611.0031 Executive Committee/10–1944
Memorandum by the Secretary of
State to President Roosevelt
Washington, October 19,
1944.
Proposal on International Commodity Arrangements
There is transmitted herewith a report on international commodity
arrangements which has been approved by the Executive Committee on Economic
Foreign Policy. As indicated in the covering summary, the report recommends
the establishment of an international commodity organization for
facilitating cooperation among governments in dealing with commodity
problems of world scope, such as those presented by cotton, sugar, and
wheat. It also recommends the establishment of an international code of
principles for governing, under the supervision of that organization, the
negotiation, provisions, and operation of intergovernmental agreements in
respect of particular commodities.
With reference to the question of the place of an international commodity
organization in the framework of world economic organization, the Executive
Committee decided to defer consideration until a later date at which time
the subject will be considered as part of the general problem of world
economic organization.
I am favorably disposed to the report as a whole especially as a basis for
further discussions, if you concur, with the Governments of the
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United Kingdom and Canada, and also
with the governments of other countries.10a
[Annex]
ECEFP D–55/44
September 19, 1944.
executive committee on economic foreign policy
committee on commodity agreements
Summary of the Eeport on International Commodity
Arrangements10b
The introduction of the report briefly reviews the principal
recommendations on international commodity organization contained in the
resolutions of the Hot Springs Conference on Food and Agriculture and
the Second Report of the Interim Food Commission, and calls attention to
the informal exchange of views on international commodity policy which
took place last fall and winter between representatives of the United
States and the United Kingdom and Canada, respectively. The case for a
jointly agreed international commodity policy is held to rest upon four
sets of conditions, namely, (a) the effects of
the present war in promoting a lopsided development of raw material
production, and the subsequent likelihood of serious maladjustment in
the conditions of supply and demand of a number of primary commodities
during the post-war period; (b) the failure of
the price mechanism in certain cases to adjust production readily to
peace-time changes in the basic conditions of supply and demand; (c) the demonstrated instability of raw material
prices and incomes in recent decades; and (d) the
need for reconciling existing unilateral national policies in support of
internationally-traded commodities with international policies for the
promotion of world trade.
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The Committee believes that a number of special problems of economic
maladjustment in primary commodities are likely to exist in the post-war
period, even if it be assumed that a high degree of success will be
achieved in the program for the relaxation of international trade
barriers and other programs for international economic expansion. It
believes, furthermore, that a properly conceived and executed, selective
program for international commodity agreements can be harmonized with a
broad program of international economic expansion, and may actually
enhance, rather than impair, the prospects of attaining the objectives
of a policy of removing international trade barriers. The report
recognizes, however, that it will be necessary to provide adequate
safeguards against possible abuses of international commodity
agreements. These safeguards include provisions for the protection of
the interests of consumers, minority groups of producers, and other
interests concerned in international commodity agreements, and further
provisions that such international commodity arrangements shall promote
as their ultimate objective the expansion of efficient production in
place of inefficient production.
The Committee recommends the establishment, along lines to be discussed
below, of an international commodity organization for the following
purposes:
- 1.
- To investigate and study international primary commodity
problems with a view to making recommendations to
governments;
- 2.
- To facilitate discussion and cooperation among governments in
dealing with international primary commodity problems;
and
- 3.
- To participate in, and to supervise, the formulation and
operation of such international commodity arrangements as may be
deemed desirable, in order to insure that they shall be in
accord with an agreed code of principles.
As an essential part of such an international commodity organization the
Committee recommends acceptance of a code of principles for
international commodity policy. These principles relate to the rights
and obligations of governments as members of the international commodity
organization, and the methods to be observed in formulating and
operating international commodity agreements.
With respect to the various proposals for international buffer stocks in
primary commodities, particularly the proposal for a program of buffer
stocks operations with broad commodity coverage as a means of promoting
general international economic stability, the Committee recommends that
the problem be referred to the proposed international commodity
organization for further study. Although the Committee has considered
the subject at length and has had the benefit of a special study on
buffer stocks prepared by one of its subcommittees (see attached
memorandum on International Buffer Stocks),10c it believes that the problems
and difficulties of a program of international buffer
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stocks are of such a character as to make it
unwise to go beyond this recommendation at the present time.
In the final section of the report dealing with the structure of the
international organization, the Committee recommends the establishment
of an international commodity commission as part of such world economic
organization as may be set up. It will be essential that the policies
and operations of the commodity organization be fully coordinated with
the policies of other specialized agencies which have been, or may be,
set up in the fields of trade and production, finance, food and
agriculture, and labor.
The majority of the Committee feels that if an international organization
for trade and production is formed, this integration of policies could
best be achieved through having the commodity commission as a branch of
such an agency. The representatives of the Department of Agriculture on
the Committee hold that the commodity organization should not be part of
a general trade and production body. Whatever the machinery, the
Committee is unanimously of the opinion that the coordination of
commodity and other economic policies is essential.
