Three International Commodity Agreements: The Experience of East Africa

TLDR: In this paper, the authors focus on the distribution of gains from international commodity agreements among producing countries, with particular attention to the relative shares of the gains that the three East African countries have obtained or are likely to obtain from the agreements that affect three of their principal export crops: coffee, sisal, and tea.

Abstract: Introduction Pressures for international commodity agreements that seek, by means of export restriction schemes, to raise the aggregate export earnings of producing countries are increasing. Such pressures reflect (a) the willingness of consumer countries to make income transfers to poorer countries through this politically acceptable medium, (b) the wish of some producing countries to protect their export crop industries from unwanted competition from new producers, and (c) the desire of international civil servants to promote development from developed country bases. The purpose of the present paper is to strike a discordant note in this otherwise agreeable congruence of interests by focusing attention on the distribution of gains from international commodity agreements among producing countries, with particular attention to the relative shares of the gains that the three East African countries have obtained or are likely to obtain from the agreements that affect three of their principal export crops: coffee, sisal, and tea. The three agreements in question are the International Coffee Agreement (ICA), now in its second 5-year term, the informal sisal agreement (ISA) under the auspices of the Consultative Sub-Committee of the Food and Agriculture Organization of the United Nations (FAO) Study Group on Hard Fibres, which came into effect in January 1968, and the informal tea agreement (ITA) under the FAO Consultative Committee on Tea, which has been in operation just over a year. While the language used to phrase the stated objectives of each of these agreements differs, the implied objectives and means of achieving them are the same, namely, to increase export earnings by getting producing countries to act together quasimonopolistically in restricting supply against an inelastic demand. Thus, the 1968 ICA under Article I has the stated objectives of eliminating fluctuations in coffee prices and increasing the purchasing power of coffee