After breaking down in deadlock last year, negotiators from over 100 nations will try again here this week to hammer out a financial arrangement, called the Common Fund, to stabilize prices and supplies of a wide range of commodities that affect family budgets in the United States and the incomes of frequently hard-pressed producers in the Third World.
As both sides again stake out their positions in one of the most far-reaching negotiations of the "north-south dialogue," there are few indications that this round will end successfully. While a key industralized-country negotiator confides, "We haven't seen much flexibility on the part of the developing countries," a top negotiator for the Third World counters, "The burden (to make a breakthrough) is on them (the rich nations)."
The basic idea is to set up a fund that would serve as a central bank to finance the buying of buffer stocks needed in commodity price stabilization schemes. When prices start moving toward agreed ceilings, the stocks would be sold on the market to bring down prices, and when prices fall too low, stocks would be bought under commodity pacts to push prices back up.
Negotiators from all sides agree on the basic idea, since in theory such an arrangement would insulate consumers and producers from the kinds of wild flucuations in commodity prices that can fuel inflation one year and drive a producer nation into unpredictable trade deficits and recessions the next.
But fundamental differences remain between developed and developing countries over who will pay for the common fund and who will control its operation. Since the breakdown in bargaining last December, only glacial progress in narrowing views has been made.
The developing countries have insisted the money for the common fund - initially $1 billion by their estimate - come from direct government contributions, mainly from industralized nations.
Meanwhile, the developed countries have maintained that each individual commodity pact should put into a pool 75 percent of the money it has collected to pay for buffer stocks.
Both sides have moved, but only slightly, on this central question. On the eve of the talks resuming, a top developing country negotiator says his group is "keeping the line open without sacrificing fundamental principles - you can't have an effective common fund without direct government contributions."
While still insisting on pooled resources from individual commodity pacts to finance the fund, the developed countries now appear willing to at least consider the concept of government contributions, but only as seed money for the fund.They also remain very doubtful, according to a Western negotiator, that the poorer countries can convince them of the economic necessity of such contributions to strengthen the borrowing capacity of the fund.
There also has been a conceptual breakthrough on using the fund for purposes other than buying stocks for price stabilization, but both sides are still far apart on details. During the past year, Western governments have modified their opposition to the fund financing other measures, such as research and development to help poor countries boast commodity exports. But the industrialized countries are arguing that this use of the common fund for "other measures" be more restricted than the Third World would like.
Even worse, according to developing country negotiators, the developed countries insist that contributions for other measures will be voluntary and kept separate from the requirements of the buffer stock fund.
Nor can the rich and poor countries decide on the system of voting within the common fund. While the Third World nations favor one-man-one vote, which would give them overwhelming control, the industralized countries maintain power must be shared to protect their consumer interests. In addition, they probably will be putting up the bulk of the money to get the scheme off the ground.
In an effort to break the logjam, the secretary general of the United Nations Conference on Trade and Development, Gamini Corea, under whose auspices the talks are held, has proposed a $500 million common fund.
While the document may be used as background, it is doubtful it will have much success as a basis for negotiation. Although a key Third World delegate calls the plan "sensible," a Western negotiator thinks it goes "much beyond what the industralized countries could accept" since, among other drawbacks, it advocates direct government contributions to set up the common fund.