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ANNEX I

PROVISIONS OF THE FOURTH LOME CONVENTION

CONCERNING STABEX27.

TITLE 11

CO-OPERATION IN THE FIELD OF COMMODITIES

CHAPTER1

STABILISATION OF EXPORT EARNINGS

FROM AGRICULTURAL COMMODITIES

Article 186

1 With the aim of remedying the harmful effects of the instability of export earnings and to help the ACP States overcome one of the main obstacles to the stability, profitability and sustained growth of their economies, to support their development efforts and to enable them in this way to ensure economic and social progress for their peoples by helping to safeguard their purchasing power, a system shall be operated to guarantee the stabilisation of export earnings derived from the ACP States' exports to the Community or other destinations as defined in Article 189, of products on which their economies are dependent and which are affected by fluctuations in price or quantity or both these factors. '

2. In order to attain these objectives, transfers shall be devoted, in accordance with a framework of mutual obligations to be agfdad between the ACID State concerned and the Commission in each case, either to the sector, interpreted in the widest possible sense, that recorded the loss of export earnings and be used there for the benefit of economic operators adversely affected by this loss, or, where appropriate, to diversification, either for use in other appropriate productive sectors in principle agricultural, or for the processing of agricultural products.

Article 187

1. The following products shall be covered:

g2mbined Nomenclature Position

1. Groundnuts in shell or shelled 1202

2. Groundnut oil 1508

3. Cocoa beans 1801

4. Cocoa husks, shells and skins and other waste 1802

5. Cocoa paste 1803

6. Cocoa butter 1804

7. Cocoa powder 1805

8. Raw or roasted coffee 0901 11 to

0901 22

9. Extracts, essences and concentrates of coffee 2101 1011

2101 1019

10. Cotton not carded or combed 5201

11. Cotton linters 140420

12. Coconuts 0801 10

13. Copra 1203

14. Coconut oil 151311

151319

15. Palm oil 1511

16. Palm kernel oil 151321

151329

17. Palm nuts and kernels 120710

18. Raw hides and skins 4101 10 to

4101 30

4102

410310

19. Leather and bovine animals 4104 10 to

410429

410431 11

410431 19

410431 30

41043910

20. Sheep and lamb skin leather 4105

21. Goat and kid skin leather 4106

22. Wood in the rough and squared wood 4403

23. Sawn wood 4407

24. Fresh bananas 0803 00

25. Dried bananas 08030090

26. Tea 0902

27. Raw sisal 5304 10

28. Vanilla 0905

29. Cloves 0907

30. Wool not carded or combed 5101

31, Fine animal hair of Angora goat - Mohair 51021050

32. Gum Arabic 1301 2000

33. Pyrethrum; saps and extracts of pyrethrum 1211 9010

130214

34. Essential oils 3301 11 to

3301 29

35. Sesame seed 120740

36. Cashew nuts and kernels 0801 30

37. Pepper 0904

38. Shrimps and prawns 030613

030623

39, Squid, octopus and cuttlefish 030741

030749

030751

030759

40. Cotton seed 120720

41. Oil cake 2305

230610

230650

230660

23069093

42. Rubber 4001

43. Peas 070810

071310

071320

44. Beans 070820

071331 to

071339

ex 0713 90

45. Lentils 071340

46. Nutmeg and Mace 090810

090820

47. Shea nuts 120792

48. Shea nut oil ex 1515 90 40 to

ex 1515 90 99

49. Mangoes ex 0804 50

50. Karakul Skins ex 4301 30 00

ex 4302 13 00

ex 4302 30 31

2. In all cases of application of the system, the Commission shall, in the interest of the ACP State concerned, consider as products within the meaning of this chapter:

(a) each product listed in paragraph 1

(b) product groups 1 and 2, 3 to 7, 8 and 9, 10 and 11, 12 to 14, 15 to 17, 18 to 21, 22 and 23, 24 and 25, 47 and 48.

Article 188

If, twelve months after the entry into force of this Convention, one or more products not contained in the list in Article 187 but upon which the economies of one or more ACID States depend to a considerable extent are affected by sharp fluctuations, the Council of Ministers shall decide, not more than six months after the presentation of a request by the ACID State or States concerned whether or not to include the said product or products in the list, taking account of factors such as employment, deterioration of the terms of trade between the Community and the ACP State concerned, the level of development of the ACP State concerned and the conditions which characterise products originating in the Community.

Article 189

1. The system shall apply to earnings from exports

(a) by each ACP State to the Community of each product referred to in Article 187(2);

(b) by the ACID States benefiting from the derogation referred to in paragraph 2 to the other ACID States of each product referred to in Article 187(2) for which such derogation has been granted;

(c) by the ACP States benefiting from the derogation referred to in paragraph 3 to all destinations of each product referred to in Article 187(2).

2. At the request of one or more ACID States in respect of one or more of the products referred to in Article 187(l), the Council of Ministers may decide, after examination of a report established by the Commission on the basis of the relevant information provided by the requesting ACP State or States, and not more than six months after the presentation of the request, to apply the system to exports of the products in question from the said ACP State or States to other ACID States.

2. In all cases of application of the system, the Commission shall, in the interest of the ACP State concerned, consider as products within the meaning of this chapter:

(a) each product listed in paragraph 1

(b) product groups 1 and 2, 3 to 7, 8 and 9, 10 and 11, 12 to 14, 15 to 17, 18 to 21,

22 and 23, 24 and 25, 47 and 48.

Article 188 1

If, twelve months after the entry into force of this Convention, one or more products not contained in the list in Article 187 but upon which the economies of one or more ACP States depend to a considerable extent are affected by sharp fluctuations, the Council of Ministers shall decide, not more than six months after the presentation of a request by the ACP State or States concerned whether or not to include the said product or products in the list, taking account of factors such as employment, deterioration of the terms of trade between the Community and the ACP State concerned, the level of development of the ACP State concerned and the conditions which characterise products originating in the Community.

Article 189

1. The system shall apply to earnings from exports

(a) by each ACP State to the Community of each product referred to in Article 187(2);

(b) by the ACP States benefiting from the derogation referred to in paragraph 2 to the other ACP States of each product referred to in Article 187(2) for which such derogation has been granted;

(c) by the ACP States benefiting from the derogation referred to in paragraph 3 to all destinations of each product referred to in Article 187(2).

2. At the request of one or more ACP States in respect of one or more of the products referred to in Article 187(l), the Council of Ministers may decide, after examination of a report established by the Commission on the basis of the relevant information provided by the requesting ACP State or States, and not more than six months after the presentation of the request, to apply the system to exports of the products in question from the said ACID State or States to other ACP States.

3. If, on the basis of relevant data for the average of the two years preceding the application year, at least 70 % of an ACP State's total export earnings from products covered by the system do not come from exports to the Community, the system shall be automatically applied to its exports of each of the products referred to in Article 187(2), whatever the destination.

In the case of the least-developed ACP States this percentage shall be 60 %.

For each year of application and for each ACP State, the Commission shall check that these criteria have been fulfilled.

Article 190

For the purposes stipulated in Article 186 and for the duration of the Financial Protocol annexed to this Convention, the amount provided for in that protocol shall be allocated to the system. It shall be managed by the Commission.

Article 191

1. The overall amount referred to in Article 190 shall be divided into a number of equal annual instalments corresponding to the number of years of application of the Financial Protocol.

2. Whatever balance remains at the end of each year of application of the Financial Protocol annexed to this Convention except the last shall be carried forward automatically to the following year.

Article 192

Interest earned by investment in the market, over the period from 1 April to 30 June, of the sum equivalent to half each annual Instalment, minus any advances and transfers paid during that period, shall be credited to the system's resources.

Interest earned by investment in the market, over the period from 1 July to 31 March, of the sum equivalent to the second half of each annual instalment, minus any advances and transfers paid during that second period, shall be credited to the system's resources

Any part of an annual instalment which has not been advanced or transformed shall continue to bear interest which will be added to the system's resources until its utilisation in the following year.

Article 193

The resources available for each year of application are made up of the sum of the following:

1. the annual instalment, plus any amounts available or less any amounts used under Article 194(l);

2. the sums carded forward under Article 191(2);

3. the amount of interest earned pursuant to Article 192;

4. amounts accruing from the application of Article 366a, paragraph 2, 1st indent

Article 194

1 . If the total amount of the transfer bases in a year of application, calculated in accordance with Article 197, and where appropriate reduced in accordance with Articles 202 to 204, exceeds the amount of resources available in the system for that year, advance use shall be made automatically, for each year except the last, of a maximum of 25 % of the following year's instalment.

2. If, after the operation referred to in paragraph 1, the amount of resources available is still less than the total amount of the transfer bases referred to in paragraph 1 for the same year of application, the amount of each transfer basis shall be reduced by 10 % of that amount.

3. If, after the reduction referred to in paragraph 2, the total amount of the transfers so calculated is less than the amount of resources available, the remainder shall be shared among all the transfers in proportion to the amounts by which each transfer was reduced.

4. If, after the reduction referred to in paragraph 2, the total amount of the transfers which may give rise to a payment exceeds the amount of available resources, the Council of Ministers shall evaluate the situation on the basis of a Commission report on the probable development of the system and shall examine the steps to be taken to remedy that situation, within the terms of this Convention.

5 Other than the reduction to in paragraph 2, there shall be no further reduction of the transfer basis as a result of a shortfall in the resources of the system if, in the case of least developed or landlocked ACP States, the transfer basis so reduced in accordance with paragraph 2 is less than ECU 2 million, or in the case of island States, is less than ECU 1 million.

Article 195

In the case of any balance remaining from the overall amount referred to in Article 190, including the interest referred to in Article 192 after the expiry of the last year of administration of the system under the Financial Protocol annexed to this Convention:

(a) the amounts resulting from the application of the percentages referred to in Article 197(3) and (4) shall be repaid to each ACID State in proportion to the deduction or deductions made in application of those provisions;

(b) if any balance remains after application of (a), the Council of Ministers shall decide on its use.

Article 196

1. The system shall apply to the earnings from an ACP State's exports of the products referred to in Article 187(2) if, during the year preceding the year of application, earnings from the export of each product to all destinations, re-exports excluded, represented at least 5 % of its total earnings from exports of all goods. The percentage shall be 4 % in the case of sisal.

2. For the least-developed, landlocked and island ACP States, the percentage referred to in paragraph 1 shall be 1 %,

3. Where, following a natural disaster, a substantial fall in production of the product in question Is recorded during the year preceding the year of application, the percentage referred to in paragraph I shall be calculated on the basis of the average export earnings from that product during the three years preceding the year of the disaster.

A substantial fall in production shall be taken to mean at least 50 % of the average production during the three years preceding the year of the disaster.

Article 197

1 In order to implement the system, a reference level and a transfer basis shall be calculated for each ACP State and for exports of each product referred to in Article 187(l) to the Community or other destinations as defined in Article 189.

2. The reference level shall be constituted by the average of export earnings during the period of the six calendar years preceding each year of application less the two years with the highest and lowest figures.

3. The transfer basis shall be constituted by the difference between the reference level and actual earnings In the calendar year of application, reduced by an amount corresponding to 4.5 % of the reference level. In the case of the least-developed ACP States, this percentage shall be 1 %.

4. The reductions referred to in paragraph 3 shall not apply in the case of the least developed or landlocked ACP States if the difference between the reference level and actual earnings Is less than ECU 2 million, or in the case of island ACP States if this difference is less than ECU 1 million.

In no case shall the reduction of the difference between the reference level and actual earnings be greater than

20 % for the least-developed and for landlocked ACP States;

30 % for other ACP States.

5. The amount of the transfer shall be the transfer basis after application, where relevant, of Articles 202 to 204 and 194.

--Article 198

1. Where an ACP State:

- begins processing a product traditionally exported in raw state, or

- begins exporting a product which it did not traditionally produce,

the system may be put into operation on the basis of a reference level calculated over the three years preceding the year of application.

2. In the case of the ACP States accorded the derogation

- referred to in Article 189(2), the transfer basis shall be calculated by adding to the

earnings from exports of the product or products concerned to the Community the

earnings from exports of those products to other ACP States;

- referred to in Article 189(3), the transfer basis shall be calculated according to the

earnings from exports of the product or products concerned to all destinations.

Article 199

1. In order to ensure that the system functions efficiently and rapidly, statistical co-operation shall be instituted between each ACID State and the Commission.

2. The ACP State shall notify the Commission of the annual statistical data specified in the joint declaration in Annex XLIII.

3. This information must be sent to the Commission not later than 31 March in the year following that of application. Failure to do so shall result in the ACID State concerned losing all transfer right In relation to the product or products in question for the relevant year of application.

Article 200

1. The system shall be implemented in respect of the products listed in Article 187 where they are:

(a) released for home use in the Community, or

(b) brought into the Community under the inward processing arrangements in order to be processed.

2. The statistics to be used to carry out the calculations referred to in Article 197 shall be those calculated and published by the Statistical Office in the European Communities.

3. In the case of ACP States accorded the derogation

(a) referred to in Article 189(2), the statistics relating to exports of the product or products in question to other ACP States shall be the volume exported by the ACP State concerned multiplied by the average unit value of imports by the Community as calculated and published by the Statistical Office of the European Communities or, failing those, the statistics of the ACID State concerned;

(b) referred to in Article 189(3), the statistics relating to exports of the product or products in question to all destinations shall be the volume exported by the ACP State concerned multiplied by the average unit value if imports by the Community as calculated and published by the Statistical Office of the European Communities or, failing those, the statistics of the ACID State concerned.

4. Should there be significant differences between the statistics of the Statistical Office of the European Communities and those of the ACP States concerned, consultations shall be held between that ACP State and the Commission.

Article 201

No transfer shall take place if it emerges from the examination of the dossier to be undertaken by the Commission in conjunction with the ACP State concerned that the fall in earnings from exports to the Community is the result of measures or policies involving discrimination detrimental to the Community.

Article 202

The transfer basis shall be reduced in due proportion to the fall in earnings from exports to the Community of the product in question if, after joint examination by the Commission and the ACID State concerned, it appears that such a drop in the consequence of trade-policy measures taken by the ACID State or through its economic operators with the aim of restricting supply; such reduction may entail the annulment of the transfer basis.

Article 203

1. Should the examinatin of:

(a) marketed produciton in the application year by comparyson with the reference period,

(b) total exports as a share of marketed production over the same period,

(d) the sum of the figures referred to in (b) and (c)

reveal a large decline, consultations shall be held between the Commission and that ACP State to determine whether the transfer basis is to be maintained or reduced, and if reduced, to what extent.

2. For purpose of applying paragraph 1, a decline shall be deemed to be large if it is.

Article 204

in no case shall any transfer basis for a given product be greater than the corresponding

amount calculated on the basis of the exports of the ACP State concerned to all destinations,

Article 206

1 . The Commission shall adopt a transfer decision on completion of the examination carried out in conjunction with the ACID State; this examination shall bear on the statistical data and the calculation of the transfer basis which may give rise to a payment.

2. For each transfer a transfer agreement shall be concluded between the Commission and the ACP Stat e concerned.

ArUcle 206

1. The ACP State concerned and the Commission shall take such steps as are required to ensure that advances and transfers are made rapidly in accordance with the procedures laid down in Article 207,

2. Article 205 shall be applicable by analogy to advances.

Article 207

1. Provided that the ACP State concerned has sent all the necessary statistical information by 31 March in the year following that of application, in accordance with Article 199(3), the Commission shall notify each ACP State not later than the 30 April following of its situation in respect of each of the products listed in Article 187(2) exported by that State during that year.

2. The ACID State concerned and the Commission shall take all possible steps to ensure that the procedures referred to in Articles 201, 202 and 203 are concluded not later than 30 June of the year in question. After this period has elapsed, the Commission shall notify the ACID States of the amount of the transfer resulting from appraisal of the dossier. ,

3. Without prejudice to Article 206 and not later than 31 July of the year in question the Commission shall take decisions concerning all transfers, except for those where consultations have not been concluded.

4. On 30 September of the year in question the Commission shall report to the Committee of Ambassadors on the progress made with the processing of all transfers.

Article 208

1 . In the event of a disagreement between an ACP State and the Commission over the results of the examinations or consultations referred to in Articles 201 to 203 and 199(3), the ACP State concerned shall have the right to initiate, without prejudice to possible resource to Article 352, a good offices procedure.

2. The good offices procedure shall be carried out by an expert appointed by agreement between the Commission and the ACP State concerned.

3. Within two months of this appointment, the conclusions of the procedure shall be communicated to the ACP State concerned and to the Commission, which shall take account of them in making the transfer decision.

The ACP State concerned and the Commission shall take all possible steps to ensure that the decision is taken not later than the 31 October following receipt of the request.

4. The procedure shall not result in a delay in the processing of any other transfers for the same year of application.

Article 209

1 .Where application of Articles 196 and 197 gives rise to a transfer basis, the ACP State

concerned shall, in the month following receipt of the notification referred to in

Article 207(l), send the Commission a substantial analysis of the sector recording the

loss of earnings, the causes of the loss, the policies pursued by the authorities and the

projects, programmes and operations to which the recipient State undertakes to allocate

the resources in accordance with the objectives set out in Article 186(2).

2. Should the recipient ACP State intend, as provided for in Article 196(2), to allocate the funds to a sector other than that where the loss has occurred, it shall communicate to the Commission the reasons for this allocation.

3. Projects, programmes or operations to which the recipient ACP State undertakes to allocate the transferred resources shall be examined jointly by the Commission and the ACP State concerned,

4. Where there is an adjuxtment progra;;e in place, including operations designed to restructure production and export activities, or to achieve diversification, the resources will be used in conformity with these efforts and support any consistent reform policy.

Article 210

When agreement is reached on the use of resources, the ACP State and the Commission shall sign a protocol setting up,a framework of mutual obligations stipulating how the funds are to be used at the various stages of the operations agreed on.

Article 211

1. The transfer shall be made in ECV upon signature of the transfer agreement referred to

in Article 205(2) into an interest-bearing account in a :e;ber State of Community, for which presentation of two signatures, of the ACP State and the Commission, shall be equired. Any interest shall be credited to this account.

2. The funds in the account referred to in paragraph 1 shall be mobilised as the operations specified in the protocol on the use of the funds are implemented, on condition that the provisions of Article 212 have been complied with.

3. The procedures laid down in paragraph 2 shall be applicable by analogy to any counterpart funds generated.

Article 212

1 . Within twelve months of the mobilisation of resources the recipient ACID state shall send the Commission a report on the use which it has made of the funds transferred.

2. Should the report referred to in paragraph 1 not be presented. within the time-limit set or should it call for comment the Commission shall send a request for substantiation to the ACP State concerned, which shall be obliged to reply thereto within two months.

3. Once the deadline referred to in paragraph 2 has expired, the Commission may, having referred the matter to the Council of Ministers and having duly informed the ACP State concerned, three months after completion of this procedure, suspend application of decisions on subsequent transfers until that State has provided the required information.

The ACP State concerned shall be notified of this measure immediately.

ANNEXES TO THE CONVENTION

ANNEX XLl

Stabex

Commission declaration on the management of the system

For the purpose of ensuring appropilate transparency in the implementation of the system, the Commission confirms that, In support of the report referred to in Article 207(4), it will provide the ACID Committee of Ambassadors with all additional relevant information that may be requested.

ANNEX XLIl

Stabex

Joint declaration on ACP exports to the OCT

For the application of Article 189(l)(b) and (2), ACP exports to the OCT shall be taken into consideration.

ANNEX XLIII

Stabex

Joint declaration on statistical requirements

(Article 199(2))

1. For the first year of application, the ACP States shall notify the Commission of:

(a) the value of their exports of all goods to all destinations for the year preceding the year of application;

(b) the volume of marketed production of the product or products in question during the reference period and in the year of application;

(c) the volume and the value of exports of the product or products in question to all destinations in the reference period and in the year of application. The ACP States to which Article 189(2) is applicable shall also notify the Commission of the volume of their exports of the product or products in question to other ACP States during the reference period and in the year of application;

(d) the volume and the value of exports of the product or products in question to the Community during the reference period and in the year of application.

2. In subsequent years of administration of the system, the statistical requirements referred to above shall refer only to the year not covered by the information provided in the previous year.

ANNEX XLIV

Stabex

Joint declaration on ACP-EC consultations in the event of the establishment of a system

for the stabilisation of export eamings at world /eve/.

The Contracting Parties agree to concert action in the context of the Convention in order to avoid any double compensation in the event of a world system for the stabilisation of export earnings being established during the period of application of the-Convention.

ANNEX XLV

Stabex

Joint declaration on Article 189(l)(b)

The Contracting Parties agree that the decisions taken pursuant to Article 27 of the second ACP-EC Convention in favour of coconuts and coconut oil as regards exports from Dominica and in favour of cowpeas (Vigna unguiculata) as regards exports from Niger shall continue to apply.

ANNAX XLVI

Pursuant too the decision of the ACP-EC Council of Ministers of 21 May 1992 in Kingston, Jamaica, and with a view to avoiding difficulties in the rapid inception and implementations of the Framwork of Mutual Obligations, the Contracting Parties agree to use all means including information seminars, appropriate technical assistance, etc within the framework of Development Finance Cooperation.

ANNEX XLVII

DELETED

ANNEX XILVIIIII

Stabex

Community declaration on Article 188

The Community hereby takes note of the requests made by the ACP States during the negotiations concerning cottonseed oil, chamois leather and live bovine animals, sheep and goats.

It declares its readiness to examine these requests in the framework of the provisions referred to in Article 188, as soon as substantial supporting documents are provided.