Documents considered by the Committee on 26 October 2011 - European Scrutiny Committee Contents


7 Food distribution to deprived persons

(a)

(31957)

13435/10

COM(10) 486


Amended draft Regulation amending Council Regulations (EC) No 1290/2005 and (EC) No 1234/2007 as regards distribution of food products to the most deprived persons in the Union
(b)

(33197)

15054/11

COM(11) 634


Amended draft Regulation amending Council Regulations (EC) No 1290/2005 and (EC) No 1234/2007 as regards distribution of food products to the most deprived persons in the Union

Legal base(a) Articles 42 and 43(2) TFEU; co-decision; QMV

(b) Articles 42, 43(2) and 175(3) TFEU; co-decision; QMV

Document originated(b) 3 October 2011
Deposited in Parliament(b) 6 October 2011
DepartmentEnvironment, Food & Rural Affairs
Basis of considerationEM of 17 October 2010
Previous Committee Report(a) HC 428-iv (2010-11), chapter 1 (20 October 2010) and HC 428-vi (2010-11), chapter 1 (3 November 2010)

(b) None

To be discussed in CouncilProbably by the end of 2011
Committee's assessmentPolitically important
Committee's decision(Both) Cleared

Background

7.1 In order to avoid a build-up of public intervention stocks, the Common Agricultural Policy (CAP) has contained provisions for the subsidised sale of produce to specified outlets. In particular, a measure[25] introduced in 1987 enabled produce in intervention stocks to be supplied free of charge to designated charitable organisations for distribution to the most deprived persons in those Member States which choose to participate.

7.2 The Commission considers that the measure has contributed to achieving two of the objectives in the Treaty — to stabilise markets, and to ensure that supplies reach consumers at reasonable prices — and has proved to be a reliable supply of food for the most deprived. It also says that the need for it has increased following successive enlargements, and increases in food prices, but it also notes that, with the various reforms of the CAP, intervention has been removed in some sectors, whilst for the others it only provides a safety net, thereby significantly increasing the programme's reliance on market purchases. It therefore proposed[26] in September 2008 that the existing EU legislation should be amended to allow food to be sourced either from intervention stocks or from the market; that distribution should take place under an EU plan established for three years; and that the EU should make a contribution of 75% for 2010-12 and 50% for 2013-15.[27]

7.3 As our predecessors noted in their Report of 29 October 2008, the then Government remained unconvinced as to the appropriateness of the proposal, believing that the EU should act only where there are clear additional benefits, and that social measures are a matter for Member States. They also noted that, although the proposal was being made under Article 37 of the EU Treaty, the focus of the revised scheme was more likely to be on the purchase of products on the open market, and that a number of Member States had questioned the appropriateness of that Article. Since the proposal clearly raised some important issues, they recommended it for debate in European Committee, and that debate took place on 20 January 2009.

7.4 In September 2010, the Commission brought forward an amended proposal (document (a)), intended to take into account the powers delegated to it under the Lisbon Treaty and to reflect some of the views raised by the European Parliament. However, the main aspects of the original proposal remained unaltered, the only significant changes being the introduction of a lower minimum contribution from participating Member States, and of an annual ceiling of €500 million for the contribution from the EU budget.

7.5 In our Report of 20 October 2010, we noted that the present Government shares the views of its predecessor, including in particular reservations over the proposal's appropriateness on subsidiarity grounds, and over the use of Article 43 Treaty on the Functioning of the European Union (TFEU), given the prospect of purchases being made in future from the open market. Also, in view of our role under the Lisbon Treaty to monitor compliance with the principle of subsidiarity, we asked the Government to clarify to what extent it objects to the proposal on the grounds of subsidiarity and to what extent on the grounds of competence. In the meantime, we asked that the Government's response should comment on our own preliminary analysis, which was that, where intervention stocks are relied on for food aid, the Commission is competent to act under Articles 39(1)(c) and (e) and 43(2) TFEU (and indeed is better placed to do so than a Member State, given its role in managing EU intervention stocks), but that, where the food is sourced from the open market, this legal base no longer seems to be valid, and we went on to question where the EU gets its competence to act.

7.6 We subsequently received a letter of 2 November 2010, in which we were told that the Government considered that the use of intervention stocks for the purposes of this scheme does fall properly within the scope of Articles 42 and 43(2) TFEU, and that the purchase of foodstuffs on the open market for a limited period, in order to ensure the scheme's viability where intervention stocks are temporarily unavailable, would also fall within the scope of these Articles. However, the Government said it was far less clear that the purchase of foodstuffs on the open market in other circumstances would fall within the objectives of the Common Agricultural Policy or that Articles 42 and 43(2) would provide an appropriate legal base for this measure. It added that, to that extent, it agreed that the issue of competency remained in doubt, but that it would still have concerns that this measure (insofar as it does not use intervention stocks) would infringe the principle of subsidiarity, since the provision of aid in these circumstances would be essentially a social measure, more appropriately dealt with by Member States themselves.

7.7 The Government also said that a small number of Member States had similar views to the UK, and that it appeared a blocking minority could be maintained; that a number of other Member States were concerned that the funding of a social measure was being proposed from the agriculture budget; and that other Member States which currently participate in the scheme did not support the inclusion of the co-financing provision. Consequently, it was not clear at this stage how this dossier would be taken forward.

7.8 We noted that there was a blocking minority of Member States which doubted whether the Commission has competence to purchase foodstuffs on the open market with the intention of distributing it as food aid within the EU, and that the Government had raised a subsidiarity argument in parallel. We added that, whilst we thought competence was the primary concern, we were content to return to the question of subsidiarity once this was resolved. In the meantime, we said we would continue to hold the document under scrutiny, pending any significant developments in the negotiations.

The current proposal

7.9 In April 2011, the General Court[28] (formerly called the Court of First Instance) annulled the provisions of the current distribution plan on the grounds that the Regulation in question did not provide an adequate legal base for significant purchases of food from the market (as opposed to purchases on an exceptional basis when intervention stocks are temporarily unavailable). As this would require the programme in 2012 and 2013 to be sourced mainly from existing intervention stocks, which are currently at a low level, the budget for the 2012 distribution plan was set at €113 million, compared with the annual ceiling of €500 million: and this has led the European Parliament to adopt in July 2011 a further resolution calling for the development of a transitional solution for the remainder of the current financial perspective, in order to avoid such a sharp cutback in food aid.

7.10 The Commission has therefore put forward this further draft Regulation (document (b)), which would maintain the programme for a transitional period until the end of the current multi-annual financial framework in 2013. It also says that it will in due course put forward further proposals for a scheme to be funded from 2014 onwards out of Heading 1 of the Budget (social and cohesion policy), and with a budget of €2.5 billion for the period to 2020. In the meantime, this proposal reproduces without alteration the provisions in document (a), except that it would remove any reference to the need for co-financing by Member States (and hence to a minimum Member State contribution); programmes would have a duration of one year (rather than three); and, in order to emphasize the role of the distribution programme in strengthening the EU's social cohesion, Article 175(2) TFEU is cited alongside Article 42 and 43(2), the intention being to provide a legal base for the sourcing of food from the market as a matter of course, rather than on an exceptional basis.

The Government's view

7.11 In his Explanatory Memorandum of 17 October 2011, the Minister of State for Agriculture and Food at the Department for Environment, Food and Rural Affairs (Mr Jim Paice) says that the Government questions whether the Commission's proposal is justified in accordance with the principle of subsidiarity, as set out in Article 5(3) of the Treaty on European Union, pointing out that it would allow for food to be sourced from either intervention stocks or the market, and therefore represents a change from the current scheme under which food can only be purchased on the market where intervention stocks are temporarily unavailable. He adds that the provision of aid in these circumstances is essentially a social measure, and that, as such, the Government remains unconvinced as to the merits or appropriateness of the amended proposal, considering that the EU should only act where there are clear additional benefits from collective efforts or EU added value, compared with action by Member States, either individually or in co-operation.

7.12 He goes on to note that the UK has not participated in the scheme since the mid-1990s because of its dwindling intervention stocks and the bureaucratic overheads associated with the prevention of fraud. He says that the Government believes that measures of this type are better and more effectively delivered by individual Member States through their own social programmes, and their regional and local authorities, who are best placed to identify and meet the needs of deprived people in their countries and communities, and not at EU level through the EU budget.

7.13 Finally, the Minister says that the Government will be working with like-minded Member States to oppose an expansion of the scheme, and to ensure that any agreed measure is time-limited given its transitional nature. Additionally, it will seek to ensure that the proposal reflects the Common Understanding on delegated acts reached between the EU Institutions.

Conclusion

7.14 Document (b) differs in a number of respects from the proposals in document (a) put forward by the Commission in September 2010, including not least the use of Article 175(3) TFEU as a means of justifying the routine sourcing of food from the market. However, it does in the main replicate the essential elements of the existing arrangements for distributing food to deprived persons, and, to that extent, it gives rise to similar issues, and similar concerns on our part, including those relating to competence and subsidiarity. Consequently, although it would clearly be right to draw it to the attention of the House, we do not think further consideration at this stage would shed any fresh light, bearing in mind that the issues in question were debated in January 2009 in the context the Commission's original proposal. We are also conscious that what is currently in prospect relates only to 2012 and 2013, and that the Commission has said that it will in due course put forward proposals for a scheme to be funded from 2014 onwards out of the budget heading relating to social and cohesion policy. We are therefore clearing both documents.





25   Council Regulation (EEC) No 3730/87 (OJ No. L 352, 15.12.87, p.1). This measure was subsequently repealed, and integrated into Council Regulation (EC) No 1234/2007 (OJ No. L 299, 16.11.07, p.1) which consolidated into one instrument existing sectoral legislation under the CAP. Back

26   See (29981) 13195/08: HC 16-xxxiii (2007-08), chapter 1 (29 October 2008). Back

27   85% and 75% respectively in Member States eligible for the Cohesion Fund. Back

28   Case T-576/08. Back


 
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