ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(78)267
Vol.1978/0100

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(78)267final
Brussels,15June1978
RequestbytheGovernmentofZambia
toaccedetoProtocolNo3onACPsugarannexedtotheConvention
ofLomé
(Communication fromtheCommissiontotheCouncil)
COM(78)267final

EXPLANATORY MMORAFDUM
Theattachedrecommendation foraCouncildecisiondealswiththe
application byZambiatobecomeamemberofProtocolNo3onACP
sugarannexedtotheACP-EECConventionofLome.Alsoattached,in
theformofadraftNoteVerbale,isaproposedreplytotheappli­
cationwhichwasmadeonbehalfofZambiabytheACPGeneralSecretariat .
Thisreplyconstitutes arejectionoftheapplication .Therecommendation
arisesfromtheapplication oftheJointDeclaration concerningpossible
requestsforparticipation -inProtocolNo3«ThetextofthisDeclaration
appearsinAnnexXIIItotheFinalActoftheConventionofLome
Financialimplications
Havingregardtoitsconclusion,thisrecommendation hasnofinancial
implications .

PROPOSAL PGR A
REccf^ngroATiow tothe council
Rarruest bytha Government ofZambia "toaccede toProtocol .Ho3
onACP sugar annexed tothe Convention ofLomg
(Alltonnages inrawvalue unless otherwise stated )
GENERAL
1*Annex XIII tothe Pinal Act ofthe Convention ofLome reads :
"Anyrequest from anACPState Contracting Party totheConvention not
specifically referred toinProtocol No3toparticipate intheprovi­
sions ofthat Protocol shall beexamined *"*
2*There isnoexpress orimplied obligation onanyContracting Party to
♦
theConvention toagree toarequest byoneofthem toparticipate in
theprovisions ofProtocol No3«Moreover ,theagreement ofallthe
Parties would benecessary before anysuch request could begiven legal
effect .This isbecause anaccession tothe Protcol necessitates an
amendment ofthe text *
3*Attheir meeting inKampala early last year alltheACPStates pledged
their support totherequests which were then expected from Zambia and
Liberia *Acopy oftheformal request dated 4May 1977 made bythe
ACPSecretariat onbehalf oftheGovernment ofZambia isattached (Annex II)
This relates toaProtocol quota of15000tonnes ,white value *
Norequest has sofarbeen received ,from the Government ofLiberia *
4*TheZambian application raises twomain questions fortheCommunity :
(a)Inthelight ofitsinternal sugar situation nowandinthe ,foreseeable
future ,andofether relevant factors ,istheCommunity prepared in
principle either : ,
(l)toincrease permanently itsexisting obligations toimport ACP
sugar ,
or
(2)toagree totheadmission ofnewmembeigto theProtocol without
increasing thecurrent total oftheCommunity 'simport obligations
under the Protocol ?
(l)rhe technical paper referred toinAnnex IIisnotatta­
ched tothese papers ,butitcanbemade available toMember
States onrequest *

-2-
(b)Inparticular,hasZambiaestablishedanetexportingpositionand,
ifso,whatannualexportablesurpluscanitreasonablyexpectto
produceandmaintain?
TheCommunityneedadoptaformalviewon(b)onlyifitsresponseto
eitherpartof(a)isaffirmative.
ADQUESTION4(a)
Economicconsiderations
5#AnnexIIIsummarisesthemainfeaturesofthepresentandforeseeable
situationsintheCommunity'ssugarsectorandontheworldmarket#
Thefollowingconclusions canbedrawn:
(1)TheCommunityiscurrentlyinsubstantialsugarsurplus.
Assumingaverageyields,itsself-sufficiency insugarislikelyto
remainsignificantly above100$untilatleast1980whenthe
Community'spresentsugarproductionpolicyexpires.Totheexpor-.
tablesurplusofCommunity-produced "quota"sugar(about1.72mio
tonnesin1977/78)mustbeaddedafurthersurplusquantityequivalent
toimportedpreferential sugar(about1.42miotonnesannually).The
totalcostoftheexportrestitutionsrequiredin1977/78isestimated
tobeoftheorderof650mioua,ofwhichabout180miouawillcome
fromtheproductionlevyonCommunityproducers.
(2)Theworldasawholeisalsoinsubstantialsurplus,withabnormally
largestocksexertingadepressiveeffectonworldmarketpricelevels.
Barringunforeseencropdisastersinmajorsugar-producing areasof
theworld,thesepricelevelsarelikelytoremainwellbelowthe
Community'spricesduringthe5-yearlifeoftheInternational Sugar
Agreement(ISA.)whichcameintoforceon1January1978.Itisthere­
foreprobablethatintheforeseeablefuturetheCommunity'sexports
ofitssurplus"quota"sugar ,togetherwiththere-exportsofpreferen­
tialsugar,willcontinuetorequireexportrestitutions onasubstan­
tialscale.
(3)TheISArestriction onimportsfromnon-members (referredtoin
AnnexIII)isnowinforce.Thiswillaffecttheopportunities for

-3
Communitytraderstofindexportmarketsforthewholeofthe
Community'sexportablesurplus;andthelargertheimportermem­
bershipoftheISAthegreaterthisadverseeffectonexportoppor­
tunitieswillbe#
Otherconsiderations
6#TheACP'sNoteVerbaleimpliesthattheSugarProtocolcanberegar­
dedasameansofprovidingcompensatory assistancetotheeconomies
ofACPStateswhoseearningsfromtheexportsofotherprimaryproducts
havebeenreduced.Ifthisprinciplehadbeenoriginallyintendedit
liouldpresumablyhavebeenreflectedinthetextoftheConventionof
Lome,notablyintheprovisionsrelatingtoSTABEX#Thisisnotthe
case;andsincesugarisexcludedfromtheSTABEXarrangementsitwould
bedifficulttoacceptthattheSugarProtocolisanextensionofthose
arrangements •
7#ZambiaislistedinAnnexIItotheISAasasmallexporter#This
meansthatifZambiajoinedthatAgreement,asitisfreetodo,it
couldexportuptoJO000tonnesannuallytotheworldfreemarket
withoutanyofthequantitative restrictions imposedonthelarger
exportingmembers#Zambiawouldalsobeexemptedfromtheobligation
tomaintainanyISAspecialstocks,anditsexportoutletswouldhot
beaffectedbytheISArestrictions onimportsfromnon-members#
ADQUESTION4(b)
8#Inthelightoftheinformationavailabletoit(summarisedinAnnexIV)
theCommissionbelievesthatitisreasonabletoconcludethatZambia '
hasnowachievedanetexportingposition#Havingregard,however,to
theforeseeableincreaseinZambia'spopulationandpercapitaconsumption
inrelationtoitsproductioncapacityandclimaticvariationsitis
difficulttoassesshowmuchexportablesurplusZambiacouldberelied
upontoproduce#Therequestedquantityof15000tonneswhitevalue
(about16000tonntesrawvalue)appearstobeover-optimistic forthe
reasonsgiveninAnnexTV#
./

9.Itisunderstandable thatZambiashouldwishtobroadenitseconomic
basebyproducingsurplussugarforexport.Suchdiversification would
reduceZambia'sdependence oncopperexports;andgiventhepresentlow
levelsofworldmarketsugarpricesZambianaturallyhopesthatitssugar
exportscanattractthemuchhigherpricepaidundertheSugarProtocol.
10.ButthatProtocol,despitetheanomalouspositionofKenyaandSurinam
(neitherofwhichisanetexporter),wasnotintendedtoenableACP
sugar-producing Statestodevelopapreferential sugarexporttrade.
ThesolepurposeoftheSugarProtocolwastoimplementtheCommunity's
undertaking (asitappliedtosugar)inpartIIIofProtocolBo22annexed
totheActofAccession(seeAnnexV).
11.Inthelightofalltheforegoingconsiderations theCommissionsees
nojustification forincreasingtheCommunity'sexistingimportobliga­
tionsundertheSugarProtocol,therebyincreasingeitherthequantity
ofCommunitysurplussugarforwhichexportmarketscannotbefoundor
thecostofdisposingofthetotalsurplusontheworldfreemarket.
RECŒMEMDATIOÏÏ
12.TheCommissionaccordingly recommendsthattheCouncilshouldreplyto
theZambianrequestinthetermsoftheattachedNoteVerbale(Annexi)
ANNEXES
I.DraftofNoteVerbalefromtheCounciltotheGeneralSecretariat
oftheACP.(SeealsotheappendixtothisAnnex.)
II.CopyoftheACPGeneralSecretariat'sNoteVerbaleof4May1977*
(ThiswassuppliedonlyinEnglish).
III.SituationintheCommunity'ssugarsectorandontheworldmarket.
IV.NotesontheZambiansugarindustry.
V.'PartIIIofProtocol No22annexedtotheActofAccession.

ANNEXI
DRAFTOFCOMMUNITY 'REPLYTONOTEVERBALE OF4WAY1977FROMTHEGENERAL
SECRETARIAT OFTHEACPGROUPOFSTATES
NOTEVERBALE
FollowingreceiptoftheNoteVerbale(referenceL.1698/77/ACP)of4May1977
fromtheGeneralSecretariat oftheACPGroupofStatestheEuropeanEconomic
Community,inaccordance withAnnexXIIItotheFinalActoftheConvention
ofLome,proceededtoexaminetherequestbytheGovernmentofZambiatoaccede
toProtocol No3onACPsugarannexedtotheConvention .
TheCommunity hasnowcompletedthisexamination .Indoingsoithastaken
intoaccountallrelevantfactors,includingthosesetoutintheGeneral
Secretariat'sNoteVerbaleandtheenclosuretheretoandthoserelatingto
thepresentandforeseeable situationsintheCommunity'ssugarsectorand
ontheworldmarket.
AstheGeneralSecretariat mayknow,theCommunityitselfisfacedwitha
difficultsituationinwhichitssugarconsumption hasfallensubstantially
andshowsnosignsofrecoveringtopreviouslevels.Bycontrast,theCommunity's
productionofsugarforinternalusehasrisentolevelswhichcurrently
exceedannualrequirements byabout1.72milliontonnes(rawvalue).Theresult
isthattheCommunity hasalargesurplusofitsownsugar,towhichmust
beaddedafurther1.42milliontonnes(rawvalue)ofsugarequivalent toits
importsofpreferential sugar,allofwhicharesurplustotheCommunity'srequire­
ments,anditisprobablethattheCommunitywillbeunabletofindexport
marketsforthewholeofthissurplusquantity.Moreover,becauseworldmarket
pricelevelsaremuchlowerthanthe'Community'sinternalpricestherestitutions
necessarytoenableexportstotakeplaceofsugarforwhichmarketscanbe
foundpresentasubstantial costtoCommunityfundsandtcCommunityproducers.
ItistheCommunity'shopethatthe1977International SugarAgreementwillbe
effective .inraisingworldmarketpricestolevelswhichwillbemore
remunerative toexportingcountries.ThiscouldbehelpfultoZambiaifand
whenitexportstotheworldmarket.Butthepresentindications arethatthe
surplussituationsintheCommunity andontheworldmarketarelikelyto
persistforsometimetocome.ThismeansthattheCommunitywillcontinueto
befacedwiththeriskofinsufficient worldmarketoutletsforallits.surplus
sugarandaheavyfinancialburdeninexportrestitutions .

TheCommunityfullyappreciates thereasonsunderlying Zambia'sdesire
toaccedetoProtocol No3.Butinthelightofthesituationoutlined
above,theCommunity hasreluctantly concludedthatitisnotina
positiontoincreaseitsexistingimportobligations underthatProtocol.
(Complimentary close). '*
Brussels*, 1978

Appendix toANNEX I
Itisforconsideration whether thefollowing should be
added asthe final paragraph ofthe Note Verbale :
Nevertheless ,ifwithin the current total quantity
ofsugar covered bytheSugar Protocol theACP states
concerned arewilling ,asagroup ,toadjust their
individual agreed quant-ities inorder toadmit Zambia
tomembership theCommunity would consider sympathetically
anyproposal onthese lines which theACPstates wish tomake .