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Sweetness and light in Berners Street.

It was as though one of those great stone statues on Easter Island had suddenly blinked and said: "Have a nice day!" For the first time in years, delegates to the recent Council session of the International Coffee Organization in London's Berners Street were actually smiling. Our special correspondent, Richard Clark, was there.

There were any number of reasons for this unaccustomed sweetness and light: The market pulse was so feeble that traders had begun checking coffin prices; farmers who had grown bananas to shade their coffee trees were exporting the fruit instead of the beans; roasters were having to juggle blends in an increasingly anxious attempt to make up for the scarcity of quality beans; the world's bankers were losing a lot of sleep.

What finally dispelled the gloom that has hung over so many of these gatherings, though, was that Brazil decided right at the outset to drop its customary veto on any proposition that threatened to diminish its quota share by a single bag.

In a 10-point guideline to the creation of a new coffee pact, it seemed finally to accept that the two-tier market--which in effect gave non-members discounts--was now wholly discredited. It also agreed to a universal quota that would meet the real needs of the market, rigorous monitoring of exports and imports with tough penalties for shady deals, and a general revision of the rules to match the realities of a consumer-driven market.

At the same time, many, if not all, the consumer delegates seemed ready to concede that actual returns to the growers are now so low that lack of costly inputs plus a suffocating burden of debt repayments really are affecting quality standards and forcing farmers to switch to crops that are easier to grow as well as more immediately profitable.

All this made the attitude of the United States to a new Agreement particularly crucial. It's no great secret that U.S. Administrations of both flavors (but most especially Republican ones) tend to detest commodity pacts, seeing them as an affront to unfettered world trade as well as a burden on the tax paying and voting American citizen.

So, on Day One, Ambassador Myles Frechette struck a cautious note when he said: "Our common purpose here is to determine whether the basis for negotiating a new International Coffee Agreement." He also set out America's preconditions, which demanded a universal quota and an end to the two-tier system of evil memory, market-oriented quota provisions, and a truly effective system of universal controls. He also ruled out any idea of using retention schemes or buffer stocks as a basis for negotiations.

But he also accepted that, if the working groups who have been beavering busily away far so long had succeeded in their tas of establishing a consensus among the disputing factions, then the U.S. would be in a position to join the talks. He also made it icily clear how the U.S. would react should consensus prove impossible. He wrapped it up in suitably elliptical diplomatic terminology, but what it boiled down to was, "No dice."

Of course, although Brazil and the U.S. were always in a position to torpedo all hopes of a new agreement, neither of them would have enjoyed the odium that would have been heaped on them if they had pressed the "Fire!" button. However, the European Community countries, including an ever-skeptical Germany, also needed to be persuaded that there was a genuine prospect that a new agreement would be faithfully adhered to in deed as well as in word. There are still those who have their doubts, though, and one hawkish Scandinavian delegate told me he would only be truly happy when total production had fallen to a level that was much more in line with actual demand.

In the main, though, having revelled initially in the freedom to buy whatever they liked and at prices they felt they could afford, the consumers do seem now to have accepted that Newton was right, and that every action invariably has an equal and opposite reaction. It would be nice to think they were moved exclusively by a kindly compassion for the plight of producers, but the truth is that they have also realized that a long run of rock-bottom prices threatens both quality and a reliable continuity in supplies. On top of that, even the most hard-nosed governments have been made uneasy by the prospect of political and economic instability in an already unpredictable world.

Just how and in what form the ICO itself will survive is, of course, another matter entirely, and most of the people I spoke to seemed to see its future as a facilitator and a center for gathering necessary statistics rather than as a quasi-political directorate. What is certain, however, is that a working group will meet at the Berners Street headquarters towards the end of June to begin the task of drafting the framework for the 1983 Agreement, in time for the regular September meeting.

"But do you think it will all be neatly tied up by then?" I asked a long-serving but fairly cynical European delegate.

"I wouldn't hold my breath," he replied.
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Title Annotation:negotiations on International Coffee Agreement at meeting in London, England
Author:Clark, Richard
Publication:Tea & Coffee Trade Journal
Date:Jun 1, 1992
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