EC Export Subsidies

HC Deb 09 January 1996 vol 269 cc124-5W

Mr. Austin Mitchell

To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the accounting and audit procedures in respect of payments of EC export subsidies to producers of composite food products outside annex II of the general agreement on tariffs and trade treaty, where it is deemed inappropriate and bureaucratic to quantify the basic commodities involved. [5899]

Mr. Douglas Hogg

I have asked the chief executive of the Intervention Board to reply to the hon. Member direct.

Letter from George Trevelyan to Mr. Austin Mitchell, dated 9 January 1996: The Minister of Agriculture, Fisheries and Food has asked me to reply to your Parliamentary Question about EC export subsidies to producers of composite food products as the matter is within the operational responsibility of this Executive Agency. [5899] I am sending a copy of this letter to the House of Commons Library and the Public Information Office. I believe that the question relates to food products outside Annex II of the Treaty of Rome, which are commonly known as processed goods.

Export refunds are paid upon the basic agricultural products (for example, cereals, sugar, and milk) when they are used in the manufacture of processed goods (such as biscuits and cakes) which are themselves exported. As you indicated in your question, the Community has taken the view that for claimants to establish for each export the quantities of basic products contained would be inappropriate and bureaucratic. It would also be very costly if laboratory analysis was required for each consignment. A system was therefore designed, and its use authorised by Community regulations, in which the manufacturer lodges with the Agency a "recipe" for the processed good in question, and this is given a code number. Thereafter, exporters declare only the weight of the processed good exported and the "recipe" number. The recipe differs from that word in common parlance and consists only of the percentages of basic agricultural products contained in unit weight of the processed good. The export refund payment is then calculated by reference to the content identified by the recipe number.

By a system which combines regulatory requirements and risk analysis techniques, public funds are safeguarded from false recipe declarations either by pre-production verification of the recipe proportions or by laboratory analysis of samples taken from export consignments, or both. In the event that the export declaration proves false the payment of export refund is reassessed.

With the exception of the recipe system the accounting and audit procedures, including those of NAO, Commission auditors and the European Court of Auditors are the same for processed goods as for Annex II basic agricultural products.