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

348. Telegram From the Mission in Geneva to the Department of State¹

Geneva, August 26, 1967, 1618Z.

628. Subject: Cocoa Meeting. Ref: Geneva 615.²

1. US opened meeting by suggesting US-Ghana agreement be discussed paragraph by paragraph for clarification instead of taking questions at random. Chairman by pre-arrangement quickly supported idea. This brought protest from Cameroon, Nigeria, Brazil, and France (Janton). Latter said he didn’t come here only to take note of any US-Ghana paper. Cameroon and Nigeria said they didn’t agree that US-Ghana paper was reason for the meeting. Ghana and UK suggested that paper be circulated as conference document. This was agreed over strong opposition and immediately French, Spanish and Russian texts were demanded. The discussion however brought to light a position paper agreed to by the producers alliance (pouched Dept.)³ and it was decided this too would be circulated.

2. The Chairman then went through the US-Ghana paper section by section and by close of day all sections except tariff preferences and standby nature of agreement were discussed. Ivory Coast speaking for alliance led off each discussion and gave producers view. Following differences emerged:

3. Mechanism. Producers want buffer stock to have authority to intervene directly in market in exceptional circumstances when Council approves by special vote. Brazil does not agree to mandatory sales to buffer stock. A new concept was introduced—if one or more countries share of the buffer stock was exhausted, producers would permit countries to make arrangements among themselves to utilize unused capacity allocated to other countries.

4. Voting. There was strong opposition from both producer and consumer (France, Swiss and Netherlands) to US or Ghana having veto power with Coffee Agreement cited as precedent against. Fact that EEC’s total votes would give them veto power did not seem objectionable. Suggestions were made for various possible compromises and Secretariat asked to develop voting formula for consideration next meeting.

5. Price range. Producers want price range of 10 cents. Nigeria would settle for 8 cents if they could get decent minimum price. UK, Germans, Swiss want 8 cents. France wants more than one cent spread between minimum price and intervention price. Janton suggested minimum 21 cents, maximum 30 cents, intervention prices at 23 and 28 cents.

6. Minimum price. Producers want basis for price negotiation to be 20 to 22 cents. Brazil wants to start from 22 cents. Ivory Coast pointed out Ghana had agreed to 20–22 cents, then went on to say as member alliance UK suggested 19–21 cents at New York, EEC now willing to negotiate in range of 19.5 to 21.5 cents. When Chairman asked if this true, Germans as EEC spokesman said there is no formal proposal of EEC but consultations still going on. Fact is that EEC has withdrawn its offer of this range when it did not prove acceptable to AOT’s. (See paragraph 8 of Geneva’s 615)⁴ It is difficult interpret what this actually means. It seems impossible to believe that at this stage producers want to keep open the possibility of 22 cent minimum.

7. Producers accepted US/Ghana view as to pre-financing buffer stock without comment other than hope that sales levy would be reduced or eliminated as soon as possible. Discussion conducted in terms one-cent levy without apparent objection or reservation.

8. Chairman noted that US position on price was on table and asked for other consumers views. When no one would speak he said he was stopping price discussion and would talk privately to each head of delegation on Monday. Issue of tariff preferences will be discussed on Monday and Russians have indicated they wish make statement.

9. In private discussions with African dels (Ghana, Nigeria, Ivory Coast) we keep emphasizing that US-Ghana agreement came about as result genuine effort US authorities to help producers by obtaining cocoa agreement to stabilize export earnings. We also make clear we came here on the understanding that African producers had accepted these principles as basis for agreement. Africans responded with reassurance that in the end Ghana/US principles would be adopted but that it is necessary allow few days of debate to avoid appearance they are rubber-stamping agreement. It is difficult reconcile these assurances with formal positions they are taking in meetings and in writing as outlined above.

10. Chairman asked trade advisers to meet Saturday⁵ morning to deal with problem of buffer stock buying cocoa at minimum price with appropriate differentials for various growths and grades. It is now becoming apparent that Ghana believes it will receive 20 cents minimum price plus market differentials that could bring its total return to 22–23 cents and that buffer stock also pays freight costs. There are also indications that Ghana is trying to convince other producers to accept 20 cent minimum on grounds their actual return will be substantially more.

Tubby

1. Source: Department of State, Central Files, INCO–COCOA 3. Limited Official Use. Repeated to Accra, Abidjan, Bonn, The Hague, Lagos, London for Jacobs, Paris, Rio de Janeiro, Rome, Yaounde, and USUN.
2. Telegram 615 from Geneva, August 25, summarized the proceedings of the first meeting of the Cocoa Consultative Group. (Ibid.)
3. “Positions Adopted on Certain Issues To Serve as Basis for Discussions on UNCTAD’s Consultative Meeting on the Draft International Cocoa Agreement” (TD/COCOA 1/CONS/CRP–2, August 25), sent in airgram A–131 from Geneva, August 30. (Ibid., INCO–COCOA 3 UNCTAD)
4. This paragraph reads: “EEC officials have apparently been working for some time to obtain agreement between EEC countries and AOT’s. EEC has agreed to a price range of 19.5 to 21.5 as basis for negotiations of minimum price. Dutch, however, have made it clear they will not go higher than 20 cents. Germans willing to go 20.5 cents, French to anything producers want. In long meeting Thurday morning EEC and AOT’s were apparently unable to agree on a common basis for an agreement. On the price issue the AOT’s refused to accept the range indicated above and stood on their previously agreed 20–22 cents. EEC and AOT’s will meet again Friday.” (Ibid.)
5. August 26.