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

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

Geneva, October 5, 1967, 0915Z.

1082. Deliver George Jacobs E Bureau 9 am Friday.

1. Following is complete text memorandum of agreement adopted at final plenary Oct 4 Cocoa Consultative Group:

“At the Cocoa consultations held in Geneva from 25 September to 4 October 1967, the following matters were unanimously agreed by the delegations represented at the consultations for inclusion in the agreement to be concluded at a resumed United Nations Cocoa Conference.

1. If, at the time the Council fixes annual sales quotas under Article 29, the indicator price is between 24–1/2 and 28 cents, quotas do not become immediately operative, unless the Council by special vote decides to put them in operation.

2. Where quotas are not in operation, producing countries may not sell more than [75 per cent]² of their annual quota in the first two quarters or [95 per cent] in the first three quarters.

3. If the indicator price falls to 24–1/2 cents, the quotas set at the beginning of the year automatically come into operation. (A) When indicator price moves downwards from 24–1/2 cents, at 22 cents: the Council would meet to review the market situation and to decide, by special vote, on possible action to defend the minimum price (20 cents). (Footnote one: The possibility of a sales quota cut is not excluded.) At 21 cents (lower intervention price): automatic sales quota cut of 3–1/2 per cent unless the Council decides on a different figure under Article 33. At 20 cents: further automatic sales quota cut of 3–1/2 per cent. (B) When indicator price moves upwards from 20 cents, at 22 cents: restoration of the sales quota cut made at 20 cents. At 23 cents: restoration of the sales quota cut made at 21 cents. At 24–1/2 cents: if quotas are in operation and if the indicator price rises to 24–1/2 cents, the Council shall be convened and shall meet within 10 days. If the Council is not able, within 5 working days, to come to an agreement by special vote on whether to retain or increase or suspend quotas, then quotas shall be suspended automatically unless in the meantime the indicator price has declined below 24–1/2 cents. (C) When indicator price moves upwards from 24–1/2 cents to 29 cents, at 29 cents: Council meets to review market situation and to decide, by special vote, on possible action. (Footnote two: The possibility of sales from the buffer stocks is not excluded.) To defend the maximum price (29 cents), at 28 cents (upper intervention price): automatic suspension of sales quotas if any are in effect and commencement of mandatory sales from buffer stock.

4. It was also understood that a resolution or an explanatory note of the conference would provide that, during the consideration of a new agreement under paragraph (2) of Article 64, a study should be made of the desirability of authorizing the Council to take special measures to defend the minimum price in exceptional circumstances.

5. Basic quotas. It was agreed that the following criteria should apply in determining basic quotas: (1) for the first two years of the agreement, the highest annual production figures during the last eight years, including the 1959/60 crop year, for each producing country.”

2. Text also pouched major producer/consumer capitals by airgram.³

Tubby

1. Source: Department of State, Central Files, INCO–COCOA 3 UNCTAD. Unclassified; Immediate.
2. All brackets in the source text.
3. Airgram A–183 from Geneva to the Department of State and 11 posts, October 5. (Department of State, Central Files, INCO–COCOA 3)