REPORT on the Commission's Sapard Annual Report - Year 2000
(COM(2001) 341 – C5‑0009/2002. – 2002/2007(COS))

18 April 2002

Committee on Agriculture and Rural Development
Rapporteur: Willi Görlach

PROCEDURAL PAGE

By letter of 9 July 2001, the Commission forwarded to Parliament the Commission's Sapard Annual Report - Year 2000 (COM(2001) 341 – 2002/2007 (COS)).

At the sitting of 16 January 2002, the President of Parliament announced that he had referred the report to the Committee on Agriculture and Rural Development as the committee responsible and to the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy, the Committee on Budgets, the Committee on Budgetary Control, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Consumer Policy, the Committee on Industry, External Trade, Research and Energy, the Committee on Fisheries and the Committee on Regional Policy, Transport and Tourism for their opinions (C5‑0009/2002).

The Committee on Agriculture and Rural Development appointed Willi Görlach rapporteur at its meeting of 6 November 2001.

The committee considered the Commission's report and the draft report at its meetings of 4 December 2001, 18 February 2002, 19 March 2002 and 17 April 2002.

At the latter/last meeting it adopted the motion for a resolution unanimously.

The following were present for the vote: Joseph Daul, chairman; Friedrich-Wilhelm Graefe zu Baringdorf, Albert Jan Maat, vice-chairmen; María Rodríguez Ramos, vice-chairwoman; Willi Görlach, rapporteur; Gordon J. Adam, Danielle Auroi, Alexandros Baltas (for Vincenzo Lavarra), Carlos Bautista Ojeda, Sergio Berlato, Niels Busk, Arlindo Cunha, Michl Ebner, Christel Fiebiger, Ilda Figueiredo (for Dimitrios Koulourianos), Francesco Fiori, Christos Folias, Jean-Claude Fruteau, Georges Garot, Lutz Goepel, Liam Hyland, Elisabeth Jeggle, Salvador Jové Peres, Hedwig Keppelhoff-Wiechert, Heinz Kindermann, Wolfgang Kreissl-Dörfler (for António Campos), Astrid Lulling (for Robert William Sturdy), Xaver Mayer, Jan Mulder (for Giovanni Procacci), Karl Erik Olsson, Neil Parish, Mikko Pesälä, Christa Prets (for María Izquierdo Rojo), Encarnación Redondo Jiménez, Agnes Schierhuber, Dominique F.C. Souchet and Eurig Wyn (for Giorgio Celli).

The opinions of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy and the Committee on Industry, External Trade, Research and Energy are attached. The Committee on Budgets, the Committee on Budgetary Control, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Consumer Policy, the Committee on Fisheries and the Committee on Regional Policy, Transport and Tourism decided on 22 January 2002, 11 September 2001, 12 September 2001 and 22 January 2002, 10 September 2001 and 22 January 2002 respectively not to deliver opinions.

The report was tabled on 18 April 2002.

The deadline for tabling amendments will be indicated in the draft agenda for the relevant part-session.

MOTION FOR A RESOLUTION

European Parliament resolution on the Commission's Sapard Annual Report - Year 2000 (COM(2001) 341 – C5‑0009/2002/2007(COS))

The European Parliament,

–   having regard to the Commission's Sapard Annual Report (COM(2001) 341 – C5‑0009/2002),

–   having regard to Rule 47(1) of its Rules of Procedure,

–   having regard to the report of the Committee on Agriculture and Rural Development and the opinions of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy and the Committee on Industry, External Trade, Research and Energy (A5‑0124/2002),

A.   whereas the main priorities of the Sapard instrument in regard to the prospective accession of the countries of Central and Eastern Europe (CCEE) to the European Union are to contribute to the implementation of the Community acquis concerning the common agricultural policy and related policies, and to solve priority and specific problems for the sustainable adaptation of the agricultural sector and rural areas in the CCEE,

B.   whereas the agricultural sector in the CCEE plays a crucial role in certain respects for the economy and employment; whereas, therefore, the success of enlargement is dependent to a considerable extent on the successful integration of the agricultural sector in the CCEE into the EU’s agricultural market; whereas the Commission should ensure that professional and training exchanges are encouraged between farms and farmers, particularly young farmers, between the present Member States and the CCEE,

C.   whereas the pre-accession strategy in the agricultural sector must be brought into line with developments in the WTO negotiations and the outcome of the mid-term review of Agenda 2000,

D.   whereas, although the Sapard regulation (Regulation No 1268/1999) was adopted in mid-1999, the first paying agency of an applicant country was not operational until December 2000; whereas, by the end of 2001, only insignificant sums (approx. 30 million euro) had been channelled into the CCEE from the Sapard programme,

E.   whereas responsibility for the management of Sapard has been transferred to the CCEE; whereas, therefore, Sapard will be implemented on a completely decentralised basis and only with ex-post control by the Commission in accordance with the financial management principles of the EAGGF, Guarantee Section,

F.   whereas the delay in implementing the Sapard programme is attributable to the need to create the requisite administrative conditions for appropriate financial management of the decentralised administration in the CCEE,

1.   Welcomes the gradual and perceptible progress made by the CCEE in the agricultural sector as they move towards accession to the European Union;

2.   Is deeply concerned that preparations for the accession of the CCEE are being considerably hindered in the agricultural sector by the delay in implementing the Sapard programme; stresses that the 2004 target for the first round of enlargement brings considerable pressure to bear on the process of adapting CCEE agriculture;

3.   Acknowledges the fact that public opinion in most applicant countries was not fully and accurately informed about the reasons for the delay in receiving Sapard funding, which increased scepticism in applicant countries towards the enlargement process; invites the Commission and the applicant countries to improve awareness about this specific preaccession instrument especially in rural areas, by explaining it in simple and accurate terms and by strengthening support for training of the rural population, in order to enable all actors to participate in planning and project implementation;

4.   Regrets that the management of Sapard funds was transferred to only five CCEE - Bulgaria, Estonia, Slovenia, Latvia and Lithuania;

5.   Regrets the fact that the difficulties which were already apparent in 2000 with regard initially to the content of the programme and subsequently to the setting-up of paying agencies have still not been completely overcome, and that this development is having an adverse impact on the structural changes which must be made in the CCEE prior to accession;

6.   Calls on the Commission to provide a written statement, by the month of June 2002, with detailed and particular information on the outstanding obstacles to the transfer of Sapard funds to applicant countries at that moment, including the accreditation of Sapard paying agencies;

7.   Regards the fact that there was no take-up of funds at all in the financial year 2000 and only insignificant amounts in 2001 for the implementation of Sapard as a sign that Sapard has been poorly organised insofar as its aim is to provide effective development aid prior to accession;

8.   Points out that the CCEE will probably have great difficulty cofinancing the Sapard programme as they will have to incorporate the budget resources originally set aside for 2000 and 2001 as an additional factor in their budgets for 2002, 2003 and later; calls therefore on the Commission to take appropriate measures to ensure that Sapard funds are not forfeited as a result of the late implementation of the programme;

9.   Recognises the problems that some CCEE have in setting up paying agencies to which the same criteria of efficiency, quality and confidence must apply as to the management and control structures in the Member States, and must note that it is proving difficult for some applicant countries to set up such agencies, as the necessary human and technical resources are often lacking;

10   Hopes that the available EU funds will now be used promptly and as productively as possible to support the various agricultural sectors in adapting to the new economic environment following accession;

11.   Asks the Commission to provide regular updates, throughout the year 2002, on experiences with Sapard funded projects, in order for Parliament to closely monitor these politically important investments in the rural areas in applicant countries;

12.   Calls on the Commission to examine whether - with the agreement of the CCEE - it would improve the uptake of appropriations if the Commission were to allocate a certain amount of Sapard funds centrally;

13.   Points out that, on average, only 11% of the Community appropriations for Sapard are earmarked for the development and diversification of agriculture in the CCEE; considers that there is an urgent need for greater support to create alternative sources of income and strengthen civil society in the CCEE in the context of promoting rural development, as there is considerable overmanning in the sector which may lead to a massive rise in unemployment following accession if their agriculture is subjected to the full pressure of competition from the present Member States; draws attention in this connection to the great importance of education and training as part of the required retraining and restructuring programmes;

14.   Endorses, therefore, a reorientation of the Sapard Programme so that greater support is given to the creation of alternative employment possibilities in rural areas, since that would fit in with the EU’s concept of multifunctional agriculture and would reduce the social problems which will be caused by the inevitable job losses in the agricultural sector in the CCEE resulting from their accession to the EU;

15.Calls, therefore, on the Commission to submit a proposal for an 'Inpard' (Innovative Participatory Rural Development) programme as soon as possible which should contribute, through preparing in due time for the implementation of Leader+ following accession, to creating additional employment and income and strengthening civil society in rural areas of the CCEE, taking a 'bottom-up' approach along the lines of the Leader programmes in the EU;

16.   Calls on the Commission, pending an agreement to amend the financial perspective, to make available the budget funds upon which it can draw for the preparation of 'bottom-up' programmes pursuant to Article 7(4) of Regulation (EC) 1268/1999;

17.   Seeks an agreement with the Council and Commission to amend the financial perspective in order to make additional funds available for pre-accession measures in rural areas;

18.   Points out that by implementing such a programme as of 2003 prior to accession, structures can be set up for use by the Leader programme following accession and valuable experience gained;

19.   Calls on the Commission to ensure, when the Sapard Programme is implemented, that the approved state aid in the agriculture sector in the CCEE is compatible with the obligations entered into by both the EU and the CCEE at the WTO;

20.   Calls on the Commission to promote, under the Sapard Programme, rapid compliance by the CCEE with the EU’s health and plant health norms and its animal welfare provisions, since that would help to prevent any distortions in agricultural trade between the EU and the CCEE.

21.   Instructs its President to forward this resolution to the Council, the Commission and the governments of the ten applicant countries of Central and Eastern Europe.

EXPLANATORY STATEMENT

1.   Introduction

The Commission recently submitted its first report on the Special Accession Programme for Agriculture and Rural Development – Sapard. The object of the programme introduced by Regulation (EC) No 1268/1999 (Council Regulation of 21 June 1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of Central and Eastern Europe in the pre-accession period), known as the “Sapard Regulation” was and is to support the 10 EU applicant countries of Central and Eastern Europe (Bulgaria, the Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Romania, Slovenia and Slovakia) to make structural improvements in agriculture and rural areas.

The total amount ear-marked for pre-accession aid is limited by the ceiling on heading 7, which the European Council meeting in Berlin in 1999 fixed at 3174 billion euro per year (at 1999 prices) for the period of the financial perspective. 50% of the ceiling is intended for PHARE (financial support for institutional development and projects requiring substantial investment); of the remainder, two-thirds go to ISPA (support for transport and environmental infrastructure) and one-third to Sapard. The total amount of appropriations from the Community budget for Sapard is approximately 530 million euro per year for the period 2000-2006. The indicative amount for the annual appropriations (in million euro at constant 2000 prices) is shown in the following table:

Bulgaria	Czech Republic	Estonia	Hungary	Lithuania	Latvia	Poland	Romania	Slovenia	Slovakia	Total.
53,026	22,445	12,347	38,713	30,345	22,226	171,603	153,243	6,447	18,606	529

2.   Requirements

(a) Content

Sapard programmes are to a large extent comparable to Member States’ agriculture and rural development programmes, but do not span the full range of those programmes. Support under the Sapard programme is granted on the basis of a single agriculture and rural development programme per applicant country. The content of each programme reflects priorities established by the CCEE (countries of Central and Eastern Europe) according to their particular circumstances and needs.

(b) Administration and management

For the management of Sapard, an approach was chosen whereby the national authorities in the applicant countries assume full responsibility on the basis of completely decentralised management. This was done to enable the underlying objectives of the Sapard instrument to be achieved, i.e. to implement numerous small-scale projects throughout the rural areas of each country, and to create structures which will enable the CCEE to apply the acquis communautaire immediately upon accession. This requires each country of Central and Eastern Europe to set up a paying agency, which must be capable of implementing Sapard in a manner consistent with the legal provisions negotiated. A further requirement is to conclude bilateral international agreements between the EU and the CCEE, which are referred to as the financing agreements.

(aa) Paying agency

The paying agencies must be organised in accordance with the provisions of the EAGGF – Guarantee Section and be capable of implementing Sapard in a manner consistent with the legal provisions negotiated. The National Funds, a department in the CCEE finance ministries, which had already been set up to manage PHARE resources, is the competent authority for the accreditation of the payment agency. It is then for the Commission to verify the accreditation of the agency on the spot. If agreement is reached, the Commission may delegate management and payment tasks to the applicant country and the working capital can be transferred to that country.

(ab) Multiannual financing agreement

This agreement lays down the Community management and control rules for Sapard for the duration of the programme. As EU legislation is not binding on applicant countries, it was necessary to drawn up bilateral agreements with each applicant country in order to create a legal framework making the rules for implementing Sapard binding on the Community and each applicant country. The multiannual financing agreement involves full decentralisation of programme management to an agency established under the responsibility of each applicant country, financing arrangements based on differentiated appropriations, and the application of the EAGGF Guarantee Section clearance of accounts procedure.

(ac) Annual financing agreement

An annual financing agreement will be drawn up and negotiated with each of the applicant countries for each year of the programme. It will set out the annual financial commitment of the Community and, where necessary, will amend provisions of the multiannual financing agreement.

3.   Timetable

Once the Commission had decided on the allocation of funds, the applicant countries were able to submit their Sapard programme plans at the end of 1999/beginning of 2000 for promoting agriculture and rural development. On the basis of those plans, several consultations and the participation of the STAR Committee, the Commission approved all the multiannual programmes in the autumn of 2000. The multiannual financing agreements and the annual financing agreements for 2000 were signed with all CCEE by early 2001.

Owing to the persistent difficulties of setting up the paying agencies, so far only Bulgaria (May 2001) and Estonia (June 2001) have joined Slovenia, Lithuania (November 2001) and Latvia (December 2001), i.e. half of the potential beneficiaries, in having the management of Sapard funds transferred to them. In several other applicant countries, the adaptation of arrangements and procedures is apparently on the verge of completion. The annual financing agreement between the Commission and the CCEE on the allocation of funds for 2001 is expected during the course of 2002.

4.   Appraisal

(a) Programme drafting and management

Overall it is regrettable that a project launched with such great expectations as Sapard is for the most part still not up and running. In the light of the experience described in the report by the Commission and the applicant countries, there are a growing number of questions which require an answer. Was the basic strategy correct and what can and must be done to speed up disbursement of Sapard funds? Would it not be more effective and expedient to manage much of the funds from Brussels? Has the late start not defeated the object and purpose of pre-accession aid? Was the decentralised approach, with small-scale projects fully managed by the CCEE, the wrong approach? Would it not have been possible to divide the allocation of resources? Were too many highly complicated bureaucratic demands being made of the CCEE?

Your rapporteur would reiterate the misgivings he has already expressed in the past. The Sapard programme, with an annual budget of over half a billion euro, was structured as a whole so that the applicant countries not only had to carry out the arduous task of drafting a programme but were also given responsibility for full independent management, thereby thwarting the objective of helping the CCEE to catch up with the EU in structural terms in the agricultural sector by means of pre-accession aid producing swift results. The basic principle of giving the CCEE the opportunity through management of obtaining experience of using the mechanisms for managing EU funds would appear to be sound at first sight but, in the long-term, investment in new systems would develop skills which could be used subsequently for the management of other Community funds. Unfortunately, however, these requirements have resulted in valuable time being lost in the pre-accession phase since, for many CCEE, both the drafting the programme and the prospective management of Sapard was obviously breaking completely new ground.

As regards the content, from the very outset, once the CCEE had submitted their draft programmes to the Commission, their shortcomings were apparent and they had to be revised partly because of the complexity of the rules to be observed and partly because the CCEE had to break completely new ground in developing their programmes. Neither was the Sapard Regulation, No 1268/99, felicitously worded, as many questions were not defined precisely enough in legal terms and some conceivable measures were not incorporated. It is particularly regrettable that such an important instrument of the rural development regulation, No 1257/99, as early retirement aid, which could have been used so effectively in the CCEE, is not among the Sapard initiatives.

The requirements were subsequently clarified by implementing Regulation (EC) No 2759/99 and the implementing provisions on financial management (Regulation (EC) No 2222/2000), which were not drawn up until the year 2000. This caused additional delays, which meant that the programmes for the CCEE could not be finalised and approved by the Commission until the end of 2000.

It was precisely the need of the CCEE to observe the planning, legal and administrative conditions governing the drafting and implementation of the Sapard programme in accordance with the above regulations which subsequently led to the considerable additional, and regrettable delays.

In administrative terms, the idea of assuming responsibility for the direct management of Community aid, the selection of projects, the tendering procedure and the award of contracts represent a departure for these countries from the usual practice of centralised agricultural policy.

During its visits to the CCEE in 2000, the Commission noted that there were difficulties in some areas such as setting up an effective internal audit, carrying out realistic accreditation, information and communication strategy, observing sound budget principles, and in bookkeeping. Furthermore, the innovations also had a considerable impact on the national legal framework, which had to be amended and adjusted. The CCEE were unable to do this from one day to the next.

One of the key issues - whether a central programme management by the Commission in Brussels via delegations in the applicant countries or a decentralised system in the CCEE should be preferred - was resolved when the EU drafted its regulation in 1999 – primarily for practical considerations – and came out in favour of the decentralised option. This option was the most favourable (the Commission did not have a sufficient number of inspectors and supervisors for individual programmes and projects of widely differing structures), and, secondly, much of the responsibility for the success or failure of the Sapard programme could be transferred to the CCEE.

It was officially announced, however, that another form of management would have meant smaller beneficiaries, i.e. SMEs and most farms, with the exception of the biggest, dropping out and, in addition, there would have been a need subsequently for lengthy renegotiation of the basic regulation as well as the Sapard programme approved by the Commission.

The Commission’s explanation that, for technical reasons, management from Brussels would mean the aid would go primarily, if not exclusively, to large-scale projects, thereby reducing the number and type of beneficiary, is indeed accurate but, in your rapporteur’s opinion, that could have been avoided if certain funding and responsibilities for programme content had been divided from the outset between the CCEE and Brussels.

That procedure would have had two advantages. Firstly, the applicant countries would have been introduced to managing EU funds, possibly with the somewhat smaller part of the available budget, and secondly, at least that part over which the Commission exercised control and responsibility, payments would have been made more promptly. Unfortunately, such an appropriate combined approach was not chosen for Sapard, thereby losing vital time for genuine ‘pre-accession aid’.

On the subject of programme drafting and management, it must, however, be said that, apart from the EU’s responsibilities, the CCEE also showed different rates of progress, so that some countries are much further on with implementing Sapard than others.

More positive results were obtained particularly where there was continuity of personnel in the institutions and senior administrators were consistently involved in the process. Negative results were obtained where officials gave up their posts after the relevant training, and communication and cooperation problems arose within both bodies (National Funds and the Sapard agency) and between each other. This should be taken more into account in future.

(b) Inpard and the participation of NGOs

Another problem area is the participation of non-governmental organisations. Was the deadline for drawing up programmes too short to allow sufficient time for consultation, which in turn meant that the entire process involved the NGOs and the population too little and lacked transparency? Despite efforts such as the participation of non-governmental organisations in the Sapard monitoring committees and individual measures within Sapard, civil society is definitely still involved too little in the rural areas of Eastern Europe.

The EU could use the Inpard programme (Innovative Participatory Rural Development) to transfer the innovative approach to rural development of the existing Leader+ programme, with its emphasis on participation, to the applicant countries. The impetus for this was given by the European Parliament’s Committee on Agriculture and Rural Development. The Commission was also urged by the Committee on Budgets to submit a proposal for a legal basis for the Inpard programme by 1 June 2002 so that Sapard could be expanded along the lines of the Leader+ programme.

Inpard should serve to prepare new Member States and non-governmental organisations to take part in the Leader+ programme upon accession so that they can play an active role in ‘bottom-up’ projects and in the development of their rural infrastructure. Inpard should now be swiftly given a legal basis and additional funds be made available to the CCEE for that purpose.

(c) Budget

One final area that must be mentioned is the budgetary sector. In the light of the situation described above, only insignificant amounts (approximately 30 million euro) will have flowed into the applicant countries from the Sapard programme by the end of 2001, despite the fact that the EU budget for the year 2000 included payment appropriations alone of over 190 million euro, which have not all been taken up.

Originally, under the provisions of the multiannual financing agreement, the amount of commitment appropriations for the year 2000 could be paid out if the relevant applications were forwarded to the Commission by the end of 2002 (the N+2 principle). Under this principle, the remaining unused amount of commitments for 2000 would be automatically released. Given that the Commission was not able to take a decision on transferring the management of the aid by the end of 2000, it quite rightly took the opportunity to extend the deadline for appropriations from the year 2000, by way of exception, until the end of 2003, so that those funds would not lapse. Your rapporteur believes that this option should also apply without question to the appropriations for 2001, where necessary, if it appears that the money will not be disbursed in 2002/2003.

A related problem is the fact that EU funds for Sapard must be jointly financed by the CCEE. The rate of Community participation is a maximum 75% of the total eligible public expenditure; in exceptional cases, the Community may finance 100% of the total cost. Owing to the delays in payment and the associated accumulation of funds, it can already be predicted that some countries may encounter difficulties in contributing the necessary own funds to the corresponding level. In this respect, the CCEE should take steps at an early stage to develop strategies for overcoming that problem.

(d) Summary

The EU Commissioner for Agriculture, Mr Fischler, recently said: ‘Courage is not blindly to overlook the danger but to overcome it with eyes wide open'. This should serve as a motto for the future of Sapard so that the programme which was launched with so many expectations finally develops into a successful model for the good of the EU and the applicant countries of Central and Eastern Europe. Every responsible person should work towards that end in his/her own field.

OPINION OF THE COMMITTEE ON FOREIGN AFFAIRS, HUMAN RIGHTS, COMMON SECURITY AND DEFENCE POLICY

16 April 2002

for the Committee on Agriculture and Rural Development

on Agriculture and rural development: Sapard programme for the candidate countries. 1st annual report 2000

(COM(2001) 341 – C5‑0009/2002 – 2002/2007(COS))

Draftsman: The Earl of Stockton

PROCEDURE

The Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy appointed The Earl of Stockton draftsman at its meeting of 24 January 2002.

The committee considered the draft opinion at its meetings of 26 March and 15/16 April 2002.

At the last meeting it adopted the following conclusions unanimously.

The following were present for the vote: Geoffrey Van Orden, chairman; Christos Zacharakis, vice-chairman; The Earl of Stockton, rapporteur; Ole Andreasen, Alexandros Baltas, André Brie, John Walls Cushnahan, Joseph Daul (for Gunilla Carlsson), Pere Esteve, Glyn Ford, Michael Gahler, Per Gahrton, Gerardo Galeote Quecedo, Jas Gawronski, Vitaliano Gemelli (for von Franco Marini), Alfred Gomolka, Vasco Graça Moura (for José Pacheco Pereira), Joost Lagendijk, Alain Lamassoure, Jules Maaten (for Bob van den Bos), Nelly Maes (for Reinhold Messner), Cecilia Malmström, Emilio Menéndez del Valle, Raimon Obiols i Germà, Doris Pack (for Armin Laschet), Jacques F. Poos, Lennart Sacrédeus (for Ursula Stenzel), Jannis Sakellariou, José Ignacio Salafranca Sánchez-Neyra, Jacques Santer, Amalia Sartori, Elisabeth Schroedter, Ioannis Souladakis, Ilkka Suominen, Hannes Swoboda, Charles Tannock, Maj Britt Theorin (for Véronique De Keyser), Demetrio Volcic, Jan Marinus Wiersma and Matti Wuori.

SHORT JUSTIFICATION

There is no doubt that the preparations for accession in the field of agriculture remain a major challenge for both candidate countries and the European Union. The particular weight of agriculture in the economy in candidate countries implies far-reaching reforms. The unfavourable farm structure, and the existence of durable semi-subsistence farming, combined with the presence of an emerging commercial farming sector, pose a range of administrative and economic dilemmas for the Common Agriculture Policy. This dichotomy of structures is likely to exacerbate political tensions during the restructuring process, when not only farm structure, but up and downstream infrastructure, services and employment opportunities in agriculture related industries, will require development.

Sapard was conceived to support the efforts to be made by the candidate countries in the pre-accession period and to attain two major objectives: to contribute to the adoption of the EU acquis and to solve priority and specific structural problems in the area of the development of agriculture. In practical terms, before the aid could be granted, two conditions were required to be met: firstly, the bilateral agreements with applicant countries based on a set of provisions covering all aspects relevant to the proper use, control and accountability of funds set, and secondly, the establishment in each applicant country of an agency capable of implementing Sapard in a manner consistent with the legal provisions. By the end of 2000, no applicant country had a Sapard agency ready and therefore no money could be transferred. Today, there are only five applicant countries entitled to receive the funds.

The report of the Committee on Agriculture and Rural Development draws its conclusions from the annual report on Sapard for the year 2000 and points out the difficulties which faced the candidate countries to satisfy the requirements, insists on the efficient use of funds and makes a number of interesting suggestions concerning the suitable completion of Sapard by other initiatives such as Inpard (Innovative Participatory Rural Development). Your draftsman shares entirely the point of view exposed in the report but would like to emphasise a few aspects which are of interest to our Committee, given the global character of the process of preparation for accession.

First of all, he wishes to underline the importance of this pre-accession instrument for candidate countries, given the scale of necessary reforms and the consequent economic burden. Such reforms would, should no financial support be provided, weigh heavily on the budget of applicant countries and could affect the whole process of preparation in other important areas. Public opinion in candidate countries and, in particular among the rural population, was very sensitive to the Community offer. They were, regrettably, not very well informed about the reasons for the delay in receiving the funds and it caused some disappointment. It also contributed to creating, in some applicant countries, an unfavourable climate with regard to accession and EU policy. This is particularly important in rural areas where the population, faced with ongoing changes, feels more vulnerable and anxious about the future and it may motivate some radical attitudes. Such discontent, if allowed to grow, could endanger the success of the enlargement process and could further add to the political volatility in some accession countries.

The draftsman is particularly anxious that the EU should reaffirm its commitment to equality amongst it members. Whilst applicant countries are expected to take on the full obligations of complying with the acquis, from the moment of (and in many cases prior to) accession, they are to be prevented from enjoying the full benefits of programmes such as the CAP until many years afterwards. Although the draftsman recognises the Commission's concerns that direct payments to farmers in accession countries would have a destabilising effect on their economies, it would be unfortunate if such an approach was to be seen as being based on budgetary considerations. The draftsman therefore proposes that rather than making direct payments to new Member States through the CAP on the same level as existing Member States, the EU should consider extending the Sapard programme to cover the transition period whilst direct payments are phased in. The "investment" made by applicant countries to satisfy the requirements and to make Sapard operational, will be useful in managing other funds which the future Member States will be entitled to, as it constitutes an important and unprecedented experience in applying the mechanism for transparent and efficient management of a considerable amount of money.

It would be particularly suitable to evaluate, according to the draftsman’s opinion, the impact of the Sapard programme on the social and economic situation of farmers and adopt the necessary measures to avoid the possible negative consequences of the restructuring of the agricultural sector, such as unemployment, loss of revenue, etc., which may lead to exacerbated political tensions and thus endanger the stability necessary to proceed successfully with the process of enlargement.

CONCLUSIONS

The Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy calls on the Committee on Agriculture and Rural Development, as the committee responsible, to incorporate the following points in its motion for a resolution:

1.   acknowledges the fact that public opinion in most candidate countries was not fully and accurately informed about the reasons for the delay in receiving Sapard funding, which increased scepticism in applicant countries towards the enlargement process; invites the Commission and the applicant countries to improve awareness about this specific pre-accession instrument especially in rural areas, by explaining it in simple and accurate terms and by strengthening support for training of the rural population, in order to enable all actors to participate in planning and project implementation;

2.   stresses the need to make good use of Sapard funds in supporting the efforts undertaken by the candidate countries to restructure and modernise their agricultural economies, the process which, given its scale of complexity, is likely to exacerbate political tensions when not only farm structures but also necessary infrastructure, services and employment opportunities in agriculture related industries, will require development;

3.   highlights the risk that economic and social pressures due to the necessary structural reforms necessary in applicant countries may cause people in those countries to associate enlargement with growing rural unemployment and poverty; suggests, therefore, to follow closely the developments in socio-economic fields and to intensify contacts with candidate farmers, so that appropriate rural development measures could be considered to save semi-subsistence farming and its welfare function, as well as to promote environmentally friendly agriculture production and income diversification according to the objectives of the Second Pillar of the CAP; calls on the Commission and the Council to extend the Sapard programme to cover the decade after enlargement, in order to minimise the social upheaval of a continuing and significant reduction in the agricultural labour force;

4.   emphasises the preparations made by the candidate countries to fulfil all requirements set by the Commission in order to ensure transparent and efficient management; believes that these future Member States have not only demonstrated valuable experience in applying the mechanisms for management of rural development programmes but also, on a broader front, skills that will be transferable to other structural fund activities and other areas of Community policy; recognises the on-going responsibility of the EU to integrate completely accession countries into full membership, thus enjoying all the benefits of membership, including the right to participate fully in all community programmes.

OPINION OF THE COMMITTEE ON INDUSTRY, EXTERNAL TRADE, RESEARCH AND ENERGY

26 March 2002

for the Committee on Agriculture and Rural Development

on the Commission’s annual report on Sapard for the year 2000

(COM(2001) 341 – C5-0009/2002 – 2002/2007 (COS))

Draftsman: Konrad Schwaiger

PROCEDURE

The Committee on Industry, External Trade, Research and Energy appointed Konrad Schwaiger draftsman at its meeting of 23 January 2002.

The committee considered the draft opinion at its meetings of 26 February and 26 March 2002.

At the latter/last meeting it adopted the following conclusions by 41 votes to 1, with 5 abstentions.

The following were present for the vote: Carlos Westendorp y Cabeza, chairman; Yves Piétrasanta, vice-chairman; Jaime Valdivielso de Cué, vice-chairman; Konrad K. Schwaiger, draftsman; Nuala Ahern, Konstantinos Alyssandrakis, Sir Robert Atkins, Luis Berenguer Fuster, Ward Beysen (for Nicholas Clegg), Guido Bodrato, David Robert Bowe (for Gary Titley), Felipe Camisón Asensio (for Alejo Vidal-Quadras Roca), Massimo Carraro, Gérard Caudron, Giles Bryan Chichester, Dorette Corbey (for Olga Zrihen Zaari), Elisa Maria Damião (for Harlem Désir), Willy C.E.H. De Clercq, Concepció Ferrer, Francesco Fiori (for Umberto Scapagnini), Cristina García-Orcoyen Tormo (for Godelieve Quisthoudt-Rowohl), Michel Hansenne, Roger Helmer (for Paul Rübig), Hans Karlsson, Bashir Khanbhai, Peter Liese (for Peter Michael Mombaur), Rolf Linkohr, Caroline Lucas, Eryl Margaret McNally, Erika Mann, Marjo Matikainen-Kallström, William Francis Newton Dunn (for Colette Flesch), Angelika Niebler, Reino Paasilinna, Samuli Pohjamo (for Elly Plooij-van Gorsel), John Purvis, Alexander Radwan (for Werner Langen), Bernhard Rapkay (for Norbert Glante), Daniela Raschhofer, Imelda Mary Read, Mechtild Rothe, Christian Foldberg Rovsing, Esko Olavi Seppänen, Claude Turmes, W.G. van Velzen, Dominique Vlasto, and Myrsini Zorba.

SHORT JUSTIFICATION

The integration of the ten applicant countries of Central and Eastern Europe (CEECs) poses a specific challenge in the sphere of agriculture. The usable agricultural area of a European Union with 25 Member States will become almost half as big again, and the number of people employed in agriculture will actually more than double. In 1997, however, agricultural production in the ten CEECs amounted to barely 15% of the total production of the 15 EU Member States. The percentage of the workforce employed in agriculture in the CEECs was around 22% as opposed to 7% in the EU. Those figures show clearly that productivity - and, hence, the earnings of persons engaged in agriculture - in the applicant countries lie well below the EU level.

As part of the accession negotiations, not only must the Community patrimony in the field of agricultural policy be brought into line with the specific features of the applicant countries, those countries must also be granted financial assistance so as to enable them to adjust their agricultural structures to the standards of the EU. To that end, the EU set up a ‘Special Association Programme for Agriculture and Rural Development’ in 1999, under which the ten applicant countries were granted annual financial assistance amounting to EUR 529 million (at 2002 prices) for the period 2000-2006. The funds are intended specifically to pay for improvements in rural infrastructure and investment in agricultural holdings as well as for the promotion of alternative employment opportunities in rural areas. In compliance with the Sapard Regulation, the Commission has now submitted the first annual report on the implementation of the programme in 2000. That year was marked in particular by teething troubles in the setting up of the administrative structures required for the decentralised management of the programme in the applicant countries.

It is specifically the possible impact of the Sapard Programme on the agricultural exports of the enlarged EU which is of importance for the opinion of the Committee on Industry, External Trade, Research and Energy. Here, we must ensure that the type and impact of the aid programmes are compatible with the agricultural export obligations to which the EU and the CEECs have subscribed under the WTO. That applies in particular to the obligation to cut back domestic production aid and export subsidies. On the other hand, compensatory payments independent of crop yields may be granted for same amount, especially if they are coupled with agri-environmental obligations or with set-aside programmes. The aid granted under the Sapard Programme largely meets those criteria. However, because of improvements in the productive agricultural infrastructure, they might lead indirectly to an increase in agricultural production and agricultural exports, an increase which might be substantial, given the untapped production potential. The cutbacks in export subsidies agreed at the WTO should, however, be continued, irrespective of the potentially greater export volumes.

It is, therefore, to be welcomed, from the point of view of exports as well, that projects for the creation of alternative employment opportunities may be assisted under the Sapard Programme in the fields of leisure and tourism, culture, gastronomy, environmental protection and the development of alternative energies such as biomass and energy crops. That fits in with the concept pursued by the EU of multifunctional agriculture, and it will also help to mitigate the social problems arising from the requisite restructuring of agriculture in the applicant countries, without, at the same time, causing trade policy problems. The Commission should lay the greatest possible emphasis on this aspect of the Sapard Programme.

CONCLUSIONS

The Committee on Industry, External Trade, Research and Energy calls on the Committee on Agriculture and Rural Development, as the committee responsible, to incorporate the following points in its motion for a resolution:

A.   whereas the untapped production potential in the agricultural sector in the CEECs may lead to significant surpluses and to additional exports because of an increase in agricultural production induced by the Sapard Programme,

B.   whereas the CEECs are members of the WTO, and whereas the state aid granted to them during the pre-accession phase must be compatible with the obligations entered into at the WTO relating to the gradual abolition of certain forms of agricultural subsidies,

C.   whereas those obligations are currently being renegotiated under the WTO’s Doha Development Agenda with a view to agreement being reached on more extensive obligations relating to cutbacks in agricultural subsidies,

1.   Calls on the Commission to ensure, when the Sapard Programme is implemented, that the approved state aid in the agriculture sector in the CEECs is compatible with the obligations entered into by both the EU and the CEECs at the WTO;

2.   Fears, should there be a significant increase in agricultural production in the CEECs, that it will prove very difficult to abide by the obligation to cut back agricultural export subsidies;

3.   Endorses, therefore, a reorientation of the Sapard Programme so that greater support is given to the creation of alternative employment possibilities in rural areas, since that would fit in with the EU’s concept of multifunctional agriculture and would reduce the social problems which will be caused by the inevitable job losses in the agricultural sector in the CEECs resulting from their accession to the EU;

4.   Calls on the Commission to promote, under the Sapard Programme, rapid compliance by the CEECs with the EU’s health and plant health norms and its animal welfare provisions, since that would help to prevent any distortions in agricultural trade between the EU and the CEECs.