After the seven years of haggling between 108 countries known as the Uruguay Round of the General Agreement on Tariffs and Trade, a final accord has been reached on the liberalization of global trade, which cannot fail to affect the food sector.
The agreement represents a major breakthrough in the dismantling of protection for agricultural production worldwide. It provides a framework for the long-term reform of agricultural trade and domestic farm policies over the years to come. The partial reduction of tariff duties and the progressive elimination of subsidies on agricultural products will result in an additional contribution to global wealth of some $200 billion, according to the Organization for Economic Cooperation and Development.
With the elimination of export subsidies and the reduction of farm surpluses, world prices of several agricultural products will increase over the next few years. But for categories of agricultural products hampered until now by restricted access to outside markets, competition should toughen and result in lower prices.
In the manufactured goods sector, the agreement provides for further tariff reductions, but also for the replacement, by tariffs, of several restrictions of a nontariff nature affecting market access.
These measures liberalizing the exchange of agricultural and nonagricultural products will clearly favor developing nations. They will be the winners of the seven-year Uruguay Round marathon: Technical progress will allow important productivity gains in their agriculture and those among them that have a dynamic manufacturing sector will benefit from easier access to developed countries. New sourcing opportunities not available prior to the signing of the agreement will be offered to importers, wholesalers and retailers from developed countries. Consequently, many Asian and Latin American countries should be among the winners. For the first time, the service sector and to some extent the food distribution trade also will benefit from a number of measures eliminating restrictions or discriminatory treatment of their access to foreign markets.
Of major interest are the obligations with respect to recognition requirements for the purpose of securing authorizations, licenses or certification. Also of interest are provisions eliminating restrictions on the kind of legal entity or joint venture through which a service is provided or any foreign capital limitation relating to maximum levels of foreign participation. The temporary entry of personnel should be facilitated under this part of the agreement.
For developing countries, the GATT agreement thus contributes indirectly to a more favorable climate for the development of sophisticated food distribution systems and the involvement of wholesalers and retailers. Those distributors that already have decided to export their expertise and technological know-how to these new markets have additional reasons to believe in their success. Those that have not made up their minds yet should not lose time.
Etienne Laurent is president and chief executive officer of CIES -- The Food Business Forum, a trade association based in Paris. That organization and Supermarket News are unaffiliated.