INTERNATIONAL COMMODITY AGREEMENTS 8^ importers reacted by pointing out that they are after price stabilization, not price support. This is an important distinction which means that a floor price can be lowered in line with the long term market trends—no matter what is happening to the production costs. After the failure of negotiations on a replacement in May 1985, the INRA was extended until 1987 beyond its October expiry date. However, its long term chances of survival are rated as poor by those involved in these talks. The case ofNR is only an instance which exposes the fragility of the framework in which many of the commodity agreements are operating. It also points to the danger facing the third world countries that take recourse to undue specialization in export crops, a prescription that today is being doled out by the World Bank.16 1. Before the introluction of tea cultivation in British Colonies, China was the only source of supply of this beverage in the form of unfermented green tea to the west. But after the successful experiment of cultivating tea in British Colonies, the Chinese green tea was gradually ousted from the world market due to the promotion of fermented black tea by the British Companies. This is a clear case which shows that even the preferences of the consumers can be changed by economic power resulting from a remarkable degree of vertical integration. Today, brand loyalty is the rule though tea is not produced in any of the western countries where these multinational corporations are based. The gravity of the problems facing the sugar producers is evident from the encroachments made by the artificial sweetners made from petroleum, biotechnology and chemical derivatives. A recent study (for details see Frederic F Clairmonte and John Cavanagh, ^Destruction of the Sugar Industry", EPW. Jan. 14th 1986, P-18) on the sugar industry shows the implications on the policies pursued by the US based soft-drink giants on sugar. It is also pointed out that developments in chemical and biological processes are now confronting the familiar beverage trinity of cocoa, coffee and tea. Flavour chemists have deployed enzyme fermentation technology to create cocoa substitutes that cost half as much to produce as natural cocoa extracts. 2. For a detailed discussion see the World Development Report (1986), World Bank, Oxford University Press, 1986, pp. 136-137. 3. The two main instruments of ICAs have been buffer stocks and controls on production and exports. For a detailed discussion on the shortcomings of these instruments with regard to individual commodities, see pp. 134-135, ibid. It is also to be noted that, more than the instruments, the fragility of the frame work in which various ICAs are operating, also contributed to the failures. 4. For details see Hidde P Smith, Globe Industry Report, Forecasts for the World Rubber Economy to the year 2000, MacmiHian Publishers Ltd, London, 1984, p. 332 Also see Rubber Statistical Bulletin, 1RSG, Vol. 40, No. 4, January 1986, London, pp. 4-5. 5. C. Suan Tan, "World Rubber Market Structure and Stabilisation, An Econometric Study", World Bank Staff Working paper No. 10, World Bank, Washington D.C. 1984, P-2. 6. The SR is processed from the oil feed stock and therefore, an increase in oil price will naturally result in an increase in SR price. For instance, during the oil