WORLD TRADE
ORGANIZATIONG/SCM/N/60/EEC
4 December 2000
(00-5212)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Updating Notification Pursuant to Article XVI:1 of the GATT 1994
and Article 25 of the Agreement on Subsidies and
Countervailing Measures
EUROPEAN COMMUNITIES
The following communication, dated 30 November 2000, has been received from the
Permanent Delegation of the European Commission.G/SCM/N/60/EEC
Page 2
EUROPEAN COMMUNITY
TABLE OF CONTENTS
Page
I. INTRODUCTION................................................................................................................. .......................3
A. S TRUCTURE OF NOTIFICATION ....................................................................................................................3
B. P ERIOD COVERED ............................................................................................................................... ........3
C. P RESENTATION OF NOTIFICATION ...............................................................................................................3
D. S TATUS OF SUBSIDIES ............................................................................................................................... ..3
II. THE  EUROPEAN COMMUNITY’S STRUCTURAL ACTIONS ........................................................4
A. E UROPEAN REGIONAL DEVELOPMENT FUND .............................................................................................5
B. E UROPEAN SOCIAL FUND...........................................................................................................................6
C. E UROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) – G UIDANCE  SECTION ..........7
III. AGRICU LTURE ................................................................................................................ .....................8
A. GENERAL REMARKS .............................................................................................................. ..............8
B. MEASURES..................................................................................................................... .........................9
1. Export Refunds............................................................................................................... .......................9
2. Measures on the Internal Market.............................................................................................. ............9
C. ANALYSIS BY SECTOR ............................................................................................................................... 10
(i) "ARABLE CROPS" - SECTOR (Cereals, oilseeds, linseed, protein plants and set-aside).........................10
(ii) "RICE"  SECTOR............................................................................................................. ..........................16
(iii) "DAIRY PR ODUCT" SE CTOR.................................................................................................... .............17
(iv) "OLIVE OIL” ................................................................................................................ .............................19
(v) "SUGAR" SECTOR .............................................................................................................. .....................20
(vi) "BOVINE ME AT" SECTOR....................................................................................................... ...............22
(vii) "PIGMEAT " SECTOR .......................................................................................................... ................24
(viii) "SHEEPMEAT AND GOATMEAT" SECTOR....................................................................................25
(ix) "FRUIT AND VEGETABLE" SECTOR............................................................................................... .....27
(x) "BANANAS"  SECTOR........................................................................................................... ..................28
(xi) "PROCESSED FRUIT AND VEGETABLES" SECTOR..........................................................................29
(xii) "WINE"  SECTOR............................................................................................................ .....................30
(xiii) "TOBACCO " SECT OR......................................................................................................... ................34
(xiv) "TEXTILE FIBRES" SECTOR ................................................................................................... ..........35
(xv) "DRIED F ODDER" SE CTOR...................................................................................................... .........37
(xvi) "SEEDS"  SECTOR........................................................................................................... ....................38
IV. INDUSTRY SECTORS............................................................................................................ .............39
V. OTHER PROGRAMMES ............................................................................................................. ...........43
1. SME Programme................................................................................................................ .................43
2. JEV Programme................................................................................................................ ..................44
3. FIFG and  PESCA............................................................................................................... .................45
4. Common Organizati on of Markets............................................................................................... .......46G/SCM/N/60/EEC
Page 3
I. INTRODUCTION
A. STRUCTURE OF NOTIFICATION
Subsidies in the European Community are grante d both at Community level i.e. out of the
Community budget, and by Member States.
In view of this, the notification is divided into two parts.  This first part of the notification
deals with subsidies granted by the European Community and general information on aid granted
within the Community’s territory.  The second part of this notification, circulated as addenda to this
notification, covers subsidies granted by individual  Member States.  The Member States’ notifications
cover subsidies granted at both national and sub-national level.
B. PERIOD COVERED
As far as possible, this notification relates to subsidies granted during the period covered by
the new and full notification and to subsidy programmes which are currently in force, and providesstatistical information at least up to the end of 1999.
C. P
RESENTATION OF NOTIFICATION
The information provided in this notification includes, as far as possible, all the elements
required by Article 25.3 of the Subsidies Agreement and in almost all cases follows the presentation
required by the subsidies questionnaire.  In a few cases, the presentation is different to that specifiedin the questionnaire, but all the required elements are still included.
D. S
TATUS OF SUBSIDIES
In preparing this notification, the Community has attempted to achieve the maximum
transparency with regard to aid and support measures granted within its territory.  The fact that such
aid has been notified does not, in accordance with Article 25.7 of the Subsidies Agreement, prejudgeits legal status under GATT 1994 or this Agreement, nor does it prejudge its effects under the
Agreement or the nature of the measure itself.  In view of the diverse nature of many of the
programmes notified, it may be that only part of a programme’s funding involves a subsidy element,
which may or may not be specific.  Consequently, the appearance of a programme in this notification
does not in any way imply that the whole or part of its expenditure amounts to a specific subsidy.
EUROPEAN COMMUNITY SUBSIDIES
(a) Subsidies granted out of the European Community budget
In 1999, total expenditure by the European Community amounted to EUR 96.6  billion.The two largest areas of expenditure were agriculture and structural operations, which
accounted for 42.2 per cent and 40.5 per cent of financial commitments respectively.  Another notable
area of expenditure is research , which took up 3.7 per cent of total expenditure.  All these are
described in more detail in this part of the notification.
(b) State aid in the Member States
The European Commission is responsible for examining all state aid granted within the
Community in order to determine its conformity with Article 92 of the EC Treaty, (and Article 95 of
the ECSC Treaty, for coal and steel products), Member States are required to notify all aid schemes toG/SCM/N/60/EEC
Page 4
the Commission, which may decide either not to raise any objection or open an investigation
procedure.  If the aid scheme is ultimately found not to conform to Article 92, the Commission issues
a negative decision which prevents the aid being granted.  If the Member State has already granted
such aid, the Commission can order the aid to be repaid.
Details of Member States’ aid schemes can be found in addenda to this notification.
II. THE  EUROPEAN COMMUNITY’S STRUCTURAL ACTIONS
INTRODUCTION
1. The Community’s structural actions (comprising the structural funds and the cohesion fund)
are intended to strengthen the economic and social cohesion of the Community, in particular by
reducing disparities between the levels of development of the various regions and the backwardnessof the least-favoured regions, including rural areas.  Revised Regulations concerning the structural
funds were adopted on 20 July 1993, and cover the period 1994-1999. In 1999, EUR 39.0 billion was
budgeted for all structural actions.
2. The three main structural funds (European Regional Development Fund (ERDF), European
Social Fund (ESF), European Agricultural Guidance and Guarantee Fund, Guidance Section
(EAGGF) are described in detail in the attached annexes.  In addition, the funds include the Financial
Instrument for Fisheries Guidance (FIFG – see part V), which assists in the restructuring of the
fisheries sector (EUR 0. 0.50 billion was budgeted for this in 1999).  The total budget of the structural
funds amounted to EUR 35.9 in 1999.
The remainder of the Community’s structural spending involves the Cohesion Fund, which is
intended to contribute to projects in the fields of  environment and Trans-European networks in the
area of transport infrastructure, and for which EUR 3.12 billion was budgeted in 1999, plus various
reserves.  Those Member States whose GDP per capita is assessed at less than 90 per cent of the EU
average (Greece, Ireland, Portugal and Spain) are eligible to benefit.
3. Total expenditure from the structural funds (ERDF, ESF, EAGGF and FIFG) is devoted to a
number of objectives as follows, all of which are cofinanced by Member States:
Objective 1: Development and structural adjustment of the regions whose development is lagging
behind (GDP of less than 75 per cent of the Community’s average).
Objective 2: Conversion of regions seriously affected by industrial decline.
Objective 3: Combating long-term unemployment and integrating young people and those
threatened with exclusion into the labour market.
Objective 4: Facilitating the adaptation of workers, especially those threatened with
unemployment, to industrial change and to changes in production systems.
Objective 5a: Speeding up adjustment of structures in agriculture and fisheries in line with the
reform of the Common Agricultural Policy.
Objective 5b: Economic diversification of fragile rural areas.
Objective 6: Combating problems faced by thinly populated regions of the Nordic countries.
In addition, EUR 4.26 billion EUR was budgeted for Community initiatives in 1999.
4. These structural actions are required to conform strictly to the Community’s rules on the
provision of state aid (Article 92 of the EC Treaty).
5. The structural actions are notified in a spirit of transparency vis-à-vis other Members of the
WTO.  The aid involved is largely devoted to the least-developed areas of the Community, and theG/SCM/N/60/EEC
Page 5
great majority of it goes to finance infrastructure or to assist individuals directly, without necessarily
conferring a direct benefit to producers of goods.  Consequently, as stated at the beginning of this
document, the notification of a particular fund does not prejudge the status of the aid involved.  In
particular, only a small part of structural funding is used to assist investment.
A. EUROPEAN REGIONAL DEVELOPMENT FUND
1. Title of the programme
European Regional Development Fund (ERDF)
2. Period covered by the notification
January 2000 –December 2000
3. Policy objective and/or purpose of the programme
The ERDF is intended to help redress the main regional imbalances in the Community
through participation in the development and structural adjustment of regions whose development is
lagging behind (Objective 1)and the social and economic renewal of zones experiencing difficulties
(Objective 2).
4. Background and authority for the programme
Article 130 (c) of the EC treaty: Council Regulation (EC) No 1260/99 and Parliament and
Council Regulation (EC) 1783/99.
5.  Form of assistance granted – Grants from Community budget for:
Grants from the Community budget for- Productive investment
- The creation and modernisation of infrastructure which contributes to the
development or conversion of the regions concerned and
- Measures to exploit the potential for internally generated development of the regions
concerned
6. To whom and how the assistance is provided
ERDF aid is co-financed with the Member States; The ERDF provides a minimum of 25 per
cent of the total public expenditure involved, except in objective 1 regions where a minimum of50 per cent applies.
  Member States submit multi-annual operation programmes, covering a coherent set of
regional development measures, and are responsible for the implementation of the programme and the
selection of individual projects.
As regards productive investment, the ERDF pa rticipates in financing (national) investment
aid with a regional aim. The aid is governed by  the principals of coordination adopted by the
Commission within the context of its competition policy and which inter-alia differentiate aid ceilings
according to the levels of development of the assisted regions.
Aid is normally in the form of grants or loans.G/SCM/N/60/EEC
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7. Total expenditure under the programme
€15.6 billion was budgeted for 1999, excluding community initiatives, €16.2 billion for 2000.
8. Duration of the programme
2000-2006 (revised regulations)
9. Trade effects
Because the programme is designed to alleviate disparities between regions within the
Community, and because the aid is paid out on a horizontal basis, within eligible regions, it isconsidered that the trade effects are minimal.
B. E
UROPEAN SOCIAL FUND
1. Title of the programme
European Social Fund (ESF)
2. Period covered by the notification
1999
3. Policy objective and/or purpose of the programme
The European Social Fund was set up by the EEC Treaty in 1957 to improve the employment
opportunities for workers and to help raise their living standards.  It is based on Articles 123-125,130(a)-130(e) of the EEC treaty, according to which its main tasks are to render the employment of
workers easier and to increase geographical and occupational mobility within the Community.  It is
provided on a general basis under objectives 3 and 4, and within the other regional objectives.
4. Background and authority for the programme
Above Articles of the EC Treaty: Council Re gulations (EEC) Nos. 2081/93, 2082/93 and
2084/93.
5. Form of assistance granted – Grants from Community budget for:
- Vocational training,- Start-up aid,
- Innovative measures.
6. To whom and how the assistance is provided
The ESF provides cofinanced support in Member States for vocational training, aids for
employment and innovate actions.  The aid is normally devoted to people, not to enterprises.G/SCM/N/60/EEC
Page 7
Operational programmes, once approved by th e Commission, are managed by the competent
authorities in the Member States.  Identification of individual projects is the responsibility of the
Member State.
Aid is normally in the form of grants or loans.
7. Total expenditure under the programme
EUR 9.6 billion for 1999, excluding Community initiatives
8. Duration of the programme
1994-1999 (Revised Regulations)
9. Trade effects
Since aid is granted for the benefit of individuals, not enterprises, and is mainly directed to
less-developed regions, the ESF is not considered to have any appreciable impact on trade.
C. EUROPEAN AGRICULTURAL GUARANTEE AND GUIDANCE FUND (EAGGF) – G UIDANCE 
SECTION
1. Title of the programme
European Agricultural Guarantee and Guidance Fund (EAGGF) - Guidance Section.
2. Period covered by the notification
1 January 1999-31 December 1999
3. Policy objective and/or purpose of the programme
(a) Speeding up the adjustment of agricultural structures in the framework of the reform
of the common agricultural policy (objective 5(a));
(b) Promoting rural development and structural adjustments in regions whose
development is lagging behind, including underdeveloped agricultural regions,
(objective 1 and 5(b),6).
4. Background and authority for the programme
Council Regulations (EEC) Nos. 2081/93, 2082/93 and 2085/93.  The EAGGF Guidance
Section was established in 1972.
5. Form of assistance granted - Grants from Community budget for:
(a) Adjustment of agricultural structures (objective 5(a));
(b) Agricultural development measures (objectives 1 and 5(b),6).G/SCM/N/60/EEC
Page 8
6. To whom and how the assistance is provided
Aid is co-financed with the member States on the basis of multi-annual operation programmes
based on the aims of the EAGGF Guidance Section as set out above.  The Member States are
responsible for the implementation of the programme and the selection of individual projects.
Aid is normally in the form of grants or loans.
7. Total expenditure under the programme
EUR 5.1 billion was budgeted for 1999, excluding Community initiatives.
8. Duration of the programme
1994-99 (Revised Regulations).
9. Trade effects
Because the aims of the programme it is considered that the trade effects are minimal.
III. AGRICULTURE
A. GENERAL REMARKS
1. The measures notified concern only products that are subject of a Common Agricultural Policy,
namely the following sectors:
- Arable crops (cereals, oilseeds, linseed, protein crops and set-aside)
- Rice- Dairy products
- Olive oil
- Sugar and isoglucose
- Bovine meat
- Pigmeat
- Sheepmeat
- Goatmeat- Fruit and vegetables and products processed from fruit and vegetables
- Bananas
- Wine
- Tobacco
- Textiles fibres (cotton, fibre flax and hemp, silkworms)- Dried fodder
- Seeds
- Hops
- Eggs and poultry
- Fishery products- Products of the agri-foodstuff industries (products “not in Annex I”)
2. The measures notified include all price support measures, and direct payments introduced by the
common market organisations that can involve participation rather by the Community's financing
organisation or by the government of a member State, to the extend that such measure derive from theCommunity regulations.G/SCM/N/60/EEC
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3. With respect to the total amount of aid for each sector, it should be noted that the data relate to
payments made by the European Agricultural Guidance and Guarantee Fund (EAGGF) in the course of
the budgetary year concerned.
B. MEASURES
1. Export Refunds
For certain of the sectors governed by a common market organisation, the Common Agricultural
Policy provides for the possibility of granting export refunds.
The purpose of export refunds is to cover the difference between Community prices and
international trade prices in order to enable exports to be effected at international trade prices.
The refund is the same for the whole of the Community; a differential may be applied according
to destination or time (months of delivery). The amount of the refund is fixed periodically by the
Commission. The periodicity of the fixing is different for each sector because of the special
characteristics of each sector. In order to facilitate export operations, in the case of the majority of
products a system has been introduced whereby refunds can be fixed in advance. The refund is paid to theexporter.
The total amount of export refunds financed by the EAGGF during the past few years, and for
each sector, is as follows:
                     (EAGGF budgetary period-EUR million)
Products Refunds
1995Refunds
1996Refunds
1997Refunds
1998Refunds
1999
Arable crops
Rice
Sugar 1)
Olive oil
Fruits and vegetables
WineTobacco
Dairy products
Bovine meat
Pigmeat
Eggs and poultryProducts of the agri-
foodstuffs
Industries
Total expenditure1,129.3
     65.1
-
     38.2
   239.4
     36.7     35.1
2,290.2
1,761.0
   118.2
   200.5
   574.3
6,488.0   320.2
     42.6
       -
     59.3
     98.4
     40.8       2.4
1,615.8
1,559.4
   101.4
   139.2
   493.9
4,473.4537.0
68.3
-
42.7
80.7
59.7
0
1,756.3
1,498.9
72.2
79.5
569.2
4,764.5429.4
49.6
-
24.9
58.3
41.2
0
1,426.7
774.5
74.5
90.7
556.1
3,525.9883,0
30.2
-
2.5
40.5
27.4
0
1,439.3
594.9
275.0
110.6
573.4
3,976.8
1)Starting with marketing year 1981/1982, the export refunds on domestic sugar have been entirely
financed out of producer contributions by producers of sugar and isoglucose and sugar beet and sugar caneproducers of the Community.
2. Measures on the Internal Market
1. In order to stabilise markets and assure the agricultural population of an equitable standard of
living, the Common Agricultural Policy provides, in the market organisation regulations for the differentG/SCM/N/60/EEC
Page 10
products, intervention and aid measures that vary according to the nature of the product and the special
characteristics of the market.
2. The cost of these intervention and aid measures is, as a general rule, financed by the EAGGF.
During the past few years, by product sector, they have amounted to:
                (EAGGF budgetary period-EUR million)  1)
Products Intervention
1995Intervention
1996Intervention
1997Intervention
1998Intervention
1999
Arable crops  1)
Rice
Sugar  2)
Olive oil
Flax and hemp
Cotton
Silkworms
Fruits and vegetablesWine
Tobacco
Seeds
Hops
Other plant products
Dairy products
Bovine meatSheepmeat and goatmeat
Pigmeat
Fishery products
Other products
 3)
Total expenditures13,924.5
         1.1
       49.7     767.8
       78.6
     797.2
         0.2
  1,543.2     820.8
     957.9
       76.4
       14.3
         1.8
  1,746.1
  2,256.6  1,780.9
       17.9
28.2
     342.0
25,205.216,065.6
-
       40.7   1930.7
       88.7
     762.7
         0.2
  1,483.1     737.5
  1,024.1
       91.8
       24.1
-
  1,971.3
  5,237.6  1,681.1
       22.8
25.3
     366,1
31,553.416,941.5
18.1
53.2
2,167.6
106.7
800.0
0.3
1,474.6
974,0
1,004.3
92.4
13.0
-
1,347.9
5,176.61,424.9
406.6
21.8
368.2
32,391.717,515.8
116.4
59,4
2,241.8
108.5
761.0
0.3
1,451.2
658.8
870.3
93.3
12.8
-
1,170.0
4,386.11,534.9
163.2
21.2
377,5
31,483.116,982.9
134.6
52.0
2,089.3
123.6
903.2
0.4
1,413.6
587.2
911.1
108.1
12.6
-
1,070.8
3,983.71,894.3
51.9
7.8
376.4
30,703.5
1)Since 1994, expenditure on cereals, oilseeds, linseed, protein crops and set-aside has been
consolidated under the same budgetary heading: "Arable crops".
2)Not including storage costs and the part comprising production refunds (chemical industry).3)Dried fodder and dried vegetables; until 1994 expenditures on these was included under expenditure
on high-protein products (for dried fodder) and fruits and vegetables (for dried vegetables).
C. ANALYSIS BY SECTOR
(i) "ARABLE CROPS" - SECTOR (Cereals, oilseeds, linseed, protein plants and set-aside)
This section covers the "classical market organisation for cereals as well as the compensatory
payment scheme for producers in the arable crop sect or (cereals, non-fibre flax, oilseeds, protein crops
and set-aside).
The common market organisation for cereals
The common market organisation came into force on 1 July 1967. It is now regulated by
Council Regulation (EEC) No. 1766/92 and covers the following products:
- Grain cereals: common wheat, durum wheat, barley, rye, oats, maize, buckwheat,
canary seed, millet, others;G/SCM/N/60/EEC
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- processed products: flours, groats and meal of wheat, malt, starch, glucose, cereal-
based preparations, bran, wheat gluten, manioc and potato starch.
The cereal marketing year runs from 1 July to 30 June.
1. Operation of the market
A. Price arrangements
The Council fixes the intervention price for cereals. At this price the intervention
agencies must, at certain periods of the year, buy in the cereals they are offered that
have the requisite quality characteristics.
One single intervention price is valid for the following cereals: wheat, maize,
sorghum, barley, rye and durum wheat; there is no longer an obligation to buy in feed
wheat.
The intervention price is increased each month from November to May to cover storage costs
(technical and financing costs) and thus help to improve the disposal of cereals in line with market
requirements.
The intervention price fixed by the Council for all cereals for an indefinite period is
EUR119.19/t, and the monthly increment is EUR 1,00/t/month.
B. Specific market instruments
(a) Border regime
Where the price of cereals within the Community is higher than the world price, a refund
calculated in terms of the difference may be granted on exports. If the world price exceeds the
common price, a levy may be imposed on exports.
Community food aid operations also attract refunds.
(b) Stocks
Two 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.
- Special measures: these are measures provided for in Article 6 of the basic regulation
(No 1766/92) to avoid situations in which the intervention agencies are forced to buy inexcessively large quantities of cereals. The Commission has broad discretionary powers
for the application of special measures and may, if necessary, also adopt measures
equivalent to carryover payments.
(c) Production refunds for potato and other starch
1. A production refund is paid to users of maize starch, wheat starch, barley starch or potato
starch for the production of certain non-foodstuff products which are not protected upon import by
tariffs. The principal beneficiary industry comprise s the chemical, paper and paperboard industry andG/SCM/N/60/EEC
Page 12
pharmaceutical sector. This refund is variable and is currently calculated so as to align prices of the
European Community raw materials to those of the world market.
2. The price and support policy for starch potatoes consists of three measures:
- the minimum potato price: This price is equivalent to the price of cereals, in particular
maize (indicative price); the price has been decreased at the level of EUR194.05 per
quantity of raw material needed to produce one ton of potato starch, as from 1 July 2000
(from 1.7.2001 EUR 178.31);
- the payment to farmers: This payment is granted to producers of  potatoes intended for
starch production. It is applied to the quantities required to produce one ton of starch, and
is set at the level of EUR 98.74 per ton as from 1 July 2000 and at EUR 110.54 from
1 July 2001. Furthermore, the payment occurs within a quota limit.
- the special starch producer’s premium: This premium set at EUR 22.25 per tonne of
starch is paid to potato starch-producing undertakings for the quantity of starch
corresponding to the starch producer’s quota provided that the minimum price is paid to
the farmer. It was intended to offset certain structural disadvantages in the starch
industry.
(d) Other intervention
These headings cover expenditure on various measures, in particular special digressive aid for
Portuguese cereal producers.
2. Aids per hectare for arable crops and set-aside
The reform of arable crops entered into force on 1 July 1993. It is governed by Regulation
(EEC) No 1765/92, which covers all cereals, oilseeds, protein plants, non-fibre flax seeds (or linseed)
and set-aside.
As far as cereals are concerned, the institutional prices have been gradually reduced as from
the 1993/94 marketing year to bring them closer to world prices. The resulting loss of income is offsetby a compensatory payment, paid per hectare and calculated on a regional basis to producers sowing
cereals and submitting applications, subject to certain conditions, in particular that of setting aside
land in the case of producers in the general scheme.
For oilseeds and protein crops (peas, field beans and sweet lupines), the previous support
arrangements have been abolished with the introduction of the reform. Or, in the case of rape,
sunflower and soya, since the introduction of a transitional support scheme consisting of payments per
hectare from the 1992/93 marketing year. With the integration of these products into the reform,
prices dropped and oilseeds as well as protein crops are now sold on the European markets at world
prices.
Regionalisation plan
In order to reflect the diversity of agricultu ral structures in the Community, compensatory
payments vary from region to region on the basis of the yields per hectare recorded in the past.(Theperiod covered is 1986/87 to 1990/91, excluding the highest and lowest year).
The Member States have established a regionalisation plan in accordance with the criteria set
out in Article 3 of Regulation (EEC) No 1765/92 whic h aims to define, insofar as is possible, distinctG/SCM/N/60/EEC
Page 13
homogeneous areas. The average yields may be modulated in order to take account of possible
structural differences between production regions. The regionalisation plan must, however, guarantee
that the average historical yield (fixed for a given period) of each Member State concerned is
respected.
As a rule, for each area an "all cereals" yield should be applied. On account of the, sometimes
substantial, differences in yield, two distinct arrangements are provided for:
- for maize a yield different from that from other cereals may be applied;- yields for a single region may be broken down into different yields for irrigated and non-
irrigated land (mixed areas).
Even where these two exceptions are applied, however, the yield recorded for all cereals in
the relevant region during the reference period must not be exceeded.
Expenditure stabilisation mechanism
The compensatory payment is granted only fo r an area not exceeding a regional base area.
This is established as the average number of hectares sown to arable crops (cereals, oilseeds and
protein plants) or, as the case may be, set aside under a public aid scheme in 1989, 1990 and 1991 in a
given region.
As with the regionalisation plan, Member States are required to determine the region, which
may cover an entire Member State or several areas within a Member State. It cannot be smaller than a
production region.
A base area must be established separately for maize or irrigated crops where a yield higher
than that for other cereals is applied to these products. In addition, the compensatory payment on
irrigated areas is granted only up to a ceiling for each production area or a separate base area.
The Member States are also authorised to apply an individual base area system. However, no
Member State took up that option.
Production and expenditure are controlled by the establishment of these base areas or of a
ceiling in the case of irrigated production.
If the sum of the areas in respect of which the compensatory payment is applied for (including
that on set-aside) plus the "COP" (cereals, oilseeds and protein plants) areas declared as fodder areasis greater than the regional base area, the following measures apply in the region in question:
(a) Base area:
- during one and the same marketing year, the eligible area per producer is to be reduced
proportionately for all types of aid.
- during the following marketing year, producers qualifying under the general scheme
must, by way of an extraordinary measure, set aside land without receiving any
compensation;G/SCM/N/60/EEC
Page 14
(b) Ceiling:
- during one and the same marketing year, compensatory payments on irrigated areas are
reduced by 1.5 times the rate of overrun. If the overrun is equal to or greater than 10 per
cent, the yield to be used is that applicable to non-irrigated crops.
In addition, where a Member State chooses to establish production regions that do not
correspond to the regional base areas and where the average yield under the regionalisation plan
applied in 1993 is exceeded, all compensatory payments to be paid to that Member State in respect of
the following marketing year are to be reduced in proportion to the observed overrun, except where
the quantity applied for is less than the product of the base area of the Member State multiplied by the
above mentioned average yield.
3. Compensatory payment
Cereals
As the cut in cereals prices was staggered over three years, the amount of the compensatory
payment also changed over the same period.  Since the marketing year 1995/1996 the compensation
reached its full rate in the 1995/96 and it amounts to EUR 54.34/t of historical cereals yield for the
region of production concerned.
As regards durum wheat, the alignment of its intervention price on that for other cereals has
led to an additional price cut and, consequently, a decrease in producer's incomes. For this reason, an
additional compensatory payment is paid for the area sown to durum wheat in the traditional
production areas. This supplement is set at a fixed amount of EUR 358.60/ha until the marketing year
1998/99. This covers both the old durum wheat aid and the part of the price cut not covered by thecompensatory payment.
Payment of the supplement was initially restricted to the hectares sown to durum wheat and
eligible for the old aid during the marketing years 1988/89 to 1991/92 for each producer. The
producer decides which marketing year is to serve as the reference.
Since the introduction of this additional paymen t, the system has been amended as follows:
- an extension of payment to certain areas in France, Spain, Portugal and Italy;- a payment to certain non-traditional areas in France and Austria of an additional payment of
EUR 138.90/ha in respect of an area not exceeding 50.000 hectares in northern producerregions of France and 5.000 hectares in Austria That amount reflects loss of income due
solely to the fall in the guaranteed price for durum wheat.
As from 1999/2000, this system of individual ri ghts has been replaced by a MGA (Maximum
Guaranteed Area) system. One MGA exists per Member State and per zone (traditional, non-traditional). The total of all MGA's reaches 3.2 million hectares. The supplementary aid for traditional
zones was cut to EUR 344.50/ha (not to be regionalised).
Oilseeds
The products covered are rape, sunflower and soya.The Community market is essentially free. Imports are free of customs duties and exports do
not attract refunds.G/SCM/N/60/EEC
Page 15
Compensatory payments are granted to producers, calculated on a regional basis according to
the historical yields defined in the regionalisation plan, regionalised either on the basis of oilseed
yields, subject to certain restrictions, or on the basis of cereal yields. The point of departure of the
regionalisation plan is the basic amount of EUR 433.50/hectare. This payment is granted only toproducers in the general scheme (with set-aside).
Payments are reduced where the base area is exceeded. In addition, the following adjustments
must be made for oilseeds:
- a reduction in the compensatory payment where the maximum guaranteed area is
exceeded (Regulation (EC) No 232/94 am ending Regulation (EEC) No 1765/92);
- an adaptation of the final reference amount in cases where any variation recorded in the
market price exceeds 8 per cent of the forecast reference price.
Protein crops and linseed
The products covered are:- peas (excluding chick peas), beans and sweet lupines
- non-fibre flax seed
The Community market is essentially free. Imports are free of customs duties and exports do
not attract refunds.
Compensatory payments are granted to producers, calculated on a regional basis according to
the historical yields defined in the regionalisation plan excluding maize where maize is treated
separately.
Reference amounts
Description
Peas, beans and sweet lupines  (1)
Non-fibre flax seed  (1)1996/97
EUR 78.49/t
EUR 105.1/t
(1) These amounts have to be multiplied by the regional yields for cereals to obtain the regional reference amounts.
Set-aside
Set-aside linked with aids per hectare:
(a) General scheme open to all producers:
Each producer claiming compensatory payments under the general scheme is required to set
aside a certain percentage of the land on his holding.
For the 1995/96 and 1996/97 marketing year, the set-aside obligation was fixed at 12 and 10 per
cent respectively. For the 1997/98 and 1998/99 marketing years the set-aside obligation was reduced to5 per cent and it was again increased to 10% as from the 1999/2000 marketing year.
The compensation for the set-aside obligation is fixed at EUR 68.83 multiplied by the regional
cereal yields.G/SCM/N/60/EEC
Page 16
This compensation is also payable on land voluntarily set aside in excess of the obligation,
subject however to a ceiling set by the Member State (which may not exceed the area sown to eligible
crops covered by payment applications).
However, notwithstanding that principle, producers who under Regulation (EEC) No 2328/91
have set land in excess of the area which they intend to sow to arable crops eligible for the aid and who
have not replanted such land may opt for the continuation of set-aside on all this land for a further sixty-
month period against payment of reduced aid of EUR 48.30/tonne on the area set aside in excess of the
area sown to arable crops.
Land set aside may be used for producing raw material for the manufacture of products not
directly intended for human or animal consumption.
Clause 7 of the Memorandum of Understanding on certain oilseeds between the EC and the US
stipulates that by-products may not exceed one million tonnes per annum, in terms of soya bean meal
equivalent, for animal or human consumption produced on set-aside land from rape, colza, sunflower andsoya.
Within one and the same Member State and under certain conditions, farmers may transfer set-
aside obligations to another producer.
(b) Simplified scheme, open to small producers:
Small producers are producers applying for compensatory payments for an area not exceeding
that needed to produce 92 tonnes of cereals.  The yields to be taken into consideration to calculate this
tonnage are those fixed by the regionalization plan.
The simplified scheme applicable to small producers:- imposes no set-aside obligation;- provides for the grant of the compensatory payment at the rate applicable to cereals for all
areas sown to arable crops, i.e. also to oilseeds and protein plants.
(ii) "RICE"  SECTOR
On 22 December 1995, the Council formally decided to reform the common market organization
for rice.
The reform includes the following points:
(a) Intervention measures
The intervention price for paddy rice shall be reduced by 15 per cent from 351.00 EUR/t. for the
1996/97 marketing year to 298.35 EUR/t. for the 1999/2000 marketing year. Community rice producers
may claim compensatory payments fixed per hectare of land under rice sown which shall be
differentiated according to the yield (tons/ha).
The intervention agencies are obliged to buy in any rice harvested in the Community and offered
to them, provided offers are made during the open period (April-July) and comply with certain
conditions, in particular in respect of quality and quantity.G/SCM/N/60/EEC
Page 17
The intervention buying-in price is fixed for a given standard quality. If the quality offered
differs from the standard quality, the price is adjust by the application of price increases or reductions. It
is applicable in all the Community intervention centres fixed at the beginning of the marketing year.
The real intervention price is increased each month during the open period to take some account
of warehousing and interest costs for storage of cereals in the Community.
The intervention buying-in prices fixed at the beginning of marketing years have been as follows:
(EUR/t.)
Product
Paddy
rice1992/93
313,651993/94
291,021994/95
291,021995/96
(1)
351,411996/97
351,001997/98
333,451998/99
315,901999/00
298,35
(1) As from February 1995, the prices were converted on the basis of the monetary coefficient of 1,207509.
Spanish prices have been aligned with Community prices as from marketing year 1990/91.
Portuguese prices have been aligned with Community prices from April 1993.
A national base area for each producer Member State is established:- Spain: 104.973 ha.
- France
         - metropolitan territory:     24,500 ha.        - French Guyana     5,500 ha.
- Greece:
          - traditional zones   22,330 ha
          - other     2,561 ha
- Italy: 239,259 ha.- Portugal:   34,000 ha.
In case national areas in a given year exceed one of the base areas indicated, progressive
penalties will be applied in the form of a reduction of the compensatory payments.
(b) Production refund
A production refund is paid to users of rice starch for the production of certain non-food products
that are not protected upon imports by a tariff system.  The main beneficiary industry comprises the
chemical, paper and pharmaceutical sector.  The refund is variable and is currently calculated so as toalign prices of Community raw materials with the world market level.
(iii) "DAIRY PRODUCT" SECTOR
(a) Intervention measures
Each year an intervention price is fixed for butter and skimmed milk powder and the national
intervention agencies buy in, following the rules as indicated below, any such products of the Community
origin which comply with certain quality and packaging conditions.
The intervention prices fixed for the last few marketing years were as follows:G/SCM/N/60/EEC
Page 18
Intervention price valid
for1996/97 1997/98 1998/99 1999/00
1. Butter 328.20 328.20 328.20 328.20
2. Skimmed milk powder 205.52 205.52 205.52 205.52
Under the intervention mechanism, as amended in March 1987 and to apply until the end of the
additional levy system, intervention buying-in may be limited when certain conditions are met. Since
July 1987, intervention butter has been bought in under a tendering procedure. Butter is bought in at a
maximum price that is fixed in relation with the bids received by the Commission, but not lower than
90 per cent of the full intervention price. Skimmed milk powder can only be bought between 1 March and
31 August each year. Purchases can be suspended when the annual quantity offered reaches
109,000 tonnes.
(b) Aid to private storage
Aid for private storage of milk powder, butter and certain cheeses produced in the Union is or
may be granted:
- for top quality skimmed milk powder: only when intervention purchasing is suspended from
1 March to 31 August and under contract;
- for butter stored for at least three months and between 15 March and 15 August; the aid can
be paid for a storage period of maximum 210 days;
- for certain cheeses : Grana Padano aged at least nine months old, Parmigiano-Reggiano
aged at least 15 months old and Provolone at least three months old.
In years where a serious imbalance can be reduced or eliminated by seasonal storage aid
can be granted for private storage of the long-keeping cheeses Emmental and Gruyère and of certain ewe
milk cheeses.
(c) Aid for skimmed milk for animal feed
Aid is granted for skimmed milk and skimmed milk powder manufactured in the Community
and intended for animal feed.
The milk or powder must be either directly denatured or incorporated in some compound
feedingstuff intended for livestock.
(d) Aid for skimmed milk processed into casein
Aid is granted for skimmed milk produced in the Community and processed into casein,
provided both the milk and the casein produced from it comply with certain conditions.
(e) Other measures
- Measures may be taken, in years in which they are found necessary, to support the market
for long-keeping cheeses and goat’s milk cheeses, if such cheeses comply with certain
conditions.  These measures are taken, in particular, in the form of private storage aid.
- When surpluses of dairy products develop, or threaten to develop, measures other than the
above may be taken to facilitate their disposal or to prevent the development of new
surpluses.  A number of measures are currently in force to facilitate butter disposal on theG/SCM/N/60/EEC
Page 19
Community market; inter alia , aid is granted for use in the form of concentrated butter for
cooking, incorporation in certain foodstuffs and for direct consumption by certain categories
of persons or institutions.
- In order to encourage consumption by young people, aid is granted to Member States which
operate an aid programme for milk distributed in schools so that pupils can obtain milk at a
reduced rate.
(f) Additional levy payable by producers or purchasers of cows' milk
An additional levy was introduced in 1984 on quantities of milk exceeding those delivered in
1981 plus 1 per cent.  The Council has fixed the corresponding quantities for each Member State.  Thecurrent rules are fixed by Regulation (EEC) No. 3950/92 (OJ L405 of 31.12.92) lastly amended by
Regulation (EC) N° 749/2000 (OJ L90 of 12.04.2000).
In the four last years, the total milk quota quantities for EC 15 were:
    (million tonnes)
1995/96 1996/97 1997/98 1998/99 1999/00
Deliveries 115.4 115.6 115.7 115.7 116.0
Direct sales 2.1 1.9 1.8 1.8 1.5
In case of non-respect of the milk quota, the levy is equal to 115 per cent of the target price
for both deliveries and direct sales, i.e. EUR 35.627/100 kg
(iv) "OLIVE OIL”
As from 1 November 1998, the market organisation system was substantially modified.
1. The public intervention system based on an intervention price fixed for a given quality and
that obliged the intervention agencies to buy in Community olive oil offered, was abolished.
Instead, a private storage system was put in place that allows market operators to store
quantities for relatively long periods if the market balance is disturbed.  The quantities to withdraw
from the market and the aid to be paid are determined by tender.
2. The maximum guaranteed quantity (MGQ) of 1.35 million tonnes was increased to
1,777,261 t and distributed among the producing Member States.  These National Guaranteed
Quantities (NGQs) are distributed as follows:
- Spain: 760,027 t
- Greece: 419,529 t
- France:     3,297 t
- Italy: 543,164 t
- Portugal:   51,244 t
Exceeding the NGQ results to a proportionate reduction of the aid to the olive oil producers of
the Member States.  If the production is lower than the NGQ, 80 per cent of the remaining quantity is
carried over to the next marketing year and 20 per cent is distributed among those Member States
which have exceeded their NGQ.G/SCM/N/60/EEC
Page 20
3. The aid to the producers of olive oil is granted for olive oil produced in the Community from
olives harvested in the Community.  This aid is designed to contribute to establishing a fair income
for producers. For Member States who wish, an aid to the producers of table olives can be granted.
The quantities benefiting from the aid scheme are being converted to olive oil and included in the
NGQs.  The increased aid granted for small producers who were also exempted from the co-responsibility scheme is abolished.
4. The Council fixes a target market price at a level that permits disposal of olive oil production.
This price is fixed for the three marketing years ending on 30 October 2001.
5. The Consumption Aid which was equal to the diff erence between the indicative price less the
production aid and the representative market price and which was designed to facilitate the marketingof the Community olive oil, has been abolished as from 1 November 1998.  The representative market
price as well as the consumption aid scheme, have been abolished.
6. Export refunds are granted to permit the Community firms to export olive oil to third
countries.
The various elements mentioned above were fixed at the following levels:
      (EUR / 100 kg)
1996/97 1997/98 1998/99 1999/2000
Target price
Intervention priceProduction aidProduction aid for small producersRepresentative market priceConsumption aid383.77
180.58142.20151.48229.50
12.07383.77
175.16142.20151.48229.50
12.07383.77
-
132.25
---383.77
-
132.25
---
7. Production refund is granted for olive oil used in the manufacture of preserves (vegetables,
fish, crustaceans).  The purpose of this refund is to enable beneficiaries to buy on the Community
market, at prices close to world market prices, the quality of oil they that they use most frequently for
their manufacturing.
The average production refunds are as follows:
       (EUR /100 kg)
1996/97 1997/98 1998/99 1999/2000
Production refunds 67.18 61.26 44.00 44.00*
* Estimate
(v) "SUGAR" SECTOR
1. Prices
(a) Sugar
Each year, an intervention price for white sugar is fixed for the non-deficit areas of the
Community; the intervention agencies are required to buy in the sugar concerned at that price
throughout the marketing year.
Intervention prices derived from that price are also fixed for each of the deficit areas.G/SCM/N/60/EEC
Page 21
The intervention price is fixed for a standard qua lity; if the quality of sugar is different, the
price is adjusted in accordance with a scale of increases or reductions.
In addition, an intervention price derived from the intervention price for white sugar is fixed
for raw sugar of a standard quality after allowing for a uniform refining margin and national yield.  Inthe marketing years 1996/97, 1997/98, 1998/99 and 1999/2000 the intervention price for white sugar
amounted to 63.19 EUR/100 kg and for raw sugar to 52.37 EUR/100 kg.
(b) Beet
For beet, a basic price is fixed each year valid for a specific delivery stage and a specified
standard quality.  This price is fixed taking account of the intervention price for white sugar and ofnational values representing in particular the processing margin, yield, and undertakings' receipts from
sales of molasses.  In addition a minimum price is fixed for A beet 
(2) equal to 98 per cent of the basic
price and a minimum price for B beet  (3) equal to 68 per cent or 60.5 per cent of the basic price.
These percentages are in direct relation with the production levies charged on A sugar and B
sugar. Manufactures are required to pay at least these prices.
In addition, in areas for which a derived intervention price of white sugar has been fixed, these
minimum prices are increased by an amount representing the effects of regionalization of prices.
2. Production levies
As from 1 July 1981, the principle in force is that producers should bear the full amount of any
financial losses resulting from disposal of surplus production of Community sugar in relation to
consumption in the Community.  Practical implementation of this principle is ensured through a levywhich may be charged at a rate of up to 2 per cent of the intervention price on all production under quotas
A and B (whereas hitherto only B sugar was subject to a levy).
If this first levy is not enough to cover the financial losses in question, a second levy, that initially
may not exceed 30 per cent and subsequently 37.5 per cent, if necessary, of the intervention price, is
charged.  This levy is only charged on B quota production (i.e. a total of 2 per cent plus 37.5 per cent =
39.5 per cent, that represents a minimum price for beet of 60.5 per cent of the
(2) A beet is beet intended for processing into A sugar, i.e. into sugar included in production quota A.
(3) B beet is beet intended for processing into B sugar, i.e. into sugar included in production quota B.
basic price). This possibility has been used since marketing year 1982/83.  Any remaining losses not
covered by these levies have been absorbed since marketing year 1986/87 by additional levies.  These
new levies were introduced during the revisions of the quota system from 1986 to 1988.  Firstly to absorb
the accumulated negative balance not covered during the five marketing years from 1981/82 to 1985/86,and secondly to avoid any further accumulation during the five-year period (from 1986/87 to 1990/91) for
which it has been decided to extend the quota system.  Thus, for the marketing years 1986/87 and
1987/88 a special absorption levy was introduced, as well as an additional levy for the remaining three
marketing years so as to absorb annually the losses not covered by the normal production levies.  These
levies are calculated by multiplying the total amount owed by the enterprise by a factor representing the
relation between the total loss recorded and the receipts from the normal levies, i.e. the basic levy for A
and B sugar and the B levy for B sugar.  The integral self-financing system on an annual basis has been
extended whenever the quota system has been extended.G/SCM/N/60/EEC
Page 22
3. Reimbursement of storage costs
Provisions has been made for reimbursement of storage costs in respect of sugar produced under
quotas A and B.  The reimbursement is calculated on the basis of the intervention price for white sugar
and a standard fixed-rate interest rate for the whole Community.  It is aimed at equalising storage costs inthe Community.  It is a measure designed to ensure regular disposal of sugar in the market throughout the
marketing year, to prevent the sale of excessive tonnage during the manufacturing period and in particular
to avoid the offering of sugar to intervention agencies solely in order to avoid storage costs.  This
reimbursement is financed out of a levy on manufacturers, based on the principle of equality, at the
Community level, between the total sum reimbursed and the total sum levied.
4. Intervention measures
(a) Production refunds are granted on sugar used in the chemical industry, of which
60,000 tonnes are charged to the budget.  That is the quantity eligible for refunds before
a new system came into effect on 1 July 1986 under which all quantities over and above
that ceiling are charged to the producers and covered by the levies they pay.
(b) Disposal aid (transport, refining) is granted on raw sugar produced in the French
overseas departments in order to ensure that it has the same conditions of refinery access
as preferential sugar (ACP countries and India).
Either a variable refining aid or a corresponding tariff adjustment is granted on all raw
preferential and special preferential sugar refined in the Community in order to maintain a competitive
refining margin.
(vi) "BOVINE MEAT" SECTOR
1. In the bovine meat sector an intervention price is fixed each year valid for the reference quality
for slaughtered adult male bovine animals.
Market price quotations and public intervention buying-in are based on the Community scale for
classification of adult bovine carcasses.
In the last marketing year the intervention price has been 347.50 EUR/100 kg carcass weight.In addition to public intervention, aid to private storage may be granted. The amount of such aid
is:
- Either established under a tendering procedure;
- Or fixed in advance on a lump sum basis.
2. Price support regime
The European Community has introduced measures to link management of the internal market
more closely to market price trends.
Under the new regime:- For the determination of buying-in prices under the tendering procedures, only offers not
exceeding market prices by more than a reasonable margin are eligible;G/SCM/N/60/EEC
Page 23
- the thresholds for the activation of intervention buying-in have been fixed as follows
(tendering procedure):
Market price as a percentage of the
intervention price equal to 347.50
EUR/100 kg. CarcassUnder regular tendering
proceduresUnder safety net
Community market price
Member State market price84%
80%78%
60%
Lastly, a premium per young male calf withdrawn from production before the age of 20 days
was granted as from April 1996 up to end 1999. In 1999 this premium amounts to EUR 115.00 per
young male either dairy or non-dairy calf and EUR 80.00 in the case of the United Kingdom (closed
on 31 July 1999)
The reorientation measures adopted in the bovine meat sector also include a substantial
reduction in the level of price support.  This is offset by the grant of direct income support, which is
not tied to the level of production, applicable as from 1 January 1993, and subject to:
- At farm level, a density threshold in livestock units (LSU) per hectare of forage area; and- At Community level, a ceiling on the number of animals eligible for premium.
3. Premiums
Payment of premiums in the bovine meat sector is subject to a density requirement in LSU/ha
of forage area, which has been fixed as follows:
In 1994: 3.0 LSU/ha.
In 1995: 2.5 LSU/ha.From 1996: 2.0 LSU/ha.
The density requirement does not apply, however, to holdings with less than 15 LSU.In addition, a supplementary extensification premium of EUR 36.23 per eligible head may be
granted when the stocking density is lower than 1.4 LSU/ha.  As from 1997, this supplementary premium
amounts to EUR 36.00 and to EUR 54.00 when the stocking density is lower than 1,0 LSU/ha.
(i) Special premium for young male bovine animals
The special premium for young male bovine animals applicable to each of the age groups at 10
months and over 22 months, is set at:
EUR 90.00 for 1995
EUR 108.70 for 1996
EUR 135.00 for bulls (only once at 10 months), and EUR 108.70 for steers as from 1997
In a country where the percentage of male bovine animals slaughtered during the "off grass"
period (IX-XI) exceeds 35 per cent of the total number slaughtered during the year, an additional
deseasonalization premium of a decreasing amount of EUR 72.45 to EUR18.11 per head may be granted
for bovine male animals slaughtered between 1 January and the end of May. In 1999, farmers in DenmarkG/SCM/N/60/EEC
Page 24
and Germany benefited from this measure at the full rate and in Ireland and Northern Ireland at 60 per
cent of the above amounts.
(ii) Premium for the maintenance of suckler cow herds
The suckler cow premium is granted to breeders who do not deliver milk or dairy products or
whose milk production is lower than a reference quantity of 120,000 kg.
The premium is set at:EUR 95.00 for 1994
EUR 120.00 for 1995EUR 144.90 as from 1996
An additional premium of EUR 30.19 per cent per cow may be granted at national level (of
which EUR 24.15 are supplied by the EAGGF) particular ly in regions where development in the sector is
lagging (Greece, Ireland and Northern Ireland, Portugal and certain regions of Southern Italy, Spain andFrance).
(vii) "PIGMEAT" SECTOR
1. Each year a basic price is fixed for meat of domestic swine, presented in carcasses or half
carcasses of a standard quality. The basic prices for the last three years has been 150.94 EUR/100 kg.
2. Intervention measures may be taken when, on the representative markets in the Community,
the average price for pig carcasses is less than 103 per cent of the basic price.
Where intervention measures are to be taken, the products for which private storage aid is to
be granted and, where appropriate, the products of a defined quality which are to be bought-in are
determined.  Likewise the prices at which the intervention agencies are to buy-in products and the
amount of private storage aid are fixed.
The buying-in prices for pig carcasses of standard quality may not be more than 92 per cent
nor less than 78 per cent of the basic price.
For products other than pig carcasses of standard quality, the buying-in prices are derived
taking into account differences in product value.
Public intervention has not been used since more than 20 years.
3. In order to support the pigmeat market, whic h suffers from very low prices since summer
1998, the Commission applied a private storage aid scheme from September 1998 to September 1999,
as indicated in the following summary:
Year Period Number of
weeksContracts concluded for frozen meats
(tons)Region of
application
1998/1999As from 28 September
1998 to 17 September
1999 50 427,000 ECG/SCM/N/60/EEC
Page 25
(viii) "SHEEPMEAT AND GOATMEAT" SECTOR
The market organisation for sheepmeat and goatmeat is governed by Regulation (EC)
No 2467/98.
The products covered are the following:- live animals;
- meat: fresh, chilled or frozen;
- processed products: meat and offal of sheep and goats, salted, dried or smoked,
preserved, 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 1999 for 5% of total EAGGF Guarantee expenditure.
A. Operation of the market in sheepmeat
Price arrangements
Every year the Council fixes the basic price for fresh or chilled sheep carcasses. It is the same
for the entire Community.
The basic price is seasonally adjusted by the Council on a proposal from the Commission, to
take account of seasonal variations on this market.
The institutional prices for the 1997 marketing year were fixed in the 1996/97 prices package.
For the 1998, 1999 and 2000 marketing years, the Council decided to maintain the basic price at the
level decided for the 1997 marketing year.
Price decision in EUR
Product 1999 and 2000
(Period of application) Amounts %
EUR/t Change
(4.1.1999-3.1.2000) sheepmeat and goat meat basic
price
(carcass weight) 5,040.7 0
B. Specific market instruments
Import and export arrangements
Since 30 June 1995, following the GATT arrangements, the levies, which were applied on
imports of sheepmeat were replaced by fixed duties.  The instrument for paying export refunds was
also abolished at this time.
The European Community has opened tariff quotas for imports of sheepmeat at a reduced
level of duty or at zero duty.  These concessions have been established under the Agreement on
Agriculture concluded within the framework of the Uruguay Round.G/SCM/N/60/EEC
Page 26
Private storage
When the Community market price and the market price of a given quotation area are less
than 90 per cent of the seasonally adjusted basic price and likely to remain so, private storage aids
may be decided on by the Commission for the quotation area in question.
Premiums
(a) Ewe and goat premium
The loss of income, which represents the difference between the basic price and the
arithmetical mean of the market prices recorded during the marketing year, is calculated at the end ofthe marketing year.  The amount of the premium pa yable per ewe is obtained by multiplying the loss
of income by the average annual production of lamb per ewe.
The Member States are authorized to pay all their producers two six-monthly advances of
30 per cent of the foreseeable amount of the premium.  The amount of the final premium is fixed atthe end of the marketing year, and the balance is paid accordingly.
In some clearly defined regions of the Community, eligibility for the premium has been
extended to she-goats. In this case, the unit am ount corresponds to 80 per cent of the ewe premium.
A distinction is made between ewes producing heavy lambs and those producing light lambs.
The calculation of the loss of income and the productivity coefficient are limited to the production of
heavy lambs.  The resulting amount is granted on ewes producing heavy lambs, while for ewes
producing light lambs the amount is reduced by 20 per cent.
In view of the increase in expenditure on this  sector, the Council, acting on a proposal of the
Commission, decided in June 1992 on an individual limit on guarantees.  Each producer could receive
the ewe/goat premium only within  the limit of the quantities received for the 1991 marketing year
(after deduction of between 1 and 3 per cent to resource a national reserve).  Where the number of
ewes in a Member State increased between 1989 and 1991, the increase would be added to the
individual limit of each producer.
(b) Premiums in less-favoured areas
In less-favoured areas, as defined in Directive 75/268/EEC, the ewe premium shall be
supplemented by a specific aid for sheep and goat amounting to EUR 6.641 per ewe producing heavy
lambs and to EUR 4.589 per ewe producing light lambs and per goat.  However from the 1998marketing year, the amount of aid for the two last categories of animals has been increased and set at
EUR 5.977.
Stabiliser
Where the total ewe number recorded for a marketing year exceeds a maximum guaranteed
quantity the premiums are reduced.  The reduction corresponds to the impact on the basic price of a
coefficient representing a 1 per cent cut in the basic price for each 1 per cent tranche by which the
maximum guaranteed quantity is exceeded.  This stabiliser applies from 23 May 1988, but has been
frozen at 7 per cent since 1993.G/SCM/N/60/EEC
Page 27
(ix) "FRUIT AND VEGETABLE" SECTOR
(a) Measures to promote the formation of producers' organizations
In order to encourage the formation of producers' organisations and facilitate their operation,
aid can be granted to such organisations established on the initiative of producers.  Theseorganisations are to promote the concentration of supply and the regularization of prices at the
producer stage and to make suitable technical means available for presenting and marketing products.
The following may be granted:1. During the preliminary recognition, (a) an aid to encourage the formation of the
producers’ organisation and facilitate its administrative operation; (b) a special loan tocover part of the investments required to attain recognition.
2. After recognition, a final assistance limited to 50 per cent (60 per cent under certain
conditions) of the actual expenditures of the operational funds, capped at (the most)
4.5 per cent of the value of the marketed production.  Those funds are used to financethe operational programme of the producers’ organization as well as market
withdrawals, supplementary to those of the normal scheme.
(b) Intervention measures
For certain fruit and vegetables  (Cauliflower, tomatoes, aubergines, melons, watermelons,
apricots, peaches and nectarines, table grapes, apples, pears, lemons, oranges, mandarines,
clementines and satsumas) producer organisations  can decide to withdraw products from the market.
If such decision is taken, growers receive a Community withdrawal compensation up to a
ceiling expressed as a percentage of the marketed quantity.  After a transitional period (from 1997 to
2002), the final ceiling for this compensation will be 10 per cent (8.5 per cent for apples and pears) of
the marketed quantity for the 2002/2003 marketing year.
During this transitional period, a threshold for intervention is set for products liable to give
rise to a too large volume of withdrawals.  If the threshold is exceeded, the withdrawal compensation
for the next marketing year is reduced accordingly. Individual growers can benefit from this schemethrough a producer organisation, for a volume not greater than 10 per cent of the growers’ marketed
production.
(c) Special measures for citrus fruit
(i) Measures for the marketing of fresh citrus fruit
The Community participates in promotion drives organized in collaboration with
various economic operators in this sector.
(ii) Measures to encourage recourse to processing
In order to encourage processing, an aid is granted to producers’ organisations for the
quantities delivered to processors.G/SCM/N/60/EEC
Page 28
(d) Special measures for nuts
In order to encourage the nuts sector (almonds, hazelnuts, walnuts, pistachios and carobs) to
modernise existing production and marketing conditions, provision has been made for the following
for the benefit of organisations of nut producers:
- Special aid for their establishment;- Aid for the establishment of a working capital fund to allow storage and improve
marketing;
- Aid to improve varieties and cultivation and modernize marketing under a plan to be
presented by producers' organizations;
.
- Participation in promotion drives organised in collaboration with the various economic
operators in this sector.
This aid is granted to the producers' organisations only to the extent that they furnish a
substantial proportion of the funds used to promote these activities.
(e) Special measures for table apples
The Community participates in promotion drives:- To encourage consumption of fresh apples, including research for variety diversification;
- To encourage consumption of products processed from apples harvested in the
Community.
(x) "BANANAS"  SECTOR
(a) Measures to promote the formation of producers' organisations
In order to encourage the formation of producers' organisations and facilitate their operation,
aid can be granted to such organisations established on the initiative of producers.  These
organizations are to promote the concentration of supply and the control of prices at the producer
stage and to provide members with appropriate technical facilities for packing and marketing bananas.
Start-up assistance may be granted during the first five years following recognition of the
organization, amounting to 5 per cent, 5 per cent, 4 per cent, 3 per cent, and 2 per cent of the value of
the production marketed, for each successive year, provided that the actual cost of establishing and
administering the organization are not exceeded.
(b) Compensatory aid to producers
A compensatory aid is payable to all producers who are members of a recognised producers'
organisation, and also to individual producers who are unable to join such an organization.  This is
limited to an annual maximum of 854,000 tonnes for all EC producers..
This compensation is calculated as the difference between a "flat-rate reference income" and
the "average production income" at ex-packing station stage obtained on the Community market
during the relevant year for bananas produced and marketed within the Community.  In 1998, when
the reference income was EUR 622.50/tonne ex packing station, the aid amounted toG/SCM/N/60/EEC
Page 29
EUR 244.20/tonne for a total of 786,232 tonnes.  There is also the possibility of a supplementary aid
for regions that have experienced especially severe market circumstances.  This supplementary aid is
decided on a yearly basis. In 1998, a supplementary aid was paid to producers in Madeira, in Portugal,
and amounted to EUR 31.90/tonne for a quantity of 30,436 tonnes.  For 1999, the reference income
has been increased to EUR 640.30/t.
(xi) "PROCESSED FRUIT AND VEGETABLES" SECTOR
Production aid
(a) A system of production aid, in the form of direct aid to processors, has been established for
pineapples preserves, Community production of which is located in the French overseas departments.
The system is designed to compensate the difference between the Community price and prices
prevailing in third countries.
The grant of this aid is conditional on payment of a minimum price to pineapple producers.
(b) Since marketing year 1978/79, a Community syst em of production aid has been in effect for
prunes prepared from dried plums, processed tomato products and peaches in syrup.
This system was extended to William pears in syrup with effect from marketing year 1979/80.
Lastly, Community aid in respect of dried grapes and dried figs was granted for the first time
for marketing year 1981/82.
Grant of this aid is conditional on payment of a minimum price to agricultural producers.
The amount of the aid is set so as to compen sate the difference between the price level of
Community raw material resulting from the minimum producer price and that of third-country
products.
As from marketing year 1990/91, until 1993/94 aid per hectare of specialised dried grapes
area has been progressive in parallel with a prog ressive reduction of the nominal producer price which
would affect the level of aid to be paid to processors.  As from marketing year 1994/95, there is nomore aid to processors.  The aid per hectare is granted within an area limit of 53,000 ha.
(c) In 1982 the Commission introduced a guarantee threshold for industrial tomatoes.
As from 1985, the threshold system was supplemented by a system of production quotas.
This dual system was applied until marketing year 1991/92.
For the 1992/93 marketing year the threshold system was again in force.  The Council
decided on 17 March 1993 to reintroduce, as from the 1993/1994 marketing year, the quota system as
operated during marketing years 1990/91 and 1991/92.  The system provides for a total quota of6,836,262 tonnes.
This amount is distributed as follows:- 4,585,253 tonnes for tomato concentrate;- 1,321,119 tonnes for whole peeled tomatoes;G/SCM/N/60/EEC
Page 30
- 929,890 tonnes for other tomato-based products.
(d) As from marketing year 1990/91, aid for peaches in syrup is also granted with a threshold
limit of 582,000 tonnes in terms of net weight, for the Community.
(e) As from marketing year 1989/90, production aid has been extended to other tomato products,
peaches and pears preserved in natural fruit juice and Rocha pears.  This extension has been made
without any increase in the existing guarantee threshold and/or quota.
(f) The production quota for aid in respect of William pears in syrup has been converted into a
guarantee threshold for aid in respect of William and Rocha pears in syrup and/or natural fruit juice.
The guarantee threshold is fixed at 102,805 tonnes.
Amount of aid
Product EUREUR/100 kg net
EUREUR/ha
1997/98EURO/100 kg net
EURO/ha
1998/99EURO/100 kg net
EURO/ha
1999/2000
Tomato concentrate (1) 26.783 24.412 21.619
S. Marzano whole peeled tomatoes- preserved
- frozen10.177 9.276 8.215
Roma whole peeled tomatoes 6.101 5.561 5.794
Non-whole tomatoes, peeled and frozen 5.024 4.579 4.925
Tomato juice (CN Heading 2002 90) (1)
- 7/8%
- 8/10%- 10/12%6.927
8.312
10.1596.314
7.5769.2605.591
6.7098.201
Tomato juice (CN Heading 2009 50)- 4.5/5%- 5/7%4.387
5.5413.998
5.0503.541
4.473
Tomato flakes (1) 89.123 81.232 71.940
Peaches in syrup/juice 8.128 6.065 6.103
Prunes 80.261 81.360 79.976
William pears in syrup/juice 15.532 12.517 11.886
Raisins 2.785 2.785 2.785
Dried figs- C quality 27.986 27.757 29.335
Pineapple 153.917 144.414 140.026
(1) This aid might be increased (by at the most 5.37%) at the end of the marketing year depending on
whether or not France and Portugal have used their quotas in totality.
(xii) "WINE"  SECTOR
1. Each year, before 1 August, a guide price is fixed for each type of table wine representative of
Community production.  A threshold price activating an intervention mechanism, termed the
"activating price" is applicable during each wine year for each type of wine for which a guide price is
fixed.  This price is applicable at the same stage as the guide price and corresponds to 92 per cent of
the latter.G/SCM/N/60/EEC
Page 31
Guide prices for wine year 1999/00 have been set as follows:
Type of wine
RI
RII
RIII
AI
AII
AIII(EUR/%vol/hl.)
(EUR/%vol/hl.)
(EUR/hl.)
(EUR/%vol/hl.)
(EUR/hl.)
(EUR/hl.)  3.828
  3.828
62.150
  3.828
82.810
94.570
As announced when prices were fixed for the preceding wine year, prices of table wines AI, RI
and RII have been fixed at the same level as in 1998/99.
2. Aid for private storage of table wines and grape must
The aim of private storage aid is to encourage wine producers to use storage to freeze existing
surplus supplies on the market for a certain period.  Private storage contracts can be concluded in cases
where the supplies of wine available at the beginning of the marketing year exceed foreseeable
requirements by four months. Storage for must is available when long-term storage for wine is decided
on.  Aid is conditional on the conclusion of storage contracts valid for a period of nine months.  Contracts
must be concluded between 16 December and 15 February.
3. Aid to concentrated grape must and rectified concentrated grape must used in the wine-
making
Aid is granted in respect of concentrated grape must and rectified concentrated grape must used
to increase the alcoholic strength of wines.  The amount of the aid is fixed in the light of the difference
between the cost of enrichment by means of grape must and sucrose, respectively.
For wine year 1999/2000, the aid is fixed, per degree of potential alcoholic strength by volume
per hectolitre of concentrated grape must and rectified concentrated grape must used, as follows:
- EUR 1.699 in the EC for concentrated grape must prepared from grapes originating in
the wine-growing zones C III (a) and C III (b);
- EUR 1.446 in the EC for concentrated grape must other than that referred to in the first
indent;
- EUR 2.206 in the EC for rectified concentrated grape must prepared from grapes
originating in the wine-growing zones C III (a) and C III (b) or produced outside the said
zones in facilities which began production prior to 30 June 1982, and prior to 1 January1986 in Spain, regardless of the origin of the grapes;
- EUR 1.953 in the EC for rectified concentrated grape must other than that referred to in
the third indent.G/SCM/N/60/EEC
Page 32
4. Aid to grapes, grape must and concentrated grape must used for purposes other than wine-
making
In order to encourage the use of wine products of Community origin for purposes other than
wine-making, a system of aid has been established.
(a) For grapes, grape must and concentrated grape must intended for the preparation of
grape juice, the amount of the aid for wine year 1999/2000 has been fixed for the entire
Community at:
- EUR 6.603 per quintal of grapes;
- EUR 8.257 per hectolitre of grape must;
- EUR 28.873 per hectolitre of concentrated grape must.
This corresponds to the level for the preceding wine year. 75 per cent of the aid is paid to
the processor. The remainder is withheld to finance campaigns to promote grape juice
consumption.
(b) The amount of aid during the wine year 1999/2000 for concentrated grape must used for
traditional preparation of certain products falling within CN Heading 22.06.00 in theUnited Kingdom and Ireland ("British and Irish wines"), has been fixed at the same level
as in the previous wine year.  This is with the application of the monetary coefficient ofEUR 0.2379/kg.  The product must be obtained entirely from grapes produced in wine-
growing zones C III (a) and C III (b) of the Community.
(c) The amount of aid for concentrated grape must used as the principal element in a group
of products with visible instructions for the preparation of a beverage that imitates wine
("home-made wine"), has been set at the same level as in preceding wine years. It is
marketed in the United Kingdom and in Ireland and the aid is EUR 0.3103/kg of
concentrated grape must used.
5. Distillation
(a) Preventive distillation
In each wine year from 1 September until a date to be determined (in most cases until
January/February) the Commission may open the possibility of preventive distillation of table wines at65 per cent of the guide price in order to improve the quality of wines marketed.  The Commission does
so where necessary and taking the harvest forecasts into account.  The distillation has to take place during
the wine marketing year (that means not later than 31 August) concerned.  The quantity of table wines
delivered for preventive distillation by each producer is taken into account for discharge of obligations
deriving from any compulsory distillation subsequently decided on.  For wine year 1999/2000, theeligible quantities are limited to 12 million hectoliters, shared between Member States.  The eligible
quantities by producer were limited to 30 hl per hectare and to 21 hl per hectare in Portugal.  For
Germany, Luxembourg, Austria  and in the Spanish part of wine-growing zone C these quantities are
limited to 40 per cent of a producer's table wine production.G/SCM/N/60/EEC
Page 33
(b) Compulsory distillation
The Commission orders compulsory distillation:
- When stocks exceed four months' normal requirements;
- or when market prices remain below 82 per cent of the guide price during a
representative period;
The Commission determines for each region the quantities to be delivered for compulsory
distillation in order to eliminate surpluses, and restore a normal market situation.  This volume is
allocated:
- As between the regions of the Community, grouped by Member States, pro rata  to the
production volumes in excess of a specific level for each of them, equal to a uniform
percentage of their average harvest calculated on the basis of the 1981/82, 1982/83 and
1983/84 wine years;
- in each region, among producers according to a progressive scale based on yield per
hectare which may vary with the region and taking account of past yields.
For wine marketing year 1999/2000, no compulsory distillation was launched.  The last time the
measure was launched was during the 1993/94 marketing year.
(c) Distillation at guaranteed minimum price, termed support distillation
Whenever compulsory distillation is decided on, the Commission at the same time makes
provision for distillation at a price equivalent to 82 per cent of the guide price for each type of table wine.
Even in the course of wine years during which no compulsory distillation is decided on, the
Commission may, if the market situation for table wine so requires, make provision for distillation at the
buying-in price of 82 per cent.  Distillation measures may be limited to certain table wines determined
having regard to the type concerned, or to one or more wine-producing zones.  For the marketing year
1999/2000, the Commission did not launch this measure.
(d) Compulsory distillation under system of wine deliveries
The aim is to avoid overpressing of grapes and to ensure that wine-making by-products are not
reused for the manufacture of poor quality wines.
The buying-in price for the products concerned has been set, for wine year 1999/2000, at
26 per cent of the guide price set for AI table wine for that wine year.
(e) Compulsory distillation of wines made from grapes normally intended for uses other than in table
wine
This measure, already established since 1976 for wines made from table grapes, has been
extended to all other cases of production surpluses likely to overburden the market for table wines
(case of Charentes products in France, of grapes intended for drying in Greece or table grapes inItaly).  The buying-in price of the wines concerned for wine year 1999/2000 is equivalent to 35 per
cent of the lowest guide price for wine year (AI white wine).G/SCM/N/60/EEC
Page 34
(f) Access to intervention measures
Access to price-support intervention measures is reserved to producers who have fulfilled their
obligations regarding compulsory distillation and the measures referred to under (e) and, where relevant,
(f) above.  They must show proof of having fulfilled those compulsory distillation obligations in the mostrecent wine year in which such distillation was decided.
6. Other support measures
(a) To the extent necessary to support the market for table wines, intervention measures may
be taken in respect of products covered by the wine regulations other than table wine.
This measure has practically never been applied.
(b) If it is found that prices have increased in the wine market of the Community so as to be
substantially above the guide price fixed for a particular type of wine, that the situation is
likely to continue and that as a result the market is being disrupted, the necessary
measures may be taken.
(c) The Council may adopt derogation measures that may be necessary to remedy any
exceptional situation resulting from natural disasters.
(xiii) "TOBACCO" SECTOR
The reform of the sector, adopted by the Council on 3 June 1992 radically changed the system
regulating tobacco, suppressing the intervention and export subsidies and the replacing target price by a
system of premium and guarantee thresholds.
The reformed market organisation regulated by Council Regulation (EEC) No. 2075/92 divides
raw tobacco into eight variety groups (Flue cured, Light air cured, Dark air cured, Fire cured, Sun cured,
Basmas, Katerini, Kaba Koulak classical).
(a) Premium
- Every year, the Council fixes the premium for each of the eight variety groups.
The amounts of the premium for the 1999 crop were as follows:
                   (EUR /Kg.)
I
FluecuredII
Light aircuredIII
Dark aircuredIV
Fire curedV
SuncuredVI
BasmasVII
KateriniVIII
KabaKoulak
2.98062 2.38423 2.38423 2.62199 2.38423 3.12957 3.50395 2.50377
- Premiums are paid directly to the tobacco producers unless the Member State opts for
payment through the first processors.
- Producers and groups of producers must have concluded a European crop contract in
order to be eligible for the premium.
- A supplementary amount to the premium is given to the northern tobacco producing
countries (France, Germany, Austria, Belgium) to compensate for the difference inG/SCM/N/60/EEC
Page 35
production costs with producers of the southern Member States.  The supplementary
amount to the 1999 premium has been fixed as follows:
Varieties
Badischer Geudertheimer, Pereg, Korso
Badischer Burley E and its hybrids
Virgin D and its hybrids, Virginia and its hybrids
Paraguay and its hybrids, Dragon vert and its hybrids
Phillippin, Petit Grammont (Flobecq), Semois, AppelterreEUR/kg.
0.5509
0.88220.50390.41120.4112
0.4112
(b) Guarantee thresholds
In 1992, the Council replaced the global guaranteed maximum quantity system by  guarantee
thresholds fixed by variety and by Member State.
The quantities produced in excess of the thresholds are not eligible for the premium.
The guarantee thresholds for the 1999 crop were fixed as follows:
I II III IV V Others Total
Flue cured Light air Dark air Fire cured Sun cured VI Basmas VII Katerini VIII Kaba
cured cured Koulak
Italy 48,125 46,655 18,056 7,173 12,000 500 132,509
Greece 30,700 12,400 14,800 26,100 22,250 20,407 126,657
Spain 29,000 2,470 10,800 30 42,300
Portugal 5,500 1,200 6,700
France 9,500 8,300 8,458 26,348
Germany 3,000 4,125 4,500 11,625
Belgium 191 1,662 1,853
Austria 30 446 100 576
Total 125,855 75,787 43,666 7,203 26,800 26,100 22750 20,407 348,568
c) Producer groups
In order to concentrate supply and adapt it to the qualitative requirements of the market, a special
aid amounting to 2 per cent of the premium is given to producer groups when they conclude cultivation
contracts.
(xiv) "TEXTILE FIBRES" SECTOR
1. COTTON
The aid system for the production of unginned cotton production has been modified with effect
from the 1995/96 marketing year, inter alia  with the aim of improving the functioning of the stabilizer
system.  The Community aid system fixes a guide price (106.30 EUR/100 kg. as from the 1995/95
marketing year) and an aid equal to the difference between this price and the world market price for
ginning enterprises that they pay producers a minimum price.  If the production of unginned cottonexceeds the guaranteed maximum quantity (GMQ) (1,031,000 tonnes), the guide price and the amount of
the aid are proportionally reduced.
In each Member State the reduction of the aid is proportional to the amount by which it exceeds
its GMQ, fixed at 782,000 tonnes for Greece and 249,000 tonnes for Spain.  This reduction (abatement) isunlimited, but if world prices allow the cost of the aid system to be limited, it is reduced.G/SCM/N/60/EEC
Page 36
On 1 September 1999, when the 1999/2000 marketing year began, the Commission fixed the
world market price at 21.765 EUR/100 kg., corresponding to an advance of aid of 41.8 EUR/100kg for
Spain and 41.50 EUR/100 kg for Greece (provisional amount).  These amounts were calculated on the
basis of estimated production of around 390,000 tonnes of unginned cotton for Spain and 1,231,500tonnes for Greece.
In December 1999, the Commission has proposed some modifications in the scheme of the
regime. Firstly an increase of the percentage of reduction in the guide price up to 0.6 per cent in case of
an overrun of the NGQ's, and secondly the possibility of introducing eco-conditional measures in the
same way as under the common rules for direct support.
2. FIBRE FLAX AND HEMP
Community regulations include the following measures:
(1) Production aid
Aid for fibre flax and hemp produced in the Community has been established in order to
give the producers concerned a fair income.  The amount of this aid is fixed each year
for every hectare sown and harvested.  As from the 1997/98 and the 1998/99 marketing
year, the contracts with processors are respectively obligatory for flax and hemp.
For hemp, the aid is given to the producer.  For fibre flax, one quarter of the aid is given
to the producer of the straw flax and three quarters to the person who buys the straw to
process into fibre.  If the producer processes the straw or has it processed on his behalf,
he receives the total amount of the aid. In addition, the Commission introduced inNovember 1998 criteria on normal cultivate work by fixing a minimum yield.
Aid (EUR/ha.) Area (ha.)
Fibre flax: 1999/2000 marketing
year815.86 133,000
Hemp: 1999/2000 marketing year 716.63 23,000
(2) Aid for private storage of flax fibre bundle and hemp
The owners of bundle may conclude storage contracts when there is a temporary market
imbalance in order to prevent or reduce any significant drop in prices. In 1991, for
example, this condition was met and the possibility was utilised.
(3) Aid to promote the use of flax fibre bundle
Community measures have been taken since the 1980/81 marketing year to promote the
use of flax in the Community.  It was decided to include in the basic regulations the
possibility of taking measures to promote the use of flax fibre bundle as from the1987/88 marketing year. These measures are entirely financed by a deduction from
production aid.
(4) In November 1999, the Commission proposed a radical reform of the aid scheme
regime. The reform is structured around two proposals. The first would include flax and
hemp in the general aid scheme for arable crops, aligning the aid per hectare with aid
rates for linseed. The second would introduce supplementary assistance in the form ofG/SCM/N/60/EEC
Page 37
processing aid for straw and distinguishing between high quality long fibre flax and low
quality short fibre flax and hemp.  The rarely used measures for private storage and
promotion should be abolished.  The reform is to enter into force on the 1 July 2000.
3. SILKWORMS
Community regulations in the silkworm-rearing sector include the following measures:(a) Production aid    
Aid for silkworms, reared in the Community, has been established in order to provide
silk producers with a fair income.  The amount of this aid is fixed annually for each boxof silk utilised.  The aid is given to the rearer who successfully rears silkworms.
In 1997/98, aid amounting to 133.26 EUR/box was granted.In the context of 2000/2001 package prices, the Commission has continued the multi-
annual approach followed for Agenda 2000 and previous reforms by fixing an amount
for the sector for an undefined period.
(b) Aid to improve quality
Community measures may be taken to improve the quality of silkworms and silkworm
eggs.  However, no such measure has been taken to date.
(xv) "DRIED FODDER" SECTOR
The common organisation of markets in the dried fodder sector covers the following products:
dehydrated fodder, the principal leguminous vegetables, sun- dried and ground, and protein concentrates
obtained from alfalfa and grass juice.
From 1 April 1995, beginning of the 1995/1996 marketing year, the Council has modified some
basic points of this sector.
Council Regulation (EC) No. 603/95 has established a system based on a flat rate aid for both
dehydrated and sun dried fodder within the limits of Maximum Guaranteed Quantities (MGQ) for both
types of fodder.
These MGQs are the following:
- Dehydrated fodder: 4,412,000 tonnes
- Sun-dried fodder: 443,500 tonnesThe MGQ is the sum of the National Guaranteed Quantities (NGQ).G/SCM/N/60/EEC
Page 38
The NGQs are the following:
Member States  National Guaranteed Quantities (in tonnes)
Dehydrated fodder Sun-dried fodder
UEBL 8,000 -
Denmark 334,000 -
Germany 421,000 -
Greece 32,000 5,500
Spain 1,224,000 101,000
France 1,455,000 150,000
Ireland 5,000 -
Italy 523,000 162,000
Netherlands 285,000 -
Austria 4,400 -
Portugal 5,000 25,000
Finland 3,000 -
Sweden 11,000 -
United Kingdom 102,000 -
Total 4,412,400 443,500
Within the MGQs, the amounts of the aid are:
-  Dehydrated fodder 68,83 EUR/tonne
-  Sun-dried fodder 38,64 EUR/tonne
If, in any marketing year, the quantities for which the aid is granted exceed the MGQ, the amount
of the aid is reduced as follows:
- If the excess is less or equal to 5 per cent of the corresponding MGQ, the amount of the
aid is reduced accordingly in all Member States;
- If the excess is more that 5 per cent of the corresponding MGQ, the amount of the aid is
reduced by 5 per cent in all Member States; moreover, supplementary reductions are
applied in those Member States where the eligible production exceeds the NGQ
increased by 5 per cent.
This rule was applied for the first time in the marketing year 1998/99 and a general reduction of
4.5 per cent was applied to all Member States
(xvi) "SEEDS"  SECTOR
Under the Community Regulations in force since 1 May 1972 and applied from 1 July 1972, a
production aid is granted for certain types of seed: rice and seeds of spelt wheat, maize and sorghum
hybrid, linseeds, leguminosae, and graminae.
When the market situation does not ensure an adequate income to the producer, an aid can be
granted. It consists of EC wide rates for each species or group of varieties.  It is fixed by quintal of
produced seeds, taking into account the market situation and the prices on the external market.
Aid is fixed for two years with the possibility of modification before the start of the second year,
if the Community market is likely to be disturbed.G/SCM/N/60/EEC
Page 39
The amount of aid for the marketing years 1996/97 to 2000/01 is as follows:
                       (EUR/100 kg..)
Products
1. Cereals (rice, spelt)
2. Oilseeds
3. Graminae
4. Leguminosae1996/97 and 1997/98
between 11.90 and 14.30
between 17.00 and 23.50
between 15.90 and 62.90
between 0 and 62.201998/99 and 1999/2000
between 14.37 and 17.27
between 20.53 and 28.38
between 19.20 and 75.95
between 0 and 75.11 2000/01
between 14.37 and 17.27
between 20.53 and 28.38
between 21.13 and 83.56
between 0 and 75.11
"HOPS"  SECTOR
In order to ensure a fair income for hop producers, the Community regulations provide for a
system of aid per hectare.  The Council fixed the aid at EUR 480.00/ha for the harvest 1996 to 2000
included, with no distinction between the various groups of varieties and payment being made at the endof the harvest year.  The aid comprises two amounts which existed previously, i.e. aid to producers and
aid for variety conversion; for this latter, up to 20% of the aid can be used.
IV. INDUSTRY SECTORS
(i) Community Framework Programmes in the Field of Research
There are two such framework programmes:
- The fifth framework programme of the European Community  for research,
technological development and demonstration activities (1998-2002)
- The  fifth framework programme of the European Atomic Energy Community
(EURATOM)  for research and training  activities ( 1998-2002).
1. Policy objective and purpose of the subsidy
Financial participation in Community research and technological development (RTD)
activities during the period  1998-2002 is provided through the two above-mentioned framework
programmes.
The legal bases of these programmes are, respectively, Article  166 of the EU Treaty and
Article 7 of the Treaty establishing the European Atomic Energy Community.
The fifth framework programme is aimed at strengthening the scientific and technological
bases of Community industry, encouraging the development of its competitiveness and contributing to
the implementation of the other Community policies under the Treaty.  These objectives and the
activities to be undertaken are listed in the Treaty and in the decision adopting the frameworkprogramme (Decision N° 182/1999/EC of 22 December 1998. .
The framework programme  of the European Atomic Energy Community has two main parts:
nuclear fission and controlled thermonuclear fusion.  The objectives and activities to be undertaken
are set out in the Decision 1999/64/Eurato m of  22 December 1998  of the Council.G/SCM/N/60/EEC
Page 40
The activities under the two Framework programmes are either fundamental research,
industrial research or pre-competitive development, and there is no financing of product development.
The arrangements for implementing the two Framework programmes are essentially the same
and are therefore described together in the following paragraph.
2. Form of subsidy
The framework programmes are implemented through specific programmes, which are the
subject of Council decisions
Community support to RTD activities is provided in the form of financing ("grants" within
the meaning of Article 25.3 of the WTO Agreement on Subsidies and Countervailing Measures)
granted to projects following an invitation for proposals and an evaluation procedure with
independent experts and selection procedure
Research projects  are carried out by participants established within the Community.  Non
Community participants whose country has signed an association agreement with the Community
may participate with Community funding to a  fifth Framework programme research project  . Non
Community participants whose country has not signed an association agreement with the Community
may participate without Community funding to a  fifth Framework programme research project
Research projects must provide for the participation of at least two partners, independent of
each other, and established in different Member States.  Partnerships may involve universities,
research organizations and firms.
The European Commission is responsible for the implementation of the programmes.
Contracts concluded by the Commission (see attached specimen contract) govern the rights and
obligations of each partner, in particular arrangements for the dissemination protection and
exploitation of research results (Article 167 of  the Treaty),.
3. Amount and duration of subsidy
1998-2002 Framework
ProgrammeTotal amounts
(in millions of
Euros)
 fifth framework programme of
the European Community  for
research, technological
development and demonstration
activities13 700
Fifth framework programme of
the European Atomic Energy
Community (EURATOM   1 260
Total Both programmes 14 960
4. Incidence on trade
The fifth RTD framework programmes   have no direct impact on trade.  As a general rule,
further work is always necessary for the results of a RTD project to lead to a commercially exploitable
process or product.G/SCM/N/60/EEC
Page 41
Furthermore, the results are shared among partners and may be made more widely available
under certain conditions, which serves the public interest.  One of the main benefits lies in
establishing links among research community partners, within Europe but also with non EU countries.
The economic impact of industrially-oriented programmes can be assessed only several years
after the completion of the projects, because firms have to make further investment to develop
competitive applications.
(ii) Aid to the coal industry
On 1 January 1994, Commission Decision No. 3632/93/ECSC1 on the Community rules for
State aid to the coal industry entered into force and will continue to operate until the expiry of theECSC Treaty in July 2002.
Article 1 of this Decision clearly define s what is considered to be an aid:
(i) All aid to the coal industry, whether specific or general, granted by Member States or
through State resources in any form whatsoever may be considered Community aid and
hence compatible with the proper functioning of the common market only if it complies
with Articles 2 to 9.
(ii) The term "aid" covers any direct or indirect measure or support by public authorities
linked to production, marketing and external trade which, even if it is not a burden on
public budgets, gives an economic advantage to coal undertakings by reducing the costs
which they would normally have to bear.
(iii) The term "aid" also covers the allocation, for the direct or indirect benefit of the coal
industry, of the charges rendered compulsory as a result of State intervention, without
any distinction being drawn between aid granted by the State and aid granted by public
or private bodies appointed by the State to administer such aid.
(iv) The term "aid" also covers aid elements contained in financing measures taken by
Member States in respect of coal undertakings which are not regarded as risk capital
provided to a company under standard market-economy practice.
In addition to the specific criteria applicable to  each category of aid, the Decision allows aid
to be considered compatible with the proper func tioning of the common market if it helps to achieve
at least one of the following objectives:
- to make, in the light of coal prices on international markets, further progress towards
economic viability with the aim of achieving a degression of aids;
- to solve the social and regional problems created by the total or partial reductions in the
activity of production units;
- to help the coal industry adjust to environmental protection standards.The Decision also contains provisions designed to make existing aid schemes more
transparent.  Article 9(7) allows for a transitiona l period not exceeding three years (which therefore
ended on 31 December 1996) after which aid would only be authorized if it was entered in the
national, regional or local public budgets of Member States or channelled through strictly equivalent
                                                     
1 OJ L 329 of 30 December 1993, p.12.G/SCM/N/60/EEC
Page 42
mechanisms (Article 2(2)).  In addition, from the beginning of 1994, all aid received by undertakings
has to be shown together with their profit-and-loss accounts as a separate item of revenue, distinct
from turnover (Article 2(3)).
Member States intending to grant aid to coal undertakings during the period 1994 to 2002 are
required to submit to the Commission in advance a modernization, rationalization and restructuring
plan to improve the economic viability of the undertakings concerned by reducing production costs
(Article 3(2)).  For undertakings unable to achieve this, aid will only be considered if they are subject
to a closure plan with a deadline occurring before the expiry of decision No. 3632/93/ECSC or, in
exceptional social and regional circumstances, if the closure occurs after the expiry of the Decision.
Aid to the coal industry under Decision 3632/93/ECSC
State aid authorized 1994 - 1999
In EUR million
1994 1995 1996 1997 1998 1999
Germany
- operating aid*- aid for the reduction of activity**- other***4845.8
0.0
181.44784.2
0.0
106.75361.8
0.0
104.73280.5
1637.7
412.02667.2
1606.8
513.42612.4
1613.4
380.4
Spain- operating aid*- aid for the reduction of activity**
- other***249.1
499.9
205.6298.8
501.3
255.3310.3
462.8
255.1285.4
419.1
363.8355.6
403.2
400.5327.8
399.6
343.9
France
- operating aid*- aid for the reduction of activity**- other***0.0
298.0614.80.0
56.9
612.30.0
87.6
592.3****
****
********
****
********
****
****
Portugal- operating aid*- aid for the reduction of activity**- other***0.0
1.83.60.0
0.00.90.0
0.00.90.0
0.00.00.0
0.00.00.0
0.00.0
United Kingdom- operating aid*- aid for the reduction of activity**- other***20.1
0.0
870.00.0
0.0
1622.80.0
0.0
512.80.0
0.0
512.30.0
0.0
1317.20.0
0.00.0
TOTAL EU- operating aid*- aid for the reduction of activity**- other***5115.0
799.7
1875.45081.0
558.1
2598.05673.4
550.4
1465.83565.9
2056.81288.13022.7
2010.02231.22940.3
2013.0
724.3
Aid in €/tonne- operating aid*
- aid for the reduction of activity**42.04
71.7340.43
53.3548.92
51.2934.30
169.9133.26
184.8037.60
115.03
Figures expressed in million EURs/euros: St ate aid authorised in national currency has been converted into EURs/euros at
the average exchange rate for the reference year. The totals for 1997, 1998 and 1999 do not include the figures for France.
* Aid granted under Article 3 of Decision No 3632/93/ECSC.
** Aid granted under Article 4 of Decision No 3632/93/ECSC.*** Inherited liabilities under Decision No 2064/86/ECSC  and aid granted under Articles 5, 6 and 7 of
Decision No 3632/93/ECSC**** France notified the aid granted for 1997, 1998 and 1999 but it was not authorised and is still being
considered by the Commission.G/SCM/N/60/EEC
Page 43
Coal production and imports in the Community (EUR-15):  1994-1999
(In million tonnes)
1999 1998 1997 1996 1995 1994
Community production 99.7 106.5 123.1 128.4 136.1 132.5
Imports into the Community 150.9 150.9 145.5 141.2 140.3 130.4
V. OTHER PROGRAMMES
1. SME Programme
1. Title of the programme
Third Multi-annual Programme for Small and Medium-sized Enterprises in the European
Union
2. Period covered by the notification
1 January 1997 – 31 December 2000
3. Policy Objective and/or purpose of the programme
(a) Simplify and improve the administrative and regulatory business environment;
(b) Improve the financial environment for enterprises(c) Help SMEs to Europeanise and internationalise their strategies;
(d) Enhance SME competitiveness and improve access to research, innovation and
training;
(e) Promote Entrepreneurship and support special target groups;
(f) Improve SME policy instruments.
4. Background and authority for the programme
Council Decision of 9 December 1996
COM (96) 591 final
5. Form of assistance granted - Grants from Community budget for
Co-financing with other sources in the public and/or private sector of events and initiatives in
pursuit of the above objectives:  Studies, seminars, training sessions, information campaigns, running
costs of instruments. Not all of the funds are disbursed through subsidies; some are used for the
procurement of services through contracts.
6. To whom and how the assistance is provided
Public, private or semi-public bodies, mainly in response to public calls for expression of
interest/calls for proposals.
7. Total expenditure under the programme
EUR 148 million over four years, of which approximately 80 per cent may be used for
subsidies and 20 per cent for administrative costs and technical assistance.G/SCM/N/60/EEC
Page 44
8. Duration of the programme
1 January 1997 –31 December 2000
9. Trade effects
Despite the fact that some actions are aimed at promoting access to new markets, the number
of SMEs capable of internationalising their activities is nevertheless small.  Consequently, the impact
on trade may be considered minimal.
2. JEV Programme
1. Title of the programme
The Joint European Venture (JEV) Programme
2. Period covered by the notification
1 January 1998 – 31 December 2000
3. Policy Objective and/or purpose of the programme
To provide financial contributions to small and medium-sized enterprises (SMEs) for the
setting-up of new transnational joint ventures within the European Union.
4. Background and authority for the programme
Council Decision of 19 May 1998
COM (98) 347 final
OJ L 155/43 (29.5.98)
5. Form of assistance granted - Grants from Community budget for:
The Community contribution is intended to cove r a part of the expenses incurred in the
conception and setting-up of transnational joint ventures.  The maximum contribution per project is
EUR 100,000 covering:
• Up to 50 per cent of the eligible expenses, with a maximum of EUR 50,000;
• Up to 10 per cent of the total amount of investment made in fixed assets.  Particular attention shall
be given to small enterprises with up to 100 employees.
6. To whom and how the assistance is provided
Direct support to SMEs within the European Union.  Applications are made to intermediaries,
which may be banks or other appropriate financial institutions.  The intermediaries (selected by a call
for expressions of interest) are entrusted with the evaluation of the applications and, in the event of afavourable opinion, make recommendations to the Commission.
7. Total expenditure under the programme
The indicative amount is EUR 100 million over three years.G/SCM/N/60/EEC
Page 45
8. Duration of the programme
1 January 1998 –31 December 2000
9. Trade effects
The programme is aimed at stimulating joint ventures inside the European Union.  The
programme will support 1,000 to 1,200 projects over three years, of which only a small number are
likely to have an impact on trade.  Consequently, the impact on trade may be considered minimal and
largely intra-EU.
3. FIFG and PESCA
1. Title of the programme
Financial Instrument of Fisheries Guidance (FIFG) – structural measures in the fisheries and
aquaculture sector, and PESCA – Community Initiative concerning the Restructuring of the FisheriesSector.
2. Period covered by the notification
1994-1999.
3. Policy and/or programme objectives
Community structural measures in the fisheries and aquaculture sector and the processing and
marketing of its products.
The objectives of the instruments are the following:- To contribute to achieving a sustainable balance between fishery resources and their
exploitation.
- To strengthen the competitiveness of structures and the development of economically
viable enterprises in the sector.
- To improve market supply and the value added to fisheries and aquaculture products.- To contribute to the revitalization of areas that depend on fisheries.
4. Legal authority
Article 39, Regulation (EC) No. 3699/ 93, Regulation (EC) No. 2080/93.
5. Type of aid
Aid to fishing fleets, aquaculture, processing and marketing circuits and port facilities.
6. To whom and how the subsidy is provided
Co-financing principle and principle of regionally diversified action.G/SCM/N/60/EEC
Page 46
Shipowners, enterprises, producer organizations, public and private bodies, professional
organizations, cooperatives, fishermen.
7. Total budget of the programme
EURR 2.7 billion   1994-99     0.765 billion EURR budgeted in 1999
8. Duration of the programme
1994-1999
9. Trade effects
The Community has a shortfall in fishery and aquaculture products and is a major importer of
these products from non-Community countries.  The structural aid has only a very small influence on
this situation.
4. Common Organization of Markets
1. Title of the measure
Common Organization of the Market in Fishery and Aquaculture Products.
2. Period covered by the notification
1994-1999.
3. Policy objectives and/or programme objectives
Stabilize the market, ensure a regular supply of high-quality products, guarantee reasonable
consumer prices and support fishermen's incomes.
4. Legal authority
Article 39, Regulation (EC) No. 3759/92.
5. Intervention mechanisms
Financial compensation, carry-over aid, autonomous withdrawal and carry-over, private
storage aid, compensatory payment for tuna supplied to industry.
6. To whom and how the subsidy is provided
Mechanisms implemented by producers' organizations.
Beneficiaries:  fishermen belonging to such organizations.
7. Total budget of the programme
20 MEURR per year.G/SCM/N/60/EEC
Page 47
8. Duration of the programme
Fishing years.
9. Effects on trade
None in so far as the Common Organization of Markets aims at regularizing prices and not at
artificially raising their level.
__________