prime accomplishment appears to have been in the avoidance of cutthroat competition among themselves. The question whether restricting the supply and/or increasing the prices of raw materials can constitute a weapon in the hands of producing countries has two parts: first, whether the producing countries have the cohesion and freedom second, the degree to which we and the other major consuming countries Producer power is conditional on: 2) producer control of over a substantial .share of world production entering into international trade; 2) their having financial resources adequate to cover the loss of export earnings involved in restricting exports; 3) inability of consumers to develop alternative sources of supply in short and medium-term; 5) limited possibilities for substitution by synthetic or other natural materials; and 6) political objectives and economic situations that are similar among producers, a condition which implies that the weapon will generally be wielded with effect only by a relatively small number of producers. While some have argued that the oil rich nations' may underwrite the cartelization efforts of bauxite and copper producers, we dɔ not see a sufficient convergence of interests for such cooperation t ́ take place. The long-run interests of. producers of all raw materials lic in not doing permanent harm to the economic well-being of the industrial countries. They threaten these interests only in extremis as perceived in terms of their own national interest. Only extreme and exceptional circumstances have enabled the Arab producing countries to stand more or less united on prices. On other issues they are still often at odds. Agricultural Products Natural rubber (Tab A) is the most strategic of the major agricultural commodities and now looms more important because the synthetic substitute is currently derived from petroleum, but producers are unlikely to try to improve on current favorable market prospects by joint action. In the long run, they must face renewed competition from synthetics. Industrial Raw Materials No commodity plays as commanding a role in industrialized countries as petroleum and other energy materials. Iron oxe (Tab B) is of special economic and strategic importance. However, since industrial countries themselves account for the bulk of its production and could expand production considerably, it is not likely to be used as a weapon, even though .,an informal group of underdeveloped producing countries has met several times. Of the other major minerals and metals, only copper and bauxite offor producers possibilities for damaging pressure on the major consuming countries (see Tabs C and D for data). The likelihood of such action, however, appears small. They do not have financial resources to bear the burden of a coordinated management of copper and bauxite sold on the international market. Most important, they do not have the close coincidence of political and economic interests that would make a durable common front vis-a-vis the consuming countries. For most minerals and metals -- including lead and zinc the possibility of concerted producer country action appears remote (Tabs E and F). A principal rearon for this is that four industrial - countries account for a large share of production of many minerals and metals - the United States, Canada, Australia and the Republic of South Africa. The USSR is also one of the largest multi-mineral producers. Other minerals are produced by countries that would be highly unlikely partners in producer cartels. For other commodities, ease of substitution precludes restricting supplies. Atomic energy materials present no problem in the foreseeable future. An SCI evaluation of these materials is appended at Tab G. There are a few materials of considerable economic importance for which the US, Europe and Japan are heavily dependent on imports. Europe and Japan do not maintain stockpiles and a review of their potential vulnerability is in order. Vulnerability of Principal Consumers The United States is dependent on foreign sources of supply for many of its requirements of important minerals and non-mineral raw materials (see Tab ). However, we have national stockpiles of most of these commodities which presently offer varying degrees of temporary protection against economic pressures. However, in April of last year; when there was still little awareness of possible supply problems, the Administration proposed legislation to authorize reduction of stockpiles to levels which would dissipate this protection. We are dependent on Caribbean, mainly Jamaican, bauxite for about 90% of our needs; our present stockpile amounts to about eight months' imports. Guyana and Jamaica are trying to organize bauxite producers to deal more effectively with aluminum companies. Cuinea, Surinam and Australia attended the first joint meeting but Australia probably would not and Surinam might not agree to withhold supplies, even if the others were to propose such action. Guyana is nationalizing its industry and Jamaica intends, by actions still undetermined, to increase its revenues from bauxite and alumina exports. The Caribbean producers limited financial reserves and heavy dependence on the United States, Canada, and Western Europe as Markets hot only for bauxite but also their other products rake it unlikely that thage countrier could withhold their bauxite supplies fox an e Caries could not rendaly ijnt other markets 10x its special type of Launiue! By the same token, alumina plants in the US and Canada that are designed to use Jamaican bauxite cannot readily use bauxite from most other sources. New technology offers premise of economic exploitation of large' US deposits of clays and aluminum ores in an uncertain time frame. Copper is not a problem for the US, which is · virtually self-sufficient. Western Europe is dependent on impets for about 90% of its copper, half its bauxite, and 40% of its supplies of iron ore: It is the principal source of only one important metal mercury. For other minerals and metals Western Europe is heavily dependent on imports. - Japan is even more dependent on imports than . Western Europe since it relies on overseas supplies not only for critical minerals and metals but also for food and many other raw materials which the US and Western Europe take for granted. The consumption of key minerals in Japan is larger as a share of GNP than in any other major consuming country and, if past trends were maintained, by 1980 Japan would account for 30% of world mineral imports. While Japan is highly vulnerable, on the producers' side the conditions for concerted action against Japan are not fulfilled. They too are vulnerable and have widely differing views of their political and economic interests. Although close to 50% of the world supply of copper is produced in non-communist developed countries, Japan and Europe are dependent on imports for the bulk of their needs. A producer group in copper (CIPEC) has existed for several years but has thus far not attempted concerted action to influence the market. Countries belonging to CIPEC Chile, Peru, Zaire and Zambia have largely nationalized their formerly foreign-owned industries and assumed a majority share in ownership. Differences among them have been, and prchubly will continue to be, an obstacle to concerted action. With regard to the major consumers of raw materials, a situation of "every man for himself", whether in the face of a real threat to their supplies or caly uncertainty, could be very costly and disnupudva vlaʊngh ampacitive bidding fox supplies. Such beggar-thy-neighbor behavior could, at least in the short-run, give the producers more in price increases than they could get by their joint action. Any depressing economic consequences of raw materials restrictions in one or more of the major consuming areas would have repercussions world-wide, including in the developing countries producing raw materials. In the face of restrictions, burden-sharing would for most materials entail sharing US resources. Role of Communist Countries Most communist countries are trying to expand their exports of raw materials in order to earn the foreign exchange needed to increase their imports · from the Western industrialized countries. For example, the USSR has not been directly supporting the Arab oil restrictions and has continued to export its own oil to Eastern and Western Europe. What the position of the communist countries would be if the Western industrialized countries allowed themselves to become heavily dependent on communist supplies of important commodities is another question. |