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Foreign Ministers of the Association of South-east Asian Nations (ASEAN) said they expect closer economic ties with Japan. A communique issued at the end of a two-day ministerial meeting said Asean hoped for greater Japanese investment in the region, better access for Asean products in the Japanese market and larger numbers of visiting Japanese tourists. The ministers are due to start four days of talks tomorrow with officials of the U.S., Japan, the European Community, New Zealand, Australia and Canada, including Secretary of State George Shultz and Japan's Foreign Minister Tadashi Kuranari. The Asean communique noted Japan's large trade surplus, which it said would enable Tokyo to play a greater role in the economic development of ASEAN and in facilitating closer ASEAN economic cooperation. "Japan could also help to facilitate the flow of Japanese investments to ASEAN through the provision of attractive financial assistance and incentives for its private sector," it said. The communique also welcomed President Reagan's firm action in vetoing trade protectionist measures in the Congress. The communique said the ASEAN ministers were concerned over the proliferation of protectionist policies, pressures and measures in developed countries, the continued depressed level of commodity prices, the instability of exchange rates and the lack of a comprehensive solution to the world debt situation. REUTER

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16-JUN-1987 05:37:38.66

ASEAN SEES CLOSER ECONOMIC TIES WITH JAPAN

Mitsubishi Heavy Industries Ltd <MITH.T> said it began building the world's most advanced energy-saving tanker, which consumes only 48 tonnes of fuel oil a day. Construction of the 258,000 dwt VLCC (very large crude carrier) Nisseki Maru for <Tokyo Tanker Co Ltd>, a shipping arm of Nippon Oil Co Ltd <NPOL.T>, is expected to be completed in April 1988. It would run on the Japan/Gulf route, a company statement said. The statement gave no other details. Mitsubishi Heavy last year finished building a vlcc of similar size, but which consumed 57 tonnes of fuel a day. REUTER

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16-JUN-1987 05:57:04.96

MITSUBISHI HEAVY BUILDS ENERGY-SAVING TANKER

The Bank of Japan is considering expanding the 60 billion yen daily limit on each securities firm's outstanding transactions in the yen call market at the request of the securities industry, Bank of Japan sources said. But before doing this, the Bank is waiting to see the effect on brokers' fund raising of the change, effective in August, to a shorter settlement period for cash bond transactions, the sources said. REUTER

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16-JUN-1987 05:59:55.47

BANK OF JAPAN MAY EXPAND BROKER CALL MARKET

Pasco Corp is issuing an 85 mln dlr equity warrant eurobond due July 9, 1992 with an indicated coupon of 1-5/8 pct and par pricing, lead manager Nomura International Ltd said. The issue is guaranteed by Mitsubishi Bank Ltd and final terms will be set on June 23. The selling concession is 1-1/2 pct while management and underwriting combined pay 3/4 pct. The issue is available in denominations of 5,000 dlrs and will be listed in Luxembourg. Payment date is July 9 and the warrants are exercisable from July 20, 1987 until June 16, 1992. REUTER

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16-JUN-1987 06:00:48.07

PASCO CORP ISSUES 85 MLN DLR EQUITY WARRANT BOND

Organisation of African Unity Chairman Denis Sassou-Nguesso said Africa was unable to pay its debts due to falling export prices. "Even if African countries want to pay their debts they will not be able to," Congolese president Sassou-Nguesso told a news conference at a meeting between foreign and African experts on the continent's economic prospects. "You cannot be expected to do the impossible. All our commodity exports, without exception and even oil, have fallen in value on international markets," he added. "In these conditions can African countries continue to respect their debt servicing?" Sassou-Nguesso asked. He said the debt issue would be the main subject at next month's OAU summit in Addis Ababa and would not rule out the possibility of a joint "debtors' revolt" there. "Let us wait and see," he replied when asked about the possibility. Debts of sub-Saharan African countries total less than 100 billion dlrs, according to the Economic Commission for Africa which is organising the current meeting in Nigeria's future capital. REUTER

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16-JUN-1987 06:03:08.45

AFRICA UNABLE TO PAY ITS DEBTS, OAU CHIEF SAYS

OPEC has regained its former role as price-setter in the oil market following last year's price war, acting OPEC Secretary General Fadhil al-Chalabi said. But he said he expects no short-term rise in demand for OPEC oil, adding that market stability will mean a continued sacrifice for the 13 OPEC member countries. Al-Chalabi, speaking at a university here yesterday, said the December 1986 conference at which OPEC set an 18 dlr per barrel reference price gave the market a signal that the producers' group was serious. "It (OPEC) has no choice but to defend the price and this has restored its credibility," said al-Chalabi, who is in Caracas for a meeting of the OPEC Fund Board of Governors. Al-Chalabi said OPEC members have not exceeded the production quotas which took effect on February 1 and spot market prices are now near or above official OPEC prices. Before the December conference OPEC faced a major and basic dilemma which led to the loss of its leadership role, he said. "The question was, what should OPEC do? Defend the price and risk losing its market share? Or defend its market share and let the price drop?" he asked. "OPEC has chosen to stabilise the price. But the question is how long will it be willing to keep up this painful exercise?" he said. Al-Chalabi said that despite OPEC's success in shoring up prices and achieving discipline regarding quotas, he saw no quick end to restraint in production. He also said he foresaw no increase in demand for OPEC oil because increased non-OPEC production, combined with conservation and the use of alternative energy sources, has caused changes in the market which will not easily be reversed. REUTER

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16-JUN-1987 06:04:20.07

OPEC OFFICIAL SAYS CARTEL HAS REGAINED LEADERSHIP

Share prices opened sharply higher, boosted by Italian general election results which dealt a big blow to the Communist party and bolstered the Christian Democrats and Socialists. The Milan Stock Index was indicated 2.90 pct higher at 0930 GMT as all sectors were stronger. Among stocks posting early gains at mid morning was Fiat ordinary, which was indicated 13,090 lire against yesterday's closing of 12,705. These are provisional, not closing prices. Analysts said the results from Sunday's and Monday's voting should boost the bourse in the short-term, but the market's medium-term prospects remain clouded because of doubt over how long it will take to form a new government. "The result is positive in the sense that the Communists suffered a defeat and Italians voted for stability," director Paolo Azzoni at Milan investment bank <ABK Spa>, told Reuters. Uncertainty about the election outcome and the possibility of large Communist gains has been weighing on the bourse in the last two weeks, brokers said. Final returns show the Socialists, led by former Prime Minister Bettino Craxi, increasing their vote to 14.3 pct from 11.4 in 1983, while the Communists dropped more than three points to 26.6 pct. Support for the Christian Democrats rose to 34.3 pct from an all-time low of 32.9 in 1983. Carlo De Benedetti, chairman of Ing C. Olivetti EC Spa <OLIV.MI>, commenting on the results last night on Italian television, said "I am sure the reaction of international markets will be extremely favourable to the electoral verdict." Broker Francesco Dinepi at Milan investment firm <Sige Spa>, said some U.K. Institutional investors had placed buy orders in Milan this morning. "In the medium-term, the direction of the market depends on the Christian Democrats and Socialists resolving their differences," said Dinepi. "What Italy wants is another government and quickly," added Azzoni. REUTER

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16-JUN-1987 06:05:28.68

ITALIAN ELECTION RESULTS BOOST SHARE PRICES

Toyota Motor Corp <TOYO.T> is likely to raise 800 mln dlrs through a Eurodollar bond with warrants in mid-July, underwriting sources said. A final official decision on the issue has yet to be made and detailed terms will be announced later, they added. The funds are likely to be used for investments to increase productivity both domestically and abroad, they said. REUTER

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16-JUN-1987 06:10:47.65

TOYOTA LIKELY TO ISSUE 800 MLN DLR WARRANT BOND

Olympic Co Ltd of Tokyo is issuing 50 mln Swiss francs of five year notes with an indicated one pct coupon, lead manager Morgan Stanley said. The issue is guaranteed by Mitsubishi Trust and Banking Corp. Terms will be fixed on June 22 with payment due July 9. The warrant exercise period is from August 3, 1987 until June 30, 1992. REUTER

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16-JUN-1987 06:13:18.90

OLYMPIC CO ISSUES 50 MLN SWISS FRANC WARRANT NOTES

The Bundesbank could announce today that it will lift its veto on the private holding of European Currency Unit (ECU) liabilities, banking sources said. But this would probably be the only significant news from today's council session, brought forward from its usual Thursday date because of the Corpus Christi holiday here. The Bundesbank is not expected to change credit policy. The sources said Bundesbank officials had been working out technical and legal problems with the ECU since the subject was discussed in the presence of federal finance minister Gerhard Stoltenberg on May 7. With the primary internal work on the ECU completed, approval from the 18-member central bank council was now virtually a mere formality, the sources said. Bundesbank president Karl Otto Poehl, chairing today's meeting, said in mid-May the remaining ECU restrictions were likely to be lifted, allowing individuals to open ECU accounts and incur liabilities previously mainly executed through the Luxembourg subsidiaries of the major German banks. The sources said the ECU liberalisation was mainly designed to show that West Germany was prepared to play its part in the effort to attain European Community monetary unity by 1992. REUTER

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16-JUN-1987 06:14:28.36

BUNDESBANK MAY LIFT VETO ON ECU USE - SOURCES

The European Community is launching a 500 mln franc, 10-year bond fungible with its 600 mln franc 8-3/4 pct, April 7, 1997 issue, lead manager Banque Indosuez said. Co-lead manager is Bank of Tokyo International. The issue price of the new tranche is 96-5/8 pct. Fees are two pct, with 1-3/8 pct for selling and 5/8 pct for management and underwriting combined including a 1/8 pct praecipuum. Payment date of the non-callable issue is July 7, plus accrued interest. Denominations are 10,000 and 50,000 francs and listing is in Luxembourg and Paris. REUTER

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16-JUN-1987 06:31:50.54

EC ISSUES 500 MLN FRENCH FRANC 10 YEAR BOND

Swedish industrial production rose 1.5 pct in April after a 2.2 pct fall in March and a rise of 3.8 pct in April 1986, according to preliminary figures from the Central Bureau of Statistics. The bureau said the April rise occurred in most of the sector, with the greatest advances in the paper products and chemicals industries. REUTER

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16-JUN-1987 06:32:48.72

SWEDISH INDUSTRIAL PRODUCTION RISES IN APRIL

Government officials said the worst may be over for the Japanese economy, after today's news of stronger than expected growth in the January/March period. But private economists were not so sure and said the economy was unlikely to achieve the government's 3.5 pct growth forecast in the current fiscal year ending next March. As already reported, GNP rose 1.2 pct in the January/March quarter, after a revised 0.7 pct increase in the previous three months. For the fiscal year that ended last March 31, GNP growth slowed to 2.6 pct from 4.3 pct in 1985/86. The government economists acknowledged that the improved export performance in the January/March quarter was unlikely to be repeated. The volume of exports during the period was up two pct from the previous three months. The yen's rise in April to about 140 to the dollar from 150 probably resulted in a fall in exports in the April/June quarter, they said. However, given the yen's recent stability, stepped-up domestic demand should work as a driving force to push the economy onto a path of sustainable growth, they said. Many private economists, though, doubt that the economy will achieve the government's 3.5 pct growth forecast for the 1987/88 year. Growth in 1986/87 also fell short of the government's forecast, which was revised downwards to three pct last December from an original four pct. Domestic demand as a whole is not strong enough, except for housing, said Johsen Takahashi, chief economist at Mitsubishi Research Institute. Consumer spending is likely to remain weak as the growth in nominal income stays low, he added. The rise in consumer spending in the January-March quarter was simply a reflection of the contraction that occurred in the preceding three months, Takahashi said. Private capital spending in the quarter looked strong but this was primarily because utility companies brought forward their 1987/88 capital investment plans into the final quarter of 1986/87 in line with the government's economic stimulation package announced last fall, he said. Dai-Ichi Kangyo Bank chief economist Kosaku Furuta said he was unable to say the economy has bottomed out, but added he expects increasing signs of recovery in the coming months. Destocking is coming to an end and companies are starting to rebuild inventories, Furuta said. Housing is expected to remain buoyant, backed up by lower interest rates as well as government policies to stimulate the sector, he said. The government's recently unveiled 6,000 billion yen economic package will also help the economy. But he said that the economy was unlikely to achieve the government's 3.5 pct forecast for 1987/88, although growth might come close to three pct. REUTER

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16-JUN-1987 06:36:51.01

JAPAN OFFICIALS SAY WORST MAY BE OVER FOR ECONOMY

The West German government today considered demands for nearly 850 mln marks to lay off or retrain 20,000 steel workers. Government spokesman Friedhelm Ost said Chancellor Helmut Kohl reviewed a joint proposal by steel employers and trade unions at a special meeting with steel industry representatives. Companies like Fried Krupp <KRPG.D> and Hoesch Werke AG <HWKG.F>, which saw profits plunge last year, have taken the unusual step of aligning with the metalworkers' trade union, IG Metall, to press for government finance to slim staff levels still further. Government officials said Bonn was prepared to take part in a common effort to find a solution for the steelworkers. But since the government was struggling to finance tax cuts by reducing state subsidies, it could not pay for all the layoffs. A spokesman for IG Metall said the joint proposal foresaw redundancy payments to 10,000 workers in Ruhr and Rhineland plants. Some 6,000 workers would be redeployed in non-steel making sectors of steel companies, while a further 4,000 would be eligible for job-retraining schemes. Redundancies are estimated at 600 mln marks, while job retraining would cost a further 240 mln. REUTER

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16-JUN-1987 06:41:16.49

GERMAN STEEL INDUSTRY SEEKS LAY-OFF FUNDS

Next year is likely to see a shortfall in zinc concentrates of up to 100,000 tonnes, although there should be ample supply in 1987, Shearson Lehman Brothers Ltd metals analyst Stephen Briggs said. Speaking on the second day of Metal Bulletin's base metals conference, Briggs said the major factor in his predicted 100,000 tonne shortfall in zinc concentrate supply in 1988 was the imminent cessation of new mining and termination of milling at Pine Point in Canada. However, this could be partially offset by some stockpiles. Nevertheless, despite this predicted shortfall there was unlikely to be any dramatic change in treatment charges in 1988. The picture for 1987, on the other hand, was one of record production of zinc metal with fewer strikes anticipated in Canada, some improvement in South America and new capacity in South Korea. "Dramatic new record levels of concentrate output are also expected in 1987," Briggs said. This would partly be due to a return to more normal levels at existing mines in Australia and Peru, allied with achievement of full capacity of 170,000 tonnes a year at Faro in Canada. Looking further forward, the major event was the probable opening in 1991 of the Red Dog mine in Alaska with a capacity of 300,000 tonnes of concentrates a year. "Once this mine is fully on stream it is unlikely that there will be a major shortage of concentrates in the early 1990s," he added. The picture for lead was also closely allied to that of zinc, with no new dedicated lead mines planned and therefore supply of concentrates largely dependent on by-products from zinc mines. "On this basis, our calculations point to a modest oversupply of lead concentrates in 1987," Briggs said. The copper forecast, however, was for a record non-Socialist output of 6.6 mln tonnes of concentrates in 1987, increasing by a further 150,000 tonnes in 1988. Production of primary refined copper metal would also increase, but not by as much as concentrate output, leading to a moderate oversupply of concentrates of up to 150,000 tonnes this year and with no shortages predicted for the rest of the decade, he said. REUTER

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16-JUN-1987 06:46:32.22

ZINC CONCENTRATE SUPPLY SHORTFALL SEEN IN 1988

Italy's wholesale price index rose 0.5 pct month-on-month in April, after increasing by 0.1 pct in March, the national statistics institute Istat said. The index, base 1980 equals 100, registered 174.2 in April compared with 173.3 in March. The April figure represents an increase of 1.6 pct compared with the corresponding month of 1986, after a year-on-year rise in March this year of 0.6 pct. REUTER

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16-JUN-1987 07:08:50.45

ITALIAN WHOLESALE PRICES UP 0.5 PCT IN APRIL

Indonesia will try to increase sugar output in calendar 1988 to 2.4 mln tonnes from an expected 2.2 mln in 1987, Agriculture Minister Achmad Affandi said. He told reporters after meeting President Suharto the gains will come from increasing average production to 10 tonnes per hectare from the previous 6.2 tonnes. He said Indonesia is aiming to pass the United States to become the world's fourth largest producer compared with its current seventh position. Affandi said the increase would insure Indonesia's self-sufficiency in the commodity and allow it to keep adequate stocks. Indonesia said it produced 2.02 mln tonnes in 1986, but the U.S. Embassy in its annual agriculture report said output was 1.8 mln tonnes. The U.S. Report forecast no change for 1987. Indonesia imported 162,000 tonnes of sugar late last year and in early 1987 to boost low sugar stocks. The country has around 284,000 hectares of sugar cane farms. The agriculture ministry estimates domestic consumption at 2.03 mln tonnes in calendar 1987. REUTER

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16-JUN-1987 07:24:57.91

INDONESIA SEEKS TO INCREASE SUGAR OUTPUT

Japan has no plans to liberalise its farm markets, but will try to narrow the gap between the price of farm products at home and overseas, Agriculture Minister Mutsuki Kato said. He told reporters the move is aimed at deflecting criticism of Japanese protectionism on its agricultural goods. But Kato said he has no plans to start bilateral trade talks with the United States over rice, Japan's staple food. Washington has called Tokyo's rice policy an extreme example of protectionism and has demanded access for U.S. Growers to the Japanese market. This is closed to imports except in emergency. Kato said Japanese farmers should however "shed some blood," to relieve the dangerous state of international farm trade. His comments precede a meeting on July 1 and 2 of the Rice Price Council at which the government advisory body will discuss the 1987 crop producer rice price. Kato said he welcomed the outcome of last week's recent summit of leaders of leading industrialised democracies in Venice and of farm trade talks at the Organisation for Economic Cooperation and Development (OECD) in May. Ministers at both conferences agreed on the long-term need to cut subsidies worldwide, Kato said. Kato said that Japan is not the only country to protect producers. He said the United States spends some 25.8 billion dlrs a year to support producer prices and on its export enhancement program and the EC 21.7 billion, while Japan spends only 2.9 billion. He said that although Japan provides the world's highest level of subsidies per acre, its subsidy per farm family was several times lower than in the United States. Expressing concern about growing protectionist moves in U.S. Congress, he said Japan should make efforts to prevent farm trade issues between the two countries from becoming a factor increasing protectionism in the United States. Japan and the United States are holding panel discussions at the General Agreement on Tariffs and Trade over Japan's import restrictions on 12 farm items. Bilateral talks on beef and citrus trade in the period from next April are due to start this autumn. REUTER

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16-JUN-1987 07:29:46.51

JAPAN HAS NO PLANS TO LIBERALISE FARM MARKET

Parliament approved a proposal to drop all controls on capital outflows, raising the prospect that Taiwan's vast resevoir of foreign exchange will flow into the world economy. A government spokesman said the new law would be promulgated by President Chiang Ching-Kuo within 10 days and financial authorities would then be empowered to lift controls on currency outflows at any time. Tight restrictions on capital inflows introduced this year will remain in place, the spokesman said. Central Bank Governor Chang Chi-Cheng has said the controls will be lifted at the end of next month or early in August. The central bank and finance ministry proposed lifting currency restrictions to help reduce Taiwan's foreign exchange reserves, which stand at about 60 billion U.S. Dlrs and have led to runaway growth in money supply. The reserves, the world's third largest after Japan and West Germany, also draw attention to Taiwan's huge trade surplus and the government fears they are making the island a target for U.S. Trade protectionism. The surplus rose 34 pct to a record 7.32 billion U.S. Dlrs in the first five months of this year and about 90 pct of it was with the United States. Money supply rose a seasonally adjusted 51.9 pct in the year to end-April, raising fears of higher inflation. Local bankers and economists say when the controls are lifted, businessmen will be allowed to buy foreign currency and invest it freely overseas. But they warn against expectations of a sudden outflow of capital. "I don't think we're going to see a big bang," John Brinsden, the Taiwan manager of Standard Chartered Bank told Reuters in a recent interview. Bankers said that businessmen have been holding vast quantities of foreign exchange overseas for many years and also have been freely buying and exporting currency through a flourishing black-market. "Obviously there will be an outflow of funds ... But I don't think it's going to be much," said Danny Chan, director of Fidelity Securities Investment Consulting Corp. Economists say the success of plans to encourage capital outflow depend on whether the central bank can slow the rise of the local currency. The Taiwan dollar has risen by about 23 pct against the U.S. Dollar since September 1983, prompting an inflow of speculative money. It rose by one Taiwan cent today to close at 31.08. The government spokesman said the new law does not empower authorities to permanently lift capital controls, but any proposal to reimpose them would need the approval of parliament. Many economists believe that once the controls are lifted it will be almost impossible to reimpose them. REUTER

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16-JUN-1987 07:41:37.77

TAIWAN PARLIAMENT BACKS FREE CAPITAL OUTFLOWS

There should be at least one merger between major European zinc smelters before the end of the decade, Christian Bue, Executive Vice President (commercial) of SMM Penarroya in France, said. Speaking on the second day of the Metal Bulletin base metals conference, Bue said he expected the current talks between five smelters including Penarroya to result in integration between at least some of the companies before 1990. The five companies, SMM Penarroya, Outokumpu Oy, Preussag Ag, Ste de la Vieille Montagne and Boliden Ore and Metals AB, have 22 pct of the world market, Bue added. "We have no alternative than to integrate out businesses into large trading blocs if we are to survive the cut-throat price competition and the trend to forward integration from the mining companies," Bue said. "It is by no means certain that all the five companies involved in the talks will integrate together. It is quite likely, and even preferable, that the European smelters form two or three large integrated blocs. "In this way we will be better able to negotiate with our concentrate suppliers on one side, and with the metal buyers on the other," Bue added. In the past, production overcapacity and the intense competition between the European zinc smelters has meant they have not only been in a very weak negotiating position when buying concentrates, but in an even weaker one when selling the metal, Bue noted. Although the apparently easy solution is to simply shut down excess capacity, the burden of this on individual companies is far too heavy and no one can be expected to volunteer, he added. Another possible but very risky solution is to invest heavily in more modern and lower cost facilities, he said. "My answer to this suggestion is that individual companies who do not invest will surely die, and those that do invest might survive, but only might, " Bue said. "The only real option in my mind is integration, rationalization and stabilization. We have no alternative, " he added. Bue also said that the European smelters were completely dissatisfied with the tradition of pricing concentrates and metals in US dollars, and suggested moving either to a basket of the world's major currencies or pricing in European currency units (Ecus) to protect against exchange rate volatility. Bue's views on integration between European smelters were met by general approval from the conference audience comprising representatives from many of the world's major mining, smelting and trading companies, although some of the mining representatives were somewhat sceptical in view of their own industry's move towards integration with smelters. However, some concentrate traders did express worry about their own position if the metals industry does make the move to large trading blocs. The currency basket suggestion cropped up constantly, but few said they thought matters would change in the near future. REUTER

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16-JUN-1987 07:54:39.94

MAJOR EUROPEAN ZINC SMELTER MERGER SEEN BY 1990

U.S. housing starts fell 2.7 pct in May to a seasonally adjusted annual rate of 1,620,000 units, the Commerce Department said. In April, housing starts fell a revised 3.8 pct to 1,665,000 units. The department previously said they fell 2.9 pct. The rate at which permits were issued for future construction fell in May by 7.6 pct to a seasonally adjusted 1,477,000 units after falling 7.0 pct to 1,598,000 units in April. The department said May housing starts were at the lowest annual rate since December 1984, when starts were at a seasonally adjusted 1,612,000 units. The permits total was the lowest for any month since March 1983, when 1,475,000 permits were issued. Before seasonal adjustment, May housing starts fell to 159,600 units from 161,600 units in April. Permits before adjustment fell to 134,800 units in May from 157,000 in April. The department said single-family housing starts fell in May by 7.6 pct to 1,129,000 units from 1,222,000 units in April. The May decline followed a slight 0.9 pct rise in single-family starts in April. Starts for multi-family units rose 10.8 pct in May to 491,000 units after declining in April by 14.6 pct to 443,000 units. Permits for single-family homes in May were down 5.0 pct to a seasonally adjusted annual rate of 1,005,000 units from 1,058,000 units in April. The decline followed a 8.0 pct drop in single-family permits in April. Permits for multi-family units fell in May by 12.6 pct to a seasonally adjusted annual rate of 472,000 units from 540,000 units in April. The May decline came after a 5.1 pct drop in the seasonally adjusted annual rate of permits for multi-family units in April. Reuter

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16-JUN-1987 08:38:34.95

U.S. HOUSING STARTS FELL 2.7 PCT IN MAY

The EC Commission has proposed a modified plan for a tax on marine and vegetable oils and fats in its revised 1987/88 farm price proposals, an official document detailing the proposals shows. The document, made available to journalists, says the commission proposes that the tax should start at levels originally proposed for vegetable oils on October 1. However, the tax on marine oils and fats would be cut by 50 pct from originally envisaged levels, the document said. In addition, the Commission proposes that the level of the tax, expected to start at 330 Ecus per tonne, could be reviewed every three months rather than annually. Diplomatic sources said the change to the proposals for fish oils appears to be an attempt to overcome objections to the tax from Portugal and Spain, major fishing nations. Other countries opposing the tax include Britain, West Germany and Denmark. The new proposals retain most of the Commission's original plans in other sectors. However, they mark the Commission's recognition that it cannot get proposals to reduce the period of intervention for cereals, diplomats said. Instead the Commission proposes to cut the monthly increments applied to cereals during the November to May period when intervention is open to 2.7 Ecus a tonne for durum wheat and two Ecus a tonne for other cereals. The document shows the Commission has also changed its green currency proposals in the light of heavy opposition, notably from West Germany. West German and Dutch positive monetary compensatory amounts (MCAs) would be immediately cut by 0.5 points, with a further one point cut at the beginning of the 1988/89 season. The Commission originally proposed a complete dismantling of positive MCAs. For other countries, the Commission makes the following proposals for dismantling negative MCAs Denmark and Benelux - reduction of around 1.5 points for animal products and just over two points for crops. France and Ireland - proposals unchanged except for an extra 1.5 point cut for beef. Italy - dismantling of all MCAs except those created since January 12. Britain - five point cut for most products, 6.5 points for beef. Greece, Spain and Portugal - for most products, dismantling of seven, 14 and 5.5 points respectively. Reuter

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16-JUN-1987 08:57:50.28

EC COMMISSION MODIFIES OILS TAX PLAN