What Is The Purpose Of International Commodity 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). (1) Inelastic request. If narrow substitutes are available, it is certain that market-priced assistance for individual products will have immediate and very detrimental effects. The presence of synthetic rubber explains the total absence of a post-war agreement for the natural product; Agreements restricting the use of the agreement for individual olive trees are excluded by the existence of a large list of alternative seeds and by competition with butter; but since 1937 sugar has borrowed a continuous succession of agreements.

Preconditions for negotiation. Empirically, if not theoretically, seems to be one of the main conditions for an international conference on raw materials to be an agreement: negotiations for a successor agreement to ITTA 1994 were concluded in 2006 and the new agreement (ITTA 2006) aims to intensify efforts to promote the tropical timber trade as part of sustainable management of tropical forests.

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