22.7.86 Official Journal of the European Communities No C 183/5 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Council Regulation setting up a system of compensation for loss of export 
earnings for less-developed countries not signatory to the Lome Convention 
COM(86) 317final 
(Submitted by the Commission to the Council on 11 June 1986) 
(86/C 183/03) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, HAS ADOPTED THIS REGULATION: 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 235 
thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European 
Parliament, 
Whereas in pursuance of the Community development 
cooperation policy it is desirable to give effect on certain 
conditions to a system to compensate least-developed 
countries not signatory to the Lome Convention for 
losses of export earnings; 
Whereas the importance and significance of development 
reside, inter alia, in its objective of promoting the welfare 
and respecting the fundamental rights of the 
communities concerned; whereas it is therefore necessary 
to obtain the fullest guarantees that the system will 
operate to the benefit of those communities; 
Whereas for the purposes of implementation, the aims 
and outlines of the system should be established in a 
framework regulation; 
Whereas to ensure that the system attains its objectives it 
is necessary to provide that recipients should benefit only 
if they undertake to abide by certain conditions; 
Whereas for the purposes of administering the system a 
procedure for prior consultation of the Member States 
should be established; 
Whereas the Treaty does not provide for the necessary 
powers, TITLE I 
OBJECTIVES AND GENERAL PROVISIONS 
Article 1 
1. As part of its development cooperation policy the 
Community shall give effect to a system to compensate 
for losses of export earnings those countries on the 
United Nations' list of least-developed countries which 
are not signatory to the Third ACP-EEC Convention. 
2. The said system shall cover the period 1986 to 1990 
and transfers shall start as from the financial year 1987. 
Article 2 
1. With the aim of remedying the effects of the 
instability of export earnings and of aiding the countries 
concerned in their development efforts, the system shall 
operate to help stabilize the said countries' earnings from 
exports to the Community of products on which their 
economies are dependent, which are affected by fluc­
tuations in price or quantity or both, and which are 
included in the list referred to in Article 3. 
2. The system referred to in paragraph 1 shall help 
stabilize export earnings by means of non-repayable 
transfers of financial resources, hereinafter referred to as 
'transfers'. 
3. Transfers must be used for projects, programmes or 
operations either: 
(a) in the sector in which the loss of export earnings 
occurred, where appraisal of the transfer request 
indicates that the said loss was caused by circum­
stances which such projects, programmes or 
operations might remedy, or 
No C 183/6 Official Journal of the European Communities 22.7.86 
(b) in other appropriate sectors for the purposes of 
diversification, provided the recipient country and 
the Commission so agree. 
Article 3 
1. The system shall apply to earnings from each of the 
recipient countries' exports to the Community of 
products listed in the Annex. 
2. Each recipient country shall certify that products to 
which the system applies have originated in its territory. 
TITLE II 
FUNDING AND FINANCIAL MANAGEMENT 
Article 4 
The budgetary cost of the system to be put into effect 
pursuant to Article 1 is estimated at a maximum of 50 
million ECU for the five year period from the financial 
year 1987 to the financial year 1991. 
Article 5 
The funds required for putting into effect the system 
established under this Regulation shall be shown in the 
general budget of the European Communities. 
TITLE III 
RULES AND PROCEDURES FOR IMPLEMENTATION 
Article 6 
1. The transfers referred to in Article 2 (2) shall be 
allocated on the basis of requests from the recipient 
countries. 
2. In addition to the necessary statistical data, transfer 
requests shall include substantial information concerning 
the situation in the sector or sectors in which the loss of 
earnings has occurred and the projects, programmes and 
operations to which the recipient country has allocated 
or undertakes to allocate the funds in accordance with 
the objectives and provisions set out in Article 2. Article 7 
Transfer requests shall be addressed to the Commission, 
which shall examine them in conjunction with the 
recipient country concerned. Such examination shall 
consider the statistical data, calculation of the transfer 
basis and of any reduction which may be applicable, and 
the use to be made of the funds to be transferred. 
Article 8 
1. Following the examination referred to in Article 7, 
the Commission shall take a transfer approval decision in 
accordance with the procedure provided for in Ar­
ticle 10. 
2. The conditions for use of the transferred funds 
shall be set out in an agreement between the Commission 
and the authorities of the recipient country. 
Article 9 
Rules for the implementation of this Regulation shall be 
adopted by the Council acting by a qualified majority on 
the basis of a proposal from the Commission. 
Article 10 
1. An Advisory Committee on the System of 
Compensation for Loss of Export Earnings for 
Non-ACP Least-Developed Countries, hereinafter 
referred to as the 'Committee', chaired by a represen­
tative of the Commission and composed of represen­
tatives of the Member States, is hereby established under 
the auspices of the Commission. The secretariat of the 
Committee shall be provided by the Commission. 
2. The Committee shall examine matters on which the 
Commission has requested an opinion. In requesting 
such opinion, the Commission may set a time-limit by 
which it must be delivered. The Committee shall not vote 
on opinions, but each member of the Committee may 
require that his views be entered in the minutes. 
Article 11 
The Commission shall report annually to the European 
Parliament and the Council on the administration of the 
system during the preceding year. 
Article 12 
This Regulation shall enter into force on . . . 
This Regulation shall be binding in its entirety and 
directly applicable in all Member States. 
22. 7. 86 Official Journal of the European Communities No C 183/7 
ANNEX 
Product coverage (see Article 3) 
1. Groundnuts, shelled or not 
2. Groundnut oil 
3. Cocoa beans 
4. Cocoa paste 
5. Cocoa butter 
6. Raw or roasted coffee 
7. Extracts, essences or concentrates of coffee 
8. Cotton, not carded or combed 
9. Cotton linters 
10. Coconuts 
11. Copra 
12. Coconut oil 
13. Palm oil 
14. Palm nut and kernel oil 
15. Palm nuts and kernels 
16. Raw hides and skins 
17. Bovine cattle leather 
18. Sheep and lamb skin leather 
19. Goat and kid skin leather 
20. Wood in the rough 
21. Wood roughly squared or half-squared, 
but not further manufactured 
22. Wood sawn lengthwise, but not further prepared 
23. Fresh bananas 
24. Tea 
25. Raw sisal 
26. Vanilla 
27. Cloves — whole fruit, cloves and stems 
28. Sheep's or lambs' wool, not carded or combed 
29. Fine animal hair of Angora goats — mohair 
30. Gum arabic 
31. Pyrethrum — flowers, leaves, stems, peel and roots; saps 
and extracts from pyrethrum 
32. Essential oils, not terpeneless, of cloves, 
of niaouli and of ylang-ylang 
33. Sesame seed 
34. Cashew nuts and kernels 
35. Pepper 
36. Shrimps and prawns 
37. Squid 
38. Cotton seeds 
39. Oil-cake 
40. Rubber 
41. Peas 
42. Beans 
43. Lentils 
44. Nutmeg 
45. Shea nuts 
46. Shea nut oil 
47. Mangoes 
48. Dried bananas 
49. Mace 
50. Jute NIMEXE Code 
12.01-31 to 12.01-35 
15.07-74 and 15.07-87 
18.81-00 
18.03-10 to 18.03-30 
18.04-00 
09.01-11 to 09.01-17 
21.02-11 to 21.02-15 
55.01-10 to 55.01-90 
55.02-10 to 55.02-90 
08.01-71 to 08.01-75 
12.01-42 
15.07-29, 15.07-77 and 15.07-92 
15.07-19, 15.07-61 and 15.07-63 
15.07-31, 15.07-78 and 15.07-93 
12.01-44 
41.01-11 to 41.01-95 
41.02-05 to 41.02-98 
41.03-10 to 41.03-99 
41.04-10 to 41.04-99 
44.03-20 to 44.03-99 
44.04-20 to 44.04-98 
44.05-10 to 44.05-79 
08.01-31 
09.02-10 to 09.02-90 
57.04-10 
09.05-00 
09.07-00 
53.01-10 to 53.01-40 
53.02-95 
13.02-91 
12.07-10 and 13.03-15 
33.01-23 
12.01-68 
08.01-77 
09.04-11 and 09.04-70 
03.03-43 
03.03-68 
12.01-66 
23.04-01 to 23.04-99 
40.01-20 to 40.01-60 
07.01-41 to 07.01-43 
07.05-21 and 07.05-61 
07.01-45 and 07.01-47 
07.05-25, 07.05-65 and ex 07.05-99 
07.05-30 and 07.05-70 
09.08-13, 09.08-60 
12.01-70 
ex 15.07-82 and ex 15.07-98 
ex 08.01-99 
08.01-35-11 
09.08-16 and 09.08-70 
57.03-10 to 57.03-50