UK SEEKS GREATER INDIA SAY IN TACKLING GLOBAL COMMODIRTY CRISIS

London, Jun 22 (PTI) The United Kingdom has called for
India to be given greater say on the global stage, including
at forums like World Bank, I.M.F. and G8, to help tame
inflation in the worldwide commodity prices.

"Open and constructive dialogue is essential if the
causes of high and volatile prices and their impact are to be
tackled," the U.K. Treasury Ministry said in a note analysing
the trends and drivers in commodity markets that have led to
recent increase in commodity prices.

"To help achieve this, the shape and role of the
international institutions needs to be reformed. This should
include offering countries such as China, India, South Africa,
Mexico, Brazil and other emerging countries a greater role on
the international stage, including with the G8, the I.M.F. and
the World Bank," the Treasury said.

The Treasury is the U.K.'s Economics and Finance Ministry
and is responsible for formulating and implementing the
government's financial and economic policy.

It has also called for wider reform of the U.N., while
noting that developing regional institutions have a role to
play as well, including the E.U., the Association of South
East Asian Nations, and the African Union.

The Treasury has also noted surge in demand from emerging
nations such as China and India for commodities like oil, coal
and edible commodities such as meat, dairy and vegetable oils
as some key demand pressures for the global commodity markets.

"Global oil demand has been on an upward trend since the
mid-1980s, and has increased by 10 per cent since 2002...
unlike episodes in previous decades where demand growth in the
advanced economies had driven changes in world oil demand, the
emerging markets particularly China, India and the Middle East
have propelled recent demand growth," it said.

On food commodities demand side pressures, the report
said, "Beyond the structural effect of population growth, a
recent driver of demand has been the effect of rising per
capita incomes, particularly in China and India, which tend
to shift consumer preferences towards more protein products
such as meat, dairy and vegetable oils."

Besides, it has also taken note of export restrictions in
India amogst the policy-driven developments contributing to
the recent surge in global commodity prices.

On coal, the Treasury said that the demand-supply balance
within the coal market is expected to improve by around 2010,
putting downward pressure on coal prices, but in the longer
term, the strength of Chinese and Indian coal demand will add
increasing pressure on producers to increase supply.

The document outlines the UK's long-term vision for
ensuring efficient and effective global commodity markets, the
Treasury said.

In a foreword for the paper, U.K.'s Chancellor of
Exchequer Alistar Darling said that recent rises in the
commodity prices and their volatility has therefore had an
impact across the world, affecting almost all people and
presenting a challenge to the international community.

"The implications of continuing instability and
uncertainty are wide ranging and far reaching: economic,
social, political and environmental. Ensuring stable, secure
and sustainable global commodity markets is therefore an
urgent international priority. It requires action in the
short, medium and long term; and it requires action at the
national, regional and international level," Darling noted.

Over the past six months significant increases in global
oil and food prices have led higher fuel and supermarket
bills, driving inflation around the world, the Treasury said.

While noting that for most of past 50 years, commodity
prices have fallen in real terms with demand and supply rising
in tandem, the paper said this "this trend has been punctuated
by a number of significant supply side shocks."

"In recent years, most prices have risen sharply... the
expert views and market expectations reviewed here suggest
that prices are likely to remain higher than their historical
averages, if lower than todays levels, with continuing and
perhaps more frequent shocks, driven by continuing strong
demand and a continuing slow supply response."

"This demands a strong response at a national and
international level to protect the poor and continue
sustainable economic growth," the report said.

Taking note of World Bank predictions about world grain
production needed to rise by 50 per cent to meet demand by
2030 and the oil demand projections by International Energy
Agency, the Treasury said that supply will face continued
pressure to keep up.

"As the impacts of climate change increase, volatility
and supply shocks will continue in the coming years and
decades, most likely with increased frequency."

The Treasury has sought action by the international
community at national, regional and international level based
on six principles of Economic stability, Openness,
Cooperation, Innovation and investment, Fairness and Climate
change.

The paper has advocated for allowing markets to
function effectively, removing tariff barriers and export
subsidies and restrictions, promoting structural reform and
allowing all countries to trade.