Report from the Commission on the operation in 1999 of the export earnings stabilisation system under the fourth ACP-EC Convention as revised by the Agreement signed in Mauritius
Date: 2000-09-21
Institutions: European Commission
Subjects: ACP countries, Stabex, export revenue, fourth Lomé Convention

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.09.2000
COM(2000)584 final

REPORT FROM THE COMMISSION

on the operation in 1999 of the export earnings stabilisation system under the fourth
ACP-EC Convention as revised by the Agreement signed in Mauritius

REPORT FROM THE COMMISSION

on the operation in 1999 of the export earnings stabilisation system under the fourth
ACP-EC Convention as revised by the Agreement signed in Mauritius

1.

1.

2.

INTRODUCTION

Article 31(3) of the Internal Agreement on the financing and administration of
Community aid states:

“Each year the Commission shall draw up a comprehensive report for the
Member States on the operation of
the system of stabilisation of export
earnings and the use made by the ACP States of the funds transferred.”

This report covers the activities of the ACP-EC institutions and the administration of
the system in 1999, paying special attention to the allocation of transfers for 1998,
the fourth year of application of Stabex under the fourth ACP-EC Convention as
revised by the Agreement signed in Mauritius.

For the fourth year of application in a row it has been possible to cover all transfers.

2

2.

3.

4.

ACTIVITIES OF THE ACP-EU INSTITUTIONS

The question of fluctuations in the ACP States’ export earnings was discussed in the
course of the negotiations on renewing the ACP-EU partnership agreement.

When the negotiations had been concluded it was decided to set up a system of
additional support under the new agreement to cover fluctuations in these earnings as
this form of support is part of the National Indicative Programme for each ACP
State. The new form of support will replace the present export earnings stabilisation
system.

3

3.

5.

6.

TRANSFERS FOR THE 1998 YEAR OF APPLICATION

Calculation of the transfer bases

For the 1998 year of application, the Commission found 13 ACP States to be eligible
for 18 transfers under the Stabex arrangements. The 18 country/product groups for
which losses of earnings eligible for compensation were recorded are listed in
Table 1 of this report (see page 12).

After calculating the reduction provided for in Article 197(3) and (4) of the
Convention, the transfer bases totalled

86 355 867.

€

Under Article 204 of the Convention the transfer basis calculated from the
Community’s import statistics is reduced to the level of the transfer basis calculated
from the statistics on the exports to all destinations of the ACP States concerned,
where the latter amount is less than the former.

7.

Reductions under Article 203

Trends in marketed output and total exports to the Community of the products in
question meant that consultations under Article 203 of the Convention had to be held
between the Commission and the representatives of
the ACP States. The
consultations resulted in the reductions shown in the following Tables.

7.1.

Reductions applied as a result of significant changes in trends in marketed output of
the product in question:

ACP state

Product

Reduction

in euro

2 162 876

139 820

232 554

73 590

872 699

671 905

1 774 623

as % of
transfer basis
(TB)

15.4

6.9

83.3

18.6

81.0

29.7

30.2

Cameroon

Rwanda

Burundi

Dominica

Saint Lucia

Coffee

Coffee

Pyrethrum

Uncured skins

Uncured skins

Bananas

Bananas

4

7.2.

Reductions applied as a result of a decline in exports to all destinations as a
proportion of marketed output:

ACP state

Product

Reduction

in euro

As % of
transfer
basis (TB)

Togo

Cocoa beans

589 609

Coffee

Cotton

Copra

Cocoa beans

2 258 118

2 748 769

9 132

93 944

Kiribati

Vanuatu

8.

Calculating the transfers

54.3

52.9

47.5

22.2

37.4

Following consultation, where appropriate and as required under Articles 202 and
203 of the Convention, the total amount of eligible transfers was therefore calculated
as

74 728 228.

€

For the 1998 year of application Stabex resources stood at:

– Annual allocation for the
1998 year of application

– Carryover from the 1995 to
the 1998 year of application

– Carryover from the 1996 to
the 1998 year of application

– Carryover from the 1997 to
the 1998 year of application

– Estimated interest at 30 June 1999

Total:

in euro

360 000 000

271 251 306

286 415 194

295 207 178

33 729 441

1 246 603 119

This meant that it was possible to cover all transfers for the 1998 year of application.

9.

Results by recipient country and product

Table 2 (page 13) gives the results by recipient country. The main recipients in
respect of 1998 were the Solomon Islands, which incurred losses on their timber
exports.

5

10.

The balance per product (see Table 3, page 14) shows that timber represented 55.9%,
coffee 21%, groundnut products 8.4% and bananas 7.6% of the total amount
transferred. In some cases the transfers made represent a substantial addition to the
recipient State’s total export earnings, examples being:

ACP States

Product

Transfers as a % of 1998

earnings from all products (estimates)

Saint Lucia

Dominica

Rwanda

Solomon
Islands

Bananas

Bananas

Coffee

Timber

8.7

3.0

3.4

26.6

11.

However, a more precise measure of the effect of the additional Stabex revenue on
the sector showing a loss of earnings can be obtained by comparing the amounts
transferred with the earnings from the products for which the transfer is requested:

ACP States

Product

Transfers as a % of 1998
earnings from the product in
question

Senegal

Groundnut products

Togo

Coffee

Cameroon

Coffee

Dominica

Bananas

Saint Lucia

Bananas

Vanuatu

Cocoa

15.5

14.4

15.3

11.8

13.4

12.5

6

4.

12.

USE OF TRANSFERS

Framework of Mutual Obligations

This part of the report is on the Frameworks that were signed in 1999 but cover the use of
transfers decided in earlier years.

12.1.

Grenada

Year of application

1995

in euro

1 192 784

531 300

Products

Bananas

Nutmegs and mace

Date of payment

3.6.1997

FMO signed

10.10.1999

Summary

The transfers will be used so to position the agricultural sector that it can respond to
the market challenges faced by its main export crops.

The 1995 transfer for bananas will be used to give producers the support they need to
establish viable banana producing units by means of:

– on-farm investment;

– drainage and irrigation;

– off-farm capital investment;

– farm practices and mobilising farm labour;

– publicity campaigns.

In the case of nutmegs and mace, the 1995 transfer will be used to make the nutmeg
industry more competitive and enable it to diversify into new products and markets.
The specific objectives are:

– to establish a quality assurance laboratory;

– to expand the Nutmeg Oil Distillation Plant, so that it can produce nutmeg butter

and organic fertiliser, and to install a water purification system.

7

12.2.

Papua-New Guinea

Year of application

Residue of the first Financial Protocol

in euro

1 422 631

2 680 376

419 512

486 422

Products

Cocoa products

Coffee

Copra products

Palm products

Payment date

17.07.1998

FMO signed

28.12.1999

Summary

The whole transfer will be used to revive agricultural activity in Bougainville
Province by financing ad hoc measures such as:

– the hiring of a barge;

– construction and/or maintenance of rural tracks;

– a system of small-scale loans.

12.3.

Saint Lucia

Year of application

1996 and 1997

Product

Bananas

1996

1997

Payment date

27.10.1998

FMO signed

4.3.1999

Summary

in euro

3 212 647

9 345 575

In accordance with the Castries II Memorandum of Understanding, the Government
of Saint Lucia and the Commission of the European Communities have agreed to use
the Stabex transfers for 1996 and 1997 to promote sustainable economic growth and
reduce poverty.

8

In view of the overall objectives, which are:

development and implementation by the central government of macro-economic and
sectoral policies, human resources development, social and community development
with a view to reducing poverty, and institutional development,
the following
specific objectives have been agreed:

– an increase in central government and consolidated public savings;

– more emphasis on manufacturing, tourism and non-tourism services where the
economy as a whole is concerned, and more diversification in the agricultural
sector;

– where the balance of payments is concerned, keeping the balance on current

account and the external debt within manageable limits;

– further opening up of the economy by implementation of the Caricom Common

External Tariff;

– raising standards of education and skill

levels to enable people to obtain

employment;

– increasing the capacity of communities to play a central role in their own

development;

– more collaboration between government and NGOs;

– facilitating the delivery of services to vulnerable groups;

– strengthening and upgrading the capability of public and private institutions in
order to make them more efficient and effective, particularly in developing and
implementing policies.

12.4.

Saint Vincent

Year of application

1996 and 1997

Products

Bananas

1996

1997

Payment date

28.8.1998

FMO signed

4.3.1999

in euro

8 397 816

6 419 882

9

Summary

In accordance with the Castries II Memorandum of Understanding, the Government
of Saint Vincent and the Commission of the European Communities have agreed to
use the Stabex transfers for 1996 and 1997 to promote sustainable economic growth
and reduce poverty.

In view of the overall objectives, which are:

development and implementation by the central government of macro-economic and
sectoral policies, human resources development, social and community development
with a view to reducing poverty, and institutional development,
the following
specific objectives have been agreed:

– an increase in central government and consolidated public savings;

– more emphasis on manufacturing, tourism and non-tourism services where the
economy as a whole is concerned, and more diversification in the agricultural
sector;

– where the balance of payments is concerned, keeping the balance on current

account and the external debt within manageable limits;

– further opening up of the economy by implementation of the Caricom Common

External Tariff;

– raising standards of education and skill

levels to enable people to obtain

employment;

– increasing the capacity of communities to play a central role in their own

development;

– more collaboration between government and NGOs;

– facilitating the delivery of services to vulnerable groups;

– strengthening and upgrading the capability of public and private institutions in
order to make them more efficient and effective, particularly in developing and
implementing policies.

10

12.5.

Solomon Islands

Year of application

1994 and 1995

Residue of the first Financial Protocol

Products

Copra products

1994

Cocoa

1995

in euro

1 275 901

182 989

Residue of the first Financial Protocol

45 502

Payment dates

21.01.99 (1994)

19.01.99 (1995)

25.11.98 (residue)

FMO signed

26.08.99

Summary

In accordance with the Government’s medium-term development strategy and earlier
FMOs the funds will be used in support of an integrated rural programme, and
particularly for:

– agriculture and rural businesses;

– rural infrastructure; and

– the forestry sector,

or for ad hoc measures, such as:

– making credit available in rural areas;

– agricultural research;

– copra processing and planning how to market copra;

– encouraging more participation by women in the projects financed;

– maintaining rural infrastructure;

– studies on new varieties;

– training programmes.

11

12.6.

Vanuatu

Year of application

1995 and 1996

Residue of the first Financial Protocol

Products

Cocoa
Cocoa
Residue of the first Financial Protocol

1995
1996

Payment dates

29.04.98 (1995)

in euro

455 819
198 668
25 205

25.11.98 (1996)

26.06.97 (residue)

FMO signed

06.08.99

Summary

As with earlier transfers, these funds will be used mainly to support diversification
in, and opening up of, the agricultural sector. Ad hoc measures to improve the road
infrastructure, particularly by building bridges and fords on the island of Espiritu
Santi, are planned.

12

Table 1: CALCULATION OF THE 1998 TRANSFER BASES (in euro)

ANNEX

Country
code

Country

Product

Loss of
earnings

“Excess
clause”

Transfer basis
after deduction
of excess
clause

Art.202/203
consultations

Transfer basis
after
consultations

Art.194(2)

Art.194(4)

reduction

reduction

Amount of
transfer

248

280

Senegal

Togo

Groundnut products

Cocoa beans

8 583 782

2 249 497

6 334 285

0

6 334 285

1 084 000

0

1 084 000

589 609

494 391

Green or roasted coffee

4 443 366

180 112

4 263 254

2 258 118

2 005 136

Cotton, neither carded nor combed

6 443 425

661 898

5 781 527

2 748 769

3 032 758

Oilcake

424 510

0

424 510

0

424 510

Cameroon

Green or roasted coffee

18 794 638

4 777 297

14 017 341

2 162 876

11 854 465

Rwanda

Green or roasted coffee

2 072 064

72 064

2 000 000

Pyrethrum: saps and other extracts

Uncured skins

Uncured skins

Cotton, neither carded nor combed

Cocoa beans

279 032

394 098

1 076 502

147 612

278 033

0

0

0

0

0

Burundi

Malawi

Haiti

279 032

394 098

139 820

232 554

73 590

1 076 502

872 699

147 612

278 033

0

0

1 860 180

46 478

320 508

203 803

147 612

278 033

Dominica

Green bananas

3 227 304

968 191

2 259 113

671 905

1 587 208

Saint Lucia

Green bananas

8 387 399

2 516 220

5 871 179

1 774 623

4 096 556

Solomon Islands Timber

43 330 923

1 510 701

41 820 222

0

41 820 222

Kiribati

Vanuatu

Samoa

Copra

Cocoa beans

Oilcake

41 068

251 034

33 057

0

0

0

41 068

251 034

33 057

9 132

93 944

0

31 936

157 090

33 057

Total

99 291 847

12 935 980

86 355 867

11 627 639

74 728 228

13

302

324

328

386

452

460

465

806

812

816

819

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

6 334 285

494 391

2 005 136

3 032 758

424 510

11 854 465

1 860 180

46 478

320 508

203 803

147 612

278 033

1 587 208

4 096 556

41 820 222

31 936

157 090

33 057

74 728 228

Table 2

BREAKDOWN BY RECIPIENT COUNTRY
1998 YEAR OF APPLICATION

Country
code

Country

Amount in euro as % of the

total

248

Senegal

6 334 285

8.48%

280

Togo

5 956 795

7.97%

302

Cameroon

11 854 465

15.86%

324

Rwanda

2 227 166

2.98%

328

Burundi

203 803

0.27%

386

Malawi

147 612

0.20%

460

Dominica

1 587 208

2.12%

465

Saint Lucia

4 096 556

5.48%

806

Solomon Islands

41 820 222

55.96%

812

Kiribati

31 936

0.04%

816

Vanuatu

157 090

0.21%

819

Samoa

33 057

0.04%

452

Haiti

278 033

0.37%

74 728 228

100.00%

14

Table 3

BREAKDOWN BY PRODUCT
1998 YEAR OF APPLICATION

Product

Amount in euro

as % of the
total

1 Groundnut products

6 334 285

8.48%

2 Cocoa beans

929 514

1.24%

3 Green or roasted coffee

15 719 781

21.04%

4 Cotton, neither carded nor combed

3 180 370

4.26%

5 Oilcake

457 567

0.61%

6 Pyrethrum: saps and other extracts

46 478

0.06%

7 Uncured skins

8 Green bananas

9 Timber

10 Copra

524 311

0.70%

5 683 764

7.61%

41 820 222

55.96%

31 936

0.04%

Total

74 728 228

100.00%

15