COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(92) 465 final 
Brussels, 11 November 1992 
Proposal for a 
COUNCIL REGULATION (EEC) 
establishing a special system of assistance 
to traditional ACP suppliers of bananas 
(presented by the Commission) 
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EXPLANATORY MEMORANDUM 
I. 
The fourth ACP/EEC Convention provides the framework for cooperation 
between the Community and the 69 African, Caribbean and Pacific countries 
(ACP). Protocol 5 of the Convention provides that in respect of its banana 
exports to the Community markets, no ACP State shall be placed, as regards 
access to its traditional markets and its advantages on those markets, in a 
less favourable situation than in the past or at present. 
To date, national market organizations have granted traditional ACP 
suppliers of bananas an outlet for their production on their traditional 
markets and enabled them to obtain from these markets an adequate income. 
The Commission's proposal on the common organization of the market in 
bananas^1) sets the framework for continuing on the Community market the 
advantages enjoyed by traditional ACP suppliers, in accordance with the 
Community's commitment set out above. 
There is nevertheless a risk that the introduction of the new organization 
and the adaptation to it could jeopardize the continuing viability of ACP 
producers. 
The majority of ACP banana exporters share the disadvantages associated 
with the producing regions of the Community such as insularity, size of 
exploitation, distance from market, etc. They are also in relative terms 
more dependent on bananas as a foreign exchange earner and as a significant 
sector of the economy - some of them almost entirely. 
A reduced presence on the Community market or a reduced income from this 
market could have an immediate negative impact on the development prospects 
of these countries. It is not to be excluded that for certain traditional 
suppliers a decline in returns from the banana trade could result in 
serious economic and political instability. 
(1) COM(92) 359 final 
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It is essential that the Community has at hand the necessary instruments to 
avoid the consequences if such a situation should develop. 
II. Assistance to improve structures and marketing (technical and 
financial assistance) 
The common organization of the market, as proposed by the Commission, 
provides traditional ACP suppliers with a guaranteed space in the Community 
market in a similar way to that provided presently in their traditional 
markets. However, the structure and nature of the market and the marketing 
effort needed to exploit that space are different and constitute new 
elements some of which neither the ACP suppliers nor the operators handling 
their produce could reasonably foresee as an outcome of the common 
organization of the market. For example, there will be a new requirement to 
meet certain quality standards and there will be incentives for operators 
handling Community bananas to organize and market in a more integrated way. 
The; ACP producers will be in a similar position to Community producers as 
regards their ability to meet the additional expenditure from market 
returns alone. It is therefore necessary to make provision for traditional 
ACP suppliers to be assisted to adapt to the new circumstances. 
The- advent of the single market in bananas is not in itself an 
unforeseeable phenomenon and ACP States have been aware for some time that 
their market situation would change. Several of them have taken measures 
within normal development programmes to meet the challenges which will face 
them. 
It is proposed that financial assistance additional to that provided for in 
the Lomé Convention is made available to ACP States who submit programmes 
designed to assist producers to adapt to new market circumstances. 
Particular attention will be given to programmes designed to improve 
quality, to improve marketing and to improve competitiveness. Programmes 
already begun will not be eligible for retroactive funding but in cases 
where a programme may have been eligible for funding if submitted after the 
adoption of the Regulation it will be eligible for additional fundB to 
accelerate its completion. 
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III. Income support 
The common organization of the market as proposed by the Commission is also 
designed to ensure that traditional ACP suppliers continue to find an 
economic return on the Community market comparable to what they can expect 
at present. However, the risk to traditional ACP suppliers that 
adjustments in the marketing arrangements of operators will result in a 
sudden loss of revenue with immediate impact on the capacity of small-scale 
producers to survive or of the economy of the ACP States to adjust to new 
challenges, exists. 
The effect of such market disturbances on ACP supplies and marketing could 
be permanent if nothing is done. However, the common organization of the 
market as proposed by the Commission should allow reaction to such 
developments and therefore market disturbances of the kind mentioned should 
only be temporary. 
In order to prevent lasting effects from any disturbance of the marketing 
of ACP bananas, income support should be granted to ACP producers to make 
up for any shortfall in income directly related to conditions prevailing on 
the Community market subsequent to the establishment of the common 
organization of the market. Any such intervention will be temporary and 
will last only until market mechanisms can reestablish stability in the 
market. 
The calculation of the lost income can be made in the same way as for the 
calculation proposed for Community producers. 
Some ACP States may be eligible for Stabex transfers as a result of a drop 
in export earnings. Stabex transfers may be triggered by the same set of 
circumstances which give rise to payment of income support, but are 
normally based on a broader assessment. Nevertheless, it is not considered 
appropriate to compensate ACP States cumulatively for foreign exchange 
losses under the Stabex system and for losses in producers income under an 
income support system in so far as both arise from the same set of 
circumstances. It is therefore proposed that income support be 
complementary to Stabex transfers and that income support shall only be 
paid in so far as Stabex transfers do not entirely offset the effects of 
price decreases on the producers' income as provided for in this proposal. 
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Proposal for a 
COUNCIL REGULATION (EEC) 
establishing a special system of assistance 
to traditional AGP suppliers of bananas 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing, the European Economic Community-, 
and in. particular; Article 113 thereof;* 
Having regard to the proposal from the Commission t3^** 
Having, regard to the opinion of the European Parliament^), 
Whereas Protocol 5 on bananas to the fourth ACP/EEC Convention- provides 
that,. in respect of its banana exports to the Community markets, no ACP 
State shall be placed, as regards access to itST traditional markets and? its 
advantages on those markets, in a less favourable situation than in the 
past., or at present; 
Whereas national market organizations have hitherto granted traditional ACP 
suppliers of bananas an outlet for their production on their traditional 
markets and enabled them to obtain from these markets ana adequate income; 
Whereas the common organization of the market established by Council. 
Regulation (EEC) No ....(3) sets the framework, for continuing,, on the 
Community market.,, the advantages enjoyed by traditional ACP suppliers, in 
accordance with the Community's commitment set out above; 
Whereas risks exist nevertheless that the introduction of a new market 
organization and the need to adapt to it could jeopardize the continuing 
viability of ACP supplies;. 
(1) 
(2) 
(3) OJ No L 
t> -
Whereas particular efforts will be needed to adapt to the new market 
conditions in order to take advantage of the opportunities offered; 
Whereas the structure and the nature of the new market and the marketing 
efforts necessary to maintain a presence on this market represent new 
elements some of which neither the traditional ACP suppliers nor the 
operators handling this produce could reasonably foresee; 
Whereas technical and financial assistance, additional to that provided for 
in the fourth ACP/EEC Convention should therefore be provided to carry out 
programmes designed to assist producers to adapt to new market conditions 
and in particular to improve quality, to improve marketing and to improve 
coropetit iveness ; 
Whereas the new conditions prevailing on the market may result in temporary 
market disturbances, particularly in the sectors of the Community Market 
traditionally supplied by the ACP States; 
Whereas such disturbances could seriously affect the returns to the ACP 
from the market and therefore the continued viability of this production; 
Whereas financial assistance should therefore be provided to permit the ACP 
to remain on the market, until such time as the market stabilizes and an 
economic return from the market can be received; 
Whereas income support should be complementary to Stabex transfers 
triggered by the same set of circumstances; 
Whereas it is therefore appropriate to align calculation of income support 
with the calculation of Stabex transfers, 
HAS ADOPTED THIS REGULATION: 
Article 1 
A special system of assistance to traditional ACP suppliers of bananas is 
hereby established. This assistance may consist of technical and financial 
assistance and/or of income support. 
Article 2 
For the purposes of this Regulation, 
- "traditional ACP suppliers" means the ACP States listed in the Annex. 
- "bananas" means fresh or dried bananas covered by the code CN 0803, 
excepting plaintains. 
TITLE I - TECHNICAL AND FINANCIAL ASSISTANCE 
Article 3 
1. Technical and financial assistance shall be provided to traditional 
ACP suppliers with a view to helping such suppliers adapt to the new 
market conditions following the establishment of a common 
organization of the market in bananas. 
2. Technical and financial assistance shall be provided to contribute to 
the carrying-out of programmes in the banana sector to achieve one or 
more of the following objectives: 
- to improve quality; 
- to adapt production, distribution or marketing requirements to 
meet the quality standards provided for in Article 2 of 
Regulation (EEC) Mo ...; 
- to establish producers' organizations which have as an objective 
the improvement of the marketing and competitiveness of their 
products; 
- te develop a production and/or marketing strategy te meet the 
requirements of the market in the Community in the light of the 
coflwm organisation of the market 1A bananas; 
- to assist with training, market intelligence, the development of 
environmentally sound production methods, improving the 
distribution infrastructure, improving trade and financial 
services to banana producers and/or improving competitivity. 
3. Assistance may be given to programmes having similar objectives which 
are currently financed under the Lomé Convention or by the public 
authorities of the Member States parties to the fourth ACP/EEC 
Convention where such assistance would result in a more rapid 
completion of the programme. 
Article 4 
The Commission shall decide on the eligibility of the programme and the 
level of assistance after consultation with the traditional ACP supplier 
concerned. It shall also take into account the coherence of the envisaged 
programme with the general development objectives of the ACP State 
concerned and its impact on regional cooperation with other banana 
producers, in particular the Community producers. 
Title II - INCOME SUPPORT 
Article 5 
1. Within the limits indicated in point 1 of Article 15 of Regulation 
(EEC) No ..., traditional ACP suppliers shall be eligible for income 
support. 
2. Income support shall be paid where the reduction in income drawn from 
exportation to the Community of bananas complying with the common 
standards is directly related to conditions prevailing on the market 
subsequent to the establishment of the common organization of the 
market in bananas. 
Article 6 
1. Income support shall be individually calculated for each traditional 
ACP supplier on the basis of the quantities exported to the Community 
during the year of application and the difference between the 
reference price and the actual price. 
2. The reference price shall be the average price per tonne of bananas 
produced in the ACP State concerned and exported to the Community 
during the six calendar years preceding the entry into force of this 
Regulation, less the two years with the highest and the lowest 
figures. 
The actual price shall be the average price per tonne of bananas 
produced in the ACP State concerned and exported to the Community 
during the year of application. 
3. The statistics needed for the calculation of income support are those 
calculated and published on Community imports by the Statistical 
Office of the European Communities. 
4. Before 1 July of each year, the Commission shall determine the income 
support for the previous year after consultation with the ACP State 
concerned. 
5. Exceptionally, and in particular during the first year of application 
of this Regulation, advances may be paid where there is a signicifant 
reduction in the production income compared to that of the previous 
year or within any given year. 
The need for and the level of such advances shall be determined by 
the Commission after consultation with the ACP State concerned. 
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Title III - GENERAL PROVISIONS 
Article 7 
1. Financial commitments made under Title I shall be in addition to any 
funds available for ACP States under the provisions of the fourth 
ACP/EEC Convention. 
2. Financial commitments made under Title II shall be complementary to 
funds available under the system guaranteeing the stabilization of 
export earnings provided for in Articles 186 to 212 of the fourth 
ACP/EEC Convention. Title II therefore permits payment of income 
support only in so far as transfers made for identical quantities in 
accordance with Articles 186 to 212 of the fourth ACP/EEC Convention 
do not entirely offset the effects of price decreases in the revenues 
of traditional ACP suppliers. 
3. Payments of income support shall be used, in accordance with a 
framework of mutual obligations to be agreed between the traditional 
ACP supplier concerned and the Commission in each case, for the 
benefit of economic operators adversely affected by the loss of 
income. 
Article 8 
1. Granting of assistance as defined in Article 1 shall be subject to 
the designation by the ACP State concerned of a representative 
organization entitled to act and to receive payments on its behalf 
within the framework of this Regulation. 
2. The representative organizations shall present the following 
characteristics : 
- be composed entirely or mainly of producers of bananas in one or 
more traditional ACP suppliers; 
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pursue at least two of the following objectives: 
improvement of the quality of the produce; 
improvement of the quality of distribution and marketing; 
improvement of the returns to producers; 
improvement of the role of producers in the organization of 
the banana market. 
3. The representative organization designed in accordance with 
paragraph 2 must be notified to the Commission. 
Article 9 
As far as necessary, detailed rules for the application of this Regulation 
shall be determined by the Commission in accordance with the procedure laid 
down in Article 10. 
Article 10 
The Commission shall be assisted by a committee of an advisory nature 
composed of the representatives of the Member States and chaired by the 
representative of the Commission. 
The representative of the Commission shall submit to the committee a draft 
of the measures to be taken. The committee shall deliver its opinion on 
the draft, within a time limit which the chairman may lay down according to 
the urgency of the matter, if necessary by taking a vote. 
The opinion shall be recorded in the minutes; in addition, each Member 
State shall have the right to ask to have its position recorded in the 
minutes. 
The Commission shall take the utmost account of the opinion delivered by 
the committee. It shall inform the committee of the manner in which its 
opinion has been taken into account. 
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Article 11 
This Regulation shall enter into force on 1 January 1993. 
It shall apply until 28 February 1996. 
This Regulation shall be binding in its entirety and directly applicable in 
all Member States. 
Done at Brussels, For the Council 
The President 
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ANNEX 
LIST PROVIDED FOR IN THE FIRST INDENT OF ARTICLE 2 
Traditional ACP suppliers of bananas; 
Belize 
Cameroon 
Cape Verde 
Dominican Republic 
Grenada 
Ivory Coast 
Jamaica 
Saint Lucia 
Saint Vincent and the Grenadines 
Somalia 
Suriname 
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Financial Statement Oate : 
1. BUDGET HEADING B7-5G23 - Compensation for ACP banana 
products APPROPRIATIONS : ECU 200 mi 11 ion 
2. TITLE : Draft Proposal for a Council Regulation establishing a special system of assistance to 
traditional ACP suppliers of bananas . 
3. LEGAL BASIS : Article 113 EEC 
4. AIMS : Assistance to traditional ACP banana suppliers to adapt to conditions created by 
the completion of the Single Market 
S. FINANCIAL IMPLICATIONS 
5.0 EXPENDITURE 
- CHARGED TO THE EC BUOGET 
(INTERVENTIONS) 
5.1 REVENUE PERIOD OF 12 MONTHS 
• ECU 60 Billion CURRENT FINANCIAL YEAR 
(1992) FOLLOWING FINANCIAL YEAR 
(1993) 
ECU 35 mill ii 
1994 
5.0.1 ESTIMATED EXPENDITURE 
5.1.1 ESTIMATED REVENUE • ECU 60 million 1995 
• ECU 60 million 1996 
• ECU 4 5 million 
5.2 METHOD OF CALCULATION 
See annex 
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET ? 
NO 
6.1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET ? 
NO 
6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY ? 
YES 
6.3 UILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY ? 
YES 
COMHENTS : 
The 1993 preliminary draft budget contains no appropriations for this measure. 
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Annex to the. Financial Statement 
1. Technical and financial assistance (Article 3) 
The objective of this aid .Is to assist traditional ACP suppliers to 
adapt to the new market conditions and not to replace normal 
development aid. 
The amount of finance depends on factors such as specific conditions 
which have yet to be determined and the priority they receive. 
Nevertheless the costs of previous expenditure on programmes In the 
banana sector can serve as a useful guide of the level of expenditure 
likely to be required. On this basis, an annual cost of ECU 10 million is 
estimated. 
income support (Article 5) 
The reference price of traditional ACP bananas calculated In accordance 
with article 6(2) is ECU 642 per tonne (a). 
The average price of bananas in the Community after introduction of the 
market organisation may be estimated from the CIF price of dollar zone 
bananas In Belgium, the Netherlands, Ireland and Denmark, the Member 
States with no special arrangements. This recently stood at ECU 414 
per tonne (b). 
Once customs duties of 20X have been added, the price on the Community 
market is therefore 414 x 1.2 - ECU 497 per tonne. 
The income support Is the difference between (a) and (b): 
642 - 497 - £CU 145 per tonne. 
Traditional ACP production referred to in Art 5 (1) Is 622,000 tonnes. 
The maximum cost will be 622,000 tonnes x ECU 145 per tonne -ECU 90.2 
mi 11 Ion 
income losses set off by Stabex transfers to be deducted In accordance 
with Article 7 (2) are estimated tentatively at ECU 40 million. 
The maximum cost for Income support will be ECU 90.2 million - ECU 40 
mi 11 ion - 50.2 mi 11 Ion. 
It is assumed that the advance provided for in Article 6 (5) is oaid at 
the rate of 50%. 
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3. Summary of expenditure 
ECU million (budgetary) 
Technical/financial assistance (Art 3) 
income support (Article 5) 
1993 
1994 
1995 
1996 
TOTAL 1993 
10 
25 
35 1994 
10 
25 
25 
60 1995 
10 
25 
25 
60 1996 
10 
25 
10 
45 
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ISSN 0254-1475 
COM(92) 465 final 
DOCUMENTS 
EM • 03 « 
Catalogue number : CB-CO-92-525-EN-C 
ISBN 92-77-50043-3 
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