2. Global Business Environment
CUN110501021
International Commodity Agreement
An international commodity agreement is an undertaking by a group of countries to stabilize trade,
supplies, and prices of a commodity for the benefit of participating countries. An agreement usually
involves a consensus on quantities traded, prices, and stock management. A number of international
commodity agreements serve solely as forums for information exchange, analysis, and policy discussion.
USTR leads United States participation in two commodity trade agreements: the International Tropical
Timber Agreement and the International Coffee Agreement (ICA). Both agreements establish
intergovernmental organizations with governing councils.
International Coffee Agreement
The International Coffee Organization (ICO) is the main intergovernmental organization for coffee. ICO
exporting members account for more than 97 percent of world coffee production, and it’s importing
Members, are responsible for around 80 percent of world coffee consumption. The ICO makes a
practical contribution to the world coffee economy and to the improvement of living standards in
developing countries by facilitating intergovernmental consultation and coordination regarding coffee
policies and priorities, by encouraging a sustainable world coffee economy, by initiating coffee
development projects to add value and improve marketing, by increasing world coffee consumption
through innovative market development activities, by promoting the improvement of coffee quality, by
working closely with the global coffee industry through a 16 member Private Sector Consultative Board,
and by ensuring transparency in the coffee market with objective and comprehensive information on
the world coffee sector by means of statistics and market studies.
The United States led recent efforts to renegotiate the ICA, and the text of the seventh International
Coffee Agreement (ICA 2007) was adopted by the International Coffee Council on September 28, 2007.
The new ICA is designed to enhance the ICO's role as a forum for intergovernmental consultations, to
increase its contributions to meaningful market information and market transparency, and to ensure
that the organization plays a unique role in developing innovative and effective capacity building in the
coffee sector. Among the features of the new agreement is a first-ever "Consultative Forum on Coffee
Sector Finance" to promote the development and dissemination of innovations and best practices that
can enable coffee producers to better manage financial aspects of the inherent volatility and risks
associated with competitive and evolving markets. Other notable changes include expanding the
organization's work in providing relevant statistical and market information and strengthening efforts to
develop, review and implement capacity building projects that are particularly important to small-scale
farmers in key developing country trading partners.
3. Global Business Environment
CUN110501021
International Tropical Timber Agreement
The International Tropical Timber Agreement (ITTA) is often described as a "hybrid" agreement because
it combines a traditional commodity trade agreement with objectives that include sustainable
management of tropical forests. The ITTA established the International Tropical Timber
Organization (ITTO), an intergovernmental organization with 59 members who collectively account for
about 80 percent of the world's tropical forests and 90 percent of the annual trade in tropical timber
trade. The ITTO promotes market transparency by collecting, analyzing and disseminating data on the
production and trade of tropical timber; assists in developing, funding and implementing projects and
other activities to build capacity to sustainably manage and use tropical forests; and facilitates
intergovernmental consultation and international co-operation on issues relating to the trade and
utilization of tropical timber and the sustainable management of its resource base.
Negotiations for a successor agreement to the ITTA 1994 were concluded in 2006, and the new
agreement (ITTA 2006) is expected to further strengthen efforts to promote tropical timber trade in the
context of sustainable management of tropical forests.
4. Global Business Environment
CUN110501021
Global System of Trade Preferences (GSTP)
The Agreement establishing the Global System of Trade Preferences (GSTP) among Developing countries
was signed on 13th April, 1988 at Belgrade following conclusion of the First Round of Negotiations. The
GSTP came into being after a long process of negotiations during the Ministerial Meeting of the Group of
77, notably at Mexico City in 1976, Arusha in 1979 and Caracas in 1981. The Ministers of Foreign Affairs
of the Group of 77 in New York set up the GSTP Negotiating Committee in 1982. The New Delhi
Ministerial meetings, held in July 1985, gave further impetus to the GSTP negotiation process. The
Brasilia Ministerial Meeting held in May 1986 launched the First Round of GSTP Negotiations. At the
conclusion of the First Round in April 1988 in Belgrade, the GSTP Agreement was signed on 13 April
1988. The Agreement entered into force on 19th April 1989. Forty-four countries have ratified the
Agreement and have become participants. The GSTP establishes a framework for the exchange of trade
concessions among the members of the Group of 77. It lays down rules, principles and procedures for
conduct of negotiations and for implementation of the results of the negotiations. The coverage of the
GSTP extends to arrangements in the area of tariffs, para-tariff, non-tariff measures, direct trade
measures including medium and long-term contracts and sectoral agreements. One of the basic
principles of the Agreement is that it is to be negotiated step by step improved upon and extended in
successive stages
The GSTP Negotiating Committee at the Senior Officials’ level also met at Accra on the sidelines of the
UNCTAD XII Ministerial Conference and agreed on; a) participants agreed to carry out negotiations on
the basis of across-the-board, line-by-line, linear cut of 20 to 40 per cent on dutiable tariff lines, to be
combined with request-and- offer and/or sectoral negotiations; and b) agreement was reached among
participants to assume commitments on at least 70% of dutiable tariff lines.
Membership
Current members’ states, participating since 19 April 1989, is: Bangladesh, Cuba, Ghana, India, Nigeria,
Singapore, Sri Lanka, Tanzania, and Zimbabwe
Additionally current members states are: Algeria, Argentina, Benin, Bolivia, Brazil, Cameroon, Chile,
Colombia, Ecuador, Egypt (16-07-89), Macedonia, Guinea, Guyana (04-05-89), Indonesia, Iran, Iraq,
North Korea, South Korea (11-06-89), Libya, Malaysia (31-08-89), Mexico (13-05-89), Morocco (13-07-
89), Mozambique, Myanmar, Nicaragua (03-05-89), Pakistan (08-07-89), Peru (15-04-89),Philippines,
Sudan, Thailand, Trinidad and Tobago, Tunisia (25-08-89), Venezuela, Vietnam and the trade bloc of
MERCOSUR (2-11-2006)
Applicants are: Burkina Faso, Burundi, Haiti, Madagascar, Mauritania, Rwanda, Suriname, Uganda and
Uruguay.
