Explanatory Memorandum to COM(2007)372 - Common organisation of the market in wine and amending certain Regulations - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2007)372 - Common organisation of the market in wine and amending certain Regulations. |
|---|---|
| source | COM(2007)372  |
| date | 04-07-2007 |
The European Union (EU) is the world's leading producer, consumer, exporter and importer of wine. In 2006, EU-27 wine production accounts for 5% of the total value of the EU's agricultural production. In terms of quality, its reputation is recognised worldwide. The wine sector in the EU represents a vital economic activity, especially as regards employment and export revenue.
However, EU wine consumption has fallen significantly and steadily over the past decades and, despite a recent recovery, the volume of wine exported from the Community since 1996 has been increasing at a much slower rate than imports. The deterioration of the balance between supply and demand in the wine sector and the increasing challenges inherent in a European and international wine market are putting producers' price and income under pressure. Nevertheless many wine producers are competitive and others are capable of becoming competitive.
As stated in its Communication 'Towards a sustainable European wine sector' of 22 June 2006 i, the European Commission is of the opinion that a fundamental reform of the common market organisation (CMO) for wine is necessary in order to replace cost-inefficient policy tools by a more sustainable and coherent legal framework. The aim is to ensure a better value for money using the current budget allocated (around EUR 1.3 billion), which is about 3% of the total for agriculture.
The current CMO is set out in Council Regulation (EC) No 1493/1999 of 17 May 1999. The adoption of the proposal will lead to the repeal of existing legislation. Also based on the Treaty establishing the European Community and in particular Articles 36 and 37, the proposed regulation when adopted will enter into force on 1 August 2008 and falls under the exclusive competence of the Community. However, many measures to be funded under this proposal will allow Member States to tackle the specific situations of their wine producing regions in accordance with the subsidiarity principle.
In keeping with the Commission's commitments on better legislation, the proposal is accompanied by an updated analysis of the economic, social and environmental aspects of the problems linked to the CMO and of the impact, advantages and drawbacks of the proposal in relation to these issues. It also takes account of the results of the debates conducted both with stakeholders and national authorities and within the Community institutions.
This draft regulation represents a Commission initiative as part of the continuing common agricultural policy (CAP) reforms of 2003 for arable crops and livestock i, 2004 for olive oil, tobacco and cotton i, and 2006 for sugar i, and the proposed reform for fruit and vegetables of January 2007, which cover all the main sectors except wine. It also takes into account Community policies on sustainable development, agreed at the Göteborg European Council, on greater competitiveness in the relaunched Lisbon Strategy, and on Simplification and Better Regulation for the CAP.
- Use of external expertise
To prepare the ground for the reform of the wine CMO, an ex-post evaluation of the current regime has been financed by the Commission and conducted by a consortium of European academics. The evaluation report was published in November 2004 and is available on the Commission website i.
In addition, when making the medium-term forecasts of the wine market the Commission submitted its assumptions, methodology and results to a panel of academics specialised in the wine economy from France, Spain, Italy and Germany.
- Wine seminar
To give stakeholders an opportunity to put forward their opinions and ideas on the present situation and future prospects of the wine sector, a seminar entitled “Challenges and opportunities for European wines” was held on 16 February 2006. This seminar was attended by more than one hundred people representing a wide range of interested parties i.
- Commission Communication and impact assessment
In June 2006, drawing its first conclusions from the debate, the Commission adopted a Communication to the Council and the European Parliament considering four possible options for the reform of the CMO. The Commission invited all the stakeholders to participate in an open debate on the future wine CMO, and announced that it would propose a reform of the wine CMO on the basis of these discussions.
Taking into account the situation of the sector and the policy objectives to be achieved, the Commission considered four possible options for the reform of the wine CMO. Three of these options – to maintain the status quo, to reform the wine CMO along the lines of the CAP reform model and to pursue complete deregulation – do not provide adequate answers to the problems, the needs and the particularities of the wine sector.
The Commission carried out an impact assessment listed in the Work Programme; the report is available on the Commission website i.
- European institutions
From July to October 2006, intense discussions took place within the Council, in particular during three meetings of the Agriculture and Fisheries Council.
In December 2006, both the European Economic and Social Committee and the Committee of the Regions adopted their reports on the wine reform.
In February 2007, the European Parliament adopted its own initiative report on the Communication.
- Stakeholders' consultation
The Commission held a wide range of meetings with stakeholders and discussions took place within the Advisory Group on Wine.
In addition, to ensure direct and concrete dialogue with the European wine sector, the Commissioner for Agriculture and Rural Development has visited many of the different vine-growing regions throughout the European Union since February 2006.
- Main concerns expressed
During all these debates held since the adoption of the Commission Communication, Member States and many stakeholders have had the opportunity to express their concerns. Even if diverging views were expressed, the following concerns are largely shared by many of them:
- the urgent need for extensive reform in the light of the Commission's economic analysis, diagnosis of problems and objectives for reform,
- the social and economic risks arising from too rapid and too widespread grubbing-up,
- the urgent need to enhance wine marketing and promotion,
- the risk for quality if the bans on imported musts for vinification and on wine coupage between EU wines and imported wines were to be lifted.
Non wine-producing countries stressed the need to introduce more cost-efficient and consumer-oriented measures.
The above-mentioned concerns have been duly taken into account by the Commission in the present proposal.
Contents
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- 2. CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT
- 3.1. Renewed, simplified and more straightforward regulatory measures
- 3.2. Setting national envelopes to allow Member States to improve their specific situation
- 3.3. Building a more sustainable sector by using more Rural Development measures
- 3.4. Making the consumer better informed about European wines
- 3.5. Preventing environmental risks
- 3.6. Granting alternatives to less competitive producers
- 3.7. Trade with third countries
- 3.8. Enhancing CAP coherence, simplification and full compliance with the Community legislation
- TABLE OF CONTENTS
- Chapter I Support programmes 24
- Chapter I General rules 31
- Chapter I Common provisions 50
- Chapter I Unlawful plantings 56
- Chapter I Amendments 69
- Objectives of the reform
The identified objectives of this reform are to:
- increase the competitiveness of the EU's wine producers; strengthen the reputation of EU quality wine as the best in the world; recover old markets and win new ones in the EU and worldwide;
- create a wine regime that operates through clear, simple rules – effective rules that balance supply and demand;
- create a wine regime that preserves the best traditions of EU wine production, reinforces the social fabric of many rural areas, and ensures that all production respects the environment.
The new EU wine policy should also give due consideration to the increased concerns of society as regards health and consumer protection, the need for World Trade Organisation (WTO) compatibility and consistency with the reformed CAP, first and second pillar and conformity with the financial perspectives.
Finally, it has to be pointed out that this proposal has been drawn up in light of the Commission proposal for a Council Regulation establishing a common organisation of agricultural markets. Some provisions of a horizontal nature have been updated, simplified and streamlined so that the wine CMO can be easily incorporated into that single CMO in due course.
- Summary of the proposed measures
Recognising the problems and the potential of the sector and its particularities, and following the in-depth analysis in the Impact Assessment, the Commission considers that there is a need to keep a specific wine CMO which must, without doubt, be fundamentally reformed.
The challenge is to adapt the production structure and regulatory framework in the interest of a sustainable and competitive European wine industry with long-term prospects while, at the same time, ensuring that budgetary means are used in the most cost-effective manner. This will entail abolishing from day one, all the measures which have proved to be inefficient, namely support for by-product distillation, potable alcohol and dual-purpose grape distillation as well as private storage support and export refunds. Aid for must in relation to enrichment, introduced to compensate additional costs when comparing enrichment with sugar, will be abolished in line with the introduction of a ban on the use of sugar for enrichment. The crisis distillation measure will be replaced by two crisis management measures introduced in the national envelope menu.
An important feature of the far-reaching reform will be to make the new wine CMO WTO-friendly. Thus, current trade-distorting ("Amber Box") intervention measures will be eliminated, and where internal support measures continue to exist, preference will be given to 'Green Box' measures.
The proposed approach consists of two phases: the first phase from 2008 to 2013 involves restoring market balance while helping those who cannot compete to leave the sector with dignity. Throughout the period new measures will be introduced to improve competitiveness, including, in a second phase, the abolition of planting rights as from 1 January 2014.
Fewer constraints for producers
The system of planting rights restrictions will be extended from 2010 to 2013.
Then, from 1 January 2014 onwards planting of vines will be free in order to improve competitiveness. The purpose is to allow competitive wine producers to expand their production in order to recover old markets and win new ones in the EU and in third countries. However, new market realities and Member States' competences regarding access to protected designation of origin or Geographical Indication status, for example area delimitation, setting of maximum yields and other stricter rules on production, processing and labelling, combined with the end of the systematic distillation safety net will de facto limit the number of hectares and avoid excessive production. Any new production decision will fully reflect the producers' capacity to find economic outlets for their products.
More adaptable oenological practices with :
- the transfer from the Council to the Commission of the responsibility for approving new or modifying existing oenological practices, including taking over the acquis except for enrichment and acidification;
- the assessment by the Commission of the oenological practices adopted by the International Organisation of Vine and Wine (OIV) and subsequent incorporation into a Commission regulation;
- the authorisation of the use in the EU of oenological practices already agreed internationally for making wine to export to those destinations;
- the deletion of the minimum natural alcohol requirement of wine.
Clearer, more coherent and consequently more market-oriented wine classification and labelling :
The concept of EU quality wines is based on a geographical origin approach (quality wine produced in a specified region). The EU wants to confirm, adapt, promote and enhance this concept worldwide.
The quality policy will be made clearer, simpler, more transparent and thus more effective, by:
- establishing a clear framework for wines with Geographical Indication (GI) consistent with the horizontal quality policy (Council Regulation (EC) No 510/2006). Wines with GI will be further divided into wines with a protected geographical indication (PGI) and wines with a protected designation of origin (PDO). A procedure for registration and protection of GIs will be established;
- maintaining the ban on over-pressing of grapes in order to ensure wine quality, to be applied under the subsidiarity principle;
- expanding the role of the interprofessional organisations in order to be able to control and manage the quality of the wine produced in their territories. Control instruments are reinforced as well, in particular for the production of ' vin de cépage '.
The Commission proposes to simplify the labelling provisions by setting up a single legal framework applying to all the different categories of wine and particulars relating to them. It will respond to the needs of consumers and be more consistent with the wine quality policy. In particular, this involves:
- the transfer of competence from the Council to the Commission;
- the use of a single legal tool for all wines by complementing the rules in the horizontal labelling Directive 2000/13/EC as appropriate to meet the particular needs of the wine sector as regards compulsory and optional labelling;
- improving the flexibility of the labelling policy, in taking into account the WTO policies, by removing the distinction between the rules on labelling wines with and without protected designations of origin or geographical indications, most importantly facilitating the indication of vine variety and vintage on wines without protected designation of origin or geographical indication respecting proper traceability requirements;
- ensuring consumer information and protection, fully informing them of the origin of the product through appropriate labelling rules on traceability.
According to the financial statement, the overall budget allocated to this type of measures will vary from EUR 623 million in 2009 to EUR 830 million from 2015 onwards.
Out of it, a budget envelope will be made available to each wine-producing Member State, calculated according to three objective criteria, namely shares in area, production and historical expenditure with the following respective weight: one fourth, one fourth and a half, except for the promotion part where the weight will be a half for the share in area and a half for the share in production.
Using their envelope, every Member State will be allowed to finance measures, according to its preference, from a given menu including:
- new support for promotion in the third countries;
- the vineyard restructuring/conversion scheme;
- new support for green harvest;
- new crisis management measures, i.e. insurance against natural disasters and administrative costs of setting up a sector-specific mutual fund.
Its use will be subject to certain common rules, including minimum environmental rules applied through the principles of cross-compliance, in order to avoid distortion of competition, and subject to the notification of the specific national programme to the Commission.
Many measures already forming part of the Rural Development Regulation i and inserted in the programmes adopted by the Member States could be of interest for the wine sector as they could provide significant encouragement and benefit for vine growers, processors and traders. Among other things:
- setting up of young farmers and investments in technical facilities and marketing improvements;
- vocational training;
- information and promotion support for producers' organisations after entering a quality scheme;
- agri-environment support to cover additional costs and income foregone in providing and maintaining vinescapes/cultural landscapes;
- early retirement: to be granted eventually to farmers who decide to stop all commercial farming activity definitively for the purpose of transferring the holding to other farmers.
The abolition of the use of sugar will force some wine producers who have traditionally used sugar for enrichment to make investments to introduce the use of must for enrichment. Under rural development it will be possible for Member States to provide investment support to wine producers who have to change from the use of sugar for enrichment to the use of must.
As the 2007–2013 Rural Development planning process is in progress, and in order to encourage these measures, a transfer of funds between budget headings (market and direct payments on the one hand and Rural Development on the other hand) will be necessary and would be earmarked for the wine producing regions in line with what was done in two other sectors (tobacco and cotton).
The transferred budget will vary from EUR 100 million in 2009 to EUR 400 million from 2014 onwards. As the Rural Development plans will already have been adopted, Member States will have the opportunity to adapt them so that they can play an important role in the economic welfare of wine sector stakeholders in the future and in preserving the environment in the vine-growing regions.
Several stakeholders, in particular during the 16 February 2006 Seminar, underlined the need for increased emphasis on wine marketing and wine promotion. The Commission intends to pursue with vigour a responsible promotion and information policy. All available opportunities in Community legislation should be used and some new ones created in order to carry out:
- new promotion projects outside the EU using national envelopes with an ambitious and earmarked budget of EUR 120 million, about 9% of the budget allocated to the sector. Those measures will be co-financed at 50% by the Community budget;
- enhanced promotion projects using rural development funds for producers' organisations entering quality schemes;
- new information campaigns on responsible/moderate wine consumption will also be financed within the EU using the horizontal legal framework for promotion with an increased co-financing rate (set at 60%). The current information campaign on European Geographical Indication classification will also be enhanced. For this purpose, Council Regulation (EC) No 2826/2000 will be amended and more funds will be made available.
The production and marketing of wine should take full account of environmental concerns, from cultivation practices to processing methods. The Commission intends to ensure that the reform of the wine regime improves the environmental impact of vine growing and winemaking, particularly as regards soil erosion and contamination, the use of plant protection products, and waste management.
In order to achieve this, the Commission proposes:
- the eligibility of all wine areas to participate in the Single Payment Scheme means that for more and more producers the cross-compliance rules will be compulsory;
- the automatic introduction of grubbed-up areas in the Single Payment Scheme means that the cross-compliance rules will be compulsory for those areas;
- a minimum environmental requirement will be attached to the grubbing-up premium to avoid land degradation as well as to the restructuring and green harvesting measures funded by the national envelopes;
- the establishment of an acceptable minimum level of environmental care in the wine making process;
- an increase of funds in Rural Development programmes, for example under axis 2, providing for support measures to improve the environment and the countryside.
Even if many producers are already competitive or will improve their competitiveness thanks to the new measures proposed in the reform, some of them are currently in a very difficult situation. Their income is often already negative and they will be hard pressed to avoid bankruptcies in an increasingly competitive market. In order to offer them a way out of the sector with dignity, a definitive abandonment regime must be maintained.
Vine growers should be free to choose to grub up or not. However, to avoid social and/or environmental problems, Member States will be allowed to limit grubbing-up in mountains and steep slopes vineyards as well as in regions under specific environmental constraints and/or to discontinue grubbing-up if the total grubbed-up area cumulated exceeds 10% of their vine area.
The grubbing-up premium will be increased and set at an attractive level. To encourage uptake from year 1, a decreasing scale will be set for the premium over the remaining period of planting restrictions. The budget allocated will make it possible to grub up around 200 000 ha in the EU over a five-year period. This is the area corresponding to the part of the structural surplus to be eliminated taking into account the recent trade improvements together with the positive effects on market balance expected from the other measures proposed, in particular the end of enrichment with sugar, promotion, green harvesting and Rural Development support.
The agricultural area formerly used for vine growing, once grubbed up, will qualify as an eligible area under the Single Payment Scheme and be granted the average regional decoupled direct payment.
Bearing in mind that the WTO negotiations are still ongoing and that their outcome remains unknown, the reform proposal does not touch on the current legal framework relating to external trade with the exception of export refunds.
However, for wine, the impact and the role of export refunds have been analysed. Their economic impact has considerably decreased. Indeed, exports with refunds represent less than 15% of total exports in volume. The value of export refunds represents 3.4% of the value of the products eligible for export refunds. It has therefore been considered that better use can be made of the funds allocated to this instrument, in part on promotion, and it is proposed to abolish export refunds.
E xtension of the eligibility of all wine areas to participate in the Single Payment Scheme is a significant step designated to offer wine producers a high degree of flexibility and ensure that they are treated on an equal footing with other farmers. For this purpose Council Regulation (EC) No 1782/2003 will be amended.
The proposal provides for simplification of legislation, simplification of administrative procedures for public authorities (EU, national or regional) and simplification of administrative procedures for private parties. For example, the administrative simplification resulting from the abolition of the market measures and of the planting rights from 2014 represents a considerable advantage of the proposed reform. Simplification and electronic transmission of accompanying documents should also be encouraged.
Irrespective of the removal of the planting restrictions, economic operators and Member States have to comply with existing Community legislation regarding so-called irregular vineyards and illicit vineyards. Compliance with these rules is crucial to the functioning of the CMO. If the rules are not observed, the Commission will (continue to) take appropriate measures in the framework of the clearance of accounts procedures or, if necessary, initiate infringement procedures under Article 226 of the Treaty.
The impact of the proposed reform does not increase costs with respect to the recent level of EUR 1.3 billion devoted to the sector. This budget will be used:
- in the new CMO for national envelopes including promotion to third counties on the one hand and for grubbing-up on the other hand,
- to allow transfer to Rural Development measures for wine producing regions, and
- to allow transfer to the single payment scheme according to the areas grubbed-up.
It is expected that the changes and innovations in the regime will lead to the budget being used more efficiently.
In addition, funds to be used for information on the internal market about wines with a protected designation of origin or geographical indication, variety wines and responsible consumption will be increased by EUR 3 million.
TITLE I INTRODUCTORY PROVISIONS 23
TITLE II – SUPPORT MEASURES 24
Section 1 Introductory provisions 24
Section 2 Support programmes 25
Section 3 Specific support measures 27
Section 4 General provisions 30
Chapter II Financial transfer 31
TITLE III – REGULATORY MEASURES 31
Chapter II Oenological practices and restrictions 32
Chapter III Designations of origin and geographical indications 35
Section 1 Scope and definitions 35
Section 2 Application for protection 36
Section 3 Procedure conferring protection 37
Section 4 Specific cases 39
Section 5 Protection and control 40
Section 6 General provisions 44
Chapter IV Labelling 44
Chapter V Producer and sectoral organisations 46
TITLE IV – TRADE WITH THIRD COUNTRIES 50
Chapter II Import and export licences 50
Chapter III Safeguard measures 52
Chapter IV Rules applying to imports 54
TITLE V – PRODUCTION POTENTIAL 56
Chapter II Transitional planting right regime 58
Chapter III Grubbing-up scheme 62
TITLE VI – GENERAL PROVISIONS 65
TITLE VII – TRANSITIONAL AND FINAL PROVISIONS 69
Chapter II Transitional and final provisions 71