Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

347. Circular Telegram From the Department of State to Certain Posts¹

Washington, July 7, 1967, 10:04 p.m.

3254. Subject: Cocoa Agreement. Ref: A—State Circular 215393; B—State Circular 3253.²

1. As reported ref A, we recently held informal discussions with Ghana at her request to see if we could reach consensus on main elements of international cocoa agreement. Both countries viewed talks as possible means of avoiding the fruitless multilateral negotiations of the past and enhancing prospects for agreement.

2. We have completed consultation and mutually agree we could support main elements of agreement along lines set forth in reference B. These provide for a buffer stock mechanism which can effectively protect against sharp falls in cocoa prices without disturbing normal channels of trade, without direct intervention of buffer stock on spot and futures markets, and without providing incentive to over-production all of which consuming countries have consistently demanded.

3. On basis agreement of how buffer mechanism would work, U.S. was able to express willingness to accept minimum price of 20 cents and intervention price of 21 cents. It was understood by both parties that all elements were agreed to as part of one interrelated package.

4. It is understood that Ghana will now attempt to get agreement of other producing countries to this understanding. We will await report her efforts. If Ghana successful in gaining agreement of producers, believe solid basis would exist for Prebisch to reconvene cocoa consultative group along lines reftel.

5. Please pass text of our understanding to pertinent host country officials with above explanation and pointing to our belief that understanding represents sound basis for negotiation of agreement. We are also calling in representatives addressee countries who have expressed interest to give them memorandum of understanding.

6. Please report reaction.

7. Geneva please pass text of understanding to UNCTAD.

Rusk

1. Source: Department of State, Central Files, INCO–COCOA 4. Limited Official Use. Drafted by Fried and Abramowitz; cleared by Kling, Liane Atlas, and Bashkin (Commerce); and approved by Assistant Secretary Solomon. Sent to Bern, Bonn, London, Paris, The Hague, and Geneva and repeated to USUN.
2. See Document 346 and footnote 2 thereto.