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Letter from the President to the Department of State regarding the Protocol for the Continuation in Force of the International Coffee Agreement of 1968 as Extended
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7338508
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Letter from the President to the Department of State regarding the Protocol for the Continuation in Force of the International Coffee Agreement of 1968 as Extended
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White House Press Releases (Ford Administration)
Press Releases
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26
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1975-03-26
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1975
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Digitized from Box 9 of the White House Press Releases at the Gerald R. Ford Presidential Library
S/S 7505789
DEPARTMENT OF STATE
WASHINGTON
March 26, 1975
The President:
I have the honor to submit to you, with a view to
its submission to the Senate for its advice and consent
to acceptance, the Protocol for the Continuation in Force
of the International Coffee Agreement of 1968 as Extended,
which Protocol was adopted by the International Coffee
Council on September 26, 1974 and signed by the United
States on January 15, 1975. I recommend that the Protocol
be transmitted to the Senate for advice and consent to
acceptance.
The purpose of the Protocol is to continue in force
until September 30, 1976 (and under certain conditions
until September 30, 1977) the International Coffee Agree-
ment of 1968 as Extended. The United States has parti-
cipated in International Coffee Agreements since 1962.
Both the 1962 International Coffee Agreement and its
successor, the 1968 International Coffee Agreement, were
designed to deal with persistent overproduction of coffee
and accumulated surpluses which depressed prices and the
export earnings of a large number of developing countries
in Latin America and Africa. Through a system of export
quotas and other measures, these Agreements made possible
the reduction of surplus stocks without a disastrous
depression of prices to levels which would have been
prejudicial to the interests of both producing and con-
suming countries. At the same time, the Agreements
The President,
The White House.
- 2 -
contributed to the achievement of better balance between
world coffee production and consumption through the 1960's.
Severe frosts in 1969 and 1972 sharply reduced
Brazilian coffee harvests. This resulted in world production
being below consumption in the early 1970's and consequently
stocks were reduced, too. These developments, exacerbated
by other factors such as international monetary adjustments,
resulted in sharply higher coffee prices. In this situation,
the United States and other importing countries questioned
the need to continue restricting the flow of coffee to the
market and the quota system was suspended in December 1972.
Before the 1968 Agreement expired on September 30,
1973, member countries decided to extend it for a period
of two years with virtually all economic provisions deleted.
This decision was reached after it had become clear that
producers and consumers were unable to reach agreement on
provisions to adapt the 1968 Agreement to the changed
market situation. Nonetheless, both producers and consu-
mers did agree that the International Coffee Organization
should be preserved as a forum for discussion and eventual
negotiation of a new Coffee Agreement containing economic
provisions and as a source of statistical information and
technical studies on developments in world coffee markets.
Forty-two producing countries and seventeen consuming
countries are members of the Extended Agreement.
One of the principal factors leading to the
suspension of economic provisions in 1972 and the extension
of the 1968 Agreement without them was a side agreement
announced by major producers in 1972 to withhold coffee
from the market, leaving export quotas underfilled. The
United States and other consuming countries objected
- 3 -
that such one sided action was incompatible with the spirit
and objectives of producer/consumer cooperation. Since
1972, producers on several occasions have expressed their
intention to restrain or control the supply of coffee to
world markets. However, the statistical data now available
indicates that, in fact, producers did not restrict exports.
On the contrary, world coffee exports increased from 53.3
million bags in 1971, to 57.7 million bags in 1972 and to
61.6 million bags in 1973. Nonetheless, the absence of a
producer and consumer agreement on supply objectives led
to unsettled market conditions and unnecessary tensions
between the producing and consuming countries.
Coffee prices continued generally strong through 1973
and rose even higher in early 1974 as the anticipation of a
longshoremen's strike in the United States and possible
frost in Brazil spurred imports. By mid-year, neither of
these fears had materialized and it appeared that world
production for the 1974/75 crop would be the highest since
the 1965/66 crop year. As a result, trade fell off, coffee
inventories in producing countries have been replenished
and a more normal equilibrium between world supply and
demand is in prospect. Reflecting this outlook, coffee
prices have eased considerably from their mid-1974 highs.
Although the International Coffee Agreement of 1968
as Extended contained provisions to encourage negotiations
for a new, more effective coffee agreement, such negotia-
tions did not get under way in 1973 or 1974. Unsettled
market conditions, rising production costs, and a generally
uncertain commodity outlook tended to make member countries
cautious and non-committal with respect to the types of
economic provisions which might be required in the future.
- 4 -
In September 1974, the International Coffee Council
adopted Resolution Number 273 calling for the further one
year extension of the International Coffee Agreement as
Extended and providing for up to an additional 12 month
extension if the conclusion of a new Coffee Agreement
had progressed to the degree specified. It also approved
Resolution Number 274 establishing a Working Group on the
Negotiation of a New Agreement which began its studies in
January 1975. Together, these Resolutions should facilitate
consideration of economic provisions for a new Coffee Agree-
ment and, if agreement is reached, should provide the time
required for the completion of the necessary constitutional
procedures for ratification and entry into force.
It is believed that the continuation of the present
Agreement will promote several United States foreign policy
interests. By responding positively to the strongly
expressed desire of the producing countries of this Hemi-
sphere and the developing world generally to preserve the
institutional cooperation on coffee developed over the past
twelve years, the United States acknowledges and strengthens
interdependence with the producing countries and reaffirms
the mutual commitment to constructive solutions to problems.
United States participation in negotiations for a new Coffee
Agreement will demonstrate our continued concern for the
economic well-being of the producing countries during
periods of excess supply and permit us to seek new, flexible
arrangements to give better protection to the interests of
consumers in periods of tight supply. Success in this
endeavor will benefit both producing and consuming countries
and reinforce the spirit of cooperation which has been the
hallmark of the International Coffee Agreements.
- 5 -
/Treasury,
The Departments of Agriculture, and Commerce, concur in
the submission of this Protocol to the Senate for its
advice and consent to acceptance by the United States. It
is hoped that the Senate will give prompt and favorable
consideration to the Protocol.
Respectfully
Signate