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DOCUMENTS "COM"
COM(82)150
Vol.1982/0047

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(82)150final
Brussels.31march1982
TEESYSTEMFORTHESTABILIZATION OPEXPORTEARNINGS
APPLICATION YEARS1980AND1981
(Communication fromtheCommissiontotheCouncil)
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COM182)150final

Cervv^
Thesystemforthestabilization ofexportearnings
Application years1980and1981
(Commission communication totheCouncil )
Itwasnecessary in1981,inrespectofthe1980application year,forthe
firsttimesincetheinception ofthesystemforthestabilization ofexport
earnings,tocutbackthetransfers requested bytheACPStatesbecauseof
lackofavailable funds.
Inspiteofthisproblem,thankstoclosecollaboration betweentheACP
StatesandtheCommunity,' thesystemoperated inaccordance withtheCon-
I i
vention. f
« s
Contrary towhatwas,originally expected regarding the1981application year,
asituation hasagainarisenwhichwillmakeareduction oftransfers inevi­
table,becauseofthedifficulties someACPStatesarehavingwithproduction
oftheproducts covered bythesystemandwiththeirsituation ontheworld
market. i .i
I
Facedwiththissituation,theCommission hasre-examined thewholeproblem
ofinadequate funds,notablyinthelightoftheideasputforwardfor
releasing additional lamounts bytheACPChairman atthemeeting on19June
1981oftheACP/EECCommittee ofAmbassadors ^,whichhadthetaskofdeciding
onthecut-backs totransfers .Theideaswereasfollows :
ι
a)tohaverecourse totheoverallallocations forfinancial andtechnical -
cooperation under^the Lom6Convention ;
b)tohaverecourse toemergency aid(Article 137oftheConvention);
c)voluntary contributions fromtheMemberStates;
»
d)thepossibilities offered byArticle 35oftheLom£Convention ,which
governstheprocedure tofollowfortheuseofanybalanceremaining in
1985.* ' .
TheCommission cametothefollowing conclusions .
r
!y

2.
4.UnderthetermsofArticle 95(1)oftheLom6Convention ,theamountofthe
tCommunity'sfinancial assistance undertheEuropean Development Fund,
excluding EIBloansfromitsowncapitalresources (685million ECU)
(Article 95(2)(1),is4,542million ECU(1),whichbreaksdownasfollows :
-2,457million ECU(1X2),earmarked forthenational programmes (Arti­
cle95(1)(a),
600million ECU(1),earmarked forregional programmes (Article 95(1)(a)
*andArticle 133(2>,
200million ECU(1),earmarked foremergency aid(Article 137),
175million ECU(1),"earmarked for'interest ratesubsidies onloans
proivided bytheEIBfromitsownresources (Internal
Agreement ,Article 4), > »
280million ECU(1)i,earmarked asriskcapital (Article 95(1)(a),
-550million ECU(1),earmarked forStabex(Article 95(1Mb), i.
280million ECU(1),earmarked forSysmin(Article 95(1)(c).
i i
5»The2,457million ECUintended forthenational programmes wasfullyalio-
catedamongtheACPStateswhentheindicative programmes weredrawnup.
6.The600million ECUwhichArticle 133(2)earmarks forregional andinter­
regionalprojects ,,inaccordance wjththeobjectives setoutinArticle133
(1),hasbeenformally ^allocated ;inaddition^thisamountwasallocated
onthebasisofabroadregional breakdown whenindicative programming was
I, .«carried out.
ι
7,Thefigureof200million ECUrepresents theceilingfixedbyArticle 137
foremergency aid;thesefundsmustremainfullyavailable untiltheend
oftheConvention period.
i
Furthermore ,.Article 137(6)stipulates that"emergency aidshallnotbe
usedfordealingwiththeharmfuleffectsoftheinstability ofexport
earnings,whicharethesubjectofTitleXI".L
(1)Amounttobeajustedaftertheratification ofActofAccession of
Zimbabwe totheLom6Convention .
(2)Including 504million ECUearmarked forspecial I6ans.
)
Κ
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ti

3.
Even ifoperations onthebasis ofArticle 137andStabex transfers some­
times take place atthesame time ,theobject ofthese operations hasalways
been distinct :intheformer case ,theobject istohelp toresolve
"serious economic and social difficulties ofanexceptional nature resul­
ting from natural disasters ..." and inthelatter case theobject isto
compensate foraloss ofexport earnings .
8.The 175million ECU,themaximum amount which Article 4ofthe Internal
Agreement lays down forthefinancing ofinterest rate subsidies onEIB
loans ,pursuant toArticle 104oftheSecond Lom6 «Convention ,must bekept
forthat purpose until theend oftheConvention period .
V.
r . . .. .I . . ... ?9.The 280million ECU isatthecomplete disposal oftheEIBuntil the end of
theConvention period .c 1
'C <
10.theStabex andSysmin appropriations arealso earmarked forspecific objec­
tives until theend oftheConvention period .
11.Itistherefore apparent that alltheappropriations oftheLom4 Convention
have been allocated .
II! !
Should there beanyresidual amounts avai lable ,.under theheading ofemer­
gency aid,interest rate' subsidies ,risk capital ,Stabex ofSysmin ,itwill
notbepossible toreallocate them toother purposes until after 1March 1985 .
t
12.With particular reference toStabex ,thereduction oftransfers isameasure
expressly provided for inArticle 34ofthe Convention .Thenegotiators <
knew what they were doing when they adopted this measure ,given thenature
"oftheproblems which theStabex system isdesigned tocope with ,namely
theconsequences ofadrop inexport earnings resulting from afall in
prices ,areduction inquantities oracombination ofboth these factors .
Inthis context ,itwill berecalled that thesystem automatically takes
account ofallfalls inearnings derived from theproducts included inthe
list ;thesystem isasneutral asregards thebeneficiary state asasregards
theproduct .
Theestimation oftheresources necessary forfive years ofapplication was
'carried out inaccordance with amethod that wssiasprecise aspossible ^,which
though admittedly involving amargin of hadproved itself under i
Lom4 I(1).
id)Asimilar situation asregards thescale oprequests did "infsct arise
under Lom6 X,but fcH®resources available deluded amounts left over frci
fe®pfilss it*sheif &fttiret >.

A.-
Nevertheless ,wearedealing herewithaforecast inanessentially uncer­
tainarea,whereaberrant phenomena ,suchastheconjunction ofreference
yearscombining recordquantities andveryhighprices,canarise.
However,undertherulesofoperation ofStabexthebadyearsarereflected
inthereference level,whichreducesthislevelproportionally andthereoy
reducesthetransfers tobepaidinsuccessive yearsofapplication .This,
combined withthegererally fairlystrongprobabilityof arecovery in
pricesafteraperiodofdecline,enables ustotakeasaprobable working
hypothesis thatasfromtheyearofapplication 1982aperiodofsmaller
transfers probably amounting tolessthantheannualinstalments available
willfollowaperiodofhightransfers .
%
' »••
13.Thislatterfactorisoneofthereasons behindtheexistence ofArticle 35
oftheConvention whichstipulates thatbeforetheexpiryoftheConvention
period,theACP/EECCouncilwilldecide"ontheuseofanybalance remaining
fromtheoverart amount"earmarked fortheStabexsystem.
Underthisprovisionitwouldbepossible toallocate anybalanceavailable
attheendoftheConvention totheACPStateswhosetransfers havehadto.
bereduced.Thisallocation ,whichwouldtakeaccountofthereductions ,
shouldtaketheformofalump-sumallocation basedonaspecialdecision of
theACP/EECCouncilofMinisters .
*
14.Ifweworkonthebasisoftheprinciple thattheoverallStabexallocation
intheSecondLom£Convention isinlinewiththeoverallrequirements
durinqthefiveyearsoftheConvention period,itisclearthat
thedifficulties encoutered aretheresultofanexcessively
-strictdivision oftheallocation intoannualinstalments ,aslaiddown
Article 32(1).
15.TheCommission hastherefore examined thepossibilities ofintroducing
greaterflexibility intoArticle 32<1>,whichlaysdownthattheoverall
amountof550million ECUforfiveyearsistobedividedintofiveequal
annualinstalments . *
:

5.-
Itwould appear that such increased flexibility could only beobtained via
anamendment totheConvent ion,anamendment that would have tobeapproved
bywayofparliamentary ratification ,given that theprovisions inforce
donotauthorize the ACP/EEC Council totake adecision ofthis kind .
t
Thesame argument applies toArticle 34§1which sets alimit of20%on
theanticipatory drawing which canbemade onthefollowing year 'sinstalment ,
This procedure would thus involve therenegptiation oftheConvention during
itsperiod ofapplication .Such astep would create aprecedent which the
Community hasalways refused tocountenance .
ι
ς * I ι
* •*
.r \
t i
I
16.The lessons that canbedrawn from theoperation ofthesystem might encou -
I »
rage theCommission topropose ,forthefuture ,that thepossibility of
»
anticipatory drawing onthe Stabex instalments for the following year be
raised toahigher figure than the 20%laid down in «Article 34 <15ofthe
♦ . .
present Convention .Thefinancial provisions ofSysmin ,forexample ,which
t .!
arelargely based onthose governing Stabex /,permit drawings ofuptoSOX
t
ontheinstalment ^forthefollowing year .
M
Another possibility would be ;toprovide for adifferent phasing oftheannual
, >instalments ,onadegressive basis ,with larger instalments atthebeginning
oftheperiod .
Measures such astheones nowbeing suggested could within afuture
Convention provide the ,.means toachieve theindispensable reconciliation
between thenecessarily rigid financial rules and theneeds arising from
economic conditions .
*
* *

6.
17.Withregardtotheyearofapplication 1980,thefirstyearinwhichunex­
pecteddifficulties occurred/itwouldappearthatnoadditional resources
canbereleased tohelpStabexfromtheotherfundswhichtheLom£Conven­
tionhasallocated forfinancial andtechnical cooperation withtheACP,
Atthesametime/itwouldseemriskytosetaboutamending theSecond
Lom6Convention toenableadditional drawings tobemadeonthefuture
annualinstalments .
Inthosecircumstances ,andsincethereduction inthetransfers forthe
yearofapplication 1980hasbeenaccepted,theCommission considers that
itwouldbeinappropriate (togobackonthatmeasure,whichconstitutes ,
acorrectapplication oftheprovisions oftheConvention .
: • .h
Accordingly ,theonlysolution offered bytheConvention isthatembodied
I
inArticle 35,namelytheallocation .ofthebalanceoftheStabexsystem
attheendoftheConvention period. ^
fc
**
18.Ontheotherhand,theoccurrence intwosuccessive yearsofliquiditydiffi­
cultiesinthesystemcouldthreatentounderlineitscredibility andtherefore
constitutes anexceptional situation whichmakes ^itdesirable tofindan'
original solutionforthtfyearofapplication 1981=
II
*
**
19.Inthelightoftheforegoing,itisclearthatsuchasolution canonlybe
basedonacontribution fromtheMemberStatestothesystem'sfunds.
Theeffortrequired oftheMemberStatescouldbemadeeasierby
'drawingfirstlyontheamountsavailable fromtherepayment ofspecialloans
andsecondly ontheEDF's*cashresources ., *
Itcouldalsobelimitedbyusingtheprovisions -ofArticle 21(4)ofthe

7.-
Convention (1)andalso byfixing sproportion that will notbecovered .
20.Onthis assumption /themachinery could beasfollows fortheyear ofappli­
cation 1981 :
I
(a)Asforthepreceding year ,themethod forthereduction oftransfers
would beleft tothe initiative ofthe ACP States .
(b)Aninitial compensation forthereductions would beprovided forthose
ACPStates which have debts owing tothe Stabeic system which will bethe
subject ofadecision tobemade bytheACP/EECCouncil ofMinisters in1982 :
the Council will beasked toconsolidate thedebts ofthe ACP States requesting
transfers for 1981 bycharging them totheir transfer requests .
> I
The balance ofthose debts for 1980 and 1981 would beextended for one year
bythe ACP/EEC Council . <
η
M • 5Since thereplenishment oftheresources available tothesystem viathe
%
repayment ofrepayable transfers isa.basic principle ofStabex ,this deci­
sion could beputforward asparticipation bytheACPIntheeffort to
•* 5
compensate for the reductions .
(c)Thereductions which hadnotbeen compensated for inthis initial stage
would then becompensated for,tothetune of50^(4OXbeing theproportion
i .... . inotcovered )/by»special contribution from theMember States .
21.The contribution from theMember States would bemobilized asfollows :
»
I
I
(1)Article 21<4)oftheFirst Lom6 Convention reads asfollows :
"If/onexpiry ofthefive-year period referred toinparagraph 2/the
resources have not been fully reconstituted ,theCouncil ofMinisters ,
taking into consideration inparticular thesituation ofandprospects
forthebalance ofpayments ,exchange reserves andforeign indebtedness
oftheACPStates concerned ,maydecided that :
-thesums outstanding aretobereconstituted wholly orinpart ,inone
ormore instalments ;
,-rights torepayment ,aretobewaived ". t

8.-
<a>Article 9(1)oftheInternal Agreement stipulates that repayments of
special loans aswell astheproceeds and income from risk capital operations
arecredited totheMember ^States inproportion to ,their contributions tothe
Fund from which the sums arederived ,"unless theCouncil decides unanimous­
ly,onaproposal from theCommission ,toplace them inreserve orallocate
them toother operations ".!
The sums available onthis baiis could beallocated tocompensate for
reductions intransfers subject totheconditions se.toutbelow *
Atthepresent .time ,theamounts available inthe EIB'sbooks total 20.7
*.million ECU,almost allofwhich represents amounts owed tothe sixoriginal
i t
Member States ,since the sums ?nquestion constitute interest payments and
I
capital repayments onoperations carried outunder the Yaounde Conventions .
ι '
Consequently ,itissuggested that the Commission propose totheMember States
toallocate these ?0.7million ECU tocompensate the reductions ofthe transfer .
r
(b)Thebalance ofthesumsrequired toguarantee ^thepayment oftheresidue
onthetransfers could beadvanced totheMember States from theEDF funds ,
onaccount oftherepayments ofspecial loans and risk capital which will occur
asfrom now .TheMember States ,having unanimously decided toallocate these
resources ,within alimit yet tobedetermined ,totheStabex operations for
theyear ofapplication 1981 ,will reimburse the EDFfund using themonies
repaid tothe EIBbyway ofspecial loans and risk capital .
Itappears that the cash advance inquestion could becleared bytheend of
1987 .If,atthat time ,thetotal amount has notbeen reimbursed ,theMember
States will examine theconditions forclearing theEDFfund .
22.AttheendoftheConvention period ,thebalance oftheStabex system would be
.•allocated asfollows :
.v(a)toclear anyoutstanding balance ontheadvance from theEDF,
(b)tooffset thereductions notyetcompensated for-both fortheyear of
application 1980 and fortheproportion notcovered fortheyear ofapplication
1981 .

V
9.-
23.1°conclusion ,theCommission proposes that theCouncil :
-should adopt noprovision tocompensate forthereductions intransfers
fortheyear ofapplication 1980 /thepossibility ofproviding such
compensation attheend ,oftheConvention /using anybalance ofthe
Stabex allocations /remaining open ;
-should ,decide tocompensate foranyreductions intransfers fortheyear
ofapplication 1981 inaccordance with thearrangements setoutabove .
-should take note that the rules and the operation ofthe system should not
lead tothe recurrence ofexceptional circumstances between now and the
endoftheConvention anddecide that forthethree remaining financial
years noexceptional measure shall under anycircumstances betaken .
4
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