On 6 December 2006, the Commission adopted new rules on the granting of State aid in the agricultural sector. These rules are divided into two parts: an exemption regulation which allows Member States not to notify State aid given to small and medium-sized undertakings involved in agricultural production provided that certain requirements are met, and guidelines which complement the regulation and lay down rules applicable to notified aid. The two documents cover the period from 2007 to 2013.
As regards the processing and marketing of agricultural products, the granting of State aid will from now on be governed by the provisions applicable to State aid in the industrial sector. The exemption regulation will make it possible for aid to be granted to farmers faster, which is especially important, for example, where they sustain losses due to bad weather or animal or plant diseases. Alongside these two texts, there is still a de minimis regulation under which Member States may grant aid which, provided specific requirements are met, is not regarded as State aid as long as a certain ceiling is not exceeded (3,000 euros per farmer over three years).
On 19 December 2006, the Agriculture Council extended until 2010 the simplified direct aid scheme applicable in eight of the Member States which joined the EU in 2004. In the interests of simplifying the management of the CAP, the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, and Slovakia will be allowed to continue operating the Single Area Payment Scheme (SAPS) for a further two years until the end of 2010. Under SAPS, uniform per-hectare entitlements are granted within any one region from regional financial envelopes.
This agreement, based on a proposal from the Commission, includes improvements to certain rules governing direct payments, notably:
the possibility for the new Member States using SAPS to continue to use this simple way of granting income support to the farmers until the end of the year 2010, instead of 2008; from the start of 2009, farmers in the countries opting to continue this simplified direct aid scheme would have, as in other Member States, to start complying under 'cross-compliance' with statutory requirements in the areas of environment, public, animal and plant health and animal welfare to receive full payments under direct payment schemes and certain rural development measures;
the simplification of the eligibility rules under the single payment scheme for land with olive trees;
the clarification that the phasing-in of direct payments in the new Member States does not apply to the direct payments related to the sugar.
On 19 December 2006, EU agriculture ministers adopted a decision to extend the energy crop premium introduced by the 2003 Common Agricultural Policy reform to the new Member States which currently do not benefit from it. The decision will give farmers in Bulgaria, the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia the chance to receive EUR 45 per hectare for growing energy crops.
It will extend the maximum area which can benefit from this aid to 2 million hectares from 1.5 million hectares at the moment. In a further push to encourage the production of feedstocks for renewable energy production, the decision will also allow the Member States to grant national aid of up to 50 percent of the costs of establishing permanent crops on areas on which an application for the energy crop aid has been made.
The EUR 45/hectare aid for energy crops was applied for the first time in 2004 to provide an incentive for farmers to grow the raw materials for biofuels. The area for which the direct payment for energy crops was claimed was between 1.2 and 1.3 million hectares in 2006, close to the limit of 1.5 m ha.
The data on the development of bioethanol and biodiesel production as well as recently constructed capacities show a dramatic increase in the demand for energy crops within the next few years.
The aid for energy crops is an incentive for farmers to produce crops for energy purposes rather than for food. Currently, 8 of the 10 "new Member States" (the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, and Slovakia) which apply the SAPS are excluded from this aid for energy crops, while Malta and Slovenia may receive this aid up to the "phasing-in" level only.
The review of the energy crops scheme has shown that it is appropriate to extend the aid for energy crops to all Member States as from 2007 and under the same conditions. Therefore the maximum guaranteed area should be increased proportionally.
To strengthen the role of multiannual energy crops, the Member States will be entitled to grant national aid up to 50 % of the costs associated with establishing permanent crops for the areas which have been subject to an application for the aid for energy crops.
On 6 December 2006, the Commission adopted a Regulation on a common charging scheme for air navigation services. The new charging system regulates how users will be charged for air navigation services. The regulation applies as of 1 January 2007. The harmonised system will contribute to achieve greater transparency and encourage the safe and effective provision of air navigation services.
The provision of air navigation services is in principle not subject to normal market forces of supply and demand. Indeed, airplanes tend to follow fixed routes and cannot choose which Member States' airspaces to cross. That is why air navigation is a service of public interest where costs and charges must be regulated. The regulation is based on the Eurocontrol multilateral agreement. Beyond enhancing enforcement of this international system, the regulation brings clear additional benefits: it is part of the single European sky legislation and will contribute to its implementation leading to more cost-efficiency. The definition of charging zones paves the way to a more integrated management of the airspace in regional airspace blocks. The regulation also promotes transparency of accounts and reinforces consultation mechanisms of airspace users.
As the Community rule is fully consistent with the current system, the impact in the short-term is expected to be fairly limited. The inclusion of terminal charges in the scheme may lead to a limited increase of costs for airline companies mostly relying on short-haul routes. This is in line with the basic "user pays" principle. Indeed, aviation is the only transport mode where infrastructure is exclusively financed through user charges. The adoption of the Regulation will be followed later this year by a proposal for a directive on airport charges, forming part of also seek to enshrine the principles of transparency, non-discrimination, consultation and cost-efficiency to the charges regime imposed by airport operators.
Further information on the Single European Sky is available on:
Rolandas Valiûnas, attorney-at-law and
managing partner of the law firm Lideika,
Petrauskas, Valiûnas ir partneriai LAWIN, was elected a new chairman of the board of the Investors' Forum.
The Investors' Forum is an association of the largest and most active investors in the Lithuanian economy. The mission of the Investors' Forum is to improve business environment in Lithuania. Founded in June 1999, the association has been growing steadily
and today has over 40 members, among them - major foreign investors in Lithuania whose investments exceed 5 billion litas.
The law firm Lideika, Petrauskas, Valiûnas ir partneriai LAWIN was one of the founders of the Investors' Forum and member of the association from the very start. Rolandas Valiûnas has been a member of the board of the Investors' Forum since 1999.