International Commodity Agreements and Arrangements

Efforts to stabilize international markets in commodities have gradually intensified during the course of this century in keeping with the grow- ing complexity and interdependence of the world economy and the increasing involvement of government in economic activity. Successive Australian Governments have con- sistently supported the concept of commodity agreements and arrangements in an effort to lessen short term fluctuations in price and to moderate the boom/bust conditions which tend to charac- terize production and trade in many commodities. The objective is to stabilize price at a level which equates supply and demand over the life of the arrangement. Such action involves a degree of market inter- vention and government involvement in the inter- national trade in the commodity concerned; the acceptability and desire to foster such arrange- ments varies from country to country depending upon attitudes to market intervention and man- agement. However attitudes, even among those opposing commodity agreements, have under- gone a major reversal in this century. Before the first world war, such intervention as existed almost entirely involved the physical producers. There was almost no government involvement and at that level most regarded commodity agree- ments as neither desirable nor practical. However government regulation of such activities as pro- duction and marketing of food during World War I, coupled with post-war shortages, followed by overproduction and the crash in prices during the Great Depression, stimulated producer gov- ernment interest in commodity market regulation. Consumer governments took a little longer and with a few exceptions, it was not until the post World War II period, that the fear of shortages of basic commodities brought some consumer countries to accept the concept.