A/42/427
English
Page 89
interest, and in any event the conditions have not existed for other commodity exporters to operate in a like manner. Any arrangement encompassing measures to enhance the export earnings of producers, as well as to ensure the resource basis, would require consumer as well as producer support.
46. In recent years, Third World commodity exporters have sought to earn more by doing the first-stage processing of raw materials themselves. This first stage often involves subsidized energy, other concessions, and substantial pollution costs. But these countries often find that they do not gain much from this capital-and energy-intensive first-stage processing, as the price spread shifts in favour of downstream products, most of which continue to be manufactured mainly in industrial countries. Tariff escalation in the industrial market economies reinforces this tendency.
47. The main international response to commodity problems has been the development of international commodity agreements to stabilize and raise developing countries' earnings from these exports. But real progress has been very limited and in fact there have been reversals. Moreover, environmental resource considerations have not played any part in commodity agreements, with the notable exception of the International Tropical Timber Agreement.[1]
48. Commodity agreements have not been easy to negotiate, and regulation of commodity trade has been notoriously controversial and difficult. Current arrangements could be improved in two crucial respects:
- Larger sums for compensatory financing to even out economic shocks - as under the IMF's Compensatory Financing Facility – would encourage producers to take a long-term view, and not to overproduce commodities where production is close to the limits of environmental sustainability during periods of market glut.
- Where producers need to diversify from traditional, single-crop production patterns, more assistance could be given for diversification programmes. The second window of the Common Fund could be used for promoting resource regeneration and conservation.[2]
49. Individual governments can better use renewable resources such as forests and fisheries to ensure that exploitation rates stay within the limits of sustainable yields and that finances are available to regenerate resources and deal with all linked environmental effects. As for non-renewable resources like minerals. governments should ensure that:
- the leaseholder undertakes exploration aimed at adding to proven reserves at least the amount extracted:
- that the ratio of production to proven reserve remains below a pro-specified limit;
- that the funds generated by royalties are used in a way that compensates for the declining income when the resource deposit is exhausted: and
- ↑ Alister MacIntyre. UNCTAD, statement at WCED Public Hearings, Oslo, 1985.
- ↑ The Common Fund is an international arrangement for the stabilization of prices for a group of commodities of particular interest to developing countries. The Second Window of the fund is meant to provide resources for promotional and research measures.
