Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

287. Memorandum From the Assistant Secretary of Commerce for International Affairs (Kearns) to the Chairman of the Council on Foreign Economic Policy (Randall)⁰

November 20, 1958.

SUBJECT

• International Commodity Problems

I. The Problem

Commodity matters, particularly as they relate to efforts to solve chronic problems of price fluctuations and market instability, have come increasingly to the fore as major international economic issues.

There is considerable pressure on the U.S. for participation in various types of international commodity arrangements. The question is whether in its implementation present U.S. policy against participation in commodity agreements is defined clearly enough to withstand such pressures while avoiding the adverse effects on our international position and objectives.

II. Facts Bearing on the Problem

U.S. policy with respect to international commodity agreements was established by the CFEP on October 25, 1955.¹ During the three years since the adoption of the policy statement, the U.S. has avoided involvement in any new international commodity agreements. However, U.S. representatives have participated in international discussions of commodity problems covering coffee, cocoa, sugar, wheat, rubber, copper, lead and zinc. The U.S. at the UN Economic and Social Council meeting held in the summer of 1958 also agreed to participate in the UN Committee on International Commodity Trade on the basis of revised terms of reference.

Nevertheless, the impression has been widely held abroad that the U.S. is disinterested in commodity problems of the less developed countries. Our attempts to remove this erroneous impression have unfortunately led to the equally erroneous impression that we are willing seriously to entertain commodity agreement proposals.

III. Conclusions

The basic statement of U.S. policy set forth in October 1955 continues to be a sound approach for the U.S. to maintain in relation to international commodity problems. Under that policy it should be possible for the U.S. to participate in international commodity discussions without compromising the basic U.S. position. In the course of such participation, we should emphasize in more positive terms the validity of the U.S. position.

The following guidelines are proposed for implementing the U.S. policy with respect to U.S. participation in international commodity discussion:

(1) Stress a willingness to exchange information about developments in production, international trade, prices and productivity.

(2) Encourage studies of means of expanding consumption of the commodity and improving marketing methods.

(3) Encourage examination of, and attention to, the more fundamental causes of commodity instability including undue economic reliance by some producer nations on single commodities, unsound monetary policies, etc.

(4) Point out the historic lack of success of other attempts to achieve price and market stability through “management” of commodities on either an international or a national scale. In this connection, reference should be made to the fact that the U.S. has not been successful in eliminating agricultural surplus despite massive attempts at crop “management” through price supports and production and acreage controls.

(5) Make clear in the context of the above approach, that for sound economic and other policy reasons U.S. participation in any international commodity discussions while indicative of U.S. cooperativeness in meeting international economic problems, should not in any way be construed as implying a commitment on the part of the U.S. to participate in an international commodity agreement.

(6) U.S. representatives in international commodity discussions should reaffirm, when it appears necessary to avoid misunderstanding, that it is U.S. policy to refrain from adhering to international commodity agreements except in the most unusual circumstances and only then with prior clearance at the highest levels of the U.S. Government.

(7) More specifically, U.S. representatives should guard against giving the impression that this country may be prepared to participate in any international arrangement:

(i) Where the importing countries will seek to control the imports of a commodity or commodities to an extent beyond their exisiting international commitments.

(ii) Where participation in an arrangement will involve an understanding or agreement concerning control of the pricing of commodities.

(iii) Where the arrangement will involve the establishment of buffer or control stocks.

(iv) Where the arrangement would imply a commitment that the United States Government will assume responsibility for the purchase, stockpiling, import regulations, shipping restrictions, or similar controls.

(8) U.S. representatives should not, [in] the absence of specific clearance by CFEP, participate in or assist with the preparation of commodity arrangements which seek to embrace the subjects referred to in item (7).

0. Source: Department of Commerce, Bureau of Foreign Commerce Files, 496, wk. copy. No classification marking. Drafted by H.N. Blackman, International Resources Staff, Bureau of Foreign Commerce. According to a memorandum from Loring K. Macy, Director of the Bureau of Foreign Commerce, to Kearns, November 20, this submission to the CFEP was based in good part on a draft prepared in the Department of the Treasury. (Ibid.)
1. See Foreign Relations, 1955–1957, vol. X, pp. 545–546.