ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(77)54
Vol.1977/0022

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COMMISSION OFTHEEUROPEAN COMMUNITIES
>*·
COM(77)54final.*A/ *\
(*■D VBrussels,3March1977.!W!:j
COMMISSION COMMUNICATION TOTEECOUNCIL .
,onparticipation bytheCommunityinthe
UnitedNationsConferenceforthenegotia-
,tionofanewInternational Sugar"Agreement
CCK(77)54final

Community approachtoanewInternational SugarAgreement
V
Obiect
1.ACommunitydecisionisrequiredastowhetherandonwhatbasistotake
partintheUNCTADconferencetonegotiate anewInternational Sugar
Agreementwhichhasbeenscheduledfor18Aprilto27May1977.
Background
2.TheCommunityisnotamemberoftheexistingAgreementbuthaspartici­
patedwit'hobserverstatusinmeetingsdirectedtowardsthepreparation
ofanewagreement.
3.On18June1976itmadeaformalstatementtotheInternational Sugar
Council.Inthis,theCommunitydeclareditselfinfavouroftheprinci­
pleofparticipation inanewAgreement,butagainsttheapproachto
suchanagreementcontainedinthedraftthenunderconsideration .It
agreedconditionally totakepartinfurtherpreparatory work,butremained
otherwise uncommitted .
4.SincethatdatetheCommunityhastakenanactivepartinthepreparatory
workwhichhasprecededtheestablishment ofthedraftnegotiatingtext.
Ithasexplainedindetail,bothorallyandinwriting,itsproposalsfor
asysteminwhichmarketstabilisation wouldbesoughtthroughamaximum
andminimumpricestructuresupportedbytheinternationally-coordinated
managementofnationalstocklevelscoupledwithappropriate disciplines
inextremepricesituations .Inthisapproach,whichisfoundedonthe
GATTMTNnegotiating directive,theCommunityfindsitselfto'tallyisola­
ted;anditisclearbeyonddoubtthatthereisnopossibility ofthe
negotiatihg conference beingledtoadoptit.
5.Thenegotiating documentwhichwillbebeforetheConferenceisadraft
preparedbytheInternational SugarOrganisation Secretariat,whichis
discussedinmoredetailinparas15to18below.
6.Inthesecircumstances theCommunitymustnowdecidewhethertotakepart
inthenegotiations atalland,ifso,bywhatmeanstosafeguarditsin­
terests.
./.

7.TheconstraintswithinwhichtheCommunitymusttakeitsdecisions
areanalysedbelow.
The_Çommun2t^s_2nternal_rnarket_çrgarn sation
8.Thecommonorganisation oftheCommunity'ssugarmarketdatesfrom
1968.Initspresentformitappliesuntil1980,whenitwillbere­
viewed.Itisacomplexstructurearrivedatonlywithdifficulty,
anditwouldbecorrespondingly difficultfortheCommunitytomo­
difyitinanybasicrespect.
9.Itsessentialfeatureisaquotasystemintwoparts:
fixedbasicquotas(Aquotas)andanadditionalvariableelement
(Bquotas).Thetotalofbasicquotaswasnotrelatedtototal
internalconsumptionbutwasfixedwithreferencetotheactualproduc­
tionin_a_previousreferenceperiod.Theaimoftheadditional Bquotas
wastoallowfurtherproductiontotakeplace_in_areas_best ^suitedtobeet
919^09yThe"B"quotasarefixedannuallybytheCounciLasaproportionof
"A"quotasj__The_result_oftheapplicationof_this^.systemwas_andrejnainsa
totalCommunityquota-based production whichisnormallyinexcessofto­
.talinternalrequirements .
10.Inaddition,producershavetherighttoproducesugar(Csugar)
inexcessoftheirAandBquotas.AllC.sugarmustbeexportedby
theproducersconcernedwithoutCommunityfinancialassistance,wi­
thoutquantitativerestriction andentirelyattheirownfinancial
risk.
11.Theneteffectisthatexportoutletsmustbesoughteachyearfor
surplusquotasugarandallCsugar.

3.
»f
The.Community _s_import_obligations .
12.TheCommunity'sobligations underProtocol3oftheLomeConvention,
andparallelarrangements withcertainotherdevelopingcountriesnot
partytothatConvention,_may_be_summarised_as _follows.
13.Underthesearrangements thecountriesconcernedundertaketosupply,
andtheCommunityguaranteesthepurchaseandimportofsugartotalling
some1.4milliontons(rawequivalent )annually,atguaranteedprices
linkedtotheCommunity'sinternalprices.Thereisnoterminaldateto
theCommunity'sobligation;andthequantitycanbereducedonlyto*the
extentthatthesupplyingcountriesconcernedfailtomeettheirsupply
commitmentforreasonsotherthanforcemajeure.Inasituation wherethe
worldpriceisbelowtheguaranteedpricethesuppliecshaveeveryincen­
tivetomakesurethatthisdoesnothappen.
14.Thesearrangements constitute averyimportanteconomiclifelinetothe
countriesconcernedatnosmallcosttotheCommunity.
DraftInternational SugarAgreement
15.ThedrafttextpreparedbytheInternational SugarOrganisation forthe
forthcoming negotiations isbaseddirectlyonthe1968Agreement.
16.Essentially,itconsistsofanexportquotamechanismtostabilizethe
priceofsugarbyregulatingthelevelofsuppliescomingontothefree
market.Thesystemiscomplicated .Abasicexporttonnageisnegotiated
intheagreementforeachexportermemberasashareofthenotionalto­
talmarket.Justbeforethebeginningofeachquotayearthelikelysize
ofeffectivemarketdemandisestimated,andacorresponding proportionate
shareofthatestimateisallocatedtoeachmemberashisinitialexport
quotafortheyear.
./.

4.
Thesequotasmaybeadjustedupordownduring"thecourseoftheyear
infunctionofSpecifiedmovementsofJtjie_actuaI.marketprice.towards
_the_max.i.mumand_minimumpricesfixedintheagreement.
17.Altogether,thisisanexceedinglydirigistesystemquiteincompatible
withtheexistingstructureoftheCommunitymarket.
18.Inadditiontothequotamechanism,thedraftnegotiating documentcon­
tainsprovisions dealingwithpurchasecommitments,respectofminimum
price,andnon-purchase fromnon-members whenthemarketisweak,coupledminimumstocksand
with/supplyobligations relatedtoamaximumpricesituation.Incontrast
tothequotamechanismjustdescribed,theseprovisions presentnospecial
problemstotheCommunity,sincetheyarebroadlyinlinewiththegeneral
"principlesofjtheCommunity'sownapproach.
Theattitudesof,othercountries
-Exporters
19.Alltheexportersinsistonexportquotasasthefundamental mechanism
forstabilising thefreemarketpriceofsugar.Theyseekanagreement
whichwillsafeguardtheirinterests whenthemarketisweak;andthey
seethevariablequotamechanism astheonlymeansofguaranteeing them
apre-determined shareofthemarketandofpermittingthemtoprogramme
theirproduction accordingly .
20.Noneoftheexporterswillaccept'astockmechanism .alone-ofwhatever
sizeorsystem.Theyhavefourmainobjections :thecapitalandrecurrent
costsofcarryingthestock;thetendencyofastocktooverhangthemar­
ketanddepressthepriceatalltimes;theneedforaback-upsystemto
protectthepricefromstillfurthererosionafterallstockobligations
hadbeenmet;thepossibility opentowealthydevelopedcountriestomeet
theirstockobligations byacorresponding expansionofproduction,
thusremainingfreetoexportwithoutrestraintyetwithoutbeingin
breachoftheagreement.Ofthese:objections,thelasttwoarethemost
entrenched .
21.Withinthese parameters therearecertainvariationsofapproach.
Anumberofcountrieshaveindicated awillingness tocontemplate amore
importantroleforstocks;inthe"caseofdevelopingcountriesthishas
beenaccompanied bytheconditionthattheyshouldnotberequiredtobear

5.
anycorresponding additionalfinancialburden.
Anumberofdevelopingcountriesaretendingtoinsistonindexation
ofthenegotiatedpricestocounterinflationandcurrencyfluctuations
duringthelifeoftheagreement;andtodemandthatanygrowthinthe
marketshouldbereservedforthegrowthoftheirexportquotas.Expor­
ters(suchasAustraliaandBrazil)withpotentialforrapidexpansion
ofproduction showagreaterflexibilityofapproachtothefixingand
adjustmentofquotasthancountries(likeCuba)whichfaceproduction
difficulties .Thesamecountrieshaveaconflictofinterestonwhether
specialarrangementsugartransactions shouldbeexcludedfromthescope
ofthenewagreement(astheywereinthepast).
22.Mauritius'originalproposalforaninternational intervention stock
backed-upbyexportquotascomingintoforceonlyattheminimumprice
hasbeenwithdrawninthefaceofsolidopposition fromalltheother
exporters.Mauritiusnowacceptsthebasiclinesofthedraftnegotiating
text,buthasintroduced aproposalforthefinancingofstocksresulting
directlyfromquotareductions :theinterestandhandlingchargeson
sugarthusstockedwouldbemetfromtheproceedsofalevyonallim­
portsandexportsoffreemarketsugar.Thisproposalhasbeenmetwith
.cautiousreserve.
-Importers
23.Theimporters'group isdominatedbyCanadaandJapan.Bothhavestated
their "willingnesstoaccepttheexporters'viewthatthefundamental
mechanismoftheagreementmust'beanexportquotasystem.Bothhave
insistedontheneedfortheQuota_adjustment_mechanismlpbemuchmore
jrealisticandflexible_than_i_n thepast,soas_toencourageashiftoftrad*
tq_efficientproducersinsteadofsimplyfreezingthetraditionalpattern."
Bothhaverejectedtheideaofmakinganyfinancialcontribution towards
thecostofstocks,andasserttheviewthattheiracceptanceofprice
maintenance throughexportquotasalreadyconstitutes asufficientcontri­
bution.
Inconsequence,theCommunity'sproposalshaveobtainednosupportin
thisquarter,despitetheattractionthatstocksoughttopresentto
Importersasasupplyassuranceintimesofproductionshortage.
24.TheUSSRhastakenlittlepartinthediscussionstodateexcepttomake
itclearthatitfisHnferested only""ina'quota-baseci "agreementof"the
1968tybe,-withspecialstatusfortheU.S.S.R.Underthe1968Agreement
./.

6.
theU.S.S.R.ssubstantialimportsfromCubaqualifieditasanimpor-
,tingmember„vwithacorrespondingly substantialvoteundertheadminis­
trativearrangementsoftheAgreement.TheU.S.S.R.concurrentlyobtained
therighttoexportbetween1.1and1.25milliontonseachyeartothe
freemarketinadditiontoanysugarexportedbytheU.S.S.R.toother
EasternBloccountries;andatthesametimeallexportsbyCubatoall
EasternBloccountriesweretreatedasspecialarrangements,andthere­
foreadditionaltotheCubanexportquotaontothefreemarket.
25.ThepositionoftheUSA,whichisbyfarthebiggestimporterofall,
remainstotallyundefineduntiltheCarteradministration hastimetoad­
dressitselftotheproblemofhowbesttoprotectAmericaninterests.
-Balanceofinterest_between_gxpgrtgrs_and importers
26.CanadaandJapanhavesaidtheycannotoperate,andthereforecannot
accept,obligationstorespecttheminimumprice;intheirviewitis
fortheexporterstotakecareofthis.Equally,theywillnotaccept
quantitative purchaseobligations .Theyrepeatthatthequotasystem
itselfprovidestheexporterswithalltheguaranteestheyneedatthe
minimumprice,andthatimporteracceptanceofthissystemmustbe
paidforbysupplycommitmentsatthemaximumprice.
27.Theexportershavemadeitequallyclearthattheywillnotenterinto
supplycommitments (eitherofpriceorquantity)atthemaximumprice
exceptinreturnforsymmetrical commitments bytheimportersatthe
minimumprice.
28.Itisthereforeconceivablethatagreement,ifreached,wouldonlybe
onthebasisofdeletingbothpurchaseandsupplycommitments .
J!2§_£2En!yDl£¥_iDi£r£St_in_2art ilciBation_in_a_new _Agreement -
-Economic^?actors
29.Theeconomic^factorsmaybesummedupinthefollowingterms.
30.Domesticproductionmeetsthewholeoftheinternaldemandplusan
exportablesurpluswhich,dependingonweatherconditions,mayreach
theorderof1.6milliontons.LomeConventionimportsamountto1.4
milliontons.TheCommunitythereforecurrentlyneedstheassurance
ofexportoutletsforsome3milliontonsperannumiftheaccumulation
ofunwantedstocksistobeavoided.

7.
31.TheCommunity'sexportsnormallytaketheformofwhitesugar,refined
■.frombeeta^d,fromcane.
Theexternalmarketforwhitesugarformspartoftheworldfreemarket
towhichthenewagreementwouldapply.Itisnevertheless aseparate
componentofthemarketwithitsownspecificlimitations .Worlddemand
forwhitesugarisnormallyoftheorderof3.5milliontons.
32.Thesizeofthetotalfreemarkettoberegulatedisoftheorderof14
milliontons.(1975ISOfigure)ThisincludesUSAimportsofsome4mil­
liontons,andamountscommittedunderlong-termcontractsfordestina­
tionsotherthanUSAofanother5milliontons,leavingonlysome5mil­
liontonsasthetruefreemarket.
33.Ontheentryintoforceofanewagreementwithexportquota,provisions,
quotaswouldapplyatonce.Toobtainaquotacorresponding tothe
Community'sexportneeds,asanalysedinparagraph30above,thiswould
besubjecttoimmenselydifficultnegotiation .(Itmaybenotedthatin
thenegotiations leadingtothe1968AgreementtheCommunityoftheSix
soughtanexportquotaof1milliontonsandwasofferedaquotaof
300000tonsonly).Tojoinanagreementonthesetermswouldgivethe
Communitytheundisputedrighttoitsnegotiatedshareofthemarket,
butwouldatthesametimemeanthatundernormalbeetharvestconditions
averysubstantial tonnagewouldbecomeunexportable .
34.IftheCommunityremainedoutsidetheagreementitwouldnotbesubject
tothislimitation,butneitherwouldithavethecorresponding entitle­
ment.Theexportpossibilities opentotheCommunityunderthesecondi­
tionswoulddependontheextenttowhichmembersobservedtheirown
rulesaboutrespectoftheminimumpriceandabstentionfrompurchase
fromnon-members,andontheextentofmembership.Neitherofthese
factors'couldbequantifiedbeforehand.
35.WhethertheCommunitywouldbebetteroff(a)insidetheagreementwith
therighttoexportaspecificlimitedquantityofsugar,or(b)outside
theagreementwiththefreedomtosellallthesugarforwhichitcould
findamarket,isaquestionofjudgment.Informingsuchajudgment
accountwouldhavetobetakenbothofthelikehoodthattheCommunity
wouldcomeunderconsiderable moralpressurenottoundercutthemarket
whichdevelopingexportersweretryingtostabilisethrough

•mutualself-discipline ,andofthedifficulties fortheCommunity
ofmodifyingtheamountofdomesticsugarproducedunderitsexis­
tingsystem.Finally,accountwouldhavetobetakenofthelikely
costtoCommunityfundsofexportrestitutions onsugareligiblefor
Communityguarantees (ie.allexcepttheCsugarelement).Thiscost
wouldbevariableinfunctionofthedifferencebetweentheworld
priceandtheCommunityprice,andofthequantityexported;while
theworldmarketpriceremainsvolatilethiscostiscorrespondingly
difficulttoestimateinadvancewithanydegreeofprecision.
-Politicalfactors
36.TheCommunity ssugarmarketorganisation represents acomplexanddif­
ficultinternalbalance,bothpolitical andeconomic.Thisbalanceresults
intheneedtobeabletoexportsugarontotheworldmarket,anditis
essentialtotheCommunitytosafeguarditsinterestsinthisrespect.
37.InrecentyearstheCommunity hasstatedonmanyoccasions andinmany
foraitscommitmenttotheprincipleoftradeexpansion andmarketstabi­
lisationthroughinternational commodityagreements.Itcannotbackdown
fromthiscommitment now,andinitsnegotiating stanceitmustbeseen
tobeadoptingapositiveandcrediblepositionwhichtakesdueaccountof
theconsensusofviewsofitsnegotiating partnersingeneral,ofthe
developingcountriesinparticular,and.of.thegeneralcontextofthe
UNCTADintegrated programmeapproach.'
38.Unfortunately ,withitspotentiality asamajor,netexporter,theCommuni­
tyisseenbytheexporting members,particularly thedeveloping exporters
asadirectcompetitor.TheirdesireforCommunitymembershipoftheagree
mentstems.directlyfromtheirdesiretolimitCommunitycompetition toa
tolerablelevel,andtheyareunlikelytoacceptanysolutionwhichdoes
notoffertheprospectofthisresult.
Proposai
39.InthelightofthisanalysistheCommunityshouldnegotiateonthe
basisofobtaining aspecialstatusintheagreement,adaptedtothe
Community'sownmarketstabilisation mechanisms andleavingtheother
membersof:heagreementfreetoadoptthesystemtheyprefer.Since
specialstatusisacceptedfortheUSSRtherecanbenoobjectionof
principletothis.

40LTheCommunity'ss'tatusshouldbethatofexporter,withexclusionof
theCommunity'spreferential sugarimportsfromthenetexportcalcu­
lationonwhichvotesintheagreementwouldbebased.Thiswould
beamirrorimageoftheUSSRspecialstatusasimporterwithinclusion
ofherspecialarrangement importsfromCubaforthepurposesofvote
entitlement calculations .
41.TheCommunitywouldacceptnoexportquotaobligations .Itwould,ho­
wever,bepreparedtonegotiateacommitmenttocontributetothesta­
bilisationoftheworldsugarmarket,throughmechanismscompatible
withitsownmarketorganisation,paralleltothecommitmentsaccep­
tedbyotherexporters.ThemechanismsenvisagedfortMspurposewould
bebroadly .ofthejtyp.edescribed(mutatismutandis)__in_paragraphs_13to15
of_the.6ATToeaotiatina.xiirectiveldoc._.I/4C/1/.75(CoS__4)rev.1of24April75)
42.Asindicatedinpara18above,theothereconomicelementsofthedraft
negotiating document(onminimumstocks,supplyandpurchasecommitments,
respectofminimumprice,provisionsagainstpurchasesfromnon-members )
presentnoparticularproblem,inthesensethattheyarenotoutofline
withtheCommunity'sexisting6ATTnegotiatingdirective.
43.TheCommunity'sproposalisonewhichcanbejustifiedascapableofpro­
ducingtherequiredresultwithoutimposingunacceptable modifications
•ontheCommunity'smarketorganisation .Itwouldrepresentaconsiderable
stepbytheCommunitytowardsacompromisesolution.Atthisjuncture
theCommunityshouldnotbewillingtopaytoogreatapricetoachieve
asettlementwhichmaybebeyondreachforotherreasons.
Particigatiorvin_the_negotjat1gns.
44.Itistobenotedthatarrangements wouldneedtobemadetoenablethe
Communityassuchtoparticipateinthenegotiatingconference.
CommunitynegotiatiQÇLçjireçtiye
45.TheCommunity'sexistingnegotiatingdirectiveisdirectedspecifically
totheconductoftheGATTmultilateral negotiations .Themembersofthe
International SugarAgreementhavingdecidedtonegotiateinanUNCTAD
context,aformaladaptationoftheCommunitydirectiveisrequiredin
thissense.Inadditionitneedstobeadaptedinthesenseofparas39
to42above.Adirectivetothiseffectisannexedtotherecommendation
foraCouncildecisionatAnnexA.

ΑΝΝΕΧΑ
>*
Recofnrnendatjon_for_a -Counc2jl_De£ision_£2DcgrDiDa_Jl!S_D§32iia~
tionofanewInternational ..SugarAgreement
£2yD£2i_^§£2§i2D_2l_iiiii
authorisingtheCommissiontotakepartinthenegotiation
ofanewInternational SugarAgreement
THECOUNCILOFTHEEUROPEANCOMMUNITIES/ *.
HavingregardtotheTreatyestablishing theEuropeanEconomicCommunity,
andinparticularArticle113thereof;
Havingregardtotherecommendation oftheCommission;
WhereastheCommunityhasdeclaredthatitsupportstheprincipleof
settingupanewInternational SugarAgreementandofparticipating
init;
WhereasanInternational ConferencewillbeheldinGenevafrom
18Aprilto27May1977withinthe.frameworkofUNCTADforthenego­
tiationofanewInternational SugarAgreement;
WhereastheCommunityshouldtakepartinthesenegotiations,which
involvethecommoncommercialpolicy;
HASDECIDEDASFOLLOWS:
îcle
TheCommissionisherebyauthorisedtoparticipateinthenegotiation
ofanewInternational SugarAgreement.

TheCommissionshallconductthenegotiations withintheframework
oftheannexeddirective andinconsultation withtheSpecial
CommitteeprovidedforinArticle113oftheTreaty.
DoneatBrussels,
FortheCouncil
ThePresident

ADDê*_î2_£2yD£ii_5§Çi§i°D_2î_iii
v*Negotiating Directive
for
International_Sugar _Agreement
Introduction
1.FollowingtherelevantCouncildecisionofJune1976,theCommunity
hastakenpartinthepreparatory worktowardsanewInternational
SugarAgreement,conductedintheframeworkoftheexistingAgreement.
2.TheCommunity'sproposalsinthiscontexthavebeendirectedtowardsthe
negotiation ofanagreementtocoordinatenationalstockpiling'policies
onthelineslaiddowninSectionIIofthedirectives fortheGATT
multilateral tradenegotiations (Councildocument 1/40/1/75(CoS4)rev.1
of24April1975).Thosedirectivesexcludetriepossibilityofaccepting
exportquotas.
3.Theconsensusreachedbyalltheotherparticipants inthepreparatory
workisthatthenewAgreementshouldfollowthegenerallinesofthe
International SugarAgreement 1968:thatis,itshouldbebasedonexport
quotas,supportedbycertainotherdisciplines atthelevelofpredetermined
maximumandminimumprices.Aconferencetonegotiatesuchanagreementhas
beenconvenedbyUNCTADfortheperiod18Aprilto27May1977.
4.InordertoenabletheCommunitytoparticipate in'thesenegotiations
inapositivespiritbutwithoutcompromising theessentialcharacteristics
ofitsowninternalmarketorganisation ,theCouncilauthorises theCommissic
tonegotiateattheUNCTADConferenceonthebasisthattheCommunityispre_^
paredtq^participa^e inanagreementofthe_typedescribed^inpara3^abovepr
videdjit.jis.accordedspecJal_status ._Underjthetermsofthatspecialstatus
theCommunitywouldundertakestockingobligations whichwouldparal­
leltheexportquotaadjustmentobligations undertaken bytheothermembers
oftheagreement;butitwouldnotitselfacceptanyquotaobligations .
5.Thisdirectivedoesnotdefineinadvancethepreciselineofactionfor
theCommunitytofollowinthedetailedaspectsofthenegotiations .For
obvioustacticalreasonsitwouldbeinadvisable fortheCommunitytoreveal
itsproposalsindetailuntil.thenegotiations havereachedthepointwhere
thesewouldhavethemaximumeffect.Thedirective must,however,besuffi­
cientlycleartoenabletheCommunitytoembarkonthenegotiations with
./.

2.
;
aclearideabfitsobjectives.
6.Thisdirectivewillhavetobedefinedmorepreciselyasthenegotia­
tionsdevelop.
Directive
A-MEt-ScgPg-gPdrelationship withtheGATTmultilateral negotiatjons
7.Theagreementshouldconstitute aframeworkformultilateral coopera­
tiontoensuretheexpansionoftradeonastableworldmarket.
Thepurposeoftheagreementwouldbeto
-achievepricestabilisation ,
-ensurethecontinuityofsuppliestoimportersandofoutlets
forexporters,
-takedueaccountoftheinterestsofdevelopingcountries.
8.Inordertobecompletelyeffectivetheagreementshouldinvolvethe
majorproducingandconsumingcountries.Iftheagreementisconcluded
beforetheconclusionoftheGATTmultilateral negotiations thenet
balanceofadvantagesandobligationsarisingoutofitshallbetaken
intoaccountinthefinalbalancetobestruckinconnection withthe
GATTnegotiations .
Mechamsms
9.Marketstabilisation shouldbesoughtthroughtheintroduction ofa
minimumandmaximumsafeguardpriceprovisionincludingobligations
linkedtoextremepricesituations.
10.AminimumandamaximumpricewouldbefixedintheAgreementdefining
apricebracketwithinwhichoperationswouldnormallytakeplace.
Theseprices,whichwouldbefixedforagivenperiod,wouldbesubject
toreviewinthelightoflongtermmarkettrends.
11.Ifmarketpricesfelltothefixedminimumofthebracket,theimportirg
countrieswouldbeobligedtoobtaintheirsuppliesfromexporting

jnembercountries,whichinturnwouldbeobligedtorespectthismini­
mumpriceandrefrainfromsellingonmorefavourabletermstonon-
membercountries.
12.Ifmarketpricesreachedorexceededthelevelofthemaximumpriceof
thebracket,exportingcountrieswouldundertaketogivepriorityto
supplyingimportingcountrieswhichwerepartytotheAgreementwith
thequantitiestraditionally importedbythematthemaximumprice
level. ^
13.TheCommunitywouldacceptnoexportquotaobligations.Itwould,ho­
wever,bepreparedtonegotiateacommitmenttocontributetothesta­
bilisationoftheworldsugarmarket,throughmechanismscompatible
withitsownmarketorganisation,paralleltothecommitments accepted
byotherexporters.Themechanismsenvisagedforthispurposewouldbe
broadlyofthetypedescribed(mutatismutandis)inparagraphs 13to
15oftheGATTnegotiatingdirectivereferredtoinparagraph 2above,
andofwhichthetextisreproducedinfootnote(1)belowforreference.
14.ForthepurposeofcalculatingthenumberofvotestowhichtheCommunity
wouldbeentitledinthecollegeofexportersundertheadministrative
provisionsoftheAgreement,allitsexportswouldbetakenintoaccount,
includingthoseexportscorresponding tothequantityofimportsinto
theCommunityunderProtocoln°3oftheLomeConventionandparallel
specialarrangements .
:.15.AspecificprovisiontoenabletheCommunityassuchtobecomeaparty
totheagreementwouldalsoberequired.
C.funçtioningoftheAgreement
16.Thefunctioningofthemechanismsdescribedaboveimpliesthatabody
responsibleforthecontinuoussurveillance ofthemarketsituation-
shouldbesetupundertheAgreementtowork,wherenecessary,with
international organisations .
(1)Textofparas13-15ofGATTDirective
"13.Inordertoachievegreatermarketstability,nationalstocksshould
besetupandmanagedonthebasisofrules.laiddownintheAgreement.
Theserulesshouldthereforedefinetheminimumandmaximumamountswhich
thebodycouldstockpileinordertomeettheobjectivesoftheAgreement.
Theyshouldalsodeterminetheallocationofthesestocks.

4.
(1)14.IfmarketpricesreachedapercentagelaiddownintheAgreement
oftheminimumpriceofthebracketthemembercountrieswould
undertakewithdueregardforothermarketfactorstostockpile
fixedquantitiesofQsugar^Jwithintheagreedmaximumamountin
aco-ordinated manner.
15.IfmarketpricesreachedapercentagelaiddownintheAgreement
ofthemaximumpriceofthebracket,themembercountrieswould
arrangeforappropriatequantitiestobetakenfromtheirstocks
andplacedonthemarketinaco-ordinated manner."

ANNEX B
•.Anne x-Financial Implications
1.Thepresent proposal ,which relates only tothenegotiating
stance tobeadopted bytheCommunity ,has initself nonew
financial implications ,
2.These would only arise from afuture Council decision asto
whether ornottoparticipate inanewInternational Sugar
Agreement ,after itsterms hadbeen negotiated .
3.Thefinancial implications ofsuch afuture decision woulo be •
related to
(a)ajudgment astowhether theoverall cost ofthe Community 's
sugar policy would beless costly inside ,oroutside theAgree­
ment ;and
(b)theobligation tomake anannual contribution tothe aar.-istro -
tive budget ofthe International Sugar Organization ,ifthe
Community decided tojoin .Onthebasis ofthe current scale of
contributions ,this could reasonably beestimated atnot r.:.re
than£44000peryear .