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DOCUMENTS "COM"
COM (79)425
Vol.1979/0150

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(79)425 final
Brussels/25July1979
* DRAFTOFCOUNCILDECISION
extendingthelistofoverseascountriesandterritories mentionedin
Decision76/568/EEContheassociation oftheoverseascountriesand
territories withtheEuropeanEconomicCommunity
M S■?V
(submittedtotheCouncilbytheCommission)
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C0M(79)425final

Council Decision
amending Decision 76/568/EECof29June 1976,#
onthe association ofthe overseas countries andterritories
4 with the European Economic Community
EXPLANATORY MEMORANDUM
1.Introduction
11.Applications have now been received from theGilbert Islands ,and the
Anglo-French Condominium ofthe New Hebrides for achange ofstatus
under Article 23§6ofthe Council Decision of29June 1976 .
12.The submission from theGilbert Islands' authorities was drawn upin
January 1978,and was forwarded tothe Commission Services ,via the
U.K. authorities on23.11.1978 .Acopy wasalso sent ^hrough the EEC
Delegate inSuva,Fiji,on3.3.1978 .Noreason has been given bythe
British authorities for the delay inforwarding this application .
13.Likewise the submission prepared bytheauthorities ofthe Anglo-French
Condominium ofthe New Hebrides was received bythe Commission Services
from the French and the U.K. authorities on8.11.1978 .The case was
drafted inJune 1978 .InNovember 1978 adelegation from the New Hebrides
visited the Commission ,andduring ameeting with DGVIII officials
clarified the arguments put forward intheapplication .
14.The major points raised inthe two submissions are summarized below .
2.The Gilbert Islands
21.The Government ofthe Gilbert Islands feels that the imminent exhaustion
.ofphosphate deposits in1979,which atpresent form the economic base
ofthe country ,will constitute "aradical andlasting change ,which ne­
cessitates theapplication ofspeical measures "asstipulated inArticle
23§6ofthe Council Decision .
22.-Phosphate accounts for 90 %oftotal exports ,and copra for 10 %.Onthe
expiry ofphosphate ,export revenue isestimated tofall from 16million
Aust .iin1979 toless than 3million Aust .tin1980 .
23.TheGilbert Islands benefit atpresent from arelatively high per capita
GDP (estimated Aust .£624 in1977 )compared with some other developing
countries ,because ofthe recent but short term boom inphosphate prices .
This fugure will bealmost halved (estimated Aust .2350)when the phos­
phate mining finishes ,which will place theGilbert Islands atthe same
level ,oreven below ,ofthat ofseveral oftheterritories receiving
Stabex grants .
24.The percapita GDPisnot agood indication ofthelevel ofnational de­
velopment and wealth ,because ofthe marked disparity of .income between .

geographical andsocial groups .Percapita incomes inrural areas are
less th%n the corresponding urban --figures .
25.Furthermore ,the current per capita GDP includes income accrued from the
phosphate ming,which does notenter into the economy /butisaccumulated
inthe Revenue Equalization Reserve Fund (RERF).Itisthis fund/which
the Government will draw upon inorder tobalance its budget /when the
phosphate mining ceases .
The current per capita GDP also takes inthe income from expatriate sa­
lary supplements .Subtracting these two items /the percapita GDPisbelow
Aust .2540.
26.TheGilbert Islands' per capita GDPis";theresult ofaspecial and tem­
porary situation "/and does not show thetrue level ofdevelopment ,which
iscomparable tothat ofthe other OCT,exempt from theobligation tocon­
tribute tothe reconstitution ofresources .
27.The country lacks other natural resources /which could provide asubsti­
tute for phosphate /apart from the sea.Efforts have been "stepped up"
toexploit brine shrimps onChristmas Island /and toestablish atuna
fishing industry .Itwill besome years /however /before anysignificant
financial»return isseen .Forecasts show that the eventual income from
these sources will only partially make upfor the phosphate income .
The geographical nature oftheGilbert Islands makes the establishment
ofnewindustries both costly and time consuming .
28.TheGilbert Islands received ,atransfer of 1/083,098 EUAtocover ashort­
fall incopra export earnings during 1976 .150,000 Aust .tofthis pay­
ment have been accorded ,asashort term loan,to"Atoll Plantations ",
who operate the copra plantations onChristman Island .The outstanding
sumisbeing held back tofinance reconstitution tothe Stabex fund .The
Gilbert Islands are required toreconstitute 174,972 £UA with respect to
the 1976 transfer .Asyet thecontribution has not been made .
The Anglo-French Condominium ofthe Hew Hebrides
31.Itisbelieved that forthcoming independence ,and thelikely associated
cut back infinancial resources available tothe country will make upa
"radical andlasting change ",asdefined inArticle 23§6oftheCouncil ,
Decision .Independence isplanned totake place inearly 1980 .
32.Inthe Council Decision ,the New Hebrides are notlisted among the OCTs '
exempted from theobligation tocontribute tothe resources ofthe system .
33.The New Hebrides receives sizeable quantities offinancial assistance
from overseas forbudgetary and development purposes .The NewHebridian
government intends ,that thereliance onoverseas budgetary aid should be
reduced .
34.Theresulting reduction inaidinflow will necessitate stringent budgeting
bythe Government ,asitworks attaking onthose governmental responsi -_
bilities ,which areatpresent carried out bytheBritish and French Resi­
dencies .

-3-
35.The cuts inaidinflow will have agrave economic impact ontheinternal
economy ofthe country .Apersistent deficit onthe balance ofpayments
islikely tooccur ;the amount ofdisposable income will decline ,thus
leading tothe closure ofshops ,restaurants ,etc.;and government in­
come asrevenue from import duty,business licences etc.will drop .
36.Thepublic debt repayment level operates currently atanacceptably
high level .The Government budget isunable towithstand anyfurther
debt reliabilities .
37.The per capita figure of64,000 FNH quoted for 1976 isamisleading
guide tothe real development level inthe country ,because much ofthe
wealth iscentred onthe two urban areas ,andisinthe hands ofnon-
indigenous personnel .Furthermore ,the government sector pays high sa­
laries toasmall number ofexpatriate staff .
38.Therural economy depends oncopra asthesingle crash crop .During the '
past 25years ,the real world price for copra hasfallen . ■.-*
. %
39.Theauthorities ofthe Anglo-French Condominium ofthe New Hebrides con­
sider that thecriteria ,which were laid down inthe document "The Lome
Convention ,measures infavour ofthe least developed states "(ref.
VIII/05/75-E),onwhich itwas decided toexempt certain countries from
reconstitution have been fulfilled .
40.Theactual situation ofthe New Hebrides resembles closely that ofthe
territories ,which are exempt from reconstitution tothe Stabex fund,
rather than those which are required toreconstitute .
 
41.The New Hebrides received Stabex transfers of1,103,499 EUAfor 1975
and 327,364 EUAfor 1976,tocompensate shortfalls inexport earnings -
from copra .The 1975 payment was used torebalance the 1976 budgetary
programme .The 1976 payment has likewise been incorporated with the bud­
getary operation for 1978 .The New Hebridian government intends tocreate
adevelopment bank ,-andtointroduce asystem toregularize andstabilize
copra prices ,andprices ofother coconut products .The New Hebrides is
required toreconstitute 1,103,499 EUAforthe 1975 transfer ,and 327,364 EUA
for the 1976 transfer . . •
CONCLUSION AND DECISION T0 BE AD0PTED
1.Both cases arewell presented .The GiIbert Islands and the New Hebrides have
been allocated additional EDFfunds ,which aredesignated fortheleast de­
veloped OCT.TheGilbert Islands will become independent on12July 1979 and
the New Hebrides in1980 .Itisexpected that both territories will askfor
accession tothe Lome Convention .The Stabex system forthese territories will
•"remain governed bythe clauses foreseen forthe PT0M,butitmust beunderstood
that these precedents are not prejudged bythe Community 'sposition onthe
drawing upofthelist ofArt.48ofthe Convention ,evenifthe Commission
Services have afavourable preconceived judgement .for the New Hebrides .
'. • . ■<
2.Additional statistical information forthePacific area,jrfhich mayprove use­
fulinanyfuture examination oftheapplication 's,isavailable .Comprehen­
sive comparisons aredifficult toobtain ,because ofthevarying sources of
information .The sources ofinformation are noted onthe documents .Thefi­

gures shown intheapplications compare favourably with theadditional data .
Insome cases there aredifferences ,which are largely duetothefact that
many ofthefigures for 1976 and 1977 are estimates .
The twoapplications have been acknowledged ,andithas been pointed outthat
these requests must beconsidered within theoffical Community framework .A
careful examination ofthe two applications onthe basis ofthe informations
and data available have been made and onthe spot inquiries have been carried
out .
Onthe basis ofthe foregoing ,the Commission invites the Council toinclude
theGilbert Islands and the Anglo-French Condominium ofthe New Hebrides under
thelist ofOCTs exempted from theobligation tocontribute tothe reconsti­
tution ofStabex resources ,totake effect from the date ofdecision .Adraft
decision isattached .forthis purpose .

COUNCIL DECISION
extending the List ofoverseas countries andterritories mentioned in
Decision 76/568/EEC onthe association ofthe overseas countries and
territories with the European Economic Community
THE COUNCIL OFTHE EUROPEAN COMMUNITIES ,
Having regard totheTreaty establishing the European Economic Community .*
/
Having regard toCouncil Decision 76/568/EECof29June 1976 onthe
association ofthe overseas countries andterritories with the European
1 . ....... 2Economic Community ,aslast amended byDecision 79/310/EEC,andin
particular Article 23(6)thereof ;
A
Whereas the economic situation oftheGilbert Islands andthe Anglo-French
Condominium ofthe New Hebrides justifies theinclusion ofthose countries
andterritories onthelist atArticle 23(5)ofthe said Decision ,
because ofradical andlasting changes that have occurred .
»
HAS DECIDED AS FOLLOWS :
Article 1 V
Asfrom 1January 1979,thefollowing countries andterritories
are added toArticle 23(5)ofDecision 76/568/£EC :
-theGilbert Islands ,
-the Anglo-French Condominium ofthe New Hebrides .
Article 2
This Decision shall bepublished intheOfficial Journal ofthe
European Communities .Itshall take effect onthe dayofitspublication .
OJNoL176,1.7.1976 ,-p.8
20JNoL72,23.3.1979 ,p.33