ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(75)434
Vol.1975/0167

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(75 )434final
Brussels .25July 1975
RECOMMENDATION FORACOUNCIL DECISION
authorizing "theCommission toopen negotiations with India
andBangladesh fortheconclusion ofagreement onjute products
(submitted totheCouncil bytheCommission )
COM(75 )434final

EXPLANATORY STATEMENT
1.Twoagreementswerenegotiatedin1973betweentheCommunity
ontheonehand,andIndiaandBangladesh,ontheother,ontradein
juteproducts.Theseagreementsconstituteforthesetwocountries,
whicharethemainsuppliersfortheCommunity,the"specialmeasures"
containedintheCommunity'.sofferongeneralisedpreferences ,and
providethemeansbywhichthedevelopingcountriesconcernedmay
benefitfrompreferencesfortheproductsinquestion,(l).
Themainprovisionsofthepresentagreementsare:
-theautonomousgroundbytheCommunityofaprogressive suspension
oftariffsreaching,bythelastyearoftheagreements(1975)a
reductionamountingtobetween50and60%accordingtotheproducts;
-self-restraint atanagreementlevelbyIndiaandBangladeshontheir
exportofbroadjute(categories4and5)andyarn(category6),
suspensionofquantitativerestrictions whichmaybeinforceforthe
productsunderrestraintaswellasastand-still fofrthequantitative
restrictions appliedwithintheCommunitytoproductsincategories
1to3(2).
-thesettingupofajointCommissionchargedinparticularwiththe
studyofallimportanteconomicproblemsconnectedwithjute.
(1)Thailandalsobenefitsfromtariffspreferencesforjuteproducts.
However,takingintoaccountpresentlevelsofThailandexports,the
Communityhasfeltpossibletograntpreferences withouttaking
measuresanalogoustothoseagreedwithitsprincipalsuppliers.
Ithasnevertheless beenagreedwithThailand,inanexchangeof
letters,thatifneoessary,thiscountrywouldjoinnegotiations .
withtheCommunity.
(2)Theselastmentionedjuteproducts,thatistosaybagsandnarrow
cloth(categories1to3)remainsubjecttotheimportregimeinforce
intheMemberStatessquotasinFrance,Ireland,UnitedKingdom
andGermany(clothonlyinthislastMemberState)liberalised
elsewhere *

-2-
2.Sincetheagreementsexpireon31December1975»theimport
regimefortheseproductsfrom1.1.1976mustbelaiddown.TheCommission
feelsitappropriatetoseek,bytheconclusionofnewarrangements
withIndiaandBangladesh,aregimewhichwillenablethesystemsetup
undertheprecedingagreementstobecontinuedand,finallythefreedom
fromduty(asenvisagedintheCommunity'sofferonGSP)andthe
progressive removalofquantitative importrestrictions .Themain
reasonsforthisapproachareasfollows:
–TheCommunity'sofferintariffpreferencesprovides,forjute
products,that"freedomfromdutyisalsoenvisagedwithintheframe­
workofspecialmeasurestobedrawnupwithexportingdeveloping
countries"}
–theCommunity'sjuteindustry,forwhicharestructuring and
adjustmentisinprogress,isundergoingaparticularly acutecrisis
andthemaintenanceofself-restraint measuresforsometimeyetshould
allowthisprocesstobeachievedinanorderlymannerandspecially
theretrainingofthoseemployedinthejuteindustryforotheractivities
orfortheachievementofcertainverysophisticated modesofproduction
inthejutesector,alreadylargelyunderway.
3.Thenegotiations shouldbeengagedtakingintoaccount
–thesituationintheCommunitymarket,
–theexperiencegainedundertheagreementsinforceaswellasthe
policyfollowedbytheCommunitywithregardtodevelopingcountries
ingeneralandthethirdcountriesinquestioninparticulartaking
accountoftheimportancewhichjuterepresentsintheireconomies.
(a)TheCommunityjuteindustryhasexperiencedsince1972afallinproduc­
tionfindconsumption ,andincertainMemberStatesatleast,
anincreaseinunemployment andshort-timeworking.Productionhasin
factfallenoffintheperiodofquestionby24$foryarnsand
25$forclothandbags.Foryarns,thefallenproductionhasbeen
particularlyfeltintheUnitedKingdomandBelgiumwhicharethe
twoprincipalproducersamongsttheMemberStates:between
1973and1974infact,thedrophasbeen16$in<-theUnitedKingdom
and13$inBelgium.Fortheclothindustrytherehasbeena.general
fallinproduction,althoughtheUnitedKingdomandBelgiumhave
beenespeciallyhard-hit:21%inr'theUnitedKingdomand17in
Belgium*

InparallelwiththisfallinCommunityproductionimportsfrom
thirdcountriesofthewholerangeofjuteproductshavealsodiminished
"between1972and1974!41%foryarns,4$forclothand"bags.However,
asfarasclothand"bagsareconcerned,sinceCommunityproduction
hasfallenmorerapidlythanimportstheproportionofimportsin
consumptionhasgrownfrom39to49%•Onecouldnotsay,however,that
thedifficultindustrialsituationcanheascribedtoimportssincethese
arediminishing .ThedroppinCommunityproductionistobeexplained
principally bythecontractionofthemarketwhichbecomesmoremarked
eachyeardueinparttothegeneraleconomicsituationbutmore
speciallytothespeedingoftheprocessofsubstitution ofjuteby^jmthetic
products.
(b)Onthebasisoftheimportsin1974fromIndiaandBangladeshonemay
deducethatdespitetheloweringoftariffprotection(reducedfrom1.1.1975
by50$or60$accordingtotheproduct,freedomffromdutybeingmain­
tainedintheUnitedKingdomandDenmark),ceilingsprovidedforbroad
cloth(categories4and5)andyarn(category6)havenotbeencompletely
usedeitherbyIndiaorbyBangladeshwiththeexceptionofthequota
shareoftheUnitedKingdom.AsregardsIndia,theCommunityceilingfor
categories4and5hasbeenusedonlytoalevelof26fo»ForBangladesh
thelimitforcategories4and5hasonlybeenusedtoalevelof34$and
noexportsofyarn(category6)havebeenrecorded.
OnseveraloccasionsIndiaandBangladeshhavedrawntheCommission's
attentiontotheirdisappointment ..regardingtheresultsachievedunder
theseagreements.Thetwocountrieshaveparticularly indicatedthat
therigidallocationofceilingsbetweenMemberStatesoftenledtoa
partialfreezingoftheirexportpossibilities .
Onemayadmitthatoneoftheessentialobjectivesoftheseagreements
forsupplyingcountries,thatistosaythegrowthoftheirsalesinthe
Communitymarket,hasnotbeenachieved.
Doubtlessthegrowthofsaleswasdifficultinamarketwheredemandhas
beenfallingfromyeartoyearasjuteproductsmetincreasingcompetition
fromsyntheticproducts(competitionsharpenedbyrelativelystableprices
forsyntheticgoodscomparedwiththeria«:inpriceforjuteproducts.)

-4-
Nevertheless itshouldbesaidthatthesituationofIndiaand
BangladeshontheCommunityjutemarkethasundeniablydeteriorated
duringtheperiodofapplicationoftheagreements (forproductsunder
self-restraint exportshavediminishedbetween1973and1974by
75$foryarnsexportedbyBangladeshandby61$forbroad,clothex­
portedbyIndia)*
Thesetwocountrieshaverfurthermore observedonmanyoccasionsthatthe
negotiation andconclusion <ofnewagreementswouldbeextremelydifficult
unlessconcreteexportpossibilities whichtookintoaccountthereality
ofthemarketsituationwereagreed.
4.Takingintoaccounttheconsiderations setoutaboveonthe
presentsituationandthelongtermpossibilities ofdevelopmentforthe
Communityjuteindustryitseemsappropriatethataself-restraint
regimefortheproductsinquestionshouldcontinuetobemaintained }
inordertorealisethisobjectivewithinacontractual frameworkit
seemsappropriatethatthenegotiating guidelinesbedrawnupinthe
followingsense:
–thepursuitofthereductionoftariffbarrierswithintheframework
ofGSP;
–agrowthinself-restraint levelswithamoreflexibleallocation
amongstMemberStatesandmoreadaptedtorealtradeflows.
TheCommission recommendsthattheCounciladoptthe
draftdecisionannexedhereto*

RECOMMENDATION FORACOUNCILDECISION
authorisingtheCommissiontoopennegotiations withIndia
andBangladeshfortheconclusionofagreementonJuteproducts
THECOUNCILOPTHEEUROPEANCOMMUNITIES
havingregardtotheTreatyestablishing theEuropeanEconomicCommunity
andespeciallyitsArticle113»
havingregardtotherecommendation oftheCommission,
whereastheCommunity'sofferingeneralisedtariffpreferences
providesthat,forjuteproducts,freedomfromdutywouldalsohe
providedfor"withintheframeworkofspecialmeasuresto"beadopted
withdevelopingexportingcountries";
whereasagreementsontradeinjuteproductswhichconstitute"these
specialmeasures"havebeennegotiated "bytheEuropeanEconomic
CommunitywithIndiaandBangladesh ,andthattheseagreements
expireon31December1975?
whereasitseemsappropriatetoauthorisetheopeningofnegotiations
withIndiaandBangladeshtoestablisharegimewhichwillapply
afterthisdatetotradeinjuteproducts }
RASDECIDED
SoleArticle
TheCommissionisauthorisedtoopennegotiations forthe
conclusionofanagreementbetweentheEuropeanEconomicCommunityand
IndiaandBangladesh ontradeinjuteproducts.
TheCommissionshallleadthesenegotiations inconsultation
withtheSpecialCommitteeestablishedunderArticle113oftheTreaty,
andinconformitywithdirectivessetoutintheannexetothepresent
decision *
DoneatBrussels, FortheCouncil
ThePrésident

AÎTNEX
NEGOTIATTNG DIRECTIVES
1.Durationofagreement:4yearsuntil31«12.1979 »
2.Self-restraint byIndiaandBangladeshoftheirexportsof
juteproductsincategories4,5and6.Communityceilingswillbe
established onthebasisofthoseagreedfor1975withanappropriate
annualgrowthratewhichwillpermitasubstantial enlargementof
presentimportpossibilities *
3.Asacounterpart ,theCommunitywillpursue,onanautonomous
basis,thesuspensionofcustomsdutiesinannualstagesso
thatby1.1.1980productsincategories4»5»and6mayenter
dutyfree*
Productsincategories 1to3whichwillnotberestrainedwillfall
underthegeneralsystemofpreferences from1.1.1976:zeroduti
withintheframeworkofceilings.