
CHAPTER I
Article 1 
This Regulation lays down implementing rules concerning national restructuring programmes under Regulation (EC) No 637/2008, containing the five eligible measures provided for in Article 7 of that Regulation.
Article 2 
Restructuring programmes submitted by Member States in accordance with Article 4(1) of Regulation (EC) No 637/2008, shall consist of the following elements:

((a)) a detailed description of the measures proposed as well as their quantifiable objectives;
((b)) the results of consultations held as provided for in the second subparagraph of Article 4(1) of Regulation (EC) No 637/2008;
((c)) an appraisal showing the expected technical, economic, environmental and social impact;
((d)) a description of the ginning facilities in the Member State concerned and use of their capacity since 2005, in case of inclusion in the restructuring programme of the measures referred to in Article 7(1)(a) and (b) of Regulation (EC) No 637/2008;
((e)) a schedule for implementing each of the measures;
((f)) a general financial table, following the model provided for in the Annex to this Regulation, showing the resources to be deployed and the envisaged allocation of the resources between the measures in accordance with the budgetary allocation fixed in Article 5(1) of Regulation (EC) No 637/2008;
((g)) the criteria and quantitative indicators to be used for monitoring and evaluation of the measure of the restructuring programme as well as the steps taken to ensure that the programmes are implemented appropriately and effectively;
((h)) the designation of competent authorities and bodies responsible for implementing the programme.
Article 3 
Changes of restructuring programmes, as referred in Article 4(3) of Regulation (EC) No 637/2008, shall not be submitted more than once per year.
The modified programmes shall indicate clearly and precisely the proposed changes, the reasons for these changes and their financial consequences, and shall include, if applicable, a revised version of the financial table following the model provided for in the Annex to this Regulation.
Expenditure resulting from modification of restructuring programmes shall be eligible from the date of the submission of the revised programme to the Commission. Member States shall bear the responsibility for expenditure between the date on which their modified restructuring programme is received by the Commission and the date of its applicability in accordance with the second subparagraph of Article 4(2) of Regulation (EC) No 637/2008.
Article 4 

1. Member States shall submit to the Commission a report on the implementation of the restructuring programme with the submission of each new restructuring programme, except of the first restructuring programme submitted in 2009 as referred to in Article 4(1) of Regulation (EC) No 637/2008.
2. The report submitted under paragraph 1 of this Article and that submitted with the communication requesting termination of the programme as referred to in Article 5(2) of Regulation (EC) No 637/2008 shall:
(a) list and describe the measures for which Community assistance under the restructuring programmes was granted, for each of the years of the programming period concerned;
(b) if applicable, describe any changes to the restructuring programme, the reasons therefore and its implications for the future;
(c) describe the results achieved with each measure, in light of the quantifiable objectives set out in the restructuring programme;
(d) contain a statement of expenditure by financial year already incurred in the programming period which will in no case overshoot the limit of the total financial amount allocated to the Member State pursuant to Article 5(1) of Regulation (EC) No 637/2008;
(e) support forecasts for expenditure until the end of the foreseen period of implementation of the restructuring programme, up to the limit of the total financial amount allocated to the Member State pursuant in Article 5(1) of Regulation (EC) No 637/2008;
(f) if applicable, contain an analysis of the involvements of other Community funds and their conformity with the aids financed by the restructuring programme.
3. Member States shall record the details of all restructuring programmes, whether or not amended, and of all measures carried out under those programmes.
Article 5 
Member States shall make the restructuring programme, its modifications, the report on the implementation of the programme, and any national legislation concerning this programme, publicly available on a website.
Article 6 

1. Member States shall for each measure contained in their restructuring programme and listed in Article 7(1) of Regulation (EC) No 637/2008:
(a) determine the elements to be contained in an application for support;
(b) set the start date and end date of the period for lodging an application;
(c) approve valid and complete applications on the basis of objective and non-discriminatory criteria, taking into account the financial resources available within the annual ceilings provided for in Article 5(1) of Regulation (EC) No 637/2008;
(d) pay the eligible support, or the remaining eligible support in case an advance has been paid, after completion of the measure and execution of controls as referred to in Article 7 of this Regulation.
2. For the measures referred to in Article 7(1), points (a), (b), (d), and (e) of Regulation (EC) No 637/2008, Member States may pay the beneficiary one or more advances. The combined level of all advances shall not be higher than 75 % of the eligible expenditure.The payment of an advance shall be subject to the lodging of a security of an amount equal to 120 % of the amount of the advance concerned.The securities shall be released provided that the measures have been completed and the controls, as referred to in Article 7, have been carried out.
3. All payments referred to in paragraphs 1 and 2 that relate to a particular application shall be made at the latest by 30 June of the fourth year following the year of the deadline for submission of the draft restructuring programmes as laid down in Article 4(1) of Regulation (EC) No 637/2008. Payments in the first year of the first programming period shall be made from 16 October 2009.
4. Member States shall lay down specific rules for the implementation of this Article.
Article 7 

1. Notwithstanding the control obligations referred to in Regulation (EC) No 1290/2005, Member States shall monitor, control and verify the implementation of the restructuring programme as has become applicable.For the measures referred to in Article 7(1), points (a) and (b) of Regulation (EC) No 637/2008, the Member States shall inspect on the spot each factory and production site which receives support under the restructuring programme before a final payment is made, to check that all conditions for obtaining the aid have been met.With regard to the measure referred to in Article 7(1), point (a) of Regulation (EC) No 637/2008 an on-the-spot inspection shall be carried out on all relevant factory and production sites at the latest three months after the expiry of the one year period referred to in Article 10(1)(b) of this Regulation to verify that the requirements of that paragraph have been met.
2. For each on-the-spot inspection a report shall be established within one month, fully describing the work undertaken, the main findings and any follow-up action required. Specifically, the inspection reports shall:
(a) contain information regarding the beneficiary and the production site subject to inspection as well as the persons present;
(b) state whether notice of the visit was given to the beneficiary and, if so, the period of advance notice;
(c) state the requirements and standards subject to inspection;
(d) describe the nature and extent of the checks carried out;
(e) contain the findings;
(f) contain the elements in relation to which non-compliances are found;
(g) contain an evaluation providing an assessment of the importance of the non-compliance in respect of each element on the basis of, among others, its severity, extent, degree of permanence and history.The beneficiary shall be informed of any non-compliance found.
Article 8 
Undue payments shall be recovered, with interest, from the beneficiaries concerned. The rules fixed in Article 73 of Regulation (EC) No 796/2004 shall apply mutatis mutandis.
Implementation of administrative penalties and recovery of unduly paid amounts are without prejudice to communication of irregularities to the Commission pursuant to Commission Regulation (EC) No 1848/2006.
Article 9 

1. If a beneficiary does not comply with one or more conditions for obtaining the aid under the measures of the restructuring programme, it shall be required to pay an amount equal to 10 % of the amount to be recovered under Article 8.
2. The penalties to be imposed pursuant to paragraph 1 shall not be imposed if the undertaking can demonstrate, to the satisfaction of the competent authority, that non-compliance is due to force majeure and if it has clearly identified the non-compliance in writing and in due time to the competent authority.
3. The penalties referred to in paragraph 1 shall not apply if the payment was made by error of the competent authorities itself of the Member States or of another authority concerned and the error could not reasonably be detected by the beneficiary and the beneficiary for his part acted in good faith.
4. If the non-compliance has been committed intentionally or as a result of grave negligence, the beneficiary shall be required to pay an amount equal to 30 % of the amount to be recovered under Article 8.
CHAPTER II
SECTION 1
Article 10 

1. Full and permanent dismantling of ginning facilities as referred to in Article 7(1)(a) of Regulation (EC) No 637/2008 shall require:
(a) the definitive and total cessation of the ginning of cotton in the factory or factories concerned;
(b) the dismantling of all ginning equipment thereof, and the removal of the ginning equipment from the site or sites, within one year of the approval of the application by the Member State;
(c) the definitive exclusion of the ginning equipment from cotton processing in the Community, by:
((i)) removal of equipment to a third country;
((ii)) guaranteed application of equipment in another sector; or
((iii)) destruction of equipment;
(d) the restoring of the good environmental conditions of the factory site or sites and the facilitation of redeployment of the workforce; and
(e) the written commitment not to use the production site or sites for the ginning of cotton during a period of 10 years.Ginning equipment means all specific equipment used for the transformation of unginned cotton into ginned cotton and its by-products, including feeders, dryers, cleaners, stick machines, gins, condensers, lint cleaners and bale presses.
2. Member States may impose additional requirements with regard to dismantling as referred to in paragraph 1.
3. The ginning facilities referred to in paragraph 1 need to be in good working condition for an application to be eligible.
4. Factory buildings and sites may continue to be used for activities unrelated to cotton production, processing or trade.
Article 11 

1. Member States shall decide, on the basis of objective and non-discriminatory criteria, the amount of aid to be granted under the measure referred to in Article 10.
2. The aid per ginning factory shall be limited to a maximum amount of EUR 100 per tonne of unginned cotton for the quantity of cotton processed in that factory, which has been eligible for support under Chapter V of Council Regulation (EC) No 1051/2001, in the marketing year 2005/06.
SECTION 2
Article 12 
Support for the measure referred to in Article 7(1)(b) of Regulation (EC) No 637/2008 shall be granted for tangible or intangible investments which improve the overall performance of the enterprise and concern:

((a)) the processing and/or marketing of cotton; and/or
((b)) the development of new processes and technologies linked to cotton.
Article 13 

1. The supported investments shall respect the Community standards applicable to the investment concerned.
2. Eligible expenditure shall be:
(a) the improvement of immovable property;
(b) the purchase or lease purchase of new machinery and equipment, including computer software up to the market value of the asset, and excluding other costs connected with the leasing contract, such as lessor’s margin, interest refinancing costs, overheads and insurance charges;
(c) general costs linked to expenditure referred to in points (a) and (b), such as fees of architects and engineers and consultation fees, feasibility studies, the acquisition of patent rights and licences.
3. Costs for the development of new processes and technologies as referred to in Article 12 shall concern preparatory operations, such as design, process or technology development and tests and tangible and/or intangible investments related to them, before the use of the newly developed processes and technologies for commercial purposes.
4. Simple replacement investments shall not be eligible expenditure.
Article 14 

1. The Community contribution for support referred to in Article 12 shall be limited to the following maximum aid rates:
(a) 50 % in regions classified as convergence regions in accordance with Council Regulation (EC) No 1083/2006;
(b) 40 % in regions other than convergence regions.
2. Support shall not be granted to the firms in difficulty within the meaning of Section 2.1 of the Community guidelines on State aid for rescuing and restructuring firms in difficulty.
3. Article 72 of Council Regulation (EC) No 1698/2005 shall apply mutatis mutandis to support referred to in Article 12.
SECTION 3
Article 15 
Support for the measure referred to in Article 7(1)(c) of Regulation (EC) No 637/2008 shall:

((a)) be granted for Community quality schemes for cotton established under Council Regulation (EC) No 834/2007, or Council Regulation (EC) No 510/2006, or quality schemes recognised by the Member States;
((b)) be granted as an annual incentive payment whose level shall be determined according to the level of the fixed costs arising from participation in supported schemes, for a maximum duration of four years.
Schemes whose sole purpose is to provide a higher level of control of respect of obligatory standards under Community or national law shall not be eligible for support under this section.
Article 16 

1. To be eligible for support, quality schemes recognised by Member States, as referred to in point (a) of the first subparagraph of Article 15, shall comply with the following criteria:
(a) the specificity of the final product under such schemes shall be derived from detailed obligations on farming and processing methods that guarantee:
((i)) specific characteristics including the production process; or
((ii)) a quality of the final product that goes significantly beyond the commercial commodity standards as regards plant health or environmental protection;
(b) the schemes involve binding product specifications and compliance with those specifications shall be verified by an independent inspection body;
(c) the schemes shall be open to all producers;
(d) the schemes shall be transparent and assure complete traceability of the products;
(e) the schemes shall respond to current and foreseeable market opportunities.
2. Support may be granted to farmers participating in a quality scheme only if the quality product has been officially recognised under the Regulations and provisions of the Community schemes or quality schemes recognised by a Member State, as provided for in point (a) of the first subparagraph of Article 15.As regards the quality schemes established under Regulation (EC) No 510/2006, support may only be granted in respect of names registered in the Community register.
3. Where support for participation in a quality scheme under Regulation (EC) No 834/2007 is included in a restructuring programme, the fixed costs resulting from the participation in that quality scheme shall not be taken into account in calculating the amount of support in the framework of an agri-environment measure to support organic farming.
4. For the purpose of point (b) of the first subparagraph of Article 15, ‘fixed costs’ means the costs incurred for entering a supported quality scheme and the annual contribution for participating in that scheme, including, where necessary, expenditure on checks required to verify compliance with the specifications of the scheme.
Article 17 
Support for the measure referred to in Article 15 shall be limited to a maximum amount of EUR 3 000 per holding per year.
SECTION 4
Article 18 

1. Support for the measure referred to in Article 7(1)(d) of Regulation (EC) No 637/2008 shall concern cotton covered by the quality schemes referred to in Article 15 and products mainly produced with this cotton.
2. Information and promotion activities supported under Regulation (EC) No 3/2008 shall not qualify for support.
Article 19 

1. The information and promotion activities eligible for support shall be activities designed to induce consumers to buy cotton covered by quality schemes included in Article 15, or products mainly produced with this cotton.Such activities shall draw attention to the specific features or advantages of the products concerned, notably the quality, specific production methods, and respect for the environment linked to the quality scheme concerned, and may include the dissemination of scientific and technical knowledge about those products. Such activities shall include, in particular, the organisation of, and/or participation in, fairs and exhibitions, similar public relations exercises and advertising via the different channels of communication or at the points of sale.
2. Only information, promotion and advertising activities in the internal market shall be eligible for support.Such activities shall not incite consumers to buy a product due to its particular origin, except for products covered by the quality scheme introduced by Regulation (EC) No 510/2006. The origin of a product may nevertheless be indicated provided the mention of the origin is subordinate to the main message.Activities related to the promotion of commercial brands shall not be eligible for support.
3. When activities referred to in paragraph 1 concern a product included in the Community quality schemes established under Regulation (EC) No 834/2007 or Regulation (EC) No 510/2006, the Community logo provided for under those schemes shall appear on information, promotion and/or advertising material.
4. The Member States shall ensure that all draft information, promotion and advertising materials drawn up in the context of a supported activity comply with Community legislation. To that end, beneficiaries shall transmit such draft materials to the competent authority of the Member State.
Article 20 
Support for the measure referred to in Article 18 shall be limited to 70 % of the cost of the activity.
SECTION 5
Article 21 
Aid for the measure referred to in Article 7(1)(e) of Regulation (EC) No 637/2008 shall be granted on the basis of objective and non-discriminatory criteria, for the losses incurred including the loss of value of specialised harvest machinery, which can not be used for other purposes.
Article 22 

1. Member States shall determine the level of aid to be granted under the measure referred to in Article 21. This aid shall not exceed the losses incurred and shall be limited to a maximum amount of EUR 10 per tonne for the quantity of unginned cotton harvested under contract in the marketing year 2005/06, that was delivered to a ginning factory subject to dismantling as provided for in Article 10.
2. Member States shall ensure the beneficiaries of the support comply with the criteria listed in Article 7(2)(d) of Regulation (EC) No 637/2008.
CHAPTER III
Article 23 
This Regulation shall enter into force on the third day following its publication in the Official Journal of the European Union.
It shall apply from 1 January 2009.
This Regulation shall be binding in its entirety and directly applicable in all Member States.Done at Brussels, 18 November 2008.
For the Commission
Mariann FISCHER BOEL
Member of the Commission
ANNEX
(1 000 EUR)
Member State:
Date of communication:
Amended table: Yes/No If Yes, number:
 Financial year
Measures Regulation (EC) No 637/2008 Year 1 (2010) Year 2 (2011) Year 3 (2012) Year 4 (2013) Total
Dismantling Article 7(1)(a)     
Investments Article 7(1)(b)     
Quality schemes Article 7(1)(c)     
Information and promotion Article 7(1)(d)     
Machinery contractors Article 7(1)(e)     
Total     