Foreign Relations of the United States, 1955–1957, Foreign Aid and Economic Defense Policy, Volume X

205. Brief of Staff Study on International Commodity Agreements Prepared by the Staff of the Council on Foreign Economic Policy¹

Washington, October 5, 1955.

Problem: To determine U.S. policy with respect to international commodity agreements (ICA’s).

Facts: The U.S. has not determined clearly its policy regarding participation in or support to ICA’s. A decision will be needed in the near future as to U.S. participation in a possible new international wheat agreement. Actions by the U.S. with respect to ICA’s have been taken largely on a case-by-case basis.

Discussion: The U.S. is now participating in two ICA’s: wheat and sugar. U.S. entry into these agreements was largely committed by the previous Administration and took place soon after the current Administration took office. Limited agreements have operated in the past for wool and tea although they have not included the U.S. A tin agreement in which the U.S. declined to participate has been ratified by several governments but is now awaiting ratification by Indonesia before entry into force. Conferences have been held to consider agreements for cotton and rubber but no agreements have emerged. It is possible that proposals will be made for ICA’s covering other commodities where special problems exist. These include coffee, cocoa, rice, lead, zinc, and petroleum. Pressure for the consideration of ICA’s has come largely from foreign governments primarily on the grounds that they are a possible device to bring about price stability and an orderly sharing of markets.

Within the Executive Branch somewhat different appraisals have been made with respect to the effects of ICA’s. These include differences as to the extent of interference with free markets; the contribution to price and market stability, the usefulness in gaining international support for U.S. actions to increase or maintain exports, or to control imports; possible use to assist foreign economies, and the impact abroad of the U.S. attitude.

Conclusion: Alternative U.S. positions suggested with respect to ICA’s are as follows:

a. The U.S. is opposed to U.S. participation in or support of international commodity agreements. Exception to this policy should be considered only when it is demonstrated that such participation or support is clearly in the national interest.

b. The U.S., although not favoring the extensive resort to ICA’s, believes there are situations where ICA’s may be appropriate and desirable. In approaching the question internationally, the U.S. should take a sympathetic attitude and should consider the participation in or support to specific agreements on the basis of the practical interest of the U.S.

Recommendation:

a. That the Council on Foreign Economic Policy consider the alternative policy statements regarding international commodity agreements stated in the conclusions above.

b. That the Council authorize the appointment of an inter-Agency committee to develop for its approval a statement of policy guidelines to implement such policy as may be adopted with respect to international commodity agreements.

1. Source: Department of State, E–CFEP Files: Lot 61 D 282A, International Commodity Agreements—CFEP 531. Official Use Only. Circulated to the members of the CFEP under cover of a memorandum of October 5 from Cullen. Cullen noted that the staff study reflected the comments of the Departments of Agriculture, Commerce, State, the Treasury, and the International Cooperation Administration on the draft of the Staff Study on International Commodity Agreements of September 13; see footnote 2, supra.