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277. Information Memorandum From the Assistant Secretary of State for Economic Affairs (Solomon) to the Under Secretary of State for Economic Affairs (Mann)1

SUBJECT

  • Cocoa Discussions at the United Nations

The cocoa producing countries went away reasonably satisfied from last week's UN cocoa meeting. Although the meeting had been called by the UNCTAD Trade and Development Board in an atmosphere of crisis and urgency, and Prebisch repeatedly called it a test of new machinery, the meeting resulted only in a confirmation of the work program and schedule adopted by the same countries at an April FAO meeting.

The flexible schedule for the future envisages:

a)
completion of FAO's studies by the end of the year,
b)
another meeting in early 1966 to review the studies and discuss whether conditions exist which might make the negotiation of a cocoa agreement successful,
c)
a possible negotiating conference in spring 1966.

The failure of the producing countries to press for immediate negotiations arises from their inability to agree among themselves on what kind of agreement they want or whether they should start negotiations when prices are as low as 11 cents, compared with 23 cents at the time of the last unsuccessful negotiation. So long as these differences among producers exist, the consuming countries may easily stand by, expressing concern at present conditions and willingness to resume negotiations when a successful outcome seems likely.

Producing countries at the UN meeting agreed that their basic problem was over-production and that action in this regard must be taken in any international agreement.

Only one proposal for immediate action by consumers was advanced: abolition of trade barriers. The EEC countries refused to contemplate immediate steps and merely referred to the possibility of reducing duties through the Kennedy Round.

Producing countries expressed the hope that some arrangements might be made for the World Ford Program to buy up and distribute [Page 702]margarine made from the surplus cocoa beans. This is probably a non-starter, although the producers themselves might agree to sell the surplus to normal margarine processors and thereby induce a rise in the price of cocoa beans for the chocolate industry.

The U.S. industry group is happy with the outcome of the meeting.

  1. Source: Department of State, EB/ICD/TRP Files: Lot 78 D 52, Cocoa Meeting, New York June 21–25, 1965. Limited Official Use. Drafted by Jack B. Button (E/ICD/TRP) and Paul E. Callanan (E/ICD/TRP) on June 28, and cleared by Stanley Nehmer and Edward R. Fried.