ratification of the agreement and approval of the proposed implementing legislation. The successful operation of the agreement to date and the significant improvements agreed upon during the renegotiation reflect the importance attached to the agreement by all its members, particularly the exporting countries. Coffee continues to be the single most important agricultural commodity in world trade with current annual shipments valued at approximately $2.3 billion. As chart 3 shows, for a number of countries in Latin America and Africa, coffee remains the principal source of foreign exchange. Colombia (67 percent), Ethiopia (61 percent), Uganda (52 percent), Haiti (52 percent), El Salvador (50 percent), and Brazil (47 percent) are major cases in point. The member exporting countries regard the coffee agreement, with its stabilizing influence on their foreign earnings, as a major instrument in their efforts to promote orderly economic and social development. They have evidenced this by undertaking major commitments to strengthen and enlarge the effectiveness of the agreement. IMPORTANCE TO LATIN AMERICA In Latin America, U.S. participation in the coffee agreement is considered a critical test of hemispheric solidarity. This was true of the first agreement and is still true of its renewal. This view was strongly expressed by all the heads of American states at Punta del Este last April. A collapse of the agreement could have serious and far reaching consequences. The export earnings of developing countries might fluctuate from year to year by as much as one-half to a billion dollars. A decrease in our exports to those countries would almost surely follow. Foreign aid from the United States and other sources for economic development would be canceled out to the extent of the decreased earnings and the destructive effects of instability. A number of producer governments in Africa and Latin America could be placed in serious political straits. In the long run, the termination of the agreement would also hurt consumers. Coffee prices might fall initially; but the bust boom cycle which plagued this commodity prior to the agreement would almost certainly resume and probably in more virulent form. A return to the high retail price levels reached during several years in the 1950s$1.10 per pound in 1954 and $1.03 per pound in 1956-might result. As our chart 4 shows, comparing green and ground coffee wholesale price indexes with other selected indexes, coffee prices have remained at remarkably low levels. The continuation of the agreement requires continued U.S. membership. As President Johnson stated in his recommendation on the agreement to the Senate: Without this machinery, we could return to the days of ruinous coffee price swings, disrupting the economics of many friendly nations, impairing world coffee trade, and endangering the continued flow of coffee at reasonable prices to the tables of American families. For these reasons, Mr. Chairman, I urge that this committee report favorably to the Senate the International Coffee Agreement of 1968. Thank you. 95-147-68- -2 |