282. Information Memorandum From the Assistant Secretary of State for Economic Affairs (Solomon) to the Under Secretary of State for Economic Affairs (Mann)1
SUJBECT
- Pressure for Increased Quotas Expected at Coffee Council Meetings
In contrast to past Coffee Council meetings where controversies were mostly between producing and consuming countries, the August 2–20 session will center around several producing countries’ demands for larger basic export quotas. Since Brazil and Colombia have the votes to veto any requests, we anticipate that many countries will be approaching us to intercede in their behalf with Brazil.
We have made clear to everyone that, as the President stated when he signed the implementing legislation on May 24, we intended to use the authority granted in the Act to assure that the purpose of the Agreement is achieved. This means that we will be agreeing to a realistic level for annual quotas which will help stabilize prices, that we will be ready to impose restrictions on imports from non-Members, and that we will support other measures to discourage violations of the Agreement and assure compliance with its terms.
Several countries are particularly unhappy with the basic export quotas they negotiated for themselves in 1962 and will be pressing us to [Page 709] assist them in obtaining larger quotas. We intend to take the line that shares of the market must be worked out among the producing countries and that we cannot usefully intervene. We expect the most pressure to be generated by the Ivory Coast, El Salvador, Guatemala, Dominican Republic, Trinidad-Tobago, Honduras and Peru. These countries have real internal pressures for larger quotas, but Brazil fears that if any request is honored, others will also have to be granted; Brazil is not prepared to countenance a continuation of other countries eroding her share of the market.
We hope that Brazil’s new initiative to set up a Coffee Diversification Fund, which we will promptly support, will help to deflect some of the pressure for larger quotas. United States interest in the Fund, buttressed by the IBRD’s favorable stand, will introduce a new element which may make it possible for many of the delegations to explain at home why they should be content with their existing quotas.
Brazil’s representatives have indicated they are prepared to withstand the pressure from other exporters for increases in quotas. Should it, however, develop that the pressure for larger quotas becomes too great to contain and the future of the Agreement is imperiled, Ed Fried might find at the last minute that he would want to urge Brazil to make some compromises. We have some ideas we could bring out if necessary, but we felt you should be informed at this time that the United States will be subject to considerable pressure to assist other countries at the expense of Brazil and we will be responding negatively to these pressures.
- Source: Johnson Library, Solomon Papers, Coffee, Box 1. Confidential. Drafted by Jack B. Button (E/ICD/TRP) and cleared by William Kling (AF/AFI), Joseph A. Silberstein (ARA/ECP), George R. Jacobs (OR/ICD), and Edward R. Fried (E/OR). The date is the drafting date.↩