COMERCIANTE INFORMAL

2.98. In its Special Report No 20/98 (71_{) the Court}

made recommendations aimed at improving the frame- work for the control of export refund transactions. The main recommendations related to:

— the more effective use of risk analysis for the selec- tion of export consignments for physical checks, — the recording, evaluation and reporting of the results

of such checks,

— the introduction of a strategic planning approach tailored to the type of product exported,

— the need to test products systematically for sound and fair marketable quality,

— the desirabilityof making risk analysis obligatory and extending this to cover all measures and regimes affecting the EU budget, thus enabling Member States to allocate their resources more effectively.

The disjunction of expenditure by certain paying agencies complies with Article 4(6) of Regulation (EC) No 1258/1999, Article 2(1) of Regulation (EC) No 1663/95 and Regulation (EC) No 2390/1999. As for flax in Spain, the Commission decided on a 10 % cor- rection for weaknesses in the control system for 1994 and 1995. For the financial years 1996 to 1998 the clearance of accounts procedure is still ongoing. For 1999 the findings of the OLAF investigation will be the basis for a financial cor- rection. Therefore the Commission considers that the weak- nesses discovered in Spain are and were addressed adequately by the Commission. As explained above (points 2.84 to 2.91) the Commission made efforts to propose changes to the regu- lation as early as February 1996, but these were rejected by the Council.

(71_{) Special Report No 20/98 (OJ C 375, 3.12.1998) (herein-}

2.99. The report also called upon the Commission to speed up the follow-up of deficiencies it had detected in the Member States’ systems.

2.100. The following paragraphs detail the consider- ation bythe European Council and Parliament of those recommendations and the Commission’s actions in response.

The Council of the European Union’s recommendations

2.101. The Council of the European Union, in its Agri- fin Group report of 5 February1999 on the Court’s Special Report No 20/98, accepted the Court’s main observations and recommended that the Commission adopt the following measures:

(a) the Commission should bring together the relevant data about practices in the Member States with the objective of improving the qualityof controls throughout the Communitybysharing experience; (b) the improvement of controls should be pursued as appropriate through analyses presented in the Trade Mechanisms Committee, which should also reflect the practices of the Directorate-General concerned and of OLAF;

(c) the intensityof physical controls over export refund transactions should be determined on the basis of a prudent risk analysis, with lighter controls applied to standard and less riskyproducts.

The European Parliament’s proposals

2.102. In its report of 4 March 1999 on the granting of discharge for the financial year 1997, the European Parliament agreed with the Court’s main observations and invited the Commission:

(a) to improve coordination between physical checks and a posteriori controls (72_{) in the context of an}

appropriate legal framework, as suggested bythe

2.102.

(a) The following indents should be added:

— ‘by requiring Member States to submit annual evalu- ations of the execution and effectiveness of physical checks (SR No 20/98, paragraph 4.4, sixth indent),

(72_{) Council Regulation (EEC) No 4045/89 (OJ L 388,}

Court. For the sake of efficiency, such coordination should prevail over considerations relating to sub- sidiarity;

(b) to paygreater attention to the effectiveness of the procedures for the selection of consignments for physical checks;

(c) to make it obligatoryfor the Member States to use risk analysis and to submit annual evaluations of the implementation and effectiveness of the checks; (d) to impose systematic testing of the marketable qual- ityof all samples submitted for laboratoryanalysis.

The Commission’s follow-up of the Court’s observations

2.103. The Commission has responded positivelyto some of the Court’s observations and recommenda- tions:

— byapplying financial corrections (73_{) totalling}

188 million euro on various Member States which had not complied with stipulations concerning physical checks (74_{) (}Table 2.6_{) (SR No 20/98, para-}

graph 2.6),

— byinforming Member States about the use of risk analysis via the Trade Mechanisms Committee (SR No 20/98, paragraph 4.4, third indent),

— by permitting, for those Member States having opted for risk analysis, a reduction in the level of laboratory testing where positive assurance is available from repeated satisfactory results (SR No 20/98, para- graph 4.4, ninth indent)’.

(73_{) Commission Decision 2000/216/EC of 1 March 2000}

excluding from Communityfinancing certain expendi- ture incurred byMember States under the Guarantee Sec- tion of the European Agricultural Guidance and Guaran- tee Fund (EAGGF) (OJ L 67, 15.3.2000, p. 37) and Commission Decision 2000/449/EC of 5 July2000 excluding from Communityfinancing certain expendi- ture incurred byMember States under the Guarantee Sec- tion of the European Agricultural Guidance and Guaran- tee Fund (EAGGF) (OJ L 180, 19.7.2000, p. 49).

(74_{) Council Regulation (EEC) No 386/90 of12 February1990}

on the monitoring carried out at the time of export of agricultural products receiving refunds or other amounts (OJ L 42, 16.2.1990, p. 6).

Table 2.6 — Total corrections made following Commission Decisions No 2000/216/EC and No 2000/449/EC

Financial year Member State Sector Budgetary item Reasons Financial consequences_{(EUR) (}1₎

1996-1998 Belgium Export refunds 2100 Non-compliance with the minimum check rate in the beef/veal sector 186 173

1996-1998 Denmark Export refunds Various Shortcomings in the qualityof the checks made bycustoms 29 077 014

1996-1998 GermanyExport refunds Various Non-compliance with the minimum check rate, shortcomings in the qualitative

checks 21 872 394

1996-1998 Greece Export refunds Various Shortcomings in the qualityof the checks made bycustoms 1 031 894

1996-1998 France Export refunds Various Shortcomings in the qualityof the checks made bycustoms 99 083 770

1996-1998 ItalyExport refunds Various Non-compliance with the check rates, shortcomings in the qualityof the checks

made bycustoms 31 847 349

1996-1998 Luxembourg Export refunds Various Shortcomings in the quantitative checks (weighing) 5 466

1996-1998 United Kingdom Export refunds Various Shortcomings in the qualityof the checks in the cereals sector 5 171 461

Total 188 275 521

(1_{) Correction equivalent to 5 % of the total expenditure on financing export refunds for agricultural products for all countries except Luxembourg, for which there was a correction equivalent to 2 % of the total expenditure on financ-}

ing export refunds for agricultural& products.

1 EN Of ficial Jour nal of th e European Communities 97

— byasking Member States to applya uniform clas- sification of the risks attached to different goods (SR No 20/98, paragraph 4.4, fourth indent), — byencouraging the Member States to incorporate

into their national risk analysis system a monitor- ing and feedback system to ensure that targeted checks are carried out or satisfactoryexplanations for not doing so are recorded (SR No 20/98, para- graph 4.4, fifth indent),

— bypermitting, for those Member States having opted for risk analysis, a reduction in the intensity of checks over standard goods (75_{) and at customs}

offices concerned onlywith few operators and a limited range of goods (76_{) (SR No 20/98, para-}

graph 3.7),

— byobliging Member States to make annual evalua- tions of their execution of physical inspections (SR No 20/98, paragraph 4.4, sixth indent).

2.104. However, there has been a lack of action on other points raised bythe Court in that the Commis- sion:

— has not proposed a requirement for the routine test- ing (77_{) bycustoms laboratories of sound and fair}

marketable qualityof exports of agricultural prod- ucts at the time of export (SR No 20/98, para- graph 4.4, eighth indent),

2.104.

Article 5(5) of Regulation (EC) No 2221/95 was introduced by Regulation (EC) No 2655/1999. However, routine test- ing of all aspects of soundness of all samples taken under Regulation (EEC) No 386/90 by laboratories designated for customs checks would be impossible in some cases (e.g. hor- mones in meat and glycol in wine).

(75_{) Commission Regulation (EC) No 2221/95 of 20 Septem-}

ber 1995 laying down detailed rules for the application of Council Regulation (EEC) No 386/90 as regards physical checks carried out at the time of export of agricultural products qualifying for refunds (OJ L 224, 21.9.1995, p. 13).

(76_{) Commission Regulation (EC) No 2655/1999 of16 Decem-}

ber 1999 amending Regulation (EC) No 2221/95 laying down detailed rules for the application of Council Regula- tion (EEC) No 386/90 as regards physical checks carried out at the time of export of agricultural products qualify- ing for refunds and amending Regulation (EC) No 3122/94 laying down criteria for risk analysis as regards agricul- tural products receiving refunds (OJ L 325, 17.12.1999, p. 12).

(77_{) This would applyto all samples taken under Article 3(3)}

— has not considered creating a legal framework pro- viding for the best combination of physical and a posteriori controls (SR No 20/98, paragraph 4.1),

— has not evaluated the effectiveness of arrangements for selecting goods for physical inspection (SR No 20/98, paragraph 4.3),

— has not made proposals to render compulsorythe use of risk analysis, given that Greece and Italy were not in a position to implement risk analysis owing to lack of computerisation (SR No 20/98, para- graph 4.4, first indent),

— has not sought to oblige Member States to notify physical inspection strategies annually, including rates of inspection differentiated byassessed risk (SR No 20/98, paragraph 4.4, second indent), — has not obliged Member States to compile specific

databases of export refund irregularities (SR No 20/98, paragraph 4.4, seventh indent).

Member States have been invited to describe in the annual report the measures which have been taken in order to improve coordination with Regulation (EEC) No 4045/89. The Com- mission will examine with Member States how to better com- bine the control efforts at the moment of export and a poste- riori.

Within the framework of the clearance of EAGGF accounts, audit visits were carried out in different Member States in 1999 and 2000 in order to evaluate specific customs proce- dures. During these audits some attention was given in some Member States to the topic of the selection of controls for physical inspection. In the future this aspect will be taken more into account in the annual reports.

Because of the criticisms of some Member States (e.g. Greece, which is not in a position to apply a system of risk analysis because of the lack of a computer system) risk analysis was at least not made compulsory. However, in order to push Mem- ber States to introduce such a system, the simplifications of Article 5a of Regulation (EC) 2221/95 (e.g. reduction of the control rate for NA-I products) applies only in those Member States which use a system of risk analysis.

Following the remarks of several Member States, some flex- ibility is required where physical checks are concerned. It is sometimes necessary to amend strategic programmes in the course of the year in order to adapt new circumstances. Regulation (EEC) No 595/91 requires the Member States to communicate to the Commission a list of irregularities which have been the subject of primary or judicial findings of fact. OLAF is currently making available an application which will allow Member to establish and communicate the cases of irregularity in electronic format. The output will enable Mem- ber States also to create their own database with all the infor- mation about theses cases, including the information as pro- posed by the Court of Auditors.

2.105. The Commission has partiallyfollowed the Court’s recommendations. With regard to improving checks, its approach has largelybeen to make this an option rather than an obligation, byinviting Member States to use risk analysis.

2.106. In order to improve the effectiveness of cus- toms checks, the above recommendation, to make the application of risk analysis obligatory, still needs to be extended to all the areas of checks with a financial impact on the EU budget (78_).

Common organisation of the market in sheepmeat and