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COM (85) 443 
 
 
 
Vol. 1985/0172 
  
 
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Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this f ile is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 198 3 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 27 .9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
der genannten Verordnung freigegeben.  
COMMISSION OF THE EUROPEAN COMMUNITI
C0M(85) 443 fin a l  
Brussels, 30 July 1985
CO M M UNICATION B Y  TH E COMMISSION T O  TH E CO UNCIL
Establishment a system of the Stabex type for the least-developed  
countries which are not signatories to the Lom é Convention
C O M (85) 443 fin al

-  1 r / i n
Communication from the Commission to the Council
-1-
I .  Background
1. The September 1981 Paris Conference on the least-developed countries called  
on developed countries "to study ways and means of helping the least-  
developed countries to offset the damaging effect of injury caused by loss of  
foreign exchange earnings arising from fluctuations in the la tte rs ' exports of  
primary commodities" and to report to U N C TA D  VI (see § 83 of SNPA).
The Community responded by expressing its  willingness "to examine in a  
constructive s p irit the most appropriate means of meeting this request,  
particularly by studying what arrangements could be m ade and how  to extend to  
the least-developed countries not party to the Lomé  I I  Convention dispositions  
sim ilar or equivalent to those of Stabex."
2. During the preparations for the Belgrade Conference the Commission proposed  
that the Community and its  Member  States should:
-  appeal to other commodity-importing countries or groups of countries to set  
up a commodity export earnings stab ilizatio n  system for the least-developed  
countries;
-  in that connection, indicate the Community's intention of extending Stabex  
concurrently to least-developed countries not covered by the Lomé  
Convention.
A s the coordination meetings which took place before and during U N C T A D  VI  
(June 1983) failed  to produce a Community position it  was agreed to
postpone any decision on the matter to a later date.
3. The question was broached afresh during the discussions on the  
Communication to the Council concerning the answer to be given to the U N C T A D  
Secretary-General pursuant to paragraph 4 of Resolution 157 (V I), but again no  
progress was m ade on the formulation of a common  position.
Accordingly, it  was decided to postpone discussion of the issue once more  
u n til it  could be examined in the light of:
-  the implications of the Lomé  I I I  negotiations for the form and content of  
the system;
-  the position of the main commodity importers regarding the establishment of  
a compensation system along the lines of Stabex for the least-developed  
countries.
C0M(83)736 fin a l, 12 December 1983.

-2-
4. The Community and its  Member States w ill certainly be called on to state  
their position on this question at the mid term review of the Substantial N e w  
Programme of Action (SNPA) which is due to take place in Geneva under  the  
auspices of U N C T A D  from 30 September to 11 October.
By that time, therefore, they w ill have to have worked out th eir common  stand.
5. This Memorandum  is intended to provide a basis for that work. To that end  
it  reviews:
-  the implications of a system extended as envisaged, with particular regard  
to coverage and costs (Chapter I I ) ;
-  the developments which have taken place since early December 1983 both in  
Stabex it s e lf, modified as a result of the Lomé  renewal negotiations, and  
in the attitude of the other main commodity importing countries (Chapter  
IV ).
Chapter IV outlines the Commission's proposals for a common  position in the  
light of these considerations.
I I .  Implications of an extended Stabex
(a) Geographical spread
6. Annex I ,  which lis ts  the countries concerned using the commonest  
international cla s sific a tio n , shows that:
-  Stabex already covers 27 of the 36 least-developed countries on the U N  lis t ;
-  of the 27 least-developed ACjp States covered, eight now  benefit from the  
"a ll destinations" derogation ;
-  the extended Stabex would take in another nine countries: Afghanistan,
Bangladesh, Bhutan, H a iti, Maldives, Nepal, Laos, the Yem en Arab Republic  
and P D R  Yemen.
7. In the discussions which have gone  on within the O E C D  and U N C TA D  as well as
the Community, some  delegations have raised the possibility of using a wider  
classification taking in not only the least-developed countries but those  
low-income countries (per capita G N P  under $500) most heavily dependent  on 
commodity exports i.e . with commodities accounting for 50%  or more of their  
to ta l exports. A s w e see from Annex I ,  38 countries f u f l f i l  those two
c rite ria , 29 A C P  and nine others.
Which extends the Community-financed system to cover loss of earnings on  
these A C P  countries’ exports to other destinations as well (e.g. the United  
States).

8. Using this formula to extend Stabex would mean:
-  the lis t of additional countries would s t i l l  include six of the nine least-  
developed countries listed in §6 -  Afghanistan, H a iti, Maldives, Nepal,  
Laos and the Yem en Arab Republic;

-3'
-  the other three c o u n t."a .- -  Bangladesh,,.  Bhutan and P D R  Yem en -  would not
be covered;
~ three countries which are not on the least-developed lis t would be included:  
Burma, Kampuchea and Sri Lanka.
9. Since the whole formula is subject to debate (why $500 rather than $ 60 0 ,  
why 50% dependence  rather than 30%  or 80%?), w e propose to keep to the lis t of  
least-developed countries drawn up by the UN, which is also going to be used  
for the purposes of the SNPA  mid-term review.
(b) Product cover
10. W hen Lomé  I I I  com es into force, Stabex cover w ill extend to 48 products  
(see the lis t in A rticle 148 of the Convention, at Annex I I ) .
The lis t includes the main commodities exported by the nine possible  
beneficiaries of an extended scheme (notably coffee, cocoa, cotton, tea and  
hides and skins), with the exception of jute and derived products.
11. Exports of jute and jute-based products are so v ita l to a country like  
Bangladesh that there is l i t t l e  point in extending the scheme as proposed  
unless they are covered too. Our simulations (see below) were based on this  
broader coverage.
(c) Financial -mplications
12. The figures used here are the result of the simulations included in the  
study carried out by the Commission in October 1983, which is appended  to the  
December 1983 Communication to the Council mentioned above (C0M(83)736 fin a l).
The simulations were based on the following assumptions:
-  product coverage: the 45 products covered under Lomé  I I ,  plus jute and
jute-based products;
-  dependence  and fluctuation thresholds: the "reducer" effect produced by
application of these thresholds was ignored.
13. The time series used was 1974-1981, for the ten-member Community1. At  
this stage it  is not worth changing the input, given that:
-  the three new  products added under Lom é I I I  (dried bananas, mangoes and shea  
nut o il) are marginal in value terms for both the A C P  States and the other  
least-developed countries;
exclusion of the effects of the dependence and fluctuation thresholds (even  
with the thresholds reduced from 2 %  to 1.5% under Lomé  I I I )  "rounded up" the  
in it ia l estimate for the overall loss figure, which s t i l l  seems s u ffic ien t.
I f  the Community decides to go ahead with extending the system to non-ACP  
least-developed countries the Commission w ill naturally undertake more  
detailed calculations, i f  only to get a clear picture of the commitments which  
the Twelve w ill be asked to underwrite.

-4 -
14. The simulations produced range estimates of the to tal losses which over  
a five-year period would have to be partly compensated by the various  
importing countries or groups of countries.
The figures are given in condensed form in the table in Annex I I I .  The main  
points to note are as follows:
-  the estimate for least-developed countries' potential losses over five years  
on exports of the products covered ranges from $1220m  to $1550m;  
approximately half of that risk ($570m/$750m) is already covered by the  
Community Stabex system;
~ the remaining $650m/$800m of risk breaks down as follows:
. risk on A C P  least-developed countries’ exports to desintations other than  
the Community ($489m/$588m), which accounts for about  75%;
. risk on non-ACP least-developed countries ($161m/$212m), accounting for  
the remaining 25%;
~ note that the risk on this la tte r category (non-ACP least-developed  
countries) is:
. n il for two countries (Bhutan and Maldives),
. fa irly  insignificant for four other countries (Laos, Nepal and the two  
Yemens),
2. significant for Bangladesh, Haiti and Afghanistan.
Roughly half the risk ($90m/$110m over five years) would be borne by the  
Community and its  m ember States.
15. Extending Stabex cover to the least-developed countries, as envisaged in  
the SNPA, would therefore involve two things:
-  A n extension of Community Stabex coverage proper to least-developed  
countries not included in the Lomé  Convention, i.e . to the nine countries  
already id e n tified , three of which would have a significant incidence:  
Bangladesh, Haiti and Afghanistan. The m axim um  additional risk over five  
years is put at between $90m  and $110m.
-  Acceptance by other importers w illin g  to engage on the scheme of the risk  
represented by least-developed country exports (non-ACP and ACP) going to  
destinations other than the Community.
More, in fa c t, since eight of the 27 least-developed A C P  States have been  
accorded the "a ll destinations" fa c ility ; they are Burundi, Cape Verde,  
£omoros, Ethiopia, Guinea Bissau, Lesotho, Rwanda and 1-,'sste· n Se.sor·
See footnote 2 on page 7 for the p o litic a l considt-rari· _ ·! ·'<  .  -/T
Afghanistan.

c?^
14» These t m '«Sana«*'?c«irUt '■£*'inif adueett.  < * f parft^et sthemea,
enetegy with  the «yste# c » f; Phraf«p^^&i, w ith;;fhr;'C«iNiMifi^Member States extending the system <m their own initiative · :

-5-
to the countries concerned and other interested importing countries applying  
it  to a ll least-developed countries.
Flexible s ta tis tic a l and administrative cooperation arrangements could easily  
be introduced to ensure the coordinated and uniform (for the beneficiaries)  
application of the system.
I l l . Changes in the operation of the system following the signing of the third  
Lomé  Convention
17. O ne change has already been indicated in §13 above: the inclusion of three  
new  products (dried bananas, mangoes and shea nut o il) ;  this should have no  
significant impact on the financial estimates which have been drawn up.
The same  applies to the lowering of the dependence  and fluctuation thresholds  
mentioned in the sam e paragraph.
18. The other major change agreed during the negotiations has to do with the  
use m ade of the compensatory transfers:
-  there w ill be greater advance coordination on the use of transfers to  
improve production and/or marketing in the sectors which gave rise to the  
losses;
-  more detailed reports w ill be provided regarding the follow-up of measures  
or programmes carried out using the money.
19. The Commission recently gave its  O E C D  partners an account of this change  
during the preparations for the Fourteenth Special Session of the U N C T A D  Trade  
and Development Board (TDB), devoted to compensatory financing, and held  
behind-the-scenes discussions with them during the session its e lf. The  
reactions of those O E C D  members interested in giving constructive  
consideration to the establishment of a Stabex-type mechanism for least-  
developed countries suggestss that the improvements to the system have  
rendered it  a more attractive p o ssib ility for them.
IV. Attitude of the main importers
20. The Fourteenth Special Session of the U N C TA D  T D B  which took place from 10  
to 15 June was devoted to the discussion of compensatory financing; it  
provided an overview of the position two years on from the Belgrade Conference  
(UNCTAD VI) and almost four years after the Paris Conference (SNPA).
-  The United States, Canada and the Group D  socialist countries have  
absolutely no interest in setting up any kind of Stabex mechanism for either  
developing or least-developed countries.
-  Australia and N ew  Zealand had reservations which at this stage relate to  
actual financing arrangements rather than the principle its e lf.  
Nevertheless, when i t  com es to statements and decisions they w ill probably  
com e down on the side of the previous group.

-6-
-  Japan said it  w » r. prepared to giv* further consideration to the matter/  
though its  reai. incen.ic.are  not clear at the- moment.
-  The Nordic group/ Austria and Switzerland (£FTA members)/ on the other hand/  
showed a distinct interest in following up the idea.
21. Looking at this lir.e-up in relation to the figures in Annex  Ï I I ,  the  
implications are as follows:
-  while the fa ilu re  of the United States to join in leads to a significant  
loss of cover ($270m/$340m out of the to tal $650m/$800m uncovered),  
Australia, Canada and N ew  Zealand are minor absentees, accounting together  
for no more than $50m/$65m;
-  the prospect of participation by the EFTA countries, which account together  
for $100m/$'!25m, is important, since they represent cover of more or less  
the sam e order of magnitude as the extra contribution which would be  
provided by the Community and its  Member States extending Stabex to least-  
developed countries other than A C P  States;
-  Japan could also be a significant participant ($140m/$160m).
22. It  is important to remember the possible advantages of the approach  
envisaged for the least-developed Lom é countries themselves; they already have  
cover under the Community Stabex for $570m/$750m, but that leaves $490m/$590m  
of exposure , a risk which would be reduced by:
-  $210m/$250m i f  the EFTA countries and Japan joined in , or
-  $90m/$110m in the event of participation by the EFTA countries alone.
23. The Commission departments concerned have just newly been  in touch again,  
inform ally, with the EFTA countries. They found  that:
-  every country consulted appeared, prima fa c ie , to favour of the approach  
envisaged;
-  i t  is not certain that they will  be in a position to give a firm answer by
the S N P A  mid-term review in October -  a Commission in itia tiv e  on that
occasion, however, would probably provide a strong spur  towards a decision  
by the capitals concerned;
- i f  they com e out in favour of the p rinciple, the EFTA countries would be  
keen to collaborate with the Commission in studying fle x ib le  administrative  
cooperation arrangements for the operation of the system;
-  under certain conditions, which would have to be studied in d e ta il, it  might  
be worth whUe when the time comes to present the p arallel action by EFTA  
and Community countries as the result of a coordinated EEC-EFTA approach  
inspired by the s p irit of the Luxembourg Declaration.

-7-
V. Conclusions and proposals
24. In the light of the considerations set out above, should the Community,  
pursuant to undertakings given in Paris in 1981, pronounce in favour of  
extending Stabex to non-Lomé  least-developed countries, there seems l i t t l e  
point in its  making such a proposal conditional on the intentions of the other  
importing countries:
-  the United States, Canada and the Group  D  countries would not follow a  
Community lead, and neither, in a ll probability, would Australia, N ew  Zealnd  
or Japan; the Community's conditional offer would be seen, rig h tly , as a  
covert refusal;
-  such e xp lic it conditionality would probably embarrass our EFTA partners,  
whereas a unilateral unconditional offer would be lik e ly  to e lic it a faster  
and more positive reaction from both them and Japan.
25. Other considerations which emerge are these:
-  the cost to the Community of extending Stabex to least-developed countries  
not covered by the Lomé  Convention would not be high, of the order of 25-30m  
E C U  a year;
-  participation by the EFTA countries and/or Japan in the scheme envisaged  
would produce significant additional benefits to least-developed countries  
already covered by the Lomé  Convention;
-  the implementation of p arallel schemes by the importers concerned would not
pose any major problems of organization or coordination, either in
in s titu tio n a l or administrative terms.
26. W e  accordingly propose that the Community and its  Member  States should  
take the opportunity offered by the mid-term review of the SNPA  to be held in  
Geneva in September/October to:
-  announce  th e ir intention of u n ila te ra lly  establishing a system of the Stabex  
type of the third Lom é ConventionHo the benefit of the least-developed countries  
which are not already covered, and to that end of contacting the countries  
concerned 2 to reach agreement with them on the practical details of the  
scheme's implementation ;
-  appeal to other commodity importing countries to participate in the  
in itia tiv e  by setting up p arallel schemes;
-  indicate their willingness to join with other importers interested by such  
an approach in working out appropriate administrative cooperation  
arrangements for the coordination and implementation of such parallel  
schemes.
2lncluding jute and jute products in the case of Bangladesh.
This statement will  have to be carefully worded to take c-:cc-n* of the 
p o litic a l problem of Afghanistan.

27. If thi- pi opc*« is set oat'le thU above paragraph »re adopted we rteétj to 
«nàu·r.f-vtfeetriitifâ»ieg  ffcr th* icfìoÀ  i» availab le in : ‘  doe course ie  tb»*· foret-of  
appréprfÿtien*'ΐιι^βΓ· a s^e.e.ia.L. new feudfst heading (Artiet« £3?) ir» Cti^t«r 9} 
(Cooperatdan with ftod-asnocistaé ëe^ütoping esuntriés).  V ΐ

Financement compensate! re  
pays à faib le revenu  
pays moins avancésBruxelles, le 13 mai 1985  
Annexe I1
- pays dépendant des exportations de produits de base
Pays à revenu  
<500 «(1980)P M A 36 pays
i cbnt P M A  non A C PI dont PM A/ACP
50 pays 9 pays 27 paysPays A
dépendance>50%
38 paysPays à faib le revenu et  
dépendance.) 50X38 pays do. ·  
28 P M A
9pays(dont 6 P M A ) 29 pays(dont 22 P M A )
Avgbanistan  
Bangladesh  
Bénin  
Bbutan  
Birmanie  
i  Botswana  
Burkina Faso  
Burundi  
C ap Vert  
Com ores  
Djibouti  
Egypte  
Ethiopie  
Gam bie  
G hana  
Guinée
Guinée Bissau  
iGui née Equat.  
Haïti  
Inde
Indonésie  
:  KampuchiaDém.  
Kenya  
.Kiribati  
;  Lesotho  
tedagascar  
te lawi  
teldives  
Mali
Mauritanie  
M ozam bi queAfghanistan
Bangladesh
Bhutan
Haïti
teldivesBénin
Botswana  
Burkina Faso
Burundi
C ap Vert
Comores
Djibouti
Ethiopie
Gambie
Guinée
Guinée Bissau
Guinée Equat.
Lesotho
Malawi
te liAf ghani stan  
Bénin
?
Birmanie
Burkina Faso  
Burundi  
Cap Vert  
Comores
Ethiopie
Gambie
Ghana
Guinée
Guinée Bissau
7
Haïti
Kamp. Dém .  
Kenya  
Ki ri bâti
Madagascar  
te lawi  
teldives  
te li
teuritanie
MozambiqueAfghanistan (*)
7
Birmanie
I  H aïti 00
Kamp. Dém .
teldives (*)Bépin (*)
Burkina FasoOO  
00 Burundi
Cap Vert
Com ores00
00
Ethiopie (*)  
00 Gambie  
Ghana
Guinée OO
i  | Gui née Bissau |(*)
Kenya
K iribati
tedagascar  
Malawi (*)
te li
teuritanie
Mozambique
Les pays figurant dans une cartouchei  ~ T  |sont des A C P  tjénéficiant d e  Ija  dérogation toute.
I j
m arqués d'un astérisque sont des P M A .destinations 1
L e s  pays figurant dans I 3 dernière colonrje de droite et

ü  *
-  2 -
Pays à revenu  
<500 *(1980)j P M A
i36 pays Pays à
dépendance>50%Pays à faib le revenu et  
dépendance > 50X38 pays dont  
28 F M A
I dont P M A  non A C P dont PM A/ACP dont non A C P dont A C P
50 pays !  9 pays 27 pays 38 pays 9pays(dont 6 PM A ) 29 pays(dont 22 PM A )
Népal Népal - Népal « p a l (*) -
Niger - Niger Niger - Niger (*)
Ouganda - Ouganda Ouganda - Ouganda (*)
Pakistan - - - - -
R C A - R C A R C A - R C A (*)
Rép. Laô Rép. Lao - Rép. Lao Rép. Lao(*) -
R.U. Tanzanie - R.U. Tanzanie R.U. Tanzanie - Rép. Tanz (*)
Rwanda - Rwanda Rwanda - 1  Rwanda (*)
Sam oa - Sam oa Sam oa - 1  Sam oa j <*)
Sao Terne et Pr - Sao Tom e et Pr Sao Tom é et Pr - Sao Tom e et Pr (*)
Sierra Leone - Sierra Leone - - -
Somalie - Somalie Somalie - Somalie (*)
Soudan - Soudan Soudan - Soudan (*>
Sri Lanka - Sri Lanka Sri Lanka -
Tchad Tchad Tchad - Tchad (*)
Togo - Togo Togo - Togo (*)
Yem en Yem en - Yem en Yem en (*) -
Yem en dém. Yem en dém. - - - -
Zaïre
!
1
1i
i
!Zaïre Zaïre
1\
I
I

ESTIM ATIO N D E S  P E R T E S  D E  R E C E T T E S  P O TE N TIELLES S U R  U N E  P E R IO D E
D E  C IN Q  A N S  (E N  MILLIONS D E  $, V A L E U R  1981)  
(pays d u  groupe D  n o n  compris)
\  A,
TotalAfgha­
nistanBangla­
deshY e m e n Y e m e n Sous-total Sous-total Pertes Pertes
tous P M A Buthan Haïti Laos Maldives N epa l (arab (peoples' P M A  n o n P M A /A C P couver- couvertes
(arrondi) rep. ) rep. ) A C P
(arrondi) (arrondi)
1tes par-  
système  
exi startp a  r
extension  
d u  systèm
'  . C E E 660/860 22/30 38/47 0 15/22 0,3 0 7,5/8,5 2/3 2,9/3,2 90/11 0 570/750 570/750 90/110
U S 270/340 2/4 11/14 0 24/35 0 , 8 0 2,7/3,1 0,5 0,3 40/60 230/280 - 270/340
Japon 140/160 2/3 7,5/8 0 0,5 2/3 0 0,3 2/3 1,5/1,7 15/20 125/140 - 140/160
. E F T A 100/125 1,2/2 , 8 2,2/2,3 0 3,9/4,5 0 0 0 0,5 1/5 11/13 89/112- 100/125
(- Pays nordiques) (40/50)" (0) d , - ) (0)(1,2/1,6)(0) (0) (0) (0,5) (0,5) (3/4) (37/46) (- ) (40/50)
(- Suisse) (40/50) (1,2/2)(1,2/1,7 (0)(2,2/2,4) (0) (0) (0) (0) d  / “) (6/7) (34/43) (-) (40/50)
(- Autriche) (20/25) (0,8) (0) (0) (0,5) (0) (0) (0) (0) (0) (2) (18/23) (-) (20/25)
> . Australie 20/25 0 2/2,5 0 0 0 0 0 0 0 2/3 ” >8 / 2 2- 20/25
. Canada 20/25 0 2/4 0 0 0 0 0 0 0 2/4 18/21- 20/25
Nouvelle'Zélande 10/15 0 1 / 2 0 0 0 0 0 0 0 1 / 2 9/13» 10/15
T O T A L 1220/1550 27/40 64/80 0 43/62 3/4 0 1 0 / 1 2 5/7 6/7 161/212 1059/1338 570/750 650/800
1220/1550 1220/1550
- NXX