Social Scientist. v 15, no. 167-68 (April-May 1987) p. 77.


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THARIAN GEORGE K*

International Commodity Agreements The Case of Natural Rubber

The recent history of commodity agreements is littered with failures, missed opportunities and growing tensions between the developed and developing countries. The fall in oil prices and the dissensions within the Organisation of Petroleum Exporting Countries (OPEC) demonstrated the inability of the third world cartels to control commodity prices. Despite the protective commodity agreements, prices of many raw materials have fallen sharply in recent years and the loss in revenues has decimated many third world producers. A corollary of the declining commodity prices is the deteriorating terms of trade of the developing exporters vis-a-vis the developed importers.

An international commodity agreement (ICA) is a formal agreement between the countries producing and consuming a commodity to control the market in some respect. Some forty ICAs covering thirteen commodities have been concluded since 1931. Although the details of their objectives have varied, virtually all have sought to stabilise as well as to increase the price of the commodity concerned. The present plight of many primary commodities suggest that the underlying political and economic factors that determine the fortunes of the commodities are beyond the control of producers. The fate of Chinese green tea during the turn of the 20th century and recently the declining fortunes of sugar are clear cases which illustrate the fact that a handful of transnational corporations can determine the destiny of the primary commodities.1 At the end of 1985 only four agreements capable of influencing prices were still in operation and only one of these was actively doing so.2

The two basic objectives of the commodity agreements appear to be :

(1) to stabilise commodity prices and (2) to ensure remunerative or equitable prices—that is, generally to raise them. The available indicators tend to suggest that the efforts of the commodity exporters to achieve the basic objectives are marred by a multitude of factors arising mainly from the basic conflict of interests between the producer and consumer countries on the one hand and the bluntness of the instruments used to achieve the objectives on the other.3 Even today, after protracted negotiations during

*Market Research Officer, Kottayam Rubber Research Institute of India, Kerala



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