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COM (80)71
Vol.1980/0026

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(80)71 final
Brussels,22ndFebruary1980
COMMISSION COMMUNICATION TOTHECOUNCIL
MAINTENANCE OFTHE1975INTERNATIONAL COCOAAGREEMENT
ANDCONTINUATION OFTHENEGOTIATIONS FORITSRENEWAL
(International CocoaCouncil,London.3-14March1980)
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C0M(80)71final

Commission Communication totheCouncil
Maintenanceofthe1975International CocoaAgreementandcontinuation
ofthenegotiations foritsrenewal ;
(Internafional CocoaCouncil,London,3-14March1980)
Withtheexceptionoftheconclusionoftheinternational Agreementonnaturalj
rubber,1979wasnotaveryfruitfulyearforinternational agreements on jj
• \commodities .ProgressontheUNCTADIntegrated Programme wasslow.Within ji
• !
theexistinginternational agreements,therelationship betweenproducers .j.
andconsumersaredifficult andalargenumberofdeveloping countries
j;realizedtheirstrengthasholdersofbasicfoodstuffs orindustrial raw •
materials .
• » J"
ThesituationregardingtheInternational CocoaAgreement,whichcouldnot .*
stabilizethemarketbecausethepricessetbytheagreementhavealways j
belowerthanmarketprices,givescauseforconcern.Asaresultofthe
repeatedbreakdownsinthenegotiations onpricesin1979,theexporting
countries ,(fiveofwhichcover80%ofthemarket,andtheACPStates(alone60%)
haveendeavoured toreachagreementonpricesandonastabilization fund
(attheinstigationofIvoryCoastandBrazil)atpricelevelshigherthan-j
thoseacceptable bytheimportingcountries. [
Suchanattitudedoesnotfacilitatetheresumptionofthedialoguebetween |
exportersandimporters.Itmayalsoprovideareasonfornotextending j
theexistingAgreementforexportingcountrieswhichconsiderthatitwill ,,[
remaininoperative evenifitisrenewed,andforimportingcountrieswhich >I
feelthatunilateralactionbyexportingcountrieshasremovedthejustifica-'j
tionformaintainingthiscooperationframework.'- |
TheCommunitymustmakeevery-efforttobreakthisviciouscircleatthenext[
International CocoaCouncilmeeting,wherethediscussionswill.bedecisive
for t
thecontinuation oftheAgreement,whichhasalreadybeenextendedbysixI
monthsandexpireson31Marchunlessextendedfurther; j

2.-
-initialinter-governmental consultations ,forwhichtheInternational
CocoaCouncilhasbeenmaderesponsible withaviewtopreparingforthe
negotiations toberesumed,ifpossiblebeforetheendof1980,in
accordance withtheResolution adoptedbytheConference Whenitadjourned
on30November 1979. -
AstheUnitedStatesisnotasignatorytotheAgreement,theCommunity,with
560votesoutof1000,hasacrucialresponsibility ontheimportingcountries
side.
Despitethedifficulties encountered owingmainlytoaction,takenbythe
ï
exportingcountries,anddespitethetendencyofcertainmembersofthe
agreementtoendcooperation,theCommission considersthattheCommunity
cannotenvisagesuchaneventuality ;itmusttherefore bemorerealistic
andconstructive thaninthepast,drawingexportingcountries'attention
tothedangersofpursuinganunilateralpolicyinthecase,ofatropical
agricultural productwhich,afteraperiodofshortage,islikelytobein
surplus.onceagain.
Thefollowingarguments canbeputforwardinsupportofsuchaproposal :
' ♦
-International cooperation shouldbemaintainedforthiscommodity,which
isoneofthemostimportant ontheUNCTADlistof18commodities forthe
developingcountries andparticularly fortheACPStates(1).
-Theconsultations topreparefortheresumptionofthenegotiations must
becontinuedwithintheInternational CocoaOrganization (withthepartici­
pationoftheUnitedStates)ratherthanwithinUNCTAD.
-TheendoftheAgreementwouldresultintheliquidation ofthebufferstock
andthepaymenttoexporting membersoffundsfromthestock,i.e.about'
t200millionaccumulated overt^elastsixyears.
-Liquidation wouldmakeitevenmoredifficulttoconclude athirdcocoa
fqr-w.h.i,ç>, v.ojwAdh,a,v«
tobefound.
ν
»
World-impqrt;s.qfQQc;oaandby~products wer^worth&6QQQmillionin1978..

-Itwouldalsohaveanadverseeffectonthesettingupofthefuture
CommonFundandontheimplementation oftheIntegrated Programme asa
whole.
-Therepercussions ofsuchasituationwouldbefeltbeyondtheparticular
contextofthisproductandtheCommunitywouldbecriticizedforthisin
otherinternational forums.
... -.... 1Thelastdirectives wereapprovedbytheCouncilinJanuary1979beforethe
beginningofthenegotiations ,whichfailedtoproduceanewAgreementin
thecourseoftheyeardespitethreeConference sessions.
ForthisreasontheCommissionisproposing newdraftdirectives tothe
Councilfortheforthcoming workoftheInternational CocoaCouncilinMarch
Althoughatthisstageitisnotamatterofconducting realnegotiations /
theCommunity'spositionshouldbeestablished onthebasis.ofthesenew
guidelines .
1Secretdocuments 4435/79PROBA7of24January1979and
4688/79PROBA12of7February1979
>

ANNEX
Draftdirectives fortheMarch1980sessionoftheInternational
CocoaCouncil ^
^
1.Extensionofthe1975Agreement
TheCommunityisinprincipleinfavourofafurtherextensionofthe
<
Agreementfrom1April1980ifthatisdesiredbythemajorityofthe,
members.
Thedurationofthisextension shouldbelinkedtothetimetable of
consultations andfuturenegotiations .Sincethenegotiations shouldbe
resumedbeforetheendof1980ifpossible,andgiventheperiodsrequired
forthesigningandapprovalofanewAgreement,theCommunitycouldaccept
anextensionofoneyear.Itwouldnot,however,objecttoashorter /
period,althoughitisobviousthatsixorninemonthswouldbeinsufficient .
t •
ThesuspensionoftheeconomicclausesoftheAgreementimpliesthenegotiation
ofaprotocoloramendmentstobesubmittedforacceptance bythegovernments .
TheInternational CocoaCouncilmay,however,suspendbyaspecialvotethe
contribution usedtofinancethebufferstock(Article39'1),andthis
wouldalsoinvolvethesuspensionoftheexportandimportcontrolmeasures
(Article49).
Ifanextensionoftheagreementundertheseconditions canpreventtermination
oftheAgreement,theCommunitywillnotopposeit.TheCommunity mustseek
anysolutionlikelytosuittheInternational CocoaCouncil,
astheAgreementwillautomatically cometoanendfailingafavourable
decision. -
InpresentingitspositionontheextensionoftheAgreement,theCommunity
willdrawtheexportingcountries'attentiontothe"short-andmedium-term
consequences ofunilateral measurestakenbysomeoftheminorderto
influencemarketprices.Anystorageoperation,i.e.anyoperationwhich
holdsbacksupplies,iscontrarytothespiritoftheAgreement andcevento
theletterofcertainofitsprovisions :Article27(2)andArticle45(1).

2.-
2.Consultations withaviewtotheresumptionoftheNegotiating Conference
a)Problems_rema2n2n2_to_be_sett^ed (exceptprices)
ThedraftamendmentspreparedbytheEEC,theconsumercountriesgroup,or
amajorityofthem,shouldbepresentedandexaminedduringtheconsultations
onthefollowingpoints:
-membershipbyintergovernmental organizations (Article4);
-institution ofthebufferstock(Article31);
-financingofthebufferstock(Article31A);
-liquidationofthebufferstock(Article37).
WithregardtothedurationoftheAgreement (Article68),ifamajorityofthe
participant countriesareinfavourofreducingitfromfivetothreeyears,
theCommunitywouldbeabletoagreeto,thiswiththeprovisothat:
-the250000tcapacityofthebufferstockcouldnotbeincreasedinthat
event;
-atwo-yearextensionoftheAgreementcouldbedecidedonbyaspecialvote
oftheCocoaCouncil.
! *b)Theproblemofprices
Theamendmentspreparedwithregardtothe,timetableandconditionsforthe
review andrevisionofpriceswillhavetobepresentedandconsidered.
Thesemi-automatic pricesrevisionformulamustbefurtherclarifiedand
possiblymodified. -
Theproblemofthelevelofpriceswillhavetobere-examined withthe
exportingcountriesandlookedatfromtheeconomicandtradeangles.
Giventheprospectoftheentryintoforceofanagreementin1981atthe
earliest,theCommunitymustalsotakeintoaccount,duringtheconsultations with
theexportingcountries,thedevelopment ofextraneouseconomicfactorssuch
ascurrencyexchangeratesandtheincreaseinthecostofimportedproducts,
whichisreflectedinproduction,marketingandtransportcosts.

3.Continuation oftheconsultations
OntheassumptionthattheAgreementwillbeextendedattheendofMarch,
Communitywouldfoepreparedtocontinuetheconsultations atarapidand
intensivepacein1980.
1Itcouldagreetoembarkonpreliminary negotiations onthemainoutstanding
issuesattheappropriate timeonthe.understanding that:
-onlytheNegotiating Conference canfinalizethevariouscomponents ofthe
agreementinanoverallsettlement;
-anypossibleconcession bytheCommunity onthelevelofpricestobreak
adeadlockinthenegotiations willpresuppose thattheotherproblems
relatingtopricesortoothermattershavebeensettledtotheCommunity's
satisfaction .
IftheAgreement werenotextended,theCommunitywouldreserveitsposition
ontheconsequences ofsuchasituationforfuturenegotiations andonthe
conditions underwhichtheconsultations couldbecontinuedinanother
international forum,namelyUNCTAD.
Furtheradditionswillbemadetothesedirectivesifnecessary.