to the Federal Reserve System on monetary matters). d. Arrangement 4: U.S. Participation in Multinational or International Economic Stockpile. This is the first of two collective arrangements which might provide benefits to the United States. An economic stockpile operated by two or more nations, either multinational or international in nature, could be formed along such existing political or organizational lines as the Organization of American States (OAS), the European Economic Community (Common Market), the United Nations, or just with friendly nations having materials requirements similar to those of the United States. At present the United States is conducting several discussions/negotiations which do consider this arrangement: the UNCTAD discussions within the United Nations, and the International Energy Agency. The cost of establishing and maintaining such a collective stockpile would be spread among the participants and would thus be less for any one government. The stockpile would not take as much material out of use as would separate national economic stockpiles which might further exacerbate the spiraling world shortage. The stockpile might have less effect upon specific materials prices. than separate unilateral actions. And, finally, the participating nations would have to work closely together in order to make the stockpile work successfully. The greatest disadvantage would be the possible loss of control and sovereignty over the U.S. resources and actions. e. Arrangement 5: U.S. Participation in Producer/Consumer Council Economic Stockpile.-Another form of collective stockpiling could be achieved by the creation or expansion of producer/consumer councils like the International Tin Council which is run by both producers and consumers and main tains its buffer stock to help stabilize the supply and price of tin. The benefits and costs of arrangement 5 are the same as for arrangement 4, but in addition to these there is another important benefit: an economic stockpile operated by a producer/consumer council attacks the basic cause of the materials availability problem and thereby could provide a long-term solution to specific materials problems by developing policies which are acceptable to producers and consumers, exporters and importers, developed countries and lesser developed countries. In this sense, option 5 requires even stronger cooperation among international participants than option 4. Also like option 4, though, such agreements could take a considerable amount of time to implement. f. Arrangement 6: Economic Stockpile Controlled by U.S. Government, but Operated According to International Guidelines. This arrangement could combine the advantages of arrangements 1, 2, and 4. As with option 1, the only time constraints in implementing this sixth option would be those required to create the legislation and acquire the optimal quantity of materials. Moreover, certain elements of options 2 and 4 could be introduced by specifically defining the use of the economic stockpile in the form of an "international code of operations for economic stockpiles." This code could be introduced as the announced policy of the United States and expanded on an international basis as needed. Option 6 would recognize the fact that some national economic stockpiles are being created, but that some countries like Germany have not implemented them because of serious concern regarding their impact on domestic and world market systems. An international code of operations might help reduce this concern, as well as develop effective mechanisms for alleviating U.S. supply problems without increasing the world shortage. C. PUBLIC POLICY ISSUES RELATED TO ESTABLISHING AN ECONOMIC STOCKPILE Whatever position regarding economic stockpiling is taken by Congress and the President, the detailed consideration necessary to develop that position will highlight a number of important and interrelated public policy issues which merit careful attention. Not only will the implementation of a national economic stockpiling policy involve significantly large amounts of public money, the impacts of such a policy will be unevenly distributed throughout the U.S. economy. While the existing market system will in most cases be able to deal effectively with materials problems, it is simply unable to compensate for supply disruptions and price increases which could be imposed by an international political organization like OPEC. Based on the overall impacts analysis, the public policy issues summarized below suggest both the diversity and the intensity of conflict which could be aroused and which would have to be resolved if an economic stockpile were implemented as part of a national materials strategy. (1) Should an economic stockpile be implemented in concert or in conflict with other United States materials policies? For example, how should the planning of an economic stockpile be coordinated with the International Tin Council, which the United States has just joined, or with the long-term grain agreements with the U.S.S.R., or with the discussions now underway with the lesser developing nations regarding materials supply and prices? (2) What agreements with other industrialized, as well as less developing, nations will be required in order for an economic stockpile to provide the greatest benefit to U.S. citizens? (3) How can an economic stockpile be designed and operated so that it will not be misused for financial advantage by special-interest groups? How can it be sufficiently insulated from the political process to obviate its misuse, yet insure that it will achieve the public benefits for which it was established? (4) What measures can be taken to insure that an economic stockpile will not be used to accomplish public policy objectives other than those for which it was established? For example, a stockpile established to deter cartels should not be used to stop domestic labor strikes or to control domestic prices. (5) Under what conditions, and to what degree, is it justifiable for the Federal Government to intervene in the market place in the form of an economic stockpile? Should such intervention be used to require that industry disclose private, proprietary information to the Federal stockpile managers? And if so, what assurances will be taken to protect the privacy of such information? (6) What is the real potential for future supply disruptions and price increases? What is the expected impact (i.e., benefits and costs) of such economic dislocations upon the U.S. economy in general and sectors of U.S. society in particular? What is the cost of insuring against such dislocations? For example, will the acquisition of large amounts of materials like petroleum or chromium compensate for such shortages, or will it stimulate the already spiraling inflationary rate? Second, are the expected benefits of an economic stockpile sufficiently greater than the cost to warrant the expenditure of large amounts of public money and if so, how will this money be obtained? (7) What measures will be taken to ensure public participation in the planning of an economic stockpile? Is such involvement necessary? Further, if the public is involved, what measures will be taken to maintain the |