You are on page 1of 1

Conclusion

Government some time influences supply and demand, influencing the price of commodities in the international market by interventionist measures such as formation of cartels, commodity agreements and state trading. International supply and/or prices in certain sectors are sought to be regulated by International Cartels. Examples include the Organisation of Petroleum Exporting Countries(OPEC) and International Air Transport Association (IATA). An important international cooperation endeavour for the protection of mutual benefit of the producers and consumers of primary commodities is International Commodity Agreements which are inter-governmental arrangements concerned with the production of, and trade in, certain primary products with a view to stabilising their prices. Commodity Agreements may take any of the four forms, namely, quota, buffer, stock, bilateral contract, or multilateral contract.

While a cartel is basically a unilateral decision by producers to co-operate, a commodity agreement, in principle, includes consumers in the negotiation, although in practice consumers (as opposed to consuming governments) have little direct say in their operation. State trading was very popular, particularly among the centrally planned economies and developing economies until the 1980s. It still continues although not as pervasive as in the past. State trading refers to import and export transactions undertaken by the state owned or state controlled agencies. State trading may also be resorted to due to strategic reasons. To reap advantages of bulk buying and selling. And to avoid unhealthy competition between domestic exporters. In case of some countries, like India, one of the objectives of state treading was expansion of foreign trade with socialist countries. State trading is often associated with canalisation; an item that is canalised can be imported or exported, as the case may be, only by the designated state trading agencies. Here, the emphasis is on the control of foreign trade flow rather than on the ownership of the organisation or agency conducting it. Canalisation had grown considerably in India but since mid 1980s a decanalisation trend set in because of the several drawbacks of the system of canalisation. State trading and canalisation have several disadvantage. They are often afflicted by the corruption and inefficiency usually with the public sector. They may promote bilateral trade as against multilateral trade and obstruct free trade. Further, State trading eliminates or reduces competition and enterprenuership