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July 30, 2010

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USTR Susan C. Schwab Welcomes Conclusion of a New International Coffee Agreement

WASHINGTON – U.S. Trade Representative Susan C. Schwab welcomed the successful conclusion of negotiations for a new International Coffee Agreement (ICA) – the ICA 2007.

“The new International Coffee Agreement caps an eventful two years for the International Coffee Organization since the United States rejoined in 2005,” said Ambassador Schwab. This result comes more than a decade after the United States left the International Coffee Organization (ICO) in opposition to its efforts at that time to intervene in markets to set an international coffee price.

Since rejoining the ICO in February 2005, the United States has stressed the need for structural and operational reforms to create new relevancy for the organization and provide an example of the potential role of international commodity organizations in facilitating international trade and sustainable development in economic, social and environmental terms and in a manner consistent with market principles. Renegotiation of the agreement began in January of this year and concluded at the September meeting of the International Coffee Council at the headquarters of the organization in London.

The new agreement is designed to enhance the ICO’s role as a forum for intergovernmental consultations, increase its contributions to meaningful market information and market transparency and ensure that the organization plays a unique role in developing innovative and effective capacity building in the coffee sector, including promoting sustainable approaches to coffee production and enhancing the value of production for small-scale farmers in key developing country trading partners.

The new agreement establishes a first-ever “Consultative Forum on Coffee Sector Finance” to promote the development and dissemination of innovations and best practices that can enable coffee producers to better manage financial aspects of the inherent volatility and risks associated with competitive and evolving markets. Other notable changes include: expanding the organization’s work in providing relevant statistical and market information; strengthening efforts to develop, review and implement capacity building projects; and strengthening the Council through the elimination of an Executive Board.

The International Coffee Agreement (ICA) is a commodity trade agreement that establishes the International Coffee Organization (ICO), an intergovernmental forum to discuss coffee matters. The new agreement is the seventh ICA since the agreement was first concluded in 1962. The ICO brings together exporting and importing Member countries to tackle the challenges facing the world coffee sector through international cooperation. The 77 ICO member countries account for over 97 percent of world coffee production and 80 percent of world consumption. Export of coffee is the largest source of foreign exchange for a number of developing countries, and approximately 20 million families globally are directly involved in coffee production.

The United States was a founding member of the ICO in the 1960s, but eventually left the organization in the 1990s because of continuing concerns that the ICO was primarily focused on manipulating coffee prices through restrictions on production and trade. In 2005, the United States resumed membership after ICO Members agreed to remove all vestiges of market manipulation from the organization’s activities. Since rejoining, the United States has been an advocate for efforts to rejuvenate and reform the ICO, with strong support from the U.S. private sector and non-governmental organizations. The new agreement reflects many of the specific changes proposed by the United States.

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