COFFEE TALKS FAILURE SEEN PRESSURING U.S.

  Failure of talks on re-establishing
  International Coffee Organization, ICO, coffee quotas last week
  may put political pressure on the United States, particularly
  the State Department, to reassess its position, but the U.S. is
  unlikely to back away from its basic demand quotas be set by
  "objective criteria", U.S. officials said.
      Jon Rosenbaum, assistant U.S. trade representative and head
  of Washington's delegation to the talks, told Reuters on his
  return from London that the United States is willing to resume
  the coffee negotiations as early as April if necessary.
      Rosenbaum said the United States will be "flexible" in
  discussing the method of establishing objective criteria and
  any transition to new quotas, but not on the basic aim of
  establishing an objective method of setting quotas.
      At the ICO talks major consuming nations, led by the U.S.,
  proposed that future coffee export quota shares be calculated
  by a formula incorporating a producer's recent exportable
  production and verified stocks, while large producers led by
  Brazil proposed maintaining the traditional ad hoc division of
  shares. The consumer position would have in effect reduced the
  market share of Brazil, by far the world's largest producer.
      Rosenbaum said the administration would continue to support
  legislation now before Congress which would allow the U.S.
  customs service to monitor coffee imports, as a way to comply
  with any future coffee quotas.
      He said the Reagan administration would be reviewing the
  coffee policy situation following the collapse of the London
  talks, but "nobody is proposing we change our position."
      However, other U.S. government officials involved in coffee
  policy said they are bracing for a diplomatic and coffee market
  offensive from producer countries, led by Brazil and Colombia,
  to soften the consumer position.
      "Knowing that its next crop is fairly large, Brazil will
  kind of want to test the resolve of other producers and
  consumers," said one U.S. official.
      The U.S. official, who asked not to be identified, said
  Brazil and Colombia may flood the coffee market in the next few
  months in an effort to drive down prices and pressure other
  countries, particularly the splinter group of small producers
  who differed with the major producers in London.
      This in turn could lead to urgent appeals from Latin
  American countries, faced with mounting debt problems, to the
  U.S. State department, and to the National Security Council in
  the White House, for an easing of the U.S. position, U.S.
  officials said.
      The State department, a major player in setting U.S. coffee
  policy, may then face conflicting pressures, particularly from
  politically-sensitive U.S. allies in Central America, U.S.
  officials said.
      El Salvador and Guatemala both backed Brazil and Colombia
  at the London talks in resisting pressures for quotas based on
  objective criteria. But the Dominican Republic and Costa Rica
  joined the splinter group, which said it would agree to
  objective criteria.
      There is a strong feeling among some in the State
  Department that the United States should continue to support
  the splinter group of producers who have taken the
  politically-risky step of opposing Brazil on the objective
  criteria question, U.S. officials said.
      Within the consuming countries there also is expected to be
  some pressure to reassess positions.
      In London, the U.S. was supported by the U.K., the
  Netherlands, West Germany, Japan, Australia and New Zealand on
  the issue of objective criteria, U.S. officials said.
      This bloc represented enough votes among consuming nations
  to successfully prevent adoption of the producer proposals.
      However, U.S. sources said West Germany's support was at
  times qualified and there is some concern that the European
  Community could come under pressure to be more accommodative to
  producers in future talks. France backed the Ivory Coast and
  other African producers during the talks.
      A softening of the EC stance would make it more difficult,
  although not impossible, for the U.S. to block producer plans.
      While political manuevering by small producers and
  consuming countries will be important, U.S. officials said the
  key to any future outcome will be Brazil's position.
      U.S. officials blamed Brazil's intransigence for the
  failure of the talks and said a more flexible position from
  Brasilia would be the most important step toward agreement.
  

