322. Memorandum From the Department of State Executive Secretary (Read) to the President’s Special Assistant (Rostow)1
SUBJECT
- Cocoa Conference
The Conference to negotiate a cocoa agreement recessed yesterday without reaching agreement. This outcome is a severe disappointment to the African cocoa producing countries, especially Ghana and Nigeria, which are heavily dependent on cocoa exports. The failure is being blamed on the United States. The criticism of our position includes charges that our position was determined by the negative attitude toward an agreement of the U.S. cocoa using industry.
The United States Delegation took positions which proved to be at the farthest remove from the African producers and Brazil. It consist-ently found other consuming countries (the U.K., Netherlands, France, Germany and Switzerland) willing to go further than we and our industry would go in compromising with the producers.
In the last few days of the Conference the other consumers offered to reach agreement that the minimum or floor price which the agreement would seek to maintain should be set between 19 and 21 cents.2 The U.S. industry was not willing to agree to our going above 18 cents despite efforts Arthur Goldberg and State Department officers made to obtain their agreement. (Prices have been above twenty cents for the past fifteen years, averaging more than thirty cents in the fifties and about twenty-four cents in the early sixties. In 1964–65 a record crop drove prices down to twelve cents for a few weeks last summer. Prices are now 23–24 cents.)
Despite the opposition of the U.S. industry we instructed our delegation to initiate a compromise setting the minimum price at 19 cents which Dr. Prebisch of the UN put forward. After two days of discussion, the producers decided not to accept this proposal and Dr. Prebisch withdrew it at their request. The final result of the conference shows the U.S. offering 19 cents, other consumers 19–21 cents and the producers asking 20–22 cents.
The Conference adjourned, therefore, without agreement on price, and with no agreement on the operating rules and mechanism of the [Page 785] Agreement dealing with the purchase of cocoa surpluses. We have definite views on these rules which we want to be written to limit intervention in the market.
However, agreement has been reached to continue in a consultative group with a conference to be scheduled before the end of the year. At that time it seems to us that we will still have a chance to obtain agreement on the type of operating rules we want if we can join other consuming countries on the minimum price.
- Source: Department of State, Central Files, INCO–COCOA 3. Limited Official Use. Drafted by George R. Jacobs (E/OR/ICD) on June 24 and cleared by Assistant Secretary Solomon.↩
- Telegram 5405 from USUN, June 24, summarized the efforts of the U.S., British, Netherlands, and West German delegations on June 22 to revive Prebisch’s compromise proposal. (Ibid.) For Prebisch’s proposal, see Document 320.↩
- Walsh signed for Read above Read’s typed signature.↩