This article was prepared for last Sunday’s issue of Stabroek News. Due to an unexpected mix-up, I could not send it from the site of the 30th Anniversary CARICOM Conference in Jamaica. Having a number of regional and international obligations, I clearly run the risk of missing my deadlines, especially if these commitments involve travel towards the end of the week and I have to rely on uncertain e-mail access. To the Editor and my faithful readers I apologise.

In my last article which continued the review of the collapse of the Cancun WTO Ministerial talks, I had shifted focus from the “conspiracy- oriented” explanations of the collapse, to those that centered on the “content of the negotiations, and the contradictions and conflicts” which they have produced. I began with the agricultural negotiations, which most analysts would agree constitute the “litmus test” of progress in orienting the WTO in a development direction. This week I examine “special and differential treatment (SDT),” which for developing countries is perhaps the most fundamental principle at stake in their efforts to make global trade rules work for people and not for the primary benefit of rich countries and large corporations.

Pre-WTO: Trade from a development perspective

To appreciate the significance of this concept we need to go back in time to the period before the WTO. In that period trade rules were based on very different principles. First, it was commonly agreed that countries did not have equal capacities to engage profitably in international trade. Given this “unequal playing field,” therefore, the poor, underdeveloped countries (as they were then term-ed) needed to be granted SDT. Second, an important element of that SDT was the principle of non-reciprocity, that is, if a rich country afforded a poor country access to its markets, duty-free or with some other concessions, the poor country did not have to reciprocate in doing the same. Third, trade was placed in a development perspective, which meant it was directly linked to the provision of aid. We see this clearly in the four successive Lome Conventions (1975- 2000) between the European Union (EU) and some of their ex- African-Caribbean-Pacific (ACP) colonies, which linked trade concessions (preferences) very closely to aid. Indeed, preferences came to be known as the “hard form” of SDT, since it was here that the principles of SDT were most deeply imbedded.

Because trade had a development objective, it was expected to support the ruling development ideas of the time. One of those was that import substitution and the protection of “infant industries” in poor countries through the use of trade barriers in their domestic markets were necessary to promote their rapid industrialization. Rich countries did not challenge this because they accepted the legitimacy of this claim for SDT. Indeed their advisors at the time who came from the donor community and the IFIs encouraged and financed “managed trade” as a factor in promoting growth. It should be noted that at that time trade rules focused on trade in commodities, or what is sometimes termed as the cross-border commercial exchange of goods alone.

The ideological shift in Europe and the USA, particularly as a result of the Reagan (USA) and Thatcher (UK) axis supported the spread of what is now known as neo- liberalism. This de-emphasizes the role of the state in development, and emphasizes the role of markets and private agents in every sphere of economic activity, including some of the most hallowed preserves of the state namely, basic services, utilities, and security.

To cut a long story short

To cut a long story short, by the end of the Uruguay Round in 1995, the WTO was born and a new set of trading principles now guide what is known as the “new liberal trade order.” I have discussed these before in this series, but it would be useful to recall briefly for new readers a few of its essential principles. One principle is that the rules of trade apply to all economic activities across countries; both trade in goods and trade in services. A second principle is that to make this coverage complete, trade rules should also cover all trade-related areas. Therefore, areas like customs evaluation, trade-related investment measures, trade-related intellectual property rights, competition policy in the domestic market, government procurement, technical standards, transparency and notification, and dispute resolution settlement are all covered by WTO rules.

A third principle is that, since the WTO Agreement constitutes a binding legal treaty, its rules must be enforced and penalties directed against those who break them. For this purpose a Trade Dispute Settlement Mechanism has been installed. A fourth principle is that the rules treat all members as equals, both in terms of obligations and rights. This means that the principle of reciprocity is supreme. Countries exchange concessions to each other’s market as of right and entitlement. Preferences are therefore denied. Of course, to deal with transitional problems, some minor concessions are made to this strict principle of reciprocity, but as we shall see, nothing changes its essential character. And a fifth principle is the presumption that countries have the right to export. In other words no member is presumed to have a right to place barriers on imports. Once an agreement is reached, therefore, every member has an equal standing in terms of that agreement in each other’s domestic market.

An example

Thus Guyana cannot, in terms of any agreements reached within the WTO framework, discriminate against another member’s exports to it. All parties to the agreement are entitled to equal national treatment. There are of course transitional rules for the fade-out of existing preferences and the practice of open-regionalism in existing and proposed trade cooperation agreements at the regional and hemispheric levels.

The case for SDT has been made by developing countries. It is now increasingly being made by small states. Membership to both these categories of countries is by self-election. The WTO concedes its only significant element of SDT to the “least developed countries.” To qualify, countries in this grouping are named by the United Nations Social and Economic Committee. This is not a permanent status as countries “graduate” when their development level reaches a certain point.

There are two very contentious issues that I plan to address next week. One is the claim based on research on preference areas that SDT brings more harm than benefit to its beneficiaries. The other is the effort of small states including Guyana to secure SDT within the WTO system