INTERNATIONAL COFFEE AGREEMENT ACT OF 1964

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00403R000300290001-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 58
• Document Creation Date: December 23, 2016
• Document Release Date: February 5, 2014
• Sequence Number: 1
• Publication Date: August 13, 1964
• Content Type: REPORT

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88TH CONGRESS HOUSE OF REPRESENTATIVES J REPORT
2d Session f No. 1803
INTERNATIONAL COFFEE AGREEMENT ACT OF 1964
AUGUST 13, 1964.?Ordered to be printed
Mr. MILLS, from the committee of conference, submitted the following
CONFERENCE REPORT
[To accompany H.R. 88641
The committee of conference on the disagreeing votes of the two
Houses on the amendments of the Senate to the bill (H.R. 8864) to
carry out the obligations of the United States under the International
Coffee Agreement, 1962, signed at New York on September 28, 1962,
and for other purposes, having met, after full and free conference,
have agreed to recommend and do recommend to their respective
Houses as follows:
That the House recede from its disagreement to the amendments of
the Senate numbered 1, 2, 3, 4, 5, and 6, and agree to the same.
W. D. MILLS,
CECIL R. KING,
HALE BOGGS,
JOHN W. BYRNES,
THOS. B. CURTIS,
Managers on the Part of the House.
HARRY F. BYRD,
RUSSELL B. LONG,
GEO. A. SMATHERS,
JOHN J. WILLIAMS,
FRANK CARLSON,
Managers on the Part of the Senate.
?9.9' I 1-4 115-C1 ?0 -7
35-006
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STATEMENT OF THE MANAGERS ON THE PART OF THE
HOUSE
The managers on the part of the House at the conference on the
disagreeing votes of the two Houses on the amendments of the Senate
to the bill (H.R. 8864) to carry out the obligations of the United States
under the International Coffee Agreement, 1962, signed at New York
on September 28, 1962, and for other purposes, submit the following
statement in explanation of the effect of the action agreed upon by the
conferees and recommended in the accompanying conference report:
Amendment numbered 1: Under the bill as passed by the House, the
short title for the bill was the "International Coffee Agreement Act of
1963". Senate amendment numbered 1 strikes out "1963" and in-
serts "1964". The House recedes.
Amendment number 2: This amendment adds a new section 4 to
the bill providing that whenever the Congress finds, in a concurrent
resolution agreed to by the two Houses, that there is an unwarranted
increase in the price of coffee in the United States attributable, in
whole or in part, to the application or operation of the International
Coffee Agreement, 1962, the President shall cause a copy of such
concurrent resolution to be transmitted to the International Coffee
Council and the Executive Board established under chapter IV of such
agreement. The new section 4 would also provide that if, after the
expiration of thirty days after the transmittal of such concurrent
resolution, the President finds that the Council has failed to make such
adjustments of quotas, or to take such other action, as is necessary to
remedy the situation, the President is authorized and directed to
cause to be filed with the Secretary-General of the United Nations,
in accordance with the provisions of article 68 of such agreement,
written notice of withdrawal of the United States from the Inter-
national Coffee Agreement, 1962. The House recedes.
Amendment number 3: The bill as passed by the House authorized
the President to exercise any powers conferred on him by the bill
through such agency or officer as he shall direct. Under Senate
amendment numbered 3, the President would be authorized to exer-
cise any powers and duties conferred on him by the bill, other than
the powers and duties conferred by the new section 4 added by Senate
amendment numbered 2, through such agency or officer as he shall
direct. The House recedes.
Amendments numbers 4, 5, and 6: These are clerical amendments.
The House recedes.
W. D. MILLS,
CECIL R. KING,
HALE BOGGS,
JOHN W. BYRNES,
THOS. B. CURTIS,
Managers on the Part of the House.
0
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88TH CONGRESS
2d Session
SENATE
Calendar No. 910
REPORT
No. 941
INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
MARCH 12 (legislative day, MARCH 9), 1964--Ordered to be printed
Mr. SMATHERS, from the Committee on Finance, submitted the
following
REPORT
together with
MINORITY AND INDIVIDUAL VIEWS
[To accompany H.R. 8864]
The Committee on Finance, to whom was referred the bill (H.R:
8864) to carry out the obligations of the United States under the
International Coffee Agreement, 1962, signed at New York on Sep-
tember 28, 1962, and for other purposes, having considered the same,
report favorably thereon with amendments and recommend that the
bill as amended do pass.
PURPOSE
The purpose of H.R. 8864 is to authorize the procedures required
in order that the President might carry out the obligations of the
United States under the International Coffee Agreement of 1962.
That agreement has been signed by the United States, and the Senate
has given its advice and consent to ratification.
The bill would authorize the President to require all coffee enter-
ing U.S. markets and all exports of coffee to be accompanied by a
certificate of origin or a certificate of reexport; to limit imports of
coffee from countries which have not joined in the agreement; to
require the keeping of certain records, statistics, and other information;
and to take such other action as he may consider necessary to imple-
ment the obligations of the United States under the treaty.
The bill also authorizes appropriations necessary to carry out the
obligations of the United States under the treaty. Certain obsolete
provisions of law would also be repealed.
99-010--64-1
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2_ INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
COMMITTEE AMENDMENTS
Under the committee amendments, a new section 4 is added to the
bill. This amendment provides that whenever the Congress passes
a concurrent resolution, in which it finds that there is an unwarranted
increase in the domestic price of coffee attributable, in whole or in
part, to the application or operation of the International Coffee Agree-
ment, 1962, the President shall cause a copy of the resolution to be
transmitted to the International Coffee Council and the executive
board which are established under chapter IV of the agreement. If
the President finds that the Council has failed, within 30 days after
the transmittal of the resolution, to make such adjustments of quotas,
or to take such other action, as is necessary to remedy the situation,
he is authorized and directed to cause written notice of withdrawal of
the United States from the agreement, such notice to be filed with
the Secretary General of the United Nations in accordance with the
provisions of article 68 of the agreement. Under article 68, with-
drawal of a contracting party becomcs effective 90 days after the notice
is received by the Secretary General.
Under the bill, as passed by the House, the President is authorized
to exercise any powers conferred on him by the bill through such
agency or officer as he directs. Under the committee amendments,
the powers and duties conferred on the President by the new section
4 may not be so delegated.
The amendment is designed to prevent, insofar as possible, sharp
changes in prices which would be to the detriment of the American
consumer. The coffee agreement provides for the withdrawal of
members and this provision would be used whenever Congress felt
that high prices were being maintained unnecessarily. The United
States is the greatest coffee-consuming country in the world and it
would seem unlikely that the agreement could stand without the
membership of the United States.
GENERAL STATEMENT
The Senate, on May 21, 1963, gave its advice and consent to the
ratification of the International Coffee Agreement, 1962. On Decem-
ber 27, 1963, the United States deposited its instrument of ratification.
By so doing the United States became a party of this treaty as a
provisional member pending the enactment of implementing legisla-
tion enabling the United States to meet its obligations under the
agreement. H.R. 8864 authorizes the establishment of such pro-
cedures.
Membership in the agreement does not obligate U.S. purchasers to
buy coffee from any particular country, to buy any specific amount of
coffee, or to pay any specific price for coffee. Coffee traders will be
free to continue their established practices and patterns of trade,
competing as before with buyers in other consuming countries.
The interests of the United States are protected by the fact that it
will hold a minimum of 400 votes out of the total of 1,000 consumer
votes in the International Coffee Council, the governing body of the
agreement, and will also be a member of the executive board. Since
practically all important decisions, such as adoption of the budget,
establishment of the quotas, or the production control program,
require a two-thirds vote of the consumers and producers voting
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
3
separately, the United States holds sufficient votes to prevent actions
which might be considered adverse to our policy interests, to our
business community, or to the American consumer.
The International Coffee Agreement does not contemplate any
changes in the traditional relationships between the traders, the
roasters, and the retailers. Coffee is a high volume, staple food
product. Coffee price and quality are subject to keen competition in
retail outlets in the United States. This means that the benefits of
success if promoting low-cost efficient production, or in stabilizing the
price cannot be withheld from the consumer.
The President is required to submit to the Congress an annual
report on the operations of the agreement, including full information
with regard to the level of prices. Also the legislation will expire on
October 1, 1965. Thus Congress will have repeated early oppor-
tunities to review the operation of the agreement and its advantages or
disadvantages to the United States. The United States may withdraw
from the agreement at any time upon 90 days' notice.
The Senate Committee on Finance has added another safeguard in
this respect by approving an amendment to H.R. 8864 providing that
if the Congress passes a concurrent resolution finding that an un-
warranted increase in domestic coffee prices is attributable to the
operation of the agreement, the President is directed to initiate a U.S.
withdrawal from the agreement if remedial action is not taken within
30 days after transmittal of the resolution.
The substantial increase in the price of coffee in recent months
is attributed to the natural disasters which have occurred, and trader
reaction to these disasters as described by Under Secretary of State
W. Averell Harriman in his statement before the Committee on
Finance on February 25, 1964.
Wholesale or green coffee prices have risen sharply recently.
I know that the members of this committee are concerned
by this and that you may want to know what role the agree-
ment has played in that rise and whether it can be used to
check it.
I want to state unequivocally that the coffee agreement
did not cause the rise in coffee prices. That rise was trig-
gered by a virtually unprecedented combination of natural
disasters to coffee plantations in Brazil?the world's largest
coffee producer. First came frost, then fire, then drought,
and the drought is still continuing, particularly in Sao Paulo.
That is one of the Brazilian provinces that is an important
producer of coffee.
The change in Brazil's crop prospects is enormous. In
the season 1959-60, Brazil produced 44 million bags of
coffee; 37 million bags were of exportable quality. This
year exportable production is barely 19 million bags. Some
of our officials believe next year's exportable crop will not
exceed 13 million bags; the Brazilians?some Brazilians?
say 8.5 to 9 million bags. Some in our trade say it may be
even less than this.
No one can tell, but whichever figure is right, it is clear that
a buyer's market has been turned dramatically into a seller's
market. Buyers are scurrying to buy up the short crop to
assure themselves of fresh coffee. As Brazilian coffee prices
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4 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
have risen, other coffee prices have been pushed upward as
? well. That's the way the market works.
The situation would be worse but for Brazil's large stocks.
Unfortunately, they are not all of the qualities that we con-
sume here. Of the approximately 50 million or so bags in
stock, our trade believes that perhaps 20 to 22 millionL bags
are of exportable quality. That may see Brazil through for
the next few years until the trees revive from nature's
ravages. But the market will be in a highly vulnerable
position given the possible exhaustion of stock. Conse-
quently, higher prices than we have known in the past years
of glut?the last 5 years?are to be expected. We're in a
seller's market, not a buyer's market. And buyers will
always pay more for fresh coffee than for "stored" coffee
from stocks.
? Some say that quotas are a factor, albeit minor in the price
rise. The fact is that exporters had a system of quotas in
effect in the year following the negotiation of the agreement.
Nevertheless, coffee prices continued to decline and reached
new lows in August and September of 1963. Basically, that
was because quotas were considerably too large and produc-
tion was overabundant.
When the Brazilian situation appeared to be turning the
market around, an effort was made to raise quotas but be-
cause market developments could not be clearly foreseen, no
action was approved. However, now we have a background
of rapid rise in prices and large buying for inventories as a
safeguard against still higher prices. Accordingly, a little
over 2 weeks ago, the Council of the Coffee Agreement raised
quotas. Another 2.3 million bags of coffee will legally be
available for export. In our judgment this will assure that
the quotas will not be a factor in future price rises, if any.
If further quota increases seem necessary, we are confident
that producers would again agree with us and action would
be taken. After all, look at the vote on the recent quota
increase: importers voted unanimously for the increase and
exporters voted 842 out of 955, including Brazil and Colom-
bia, for the increase also. That is an impressive record of
nearly unanimous agreement.
Price stability is what we are after and quotas should be
used for this purpose.
Although the United States deposited its instrument of ratification
of the agreement on December 27, 1963, its participation in the agree-
ment has not been effective. This implementing legislation should be
enacted by June 1, 1964, if the United States is to carry out the
obligations of the agreement.
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
5,
For- the information of the Senate the text of the International
Coffee Agreement, 1962, is printed below.:
INTERNATIONAL COFFEE AGREEMENT, 1962
PREAMBLE
The Governments Parties to this Agreement,
Recognizing the exceptional importance of coffee to the
economies of many countries which are largely dependent
upon this commodity for their export earnings and thus for the
continuation of their development programmes in the social
and economic fields;
Considering that close international co-operation on coffee
marketing will stimulate the economic diversification and de-
velopment of coffee-producing countries and thus contribute
to a strengthening of the political and economic bonds be-
tween producers and consumers;
Finding reason to expect a tendency toward persistent
disequilibrium between production and consumption, accu-
mulation of burdensome stocks; and pronounced fluctua-
? tions in prices, which can be harmful both to producers
and to consumers; and
Believing that, in the absence of international measures,
this situation cannot be corrected by normal market forces,
Have agreed as follows:
CHAPTER I-L-OBJECTIVES
ARTICLE 1
Objectives
The objectives of the Agreement are:
:(1) to achieve a reasonable balance between supply and
demand on a basis which will assure adequate supplies of
coffee to consumers and markets for coffee to producers at
equitable -prices, arid which will 'bring about long-ternrequi-
librium between production and consumption;
(2) to alleviate the serious hardship caused by burdensome
surpluses and excessive fluctuations in the prices of coffee to
the detriment of the interests of both producers and con-
sumers;
(3) to contribute to the development of productive re-
sources and to the promotion and maintenance of em-
ployment and income in the Member countries, thereby
helping to bring about fair wages, higher living standards,
and better working conditions;
(4) to assist in increasing the purchasing power of coffee-
exporting countries by keeping prices at equitable levels and
by increasing consumptien ;'
(5) to encourage the consumption of coffee by every- pos-
sible means; and
(6) in general, in recognition of the relationship of the trade
in coffee to the economic stability of markets for industrial
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6 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
products, to further international co-operation in connexion
with world coffee problems.
CHAPTER II-DEFINITIONS
ARTICLE 2
Definitions
For the purposes of the Agreement:
(1) "Coffee" means the beans and berries of the coffee
tree, whether parchment, green or roasted, and includes
ground, decaffeinated, liquid and soluble coffee. These terms
shall have the following meaning:
(a) "green coffee" means all coffee in the naked bean
form before roasting;
(b) "coffee berries" means the complete fruit of the
coffee tree; to find the equivalent of coffee berries to
green coffee, multiply the net weight of the dried coffee
berries by 0.50;
(c) "parchment coffee" means the green coffee bean
contained in the parchment skin; to find the equivalent
of parchment coffee to green coffee, multiply the net
weight of the parchment coffee by 0.80;
(d) "roasted coffee" means green coffee roasted to
any degree and includes ground coffee; t,o find the
equivalent oi roasted coffee to green coffee, multiply the
net weight of roasted coffee by 1.19;
(e) "decaffeinated coffee" means green, roasted or
soluble coffee from which caffein has been extracted; to
find the equivalent of decaffeinated coffee to green
coffee, multiply the net weight of the decaffeinated
coffee in green, roasted or soluble form by 1.00, 1.19 or
3.00, respectively;
(f) "liquid coffee" means the water-soluble solids
derived from roasted coffee and put into liquid form;
to find the equivalent of liquid to green coffee, multiply
the net weight of the dried coffee solids contained in
the liquid coffee by 3.00;
(g) "soluble coffee" means the dried water-solUble
solids derived from roasted coffee; to find the equivalent
of soluble coffee to green coffee, multiply the net weight
of the soluble coffee by 3.00.
(2) "Bag" means 60 kilogrammes or 132.276 pounds of
green coffee; "ton" means a metric ton of 1,000 kilogrammes
or 2,204.6 pounds; and "pound" means 453.597 grammes.
(3) "Coffee year" means the period of one year, from 1
October through 30 September; and "first coffee year"
means the coffee year beginning 1 October 1962.
(4) "Export of coffee" means, except as otherwise provided
in Article 38, any shipment of coffee which leaves the terri-
tory of the country where the coffee was grown.
(5) "Organization", "Council" and "Board" mean, respec-
tively, the International Coffee Organization, the Inter-
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INTERNATIONAL COFFEE AGREEMENT ACT OF I 96
national Coffee Council, and the Executive Board established
under Article 7 of the Agreement.
(6) "Member" means a Contracting Party; a dependent
territory or territories in respect of which separate Member-
ship has been declared under Article 4; or two or more Con-
tracting Parties or dependent territories, or both, which
participate in the Organization as a Member group under
Article 5 or 6.
(7) "Exporting Member" or "exporting country" means
a Member or country, respectively, which is a net exporter
of coffee; that is, whose exports exceed its imports.
(8) "Importing Member" or "importing country" means
a Member or country, respectively, which is a net importer
of coffee; that is, whose imports exceed its exports.
(9) "Producing Member" or "producing country" means
a Member or country, respectively, which grows coffee in
commercially significant quantities.
(10) "Distributed simple majority vote" means a major-
ity of the votes cast by exporting Members present and
voting, and a majority of the votes cast by importing
Members present and voting, counted separately.
(11) "Distributed two-thirds majority vote" means a two-
thirds majority of the votes cast by exporting Members
present and voting and a two-thirds majority of the votes
cast by importing Members present and voting, counted
separately.
(12) "Entry into force" means, except where the context
otherwise requires, the date on which the Agreement first
enters into force, whether provisionally or definitively.
CHAPTER M-MEMBERSHIP
ARTICLE 3
Membership in the OrganizatiOn
Each Contracting Party, together with those of its depend-
ent territories to which the Agreement is extended under
paragraph (1) of Article 67, shall constitute a single Member
of the Organization, except as otherwise provided under
Article 4,5 or 6.
ARTICLE 4
Separate Membership in Respect of Dependent Territories
Any Contracting Party which is a net importer of coffee
may, at any time, by appropriate notification in accordance
with paragraph (2) of Article 67, declare that it is partici-
pating in the Organization separately with respect to any.
its
its dependent territories which are net exporters of coffee and
which it designates. In such case, the metropolitan territory
and its non-designated dependent territories will have a single
Membership, and its designated dependent territories, either
individually or collectively as the notification indicates,
will have separate Membership.
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'8 INTERNATIONAL ' COFFEE 'AGREEMENT ACT OF 1963
ARTICLE 5
Group Membership upon Joining the Organization
(1) Two or more Contracting Parties which are net export-
ers of coffee may, by appropriate notification to the Secretary-
General of the United Nations at the time of deposit of their
respective instruments of ratification or accession, and to the
Council at its first session, declare that they are joining the
Organization as a Member group. A dependent territory to
which the Agreement has been extended under paragraph
(1) of Article 67 may constitute part of such a Member group
if the Government of the State responsible for its interna-
tional relations has given appropriate notification thereof
under paragraph (2) of Article 67. Such Contracting Parties
and dependent territories must satisfy the following condi-
tions:
(a) they shall declare their willingness to accept
responsibility for group obligations in an individual. as
well as a group capacity;
(b) they shall subsequently provide sufficient evidence
to the Council that the group has the organization
necessary to implement a common coffee policy, and
that they have the means of complying, together with
the other parties to the group, with their obligations
under the Agreement; and
(c) they shall subsequently provide evidence to the
Council either:
(i) that they have been recognized as a group in
a previous international coffee agreement; or
(ii) that they have:
(a) a common or co-ordinated commercial
and economic policy in relation to coffee, and
(b) a co-ordinated monetary and financial
policy, as well as the organs necessary for
implementing such a policy, so that the
Council is satisfied that the Member group can
comply with the spirit of group membership
and the group obligations involved.
(2) The Member group shall consitute a single Member of
the Organization, except that each party to the group shall
be treated as if it were a single Member as regards all matters
arising under the following provisions:
(a) Chapters XI and XII;
(b) Articles 10, 11 and 19 of Chapter IV; and
(c) Article 70 of Chapter XIX.
(3) The Contracting Parties and dependent territories
joining as a Member group shall specify the Government or
organization which will represent them in,the CounCil as
regards all matters arising under the Agreement other than
those specified in paragraph (2) of this Article.
(4) The Member group's voting rights shall be as follows:
(a) the Member group shall have the same number of
basic votes as a single Member country joining the
Organization in an individual capacity. These basic
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
votes shall be attributed to and exercised by the Govern-
ment or organization representing the group;
(b) in the event of a vote on any matters arising under
provisions specified in paragraph (2) of this Article, the
parties to the member group may exercise separately the
votes attributed to them by the provisions of paragraph
(3) of Article 12 as if each were an individual Member
of the Organization, except for the basic votes, which
? shall remain attributable only to the Government or
organization representing the group.
(5) Any Contracting Party or dependent territory which
is a party to a Member group may, by notification to the
Council, withdraw from that group and become a separate
Member. Such withdrawal shall take effect upon receipt
of the notification by the Council. In case of such with-
drawal from a group, or in case a party to a group ceases, by
withdrawal from the Organization or otherwise, to be such
a party, the remaining parties to the group may apply to the
Council to maintain the group, and the group shall continue
to exist unless the Council disapproves the application. If
the Member group is dissolved, each former party to the
group will become a separate Member. A Member which
has ceased to be a party to a group may not, as long as the
Agreement remains in force, again become a party to a group.
ARTICLE 6
Subsequent Group Membership
Two or more exporting Members may, at any time after the
Agreement has entered into force with respect to them,
apply to the Council to form a Member group. The Council
shall approve the application if it finds that the Members
made a declaration, and have provided evidence, satisfying
the requirements of paragraph (1) of Article 5. Upon such
approval, the Member group shall be subject to the provi-
sions of paragraphs (2), (3), (4), and (5) of that Article.
CHAPTER TV?ORGANIZATION AND ADMINISTRATION
ARTICLE 7
Establishment, Seat and Structure of the International Coffee
Organization
(1) The International Coffee Organization is hereby estab-
lished to administer the provisions of the Agreement and to
supervise its operation.
(2) The seat of the Organization shall be in London.
(3) The Organization shall function through the Interna-
tional Coffee Council, its Executive Board, its Executive
Director, and its staff.
S. Rept. 941, 88-2-2
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10 INTERNATIONAL COFFEE AGREEMENT ACT . OF 1 963
ARTICLE 8 '
Composition of the International Coffee Council
(1) The highest authority of the Organization shall be the
International Coffee Council, which shall consist of all the
Members of the Organization.
(2) Each Member shall be represented on the Council by
a representative and one or more alternates. A Member
may also designate one or more advisers to accompany its
representative or alternates.
ARTICLE 9
Powers and Functions of the Council
, (1) All powers specifically conferred by the Agreement
shall be vested in the Council, which shall have the powers
and perform the functions necessary to carry out the pro-
visions of the Agreement.
(2) The Council shall, by a distributed two-thirds majority
vote, establish such rules and regulations, including its own
rules of procedure and the financial and staff regulations of
the Organization, as are necessary to carry out the provisions
of the Agreement and are consistent therewith. The Council
may, in its rules of procedure, provide a procedure whereby
it may, without meeting, decide specific questions.
(3) The Council shall also keep such records as are re-
quired to perform its functions under the Agreement and such
other records as it considers desirable, and shall publish an
annual report.
ARTICLE 10
'Election of the Chairman and Vice-Chairmen of the Council
(1) The Council shall elect, for each coffee year, a Chair-
man and a first, a second, and a third Vice-Chairman.
(2) As a general rule, the Chairman and the first Vice-
Chairman shall both be elected either from .among the
representatives of exporting Members, or from among the
representatives of importing Members, and the second and
the third Vice-Chairmen shall be elected from representatives
of the other category of Members; these ,offices shall alternate
each coffee year between the two categories of Members.
(3) Neither the Chairman nor any Vice-Chairman acting
as Chairman shall have the right to vote. His alternate will
in such case exercise the Member's voting rights.
ARTICLE 11
Sessions of the Council
As a general rule, the Council shall hold regular sessions
twice a year. It may hold special sessions if it so decides.
Special sessions shall also be held when either the Executive
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Board,, or any five Members, or a Member or Members hav-
ing at least 200 votes so request. Notice of sessions shall be
given at least thirty days in advance, except in cases of
emergency. Sessions shall be held at the seat of the Organi-
zation, unless the Council decides otherwise.
ARTICLE 12
Votes
(1) The exporting Members shall together hold 1,000
votes and the importing Members shall together. hold 1,000
votes, distributed within each category of Members?that is,
exporting and importing Members, respectively?as provided
in the following paragraphs of this Article.
(2) Each Member shall have five basic votes, provided
that the total number of basic votes within each category
of Members does not exceed 150. Should there be more than
thirty exporting Members or more than thirty importing
Members, the number of basic votes for each Member
within the category of Members shall be adjusted so as to
keep the number of basic votes for each category of Members
within the maximum of 150.
(3) The remaining votes of exporting Members shall be
divided among those Members in proportion to their respec-
tive basic export quotas, except that in the event of a vote
on any matter arising under the provisions specified in
paragraph (2) of Article 5, the remaining votes of a member
group shall be divided among the parties to that group in
proportion to their respective participation in the basic
export quota of the Member group.
(4) The remaining votes of importing Members shall be
divided among those Members in proportion to the average
volume of their respective coffee imports in the preceding
three-year period.
(5) The distribution of votes shall be determined by the
Council at the beginning of each coffee year, and shall remain
in effect during that year, except as provided in paragraph
(6) of this Article.
(6) The Council shall provide for the redistribution of
votes in accordance with this Article whenever there is a
change in the Membership of the Organization, or if the
voting rights of a Member are suspended or regained under
the provisions of Article 25, 45 or 61.
(7) No Member shall hold more than 400 votes.
(8) There shall be no fractional votes.
ARTICLE 13
Voting Procedure of the Council
(1) Each representative shall be entitled to cast the num-
ber of votes held by the Member represented by him, and
cannot divide its votes. He may, however, cast differently
from such votes any votes which he exercises pursuant to
paragraph (2) of this Article.
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12 INTERNATIONAL, .COFFEE AGREEMENT' ACT OF 19 6 3
(2) Any exporting Member may authorize any other ex-
porting Member, and any importing Member may authorize
any other importing Member, to represent its interests and
to exercise its right to vote at any meeting or meetings of the
Council. The limitation provided for in paragraph (7) of
Article 12 shall not apply in this case.
ARTICLE 14
Decision,s of the Council
(1) All decisions of the Council shall be taken, and all rec-
onniaendations shall be made, by a distributed simple ma-
jority vote unless otherwise provided in the Agreement.
(2) The following procedure shall apply with respect to
any action by the Council which under the Agreement re-
quires a distributed two-thirds majority vote:
(a) if a distributed two-thirds majority vote is not
obtained because of the negative vote of three or less
exporting or three or less importing Members, the pro-
posal shall, if the Council so decides by a majority of the
Members present and by a distributed simple majority
vote, be put to a vote again within 48 hours;
(b) If a distributed two-thirds majority vote is again
? not obtained because of the negative vote of two or less
importing or two or less exporting Members, the pro-
posal shall, if the Council so decides by the majority of
? the Members present and by a distributed simple
majority vote, be put to a vote again within 24 hours;
(c) if a distributed two-thirds majority vote is not
obtained in the third vote because of the negative vote
?of one exporting Member or one importing Member, the
proposal shall be considered adopted;
(d) if the Council fails to put a proposal to a further
vote, it shall be considered rejected.
(3) The Members undertake to accept as binding all deci-
sions of the Council under the provisions of the Agreement.
ARTICLE 15
Composition of the Board
(1) The Executive Board shall consist of seven exporting
Members and seven importing Members, elected for each
coffee year in accordance with Article 16. Members may
re-elected.
(2) Each member of the Board shall appoint one repre-
sentative and one or more alternates.
(3) The Chairman of the Board shall be appointed by the
Council for each coffee year and may be re-appointed. He
shall not have the right to vote. If ?a representative is ap-
pointed Chairman, his alternate will have the right to vote
in his place.
(4) The ,Board shall normally meet at the seat of the
Organization but may meet elsewhere.
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ARTICLE 16
Election of the Board -
,(1) The exporting and . the importing Members of the
Board shall be elected in the Council by the exporting and
the importing Members of the Qrganization respectively.
The election within each category shall be held in accordance
with the following paragraphs of. this Article.
. (2) Each Member shall cast all the votes to which it is
entitled under Article 12 for a single candiate. A Member
may cast for another candidate any votes which it exercises
pursuant to paragraph (2) of Article 13.
(3) The seven candidates receiving the largest number of
votes shall be elected; however, no candidates shall be
elected on the first ballot unless it receives at least 75 votes.
(4) If under the provisions of paragraph (3) of this Article
less than seven candidates are elected on the first ballot,
further ballots shall be held in which only Members who did
not vote for any of the candidates elected shall have the right
to vote. In each further ballot, the minimum number of
votes required for election shall be successively diminished by
five until seven candidates are elected.
(5) Any Member who did not vote for any of the Members
elected shall assign its votes to one of them, subject to para-
graphs (6) and (7) of this Article.
(6) A Member shall be deemed to have received the num-
ber of votes originally cast for it when it was elected and, in
addition, the number of votes assigned to it, provided that
the total number of votes shall not exceed 499 for. any
Member elected.
(7) If the votes deemed received by an elected Member
would otherwise exceed 499, Members which voted for or
assigned their votes to such elected Member shall arrange
among themselves for one or more of them to withdraw their
votes from that Member and assign or reassign them to
another elected Member so that the votes received by each
elected Member shall not exceed the limit of 499.
ARTICLE 17
Competence of the Board
(1) The Board shall be responsible to and work under the
general direction of the Council.
(2) The. Council may, by a distributed simple majority
vote, delegate to the Board the exercise of any or all of its
powers, other than the following:
, (a) annual distribution of votes under paragraph (5)
of Article 12;
(b) approval of the administrative budget and assess-
ment of contributions under Article 24;
(c) determination of quotas under the Agreement;
(d) imposition of enforcement measures other than
those whose application is automatic;
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14 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
(e) suspension of the voting rights of a Member
under Article 45 or 61;
(f) determination of individual country and world
production goals under Article 48;
(g) establishment of a policy relative to stocks under
Article 51;
(h) waiver, of the obligations of a Member under
Article 60;
(i) decision of disputes under Article 61;
(j) establishment of conditions for accession under
Article 65;
(k) a decision to require the withdrawal of a Member
under Article 69;
(1) extension or termination of the Agreement under
Article 71; and
(m) recommendation of amendments to Members
under Article 73.
(3) The Council may at any time, by a distributed simple
majority vote, revoke any delegation of powers to the Board.
ARTICLE 18
Voting Procedure of the Board
(1) Each member of the Board shall be entitled to cast the
number of votes received by it under the provisions of
paragraphs (6) and (7) of Article 16. Voting by proxy
shall not be allowed. A member may not split its votes.
(2) Any action taken by the Board shall require the same
majority as such action would require if taken by the Council.
ARTICLE 19
Quorum for the Council and the Board
(1) The quorum for any meeting of the Council shall be
the presence of a majority of the Members representing a
distributed two-thirds majority of the total votes. If there
is no quoruin on the day appointed for the opening of any
Council session, or if in the course of any Council session there
is no quorum at three successive meetings, the Council shall
be convened seven days later; at that time and throughout
the remainder of that session the quorum shall be the
presence of a majority of the Members representing a dis-
tributed simple majority of the votes. Representation in
accordance with paragraph (2) of Article 13 shall be con-
sidered as presence.
(2) The quorum for any meeting of the Board shall be
the presence of a majority of the members representing a
distributed two-thirds majority of the total votes.
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ARTICLE 20
The Executive Director and the Staff
(1) The Council shall appoint the Executive Director on
the recommendation of the Board. The terms of appoint-
ment of the Executive Director shall be established by the
Council and shall be comparable to those applying to corre-
sponding officials of similar inter-governmental organizations:
(2) The Executive Director shall be the chief administra-
tive officer of the Organization and shall be responsible for
the performance of any duties develving upon him in the
administration of the Agreement.
(3) The Executive Director shall appoint the staff in
accordance with regulations established by the Council.
(4) Neither the Executive Director nor any member of the
staff shall have any financial interest in the coffee industry,
coffee trade, or coffee transportation.
(5) In the performance of their duties, the Executive
Director and the staff shall not seek or receive instructions
from any Member or from any other authority external to
the Organization. They shall refrain from any action which
might reflect on their position as international officials
responsible only to the Organization. Each Member under-
takes to respect the exclusively international character of the
responsibilities of the Executive Director and the staff and
not to seek to influence them in the discharge of their
responsibilities.
ARTICLE 21
Co-operation With Other Organizations
The Council may make whatever arrangements are
desirable for consultation and co-operation with the United'
Nations and its specialized agencies and with other appro-
priate inter-governmental organizations. The Council may
invite these organizations and any organizations concerned
with coffee to send observers to its meetings.
CHAPTER V-PRIVILEGES AND IMMUNITIES
ARTICLE 22
Privileges and Immunities
(1) The Organization shall have in the territory of each
Member, to the extent consistent with its laws, such legal
capacity as may be necessary for the exercise of its functions
under the Agreement.
(2) The Government of the United Kingdom of Great
Britain and Northern Ireland shall grant exemption from
taxation on the salaries paid by the Organization to its
employees, except that such exemption need not apply to
nationals of that country. It shall also grant exemption
from taxation on the assets, income and other property of the
Organization.
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lb. INTERNATIONAL COFFEE AGREEMENT ACT OF ?1 963
CHAPTER VP---FINANCE
ARTICLE 23
? Finance
(1) The expenses of delegations to the Council, representa-
tives on the Board, and representatives on any of the com-
mittees of the Council or the Board shall be met by their
respective Governments.
(2) The other expenses necessary for the administration of
the Agreement shall be met by annual contributions from
the Members assessed in accordance with Article 24.
(3) The financial year of the Organization shall be the same
as the coffee year.
ARTICLE 24
Determination of the Budget and Assessment of Contributions
(1) During the second half of each financial year, the
Council shall approve the administrative budget of the Or-
ganization for the following financial year, and shall assess
the contribution of each Member to that budget.
(2) The contribution of each Member to the budget for
each financial year shall be in the proportion which the num-
ber of its votes at the time the budget for that financial year
is approved bears to the total votes of all the Members.
However, if there is any change in the distribution of votes
among Members in accordance with the provisions of para-
graph (5) of Article 12 at the beginning of the financial year
for which contributions are assessed, such contributions shall
be correspondingly adjusted for that year. In determining
contributions, the votes of each Member shall be calculated
without regard to the suspension of any Member's voting
rights or any redistribution of votes resulting therefrom.
(3) The initial contribution of any Member joining the
Organization after the entry into force of the Agreement shall
be assessed by the Council on the basis of the number of
votes to be held by it and the period remaining in the current
financial year, but the assessments made upon other Mem-
bers for the current financial year shall not be altered.
(4) If the Agreement comes into force more than eight
months before the beginning of the first full financial year of
the Organization, the Council shall at its first session approve
an administrative budget covering only the period up to, the
commencement of the first full financial year. Otherwise
the first administrative budget shall cover both the initial
period and the first full financial year.
ARTICLE 25
Payment of Contributions
(1) Contributions to the 'administrative budget for:each
financial yeat'Shall.be payable in freely convertible currency, '
and shall become due on the first day of that financial year.
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1983 17
(2) If any Member fails to pay its full contribution to the
administrative budget within six months of the date on which
the contribution is due, both its voting rights in the Council
and its right to have its votes cast in the Board shall be
suspended until such contribution has been paid. However,
unless the Council so decides by a distributed two-thirds
majority vote, such Member shall not be deprived of any of
its other rights nor relieved of any of its obligations under
the Agreement.
(3) Any Member whose voting rights have been suspended,
either under paragraph (2) of this Article or under Article 45
or 61, shall nevertheless remain responsible for the payment
of its contribution.
ARTICLE 26
Audit and Publication of Accounts
As soon as poSsible after the close of each? financial year,
an independently audited statement of the Organization's
receipts and expenditures during that financial year shall be
presented to the Council for approval and publication.
CHAPTER VII?REGULATION OF EXPORTS
ARTICLE 27
General Undertakings by Members
(1) The Members undertake to conduct their trade policy
so that the objectives set forth in Article 1 and, in particular,
paragraph (4) of that Article, may be achieved. They agree
on the desirability of operating the Agreement in a manner
such that the real income derived from the export of coffee
could be progressively increased so as to make it consonant
with their needs for foreign exchange to suPport their pro-
grammes for social and economic progress.
(2) To attain these purposes through the fixing of quotas'
as provided for in this Chapter and in other ways carrying out
the provisions of the Agreement, the Members agree on the
necessity of assuring that the general level of coffee prices
does not decline below the general level of such prices in
1962.
(3) The Members further agree on the desirability of
assuring to consumers prices which are equitable and which
will not hamper a desirable increase in consumption.
ARTICLE 28
Basic Export Quotas
(1) For the first three coffee years, beginning on 1 October
1962, the exporting countries listed in Annex A shall have
the basic export quotas specified in that Annex '
(2) During the last six months of the coffee year ending
30 September 1965, the Council shall review the basic export
S. Rept. 941, 8
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1NTRNATIONA1,4 COFFEE AGREEMENT ACT OF 1963
quotas specified in Annex A in order to adjust them to general
market conditions. The Council may then revise such
quotas by a distributed two-thirds majority vote;. if not
revised, the basic export quotas specified in Annex A 'shall
remain in effect.
ARTICLE 29
Quota of a Member Group
Where two or more countries listed in Annex A form a
Member group in accordance with Article 5, the basic export
quotas specified for those countries in Annex A shall be
added together and the combined total treated as a single
quota for the purposes of this Chapter.
ARTICLE 30
Fixing of Annual Export Quotas
(1) At least 30 days before the beginning of each coffee
year the Council shall adopt by a two-thirds majority vote
an estimate of total world imports for the following coffee
year and an estimate of probable exports from nonmember
countries.
(2) In the light of these estimates the Council shall forth-
with fix annual export quotas which shall be the same per-
centage for all exporting Members of the basic export quotas
specified in Annex A. For the first coffee year this percent-
age is fixed at 99, subject to the provisions of Article 32. ?
ARTICLE 31
Fixing'of Quarterly Export Quotas
(1) ImiIediately following the fixing of the annual export
quotas the Council shall fix quarterly export quotas for each
exporting Member for the purpose of keeping supply in
reasonable balance with estimated demand throughout the
coffee year.
(2) These quotas shall be, as nearly, as possible, 25 per
cent of the annual export quota of each Member during the
coffee year. No Member shall be allowed to export more
than 30 per cent in the first quarter, 60 per cent in the first
two quarters, and 80 per cent in the first three quarters of
the coffee year. If exports from any Member in one quarter
are less than its quota for that quarter, the outstanding
balance shall be added to its quota for the following quarter
of that coffee year.
ARTICLE 32
Adjustment of Annual Export Quotas
If market conditions so require, the Council may review
the quota situation and may vary the percentage of basic ex-
port quotas fixed under paragraph (2) of Article 30. In so
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doing,' the Co-unCit shall have regard to any likely shortfalls
by Members.'
ARTICLE 33
Notification of Shortfalls
(1) Exporting Members undertake to notify the Council
at the end of the eighth month of the coffee year, and at such
later dates as the Council may request, whether they have
sufficient coffee available to export the full amount of their
quota for that year.
(2), The Council shall take into account these notifications
in determining whether or not to adjust the level of export
quotas in accordance with Article 32.
ARTICLE 34
Adjustment of Quarterly Export Quotas
(1) The Council shall in the circumstances set out in this
Article vary the quarterly export quotas fixed for each
Member under paragraph (1) of Article 31.
(2) If the Council varies the annual export quotas as
provided in Article 32, then the change in that annual quota
shall be reflected in the quotas for the current and remaining
quarters, or the remaining quarters, of the coffee year.
(3) Apart from the adjustment provided for in the pre-
ceding paragraph, the Council may, if it finds the market
situation so requires, make adjustments among the current
and remaining quarterly export quotas for the same coffee
Year, without, however, altering the annual export quotas.
(4) If on account of exceptional circumstances an export-
ing Member considers that the limitations provided in para-
graph (2) of Article 31 would be likely to cause serious harm
to its economy, the Council may, at the request of that
Member, take appropriate action under Article 60. The
Member concerned must furnish evidence of harm and pro-
vide adequate guarantees concerning the maintenance of
price stability. The Council shall not, however, in any event,
authorize a Member to export more than 35 per cent of its
annual export quota in the first quarter, 65 per cent in the
first two quarters, and 85 per cent in the first three quarters
of the coffee year.
(5) All Members recognize that marked price rises or
falls occurring within brief periods may unduly distort under-
lying trends in price, cause grave concern to both producers
and consumers, and jeopardize the attainment of the objec-
tives of the Agreement. Accordingly, if such movements in
general price levels occur within brief periods, Members may
request a meeting of the Council which, by distributed simple
majority vote, may revise the total level of the quarterly
export quotas in effect.
(6) If the Council finds that a sharp and unusual increase
or decrease in the general level of prices is due to artificial
manipulation of the coffee market through agreements among
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importers or exporters or both, it shall then decide by a
simple majority vote on what corrective measures should be
applied to readjust the total level of the quarterly export
quotas in effect.
ARTICLE 35
Proecdure for Adjusting Export Quotas
(1) Annual export quotas shall be fixed and adjusted by
alerting the basic export quota of each Member by the same
percentage.
(2) General changes in all quarterly export quotas, made
pursuant to paragraphs (2), (3), (5) and (6) of Article 34,
shall be applied pro rata to individual quarterly export quotas,
in accordance with appropriate rules established by the
Council. Such rules shall take account of the different per-
centages of annual export quotas which the different Mem-
bers have exported or are entitled to export in each quarter
of the coffee year.
(3) All decisions by the Council on the fixing and adjust-
ment of annual and quarterly export quotas under Articles
30, 31, 32 and 34 shall be taken, unless otherwise provided,
by a distributed two-thirds majority vote.
ARTICLE 36
Compliance with Export Quotas
(1) Exporting Members subject to quotas shall adopt the
measures required to ensure full compliance with all pro7
visions of the Agreement relating to quotas. The Council
may request such Members to adopt additional measures.for
the effective implementation of the quota system provided
for in the Agreement.
(2) Exporting Members shall not exceed the animal and"
quarterly export quotas allocated to them.
(3) If an exporting Member exceeds its quota for any
quarter, the Council shall deduct from one or more of its
future quotas a total amount equal to that excess.
(4) If an exporting Member for the second time wink be
Agreement remains in force exceeds its quarterly quota, the
Councit-shall deduct from one or more of its future quotas ,a
total amount equal to twice that excess. ,
(5) If an exporting Member for a third or subsequent
time while the Agreement remains in force exceeds its .quar-
terly quota, the Council shall make the same deduction as
provided in paragraph (4) of this Article, and in addition.,
the Council may take action in accordance with Article 09;
to require the withdrawal of ?such a Member from the
Organization.
(6) The deductions in quotas provided in paragraphs (3),
(4) and (5) of this Article shall be made by the Council as,
soon as it receives the necessary information.
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ARTICLE 37
Transitional Quota Provisions
(1) Exports of coffee after 1 October 1962 shall be charged
against the annual export quota of the exporting country
concerned at such time as the Agreement enters into force in
respect of that country.
(2) If the Agreement enters into force after 1 October 1962,
the Council shall, during its first session, make such modifi-
cations as may be necessary in the procedure for the fixing
of annual and quarterly export quotas in respect of the coffee
year in which the Agreement enters into force.
ARTICLE 38
Shipments of Coffee from Dependent Territories
(1) Subject to paragraph (2) of this Article, the shipment
.of coffee from any of the dependent territories of a Member
to its metropolitan territory or to another of its dependent
territories for domestic consumption therein or in any other
of its dependent territories shall not be considered. as the
export of coffee, and shall not be subject to any export quota
limitations, provided that the Member concerned enters into
arrangements satisfactory to the Council with respect to the
control of re-exports and such other matters as the Council
may determine to be related to the operation of the Agree-
ment and which arise out of the special relationship between
the metropolitan territory of the Member and its dependent
territories.
(2) The trade in coffee between a Member and any of its
dependent territories which, in accordance with Article 4 or
5, is a separate Member of the Organization or a party to a
Member group, shall however be treated, for the purposes
of the Agreement, as the export of coffee.
ARTICLE 39
Exporting Members not Subject to Quotas
(1) Any exporting Member whose average annual exports
of coffee for the preceding three-year period were less than
25,000 bags shall not be subject to the quota provisions of
the Agreement, so long as its exports remain less than that
quantity.
(2) Any Trust Territory administered under a trusteeship
agreement with the United Nations whose annual exports to
countries other than the Administering Authority do not
exceed 100,000 bags shall not be subject to the quota pro-
visions of the Agreement, so long as its exports do not exceed
that quantity.
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ARTICLE 40
Exports not Charged to Quotas
(1) In order to facilitate the increase of coffee consumption
in certain areas of the world having a low per capita consump-
tion and considerable potential for expansion, exports to
countries listed in Annex B shall not, .subject to the provisions
of sub-paragraph (f) of this paragraph, be charged to quotas.
The Council, at the beginning of the second full coffee year
after the Agreement enters into force, and annually there-
after, shall review the list with a view to determining whether
any country or countries should be deleted from it, and may,
if it so decides, delete any such country or countries. In
connexion with exports to the countries listed in Annex B,
the provisions of the following sub-paragraphs shall be
applicable:
(a) At its first, session, and thereafter whenever it
deems necessary, the Council shall prepare an estimate
of imports for internal consumption by the countries
listed in Annex B, after reviewing the results obtained
in the previous year with regard to the increase of coffee
consumption in those countries and taking into account
the probable effect of promotion campaigns and trade
arrangements. Exporting Members shall not in the
aggregate export to the countries listed in Annex B more
than the quantity set by the Council, and for that pur-
pose the Council shall keep those Members informed
of current exports to such countries. Exporting Mem-
bers shall inform the Council not later than thirty days
? after the end of each month of all exports made to each
of the countries listed in Annex B during that month.
(b) Members shall supply such statistics and other
information as the Council may require to assist it in
controlling the flow of coffee to countries listed in Annex
B and its consumption therein.
(c) Exporting Members shall endeavor to renegotiate
existing trade agreements as soon as possible in order
to include in them provisions preventing re-exports of
coffee from the countries listed in Annex B to other
markets. Exporting Members shall also include such
provisions in all new trade agreements and in all new
sales contracts not covered by trade agreements, whether
such contracts are negotiated with private traders or with
government organizations.
(d) In order to maintain control at all times of ex-
ports to countries listed in Annex B, the Council may
decide upon further precautionary steps, such as requir-
ing coffee bags destined to those countries to be specially
? marked and requiring that the exporting Members re-
ceive from such countries banking and contractual
guarantees to prevent re-exportation to countries not
listed in Annex B. The Council may, whenever it deems
necessary, engage the services of an internationally recog-
nized worldwide organization to investigate irregulari-
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INTERNATIONAL COFFEE AdREEMENT ACT OF 196. 23
ties in, or to verify exports to, countries listed in Annex
B. The Council shall call any possible irregularity to
the attention of the Members.
(e) The Council shall annually prepare a compre-
hensivei
report on the results obtained n the develop-
ment of coffee markets in the countries listed in Annex B.
(f) If coffee exported by a Member to a country listed
in Annex B is re-exported to any country not listed in
Annex B, the Council shall charge the corresponding
amount to the quota of that exporting Member Should
there again be a re-exportation from the same country
listed in Annex B, the Council shall investigate the case,
and unless it finds extenuating circumstances, may at
any time delete that country from Annex B.
(2) Exports of coffee beans as raw material for industrial
processing for any purposes other than human consumption
as a beverage or foodstuff shall not be charged to quotas,
provided that the Council is satisfied from information sup-
plied by the exporting Member that the coffee beans are in
fact used for such other purposes.
(3) The Council may, upon application by an exporting
Member, decide that coffee exports made by that Member
for humanitarian or other non-commercial purposes shall not
be charged to its quota.
ARTICLE 41
? Assurance of Supplies
In addition to ensuring that the total supplies of coffee
are in accordance with estimated world imports, the Coun-
cil shall seek to ensure that supplies of the types of
coffee that consumers require are available to them. To
achieve this objective, the Council may, by a distributed
two-thirds majority vote, decide to use whatever methods
it considers practicable.
? ARTICLE 42
Regional and Inter-regional Price Arrangements
? (1) Regional and inter-regional price arrangements among
exporting Members shall be consistent with the general ob-
jectives of the Agreement, and shall be registered with the
Council. Such arrangements shall take into account the
interests of both producers and consumers and the objec-
tives of the Agreement. Any Member of the Organization
which considers that any of these arrangements ? are likely
to lead to results not in accordance with the objectives of
the Agreement may request that the Council discuss them
with the Members concerned at its next session.
(2) In consultation with Members and with any regional
organization to which they belong, the Council may recom-
mend a scale of price differentials for various grades and
qualities of coffee which Members should strive to achieve
through their pricing policies.
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h% pTE1WArl101NAL COFFEE AGREENEM\TT ACT OF 1963
(3) Should sharp price fluctuations occur within brief
periods in respect to those grades and qualities of coffee for
which a scale of price differentials has been adopted as the
result of recommendations made under paragraph (2) of this
Article, the Council may recommend appropriate measures
to correct the situation.
ARTICLE 43
Survey of Market Trends
The Council shall keep under constant survey the trends
of the coffee market with a view to recommending price
policies, taking into consideration the results achieved
through the quota mechanism of the Agreement.
CHAPTER VIII?CERTIFICATES OF ORIGIN AND RE-EXPORT
ARTICLE 44
Certificates of Origin and Re-export
? (1) Every export of coffee from any Member in whose
territory that coffee has been grown shall be accompanied
by a certificate of origin modelled on the form set forth in
Annex C, issued by a qualified agency chosen by that Mem-
ber. Each such Member shall determine the number of
copies of the certificate it will require and each copy shall
bear a serial number. The original of the certificate shall
accompany the documents of export, and a copy shall be
furnished to the Organization by that Member. The Council
shall, either? directly or through an internationally recog-
nized world-wide organization, verify the certificates of
origin, so that at any time it will be able to ascertain the
quantities of coffee which have been exported by each
Member.
(2) Every re-export of coffee from a Member shall be
accompanied by a certificate of re-export issued by a qualified
agency chosen by that Member, in such form as the Council
may determine, certifying that the coffee in question was
imported in accordance with the provisions of the Agree-
ment, and, if appropriate, containing a reference to the cer-
tificate or certificates of origin under which that coffee was
imported. The original of the certificate of re-export shall
accompany the documents of re-export, and a copy shall be
furnished to the Organization by the re-exporting Member.
(3) Each Member shall notify the Organization of the
agency or agencies designated by it to perform the functions
specified in paragraphs (1) and (2) of this Article. The
Council may at any time, for cause, declare certification by
a particular agency unacceptable to it.
(4) Members shall render periodic reports to the Orga-
nization concerning imports of coffee, in such form and at
such intervals as the Council shall determine. ?
(5) The provisions of paragraph (1) of this Article shall be
put into effect not later than three months after the entry into
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1963 25
force of the Agreement. The provisions of paragraph (2)
shall be put into effect at such time as the Council shall decide.
(6) After the respective dates provided for under para-
graph (5) of this Article, each Member shall prohibit the
entry of any shipment of coffee from any other Member which
is not accompanied by a certificate of origin or a certificate of
re-export.
CHAPTER IX?REGULATION OF IMPORTS
ARTICLE 45
Regulations of Imports
(1) In order to prevent non-member exporting countries
from increasing their exports at the expense of Members, the
following provisions shall apply with respect to imports of
coffee by Members from non-member countries.
(2) If three months after the Agreement enters into force,
or at any time thereafter, the Members of the Organization
represent less than 95 per cent of world exports in the calendar
year 1961, each Member shall, subject to paragraphs (4)
and (5) of this Article, limit its total annual imports from
non-member countries as a group to a quantity not in excess
of its average annual imports from those countries as a
group during the last three years prior to the entry into force
of the Agreement for which statistics are available. How-
ever, if the Council so decides, the application of such limi-
tations may be deferred.
(3) If at any time the Council, on the basis of information
received, finds that exports from non-member countries as
group are disturbing the exports of Members, it may, not-
withstanding the fact that the Members of the Organization
represent 95 percent or more of world exports in the calendar
year 1961, decide that the limitations of paragraph (2) shall
be applied.
(4) If the Council's estimate of world imports adopted
under Article 30 for any coffee year is less than its estimate
of world imports for the first full coffee year after the Agree-
ment enters into force, the quantity which each Member
may import from non-member countries as a group under
the provisions of paragraph (2) shall be reduced by the same
proportion.
(5) The Council may annually recommend additional
limitations on imports from non-member countries if it
finds such limitations necessary in order to further the
purposes of the Agreement.
(6) Within one month from the date on which limitations
are applied under this Article, each Member shall inform the
Council of the quantity of its permissible annual imports
from non-member countries as a group.
(7) The obligations of the preceding paragraphs of this
Article shall not derogate from any conflicting bilateral or
multilateral obligations which importing Members have
S. Rept. 941, 88-2-4
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26 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
entered into with non-member countries before 1 August
1962; provided that any importing Member which has such
conflicting obligations shall carry them out in such a way as
to minimize the conflict with the obligations of the preceding
paragraphs, take steps as soon as possible to bring its obliga-
tions into harmony with those paragraphs, and inform the
Council of the details of the confficting obligations and of the
steps taken to minimize or eliminate the conflict.
(8) If an importing Member fails to comply with the
provisions of this Article, the Council may, by a distributed
two-thirds majority vote, suspend both its voting rights in
the Council and its right to have its votes cast in the Board.
CHAPTER X?INCREASE OF CONSUMPTION
ARTICLE 46
Promotion
(1) The Council shall sponsor a continuing programme for
promoting the consumption of coffee. The size and cost of
this programme shall be subject to periodic review and
approval by the Council. The importing Members will
have no obligation as respects the financing of this programme.
(2) If the Council after study of the question so decides, it
shall establish within the framework of the Board a separate
committee of the Organization, to be known as the World
Coffee Promotion Committee.
(3) If the World Coffee Promotion Committee is estab-
lished, the following provisions shall apply:
(a) The Committee's rules, in particular those regard-
? ing membership, orpanization, and financial - all airs, shall
be determined by the Council. Membership in the
Committee shall be limited to Members which con-
tribute to the promotional programme? established in
paragraph (1) of this Article.
(b) In carrying out its work, the Committee shall
establish a technical committee within each country in
which a promotional campaign. will be conducted. Be-
fore a promotional campaign is inaugurated in any Mem-
ber country, the Committee shall advise the representa-
tive of that Member in the Council of the Committee's
intention to conduct such a campaign and shall obtain
that Member's consent.
(c) The ordinary administrative expenses relating to
the permanent staff of the Committee, other than ? the
costs of their travel for promotion purposes, shall be
charged to the administrative budget of the Organiza-
tion, and shall not be charged to the promotion. funds of
the Committee.
ARTICLE 47
Removal of Obstacles to Consumption
(1) The Members recognize the utmost importance'- of
achieving the greatest possible increase of coffee, consump-
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tion as rapidly as possible, in particular through the pro-
gressive removal of any obstacles which may hinder such
increase.
(2) The Members affirm their intention to promote full
international co-operation between all coffee exporting and
importing countries.
(3) The Members recognize that there are presently in
effect measures which may to a greater or lesser extent
hinder the increase in consumption of coffee, in particular:
? (a) import arrangements applicable to coffee, in-
cluding preferential and other tariffs, quotas, operations
of Government import monopolies and official purchasing
agencies, and other administrative rules and commercial
practices;
(b) export ? arrangements as regards direct or in-
direct subsidies and other administrative rules and com-
mercial practices; and
(c) internal trade conditions and domestic legal and
administrative provisions which may affect consumption.
(4) The Members recognize that certain Members have
shown their concurrence with the objectives stated above by
announcing their intention to reduce tariffs on coffee or by
taking other action to remove obstacles to increased con-
sumption.
(5) The Members undertake, in the ilght of studies already
carried out and those to be carried out under the auspices
of the Council or by other competent international organiza-
tions, and of the Declaration adopted at the Ministerial
Meeting in Geneva on 30 November 1961:
(a) to investigate ways and means by which the obsta-
cles to increased trade and consuption referred to in
paragraph (3) of this Article could be progressively
reduced and eventually, whenever possible, eliminated,
or by which their effects could be substantially dimin-
? ished;
(b) to inform the Council of the results of their in-
vestigation, so that the Council can review, within the
first eighteen months after the Agreement enters into
force, the information provided by Members concerning
the effect of these obstacles and, if appropriate, the
measures planned to reduce the obstacles or diminish
their effects;
(c) to take into account the results of this review by
the Council in the adoption of domestic measures and
in proposals for international action; and
(d) to review at the session provided for in Article 72
the results acheived by the Agreement and to examine
the adoption of further measures for the removal of
such obstacles as may still stand in the way of expansion
of trade and consumption, taking into account the
success of the Agreement in increasing income of ex-
porting Members and in developing consumption.
(6) The Members undertake to study in the Council and
in other appropriate organizations any requests presented by
-
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Members whose economies may be affected by the measures
taken in accordance with this Article.
CHAPTER XI-PRODUCTION CONTROLS
ARTICLE 48
Production Goals
(1) The producing Members undertake to adjust the pro-
duction of coffee while the Agreement remains in force to the
amount needed for domestic consumption, exports, and stocks
as specified in Chapter XII.
(2) Not later than one year after the Agreement enters into
force, the Council shall, in consultation with the producing
Members, by a distributed two-thirds majority vote, recom-
mend production goals for each of such Members and for the
world as a whole.
(3) Each producing Member shall be entirely responsible
for the policies and procedures it applies to achieve these
objectives.
ARTICLE 49
Implementation of Production-Control Programmes
(1) Each producing Member shall periodically submit
written reports to the Council on the measures it has taken or
is taking to achieve the objectives of Article 48, as well as on
the concrete results obtained. At its first session the Council
shall, by a distributed two-thirds majority vote, establish a
time-table and procedures for the presentation and discussion
of such reports. Before making any observations or recom-
mendations the Council will consult with the Members
concerned.
(2) If the Council determines by a distributed two-thirds
majority vote either that any producing Member has not,
within a period of two years from the entry into force of the
Agreement, adopted a programme to adjust its production to
the goals recommended by the Council in accordance with
Article 48, or that any producing Member's programme is not
effective, it may by the same majority decide that such
Member shall not enjoy any quota increases which may result
from the application of the Agreement. The Council may by
the same majority establish whatever procedures it considers
appropriate for the purpose of verifying that the provisions
of Article 48 have been complied with.
(3) At such time as it considers appropriate, but in any
event not later than the review session provided for in Article
72, the Council may, by a distributed two-thirds majority
vote, in the light of the reports submitted for its consideration
by the producing Members in accordance with paragraph (1)
of this Article, revise the production goals recommended in
accordance with paragraph (2) of Article 48.
(4) In applying the provisions of this Article, the Council
shall maintain close contact with international, national and
private organizations which have an interest in or are 1'6-
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
sponsible for financing or, in general, assisting the develop-
ment plans of the primary producing countries.
ARTICLE 50
Co-operation of Importing Members
Recognizing the paramount importance of bringing the
production of coffee into reasonable balance with world de-
mand, the importing Members undertake, consistently with
their general policies regarding international assistance, to co-
operate with the producing Members in their plans for
limiting the production of coffee. Their assistance may be
provided on a technical, financial or other basis, and under
bilateral, multilateral or regional arrangements, to producing
Members implementing the provisions of this Chapter.
'CHAPTER XII-REGTJLATION OF STOCKS
ARTICLE 51
Policy Relative to Coffee Stocks
(1) At its first session the Council shall take measures
to ascertain world coffee stocks, pursuant to systems which
it shall establish, and taking into account the following
points: quantity, countries of origin, location, quality, and
condition. The Members shall facilitate this survey.
(2) Not later than one year after the Agreement enters
into force, the Council shall, on the basis of the data thus
obtained and in consultation with the Members concerned,
establish a policy relative to such stocks in order to comple-
ment the recommendations provided for in Article 48 and
thereby to promote the attainment of the objectives of the
Agreement.
(3) The producing Members shall endeavour by all means
within their power to implement the policy established by
the Council.
(4) Each producing Member shall be entirely responsible
for the measures it applies to carry out the policy thus
established by the Council.
ARTICLE 62
7 Implementation of Programmes for Regulation of Stocks
Each producing Member shall periodically submit written
reports to the Council on the measures it has taken or is
taking to achieve the objectives of Article 51, as well as on
the concrete results obtained. At its first session, the
Council shall establish a time-table and procedures for the
presentation and discussion of such reports. Before making
any observations or recommendations, the Council shall
consult with the Members concerned.
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30 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
?CHAPTER XIII-MISCELLANEOUS OBLIGATIONS OF MEMBERS
ARTICLE 53
Consultation and Co-operation with the Trade
(1) The Council shall encourage Members to seek the
views of experts in coffee matters.
(2) Members shall conduct their activities within the
framework of the Agreement in a manner consonant with
the established channels of trade.
ARTICLE 54
Barter
In order to avoid jeopardizing the general price structure,
Members shall refrain from engaging in direct and indi-
vidually linked barter transactions involving the sale of coffee
in the traditional markets.
ARTICLE 55
Mixtures and Substitutes
Members shall not maintain any regulations requiring
the mixing, processing or using of other products with coffee
for commercial resale as coffee. Members shall endeavour to
prohibit the sale and advertisement of products under the
name of coffee if such products contain less than the equiva-
lent of 90 per cent green coffee as the basic raw material.
CHAPTER XIV-SEASONAL FINANCING
ARTICLE 56
Seasonal Financing
(1) The Council shall, upon the request of any Member
who is also a party to any bilateral, multilateral, regional
or inter-regional agreement in the field of seasonal financing,
examine such agreement with a view to verifying its com-
patability with the obligations of the Agreement.
(2) The Council may make recommendations to Members
with a view to resolving any conflict of obligations which
might arise.
(3) The Council may, on the basis of information obtained
from the Members concerned, and if it deems appropriate
and suitable, make general recommendations with a view to
assisting Members which are in need of seasonal financing.
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CHAPTER XV-INTERNATIONAL COFFEE FUND
ARTICLE 57
International Coffee Fund
(1) The Council may establish an International Coffee'
Fund. The Fund shall be used to further the objective of
limiting the production of coffee in order to bring it into
reasonable balance with demand for coffee, and to assist in
the achievement of the other objectives of the Agreement.:
(2) Contribution to the Fund shall be voluntary.
(3) The decision by the Council' to establish the Fund:and
the adoption of guiding principles to govern its administra-
tion shall be taken by a distributed two-thirds majority vote.
CHAPTER XVI-INFORIVIATION AND STUDIES
ARTICLE 58
Information
(1) The Organization shall act as a centre for the collec-
tion, exchange and publication of:
(a) statistical information on world production,
prices, exports and imports, distribution and consump-
tion of coffee; and
(b) in so far as is considered appropriate, technical
information on the cultivation, processing and utilization
of coffee.
(2) The Council may require Members to furnish such
information as it considers necessary for its operations, in-
cluding regular statistical reports on coffee production, ex-
ports and imports, distribution, consumption, stoeks and
taxation, but no information shall be published which might
serve to identify the operations of persons or companies pro-
ducing, processing or marketing coffee. The Members shall
furnish information requested m as detailed and accurate a
manner as is practicable.
(3) If a Member fails to supply, or finds difficulty in
supplying, within a reasonable time, statistical and other in-
formation required by the Council for the proper functioning
of the Organization, the Council may require the Member
concerned to explain the reasons for non-compliance. If it
is found that technical assistance is needed in the matter, the
Council may take any necessary measures.
ARTICLE 59
? Studies
(1) The Council may promote studies in the fields of the
economics of coffee production and distribution, the impact
of governmental measures in producing and consuming coun-
tries on the production and consumption of coffee, the oppor-
tunities for expansion of coffee consumption for traditional
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32 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
and possible new uses, and the effects of the operation of the
Agreement on producers and consumers of coffee, including
their terms of trade.
(2) The Organization shall continue, to the extent it con-
siders necessary, the studies and research previously under-
taken by the Coffee Study Group, and shall periodically carry
out studies on trends and projections on coffee production
and consumption.
(3) The Organization may study the practicability of pre-
scribing minimum standards for exports from Members who
produce coffee. Recommendations in this regard may be
discussed by the Council.
CHAPTER XVII-WAIVER
ARTICLE 60
Waiver
(1) The Council may, by a two-thirds distributed majority
vote, relieve a Member of an obligation which, on account of
exceptional or emergency circumstances, force majeure,
constitutional obligations, or international obligations under
the United Nations Charter for territories administered
under the trusteeship system, either:
(a) constitutes a serious hardship;
(b) imposes an inequitable burden on such Member;
or
(c) gives other Members an unfair or unreasonable
advantage.
(2) The Council, in granting a waiver to a Member, shall
state explicitly the terms and conditions on which and the
period for which the Member is relieved of such obligation.
CHAPTER XVIII-DISPUTES AND COMPLAINTS
ARTICLE 61
Disputes and Complaints
(1) Any dispute concerning the interpretation or applica-
tion of the Agreement which is not settled by negotiation,
shall, at the request of any Member party to the dispute,
be referred to the Council for decision.
(2) In any case where a dispute has been referred to the
Council under paragraph (1) of this Article, a majority of
Members, or Members holding not less than one-third of the
total votes, may require the Council, after discussion, to
seek the opinion of the advisory panel referred, to in para-
graph (3) of this Article on the issues in dispute before giving
its decision.
(3)(a) Unless the Council unanimously agrees otherwise,
the panel shall consist of:
(i) two persons, one having wide experience in matters
of the kind in dispute and the other having legal standing
and experience, nominated by the exporting Members;
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(ii) two such persons nominated by the importing
Members; and
(iii) a chairman selected unanimously by the four
persons nominated under (i) and (ii), or if they fail to
agree, by the Chairman of the Council.
(b) Persons from countries whose Governments are
Contracting Parties to this Agreement shall be eligible to
serve on the advisory panel.
(c) Persons appointed to the advisory panel shall act in
their personal capacities and without instructions from any
Government.
(d) The expenses of the advisory panel shall be paid by
the Council.
(4) The opinion of the advisory panel and the reasons
therefor shall lie submitted to the Council which, after con-
sidering all the relevant information, shall decide the dispute.
(5) Any complaint that any Member has failed to fulfill
its obligations under the Agreement shall, at the request of
the Member making the complaint, be referred to the
Council, which shall make a decision on the matter.
(6) No Member shall be found to have committed a
breach of its obligations under the Agreement except by a
distributed simple majority vote. Any finding that a Mem-
ber is in breach of the Agreement shall specify the nature of
the breach.
(7) If the Council finds that a Member has committed a
breach of the Agreement, it may, without prejudice to other
enforcement measures provided for in other articles of the
Agreement, by a distributed two thirds majority vote,
suspend that Member's voting right in the Council and its
right to have its votes cast in the Board until it fulfills its
obligations, or the Council may take action requiring com-
pulsory withdrawal under Article 69.
CHAPTER XIX?FINAL PROVISIONS
ARTICLE 62
Signature
The Agreement_ shall be open for signature at United
Nations Headquarters until and including 30 November
1962 by any Government invited to the United Nations
Coffee Conference, 1962, and by the Government of any
State represented before independence as a dependent
territory at that Conference.
ARTICLE 63
Ratification
The Agreement shall be subject to ratification or ac-
ceptance by the signatory Governments in accordance with
their respective constitutional procedures. Instruments of
ratification or acceptance shall be deposited with the Secre-
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tary-General of the United Nations not later than 31 Decem-
ber 1963. Each Government depositing an instrument of
ratification or acceptance shall, at the time of such deposit,
indicate whether it is joining the Organization as an exporting
Member or an importing Member, as defined in paragraphs
(7) and (8) of Article 2.
ARTICLE 64
Entry into Force
(1) The Agreement shall enter into force between those
Governments which have deposited instruments of ratifica-
tion or acceptance when Governments representing at least
twenty exporting countries having at least 80 per cent of total
exports in the year 1961, as specified in Annex D, and Govern-
ments representing at least ten importing countries having at
least 80 per cent of world imports in the same year, as specified
in the same Annex' have deposited such instruments. The
Agreement shall enter into force for any Government which
subsequently deposits an instrument of ratification, accept-
ance or accession on the date of such deposit.
(2) The Agreement may enter into force provisionally.
For this purpose, a notification by a signatory Government
containing an undertaking to seek ratification or acceptance
in accordance with its constitutional procedures as rapidly
as possible, which is received by the Secretary-General of the
United Nations not later than 30 December 1963, shall be
regarded as equal in effect to an instrument of ratification or
acceptance. It is understood that a Government which
gives such a notification will provisionally, apply the Agree-
ment and be provisionally regarded as a party thereto until
either it deposits its instrument of ratification or acceptance
or until 31 December 1063, whichever is earlier.
(3) The Secretary-General of the United Nations shall
convene the first session of the Council, to be held in London
within 30 days after the Agreement enters into force.
(4) Whether or not the Agreement has provisionally
entered into force in accordance -with paragraph (2) of this
Article, if by 31 December, 1963 it has not definitively
entered into force in accordance with paragraph (1), those
Governments which have by that date deposited instruments
of ratification or acceptance may consult together to consider
what action the situation requires, and may, by mutual
consent, decide that it shall enter into force among them-
selves.
ARTICLE 65
Accession
The Government of any State Member of the United
Nations or of any of its specialized agencies and any Govern-
ment invited to the United Nations Coffee Conference, 1962,
may accede to this Agreement upon conditions that shall be
established by the Council. In establishing such conditions
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the Council shall, if such country is not listed in Annex A,
establish a basic export quota for it. If such country is
listed in Annex A, the respective basic export quota specified
therein shall be the basic export quota for that country
trdess the Council decides otherwise by a distributed two-
thirds majority vote. Each Government depositing an in-
strument of accession shall, at? the time of such deposit,
indicate,whether it is joining the Organization as an exporting
Member or an importing Member, as defined in paragraphs
(7) and (8) of Article 2.
ARTICLE 66
Reservations
Reservations may not be made with respect to any of the
provisions of the Agreement.
ARTICLE fi7
No4fication8 in Respect of Dependent Territories
(1) Any. ,Goyeinnient may, at the time of signature or
'deposit' of :an'instrurnent of acceptance, ratification .or acces-
sion, or at any tinie thereafter', by notification to the Secre-
tary-General of the United Nations, declare that the Agree-
ment shall extend to any of the territories for whose
international relations it -is responsible,, and the Agreement
shall extend 1,6 the territories named therein from the date
of such notification.
(2) Any Contracting Party which desires to exercise its
rights under .Article.14 :in respect . of any of its dependent
territories, or which desires to, authorize one of its dependent
territories to become part of a Member group formed under
Article 5 .or .6, may do so by making :a notification to that
effect to the Secretary-General of the United Nations, either
at the time of .the deposit of its instrument of ratification,
acceptance or-accession, or at any ;later time.
- (3) Any Contracting Party which has made a declaration
under paragraph (I) of this Article may at any time there-
after, by notification to the Secretary-General of the United
Nations declare that the Agreement shall cease to extend
to the territory named in the notification, and the 'Agree-
ment shall cease to extend to :such territory from the date
of such notification.
(4) The Government of a territory to which the Agreement
has been extended under paragraph (1) of this Article and
which has subsequently become independent may, within 90
days after the attainment of independence, declare by noti-
fication to the Secretary-General of the United Nations that
it has assumed the rights and obligations of a Contracting
Party to the Agreement. It shall, as from the date of such
notification, become a party to the Agreement.
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36 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
ARTICLE 68
Voluntary Withdrawal
No Contracting Party may give notice of voluntary with?
drawal from the Agreement before 30 September 1963.
Thereafter, any Contracting Party may withdraw from the
Agreement at any time by giving a written notice of with-
drawal to the Secretary-General of the ?United Nations.
Withdrawal shall become effective 90 days after the notice is
received.
ARTICLE 69
Compulsory Withdrawal
If the Council determines that any Member has failed to,
carry out its obligations under the Agreement and that such
failure significantly impairs the operations of the Agreement,
it may, by a distributed two-thirds majority vote, require the
withdrawal of such Member from the Organization. The
Council shall immediately notify the Seeretary-General of
the United Nations of any such decision. Ninety days after
the date of the Council's decision, that Member shall cease
to be a Member of the Organization, and, if such Member is a
Contracting Party, a party to the Agreement.
ARTICLE 70
Settlement of Accounts with Withdrawing Members
(1) The Council shall determine any settlement of accoimts
with a withdrawing Member. The Organization shall retain
any amounts already paid by a. withdrawing Member, and
such Member shall remain bound to pay any amounts due
from it to the Organization at the time the withdrawal be-
comes effective; provided, however, that in the case of a
Contracting Party which is unable to accept an amendment
and consequently either withdraws or ceases to participate in
the Agreement under the provisions of paragraph (2) of
Article 73, the Council may determine any settlement of
accounts which it finds equitable.
(2) A Member which has withdrawn or which has ceased
to participate in the Agreement shall not be entitled to any
share of the proceeds of liquidation or the other assets of the
Organization upon termination of the Agreement under
Article 71.
ARTICLE 71
Duration and Termination
(1) The Agreement shall remain in force until the com-
pletion of the fifth full coffee year after its entry into force,
unless extended under paragraph (2) of this Article, or earlier
terminated under paragraph (3).
(2) The Council, during the fifth full coffee year after the
Agreement enters into force, may, by vote of a majority of the
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
Members having not less than a distributed two-thirds
majority of the total votes, either decide to renegotiate the
Agreement, or to extend it for such period as the Council shall
determine.
(3) The Council may at any time, by vote of a majority
of the Members having not less than a distributed two-thirds
majority of the total votes, decide to terminate the Agree-
ment. Such termination shall take effect on such date as
the Council shall decide.
(4) Notwithstanding termination of the Agreement, the
Council shall remain in being for as long as necessary to
carry out the liquidation of the Organization, settlement
of its accounts, and disposal of its assets, and shall have
during that period such powers and functions as may be neces-
sary for those purposes.
ARTICLE 72
Review
In order to review the Agreement, the Council shall hold a
special session during the last six months of the coffee year
ending 30 September. 1965.
ARTICLE 73
Amendment
(1) The Council may, by a distributed two-thirds majority
vote, recommend an amendment of the Agreement to the
Contracting Parties. The amendment shall become effective
100 days after the Secretary-General of the United Nations
has received notifications of acceptance from Contracting
Parties representing at least 75 per cent of thefl exporting
countries holding at least 85 per cent of the votes of the
exporting Members, and from Contracting Parties repre-
senting at least 75 per cent of the importing countries holding
at least 80 per cent of the votes of the importing Members.
The Council may fix a time within which each Contracting
Party shall notify the Secretary-General of the United
Nations of its acceptance of the amendment, and, if the
amendment has not become effective by such tiine, it shall be
considered withdrawn. The Council shall provide the
Secretary-General with the information necessary to de-
termine whether the amendment has become effective.
(2) Any Contracting Party, or any dependent territory
which is either a Member or a party to a Member group, on
behalf of which notification of acceptance of an amendment
has not been made by the date on which such amendment
becomes effective, shall as of that date cease to participate
in the Agreement.
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38 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
ARTICLE 74
Notifications by the Secretary-General
The Secretary-General of, the United Nations shall notify'
all Governments represented: by delegates or Observers at
the United Nations Coffee Conference, 1962, and all other
Governments of States Members of the 'United Nations or
of any of its specialized agencies, of i each deposit of an in-
strument of ratification, acceptance or accession, and of the
dates on which the Agreethent comes provisionallY and defin-
itively into force. The Secretary-General of the United
Nations shall also notify- all Contracting Parties of each
notification under Article 5, 67, 68 or 69; of the date to which_
the Agreement is extended or on which it is terminated under
Article 71; and of the date on which an aniendment becomes
effective under Article 73.
IN WITNESS WHEREOF the underSigned, having been duly
authorized to this effect by _their respective Governments,
have signed this Agreement on the dates appearing opposite
their signatUres.-
The texts of this Agreement in the English, French, Rus-,
sian, Spanish and Portuguese languages shall all: be equally,
authentic. The originals shall be deposited in the archives
of the United Nations, and the Secretary-General of the
United Nations shall transmit certified copies thereof to each
signatory and acceding Government.
For Argentina:
L M CARABALLO
For Belgium:
WALTER LORIDAN
For Bolivia:
JAIME CABALLERO TA1IIAY0
For Brazil:
SERGIO ARMANDO FRAIZA0
For Burundi:
PASCAL BUBIRIZA
For Cameroon:
J. KUOH MOUKOURI
For Colombia:
CARLOS SANZ DE SANTAMARIA
For Costa Rica:
F. Vold() J.
For the Dominican Republic:
DE MOYA
For El Salvador:
F R LIMA
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INTERNATIONA 'COFFE. ,AGREV4ENT.' ACT PF 1963 39
For France:
SEYDOUX
- GlIatd1Hald:
ROBERTO ALEJO
For Haiti:
CARLET AUGUSTE
, For Honduras:
CI(CEHES
? For Italy: _ _
GIUSEPPE BRUSASCA:
or Japan: ?
KATSUO OKAZAKI ,
A.4 referendum
or Madagascar :
. Lours .K.AKOTOMALALA
For Mexico: .
'M A CORDERA !.Trt
Ad referendum
For Peru': -
LUIS EDGARIO LLOSA
For Spain ,
JosE F. DE LEQUERICA
For Tanganyika:. '
A. Z: NSILO -SWAI
For the United Kingdom of Great Britain and Northern
Ireland
PATRICK DEAN
For the United States of America:
W. MICHAEL BLUMENTHAL
For Venezuela:
MAURICIO BAEZ
Ad referendum
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40 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
UNITED NATIONS COFFEE CONFERENCE, 1962
ANNEXES TO THE INTERNATIONAL COFFEE AGREEMENT, 1962
ANNEX A
Basic Export Quotas
[60-kilogramme bags]
Brazil
18,
000,
000
Gabon
18,
000
Colombia
6,
011,
280
Ivory Coast 2,
324,
278
Costa Rica
950,
000
Malagasy Republic_
828,
828
Cuba
200,
000
Togo
170,
000
Dominican Repub-
lic a
425,
000
Kenya
Uganda 1,
516,
887,
835
737
Ecuador
552,
000
Tanganyika
435,
458
El Salvador
1,
429,
500
Portugal 2,
188,
648
Guatemala
1,
344,
500
Congo (Leopold-
Haiti a
420,
000
ville) b
700,
000
Honduras
285,
000
Ethiopia
850,
000
Mexico
1,
509,
000
India
360,
000
Nicaragua
419,
100
Indonesia 1,
176,
000
Panama
26,
000
Nigeria
18,
000
Peru
580,
000
Rwanda and
Venezuela
475,
000
Burundi b
340,
000
'Cameroun
762,
795
Sierra Leone
65,
000
Central African Re-
public
150,
000
Trinidad
Yemen
44,
77,
000
000
Congo (Brazzaville)-
11,
000
'Grand total 45,
587,
183
Dahomey
37,
224
The Republic of Haiti and the Dominican Republic shall be permitted to export 20 percent
:more than their respective adjusted basic, quotas in the -coffee -year 1963-64. In 'no event,
however, shall such increases be taken into account for the purpose of 'calculating the distri-
,bution of votes. In the review of the Agreement, provided for in Article 72, the two-year
-production cycle in those countries shall be given special consideration. -
b In the first coffee year, the Republic of the Congo (Leopoldville), after presentation to the
-Council of acceptable evidence of an exportable production larger than 700,000 bags, shall be
:authorized by the Council to export up to 900,000 bags. In the second and third coffee years
-it-is permitted to increase its coffee exports by an amount not to exceed 20 percent over those
,for the previous year. After presentation to the Council of acceptable evidence of an export-
able production larger than 340,000 bags, Rwanda and Burundi may be authorized--by the
Council to export a combined total of up to 450,000 bags in the.first coffee year, 500,000 bags
:In the second coffee year and 565,000 bags in the third coffee year. In no event, however, shall
-the increases allowed those countries 'in the first three years be taken. into account for-the
-purpose of calculating the distribution of votes. L ? i ,c ? ,
ANNEX
]"Ton-quota Countries of Destination, referred to in Article 40, Chapter VII
The geographical areas below are non-quota countries for purposes of
-this Agreement:
Bahrein
Basutoland
Bechuanaland
Ceylon
'China (Taiwan)
China (mainland)
:Federation of Rhodesia and Nyasa-
land
Hungary
-Iran
Iraq
Japan
Jordan
Kuwait
Muscat and Oman
'Oman
Philippines
Poland
Qatar
Republic of Korea
North Korea
Republic of Viet-Nam
North Viet-Nam
Romania
Saudi Arabia
Somalia
South West Africa
Sudan
Swaziland
Thailand
Republic of South Africa
Union of Soviet Socialist Republics
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INTERNATIONAL Cate.FEE AGREEMENT. 'Aur OF.1963 4.1
ANNEX 'C
CeptiAcat, Of, OrOin
This certificate is made pursuant to the International Coffee Agree-
ment. A copy of this certificate must be submitted with export docu-
ments and will _be_required,for export _(and import) clearance.....
No. Member
(to be cited in any future (producing country)
correspondence)
I hereby certify that the green, soluble, roasted, semi-roasted or
other coffee described below has been produced in (producing
country).
per S. S.: or other carrier
from: (name of port or other point of em-
barkation)
to: (name of port or country of final desti-
nation)
via:
on or about: (date)
Shipping Marks Quantity
or other identi- (number of Total Weight Observations
fication units) Kg. lbs.
Green
Gross Gross
Net Net
Grsoo Gross
Roasted or
Soluble Net Net
Other (specify)
Date Signature
(Certifying Officer)
(Certifying Agency)
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42 INTERNATIONAL COFFER AGREEMENT ACT OF 1963
ANNEX D
List of exports and imports in 1961
I. EXPORTS
[Thousands of 60-kilogramme bags]
Country
Bags
Percent
Country
Bags
Percent
Bolivia
(a)
0.0
Jamaica
(a)
?
o
P PPP:. .-.PP!-P 1..oraPPPPPI-'PP
ci .cOON bO5ctv.) txt C.4 . 0 CA CA 0 01 . 0
Brazil
16, 971
39.2
Liberia
41
Burundi and Rwanda
397
0. 9
Madagascar
651
Cameroon
591
1. 4
Mauritania
(.)
Central African Republic..
121.
O. 3
Mexico ? ,
1,483
Colombia
5,651
13. 1
Nicaragua
' 349
Congo (Brazzaville)
(a)
0. 0
Nigeria
(.)
Congo (Leopoldville)
499
1. 2
Panama
(a)
Costa Rica
835
1.9
Paraguay
25
Cuba
85
0. 2
Peru
567
Dahomey
40
0. 1
Portugal
1,976
Dominican Republic
327
0.8
Rwanda (see Burundi).
Ecuador
381
0. 9
Sierra Leone
85
El Salvador
1,430
3. 3
Tanganyika
438
Ethiopia
950
2. 2
Togo
171
Gabon
(a)
0.0
Trinidad and Tobago
38
Ghana
28
0.1
United Kingdom (Kenya) _
536
Guatemala
1,255
2.9
United Kingdom
Guinea
200
0. 5
(Uganda)
,
1,806
Haiti
348
0. 8
Upper Volta
(a)
Honduras
210
0. 5
Venezuela
406
India
539
1. 2
Yemen
80
Indonesia
1, 091
2. 5
43, 219
Ivory Coast
2,618
6. 0
Total
II. IMPORTS
[Thousands of 60-kilogramme bags]
Afghanistan
Albania
(a)
(a)
00M,LOTI?,10 0 000000,, .C1 00Cem..000.N00.00c4dd Ocid00666.4 cci6 ci.406:566666c346cicicici-ci
Luxembourg (included in
Belgium)
Argentina
574
Mali
(*)
0.0
Australia
156
Mongolia
(a)
0. 0
Austria
218
Morocco
129
0.3
Belgium
5,036
Nepal
(a)
0. 0
Bulgaria
60
Netherlands
1, 147
2.6
Burma
(a)
New Zealand
35
0.1
Byelorussian, S.S.R. (in-
?Niger
(a) ?
0..0
chided an U.S.S.R.)
Norway
450.
1.0
Cambodia - .
(a)
Pakistan'
(a)
0.0
Canada
1, 119
Philippines
(a)
0. 0
Ceylon
(a)
Poland
89
0.2
Chad
(a)
Republic of Korea
(.)
0. 0
Chile
113
Republic of Viet-Nam
()
0.0
China
(a)
Romania
(a)
0. 0
Cyprus
(a)
Saudi Arabia
(a)
0.0
Czechoslovakia
175
Senegal
(a)
0.0
Denmark
727
Somalia
(a)
0. 0
Federal Republic of Ger-
South Africa
185
0. 4
many
3,540
Spain
300
0.7
Federation of Malaya
109
Sudan
154
0.3
Federation of Rhodesia
Sweden
1, 295
3. 0
and Nyasaland
(?)
Switzerland
541
1.2
Finland
?38
Syria
31
0. 1
France
3, 882
Thailand
83
0. 2
Greece
132
Tunisia
48
0. 1
Hungary
39
Turkey
36
0. 1
Iceland
29
Ukrainian S.S.R. (in-
Iran
(a)
eluded in U.S.S.R.)
Iraq
(a)
Union' of Soviet' Socialist?
Ireland
(a)
Republics
371
0. 9
Israel
74
United Arab Republic
70
0. 2
Italy
1,753
United Kingdom
978
2.3
Japan
244
United States
22, 464
51.7
Jordan
23
Uruguay
45
0.1
Kuwait
(a)
Yugoslavia
143
0.3
Laos
(a)
43, 393
100. 0
Lebanon
158
Total
Libya
(a)
Less than 22,000 bags.
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MINORITY VIEWS ON H.R. 8864
The Senate should not hesitate to reject this bill. The chief bene-
ficiaries of the International Coffee Agreement are government
treasuries which levy heavy taxes on exports, coffee speculators, and
a few large landowners and the American housewife will pay the bill.
The agreement is a brew of international politics in which those
interested in global price fixing are determined to place an unnecessary
and unconscionable burden on the coffee drinkers of our Nation and
the world. This commodity agreement substitutes political judgment
for economic judgment in trying to solve an economic problem.
The agreement gives some lipservice to the regulation of supplies
in order to prevent wide fluctuations in prices, but its prime purpose
is to keep those prices at a high level. Article 27(2) states that:
the Members agree of the necessity of assuring that the
general level of coffee prices does not decline below the
general level of such prices in 1962.
?There seems to have been a policy established which would place a
floor on prices, but there is no reference to any ceiling. Article 1
refers to the objectives to?
achieve a reasonable balance? between supply and demand
on a basis which will assure adequate supplies of coffee to con-
sumers and markets for coffee to producers at equitable
prices * * *
but this objective is at once lost sight of and there is no later provision
for carrying out that objective.
In short, the principal purpose of the agreement and the imple-
mentation of it are aimed at keeping prices high.
The International Coffee Council in London was conceived and
created not to stabilize the prices of coffee, but to increase them at
the discretion of the coffee-producing countries.
The only possible provision for preventing runaway prices is that
for increasing quotas, and this by no means assures the American
consumer of fair prices.
Before quotas can be increased two-thirds of the consuming coun-
tries, plus two-thirds of the producing countries, must vote in favor
of the increase. Every consuming country could vote for an increase,
but this would not be sufficient.
The first test of the agreement painfully proved that the United
States is powerless and defenseless in that body. It proved the coffee-
producing countries of Africa, Latin America, and Asia can and will
dominate the market. They can and will reduce or limit export-
import quotas at their discretion, thus fixing prices at any level they
see fit.
Furthermore, if there happens to be a shortage, the price can
skyrocket and there is nothing to prevent it from so doing. On the
other hand, if stocks become large so that the price might be affected,
43
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44 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
or if competition on the market tends to drive the price down, the
quota system prevents any of this advantage from reaching the
ultimate consumer.
Present experience bears this out. There are claims that today's
inflated price is the result of crop failure in Brazil. Yet testimony
before the Finance Committee brought out the fact that there is a
very large supply on band, and there seems to be no question that if
there had been no coffee agreement there would be an ample supply
and prices would be much less than at present.
If there have been crop failures, and there may someday be a
shortage, than prices at some future date might have risen, but a
possible future shortage seems little reason for the very high prices
of today. It is more than just coincidence that prices began an
inexorable march upward just at the time the international agreement
became effective. Had prices not increased, then the stated objec-
tives of the agreement would have failed in accomplishment.
Nothing could be done which would interfere more with the natural
economy of free enterprise than controlled production, subsidized
inefficiency, and artificially supported subsidies for large producers.
Those who know the situation in the principal producing countries
are aware that the fancy prices now being paid for coffee by the
American housewife never reaches the worker on the foreign planta-
tions. It is readily admitted that the increased income from higher
prices for coffee is intercepted to a very large degree by the govern-
ments of the countries concerned, and what does filter through is
quickly pocketed by the owner of the plantation.
This is not a program for the stabilization of coffee markets, it
is a very bad form of foreign aid, camouflaged to deceive the un-
suspecting public.
Is it not reasonable to assume that the State Department, which
will be our representative in the International Coffee Agreement,
would be more interested in buying good will in coffee exporting
countries than in protecting our coffee consumers?
If the coffee drinkers of the United States were fully informed about
the reasons for the great increase in the cost of a pound of coffee, and
if they understood that little, if any, of the extra amount they have
to spend ever reaches the workman's level in the foreign country,
they would be even more up in arms about the new "foreign entangle-
ment" we have entered into. The public should know that coffee
buyers in the United States are now paying at the rate of over $500
million per year more than in 1962.
In May of 1963, the Secretary of State, the Honorable Dean Rusk,
wrote:
The objective of the new International Coffee Agreement
is to stop the long-term decline in revenues from coffee ex-
ports by stabilizing prices at a level no lower than the
general level of coffee prices in 1962.
Before the agreement was more than a few weeks old, it had suc-
ceeded in the price increase part of that objective, but it has failed
utterly to stabilize prices at any fair level to the consumer.
This implementing legislation, if adopted, will cost the taxpayers
literally billions over a relatively few years.
It places-a floor on prices but makes the sky the limit as far as a
ceiling is concerned.
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INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
45
Although the United States consumes one-half of the coffee used in
the entire world, when it comes to changing quotas to affect some
reduction in price, it has only one-fifth of the votes, and even worse,
it must convince two-thirds of the producing countries to take a finan-
cial loss by taking the necessary action to reduce prices. The only
way this can be done, as has been proved already, is to exert diplo-
matic pressure. Such pressures almost invariably result in a loss of
good neighborliness and friendship.
The American housewife pays and pays, and the recipients are
foreign governments and wealthy landowners.
It seems obvious that the below-normal crop in Brazil has not been
the real cause of all of the massive price rise that is still growing. Huge
stocks are on hand and could have been used, and can yet be used,
to keep prices to a reasonable level.
Foreign countries have been encouraged and financially helped to
diversify production. The coffee agreement is a step in the opposite
direction. If the United States supports price fixing and helps to
assure a high level of income to coffee producers, how can we expect
them to listen to pleas to produce a wider range of commodities?
How can they hear what we are saying when what we are doing rings
so loudly in their ears?
If H.R. 8864 is adopted there can be but one result. Prices will
remain high and continue to penalize the domestic consumer. A
solid floor has been built, but nothing has been done to set an upward
limit.
The time has arrived when we had best begin to look after our
American interests, instead of trying to assume the burdens of surplus
coffee producers. in, many ,na,tions.
The bill should be defeated.
FRANK CARLSON.
JOHN J. WILLIAMS.
WALLACE F. BENNETT.
CARL T. CuRTis.
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INDIVIDUAL VIEWS BY SENATOR PAUL H. DOUGLAS
The implementing legislation to make the International Coffee
Agreement effective in this country (H.R. 8864) creates grave dangers
for the people of the United States.
I. THE STRUCTURE OF THE AGREEMENT AND PROPOSED LEGISLATION
Under section 2 of H.R. 8864, the President is authorized, in order
to carry out the agreement?
(1) to regulate the entry of coffee for consumption, or
withdrawal of coffee from warehouses for consumption,
including (A) the limitation of entry, or withdrawal from
warehouses, of coffee imported from countries which are
not members of the International Coffee Organization and
(B) the prohibition of entry of any shipment from any
member of the International Coffee Organization of coffee
which is not accompanied by a certificate of origin or certifi-
cate of reexport, issued by a qualified agency in such form
as required under the agreement.
Stated more simply, this means that our Government would be
expected to be an enforcing arm of the coffee organization or cartel.
We would not be expected to admit coffee from any country which is
not now a member of the International Coffee Organization or which
in the future secedes from it. Similarly, we would not be expected
to admit coffee from any maverick inside a member country who tries
to export coffee to us without a permit from that country authorizing
him to do so.
Pursuant to this agreement, the International Coffee Organization
fixes quotas for each country of the number of bags of coffee which
can be exported annually. The sum of these quotas constitutes, of
course, the global total. This was set originally in 1662 at 45.6
million bags of coffee of 60 kilograms each. Brazil was allotted 18
million bags, or between 39 and 40 percent of the total. Colombia's
allotment was 6,011,000 bags, or over 13 percent. The 5 Republics
of Central America were allowed 4.43 million bags, or nearly 10
percent. Mexico was given 1.5 million bags, or 3% percent, while
3 South American countries (Ecuador, Peru, and Venezuela) were
allotted 1.6 million bags, or 3% percent. In all, the share of the Latin
American countries came to 70 percent of the global total. The
African countries, which have been rapidly expanding their produc-
tion, were allotted approximately 27 percent, while India and Indonesia
had 3 percent.
These were the original total quotas. But population is also
increasing rapidly all over the world, new groups are adopting coffee
as a drink, and since coffee is, in a sense, habit forming, the demand
for coffee is steadily increasing. It is estimated that this annual
increase ,in the quantity demanded at the same price is somewhere
around 3 percent a year.
46
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?? ?How QUOT. AS MAY .BE CHANGED
...Now -let us notice carefully ;how the ?quotas .may be -adjuste&and
changed. This is laid down in article -35, paragraph .3 of the Inter-
liatiOnal -Coffee Agreement as follows: .
All decisions by the-Council on ?the fixing and adjustment
of annual and quarterly export quotas- under articles 30,'
31, 32, and 34 shall be ?taken unless otherwise provided by;. a ?
distributed two-thirds Majority vote. (Hearings -before
Senate Committee on Foreign Relations, Mar. 22, 1963;
?? P. 20.)' ? ? '?
What, then,- is-the meaning of "a distributed two-thirds majority
vote"?. This is defined in article 2, paragraph 11 (Senate hearings,
p. 8) as "a two-thirds majority of the votes cast by exporting mem-
bers present. and a two-thirds majority of the votes cast by import-
ing members present and voting counted separately [Italics mine.]
In other .words a simple .majority of . the. two panels of. the exporting
and importing nations taken either separately or together will not
be sufficient to alter the export quotas, nor will a majority of the
.combined two panels in joint session. No, it must be two-thirds of
. ?
each panel taken separately. A clear proof of this was given last
November. when the International Coffee Council, which is the leg-
islative body of the organization, met to decide whether they would
increase the export quotas as. had been recommended by the execu-
tive board. All of the importing countries voted for such an increase
and cast their full.1,000 votes in its favor, but only 629 of the 1,000
votes among the exporters were cast affirmatively, instead of the 667
which were needed to carry the proposal.
It is further contended by advocates of the bill that, while a third
of .the votes of the exporting nations may prevent an increase in the
quarterly quotas, they cannot do so in the case. of the annual quotas.
These they maintain, are -"original' ! quotas . and the two-thirds
requirement of each panel voting separately does not apply.
? This is a clear and proven error. ,Section 28 of tbe International
Coffee Agreement covers this point in clear and explicit language.
? ARTICLE 28. BASIC EXPORT QUOTAS
. ?
(1) For the first three coffee years, beginning on IS October
1062, the exporting Countries listed in Annex A shall have
, the ibasic.export quotas specified in that Anne*..
(2) During the last six months of the COffee year ending
30 September 1965, the Council shall revie* -the basic export
quotas .specified in Annex A . -in- Order to adjust them 1O
general. market condition's. The Council .May then revise
such quotas .:16 a distributed.. tWo-thirds majority vote;
if not revised, the basic. export, quotas specified in Annex A
shall remain, in. effect. .
other.words,Ithe two-thirds requirement. for. both panels applies
to all changes in quotasfrom those. originally fixed. ?
-should. now explore .the distribution .of voting strength within
the -exporting .and'importing. panels. ? :The total votes in each .are, as
..previously.statedi.. 1;000,- 'These are apportioned 'among the exporting
countries in proportion to their.- assigned' export quotas, while :those
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46 INTERNAIIONAL COFFEE AGREEMENT ACT OF 1963
for the importing countries are alloted in proportion to the relative
volume of their coffee imports during the preceding 3 years. No
nation, however, is to have more than 400 votes. Since the United
States consumes approximately 52 percent of all coffee imported, this
does mean some scaling down of our representation. Since we have
more than a third of the votes, we will, however, be able to veto
changes in the quotas. Had the agreement been negotiated some
years back when Brazil dominated the export market with from 60 to
47 percent of coffee exports, the limit on total votes would also
have applied to that nation. But now that the Brazilian quotas are
only 37 percent of the total, the ceiling of 400 votes applies only to
the United States.
But just as the United States, with its 400 votes in the importing panel,
can veto any change in the quotas (as can a solid front of the Western
European nations which import approximately 37 percent of the total)
so can Brazil with its approximately 370 votes. So can a coalition of
the countries of Central and Northern South America when supported
by the countries of the Caribbean and some from Africa and Asia.
Finally, a solid Afro-Asian bloc, with some aid from Latin America,
could also impose a veto.
The conclusion is inescapable. While we are protected from having
the total exports of coffee reduced by our effective voting veto, we
are not protected from the exporting countries refusing to increase
the global quotas in the face of a world increase in population and in
the demand for coffee. This failure to increase the quotas, or increas-
ing them inadequately, would, of course, raise the price per pound and
levy tribute upon the consumers, over half of whom are in the United
States.
The vote in November within the Coffee Council showed some of
the possibilities. While Brazil and Mexico voted for an increase in
global and assigned quotas, the Central and Northern South American
countries did not and they were able to get sufficient support from
other areas to poll about 37 percent of the export votes and hence to
defeat the proposals.
This is what we would have to fear in the future were we to pass this
implementing legislation, namely, that Brazil, or some coalition of
exporting countries, would refuse to permit adequate supplies of coffee
to be exported even though population and the world demand for
coffee were steadily rising. This would, of course, increase the price
of coffee in the United States. And yet while we stayed in the Coffee
Organization, to whose principles we are now asked to subscribe, we
would be prevented from importing coffee from any country which
might secede from the Organization or from any maverick who tried
to ship us coffee without an export license. We would become an
enforcing arm of a coffee cartel which, in the face of a rising demand,
refused to permit supplies to be expanded adequately. And we
would be helping to maintain artificially high prices at the expense of
the great mass of American consumers.
We should never forget that each increase of 1 cent a pound in the
retail price of coffee means an added burden of $30 to $35 million
a year to the American consumer. Last March, when the Foreign
Relations Committee considered the treaty, the import price of Brazil-
ian coffee was 34 cents a pound. On Monday, March 2, it was 51
cents. During the period, therefore, in which the treaty and imple-
menting agreement have been under consideration by the U.S.
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49
? Government, we have had an increase in the wholesale price of 17
cents a pound, an increase of 50 percent. This has meant a loss to
the American consumer of at least $500 million. There are influential
voices in the exporting countries proposing a further increase of 10
cents per pound. If this were to happen our housewives would lose
a further $300 million a year. These are not small sums. The effect
of such increases are widely distributed but primarily hit the low and
middle income groups. Their impact, therefore, is highly regressive.
II. THE ARGUMENTS OF THE ADVOCATES OF THE LEGISLATION CONSIDERED
But, rejoin the advocates of this legislation, "did not the exporting
countries show their good faith by agreeing in early February to a
further increase in the global quotas of 2.6 million tons, or 5.6 percent?
Is not this proof of their benevolent intentions?"
The reversal of the November refusal to increase quotas is surely
to be welcomed. But it should be scrutinized carefully before it is
accepted as conclusive proof of a permanent change of heart. The
Council was summoned to meet only a few days before the Senate
Finance Committee.was scheduled to consider the implementing legis-
lation. There had already been a sharp increase in the price of coffee
and it was known that there were some Senators, at least, who were
more than dubious about the wisdom of passing the enabling legislation.
It was also felt that unless the exporting nations gave ground a little,
the Senate might refuse to approve the bill which is now before us,
thereby severely crippling the ability of the cartel to maintain or
raise prices. In response to a question which I directed to him,
Mr. John T. McKiernan, an honest and competent witness, who is an
ardent advocate of the legislation, admitted that the shadow of pos-
sible adverse action by the Senate hung heavily over the meeting and
while it was not referred to officially, it exercised a powerful influence
to induce hitherto recalcitrant countries to permit an increase in world
supplies.
But once we have passed this legislation, this inducement will
largely disappear. In slang phrase, we will have been "hooked."
We will be bound to shut off our markets from dissenters and noncon-
formists and the cartel will have its way with , the United States.
We will be committed to help the cartel enforce the quotas for world
consumption, with their consequent effect upon price.
CAN WE WITHDRAW?
But, expostulate the sponsors of this legislation, under article 68
we can withdraw upon giving 90 days' notice. Therefore, if we are
gouged, we can always escape.
This may be technically true, but we all know the moral and propa-
ganda opprobrium which would be heaped upon us if we were to
withdraw. We would be accused of breaking faith with the coffee
exporting nations of the world, and the followers of Castro, Khru-
shchev, and Mao Tse-tung would seek to set all of Latin America
against us. The honest nationalists of the countries affected would
also be embittered and estranged.
No, the possibility of an ultimate divorce should not lead us to
contract an unsound marriage. As a matter of fact, this body has
already been led too far down the primrose path of dalliance by
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50 INTERNATIONAL COFFEE, AGREEMENT ACT OF 1963
previous steps which we have been induced to take by the State De-
partment and by our Foreign Relations Committee.
-We were told by the distinguished chairman of the Foreign Rela-
tions Committee last year when we were considering the formal
coffee treaty that even if we did approve it, it would not go into
effect or be binding upon us until the Congress passed the legislation
now before us. I am sure the able and honorable Senator from
Arkansas, who made that pledge, did so in complete and utter good
faith. Secretary Rusk, also a highly honorable man, made a similar
pledge to the minority leader. (See Congressional Record, May 21,
1963, p. 8624.) We assumed, therefore, that the ratification of the
treaty would not be deposited unless and until the implementing
legislation was passed.
The Finance Committee was delayed in considering the imple-
menting legislation in the fall because of hearings on the long delayed
tax bill. But in December our committee squared away to consider
the measure. I shall never forget the hectic morning when the State
Department started off by urging speedy hearings on the coffee
agreement and then within an hour urged just as strenuously that
action be withheld until after the tax bill was passed. I do not blame
anyone for this. Assistant Secretary Dutton manfully took the blame
for this, but it was obviously not his fault as he was merely the mes-
senger. Then, at the suggestion of members, the chairman asked a
high authority whether, if we withheld action as requested, there would
be any danger that the treaty would be deposited and hence go into
effect even though no implementing legislation had been passed. He
reported to us that he had been assured that this would not be done.
The committee, therefore, felt it safe to postpone the hearings on
coffee and get on with the tax bill. No sooner was this done, however,
than individuals on the committee, of whom I was one, were informed
that, due to the pressure of time, the State Department would deposit
the treaties after all. I was asked if I had an individual objection
and replied that I did not regard myself, as one Member of the U.S.
Senate, as being sufficiently important to alter the policy of the U.S.
Government, but that I thought the Finance Committee had been
treated cavalierly to say the least and that promises had been made
which had not been fulfilled.
Now, Under Secretary Harriman, who is one of the finest and most
experienced men in public life, tells us that while we are legally and
morally free not to pass the implementing legislation it is, nevertheless,
unthinkable that we should back away from the treaty. I ask, there-
fore, how much chance is there that once we have passed this second
bill the State Department would ever permit us to withdraw from the
Coffee Organization even though prices were to be raised further by
the cartel? I think I can answer "Very little."
Once in, we are caught. ?This is aln-lost our last chance to exercise
caution and I urge that we stop, look, and listen before we follow those
siren calls and blindly pass this legislation.
HAVE FOREIGN GOVERNMENTS HELD BACK EXPORTS?
I do not wish to impugn the motives of any foreign government.
They have a right to decide what they shall do. But I was a bit
disconcerted when the very nice? special representative on coffee
matters of the State Department pled ignorance upon what the past
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51
policies of -Brazil in the:matter of -coffee had been prior to 1958. I
have never specialized in the affairs of that commodity or that coun-
try, but I thought I could remember a long line of attempts by the
'Brazilian governments torestrict coffee exports and to keep up
prices. 'In the days which have passed since that hearing, I havelad
the chance to look up the record and I have had the chance to study
a number of authoritative books and,articles which I cite in a footnote
and which the State Department and the Foreign Relations Committee
may find useful in their studies.'
The record shows that early in this century the State of Sito Paulo,
-then the chief 'coffee producing center of the world, destroyed enor-
'mous quantities of coffee in an effort to keep up world prices: The
record further shows that after World War I, the Brazilian Govern-
ment itself took- 'a' hand and restricted exports and fixed minimum
export prices.? The -record aim; shows that during the 1930's, the
Brazilian- Government 'destroyed and burned no less than 75 million
bags of coffee or 4M million tons. This was equal to two and one-half
times the yearly -world exports.
' The record also shows that the Brazilian Government has been
holding back Coffee for the last 8 years and that there has been an
admitted world production during that time of approximately 70
million bags above world exports.' Allowing for some coffee which
has spoiled, there is an admission that at least 50 million bags are
now stored. in Brazilian warehouses which could be used to meet the
demands of the coffee drinkers of the world. The record further
shows that Brazil-governs the amount which can be exported by means
of export-licenses and fixes minimum export prices. It levies a high
export tax on coffee and thus the Government shares in the venture.
The existence of such a huge oversupply of coffee might be expected
to depress ,the :futures market on coffee: But this has not been the
case. On Monday, March 9, December coffee futures were 3 cents above
Spot prices; iiain?,?54' instead' of 51 'Cents. " And the well-informed
New York Tithes 'reported on Tuesday; March 8, that the feeling. WEIS
strong. On the- 'New York Coffee Exchange that the Senate Finance
?Coinmitte:e .-wenlereconthiend. the. pending legislation (Ne W York
'Tithes, Mar: 3;?,1964,- .P."54)-. ? Evidently the speculators believe that
this ao?reethent? 'bail'Brazil out of its trObbles 'and that the Price
*of coffee Will-risestill further:. ' Brazil, 'and indeed every coffee cOuntry
of 'which I -know, ?has the'machinery in being: with which it-can control
export' quite- effectively . 'und.er 'the agreeinents Of the international
t.
coffee cartel. ' ? , ?? ?
.t. ,
I See Wickizer, "The World Coffee Economy With.Special 'Reference to Control Schemes," 258 'pages,
Food Research Institiite, 1943; "Brazilian Coffee:-Production and World Trade," U.S. Foreign Service,
?182 pages plus tables, 1963; Federal-Trade Commission, "Economic Report of the Investigation of Coffee
Prices," 523 pages, 1954; Heather Wood, "The World Coffee Economy, Cartel, October 1963, vol. XIII,
No. 4, pp. 160-161? 164-168; ,American Enterprise Association, "The International Coffee A greement,"
1962, 42 pages; Elizabeth Stoffregen, "A History of Brazil Coffee Control," Tea and Coffee Trade Journal,
vol. 55, November-December 1928, pp. 555-557, 744-751, and vol. 56, January-June 1929, pp. 120-125. '
While this is-denied from time to time, it is shown in the Department of State's own brochure, "Coffee:
Production-Trade Prices," p, 2. The world's exportable production of coffee averaged 48,500,000 bags a
year during the 5 years from 1956 to 1960, inclusive. This was a total, therefore, of 242,500,000 bags. The total
exports amounted to an average of 39,200,000 bags, or a total of 196 million bags. This left a surplus of
46,500,000 bags. The surplus for 1961 was 9,100,000 bags and for 1962, 11,600,000. The combined surplus for
the 7 years was, therefore 67,200,000 bags. This does not include 1963 when the exportable production was
51,700,000 bags but for which we do not yet have precise figures on actual exports. Moreover, a considerable
amount of coffee is produced which is not included in the figure of exportable production.
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52 \INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
WILL FEAR OF SPOILING THE MARKET RESTRAIN THE EXPORTING
COUNTRIES?
But, it is argued, even if the exporting countries had the desire, the
past experience, and the present machinery to restrict exports and
boost prices unduly, they would be restrained from abusing their
powers by the fact that such action would reduce the demand for
coffee by promoting the use of substitutes such as tea,- cocoa, the cola
drinks and by the increasing use of "instant" coffee whereby we may
get more cups to the pound. But this ignores the fact that while
there will be some such substitutes, on the whole the demand for
coffee is relatively inelastic. If the price of coffee were increased by
10 percent a pound, the quantity of coffee purchased will decrease by
much less than 10 percent. In consequence gross receipts for the
exporting nations will be greater. This is the consequence of inelastic
demand and it is why Brazil and other countries have sought to
reduce exports and hence supply. The Federal Trade Commission
in its 1954 study estimated that the elasticity of demand for coffee
was only ?0.5, or that the proportionate fall in quantity demanded
was only half the relative increase in price per unit. Such study as I
have been able to give to the subject suggests that the elasticity of
demand may well be lower and that the total gains from a reduction
in supply and an increase in price may indeed be greater than the
Federal Trade Commission believed 10 years ago. In short, it will be
to the interest of the coffee exporting countries to restrict the amounts
they ship abroad. We no longer will deal with a Brazilian but a
world cartel. And where the economic interests lead, can the execu-
tion linger far behind?
IS WEATHER SOLELY TO BLAME FOR THE BIG PRICE INCREASE?
But now an old excuse is being put forward. The increase of 16
cents a pound in spot prices during the last few months and the fact
that coffee futures are still higher is said not to be due to the coffee
agreement and the cartel but to the recent inclement weather in
Brazil and to the damage infficted by frost upon the coffee shrubs
and trees. This no doubt is a factor. ? But it is not the sole and pos-
sibly not even the primary cause of the tremendous upsurge in coffee
prices. Even with the frost, there are 50 million bags of good coffee
ensconced in safe, weatherproof warehouses and storage sheds in Brazil
which could more than make good any damage done to the coffee trees.
But due to the policies of the Brazilian Government and the Inter-
national Coffee Organization these are not to be allowed to come on
to the market. And if we pass this legislation we will be bound under
?section 2 of this bill, to refuse to let them be sold on the American
market should they be sent here in violation of the agreement. More-
over the argument that it is the weather and not the cartel which
sends up the price of coffee is an old excuse which should be thread-
bare by now. It was used in 1953-54 as a coverup for the restriction-
ist policies in Brazil and was frequently employed even before that.
There is a modicum of truth in it, but not enough to conceal from an
observing eye the naked use of cartel restriction and price boosting.
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HOW MUCH WILL THE AGREEMENT HELP THE PEASANTS?
53
With all the economic justifications for approval of this legislation
largely stripped away, its advocates fall back upon another argu-
ment; namely, that we, through this legislation; can promote the
Alliance for Progress which aims to help the common people of Latin
America, and the allied claim that it is necessary to prevent Latin
America from turning toward Havana, Moscow, or Peiping.
Appeals are being made that it is necessary to raise the price of
coffee markedly to improve the conditions of the impoverished
peasantry of Latin America. It is suggested that those who oppose
any such move are hardhearted enemies of the oppressed, and that
those who seek to raise coffee prices are, on the contrary, trying to
emancipate the masses of the people from misery and are their true
friends and benefactors.
There is certainly terrible misery and poverty among the peasants or
campesinos of the coffee countries. In Guatemala, El Salvador,
and Columbia, which my wife and I have visited at our own expense, I
doubt if the daily wage during the coffee season exceeds $1?and
perhaps more often is only 80 cents. Employment is slack during the
rest of the year. But with some honorable exceptions the rich land-
lords, who in many countries own and operate the coffee plantations,
have never shown themselves appreciably concerned about the con-
ditions of the people. They have, on the contrary, (again with honor-
able exceptions) kept wages down, repressed efforts at organization,
and taken advantage of the docility of the Indian population. They
have neglected the health and education of the people, have resisted
efforts at genuine land and tax reform, and have not helped with hous-
ing or with the provision of vegetable gardens from which a supple-
mentary living might be derived. While an increase in coffee prices
would help the small growers, who it is understood predominate in
such countries as Costa Rica and certain sections of Brazil, there is
little surety that the owners of the big plantations would pass the
gains on to their workers. Indeed, the evidence is all to the contrary.
They would pocket most of these gains for themselves. Indeed, there
is little evidence that very much of the tremendous increase in coffee
prices which occurred in 1953; 1954, and 1955 ever trickled down to the
peasants at the bottom of the social, economic, and political structure.
They remained poor, miserably fed, clothed, and housed, deprived of
education and health, and kept in political and social subjection. It
was the big growers, merchants, and exporters who profited.
It is true that the governments of the exporting countries profit
greatly from export taxes which they levy. As the following table
shows, in 1962, a year of low coffee prices, the governments collected
approximately $472 million in this fashion of which $360 million went
to Brazil and $43.4 million to Colombia. With an increase in prices
the governments will collect more. But should the low and middle
income consumers of, the United States be required to subsidize further
these governments where the most important country in this group
has indulged in very unsound financial practices?
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54 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
Coffee: 1962 exports, export value, and export tax revenue for specified countries
[Dollar amounts in thousands]
1962 exports
(thousands of
bags, 132.3
pounds each
Total export
value
Export tax
revenue I
Dominican. Republic
487
$19, 849
$5, 558
El Salvador
1, 263
74, 227
8, 165
Guatemala
1, 552
74, 034
11, 105
Haiti
514
20, 627
6,460
Honduras
264
11, 450
1, 720
Mexico
1, 519
71, 286
7, 924
Nicaragua
338
15, 430
331
Brazil
16, 376
642, 629
360, 272
Colombia
6, 561
343, 065
43, 400
Ecuador
551
20, 901
1,820
Peru
624
24,191
1,650
Angola
2, 615
65, 192
7,930
Ethiopia
1,044
44,000
5, 022
Ivory Coast
2,352
76, 650
11, 497
I In several cases these figures are derived, and should therefore be used as approximations only.
Moreover, the dominant landed and semifeudal proprietors do not
invest appreciably in their own countries. Instead they send a large
part of their rents and profits abroad into numbered and anonymous
accounts in Switzerland and balances in the New York, London, and
Geneva banks. I have seen estimates that in recent years they have
been investing abroad more money than we have been pouring in
through the Alliance for Progress. Excuses can be given for this in
the fear of nationalization which the Castro movement has en-
gendered and in the galloping inflation which has been endemic in
such countries as Chile and Brazil. But the same tendency has been
at work until recently in countries like El Salvador which have had a
comparatively stable price level and a decent government. Not
much of the higher income from coffee would, therefore, trickle down
from the few at the top to the many at the bottom. I am surprised
that many who reject the trickle-down theory of prosperity as being
not applicable in the United States with our relatively democratic
economic and social system should nevertheless think it would work
in the semifeudal societies of the coffee countries.
Nor do I place much reliance in the belief that progressive govern-
ments can be developed which can tax away the surplus given to
those on top and use it for the benefit of the people. I am afraid, rather,
that the few governments which try to carry out such a policy will be
overthrown by the dominant economic groups.
I do not mean that I feel hopeless about social reform in Latin
America. Reform is needed. It is ethically right. We are trying
to further it and I have always been a strong supporter of the principles
of the Alliance for Progress and expect to continue as such. But I do
say that further to enrich the wealthy is not the most effective way of
aiding the poor. Rather the increase in coffee prices would levy a
heavier burden upon our own poor to enrich the wealthy landlords
and plantation owners of Latin America. It would be an economic
blood transfusion from the hard-pressed, low income families of the
United States into the well-fed bodies of the coffee aristocracy. This
would be the Alliance in reverse. If there were some surety that any
increase in prices would largely go to help the group in the coffee
countries who are furthest down, then I think the generous families
of the United States would be willing to pay a little more per pound.
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INTE'RNATIONAL ? COFFEE: AGREEMENT ACT OF 1 96 3
55
But there is no such surety. There is no such provision in the coffee
treaty or agreement and I see at the moment no way of making such a
provision effective in other countries by a provision in our own laws.
No, I choose instead to help Latin-America through the Alliance
for Progress properly conducted. And I do not think that we can
properly be called hardhearted by the power hierarchies of the coffee
countries which stubbornly fight social reform, seek to sabotage the
Alliance for Progress, but want to wring more profits out of the coffee
crops of the Americas.
The Alliance, on the other hand, reaches the people who need help
the most. It is under our own control as regards the amount of aid
to be granted, whereas the costs of the coffee program would be largely
controlled by foreign nations. The Alliance, moreover, can be sup-
ported from a relatively progressive system of taxation while the
coffee levies are regressive, falling most heavily on the lower income
groups.
IS THE LEGISLATION NECESSARY FROM THE STANDPOINT OF FOREIGN
POLICY?
A final plea of the State Department is that approval of the agree-
ment is necessary to keep Latin America on our side in our struggle
with Russian and Chinese communism. The coffee growers are the
most powerful economic group within Brazil, Colombia, and several
of the Central American Republics. If they are tied to us and to
the free world by a higher coffee price, it is argued, they will be more
ardent in their opposition to a Communist takeover of their govern-
ments. The coffee countries will, moreover, have more foreign
exchange with which to purchase machinery and other capital goods,
thus helping to industrialize their economies and raise the standard
of living of their peoples. For us to refuse to enforce the export
quotas of the international coffee cartel would, it is said, expose the
economies of Latin America to sharp fluctuations in prices and pros-
perity.
This last point is unfortunately true in the case of those commod-
ities the demand for which, like coffee, is relatively inelastic. For
here slight fluctuations in quantity create larger proportionate
fluctuations in price. An increase in quantity, other things remaining
the same, will cause the price per pound to fall by a greater ratio so
that the total gross receipts will be less. There is, to be sure, some
tendency for demand to increase; namely, for more to be demanded
at the same price. But when the increase in quantity exceeds this
shifting of the demand curve, then the coffee industry will suffer.
That is what the coffee producers fear and why they want the con-
suming countries to help them enforce the restrictions upon exports
which they seek to impose. If we do not do this it is indeed probable
that they will blame us and that what is in reality the unfortunate
peculiarity of the free and impersonal market in cases where the de-
mand is inelastic will be ascribed to us as a national sin. The political
consequences may indeed be unfortunate. Not, however, because
the coffee producers will be angry with us, but because it will have
an effect on the general prosperity within these countries.
I grant this and I can understand why the State Department
favors this legislation. But is this coffee agreement the way we want
to promote democratic attitudes and institutions among our friends
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00 INTERNATIONAL COFFEE AGREEMENT ACT OF 1963
in the Americas? There are many other ways we may wish to proceed
with this serious problem. I have already made reference to the
Alliance for Progress and my support of the Alliance as a more equit-
able way to aid all the people of Central and South America.
It is also true that since World War II we have spent no less than
$100 billion in assistance to foreign nations. Never in human history
has a nation been so generous and, I believe, farsighted. I recognize
that a good deal of this assistance must be continued. But to tax
the poor here at home to help primarily the rich south of the border
does not seem to be either a wise or a truly charitable undertaking.
Some charity should begin at home. Is there an obligation on the
United States to shore up the prices of most tropical products? For
years we paid a bonus of $150 million a year to the foreign producers
of cane sugar. An effort will shortly be made to restore this practice.
Our consumers are now being asked to subsidize the Latin American
coffee cartel to the probable tune of several hundred million dollars a
year. And behind coffee lies cocoa. An international convention
for this commodity has been drafted. It has not yet been put into
effect because, it is understood, of justified State Department opposi-
tion. If this legislation is enacted, however, it is likely to be taken
out of the closet and either approval will be asked of Congress or it
may be put into effect through an Executive agreement. If this
happens we will then be charged with a major responsibility for sup-
porting the economies of Africa as we are now being asked to do for
Latin America.
With all our proper desire to help other peoples, should we assume
unlimited liability for all the economic ills and liabilities of the world?
Can we not continue to be a good neighbor while evidencing some
concern for the poor and the low-income families of our own country?
Is a regressive tax on our own people for the benefit of a very few
wealthy landowners in Latin America the way we should properly
proceed? Or are there not better ways, such as the Alliance for
Progress?
I ask merely that these considerations be taken into account before
the Senate takes a fateful step which, in my judgment, may be
extremely costly to the people of the United States.
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