Foreign Relations of the United States, 1969–1976, Volume XXXI, Foreign Economic Policy, 1973–1976

307. Memorandum From the Assistant Secretary of the Treasury for International Affairs (Parsky) to the President’s Assistant for Economic Affairs (Seidman)¹

Washington, undated.

SUBJECT

• Treasury Position on the UNCTAD Proposed Common Fund

Treasury favors Option 3 (a)—Passive Opposition to the Common Fund.

This option allows us to reject the Common Fund without being confrontational as long as we combine it with an active and constructive role in the individual commodity consultations. Option 3 (a) also gives us the flexibility to move at a later date.

We have concluded that without U.S. participation the economic impact of a Common Fund on the U.S. would be minimal for the commodities which could be financed by a limited fund ($500 million–$1 billion). Nearly all of the eighteen commodities on the UNCTAD list either (1) do not lend themselves to stocking arrangements (bauxite, meat, bananas, tea, timber, vegetable oils); (2) have existing buffer stocks and do not require additional financial resources (tin, cocoa); (3) have ready substitutes which would serve to limit price increases (jute, sisal, rubber); or (4) would require financial resources beyond the means of a limited fund thus prohibiting market intervention schemes on a scale detrimental to the U.S. (copper, coffee, cotton, phosphates, sugar, iron ore).

We believe that by maintaining the position as described in Option 3 (a) through the November preparatory conference, we can retain the support of our key developed country allies, the UK and Germany. The absence of three major industrialized countries would severely limit the adverse economic impact of a Common Fund.

An important part of this position, however, is that we be willing to discuss constructively the problems of each of the individual commodities in upcoming international meetings. We must take a leadership role and make positive proposals to give meaning to our commitment to undertake a wide variety of means for improving trade and markets in commodities. This will require extensive U.S. Government preparation in the coming months under the leadership of the EPB/NSC Commodities Policy Coordinating Committee.

1. Source: Ford Library, L. William Seidman Papers, Box 50, Economic Policy Board Subject File, Commodities—United Nations Conference on Trade and Development (UNCTAD). No classification marking. Seidman initialed the memorandum.