Dan Lewis

Discuss And Explain Major International Commodity Agreement

International commodity agreements (IIs) are essentially multilateral instruments of state control that support the international price of certain primary raw materials, notably through agreements such as export quotas or guaranteed market access. As a result, international commodity agreements must be distinguished from commodity study groups that lack fully operational responsibility; international non-governmental cartels; and the Combined Food Board (1942-1945) or the International Materials Conference (1951-1953), which involved international allocentric machines for a considerable number of primary raw materials in times of war-induced shortage. The proposed definition also excludes “close” forms of international commitments: (1) bilateral mass purchase agreements; (2) multilateral market control agreements for industrial products, such as the international cotton textile agreement negotiated in 1961; (3) sectoral integration schemes modelled on the European Coal and Steel Community or the European Economic Community`s Common Agricultural Policy; (4) plans for a commodity reserve currency; (5) proposals for international food reserves; and (6) measures to reduce tariffs or non-tariff restrictions on international trade in goods or services. International agreements on raw materials, in their modern form, can be dated to the Brussels Sugar Convention (1902), under which the major modern sugar exporters pledged to support the international market by abandoning national export subsidy systems. The most important agreement of the 1920s was the Stevenson Rubber Scheme, implemented by the British and Dutch authorities on behalf of their respective colonial territories in Malaya and the Netherlands, East India. This regime, which led to a sharp but ephemeral price increase (Whittlesey in 1931), was frankly restrictive and the experience under it was the main reason for certain protective measures introduced in Chapter 5 of the Havana Charter for an international trade organization (United Nations in 1947). It has been argued that price stabilization, which is paid only for a portion of global export sales, tends on the whole to destabilize the price of the rest (Johnson 1950). However, the general reason for this theoretical position is not definitively proven. An important aspect is the inelasticity of demand in the stabilized part of the market relative to that of the destabilized sector. Thus, the assurance of an adequate supply of wheat from the United States and the United Kingdom has generally stabilized under successive international agreements or national control programs.