52000PC0604

Proposal for a COUNCIL REGULATION on the common organisation of the markets in the sugar sector

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. THE PRESENT REGIME

The common organisation of the market in sugar is governed by Regulation (EC) No 2038/1993. Its essential features are rules on prices, quotas, trade with third countries and self-financing. The present sugar regime is applicable until 1 July 2001. A decision by the Council following Parliament opinion is required by 31 December 2000.

Community support for the sector involves a minimum price for sugar beet, which sugar manufacturers must pay to Community farmers and an intervention price for sugar at which the intervention agencies buy in all sugar offered to them by Community producers. These are fixed annually by the Council on a proposal from the Commission and have been frozen since 1984/85.

The rules on trade with third countries entail the application of import duties to sugar from third countries and the payment of refunds on sugar exported by the Community to third countries. This system takes account of the difference between prices on the international and Community markets, which is currently quite large.

The market organisation is characterised by tight control over production, with producers benefiting from guaranteed prices by way of quotas, fixed for each country and establishment. These quotas (A and B quotas) correspond in principle to the demand on the internal market, and to the export of excess quota sugar with export refunds, respectively. Producers are allowed to produce in excess of the level of the A+B quotas, the so-called C sugar, which has to be exported without refund.

Quota sugar exports incorporate two different elements. ACP and India imports into the EU under preferential arrangements at Community guaranteed prices can be re-exported financed by the EU-budget. Net exports are financed by a system of production levies paid in full by the sugar beet producers and the sugar industry.

The market organisation has fulfilled many of its stated objectives. The internal market has been supplied by a steady and even flow of white sugar and the budget burden has been limited by way of the self-financing system. In addition, it has provided for a stable income to sugar beet producers in a sector that is characterised by huge price volatility in world markets. Although intervention is possible, it has not taken place since 1986. This has been the result of the flexibility under the present regime to adjust quota production in the light of world market prices, internal consumption and imports. Finally, the ACP countries obtain significant economic benefit from the price guarantee for their preferential sugar exports to the EU in the light of the low world market prices.

But the regime has also come under criticism, which has focused on various issues. The lack of competition has been attributed to the high segmentation of the market and concentration in the industry. The cost to the consumer is considered to be high due to the difference between EU and world market prices by high tariffs and the need to restrict access to the EU market by the use of the special safeguard clause. Surplus production needs to be exported with the use of export refunds, with negative effects on developing countries due to pressure on world market prices, and restricted access to EU market. Finally, intensive sugar production has been considered generating negative impacts on the environment.

It should be noted that even if world market prices recover from their present depressed levels, not all current sugar producing areas in the Community would remain competitive, in the absence of support, with consequent effects on agricultural incomes in those areas.

2. REFLECTIONS ON REFORM

The main question is how the sugar regime should be overhauled. This question becomes more pertinent given the process of CAP reform initiated in 1992 and continued in 1999. But the answer to this question cannot be given in abstraction, but in the concrete environment of three major factors that influence the evolution of the CAP:

-the financial framework agreed upon in Berlin,

-the new WTO negotiations on agriculture,

-the future enlargement of the Union.

At this stage significant uncertainties remain on technical issues that would affect any radical change in the sugar regime. In addition, the present regime and any changes introduced into it should be carefully examined in terms of their impact on the sector as well as on competing crops, on support to the industry, on employment, on consumers, on the outermost regions, on LDCs and on developing countries, inter alia, by an overall cost/benefit comparison.

Fundamental reform of the sector to respond to the various criticisms will require both a review of the quota system, as well as of the level of intervention prices. Issues such as increasing market concentration, lack of competition or the gap between the price received by producers and the price paid by consumers are issues that are not only pertinent in the sugar sector, but throughout the food industry. Their relationships are complex and merit a thorough analysis.

The Commission will undertake a study in order to assess the above issues, as well as the degree of competition in major food sectors (not only in sugar, but also in meat, dairy and cereals). Further the issue of transmission of price changes and the reasons for the gap between producer and consumer prices need to be studied. In addition the impact on sugar and/or on competing arable crops of the continuation or the abolition of quotas needs to be studied.

The conclusion of these studies (by July 2002 at the latest) should provide the Commission with useful information in its examination of the future of the quota regime. At the same time, the state of WTO negotiations, and the already foreseen (under the Berlin agreement) reviews of the cereal and oilseed should provide a more complete picture that would allow a thorough review of the main features of the present regime.

In the light of the factors that were mentioned above, the Commission has examined the future of the sugar regime by looking into three alternative options that assumed the continuation of the quota system. These options are the following:

-a price reduction following the Agenda 2000 model combined with a compensation to the producers for the income loss,

-a progressive reduction in prices over a number of years,

-continuation of the present price level and minor adjustments of the quota level.

Since the first two options entail price reductions, some observations on the characteristics of the sugar sector are essential. Since a reduction in a (guaranteed) price implies loss of producer income, such action is advisable if the desired effect, a drop in production, generates benefits (for consumers and taxpayers) that outweigh costs (to producers).

The sugar sector is estimated to have very low responses at both the supply and the demand level to price changes. In addition, the transmission of price changes from the producer to the consumer seems to be also very low. Thus any price reduction would have to be significant (exceeding 25%) for a real effect on production to be felt.

The first option on the Agenda 2000 model consisting of price cuts with partial compensation to producers would have very important budgetary consequences (EUR 1 125 million for a 25% price cut if only 50% were to be compensated) for which there is no room under the present financial framework as decided in Berlin. Any change in the financial framework would necessitate reopening the discussion in the Council of the Agenda 2000 decisions.

The second option, that of a progressive reduction in prices over several years, would still have to result in a significant reduction as mentioned above in order to have any significant effect on production, competitiveness and on the market. Even if distributed over several years it would still have a substantial cumulative effect on producers' incomes. As in the Agenda 2000 model, producers will insist on compensation. Compared with the first option, the budgetary effect will be distributed with a different time profile, the impact on production would take longer and the potential benefit to consumers even more marginal.

All options would have substantial consequences on the guarantees that the ACP countries have under the present system (1.6 million t of imports to the EU at the Community guaranteed price). A 25% reduction in prices would therefore represent an income loss of EUR 250 million for the ACP countries).

Thus the third option of a continuation of the present regime to 2003 with some modifications was considered the most appropriate for the time being. Under this option, the decrease of the quota by 115 000 t would allow the Community to make a further step in fulfilling its WTO obligations, while the annual fixing of the quota level would leave the necessary flexibility of other adjustments, if market developments so entail. In addition, the abolition of the storage aid would lower expenditure by EUR 300 million while at the same time introducing more competition at the level of processing.

3. CONCLUSIONS

Among the alternatives examined by the Commission, the option of an interim continuation of the present regime to 2002/03 with some modifications was considered the most appropriate. Under this option:

-prices would remain unchanged for the next two years,

-quotas would be reduced by 115 000 t corresponding to 50% of the structural surplus taking into account production, consumption, imports and our WTO export limits,

-the flexibility of the present regime would be maintained in the form of the annual exercise of additional quota reduction to respect the WTO limit in the light of prevailing world market prices, allowing for developments internally as well as externally,

-the storage levy/refund system would be abolished entailing a reduction in annual EAGGF expenditure of EUR 300 million,

-minimum stocks would be abolished,

-production refunds for chemical industry to be fully covered by production levies.

The effect of the proposal would be a continuation of the drop in real prices since 1984/85; a somewhat increased competition amongst sugar producers with the abolition of the storage levy/refund system, in particular in those parts of the Community with several suppliers in the vicinity of major markets; and the simplification of the present system and easing of the administrative burden.

These proposals will not prejudice the option to be examined on the basis of the wide ranging studies outlined above.

These studies together with developments in the WTO negotiations, the budgetary situation for the CAP and the review of the other arable crop regimes (Berlin decision on Agenda 2000) will provide a good basis for Commission proposals for the future sugar regime from 2003/04 onwards.

ANNEXES

ANNEX I THE PRODUCTION SYSTEM - CHARACTERISTICS AND PERIOD OF APPLICATION

ANNEX II SUPPORT MEASURES (QUOTA AND PRICE GUARANTEES)

ANNEX III THE SYSTEM FOR REIMBURSING STORAGE COSTS

ANNEX IV SUPPLIES TO REFINERIES

ANNEX V OTHER ISSUES

ANNEX VI BUDGETARY IMPLICATIONS OF THE PROPOSAL

ANNEX I THE PRODUCTION SYSTEM - CHARACTERISTICS AND PERIOD OF APPLICATION

First of all, it should be remembered that the essential aims of the quota system are still to bring production into line with possible market outlets and, in respect of each marketing year, to cover through financial contributions by producers all the losses caused by the disposal of excess Community production. In view of these objectives, the following issues still have to be taken into account in drawing up the future production regime.

A. CONTINUATION OF THE PRODUCTION QUOTA SYSTEM

1. The last reform in 1995 and experience with its application

That reform was above all dictated by the need to bring the COM into line with the Community's commitments under the GATT which, for this sector, involved:

-a reduction in refunded exports by 21% in terms of volume and 36% in terms of budget over the six marketing years 1995/96 to 2000/01,

-a 20% tariff reduction over the same six marketing years.

Mechanisms were introduced into the regime enabling guarantees to be reduced on an annual basis to ensure that the abovementioned GATT commitments were met.

Practical experience since 1995 has shown that this reform enabled the COM to meet the challenges of the Agreement. In the sixth and last marketing year (2000/01) a reduction in production quotas (and the anticipated maximum needs of refineries) proved necessary as a result of:

1) full application of the Community's export commitments under the GATT agreement, with no option to use the carryover mechanism,

2) deterioration in the situation on the world sugar market making the budgetary commitment more restrictive than the quantitative commitment.

2. Developments on the world market

Since 1995/96, i.e. since the first marketing year in which the present regime in the Community was applied, coinciding with the entry into force of the GATT Agreement on Agriculture, the situation on the world market has been such that in spite of the continued improvement in consumption the overall surplus has continued unabated. Over this period and despite the financial crisis affecting the importing developing countries, exports have continued to rise at a rate of about 1.5 million tonnes/year. Nevertheless, sugar prices have fallen steadily to below 50% of 1995 levels, for both white sugar and raw sugar.

Table I: World sugar market1 (million tonnes)

(August-September, raw sugar equivalent)

>TABLE POSITION>

1 Source: F.O. Licht.

During the same period consumption continued to increase at an annual rate of 1.8%, which is considerably higher than the rate of 0.5% in the early 1990s.

However, consumption in the developed countries continues to be checked by demographic trends and the state of the economy and by the substitution of isoglucose for sugar (in the USA and Japan). Stocks increased sharply (+30%) and certainly affected prices on the world market. However, the forecasts for the 2000/01 marketing year point to production falling short of world consumption with, for the first time in the period, a change in price trends.

The intervention price for white sugar in the Community over the whole of the period covered by the present system (1995-2001) is 24.48 cents/lb (before deduction of the production levy) while the support price in the United States for the period 1996-2002 is 22.90 cents/lb for white beet sugar. Producer prices in Japan, the other most important traditional importer, are still much higher than in the United States.

Throughout this period, in spite of this situation, the Community had no major difficulties in disposing of its exportable white sugar surplus on the world market.

3. Market trends in the Community

In the wake of constant improvements in yields and the accession of Austria, Finland and Sweden, sugar production in the Community reached the high level of 18.0 million tonnes of white sugar equivalent in 1999/2000 as a result of the exceptional weather conditions that year. This production level during a normal processing year shows that production capacity in technical terms, at both the farming and industrial stages, is around 18.0 million tonnes in the Community of Fifteen. Internal consumption is fairly stable: 12.75 to 12.8 million tonnes. For the 2000/01 marketing year, forecasts indicate that output will shrink significantly as a result of the reduction in the size of areas sown (-7%) and an anticipated yield level closer to the average for previous marketing years.

Table 2: The Community sugar market(1)

(in '000 t of white sugar equivalent)

>TABLE POSITION>

(1) Figures are per marketing year (EU 15). (2) Forecast.

Production of sugar within the A and B quotas was very stable over this period at an average of 14.250 million tonnes. This corresponds to 98% of the sum of the A and B quotas granted.

Sugar consumption in the European Union is similar to that in other developed countries, at almost 34 kg per capita per annum. Also, there is a strong correlation between per capita sugar consumption and per capita GNP. The rise in consumption has slowed down sharply if not levelled off in the developed countries while it continues in the developing countries. High sugar consumption in the form of processed products is also a feature of consumption in the developed countries.

Thus, in the European Union sugar is consumed principally in the form of processed products: 73% of consumption is mainly in confectionery and chocolate, soft drinks, syrup, ice cream, fruit juice and bakery products. This "indirect" consumption has risen by 2.4% per annum since 1986 while "direct" consumption fell by 0.7% per annum.

The cost of sugar accounts for about 5% of the price of the processed products.

Table 2a: The isoglucose market in the EC

(in tonnes of dry matter)

>TABLE POSITION>

Table 2b: The inulin syrup market in the EC

(in tonnes of dry matter sugar/isoglucose equivalent)

>TABLE POSITION>

As regards inulin syrup, incorporated into the sugar quota system in 1994, production has grown over the years without ever reaching the total amount of quotas allocated. In 1999/2000, production in tonnes of dry matter sugar/isoglucose equivalent reached 73% of the quotas allocated. The development of domestic consumption has led to exports this marketing year accounting for 11% of production.

4. The socio-economic impact of the COM in sugar on Community agriculture

The results of the latest available structural study (1997) show that there are about 268 000 growers of sugar beet in the European Union cultivating 2 130 000 ha. The average size of land under beet is therefore about 8 ha/grower. Income from beet accounts for 2.6% of total agricultural output, covering 1.5% of total agricultural land.

According to a study made by the interbranch association for this sector in February 1998, beet cultivation in 1998 provided 45 000 full-time jobs in agriculture and 100 000 jobs in the industries and services upstream of agriculture. In that marketing year, the beet processing industry comprised 159 plants employing a workforce of more than 47 000. In addition, there were about 14 000 cane growers in the French overseas departments.

Beet is grown in all countries of the European Union except Luxembourg, and is a major factor in maintaining the economic and agronomic balance of the farms concerned.

The regions in which beet growing is most important for the agricultural economy (with more than 10% beet farms) are set out below, with (a) indicating the percentage of the total number of farms in the region accounted for by beet farms and (b) indicating the percentage of the total agricultural area in the region accounted for by the area under beet.

>TABLE POSITION>

Also, 20% of Community land under beet is in Structural Fund priority regions (Objective 1).

The share of total farm income accounted for by beet varies from region to region:

>TABLE POSITION>

However, the table below shows how important beet growing is in some regions.

>TABLE POSITION>

Source : EUROSTAT: 1 1997 Farm Structure Survey; 2 REGIO database.

5. Environmental issues

From an agronomic point of view, beet growing ensures crop rotation on farms, which is an essential element in the maintenance of soil balance and thus the structure and productivity of farmland and environmental compatibility. Thus, over the past thirty years, although productivity has increased, the quantity of inputs used has decreased. In any event, in order to promote the development of production methods reducing negative environmental impact (erosion, for example), and given the Member States' limited scope at present for taking specific environmental measures, it is proposed that each Member State should be able to submit appropriate measures on this subject. Therefore, the proposal is in line with the Union's general environmental objectives. It is proposed that the Member States should send the Commission a report on the environmental situation in the sector by 30 June 2002 at the latest.

Concerning the sugar industry, the application of EU provisions in the field of the environment has obliged this industry to take measures mainly concerning water treatment in order to lower its pollution levels, the limitation of emissions of pollutants into the air, the limitation of noise levels, as well as the treatment of solid waste and by-products disposal in order to respect all legal requirements. At present investments in equipment related to environmental actions represent about 10-15% of total annual investment by the Community sugar industry.

In the light of this, but also in view of:

-the European Community's obligation to import every year, at Community prices, 1.3 million tonnes of ACP and Indian sugar and 83 000 tonnes of raw sugar from third countries for supplying its refineries,

-the Berlin Agreement on financial perspectives,

-the need to continue to control guaranteed production, in particular to meet GATT commitments,

-the need for an in-depth analysis of sectoral aspects relating to concentration in the sugar industry and to the impact on the sector of a possible abolition of the quota arrangements,

-the need to take account of developments in WTO negotiations and the future enlargement of the Union.

It is necessary in the Commission's opinion to keep the production quota system for a period of two marketing years, 2001/02 and 2002/03. This will enable the Commission to carry out studies on concentration in the sugar industry and on the impact of abolishing the quota arrangements in the sector, including the question of quota transfers, by July 2002 at the latest. That date will also enable the Commission to carry out a complete analysis of the main common market organisations under the CAP in the form of a mid-term review, as decided in Berlin in March 1999. The review is to cover the cereals, oilseeds, sugar and probably the milk sectors, including a review of the financial perspectives in force until 2006.

B. QUOTA LEVELS

The review must focus on whether provision should be made for reducing quotas or maintaining them at their current levels. This issue should be assessed in the overall context of the CAP but also in the light of the particular situation of the sugar industry and the mechanisms available to make it possible to meet commitments under the GATT agreements.

1. The supply situation in the Union

Table 3: Production under Community guarantee and consumption in the Union taking into account the quotas available and the prospects for 2000/01

('000 t of white sugar)

>TABLE POSITION>

(1) Forecast, account not taken of the reduction in guarantees for the 2000/01 marketing year of some 500 000 t of quota.

Thus Community output within quota over the marketing years since the accession of Austria, Finland and Sweden has been fairly stable, at an average level for the Fifteen of around 14.250 million tonnes. The fact that production fell short of the quotas is due mainly to Portugal and the French overseas departments.

Consumption also remained stable at an average level of 12.700 million tonnes, although there was a slight increase towards the end of the period, in particular as a result of the measures taken by the Commission on production refunds for the chemical industry and the general improvement in the economic situation. In any case, this trend still remains to be consolidated.

2. The GATT restrictions. The structural overrun of quotas

Article 20 of the Marrakech Agreement on Agriculture establishes that the process of reform launched is an ongoing process. Thus, the WTO export limits undertaken for the last marketing year in which the agreements are to apply (2000/01) are to be maintained without the possibility of using the carryover mechanism for unused commitments until a new regime negotiated at the WTO is introduced.

These levels of constraints limit refunded exports of Community surpluses to EUR 499.1 million and 1.2735 million tonnes. At a level of production within the bounds of the quotas of 14.250 million tonnes and a consumption level cautiously estimated at 12.750 million tonnes, the surplus production under Community guarantees to be disposed of would be 14.250 minus 12.750 million tonnes = 1.500 million tonnes. There would be a structural surplus over and above the maximum exportable under the WTO estimated at 1.500 minus 1.273 = 0.227 million tonnes, i.e. 230 000 tonnes per marketing year.

3. Conclusion

In view of the above, and taking account of the restrictive context laid down in the Berlin budget agreement, the Commission cautiously concludes that - as a result of the annual quota reduction exercise needed to meet WTO commitments and depending on how consumption, stocks and imports progress - it is necessary as a minimum to reduce, for the duration of the new regime, the A and B production quotas for sugar, isoglucose and inulin syrup by a total of 115 000 tonnes, i.e. 50% of the abovementioned estimated structural surplus, without prejudice to application of the mechanisms provided for in Article 26 of the present basic Regulation. To establish a balance between the production quota system and the preferential import system, provision should be made to make a corresponding reduction in the anticipated maximum needs for the supply of raw sugar to Community refineries pursuant to Article 44(5) of the present basic Regulation.

C. CONTINUATION OF THE SYSTEM OF SELF-FINANCING THROUGH PRODUCTION LEVIES

1. Principles and mechanisms

The principle that the industry itself should finance the losses due to disposal of excess production under Community guarantee was strengthened with effect from the 1981/82 marketing year on a multiannual basis.

Since the 1986/87 marketing year, this principle has been made more strict in that the mechanisms (special elimination levy for 1986/87 and 1987/88 and supplementary levy as from the 1988/89 marketing year) have been adjusted to make the principle applicable to each individual marketing year.

The Commission points out that up to now the disposal of Community production in excess of quotas has been financed by producers (i.e. beet growers and manufacturers) paying a levy of a maximum of 2% of the white sugar intervention price applicable to all A and B quota production, a B levy of a maximum of 37.5% of that price and only applicable to B production and, if necessary, a supplementary levy (in addition to the A and B levies) to cover losses in each marketing year caused by the disposal of Community production in excess of internal Community consumption. This system is applied in full to production of inulin syrup. In the case of isoglucose, the mechanism applies mutatis mutandis but only to the industrial part. In addition, if for any reason a marketing year shows a negative or positive balance it has to be carried over to the following year. This means that self-financing has to be achieved by this cumulative system at the latest by the end of the period of application of the quota system.

However, the self-financing mechanisms provided for in Articles 33 to 36 of the basic Regulation did permit self-financing to be achieved over the 1986/87 to 1994/95 marketing years and again over the 1995/96 to 1999/2000 marketing years.

Starting from the Commission's assumption, i.e. that the balance of existing guarantees will be maintained for the next two marketing years, despite the overall reduction in the level of quotas for sugar, isoglucose and inulin syrup under the mechanisms provided for in Article 26 of the basic Regulation, it is merely necessary to introduce a special provision to permit the transition to the new application period for quotas.

2. Conclusions

The Commission therefore considers that it is not necessary to modify the mechanism for self-financing through production quotas or to readjust the balance, since the burdens imposed are directly related to the quotas allocated.

ANNEX II SUPPORT MEASURES (QUOTA AND PRICE GUARANTEES)

1. In addition to the reduction in quotas referred to in Section II, the Commission proposes, by maintaining the mechanisms provided for in Articles 26 and 44 of Regulation (EC) No 2038/1999, that these disposal guarantees could be reduced for one or more marketing years to the extent necessary. Taking into account forecasts for production, imports, consumption, storage, carryover, the exportable balance and the average loss covered by the self-financing arrangements due to export commitments for the marketing year in question, quotas for firms will be subject to a coefficient making it possible to determine the production volume which will benefit from these guarantees within the limits of the maximum exportable volume fixed in the WTO Agreements.

These coefficients have been determined by product so that the distribution of the reduction in guarantees resulting from the quotas does not disturb the balance of existing guarantees, which are determined by the level of the current A and B quotas and the costs for each quota under the self-financing system. The balance thus remains unchanged at Member State level and for each firm in a given Member State, and consequently so does the distribution of price and disposal guarantees resulting from the quotas for each Member State.

2. In view of the considerations set out above, the reductions in the disposal guarantees provided for in the previous paragraph and the measures outlined in Section IV, the Commission, while remaining prudent, considers that the system will be sufficiently robust to cope with the commitments made under the WTO and the budgetary constraints imposed by the Berlin agreement.

Therefore, the Commission proposes that the prices fixed for the 2000/01 marketing year be maintained for the 2001/02 and 2002/03 marketing years.

The Commission takes the view that the supply situation in the various Community regions should be checked in each marketing year.

ANNEX III THE SYSTEM FOR REIMBURSING STORAGE COSTS

1. Principles and mechanisms

Applicable since the introduction of the COM in 1968, the purpose of this system is to stabilise the Community sugar markets, which are characterised by seasonal production with disposal throughout the year for both internal consumption and export. Storage costs (financing + rent + insurance) for sugar produced under A and B quotas are advanced to manufacturers and to certain traders specialising in sugar, in the form of a monthly reimbursement fixed annually by the Council in the price package, currently amounting to EUR 3.3/tonne/month. Since 1981, C sugar carried over has also been eligible for the reimbursement. In order to ensure that the system is self-financing, a storage levy, currently EUR 20/tonne, is collected when the manufacturer concerned disposes of the A and B sugar. The Commission fixes the levy annually so that expected expenditure on reimbursements is fully covered by the levy after taking account of carryovers from previous marketing years. These levies form part of the Community's traditional own resources.

2. The current situation

Following the adoption on 6 May 1999 of the Interinstitutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline and improvement of the budgetary procedure, all proposals to amend existing Community policies must be examined in detail with the aim of making budgetary savings. Given the level of the storage levy compared with market prices, it is no longer a decisive element in maintaining the stability of those prices. Furthermore, in addition to generating annual savings of around EUR 300 million in the EAGGF Guarantee Section budget, abolition of the system would be in line with the principle of simplifying administrative procedures, with corresponding savings on administration.

3. The special case of carryovers

In addition, with effect from the 1981/82 marketing year, provision was made to permit C sugar carried over to qualify for reimbursement of storage costs under the Community system. After nineteen years of reimbursements, experience shows (see Table 5) that the carryover has been used since 1981/82 in ways that do not correspond to the original intention.

Table 5: Carryovers of C sugar

('000 tonnes)

>TABLE POSITION>

The Commission regards the virtually systematic practice of carrying over substantial quantities as encouraging the production of C sugar and as an obstacle to the correct operation of the quota system.

4. Conclusions

In view of the above and, in particular, of the savings to be made under the Berlin budgetary agreement, the Commission proposes the abolition of the system for the reimbursement of storage costs, including for all carryovers of C sugar.

In the interests of sound financial management, the Commission proposes that the balance, either positive or negative, at the end of the 2000/01 marketing year be transferred to the account for self-financing through production levies.

ANNEX IV SUPPLIES TO REFINERIES

When the COM in sugar was last reformed in 1995, new preferential supply arrangements were introduced for the additional quantities required. These arrangements introduced the following objectives into the COM in sugar:

-to harmonise throughout the Community the conditions of access to sugar for refining from various origins,

-to guarantee steady supplies, taking account of the need of existing refineries for stability,

-to apply a system for determining shortfalls based on a Community balance and agreements concluded, in particular, with the ACP States and India,

-to determine the anticipated maximum traditional needs for each Member State based on refining references during a certain period in the past and, in the case of Portugal and Finland, on the basis of the results of the accession negotiations.

The coverage of traditional needs was therefore guaranteed for a period equal to that proposed for the system of production under quota.

The management of supplies to refineries continued to be based on a Community raw sugar balance and determination of the additional quantities required in the light of the Community and preferential sugar available and the agreed needs, taking account, of course, of the quantities not available for refining.

The additional quantities required that are identified in this way would in future be covered by special preferential arrangements, with reduced import duties for raw cane sugar. The terms of these arrangements for imports of raw sugar from the ACP States and India were fixed under an agreement with those countries.

After five years of application, these preferential supply arrangements for the additional quantities required have proven their worth by ensuring uniform and effective supply arrangements for refineries. The Commission therefore proposes the roll-forward of the current arrangements, including the possibility of the alteration of the adjustment aid and the additional aid provided for in the present Article 43.

The Commission wishes, therefore, to inform the Council of its intention, as in 1995, to present it in the very near future with a recommendation under the terms of which the Council would authorise it to conduct negotiations with the ACP States party to Protocol No 3 of Annex IV to the Cotonou ACP-EC Agreement and the agreement with India. The negotiating directives for an agreement to permit application of the special preferential arrangements proposed could provide for the following:

-a duration of two marketing years, the same as the Community sugar production regime,

-a tariff quota for a quantity of raw sugar originating from those countries to be determined on the basis of the anticipated maximum annual requirements of Community refineries not met by the Community sugar available and by the preferential sugar referred to in Protocol No 3 of the Cotonou ACP-EC Agreement and the agreement with India on sugar,

-a minimum purchase price to be paid by refineries, which would be determined with reference to the intervention price for Community raw sugar,

-a special reduced import duty for quota quantities representing the preference granted to that raw sugar.

ANNEX V OTHER ISSUES

1. The financing of sugar used to manufacture chemicals

The Commission wants to come back to this matter for reasons already referred to in the past, since it is of the opinion that all quantities of sugar disposed of in the Community for use by the chemical industry reduce the quantities available for export to non-member countries. It therefore takes the view that, in the self-financing arrangements which apply to this sugar, the exemption from the production levy for a quantity of 60 000 tonnes provided for in Article 9 of Regulation (EEC) No 1010/86 should be abolished.

2. The minimum stock arrangements

These arrangements were introduced in 1974 following shortages of sugar on Community markets caused by soaring prices on the world market. Initially fixed at 10% of the annual quantity of sugar produced/refined by each undertaking, the figure has been reduced over the years and currently stands at 3%. This gives a minimum stock of around 400 000 tonnes or some eleven days' normal sugar consumption in the Community.

The situation encountered at the beginning of the 70s has never repeated itself and experience has shown that manufacturers and refiners maintain sufficient stocks to ensure normal supplies to the Community markets throughout the year. In addition, these arrangements are regarded as being very cumbersome and involving administrative costs out of all proportion to the benefits gained.

As with the system for reimbursing storage costs, the Commission is of the opinion that the current situation on the Community sugar markets does not justify the continuation of the minimum stock arrangements. It therefore proposes the deletion of Article 12 of the basic Regulation concerned and the repeal of the general rules laid down by Council Regulation (EEC) No 1789/81.

3. Simplification of the rules

Council Regulation (EEC) No 1785/81 on the common organisation of the markets in the sugar sector was formally consolidated in 1999 by Regulation (EC) No 2038/1999.

The reform of 2001 provides the opportunity to update the existing legislation in the light of, on the one hand, the Community's policy of simplification, and, on the other, the new institutional balance provided for in the amendments to the Treaty made since the introduction of the COM.

The Commission proposal, in addition to the innovations set out in this explanatory memorandum, therefore involves:

-a recasting of all the rules constituting the COM: the repeal of numerous provisions which are no longer applicable, in particular to permit the application of the COM to both those Member States that have acceded since the COM was introduced and to new products such as isoglucose and inulin syrup,

-the repeal of provisions giving the Council a legal basis for adopting regulations on a proposal from the Commission without an opinion from the European Parliament.

The simplification of the sugar legislation, initiated in this Commission proposal, will be monitored on a permanent basis, in particular during application of the implementing provisions for the new basic Regulation.

ANNEX VI BUDGETARY IMPLICATIONS OF THE PROPOSAL

The budgetary calculations are based on all the factors taken into account in the 2001 PDB, except for the level of the refund which is based on a world price of USD 195/t, resulting in a refund of EUR 500 per tonne.

These calculations, details of which are given in the financial statement and its annex, result in:

-a reduction in expenditure on the 2001 PDB of EUR 406.8 million in 2002 and EUR 389.9 million in 2003, and

-a reduction in own resources on the 2001 PDB of EUR 163.7 million in 2002 and EUR 148.7 million in 2003.

2000/0250 (CNS)

Proposal for a

COUNCIL REGULATION

on the common organisation of the markets in the sugar sector

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 36 and 37 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C

Having regard to the opinion of the European Parliament [2],

[2] OJ C

Having regard to the opinion of the Economic and Social Committee [3],

[3] OJ C

Whereas:

(1) In order to work properly, the common agricultural policy requires a common organisation of the markets in the sugar sector covering, in particular, sugar and isoglucose and inulin syrup, which are liquid substitutes for sugar.

(2) In order to achieve the objectives of the common agricultural policy, and in particular to ensure that Community growers of sugar beet and sugar cane continue to benefit from the necessary guarantees in respect of employment and standards of living, the market in sugar should be stabilised. This objective can be attained by allowing intervention agencies to buy in sugar. For this purpose, an intervention price for white sugar should be fixed for areas having no deficit, as well as an intervention price for raw sugar, and, every year for each of the deficit areas, a derived intervention price for white sugar and, if necessary, for raw sugar. The intervention price must be fixed at a level which will ensure a fair income for sugar-beet and sugar-cane producers while taking account of the interests of consumers. Such price guarantees for sugar also benefit sugar syrups, isoglucose and inulin syrup, the prices of which are based on sugar prices. In view of the financial perspective and the budgetary rules adopted by the European Council in Berlin in March 1999, the support prices in the sugar sector should be fixed for the whole duration of the new arrangements.

(3) The intervention price must be fixed for standard qualities of white sugar and raw sugar which should be defined. Such standard qualities should be average qualities representative of sugar produced in the Community and should be determined on the basis of criteria used by the sugar trade. It must also be possible to review the standard qualities to take account, in particular, of commercial requirements and developments in analysis techniques.

(4) So as not to interfere with the prices referred to above, intervention agencies must sell sugar at a price higher than the intervention price unless it is to be exported either without further processing or in the form of processed products, or used as animal feed. One consequence of this rule is that sugar cannot be made available to charitable organisations for use for human consumption in the Community. It should nevertheless be possible to dispose of sugar in this fashion through individual emergency aid operations intended to ensure the availability of supplies and thus representing at the same time a humanitarian operation. Such operations are effective only if rapidly implemented. The most appropriate procedure should therefore be used in such instances.

(5) These rules should ensure fair treatment for both manufacturers and producers of the basic products. In addition to the basic price derived from the intervention price for white sugar and fixed values representing the processing margin, the yield, undertakings' receipts from sales of molasses and, where applicable, the cost incurred in delivering beet to undertakings, minimum prices should therefore be fixed for A beet intended for processing into A sugar and for B beet intended for processing into B sugar, to be paid by sugar manufacturers buying beet. Specific instruments are needed to ensure a fair balance of rights and obligations between manufacturers and growers, in particular standard Community provisions should be laid down to govern the contractual relations between buyers and sellers of beet and adequate measures adopted for the same purpose for sugar cane.

(6) The reasons which have hitherto led the Community to adopt a production quota system for sugar, isoglucose and inulin syrup currently remain valid. However, that system has been adjusted to take account of recent developments in production, to provide the Community with the instruments necessary to ensure, in a fair yet efficient way, that the producers themselves meet in full the cost of disposing of the surpluses of Community production over consumption and to comply with the Community's obligations under the Agreements resulting from the Uruguay Round of multilateral trade negotiations, hereinafter referred to as "GATT", approved by Decision 94/800/EC [4].

[4] OJ L 336, 23.12.1994, p. 1.

(7) The agreement on agriculture concluded under the GATT agreements (hereinafter called as "the Agreement") in particular requires the Community to gradually reduce its export support for agricultural products and in particular for sugar under guarantee of production quotas. The Agreement provides for export support to be reduced, in terms of both the quantities covered and the level of the subsidies involved, over a transitional period. As a first step in adjusting the guarantees, the difference recorded for a given marketing year between the Community's exportable volume and the amount set in the Agreement should be apportioned between sugar, isoglucose and inulin syrup according to the percentages which the quotas of each represent in the total quota set for all three products for the Community. However, such a system should apply for a limited period only and should be regarded as transitional. In view, in particular, of the financial perspective and the budgetary rules adopted by the European Council in Berlin in March 1999 and the need to take account of the progress of negotiations under the WTO, the quota system should be maintained for the 2001/02 and 2002/03 marketing years. However, the situation should be reviewed in 2003.

(8) The common organisation of the markets in the sugar sector is based, firstly, on the principle that producers should bear full financial responsibility for the losses incurred each marketing year from disposing of that part of Community production under quota which is surplus to the Community's internal consumption and, secondly, on a differentiation of price guarantees for disposal reflecting the production quota allocated to each undertaking. A sugar production quota is allocated to each undertaking on the basis of its actual production during a particular reference period.

(9) Since commitments to reduce export support were implemented during the transitional period, the basic quantities of sugar and isoglucose and the quotas for inulin syrup should be kept at their present levels, but it must be possible for the relevant guarantees to be adjusted as necessary to enable the Community to comply with its commitments under the Agreement, while taking account of the fundamental factors affecting the situation of its sugar sector. The sector's system of self-financing through production levies and the production quota regime should be maintained.

(10) The producers should thus continue to assume financial responsibility by paying a basic production levy charged on all production of A and B sugar, which is however limited to 2% of the intervention price for white sugar, and a B levy charged on the production of B sugar up to a limit of 37.5 % of that price. In certain circumstances, producers of isoglucose and inulin syrup also pay a proportion of those contributions. As matters now stand, capping the levies in the manner described above means that in some marketing years sugar production is not fully self-financing. An additional levy should therefore be charged in those cases.

(11) In the interests of equal treatment, the additional levy should be calculated for each undertaking on the basis of its share in the revenue generated by the production levies which it has paid for the marketing year in question. A coefficient should therefore be fixed for the Community as a whole representing the ratio for that marketing year between the total loss recorded and the total revenue generated by the production levies concerned. It is necessary to specify the conditions under which beet and cane sellers are to contribute to eliminating the outstanding loss for the marketing year concerned.

(12) In any given marketing year, the consumption, production, importation, stock and carryover levels, and the average loss likely to be borne under the self-financing scheme, may be such that the production quotas allocated to each undertaking in the sugar sector result in an export volume exceeding that set in the Agreement. The guarantees linked to the quotas should therefore be adjusted each marketing year so that the Community can meet its commitments.

(13) The initial breakdown by product should be followed by a further breakdown between the Member States to take account of the guarantees linked to the quotas assigned to producing undertakings in each Member State so that those guarantees can be adjusted in a way that does not affect the existing balance of quotas and burden-sharing. A reduction coefficient for the A and B guarantees should therefore be fixed for each Member State based on the maximum contributions pertaining to those guarantees. Each Member State concerned should then make an allocation among undertakings which takes account of the guarantees arising for each undertaking from its own quotas.

(14) Given the need to allow for a certain structural adjustment of the processing industry and of beet and cane growing during the period in which these quotas are to be applied, Member States should be allowed to alter the quotas of undertakings by a maximum of 10%. However, in view of the particular situation of the sugar sector in Spain, Italy and the French overseas departments, this limit should not be applied in those regions while restructuring plans are being implemented.

(15) Since allocating production quotas to undertakings is a way of ensuring that producers are paid Community prices and have an outlet for their production, the interests of all the parties concerned, in particular beet and cane producers, should be taken into consideration when quotas are transferred inside production regions.

(16) To expand the outlets for sugar and isoglucose on the Community's internal market, it should be possible to put all sugar or isoglucose intended for manufacture in the Community of products other than foodstuffs out of production, within the meaning of the quota system, under conditions to be laid down.

(17) A Community market for sugar as for isoglucose and inulin syrup requires a common trading system at the external frontiers of the Community. A trading system including import levies and export refunds will stabilise the Community market, in particular, by preventing prices inside the Community from being affected by price fluctuations on the world market. A levy should therefore be charged on imports from third countries and a refund paid on exports to such countries to compensate for the difference between prices on the sugar market inside and outside the Community when world market prices are lower than the Community prices, and to provide a certain measure of protection for the Community industry processing isoglucose and inulin syrup.

(18) To ensure that these trading arrangements can function properly, it must be possible to regulate or prohibit the use of inward-processing arrangements when the situation on the market so requires.

(19) Should a shortage on the world market result in higher prices on the world market than in Community, or should all or part of the Community be unable to obtain normal supplies, it must be possible to act in good time to avoid a situation where regional surpluses are exported to third countries while an abnormal rise in Community prices makes it impossible to continue to supply consumers at reasonable prices.

(20) The competent authorities must be in a position to constantly monitor movements in trade with third countries so as to assess trends and apply such of the measures provided for in this Regulation as may prove necessary. To this end, there should be a system of import and export licences, to be issued only after a security has been lodged to ensure that the operation covered by a licence application is actually carried out.

(21) The system of customs duties makes it possible to dispense with all other forms of protection at the external frontiers of the Community. However, in exceptional circumstances the prices and customs duties machinery could break down. So as not to leave the Community market unprotected against disturbances which may ensue in such cases, the Community should be able to take whatever measures are necessary without delay. Such measures must comply with the Community's obligations under the GATT Agreements. Moreover, in order to avert problems of supply to the Community market, it must be possible to suspend customs duties on certain sugar products.

(22) The Community has made an overall examination of its refining industry. This examination has shown that if a steadier and more even flow of supplies to refineries throughout the Community is to be achieved, a clear estimate is needed of the traditional presumed maximum requirements of raw sugar for refining into white sugar in each of the Member States concerned, namely Finland, France, Portugal and the United Kingdom, using objective reference data and taking into account the quantities of sugar going for direct consumption recorded for the 1994/95 marketing year. The refining industry should therefore be allowed access, on certain terms and within the limit of its presumed needs, to all raw sugar originating in the Community, the ACP States and/or certain other traditional supplier countries to be specified, on the basis of a forward balance and in a particular order of priority, namely Community sugar, followed by preferential sugar covered by Protocol No 3 to Annex IV to the Cotonou ACP-EC Partnership Agreement, followed by sugar imported from ACP States and/or other traditional suppliers. A special preferential arrangement for access to the Community refining market should be introduced for raw sugar imported from the ACP States listed in Protocol No 3 and from India other than preferential sugar in the strict sense. In order to counterbalance the Community's commitments to reduce export support, the quantities imported to cover the traditional requirements of the refining industry should be reduced.

(23) Under Article 1 of the said Protocol and Article 1 of the Agreement between the European Economic Community and the Republic of India on cane sugar, these preferential import arrangements must be implemented within the framework of the common organisation of the market in sugar.

(24) Raw cane sugar imported under the said preferential arrangements must be refined under the fairest possible conditions of competition.

(25) Sugar refining is an important activity both at world level and in the Community, particularly in refineries converting raw sugar into white sugar. From a technical point of view, refining turns sugar cane into high-quality products that can meet market requirements. Moreover, these refineries are located in areas of high consumption. The Community's port-related refining industry is therefore a valuable complement to the beet-processing industry, especially in Finland, mainland Portugal, the United Kingdom and southern and western France.

(26) Examination of supplies to port refineries throughout the Community, suggests that special priority access should be given to raw cane sugar originating in the ACP States party to Protocol No 3 and India, under special agreements negotiated between the Community and the countries referred to in Protocol No 3 and/or other countries and based on an estimate of the Community's requirements once all available raw cane and beet sugar in the Community and preferential sugar has been refined.

(27) Until the 2000/01 marketing year, the refining industry received Community adjustment aid for refining preferential raw cane sugar and raw sugar from cane and beet harvested in the Community. In the light of experience, this aid should continue and provision should be made for it to be adjusted to take account of economic trends in the sugar sector, particularly manufacturing and refining margins.

(28) Some transitional measures may prove necessary and this need may arise at each changeover from one marketing year to the next or during a single marketing year. It should therefore be possible to adopt the appropriate measures.

(29) To facilitate implementation of this Regulation, a procedure is needed for close cooperation between Member States and the Commission within a Management Committee for Sugar.

(30) In order to take account of environmental objectives, Member States should draw up and implement suitable environmental measures concerning the use of agricultural land for the production of the products referred to in Article 1. In future, Member States must introduce measures to promote production in accordance with objective environmental criteria and remind producers of the need to comply with the legislation in force. The Member States must submit a report on the impact of national environmental measures on the sugar sector.

(31) Under Articles 2 and 3 of Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing of the common agricultural policy, the expenses incurred by the Member States in meeting obligations arising from the application of this Regulation are to be borne by the Community.

(32) Since the measures needed to implement this Regulation are management measures within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [5], they should be adopted by the management procedure provided for in Article 4 of that Decision.

[5] OJ L 184, 17.7.1999, p. 23.

(33) The support arrangements introduced by this Regulation replace the arrangements provided for by Council Regulation (EC) No 2038/1999 of 13 September 1999 on the common organisation of the markets in the sugar sector [6], which must be repealed along with Regulations (EEC) No 206/68 [7], (EEC) No 431/68 [8], (EEC) No 447/68 [9], (EEC) No 2049/69 [10], (EEC) No 793/72 [11], (EEC) No 741/75 [12], (EEC) No 1358/77 [13], (EEC) No 1789/81 [14], (EEC) No 193/82 [15], (EEC) No 1010/86 [16] and (EEC) No 2225/86 [17] laying down the general rules for its implementation.

[6] OJ L 252, 25.9.1999, p. 1. Regulation last amended by Commission Regulation (EC) No 1381/2000 of 28 June 2000 altering the export refunds on white sugar and raw sugar exported in the natural state (OJ L 156, 29.6.2000, p. 36).

[7] Council Regulation (EEC) No 206/68 of 20 February 1968 laying down outline provisions for contracts and inter-trade agreements on the purchase of beet (OJ L 47, 23.2.1968, p. 1). Regulation as last amended by the Act of Accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden (OJ C 241, 29.8.1994, p. 124).

[8] Council Regulation (EEC) No 431/68 of 9 April 1968 determining the standard quality for raw sugar and fixing the Community frontier crossing point for calculating c.i.f. prices for sugar (OJ L 89, 10.4.1968, p. 3). Regulation last amended by Regulation (EC) No 3290/94 (OJ L 349, 31.12.1994, p. 105).

[9] Council Regulation (EEC) No 447/68 of 9 April 1968 laying down general rules for intervention buying of sugar (OJ L 91, 12.4.1968, p. 5). Regulation last amended by Regulation (EEC) No 1359/77 (OJ L 156, 25.6.1977, p. 7).

[10] Council Regulation (EEC) No 2049/69 of 17 October 1969 laying down general rules on the denaturing of sugar for animal feed (OJ L 263, 21.10.1969, p. 1). Regulation last amended by Regulation (EC) No 260/96 (OJ L 34, 13.2.1996, p. 16).

[11] Council Regulation (EEC) No 793/72 of 17 April 1972 fixing the standard quality for white sugar (OJ L 94, 21.4.1972, p. 1).

[12] Council Regulation (EEC) No 741/75 of 18 March 1975 laying down special rules for the purchase of sugar beet (OJ L 74, 22.3.1975, p. 2).

[13] Council Regulation (EEC) No 1358/77 of 20 June 1977 laying down general rules for offsetting storage costs for sugar and repealing Regulation (EEC) No 750/68 (OJ L 156, 25.6.1977, p. 4). Regulation last amended by Regulation (EEC) No 3042/78 (OJ L 361, 23.12.1978, p. 8).

[14] Council Regulation (EEC) No 1789/81 of 30 June 1981 laying down general rules concerning the system of minimum stocks in the sugar sector (OJ L 177, 1.7.1981, p. 39). Regulation last amended by Regulation (EC) No 725/97 (OJ L 108, 25.4.1997, p. 13).

[15] Council Regulation (EEC) No 193/82 of 26 January 1982 laying down general rules for transfers of quotas in the sugar sector (OJ L 21, 29.1.1982, p. 3).

[16] Council Regulation (EEC) No 1010/86 of 25 March 1986 laying down general rules for the production refund on certain sugar products used in the chemical industry (OJ L 94, 9.4.1986, p. 9). Regulation last amended by Regulation (EC) No 1888/2000 (OJ L 227, 7.9.2000, p. 15).

[17] Council Regulation (EEC) No 2225/86 of 15 July 1986 laying down measures for the marketing of sugar produced in the French overseas departments and for the equalisation of the price conditions with preferential raw sugar (OJ L 194, 17.7.1986, p. 7).

(34) Regulation (EC) No 2038/1999 provided for a system for compensating storage costs. Since the regime to be introduced by this Regulation does not include such a system, transitional provisions should be adopted to ease the transition from the old system to the new one. To that end, firstly, the balance of the old compensation system for storage costs should be charged, if negative, or credited, if positive, to the system for financing the disposal of surplus Community production in the sugar sector and, secondly, the date of disposal for the purposes of paying the storage levy for sugar in storage at the date of entry into application of this Regulation should be deemed to be the last day of the 2000/01 marketing year.

(35) It must be possible to adopt transitional rules to ease the transition from the regime provided for by Regulation (EC) No 2038/1999 to the new arrangements introduced by this Regulation,

HAS ADOPTED THIS REGULATION:

Article 1 Scope and definitions

1. The common organisation of the markets in the sugar sector established by this Regulation shall cover the following products:

CN Code // Description

(a) 1701 // Cane or beet sugar and chemically pure sucrose, in solid form

(b) 1212 91 1212 92 00 // Sugar beet Sugar cane

(c) 1703 // Molasses resulting from the extraction or refining of sugar

(d) 1702 20 1702 60 95 1702 90 99 1702 90 60 1702 90 71 2106 90 59 // Maple sugar and maple syrup Other sugars in solid form and sugar syrups, not containing added flavouring or colouring matter, but not including lactose, glucose, maltodextrine and isoglucose Artificial honey, whether or not mixed with natural honey Caramel containing 50% or more by weight of sucrose in the dry matter Flavoured or coloured sugar syrups, other than isoglucose, lactose, glucose and maltodextrine syrups

(e) 2303 20 // Beet pulp, bagasse and other waste of sugar manufacture

(f) 1702 30 10 1702 40 10 1702 60 10 1702 90 30 // Isoglucose

(g) 2106 90 30 // Flavoured or coloured isoglucose syrups

(h) 1702 60 80 1702 90 80 // Inulin syrup

2. For the purposes of this Regulation:

(a) "white sugars" means sugars, not flavoured or coloured or containing any other added substances, containing, in the dry state, 99.5% or more by weight of sucrose, determined by the polarimetric method;

(b) "raw sugars" means sugars, not flavoured or coloured or containing any other added substances, containing, in the dry state, 99.5% by weight of sucrose, determined by the polarimetric method;

(c) "isoglucose" means the product obtained from glucose or its polymers with a content by weight in the dry state of at least 10% fructose;

(d) "inulin syrup" means the immediate product obtained by hydrolysis of inulin or oligofructoses, containing in the dry state at least 10% fructose in free form or as sucrose;

(e) "A sugar" and "A isoglucose" means any quantity of sugar or isoglucose production attributed to a specific marketing year under the A quota of the undertaking concerned;

(f) "B sugar" and "B isoglucose" means any quantity of sugar or isoglucose production attributed to a specific marketing year in excess of the A quota but within the sum of the A and B quotas of the undertaking concerned;

(g) "C sugar" and "C isoglucose" means any quantity of sugar or isoglucose production attributed to a specific marketing year either over and above the sum of the A and B quotas of the undertaking concerned or by an undertaking which has no quota;

(h) "A beet" means all beet processed into A sugar;

(i) "B beet" means all beet processed into B sugar;

(j) "A inulin syrup" means any quantity of inulin syrup production, expressed as sugar/isoglucose equivalent, attributed to a specific marketing year under the A quota of the undertaking concerned;

(k) "B inulin syrup" means any quantity of inulin syrup production, expressed as sugar/isoglucose equivalent, attributed to a specific marketing year in excess of the A quota but within the sum of the A and B quotas of the undertaking concerned;

(l) "C inulin syrup" means any quantity of inulin syrup production, expressed as sugar/isoglucose equivalent, attributed to a specific marketing year either over and above the sum of the A and B quotas of the undertaking concerned or by an undertaking which has no quota;

(m) for all the products listed in paragraph 1, "marketing year" means the period beginning on 1 July and ending on 30 June of the following year.

TITLE I INTERNAL MARKET Chapter 1 PRICES

Article 2

1. For the 2001/02 and 2002/03 marketing years, for white sugar:

(a) the intervention price shall be EUR 63.19/100 kg,

(b) a derived intervention price shall be fixed each year for each of the deficit areas.

2. For the 2001/02 and 2002/03 marketing years, the intervention price for raw sugar shall be EUR 52.37/100 kg.

Where it is necessary to market raw sugar produced in a deficit area, a derived intervention price may be fixed for such sugar.

3. The intervention prices referred to in paragraphs 1 and 2 shall apply to unpacked sugar, ex-factory, loaded on to a means of transport chosen by the purchaser.

They shall be valid for white sugar and raw sugar of the standard quality described in Annex I.

4. Acting in accordance with the procedure referred to in Article 42(2), the Commission shall fix derived intervention prices for white sugar each year, and for raw sugar when necessary.

Derived intervention prices shall be fixed taking account of the costs of transporting sugar from surplus areas to deficit areas.

The Commission may amend Annex I in accordance with the same procedure.

Article 3

1. For the 2001/02 and 2002/03 marketing years, the basic price for beet of the standard quality shall be EUR 47.67 per tonne delivered to the collection centre.

The standard quality for beet shall be as described in Annex II.

2. The Commission may amend Annex II in accordance with the procedure referred to in Article 42(2).

Article 4

1. For the 2001/02 and 2002/03 marketing years:

(a) the minimum price for A beet shall be EUR 46.72 per tonne;

(b) subject to Article 15(5), the minimum price for B beet shall be EUR 32.42 per tonne.

2. For areas for which a derived intervention price is fixed for white sugar, the minimum prices for A beet and B beet shall be increased by an amount equal to the difference between the derived intervention price for the area concerned and the intervention price, such amount being adjusted by the coefficient 1.30.

Article 5

1. Without prejudice to Article 21 and the provisions adopted under Article 14, sugar manufacturers buying beet:

(a) suitable for processing into sugar, and

(b) intended for processing into sugar,

shall be required to pay at least a minimum price, adjusted by price increases or reductions to allow for deviations from the standard quality.

2. The minimum price referred to in paragraph 1 shall correspond:

(a) in non-deficit areas, to:

-the minimum price for A beet, in the case of beet to be processed into A sugar,

-the minimum price for B beet, in the case of beet to be processed into B sugar;

(b) in deficit areas:

-the minimum price for A beet adjusted in accordance with Article 4(2), in the case of beet to be processed into A sugar,

-the minimum price for B beet adjusted in accordance with Article 4(2), in the case of beet to be processed into B sugar.

3. Detailed rules for applying this Article, as well as the price increases and reductions, shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 6

1. Agreements within the trade and contracts concluded between buyers and sellers of beet must conform to the standard provisions set out in Annex III hereto, in particular as regards the conditions governing the purchase, delivery, taking over and payment of beet.

2. The terms for buying sugar cane shall be governed by agreements within the trade concluded between Community sugar-cane producers and Community sugar manufacturers.

The terms for buying the agricultural raw materials for the manufacture of inulin syrup shall be governed by agreements within the trade between Community growers of those raw materials and inulin syrup producers.

3. If necessary, detailed rules for applying paragraphs 1 and 2 shall be adopted in accordance with the procedure referred to in Article 42(2).

4. If no agreements within the trade exist, the Member State concerned may take the necessary steps under this Regulation to protect the interests of the parties concerned.

The Member State concerned shall inform the Commission without delay of measures taken under the first subparagraph.

Article 7

1. Throughout the marketing year, and subject to conditions to be determined in accordance with paragraphs 5 and 6, the intervention agency designated by each sugar-producing Member State shall be required to buy in any white and raw sugar offered to it which has been manufactured from beet and cane harvested in the Community, provided a storage contract has first been concluded between the seller and the intervention agency for the sugar concerned.

Intervention agencies shall buy in at the intervention price or the derived intervention price, as the case may be, valid for the area in which the sugar is located at the time of buying in. If the quality of the sugar differs from the standard quality for which the intervention price was fixed, then this price shall be increased or reduced accordingly.

2. It may be decided to grant premiums for sugar in one of the situations referred to in Article 23(2) of the Treaty which is rendered unfit for human consumption.

3. It may be decided to grant production refunds on the products listed in Article 1(1)(a),(f) and (h) and on the syrups listed in Article 1(1)(d), where these fall within one of the situations referred to in Article 23(2) of the Treaty and are used to manufacture certain products of the chemical industry.

4. Appropriate measures shall be taken concerning the transport costs of sugar produced in the French overseas departments and, where applicable, its storage in those departments.

If the supply of refineries so requires, raw sugar manufactured from beet harvested in the Community may qualify for measures as referred to in the first subparagraph.

For the purposes of this Article, "refinery" means a production unit whose sole activity consists in refining either raw sugar or syrups produced prior to the crystallising stage.

5. Detailed rules for applying this Article shall be adopted in accordance with the procedure referred to in Article 42(2), covering in particular:

-the minimum quality and quantity requirements for intervention,

-the price increases and reductions applicable on intervention,

-the procedures and requirements for taking over by the intervention agencies,

-the conditions for granting premiums and the amounts of such premiums,

-the conditions for granting production refunds and the amounts of such refunds,

-the measures referred to in paragraph 4.

Article 8

Where Article 31 is applied to help ensure supplies to the Community or one of its regions, the Commission shall adopt special intervention measures in accordance with the procedure referred to in Article 42(2).

Such measures may not result in Community sugar manufacturers being obliged to sell sugar to intervention agencies.

Article 9

1. Intervention agencies may sell sugar only at a price which is higher than the intervention price.

It may, however, be decided that intervention agencies may sell sugar at a price equal to or lower than the intervention price if the sugar is intended:

-for use as animal feed, or

-for export, either without further processing or after processing into the products listed in Annex I to the Treaty or into the goods listed in Annex V to this Regulation.

2. However, notwithstanding paragraph 1, it may be decided that intervention agencies are to make unprocessed sugar held by them available, for human consumption on the internal market of the Community, to charitable organisations - recognised by the Member State concerned or by the Commission in cases where a Member State has not recognised any such organisations - at a price which is lower than the intervention price, or free of charge, for free distribution as part of individual emergency aid operations.

3. Detailed rules for applying this Article and decisions to make sugar available under paragraph 2 shall be adopted in accordance with the procedure referred to in Article 42(2).

Chapter 2 QUOTAS

Article 10

1. Chapter 2 shall apply to the 2001/02 and 2002/03 marketing years.

2. The basic quantities for the production of A and B sugar, isoglucose and inulin syrup shall be those fixed in Article 11(2).

3. The guarantees for the disposal of sugar, isoglucose and inulin syrup produced under quota may be reduced for one or more marketing years in order to comply with the Community's commitments under the Agricultural Agreement concluded under Article 300(2) of the Treaty.

4. For the purposes of applying paragraph 3, the guaranteed quantity under quotas shall be fixed before 1 October for each marketing year on the basis of forecasts relating to production, imports, consumption, storage, carryovers, the exportable balance and the average loss likely to be borne by the self-financing scheme within the meaning of Article 15(1)(d). If these forecasts show that the exportable balance for the marketing year in question is greater than the maximum laid down in the Agreement, then the guaranteed quantity shall be reduced by the difference in accordance with the procedure referred to in Article 42(2). This difference shall be split between sugar, isoglucose and inulin syrup according to the percentage represented by the sum of each product's A and B quotas for the entire Community. It shall then be further broken down by Member State and by product by applying the relevant coefficient as set out in the table below:

>TABLE POSITION>

5. The Member State shall then allocate the difference corresponding to it among the producer undertakings established in its territory on the basis of the ratio between their A and B quotas for the product in question and the basic quantity A and the basic quantity B for the Member State for that product.

Sugar, isoglucose and inulin syrup produced in excess of the quantity guaranteed shall be treated as C sugar, C isoglucose and C inulin syrup.

6. Detailed rules for applying this Article, in particular for reducing the guaranteed quantity and, where applicable, adjusting that quantity with a view to fixing the guaranteed quantity for the following marketing year, shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 11

1. Under the terms of this Chapter, the Member States shall allocate an A and B quota to each undertaking producing sugar, each undertaking producing isoglucose and each undertaking producing inulin syrup established in its territory and provided with an A and B quota during the 2000/01 marketing year.

2. For the purposes of allocating the A and B quotas referred to in paragraph 1, the basic quantities shall be fixed as follows:

1. Basic quantities A

>TABLE POSITION>

(1) In tonnes of white sugar.

(2) In tonnes of dry matter.

(3) In tonnes of dry matter sugar/isoglucose equivalent.

2. Basic quantities B

>TABLE POSITION>

(1) In tonnes of white sugar.

(2) In tonnes of dry matter.

(3) In tonnes of dry matter sugar/isoglucose equivalent.

3. Without prejudice to Article 10(3), (4), (5) and (6) and Article 12, the A and B quotas of undertakings producing sugar, undertakings producing isoglucose and undertakings producing inulin syrup shall be those assigned by the Member States for the 2000/01 marketing year before application of Article 26(5) of Regulation (EC) No 2038/1999, adjusted according to the basic quantities fixed in paragraph 2 in accordance with the procedure laid down in Article 10(5).

4. Detailed rules for implementing this Article shall be adopted, as the need arises, in accordance with the procedure referred to in Article 42(2).

Article 12

1. Member States may transfer A and B quotas between undertakings in accordance with this Article and taking into consideration the interests of each of the parties concerned, particularly sugar beet and cane producers.

The first subparagraph shall not apply to inulin syrup.

2. Member States may reduce the A and B quotas of each sugar-producing undertaking or isoglucose-producing undertaking established in their territories by no more than 10% of the A quota or the B quota, as the case may be, fixed for each undertaking under Article 11.

The 10% limit referred to in the first subparagraph shall not apply in Italy, Spain and the French overseas departments in cases where quotas are transferred under restructuring plans in the beet, cane and sugar sectors in the region concerned and to the extent necessary to permit such plans to be implemented.

Restructuring plans and the ensuing measures affecting the A and B quotas shall be communicated to the Commission without delay.

3. The quantities of A quotas and B quotas thus withdrawn shall be allocated by the Member States to one or more other undertakings, whether or not in possession of a quota, situated in the same region, within the meaning of Article 11(2), as the undertakings from which those quantities were withdrawn.

Nevertheless, France may reduce the A quotas of undertakings established in its overseas departments, as fixed under Article 11, by not more than 30 000 tonnes of white sugar and may reallocate the quantities thus withdrawn to one or more other undertakings established in metropolitan France. The A quota of each undertaking concerned may not be less after reduction than the average quantity of sugar it produced under its quota as recorded in each of the 1977/78, 1978/79 and 1979/80 marketing years.

4. Annex IV lays down detailed rules on adjusting quotas in the event of mergers and transfers of undertakings.

5. Detailed rules for applying this Article shall be adopted as necessary in accordance with the procedure referred to in Article 42(2).

Article 13

1. C sugar not carried forward under Article 14, C isoglucose and C inulin syrup may not be disposed of on the Community's internal market and must be exported without further processing before 1 January following the end of the marketing year concerned.

Articles 7, 27 and 33 shall not apply to C sugar, C isoglucose and C inulin syrup.

2. Exceptionally, and to the extent necessary to guarantee the Community's sugar supplies, it may be decided that Article 33 shall apply to C sugar. In that event, it shall be decided at the same time that the entire quantity of C sugar concerned may be definitively disposed of on the internal market without the amount provided for in paragraph 3 of this Article being levied.

3. Detailed rules for applying this Article shall be adopted in accordance with the procedure referred to in Article 42(2).

These rules shall provide in particular for a charge to be levied on C sugar, C isoglucose and C inulin syrup as referred to in paragraph 1 for which no proof has been supplied, by a date to be determined, that it has been exported without further processing within the time laid down.

Article 14

1. Each undertaking may decide to carry forward all or part of the sugar it has produced in excess of it's a quota to the next marketing year to be treated as part of that year's production. That decision shall be irrevocable.

Each undertaking may decide to carry forward all or part of its production of A sugar and B sugar which has become C sugar after application of Article 10(3), (4), (5) and (6) to the next marketing year to be treated as part of that year's production. That decision shall also be irrevocable. Furthermore, it shall not be subject to any limit that may be laid down under paragraph 4 of this Article.

2. Undertakings which take the decision referred to in paragraph 1 shall:

-inform the Member State concerned, before 1 February, of the quantity or quantities of sugar being carried forward, and

-undertake to store such quantity or quantities for a period of 11 consecutive months from a date to be determined.

However, the date of 1 February referred to in the first indent of the first subparagraph shall be replaced:

(a) for undertakings established in Spain, by 15 April in the case of beet-sugar production and 20 June in the case of cane-sugar production;

(b) for undertakings established in the United Kingdom, by 15 February.

(c) for undertakings established in the French overseas departments of Guadeloupe and Martinique, by 1 May.

If an undertaking's definitive production in the marketing year concerned was less than the estimate made when the decision to carry forward was taken, then the quantity carried forward may be adjusted retroactively before 1 August of the following marketing year.

3. Should a natural disaster such as drought or flooding strike a Community region, it may be decided, in accordance with the procedure referred to in Article 42(2), to reduce the period of compulsory storage referred to in the second indent of the first subparagraph of paragraph 2 for a quantity of sugar sufficient to ensure the normal supply of the affected region.

4. Detailed rules for applying this Article, which may restrict the quantities of sugar which may be carried forward, shall be adopted in accordance with the procedure referred to in Article 42(2).

These rules shall provide, in particular, for a charge to be levied on any sugar from the quantity to be stored under the second indent of the first subparagraph of paragraph 2 which is disposed of during the compulsory storage period.

Article 15

1. Before the end of each marketing year, the following shall be recorded:

(a) a forecast of the production of A and B sugar, A and B isoglucose and A and B inulin syrup attributable to the marketing year concerned;

(b) a forecast of the quantities of sugar, isoglucose and inulin syrup disposed of for consumption within the Community during the marketing year concerned;

(c) the exportable surplus obtained by subtracting the quantity referred to in (b) from the quantity referred to in (a);

(d) an estimate of the average loss or revenue per tonne of sugar for export obligations to be fulfilled during the current marketing year. This average loss or revenue shall be equal to the difference between the total amount of refunds and the total amount of levies on the total tonnage of export obligations in question;

(e) an estimate of overall loss or revenue, obtained by multiplying the surplus referred to in (c) by the average loss or revenue referred to in (d).

2. Before the end of the 2002/03 marketing year and without prejudice to Article 10(3), (4), (5) and (6), the following shall be recorded cumulatively for the 2001/02 and 2002/03 marketing years:

(a) the exportable surplus established on the basis of the definitive production of A and B sugar, A and B isoglucose and A and B inulin syrup and the definitive quantity of sugar, isoglucose and inulin syrup disposed of for consumption within the Community;

(b) the average loss or revenue per tonne of sugar resulting from the total export obligations concerned, calculated using the method described in the second subparagraph of paragraph 1(d) above;

(c) the overall loss or revenue, obtained by multiplying the surplus referred to in (a) by the average loss or revenue referred to in (b);

(d) the sum total of the basic production levies and the B levies charged. The estimate of overall loss or revenue referred to in paragraph 1(e) shall be adjusted by the difference between the amounts referred to in (c) and (d).

3. Without prejudice to Article 18(1), should the figures recorded under paragraph 1 and adjusted under paragraph 2 result in a foreseeable overall loss, then that loss shall be divided by the estimated production of A and B sugar, A and B isoglucose and A and B inulin syrup attributable to the current marketing year. The resulting amount shall be charged to manufacturers as a basic production levy on their production of A and B sugar, A and B isoglucose and A and B inulin syrup.

However, this levy shall not exceed:

-for sugar, 2% of the intervention price for white sugar,

-for inulin syrup, expressed as sugar/isoglucose equivalent by applying a coefficient of 1.9, the maximum amount payable on white sugar, and

-for isoglucose, the share of the basic production levy borne by sugar manufacturers.

4. Should the maximum permitted basic production levy not fully cover the overall loss referred to in the first subparagraph of paragraph 3, the balance not covered shall be divided by the estimated production of B sugar, B isoglucose and B inulin syrup attributable to the marketing year in question. The resulting amount shall be charged to manufacturers as a B levy on their production of B sugar, B isoglucose and B inulin syrup.

However, subject to paragraph 5, this levy shall not exceed:

-for B sugar, 30% of the intervention price for white sugar,

-for B inulin syrup, expressed as sugar/isoglucose equivalent by applying a coefficient of 1.9, the maximum amount payable on B white sugar, and

-for B isoglucose, the share of the B levy borne by sugar manufacturers.

5. Where the figures recorded under paragraph 1 suggest that the foreseeable overall loss for the current marketing year is unlikely to be covered by the expected proceeds from the levies because of the ceilings on the basic production levy and the B levy fixed in paragraphs 3 and 4, then the maximum percentage referred to in the first indent of paragraph 4 shall be adjusted to the extent necessary to cover the overall loss, without exceeding 37.5%.

The revised maximum percentage for the B levy shall be fixed for the current marketing year before 15 September. The minimum price for B beet referred to in Article 5(4)(b) shall be adjusted accordingly.

6. All the losses resulting from the grant of production refunds under Article 7(3) shall be taken into account when calculating the overall loss referred to in paragraph 1(e).

7. The levies referred to in this Article shall be collected by the Member States.

8. Detailed rules for applying this Article shall be adopted in accordance with the procedure referred to in Article 42(2), and shall cover in particular:

-the amounts of the levies to be collected,

-the revised maximum percentage for the B levy,

-the adjusted minimum price for B beet corresponding to the revised maximum percentage for the B levy.

Article 16

1. Where the overall loss recorded for a particular marketing year under Article 15(1) and (2) is not fully covered by the proceeds from the production levies for that marketing year after application of Article 15(3), (4) and (5), an additional levy shall be charged to manufacturers, without prejudice to Article 4, to cover the outstanding balance of the overall loss.

2. The additional levy shall be determined for each sugar-producing undertaking, each isoglucose-producing undertaking and each inulin syrup-producing undertaking by multiplying the total sum due from the undertaking by way of production levies for the marketing year concerned by a coefficient to be determined. That coefficient shall be the ratio for the entire Community, reduced by 1, between the overall loss recorded under Article 15(1) and (2) for the marketing year concerned and the proceeds from the basic production levies and B levies due from manufacturers of sugar, isoglucose and inulin syrup, respectively, for that marketing year.

3. The manufacturers concerned shall pay the additional levy before 15 December following the marketing year for which it is due.

Sugar manufacturers may recover part of the additional levy thus charged to them from sellers of Community-produced cane or beet, as the case may be. The amount thus recovered may not exceed the maximum amount contributed by the beet and cane sellers towards the basic production levy and the B levy, provided for in Article 15, for the marketing year in question multiplied by the coefficient referred to in paragraph 2 of this Article.

The amount referred to in the second subparagraph shall be recovered on beet delivered during the marketing year in question. However, the parties concerned may agree that the refund shall be recovered on beet delivered during the following marketing year.

4. The proceeds from the additional levy referred to in paragraph 1 of this Article shall be included for the purposes of the information recorded under Article 15(2).

5. Detailed rules for applying this Article, in particular the coefficient referred to in paragraph 2, shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 17

1. Manufacturers of inulin syrup may recover part of the basic production levies, B levies and additional levies charged to them from the sellers of the agricultural raw material used to manufacture such inulin syrup. The amount thus recovered may not exceed the amount borne by the beet growers for the marketing year concerned; it shall be fixed by agreements within the trade or by contracts on the basis of the purchase price of the agricultural raw material delivered for the manufacture of inulin syrup during the marketing year in question.

2. Detailed rules for applying paragraph 1 shall be adopted as necessary, in accordance with the procedure referred to in Article 42(2).

Article 18

1. If, after Articles 15 and 16 have been applied to the 2000/01 marketing year, it is found that the actual overall loss for that marketing year:

(a) is not fully covered by the proceeds of the production levy and, if applicable, the additional levy, the resulting financial burden shall be added to the estimate of overall loss referred to in Article 15(1)(e) for the marketing year concerned;

(b) is less than the proceeds of the production levies and, if applicable, the additional levy, the difference shall be deducted from the estimate of overall loss or added to the estimate of overall revenue, as the case may be, resulting from applying Articles 15 and 16 to the marketing year concerned.

2. When the basic production levy is lower than the maximum amount referred to Article 15(3) or when the B levy is lower than the maximum amount referred to in Article 14(4), adjusted, where necessary, in accordance with Article 15(4), sugar manufacturers shall be required to pay the beet sellers 60% of the difference between the maximum amount of the levy concerned and the amount actually charged.

The amount to be paid per tonne of beet shall be fixed for the standard quality.

The price increases and reductions referred to in Article 5 shall apply to this amount.

3. Community sugar manufacturers may recover 60% of the levy concerned from the sellers of cane produced in the Community on the quantity of sugar for which the levy was charged.

4. Member States shall ensure from the information provided by the sugar manufacturers that the payment for the beet complies with the relevant Community rules.

5. Detailed rules for applying this Article shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 19

1. In contracts for the delivery of beet for the manufacture of sugar, a distinction shall be made according to whether the quantities of sugar to be manufactured from the beet are:

(a) A sugar,

(b) B sugar,

(c) sugar other than A and B sugar.

Each sugar-manufacturing undertaking shall provide the Member State in which it produces sugar with the following information:

-the quantities of beet referred to at (a) for which they have concluded pre-sowing contracts and the sugar content on which those contracts are based, and

-the corresponding estimated yield.

The Member States may require additional information.

2. Notwithstanding Article 5(2)(b), sugar manufacturers who have not signed pre-sowing delivery contracts for a quantity of beet equal to their A quota at the minimum price for A beet shall be required to pay at least this minimum price for all the beet they process into sugar.

3. Agreements within the trade may derogate from paragraphs 1 and 2 provided the Member State concerned agrees.

4. The general rules for applying this Article are set out in Annex III.

5. Detailed rules for applying this Article and, if necessary, the criteria to be applied by manufacturers when allocating among beet sellers the quantities of beet to be covered by pre-sowing contracts within the meaning of paragraph 1, shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 20

1. It may be decided that sugar or isoglucose used for the manufacture of certain products shall not be considered as production within the meaning of this Chapter.

2. Detailed rules for applying this Article, in particular the exceptions referred to in paragraph 1, shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 21

1. Sugar manufacturers may buy beet with which to manufacture C sugar or the sugar referred to in Article 20 at a price lower than the minimum prices for beet fixed in Article 4(1).

2. For the quantity of beet purchased corresponding to the quantity of sugar:

-disposed of on the internal market under Article 13(3), or

-carried forward to the following marketing year under Article 14,

the sugar manufacturers concerned shall, where appropriate, adjust the purchase price so that it is at least equal to the minimum price for A beet.

3. Detailed rules for applying this Article shall be adopted as necessary in accordance with the procedure referred to in Article 42(2).

TITLE II TRADE WITH THIRD COUNTRIES Chapter 1 GENERAL RULES

Article 22

1. Imports into and exports from the Community of any of the products listed in Article 1(1)(a),(b),(c),(d),(f),(g) and (h) shall be subject to presentation of an import or export licence.

The Member States shall issue licences to all applicants, irrespective of where they are established in the Community and without prejudice to measures taken to apply of Articles 26 and 27.

Import and export licences shall be valid throughout the Community. Such licences shall be issued provided a security is lodged to guarantee that the products are imported or exported during the term of validity of the licence; except in cases of force majeure, the security shall be forfeit in whole or in part if import or export is not carried out, or is carried out only partially, within that period.

2. In accordance with the procedure referred to in Article 42(2):

(a) the arrangements provided for in paragraph 1 may be extended to cover the products listed in Article 1(1)(e);

(b) detailed rules shall be adopted for applying this Article, including in particular the term of validity of licences and, if necessary, a time limit for the issue of licences.

Article 23

1. Unless this Regulation provides otherwise, the rates of duty in the common customs tariff shall apply to the products listed in Article 1.

2. Notwithstanding paragraph 1, to ensure that the Community market is adequately supplied with raw sugar for refining falling within CN codes 1701 11 10 and 1701 12 10 and molasses falling within CN code 1703 by means of imports from third countries, the Commission may suspend in whole or in part the application of import duties on these products and lay down the detailed rules for any such suspension in accordance with the procedure laid down in Article 42(2).

Suspension may apply during periods when the price on the world market plus the import duty in the common customs tariff:

-is higher that the intervention price for the product, in the case of raw sugar,

-in the case of molasses, is higher than the price of molasses used to calculate revenue from sales of molasses by sugar manufacturers for the purposes of fixing the basic price for beet for the marketing year concerned.

Article 24

1. In order to prevent or counteract any adverse effects on the Community market caused by imports of certain agricultural products, imports of one or more of such products at the rate of duty laid down in the common customs tariff shall be subject to payment of an additional import duty if the conditions in Article 5 of the Agreement on Agriculture concluded under Article 300 of the Treaty in the framework of the Uruguay Round of multilateral trade negotiations are met, unless such imports are unlikely to disturb the Community market, or where the effects would be disproportionate to the intended objective.

2. The trigger prices below which an additional duty may be imposed shall be those forwarded by the Community to the World Trade Organisation.

The trigger volumes which must be exceeded in order for an additional import duty to be imposed shall be determined in particular on the basis of imports into the Community during the three years preceding the year in which the adverse effects referred to in paragraph 1 arise or are likely to arise.

3. The import prices to be taken into consideration for imposing an additional import duty shall be determined on the basis of the cif import prices of the consignment concerned.

The cif import prices shall be checked for this purpose against the representative prices for the product in question on the world market or on the Community import market for the product.

4. The Commission shall adopt detailed rules for applying this Article in accordance with the procedure referred to in Article 42(2). Such detailed rules shall specify in particular:

(a) the products to which additional import duties may be applied under the terms of Article 5 of the Agreement on Agriculture;

(b) the other trigger criteria necessary to ensure that paragraph 1 is correctly applied in accordance with Article 5 of that Agreement.

Article 25

For molasses:

-the world market price referred to in Article 23(2), and

and

-the representative price referred to in Article 24(3),

shall apply to a standard quality.

The standard quality may be laid down in accordance with the procedure referred to in Article 42(2).

Article 26

1. Tariff quotas for the products listed in Article 1 resulting from agreements concluded in the framework of the Uruguay Round of multilateral trade negotiations shall be opened and administered under detailed rules adopted in accordance with the procedure referred to in Article 42(2).

2. Quotas shall be administered by one or more of the following methods:

-a method based on the chronological order in which applications are lodged ("first come, first served"),

-a method of distribution in proportion to the quantities requested when the applications are lodged (the "simultaneous examination" method),

-a method whereby traditional trade patterns are taken into account (the "traditional/new arrivals" method).

Other appropriate methods may be adopted.

They must avoid any discrimination between the importers concerned.

3. Whichever administration method is adopted shall give due weight to the Community's supply requirements and the need to safeguard market equilibrium, but may also draw on methods used to administer quotas in the past such as those referred to in paragraph 1, without prejudice to the rights arising from agreements concluded in the framework of the Uruguay Round negotiations.

4. The detailed rules referred to in paragraph 1 shall provide for annual quotas, if necessary suitably staggered over the year, shall specify the administrative method to be used and, where appropriate, shall include:

(a) guarantees covering the nature, provenance and origin of the product,

(b) recognition of the document used for verifying the guarantees referred to in (a), and

(c) the conditions under which import licences are issued and their term of validity.

Article 27

1. To the extent necessary to enable the products listed in Article 1(1)(a),(c) and (d) to be exported without further processing or in the form of goods listed in Annex V, on the basis of world market quotations or prices in the case of products listed in Article 1(1)(a) and (c), and within the limits resulting from agreements concluded in accordance with Article 300 of the Treaty, the difference between such quotations or prices and prices in the Community may be covered by export refunds.

The export refund for raw sugar may not exceed that granted for white sugar.

2. Provision may be made for export refunds to be granted on the products listed in Article 1(1)(f), (g) and (h) and exported without further processing or in the form of goods listed in Annex V.

The amount of the refund per 100 kg of dry matter shall be fixed taking particular account of:

(a) the refund applicable to exports of products falling within CN code 1702 30 91,

(b) the refund applicable to exports of the products listed in Article 1(1)(d),

(c) the economic aspects of the planned exports.

3. Refunds on the products listed in Article 1 exported in the form of goods listed in Annex V may not be higher than those applicable to the same products exported without further processing.

4. The method adopted for allocating the quantities which may be exported with a refund shall be the one which:

(a) is most suited to the type of product and market situation concerned, allowing the most efficient possible use of the resources available in view of the efficiency and structure of Community exports but without discriminating between large and small exporters;

(b) is least cumbersome administratively for exporters without neglecting administrative requirements;

(c) does not discriminate between exporters.

5. Refunds shall be the same for the whole Community. They may vary according to destination, where the world market situation or the specific requirements of certain markets make this necessary.

Refunds shall be fixed in accordance with the procedure referred to in Article 42(2). Refunds may be fixed:

(a) at regular intervals;

(b) by tendering procedure for products for which that procedure has been used in the past.

Refunds fixed at regular intervals may, where necessary, be adjusted in the intervening period by the Commission at the request of a Member State or on its own initiative.

Tenders submitted in response to an invitation shall not be considered unless a security is lodged. Except in cases of force majeure, the securities shall be forfeit in whole or in part if tenderers have not fulfilled, or have only partially fulfilled, their obligations under the tendering procedure.

In the case of undenatured products listed in Article 1(1)(a),(c) and (d) exported without further processing, Articles 28, 29 and 30 shall also apply.

6. When fixing the amount of the refund, account shall be taken in particular of the need to strike a balance between the use of Community basic products for export as processed goods to third countries and the use of products from these countries admitted for inward processing.

7. Refunds shall be granted on the products referred to in paragraph 1 exported without further processing only on application and on presentation of the relevant export licence.

8. The refund applicable to exports of products listed in Article 1 exported without further processing shall be that applicable on the day the licence application is lodged and, in the case of a differentiated refund, that applicable on the same day:

(a) for the destination indicated on the licence,

(b) for the actual destination, if it differs from the destination indicated on the licence. In that case the amount applicable may not exceed the amount applicable to the destination indicated on the licence.

Appropriate measures may be taken to prevent abuse of the flexibility provided for in this paragraph.

9. Paragraphs 7 and 8 may be extended to cover products listed in Article 1 and exported in the form of goods listed in Annex V in accordance with the procedure laid down in Article 16 of Regulation (EC) No 3448/93.

10. Paragraphs 7 and 8 may be waived in the case of products listed in Article 1 on which refunds are paid under food-aid operations, in accordance with the procedure referred to in Article 42(2).

11. The refund shall be paid upon proof that:

-the products have been exported from the Community,

and

-in the case of a differentiated refund, the products have reached the destination indicated on the licence or another destination for which a refund has been fixed, without prejudice to point (b) in the first subparagraph of paragraph 8. Exceptions may be made to this rule in accordance with the procedure referred to in Article 42(2), provided conditions are laid down which offer equivalent guarantees.

Additional rules may be laid down in accordance with the procedure referred to in Article 42(2).

12. No refund shall be granted on undenatured products as referred to in Article 1(1)(a) exported without further processing unless, as the case may be, they have been:

(a) obtained from sugar beet or sugar cane harvested within the Community,

(b) imported into the Community under Article 35,

(c) obtained from one of the products imported under Article 35.

13. No refund shall be granted on undenatured products as referred to in Article 1(c) and (d) exported without further processing which are not of Community origin or which have not been obtained from sugar imported into the Community under paragraph 12(b) or from the products referred to in paragraph 12(c).

14. Compliance with the restrictions on volume resulting from agreements concluded under Article 300 of the Treaty shall be ensured by means of export licences issued for the reference periods provided for in such agreements and applying to the products concerned.

15. The detailed rules for applying this Article, including the arrangements for redistributing unallocated or unused exportable quantities and for amending Annex I, shall be adopted in accordance with the procedure referred to in Article 42(2). However, the detailed rules for applying paragraph 6 in the case of products as referred to in Article 1 exported in the form of goods listed in Annex V shall be adopted in accordance with the procedure laid down in Article 16 of Regulation (EC) No 3449/93.

Article 28

1. This Article shall apply to the fixing of refunds on undenatured products as referred to in Article 1(1)(a) exported without further processing.

2. Where refunds for products as referred to in Article 1(1)(a) are fixed at regular intervals:

(a) the refunds shall be fixed every two weeks. However, such fixing may be discontinued in accordance with the procedure referred to in Article 42(2) if it is found that no surplus sugar is available in the Community for export at world market prices. In that event, no refund shall be granted;

(b) when fixing the refund, account shall be taken of the situation on the Community and world markets in sugar, and in particular the following:

-the intervention price for white sugar for the Community area with the largest surplus or the intervention price for raw sugar for the Community area which is considered to be representative for the exportation of such sugar,

-the costs of transporting sugar from the areas referred to in the first indent to ports or other points of export in the Community,

-trade expenses and any transhipment, transport and packaging charges incurred in marketing sugar on the world market,

-quotations or prices recorded for sugar on the world market,

-the economic aspect of the proposed exports and

-limits resulting from agreements concluded under Article 300 of the Treaty.

3. Where the refund for the products referred to in Article 1(1)(a) is fixed by tendering procedure:

(a) the purpose of the tender shall be to determine the amount of the refund;

(b) the competent authorities of the Member States shall invite tenders in accordance with an instrument legally binding in all Member States. This instrument shall lay down the terms of the tendering procedure, which must guarantee equal access for all persons established within the Community;

(c) the terms of the tendering procedure shall include a time limit for the submission of tenders. Within three working days following the expiry of the time limit, the maximum amount of the refund to which the tendering procedure relates shall be fixed in accordance with the procedure referred to in Article 42(2) in the light of the tenders received. When calculating the maximum amount, account shall be taken of the supply situation and prices within the Community, prices and potential outlets on the world market and the costs incurred in exporting sugar.

A maximum tonnage may be fixed in accordance with the same procedure;

(d) where exports can be effected with a refund which is lower than that which would result from taking account of the difference between prices within the Community and prices on the world market and where exports are for a specific destination, the competent authorities of the Member States may be required to issue a special invitation to tender stipulating:

-that tenders may be submitted at any time until the tendering procedure is terminated, and

-a maximum amount of the refund, calculated in the light of requirements for the exports in question;

(e) if the amount of the refund offered in a tender:

-exceeds the maximum fixed, the competent authorities of the Member States shall reject that tender,

-does not exceed the maximum, those authorities shall fix the refund at an amount equal to the refund offered in the tender concerned.

4. In the case of raw sugar:

(a) the refund shall be fixed for the standard quality defined in Annex I;

(b) refunds fixed at regular intervals under paragraph 2(a):

-may not exceed 92% of the refund for white sugar for the same period. However, this limit shall not apply to refunds to be fixed for candy sugar,

-shall be multiplied, for each exporting operation concerned, by a conversion factor obtained by dividing the yield of the raw sugar exported, calculated in accordance with Annex I, by 92;

(c) the maximum amount as provided for in paragraph 3(c) fixed under a tendering procedure may not exceed 92% of the maximum amount fixed at the same time for white sugar under that paragraph.

Article 29

1. The refund on undenatured products as listed in Article 1(1)(c) exported without further processing shall be fixed each month taking account of:

(a) the price of molasses used to calculate revenue from sales of molasses by sugar manufacturers for the purpose of fixing the basic price for beet for the marketing year concerned;

(b) prices and potential outlets for molasses on the Community market;

(c) quotations or prices recorded for molasses on the world market, and

(d) the economic aspect of the proposed exports.

However, fixing at regular intervals may be discontinued in accordance with the procedure referred to in Article 42(2) if it is found that no surplus molasses is available within the Community for export at world market prices. In this event, no refund shall be granted.

2. In special circumstances the amount of the refund may be fixed by tendering procedure for specific quantities and specific areas of the Community. The purpose of the tendering procedure shall be to determine the amount of the refund.

The competent authorities of the Member States concerned shall organise a tendering procedure under an authorisation laying down the rules to be followed, which must guarantee equal access for all persons established within the Community.

Article 30

1. The basic amount of the refund shall be fixed each month for undenatured products as listed in Article 1(1)(d) exported without further processing. However, fixing at regular intervals may be discontinued in accordance with the procedure referred to in Article 42(2) if the regular fixing of the refund on white sugar without further processing is suspended. In this event, no refund shall be granted.

2. The basic amount of the refund on the products referred to in paragraph 1, with the exception of sorbose, shall be equal to one-hundredth of an amount obtained by taking account of:

(a) the difference between the intervention price for white sugar for the Community area with the largest surplus for the month for which the basic amount is fixed, and the quotations or prices for white sugar recorded on the world market;

(b) the need to strike a balance between:

-the use of Community basic products in the manufacture of processed goods for export to third countries, and

-the use of third-country products brought in under inward-processing arrangements.

3. In the case of sorbose, the basic amount of the refund shall be equal to the basic amount of the refund less one-hundredth of the production refund in force.

4. Application of the basic amount of the refund may be restricted to specific products listed in Article 1(1)(d).

Article 31

To the extent necessary for the proper functioning of the common organisation of the markets in the sugar sector, the Commission may fully or partially prohibit the use of inward-processing arrangements for the products listed in Article 1(1) in accordance with the procedure referred to in Article 42(2).

Article 32

1. The general rules for interpreting the combined nomenclature and the special rules for its application shall apply to the tariff classification of products covered by this Regulation; the tariff nomenclature resulting from applying this Regulation shall be included in the common customs tariff.

2. Save as otherwise provided for in this Regulation or by a rule adopted pursuant thereto, the following shall be prohibited in trade with third countries:

(a) the levying of any charge having equivalent effect to a customs duty;

(b) the application of any quantitative restriction or measure having equivalent effect.

Article 33

1. Where the price of sugar on the world market is higher than the intervention price, an export levy may be applied to the sugar concerned. Such a levy shall be compulsory when the cif price of white or raw sugar is higher than the intervention price plus 10%.

The export levy may be determined by tendering procedure. Otherwise, the levy to be charged shall be that applicable on the day of export.

2. Where the cif price of white or raw sugar is higher than the intervention price plus 10%, the Council may decide, acting on a proposal from the Commission in accordance with the voting procedure laid down in Article 37(2) of the Treaty, to grant an import subsidy for the product in question.

Where it is established that supplies available within the Community are not sufficient to:

(a) meet requirements within the Community

(b) meet the requirements of a major consumption region in the Community,

then the Council shall decide, acting on a proposal from the Commission in accordance with the voting procedure laid down in Article 37(2) of the Treaty, to grant the import subsidy and lay down rules for implementing it. Those rules shall determine in particular the quantity of white or raw sugar to be covered by the subsidy, the duration of the subsidy and, where appropriate, the importing regions.

3. The following shall be laid down in accordance with the procedure referred to in Article 42(2):

(a) the cif prices referred to in paragraphs 1 and 2,

(b) export levies fixed by tendering procedure,

(c) the other detailed rules for applying this Article.

In the case of the products referred to in Article 1(1)(b),(c),(d),(f),(g) and (h), provisions similar to those in paragraphs 1 and 2 may be adopted in accordance with the procedure referred to in Article 42(2).

4. The amounts, other than those referred to in paragraph 3, resulting from the application of this Article shall be fixed by the Commission.

Article 34

1. If imports or exports create or threaten to create a serious disturbance on the Community market in one or more of the products listed in Article 1 which is likely to jeopardise the achievement of the objectives set out in Article 33 of the Treaty, appropriate measures may be applied in trade with third countries until such disturbance or threat of disturbance has ceased.

The Council, acting in accordance with the procedure laid down in Article 37(2) of the Treaty, shall adopt the general rules for implementing this paragraph and shall define the cases and limits within which the Member States may take protective measures.

2. Should the situation referred to in paragraph 1 arise, the Commission shall decide upon the necessary measures, either at the request of a Member State or on its own initiative; the Member States shall be notified of the measures, which shall be immediately applicable. The Commission shall take a decision on any request from a Member State within three working days of receiving it.

3. Measures decided upon by the Commission may be referred to the Council by any Member State within three working days of the day on which they were notified. The Council shall meet without delay. Acting by a qualified majority, it may amend or repeal the measures in question.

4. This Article shall be applied in compliance with the Community's obligations resulting from agreements concluded under Article 300(2) of the Treaty.

Chapter 2 PREFERENTIAL IMPORT ARRANGEMENTS

Article 35

Articles 36, 37 and 38 shall apply to cane sugar, hereinafter called "preferential sugar", falling within CN code 1701, originating in the States listed in Annex VI and imported into the Community under:

(a) Protocol 3 to Annex IV to the ACP-EC Partnership Agreement,

(b) the Agreement on sugar cane between the European Community and the Republic of India.

Article 36

Where the quality of preferential sugar imported under Article 35 and purchased by intervention agencies or other agents appointed by the Community deviates from the standard quality, the guaranteed prices shall be adjusted by means of price increases and reductions.

Article 37

1. No import duty shall apply to imports of preferential sugar under Article 35.

2. Preferential sugar shall enjoy no derogations from the prohibitions referred to in Article 32(2).

Article 38

1. During the 2001/02 and 2002/03 marketing years, adjustment aid shall be granted as an intervention measure to the industry refining preferential raw cane sugar imported into the Community for that purpose under Article 35.

2. The aid referred to in paragraph 1 may be granted only for quantities eligible under Article 35, which are refined into white sugar at refineries as referred to in Article 7(4). The aid for producing the white sugar concerned shall be EUR 0.10 per 100 kilograms, expressed in white sugar.

3. During the period specified in paragraph 1, additional basic aid of EUR 0.10 per 100 kilograms, expressed as white sugar, shall be granted to enable refineries as referred to in Article 7(4) to refine raw cane sugar produced in the French overseas departments, with a view to restoring the price balance between that sugar and preferential sugar.

4. The adjustment aid and the additional aid may be adjusted to take account of economic trends in the sugar sector, particularly manufacturing and refining margins.

5. Under the second subparagraph of Article 7(4) and on terms to be determined, the aid scheme provided for in paragraphs 1 to 3 of this Article may be extended to raw sugar produced from beet harvested in the Community and refined in refineries as referred to in Article 7.

6. Detailed rules for applying this Article, in particular the adjustments referred to in paragraph 4, shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 39

1. During the period referred to in Article 38(1), in order to ensure adequate supplies to Community refineries as referred to in Article 7(4), a reduced rate of duty, hereinafter called "special duty", shall be levied on imports of raw cane sugar, hereinafter called "special preferential sugar", originating in the States referred to in Article 35 and other States with whom agreements have been concluded, and subject to the conditions laid down therein, in particular the minimum purchase price to be paid by refiners.

2. For the purposes of paragraph 1 and without prejudice to paragraph 5, the presumed maximum supply needs per marketing year, expressed in white sugar, of the refining industries in:

>TABLE POSITION>

3. Without prejudice to paragraph 5, the quantities of raw cane sugar and raw beet sugar harvested in the Community available to the refining industry, with or without distinction of origin, shall be determined on the basis of a Community forecast supply balance for raw sugar for each marketing year or part of a marketing year. This balance may be revised during the marketing year.

For the purposes of determining these quantities, the quantities of sugar from the French overseas departments and preferential sugar intended for direct consumption to be included in each balance shall be those determined for the 1994/95 marketing year, less forecast local consumption in the French overseas departments during the marketing year concerned. If the balance shows that the amounts available will be insufficient to meet the maximum needs laid down in paragraph 2, the necessary measures shall be laid down to enable the Member States concerned to import the shortfall as special preferential sugar under the arrangements for imports at a special rate of duty provided for in the agreements referred to in paragraph 1.

4. Except in cases of force majeure, where the presumed maximum needs for a Member State as laid down in paragraph 2 or after revision under paragraph 5 are exceeded, an amount corresponding to the full rate of duty in force for the marketing year concerned shall be charged on a quantity equivalent to the excess, increased by the aid referred to in Article 38 and, where appropriate, by the highest additional rate of duty recorded during that marketing year.

However, in the case of preferential raw sugar and where a review has been carried out under paragraph 5, the quantities in excess of the revised presumed maximum needs, within the limit of the quantities laid down in paragraph 2, may be sold to intervention agencies on the terms stipulated in Article 36 if they cannot be marketed in the Community.

5. Where Article 10(3), (4), (5) and (6) apply, the sum of the presumed maximum needs referred to in paragraph 2 of this Article shall be reduced for the marketing year concerned by a quantity equal to the sum of the special preferential sugars needed to cover the presumed maximum needs determined under paragraph 3 of this Article, and reduced by the same percentage reduction as was applied to the sum of the basic quantities A for Community sugar under Article 10(5).

This reduction in the maximum needs shall be apportioned between the Member States concerned to reflect the ratio between the quantity fixed for each in paragraph 2 and the sum of the quantities fixed in that paragraph.

6. Detailed rules for applying this Article, in particular for implementing and administering the agreements referred to in paragraph 1, shall be adopted in accordance with the procedure referred to in Article 42(2).

TITLE III GENERAL PROVISIONS

Article 40

Any measures needed to prevent the market in sugar being disturbed by changes in price levels at the changeover from one marketing year to the next or during a single marketing year may be adopted in accordance with the procedure referred to in Article 42(2).

Article 41

Member States and the Commission shall communicate to each other the information necessary for implementing this Regulation.

Rules for the communication and dissemination of such information shall be adopted in accordance with the procedure referred to in Article 42(2).

Article 42

1. The Commission shall be assisted by a Management Committee for Sugar, composed of representatives of the Member States and chaired by the representative of the Commission.

2. Where reference is made to this paragraph, the management procedure provided for in Article 4 of Decision 1999/468/EC shall apply, subject to Article 7 of that Decision.

3. The period laid down in Article 4(3) of Decision 1999/468/EC shall be set at one month.

Article 43

The Committee may consider any other question referred to it by its chair on his or her own initiative or at the request of the representative of a Member State.

Article 44

Goods listed in Article 1(1) which are manufactured or obtained from products not covered by Article 23(2) and Article 24 of the Treaty shall not be admitted to free circulation within the Community.

Article 45

1. Member States shall adopt the measures necessary in the sugar sector to ensure that:

-sugar beet is grown using methods likely to reduce damage to the environment,

-research programmes intended to develop more environment-friendly cultivation methods for sugar beet are implemented,

-sugar-beet growers and sugar producers are informed of the results and the benefits of such research programmes.

2. Member States shall limit, where appropriate, the areas used for sugar production on the basis of objective criteria that they shall lay down concerning:

-the agricultural economy of those regions where sugar is a major crop,

-the soil and climate conditions in the areas in question,

-the management of irrigation water,,

-rotation systems and cultivation methods likely to improve the environment.

3. Member States shall, where appropriate, lay down suitable penalties proportionate to the gravity of the environmental consequences of failure to comply with the environmental requirements referred to in paragraph 2, on the basis of objective criteria that they shall lay down concerning, in particular, the topography of the area concerned and the management of irrigation water.

4. Member States shall submit to the Commission, by 30 June 2002, a report on the environmental situation in the sugar sector and the impact of national measures adopted under paragraphs 1, 2 and 3.

TITLE IV TRANSITIONAL AND FINAL PROVISIONS

Article 46

The balance remaining from the compensation system for storage costs applied during the 2000/01 marketing year under Regulation (EC) No 2038/1999 shall be charged, if negative, or credited, if positive, under the system referred to in Articles 15 and 16 of this Regulation for the 2001/02 marketing year.

In the case of sugar in storage at 30 June 2000 under the compensation system for storage costs provided for in Regulation (EC) No 2038/99, the date of disposal for the purposes of collecting the storage levy shall be 30 June 2001.

Article 47

Regulations (EC) No 2038/1999, (EEC) No 206/68, (EEC) No 431/68, (EEC) No 447/68, (EEC) No 2049/69, (EEC) No 793/72, (EEC) No 741/75, (EEC) No 1358/77, (EEC) No 1789/81, (EEC) No 193/82, (EEC) No 1010/86 and (EEC) No 2225/86 are hereby repealed.

References to Regulations (EC) No 2038/1999, (EEC) No 206/68, (EEC) No 431/68, (EEC) No 793/72, (EEC) No 741/75 and (EEC) No 193/82 shall be understood as references to this Regulation and are to be read in conjunction with the correlation table in Annex VII.

Article 48

The Commission may adopt any transitional measures required to ensure a smooth changeover from the arrangements in force for the 2000/01 marketing year to those introduced by this Regulation in accordance with the procedure referred to in Article 42(2). Such measures may derogate from this Regulation.

Article 49

This Regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Communities.

It shall apply from the 2001/02 marketing year.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

ANNEX I

Point I

STANDARD QUALITY FOR WHITE SUGAR

1. White sugar of the standard quality shall have the following characteristics:

(a) be of sound, genuine and merchantable quality; dry, in homogeneous granulated crystals, free-flowing,

(b) minimum polarisation 99.7º,

(c) maximum moisture content 0.06%,

(d) maximum invert sugar content: 0.04%,

(e) the number of points determined under paragraph 2 shall not exceed a total of 22, nor:

-15 for the ash content,

-9 for the colour type, determined using the method of the Brunswick Institute of Agricultural Technology, hereinafter called the "Brunswick method",

-6 for the colouring of the solution, determined using the method of the International Commission for Uniform Methods of Sugar Analysis, hereinafter called the "ICUMSA method".

2. One point shall correspond to:

(a) 0.0018% of ash content determined using the ICUMSA method at 28º Brix,

(b) 0.5 units of colour type determined using the Brunswick method,

(c) 7.5 units of colouring of the solution determined using the ICUMSA method.

3. The methods for determining the factors referred to in paragraph 1 shall be those used for determining those factors under the intervention measures.

Point II

STANDARD QUALITY FOR RAW SUGAR

1. Raw sugar of the standard quality shall be sugar with a yield of 92%.

2. The yield of raw beet sugar shall be calculated by subtracting from the degree of polarisation of that sugar:

(a) its percentage ash content multiplied by four,

(b) its percentage invert sugar content multiplied by two,

(c) the number 1.

3. The yield of raw cane sugar shall be calculated by subtracting 100 from the degree of polarisation of that sugar multiplied by two.

ANNEX II

STANDARD QUALITY FOR SUGAR BEET

Standard quality beet shall:

(a) be of sound and fair merchantable quality;

(b) have a sugar content of 16% at the reception point.

ANNEX III

PURCHASE TERMS FOR BEET

Point I

For the purposes of this Annex:

1. Contracting Parties means:

(a) sugar manufacturers, hereinafter called "manufacturers",

(b) beet sellers, hereinafter called "sellers";

2. "contract" means a contract concluded between a seller and a manufacturer for the delivery of beet for the manufacture of sugar;

3. agreement within the trade means:

(a) an agreement concluded at Community level, prior to the conclusion of any contract, between a group of national manufacturers' organisations on the one hand and a group of national sellers' organisations on the other;

(b) an agreement concluded, prior to the conclusion of any contract, between manufacturers or a manufacturers' organisation recognised by the Member State concerned on the one hand and a sellers' association recognised by the Member State concerned on the other;

(c) the law on companies and the law on cooperatives, in so far as they govern the delivery of sugar beet by the share holders or members of a company or cooperative manufacturing sugar;

(d) in the absence of any agreement as referred to in (a) or (b), the arrangements existing before the conclusion of any contract between manufacturers and sellers, provided the sellers accepting the arrangement supply at least 60% of the total beet bought by the manufacturer for the manufacture of sugar in one or more factories.

Point II

1. Contracts shall be made in writing for a specified quantity of beet.

2. Contracts shall specify whether an additional quantity of beet may be supplied, and under what terms.

Point III

1. This Point shall apply only where Article 19 of this Regulation applies.

2. Contracts shall indicate the purchase prices for the quantities of beet referred to in the first part of Article 19(1) of this Regulation. In the case of the quantities referred to at (a) and (b) of Article 19(1), those prices may not be lower than the minimum price for beet referred to in Article 4 of this Regulation applicable in the production area concerned.

3. Contracts shall lay down a fixed sugar content for beet. They shall include a conversion scale showing the different sugar contents and factors for converting the quantities of beet supplied into quantities corresponding to the sugar content shown in the contract.

The scale shall be based on the yields corresponding to the different sugar contents.

4. Where a seller has signed a contract with a manufacturer for the delivery of beet as referred to in the first part of Article 19(1) of this Regulation and in (a) thereof, all deliveries by that seller, converted under paragraph 3 above, shall be considered to be deliveries within the meaning of the first part of the above-mentioned Article 19(1) and (a) thereof up to the quantity of beet specified in the contract.

5. Manufacturers producing a quantity of sugar lower than their basic quota from beet for which they have signed pre-sowing delivery contracts under the first part of Article 19(1) and (a) thereof shall distribute the quantity of beet corresponding to any additional production up to the amount of their basic quota among the sellers with whom they have signed pre-sowing delivery contracts within the meaning of the first part of the above-mentioned Article 19(1) and (a) and (b) thereof.

Agreements within the trade may derogate from this provision.

6. In no case may a manufacturer require a seller to reimburse the production levy for beet delivered by the seller under a contract concluded under the first part of Article 19(1) of this Regulation and (a) thereof.

Point IV

1. Contracts shall contain provisions concerning the staggering and normal duration of beet deliveries.

2. Such provisions shall be those applicable during the 2000/01 marketing year, taking account of the level of actual production; agreements within the trade may derogate therefrom.

Point V

1. Contracts shall provide for beet collection centres.

2. Where sellers and manufacturers have already signed a contract for the 2000/01 marketing year, the collection centres agreed upon by them for deliveries during that marketing year shall remain in operation; agreements within the trade may derogate from this provision.

3. Contracts shall provide that transport costs from the collection centres are to be borne by the manufacturer subject to special agreements based on local rules or usages in operation before the 2000/01 marketing year.

4. However, in Denmark, Spain, Finland, Greece, Ireland, Portugal and the United Kingdom, where beet is delivered free-at-factory, contracts shall require manufacturers to contribute to transport costs and shall stipulate the percentage or amounts.

Point VI

1. Contracts shall provide for reception points for beet.

2. Where sellers and manufacturers have already signed a contract for the 2000/01 marketing year, the reception points agreed upon by them for deliveries during that marketing year shall remain in operation; agreements within the trade may derogate from this provision.

Point VII

1. Contracts shall provide for the sugar content to be determined using the polarimetric method. A sample of the beet shall be drawn at the time of reception.

2. Agreements within the trade may provide for samples to be drawn at another stage.

In such cases, the contract shall provide for a correction to compensate for any drop in the sugar content between the reception and the drawing of the sample.

Point VIII

Contracts shall provide for gross weight, tare and sugar content to be determined using one of the following procedures:

(a) jointly, by the manufacturer and the beet producers' trade organisation, if an agreement within the trade so provides;

(b) by the manufacturer, under the supervision of the beet producers' trade organisation;

(c) by the manufacturer, under the supervision of an expert recognised by the Member State concerned, provided the seller defrays the costs thereof;

(d) by the manufacturer, if local rules or usages in force before the 2000/01 marketing year so provide.

Point IX

1. Contracts shall provide for an additional price to be paid to the seller where:

(a) there is an increase in the price for beet at the changeover from one marketing year to the next, and

(b) the increase in the intervention price for sugar resulting from the increase in the price for beet is not made subject to a levy for stocks held at the time of the changeover.

The additional price shall be calculated per 100 kilograms of white sugar by multiplying the increase referred to in the first subparagraph under (b) by a coefficient equal to the ratio of

-the quantities of sugar produced within the A and B quota not carried forward under Article 14 of this Regulation in stock at the time of transition

and

-the quantities of sugar produced by manufacturer during the previous marketing year within their maximum quota not carried forward under Article 14 of this Regulation.

2. Agreements within the trade may derogate from paragraph 1.

Contracts shall mention the possibility of such derogation.

Point X

1. Contracts shall require manufacturers to do one or more of the following for the whole quantity of beet delivered; when parts of that quantity are subject to different treatment, the contract shall impose more than one such obligation:

(a) to return the fresh pulp from the tonnage of beet delivered free of charge to the seller, ex factory;

(b) to return part of that pulp dried or dried and molassed, free of charge to the seller, ex factory;

(c) to return the pulp, dried, to the seller, ex factory; in this case, the manufacturer may require the seller to pay the drying costs;

(d) to pay the seller compensation which takes account of the possibilities of selling the pulp concerned.

2. Agreements within the trade may provide for pulp to be delivered at a stage other than that referred to in paragraph 1(a), (b) and (c).

Point XI

1. Contracts shall fix the time limits for any advance payments and for payment of the purchase price for beet.

2. Such time limits shall be those valid during the 2000/01 marketing year; agreements within the trade may derogate from this provision.

Point XII

Where contracts lay down rules covering matters which are dealt with in this Annex, or where they contain provisions governing other matters, their provisions and effects must not conflict with this Annex.

Point XIII

1. Agreements within the trade as described in Point I(3)(b) shall contain arbitration clauses.

2. Where agreements within the trade at Community, regional or local level lay down rules covering matters which are dealt with in this Regulation, or where they contain provisions governing other matters, their provisions and effects must not conflict with this Annex.

3. Such agreements may lay down, in particular:

(a) rules on the distribution to sellers of quantities of beet which the manufacturer decides to buy prior to sowing, for the manufacture of sugar within the limits of the basic quota;

(b) rules on distribution as referred to in Point III(5);

(c) the conversion scale referred to in Point III (3);

(d) rules on the choice and supply of seeds of the varieties of beet to be produced;

(e) the minimum sugar content of beet to be delivered;

(f) a requirement for consultation between the manufacturer and the sellers' representatives before the starting date of beet deliveries is fixed;

(g) the payment of premiums to sellers for early or late deliveries;

(h) details of:

-the part of the pulp referred to in Point X(1)(b),

-the costs referred to in Point X(1)(c),

-the compensation referred to in Point X(1)(d);

(i) the removal of pulp by the seller;

(k) rules on how any difference between the intervention price and the actual selling price of the sugar is to be allocated between the manufacturer and sellers.

Point XIV

Where there is no set agreement within the trade as to how the quantities of beet intended for the manufacture of sugar within the basic quota limits which the manufacturer offers to buy before sowing should be allocated among the sellers, the Member State concerned may itself lay down rules for such allocation.

These rules may also grant to traditional sellers of beet to cooperatives delivery rights other than those which they would enjoy if they belonged to such cooperatives.

ANNEX IV

DETAILED RULES ON TRANSFERS OF QUOTAS BETWEEN FIRMS

Point I

Member States shall adopt such measures as they deem necessary to take account of the interests of sugar beet and cane producers when quotas are allocated to a sugar-producing undertaking which has more than one factory.

Point II

1. Without prejudice to paragraph 2, in the event of the merger or transfer of sugar-producing undertakings or the transfer of sugar factories, the A and B quotas shall be adjusted as follows:

(a) in the event of the merger of sugar-producing undertakings, the Member States shall allocate to the undertaking resulting from the merger an A quota and a B quota equal respectively to the sum of the A quotas and the sum of the B quotas allocated prior to the merger to the sugar-producing undertakings concerned;

(b) in the event of the transfer of a sugar-producing undertaking, the Member State shall allocate the A quota and the B quota of the transferred undertaking to the transferee undertaking for the production of sugar or, if there is more than one transferee undertaking, the allocation shall be made in proportion to the sugar production absorbed by each of them;

(c) in the event of the transfer of a sugar factory, the Member State shall reduce the A quota and the B quota of the undertaking transferring ownership of the factory and shall increase the A quota and the B quota of the sugar-producing undertaking or undertakings purchasing the factory in question by the quantity deducted in proportion to the production absorbed.

2. Where a number of the sugar-beet or cane producers directly affected by one of the operations referred to in paragraph 1 expressly show their willingness to supply their beet or cane to a sugar-producing undertaking which is not party to those operations, the Member State may make the allocation on the basis of the production absorbed by the undertaking to which they intend to supply their beet or cane.

3. In the event of closure, in circumstances other than those referred to in paragraph 1, of:

(a) a sugar-producing undertaking,

(b) one or more factories of a sugar-producing undertaking,

the Member State may allocate the part of the quotas involved in such closure to one or more sugar-producing undertakings.

Also in the case referred to in (b) in the preceding subparagraph, where some of the producers concerned expressly show their willingness to supply their beet or cane to a given sugar-producing undertaking, the Member State may allocate the proportion of the quotas corresponding to the beet or cane concerned to the undertaking which they intend to supply with those products.

4. Where the derogation referred to in Article 19(3) of this Regulation is invoked, the Member State concerned may require the beet producers and sugar manufacturers concerned by that derogation to include in their agreements within the trade special clauses enabling the Member State to apply paragraphs 2 and 3, where applicable.

5. In the event of the lease of a factory belonging to a sugar-producing undertaking, the Member State may reduce the quotas of the undertaking offering the factory for rent and allocate the portion by which the quota was reduced to the undertaking which rents the factory in order to produce sugar in it.

If the lease is terminated during the period of three marketing years referred to in Point V(d), the adjustment of quotas under the preceding subparagraph shall be cancelled retroactively by the Member State as at the date on which the lease took effect. However, if the lease is terminated by reason of force majeure, the Member State shall not be bound to cancel the adjustment.

6. Where a sugar-producing undertaking can no longer ensure that it meets its obligations under Community regulations towards the sugar-beet or cane producers concerned, and where that situation has been ascertained by the competent authorities of the Member State concerned, the latter may allocate for one or more marketing years the part of the quotas involved to one or more sugar-producing undertakings in proportion to the production absorbed.

7. Where a Member State grants a sugar-producing undertaking price and outlet guarantees for processing sugar beet into ethyl alcohol, the Member State may, in agreement with that undertaking and the beet producers concerned, allocate all or part of the sugar-production quotas to one or more other undertakings for one or more marketing years.

Point III

In the event of the merger or transfer of isoglucose-producing undertakings, the transfer of an isoglucose-producing factory or the closure of one or more isoglucose-producing undertakings or one or more factories belonging to such an undertaking, the Member State may allocate the quotas involved for the production of isoglucose to one or more other undertakings, whether or not they have a production quota.

Point IV

The measures taken pursuant to Points II and III may take effect only if:

(a) the interests of each of the parties concerned are taken into consideration

and

(b) the Member State concerned considers that they are likely to improve the structure of the beet, cane and sugar-manufacturing sectors

and

(c) they concern undertakings established in the same region within the meaning of Article 11(2) of this Regulation.

Point V

For the purposes of this Annex:

(a) "merger of undertakings" means the consolidation of two or more undertakings into a single undertaking;

(b) "transfer of an undertaking" means the transfer or absorption of the assets of an undertaking having quotas to one or more undertakings;

(c) "transfer of a factory" means the transfer of ownership of a technical unit, including all the plant required to manufacture the product concerned, to one or more undertakings, resulting in the partial or total absorption of the production of the undertaking making the transfer;

(d) "lease of a factory" means the leasehold contract of a technical unit including all the plant required for the manufacture of sugar, with a view to its operation, concluded for a period of at least three consecutive marketing years, which the parties agree not to terminate before the end of the third marketing year, with an undertaking which is established in the same region, within the meaning of Article 11(2) of this Regulation, as the factory concerned, if, after the lease takes effect, the undertaking which rents the factory can be considered a solely sugar-producing undertaking for its entire production.

Point VI

The measures referred to in Points II and III shall take effect when the closure of the undertaking or factory, the merger or transfer occurs:

(a) between 1 July and 31 January of the following year, for the marketing year current during that period;

(b) between 1 February and 30 June of the same year, for the marketing year following that period.

Point VII

Where a Member State applies Article 12(2) of this Regulation, it shall allocate the adjusted quotas before 1 March with a view to applying them in the following marketing year.

Point VIII

Where Points II and III are applied, Member States shall inform the Commission of the adjusted A and B quotas not later than 15 days after expiry of the periods referred to in Point VI.

Point IX

For the purposes of transfers of quotas in Italy, Spain and the French overseas departments under restructuring plans as referred to in the second subparagraph of Article 12(2) of this Regulation, a group of sugar-producing undertakings having technical, economic and structural links and jointly and severally liable for their obligations under Community rules, particularly in respect of beet or cane growers, may be regarded as a sugar-producing undertaking.

ANNEX V

CN Code // Description

ex 0403

0403 10 0403 10 51 to 0403 10 99

0403 90 0403 90 71 to 0403 90 99

ex 0710

0710 40 00

ex 0711

0711 90

0711 90 30

1702 50 00

ex 1704

1806

ex 1901 1901 10 00

1901 20 00

1901 90

1901 90 99

ex 1902

1902 20

1902 20 91

1902 20 99

1902 30

1902 40

1902 40 90

1904

ex 1905

1905 10 00

1905 20

1905 30

1905 40

1905 90

1905 90 40

1905 90 45

1905 90 55

1905 90 60

1905 90 90

ex 2001

2001 90

2001 90 30

2001 90 40

ex 2004

2004 10

2004 10 91

2004 90

2004 90 10

ex 2005

2005 20

2005 20 10

2005 80 00

ex 2101

2101 12 98

2101 20 98

2101 30 19

2101 30 99

ex 2102

2102 10

2102 10 31

2102 10 39

2105 00

ex 2106

2106 90

2106 90 10

2106 90 92 2106 90 98

2202

2205

ex 2208

2208 20

2208 50 90 to 2208 50 99

2208 70

2208 90 41 to 2208 90 78

2905 43 00

2905 44

ex 3302

3302 10

3302 10 29

ex Chapter 38

3824 60 // Buttermilk, curdled milk and cream, yoghurt, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa:

- Yoghurt; -- Flavoured or containing added fruit, nuts or cocoa

- Other; -- Flavoured or containing added fruit, nuts or cocoa Vegetables (uncooked or cooked by steaming or by boiling in water), frozen:

- Sweet corn

Vegetables provisionally preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption:

- Other vegetables; mixtures of vegetables:

-- Vegetables:

--- Sweet corn

- Chemically pure fructose:

Sugar confectionery (including white chocolate), not containing cocoa, except liquorice extract of sub-heading No 1704 90 10

Chocolate and other food preparations containing cocoa

Malt extract; food preparations of flour, meal, starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of heading Nos 0401 to 0404, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included:

- Preparations for infant use, put up for retail sale

- Mixes and doughs for the preparations of bakers' wares of heading No 1905

- Other:

-- Other:

--- Other

Pasta, whether or not cooked or stuffed (with meat or other substances) or otherwise prepared, such as spaghetti, macaroni, noodles, lasagne, gnocchi, ravioli, cannelloni; couscous, whether or not prepared:

- Stuffed pasta, whether or not cooked or otherwise prepared:

-- Other

--- Cooked

--- Other

- Other pasta

- Couscous:

-- Other

Prepared foods obtained by the swelling or roasting of cereals or cereal products (for example, corn flakes); cereals (other than maize (corn)) in grain form or in the form of flakes or other worked grains (except flour and meal), pre-cooked, or otherwise prepared, not elsewhere specified or included:

Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products:

- Crispbread

- Gingerbread and the like

- Sweet biscuits; waffles and wafers

- Rusks, toasted bread and similar toasted products

- Other:

-- Other:

--- Waffles and wafers with a water content exceeding 10%

---Biscuits

---Extruded or expanded products, savoury or salted

---- With added sweetening matter

---- Other

Vegetables, fruit, nuts and other edible parts of plants, prepared or preserved by vinegar or acetic acid:

- Other:

-- Sweet corn (Zea mays var. saccharata)

- - Yams, sweet potatoes and similar edible parts of plants containing 5% or more by weight of starch

Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, frozen, other than products of heading No 2006:

- Potatoes:

-- Other:

--- In the form of flour, meal or flakes

- Other vegetables and mixtures of vegetables:

-- Sweet corn (Zea mays var. saccharata)

Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading No 2006:

- Potatoes:

-- In the form of flour, meal or flakes

-- Sweet corn (Zea mays var. saccharata)

Extracts, essences and concentrates of coffee, tea or maté and preparations with a basis of these products or with a basis of coffee, tea or maté; roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof:

- Extracts, essences and concentrates of coffee and preparations with a basis of these extracts, essences or concentrates or with a basis of coffee:

-- Preparations with a basis of these extracts, essences or concentrates or with a basis of coffee:

--- Other

- Extracts, essences and concentrates, of tea or maté, and preparations with a basis of these extracts, essences or concentrates, or with a basis of tea or maté:

-- Preparations

--- Other

- Roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof::

-- Roasted chicory and other roasted coffee substitutes:

--- Other

-- Extracts, essences and concentrates of roasted chicory and other roasted coffee substitutes:

-- Other

Yeasts (active or inactive); other single-cell micro-organisms, dead (but not including vaccines of heading No 3002); prepared baking powders:

- Active yeasts:

-- Bakers' yeast:

--- Dried

--- Other

Ice cream and other edible ice, whether or not containing cocoa:

Food preparations not elsewhere specified or included:

- Other:

-- Cheese fondues

-- Other:

----- Containing no milk fats, sucrose, isoglucose, glucose or starch or containing, by weight, less than 1.5% milk fat, 5% sucrose or isoglucose, 5% glucose or starch

----- Other

Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured, and other non-alcoholic beverages, not including fruit or vegetable juices of heading No 2009

Vermouth and other wine of fresh grapes flavoured with plants or aromatic substances:

Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol.; spirits, liqueurs and other spirituous beverages:

- Spirits obtained by distilling grape wine or grape marc:

-- Geneva

- Liqueurs and cordials:

-- Other spirits and spirituous beverages:

Mannitol

D-glucitol (sorbitol):

Mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry; other preparations based on odoriferous substances, of a kind used for the manufacture of beverages:

- Of a kind used in the food or drink industries:

-- Of a kind used in the drink industries:

--- Preparations containing all flavouring agents characterising a beverage:

Other (of an actual alcoholic strength by volume not exceeding 0.5%):

Other

Miscellaneous chemical products:

Sorbitol other than that of subheading 2905 44:

ANNEX VI

States, countries and territories referred to in Article 35

Barbados

Belize

Côte d'Ivoire

Fiji

Guyana

Mauritius

India

Jamaica

Kenya

Madagascar // Malawi

Uganda

Democratic Republic of the Congo

Saint Kitts and Nevis - Anguilla

Surinam

Swaziland

Tanzania

Trinidad and Tobago

Zambia

Zimbabwe

ANNEX VII

Correlation Table

Regulation (EC) No 2038/1999 // This regulation

Article 1 // Article 1

Article 2(1) // Article 1(2)(m)

Article 2(2) and (3) // Deleted

Article 3 // Article 2

Article 4 // Article 3

Article 5 // Article 4

Article 6 // Article 5

Article 7 // Article 6

Article 8 // Deleted

Article 9 // Article 7

Article 10 // Article 8

Article 11 // Article 9

Article 12 // Deleted

Article 13 // Article 22

Article 14 // Article 23

Article 15 // Article 24

Article 16 // Article 25

Article 17 // Article 26

Article 18 // Article 27

Article 19 // Article 28

Article 20 // Article 29

Article 21 // Article 30

1st indent of Article 22(1) // Article 31

Article 22(2) and (3) // Deleted

Article 23 // Article 32

Article 24 // Article 33

Article 25 // Article 34

Article 26(1) // Article 10(1)

Article 26(2) // Article 11(3)

Article 26(3) // Article 10(2)

Article 26(4) // Article 11(3)

1st subparagraph of Article 26(5) // Article 10(3)

2nd subparagraph of Article 26(5) // Article 10(4)

3rd subparagraph of Article 26(5) // Article 10(5)

5th subparagraph of Article 26(5) // Article 10(6)

Article 26(6) // Deleted

1st indent of Article 27(1) // Article 11(1)

Article 27(2) // Deleted

Article 27(3) // Article 11(2)

Article 27(4) // Deleted

Article 27(5) // Deleted

Article 27(6) // Article 11(4)

Article 28 // Deleted

Article 29 // Deleted

Article 30 // Article 12

Article 31 // Article 13

Article 32 // Article 14

Article 33 // Article 15

Article 34 // Article 16

Article 35 // Article 17

Article 36 // Article 18

Article 37 // Article 19

Article 38 // Article 20

Article 39 // Article 21

Article 40 // Article 35

Article 41 // Article 36

Article 42 // Article 37

Article 43 // Article 38

Article 44 // Article 39

Article 45 // Article 40

Article 46 // Article 41

Article 47 // Article 42(1)

Article 48 // Article 42(2) and (3)

Article 49 // Article 43

Article 50 // Article 44

Article 51 // Deleted

Article 52 // Deleted

Article 53 // Deleted

Article 54 // Deleted

Article 55 // Article 47

Article 56 // Article 49

Regulation (EEC) No 793/72 // This regulation

Article 1 // Annex I, Point I

Regulation (EEC) No 431/68 // This regulation

Article 1 // Annex I, Point II

Regulation (EEC) No 206/68 // This regulation

Article 1 // Annex III, Point I

Article 2 // Annex III, Point II

Article 3 // Annex III, Point III

Article 4 // Annex III, Point IV

Article 5 // Annex III, Point V

Article 6(1) // Annex III, Point VI

Article 6(2) // Deleted

Article 7 // Annex III, Point VII

Article 8 // Annex III, Point VIII

Article 8a // Deleted

Article 8b // Annex III, Point IX

Article 9 // Annex III, Point X

Article 10 // Annex III, Point XI

Article 11 // Deleted

Article 12 // Annex III, Point XII

Article 13 // Annex III, Point XIII

Regulation (EEC) No 741/75 // This regulation

Article 1 // Annex III, Point XIV

Regulation (EEC) No 193/82 // This regulation

Article 1 // Annex IV, Point I

Article 2 // Annex IV, Point II

Article 3 // Annex IV, Point III

Article 4 // Annex IV, Point IV

Article 5 // Annex IV, Point V

Article 6 // Annex IV, Point VI

Article 7 // Annex IV, Point VII

Article 8 // Annex IV, Point VIII

Article 9 // Annex IV, Point IX

Annex I // Annex V

Annex II // Annex VI

Annex III // Annex VII

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ANNEX TO THE FINANCIAL STATEMENT

This Financial Statement has been drawn up on the basis of all information included in the 2001 PDB, with the exception of the amount of the refund, which is based on a world price of USD 195/t, giving a refund of EUR 500 per tonne. The budget impact of the proposal has been calculated in relation to the 2001 PDB.

1. Expenditure

1.1. Storage costs

Discontinuing the compensation system for storage costs automatically means that storage costs will no longer be reimbursed. The cost of reimbursement is put at EUR 310.5 million in the 2001 PDB. Doing away with the system thus generates savings of the same amount in terms of the 2001 PDB.

Furthermore, discontinuing the compensation system for storage costs implies that the aid for the disposal of raw sugar must also be adjusted. The storage component used in the 2001 PDB equals EUR 10.1/t. Assuming that the quantity involved is 0.215 million tonnes, the additional savings come to EUR 2.2 million (0.215 x 10.1).

1.2. Refunds

The key figures on subsidised sugar exports are set by the WTO. Annual expenditure is capped at EUR 499.1 million and the maximum subsidised quantity that can be exported is 1 273 500 tonnes. The world price and the relevant refund used for reducing quotas pursuant to Article 26 of Regulation (EC) No 2038/1999 are USD 195/t and EUR 500/t respectively (conversion rate: EUR 1 = USD 0.99). There are currently no grounds for thinking that there will be any fundamental change in these assumptions. Naturally, any change will affect the quantities that can be exported.

Discontinuing the compensation system for storage costs automatically implies the end of the storage levy of EUR 20 per tonne. The Community price used for the flat-rate calculation of the refund should therefore be that much lower. The refund should also fall by that amount to EUR 480 per tonne.

This reduction in the refund should not have any immediate impact on expenditure linked to exports of sugar produced within the quotas. Within the abovementioned ceilings and subject to other decisions, particularly relating to the budget, it allows quantities exported to be increased. A refund of EUR 500 per tonne enables 998 200 tonnes to be exported within the budget ceiling of EUR 499.1 million. A refund of EUR 480 per tonne means that 1 039 791 tonnes can be exported, and this is still within that ceiling. Anticipated expenditure on refunds linked to exports of sugar produced within the quotas should therefore be trimmed to the WTO budget ceiling. Furthermore, the world price would have to rise to USD 283/t before the WTO quantity limit is reached and before budget savings are made.

Nonetheless, the refund does not apply only to exports of sugar produced within the quotas. It also applies to ACP quantities, quantities used for the manufacture of chemical products, Poseima/Poseican measures, products not listed in Annex I and food aid. A change in the refund on non-Annex I products is not assumed to have any impact on expenditure, which is subject to a ceiling of EUR 415 million. Assuming that the quantities used in the 2001 PDB stand, the annual savings generated by this reduction are set out in the following table.

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The quantity of sugar attracting refunds for the production of chemical products is rising gradually. It is now estimated at 330 000 tonnes for the 2000/01 marketing year. During the period of application of this draft Regulation, it is therefore proposed to assume an average quantity of sugar attracting production refunds of 350 000 tonnes. This implies an extra cost over the 2001 PDB of EUR 20.7 million [50 000 t x EUR (480 - 65)/t]. The savings in the above table accordingly fall to EUR 17.7 million.

1.3. Adjustment aid for refining

Doing away with the obligation to adjust the adjustment aid and the additional aid because the compensation system for storage costs has been abolished could result in savings of EUR 39.20 million.

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1.4. Summary of expenditure connected with this draft Regulation

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* Based on a refund of EUR 500/t in 2000/01.

** Potential saving.

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* Based on a refund of EUR 500/t in 2000/01.

** Potential saving.

2. Own resources

2.1. Storage levy

Set against the 2001 PDB, discontinuing the compensation system for storage costs and accordingly of the storage levy results in EUR 277.55 million less revenue from 2002.

2.2. Production levy

Resources from production levies must cover expenditure on export refunds for the GATT quota, production refunds for the chemical industry and net export costs of sugar exported as non-Annex I products. In the latter case, expenditure on sugar in the budget quota for such products is estimated to account for 40%, i.e. EUR 166 million.

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2.3. Customs duties

2.3.1. Imports in the natural state

These imports break down as follows.

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2.3.2. Imports of processed products

It is estimated that 450 000 tonnes are imported at the full duty (EUR 424/t) plus an average additional duty of EUR 50/t. The resulting own resources therefore amount to EUR 213.3 million [450 000 x (424 + 50)].

2.3.3. Total customs duties

Total own resources from customs duties thus amount to EUR 259 million (45.7 + 213.3).

2.4 Summary of own resources

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