Proposal for a COUNCIL DECISION on the position to be taken by the European Union within the International Jute Study Group as regards the negotiation of new Terms of Reference beyond 2014
Date: 2012-10-05
Institutions: European Commission
Subjects: aid to agriculture, commodity agreement, international trade, jute, poverty, trade cooperation, trade promotion, world organisation

EUROPEAN 
COMMISSION 

Brussels, 5.10.2012  
COM(2012) 575 final 

2012/0277 (NLE) 

Proposal for a 

COUNCIL DECISION 

on the position to be taken by the European Union within the International Jute Study 
Group as regards the negotiation of new Terms of Reference beyond 2014 

EN 

   EN 

 
 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The International Jute Study Group (IJSG) was established under the aegis of United Nations 
Conference  on  Trade  and  Development  (UNCTAD)  and  entered  into  force  in  2002.  The 
Agreement establishing the IJSG was accepted by the European Community on 15 April 2002 
by Council Decision 2002/312/EC1. The IJSG is an intergovernmental body set up to function 
as the International Commodity Board (ICB) for Jute, Kenaf and Allied Fibres. Its mandate is 
to promote sustainable development of the global jute sector incorporating a large role for the 
private  sector  and  focusing  on  development  of  new  usage,  commercialization  and  poverty 
alleviation.  

As  the  Terms  of  Reference  of  the  current  Agreement  come  to  an  end  in  April  2014,  the 
question of its renewal, through negotiation of new Terms of Reference for the IJSG, has been 
discussed in the IJSG Council meetings in 2011 and 2012. It will again be addressed at the 
next IJSG Council meeting, to be held in November 2012, and a formal decision on opening 
negotiations under the aegis of UNCTAD should be taken on this occasion.  

In its present and likely future form, the Commission considers that the IJSG does not bring 
any  significant  added  value  for  the  EU.  In  commercial  terms  EU  imports  of  jute  and  kenaf 
products amount to approximately €80 million per year. Moreover, the IJSG does not provide 
market analysis or  trade statistics as the organisation entirely relies on the data provided by 
the  FAO  Intergovernmental  Group  on  Jute  (IGG/JU).  Although  the  private  sector  is 
represented within the IJSG by some 150 companies, only 3 of them come from the EU.  

From a development policy perspective, the IJSG has a mandate to alleviate poverty, and as 
such,  it  is  in  line  with  the  development  objectives  of  the  EU.  However,  an  independent 
evaluation carried out in 2010 showed that the 15 development projects initiated by the IJSG 
over  the  last  10  years  have  had  a  limited  impact  on  poverty  reduction.  In  this  context,  the 
Commission considers that the EU can better address poverty alleviation through its bilateral 
programmes (i.e. in Bangladesh and India, which account for 96% of Jute production) rather 
than by supporting the work of the IJSG. 

The main problem of the IJSG is its low representation. Indeed, following the withdrawal of 
Switzerland in 2010, the IJSG can only count India, Bangladesh as well as the EU and its 27 
Member States among its members. Morocco which had shown interest in joining the IJSG is 
deferring  its  adhesion  following  the  recent  election  of  a  new  government.  Other  major 
importing countries like the USA, Canada and Turkey are not member of the IJSG. As such, 
the  IJSG  could  be  considered  as  a  regional  organisation  rather  than  an  international 
organisation.  

In  light  of  the  above,  the  Commission  does  not  recommend  to  open  negotiations  for  the 
renewal of the IJSG Terms of Reference.  

In order to continue to support the jute sector, the Commission recommends to focus on the 
existing  Intergovernmental  Group  on  Jute,  Kenaf  and  Allied  Fibres  (IGG/JU),  managed  by 
FAO  with  a  view  to  transforming  this  group  into  an  International  Commodity  Board.  The 
main reasons are the following: 

• 

1 
2 

EN 

In the Communication "Agricultural Commodity Chains, Dependence and Poverty"2 
the  Commission  considers  that  the  value  chain  approach  is  key  to  ensure 

OJ L 112, 27.4.2002, p. 34. 
COM(2004)89 

2 

   EN 

                                                 
• 

• 

• 

• 

participation and improve revenue of smallholders. Since 2005, the Commodities and 
Trade Division of FAO has developed a comprehensive expertise in the value chain 
approach and has already applied it to other commodities like Hard Fibres. 
Being  already  responsible  for  the  IGG  on  Hard  Fibres3,  FAO  could  easily  exploit 
commonalities and synergies which exist between Jute and Hard Fibres.  

If  the  IJSG  ceases  to  exist,  the  IGG/JU  could  be  designated  as  an  International 
Commodity  Board.  Under  this  status,  it  will  be  entrusted  to  initiate  and  monitor 
projects  and  to  mobilize  significant  resources  from  the  Common  Fund  for 
Commodities but also from FAO members or other donors.  

As regards participation, IGGs are open to all Member Nations of the UN and do not 
require  any  lengthy  process  of  ratification.  Moreover,  it  has  been  proven  that 
granting the activity of development projects to an IGG has a greater impact on the 
work of the Group and on the participation of developing countries. 

Reducing  poverty  and  improving  food  security  are  the  main  objectives  of  FAO. 
Considering, on the one hand, its extensive experience in advising governments and 
in  analysing/drafting  policies,  and  on  the  other  hand,  its  experience  at  field  level, 
particularly  within  small  holder  farmers  and  entrepreneurs,  it  appears  that  FAO  is 
well  placed  to  steer  policies  towards  poverty  reduction  and  to  integrate  poor 
communities  concerns  into  national  policies.  As  a  member  of  the  FAO,  the  EU  is 
well placed to ensure that its objectives are well taken on board. 

2. 

EXISTING PROVISION IN THE AREA OF THE PROPOSAL 

The Community has accepted the Agreement establishing the International Jute Study Group 
on 15 April 2002 on the basis of Council Decision 2002/312/EC. 

3. 

RESULTS  OF  CONSULTATIONS  WITH  THE  INTERESTED  PARTIES  AND  IMPACT 
ASSESSMENTS 

At the Council Working Group on Commodities (PROBA) of 14 June 2012, Member States 
expressed support for not opening negotiations for the renewal of the IJSG. 

4. 

• 

LEGAL ELEMENTS OF THE PROPOSAL 

Legal basis 

Article 207 (3) and (4) and Article 218 (9) of the Treaty on the Functioning of the European 
Union 

• 

Subsidiarity 

The proposal falls under exclusive competence. 

• 

Proportionality 

Not applicable 

• 

Choice of instrument 

Proposed instrument: Council Decision. 

3 

The IGG on Hard Fibres has the status of International Commodity Board as there is no international 
organisation dealing with this commodity 

EN 

3 

   EN 

                                                 
5. 

BUDGETARY IMPLICATION 

The  annual  contribution  to  the  IJSG  administrative  budget  amounts  to  €310,000  (on  July 
2012). Focusing on FAO-IGG/JU will not have any financial implication, as the running costs 
of  the  FAO-IGG  are  covered  by  the  regular  budget  of  FAO.  The  EU  will  in  fact  save 
€310,000. 

Conclusion 

In  view  of  the  above,  the  Commission  proposes  that  the  Council  establish  the  following 
position  on  behalf  of  the  European  Union,  and  authorise  the  Commission  accordingly  to 
oppose the opening of negotiations for the renewal of the IJSG Terms of Reference. 

EN 

4 

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2012/0277 (NLE) 

Proposal for a 

COUNCIL DECISION 

on the position to be taken by the European Union within the International Jute Study 
Group as regards the negotiation of new Terms of Reference beyond 2014 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 207(3) and (4), in conjunction with Article 218(9) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

The  Agreement  establishing  the  Terms  of  Reference  of  the  International  Jute  Study 
Group, 2001 was accepted on behalf of the European Community on 15 April 2002 by 
Council Decision 2002/312/EC4. 

The current Terms of Reference expires on 30 April 2014 and the question of opening 
negotiations for the renewal of these Terms of Reference will be discussed in the 15th 
session of the International Jute Study Group Council meeting in November 2012. 

(3) 

Renewal of the abovementioned Agreement is not in the interest of the Union 

HAS ADOPTED THIS DECISION:  

The position of the Union within the International Jute Study Group shall be to vote against 
opening negotiations for the renewal of the Terms of Reference beyond 2014. 

Article 1 

The  Commission  is  hereby  authorised  to  express  this  position  within  the  International  Jute 
Study Group Council meetings. 

Article 2 

This Decision shall enter into force on the day of its adoption. 

Done at Brussels,  

Article 3 

For the Council 
The President 

4 

OJ L 112, 27.4.2002, p. 34 

EN 

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