CELEX: 51992PC0465
Language: en
Date: 1992-11-11
Title: Proposal for a COUNCIL REGULATION (EEC) establishing a special system of assistance to traditional ACP suppliers of bananas

COMMISSION OF THE EUROPEAN COMMUNITIES
                                    COM(92) 465 final
                                    Brussels, 11 November 1992
                     Proposal for a
                COUNCIL REGULATION (EEC)
      establishing a special system of assistance
        to traditional ACP suppliers of bananas
             (presented by the Commission)
 ---pagebreak---                                         - 2 -
                              EXPLANATORY MEMORANDUM
I.
The   fourth   ACP/EEC   Convention   provides   the   framework    for  cooperation
between the Community and the 69 African, Caribbean and Pacific countries
(ACP). Protocol 5 of the Convention provides that in respect of its banana
exports to the Community markets, no ACP State shall be placed, as regards
access to its traditional markets and its advantages on those markets, in a
less favourable situation than in the past or at present.
To   date,   national   market   organizations    have   granted   traditional    ACP
suppliers of bananas an outlet for their production on their traditional
markets and enabled them to obtain from these markets an adequate income.
The Commission's     proposal  on the    common  organization    of   the market   in
          1
bananas^ ) sets the framework for continuing on the Community market the
advantages enjoyed by traditional ACP suppliers, in accordance with the
Community's commitment set out above.
There is nevertheless a risk that the introduction of the new organization
and the adaptation to it could jeopardize the continuing viability of ACP
producers.
The majority of ACP banana exporters share the disadvantages              associated
with the producing regions of the Community such as insularity, size of
exploitation, distance from market, etc. They are also in relative terms
more dependent on bananas as a foreign exchange earner and as a significant
sector of the economy - some of them almost entirely.
A reduced presence on the Community market or a reduced income from this
market could have an immediate negative impact on the development prospects
of these countries.      It is not to be excluded that for certain traditional
suppliers   a decline     in returns   from  the   banana  trade   could   result  in
serious economic and political instability.
 (1)   COM(92) 359 final
 ---pagebreak---                                           - 3 -
It is essential that the Community has at hand the necessary instruments to
avoid the consequences if such a situation should develop.
II.    Assistance    to   improve    structures      and   marketing     (technical    and
       financial assistance)
The common    organization    of   the market,     as proposed      by  the   Commission,
provides traditional ACP suppliers with a guaranteed space in the Community
market in a similar way to that provided presently                in their traditional
markets. However, the structure and nature of            the market and the marketing
effort   needed   to  exploit    that   space    are   different    and  constitute    new
elements some of which neither the ACP suppliers nor the operators handling
their   produce   could   reasonably      foresee    as   an   outcome   of   the   common
organization of the market. For example, there will be a new requirement to
meet certain quality standards and there will be incentives for operators
handling Community bananas to organize and market in a more integrated way.
The; ACP producers will be in a similar position to Community producers as
regards   their   ability   to   meet    the   additional    expenditure     from   market
returns alone. It is therefore necessary to make provision for traditional
ACP suppliers to be assisted to adapt to the new circumstances.
The- advent    of   the  single     market    in   bananas     is   not   in   itself   an
unforeseeable phenomenon and ACP States have been aware for some time that
their market situation would change. Several of them have taken measures
within normal development programmes to meet the challenges which will face
them.
It is proposed that financial assistance additional to that provided for in
the Lomé Convention is made available to ACP States who submit programmes
designed   to   assist   producers      to   adapt    to   new   market   circumstances.
Particular   attention    will    be   given   to   programmes     designed   to   improve
quality, to improve marketing         and to improve competitiveness.          Programmes
already begun will not be eligible for retroactive funding but in cases
where a programme may have been eligible for funding if submitted after the
adoption of the Regulation         it will be eligible for additional            fundB to
accelerate its completion.
 ---pagebreak---                                           - 4 -
III.   Income support
The common organization of the market as proposed by the Commission is also
designed to ensure that traditional           ACP   suppliers    continue   to   find    an
economic return on the Community market comparable to what they can expect
at   present.   However,     the    risk   to    traditional     ACP    suppliers     that
adjustments in the marketing arrangements of operators will result                    in a
sudden loss of revenue with immediate impact on the capacity of small-scale
producers to survive or of the economy of the ACP States to adjust to new
challenges, exists.
The effect of such market disturbances on ACP supplies and marketing could
be permanent if nothing is done.          However, the common organization of the
market   as  proposed    by   the    Commission    should    allow   reaction    to   such
developments and therefore market disturbances of the kind mentioned should
only be temporary.
In order to prevent lasting effects from any disturbance of the marketing
of ACP bananas, income support should be granted to ACP producers to make
up for any shortfall in income directly related to conditions prevailing on
the   Community   market    subsequent     to  the    establishment     of   the    common
organization of the market.         Any such intervention will be temporary and
will last only until market mechanisms can reestablish stability                   in the
market.
The calculation of the lost income can be made in the same way as for the
calculation proposed for Community producers.
Some ACP States may be eligible for Stabex transfers as a result of a drop
in export earnings.      Stabex transfers may be triggered by the same set of
circumstances    which   give   rise    to  payment    of   income   support,    but    are
normally based on a broader assessment.          Nevertheless, it is not considered
appropriate   to   compensate    ACP   States   cumulatively     for   foreign   exchange
losses under the Stabex system and for losses in producers income under an
income   support   system   in   so   far  as  both    arise   from   the  same   set    of
circumstances.    It    is    therefore     proposed      that    income    support      be
complementary to Stabex transfers and that income support shall only be
paid in so far as Stabex transfers do not entirely offset the effects of
price decreases on the producers' income as provided for in this proposal.
 ---pagebreak---                                      - 5 -
                                Proposal for a
                           COUNCIL REGULATION (EEC)
                 establishing a special system of assistance
                   to traditional AGP suppliers of bananas
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing, the European Economic Community-,
and in. particular; Article 113 thereof;*
Having regard to the proposal from the Commission t3^**
Having, regard to the opinion of the European Parliament^),
Whereas Protocol 5 on bananas to the fourth ACP/EEC Convention- provides
that,. in respect of its banana exports to the Community markets, no ACP
State shall be placed, as regards access to itST traditional markets and? its
advantages on those markets, in a less favourable situation than in the
past., or at present;
Whereas national market organizations have hitherto granted traditional ACP
suppliers of bananas an outlet for their production on their traditional
markets and enabled them to obtain from these markets ana adequate income;
Whereas the common organization of the market established by Council.
Regulation (EEC) No ....(3) sets the framework, for continuing,, on the
Community market.,, the advantages enjoyed by traditional ACP suppliers, in
accordance with the Community's commitment set out above;
Whereas risks exist nevertheless that the introduction of a new market
organization and the need to adapt to it could jeopardize the continuing
viability of ACP supplies;.
(1)
(2)
(3)    OJ No L
 ---pagebreak---                                             t> -
Whereas   particular    efforts  will    be   needed   to  adapt   to  the  new   market
conditions in order to take advantage of the opportunities offered;
Whereas the structure and the nature of the new market and the marketing
efforts   necessary    to maintain    a presence     on   this market    represent   new
elements    some  of   which  neither    the    traditional   ACP   suppliers   nor  the
operators handling this produce could reasonably foresee;
Whereas technical and financial assistance, additional to that provided for
in the fourth ACP/EEC Convention should therefore be provided to carry out
programmes designed to assist producers to adapt to new market conditions
and in particular to improve quality, to improve marketing and to improve
coropetit iveness ;
Whereas the new conditions prevailing on the market may result in temporary
market disturbances, particularly in the sectors of the Community Market
traditionally supplied by the ACP States;
Whereas such disturbances could seriously affect the returns to the ACP
from the market and therefore the continued viability of this production;
Whereas financial assistance should therefore be provided to permit the ACP
to remain on the market, until such time as the market stabilizes and an
economic return from the market can be received;
Whereas    income    support   should    be    complementary    to   Stabex   transfers
triggered by the same set of circumstances;
Whereas it is therefore appropriate to align calculation of income support
with the calculation of Stabex transfers,
HAS ADOPTED THIS REGULATION:
                                       Article 1
A special system of assistance to traditional ACP suppliers of               bananas is
hereby established.      This assistance may consist of technical and financial
assistance and/or of income support.
 ---pagebreak---                                   Article 2
For the purposes of this Regulation,
-     "traditional ACP suppliers" means the ACP States listed in the Annex.
-     "bananas" means fresh or dried bananas covered by the code CN 0803,
      excepting plaintains.
                TITLE I - TECHNICAL AND FINANCIAL ASSISTANCE
                                  Article 3
1.    Technical and financial assistance shall be provided to traditional
      ACP suppliers with a view to helping such suppliers adapt to the new
      market   conditions   following   the   establishment   of   a   common
      organization of the market in bananas.
2.    Technical and financial assistance shall be provided to contribute to
      the carrying-out of programmes in the banana sector to achieve one or
      more of the following objectives:
      -   to improve quality;
        - to adapt production, distribution or marketing requirements to
          meet   the  quality  standards   provided  for  in  Article   2  of
          Regulation (EEC) Mo ...;
        - to establish producers' organizations which have as an objective
          the  improvement  of the marketing   and competitiveness   of their
          products;
        - te develop a production and/or marketing strategy te meet       the
          requirements of the market in the Community in the light of the
          coflwm organisation of the market 1 A bananas;
 ---pagebreak---         - to assist with training, market intelligence, the development of
           environmentally     sound    production   methods,     improving    the
           distribution    infrastructure,    improving   trade    and   financial
           services to banana producers and/or improving competitivity.
3.    Assistance may be given to programmes having similar objectives which
      are currently financed under the Lomé Convention or by the public
      authorities of the Member        States parties to the fourth ACP/EEC
      Convention   where   such   assistance would    result   in   a more   rapid
      completion of the programme.
                                     Article 4
The Commission shall decide on the eligibility of the programme and the
level of assistance after consultation with the traditional ACP supplier
concerned.   It shall also take into account the coherence of the envisaged
programme   with  the   general   development   objectives   of   the   ACP  State
concerned   and  its  impact    on   regional  cooperation   with    other  banana
producers, in particular the Community producers.
                            Title II - INCOME SUPPORT
                                     Article 5
1.    Within the limits indicated in point 1 of Article 15 of Regulation
      (EEC) No ..., traditional ACP suppliers shall be eligible for income
      support.
2.    Income support shall be paid where the reduction in income drawn from
      exportation to the Community of bananas complying with the common
      standards is directly related to conditions prevailing on the market
      subsequent to the establishment of the common organization of the
      market in bananas.
 ---pagebreak---                                Article 6
1. Income support shall be individually calculated for each traditional
   ACP supplier on the basis of the quantities exported to the Community
   during   the  year  of application   and the  difference  between  the
   reference price and the actual price.
2. The reference price shall be the average price per tonne of bananas
   produced   in the ACP State concerned and exported to the Community
   during the six calendar years preceding the entry into force of this
   Regulation,   less the  two  years  with the  highest and  the  lowest
   figures.
   The actual price shall be the average price per tonne of bananas
   produced   in the ACP State concerned and exported to the Community
   during the year of application.
3. The statistics needed for the calculation of income support are those
   calculated   and published  on Community  imports by  the  Statistical
   Office of the European Communities.
4. Before 1 July of each year, the Commission shall determine the income
   support for the previous year after consultation with the ACP State
   concerned.
5. Exceptionally, and in particular during the first year of application
   of this Regulation, advances may be paid where there is a signicifant
   reduction in the production income compared to that of the previous
   year or within any given year.
   The need for and the level of such advances shall be determined by
   the Commission after consultation with the ACP State concerned.
 ---pagebreak---                                   - 10 -
                     Title III - GENERAL PROVISIONS
                                Article 7
1. Financial commitments made under Title I shall be in addition to any
   funds available for ACP States under the provisions of the fourth
   ACP/EEC Convention.
2. Financial commitments made under Title II shall be complementary to
   funds available under the system guaranteeing the stabilization of
   export earnings provided    for in Articles 186 to 212 of the fourth
   ACP/EEC  Convention.   Title   II therefore permits     payment   of   income
   support only in so far as transfers made for identical quantities in
   accordance with Articles 186 to 212 of the fourth ACP/EEC Convention
   do not entirely offset the effects of price decreases in the revenues
   of traditional ACP suppliers.
3. Payments  of  income   support   shall  be  used,  in   accordance    with  a
   framework of mutual obligations to be agreed between the traditional
   ACP  supplier  concerned   and  the  Commission   in each    case,   for  the
   benefit  of  economic   operators   adversely  affected    by  the   loss  of
   income.
                                Article 8
1. Granting of assistance as defined in Article 1 shall be subject to
   the  designation   by  the  ACP   State  concerned   of   a   representative
   organization entitled to act and to receive payments on its behalf
   within the framework of this Regulation.
2. The   representative    organizations    shall   present     the   following
   characteristics :
   -   be composed entirely or mainly of producers of bananas in one or
       more traditional ACP suppliers;
 ---pagebreak---                                     - 11 -
          pursue at least two of the following objectives:
              improvement of the quality of the produce;
              improvement of the quality of distribution and marketing;
              improvement of the returns to producers;
              improvement of the role of producers in the organization of
              the banana market.
3.    The   representative  organization    designed  in   accordance  with
      paragraph 2 must be notified to the Commission.
                                  Article 9
As far as necessary, detailed rules for the application of this Regulation
shall be determined by the Commission in accordance with the procedure laid
down in Article 10.
                                 Article 10
The Commission shall be assisted by a committee of an advisory nature
composed of the representatives of the Member States and chaired by the
representative of the Commission.
The representative of the Commission shall submit to the committee a draft
of the measures to be taken.    The committee shall deliver its opinion on
the draft, within a time limit which the chairman may lay down according to
the urgency of the matter, if necessary by taking a vote.
The opinion shall be recorded in the minutes; in addition, each Member
State shall have the right to ask to have its position recorded in the
minutes.
The Commission shall take the utmost account of the opinion delivered by
the committee.   It shall inform the committee of the manner in which its
opinion has been taken into account.
 ---pagebreak---                                    - 12 -
                                 Article 11
This Regulation shall enter into force on 1 January 1993.
It shall apply until 28 February 1996.
This Regulation shall be binding in its entirety and directly applicable in
all Member States.
Done at Brussels,                         For the Council
                                          The President
 ---pagebreak---                                    - 13 -
                                                             ANNEX
             LIST PROVIDED FOR IN THE FIRST INDENT OF ARTICLE 2
Traditional ACP suppliers of bananas;
Belize
Cameroon
Cape Verde
Dominican Republic
Grenada
Ivory Coast
Jamaica
Saint Lucia
Saint Vincent and the Grenadines
Somalia
Suriname
 ---pagebreak---                                                      -   14 -
        Financial Statement                                               Oate :
 1. BUDGET HEADING          B7-5G23 - Compensation for ACP banana        APPROPRIATIONS : ECU 2 0 0    mi 11 i o n
                           products
 2. TITLE : Draft Proposal for a Council Regulation establishing a special system of assistance to
             traditional ACP suppliers of bananas               .
3. LEGAL BASIS :
                   Article 113 EEC
4. AIMS : Assistance to traditional ACP banana suppliers to adapt to conditions created by
            the completion of the Single Market
 S. FINANCIAL IMPLICATIONS           PERIOD OF 12 MONTHS    CURRENT FINANCIAL YEAR     FOLLOWING FINANCIAL YEAR
                                                                   (1992)                         (1993)
 5.0 EXPENDITURE
       - CHARGED TO THE EC BUOGET
         (INTERVENTIONS)              • ECU 60 Billion                                        ECU 35 mill ii
5.1 REVENUE
                                          1994                1995                1996
5.0.1 ESTIMATED EXPENDITURE          • ECU 60 million • ECU 60 million    • ECU 4 5 million
5.1.1 ESTIMATED REVENUE
5.2 METHOD OF CALCULATION
       See annex
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET ?
                                                                                                          NO
6.1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET ?
                                                                                                          NO
6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY ?
                                                                                                         YES
6.3 UILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY ?
                                                                                                         YES
COMHENTS :
The 1993 preliminary draft budget contains no appropriations for this measure.
 ---pagebreak---                                       - 15 -
                       Annex to the. Financial Statement
1. Technical and financial assistance (Article 3)
   The objective of this aid .Is to assist traditional ACP suppliers to
   adapt to the new market conditions and not to replace normal
   development aid.
   The amount of finance depends on factors such as specific conditions
   which have yet to be determined and the priority they receive.
   Nevertheless the costs of previous expenditure on programmes In the
   banana sector can serve as a useful guide of the level of expenditure
    likely to be required. On this basis, an annual cost of ECU 10 million is
   estimated.
   income support (Article 5)
   The reference price of traditional ACP bananas calculated In accordance
   with article 6(2) is ECU 642 per tonne (a).
   The average price of bananas in the Community after introduction of the
   market organisation may be estimated from the CIF price of dollar zone
   bananas In Belgium, the Netherlands, Ireland and Denmark, the Member
   States with no special arrangements. This recently stood at ECU 414
   per tonne (b).
   Once customs duties of 20X have been added, the price on the Community
   market is therefore 414 x 1.2 - ECU 497 per tonne.
   The income support Is the difference between (a) and (b):
   642 - 497 - £CU 145 per tonne.
   Traditional ACP production referred to in Art 5 (1) Is 622,000 tonnes.
   The maximum cost will be 622,000 tonnes x ECU 145 per tonne - E C U 90.2
   mi 11 Ion
   income losses set off by Stabex transfers to be deducted In accordance
   with Article 7 (2) are estimated tentatively at ECU 40 million.
   The maximum cost for Income support will be ECU 90.2 million - ECU 40
   mi 11 ion - 50.2 mi 11 Ion.
   It is assumed that the advance provided for in Article 6 (5) is oaid at
   the rate of 50%.
 ---pagebreak---                                    - 16 -
3.   Summary of expenditure
                                           ECU million (budgetary)
                                          1993 1994 1995 1996
   Technical/financial assistance (Art 3)  10   10   10   10
   income support (Article 5)
   1993                                    25   25
   1994                                         25   25
   1995                                              25   25
   1996                                                   10
   TOTAL                                   35   60   60   45
 ---pagebreak---                                                17 -
                                                                     ISSN 0254-1475
                                                              COM(92) 465 final
                                                      DOCUMENTS
EM                                                                   •     03 «
                                Catalogue number : CB-CO-92-525-EN-C
                                                             ISBN 92-77-50043-3
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