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Vol.1980/0199

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i
COMMISSION OFTHEEUROPEAN COMMUNITIES
COMMISSION COMMUNICATION TOTHECOUNCIL
PURSUANT TOARTICLE29OFTHEINTERNAL AGREEMENT ON
(
THEFINANCING ANDADMINISTRATION OFCOMMUNITY AID
REPORT
ONTHEOPERATION DURING1979OFTHESYSTEMSETUPBY
THELOMECONVENTION FORSTABILIZING EXPORTEARNINGSCOM(80)627final
Brussels,28thOctober1980
COM(80)627final
COM</v>v/s-'.1r3 /v:
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/

ITTTRODUCTIOÎT
1.UnderArticle29oftheInternalAgreementonthefinancingand
administration ofCommunityaid,theCommissionisrequiredtoprepare
anannualreportontheoperationofthesystemforstabilizingexport
earnings(Stabex),indicatinginparticularitseffectontheeconomic
developmentoftherecipientcountriesandonthedevelopmentofexternal
trade.
2.Thisreportisconcernedwiththeapplicationofthesystemduring
1979 <totheACPStatessignatorytotheLomeConventionandgives
information aboutoperationsrelatingtofonnerOCTsthathaveacceded .
totheLomeConventionbutarestillcoveredbytheOCTallocationas
7farasthesystemforthestabilization ofexportearningsisconcerned*
2.Thecooperationmachinerydescribedinthefirstcomprehensive reports
.hascontinuedtofunctionsatisfactorily onthewholeandhencedoesnot
callforanydetailedremarks. -
4*InthisreporttheCommissionwillexaminetheactivitiesofthe
ACP-EECinstitutions andthedevelopmentofthesystem,andlookat
thefifthyearofapplicationofthetextsandtheresults.
Fortheeffectofthetransfersontheeconomicdevelopmentofthe
recipientcountries,referenceshouldbemadetothecomprehensive •
reportontheyears1975to1979»andinduecourseto-theobjective
studywhichwillbeundertakenfrom1981whenallthefactsneededto
produceageneralsurveywillbeavailable.

-2-
PART 07TE ;ACTIVITIES OFTHE ACP-EEC DTSTITUTI0IT5 AM )DEVELOPMENT OFTHE
SY3TEM
Chapter Or.e ;Activities ofthe institutions
§1,ACP-EEC Subcommittee ontheStabilization ofExport Earnings and
.Committee ofAmbassadors
5.TheACP-ESC Subcommittee ontheStabilization ofExport Earnings did
notmeet in1980 -todiscuss theapplication ofthesystem setupunder
the first Lome Convention .
6.TheACP-EEC Committee ofAmbassadors meton18January 1980 to
prepare fortheadoption ofthedecision ontransitional measures enabling
Title II,Chapter 1ofthefirst Convention tobeapplied from 1March 1980
until theentry into force ofthenewConvention oruntil 31December 1980 ,
whichever istheearlier . * ,
TheCommittee metagain on15April 1980 toprepare thedecision onthe
inclusion ofsesame seed inthelist ofproducts inArticle 17(l )ofthe
first Convention asfrom 1January 1978 .
§2.ACP-EEC Council ofMinisters
7.Meeting inNairobi on8and9May1980 ,theACP-EEC Council of
Ministers decided toapprove theACP request fortheinclusion ofsesame
seed among theproducts covered byStabex ,with effect from 1January 1978 .
8.The Council also decided atNairobi toallocate whatever balance
remained after the final year ofapplication ofthe Lome Isystem tothe
first year 'sinstalment oftheamount earmarked fortheLome IIsystem .
Sums paid intoreplenish thesystem asrepayments fortransfers made
fortheyears 1975 "to1979 inclusive will likewise beadded tothe
Lomé IIallocation .
§3.Parliamentary bodies oftheLome Convention
9.Atthemeeting oftheJoint Committee oftheACP-EEC Consultative
Assembly held atArusha (Tanzania )from 25to28February 1980
MrsKatharina Focke ,rapporteur general ,presented an'introductory report
outlining theachievements ofLome Iwith aview tothe forthcoming entry
into force ofLome II,andincluding afavourable assessment ofthe
operation oftheStabex system .Theassessment wasincorporated into
the final statement issued atthe close ofthe session .
§4»European Parliament
9
10.IntheCommittee onDevelopment andCooperation 'sdraft opinion for ^
theCommittee onBudgetary Control regarding discharge ofthe1978 Budget
inrelation toexpenditure ondevelopment aidpolicy ,therapporteur .

Mrs X.Focke ,noted certain statements intheBudgetary Control
Committee 'sworking paper -andeven intheCourt ofAuditors' report -
which stemmed partly from amisunderstanding ofthesystem 'saims ,
without prejudice towhatever conclusions might bedrawn from amore
detailed study ofitsoperation .
§5«Court ofAuditors
11.On19July 1979 aspecial report "bytheCourt ofAuditors was
circulated to -theCommunity institutions .Thetext ofthereport ,plus
ananalysis ,vail "beappended tothecomprehensive study onthe
operation ofStabex from 1975 "to1979 .
FortheCourt 'sroutine study ofthe1979 operating year ,seetherelevant
conclusions when published intheOfficial Journal oftheEuropean
Communities .
Chapter 2:Development ofthe system
12.Aletter dated 4July 1980 from theAmbassador ofZambia ,'co-chaiiman
oftheStabex Subcommittee ,contains arequest bytheACPGroup forthe
inclusion among Stabex products ofnutmeg andmace ,which areimportant
for theeconomy ofGrenada .
Assuming therequest isgranted ,itwill notbepossible toaddthese
products to -the list until ayear has elapsed from theentry into force
ofLome II.
PART TWO ;FIFTH' YEAR OFAPPLICATION OFTEE TEXTS AMD THE HESULTS
Chapter One ;Application ofthe texts
§1.Application ofArticle 19(4 )(b)
13.Significant changes inthetrend oftotal ,exports bycertain ACP
States were noted .inrelation tosixrequests .Talks were accordingly
held with theapplicant countries toseewhether these changes would
affect the si2fe ofthe transfers .
Inthecase ofMali (groundnut s),theCommission came totheconclusion
that the change observed should notaffect the size ofthetransfer .
This wasbecause thetotal fall ingroundnut exports wasaresult of
Mali 'sdecision toswitch output tooilmills ,which made itjust possible
tomaintain groundnut oilexports .
Intheother five cases agreement wasreached onacutinthetransfers
requested ;
The implementation ofArticle 17(1 )and (4)and ofthe Fiji Declaration
for the year 1979calls for nocomment .

(i)Central African Republic (cotton ):in1979 theproportion ofcotton
exports going totheCommunity fell by12.39 $inrelation tothe
reference period .,occasioning acutof12.39$ inthetransfer base ;
(ii)Uganda (tea);in1979 theproportion ofteaexports going tothe
Community fell by16.01$ inrelation tothereference period ,
occasioning acutof16.01$ inthetransfer base ;
.(iii)Sudan (groundnuts ):in1979 theproportion ofgroundnut exports
going totheCommunity fell by41*52$ inrelation tothereference
period ,occasioning acutof41*52$ inthetransfer base ;
(iv)Sudan (sesame ).:afall of23.39 %inthe proportion ofproduction
exported ,together with afall of10.34 %intheproportion ofexports
tothe EEC,ledtoacutof31.31 %inthetransfer base ;
(v)Swaziland (iron ore ):the 22.57 %reduction corresponds tothe fo­
reign exchange saved asaresult oftheclosure ofthemine and
cessation ofproduction .
§2.Replenishment ofStabex resources
14.Inaccordance with Article 21(3 )ofthefirst Lome Convention and -
with thepractical arrangements contained intheletters exchanged when
each transfer ismade ,theCommission carried out thenecessary
calculations regarding transfers -made fortheyears 1975 "to1978 inclusive
tocduntries required tohelp replenish thesystem 'sresources which have
not refunded the requisite amounts .
The calculations showed that the conditions laid down inthe Convention
fortriggering thereplenishment procedure were fulfilled inrespect of
thetotal amount transferred totheRepublic ofMadagascar for1976
(forcloves ),i.e. 1139516EUA .
§3.Requests refused (1979 )
15.Outof28requests received from 20ACPStates (including twothat
hadacceded totheLome Convention under Article 89),11were turned
down onthe following grounds :
V­
-dependence threshold not reached ;
Bénin (palm oil)
" (palm nutandkernel oilcake )
Ethiopia (sesame )
Guinea-Bissau (sawn wood )
Upper Volta (groundnuts );
-fluctuation threshold not reached :
Tonga (bananas );

-no1033ofearningsonexportstoalldestinations :
UpperVolta(cotton);
-nolossofearningsinrelationtoreferenceperiod:
Congo(woodintherough)
Guinea-Bissau (palmnutsandkernels);
-Tonga'slossofearningsoncoprahas"beenamplyoffsetbyincreased
earningsfromtheexpansioninprocessingtoproducecoconutoil;
-whilethe(technicallydebatable)figuressuppliedbyTogoshoweda
lossofearningsoncocoabeans,theCommunity'sstatisticspointedto.
alargesurplus. -
Chapter2;Theresults
§1.Overallresults
16.A.Resultsofthe1980operationbyACPState:
Recipient ACPState Product AnountoftransferinEUA
Benin Cottonnotcarded
orcombed 349246
CapeVerde Bananas 429352
CentralAfricanRepublic Cottonnotcarded
orcombed 3846980
Chad cottonnotcarded
orcombed 2664588
Gambia Groundnutoil 3999947
Gambia Groundnutoilcake 1026143
Guinea-Bissau Groundnuts,shelledornot248O509
Madagascar ,Vanilla\2845088
Mali Groundnuts,shelledornot3894154
Sudan.Groundnuts,shelledornot27190125
Sudan Sesame 2632923
Swaziland '. Ironore .4-365532
Tonga Vanilla -58632
Uganda Cotton,notcarded
orcombed 3806872'
Uganda Tea, 3093453
TOTAL 62683544
17.B.Resultsofthe1980operationforACPStatesaccedingtothe
LomeConventionunderArticle89
Recipient ACPState Product AmountoftransferinEUA
Comoros Cloves 431155
Dominica 'Bananas 2892944
TOTAL 3324099
1 .Itshouldbenotedthatafteritwasdecidedtoincludesesameseed
from1January1978Sudanenteredarequestforthisproductrelating
to1978whichwasturneddownforthereasongiven.

$2.Hosuits bycourtry
18.Atotal of59838456EUA (95»5 %)wastransferred toleast developed
ACP States ,which arenotrequired tocontribute towards thereplenishment
ofStabex resources .For the five financial years taken together ,grants
account for 67.5 %ofpayments .
§3.Result byproduct -
19•Fortheindividual products theresults areasfollows (excluding
states having acceded tptheConvention under Article 89);
Products Amount inEUA X
Groundnuts 33564788 53.55
Groundnut oil 3999 947 6.38
Groundnut oilcake 1026 143 I.64
Cotton ,notcarded orcombed lO.667.686 '17.02
Bananas 429 352 0.68
Tea 3093 453 4.94
Iron ore 4365532 6.96
Vanilla 2903 720 4.63
Sesame 2632923 4.20
TOTAL .62683544 100.00
ofwhich products affected by:
-theeconomic situation :0,0 %
-local contingencies :100,0 % ,
§4-Balance tobecarried over
20.Inaccordance with thedecision adopted bytheAGP-ESC Council of
Ministers meeting inNairobi on8and9May1980 (seepoint 8),the
balance remaining attheclose offinancial years 1975 "to1979 inclusive
(asumof5975905EUA)hasbeen carried over tothefirst year 's
instalment oftheamount earmarked fortheLome IIsystem .
Conclusion
21.Asthis report shows ,thesystem hasoperated satisfactorily andno
further comments arenecessary onthis score ;the comprehensive report
summing upactivities from 1975 "to1979 will beappearing shortly .It
wastherefore felt -unnecessary tolook here attheeffects oftransfers
ontheeconomies ofrecipient states andexternal trade patterns .
22.Reports ontheuseoftheresources transferred for1978 ,andalso
for1979 asfaraspossible ,arenotlegally required tobesubmitted
bythedate ofissue ofthis report ;these matters will becovered in
the course oftheobjective study onthegeneral topic oftheimpact of
transfers .*±Lich will beputinhand in1981 .

ANNEX1
ListofdrawingsundertheInternational Monetary Fund'scompensatory
paymentssystemcarriedoutsince1.1.1979 (1)
CountryMiIlion
SDRsLastmonthof
relevant 12--
monthperiodMonthof
drawing
GuineaBissauχ(2K3) 1,10 12/78 A/79
Tanzaniaχ(2)(3) 20,25 12/78 5/79
Ethiopia (3) 18,00' 12/78 .8/79
Malawi(3) 9,50 2/79 8/79
Kenya 69,00 3/79 8/79
Ugandaxx(2)(3) 5,00 3/79 8/79
Ugandaxx(2)(3) Γ.25,00 .10,79 9/79
Jamaica 31,75 ; 10/79 9/79
Burundi(3) 9,50 6/79 10/79.
Malawi(3)s 9,50 5/79' 11/79
Soudanχ(2)(3)
/■36,00 12/79 11/79
Liberia χ(2) 20,50 6/79- 12/79
Dominicaχ(2)(3) 0,95 12/79 12/79
Ethiopia (3) 18,00 6/79 12/79
Mauritania (3) 10,50 6/79 1/80
Guyana 6,25'12/79 1/80
Ugandaxx(2)(3) 25,00 9/79 1/80
Maliχ(2)(3) 5,10 12/79 3/80
,Madagascar χ(2) 29,20 J 12/79 *7/80
Equatorial Guinea 6,40 5/80 7/80
(1)ListrequestedbytheEuropeanParliament'sCommitteeonDevelopment
.andCooperation .
(2)The"x)denotethenumberoftransferts receivedbytheACPStatecon­
cernedin1978and1979.
(3)ACPStatesnotrequiredtocontributetothereplenishment ofresources.