AMS Resource, Inc. - Alloy, Metal & Steel Supplier

Types Of International Commodity Agreements

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. An international commodity agreement is a commitment by a group of countries to stabilize trade, deliveries and product prices for participating countries. An agreement usually involves consensus on the quantities traded, prices and inventory management. A number of international commodity agreements serve exclusively as forums for information exchange, analysis and political debate. (4) Mixed producer-consumer interest. The longest agreements are commodities whose motivations are rather different for the major industrialized countries. For example, the United Kingdom, as an importing country, is interested in relatively low sugar prices; but as the commonwealth champion in West India and Oceania, the UK does not want world sugar prices to fall to a catastrophic level.

Before Castro, the United States was looking for a higher price for sugar shipments from Cuba outside the United States. As well as the Cubans, who were a little more impressed by the opportunity to maintain the volume of exports. Even the new coffee agreement reflects some mutual interest from producers and consumers in major importing countries: there are no domestic sources of supply, but moderate industrialized countries are generally concerned about the well-being of less developed countries in the tropical regions of Latin America and Africa, which supply the bulk of world coffee exports. Economic impact . International commodity agreements suffer from the different boundaries that characterize all efforts to artificially support the market position of certain raw materials. In particular, price targets tend to be overestimated, long-term elasticities of demand and supply tend to be underestimated, and cost structures tend to develop so that favourable effects on producer income are at best temporary. The longevity of agreements is therefore not necessarily a virtue and, in the case of sugar, it is only through the ineffectiveness of the main provisions relating to export quotas during periods (especially at high prices) that when an agreement on market share has proved impossible. Controlling the market price of certain raw materials has adverse effects both politically and economically. The rigour of the export quotas introduced under the tin agreement from December 1957 to September 1960 appears to have had a long-term effect on production capacity; When restrictions on the export of tin were eased, production was unable to accelerate with a strong recovery in consumption and, therefore, this product is a classic example of the irreversible supply curve.

One possible lesson of Fidel Castro`s Cuban experience is that there is a subtle, unopened form or form of control of economic markets and a degree of political tyranny. Such a philosophy was shared by supporters of the Anti-Corn-Law League in 19th-century England, who built their case on a supposed link between free trade and world peace. Historically, U.S. policy on international commodity agreements has been marked by some ambivalence. Until recently, it has only participated in agreements that are of interest to the United States, particularly the international wheat agreement.