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Southern bargaining in north-south trade : the case of tin Saravanamuttu, Jayaratnam 1972

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SOUTHERN BARGAINING IN NORTH-SOUTH TRADE: THE CASE OF TIN  by JAYARATNAM SARAVANAMUTTU B.Soc. S c i .  (Hons.)» University  of  S i n g a p o r e , 1969 „  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n the Department of Political  Science  We a c c e p t t h i s t h e s i s as  conforming  to  required standard  THE UNIVERSITY OF BRITISH COLUMBIA April,  1972  In p r e s e n t i n g t h i s t h e s i s  in partial fulfilment  of the requirements  an a d v a n c e d d e g r e e a t t h e U n i v e r s i t y o f B r i t i s h C o l u m b i a , t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e  I agree and  I f u r t h e r agree t h a t p e r m i s s i o n f o r extensive copying of t h i s for  that  study. thesis  s c h o l a r l y p u r p o s e s may be g r a n t e d b y t h e Head o f my D e p a r t m e n t o r  by h i s r e p r e s e n t a t i v e s . of t h i s t h e s i s  I t i s understood that copying or p u b l i c a t i o n  for financial  g a i n s h a l l n o t be a l l o w e d w i t h o u t my  written permission.  Department o f  Political  The U n i v e r s i t y o f B r i t i s h Vancouver 8, Canada  Date  for  May 1, 1 9 7 2  Science Columbia  ABSTRACT  T h i s s t u d y e x p l o r e s the k i n d s o f b a r g a i n i n g s t r a t e g i e s w h i c h have been used and can be used by t h e l e s s developed c o u n t r i e s , d e s i g n a t e d as " t h e S o u t h " , i n t r a d e n e g o t i a t i o n s w i t h the developed c o u n t r i e s , d e s i g n a t e d as " t h e N o r t h " .  I t t a k e s as i t s p o i n t o f  departure  the N o r t h - S o u t h a x i s o f c o n f l i c t i n i n t e r n a t i o n a l r e l a t i o n s , n a m e l y , the c o n f l i c t between the r i c h , advanced and i n d u s t r i a l n a t i o n s and t h e p o o r , newly emergent and d e v e l o p i n g n a t i o n s .  I t f o c u s e s s p e c i f i c a l l y on  Southern b a r g a i n i n g i n one s u b - a r e a o f N o r t h - S o u t h t r a d e - i n t e r n a t i o n a l tin  accords. The s t u d y i s p r e s e n t e d i n t h r e e c h a p t e r s .  presents  The f i r s t  chapter  an o v e r v i e w o f N o r t h - S o u t h t r a d e r e l a t i o n s h i p s and i s s u e s .  The  second c h a p t e r b e g i n s a case s t u d y o f N o r t h - S o u t h c o n f r o n t a t i o n i n t i n agreements.  The f i n a l c h a p t e r c o n c l u d e s w i t h a c h e c k - l i s t of b a r g a i n i n g  s t r a t e g i e s w h i c h have been employed o r may be employed by S o u t h e r n producing countries i n t i n n e g o t i a t i o n s . The major f i n d i n g o f the s t u d y i s t h a t Southern b a r g a i n i n g i n t i n a c c o r d s has r e l i e d most h e a v i l y on s t r a t e g i e s o f n o r m a t i v e a p p e a l based on the UNCTAD ' e t h o s ' .  In p a r t i c u l a r , b a r g a i n i n g s t r a t e g i e s which  a p p e a l t o N o r t h e r n a l t r u i s m and d e m o c r a t i c norms are e s p e c i a l l y p o p u l a r . The second most used group o f s t r a t e g i e s a r e those w h i c h a p p e a l  to  self-interest. 0  I n g e n e r a l , i t was found t h a t S o u t h e r n b a r g a i n i n g has not  ii  been v e r y e f f e c t i v e .  I t i s t h e r e f o r e recommended t h a t S o u t h e r n c o u n t r i e s  s h o u l d (1) employ more i n t e n s i v e l y s t r a t e g i e s o f n o r m a t i v e a p p e a l o t h e r t h a n tho se based on the UNCTAD e t h i c ;  (2) employ more i n t e n s i v e l y  s t r a t e g i e s which appeal to s e l f - i n t e r e s t s  o f N o r t h e r n c o u n t r i e s ; and (3)  employ s t r a t e g i e s w h i c h demonstrate commitment t o b a r g a i n i n g p o s i t i o n s , and i f need b e , t o demonstrate such commitment by the use of  threats.  iii TABLE OF CONTENTS CHAPTER  PAGE  INTRODUCTION  ..  ..  I THE NATURE AND ISSUES OF NORTH-SOUTH TRADE The P a r t i e s i n t h e Trade I s s u e - a r e a  6 ..  The N a t u r e o f N o r t h - S o u t h Trade Commodity Trade  ..  M a n u f a c t u r e s Trade  ..  ..  6  ..  ..  9  ..  ••  12  ..  ..  16  Southern C o m p l a i n t s A g a i n s t t h e Trade System: Key I s s u e s The " T r a d e Gap"  ..  D e t e r i o r a t i n g terms o f t r a d e The GATT  ..  Remedies  ..  . . . .  22  ..  24  ..  26  ..  ..  27  ..  ..  ..  32  ..  ..  ..  32  ..  I H i s t o r y and I s s u e s o f T i n Agreements  The R e l a t i v e N o r t h - S o u t h Stakes i n T i n Trade . . . .  39  The O b j e c t i v e s o f T i n Agreements The E f f e c t i v e n e s s  ..  o f T i n Agreements  ..  ..  ..  47  ..  ..  ..  51  ..  65  I I The S t r u c t u r e and P r o c e s s of T i n N e g o t i a t i o n s Preparatory Negotiation  ..  ..  ..  ..  ..  67  Operational Negotiation  ..  ..  ..  ..  ..  70  ..  ..  ..  ..  73  . . . .  ..  ..  ..  75  The O p e r a t i o n o f an Agreement III  20  ..  . . . . . . .  I I NORTH-SOUTH CONFRONTATION IN TIN AGREEMENTS  1  The D e c i s i o n t o Go f o r A c c o r d  I I I SOUTHERN BARGAINING STRATEGIES: PAST USAGE AND FUTURE POSSIBILITIES  84  I n f l u e n c i n g t h e Opponent's N o r m a t i v e P o s i t i o n  ..  85  I n f l u e n c i n g t h e Opponent's P e r c e p t i o n of h i s U t i l i t y from an Outcome .. .. ..  ..  .93  iv CHAPTER  PAGE I n f l u e n c i n g the Opponent's P e r c e p t i o n o f U t i l i t y from an Outcome .. .. P r o m i s i n g the Opponent a R e a l G a i n from an Outcome . . ..  One's ..  ..  ..  ..  106  T h r e a t e n i n g the Opponent w i t h a R e a l Loss from an Outcome .. ..  ..  108  P r e s e n t i n g the Opponent w i t h a R e a l Change i n h i s U t i l i t y from an Outcome  ..  Assessment and Recommendations Some C o n c l u d i n g O b s e r v a t i o n s BIBLIOGRAPHY APPENDICES  ..  ..  ..  ..  ..  ..  113  .•  ..  ..  114  ..  ..  ..  ~  i 3 4  ..  ..  13  1 4 1  V  LIST OF TABLES TABLE  PAGE  I - A B II  III  IV V VI  TOTAL TRADE OF NORTH AND SOUTH, 1969  11  NORTH-SOUTH TRADE, 1969  11  PRIMARY COMMODITIES: IMPORTS INTO NORTHERN COUNTRIES, 1967 ..  17  SOUTHERN EXPORTS BY PRINCIPAL COUNTRIES OF MANUFACTURES AND SEMI-MANUFACTURES TO NORTHERN COUNTRIES, 1967  19  PRODUCTION OF TIN CONCENTRATES, 1969  '..  INDUSTRIAL CONSUMPTION OF T I N , 1969  41  TIN AS A PERCENTAGE OF TOTAL EXPORTS BY VALUE, 1968  VII  IX  XI XII  . . . . .  ..  45  PRICE RANGES IN THE TIN AGREEMENTS  54  BUFFER STOCK TIN METAL PURCHASES UNDER THE 1965  X  43  TIN AS A PERCENTAGE OF TOTAL IMPORTS BY VALUE, 1968  VIII  40  TIN AGREEMENT  ..  TIN EXPORT EARNINGS OF PRODUCING COUNTRIES OBJECTIVES,  55 ..  ..  62  INTERESTS AND EFFECTIVENESS  OF TIN AGREEMENTS .. ASSUMED BURDEN OF CONSUMERS IN CONTRIBUTING TO THE TIN BUFFER STOCK ..  66 98  !vi  LIST OF ILLUSTRATIONS  FIGURE I  p  G r a p h i c a l I l l u s t r a t i o n of M a t r i x 1  . . . .  AGE 80  vii  ACKNOWLEDGEMENT  I would l i k e to thank my s u p e r v i s o r , P r o f e s s o r Mark Zacher f o r h i s c o n s t a n t a s s i s t a n c e , guidance and c r i t i c i s m i n h e l p i n g me r e s e a r c h t h i s s t u d y . N e e d l e s s t o s a y , he s h o u l d n o t be h e l d a c c o u n t a b l e f o r any e r r o r s , o m i s s i o n s and v i e w s c o n t a i n e d i n t h e s t u d y .  INTRODUCTION The main aim o f t h i s s t u d y i s t o e x p l o r e the k i n d s o f  bargaining  s t r a t e g i e s w h i c h have been employed and can be employed by l e s s countries  developed  (LDC's) i n t r a d e n e g o t i a t i o n s w i t h developed c o u n t r i e s .  I am  a l s o i n t e r e s t e d g e n e r a l l y i n u n c o v e r i n g t h e dynamics of N o r t h - S o u t h c o n f l i c t i n the trade i s s u e - a r e a .  The terms " N o r t h " and " S o u t h "  are  used here to r e f e r to the developed c o u n t r i e s and the L D C ' s r e s p e c t i v e l y . I have found t h i s c h a r a c t e r i z a t i o n u s e f u l i n d i s t i n g u i s h i n g t h e two groups under i n v e s t i g a t i o n from the groups known as " E a s t " and "West" i n the more p u b l i c i z e d C o l d War c o n f l i c t . The b u l k o f t h i s s t u d y w i l l be an i n v e s t i g a t i o n i n one s u b - a r e a o f N o r t h - S o u t h t r a d e r e l a t i o n s h i p s - i n t e r n a t i o n a l t i n agreements. attempted, n e v e r t h e l e s s ,  I have  t o c o n s i d e r N o r t h - S o u t h t r a d e r e l a t i o n s and i s s u e s  a t t h e "macro" l e v e l i n the f i r s t p a r t of the s t u d y w i t h a v i e w t o p u t t i n g t h e remainder o f the s t u d y i n p r o p e r p e r s p e c t i v e .  C o n c e n t r a t i n g on N o r t h -  South b a r g a i n i n g i n the t r a d e of one commodity and w i t h r e s p e c t t o  the  i s s u e of commodity p r i c e c o n t r o l ( f o r t h i s i s what t i n agreements a r e about) c e r t a i n l y r e p r e s e n t s a d r a s t i c c i r c u m s c r i p t i o n o f the v a s t and r i c h of  questions  array  t h a t N o r t h - S o u t h t r a d e r e l a t i o n s h i p s and i s s u e s p r e s e n t t o  the i n t e r e s t e d r e s e a r c h e r .  T h i s p o i n t s h o u l d become e v i d e n t even i n my  b r i e f t r e a t m e n t o f the n a t u r e and i s s u e s of N o r t h - S o u t h t r a d e i n Chapter One.  However, g i v e n the c o n s t r a i n t s  o f l e n g t h and t i m e , I have reasoned  t h a t an i n - d e p t h s t u d y would be more f r u i t f u l comprehensive b u t s u p e r f i c i a l s t u d y .  and s a t i s f y i n g  than a  H o p e f u l l y , the s t u d y w i l l  suggest  - 2 -  t h e p o s s i b l e d i r e c t i o n s f o r f u t u r e r e s e a r c h i n o t h e r a r e a s and a s p e c t s of North-South trade  relations.  F o c i of Study My f o c u s on b a r g a i n i n g s t r a t e g i e s r e f l e c t s a fundamental c o n c e r n with p o l i c y relevant research.  I do not p r e t e n d , o f c o u r s e ,  t h a t i n an  e x p l o r a t o r y s t u d y o f t h i s k i n d , p o l i c y recommendations can be made w i t h any degree o f c o n f i d e n c e .  Thus s u g g e s t i o n s made i n terms o f b a r g a i n i n g  s t r a t e g i e s f o r Southern c o u n t r i e s i n t i n n e g o t i a t i o n s must be t a k e n as very t e n t a t i v e .  I n s h o r t , t h e y a r e meant as a c h e c k - l i s t o f the range  o f p o s s i b l e s t r a t e g i e s t h a t Southern c o u n t r i e s can employ r a t h e r t h a n as firm prescriptions for action. The g e n e r a l o r i e n t a t i o n o f the s t u d y toward a N o r t h - S o u t h a x i s  of  c o n f l i c t s p r i n g s from an i n t e r e s t i n the impact o f the newly emergent n a t i o n s on t h e contemporary i n t e r n a t i o n a l system.  These "New S t a t e s "  p r e s e n t something o f an "unknown q u a n t i t y " t o t h e i n t e r n a t i o n a l system and t h e i r impact has o n l y been r e c e n t l y r e c o g n i s e d .  F o r example,  their  t h r u s t i n t o the w o r l d scene has o f t e n been thought t o have f a c i l i t a t e d the growing d e t e n t e between E a s t and West i n t h e C o l d War, t h a t i s ,  the  e x i s t e n c e of a s o - c a l l e d " T h i r d W o r l d " i s thought t o have d i l u t e d the " b i p o l a r i t y " o f the contemporary i n t e r n a t i o n a l system. i s not the p r o p o s i t i o n I w i s h t o i n v e s t i g a t e ,  T h i s , however,  i f o n l y because t h e r e  a l r e a d y ample t r e a t m e n t of i t i n the l i t e r a t u r e . " * "  is  My c o n c e r n i s w i t h  a somewhat more r e c e n t l y i d e n t i f i e d a x i s o f c o n f l i c t ,  a n d , as I i n t e r p r e t  -  it,  3  -  one l a r g e l y d i v o r c e d from East-West c o n s i d e r a t i o n s .  It is  that  c o n f l i c t between the advanced, i n d u s t r i a l i s e d c o u n t r i e s and the newly emergent underdeveloped o r d e v e l o p i n g c o u n t r i e s , between the r i c h  nations  and the poor n a t i o n s , between the N o r t h and the S o u t h , t h a t I w i s h t o investigate.  F o r , s u r e l y , the N o r t h - S o u t h c l e a v a g e ,  a l t h o u g h economic i n  o r i g i n and n a t u r e , has grave p o l i t i c a l i m p l i c a t i o n s f o r the s t a b i l i t y o f the i n t e r n a t i o n a l system.  The p a u c i t y o f s t u d i e s  on t h e p o l i t i c a l 2  i m p l i c a t i o n s o f t h i s i n t e r n a t i o n a l c l e a v a g e has s p u r r e d t h i s Finally,  study.  t h e r e i s the focus o f the s t u d y on Southern b a r g a i n i n g .  There are a number o f j u s t i f i c a t i o n s one c o u l d g i v e f o r c h o o s i n g a p a r t i c u l a r f o c u s , but u l t i m a t e l y , the c h o i c e h i n g e s on the i n t e r e s t s the r e s e a r c h e r .  of  L e t me s t a t e from t h e o u t s e t t h a t I am d e e p l y concerned  w i t h the f o r t u n e s o f Southern c o u n t r i e s , i n p a r t i c u l a r , w i t h the manner i n w h i c h t h e s e c o u n t r i e s cope w i t h t h e problem o f p o l i t i c a l and economic development i n an ever changing w o r l d .  I n t e r n a t i o n a l a c t i o n provides  avenue t h r o u g h w h i c h Southern c o u n t r i e s can pursue the g o a l o f  one  development  and t h i s has p r o v i d e d t h e major premise f o r my focus on Southern bargaining.  Of c o u r s e ,  the Southern f o c u s i s a l s o a c o n v e n i e n t p o i n t o f  d e p a r t u r e f o r an e x p l o r a t o r y s t u d y such as t h i s . South t h a t p e r c e i v e s  After a l l , i t is  the  i t s e l f as the " a g g r i e v e d p a r t y " i n N o r t h - S o u t h t r a d e  i s s u e s and i t i s the Southern n a t i o n s t h a t a r e a g i t a t i n g f o r an o v e r h a u l o r m o d i f i c a t i o n t o the e x i s t i n g t r a d e system.  I n s h o r t , major i n i t i a t i v e s  f o r changes t o the c u r r e n t N o r t h - S o u t h t r a d e r e l a t i o n s h i p s emanate from  - 4 -  t h e S o u t h , the h i g h p o i n t o f such a g i t a t i o n b e i n g the convening o f  the  U n i t e d N a t i o n s Conference on Trade and Development (UNCTAD) i n 1964. t h e language of n e g o t i a t i o n , the N o r t h - S o u t h t r a d e i s s u e s may be  In  charac-  t e r i s e d as i n t e r n a t i o n a l b a r g a i n i n g o f " r e d i s t r i b u t i o n " where t h e r e  exists  3  an " o f f e n s i v e "  South making demands on a " d e f e n s i v e " N o r t h .  Southern i n t e r e s t  e v i n c e d r e c e n t l y on N o r t h - S o u t h t r a d e i s s u e s has  f u r t h e r p r o v i d e d impetus t o my i n t e r e s t Organization of  The s t r o n g  in their  itself  fortunes.  Study  The s t u d y i s p r e s e n t e d  i n t h r e e p a r t s , or c h a p t e r s .  The f i r s t ,  as  n o t e d , p r e s e n t s an o v e r v i e w o f N o r t h - S o u t h t r a d e r e l a t i o n s h i p s and i s s u e s . The second c h a p t e r b e g i n s a case s t u d y i n a p a r t i c u l a r s u b - a r e a o f N o r t h South t r a d e n e g o t i a t i o n s  - i n t e r n a t i o n a l t i n agreements.  The whole range  o f N o r t h - S o u t h t r a d e n e g o t i a t i o n s may perhaps be summarized a l o n g f o l l o w i n g o r g a n i z a t i o n a l and i s s u e - a r e a  the  contexts:  1) B i l a t e r a l , i s s u e - a r e a - s p e c i f i c - n e g o t i a t i o n s on a p a r t i c u l a r commodity o r t r a d e i s s u e between a N o r t h e r n and a S o u t h e r n nation. 2) B i l a t e r a l , i s s u e - a r e a - g e n e r a l - n e g o t i a t i o n s on a wide range o f commodities a n d / o r t r a d e i s s u e s between a N o r t h e r n and a Southern n a t i o n . 3) M u l t i l a t e r a l , issue-area-specificn e g o t i a t i o n s on a commodity o r t r a d e i s s u e between a number of N o r t h e r n and Southern nations. ( I n t e r n a t i o n a l Commodity Agreements are the prime example).  - 5 -  4) M u l t i l a t e r a l , i s s u e - a r e a - g e n e r a l - n e g o t i a t i o n s on a wide range of commodities a n d / o r t r a d e i s s u e s between a number o f N o r t h e r n and S o u t h e r n c o u n t r i e s . (UNCTAD, GATT and o t h e r g e n e r a l - p u r p o s e t r a d e o r g a n i z a t i o n s and forums a r e good examples.) Thus t h e second p a r t o f t h i s s t u d y examines N o r t h - S o u t h t r a d e  negotiations  o n l y i n the t h i r d c o n t e x t , t h a t i s , o n l y one commodity - t i n - and one main i s s u e - p r i c e c o n t r o l - w i l l be i n v e s t i g a t e d .  The o r g a n i z a t i o n a l  i s s u e - a r e a c o n t e x t s may themselves be i m p o r t a n t " s i t u a t i o n a l " v a r i a b l e s a f f e c t i n g the outcome of n e g o t i a t i o n s .  However, t h i s i s a p r o p o s i t i o n  t h a t can be examined o n l y a f t e r r e s e a r c h o f a c o m p a r a t i v e n a t u r e conducted.  is  I t i s t h e f i n a l c h a p t e r of the s t u d y t h a t f o c u s e s on  bargaining strategies proper.  I t w i l l encompass b o t h the s t r a t e g i e s  are known t o have been used by S o u t h e r n c o u n t r i e s i n t i n agreements a range o f s t r a t e g i e s t h a t c o u l d be u s e d .  that and  CHAPTER I THE NATURE AND ISSUES OF NORTH-SOUTH TRADE The P a r t i e s i n the Trade  Issue-Area  I n t h i s s t u d y I am concerned w i t h the i n t e r a c t i o n s o f " t h e N o r t h " , o r developed c o u n t r i e s , and " t h e S o u t h " , o r l e s s developed c o u n t r i e s , i n the t r a d e i s s u e - a r e a .  The n o t i o n o f t h e s e c t o r a l i s s u e - a r e a p o s t u l a t e s  a w i d e r system o f i n t e r a c t i o n s or " i n t e r n a t i o n a l s y s t e m " , many o t h e r issue-areas."'" concept i n t h e f o l l o w i n g  encompassing  Robert W. Cox has n o t e d the u s e f u l n e s s o f  the  terms:  The d e v i c e o f the s e c t o r a l i s s u e - a r e a system s h o u l d e n a b l e the p o l i t i c a l s c i e n t i s t t o embrace the h i s t o r i a n ' s b r e a t h o f e x p l o r a t o r y power and y e t f i t t h i s i n t o a framework w h i c h c o u l d be used f o r comparisons between i s s u e - a r e a systems so as b o t h t o y i e l d some g e n e r a l i n s i g h t s i n t o p r o c e s s e s o f i n t e r n a t i o n a l p o l i t i c s , and . . . . t o show what d i f f e r e n c e s t h e r e may be i n the d i s t r i b u t i o n o f power as between d i f f e r e n t issue-areas.^ A l t h o u g h t h i s s t u d y does n o t address i t s e l f d i r e c t l y t o the b r o a d p u r p o s e s mentioned above,  I have found the n o t i o n o f i s s u e - a r e a a u s e f u l method o f  d e l i n e a t i n g the a r e a and i s s u e s o f N o r t h - S o u t h t r a d e .  The t r a d e  area,  i n the t o t a l  I t h i n k , s t a n d s out d i s t i n c t l y as a " s u b - s y s t e m "  issue-  i n t e r n a t i o n a l i s s u e - a r e a s y s t e m , and i n g e n e r a l s a t i s f i e s what James N . Rosenau has i d e n t i f i e d as the c r i t e r i a f o r d e l i n e a t i n g i s s u e - a r e a s , v i z . : (1) a c l u s t e r o f v a l u e s , the a l l o c a t i o n of w h i c h (2) l e a d s t h e a f f e c t e d o r p o t e n t i a l l y a f f e c t e d a c t o r s t o d i f f e r so g r e a t l y o v e r (a) the way i n w h i c h the v a l u e s s h o u l d be a l l o c a t e d o r (b) the h o r i z o n t a l l e v e l s a t w h i c h the a l l o c a t i o n s s h o u l d be a u t h o r i z e d t h a t (3) t h e y engage i n d i s t i n c t i v e b e h a v i o r f o r the a t t a i n m e n t of t h e i r p a r t i c u l a r v a l u e s . 3  - 6 -  - 7 -  E s s e n t i a l l y this means that a set of international interactions q u a l i f y as an issue-area i f they exhibit a d i s t i n c t i v e pattern of c o n f l i c t i n the 4 manner authoritative values are allocated  among the actors.  I think  there i s ample evidence to suggest that North-South trade interactions do exhibit such distinctiveness and c o n f l i c t .  Furthermore, there i s reason  to believe that f o r the bulk of LDC's, general economic and trade issues tend to predominate over p o l i t i c o - m i l i t a r y issues i n their interactions with other nations.^  The North-South trade question has, however, come  into prominence only r e l a t i v e l y recently, reaching a high point during the early 1960s when the LDC's banded together f i r s t as the "Group of 75" at  the United Nations and then as "the Group of 77" at the f i r s t UNCTAD  conference.  This l e d to an informal "group system" i n the trade  issue-area which I s h a l l now b r i e f l y describe.' The Group of 77: This i s the LDC grouping which we s h a l l take as synonymous with "the South" (although we would also include new r e c r u i t s beyond the o r i g i n a l 77). at  This grouping f i r s t emerged as a caucus group  the UN i n the early 1960s and consisted o r i g i n a l l y of the "75" which  had pressed for the convening of a trade conference to discuss outstanding g North-South trade issues. At UNCTAD they became known as the "77". The group i s characterized by a heterogeneous composition of countries of various p o l i t i c a l and i d e o l o g i c a l persuasions, with the leadership roles f i l l e d by the larger countries, p a r t i c u l a r l y A l g e r i a , B r a z i l , India, 9 Nigeria, Pakistan, United Arab Republic and Yugoslavia.  There i s no  - 8 -  i n s t i t u t i o n a l i z e d group m a c h i n e r y , a l t h o u g h B r a n i s l a v G o s o v i c n o t e s t h a t t h e UNCTAD S e c r e t a r i a t the " 7 7 " .  has had a s p e c i a l l y c o r d i a l r e l a t i o n s h i p w i t h  T h i s i s not s u r p r i s i n g c o n s i d e r i n g t h a t the  Secretary-  G e n e r a l , R a u l P r e b i s c h , was t h e l e a d i n g champion of the Southern c a u s e . C o n f l i c t s w i t h i n the group s p r i n g from t h e i r d i f f e r e n t l e v e l s of economic development and the s p e c i a l t i e s v a r i o u s Southern groups have w i t h d i f f e r e n t Northern groups.  I n t h e m a i n , t h e s e are the t i e s t h e Yaounde  group o f A f r i c a n n a t i o n s have w i t h the EEC, the t i e s L a t i n American n a t i o n s have w i t h the U n i t e d S t a t e s t h r o u g h the OAS, and f i n a l l y the t i e s  former  B r i t i s h c o l o n i e s have w i t h t h e Commonwealth. The " B " G r o u p :  As a c o u n t e r measure t o the c r e a t i o n o f UNCTAD, the  Western c o u n t r i e s  ( i n c l u d i n g Japan) o r g a n i z e d themselves  around the  already  e x i s t i n g machinery o f the O r g a n i z a t i o n f o r Economic C o o p e r a t i o n and Development  (OECD).  Thus the " B " Group comprise the OECD c o u n t r i e s ,  namely the members o f the European Economic Community, B e l g i u m , F r a n c e , F e d e r a l R e p u b l i c o f Germany, I t a l y , Luxembourg and N e t h e r l a n d s ;  the  members o f the European F r e e Trade A s s o c i a t i o n , A u s t r i a , Denmark, Norway, P o r t u g a l , Sweden, S w i t z e r l a n d and U n i t e d Kingdom; G r e e c e , S p a i n , T u r k e y , USA, Canada, and J a p a n .  Iceland,  The l e t t e r " B " r e f e r s t o t h e i r  d e s i g n a t i o n as. the B l i s t o f n a t i o n s among f o u r l i s t s o f UNCTAD members d i v i d e d f o r purposes of e l e c t i o n t o p o s t s i n the o r g a n i z a t i o n . n o t e s t h r e e c l e a v a g e s i n the B Group:  1) the i n t e r e s t s  Gosovic  of Turkey,  S p a i n and Greece a r e o f t e n c l o s e r t o t h o s e o f the " 7 7 " than t o t h o s e of  - 9 -  the o t h e r OECD members;  2) t h e l a r g e r c o u n t r i e s as compared w i t h the  s m a l l e r c o u n t r i e s a r e l e s s s y m p a t h e t i c toward the L D C ' s and 3) a F r e n c h US c o n f l i c t r e l a t e d t o the q u e s t i o n o f r e s p o n s i v e n e s s  toward L D C ' s . ^  We s h a l l t a k e t h i s group to be " t h e N o r t h " . The " D " Group:  T h i s g r o u p i n g i s composed o f the c e n t r a l l y planned  c o u n t r i e s o f E a s t e r n E u r o p e , spearheaded by the S o v i e t U n i o n . as w i t h t h e " B " Group, r e f e r s  t o the UNCTAD l i s t s ) .  ("D" h e r e ,  There i s a tendency  f o r t h i s group t o s u p p o r t the LDC demands, a l t h o u g h i t i s by and l a r g e m a r g i n a l a c t o r i n the N o r t h - S o u t h c o n f l i c t .  a  G o s o v i c p o i n t s out t h a t i n  exchange f o r p o l i t i c a l s u p p o r t , the D group may expect the " 7 7 " t o  treat  12 i t more f a v o u r a b l y t h a n the West.  I have e x c l u d e d t h i s group from my  d e f i n i t i o n o f N o r t h and S o u t h , a l t h o u g h i f t h e d e f i n i t i o n i s t o f o l l o w s t r i c t r i c h - p o o r l i n e s , some o f the more developed c o u n t r i e s o f camp s h o u l d be c o n s i d e r e d as members of the N o r t h .  this  However, t h e r e  is  r e l a t i v e l y l i t t l e t r a d e between the D Group and the L D C ' s and t h e i r e x c l u s i o n i s t h e r e f o r e not w i t h o u t j u s t i f i c a t i o n . Thus, the two dominant groups o f a c t o r s  i n the trade  issue-area  a r e t h e Group o f 77 and the B Group, w h i c h f o r t h e purposes o f  this  s t u d y w i l l be r e f e r r e d to as South and N o r t h r e s p e c t i v e l y . The N a t u r e o f N o r t h - S o u t h Trade As we a r e i n t e r e s t e d i n N o r t h - S o u t h b a r g a i n i n g i n t h e issue-area, i t i s  trade  important t h a t we a s c e r t a i n the r e l a t i v e s t a k e s and  - 10 -  interests  t h a t the N o r t h and the South have i n t r a d i n g w i t h each o t h e r .  I i n t e n d t o do t h i s by comparing f l o w s o f t r a d e between and among N o r t h e r n and Southern c o u n t r i e s .  We f i n d from examining such f l o w s  that  i n g e n e r a l t h e r e i s much g r e a t e r t r a d e among N o r t h e r n c o u n t r i e s  than  t h e r e i s between N o r t h e r n and Southern c o u n t r i e s .  Southern  c o u n t r i e s t r a d e much l e s s w i t h themselves countries.  The f i g u r e s  Furthermore,  than t h e y do w i t h N o r t h e r n  on T a b l e I - A a l s o show t h a t the v a l u e o f N o r t h e r n  t r a d e f a r exceeds t h a t of Southern t r a d e ,  although trade i n general  tends  t o be more i m p o r t a n t f o r t h e South than i t i s f o r the N o r t h , i f we t a k e e x p o r t s as p e r c e n t a g e o f GNP t o be an i n d i c a t o r o f t h i s i m p o r t a n c e .  On  c l o s e r i n s p e c t i o n , the e x p o r t f l o w s o f t h e two groups show t h a t N o r t h t o - N o r t h t r a d e amounted t o $147.9 b i l l i o n , w h i l e N o r t h - t o - r S o u t h t r a d e amounted t o o n l y $37.5 b i l l i o n i n 1969.  W h i l e the N o r t h - t o - N o r t h t r a d e  accounted f o r 7.9 p e r cent o f t o t a l N o r t h e r n GNP ( 1 9 6 6 ) , t h e N o r t h - t o South t r a d e r e p r e s e n t e d  a mere 1.9 per c e n t o f N o r t h e r n GNP.  S o u t h , e x p o r t f l o w s among Southern c o u n t r i e s were o n l y $10.3 while t h e i r exports  As f o r  the  billion  t o the N o r t h amounted t o $36.4 b i l l i o n , more than  t h r e e times as much as t h e i r t r a d e w i t h each o t h e r .  The  South-to-South  t r a d e o n l y accounted f o r 3.9 p e r cent o f Southern GNP, w h i l e the S o u t h to-North trade registered  a h i g h 10.2 per cent o f GNP i n 1966.  What do a l l t h e s e f i g u r e s mean?  Quite c l e a r l y they show t h a t  the  Southern s t a k e i n t r a d e w i t h the N o r t h i s r e l a t i v e l y m u c h g r e a t e r t h a n the N o r t h e r n s t a k e i n t r a d e w i t h the S o u t h . Northern c o u n t r i e s '  The c o r o l l a r y i s t h a t  s t a k e i n t r a d i n g among themselves  the  i s much g r e a t e r  - 11 TABLE I  A.  TOTAL TRADE OF NORTH AND SOUTH, 1969  1  (US $ millions)  Exports as % of GNP (1966)  Exports  Imports  Total GNP (1966)  193,600  204,700  1,519,200  9.3  99,400  49,300  50,100  274,800  14.2  497,700  242,900  254,800  1,794,000  Combined Developed Market Economies (North) .398,300 Developing Market Economies  (South) Total  B.  NORTH-SOUTH TRADE, 1969 Exports From North to North  US $ B i l l i o n s 147.9  v  10.1  Exports as % of 1966 GNP 7.9  From North to South  37.5  1.9  From South to North  36.4  10.2  From South to South  10.3  3.9  Excludes trade of Centrally Planned Economies. Source: Compiled from United Nations S t a t i s t i c a l Yearbook, 1970, New York, 1971. For precise d e f i n i t i o n s of Developed Market Economies, Developing Market Economies and Centrally Planned Economies, see p. 398.  - 12 -  than their stake i n trading with the South, while the opposite i s true for Southern countries, who have only a r e l a t i v e l y small stake i n trading with each other.  This would i n part explain why  Southern countries are  so much more interested i n North-South trade issues than are perhaps 13 Northern countries.  The Southern stake i n North-South trade i s  further augmented when we consider that the gains from trade are urgently needed for economic development.  Export earnings contribute i n no small  way toward the.goal of economic development.  In the main, they are used 14 to finance v i t a l l y needed c a p i t a l goods e s s e n t i a l for such development. Commodity Trade: Turning now to the nature or type of goods traded, the most s t r i k i n g feature of Southern trade i s the heavy, usually lop-sided  dependence on primary  commodities:  Almost 90 per cent of the export earnings of developing countries derive from primary products. Moreover, nearly h a l f of those countries earn more than 50 per cent of t h e i r export receipts from a single primary commodity. As many as three-quarters of them e a r n ^ more than 60 per cent from three primary products. Thus, i n a very r e a l sense, primary commodity trade i s the economic l i f e b l o o d of the South.  This consideration, however, often beclouds the  fact that Southern countries export only under one-half of the world's primary commodities, and i f fuels are excluded from the c a l c u l a t i o n , 16 the Southern share f a l l s to one-third.  (In f a c t , i f we consider  only the South-to-North flow of primary commodities, my figures i n  - 13  -  Table II show that Southern exports to major Northern countries account for a mere 28.7 per cent of the l a t t e r s ' imports of primary commodities). In short, Northern countries are as important, i f not more important than LDC's as primary commodities exporters.  This fact dispels a popular notion  that Northern countries are merely buyers of primary commodities Southern countries t h e i r supply source.  and  In r e a l i t y , Northern and Southern  countries are also competitors i n primary commodity trade, where i r o n i c a l l y , the group that i s more dependent on commodity trade a c t u a l l y exports less than the group not so dependent on i t .  (Consider the number of countries  i n the North and the number i n the South and the asymmetry becomes even more lop-sided).  Moreover, a number of t r o p i c a l raw materials are up  against competition from synthetics produced i n the North.  The unkindest  cut of a l l i s that i n terms of markets, the North remains of paramount importance, absorbing some 75 per cent of LDC primary  commodities.^  LDC commodity trade with the North i s usually c l a s s i f i e d according to non-competing of commodities  and competing products.  Let us examine these two categories  briefly.  Non-competing products: For the most part, these comprise the t r o p i c a l beverages, coffee, tea and cocoa, and the minerals, t i n and manganese products for which there are no close Northern substitutes. These f i v e commodities account for some 95 per cent of non-competing ducts, which goes to show that there are not very many primary  pro-  commodities  that do not compete with Northern counterparts. Tin and coffee are marketed under international commodity agreements.  There are r e l a t i v e l y  - 14 few t r a d e r e s t r i c t i o n s on t h e s e p r o d u c t s except  f o r some e x p o r t  levies  18 and e x c i s e t a x e s .  The main problem f o r t h e s e c o m m o d i t i e s , r a t h e r ,  t h a t " w o r l d demand p r o s p e c t s a r e s i m p l y n o t f a v o u r a b l e  is  compared t o those  19 of m a n u f a c t u r e s . 1 1  For example,  i t has been p o i n t e d out t h a t p r i m a r y  commodities i n g e n e r a l and f o o d s t u f f s sed by s l u g g i s h demand because as  i n p a r t i c u l a r tend t o be c h a r a c t e r i -  incomes r i s e , a d d i t i o n a l income i s  n o t on such p r o d u c t s but on l u x u r y i t e m s . unaffected  The m i n e r a l s a r e  spent  somewhat  by t h i s problem as they a r e used i n i n d u s t r i a l p r o d u c t i o n b u t  t h e n t h e y c o n s t a n t l y f a c e the problem o f s y n t h e t i c s u b s t i t u t e s .  A  f u r t h e r d i f f i c u l t y f o r t h e s e p r o d u c t s i n g e n e r a l , and p a r t i c u l a r l y w i t h the b e v e r a g e s , i s t h a t t h e i r output and demand a r e u n r e s p o n s i v e 20 changes i n the s h o r t - r u n .  to  price  I n o t h e r w o r d s , s u p p l y and demand a r e  said  t o be i n e l a s t i c i n the s h o r t - r u n because t h e n a t u r e o f p r o d u c t i o n i s t h a t f o r any p e r i o d t h e r e tends t o be a f i x e d l e v e l o f o u t p u t .  such  Thus,  t h e most u r g e n t problem f o r t h e s e p r o d u c t s i s e x p o r t i n s t a b i l i t y , t h a t  is,  the wide v a r i a t i o n i n the p r i c e s t h a t t h e s e p r o d u c t s f e t c h on t h e w o r l d market.  Hence the need f o r the p r i c e c o n t r o l l i n g mechanisms o f commodity  agreements. Competing p r o d u c t s : The main Southern commodities t h a t with Northern counterparts synthetics;  compete  are 1) r u b b e r , f a c i n g c o m p e t i t i o n from  2) c o t t o n , j u t e and o i l s e e d s ,  f a c i n g c o m p e t i t i o n from s y n t h e t i c s  and N o r t h e r n s u b s t i t u t e s o r N o r t h e r n p r o d u c t i o n o f t h e commodity; and 3) m a i z e , s u g a r , t o b a c c o , wood and l u m b e r , p e t r o l e u m , c o p p e r , l e a d ,  zinc  - 15 -  and a l u m i n i u m , w h i c h a r e a l s o produced i n the N o r t h . products or s u b s t i t u t e s  Because t h e s e  are a l s o found i n the N o r t h , t h e r e a r e  considerable  r e s t r i c t i o n s on t h e i r i m p o r t . H e r e , p r o s p e c t s f o r r a p i d e x p a n s i o n of e x p o r t e a r n i n g s [of LDC'§7 depend on the w i l l i n g n e s s o f developed c o u n t r i e s t o r e l a x r e s t r i c t i o n s on i m p o r t s as w e l l as on the a b i l i t y o f the d e v e l o p i n g c o u n t r i e s t o improve the q u a l i t y and g e n e r a l compet i t i v e n e s s of t h e i r products.21 F r e e r a c c e s s o f such Southern p r o d u c t s i n t o N o r t h e r n markets i s not however, because o f the e x i s t e n c e o f p o w e r f u l p r o t e c t i o n i s t f o r c e s N o r t h f o r these p r o d u c t s .  likely, i n the  T h i s p o i n t w i l l be pursued when we d i s c u s s  the  trade l i b e r a l i z a t i o n issue. T a b l e I I i s a summary o f t h e S o u t h - t o - N o r t h f l o w o f twenty o f t h e most i m p o r t a n t Southern p r i m a r y c o m m o d i t i e s .  L D C ' s as d e f i n e d i n t h e  t a b l e a r e synonymous w i t h my d e f i n i t i o n o f the S o u t h .  However, o n l y the  major N o r t h e r n c o u n t r i e s o f the OECD, o r the B Group o f UNCTAD, have been i n c l u d e d (See T a b l e , n o t e 2 ) .  N e v e r t h e l e s s , s i n c e the s m a l l e r  N o r t h e r n c o u n t r i e s e x c l u d e d account f o r o n l y a minor p o r t i o n o f the i m p o r t o f t h e s e c o m m o d i t i e s , t h e i r e x c l u s i o n does n o t d i s t u r b t h e v a l i d i t y o f the f i g u r e s t o any e x t e n t .  The 20 commodities h i g h l i g h t e d i n t h e  table  account f o r 78.3 per cent o f Southern p r i m a r y commodity e x p o r t t o t h i s Northern market.  Column one i n d i c a t e s N o r t h e r n i m p o r t v a l u e s  20 commodities from a l l s o u r c e s ;  for.these  column t w o , t h e v a l u e s o f t h e s e same  commodities imported from the South o n l y ;  column t h r e e , the Southern  s h a r e o f the market f o r t h e s e commodities as a p e r c e n t a g e ;  column f o u r ,  - 16 -  the rank o r d e r of t h e s e commodities a c c o r d i n g t o share of t h e m a r k e t ; column f i v e , t h e Southern s h a r e as a p e r c e n t a g e o f t o t a l Southern  exports  t o t h i s m a r k e t ; and column s i x , the rank o r d e r o f t h e s e commodities a c c o r d i n g t o Southern share as a p e r c e n t a g e o f Southern t o t a l . Even a c u r s o r y i n s p e c t i o n would convey t o the r e a d e r t h e importance o f t h e s e 20 commodities t o the South i n terms o f t h e t w i n c r i t e r i a o f v a l u e o f t r a d e and share o f m a r k e t .  (They account f o r 6 7 . 3 per cent o f  the N o r t h e r n market and c o n s t i t u t e 78.3 p e r cent o f t o t a l Southern e x p o r t to t h i s market.)  However, i t i s a l s o e v i d e n t t h a t N o r t h e r n i m p o r t s o f  p r i m a r y commodities are by no means r e s t r i c t e d t o t h e s e 20 c o m m o d i t i e s ; o t h e r i t e m s account f o r more than t w i c e the N o r t h e r n import v a l u e t h e s e 20 c o m m o d i t i e s , where the Southern share i s o n l y 9.3 p e r  for  cent.  Manufactures Trade: Southern e x p o r t o f manufactured and semi-manufactured  goods  amounted t o some $5.5 b i l l i o n ,  r e p r e s e n t i n g a t i n y 5 per cent o f  world exports i n manufactures,  and a p p r o x i m a t e l y 16 per cent o f  total total  22 Southern e x p o r t s i n 1964.  The N o r t h absorbed t w o - t h i r d s o f t h i s  total,  but t h i s accounted on an average f o r o n l y 5 per cent o f t o t a l , i m p o r t s of 23 manufactured goods i n t o t h e N o r t h .  A g a i n , the message i s c l e a r :  Southern s t a k e i n t r a d e w i t h the N o r t h i s much g r e a t e r stake i n trade w i t h the South.  In f a c t ,  t u r e s t r a d e w i t h the South i s m i n u s c u l e .  than t h e  the  latter's  the N o r t h e r n s t a k e i n manufacI n commodity t r a d e we saw t h a t  TABLE I I PRIMARY COMMODITIES: 1  IMPORTS INTO NORTHERN COUNTRIES, 2 1967  ^  (US $ m i l l i o n s ) Commodity MEAT, f r e s h c h i l l e d or frozen MAIZE SUGAR & HONEY COFFEE COCOA TEA & MATE VEGETABLE OILS & FATS TOBACCO NATURAL RUBBER WOOD & LUMBER WOOL COTTON JUTE IRON COPPER BAUXITE & ALUMINIUM LEAD & ZINC TIN MANGANESE PETROLEUM  From a l l Sources  From, LDCs  LDCs' Share (%)  Order  LDCs' Share as % o f LDC T o t a l Order  2,229.0 1,451.6 1,423.9 2,132.4 630.0 445.9  507.9 478.7 1,071.6 2,054.1 523.0 415.6  22.8 33.6 75.3 96.3 83.0 93.2  19 17 9 2 8 4  1.9 1.8 4.0 7.8 2.0 1.7  9 10 5 2 8 11  695.5 990.1 627.2 2,484.8 1,718.5 2,780.9 184.6 2,005.9 333.2  389.9 231.9 609.4 1,523.5 239.0 1,655.4 174.0 1,046.0 179.5  56.1 23.4 97.2 61.3 13.9 59.5 94.3 52.2 53.9  13 18 1 11 20 12 3 15 14  1.5 0.9 2.3 5.7 0.9 6.2 0.7 4.0 0.7  12 15 7 4 14 3 17 6 16  289.7 344.2 143.5 187.3 9,848.8  255.2 122.1 132.0 121.3 9,029.8  88.1 35.5 92.0 64.8 91.7  7 16 5 10 6  1.0 0.5 0.5 0.5 34.1  13 19 18 20 1  T o t a l 20 i t e m s  30,867.3  20,759.9  67.3  78.3  A l l other items  61,440.9  5,737.4  9.3  21.7  T o t a l a l l items  92,308.2  26,497.3  28.7  100.0  ±  P r i m a r y commodities a r e d e f i n e d by SITC s e c t i o n s 0 - 4 .  2 N o r t h e r n c o u n t r i e s a r e d e f i n e d h e r e as t h e OECD ( O r g a n i z a t i o n f o r Economic C o o p e r a t i o n and Development) c o u n t r i e s , e x c l u d i n g I c e l a n d , Greece and T u r k e y . Other OECD c o u n t r i e s a r e USA, Canada, Japan and t h e c o u n t r i e s o f EEC and EFTA. 3  LDCs i n c l u d e a l l non-OECD members o f the w o r l d , e x c e p t t h e C e n t r a l l y Planned C o u n t r i e s ( e x c e p t i n g Y u g o s l a v i a ) , South A f r i c a , A u s t r a l i a and New Z e a l a n d . S o u r c e : Compiled from OECD F o r e i g n T r a d e . S e r i e s C. Commodity T r a d e : I m p o r t s , 1967, V o l . 1.  - 18 -  the Southern share of the Northern market was nearly one-half;  in  manufactures trade i t i s only one-twentieth! On inspecting the Southern flow of manufactured goods to Northern countries, we discover an interesting  feature:  Southern exports of  manufactured and semi-manufactured goods are not i d e a l l y distributed among Souther countries, to say the l e a s t .  As few as 20 countries contributed  as much as 82 per cent of the t o t a l Southern exports to Northern countries in 1967  (see Table I I I ) . In f a c t , the top ten exporters - Hong Kong,  Chile, Zambia, India, Congo, Mexico, Malaysia, Peru, Israel and Taiwan accounted f o r 67.1 per cent of the t o t a l .  Moreover, the values of  exports vary widely even among the top contributors. (For example, Hong Kong's export value i s about nine times that of Pakistan.)  This  means that the Southern stake i n manufactures trade with the North i s 24 somewhat asymmetrical.  In the long-run, however, t h i s asymmetry w i l l 25  tend to l e v e l o f f as more LDC's begin to i n d u s t r i a l i z e . u n r e a l i s t i c assumption goal among LDC's.  This i s not an  as i n d u s t r i a l i z a t i o n i s almost always a foremost  In f a c t , the South often r a l l i e s around the argument  that trade i n manufactured goods holds out the greatest promise for the future, given the extraordinary growth i n the Southern export of manufactures on the recent years.  (A rate of 12.7 per cent per year 26  between 1959-60 and 1965-66 was recorded.  )  Because of the favourable  prospects that manufactures trade hold f o r Southern countries, they have generally decried the highly prevalent Northern trade r e s t r i c t i o n s on the import of Southern manufactures and semi-manufactures.  The  Pearson  - 19 TABLE I I I SOUTHERN EXPORTS BY PRINCIPAL COUNTRIES OF MANUFACTURES AND SEMI-MANUFACTURES 1 TO NORTHERN COUNTRIES, 2 1967 V a l u e (US $ m i l l i o n s )  % of T o t a l  HONG KONG  966.2  16.2  CHILE  603.0  10.1  ZAMBIA  555.5  9.3  INDIA  456.5  7.7  CONGO, Dem. Rep.  376.0  6.3  MEXICO  245.5  4.1  MALAYSIA  226.0  3.8  PERU  217.6  3.7  ISRAEL  189.4  3.2  TAIWAN  161.0  2.7  SOUTH KOREA  148.1  2.5  PAKISTAN  106.6  1.8  BRAZIL  95.8  1.6  THAILAND  94.1  1.6  IRAN  93.4  1.6  PHILIPPINES  79.4  1.3  SIERRA LEONE  72.4  1.2  ARGENTINA  56.5  1.0  ANGOLA  46.5  0.8  JAMAICA  43.6  0.7  T o t a l 20 c o u n t r i e s  4,893.1  82.0  Other LDCs  1,072.5  18.0  T o t a l a l l LDCs  5,965.6  100.0  Manufactures and semi-manufactures sections 5-8. SITC SITC SITC SITC  Code Code Code Code  a r e d e f i n e d by SITC  5 : Chemicals 6: Manufactured goods c l a s s i f i e d c h i e f l y by m a t e r i a l . 7: M a c h i n e r y and t r a n s p o r t equipment 8: Miscellaneous  ^They are d e f i n e d here as i n T a b l e  I  S o u r c e : Compiled OECD F o r e i g n T r a d e . S e r i e s C. Commodity T r a d e : I m p o r t s , 1967. V o l . 1  - 20 -  Commission u n d e r s c o r e s  the e x t e n t o f N o r t h e r n q u a n t i t a t i v e  on Southern m a n u f a c t u r e s  restrictions  i n the f o l l o w i n g passage:  E x c l u d i n g p e t r o l e u m p r o d u c t s , base m e t a l s , and s h i p s (which have been " e x p o r t e d " t o developed c o u n t r i e s f o r r e p a i r s ) , no l e s s t h a n 30 p e r cent o f manufactured goods a r e s u b j e c t t o q u a n t i t a t i v e r e s t r i c t i o n s . Cotton t e x t i l e s and c l o t h i n g and p r o c e s s e d f o o d s t u f f s a r e s u b j e c t t o such r e s t r i c t i o n s i n most w e a l t h y c o u n t r i e s . I n a d d i t i o n , a number impose r e s t r i c t i o n s on n o n - c o t t o n t e x t i l e s and l e a t h e r a r t i c l e s , f o o t w e a r , d y e s t u f f s , g l a s s and g l a s s w a r e . 2 7 As f o r t a r i f f b a r r i e r s ,  i m p o r t s from Southern c o u n t r i e s a r e s t i l l  subject  t o c o n s i d e r a b l y h i g h e r r a t e s than those from N o r t h e r n c o u n t r i e s , and even the Kennedy Round o f t a r i f f r e d u c t i o n s c a r r i e d out under GATT i n 1967 has l a r g e l y r e s u l t e d i n " p r o p o r t i o n a t e l y l a r g e r r e d u c t i o n s i n t a r i f f s  on  28 products of i n t e r e s t  t o developed c o u n t r i e s . "  We are now v e r g i n g on  the i s s u e s o f N o r t h - S o u t h t r a d e w h i c h w i l l be the s u b j e c t o f i n the next  discussion  section.  S o u t h e r n C o m p l a i n t s A g a i n s t the Trade System: Key I s s u e s Southern c o m p l a i n t s a g a i n s t the e x i s t i n g t r a d e system c e n t r e around t h e argument t h e p r e s e n t  trade patterns  a g a i n s t t h e i r economic g r o w t h .  i n one way o r a n o t h e r m i l i t a t e  These c o m p l a i n t s c u l m i n a t e d i n t h e  convening and c r e a t i o n o f UNCTAD and are b e s t e x p r e s s e d i n t h e j o i n t d e c l a r a t i o n o f the Group o f 75 made a t t h e UN G e n e r a l Assembly i n t h e  Fall  29 o f 1963,  p r e c e d i n g the Geneva C o n f e r e n c e .  The Group o f 75 s t a t e d  that  w h i l e i n t e r n a t i o n a l t r a d e c o u l d be a more p o w e r f u l i n s t r u m e n t and v e h i c l e o f economic development, " t h e e x i s t i n g p r i n c i p l e s and p a t t e r n s  of w o r l d  - 21 t r a d e s t i l l m a i n l y f a v o u r the advanced p a r t s o f the w o r l d " and t h a t trends,  i n s t e a d o f h e l p i n g d e v e l o p i n g c o u n t r i e s t o promote the  and d i v e r s i f i c a t i o n o f t h e i r economies, more r a p i d g r o w t h .  frustrate  present  development  their efforts  to  attain  They argued t h a t t o remedy the s i t u a t i o n , " t h e volume  o f t h e i r t r a d e s h o u l d be i n c r e a s e d and i t s c o m p o s i t i o n d i v e r s i f i e d ; p r i c e s of t h e i r exports  s h o u l d be s t a b i l i s e d a t f a i r r e n u m e r a t i v e  and " i n t e r n a t i o n a l t r a n s f e r s o f c a p i t a l s h o u l d be made more  levels"  favourable";  and t h a t a "dynamic i n t e r n a t i o n a l t r a d e p o l i c y " i s r e q u i r e d . p o l i c y s h o u l d be based on the need t o r e c o g n i s e  the  Such a  the s p e c i a l p o s i t i o n o f  the L D C ' s and the need t o p r o v i d e them w i t h s p e c i a l a s s i s t a n c e . removal of impediments t o t r a d e i s n o t enough and s h o u l d be  The  buttressed  by p o s i t i v e measures d i r e c t e d toward a c h i e v i n g a new i n t e r n a t i o n a l d i v i s i o n of  labour.  More s p e c i f i c a l l y , the d e v e l o p i n g c o u n t r i e s hoped t h a t the c o n v e n i n g o f an i n t e r n a t i o n a l t r a d e c o n f e r e n c e would l e a d t o t h e f o l l o w i n g a c t i o n s : 1)  C r e a t i o n of c o n d i t i o n s f o r the e x p a n s i o n o f t r a d e between c o u n t r i e s a t a s i m i l a r l e v e l o f development, a t  different  s t a g e s o f development o r h a v i n g d i f f e r e n t systems o f  social  and economic o r g a n i z a t i o n ; 2)  Progressive  r e d u c t i o n and e a r l y e l i m i n a t i o n o f a l l  and r e s t r i c t i o n s impeding the e x p o r t s r e c i p r o c a l concessions 3)  barriers  of LDC's without  on t h e i r . p a r t ;  I n c r e a s e i n the volume o f e x p o r t s o f t h e d e v e l o p i n g  countries  i n p r i m a r y p r o d u c t s , b o t h raw and p r o c e s s e d , t o t h e i n d u s t r i a l c o u n t r i e s , and s t a b i l i z a t i o n of p r i c e s a t f a i r tive  prices;  remunera-  - 22 4) E x p a n s i o n o f t h e markets f o r e x p o r t s o f LDC manufactures and semi-manufactured goods; 5) P r o v i s i o n o f more adequate f i n a n c i a l r e s o u r c e s a t  favourable  terms so as t o e n a b l e LDC's t o i n c r e a s e t h e i r i m p o r t s o f c a p i t a l goods and i n d u s t r i a l raw m a t e r i a l s e s s e n t i a l  for  t h e i r economic development, and b e t t e r c o - o r d i n a t i o n o f  trade  and a i d p o l i c i e s ; 6) Improvement o f the i n v i s i b l e t r a d e o f d e v e l o p i n g c o u n t r i e s , p a r t i c u l a r l y by r e d u c i n g t h e i r payments f o r f r e i g h t and i n s u r a n c e and t h e burden o f t h e i r debt c h a r g e s ; 7) Improvement o f i n s t i t u t i o n a l arrangements,  and  including,  if  necessary,  the e s t a b l i s h m e n t o f new m a c h i n e r y and methods 30 f o r i m p l e m e n t i n g t h e d e c i s i o n s o f the C o n f e r e n c e .  The main themes o f the j o i n t d e c l a r a t i o n o f the " 7 5 " were  fully  expounded i n the " P r e b i s c h R e p o r t " , e n t i t l e d , "Toward a New Trade P o l i c y 31 f o r Development",  which, i n effect,  embodies the main S o u t h e r n c o m p l a i n t s  a g a i n s t the e x i s t i n g t r a d e system and p r o p o s a l s  for i t s  changes.  The " T r a d e Gap"; The s t a r t i n g p o i n t of t h e Report i s the n o t i o n o f the " t r a d e  gap",  w h i c h i n s i m p l e t e r m s , i s the gap between the need f o r i m p o r t s of c a p i t a l goods e s s e n t i a l t o s u s t a i n a g i v e n development e f f o r t and t h e e x p o r t e a r n i n g s l i k e l y t o be a v a i l a b l e t o f i n a n c e t h e s e i m p o r t s .  The Report  states: U n l e s s t h e s e measures //suggested i n the R e p o r t J a r e a d o p t e d , the t r a d e gap o f the d e v e l o p i n g c o u n t r i e s w i l l be immense; a v a i l a b l e e s t i m a t e s show t h a t , i f the f a c t o r s r e s p o n s i b l e f o r t h e p r e s e n t t r e n d i n w o r l d t r a d e c o n t i n u e , t h e gap may r e a c h an o r d e r of m a g n i tude of about $20,000 m i l l i o n by 1 9 7 0 . . . 3 2  - 23 The $20 b i l l i o n gap i s , o f c o u r s e ,  " p o t e n t i a l and not r e a l " and assumes  the f o l l o w i n g c o n d i t i o n s : (a)  a 5 per c e n t t a r g e t a n n u a l income growth r a t e f o r L D C ' s , the r a t e s e t out as one o f the g o a l s o f t h e Development Decade;  (b) an a n n u a l i m p o r t growth r a t e of 6 per c e n t ,  and  (c) an i n c r e a s e i n the p u r c h a s i n g power of LDC e x p o r t s 2 per cent per annum.  of  Any of the assumptions c o u l d , of c o u r s e , be changed by i n c r e a s e d  capital  i n f l o w s , above-average i n c r e a s e  terms  of trade of L D C ' s .  i n exports  o r improvement i n t h e  F o l l o w i n g P r e b i s c h , o t h e r s have made more d e t a i l e d  c a l c u l a t i o n s of the gap.  One such p r o j e c t i o n , by B e l a B a l a s s a , worked  out a range o f e s t i m a t e s , w i t h the mean c e n t e r i n g around the f i g u r e $12  of  billion.33 H a v i n g t h u s set  t h e t a r g e t o f f i l l i n g a $20 b i l l i o n t r a d e  gap,  the P r e b i s c h Report goes on t o examine the p r o s p e c t s f o r f i l l i n g  this  and f i n d s them f a r from p r o m i s i n g .  Some o f t h e reasons f o r t h e poor  p r o s p e c t s are adduced as the i n e v i t a b l e s t r u c t u r a l  consequences o f  t e c h n o l o g i c a l p r o g r e s s , namely: 1) the development o f s y n t h e t i c s u b s t i t u t e s f o r n a t u r a l raw materials; 2) a d i m i n i s h i n g raw m a t e r i a l c o n t e n t i n m a n u f a c t u r e s ;  and  3) a g r a d u a l r e l a t i v e s h i f t i n demand away from e s s e n t i a l s , such as f o o d s t u f f s and o t h e r s t a p l e consumer goods toward i n d u s t r i a l goods and s e r v i c e s , as p e r c a p i t a income i n c r e a s e s . Other o b s t a c l e s a r e t h e r e s u l t of r e s t r i c t i v e p o l i c i e s i n developed countries,such  as,  gap  - 24 -  1) p r o t e c t i o n of h i g h - c o s t temperate a g r i c u l t u r e , l e a d i n g t o s u r p l u s p r o d u c t i o n ; and  often  2) t a x e s and d u t i e s on t r o p i c a l p r o d u c t s . D e t e r i o r a t i n g Terms o f  Trade:  I n d e s c r i b i n g the demand t r e n d s o f p r i m a r y c o m m o d i t i e s ,  Prebisch  d e v e l o p s a g e n e r a l t h e s i s c o n c e r n i n g the terms of t r a d e o f L D C ' s . economics,  the concept r e f e r s t o the r a t i o ,  between the p r i c e o f an  average u n i t of i t s i m p o r t s , t h e most s i m p l e r e p r e s e n t a t i o n Export p r i c e index E -=—*—: :—:— . Import p r i c e i n d e x  T t . *. In short,  In  of t h i s b e i n g ,  ^.u * J • J • ..t, t h e terms o f t r a d e i n d i c a t e s the 34  p u r c h a s i n g power o f e x p o r t s  over i m p o r t s .  The P r e b i s c h Report  t h a t the terms o f t r a d e o f p r i m a r y commodities r e l a t i v e t o tend t o d e t e r i o r a t e .  manufactures  C o n s e q u e n t l y , because L D C ' s are l a r g e l y  o f p r i m a r y p r o d u c t s and i m p o r t e r s of m a n u f a c t u r e s ,  i t i s argued  t h e i r terms o f t r a d e tend t o be i n c r e a s i n g l y d i s a d v a n t a g e o u s . analysis  o f the causes i s somewhat complex, but s u f f i c e  f o r LDC's t h r o u g h t r a d e .  that The the  against  i n a l o s s of r e s o u r c e s  Although P r e b i s c h denies  an "immutable l a w " , he n e v e r t h e l e s s  exporters  i t to say,  i m p l i c a t i o n i s t h a t t h e e x i s t i n g w o r l d economic o r d e r i s b i a s e d p r i m a r y p r o d u c i n g c o u n t r i e s and tends t o r e s u l t  contended  that h i s thesis  p a i n t s a gloomy p i c t u r e o f  the  a b i l i t y of LDC's t o overcome t h i s p r o b l e m : I t i s obvious t h a t , i f t e c h n o l o g i c a l progress i n p r i m a r y p r o d u c t i o n i s i n t e n s i f i e d and i f t e c h n o l o g y i n the d e v e l o p i n g c o u n t r i e s a l s o undergoes a r e v o l u t i o n , w i t h o u t w h i c h they cannot grow f a s t e r , the tendency o f the terms o f t r a d e to d e t e r i o r a t e may even be s t r o n g e r than i n t h e p a s t . This i s not a prediction. B u t , what f a c t o r s can we d e s c r y on the economic h o r i z o n t h a t a r e c a p a b l e of c o u n t e r i n g t h i s tendency?3^  is  - 25 P r e b i s c h ' s t h e s i s has been c h a l l e n g e d . b y o t h e r economists and remains c o n t r o v e r s i a l .  For example, i t has been argued t h a t t h e Report  drew on e v i d e n c e from a terms of t r a d e i n d e x based on 1950, a peak y e a r f o r LDC e x p o r t p r i c e s , and e n d i n g i n 1961, a year o f d e p r e s s i o n .  For  t h e purposes of t h i s s t u d y , however, we are l e s s concerned w i t h t h e m e r i t s and s h o r t c o m i n g s o f the P r e b i s c h t h e s i s on academic grounds t h a n w i t h the p e r c e p t i o n of L D C ' s themselves o f t h e i r s i t u a t i o n .  It  is  e v i d e n t t h a t t h e y are s u f f i c i e n t l y c o n v i n c e d o f a need t o change the e x i s t i n g t r a d e system and are p r e s s i n g f o r such changes.  A similar  p o i n t made by I s a i a h F r a n k w a r r a n t s q u o t i n g : The t r o u b l e w i t h the h i s t o r i c a l approach /Jin a n a l y s i n g e x p o r t t r e n d s o f LDC's_7 i s t h a t i t i g n o r e s t h e changes i n the i n t e r n a t i o n a l environment a g a i n s t w h i c h the p r e s e n t and p r o s p e c t i v e e x p o r t s i t u a t i o n o f d e v e l o p i n g c o u n t r i e s must be a s s e s s e d . As l o n g as the p o o r e r c o u n t r i e s o f the w o r l d a r e d e t e r m i n e d t o f o r c e t h e pace of development t h r o u g h c o n s c i o u s p o l i c i e s the r e l e v a n t q u e s t i o n i s not whether t h e i r t r a d e p r o s p e c t s are n o t as f a v o u r a b l e as i n the p a s t when such g o a l s d i d not exist. I t i s i n s t e a d , whether t h e y are such as t o l e n d support to o r a c t as a c o n s t r a i n t on a c o u n t r y ' s own development e f f o r t s . 3 6 Manufactures t r a d e :  As w i t h p r i m a r y c o m m o d i t i e s , the R e p o r t . p o i n t s  to two t y p e s o f o b s t a c l e s t o i n c r e a s e d e x p o r t s by L D C ' s - the s t r u c t u r a l and the imposed.  The imposed ones are the b a r r i e r s s e t up by t h e  developed c o u n t r i e s , w h i l e these b a r r i e r s have i n t u r n tended t o  create  the s t r u c t u r a l o b s t a c l e , w h i c h P r e b i s c h c a l l e d " i n w a r d - l o o k i n g i n d u s t r i a lization."  By t h i s he meant i n d u s t r i a l i z a t i o n on the b a s i s o f p r o t e c t e d ,  h i g h - c o s t , i m p o r t s u b s t i t u t i n g i n d u s t r i e s , w h i c h have l i t t l e i n c e n t i v e t o compete i n i n t e r n a t i o n a l e x p o r t m a r k e t s , and w h i c h , because o f s m a l l n e s s of home m a r k e t s , remain h i g h l y i n e f f i c i e n t .  the  - 26 THE GATT: The Report makes i t s l a s t s t o p a t the G e n e r a l Agreement on Trade and T a r i f f s  (GATT).  The achievement o f the GATT a r e f i r s t l i s t e d .  the m a i n , the o r g a n i z a t i o n has i n t r o d u c e d " a r u l e o f law i n w o r l d  In trade",  and has p r o v i d e d t h e machinery f o r c o m p l a i n t and c o n s u l t a t i o n .  It  a l s o p r o v i d e d an i n t e r n a t i o n a l forum t o d i s c u s s a wide range o f  trade  matters.  has  However, P r e b i s c h c o n t e n d s , t h e o r g a n i z a t i o n l a c k s t h e dynamism  needed to meet the needs o f the L D C ' s .  I n p a r t i c u l a r , GATT's  of the " f r e e p l a y of i n t e r n a t i o n a l economic f o r c e s "  i s not  espousal  appropriate  t o t r a d e r e l a t i o n s o f c o u n t r i e s a t v a s t l y d i f f e r e n t l e v e l s o f economic development.  By t h i s P r e b i s c h meant t h a t GATT's t a r i f f r e d u c t i o n p o l i c y  on " t h e most f a v o u r e d n a t i o n " b a s i s was i n a p p r o p r i a t e f o r L D C ' s who were e c o n o m i c a l l y on a much l o w e r f o o t i n g than the developed c o u n t r i e s . p r i n c i p l e r e q u i r e s t h a t a c o u n t r y reduces  its tariffs  on o t h e r  The  countries  t o the l e v e l of t h a t c o u n t r y w h i c h i s "most f a v o u r e d " , i . e . , t h e c o u n t r y on w h i c h . t h e l o w e s t t a r i f f i s imposed.  The more s p e c i f i c  contentions  w i t h r e s p e c t t o GATT w e r e : 1)  the GATT system o f r e c i p r o c a l b a r g a i n i n g has been used m a i n l y to reduce b a r r i e r s t o e x p o r t s o f i n t e r e s t t o developed c o u n t r i e s ;  2)  the apparent symmetry o f n o n - d i s c r i m i n a t i n g and r e c i p r o c a l t r a d e p o l i c i e s does n o t c o r r e s p o n d w i t h the a c t u a l asymmetry o f the w o r l d economy, i n w h i c h t h e L D C ' s tend t o r u n p e r s i s t e n t d e f i c i t s and t h e r e f o r e have a g r e a t e r need f o r p r o t e c t i o n t h a n developed c o u n t r i e s ;  3)  t h e GATT r u l e s have i n h i b i t e d the f o r m a t i o n of r e g i o n a l economic g r o u p i n g s among L D C ' s , t o make i m p o r t s u b s t i t u t i o n more e f f i c i e n t and t o p r o v i d e a sound base f o r e x p o r t s .  - 27 P r e b i s c h ' s a s s e r t i o n s have a l s o been c h a l l e n g e d i n r e g a r d  to  GATT, e s p e c i a l l y w i t h r e s p e c t t o the r i g i d i t y of t h e o r g a n i z a t i o n i n c o p i n g w i t h the needs o f L D C ' s .  As a m a t t e r o f f a c t ,  s i n c e 1964,  "non-  37 r e c i p r o c i t y " has been i n t r o d u c e d under P a r t IV of the GATT. i s on f i r m e r ground i n a s s e r t i n g  t h a t the b a l a n c e o f advantage i n the  o r g a n i z a t i o n has r e s t e d w i t h the developed c o u n t r i e s . difficult  Prebisch  I t would be  to p r o v e , however, t h a t GATT r u l e s have a c t u a l l y i n h i b i t e d  regional integration.  B u t , a g a i n , as w i t h o t h e r c o m p l a i n t s about  the  e x i s t i n g t r a d e system,  the r e l e v a n t q u e s t i o n i s the p e r c e p t i o n of  the  bulk of L D C ' s , and, i n g e n e r a l ,  t h e o v e r r i d i n g v i e w seems t o be t h a t GATT  i s some k i n d o f " a r i c h c o u n t r i e s '  club".  That i s why L D C ' s  agitated  f o r the f o r m a t i o n o f UNCTAD. Remedies: The P r e b i s c h Report c o n t i n u e s i n P a r t Two t o suggest to f i l l  the p r o j e c t e d  $20 b i l l i o n t r a d e gap.  and may be t a k e n t o r e p r e s e n t  remedies  They are summarised  below,  the N o r t h - S o u t h t r a d e i s s u e s i n o p e r a t i o n a l  terms: 1) D i r e c t a c t i o n t o r a i s e commodity p r i c e s by e x t e n d i n g domestic p r i c e s u p p o r t s i n developed c o u n t r i e s to c o v e r i m p o r t s from L D C ' s and by i n t e r n a t i o n a l commodity agreements t o m a i n t a i n h i g h and s t a b l e  prices;  2) "Compensatory f i n a n c e " t o meet any r e s i d u a l  deterioration  i n terms of t r a d e of L D C ' s , o v e r and above r e g u l a r transfers;  aid  - 28 3) T a r i f f p r e f e r e n c e s all  t o manufactured goods imported from  LDC's;  4) P r e f e r e n t i a l g r o u p i n g s among L D C ' s t o encourage  regional  industrialization; 5) A permanent i n t e r n a t i o n a l t r a d e o r g a n i z a t i o n  established  under the UN t o d e a l w i t h t h e problems o f t r a d e and d e v e l o p ment on a l l f r o n t s and t o c o - o r d i n a t e the work of  related  bodies; 6) A c t i o n t o reduce t h e burden on LDC d e b t - s e r v i c i n g , by " s o f t e n i n g " t h e terms of a i d and e x p o r t  credits;  7) I n v e s t i g a t i o n i n t o the f e a s i b i l i t y o f r e d u c i n g f r e i g h t charges on L D C ' s i n s h i p p i n g and i n s u r a n c e ; 8) I n c r e a s e d  t r a d e between L D C ' s and the c e n t r a l l y planned  countries. As can be s e e n ,  t h e s e p o l i c y recommendations r e f l e c t by and  l a r g e the q u e s t i o n s r a i s e d by the o r i g i n a l Group o f 7 5 . Commodity p r i c e s : L e t us l o o k a t t h i s i s s u e i n g r e a t e r  detail  s i n c e we w i l l be examining N o r t h - S o u t h b a r g a i n i n g r e l a t i o n s h i p s i n t h i s area i n the next s e c t i o n of t h i s study.  The u s u a l method by w h i c h  p r i c e s t a b i l i z a t i o n i s c a r r i e d out i s t h r o u g h the e s t a b l i s h m e n t  of  i n t e r n a t i o n a l Commodity Agreements ( I C A ' s ) , aimed a t e l i m i n a t i n g s h o r t term f l u c t u a t i o n s i n p r i c e w i t h o u t i n t e r f e r i n g w i t h l o n g - t e r m market trends.  The P r e b i s c h Report had c a l l e d f o r a b r o a d e n i n g of such a g r e e -  ments b o t h i n the sense o f b r i n g i n g more commodities under such and a l s o i n the sense o f u s i n g such a c c o r d s i n LDCs' terms o f t r a d e .  accords  t o o f f s e t the d e t e r i o r a t i o n  I n g e n e r a l , t h e n , I C A ' s a r e aimed s i n g l y , o r  - 29 -  i n combination,  at:  1) r a i s i n g (or p r e v e n t i n g d e c l i n e s i n ) p r i c e s , increasing producers' taxed,  earnings,  thereby  o r , where b e n e f i t s  i n c r e a s i n g the f o r e i g n exchange o f  are  governments;  2) d i m i n i s h i n g f l u c t u a t i o n s i n p r i c e s and e a r n i n g s ;  and  3) g e n e r a l l y o f l e s s i m p o r t a n c e , g u a r a n t e e i n g market a c c e s s for specified quantities, . . . . .  as a method of . 38  counteracting  protectionism m importing countries. The t i n agreements h a v e , i n a d d i t i o n , the o b j e c t i v e s  of p r e v e n t i n g t i n  s h o r t a g e s and unemployment i n the t i n i n d u s t r y . (See Appendix A , A r t i c l e 1).  The main f u n c t i o n of commodity a c c o r d s ,  however, r e l a t e  to  price control. I t i s g e n e r a l l y r e c o g n i z e d t h a t p r i c e - f i x i n g s h o u l d be c a r r i e d out on a commodity-by-commodity b a s i s a l t h o u g h t h e r e has been a s u g g e s t i o n t h a t the c r e a t i o n o f a "commodity r e s e r v e c u r r e n c y " , c o n t r o l l e d by an 39 i n t e r n a t i o n a l authority operating buffer stocks,  is feasible.  UNCTAD,  however, has i t s e l f endorsed the commodity-by-commodity a p p r o a c h .  As  one o f the Conference r e s o l u t i o n s s t a t e s : I n t e r n a t i o n a l commodity agreements s h o u l d be u s u a l l y on a commodity-by-commodity b a s i s , a n d , as f a r as each commodity i s c o n c e r n e d , s h o u l d t a k e due account of t h e i n t e r e s t s o f e x p o r t i n g and i m p o r t i n g c o u n t r i e s , o f the c h a r a c t e r i s t i c s o f t h e p r o d u c t concerned and o f the t r a d e i n and market arrangements f o r , t h a t p r o d u c t : 4 ^ What c o u l d be the e f f e c t  f o r Southern c o u n t r i e s o f p r i c e - f i x i n g  ments c a r r i e d out t h r o u g h I A C ' s ? to f i v e t r o p i c a l crops - c o f f e e ,  P i n c u s has e s t i m a t e d  that i f  arrangeapplied  c o c o a , t e a , bananas, and sugar - p r i c e -  f i x i n g aimed p r i m a r i l y a t r a i s i n g p r i c e s c o u l d have i n c r e a s e d LDC  - 30 -  revenues by $600 m i l l i o n a n n u a l l y i n 1961, and by about $900 m i l l i o n a n n u a l l y i n 1970, as compared w i t h revenues o b t a i n e d under f r e e market  41 conditions.  Thus, p r i c e - f i x i n g t h r o u g h commodity a c c o r d s can be of  considerable benefit  to the S o u t h .  How would p r i c e - f i x i n g a f f e c t the r e l e v a n t p a r t i e s ? pointed out, for instance, e q u a l l y among i m p o r t e r s .  I t has  been  t h a t i t may not d i s t r i b u t e " t h e b u r d e n " C o n s i d e r , f o r example, t h a t o f the Southern  e x p o r t s o f food and raw m a t e r i a l s  to the N o r t h i n 1962, l e s s t h a n one-  t h i r d o f the t o t a l went to the U . S . and Canada, w h i c h account 42 the U . S . , o f c o u r s e ) f o r o n e - h a l f o f the N o r t h e r n income. w o r d s , any g e n e r a l i n c r e a s e  (mainly In other  i n the p r i c e of Southern commodities would  put a d i s p r o p o r t i o n a t e " b u r d e n " on Europe.  A f t e r an e l a b o r a t e a s s e s s -  ment of the r e l a t i v e c o s t s of p r i c e - f i x i n g arrangements f o r N o r t h e r n countries, Pincus concludes: . . . . i t seems l i k e l y t h a t commodity agreements would p r o v e to be a h i g h l y a r b i t r a r y form o f t a x a t i o n . From the v i e w p o i n t o f two major /aid_7 d o n o r s , the US and F r a n c e , i t o f f e r s the i m p o r t a n t advantage o f r e d r e s s i n g the r e l a t i v e shares of Northern c o s t s . I n g e n e r a l , c o u n t r i e s t h a t by e q u i t y s t a n d a r d s a r e p a y i n g l e s s t h a n t h e i r f a i r share o f N o r t h e r n f o r e i g n a i d c o u l d be p a y i n g h e a v i e r s h a r e s o f the i n c r e m e n t a l c o s t s o f commodity agreements.^3 Despite Pincus' observation,  i t i s i n t e r e s t i n g t o note t h a t the US  has s t a y e d a l o o f from i n t e r n a t i o n a l t i n agreements.  This suggests  that  N o r t h e r n c o u n t r i e s i n j o i n i n g commodity a c c o r d s are l e s s l i k e l y  to  t a k e i n t o c o n s i d e r a t i o n the o v e r a l l c o s t s t h a t I C A ' s i n g e n e r a l  represent  - 31 -  t h a n the p a r t i c u l a r c o s t s a n d , i n d e e d , g a i n s (which P i n c u s g l o s s e s that i n d i v i d u a l ICA's represent  f o r them.  over)  For the Southern c o u n t r i e s  i t was a l r e a d y n o t e d t h a t they s t a n d t o g a i n from g e n e r a l N o r t h e r n commitment toward I C A ' s , a l t h o u g h i t i s a g a i n the s p e c i f i c  Southern  p r o d u c i n g c o u n t r i e s o f t h o s e commodities f o r w h i c h commodity a c c o r d s e s t a b l i s h e d who are the immediate b e n e f i c i a r i e s .  are  CHAPTER II NORTH-SOUTH CONFRONTATION IN TIN AGREEMENTS I  Commodity accords are one method by which Southern countries hope  to a l t e r e x i s t i n g trade patterns i n their favour, primarily through certain price s t a b i l i z a t i o n mechanisms contained  i n such accords.  chapter begins a case study of North-South bargaining in International Tin Agreements.  This  relationships  I t should be noted that the following  investigation involves but one sub-issue-area of the whole range of North-South trade relationships,the broad issues of which were raised i n Chapter I.  More s p e c i f i c a l l y , North-South interactions i n t i n  agreements take place i n what may  be c a l l e d the m u l t i l a t e r a l issue-area-  s p e c i f i c context. History and Issues of Tin Agreements International Tin Agreements have a r e l a t i v e long h i s t o r y . to the f i r s t post-World War  II Agreement of 1953,  which may  be  Prior  considered  the prototype of the subsequent agreements up t i l l the present, there had existed four intergovernmental t i n control schemes, v i z . , 1) the F i r s t International Tin Control Scheme, 1931-33; 2) the Second International Control Scheme, 1934-36; 3) the Third International Tin Control Scheme, 1937-41; and 4) the Fourth International Control Scheme, 1942-46.  1  In f a c t , actual attempts at c o n t r o l l i n g the trade i n t i n pre-dated the above schemes i n the form of a number of "buffer stock" arrangements, namely, the Bandoeng Pool of 1921-24, the Private Pool of 1931-34, - 32 -  - 33 -  the Producers' Stock of 1934, the Intergovernmental Buffer Stock of 1934-35, and the Buffer Stock Agreement of 1938-42, the l a s t two being 2 adjuncts of the second and t h i r d control schemes.  These early attempts  at regulating the t i n trade have been "credited" to the e f f o r t s of combines of t i n producing companies, the better known being Anglo-Oriental Mining Corporation, Ltd., and Patino Mines and Enterprises Consolidated, the combination commonly c a l l e d the "Anglo-Patino Group".  This Group,  through interlocking corporations, controlled the great bulk of t i n production i n Malaya, Nigeria and B o l i v i a , and, to a lesser extent, Thailand and Burma.  Another group, headed by B i l l i t o n Company, controlled 3  Indonesian production. Thus i t would seem that the early control schemes primarily served the interests of a c a r t e l of t i n producing companies, though their interests were not necessarily exclusive of those of governments.  To  return to the history of these schemes, we f i n d that producer groups i n 1929 coalesced into a Tin Producers Association (TPA). which was mainly responsible for spearheading the buffer pool r e s t r i c t i o n  arrangements,  and which, i n 1931, succeeded i n persuading governments i n formalising 4 these schemes into the F i r s t International T i n Agreement.  It would seem  that the interests of t i n companies and producing governments converged at this point.  Producing governments, l i k e the companies, have a stake  i n keeping t i n prices high.  The Agreement was largely successful i n  achieving this objective but i t provoked considerable consumer resentment.  - 34 -  The second Agreement was e s s e n t i a l l y  s i m i l a r t o the f i r s t ,  except  a  b u f f e r s t o c k was i n t r o d u c e d as an a d d i t i o n a l i n s t r u m e n t of c o n t r o l , where the f i r s t employed o n l y e x p o r t c o n t r o l .  (A b u f f e r s t o c k  operation  i n v o l v e s the b u y i n g and s e l l i n g o f t i n from a p o o l of t i n a n d / o r  cash,  so as t o b o l s t e r p r i c e s , w h i l e e x p o r t c o n t r o l i n v o l v e s o n l y t h e r e s t r i c t i o n of t i n e x p o r t s . )  By the time o f the t h i r d scheme,  consumer  countries,  who were h i g h l y c r i t i c a l o f the c o n t r o l schemes, were a l l o w e d t o p a r t i c i p a t e i n the c o n f e r e n c e as o b s e r v e r s but w i t h no v o t i n g r i g h t s .  I n the  war p e r i o d , a f o u r t h agreement was s i g n e d i n 1942 but i t s i n f l u e n c e was s m a l l as i t was i n t e n d e d o n l y as a means o f c o n t i n u i n g the mechanism d u r i n g the w a r . statistical  A f t e r t h e w a r , a T i n Study Group was formed to p r o v i d e  services  and t o draw up a d r a f t  c e r t a i n proposals contained i n a draft Organization.  agreement i n accordance  c h a r t e r f o r an I n t e r n a t i o n a l  with Trade  A l t h o u g h the ITO n e v e r came i n t o b e i n g , t h e Havana C h a r t e r  was p r o c l a i m e d i n 1948 and i n c l u d e d t h o s e p r o p o s a l s f o r commodity a g r e e ments.  I n e s s e n c e , the Havana C h a r t e r p r i n c i p l e s on w h i c h t h e T i n Study  Group based i t s r e p o r t p r o v i d e d f o r the e q u a l p a r t i c i p a t i o n o f p r o d u c i n g and consuming c o u n t r i e s i n commodity agreements. a new t i n agreement was n e g o t i a t e d in July  I n accordance w i t h t h i s ,  i n 1953 and f i n a l l y came i n t o  force  1956. I t s h o u l d be e v i d e n t from t h i s b r i e f h i s t o r i c a l account t h a t  pre-war t i n a c c o r d s r e s u l t e d i n a c l a s h o f i n t e r e s t s  between  the  consumers  qua consumers and p r o d u c e r s qua p r o d u c e r s , w i t h t h e consumers l a r g e l y "the aggrieved p a r t y " .  Through i n t e r n a t i o n a l p r e s s u r e , w h i c h perhaps  as  - 35 -  reached a peak w i t h t h e c o n v e n i n g o f the Havana c o n f e r e n c e ,  consumer  i n t e r e s t s began t o be r e c o g n i s e d and were f i n a l l y f o r m a l i s e d i n t h e 1953 Agreement.  N o t w i t h s t a n d i n g t h i s , major consuming c o u n t r i e s l i k e  U n i t e d S t a t e s and West Germany have y e t to be p a r t i e s  to t i n  the  agreements.  The U . S . p a r t i c i p a t e d i n the 1965 and 1970 t i n c o n f e r e n c e s b u t to d a t e has not s i g n e d the l a t e s t  agreement.  The same i s t r u e f o r West Germany.  R u s s i a , a n o t h e r major consumer, t o o k p a r t i n the 1970 c o n f e r e n c e and acceded t o the agreement U . S . may f o l l o w s u i t . " * agreements  i n F e b r u a r y 1971, r a i s i n g e x p e c t a t i o n s  that  the  The U . S . has been a b l e t o s t a y a l o o f from the  d e s p i t e i t s heavy consumption o f t i n because i t has  accumulated  a huge s t o c k p i l e , w h i c h a g g r a v a t e s the problem o f h e r n o n - p a r t i c i p a t i o n from the v i e w p o i n t o f the p r o d u c e r s .  However, i t i s assumed t h a t  l o n g as t h e U . S . m a i n t a i n s a " b e n e v o l e n t n e u t r a l i t y " toward t h e t h e y would remain l a r g e l y  as agreements,  effective.  I t was not u n t i l t h e second p o s t - w a r agreement  (1960) t h a t a  N o r t h - S o u t h o r i e n t a t i o n of i n t e r e s t s became e v i d e n t i n t i n B a s i c a l l y , t h i s new c l a s h o f i n t e r e s t s  agreements.  s p r i n g s from growing S o u t h e r n  awareness o f t h e i r dependence on p r i m a r y commodity t r a d e , an awareness t h a t has been f u r t h e r a t t e n u a t e d by the c o n v e n i n g o f UNCTAD.  Ostensibly,  the p o l a r i z a t i o n o f i n t e r e s t s remains one of p r o d u c i n g c o u n t r i e s  versus  consuming c o u n t r i e s , but where the prewar s i t u a t i o n was c h a r a c t e r i s e d by the consumers making demands on the p r o d u c e r s , the p o s t - w a r  situation  saw the p r o d u c i n g c o u n t r i e s c o n f r o n t i n g t h e consuming c o u n t r i e s w i t h what t h e y c o n s i d e r e d t o be c e r t a i n i n e q u i t i e s i n the terms and o p e r a t i o n s  of  - 36 -  t i n agreements.  In the pre-war situation,some of the producing countries  such as Malaya, Nigeria and Indonesia, were represented by their metropol i t a n governments, B r i t a i n and the Netherlands, who therefore played a dual r o l e as producers and consumers.  By contrast, the post-war s i t u a -  tion was marked by a sharp s p l i t between producers, which were Southern countries, now f u l l y independent nations, and consumers, which were Northern i n d u s t r i a l countries, including the former c o l o n i a l "producer" governments.  This new clash of interests i n t i n agreements i s evident  from the statements by producing countries' delegations to t i n conferences. For example,at the 1960 Conference, the Thai delegate complained  that  contributions to the buffer stock placed a heavy burden on producers and asked i f that was j u s t i f i a b l e , considering that producing countries were neither very large nor r i c h . ' '  Also, at the same conference, both the  Malayan and Bolivian delegates referred to the agreement as an important instrument to s t a b i l i z e the economies of primary-producing countries, the B o l i v i a n further pointing out his country's heavy dependence on the g export of t i n and hence the need f o r an e f f e c t i v e agreement.  By the  time of the 1965 Conference, which came on the heels of UNCTAD I, some of the UNCTAD resolutions on commodity agreements found t h e i r way into the preamble and objectives of the draft agreement and the f i n a l version which emerged from the negotiations.  For example, the preamble of the  1965 Agreement recognized that "commodity agreements by helping to secure short-term s t a b i l i z a t i o n of prices and steady long-term development of  - 37 -  p r i m a r y commodity m a r k e t s ,  can s i g n i f i c a n t l y a s s i s t economic g r o w t h ,  e s p e c i a l l y i n developing producing c o u n t r i e s . " new o b j e c t i v e s agreement.  More s p e c i f i c a l l y , two  p e r t a i n i n g to Southern c o u n t r i e s were added t o the  They w e r e :  t o make arrangements w h i c h w i l l h e l p m a i n t a i n and i n c r e a s e the e x p o r t e a r n i n g s from t i n , e s p e c i a l l y those o f the developing producing countries w i t h resources for acceler a t e d economic growth and s o c i a l development, w h i l e a t the same t i m e t a k i n g i n t o account the i n t e r e s t s o f consumers i n importing countries and,  t o ensure c o n d i t i o n s w h i c h w i l l h e l p a c h i e v e a dynamic and r i s i n g r a t e o f p r o d u c t i o n o f t i n on t h e b a s i s o f a remunerat i v e r e t u r n t o p r o d u c e r s , w h i c h w i l l h e l p s e c u r e an adequate s u p p l y a t p r i c e s f a i r t o consumers and w h i c h w i l l h e l p p r o v i d e a l o n g - t e r m e q u i l i b r i u m between p r o d u c t i o n and consumption.^ Statements by d e l e g a t i o n s  of p r o d u c i n g c o u n t r i e s a l s o tended t o  echo the g r i e v a n c e s u t t e r e d a t UNCTAD I , w i t h S o u t h e r n c o u n t r i e s t a k i n g on somewhat more a g g r e s s i v e and b o l d e r p o s i t i o n v i s - a - v i s counterparts.  For i n s t a n c e ,  t h e i r Northern  the N i g e r i a n d e l e g a t e t o o k t h e o p p o r t u n i t y  t o c h i d e those c o u n t r i e s who would not p a r t i c i p a t e i n t i n agreements i n the f o l l o w i n g  terms:  They have o f t e n p r o f e s s e d t h e i r b e l i e f i n the o b j e c t i v e s of the Agreements, i n i n t e r n a t i o n a l t r a d e and i n a reasonably ordered w o r l d . Should t h e y not a l s o b e l i e v e i n an o r d e r l y p r o m o t i o n o f i n t e r n a t i o n a l t r a d e ? Can they not persuade t h e i r i n d u s t r i a l l e a d e r s o f the u s e f u l n e s s o f a mechanism w h i c h made p o s s i b l e freedom o f e n t e r p r i s e w i t h o u t the u n p r e d i c t a b l e and v i o l e n t f l u c t u a t i o n s of t h e t i n market p r i o r t o the agreements? A r e t h e r e any t i n u s e r s who do not c a r e about the d i s a s t r o u s e f f e c t s t h a t l a c k o f a commodity agreement f o r t i n can have on t h e p e o p l e s o f t h e d e v e l o p i n g producer c o u n t r i e s ? ! 0  - 38  -  The growing s c h i s m between N o r t h and South i n t i n agreements was p a r t i c u l a r l y e v i d e n t from the words o f the M a l a y s i a n d e l e g a t e , b i t t e r d i s a t i s f a c t i o n w i t h the outcome o f . t h e c o n f e r e n c e .  who showed He c l a i m e d t h a t  h i s d e l e g a t i o n had attempted t o g i v e the c o n f e r e n c e " a new o r i e n t a t i o n and new o b j e c t i v e s " but had f a i l e d .  H i s main c o m p l a i n t was t h a t a h i g h e r f l o o r  p r i c e s h o u l d have been e s t a b l i s h e d , and he f u r t h e r s t a t e d  t h a t the b u f f e r  s t o c k arrangement, w i t h the c o n t r i b u t i o n s coming e n t i r e l y from p r o d u c i n g c o u n t r i e s , h u r t none but the p r o d u c e r .  The p r i n c i p l e seemed t o b e , "To  him t h a t h a t h , more s h a l l be g i v e n ; f o r h i m who g i v e t h , more s h a l l be t a k e n away."  F i n a l l y , he commented t h a t p r o d u c e r s c o u l d not h e l p t h i n k i n g  t h a t i n the end t h e consumers had proved t o be the b e t t e r  negotiators,  a c c o r d i n g t o t h e c l a s s i c d e f i n i t i o n o f s u c c e s s f u l n e g o t i a t i o n , " g i v i n g the o t h e r f e l l o w e v e r y t h i n g he wants w i t h o u t g i v i n g him a n y t h i n g you do not 11 want t o p a r t  with."  In f a c t ,  the M a l a y s i a n Government i n December announced i t s d e c i s i o n  not to s i g n the agreement and t h e r e f o r e c r i p p l i n g i t i n v i e w of M a l a y s i a ' s l a r g e number o f p r o d u c e r v o t e s .  ( M a l a y s i a i s the l e a d i n g e x p o r t e r o f t i n . )  However, an ITC team was sent t o K u a l a Lumpur t o persuade M a l a y s i a t o 12 r e t u r n t o the f o l d , w h i c h i t d i d . T h i s summary account o f the background and i s s u e s o f i n t e r n a t i o n a l t i n agreements  b r i n g s to d a t e the c u r r e n t c o n s t e l l a t i o n o f i n t e r e s t s  r e s p e c t t o t i n agreements.  I n c o n t i n u i n g t h e i n v e s t i g a t i o n of N o r t h - S o u t h  b a r g a i n i n g r e l a t i o n s h i p s i n t i n agreements, follows:  with  I propose t o proceed  as  - 39 Ca) Assess the magnitude of the r e l a t i v e Southern and Northern stakes i n t i n trade and hence i n t i n agreements,  and  (b) Identify and assess the objectives of t i n agreements i n terms of ( i ) the extent to which these objectives r e f l e c t Southern and Northern interests and ( i i ) the e f f i c a c y of t i n agreements in carrying out these objectives. The Relative North-South Stakes i n T i n Trade The trade i n t i n between Southern and Northern countries corresponds i n general to the o v e r a l l North-South trade patterns and also i n terms of the stakes that North and South have i n such trade, as analysed i n Chapter I.  In categorising goods traded between Northern and  Southern countries, t i n i s a "non-competing"  commodity.  In f a c t , Southern  countries produce nearly a l l the t i n concentrates of the world.  The  producer participants i n the current t i n agreement (1970) accounted i n 1969 for 91.5 per cent of t o t a l production.  (See Table IV).  On the  import side, consumers of concentrates and unwrought t i n are nearly a l l i n d u s t r i a l countries, the participants i n the current agreement accounting for some 60 per cent of i n d u s t r i a l consumption i n 1969  (see Table V).  Thus, t i n trade follows the c l a s s i c pattern of North-South primary commodity trade, where producers are almost e n t i r e l y Southern countries 13 and consumers almost a l l Northern countries. As noted, the general pattern of North-South stakes i n primary commodity trade holds for t i n as well.  Of a l l the Southern producing  countries, B o l i v i a i s most dependent on t i n , which accounts f o r more than  - 40 TABLE IV PRODUCTION OF TIN CONCENTRATES, 1969 M e t r i c tons  Percentage  8,128  4.5  30,047  16.7  6,639  3.7  Indonesia  16,542  9.2  Malaysia  73,325  40.8  Nigeria  8,741  4.9  21,092  11.7  164,514  91.5  Others  15,086  8.5  World  179,600  100.0  Australia Bolivia Congo, D. R.  Thailand Subtotal  1  E x c l u d i n g M a i n l a n d C h i n a , German Democratic Democratic R e p u b l i c o f Vietnam and U . S . S . R . Source:  Compiled from UN S t a t i s t i c a l New Y o r k , 1971.  Republic,  Yearbook 1970,  - 41 TABLE V INDUSTRIAL CONSUMPTION OF T I N , 1969 M e t r i c tons Australia  Percentage  3,820  2. 00  600  0. 31  3,033  1. 59  254  0. 13  4,508  2. 36  (Taiwan)  280  0 . 15  Czechoslovakia  3,250  1. 70  724  0. 38  France  11,280  5 . 91  Germany, F e d . Rep.  13,430  7. 03  Hungary  1,220  0. 64  India  4,470  2. 34  Italy  6,800  3. 56  Japan  25,880  1 3 . 55  Mexico  1,630  0. 85  Netherlands  4,910  2 . 57  Philippines  630  0 . 33  Austria Belgium-Luxembourg Bulgaria Canada China  Denmark  Poland  3,960  Rep. o f Korea  -  2 . 07  284  0. 15  1,699  0. 89  910  0 . 48  U.K.  18,062  9. 46  U.S.A.  58,336  Spain Turkey  U.S.S.R.  6,600  Yugoslavia  1,460 Subtotal  Others World3  30. 55 2  3. 46 0. 76  178,030  9 3 . 22  12,924 190,954  6. 78 100. 00  Data r e f e r to consumption by m a n u f a c t u r i n g i n d u s t r i e s ; they do not n e c e s s a r i l y r e p r e s e n t the f i n a l domestic consumption of t i n . 2 F i g u r e o b t a i n e d from UN T i n C o n f e r e n c e , Summary o f P r o c e e d i n g s , T P / T I N . 4 / 7 / R e v . l , New Y o r k , 1970, p . 24. ( R e f e r s o n l y t o i m p o r t s . ) 3 E x c l u d i n g M a i n l a n d C h i n a , D e m o c r a t i c R e p u b l i c o f V i e t n a m , German Democratic R e p u b l i c and Romania. S o u r c e : Compiled from UN S t a t i s t i c a l Yearbook, 1970.  - 42 -  one-half of the value of i t s t o t a l e x p o r t s .  I n one y e a r , 1965, t i n 14  c o n s t i t u t e d a huge 70 p e r cent of B o l i v i a ' s e x p o r t s .  For M a l a y s i a , t i n  i s the second most i m p o r t a n t f o r e i g n exchange e a r n e r (next t o r u b b e r ) . The m e t a l a c c o u n t s f o r 22.5 p e r cent of the t o t a l v a l u e o f i t s  exports.  As f o r the o t h e r Southern p r o d u c e r s , t h e f i g u r e ranges from 9 p e r cent f o r T h a i l a n d t o 4.7 p e r cent f o r the D e m o c r a t i c R e p u b l i c o f Congo Table V I ) .  (see  These f i g u r e s m e r e l y u n d e r s c o r e the p o i n t made i n Chapter I  on the heavy dependence o f Southern c o u n t r i e s on a few p r i m a r y p r o d u c t s f o r t h e i r export earnings.  I t i s e v i d e n t t h a t t i n i s one o f t h e i m p o r t a n t  p r i m a r y p r o d u c t s i n w h i c h such dependence i s p a r t i c u l a r l y a c u t e , f o r B o l i v i a and M a l a y s i a .  especially  I n s h o r t , the Southern p r o d u c i n g c o u n t r i e s '  s t a k e i n t i n t r a d e , and hence i n t i n agreements, i s not o n l y one o f g r e a t magnitude b u t , perhaps i n the case o f B o l i v i a , a m a t t e r of economic survival.  Thus e c o n o m i c a l l y , S o u t h e r n p r o d u c i n g c o u n t r i e s ,  especially  B o l i v i a and M a l a y s i a , a r e h i g h l y v u l n e r a b l e to the v i c i s s i t u d e s o f t i n market.  the  I n one s e n s e , t h e n , they a r e i n a weak b a r g a i n i n g p o s i t i o n  because t h e i r heavy s t a k e i n t i n t r a d e would make them go the e x t r a d i s t a n c e t o o b t a i n perhaps a l e s s o p t i m a l outcome.  On t h e o t h e r h a n d ,  depending on how c r u c i a l o r v a l u a b l e t h e i r good i s t o t h e o t h e r p a r t y , t h e y are i n a s t r o n g p o s i t i o n because t h e y have almost a monopoly o f the good.  But more o f b a r g a i n i n g i n Chapter I I I ; f o r the moment l e t  us  examine t h e magnitude o f the N o r t h e r n s t a k e i n t i n t r a d e . As f i g u r e s g o , the N o r t h e r n s t a k e seems t o be i n c r e d i b l y s m a l l .  - 43 TABLE V I TIN AS A PERCENTAGE OF TOTAL EXPORTS BY VALUE, 1968  Percentage Bolivia  54.25  Malaysia  22.55  Thailand  9.01  Nigeria  6.69  Congo, D. R.  4.71  Indonesia  7.71  Australia  2.10  E x c l u d i n g t i n b a r s and i n g o t s .  ( F i g u r e s not  available.)  S o u r c e : Compiled from UN Yearbook o f I n t e r n a t i o n a l S t a t i s t i c s 1968, New Y o r k , 1970  Trade  - 44 For example, f o r the l a r g e s t t i n consumer, the U . S . , t i n as a p e r c e n t a g e of t o t a l i m p o r t s by v a l u e c o n s t i t u t e a mere 0.57 per c e n t , o r s l i g h t l y more than o n e - h a l f o f one p e r cent of t o t a l i m p o r t s by v a l u e .  For J a p a n ,  the n e x t most i m p o r t a n t consumer, the f i g u r e i s 0.51 p e r c e n t ; f o r  the  U n i t e d Kingdom, t h i r d i n i m p o r t a n c e , i t i s a l s o 0.51 per c e n t ; West Germany, 0.19 per c e n t ; F r a n c e , 0.23 p e r cent (see  Table V I I ) .  For t h e s e top  consuming c o u n t r i e s , t h e i r s h a r e o f i n d u s t r i a l t i n consumption i n 1969 was 30.5 per c e n t , 1 3 . 5 per c e n t , 9.4 per c e n t , 7 per c e n t , and 5 . 9  per  c e n t r e s p e c t i v e l y , i n aggregate a c c o u n t i n g f o r 66.5 per cent o f t h e t o t a l i n d u s t r i a l consumption (see T a b l e V ) .  I t a l y and USSR a r e n e x t i n  importance consuming about 3.5 per cent e a c h , w i t h t i n c o n s t i t u t i n g a t i n y 0.2 per cent o f t o t a l i m p o r t s .  S u r p r i s i n g l y , I n d i a , a Southern c o u n t r y ,  has t h e h i g h e s t p e r c e n t a g e of t i n i m p o r t s - 1.2 than t w i c e the f i g u r e f o r the top consumers. scale, fact:  she r a n k s o n l y n i n t h .  per cent - w h i c h i s more  However, on t h e consumption  These f i g u r e s would seem t o p o i n t t o one  the N o r t h e r n s t a k e i n t i n t r a d e i s v e r y s m a l l .  But i n f a c t  statement may be m i s l e a d i n g because o f two c o n s i d e r a t i o n s .  the  First,the  n a t u r e o f t i n i s such t h a t i t i s n o t used i n l a r g e q u a n t i t i e s i n i n d u s t r i a l production, i . e . , p e r c e n t a g e of pure t i n .  f i n i s h e d t i n products c o n t a i n only a small F o r example, the u b i q u i t o u s t i n can (made from  t i n p l a t e ) c o n t a i n s o n l y about 1 p e r cent pure t i n , 99 per cent b e i n g steel.  T h i s e x p l a i n s why consuming c o u n t r i e s do not i m p o r t t h a t much t i n .  Second, a l t h o u g h t i n i s used i n o n l y s m a l l q u a n t i t i e s ,  i t i s of  strategic  s i g n i f i c a n c e , l e a d i n g t o a few c o u n t r i e s h o l d i n g n o n - c o m m e r c i a l s t o c k p i l e s .  - 45 TABLE V I I T I N 1 AS A PERCENTAGE OF. TOTAL:IMPORTS BY VALUE,  1968  Percentage Australia  0.15  Austria  0.07  Belgium-Luxembourg  0.26  Bulgaria  n.a.  Canada  0.12  China  (Taiwan)  0.11  Czechoslovakia  0.26  Denmark  0.09  France  0.23  Germany, F e d . Rep.  0.19  Hungary  n.a.  India  1.23  Italy  0.21  Japan  0.51  Mexico  0.08  Netherlands  0.38  Philippines  0.18  Poland  0.34  Rep. of Korea  n.a.  Spain  0.91  Turkey  0.91  U.K.  0.51  U.S.A.  0.572  U.S.S.R.  0.23  Yugoslavia  0.25  I n c l u d e s o r e s and c o n c e n t r a t e s and t i n and a l l o y s  (1967)  (unwrought).  2 E x c l u d e s s p e c i e , o r e s , c o n c e n t r a t e s , p r e c i p i t a t e s , b l i s t e r and s c r a p . S o u r c e : Compiled from UN Yearbook o f I n t e r n a t i o n a l Trade S t a t i s t i c s 1968, New Y o r k , 1970.  - 46  -  The United States General Services Administration (GSA) stockpile i s the prime example. In the l i g h t of the above two considerations, t i n imports as a percentage, of t o t a l imports may be a poor indicator of the magnitude of the Northern stake i n t i n trade.  Clearly, t i n i s important to the  North because i t i s a non-competing product, i . e . , i t i s not produced to any large extent i n the North.  It would appear, then, that the Northern  stake i n t i n trade i s somewhat d i f f i c u l t to assess, unlike the Southern stake which was clear-cut.  Notwithstanding t h i s , i t i s evident that  the Northern stake i n the trade.of t i n i s not as small as i t seems. Irrefutable evidence of this i s the strong consumer interest shown toward the t i n control schemes i n the pre-war period, t h e i r subsequent  agitation  for p a r t i c i p a t i o n i n t i n agreements, and t h e i r current p a r t i c i p a t i o n . As f o r the r e l a t i v e stakes of North and South i n t i n trade, the assessment becomes even more problematic.  Certainly t i n i s of v i t a l  importance to Southern producing countries and i n the f i n a l analysis one must submit that i t i s also more important for them than f o r the Northern consumers.  But how much more important i t i s to them than i t i s to  consumers w i l l perhaps depend ultimately on the extent to which the metal can be substituted i n i n d u s t r i a l production. " s u b s t i t u t a b i l i t y " w i l l be in.order here.  A b r i e f discussion of  -The main use of t i n i s i n the  coating of s t e e l into t i n p l a t e , from which our " t i n " cans are made. f a c t , aluminium has for many years been tinplate's most important  In  - 47 -  competitor i n t h i s regard. l i g h t e r but i t s u f f e r s  I t has an advantage o v e r t i n i n t h a t i t  from a s e r i o u s d i s a d v a n t a g e  t i v e l y weaker and has a l o w e r r e s i s t a n c e  because i t i s  to c o r r o s i o n than t i n .  is  relaOther  m a t e r i a l s t h a t c o n s t i t u t e a t h r e a t to t i n p l a t e a r e p l a s t i c s , chromium, n i c k e l , l a c q u e r and p a p e r . ^  In the p e r i o d of acute t i n shortage  s o a r i n g p r i c e s i n t h e m i d - 1 9 6 0 s , i t was r e p o r t e d t h a t a number o f companies i n the U n i t e d S t a t e s  and steel  ( t h e l e a d i n g p r o d u c e r o f t i n p l a t e ) were  u n d e r t a k i n g e x t e n s i v e r e s e a r c h t o f i n d ways o f r e d u c i n g o r e l i m i n a t i n g t h e 16 use o f t i n .  Other u s e r s of t i n were a l s o r e p o r t e d t o have reduced  or were a t t e m p t i n g t o reduce t i n u s a g e , i n c l u d i n g makers o f a u t o m o b i l e r a d i a t o r s , plumbing equipment and c a r b o d i e s . " ^  solder, I n s p i t e of  e f f o r t s a t s u b s t i t u t i o n , however, the demand f o r t i n remains h i g h e v i d e n c e d by t h e steady upward c l i m b o f t h e t i n p r i c e o v e r the I t does appear t h a t t i n i s s t i l l  as  years.  a c r u c i a l metal i n i n d u s t r i a l production.  Given t h i s c o n s i d e r a t i o n , t h e n , we may s t i l l p o s t u l a t e  that Northern  consuming c o u n t r i e s have a r e a s o n a b l y s t r o n g s t a k e i n t h e t r a d e i n t i n . I n o t h e r w o r d s , S o u t h e r n p r o d u c i n g . c o u n t r i e s s t i l l have a good b a r g a i n i n g p o s i t i o n v i s - a - v i s the N o r t h e r n consuming c o u n t r i e s . The O b j e c t i v e s o f T i n Agreements I n the f o u r p o s t - w a r t i n agreements  a r r i v e d a t from 1953 t o 1970,  the f o l l o w i n g s i x main o b j e c t i v e s can be i d e n t i f i e d : Ca) p r e v e n t p r i c e f l u c t u a t i o n s , (b) ensure adequate s u p p l y ,  - 48 (c) a l l e v i a t e unemployment a n d / o r under-employment, (d) promote economic p r o d u c t i o n o r p r e v e n t (e)  increase producers'  export earnings,  waste,  and 18  (d) r e v i e w d i s p o s a l o f n o n - c o m m e r c i a l s t o c k s . The f i r s t f o u r o b j e c t i v e s have been p a r t o f the t i n agreements s i n c e w h i l e the l a s t two were i n c l u d e d o n l y by t h e 1965 Agreement,  1953,  following  the c o n v e n i n g o f UNCTAD, r e f l e c t i n g , as I have a r g u e d , a new o r i e n t a t i o n i n the c o n s t e l l a t i o n o f i n t e r e s t s tend t o r e f l e c t b o t h the i n t e r e s t s  i n t i n accords.  Most o f the  objectives  o f p r o d u c i n g and consuming c o u n t r i e s ,  a l t h o u g h f o r our purposes here two of the s i x may be c o n s i d e r e d e x c l u s i v e l y p r o d u c e r o r consumer o b j e c t i v e s .  O b j e c t i v e (b)  to  as ensure  adequate s u p p l y i s c l e a r l y a consumer o b j e c t i v e , w h i l e o b j e c t i v e  (e)  to  i n c r e a s e e x p o r t e a r n i n g s i s almost e x c l u s i v e l y a p r o d u c e r o b j e c t i v e . f o r the o t h e r s , we can r a n k them on a t h r e e - t i e r o r d i n a l s c a l e , t o t h e i r importance t o p r o d u c e r s and consumers O b j e c t i v e (a)  As  according  (see T a b l e X I ) .  t o p r e v e n t p r i c e f l u c t u a t i o n s tends t o be o f  stronger  i n t e r e s t t o p r o d u c e r s than t o consumers f o r the s i m p l e r e a s o n t h a t p r o d u c i n g c o u n t r i e s i n d i v i d u a l l y e x p o r t much more t i n than consuming c o u n t r i e s i n d i v i d u a l l y i m p o r t , i . e . , p r o d u c e r s have more a t s t a k e . f l u c t u a t i o n s w i l l have g r e a t e r  As s u c h , p r i c e  consequences f o r p r o d u c i n g c o u n t r i e s than  f o r consuming c o n t r i e s , e s p e c i a l l y i n terms o f the g a i n s from t r a d e . Consider also that p r i c e s d i r e c t l y affect and those employed i n such p r o d u c t i o n . employment i s a l s o o f g r e a t e r  the l e v e l of p r o d u c t i o n o f t i n  O b j e c t i v e (c)  to a l l e v i a t e u n -  i n t e r e s t t o p r o d u c e r s than t o  consumers,  - 49 -  but i t i s p r o b a b l y o f a l o w e r l e v e l of i m p o r t a n c e t o b o t h p r o d u c e r s and consumers t h a n t h e f i r s t o b j e c t i v e . p r o d u c t i o n i s a l i t t l e more d i f f i c u l t  O b j e c t i v e Cd) to promote economic  t o p i n down:  i t i s c e r t a i n l y of  d i r e c t importance to p r o d u c e r s w h i l e a t the same t i m e i t r e f l e c t s consumer f e a r o f an uneconomic run-down o f t i n s u p p l i e s . a l o w e r magnitude o f i m p o r t a n c e t h a n o b j e c t i v e ( a ) . (f)  a  I t i s again of  Finally,  objective  t o r e v i e w d i s p o s a l of n o n - c o m m e r c i a l s t o c k s i s o f p r i m a r y i n t e r e s t  t o p r o d u c e r s as such d i s p o s a l s  have a d i r e c t e f f e c t  on the p r i c e o f t i n .  For p r o d u c e r s , i t may be c o n s i d e r e d almost o f the same magnitude o f i m p o r t a n c e as p r e v e n t i n g p r i c e , f l u c t u a t i o n s , a l t h o u g h the l a c k o f U . S . p a r t i c i p a t i o n tends t o reduce i t s i m p o r t a n c e i n t i n  agreements.  Thus on b a l a n c e the o b j e c t i v e s of t i n agreements  t e n d to r e f l e c t  p r o d u c e r i n t e r e s t s more s t r o n g l y t h a n consumer i n t e r e s t s . reasons account f o r t h i s .  Two main  F i r s t , the preponderance o f p r o d u c e r  interests  i s p a r t l y a f u n c t i o n of the h i s t o r i c a l development of t i n c o n t r o l which s t a r t e d out as " p r o d u c e r c l u b s " .  schemes,  Second, the impact o f UNCTAD  f u r t h e r emphasised p r o d u c e r i n t e r e s t s i n commodity agreements,  the  o f w h i c h was t h e i n c l u s i o n o f the new o b j e c t i v e s  However,  t o say t h a t t i n agreements  (e)  and ( f ) .  effect  r e f l e c t more s t r o n g l y p r o d u c e r t h a n consumer  i n t e r e s t s i s n o t n e c e s s a r i l y s a y i n g t h a t p r o d u c i n g c o u n t r i e s have s t r u c k a good b a r g a i n .  On the c o n t r a r y , the preponderance o f p r o d u c e r  interests  i n the o b j e c t i v e s o f t i n agreements may be m e r e l y a r e c o g n i t i o n t h a t p r o d u c i n g c o u n t r i e s have a g r e a t e r  stake i n t i n trade.  - 50 -  The main i n t e r e s t of consuming c o u n t r i e s i n t i n agreements w i t h o u t d o u b t , e n s u r i n g o f adequate s u p p l i e s o f t i n f o r t h e i r but the i n t e r e s t does not s t o p h e r e , o f c o u r s e .  is,  industries,  More i m p o r t a n t l y ,  consumers would l i k e t o o b t a i n adequate s u p p l i e s a t " f a i r p r i c e s " , low p r i c e s i f p o s s i b l e .  No t i n agreement c o u l d r e a l l y  or  guarantee  adequate s u p p l i e s , a n d . t h e r e f o r e some consuming c o u n t r i e s , l i k e the U . S . , go i t a l o n e , a c c u m u l a t i n g t h e i r own s t o c k p i l e s o f t i n .  However,  consumers w i t h o u t s t o c k p i l e s have n o t h i n g t o f a l l back on when p r i c e s r a c e i n t o the upper l i m i t s ,  so t h e y j o i n t i n agreements w h i c h c o u l d t o  a c e r t a i n e x t e n t ensure " f a i r p r i c e s " .  But p r i c e s b e s i d e s b e i n g " f a i r "  have t o be " r e m u n e r a t i v e " t o p r o d u c i n g c o u n t r i e s i n t i n  agreements.  I n d e e d , t h i s i s where the r e a l b a r g a i n i s s t r u c k between consuming and p r o d u c i n g c o u n t r i e s p a r t i c i p a t i n g i n t i n agreements.  The manner by w h i c h  commodity a c c o r d s have overcome t h i s p o t e n t i a l zero-sum game where " f a i r " p r i c e s may not n e c e s s a r i l y be a l s o " r e m u n e r a t i v e " , i s by the method o f e s t a b l i s h i n g f l o o r and c e i l i n g p r i c e s f o r t h e commodity and t h e r e b y a l l o w i n g p r i c e s t o f l u c t u a t e w i t h i n t h e agreed r a n g e . p r i c e represents  the l o w e s t p r i c e the p r o d u c e r s w i l l a c c e p t  for  good and the c e i l i n g p r i c e the most consumers w i l l pay f o r i t .  The f l o o r their For  purposes o f o p e r a t i n g the b u f f e r s t o c k , w h i c h w i l l be e x p l a i n e d b e l o w , the p r i c e range between f l o o r and c e i l i n g i s d i v i d e d i n t o t h r e e s e c t o r s l o w e r , m i d d l e and u p p e r .  I n the next s e c t i o n we w i l l  c o n s i d e r how  e f f e c t i v e such o p e r a t i o n s a r e i n c a r r y i n g out the o b j e c t i v e s o f t i n accords.  - 51 -  Effectiveness of Tin Agreements Clearly the main objective of t i n accords i s to prevent d r a s t i c fluctuations of price while at the same time ensuring an adequate supply of the commodity. Ca)  This i s pursued through two instruments of c o n t r o l :  buffer stock operation and (b) export control.  Tin accords tend to  place the emphasis on buffer stock operation, using export control as a stand-by mechanism. Buffer Stock: Contributions amounting to 20,000 tons of t i n (1965 and 1970)  to the buffer stock are made by producing countries  according to their percentages of t i n production, although voluntary contributions may also be made by other p a r t i c i p a t i n g and even non19 p a r t i c i p a t i n g countries.  One-half of the required contributions i s  c a l l e d up when an agreement comes into force payable either i n cash or i t s metal equivalent.  The T i n Council, the on-going body set up to  operate an agreement, decides the dates and instalments for the other half of the contributions.  (In the 1965 Agreement, the f i r s t half 20  was called up on July 1966 and the second half by 31 January, 1968.) A Buffer Stock Manager i s responsible for the operation of the stock i n r e l a t i o n to the agreed f l o o r and c e i l i n g prices and the range of sectors between these to l i m i t s . summarised as follows:  His r e s p o n s i b i l i t i e s may  be  I f the market price of t i n  1) i s equal to or greater than the c e i l i n g p r i c e , the Manager s h a l l , i f he has cash t i n at h i s disposal, offer such t i n f o r sale at the c e i l i n g price u n t i l the market price  - 52 f a l l s below the c e i l i n g p r i c e o r the cash t i n a t disposal is  his  exhausted;  2) i s i n t h e upper s e c t o r o f the r a n g e , the Manager may s e l l cash t i n i f he c o n s i d e r s i t n e c e s s a r y p r i c e from r i s i n g too  t o p r e v e n t the market  steeply;  3) i s i n t h e m i d d l e s e c t o r ,  the Manager may buy a n d / o r s e l l  t i n o n l y on s p e c i a l a u t h o r i z a t i o n by the C o u n c i l ; 4) i s i n the l o w e r s e c t o r , considers i t necessary f a l l i n g too s t e e p l y ;  the Manager may buy cash t i n i f he t o p r e v e n t the market p r i c e from  and  5) i s e q u a l to o r l e s s t h a n the f l o o r p r i c e , the Manager s h a l l , i f he has funds a t h i s d i s p o s a l , o f f e r to buy cash t i n a t the f l o o r p r i c e u n t i l the market p r i c e o f t i n i s above f l o o r p r i c e o r the funds a t h i s d i s p o s a l are  the 21  exhausted.  I n c e r t a i n c i r c u m s t a n c e s and n o t w i t h s t a n d i n g the above p r o v i s i o n s , the o p e r a t i o n s o f the b u f f e r s t o c k may be r e s t r i c t e d o r suspended i f C o u n c i l so d e c i d e s .  At the end of t h e agreement,  the  the Buffer stock  is  l i q u i d a t e d , the s t o c k e v a l u a t e d , and each c o n t r i b u t i n g c o u n t r y r e c e i v e s 22 i t s appropriate p o r t i o n . E x p o r t C o n t r o l : T h i s i s the second main i n s t r u m e n t a l i t y o f t i n agreements.  I f and when n e c e s s a r y ,  a c o n t r o l p e r i o d i s d e c l a r e d by t h e  t i n Council thereby f i x i n g a t o t a l of p e r m i s s i b l e exports of t i n f o r t h a t p e r i o d , the c o n t r o l . p e r i o d i s a q u a r t e r and the q u a r t e r l y e x p o r t amounts a r e d i v i d e d among p r o d u c i n g c o u n t r i e s i n p r o p o r t i o n t o percentages of p r o d u c t i o n .  their  P e n a l t i e s can be imposed f o r o v e r - e x p o r t  by p r o d u c i n g c o u n t r i e s d u r i n g a c o n t r o l p e r i o d , i n c l u d i n g t h e d e f a u l t i n g c o u n t r y b e i n g r e q u i r e d t o make an a d d i t i o n a l c o n t r i b u t i o n t o the b u f f e r  - 53 -  s t o c k , i t s p e r m i s s i b l e e x p o r t s f o r subsequent  p e r i o d s be r e d u c e d , o r  t h a t i t f o r f e i t s a p a r t o f i t s b u f f e r s t o c k c o n t r i b u t i o n s on l i q u i d a t i o n 23 of  the  stock. There are two o t h e r r e s i d u a l " i n s t r u m e n t s " o f c o n t r o l .  event of a s e r i o u s s h o r t a g e o f . t i n , necessary and  In the  the C o u n c i l i s o b l i g e d t o make the  e s t i m a t e s o f r e q u i r e m e n t s and a v a i l a b i l i t y o f t h e commodity  t h e n make recommendations t o p a r t i c i p a n t s " t o i n i t i a t e such a c t i o n  as w i l l ensure as soon as p o s s i b l e a r a p i d e x p a n s i o n i n t h e amount of t i n w h i c h they w i l l be a b l e t o make a v a i l a b l e " , and " i n v i t e them t o e n t e r i n t o such arrangements w i t h i t as may ensure consuming c o u n t r i e s an e q u i t a b l e 24 d i s t r i b u t i o n o f the a v a i l a b l e s u p p l i e s o f t i n . attempt t o b u t t r e s s  the s u p p l y o b j e c t i v e but appears vague and o f f e r s  s p e c i f i c l i n e of a c t i o n . of  T h i s p r o v i s i o n i s an  Second, t h e r e i s the p r o v i s i o n f o r the d i s p o s a l  n o n - c o m m e r c i a l s t o c k s by p a r t i c i p a n t s , r e l a t e d to o b j e c t i v e  members w i s h t o make such d i s p o s a l s w i l l discuss  no  (f).  When  they are t o n o t i f y t h e C o u n c i l w h i c h  t h e p l a n and make recommendations.  The d i s p o s a l s  a r e to be  made w i t h due r e g a r d t o the p r o t e c t i o n o f p r o d u c e r s and consumers and " t o the consequences  o f such d i s p o s a l s  on t h e i n v e s t m e n t o f c a p i t a l i n  e x p l o r a t i o n and development o f new s u p p l i e s and the h e a l t h and growth 25 of  t i n m i n i n g i n the p r o d u c i n g c o u n t r i e s " . The P r i c e O b j e c t i v e :  The I n t e r n a t i o n a l T i n Agreements up  till  the m i d d l e o f 1970 had f a i l e d t h r e e t i m e s t o r e s t r a i n p r i c e movements w i t h i n the b u f f e r s t o c k r a n g e s .  The f i r s t t i m e was i n 1959 when the  p r i c e f e l l t h r o u g h the f l o o r , the second i n 1963 when i t r o s e above  the  - 54 TABLE V I I I PRICE RANGES IN THE TIN AGREEMENTS (London p r i c e f o r c a s h t i n ) P e r i o d of O p e r a t i o n  ^ p e r long ton Floor  M i d d l e Range  Ceiling  1 J u l y 1956 - 22 M a r . 1957  640  735-785  880  22 M a r . 1957 - 12 J a n . 1962  730  780-830  880  12 J a n . 1962 -  4 D e c . 1963  790  850-910  965  4 Dec. 1963 - 12 Nov. 1964  850  900-950  1000  12 Nov. 1964 -  6 J u l y 1966  1000  1050-1150  1200 •  6 J u l . 1966 - 20 Nov. 1967  1100  1200-1300  1400  20 Nov. 1967 - 16 J a n . 1968  1283  1400-1516  1633  16 J a n . 1968 - 2 J a n .  1280  1400-1515  1630  1260  1380-1490  1605  2 J a n . 1970 -  1970  (j[  p e r m e t r i c ton)  S o u r c e : ITC S t a t i s t i c a l Yearbook 1968, p . 275  - 55 TABLE I X BUFFER STOCK T I N METAL PURCHASES UNDER THE 1965 TIN AGREEMENT (Long t o n s ) 1966  I  -  II III  1967  3470  -  II  975  -  III  2090  35  I  1475  II III IV  1  I  IV  Net  1930  1968  IV  1969  I II  28401  III  8051  1315  Sales  S o u r c e : ITC S t a t i s t i c a l Yearbook 1968, p . 13  - 56 -  c e i l i n g and t h e n i n A p r i l 1970 when i t a g a i n b r o k e t h r o u g h the  ceiling.  A g l a n c e a t T a b l e V I I I shows t h a t p r i c e ranges have tended to p r o g r e s s i v e l y s h i f t upwards under the t i n agreements.  The g e n e r a l upward p r i c e t r e n d  o v e r the y e a r s i s o f c o u r s e l a r g e l y the r e s u l t of u n d e r l y i n g market forces,  and i t would be f o o l h a r d y t o make any f u r t h e r c o n c l u s i o n s from i t  w i t h o u t more d e t a i l e d a n a l y s i s .  However, under the 1965 Agreement, the  p r i c e range was o s t e n s i b l y changed t h r e e t i m e s (up t i l l December  1969),  t w i c e w i t h upward r e v i s i o n s , as f o l l o w s : Floor  M i d d l e Range  Ceiling  Initial:  1000  1050-1150  1200  J u l y 1966:  1100  1200-1300  1400  Nov.  1967:  1283  1400-1516  1633  Jan.  1968:  1280  1400-1515  1630'  The upward s h i f t s c o u l d mean t h a t the b u f f e r s t o c k o p e r a t i o n and e x p o r t c o n t r o l under the 1965 Agreement were not  adequately  e f f e c t i v e i n k e e p i n g p r i c e s down t o the i n i t i a l p r i c e r a n g e s , as was the 27 case f o r s i m i l a r upward s h i f t s under t h e 1960 Agreement (see T a b l e V I I I ) . However, we know t h a t f o r the g r e a t e r p a r t o f t h e 1965 Agreement, 28 t h e r e tended t o be an o v e r s u p p l y o f t i n , depress p r i c e s .  w h i c h would have tended to  F u r t h e r m o r e , the b u f f e r s t o c k o p e r a t i o n under t h i s  Agreement c o n s i s t e d m a i n l y o f p u r c h a s e s (see  T a b l e I X ) , w h i c h meant  that  t h e y were aimed a t k e e p i n g t h e p r i c e a t l e a s t below the f l o o r . M o r e o v e r , to f u r t h e r b u t t r e s s  t h e f l o o r p r i c e , e x p o r t c o n t r o l was d e c l a r e d from  from mid-September 1968 t i l l  31 December 1969.  A l l t h i s means t h a t  upward r e v i s i o n s of the p r i c e range must have been d e f i n i t e p o l i c y r a t h e r than an e f f o r t  t o cope w i t h market f o r c e s .  the  decisions  One good i n d i c a t o r o f  t h i s i s t h a t p r o d u c i n g c o u n t r i e s had complained t h a t the p r i c e range f i x e d a t the 1965 n e g o t i a t i o n s were too low and t h a t M a l a y s i a and B o l i v i a had t h r e a t e n e d not t o accede t o the Agreement.  Lri f a c t , we know t h a t the f i r s t  upward s h i f t i n J u l y 1966 was the d i r e c t r e s u l t o f the M a l a y s i a n - B o l i v i a n t h r e a t n o t t o accede t o the  agreement.  As f o r the g e n e r a l e f f e c t i v e n e s s  o f t h e 1965 Agreement i n  p r e v e n t i n g p r i c e f l u c t u a t i o n s , i t appears t h a t the b u f f e r s t o c k o p e r a t i o n i n t h e form of purchases were a b l e t o cope w i t h a downward p r e s s u r e  on p r i c e  u n t i l the end of 1968 when e x p o r t c o n t r o l was d e c l a r e d and kept i n  effect  u n t i l the end of 1969.  As the t i n p r i c e d i d n o t c r a s h below t h e r e v i s e d  f l o o r d u r i n g t h i s p e r i o d , we may c o n c l u d e t h a t b o t h b u f f e r s t o c k o p e r a t i o n and e x p o r t c o n t r o l were g e n e r a l l y e f f e c t i v e i n c o n t r o l l i n g w i t h i n t h e ranges e s t a b l i s h e d by the C o u n c i l .  fluctuations  However, p r i c e s moved  upwards i n 1970 and i n A p r i l shot above the c e i l i n g .  The B u f f e r S t o c k  Manager a t t r i b u t e d t h e f a i l u r e of the C o u n c i l t o check t h i s l a r g e l y t o t h e a c t i v i t y of s p e c u l a t o r s ,  combined w i t h a growing s h o r t a g e  of t i n i n t h e  m a r k e t , h i g h i n t e r e s t r a t e s p r e v a i l i n g then i n the w o r l d and g e n e r a l inflation. I n g e n e r a l , i n a s s e s s i n g the e f f i c a c y of t i n agreements  in  c o p i n g w i t h p r i c e f l u c t u a t i o n s , we may c o n c l u d e t h a t they have been considerably effective.  There have b e e n , a f t e r a l l , o n l y t h r e e  failures  t o check p r i c e movements from b r e a k i n g out of t h e agreed p r i c e ranges i n  - 58 a period of 15 years (1956-1970). i t was  In our analysis of the 1965  Agreement,  shown that buffer stock operation and export control were able to  maintain the f l o o r p r i c e despite two upward revisions.  The f a i l u r e to  protect the c e i l i n g w i l l be discussed under the supply objective.  The Supply Objective: Ensuring adequate supplies of t i n i s almost exclusively a consumer i n t e r e s t , but consumers, as noted e a r l i e r , are not interested only i n having adequate supplies;  they would l i k e to ensure  that such supplies are acquired at " f a i r prices".  We w i l l assume for  purposes of analysis that a f a i r price to consumers i s one that f a l l s within the range of prices established by an agreement and the Tin Council from time to time, for consumers have an equal r o l e i n f i x i n g such p r i c e ranges.  As for the question of what constitutes adequate supplies, we  w i l l have to use the price indicator.  In other words, i f prices r i s e too  sharply and too high, this would indicate that supply was According  to the Buffer Stock Manager, under the 1965  short of demand.  Agreement, there  tended to be an over-supply i n the market and he had to .purchase  11,290  31 tons of t i n .  However, toward the end of the agreement period and  the second quarter of 1969,  by  he began s e l l i n g (see Table IX) but f a i l e d  to prevent the price from breaking  through the c e i l i n g .  Under the  Agreement, the p r i c e of t i n also broke through the c e i l i n g i n 32  1960  1963  indicating acute shortage i n the metal. There were successive upward s h i f t s i n the price range i n January 1962,  December 1963  and November  1964  (see Table VIII) to bring the market price within the agreement range. Rogers argues that the problem was  due i n part to the small size of the  - 59 -  buffer stock.  The Buffer Stock Manager was less Inclined to put the  blame e n t i r e l y on buffer stock s i z e , pointing out that because of upward s h i f t s i n the f l o o r price his buying power was reduced as the contributions were based on the i n i t i a l f l o o r p r i c e .  Furthermore, there was no metal  contribution and this made i t d i f f i c u l t f o r him to protect the c e i l i n g 34 as he had to convert the cash- at hand into metal to do so.  He  admitted, however, that i f participants of t i n agreements f e l t that the buffer stock should be the main instrument of control, then, to be e f f e c 35 t i v e , i t has to be enlarged. Thus i n assessing the effectiveness of t i n agreements i n carrying out the supply objective, we find two periods where t i n shortages were c l e a r l y evident and when " f a i r p r i c e s " could not be maintained by the instrumentalities of the agreements.  As noted, t i n agreements have  r e a l l y no way of guaranteeing adequate supplies of t i n ; they can only hope to prevent prices from soaring or dropping to unacceptable levels for consumers and producers.  Therefore, given that i n the length of 15  years for which t i n agreements were operative, there were only two periods when prices broke the c e i l i n g , we may s t i l l conclude that the objective "adequate supply at f a i r p r i c e s " has been adequately achieved. Obviously, as the Buffer Stock Manager pointed out, there are some major shortcomings i n the operational aspects of the agreements i n coping with periods of acute t i n shortage.  Given these d i f f i c u l t i e s , one could  hardly expect the agreements to have function any more e f f e c t i v e l y .  - 60 -  The Employment O b j e c t i v e : T h i s i s a nebulous o b j e c t i v e  as  n o t h i n g i n a c t u a l o p e r a t i v e a s p e c t s o f t i n agreements c o n t r i b u t e s p o s i t i v e l y toward such an o b j e c t i v e .  In fact,  as L i m Chong Yah and Y i p Y a t  36 Hoong p o i n t o u t ,  the o p e r a t i o n s of t i n agreements, e s p e c i a l l y e x p o r t  c o n t r o l t e n d t o have a n e g a t i v e e f f e c t  on employment i n p r o d u c i n g c o u n t r i e s .  I n M a l a y s i a , e x p o r t r e s t r i c t i o n has been shown t o cause the c l o s i n g down 37 o f mines f o r c e r t a i n p e r i o d s , e s p e c i a l l y the s m a l l e r p r o d u c t i o n u n i t s . F o r example, i n t h e year 1958, under t h e F i r s t Agreement, 42 t i n dredges and 257 o t h e r t i n mines were abandoned, and 11,712 w o r k e r s employed i n 38 the t i n i n d u s t r y were r e t r e n c h e d i n M a l a y a . I t may be argued t h a t the employment o b j e c t i v e tends t o be i n c o n t r a d i c t i o n t o the p r i c e o b j e c t i v e , t h a t i s , t o m a i n t a i n a h i g h p r i c e sometimes i n v o l v e s e x p o r t c o n t r o l w h i c h may r e s u l t i n unemployment i n the t i n i n d u s t r y .  I t s h o u l d be n o t e d , however, t h a t the o b j e c t i v e  is  s t a t e d as " t o p r e v e n t w i d e s p r e a d unemployment o r u n d e r - e m p l o y m e n t , " i . e . , the agreements do not r e a l l y e n v i s a g e p o s i t i v e a c t i o n but o n l y hope t o c u r t a i l whatever unemployment may r e s u l t from the o p e r a t i o n o f e x p o r t control.  N o n e t h e l e s s , i n the f i n a l a n a l y s i s ,  t h i s o b j e c t i v e cannot be  s a i d t o have been e f f e c t i v e l y pursued v i a t i n agreements. The Economic P r o d u c t i o n O b j e c t i v e :  L i m Chong Yah s u g g e s t s t h a t  t h i s o b j e c t i v e may be viewed from t h r e e a n g l e s :  (a)  t h e l o w e r i n g of  average p r o d u c t i o n c o s t s o f i n d i v i d u a l m i n e s , (b) the p r e v e n t i o n o f premature abandonment o f m i n e s , and (c)  t h e e l i m i n a t i o n of h i g h - c o s t .  - 61 -  mines.  L i k e the p r e v i o u s o b j e c t i v e ,  t i n agreements have no r e a l  p r o v i s i o n s f o r any o f the above measures. l a r g e l y on the d e c i s i o n s  Indeed, these a c t i v i t i e s  of i n d i v i d u a l producing c o u n t r i e s  depend  themselves.  F u r t h e r m o r e , L i m s u g g e s t s t h a t t h i s o b j e c t i v e may be i n c o n t r a d i c t i o n to 40 other o b j e c t i v e s .  F i r s t , mines a r e o f t e n p r e m a t u r e l y abandoned because  of e x p o r t c o n t r o l aimed at m a i n t a i n i n g the p r i c e range f i x e d by an a g r e e ment.  Second, one o f the f a v o u r i t e c l a i m s of p r o d u c i n g c o u n t r i e s i n  b a r g a i n i n g f o r a h i g h e r f l o o r p r i c e i s t h a t p r o d u c t i o n c o s t s a r e h i g h and t h a t m a r g i n a l mines would be c l o s e d i f the f l o o r p r i c e were n o t 41 B o l i v i a has f r e q u e n t l y t a k e n such a p o s i t i o n .  raised.  I n o t h e r w o r d s , some  p r o d u c i n g c o u n t r i e s are committed t o m a i n t a i n i n g h i g h - c o s t mines i n the first  p l a c e i f o n l y because t o c l o s e them would r e s u l t i n unemployment.  So, the economic p r o d u c t i o n o b j e c t i v e i s a l s o i n c o n f l i c t w i t h the o b j e c t i v e because i n p e r i o d s o f a c u t e s h o r t a g e , even the  supply  highest-cost  mines w i l l be brought i n t o o p e r a t i o n . Therefore,  l i k e the p r e v i o u s o b j e c t i v e ,  the economic p r o d u c t i o n  o b j e c t i v e cannot be s a i d t o have been e f f e c t i v e l y pursued t h r o u g h t i n agreements. The E x p o r t E a r n i n g s O b j e c t i y e :  T h i s i s one o f t h e  objectives  w h i c h was i n c o r p o r a t e d i n t o t i n a c c o r d s as a d i r e c t consequence o f UNCTAD. There i s no s p e c i f i c p r o v i s i o n i n the o p e r a t i o n a l f e a t u r e s o f t i n agreements t h a t p e r t a i n d i r e c t l y t o t h i s o b j e c t i v e ,  a l t h o u g h i t i s assumed  t h a t p r i c e f i x i n g i s the i n s t r u m e n t a l i t y t h r o u g h w h i c h i t i s  attained.  - 62 -  .TABLE X TIN  1  EXPORT EARNINGS OF PRODUCING COUNTRIES (jt m i l l i o n )  1960  1961  1962  1963  1964  1965  1966  1967  1968  17.1  18.0  20.5  21.9  28.9  33.2  33.4  32.7  38.8  4.6  2.6  6.8  9.9  10.3  12.8  18.4  • •• •  • •• •  Indonesia  ••• •  • •• •  6.4  ••• •  • •••  • •• •  Malaysia  59.2  64.5  72.3  74.9  84.9  101.8  92.1  88.4  113.0  Nigeria  • •••  0.5  6.7  8.9  12.9  14.9  15.4  13.1  16.1  9.3  10.7  11.9  12.9  16.7  20.5  22.7  31.4  30.1  Bolivia Congo, Dem. Rep.  Thailand  • •• •  Includes both t i n metal and concentrates. Source: ITC S t a t i s t i c a l Yearbook 1968, p. 279.  - 63  -  Table X shows upward trends i n the export earnings from t i n for most producing countries.  Although one could not conclude from t h i s that t i n  agreements have been eminently successful i n helping the producing countries increase their export earnings, one could nevertheless point out that the  agreements have not at any rate adversely affected the export  earnings of these countries.  One way of getting around the problem of  assessing this objective i s to consider how e f f e c t i v e t i n agreements have been i n maintaining "remunerative" prices. analysing the price objective.  This, we have done i n  We found that the buffer stock operations  and export control have been considerably e f f e c t i v e i n maintaining the f l o o r price (below which prices would not presumably be considered "remunerative" by producers). prices sink below the f l o o r .  Only once, under the 1953 Agreement, did Also, i n reviewing price ranges, there  has been a general tendency for upward s h i f t s over the years.  It may  therefore be adduced that t i n agreements have been reasonably e f f e c t i v e in pursuing the export earnings objective.  Exactly how  s a t i s f a c t o r y the  agreements have been to producing countries must f i n a l l y depend on what they expect.  There was i n d i c a t i o n i n the 1965 negotiations that  producing countries were not s a t i s f i e d with the price range f i x e d , when both B o l i v i a and Malaysia threatened non-accession.  However, i n the  1966 July meeting of the Council, the f l o o r price was raised from /l,000 per ton to$:l,100 per ton and the c e i l i n g from^l,200 to ^1,400.  In  f a c t , there was subsequently a further upward revision i n November 1967 (see Table VIII).  - 64 -  The Stocks Disposal Objective:  The Council has had  considerable  success i n the disposal of non-commercial stocks for p a r t i c i p a n t s of t i n agreements. the U.K.,  During 1959  and i n 1960,  and 1960,  4,900 tons of t i n metal were sold for  disposals began from the I t a l i a n stock of 2,500 tons,  while the intention of disposal 3,000 tons of Canadian stocks announced.  was  In the l a s t three years of the F i r s t Agreement, over 10,000 42  tons of t i n metal were sold by the Council from these sources. The absence of the U.S.  from the agreements, however, remains  the main problem i n respect to such ; vposals.  The GSA  s continuing  changes i n the disposal programme have had a major u n s e t t l i n g influence on the market.  Even a f t e r a decision i n 1969  metal from the disposable surplus, leaving the GSA  to take 32,000 tons of 43  25,000 tons for sale,  s t i l l has a greater holding than the ITC buffer stock.  i f the U.S. eliminated.  However,  accedes to the current agreement, the problem w i l l be Thus, as a result of the lack of U.S.  participation in t i n  agreements so f a r , the disposal of non-commercial stocks remains a problem. Table XI represents an attempt to summarise the foregoing discussion of the objectives of t i n agreements, the r e l a t i v e i n t e r e s t producing  and consuming countries have i n these objectives, and  effectiveness of t i n agreements i n pursuing.these  objectives.  the The six  main objectives of t i n agreements (1953-70) are l i s t e d and the r e l a t i v e interest of producing  and consuming countries i n these objectives scored  according to a simple t h r e e - t i e r ordinal scale of "very strong  interest",  -es-  t o . " l i t t l e o r no i n t e r e s t " .  I n o t h e r w o r d s , the s c o r e s are m e r e l y an  i n d i c a t i o n of how r e l a t i v e l y i m p o r t a n t t h e s e o b j e c t i v e s and consumers.  The s i x o b j e c t i v e s  are t o  producers  a r e a l s o r a t e d c r u d e l y on a low t o  h i g h s c a l e a c c o r d i n g t o how e f f e c t i v e l y t h e y have been pursued i n t i n agreements.  The e v a l u a t i o n s h o u l d by no means be t r e a t e d as a  precise  assessment s i n c e the e v i d e n c e p r e s e n t e d has been l e s s t h a n comprehensive.  II  THE STRUCTURE AND PROCESS OF TIN NEGOTIATIONS N e g o t i a t i o n has been d e f i n e d by F r e d I k l e as " a p r o c e s s o f  w h i c h e x p l i c i t p r o p o s a l s a r e put f o r w a r d o s t e n s i b l y f o r the purpose o f r e a c h i n g agreement f o r an exchange o r on the r e a l i z a t i o n o f a common 44 i n t e r e s t where c o n f l i c t i n g i n t e r e s t s t i n negotiations described  are p r e s e n t . "  International  and commodity a c c o r d n e g o t i a t i o n s  i n g e n e r a l can be  i n such t e r m s .  However, I k l e ' s d e f i n i t i o n e x c l u d e s  tacit 45  b a r g a i n i n g because he sees n e g o t i a t i o n as a b a s i c a l l y " o p e n " p r o c e s s . For my purposes I would i n c l u d e the n o t i o n . o f t a c i t b a r g a i n i n g i n the w o r k i n g d e f i n i t i o n o f n e g o t i a t i o n , as t o e x c l u d e i t would be t o l e a v e out a major p a r t o f t h e phenomenon o f b a r g a i n i n g , namely, t h a t aspect that coordinates  expectations,  p l e t e between b a r g a i n i n g p a r t i e s ,  even when communication i s i n c o m 46  as S c h e l l i n g p u t s i t .  I t i s a l s o u s e f u l t o c o n s i d e r n e g o t i a t i o n , and t i n i n p a r t i c u l a r , as a s e q u e n t i a l a c t i v i t y , t h a t i s , n e g o t i a t i o n p r o c e s s and i s not a s t a t i c  "psychic"  activity.  negotiations involves  F o l l o w i n g J a c k Sawyer and H a r o l d  47 Guetzkow, namely,  one can i d e n t i f y a t l e a s t f o u r s t e p s o r s t a g e s o f  negotiation,  - 66 TABLE XI OBJECTIVES, INTERESTS AND EFFECTIVENESS OF TIN AGREEMENTS  Interest  Objectives  Years  Producers  Effectiveness  Consumers  Ca)  1953-70  Prevent price Fluctuations  High  (b)  1953-70  Ensure adequate supply  Moderate-High  (c)  1953-70  A l l e v i a t e unemployment  Low  (d)  1953-70  Promote economic production  Low  (e)  1965-70  Increase export earnings  Moderate-High  (f)  1965-70  Review disposal of non-commercial stocks  Key 1 - Very strong interest 2 - Strong interest 3 - L i t t l e or no interest  High  - 67 -  (a) p r e l i m i n a r y n e g o t i a t i o n c o n c e r n i n g p r o c e d u r e and agenda, (b) f o r m u l a t i o n o f a l t e r n a t i v e s  and p r e f e r e n c e s  of  each  party into a j o i n t decision matrix, (c) communication and p e r s u a s i o n i n t e n d e d t o a l t e r the o t h e r p a r t y ' s p e r c e p t i o n o f the s i t u a t i o n , and (d) t h r e a t s and p r o m i s e s ,  f a i t a c c o m p l i s and c r e a t i v e p r o b l e m -  s o l v i n g a c t i v i t y t o narrow o r w i d e n t h e range o f  available  outcomes and a l t e r n a t i v e s . F o r the a n a l y s i s o f t i n n e g o t i a t i o n s I have d e c i d e d t o  collapse  the p r o c e s s o f n e g o t i a t i o n i n t o two fundamental s t a g e s w h i c h I s h a l l (1) P r e p a r a t o r y N e g o t i a t i o n , i n v o l v i n g the Sawyer-Guetzkow s t e p s (c) (d).  call and  T h i s s t u d y w i l l be concerned more w i t h o p e r a t i o n a l n e g o t i a t i o n t h a n  w i t h p r e p a r a t o r y n e g o t i a t i o n f o r t h e main r e a s o n t h a t the l a t t e r i s n o t p a r t i c u l a r l y i m p o r t a n t f o r o n - g o i n g commodity a c c o r d s , agreements.  such as t h e t i n  The p r e p a r a t o r y n e g o t i a t i o n s had by and l a r g e been c a r r i e d  out b e f o r e the f i r s t p o s t - w a r agreement  (1953) was n e g o t i a t e d .  The  subsequent agreements were i n l a r g e p a r t no more than r e n e w a l s o f p r e c e e d i n g agreements, w h i c h formed the b a s i s of n e g o t i a t i o n f o r each new t i n conference.  I n o t h e r w o r d s , a j o i n t d e c i s i o n m a t r i x need not be  f o r m u l a t e d de nouveau a t each new t i n c o n f e r e n c e .  Nevertheless,  pre-  p a r a t o r y n e g o t i a t i o n i s v e r y i m p o r t a n t i n the n e g o t i a t i o n o f new commodity a c c o r d s , existing  t h a t i s , commodities f o r w h i c h t h e r e a r e no p r e -  accords.  Preparatory Negotiation Where t h e r e has been no p r i o r agreement  f o r a commodity, the  - 68 -  United Nations Economic and Social Council Resolution 296 (XI) allows that a commodity conference may be c a l l e d by an appropriate i n t e r governmental body, usually a commodity study group.  Where there have  existed previous agreements, the commodity council of that p a r t i c u l a r commodity requests a conference as a matter of course when the agreement i n force i s due to expire.  The convening of study groups to recommend  new accords i s the r e s p o n s i b i l i t y of the Interim Co-ordinating Committee for International Commodity Arrangements (ICCICA), established by 48 ECOSOC i n 1947.  The ICCICA stresses that before a conference i s  undertaken there must be (a) some assurance that an agreement i s a p o s s i b i l i t y , and (b) adequate preparation and the necessary documentation. The normal procedure leading to the setting up of a study group i s as follows:. (a) a request i s received from an interested government  or  the ICCICA decides to seek the views of interested governments, (b) usually the ICCICA requests the Secretary-General of the UN to take soundings as to the views of p r i n c i p a l importing and exporting countries, "using some objective basis as a c r i t e r i o n of i n t e r e s t " , (c) i n some cases, governments present at the preparatory meeting have considered i t advisable to establish on an ad hoc basis a standing committee to prepare f o r the establishment of a study group and to keep the s i t u a t i o n  - 69 -  under r e v i e w (examples a r e l e a d , z i n c and t u n g s t e n ) , (e) the terms of r e f e r e n c e o f t h e study group a r e p r e p a r e d e i t h e r by the p r e p a r a t o r y meeting o r the s t a n d i n g c o m m i t t e e , w i t h a request  t o i n d i c a t e whether t h e y would be p r e p a r e d 49  t o become members o f a s t u d y g r o u p . Once the s t u d y group has been e s t a b l i s h , i t s e t s out t o g a t h e r the necessary governing'  i n f o r m a t i o n and conducts s t u d i e s on the economic  factors  t r a d e i n t h a t commodity, w i t h a v i e w t o a r r i v i n g a t a s u i t a b l e  type o f commodity arrangement f o r the p r o d u c t c o n c e r n e d . the s t u d y group p r e p a r e s  More i m p o r t a n t l y ,  the d r a f t agreement, w h i c h may be compared t o  the Sawyer-Guetzkow s t e p (b) o f " f o r m u l a t i n g a l t e r n a t i v e s and of each p a r t y i n t o a j o i n t d e c i s i o n m a t r i x " .  preferences  Such p r e p a r a t i o n i s  essential  b e f o r e o p e r a t i o n a l n e g o t i a t i o n can p r o c e e d . As t h e ICCICA p u t s i t Measures d e s i g n e d t o a c h i e v e the o b j e c t i v e s o f a commodity agreement a r e n e c e s s a r i l y s p e c i f i c t o each commodity. Only a f t e r h a v i n g g a t h e r e d t h e b a s i c i n f o r m a t i o n . . . . w o u l d i t be p o s s i b l e t o form a judgement on t h e p r a c t i c a l i t y o f the mechanism o f the proposed agreement. S i n c e the s t u d y group p r o v i d e s a forum f o r an i n t e r n a t i o n a l d i s c u s s i o n o f b o t h the problems and suggested r e m e d i e s , the group would be i n a p o s i t i o n t o make recommendations on t h e type o f arrangement w h i c h would b e s t ensure an improvement i n t h e t r a d e of t h e commodity.50 The f o r m u l a t i o n of a l t e r n a t i v e s and p r e f e r e n c e s does not o f c o u r s e end a t the s t u d y group l e v e l ;  many amendments a r e made t o the d r a f t  agreement  p r e s e n t e d t o the d e l e g a t e s f o r c o n s i d e r a t i o n a t the c o n f e r e n c e s t a g e o f negotiation.  A t t h e s t u d y group l e v e l , " r e p r e s e n t a t i v e s  to d i s c u s s the d i f f i c u l t A  ,  I.  p r i c e s and quotas .  5  1  are not prepared  and c o n t r o v e r s i a l q u e s t i o n s such as those of  - 70 -  P r e - c o n f e r e n c e p r e p a r a t i o n a l s o i n c l u d e s drawing up the agenda and d r a f t i n g the r u l e s o f p r o c e d u r e , i . e . , s t e p (a) sequence.  i n the Sawyer-Guetzkow  T h i s work i s u n d e r t a k e n by the ICCICA where t h e r e e x i s t s no  p r i o r agreement,  and by the commodity c o u n c i l s where p r e v i o u s  agreements  have been i n e x i s t e n c e .  Operational Negotiation T h i s i s , o f c o u r s e , c a r r i e d out a t t h e c o n f e r e n c e l e v e l . o p e r a t i o n a l n e g o t i a t i o n , I mean, by and l a r g e ,  By  substantive negotiation,  b u t i t may a l s o i n c l u d e the f o r m u l a t i o n o f a l t e r n a t i v e s and w h i c h I c o n s i d e r as p a r t o f p r e p a r a t o r y n e g o t i a t i o n .  preferences,  In short, operational  n e g o t i a t i o n i n c o r p o r a t e s b a r g a i n i n g and the use of c o m m u n i c a t i o n , p e r s u a s i o n , t h r e a t , promises and the l i k e t o s e c u r e d e s i r e d outcomes, i . e . , Guetzkow s t e p s (c) and  Sawyer-  (d).  An i m p o r t a n t f e a t u r e o f ICA c o n f e r e n c e s i s t h a t a r e l a r g e l y c a r r i e d out i n c l o s e d s e s s i o n s . c l o s i n g g e n e r a l statements  negotiations  A p a r t from the opening and  by d e l e g a t e s a t the b e g i n n i n g and a t the end o f  a c o n f e r e n c e , n e g o t i a t i o n s f o r the most p a r t are h e l d b e h i n d c l o s e d the major d e c i s i o n s b e i n g made by an E x e c u t i v e Committee. underscores  doors,  The ICCICA  the importance o f k e e p i n g n e g o t i a t i o n s c l o s e d f o r the  reason: . . . t h i s tends t o reduce o r e l i m i n a t e s p e c u l a t i o n w h i c h might be based on t h e b a r g a i n i n g p o s i t i o n t a k e n by t h e group a t a g i v e n t i m e . P a r t i c u l a r l y where p r i c e s a r e under c o n s i d e r a t i o n such d i s c u s s i o n s s h o u l d not be a l l o w e d t o i n f l u e n c e the m a r k e t .  following  - 71 For c a r r y i n g out t h e main work o f the c o n f e r e n c e , s e t s up two p r i n c i p a l committees  - t h e Economic Committee and  A d m i n i s t r a t i v e and L e g a l Committee. i t s own sub-committees  t h e E x e c u t i v e Committee  The f i r s t ,  the  i n t u r n , u s u a l l y s e t s up  - a T e c h n i c a l Committee and a S t a t i s t i c a l  which deal w i t h t e c h n i c a l questions  such as  price differentials  v a r i o u s g r a d e s of the commodity and e s t i m a t e s o f t o t a l w o r l d of t h e commodity.  and c l a r i f i e s  S t e e r i n g Committee, w h i c h i s  t h e s e terms and makes t h e n e c e s s a r y There i s y e t a t h i r d c o m m i t t e e ,  established  i n o r g a n i z i n g t h e work of  the  to g u i d e t h e c h a i r m a n and  arrangethe executive  conference.  A l e s s f o r m a l s t r u c t u r e o f ICA n e g o t i a t i o n s party.  requirements  the terms o f t h e agreement, w h i l e t h e A d m i n i s t r a t i v e  ments to implement t h e agreement.  secretary  for  However, t h e b u l k o f t h e work of t h e Economic Committee  c o n s i s t s of n e g o t i a t i n g Committee d e f i n e s  Committee,  T h i s i s an ad hoc group of d e l e g a t e s s e t  is  the w o r k i n g  up to d i s c u s s and  h o p e f u l l y r e s o l v e some of t h e more d i f f i c u l t i s s u e s , w h i c h have b r o u g h t the l a r g e r committees  to a deadlock.  As t h e ICCICA o b s e r v e s ,  As d i f f e r e n t i s s u e s of a complex n a t u r e a r e r a i s e d d u r i n g the c o n f e r e n c e i t i s u s u a l t o s e t up w o r k i n g p a r t i e s to d e a l w i t h them. W i t h a v i e w to making p r o g r e s s , i t has been found most u s e f u l to i s o l a t e i n t h i s way t h e separate i s s u e s f o r c o n s i d e r a t i o n by s m a l l g r o u p s . For example,  i n t h e 1970 t i n n e g o t i a t i o n s ,  up a w o r k i n g p a r t y to c o n s i d e r  the d e l i c a t e  v  the Economic Committee i s s u e of b u f f e r  set  stock  54 financing.  Yet another i n f o r m a l aspect of the o p e r a t i o n a l  t i o n i n commodity agreements i s  the s e p a r a t e group meetings  negotiaof  producing  - 72 -  and consuming c o u n t r i e s on t h e assumption t h a t most i n t e r e s t s  tend  to c o a l e s c e a l o n g producer-consumer l i n e s . V o t i n g : D u r i n g a c o n f e r e n c e no attempt i s made t o i n t r o d u c e any form of v o t i n g , f o r example, the w e i g h t e d v o t i n g system t h a t i s used i n commodity c o u n c i l s ( t o be e x p l a i n e d b e l o w ) .  I n s t e a d , under t h e r u l e s  of p r o c e d u r e w h i c h the ICCCTA has framed, t h e chairman i s supposed  to  " a s c e r t a i n the sense o f the meeting i n l i e u of a f o r m a l v o t e . "  this  i s not p o s s i b l e ,  If  the i s s u e i s d e f e r r e d to a n o t h e r time o r r e f e r r e d to  another group, u s u a l l y a working p a r t y .  A f o r m a l v o t e may be  requested,  but i t appears t h a t d e l e g a t e s g e n e r a l l y r e c o g n i s e the importance o f t h e interests  o f c o u n t r i e s p a r t i c u l a r l y concerned about an i s s u e and do n o t  i n s i s t on a v o t e where such a c t i o n would make i m p o s s i b l e t o c o n t i n u e the work o f the c o n f e r e n c e .  Thus, i t f o l l o w s t h a t where a major p r o d u c i n g  c o u n t r y o r consuming c o u n t r y i s opposed t o a p a r t i c u l a r measure, de f a c t o v e t o on t h a t measure.  it  has  The c o n v e r s e , however, may n o t be t r u e ,  i . e . , where a major p r o d u c e r o r consumer i s i n f a v o u r o f a p a r t i c u l a r measure,  i t does not mean t h a t the measure w i l l be approved f o r the s i m p l e  reason t h a t o t h e r p r o d u c e r s a n d / o r consumers may oppose i t . The f o r m u l a t i o n of a l t e r n a t i v e s and p r e f e r e n c e s  in a joint  d e c i s i o n m a t r i x i s a r r i v e d a t o n l y i n t e n t a t i v e form at the s t u d y group level.  A t t h e c o n f e r e n c e s t a g e o f n e g o t i a t i o n , the terms a r e f u r t h e r  pursued, p a r t i c u l a r l y with respect  t o p r i c e - f i x i n g and q u o t a s .  (In the  case o f t i n , b u f f e r s t o c k q u e s t i o n s are a l s o a prime bone o f c o n t e n t i o n . ) Where s t a l e m a t e s o c c u r on t h e s e q u e s t i o n s , delegations  i t i s necessary  sometimes  t o seek i n s t r u c t i o n s from the home government, and the  for  -  73  conference adjourns f o r t h i s purpose.  -  The Havana C h a r t e r and UNCTAD  p r o v i d e no more than g e n e r a l g u i d e l i n e s on p r i c e s and q u o t a s . The outcome o f any commodity agreement  i s as much a f u n c t i o n  o f the b a r g a i n i n g s t r a t e g i e s , p l o y s and s k i l l s o f the p a r t i e s as i t i s the r e s u l t o f the b a r g a i n i n g s t r e n g t h s  concerned  of t h e s e p a r t i e s ,  b e i n g l a r g e l y determined by the s t r u c t u r a l c h a r a c t e r i s t i c s  the l a t t e r  of p r o d u c t i o n ,  consumption and t r a d e o f a commodity.  The O p e r a t i o n of an Agreement The d u r a t i o n o f an ICA i s u s u a l l y n o t more t h a n f i v e The agreement  comes i n t o f o r c e a f t e r  ratification,  acceptance,  obtained.  a complex p r o c e s s of  years.  signatures,  a p p r o v a l and a c c e s s i o n by governments has  (See Appendix A , A r t i c l e s 4 4 - 4 8 . )  A c c e s s i o n i s the f i n a l  been step  i n d i c a t i n g t h a t the a c c e d i n g government w i l l p a r t i c i p a t e i n t h e i m p l e m e n t a t i o n o f an agreement.  C e r t a i n c o n d i t i o n s a l s o need t o be  f i l l e d b e f o r e an ICA can come i n t o f o r c e .  These o b j e c t i v e s  are  ful-  framed  i n the l i g h t of the o b j e c t i v e s and n a t u r e o f a p a r t i c u l a r agreement. most c a s e s , where agreement  i n v o l v e s r e g u l a t i n g t h e t r a d e i n a commodity,  a minimum p e r c e n t a g e o f w o r l d t r a d e must b e . c o v e r e d by the b e f o r e the o p e r a t i o n o f the agreement coffee,  In  can be e f f e c t i v e .  participants  As s u c h , t i n ,  wheat, and sugar agreements r e q u i r e t h a t t h i s c o n d i t i o n . b e  satisfied  b e f o r e an agreement  can come i n t o f o r c e .  I n the f i r s t two  cases a minimum number o f p r o d u c i n g and consuming c o u n t r i e s a r e r e q u i r e d to accede t o an agreement.  also  The o l i v e o i l agreements, however,  - 74 -  only require that a certain number of " s u b s t a n t i a l l y interested" countries accede as the main objective of the agreements i s to improve marketing of 56 the commodity, rather than regulate p r i c e .  The s p e c i f i c conditions  for an i n t e r n a t i o n a l t i n agreement to come into force are: accession by at least six producing 1,000  countries holding 950 votes out of a t o t a l  (see.below), and nine consuming countries holding 300 votes also  out of a t o t a l 1,000  (see Appendix, A r t i c l e 47).  The t i n agreements  are p a r t i c u l a r l y stringent i n requiring producer p a r t i c i p a t i o n because price i s maintained by a buffer stock financed by producing F i n a l l y an agreement has to be implemented.  This i s done by  the commodity council - the on-going body of an agreement. f a l l into two categories: producing  countries.  The members  (exporting) countries and consuming  (importing) countries, each having a thousand votes which are d i s t r i b u t e d and weighted according to the proportion of exports of imports of the individual p a r t i c i p a t i n g countries.  For example, i n the 1970  Tin  Agreement, the top three producers - Malaysia, B o l i v i a and Thailand were assigned, respectively, 442,  164, and 139 votes each, while the top  two consumers - United States and Japan - had 310 and 121 votes respectively.  These votes are calculated for a l l p a r t i c i p a n t s i n a conference  and are changed accordingly a f t e r the actual acceding governments have been determined.  In addition.to these percentage votes, each p a r t i c i p a t i n g  country receives f i v e i n i t i a l votes. 450 votes.  No country may  receive more than  (See Appendix, A r t i c l e 11 and Annexes A and B.)  Decision-  making i n the Council i s effected through four d i f f e r e n t voting systems:  - 75 -  1)  a s i m p l e m a j o r i t y v o t e , t a k e n by p r o d u c e r s and consumers as a w h o l e ;  2) a s i m p l e d i s t r i b u t e d m a j o r i t y v o t e , i . e . , s i m p l e m a j o r i t y v o t e s t a k e n by p r o d u c e r s and consumers  separately;  3) a t w o - t h i r d s m a j o r i t y v o t e , t a k e n by p r o d u c e r s and consumers as a w h o l e ; and 4) a t w o - t h i r d s d i s t r i b u t e d m a j o r i t y v o t e , i . e . , t w o - t h i r d s m a j o r i t y v o t e s t a k e n by p r o d u c e r s and consumers  separately.  Which of t h e f o u r v o t i n g systems w i l l be used depends l a r g e l y on the i m p o r t a n c e of t h e i s s u e at hand.  For t h e more i m p o r t a n t d e c i s i o n s - f o r  example, q u e s t i o n s of e x p o r t c o n t r o l - u s u a l l y a t w o - t h i r d s d i s t r i b u t e d m a j o r i t y vote i s r e q u i r e d .  The o t h e r more i m p o r t a n t d e c i s i o n s t h a t  the  T i n C o u n c i l makes r e l a t e t o t h e d i s p o s a l of non-commercial s t o c k s and action during a t i n shortage,  as w e l l as t h e s e t t i n g up of v a r i o u s  committees t o s t u d y t h e o n - g o i n g problems o f the t i n i n d u s t r y .  For the  most p a r t , however, the C o u n c i l m e r e l y implements the terms o f an agreement  Ill  as d e c i d e d by the  THE DECISION TO GO FOR ACCORD If  tin  p a r t i c i p a n t s at a conference.  we c o n s i d e r p r o d u c i n g and consuming c o u n t r i e s n e g o t i a t i n g  agreements i n a game t h e o r y c o n t e x t , we w i l l  find that b a s i c a l l y a  mixed i n t e r e s t s o r m i x e d - m o t i v e " ^ b a r g a i n i n g problem o b t a i n s .  In essence,  t h i s means t h a t p r o d u c e r s and consumers have b o t h competing and common interests i n t i n trade.  I f t h e i r i n t e r e s t s were p u r e l y c o m p e t i t i v e ,  t h e r e c o u l d be no n e g o t i a t i o n o f t i n agreements;  on t h e o t h e r hand, i f  t h e i r i n t e r e s t s c o m p l e t e l y o v e r l a p p e d , t h e r e need be no such n e g o t i a t i o n .  "Pure" situations  such as t h e s e c l e a r l y do not e x i s t  i n the r e a l w o r l d  i n w h i c h i n t e r e s t s are i n v a r i a b l y mixed t o some d e g r e e .  I n the case o f  the p a r t i e s i n t i n t r a d e , we would agree i n g e n e r a l  producing  that  c o u n t r i e s would l i k e a h i g h p r i c e f o r t h e i r p r o d u c t and consuming a low p r i c e .  countries  We would a l s o agree t h a t n e i t h e r a h i g h p r i c e n o r a low p r i c e  c o u l d be m a i n t a i n e d i n the f r e e market f o r v e r y l o n g . f o r b o t h s i d e s c o u l d be s t a b i l i s e d  However, the  price  t h r o u g h the c o n t r o l mechanism o f a  commodity agreement, w h i c h reduces the p r i c e from f l u c t u a t i n g between v e r y h i g h and v e r y l o w . and consumers are as  I t f o l l o w s , t h e n , t h a t the p r e f e r e n c e s o f  producers  follows:  Producers 1.  High p r i c e w i t h o u t commodity agreement  2.  Medium range p r i c e w i t h agreement  3.  Price fluctuates  4.  Low p r i c e w i t h o u t agreement  between h i g h and l o w w i t h o u t agreement  Consumers 1)  Low p r i c e w i t h o u t agreement  2) Medium-range p r i c e w i t h agreement 3) P r i c e f l u c t u a t e s  between low and h i g h w i t h o u t agreement.  4) H i g h p r i c e w i t h o u t agreement To i l l u s t r a t e t h e s e p r e f e r e n c e s o f p r o d u c e r s  and consumers i n  a game m a t r i x , we need to know more than the o r d e r o f p r e f e r e n c e s ; we have to know the p a y o f f s , e x p r e s s e d i n terms o f u t i l i t y ,  f o r each o f  the  - 77 -  p o s s i b l e e i g h t outcomes t h a t can o c c u r f o r the two p a r t i e s .  The e i g h t  d i f f e r e n t outcomes w i l l t h e r e f o r e be a s s i g n e d numbers, o r u n i t v a l u e s 58 of  utility,  r e p r e s e n t i n g the p a y o f f o f each outcome to t h e two p a r t i e s .  We w i l l draw on our e a r l i e r a n a l y s i s of t i n agreements and the r e l a t i v e s t a k e s o f p r o d u c e r s and consumers i n t i n t r a d e t o a s s i g n t h e s e The  utilities.  example, however, s h o u l d be t a k e n as i l l u s t r a t i v e r a t h e r t h a n r e a l .  We may get t h e f o l l o w i n g m a t r i x :  5,3  0,5  -10,0  -10,-5  M a t r i x 1: S u b s c r i p t 1 - " c o o p e r a t e " ;  S u b s c r i p t 2 - "compete"  I n t h e m a t r i x above, we have c o l l a p s e d the s t r a t e g i e s a v a i l a b l e to p r o d u c e r s (P) and consumers (C) i n t o t w o :  "cooperate", i . e . ,  partici-  p a t e i n a t i n agreement, o r " c o m p e t e " , i . e . , g i v e f r e e r e i g n t o market f o r c e s o p e r a t i n g on the p r i c e o f t i n .  The p a y o f f s  f o r p r o d u c e r s when  t h e y choose to c o o p e r a t e a r e 5 u n i t s when consumers a l s o choose to cooperate  ( i . e . Agreement a t P_^, C^) , and 0 u n i t s when consumers choose —  not  to cooperate  —  (No Agreement a t P ^ , C ^ ) .  compete (No Agreement a t P 2 ,  59 When p r o d u c e r s choose to  and P , , , C^) , the p a y o f f s a r e a p o s i t i v e  10 u n i t s o r a n e g a t i v e 10 u n i t s , i n d i c a t i n g t h a t at t i m e s a v e r y h i g h  - 78 -  p r i c e may be m a i n t a i n e d but a t o t h e r t i m e s , i t may plummet t o e q u a l l y low l e v e l s .  For consumers, when t h e y choose t o c o o p e r a t e ,  are 3 u n i t s  when p r o d u c e r s a l s o choose t o c o o p e r a t e  ,the  payoffs  (Agreement a t P ^ ,  C^) , and 0 u n i t s when p r o d u c e r s choose t o compete (No Agreement a t 60 C^) .  When consumers choose not to c o o p e r a t e  and P £ ,  , t h a t i s , market f o r c e s  (No Agreement a t P ^ ,  are allowed f r e e r e i g n , the  payoffs  are a p o s i t i v e 5 u n i t s o r a d i s u t i l i t y a l s o of 5 u n i t s , i n d i c a t i n g p r i c e f l u c t u a t i o n s between low and h i g h .  I t s h o u l d be e v i d e n t t h a t  the  d i f f e r e n c e i n p a y o f f s when 'Agreement' and 'No Agreement' o b t a i n " i s s m a l l e r f o r consumers producers  (3-0 = 3^,  5-3 = 1_, and 3- (-5)  (5-0 = _5, 10-5 = _5, and 5 - (-10)  = 15) .  always  = iOthan i t i s  The l o g i c of  for  this  d i f f e r e n c e l i e s i n the r e l a t i v e s t a k e s o f p r o d u c e r s and consumers i n t i n trade.  S i n c e we f o u n d , i n an e a r l i e r s e c t i o n , t h a t p r o d u c e r s have a  h i g h e r s t a k e i n t i n t r a d e than consumers,  i t should f o l l o w that both the  s a l u t a r y and adverse e f f e c t s t h a t a t i n agreement  o r market f o r c e s may  have on t h e p r i c e o f t i n must n e c e s s a r i l y r e g i s t e r h i g h e r v a l u e s p r o d u c e r s than f o r consumers.. price i s greater consumers,  for  S t a t e d d i f f e r e n t l y , t h e u t i l i t y of a h i g h  t o p r o d u c e r s t h a n i s t h e u t i l i t y of a low p r i c e t o  and s i m i l a r l y , a s t a b l e m i d d l e - r a n g e p r i c e i s o f g r e a t e r  u t i l i t y t o p r o d u c e r s than consumers.  T h i s p r o p o s i t i o n s h o u l d be a t  < once  e v i d e n t when one r e c a l l s t h a t p r o d u c i n g c o u n t r i e s a r e Southern c o u n t r i e s h e a v i l y dependent on the t r a d e i n t i n f o r e x p o r t  earnings.  The b a r g a i n i n g problem i n v o l v e d i n the n e g o t i a t i o n o f t i n agreements can be f u r t h e r i l l u s t r a t e d i n a t w o - d i m e n s i o n a l " n e g o t i a t i o n  - 79 -  g r a p h " , i n w h i c h the p a y o f f s  i n M a t r i x 1 are p l o t t e d .  (Figure 1).  the g r a p h i c a l r e p r e s e n t a t i o n  o f M a t r i x 1, t h e s p e c i a l p o s i t i o n o f V^,  when b o t h p r o d u c e r s and consumers choose not t o c o o p e r a t e , apparent.  F o r t h i s outcome a l o n e ,  is  the u t i l i t y o f b o t h p a r t i e s  i n c r e a s e d by t h e i r c h o o s i n g any of t h e o t h e r t h r e e outcomes. t h r e e outcomes  ( P ^ C^l  In  immediately c o u l d be Among t h e s e  P.^, C ^ ; and P 2 > C^) , however, an i n c r e a s e  t h e u t i l i t y o f one n e c e s s a r i l y means a d e c r e a s e i n the u t i l i t y o f other.  These outcomes a r e c a l l e d P a r e t o o p t i m a , a f t e r  m i s t V i f r e d o P a r e t o , who f i r s t used the n o t i o n .  in the  the F r e n c h econo-  For any p o i n t t h a t i s n o t  P a r e t o - o p t i m a l , a n o t h e r p o i n t can be found p r o v i d i n g g r e a t e r u t i l i t y one p a r t y w i t h o u t d e c r e a s i n g  ,  the u t i l i t y o f t h e o t h e r p a r t y .  for  Bargaining  " s o l u t i o n s " a r e t h e r e f o r e u s u a l l y assumed t o be a r r i v e d a t a p o i n t on the " u t i l i t y f r o n t i e r " w h i c h i s the l i n e drawn t h r o u g h a l l the p a r e t o o p t i m a . The p r e c e d i n g d i s c u s s i o n t e l l s us t h a t i t would be l o g i c a l f o r p r o d u c e r s and consumers t o agree t o c o o p e r a t e i n s t a b i l i s i n g the p r i c e o f tin.  There i s s t i l l  It is possible  the problem o f n e g o t i a t i n g the a c t u a l c o n t r o l p r i c e .  t h a t the b a r g a i n i n g o v e r the c o n t r o l p r i c e may d e v e l o p  i n t o a zero-sum game.  Indeed,  t h i s might w e l l be the case i f one assumes  a one-to-one r e l a t i o n s h i p between p r i c e and u t i l i t y f o r the b a r g a i n i n g parties,  i . e . , an i n c r e a s e  producers'  i n the p r i c e c o r r e s p o n d s  u t i l i t y while decreasing  the p r i c e corresponds t h a t of consumers.  to an i n c r e a s e  t h a t o f consumers,  to a decrease i n producers'  I n s h o r t , we have the c l a s s i c  the g a i n o f one e q u a l s the l o s s of the o t h e r .  in  and '. l o w e r i n g o f  u t i l i t y while increasing zero-sum game where  We can i l l u s t r a t e  this  - 80  -  5  0  UTILITY  FIGURE 1:  -  5  TO  10  P  GRAPHICAL ILLUSTRATION OF MATRIX 1  - 81 -  q u i t e s i m p l y i n a game m a t r i x , where p r o d u c e r s and consumers can e i t h e r choose t o i n c r e a s e o r l o w e r a g i v e n p r i c e , be i t the e x i s t i n g c o n t r o l p r i c e as i n the case o f o n - g o i n g t i n agreements, as i n t h e n e g o t i a t i o n of new agreements.  o r any proposed p r i c e  We may get the f o l l o w i n g m a t r i x  ( a g a i n , b a s i n g t h e v a l u e s on the a s s e r t i o n t h a t p r o d u c e r s have a h e a v i e r s t a k e i n t i n agreements than c o n s u m e r s ) :  '10  0  -5  Matrix 2;  Subscript 1 - "increase p r i c e " ; Subscript 2 "lower p r i c e " .  We can see t h a t t h e b e s t outcome f o r p r o d u c e r s i s P ^ , a p a y o f f o f 1 0 , i . e . , when b o t h s i d e s agree t o i n c r e a s e the p r i c e . b e s t outcome f o r consumers i s  C  2  w  i-  t n  a  with The  p a y o f f o f 5 , when b o t h p a r t i e s  62 decide to decrease the p r i c e . 63 s t r a t e g y from t h e o t h e r ,  I f e i t h e r s i d e chooses an o p p o s i t e  the p a y o f f t o b o t h i s 0 , i n d i c a t i n g t h a t no  agreement can be reached on f i x i n g the p r i c e and t h e r e f o r e the s t a t u s quo p r e v a i l s , i . e . , n e i t h e r side gains nor l o s e s . s a d d l e p o i n t , i . e . , a p o i n t where a " s t a b l e were r a t i o n a l .  T h i s i s the p o i n t P ^ ,  The game i n f a c t has a  solution" rests,  i f both players  where i f p r o d u c e r s choose t o  i n c r e a s e the p r i c e , the w o r s t t h a t can happen t o them i s 0 u t i l i t y .  - 82 -  S i m i l a r l y , i f consumers choose t o d e c r e a s e the p r i c e , t h e w o r s t t h a t can  happen t o them i s a u t i l i t y o f 0.  choosing  There i s no sense i n p r o d u c e r s  t h e r e b y opening themselves t o a d i s u t i l i t y o f -5 i f t h e o t h e r  s i d e chooses C ^ .  S i m i l a r l y , consumers w i l l be f o o l i s h t o choose  be v u l n e r a b l e t o a h i g h n e g a t i v e p a y o f f  and  (-10).  C l e a r l y the above game i s an o v e r s i m p l i f i c a t i o n , but i t does i l l u s t r a t e the p o i n t t h a t p r i c e b a r g a i n i n g i f i t becomes zero-sum w i l l l e a d t o non-agreement.  The 1962 cocoa agreement n e g o t i a t i o n s  l a r g e l y because p r i c e b a r g a i n i n g d i d become z e r o - s u m . ^  foundered  Similarly,  the  1965 T i n Agreement may have c o l l a p s e d i f M a l a y s i a and B o l i v i a were n o t f i n a l l y g r a n t e d the p r i c e i n c r e a s e s part,  t i n agreementshave  they s o u g h t .  However, f o r t h e most  a v o i d e d , though n o t e n t i r e l y e l i m i n a t e d , z e r o -  sum b a r g a i n i n g by h a v i n g a c o n t r o l p r i c e t h a t f l u c t u a t e s between a f l o o r and  a c e i l i n g , instead of a s i n g l e p r i c e .  Flexible price  i n c r e a s e the l a t i t u d e o f c h o i c e f o r t h e b a r g a i n i n g p a r t i e s .  arrangements Within  l i m i t s , p r o d u c e r s and consumers can now have t h e i r " o w n " p r i c e , as  it  were.  S t a t e d d i f f e r e n t l y , consumers can d e v o t e a l l t h e i r e n e r g i e s  in  s e c u r i n g a low f l o o r p r i c e and p r o d u c e r s c o n c e n t r a t e t h e i r e f f o r t s  on  securing a high c e i l i n g p r i c e .  However, the f i n a l f l o o r and c e i l i n g  p r i c e s d e c i d e d on must never be below the minimum d i s p o s i t i o n s ^ " * o f p r o d u c e r s and consumers r e s p e c t i v e l y , i . e . , the minimum p r i c e p r o d u c e r s w i l l a c c e p t f o r t h e i r good and the maximum p r i c e consumers w i l l pay f o r it. The p r e c e d i n g d i s c u s s i o n has attempted t o focus on t h e broad  - 83 -  considerations accords. t i n trade,  t h a t i n f l u e n c e p r o d u c e r s and consumers t o n e g o t i a t e t i n  We t r i e d to show t h a t g i v e n the s t r u c t u r a l c h a r a c t e r i s t i c s i t i s i n the i n t e r e s t s  c i p a t e i n such a c c o r d s .  o f b o t h p r o d u c e r s and consumers  I t i s e s p e c i a l l y i n the i n t e r e s t s  of  of  to p a r t i -  Southern  p r o d u c i n g c o u n t r i e s , h e a v i l y dependent on the income, from t i n t r a d e , c o n c l u d e such agreements w i t h t h e consuming c o u n t r i e s . t h a t the f i n a l d e c i s i o n to p a r t i c i p a t e  to  We-suggested,  also,  i n such agreements r e s t s on t h e  n e g o t i a t i o n o f the p r i c e range to be implemented by an agreement. 66 the p i c t u r e p r o v i d e d so f a r has been b a s i c a l l y a s t a t i c  However,  one. We have y e t  t o probe i n t o the " b l a c k b o x " o f b a r g a i n i n g w h i c h i n v o l v e s the whole p r o c e s s of persuasion,  c o m m u n i c a t i o n , the use o f t h r e a t s and promises  to s e c u r e f a v o u r a b l e outcomes.  t i o n s of b a r g a i n i n g p a r t i e s  like,  F o r example, we i n t r o d u c e d t h e n o t i o n s o f  u t i l i t y and. minimum d i s p o s i t i o n as i f they were f i x e d and C l e a r l y t h i s i s not t h e c a s e .  and the  unchangeable.  Not o n l y do u t i l i t i e s and minimum d i s p o s i -  change w i t h time and c i r c u m s t a n c e , but what  i s more i m p o r t a n t , can be changed by the b a r g a i n i n g p a r t i e s i n v o l v e d . F u r t h e r m o r e , new a l t e r n a t i v e s  can become a v a i l a b l e i n any b a r g a i n i n g  s i t u a t i o n , t h e r e b y changing the whole s t r u c t u r e o f the d e c i s i o n m a t r i x and n e g o t i a t i o n g r a p h .  I t i s t h i s dynamic a s p e c t o f b a r g a i n i n g - the  m o d i f i c a t i o n o f u t i l i t i e s , minimum d i s p o s i t i o n s and a l t e r n a t i v e s  -  t h a t I propose t o examine i h t h e next c h a p t e r , under the b r o a d l y d e f i n e d r u b r i c of " b a r g a i n i n g  strategies".  CHAPTER I I I SOUTHERN BARGAINING STRATEGIES:  PAST USAGE AND FUTURE POSSIBILITIES  I n t h i s c h a p t e r , I propose t o examine the k i n d s of b a r g a i n i n g s t r a t e g i e s S o u t h e r n p r o d u c i n g c o u n t r i e s have used and can use v i s - a v i s N o r t h e r n consumers i n t i n n e g o t i a t i o n s .  A bargaining strategy  is  d e f i n e d b r o a d l y t o i n c l u d e any method o r t e c h n i q u e , v e r b a l and n o n verbal,  t h a t a p a r t y can b r i n g to bear on the o t h e r p a r t y i n i n f l u e n c i n g  i t t o a c t i n the f i r s t p a r t y ' s  favour.  Thus, b a r g a i n i n g  strategies  would encompass most o f the a c t i v i t y i n v o l v e d i n o p e r a t i o n a l n e g o t i a t i o n as we have d e f i n e d i t .  More s p e c i f i c a l l y , b a r g a i n i n g d e a l s w i t h  m o d i f i c a t i o n of u t i l i t i e s , minimum d i s p o s i t i o n s and the a v a i l a b l e t o the b a r g a i n i n g p a r t i e s .  alternatives  A b a r g a i n i n g s t r a t e g y would there-  f o r e - be a method by w h i c h such m o d i f i c a t i o n i s e f f e c t e d of the i n i t i a t o r .  the  t o t h e advantage  My i n t e n t i o n i s t o p r o v i d e something of a c h e c k - l i s t  o f s t r a t e g i e s t h a t have been employed and can be employed by Southern producing countries i n t i n n e g o t i a t i o n s .  S i n c e t h i s i s an e x p l o r a t o r y  s t u d y , I have c a s t my n e t s r a t h e r wide i n c o n s i d e r i n g the s t r a t e g i e s a v a i l a b l e t o Southern p r o d u c e r s , b u t d e s p i t e a l l p o s s i b i l i t i e s have been  t h i s , I make no c l a i m t h a t  exhausted.  The s t r a t e g i e s o u t l i n e d and f o r m u l a t e d s h o u l d b e s t be  understood  i n terms of how a_ S o u t h e r n c o u n t r y may b a r g a i n i n t i n n e g o t i a t i o n s , the assumption t h a t the g r e a t e r i n c o n c e r t on any s t r a t e g y , success.  the number o f Southern p r o d u c e r s  with  acting  the g r e a t e r would be the l i k e l i h o o d of  There i s some e v i d e n c e , however, t h a t S o u t h e r n c o u n t r i e s  r e a s o n a b l y s i m i l a r b a r g a i n i n g p o s i t i o n s on a number of i s s u e s , as  take shall  - 85  be s e e n .  I have attempted t o arrange the s t r a t e g i e s on some k i n d of a  " m i l d - t o - s t r o n g " c o n t i n u u m , t h a t i s , they range from s t r a t e g i e s of n o r m a t i v e a p p e a l and those employing " s o f t "  persuasion  techniques  through t o those e m p l o y i n g " h a r d " t e c h n i q u e s such as t h r e a t s accomplis.  and  faits  The problem o f a s s e s s i n g the e f f i c a c y of these s t r a t e g i e s  and making recommendations f o r t h e i r f u t u r e usage w i l l be l a r g e l y u n d e r taken i n a s e p a r a t e s e c t i o n a f t e r the s t r a t e g i e s have been d e s c r i b e d and illustrated. I n f l u e n c i n g the Opponent's N o r m a t i v e - P o s i t i o n The group o f s t r a t e g i e s t o be c o n s i d e r e d under t h i s h e a d i n g are among t h e more common and p o p u l a r ones used i n b a r g a i n i n g s i t u a t i o n s , a l t h o u g h they are a t the same t i m e some o f t h e more d i f f i c u l t execute s u c c e s s f u l l y .  to  When one employs such s t r a t e g i e s , one, i n  effect,  t e l l s the opponent, " I f t h i s i s y o u r n o r m a t i v e p o s i t i o n , y o u s h o u l d do thus...".  There are two b r o a d ways of a p p r o a c h i n g such s t r a t e g i e s :  one c o u l d merely p o i n t out t o t h e opponent t h a t h i s n o r m a t i v e p o s i t i o n demands t h a t he t a k e s a p a r t i c u l a r c o u r s e o f a c t i o n w h i c h i s  favourable  toward one, o r one c o u l d a c t u a l l y attempt t o s h i f t h i s n o r m a t i v e p o s i t i o n i n such a way t h a t he t a k e s an a c t i o n t h a t i s f a v o u r a b l e toward one.  The end r e s u l t i s e s s e n t i a l l y the same — i f one succeeds i n c o n -  v i n c i n g the opponent of the n o r m a t i v e v a l u e ( t o him) o f a p a r t i c u l a r course o f a c t i o n , he must n e c e s s a r i l y x<rant t o pursue t h a t c o u r s e of tion.  ac-  I n b a r g a i n i n g t e r m s , one would have succeeded i n m o d i f y i n g the  opponent's u t i l i t y  (satisfaction)  from an outcome.  There are b a s i c a l l y  - 86 -  t h r e e v a r i a n t s of t h i s s t r a t e g y  t h a t I w i s h t o c o n s i d e r , two of w h i c h  have been w i d e l y used i n t i n n e g o t i a t i o n s .  The f i r s t may be c a l l e d the  " a l t r u i s m a p p r o a c h " , t h e s e c o n d , t h e "democracy a p p r o a c h " , and the t h i r d , " p r o m o t i n g empathy". The a l t r u i s m a p p r o a c h :  E s p e c i a l l y s i n c e the c o n v e n i n g o f UNCTAD,  i t i s common, i n t i n n e g o t i a t i o n s ,  to hear Southern delegates t a l k of  t h e new k i n d of e t h i c t h a t has been f o s t e r e d i n t h e r e l a t i o n s among nations.  Some c a l l e d i t a "ne\j m o r a l i t y " and r e l a t e d i t t o " s o c i a l  jus-  t i c e " , an " o r d e r e d w o r l d " , and " p e a c e " ; and o t h e r s c a l l e d i t a "new o r i e n t a t i o n " for t i n agreements.1  More s p e c i f i c a l l y , t h i s new e t h i c  r e f e r r e d t o the v a l u e s engendered by the  UNCTAD movement, w h i c h were  based on the need f o r a more e q u i t a b l e i n t e r n a t i o n a l r e - d i s t r i b u t i o n o f economic w e l l - b e i n g . in t i n negotiations,  When S o u t h e r n d e l e g a t e s r e f e r t o the UNCTAD e t h i c they a r e , i n e f f e c t ,  a t t e m p t i n g t o persuade t h e i r  N o r t h e r n c o u n t e r p a r t s of the m o r a l i t y of c e r t a i n c o u r s e s o f a c t i o n ; more s p e c i f i c a l l y , they are a p p e a l i n g t o N o r t h e r n a l t r u i s m . o f r e a s o n i n g g e n e r a l l y goes as f o l l o w s : the i d e a l s  The l i n e  Many N o r t h e r n c o u n t r i e s espouse  f o s t e r e d by UNCTAD i f not e x p l i c i t l y , at l e a s t t a c i t l y .  s u c h , they s h o u l d approach t i n agreements  from a " w e l f a r e "  As  perspective.  I t f o l l o w s t o o , t h a t they s h o u l d c o n s i d e r the q u e s t i o n o f p r i c e - f i x i n g and c o n t r i b u t i o n s t o t h e b u f f e r s t o c k on the p r i n c i p l e , "From each a c c o r d i n g t o h i s a b i l i t y , t o each a c c o r d i n g t o h i s n e e d . " This strategy issue,  i s used most o f t e n w i t h r e s p e c t  i n p a r t i c u l a r , w i t h respect  t o the b u f f e r  stock  t o the f a c t t h a t consumers do not c o n -  -  87 -  t r i b u t e t o the f i n a n c i n g of t h e b u f f e r s t o c k .  F o r example, the T h a i  d e l e g a t e t o the 1960 c o n f e r e n c e complained t h a t the c o u n t r i e s c o n t r i b 3  u t i n g t o t h e b u f f e r s t o c k were the ones l e a s t a b l e t o do s o .  Similarly,  the M a l a y s i a n r e p r e s e n t a t i v e t o t h e 1965 c o n f e r e n c e s a i d t h a t t h e burden of m a i n t a i n i n g the b u f f e r s t o c k was a m a t t e r of " g r a v e c o n c e r n " t o the producer c o u n t r i e s : I t h u r t none b u t the p r o d u c e r ; the p r i n c i p l e seems to be: "To h i m t h a t h a t h , more s h a l l be g i v e n ; from him who g i v e t h , more s h a l l be t a k e n a w a y . " The p r o d u c e r s ' burden w i l l n o t be l i g h t e n e d f o r another f i v e long y e a r s . Condemned t o t h e same o l d f l o o r p r i c e , he would a l s o be r e q u i r e d t o s u b s i d i z e the consumer by p r o v i d i n g out of h i s own meagre e a r n i n g s the means w i t h w h i c h t o keep the p r i c e a t o r below t h e c e i l i n g . ^ The second p a r t o f the quote a l s o i n d i c a t e s t h a t S o u t h e r n p r o d u c e r s employ the a l t r u i s m approach o r some form of m o r a l p e r s u a s i o n i n b a r g a i n i n g f o r h i g h e r p r i c e s t o be f i x e d i n t i n agreements.  It is  also  o f t e n used t o persuade n o n - p a r t i c i p a t i n g consumer c o u n t r i e s t o become parties  t o t i n agreements.  The B o l i v i a n r e p r e s e n t a t i v e t o t h e 1965  n e g o t i a t i o n s thought t h a t i t was no l o n g e r p o s s i b l e t o r e g a r d i n t e r n a t i o n a l t r a d e from a p u r e l y c o m m e r c i a l a n g l e . demanded " t h a t prosperous  Present-day m o r a l i t y  c o u n t r i e s s h o u l d c o n t r i b u t e t o the economic  development o f the l e s s f a v o u r e d c o u n t r i e s , not o n l y by p r o v i d i n g assistance,  b u t a l s o h e l p i n g t o e s t a b l i s h f a i r and r e m u n e r a t i v e p r i c e s  f o r commodities e x p o r t e d by many of the d e v e l o p i n g c o u n t r i e s . " ^  Using  the same a p p r o a c h , t h e T h a i d e l e g a t e argued t h a t s i n c e c o u n t r i e s  like  the US, USSR, and F e d e r a l R e p u b l i c o f Germany were a l r e a d y  cooperating  -  88 -  w i t h the I T C , they s h o u l d a f f i r m t h e i r " s o u n d m o r a l i n t e n t i o n s " by j o i n i n g the agreement.  Thus, the a l t r u i s m b a r g a i n i n g s t r a t e g y i s  a  p o p u l a r s t r a t e g y among Southern p r o d u c i n g c o u n t r i e s . The democracy a p p r o a c h :  T h i s i s the second v a r i a n t o f  the  m o r a l p e r s u a s i o n s t r a t e g y and p e r t a i n s p a r t i c u l a r l y t o the q u e s t i o n of buffer stock c o n t r i b u t i o n s .  I n s t e a d o f a l t r u i s m , t h i s s t r a t e g y uses  as  i t s p p i n t of d e p a r t u r e d e m o c r a t i c norms, e s p e c i a l l y t h e n o t i o n s of e q u a l i t y and f a i r n e s s .  I t i s a l s o t o a l a r g e e x t e n t used i n d e p e n d e n t l y  of the UNCTAD ' e t h o s ' .  The l i n e o f argument u s u a l l y t a k e s the  following  progression: " T i n agreements a r e no more t h e c a r t e l - l i k e r e s t r i c t i o n schemes they used t o be i n the pre-war days.  From 1953 onwards, f o l l o w i n g  the  Havana C h a r t e r , i t was agreed t h a t consuming c o u n t r i e s s h o u l d have an e q u a l say i n the terms and o p e r a t i o n s  o f t i n agreements.  Such e q u a l  p a r t i c i p a t i o n has been i n s t i t u t i o n a l i z e d i n the T i n C o u n c i l , where p r o d u c i n g c o u n t r i e s and consuming c o u n t r i e s each have a thousand v o t e s t o c a s t i n d e c i d i n g the o p e r a t i o n s  of t i n agreements.  Indeed,  the  p r i n c i p l e o f e q u a l p a r t i c i p a t i o n i n d e c i s i o n - m a k i n g has been adhered despite  t h e f a c t t h a t t h e consuming c o u n t r i e s r e p r e s e n t e d  to  i n t i n agree-  ments account f o r a much s m a l l e r p r o p o r t i o n o f t o t a l t i n consumption than p r o d u c e r s account f o r t o t a l p r o d u c t i o n .  Thus, consuming c o u n t r i e s  have g a i n e d e q u a l p a r t i c i p a t i o n i n t i n agreements, w h i c h f a c t  producing  c o u n t r i e s t o not begrudge them.  object  However, p r o d u c i n g c o u n t r i e s  s t r o n g l y t o the c o n t i n u i n g anomaly t h a t consumers do not c o n t r i b u t e  - 89 -  e q u a l l y t o the maintenance and o p e r a t i o n s of t i n agreements.  Most  i m p o r t a n t l y , consumers do not c o n t r i b u t e t o the f i n a n c i n g of t h e b u f f e r s t o c k — the main i n s t r u m e n t o f c o n t r o l of t i n agreements. s h o u l d not be i f we a l l espouse t h e p r i n c i p l e , e n t a i l s e q u a l s h a r i n g of  Surely, this  'Equal p a r t i c i p a t i o n  costs'".  T h i s i s a l s o a f a i r l y common s t r a t e g y countries i n t i n negotiations.  employed by p r o d u c i n g  For i n s t a n c e , the M a l a y s i a n d e l e g a t e  s a i d t h a t c o n t r i b u t i o n t o t h e b u f f e r s t o c k by p r o d u c e r s a l o n e was " i l l o g i c a l " s i n c e p r o d u c e r s reaped e q u a l l y the b e n e f i t s  from t i n  agreements.  I n the Economic Committee meetings of t h e 1970 n e g o t i a t i o n s , the b u f f e r s t o c k i s s u e dominated t h e s e s s i o n s w i t h p r o l o n g e d debates between p r o 8 ducers and consumers on the manner t h e s t o c k s h o u l d be f i n a n c e d .  In  g e n e r a l , S o u t h e r n c o m p l a i n t s c e n t r e d around the i n h e r e n t u n f a i r n e s s  of  the p r e s e n t method of f i n a n c i n g , a l t h o u g h they tended t o c o u p l e t h i s democracy approach w i t h a p p e a l s t o the s e l f - i n t e r e s t  o f consumers,  which,  a n a l y t i c a l l y speaking, i s a d i f f e r e n t l y k i n d of b a r g a i n i n g s t r a t e g y , we s h a l l c o n s i d e r l a t e r o n .  one  The I n d o n e s i a n d e l e g a t e summed up the debate  i n the f o l l o w i n g t e r m s : The new a g r e e m e n t . . . s h o u l d i n g r e a t e r measure r e f l e c t the p r i n c i p l e o f p a r t n e r s h i p between consumers and p r o d u c e r s , y e t t h e l a t t e r ' s e f f o r t s t o persuade t h e consuming c o u n t r i e s t o s h o u l d e r p a r t o f the burden now bourne e n t i r e l y by the p r o d u c i n g c o u n t r i e s has been u n s u c c e s s f u l . N e v e r t h e l e s s , I have not g i v e n up hope t h a t consuming c o u n t r i e s w i l l agree t o s h a r e b o t h i n b u f f e r s t o c k f i n a n c i n g and i n b o r r o w i n g by the b u f f e r s t o c k . S i n c e the i s s u e ended i n d e a d l o c k , a w o r k i n g p a r t y was s e t  up t o  discuss  - 90  -  the forms o f f i n a n c i a l a s s i s t a n c e , e s p e c i a l l y from the I n t e r n a t i o n a l Monetary Fund, t h a t might be a v a i l a b l e f o r b u f f e r s t o c k f i n a n c i n g . I n fact,  an IMF r e p r e s e n t a t i v e  p a r t o o k i n the d e l i b e r a t i o n s and o u t l i n e d  a number of ways i n w h i c h the w o r l d body c o u l d h e l p p r o d u c e r s the b u f f e r s t o c k . 1 ( ^  finance  So, t h e q u e s t i o n of consumer p a r t i c i p a t i o n i n t h e  b u f f e r s t o c k was bypassed i n the f a c e o f s t r o n g o b j e c t i o n s  from major  consuming c o u n t r i e s , e s p e c i a l l y t h e U n i t e d Kingdom, J a p a n , US and Canada.  There were a number of consuming c o u n t r i e s , however, who were  s y m p a t h e t i c tox-jard e q u a l f i n a n c i a l r e s p o n s i b i l i t y w i t h r e s p e c t  to  b u f f e r s t o c k f u n d i n g , n o t a b l y F r a n c e , the N e t h e r l a n d s and A u s t r a l i a . 1 1 I t i s i n t e r e s t i n g t o n o t e t h a t Southern c o u n t r i e s such as I n d i a and the P h i l i p p i n e s took no p a r t i n the b u f f e r s t o c k d e b a t e .  These two  c o u n t r i e s are i n the somewhat d e l i c a t e p o s i t i o n o f b e i n g S o u t h e r n c o u n t r i e s w h i l e a t the same time b e i n g consumers  i n t i n agreements.  U n d e r s t a n d a b l y , they d i d n o t speak out a g a i n s t t h e i r own d i r e c t  interests  as consumers, w h i l e p r e s u m a b l y , t o p r e s e r v e S o u t h e r n s o l i d a r i t y , n e i t h e r d i d they oppose the S o u t h e r n p r o d u c i n g c o u n t r i e s ' attempts t o have c o n sumers c o n t r i b u t e t o the b u f f e r P r o m o t i n g empathy:  stock.  T h i s s t r a t e g y attempts t o . change o r s h i f t  the  o t h e r p a r t y ' s n o r m a t i v e p o s i t i o n through the t e c h n i q u e known t o p s y c h o l 12 o g i s t s as " p e r m i s s i v e t h e r a p y " . " S t a t e the opponent's yours.  •i  prescribes:  case f o r him so as t o ensure h i s empathy w i t h  A n a t o l Rapoport l i s t s 1)  In b a r g a i n i n g terms, i t  t h r e e s t e p s i n p r o m o t i n g such empathy:  Conveying to the opponent t h a t he has been heard and understood;  13  - 91 2)  D e l i n e a t i n g the r e g i o n o f v a l i d i t y of the o p p o n e n t ' s  stand;  and 3)  I n d u c i n g the assumption of  similarity.  Thus, what i s suggested h e r e i s a r e v e r s a l of the s t e r e o t y p e b e h a v i o u r one o f t e n f i n d s at the b a r g a i n i n g t a b l e where t h e p a r t i e s are i m p a t i e n t and even u n w i l l i n g t o hear out t h e i r o p p o s i t e numbers. strategy  The i d e a o f t h i s  i s t o convey t o t h e opponent t h a t one n o t o n l y understands  v a l u e s b u t t h a t one a p p r e c i a t e s  his  the v a l i d i t y o f h i s s t a n d , t h e r e b y i n -  v i t i n g the opponent t o pay one the same compliment by showing h i s empathy f o r o n e ' s s t a n d . case i n t i n agreements permissive  I w i l l now attempt t o s t a t e the  i n the manner one might expect o f a S o u t h e r n  therapist:  "The consuming c o u n t r i e s ' s t a k e i n t i n agreements large,  consumer's  i s not v e r y  i f one measures t h i s s t a k e i n terms of t h e p e r c e n t a g e o f t o t a l  trade that t i n represents  f o r these c o u n t r i e s .  T h e r e f o r e , one i s  to b e l i e v e t h a t consumer i n t e r e s t i n t i n agreements  led  i s not v e r y s t r o n g  as compared t o t h e i n t e r e s t o f p r o d u c i n g c o u n t r i e s f o r whom t i n forms a l a r g e percentage  of t r a d e .  However, t i n remains an i m p o r t a n t i n p u t  i n i n d u s t r i a l p r o d u c t i o n and consumers are t h e r e f o r e i n t e r e s t e d i n a c q u i r i n g t h e m e t a l i n s u f f i c i e n t q u a n t i t i e s f o r t h e i r needs a t p r i c e s on a r e g u l a r b a s i s .  fair  I t i s m a i n l y f o r t h i s reason t h a t consuming  c o u n t r i e s have j o i n e d p r o d u c i n g c o u n t r i e s i n i m p l e m e n t i n g t h e mechanism of a commodity a c c o r d w h i c h aims at s t a b i l i s i n g the p r i c e of t i n and a t the same time e n s u r i n g t h a t adequate s u p p l i e s are a v a i l a b l e . developed consuming c o u n t r i e s have a l s o e x p r e s s e d  The more  their interest i n  - 92 -  h e l p i n g the developing producing c o u n t r i e s to s t a b i l i s e earnings  from t i n .  This i s a noble o b j e c t i v e ,  t h e i r export  and commodity agreements  are a p r e - e m i n e n t l y e f f e c t i v e way of p u r s u i n g such an aim so l o n g as the p a r t i c i p a t i n g c o u n t r i e s c o o p e r a t e to achieve t h i s end.  i n taking a l l reasonable steps  There i s no reason t o doubt t h a t the p a r t i e s  t i n agreements have s i n c e r e l y and c o n s c i e n t i o u s l y committed  to  themselves  to such a g o a l . Now, l e t us c o n s i d e r t h e p o s i t i o n o f p r o d u c i n g c o u n t r i e s i n t i n agreements.  I t i s o f t e n thought t h a t our v a l u e s  posed t o those o f consuming c o u n t r i e s . the t r u t h ! ments.  are d i a m e t r i c a l l y op-  There i s n o t h i n g f u r t h e r from  I n d e e d , i f t h i s were the c a s e , t h e r e c o u l d be no t i n a g r e e -  Quite on the c o n t r a r y , the v a l u e s  c o u n t r i e s a r e i n many ways v e r y s i m i l a r . commonality, o r s h a r e d v a l u e s ,  o f p r o d u c i n g and consuming L e t us d e l i n e a t e the a r e a o f  among p r o d u c e r s and consumers.  First,  producers and consumers a l i k e are i n t e r e s t e d i n an adequate s u p p l y of t i n at a l l t i m e s ; s e c o n d , b o t h s i d e s agree t h a t p r i c e s s h o u l d be t o consumers and r e n u m e r a t i v e t o p r o d u c e r s , w o r k i n g of market f o r c e s  and t h a t ,  fair  l e f t t o the  such a s i t u a t i o n may not o b t a i n ; t h i r d , p r o d u c i n g  c o u n t r i e s and consuming c o u n t r i e s s h a r e t h e v a l u e of f o s t e r i n g a h e a l t h y growth o f the t i n i n d u s t r y ; and l a s t , tant,  b u t c e r t a i n l y not t h e l e a s t i m p o r -  i s the i n t e r e s t o f b o t h s i d e s i n p r o m o t i n g the economic d e v e l o p -  ment o f the l e s s favoured n a t i o n s through t i n  accords."  Such a t t e m p t s at p r o m o t i n g empathy w i l l not a u t o m a t i c a l l y  guar-  antee p r o d u c e r s a good p r i c e o r consumer c o n t r i b u t i o n t o the b u f f e r  stock.  -  93 -  They m e r e l y p r e p a r e the ground f o r b a r g a i n i n g t o be c a r r i e d out i n a "give-and-take"  spirit.  The v a l u e o f p r o m o t i n g empathy l i e s i n making  the opponent more open t o s u g g e s t i o n s , where a n t a g o n i s i n g him may make him s o l i d i f y h i s b a r g a i n i n g p o s i t i o n .  I n p r o m o t i n g empathy, one t h e r e -  f o r e hopes t o s h i f t the o p p o n e n t ' s n o r m a t i v e p o s i t i o n i n o n e ' s There i s  l i t t l e use o f t h i s s t r a t e g y i n t i n agreements.  favour.  We n o t e d e a r l i e r  t h a t the T h a i d e l e g a t e i n 1965 urged US, USSR and West Germany to a f f i r m t h e i r "sound m o r a l i n t e n t i o n s " by j o i n i n g the agreement, representative  a l s o appealed  and N i g e r i a n  t o the " c o n s c i e n c e " o f n o n - p a r t i c i p a t i n g  14 countries,  w h i c h to some e x t e n t , may be seen as attempts at p r o m o t i n g  responsiveness,  b u t by and l a r g e ,  d e l e g a t e s tend t o base t h e i r a p p e a l on  the UNCTAD ethos and on a l t r u i s m . I n f l u e n c i n g t h e Opponent's P e r c e p t i o n o f h i s U t i l i t y from an Outcome The p r e v i o u s group of s t r a t e g i e s were p r i m a r i l y based on n o r m a t i v e considerations.  F o r the most p a r t ,  they were premised on the i d e a  that  the opponent s h o u l d want t o take a c e r t a i n c o u r s e o f a c t i o n i f he became c o n v i n c e d of i t s n o r m a t i v e v a l u e . are l a r g e l y amoral i n n a t u r e . d i r e c t l y t o the s e l f - i n t e r e s t  The s t r a t e g i e s t o be c o n s i d e r e d now  The f i r s t t o be c o n s i d e r e d a p p e a l s o f the o t h e r p a r t y .  The a p p e a l t o  self-  i n t e r e s t i s a d u r a b l e n o t i o n i n b a r g a i n i n g and n e g o t i a t i o n , and i s by no means a n o v e l c o n c e p t .  As e a r l y as  1716, d u r i n g what has been  n o s t a l g i c a l l y dubbed the Golden Age o f D i p l o m a c y , de C a l l i e r e s had enjoined diplomats  to  . . . m a k e each p r o p o s i t i o n w h i c h you put f o r w a r d as  -  9A  -  a statement o f the i n t e r e s t s of those w i t h whom y o u a r e n e g o t i a t i n g , f o r s i n c e diplomacy i s the attempt t o f i n d a b a s i s f o r common a c t i o n o r agreement, i t i s o b v i o u s t h a t the more the opposing p a r t y can be b r o u g h t t o see y o u r d e s i g n s i n t h e i r own l i g h t and t o a c c e p t them t h u s , the more s u r e l y w i l l t h e i r c o o p e r a t i o n f o r any a c t i o n be f r u i t f u l t o themselves and t o you."'""' In s h o r t , the suggestion  i s t h a t one s h o u l d always p o i n t out t o the  opponent t h a t he has a d i r e c t i n t e r e s t i n d o i n g something t h a t one wants done.  By s u g g e s t i n g  t o the o p p o s i n g p a r t y t h a t something d i r e c t l y b e n -  e f i t s h i m , and c o n v i n c i n g him o f i t , one would h a v e , i n  effect,  i n f l u e n c e d h i s p e r c e p t i o n of g a i n from a p a r t i c u l a r outcome.  The second  method of i n f l u e n c i n g the o p p o n e n t ' s p e r c e p t i o n of g a i n , w h i c h I  will  c o n s i d e r , i n v o l v e s m o d i f y i n g h i s minimum d i s p o s i t i o n , i . e . , t h e l e a s t 16  f a v o u r a b l e terms he would a c c e p t i n a b a r g a i n . t i a l l y entails telling  The s t r a t e g y  (and c o n v i n c i n g ) the opponent t h a t the terms  were a c t u a l l y more f a v o u r a b l e t o him t h a n he had o r i g i n a l l y The  essen-  thought.  t h i r d s t r a t e g y may be c a l l e d e x p l a i n i n g away a m i s p e r c e p t i o n w h i c h  e s s e n t i a l l y i n v o l v e s m o d i f y i n g t h e o p p o n e n t ' s p e r c e p t i o n o f g a i n by t e l l i n g him t h a t he has i n f a c t m i s p e r c e i v e d the u t i l i t y from a p a r ticular  outcome.1^ The  d i r e c t appeal to s e l f - i n t e r e s t :  gaining strategy  Quite s i m p l y , t h i s b a r -  e n t a i l s t e l l i n g the opponent, " Y o u s h o u l d want t o do I  t h i s f o r i t s d i r e c t b e n e f i t , w h i c h you p o s s i b l y do n o t f u l l y Such a b a r g a i n i n g s t r a t e g y with respect  Q  perceive."  can be a p p l i e d i n t i n n e g o t i a t i o n s p a r t i c u l a r l y  t o the b u f f e r s t o c k q u e s t i o n .  It is generally  recognised  " 95  "  t h a t the b u f f e r s t o c k m a i n t a i n e d by t i n agreements  i s not s u f f i c i e n t l y  l a r g e t o w i t h s t a n d d r a s t i c p r i c e movements, e s p e c i a l l y those i n the up19 per l e v e l s .  F o r example, an 20  the p e r i o d 1948-61  e c o n o m e t r i c study of t h e t i n market over  found t h a t the most s u c c e s s f u l s i z e was 35,000  tons,  w h i c h i s 15,000 tons more t h a n the s t o c k u s u a l l y m a i n t a i n e d by t i n a g r e e ments.  More i m p o r t a n t l y , i n c r e a s i n g the s i z e o f t h e b u f f e r s t o c k would  tend t o be more o f a check on p r i c e s r i s i n g above t h e c e i l i n g than a check on the f l o o r p r i c e , as the l a t t e r can a l r e a d y be b u t t r e s s e d by e x p o r t c o n t r o l measures i f b u f f e r s t o c k o p e r a t i o n s prove i n a d e q u a t e .  In  s h o r t , i n c r e a s i n g the s i z e o f t h e b u f f e r s t o c k would be i n the i n t r i n s i c i n t e r e s t o f consuming c o u n t r i e s .  A l a r g e r b u f f e r stock i s , of  course,  a l s o t o the b e n e f i t of p r o d u c e r s as i t would mean t h a t the f l o o r p r i c e can be defended e f f e c t i v e l y w i t h a minimum o r even w i t h o u t e x p o r t c o n t r o l and i t s concomitant u n d e s i r a b l e domestic r e p e r c u s s i o n s  f o r producing  countries. Southern p r o d u c i n g c o u n t r i e s can t h e r e f o r e argue t h a t i t would be i n consuming c o u n t r i e s ' d i r e c t s e l f - i n t e r e s t to c o n t r i b u t e t o a larger buffer stock.  As we n o t e d e a r l i e r , t h e q u e s t i o n of b u f f e r  f i n a n c i n g came t o a d e a d l o c k i n the 1970 n e g o t i a t i o n s .  stock  The main bone  of c o n t e n t i o n , however, was the p r i n c i p l e of consumer c o n t r i b u t i o n t o the b u f f e r s t o c k and b u f f e r s t o c k s i z e was n o t d i s c u s s e d t o any l a r g e extent.  At one s t a g e , hox^ever, the b u f f e r s t o c k manager was asked by  the I n d o n e s i a n d e l e g a t e i f a b u f f e r s t o c k t w i c e the p r e s e n t s i z e w o u l d e l i m i n a t e the need f o r e x p o r t c o n t r o l , t o w h i c h the manager r e p l i e d t h a t  -  if  96 -  e x p o r t c o n t r o l were t o t r u l y be an i n s t r u m e n t o f l a s t  resort,  the  21 b u f f e r s t o c k h o l d i n g s would have t o be i n c r e a s e d . d e l e g a t e d i d not pursue the p o i n t .  The I n d o n e s i a n  There are two examples,  nevertheless,  of p r o d u c i n g c o u n t r i e s s u g g e s t i n g  t h a t a l a r g e r b u f f e r s t o c k i s i n the  i n t r i n s i c i n t e r e s t o f consumers.  The T h a i d e l e g a t e commented t h a t one  way o f overcoming t i n s h o r t a g e s was t o i n c r e a s e the b u f f e r s t o c k  size,  and t h a t " t h e consuming c o u n t r i e s can h e l p t o defend the c e i l i n g by c o n 22 t r i b u t i n g to the f i n a n c i n g o f the b u f f e r s t o c k " .  The M a l a y s i a n d e l e -  gate a l s o made a s i m i l a r s u g g e s t i o n a l t h o u g h he f e l t t h a t " t h e o n l y  true  remedy" o f combating t i n s h o r t a g e was t o have " r e a l i s t i c and remunera23 tive" prices. respect  (This represents  an a p p e a l t o i n t r i n s i c i n t e r e s t w i t h  to p r i c e b a r g a i n i n g . ) To my knowledge, t h e r e has r e a l l y been no t h o r o u g h - g o i n g b a r -  gaining strategy buffer stock.  used by S o u t h e r n c o u n t r i e s i n a r g u i n g f o r a l a r g e r  Admittedly, their efforts  have so f a r been m a i n l y c o n -  c e r n e d w i t h e s t a b l i s h i n g t h e p r i n c i p l e of consumer p a r t i c i p a t i o n , and they perhaps  f e e l t h a t t o pursue the q u e s t i o n o f a l a r g e r b u f f e r  b e f o r e consumer p a r t i c i p a t i o n i s o b t a i n e d i n p r i n c i p l e i s However, i f p r o d u c e r s were t o a r g u e ,  stock  premature.  as they h a v e , t h a t consumers s h o u l d  c o n t r i b u t e t o a b u f f e r s t o c k o f the p r e s e n t s i z e ,  they would be h a r d put  to show what i n t r i n s i c i n t e r e s t t h i s c o u l d be t o the consumers.  This  e x p l a i n s why they have r e l i e d p r i m a r i l y on the a l t r u i s m and democracy approaches w i t h r e s p e c t  t o the b u f f e r s t o c k i s s u e .  t i o n to a b u f f e r stock of the present s i z e i s a l s o ,  Consumer c o n t r i b u i n a s e n s e , more  - 97  appealing  to producers  because i t c o u l d reduce t h e i r c o n t r i b u t i o n s by  h a l f , w h i l e c o n t r i b u t i o n to a b u f f e r result  -  s t o c k t w i c e the p r e s e n t s i z e  i n no r e d u c t i o n o f t h e i r p r e s e n t  will  contributions.  On the q u e s t i o n of f i n a n c i a l b u r d e n , t h e r e i s room f o r p r o d u c i n g countries  t o b u t t r e s s t h i s b a r g a i n i n g s t r a t e g y w i t h the argument  consumer c o n t r i b u t i o n to the b u f f e r  that  stock w i l l only represent a r e l a t i 24  v e l y t i n y d r a i n on t h e i r r e s o u r c e s , as Rogers has shown.  Assuming  t h a t consumers were t o c o n t r i b u t e to a b u f f e r s t o c k t w i c e the p r e s e n t s i z e , w i t h the p r i c e of t i n v a l u e d at the f l o o r p r i c e of j t l , 2 8 0 p e r t o n , Rogers c a l c u l a t e d  t h i s burden as p r e s e n t e d i n T a b l e X I I .  F o r the  c o n t r i b u t o r s , Japan and U n i t e d Kingdom, the amount i s about $15.5 ( T h i s amount would be a p p r e c i a b l y pant i n t i n a g r e e m e n t s ) . of  the two c o u n t r i e s '  highest million.  reduced i f the US were to be a p a r t i c i -  This c o n t r i b u t i o n represented  o n l y 0.02 p e r  n a t i o n a l income, o r about 4.8 p e r cent o f  f o r e i g n a i d i n J a p a n ' s case and 1.9  per cent i n B r i t a i n ' s .  total  The p e r c e n t -  ages i n f a c t over-emphasise t h e burden o f such c o n t r i b u t i o n s as they not due a n n u a l l y but are p a i d i n i n s t a l m e n t s  (two o r more) o v e r  d u r a t i o n of f i v e y e a r s — t h e p e r i o d o f a t i n agreement.  cent  are  the  Perhaps,  then,  a d i v i s i o n o f the p e r c e n t a g e s by f i v e would be a more a c c u r a t e assessment of b u r d e n .  T h i s procedure  (see  c o n t r i b u t i o n s appear m i n u s c u l e .  figures  i n b r a c k e t s i n t a b l e ) makes the  F o r example,  Japan and B r i t a i n ' s c o n -  t r i b u t i o n s as a p e r c e n t a g e o f f o r e i g n a i d w o u l d be o n l y 0.57 p e r and 0.39 per cent r e s p e c t i v e l y ,  cent  and as a p e r c e n t a g e o f n a t i o n a l income,  the f i g u r e i s 0.004 per cent f o r b o t h  countries.  -98 _ TABLE XII ASSUMED BURDEN OF CONSUMEES IN CONTRIBUTING TO 1  THE TIN BUFFER STOCK  Votes  Country  Contributions (US $ millions)  Contributions as percent of a i d  Contributions as percent of Nat. Inc.  3.17 (0.63)  0.02 (0.004)  Australia  54  3.9  Austria  11  0.8  BelgiumLuxembourg  35  2.5  1.39 (0.28)  0.01 (0.002)  Canada  62  4.5  2.75 (0.55)  0.01 (0.002)  Czechoslovakia  36  2.6  Denmark  12  0.9  9.56 (1.91)  0.01 (0.002)  121  8.7  0.76 (0.15)  0.01 (0.002)  44  3.2  0.01 (0.002)  6  0.4  0.02 (0.004)  Italy  71  5.1  2.96 (0.59)  0.01 (0.002)  Japan  216  15.5  4.86 (0.57)  0.02 (0.004)  Korea  9  0.6  0.03 (0.006)  Mexico  20  1.4  0.01 (0.002)  Netherlands  48  3.5  Spain  25  1.8  0.02 (0.004)  Turkey  16  1.2  0.02 (0.004)  214 1,000  15.4 72.0  France India Israel  U.K. Total  2  2  0.01 (0.002)  2.09 (0.42)  0.02 (0.004)  1.96 (0.39)  Consumers l i s t e d are the participants of the 1965 T i n Agreement. 2  Figures i n brackets (added) indicate a d i v i s i o n of the percentage by f i v e . See explanation i n text. Source: Christopher D. Rogers, "Consumer P a r t i c i p a t i o n i n International Tin Agreements", Malayan Economic Review, V o l . 14:2, Oct. 1969, p. 126.  -  99 -  Such an argument has n o t , t o my knowledge, been used by S o u t h e r n c o u n t r i e s i n t i n agreement n e g o t i a t i o n s , a l t h o u g h t h e r e a r e references  constant  by d e l e g a t e s t h a t t h e consumers are a l s o the r i c h e r ones and  s h o u l d t h e r e f o r e c o n t r i b u t e t o the b u f f e r s t o c k (the a l t r u i s m a p p r o a c h ) . P e r h a p s , S o u t h e r n d e l e g a t e s may j u s t have o v e r l o o k e d the impact o f showing the major consuming c o u n t r i e s j u s t how r i c h they a r e . M o d i f y i n g the Opponent's Minimum D i s p o s i t i o n :  As n o t e d , t h i s i n -  v o l v e s a r g u i n g t h a t the terms are more f a v o u r a b l e t o the opponent than he had  o r i g i n a l l y thought.  such was i n f a c t  I f one succeeds i n c o n v i n c i n g the opponent  the c a s e , he would have t o r e - a s s e s s h i s minimum d i s p o -  s i t i o n s i n c e t h e terms he thought were the w o r s t he was w i l l i n g t o have now become " b e t t e r " . w i t h respect  This strategy  to p r i c e b a r g a i n i n g .  to o f f e r producers.  The s t r a t e g y  accept  i s b e s t used and i l l u s t r a t e d  We w i l l  t a k e consumer's minimum d i s -  p o s i t i o n to be t h e h i g h e s t c e i l i n g and f l o o r p r i c e s t h a t they are  prepared  therefore e n t a i l s producing countries  a r g u i n g t h a t t h e p r i c e range o f f e r e d by consumers i s f a r too to consumers.  that  favourable  The a b i l i t y of p r o d u c i n g c o u n t r i e s t o argue thus  will  depend t o a v e r y l a r g e e x t e n t on the s p e c i f i c c o n d i t i o n s a f f e c t i n g t i n t r a d e and p r i c e a t the time of n e g o t i a t i o n o r the c o n d i t i o n s for  t h e p e r i o d o f agreement,  forecast  i f t h i s c o u l d i n f a c t be a s s e s s e d .  A p a r t i c u l a r l y p r o p i t i o u s time t o employ such a s t r a t e g y be i n a p e r i o d of t i n s h o r t a g e o r impending s h o r t a g e .  would  For i n such a  p e r i o d , S o u t h e r n p r o d u c i n g c o u n t r i e s c o u l d argue t h a t t h e t i n p r i c e i s l i k e l y t o r i s e h i g h e r than a c e i l i n g t h a t consumers may have p r o p o s e d .  -100 -  S i m i l a r l y , they c o u l d argue t h a t the f l o o r p r i c e proposed i s  unrealis-  t i c a l l y low because t h e p r i c e c o u l d h a r d l y f a l l t o anywhere near level.  I n more o r d i n a r y t i m e s , S o u t h e r n c o u n t r i e s may be a b l e t o base  t h e i r b a r g a i n i n g on p a s t r e c o r d t h a t p r i c e ranges had been low. last  that  That i s t h e evidence?  The r e c o r d i s i n c o n c l u s i v e .  artificially We saw i n the  c h a p t e r t h a t the p r i c e sank below the f l o o r i n 1959 under the  F i r s t Agreement, and i t shot p a s t the c e i l i n g t w i c e i n 1963 and 1970; b u t as we p o i n t e d out t h e r e are a number of reasons why t h e t i n a g r e e ments were unable t o defend the range i n t h e s e i n s t a n c e s .  Thus, r a t h e r  than r e l y on p a s t r e c o r d , S o u t h e r n p r o d u c e r s would be b e t t e r a d v i s e d  to  argue i n terms o f impending market c o n d i t i o n s . There i s e v i d e n c e t h a t S o u t h e r n p r o d u c i n g c o u n t r i e s have employed this strategy  i n t i n negotiations.  I n the 1965 c o n f e r e n c e , b o t h t h e  B o l i v i a n and M a l a y s i a n d e l e g a t e s s a i d t h a t t h e p r i c e range  established  25 by the c o n f e r e n c e was " u n r e a l i s t i c " . d u r i n g the term of the agreement,  The B o l i v i a n d e l e g a t e hoped t h a t  i t would be p o s s i b l e t o r e v i s e t i n 2  p r i c e s " t o adapt them t o t h e p r e v a i l i n g s i t u a t i o n i n t h e w o r l d m a r k e t . " The M a l a y s i a n d e l e g a t e was more e x p l i c i t , and w a r r a n t s q u o t i n g a t some length.  ( H i s argument can a l s o be seen as an example o f a p p e a l i n g t o  i n t r i n s i c interest i n price bargaining.) My d e l e g a t i o n had proposed a d o p t i n g a r e a l i s t i c approach t o the p r i c e - r a n g e problem — t a k i n g a c count o f the s h o r t a g e o f t i n at p r e s e n t and i n the f o r e s e a b l e f u t u r e — by e s t a b l i s h i n g a h i g h e r f l o o r p r i c e t h a t would h e l p p r o d u c t i o n t o keep pace w i t h demand and by e n c o u r a g i n g more i n t e n s i v e m i n i n g , He went on t o s a y ,  - 101-  . . . t h e consuming c o u n t r i e s have not demonstrated the u n d e r s t a n d i n g w h i c h had been hoped f o r ; i t appears t h a t they a r e w i l l i n g t o see demand o u t s t r i p s u p p l y and o f t e n t o pay an e x c e s s i v e p r i c e r a t h e r t h a n p r o v i d e an i n c e n t i v e f o r raining more m e t a l and t h e r e b y a s s u r e themselves o f a r e a s o n a b l e p r i c e over a g i v e n period. I t has been demonstrated t h a t the p r e s e n t p r i c e range i s h a r m f u l t o consumer and p r o d u c e r a l i k e and i s t o t a l l y u n r e a l i s t i c . C u r r e n t market p r i c e s t e l l t h e same t a l e . ^ Another method of showing consumers t h a t the terms are more f a v o u r a b l e t o them t h a n t o p r o d u c e r s may be based on c e r t a i n more p e r manent f e a t u r e s o f t i n t r a d e .  S o u t h e r n p r o d u c i n g c o u n t r i e s c o u l d make  a r e a s o n a b l y good case at most times t h a t consuming c o u n t r i e s ' minimum d i s p o s i t i o n i s l o w e r t h a n what they make i t out t o b e , f o r the two r e a s o n s :  (i)  following  t i n forms such a s m a l l p e r c e n t a g e o f t h e i r t o t a l  trade,  and ( i i ) a l t h o u g h i t c o n s t i t u t e s o n l y a s m a l l i n p u t i n i n d u s t r i a l p r o d u c t i o n , i t i s a f a i r l y v i t a l raw m a t e r i a l .  In s h o r t , Southern producers  c o u l d t e l l consumers q u i t e s i m p l y t h a t they c o u l d and s h o u l d pay much more f o r t h e t i n they b u y , i n e f f e c t ,  c a l l i n g consumers'  "bluff"  that  such and such a p r i c e was t h e w o r s t terms consumers c o u l d a c c e p t . danger of such a s t r a t e g y i s t h a t  The  "Southern p r o d u c e r s may have i n f a c t  m i s p e r c e i v e d a genuine p o s i t i o n f o r a f a k e d one.  It is v i t a l ,  therefore,  t h a t p r o d u c e r s know what the upper l i m i t of t h e t i n p r i c e i s f o r  consumers.  For want o f a b e t t e r y a r d s t i c k , t h i s l i m i t would presumably be the p o i n t when s u b s t i t u t e s rises.  f o r t i n b e g i n t o be used e x t e n s i v e l y as t h e t i n p r i c e  Consumers have been known t o c a u t i o n p r o d u c e r s o f the danger o f  substitutes,  b u t the M a l a y s i a n d e l e g a t e i n 1965 thought t h a t  substitutes 28  f o r t i n was " a n enemy t h a t i s v e r y remote, i f n o t n o n - e x i s t e n t . "  We  _ 102_  a l s o n o t e d e a r l i e r t h a t d e s p i t e the s c a r e o f the m i d - 1 9 6 0 ' s when p r i c e s s o a r e d t o the upper l i m i t and many US i n d u s t r i e s were b e g i n n i n g t o develop s u b s t i t u t e s ,  the demand f o r t i n has not d e c l i n e d t o any  T a k i n g a w i d e s l i c e o f t i m e , the t i n p r i c e has c l i m b e d r a t h e r i n d i c a t i n g a c o n t i n u i n g demand f o r the commodity. Thus, i t appears t h a t this  steadily,  (See Appendix B)  S o u t h e r n p r o d u c e r s s t i l l have some m i l e a g e w i t h  strategy. E x p l a i n i n g away a m i s p e r c e p t i o n :  of  degree.  T h i s i s b a s i c a l l y t h e method  psychoanalysis: . . . y o u p o i n t out t o the " p a t i e n t " t h a t i t i s " n a t u r a l " f o r him t o have the m i s t a k e n i d e a , because here i s how he happened t o p i c k i t u p , and h e r e i s why he i s h a n g i n g on t o i t . ™  A bargaining strategy  e m p l o y i n g t h i s t e c h n i q u e would t h e r e f o r e be based  on the c o n d i t i o n t h a t the opponent h o l d s a m i s t a k e n b e l i e f about how c e r t a i n c o u r s e s cf a c t i o n a f f e c t  h i m , and t h a t t h i s b e l i e f i s h e l d on so  s t r o n g l y t h a t i t o f t e n becomes a s e l f - f u l f i l l i n g  prophecy.  F o r my e x -  ample, I w i l l t a k e the w i d e s p r e a d b e l i e f among N o r t h e r n consuming c o u n t r i e s t h a t t i n agreements  o p e r a t e p r i m a r i l y i n the i n t e r e s t s  of producers ,  w h i c h u s u a l l y l e a d s them t o argue t h a t p r o d u c e r s s h o u l d t h e r e f o r e be the ones b e a r i n g t h e c o s t of b u f f e r s t o c k f i n a n c i n g .  rightly  For i n s t a n c e ,  the US p o s i t i o n , p r e m i s e d on the i d e a t h a t t i n agreements  do not g i v e  s u f f i c i e n t p r o t e c t i o n to the c e i l i n g p r i c e and t h a t the b u f f e r  stock  30 therefore operated i n producers' plicitly,  favour,  i s a view s h a r e d , i f n o t e x -  at l e a s t i m p l i c i t l y , by t h e m a j o r i t y of consuming c o u n t r i e s .  Perhaps what b e l i e s such an a t t i t u d e i s t h a t consumers are  nevertheless  - 103-  eager p a r t i c i p a n t s i n the o p e r a t i o n s o f t i n agreements,  unless,  the US, they have an enormous s t o c k p i l e t o p r o t e c t t h e m s e l v e s .  like There  i s c e r t a i n l y no g a i n s a y i n g the f a c t t h a t p r o d u c e r s , because they have a g r e a t e r s t a k e i n t i n t r a d e , would t h e r e b y have a g r e a t e r i n t e r e s t i n t i n agreements, is s t i l l  as has been argued throughout t h i s s t u d y .  However, i t  c o n c e i v a b l e t h a t the N o r t h e r n p e r c e p t i o n of t h e i r g a i n s from  t i n agreements  may be u n d u l y p l a y e d down, and p o s s i b l y d i s t o r t e d by  c o n s t a n t emphasis o f S o u t h e r n g a i n s from such agreements.  The uncon-  c i o u s " i m a g e s " may be f u r t h e r r e i n f o r c e d by the f a c t t h a t t i n c o n t r o l 31 schemes s t a r t e d out i n the p r e - w a r days as If  cartels.  t h i s p r o p o s i t i o n i s c o r r e c t , Southern p r o d u c i n g c o u n t r i e s  c o u l d attempt t o e x p l a i n away such an image by showing consumers they had i n f a c t m i s p e r c e i v e d the r o l e of p r e s e n t - d a y To i m p l y t h a t  they they a r e s t i l l  terms.  agreements.  the t o o l s o f p r o d u c e r governments  t o j a c k up the t i n p r i c e i s s i m p l y n o t t r u e . t i n agreements,  tin  that  F o r , i n the  present-day  consumers have an e q u a l say i n t h e i r o p e r a t i o n s and  I f consumers f e e l t h a t t i n agreements  do not  adequately  o p e r a t e i n t h e i r f a v o u r , they had an e q u a l v o i c e i n m o d i f y i n g b o t h t h e terms and o p e r a t i o n s of such  agreements.  To my knowledge, t h e r e has been no r e a l use of the " e x p l a i n i n g away a m i s p e r c e p t i o n " s t r a t e g y .  I n the 1965 n e g o t i a t i o n s ,  the  N i g e r i a n r e p r e s e n t a t i v e s a i d something v a g u e l y r e s e m b l i n g such a strategy.  He t a l k e d o f a new p o s i t i v e view of commodity a c c o r d s  g e s t i n g t h a t they s e r v e the i n t e r e s t s  sug-  of a l l p a r t i c i p a n t s r a t h e r t h a n  -104 _  sectarian i n t e r e s t s . J  However, f o r the most p a r t , h i s statement  alluded  t o the UNCTAD s p i r i t and i s p r o b a b l y more an example of the a l t r u i s m s t r a t e g y than the one e n u n c i a t e d h e r e .  .  I n f l u e n c i n g t h e Opponent's P e r c e p t i o n of One's U t i l i t y from an Outcome W h i l e the p r e v i o u s c a t e g o r y of s t r a t e g i e s were concerned w i t h i n f l u e n c i n g the o p p o n e n t ' s p e r c e p t i o n o f h i s g a i n from an outcome,  the  s t r a t e g y t o be c o n s i d e r e d under t h i s h e a d i n g i s concerned w i t h i n f l u e n c i n g the o p p o n e n t ' s  p e r c e p t i o n o f o n e ' s g a i n from an outcome.  The s t r a t e g y  to  be c o n s i d e r e d i s based on the n o t i o n o f "commitment", o r " b i n d i n g o n e s e l f " , 33 or the more p o p u l a r i d e a o f " b u r n i n g b r i d g e s " . sometimes,  Success i n b a r g a i n i n g  depends on who commits h i m s e l f t o a p o s i t i o n f i r s t .  This  p a r t i c u l a r l y t r u e f o r b a r g a i n i n g s i t u a t i o n s w i t h no s a d d l e p o i n t s ,  is  or  stable solutions. Such " p u r e " b a r g a i n i n g , as S c h e l l i n g n o t e s , . . . r e s t s on t h e paradox t h a t the power t o c o n s t r a i n an a d v e r s a r y may depend on t h e power to b i n d o n e s e l f ; t h a t , i n b a r g a i n i n g , weakness i s o f t e n s t r e n g t h ; freedom may be freedom t o c a p i t u l a t e , and t o b u r n b r i d g e s b e h i n d one may s u f f i c e t o undo an opponent.34 I n n o n - m i l i t a r i s t i c t e r m s , S c h e l l i n g ' s i d e a s u g g e s t s t h a t one c o u l d f o r c e the opponent t o r e - e s t i m a t e  o n e ' s minimum d i s p o s i t i o n by s t i c k i n g f i r m l y  t o a p o s i t i o n t h a t the opponent may have thought was f l e x i b l e .  The op-  p o n e n t , s e e i n g t h a t one w i l l not move, w i l l t h e r e f o r e have t o a l t e r h i s own p o s i t i o n a c c o r d i n g l y — i f he b e l i e v e s The b u r n i n g b r i d g e s  approach:  business.  The use o f t h i s b a r g a i n i n g s t r a t e g y  i s best i l l u s t r a t e d i n t i n negotiations Essentially,  t h a t one means  i n terms o f p r i c e b a r g a i n i n g .  i t w o u l d e n t a i l p r o d u c e r s d e m o n s t r a t i n g t h a t they c o u l d not  and w i l l not accept  terms o t h e r t h a n those they p r o p o s e d .  F o r example,  -105 -  Southern p r o d u c e r s  c o u l d argue t h a t t o go below a c e r t a i n p r i c e range  would be tantamount t o c o u r t i n g economic d i s a s t e r f o r themselves mines w i l l be c l o s e d , w o r k e r s r e t r e n c h e d , e x p o r t e a r n i n g s w i l l bringing i n i t s  tide untold hardships.  a lower p r i c e .  Whatever the reasons advanced,  — many  plummet,  I n a w o r d , they w i l l n o t a c c e p t the i m p o r t a n t p o i n t  is  t o convey the image o f unbending commitment t o a p a r t i c u l a r p o s i t i o n , because the s u c c e s s o f t h i s s t r a t e g y r e s t s u l t i m a t e l y on whether t h e opponent b e l i e v e s  one o r n o t .  There are few examples of Southern p r o d u c i n g c o u n t r i e s u s i n g such a bargaining strategy i n t i n negotiations, out t h e i r dependence  although producers  on t i n f o r t h e i r economic w e l l - b e i n g .  o f t e n than n o t , they p o i n t out t h e i r dependence departure  f o r a p p e a l i n g t o consumers'  often point  However, more  on t i n as a p o i n t o f  altruism.  This i s B o l i v i a ' s t y p i c a l  b a r g a i n i n g p o s i t i o n , i t s d e l e g a t e s n e v e r f a i l i n g t o p o i n t out t h a t c o u n t r y not o n l y depended h e a v i l y on i t s e a r n i n g s  their  from t i n b u t t h a t  p r o d u c t i o n c o s t s were the h i g h e s t i n the w o r l d and i t s miners  its  received  " b a r e s u b s i s t e n c e wages and worked under c o n d i t i o n s w h i c h r e p r e s e n t e d real sacrifice."  I would suggest t h a t such dependence  c o u l d w e l l be used as a p o i n t o f d e p a r t u r e as w e l l .  U l t i m a t e l y , of c o u r s e ,  by t h e use o f t h r e a t ,  on the commodity  for demonstrating  commitment may have t o be  commitment demonstrated  the 1965  nego-  t i a t i o n s , when they s a i d they w o u l d not accede t o the agreement.  How-  ever, for  as B o l i v i a and M a l a y s i a d i d a f t e r  a  the use of t h r e a t i n v o l v e s , p e r h a p s ,  a q u a l i t a t i v e change o f s t r a t e g y  i t n o t o n l y i n v o l v e s changing t h e opponent's  p e r c e p t i o n of o n e ' s  gain,  _106 _  it  a l s o p r e s e n t s him w i t h a p o s s i b i l i t y o f a r e a l l o s s as  well.  P r o m i s i n g the Opponent a R e a l G a i n from an Outcome Promises are c o n d i t i o n a l s t a t e m e n t s of the t y p e , " I w i l l w o n ' t ) do t h i s i f you do (or d o n ' t do) t h a t . "  (or  When one makes a  promise i n b a r g a i n i n g , one i s t e l l i n g the o t h e r p a r t y t h a t one w i l l something f a v o u r a b l e toward i t , i f i t does something i n o n e ' s I t s h o u l d be i m m e d i a t e l y apparent  t h a t promises  l i k e most b a r g a i n i n g s t r a t e g i e s .  However, u n l i k e the ones  so f a r ,  appeal to  do  favour.  self-interest considered  t h e a p p e a l i s i n d i r e c t , o r c o n d i t i o n a l , i . e . , i t i s based on a  q u i d pro quo.  I n one s e n s e , promises  u t i l i t y or s a t i s f a c t i o n  go beyond merely m o d i f y i n g t h e  o f the o t h e r p a r t y from an outcome; they i n v o l v e  p r e s e n t i n g t h e opponent w i t h new a l t e r n a t i v e s w h i c h a l t e r t h e n a t u r e o f the outcome. first  I w i l l c o n s i d e r promises used as a b a r g a i n i n g s t r a t e g y  i n terms o f q u i d p r o quos o f f e r e d i n t h e same i s s u e - a r e a ,  m a t t e r s p e r t a i n i n g s o l e l y t o t i n agreements and t i n t r a d e , i n other i s s u e - a r e a s , i . e . , matters tin  and s e c o n d ,  s t r i c t l y o u t s i d e the p r o v i n c e of  agreements. P r o m i s i n g reward i n the same i s s u e - a r e a :  p r o m i s e , one, i n e f f e c t , you  i.e.,  like."  says:  When one makes a  " I f you do t h i s , I w i l l  do something  Southern p r o d u c i n g c o u n t r i e s c o u l d w e l l use such a s t r a t e g y  in price bargaining.  F o r example,  i n exchange f o r a h i g h p r i c e  or one t h a t i s more than the consumers'  minimum d i s p o s i t i o n ,  range,  producers  c o u l d o f f e r to t a k e a number of measures t o ensure adequate s u p p l i e s consumers. impending  to  Such a s t r a t e g y w o u l d be p a r t i c u l a r l y germane i n a p e r i o d o f shortage.  -  107'-  There i s some e v i d e n c e t h a t p r o d u c i n g c o u n t r i e s have employed such a b a r g a i n i n g s t r a t e g y ,  g o i n g by some o f the s t a t e m e n t s o f S o u t h e r n  37 delegates.  The M a l a y s i a n d e l e g a t e , f o r example, argued t h a t i f c o n -  sumers had agreed t o a h i g h e r f l o o r p r i c e , t h i s w o u l d have h e l p e d p r o d u c t i o n keep pace w i t h demand.  However, as n o t e d e a r l i e r , t h i s may be  more i n the n a t u r e of an a p p e a l t o i n t r i n s i c ( d i r e c t ) than one i n w h i c h a p o s i t i v e q u i d pro quo was o f f e r e d .  interest  rather  The main d i f -  f i c u l t y with this strategy is c r e d i b i l i t y .  I t i s doubtful that  c o u l d r e a l l y promise t h a t adequate s u p p l i e s  c o u l d be met at a l l t i m e s ,  g i v e n t h e i n e l a s t i c n a t u r e of the s u p p l y of t i n .  producers  T h u s , t h e r e are  obvious  l i m i t s on the use o f such a s t r a t e g y i n p r i c e b a r g a i n i n g . P r o m i s i n g reward i n o t h e r i s s u e - a r e a s : positive trade-offs  are r e q u i r e d h e r e , e x c e p t ,  o f reward are made f o r m a t t e r s ments and t i n t r a d e .  L i k e the previous  strategy,  i n this strategy,  promises  s t r i c t l y o u t s i d e the p u r v i e w o f t i n a g r e e -  There are a v a r i e t y o f b e n e f i t s ,  Southern producing  c o u n t r i e s c o u l d o f f e r N o r t h e r n consuming c o u n t r i e s i n exchange f o r a higher p r i c e range.  These i n c l u d e r e d u c i n g t a r i f f s  on v a r i o u s  products  t h a t N o r t h e r n consuming c o u n t r i e s may e x p o r t , i n c r e a s i n g o r i m p r o v i n g i n v e s t m e n t o p p o r t u n i t i e s f o r N o r t h e r n c o u n t r i e s w h i c h have o t h e r besides t i n , i n c r e a s i n g responsiveness  toward m i l i t a r y and defense a r r a n -  gements f o r N o r t h e r n c o u n t r i e s and so f o r t h . are perhaps more f e a s i b l e situations  Many such c o u r s e s of a c t i o n  i n b i l a t e r a l b a r g a i n i n g than i n m u l t i l a t e r a l  such as t i n n e g o t i a t i o n s .  negotiations,  interests  I n o r d e r t o be c r e d i b l e i n t i n  such c o u r s e s o f a c t i o n must be a b l e t o d i s t r i b u t e b e n e f i t  - 108 -  more o r l e s s e q u a l l y among a l l consuming c o u n t r i e s .  I n s h o r t , one has  to be wary t h a t i n p l e a s i n g a U n i t e d Kingdom, one does not a l i e n a t e S o v i e t U n i o n , o r any o f the o t h e r consumers theless,  i t may be p o s s i b l e  f o r that matter.  f o r Southern producers  b i l a t e r a l b a s i s , responsiveness  a  Never-  t o c u l t i v a t e , on a  w i t h major consumers by e m p l o y i n g  t a c t i c s such as t h e above, w i t h t h e hope t h a t t h e s e c o u n t r i e s may r e c i p r o c a t e by b e i n g r e s p o n s i v e  t o S o u t h e r n demands i n t i n agreements.  I know no i n s t a n c e of the use of such a s t r a t e g y , would by n a t u r e be d i f f i c u l t  but  examples  to l o c a t e s i n c e t a c i t r e c i p r o c i t y i s i n -  v o l v e d , not e x p l i c i t q u i d pro quos. T h r e a t e n i n g the Opponent w i t h a R e a l Loss from an Outcome Threats, "I w i l l  l i k e promises,  are c o n d i t i o n a l s t a t e m e n t s of the t y p e ,  (or w o n ' t ) do t h i s i f you do ( o r d o n ' t do) t h a t " .  U n l i k e making  a p r o m i s e , however, the t h r e a t e n i n g p a r t y says t o the o t h e r p a r t y  that  he would do something u n f a v o u r a b l e t o i t i f i t does not do something the t h r e a t e n e r wants done.  T h r e a t s and promises  are t h e r e f o r e l o g i c a l l y  s i m i l a r i n t h a t a q u i d p r o quo i s i n v o l v e d , except i n s t e a d o f a t t e m p t i n g to i n c r e a s e the o t h e r p a r t y ' s to c i r c u m s c r i b e i t .  A g a i n , as w i t h p r o m i s e s ,  that  that i n a threat, c h o i c e , one a t t e m p t s  one c o u l d t h r e a t e n a c t i o n  i n the i s s u e - a r e a i n which b a r g a i n i n g o c c u r s , o r i n o t h e r n o n - r e l a t e d issue-areas. T h r e a t e n i n g d e p r i v a t i o n i n the same i s s u e - a r e a :  In bargaining,  employing a t h r e a t i s s a y i n g t o the opponent: " I f you d o n ' t do t h i s , I w i l l do something you w o n ' t l i k e . "  A g a i n , such a s t r a t e g y i s  i l l u s t r a t e d w i t h respect to p r i c e b a r g a i n i n g .  best  There a r e a number of  -109  -  a c t i o n s Southern c o u n t r i e s c o u l d t h r e a t e n i n t i n n e g o t i a t i o n s . most o b v i o u s i s t o t h r e a t e n "no agreement". out t h i s s t u d y , t i n agreements  The  As we have argued t h r o u g h -  are of g r e a t e r b e n e f i t t o p r o d u c e r s than  consumers, so t o t h r e a t e n "no agreement" may perhaps be c u t t i n g o f f  one's  n o t e t o s p i t e o n e ' s f a c e — i n s h o r t , t h e t h r e a t may not be c r e d i b l e . However, w h i l e i t may be t r u e t h a t consumers have a r e l a t i v e l y i n t e r e s t i n t i n agreements,  there i s , nevertheless,  n o t e d , f o r example, t h a t t i n i s a v i t a l  lesser  an i n t e r e s t .  We  input i n i n d u s t r i a l production.  M o r e o v e r , i f t h e r e were no t i n agreements,  p r o d u c e r s may w e l l r e v e r t  the c a r t e l - l i k e arrangements  T h i s would not be too d i f -  ficult,  o f the p a s t .  c o n s i d e r i n g t h a t a s m a l l number o f c o u n t r i e s , s i x , t o be  produce some n i n e t y p e r cent of a l l the w o r l d ' s t i n .  As s u c h ,  to  exact,  the  t h r e a t o f "no agreement" may prove t o be c r e d i b l e a f t e r a l l . In fact,  B o l i v i a and M a l a y s i a d i d not employ such a t h r e a t ,  l o w i n g t h e 1965 n e g o t i a t i o n s .  fol-  B o l i v i a t h r e a t e n e d t o w i t h d r a w from the  agreement i f a h i g h e r p r i c e range were n o t f i x e d , w h i l e M a l a y s i a , f o r the same r e a s o n , s a i d i t would not s i g n the agreement.  Had, b o t h o r  e i t h e r of these c o u n t r i e s made good t h e i r t h r e a t , t h e r e c o u l d have been no t i n agreement, votes  g i v e n B o l i v i a and M a l a y s i a ' s preponderance of  (based on t h e i r e x p o r t s )  on the T i n C o u n c i l .  Both t h e s e c o u n t r i e s ,  however, withdrexj t h e i r t h r e a t s , M a l a y s i a , " o u t of d e f e r e n c e t o the wishes of M a l a y s i a ' s f r i e n d s , T h a i l a n d , N i g e r i a , B o l i v i a and o t h e r t i n p r o d u c i n g c o u n t r i e s , and i n the s p i r i t of i n t e r n a t i o n a l c o o p e r a t i o n and goodwill."  The M a l a y s i a n government appeared t o be p r e t t y s e r i o u s  in  _ 110 _ i t s t h r e a t not t o s i g n the agreement, one s t a g e t h a t , i f n e c e s s a r y ,  the Prime M i n i s t e r p r o c l a i m i n g a t  h i s c o u n t r y would b u i l d i t s own s t o c k p i l e 39  of t i n t o p r o t e c t " t h e n a t i o n a l i n t e r e s t " .  The immediate q u i d p r o quo  appeared t o be a demand t h a t the p r i c e range M a l a y s i a proposed at c o n f e r e n c e be e s t a b l i s h e d . C o u n c i l meeting h e l d ,  I t was n o t , however, u n t i l t h e  following Malaysia's quick volte-face,  consuming c o u n t r i e s conceded t o a h i g h e r p r i c e r a n g e . ^  the  subsequent that  the  I t seems odd t h a t  a t h r e a t was made and withdrawn b e f o r e t h e c o n c e s s i o n sought was made, b u t , q u i t e p o s s i b l y , promises t o r e c o n s i d e r the p r i c e range must have been e x t r a c t e d from the major consumers b e f o r e t h e t h r e a t was w i t h d r a w n . A l t h o u g h the p r i c e range was r a i s e d from j [ l , 0 0 0 and j £ l , 2 0 0 t o j £ l , 1 0 0 and i l , 4 0 0 per t o n w h i c h r e p r e s e n t s  a substantial increase,  it  is  not known what the a c t u a l ranges proposed by M a l a y s i a o r B o l i v i a w e r e . At any r a t e , one may say t h a t the use o f t h r e a t i n t h i s i n s t a n c e had the d e s i r e d impact on consuming c o u n t r i e s , a n d , i n t h i s s e n s e , was l y executed.  successful-  The B o l i v i a n - M a l a y s i a n e p i s o d e i s a l s o an example o f t h e  commitment o r b u r n i n g b r i d g e s s t r a t e g y , t h r e a t i n such a  o r more c o r r e c t l y , t h e use o f  strategy.  The l o g i c a l p r o g r e s s i o n from a t h r e a t of "no agreement" i s  a  t h r e a t t o form a t i n c a r t e l , w h i c h , i n t u r n , c o u l d l e a d t o the l o g i c a l p o s s i b i l i t y o f t h r e a t e n i n g t o cut o f f a l l e x p o r t s  to consumers, each of  t h e s e p o s s i b i l i t i e s r e p r e s e n t i n g i n c r e a s i n g s e v e r i t y of the t h r e a t I n the f i n a l a n a l y s i s , Besides  used.  the use o f t h r e a t s must be premised on c r e d i b i l i t y .  t h e t h r e a t o f "no agreement",  t r e s s e d by the e x p r e s s e d  w h i c h i n M a l a y s i a ' s case was b u t -  i n t e n t i o n t o b u i l d i t s own s t o c k p i l e , n e i t h e r  - Ill the t h r e a t t o form a t i n c a r t e l n o r t o cut o f f e x p o r t s have been employed by p r o d u c i n g c o u n t r i e s .  C u t t i n g o f f e x p o r t s t o consumers i s c l e a r l y n o t  a v i a b l e t h r e a t , g i v e n t h a t p r o d u c e r s a r e so dependent on the e a r n i n g s from t i n e x p o r t s .  The f o r m a t i o n of a t i n c a r t e l , on the o t h e r h a n d ,  demands t h a t p r o d u c e r s a c t i n c o n c e r t , a l t h o u g h , as I have a r g u e d ,  this  i s not an i m p o s s i b i l i t y . Southern p r o d u c e r s have a l s o been known to use t h r e a t s on the o t h e r end o f t h e continuum of s e v e r i t y . " m i l d " form and p a r t i c u l a r l y w i t h r e s p e c t  By t h i s , I mean t h r e a t s o f a t o the b u f f e r s t o c k  issue.  I n the p r o t r a c t e d debate over b u f f e r s t o c k f i n a n c i n g i n the 1970 negot i a t i o n s , t h e r e was an attempt by the p r o d u c e r s t o deny consumers a 41 v o i c e i n the m a t t e r o f b o r r o w i n g by the b u f f e r s t o c k .  They argued  t h a t consumers s h o u l d have no r i g h t i n d e c i d i n g such m a t t e r s i f they would n o t c o n t r i b u t e t o the b u f f e r s t o c k .  F o r example, the B o l i v i a  rep-  r e s e n t a t i v e remarked, Some c o u n t r i e s have i n d i c a t e d t h e i r o p p o s i t i o n , on grounds of p r i n c i p l e , t o c o n t r i b u t e t o the b u f f e r stock. S i m i l a r l y , my c o u n t r y c o n s i d e r s on grounds of p r i n c i p l e t h a t o n l y those c o u n t r i e s x^hich have c o n t r i b u t e d to the b u f f e r s t o c k have the r i g h t to ^ l a y down r u l e s i n r e g a r d to b u f f e r s t o c k b o r r o w i n g - . S i m i l a r l y , the I n d o n e s i a n d e l e g a t e thought t h a t i f p r o d u c i n g c o u n t r i e s a l o n e were t o c o n t r i b u t e t o the b u f f e r s t o c k and b e a r the r e s p o n s i b i l i t y f o r b o r r o w i n g by the s t o c k , he saw no reason why the consuming c o u n t r i e s 43 i n s i s t e d on t a k i n g p a r t i n the d e c i s i o n - m a k i n g p r o c e s s . say,  the consumers o b j e c t e d t o such attempts  Needless  to  t o d e p r i v e them o f d e c i s i o n -  making power, and, as i t i n v a r i a b l y happens i n d e a d l o c k s , the e x i s t i n g terms p r e v a i l e d — a d i s t r i b u t e d t w o - t h i r d s m a j o r i t y i s s t i l l r e q u i r e d  _ 112 _  t o make such b o r r o w i n g s .  (See Appendix A , A r t i c l e  24.)  Threatening d e p r i v a t i o n i n other issue-areas: promises,  As i n t h e case of  such a c t i o n r e q u i r e s t h a t one moves o u t s i d e the p r o v i n c e o f t i n  agreements  and t i n t r a d e p r o p e r .  The d e p r i v a t i o n s t h a t Southern p r o d u c i n g  c o u n t r i e s may t h r e a t e n range from r a i s i n g t a r i f f s c o u n t r i e s (of t i n a c c o r d s ) ,  on t h e goods of consuming  i m p o s i n g s t r i n g e n t laws and p r o c e d u r e s  those consumers who may have i n v e s t m e n t i n t e r e s t s  i n producing c o u n t r i e s ,  through t o b r e a k i n g d i p l o m a t i c a n d / o r m i l i t a r y t i e s .  These t a c t i c s  a g a i n , up a g a i n s t the problem o f c r e d i b i l i t y as w i t h the use of i n such i s s u e - a r e a s . when t h r e a t s  In fact,  for  c r e d i b i l i t y i s a more s e r i o u s  are,  promises  business  are i n v o l v e d ; i f they are not commensurate w i t h the q u i d p r o  quo demanded, they may w e l l tempt r e t a l i a t i o n , and, n e e d l e s s t o s a y ,  in a  t a r i f f w a r , f o r example, S o u t h e r n p r o d u c i n g c o u n t r i e s w i l l h a r d l y be a match f o r t h e i r N o r t h e r n  adversaries.  I t is conceivable, nevertheless,  that i n c e r t a i n s p e c i f i c  b i l a t e r a l t h r e a t s may have the d e s i r e d e f f e c t s ,  cases,  i f employed w a r i l y .  To  t a k e a h y p o t h e t i c a l example, s u p p o s i n g B r i t a i n , d u r i n g a t i n c o n f e r e n c e , took a p o s i t i o n t h a t was v e r y u n f a v o u r a b l e toward p r o d u c e r s .  I t may be  p o s s i b l e i n such a s i t u a t i o n f o r M a l a y s i a and N i g e r i a , f o r example,  to  t h r e a t e n B r i t a i n p r i v a t e l y w i t h a w i t h d r a w a l o f B r i t i s h Commonwealth preferences  i n t r a d e , o r w i t h c e r t a i n measures u n f a v o u r a b l e toward  B r i t i s h investment i n t e r e s t s  i n t h e s e two c o u n t r i e s .  The example,  of c o u r s e , p u r e l y h y p o t h e t i c a l , b u t who i s t o say t h a t p r i v a t e such as t h e s e are n e v e r employed.  I n the t i n n e g o t i a t i o n s  is,  threats  examined,  - 113  _  however, t h e r e was no e v i d e n c e o r even a h i n t t h a t t h r e a t s tin  outside  the  i s s u e - a r e a were ever employed.  P r e s e n t i n g the Opponent w i t h a R e a l Change i n H i s U t i l i t y from an Outcome When one t e l l s the opponent, " I have done t h i s , so y o u can now o n l y do the f o l l o w i n g " , one i s , i n e f f e c t , change i n h i s u t i l i t y accompli, uation.  from an outcome.  p r e s e n t i n g the opponent w i t h a r e a l Such i s the n a t u r e of the  whether the opponent l i k e s i t o r n o t , he cannot a l t e r the s i t The f a i t a c c o m p l i i s t h e r e f o r e q u a l i t a t i v e l y d i f f e r e n t from the  promise o r t h r e a t ,  f o r w h i l e t h e l a t t e r are c o n d i t i o n a l i n n a t u r e , i t  pre-emptory i n n a t u r e . ^  i s the " h a r d e s t "  is  U n l i k e t h e promise w h i c h attempts t o c i r c u m -  s c r i b e i t , the f a i t a c c o m p l i a c t u a l l y reduces c h o i c e . it  fait  I n t h i s sense t h e n ,  t y p e o f b a r g a i n i n g t e c h n i q u e t o be c o n s i d e r e d .  Presenting f aits accomplis:  The f a i t a c c o m p l i i s d i f f i c u l t  t o employ  i n t i n n e g o t i a t i o n s because the s u b j e c t o f n e g o t i a t i o n , p r i c e , i s such an ephemeral phenomenon, t h a t i s , p r o d u c e r s c o u l d n o t t e l l consumers  that  they have f i x e d such and such a p r i c e range and t h a t t h e r e i s n o t h i n g t h e l a t t e r can do about i t .  However, p r o d u c e r s c o u l d c o n c e i v a b l y c a r r y out  c e r t a i n a c t i o n s . o n the d o m e s t i c f r o n t w h i c h may be something a k i n t o t h e f a i t accompli.  F o r example, they c o u l d say t h a t t i n p r o d u c t i o n has been  curbed because o f a programme o f e x p o r t d i v e r s i f i c a t i o n , o r t h a t a number o f t i n mines had been p l a g u e d by p r o l o n g e d s t r i k e s , the l o g i c o f w h i c h would be t o convey t o consumers t h a t t h e r e w i l l be an impending s h o r t a g e t h a t w i l l make the m a i n t a i n i n g of a p r i c e range below a c e r t a i n level impossible.  I n p r a c t i c e , however, such pronouncements may n o t be  -114-  -  a c c e p t e d as f a i t s a c c o m p l i s , t h a t i s , i t i s d o u b t f u l i f consumers t a k e them a t f a c e v a l u e , and w i l l t h e r e f o r e remain h o p e f u l t h a t  will the  b u f f e r s t o c k mechanism w i l l s t i l l be a b l e t o cope w i t h the a l l e g e d shortage  that producers f o r e c a s t .  a t the 1965 n e g o t i a t i o n s of  We saw how the M a l a y s i a n d e l e g a t e  lamented h i s f a i l u r e t o c o n v i n c e consumers  an impending t i n s h o r t a g e . A l t h o u g h the B o l i v i a n d e l e g a t e s c o n s i s t e n t l y a l l u d e t o t h e  of tin  t h e i r c o u n t r y ' s h i g h c o s t of p r o d u c t i o n and the d i f f i c u l t y  fact  of m i n i n g  i n t h a t c o u n t r y , I know no example of a p r o d u c i n g c o u n t r y a c t u a l l y  s t a t i n g i n t i n n e g o t i a t i o n s t h a t p r o d u c t i o n had been curbed as a c o n s c i o u s government p o l i c y and t h a t consumers had no c h o i c e but t o f i x the p r i c e range at a c e r t a i n l e v e l . i s such t h a t i t d i s c o u r a g e s  P e r h a p s , the n a t u r e of the f a i t a c c o m p l i  usage.  As Sawyer and Guetzkow n o t e ,  The pre-emptory n a t u r e o f the f a i t a c c o m p l i may t o such an e x t e n t a n t a g o n i s e i t s t a r g e t . . . t h a t p u n i s h i n g the o t h e r (even at o n e ' s own l o s s ) becomes a t t r a c t i v e — i f only to discourage r e p e t i t i o n . 4 ^ Assessment  and Recommendations  H a v i n g gone through the gamut o f b a r g a i n i n g s t r a t e g i e s  that  Southern p r o d u c i n g c o u n t r i e s have employed and c o u l d employ i n t i n negotiations, and  the t a s k remains t o a s s e s s the e f f i c a c y o f t h e s e s t r a t e g i e s  t o make some recommendations about t h e i r f u t u r e usage.  Of the seven  groups o f b a r g a i n i n g s t r a t e g i e s examined, the overwhelming i m p r e s s i o n i s t h a t S o u t h e r n c o u n t r i e s r e l y most h e a v i l y on s t r a t e g i e s of n o r m a t i v e app e a l , w h i c h were based on p e r s u a d i n g the o t h e r p a r t y o f the n o r m a t i v e v a l u e of c e r t a i n c o u r s e s of a c t i o n .  I n p a r t i c u l a r , the a l t r u i s m and  _ ,115 -  democracy approaches were most p o p u l a r .  C l e a r l y , t h i s heavy r e l i a n c e on  such s t r a t e g i e s i s a d i r e c t r e f l e c t i o n o f the impact o f t h e "UNCTAD Movement".  The t h i r d group o f s t r a t e g i e s , and s p e c i f i c a l l y , the a p p e a l  to i n t r i n s i c i n t e r e s t ,  i s perhaps  the n e x t most u s e d .  There was one  major example o f the use o f t h r e a t , w h i l e the o t h e r s t r a t e g i e s o u t l i n e d were c h a r a c t e r i s e d by a g e n e r a l d i r t h o f examples.  I would h e s i t a t e  s u g g e s t , however, t h a t they have never o r seldom been u s e d .  The l a c k o f  examples i s i n l a r g e p a r t due t o the g e n e r a l u n a v a i l a b i l i t y o f m a t e r i a l on t i n n e g o t i a t i o n s and the low p u b l i c i t y t h a t the  to  secondary  subject  g e n e r a l l y commands i n i n t e r n a t i o n a l a f f a i r s . How e f f e c t i v e have S o u t h e r n b a r g a i n i n g s t r a t e g i e s been? suggest t h a t they have not been v e r y e f f e c t i v e .  I would  F o l l o w i n g UNCTAD I when  Southern e s p r i t de corps was roused t o a peak, i n t e n s i v e use o f the a l t r u i s m and democracy approaches the o b j e c t i v e s  o f t i n agreements  l e d t o two " s i g n i f i c a n t " a d d i t i o n s  to  — t h a t aimed at i n c r e a s i n g the e x p o r t  e a r n i n g s of S o u t h e r n p r o d u c e r s , and t h a t r e l a t i n g t o t h e d i s p o s a l o f n o n commercial s t o c k s .  However, t h e s e two new o b j e c t i v e s  o p e r a t i o n s o f t i n agreements respect  t o any e x t e n t .  d i d not a l t e r  the  The most u r g e n t i s s u e w i t h  t o such o p e r a t i o n s — b u f f e r s t o c k c o n t r i b u t i o n s — remains  u n r e s o l v e d , w i t h Southern c o u n t r i e s s t i l l h a v i n g t o b e a r the b r u n t o f f i n a n c i n g the s t o c k .  A l b e i t , some f a c i l i t i e s o f the IMF w i l l now be  made a v a i l a b l e t o them. i s the q u e s t i o n o f p r i c e .  A d m i t t e d l y , the c h i e f c o n c e r n o f t i n  agreements  Have S o u t h e r n c o u n t r i e s , t h e n , been a b l e  obtain "remunerative" prices?  I f upward p r i c e r e v i s i o n s i n d i c a t e  to  -  1 1 &  -  a n y t h i n g , one would be. l e d t o b e l i e v e t h a t S o u t h e r n p r o d u c e r s i n d e e d , had a "good d e a l " .  To d a t e ,  r e v i s i o n of the p r i c e r a n g e . gross.  have,  t h e r e i s y e t t o be a downward  However, such assessment i s f a r  too  The f a c t t h a t p r i c e r e v i s i o n s have always been upward may  merely r e f l e c t the s t e a d y growing demand f o r t h e m e t a l i n the w o r l d market i n g e n e r a l , and i s more a f u n c t i o n o f u n d e r l y i n g market  forces  r a t h e r than t h e b a r g a i n i n g s k i l l s o f S o u t h e r n p r o d u c i n g c o u n t r i e s . I n d e e d , i n the 1965 n e g o t i a t i o n s ,  t h e r e was deep d i s s a t i s f a c t i o n  with  the p r i c e range f i x e d , t o the e x t e n t t h a t the two major p r o d u c e r s were w i l l i n g , o r so they t h r e a t e n e d , t o w i t h d r a w from the agreement. the use of t h r e a t was s u c c e s s f u l  While  i n t h a t i n s t a n c e , I would n o t go t o on  t o suggest t h a t S o u t h e r n p r o d u c e r s have been e m i n e n t l y s u c c e s s f u l  in  o b t a i n i n g the p r i c e ranges t h a t they w a n t .  clear  with respect  However, one p o i n t i s  t o t h e p r i c e g o a l ; S o u t h e r n p r o d u c i n g c o u n t r i e s are  b e t t e r o f f w i t h t i n agreements  still  t h a n w i t h o u t them, u n l e s s they can a c t  t o g e t h e r t o form a c a r t e l - l i k e p r o d u c e r s ' c l u b .  A l l i n a l l , t i n agree-  ments a r e q u i t e e f f e c t i v e i n c o n t r o l l i n g t h e f l o o r p r i c e , w h i c h ,  ulti-  mately i s the c h i e f concern of producing c o u n t r i e s . C l e a r l y not a l l the s t r a t e g i e s o u t l i n e d are m u t u a l l y a p p l i c a b l e and some are p o s s i b l e o n l y under c e r t a i n c o n d i t i o n s and c i r c u m s t a n c e s , w h i c h were s p e c i f i e d when each o f the s t r a t e g i e s was d e s c r i b e d and i l lustrated.  On the q u e s t i o n of mutual a p p l i c a b i l i t y , the f i r s t  o f s t r a t e g i e s i s c l e a r l y based on d i f f e r e n t r a t i o n a l e s employ t h r e a t s o r f a i t s  a c c o m p l i s , f o r example.  group  t h a n those  that  One c o u l d h a r d l y p r e t e n d  -117: -  t o be a p e r m i s s i v e t h e r a p i s t and t h r e a t e n the opponent a t the same t i m e . How, t h e n , would the b a r g a i n i n g s t r a t e g i s t p r e s c r i b e ? analysis,  I n the  final  p r e s c r i p t i o n w i l l be based n o t o n l y on expediency b u t on m o r a l  considerations,  as w e l l .  For my p a r t ,  I w o u l d not h e s i t a t e  t o urge  a l l s t r a t e g i e s o f n o r m a t i v e a p p e a l be exhausted b e f o r e one r e s o r t s the h a r d e r b a r g a i n i n g s t r a t e g i e s .  that to  I n any c a s e , t h e r e i s no g a i n s a y i n g  the employment of the f i r s t c a t e g o r y o f s t r a t e g i e s s i n c e , i n a r e a l s e n s e , they harm no o n e , whether i t be o n e s e l f o r the opponent. as one approaches the h a r d e r s t r a t e g i e s , t h e r i s k o f i n j u r y t o and t h e opponent becomes g r e a t e r .  A g a i n , how one p r e s c r i b e s  However, oneself  ultimately  r e s t s on o n e ' s p e r c e p t i o n of the s i t u a t i o n as w e l l as o n e ' s m o r a l position.  L e t me, t h e r e f o r e , o f f e r one such l i n e o f p r e s c r i p t i o n — from  a. p e r c e p t i o n of the s i t u a t i o n , and from one m o r a l s t a n d p o i n t . There are t h r e e main i s s u e s t h a t Southern p r o d u c i n g c o u n t r i e s are concerned w i t h i n t i n agreements — p r i c e , b u f f e r s t o c k c o n t r i b u t i o n s , and n o n - p a r t i c i p a t i o n of major consumers  l i k e the US and West Germany.  On the l a s t two i s s u e s , Southern c o u n t r i e s are perhaps  l i m i t e d t o the  s o f t e r b a r g a i n i n g s t r a t e g i e s , b e c a u s e , u l t i m a t e l y , the d e c i s i o n t o c o n t r i b u t e t o the b u f f e r s t o c k o r p a r t i c i p a t e i n t i n agreements r e s t s w i t h the consumers.  Here t h e a p p e a l t o a l t r u i s m and d e m o c r a t i c norms must  remain i m p o r t a n t b a r g a i n i n g s t r a t e g i e s .  I would s u g g e s t , f u r t h e r ,  that  the o t h e r s t r a t e g y o f n o r m a t i v e a p p e a l — p r o m o t i n g empathy — s h o u l d be used t o supplement the f i r s t two a p p r o a c h e s . been l i t t l e u s e d .  To my knowledge, i t  I n a d d i t i o n , I t h i n k Southern c o u n t r i e s should not  has  _ ,118 _  f o r g e t t h e t i m e - t e s t e d a p p e a l t o i n t r i n s i c i n t e r e s t , w h i c h c o u l d be brought t o b e a r e s p e c i a l l y p o t e n t l y i n r e g a r d t o the b u f f e r s t o c k i s s u e .  My i m -  p r e s s i o n i s t h a t S o u t h e r n c o u n t r i e s have n e g l e c t e d t h i s s t r a t e g y  i n the  f l o o d o f e n t h u s i a s m c r e a t e d by UNCTAD. On the q u e s t i o n o f p r i c e b a r g a i n i n g , I t h i n k t h e r e i s g r e a t e r room f o r the h a r d e r s t r a t e g i e s .  A g a i n t h e r e i s too much r e l i a n c e so f a r on  the a l t r u i s m and democracy approaches  h e r e as w e l l .  I would suggest  that  more a t t e n t i o n s h o u l d be p a i d t o the commitment o r " b u r n i n g b r i d g e s "  ap-  p r o a c h , w h i c h , i f need b e , s h o u l d be b u t t r e s s e d by c r e d i b l e t h r e a t s .  We  saw t h a t i n t h e M a l a y s i a n - B o l i v i a n e p i s o d e — u n f o r t u n a t e l y the o n l y e x ample we have — t h a t the t h r e a t o f "no agreement" proved t o be s u f f i ciently credible. credible.  T h r e a t s a c r o s s i s s u e - a r e a s , however, may not be  To use a n o t h e r o f I k l e and L e i t e s '  t e r m s , t h e r e may e x i s t  46 c e r t a i n " n e g o t i a t i o n mores" parties  i n b a r g a i n i n g betx^een b a s i c a l l y  t h a t c i r c u m s c r i b e the use o f t h r e a t s  across  friendly  47  issue-areas.  But i t may be p o i n t e d out t h a t c r e d i b i l i t y would depend on the magnitude and s e v e r i t y o f the t h r e a t . in threats  W h i l e t h i s may be t r u e , how does one d e c i d e  a c r o s s i s s u e - a r e a s , what i s s e v e r e and what i s n o t ?  we would be w e l l a d v i s e d to take n o t e of S c h e l l i n g ' s n o t i o n o f n e n c e " ( a l t h o u g h he used i t i n a d i f f e r e n t c o n t e x t ) .  Perhaps "promi-  As he p o i n t e d o u t ,  what c o u l d have been more unambiguous f o r the b e l l i g e r e n t s i n the Second World War t h a n t o t a c i t l y agree on "No Gas" as they were d e c i d i n g on the range and scope o f weapons t o be u s e d .  Perhaps, i n a s i m i l a r sense,  "No Agreement" i s the u l t i m a t e t h r e a t t h a t c o u l d be employed i n t i n  - 119 -  n e g o t i a t i o n s because o t h e r t h r e a t s may not be so c l e a r l y unambiguous. Southern p r o d u c i n g c o u n t r i e s , t o my m i n d , w i l l be l e s s a b l e to employ s t r a t e g i e s based on promises and f a i t s  accomplis i n t i n n e g o t i a t i o n s .  G i v e n the s t r u c t u r a l c h a r a c t e r i s t i c s of t i n p r o d u c t i o n and t i n t r a d e , promises may be d i f f i c u l t to c a r r y o u t .  to f u l f i l l  and f a i t s  a c c o m p l i s even h a r d e r  T h i s makes them f a u l t b a d l y on the q u e s t i o n o f  credi-  b i l i t y , which i s a l l - i m p o r t a n t i n b a r g a i n i n g . To sum u p , S o u t h e r n c o u n t r i e s have t y p i c a l l y r e l i e d on b a r g a i n i n g s t r a t e g i e s based on the UNCTAD ethos and would t h e r e f o r e be w e l l  advised  t o t u r n more t o o t h e r s t r a t e g i e s of n o r m a t i v e and i n t r i n s i c a p p e a l . r e g a r d t o p r i c e b a r g a i n i n g , they c o u l d be c o n s i d e r a b l y more  In  effective  by showing s t r o n g commitment t o b a r g a i n i n g p o s i t i o n s , and, i f need b e , t o demonstrate t h i s by t h r e a t e n i n g "no  agreement".  Some C o n c l u d i n g O b s e r v a t i o n s By way o f c o n c l u s i o n , I would l i k e t o t u r n t o t h e b r o a d e r  questions  w i t h w h i c h t h i s study s t a r t e d out t o examine — namely, t h e dynamics of N o r t h - S o u t h i n t e r a c t i o n s i n the t r a d e i s s u e - a r e a .  I t s h o u l d be empha-  s i s e d t h a t the s t u d y was l e s s concerned w i t h d e r i v i n g e m p i r i c a l p r o p o s i t i o n s about the dynamics o f N o r t h - S o u t h t r a d e i n t e r a c t i o n s than w i t h e x p l o r i n g i n a l i b e r a l and h e u r i s t i c manner the range o f b a r g a i n i n g s t r a t e g i e s t h a t are a v a i l a b l e t o S o u t h e r n c o u n t r i e s i n one s u b - i s s u e - a r e a of North-South trade r e l a t i o n s . liminary observations  Nevertheless,  l e t me v e n t u r e a few p r e -  about the n a t u r e of S o u t h e r n b a r g a i n i n g i n t i n  n e g o t i a t i o n s , w i t h a view t h a t t h e s e may s e r v e as p o s s i b l e f o c i  for  -. 120 -  f u t u r e i n v e s t i g a t i o n i n the same a r e a and a l s o w i t h r e s p e c t to i n o t h e r commodity agreements and i s s u e - a r e a s of N o r t h - S o u t h O b s e r v a t i o n 1:  bargaining  trade.  Southern b a r g a i n i n g tends t o c e n t r e around a  narrow range o f b a r g a i n i n g s t r a t e g i e s t y p i c a l l y based on the ethos c r e a t e d by UNCTAD o f the need f o r an e c o n o m i c a l l y more e q u i t a b l e (As noted e a r l i e r ,  world.  t h i s o b s e r v a t i o n may be more apparent than r e a l  because of low p u b l i c i t y and g e n e r a l l a c k o f m a t e r i a l s  on n e g o t i a t i o n  i n t i n agreements.) Observation 2:  Southern b a r g a i n i n g has tended to be more  though not n e c e s s a r i l y O b s e r v a t i o n 3:  more c r e a t i v e  vigorous,  f o l l o w i n g UNCTAD.  I n s p i t e o f O b s e r v a t i o n 2 , Southern b a r g a i n i n g  n o t changed i n any s i g n i f i c a n t  sense the terms and e s p e c i a l l y  the  has  opera-  t i o n s o f t i n agreements. O b s e r v a t i o n 4:  Southern b a r g a i n i n g ,  as a r u l e , tends t o r e l y more  h e a v i l y on " s o f t " s t r a t e g i e s r a t h e r than the " h a r d " s t r a t e g i e s . Observation 5:  There appears t o be an absence o f the use  t h r e a t s (or promises) across  of  issue-areas.  O b s e r v a t i o n 6:  In general,  t h e r e i s l i t t l e use of  Observation 7:  The above t h r e e o b s e r v a t i o n s  threats.  may be due t o  (i)  the r e s t r a i n i n g e f f e c t of n e g o t i a t i o n mores on the use o f the h a r d b a r g a i n i n g s t r a t e g i e s and/or and g r e a t e r i n t e r e s t  ( i i ) Southern r e a l i z a t i o n of i t s heavy  in tin  Observation 8 :  stake  trade.  In s p i t e of Observation 7 ( i i ) , i f threats  are  employed, they a r e l i k e l y t o be used by the c o u n t r i e s w h i c h are most  --.121 -  dependent on t i n t r a d e .  A.  (The o n l y e v i d e n c e o f t h i s i s the one example o f the use o f t h r e a t by M a l a y s i a and B o l i v i a i n 1965.) Observation 9:  The r e a s o n f o r O b s e r v a t i o n 8 i s t h a t  those  c o u n t r i e s w h i c h a r e most dependent on t i n t r a d e w i l l a u t o m a t i c a l l y be most a f f e c t e d by terms w h i c h a r e u n f a v o u r a b l e toward p r o d u c i n g c o u n t r i e s . F i n a l l y , i t must be s a i d t h a t N o r t h - S o u t h n e g o t i a t i o n s i n the t r a d e i s s u e - a r e a a r e h i g h l y amenable t o a n a l y s i s i n terms o f b a r g a i n i n g behavior.  I t would be a s u f f i c i e n t p a y o f f f o r t h i s w r i t e r i f  r e l e v a n c e has been demonstrated i n the s t u d y .  this  -122  -  NOTES Introduction ^The voluminous l i t e r a t u r e on n o n - a l i g n m e n t and n e u t r a l i s m i s proof of t h i s a s s e r t i o n . Some o f the b e t t e r known works i n t h i s a r e a i n c l u d e , C e c i l V . C r a b b , The E l e p h a n t s and the G r a s s : A Study o f Nona l i g n m e n t . (New Y o r k : F r e d e r i c k A . P r a e g e r , 1 9 6 5 ) ; P e t e r L y o n , Neutralism (Leicester: L e i c e s t e r U n i v . P r e s s , 1 9 6 4 ) ; and Laurance M a r t i n , e d . , N e u t r a l i s m and N o n - a l i g n m e n t : The New S t a t e s i n World A f f a i r s , (New Y o r k : P r a e g e r , 1 9 6 2 ) . There are o f c o u r s e numerous a r t i c l e s on t h e s u b j e c t as w e l l . 2  The b u l k of l i t e r a t u r e on the N o r t h - S o u t h q u e s t i o n are l a r g e l y o f an economic n a t u r e . See, f o r example, B a r b a r a Ward, The R i c h N a t i o n s and the P o o r N a t i o n s (New Y o r k : W.W. N o r t o n & C o . , 1 9 6 2 ) ; D a v i d H o r o w i t z , Hemispheres N o r t h and S o u t h : Economic D i s p a r i t y among N a t i o n s ( B a l t i m o r e : John Hopkins P r e s s , 1 9 6 6 ) ; John P i n c u s , T r a d e , A i d and Development: The R i c h and Poor N a t i o n s (New Y o r k : M c G r a w - H i l l , 1 9 6 7 ) ; Dudley Seers and Leonard J o y , e d s . . Development i n a D i v i d e d World ( M i d d l e s e x : P e n g u i n Books, 1971); H a r r y J . J o h n s o n , e d . , Trade S t r a t e g y f o r R i c h and P o o r N a t i o n s (London: A l l e n and Unwin, 1 9 7 1 ) . Those t r e a t m e n t s o f a M a r x i a n bent i n c l u d e , I d r i s Cox, The Hungry H a l f : A Study i n t h e E x p l o i t a t i o n o f the " T h i r d W o r l d " (London: Lawrence and W i s e h a r t , 1 9 7 0 ) ; H a r r y Magdoff, The Age of I m p e r i a l i s m : The Economics of U . S . F o r e i g n P o l i c y (New Y o r k : Monthly R e v i e w , I n c . , 1 9 6 9 ) , Chapter 4 ; F e l i x G r e e n , The Enemy (New Y o r k : V i n t a g e Books, 1 9 7 0 ) , S e c t i o n Two, Chapters 4, 5 , 6, 7, and 8 . (The l a s t two books p e r t a i n m a i n l y t o US p o l i c y , b u t the c h a p t e r s c i t e d c o n c e r n US r e l a t i o n s v i s - a - v i s Southern c o u n t r i e s . ) The more " p o l i t i c a l " t r e a t m e n t s i n c l u d e Bruce M. R u s s e t ' s UN v o t i n g s t u d i e s ; s e e , f o r example, Trends i n World P o l i t i c s (New Y o r k : M a c m i l l a n C o . , 1965) and " D i s c o v e r i n g V o t i n g Groups i n t h e U n i t e d N a t i o n s " , American P o l i t i c a l S c i e n c e R e v i e w , V o l . L X , No. 2, p p . 327-339; and B r a n i s l a v G o s o v i c ' s e x c e l l e n t a r t i c l e , "UNCTAD: N o r t h - S o u t h E n c o u n t e r " , I n t e r n a t i o n a l C o n c i l i a t i o n , May 1968, No. 568, 80 pp. c f . F r e d C h a r l e s I k l e , How N a t i o n s N e g o t i a t e 1 9 6 4 ) , p . 27, and p p . 30-35.  (New Y o r k :  Praeger,  Chapter 1 -^cf. Robert W. Cox, " I n t r o d u c t i o n : P e r s p e c t i v e and P r o b l e m s " i n R.W. Cox, e d . , The P o l i t i c s of I n t e r n a t i o n a l O r g a n i z a t i o n (New Y o r k : P r a e g e r , 1970) p p . 43-44.  - .123  -  I b i d . , p. 44. Cox suggests, for example, that UNCTAD may be regarded as the functional equivalent of the "single party" for LDC's, acting as their pressure group i n the world trade issue-area. z  James N. Rosenau, "Pre-theories and Theories of Foreign P o l i c y " i n R. Barry F a r e l l , ed., Approaches to Comparative and International P o l i t i c s (Evanston: Northwestern Univ. Press, 1966), p. 81. Rosenau goes on to i d e n t i f y four basic issue-areas — t e r r i t o r i a l , status, human resources, and nonhuman resources — each of which encompasses " d i s t i n c t i v e motives, actions and interactions...", pp. 82-83. In a subsequent a r t i c l e , "Toward the Study of National-International Linkages" in J.N. Ros enau, ed., Linkage P o l i t i c s (New York; The Free Press, 1969) , he i d e n t i f i e s s i x "subenvironments" i n the international system, v i z . , the contiguous, regional, cold war, r a c i a l , resource, and organizational environments. Trade, i n his taxonomy, would f a l l under the resource environment, or i n the nonhuman resources issue-area. I f e e l , however, that the issues i n trade are s u f f i c i e n t l y d i s t i n c t i v e for i t to be treated as an autonomous issue-area. ^This i s David Easton's well-worniphrase. See A Framework for P o l i t i c a l Analysis (New York: Praeger, 1965), p. 50 et passim. -*See, for example, Rudolf J . Rummel, "Some Empirical Findings on Nations and t h e i r Behavior", World P o l i t i c s , 1969, Vol. 21, No. 2. One finding (3.2.2) states that "economic development i s the single most important determinant of UN voting behavior", which i f nothing more, i s an indication of the LDC's using t h e i r numerical strength i n the UN to press issues of t h e i r concern. Another finding (5.1.4) states that " d i s s i m i l a r i t i e s i n size and economic development are the most important determinants of the v a r i a t i o n i n behavior of nations toward each other, explaining 85 per cent of the variance". Such findings suggest to me that the North-South cleavage may be a more important determinant of international interactions than has hitherto been thought. Russet's voting studies also suggest that North-South issues were prominent even i n the 1947, 1952, 1957 and 1961 UN assemblies. He found them to be next i n prominence to East-West issues. See Trends i n World P o l i t i c s , op. c i t . , p. 70. See Gosovic, op. c i t . , pp. 5-8 and Charles L. Robertson, Creation of UNCTAD", i n Cox, op. c i t . , pp. 258-274.  "The  ^My depiction of the UNCTAD "group system" w i l l draw largely on Gosovic's excellent account. See pp. 14-30. 9 Yugoslavia i d e n t i f i e d i t s e l f with the "Group of 77", although in a s t r i c t sense, i t cannot be considered an LDC. Robertson, op. c i t . , pp. 261-262.  -- l"24 -  26  P a r t n e r s . . . , p.  2 7  Ibid.,  2 8  Ibid.  p.  87.  87.  " " " J o i n t D e c l a r a t i o n o f the D e v e l o p i n g C o u n t r i e s made at the E i g h t e e n t h S e s s i o n of the G e n e r a l A s s e m b l y " , G e n e r a l Assembly R e s o l u t i o n 1897 ( X V I I I ) , 11 November, 1963, Annex. Ibxd. 31  P r o c e e d i n g s o f the U n i t e d N a t i o n s Conference on Trade and Development, Geneva, 23 March - 16 June 1964, UN P u b l i c a t i o n , S a l e s No: 6 4 . I I . B . 11-18 (UN Doc. E / C O N F / 4 6 / 1 4 1 ) , New Y o r k , 1964, V o l . I I , pp. 5 - 6 3 , h e r e i n a f t e r c i t e d as P r o c e e d i n g s . . . . ( V o l s . I - V I I I ) . 3 2  I b i d . , p.  6.  33  B e l a B a l a s s a , Trade P r o s p e c t s f o r D e v e l o p i n g C o u n t r i e s (Homewood, 1 1 1 . : R i c h a r d D. I r w i n , 1964). 34 C u t a j a r and F r a n k s , o p . c i t . , p . 158. 35 Proceedings...,  V o l . I I , p.  I s a i a h F r a n k , op. c i t . , p . 37  11. 57.  P a r t IV came i n t o b e i n g on June 2 7 , 1966, a f t e r the e n d o r s e ment by t h e n e c e s s a r y t w o - t h i r d s m a j o r i t y . The most i m p o r t a n t a r t i c l e r e l a t e s t o an u n d e r t a k i n g by developed c o u n t r i e s t o r e f r a i n from i n c r e a s i n g b a r r i e r s t c i m p o r t s of i n t e r e s t to L D C ' s . See C u t a j a r and F r a n k s , o p . c i t . , p . 143. 38 P i n c u s , op. c i t . , p . 267. 39 A . G . H a r t , N . K a l d o r and J . T i n b e r g e n , "The Case f o r an I n t e r n a t i o n a l Commodity Reserve C u r r e n c y " i n P r o c e e d i n g s . . . , V o l . I l l , p p . 522-541. 40 P r o c e e d i n g s . . . , V o l . I , p . 27. 41 P i n c u s , op. c i t . , p . ibid. 4 2 Ibid. 4 3  278.  Gosovic, op. c i t . , p. 32. 1:L  1 2  I b i d . , p. 24.  I b i d . , p. 26.  13 cf. Pincus, op. c i t . , pp. 48-49. 14 For a f u l l e r exposition of the role of trade i n economic development, see an excellent and concise treatment by Isaiah Frank, "The Role of trade i n Economic Development", International Organization, Vol. 22, No. 1, Winter 1966, pp. 44-71. "^Partners i n Development: Report of the Commission on International Development (New York: Praeger, 1969) p. 81, hereinafter c i t e d as Partners.. "^Michael Z. Cutajar and A l l i s o n Franks, The Less Developed Countries in World Trade (London: Overseas Development I n s t i t u t e , 1967), p. 29. 1 7  I b i d . , p. 30.  18  Partners..., p. 84. 19 Pincus, op. c i t . , p.  237  20 Partners..., p. 82. 2 1  I b i d . , p. 84.  22 Cutajar and Franks, op. c i t . , p. 73. 2 3  Ibid.  24 Commodity trade also exhibits some asymmetry, e s p e c i a l l y when one considers that petroleum exporters take the l i o n ' s share of about 34 per cent of the LDC t o t a l share of the Northern market. (See Table II) However, i n general, there i s a more even spread of gains i n commodity trade among LDC's simply because many more LDC's are engaged i n commodity trade than i n manufactures trade. 25 There i s strong evidence to suggest that this i s i n fact what happens. For instance, i n 1964, the top ten LDCs i n manufactures trade had accounted for 70.9 per cent of exports to the North, with the two top countries — Hong Kong and India — accounting for close to half (44%) of the t o t a l (see Cutajar and Franks, op. c i t . , p. 73). My figures show that the top ten accounted for somewhat less i n 1967 (67%), with changes i n both the order of and i n those LDCs included i n this group. Moreover, the two top countries — Hong Kong and Chile (India f e l l to No. 4) — accounted for only 26.3 per cent of the t o t a l (see Table I I I ) .  -126  -  Chapter 2 •'•International Tin Study Group, S t a t i s t i c a l Year Book 1949, Appendix, p. 217. See also, Klaus E. Knorr, T i n Under Control (Stanford: Stanford Univ. Press, 1945) for a x^ell-documented history and analysis of these schemes. 2 ITSG, S t a t i s t i c a l Year Book 1949, l o c . c i t . 3 See Knorr, op. c i t . , pp. 89-91, and Siew Nim Chee, "The International Tin Agreement of 1953", Malayan Economic Review, Vol. 2, No. 1, A p r i l - 1957, pp. 36-37. ^Christopher D. Rogers, "Consumer P a r t i c i p a t i o n i n the Internat i o n a l Tin Agreements", Malayan Economic Review, V o l . 14, No. 2, Oct. 1969, p. 115, and Knorr, op. c i t . , pp. 95-98. ~*The Times (London), "New Feb. 5, 1971, p. 22.  Signatory to International Tin Agreement",  Such a view i s expressed, for example, by Siew, op. c i t . ^United Nations Tin Conference, 1960. UN Doc. E/CONF.32/5, pp. 13-14. 8  Summary of Proceedings,  I b i d . , p. 13 and p. 18.  ^Third International and (d), United Nations Tin UN Doc. TD/TIN.3/5, p. 29. of the Fourth International 10  UN  1 1  Tin Agreement, A r t i c l e 1, subsections (c) Conference, 1965. Summary of Proceedings, These two objectives continued to be part T i n Agreement. See Appendix A, A r t i c l e 1.  Tin Conference, 1965, pp. 14-15.  I b i d . , p. 26.  "The Tunku's Tin Trouble", The Far Eastern Economic Review, 51, Jan. 20, 1966, p.89. 12  Vol.  13 It should be remembered, however, that t i n products i n different stages of processing — from t i n metal through to t i n - p l a t e and t i n cans — are imports of both Northern and Southern countries. The statement, therefore, refers only to primary production and consumption. 14 See Rogers, op. c i t . , p. 123. 15  I n t e r n a t i o n a l Tin Council, S t a t i s t i c a l Yearbook 1968, p. 32.  - 127 -  "Troubled T i n : Metal's Shortage, High Demand I n f l a t e World Prices; Consumers, Seeing No Downturn, Switch to Substitutes", The Wall Street Journal, Nov. 12, 1964, p. 28. 1 7  Ibid.  18 Lim Chong Yah, " A Re-appraisal of the 1953 International T i n Agreement", Malayan Economic Review, V o l . 5, No. 1, A p r i l 1960, sums up the 1953 objectives as four: 1) the employment objective, 2) the economic production objective, 3) the supply objective, and 4) the p r i c e objective. These correspond to the f i r s t four objectives I have i d e n t i f i e d . The other two objectives were included only a f t e r the 1965 Agreement. "^See Appendix A, A r t i c l e 21 and A r t i c l e 22. ^ ITC S t a t i s t i c a l Yearbook 1968, p. 12. U  21  S e e Appendix A, A r t i c l e 25.  2 2  I b i d . , A r t i c l e 30.  2 3  I b i d . , A r t i c l e 33.  2 4  I b i d . , A r t i c l e 37.  2 5  I b i d . , A r t i c l e 40.  J  S e e Rogers, op. c i t . , pp. 121-122, and UN T i n Conference, 1970, Economic Committee Meetings, Summary Records of the F i r s t to Twentyfourth meetings, UN Doc. TD/TIN.4/C.1/SR.1-24, p. 77. 2 6  27 Rogers, l o c . c i t . O Q  UN Tin Conference, 1970, Economic Committee Meetings, l o c . c i t . 2 9  I T C S t a t i s t i c a l Yearbook 1968, p. 15.  30 Economic Committee Meetings, p. 81. 3 1  I b i d . , p. 80.  " T r o u b l e d T i n : Metal's Shortage ", The Wall Street op. c i t .33 Rogers, op. c i t . , p. 118 and pp. 121-122. 32  ^Economic Committee Meetings, pp. 76-77.  Journal,  -ri28  3  -  "*Ibid., p. 85.  O A  Lim, op. c i t . , p. 14, and Yip Yat Hoong, "The Domestic Implementation of the 1953 International Tin Agreement i n Malaya", Malayan Economic Review, Vol. 5, No. 2, Oct. 1960, p. 62. 37 ,., Ibid. T  Lim, op. c i t . 39 Ibid., p. 17. Ibid. 41  i See, for example, the B o l i v i a n delegate s statement at the UN  Tin Conference, 1965, op. c i t . , p. 13-14. 42  Rogers,  44 4 3  p. 3.  op. c i t . , p. 121.  F I b. iCd.. Ikle, How  Nations Negotiate (New York:  Praeger, 1964),  45 ... Ibid. T  46 Thomas C. Schelling, The Strategy of C o n f l i c t (New York: Oxford Univ. Press, 1963), Chapter 3, Appendix A, et passim. 47 Jack Sawyer and Harold Guetzkow, "Bargaining and Negotiation in International Relations", i n Herbert C. Kelman, ed., International Behavior (New York: Holt, Rinehart and Winston, 1965), p. 427. 48 Report by Interim Co-ordinating Committee f o r International Commodity Arrangements, "Inter-governmental Commodity Agreements" i n Proceedings..., Vol. I l l , p. 114. 49 It may not be necessary to follow a l l of these steps i f the s i t u a t i o n i s s u f f i c i e n t l y urgent and adequate information i s available. See Ibid., p. 115. 5 0  Ibid.  ~*"*"Ibid. , p. 116. 5 2  I b i d . , p. 118.  5 3  Ibid.  - 129 -  "^Economic Committee M e e t i n g s , S i x t e e n t h M e e t i n g , p . 55 Report by I n t e r i m C o - o r d i n a t i n g Committee 5 6  I b i d . , p.  p.  157. 118.  124.  57  M i x e d i n t e r e s t s games are t h o s e t h a t i n v o l v e b o t h c o m p e t i t i o n and c o o p e r a t i o n . They are d i s t i n g u i s h e d from i d e n t i c a l i n t e r e s t s , o r p u r e l y c o o p e r a t i v e , g a m e s , and o p p o s i t e i n t e r e s t s , o r p u r e l y c o m p e t i t i v e , games, a l s o c a l l e d zero-sum games. See, John C. H a r s a n y i , "Game Theory and t h e A n a l y s i s of I n t e r n a t i o n a l C o n f l i c t " i n James N . Rosenau, e d . , I n t e r n a t i o n a l P o l i t i c s and F o r e i g n P o l i c y , R e v i s e d E d i t i o n (New Y o r k : The F r e e P r e s s , 1 9 6 9 ) , pp. 370-380, f o r a s u c c i n c t d i s c u s s i o n o f t h e s e distinctions. C O  U t i l i t y i s not n e c e s s a r i l y t r a n s f e r a b l e , as r e p r e s e n t a t i o n by numbers may l e a d one t o b e l i e v e . I n o t h e r w o r d s , 2 u n i t s of u t i l i t y f o r producers are not n e c e s s a r i l y 2 u n i t s o f u t i l i t y f o r consumers as w e l l . The numbers o n l y i n d i c a t e t h a t t h e u t i l i t y o f each s i d e i s measured on an i n t e r v a l s c a l e . See A n a t o l R a p o p o r t , F i g h t s , Games and Debates (Ann A r b o r , M i c h . : U n i v . o f M i c h . P r e s s , 1 9 6 0 ) , p p . 180-186 f o r an e x p l i c a t i o n of t h i s p o i n t . 59  The 0 u t i l i t y i n d i c a t e s t h a t the a c t o f consumers c h o o s i n g not t o c o o p e r a t e does not i t s e l f a f f e c t the outcome as s u c h ; i t i s r a t h e r t h e market f o r c e s ( " c h a n c e " ) w h i c h o p e r a t e under the c o n d i t i o n o f "no agreement" t h a t a f f e c t the p r i c e . Such e f f e c t s o f market f o r c e s a r e i n d i c a t e d by p r o d u c e r s ' outcomes 10 and -10 and consumers outcomes 5 and -5 i n the t h r e e c e l l s where "no agreement" o b t a i n s . The two s e t s o f u t i l i t i e s f o r p r o d u c e r s and consumers here a l s o i n d i c a t e t h a t o v e r a l o n g p e r i o d , they tend t o c a n c e l out t o z e r o , as market f o r c e s become randomized. 60 The same r e a s o n i n g i n Note 59 a p p l i e s f o r t h e 0 u t i l i t y h e r e . 61 For s i m p l i c i t y , we have drawn the u t i l i t y f r o n t i e r as t h e d o t t e d l i n e j o i n i n g our t h r e e P a r e t o o p t i m a . I n r e a l i t y , t h e r e c o u l d be an i n d e t e r m i n a t e number of such o p t i m a , f o r example, t h e r e c o u l d be d i f f e r e n t degrees o f " c o o p e r a t e " and " c o m p e t e " , and p o i n t s p l o t t e d a c c o r d i n g l y , a l though we can assume t h a t the f r o n t i e r w i l l f o l l o w the same rough s h a p e . See Sawyer and Guetzkow f o r f u r t h e r e l a b o r a t i o n on t h i s p o i n t , o p . c i t . , pp. 476-477. 62 I n a zero-sum game m a t r i x , o n l y Row's p a y o f f s need be e n t e r e d , as Row's g a i n s a r e always Column's l o s s e s and v i c e v e r s a . As s u c h , a n e g a t i v e s i g n i n d i c a t e s a g a i n f o r Column. T h i s i n c l u d e s the h i g h l y i m p r o b a b l e s i t u a t i o n where  producers  - 130  TT  choose to decrease the price and consumers to increase i t . For purposes of game theory, however, a l l possible outcomes have to be specified. r  Ghana, the leading cocoa producer, was unwilling to accept the price range proposed by consumers, who could not accept Ghana's proposal either. See United Nations Commodity Survey, 1968, p. 91 and Cutajar and Franks, op. c i t . , p. 71 for the f a i l u r e of producers and consumers to agree on a f l o o r price i n a number of cocoa conferences. 65 This i s a term introduced by Fred C. Ikle and Nathan L e i t e s , " P o l i t i c a l Negotiation as a Process of Modifying U t i l i t i e s " , Journal of Conflict Resolution, Vol. 6, 1962. It has also been c a l l e d "threat point" i n economics, R.L. Bishop, "Game Theoretical Analysis of Bargaining", Quarterly Journal of Economics, Vol. 77, 1963; and "resistance point" i n labour r e l a t i o n s , R.E. Walton and R.B. McKersie, A Behavioral Theory of Labor Negotiations (New York: McGraw-Hill, 1965). Ikle and Leites define minimum d i s p o s i t i o n as "the least favorable terms at which each negotiator would prefer agreement to no agreement, op. c i t . , p. 20. We s h a l l use t h e i r d e f i n i t i o n i n this study. ^ S e e Rapoport, op. c i t . , for a trenchant c r i t i q u e of game theory with respect to i t s s t a t i c nature. See also Michael P. S u l l i v a n , "International Bargaining Behavior", International Studies Quarterly, Vol. 15, No. 3, Sept. 1971, for a s i m i l a r c r i t i q u e of bargaining l i t e r a t u r e i n international r e l a t i o n s .  Chapter 3 '''See statements by the Bolivian,Nigerian and Malaysian delegates at the plenary sessions of the 1965 Conference, UN T i n Conference, 1965, op. c i t . , pp. 14-15 and pp. 25-26. 2 The statement of the Thai delegate at the 1960 Conference was s i m i l a r to t h i s . He referred to the fact that the buffer stock was financed by those least able to do so, UN Tin Conference, 1960, op. c i t . p. 14. 3 See Note 2. UN Tin Conference, 1965, p. 19 and p. 26. (The text i s i n the reported tense, which I have altered to the present tense when c i t e d as quotes.) 4  5  I b i d . , p. 14.  6  I b i d . , p. 15.  - 131 -  7  I b i d . , p.  19.  Q  UN T i n C o n f e r e n c e , 1970, Economic Committee M e e t i n g s , e s p e c i a l l y the 9 t h , 1 0 t h , 1 1 t h , 1 3 t h , 1 5 t h , 1 6 t h , 1 9 t h , and 23rd m e e t i n g s . 9  Ibid.,  16th M a e t i n g , p .  157.  ^ I b i d . , see e s p e c i a l l y 19th and 23rd M e e t i n g s . "^See  Ibid,  passim.  12 The c h i e f proponent i s C a r l R. R o g e r s . See, f o r example, h i s C l i e n t - c e n t e r e d Therapy ( B o s t o n : Houghton M i f f l i n C o . , 1 9 5 1 ) . 1  "3  XJ  R a p o p o r t , op. c i t . , pp.  286-287.  ^ U N T i n C o n f e r e n c e , 1965, l o c . c i t . •'"^F.C. de C a l l i e r e s , On the Manner o f N e g o t i a t i n g w i t h P r i n c e s ; On the uses of D i p l o m a c y ; t h e c h o i c e o f M i n i s t e r s and E n v o y s ; and the P e r s o n a l Q u a l i t i e s N e c e s s a r y f o r Success i n M i s s i o n s Abroad ( P a r i s : M i c h e l B r u n e t , 1716) t r a n s l a t e d by A . F . Whyte (New Y o r k : Houghton M i f f l i n , 1 9 1 9 ) , pp. 122-123, c i t e d by Sawyer and Guetzkow, o p . c i t . , p . 481. I t seems l o g i c a l t o expect t h a t i n n e g o t i a t i o n s between b a s i c a l l y f r i e n d l y c o u n t r i e s / p a r t i e s , the appeal to s e l f - i n t e r e s t i s q u i t e w i d e s p r e a d , i f o n l y because the use o f h a r d t e c h n i q u e s - s u c h as t h r e a t s , a r e , i n such s i t u a t i o n s c i r c u m s c r i b e d . The o b s e r v a t i o n has been made, f o r example, o f Canadian-US n e g o t i a t i o n s on a w i d e range o f issues. See K a l J . H o l s t i , "The U n i t e d S t a t e s and Canada" i n Steven L . S p i e g e l and Kenneth N . W a l t z , e d s . , C o n f l i c t i n World P o l i t i c s (Cambridge, M a s s . : Winthrop P u b l i s h e r s , 1 9 7 1 ) , p . 384. " ^ I k l e and L e i t e s , o p . c i t . , p .  23.  17 Rapoport, op. c i t . , p.  280.  "^Sawyer and Guetzkow, op. c i t . , p .  480.  19 c f . Rogers, op. c i t . , p .  118.  20  Maghnad D e s a i , " A n E c o n o m e t r i c Model of t h e World T i n Economy, 1 9 4 8 - 6 1 " , E c o n o m e t r i c a , V o l . 34, No. 1, J a n . 1966, p p . 105-134. 21 Economic T Committee M e e t i n g s , 10th M e e t i n g , p p . 8 4 - 8 5 . 2 2  IIbbii dd . ,  13th K( Meeting, p.  2 3  Ibid.,  p.  117.  115.  o/ 2 5  R o g e r s , op. c i t . , p . 120 and p . 126. U N T i n C o n f e r e n c e , 1965, pp. 25-26. p.  25.  I b i d . , p. 28T, . , Ibid.  26.  2 6  Ibid.,  27  29 Rapoport, l o c .  cit.  30 See Economic Committee M e e t i n g s , 9 t h M e e t i n g , p .  72.  31  T h i s might be e s p e c i a l l y t r u e o f the U . S . , w h i c h i n the p r e war days was p a r t i c u l a r l y concerned about the t i n c o n t r o l schemes, w h i c h i n f a c t prompted i t t o accumulate i t s huge s t o c k p i l e . See S i e w , op. c i t . 32 UN T i n C o n f e r e n c e , J J  3 4  1965, p .  S c h e l l i n g , op. c i t . , p p . I b i d . , p.  14.  21-52.  24.  U N T i n C o n f e r e n c e , 1965, p . 25 G e o r g e K e n t , The E f f e c t s o f T h r e a t s (Ohio S t a t e U n i v . P r e s s , 1 9 6 7 ) , p . 30. 37 -"See UN T i n C o n f e r e n c e , 1965, 5 t h P l e n a r y S e s s i o n , e s p e c i a l l y s t a t e m e n t s by B o l i v i a n and M a l a y s i a n d e l e g a t e s , p p . 25-26. 3 8 " T h e Tunku's T i n T r o u b l e " , op. c i t . , p . 89. 3 5  JD  39  Storm i n the T i n c u p " . The F a r E a s t e r n Economic R e v i e w , V o l . 5 1 , J a n . 20, 1966, p p . 9 0 - 9 1 , and "The Tunku's " loc. cit. 40 Ibid. See a l s o , " T i n : I s t h e P r i c e Too H i g h ? " . The F a r E a s t e r n Economic Review, V o l . 5 3 , A u g . 1 8 , 1966, p . 323. The M a l a y s i a n d e l e g a t e t o the J u l y C o u n c i l meeting was supposed t o have remarked t h a t t h e r e ensued "some l o n g and d i f f i c u l t n e g o t i a t i o n s " , I b i d . ^ E c o n o m i c Committee M e e t i n g s , 15yh and 19th M e e t i n g s , p p . 136140 and pp. 178-181. 4 2  Ibid.,  p.  139.  4 3  Ibid.,  p.  180.  - 133 -  44 4 5  Sawyer and Guetzkow, op. c i t . , p .  485.  Ibid.  ^ N e g o t i a t i o n mores are d e f i n e d by I k l e and L e i t e s as " t h e conc e p t i o n s as t o the ' p r o p e r ' conduct i n n e g o t i a t i o n s t h a t a r e h e l d by n e g o t i a t o r s , t h e i r governments, t h e i r domestic p u b l i c , e t c . . . . " , o p . e x t . , p. 23. 47  There i s some e v i d e n c e t o suggest t h a t t h e r e may be such n e g o t i a t i o n mores among b a s i c a l l y f r i e n d l y c o u n t r i e s . F o r example, K . J . 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(New Y o r k : M c G r a w - H i l l , 1965) Ward, B a r b a r a . W.W. N o r t o n & C o . ,  The R i c h N a t i o n s and t h e Poor N a t i o n s . 1962)  (New Y o r k :  - 139 Wells, Sidney J. Fabian Society, 1965)  Trade and International Inequality.  (London:  Yip Yat Hoong. The Development of the Tin Mining Industry of Malaya. (Kuala Lumpur: Univ. of Malaya Press, 1969) ARTICLES, PERIODICALS AND NEWSPAPERS Asher, Robert E. "International Agencies and Economic Development: An Overview". International Organization, Vol. 22, No. 1, Winter 1968, pp. 432-458. "Big Nations Asked to Join Tin Pact". 14, 1970, p. 20.  The Times.  (London)  April  Bishop, R.L. "Game Theoretical Analysis of Bargaining". Quarterly Journal of Economics, Vol. 77, 1963. Davies, Joseph S. "International Commodity Agreements: Hope, I l l u s i o n or Menace?" Committee on International Economic Policy i n Cooperation with Carnegie Endowment for International Peace, 1947. Desai, Maghnad. "An Econometric Model of the World Tin Economy, 1948-61". Econometrica, Vol. 34, No. 1, Jan. 1966, pp. 105-134. Evans, John W. "The General Agreement on Trade and T a r i f f s " . International Organization, Vol. 22, No. 1, Winter 1968, pp. 72-98. Frank, Isaiah. "The Role of Trade i n Economic Development". International Organization, Vol. 22, No. 1, Winter 1968, pp. 44-71. Gardner, Richard N. "The United National Conference on Trade and Development". International Organization, Vol. 22, No. 1, Winter 1968, pp. 99-130. Gosovic, Branislav. "UNCTAD:' North-South Encounter". C o n c i l i a t i o n , May 1968, No. 568, 80 pp.  International  Ikle, Fred Charles and Nathan L e i t e s . " P o l i t i c a l Negotiation as a Process of Modifying U t i l i t i e s " . Journal of C o n f l i c t Resolution, Vol. 6, 1962. Kotschniq, W.M. "The UN as an Instrument of Economic and Social Development". International Organization, Vol. 22, No. 1, Winter 1968, pp. 16-43. Kravis, I r v i n G. "International Commodity Agreements to Promote Aid and E f f i c i e n c y : The Case of Coffee". The Canadian Journal of Economics, Vol. 1, No. 2, May 1968, pp. 295-317.  '- 140 Kristensen, T. "The South as an I n d u s t r i a l Power". and C o n f l i c t , Vol. 2, 1967, pp. 61-66.  Cooperation  Lim Chong-Yah. "A Re-appraisal of the 1953 International T i n Agreement". The Malayan Economic Review, Vol. 5, No. 1, A p r i l 1960. "New Signatory to International T i n Agreement". (London) Feb. 5, 1971, p. 22.  The Times.  Ohlin, Goran. "The Organization f o r Economic Cooperation and Development". International Organization, Vol. 22, No. 1, Winter, 1968, pp. 231-243. Rogers, Christopher D. "Consumer P a r t i c i p a t i o n i n International Tin Agreements". The Malayan Economic Review, Vol. 14, No. 2, Oct. 1969, pp. 113-125. Rummel, Rodolf J . "Some Empirical Findings on Nations and t h e i r Behavior". World P o l i t i c s , Vol. 21, No. 2, 1969, pp. 226-242. Russet, Bruce M. "Discovering Voting Groups i n the United Nations". American P o l i t i c a l Science Review, Vol. 60, No. 2, pp. 327-339. Siew Nim Chee. "The International Tin Agreement of 1953". Malayan Economic Review, Vol. 2, No. 1, A p r i l 1957, pp. 35-53. "Storm i n a Tincup". Jan. 20, 1966, pp. 90-91.  The  The Far Eastern Economic Review, Vol. 51,  S u l l i v a n , Michael P. "International Bargaining Behavior". International Studies Quarterly, V o l . 15, No. 3, Sept. 1971, pp. 359-382. "The Tunku's Tin Trouble". Jan. 20, 1966, pp. 88-91.  The Far Eastern Economic Review, Vol. 51,  "Troubled T i n : Metal's Shortage, High Demand Inflate World Prices; Consumers Seeing no Downturn, Switch to Substitutes". The Wall Street Journal, Nov. 12, 1964, p. 28. "Tin Council Changes Price Limits". "Tin: Is the Price too High?" 53, Aug. 18, 1966, pp. 321-324.  The Times, Oct. 22, 1970, p. 28.  The Far Eastern Economic Review, V o l .  "Tin Output May F a l l Short by 10,000 Tons". 1970, p. 20.  The Times, Aug. 18,  Yip Yat Hoong. "The Domestic Implementation of the 1953 International Tin Agreement i n Malaya". The Malayan Economic Reviex<r, Vol. 5, No. 2, Oct. 1960.  A P P E N D I C E S  - 142 -  APPENDIX A:  THE FOURTH INTERNATIONAL TIN AGREEMENT, 1970  Source: United Nations T i n Conference 1970, Summary of Proceedings, UN Doc. TD/TIN. 4/7/Rev.l, UN Publication, Sales No. E. 70. I I . D. 10, pp. 5-  - 143 -  Preambe l favourable and equitable conditions for its production, The Contracting Governments, recognizing: c (a) That commodtiy agreements, by helping to secuo rensumption or trade; stabilization of prices and steady deveo l pment of expor(d) t The need to protect and foster the health and earnings and of primary commodtiy markets, can sigg niro fi-wth of the tin industry, especialy in the developing cantly assist economc i growth, especialy in developingproducing countries, and so to ensure adequate supplies of tin to safeguard the interests of consumers in the producing countries; importing countries; (b) The value of continued co-operation between pro(e) The importance to tin producing countries of mainducing and consumn i g countries, within the framewto rik a n is ng and expanding their import purchasing power; of the basic principles and objectives of the United Naa tio n n d Conference on Trade and Deveo l pment by means of an international commodtiy agreement, to help to resolve(/) The desirability of achieving the expansion of tin problems relevant to tin; consumption in both developing and industrialized (c) The exceptional importance of tin to numerouscountries; countries whose economy is heavily dependent upon Have agreed as follows: .  (e) To prevent wd i espread unempo l yment or underempo l yment and other serious difficulties which may result from maladjustments between the supply of and the Article 1 demand for tin; (/) In the event of a shortage of supplies of tin occurOBJECTIVES ring or being expected to occur, to take steps to secure an increase in the production of tin and a fair distribution The objectives of.this Agreement are: o fc-tin metal in order to mitigate serious difficulties which (a) To provide for adjustment between world prodc u o nsumn i g countries might encounter; tion and consumption of tin and to aleviate serious diffi( g ) In. the event of a surplus of supplies of tin occurring culties arising from surplus or shortage of tin; o r b e i n g e xpected to occur, to take steps to mitigate serious (b) To prevent excessv i efluctuationsin the price of di tin f fi c ul t i e s w hich producing countries might encounter; and in export earnings from tin; review disposals of non-commercial stocks of (c) To make arrangements which will help to incre a(h) sebyToGo tin vernments and to take steps which would avoid the export earnings from tin, especialy those of the d veae n loping producing countries, thereby helping to provid ey uncertainties and difficulties which might arise; l pment such countries with resources for accelerated economc i (i) To keep under review the need for the deveo deexploitation of new deposits of tin and for the progrowth and social development, while at the samean tim m taking into account the interests of consumers in imp orot-tion, through, inter alia, the technical and financial assistance resources of the United Nations and other ing countries; a ations within the United Nations system, of the (d) To ensure conditions which will help to achievo erg atniz o s efficient methods of mining, concentration and smeltdynamc i and rising rate of production of tin on them b a s i s of a remunerative return to producers, which will in hg elpof tin ores; and to secure an adequate supply at prices fair to consum(j) ersTo continue the work of the International Tin and to provide a long-term equilibrium between prod -ncil under the First, Second and Third International Cuocu tion and consumption; Tin Agreements. C H A P T E R I — OBJECTIVES  -  CHAPTER n — DEFINITIONS  iMf -  Control period m eans a period which has been so de clared by the Council and for which a total permissib export tonnage has been fixed. Article 2 Quarter m eans a calendar quarter beginning on 1 Jan ary, 1 April, 1 July or 1 October. DEFINITIONS Financial year m eans a period of one year beginning on For the purposes of this Agreement: 1 July and ending on 30 June of the next year. Tin means tin metal, any other refined tin or the tin content of concentrates or tin ore which has been extracted from its natural occurrence. For the purposes of this definition, "ore" shall be deemed to exclude (a) material which has been extracted from the ore body for a pC urH po eTER III — MEMBERSHIP IN THE COUNCIL AsP other than that of being dressed and (b) material which is discarded in the process of dressing. Article 3 Tin metal m eans refined tin of good merchantable quality assaying not less than 99.75 per cent. PARTICIPATION IN THE COUNCIL Buffer stock m eans the bufer stock established and Each Contracting Government shall constitute a single operated in accordance with the provisions of chapter VIII member of the Council, except as otherwise provided of this Agreement. in article 49. Tin metal held m eans the metal holding of the buffer stock, including metal which has been bought for the Article 4 buffer stock but not yet received, and excluding metal which has been sold from the bufer stock but not yet CATEGORIES OF PARTICIPANTS delivered, by the Manager of the buffer stock. Each member of the Council shall be declared b Ton means " metric ton, i.e. 1,000 kilogrammes. the(a)Counci l, with the consent of the country concerne Net exports m eans the amount exported in the cirt o b e a p cing or a consumn i g country, as soon cumstances set out in part one of annex C to this p Aogsre e -le afterrodru s i b e c e i p t b y t h e Counci f notice from th ment less the amount imported as determined in acd ce orp do -sitary Government that such melmo b e r has deposited ance with part two of the same annex. its instrument of ratification, approval, acceptance or Participating country m eans a country whose Governa-ccession under article 45 or 48, or notification of inten ment has ratified, approved or accepted this Agreem en tio nt, to ratify, approve or accept this Agreement unde or given notification of intention to ratify, approve arti orcle 47. accept it, or acceded to it, or any territory or territorie s The membershp i of producing countries and conwhose separate participation has taken efect under su(b) m i n g c o u n t r i e s shal l be based respectively on their article 49 or as the context may require, the Governdm enetstic mn o m i e p r o d u c of such country or of such territory or territories the m -tal provided that: tion and their consumption of tin m e selves. (i) The membershp i of a producing country which is Producing country means a participating country a substantial consumer of tin metal derived from which the Council has declared, with the consent of thatits own domestic mn i e production shall with the country, to be a producing country. consent of the country be based on its exports tin; Consuming country means a participating country which the Council has declared, with the consent of th a t (ii) The membershp i of a consumn i g country which country, to be a consumn i g country. produces from its own domestic mn i es a substantia proportion of the tin it consumes shall with the Contributing country m eans a participating country consent of the country be based on its imports which has contributions in the bufer stock. Simple majority m eans a majority of the votes cast by tin. (c) In its instruments of ratification, approval, acceptparticipating countries counted together. a n ce or accession or in its notification of intention to Simple distributed majority m eans a majority of the ratify, prove or accept this Agreement, each Contrac votes cast by producing countries and a majority oin fg theGoavp e ment may state the category of participating votes cast by consumn i g countries, counted separatelyc.ountries trn o which it considers that' it should belong. Two-thirds distributed majority means a two-thirds (d) At thefirstmeetn i g of the Council after the entr majority of the votes cast by producing countries an dtoaforce of the Agre i n ment, the Council shall take th two-thirds majority of the votes cast by consumn i g co u n -isions necessary for te d e c h e application of this article by tries, counted separately. a majority of votes cast by the participating countries listed in annex A and by a majority of votes cast by Entry into force means, except w hen qualified, the initial entry into force of this Agreement, whether such participating countries listed in annex B, the votes bein cou entry into force is provisional in accordance with article 4n 7ted separately and voting rights being in conformit with annexes A and B to this Agreement. or definitive in accordance with article 46.  -  Article  U 5  5  CHANGE OF CATEGORY  (a) Where the position of a participating country has changed from that of a consuming to that of a producing country, or vice versa, the Council shall, on the request of that country or on its own initiative with the country's consent, consider the new position and determine the tonnages or percentages applicable. (b) The Council shall determine the date when the tonnages and/or percentages, as the case shall require, which it has arrived at under paragraph (a) of this article shall come into effect. (c) From the date of coming into effect determined by the Council under paragraph (6) the Contracting Government concerned shall cease to hold any of the rights and privileges in, or to be bound by any of the obligations under, this Agreement which pertain to countries in its previous category and shall acquire all the rights and privileges in, and shall be bound by all of the obligations under, this Agreement which pertain to countries in its new category: Provided that: (i) If the change of category is from a producing country to a consuming country, the country which has changed shall nevertheless retain its rights to the refund at the termination of this Agreement of its share in the liquidation of the buffer stock in accordance with articles 30, 31 and 32; and (ii) If the change of category is from a consuming country to a producing country, the conditions laid down by the Council for the country which has changed shall be equitable as between the country and the other producing countries already participating'in the Agreement.  CHAPTER IV — ORGANIZATION^ A N D ADMINISTRATION Article  6  THE INTERNATIONAL TIN COUNCIL  (a) The International Tin Council (hereinafter called the Council), established by the previous International Tin Agreements, shall continue in being for the purpose of administering the Fourth International Tin Agreement, with the membership, powers and functions provided for in this Agreement. (b) The seat of the Council shall be in London, unless the Council decides otherwise. Article  7  COMPOSITION OF THE INTERNATIONAL TIN COUNCIL  (a) The Council shall be composed of all the participating countries.  -  ' (b) (i) Each participating country shall be represented in the Council by one delegate. Each country may designate alternates and advisers to attend sessions of the Council; (ii) An alternate delegate shall be empowered to act and vote on behalf of the delegate during the latter's absence or in other special circumstances. Article  8  POWERS AND FUNCTIONS OF THE COUNCIL  The Council: (a) Shall have such powers and perform such duties as may be necessary for the administration and operation of this Agreement. (b) Shall establish its own rules of procedure. (c) Shall receive from the Executive Chairman, whenever it may request, such information with regard to the holdings and operations of the buffer stock as it considers necessary to fulfil its functions under this Agreement. (d) May request participating countries to furnish any necessary data concerning production, consumption, international trade and stocks and any other information necessary for the satisfactory administration of this Agreement not inconsistent with the national security provisions as laid down in article 41, and the c.entries shall furnish to the fullest extent possible the information so requested. (e) Shall, at least once in every quarter, estimate the probable production and consumption of tin during the following quarter, and it may consider the influence of such other factors as are relevant to the total statistical tin position for that period. (/) Shall make arrangements for the continuing study of the short-term and long-term problems of the world tin industry; to this effect it shall undertake or promote such studies on problems of the tin industry as it deems appropriate. (g) Shall keep itself informed of new uses of tin and the development of substitute products which might replace tin in its traditional uses. (h) Shall encourage wider participation in organizations devoted to research aimed at promoting the consumption of tin. (/) Has the power to borrow for the purposes of the Administrative Account established under article 15. (j) (i) Shall publish after the end of each financial year a report of its activities for that year; (ii) Shall publish after the end of each quarter (but not earlier than three months after the end of that quarter, in the absence of a contrary decision by the Council) a statement showing the tonnage of tin metal held at the end of that quarter. (k) May appoint such committees as it considers necessary to assist it in the performance of its functions, and may draw up their terms of reference; these committees may, unless the. Council otherwise decides, establish their own rules of procedure. ><•..••:  -  146 -  . (/) (i) May at any time, by a two-thirds distribudted cd i es otherwise. If the Executive Chairman resigns majority, dee l gate to any commtiee any pow oe rris permanently unable to perform his duties, the Coun i which the Council may exercise by a sim cilpleshall appoint a new Executive Chairman. distributed majority, other than those relating(g) When a Vice-Chairman performs the duties of the to: Executive Chairman he shall have no vote; the right to v,ote of the country he represents may be exercised in assessment of contributions under article 16 accaonrd ce with the provisions of paragraphs (b) (ii) of floor and ceiling prices under articles 19 dan arti c l e 7 and (c) of article 12. 29, assessment of export control under article 33, action in the event of a tin shortage under Article 10 article 37; SESSIONS OF THE COUNCIL (ii) Shall, by a two-thirds distributed majority, fix the membershp i and terms of reference of an(a) y The Council shall hold at least four sesso i ns a year such commitee; (b) T h e d e p o s i t a r y G o v e r n m e n t shal l cal l t h e first (iii) May by a simple majority revoke at any m timeeetn i g o f t h e C o u n c i l u n d e r thi s A g r e e m e n t i n London. any delegation of powers to any such commT tieheis meetn i g shal l b e g i n w i t h i n e i g h t d a y s a f t e r e ntry into of the appointment of any such commitee. force of the Agreement. • (m) Shall make whatever arrangements are appropriate(c) Meetings shall be convened, at the request of any for consultation and co-operation with: participating country or as may be required by the prov sio-ns of this Agreement, by the Executive Chairman or, (i) The United Nations, its appropriate organs (parti cularly the United Nations Conference on Tradaefter consultation with the first Vice-Chairman, and on his and Development), the specialized agencies, othb ee rhalf, by the Secretary in the event of the incapacity of th organizations within the United Nations system aE nd xecutive Chairman. Meetings may also be convened by appropriate inter-governmental organizations; andthe Executive Chairman at his discretion. (ii) Non-participating countries which are Members of(d) Meetings shall, unless otherwise decided by the the United Nations or of its specialized agence i sCounci or l, be held at the seat of the Council. Except in th asn e of meetn i gs convened under article 29, at least seven which were parties to the previous International cTi days' notice of each meeting shall be given. • Agreements. (e) Dee l gates holding two-thirds of the total votes of all producing countries and two-thirds of the total votes '). Article 9 of all consumn i g countries shall together constitute a quorum at any meeting of the Council. If for any session EXECUTIVE CHAIRMAN AND VICE-CHAIRMEN of the Council, there is not a quorum as defined above, OF THE COUNCIL further session shall be convened after not less than seven daajo y-s, at which dee l gates holding more than 1,000 votes ' (a) The Council shall, by a two-thirds distributed m shal l t o g e t h e r c o n s t itute a quorum. rity and by ballot, appoint an independent Executive Chairman, who may be a national of one of the participating countries. The appointment of the Executive Article 11 Chairman shall be considered at thefirstsession of the Council after the entry into force of this Agreement. VOTES (b) The Executive Chairman shall not have been acti (a )gThe producing countries shall together hold 1,000 vely engaged in the tin industry or in the tin trade vdou rs in t e hich shall be distributed among them so that eac thefiveyears preceding his appointment and shall co m -ucw p r o d i n g country receivesfiveinitial votes and, in addiply with the conditions set out in article 13. tion, a proportion as nearly as possible equal to the pro (c) The Executive Chairman shall hold office for su pcohrtion which the percentage of that country as listed in period and on such other terms and conditions aa snnte hxe A or as published from time to time in accordanc Council may determine. with paragraph (q) of article 33 bears to the total of th (d) The Executive Chairman shall preside over meetn ip ge srcentages of all producing countries. of the Council; he shall have no vote. (b) The consumn i g countries shall together hold 1,000 (e) The Council shall elect annualy a first Vice- votes, which shall be distributed among them so that eac i g country receives five initial votes and, in addiChairman and a second Vice-Chairman, chosen alterc no an-sumn tely eachfinancialyear from among the dee l gates oftion, the a proportion as nearly as possible equal to the pro pn rtion which the tonnage of that country as listed in producing countries and the dee l gates of the consum iog annex B bears to the total of the tonnages of all consum countries. g countries: (f) If the Executive Chairman is temporarily absent, in he Psr-ovided that: shall be replaced by the first Vice-Chairman, or if nece i g countries, sary by the second Vice-Chairman, who shall only hav(i) e If there are more than thirty consumn the duty to preside over meetn i gs unless the Council the initial vote for each consumn i g country shall be  the highest whoe l number consistent with the Article 13 requirement that the total of all initial votes for all consumn i g countries shall not exceed 150; THE STAFF OF THE COUNCIL (ii) If any country not listed in annex B ratines, a(p he Executive Chairman appointed under article 9 proves, accepts, gives notification of intention shal toa)l bT e esponsible to the Council for the administration ratify, approve or accept, or accedes to, this Agare e - operra n d tion of this Agreement in accordance with the ment as a consumn i g country, or has changedecitis s category from that of a producing country to d that ions of the Council. of a consumn i g country in accordance with article(b) 5 The Executive Chairman shall also be responsible fonrdthe administration of the secretariat services and staff of this Agreement, the Council shall determine a at thle Council's seat. publish a tonnage for that country; this tonnage shal take efect upon the date decided by the Cou(ncc)il The Council shall appoint a Secretary of the Council for the purposes of this article as if it were on ae ndofa Manager of the Bufer Stock (hereinafter caled the the tonnages listed in annex B; Manager) and shall determine the terms and conditions service of those two officers. (iii) The Council may at itsfirstsession revise anneo xf B and shall publish the revised annex, which shal (d)l The Council shall give instructions to the Executive be effective for the purpose of this article forthChairman as to the manner in which the Manager is to with; and carry out the duties laid down in this Agreement as wel sesuch additional duties as the Council may determine. (iv) Subsequently, at meetn i gs to be held during a th second quarter of each calendar year the Counc(e il ) The Executive Chairman shall be assisted by the shall r e v i e w thefiguresof the consumption of tin staff considered necessary by the Council. All staff, includof each consumn i g country for each of the th inre gethe Secretary of the Council and the Manager, shall preceding calendar years and shall publish revisb ee d responsible to the Executive Chairman. The method of tonnages for each consumn i g country on the ba ap sp isointment and the conditions of empo l yment of the of the averages of suchfiguresof consumption s,taff shall be approved by the Council. which tonnages shall take efect on 1 July n(J) extThe Executive Chairman and the staff of the Council folowing for the purposes of this article as if m the y a y not hold, or shall cease to hold, anyfinancialinterest were the tonnages listed in annex B. in the tin industry or in the tin trade; they shall not seek or erc ef instructions regarding their work or their duties (c) Where, by reason of the failure of one or mro eeivo from any Government or person or authority other than the countries listed in annex A or annex B to ratify, e Council or a person acting on behalf of the Council approve or accept, or give notification of intention th to efr the terms of this Agreement. ratify, approve or accept this Agreement, or by reasou nndo the operation of the provisions of this Agreement, or (b gy) No information concerning the operation or adminreason of a change in the category of a participating is co trati uno -n of this Agreement shall be revealed by the Exetry, the total of the votes of the consumn i g countriescu otrive ofChairman, the Manager or other staff of the Counthe producing countries becomes less than 1,000, thecil, except as may be authorized by the Council or as is balance of votes shall be distributed among other n ce ocne-ssary for the proper discharge of their duties under sumn i g or producing countries, as the case may bthi e,saA sgreement. nearly in proportion to the votes they already hold, less in each case the initial votes, as is consistent with there being no fractional votes. (d) No participating country shall have more thanCHAPTER V — PRIVILEGES AND IMMUNITIES 450 votes. (e) There shall be no fractional votes. Article 14 Article 12  PRIVILEGES AND IMMUNITIES  (a) The Council shall be accorded in each participating country such currency exchange facilities as may be (a) Each member of the Council shall be entitled to nece ssary for the discharge of its functions under this cast the number of votes it holds in the Council. W hre Ag enement. voting, a dee l gate shall not divide his votes. When (b) The Council shall have legal personality. It shall in abstaining, a dee l gate shall be deemed not to have cp aa strtic hu islar have the capacity to contract, acquire and votes. dispose of movabe l and m i movabe l property and to insti(b) Decisions of the Council shall, except when oth tuete r, legal proceedings. ws i e provided, be taken by a simple distributed majo(rc ity)- The Council shall have in each participating country, (c) Any participating country may, in a form satisto fact-he extent consistent with its law, such exemption from tory to the Council, authorize any other participatingtaxation on the assets, n i come and other property of the country to represent its interests and to exercise its vC otio nu gncil as may be necessary for the-discharge of its funcrights at any meetn i g of the Council. ; tions under this Agreement .. VOTING PROCEDURE OF THE COUNCIL  - 1L8 -  (d) The member in whose territory the headquartersAc ocfount is likely to be inadequate to meet the administra t i v the Council is situated (hereinafter referred to as "thee expenses of the Council, the Council may approve a cte ssary supplementary budget for the remainder of host member") shall, as soon as possible after the neen ry hn actil financial year. into force of the Agreement, conclude with the Cotu an agreement to be approved by the Council relating(b)toUpon the basis of such budgets the Council shal the status, privileges and immunities of the Councia l,sso esfs in sterling the contribution to the Administrative its Executive Chairman, its staff and experts and of re eo -unt of each participating country, which shall be Apcrc sentatives of members while in the territory of the lia hbl oset to pay its full contribution to the Council upon member for the purpose of exercising their functions. notice of assessment. Each participating country shall pay inisrespect of each vote which it holds in the Council upo (e) The agreement envs i aged in paragraph (d) of th the day of assessment one two-thousandth of the total article shall be n i dependent of this Agreement and shal amolunt required, provided that no country shall contriprescribe the conditions for its own termination. bute less than £200 sterling in anyfinancialyear. (J) The host member shall grant exemption from taxation on remuneration paid by the Council to its empo l yees other than those empo l yees who are its nationals. Article 17 PAYMENT OF CASH CONTRIBUTIONS  (a) Cash payments to the Administrative Account by participating countries under articles 16 and 53, cash payments to the Bufer Stock Account by contributing Article 15 countries under articles 21,22 and 23, cash payments from the Administrative Account to participating countries FINANCE under article 53 and cash payments from the Bufer Stock Ainc-count to contributing countries under articles 21,22, 23, (a) (i) There shall be kept two accounts—the Adm istrative Account and the Bufer Stock 31 and 32 shall be made in sterling or, at the option o Account— for the administration and operatiocnountry concerned, in any currency which is freely convertible into sterling on the London foreign exchange of this Agreement; (ii) The administrative expenses of the Council, market. including the remuneration of the Executive (b) Any participating country which fails to pay its Chairman, the Secretary, the Manager and c thoentribution to the Administrative Account within six staff, shall be brought into the Administratim veonths of the date of notice of assessment may be deprived Account; by the Council of its right to vote. If such a country fa (iii) Any expenditure which is solely attributable to pay its contribution within twelve months of the date o buffer-stock transactions or operations, includ-notice of assessment, the Council may deprive it of any ing expenses for borrowing arrangements, other rights under this Agreement, provided that the Counstorage, commission and insurance, shall cil be shall, on receipt of any such outstanding contribution, r borne by the buffer-stock contributions payablestore to the country concerned the rights of which it has by contributing countries under this Agree- been deprived under this paragraph. ment and shall be brought by the Manager into the Bufer Stock Account. The liability on the Article 18 Bufer Stock Account for any other type of expenditure shall be decided by the Executive AUDIT AND PUBLICATION OF ACCOUNTS Chairman. (b) The Council shall not be responsible for the expensT es he Council shall, as soon as possible after the end o of dee l gates to the Council or the expenses of their e alatcerhfinancialyear, publish the independently audited nates and advisers. Administrative and Bufer Stock Accounts, provided that such Bufer Stock Accounts shall not be published earlier than three months after the end of the financial year to Article 16 which they relate. CHAPTER VI — FINANCE  THE ADMINISTRATIVE ACCOUNT  (a) The Council shall, at its first session after the entry into force of this Agreement, approve the budget of cC ontributions and expenditure on the Administrative AccountHAPTER VII — FLOOR AND CEILING PRICES for the period between the date of entry into force of the Article 19 Agreement and tha end of thefinancialyear. Thereafter it shall approve a similar annual budget for each financial FLOOR AND CEILING PRICES year. If at any time during any financial year, because of unforeseen circumstances which have arisen or are likel(a) y For the purposes of this Agreement there shall be to arise, the balance remaining in the Administrative floor and ceiling prices for tin metal.  -  1^9 -  (b) The initial floor and ceiling prices shall be those (iii) The Council shall decide what portions of the which were in force under the Third Agreement at the date contributions to be made under sub-paragraphs of the termination of that Agreement. (i) or (ii) shall become due in cash or in tin (c) The range between the floor and ceiling prices shall metal. The producing countries shall make the be divided into three sectors. The Council may at any payment of the cash portion on the date deteri ed by the Council and the payment of the meetn i g decide the extent of each or any of these sectors. mn p o rtion in tin metal not later than three months (d) (i) The Council shall, at its first sesso i n after the from the date of such decision. entry into force of this Agreement and from time to time thereafter or in accordance with (iv) At any time the Council may determine by which date or dates and in what instalments the whoe l the provisions of article 29, consider whether o r p a r t o f t h e b a a l n c e s o f t h e a g g r e g a t e contri the floor and ceiling prices are appropriate for bution shall be made. However, the Council may the atainment of the objectives of this Agreeauthorize the Executive Chairman to request ment and may revise either or both of them; l nces at not (ii) In so doing, the Council shall take into account payment of instalments of these baa less than fourteen days' notice. the short-term deveo l pments and medu i m-term trends of tin production and consumption, the (v) If at any time the Council holds cash assets in the Bufer Stock Account, in excess of the conexisting capacity for mn i e production, the tributions made under sub-paragraph (ii) and adequacy of the current price to maintain suffiof any voluntary contribution made under cient future mn i e production capacity and other article 22, the Council may authorize refunds relevant factors. ut of such excess to the producing countries (e) The Council shall publish as soon as possible any o i n proportion to the contributions they have revised floor and ceiling price, including any provisional or ade under this article. The baa l nces referred revised price determined under article 29 and any revised tm o a s d u e u n d e r s u b p a r a g r a p h (i v) shall be indivision of the range. creased by the amount of .uch refunds. At the request of a producing country, the refund to which it is entitled may be retained in the buffer stock. (b) Contributions due in accordance with paragraph (a) CHAPTER VIII — THE BUFFER STOCK of this article may, with the consent of the contributing country concerned, be made by transfer from the bufer Article 20 stock held under the Third Agreement. i (c) The contributions referred to in paragraph (a) of ESTABLISHMENT OF THE BUFFER STOCK this article shall be apportioned among the producing countries according to the percentages in annex A, as (a) A bufer stock shall be established. ed ve iewed and redetermined at thefirstsession of the (b) (i) Contributions to the buffer stock shall be mra by producing countries in accordance with tCounci he l in accordance with paragraph (m) of article 33. provisions of article 21; • (d) (i) If on or after the entry into force of this Agree(ii) Any country invited to the United Nations Tin ment a country listed in annex A ratifies, approves or accepts, or gives notification of intenConference, 1970, may also make a voluntary tion to ratify, approve or accept, or accedes to, contribution to the bufer stock in accordance this Agreement, or if a consumn i g country has with article 22. (c) For the purposes of this article any part of a con- changed its category to that of a producing tribution made in cash shall be deemed to be equivalent country in accordance with article 5, the contrito the quantity of tin metal which could have been pur- bution of that country shall be determined by chased at the floor price in efect on the date of entry into the Council with reference to its percentage in annex A; force of this Agreement. (ii) Contributions determined under sub-paragraph (i) shall be made on the date of the deposit of the Article 21 instrument or on the date determined by the Council under paragraph (b) of article 5; COMPULSORY CONTRIBUTIONS (iii) The Council may direct refunds, not exceedn ig (a) (i) Producing countries shall make contributions in the aggregate the amount of any contribution to the bufer stock amounting in the aggregate received under sub-paragraph (i), to be made to to the equivalent of 20,000 tons of tin metal, the other producing countries or consumn ig (ii) The equivalent of 7,500 .tons of this aggregate countries. If the Council decd i es that such contribution in sub-paragraph (i) shall be due on refunds or parts of such refunds are to be made the entry into force of the Agreement and, sub- in tin metal, it may attach to these refunds such ject to the provisions of sub-paragraph (iii), conditions as it deems necessary. At the request shall be made on the date of the first meetn i g of of a producing country, the refund to which it is the Council under this Agreement. .. entitled may be retained in the bufer stock. :  - 150 (e) (i) A producing country which for the purpose of making a contribution under this article wishes to export tin from stocks lying within that country may apply to the Council io be permitted to export the tonnage so desired in addition to its permissible export tonnage, if any, determined under article 33; (ii) The Council shall consider any such application and may approve it subject to such conditions as it deems necessary. Subject to these conditions being satisfied and to the furnishing of such evidence as the Council may require to identify the metal or concentrates exported with the tin metal delivered to the buffer stock, paragraphs (/J), (o) and (p) of article 33 shall not apply to such exports. (_/*) Contributions in tin metal may be accepted by the Manager in warehouses officially approved by the London Metal Exchange or at such other place or places as are determined by the Council. The brands of tin so delivered shall be brands registered with and recognized by the London Metal Exchange. Article  22  VOLUNTARY CONTRIBUTIONS  (a) Any country invited to the United Nations Tin Conference, 1970, may, with the consent of the Council and upon conditions which shall include conditions as to refund, make voluntary contributions to the buffer stock in cash or in tin metal or in both. Such voluntary contribution shall be additional to the contributions shown in paragraph (a) of article 21. (b) The Executive Chairman shall notify the participating countries and any non-participating country which has made a contribution under paragraph (a) of this article of the receipt of any such voluntary contribution. (c) Notwithstanding the conditions which shall have been imposed under paragraph (a) of this article, the Council may refund to any country which has made a voluntary contribution to the buffer stock under paragraph (a) of this article the whole or any part of such contribution. If such refund or part of such refund is made in tin metal the Council may attach to this refund the conditions which it deems necessary. Article  23  (c) If a part of the deficit is to be made good in tin metal, the producing countries which are making good that deficit shall be permitted to export the amounts required of them in addition to any permissible export amounts that may have been determined under article 33. Subject to the furnishing of such evidence as the Council may require to identify the metal or concentrates exported with the tin metal delivered to the buffer stock, paragraphs (/j), (o) and (/>) of article 33 shall not apply to such exports. (cl) The Council may at any time and on such conditions as it may determine: (i) Declare that the default has been remedied; (ii) Restore the rights and privileges of the country concerned; and (iii) Refund the additional contributions made by the other producing countries under paragraph (b) of this article together with interest at a rate which shall be determined by the Council, taking into account prevailing international interest rates, provided that, in respect of that part on the additional contribution which has been made in tin metal, such interest shall be calculated on the basis of the cash equivalent at the settlement price for tin metal on the London Metal Exchange on the date of the decision of the Council under paragraph (b) of this article. If such refunds or parts of such refunds are made in tin metal the Council may attach to these refunds the conditions which it deems necessary. Article  24  BORROWING FOR THE BUFFER STOCK  (a) The Council may borrow for the purposes of the buffer stock and upon the security of tin warrants held by the buffer stock such sum or sums as it deems necessary, provided that the maximum amount of such borrowing and the terms and conditions thereof shall have been approved by the majority of the votes cast by consuming countries and all the votes cast by producing countries. • (b) The Council may by a two-thirds distributed majority make any other arrangements it thinks fit for borrowing for the purposes of the buffer stock. (c) No obligation shall be laid upon any participating country under this article without the consent of that country. Article  25  PENALTIES  OPERATION OF THE BUFFER STOCK  (a) The Council shall determine penalties to be applied to countries which fail to meet their obligations under paragraph (a) (iv) of article 21. (6) If a producing country does not fulfil its obligations under article 21 the Council may deprive it of any or all of its rights and privileges under this Agreement and may also require the remaining producing countries to make good the deficit in cash or in tin metal or in both.  (a) The Manager shall, in conformity with article 13 and within the provisions of the Agreement and the framework of instructions of the Council, be responsible to the Executive Chairman for the operation of the buffer stock. (£>) For the purposes of this article, the market price of tin shall be the price of cash tin on the London Metal Exchange or such other price or prices as the Council may from time to time determine.  151  such restriction or suspension. If the Council does not (c) If the market price of tin: c ome to a decision, bufer-stock operations shall be resum(i) Is equal to or greater than the ceiling price thee Manager shall, une l ss otherwise instructed by thd e or continue without restriction, as the case may be. Council, if he has tin at his disposal and subject(d)toSo long as any restriction or suspension of the ope antio nn s of the bufer stock determined in accordance with articles 26 and 27, offer tin for sale on the Lro do i s in force, the Council sha Metal Exchange at the market price, until the this article or article 27 reman ierw this decision at intervals of not longer than six market price of tin falls beo l w the ceiling pricerevo weeks. If at a meetn i g to make such a review the Coun the tin at his disposal is exhausted; d o e s n o t c o m e t o a decision in favour of the continuatio (ii) Is in the upper sector of the range between o thfethe restriction or s uspension, buffer-stock operations floor and ceiling prices, the Manager may opeshal ratel be resumed. on the London Metal Exchange at the market price if he considers it necessary to prevent the market price from rising too steeply, provided he Article 27 is a net seler of tin; (iii) Is in the middle sector of the range between theRESTRICTION OR SUSPENSION OF BUFFER-STOCK floor and ceiling prices, the Manager may buy OPERATIONS: ACTION BY T i r e EXECUTIVE CHAIRMAN and/or sell tin only on special authorization by the (a) At such times as the Council is not in session, th Council; p o wor er to restrict or suspend operations under paragraph (iv) Is in the lower sector of the range between the(b)flo o and ceiling prices, the Manager may operate on thef article 26 shall be vested in the Executive Chairman London Metal Exchange at the market price if h(b) e The Executive Chairman may at any time revoke a restri considers it necessary to prevent the market price ction or suspension which he has decided by virtue f yte hre power vested in him under paragraph (a) of this from falling too steeply, provided he is a net o bu article. of tin; (cg)erImmediately after a decision by the Executive Chair(v) Is equal to or less than the floor price, the Ma na m a to restrict or suspend the operations of the buffer shall, unless otherwise instructed by the Counci l,cnk u s t o der the powers vested in him under paragraph (a if he has funds at his disposal and subject to aortficle ss narti cle, he shall convene a meeting of the Coun 26 and 27, offer to buy tin on the LondoncilMtthi e t a l o r e v i e w such decision. Such meeting shall be held Exchange at the floor price until the market pw ricite h i n f o u r t e e n days after the date of the restriction or of tin is above the floor price or the funds a tsp he isnsion. su disposal are exhausted. (d) When under the provisions of paragraph (c) of this Article 28 article the Manager may buy (or sell, as the case may be) tin on the London Metal Exchange, he may buy (or sell, . as the case may be) tin on any other established market forOTHER OPERATIONS OF THE BUFFER STOCK tin, provided that he may not engage in forward tra(d) ns-The Council may, under given circumstances, actions unless these will be completed before the tera m uitn h-orize the Manager to buy tin from, or sell tin to or f ation of this Agreement. the account of, a governmental non-commercial stock in accordance with the provisions of article 40. The provisions of paragraph (c) of article 25 shall not apply to tin Article 26 metal for which such authorization has been given. (b) Notwithstanding the provision of articles 25, 26 and RESTRICTION OR SUSPENSION OF BUFFER-STOCK 27 the Council may authorize the Manager, if his funds OPERATIONS: ACTION BY THE COUNCIL are inadequate to meet his operational expenses, to sell sufficient quantities of tin at the current price to meet (a) Notwithstanding the provisions of sub-paragraphse ea ny ses. (ii) and (iv) of paragraph (c) of article 25, the Councilxp m restrict or suspend forward transactions of tin when the Article 29 Council considers it necessary to achieve the purposes of this Agreement. THE BUFFER STOCK (b) Notwithstanding the provisions of sub-paragraphs AND CHANGES IN EXCHANGE RATES (i) and (v) or paragraph (c) of article 25, the Council, if in session, may restrict or suspend the operations of t(a) heThe Executive Chairman may convene, or any parbuffer stock if, in its opinion, the discharge of the obl ig ipaating country may request him to convene, a meeting tions laid upon the Manager by those sub-paragraphstiocwill f t h e Council immediately to review the floor and ceiling not achieve the purposes of this Agreement. prices if the Executive Chairman or the participating (c) The Council may confirm any restriction or suscpo eu n-ntry, as the case may be, considers that changes in sion under paragraph (a) of article 27 or, where a restri excha cn -ge rates make such a review necessary. Meetings tion or suspension has been revoked by the Execm utiv ae y be convened under this paragraph by less than seve Chairman under paragraph (b) of article 27, may restd oa reys' notice. > :  -  152 -  (b) In the circumstances set forth in paragraph (a) (d) of Unless the Council from time to time substitutes this article, the Executive Chairman may, pending th oe ther arrangements for those contained in articles 31 and meetn i g of the Council referred to in that paragraph,3p 2r,o-the Manager shall, in connexion with the liquidation visionally restrict or suspend the operations of the buoffe f rthe buffer stock, take the steps set out in articles 31 and stock if such a restriction or suspenso i n is in his op3 in2ionand annex H. necessary to prevent buying or seling of tin by the Manager to an extent likely to prejudice the purposes of this Agreement. Article 31 (c) The Council may restrict or suspend or confirm the LIQUIDATION PROCEDURE restriction or suspension of bufer-stock operations under this article. If the Council does not come to a decis(a) ion,As soon as possible after the termination of this buffer-stock operations, if provisionaly restricted or susA -greement, the Manager shall make an estimate of the pended, shall be resumed. total expenses of liquidation of the bufer stock in accord(d) Within thirty days of its decision to restrict or ance with the provisions of this article and shall set aside suspend or to confirm the restriction or suspension from f the baa l nce remaining in the Bufer Stock Account a buffer-stock operations under this article, the Council sum which is in his opinion sufficient to meet such expenses. shall consider the determination of provisional floor aS nd hould the balance remaining in the Bufer Stock Account ceiling prices and may determine these prices. be inadequate to meet such expenses, the Manager shall (e) Within ninety days from the establishment of psel ro-l a sufficient quantity of tin metal to provide the additio nal sum required. visional floor and ceiling prices, the Council shall rev iew these prices and may determine new floor and ceilin(b) g Subject to and in accordance with the terms of this prices. Agreement, the share of each contributing country in the buffer stock shall be refunded to that country. (J) If the Council does not determn i e provisional floor and ceiling prices in accordance with paragraph (d) of th(c is article, it may at any subsequent meetn i g determine what) (i) The share of each contributing country shall be thefloorand ceiling prices shall be. ascertained in accordance with annex H; (g) Buffer-stock operations shall be resumed on the (ii) Upon the request of all contributing countries, basis of suchfloorand ceiling prices as are determined in the Council shall revise annex H. accordance with paragraphs (d), (e) or (f) of this article, as the case may be. Article 32 Article 30  •' .•  ALLOCATION AND PAYMENT OF PROCEEDS OF LIQUIDATION  (a) Subject to the provisions of paragraph (a) of article 31 the share of each contributing country in the cash and tin metal available for distribution in accordance with (a) Whenfixingthe total permissible export tonnage a for nnex H shall be alocated to it, provided that if any conany control period in accordance with the provisionstribo f ng country has forfeited-the whoe uti l or part of its article 33, the Council shall, in the light of considerra t i o n ights to participate in the proceeds of the liquidation of given to the renewal of the Agreement under paragtrh ae phbufer stock by virtue of articles 17, 23, 33, 42, 43 or (c) of article 53, decide whether there is need to reduc e 52, th iteshall to that extent be excluded from the refund of its tonnage of tin metal currently held in the buffer ssto hc ak re. and the resulting residue shall be apportioned In such case, the total permissible export tonnage ma by etwbeeen the other contributing countries in the manner fixed at suchfigure,lower than thefigurewhich thelaiC uo nw - n in clause (iv) of annex H for the apportionment dod cil would otherwise havefixedas the total permisso ibflea deficit. export tonnage for that period, as the Council may decide. (b) The ratio of tin metal to cash alocated to each con(b) Within the framework of instructions of the Cou n -utin tri b country under the provisions of paragraphs (b) cil, the Manager may sell from the bufer stock at aa n y(cg n d ) o price, being the current market price but not less than the f article 31 and (a) of this article shall be the sam floor price, the quantities of tin metal by which the(c C)ouE na -ch contributing country shall be repaid the cash cil has reduced the total permissible export tonnagesalo incated to it as the result of the procedure set out in nn accordance with the provisions of paragraph (a) of ath isex H. To this effect, either: article. (i) The tin metal so alocated to each contributing (c) On the termination of this Agreement all buffer- country may be transferred in such instalments and over such period as the Council may deem approstock operations under articles 25, 26, 27, 28, 29 or i g twenty-four paragraph (b) of this article shall cease. The Manager priate, but in any case not exceedn shall thereafter make no further purchase of tin metal months; or and may sell tin metal only as authorized by paragra phAt the option of any contributing country any such (ii) (a) of article 31 and paragraph (c) of article 32 or by thin estalment may be sold and the net proceeds of Council under paragraph (d) of this article. such sale paid to that country. LIQUIDATION OF THE BUFFER STOCK ON THE TERMINATION OF THE AGREEMENT  -  153  (d) When all the tin metal has been disposed of in accordance with paragraph (c) of this article, the Manager shall distribute among contributing countries any balance remaining of the sum set aside under paragraph (a) of article 31 in the proportions allocated to each country in accordance with paragraph (c) of article 31 and annex H .  C H A P T E R IX — EXPORT CONTROL Article  33  ASSESSMENT OF EXPORT CONTROL  (a) In the light of its examination of the estimates of production and consumption made under paragraph (e) of article 8 and taking account of the quantity of tin metal and cash held in the buffer stock, the quantity, availability and probable trend of other stocks, the trade in tin, the current price of tin metal and any other relevant factors, the Council may from time to time determine the quantities of tin which may be exported from producing countries in accordance with the provisions of this article and , may declare a control period and shall, by the same resolution, fix a total permissible export tonnage for that control period. In fixing such tonnage, it shall be the duty of the Council to adjust supply to demand so as to maintain the price of tin metal between the floor and ceiling prices. The Council shall also aim to maintain available in the buffer stock tin metal and cash adequate to rectify any discrepancies between supply and demand which may arise through unforeseen circumstances. (6) The control periods shall correspond to the quarters, provided that, on any occasion when the limitation of exports is being introduced for the first time during the currency of this Agreement or is being reintroduced after an interval during which there has been no limitation of exports, the Council may declare as the control period any period not being greater than five months or less than two months, ending on 31 March, 30 June, 30 September or 31 December. (c) The limitation of exports under this Agreement in each control period shall depend on the decision of the Council, and no such limitation shall operate in any period unless the Council has declared it to be a control period and fixed a total permissible export tonnage in respect of it. (d) A control period already declared may be revoked before, or terminated during, the currency of that period by the Council and the period so revoked or terminated shall not be regarded as a control period for the purposes of paragraph (/) and sub-paragraphs (ii), (iii), and (iv) of paragraph (p) of this article. (e) The Council shall not declare a control period unless it finds that at least 10,000 tons of tin metal are likely to be held in the buffer stock at the beginning of that period, provided that: (i) If a control period is declared for the first time after an interval during which ho limitation of exports was in force, the figure for the purposes of  this paragraph shall be 5,000 tons, applicable from the effective date of the control period already declared or as from and to such date or dates as the Council shall decide; and (ii) The Council may by a two-thirds distributed majority reduce in respect of any control period the required tonnage of 10,000 tons or 5,000 tons, as the case may be. (f) A total permissible export tonnage which has become effective shall not cease to be effective during the course of the period to which it relates by reason only of the fact that the buffer-stock holding has fallen below the minimum tonnage of tin metal required under paragraph (e) of this article or any other tonnage substituted therefor under the same paragraph. (g) The Council may declare control periods and fix total permissible export tonnages, notwithstanding the restriction or suspension of buffer-stock operations in accordance with the provisions of articles 26, 27 or 29. (//) A total permissible export tonnage previously fixed under paragraph {a) of this article may be revised by the Council, provided, however, that a total permissible export tonnage may not be decreased during the control period to which it relates. (0 When, under the provisions of paragraph (a) of this article, the Council has declared a control period and has fixed a total permissible export tonnage in respect of that period the Council may at the same time call upon any country invited to the United Nations Tin Conference, 1970, which is also a producer of tin from mines within its territory or territories to put into effect for that period such a limitation of its exports of tin derived from such production as may be agreed to be appropriate between the Council and the country concerned. 0') Notwithstanding the provisions of this article, if, under the Third International Tin Agreement, a total permissible export tonnage has been fixed in respect of the last quarter of that Agreement and is still effective at the termination of that Agreement: (i) A control period, commencing upon the entry into force of this Agreement, shall be deemed to have been declared under this Agreement; and (ii) The total permissible export tonnage for such control period shall be at a rate proportionate to that fixed by the Third Agreement for the last quarter of that Agreement unless and until revised by the Council in accordance with the provisions of this article: Provided that, if at the time of the first session of the Council under this Agreement less than 10,000 tons of tin metal are held in the buffer stock, the Council shall consider the position at its first session and, if a decision to continue the limitation of exports is not reached, the period in question shall cease to be a control period. (k) The total permissible export tonnage for any control period shall be divided among producing countries in proportion to their percentages in annex A or in proportion to their percentages in any revised table of percentages which may be published in accordance with this Agreement, and the quantity of tin so computed in respect  i  -  154 -  of any country for any control period shall be the permis- months after the date upon which such permissible export tonnage of that country for that control sible export tonnage has become effective, a period. declaration to that effect. (/) If, after the entry into force of this Agreement, any (ii) If the Council has received such a declaration or is of the opinion that any producing country is country ratifies, approves or accepts, or gives notification of intention to ratify, approve or accept, or accedes to it, unlikely to be able to export in any control as a producing country, or has been approved by the period as much tin as it would be entitled to Council for a change in its category from that of a con- export in accordance with its permissible export sumn i g country to that of a producing country in accord- tonnage, the' Council may increase the total ance with article 5, the Council, having determined the permissible export tonnage for that control period by such a tonnage as will in its opinion percentage of that country, shall re-determine the ensure that the total permissible export tonnage percentages of all the other participating countries in required will in fact be exported. proportion to their current percentages. (p) (i) The net exports of tin from each producing (m) (i) The Council shall review the percentages of the c ountry for each control period shall be limited, producing countries and redetermine them in except as otherwise provided in this article, to accordance with the rules of annex G. Except the permissible export tonnage for that country for the first redetermination, which shall take for that control period. place at thefirstsession of the Council, the percentage of a producing country shall not, (ii) If, notwithstanding the provisions of subduring any period of twelve months, be reduced paragraph (i) of this paragraph, the net exports by more than one-tenth of its percentage at the of tin from a producing country in any control commencement of that period. period exceed its permissible export tonnage for hat control period by more than five per cent, (ii) In any action which it may propose to take in tth e Council may require the country concerned accordance with the rules of annex G, the t o make an additional contribution to the buffer Counctl shall give due consideration to any s t o c k not exceedn i g the tonnage by which such circumstances stated by any producing country e x p o r t s e x c e e d i t permissible export tonnage. as being exceptional and may, by a two-thirds Such a contributs i o n shall be in tin metal or in distributed majority, wav i e or modify the full c a s h o r in s u c h p r o p ortions of tin metal and application of those rules. cash and before such date or dates as the Counc (iii) The Council may, from time to time, by a two'- may decide. That part, if any, of the contributhirds distributed majority revise the rules of tion which is to be paid in cash shall be calcu annex G, and any such revision shall have efect lated at the floor price in efect on the date o as if it were included in that annex. • entry into force of this Agreement. That part, if any, of the contribution which is to be made (iv) The percentages resulting from the procedure set out in this paragraph shall be published and in tin metal shall be included in and shall not b shall take efect upon thefirstday of the quarter additional to the permissible export tonnage of folowing the date of the decision of the Council in the country in question for the control period in which such contribution is made. repa l cement of the percentages listed in annex A. If, notwithstanding the provisions of sub(n) (i) Notwithstanding the provisions of paragraph {k) (iii) p ragraph (i) of this paragraph, the aggregate of this article, the Council may, with the con- na e t exports of tin from a producing country in sent of a producing country, reduce its share in any four successv i e control periods including, if i the total permissible export tonnage and rea p p r o p r i a t e , t h e control period referred to in distribute the tonnage of the reduction among s u b p a r a g r a p h (ii) of this paragraph exceed by the other producing countries in proportion to m o r e t h a n o n e per cent the aggregate of its the percentages of those countries or, if circump e r m i s s i b l e e x p o r t tonnages for those periods, stances so require, in some other manner. the permissible export tonnages of that country during each of the four subsequent control (ii) The quantity of tin determined according to periods may be reduced by one-quarter of the sub-paragraph (i) of this paragraph for any aggregate tonnage so over-exported or, if the producing country for any control period shall for the purposes of this article be deemed to be Council so decides, by any greater fraction not exceedn i g one-half. Such reduction shall take the permissible export tonnage of that country efect in and from the control period next folowfor that control period. ing that in which the decision was taken by the (o) (i) It shall be the duty of any producing country Counci l. which believes itself unlikely to be able to export in any control period as much tin as it(iv) If, after any such four successv i e control periods would be entitled to export in accordance with (during which the aggregate net exports of tin its permissible export tonnage for that control from a country have exceeded its permissible period to make to the Council, as soon as pos- export tonnage as mento i ned in sub-paragraph sible but in any case not later than two calendar (iii) of this paragraph), the aggregate net exports :  _  1  _  of tin from that country in any four further («) For the purposes of sub-paragraphs (ii), (iii) and successv i e control periods (which shall not (iv) of paragraph (p) of this article, control periods for include any control period covered by sub- which total permissible export tonnages have been fixe paragraph (iii)) exceed the aggregate of the and penalties m i posed under article VII of the Third permissible export tonnages for those four coA n-greement shall be deemed, as from the entry into force trol periods, the Council may, in addition o tof this Agreement, to have beenfixedor m i posed under reducing the total permissible export tonnagethi os f article. that country in accordance with the provisions of sub-paragraph (iii), declare that the country Article 34 shall forfeit a part, which shall on the first occasion not exceed one-half, of its rights to SPECIAL EXPORTS participation on liquidation of the buffer stock.(a) At any time when it has declared a control period, The Council may at any time restore to tth e ho e Council, if it considers that the conditions in annex D country concerned the portion of its rights a s r eaysatisfied, may by a two-thirds distributed majority forfeited on such terms and conditions as itpm e rmit the export (hereinafter caled a special export) of a determine. specified quantity of tin in addition to the permissible (v) It shall be the duty of a producing country e wxh picohrt amount referred to in paragraph (k) of article 33. has exported a tonnage of tin in excess of its p er-The Council may by a two-thirds distributed majo(b) missible'export tonnage and of any tonnage prity er- m i pose such conditions upon a special export as it mitted by other provisions of this article to ta ke ems necessary. de effective steps to correct its breach of this Agree (c-) If the provisions of article 36 and the conditions ment at the earliest possible opportunity. Th e ikepn osed by the Council under paragraph (b) of this article Council, when deciding the action to be tam a r e a special export shall not be taken into under this paragraph, shall take account of a ncycofulfilled, a u n t w h e n provisions of paragraphs (n), (o) and failure to take steps or delay in doing so. (p) of article 33the are being applied. . (q) When, by reason of the determination or alteratio(d) n The Council may by a two-thirds distributed majoof the percentage of a producing country or of the rity with- at any time revise the conditions in annex D, pr drawal of a producing country, the total of percentavgidee sd that any such revision shall be without prejudice to is no longer one hundred, the percentage of each a on thyeth ring done by a country in pursuance of permission producing country shall be proportionately adjusted gsiv oen and conditions already m i posed under paragraph that the total of percentages is restored to one hun(b) dredo.f this article. The Council shall then publish as soon as possible the revised table of percentages which shall come into force Article 35 for the purposes of export control with efect from the first day of the control period folowing that in which the SPECIAL DEPOSITS decision to revise percentages was taken. (a) A producing country may at any time with the (r) Each producing country shall take such measurescoa ssen n the Council make special deposits of tin metal may be necessary to maintain and enforce the provis ioitn s thteofM w h ger. A special deposit shall not be treated of this article so that its exports shall correspond asas part of thaenab uffer stock and shall not be at the dispos closely as possible to its permissible export tonnageofor f t h e M a n a g e r . any control period. oducing country which has informed the Coun(j) For the purposes of this article, the Council m a(b) yof Aitspirn cil ention of making a special deposit of tin meta decide that exports of tin from any producing couonrtig ryinating tw ithin that country shall, subject to furnishshall include the tin content of any material derived in fro msuch evd g i e nce as the Council may require to identify the mineral production of the country concerned. the metal or th e concentrates exported with the tin meta (f) Tin shall be deemed to have been exported if,w inhictheis the subject of the special deposit, be permitted case of a country named in annex C, the formalitieto ss eextport such metal or concentrates in addition to any out in that annex opposite the name of that countrype ha veissible export amount that may have been alocated rm been completed, provided that: to that country under article 33 and, subject to the com lian ce e producing country with the requirements (i) The Council may, from time to time, with thep o n -cleby36th oafc arti , paragraphs (n), (o) and (p) of article 33 sha sent of the country concerned, revise annex C n n d ot apply to such exports. any such revision shall have efect as if it were included in that annex; (c) Special deposits may be accepted by the Manager ng ly at such place or places as may be convenient to him (ii) If any tin shall be exported from any produo cin country by any method which is not provided f(d) or The Executive Chairman shall notify the participatby annex C, the Council shal determine whein thg er countries of the receipt of any such special deposit, bu srooner than three months after the date of receipt. such tin shall be deemed to have been exportendotfo the purposes of this Agreement and, if so, the tim e) A producing country which has made a special (e at which such export shall be deemed to had veposit of tin metal may withdraw the whoe l or part of taken place. that special deposit in order to fulfil the whole or part o  - 156 -  its permissible export amount in any control period. In additional stocks bear to the total amount of such a case the amount withdrawn from the special deposit the other minerals mn i ed shall not at any time shall be regarded as having been exported for the purposes exceed the proportion stated in annex F; of article 33 in the control period in which the with- (ii) Except with the consent of the Council, the drawal was made. export of such additional stocks shall not com(J) In any quarter which has not been declared a con- mence until after the liquidation of all the tin trol period any special deposit shall be at the disposal of metal in the bufer stock and the rate of export the country which has made the deposit, subject only to thereafter shall not exceed one-fortieth of the the provisions of paragraph (h) of article 36. whoe l or 250'tons, whichever is the greater, in (g) All charges incurred in connexion with any special each quarter. deposit shall be borne by the country making the dep(e) ositCountries listed in annex E or annex F shall, in and no charges shall be borne by the Council. consultation with the Council, make regulations governing the maintenance, protection and control of such additional stocks. (J) The Council may, with the consent of the producing country concerned, revise annex E and annex F. CHAPTER X — STOCKS (g) Each producing country shall forward to the Council at such intervals as the Council may require statements as to the stocks of tin within its territory which have no Article 36 been exported in accordance with the definition for that country in annex C. Such statements shall not include tin STOCKS IN PRODUCING COUNTRIES in course of transport between the mn i e and the point of e x p o r t a s d e f i n e d i n a n n e x C. T h e s e s tatements shall show (a) (i) The stocks of tin within any producing coun tryparately the stocks held under parag se raph (d) of this which have not been exported within the defi n i arti c l e . tion for that country contained in annex C shall ) A country which holds special deposits under not at any time during a control period exce(e/;d the tonnage shown against that country in article 35 or is permited to increase tonnages in accordance with the provisions of paragraph (a) of this article annex E; shal l, not later than twelve months before the termination (ii) Such stocks shall not include tin in the coo ufrse t h Agreement, inform the Council of its plans for the of transport between the mn i e and the poinetxp oo first o f such special deposits and of all or part of such export as defined in annex C; i n c r e a s e d tonnages (but not including additional stocks (iii) The Council may revise annex E but, if in d ohin g w o s e e x p ort is governed by paragraph (</) of this article) so it has increased the tonnage listed in anna ex Eshall c n d onsult with the Council as to the best means o against any country, it may m i pose conditionm s,aking such xport without avoidable disruption of the. including conditions as to period and subsetin - market ane d in harmony with the provisions for the quent export, in relation to any such additiolin. quidation of the bufer stock under article 30. The pro(b) Any increase in the proportion approved under ducing country concerned shall give due consideration to paragraph 2 of article XIV of the Third Agreementthaendrecommendato i ns of the Council. still operative at the termination of that Agreement and any conditions m i posed in connexion therewith shall be deemed to have been approved or m i posed under this Agreement une l ss the Council otherwise decd i es within six months after the entry into force of the Agreement. CHAPTER XI — TIN SHORTAGE (c) Any special deposit made under article 35 shall be deducted from the amount of stocks permited under this Article 37 article to be held during a control period within the producing country concerned. ACTION IN THE EVENT OF A TIN SHORTAGE (d) (i) Where in a producing country mento i ned in (a) If at any time the Council concludes that a serious annex F tin ore is unavoidably extracted from s h orrtage of supplies of tin has deveo l ped or is likely to its natural occurrence in the mining of the othe minerals mento i ned in that annex and for td he avtelop, the Council shall make whatever inquiries are reason the limitation of stocks prescribed in necessary in order to enable it to estimate total requirem paragraph (a) of this article would unreasonab lyents and availability of tin for such periods as it shall de-termine. restrict the mining of those other minerals, addi tional stocks of tin-in-concentrates may be held(b) If studies and inquiries, together with pertinent within that country to the extent that thesefactors, are confirm the danger of a tin shortage, the Council: certified by the Government of that country as(i) Shall recommend to the participating countries having been won exclusively in association with that they initiate action to ensure as rapid an those other minerals and actualy retained in that increase as possible in the amount of tin which they country, provided that the proportion which such may be able to make available;  -  157 -  otn (ii) May invite the participating countries to enter in o the plan with that country for the purpose of assuring de-quate fulfilment of the provisions of paragraph (d) such arrangements with it as may assure consuam ing countries an equitable distribution of the of this article. available supplies of tin; and (c) The Council shall from time to time review the ogress of such disposals and may make recommenda(iii) Shall observe the behaviour of the market atprall ioen.s to the disposing participating country. times with a view to preventing any tin shortatg (d) The disposals shall be made with due regard to th protection of producers, processors and consumers against avoidable disruption of their usual markets. Account shall also be taken of the consequences of such disposals on the investment of capital in exploration and CHAPTER XII — MISCELLANEOUS PROVISIONSdeveo l pment of new supplies and the health and growth of tin mining in the producing countries. The disposals shall be in such amounts and over such periods of tim Article 38 as will not interfere unduly with production and employment in the tin industry in the producing countries and a FAIR LABOUR STANDARDS will avoid creating hardships to the econome i s of the The participating countries declare that, in orderpta orticipating producing countries. avoid the depression of living standards and the introduction of unfair competitive conditions in world trade, they will seek to ensure fair labour standards in the tin indusArticle 41 try. Article 39  NATIONAL SECURITY PROVISIONS  (a) Nothing in this Agreement shall be construed: (i) To require a participating country to furnish any GENERAL PROVISIONS information the disclosure of which it considers (a) Participating countries shall during the currency of contrary to its essential security interests; this Agreement use their best endeavours and co-operate(ii) To prevent a participating country from taking, to promote the atainment of its objectives. either singly or with other countries, any action (b) The participating countries undertake to accept as which it considers necessary for the protection of binding all decisions of the Council under this Agree- its essential security interests where such action ment. relates to traffic in arms, ammuniton or imple(c) Without prejudice to the general scope of paragraph ments of war, or to traffic in other goods and mate (a) of this article, participating countries shall in particular rials carried on directly or indirectly for the purobserve the following: pose of supplying a military establishment of any ountry, or is taken in time of war or other eme (i) They shall not, so long as sufficient quantities of c g ency in international relations; v tin are available to meet their full requirements, prohibit o.r limit the use of tin for specified end(iii) - To prevent a participating country from entering uses except in circumstances in which such prohi- into or carrying out any inter-governmental bition or limitation would not be inconsistent with agreement (or other agreement on behalf of a country for the purpose specified in this paragraph) other international agreements on trade; made by or for a military establishment for the (ii) They shall create conditions which would promote p rpose of meeting essential requirements of the the transfer of tin production from less efficient to nu a tional security of one or more of the countries more efficient enterprises; and participating in such agreements; or (iii) They shall encourage the conservation of the natu(i-v) To prevent a participating country from taking ral resources of tin by preventing the premature any action in pursuance of its obligations under the abandonment of deposits. United Nations Charter for the man i tenance of international peace and security. (b) Participating countries shall notify the Executive Article 40 Chairman as soon as possible of any action they take r specting tin in consequence of sub-paragraph (ii) or (iv) of DISPOSAL OF TIN paragraph (a) of this article and the Executive Chairman FROM NON-COMMERCIAL STOCKPILES shall so notify other participating countries. (a) A participating country desiring to dispose of tin(c) Any participating country which considers its ecofrom non-commercial stockpiles shall, at adequate notic ne o,mic interests under this Agreement seriously injured consult with the Council concerning its disposal plansb .y action taken by any other participating country or ufntries, other than action taken in time of war, unde (b) At the time a participating country gives noticecoo thile es,provisions of paragraph (a) of this article, may com a plan to dispose of tin from non-commercial stockp the Council shall promptly enter into official consultatiopl na sin to the Council.  (d) On receipt of such a complaint the Council shall ig review the facts of the situation and shal by a majority Two such persons nominated by the consumn c o u n t r i e s ; a n d of the total votes held by all consumn i g countries and a majority of the total votes held by all the producing coun- A chairman selected unanimously by the four persons nominated above or, if they fail to tries decide whether the complainant country is justified in its complaint and shall, if it so decides, permit the, com- agree, by the Executive Chairman. (ii) Persons appointed to the advisory panel shall plainant country to withdraw from this Agreement. act in their personal capacity and without instructions from any Government; (iii) The expenses of the advisory panel shall be paid by the Council. CHAPTER Xni — COMPLAINTS AND DISPUTES• (d) The opinion of the advisory panel and the reasons therefor shall be submited to the Council which, after Article 42 considering all the relevant information, shall decide the dispute. ;  COMPLAINTS  (a) Any complaint that any participating country has commited a breach of this Agreement for which a remedy is not provided es l ewhere in this Agreement shall, at the CHAPTER XIV — FINAL PROVISIONS request of the country making the complaint, be referred Article 44 to the Council for a decision. (b) Save where otherwise provided in this Agreement, SIGNATURE no participating country shall be found to have commited a breach of this Agreement unless a resolution to th a t Tre his Agreement shall be open for signature in London efect is passed. Any such finding shall specify the nw atu i t h the Government of the United Kingdom of Great and extent of the breach. Britain and Northern Ireland (hereinafter referred to as (c) If the Councilfindsunder this article that a parti - depositary Government") from 1 July 1970 to "the cipating country has commited a breach of this Ag r e e 29 -January 1971 inclusive, on behalf of countries particiment, the Council may, unless some other penalty ip sating in the Third International Tin Agreement and on provided es l ewhere in this Agreement, deprive the coub ne try half of Governments of n i dependent States represented concerned of its voting and other rights until it has a retmth ee - United Nations Tin Conference, 1970. died the breach or has otherwise fulfilled its obligations. (d) For the purposes of this article the expression Article 45 "breach of this Ag-cement" shall be deemed to include the breach of any condition m i posed by the Council or failure to fulfil any obligation laid upon a participating RATIFICATION, APPROVAL, ACCEPTANCE country in accordance with this Agreement. This Agreement shall be subject to ratification, approval or acceptance by the signatory Governments in accordance with their respective constitutional procedures. InsArticle 43 truments of ratification, approval or acceptance shall be d eposited with the depositary Government. DISPUTES  (A) Any dispute concerning the interpretation or appliArticle 46 cation of this Agreement which is not settled by negotiation shall, at the request of any participating country, DEFINITIVE ENTRY INTO FORCE be referred to the Council for decision. (b) Where a dispute has been referred to the Counc(a) il inThis Agreement shall, for the Governments which accordance with this article a majority of participatih na gve deposited instruments of ratification, approval or countries or any participating countries holding not leascsceptance, enter into force definitively as soon after than one-third of the votes in the Council may requir3e0 th ene 1971 as such instruments have been deposited on Ju Council, after full discussion, to seek the opinion ofbe thhealf of Governments representing at least six producadvisory panel referred to in paragraph (c) of this arti clecountries as set out in annex A holding together at ing on the s i sues in dispute before giving its decision. least 950 of the votes set out in that annex and at leas nino ef consumn i g countries as set out in annex B holding (c) (i) Unless the Council, by a unanm i ous decision votes cast, agrees otherwise, the panel shall together at least 300 of the votes set out in that annex. consist of: (b) For the signatory Government which has deposited Two persons, one having wd i e experiencean ininstrument of ratification, approval or acceptance after maters of the kind in dispute and the oth th eerdefinitive entry into force of this Agreement, this Agreehaving legal standing and experience, nom mi-ent shall enter into force definitively on the date of the nated by the producing countries; deposit of such instrument.  (c) If this Agreement has entered into force provisionally under paragraph (a) of article 47, then as soon as instruments of ratification, approval or acceptance have been deposited on behalf of Governments representing countries satisfying the conditions laid down in paragraph (a) of this article, it shall enter into force definitively for those Governments. (d) If this Agreement has entered into force definitively under paragraph (a) or paragraph (c) of this article, and if any Government which has given a notification of intention to ratify, approve or accept has failed to deposit an instrument of ratification, approval or acceptance within a period of ninety days from the date of definitive entry into force, that Government shall cease to participate in this Agreement, provided that the Council may extend the period aforesaid if so requested by that Government, and further provided that that Government may cease to participate in the Agreement before the expiry of the period aforesaid or any extension thereof by giving to the depositary Government at least thirty days' notice. Article  47  PROVISIONAL ENTRY INTO FORCE  (a) (i) If the conditions for the definitive entry into force of this Agreement laid down in paragraph (a) of article 46, have not been satisfied, this Agreement shall, for the Governments which have deposited instruments of ratification, approval or acceptance or have given notification of intention to ratify, approve or accept, enter into force provisionally on the day following the date of termination of the Third Agreement, provided that such instruments or notifications have been deposited with the depositary Government: , By 30 June 1971 or, if the Third Agreement is extended, by the date of termination of that Agreement; and On behalf of Governments representing at least six producing countries as set out in annex A holding together at least 950 of the votes set out in that annex, and at least nine consuming countries as set out in annex B holding together at least 300 of the votes set out in that annex. (ii) For each signatory Government which has deposited an instrument of ratification, approval or acceptance of, or has given notification of intention to ratify, approve or accept, this Agreement while it is provisionally in force, the Agreement shall enter into force provisionally on the date of the deposit of such instrument or notification. (b) If, within six months after the termination of the Third Agreement, this Agreement has entered into force provisional^ but not definitively as laid down in article 46, the Executive Chairman shall as soon as possible convene a meeting nr meetings of the Council to consider the posi-  tion. If, however, the entry into force remains provisional the Agreement shall be terminated not later than one year after the provisional entry into force.  Article  48  ACCESSION  (a) Any Government represented at the United Nations Tin Conference, 1970, or any participating country in the Third International Tin Agreement shall have the right to accede to this Agreement upon conditions to be determined by the Council. (b) Any other Government not represented at the United Nations Tin Conference, 1970, which is a Member of the United Nations or a member of its specialized agencies may upon conditions to be determined by the Council accede to this Agreement. (c) The conditions laid down by the Council shall be equitable, in respect of voting rights and financial obligations, as between the countries seeking to accede and other countries already participating. (d) Upon the accession of a producing country to this Agreement the Council (i) shall fix, with- the consent of that country, the tonnages and proportions to be shown against that country in annexes E and F where appropriate and (ii) shall also fix the circumstance for the purpose of export control to be shown against the name of that country in annex C, part one. The tonnage, proportion or description so fixed shall have effect as though it were included in such annexes. (e) Accession shall be effected by the deposit of an instrument of accession with the depositary Government, which shall notify all interested Governments and the Council of such accession. Article  49  SEPARATE PARTICIPATION  A Contracting Government may, at the time of depositing its instrument of ratification, approval, acceptance or accession, or giving notification of intention to ratify, approve or accept or at any time thereafter, propose the separate participation as a producing or as a consuming country, as may be appropriate, of any territory or territories, interested in the production or consumption of tin, for whose international relations the Contracting Government is responsible and to which the Agreement applies or will apply when the Agreement enters into force. Such separate participation shall be subject to the consent of the Council and to the conditions which the Council may determine. Article  50  An inter-governmental organization having responsibilities in respect of the negotiation of international Agreements may participate in the International Tin Agree-  - 160 ment. Such an organization shall not itself have the right to vote. On matters within its competence the voting rights of its member States may be exercised collectively. Article  51  AMENDMENTS  (a) The Council may, by a two-thirds majority of the total votes held by all producing countries and a twothirds majority of the total votes held by all consuming countries, recommend to Contracting Governments amendments to this Agreement. The Council shall, in its recommendation, fix the time within which each Contracting Government shall notify the depositary Government whether or not it ratifies, approves or accepts the amendment. (b) The Council may extend the time fixed by it under paragraph (a) of this article for notification of ratification, approval or acceptance. (c) If, within the time fixed under paragraph (a) of this article or extended under paragraph (b) of this article, an amendment is ratified, approved or accepted by all participating countries it shall take effect immediately on the receipt by the depositary Government of the last ratification, approval or acceptance. (d) If, within the time fixed under paragraph (a) of this article or extended under paragraph (b) of this article, an amendment is not ratified, approved or accepted by participating countries holding all of the votes of producing countries and by participating countries holding twothirds of the total votes of all consuming countries, it shall not take effect. (e) If, by the end of the time fixed under paragraph (a) of this article or extended under paragraph (b) of this article, an amendment is ratified, approved or accepted by participating countries holding all of the votes of producing countries and by participating countries holding two-thirds of the total votes of all consuming countries: (i) The amendment shall, for the participating countries by which ratification, approval or acceptance has been signified, take effect at the end of three months next following the receipt by the depositary Government of the last ratification, approval or acceptance necessary to comprise all of the votes of producing countries and two-thirds of the total votes of all consuming countries; (ii) Any Contracting Government which does not ratify, approve or accept an amendment by the date of its coming into effect shall as of that date cease to participate in the Agreement, unless any such Contracting Government satisfies the Council at its first meeting following the effective date of the amendment that its ratification, approval or acceptance could not be secured in time by reason of constitutional difficulties, and the Council decides to extend for such Contracting Government the period fixed for ratification, approval or acceptance until these difficulties have been overcome.  (/) If a consuming country considers that its interests will be adversely affected by an amendment it may, before the date of its coming into effect, give notice to the depositary Government of withdrawal from the Agreement. Withdrawal shall become effective on the effective date of the amendment. The Council may, at any time, on such terms and conditions as it considers equitable, permit such country to withdraw its notice of withdrawal. (g) Any amendment to this article shall take effect only if it is ratified, approved or accepted by all participating countries. (h) The provisions of this article shall not affect any power under this Agreement to revise any annex to this Agreement. Article  52  WITHDRAWAL  A participating country which withdraws from this Agreement during its currency, except (i) In accordance with the provisions of paragraph (d) of article 41 or paragraph (J) of article 51; or (ii) Upon at least twelve months' notice being given to the depositary Government not earlier than one year after the entry into force of this Agreement, shall not be entitled to any share of the proceeds of the liquidation of the buffer stock under the terms of article 31 or 32 nor shall it be entitled to a share of the other assets of the Council under the terms of article 53 on the termination of this Agreement. Article  53  DURATION, EXTENSION AND TERMINATION  {a) The duration of this agreement shall, except as otherwise provided in this article or in paragraph (b) of article 47, be five years from the date of entry into force. (b) The Council may, by a two-thirds majority of the total votes held by all producing countries and a twothirds majority of the total votes held by all consuming countries, extend the duration of this Agreement by a period or periods not exceeding twelve months in all. (c) The Council, in a recommendation to the Contracting Governments, not later than four years after the entry into force of this Agreement, shall inform them whether it is necessary and appropriate that this Agreement should be renewed and, if so, in what form; it shall at the same time consider what the relationship between the supply of and demand for tin is likely to be at the expiration of this Agreement. (d) (i) A Contracting Government may at any time give notice in writing to the Executive Chairman that it intends to propose at the next meeting of the Council the termination of the Agreement; (ii) If the Council, by a two-thirds majority of the total votes held by all producing countries and by all consuming countries, adopts the proposal  - 161 -  to terminate, it shall recommend to the ContractArticle 54 ing Governments that this Agreement shall terminate; NOTIFICATIONS BY THE DEPOSITARY (iii) If Contracting Governments holding twoGOVERNMENT thirds of the total votes of all producing countries and two-thirds of the total votes of all The depositary Government shall notify all Governm consumn i g countries notify the Council that the yents represented at the United Nations Tin Conference, accept that recommendation, this Agreement 1970, all Governments members of the Third International Tinl Agreement, all Governments which have acceded to shall terminate on the date the Council shal hth iss Agreement in accordance with the provisions of decide, being a date not later than six motn ce le 48, the Secretary of the Council and the Secretaryafter the receipt by the Council of the last oarti f th notifications from those Contracting Govern- General of the United Nations of the following: ments. (i) Signatures, ratifications, approvals, acceptances (e) The Council shall remain in being for as long asand notifications of intention to ratify, approve or may be necessary for the carrying out of paragraph (/") accept, in accordance with articles 44, 45 or 47; of this article, for the supervision of the liquidation of th(ii) e he entry into force of this Agreement, both defibufer stock and any stocks held in producing countries in T nitive and provisional in accordance with article 46 accordance with article 36 and for the supervision of the o due performance of conditions m i posed under this Agree- r 47; ment by the Council or under the Third Agreement; (iii) the Accessions and notifications of separate particiCouncil shall have such of the powers and functions con- pation, in accordance respectively with article 48 ferred on it by this Agreement as may be necessary for theor 49; purpose. (iv) Notifications of ratification, approval or acceptance of amendments and dates of their entry (f) On termination of this Agreement: (i) The buffer stock shall be liquidated in accordance into force, in accordance with article 51; with the provisions of articles 30, 31 and 32; (v) Notifications of withdrawal and of cessation of (ii) The Council shall assess the Obligations into which participation; and it has entered in respect of its staff and shall, (vi if) Notifications of the termination of this Agreement, necessary, take steps to ensure that, by means of a in accordance with article 53. supplementary estimate to the Administrative Account raised in accordance with articles 15 and 16, sufficient funds are made available to meet such Article 55 obligations; (iii) After all liabilities incurred by the Council, other CERTIFIED COPY OF THE AGREEMENT than those relating to the buffer-stock account, have been met, the remaining assets shall be dispA os s- soon as possible after the definitive entry into force ed of in the manner laid down in this article.of this Agreement, the depositary Government shall send (g) If the Council is continued or if a body is creaa tedcerti tofied copy of this Agreement in each of the a l nguages succeed the Council, the Council shall transfer its archm iveesn ,tioned in article 56 to the Secretary-General of the statistical material and such other documents as the CU ou -d Nations for registration in accordance with nn ite cil may determine to such successor body and mayArti byclea 102 of the Charter of the United Nations. Any distributed two-thirds majority transfer all or any ofaim tsendments to this Agreement shall likewise be commuremaining assets to such successor body. nicated. (/;) If the Council is not continued and no successor body is created: Article 56 (i) The Council shall transfer its archives, statistical material and any other documents to the SecretaryAUTHENTIC TEXTS OF THE AGREEMENT General of the United Nations or to any international organization nominated by him or, failingThe texts of this Agreement in the English, French, such nomination, as the Council may determinR e;ussian and Spanish a l nguages are all equaly authentic, thceil originals being deposited with the Government of the (ii) The remaining non-monetary assets of the Coun nniterd Kingdom of Great Britain and Northern Ireland, shall be sold or otherwise realized in such a mU an which shall transmit a certified copy thereof to each as the Council may direct; and atory and acceding Government and to the Secretary (iii) The proceeds of such realization and any rems aig inn-th o f ing monetary assets shall then be distributed in e Council. such a manner that each participating country shal INl WITNESS WHEREOF the undersigned, having b een duly receive a share proportionate to the total ofatu hte horized to this efect by their respective Governments, contributions which it has made to the Adminishtraav-e signed this Agreement on the dates appearing oppotive Account established under article 15. site their signatures.  - 162 ANNEXES i.-. ANNEX A  Percentages and votes o f producing countries  Country  Percentage  C o n g o ( D e m o c r a t i c R e p u b l i c of)  . . .  TOTAL  Votei Initial  Additional  Total  5  27 164 44 ' 88 442 61 139  32 169 49 93 447 66 144  2.82 16.98 4.51 9.14 45.83 6.36 14.36  5 5 5 , 5 5 5  100.00  35  •  965  1 000  NOTE —The countries, percentage! and votes listed in this annex are those arrived at during the United Nations Tin Conference, 1970, at which the Fourth International Tin Agreement was drawn up. The list of names and thefiguresaro subject to revision from time to time in accordance with the operation of the provisions of the Agreement.  ANNEX B  Tonnages and votes of consuming countries  Country  Tonnage metric tons  Italy  Votes Initial  600 2 770 254 4 508 284 3 153 737 12010 10 430 1 151 4 234 6319 23 046 1 612 4 555 630 3 470 265 1 798 914  5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5  17 58 6 1  705 970 600 565  5 5 5 5  167 580  120  Additional  '  ,  3 15 1 24 2 17 4 63 55 6 22 33 121 8 24 3 18 t 9 5  .  Total 8 20 6 29 7 22 9 68 60 11 27 38 126 13 29 8 23 6 14 10  U n i t e d K i n g d o m o f Great B r i t a i n and  U n i o n o f Soviet Socialist Republics  .  .  TOTAL  ,  93 310 35 8  98 315 40 13  880  1 000  NUIE — The countries, wruiages and votes listed ia this snnc* arc those arrived at during the United Nation* Tin Conference, 1970, at which the fourth International Tin Agreement was drawn up. The hit of names and Lhcfiguresaro subject to revision from lime to lime in accordance with the operation of the provisions of the Agreement.  -  163 ANNEX  C  Part one Circumstances In which tin shall be deemed to have been exported for the purposes of export control T h e text o f annex C o f this Agreement shall be the revised text o f annex C in force at the date o f termination o f the T h i r d International T i n Agreement. I n the case o f A u s t r a l i a tin shall be deemed to be exported o n the date o f shipment s h o w n i n the Restricted G o o d s E x p o r t Permit issued under the Customs (Prohibited Exports) Regulations, provided that actual shipment takes place within fourteen days o f that date.  Part  two  Imports into producing countries F o r the purpose o f determining net exports o f t i n under article 33, imports deductible from exports d u r i n g a c o n t r o l period shall be the amount imported into the p r o d u c i n g country concerned during the quarter immediately preceding the declaration o f the c o n t r o l period i n question, p r o v i d e d that t i n i m p o r t e d for smelting and exported shall not be taken into account.  ANNEX D  Conditions for special exports T h e c o n d i t i o n s referred to i n article 34 are that the proposed special export is destined to f o r m part o f a governmental stockpile and u n l i k e l y to be used for any c o m m e r c i a l o r industrial purpose d u r i n g the currency o f this Agreement.  ANNEX E  Stocks in producing countries aider article 26 Country  ,  Tonnage metric tons  Australia » Bolivia C o n g o ( D e m o c r a t i c R e p u b l i c of) Indonesia Malaysia N i g e r i a (Federal R e p u b l i c of) Thailand  •.  ANNEX  2 200 7511 2 000 4 126 18 331 2 185 5 298  F  Additional stocks won unavoidably Country  Other mineral  Tin content of concentrates' permitted to be stocked additionally for each ton of other mineral mined (tons)  1.5 1.5 1.5 1.5  ANNEX G  I6i* K-  Rules for the redetermination of the percentages of the producing countries  the p r o d u c i n g countries i n the latest periods o f twenty-four and thirty-six consecutive calendar months respectively for w h i c h figures are available. Rule 8  Rule 1 The first redetermination o f the percentages o f the p r o d u c i n g countries shall be made at the first meeting o f the C o u n c i l under this Agreement. T h i s redetermination shall be made o n the basis o f the last four quarters for w h i c h figures of the p r o d u c t i o n o f tin i n each o f the p r o d u c i n g countries are available. Rule 2 F u r t h e r redetermination o f the percentages shall be made at yearly intervals following the first redetermination, provided that no period subsequent to the quarters referred to i n rule 1 shall have been declared to be a c o n t r o l p e r i o d .  F o r t h e purposes o f the foregoing rules, i f any p r o d u c i n g country has failed to make available to the C o u n c i l its p r o d u c t i o n figures for any period o f twelve consecutive calendar months w i t h i n one m o n t h of the date by w h i c h four .producing countries have made their figures available, the p r o d u c t i o n o f that country for such period o f twelve months shall be calculated by m u l t i p l y i n g by twelve the average m o n t h l y rate o f p r o d u c t i o n d u r i n g the period as shown by such figures as are available and deducting five per cent from the amount so calculated. Rule 9 Figures o f the p r o d u c t i o n o f tin i n any p r o d u c i n g country for any period earlier than forty-two months before the date o f any redetermination shall not be employed i n that redetermination.  Rule 3  •  Rule 10 S h o u l d any period be declared to be a c o n t r o l period, no further redetermination of the percentages shall be made u n t i l a further four N o t w i t h s t a n d i n g the provisions of the foregoing rules, the C o u n c i l consecutive quarters have not been declared to be c o n t r o l periods; may reduce the percentage o f any p r o d u c i n g c o u n t r y w h i c h has a further redetermination shall then be made as soon as figures for the failed to export the whole o f its permissible export tonnage as deterp r o d u c t i o n o f tin i n each of the p r o d u c i n g countries i n such four • mined under paragraph (k) o f article 33 or any greater amount consecutive quarters are available; and subsequent redeterminations accepted by it under paragraph («) o f that article. In considering its shall be made at yearly intervals thereafter for as long as no period is decision, the C o u n c i l shall regard as mitigating circumstances that declared to be a c o n t r o l period. A similar procedure shall be followed the p r o d u c i n g country concerned surrendered under paragraph (n) if any subsequent period is declared to be a c o n t r o l p e r i o d . of article 33 a part of its permissible export tonnage i n time for effective steps to be taken by the other p r o d u c i n g countries to make good the deficit or that the p r o d u c i n g c o u n t r y concerned w h i c h has Rule 4 failed to export the amount determined under paragraph (o) o f article 33 has exported the whole o f its permissible export amount F o r the purpose o f rules 2 and 3 redeterminations shall be deemed as determined under paragraph (k) o r (n) o f article 33. to have been made at yearly intervals i f they are made i n the same quarter o f the calendar year as were the preceding redeterminations. Rule 11  Rule 5 A t the first redetermination, made under rule 1, new percentages for the p r o d u c i n g countries shall be determined i n direct p r o p o r t i o n t o the p r o d u c t i o n of tin i n each of them d u r i n g the four quarters referred to i n rule 1. Rule 6  Rule 12  In subsequent redeterminations, made under rule 2, the percentages shall be calculated as follows:  new  (i) T h e percentages i n the second redetermination shall be i n direct p r o p o r t i o n to the p r o d u c t i o n of tin i n each o f the p r o d u c i n g countries i n the latest twenty-four consecutive calendar months for w h i c h figures are available; a n d (ii) T h e percentages i n the third redetermination, and a l l later redeterminations, shall be i n direct p r o p o r t i o n to the production o f tin i n each o f the p r o d u c i n g countries i n the latest thirty-six consecutive calendar months for w h i c h figures are available. Rule 7 In subsequent redeterminations, made percentages shall be 'calculated as follows:  under  rule 3, the  new  (i) T h e percentages i n the first subsequent redetermination shall be i n direct p r o p o r t i o n to the sum o f the p r o d u c t i o n o f tin i n each o f the producing countries i n the latest twelve consecutive calendar months for which figures are available and i n the four quarters immediately preceding that c o n t r o l period; and 1  If a reduction i n the percentage o f any p r o d u c i n g country is made i n accordance with rule 10, the percentage so made available shall be distributed a m o n g the other p r o d u c i n g countries i n p r o p o r t i o n to their percentages current at the date o f the decision to make the reduction.  (ii) The percentages i n the next following redeterminations, provided that no period shall have been declared to be a c o n t r o l period, shall be i n direct p r o p o r t i o n l o the p r o d u c t i o n o f tin i n each o f  If, by the a p p l i c a t i o n of the foregoing rules, the percentage of a p r o d u c i n g c o u n t r y is reduced to less than the m i n i m u m figure permitted by the operation o f the proviso to paragraph (m) (i) of article 33, then the percentage o f that country shall be restored to such m i n i m u m figure and the percentages o f the other p r o d u c i n g countries shall be proportionately reduced so that the total o f the percentages is restored to one hundred.  Rule 13 F o r the purposes o f paragraph (ni) (ii) o f article 33, the f o l l o w i n g circumstances inter alia may be regarded as exceptional: a national disaster, a major strike w h i c h has paralyzed the tin m i n i n g industry for a substantial period, a major b r e a k d o w n o f power supplies o r o f the m a i n line of transport to the coast.  . Rule 14 F o r the purposes o f these rules, the c a l c u l a t i o n for p r o d u c i n g countries which are substantial consumers o f tin derived from their domestic mine p r o d u c t i o n shall be based on their exports of tin and not on mine p r o d u c t i o n of tin. In the first redetermination of annex A under rule 1 the c a l c u l a t i o n i n the case o f A u s t r a l i a shall be o n the basis  -  165 -  o f the last four quarters for which export figures o f tin are available provided that the percentage figure arrived at shall be equivalent to a tonnage figure not less than 4,572 tons. Rule IS I n this annex the expression "the production o f t i n " shall be deemed to refer exclusively to mine p r o d u c t i o n , and smelter production shall accordingly be ignored.  ANNEX H Procedure for ascertaining shares i n the buffer stock F o r the purpose o f ascertaining the share o f each c o n t r i b u t i n g country i n the buffer stock, the M a n a g e r shall adopt the following procedure: (i) T h e contributions o f each c o n t r i b u t i n g country to the buffer stock (excluding any voluntary c o n t r i b u t i o n o r part o f a voluntary c o n t r i b u t i o n w h i c h has been made under paragraph (a) o f article 22 and which has been refunded under paragraph (c) o f article 22) shall be evaluated, and for this purpose any contributions or p o r t i o n o f any c o n t r i b u t i o n made by a contributing country i n metal shall be calculated at the floor price in effect o n the date o f entry into force o f this Agreement and shall be added to the total contributions made by that country i n cash. (ii) A l l the tin metal held by the M a n a g e r on the date o f termination of this Agreement shall be valued o n the basis of the settlement price o f t i n o n the L o n d o n M e t a l Exchange o n that date and an amount to that value shall be added to the total cash held by h i m at that date after setting aside a s u m as required b y paragraph (a) o f article 31. „. „  (iii) If the total arrived at under clause (ii) o f this annex is greater than the sum total of a l l the contributions made to the buffer stock by a l l Ihc c o n t r i b u t i n g countries (calculated i n a c c o r d ance with clause (i) o f this annex), the surplus shall be apportioned a m o n g the c o n t r i b u t i n g countries in p r o p o r t i o n to the total contributions to the buffer stock o f each c o n t r i b u t i n g country multiplied by the number o f days that such c o n t r i b u tions have been a', the disposal of the M a n a g e r up to the termination of this Agreement. F o r this purpose c o n t r i b u t i o n s in tin metal shall be calculated i n accordance with clause (i) o f this annex and each i n d i v i d u a l c o n t r i b u t i o n (in metal or in cash) shall be multiplied by the number o f days that it has been at the disposal o f the M a n a g e r , and for the purpose o f calculating the number o f days that a c o n t r i b u t i o n has been at the dispo-^il o f the M a n a g e r neither the clay o n w h i c h the c o n t r i b u t i o n was received by h i m nor the day o f the termination o f this Agreement shall be counted. T h e amount o f surplus so apportioned to each c o n t r i b u t i n g country shall be added to the total o f the contributions o f that country (calculated in accordance with clause (i) o f this annex): p r o v i d e d , however, that i n calculating the apportionment o f such a surplus a forfeited c o n t r i b u t i o n shall not be regarded as h a v i n g been at the disposal o f the M a n a g e r d u r i n g the period o f forfeiture. (iv) I f the total arrived at under clause (ii) o f this annex is less than the sum o f a l l the contributions made to the buffer stock by all the c o n t r i b u t i n g countries, the deficit shall be a p p o r t i o n e d a m o n g the c o n t r i b u t i n g countries i n p r o p o r t i o n to their total c o n t r i b u t i o n . T h e amount o f the deficit so a p p o r t i o n e d to each c o n t r i b u t i n g country shall be deducted from the total of the c o n t r i b u t i o n s of that c o u n t r y . T h e c o n t r i b u t i o n referred to in this clause shall be calculated in accordance w i t h clause (i) of this annex. (v) T h e result of the foregoing c a l c u l a t i o n shall in the case of each c o n t r i b u t i n g country be treated as its share of the buffer s t o c k .  - 166  -  APPENDIX B : CHART 1:  World T i n P o s i t i o n  CHART 2 :  P r o d u c t i o n of T i n - i n - C o n c e n t r a t e s : Producing Countries  CHART 3:  Consumption o f T i n M e t a l : Main C o u n t r i e s  S o u r c e : ITC S t a t i s t i c a l  Yearbook  1968.  Main  W O R L D  CHART 1  167 TIN  1 9 5 G  of tin - In - c on c o n t ra t e •  production  POSITION -  M  A  lul u k e  from  certain  c o nt r o i l y - p l a nnOtl  countries  150 r-  _I ' Production  of primary  IL  t I 1-—  1  tin metal  Outyoinys  to  certain  centrally-  countries  CO  f—  0 U*/L_J  I  I  1  I  Consumption  t  Tin  i  I  I  !  1  !  of primary  1  1  1 —  tin metal  G . S . A.  L  prices — London  cash  Buflcr  ri  _1  lv S i  Sales  1„_ 1965  il._LL  stock  holdings  plunncd  CHART  2  PRODUCTION  OF  TIN-IN-CONCENTRATES  C I-: A R T 3  CONSUMPTION  OF  TIN  fi'S-TAL: 1S5G -1SC-G  /  A  IVlAiN  CCUNTHIES  

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