Examples Of International Commodity Agreement

Commodity agreements are agreements between producer and consumer countries to stabilize markets and increase average prices. Such agreements are common in many markets, including the coffee, tea and sugar markets. The commodity market is particularly vulnerable to sudden changes in supply conditions, known as supply shocks. Shocks such as bad weather, disease and natural disasters are largely unpredictable and cause high volatility in commodity markets. In comparison, the markets for finished products from these raw materials are much more stable. 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. The International Tropical Woods Agreement (ITTA) is often referred to as a «hybrid agreement» because it combines a traditional trade agreement on raw materials with sustainable tropical forest management objectives.

ITTA has established the International Tropical Timber Organization (ITTO), a 59-member intergovernmental organization, which together represents about 80 percent of the world`s tropical forests and 90% of the annual tropical timber trade. ITTO promotes market transparency through the collection, analysis and dissemination of data on the production and trade of tropical timber; supports the development, funding and implementation of projects and other measures to strengthen the sustainable management and exploitation capacity of tropical forests; and facilitates intergovernmental consultation and international cooperation on trade and exploitation of tropical timber and sustainable management of its resource base. Principles that are outdated from reality. The havana Charter chapter, which deals with intergovernmental agreements to control goods, included provisions that would have benefited the consumer, including (a) equal representation for import and export countries; (b) the participation of all countries that are «essentially interested in the product concerned»; (c) advertising controls in the form of an annual report; and (d) to ensure increased market opportunities for deliveries from regions where production is most efficient. Since the end of the Second World War, agreements have been successfully negotiated on wheat, sugar, tin, coffee and olive oil. The 1949 and 1953 International Wheat Agreements (IWA) and the Post-War International Sugar Agreements (ISA) are prototypes of two forms of commodity agreements – the multilateral treaty and the variable export quota.