CELEX: 51976PC0448
Language: en
Date: 1976-09-08 00:00:00
Title: RECOMMENDATION FOR A DECISION OF THE COUNCIL AND OF THE REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES MEETING IN THE COUNCIL AUTHORIZING THE COMMISSION TO OPEN NEGOTIATIONS WITH PAPUA NEW GUINEA#DRAFT INTERNAL AGREEMENT AMENDING THE INTERNAL AGREEMENT ON THE FINANCING AND ADMINISTRATION OF COMMUNITY AID SIGNED ON 11 JULY 1975 (submitted to the Council the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (76) 448
Vol. 1976/0136
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983
concernant l'ouverture au public des archives historiques de la Communauté économique
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983,
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
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file have been declassified in conformity with Article 5 of the aforementioned regulation.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                               COM ( 76 ) 448 Final
                                               Brussels, 8th September 1976
     RECOMMENDATION FOR A DECISION OF TIE COUNCIL AND OF THE
     REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES
     MEETING IN THE COUNCIL AUTHORIZING THE COMMISSION' TO
     OPEN NEGOTIATIONS KITH PAFUA NEW GUINEA
                             DRAFT
    INTERNAL AGREEMENT AMENDING THE INTERNAL AGREEMENT ON
    THE FINANCING AND ADMINISTRATION OF COMMUNITY AID SIGNED
    ON 11 JULY 1975
                (submitted to the Council    the Commission)
 ---pagebreak---  ACCESSION Tr THE ACP -^SC CONVENTION OF LOME BY PAPUA HEW GUINEA
  (Comaisr -on Communications to the Council concerning the opening of
 negoti. tions)
 j,         Papua New Cuinea made a formal request for accession to the Lom6
 CcAventioa, under Article 90 of the Convention on the 3rd December 1975 .
 The request was formally approved by the AGP/EEC Council of Ministers at
 its first meeting in Brussels on the 14th and 15th July 1916 .
 2»         During exploratory talks with representatives of Papua New Guinea
 it "became clear that the country was ready to accept in principle all the
 obligations involved in accession to the Convention.
            The only matter which eight be raisod by Papua New Guinea in the
•course of negotiations proper concerns trade , given the de facto existence
    >
 of preferential arrangements with the fomer motropolia. Since , howevor,
 the country has stated that it intends i.i any c;.o : to a^oli:;h Vr.->no prefe­
 rential arrangements eventually , their existence does not r,ec;n to bo a pro-
 bloa which cannot be resolved satisfactorily during the negotiations.
            Since there are no other special problomo 7 it would appear that the
 negotiations could take place in a relatively short tine , loading rapidly to
 the signing by the Community of an accession agrocmont with this country.
            The Community would thus be responding to the desire which has been
 expressed for accession to the Convention at the earliest possible date .
 3.         The negotiations will be conducted in close contact with the ACP
 States , which will be kept informed by exchanges of views as necessary. The
 Commission considers that , although it is not a legal requirement of the
 Convention , when the negotiations have been completed the accession agreement
  should then be the subject of consultation with the ACP Group.
 The accession agreements will subsequently be signed and the necessary ratifi
 cation procedures begun.
                                                                               •/
 ---pagebreak---                                  fi f»
4.        With a view to enabling the negotiations with this country to be
opened as soon as possible , the Commission recommends that the decision of the
Council and the Representatives of the Member States meeting in the Council
be adopted, authorizing the Commission to open negotiations with Papua New
Guinea , and the relevant directives issued.
          While the negotiations with the applicant State is being conducted ,
                              \
the Member States should agree on the provisions amending the Internal
Financial Agreement in order to enable the necessary procedures for
ratifying those provisions to be undertaken at the same time as those for
the accession agreement (Annex).
5.        The Commission considers that as soon as the accession agreements
have been signed, pending oonpletion of the ratification procedures in
th« Member States , the Community and the applicant countries, should agree ,
for the purpose of their trade , to apply autonomously the trade arrangements
provided for by the agreements , as the Community and the 46 ACP States did
fron 1 July 1975 .
          Lastly, the Commission considers that , in the same spirit , transi-
tioaal aitiurts similar to those adopted between the Community and the ACP
Statoa from 1 July 1975 a-0 regards financial and technical cooperation in
ytuHiMlar should also be applied.
 ---pagebreak---     RECOMMENDATION FOR A DECISION 0? THE COUNCIL AND OP THE
    REPRESENTATIVES OP THE GOVERNMENTS OF THE MEMBER STATES
    MEETING IN THE COUNCIL AUTHORIZING THE COMMISSION TO
    OPEN NEGOTIATIONS WITH PAPUA NEW GUINEA
   THE COUNCIL OF THE EUROPEAN COMMUNITIES AND THE REPRESENTATIVES OF THE
   GOVERNMENTS OF THE MEMBER STATES MEETING IN THE COUNCIL ,
   Having  regard to the Treaty establishing the European Economic Community *
   and in particular Artiole 238 thereof,
' Having regard to the recommendation from the Commission,
  Whereas   Papua Hew Cuinea has applied to aooede to the ACP-EEC Convention si
  in Lome on 28 February 1975 »
  Whereas the first paragraph of Artiole 90 of the Convention stipulates
  that, subject to the approval of the ACP-ETEC Council of Ministers an
  agreement between the Community and a State whose economic structu^
 and production are comparable with those of the ACP Statesnay provide for
 the acoession of that State to the Convention,
 HAVE DECIDED AS FOLLOWS :
                                   Sole Article
The Cohesion is hereV authorised to open negotiations for the oonolusion
of an agreement between the European Economic Community ai.d ?iiPua Nov Guinea
on the acoession of that country to the ACP-EEC Convention of Loui.
The Commission shall conduct these negotiations in consultation „< th th»
Representatives of the Member States and in accordant with the directives
annexed hereto.-                                                        ^ ives
 ---pagebreak---    DIRECTIVES RELATING TO THE NEGOTIATIONS WITH PAPUA NEW GUINEA
   FOR THE CONCLUSION OP AN AGREEMENT ON TIE ACCESSION OF THAT
   COUNTRY 10 THE ACP-CEE CONVENTION OP LOME
   1,          The sigreemeirt to be concluded shall provide for the accession
   of Papua New Guinea to the ACP-EEC Convention of Lome .
   2.          The agreement may stipulate the date on which certain of its
   obligr/t:' one , in particular concerning trade , would 13000186 applicable
   to Papua New Guinea.                     1
. '3 .         (ECSC products)
 ---pagebreak---                            Β Κ Λ Ρ Τ
Internal Agreement amending the Internal Agreement on the iinancing
and administration of Community aid signed on 11 July 1975
THE REPRESENTATIVES OP THE GOVERNMENTS OP THE MEMBER STATES OP THE EURO­
PEAN ECONOMIC COMMUNITY MEETING IN TOE COUNCIL , •
Having regard to the Treaty establishing the European Economic Community,
hereinafter referred to as tho "Treaty",
After consulting the Commission ,
Whereas the Agreements between the European Economic Community and respect–
 ingly          signed on           , hereinafter referred to as the
 "Accession Agreement^ provide for the accession of
ttf'tho ACP-EEC Convention signed in Lome on 28 February 1975 ?
Whereas pursuant to Article 90 of "th® Convention the accession of a State
must not adversely affect the advantages accruing to the AC? States signa­
tory to the : Convention , inter alia from the provisions on financial and
 technioal cooperation and the stabilization of export earnings ;
Whereas the Member States have now decided to increase by              million
\mits of account the omounts^made available to the European Development
 Fund ( 1975 );
 Whereas the Internal Agreement on the financing and administration of
                        I                                                      ,
 Community aid signed on 11 July 1975 should therefore be amended ,
                                                                    .*
 HAVE AGREED AS FOLLOWS :
                                                                • • • /• « «
 ---pagebreak---   Article 1 ( 2 ) and ( 3 ) of the Internal Agreement on the financing and
   administration of Conununity 0 id is hereby emended as follows :
  "The Fond shall consist of               million vnits of account to ba financed
  "by the I-'cmbor States as follows :
   " lîelgium                 million u.a.
  " Deraark                   million u . a .
  "Germany                    million u.a.
  " Franco            ..... million u.a .
  " Ireland                   million u.a.
  " Italy             ..... million u.a .
                    *                         • *
  " Luxembourg        ..... million u.a.
  " Netherlands       ..... million u.a.                                     '■
  " United Kingdom ..... million u.a.
' " The amount stated in paragraph 2 shall be allocated as follows :
  " a) .... million u.a. for tha ACP States , comprising :
  "       .... million u.a. in the form of grants
  "       .... million u.a. in the form of special loans
  "       .... million u.a. in ths form of risk capital
  "       .... million v.. a . in the form of transfers pursuant to Title II of
               the Convention .
  " b)    .... million u.a. for the countries and territories and the French
          overseas departments , comprising :
                                                                                »
          .... million u.a . in the form of grants
   '      .... million u.a. in the form of special loans
   '      .... million uia. in the form of risk capital
   '      .... million u.a".' as a reserve .
   1 c ) .... million u.a. in the form of transfers for the countries and
  "       territories , pursuant to those provisions of the decision which
 concern the system for stabilizing export earnings .
 p. m . EID loans .
 ---pagebreak--- This Agreement shall be approved "by each »Iesoer State in accordance Kith
its own constitutional, requirements .  "The Government or each Member State
shall notify the Secretariat of the Council of the European Corsscunities -
when the procedures required for its entry into force have been completed.
This Agreement shall enter into force , provided that the procedures refer­
red to in the preceding paragraph have been coapleted , at the saae tise
as the Accession Agreeaents .
                             Article 3
This Agreement , drawn up in a single original in the Danish , Dutch",
English , French , German and Italian languages , each of these tests being
equally authentic , shall be deposited in the archives of the Secretariat
of J ths Council of the European Coraunities , which shall transmit a certi–
  t
fied copy to each of the Government s 01 the Signatory States .
 ---pagebreak---                                                                                                                  ANNEX    1
                                                   DOCUMENT
                           concerning directives for negotiations with
                                                 PAPUA NEW GUINEA
                                                          TITLE I
                                               TRADE COOPERATION
                                 Upon the accession of Papua Now Guinea to the ACP/EEC Convention
                     of Lome |       the trade cooperation provisions thereof shall apply to thea
                     in the same manner as to the ACP States*                                                       *
                      »
                                                           TITLE II
                                            COMMODITY EXPORT EARNINGS
                                 Upon accession to the ACP/EEC Convention of Loiae , Papua New
                     Guinea shall he entitled to the benefit of the provisions of Title                                          II
                     thereof in the same manner as the ACP States .
                                                           TITLE IV
                                            FINANCIAL AND TECHNICAL COOPERATION
                                 Upon accession to the LOQ<§ Convention , Papua New Guinea shall he
                     entitled to the benefit of the provisions of Title IV thereof in the
                     same manner as the ACP States .
                                                                                                                             ./•
Provi«lon*l addrtit: Rue dt lu toi 200, 8-1049 Bru»w!» - Telophon# 736 00 40 / 73080 40 - Ytlegraphic addrau : "COMEUR Brunols" -
                                                     ** - 1  . i««ti Att rr\>ir:l i i% "
 ---pagebreak---                                   2 -                           ANNEX 1
          To that end the EDP shall "be increased "by ...... . million EUA , "by-
 raising of the Member States' contributions provided for in Article 1
 ( 2 ) of the Internal Financial Agreement of 1975 in line with the ad hoc
"breakdown adopted in 1975 for the determination of the Member States'
 contributions to the 1975 Fund.
          Provision shall be made for the amounts in Article 1 (3 ) ( a) of the
Internal Financial Agreement to be adjusted proportionately to the
 increase in the 1975 Fund.
                                OTÏIER PROVISIONS
          Upon acoession to the Lome Convention the following provisions
 and related texts thereof shall apply to Papua New Cuinea :
 TITLE III       :  industrial cooperation
TITLE V '        :  provisions on establishment , services , payments and
           .        capital raoveraontB
TITLE VI         :  the Institutions
 TITLE VII       I general and final provisions , save for Article 87 , the
                    agreement to enter into foroe on the first day of the
                    second month from the date on which the instruments of
                    ratification of the Member States and of Papua New Guinea
                    are lodged and :
                    – the act of conclusion of the agreement by the Community ,
                    - the protocols annexed to the Convention ,
              i     -  the declarations annexed to the Final Act .
             . PROVISIONS FOR IMPLEMENTATION OF THE LOME CONVENTION
          Upon accession to the Lomo Convention , Papua New Guinea shill bring
 into force the decisions and other implementing provisions adopted by the
 Institutions of the Convention, and the Community shall make the Regula­
 tions adopted for the benefit of the ACP States applicable to Papua New
 Guinea.
 ---pagebreak---                                                              AÏTÎÏEX 1
                              -  3  -
                  TRANSITIONAL PROVISIONS
        In accordance with -the communication addressed, by the Commission
to the Council concerning the opening of negotiations with Papua New
Guinea , it would "be well that the Community and the applicant States
should exchange letters undertaking each for its part to apply uni­
laterally the trade arrangements in the ACP/EEC Convention of Lom6.
 ---pagebreak---                                                                                                                    ANNEX 2
                            Points arising with regard to accession "by Papua New Guinea
                                                      to the Lom<§ Convention
                 1.             It emerged from the exploratory talks with representatives of
                 Papua New Guinea that the country was prepared to accept in principle
                 all the obligations entailed lay accession to the Convention,
                 2.             Titre I of the Convention ( trade cooperation)
                                Trade arrangements               –    Position or desiderata of the acceding
                                counxry
               *
            V
                                Unconditional implementation of Art . ^ of the Convention as
                 Papua New Guinea does not grant preferential treatment to any country.
                 3.             Title II of the Convention ( Stabex)
                 3.1 .          Position of Papua New Guinea
                                The following produots falling under the Stabex Regime are regular
                 exports from Papua New Guinea :
                 –    cocoa beans
                 -    copra
                 -    timber
                 -    coffee
             . -      palm kernels
                 -    palm oil
                 –    tea
                                Desiderata of Papua New Guinea with regard to the operation of
                 the stabilization scheme can be stated briefly as being inclusion among
                 the least developedt landlocked or island ACP countries referred to in
                 Article 24 of the Convention ( application of 2.5 $ dependence and fluctuation
                 thresholds as provided for in Article 17 ( 2))j in view of the country 's
                 level of development and its particular problems in consequence of its
rroviiional oddross : Ru« do lo Coi 200, B-1049 Brustoli - Tolophono 735 00 40 / 73580 40 - Tologrophlc oddresi : "COMGUR Oru»*®»»" -
                                                       TOIOMÍ " 21 877 COMEU B
 ---pagebreak---  island character and itB poor internal transport infrastructure .
 3.2 .      Position of the Conninsion
            Information, to hand indicate a tnat the products in respect of
 which Papua New Guinea might ho eligible for Stabex intervention are :
.-   cocoa beans
 –   copra
 -   coffee                                           t •
 -   timber .
            The country also exports tea s pala kernels , palm oil , coconuts and
 peanuts , but in the recent past none of these have accounted for 2.5 $ or
 more of total export earnings .
            In view of insular character of the count ry, tho 2.5 $ dependence
 and fluctuation thresholds     would apply   automatically to Papua New Guinea.
 4.         Title IV of tho Convention ( financial and technical cooperation)
            As concerns finanoial and technical cooperation it snust bo borne
 in mind that Papua New Guinea must not be treated differently from the
 other ACP countries as to form and consistency of aid.
            With regards to the eventual inclusion of Papua New Cuir.oa a.~ong
 the least developed ACP States referred to in Article 48 the C emission
 considers that , though favourable arguments could bo put forward in ia
 favour, this is not justified , in view of the income por capita and tho
 potential resources of this country.
 5.         Title III
            Title V
                           })
                                   No particular problems
            Title VI       )
            Title VII      )
 ---pagebreak---                                                                      ANNEX 3
                              Papua New Guinea
T.          INTRODUCTION
            Papua New Guinea comprises the eastern half of the island, of hew
Guinea, the Bismarck Archipelago (New Britain and New Ireland being the largest
islands), two islands of the Salomon Group (Buka and Bougainville ) and the
Trobriand , Woodlark and Louiside islands .
            It has a land area of 178.000 sq. miles (460,842 sq. km) and a population
of 2,75 million (June 1975 est ).       As in 1971 Papua New Guinea had an indigenous
population of 2,4 ms the average increase has "been of the order of 2,7 $ per annua.
The population is durded into 300 ethnic groups speaking 700 languages.
            The non-indigenous population , mostly Australian expatriates which had
totalled 55 . OOO at end of July 1971 , decreased to about 39.000 at end June 1975»
            Urban population increased from 232.000 in 1971 "to 333.000 in 1975 1 a rise
of 44 io. This increase has "been partly caused "by the widening differential
between minimus wages on the urban and rural areas.
            It is estimated that the total work force in the monetary sector, inclu­
ding expatriates fell slightly from 338.000 in 1971 "to 33I.OOO in 1974 •
            Until 1971 the labour surplus resulting from urbanisation was absorbed
 into the work force { since their rapid employment growth haa creased, due partly
to the withdrawal of Australian Capital which accompanied the Australian migration.
           The economy which had developed as a result of foreign investment (mainly
Australian) in agrioulture } mining .and to a much lesser extent industry , has relied
 on the provision of skills from outside . At the higher levels of skills , the com­
 position of the work force is still heavily biased towards expatriates , with
Papua New-Guineans generally occupying the semi skilled and unskilled positions .
             However , expanding school and training facilities are supplying more
Papua New Guineans qualified for higher level jobs and also Britons , New Zealanders
 Filippinos are replacing Australian expatriates in some of the professional po­
 sitions .
 ---pagebreak---                                        -  2  -                         ANNEX 3
             As the number of school leavers "begins "to rise and the differential
  "between urban and rural wages widen the problem of unemployment ia likely
   to become core serious.
             Migration to the 'towns is imposing heavy strains on existing urban
   facilities , especially housing , and the concentration of migrants in ethnic
   settlements within the towns has accentuate . the problem of law and order.
  There has been a considerable inorease in crime and drunkenness which has
   severely strained the resources of the authorities.     Expenditures on the
   polioe force has been increased by almost 50 i« ia each of the past two years .
  II .       ECONOMIC STRUCTURE
             The major characteristics are the dominant role played by Bougainville? s
   exports of copper in the "balance of payments and the large share taken by
  Australian aid in financing public sector expenditures sales of copper abroad
. acoount for about 60 $ of total merchandise exports , while iiaports are relatively
   small , consisting mainly of replacement machines , petroleum and vehicles .    The
  mine gives employment to 3.250 indigenous workers , but its direct income and
   employment effects on other sectors are marginal ; its major contribution consisting
   in the payment of company taxe , royalties and dividends to the central government ,
   since a substantial part of the profit earned is repatriated abroad.
             The copper deposits on Bougainville Island are minod by the Bougainville
  Copper LTD (BCL ) ; 53 »6 $ of which is owned by Conzinc Rio Tinto of Australia ,
  with the Papua New Guinea Government taking a 20 $ share of the equity. The
  remainder of the equity is held by individuals and corporations , both in Papua
  New Guinea and overseas .
  Commercial production of copper commenced on 1st April 1972 .       The mine now pro­
  duces about 170.000 MT of copperraetal equivalent annually.       The entire production
  is exported in the form of concentrates as there are no smelting facilities in
  Papua New Guinea. The value of copper exports in 1973/74 amounted to K 316 a ;
  69 % of total merchandise exports . However prices for copper wirebar which had
  risen to a peak of K 2,15 per kg in April 1974 » declined to K 0,88 in June 1974 .
  Overall the value of copper exports declined by 25        - and the contribution of the
  Bougainville sector to GDP was reduced to about 20 $ as against more than 30 <fa
  in 1973/74 * The copper is marketed under long-term sales contracts with five
  countries 1 Japan , West Germany , Spain , Mexico and Yugoslavia ( the Yugoslav and
 Mexican contracts are due to expire shortly).
 ---pagebreak---                                        -  3  -                        ANÏÏEX 3
            Exports , mainly plantation crops , copra, cocoa and. coffee were gener-Ily
  successful in 1974/75 "but "this was not sufficient to offset either the decline
  in copper exports or the increase in imports.                                      -?;s
  Copra '
  Papua New Guina is the second largest exporter of copra in the world, though it 5.8
  only the sixth largest producer in Asia.                                              '
  All coconut products are exported as copra , except 25 . OCX) tons of coconut oil
  and 15.000 tons of coconut meal , that are exported from Rabaul . Record prices for
  copra during the first half of 1974 led to a substantial accumulation of fund ,
  lout with the decline of world prices , the Government stepped in with a K JO per
  ton subvention, and in March 1975 wawed the collection of export tax on copra
  and cooonut products*.
  Coffee    . ,
  World prices fell less sharply in 1974/75 than those of other primary commodities ,
  and Papua New Guinea exports rose by 13 $ in volume and 16 % in value. Papua
  New Guinea subscribes to the International Coffee Agreement . Price expectations
  are favourable for the next two years and export earnings are expected to increase
  Cocoa
  Output rose sharply in 1974/75 1 despite a drop in prices in the middle of 1975
  and the value of cocoa exports reached K 40.3 m, 72 $ above 1973/74 levels,
  A Coooa Industry Board was established in 1975 for "the purpose of setting up
  a stabilisation fund.
  Rubber
  The industry remained depressed throughout 1974/75 ant*. exports in that year fell
  short of previous year 's total by 28 $>,
  Timber
  Exports also declined, reflecting lower demand abroad , especially in Japan.
  Manufacturin/?
  This sector is small in Papua New Guinea consisting mainly of enterprises produ-
' cing beer, cigarettes , carbonated bovorages and rubber shoes. Output of those
  items have increased reoontly though manufacturing firms suffer from the size of t
  local market , which io effectively reBtrioted by transport difficulties to the
  particular enolave in whioh the enterprise is located. Furthermore it has
  provod diffioult to train and maintain an indigonoua labour force . These diffi­
  culties combined with the sharp increases in wages and material costs as well as
  tho unoortainty concerning government pln.no regarding investment in industrial
 ---pagebreak---                                     -  4  -                          ANNEX 3
 undertakings have inhibited new investment .
 Trade Agreement b
 Papua New Guinea and Australia signed a Meaoradum of Understanding on Trade and
 Commercial Arrangements in December 1973 to preserve the existing special and
 general tariff treatment and other existing arrangements during the self-
 government period. This agreement has recently "been extended pending the
 conclusion of a long term agreement .
 When the U.K. joined the EEC , it was agreed that tariff preference to which
 Papua New Guinea was eligible would be maintained until 1977 *
 Conclusions
 Papua New Guinea has a considerable potential for economic growth , especially
 in agriculture where only 2 $ of the land area in under cultivation. The soil is
 fertile , rainfall ample and most tropical products can be grown readily.
 If more land is to be brought into cultivation , changes will have to be made in
     .1
 the' system of landtenure. Distribution of food within the country is a major
 problem ; the main producing areas in the Highlands having no outlet to Papua
 and Port Moresby. The economy cannot achieve its potential until interval
 communications are greatly improved and extended.
PNGfe mineral resources have not yet been fully explored , but it is clear that
 they are extensive .  There are extensive timber resources both on the mainland and
 in the islands. Exploration of mineral wealth began only reoently and in addi­
 tion to the discovery of large copper deposits in Bougainville , important deposits
 have been discovered in the western part of the mainland , where 3 major ventures
 are being considered. Oil and gas exploration is also under way both onshore and
 offshore , though no commercially viable fields have yet been found. Several hydro­
 electric projeots have been undertaken on the numerous large rivers of the main­
 land , which when completed would be more than sufficient to meet energy require­
 ments for the foreseeable future . The exploitation of these resources will ,
 however , require large amounts of capital and a great deal of technical expertise .
 Hitherto , Papua New Guinea has relied on Australian aid and investment , Australian
 personnel and technical expertise. The economy made up of a series of enclaves
 has developed a cost structure and consumption patterns similar to those of
 Australia - characterised by & high propensity to import , vulnerability to
 inflation abroad and concentration of investment in the extractive industries.
 ---pagebreak---                                    -   5  -
Kanagement and. development of such an economy , difficult in any circumstances ,
is made sore difficult after independence "because popular aspirations have "been
raised , while domestic administrative arrangements are still in a state of
transition and the international economic environment has "become less favourable .
The fall in cocsaodity prices , especially copper has entailed a substantial loss
of foreign exchange receipts.    The "budget out-turn will depend for some years
to come on the flow of Australian aid and medium-term arrangements for Australia,
aid are "being discussed between the two Governments,    If the development poten­
tial of the country is to be fulfilled , the main objective of the government
should be to balance its budget , especially if world recession continues by
implementing policies for economic diversification! import substitution and
self-help.
 ---pagebreak---                                              Papua Nov; Guinea,                             ANNEX 3
                                         « 4 Baoio Data
     Ar .    Siul Population               • •                             -
     Area .             .                                                178.000 sq.Mlles (460,842
     Populatic n ( oni June 1975 )                                        2,75 Billion
     Annual rst.s of population increase                                  2,7 $
    Populate i density                                                   15/sq.nη
   Monetary . " " tor work force ( 1974 )                                331,529   *
           * including expatriates )
   Monet re , sc.; tor work force as $ of
                     i j-tion                                                  7°
                    ?          Moresby (the Capital >      pop. ( 1971 )           76.507
                          Lae (New Guinea)                  »»        11           3 g ^qô
                          Rabaul (New Britain)               »        ••           2ô'518
                         Goroka (New Guinea)                «         n            12*066
                         Arawa & Kieta (Bougainville ) "              "            14 S431
  • CnrranfV       v?
   Pììu ovm currency introduced on 19 Aprii 1975
          tao «Cisto, ; 1 Australian dollar
                toua i 1 Australian cent
   i!,xou:ur- VR\* t 1 K : US f! I.25 (Jan. 76 )
                              1 K ; SDR 1.12 ( 1974/75 )
  ££2£iL.4:- 1 "SO t ic Product (million Kinas )
 Gdp y w r                         +                            ^ ^ ^                           1973
 GPP ~ Market CoiViponent
 liUr     – l'^rke;-t   fin!,»Ana «+
                                                    463 .! 495-0 621.0 84I.8
                                                     •   -
            Non^rket Component                      133.6      l50. 5        l6c 2    U2 Q
 cw - «,„««* market prices                          621.7 645.5 786 .2 1003.8                  996.8
 Cross H-~' tions.l Product
 GWP por o-j.pi- ta ( 1973 )                     SDR 290                           4l0 us 4          1
 produot, if raeasurediinhLmaUoftprLor^lWielthai
exceed A # '(Q-&Q per oapita8
                                                                            eubsiGtGnce sector, when
                                                                 elsewhere in S.E. Asia may not
                               Bebt (raillions K )
Total dobt                                          ûoo            ,          r
«*u».v
external deM
                                                    9 *9 136,1„ 159* 7 21i
                                                    c, „                             ...
                                                                                        '6     "5-8
                                                    5ό.3       96.7       127.7      165.ό    211.4 ]
 ---pagebreak---                                     -   2                         AfJNTCX 5
  Debt service ?«v/r..ent3
  Interest and Repayments ( k )          8.4      8.3'  '   J-3.4    11.4       r"\ /»
                                                                                c. J
 Interest and amortisation as 4,
        of Revenues                     11.3      9.8       14.4      8.3       11 . .
 Central Government Finance (mil. K )
                                       1221       1972     M         1974   *   10'
 Revenue
                                         74.2      85.1      93.3    136.7      17' -
 Fo reagii Grani s                     101.8 •    108.2     121.8    152.3      IV
 Total revonua
                                       176.0      193.3    215.1    289.0      31 ;
 Total Expenditura                     204.7     233.8     250.4    307.5      37< !
 Overall deficit (-)                  - 28.7    - 40.5    - 35.3  - I8.5      - 56,8
Balance of payments (mii. K)
Exports
                                        86.4     109.5     267.9   561.1       4(>C , •
Iaports
                                      328.3      323.2     243.7   274.1       4 Go .
Tri.de 'balance
                                      241.9    - 213.7      24.2   286.9
     r'                                                                          54.3