Negotiators from more than 100 nations agreed early this mo6rning to the basic elements of a common fund to stabilize world commodity prices.
But an interim committee will have to meet to resolve one outstanding issue -- American disapproval of the fund's allocation of voting shares.
Other industrial countries have agreed somewhat reluctantly that the developing countries could control 47 percent of the fund's votes compared with 42 percent for themselves. But the U.S. is opposed because it fears such a superiority could become a precedent for other international financial institutions such as the International Monetary Fund because the developed countries are putting up so much of the capital for the fund. The U.S. is insisting that votes be shared on a 45-45 percent basis between Western and developing countries, with the rest of the votes going to the Socialist nations participating in the fund.
The numbers are virtually irrelevant, however, except as for symobols because the package also provides that major financial decisions by the fund require a 75 percent majority of total votes cast.
Aside from the voting controversy, however, negotiators have managed, after extensive and often frustrating bargaining, to hammer out the basic framework for the common fund, including its objectives, financial structure and organization.
There has been agreement that the banking side of the fund to stabilize commodity prices will be launched with $400 million coming from governments and that the fund will provide $370 million to finance other measures to help commodity producers.
The common fund will facilitate the buying of buffer stocks needed in commodity rice stabilization pacts. When prices start moving toward agreed-upon 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 have agreed on the basic idea from the start, because in theory such an arrangement would insulate consumers and producers from the kinds of wild fluctuations in commodity prices which can fuel inflation one year and drive a producer nation into unpredictable trade deficits and recession the next.
But for over a year of drawn-out bargaining, negotiators from the rich and poor countries could not agree on the basic nature of the fund. Industrial nations argued that the fund should be based essentially on individual commodity arrangements that would supply the major share of the fund's capital. The developing countries maintained that the fund should rely heavily on direct government contributions.
The compromise which has emerged seems to tilt toward the developing countries' point of view. Although part of the common fund would be made up of pooled contributions from individual commodity arrangements (ICA), $400 million will be paid into the fund by direct government contributions. In another compromise between the rich and poor countries, an ICA would need to put in cash only one-third of its maximum financial requirements with the fund before it can have borrowing privileges.
Despite the protracted haggling over the common fund's provisions on stocking arrangements, in practice the more significant feature will be the so-called "second window" of the fund, which will help poor countries boost commodity exports by aiding research and development and other measures. Today's agreement calls for $370 million for this side of the common fund.