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DOCUMENTS "COM"
COM(79)305
Vol.1979/0116

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(79)305final
Brussels,8thJune1979
COMMUNITY POSITION CONCERNING APOSSIBLE
INTERNATIONAL AGREEMENT ONCOPPER
(Commission Communication totheCouncil)
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-EXPLANATORY NOTE
Subject: Communication oftheCommissiontotheCouncil
regardingthepositionoftheCommunity astoaneventualinter­
nationalagreement onCOPPER. -
InviewofthethirdUNCTADpreparatory meetingoncopperin
January1978(S/1955/77),theCommission presented aCommunication tothe
Councilregarding"guidelinesforaCommunitypositionwithregardtothe
preparatory workofUNCTADforaninternational Conference onCopper".
Sincethatdateandontheoccasionofeachoneoftheseriesof
UNCTADmeetingsoncopper,theCommissionregularlyinformedtheGroup.
"Commodities"oftheCouncilofitsviewsonthe-verymarkedbynow-.
evolutionofthesituationinthecoppermarketandsector.Accordingly
itdoesnotconsiderusefulagaintosetoutfactualdata.Beitsufficient
torecallthatrelativelytightsuppliesnowhavefollowed -averylong
periodofsurplus.
Ontheothersideitisrecalledthat-afternumerousandrelatively
improductive meetings,thepreparatory workoncoppernotably,setasidethe
prospecttolimitoneselftothecreationofaconsultative bodyoncopper
inafirststage.Finally,asecondIntergovernmental GroupofExpertson
Copper(2ndIGEC)willmeetinGenevafromthe25thofJuneandthe6thof
July;itsmandatewillbetoproposeareasonedselectionofmeasures
whichcouldpossiblyformthebasisofaninternational agreement oncopper.
Aseventhpreparatory meetingwillmeetinSeptember 1979atthelatest
"toappraisethefindingsandconclusions ofthe2ndIGECandmakeappro­
priaterecommendations fortheimplementation ofConference Resolution 93
(IV)withinthecalendaroftheIntegrated ProgrammeforCommodities ".<
Asiswellknown,therevisedtimetableoftheIntegrated Programme
envisagestheconclusionofthepreparatory workoncopperandtheholding
ofeventualnegotiating conferences ofinternational commodityagreements
beforetheendof1979.Itisknownaswellthatthefifth -UNCTADpresently
beingheldinManilawillnotablylookintotheresultsachievedbythe_
Integrated Programme andintoitscontinuation .
Underthesecircumstances thisprojectofanew"Communicationon
copperproposestheoutlineofanagreementwhich,inourmind,shouldbe
capableofbeingacceptedbythedeveloping producercountrieswithout
beingincontradiction withtheprinciplesofmarketeconomyorinvolving
anexcessiveburdenfortheeconomyoftheCommunity.

Introduction
TheSixthPreparatory MeetingonCoppersetouttheobjectives of
intergovernmental cooperation andalsoestablished alistoftheelements
whichmightappearinaninternational arrangement aswellasanon­
restrictivelistofrelevantaspectsandimplications .
Inthelightoftheaboveindications,theSixthPreparatory Meeting
instructed aSecondIntergovernmental GroupofExpertsonCopper(2nd
IGEC)tocarryoutatechnicalexamination ofapossibleagreementfrom
thepointofviewofeffectiveness,costandadvantages;ifthe2ndIGEC
isabletoreachaconclusion onthemostappropriate measuresfor
stabilization ,itisalsoinvitedtogiveanopiniononthearrangements
forimplementing andadaptingthosemeasures.The2ndIGECwillmeet
from26Juneto6JulyandaSeventhPreparatory Meet.ingwillbeheld
"nolaterthanSeptember".Thislattermeetingwillhavethetaskof
evaluating theresultsandconclusions ofthe2ndIGECandofformulating
appropriate recommendations withaviewtotheimplementation of
Resolution 93CIV)withinthetimetablefortheIntegrated Programmefor
Commodities .
IntheCommission'sopinion,theclimateandtenorofthediscussions
ofth?SixthPreparatory MeetingleadtotheconclusionthattheCommunity
positioninfavourofsimpleconsultations betweencopperproducers and.
consumers,orevenfurther,infavourofevolutiveinternational action
iscertaintomeetwithinsurmountable incomprehension orevenhostility
whateverthemeritofitsarguments.Itshouldberecalled,moreover,
thatattheSixthPreparatory MeetingtheCommunitystatedits
readinesstoparticipate inaconstructive spiritinanegotiating
conferenceiftherewasamutuallyacceptable basisforanagreement
oncopper.Lastly,theargumentthatUNCTADVmighteventually make
therapidconvocation ofaconference oncoppermoreplausibleoreven
politically inev-itable,cannot,itseems,beruledout.

Given thetimetable constraints ,the Commission therefore feels
that theCommunity should prepare itself now foranyeventuality and
should look beyond thework ofthe2nd IGE-C inJuly .Itshould therefore
rea'ch agreement onwhat itcould regard asaplausible formula for an
initial agreement oncopper ,that isaformula that could winthe support
ofthedeveloping country producers whileatthesame time pursuing as
well aspossible the interests oftheCommunity . ~
Toobtain thesupport ofthedeveloping country producers ,it
appears totheCpmmission tobeunavoidably necessary towork from the
outset along thelines ofastabilization agreement with buffer stocking ,
supported asalast resort ,byexport control .Incounterpart tothese
economic elements ,theagreement ,which would have appropriate resources
atitsdisposal ,-would oblige theparties tohold consultations onthe
j
closest possible basis andtoensure thenecessary transparency ofthe
copper sector atworld level .
Itisinthis light that theCommission outlines here itsreflexions
ontheheadings inthemandate given tothe 2nd IGEC .
Forthesake ofclarity ,theheadings ofthemandate will bedealt '
with asfollows : .
1.Market stabilization andprice range ; " .
2.Buffer stocking andprivate orstrategic stocks ;
.*
3.Practical arrangements andvolume ofthebuffer stock ;
A.Regulation ofexports (and/orproduction );
5.Particular problems ofthedeveloping country producers ; ^
6.Objective of,andarrangements for,international consultations ,
institutional aspects ; •
7.Financial requirements ;
8.Financing arrangements , .
Itwill beassumed that thedata concerning thecharacteristics
ofthecopper sector and itspresent situation are known .The
Commission feels itisnotnecessary toreturn tothese aspects since
itrecently reported onthem indetail andthere have been nonotable
subsequent changes .-
v "''mim

-3-
1.Marketstabilityandpricerange
Theindicatorsfurnishedbypricesprevailing onthefutures
markets,andnotablytheLME,arenotcontestedinpractice.Inany
event,theCommunitywouldrefusetointerferewiththeirfunctioning..
Forthisreason,fortheCommunity,marketstabilization wouldconsist
ofthemaintenance ofthepricewithinacertainrangearoundthelong-
termtrendbydefendingaminimumpriceandamaximumprice.Itis
truethatthedevelopingcountryproducerswouldpreferthedefenceofa
minimumpricefixedonthebasisofcopperproductioncosts,butthis
ideaiscomplicated bythediversityofthelevelandstructureofthose
costsandwouldthereforebedifficulttoapply.Stabilization ,inthe
mannerinwhichitcanbeenvisaged,makesitnecessaryinprinciple :
-tohaveasatisfactory evaluationofthepricecorresponding atagiven
momenttothelong-termtrend;
-todeterminethequantitative relationship thatexistsbetweenthe
widthofthestabilization rangeandthevolumeofintervention
resources,i.e.stockingresources,thatarenecessary.
Itmustberecognizedthatthe,hithertoinadequate,qualityof
theanalysisofthephenomenaobservedonthemarketmakesanysuch
evaluations veryapproximate .Quantitatively satisfactory evaluations
thereforeseemtobeapriorconditionforstabilization .
Itisnevertheless possibletoavoidthispriorcondition-which
wouldotherwisepreventmarketstabilization actioninthepresent
circumstances -if:
-thereisnoattempttonarrowthepricerangeexcessively;
-acertainmarginofempiricismandflexibility asregardsthemanagement
ofthe.stabilisation resourcesisleftforthemanagingbodyofthe
agreement.,
Itiscertainlydesirablethatapossibleagreementshouldmeet
thesetwoconditions.Inparticularitcanbemaintainedthatto
reducetherangebelow-10%forexamplewoulddeprivethemarketofits

-4-
roleandaccordingly itssignificance .Inthesecircumstances,one
cannotoveremphasise theneedforprecisioninthedetermination ofthe
averagestabilization priceandtheprojectedvolumeofstock.
Ifnevertheless thefixingofapricerangeasarealistic
stabilization objective wereonexamination toappearanexcessively
delicatematter,thiswouldnotnecessarily meanabandoning theidea
ofactiontoachievestabilization .Inordertoavoidthewell-known
drawbacksofabadlychosenorexcessively widepricerange,an
examination couldinitially bemadeofthepossibility ofbufferstock
operationconsistinginbuyingwhenthemarketisincontango(supply
availability situation)andsellingwhenthemarketisinbackwardation
(scarcitysituation).Thissimplerulemightormightnotbecombined\ _ +withthefixingofaverywidesafetyrange(eg-25/.).Theobjective
wouldinanycasebetonarrowtherangesubsequently inthelightof
theexperience acquired.
2.Bufferstockingandprivateorstrategicstocks
TheCommunityshouldtakenoteofthefactthat,withprice
stabilization astheobjective,thepreparatory work-hasconstantly
indicatedbufferstockingasanessentialinstrumentofthat
>stabilization .■. ''
Itisclearthatcopperisparticularly suitableforstockingand
thatbetweenproduction andconsumption ,theknownorestimatedstocks,'
\ofwhatevernature,havealwaysplayedanimportantroleinthe
relationship betweensupplyanddemand,i.e.inthefixingofthemarket
price. -
TheCommunityshouldthereforerecognizeattheoutsetthatany
agreement oncoppershouldutilizebufferstocking.Thisbeingsaid,
bufferstockingpractised onaworldscaledoesnotipsofactoremove
theproblemslinkedwithexistingprivateandnationalstocksbutcan
infact,resultina-numberofadditional ,problems.-TheCommunityshould
payparticularattentiontotheproblemsthatcouldarisefromthefact
thatinternational stocking,bycreatinganillusionofsecurity,

-5-
mightinduceprivateoperatorsorthemembersoftheagreementtoreduce'
appreciably theleveloftechnicalorstrategicstocks,and,more
generally,toplayirresponsibly withtheirstocksforspeculative
purposesorsimplytocopewithliquidityproblems.
Thebufferstockingarrangements willthereforeneedtoincorporate
necessarysafetyfeaturestoavoidthepossibility ofbufferstocking
givingrisetosecondaryeffectswhichareworsethanthoseit^s
•designedtocounteract.
3.Practicalarrangements andvolumeofthebufferstock .
Inthe(jourseofthepreparatory workcarriedouttodate,the
practicalarrangements forbufferstockinghaveneverbeendiscussed
indetaiI. -
Itshouldbeobservedfirstofallthatthepossibilities areeither
international financingandcentralised stockmanagement (international
bufferstock)oracoordinated managementofnationalstocks.This
secondformulawouldappearatfirstsighttohavecertainadvantages,
notably:
-thatofnot,intheory,requiringinternational financing;
-thatofleavingtothosewhorunthenationaleconomies-whoarein
thebestpositiontoseehowthedifficulties arisingfromthe-
interaction ofthevarioustypesofstocking(referredtoabove)
canbeavoidedinthelocalcontext-theresponsibilityforfulfilling
;thebufferstockobligations incumbentupon"theircountry.
However,italsohasdisadvantages,notably:.
\-recoursetointernational financingbodieswouldinanycasebe
inevitabletoenablecertainparticipants intheagreement,
particularly thedevelopingcountries whowereexperiencing financial
difficulties,tohonourtheirstockingobligations;
-thecoordinated managementofnationalstocksisnecessarily
<cumbersomeandsuccessisuncertaingivenamarketasvolatileas■
thecoppermarket.
/

Sincethedisadvantages seemtooutweightheadvantages,the
Communityshould,intheCommission'sopinion,declareitselfinfavour
ofinternational financingandcentralized managementofthebuffer
stock.
Thehypersensitivity ofthecoppermarketsmilitates,atleastif
oneexcludesthehypothesisofastructuraldepressionofmetalprices,
infavourofnon-excessive stocking;itbeingunderstoodthatthe
agreementshouldcontainaprovisionwherebyanincreaseinthese
resourcescouldbeconsideredinthelightofthecircumstances
prevailing.Moreover,inviewofthedangeroftheeffectofillusory
security,thebufferstockingmechanismshouldnotbegivenexcessively
largeresourceseventojustifyabandoningrecoursetoanyothertype
ofmeasureforreasonsofsimplicityorotherreasons.
•Inanyeventandinviewoftheannualvolumeoftheinternational
trade,resourcescqrresponding to500,000tonnesofcopper,or
approximately 10%ofthatannualvolumeor5weekstradingseemtobe
appropriateifonebearsinmind:
-thatbufferstockingisintendedtobeinadditiontothestocking
alreadypractisedbyprivateandpublicoperatorsandnottoreplace
it;
-that500,000tonnesinsupplementary stockswouldatcertaintimes
(egtheendof1973/beginningof1974)havebeenequivalenttototal
recordedworldstocks;
-thatitisnotintendedthatbufferstockingshouldbethemeansof
absorbingthesurplusinacontinuingsituationofoverproduction ;
thatitisnecessarytoremainwithinacceptablefinancialcommitment
limits. :
Theuseoftheresourcescallsforanumberofcomments.Firstly,
duringtherunning-inperiodof.aninitialagreementoncopper,it
willbenecessarytoexaminetowhatrulesandwhatspecialflexibility
(see1.above)itwouldbedesirable,orevennecessary,tosubject ""
thebufferstockingoperationswithaviewtoavoidingunexpectedand
undesirable effects.

-7-
Secondly,itwiLL.beseenthat,depending onthecirctmistances,
itmightbedesirabletobeabletotakeactiontoimmobilize or
mobilizestocksbymeansofwarrantage operations onprivateorpublic
stocks,particularly infavourofdeveloping countryproducers,rather
thanbypurchasesproper.IntheCommission'sopinion,ifthepossibiLity
wereprovidedforoperations ofthistype,theyshouldbetreatedas
bufferstockoperations .
Withthisoneexception,theCommunityshouldremainfirm
regardingtheprinciplethatpurchases andsalescarriedoutbythe
bufferstockmanagerwouldhavetobecarriedoutonacashbasisand
ontheofficialmarkets;. ■'
Lastly,itshouldbeaddedthatthecopperacquiredbythestock
shouldasfaraspossiblebedividedamongwarehouses situatedclose
tothevariousareasofmajorconsumption .
4.Regulation ofexports
Fromthepreparatory workoncopper,itcanbeconcludedthatthe
regulation ofcopperproduction wouldnotbedirectlypossibleinthe
caseofcertainmajorproducers.Moreover,theCommissioniswell
awarethatrecoursetoexportregulation,theonlymeansofachieving
analogousresults,alsowouldinviteobjections from'theviewpoint
ofthemarketeconomy.Theexperience oftheperiod1975-78,when
persistent production surpluses,coinciding witha'generalized economic
•\ 1
depression,keptpricesatabnormally lowlevels,shows,however,that
theinertiaoftheproductioninfrastructure issuchthatthelawof
themarketcannotrapidlyensurethedownwardadjustment ofsupply
todemand.TheCommission thereforeconsidersthatthepossibility
ofhavingtemporary recoursstoexportregulation mustbeenvisaged
intheagreementtocopeasalastresortwithcircumstances ofthis
kind.Theuseofsuchmeasuresshouldinanycasebeconditional on
a)theexhaustion ofthebufferstockingresources;
b)anegativeresultinconsultations withinthebodiesofthe
agreement onaself-imposed andindividualdiscipline atthe
production stagetobringpricestoanacceptable level;

c)aconsensuswithinthemanagingbodyoftheagreementnotonlyonthe
arrangements forexportregulationbutalsoontheobjectiveof
marketrecovery,i.e.onthedesiredpricerise. *
Furthermore/theCommunitycouldridicatenowthatinitsview,and
sincecopperistradedinfourforms-concentrates andmattes,blister,
refinedandscrap-thequotaforanyparticipant shouldbeappliedto
theoverallcoppercontentofitsexports,irrespective oftheproducts
exported.Naturally,itwouldalsobenecessarytoenvisageprovisions
.topreventparticipants •frommisapplying thequotasbyexportingsemi­
finishedproductsorviatheirtradewithnon-participating countries.
Undersuchconditions,theregulationofexportscouldbeexpected
tohaveaneffectiveandnecessaryinfluenceonproductionandcould
avoidinparticulartheformationoflarge-scale anduncommitted stocks
bytheproducers,theveryexistenceofwhichwouldinthelongrun
weighheavilyonprices. ~
( . r
Lastly,andinviewofthefactthatthe.mandateofthe2ndIGEC
mentionsthemexplicitly,awordcouldbesaidhereontheimplications
ofthestabilization measuresconcerningtheco-products ofcopperand
copperscrap.Asfarasthelatterisconcerned,theCommissiondoes
notconsiderthatcopperscrapposesanyspecialproblemwithregard
tomarketstabilization,exceptthatitwillbenecessarytotakeit
intoaccountintheeventofexportregulation,asstatedabove.In
practice,scrapand,moreparticularly,reclaimedmetalalreadyplay
astabilizingrole,sincehighpricesstimulaterecoveryandthe
marketingofscrapandlowpriceshavetheoppositeeffect.
Asregardsthenumerousco-andby-products ofcoppermetallurgy
(cobalt,nickel,molybdenum,zinc,gold,silver,etc.),itis
particularly whenthemarketisdepressedforcopper,possiblymaking
theregulationofcopperproductioninevitable,thatproblemsarelikely
toarisebecauseoftheinteractions betweenthemarketsinquestion.
Thequestiortalsoarisesofmakingallowancesfortheseproductsinthe"
lossesinearningsfromcopperexportssustainedbycertaindeveloping
countriesifsuchlossesweretoconstitute acriterionforthe
applicationofpossiblemeasuresspecifically concerningthem(see
5above). ./.

-9-
Theproblemsinquestionare,however,toovariedinimportance
andnature,dependingontheco-product,thecountryandeventheore
deposits,forittobepossibleatthisstagetosaywhetherandhow
anarrangement oncoppercouldprovideasolution.
5.Particularproblemsofthedevelopingcountryproducers
Mineralandmetalproductionexposesoperatorstouncertainties
thatarenormallytheresultofthemarketeconomy.,TheCommission
wouldstressthatinthecaseofdevelopingcountriesthatare
economically vulnerable andinadditionverydependentoncopper
(notablyZaire,Zambia,Chile,PeruandPapuaNewGuinea)these
uncertainties canresultinaneconomicdisasterofunacceptable
proportionsforthecountriesconcernedandalso,becauseoftheinvest
mentshortfallscumulatively induced,canresultintheunexpected and
excessivelossofproductioncapacitythatbyitsnatureshouldinno
waybeconsideredaseconomically marginal.
Thecopper-consuming industrialized countriescannotremain
indifferent tosuchproblemsandcorrectivemeasuresmustbeadopted.
Afirstquestiononthissubjectinvolvesdiscriminating betweenthose
correctivemeasurestobeintroducedinthecopperagreementitself
andthosethatshouldbeincludedamongdevelopment aidmeasures.
Itislogicalofcoursetoincludeintheagreementoncopper
correctivemeasurestodealwiththeeffectsofthemeasuresprovided
forinthearrangementitself.Thisappliesinparticulartothe
measuresreferredtoin4above:measureswhichrefertothe
s
circumstances wherethedevelopingcountryproducerswouldbeobliged
tosimultaneously putaceilingontheirexportsandreceiveless
remunerative prices.TheCommissionthereforefeelsthatwithcopper
stabilization inview,anexamination shouldbemadeinsuchcasesof
thewaysofalleviating thedifficulties facedbycertainproducer
developingcountriesinhonouringtheircommitments undertheagreement
wheresuchdifficulties aredueinparticulartolossesinearnings
fromcopperexports.

-10-
Itisclearmorevoverthattheproblemofprovidingcompensation
assuchforthe^developingcountries'lossesinearningsfromcommodity
exportswillcontinuetobestudiedbothasageneraldevelopment
problemandinconnectionwiththebalanceofpaymentsproblem.
TheproblemfacingtheCommunityisspecialanddelicatebecause
certainofitsmembersconsiderthatthecompensation ofthedeveloping ,
countries'lossesincommodityexportearningsshouldbeconsideredasa
solutioninsteadofcommodityagreements andparticularly,inthespecif
caseofcopper,asasolutionthatispreferabletomarketstabilization
measures.
FortheCommission,itisthereforeoftheutmostimportance,to
removeanobstaclewhichinitsviewisreallyratherartificial.The
Commission wouldrecallinfact:
a)thatitisnot"on"politicallytoproposethe'basingofacopper
agreementonexportearningscompensation forcertaindeveloping
countries;' '
b)fullcompensation couldprovemuchmorecostlythanastabilization
agreementandthecommunity,thelargestworldconsumerimporting
coppermainlyfromthedevelopingcountriesthataremostdirectly
.concerned,mightfinditdifficulttoavoidmakingaverycostly ,
-contribution ; ~ -
c)itisclearthattheCommunitywillalreadybemakingaconsiderable
effortinfavourofcertainofthedevelopingcountriesmostdirectly
-concernedinthecontextofthenewACP-EECConvention;
d)theCommunityisinanyeventalreadyinvolvedinthediscussions
concerning"horizontal"solutionstothisproblemintheIMF,UNCTAD,
etc.; •-
e)-asfarastheconceptofthesystemisconcerned,compensation for
lossesinexportearningscannotremainwithinacceptable ,limits
unless:
~itappliestoagroupofproducts; -
-themarketsofthemaincommodities,includingcopper,are
suitablystabilized.

-11-
TheCommissiontherefore hopesthattheCommunity wi11beableto
agreetoitsproposalanddeclareitselfinfavouroftheprincipleof.
adjustments tothestabilization measures-tobewrittenintoany
agreement-infavourofthemostvulnerable developing countries.It
shouldbepreparedtostudysuchadjustments withoutprejuduce andleave
aside,asregardsacopperagreement,thequestionofcompensation
properforlossesofexportearningsfromcopper.
6..Objectiveofandarrangements forinternational consultations ,
institutional aspects "
IntheCommission'sview,thesuccessofanagreement oncopperwill
bedependenttoaverygreatextentonaspecialeffortto:
-administer themeasureswhilepayingcloseattentiontothedevelopment
ofthesituationinthecoppersector;
-takeintoaccountthepracticalexperience' andproblemsofindustrial
andcommercial operators;
-ensuretransparency ,particularly asregards:thetechnological ,
economicandfinancialaspectsofproduction andconsumption ;the
futuresmarkets;theinternational tradeandthepricesactually
applied;theforeseeable trendofsuchdata;
-clarifyandencouragetheconsistency ofthepoliciesofthe
participants intheagreementwiththeobjectives ofthatagreement;
-makeitpossibletodefine,withaviewtothedevelopment ofsubsequent
.international action,themostsuitablemeasuresformarket
stabilization andmoregenerallyforanimprovement inthefunctioning
ofthecoppersectorinthemediumandlong-term.
\
Giventheinteraction inallthesefieldstheCommunitywill
therefore needtoinsistveryfirmlythattheinstitutional structure
oftheagreement makeitpossibleforcloseandeffectiveconsultations '
tobeheldbetweentheparticipants .TheCommunitywillthereforepay
particularattentiontothepowersofthegoverningbodyinthevarious
areascoveredbytheagreement,tothedecision-making process,andto
thelinkageandimportanceofthetechnicalresourcesgiventothe
..) . ,
agreement.

Amongtheseresourcestheagreementmustestablishamonitoring
servicetoensurethecollection,elaboration,and,underthe
responsibility ofthemanagingbodyoftheagreement,thecirculation
oftheinformationtoensurethedesiredtransparency .Theobligations
oftheparticipants relatingtothecommunication ofthenecessary
datamustbesetoutexplicitly'inanyagreement.
Thepreviousexamination ofthemeasurestobeenvisagedshows
thatitwouldbenecessaryasamatterofprioritytodirectthestudies
andconsultations towardscertainsubjects.IntheCommission'sview
thesewouldincludeinparticular :
-ananalysisofmarketphenomena,particularly thecontango-backwardation
movementanditssignificance inrelationtotheevaluationofthe
long-termpricetrend;
-therelationship betweenthepricetrendandthetrendoffactors
determining productioncosts,particularly inthelightoftechnological
developments ;
-therelationshipbetweenthewidthofapricerangeandthenecessary
bufferstockresources;
-possibleinteractions betweencommercialstocks,technicalstocks,
strategicstocksandbufferstocking;
-theforeseeabletrendofproductionandconsumptioncapacity.
Thenumberandimportanceofthesetopics,moredetailedknowledge
ofwhichconstitutes apre-condition fortheeffectivemanagementofthe,
agreement ,andindeedforanyimprovement ofthemeasuresinsubsequent
agreements,alsoshowsthattheCommunitywillneedtopayparticular
attentiontothedetermination ofthedurationoftheagreementand
totheconditionsgoverning^its renegotiation oradaptation.Ifan
agreementoffiveyears(ormore)wereproposed,eithertherewould-
needtobeprovisionsenablingitsmanagingbodytoadjustthe
measuresinaccordance withcircumstances orelsetherewouldneedtobe
provisionforthepossibility ofmid-termrenegotiation .

-13-
Onthis latter point itmust bestressed ,intheCommission 'sview ,,
that unless aneffort ismade toachieve abetter regulation ofinvestment
and ofproduction capacity inthe light ofknown andforeseeable
requirements ,thestabilization measures provided for inanyagreement
are indanger offrequently andperhaps permanently being insufficient
tomeet the needs ofthe moment .One ofthe main merits ofthe
consultations pursued inthecontext ofanagreement oncopper would
therefore betopromote aself-imposed and individual discipline as
regards investment andcapacity .
Inconclusion ,itshould berecalled that experience hasshown
that itwill beinthe Community 'sinterest toensure the best means
ofbeing able toexercise effective control over theaction carried out
inthe context oftheagreement ,particularly regarding thebasis of
thevoting rights t>beallocated tothe Community and itsintrinsic
participation intheagreement .From this viewpoint ,theCommission
would recall itsposition ontheform oftheCommunity 'sparticipation in
commodity agreements ,aposition onwhich the Court ofJustice wasasked
for anopinion regarding thenegotiation oftheagreement onnatural
rubber .
8.Financial requirements
The requirements can beconsidered under three headings :
(i)Management oftheagreement
Thescale oftheannual expenses might reasonably beasfollows :
mio ECU
Secretariat oftheagreement 0.25
Copper monitoring service ■• 0.5
Management ofthebuffer stock and of
possible export régulation measures 0.25
Meetings oftheorgans oftheagreement 1.00
2.0
Afive-year agreement would therefore cost 10million ECU.
(ii>Bufferstock (First Window ofthe Common Fund )
Thebuffer stock isnot,itshould beremembered ,lost expenditure ,
but rather investment tobemade instages ,even ifsuch stages and

thecorresponding -volumearenotforesseableindetailattheoutset.At
thisstageitisonlypossibletosaythat500000tonnesofcopperata
priceofprobablylessthan2000ECUpertonnewouldinvolveatthe
verymaximumaninvestmentfigureof1000millionECU.
Alloperationseffectingstocksandtheavailability oftheproductand
thereforethesupply(warrantage,possiblefinancialaidstothecopper
sectorincertaindevelopingcountriesandundercertainconditions-see
5)shouldbebroughtunderbufferstockingandbecapableofbeing
financedunderthishead.
(iii)Othermeasures:(SecondWindowoftheCommonFund)
Withoutexcludingthepossibility ofcopperbenefiting fromactivities
intechnological research,tradepromotion,etc.,itisunlikelythat,
stresswillbelaidonthistypeofaction.Itwouldnevertheless be
reasonabletomakeprovision,underthiscategoryofmeasures,forthe•
resourcesneededtocarryoutspecialstudiesonthecopperindustry
andtradeamountingforexampletoanannualfigureofaround0.5
millionECU.
9.Financing
Therearetwotheoretically opposedmethodsoffinancing:that
/ ■ofleviesoninternational tradeandthatofnationalcontributions .
Theadvantageofthefirstmethodisitsrelativelysimplenatureandthe
factthatitmakesitpossibletoavoidthebudgetaryproblemsrelating
tonationalcontributions .However,thismethodgivesrisetotwo.
criticisms :
a)ItignorestheUSAwhoseinfluenceonthecoppermarketatworld
levelgreatlyexceedstheextentofitsinvolvement ininternational .'
trade.
b)Thismethodisopentoquestionasregardsitsallocation-difficult
toevaluateinobjectiveterms-ofthefinancialburdenbetween
consumersandproducers.Producersinsistwithsometruththatin
adepressedmarketthelevieswouldamounttoartequivalent
reductionintheirearnings.

Inanyevent,theprospectoftheforthcoming establishment ofthe
CommonFundwilldoubtlesstendtoexertaninfluenceinfavourof
nationalcontributions .Onthisassumption,anyagreementoncopper
wouldaccedealmostinevitablytotheCommonFund.Thiswouldmean,
insofarascanbeforeseenatpresent,theinitialpaymenttothe
Fundofone-thirdofthemaximumamountenvisagedforthefinancingofthe
bufferstock,or333millionECUasaroughestimate.
-Theinitialcontribution -oftheCommunity,assumingequal
participation ofproducersandconsumers,wouldthereforeamounttosome
45-55millionECU.Theobligations oftheCommunity,underthe
agreement,wouldinvolvecomplementary financingamountingtosome
90-110millionECU.
TheCommunityparticipation inthecurrentexpenditure ofthe
agreement-some0.45-0.55millionECUannually-whateverthemethod
offinancingshouldnotofcourseposeanyparticularproblems.