CELEX: 51979PC0425
Language: en
Date: 1979-07-25
Title: DRAFT OF COUNCIL DECISION extending the list of overseas countries and territories mentioned in Decision 76/568/EEC on the association of the overseas countries and territories with the European Economic Community (submitted to the Council by the Commission)

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COM (79) 425
Vol. 1979/0150
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                           COM(79)425 final
                                                           Brussels / 25 July 1979
      *               DRAFT OF COUNCIL DECISION
 extending the list of overseas countries and territories mentioned in
 Decision 76/ 568/ EEC on the association of the overseas countries and
         territories with the European Economic Community
                                      M             S ■? V
           ( submitted to the Council by the Commission )
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 C0M(79 ) 425 final
 ---pagebreak---                                  Council Decision
                     amending Decision 76 / 568 / EEC of 29 June 1976 , #
           on the association of the overseas countries and territories
     4                   with the European Economic Community
EXPLANATORY MEMORANDUM
1 . Introduction
    11 . Applications have now been received from the Gilbert Islands , and the
          Anglo-French Condominium of the New Hebrides for a change of status
          under Article 23 § 6 of the Council Decision of 29 June 1976 .
    12 . The submission from the Gilbert Islands' authorities was drawn up in
          January 1978, and was forwarded to the Commission Services , via the
          U.K. authorities on 23.11.1978 . A copy was also sent ^ hrough the EEC
          Delegate in Suva , Fiji , on 3.3.1978 . No reason has been given by the
          British authorities for the delay in forwarding this application .
    13 . Likewise the submission prepared by the authorities of the Anglo-French
          Condominium of the New Hebrides was received by the Commission Services
          from the French and the U.K. authorities on 8.11.1978 . The case was
          drafted in June 1978 . In November 1978 a delegation from the New Hebrides
          visited the Commission , and during a meeting with DG VIII officials
          clarified the arguments put forward in the application .
    14 . The major points raised in the two submissions are summarized below .
2 . The Gilbert Islands
    21 . The Government of the Gilbert Islands feels that the imminent exhaustion
        . of phosphate deposits in 1979, which at present form the economic base
          of the country , will constitute "a radical and lasting change , which ne­
          cessitates the application of speical measures " as stipulated in Article
          23 § 6 of the Council Decision .
    22 .- Phosphate accounts for 90 % of total exports , and copra for 10 % . On the
          expiry of phosphate , export revenue is estimated to fall from 16 million
          Aust . i in 1979 to less than 3 million Aust . t in 1980 .
    23 . The Gilbert Islands benefit at present from a relatively high per capita
          GDP ( estimated Aust . £ 624 in 1977 ) compared with some other developing
          countries , because of the recent but short term boom in phosphate prices .
          This fugure will be almost halved ( estimated Aust . 2 350 ) when the phos­
          phate mining finishes , which will place the Gilbert Islands at the same
          level , or even below, of that of several of the territories receiving
          Stabex grants .
    24 . The per capita GDP is not a good indication of the level of national de­
          velopment and wealth , because of the marked disparity of .income between .
 ---pagebreak---       geographical and social groups . Per capita incomes in rural areas are
      less th%n the corresponding urban -- fi gures .
25 . Furthermore , the current per capita GDP includes income accrued from the
     phosphate ming , which does not enter into the economy / but is accumulated
     in the Revenue Equalization Reserve Fund ( RERF ). It is this fund / which
     the Government will draw upon in order to balance its budget / when the
     phosphate mining ceases .
     The current per capita GDP also takes in the income from expatriate sa­
      lary supplements . Subtracting these two items / the per capita GDP is below
     Aust . 2 540 .
26 . The Gilbert Islands' per capita GDP is ";the result of a special and tem­
     porary situation "/ and does not show the true level of development , which
     is comparable to that of the other OCT , exempt from the obligation to con­
     tribute to the reconstitution of resources .
27 . The country lacks other natural resources / which could provide a substi­
     tute for phosphate / apart from the sea . Efforts have been " stepped up "
     to exploit brine shrimps on Christmas Island / and to establish a tuna
     fishing industry . It will be some years / however / before any significant
     f inancial»return is seen . Forecasts show that the eventual income from
     these sources will only partially make up for the phosphate income .
     The geographical nature of the Gilbert Islands makes the establishment
     of new industries both costly and time consuming .
28 . The Gilbert Islands received ,a transfer of 1 / 083,098 EUA to cover a short­
     fall in copra export earnings during 1976 . 150,000 Aust . t of this pay­
     ment have been accorded , as a short term loan , to " Atoll Plantations ",
     who operate the copra plantations on Christman Island . The outstanding
     sum is being held back to finance reconstitution to the Stabex fund . The
     Gilbert Islands are required to reconstitute 174,972 £UA with respect to
     the 1976 transfer . As yet the contribution has not been made .
The Anglo-French Condominium of the Hew Hebrides
31 . It is believed that forthcoming independence , and the likely associated
     cut back in financial resources available to the country will make up a
     " radical and lasting change ", as defined in Article 23 § 6 of the Council,
     Decision . Independence is planned to take place in early 1980 .
32 . In the Council Decision , the New Hebrides are not listed among the OCTs '
     exempted from the obligation to contribute to the resources of the system .
33 . The New Hebrides receives sizeable quantities of financial assistance
     from overseas for budgetary and development purposes . The New Hebridian
     government intends , that the reliance on overseas budgetary aid should be
     reduced .
34 . The resulting reduction in aid inflow will necessitate stringent budgeting
     by the Government , as it works at taking on those governmental responsi - _
     bilities , which are at present carried out by the British and French Resi­
     dencies .
 ---pagebreak---                                             - 3 -
      35 . The cuts in aid inflow will have a grave economic impact on the internal
            economy of the country . A persistent deficit on the    balance of payments
             is likely to occur ; the amount of disposable income   will decline , thus
             leading to the closure of shops , restaurants , etc .; and government in­
            come as revenue from import duty, business licences     etc . will drop .
      36 . The public debt repayment level operates currently at an acceptably
            high level . The Government budget is unable to withstand any further
            debt reliabilities .
     37 . The per capita figure of 64,000 FNH quoted for 1976 is a misleading
            guide to the real development level in the country, because much of the
            wealth is centred on the two urban areas , and is in the hands of non-
            indigenous personnel . Furthermore , the government sector pays high sa­
            laries to a small number of expatriate staff .
     38 . The rural economy depends on copra as the single crash crop . During the              '
           past 25 years , the real world price for copra has fallen .                  ■ . - *
               .                                                                         %
     39 . The authorities of the Anglo-French Condominium of the New Hebrides con­
           sider that the criteria , which were laid down in the document " The Lome
           Convention , measures in favour of the least developed states " ( ref .
           VIII / 05 / 75-E ), on which it was decided to exempt certain countries from
           reconstitution have been fulfilled .
     40 . The actual situation of the New Hebrides resembles closely that of the
           territories , which are exempt from reconstitution to the Stabex fund ,
           rather than those which are required to reconstitute .
     41 . The New Hebrides received Stabex transfers of 1,103,499 EUA for 1975
           and 327,364 EUA for 1976 , to compensate shortfalls in export earnings -
           from copra . The 1975 payment was used to rebalance the 1976 budgetary
           programme . The 1976 payment has likewise been incorporated with the bud­
           getary operation for 1978 . The New Hebridian government intends to create
           a development bank ,- and to introduce a system to regularize and stabilize
           copra prices , and prices of other coconut products . The New Hebrides is
           required to reconstitute 1,103,499 EUA for the 1975 transfer , and 327,364 EUA
           for the 1976 transfer .                                        .    •
CONCLUSION AND DECISION T0 BE AD0PTED
1 . Both cases are well presented . The Gi Ibert Islands and the New Hebrides have
     been allocated additional EDF funds , which are designated for the least de­
     veloped OCT . The Gilbert Islands will become independent on 12 July 1979 and
     the New Hebrides in 1980 . It is expected that both territories will ask for
     accession to the Lome Convention . The Stabex system for these territories will
 • " remain governed by the clauses foreseen for the PT0M , but it must be understood
     that these precedents are not prejudged by the Community 's position on the
     drawing up of the list of Art . 48 of the Convention , even if the Commission
     Services have a favourable preconceived judgement . for the New Hebrides .
                                     ' .          •   .                          ■ <
2 . Additional statistical information for the Pacific area , jrfhich may prove use­
     ful in any future examination of the application's , is available . Comprehen­
     sive comparisons are difficult to obtain , because of the varying sources of
     information . The sources of information are noted on the documents . The fi­
 ---pagebreak--- gures shown in the applications compare favourably with the additional data .
In some cases there are differences , which are largely due to the fact that
many of the figures for 1976 and 1977 are estimates .
The two applications have been acknowledged , and it has been pointed out that
these requests must be considered within the offical Community framework . A
careful examination of the two applications on the basis of the informations
and data available have been made and on the spot inquiries have been carried
out .
On the basis of the foregoing , the Commission invites the Council to include
the Gilbert Islands and the Anglo-French Condominium of the New Hebrides under
the list of OCTs exempted from the obligation to contribute to the reconsti­
tution of Stabex resources , to take effect from the date of decision . A draft
decision is attached . for this purpose .
 ---pagebreak---                                COUNCIL  DECISION
extending the List of overseas countries and territories mentioned in
Decision 76 / 568/ EEC on the association of the overseas countries and
territories with the European Economic Community
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community .
                                                                               *
                                                                           /
Having regard to Council Decision 76/ 568/ EEC of 29 June 1976 on the
association of the overseas countries and territories with the European
                     1       . .      ......                    2
Economic Community , as last amended by Decision 79/ 310/ EEC , and in
particular Article 23 ( 6 ) thereof ;
                                                                  A
Whereas the economic situation of the Gilbert Islands and the Anglo-French
Condominium of the New Hebrides justifies the inclusion of those countries
and territories on the list at Article 23 ( 5 ) of the said Decision ,
because of radical and lasting changes that have occurred .
                                                 »
HAS DECIDED AS   FOLLOWS :
                                   Article 1                                  V
          As from 1 January 1979, the following countries and territories
are added to Article 23 ( 5 ) of Decision 76/ 568/ £EC :
         - the Gilbert Islands ,
         - the Anglo-French Condominium of the New Hebrides .
                                   Article 2
          This Decision shall be published in the Official Journal of the
European Communities .     It shall take effect on the day of its publication .
 OJ No L 176 , 1.7.1976 ,- p . 8
20J No L 72, 23.3.1979, p . 33