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EU wants U.S. to help ease impact of world coffee prices.

The European Parliament April 10 urged the United States to rejoin the International Coffee Organization (ICO) to help coordinate international efforts to ease the "devastating" impact of falling world coffee prices. The Parliament also called for a dual EU response: removal of all remaining tariffs on processed coffee products, and aid to worst hit nations. Parliamentarians suggested drawing on $11 billion of unused funds in the EU overseas aid program, the European Development Fund (EDF) to make "immediately disbursable payments to alleviate the effects of the coffee crisis on dependent households and coffee-growing regions".

For several years, the United States has not played an active role in the ICO, a London-based intergovernmental body representing major coffee exporting and importing countries. The European Parliament resolution opined that a 50 percent fall in prices since 2000 - to the lowest price in real terms for a century-"has partly arisen from the dismantling of the ICO, which [formerly] regulated the coffee market by various means, including a quota system".

In a statement to the Parliament, EU Commissioner Erkki Liikanen argued that the coffee crisis was part of a wider problem of commodity-dependent economies, subject of a policy study currently being finalized by the Commission, the EU's executive arm.

Parliamentarians questioned the role of four multinationals who control almost half global coffee sales: Nestle, Kraft, Sara Lee, and Proctor & Gamble. While prices to 25 million poor growers can drop below cost, the companies' profit margins on coffee sales range from 17 to 21 percent, according to a report from the British food aid charity Oxfam cited by the Parliament.

Liikanen also said that trade talks alone could not resolve a fundamental imbalance of coffee supply and demand. "The real problem is that the United States - the world's second biggest coffee consumer--remains outside the ICO. Unless the United States is ready to reconsider its position regarding the ICO, any measures adopted by the organization will lack international impact," he warned.
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Comment:EU wants U.S. to help ease impact of world coffee prices.
Publication:Food & Drink Weekly
Geographic Code:4E
Date:Apr 21, 2003
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