The Treaty provides for the establishment of a common agricultural policy covering the agricultural products listed in Annex I to the Treaty.

Certain agricultural products are used in numerous goods not covered by Annex I to the Treaty.

It is necessary to provide for measures under the common agricultural policy and the common commercial policy to take account of the impact of trade in such goods on the objectives of Article 33 of the Treaty and of how measures adopted to implement Article 37 of the Treaty affect the economic position of such goods, given the differences between the costs of procuring agricultural products within and outside the Community and the differences in the prices of agricultural products.

The Treaty lays down that the agricultural policy and the commercial policy are Community policies. It is necessary to establish for certain goods resulting from the processing of agricultural products general and comprehensive rules, applicable throughout the Community, relating to trade in these goods, in order to attain the objectives of the Treaty.

Certain goods not falling within Annex I of the Treaty and listed in Annex II to this Regulation are obtained using agricultural products subject to the common agricultural policy. The charges applied to imports of such goods should therefore, on the one hand, cover the difference between the world market prices and the prices on the Community market for the agricultural products used in their production and, on the other hand, ensure the protection of the processing industry concerned.

Under agreements entered into, the Community is to limit such charges to covering, in whole or in part, differences in the price of agricultural products used in the production of the goods in question. It is accordingly necessary to establish for these goods that part of the overall charge which covers the differences between the prices of the agricultural products taken into account.

In addition, it is necessary to maintain a close link between the calculation of the agricultural component of the charge applicable to goods and that applicable to basic products imported in the unaltered state.

In order to avoid undue administrative formalities, negligible amounts should not be applied and Member States should be permitted to refrain from adjusting amounts relating to a given transaction where the balance of the amounts concerned is itself negligible.

The implementation of preferential agreements should not complicate the procedures applicable to trade with third countries. The implementing rules should therefore ensure that goods declared for export under a preferential arrangement are not in fact exported in accordance with the general arrangements and vice versa.

Under certain preferential agreements reductions are granted on the agricultural components within the framework of the Community's commercial policy. These reductions are established with reference to the agricultural components applicable to non-preferential trade. These reduced amounts must therefore be converted into national currency at the same rate as applied for conversion of the non-reduced amounts.

Under certain preferential agreements concessions are granted within quota limits relating to both agricultural and non-agricultural protection, or non-agricultural protection is subject to reductions as a consequence of such agreements. It is essential that the management of the non-agricultural part of protection should be subject to the same rules as for the agricultural part.

Arrangements should be made for export refunds on certain agricultural products used in the manufacture of goods not covered by Annex I to the Treaty in order not to penalise producers of the said goods for the prices at which they are obliged to procure their supplies as a result of the common agricultural policy. Such refunds may cover only the difference between the price of an agricultural product on the Community market and world market respectively. These arrangements should accordingly be established as part of the common organisation of the markets concerned.

In particular, there should be checks on expenditure on the basis of commitments through the issuing of certificates. However, as regards expenditure which has not been covered by obtaining a certificate or certificates, accounting of such expenditure will continue to be carried out on the basis of refund payments, if necessary in the form of an advance.

The Commission will take into consideration agricultural products processing enterprises as a whole, and, in particular, the situation of small and medium-sized enterprises, taking account of the impact of targeted measures relating to savings on export refunds. In view of their specific interests, small exporters should be exempted from submission of certificates under the export refund arrangements.

The mechanism of agricultural protection provided for by this Regulation may prove defective under exceptional circumstances. That risk may also arise in the context of preferential agreements. In order to avoid in such cases leaving the Community market without defence against disturbances which could result from this, it is appropriate to provide for all necessary measures to be taken rapidly.

The distinction drawn between agricultural products covered by Annex I to the Treaty and goods not covered by Annex I is a criterion specific to the Community, based on the situation of agriculture and the food industry in the Community. The situation may be appreciably different in certain third countries with which the Community concludes agreements. Therefore, provision should be made in such agreements for the possibility of extending the general rules applicable to processed agricultural products not covered by Annex I to the Treaty, mutatis mutandis, to certain agricultural products covered by Annex I to be Treaty.

In order to safeguard the interests of producers of agricultural raw materials, in successive financial years, the necessary appropriations should be made available so that goods not covered by Annex I to the Treaty may benefit fully from a maximum use of the current WTO ceiling. There should also be overall checks, though the procedure laid down should be flexible, on the basis of a regularly revised forward estimate, of the quantities admitted under inward processing arrangements not subject to prior individual checks of the economic conditions (excluding those used for processing, the usual forms of handling or the manufacture of goods not eligible for refunds) and in compliance with the other general conditions relating to the inward processing arrangements. Finally, account should also be taken of the situation on the Community market for the commodities concerned, to ensure prudent management of the said quantities.