SPECIAL AND DIFFERENTIAL TREATMENT in the Doha Work Programme UNCTAD Commercial Diplomacy Programme October 2002 UNCTAD

2 THE BASIC IDEAS BEHIND THE CONCEPT OF SPECIAL AND DIFFERENTIAL TREATMENT (S&D): There are structural imbalances between developing and developed countries in terms of:There are structural imbalances between developing and developed countries in terms of: –share of world trade; –access to financing; –access to technology; –infrastructure weaknesses; –institutional capacity and human resources. UNCTAD

3 THE BASIC IDEAS BEHIND THE CONCEPT OF SPECIAL AND DIFFERENTIAL TREATMENT (S&D)  The trade liberalisation does not automatically imply development nor equitable welfare gains.  Developing countries do not have the same capacity as developed countries in taking advantage of the opportunities created by trade liberalisation. UNCTAD

4 Financing for developmentFinancing for development Development aidDevelopment aid TRADETRADE THE S&D CONCEPT IS APPLIED IN SEVERAL AREAS OF THE INTERNATIONAL ECONOMIC RELATIONS: UNCTAD At the nationalnational bilateralbilateral regionalregional multilateralmultilaterallevels

5 SOME BENCHMARKS IN THE HISTORY OF S&D IN MULTILATERAL TRADE RULES : GATT 1947:GATT 1947: MFN for all members, exc. art.XVIII which allows for flexibility and for tariff protection and QRs in case of balance of payments crisis GATT PART IV (1964):GATT PART IV (1964): the principle of “non- reciprocity” is introduced ENABLING CLAUSE (1979):ENABLING CLAUSE (1979): allows for GSPs, trade agreements among developing countries, S&D for LDCs TOKYO ROUND (1978):TOKYO ROUND (1978): plurilateral codes as a way to implement S&D URUGUAY ROUND (1994):URUGUAY ROUND (1994): the “single undertaking” does not allow for opt-in/opt-out rules DOHA MIN.DECL.(2001):DOHA MIN.DECL.(2001): paras. 44 on S&D, on LDCs, and 35 on small economies (plus the Decision on Implementation Issues) UNCTAD

6 The evolution of the concept of S&D Until the Tokyo Round: border barriers S&D was meant to avoid these barriers through preferences. The trade agenda focused on border barriers (mainly tariffs): S&D was meant to avoid these barriers through preferences. development tool S&D was conceived as a development tool to help the exports of developing countries Until the Tokyo Round: border barriers S&D was meant to avoid these barriers through preferences. The trade agenda focused on border barriers (mainly tariffs): S&D was meant to avoid these barriers through preferences. development tool S&D was conceived as a development tool to help the exports of developing countries During and after the Uruguay Round: « within the border » barriers The trade agenda focused on « within the border » barriers (domestic measures) and trade- related obligations: S&D was mant to fulfill them. adjustment tool S&D conceived as an adjustment tool to fulfill the new rules During and after the Uruguay Round: « within the border » barriers The trade agenda focused on « within the border » barriers (domestic measures) and trade- related obligations: S&D was mant to fulfill them. adjustment tool S&D conceived as an adjustment tool to fulfill the new rules UNCTAD

7 WAYS OF IMPLEMENTING THE S&D IN THE AREA OF TRADE: Transition periods to comply with the rules Different criteria and /or thresholds in the implementation of the rules Exceptions to the rules Technical assistance and capacity building Greater market access (GSPs) “Best endeavour” clauses Positive list approach (GATS) UNCTAD “NEGATIVE” measures (to support the adjustment) (binding rules, enforceable) “POSITIVE” measures (pro- development) (non-binding rules, not enforceable) “POSITIVE” measures (pro- development) (non-binding rules, not enforceable)

8 TWO PARALLEL APPROACHES TO S&D: The defense of the concept per se: Implies a strong political support It is linked to an ideological debate It is linked to the issue of coherence between trade and financing for development The defense of the concept per se: Implies a strong political support It is linked to an ideological debate It is linked to the issue of coherence between trade and financing for development The defense of the concept topic by topic: Implies in-depth technical inputs Implies both legal and economic arguments The defense of the concept topic by topic: Implies in-depth technical inputs Implies both legal and economic arguments UNCTAD

9 Opportunities and caveats of the approach to S&D topic by topic (sectoral): Agriculture:Agriculture: –Divergences among developing countries Services:Services: –Make « pro-development » requests –Attach conditions to your offers Anti-dumping:Anti-dumping: –Many AD cases among developing countries…. Subsidies and TRIMS:Subsidies and TRIMS: –Divergences among developing countries Art. XXIV and Enabling Clause:Art. XXIV and Enabling Clause: –S&D for South/South arrangements only ? Singapore issues:Singapore issues: –S&D may be envisaged in any multilateral framework TRIPS:TRIPS: –Difficulties to implement S&D provisions Market access:Market access: –The pending issue of the erosion of preferences –Applied or bound rates ? UNCTAD

10 1.Provisions aimed at increasing the trade opportunities of developing countries (*) 2.Provisions under which WTO members should safeguard the interests of developing countries (*) 3.Flexibility of commitments, of action, and use of policy instruments 4.Transitional time periods 5.Technical assistance (*) 6.Provisions relating to LDCs (*) (*)= all or several “best endeavour” clauses UNCTAD THE WTO SECRETARIAT’S TYPOLOGY OF THE 155 EXISTING S&D MEASURES:

11 HOW TO ENSURE ENFORCEABLE S&D CLAUSES: BY CREATING CLEAR RIGHTS AND OBLIGATIONS IN THE MANDATORY PROVISIONS OF THE AGREEMENTS, SUBJECT TO THE WTO DISPUTE SETTLEMENT MECHANISM WTO criterion: the “SHALL” language is mandatory (the “should” is not) UNCTAD HOW TO ENSURE ENFORCEABLE S&D RULES: The Preambles, Declarations, some Decisions and footnotes are NOT mandatory The Preambles, Declarations, some Decisions and footnotes are NOT mandatory

12  Through AMENDMENTS of the existing provisions (ex.: “should” becomes “shall”)  Through AUTHORITATIVE INTERPRETATIONS (“Understanding on the interpretation” of the rules)  Through the negotiation of a horizontal “FRAMEWORK AGREEMENT” on S&D (para.44 Doha Min.Decl.) HOW TO STRENGTHEN THE S&D PROVISIONS IN THE CURRENT NEGOTIATIONS: UNCTAD

13 THE CATEGORIES OF DEVELOPING COUNTRIES WERE INTRODUCED IN 1979  Least developed countries (LDCs) UN Index (49 LDCs): category recognised by the 1979 GATT Enabling Clause  Landlocked countries  Island countries  Small economies Para.35 Doha Min.Decl.  Net food importing countries Marrakech Min.Decl.  Small suppliers Textiles UNCTAD The issue of GRADUATION...

14 Other problems raised by the S&D issues: Proliferation of trade regimes with different S&D levels The value of the autonomous liberalisation Quality and financing of the trade-related technical assistance Assessment of the utilisation instead of the effectiveness of the S&D: –We need development benchmarks –The role of a monitoring mechanism UNCTAD

15 The state of play in the current negotiations New deadline of 31 Dec.2002 to agree on « clear recommendations » to the General CouncilNew deadline of 31 Dec.2002 to agree on « clear recommendations » to the General Council Only 3 formal meetings scheduled between October and December 2002Only 3 formal meetings scheduled between October and December 2002 Some 90 proposals on S&D are onSome 90 proposals on S&D are on the table the table No consensus (except on theNo consensus (except on the monitoring mechanism) UNCTAD

16 WHAT IS REALLY IMPORTANT: The S&D concept is part ofThe S&D concept is part of the « single undertaking » the « single undertaking » Close links between S&D issues and the implementation issuesClose links between S&D issues and the implementation issues Assess both issues at the 5 th WTO Ministerial Conference in CancunAssess both issues at the 5 th WTO Ministerial Conference in Cancun UNCTAD

17 UNCTAD THANK YOU !...QUESTIONS ? THANK YOU !...QUESTIONS ?