Explanatory Memorandum to COM(2013)527 - Fixing, for several marketing years, of the production levies in the sugar sector, the additional levy and the payments by sugar manufacturers to beet sellers - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)527 - Fixing, for several marketing years, of the production levies in the sugar sector, the additional levy and the payments by ... |
|---|---|
| source | COM(2013)527  |
| date | 17-07-2013 |
On 27 September 2012, the Court of Justice delivered its judgment in joined cases C-113/10, C-147/10 and C-234/10, Zuckerfabrik Jülich AG v Hauptzollamt Aachen, British Sugar plc v Rural Payments Agency, Tereos v Directeur général des douanes et droits indirects (the “Jülich-II” judgement) by which it annulled Commission Regulation (EC) No 1193/2009 of 3 November 2009 correcting Regulations (EC) No 1762/2003, (EC) No 1775/2004, (EC) No 1686/2005, (EC) No 164/2007 and fixing the production levies in the sugar sector for the marketing years 2002/2003, 2003/2004, 2004/2005, 2005/2006.
Regulation (EC) No 1193/2009, annulled in its entirety by the judgement of 27 September 2012, retroactively corrected the production levies for the marketing years 2002/2003, 2003/2004, 2004/2005, 2005/2006 as previously fixed by the Commission following the annulment by the Court of Regulations (EC) Nos 1762/2003, 1775/2004, 1686/2005 and 164/2007, with its judgement of 8 May 2008 in Joined Cases C-5/06, and C-23/06 to C-36/06, Zuckerfabrik Jülich and Others (‘Jülich I’) and subsequent order of 6 October 2008, in Joined Cases C-175/07 to C-184/07, SAFBA and Others ('SAFBA').
The levies for the marketing years in question were originally set by the Commission pursuant to Council Regulation (EC) No 1260/2001 of 19 June 2001 on the common organisation of the markets in the sugar sector ('the basic regulation'), which provided, for the marketing years 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006, for a self-financing system of the sugar sector by flexible production levies.
Under Council Regulation (EC) No 1260/2001, the common organisation of the markets in the sugar sector was based 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 on a differentiation of price guarantees for disposal, reflecting the production quota allocated to each undertaking.
The principle of financial responsibility was assured by producers being charged a basic production levy on all production of A and B sugar, 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. When those levies did not allow achieving the objective of self-financing of the sector each marketing year, the basic regulation provided for an additional levy to be charged to producers. Article 15 of the basic regulation provided for the elements to be taken into consideration for the calculation of the levies.
In its above mentioned judgements, the Court did not put into question the production levy system and the principle by which the sugar producers had to bear the full financial responsibility for the losses incurred in each marketing year by disposing of that part of production under quota which is surplus to the Union's internal consumption and were accordingly liable to a levy on their production under quota, to be fixed by the Commission with a view to covering the losses incurred during the marketing years from 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006.
The Court has ruled, however, that the Commission has repeatedly erred in calculating the annual levies set for the period in question pursuant to Council Regulation (EC) No 1260/2001. Lastly, it found that the method used by the Commission in its Regulation (EC) No 1193/2009 to fix the levies was incorrect because it led to an over-estimation of the costs to be covered and to consequently over-charging sugar producers.
As a result of the invalidity of Regulation (EC) No 1193/2009, the Court held that individuals are entitled to reimbursement of the excess sums unduly paid in respect of the invalid production levies collected by the Member States over the period in question as well as to the payment of interest on such sums.
The judgement has left a legal void as to the exact amount of the levies for the marketing years 2002/2003, 2003/2004, 2004/2005, 2005/2006. Therefore, to comply with the judgement, the levies set for these marketing years should be replaced by new ones, calculated according to the method validated by the Court, with retroactive effect.
Contents
The Commission has presented to the Member States various working documents relating to the determination of the corrected sugar levies and the follow-up to the Court's judgement of 27 September 2012. Those working documents were presented at the Management Committee for the Common Organisation of Agricultural Markets on 6 December 2012, on 20 December 2012, on 24 January 2013 and a consolidated version on 28 February 2013.
A number of Member States (DE, BE, LV, IT, FR, NL, UK, CZ) called the Commission to prepare a legal act correcting the levies, which should include the reimbursement by the Union budget of interest on reimbursements made or to be made to the sugar producers who paid excess levies in the relevant years, by the concerned Member States. Some delegations also suggested that interest should be calculated at a uniform rate at the European level.
Pursuant to Article 266 TFEU 'The institution whose act has been declared void …shall be required to take the necessary measures to comply with the judgement of the Court of Justice of the European Union.'. Therefore, following the annulment of Regulation (EC) No 1193/2009, new levies for the period in question are to be fixed.
Since, with effect from the marketing year 2006/2007, Regulation (EC) No 1260/2001 was repealed and replaced by Council Regulations (EC) No 318/2006, on the common organisation of the markets in the sugar sector, and further replaced by (EC) No 1234/2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation), Council Regulation (EC) No 1260/2001 can no longer serve as the legal basis for correcting the levies. The Commission is therefore not empowered to adopt the corrective legal act necessary to implement the judgement.
Pursuant to Article 43 i TFEU 'The Council, on a proposal from the Commission, shall adopt measures on fixing … levies.'. In view of the nature of the proposed Regulation, Article 43 i appears to be the appropriate legal basis to fix the corrected sugar levies for the marketing years in questions.
Although the Court did not invalidate Regulation (EC) No 1837/2002, fixing the production levies for the marketing year 2001/2002, taking into consideration that the same method invalidated by the Court has been used for setting the levies for the marketing year 2001/2002, the levies set for that marketing year are to be considered incorrect as well. Therefore, new levies for that marketing year should be fixed and included in the corrective legislative act.
In its above mentioned judgements, the Court has clarified all the elements that have to be taken into consideration for the calculation of the average loss, within the meaning of Article 15 of the basic regulation, which has to be used for estimating the overall loss to be covered by the production levies. In particular, the average loss is to be calculated by dividing the actual total refunds paid (lower than that calculated by the Commission in the annulled Regulation (EC) No 1193/2009) by the total exported quantities, regardless whether they were exported with or without a refund. The exportable surplus is also calculated by using all exports, whether a refund has been paid or not. The application of the new method indicated by the Court leads to a substantial decrease of the average loss and the overall loss to be covered by the levies for the period in question.
Therefore, the proposed Regulation will establish the sugar production levies for the marketing years 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006, re-calculated on the basis of the methodology clarified by the Court. This will allow Member States to calculate the reimbursement due to sugar producer in respect of the excess levies that they have been charged over the same period.
Moreover, the revision of the production levies for the marketing years 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006 will impact on the complement price that the sugar producers had to pay to beet growers in respect of the difference between the maximum amount of the A or B levy and the amount of these levies charged for the marketing years 2002/2003, 2003/2004 and 2005/2006.
Indeed, according to the common organisation of the markets in the sugar sector in force until 2006, the levies were paid by sugar manufacturers but the latter recovered 60% of these costs from beet growers, by paying a lower beet price. When the amounts of the levies were set below the maximum level for the A or B levies (i.e. 2% and 37.5% of the intervention price for white sugar respectively), Article 18 i of the basic regulation provided that sugar manufacturers have to pay beet sellers 60% of the difference between the maximum amount of the levy in question and the amount of the base levy or the B levy actually charged.
Therefore, this corrective legal act establishes the revised complement prices that sugar producers should pay back to beet sellers. Only the difference between the old and the new complement prices should be reimbursed to beet sellers.
The reimbursement of the sugar levies constitutes a correction of the sugar levies originally paid in the EU own resources. Member States have to establish the new sugar levies entitlements based on the new levies within four months following the entry into force of the current act.
The revision of the sugar production levies for the marketing years 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006 will result in a negative correction of EUR 295 541 212, to be charged to the own resources of the EU budget. Besides the said amount, Member States could claim from the Commission the reimbursement of the interest effectively paid by them, in accordance with their national law, in reimbursing the excess levies collected for the relevant years. The latter expenditure shall be separately charged to the EU budget by the concerned Member States upon presentation of the corresponding proofs of payment.
The Commission will issue a declaration accompanying the present proposal for a Council Regulation, in order to clarify certain elements related to the reimbursement of the principal and interest, the reimbursement to the beet sellers, the accounting procedure and monitoring of the reimbursement process.