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Message to the Senate Transmitting the International Coffee Agreement 1983

May 4, 1983

To the Senate of the United States:

I am transmitting herewith, for the advice and consent of the Senate to ratification, the International Coffee Agreement 1983. This Agreement would enter into force October 1, 1983, for a period of six years. I am the fifth President since 1962 to seek favorable Senate consideration of a new or extended International Coffee Agreement. The 1983 Agreement is similar in many respects to those of 1962, 1968 and 1976, but it contains several improvements of importance to the United States. I strongly urge that the Senate give advice and consent to ratification of this Agreement, thus signaling that the spirit of cooperation which has characterized the international coffee community these past 20 years will be continued and strengthened.

Coffee is vitally important to a large number of friendly, developing countries in Latin America, Africa and Asia. In terms of value, it is the most important agricultural commodity exported by developing countries. In 1981, coffee exports by these nations amounted to $8 billion. Eighteen countries obtained more than 20 percent of their total export earnings from coffee. Altogether 71 countries participated in the negotiation of the International Coffee Agreement 1983 and are expected to join it. In 1982 the United States imported $2.7 billion worth of coffee, 30 percent of the amount traded internationally.

The International Coffee Agreement 1983 represents the latest development in twenty years of United States leadership in international coffee cooperation. The impetus for the first International Coffee Agreement in 1962 came from the United States and Brazil. We participated actively in the negotiation and implementation of subsequent agreements in 1968 and 1976. The 1976 Agreement, successfully negotiated in a difficult period immediately following the disastrous 1975 frost in Brazil, has been generally successful in keeping coffee prices within the agreed range once quotas came into effect in late 1980.

The basic framework of the 1983 Agreement is similar to that of the 1976 Agreement:

-- Its objective is to stabilize the price of coffee within a range that is acceptable to both consumers and producers.

-- Its principal economic provision is a system of country export quotas which are decreased when prices are declining and increased when prices are rising in order to seek to keep the price of coffee within the agreed range. In periods of exceptionally high prices quotas are suspended altogether in order to encourage maximum exports. The quota system is enforced by the importing members.

-- It promotes the maintenance of adequate coffee stock levels by making each producing country's export quota partially dependent on its level of stocks. These stocks can be released in a period of high prices to put immediate downward pressure on the market.

In the 1983 Agreement, however, the United States sought and achieved several improvements:

-- An enhanced role for importing countries in the determination of individual country export quotas.

-- More effective provisions regarding the declaration of export shortfalls to assure that export quotas remain realistic.

-- Language clarifying the obligation of producers to refrain from market activities outside the scope of the Agreement.

International Coffee Agreements have aimed at balancing the economic interests of producers and consumers, and each has been an improvement over the predecessor in this regard. Like the previous Agreements, the 1983 Agreement is intended to stabilize coffee prices for short-run periods along long-term market trends. The Agreement itself contains no fixed price objective; rather, each year the members of the Agreement will establish a price range based on current production and consumption trends, inventory levels, and other factors that influence the market.

I believe that the International Coffee Agreement 1983 represents an important element in the continuation of the cooperation between coffee-producing and consuming countries. It provides the framework and the flexibility for the United States to continue the special relationship we have fostered with the coffee countries since 1962.

I recommend that the Senate give early and favorable consideration to this Agreement and its advice and consent to ratification. The United States Trade Representative will separately submit proposed legislation to implement the Agreement through September 30, 1989.

Ronald Reagan

The White House,

May 4, 1983.