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SPECIAL AND DIFFERENTIAL TREATMENT FOR THE DEVELOPING COUNTRIES IN THE WTO
Jane Nalunga
January 2003
The idea of ‘Special and Differential treatment ‘ (S&D) goes back to 1947 to the initial attempts to cast the foundations of the international trading system. The preamble of the WTO agreement recognises the special needs of developing countries originally embodied in the Havana Charter. The provision for the Least Developed Countries (LDCs), stipulates that they will only be required to undertake commitments and concessions to an extent consistent with their development, financial and trade needs, or their administrative and institutional capabilities.
With the broadening of the multilateral trade agenda, deepening liberalisation and the widening gap between the rich and poor nations within the WTO, the issue of S&D is of fundamental importance, especially to developing countries.

Types of S&D
S&D provisions may be categorised in two ways.
i) exceptions to the overall rules that apply to developed countries in the system.
ii) positive actions in favour of developing countries that are required by developed countries or by the WTO and other organisations.
Hesham Youssef* has identified the following six types of S&D provisions depending on the nature of the action required:

• those requiring developed countries to safeguard the interests of developing countries when adopting certain measures
• those mandating or requesting support measures to developing countries, including financial and technical assistance either by developed countries, the WTO or other international organisations
• those aimed at enhancing trading opportunities for developing countries, through providing more favourable access to the markets of developed countries
• those giving developing countries some flexibility and policy discretion including granting them more favourable thresholds or exempting them from obligations or disciplines that apply to developed country members
• those providing for some safeguard-type measures, i.e. giving assurance to developing country members that if they face difficulties, they will be able to resort to policies and measures that will assist them in addressing those difficulties
• those granting limited derogation from the application of rules. These allow developing countries to derogate from commitments for specific time periods, with conditions that vary from one agreement to another and may also differ between developing and LDCs. At the end of these transitional periods, developing countries will generally have similar obligations to those of developed countries.

Importance of S&D to developing countries:
The initiative for multilateral trade negotiations has so far come from developed countries and as a result the agreements reflect their priorities and objectives and are full of imbalances and deficiencies. For example the Trade Related Investment Measures (TRIMs) Agreement addresses the interests and rights of investors but has nothing regarding the obligation of investors.
The deepening of liberalisation commitments and the broadening of the multilateral trade agenda has led to agreements being concluded in a number of areas critical to the national development of the developing countries, necessitating sufficient flexibility to adopt appropriate policies to protect their economies.
Owing to their development challenges, many developing countries are unable to participate effectively in the WTO processes and negotiations. Thus the results reflect the interests of the developed countries. They also have difficulty in implementing the agreements and in adequately understanding their rights and obligations.

Implementation of S&D under the WTO
While the principle of S&D for developing countries has been accepted and a number of provisions are stated in the various agreements, trade and trade-related negotiations still start from the premise that the same rules should apply to all. Only through the bargaining process will S&D be accorded to developing countries, in line with the principle of Single Undertaking. The implementation of the S&D provisions has also proven difficult in practice, as they are either unclear, or for various reasons have not been utilised by the developing countries.
In practice S&D means little more than longer implementation time frames and exemptions for the poorest countries. Technical assistance, one of the major S&D provisions is limited to workshops and seminars, thus falling short of the kind of assistance required by developing countries.
There is growing pressure to limit the coverage, scope and duration of S&Ds. More advanced developing countries (Peru, Argentine and Brazil) are being urged to forfeit certain S&D rights and safeguards which they can presently use, while developing countries applying to join the WTO are being pressurised to forego S&D provisions. IMF/WB policy prescriptions often contradict S&Ds enshrined in the WTO.

S&D in the Doha Agenda
The Doha Ministerial Declaration reaffirmed the provisions of S&D as an integral part of the WTO Agreements, endorsed the work programme on S&D treatment set out in the Decision on Implementation-Related Issues and Concerns. It also mandated the Committee on Trade and Development to look into ways of reviewing all S&D provisions with a view to strengthening them and making them more precise, effective and operational. A number of proposals have been made, including joint proposals by the Africa Group, the Consultative Group of LDCs, and the Like Minded Group.

Proposals for the improvement of S&D
1. There is need to examine whether the present S&D provisions can achieve their objectives and if not, how they can be developed to do so; to examine the actual implementation of all S&D provisions in various WTO agreements; and to ensure coherence in the overall approach to this issue.
2. Make S&D provisions enforceable by converting the ‘shoulds’ to mandatory obligations of ‘shalls’.
3. A monitoring mechanism should be established. This would; regularly evaluate the effective utilisation of S&D provisions; make recommendations for appropriate improvement in the rules; provide a forum for member consultations designed to ensure compliance with S&D provisions.
4. S&D and graduation from it should be determined by development benchmarks, not arbitrary timetables.
5. S&D should be a permanent and integral feature of WTO rules.
6. Capacity building activities should go beyond workshops and seminars and technical missions. These activities should address the supply-side constraints of developing countries and build domestic skills in all WTO sectors.
7. Developing countries now in the process of accession to the WTO should not be forced to forego S&D provisions.

Developing countries have now gained practical experience in both negotiating and in the implementation of the agreements, both in their domestic policies and through their participation in international trade. S&D is a cross-cutting issue where all developing countries have a shared interest and therefore have the scope to press their demands in a coordinated manner as a group. Developing countries must formulate a practical and pragmatic strategy for the on-going negotiations, so that S&D is further developed and improved to meet the challenges they face in the ever broadening multilateral trade agenda.

References:
1. South centre (June 1999) Trade – Related Agenda, Development and Equity ((T.R.A.D.E) Working Papers, Special and Differential Treatment For Developing Countries In The WTO, South Centre, Geneva
2. Bhagirath Lal Das (1998): The WTO Agreements, Deficiencies, Imbalances and required changes. Third World Network.
3. ECDP, ICTSD and ODI (Vol. 1, issue No.3 September 2002) Trade negotiations Insights, From Doha to Cotonou.
4. The Doha Declaration and The Decision on Implementation – related issues and Concerns.

Footnote
* Hesham Youssef (June 1999): South centre (June 1999) Trade – Related Agenda, Development and Equity ((T.R.A.D.E) Working Papers, Special and Differential Treatment For Developing Countries In The WTO, South Centre, Geneva



            
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