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The current pressure that favours agreements. Despite the serious drawbacks, the number of international commodity agreements has tended to increase and there is good reason to expect this trend to continue. On the one hand, the United States, through a series of moderate measures, has moved from doctrinal opposition to these agreements to one in which official policy, as President Kennedy says, “is poised to cooperate on a case-by-case review of commodity market problems.” Such agreements tend to be strongly favoured by less developed countries to “stabilize” (i.e. increase) the currencies they obtain from their main exports. In Europe, international market-sharing agreements have been actively supported by the French authorities for more than a decade. The Federal Republic of Germany, the main importer of agricultural raw materials in the European Economic Community, supports the agreements as instruments for maintaining a place for foreign suppliers in the common market. For similar reasons, an agreement on cereals also received some scientific support (Coppock 1963). In addition, the United Kingdom, which until recently relied on a policy of cheap food imports and a programme of direct payments to its domestic agricultural producers, has begun to conclude a series of agreements with major foreign suppliers of cereals and meat in order to reduce the budgetary burden resulting from a combination of direct payments and unlimited domestic production. and unlimited imports. International commodity agreements significantly draw all external suppliers to short-term benefits and are willing to ignore longer-term disadvantages by securing opportunities on the basis of quotas. 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. Even in the case of sugar (where the United States remains a net importer), it has acted more in a producer than among consumers; Too large a gap between domestic and foreign prices would embarrass the continuation of the national sugar control system. From time to time, the United States has co-ordded the idea of a lead and zinc agreement to end an existing system of unilaterally imposed import quotas, which has caused great irritation in trade relations with Mexico, Peru, Australia and Canada. 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.

Alternatives. Various efforts have been made to invent mechanisms other than international commodity agreements, to transfer purchasing power to less developed countries whose incomes have been cyclically or chronically depressed. Some of these alternatives, such as commodity reserve currency proposals (United Nations, 1964a), would serve the objectives of foreign aid and international monetary “reform” to undermine the role of the price system as the main instrument of economic management in (relatively) free enterprises.