What Do You Mean By International Commodity Agreement

The USTR cites U.S. participation in two trade agreements on raw materials: the International Tropical Woods Agreement and the International Coffee Agreement (ICA). These two agreements form intergovernmental organizations with boards of directors. (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. While it is generally true that prices in domestic markets tend to fluctuate less strongly than those of products sold without protection in the remaining “free” markets, it is not at all clear that free market prices as a group are necessarily less stable than those of primary commodities that are subject to global market conditions (i.e. primary raw materials) , for which prices vary throughout the non-communist world mainly through transport costs combined with nominal fares). This is mainly for reasons of supply elasticity, reinforced in the case of cocoa by the inadequacy of demand and by fairly large cyclical variations in demand, cocoa, natural rubber and wool in the case of cocoa, which have experienced the most significant variations in market prices. While sterling producers are off-the-top of all three and sterling`s foreign exchange reserves tend to fluctuate according to their current market strength or weakness, none were settled by an agreement in the post-war period. Moreover, the fact that price fluctuations in these raw materials were generally reversible has led major exporting countries to introduce various devices – from national marketing advice to variable export taxes to producer income tax – which have the effect of “stabilizing” producers` incomes from year to year (but not all of the country`s foreign exchange earnings). This approach is an adaptation to life with instability (Nurkse 1958).

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. 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.

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