1. SPECIAL AND DIFFERENTIAL TREATMENT in the Doha Work Programme UNCTAD Commercial Diplomacy Programme Jul y 2002 UNCTAD

2. 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. 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. 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. 5 CATEGORIES OF DEVELOPING COUNTRIES (AND DIFFERENT IMPLEMENTATION OF S&D) WERE INTRODUCED IN THE 80’S:  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

6. 6 SOME BENCHMARKS IN THE HISTORY OF S&D IN MULTILATERAL TRADE RULES : GATT 1947: same treatment for all members, exc. art.18GATT 1947: same treatment for all members, exc. art.18 (flexibility and for tariff protection and QRs for infant industries and 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): allows for GSPs, trade agreem. b/w developing countries, and S&D for LDCsENABLING CLAUSE (1979): allows for GSPs, trade agreem. b/w developing countries, and S&D for LDCs TOKYO ROUND (1978):TOKYO ROUND (1978): plurilateral codes as a way to implement S&D URUGUAY ROUND (1994): the “single undertaking” does not allow for opt-in/opt-out rulesURUGUAY ROUND (1994): the “single undertaking” does not allow for opt-in/opt-out rules DOHA MIN.DECL.(2001): paras 44 on S&D, 42-43 on LDCs, and 35 on small economies (plus the Decision on Implementation Issues)DOHA MIN.DECL.(2001): paras 44 on S&D, 42-43 on LDCs, and 35 on small economies (plus the Decision on Implementation Issues) UNCTAD

7. 7 ARGUMENTS AGAINST S&D: Arguments against S&D were raised during the 80s in industrialized as well as in developing countries: At the level of trade negotiations: diversity among developing countries makes the design of S&D mechanisms difficult; S&D is part of the “ideological baggage” superseded by the processes of liberalization and globalization; S&D works as an unnecessary “crutch” for developing countries as it hinders their insertion in world trade on competitive terms; At the national level in the developing countries themselves: S&D has favoured some enterprises, distorted trade, and encourages subsidies which are no longer sustainable. UNCTAD

8. 8 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 (binding rules, enforceable) “POSITIVE”measures (non-binding rules, not enforceable) “POSITIVE”measures (non-binding rules, not enforceable)

9. 9 Provisions aimed at increasing the trade opportunities of developing countries (*)Provisions aimed at increasing the trade opportunities of developing countries (*) Provisions under which WTO members should safeguard the interests of the developing countries (*)Provisions under which WTO members should safeguard the interests of the developing countries (*) Flexibility of commitments, of action, and use of policy instrumentsFlexibility of commitments, of action, and use of policy instruments Transitional time periodsTransitional time periods Technical assistance (*)Technical assistance (*) Provisions relating to LDCsProvisions relating to LDCs (*)= “best endeavour” clauses UNCTAD THE WTO SECRETARIAT’S TYPOLOGY OF THE 155 EXISTING S&D MEASURES:

10. 10 IN THE ON-GOING WTO NEGOTIATIONS THREE CHALLENGES HAVE EMERGED FOR DEVELOPING COUNTRIES CONCERNING S&D: To consolidate a “political platform” in favor of S&D, acknowledging the necessity of mechanisms and criteria to compensate for the imbalances between developing and industrialized countries. To ensure the implementation and the effectiveness of S&D provisions (transform “best endeavour” clauses into enforceable obligations). To update the national position on S&D according to the new world economic context and national development policies. UNCTAD

11. 11 HOW TO ENSURE ENFORCEABLE S&D CLAUSES: CREATE CLEAR OBLIGATIONS FOR THE DEVELOPED COUNTRIES 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, Decisions and footnotes are NOT mandatory The Preambles, Declarations, Decisions and footnotes are NOT mandatory

12. 12 REQUIREMENTS TO UPDATE THE NATIONAL POSITIONS ON S&D: A national and sectoral evaluation of costs and benefits of the S&D based on criteria such as the:A national and sectoral evaluation of costs and benefits of the S&D based on criteria such as the: –importance of preferential access to markets for the main exports; –need for longer implementation periods and greater flexibility in the implementation of multilateral rules; –impact and utility of technical assistance provided for in the S&D; –analysis of other examples of S&D (Andean Community, FTAA, Mercosur, Lomé IV, European Union, treatment to LDCs, etc.). UNCTAD

13. 13 0Through AMENDMENTS of the existing provisions (ex.: “should” becomes “shall”) 0Through AUTHORITATIVE INTERPRETATIONS (“Understanding on the interpretation” of the rules) 0Through 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

14. 14 DiscriminationDiscrimination (different treatments, different categories of countries) Graduation criteriaGraduation criteria utilisationthe effective utilisation of the transition periods and flexibility impactthe impact of S&D provisions “positive” or “negative” measureseach area of the trade agenda needs a different kind of S&D : “positive” or “negative” measures non-bindingthe non-binding nature of technical assistance and other “best endeavour” clauses implementation issueslink with the implementation issues. UNCTAD PROBLEMS RAISED BY THE S&D PROVISIONS:

15. 15 àFocus on the “positive” measures and not only on the “negative” ones àPreserve “policy spaces” in the trade rules àLook for the “commercial value” of S&D (for ex. in agriculture, fisheries, textiles, rules of origin) àAssess the quality of the technical assistance provided and link it to the new obligations àElaborate “development benchmarks” or “development needs tests” issues-based rather than country-based àEnlarge the mandate of the WTO-Committee on Trade and Development to monitor the S&D provisions. UNCTAD POSSIBLE NEW APPROACHES TO S&D:

16. 16 UNCTAD THE STATE OF PLAY (MID-JULY 2002) Work started in April 2002: no consensus on the interpretation of the Doha mandate in the Special Session of the Committee on Trade and Development. Work started in April 2002: no consensus on the interpretation of the Doha mandate in the Special Session of the Committee on Trade and Development. 2 mandated areas of work: 2 mandated areas of work: -(1) make « operational and effective » the EXISTING S&D provisions; -(2) prepare a « framework agreement » on S&D. Deadline of 31 July to make proposals on (1) to the GC. Deadline of 31 July to make proposals on (1) to the GC. Factual report being prepared by the Chairman since there is no consensus on the substance nor on the procedure. Factual report being prepared by the Chairman since there is no consensus on the substance nor on the procedure. Possibly a « monitoring mechanism » on S&D. Possibly a « monitoring mechanism » on S&D.

17. 17 SOME CONCLUDING REMARKS defend the concept of S&D for all developing countries; formulate clear rights and obligations on S&D; establish mechanisms and operational criteria which take into account: –structural imbalances (which cannot be solved with transition periods); –supply weaknesses of developing countries; –and the effective results of the S&D. Ensure that the Doha Work Programme has a tangible “development content”. – It is important to It is important to: UNCTAD

18. 18 UNCTAD THANK YOU !...QUESTIONS ? THANK YOU !...QUESTIONS ?