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ČR challenges food surplus fine

Agriculture minister claims no disruptions to the EU market

July 25th, 2007 issue

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Food war

The Czech Republic has filed suit against the European Commission (EC) over a 12.25 million euro fine. The commission accuses the country of stockpiling meat, fruit and rice prior to joining the EU in 2004
Fine was first lodged in 2005 and set at 100 million euros. Czechs bargained fine down to current level, still refuse to pay
Every 2004 member state except Hungary has been similarly fined. Slovakia filed suit against EC several days before the Czech Republic

Canned button mushrooms, tangerines and chicken meat are among the food products behind the Agriculture Ministry’s recent lawsuit against the European Commission (EC).
The Czech Republic filed a complaint July 17 with the European Court of Justice in Luxembourg against the EC’s 12.3 million euro ($17 million/347 million Kč) fine for surplus food supplies held by the country before joining the European Union in 2004.
The complaint is a reaction to a sanction against the country and eight other new member states that the EC announced this April. The countries are required to pay a collective fine of 41.1 million euros for violating their accession treaties by stockpiling various agricultural products.
In the case of the Czech Republic, the EC says the country exceeded its quota for meat, fruit and rice. While all the other 2004 member states except Hungary were also fined, the Czech Republic’s fine is the second-highest, exceeded only by Poland, which was ordered to pay 12.25 million euros.
Regardless of the lawsuit, the Czech Republic will have to pay the first installment of the fine — about 86 million Kč — by the end of this month.
Government officials say the fine is unfair because the country’s stockpiles in 2004 had no effect on the EU economy.
“No one has proven that the Czech Republic caused any disruptions to the EU market,” said Agriculture Minister Petr Gandalovič, who signed the lawsuit July 13. “The EU budget had no extra costs in this connection — not a single euro.”
Gandalovič’s complaint follows similar actions from Slovakia, which filed a suit against the commission July 12. Slovakia’s justice minister, Štefan Harabin, argues that the commission has no right to impose the fine so late after Slovakia’s EU entry.
“Even if it were empowered to issue such a decision, it may have done so exclusively in a period of three years from Slovakia’s accession into the EU, which has not happened,” he told the Czech News Agency.
While taking note of the countries’ complaints, the EC says the sanctions correspond with standard policy.
“Measures to prevent the build-up of surplus stocks are a normal feature of every EU enlargement,” said Mariann Fischer Boel, European commissioner for Agriculture and Rural Development. “It is our legal duty to make sure these rules are enforced.”
The EC imposes such measures on new member states to prevent a disruption of the EU’s internal economy.
“We want to avoid people speculating, gathering stocks of food commodities and benefiting from the fact prices in the EU are higher, import levies apply and, in a few cases, export subsidies are available,” said Boel’s spokesman, Michael Mann. “It is normal practice — all member states know full well their responsibilities. It is nothing unusual.”
The EC dismisses the government’s claim that its food supply was not a surplus because it had no effect on the EU’s internal market.
“Surplus stocks by definition unbalance the economy to a greater or lesser degree,” said Mann. “It can cause serious distortion to the EU’s internal market and damage honest traders and producers across the EU.”
The EC also points out that it has already given the Czech Republic substantial ground on the matter. When it first imposed the surplus fines in 2005, the country was ordered to pay nearly 100 million euros. Faced with criticism from the new member states, the EC twice adjusted this amount, lowering it to its current level.
Because of these concessions, the EC is unlikely to yield to the Czech Republic’s request of repealing the fine entirely.
“The final figure was substantially lower than the original one,” Mann said. “We gave them four years to pay. There will be no further concessions.”
Despite this hard-line stance, domestic food production experts commend the government’s decision to take action.
“The idea that a few cans of tangerines could disrupt the EU market is laughable,” said Agrarian Chamber chairman Jan Veleba.
He points out that the fines, which focused on food stockpiled in 2003, are in sharp contrast with the glut of EU food products the Czech Republic began importing that year. Also, because a majority of the sanctioned food products were imports, Veleba said expecting a country to keep a precise record is unrealistic.
“Given the free movement of goods, it’s difficult to monitor the exact norms of certain products,” he said. “This fine is a great example of just how far over bureaucracy can go.”


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