Explanatory Memorandum to COM(2017)619 - Fixing of the production levies and the coefficient for calculating the additional levy in the sugar sector for the 1999/2000 and 2000/2001 marketing years - Main contents
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| dossier | COM(2017)619 - Fixing of the production levies and the coefficient for calculating the additional levy in the sugar sector for the ... |
|---|---|
| source | COM(2017)619  |
| date | 24-10-2017 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
On 9 February 2017, the Court of Justice delivered its judgment in case C-585/15, Raffinerie Tirlemontoise SA v État belge by which it declared invalid Commission Regulation (EC) No 2267/2000 of 12 October 2000 fixing the production levies and the coefficient for calculating the additional levy in the sugar sector for the marketing year 1999/2000 and Commission Regulation (EC) No 1993/2001 of 11 October 2001 fixing the production levies in the sugar sector for the marketing year 2000/2001.
The levies for the marketing years in question were originally set by the Commission pursuant to Council Regulation (EC) No 2038/1999 of 13 September 1999 on the common organisation of the markets in the sugar sector. This regulation provided for a self-financing system of the sugar sector set by flexible production levies.
Under Council Regulation (EC) No 2038/1999, 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 Regulation (EC) No 2038/1999 provided for an additional levy to be charged to producers. Article 33 of Regulation (EC) No 2038/1999 provided for the elements to be taken into consideration for the calculation of the levies.
In its above mentioned judgement 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 1999/2000 and 2000/2001.
The Court has ruled, however, that the Commission has erred in calculating the annual levies set for the period in question pursuant to Council Regulation (EC) No 2038/1999. It found that the method used by the Commission in its Regulations (EC) No 2267/2000 and No 1993/2001, in order 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.
The judgement has left a legal void as to the exact amount of the levies for the marketing years 1999/2000 and 2000/2001. 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.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
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 Regulations (EC) No 2267/2000 and No 1993/2001, new levies for the period in question are to be fixed.
The framework of the common market organisation for the sugar sector has changed since 1999: Council Regulation (EC) No 2038/1999 was repealed and replaced by Council Regulation (EC) No 1260/2001, which was repealed and replaced by Council Regulation (EC) No 318/2006, and further repealed and replaced by Council Regulation (EC) No 1234/2007. Council Regulation (EU) No 1308/2013 repealed and replaced Council Regulation (EC) No 1234/2007. Hence, Council Regulation (EC) No 2038/1999 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 TFEU appears to be the appropriate legal basis to fix the corrected sugar levies for the marketing years in questions.
In its above mentioned judgement, the Court clarified all the elements that have to be taken into consideration for the calculation of the average loss, within the meaning of Article 33 of Council Regulation (EC) No 2038/1999, 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 by the total exported quantities of quota sugar, regardless whether they were exported with or without a refund. 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 1999/2000 and 2000/2001, re-calculated on the basis of the methodology clarified by the Court. This will allow Member States to calculate the reimbursement due to sugar producers in respect of the excess levies that they have been charged over the same period. Member States should execute the reimbursement to sugar producers resulting from the application of the revised levies in accordance with the applicable national law including national limitation periods. They should ensure that economic operators that claimed reimbursement rightfully and in a timely manner are reimbursed.
Moreover, the revision of the production levies for the marketing years 1999/2000 and 2000/2001 will impact on the amount 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 concerned .
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 36 (2) of Regulation (EC) 2038/1999 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 amounts that sugar producers should pay back to beet sellers. Only the difference between the old and the new amounts 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 no later than 30 September 2018.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
The Commission has presented to the Member States a working document relating to the determination of the corrected sugar levies and the follow-up to the Court's judgement of 9 February 2017. This working document was presented and discussed at the Management Committee for the Common Organisation of Agricultural Markets on the 28th of September 2017.
A number of Member States 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.
4. BUDGETARY IMPLICATIONS
The revision of the sugar production levies for the marketing years 1999/2000 and 2000/2001 will result in a negative correction of EUR 116 318 466, 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 is issuing, in parallel, a Staff Working Document 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.