In October 1946 the Preparatory Committee for the United Nations Conference on Trade and Employment meeting in London began consideration of a United States policy for the establishment of an international order to deal with world problems relating to primary (raw material and agricultural) commodities. The United States proposal was incorporated into Chapter VI of the “Suggested Draft of a Charter for an International Trade Organization of the United Nations” (for documentation regarding United States interest in the development of international economic cooperation through the establishment of an International Trade Organization, see pages 1263 ff.).
The U.S. policy on commodities was developed between 1943 and 1946 in the Executive Committee on Economic Foreign Policy, and the resulting foreign commodity policy was closely related to this Government’s general commercial policy for the reduction of trade barriers and expansion of world trade and employment. For the United States the point of departure was the United Nations Conference on Food and Agriculture that met at Hot Springs in 1943; and which recommended in pertinent part that international commodity arrangements should be designed to promote the expansion of an orderly world economy, that a body of broad principles be developed regarding the formulation and administration of such international commodity arrangements, and that an international organization to study the feasibility and desirability of such arrangements with reference to individual commodities be created at an early date. The subject of postwar international commodity policy was also taken up in the course of informal economic conversations in 1943 and 1944 between representatives of the United States, the United Kingdom, and Canada.[Page 1373]
In September 1944 the Executive Committee addressed itself directly to this problem, receiving from its subcommittee on commodity agreements a report which first outlined the need for action in theses terms:
“The case for a jointly agreed international commodity policy rests upon four sets of conditions, namely, (a) the effects of the present war in promoting a lop-sided 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; (d) the need for reconciling existing unilateral national policies in support of internationally-traded commodities with international policies for the promotion of world trade.” (ECEFP document D–55/44, September 19, 1944, Lot 122, Box 21)
The report in brief recommended the establishment of an intergovernmental authority within the framework of a world-wide economic organization. This authority would address itself to the case of primary commodities characterized by “burdensome surpluses” and “wide-spread distress” that could not be corrected by the operation of normal market forces. Such cases were to be handled by intergovernmental commodity agreements under stated limitations.
The Executive Committee accepted the report, which became the basis for all subsequent action by this Government in the commodity field. In 1945 the Executive Committee, its commodity subcommittee, or technical committees of this subcommittee, sharpened and clarified these basic propositions (ECEFP documents D–98/45, July 17; D–99/45, July 18; D–106/45, July 24; and D–121/45, September 14, 1945). The results of these studies were embodied by the Executive Committee in late 1945 in the United States “Proposals for Expansion of World Trade and Employment”, and subsequently in the “Suggested Charter” which was transmitted by this Government to interested governments in September 1946, after approval by the Executive Committee in ECEFP document D–70/46 in July 1946. No definitive redrafting of the “Suggested Charter” was undertaken by the London Committee; see pages 1357 ff. for the general results of the London meeting.