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Senator Brown's ICA amendment.

On July 27, 1992 the U.S. Senate quickly supported, without opposition, an amendment by Sen. Brown (R-Co), relating to U.S. funding of the International Coffee Organization in London, England. With the full support of Sen. Hollings (D-SC), Chairman of the Senate Appropriations Subcommittee which funds the U.S. State Department, Sen. Brown had his amendment incorporated into S.3026, the fiscal year 1993 Commerce, State, Judiciary funding bill. A similar provision does not appear in the House version of the bill, and the issue will be resolved this fall by a joint House/Senate Conference Committee.

The Senator's amendment reads that, "none of the funds made available by this Act may be used to implement or enforce any International Coffee Agreement which has not been submitted to the United States Senate for its advice and consent." The Senator referred in his comments on the floor of the U.S. Senate to the fact that in both funding bills (S.3026 and its House version H.R.5628) $913,000 was recommended for the ICO as a part of over $913.2 million annual U.S. contributions to various international organizations. In explaining his amendment, the Senator indicated that these funds for the ICO would be used by that organization to "fund the negotiation of a new International Coffee Agreement." Which is on a "...collision course with the interests of American consumers."

Sen. Brown went on to explain his actions: "The administration is now negotiating a new coffee agreement, one that could again cost American consumers literally billions of dollars. What this amendment simply does is hold in abeyance a new coffee agreement until the Senate has had an opportunity to lend its advice and consent. It does nothing more than to make it clear that this body will exercise its constitutional powers to review treaties, to make sure that this particular new agreement does not slip through the cracks.

"Mr. President, if it were up to me alone, I would eliminate all money for negotiating a new cartel agreement. This amendment does not do that. What it does, though, is ask that at least this body have its opportunity to review the new agreement before it goes into effect."

Boost Prices 20%

In a statement released by the Senator's office, he went on to say that, "last year the Colombian delegation to the International Coffee Organization sought to boost coffee prices 20%. The proposed quota agreement would have taken an additional $400 million out of American pockets a year. What is ironic is the fact the United States is funding this organization.

"A very small amount, 1.3%, of the coffee consumed each year in the United States is produced in Hawaii. The rest, 98.7%, is imported from around the world, mainly from Africa and South or Central America. Consequently, as the world's largest coffee importer, it is in our interest to competitively purchase the lowest priced coffee the world market has to offer. But that isn't what happens.

"In 1983, many of the major coffee producing and coffee importing countries signed what amounted to a cartel agreement, dubbed the International Coffee Agreement (ICA). The agreement set export quotas with a view to price stabilization. Importing nations agreed to check `certificates of origin' on imported coffee to ensure countries did not exceed their export quotas. Not only did the United States agree to participate in this cartel, we also agreed to pay a large share of the yearly administrative costs for the parent organization. In fact, for 1992, the Congress spent $899,000 as our contribution to the administrative offices in London.

"Cartels establish export quotas to limit supply, thereby creating artificially high prices for importing nations like the U.S. OPEC can do it for oil exports, and that's what the ICA did for coffee in the past. In fact, after the ICA lapsed in 1989 and coffee was again sold on a free market, wholesale coffee prices in the U.S. dropped 22% and retail prices dropped almost 10%.

"U.S. Hoodwinked..."

"How then could the United States ever have been hoodwinked into joining an organization with a mandate to increase coffee prices to the American consumer? Administration experts report the U.S. joined the organization to provide a stable coffee market for countries like Colombia, to provide Colombian farmers other alternatives to producing cocaine.

Whether or not the coffee agreement actually reduced the hemispheric drug trade during the years it was in effect was questionable. The primary beneficiaries of the quota system are the largest coffee exporters--Colombia and Brazil. Central American countries, without the clout to get a quota that matches their ability to produce, report they did not benefit from the coffee agreement.

"Clearly, it makes no sense to use taxpayer money to support an agreement Which will result in higher coffee prices for American consumers. It is time for Congress to eliminate this type of wasteful government spending which will only result in gouging the American consumer. Funding an organization that increases the price of an import by more than 20% is not acting in the interests of everyday working Americans."
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Hank Brown's amendment would give Congress the right to approve a treaty made with the International Coffee Organization
Author:Chwat, John
Publication:Tea & Coffee Trade Journal
Date:Sep 1, 1992
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