The Chargé in Colombia (Daniels) to the Secretary of State

No. 3776

Sir: I have the honor to refer to the Department’s confidential instruction no. 2131 of May 8, 1944 enclosing a translation of a memorandum dated April 18, 1944 received by the Department from the Colombian Embassy at Washington, pointing out the desirability, [Page 145] from the standpoint of Colombia, of modifying the basic quotas as established by the Inter-American Coffee Agreement to permit the importation into the United States of a larger quantity of Colombian coffee. The Embassy is requested to supply the Department with its views regarding the memorandum from the Colombian Embassy, as well as the views of the Department set forth in the instruction under reference, and to transmit any suggestions it may have as to further procedure.

The Embassy is in full accord with the views of the Department as expressed in the instruction under reference.

With reference to the Colombian memorandum of April 18, the following observations are set forth as of possible interest:

Although the figure cited in Section (1) of the Colombian memorandum for average production of exportable coffee in Colombia, namely 5,200,000 bags per year, may appear to be high in relation to past statistical records, the Embassy has no reason to question the accuracy of this figure.
It is stated in Section (2) of the Colombian memorandum that there is left a difference of 1,900,000 bags between the “quota” in force and actual production, which would increase surplus accumulations by the Federation16 in Columbia. Aside from the fact that that figure may already be considered diminished by the amount of 687,393 bags as the result of the quota increase of April 20, it should also be borne in mind that Colombia likewise has a quota for the market outside the United States which now amounts to 1,079,000 bags. While this latter figure is of course unrealistic under present conditions, it will become of increasing importance as the European market reopens and as added shipping facilities make possible increased exports to Canada and other parts of the world. According to the latest weekly Statistical Bulletin which has been received from the Inter-American Coffee Board, Colombia has exported under that quota up to April 22, 1944 121,768 bags; but it is to be assumed that this figure will be increased prior to September 30. In other words, it is believed that in calculating any unexportable surplus of coffee in Colombia account should be taken of the quota for the market outside the United States and not merely consider the United States quota as the only one in effect.
The Colombian memorandum refers to the “large stocks already acquired by the Federation in the last three years.” It is observed from the last weekly Statistical Bulletin of the Inter-American Coffee Board dated May 3, 1944 that estimated total stocks of green coffee in Colombia are shown as 676,993 bags. This is not considered to be a very large stock. (Of course actual stocks of green coffee in Colombia, [Page 146] including interior stocks as well as port stocks, are much higher than this figure; accordingly, it might be advantageous for the Colombian Delegate to the Board to provide accurate statistical information on the Colombian coffee situation in order to facilitate an intelligent study of the problem.)
There is no doubt that the quotas for some producing countries are relatively high in comparison with their production; and that the percentages reflected by the existing basic quotas for these countries might equitably be readjusted. Sections (4) and (5) of the Colombian memorandum are believed to be substantially accurate. While I hesitate to cite specific countries which might be satisfied with a lesser percentage participation in the total basic quotas (both Articles I and II of the Agreement), a study of past statistical information and recent experience should indicate such readjustments in the basic quotas as could be made without creating unfair hardships. In any discussion of quota readjustments it is suggested that the basic quotas under Article II be given full consideration, so as to alleviate the pressure in obtaining larger quotas under Article I.
Under the basic quotas Colombia may export 3,150,000 bags to the United States market and 1,079,000 bags to the market outside the United States—a total exportable production, so to speak, of 4,229,000 bags. If actual production of exportable coffee in Colombia is now running around 5,200,000 bags per year, as claimed, it is believed that Colombia has some justification in seeking an increase in its basic quotas.
In Sections (B) and (D) of the Colombian memorandum there is expressed the desire of the Colombian Government to seek modifications in the basic quotas to give Colombia a larger percentage of the total. I agree that this matter should be studied, and see no reason why Colombia should not present its views and arguments to the Inter-American Coffee Board for thorough discussion. The Inter-American Coffee Agreement itself provides the mechanism for bringing about any changes in the text of the Agreement which may be agreed to by the participating governments.
Section (C) of the Colombian memorandum states that if no such modifications are approved a very grave situation would result in Colombia. If this should come to pass, Colombia has the legal right under the terms of the Inter-American Coffee Agreement to withdraw therefrom; and since Colombia’s participation in the basic quotas established by Article I of the Agreement is not less than 20%, such withdrawal, it is understood, would automatically terminate the Agreement. In other words, the Government of Colombia alone has the power to extricate itself from any situation which is considered unfavorable under the Inter-American Coffee Agreement.

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Respectfully yours,

Paul C. Daniels
  1. Federación Nacional de Cafeteros.