF Guarantee spending in 1 987).
1 . Economic background
In 1986 production in the Community of Twelve was 43 510 1, 38 % of world production. This represents a 9,7 %
drop over 1985 , with the areas planted declining by 3,7 %. A persistence of surpluses on the world market has
caused a further drop in the area planted in the Community and the 1987 harvest totalled 39 731 1.
2. Operation of the market
2. 1 . Price arrangements
The Council, acting on a proposal from the Commission, fixes only the levels of aid to producers (see 2.2.2.).
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
CCT duties are the only protection against hop imports. However, appropriate measures may be applied by
Member States which trade with non-member countries if there is serious market disturbance or risk thereof as
a result of imports or exports.
2.2.2. Aid to producers
Aid per hectare, varied according to group of varieties, may be granted to hop producers to enable them to
achieve a fair income. The amount is fixed in the light of the market situation, market forecasts, price trends on
external markets and changes in costs. Where there is a risk of structural surpluses or market disturbance, the
aid may be granted in respect of a specified area only.
2.2.3 . Aid for varietal conversion
Owing to the continuing difficulties in finding market outlets for most types of bitter hop and the particularly
uncertain position of hop growers in certain Commission regions, provision has been made to grant a special
aid of 2 500 ECU/ha in respect of up to 800 hectares in each Member State for the conversion of areas essentially
under bitter varieties to aromatic varieties and super-alpha type varieties.
 ---pagebreak---  138                                   Preliminary draft general budget, 1989
C. ARTICLE 182 - POTATOES
So far, no potato market organization has been set up. A proposal covering all fresh and processed products was
submitted to the Council by the Commission on 23 January 1976, but is still pending.
It is proposed that a token entry be made under this heading.
D. ARTICLE 183 - AGRICULTURAL ALCOHOL
This Article has been inserted to take account of the Commission’s amended proposal of 7 December 1976
(COM(76) 274 final) on the common organization of the market in ethyl alcohol of agricultural origin, as further
amended on 22 May 1979 (COM(79) 237 final) and 14 July 1983 (COM(83) 470 final).
This proposal is now before the Council.
It is proposed that a token entry be made under this heading.
F. ARTICLE 185 - TRANSHUMANCE
This Article has been inserted to take account of Council Regulation (EEC) No 764/85 of 12 March 1985 intro­
ducing aid for the transhumance of sheep, goats and cattle in Greece (OJ No L 86, 27. 3. 1985, p. 4).
G. APPROPRIATIONS FOR 1989
1 . Recent trends
                                                                                                      (million ECU)
     Item /                                                                        1987        1988       1989
     Article
                                         Heading                                                        estimate
                                                                               expenditure  approps
        a                                    b                                       c           d           e
      180      Seeds                                                              41,9        59          64
      181      Hops                                                                 1,5       13          13
      182      Potatoes                                                             0          p.m .       p.m .
      183      Agricultural alcohol                                                 0          p.m .       p.m .
      185       Transhumance                                                        1,0         1           1
      189      Other                                                                0          p.m .       p.m .
      18                                                  Total for the sector    44,5        73         78
               Sector as % of EAGGF Guarantee total                                 0,2         0,3        0,3
 ---pagebreak---                                          Preliminary draft general budget, 1989                                      139
                             CHAPTER 20 - MILK AND MILK PRODUCTS
The milk and milk products market organization, which began operation on 29 July 1968, is governed by Regula­
tion ( EEC) No 804/68 (the basic regulation) as last amended by Regulation ( EEC) No 1 109/88.
The common organization of the market covers the following products :
– fresh, preserved, concentrated or sweetened milk and cream ;
– butter, cheese and curds ;
– lactose and lactose syrup ;
– milk-based compound feedingstuffs.
The milk year runs from 1 April to 31 March.
This sector takes the largest share of total EAGGF Guarantee spending. This share has however decreased mar­
kedly from 42% in 1980 to 21,8% in 1987 .
1 . Economic background
The Community is the world’s main milk producer. In 1984 milk production accounted for about 19,5 % of the
total value of final agricultural production.
Almost half of the Community’s milk production is supplied by France (the main producer) and Germany.
The introduction by the Council of the additional levy system has led to a reduction in the number of dairy cows
in the Community and to a fall in production and milk deliveries to dairies. In 1984 and 1985 deliveries fell by
2,3 % and 1,4 % respectively as compared with 1983 . Although deliveries increased by 1,2 % in 1986, they are ex­
pected to fall by 5,5 % in 1987 following the Council decisions of December 1986. Deliveries in 1984/85 fell short
of the overall guaranteed quantities, but the latter were slightly exceeded over the next three years.
The rise in consumption recorded between 1974 and 1983 was very slight. For all milk products, expressed in
terms of whole milk, it was 0,5 % per year.
In 1986 and 1987 , human consumption of milk and milk products within the Community rose only slightly and
did not reach the 0,5 % rate of increase corresponding to the general trend. This overall trend masks the fact that
the trend of consumption varies very significantly from one product to another. The general downward trend
of butter consumption at market prices continued in 1987 but total consumption showed an increase because of
the application of special measures. Lastly, the rate of increase in cheese consumption has slowed down
somewhat while consumption of fresh milk products, instead of continuing to rise, has fallen slightly.
There is a milk surplus in the Community. The degree of self-sufficiency varies from one product to another but
is well over 100 % in almost every case. The Community, consequently, has to dispose of production surpluses.
Public stocks of skimmed-milk powder fell from 1,1 million t at the end of 1975 to 674 000 t at the end of 1978
and to 279 000 1 by the end of 1981 . At the end of 1 982 they stood at 576 000 1, at the end of 1 983 at 983 000 1,
at the end of 1984 at 617 000 1, at the end of 1985 at 520 000 1, at the end of 1986 at 772 000 1 and at the end of
 1987 at 560 000 1 (474 000 t of which were available).
Public and private stocks of butter fell from 418 000 1 at the end of 1978 to 147 000 1 by the end of 1981 and then
rose again to 306 000 1 at the end of 1982, 853 000 1 at the end of 1983 , 948 000 1 at the end of 1984, 1 124 000 1
at the end of 1985, 1 413 000 1 at the end of 1986 and 958 000 1 at the end of 1987 (including 630 000 1 available).
In 1986 exports fell back to 1 1,4 million t, as compared with 12,8 million t in 1984 and 12,2 million t in 1985 .
Commercial exports declined considerably in 1984 and 1985 (– 169 999 t, i.e. – 49 % in two years) but as a result
of special exports of butter (262 000 t) to the Soviet Union and to other countries, and of increased exports in
the form of food aid, total exports of butter were still substantial during this period. As regards the protein frac­
tion of milk, in 1986 exports of cheese declined by 19 000 1 (5 %) whilst those of whole-milk powder remained at
much the same level .
As regards imports, the Community imported 84 000 1 of butter in 1986, including 83 000 1 from New Zealand
destined for the United Kingdom. The EEC also imported 98 000 1 of cheese ( 12,5 % down on 1985).
 ---pagebreak---  140                                      Preliminary draft general budget, 1989
2. Operation of the market
2.1 . Price arrangements
Each year the Council fixes three types of price :
(a) Target price: A target price is fixed for milk containing 3,7 % fat on delivery to the dairy. It represents the price
which it is aimed to obtain for the aggregate of producers’ milk sales, on the Community market and on external
markets, during the milk year.
(b) Intervention prices: Intervention prices are fixed for butter, skimmed-milk powder and certain types of cheese.
The intervention agencies must buy in all quantities meeting the set quality standards offered to them at that price.
(c) Threshold prices: Each year the Council, acting on a proposal from the Commission, fixes threshold prices
for certain products for the following milk year. These prices are fixed so that the price of imported milk products
is geared to the target price for milk, thus affording the necessary protection to Community processors.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
Export refunds are granted on most milk products ; the Commission fixes the rates every four weeks. They may
be differentiated according to intended use/destination.
Import levies are fixed once a fortnight by the Commission and apply to most milk products except casein.
Safeguard measures, such as quota arrangements or even the closure of frontiers, may be applied to curtail im­
ports.
When a shortage occurs, entry charges may be limited or cancelled and export charges may be imposed.
2.2.2. Storage
(a) Public storage: National agencies must buy in butter, milk powder offered for intervention during the period
1 March – 31 August and certain types of cheese at intervention prices. These products, once stored, are disposed
of either by tender or directly via :
– sales of butter to manufacturers of pastry, ice-cream and other food products, to non-profit-making orga­
     nizations, to the armed forces or to the recipients of welfare benefit ;
– sales of skimmed-milk powder for use as feed for animals other than young calves or for export as feed ;
– export or sale on the internal market at reduced prices, with a rebate offered on the selling price on re­
     moval from public storage (e.g. butter exported to the USSR, Christmas butter, etc.);
– food aid operations.
 The public storage arrangements have been altered for the fourth and fifth 12-month periods of the application
of the additional levy. If more than 180 000 1 of butter have been offered for intervention, the Commission will
be able to suspend buying-in throughout the Community or, if the market situation so warrants, in part of the
Community. The Commission will employ the other means described in the Regulation to support the market
price and to prevent a downward spiral. If the latter occurs nevertheless and if the market price falls to 92 % of
the intervention price in one or more Member States, the Commission will reintroduce buying-in in the Member
States concerned.
As regards skimmed-milk powder (during the period 1 March – 31 August), buying-in may be suspended once
the quantities offered for intervention exceed 100 000 1, no account being taken of the quantities offered before
1 March.
(b) Private storage: Private storage aid is granted in respect of:
– butter stored for not less than four months between 1 April and 15 September ;
– top-quality skimmed-milk powder, where there is a Council decision to that effect (this intervention mea­
     sure is rarely applied);
– Grana padano cheese not less than nine months old, Parmigiano-Reggiano cheese not less than
     15 months old and Provolone cheese not less than three months old. In years when it is necessary to reduce
     a serious imbalance aid can be granted for the private storage of long-keeping cheeses (Emmental and
     Gruyere) and certain cheeses produced from ewes’ milk (Pecorino).
2.2.3 . Aid for milk used as animal feed
This aid is fixed by the Commission or the Council to help dispose of liquid skimmed milk, milk powder and
buttermilk.
 ---pagebreak---                                          Preliminary draft general budget, 1989                                  141
(a) Aid for liquid milk
 – aid for denatured liquid skimmed milk and buttermilk:
     – either returned to the farm , or
    – used on the farm where it is produced.
    This aid is granted in respect of liquid skimmed milk for use as feed for animals, mainly calves. The amount
    of the aid depends on the intervention price and supply situation for skimmed-milk powder, the price of
    calves and the price of competing proteins.
– special aid for liquid skimmed milk: This aid is granted in respect of liquid skimmed milk for use as feed
    for animals other than calves under four months old. The aim is to prevent the processing of milk into milk
    powder. The amount of the aid depends on the trend in prices for competing proteins and on the intervention
    price for skimmed-milk powder.
(b) Aid for skimmed-milk powder
– aid for milk used in animal feed: This aid is granted in respect of skimmed milk processed into compound
    feedingstuffs and skimmed-milk powder intended as feed for calves. It makes it possible to dispose of most
    of the skimmed-milk powder produced in the Community.
– special aid for skimmed-milk powder: Such aid is granted in respect of skimmed-milk powder for use as
    feed for animals other than young calves and in respect of milk powder with a fat content of 10 % which is
    to be fed to calves.
    These aids enable the cost price of feed to be reduced, making it competitive wi3h substitute products (particu­
    larly vegetable proteins).
2.2.4. Aid for skimmed milkj)rocessed into casein
Casein is a basic product intended for industrial processing. To enable it to be produced, aid is granted so that
the proceeds from the sale of skimmed milk processed into casein are the same as those from the sale of skim­
med-milk powder. The amount of the aid is fixed by the management committee procedure.
2.2.5 . Special disposal measures for butterfats
The purpose of these measures is to facilitate the disposal of butter surpluses :
– either by granting aid for the use of butterfats in the manufacture of pastry products, ice cream and other
    foodstuffs to be determined ;
– or by granting a consumer subsidy for the armed forces, for non-profit-making organizations and for wel­
    fare recipients, or by subsidizing the consumption of butter (in the form of concentrated butter);
– or by other special measures.
2.2.6. Milk non-marketing and dairy herd conversion premiums
The aim of the former is to reduce deliveries of milk to dairies and to encourage the direct use of milk in feed.
The aim of the latter is to encourage farmers to go over from milk to beef production. These premiums were dis­
continued on 15 September 1980 and 1 April 1981 respectively. The period for non-marketing is five years and
that for conversion to beef production is four years.
The non-marketing and conversion premiums are calculated on the basis of the quantity of milk (or the equivalent
in milk products) delivered by the producer during the 12 calendar months preceding the month in which appli­
cation for the premium was made.
2.2.7 . Co-responsibility levy
 In order to improve the balance between production and consumption, producers pay a financial contribution
known as the ‘co-responsibility levy’ . The way in which the proceeds from the levy are used is decided by the
Commission after consultations with the trade. The levy is used to finance market development measures, pro­
 motion measures and publicity as a follow-up to market surveys and research on new products or is deducted
 from the overall expenditure on the milk sector. It also serves to finance certain disposal measures such as the
 distribution of milk in schools or the special disposal measures for butterfats.
 The levy is deemed to form part of the intervention arrangements designed to ensure stable agricultural markets.
 For 1984/85 the levy was fixed at 3 % of the target price for milk.
 For 1985 /86 the rate was again 2 %. The levy is not collected in mountain areas and is reduced by 0,5 % in less-
 favoured areas, subject to an annual maximum of 60 000 kg per producer. The same rates have been applied in
 1986/ 87 .
 ---pagebreak---  142                                        Preliminary draft general budget, 1989
For the 1988/89 milk year, it is proposed to maintain the rate of the co-responsibility levy at 2 %.
The aid for small-scale milk producers ( 120 million ECU) was discontinued as from 1986/87.
This measure was deemed to form part of the intervention arrangements designed to ensure stable agricultural
markets.
2.2.8 . Guarantee threshold
When fixing the annual prices, the Council also fixes a guarantee threshold for milk.
For the 1982 calendar year the guarantee threshold was fixed as the quantity of milk delivered to dairies in the
198 1 calendar year, plus 0,5 %.
If the quantities of milk delivered by Community producers exceed the guarantee threshold, the Council, acting
on a proposal from the Commission, adopts appropriate measures to offset the additional costs. As the guarantee
threshold was far exceeded for 1982, the Council decided that the 1983/84 prices should be increased by not more
than 2,33 %, subject to the guarantee threshold. The guarantee threshold for 1983 was fixed as the quantity
delivered to dairies in 1981 plus 1 %. Following the Commission proposals of July 1983, however, the Council
decided on a quota system to replace the guarantee threshold for a five-year period ( 1984/85 to 1988/89).
2.2.9. Additional levy scheme
In 1984, since the guarantee thresholds were proving ineffective in restoring the balance between supply and de­
mand in the milk sector, the Council introduced the additional levy scheme, the purpose of which is to curb the
growth of milk production whilst at the same time permitting the structural developments and adjustments re­
quired, having regard to the diversity of the situations obtaining in the various Member States, regions and collec­
tion areas in the Community. The levy applies to any quantity in excess of the reference quantities shared out
among the producers or the dairies.
The guaranteed overall quantity, including the Community reserve, for the 1984/85 and 1985/86 milk years was
99 917 million t ( ') and 99 47 1,574 million t(' ) respectively. For 1986/87, 1987/88 and 1988/89 the figures are
104 241,574 million t (2), 98 010,660 million t (3) and 95 414,445 million t (3) respectively.
The Community reserve of 393 000 1 is allocated as follows : 25 000 1 for Luxembourg ; 303 000 1 for Ireland ;
65 000 1 for Northern Ireland.
In the allocation of quantities added to the Community reserve, priority will be given to Ireland. During the tran­
sitional period of 1984/85 arrangements will be made to ensure that the quantities available to Ireland are not re­
duced in subsequent years.
The reference quantities of each Member State are shared out on a regional basis in accordance with Community
criteria and procedures, either among the producers or among the dairies. If the reference quantity is exceeded,
the penalty takes the form of a levy amounting to 100 % of the target price for milk, in accordance with the Coun­
cil decisions of 16 December.
The scheme also covers direct sales. If the quota is exceeded, a levy amounting to 100% of the target price
becomes payable with effect from the 1987/88 milk year.
Since the fall in production recorded in 1984 and 1985 had proved insufficient to restore balance to the milk mar­
ket, the Council decided on 16 December 1986 on a further reduction of the guaranteed overall quantities, to be
spread over 1987/88 and 1988/89.
On 16 December 1986 the Council reaffirmed its decision of April 1986 to reduce the quotas by 2 %. The reduction
will be achieved through a scheme whereby the voluntary cessation of milk production will be encouraged by
granting to farmers who discontinue production an annual allowance of 6 ECU per 100 kg for seven years. As
decided in April, if 2 % of the guaranteed overall quantities can be bought up by granting an allowance which
is lower than the abovementioned maximum amount, the remaining EAGGF funds may be used by the Member
States for restructuring purposes.
As from 1 April 1987 production will be further reduced by a temporary linear suspension of 4% of the quotas.
The EAGGF will grant compensation amounting to 10 ECU for each 100 kg by which annual production is re­
duced, for a period of two years.
Member States, if they so wish, may increase this amount by 2,5 ECU per 100 kg, chargeable to their national
budgets, but only for 1987/88. It has also been decided that production should be reduced by a further 2,5 % in
the 1988/89 milk year, the last year for which the present five-year quota system will be applicable. This will be
achieved by :
– an additional 1 % reduction in quotas, as decided in April 1986 ;
– a further temporary suspension of 1,5% of the quotas, similar to the 4% suspension to apply as from
     1987/88. This will be offset by an allowance of 10 ECU per 100 kg, for a period of two years.
(' ) EUR 10.
(2) EUR 12.
(3) Taking into account the temporary, across-the-board suspension of the quotas, which will total 4 153,943 million t in
     1987/ 88 and 5 711,672 million t in 1988/89.
 ---pagebreak---                                            Preliminary draft general budget, 1989                                        143
The validity of the derogation whereby Member States may allocate unused reference quantities to producers
or buyers in the same region or, if need be, in other regions and which applied during the first three years of the
quota system has been extended until the present system comes to an end ( 1988/89). Formula B, whereby the
levies on quantities exceeding the reference quantity are paid by the purchasers (dairies), has also been main­
tained.
Once the unused quotas have been reallocated , any excess production will entail a penalty at the full rate of the
Community levy, falling directly on the producer responsible. It is estimated that this measure will have an effect
equivalent to a 1 % cutback in production.
2.3 . Prices and aids fixed
                                                                                                                     (ECU/t)
                                                                                         1987 / 88          1988 / 89
Prices
Target price for milk                                                                        278,4              278,4
Intervention price
– skimmed-milk powder ( EUR 10)                                                            1 740,4            1 740,4
                            (Spain)                                                        2 319,6            2 260,4
– butter (EUR 10)                                                                          3 132,0            3 132,0
             (Spain)                                                                       3 436,0            3 391,3
– cheese :
     – Grana padano 30–60 days                                                             3 889,3            3 889,3
     – Grana padano 6 months                                                               4 803,3            4 803,3
     – Parmigiano-Reggiano 6 months                                                        5 291,9            5 219,9
Threshold price
– skimmed-milk powder                                                                      1 955,7            1 955,7
– butter                                                                                   3 510,1            3 510,1
Aid
– for skimmed-milk powder – calves                                                        600-900         '  600-900
                                 – other                                                         –                  –
– for liquid skimmed milk        – calves                                                     72,7                56,9
                                 – other                                                     110,0                  –
– for casein                                                                                  93,0                73,9
– for school milk                                                                            348,0              348,0
Premiums
– for the definitive cessation of milk production                                             60,0                60,0
– for the temporary suspension of quotas                                                     100,0              100,0
3. Appropriations for 1989
3.1 . Trend of appropriations
                                                                                                              (million ECU)
      Item /                                                                          1987            1988        1989
     Article
                                             Heading                                                            estimate
                                                                                  expenditure       approps
         a                                       b                                     c               d            e
      2000       Refunds on butter and butteroil                                     579,2           475         467
      2001       Refunds on skimmed-milk powder                                      310,6           352         289
      2002       Refunds on cheese                                                   366,6           477         436
      2003       Refunds on other milk products                                    1 001,5         1 115       1 023
      200        Refunds on milk and milk products                                 2 257,9         2 419       2 215
 ---pagebreak---  144                                           Preliminary draft general budget, 1989
Continued
                                                                                                                                 (million ECU)
       Item /                                                                                         1987            1988           1989
                                                   Heading
      Article                                                                                     expenditure      approps         estimate
          a                                           b                                                 c               d              e
       2010       Private storage of skimmed-milk powder                                                0                8            p.m .
       2011       Technical costs of public storage                                                    12,9            10               2
       2012       Financial costs of public storage                                                    71,3            50               3
       2013       Other public storage costs                                                          160,2        - 38            - 12
       2014       Depreciation of stocks                                                                –
                                                                                                                       p.m .          23
       201        Intervention storage of skimmed-milk powder                                         244,4            30              16
       2020       Aid for skimmed-milk powder for use as feed for calves                              850,6          950             639
       2021       Aid for liquid skimmed milk for use as feed for calves                              105,9          124             103
       2022       Aid for skimmed-milk powder for use as feed for animals other
                  than calves                                                                           0              p.m .          p.m .
       2023       Aid for liquid skimmed milk for use as feed for animals other
                  than calves                                                                         206,6            27             p.m .
       2024       Aid for skimmed milk processed into casein                                          579,9          534             448
       2025       Aid for skimmed-milk powder with a fat content between 9 %
                  and 1 1 % for use as feed for calves                                                  0              p.m .          p.m .
       2029       Other aid                                                                             0              p.m .          p.m .
       202        Aid for skimmed milk                                                              1 743,0        1635            1 140
       2030       Private storage of butter                                                            30,8            67 '           58
       2031       Technical costs of public storage                                                   104,8            66             27
       2032       Financial costs of public storage                                                   220,0          289             182
       2033       Other storage costs                                                                 350,0          202              52
       2034       Depreciation of butter stocks                                                         0            135             171
       203        Intervention storage of butter and cream                                            705,5          759            490
       2040 ,     Aid for butter consumption and for recipients of welfare
                  benefits                                                                              4,8            58             60
       2049       Other measures                                                                      247,7          321             325
       204        Other measures relating to butterfat                                                252,5          379             385
       2050       Storage of cheese                                                                    77,2            80             86
       2059       Other intervention                                                                    0              p.m .          p.m .
       205        Intervention for other milk products                                                 77,2            80              86
       2060       Financial contribution by the Guarantee Section to
                  non-marketing an conversion premiums                                                 p.m .           p.m .          p.m .
       2061       School milk                                                                         193,4          149             159
       2062       Market development measures                                                          40,7            31             44
       2063       Improvement of milk quality                                                            5,2             2              1
       2064       Other measures under the programme to expand the market for
                  milk products                                                                         0,6            p.m .          p.m .
       2066       Premium for the definitive cessation of milk production                              71,0          259             212
       2067       Compensation for the temporary suspension of quotas                                   –            415             574
       2069       Other measures                                                                       p.m .           p.m .          p.m .
       206         Other measures in the milk and milk products sector                                310,9          856             990
       2070       Linear levy                                                                     - 447,6         - 496          - 522
       2071       Additional levy                                                                 - 153,7              p.m .          p.m .
       207        Financial contribution by producers                                             - 601,3         - 496          - 522
       208        Measures on behalf of small-scale producers                                          23,0           p.m .           p.m .
       20                                        Milk and milk products sector – Total             5 013,0         5 662 ( ‘ )    4 850
                  Expenditure in the milk sector as a % of total EAGGF
                  Guarantee Section expenditure                                                        21,8            19,7            17,2
( ' ) Excluding 300 million ECU entered in Title 8 for the depreciation of old butter stocks. If this sum is included, the percentage becomes
      20,7 %.
 ---pagebreak---                                          Preliminary draft general budget, 1989                                 145
                                         CHAPTER 21 - BEEF/ VEAL
The common organization is governed by the basic Regulation (EEC) No 805/68 of 28 June 1968 , as last amen­
ded by Regulation ( EEC) No 3905/87.
It covers the following products :
– live animals : bovine animals of less than 300 kg and adult bovine animals, whether pure-bred breeding
     animals or not,
– meat: meat, fresh, chilled or frozen, other,
– processed products : other preparations and preserves of meat or offal , cooked or uncooked,
– offal.
The marketing year runs from the first Monday in April to the end of the previous day of the following year.
In 1987 , expenditure on beef/veal accounted for some 9,4% of total EAGGF Guarantee spending ( 15,7% in
1986).
1 . Economic background
The Community ranks second behind the United States in the production of beef/veal , which accounts for some
14 % of the value of final production. In 1984, total production in the Community of Twelve increased by 7,2 %
compared with 1983 , mainly as a result of the slaughterings attendant on the application of the system of milk
quotas. In the years that followed ( 1985-87), the production of beef/veal held steady at about 8 million t.
The economic situation having improved somewhat from 1983 onwards, beef/veal consumption showed a rise
of about 5% until 1986. Consumption in 1987 is estimated at about 7,5 – 7,6 million t for the Community of
Twelve.
The rate of self-sufficiency has exceeded 100% since 1979 (about 106,0% in 1986 and 1987).
As regards trade, the EEC imported about 490 000 1 of beef/veal in 1987 and exported some 901 000 1, leaving
a surplus balance of about 420 000 1.
2 . Operation of the market
2.1 . Price arrangements
Every year the Council fixes two categories of prices :
(a) The guide price : The guide price is fixed for adult bovine animals in the light of the outlook for production
and consumption, of the situation of the milk and milk products market and of past experience. It is the desirable
average price on the Community market for all quantities marketed during the marketing year. The guide price
and the Community market price are used as a reference to determine the relevant import levies.
(b) The intervention price : This is the price (344 ECU/ 100 kg carcase weight for R3 adult male bovine animals)
which determines support for the market in beef/veal.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
Imports are governed by very specific rules according to product. The principle is that a customs duty and a levy
are charged related to the guide price and the market price. There are two exemptions :
– the scarcity clause, which restricts or abolishes customs duties and levies ;
– the protective clause, which provides for restrictions on imports.
There are also special schemes in certain fields.
Community exports may attract a refund – which may be varied according to intended use/destination – offset­
ting the difference between world prices and Community prices.
2.2.2. Storage
 Buying-in and subsequent operations : Under the intervention system set up in 1972, intervention agencies can buy
in categories and qualities of meat the market price of which fails to reach a certain percentage of the derived
intervention price for these categories.
 ---pagebreak---  146                                    Preliminary draft general budget, 1989
The Council has decided (Regulation 467/87) that intervention will be opened by reference to the following cri­
teria :
(a) the average market price in the Community for the quality or group of qualities concerned must be
     below 91 % of the corresponding intervention price ;
(b) the average market price nationally for the quality or group of qualities concerned must be below 87 % of
     the corresponding intervention price.
The buying-in price is the weighted average of market prices in the Member States where meat is bought in.
Aidfor private storage: Aid of this kind permits more flexible intervention according to the quantities and quali­
ties meeting market requirements and may be paid when the market price falls below a certain percentage of the
guide price.
2.2.3 . Premium system
In parallel with the changes to the intervention system the Council decided on a temporary system of premiums
valid from 6 April 1987 to 31 December 1988 . These premiums should help to offset the effect of the adjustments
to the intervention system on producers’ incomes.
Premium for suckler cows (Régulation (EEC) No 1357/80)
The aim of this premium is to ensure a reasonable income for stockfarmers while preventing any substantial
increase in the disposal price of beef/veal compared with other competing meats. To claim the premium, each
farmer must show that he delivers no milk or milk products from the holding operated on the day he files the
application. The premium for 1987/88 has been raised to 25 ECU/head, chargeable to the EAGGF Guarantee
Section. The Member States may pay an additional premium, not exceeding 25 ECU/cow, of which 20 ECU are
chargeable to the EAGGF Guarantee Section when paid in Ireland, Northern Ireland and Greece.
Spécial premium (Régulation (EEC) No 467/87
This premium is fixed at 25 ECU per head and may be paid for male animals reared to adulthood once during
the life of the animal or at slaughter. It is paid for a maximum of 50 head per holding. This premium may not
be paid in the Member States which qualify for the calf premium or the premium for the slaughter of adult bovine
animals, with the exception of Ireland where 18 ECU per head may be paid.
Calfpremium (Régulation (EEC) No 1064/84)                                           \
The aim of this premium is to restore market stability. It is granted to producers in the Member States for any
calf born in the relevant Member State during a 12-month period and still alive six months later. The premium
is being operated in Italy, Ireland and Northern Ireland.
The amount is fixed at 9 ECU per calf and is chargeable to the EAGGF Guarantee Section.
Premium for the slaughter of adult bovine animals (Regulation (EEC) No 1063/84)
This premium is designed to ensure for farmers an adequate price at market for male adult bovine animals and
heifers. The scheme is operated only in the United Kingdom.
On average, it may not exceed the difference between 85 % of the guide price and the market price in the Member
State concerned. Not more than 40 % of premiums actually paid can be claimed from the EAGGF Guarantee
Section.                                                                    i
2.2.4. Community scale for the classification of carcases of adult bovine animals (Regulation (EEC) No 1208/81 )
This Regulation standardizes the classification of carcases in the Community. Market prices are recorded on the
basis of the classification, in carcase weight at the slaughterhouse and expressed according to the reference pre­
sentation established by the Regulation. By Regulation (EEC) No 869/84 the Council decided that intervention
measures for carcases of adult bovine animals were to be applied on the basis of the Community scale from
9 April 1984. It has enabled a single buying-in price to be fixed for each quality of fresh or chilled meat eligible
for intervention .
 ---pagebreak---                                                                                                 f
                                                 Preliminary draft general budget, 1989                                                          147
2.3 . Prices and premiums
                                                                                                          1987 / 88                1988 / 89
                                                                                                    ECU/t                      ECU/t
Guide price
– adult bovine animals (live weight) ( EUR 10)                                    '                     2 050,2                  2 050,2
Intervention price
– adult bovine animals (dead weight) ( EUR 10)                                                          3 440                    3 440
                                                                                                  ECU/head                  ECU/head
Premium for suckler cows                                                                                    25                       25
Additional premium for suckler cows                                                                         20                       20
Special premium                                                                                             25                       25
Special premium ( Ireland)                                                                                  18                       18
Calf premium                                                                                                 9                        9
Premium for the slaughter of adult bovine animals                                                           65 (>)                   65 0
( ' ) Maximum amount, of which 40 % chargeable to the EAGGF.
3. Appropriations for 1989
3.1 . Trend of appropriations
                                                                                                                                     (million ECU)
      Item /                                                                                           1987             1988              1989
                                     ,              Heading                                                                            estimate
      Article                                                                                     expenditure         approps
         a                                             b                                                 c                d                 e
       210          Refunds on beef/veal                                                             877,9          1 303            1 243
      2110          Private storage                                                                   66,3            141               110
      2111          Technical costs of public storage                                                129,8            105               112
      2112          Financial costs of public storage                                                 83,1             73                60
      2113          Other public storage costs                                                       771,1            605              239
      2114          Depreciation of beef stocks                                                         0             140              388
       211          Intervention storage                                                           1 050,3          1 064               909
       2120         Premiums for suckler cows                                                         62,0            173               190
       2121         Special premium                                                                   73,8            178               122
       2122         Calf premiums                                                                     19,4             36                33
       2123         Premiums for the slaughter of adult cattle other than cows                        65,2             71                26
       2129         Other intervention                                                                  0                p.m .             p.m .
       212          Intervention other than storage of beef                                          220,4            458               371
       21                                                     Beef and veal sector – Total        2 148,7           2 825 C )        2 523
                    Sector as a % of total EAGGF Guarantee Section expenditure                          9,4              9,8               9,0
 (*) If Title 8 is made to include 190 million ECU in respect of the depreciation of old stocks of beef the figure rises to 10,5 %.
 ---pagebreak---  148                                       Preliminary draft general budget, 1989
                             CHAPTER 22 - SHEEPMEAT AND GOATMEAT
The market organization for sheepmeat and goatmeat is governed by the basic Council Regulation (EEC)
No 1837/80 of 27 June 1980, as last amended by Regulation (EEC) No 3908/87 of 22 December 1987.
The products covered are the following :
– live animals : sheep and goats whether or not pure-bred,
– meat: fresh, chilled or frozen ,
– processed products: meat and offal of sheep and goats, salted, dried or smoked, other,
– offal.
The marketing year runs from the first Monday in January to the end of the previous day of the following year.
Expenditure in this sector accounted in 1987 for 2,5 % of total EAGGF Guarantee expenditure.
1 . Economie background
The gross Community production of sheep- and goatmeat in 1986 was 947 000 1 (EUR 12), i.e. an increase on the
1985 figure. The long-term trend has been upward since 1970. Production is expected to rise by about 6,1 % in
1987. The number of sheep is about 90 million ( EUR 12 ; EUR 10 : 63 million). The Community is the world’s se­
cond largest producer, the largest being the USSR.
In 1986 Community consumption was 1 182 000 1 (EUR 12). The long-term trend is upward in all Member States
except the United Kingdom and Ireland, where it is steady.
The degree of self-sufficiency is at present about 81 % (EUR 12).
As regards trade in 1986, the EEC imported 248 000 1 of sheepmeat, in particular from New Zealand ; its exports
were just under 4 500 1. In 1987, the quantities imported should be slightly less than in 1986.
2. Operation of the market in sheepmeat
2.1 . Price arrangements
Every year the Council fixes three types of price :
(a) Basic price : The basic price is fixed for fresh or chilled sheep carcases. It is the same for the entire Community.
(b) Intervention price : This is 85 % of the basic price. Intervention is decided upon in accordance with the proce­
dure of the Management Committee when several conditions are met. There is no intervention in Great Britain
(Region 5).
(c) Derived intervention price, applicable in Ireland (Region 4).
The basic price and the intervention prices are seasonally adjusted by the Council on a proposal from the Com­
mission, to take account of seasonal variations on this market.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
The arrangements for imports vary according to the product imported. For some products, i.e. offal, the CCT
duties are chargeable.
For others, i.e. live animals other than pure-bred breeding animals, and meat, chilled or frozen, imports attract
a levy. The levy matches the difference between the basic price, seasonally-adjusted, and the Community free-
at-frontier price established on the basis of the most representative purchasing possibilities, as regards quality
and quantity, recorded during a period to be fixed, preceding the determination of the levy.
However, for products bound under GATT, i.e. fresh and frozen meat, the levies may not exceed the amount
bound (20 % ad valorem).
A special levy may be fixed for products originating in or coming from one or more non-member countries, if
such exports are effected at abnormally low prices. In practice however, under voluntary restraint arrangements
concluded with the main non-member supplier countries ( 13 countries), the levy may not exceed 10 % ad valorem .
 ---pagebreak---                                           Preliminary draft general budget, 1989                                   149
Exports of sheepmeat may, where necessary, attract a refund matching the difference between the prices of the
products on the world market and those in the Community. It may be varied according to intended use/destina­
tion. Thus far, the instrument in question has not been applied.
2.2.2 . Storage
Private storage: Aid for private storage may be granted whenever the Community market price falls below 90 %
of the seasonally-adjusted basic price and is expected to remain at this level.
Public storage: Whenever, between 15 July and 15 December, the Community market price is the same as or less
than the seasonally-adjusted intervention price and at the same time the price recorded on the representative mar­
kets of a given region is equal to or below the seasonally-adjusted intervention price, the intervention agencies
buy in sheepmeat where one or more Member States so request.
If a serious situation arises during the period between 16 December and 14 July necessitating market support,
sheepmeat may be bought in during this period as well.
2.2.3 . Premiums
(a) Ewe and goat premium . The Community is divided into seven regions. Taking into account any change in mar­
ket prices in each relevant region, losses of income are estimated at the end of the marketing year. The loss of in­
come represents any difference between the basic price and the arithmetical mean of the market prices recorded
during the marketing year.
The amount of the premium payable per ewe is obtained by multiplying the loss of income referred to above by
the normal average annual production of lamb per ewe for each region.
An advance payment may be made to farmers in less-favoured agricultural areas. The balance is set at the end
of the year, to take account of real changes in market prices and to ensure that the premium actually paid corre­
sponds to the actual loss of income.
From the 1986 marketing year and in certain well demarcated Community regions, the grant of the ewe premium
has been extended to two categories of animals, i.e. to certain females of hardy sheep breeds, other than ewes,
and to goats. The unit amount in this case corresponds to 80 % of the ewe premium.
(b) Variable slaughter premium : The United Kingdom can grant a sheep slaughter premium in Region 5 (Great
Britain), whenever the prices on the representative market or markets of that region are below a ‘guide level’ cor­
responding to 85 % of the basic price. The guide level is seasonally adjusted every week in the same way as the in­
tervention prices and the basic price. The variable slaughter premium , equal to the difference, is paid in respect
of sheep certified as having been marketed during the week concerned.
Where the premium has been paid, an equivalent amount is charged on exports leaving that region (‘clawback’).
Products exported to non-member countries are excluded from clawback until the end of 1988 .
Where the variable-premium arrangements are applied, the weighted average of the variable premiums actually
granted is deducted from the loss of income.
2.3 . Prices fixed
                                                                                                               (ECU/I)
                                                                   -                1987 / 88         1988 / 89
Single basic price (EUR 12)                                                           4 323,2           4 323,2
Intervention price                                                                    3 674,7           3 674,7
Derived intervention price (applicable in Ireland)                                    3 476,6           3 476,6
 ---pagebreak--- 150                                          Preliminary draft general budget, 1989
3. Appropriations for 1989
3.1 . Trend of appropriations
                                                                                                           (million ECU)
      Item /                                                                           1987         1988       1989
                                               Heading
     Article                                                                        expenditure   approps    estimate
         a                                         b                                     c            d          e
      220       Refunds on sheepmeat and goatmeat                                       0            p.m .      p.m .
      2210     Premiums                                                               573,8     1 000      1 210
      2211     Storage                                                                 p.m .         p.m .      3
      2219     Other intervention                                                       0            p.m .      p.m .
      221       Intervention in respect of sheepmeat and goatmeat                     573,8     1 000      / 213
      22                                     Sheepmeat and goatmeat sector – Total    573,8     1 000      1 213
               Sector as a % of total EAGGF Guarantee Section expenditure               2,5          3,5        4,3
 ---pagebreak---                                              Preliminary draft general budget, 1989                                              151
                                               CHAPTER 23 - PIGMEAT
The pigmeat market organization is governed by the basic Regulation (EEC) No 2759/75 , which entered into
force on 1 November 1975 , as last amended by Regulation (EEC) No 3906/87.
The products covered are :
– live animals, other than pure-bred pigs for breeding,
– méat, offal, bacon and fats,
– processed products : préserves, sausages, etc.
The marketing year runs from 1 November to 31 October.
Expenditure in this sector varies around 1 % of total EAGGF Guarantee expenditure (0,7 % in 1987).
1 . Economic background(')
In 1987, about 12,5 million t of pigmeat was produced in the EEC, an increase of 1,4 % on the previous year. De­
spite fairly low pigmeat prices, production remained profitable for most of the year thanks to a fall in feed prices.
The number of pigs was 103,2 million in August 1987.
Overall self-sufficiency in 1987 was 102,8 %, but varied widely from Member State to Member State.
As for trade with non-member countries, imports are estimated at 92 000 1 in 1987 (– 30%) and exports at
442 000 1 ( + 22%), including offal and lard.
Despite the dollar’s weakness, which was offset by a series of increases in export refunds during the year in
question, exports were up in 1987. There was a further downturn in imports, however, because of the less
attractive prices prevailing on the internal market.
2. Operation of the market
2.1 . Price arrangements
The pigmeat market organization has three prices :
(a) The basic price .- This price is fixed every year by the Council, in the light of the sluice-gate price and the levy
applicable in the three-month period beginning on 1 August of each year and of the need for a price at a level
such as to help ensure stable prices on the markets without engendering structural surpluses in the Community.
(b) The buying-in price : This price is derived directly from the basic price (between 78 and 92 % of the latter for
carcases of standard quality). When intervention purchasing is in operation the intervention agencies buy in at
this price. It is fixed by the Commission by the management committee procedure. There has been no intervention
purchasing since 1971 .
(c) The sluice-gate price: This price is calculated for each three-month period by the Commission and corresponds
to cost prices in non-member countries. It is based on world market feed prices and on the other costs of produc­
tion .
The sluice-gate price is used for the calculation of the additional amounts which may be charged on imports.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
Imports attract a levy which depends primarily on the difference between the world market price and the Com­
munity market price of the quantity of feed grain necessary for the production of 1 kg of pigmeat in the EEC.
For products bound under GATT, the levies may not exceed the limit agreed.
Whenever imports from non-member countries are offered at a price below the sluice-gate price, an additional
amount may be added to the levy. The increased levy is applicable to the relevant product and to the non-member
country concerned .
( ' ) With the exception of Portugal , which keeps its national market organization for pigmeat during the first stage of the tran¬
      sitional period .
 ---pagebreak---  152                                      Preliminary draft general budget, 1989
 Exports qualify for a refund fixed, for each product, uniformly throughout the Community but which may be
varied according to intended use/destination. The refund is based on the difference between the world market
price and the Community price.
2.2.2. Storage
 Buying-in – Public storage: Pigmeat may be bought in whenever the Community market price for carcases, esta­
blished on the basis of prices recorded in each Member State on the EEC representative markets and weighted by
coefficients expressing the relative size of the pig herds of each Member State, is below 103 % of the basic price
and is likely to remain at this level.
When intervention purchasing is in operation the intervention agencies buy in at the buying-in price referred to
under 2.1 .
Aid to private j/orage . This is the commonest kind of intervention , because of its greater flexibility.
The aid is fixed :
– either by tendering procedure,
– or at a flat rate in advance.
Normally it may not exceed an amount corresponding to the costs which would be involved in storage under
public intervention arrangements. It always allows for storage costs, normal quality loss and, as far as possible,
the foreseeable increase in the price of the product.
2.3 . Price fixed
                                                                                                                  (ECU/t)
                                                                                       1987 / 88         1988 / 89
Basic price (slaughter weight) ( EUR 12)                                                 2 033,3           2 033,3
3. Appropriations for 1989
3.1 . Trend of appropriations
                                                                                                           (million ECU)
      Item /                                                                        1987           1988         1989
     Article
                                            Heading                                                          estimate
                                                                                 expenditure     approps
         a                                      b                                     c              d            e
      230        Refunds on pigmeat                                               111,5          125         177
      231        Intervention for pigmeat                                           47,1          58           51
      23                                                 Pigmeat sector – Total    158,6         183         228
                Sector as a % of total EAGGF Guarantee Section expenditure           0,7            0,6          0,8
 ---pagebreak---                                         Preliminary draft general budget, 1989                                153
                                   CHAPTER 24 – EGGS AND POULTRY
The egg market organization is governed by Regulation (EEC) No 2771 /75, which entered into force on 1 No­
vember 1975, as last amended by Regulation (EEC) No 4000/87.
The poultry market organization is governed by Regulation (EEC) No 2777/75, which entered into force on
 1 November 1975, as last amended by Regulation (EEC) No 3907/87.
The products covered are as follows :
– eggs: eggs in shell ; eggs not in shell and egg yolks, liquid, frozen or dried ;
– poultry : live, dead and offal, poultry liver, poultry fat, other preparations.
There is no marketing year for eggs or poultry.
In the past, expenditure on eggs and poultry has remained below 1 % of total EAGGF Guarantee spending (0,7 %
in 1987).
1 . Economie background
1.1 . Eggs
In 1986, Community production of eggs totalled 4,93 million t, 0,4% more than in 1985 .
Human consumption fell by about 0,9 % in 1986, to a figure of 4,55 million t.
The degree of self-sufficiency was 101,9 % in 1986 (+ 0,3 %).
As regards trade, the EEC exported 137 000 1 of eggs and imported 45 000 1 in 1986 (including egg products ex­
pressed in terms of eggs in shell).
1.2. Poultry
In 1986, the Community of Twelve’s gross internal production of poultrymeat was 5,45 million t ( + 3,3 % com­
pared with 1985).
Consumption increased by 2,4% to a figure of 5,17 million t.
The degree of self-sufficiency in 1986 was 104,4% (+ 0,1 %).
As regards trade, imports in 1986 fell by 20 % (68 000 1) (Chernobyl effect). Exports were also down 1 % on 1985,
to a tonnage of 329 000 1.
2. Operation of the market
2.1 . Price arrangements
The common organization for eggs and poultry is very flexible. There are no guaranteed prices but only a set
of measures designed to improve the organization of production, processing and outlets and to achieve an im­
provement in quality and forecasts. There are no arrangements for intervention.
There is, however, a sluice-gate price, fixed in advance for each quarter by the Commission by the management
committee procedure. The sluice-gate price corresponds to the cost of production in non-member countries and
is made up of:
– an amount equal to the world market price of the quantity of feed grain needed for the production in
     non-member countries of 1 kg of the relevant product ;
– a standard amount expressing the other feed costs and general production and marketing overheads.
2.2. Spécifie market instruments
2.2.1 . Import and export arrangements
Imports of eggs and poultry attract a levy fixed in advance for each quarter. The levy is made up of:
 – a component matching the difference between Community prices and world prices of the quantity of
     feed grain needed to produce 1 kg of the relevant product ;
 – a component of 7 % of the average sluice-gate prices for the four quarters preceding 1 May of each year.
Where, for a given product, the free-at-frontier offer price falls below the sluice-gate price, the levy may be
increased by an additional amount equal to the difference between the sluice-gate price and the offer price.
 Exports may qualify for refunds, which may be varied according to intended use/destination.
 ---pagebreak--- 154                                     Preliminary draft general budget, 1989
3. Appropriations for 1989
3.1 . Trend of appropriations
                                                                                                   (million ECU)
      Item /                                                                      1987       1988      1989
                                          Heading
     Article                                                                   expenditure approps   estimate
         a                                    b                                     c          d         e
    . 240       Refunds on eggs                                                   29.1      41         48
      241       Refunds on poullrymeal                                           122,9     137       174
      24                                   Eggs and poultrymeat sector – Total   152,0     178       222
               Sector as a % of total EAGGF Guarantee Section expenditure          0,7        0,6       0,8
 ---pagebreak---                                          Preliminary draft general budget, 1989                                 155
                           CHAPTER 25 - REFUNDS ON CERTAIN GOODS
                            OBTAINED BY PROCESSING AGRICULTURAL
                                                    PRODUCTS
A. ARTICLE 250 - ADJUSTED REFUNDS ON CEREALS EXPORTED IN THE FORM OF CERTAIN
                        SPIRITUOUS BEVERAGES
These refunds are covered by Regulations (EEC) Nos 1187/81 , 1188/81 and 3496/81 .
Under Protocol 19 to the 1972 Act of Accession , refunds were to be granted for cereals used in the manufacture
of certain spirituous beverages for export. A decision on this subject was taken only in 1981 .
The products covered are :
– spirituous beverages (in general) made from cereals, such as gin, vodka, liqueurs made from such bev­
    erages, etc.; they are dealt with in Regulation ( EEC) No 1187/81 , amending Regulation ( EEC) No 2727 /75
    (market organization for cereals), and Regulation (EEC) No 3496/81 , amending Regulation (EEC)
     No 3033 /80 (refunds for non-Annex II products);
– Scotch whisky and Irish whiskey : Regulation (EEC) No 1188/81 also provides for ‘adjusted’ rules on the
    granting of refunds for cereals exported in the form of spirituous beverages requiring at least three years for
    ageing as a necessary part of the manufacturing process. These special rules are necessary because of the
    widespread practice of blending products of different cereals, distillers and ages. For such products, the re­
    fund applies to the quantity of cereals placed under control by claimants, adjusted by a coefficient fixed an­
    nually for each Member State concerned and applicable to each applicant for refund. The coefficient repre­
    sents the relationship between the total quantity of the beverage exported and the total quantity which is mar­
    keted.
    The rate of the refund is the rate valid on the day when the cereals are placed under control. The refund can
    be withheld for exports to certain destinations where the world market situation or the requirements of parti­
    cular markets make this necessary .
Expenditure in 1987 accounted for 0,2% of total EAGGF Guarantee spending.
B. ARTICLE 251 -        REFUNDS ON CERTAIN GOODS OBTAINED BY PROCESSING AGRICULTURAL
                        PRODUCTS
This scheme is currently governed by Regulation ( EEC) No 3033 /80 and has applied since 1 July 1969.
The products covered are those in the manufacture of which one or more basic products (milk, cereals, butter,
sugar) have been used, either processed or unprocessed.
Expenditure in 1987 was 2,4% of total EAGGF Guarantee Section spending.
1 . Operation of the market                                                                                 N
By way of exception to Article 38 of the Treaty establishing the European Communities, certain goods which
are not listed in Annex II to the Treaty, and in the manufacture of which basic products have been used, may
be made subject to the system of trade applying to those products.
The Council , acting on a proposal from the Commission, determines for each of these goods :
– the type and nature of the basic products on which to base the calculation of the variable component in
    the import levy ;
– the quantity of each basic product deemed to have been used in the manufacturing process.
2 . External trade arrangements
Duty is charged on imports of each of these goods in accordance with the CCT, this duty being composed of:
– an ad valorem duty as the fixed component ;
– a variable component designed to cover, in respect of the quantities of basic products deemed to have
     been used in the manufacturing process, the difference between prices for these products in the Community
     and prices for imports of these products from non-Community countries, provided that the total cost of the
     quantities of basic products deemed to have been used is higher in the Community.
 ---pagebreak--- 156                                     Preliminary draft general budget, 1989
Processed products are eligible, upon export, for a refund based on :
– their composition in terms of basic products ;
– the rates of refund or levy applicable to each of the basic products.
C. APPROPRIATIONS FOR 1989 UNDER CHAPTER 25
                                                                                                    (million ECU)
    Item /                                                                         1987       1988      1989
                                          Heading
    Article                                                                     expenditure approps   estimate
       a                                      b                                      c          d         e
    250      Adjusted refunds on cereals exported in the form of certain
             spirituous beverages                                                  49,5      51         58
    251      Refunds on certain goods obtained by processing agricultural
             products                                                             540,8     546       616
    25                                               Processed products – Total   590,3     597       674
             Sector as a % of total EAGGF Guarantee Section expenditure             2,6        2,1       2,4
 ---pagebreak---                                         Preliminary draft general budget, 1989                                   157
                   CHAPTER 27 - ACCESSION MONETARY COMPENSATORY
                              AMOUNTS IN INTRA-COMMUNITY TRADE
1 . References
Articles 72 and 240 of the Act of Accession of Spain and Portugal .
2 . Description
Prices in new Member States are aligned with those in the rest of the Community over a period of several years.
In the interim period, a system of accession compensatory amounts serves to offset the differences in price levels.
Compensatory amounts are granted in respect of exports from the pre-enlargement Community to a new Mem­
ber State and charged on imports, the revenue accruing as own resources.
In trade between new Member States and non-member countries , levies and refunds are reduced or increased ,
as appropriate, by the accession compensatory amounts.
The appropriation of 45 million ECU for 1989 concerns accession compensatory amounts relating to the acces­
sion of Portugal and Spain. Price alignment will be spread over seven to ten years depending on the product.
 ---pagebreak---  158                                       Preliminary draft general budget, 1989
                              CHAPTER 28 – MONETARY COMPENSATORY
                                 AMOUNTS LEVIED OR PAID IN TRADE IN
                                          AGRICULTURAL PRODUCTS
1 . References
Regulation (EEC) No 974/71 , repealed and superseded by Regulation (EEC) No 1889/87.
2. Principles of the agri-monetary system
Chapter 28 provides an opportunity for an overview of the agri-monetary system and its impact on the Com­
munity budget.
The agri-monetary system is based on the ‘green rates’, the purpose of which is to prevent the consequences of
a currency realignment being passed on directly to agricultural prices expressed in national currency.
If it were not thus possible to use a conversion rate other than the central rate for agricultural trade, any revalua­
tion of a national currency against the ECU would immediately lead to a fall in agricultural prices in the national
currency of the country concerned. Conversely, any devaluation of a national currency against the ECU would
lead to prices expressed in that currency rising.
The agri-monetary system is reflected in the budget in the following forms :
– monetary compensatory amounts (MCAs), most expenditure on which is covered by Chapter 28 ;
– the ‘dual rate coefficient’, which shows up within each budget heading for EAGGF Guarantee expendi­
     ture ;
– refunds (EAGGF Guarantee Section) and levies (own resources).
3. Monetary compensatory amounts
3.1 . General principles
The system provides that :
– those Member States whose currencies have appreciated against the ECU value of their agricultural con­
     version or green rate (the exchange rate used for the purposes of the CAP) may charge monetary compensatory
     amounts on imports and grant monetary compensatory amounts on exports (‘positive’ MCAs);
– those Member States whose currencies have depreciated against the ECU value of their agricultural con­
     version or green rate are allowed to grant monetary compensatory amounts on imports and charge monetary
     compensatory amounts on exports (‘negative’ MCAs).
The compensatory amount granted or charged depends on :
(a) the price of the product (generally based on the intervention price);
(b) the percentage appréciation or dépréciation of the relevant currency.
For the currencies which participate fully in the European Monetary System and which therefore are main­
tained within 2,25 % of each other at any one time, this percentage is measured by the difference between the
representative rate and the central rate ; consequently, it remains unchanged until such time as a decision is taken
either :
– to change the representative rate,
     or
– to dévalué or revalue the central rates.
For the lira, sterling, the drachma, the peseta and the escudo, the percentage appreciation or depreciation is
determined by reference to changes in spot exchange rates. It is reviewed each week and readjusted if there has
been a change in relation to the preceding week’s percentage of not less than 1 percentage point.
But, for all currencies, a neutral margin (franchise) is subtracted from the percentage differences (real monetary
gaps), as follows : 1,5 percentage points for all Member States and all sectors, with the exception of the Nether­
lands ( 1 ,0 point) ; 5 percentage points for wine, eggs and poultrymeat ; 1 0,0 percentage points for olive oil .
The result obtained represents the ‘applied monetary gap’. If this result is equal to or less than 0,50 but more than
0, the applied monetary gap is 0. If it is equal to or less than 1 but more than 0,50, the applied monetary gap is 1 .
 ---pagebreak---                                          Preliminary draft general budget, 1989                                 159
Since 1984/85 , the central rates used for calculating MCAs have been multiplied by a correcting factor (see tem­
porary switch-over system below) ;
(c) export or import flows, in terms of quantity.
MCAs apply to products eligible for intervention, the so-called ‘basic products’. The MCAs on ‘derived prod-
ucts’ are the same as if MCAs had been applied to the price of the basic product from which they are derived.
3.2 . Switch-over system
The Council has made the arrangements necessary to ensure that with effect from 1987/88 changes in currency
parities can in no circumstances entail the creation of fixed positive MCAs.
For this purpose the MCAs are no longer to be calculated on the gap between the green rate and the central rate,
buy on that between the green rate and the central rate multiplied by a correcting factor. The latter rate is often
called the ‘green central rate’, as it applies only for the purposes of the CAP. The conversion of positive MCAs
into negative ones as a result of the new system is called the ‘switch-over’ ; MCAs thus created are called
‘transferred negative MCAs’.
The creation of new positive MCAs when currencies are realigned is avoided by increasing common prices by
the amount by which the currency which is revalued most rises against the ECU. For the weaker currencies, the
increase in common prices as expressed in national currency will emerge as and when that part of the transferred
negative MCAs due to the switch-over is dismantled.
With effect from 1 July 1987, strict rules have been applied on MCA dismantling. The system provides for the
automatic dismantling of newly-created MCAs. Transferred negative MCAs created during the marketing year
are dismantled by :
– 25 % at the beginning of the marketing year following the currency realignment(s),
– 37,5 % at the beginning of the second and third years following the realignment(s).
When the new agricultural conversion rates resulting from the first (25 %) dismantling of transferred negative
MCAs take effect, prices fixed in ECU under the CAP are reduced to neutralize the increase in prices in national
currencies resulting from the change in the green rates.
The other new negative MCAs (commonly known as ‘natural negative MCAs’), created since the last realignment,
must be dismantled by :
– 30 % at the most at the time of realignment,
– two equal tranches at the beginning of the two marketing years following the realignment.
All these adjustments are made by the Commission under the procedure laid down in Article 12 of Regulation
(EEC) No 1677/85 (Management Committee procedure).
The procedure provides that agricultural conversion rates for the pigmeat sector must be adjusted in order to pre­
vent the creation of any new MCAs, subject to a maximum difference of eight points between the gap applicable
in the pigmeat sector and the one applicable to cereals.
3.3 . Financial mechanisms
(a) Under Article 4a and Article 7 of Regulation (EEC) No 974/71 , and Article 2 of the Decision of 21 April 1970
on the replacement of Member States’ contributions by the Community’s own resources, the following financial
provisions apply to MCAs :
 – For trade between Member States, the compensatory amounts are regarded as intervention to regulate the
     agricultural markets and are therefore always counted as ‘expenditure’.
 – For trade with non-member countries, Chapter 28 on EAGGF Guarantee expenditure does not include
     all MCAs resulting from extra-Community trade. The rules at present lay down that :
     – positive MCAs on exports to non-member countries are included in Chapter 28 (MCAs) of the
         EAGGF Guarantee budget, while those on imports are considered as own resources accruing under the
         chapter on agricultural levies, and shown undifferentiated ;
     – negative MCAs on exports are deducted from refunds, the balance being credited as own resources,
         while those on imports are deducted from agricultural levies, the balance being treated as expenditure
         under Chapter 28 (MCAs) of the EAGGF Guarantee budget.
 ---pagebreak---  160                                       Preliminary draft general budget, 1989
(b) For the purposes of the budget, the compensatory amounts are classified, in Chapter 28 , under the following
headings :
Article 280:      monetary compensatory amounts in respect of intra-Community trade.
Item 2800         covers monetary compensatory amounts paid on imports by importing Member States whose
                  currency has depreciated.
Item 2801         covers compensatory amounts on imports paid by exporting Member States on behalf of im­
                 porting Member States whose currency has depreciated.
                  For the purposes of implementing Council Regulation ( EEC) No 1677/85 setting up a Financial
                 mechanism it is desirable to isolate these payments in the accounts.
Item 2802        covers the monetary compensatory amounts on imports levied by importing Member States
                 with an appreciated currency.
Item 2803        covers the monetary compensatory amounts on exports paid by exporting Member States
                 with an appreciated currency.
Item 2804        covers the monetary compensatory amounts on exports levied by exporting Member States
                 with a depreciated currency.
Article 281 :     monetary compensatory amounts in trade with non-member countries.
Item 2810        gives the portion of monetary compensatory amounts granted on imports (into Member
                  States with a depreciated currency) which exceeds the import levy.
Item 2811         covers the compensatory amounts paid on exports by Member States whose currency has ap­
                 preciated ; the MCAs levied on exports by countries with a depreciated currency are deducted
                  from the refunds and, if they exceed the refunds, the amount in excess accrues as own resources.
The financial mechanism is summarized, taking into account the state of each currency, in the table below, where
the + sign indicates EAGGF expenditure and the – sign indicates a reduction in expenditure or revenue to be
deducted from expenditure.
                                                                                             Appreciated  Depreciated
                                        Item of expenditure                                   currencies  currencies
280 MCAs (intra-Community trade):
2800 MCAs on imports paid by importing Member States (with a depreciated currency)                            +
2801 MCAs on imports paid by exporting Member States on behalf of importing Member
     States with a depreciated currency                                                                       +
2802 MCAs on imports levied by importing Member States (with an appreciated currency)             –
2803 MCAs on exports paid by exporting Member States (with an appreciated currency)               +
2804 MCAs on exports levied by exporting Member States (with a depreciated currency)                          –
281 MCAs (extra-Community trade):
2810 Portion of MCAs granted on imports (into Member States with a depreciated currency)
     which exceeds the import levy                                                                            +
2811 MCAs on exports paid by exporting Member States (with an appreciated currency)               +
 ---pagebreak---                     Preliminary draft general budget, 1989                      161
                      MCA EXPENDITURE IN 1989
                                                                      (million ECU)
2800     2801 2802            2803           2804          2810 2811    Total
   268 405    p.m .           p.m .         - 326           78  p.m .    425
 ---pagebreak---  162                                      Preliminary draft general budget, 1989
4. Dual rate coefficients
4.1 Définition
In the agri-monetary system all amounts (levies, refunds, aids, charges, etc.) are fixed in ECU and converted into
national currencies at the green rates. When expenditure declared by the Member States in national currencies
is entered in Community accounts it is converted back into ECU at each currency’s market rate for the ECU.
Consequently (forecast) actual expenditure under the EAGGF Guarantee Section will vary from currency to cur­
rency and perhaps from product to product depending upon the ratio of the green rate to the market rate. This is
called the ‘dual rate coefficient’ .
4.2 Economic and budgetary significance
The dual rate coefficient is an indicator of the level of agricultural intervention prices in national currency (con­
verted from ECU at the green rate) in each Member State, which can be compared with intervention prices in
other Member States expressed in the same way.
For each national currency, the amount of EAGGF Guidance expenditure varies as the levels of agricultural in­
tervention prices fluctuate against each other. When a currency’s market rate depreciates, the relative level of in­
tervention prices falls (reduction in the dual rate coefficient), as do EAGGF Guarantee expenditure and own re­
sources in the currency concerned. When a currency’s market rate appreciates, the relative level of intervention
prices rises (increase in the dual rate coefficient), and additional expenditure and own resources result.
5. Effects on refunds and levies of the temporary agri-monetary system
For any given product, the refund and the levy represent the difference between its price on the world market,
expressed in ECU, and the common price, also in ECU. (On the other hand, the gap between the common price
and the intervention price in each Member State is covered by MCAs.)
In the temporary agri-monetary system, the switch-over for currency realignments (see point 3.2) gives an in­
crease in common prices (without any change in prices expressed in national currency) and thus an increase in
the divergence from world prices, leading to a rise in refunds and levies.
 ---pagebreak---                                          Preliminary draft general budget, 1989                                     163
                                  CHAPTER 29 – OTHER EXPENDITURE
ARTICLE 290 - CLEARANCE OF PREVIOUS YEARS’ ACCOUNTS
This Article is provided for in Article 99 of the Financial Regulation of 21 December 1977 for the purpose of
showing the difference between expenditure charged for a given year and the expenditure recognized by the
Commission during clearance of accounts under Article 5(2)(b) of Council Regulation (EEC) No 729/70 of
21 April 1970 on the financing of the common agricultural policy.
ARTICLE 292 - REFUNDS IN CONNECTION WITH COMMUNITY FOOD AID
All the items relating to refunds in connection with food aid pursuant to Regulation (EEC) No 2681 /74 on
Community financing of expenditure incurred in respect of the supply of agricultural products as food aid, and
in particular Article 2(1 ) thereof, previously contained in the chapters ‘Cereals and rice’, ‘Sugar’, ‘Olive oil’ and
‘Milk and milk products’, have been regrouped under this Article.
ARTICLE 294 - INTEREST PAYMENTS TO MEMBER STATES, FOLLOWING CHANGES IN THE
                     METHOD USED FOR FINANCING EAGGF GUARANTEE EXPENDITURE
This Article is designed to allow possible interest payments – based on the national funds set aside for pre-
financing the expenditure of the departments and agencies responsible for payment – to Member States
which experience difficulties in implementing the new financing system .
ARTICLE 295 - DIRECT AIDS TO AGRICULTURAL INCOMES
This appropriation is designed to cover the cost of granting temporary and degressive aid to agricultural incomes
in order to help potentially viable farms adapt to the new situation on agricultural markets.
ARTICLE 296 - FACILITIES FOR FINANCING IMPORTS OF AGRICULTURAL PRODUCTS FROM
                     THE EEC INTO DEVELOPING COUNTRIES
This new instrument is designed to facilitate imports of food products by developing countries. The object is to
satisfy the growing need for food products in these countries. At the same time, it is entirely consistent with the
reform of the common agricultural policy that the Community has embarked upon to produce a better balance
between supply and demand.
The ‘loan’ element of the credits contracted by the developing countries will be provided by the financial markets,
while the Community budget will :
 – finance the ‘gift’ element with the appropriations in this article,
 – offer a guarantee for loans with appropriations in Chapter 83 .
 ARTICLE 297 - DISTRIBUTION OF AGRICULTURAL PRODUCTS TO THE MOST DEPRIVED
                     PERSONS OF THE COMMUNITY
 The purpose of this Article is to finance the supply of foodstuffs from intervention stocks to certain organizations
 for distribution to the most deprived persons of the Community in accordance with Council Regulation ( EEC)
 No 3730/ 87 of 10 December 1987 .