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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
SecretorlotCOM(76)93final.
Brussels,nMarch1976.
CONFIDENTIAL
COMMISSION COMMUNICATION TOTHECOUNCIL
onthenegotiations
withEgypt,JordanandSyria
COM(76)93final.

Commission Communication tothsCôtmoil
onthenegotiations
withEgypt,JordanandSyria
1.FollowingthedecisionsadoptedbytheCouncilon20January1976,the
Commissionbegannegotiations withEgypton28-29January,withJordan
on2FebruaryandwithSyriaon4-5February1976»withaviewtothe
conclusionofcooperationagreements(l).
Althoughmanypointsofconvergencehavealreadybeenfoundinthenegotiations
witheachofthedelegations,ithasobviouslynotbeenpossibleinthis
preliminaryphasetoreachagreementonalltheelementsofthenegotiations.
ForthesereasonstheCommissionconsidersitdesirabletogiveinthis
communication anappraisalofthenegotiations ,inordertoenabletheCouncil
todefinethesupplementary directiveswhichwouldappeartobenecessaryfor
thesuccessfulconclusionofthenegotiations *
0
2*Egypt,JordanandSyriawereunanimousinstressingthatthedesiretoestablish
veryclosecontractualrelationswiththeCommunitywasnotbasedonapurely
economicinterestbutwastheexpressionoftheirpoliticalwilltodiversify
theirexternaleconomicandpoliticalrelationsandtoincorporate cooperation
withEuropeintheirdevelopmentplans.
(l)Negotiations withLebanonwillbestartedassoonaspossible.TheLebanese
EnibassyhasproposedthattheybeginsometimeinApril.

TheSyriandelegation,forexample,describedthesenegotiations as"a
deliberatechoice",inlinewiththenewapproachofitscountry'sexternal
policy,andtheEgyptiandelegationstatedthatintheeyesofitsGovernment
cooperationwithEuropewasawayofhelpingEgypttocontinueitspolicyof
steeringamid-waycoursebetweenthetwogreatpowers*
Whilepointingtotheimportancetheyattachtotherapidconclusionofthe
negotiations thedelegationsofthethreecountriesclearlystatedthatthe
Community'spresentofferdidnotgofarenoughintermsoftheirpolitical
objectiveortheireconomicneeds;thefactthattherewastobenofinancial
section,evenalimitedone,intheagreementsintheirviewdetractedfrom
theoverallcharacterwhichisessentialtoacooperation agreement jwithout
suchasectionitwouldnotthereforebepossibletoconcludeanagreement.
Financialcooperation
Thethreedelegationsdid,however,pointoutthatthecloseeconomicandtrade
relationswhichtheircountrieswishtoestablishwiththeCommunitycouldnot
bedevelopedbyprovisionsessentially concernedwithtrade.
Onlythroughanagreementwhichincludedfinancialandtechnicalcooperation
couldtheCommunitymakeaneffectivecontribution towardssolvingtheproblems
posedbythedevelopmentoftheircountriesandenablerealmeaningtobegiven
totheproposedeconomicandtradecooperation.Iftherewerenofinancial
section,thiswouldnotonlydetractfromtheoverallcharacteressentialto
acooperationagreementsuitablefortheireconomicrequirements butwouldalso
amounttodiscrimination againsttheircountriesbycomparisonwiththeprinciple
appliedbytheCommunityinitsrelationswithotherMediterranean countries
ofacomparable-andeveninsomecaseshigher-levelofdevelopment.
Therefore,whileacceptingtheprinciplesoftheforms,methodsandobjectives
ofeconomiocooperation asproposedbytheCommunity,thethreedelegations
requestedthattheagreementsbesupplemented byprovisionsonfinancialand
technicalcooperationinordertopermitparticipation inthefinancingof
develcTlentprojectsintheircountriesandprovidethesupportneededtoattain
theobjectivesofeconomiccooperation.

-3-
EmphasizingtheimportancewhichtheMemberStatesandtheCommunitythemselves
attachedtotriangularcooperation,"bringingEuropeantechnologyandcapital
togetherunderjointventureswithcapitalfromAraboilsources,theyrequested
thatthefinancialaidfromtheCommunityshouldbeadequatetomeetthescale
oftheeconomicproblemswithwhichtheircountriesarefacedandthatthe
volumeofaidshouldbeproportional tothesizeoftheirpopulations.This
cooperation couldtaketheformofhardandsoftloans,andgrants*
Tradecooperation
5.Thethreecountriespointedoutthatinviewofthepresentleveloftheir
productionandtheirrisinginternalrequirements ,itwasunlikelythatthere
wouldbeamajorincreaseintheirexportstotheCommunityor,consequently ,
arapidimprovementintheirtradebalance.Beforetheirexportscouldbe
increasedsignificantly thestructureoftheireconomieswouldhavetobe
transformed .
Tradeconcessionsalonewouldnotbeabletobringaboutsuchatransformation .
Intheirpresenteconomicsituationwhatwasneededaboveallforthis
transformation to.takeplacewasanincreasedinjectionofexternalinvestment
andalargetransferofkriow-4iowandtechnology.
6.Nevetheless,thethreecountriesconsideredthatanylimitingoftheincentive
effectofopeninguptheCommunitymarkettotheirproductswouldbelikely
todelayfurtherthedevelopmentoftheirexports.
Withregardtotheindustrialsector,therefore,thecountriesconcernedrequested
inparticularthatthetariffexemptionenvisagedfortheirindustrialproducts
shouldbeappliedinfullfromthedateofentryintoforceoftheagreements
andnotfrom1July1977asproposedbytheCommunit/.
/
•/•
t

Inaddition,theyrequestedthattheceilingsapplyingtosomeoftheir
industrialproducts(textiles,petroleumproducts,phosphaticfertilizers)
shouldnotbe"basedonpresentexportfigures(whicharetheresultofa
specialsituation)butshouldtakeintoaccounttheirrealexportcapacity.
7.Thecountriesinquestionconsideredthattheconcessions proposedbythe
Communityintheagricultural sectordidnotmeettheirrequests.Inparticular,
theconcessions offereddidnottakesufficient accountofthedifficulties
encounteredinexportingtheirproductstotheCommunity(distancefromthe
markets,highforwardingcosts,smallexportablequantities)andestablished
discrimination intheconditionsofcompetitioninrelationtosimilarproducts
which,arethesubjectofconcessionsunderagreementswithotherMediterranean
countries,forexampleundertheagreementwithIsrael.Moreover,theCommunity
offerdidnotincludecertainproductswhichtheyregardedasbeingofgreat
importancefortheirexporttradeandwhich,ifdeveloped,wouldenablethem
toincreasetheirexportearningsandreducetheirtradedeficitwiththe
Community.
Thesecountrieshavethereforereservedtherighttopresentalistoftheir
claimsinthisfieldatalaterdate(l).
••
Othermatters
8.Alltheprovisionsofthefutureagreementsrelatingforexampletogeneral
matters,duration,safeguardclauses,institutional machineryandreciprocity
havealreadybeenagreedinprinciplebythedelegations.
TheEgyptianandJordaniandelegations havealsoagreedtoincludeinthe
agreementsanon-discrimination clause,although1heyhavealreadystatedthat
whenthetimecomestheyintendtomakethesameunilateraldeclarationthat
theEgyptiandelegation madeinthisconnection whenthe1972agreementwas
concluded -(2).OnlytheSyriandelegationhasmaintainedareservation onthis
clauseatthisstagealthoughithasnotedthatthisclausehasbeenaccepted
byotherArabcountriesintheregion.
(1)Egypt'srequestsarethesubjectofdocumentNEG-RAEN°13
(2)DeclarationincludedintheagreementswiththeMaghrebcountries.

-5-
Ontherulesoforiginthethreecountriesrequestedthatthevalueadded
percentageruleherelaxedandSyriaaskedforapplicationoftheruleon
cumulationoforigintoallthecountriesoftheArabCommonMarket.
9#Lastly,withtheaimoffurtherconsolidating theireconomicrelationswith
theCommunity,theEgyptian,JordanianandSyriandelegationsrequestedthat
additionalformsofcooperation (eitherundertheagreementbeingnegotiated
oroutsidethatagreement)shouldbeestablishedwiththeCommunity,in
particularthesetting-upofasystemforstabilizingearningsfromtheir
mainexportproducts,theconclusionofagreementswherebytheCommunitywould
supplyfoodstuffsatspeoialprices,tradepromotionfortheirproductson
theEuropeanmarketandincreasedfoodaid(l).
Commission assessment
10.Thisroundofnegotiations hasclearlyshownthatagreementswiththesecountries
cannotbeconcludedonthebasisofthedirectivesadoptedbytheCouncilon
20January1976.ThisdoesnotsurprisetheCommission.
TheCommissionconsidersthattheCommunitymustgiveapositiveresponseto
thesecountries'request.thatthepresentofferbesupplemented byfinancial
provisions.Theincorporation ofafinancialcomponentisnotonlyvitalin
ordertoensurethattheobjectivesoftheenvisagedeconomiccooperationare
achieved,butisalsoanecessityfromthepoliticalangle.
^TheCommunity'sMediterraneanpolicywouldloseallcredibilityiftheCommunity
failedtogiveavalidresponsetothepoliticaloverturefromthesecountries
andshowedlackofunderstanding oftheeconomicproblemsofthisregionofthe
Mediterranean ,whichishighlyunstableandsoclosetoEurope.
11.ThroughdirectfinancialassistancetheCommunityw.aidnotsimplybemaking
aneffectivecontribution towardssolvingthesecountries'development problems
butwouldbegivingaspecialstimulustothemobilization anduseofderived
capitalforthebenefitofthesecountriesbyenablingpartoftheaidwhich
theyhavealreadybeenoraretobegrantedtobeusedrapidlyandunder
favourableconditions.
(l)TheCommissionhashoweveralreadyindicatedthatthesequestionsfalloutside
thescopeofthenegotiations .

SUchtriangularcooperation would,moreover,"bebeneficialfortheCommunity
itselfbecauseitwouldmakeiteasierfortheCommunitytosupplytheplant
andmachinezy,know-howandtechnologyneededtocarryouttheprojectswhich
would "befinanced.
Astothevolumeandtermsofthefinancialaidtobedecidedinfavourofthese
countries,theCommissionreferstothetechnicalanalysispresentedby■■
MrCheyssonon10june1975Jnewfactorswillprobablycomeintoplayas
regardsLebanonbuttheydonotaffecttheothercountriesorIsrael.
OnthesubjectoftradecooperationtheCommissionconsidersthattheproblems
raisedbyEgypt,JordanandSyriaintheindustrialsectorandinrespectof
therulesoforiginarenotsuchthatitisnecessarytoconsidermodifying
thenegotiatingdirectiveswhichithasalreadyreceivedonthesemattersfrom
theCouncil.
TheCommissionhasalreadystatedtothepartnersinthenegotiations thatthe
offeronconcessions intheagricultural sectorwasfirmandfinal.Itisof
theviewthattheclaims''ptit*forwardbythesecountriesare,inthepresent
stageoftheirtrade,morepoliticalthaneconomicfortheyrelateinparticular
tocertaindifferences between ,theoffersmadetothemandtheconcessions
alreadygrantedtoothercountriesinthesameregion.Andso,theCommission
willendeavourtoconcludethenegotiations inthissectoronthebasisofthe
directiveswhichithasalreaciybeengiven.
TheCommissionconsidersthatiftheCounciladoptssupplementary directives
regardingfinancialandtechnicalcooperationitsthreepartnerswillfindit
easiertoacceptthesolutionsproposedbytheCommunityinthetradefield,
thusrestoringtheoverallbalancevis-a-visothercountriesintheMediterranean
area,whichtheyconsidertobebettertreatedthanthemasregardstrade.

13.Inconclusion,theCommissionrecommendsthattheCounciladopiBtheproposals
onfinancialandtechnicalcooperationsubmittedtoiton22January1975(l)
anddeterminetheamountsanddetailsofthefinancialaidfortheMashrek
countriesonthe"basisofthesuggestions madeinthiscontext "byMrCheysson
on10June1975*
O
o
(1)doc.COM(74)2020final.