Chapter 7: Problem 3

What are some examples of international commodity agreements? Why have many of them broken down over time?

Short Answer

Expert verified

International Commodity Agreements, like OPEC and the International Coffee Agreement, aim to stabilize commodity prices and supply. They often break down due to economic disparities among participating countries, political instability, and changes in global market trends.

Step by step solution

Understand International Commodity Agreements

International Commodity Agreements are agreements made to stabilize the price and supplies of certain commodities on the international stage. They are typically made by commodity-producing countries to stabilize prices and prevent the negative effects of price volatility. Examples could be OPEC and International Coffee Agreement.

Provide Examples

Some examples of international commodity agreements include: 1) OPEC - Organization of Petroleum Exporting Countries, focuses on coordinating and unifying petroleum policies. 2) International Coffee Agreement - established to tackle the problems of oversupply and low prices affecting coffee producers.

Exploring Reasons for Breakdown

Many of these agreements break down over time for several reasons including: 1) Economic disparities – Agreements often break down because of the existence of economic disparities between the countries involved, where wealthier countries may have more bargaining power than poorer ones. 2) Political instability – In many cases, political instability in some countries disrupts the enforcement of agreements. 3) Changes in global market trends – Changes in global market conditions, such as fluctuating demand and supply, can make it hard to maintain fixed prices.

Conclude

Therefore, while International Commodity Agreements can help stabilize prices and supplies, various factors including economic disparities, political instability, and changing global market trends can make these agreements difficult to maintain in the long term.

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