There was some convergence of views when representatives from exporting and importing countries met in London in January to consider the changes needed to the current coffee pactio enable the International Coffee Organization (ICO) to improve its services to the coffee community. Discussions on the issue are taking place in the special working group set up by the ICO's governing Council in September (FO. Licht's International Coffee Report, Vol. 21, No.9). Its mandate is to examine all proposals for changes to the current (2001) International Coffee Agreement (lCA), which expires at the end of September this year, and make recommendations on which should be adopted.

In effect, the working group is drawing up a new ICA, for this - it is now clear - is what it will be. That what is being planned is a new instrument of international cooperation on coffee, which the USA has all along insisted is necessary, has now been accepted by the .EU, which hitherto had insisted that just a little minor tinkering was needed to the text of the existing accord. However, by confining discussion on the changes to the working group, a full renegotiation of the existing accord - which from past experience would almost certainly have been lengthy and expensive - will be avoided, always provided it can settle matters.

Although many, the modifications to the existing agreement that are being considered are hardly monumental and, since they will not change the ICO's role in essence, should, in theory, be relatively easily aggreed. However, it would be foolish to pretend that differences do not exist.

The aim is that the group, which is being chaired by Cote d'lvoire's Saint-Cyr Djikalou, should present its draft of the text of new ICA to the Council at its May meeting, although considerably more work will be needed for it to be in a position to do this. The group will meet again in London on March 19-20 and may well have to hold a further - ideally final- session before the ICO's May session in London.

If all goes to plan, the Council will endorse the new text then. This would not, however, leave sufficient time for the completion of all the legal formalities - signatures by governments and, where required, ratification by legislatures - for the new treaty to be ready to take over automatically from the old on October 1st this year. Therefore the most likely way forward, provided everything goes smoothly, will be for the Council in May to agree a one-year extension of the present accord to give the time needed.

Moreover, completing the necessary procedures for implementation of the treaty, officials say, could be speedier than in the past, as the US Congress will not be required to ratify it and the EU will be acting in this matter on behalf of its member states. Giving the Commission this authority is one of the big changes envisaged in the provisions related to membership - and is one that all parties accept is necessary for the new ICA.

Discussion of the new accord is being concentrated in five areas objectives; membership and votes; efficiency of deliberations and decision-making; structural and administrative matters; and new and expanded areas of work. The first area is clearly the most important, as it is from the pact's objectives which may be reinforced by a fashionable "mission statement", which Washington is keen on - that all other provisions defining the ICO's work will flow.

Broadly speaking, most of the present ICA's objectives will be kept, albeit invariably with changes of emphasis and"· therefore modified wording. Controversy, however, has arisen over the desire of some producer countries for the ICA to continue to maintain the substance of the current pact's second objective: "to provide a forum for intergovernmental consultations, and negotiations when appropriate, on coffee matters and on ways to achieve a reasonable balance between world supply and demand on a basis which will assure adequate supplies of coffee at fair prices to consumers and markets for coffee at remunerative prices to producers, and which will be conducive to long-term equilibrium between production and consumption".

But exerting a direct influence on supplies and prices is something that the ICO working according to an ICA without economic clauses (and there is no question of these!) cannot do. The US wants to underscore this by taking out all the existing references to prices and supplies and replacing them with a mission statement for the ICO.

This is "to strengthen the global coffee sector in a free market environment and provide for the sustainable expansion of the sector, for the betterment of all participants in the coffee value chain". All parties involved in the talks on the ICA's future agree that working toward a sustainable coffee economy is a desirable objective, although the issue is also not without controversy. Some producers want it made clear that the responsibilities and the costs involved should be shared equally and not just fall on them. It should thus be made explicit, therefore, that sustainability should not simply be seen in environmental terms, but in social and economic ones, too.

Quitc a few countries have proposed changes to the current rCA's objectives. They include the insertion of wording calling on the rco to do more to help smaller fam1ers, as part of the fight against poverty, to help producers develop their processed coffee industries and to playa role in co-ordinating assistance when disasters hit producing regions. A greater role in ensuring the security and safety of the supply chain is another.

How many of these will survive remains to be seeri. It is clear, however, that everyone wants the promotion of consumption retained as one of the ICO's key objectives, with the US wanting a specific reference to make it clear that itshould aim to do this in exporting as well as importing countries. Similarly, it is agreed, future objectives, as now, must refer to the importance of the rco's job of collecting and disseminating statistical and other infol111ation on the market, promoting quality and supporting coffee development projects.

The last area is one in which the US wants the ICO's work beefed up by involving it much more than now in setting guidelines for projects, drawing them up and then overseeing their implementation. Currently these last two jobs are done by others, who put their ideas for schemes to the ICO, which then decides whether to sponsor them for financing by the Common Fund for Commodities (CFC). There would clearly be cost implications ifit took them on itself.

The US and others also want to broaden the sources of finance for coffee projects, with Washington's proposing that the ICO should act as a forum for consultations between those with schemes and possible financiers, such as regional banks. To this end it has proposed a new objective for the ICO: "facilitating the availability of information on financial tools that may be of value to coffee producers, including access to credit and approaches to managing risk". Nobody in January, including the US, seemed very clear as to how the ICO would carry out this function and Washington has promised to provide more information at the working group's next meeting. What we know so far is that the US is proposing what it calls the Consultative Forum on Coffee Sector Finance.

It would be composed of ICO members and representatives of relevant intergovernmental organizations, financial institutions, the private sector, non-govemmental organizations and other interested parties. Its aim would be "to facilitate consultations on topics related to finance in the coffee sector, with a particular emphasis on the needs of small and medium scale producers and local communities in coffee producing areas."

Certainly the thinking behind the proposal appeals to several producing countries. Honduras, for instance, would like the ICO act as facilitator in providing information to financial institutions on the investment needs of members and to advise on coffee investment policies for project financing.

The next issue tackled by the working group in January - a rather arcane one that has no relevance to the job done by the agency - was ICO membership. Changes in the ICA, where hitherto membership has been based on the concept of individual sovereign states, are needed to accommodate the EU as the single member representing all of its 27 member countries. Since this is its status in the tropical timber agreement - and was, too, in the now defunct natural rubber and jute pacts - the precedent is now established. But making such a change - which is accepted by all as necessary - has implication for the allocation of votes, which in turn determine members' budgetary contributions. Currently each ICO member is allotted five basic votes out of 1,000 for each side and the remaining votes are then distributed according to each member's share of imports or exports, as the case may be.

In January it was accepted that no one member should be able to command two-thirds or more of the total votes on either the producers' or consumers' side that, under the current rules (which seem likely to be maintained), arc deemed to constitute a majority. But unless the current system of allocating votes is changed, the EU could well find itself in the position of commanding such a majority, so a formula is being sought to avoid this. It has also been accepted that tr.e current provision that no one member should have more than 400 votes should be abandoned. If it were kept it would mean that the EU would have roughly a third fewer votes than it would strictly be entitled to - and would therefore be paying less towards the budget than it should. This would be patently unfair.

It has been proposed in the discussions on improving efficiency and decisionmaking at the agency that voting at the ICO should be formally abandoned and the Council operate solely by consensus - which is accepted as the ideal approach and is the way the organization generally deals with matters. But this is likely to be ruled out, as the general feeling appears to be that that there should be a provision allowing voting in certain circumstances. Otherwise, it would be possible, as ICO executive director Nestor Osorio points out, for one country to block a decision (for instance approval of the budget) and thus effectively paralyse the agency.

There is general agreement that the way the ICO operates - which currently leads to too much duplication of work -' could be streamlined. The most radical proposal - from the US - is the abolition of the executive board. This proposal has its merits, Osorio has noted, as it would simplify decision-making by confining it to the Council and save on costs. But, on the other hand, the full Council - which currently has 77 members might be too unwieldy a body for dealing with issues requiring detailed debate. Moreover, if another proposal were adopted - again from the US - that Council sessions be reduced from the current two to one a year there would be long periods where no decisions would be possible.

Producers would certainly prefer the ICO to meet more frequently than once a year. In the ICO of the future a continuing role is seen for the Private Sector Consultative Board (PSCB), whose role the US for one would like to see strengthened. Some producers, meanwhile, would like smaller growers to be given a voice on the body, the creation of which was one of the innovations of the present ICA - and a very successful one, too. There have also been suggestions that the board could have more of a say in detennining the Council's agenda, although - it has been agreed - its role, as now, must remain purely advisory.

Another suggestion, meanwhile, is that non-government organizations and so-called "representatives of civil society" sh0uld be able to join the PSCB, but the working group has ruled this out. It has been decided that bodies that have no intrinsic relationship to coffee, such as Oxfam, which had sought the right to participate formally in some way in the ICO's work, should be ineligible for membership. However, such bodies could - as now - be granted observer status at the agency on an ad-hoc basis, with the decision in each case left up to the Council.

Looking at new and expanded areas of work, strengthening the ICO's provision of statistical and other market data is widely seen as important. Since the ICO's statistics are only as good as the data supplied it by members, and some are not as good as they should be in this area, there is clearly room for improvement. Japan, meanwhile, would like to see the ICO start to forecast supply and dcmand and the USA wants it to carry out more studies and surveys to help illuminate the market and provide increased coverage of market trends generally.

In short, the 'general idea here is the more information that is available the more helpful the ICO will be to all stakeholders. As well as wanting the ICO to expand its role in furthering coffee development developing projects, many countries would also like to see the agency doing more to promote consumption, ideally by attracting private sector money for schemes. It has also been suggested that the Council should oversee promotion activities, thus doing away with the need for a separate promotion committee, as is the case now.

One thing is clear, however, the ICO is never again going to have the funds it had in the distant past for promotion work. It cannot therefore act as an advertising agency, as Osorio notes, but it can sow the seeds for activities by others. Finally, turning to administrative matters, there seems general agreement that a longer duration for a new ICA than the six years set for the present pact would make sense. A period between eight and ten years has been proposed, with a review of how the ICO is functioning halfway through, when the Council would be able to decide whether the treaty needed amending, or should be extended unchanged.

It really is time to end the uncertainties and difficulties invariably caused by the need periodically to renegotiate the ICA by putting in place an effectively continuous instrument of cooperation, which can be modified simply when necessary. This had been the thinking behind the drafting of the present pact. But - because of the determination of the US, which was not involved in that process, to put its stamp on the future terms of co-operation - things have not worked out quite as planned.

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