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Goal of stability proves elusive in olive oil accord

The first International Agreement on Olive Oil and Table Olives was signed in 1959. The International Olive Oil Council is responsible for the application of the Agreement, the objectives of which are to issue information on demand and supply, provide member countries with technical assistance aimed at improving production, manage promotion funds, and, in accordance with the Codex Alimentarius Commission, standardize technical specifications.

The negotiation of international agreements for staple products is usually an extremely laborious procedure, full of obstacles, and very trying on the patience and good intentions of the parties concerned. Despite the active participation of international bodies which, for decades, have endeavoured to promote international trade and stabilize the prices of raw materials, the results are disappointing. The parties concerned rarely succeed in overcoming their differences, and discussions often come to nothing.

These observations are confirmed in a report published by the UNCTAD Secretariat in 1985. The report acknowledges that staple-product agreements have tailed in a number of areas and stresses that in developing countries virtually no progress has been made toward such long-term objectives as increasing export revenues, providing stiffer competition, and setting up systems to cope with slumps in demand.

Therefore, the fact that the International Agreement on Olive Oil has been in effect for so long is somewhat surprising. Moreover, the Fourth, and current, Agreement, signed in 1986, was negotiated in a very short time, as opposed to, say, the Cocoa Agreement, which was signed in extremis in July 1986, after five attempts at negotiations.

The difficulty is due mainly to the absence of economic clauses and to the fact that olive oil is produced and consumed in a limited geographic area. It has long been the conviction of the parties concerned that quota restrictions and price regulation on the international market make it difficult to solve the problems, particularly since olive harvests are extremely variable: a good harvest is often followed by one or more years of moderate or poor harvests; and in some cases - roughly once every five years - there is either an exceptionally good or an exceptionally bad harvest. These fluctuations affect oil prices, revenues, and trade considerably. It is in the interest of producer and consumer countries to keep well informed on market trends so they can act accordingly.

Recently, neo-liberal economists have questioned both the economic clauses contained in the agreements and the concept of market stabilization, and have advised compensatory mechanisms (STABEX, the IMF compensatory facilities). Some of them, including Michel Rocard, the former French Minister of Agriculture, consider that measures should be taken to increase the supply and regulate production, and that temporary aid should be given to countries where export revenues have witnessed a sharp drop.

The salient feature of the olive oil market is that it is geographically limited to the Mediterranean region, where most of the production is also consumed. The parties to the Agreement (Algeria, EEC-in its members' names, Egypt, Libya, Morocco, Tunisia, Turkey, Yugoslavia) provide almost 95 per cent of the world's olive oil production. Moreover, the EEC alone produces 83 per cent of the olive oil coming from the member countries of the International Olive Oil Council. Since January 1986 (when Spain and Portugal entered the EEC), the world's olive oil production has been even more concentrated in a single economically integrated regional entity. This is reflected in the share of member countries in the Council's budget, which is based on the net average annual production and imports of olive oil and table olives during recent campaigns. The EEC, signatory to the present Agreement on behalf of its 12 member countries, is the principal producer and importer, covering approximately three-quarters of the Council's financial resources and promotion funds.

The volume of exports and imports among Council member countries is minimal compared with trade within the Community. The risk of imbalance between the EEC and the other parties to the Agreement therefore does exist and, according to Alister MacIntyre, Deputy Secretary General of UNCTAD, efforts must be made to harmonize the interests of all parties to the Agreement.

The current International Olive Oil Agreement has succeeded in adapting to the changes in international olive oil economics by taking into account the geographic and economic change that has taken place within the EEC following the entry of Spain and Portugal. The title, "The 1986 International Agreement on Olive Oil and Table Olives", reflects the extension of the area in question, since it contains provisions on olive products other than oil. As stressed by Mohammed Tazi (Morocco), who presided over the last United Nations conference on olive oil, this is a "dynamic and evolutive" agreement.

Marie Annie Bousquet