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The U.S. Senate passes an ICO amendment.

It was a direct attack against the International Coffee Organization. It prompted a short statement by Sen. Pell (D-RI), Chairman of the State Foreign Relations Committee, during the Senate floor debate to Sen. Hank Brown (R-CO) "This Amendment is acceptable from this (Democratic) side". The Amendment, introduced July 29, 1991, by Sen. Hank Brown (R-CO) took virtually no time for debate, consideration and passage. In fact, there was no opposition or a roll call vote-merely a "voice vote" which incorporated its provisions into S. 1433, the Foreign Relations Authorization Act for Fiscal Years 1992-1993. The Brown (ICO) Amendment prohibited the U.S. State Department from"...making further payments to the International Coffee Organization (ICO)." The amendment introduced by Sen. Brown reads as follows:

"SECTION 170A. PROHIBITION

ON FUNDINGS."

(a) FINDINGS. -- The Congress finds that -- (1) the Department of State has requested $899,000 for Fiscal Year 1992 to fund the International Coffee Organization;

(2) the International Coffee Agreement (ICA) and its administrative arm, the International Coffee Organization (ICO), were born in 1983 to stabilize global coffee trade by establishing an export quota system;

(3) an export quota system for coffee acts directly against the interests of American consumers by keeping prices at artificially high levels;

(4) this fact was demonstrated when the ICA was suspended in July 1989, and prices fell from $1.16 per pound in May 1989, to .61 per pound in October 1989; and

(5) although the agreement lapsed in 1989, United States imports of coffee increased by 26% in 1990 over 1988 levels, at a total cost reduction of $548,000 due to lower prices.

(b) PROHIBITION. -- No funds made available under this Act or any other Act shall be available for making further payments to the International Coffee Organization (ICO).

This is the first year that Sen. Brown serves on the Senate Foreign Relations Committee as well as the Terrorism, Narcotics and International Operations Subcommittee, which has jurisdiction over the ICO. The Senator served in the U.S. House from 1981 until his election to the Senate in 1990.

Senator Brown, explaining his position during the floor debate on the bill, said he was, "...concerned about the potential of the United States participating in a cartel much to the disadvantage of the consumers of this nation." Citing ICO membership dues as a "waste of taxpayer dollars", Sen. Brown (R-CO) according to his staff assigned to this issue, has been contacted by representatives of Guatemala and Mexico, who support a free market approach to coffee rather than the present ICO's quota system.

The Senator explained the reasons for introducing his amendment as follows: "The facts are very clear. The United States is a consuming country, not a producing country. When we have had an active cartel that has controlled production and allocations of produce, the prices for coffee have been significantly higher for Americans. It is certainly understandable that producing countries would be interested in higher prices for coffee. But what is not understandable is that the United States would participate in or even encourage a cartel activity which would penalize the consumers of America. There is no suggestion that this kind of cartel activity is helpful to Americans in any way. We are the ones, along with the rest of the consuming world, who pay the price.

What we suggest is simply a prohibition on funding for this organization. It saves the taxpayers $889,000, but more than that, I think it will save the consumers of this country a significant amount of money, into the millions and tens of millions a year in the comong decade."

In a one page flyer distributed by Senator Brown's office entitled, "End the Coffee Cartel," he urged his colleagues to support his Amendment. The Flyer declared;

"Quotas Are Anti-Consumer"

* Since the ICO quotas were suspended, retail coffee prices have declined 9.5%, from $3.17/lb. in June 1989 to $2.87/lb. in June 1991.

* In the absence of quotas, 1990 U.S. imports of coffee increased by 26% from 1988 levels. The total cost, however, decreased by $548 million to $1.91 billion in 1990 due to lower prices.

* The National Coffee Association, consisting of both U.S. importers and roasters of raw beans, opposes the export quaota system and contends that the industry can be more efficient without government interference.

* A World Bank study found quota benefits come at the expense of the consumer and mid-level producing countries."

The week of Sept. 22, 1991: The

ICO funding was rejected by the

joint House Senate Conference

Committee.

On September 24, 1991 the U.S. Senate added an amendment by Sen. Brown to $1722, the unemployment compensation bill, which urges U.S. negotiators to seek an agreement in the interest of American consumers. An attempt to table the amendment was defeated 58 to 41, and it passed by voice vote. The amendment is reprinted below:

Brown Sense of the Senate

Resolution on coffee

Viz: At the appropriate place in the bill, add the following new section:

Sec. . International Coffee Agreement

Since the International Coffee Agreement (ICA) and its administrative arm, the International Coffee Organization (ICO), were born in 1983 to stablize global coffee trade, by establishing an export quota system;

Since the ICO members control 95% of coffee exports and 86% of coffee imports and act much like a cartel by restricting the amount of coffee that can be sold on the world market;

Since an export quota system for coffee acts directly against the interests of American consumers by keeping prices at artificially high levels;

Since the negative effect of ICA quotas on consumers has been demonstrated from April 1989, when it appeared the agreement would lapse, to June 1991, by a 46.1% drop in the price of coffee;

Since the agreement lapsed in 1989, U.S. imports of coffee increased by 26% in 1990 over 1988 levels, at a total cost savings of $1.27 billion due to lower prices;

Since a World Bank study found quota benefits for members of the ICA come at the expense of the consumer and mid-level producing countries;

Since the International Coffee Organization, of which the United States is a member, began meeting on September 23, 1991, to establish a new coffee agreement and to again limit exports and control world coffee prices;

Since the proposals for a new coffee agreement discriminate against the coffee producers of Central America;

Since on July 29, 1991, the Senate unanimously agreed to an amendment that would prevent further U.S. participation in the International Coffee Organization;

Therefore, it is the Sense of the Senate that the United States should not be party to any coffee agreement which will increase the price of coffee to the American consumer."

John Chwat, is a partner in Chwat/Weigend Associates a congressional and government relations firm in Washington, D.C.
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Title Annotation:International Coffee Organization payments affected by Hank Brown amendment to Foreign Relations Authorization Act 1992-93
Author:Chwat, John
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1991
Words:1145
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