Inside US Trade | October 26, 2001
World Trade Organization members reached a compromise this week on how to handle the special and differential treatment of developing countries in the declaration that will lay out the future WTO work program at the next ministerial, according to trade officials. The issue had pitted developing and industrialized countries against each other.
They agreed that the ministerial declaration would authorize a work program to study how special and differential treatment provisions for developing countries now in existing WTO agreements could be mandated or made more operational, informed sources said. The WTO's Committee on Trade and Development would study all S&D provisions and provide a report so that the General Council could decide on how to handle these provisions by July 2002, sources said.
The compromise, finalized after an informal CTD meeting on Oct 21, provides developing countries with a speedy work program instead of their initial demand that all S&D provisions should be made mandatory, sources said. They also had insisted that S&D provisions could be mandated without a new round of negotiations.
Developed countries resisted, arguing that determining what specific S&D provisions should be mandated, or how specific provisions should be strengthened, would be impossible without negotiations. Led by the U.S. and EU, they argued that it would be impossible to mandate all S&D provisions because of the difficulty of measuring compliance with "best endeavor" language typical of many S&D provisions.
Developed countries also wanted a longer time to make a decision, which would have pushed the CTD recommendations to the General Council by July 2002, but would not have required a General Council decision by that date, sources said.
The compromise work program calls for the CTD to identify what S&D provisions are already mandatory, to determine which provisions could be made mandatory, and to consider the consequences of making provisions mandatory for both developing and developed countries, sources said. If after examining a provision, the CTD cannot reach consensus on whether a certain provision can be mandated, the work program authorizes the CTD to make the provision more operational.
The draft declaration would also call for the CTD to consider how S&D treatment may be incorporated into the architecture of WTO rules, sources said. This reflects the complaints of developing country members that S&D provisions are seen as an addendum to WTO rules instead of as a part of the rules.
"The argument has been put forward that one problem with existing structure is that S&D was built on afterwards," said an informed source. "There's a point of view that S&D might be properly built in to ensure that developing countries can better apply new provisions and existing provisions."
Many S&D provisions are written with vague language that, if mandated, would still leave much to interpretation, sources said. Different agreements classify S&D provisions in several ways, including provisions aimed at increasing the trade opportunities of developing country members and at having WTO members safeguard the interests of developing country members. Additional provisions provide for flexibility of commitments, of action and use of policy instruments; transitional periods, technical assistance, and provisions related to least developed countries.
S&D provisions are intended to help developing countries participate fully and best take advantage of the global trading system. Developing countries want to ensure that these provisions are strengthened and implemented so that they are effective in securing benefits for poorer countries, sources said.
The inability of developing and industrialized countries to strike a deal had prevented text on special and differential provisions in the first draft of a ministerial declaration issued on Sept. 26. Instead, draft paragraph 35, which was to cover S&D, remained blank. The compromise work program will be reflected in the implementation section of the draft Ministerial declaration, a source said, while the rest of the text covering S&D treatment will be included under paragraph 35 of the draft.
To provide language for the ministerial declaration, General Council Chairman Stuart Harbinson asked the CTD in August to review all S&D provisions and to report how they could be made operational and further enhanced. After a Sept. 28 meeting of the CTD that did not move towards consensus language, Chairman Nathan Irumba submitted a chairman's report in lieu of a committee report to the Secretariat that reflected the status of the debate. Harbinson then instructed Deputy Director General Ablasse Ouedraogo to hold open-ended consultations with CTD members aimed at creating a text, which sources said led to the compromise.
This week's compromise reflects that developing countries have recognized that some provisions would not be improved by being mandated, informed sources said. Developed countries "might have a point on some provisions," a developing country source said. "Some [provisions] may not have added value by mandating and may add value more from being made more operational," the source said.
For example, one source said that while S&D provisions in the Agreement on Trade-Related Aspects of Intellectual Property Rights would, by his reading, be possible to mandate, several agreements that include S&D provisions covering technical assistance or providing transitional periods for developing country members would be impossible to measure if mandated. "The question is which ones can be made legally binding and which ones can't," said the source.
Article 12.3 of the Agreement on Technical Barriers to Trade, which covers S&D, illustrates the problem of vague language. It states that members preparing and applying technical regulations shall, "take account of the special development, financial and trade needs of developing country Members, with a view to ensuring that such technical regulations, standards and conformity assessment procedures do not create unnecessary obstacles to exports from developing country members."
Compliance with such a provision would be hard to assess, one informed source said. "How can they judge whether they've done it, or how can others judge that they've done it when the language is so vague," he said. Mandating this provision, sources said, would not make it more operational, since it would be difficult to measure what an unnecessary obstacle is.
Similarly, in the Agreement on the Application of Sanitary and Phytosanitary Measures, importing members are to consider providing "such technical assistance as will permit the developing country member to maintain and expand its market access opportunities for the product involved" when substantial investments are required in order for an exporting developing country member to fulfill SPS requirements. Definitions of "substantial" and "such technical assistance as will permit" are left to interpretation.
Mechanisms for how S&D treatment might be incorporated into the architecture of WTO rules have yet to be discussed in detail, an informed source. Broadly, the source said, the debate could involve clarifying existing S&D provisions by examining how rules will be placed in the structure of agreements in the future.
The draft also notes the Like Minded Group's proposal that a Framework Agreement on how poorer countries could receive S&D treatment be negotiated in a new round. The Like Minded Group proposal seeks to establish a "concrete and binding" regime of commitments in existing and future WTO agreements that account for the specific needs of developing countries (Inside U.S. Trade, Sept. 21, p.6).
The draft language developed by the CTD would authorize the CTD to consider the Like Minded Group's proposal in connection with its work in determining how S&D treatment could be incorporated into the architecture of WTO rules, according to sources.
The draft would also authorize the CTD to examine additional ways in which S&D provisions can be made more effective and to consider ways, including improved information flows, in which developing countries may be assisted to make best use of S&D provisions, and to consider links to capacity building required by developing countries.Inside US Trade:
