International Spice Marketing and the Uruguay Round Agreements

By Nandakumar, T. | International Trade Forum, January-March 1997 | Go to article overview

International Spice Marketing and the Uruguay Round Agreements


Nandakumar, T., International Trade Forum


The overall trade in agricultural products will be significantly affected by the Uruguay Round Agreements. Spices, tropical products making up a small part of this trade, are mostly grown and exported by developing and least developed countries. As these countries have been accorded special and differential treatment, the impact of the agreements on the trade in this product group is expected to be enhanced.

The Agreements on Agriculture, Sanitary and Phytosanitary Measures (SPS) and Trade-Related Aspects of Intellectual Property Rights (TRIPS) will have a direct impact on the spice trade. The Agreements on Safeguards, Technical Barriers to Trade (TBT), and Subsidies and Countervailing Measures (SCM) will also affect the trade. The major areas of impact are briefly summarized below.

Agreement on Agriculture

The Agreement on Agriculture lays the foundation for reducing distortions in agricultural trade and for the gradual establishment of a fair and market-oriented agricultural trading system. Member countries have agreed to adopt new disciplines with regard to market access, domestic support and export competition.

The improvement of market access is generally sought through the tariffication of all nontariff barriers, the binding and reduction of tariffs, and the provision of minimum market-access commitments. However, as the tariffs on spices and spice products in the pre-Uruguay Round period have been low and most spice-producing countries have been exporting spices under special preferential arrangements (such as the Generalized System of Preferences or GSP), the impact of the Agreement on market access for spices may not be significant.

Commitments to reduce domestic support (quantified as the Total Aggregate Measurement of Support or Total AMS) over specified periods are required. Domestic support measures with minimal impact on trade ("green box" measures) are excluded from reduction commitments. These measures include general government services, for example, in the areas of research, disease control, infrastructure and food security; certain direct payments to producers, for example, certain forms of direct income support which do not encourage production, structural adjustment assistance and direct payments under environmental and regional assistance programmes. Other measures that need not be taken into account in the calculation of Total AMS are certain government assistance measures to encourage agricultural and rural development in developing countries and measures that make up a low proportion of the value of production, such measures being below the de minimis level. Most spice-producing countries should be able to maintain some subsidies under the de minimis rule.

The values of direct export subsidies are to be reduced by certain percentages below a specified base level over the implementation period. The quantity of subsidized exports is also to be reduced by varying percentages (lower for developing countries); least developed countries (LDCs) are exempt from this obligation. While the use of export subsidies for products not subject to reduction commitments is prohibited, developing countries may have recourse to subsidies to reduce the costs of marketing exports of agricultural products and the costs of internal transport and freight charges on export shipments.

Agreement on the Application of Sanitary and Phytosanitary Measures

This Agreement concerns the application of measures to protect human, animal or plant life or health. Sanitary (human and animal health) and phytosanitary (plant health) measures are applied to domestic products and products from other countries. By their very nature, these measures may restrict trade.

Member countries have accepted the fact that some trade restrictions are necessary and appropriate in order to ensure food safety (which is a highly emotive issue among consumer groups and environmentalists) and animal and plant protection. …

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