International Commodity Agreement

(3) Note price levels. As best illustrated by the failure of negotiations on a revised sugar agreement in 1951 and a cocoa agreement in 1963, exporting countries are not prepared to accept the necessary trade-offs unless prices are extremely low. Alternatives. Various efforts have been made to invent mechanisms other than international commodity agreements, to transfer purchasing power to less developed countries whose incomes have been cyclically or chronically depressed. Some of these alternatives, such as commodity reserve currency proposals (United Nations, 1964a), would serve the objectives of foreign aid and international monetary “reform” to undermine the role of the price system as the main instrument of economic management in (relatively) free enterprises. Others acting through covert financial transfers (United Nations, 1964 b); Swerling 1964), the great advantage is that the price system, as a leader in economic resources, is not affected to a large extent. Finally, the International Monetary Fund has acted – albeit with great restraint and after some delay (Fleming – Lovasy 1960) – to provide an additional tranche (a quarter of the country`s IMF ratio) to compensate for the export revenue deficits of less developed countries when these deficits occur for reasons not under the control of the country suffering from balance-of-payments difficulties (International Monetary Fund 1963). Such an approach has the important advantage of taking into account fluctuations in export volume rather than reacting solely to fluctuations in commodity prices. (2) Reasonably stable market share. Since export quotas generally distribute markets in proportion to national shares over a given reference period, difficulties arise when there are sudden or longer-term changes in the shares held by different producing countries. The gradual ouster of U.S.

raw cotton by exports from other countries, reinforced by the development of synthetic fibres, prevented the negotiation of an international cotton agreement in the post-war period and the increase in the volume of exports from African countries seriously complicated the negotiations of the 1962 International Coffee Agreement. Since the end of the Second World War, agreements have been successfully negotiated on wheat, sugar, tin, coffee and olive oil. The 1949 and 1953 International Wheat Agreements (IWA) and the Post-War International Sugar Agreements (ISA) are prototypes of two forms of commodity agreements – the multilateral treaty and the variable export quota. Land prices and sugar caps have been set and, for the most part, imposed by the export regulations authorised by Member States; the sugar agreement also provided that stocks held by exporters were not higher or lower than the percentages indicated by export quotas. A very different instrumentality was used for wheat. Importers agreed to accept certain quantities when the price fell to the minimum level set in the agreement and exporters agreed to disclose certain quantities to Member States when the contract price was set. In terms of prices between the ground and the ceiling, the wheat agreement should be largely ineffective. The Tin Agreement (ITA) gradually set higher price thresholds for which a buffer storage agency (a) could purchase, (b) buy, c) could not buy or sell without special authorization, d) sold and (e) was required to sell. The agreement also provided for the introduction of export controls after the accumulation of the cushion exceeded the specified amounts. The main sanction of the coffee agreement, negotiated in 1962 at a long conference, was the certificate of origin to be required of importing countries in order to limit their recipe to exporters who choose to “do it alone”.

International Commodity Bodies (ICBs) are independent and autonomous legal entities, with their mandates, procedures and boards of directors as their supreme authority.