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The problem of our age is growing economic disparity between developed and industrialized country on the one hand, and the developing world on the other. WTO deals with the amelioration of condition for trade and investments. The problem facing the WTO is how to do a better job of integrating developing countries and their specific concerned into its work. This is a particularly urgent task now that two-thirds of the memberships of the WTO fall into the developing country classification. The failure of the trade of less developed countries to develop as rapidly as that of industrialized countries had been a concern in the history of GATT/WTO. The developing countries play a key role in the WTO: the recognition of their political power now that they comprise a majority of WTO members and of that trade liberalization is beneficial rather than detrimental to economic development.
The Trade liberalization within a framework of internationally agreed rules benefits developed and developing countries alike, and the WTO has called for special attention to developing countries to increase trade and investment. Also it has set Special and Differential Treatment Provisions (S&D) for Developing Countries. The first WTO Ministerial Conference in 1996 adopted the following declaration: the integration of developing countries in the multilateral trading system, improvements of the availability of technical assistance and the possible negative effects of the agricultural reform program on least-developed and net-food-importing developing countries. The consecutive WTO Ministerial conferences also declared a plan action: adaptation of an Integrated Framework for trade-related assistance to least-developed countries, provision of market access in product areas of particular concern to developing countries such as agriculture and textiles, provision of additional special and differential treatment provisions in WTO agreements to benefit developing countries as well as technical assistance to increase the capacity of developing countries to implement WTO obligations and to participate more fully in the WTO.
Recently about one of the most important issues facing the world trading system and the WTO coming to terms with the mixed claims of developing country members of the WTO, or more generally working out the relationship between the rules of the trading system and development. The centrality of development to international trade is recognized in the very name of the current multilateral trade negotiations. The Doha Round was launched with the Doha Development Agenda. The failure at Cancun was based at least in the view of some on a rift between developed and developing states . There emerged from Cancun a 'Group of 21' or what is now 'Group of 20 plus', a coalition of developing states that wanted a round that reflected their concerns. But the roots go deeper than that. The Uruguay Round is often represented as a betrayal. Developing countries agreed to TRIPS in exchange for a liberalization of agricultural and other trade that never eventuated. This has not only been an impediment to the new Round, it has also affected the functioning of the WTO.
Developing countries account for seventy-five percent of the membership of the World Trade Organization (“WTO”) and are increasingly able to use their power to influence negotiations traditionally dominated by developed countries. Although the organization operates on a one-country-one-vote basis and on a consensus mechanism (which formally also considers members on an equal basis), the reality of negotiations and of the decision-making process is much more complex and susceptible to the arbitrage of economic power. As a result, in most instances, developing countries have to act in coalitions in order to gain sufficient leverage and some developing country members have little if any voice if they do not ally with others. Despite their increased number and activity in the WTO, developing countries still find themselves in a relatively marginalized position and experience difficulties in linking their development agenda to multilateral trade negotiations.
The recent emergence of a multitude of developing country coalitions reflects fundamental changes in the landscape of developing country positions in the General Agreement on Tariffs and Trade ("GATT") and the WTO and shows that such coalitions are beginning to change the organization's dynamics. For instance, the Hong Kong Ministerial meeting signaled some progress on issues of interest to developing countries largely as a result of a coordinated approach by developing countries under the aegis of larger developing states such as India, Brazil, and Egypt. The increasing heterogeneity of developing countries and their diverging interests also is reflected in the plethora of coalitions. Coalition strategies therefore appear promising for developing countries but they face serious hurdles. Developing country coalitions have received some attention in the field of political science and international relations
The Perform of Developing Country Coalitions In The Gatt And WTO:This Part sets forth the factual base of the analysis by identifying the coalitions and group bargaining that have taken place in the GATT and later in the WTO. Colleen Hamilton & John Whalley defines the term “coalition” is used here as a neutral categorical denomination, which comprises several subsets. Coalitions have been described as “any group of decision-makers participating in a negotiation and who agree to act in concert to achieve a common end,” Narlikar distinguishes between two broad types of coalitions. On the one hand coalition “rest on the fulfillment of the self-interest of members and their inability to dislodge members from other alliances to form a more beneficial coalition.” They are typical of realist politics driven by power considerations and trade-offs. In the field of political economy, alliance-type coalitions are “among self-interested actors as opposed to collective identities,” are driven by instrumental rather than ideological motives, and are focused on specific issues addressing specific threats in lieu of building an ideological quorum that "hopes to be relevant to all situations.” On the other hand, blocs are based on a common ideology or political vision; they combine like-minded states and emphasize a collective identity. Most coalitions combine characteristics of each type.
Part I.A presents a map of the most important coalitions in the GATT and WTO.
Part I.B reviews theoretical conclusions of recent publications on developing country coalitions in the WTO.
o Developing Country Coalitions in the GATT and WTOIn the first few decades of the GATT, the place and strategy of developing country members was largely influenced by the political, economic, and strategic context beyond the GATT. As a result, developing country coalitions reflected these external concerns and agendas much more than they have since the Uruguay Round. Country groupings up to the Uruguay Round and shows that they operated both in the framework of the GATT and beyond, particularly in the context of the United Nations Conference on Trade and Development (“UNCTAD”) and emerging Regional Trade Agreements (“RTAs”). This configuration is also a reflection of the place of the GATT in the international legal system at the time. The polarization in the WTO and the receding role of other agencies, in particular UNCTAD, has resulted in the emergence of coalitions that are active almost exclusively within the WTO. In a peculiar paradox, as WTO law has been mainstreamed into public international law, developing country coalitions have, on the contrary, become more WTO-specific, often paying little regard to activities in other institutions of international law 1.
GATT Strategies Prior to the 1990s, coalitions were influenced in large part by the North-South and East-West relations that characterized the Cold War, either because they were part of the East-West geo-strategic map or because they were in clear opposition to that bipolar division of power (most notably the Non-Alignment Movement). The strategies of developing countries in the GATT in the 1960s and 1970s must be read in the broader context of their activity in UNCTAD, which reflected their desire to promote economic and development interests separately from East-West trade and political positions. Alongside the major movement by developing countries leading to the creation of UNCTAD, some alliances also were motivated by common economic policies and geographic proximity. The largest and most notable coalition of that era certainly was the Group of Seventy-Seven ("G-77"), formed within UNCTAD, but many of its members also were parties to the GATT. Indeed, developing country coalescence around issues of common interest found its paramount expression in the Joint Declaration of the Seventy-Seven Developing Countries at the conclusion of the first session of UNCTAD in Geneva on June 15, 1964. While the Joint Declaration endorses the outcome of the first UNCTAD conference, it highlights that much remained to be done and that the conference's achievements were seen as a beginning rather than an end.
The call for international cooperation in the field of trade to solve development problems and for the establishment of an “international machinery” to that effect is very much reminiscent of both the wording and the spirit of the International Trade Organization ("ITO") Charter. The G-77's Algiers Charter of 1967 discusses, in technical detail, declining terms of trade, loss of purchasing power and general economic stagnation of developing countries, rising debt problems, insufficient technology transfers, increased protection by developed countries of agricultural products, developed country tariffs on tropical products and quotas on products from developing countries, and increased protectionism in developed countries through economic integration processes. Later, the G-77 evaluated the results of the GATT's Tokyo Round of negotiations (1973-1979) in a Declaration on the Multilateral Trade Negotiations, coming in large part to a negative conclusion . The coalition strategy of the G-77 and UNCTAD nevertheless led to the creation of the Generalized System of Preferences ("GSP") and the Enabling Clause of 1979 that laid the groundwork for special and Search Term Begin differential treatment Search Term End of developing Search Term Begin countries, Search Term End non-reciprocity, and preferential South trade.
These legal instruments still constitute the core of development-oriented provisions in the GATT and Search Term Begin WTO. Search Term End Other alignments, though not formal coalitions were motivated by similarities in economic policies. The import substitution policies followed by many Latin American Search Term Begin countries Search Term End and some Asian Search Term Begin countries Search Term End from the 1960s to the early 1980s are prominent examples of such alignments. These economic policies consisted of inward-looking trade policies and resulted in defensive positions at the GATT. Other Search Term Begin countries, Search Term End such as Brazil, India, and Egypt, led the developing Search Term Begin countries' Search Term End momentum in obtaining more preferences from developed Search Term Begin countries Search Term End and exceptions to the negotiated agreements as well as derogations to foster preferential South-South trade at the margins of agreements chiefly negotiated by industrialized Search Term Begin countries Search Term End for their own purposes.
The Informal Group of Developing Search Term Begin Countries ("Search Term End IGDC") represented an important bloc-type coalition united by a common rejection of the perceived "rich man's club" aspect of the GATT and a political approach to the issue of international trade. Its leadership included Argentina, Brazil, Egypt, India, and Yugoslavia as well as other important members such as Chile, Pakistan and Uruguay. It became one of the most important developing country groups in the GATT to push for exceptions to trade disciplines (ultimately formalizing as special and differential treatment). It had some success in the mid 1950s when it pushed for an amendment to Article XVIII allowing the use of quotas for balance of payment purposes (“Article XVIII:B”) and later, in coordination with UNCTAD and the G-77 for the inclusion of Part IV and the adoption of the Enabling Clause.
However, the track record of this coalition reflects many of the problems encountered by developing countries in the GATT; aside from a few broad themes, their agenda, like their membership, was too diverse to allow effective bargaining, and the fallback position of seeking exclusions tended to marginalize the coalition's members in negotiations. Given the exclusion during the Tokyo Round of crucial developing country exports from further tariff reduction, some developing countries individually sought quotas for their exports on a bilateral basis to secure market access for their products in developing countries. These strategies were pursued, for instance, by Hong Kong, Taiwan, Korea, India, Mexico, the Philippines, Singapore and Brazil with respect to textiles and a few other exports. The return to separate bilateral agreements was not conducive to coalition bargaining and was even a divisive factor among developing countries that were competing against each other to secure market shares in large developed countries.
The Association of Southeast Asian Nations ("ASEAN") Geneva Committee, formed in 1973, included Hong Kong, Indonesia, Malaysia, Thailand, Singapore, Philippines, and Brunei. Despite the low-level regional integration of the group as a regional economic organization and the lack of formal institutions, it proved remarkably effective in coordinating issues within the membership. Narlikar credits this success to the group's relative internal cohesion, common economic interests, and similar geo-strategic concerns arising from their proximity to China. This specific identity was likely further enhanced as the Newly Industrialized Countries rapidly diverged from the traditional Southern views and interests.
To summarize, developing country coalitions in the first few decades of the GATT were not confined to the GATT itself, but rather, reflected a broader political and economic agenda mindful of international dynamics in other international forum. This accounts for the fact that the GATT was by no means the omnipresent and global organization that it became during and after the Uruguay Round. The relatively small number of active coalitions may also be explained in part by the fact that decolonization was in full swing, so that a large number of ‘new’ developing countries emerged throughout the 1960s and 1970s. This constantly evolving scene of new actors could more easily aggregate around a large and diverse group such as the G-77 than it could form smaller resource-intensive coalitions driven by specific interests. The Uruguay Round marked a shift from North-South opposition to a pragmatic, issue-based bargaining approach, with many coalitions bringing together developed and developing countries.
The mid-1980s marked the heyday of coalitions in the GATT. This evolution was prompted both by dynamics internal to the GATT negotiations with the massive expansion of its field of regulation and the surge in membership (most former Soviet-bloc countries became members by the end of the Uruguay Round bringing membership to 128), and by external factors such as the end of the East-West confrontation, the subsequent realignment of the South, and the reorientation of economic policies in a number of developing countries in favor of trade-oriented policies. The divergent positions of developing countries regarding services was perhaps the first and most stark instance of developing countries realizing that their individual interests were not necessarily represented by the traditional Third World stance that had infused the positions of UNCTAD and the G-77, within and outside of the GATT. The IGDC created a forum for exchange of information and the development of research on trade and, particularly, services.
This marked an important shift from the earlier political and ideologically motivated involvement in trade negotiations to participation focused on trade regulations. This was accompanied by the recognition that developing countries do not constitute a homogeneous group. For instance, some developing countries realized that they had an interest in the international regulation of services because much of their economy relied on service industries (typically transport and tourism); others planned to use a softer stance on services as a bargaining chip to obtain other concessions; and others perceived no immediate interest in services but used the issue to form alliances . Some members from the IGDC institutionalized their position as the G-10 in 1982. The group of Developing Countries on Services also opposed the inclusion of services in the negotiations and focused on development issues. A common problem of both the G-10 and the Developing Countries on Services was that their members brought together a broad range of heterogeneous issues, which made for a relatively amorphous and politically unsustainable agenda.
Ultimately, this approach significantly weakened the coalitions. Other developing countries were more open to the inclusion of services in the negotiations and formed alliances with developed countries culminating in the brokerage of a deal between the traditional stance of the South embodied by the G-10 hardliners and the equally hard-line position spearheaded by the United States at the Punta del Este Ministerial Meeting . The G-20, also dubbed the "Cafe au Lait" coalition, formed in 1983 during the run-up to the Uruguay Round as another spin-off from the IGDC, later aggregated with the G-9 under the leadership of Columbia and Switzerland. It continued to some extent as Friends of Services during the Uruguay Round. The alliance between the G-20 and the G-9 is one example of coalitions bringing together developed and developing countries, a feature of several important coalitions during the Uruguay Round. Finally, several regionally based coalitions emerged during the round.
The Latin American Group produced some joint documents and the ASEAN Geneva Committee became a significant player. Despite diverging individual economic priorities (particularly on services) ASEAN members were successful in promoting a coordinated platform emphasizing the opening of commodity markets and some specific demands in certain sub-sectors (such as increased liberalization in telecommunications and financial services). Aside from the European Communities ("EC"), which began negotiating as a group early on in the existence of the GATT, the ASEAN strategy presented a relatively novel configuration. The nature of the participation of developing countries in GATT negotiations changed quite radically in the run-up to and during the Uruguay Round, with an increase in the quality and quantity of their involvement.
Accordingly, the type of coalitions that they formed evolved from the ideological and political polarization of the previous decade toward a preference for alliances focused on issue-bargaining (most prominently agriculture and services). India and Brazil initially maintained a more traditional stance, but Brazil finally joined the pragmatic approach when it engaged in domestic liberalization in the mid-1990s . However, the active minority of developing countries should not obscure the vast majority of poor members that did not have the resources to participate effectively, either at home or in Geneva. It is also possible that the poorest developing countries were disinclined to use whatever scarce resources they might have had in negotiations that appeared forlorn once it was ascertained that they were unlikely to obtain immediate concessions on agriculture and textiles.
Trade Law Instruments Impact On Developing Country CoalitionsWTO as an institution, with governing rules and practices, has an important impact on the formation and sustainability of developing coalitions, that the impact can be either positive or negative, and that legal mechanisms could be envisioned to support developing country coalitions. Trade law instruments, both within the framework of the WTO and at its margins, also have an impact, and perhaps even an overriding one, on developing country coalitions.
o Competing for Preferences: A Polarizing Factor for Developing Country Coalitions
Preference systems are unilateral programs whereby a country (typically rich and industrialized) grants more favorable treatment to products originating from other countries (often former colonies or countries with which the grantor wishes to foster privileged trade and political relations) than it gives to other trade partners. This is normally prohibited by the GATT under the MFN clause. GSP were formally legalized under the GATT as a derogation to the MFN clause on a temporary basis in 1971 and the provision was made permanent in 1979 through the Enabling Clause as a result of pressure by developing countries in the GATT and the UNCTAD.
Despite the Enabling Clause's requirement that preference programs be generalized and non-discriminatory, grantors simply continued their programs or implemented new ones without further scrutiny from the GATT until the recent case opposing India to the EC. Although the final word on the exact value of preferences to beneficiaries is still to be determined, it has been established that the policy has benefited some countries while imposing costs on others . Some non-beneficiaries therefore want either to gain access to the regime, or want the regime amended so that it will not place them at a comparative disadvantage. In particular, medium-income developing countries which have gained relatively more than their poorer counterparts from the multilateral trade process have increasingly found themselves adopting positions divergent from those of African, Caribbean, and Pacific ("ACP") and Least Developed Countries (LDCs), on the question of preferential access to rich country markets. Initiatives on duty-free access to exports from LDCs were greeted with skepticism by some developing countries in the Doha Round.
Recent disputes arising from developed countries' preference schemes have crystallized competition between groups of developing countries. Two cases will be discussed in some detail here: the dispute between India and the EC on the latter's preference program, and the dispute between the United States (effectively acting as a proxy for some Central American countries) and the EC on the importation of bananas under the latter's preferential program. A third case, on shrimp imports to the United States, will be briefly addressed because it involves a unilateral regime allowing market access to some developing countries but not all, as with traditional preferential schemes. In the recent case between India and the EC, India challenged the legality of the EC's new GSP programs, specifically the programs that offered supplemental preferences to countries that met certain standards on environmental protection, labor rights, or that the EC found to fight drug trafficking (so-called Drug Arrangements).
India argued that restricted eligibility for these programs constituted an impermissible discrimination in violation of Article I:1 of the GATT, but it ultimately restricted its complaint to the Drug Arrangements. Aside from the legal dispute and the political undertones in the context of post-September 11 geo-strategic alignments, India also may have been concerned that Pakistan, a beneficiary under the Drug Arrangements, would gain an advantage in its exports of textiles to the European market to the detriment of India's competing industry. The EC argued that the scheme was consistent with the Enabling Clause authorizing preferential schemes or, alternatively, with the general health exception of Article XX(B) of GATT 1994. The panel found in India's favor and concluded that "because the Drug Arrangements are inconsistent with Article I:1 of GATT 1994 and not justified by Article 2(a) of the Enabling Clause or Article XX(B) of GATT 1994, the EC has nullified or impaired benefits accruing to India under GATT 1994.
The EC appealed and the Appellate Body upheld India's victory, albeit on slightly different grounds. Specifically, it found that the Enabling Clause's mention of non-discrimination nonetheless allowed a differentiated treatment of developing countries on the basis of objective criteria corresponding to the development objectives mentioned in the Enabling Clause. According to the Appellate Body, the Drug Arrangements failed the non-discrimination test on that basis. The legal grounds for this case illustrate the problem of competition between developing countries for preferential treatment, and their fear that more favorable access by a competitor might lead to trade diversion. An examination of third country participants gives further insights into the dynamics of coalitions and competition. Twenty-five countries participated, in addition to India and the EC.
The Andean Community (a term used by the Panel to describe the joint participation of Bolivia, Columbia, Ecuador, Peru and Venezuela) submitted a brief arguing that the Drug Arrangements properly fell within the scope of preferential systems contemplated by the Enabling Clause and that the Enabling Clause was not a waiver or exception to the MFN obligation of GATT Article I:1, but rather constituted a self-standing regime. On appeal the Andean Community reiterated its interpretation of the Enabling Clause as a self-standing regime and argued in the alternative that the reference to non-discrimination only prohibited discrimination between similarly situated developing countries. The Central American beneficiaries of the EU scheme also participated as a group in written and oral proceedings.
Their argument in support of the Drug Arrangements emphasized that support for their efforts to combat drug trafficking addressed an important development need as contemplated by the Enabling Clause. Costa Rica, despite being a member of the Central American Free Trade Agreement along with the other members of the Central American group, filed separately in favor of the EC. Its argument, particularly on appeal, also differed from the Andean Community's position in that Costa Rica rejected the need to rely on drafting history to interpret the relevant portions of the Enabling Clause. Panama (also a beneficiary of the Drug Arrangements) participated individually. Its position on the legal status of the Enabling Clause as a stand-alone regime is similar to the Andean Community's argument, but its non-discrimination argument is policy-based, rather than legally-based. Pakistan, as noted above, is a beneficiary of the Drug Arrangements, but its geo-strategic and economic positions vis-à-vis India were equally at stake in the dispute. Its brief responds to India's claim that Pakistan was included in the Drug Arrangements as a matter of EC politics, rather than in response to Pakistan's development needs. Pakistan apparently did not make additional submissions on appeal.
Mauritius presents an interesting case, as it is a frequent beneficiary of EC preference schemes, but is excluded from the Drug Arrangements. Nevertheless, it argued that the Drug Arrangements were “consistent with the provisions of the Enabling Clause, as they provide for non-discriminatory treatment to products originating from developing countries where the same conditions prevail” and also reiterated the EC's argument regarding Article XX(B). Political alignment with the EC, rather than self-interest in the issue at stake, could explain this position. The United States limited its participation in the case to technical matters, a somewhat surprising approach given the possible implication of the case for the United States' own preferential programs with political components. On appeal, the United States supported the EC's arguments on the relationship between the Enabling Clause and GATT Article I:1, as well as on the meaning of non-discrimination. In contrast, Paraguay sided with India, so much so that they both were represented by the same counsel.
Much as including Pakistan in the Drug Arrangements exacerbated the regional rift with India, excluding Paraguay generated political tensions with neighboring Andean countries that were beneficiaries of the arrangements, such as Bolivia. Without specifically referring to its regional situation, Paraguay argued that it “has suffered and continues to suffer from the discriminatory treatment accorded by the European Communities” to certain developing countries and that the cost of preferences granted to others is borne by those countries that are excluded from the schemes. The argument is explicitly framed in terms of competition between developing countries for preferences and the ensuing disadvantages borne by excluded countries. Like India, Paraguay appears concerned about trade diversion. Paraguay also makes the political argument that under the European practice “the GSP would be an instrument to exercise undue influence toward developing countries by granting tariff preferences selectively. This in turn would transform the GSP from an instrument of generosity of developed countries into a perversion of the GSP that is detrimental to the developing countries.” The number and diversity of these briefs shows that political and regional alignments between countries with similar interests can falter in the face of legal issues that affect their own trade position vis-à-vis powerful partners.
In the GSP case, although Paraguay is situated similarly to India, it will be unable to join forces with India to retaliate against the EC should the latter fail to comply with the decision. Because of the requirement of initial consultations prior to the establishment of a panel, a country may not be able to jump on the bandwagon of an existing case as a co-complainant or co-respondent once a panel has been established. As a result, a country wishing to become a co-complainant would have to institute parallel proceedings on the same legal issue. Such was the case in the disputes between the United States and India on patent protection and the subsequent case between the EC and India on the same issue. The EC could have recourse to enforcement mechanisms (if it prevailed on the merits) only if it joined the initial proceedings as a co-complainant with the United States, but it could not do so because it first had to consult with India.
Therefore, the EC instituted separate proceedings against India. On other hand India unsuccessfully argued that it was very burdensome for it to deal with these two parallel proceedings. The lessons of these experiences are two-fold. First, the current procedures impose a significant burden on developing countries that find themselves in the respondent's position and are faced with multiple cases on the same claims by countries with much larger technical and financial resources than themselves. A reasonable stay in the first proceedings giving an opportunity to any other Member state to join as a co-complainant after expedited consultation would allow other interested parties with similar claims to join as co-complainants and preserve access to the enforcement mechanisms.
The possibility of a waiver of the requirement for consultation by the respondent developing country could also resolve the problem. Such adjustments would allow for a more efficient allocation of resources in a consolidated case by developing country respondents. Second, if developing countries find themselves in the complainant position these proposed procedures would also alleviate the burden of litigating multiple cases on the same issue. More significantly, if they prevail, it would allow them to combine their economic weight in potential enforcement measures.
Special And Differential Treatment In International Trade LawAs defined by Dr. Jayagovind in his article that conceptually, S&DT can take the following four forms:
1. Coordinated measures between developed and developing countries which positively help the latter.
2. Exemptions for developing countries from a general rule so as to provide them with some autonomous policy space.
3. Imposition of comparatively lesser obligations on developing countries taking into account their relatively weaker position.
4. Provision of a relatively longer period of time to developing countries to comply with the general obligations.
The coordinated measures envisaged under (1) imply the transfer of resources from developed to developing countries. In the context of international trade, international commodity agreements and generalized system of preferences are examples of this coordinated approach. In the present state of international relations, where there is insufficient community spirit, it is very difficult to implement this type of measure. Article XVIII of the GATT, an example of the second type of special treatment, provides for a special regime for developing countries to manage there balance of payments problems and to promote industrialization. The Agreement on agriculture and the Agreement on Subsidies and Countervailing Measures forming the part of WTO agreement are good example for the third kind of special treatment; for they impose lesser obligation on developing countries.
The agreement on Trade related Aspects of Intellectual Property Rights, permitting developing countries to avail a longer period of time to comply with the obligations under the agreement, illustrates the fourth type of special treatment.
In the present day, according to the WTO Secretariat, there are at least 97 S&DT provisions scattered in various Uruguay Round Agreements. An examination of the origin and development of S&DT provisions reveals a noticeable difference between the pre-Uruguay round understanding of the concept and the post-Uruguay round understanding and practice. The basic problem today is not so much the number of S&DT provisions there are, but persisting uncertainty regarding the legal status of most of the pro-visions and the general lack of implementation.
History of S&DT
A. Pre-Uruguay Round SDT (1947-1986)
Essentially, S&DT in the pre-Uruguay Round period had three main prongs: enhanced (preferential) market access to developed country markets for products originating in the developing world under the Generalized System of Preferences, special right of developing countries to adopt market protective measures for balance of payment purposes and to shield their infant industries from foreign competition, and exclusion from some GATT disciplines.
Although eleven out of twenty-three original founding members of GATT would have been considered developing countries , the original GATT, as negotiated in 1947, did not recognize the special situation of developing countries.
This was not surprising given that MTS rested firmly on the principles of universality (uniformity) of rights and obligations, and non-discrimination and reciprocity in trade relations; developing countries did not have much say in the constitutive treaty that birthed GATT .GATT was constituted long before the wave of decolonization that took place in the 1960s and gave birth to the majority of the countries that now make up the WTO. Moreover, in 1947, the priorities and processes of GATT were determined by the North a fact that earned GATT its early reputation as a “rich men's club.” In addition, as originally conceived, GATT was essentially a trade policy forum designed to facilitate reduction of barriers to trade; it was not designed nor programmed to respond to the development concerns that developing countries sought to foster upon it. Changes gradually began to occur about 1954. Between 1954 and 1986, four main provisions of GATT and related instruments dealt with special rights and protection for developing countries. These are: Article XVIII, Article XXVIIIbis (iii), Part IV of GATT, and the Enabling Clause.
The first major change occurred in 1955 following the 1954-55 Review Session and came in the form of amendment to Article XVIII entitled “Governmental Assistance to Economic Development.” It was an acknowledgment that developing countries faced serious balance of payment (BOP) problems and that protection of infant industry was needed to address this problem. Permissible market protective measures included the following: quantitative restrictions to trade for BOP purposes, tariff increases on imports to protect infant industry, and broad flexibility in policy options. The word “developing country” did not appear in the amendment; rather, reference was made to contracting parties the economies of which can only support low standards of living and are in the early stages of development. The Contracting Parties recognized that in order to promote the establishment of particular industry to raise general standard of living, designated countries might be allowed to maintain flexibility in their tariff structure and to apply quantitative restriction for balance of payment purposes.
Specifically, the revision allowed designated countries to withdraw or modify negotiated concessions if the party considers it desirable in order to promote the establishment of a particular industry with a view to raising the general standard of living of its people , and it relaxed the conditions developing countries had to satisfy in order to impose import quotas under Article XVIII (B). Also, in 1955, the reciprocity requirement relating to tariff negotiations was eased with the adoption of Article XXVIII of GATT.
The 1955 review session, however, failed to address a number of issues important to developing countries, such as the issue of agricultural protectionism in developed countries, low export earnings, and wide fluctuations in the prices of commodity products. Some of these issues were taken up in the twelfth session of the GATT Contracting Parties in 1957 and as a result, a panel of experts was established to examine trends in international trade.
In 1964, Part IV, entitled “Trade and Development” and comprising three new Articles--XXXVI, XXXVII and XXXVIII was added to GATT. Part IV emphasized the need for preferential market access for goods from developing countries and essentially called for lower tariff rates on products originating in a developing country and destined for developed countries' markets.
Part IV was a recognition by GATT contracting parties that trade and development were inextricably intertwined and a concomitant willingness to address development issues within an inter-national trade regime. In Article XXXVI, contracting parties agreed that there was a “need for a rapid and sustained expansion of the export earnings of the less-developed contracting parties,” a need “for positive efforts designed to ensure that less-developed contracting parties secure a share in the growth in international trade commensurate with the needs of their economic development,” and a need "to provide in the largest possible measure more favorable and acceptable conditions of access to world markets" for primary products of less-developed countries, given these countries dependence on the exportation of a limited range of these products. Additionally, under Article XXXVI, contracting parties recognized a need for “increased access to markets under favorable conditions for processed and manufactured products of particular interests to less-developed contracting parties.” The Article also formally recognized the concept of non-reciprocity.
To give effect to Article XXXVI, developed contracting parties of GATT agreed to “accord high priority to the reduction and elimination of barriers to products of particular export interest to less-developed contracting parties,” “refrain from introducing, or increasing the incidence of, customs duties or non-tariff import barriers on products of particular export interest to less-developed contracting parties,” and to “refrain from imposing new fiscal measures which would hamper, or which hamper, significantly the growth of consumption of primary products, in raw or processed form produced in the territories of less-developed contracting parties.” Article XXXVIII approved the principles and objectives for granting trade preferences to products from developing countries. The broad principles included, increasing export earnings of developing countries, promoting industrialization in developing countries, and accelerating economic growth in developing countries .
Part IV “opened the door for preferential treatment of developing countries in international trade rules” and “provided some flexibility in relation to the notion of strict reciprocity” by firmly asserting the principle of non-reciprocity.
Despite its laudable objectives, Part IV did not legally bind members to any concrete actions for accomplishing stated objectives. Moreover, although Part IV asserted the principle of non-reciprocity, the exact meaning of the term was never too clear. Non-reciprocity appeared to mean that in the course of trade negotiations, developing countries would generally not be expected to make contributions inconsistent with their individual needs. Yet, as the World Trade Report 2003 rightly notes, just like the concept of S&D, "a definition of reciprocity or its inverse has eluded the precision that might have avoided some of the debates which continues to dominate the discussions of developing countries participating in the trading system.”
The Tokyo Round (1973-1979) led to the adoption of the Decision on Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries (the Enabling Clause) on November 28, 1979. The Enabling Clause provided a permanent legal basis for S&DT under GATT agreements, provided for certain aspects of regional or global preferential agreements among developing countries, and provided a legal basis for the continuation of Generalized System of Preferences. The Enabling Clause also called for more favorable treatment for developing countries in other GATT agreements and for special treatment for the least developed developing country.
Institutionally, several changes occurred between 1947 and 1986 including, the establishment of the Committee on Trade and Development in 1964, the establishment of the International Trade Centre also in 1964, and the Establishment of Working Group on Preferences in 1965, a creation of the Committee on Trade and Development. On a different front, the first United Nations Conference on Trade and Development in 1964 led to the creation of UNCTAD, an organization that was instrumental in injecting development concerns into the global trading system, at least in the early days.
In conclusion, between 1947 and 1986, the MTS witnessed significant evolution in thinking about the relationship between trade and development and changes in the substantive provisions of GATT pertaining to developing countries. SDT during this period focused on two core areas: preferential access for products from developing countries and right of protection. Preferential market access was considered a necessary response to the inequality of consumer markets among GATT members. Equally, members considered the introduction of temporary restrictions, under which developing countries could protect their economy and engage in economic growth, as politically and economically necessary.” Both prongs were anchored in the tacit understanding that the principle non reciprocity or less-than full reciprocity in concessions and commitments was needed if developing countries were to realize their development goals.
The basic trust of the various reforms was to give developing countries room to promote their national development goals, to provide flexibility in relation to the notion of strict reciprocity, and to afford them a chance to gain improved market access to developed countries' markets despite their weak bargaining position. For most developing countries, however, the gains were marginal at best. The exact content, scope, and legal status of the SDT provisions were not altogether clear. As Constantine Michalopoulos rightly observed, the GSP turned out less than it was touted to be at its inception," and despite the ample flexibilities, it was evident that "all was not well in the international trade rules governing developing country trade.
B. Post Special and Differential Treatment under the Uruguay Round Agreements (1986- 1994)The Uruguay Round negotiations brought many changes to substantive provisions of GATT agreements dealing with S&DT. While there appeared to be general recognition of the problems developing countries faced and an acknowledgment that S&DT was a central part of the MTS, there was little commitment to broadening the concept of S&DT. In the course of the Uruguay Round negotiations, the notion that developing countries needed radically different treatment from those accorded developed countries changed. Consequently, the “major innovation arising from the Uruguay Round negotiations was the adoption of identical commitments applying to all members irrespective of their level of development.” The "Single Undertaking Approach," a guiding principle of the Uruguay Round, also meant that all members were subject to the same set of trade rules.
While S&DT in the pre-Uruguay Round period denoted both an access and a right to protect, key features of the results of the Uruguay Round negotiations included: (i) a shift in focus from development concerns to implementation concerns; in other words, the emphasis was on ensuring that developing countries implemented their commitments through the provision of time extensions, technical assistance, and compensations; (ii) erosion of the non-reciprocity principle and idea of special treatment; in their place universality and mutuality of obligations and non-discrimination were stressed; and (iii) new restrictions on the ability of developing countries to adopt policies in furtherance of their national industrial development objectives. Overall, the Uruguay Round resulted in "a major revision and roll-back of the traditional international development agenda" of the global trading system.
Post Substantive Changes
S&DT provisions appear in virtually all the Uruguay Round agreements. According to a December 2000 report by the WTO's Committee on Trade and Development, these agreements house about 145 S&DT provisions; of these, 107 were adopted at the conclusion of the Uruguay Round, and twenty-two apply to least-developed country Members only. In terms of typology, the SDT provisions fall into six broad categories:
(i) provisions that are aimed at increasing trade opportunities for developing countries;
(ii) provisions that require WTO members to safeguard the interest of developing country member;
(iii) provisions that allow developing country members some flexibility of commitments, including flexibility in the use of domestic policy instruments;
(iv) provisions that pertain to transitional time periods;
(v) provisions that provide for technical assistance to developing countries; and
(vi) provisions that relate specifically to least developing country members of the MTS.
A complete listing of all these S&DT provisions as they appear in these agreements is beyond the scope of this article. In general, concessions to developing countries were made in a broad range of issue areas, including agriculture, technical barriers to trade, services, dispute settlement, and subsidies/countervailing duties to mention a few. In this section, selected S&DT provisions of Uruguay Round agreements will be discussed using the six-fold taxonomy developed by the WTO Secretariat. Few key aspects of these provisions which effected
a. Provisions That Are Aimed at Increasing Trade Opportunities for Developing Countries
Under this category, the most prominent and most controversial form of S&DT are provisions that call for preferential access to developed countries' market and specify actions to be taken by WTO members in order to increase the trade opportunities available to developing countries. Arrangements such as the generalized system of preferences are covered under this heading, as are other measures aimed at increasing trade opportunities for developing countries. These can be found in various agreements including the Agreement on Agriculture, the Agreement on Textile and Clothing , and the General Agreement on Trade in Services. One problem with category.
(a) Provisions is that most of the provisions are of a best endeavor nature. The result, as the World Trade Report 2003 rightly noted, is that “while some countries have been able to make good use of preferences schemes like the GSP (Generalized System of Preferences) have been of limited utility to most developing countries in terms of expanding their export.”
(b) Provisions That Require WTO Members to Safeguard the Interest of Developing Country Members. These provisions concern either actions to be taken by WTO Members or actions to be avoided by Members, in order to safeguard the interests of developing country members of the WTO. These provisions can be found in about thirteen different WTO agreements, including GATT 1994 (Part IV), the Agreement on Technical Barriers to Trade (TBT) , the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), the Agreement on Textile and Clothing , and the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
(c) Provisions That Allow Developing Country Members Some Flexibility of Commitments, of Action, and Use of Policy Instruments. These provisions specify actions that developing countries may undertake through exemptions from GATT/WTO disciplines, exemptions from commitments, or a reduced level of commitments developing countries may choose to undertake when compared to Members in general . They can be found in about nine different WTO agreements including GATT 1994, the Agreement on Agriculture (AOA), the Agreement on Technical Barriers to Trade (TBT), the Agreement on Trade-Related Investment measures, and the DSU.
(d). Provisions That Pertain to Transitional Time Periods
Provisions under this heading relate to time bound exemptions from disciplines otherwise generally applicable. Provisions relating to transitional time periods can be found in eight different WTO agreements, including AOA, SPS, TBT, and TRIMS.
(e). Technical Assistance Provision
These provisions carry with them the promise of technical assistance to enable recipient countries implement the covered agreement. These can be found in about six WTO agreements, including TBT, TRIPS and the DSU.
(f). Provisions That Relate Specifically to Least Developed Countries (LDCs)
The provisions are unique to the extent that their applicability are limited exclusively to LDCs. Seven different agreements have provisions available only to LDCs; these include TBT, TRIPS, AOA, DSU and GATS.
Overall, although the Uruguay Round agreements contain numerous specific provisions in favor of developing countries, these are of a different nature from those in force under GATT. For the most part, the new pro-visions focus on problems associated with implementing the Uruguay Round agreements rather than on the more important question of barriers to products originating in developing countries and on the development constraints to trade . Emphasis is on granting developing countries transitional periods and technical assistance to enable them “catch-up.” Questions also exist regarding the exact legal status of new S&DT provisions. The result is lack of implementation of agreed provisions.
The major institutional development that occurred between 1986 and 1995 was the establishment of the WTO. With the establishment of the WTO came a more structured organ with powers to periodically review trade policies of Member States and to adjudicate trade disputes between states. The establishment of the WTO has affected discussions about S&DT in two ways. First, the policies of developing countries are under more intense scrutiny today; this means that deviations from trade rules are much more easily detected and that domestic policies are more susceptible to external monitoring and supervision. Second, the establishment of a strong dispute settlement mechanism means that developing countries that violate global trade are more vulnerable to law suits via the WTO dispute settlement mechanism. However, the establishment of a strong dispute settlement mechanism also means that developing countries have more opportunities to call for authoritative clarification of the content and meaning of existing SDT provisions.
From the above discussion it shows a major change in the concept of S&DT occurred in the course of the Uruguay Round negotiations. Although there was an unequivocal reaffirmation of S&DT as a principle of the MTS in the Punta del este Declaration on the Uruguay Round Negotiations, in the course of the negotiations the concept of S&DT “changed from a focus on preferential access and special right to protect, to one of responding to special adjustment difficulties in developing countries stemming from the implementation of WTO decisions.” Essentially, developing countries lost the flexibilities and policy spaces based on their economic conditions that they had hitherto enjoyed. What they “gained” were promises of tech-nical assistance, extension of time within which to comply with agreed rules, and a few agreement-specific concessions.
Several reasons have been advanced to explain the pre-Uruguay Round focus on preferential access and non-reciprocity and the radical changes that were introduced during the Uruguay Round. Five factors help explain the gains that were made between 1947 and 1986: (a) guilt on the part of erstwhile empires and sympathy for newly independent territories, (b) prevailing consensus regarding the type of trade strategy best suited for development, (c) impetus from the United Nations, (d) a strong and united negotiating strategy by developing countries, and (e) the politics of the Cold War. Regarding negotiation strategy, in the early days of GATT, developing countries acted and were treated as one single negotiating block; many were ex-colonies with common histories and similar experiences and problems . Presenting a united front made it easier for developing countries to win concessions. In terms of the trends in intellectual thought during this period, the widely held belief in the 1950s and 1960s was that all developing countries would inevitably face balance of payment problems as a result of their low income status and because of the prevailing patterns of international specialization. [ Excessive trade liberalization was thought to be bad for developing countries as that would worsen their balance of payment problems and fail to promote industrialization. Consequently, protection of infant industry was seen as a sound strategy to avoid trade deficits and an altogether desirable path to development.
By contrast, by 1986, most of the factors that helped shape the development of SDT provisions in the pre-Uruguay Round days had all but disappeared. Factors that explain what some call the round-about stance towards SDT include: a) the erosion of the U.N.'s role in the economic sphere; (b) shifts towards liberalization in the South; (c) the weakening of collective action by the South and a changed negotiating strategy; (d) changes in the global geopolitical and economic situation, including shifts towards radical neoliberalism in the North, the pressure to expand trade agenda, the growing skepticism about the economic development benefits of trade protection, and overall change in trade policy discussions away from import substitution and towards export orientation and full liberalization.
Doha Development Round Towards Improvement In The System: Doha Round And BeyondProf- Jayagovind in his article superbly argued the Doha development round in a dreadfully lucid manner he says Neo-liberalism reached its peak in the mid `990s with the establishment of the WTO. Market-based reforms yielded some positive results initially. But soon the reform process both at national and international levels was faced with road bocks. Within the WTO, it was reflected in the increase disenchantment of developing countries with the WTO mechanism.
In principle, the Search Term Begin WTO Search Term End is committed to the idea of special and Search Term Begin differential treatment Search Term End for developing Search Term Begin countries. Search Term End In November 2001, trade ministers launched a new round of global trade negotiations (the Doha Development Agenda) that is expected to put development issues squarely on the Search Term Begin WTO Search Term End agenda. The Search Term Begin WTO Search Term End Ministerial Declaration (Doha Declaration) of November14, 2001 is indicative of the new openness towards development questions in the Search Term Begin WTO. Search Term End Central in the Doha Declaration is the need to address comprehensively the linkages between trade and development . Addressing the widely held fear of a massive disengagement from the multilateral trade system by developing Search Term Begin countries, Search Term End the world trade ministers promised to address developing Search Term Begin countries' Search Term End interest in global trade, particularly the problems in the agricultural sector and concerns about S&DT provisions. The round of global trade negotiations launched in Doha began in January 2002 and is scheduled to be concluded by January 1, 2005.
# Doha Development AgendaIn the Doha Declaration, WTO Members reaffirmed that “provisions for special and differential treatment are an integral part of the WTO agreements,” and they agreed that "all special and differential provisions shall be reviewed with a view to strengthening them and making them more precise, effective and operational.” In particular, trade ministers expressed a commitment to “addressing the marginalization of least-developed countries in international trade and to improving their effective participation in the multilateral trading system.” The Doha Ministerial Declaration also noted that “international trade can play a major role in the promotion of economic development and the alleviation of poverty.”
The Implementation-Related Issues and Concerns Decision of November 14, 2001, also adopted during the fourth Ministerial Conference, contains an elaborate work program on SDT . Paragraph 12 of the Implementation Decision outlines four major prongs of work for the Committee on Trade and Development (CTD). Paragraph 12 instructed the CTD to accomplish the following:
(i) "identify those special and differential treatment provisions that are already mandatory in nature and those that are non-binding in character;”
(ii) “consider the legal and practical implications for developed and developing Members of converting special and *866 differential treatment measures into mandatory provisions, [and] identify those that Members consider should be made mandatory;”
(iii) “examine additional ways in which special and differential treatment provisions can be made more effective;”
(iv) consider ways “in which developing countries, in particular the least-developed countries, may be assisted to make best use of special and differential treatment provisions;” and
(v) “consider, in the context of the work program adopted at the Fourth Session of the Ministerial Conference, how special and differential treatment may be incorporated into the architecture of WTO rules.” The CTD was expected to report to the General Council by July 2002. The Trade Negotiation Committee (TNC), under the authority of the General Council, had the overall responsibility to supervise all negotiations. In 2002, the (The Trade Negotiation Committee) TNC decided that the S&DT mandate would be handled in the Special Sessions of the CTD (Committee on Trade and Development).
To many observers, a significant change in global trade arrangements occurred in Doha. Essentially, the Doha Declaration recognized the need to address the concerns of developing countries and established an elaborate work program to ensure that these concerns are addressed . According to Michael Moore, former Director-General of the WTO, "Doha was a wakeup call not just for the WTO, but for the international community as a whole that it cannot be business as usual in the treatment of trade and development issues.” This view was echoed by H.E. Ms. Amina Chawahir Mohammed, permanent Representative of Kenya to the WTO. According to Ambassador Mohammed, "Doha marked a turning point in international economic relations.” William Kerr has also argued that at the Doha meeting, the GATT/WTO was transformed from a club into an inclusive organization that encouraged the active participation of all its members and that major trading nations “no longer control the agenda-making and the negotiation process.” However, the representatives of many developing countries are skeptical about the promises of Doha; many now wonder whether the Doha Declaration deserved the praise it initially got or whether it is a major disappointment.
Break-Down of Doha NegotiationsTwo years after the Doha Ministerial Conference, there are troubling signs of a major crisis in the global trading system as key deadlines for negotiations on S&DT have fallen by the wayside. An initial deadline of December 31, 2002 (itself an extension of a missed July 31 deadline) passed without any meaningful report from the Committee on Trade and Development. The deadline was extended to February 10, 2003, but as of February, members were still unable to agree on any recommendations for a decision . Indeed, in February 2002, talks on S&DT ground to a complete halt. Although the Chairman of the General Council circulated an approach paper on April 8, 2003, which suggested a fresh approach to the work on agreement specific proposals, little progress has been made ever since.
At the beginning of September 2003, members remained at odds over both substance and process. Any hope that the WTO's Fifth Ministerial Conference in Cancun would offer guidance on how to put the negotiations back on track evaporated when developed countries walked out of the Cancun meeting.
The problem is that sufficient convergence has not been achieved on most of the issues under discussion. As might be expected, the divergence is between mostly developed countries and most of the developing countries, and the arguments center around how to deal with the eighty-five-plus proposals that have been submitted by WTO members.
Where are the fault lines drawn? There are at least three contentious issues. First, members disagree on the precise scope of the mandate of the Special Session of the CTD on the S&DT question. Second, members disagree on which proposals agreement- specific proposals or crosscutting issues should have priority in the negotiations. Third, there is also serious disagreement on the form, content, and structure of a monitoring mechanism for S&DT provisions.
Agreement-Specific Proposals vs. Cross-Cutting IssuesRegarding the tension between agreement-specific proposals and cross-cutting proposals, developed countries want a detailed discussion on the broader principles and objectives of S&DT before consideration of the eighty-five-plus proposals submitted to the CTD. The argument is that the WTO work program on S&D treatment could benefit from greater structure and focus if there was agreement on a set of guidelines to be used to test specific proposals. Overall, developed countries believe that crosscutting issues, such as those relating to qualification for S&DT benefits and criteria for countries to “graduate” out of S&DT benefits, should be addressed first. Developing countries interpret the Doha mandate differently; they want the eighty-five-plus agreement-specific proposals to be addressed before the more controversial crosscutting issues are taken up. Indeed, some argue that examination of the cross-cutting issues is not part of the mandate of the CTD.
There is also a divergence of opinion on the question of establishing a monitoring mechanism for S&DT provisions. While there is an agreement on the broad idea of establishing a monitoring mechanism, parties disagree on the nature of the mechanism. Countries like the United States, Canada, and members of the European Union want the monitoring mechanism to be established before further discussions on the Agreement-specific proposals are taken up. They also have an ambitious mandate for this mechanism. Such a mechanism would be responsible for monitoring the effectiveness of S&DT provisions in the MTS, monitoring and reporting on the work of various bodies that have the mandate to review the S&DT provisions, and ensuring effective relations between the WTO and international organizations such as UNCTAD and the World Bank. Developing countries want a mechanism to be established and first put forth a proposal for such a mechanism. However, they fear that the monitoring mechanism may become a poor substitute for the Special Session of the CDT, the body that has the actual mandate to review current S&DT provisions.
Three other factors account for the relative lack of progress on the S&DT negotiations. First, with changes in the global trading system, the subject of S&DT has become fairly complex and detailed; it is therefore understandable that members need more time to consider the effects of the eighty-five-plus proposals made. Second, Members have been unwilling to agree to changes where these would entail changes in the WTO agreements and carry major systemic implications. Third, the question of causation has not been fully established; in order words, in the absence of detailed systematic study, it is difficult to sort out which problems are attributable to shortcomings in S&DT provisions and which are attributable to other factors such as domestic policy shortcomings.
The Doha Declaration mandate that the negotiations had to conclude by the January, 1, 2005 and the ministerial meetings which took place in between had to take stock of the progress and give appropriate directions. But in reality, the deadline was missed several times and the deliberations are still continuing. The Agreement on agriculture appears to be the most intractable issue dividing the developed and developing countries and even here the domestic subsides to farmers appears to be bone of controversy.
Highly charged controversy, the sense of S&DT has totally changed, and developed countries are now demanding special treatment exempting them from blatant violation of the rule which they had laid down after elaborating negotiations. As it is, the AOA was titled in favour of developed countries since it exempts income support subsidies (restored to by the western developed countries). Both the USA and the EC resort to box shifting, i.e., amber box subsides are shows as either blue box or green box subsidies. When the developing countries point that huge subsidies, under whatever box they are provided, will distort international trade, the developed countries stone wall on the issue. As an illustration, the U.S.A has not yet complied with adverse WTO ruling in the Brazil- Upland Cotton case.
The Challenge For Special And Differential Treatment: For Developing Countries?Today, the legal basis for S&DT provisions in trade agreements is firmly established. Formal recognition of the needs and problems of developing countries in the MTS is not new but goes back over half a century. Moreover, at Doha, Ministers unequivocally endorsed the concept of S&DT, thus providing a firm foundation for any serious work in the future directed at realizing the full potential of S&DT. Nevertheless, several questions still remain to be answered.
First, is there still a good case for S&DT?
Second, should S&DT be universalized (made applicable to all developing countries) or should it be based on some system of differentiation?
Third, what obligations, if any, should be imposed on developing countries that choose to avail themselves of S&DT provisions in present and future trade agreements?
Fourth, what type of actions will make a real difference to developing countries, particularly, least-developing countries?
Regarding the first question, some of the original rationales for S&DT remain very valid today. Moreover, the introduction of non-trade issues in multilateral trade negotiations now makes it all the more imperative that developing countries retain some flexibility in their policy options. Additionally, an effective S&DT is necessary if the WTO is to regain the public confidence it had lost and address the crisis of legitimacy it currently faces. However, while there is a good case for S&DT, to make it a more effective instrument of integration and development some changes are warranted.
The second question touches on a very sensitive subject, that is, the issue of which countries should be eligible for S&DT and how eligibility should be defined. It is very important that S&DT is targeted to countries that need it most; some system of tiering will therefore be inevitable in the future. There is a need to go beyond the current narrow categorization of developing countries in the MTS. In order words, the current distinction between developing and least-developing countries is very narrow and ignores the vast difference that exists among the different developing countries that make up the MTS. Tiering is obviously a very sensitive and divisive subject that must be handled carefully; it must be based on an objective, clearly definable, and manageable standards.
Regarding obligations that may be reasonably imposed on developing countries in relation to S&DT, several points could be made. The WTO is not a development institution. Consequently, in the future developing countries will have to critically evaluate and prioritize the demands they make on the MTS. The expertise and resources needed to build the frame-works necessary for sustainable development is beyond the capacity of the WTO. Developing countries must therefore continue to engage other development agencies and international institutions. It is also the responsibility of developing countries, in cooperation with all development partners including the WTO, to meaningfully address supply-side constraints to development and integration into the global trading system. Corruption, lack of policy directions, and inadequate support has led to agricultural underproduction in many developing countries and must be urgently addressed. At present, few developing countries have clearly de-fined sustainable development objectives.
It is the primary responsibility of developing countries to adopt sound policies that can stimulate growth, diversification, and competitiveness. However, global trade rules must afford governments considerable policy autonomy and must not constrict spaces for development. Finally, in the future, a system of periodic review of the actions taken by developing countries in relation to S&DT may be necessary. Given the underlying premise for S&DT, it may be necessary to institute a system of review to evaluate the degree of utilization of S&DT provisions by individual Members and the totality of factors (internal as well as external) that determine the level of benefits a Member derives from given S&DT provisions. In this regard, a level of transparency and accountability on the part of developing countries will be necessary. Third, although the idea of a proposed “Framework Agreement on S&DT” is interesting, whether such an agreement will bring about greater protection of the development interests of developing countries in the MTS is debatable. The problem with current S&DT provisions is not so much the absence of a framework agreement as the lack of commitment on the part of important stakeholders. Fashioning such an agreement could also be time-consuming and could detract attention from more important issues. Nevertheless, a framework agreement could provide needed guidance and coherence for future action on the S&DT; such an agreement could provide guidance on the criterion against which present and future S&DT provisions must be evaluated. Fourth, equally interesting is the idea of an S&DT monitoring mechanism.
as However, unless there is clear agreement on the SD&T rules that are appropriate for development, the effectiveness of such a monitoring mechanism will be minimal. In the event that WTO Members decide to establish such a mechanism, it is important that the role of such a body be clearly defined and its modus operandi carefully decided. Fifth, unless key S&DT provisions are binding and made enforceable through the dispute settlement system, effort directed at strengthening the existing S&DT provisions as mandated by the Doha Declaration would be meaningless. At present, large areas of global trade rules and policies lack legally enforceable S&DT provisions. However, not all S&DT provisions in existing trade agreements can be legally binding. For example, it is difficult to see how commitments of monetary support and promises of technical assistance by developing countries can be made mandatory.
Finally, in the future; developing countries owe it to themselves to effectively employ their negotiating capital. Countries may be better off refraining from ratifying onerous trade agreements than ratifying it and subsequently calling for S&DT provisions. Negotiating capital is better ex-pended obtaining firm concessions relating to market access from developed countries than seeking expanded S&DT, particularly when the SD&T provisions are time-bound and limited to adjustment. Trade negotiations must therefore be approached with a view to producing rules that support sustainable development.
The effectiveness or ineffectiveness of past and present S&DT provisions cannot just be assumed but must be assessed in specific cases and in relation to specific countries and regions. The future of S&DT in the multilateral trading system will depend not on the paper promises of the Doha Declaration but on the demonstrated commitment of WTO Members, particularly advanced countries, to bring about genuine change in the MTS; good faith political compromises will be needed. Bearing in mind that a sound liberalization policy is not a substitute for a sound development policy, S&DT must address both the development needs and integration needs of developing countries. This calls for a reform of the overall system of S&DT as well as reform of specific S&DT provisions in existing trade agreements. In recent times with the ubiquity of the neo-liberalism mantra, and with the advent of the WTO, S&DT has lost much of its significant as far as developing countries are concerned.
Finally, it must be noted that much of the workings of developing country coalitions in the WTO and their legal impact remains in the shadows. Above discussion has assessed past practice and ongoing challenges. Like any empirically grounded work, this one is bound to reflect a subjective element as to where it casts its lens. Its aim, however, has been to provide a critical but ultimately constructive assessment of WTO capacity-building initiatives, highlighting the adaptations that donors, beneficiaries, and the WTO Secretariat have made, and those that they could make, for WTO capacity-building programs to become more effective over time.
The author can be reached at: firstname.lastname@example.org / Ph no: 094255-01279 / Print This Article
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