CELEX: 51991PC0458
Language: en
Date: 1991-11-22
Title: Proposal for a COUNCIL DECISION on the conclusion by the European Economic Community of an Agreement in the form of a complementary exchange of letters between the European Economic Community and the Union of Soviet Socialist Republics on a credit guarantee for exports of agricultural products and foodstuffs to the Soviet Union

COMMISSION OF THE EUROPEAN COMMUNITIES
§fe-_                  •                         COM (91) 458 final
Ilv L                                             Brussels, 15 November 1991
                                      Proposal for a
      on the conclusion by the European Economic Community of an Agreement in the
      form of a complementary exchange of letters between the European Economic
      Community and the Union of Soviet Socialist Republics on a credit guarantee
      for exports of agricultural products and foodstuffs to the Soviet Union
                               (presented by the Commission)
 ---pagebreak---                              EXPLANATORY MEMORANDUM
Subject: Approval of an Agreement in the form of a complementary exchange of
          letters between the European Economic Community and the Union of
          Soviet Socialist Republics on a credit guarantee for exports of
          agricultural products and foodstuffs to the Soviet Union
The Council introduced a credit guarantee of 500 mio ECU for exports of
agricultural products and foodstuffs to the Soviet Union in Regulation (EEC)
No 599/91 (0J 1991, L67/21). This Regulation was amended on October 21 last,
with a view to extending the EEC guarantee to purchases of products
originating     in Bulgaria,    Czechoslovak la,  Hungary,  Poland,  Romania,
Yugoslavia, Lithuania, Latvia and Estonia. Deliveries from Yugoslavia are
suspended for the time being.
Article 2 of the Regulation refers to an Agreement to be concluded with the
USSR concerning the various conditions under which the guarantee shall be
extended by the Community. In line with this Article, an exchange of letters
was negotiated with the Soviet Union by the Commission in consultation with a
Committee composed of representatives of the Member States. This Agreement
was approved by Council Decision 91/73/EEC of July 8, 1991 (OJ 1991, L
202/39). The Agreement will enter into force on the day of its signature by
both parties.
The possibilities of deliveries under the credit guarantee from the said
countries, requires a complementary Agreement with the USSR. It is submitted
that a complementary letter is more suitable in view of the present situation
 in the USSR than an amendment to the first exchange of letters, notably
because the latter solution could imply new discussions in the USSR on a text
that has already been approved by the relevant USSR authorities. The
Commission felt that there were no objections to a new exchange of letters
provided the substance of the first letter is not changed.
The text of tfea complementary exchange of letters, and Chapter I I in
part icular,provides that the provisions of the first exchange are applicable
mutatis mutandis to the second exchange with one exception only: the Article
which stipulates that the three Agreements which are required for the credit
operation (Guarantee Agreement, Loan Agreement and Exchange of Letters) are
to be signed on the same day. The exclusion of this provision makes it
possible to conclude the three Agreements referred to above without having to
await the approval of the complementary exchange of letters by both sides.
As regards the identity of the borrower, the following understanding was
reached with the Soviet side: the Vnesheconombank will be the sole borrower
of the loan (the repayment of which is guaranteed by the EEC) and the USSR
will guarantee the obligations of this bank vis-a-vis the Communities. In
practice, this means that the USSR has accepted a side letter in which it
engages in indemnifying the EC in case the Community banking syndicate calls
on the EEC guarantee following a default by the Vnesheconombank. This
                                                                              2s
 ---pagebreak--- solution is in line with the approach that was proposed in a letter of the
Commission President to the Finance Ministers of the Member States of
September 24, 1991.
Approval of the complementary Agreement by the Council and the Government of
the USSR is required to allow so-called triangular operations under the
credit operation. After approval, the purchase of products in the countries
concerned can start. Approval by the Council        is, therefore, urgently
required.
                                                                             -2>
 ---pagebreak---                                  Proposal for a
                                COUNCIL PECISIQN
on the conclusion by the European Economic Community of an Agreement in the
form of a complementary exchange of letters between the European Economic
Community and the Union of Soviet Socialist Republics on a credit guarantee
for exports of agricultural products and foodstuffs to the Soviet Union
The Council of the European Communities,
Having regard to the Treaty establishing the European Economic Community, and
 in particular Articles 113 and 235 thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the European Parliament,
Whereas Regulation (EEC) 599/91 (1), as last amended by Regulation (EEC) No
3281/91 (2) introduced a credit guarantee of ECU 500 million for exports of
agricultural products and foodstuffs to the Soviet Union;
Whereas Regulation (EEC) 599/91 provides for the guarantee to cover not only
contracts for supply of agricultural products and foodstuffs between the
Soviet Union and undertakings in the Community, but also contracts of supply
of these goods between the Soviet Union and undertakings established in
Bulgaria, Czechoslovakia, Hungary, Poland, Romania, Yugoslavia, Lithuania,
Latvia and Estonia;
Whereas Article 2 of the said Regulation refers to an Agreement to be
concluded between the Community and the Government of the USSR on the
conditions under which the guarantee shall be extended by the Community;
whereas the said Agreement was approved on behalf of the European Economic
Community by Council Decision 91/73/EEC of 8 July 1991 (3);
Whereas the possibilities for deliveries under the credit guarantee from
Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, Yugoslavia, Lithuania,
Latvia and Estonia requires a complementary Agreement between the European
Economic Community and the Union of Soviet Socialist Republics;
Whereas the    Agreement in question was    negotiated by the Commission in
consultation   with a Committee comprised   of representatives of the Member
States,
(1) 0J No L 67, 5.3.1991, p. 21.
(2) OJ No L 310, 12.11.1991, p. 1.
(3) OJ No L 202, 25.7.1991, p. 39.                                            4
 ---pagebreak--- Has decided as follows:
                                  Article 1
The Agreement in the form of a complementary  exchange of letters between the
European Economic Community and the Union of  Soviet Socialist Republics on a
credit guarantee for exports of agricultural   products and foodstuffs to the
Soviet Union is hereby approved on behalf of the European Economic Community.
The text of the Agreement is attached to this Decision.
                                  Article 2
The President of the Council is hereby authorized to designate the person
empowered to sign the Agreement in order to bind the Community.
Done at Brussels
                                         For the CounciI
                                         The President
 ---pagebreak---                                    AGREEMENT (REV 5)
             in the form of a complementary exchange of letters between
                     the European Economic Community and the Union
                 of Soviet Socialist Republics on a credit guarantee
                 for exports of agricultural products and foodstuffs
                                  to the Soviet Union
                                     A. Letter No 1
  Sir,
  With reference to the exchange of tetters on a credit guarantee for exports
  of agricultural products and foodstuffs to the USSR, signed on                    I
  hereby confirm the understanding on the following complementary Agreement
  between the European Economic Community and the Union of Soviet Socialist
  Republics:
   I.  The credit guarantee provided by the European Economic Community shall
       also cover the purchase and importation to the USSR of agricultural
       products and foodstuffs originating in Bulgaria, Czechoslovakia, Hungary,
       Poland, Romania, Yugoslavia, Latvia, Lithuania and Estonia. The amount up
       to which the credit guarantee may be used for purchases in these
       countries, will be indicated to the Government of the USSR by the EC
       Commission.
   II. The provisions in the exchange of letters mentioned above shall apply
       mutat is mutandis to the purchase and importation of agricultural products
       and foodstuffs from the countries listed under Chapter I. This provision
       does not apply to Chapter II, first paragraph, fourth alinéa of the
       exchange of letters mentioned above.
   I propose   that   this Agreement will   enter  into force on  the date of your
   reply.
   I should be obliged if you would confirm that your Government     is in agreement
   with the above.
   Please accept, Sir, the assurance of my highest consideration.
                                               On behalf of the Council of the
                                               European                  Commun i t i es
[/Us
                                                                                         6
 ---pagebreak---                                         (REV 5)
                                    B. Letter No 2
Sir,
I have     the honour   to acknowledge   receipt of your   letter of  today's date,
which reads as follows:
     "With reference to the exchange of letters on a credit guarantee for
     exports of agricultural products and foodstuffs to the USSR, signed on
              , I hereby confirm the understanding on the following complementary
     Agreement between the European Economic Community and the Union of Soviet
     Soc i a Ii st RepubIi cs:
 I.  The credit guarantee provided by the European Economic Community shall
      also cover the purchase and importation to the USSR of agricultural
      products and foodstuffs originating in Bulgaria, Czechoslovakia, Hungary,
      Poland, Romania, Yugoslavia, Latvia, Lithuania and Estonia. The amount up
      to which the credit guarantee may be used for purchases in these
      countries, will be indicated to the Government of the USSR by the EC
      Commission.                                      -^
 II. The provisions in the exchange of letters mentioned above shall apply
      mut at Is mutandis to the purchase and importation of agricultural products
      and foodstuffs from the countries listed under Chapter I. This provision
      does not apply to Chapter II, first paragraph, fourth alinéa of the
      exchange of letters mentioned above.
 I propose     that  this Agreement   will  enter  into force on  the date of your
 reply.
  I should be obliged if you would confirm that your Government      is in agreement
 with the above."
  I have the honour to confirm       that my Government   is in agreement with   the
 contents of your letter.
 Please accept. Sir, the assurance of my highest consideration.
                                               For the Government of the
                                               Union of Soviet Socialist Republics
                                                                                     }
 ---pagebreak---  ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(91) 458 final
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