PURPOSE: Corrigendum to Council Regulation (EC) No 479/2008 of 29 April 2008 on the common organisation of the market in wine, amending Regulations (EC) No 1493/1999, (EC) No 1782/2003, (EC) No 1290/2005, (EC) No 3/2008 and repealing Regulations (EEC) No 2392/86 and (EC) No 1493/1999 ( Regulation initially published in Official Journal of the European Union L 148 of 6 June 2008 ).

The corrigendum concerns changes to the number of specific articles:

- page 40, Article 128(2): it should read “Regulation (EEC) No 2392/86 and Chapters I and II of Title V, Title VI, Articles 18 and 70 …”.

The European Parliament adopted a resolution based on the report drafted by Giuseppe CASTIGLIONE (EPP-ED, IT) by 497 votes for, 109 votes against and 89 abstentions, and made several amendments to the proposal a Council regulation on the common organisation of the market in wine.

The main amendments adopted in plenary were as follows :

Support Programmes : Parliament proposed that national aid programmes should be used not only to focus on support for third countries but also on areas affecting the internal market such as: restructuring of the sector, crisis prevention, research and development, cultivation practices and environmental standards, improvement of grape and wine quality, private storage of wines, alcohol and musts. A producer shall be eligible for more than one measure during the same campaign. Member States may, with the agreement of the Commission, include new measures in their support programmes. Moreover, support measures in third countries may cover the labelling of wines support programmes for the protection of wine geographical indications at international level, educational measures based on scientific studies into the beneficial effects of moderate wine consumption, and actions designed to improve knowledge of the market. The support shall be granted primarily to those measures which are carried out on the basis of partnerships between EU operators. The Community contribution to promotion activities must not exceed 50% of the eligible expenditure. In regions classified as convergence regions in accordance with Regulation (EC) No 1083/2006, the Community share of the costs of promotion must not exceed 75%. However, that share may rise to 100% in the case of programmes designed to protect geographical indications at international level and programmes involving actions or studies relating to the combating of wine-product counterfeiting in third countries and the removal of technical and plant-health obstacles.

Crisis Prevention : crisis prevention means all the cultivation, agricultural or oenological practices intended to curb the quantities of grapes produced or reduce grape to wine processing yields. Support for crisis prevention measures may consist of the granting of compensation in the form of a payment proportionate to the reduction in the quantities of grapes or wine produced as a result of the use of an identified practice.

Cross-compliance : Parliament deleted the Articles where farmers are penalised for non-compliance with the statutory management requirements and the good agricultural and environmental condition referred to in Regulation (EC) No 1782/2003.

Rural development : the article concerning the financial transfer of funds to rural development budget has been deleted.

Addition of sucrose/aid for must : Parliament proposes to maintain aid for concentrated or rectified grape must used to increase the alcoholic strengths of wine products. It also proposes to retain the option of adding sucrose in those wine-growing zones where the use of sucrose is traditionally allowed. The addition of sucrose may only be performed by dry sugaring and only in wine-growing regions in which it is traditionally practiced in accordance with legislation in force on 8 May 1970, in cases where, owing to unfavourable climatic conditions, this practice is necessary in order to obtain the minimum alcohol strength. Parliament also proposes that the limits on increases in the alcoholic strength may be reduced gradually following the impact assessment into the reform to be carried out by the European Commission in 2012.

Oenological practices : Parliament proposes that a positive list of the oenological practices permitted on Community territory be established. The Council should continue to be responsible for updating those practices and approving new ones. Parliament is also opposed to the idea that oenological practices and restrictions recognised by the International Organisation of Vine and Wine (OIV), and not the authorised Community oenological practices and restrictions, shall apply to products covered by the Regulation which are produced for export.

By-products of winemaking : in order to guarantee the quality of wine intended for the market and to safeguard the environment, Parliament proposes to maintain by-products distillation by prohibiting the overpressing of grapes and paying an aid for the collection and distillation of by-products. Under no circumstances may the alcohol obtained from such distillation be destined for human consumption. In years when climatic conditions have been exceptional and, despite regulatory agricultural measures to prevent surpluses, very high levels of production are anticipated, bringing with them the danger of serious market disruption, the alcohol content of the by-products may be increased so as to avoid surplus production entering the market. Such an increase may be applied in specific Member States or regions in response to market conditions. In such cases, flat-rate aid shall be granted to producers. Parliament specified that the overpressing of grapes, whether or not crushed, and the pressing of wine lees shall be prohibited. The refermentation of grape marc for purposes other than distillation shall be prohibited. The quantity of alcohol contained in the by-products must be at least equal to 10% in relation to the volume of alcohol contained in the wine produced if the wine has been made directly from grapes. Save in the case of derogations for technically justified cases, it may not be less than 5% where the wine has been made by vinification of grape musts, partially fermented grape musts or new wines in fermentation.

Potable alcohol : Parliament wished to preserve aid for distilling potable alcohol, which could be granted via national budgetary envelopes. A new clause states that the Community may establish aid for the processing of wine to be used in food products. The purpose of that aid shall be to support the wine market and hence the potable-alcohol sector in cases where the use of such alcohol is traditional and there is a market outlet.

Designations of origin and geographical indications : Members considered it essential that the production, including processing and preparation, and, where appropriate, refining and bottling, of protected designation of origin wines and protected geographical indication wines should take place in the geographical areas in question. These areas may, in exceptional cases, correspond to the territory of a small Member State and a derogation is envisaged which would enable such wine to be obtained or worked in a neighbouring zone provided that it is expressly authorised by the Member State concerned. The Commission, acting on the basis of a duly substantiated request from a Member State, a third country or a natural or legal person having a legitimate interest, shall take action to ensure the effective protection of the protected designation of origin or protected geographical indication. Producer Member States may, taking due account of fair and traditional practices, lay down all additional or more rigorous requirements or production, preparation and movement conditions for wines with protected designations or origin or geographical indications.

Labelling : Parliament stated that the description, designation and presentation of the products covered by this Regulation are a decisive factor in their marketability. As regards labelling, distinctions based on the different categories of wine should be maintained, as should a system to protect existing traditional terms, so that the product can be identified and consumers provided with certain essential items of information. The label must contain the name or trading name of the bottler, the district and Member State in which the bottler is established. Such information shall appear in characters of the same size and must always be preceded by the words 'Bottled by' or variants of these which are authorised under Community or Member-State law. Where bottling or shipping takes place in a district other than that of the bottler or shipper or in a neighbouring district, the labelling information shall be accompanied by a remark specifying the district in which the operation has taken place. Where bottling or shipping takes place in another Member State, that Member State shall be indicated. The Parliament’s text specifies that the marketing in the Community of products governed by the Regulation that have been labelled in a manner contravening its provisions shall be prohibited.

Restricted market access : a new clause states that a duty shall be levied on imported wines not produced and prepared in accordance with the minimum environmental protection standards applicable to domestic wine growers. The revenue from this duty shall be paid into a fund from which, in keeping with the principle of sustainable rural development, resources shall be made available for projects which foster more environmentally-friendly production practices in third countries.

Planting rights : Parliament opposes the full liberalisation of planting rights as of 1 January 2014 for wines protected by designations of origin and geographical indications. For other wines, it believes the decision to liberalise should be taken in the light of a report, to be produced by 2012, on measures for balancing the market. If regional reserves exist in a Member State, the Member State must lay down rules permitting the transfer of planting rights between regional reserves. If both regional and national reserves exist in a Member State, the Member State must also allow for transfers between those reserves. The Chapter on planting rights will not apply in Member States where wine production does not exceed 50 000 (rather than 25000) hectolitres per wine year.

Grubbing up: Parliament states that the package of subsidies for grubbing up over five years should be distributed over three years, so as to allow winegrowers wishing to stop production to do so as quickly as possible. The amounts in question are as follows: EUR 510 million for 2009/2010, EUR 337 million for 2010/2011, EUR 223 million for 2011/2012 instead of EUR 430 million for 2008/2009, EUR 287 million for 2009/2010, EUR 184 million for 2010/2011, EUR 110 million for 2011/2012 and EUR 59 million for 2012/2013. Parliament also stressed that the scales proposed by the Commission for the grubbing-up premiums should set the minimum and maximum levels of premium that Member States can grant, on the basis of yield.

Implementation of the reform : Parliament considered that the time limit set out by the Commission was unrealistic (1 August 2008), and it therefore proposed that this date be postponed until 1 August 2009.

Following trilateral meetings held by the Presidency, the Commission and delegates from the European Parliament, the Presidency informed the Council of its strategy of finding agreement on the reform of the wine sector.

Three major political points to be submitted to the Ministers in December include:

Planting rights scheme and, in particular, the date for terminating planting rights. The 1999 reform, for example, fixed the date for the abolition of planting rights at 2010. Under the terms of the proposed new reform proposal, this date would be revised to 2013. National envelopes, given that they have to comply with the current Financial Perspective. The possible retention of sugar enrichment (chaptalisation); the need to rethink the question of abolishing aid for concentrated must and the need to reconsider labelling conditions.

The Council also instructed the SCA to continue its discussion on certain issues which will require further attention if a compromise is to be reached. These issues relate to: (a) the grubbing-up scheme over a three-year instead of a five-year period (in particular the resulting budgetary aspects); (b) requirements concerning grape variety and the labelling of wines without a geographical indication or appellation of origin; (c) the role of interprofessional organisations in market management; and (d) how much room for manoeuvre Member States will be given concerning national envelopes. Also requiring further consideration is the possible addition of further measures to the "menu".

The European Parliament adopted a report drafted by Giuseppe CASTIGLIONE (EPP-ED, IT), on the proposal for a Council regulation on the common organisation of the market in wine and amending certain Regulations, with a number of modifications. The report was adopted with a 31 majority, 7 voted against and 3 abstained.

The main elements of the amendments are as follows :

Support Programmes : MEPs propose that national aid programmes should not only focus on support for third countries but also on areas affecting the internal market such as: restructuring the sector; crisis prevention; research and development; cultivation practices and environmental standards; improvement of grape and wine quality; and on private storage of wines, alcohols and musts. In addition, financial aid, under the heading of the promotion of EU wine in third countries, could similarly go towards programmes for the protection of wine geographical indications as well as studies relating to combating grapevine product counterfeiting in third countries and technical and plant-health obstacles. In regions classified as “convergence regions”, the committee proposes that the Community share of costs should not exceed 75%. However, that share may rise to 100% in the case of programme designed to protect geographical indications at an internal level and programmes involving actions or studies relating to the combating of wine-product counterfeiting in third countries as well as the removal of technical and plant health obstacles.

Crisis Prevention : the European Commission aims to replace the crisis distillation measure by two crisis prevention measures. The committee states that the support of these measures may consist of the granting of compensation in the form of a payment proportionate to the reduction in the quantities of grapes or wine produced.

Cross-compliance : the committee has deleted the article concerning cross-compliance which states that where farmers are found to not have complied on their holding, at any time during five years from payment under the support programmes for restructuring and conversion or at any time during one year from payment under the support programmes for green harvesting, with the statutory management requirements and the good agricultural and environmental condition, the amount of the payment shall, where non-compliance is the result of an action or omission directly imputable to the farmer, be reduced or cancelled, partially or wholly depending on the severity, extent, permanence and repetition of the non-compliance, and the farmer shall, where applicable, be ordered to reimburse it in accordance with the conditions set out in the said provisions. Rules shall be determined as regards partial or whole reduction or recovery of the support by the Member State concerned.

Rural development : the article concerning the financial transfer of funds to rural development budget has been deleted.

Ban on sugar for enrichment : the committee is against the Commission’s proposal to ban the use of sugar for enriching wine (chaptalisation) from the day the reform comes into force as well as the ban against the aid for must. However, the report states that in years when climatic conditions have been exceptionally unfavourable the limits on increases in the alcoholic strength by volume may be raised. As a compromise, MEPs stipulate that following the impact study into the reform carried out by the European Commission in 2012, measures may be adopted gradually to reduce the increases in alcoholic strength by volume.

Oenological practices : the committee proposes, as an alternative solution to the one put forward by the Commission, that a positive list of the oenological practices permitted on Community territory be kept, and that a regulatory committee, as referred to in Decision 1999/468/EC, responsible for authorising new practices, be introduced. It is also opposed to the idea that oenological practices and restrictions recognised by the International Organisation of Vine and Wine (OIV), and not the authorised Community oenological practices and restrictions, shall apply to products covered by this Regulation which are produced for export.

By-products of winemaking : in order to guarantee the quality of wine intended for the market and to safeguard the environment, the committee stresses that it is necessary to reintroduce the current ban on the overpressing of grapes and to provide for instruments to enforce this. MEPs stipulate that in years when climatic conditions have been exceptional and, despite regulatory agricultural measures to prevent surpluses, very high levels of production are anticipated, bringing with them the danger of serious market disruption, the alcohol content of the by-products may be increased so as to avoid surplus production entering the market. In such cases, flat-rate aid shall be granted to producers. Lastly, under no circumstances may the alcohol obtained from such distillation be destined for human consumption.

Potable alcohol : the committee includes an amendment to safeguard supplies of potable alcohol to industries which traditionally use it in order to maintain the necessary traditional quality of certain beverages derived from such alcohol.

Designations of origin and geographical indications : the committee calls for stricter rules in this area. MEPs consider it essential that designations of production areas should be an integral component of designations of origin and geographical indications. The designation of origin’ means the name of a region, a specific place or, in exceptional cases, a geographically small Member State, used to describe a wine, a liqueur wine, a sparkling wine, a semi sparkling wine, a wine of sun-dried grapes or a wine of overripe grapes originating from that region, specific place, etc. A s regards labelling, distinctions based on the different categories of wine should be maintained, as should a system to protect existing traditional terms, so that the product can be identified and consumers provided with certain essential items of information. Certain categories of grape vine products may not be used in the labelling of wines with a protected designation of origin or a protected geographical origin. I n the case of wine shipped to another Member State or exported, an indication of provenance including the name of the Member State of origin. If genetically modified yeast is used in the production of a wine, this shall be made clear to the final consumer by including on the packaging the words 'produced using genetically modified organisms'. The name or trading name of the bottler, district in which he is established, and Member State shall be included. Member States shall be authorised to maintain or adopt any national legislative provisions which ensure even greater protection of protected designations of origin and protected geographical indications. The report also includes an amendment stipulating that the Commission, on the basis of a duly substantiated request from a Member State, a third country or a natural or legal person having a legitimate interest, shall take action to ensure the effective protection of the protected designation or origin or protected geographical indication.

Labelling : the report disagrees with the Commission’s proposal to allow, for all wines, the optional indication on labels of the vintage year and wine grape variety. While the advantages

of this for non-quality wines appear minimal, such an option would be hugely detrimental both to quality wine producers and to consumers. On the other hand, MEPs consider that the name or trading name of the bottler, district in which he is established, and Member State should appear on the label and must always be preceded by the words 'Bottled by' .

Producers’ organisations : these organisations shall have the specific objectives of ensuring that production is planned and adjusted to demand, in terms of quality and quantity and compliance with food safety rules; monitoring and managing programmes relating to the agricultural cultivation practices and environmental standards; promoting the use of environmentally sound cultivation practices, production techniques and waste management practices, in particular to protect the quality of water, soil and landscape and preserve and/or encourage biodiversity; seeking new means to restrict the use of plant protection products; carrying out measures relating to logistics and technological research; notifying consumers; conducting the research necessary to orient production to products which are better adapted to market requirements and consumer preferences so as to improve the movement and marketing of products in this sector;

Restricted market access : the report states that a duty shall be levied on imported wines not produced and prepared in accordance with the minimum environmental protection standards applicable to domestic wine growers. The revenue from this duty shall be paid into a fund from which, in keeping with the principle of sustainable rural development, resources shall be made available for projects which foster more environmentally-friendly production practices in third countries.

Planting restrictions : the committee is opposed to a total liberalisation of planting rights from 1 January 2014 for the production of designation of origin or geographical indication wines. By 31 December 2012 at the latest, the Commission shall present an impact assessment on planting rights in areas not delimited by the product specifications and draw up, if appropriate, a proposal for the liberalisation of these planting rights. It should be noted that greater flexibility should nevertheless be ensured as regards planting rights, in order to permit competitive producers to adapt freely to market conditions. Where there is a significant improvement in the market situation, a flexibility clause will allow the granting of additional, temporary planting rights to wine-producing holdings in the areas concerned and with the level of quality capable of recording increased sales.

Grubbing-up : MEPs are in favour of a grubbing up campaign limited to three years (instead of five) whilst maintaining the same financial envelope for premiums. This will enable wine producers who abandon production to receive a decent premium that meets their expectations as closely as possible. The funds set out by Commission have been amended by committee. The committee proposes EUR 510 million for the 2009/2010 wine year; EUR 337 million for the 2010/2011 wine year; EUR 223 million for 2011/2012.

Implementation of the reform : the committee considers that the time limit set out by the Commission is unrealistic (1 August 2008); therefore it proposes that this date be postponed until 1 August 2009.

The Council held a policy debate on the reform of the wine sector. The debate focused, in particular, on:

Menu of national envelopes: Most delegations supported the principle of national envelopes and agreed to extend the list of measures eligible ("the menu") under those envelopes. They shared the Commission's view that such envelopes will make it possible to meet the specific needs of each Member State, namely (i) support for restructuring and/or conversion at the level of production, processing and/or marketing; (ii) the promotion of new production techniques; (iii) promoting wine, both within the internal market and in third countries; (iv) agri-environmental measures; (v) crisis prevention and management measures; and (vi) green harvesting. Some delegates were more reticent on some of the measures being proposed and drew the Council's attention to the need to check the compatibility of the proposed measures with the World Trade Organisation.

Transfer from the first to the second pillar: This proposed measure, on the other hand, was received with scepticism by most delegations, who feared a re-nationalisation of the CAP or that resources would not be channelled into the wine sector. Most of the delegations preferred to see the wine sector remaining in the first pillar. Some delegations did, however, concur with the Commission’s view that a transfer from the first to the second pillar would actively support vulnerable wine regions.

Method of allocating envelopes: Several delegations, in particular those from the new Member States, requested that resources should be allocated equally between the Member States.

Decoupled payment: Some delegations accepted measures the proposals vis-à-vis decoupled payment and that such a payment method could, for example, take the form of transitional measures similar to those adopted for the processing of certain fruit and vegetables. Many, however, did not see an immediate need for it. During the debate, several delegations expressed a desire to continue using the term "fruit wines". Under certain conditions and where appropriate, they feel that this should be mentioned on the label. Such a measure would be in line with provisions adopted for vodka.

Grubbing-up scheme: Some delegations welcomed the grubbing-up scheme as a way of rebalancing the market and/or as a socially-based measure being offered to producers wishing to leave the sector – on condition that the measure remains voluntary. However, opinions remained divided on the matter of how long the scheme should last for (5 years or less), the principle of degressivity and/or the level of premiums. Other delegations, indicated a preference for grubbing-up on a wider scale than is being proposed, and expressed doubts as to the effectiveness of the system advocated in view of the large number of proposed exemptions.

Whilst expressing some reservations, other delegations stated that they could accept a grubbing-up scheme which was not an end in itself, and suggested that Member States should be offered some leeway to restricting grubbing-up in certain sensitive areas. Several delegations seriously doubted whether the proposed grubbing-up scheme would be effective in resolving the problem of over-production, and expressed a preference for incorporating this measure into the national envelopes.

According to the Commission representative who attended the meeting:

national envelopes should allow the Member States to opt for solutions best suited to their needs. They should not, however, be used as a disguised means to reintroduce tools that had proved to be ineffective at reviving the sector's competitiveness; the amount of the national envelopes was a "Pandora's box", the opening of which could prove to be risky; the proposed transfer to the second pillar has been put forward in order to deal with specific problems that certain wine-growing regions face; and the grubbing-up scheme allows producers, who wish to leave the sector, to do so with dignity. The Commission remains open to constructive proposals in relation to both the duration of the scheme and in relation to the proposed ceiling of 200 000 hectares.

The Council asked its preparatory bodies to continue examining the proposal with a view to returning to this question at its next meeting on agriculture and reaching political agreement at the end of the year.

The Council held a policy debate on a proposal for a Regulation submitted in July 2007 on reform of the wine sector.

The debate focussed on two questions from the Presidency, one on planting rights, the other on abolishing the use of sugar (chaptalisation).

- On the first question, some delegations confirmed their support for abolishing planting rights and liberalising the market as from 2014, to make the sector more competitive.

Certain other delegations wanted liberalisation to come sooner and in any event in 2010, as provided for under the current legislation. Those delegations accordingly wanted consideration to be given to the introduction of transitional measures enabling them to liberalise planting rights from 2010. Other delegations, however, thought that the present time was too early to take a decision to liberalise rights in 2014; they preferred the idea of "fixing a date" in 2013 to assess the impact of the other market reform measures before deciding on the possibility of liberalising planting rights.

- As regards chaptalisation, a large number of delegations said they favoured this oenological practice which was associated with climatic conditions. Others, however, supported the Commission proposal to do away with the possibility of enriching wine by adding sugar, while abolishing aid for musts, regarding this as a non-negotiable element of balance in the reform.

The Council instructed the Special Committee on Agriculture to continue its discussions with a view to reaching an agreement during the Portuguese Presidency.

The European Parliament's opinion is due in early December.

Delegations gave their initial reactions on key issues which, in their view, needed close consideration in the future negotiations on the reform of the wine sector.

While all delegations endorsed the need for a fundamental reform of the sector and the stated objectives for such a reform, differences emerged regarding the means being proposed for meeting those objectives.

The Presidency asked the Special Committee on Agriculture to take forward in a constructive spirit its preparatory work on reaching a political agreement.

PURPOSE: to reform the common organisation of the wine market.

PROPOSED ACT: Council Regulation.

BACKGROUND: the European Union is the world’s leading producer, consumer, exporter and importer of wine. In 2006 wine accounted for 5% of the total value of the EU’s agricultural production. For economic as well as employment purpose the wine sector is vital. At the same time, however, the volume of wine exported since 1996 has been increasing at a much slower rate than imports and there has been a distinct deterioration in the balance between supply and demand in the wine sector. Third country imports are putting European producers’ income and prices under pressure.

The current common organisation of the wine market or CMO is regulated through Council Regulation (EC) No 1493/1999. (See: CNS/1998/0126 ). Not all of the Regulation’s instruments have proved effective and their continued use is preventing the EU wine sector from gaining a competitive momentum. For example, “crisis distillation” has proved cost-inefficient to the extent that it has encouraged structural surpluses without requiring improvements in the relevant competitive structures. It can therefore be concluded that the current legal framework is not able to attain the Treaty objectives of stabilising the wine market whilst ensuring a fair standard of living for the agricultural community concerned.

Prior to presenting this proposal the Commission held a wide-ranging consultation process based on the publication of its 2006 Communication “Towards a sustainable European wine sector”. (See INI/2006/2109 ).

CONTENT: the purpose of this proposal is a fundamental reform of the Community’s wine regime. The objective of the reform is to:

- increase EU wine producers’ competitiveness;

- strengthen the EU’s wine reputation globally;

- recover old markets and win new ones, both globally and within the EU;

- create a new wine regime based on clear, simple and effective rules that are capable of balancing supply with demand;

- preserve the best traditions of Community-wide wine production methods;

- reinforce the social fabric of rural areas; and

- take account of environmental considerations when producing wine.

To achieve these stated objectives, the Commission is proposing, in summary, the following measures:

Support measures: The Commission proposes that a budget envelope be given to each wine-producing Member State, calculated according to three objective criteria, namely shares in area, production and historical expenditure. Using their envelope, every Member State will be allowed to finance measures according to their preference and from a given menu. That menu being:

- new support for wine promotion in third countries;

- vineyard restructuring and conversion schemes;

- support for green harvest; and

- new crisis managements measures (for example, insurance against natural disasters and administrative costs of setting up a sector-specific mutual fund).

Regulatory measures:

More adaptable oenological practices: Responsibility for approving new, or modifying, oenological practices will be transferred to the Commission, which will assess the oenological practices accepted by the OIV and incorporate them into the list of accepted EU practices. For the purpose of exports, the EU will authorise those practices that have been agreed internationally. The ban on imports of musts for vinification and on blending EU wines with imported wines will be maintained.

Designation of origin and geographical indications : The Commission proposes to confirm, adapt, promote and enhance the concept of EU quality wines based on a geographical origin approach. In order to do so, the Commission proposes establishing a clear framework for wines with Geographic Indications (GI); these can be further sub-divided into wines with a protected geographical indications (PGI); and wines with a protected designation of origin (PDO). These indications will be compatible with the horizontal provisions set out in Council Regulation (EC) No 510/2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs. (See CNS/2005/0275 ).

To maintain quality standards the Commission is also proposing to maintain the ban on over-pressing grapes and to expand the role of inter-professional organisations in order to control and manage the quality of wine produced. Control instruments will be reinforced for the production of “ vin de cépage”. In addition, the Commission is proposing to ban the use of sugar for enriching wine on the day that the reform comes into force. In future, all wine will be made purely from grapes and unsubsidised must.

Labelling: The Commission proposes to simplify the labelling of provisions by setting up a single legal framework that applies to all the different categories of wine and particulars relating to them. This will involve the use of a single legal tool for all wines by complementing the rules and provisions set out in Directive 2000/13/EC on approximating laws relating labelling, presentation and the advertising of foodstuffs. (See COD/1999/0090 ). The new labelling provisions will also take account of WTO policies by removing the distinction between the rules on labelling wines with and without protected designations or origin or geographical indications and to fully inform the consumer about the origin of the product through appropriate labelling rules on traceability.

Trade with third countries:

Bearing in mind that WTO negotiations are still ongoing and that their outcome remains unknown, the proposal does not touch on the current legal framework relating to external trade. The proposed reform does, however, touch upon the impact and the role of export refunds. The economic impact of wine exports has decreased. Indeed, exporters with refunds represents less than 15% of total exports in volume. The value of export refunds represents 3.4% of the value of the products eligible for export refunds. The Commission is, as a result, proposing to abolish export refunds.

Unlawful plantings, transitional plantings and the grubbing-up scheme: These measures are being proposed in a bid to help less competitive wine-growers leave the sector with dignity. The surplus production of wine in the Community has been aggravated by violations of the transitional prohibition on new plantings. A significant number of unlawful plantings continue to exist in the Community, constituting a source of unfair competition and exacerbating problems for the wine sector. To address this challenge, the Commission is proposing a definitive abandonment regime.

Thus, growers who wish to leave the sector will be offered a voluntary grubbing-up premium. In year one, the premium will be 30% higher than current levels. To encourage uptake from year one, it will decrease over the five years of the scheme. To avoid social or environmental problems, the Member States affected will be allowed to limit grubbing-up in mountains and steep slope vineyards and in environmentally sensitive regions.

Grubbing-up will be stopped if the total reaches 10% of a country’s area under vines. The total amount of grubbing-up should be about 200 000 hectares. The budget for this will fall from EUR 420 million in year one to EUR 59 million in the fifth and final year. The average premium will decrease from EUR 7, 174/hecrate in year one to EUR 2,938/hectare in year five.

Given that a market balance still needs to be found and given that the grubbing-up scheme will take time to take affect, the prohibition on planting will be kept in place until 31 December 2013. At the end of this deadline, the ban on new plantings will be lifted to allow competitive producers the chance to respond to market conditions.

The agricultural area, previously used for vine growing, once grubbed up, will qualify as an eligible area under the Single Payment Scheme and be granted the average regional decoupled direct payment, as set out in Regulation (EC) No 1782/2003. (See CNS/2003/0006 ). In order to qualify for the Single Payment Scheme, environmental standards under cross compliance will be applied more widely. Cross compliance will apply for all grubbed-up areas. Minimum environmental requirements for grubbing-up, restructuring, green harvesting and increased funds for agri-environmental schemes in Rural Development programmes will be made available.

Rural development measures: The proposed reform of the Community’s wine sector links into Regulation (EC) No 1698/2005 on support for the rural development by the European Agricultural Fund for Rural Development of EAFRD. (See CNS/2004/0161 ). As a result, the Commission proposes that funds be transferred from the wine sector budget to the EAFRD, rising from EUR 100 million in 2009 to EUR 400 million in 2014. The money thus transferred will be ring-fenced for the wine producing regions. The kind of programmes eligible for EAFRD funding on this scheme would include: helping young farmers to establish themselves in the reformed wine market; vocational training; information and promotion support for producers’ organisation after entering a quality scheme; and early retirement for farmers who decide to stop all commercial farming activity for the purpose of transferring the holding to other farmers.

Promotion and information: The Commission also proposes a responsible promotion and information campaign as well as setting EUR 120 million aside from the national envelopes for promotion measures in third countries. The measures will be eligible for 50% Community financing. There will be new information campaigns within the EU on wines with Geographical Indications as well as on responsible/moderate wine consumptions.

Budgetary implications: The proposal will not increase costs and the recently agreed wine sector budget amounting to EUR 1.3 billion will not be effected. The budget will be used for national envelopes (including promoting EU wines in third-countries and grubbing up); to allow a transfer of funds to Rural Development measures for wine producing regions and to allow transfer to the single payment scheme according to the areas grubbed-up. The Commission suggests that the reform will lead to a more efficient use of the current EU budget.

PURPOSE: to reform the common organisation of the wine market.

PROPOSED ACT: Council Regulation.

BACKGROUND: the European Union is the world’s leading producer, consumer, exporter and importer of wine. In 2006 wine accounted for 5% of the total value of the EU’s agricultural production. For economic as well as employment purpose the wine sector is vital. At the same time, however, the volume of wine exported since 1996 has been increasing at a much slower rate than imports and there has been a distinct deterioration in the balance between supply and demand in the wine sector. Third country imports are putting European producers’ income and prices under pressure.

The current common organisation of the wine market or CMO is regulated through Council Regulation (EC) No 1493/1999. (See: CNS/1998/0126 ). Not all of the Regulation’s instruments have proved effective and their continued use is preventing the EU wine sector from gaining a competitive momentum. For example, “crisis distillation” has proved cost-inefficient to the extent that it has encouraged structural surpluses without requiring improvements in the relevant competitive structures. It can therefore be concluded that the current legal framework is not able to attain the Treaty objectives of stabilising the wine market whilst ensuring a fair standard of living for the agricultural community concerned.

Prior to presenting this proposal the Commission held a wide-ranging consultation process based on the publication of its 2006 Communication “Towards a sustainable European wine sector”. (See INI/2006/2109 ).

CONTENT: the purpose of this proposal is a fundamental reform of the Community’s wine regime. The objective of the reform is to:

- increase EU wine producers’ competitiveness;

- strengthen the EU’s wine reputation globally;

- recover old markets and win new ones, both globally and within the EU;

- create a new wine regime based on clear, simple and effective rules that are capable of balancing supply with demand;

- preserve the best traditions of Community-wide wine production methods;

- reinforce the social fabric of rural areas; and

- take account of environmental considerations when producing wine.

To achieve these stated objectives, the Commission is proposing, in summary, the following measures:

Support measures: The Commission proposes that a budget envelope be given to each wine-producing Member State, calculated according to three objective criteria, namely shares in area, production and historical expenditure. Using their envelope, every Member State will be allowed to finance measures according to their preference and from a given menu. That menu being:

- new support for wine promotion in third countries;

- vineyard restructuring and conversion schemes;

- support for green harvest; and

- new crisis managements measures (for example, insurance against natural disasters and administrative costs of setting up a sector-specific mutual fund).

Regulatory measures:

More adaptable oenological practices: Responsibility for approving new, or modifying, oenological practices will be transferred to the Commission, which will assess the oenological practices accepted by the OIV and incorporate them into the list of accepted EU practices. For the purpose of exports, the EU will authorise those practices that have been agreed internationally. The ban on imports of musts for vinification and on blending EU wines with imported wines will be maintained.

Designation of origin and geographical indications : The Commission proposes to confirm, adapt, promote and enhance the concept of EU quality wines based on a geographical origin approach. In order to do so, the Commission proposes establishing a clear framework for wines with Geographic Indications (GI); these can be further sub-divided into wines with a protected geographical indications (PGI); and wines with a protected designation of origin (PDO). These indications will be compatible with the horizontal provisions set out in Council Regulation (EC) No 510/2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs. (See CNS/2005/0275 ).

To maintain quality standards the Commission is also proposing to maintain the ban on over-pressing grapes and to expand the role of inter-professional organisations in order to control and manage the quality of wine produced. Control instruments will be reinforced for the production of “ vin de cépage”. In addition, the Commission is proposing to ban the use of sugar for enriching wine on the day that the reform comes into force. In future, all wine will be made purely from grapes and unsubsidised must.

Labelling: The Commission proposes to simplify the labelling of provisions by setting up a single legal framework that applies to all the different categories of wine and particulars relating to them. This will involve the use of a single legal tool for all wines by complementing the rules and provisions set out in Directive 2000/13/EC on approximating laws relating labelling, presentation and the advertising of foodstuffs. (See COD/1999/0090 ). The new labelling provisions will also take account of WTO policies by removing the distinction between the rules on labelling wines with and without protected designations or origin or geographical indications and to fully inform the consumer about the origin of the product through appropriate labelling rules on traceability.

Trade with third countries:

Bearing in mind that WTO negotiations are still ongoing and that their outcome remains unknown, the proposal does not touch on the current legal framework relating to external trade. The proposed reform does, however, touch upon the impact and the role of export refunds. The economic impact of wine exports has decreased. Indeed, exporters with refunds represents less than 15% of total exports in volume. The value of export refunds represents 3.4% of the value of the products eligible for export refunds. The Commission is, as a result, proposing to abolish export refunds.

Unlawful plantings, transitional plantings and the grubbing-up scheme: These measures are being proposed in a bid to help less competitive wine-growers leave the sector with dignity. The surplus production of wine in the Community has been aggravated by violations of the transitional prohibition on new plantings. A significant number of unlawful plantings continue to exist in the Community, constituting a source of unfair competition and exacerbating problems for the wine sector. To address this challenge, the Commission is proposing a definitive abandonment regime.

Thus, growers who wish to leave the sector will be offered a voluntary grubbing-up premium. In year one, the premium will be 30% higher than current levels. To encourage uptake from year one, it will decrease over the five years of the scheme. To avoid social or environmental problems, the Member States affected will be allowed to limit grubbing-up in mountains and steep slope vineyards and in environmentally sensitive regions.

Grubbing-up will be stopped if the total reaches 10% of a country’s area under vines. The total amount of grubbing-up should be about 200 000 hectares. The budget for this will fall from EUR 420 million in year one to EUR 59 million in the fifth and final year. The average premium will decrease from EUR 7, 174/hecrate in year one to EUR 2,938/hectare in year five.

Given that a market balance still needs to be found and given that the grubbing-up scheme will take time to take affect, the prohibition on planting will be kept in place until 31 December 2013. At the end of this deadline, the ban on new plantings will be lifted to allow competitive producers the chance to respond to market conditions.

The agricultural area, previously used for vine growing, once grubbed up, will qualify as an eligible area under the Single Payment Scheme and be granted the average regional decoupled direct payment, as set out in Regulation (EC) No 1782/2003. (See CNS/2003/0006 ). In order to qualify for the Single Payment Scheme, environmental standards under cross compliance will be applied more widely. Cross compliance will apply for all grubbed-up areas. Minimum environmental requirements for grubbing-up, restructuring, green harvesting and increased funds for agri-environmental schemes in Rural Development programmes will be made available.

Rural development measures: The proposed reform of the Community’s wine sector links into Regulation (EC) No 1698/2005 on support for the rural development by the European Agricultural Fund for Rural Development of EAFRD. (See CNS/2004/0161 ). As a result, the Commission proposes that funds be transferred from the wine sector budget to the EAFRD, rising from EUR 100 million in 2009 to EUR 400 million in 2014. The money thus transferred will be ring-fenced for the wine producing regions. The kind of programmes eligible for EAFRD funding on this scheme would include: helping young farmers to establish themselves in the reformed wine market; vocational training; information and promotion support for producers’ organisation after entering a quality scheme; and early retirement for farmers who decide to stop all commercial farming activity for the purpose of transferring the holding to other farmers.

Promotion and information: The Commission also proposes a responsible promotion and information campaign as well as setting EUR 120 million aside from the national envelopes for promotion measures in third countries. The measures will be eligible for 50% Community financing. There will be new information campaigns within the EU on wines with Geographical Indications as well as on responsible/moderate wine consumptions.

Budgetary implications: The proposal will not increase costs and the recently agreed wine sector budget amounting to EUR 1.3 billion will not be effected. The budget will be used for national envelopes (including promoting EU wines in third-countries and grubbing up); to allow a transfer of funds to Rural Development measures for wine producing regions and to allow transfer to the single payment scheme according to the areas grubbed-up. The Commission suggests that the reform will lead to a more efficient use of the current EU budget.