§ Mr. Spearingasked the Minister of Agriculture, Fisheries and Food if he will set out the working of the option referred 646W to in paragraph 295 of the EEC Agricultural Report of 1976 and explain how the savings are made and at whose expense.
§ Mr. BishopArticle 2a of Regulation 974/71 allows MCA import subsidies due in intra-Community trade to be paid by the Exporting member State by agreement between the member States concerned. It was agreed by the Council of Ministers on 29th April 1976 that this option should be exercised with regard to United Kingdom and Italian MCAs. As was made clear on 3rd May 1976 in a reply given to my hon. Friend the Member for Durham (Mr. Hughes)—[Vol. 910, c. 225] —the decision did not affect the amount of money being paid on a transaction. It follows that the budgetary saving is only an apparent one. It arises because, for budgetary purposes, payments are converted from the currencies in which they are made into units of account at the old IMF parities. Thus, for sterling, the rate of £1=2.4 ua has been unaffected by the decline in the market value of the pound. Consequently an MCA paid in sterling on an import from another member State generally represents more units of account than the same sum paid in the exporting member State in its own currency. Similar considerations apply to Italian MCAs.