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Maintenance of a Perfect Relationship Between the Traders - Research Paper Example

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The paper describes international commodity trade organizations that are stating agreements to have a special class of trade and promote international cooperation in a commodity of interest. The agreements set by these organizations affect both parties that are the consumers and the producers…
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Maintenance of a Perfect Relationship Between the Traders
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Download file to see previous pages International commodity agreements have been difficult to run and administer due to the current global economic crisis. There have been difficulties in the arranging and administering agreements partly due to technical problems surrounding the production and trading of products(27). The organizations have been facing the problem of conflicting interest between the importers and exporters where the importers want low-quality products but of high prices. On the non-competitive imports, the importers require commodities of low prices and their respective quantity determined by demand. The international distribution of products is directly affected by government policy and the manner of trade restrictions within national bounds. Commodities transferred from the rich to the poor countries have an impact of accelerated economic impact. Large capitals are required to fulfill growth targets for the organizations and their payments are from the exchange earnings (29). For commodities that are largely produced in poor countries but consumed at the rich countries, the agreement price set might be above the market levels or inelastic. These incidences give the market organizations to make negotiations with the producers who end up incurring losses or failing to strike a deal (31). The international trade organization having been facing another major challenge in the price stabilization, meant to implement support purchases. Theoretically, prices are set by the long term interlink of the supply and demand to bring the equilibrium price and commodity. However, the stabilization effect is not achieved in buffer stocks without heavy financial commitment (37). ...Download file to see next pagesRead More
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