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USTR Susan C. Schwab Welcomes Conclusion of a New International Coffee Agreement

10/02/2007

 

 

WASHINGTON – U.S. Trade Representative Susan
C. Schwab welcomed the successful conclusion of negotiations for a new
International Coffee Agreement (ICA) – the ICA 2007.  


“The new International Coffee Agreement caps an eventful
two years for the International Coffee Organization since the
United
States rejoined in 2005,” said Ambassador
Schwab.  This result comes more than a decade after the United States
left the International Coffee Organization (ICO) in opposition to its efforts at
that time to intervene in markets to set an international coffee
price.


Since rejoining the ICO in February 2005, the
United
States has stressed the need for structural and
operational reforms to create new relevancy for the organization and provide an
example of the potential role of international commodity organizations in
facilitating international trade and sustainable development in economic, social
and environmental terms and in a manner consistent with market
principles.   Renegotiation of the agreement began in January of this
year and concluded at the September meeting of the International Coffee Council
at the headquarters of the organization in London.


The new agreement is designed to enhance the ICO’s role as
a forum for intergovernmental consultations, increase its contributions to
meaningful market information and market transparency and ensure that the
organization plays a unique role in developing innovative and effective capacity
building in the coffee sector, including promoting sustainable approaches to
coffee production and enhancing the value of production for small-scale farmers
in key developing country trading partners.


The new agreement establishes a first-ever “Consultative
Forum on Coffee Sector Finance” to promote the development and dissemination of
innovations and best practices that can enable coffee producers to better manage
financial aspects of the inherent volatility and risks associated with
competitive and evolving markets.  Other notable changes include: expanding
the organization’s work in providing relevant statistical and market
information; strengthening efforts to develop, review and implement capacity
building projects; and strengthening the Council through the elimination of an
Executive Board.


Background


The International Coffee Agreement (ICA) is a commodity
trade agreement that establishes the International Coffee Organization (ICO), an
intergovernmental forum to discuss coffee matters.  The new agreement is
the seventh ICA
since the agreement was first concluded in 1962.  The ICO brings together
exporting and importing Member countries to tackle the challenges facing the
world coffee sector through international cooperation. The 77 ICO member
countries account for over 97 percent of world coffee production and 80 percent
of world consumption.  Export of coffee is the largest source of foreign
exchange for a number of developing countries, and approximately 20 million
families globally are directly involved in coffee production.


The United States was a founding member
of the ICO in the 1960s, but eventually left the organization in the 1990s
because of continuing concerns that the ICO was primarily focused on
manipulating coffee prices through restrictions on production and trade. 
In 2005, the United
States resumed membership after ICO Members
agreed to remove all vestiges of market manipulation from the organization’s
activities.   Since rejoining, the United States has been an advocate for efforts to
rejuvenate and reform the ICO, with strong support from the U.S. private
sector and non-governmental organizations.  The new agreement reflects many
of the specific changes proposed by the United States.


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