§ Mr. Drew
To ask the Minister of Agriculture, Fisheries and Food (1) what discussions he has had with the European Commission on the regime of control regarding export refund certificates; 
(2) if he will make a statement on the decision of the European Union to apply a cut-off at the end of each application period For the operation of export refund certificates; 
(3) what discussions he has had with the European Commission on its decision to restrict refunds on processed goods by introducing the export refund certificate system; 
(4) if he will make a statement on the mechanism recently introduced by the European Union to split the year into six application periods for the operation of export refund certificates; 
(5) if he will make a statement on the policy of the EU to apply reducing co-efficients to exports and on the impact this will have upon (a) the exporting agents and (b) the principal's budgets. 485W
§ Ms Quin
[holding answer 6 March 2001]: The EU is committed under the WTO Uruguay Round agreement to reducing expenditure on export refunds. This applies to export refunds for both agricultural raw materials and to processed agricultural products. These refunds are provided to compensate for the higher price of EU raw agricultural materials which is supported under the CAP and is higher than prices on the world market.
The UK's long-term aim is the reform of CAP to lower EU prices and to remove the need for export refunds—but this will take time. Meanwhile our priority is to ensure that WTO and CAP budgetary commitments are honoured with minimum damage to export competitiveness of UK industry. In consultation and with the support of our industry my Department has been active in developing these arrangements with the Commission.
A system of refund certificates was introduced last year with the agreement of member states to keep expenditure within WTO limits. Under this system there are six tranches available in which traders may obtain time-limited refund certificates. These tranches are intended to facilitate planned access to refunds by traders throughout the year. If demand for certificates exceeds funds allocated within a tranche, access to refunds is adjusted by means of a reducing coefficient. The intention at times of such shortfall is to provide increased flexibility to enable processors to access raw materials at (cheaper) prices from the world market.