EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

The International Cotton Advisory Committee (ICAC) is the International Commodity Body (ICB) for cotton. Its mission is to assist governments in fostering a healthy world cotton economy. It does this by ensuring transparency on the world cotton market, by serving as a clearinghouse for technical information on cotton production and a forum for discussion of cotton issues of international significance. ICAC acts as a statistical observer and brings together producing, consuming, and trading countries and all segments of the cotton industry. It has an overall facilitating role. It is not engaged in cotton price setting or determination.

To date, the ICAC is one of the few ICBs where the European Union (EU) is not a member, whereas nine Member States have been members of the ICAC in their own right (Belgium, Germany, Greece, Finland, France, Italy, Netherlands, Poland and Spain). Membership of ICAC is in the interest of the Union, owing to the significance of cotton to the Union's economy. The EU is a producer of cotton and has evolved from a net cotton importer (until 2008) to a net cotton exporter as of 2009. The EU textiles and clothing industry is an important user of cotton cloth. Moreover, cotton is an important area for European development cooperation, the EU remaining a main donor to the African cotton sector.

On various occasions (namely in its conclusions of 2004 (ref. 8972/04), 2008 (ref. 9986/08) and 2010 (ref. 9648/10)), the Council of the European Union has requested the European Commission to consider EU membership of ICAC. It authorised the Commission in 2013 to negotiate, on behalf of the European Union and on the basis of negotiating directives, the accession of the Union to ICAC (Council Decision 13406/13, 16 Sept. 2013). In view of the accession of the Union to ICAC, all the Member States have notified ICAC of their withdrawal from membership in line with Article II, section 3 of the ICAC's rules and regulations.

2. LEGAL BASIS

As trade issues represent the most important part of ICAC's tasks, the legal basis should be Article 207 TFEU.

3.RESULTS OF STAKEHOLDERS CONSULTATIONS AND IMPACT ASSESSMENTS

Taking into account the present situation, the Commission considers that membership to the ICAC would be desirable as it would:

–allow the EU to express its views on cotton with a single voice and paying one contribution in the appropriate ICB, taking into account the views of the EU Member States,

–provide the EU access to information on cotton issues, in order to follow the cotton market and influence the cotton agenda,

–facilitate linkages and partnerships between the EU private sector (cotton and textiles), cotton producers and consumers (from the EU and from developing countries), and public authorities.

The ICAC Secretariat is in favour of EU membership as it will increase the importance and international status of ICAC as an ICB. It has definitely asserted that EU has no liability at all in any current or future financial arrears of any members.

4. BUDGETARY IMPLICATION

ICAC membership is based on the payment of an annual contribution. It is calculated on an annual basis as a function of the number of ICAC's members (fixed part) and the volume of raw cotton traded by each member (variable part). A first contribution of maximum EUR 400 000 would be required, which will give the EU an appropriate influence in ICAC affairs and allow broad EU involvement in ICAC's activities.

5. OTHER ELEMENTS: implementation plans