Information paper on recent developments in commodity stabilization

UNITED NATIONS

ECONOMIC AND

SOCIAL COUNCIL

ECONOMIC COMMISSION FOE AFRICA Standing Committee on Trade Seoond session

Niamey, 20-28 November 19^3 ^3&8is_{■ ■}

i

Distr.

LIMITED

25 October 19*

Original: ENGLISH

IKFORMATIOJI PAPEP. 01!

RECENT DEVELOPMENTS IN COMMOBITY STABILISATION

63-377?

E/CK.14/STC/28

FOREWORD

Chapter I

TABLE OF CONTENTS

AFRICAN COMMODITY TEADE

INTERNATIONAL MACHINERY FOR COMMODITY STABILIZATION

Past Developments Hecent Developments

Commodity agreements Study Groups

General commercial policy measures affecting commodity stabilization The United Nations Conference on

Trade and Development

LIST OF TABLES

African Experts of Selected Commodities Percentage Changes in Average Export Unit

Values from Previous Year

Prices of Major Export Commodities Annual Averages 196"1 and 1962 and

Highest and Lowest Averages 1950 to i960

E/CN.14/STC/28

FOREWORD

Concern is increasingly being expressed about the persistent weakness as well as the short-term fluctuations of prices of the.main export commodities of Afrioan countries. The Standing Committee on Trade of the Economic Commission for Africa at its first session in September 1962 requested the Executive Secretary to report to its next session on any significant developments in commodity stabilization.

The worldwide character of the problems of commodity stabilization is generally realized. The African meeting on commodity stabilization

held in August 1962, organized by ECA/FAO, stated in its report

(j/CN.14/2O5) that merely action.on the regional level through the ; ■

co-operation of the countries of Africa is not likely to be appreciably successful beoause of the existence of export supplies which emanate from other primary produoing regions, identical to those produoed in Africa or direotly oompeting with them. This should not, however, discourage African countries from attempting to present a common line of approach in all international forums where problems of oommodity price stabilization are discussed.

In this respect advantage should be taken of the forthcoming United Nations Conference on Trade and Development to present an Afrioan point

of view. This Conference will, among other issues, discuss measures for stabilizing primary commodity markets at equitable and remunerative , prioes as well as schemes for stabilization of primary export earnings

at adequate levels.

The following is an information paper whioh may serve as background document for discussion of these questions by the Standing Committee on Trade* After briefly outlining the economics of African oommodity trade, it presents a short description of the main developments in the field of international commodity stabilization during the past year,

E/CN.14/STC/28

Page 2

CHAPTER I .r AFRICAN COMMODITY TRAIiE

1. Africa-plays a relatively' important parV in world production and""" ' trade of-primary commodities (see table l). ' African trade is dominant in a number-of-commodities/and particularly for docoai certain oil seeds and oils andLsrsal. Thelis'E would' obviously"be multiplied if the varieus"grades*ofcommodities :were more differentiated. Thus, although the shares,;, of..African exports of cotton and coffee-are rather moderate,., those of extra-lpng.staple p.otton and robusta coffee are very

significant, ;.,,Furthermore, in comparison with the.-pre-war years, the- ; African share in,the world output and .exports :6f/a-/large nt&aber of ■ '■

commodities^ ^uch.as^coppei?.:,; lead jand-stint), imbber, jcoffetf" and tea, has1"1

increased remarkably since the -war,■-: ■;•:■ ■■■-...■ I ,-•.■,;. . - ■■■-: ■:...•■.-.■ y\ .-.;> ■.

2. Africa's exports of primary commodities suffer from a high degree

of instability-(see table '2)\ ::±^deeU, VherV is'some indication that for AfricW the:'degree of fluctuation in unit value "'is'larger than for "

other underdeveloped^ areas' '& tie world, reflecting partly the fact that Africa*s exports of primary commodities are relatively concentrated in agricultural .commodities: jof .hi^il-yi inelastic Supply. ■ ■■ ■'■ " ' ; -• ; 3. The toost conspicuous feature'of'price developments in the last decade hasy however, been^a'si^ificantdebline in Ine average prices "

of African expbrts coupled with an opposite tren<Tin the average'prices"

on the region^simports.^' Between 195O-i952 and I96O-I962, the unit

value of exports from Africa declined "by about 13 per cent'.' ' The ' quantum .index,of exports.,on the other, hand rose by nearly 75 per cent,' resulting in ;an overall,increase, in export earnii4gSoof abound 50 per ^ oent during djhe.aast decade;,- There .has been.-a: 'general:%ic:rease iri the

See Foreign Trade Newsletter No. 5 & 6 for a detailed review of

the development of terms of trade of the region during recent years,

Commodity

mllion US*

African exports

peir G^nt

ofvrorld. experts IS&izs Bananas Citrusfruits:; Svigar Coffee. TC2. Cocoa Wine Tobacco HidosandSkina J&lmkernels Groundnuts F&Imkei-neloil Palmoil Groundnutoil Oliveoil. Rubber Timber Wool Cotton Sisal Phosphates Diamonds Copper Tin Zinc lead

■42 116-{ 346 40 565 242 116 78 104 163 15 77 66 17 103 156 140 638 78 107 213 544 30 16 52

Tabls1 AFR1DMIEFFORTSOPSELECTEDCCG^IODITIES I2T0T2C1953-100 1950195119521953195419551956195719581959I960 22;53 '1eo 72G381 45 45 51 ^-25 131 40 50 130

fl-I ■:89 52 fr- C> .62 122 63 21 109

33 95 46 ^Cxz65 95 125 69 29 87

79 136 55 96 89 122 86 50 93 149140 101102

2069 SourcesPret)aredonthebasisofofficialstatistics.

/

Page 4

Table 2

PERCENTAGE CHANGES IK AVERAGE EXPORT UNIT VALUES FROM PREVIOUS TEAR

(1958 - 100)

: 1951 .. 1952 ,

1953;

i 19541955

' 1956

1957: -■

, 1959

I 1959 I960- ■?.

! 1961 ■

Africa

Total

llorld excluding Africa

Underdeveloped areas

] a/ ^Excluding South Africa.

1"I

:volume of exports of most commodities exported. Exports of tropical I woods neatly'tre'bled during xhe ;last decade, whereas the volume of

fruits and of cocoa, tea and coffee,, expanded "by 65-75 per cent.

;Price trends were more mixed, with price levels slightly higher in the

; "beginning of■the sixties than a decade earlier for minerals and fruits

; and significantly lower for textile fibres and "beverages. ■"- 4* Table 3 shows price series of significance for a number of

! important;,4-fr'ioan export commodities,, The price series selected ape

!generally those ruling on free markets, which, in many oases, and :particularly for sugar, is limited to.only a fraction of world trade

I ■ ■ . ■

|in the commodity in question. Only two "preferential" prices are

I shown in the.table (for Ivory Coast Robusta ooffee and;the Commonwealth '

; Sugar Agreement) «v ,-,"'■ ", '.■■ .■; ■„■ .-. ' . . ..

Table3 :PRIDESCE1MJOREXPORTCCMMCBOTIES AMffia^.iiLTER4GESr>a96lAH3)1962AHDHIGHESTAUDLOWESTAVEMGES1950TOI960 (UScentsperkg.) (-r*L -™-Commod^fcy-Y^ JSaHanafi;^--""■■ Granges-;'.17- —Soffee-'?* .159V/iM l^Socoabewas-v: 12°"^54 .1,Sea:1%j5 ;.Sugar^59 llffitie-' ':Tobacco,.i'-.f: ■"Groundnuts:.:.. Groundnut;;.oil•.. •Palmkernels;..•-.. I&lmkerneloil. £aljnoil;;\■„ ■'Rubber..-.^;;L ■jj.^lotton-■it/; r^:;->J■"':■ Wool ■^"^ea^:.951-19.

.rf-i??10 .:951 is.

•-.--ffill-.■vr*»!'-it i~j-.'.&.si.i.^,.'-

Franbarw France France->O NewYork/ TinmH.||.r' iiamDulg*' NewYork France^ Londonv Calcuirta1 .Londonv: Cuba',. Algeria Rhodesia Europeanports "i%n" ..>?» London^-) Egypt-,..; 11 SouthAfrica London-^

....,„.*., bpecmoa&ion :Cameroun',;.-^ ""SorUiArrloa-T■/ IvoryOoastRobusta: Angolaiiffibriz:; "RnpfhAf"p"ifia(K^JTval ,tColombiaiiBfenizales *-;IvoryOoast--.; .Accra..-:j Auction^rice-; JSSkcontractprice No.4contract ■.Secondquality,11 Flue-cured,auction .Nigerianshelled-;. SritishWestAfrica- ;Congo,.„■.. Congo.■•■.■--■'~■'- ■Congo;,...■: No.lESS; Karnakexportu^y.£■ Ashmouni,exportu*t. Auction,averageall typegreasy -Africa,Ho,l -■Electrolytic Foreign.,-dutypaid.■ 1Foreign,'Autyja.id■- Standard

Max. Max. 24-9 23.9 122 139 244TT 176 155 129 144 12.4 12.6 19-9 no 30.1 47.6 21.8 45.3 40.4 131 211 158 222 64.4 98.2 44.2 47.* 296

andMin. Year 1956 -1nnn: 1955 1954 1954 1954 1954 1954 1954 1954 1959 1951 1958 1952 1951 1951 1951 1951 1951 1951 1951 1951 1951 1951 1955 1951 1951 1951

1950to Min. 17-4 T1T I7.5 70 56 160 99 63 58 65 8,4 6,5 8.5 _{85 I6.7} 27.6 13.9 25.4 19.9 51 107 85 88 19.8 49-3 19-4 18.3 198

I960 Year 1959 *TQc:Q iy:>y 195>-6O i960 1951 i960 1956 1950 1952 1950 1959. 1954 1956. 1957 1958 1957 1955 1953 1953 ^I960 1953. 1958 1957 1950-■ 1959 1958 1954

1961 18.1 iyo 67 44 a• 96 56 47 10? 12.4 6.4 ,12.1 ■85 20.3 34.3 13.3 23.6 22.6 63 110 ■96 95 25.6, .63.3: 17-7 ■a.4 244

';Percentage ,;1962 69: 48 90 54 44 101 12.6 6.6 ™e/

92.4^

17.4w 28.2^

12*8f/

22-?^ ■21.5'J 59 92-' 81 100 27.6 64.4 15.4 17.6 247

Change -3 1Q--ly +3 +9 -6 —4 -6 -2. +2'1 ■* "+9 -14 -18 -4 -6

.'■:- '5

-6 -16 -16 +5 -+a +2 -13 -18 +1

-I, >.■■ (D!2J .-.■Si

------— r Sources:(seeE/CN.14/STC/2)a/-Ho.quotationbefore1953 :-.;;,":'■■~«.b/""after1958d/averageof8months e/","6months

if " "10 mcnths

3/CN.14/STC/28

Page 7

■"' P INMNATIONAi; MACHINERY FOR^ COttbDITY STABILIZATION

Past

6. ' Inie^goVernmental machinery for dealing multilaterally with "world oommodity problems "-for consultation on commodiiy stabilization or for execuii&ti of stabilization measures - exists for a number of commodities of Interest to Afrioan countries. The importance of a solution to' these problems for the economio progress of developing countries haB been stre'ssed" in various forums dealing with international economic problems afier ttfe second world-war.

7. Since the Great Depression there has been a growing preoooupation with the; problems of organizing international commodity trade, ' There

were"1 agteemeiits related io wheat (1933) > sugar (1937) » tea (1933, 1936*' and 1938), "rubbed (1934, 1936 and 1948), timber (1935), tin" (iS&L, 1935V"

1934, 1937» 1938 ahdl942), and coffee (1940). Apart from thes^ inteiv'"

goverrimVn'tai agreements, a number of producers agreements (particularly

;. -,. ., ■- .. ■■ :-■■ ■'■■■', ■-'.-■■■■■■••■

for minerals) were also established in the 193°'s*

u> Jtov - W-:.■.:-■'- -.:.rf :.: ■■}■■■'■ \ \ [tiov% notrS .e '■' -.U -:-rrr - t 8# .This attack on pommoiiity problems has been muoh more oomprehensiye,., r sinoe the war. . Several inter-governmental conferences have taken, plaoe,.

and the attentionrof. the United, Nations General Assembly and-, the Economic and Social. Council has repeatedly been drawn to problems, in. the field ... . of international trade of primary commodities, and to possible polioies...

that would alleviate or overcome them.

9. In 1947, the Interim Co-ordinating Committee for International

Commodity Arrangements (iOCICA) was established by the Economic and

SoQiai°CounciiJ1;o facilitate inter-governmental consultation on commodity

problems. The ICCICA has been responsible for convening oommodity

study groups, ^forxmaking/recoamendations on the calling of oonferen'c;es \-L for negotlatingcommodity agreements and for co-ordinating-the activities

Page 8

of study groups and councils administering commodity agreements. The Commission on International Commodity Trade (CICT),. constituted by the Economic and Sooial Council in 1954j has kept a continuous watoh on developments and problems in international commodity trade, including the fluctuations in terms of trade and their effeot on the;^op.nomio : :,■■_

development of the less-developed countries. Working to the same end

' --"'■■" £4 **<• '■■'■-■■■■■"■11 -■;■ \j r '= ' ■.'^-■i Sf ■ 'i'.f ■■;'>■■■'!-'■ ,-C :;.-- .■...,t<- r..i" ~> ■"c\ --■:■. .■':... ■. n

is the United Nations Food and Agricultural Organization (FAO), whioh has .devoted considerable attention to the solution of these problems

through its .own Committee on Commodity Problem^ (CO?) and. in .oollabqr-:

ation with the CICT and other UN bodies. ' Mention will be, made later

of the activities of. the International Monetary.Fund .(IMF) in the field of compensatory financing and the General Agreement on Tariffs,and Trade (GATT).

:--^ --i---^-W •#£<: '■■■ « ■■::■ f ,h-} ■■:- if .,:J:.hk-.-.' ■-;.-.^. (id3 ^SiiJtg .V 10, International commodity agreements are currently in force for

&*«**' -*'j • -. ' . v r\ '■:■.'■■:.: }*m£ tf !.U*?-'~ •.-,ri-. ":='■: .■.■-: .lit?; -;.o ': Hsff^AUFi-fti .^.KJ Jrfiv

ooffee, wheat, sugar, tin and olive oil.,, each,being administered by an

- n ■* ■* ■-■ ■" . _ ' ■ -J ■-1" i *' —■ ■ . ' '.,.-*'','. i' r... , ■ ■/ ' \- _ ^ *i l' £j47t!iOC iki*1: C -. -1 -■■

international oounoil comprising participating governments. An agr^e-

ment j??p ooooa is.; Ja\.P:r'e'sen't ^i^g, negotiated in Geneva. ,,flherer^io., formal .inter-governmental agreement has been worked out, the problems

of a particular commodity are in a. number of. cases dealt with by a commodity study group- Suoh groups have been doing valuable work in

promo^ittg siaiistibal lihiformity» in advancing iu'alit^ standardization * arid itt:the- examination^of7'information'^aiMt"various economic'and ' M ■ ;'?; ' t'eelaiical aspects reiatedt^ trade In' the commodity in question;

Arrangements between private" companies, particularly for min^tals^may ''''"

also haveL-a-stabilising- effbct^onprioes,-^0'^"' '-'' *yi* ^-n>i#fj ;*$& ■■:■

11. One of the most important ^Tjnta in the field of individual

commodity consultations in 1962-196} was the successful conclusion of

Private arrangements-wi^J not be tisoussed.further in thie^pa nor will the arrangements under the Organization of Petroleum

Exporting Countries' {O^2o)\. - ' '■■■'■-'■'-■■■^ 1**' - : - -

Page

a five-year agreement for coffee. This agreement, which is the result of extensive Sadies' undertaken over a period of years by the Inter national Coffee Study Group, supersedes a series' of "annual agreements

for the regulation of the coffee market by means of export quotas/

'■entered into by the major producing countries. The latest of these annual agreements covered the trading year which ended 30 September 1963.

12. The International Coffee Agreement provides for basic export quotas valid for three years. These quotas may be revised from time

to time on the basis of estimated world imports of coffee. The agree-

ment furthermore^limits the amount which participating consumer countries may purchase from non-members. Perhaps We important in the long run

are built-in measures for increasing the flexibility of the system, including quarterly quota adjustments, freedom to export outside the

quota to "new markets" in which coffee consumption is low, reviews by

the Council of price scales and stock policies, adjustments of production policies and the mobilization of assistance to ease the burden of such

adjustments. ■■'■ ., ,.„■.,.,..

13. Among international agreements that were re-negotiated in 1962,

:was the International Wheat Agreement. The terms of this agreement,

concluded in 1949 and revised in 1953, 1956, 1959, are similar to those

of the previous agreements. It stipulates maximum and minimum prices for. internationally traded wheat. As long as the market price is within a specified range,-no obligations are imposed on participating countries. When the market price is below the minimum, the importers undertake to buy a specified proportion of their total commercial ■ purchases from exporting members. When the market price exceeds the

upper limit, the exporting countries undertake to supply specified

quantities of wheat at the maximum prioe. Under the terms of the agreement, the total guaranteed sales are equal to the total guaranteed

purchases. .,

14. A UN conference in Geneva negotiated a new International Olive Oil Agreement, to supersede the old agreement which expired on

Page 10

~3O September'1963.. -The-Agreement -establishes an Olive Oil Council whioKis responsible for action aimed at, the stabilization and expansion of. wofld olive Oil consumption..". Among other measures, the Agreement provides for the setting up of a Propaganda Fund to be ueed for educa tional and advertising campaigns -to expand world consumption of olive Oil,... The. agreement will be operative for a period of four years, and .contains a clause providing for extension for a further year under.-,

, certain circumstances.

15i Thfr International Sugar Agreement, which was signed in 1953 and -re-negotiated in 1958, is aimed at regulating the movement of sugar on

the international markets through a system of export quotas. The termination of trade relations between Cuba arid the United States, ■:

-.however, altered the pattern of international sugar trade so radically

■that.the export quota,provisions of the agreement lapsed at the end'of ..-.196lv ^.International Sugar Council remains in existence, and a ^

conference is to be convened at the end of 1963 to consider a protocol

to continue the Agreement.

16,.,,,-ffli. Commonwealth Sugar Agreement has been extended until the end of 1970., ; The -negotiated price quotas (the quantities of sugar bought by the..United Kingdom Sugar Board at the negotiated price) for 1963 have been fixed at 5 per ce«t above -basic quotas in the agreement.

The negotiated price quotas for 1962 were 4.5 per cent above basic

■■quotas. ■ - f-;..\,..; . . -..-■ ■.-.■.:;.. ..; -.. ■ .>.-.,;■ Ml;-

17. The International Tin Agreement, which came into force in 1956 '

and Was subsequently revised in i960 and 1962,'rests on the mechanism

of buffer stock operations, coupled with necessary export' controls. :

The International Tin Council entered into consultations during 1962

with the United States on the question of disposal from that country< s

strategic stockpile, which is estimated to contain tin sufficient for

more than-one year<s world, consumption. -The United States has agreed

to consult .ith the-Council and has assured it th.t thedisposals from

the stockpile will be spaced over time and arranged in a way that will

E/CN.14/STC/2&

Page 11 ::■-■

not disrupt the market *.

18.- Preparatory work or, ah international agreement for cocoa has been

going on in the FAO Cocoa Study Group for some time, A "UN Cocoa Conference which met in Geneva in September/October 1963, failed to

agree on an international agreement-^ The agreement aimed at stabi

lizing the international cocoa market through a system of "sales" rather than "export", quotas in o?der to influence the market more directly.

The draft agreement further proposed measures to keep production "in

reasonable balance" with consumption, and steps to expand consumption^

19. A Cocoa Producers Alliance consisting of Ghana, Nigeria, Cameroun,

Ivory Coast and Brazil was established in mid-1962. An important object of the Alliance is to work for an increase in world consumption of cocoa. ' Another purpose is to enoourage members to oo-operate in

observing more orderly export marketing procedures.

Study Groups . ..-.,.

20. None of the other commodity groups that met during the past year considered the introduction of formal international agreements. The following is a short reviow of tho activities of study groups of interest

to African countries during tho last yoar.

21. A meeting of. latin American banana producers in October 1962 ...

recommended the establishment of an International Banana Study Group under the auspices of PAD to examine all aspects of production,

marketing and consumption of bananas- The FAQ Coconut Group meeting^

in September 1953 discussed how to alleviate the effects of competition

BBC news 25 October. 1-963. ■ ■' '

In this connexion, it should be mentioned that the conclusion of a Cocoa Agreement was opposed by the International Cocoa Trades Federation which consists of the cocoa associations of the five

major consuming countries, ?rr.n3e, West Germany, .Netherlands, Unit-3

Kingdom and'the USA.-' -The Federation feels that there is no emer gency situation in cocoa it the present moment and that the future

prospects for cocoa appear bright.

E/CM.14/STC/28

Page 12

between coconut oil, and other cils and also hew to eliminate big price fluctuations. The International Advisory Committee on Cotton has been : studying the overall statistical situation in cotton and particularly the tendency for the .products of extra-long staple cotton .to outrun demand. The FAO Group on Grains has studied the feasibility of inter national action in the field cf coarse grains, taking into account inter alia substitutability and price relations between grains. The FAC~~

Consultative Sub-Committee on Economic Aspects of Eice, at its seventh

session early in 1963, recommended to its members that they should report

their plans for rice exports and imports over several years. Steps are being taken to establish an African Groundnut Council. A draft agreement formulated by Nigeria and Senegal in mid-l962 has been trans

mitted to African groundnut exporting countries for examination. The main aim of the Council will be to agree on a policy for the sale of groundnuts on world markets with a view to stabilising groundnut prices and expanding sales. Steps have also been taken to set up an PAD Study Group on Jute, Kenaf and Allied Fibers following a 15 nation ad hoc

meeting convened by FAO and ECAFE in December 1962. The main"^

envisaged for this group is to study how to promote long-term e^llta*.

and grater short-term stability in the jute industry. The International Hubber Study Group has studied the competition of natural rubber with synthetic rubber. The International Wocl Study Group met in 1962 for the first time since 1955 and discussed trade problems as well as the position of wool fibers and competing synthetics in the textile industry.

The International lead and Zinc Study Group agreed in 1962 to certain voluntary cutbacks in metal production for export in order to stabilise Prices, whereas its sixth session in 1963 concentrated mere en long-term problems, including the question of future disposals cf metal presently held ln national stockpiles and pricing practices and marketing arrange-

ments for these metals. ■■■ - ■. ■■ .

22- There is an increasing tendency to adopt a much broader approach

/

Page 13

to the problems confronting producers of primary commodities. 'ftiis may partly be a result of the prevalent trend towards regional eoonoipic : integration. The establishment of the European Economic Community, ■'' in particular, has forced the producers of tropical and temperate zone agricultural products respectively to consider the problems facing the two groups as a whole.

23. The common agricultural policy of the EEC went into effect on 30 July 1962. Basically, the system now being applied for all produots

(except fruits,, vegetables and wines) aims at the eventual fixing of a

common price, level throughout the Community to be maintained above the world ..market level by means of variable import levies on supplies from third countries. The common market organization for fruits and vege tables will .be achieved principally through the determination for each product or group of products of a common quality standard. Tfee main feature of.,the rules regulating trade in wine is the establishment of

'■■■■-■■■■ '■' " '; . 1. ■■■;■■■

minimum prices; imports valued below these prices may be either temporarily suspended ,or reduced or made conditional on the values,, being above the. minimum price. The common agricultural policy will be

extended-also to rice, where.the Commission has proposed a levy system similar to the^ .system adopted for other cereals. A proposal for the.

establishment of a common policy for oils and .fats was published by the Commission in mid-1963. Oils from assooiated African states imported into the European Common Market will be duty free. African produbers will receive financial aid if prices fall below a certain minimum and be granted special protection to assure them some degree of preference

in the Community.

24« The ,new .Convention, between 18 African states and the European

Economic Community was signed in Yaounde 20 July 1963»^* It is to

This Convention does not regulate the relations between the EEC and the territories still dependent on either France or the Netherlands. The latter require a Council ruling in pursuance of Article 136 of the Eome Treaty. The provisions for the

continuation of this system of association are now being finalized.

VcN.H/stc/28

Page 14

oome into force after it has teen ratified by the member states of the EEC and at least 15 of the associated states. Over the five-year period covered by the Convention, the EEC will provide aid totalling

$730 million to the countries concerned. A total of $230 million will be devoted to measures to enable the associated countries to market

their productions at competitive world prries rather than the preferen- tial prices whioh most of the associated states have reoeived so far.

A timetable has been agreed for the alignment of the prioes of all tropical products to prices prevailing in the world market. For cooo-*

nuts, pepper, palm oil, cotton arid gum arable this will start in the 1963-1964 season; for oilseeds, rice and sugar,;the transition will' start with the coming into force of a common agricultural policy for ' these products. For ooffee, marketing ;at a competitive price will be carried out gradually from the season which starts during the second

half of 1963 arid is to be completed riot later 7tnari the 1967-1968 season-

Certain tropical commodities, which represent an important part of ttie ' exports of the associated states, will be admitted free of duty into the six Common Market oountries from the date the new Convention enters into foroe. These commodities are pineapple, ooconut, coffee, tea, pepper, vanilla, cloves and nutmeg. The oommon external tariff on ; ■ these products will be applied for imports from third oountries after -;r

the sanie date, with oertain reductions. ■

25. In the course of the year, the contracting parties to the General Agreement on Tariffs and Trade (GATT) undertook further consultations

and studies on primary c^modtty problems both on an indivudual

commodity level and on the level of broader commerical policy within ; the context of the Programme for Expansion of Trade initiated in

November 195&. All three commodity groups, on oereals, meat and*

tropical products, 'met during the year. The two major GAT$ committees

on expansion of international trade, Committee II (on agricultural policy)

and Committee III (on measures for promoting trade ;of developing;>_

oountries), oontiniiedVand intensified their activities during the year.

/ Pag© 15

26. Furthermore, & GATT Ministerial Meeting was held in May 1963 to consider a programme gq* the1 effective liberalization and expansion of trade in both primary and seoondai-y l^&cts, Itoihg this meeting a programme of aotiOn, Ifcioh had previously been examined iln Committee IXX was-adopted.^ Tho Programme of Action contains stand-still proirisioris *X i^riff i^W«Me barriers against the export trade of lee^-deVelbped coimtriss," elimination of quantative restrictions 0:1 imports from less-developed countries, duty froe entry for tropical products, elimination of tariffs on primary predicts, relation or

elimination cf tariff tarried to exports of processed and semi-processed

products from less^developed-countries pro^gressive reductions of inter

nal fisbal charges and revenao duties on produces wholly or^ mainly produced by less-developed coi^tries and reporting prboedures on steps

taken by- indnis-Grialised countries *® Implement- these measures. As far as individual products are concerned, the Ministers agreed that

customs duties on tsa ^.d .tropical timber should ^ -removed. This. -

decision will/ueoo^c ,4ffe9^^4[^ 196.4.^ the X^ited Kingdom

and European 5ppno^i.ot ppaaEcealty* ■;■■.■ .- -: -'-' ■ ■■-"■"■' 27, The 1962

Nations reque

and Social Council of the "United Nations requestoG/^ye^e^r^G^aral to appoint a:group of experts7

to review the activiti^ o:C various'i^eriiaticAal organizations on

commodity and oUmv****** problems of developing countries. The group

had its first mastingin-februarv 19^3 and.eubmittod itc roport-/ in

May 1963,' "coiiBistxne «ft $&»; following :fcur" al-berKative proposals:

lie 'Mifcitftsrs of all industrialized countries, ^ith the exception of .th-3 Minis-1, rs of tho member states of the European Soonomio.

"Community, agreod to'the Programae. . : . ... -■■■■

:nt- •:. to African countries which were

•««&£** the lotion Committeo, the Work ins Group on Preferences and the Gommittes on the Legal and

:Tnstitutio-nal framework of the C-ATT in relation to less-developed

.oountries - have started. their ..work:. ..,:... . -■ ; ■ ■

m document s/375^< R [ ' „ ',.."" < . ; ./■■ ■ ■■■

E/CN.14/STC/28

Page 16

.1) to set up a completely new specialized agency, a United Nations

International.Trade Organization, on the basis of universal

.membership;

ii) governments to use more fully and constructively the machinery

already at their disposal by further evolution of the GATT in directions in which it is already moving, and by re-organic . ation of the. work of the Economic and Social Council and the -

General Assembly;

iii) positive revision of the GATT structure independent of othe* -.

_ _ changes in the United Nations apparatus in general;

K*r) to establish a permanent forum open to all members of the

United Nations, supported by a representative standing ... ] . .

. committee and a competent executive organ within the United

Nations Secretariat.

26. Finally, mention must be made of studies undertaken on the feas ibility of a system cf compensatory financing to cff-set the adverse effects,of large fluctuations in the exports proceeds of the developing countries. Proposals regarding the establishment of a "development instance fund", applicable to export proceeds on either the aggregative

or on the individual commodity level have been examined by the CIOT ,.

Moreover, early in 1963, the IMF decided to extend compensatory assist ance by liberalizing the drawing rights available to its members for ■ ~.

meeting temporary declines in their export earnings.

29. At its 10th, sess.on in 1962, the CICT recommended that a technical ':

working group be convened to examine two schemed put forward for

stabilising export earnings rather than the prices of exported commo-' ' duties, and.accordingly to inquire to what extent compensatory financing schemes could be adopted for off-setting long-term declines in export receipts; of primary exporting countries and the deterioration in their

A scheme for a Development Insurance Fund

ation of American States.

/ Page 17

terms of trade. The report of the group was presented to the 11th

session of the CICT in May 1<*3.^ W its -port, the MtMta *= ^

states that in view-of the action taken by the IMP and the difficulties of applying compensatory financing technics to longer-term change^

neither of the two sohe.es. examined by the technical .working group could t6 commended to governments..ior approval. The report of the CICT-^ , and

particularly its conclusions on compensatory financing measures for fluctuations in_Wo^t,,amings)WaB endorsed by the 36th session .of the Economic, and Social Council in July-August 1963.

30. Recognition of the urgent need for international action to alleviate trading difficulties of the developing countries, particularly in the field of commodity trade, led to the decision of the 17th session of the General Assembly.of the United Nations in 1962 to convene a Unite*

Nations Conference on Trade and.Development, which will deal with he

whole spectrum of trade problems affecting developing countries. At its 36th session in July-August 1963, the Economic and Social Council unanimouslffixed the dates for'the Conference to 23 March-15 June 1964.

31.' ^Preparatory Committee has been.set up to make arrangements f<«_

the Conference It.held.two sessions, in February 1963 and.in May- June"l963. " The first session agreed on a provisional.agenda for^the

Conference, while the second session discussed extensively the main headings of this agenda. Particular attention was devoted to inter national commodity problems, to trade in manufactures and semi

manufactures^ and to the creation of suitable international machinery

to.deal with ;these questions. .... .. ■,- -r- ..

32. As far as commodity problems are concerned, the Preparatory , * Committee discuSBed,measures aM< actions for the removal of obstacles

\j UN document E/CN.13/56 ....^3;; *$4

2/ UN document e/3763 . . ,._...,- v,t^mms

3/ Resolution 1785 (XVIl)'

Page 18

to tsade in- primary, .commodities,; for the promotion, of such trade and for e^aMliaation of primary commodity markets. , Frequent reference .'«a*Rj4e to the objectives which should be Bought throughmeasures

relating to. a*abi-lization. tJ :Those most commonly mentioned included*

,. . .'■* ■

, ' .;£) ' elimination °? **© uncertainty for economic activity

and the -development of primary exporting'obuntries due to ezbessive fluctuations in oommodity-tr^d© and^ prioeB* L+-

li) promotion oif "stable, equitable ana'remunerative11 prices! did

and the consequent improvement- in the incomes, and standard« <

of living,^ prpducers;

ttabtfu") :,/^sion of *he ^ent of predictability aid assuranoe^ ""

»rf? r;i ^SS^tH'^''t?^<?* **??*** '^^^^^mM%UX^ the

6« , ^ 2 -*^4*^£™ of d^elo^nent planning by the Goverhmenti

and ■ - r ■ -:..: y.:~i .■■■::■!■>: ;._c, ^j-"-'i'.

IyJ■ ■imi>rovemen1i' in tii^ ability to co-ordinate national " v-#»a I a . ,^<hicti0n P1^^ ^th consequent improvement in conditions

for the expansion "of trade*"' '" ' ~'x■ :";" -!> --■ "'■■' ?Ic

.i% ^P6^1 interest was also demonstrated in the possibility of.

organizing managed international markets, although some delegates' in ^ the Preparatory Committee expressed certain doubts as to the deslr- ' '

ability or feasibility of such a Bbheme. looordin^ to this sohem©,U commodity producers would ^e given guaranteed prices and, if possible, asBured quantities of commodities wnich could be sold on the World : :

marketB. througa an Appropriate organization, pbssibly involving a ::

certain amount of discipline iri;respect of the quantity and quality ' "

of their exportable supplies. The market organisations wlthihj the ■ "

franc area were cited as an example of a systen^ which might W intrc- r duoed oir'a-wor^wide:^is.: The organization of international

■ndbsw should not .apply to all cotntaodities but only to those which .:■

would be likely to suffer under open market conditions.

34- Reference was made to the disadvantages for -spme countries of . \

commodity agreements for individual commodities whio^ provide for

Page 19

export quotas based on existing production levels or export performance of recent years. Some delegates mentioned the advantages of a multi- commodity approach which would take into account the probable reper- oussions which arrangements concerning one commodity might have on other commodities.

35. The studies to be presented to the United Nations Conference on Trade and Development, as well as the results of that Conference, may provide the basis for comprehensive studies of long-range oommodity problems and examination of various policy measures to deal with them.

The measures and the machinery decided upon by the Conference in the field of commodity stabilization will undoubtedly have a great impaot on the economic development of African oountries. The Conference provides a unique opportunity for Afrioan governments to participate in the challenging task of determining the international policies whioh may help resolve the difficulties confronting oommodity trade.