Explanatory Memorandum to COM(2021)537 - EU position in the International Sugar Council with respect to amending the International Sugar Agreement, 1992 - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2021)537 - EU position in the International Sugar Council with respect to amending the International Sugar Agreement, 1992. |
|---|---|
| source | COM(2021)537  |
| date | 08-09-2021 |
1. Subject matter of the proposal
This proposal concerns a decision establishing the position to be taken on the Union's behalf in the International Sugar Council ('ISC') in connection with the envisaged special vote to be conducted in accordance with Article 44 i of the International Sugar Agreement (‘ISA’) to recommend to the Members of the International Sugar Organisation ('ISO') to amend the ISA in accordance with the outcome of the negotiations for its partial review initiated in July 2019.
2. Context of the proposal
2.1.The International Sugar Agreement, 1992
The ISA, 1992 aims to ensure enhanced international cooperation in connection with world sugar matters and related issues, to provide a forum for intergovernmental consultations on sugar and on ways to improve the world sugar economy, to facilitate trade by collecting and providing information on the world sugar market and other sweeteners, and to encourage increased demand for sugar, particularly for non-traditional uses.
The ISA entered into force on 1 January 1993.
The Union is a party to the ISA 1 . The ISA was concluded by Council Decision 92/580/EEC and entered into force on 1 January 1993. It was concluded for a period of three years until 31 December 1995 and since then, has been regularly extended for further periods of two years, as foreseen by its Article 45. The ISA was last extended in July 2019 2 and remains in force until 31 December 2021. The Commission has prepared a proposal for a Council Decision to further extend the ISA until December 2023. The adoption procedure concerning this proposal is on-going.
It is in the Union's interests to participate in an international agreement on sugar, considering the importance of that sector for a number of Member States and for the economy of the Union’s sugar sector.
2.2.The International Sugar Council
The ISC is the responsible body for the performance of all functions necessary to carry out the provisions of the ISA. It adopts rules and regulations including rules of procedure for the ISC and its committees and the financial and staff regulations of the ISO. The ISC keeps the necessary records and publishes an annual report and other information if deemed appropriate.
Members to the ISA hold 2000 votes in total. Each Member to the ISA holds a specified number of votes, which is annually adjusted following predefined criteria in the ISA. All decisions of the Council shall be taken in principle by consensus unless stipulated otherwise in the ISA. In the absence of consensus, decisions shall be made by simple majority vote unless the ISA provides for a special vote.
2.3.The envisaged act of the International Sugar Council
In 2017, the Commission received the authorisation from the Council 3 , to enter into negotiations with the other parties to the ISA, within the ISC, with a view to modernising the ISA, in particular as regards the discrepancies between the number of votes and financial contributions of Members of the ISO on the one hand, and their relative position in the global sugar market on the other. That authorisation was extended in 2019 and remains valid until 31 December 2021 4 .
In its 55th session, on 19 July 2019, the ISC decided to open negotiations under UNCTAD guidance. These negotiations concerned a partial review of the ISA, focusing on the following three areas: the administrative budget and contributions of Members under Article 25; the broadening of the objectives, studies, evaluations and the research activities to allow for the inclusion of other sugar related products (in particular, bioethanol) in the scope of Articles 1, 32, 33 and 34; and the rules for the appointment of the Executive Director under Article 23.
(a)The administrative budget and contributions of Members under Article 25
Based on the negotiation authorisation from the Council, the Commission presented concrete proposals for the amendment of Article 25, which governs the adoption of the administrative budget and contributions of Members. This proposal was triggered by the fact that under current rules on financial contributions to the ISO, the Union’s share of the financial contribution has remained practically the same since 1992, although the global sugar market, and in particular the Union’s relative position in it, has substantially changed since then. As a result, the Union has assumed a disproportionately large share of the budgetary costs 5 and responsibility in the ISO in recent years. To address the situation the Commission initiated negotiations on a revised calculation method and a more effective updating adjustment mechanism. The proposed formula equally weighs the relevant indicators: production, consumption, exports, imports and ability to pay factor, and takes into account structural changes over time with annual adjustment mechanism based on five-year moving averages. In order to align the current distribution of votes with today's realities of the world sugar market, a transition mechanism is included, which limits the annual change in the number of votes to 15% in the first five years and 20% for the remaining part of the transition period. The transition period cannot exceed ten years. The Commission, on behalf of the Union and in line with the negotiation authorisation granted, supported the amendment to Article 25 of the ISA resulting from the negotiations.
(b)The broadening of the objectives, studies, evaluations and the research activities to allow for the inclusion of other sugar related products in the scope of Articles 1, 32, 33 and 34
During the negotiations for the partial review of the ISA, other Members of the ISA proposed amendments concerning Articles 1 (objectives), 32 (information and studies), 33 (market evaluations, consumption and statistics) and 34 (research and development). The changes proposed through these amendments involve:
inclusion of bioethanol the in overall objectives of the ISA (Article 1, Chapter I).
a broader view on “information and studies” (Article 32, Chapter IX), “market evaluations, consumption and statistics” (Article 33, Chapter IX), “research and development” (Article 34, Chapter X), essentially to allow for the inclusion of other sugar related products (in particular, bioethanol) in such activities.
The Commission, on behalf of the EU and in line with the negotiation authorisation granted, supported these amendments, as the overall purpose of the ISA as outlined in Article 1 of the ISA will not change with the inclusion of bioethanol.
The amendments under points a) and b) above were discussed at length and a consensus on their final formulation was reached by the ISC during its 57th session held in November 2020.
(c)The rules for the appointment of the Executive Director under Article 23
In December 2020, Brazil proposed an amendment to Article 23 of the ISA concerning the rules for the appointment of the Executive Director. The main change brought by this amendment is the limitation of the number of mandates that an Executive Director could serve to two. Currently, both chapter IV of the ISA and Chapter IX of its related Administrative rules are silent on all these aspects. Although submitted after the agreed deadline of 31 January 2020, the EU supported the inclusion of this amendment under the current partial review of the ISA as it aims to improve the International Sugar Organisation’s activities and contributes to the overall objective of the modernisation of the ISO. An agreement on the final formulation of this amendment as well its inclusion in the current partial review of the ISA was reached by the ISC during its 58th session in June 2021.
All of the above amendments agreed upon during the negotiations for the partial review of the ISA should be adopted in accordance with the procedure set out in Article 44 of the ISA in order to become effective: “The Council may, by special vote, recommend to the Members an amendment of this Agreement. The Council may fix a time after which each Member shall notify the depositary of its acceptance of the amendment. The amendment shall become effective 100 days after the depositary has received notifications of acceptance from Members holding at least two thirds of the total votes of all Members under Article 11 as determined under Article 25, or on such later date as the Council may have determined by special vote. The Council may fix a time within which each Member shall notify the depositary of its acceptance of the amendment and, if the amendment has not become effective by such time, it shall be considered withdrawn. The Council shall provide the depositary with the information necessary to determine whether the notifications of acceptance received are sufficient to make the amendment effective.”
Pursuant to the above Article, during its next session planned for 26 November 2021, the ISC will:
·Recommend to Members to amend the ISA, either by consensus or, if consensus not reached, by special vote.
·Approve the timetable for the implementation of the amendment either by consensus or, if consensus not reached, by special vote. The ISO secretariat has proposed a timetable for the implementation of the amendment procedure under Article 44 and the subsequent entry into force of the amendments to the Articles of the ISA resulting from the negotiations for the partial review of the ISA. This proposed timetable was presented to the ISC during its 58th session on 18 June 2021. During the session, no Member has raised any objections in relation to the proposed implementation timetable.
The main milestones of the proposed implementation timetable mentioned above are:
·Members will notify the depositary the notification of acceptance of the amendments by 30 June 2023. This deadline is proposed in view of allowing sufficient time for Member to carry out all the necessary constitutional procedure for the approval of the amendment of the ISA.
·If the depositary has received notification of acceptance from Members holding at least two thirds of the total votes, the amendments become effective on 31 October 2023. This is approximately 123 days after the date set for the receipt of notification of acceptance (i.e. 30 June 2023). Member that did not send notification of acceptance by this date shall cease to be party to the ISA.
·If the above situation occurs, Members will approve the revised distribution of votes, according to the new calculation formula in the amended Article 25 of the ISA, and the financial contribution for 20245 in its second session of the ISC for 2023, to be held in the last week of November or the first week of December 2023.
·The amended ISA will enter into force on 1 January 2024. This date coincides with the expiration of the latest ISA extension covering the period 1 January 2022 to 31 December 2023 (to be approved by ISC its session on 26 November 2021 6 ).
·If the depositary has received notifications of acceptance from Members holding less than two thirds of the total votes by 31 October 2023, the amendment does not become effective and the ISA, 1992 remains unchanged.
The above timetable is in line with the provisions of Article 44 of the ISA.
3. Position to be taken on the Union's behalf
The purpose of this decision is to seek Council’s authorisation to the Commission to vote, on behalf of the Union, during the 59 session of the ISC to be held on 26 November 2021, in favour of recommending to the Members of the ISO to amend the ISA in accordance with the outcome of the negotiations for its partial review. The draft amended ISA includes changes in relation to Articles 1, 25, 23, 32, 33 and 34 resulting from the negotiation for the partial review of the ISA (for details, see sub-points a, b and c under point 2.3 above).
Reforming the ISO to further align it with the practices the Union fosters in other international commodity bodies, as well as with developments in the global sugar market since 1992, is clearly in the interest of the Union. This reform would lead to transparency concerning the Members' responsibilities in voting as well as their financial contributions. The establishment of clear rules regarding the appointment of the Executive Director and the limitation of the number of mandates that he or she may serve is in line with the Union’s aim of modernising the ISA, while the formal inclusion of ethanol in the objectives and work programme of the ISO aligns its content with what is already existing practice.
In addition, the purpose of this decision is to seek the Council’s authorisation for the Commission to vote, on behalf of the Union, during the 59th session of the ISC to be held on 26 November 2021, in favour of an implementation timetable that ensures that the different milestones linked to the amendment to the ISA are clearly laid out and that the entry into force of the amendment is not later than 1 January 2024.
4. Legal basis
4.1.Procedural legal basis
Contents
Article 218 i of the Treaty on the Functioning of the European Union (TFEU) provides for decisions establishing ‘the positions to be adopted on the Union’s behalf in a body set up by an agreement, when that body is called upon to adopt acts having legal effects, with the exception of acts supplementing or amending the institutional framework of the agreement.’
The concept of ‘acts having legal effects’ includes acts that have legal effects by virtue of the rules of international law governing the body in question. It also includes instruments that do not have a binding effect under international law, but that are ‘capable of decisively influencing the content of the legislation adopted by the EU legislature’ 7 .
The envisaged act of the International Sugar Council will amend the ISA, which is an international agreement binding the Union. The envisaged act has therefore legal effects.
The envisaged act does not supplement or amend the institutional framework of the ISA.
Therefore, the procedural legal basis for the proposed decision is Article 218 i TFEU.
4.2.Substantive legal basis
The substantive legal basis for a decision under Article 218 i TFEU depends primarily on the objective and content of the envisaged act in respect of which a position is taken on the Union's behalf. If the envisaged act pursues two aims or has two components and if one of those aims or components is identifiable as the main one, whereas the other is merely incidental, the decision under Article 218 i TFEU must be founded on a single substantive legal basis, namely that required by the main or predominant aim or component.
The main objective and content of the envisaged act relate to common commercial policy (trade in agricultural products).
Therefore, the substantive legal basis of the proposed decision is Article 207 TFEU.
4.3.Conclusion
The legal basis of the proposed decision should be Article 207 TFEU, in conjunction with Article 218 i TFEU.
5. Publication of the envisaged act
As the act of the International Sugar Council will amend the ISA, it is appropriate to publish it in the Official Journal of the European Union after its adoption.