Foreign Relations of the United States, 1981–1988, Volume XXXVIII, International Economic Development; International Debt; Foreign Assistance

293. Memorandum From the Assistant United States Trade Representative for Agricultural Affairs and Commodity Policy (Nelson) to the United States Trade Representative (Brock)¹

Washington, March 24, 1983

SUBJECT

• Commodity Policy

Thus far, this Administration has maintained essentially the same stance vis-a-vis international commodity agreements as the last two Administrations—i.e., we have indicated we will consider participation in such agreements on a case-by-case basis and we have continued to support the “Integrated Program for Commodities” (IPC) agreed to at UNCTAD IV in 1976 (even if mainly by not disavowing it). It has, of course, been made clear that this Administration is far more skeptical of the value of commodity agreements than the Carter Administration, but this has been done without great fanfare.²

Our policy on commodities is now caught up in two opposing crosscurrents, however. On the one hand, there is increasing pressure within the Administration to take a hard stance against commodity agreements on philosophical grounds. The primary sources of this pressure are Sprinkel (Treasury) and Wallis (State) although most high-level officials would at least agree with the philosophical underpinnings of their approach. This point of view manifested itself at February 4, 1983, meeting of SIG, which approved the Coffee Agreement, but at the same time, apparently agreed that we should not participate in any other agreements and, moreover, that there should be an interagency review of commodity policy (see attachment).³

On the other hand, there are pressures to “give” more on commodities in the interest of maintaining Group B unity at UNCTAD VI and avoiding a confrontation with the developing countries at that Conference. These pressures have so far come mainly from other developed countries in international fora involved in UNCTAD VI preparation, but I suspect they will find sponsors within the Administration as we approach the Belgrade conference.

I believe that we should maintain the steady, low profile, unambitious stance on commodity policy that we have pursued over the past two years. The key elements of our position would, thus, be:

1. Case-by-case approach to individual agreements. We should restate this principle and establish its credibility by certain specific courses of action (discussed below).

2. Reaffirmation of our carefully qualified support for the IPC. This really commits us to nothing, except the case-by-case approach, as we have proven over the past seven years. But we should at least be able to sing the joys of the IPC at UNCTAD VI—i.e., join with other Group B countries in pointing out the accomplishments of this program (the Rubber Agreement and other existing commodity agreements, progress in discussions of other commodities, etc.).

If we were, instead, to embrace a hard, anticommodity agreement position, we could expect to take a great deal of flak both from the developing countries, and from our Group B “allies.” We would be accused, with considerable justification, of reneging on commitments made, and repeatedly affirmed, by the USG since 1976. We would be completely isolated at UNCTAD VI and positioned as a perfect scapegoat, giving the Europeans and the Japanese another opportunity to ingratiate themselves with the developing countries at our expense. Finally, such a stance would worsen our relations with the developing countries and possibly throw up additional obstacles to our various political, economic, and commercial initiatives involving them.

The cost of our current commodity policy—in terms of sacrifice of principle, budgetary outlays, or adverse effects on U.S. economic interests—is minimal. Consequently, I don’t believe that renouncing it in favor of an overtly hard line approach is worth incurring these adverse affects. Unless otherwise directed, I will be seeking the establishment of a USG position on commodities for UNCTAD VI along the lines described above. (A paper outlining this strategy in detail is now being prepared.) I have taken the position, incidentally, that the development of this position in the TPSC framework constitutes the review of commodity policy requested by the SIG.

In addition to the UNCTAD VI question, a number of specific decisions are now pending in the commodities area which will greatly affect the credibility of our basic position on commodity policy. In the interest of strengthening that credibility, I will, unless otherwise directed, be seeking the following results in the interagency deliberations on these issues:

1. A decision that the USG will participate in the renegotiation of the International Sugar Agreement. The first conference will be held in May 1983.

2. A decision to join the International Jute Agreement (IJA). This is an “other measures” agreement—i.e., it concerns market development and research projects and exchange of information and does not have any price stabilization provisions. It will not require Congressional approval and will cost about $100,000 (for Administrative expenses). It essentially meets all of the major negotiating objectives set by the United States.

A key element in the U.S. approach to the IPC has been our efforts to point discussions away from stabilization agreements towards “other measures” agreement for most commodities. Failure to join the IJA, which does basically all the things we said we wanted, will seriously undercut that approach.⁴

3. Leave open the question of whether or not the United States will participate in renegotiation of the International Cocoa Agreement. Renegotiation of this Agreement is likely to begin sometime in the autumn of 1983. We will face three options: (a) Don’t participate in negotiations, (b) participate but with no real intention of joining, and (c) participate with the aim of concluding an agreement we can accept. I believe we can avoid making a decision on this until after UNCTAD VI and will strive to do so.

1. Source: Reagan Library, Douglas McMinn Files, Subject Files, Sugar Quotas. No classification marking. Sent through Ambassador Smith. Copies were sent to Ambassador Macdonald, Whitfield, Rosenbaum, Cooper, and Murphy.
2. Brock wrote in the left-hand margin next to this paragraph: “Don, I agree, B.”
3. The reference to February 4 is in error. The SIG–IEP meeting minutes section on the Coffee Agreement is attached but not printed. For the February 3 meeting minutes, see Document 290.
4. Smith wrote in the right-hand margin next to this point: “BOSS: If we can, I recommend we join this one. It’s not a stabilization agreement and costs us little in terms of our help to the very poor. Mike Smith.”