The Brew-haha Over Coffee Trade
COLOMBIA has two major export commodities: coffee and cocaine. Since the United States seeks to block Colombia's illicit cocaine trade, it stands to reason that Washington should facilitate the South American country's legitimate trade. Legal export earnings help fund Colombia's war against the drug lords, and non-cocaine production, as in the case of coffee, employs millions of Colombians who might otherwise join the cocaine network. Yet the US dealt a hard blow to Colombia's economy this summer when it allowed the collapse of a coffee agreement among 74 exporting and consuming countries. In the absence of the trade quotas established under the accord, a world glut has caused the price of coffee to plunge more than 40 percent, from $1.45 a pound in July to 85 cents today. A boon for consumers, yes, but the drop has staggered producing countries.
Besides Colombia, affected coffee producers include El Salvador, where the US has made a large commitment to defeating a communist insurgency.
The US has some legitimate gripes. Washington says it's unfair for producing countries, in high-harvest years, to sell coffee surpluses to nonmember countries - notably in East Europe - at below-market prices. Also, the US wants to adjust its quotas to reflect American consumer preferences for milder coffee grades, a demand that Brazil, the world's largest coffee producer, resists.
Nonetheless, Washington could have kept the coffee accord in force while it negotiated. By taking what some analysts saw as a surprisingly hard line, the US hurt other interests.
Happily, President Bush has indicated a desire to get the coffee negotiations back on track.
To be sure, US commodity pacts with developing countries are complex. Ideally, they benefit all parties: the exporting countries, by giving them earnings for economic development and smoothing out harmful short-term price gyrations; and US consumers and manufacturers, by giving them guaranteed supplies at fair prices that reflect long-term equilibriums. When there are no US producers of a commodity, such as coffee or tin, quotas are not protectionist (unlike US sugar quotas, which, to benefit a handful of domestic producers, hurt both Caribbean exporters and American consumers).
But rarely, in practice, are commodity agreements all things to all people. Objectives clash, and such agreements are subject to producer manipulation. Washington has a responsibility to US consumers, whose interests can't be wholly sacrificed to foreign policy goals; yet foreign policy considerations can't be ignored, either. US actions on commodity agreements thus are best considered case by case.
As the biggest single market for most commodities, though, the US should always bear in mind that when it swings its weight around, it can break a lot of china - including, as in the case of coffee, some of its own cups.