CELEX: 51980PC0546
Language: en
Date: 1980-09-24 00:00:00
Title: RECOMMENDATION FOR A COUNCIL DECISION ON THE NEGOTIATION OF A THIRD INTERNATIONAL COCOA AGREEMENT (Presented by the Commission to the Council)

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COM (80) 546
Vol. 1980/0176
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                   COM(80)546 final
                                                   Brussels , 24.9.1980
                RECOMMENDATION" FOR A COUNCIL DECISION ON THE NEGOTIATION
                OP A THIRD INTERNATIONAL COCOA AGREEMENT
                                                                    /
                    ( Presented by the Commission to the Council )
                      " -          7
   COil(SO ) 546 final
 ---pagebreak---          RECOMMENDATION FOR A COUNCIL DECISION ON THE NEGOTIATION OF A THIRD
                            INTERNATIONAL COCOA AGREEMENT
Introduction
       On 10 July 1980 the Commission transmitted a communication to the
Council with regard to the consultation meeting convened by the UNCTAD /
Secretary-General in Geneva from 28 July to 1 August on international
cooperation in the cocoa sector . At its meeting on 22 July , the Council
basing itself    on this communication :
     recognized the political imDortance of safeguarding international
     cooperation between producer and consumer countries ; especially as regards
     such an important primary commodity as cocoa ;
( ii ) agreed that the Community should declare itself ready to resume the
       negotiations which were interrupted at the end of March , since the
       International Cocoa Council had been unable either to extend the
       validity of the second Agreement or to recommend a further negotiating
       conference after the series of failures in 1979 ;
( iii)would wait to continue the di scussions, parti cularly on prices , in
       the light of the results of the Geneva consultations .
The Geneva meeting
       The producer countries
( a ) wanted to reach an agreement containing economic provisions , particularly
      a buffer stock , financed as before by a levy on trade in the product ,
 ---pagebreak---                                  - 2 -
 ( b ) confirmed their intention of transferring the buffer stock 's
       assets from the second Agreement to a third agreement , which
       was consistent with the desire expressed by the consumer countries ,
       in particular the Community , for the negotiations to be resumed ;
                                 χ
( c ) agreed to resume negotiation of the Lower intervention price for the
       buffer stock on the basis of the proposal made by the consumer
       countries in March - i.e. 110 cts / lb - while at the same time pointing
       out that they would like to see prices reviewed and revised
       annually by the Council ( under a three-year agreement ).
        In view of the content of the Council decisions , the EEC was not in
a position to express an opinion on the crucial question of the level of
intervention prices for the buffer stock under a future agreement , despite
the fact that in order for the negotiations to be resumed with a good
chance of success , it was important for its position to be sufficiently
clear for the UNCTAD Secretary-General to have a reasonable idea of
where the main parties stood . The EEC did , however , confirm that it
would like the- agreement to include a semi-automatic price revision            %
clause , which could operate both upwards or downwards .
        The United States , which is the world 's second largest consumer after
the Community , raised a number of outstanding issues on which there
would have to be a final compromise with the question of prices , and
were particularly insistent that the future agreement should be linked
to the Common Fund . It supported the Community 's wish for the agreement
to contain , along with periodic price revision by Council decision , a
semi-automatic revision system related to market conditions and buffer
stock operations . (1 )
                                                                     ./.
( 1 ) While they have not refused to consider this point , the producer countries
       demand that world inflation should also be taken into account .
 ---pagebreak---                                - 3 -
      With regard to the Lower intervention price level , the United States
 considered that it had to be negotiated at between 100 and 110 cts ,
taking into account current and predictable market trends .
      The other consumer countries which expressed an opinion ( Japan , Sweden ,
Switzerland etc .) agreed to resume negotiations on a price in the
110-120 cts bracket ; the USSR expressed no opinion on this question , nor
on any other for that matter .
      The producer countries expressed disappointment at the position
adopted by the United States , and at the lack of a Community position
on prices . The latter was not criticized too heavily however , since
the Council had reiterated its political resolve in this field and
expressed its intention of quickly concluding its discussions . The
contacts the four ACP Ministers present in Geneva had had with the
President of the Council had given a clearer idea of the situation
within the Community .
      The producer countries were particularly reluctant to accept a
semi-automatic price variation clause , and made it clear that their
acceptance , on terms to be negotiated , would depend upon the consumer
countries adopting a reasonable stance on the level of prices to
which the clause would be linked .
                                *
                          *          *
      In view of the failure to reach agreed conclusion at the
consultation meeting , the conference chairman compiled his own conclusions
which the Council will find annexed to this communication . His main point
is to request the UNCTAD Secretary-General to carry on his consultations
immediately so that a new conference can be convened in
October 1980 .
 ---pagebreak---                                      - 4 -
      Commission proposal
             The Commission recalled in its communi cation to the Council of 10th
      July 1980 and during the discussions that were held during the Council of
      22nd July 1980 , the utmost political importance of the subject itself -
      a failure of the cocoa agreement would be primarily a failure between the
      EEC and the ACP . It also recalle-d that the stakes were more important than
      the cocoa field alone because there was a clear risk of initiating a-
      negative evolution of the general Community policy on primary commodities
      in its relationship with its aid policy to the developing countries .
             Therefore , the Commission deems it essential that , during its next
      session , the Council gives the Commission the necessary directives that
      will allow it to express a constructive view point which will meet the
      mutual long term interests , of both the consumers and the producers .
             In this prospect , the Commission considers that a number of the nego­
      tiating directives issued in 1979 should be reviewed given the prospect of a
      future conference , in order to take account of the way the situation has
      developed since the end of the last conference ( November 1979 ).
          To update the Community 's position , the experts may   use as a basis
the elements of the compromise arrived at on 20 March ( see Annex to
Document 8085 / Proba 24 of 23 July ) and incorporated by the consumer countries
in their proposal to the International Cocoa Council at the end of March 1980 .
         With regard to the vital question of prices ( level and revision system ),
the Commission recommends that the Counci I modi fy the decision of '6th
  February 1979 and take the following comD lementary negotiation directives :
( i ) the negotiation of the level of the lower intervention price to be
        laid down in . the agreement should be confined : to a spane of a
        few cents between the extremes quoted during the consultations ; ( 1 )
( ii)the Community will make an effort to reduce as far as possible the
        proposed 40 cts difference between the lower and higher intervention
        prices . From the point of view of developing industrial cocoa con­
        sumption , the level of the higher price is extremely important since
      the buffer stock releases its cocoa on the market when this is exceeded ;
        it is equally so from the point of view of the profitability of buffer
        stock operations , since for technical , economic and financial reasons ,
        cocoa must not be stockpiled for too great a length of time ;
                                                                   ./.
 ( 1 ) The Commission wi U communicate the exact figures orally to Council
        bodies .
 ---pagebreak---                                     - 5 -
    ( iii ) the Community will have to have a certain amount of room for manoeuvre in
\ ♦
            negotiating the price revision system , which is linked to the letfel
¥           of prices ;
«
    ( iv )  in view of the producer countries difficulties in accepting the
            concept of semi-automatic price revision and the actual form
            this would take , the Community will initially have to make an
            effort to negotiate such a system in the agreement linking it to
            the level of prices and to the number of revisions made by
            Council decision ; then , should the success of the negotiations be
            at risk because of this issue alone , it would have to try to ensure
            that the principle at least was recognized in the agreement and that
            the agreement council was obliged to study how such a system
            could be put into operation and possibly implemented before the end
            of the first year of the agreement ;
    (v)     at a more general level , the Community will have to look into all
            possible satisfactory compromises in order to arrive at an agreement
            limited to three years, which ought to enter into force as soon as
            possible , given  that the producer countries - particularly the
            ACP ones - attach major political and economic importance to
            continuing cooperation with the Community in this field , the
            United States not having participated in the first two international
            agreements .
 ---pagebreak---                       Statement by the Chairman
    As Chairman of the Meeting on Cocoa , held under the auspices
f UirCTAD 's Integrated Programme for - Commodities , my perception of
he results of the discussions can be summed up as follows :
    1 . ■ There is a common desire among cocoa producing and
    cocoa consuming countries to continue their co-operation
    in the world cocoa economy , and to this end to work towards
    arriving at a third agreement on cocoa as soon as possible .
    2.     A new cocoa agreement should , to the greatest extent
    possible , build on the provisional agreements reached at the
    previous cocoa conference as they are contained in document
    TD/COCOA.5/R. 3''.
     3.    The Secretary-General of UNCTAD is requested to urgently
    pursue his consultations with a view to convening a negotiating
     conference in the first half of October 1980 .
    4.     All Governments are urged to focus their attention oh
     outstanding issues , particularly the following:
           ( a ) the- level and structure of the price range ; and
           ( b) the mechanism for price revision.              '