CELEX: 51988PC0584
Language: en
Date: 1988-10-18 00:00:00
Title: Recommendation for a COUNCIL DECISION concerning the negotiation of a new International Coffee Agreement (presented by the Commission)

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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                    COM(88 ) 584 final
                                                    Brussels , 18 October 1988
                           Recommendation for a
                             COUNCIL DECISION
  concerning the negotiation of a new International Coffee Agreement
                     ( presented by the Commission )
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                          EXPLANATORY MEMORANDUM
I.   Intrcxïuctian.
1 . At forthcoming meetings of the International Coffee Council (ICC) the
Community and its Member States will have to express their opinion on the
desirability of opening negotiations on the future of the 1983
International Coffee Agreement in the light of the conclusions of the
Technical Preparatory Group on the Agreement set up within the
International Coffee Organization (ICO) to prepare the ground for possible
negotiations .
The current Agreement , which, came into force on 1 October 1983 , expires on
30 September 1989 .
2 . The dominant position of the Community and the Member States within the
group of consumers , which has become more pronounced in recent years ,
confers considerable political responsibilities . The Community of Twelve
accounted for 35% of total imports by all member countries of the Agreement
in 1985/63 end its share has now risen to 47.5% .
3 . In view of the importance of the coffee industry and coffee trade in
Europe , and the significance of the commodity for the economies c£ a great
many African , Latin American , Asian and Pacific producers with woich. the
Community has recently been strengthening its ties , the Ccoiourity and its
Member States have always acceded to international coffee a-.jree&snts ; The
basic aim of these agreements is to establish a balance .between production
and consumption and stabilize prices at a level that is fair for consumers
and remunerative for producers .
4 . It should be noted that the renegotiation of a new international
agreement would take place at the same time as the negotiations on the
renewal of the ACP-EEC Convention and that the AGP countries are well
represented in the coffee producers' group . AGP countries account for 27
of the 50 producer members of the Organization and 28% of world output .
5 . The purpose of this communication is to present , on the basis of a draft
Council Decision , negotiating directives that could be supplemented at a
later date in the light of developments .
II . Backgoord. to international cooperatioa an ooffea
1 . Hie International Coffee Agreement is the oldest of the commodity
agreements aimed at price stabilization . 'The Latin American producers came
up with proposals for a market organization based on export quotas as early
as 1929 . After a number of short-term agreements among producers , a
working party on coffee set up by the UN drew up the first International
Coffee Agreement , signed in 1962 . The first five-year Agreement was
followed by three others , signed in 1968 , 1976 and 1983 . The basis of
these Agreements has been a system of quotas .
                                                                              I
 ---pagebreak--- 2 . The 1983 Agreement has 74 signatories , of which 50 are producer
countries and 24 consumers . Together , they account for 99% of world output
and 90% of world consumption . The main non-member consumer countries are
the East European countries . World trade in coffee is worth same
12 billion dollars a year .
3 . The Community and its Member States have played an active part in the
negotiation and management of all the International Coffee Agreements .
III . Préparations for possible negotiatlons on a new Agressent
1 . The Community 's preparations for the negotiation of a new International
Agreement started at the meeting of the Council 's Working Par try on
Commodities on 21 January where the Commission presented a memorandum
containing some initial ideas on the current International Agreement .
2 . When the ICC met from 25 to 29 April this year the Community spoke in
favour of continued international cooperation on coffee . It was decided to
set up a Technical Preparatory Group on the Agreement with, the task of
compiling a list of the difficulties arising from the provisions of the
1983 International Coffee Agreement and examining proposals presented Ly
members with a view to resolving these difficulties . The Group was open to
all members of the ICO and to observers designated by international
organizations aid. invited non-member countries .
Hie Group has met twice , from 31 May to 3 June and from 25 to 29 July .
3 . The Camnunity and the Member States have taken full part in the work of
the Group and have presented two papers :
(i)      WP4/ 88 of 1 June 1988 outlining the Comunity 's preliminary
         position . The paper sets out the main problems concerning the
         objectives and workings of the 1983 International Coffee Agreement ;
(il )    WPI2/ 88 of 25 July 1988 - a supplementary memorandum .  For each of
         the problems identified in the earlier paper it puts forward a few
         ideas for discussion .
 ---pagebreak--- 4 . Most consumer countries have supported the preliminary guidelines
suggested by the Community concerning production policy , price
differentials between members and non-members , selectivity aid availability
of coffee on the market , stocks , the verification system , declsion-makl rg
and indicator prices .     The producer countries have showed readiness to
discuss some of these ideas , notably the issues of selectivity , the overall
quota and indicator prices .
A restricted technical working party has been set up to study a selective
quota adjustment system and the type of indicator prices needed to makp the
system work .
IV . Participation of the Cammunity and lts           States
1 . It is important for the Community to play an active part in the various
stages leading to the drawing up of an International Coffee Agreement .
The Community has always worked hand in hand with the Member States in the
preparatory work and negotiations leading to the four previous Agreements ,
and in the administration of the Agreements themselves , and it has always
proved possible to adopt a common position .
2 . Since 27 March 1981 the procedures for participation by the Community
and the Member States have been governed by an arrangement concerning the
participation of the Community and its Member States in international
proceedings on commodities . 1 The arrangement provides for joint
participation in the form of a joint delegation that puts forward a common
position .
3 . This communi cat i on will provide       . .
the basis for the adoption of a common position on the main economic
provisions of any future Coffee Agreement so that the Community and its
Member States can play an active part in the formulation of the decision
that the ICC will have to take on the opening of negotiations regarding the
future of the International Agreement . The Commission may make further
proposals as and when necessary .
4 . The Coommision recommends that the Council adopt the
Decision attached hereto and the negotiating directives annexed .
1 Council document 5887/81 of 27 March 1981 .
 ---pagebreak---                      RECOMMENDATION FOR A COUNCIL DECISION
                             uF .
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Coxnrnunity ,
and in particular Articles 113 and 116 thereof ,
Having regard to the Recommendation from the Commission ,
Whereas Article 68(2) of the International Coffee Agreement 1S83 provides
that at any time after 30 September 1987 , the International Coffee Council
nay , by a vote of 58% of the members , decide that the Agreement be
renegotiated or extended , with or without modification , , for such period as
it shall determine ;
Whereas to this end the International Coffee Council decided at its meeting
of 25–29 April 1988 on the steps to be taken in the coffee year 1967-88
with a view to renegotiating the Agreement , namely the setting-up of a
Technical Preparatory Group ;
Whereas the conclusions reached, by the Technical Preparatory Group at its
meetings in London from 31 May to 3 June and from 25 'to 2S July have been
considered ;
Whereas the Community should participate by means of a caramon delegation
proceeding on the basis of a common position established beforehand in
accordance with the usual procedures and. expressing this oammon poeitian
with a single voice ; whereas the spokesman shall normally be a Commission
representative ,
HAS DECIDED AS FOLLOWS :
 ---pagebreak---                                    - 2 -
                                Sole Article
The Community and its Member States shall take part in the meetings
concerning the application of Article 68(2) of the International Coffee
Agreement 1983 on the basis of a common position .
The spokesman for this oammon position shall normally be the Commission
representative .
The Commission representative shall express the common position in
accordance with the directives set out in the Annex and any amendments or
additions that may be made where necessary on the basis of Commission
proposals .
Dane at Brussels ,                                      For the Council
                                                         The President
 ---pagebreak---                                                               Annex
               DRAFT DIRECTIVES FOR THE NEGOTIATION OF A HJTPKE
                         INTERNATIONAL COFFEE AGREEMENT
                                                  aavisw
1 . These directives concern the economic provisions of any future draft
International Coffee Agreement . They take account of the need to strike a
balance between the duties and obligations of producers and consumers and
embody the position expressed by the Community and its Member States on the
possible options for international cooperation on coffee , summarized below :
(i )      international cooperation on coffee has to continue under an
          international agreement ;
(ii )     the 1983 Agreement should not be renewed ;
(.1.11 )  a renegotiation of the 1983 Agreement would be preferable in view
          of the number of amendments to be made , the criticisms expressed,
          about the functioning of the Agreement and the experience acquired .
These directives will be supplemented in the light of proceedings on the
basis of Commission proposals .
2 . Any future agreement will have to be based , like the 1933 Agreement , on
a system of export quotas aid a price scale , underpinned by compulsory
controls .
Diahstantial changes may , however , be made to overcome "the major stumbling
blocks to the implementation of the 1983 Agreement , namely inadequate
supnlies of 'the right quality ard the selling price differential 1 etwee,
mercer ard non-member importers .
3 . The objective of market stabilization under the Agreement .should act os
en incentive to producing countries to regulate their production ard
exports to meet demand .
4 . Briefly , three possible forms of Agreement emerged from the pre-Tarav/cy
'balks of the Technical Preparatory Grou p convened by the International
Coffee organization from 31 May to 3 June and from 25 to 29 obiy .
1 Inteniational Coffee Organization , WP Agreement No 4/ 88 of 1 June 1983 :
" Prelimi nary position of the EEC " .
 ---pagebreak---                                      - 2 -
(i)      a system of withholding stocks based on regulation of stocks by
         producing countries , backed up by export controls (a system
         suggested by one of the major consumer countries );
(ii)     a system of universal quotas accompanied by a simplified system of
         export and import controls (suggested by the Community (see IOO-WP
         Agreement No 12/88 of 25 July);
(iii)    maintenance of the system of quotas based on two import markets ,
         that of member countries and that of non-members , backed up by
         tough controls (system favoured by most producing countries).
5 . The overriding objective of the new Agreement must be to create a
balanced market , which , although price fluctuations cannot be avoided ,
would ensure steady and adequate supplies to the Importing countries on
terms that do not discourage an increase in production of high-quality
coffee .
6 . In the negotiations , the Community and its member States will be arguing
in favour of the following principles :
6.1 .    Establishment of a universal export quota covering imports of
         coffee worldwide by both member and non-member countries . The
         corresponding quota system would be linked to a system of
         simplified import and export controls .
6.2 .    Introduction of the principle of selectivity in the quota system in
         order to ensure that European trade and industry can obtain the
         quantity and quality of supplies required by the market .
6.3      Adoption of a price support mechanism to keep price margins at
         previous years' levels (120-140 US cents/lb), whatever method of
         calculation is chosen .
6.4 .    Revision of the composite price indicator so that it can be
         adjusted in the light of developments on the market of each type of
         coffee (price and market share).
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