CELEX: 51982PC0073
Language: en
Date: 1982-03-04 00:00:00
Title: Recommendation for a COUNCIL DECISION on the directives to be followed in negotiations with certain third countr on the framework agreements relating to multiannual supply of agricultural products (submitted to the Council by the Commission)

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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  COM(82)73 final
                                                  Brussels , ^ March  1982
                             Recommendation for a
                               COUNCIL DECISION
 on the directives to be followed in negotiations with certain third countr
 on the framework agreements relating to multiannual supply of agricultural
                                   products
                ( submitted to the Council by the Commission )
 ---pagebreak---                      -y-
1 . In its Communication to the Council of 10 August 1981 on the negotiation
    of framework agreements relating to the multiannual supply of agricultu­
    ral products , the Commission announced that , following a debate in the
    Council bodies and in the light of the discussions held there and the
    positions which had emerged, it would submit draft directives for the
    opening . of negotiations with certain applicant third countries .
2 . The aim of the annexed draft Decision which the Commission is forwarding
    to the Council is to obtain authorization for the Commission to start
    negotiations with the assistance of the Article 113 Committee with Alge­
    ria , Egypt , Morocco and Tunisia with a view to concluding framework agree­
    ments relating to the multiannual supply of agricultural products .
3 . In order to clarify the discussions , the Commission felt it would be
    appropriate to attach to this draft Decision reports on the fact-finding
    missions carried out in the abovementioned countries .
 ---pagebreak---                                                                     ANNEX I
                               COUNCIL DECISION
On the directives to be followed in the negotiations with certain third
countries on the framework agreements relating to       multiannual supply
of agricultural products .
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community ,
Having regard to the Recommendation from the Commission ,
Whereas a number of third countries have expressed interest in being able to
forecast deliveries of agricultural products from Member States of the Community
Whereas agreements relating to the multiannual supply of agricultural products
may facilitate     orderly development of exports of agricultural products by
the European Economic Community ;
Whereas , consequently , the Commission should be authorized to enter into
negotiations with a view to concluding such agreements with the countries con­
cerned in accordance with the directives contained in a model framework
agreement ,
HAS DECIDED AS FOLLOWS   :
                                  Article 1
The Commission is hereby authorized to enter into negotiations with a view
to signing framework agreements relating to       multiannual supply of agricul­
tural products with the competent authorities of Algeria , Egypt , Morocco and
Tunisia .
                                  Article 2
The Commission will conduct the negotiations in consultation with the Special
Committee provided for in Article 113 of the Treaty and in accordance with the
directives contained in the model framework agreement contained in the Annex .
                                                     For the Council
                                                      The President
 ---pagebreak---                                                             ANNEX
MODEL FOR A FRAMEWORK AGREEMENT WITH                    RELATING TO THE
MULTI ANNUAL SUPPLY OF AGRICULTURAL PRODUCTS
The Council of the European Communities , of the one part , and the Government of
      name of country ..//
Desirous of contributing to the development of commercial relations and
to the strengthening of cooperation between /... name of country         and
the European Economic Community ,
Concerned to contribute to the security of food supplies in /'... name
of country
Have decided to conclude a Framework Agreement relating to the supply of
agricultural products and to this end have designated as their Plenipoten­
tiaries : /... names of persons ..._/
Who have agreed as follows :
                                   TITLE I
                            GENERAL PROVISIONS
                                Article I
This Framework Agreement , hereinafter called the   Agreement , is designed
to assure /... name of country ..._/ of supplies of agricultural products
and the European Economic Community of outlets for those same products on a
regular , planned and mutually satisfactory basis .
                                Article 2
The authorities authorized to enter into the requisite commitments as re­
gards the operation of the Agreement shall be :
- ^ or the European Economic Community, the Commission of the European
   Communities ;
 ---pagebreak---                                  -Ϋ­
- for /... name of country ...//such and such a Body/.
                               Article 3
The products covered by this Agreement shall be / list of products /.
                               Article 4
1 . This Agreement shall constitute an undertaking , in accordance with the
    conditions laid down in the Articles following :
    - on the part of the European Economic Community to supply /..„ name of
      country ..._/ with certain quantities of / list of products J ;
    - on the part of /... name of country ...J to import the same quantities
      of products from the European Economic Community .
2 . For the purposes of this Agreement :
    - "undertaking to supply " shall mean that the Commission of the European
      Communities undertakes to adopt all the provisions necessary in com­
      pliance with Community rules to ensure the availability of/ the products./
      in accordance with the conditions laid down in this
      Agreement ;
    - "undertaking to import " shall mean that /... name of country
      undertakes to adopt all necessary measures to insure the importation
      of / the products./ from the European Economic Community in accordance
      with the conditions laid down in this Agreement .
                               Article 5
The transactions pursuant to the undertaking entered into by the European
 Economic Community as specified in Article 4 of this Agreement shall be
 the responsibility of private operators .
 ---pagebreak---                                 Article 6
1 . /... name of country ..._/ shall do everything necessary to ensure that
     the procedures it lays down for importing / the products 1 originating
     in the Community do not result in discrimination between operators in the
     European Economic Community .
2 . It hereby undertakes to exercise the greatest possible care to ensure that
     the tendering arrangements for transport by sea shall not be prejudicial
     to the free play of fair competition
                                Article 7
The Commission of the European Communities and /... name of country
hereby undertake to notify each other of the provisions and measures adopted
for the implementation and execution of the obligations under this Agreement .
                                Article 8
1 . A Joint Committee shall be set up to ensure that this Agreement is properly
      implemented .
2 . The Joint Committee shall be composed , on the one hand , of representatives
     of the Commission of the European Communities and , on the other , of repre­
     sentatives of /... name of country ..._/.
3 . The Joint Committee shall meet once every four months at a date and place
     arranged   by mutual agreement .  It shall also meet each time the need
     arises, at the request of either of the Parties to this Agreement .
                                                                          ■!m m m
 1
   This clause is indentical to one contained in long-term agreements with
    a number of countries and in the Food Aid Convention .
 ---pagebreak---                                    TITLE II
                              SPECIAL PROVI SIOMS
Article 9
1 . The quantities of [[products^ which       . . name of country . . .^ undertakes to
    import and the European Economic Community undertakes to supply , under , the
    conditions set out in Article 4 of this Agreement , shall be the following
    for each marketing year :
    - common wheat ( or equivalent in wheat flour ) :
      a minimum οτ            tonnes
      and a maximum of . . .  tonnes
    - durum wheat meal   :
      a minimum of            tonnes
      and a maximum of .. .   tonnes
    - barley :
      a minimum of            tonnes
      and a maximum of .. .   tonnes
    - etc.
2 . The marketing year within the meaning of this Agreement for[_the product ^
    shall begin on           and shall end on            of the following year , and
    for [[the other product~Jshall begin on             and shall end on
Article 10
   The[product Jcovered by this Agreement shall comply with the qualities and
specifications traditionally adopted in transactions between the European
Economic Community and£"... name of country ..."! .
Article 11
Approximately twomonths before the beginning of each marketing year , the
Joint Committee shall meet in order to decide precisely what quantities shall
be supplied and imported during that marketing year under this Agreement and
how the purchases shall be spread over that year .
 ---pagebreak---                                          ~
Article 12
If owing to exceptional ci rcumstances there are large quantities available in
£••• name of country . . /Jsr insufficient quantities in the Community, the Joint
Committee shall meet in order to amend the quantities referred to in Article 9 ( 1 )
accordingly .
Article 13
         name of country . .. jand the European Economic Community herby agree , each
    for its part , to make such arrangements as are necessary to ensure that the
    transactions are carried out at the     prices or quotations prevailing on the
    world market .
2 . The two Parties to this Agreement will consider whether the credit facilities
    accorded by the Member States of the Community or their authorized representatives
    can be applied to the contracts to be concluded under this Agreement.
                         B
                                      TITLE  III
                                  FINAL PROVISIONS
Article 14
This Agreement shall be valid for a period of three marketing years . This period
may be tacitly renewed for a further three years .
Article 15
This Agreement shall come into force on the first day of the marketing year
following that in which theJ^Office               and the Commission of the European
Communities notify each other that the procedures necessary for this purpose
have been completed .
 ---pagebreak--- Article 16
This Agreement is drawn up in duplicate in one of the languages of the
Community and in[fofficial language of the non-member countryj, each text
being equally authentic .
                     Mr                  . for the Commission of the
                                           European Communities
                     Mr.                   for
                     Done at                 this
 ---pagebreak---            -y-
   REPORTS ON FACT-FINDING MISSIONS
IN ALGERIA . EGYPT . TUNISIA AND MOROCCO
 ---pagebreak---                                    REPORT
        CONCERNING      EXPLORA    ORY    TALKS   WITH    THE    ALGERIAN
 AND    EGYPTIAN      AUTHOR I T I S   REGARDING      A  FRAMEWORK    AGREEMENT
   FOR    THE    MULT I ANNUAL     SUPPLY    OF   AGRI CULTURAI     PRODUCTS
I. MISSION TO ALGIERS
   1 . Two rounds of talks were held in Algiers from 4 to 6 May , one
       with , and under the auspices of , the Ministry of Trac ?, and the
       other with the . Ministry of Agriculture and the Agrarian Revolu­
       tion ( MARA ). The heads < arid deputy heads ) of the state corpora­
       tions or public boards .
 ---pagebreak---                                       - /-/-
              acting on behalf of one or other, of these two Ministries ( 1 ) in directing
               supplies were present at each set of talks .      Also , with the agreement of
              the Presidency, a briefing session with the Member States' representati­
              ves was organized by the Commission Delegation in Algiers , since the
              Algerian authorities had sent formal and detailed requests direct to
              certain embassies at the end of February, concerning the conclusion of
               long-term agreements .
         2 . On a general level the gre?t importance attached by the Algerian autho­
              rities to the rapid conclusion of a framework agreement between the
              Community and Algeria for the multiannual supply of agricultural products
              should be stressed .     The fact that they have placed such strong emphasis
              on this ties in with political and also economic motives which were very
              clearly stated in each round of discussions .
              ■                     : The Algerians consider the Commission as a special
                  discussion partner , since the talks are made easier from their point
                  of view by the absence, when dealing with the European Economic Com­
                  munity as such , of other considerations or extrapolated political and
                  psychological conflicts which stop any further progress at a certain
                : stage in government - to- government relations .  Algeria considers it
                  necessary to strengthen the Association Agreement with the EEC by
                  means of a new approach to food security ( markets and supplies ).
              ■ §£2Q2Sl£_!I!2ilve£ ■ Algeria has requirements which become greater every
                  year , particularly as a result of population growth ( 550 000 more
                  mouths to feed every year ), the r'ise in the standard of living , and
                  the very slow growth rate of agricultural production ; the Community
                  is near Algeria , which reduces the costs of transporting supplies
                  accordingly, and only the Community can provide the very varied range
                  of products which this country with a population of almost 20 million
            1     requires ;
                                                                                       ■ /• • ■
( 1 ) 0RGANIZATI0N_0F_IMP0RTS_INT0_ ALGERIA : The Government has given the monopoly
      for procurement from abroad to national corporations or boards , some of which
      come under the Ministry of Trade while others come under the Ministry of
      Agriculture ( MARA ). Those coming under Trade arethe 0NAC0 ( Office National
      de Commercialisation ), responsible mainly for milk products for direct consump
      tion , and the SNNGA ( Societe Nationale des Nouvelles Galeries Algeriennes ) ,
      responsible for all supplies for the large stores . Those coming under Agri­
      culture are the OAIC ( Office Algerien interprofessionnel des Cereales ) which
      is responsible for wheat and barley, the SN SEMPAC ( Societe Nationale des
      Semouleries , Meuneries , Fabriques de pates alimentaires et Couscous ) respon­
      sible for purchasing meal , flour and pasta , the ONAB ( Office National des
      Aliments du Betail ) and ONALAIT ( Office National du Lait et Produits Laitiers )
      responsible for domestic production and the reconstitution of milk .
 ---pagebreak---     Algeria is also anxious to embark upon a programme for the development of
    agricultural production ( poultry-raising and dairy farming , one of these
    to be financed by the EEC under the 1976 Financial Protocol ) and only the
    Community can provide effective help and support in all sectors .
3 . Iplith regard to the general scope and form of a long-term agreement , the
    Commission representatives noted that the " approach suggested in the draft
    Communication to the Council ( C0M(81)75 ) corresponded " almost perfectly "
    to that envisaged by the Algerian authorities .
     (i )   The type of agreement being considered by Algeria would be a frame­
            work agreement ( or a framework convention ) providing general criteria
            for the negotiation and conclusion of commercial contracts between
            Community operators and the corporations , boards or organizations
            which hold the purchasing monopoly in Algeria ;
    ( ii )  The framework agreement or framework convention would be concluded
            between a Community authority and an Algerian ministerial authority .
            Two additional remarks should be made on this subject : the Algerians
            are aware of the fact that where the export of a Community agricultu­
            ral product entails the granting of a refund , a framework agreement
            for multiannual supplies involves an undertaking on the part of the
            Community as such , as they have learnt from experience that a Commu­
            nity operator or even a Member State always waits for 9 Commission
            refund decision before acting .  They have also left open the matter
            of whether one or two framework agreements would have to be concluded ,
            in view of the fact that , even though the Ministry of Trade 's Direc-
            torate-General for Coordination and Supervision has a horizontal role
            and is responsible for all external supplies , certains boards or state
            corporations come under the Ministry of Agriculture .
    ( iii ) The provisions to be included in the framework agreement should , in
            the opinion of our Algerian partners , be flexible and straightforward ,
            so that they can , if necessary, be adapted as circumstances require
            and also so that trade can be conducted freely, but the commitments
            made by the two sides should not be merely nominal or insufficiently
            binding .
 ---pagebreak---                          - J3-
 4 . On the matter of the actual content of the framework agreement , there is
      again a striking similarity of approach between what was proposed to the
      Commission on 19 February and the Algerians' stance now .
      The framework agreement would cover the following : the period of applica­
      tion Ca three-year period has been mentioned , but a request has also been
      made for linkage with the present five-year plan ); the range of products
      covered ; the quantities concerned (a very marked preference has been stated
      for a quantity bracket , the actual supply and purchase figures for a given
      year being fixed by common accord before the beginning of that year in the
      light of the respective situations of the contracting parties ); the wording
      of the undertakings given by the two sides , including the description of
      the administrative measures adopted to ensure the agreement is implemented
      through normal trading channels ; the terms of reference - with particular
      regard to prices - for the commercial delivery or purchase contracts between
      Community operators and the Algerian state corporations ; lastly the adminis­
      trative machinery ( for the annual negotiation of quantities, operation of
     the arrangements, etc .).
     The Algerian authorities also put forward certain points which it should ,
      in their opinion , be possible to include in the framework agreement .  Assu­
      rances should thus be given, with proper backing , that products whose avai­
      lability is guaranteed under the framework agreement really are of Community
     origin and that no single operator or Member State can artificially esta­
     blish a de facto monopoly ("there is no single automatic channel "), as this
     would prevent Algeria from stabilizing its purchase flows on the basis of
     other external or domestic requirements ( equilibrium in its trade balance
     with a particular country , etc .).  The Algerian authorities also consider
     that if such a framework agreement were concluded , a joint effort to improve
     the quality of the products sold by the EEC should be undertaken - hence the
     need to include qualitative terms of reference corresponding , for example ,
     to the standards of the Algerian Ministry of Health - and that the syste­
    matic use of letters of credit by Community operators ( sign of mistrust )
     should be abandoned in paying for supplies under the Agreement .
5 . A very detailed discussion was held on the matter of prices .     Various points
    should be singled out .    Firstly, Algeria considers that , in the light of
    the two sides , and above all in view of the fact that , for example , the
 ---pagebreak---                           - /y-
     EEC plays only an indirect role in price formation through the refund
     mechanism , fixed purchasing or selling prices or even a price bracket
     cannot be established in the framework agreement . It notes , however ,
     that the level of the refund and its degree of continuity during a mar­
     keting year are determining factors for the conclusion of contracts by
     operators .   The Algerian authorities have voiced a number of criticisms
   . in this respect concerning the present system of administering refunds ,
     pointing to its somewhat arbitrary nature , which prevents the Algerian
     authorities from being able to rely on the Community at all times ; in
     their opinion , a "preferential difference " should be established between
     the rules governing the refund applicable to supplies under the Agreement
     and the rules relating to supplies not covered by the agreement .     In other
     words, it does not seem to be a matter of fixing a preferential refund
     level but of laying down special rules for the fixing of the refund
     ( advance fixing - duration of the advance fixing arrangement , terms of
     reference of the world price used to calculate the refund ) for only those
     quantities covered by the framework agreement .
     The Algerian authorities have raised the matter of the financing facilities
     granted to Algeria in one form or another by other trading partners : export
     credit granted by Sweden under the long-term wheat agreement , virtually
     free . installation - 1 % interest over 50 years - of intake silos under the
     long-term durum wheat and barley agreement with Canada , deferred payment
     under the red meat supply agreements concluded with Argentina and Australia
     etc .    They have expressed the wish that the EEC ,  which , as explained ,
     does not yet have an export credit mechanism , should follow up any opera­
     tions undertaken by the Member States and or finance the installation in
     Algeria of intake capacity for some of the products supplied ( refrigeration
     facilities, silos , warehouses , port infrastructure , etc .).
6 . As regards products and quantities, the Algerians have supplied a list of
     what they estimate to be their import requirements ( see Annex I ), speci­
     fying that this did not mean that all these products and quantities should
     come solely from the Community ana that even the quantities which could
     come from the Community should be covered by the framework agreement on
     multiannual supplies; this last remark ties in with the ideas expressed
     in COM (81 ) 75 ( see paragraph 5 . ( ii ).
 ---pagebreak---    They stressed that , when negotiations were initiated , their authorities
   would make precise proposals concerning the range of products and the
   quantities- to be covered by the framework agreement .
   They also drew attention to the fact that there were , strictly speaking ,
   three categories of products , whi ch could come under a framework agreement :
   - agricultural commodities : wheat , sugar , milk products for reconstitution ;
   - agricultural products for direct consumption : red meat , butter , flour ,
      meal , rice , pasta , eggs for direct consumption ;
   - products intended for the programme for the development of agricultural
      production : eggs for hatching , day-old chicks, dairy cows , compound
      feedingstuffs .
   In the case of the last category, the Ministry of Trade and the Ministry of
   Agriculture stressed this request and the particular urgency of making a
   start on meeting it , even if only on a very small scale ( poultry farming ),
   since this would provide an additional source of products for one of the
   projects financed under the EEC-Algeria Financial Protocol and would be of
  great importance to the implementation of that project .
. Cone lusions : Algeria is obviously anxious to conclude with the Community a
   framework agreement for the multiannual supply of agricultural products ,
  and to do so very shortly .      The Algerian authorities expressed in this res­
  pect their heartfelt       wish that the Commission ( and the Council ) should
  pass very quickly from this exploratory stage to actual negotiations, and
  they hoped that 1982 could be the first year of application of a framework
  agreement .    The Community can meet this request without causing an increase
  in Community agricultural production ( the products and quantities requested
  are less than present supplies ), or excessive expenditure on refunds, or
  adverse effects on other countries' trade ( supplementary or sole source of
  supply ).
  It is obvious , however , that the real significance of such a framework
  agreement for the supply of agricultural products goes far beyond the trade
  sphere , for it would not only provide supplies for direct consumption but
  also ensure regular supplies of raw materials for the food processing in­
  dustry and of agricultural inputs for a developing farm sector .        The im­
  pression obtained was that Algeria thus attributes deep political signifi­
  cance to it , that it could have economic repercussions on sectors other
  than agriculture , and that such a mutual commitment would pave the way for
  a new type of relations between Algeria and the EEC and its Member States
  in the context of the new international economic order .
 ---pagebreak---                                                             ANNEX I
      ESTIMATED REQUIREMENTS FOR ANNUAL IMPORTS OF AGRICULTURAL PRODUCTS
                                INTO ALGERIA
MILK PRODUCTS
Milk for infant feeding                 15 Q00 -   20 000 t
Flour for infant feeding'                2 000 -    3 000 t
Evaporated and instant milk            100 000 - 120.000 t
Butter ( not more than
           3 months old )               25 000 -   30 000 t
Cheese for processing                    7 000 -   10 000 t
Cheese for direct consumption :
     Emmental .                          3 000 -    4 000 t
     Gouda - type                        4 000 ~    7 000 t
Butteroil                                          10 000 t
CEREALS
Wheat - flour and meal                  to be specified by the MARA and OIAC
Barley and malt
Rice
OTHER PRODUCTS
Seed potatoes                                      10 000 t
Red meat ( mutton , beef )              20 000 -   30 000 t
Eggs for direct consumption             1 000 000 000 unit s
Powdered eggs                              100 -      500 t
Animal fat                              40 000 t
Eggs for hatching                       100 000 000 - 150 000 000 unit s
Day-old chicks                          1 000 000 - 2 000 000 units
Dairy cows                              2 000 head
Cattle on the hoof                      2 000 - 3 000 head
Sugar                                   500 000 t
Point-of- lay pullets                   100 000 - 200 000 units
Colza oil                               200 000 t
Colza seed                              70 000 - 90 000 t
 ---pagebreak--- II . MISSION TO CAIRO
      8 . The general objective which , in the view of the Egyptian authorities,
           should guide any framework agreement concluded between the EEC and
                  /
           Egypt on the mutiannual supply of agricultural products is somewhat
           different from the situation in the case of     Algeria .  It should be
           based on the national food strategy which President Sadat has made the
           cornerstone of his internal policy and which aims to satisfy the food
           requirements of a population growing at the rate of almost 100 000 per
          month and whose standard of living is improving every year (whence the
           growing need for high protein products such as meat and milk products ).
          This " food strategy policy " aspect was emphasized forcefully at each of
          the meetings which the Commission representatives had with the ministers
          responsible for supply, financial affairs , economic affairs and agricul­
          ture during their visit to Cairo from 7 to 9 June .      Egypt bases this
          policy partly on the expansion of domestic agricultural production , which
           requires external financial and technical Support ( bilateral , plurilateral
          or multilateral ), and partly on "the conclusion of supply agreements with
          other countries .    The Commission representatives were accordingly infor­
          med of the need for an overall cooperation agreement , thus confirming
          the impressions formed by Mr Cheysson .during his official visit to Egypt
          from 27 October to 2 November 1980 .
     9 . On the more specific question of a possible multiannual supply agreement ,
          whereas in Algeria the Community is able , it seems , to play the leading
          part , in Egypt it finds that other countries are already fulfilling that
          role .    In particular , the United States exports to Egypt in the region
          of t 750 million of agricultural products, thus accounting for over a
          third of its agricultural imports , in addition to which Australia and
          Argentina have concluded long-term agreements with Egypt (on cereals and
          beef and veal respectively ).
 ---pagebreak---      The Egyptian ministers stressed the need , however , to diversify their
     sources of supply and, in this context , described the role which they
     envisage for the Community which exports to Egypt a mere i 375 million
     of agricultural products ( i.e. around half the United States' exports ).
     The ministers considered that the Community possessed an immense advan­
     tage in being able to offer a wide range of the    food products which
     Egypt requires .
10 . Another notable difference compared with Algeria , at least at this stage ,
     concerns the terms und^r which transactions are carried out ; credit sales
     seem to have reached unprecedented proportions in Egypt.'
     According to information provided by the Minister for Economic Affairs ,
     Dr Nour El Dine ( confirmed by a USDA report ), approximately 70 % of US
     agricultural exports to Egypt were sold in 1980 through USG financing
     programmes PL 480 and the Commodity Import Program .    Egypt is , for the
     USA , the principal recipient of PL 480 and all cereals sold (a third , of
     PL 480 to Egypt ) are covered by this aid ( i.e. 1.6 million t of wheat
     end flour and 100 000 t of maize ).   The terms of the agreement are those
     normally applicable ( down payment 5 % , the  balance payable in 31 annui­
     ties , ten years after the final delivery , interest rate 2 % rising to 3 % ) .
     The Commodity Import Program (2 129 million in    1986 ) covers the greater
     part of other US agricultural exports to Egypt : lard, maize , tobacco ,
     poultrymeat and lentils .
     Australia , which on 5 February announced the signing of a long-term agree­
     ment ( lasting five years , the 1977 agreement having lasted three years )
     for an annual supply of one million t .of wheat ( possibly 1.5 million t
     in the event of a good Australian harvest ), is granting Egypt credit fa­
     cilities (for three years with interest negotiable at commercial rates in
     a trade-off with the price formula ).   In addition to this contract there
     is a food aid scheme involving 20 000 to 25 000 t of cereals .
     France , at the end of April , granted Egypt a loan fevai lable until 1 Au­
     gust 1982 ) to import French agricultural products up1 to a value of
     FF 1 500 million ( i.e. approximately i 270 million ).    An earlier loan
     of the same type was worth FF 930 million but allowed Cairo to buy only
     wheat and flour ; the new agreement of April 1981 permits the additional
     purchase of sugar, milk products , meat , live cattle , eggs and oils .
 ---pagebreak---                                _
            Undoubtedly , other countries are similarly involved though not to such
            an obvious extent .    Egypt has always attached major importance to the
            " special conditions of sale " aspect and a long-term agreement with that
            country cannot ignore it ,
      11 . In relation to Algeria , the final difference concerns the arrangements
            for marketing Egyptian imports .    According to information provided by
            Or Fouad Hussein , Minister for Financial Affairs , a third of tre gc;ds
            entering the country are imported by private companies direct ( under
           monetary authorizations granted by the Central Bank ).       This free trade
            is increasing along with the increase in demand for goods ( not covered
           by special conditions of sale stipulated by exporting countries ) and
           their greater diversification ( linked to the improving standard of li­
           ving ).   There are in Egypt no rules requiring all imports to be covered
           by long-term agreements , i.e. essentially bilateral agreements between
           governments .    A fairly substantial share of Egypt 's EEC exports would
           not be covered , therefore , by a framework agreement and private imports
           would continue .
      12 . Mr Ahmed Nouh , the Minister for Supply , who had a long meeting with the
           Commission representatives and was accompanied by Mr Darwish , Deputy
           Minister and Chairman of the      General Authority for Supply Commodities
           ( GASC ), the central import agency , answered detailed questions and argu­
           ments by confirming that the Government was interested in entering into
           negotiations with a view to concluding between the EEC and Egypt an
           agreement on the multilateral supply of agricultural products .
           (i)     The general pattern of such a framework agreement could, according
                   to the Egyptians , be virtually identical to that envisaged in the
                   communication to the Commission of 19 February 1981 ( C0M(81 ) 75 ) ;
                   Algeria is thinking along the same lines , as indicated above .
           ( ii )  With regard to the range of products which could be covered, the
                   Minister for Supply mentioned :
                   - cereals : wheat , Western White type preferably required ( EEC stan­
                     dard wheat is not far    behind ( 1 ), wheat flour, maize ( not cur­
                     rently supplied by the EEC , which is a net importer ) ;
( 1 ) The current question of a 2 20 - 30 / t preference premium for this' type of
       wheat compared with EEC wheat - for which there is no justification in purely
       commercial terms - has not been clarified .                            '
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        - mi lk_PC°ducts : butter , butteroil , milk powder , certain types
          of cheese ( gouda , processed cheeses , blue ) ;
        - sugar : in the eyes of the population this product is the key
           to the Government 's success in the manangement of its food po­
           licy , though account should be taken of Egypt 's membership of
           the International Agreement and the provisions of that Agreement
          concerning restrictions on purchases from non-members ( including
           the EEC , which nevertheless sold around 100 000 t on average in
           1979 and 1980 ) ;
        ~ vegetable oils : sunflower or cotton seed oil ;
        - eggs ;
        - meat : red meat ( beef and sheepmeat ), bone-in or boneless , live
          animals for slaughter or stock-building , corned beef , poultry-
          meat and day-old chicks ;
        - fish : fillets and preserved fish ( mainly mackerel ).
( iii ) No quantity was mentioned .   The Minister for Supply refused to
        give any details on the grounds that the prices or terms of payment
        offered by the EEC would determine what Egypt would ask for during
        the negotiations .   He expressed interest in receiving official of­
        fers from the EEC regarding quantities in due course .
( iv )  The question of prices and price conditions was the subject of a
        long and wide-ranging exchange of views .
        First , the Egyptian authorities clearly had an erroneous view of
        the respective responsibilities of the Commission , the' Member States
        and Community operators in each export operation ; the Community as
        such was seen as having more power or more resources ( credit ) than
        it in fact has at present , and certain operators or Member States
        had omitted to point out to their opposite numbers that the refund ,
        which was necessary for each operation , was a Community instrument .
 ---pagebreak--- Secondly , it is clear that being accustomed to trading on
the basis of special conditions of sale , the Egyptians do
not wish to contemplate a framework agreement containing no
reference to some sort of " preference ", at least for major
products .  The terms of payment ( credit ) were discussed , but
also alternative arrangements involving a link with food aid .
Solutions to these questions are feasible and include the
possibility of a parallel arrangement involving both a frame­
work agreement and food aid , the incorporation in the frame­
work agreement of national credit             for the purchase
by Egypt of foodstuffs , or arrangements for financing develop­
ment projects .   It appears that Egypt has realized that a
higher refund ( the preferential price idea ) is not necessarily
reflected in the prices charged by Community operators .