Committee Reports > List of Committees > Joint > 1975 > Committee on the Secondary Legislation of the European Communities > Report No. 17 - Sheepmeat Transitional Common Organisation of the Market in

REPORT

1. Introduction

The Joint Committee has examined the proposal fora Council Regulation on the transitional common organisation of the market in sheepmeat (R/2274/75). As the proposed Regulation is due to enter into force on 1st January, 1976 the Council has been asked by the Commission to act on the proposal before that date.

Before examining the proposed Regulation in detail, the Joint Committee proposes in the first instance to indicate the general pattern of Community trade in the sheepmeat sector and to refer to the factors inhibiting that trade at present.

2. Community Trade

Intra-Community trade consists mainly of exports from the United Kingdom, Netherlands and Ireland to France and from Ireland to the United Kingdom. British and Irish exports represent approximately 10 and 25 per cent respectively of annual national production. Although imports from third countries have been declining in recent years the Community as a whole remains heavily dependent on imports. New Zealand accounts for 80 per cent of these imports which reach the Community via the United Kingdom.

3. Existing Protective Measures

In France there is a national market organisation. Under this organisation, the importation of frozen sheepmeat originating in non-member countries is authorised only for short periods, and imports of live sheep and of meat other than frozen meat are authorised only if the price prevailing on the internal market is above a certain threshold. In addition, a countervailing charge, the level of which varies according to the price on the French domestic market, is levied on imports. France also authorises, subject to a quota, the importation into its territory of lean sheep for fattening.

As part of a plan to boost sheep production, it also grants certain types of production aid to breeders belonging to recognised producer groups.

Imports to the Federal Republic of Germany were freed experimentally in November, 1972 and in the other Member States of the Community as originally constituted, there is no quantitative restriction on imports.

There is no restriction on imports in the new Member States. In the United Kingdom, however, national production is protected by fixing a guaranteed price: as soon as the market price falls below this price, producers receive the difference in the form of a deficiency payment. In the United Kingdom, direct subsidies are also paid to breeders in certain less-favoured areas (hill sheep subsidy) to an amount of about 20 million u.a./ year (40 million u.a./year from the 1975/76 marketing year).

Since 1st January, 1970 Intra-Community customs duties have been abolished and the Common Customs Tariff has been fully applied (20 % for meat and 15% for live animals) in the six original Member States. In the new Member States, the levels of the Common Customs Tariff are being progressively introduced in accordance with Articles 39 (1) and 59 (2) of the Act concerning the Conditions of Accession. Similarly, the Intra-Community customs duties are being progressively abolished in accordance with Articles 32 (1) and 59 (1) of the Act. On 1st July, 1977, therefore, the Intra-Community customs duties will be abolished and the Common Customs Tariff will be fully applied in the enlarged Community.

The present trade arrangements with non-member countries are based on obligations entered into by the Community under GATT. The Community is bound against increase in the following duties in the sheepmeat sector:—

The duty of 15% on live sheep is not bound.

4. The proposed Regulation

The proposal is aimed at replacing the protective measures applied by France under its national market organisation for the control of imports from other Member States by a levy of a compensatory amount on imports into France of carcase lamb and live sheep from Ireland and Britain. The compensatory amount would not exceed the difference between representative Irish and British prices and representative French prices, the former being reduced by the amount of the diminishing customs duty applied by France on imports from new Member States. The compensatory amount would be fixed at regular intervals in accordance with Council rules and would be progressively reduced. At the same time the United Kingdom would be required to reduce progressively the production subsidies paid under its national system of guaranteed prices. No specific change is proposed in relation to third country imports beyond providing for the adoption of Council rules for taking “appropriate measures” if the Community market “experiences or is threatened with serious disturbances which may endanger the objectives set out in Article 39 of the Treaty”. Pending the setting up of a Community system, national systems in respect of non-member countries are to remain.

The proposed Regulation would apply from 1st January, 1976 to 31st December, 1977. The decision of the Court of Justice in Charmassen v Minister for Economic Affairs and Finance (Paris) [Case 48/74] indicates that a national market organisation for the agricultural sector may not, after the transitional period, preclude the full application of Article 33 of the EEC Treaty providing for the elimination of quantitative restrictions. The Commission regards this decision as removing any obligation on the-new Member States to accept the French national system after 1st January, 1978 and the present proposals are designed to avoid difficulties in the transition from the present system to a single market.

5. General View of Joint Committee

Obstacles to Intra-Community trade in the sheepmeat sector are particularly harmful to this country in view of our dependence on exports. Naturally, therefore, the Joint Committee welcomes any development directed towards removing those obstacles and achieving the free movement of sheepmeat within the Community. Moreover, it is hopeful that continuing access to the high priced French carcase lamb market, subject to diminishing compensatory amounts, and the gradual abolition of the U.K. guarantee system for sheep, will have the effect of raising to some extent the export price for our live sheep and carcase lamb. Nevertheless, the Joint Committee considers that the present proposals fall far short of what is required to attain the objectives of the Common Agricultural Policy in the sheepmeat sector as set out in Article 39 of the EEC Treaty. It, therefore, wishes to draw attention to the further measures which it believes to be essential if these objectives are to be attained.

6. Imports from Third Countries

In the Joint Committee’s view the proposed Regulation deals very inadequately with the problem of imports from third countries. While there is unrestricted access to the United Kingdom for low priced mutton and lamb, it seems doubtful if the object of raising the price of British and Irish products can readily be achieved. The Joint Committee notes that trade with third countries is affected by the Community’s obligations under GATT whereby the duty on carcase meat cannot be raised without equivalent compensation and stopping imports in the event of disturbances is ruled out. It is by no means clear what are the “appropriate measures” that may be taken under the proposed Regulation in the event of the market being “threatened with serious disturbances”, owing to imports from third countries. It seems to the Joint Committee that if the objectives of the Common Agricultural Policy are to be attained in this sector, the market must be founded on the principle of Community preference which involves effective protection against imports from third countries.

7. Price Support

The Joint Committee regards the absence of any provisions in the proposals for the market support of sheepmeat as a serious defect which unfairly discriminates against sheep farmers as compared with other farmers. In its view there should be in the sheepmeat sector, as in the beef and veal sector, a system of price support sustained by intervention and supplemented by levies on imports. A guide price should be fixed at a level which takes full account of the production costs in all regions of the Community and should be adjusted seasonally. An intervention system should be introduced with an intervention price derived from the guide price. In the absence of an intervention system, the Joint Committee would favour the introduction of a Community deficiency payment system on the lines of that operated for beef in the United Kingdom. To stimulate exports to third countries there should also be a system of export refunds. It seems quite clear to the Joint Committee that measures such as these are as essential in the sheepmeat sector as in other areas and that a sustained and reasonable return for sheep farmers can hardly be ensured in their absence.

8. Acknowledgment

The Joint Committee wishes to express its appreciation of the assistance it received from the Irish Farmers’ Association in its consideration of this matter.

(Signed) CHARLES J. HAUGHEY,

Chairman of the Joint Committee.

10th December, 1975.