Definition of Commodity

A good that has a physical attribute and must offer a convenience A commodity has same physical properties and are freely interchangeable Basic goods which are uniform across producers. Slight variations do not change its fundamental properties Normally produced in large quantities and are not differentiated by branding

Important Characteristics
Production is not limited and stretches across a large production base Producers tend to ensure a uniform standard of quality with same characteristics The Price is determined by market forces of demand and supply They are tradable goods for which there is an established market

Types of commodities
In India, Agricultural commodities are important since they affect the livelihood of large population Important Agricultural commoditiesWheat, Rice, Maize, Chana, Tur, Sugar, Soy Complex, Rapeseed, Palm oil, Pepper, Jeera, Turmeric, Guar Seed Non-Agricultural - Gold, Silver, Crude, Copper and Power

Markets
Markets were common place for determining prices based on supply and demand factors Historically, brokers or intermediaries have played an important role in commodity markets The basics of commodity trading have become sophisticated but the essentials remain the same Agricultural products trading was a foundation on which markets have evolved to its present dynamic operations

Trading of Commodities
Physical Markets / Cash market / Spot market Goods are sold for cash and deliveries are immediate Players in this market are directly involved in the commodity Trading is delivery based Spot price is for immediate or spot settlement

Commodity Agreements Sugar, Coffee, Cocoa, Coconut

New York, May 2004 Lynne Moorhouse

International Commodity Management

An Overview and brief on Important Commodities

Overview
Establish an inter-governmental organization concerning specific commodities Promote non-discriminatory trade, enhance international cooperation, improve commodity economy, encourage increased demand Agreements Limited duration and stringent time limits Increasingly enter into force provisionally Council consists of all members of the organization and is highest authority in the organization
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Council Characteristics
The Council: Establish rules and regulations to carry out provisions of the agreement Set up working groups or committees Establish rules of procedure for Council/Committees Maintains records, prepare annual report Extensions Time Limit: deposit of instruments; extension of the agreement Establish conditions for accession, general and for a particular State Cannot amend the Treaty
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International Coffee Agreement, 2001

Objectives To encourage the development of a sustainable coffee economy To promote coffee consumption To promote quality coffee To provide a forum for the private sector To promote training and information programmes designed to assist the transfer of technology relevant to member countries
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International Cocoa Agreement, 2001

Objectives To promote a sustainable cocoa economy To ensure active involvement of private sector through Private Sector Board To create transparency in world cocoa market through research, analysis and dissemination of relevant statistics To strengthen national cocoa economies

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Provisional Application
A unilateral undertaking by a State to give effect to treaty obligations provisionally
Pursuant to the provisions of a treaty (before or after entry into force of the treaty) Domestic procedural requirements for ratification not completed Provisional application can unilaterally terminated
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International Coffee Agreement, 2001 Participation Case Study

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International Coffee Agreement,2001 Article 43: Signature

This Agreement shall be open for signature at the United Nations headquarters from 1 November 2000 until and including 25 September 2001 by: Contracting Parties to the International Coffee Agreement 1994 or the 1994 Agreement as extended, and Governments invited to the session of t he International Coffee Council at which this Agreement was negotiated
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International Coffee Agreement, 2001 Article 44: Ratification, Acceptance or Approval

(1) This Agreement is subject to ratification, acceptance or approval by the signatory Governments in accordance with their respective constitutional procedures.
(2) Instruments of ratification, acceptance or approval shall be deposited with the SG not later than 25 September 2001.

However, the Council may decide to grant extensions of time to signatory Governments which are unable to deposit their instruments by that date.
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International Coffee Agreement, 2001 Article 45: Entry into Force

Definitive entry into force on 1 October 2001 if ratified, accepted or approved by: 15 exporting members holding 70% of the votes 10 importing members holding 70% of the votes

Alternatively, shall enter into force definitively any time after 1 October 2001 if it is provisionally in force and these percentage requirements are satisfied by the deposit of instruments of ratification,acceptance or approval.
The conditions were not met
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International Coffee Agreement, 2001 Article 45(3): Provisional Entry into Force
Agreement may enter into force provisionally on 1 October 2001 in accordance with paragraph 2 (provisional application) and percentage requirements are satisfied (not met) If the Agreement is not in force definitively or provisionally on 1 October 2001, Governments having deposited instruments of ratification, acceptance, approval or accession or made notifications or provisional application may decide that it shall enter into force among themselves. Entered into force provisionally on 1 October 2001 May also decide that Agreement enters into force definitively 17

International Coffee Agreement, 2001 Article 45(2): Provisional Application

By signatory State or Party to the 1994 Agreement Notification received by 25 September 2001 Regarded as equal in effect to instrument of ratification, etc(for provisional entry into force purposes) Status of provisional Party terminates upon deposit of instrument of ratification, acceptance or approval, or on 30 June 2002, whichever is earlier Council may grant extensions for a provisional Party to deposit instrument of ratification, acceptance or approval
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Accession
If have not signed treaty by deadline, must accede to the treaty
Deposit instrument of accession with depositary Instrument of accession should include acceptance by government to all conditions established by the Council
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International Coffee Agreement, 2001 Article 46: Accession

(1) The Government of any State member of the United Nations or of any of its specialized agencies may accede to this Agreement upon conditions which shall be established by the Council
(2) Instruments of accession shall be deposited with the Secretary-General of the United Nations

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International Sugar Agreement, 1992 Article 41: Accession

This agreement shall be open to accession by the Governments of all States upon conditions established by the Council. . . . Instruments of accession shall state that the Government accepts all the conditions established by the Council.

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Important Things to Remember

If have not signed by the treaty deadline, which cannot be extended in these treaties, cannot: Ratify or Provisionally apply cannot attend provisional entry into force meeting
Only option is to: Accede conditions must be met which may result in delays
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Important Things to Remember

Generally enters into force provisionally by mutual consent of governments which have deposited instruments of ratification, acceptance, approval or accession or made notifications of provisional application Deadlines create confusion Poor drafting creates burdensome work for depositary, confusion for states and the treaty body
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Summary
To To ratify, approve, accept or provisionally apply Must sign by deadline Instrument must be deposited by deadline accede Conditions established by the Council must be transmitted to depositary Instrument of accession must be deposited and contain undertaking to abide by conditions established by the Council Be aware of Council resolutions Can extend certain deadlines (deposit) Cannot amend a treaty provision

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Copyright Notice
Copyright 2001 by the United Nations. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, i.e., electronic, mechanical, photocopying, recording, or otherwise, without the written permission of the United Nations.

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