I move "That the Bill be now read a Second Time."
International Common Fund for Commodities Bill, 1981: Second Stage.
Clare): The purpose of the Bill is to approve the terms of the agreement establishing the Common Fund for Commodities and to enable this country to honour its financial and other obligations as a signatory.
We can trace the origin of the fund to the Fourth United Nations Conference on Trade and Development (UNCTAD-IV) held in Nairobi in May 1976 which adopted the Integrated Programme for Commodities (IPC). The main objectives of the IPC are:
— to diversify and expand the processing of commodities in developing tain adequate production and at the same time be consistent with the long-term progress of developing countries;
— to diversify and expand the proccessing of commodities in developing countries and to modernise their marketing and distribution systems.
The Conference on International Economic Cooperation (CIEC) agreed at Paris in June 1977 that a common fund should be established to serve as a key instrument in attaining the objectives of the IPC. A negotiating conference was convened to work out the common fund's functions and structure. After several meetings in Geneva the Agreement Establishing the Common Fund for Commodities was finally adopted there in June 1980.
The basic function of the common fund will be to provide loans to International Commodity Organisations (ICOs) to enable them to intervene in the market with a view to stabilising commodity prices. Let us take the International Natural Rubber Agreement as an example. If there is an excessive supply of rubber on the market the rubber organisation may borrow from the first account of the Fund to purchase some of the excess stock, thus restricting supplies and ensuring a minimum price. Conversely, if the price of rubber begins to rise rapidly stocks may be released onto the market, thereby increasing the supply and preventing the price from rising above an agreed ceiling. In the event both producers and consumers benefit from greater stability of supply and price.
In particular, the fund must be seen as a helpful gesture to the Third World which relies so heavily on the production of primary commodities. It should give some momentum to the various international movements which have evolved in recent years with a focus on the Third World and a clear call for action. I might, for example, refer to the Brandt Commission which reported on international development issues. It declared:
An action programme must be launched comprising emergency and longer-term measures, to assist the poverty belts of Africa and Asia and particularly the least developed countries. Measures would include large regional projects of water and soil management; the provision of health care and the eradication of diseases;... afforestation projects; solar energy development; mineral and petroleum exploration; and support for industrialisation, transport and other infrastructural investment.
It went on:
Such a programme would require additional financial assistance of at least $4 billion per year for the next two decades, at grant or special concessional terms assured over long periods and available in flexibly usable forms. New machinery is required on a regional basis to coordinate funding and to prepare plans in cooperation with lending and borrowing countries. Greater technical assistance should be provided to assist such countries with the preparation of programmes and projects.
We would see the common fund as a significant step in the implementation of such a programme. We have taken an active part in the preparation of the agreement and, being aware of our obligations to the Third World, are glad to be associated with the fund, to contribute to its financial resources and to ensure that it operates effectively.
Deputies will, of course, appreciate that in helping the Third World one is also helping international trade as a whole. Ireland, in common with other developed countries, has a vital interest in market stability for raw materials. In addition, price stability will strengthen Third World purchasing power, so improving international trade generally.
I will now turn to the agreement which forms the Schedule to the Bill. The explanatory memorandum already gives an outline of the content so I do not propose to describe it in any great detail.
The common fund will have two separate accounts, one to be used for market intervention, the other for research and development. The first account will provide credit to international commodity organisations for the purchase of buffer stocks of their respective commodities when supplies reaching the market are excessive, The buffer stocks will be owned and managed internationally. The first account should, in fact, lead to the conclusion of more commodity agreements because ICOs will know in advance that they can get the financial resources required for intervention buying and selling.
The second account will be used to provide loans and grants to ICOs and other designated bodies associated on a continuing basis with the trade, production and consumption of particular commodities. The objective is to promote research and to improve productivity and marketing. For example, developing countries will be encouraged to engage in additional processing of goods within their own territories and greater diversification in production.
The first account will be financed from directly contributed capital, that is, member's subscription to shares, capital guarantees and cash deposits from ICOs associated with the fund, and borrowings from the financial markets. The resources of the second account will consist of an initial allocation from the share subscription to the first account, additional voluntary contributions from members and borrowings. The target set for resources is US $750 million - $400 million for the first account and $350 million for the second account.
Membership of the fund is open to all states who are members of the United Nations or of any of its specialised agencies or of the International Atomic Energy Agency. It will be managed by a governing council and an executive board. Each member state will appoint one governor to the council which will elect 28 executive directors to the board.
The remaining provisions of the agreement are the customary ones for international financial institutions and deal with such matters as the legal status of the fund, immunities from judicial proceedings, interpretation and arbitration procedures, process of amendment and provision for entry into force.
Ireland's commitments to the fund will consist of US $1,000,000 for the purchase of shares in the initial capital of the fund. A portion of this may be transferred to the second account. This country will also provide a voluntary contribution of US $250,000 to the second account. These payments will be spread over a two-year period after the entry into force of the agreement. Besides we will have certain liabilities as members of international commodity organisations associated with the fund. These would consist of the annual membership subscription to each ICO and the provision of guarantees which each member may have to give from time to time as part security for ICO borrowings from the fund.
In conclusion I will summarise briefly the provisions of the Bill. Section 1 defines various terms. Section 2 provides for approval of the agreement. Section 3 contains the financial and other provisions.
Subsection (2) provides for the payment out of the Central Fund of subscriptions for shares in the fund, both the initial shares and those issued subsequent to reviews of the existing levels of paid-in capital.
Subsection (3) provides for the payment, out of moneys provided by the Oireachtas, of an initial contribution to the second account and of later contributions to this account subsequent to reviews of the adequacy of its resources.
Subsection (4) provides for the issue and discharge of guarantees, required by reason of the State's participation in international commodity organisations associated with the fund. Such guarantees are given by means of a ministerial order. This subsection also provides for the repayment, out of voted moneys, to the Central Fund of moneys paid on foot of guarantees.
Subsection (5) provides for the issue and discharge of promissory notes which may be used in part payment of share subscriptions and cashed at the discretion of the fund.
Subsection (6) states that ministerial orders relating to guarantees must be approved beforehand by affirmative resolution of each House of the Oireachtas.
Section 4 provides for the disposal of any moneys received under the agreement. Section 5 provides for payment of administration expenses. The Schedule contains the text of the agreement.
I commend the Bill for the approval of the House.
I must say I am disappointed with the content of the speech of the Minister of State. This is the first issue in the area of development co-operation to come before this House since this Government came to power. I had hoped the opportunity would be used to provide a statement of policy of general intent in the area of development co-operation. Instead the Minister of State has confined himself to a very correct but rather erudite approach. In the light of the major advances made in the area of development co-operation during the term of office of the Coalition Government, I am entitled to be disappointed at htis approach. There are few enough occasions that this House has the opportunity to discuss development co-operation issues and any such occasion should be used to the full. In particular, and speaking from the Opposition benches, I believe we are entitled to know the general thrust and policy of the present Government in the area of development co-operation. The fact that Fianna Fáil's record on development co-operation in the past has been so weak, coupled with the Taoiseach's failure so far to appoint a Minister of State for Development and Co-operation, gives rise to very grave suspicions in this regard.
Debate adjourned.