The European Court of Auditors has isssued a critical report on the reform of the EU regime of subsidies for tobacco growing.
The EU has financed the cultivation of tobacco through a Common Market Organisation (CMO) since 1970 with annual subsidies of 1 billion euro, most of which is disbursed to farmers in Italy, Greece and Spain which together account for 87 % of total production. The market was reformed substantially first in 1992, then in 1998 and again in 2004. The Court assessed whether the reforms introduced in 1998 were soundly based and well managed by Member States. It also examined how the Commission had monitored and evaluated implementation and whether the objectives of the reformed CMO had been achieved. Finally, it examined how the newly adopted reform might affect the tobacco CMO.
The Auditors’ main observations are:
– The process by which the Commission elaborated its proposals for the 1998 reform was based on unreliable data and its analysis of the market was inadequate. The measures adopted were largely inappropriate from the outset and proved to be ineffective in many areas.
– The Court also found that the measures introduced did not achieve significant improvements in the income from tobacco cultivation or the market balance anticipated. The value of production was also put at risk by anti-competitive behaviour, in the form of price agreements, in the three largest producer states.
– There were numerous failings in Member States to apply the checks required by the regulations and the verification of key controls and the pursuit of corrections through the Clearance of Accounts process should have been extended. No Clearance of Accounts decision has been taken as at June 2004.
– The Commission’s monitoring was unsatisfactory and the evaluation of the CMO was delayed. The findings of the evaluation carried out by external consultants were made public in a report in October 2003 and are, on common issues, very similar to those of the Court.
– The reform adopted by the Council in April 2004 envisages phased decoupling of the aid from production. Future support for tobacco producers will be included in the single farm payment scheme. There will also be a specific financial envelope for the restructuring of tobacco-producing areas.
– The Court welcomes the present reform, which should go some way to addressing many of the weaknesses identified by the audit, although this will take some time.
– The Court recommends that the Commission pursue their investigations of the anti-competitive behaviour in Member States and, if it is confirmed, take appropriate action. The Member States’ failures to apply the checks required by the regulations should also be pursued and corrections applied where possible.