International Commodity Organization

Summary of International Commodity Organization

An organization of the producing nations of a particular commodity. The principal motive for the organization is to foster price collaboration among the producers; the organization may establish buffer stocks to prevent wide swings in the market price of the commodity. The principal international commodity organizations are listed below.

1. Association of Natural Rubber Producing Countries was conceived in Kuala Lumpur, Malaysia, in 1967 and formally organized in 1970 by Sri Lanka, Thailand, India, Malaysia, Indonesia, Singapore, and Papua New Guinea. In 1979 the members and Vietnam agreed to enter into an international commodity agreement beween producing and consuming nations with a buffer stock of 550,000 tons to be established.

2. Intergovernmental Council of Copper Exporting Countries, organized in Paris in 1967, includes Chile, Indonesia, Peru, Zaire, and Zambia as full members; Australia, Papua New Guinea, and Yugoslavia are associate members. Spurred by the successes of OPEC in controlling prices, the copper producers attempted to increase prices by withholding supply; the efforts were unsuccessful. An attempt was made in 1979 to establish a commodity agreement with consuming nations, but the agreement did not proceed because of U.S. insistence upon a three million ton buffer stock to stabilize prices.

3. International Bauxite Association commenced activities in 1975. It embraces Australia, Dominican Republic, Ghana, Guinea, Guyana, Haiti, Indonesia, Jamaica, Sierra Leone, Surinam, and Yugoslavia. The principal efforts of the organization are directed toward supporting the market price of alumina. In 1979 the association agreed to begin a dialogue with consuming nations.

4. International Coffee Organization is the administrator of the International Coffee Agreement of 1976, an international commodity agreement among the principal coffee-producing and consuming nations designed to control the amount of coffee produced and sold internationally. The agreement establishes production objectives and quotas; administration is performed by the International Coffee Council. The agreement expires September 30, 1986, unless renewed by the signatory

International Convention

Dominican Republic Malawi

Ecuador Mexico

El Salvador Nigeria

Ethiopia Panama

Gabon Papua New Guinea

Ghana Paraguay

Guatemala Peru

Haiti Rwanda

Honduras Sierra Leone

India Tanzania

Indonesia Togo

Ivory Coast Trinidad

Kenya Uganda

Liberia Venezuela

Malagasy Republic Zaire

Importing members are:

Australia Israel

Austria Italy

Belgium (and Luxembourg)

Japan Netherlands

Canada New Zealand

Cyprus Norway

Denmark Portugal

Finland Spain

France Sweden

German Federal Switzerland

Republic United Kingdom

Hungary United States

Ireland Yugoslavia

International Cotton Advisory Committee originated at a 1939 meeting of ten producing nations. In 1945 the group was opened to all interested nations. Its principal efforts are directed to improvements in technology and market promotion of cotton. International Lead and Zinc Study Group was formed in 1959. The group devotes most of its efforts to statistical and technical matters 7. International Olive Oil Council administers the International Olive Oil Agreement, the third of which was implemented in 1980; previous accords had been adopted in 1956 and 1963. The organization is concerned with balancing supply and demand, product standardization, and technical cooperation. The producing members are Algeria. Greece, Morocco, Portugal, Spain, Turkey, Tunisia, and Yugoslavia. The importing members are Egypt, the European Economic Community, Libya, and Panama.

8. International Sugar Organization was formed to implement the International Sugar Agreement of 1977, designed to establish upper and lower price limits within which sugar prices would respond to market forces. The price range established is 1to 21 1 per pound. Reserve stocks would be built over a three-year period, and the reserves would be released and export quotas imposed as the prices approach the lower limit. Similarly as prices approach the upper limit, the manufacturing quotas of the producing states would be increased. Interest-free loans of 1.50 per pound would be provided to nations obliged to hold reserve stocks; this fund would be financed by a 2.8c per pound tax on all free- market sugar sales.9. International Tin Council implements the fifth International Tin Agreement, which came into force in 1977. Agreements are adopted for periods of five years and cannot be extended. The principal objective of the group is to foster price equilibrium. Plans were advanced to establish a seventy- thousand-ton buffer stock.10. International Wheat Organization was established in 1949 to promote trade in wheat and flour and to stabilize the trade. Various wheat agreements of 1949, 1953, 1956, 1967, and 1971 have been implemented by the organization; the group provides food aid to developing nations.

(Main Author: William J. Miller)

International Commodity Organization and the GATT Policy Negotiations

In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation and/or definition of International Commodity Organization: An organization of nations engaged in international trade involving a particular commodity. Principal motives for such an organization, such as price collaboration among producers, may be similar to those of a producer cartel (Sec. II); the organization may also establish buffer stocks to prevent wide swings in the market price of the commodity. Some international commodity organizations, established to implement a commodity agreement, include both producing and consuming nations. The principal international commodity organizations (descriptive details of which may be found in Section III) include:

* Association of Natural Rubber Producing Countries

* Intergovernmental Council of Copper Exporting Countries

* International Bauxite Association

* International Cocoa Organization

* International Coffee Organization

* International Cotton Advisory Committee

* International Jute Organization

* International Lead and Zinc Study Group

* International Natural Rubber Organization

* International Olive Oil Council

* International Sugar Organization

* International Tropical Timber Organization

* International Wheat Council.

See also International Rice Commission; International Tea Committee; International Tin Council; International Wool Secretariat; and Organization of Petroleum Exporting Countries (Sec. III).