International Commodity Agreements

MAC/WFY

Page-71

0230_553559_11_cha07

took about 85 per cent of the world imports on commercial terms of all primary
products. (The only commodity mainly traded among developing countries was
rice: only about four per cent of world rice production entered international trade.)
In contrast to temperate-zone foodstuffs, tropical export products were subject
to the problem of the narrowing of markets due to the protectionist measures
of importing countries only in relatively few cases. For this reason, the primary
exporting countries had relatively little to gain from the usual kind of multilateral
negotiations for the reciprocal reduction of tariffs and quantitative restrictions.
Indeed, they might tend to lose since their own exports were not predomin-
antly hampered by trade restrictions while the concessions made in return might
handicap them in developing new industries.

Analogous problems arose, however, on account of preferential arrangements.

On the other hand, the markets for exports of raw materials from the developing
countries (with some exceptions, such as petroleum) were affected by other causes.
These included the growing use of synthetic materials, reduction in the amount
of raw materials required per unit of finished product, and a shift in the pattern of
industrial production which caused a decline in the relative importance of indus-
tries heavily dependent on imported materials. In addition, there was growing
evidence of a structural over-production for a large number of tropical products
through yield increases resulting from technological improvements and increases
in the area planted. The spread of `development consciousness' in the newly inde-
pendent developing countries also stimulated increased production in order to
increase the export earnings needed for economic growth. But FAO projections of
the main tropical products up to 1970 indicated a growing excess of world produc-
tion over consumption, even on the most optimistic assumptions concerning the
growth of demand in high-income countries (FAO, 1962a).

The only long-term remedy, therefore, lay in the economic development of

the developing countries themselves. This would allow a diversification of their
domestic production. They would then become less dependent on a few basic
commodities for their export earnings and less dependent on imports to cover
their essential needs. But the prospects for their economic development were
greatly dependent on their ability to maintain and increase their foreign receipts
both through trade and aid. Singer and Prebisch had shown that history had been
unkind to the developing countries. The long-run terms of trade were stacked
against them and unless there were a more level playing field in international
trade and development, developing countries would find it difficult to embark on
a programme of industrialization of the import-substituting or export-substituting
kind, or a combination of both, and divergence not convergence would have taken
place between them and the developed countries, threatening world prosperity
and peace (Singer, 1950; Prebisch, 1950).

The pressing need of developing countries was for more resources, particularly

of foreign exchange, to sustain their development programmes. Economic aid had
increased fairly rapidly in the early 1960s thanks in large part to the inspiration
brought by President John F. Kennedy and his proposition, accepted by the UN
General Assembly, that the 1960s should be declared the UN Decade of Devel-
opment (UN, 1961b). This ushered in a newly accepted principle of international

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Useful links	International Commodity Agreements MAC/WFY Page-71 0230_553559_11_cha07 International Commodity Agreements 71 took about 85 per cent of the world imports on commercial terms of all primary products. (The only commodity mainly traded among developing countries was rice: only about four per cent of world rice production entered international trade.) In contrast to temperate-zone foodstuffs, tropical export products were subject to the problem of the narrowing of markets due to the protectionist measures of importing countries only in relatively few cases. For this reason, the primary exporting countries had relatively little to gain from the usual kind of multilateral negotiations for the reciprocal reduction of tariffs and quantitative restrictions. Indeed, they might tend to lose since their own exports were not predomin- antly hampered by trade restrictions while the concessions made in return might handicap them in developing new industries. Analogous problems arose, however, on account of preferential arrangements. On the other hand, the markets for exports of raw materials from the developing countries (with some exceptions, such as petroleum) were affected by other causes. These included the growing use of synthetic materials, reduction in the amount of raw materials required per unit of finished product, and a shift in the pattern of industrial production which caused a decline in the relative importance of indus- tries heavily dependent on imported materials. In addition, there was growing evidence of a structural over-production for a large number of tropical products through yield increases resulting from technological improvements and increases in the area planted. The spread of `development consciousness' in the newly inde- pendent developing countries also stimulated increased production in order to increase the export earnings needed for economic growth. But FAO projections of the main tropical products up to 1970 indicated a growing excess of world produc- tion over consumption, even on the most optimistic assumptions concerning the growth of demand in high-income countries (FAO, 1962a). The only long-term remedy, therefore, lay in the economic development of the developing countries themselves. This would allow a diversification of their domestic production. They would then become less dependent on a few basic commodities for their export earnings and less dependent on imports to cover their essential needs. But the prospects for their economic development were greatly dependent on their ability to maintain and increase their foreign receipts both through trade and aid. Singer and Prebisch had shown that history had been unkind to the developing countries. The long-run terms of trade were stacked against them and unless there were a more level playing field in international trade and development, developing countries would find it difficult to embark on a programme of industrialization of the import-substituting or export-substituting kind, or a combination of both, and divergence not convergence would have taken place between them and the developed countries, threatening world prosperity and peace (Singer, 1950; Prebisch, 1950). The pressing need of developing countries was for more resources, particularly of foreign exchange, to sustain their development programmes. Economic aid had increased fairly rapidly in the early 1960s thanks in large part to the inspiration brought by President John F. Kennedy and his proposition, accepted by the UN General Assembly, that the 1960s should be declared the UN Decade of Devel- opment (UN, 1961b). This ushered in a newly accepted principle of international back to top Next page
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