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Special and differential treatment
Under the WTO, the term that is used to cover provisions in the agreement that take the special circumstances of the developing countries into account is ‘special and differential treatment.’ Experience has shown that for most developing countries, these provisions represent their number one priority. At present there are about 150 provisions in the WTO Agreement that fall within the category of special and deferential treatment. As might be expected, these cover a wide range of developing country concerns. Thus for example, some of them seek to enhance the trade opportunities for developing countries through greater market access in areas such as agriculture, manufactures, and services. Other provisions give them greater flexibility in meeting their WTO commitments, including longer transitional time periods to fulfil obligations. Some also provide greater opportunities to resort to ‘safeguards,’ which developing countries may use to protect their economies from unanticipated shocks arising from the process of trade liberalisation.
There are also provisions that offer access to technical assistance.
In our earlier examination of the WTO we had touched on many of these provisions when we covered such areas of the WTO as the Agreement on Agriculture, the General Agreement on Trade in Services (GATS), Trade Related Intellectual Property Rights (TRIPS) and the Dispute Settlement Mechanism. The November 2001 Doha Ministerial Conference of the WTO had mandated further examination of this issue of special and differential treatment, and towards this end it was decided in late July 2002 to present a report on this subject to the General Council of the WTO. To date over 80 proposals have been submitted to the WTO, which signifies the importance developing countries attach to this matter.
Dissatisfaction
Despite the large number of provisions, within the WTO there is great dissatisfaction among the developing countries with the present operations of the special and differential treatment provisions. It is felt that they do not sufficiently compensate for the extent of the disadvantage developing countries face in an open competitive trading system. The rich countries differ on this and as a rule advance the view that it is practically impossible to find a formula that would satisfactorily addresses the variety of trade situations presently found in developing countries.
As a consequence they have tended to prefer a more pragmatic step-by-step response rather than a general comprehensive re-examination of the status of developing countries as a group, which the developing countries themselves prefer.
It is in this unsatisfactory state of affairs that CARICOM has shared the leadership at the WTO in pushing for the recognition of small developing countries to be entitled to special and differential treatment. Last week we saw that this has received so far limited support. There are many reasons for this but among them three stand out. First, most CARICOM countries enjoy a standard-of-living and level of human development far above that of the typical developing region. The result is that the argument, which uses poverty and need in support of the case for special treatment, is not well supported.
Second, CARICOM countries have historically been beneficiaries of special preferential trading schemes with Europe and North America, which many other developing countries would dearly love to enjoy.
They see the CARICOM countries therefore, as a privileged group, not one entitled to special benefits. Third, several developing countries favour free trade for agricultural products because they are convinced that their exports are globally competitive and have been stymied in their growth by subsidies in the USA and Europe and the special preferential trading arrangements developing countries like CARICOM still enjoy. The developing country members of the Cairns Group are the most ardent free traders for agriculture. Recently, one of these, Brazil, has launched a WTO objection to the Sugar Protocol that is linked to the Cotonou Agreement, which this series has already examined at some length.
Least Developed Countries
One group of developing countries that has received substantial special treatment under the WTO is the ‘least developed countries.’ As we saw last week there are 49 of these, categorised by the United Nations on the basis of low per capita income, weak human assets, and high degree of vulnerability.
The WTO has a Sub-committee on Least Developed Countries that reports to its Trade and Development Committee.
The work of the sub-committee falls under two broad and related areas, namely technical cooperation, and identifying means for integrating the least developed countries into the global trading system in as painless a manner as possible. This sub-committee also examines the operations of the various special and differential treatment provisions as they affect this group of counties and for this a Plan of Action has been prepared.
At the heart of the issue of special and differential treatment is the question of equity in the global trading system. With the global playing field so heavily unequal, the trading rules of the WTO cannot be just if every country was treated as being equal in their economic competences. Freer trade always benefits the more competitive, and invariably the richer countries.
Free trade is therefore a hard sell to poor countries, unless mechanisms are put in place to redress the imbalances and improve their economic competences.