Commodity Agreements Introduction

Since the end of World War II, agreements have been successfully negotiated for wheat, sugar, tin, coffee and olive oil. The International Wheat Agreements (IWA) of 1949 and 1953 and the post-war International Sugar Agreements (ISAs) are prototypes of two types of commodity agreements: the multilateral treaty and the variable export quota. For sugar, lower and maximum prices have been fixed and, for the most part, imposed by export rules authorised by the Member States; The sugar agreement also provided that stocks in the hands of exporters should not exceed or be less than the indicated percentages of export quotas. A completely different instrument was used for wheat. Importers agreed to accept certain quantities when the price fell to the minimum level set out in the agreement and exporters agreed to make certain quantities available to Member States when the price reached the contract ceiling. As far as prices between the floor and ceiling are concerned, the wheat agreement should be essentially ineffective. The Tin Agreement (ITA) gradually set higher price thresholds for which a compensating storage agency (a) had to buy, (b) buy, c) could not buy or sell without special permission, (d) could sell and had to sell. The agreement also provided for the introduction of export controls after buffer accumulations exceeded certain amounts. The main sanction of the Coffee Agreement, negotiated at a lengthy conference in 1962, was the certificate of origin that was to be required of importing countries in order to limit their revenues to exporters who chose to act “alone”. It has been argued that the stabilization of the price, which is paid for only a part of world export sales, tends to largely destabilize the price of the rest (Johnson in 1950). However, the general arguments in favour of this theoretical position are not definitively proven. An important consideration is the inelasticity of demand in the stabilized part of the market compared to that of the unstabilized sector. Overall, the guarantee of an adequate supply of sugar to the United States and the United Kingdom of wheat has tended to stabilize under successive international agreements or national control programmes.

Commodity agreements often involve intervention regimes such as compensatory stocks and usually last only a few years, after which they are renegotiated. They are different from agreements such as OPEC, mainly because producing and consuming countries participate in discussions and negotiations, unlike agreements that are created only to protect the interests of producers. Alternatives. Various efforts have been made to invent mechanisms other than international agreements on raw materials, to transfer purchasing power to less developed countries, whose incomes were either cyclical or chronically low. Some of these alternatives, such as the commodity reserve currency proposals (UN 1964a), would serve as the main instrument of economic management in (relatively) free corporate societies, to the detriment of the objectives of external aid and international monetary “reform”, to the detriment of the role of the price system. . . .