COUNCIL OF THE EUROPEAN UNION					Brussels, 16 September 2005 (16.09) (OR. fr)
				12354/05     LIMITE
					AGRIORG 44 AGRILEG 121 AGRIFIN 62

COVER NOTE

from:	Secretary-General of the European Commission, signed by Ms Patricia BUGNOT, Director
date of receipt:	26 July 2005
to:	Mr Javier SOLANA, Secretary-General/High Representative
Subject:	Commission Staff Working Document: Report on the recovery of export refunds for live animals in 2004

Delegations will find attached Commission document SEC(2005) 1035.

Encl.: SEC(2005) 1035

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 25.7.2005

SEC(2005) 1035

 

COMMISSION STAFF WORKING DOCUMENT

REPORT ON THE RECOVERY OF EXPORT REFUNDS FOR LIVE ANIMALS
IN 2004

1.           Introduction

In their joint declaration of 22 November 2001 on the recovery of export refunds for beef and veal, the Parliament and the Council requested the Commission to submit an annual report to the budgetary authority by 31 May. This report highlighted on the implementation of and compliance with Community legislation, on the recovery of refunds in the event of a failure to comply with Commission Regulation (EC) No 615/98 of 18 March 1998 laying down specific detailed rules of application for the export refund arrangements as regards the welfare of live bovine animals during transport[1]. Parliament and the Council issued another joint declaration along the same lines on 25 November 2002.

The Commission responded to this request by sending to the budgetary authority, in December 2002, an interim report covering part of 2002 and the preceding years (1 September 1998 to 30 June 2002). The succeeding report covering 2002^[2] incorporated information on the application of Regulation (EC) No 615/98 during 2002 as a whole, on the refusal and recovery of refunds, and the statistical data of the first report were supplemented.

The Commission strengthened existing legislation by adoption of Commission Regulation (EC) No 639/2003 of 9 April 2003 laying down detailed rules pursuant to Council Regulation (EC) No 1254/1999 as regards requirements for the granting of export refunds related to the welfare of live bovine animals during transport[3]. This instrument replaces Regulation (EC) No 615/98 and applies to export declarations accepted from 1 October 2003.

The annual reports are based on the number of export declarations of live bovine animals for which the refunds have been paid [Article 8(a)] during the previous calendar year. It may take 6 months or more to complete the process from lodging the export declaration, transporting the animals to the third country, collecting the returned relevant customs and veterinary documents and deciding on the definitive payment of the refunds. Moreover, another aspect of the time gap is that information on refusal or recovery of refunds may be based on export transports having taken place in 2003.

It has to be taken in consideration that data concerning export refunds reflect the EAGGF financial year from 16 October 2003 to 15 October 2004. Furthermore, data from new Member States reflect the period from the date of their accession to the European Union (1 May 2004) onwards.

Member States structured their reports based on the requirements of Regulation (EC) No 639/2003 (Article 8); the same structure will be followed in this consolidated report.

2.           Commission Regulation (EC) No 639/2003 of 9 April 2003 laying down detailed rules pursuant to Council Regulation (EC) No 1254/1999 as regards requirements for the granting of export refunds related to the welfare of live bovine animals during transport

Article 33(9) of Council Regulation (EC) No 1254/1999 of 17 May 1999 on the common organisation of the market in beef and veal[4] subjects the payment of refunds for exports of live animals to compliance with Community legislation concerning animal welfare and, in particular, the protection of animals during transport. Regulation (EC) No 615/98 has laid down specific detailed rules of application for the export refund arrangements in this sector in order to ensure compliance with legislation concerning animal welfare in the framework of export refunds arrangements. Regulation (EC) No 639/2003, replacing Regulation (EC) No 615/98 strengthened the specific detailed rules. Refunds are paid providing the provisions have been met of Regulation (EC) No 639/2003 and those of Council Directive 91/628/EEC of 19 November 1991 on the protection of animals[5]. The Regulation establishes a system of checks and provides for financial consequences for exporters who fail to comply with the provisions on the transport of animals. The checks and the financial consequences relate to the payment of the refund. They apply without prejudice to the checks provided for by Directive 91/628/EEC.

Checks are carried out at three points:

At the point of exit from the Community (Article 2): before the animals leave Community territory, the official veterinarian must check whether the conditions set in Directive 91/628/EEC have been fulfilled from the point of departure to the point of exit and whether the means of transport and the animals are fit for continuing the journey. The veterinarian must also check that provisions have been made for the care of the animals during the succeeding journey in accordance with the Directive.

On the spot where the means of transport are changed (Article 3): where the means of transport are changed in a third country the exporter must ensure that checks are carried out on the change.

In the third country of final destination (Article 3): the purpose of these checks is to determine, on the basis of the general condition of the animals unloaded at the place of the first unloading in the third country of final destination, whether they have been transported in accordance with Directive 91/628/EEC.

The competent official veterinarian is responsible for checks at the exit point and enters his or her comments on the document that proves the animals have left the Community customs territory, which may be either the T5 control document or the appropriate national document. Checks in third countries are carried out by veterinarians either employed by international control and supervisory agencies approved for this purpose by a Member State either by veterinarians charged for the function by an official agency of a Member State. The veterinarians must draw up an inspection report. The T5 control document, or the national document, and the inspection reports are sent to the paying agencies who take them into account when deciding whether to pay refunds, reject applications or, where appropriate, apply penalties.

The financial consequences for exporters who fail to comply with the provisions on the transport of animals are as follows:

Non-payment of the refund [Article 5(1)]

The refund is not paid for animals that die during transport, that have given birth or aborted before their first unloading in the third country, or for which the competent authority considers that Directive 91/628/EEC was not complied with. To that end, the competent authority must take account of the documents concerning checks or of any other element concerning compliance with the provisions of the Regulation and the Directive. Death during transport by proved force majeure after leaving the customs territory may give right to partially payment of the total of the export refund.

Reduction of the refund [Article 6(1)]

Where the number of animals for which no refund is paid amounts to more than 1% of the total number indicated in the accepted export declaration, provided it is at least two animals, or where it is more than five animals, the refund for those animals is further reduced by an amount equal to the amount of refund not paid. Animals for which the exporter proves that death, birthing or abortion was not the result of non-compliance with the provisions on the protection of animals are not taken into account.

Refusing refunds [Article 6(2)]

If no refund is paid for individual animals and their number is more than 5% of the number endorsed in the export declaration with a minimum of 3 animals, or 10 animals, but at least 2%, no refund will be paid for the whole lot declared in the export declaration. Again, animals for which the exporter proves that death, birthing or abortion was not the result of non-compliance with the provisions on the protection of animals are not taken into account.

The general refunds penalty system pursuant to Article 51 of Regulation (EC) No 800/1999 does not apply in the system of non-payment, reduction or refusal.

Recovery of refunds (Article 7)

If it is established after payment of the refund that the provisions on the protection of animals during transport have not been complied with , the refund or the relevant part of the refund shall be recovered including where appropriate the penalty.

These financial consequences for the exporter fall within the area of responsibility of the competent authorities of the Member State where the export declaration was accepted. Where Member States do not correctly apply the provisions on the payment of refunds, financial corrections may be adopted under the clearance of accounts procedure.

3.           Application of Regulations (EC) No 615/98 and (EC) No 639/2003 in 2004

3.1.        Amounts of export refunds paid

The payment of the refund for exports of live animals pursuant to Article 33 of Regulation (EC) No 1254/1999 paid in the years 2002, 2003 and 2004 is shown in the following table:

Belgium, Greece, Portugal, Finland, the United Kingdom as well as Cyprus, Estonia, Lithuania, Latvia, Malta and Poland, Slovakia, Czech Republic did not pay refunds for the export of live bovine animals in the above mentioned period of the EAGGF financial year 2004.

3.2.        Information transmitted by member states related to export refunds for live animals

Since 2000, the Commission has asked Member States to send annual data on the amounts of refund refused or recovered. The table in Annex 1 gives an overview of the figures sent by the Member States on the year 2004. This chapter compares the information of the years 2004, 2003 and 2002.

3.2.1.     The number of export declarations of live animals exported with refunds

The number of export declarations increased by 9.4% from 6 078 in 2003 to 6 651 in 2004 (figures of the EU-25). As one export declaration may cover a number of animals varying from a truckload to a shipload, it is not possible to establish a general direct relation between the number of export declarations and the number of animals exported.

Further details are given in the table below. *

3.2.2.     The number of live animals exported with refunds

The total number of exported live bovine animals, based on the number of export declarations for which refunds were paid, increased with 7 149 animals (3.1%) from 229 278 animals in 2003 to 236 427 animals in 2004 (figures for the market of EU-25). Increase of exports took in particular place in Denmark, Germany, Spain, France, the Netherlands and Austria whereas in Ireland there was a net decrease from 37 776 animals exported in 2003 to 10 572 animals exported in 2004. In Italy the export market has come to a standstill with only 2 animals exported in 2004. Germany stays the largest exporter of animals with refunds, a position that both absolutely and relatively increased from 123 431 animals (53.8%) in 2003 to 145 627 animals (61.59%) in 2004. France comes next with an increase from 42 815 animals (18.7%) in 2003 to 44 108 animals (18.66%) in 2004. The biggest relative increase can be noted for Austria from 4 937 animals in 2003 (2.2%) to 8 764 animals in 2004 (3.71%). For more details, please see the table below.

3.2.3.     The number of export declarations and animals for which payment of the refund was partly or totally refused or recovered

According to the requirements of Article 8(b) and (c) of Regulation (EC) No 639/2003 the Member States communicated the following information:

The Member States refused to pay the refund in full or in part for 408 (2003: 474) export declarations, concerning 2 160 (2003: 3 804) animals. For another 83 (2003: 115) export declarations, concerning 1 183 (2003: 2 643) animals, the export refunds had to be recovered. In total for 1.41% (2003: 2.81%) of the exported animals irregularities occurred in either the refund provisions (like refund code) or in the welfare conditions as mentioned in Directive 91/628/EEC or in Articles 5, 6 and 7 of Regulation (EC) No 639/2003. The reasons for such partly or total refusals or partly and total recoveries reported by the Member States are mentioned under point 3.2.5 of this report. Further details are given in Annex 2.

3.2.4.     Amounts of refunds not paid or recovered and recovery still running

According to the information provided under Article 8(e) and (f) of Regulation (EC) No 639/2003 the major amounts of refunds not paid or recovered were dealt with by Germany, which is also the major exporter (see point 3.2, page 7). In total Germany was involved in € 610 881 not paid or recovered refunds (incl. still running recovery), which is 55.96% of the total EU amount of € 1 091 690.

The relatively largest amount of non-paid refunds including the still running recovery process occurred in the Netherlands. In a total expenditure of € 1 091 690 the non-paid share is 7.93% followed by Austria with the second largest amount of non-payment share of 5.01%.

Further details are given in the table below:

The Regulation provides in either (partly) non-payment if the refunds were not yet definitively paid (Articles 5 and 6) or recovery of payment if it is established after payment that Directive 92/628/EEC has not been complied with (Article 7).

A comparison between 2002, 2003 and 2004 as regards the amount involved shows the following result:

The amount of unpaid or recovered refunds decreased from € 1 670 139 in 2003 to € 873 130 in 2004. In 2003 the amount refused and recovered represented 2.9% of the total expenditure on refunds; in 2004 this was 2.1%. The both absolute and relatively decrease may be explained by several developments:

·      the still pending amounts of refunds to recover, which was € 58 680 in 2003 but € 218 560 in 2004;

·      possible better compliance to welfare conditions by exporters leading to less impact of the customs and veterinary controls;

·      the time-lag effects as described in the introduction of this report;

·      the scale of transport means (truck or ship).

Further details are given in the table below.

3.2.5.     The reasons for refusal and recovery of refunds for live animals in 2004

According to the requirements of Article 8(d) of Regulation (EC) No 639/2003 the Member States communicated the following information to the Commission on the reasons for the non-payment and the recovery of the refund for the animals referred to in Articles 8(b) and 8(c) of the same Regulation.

Germany

·      Incomplete plan of transport;

·      no proof of arrival furnished by surveillance agency;

·      police and/or Veterinary services recorded essentially inadequate headroom in the loading part of the truck intended to transport the animals;

·      non respect of transport and rest periods;

·      death/calving during transport of animals.

France

·      During checks at the point of exit of the Customs territory it was found that fewer animals were loaded than declared;

·      the veterinary check was negative at the point of destination;

·      death during transport of animals before arriving at the point of exit of the Customs territory;

·      death/calving during transport of animals;

·      abortion/calving during transport of animals as appeared during checks at the point of exit of the Customs territory;

·      the means of transport were not in conformity with the welfare conditions as was established in the veterinary check at the point of exit of the Customs territory;

·      animals were not fit for transport as appeared during checks at the point of exit of the Customs territory;

·      animals died during quarantine at destination;

·      animals died during unloading at destination;

·      abortion during quarantine.

Ireland

Non compliance with Article 5(1)(c) and Article 5(1)(a) of Regulation (EC) No 639/2003.

The Netherlands

·      The refund code was incorrect for 12 declarations concerning 13 animals;

·      for 2 declarations with 65 animals the carrier had no authorization according to Directive 91/628/EEC;

·      for 4 declarations it appeared that 4 animals were not brought into free circulation in the third country;

·      for 5 declaration concerning 174 animals the travel time according to Directive 91/628/EEC was exceeded;

·      for 1 declaration concerning 36 animals it was found that the capacity of the vessel was exceeded;

·      for 5 declarations it appeared that 9 animals were slaughtered in emergency at the point of destination as the welfare conditions during the journey were not met;

·      for 1 declaration 1 animal with injuries had to be put down;

·      for 6 declarations it was found that 7 animals calved before release into free circulation in the country of destination;

·      for 1 declaration it was found that 1 animal had an abortion during transport;

·      for 1 declaration animals were declared on an estimated weight and the real weight determined later was more than 10% bigger than the estimated weight which affects the amount of refunds payable (Article 51 of Regulation (EC) No 800/1999;

·      for 1 declaration it was found that 2 animals had to be slaughtered in the country of destination due to sickness;

·      for 10 declarations it was found that 19 animals had to be slaughtered in emergency in the country of destination and the reason for this measure could not be established.

Austria

·      For 2 declarations concerning 64 animals the food and drink conditions during the transport were not compliant to the animal welfare provisions;

·      an excess of the travel period was established for 12 declarations concerning 318 animals;

·      death during transport for 2 declarations concerning 4 animals;

·      for 1 declaration concerning 2 animals abortion during transport;

·      for 1 declaration concerning 1 animal death during unloading.

Slovakia

·      Formal problems (No licence, no refund code).

3.3.        Clearance of accounts by the Commission

The clearance of accounts procedure has been finalised concerning a series of audits in late 2000 and early 2001 of expenditure on export refunds for bovine animals. Decision 2004/561/CE, published in Official Journal L 250 of 14 July 2004, excluded from Community financing €1 064 627.33 of expenditure incurred by the Netherlands because it did not comply with Community rules. Decision 2005/354/CE, published in Official Journal L 112 of 3 May 2005, excluded for the same reason €13 823 822.23 and €1 649 755.75 in respect of expenditure incurred by Germany and France respectively.

4.           Reinforcement of Legislation

4.1.        Regulation (EC) No 639/2003

As announced in the Communication from the Commission to the Council and the European Parliament on the Mid-term Review of the Common Agricultural Policy[6], the Commission has strengthened existing legislation and, on 9 April 2003, adopted Regulation (EC) No 639/2003. Reinforcement is provided in the mandatory veterinary checks on transport and animals in third countries, in the norms for penalties and on the communication of information by the Member States.

4.2.        Regulation (EC) No 118/2003

Commission Regulation (EC) No 118/2003 of 23 January 2003 fixing the export refunds on beef and veal and amending Regulations (EEC) No 3846/87 establishing an agricultural product nomenclature for export refunds and (EC) No 1445/95 on rules of application for import and export licences in the beef and veal sector[7] reduces the number of cases in which a refund may be granted for the export of live bovine animals. This Regulation came into force on 3 February 2003. It abolished export refunds for live animals in the situations where the trade with third countries was insignificant. Since 3 February 2003, export refunds have no longer been paid for animals intended for slaughter, except in the case of third countries which traditionally import them for cultural and/or religious reasons (Egypt, Lebanon). In addition, where it concerns pure-bred breeding animals, in order to prevent any abuse, export refunds are limited to female animals of a maximum of 30 months of age. Although the information in this report is influenced by time-lags (see introduction), it may be assumed that this Regulation partly will have attributed to the decline in the number of exported animals from 245 763 in 2002 to 229 278 in 2003 (see page 7). The reason for the slight increase of exported animals to 236 427 in 2004 mainly resulted, according to an inquiry to the main Member States concerned, from reinforced export of pure breed animals in some Member States (e.g. Austria, the Netherlands). In Germany there was an increase concerning the export of pure breed animals and slaughter animals.

4.3.        The possible further amendment of legislation

Following complaints by the Non Governmental Organisations GAIA (Global Action in the Interest of Animals), ECL (European Coalition for Livestock) and CIWF (Compassion in World Farming), the Commission has started again in 2005 to study possibilities for reinforcement of the legislation in the light of the allegations made.

Annex 1 – Overview

Annex 2