Limitations Of International Commodity Agreement

(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. 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). There is a small error in all economic progress management plans with certain growth rates that economists generally do not mention: no genius, no power over this world, has the ability to predict the supply, demand or price of any commodity, or predict the performance of one or many economies in a three or five years.

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