The Political and Social Economy of Commodity Control

The social structures discussed in this volume, like all social structures, are contrived and imperfect systems created by varied groups of people over time, in response to situations and issues open to a variety of interpretations. Some readily fell apart while others have lasted over three decades. This first chapter briefly reviews the early post-World War II deliberations and actions on primary-commodity control devices later included in the Integrated Programme for Commodities of the United Nations Conference on Trade and Development (UNCTAD) to show why certain devices were found easier to negotiate than others, and so far as possible, to touch upon the beliefs, attitudes, motivations, habits, expectations, and perceptions of those involved in the dialogue that eventually created UNCTAD and held it and related organizations together.

Within countries and between them one factor that pervades the political climate is the scarcity that exists in most of the things that people want. Political systems come into being in the first place because of conflicts over these valued things, with the resulting political system providing a framework within which conflict and compromise can occur before decisions are taken. There would have been no need for a political organization such as UNCTAD had there been unanimity between countries about trade and development objectives and the means for meeting them. The present chapter examines how UNCTAD emerged to resolve differences between developed and developing countries over problems of trade and development and the way in which it attempted to resolve these problems. Its more conspicuous accomplishments, particularly the Generalized System of Preferences (GSP) and the International Cocoa Agreement, are discussed below while some of its more intangible accomplishments are covered in chapter 7, and the initiatives taken toward the Integrated Programme for Commodities, in the following chapter. The latter occurred against a background of cartel and producer-association activity, declarations surrounding the concept of a New International Economic Order and parallel initiatives in other forums. Each of these provided impetus for or modification of the Programme, and influenced the underlying social, political and economic dynamics of the issues it raised.

Many of the events which gave rise to the Integrated Programme and its specific configuration and led to the cool reception it received from developed countries at UNCTAD IV were already under way during the period covered in the previous chapter. The declarations and actions which accompanied these on an international level are reviewed in the present chapter. This chapter traces the development of the Integrated Programme from its early conceptual antecedents to Resolution 93(IV) and then focuses on the attempts it triggered among many, especially developed, countries to offer alternatives. Particular attention is paid to the STABEX compensatory-finance scheme of the Lomé Convention, since this subsequently sparked considerable interest among the European Community Countries in a globalized STABEX as an alternative to the Integrated Programme, and among ASEAN countries (Indonesia, Malaysia, the Philippines, Singapore and Thailand) in a regional STABEX scheme negotiated bilaterally with the European Community, Japan and the United States as an adjunct complementary to (but outside) the Integrated Programme. Likewise, United States’ proposals for an International Investment Trust and later an International Resources Bank, both of which would be institutionalized outside the United Nations, are discussed as additional alternatives put forward in place of the Integrated Programme, representative of the type of solutions acceptable to several dominant industrial powers.

Pressure on the Secretariat for action, whether real or anticipated, produced a programme which, although it provided momentary relief through structured activity was neither the product of a careful analysis of the problem nor adequately weighed up the possible consequences. The history of the Common Fund dialogue reflects the resulting gaps in fundamental preparation and the pull of the wider organization and the Secretariat between two opposing forces. While the major goals of the organization were clear (logistical support of development-related trade efforts), and the means of achieving them were generally known (information gathering and the provision of a forum for the exchange of information and for negotiation), these purely neutral activities were increasingly supplemented by less-clearly legitimized activities designed more for organizational survival: taking initiatives; providing direction and leadership in programme formulation and implementation; and accommodating General Assembly resolutions which impinged on the Secretariat’s better judgement and excluded the concerns of an important element of its membership. Paradoxically, this concentration on survival or image, with the responsibilities and risks it entailed, seemed to set the organization on the opposite course, sapping credibility and, with it, viability. In several instances, the nature of this dilemma went unrecognized by those who stood to lose most, to the extent that they persistently adhered to frames of reference which afforded no basis from which the problems of trade and development, and more specifically, those of the Common Fund in the larger world of commodity trade, could be resolved.

The role of economic analysis in the Integrated Programme, and specifically in the Common Fund dialogue was seen as tangential by some, as integral and sorely lacking by others. Chapter 4 alluded to questions and disputes which might have been resolved through research and careful analysis and implied an element of wishful longing on both sides of the argument for the type of decisive data which would prove irrefutable and offset further debate. Any commodity scheme is likely to be easier to negotiate if it is prepared by a known objective method, if it estimates quantitatively the benefits it expects to offer to producers and consumers, and if it enables the balance of advantage to be adjusted simply during the course of negotiations. However, the art of theoretical and empirical economic analysis as applied to the control of international commodity trade is still tentative and far from providing concrete answers. The constraints that make this so, as well as the application of analysis which has been possible to date, are reviewed in the present chapter in an attempt to identify what analysis does have to offer to those in the position to make decisions on primary-commodity control. Particular attention is given to the role which information plays in both trade and analysis since problems of information gathering and sharing are of major interest to the producer associations and international commodity organizations with which UNCTAD deals and clearly fall within the organization’s purview. The chapter concludes by synthesizing points made in this and the previous chapter. The way in which the Secretariat coped with the dichotomy between demands for analysis and the threats posed by this is left until the concluding chapter.

The negotiations on individual commodity agreements which took place under the Integrated Programme tended to display less political posturing than the Common Fund dialogue discussed in the preceding chapters, to be attended by delegates and advisers relatively more familiar with commodity-market problems, and to be influenced more by economic as opposed to political bargaining positions. Often, however, developing countries sent political figures demanding political commitments to these meetings (e.g. Geneva mission personnel who, without technical advisers, represented their capitals in discussions of all commodities) at times when developed countries had despatched technical experts who were familiar with commodity markets and control but not with the sort of political gestures that the others sought. These two groups tended to talk past one another. As envisaged by the UNCTAD Secretariat, and subsequently adopted by the Group of 77, the ten core commodities (these were, in declining order of export value to developing countries: coffee, copper, sugar, cotton, rubber, cocoa, tin, tea, jute, and hard fibres) were to come under buffer-stock control by the end of the 1978.¹ At the time that the Integrated Programme for Commodities was being put forward by its proponents, coffee was already controlled by an export-quota agreement, cocoa and tin by export-quota devices complemented by weaker international buffer-stock provisions, and sugar was seriously being considered for control by export quotas and national buffer stocks in a renewal of the 1968 Sugar Agreement.

In its formal aspects, UNCTAD is composed of two distinct sets of personae: the national delegations of the 156 member states¹ which periodically meet to present and negotiate their official positions on issues related to trade and development, and the international staff of the UNCTAD Secretariat which numbers some 450 individuals. The assemblages of government representatives may be seen as the public life of the organization and a consideration of the organization and its functioning from their perspective is the main focus of the present chapter. Their attitude of general discontent with respect to the organization’s efficiency and cost-effectiveness in structuring their activities, to Secretariat staff initiatives in the field of primary-commodity control and to employment and promotion practices within the Secretariat are examined. Towards the end of the chapter, the functioning of the delegates themselves in relation to one another and to the aims of the organization receives special consideration. This representation of the organization, the accumulation of the values and behaviours of those of its individual member delegations, is in a sense the organization itself, although to many outside the system, as well as within delegations, the organization is easily, perhaps conveniently, confused with its Secretariat. Whether directly, through its members’ activities, or indirectly through their exercise of control over its Secretariat, the organization exerts a force sometimes greater, at times considerably less, than the sum of individual member energies and convictions.

This last chapter looks at the UNCTAD Secretariat in relation to the mechanistic conception so often applied to it and describes how remarkably it adheres to this concept in some respects and challenges it in others. An attempt is made to look beyond generalizations in order to identify the sources of idiosyncracies and the effects these have on the organization’s functioning and particularly on its success in meeting the functionally neutral and symbolic goals (whether formally stated or not) discussed in the previous chapter. It looks behind the scenes at those individuals, most of whom never appear on stage in the sense that delegates do, but who since UNCTAD’s inception in 1964 have created the programmes which have been discussed in chapters 2 and 3 and whose attempts to influence their further development have been a theme especially in chapters 4 and 6.