SPECIAL AND DIFFERENTIAL TREATMENT in the Doha Work Programme

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

2. UNCTAD THE BASIC IDEAS BEHIND THECONCEPT OF SPECIAL AND DIFFERENTIAL TREATMENT (S&D): • There are structural imbalances between developing and developed countries in terms of: • share of world trade; • access to financing; • access to technology; • infrastructure weaknesses; • institutional capacity and human resources.

3. UNCTAD THE BASIC IDEAS BEHIND THECONCEPT OF SPECIAL AND DIFFERENTIAL TREATMENT (S&D) • The trade liberalisation does not automatically imply development nor equitable welfare gains. • Developing countries do not have the same capacity as developed countries in taking advantage of the opportunities created by trade liberalisation.

4. Financing for development Development aid TRADE At the national bilateral regional multilateral levels UNCTAD THE S&D CONCEPT IS APPLIED IN SEVERAL AREAS OF THE INTERNATIONAL ECONOMIC RELATIONS:

5. UNCTAD CATEGORIES OF DEVELOPING COUNTRIES (AND DIFFERENT IMPLEMENTATION OF S&D)WERE INTRODUCED IN THE 80’S: • Least developed countries (LDCs) UN Index (49 LDCs): category recognised by the 1979 GATT Enabling Clause • Landlocked countries • Island countries • Small economiesPara.35Doha Min.Decl. • Net food importing countries Marrakech Min.Decl. • Small suppliersTextiles

6. GATT 1947:same treatment for all members, exc. art.18 (flexibility and for tariff protection and QRs for infant industries and in case of balance of payments crisis) GATT PART IV (1964): the principle of “non- reciprocity” is introduced ENABLING CLAUSE (1979):allows for GSPs, trade agreem. b/w developing countries, and S&D for LDCs TOKYO ROUND (1978): plurilateral codes as a way to implement S&D URUGUAY ROUND (1994):the “single undertaking” does not allow for opt-in/opt-out rules DOHA MIN.DECL.(2001):paras 44 on S&D, 42-43 on LDCs, and 35 on small economies (plus the Decision on Implementation Issues) UNCTAD SOME BENCHMARKS IN THE HISTORY OF S&D IN MULTILATERAL TRADE RULES :

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among developing countries makes the design of S&D mechanisms difficult; • S&D is part of the “ideological baggage” superseded by the processes of liberalization and globalization; • S&D works as an unnecessary “crutch” for developing countries as it hinders their insertion in world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

8. Transition periods to comply with the rules Different criteria and /or thresholds in the implementation of the rules Exceptions to the rules Technical assistance and capacity building Greater market access (GSPs) “Best endeavour” clauses Positive list approach (GATS) UNCTAD WAYS OF IMPLEMENTING THE S&D IN THE AREA OF TRADE: “NEGATIVE” measures (binding rules, enforceable) “POSITIVE” measures (non-binding rules, not enforceable)

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

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

11. UNCTAD HOW TO ENSURE ENFORCEABLE S&D RULES: HOW TO ENSURE ENFORCEABLE S&D CLAUSES: CREATE CLEAR OBLIGATIONS FOR THE DEVELOPED COUNTRIES IN THE MANDATORY PROVISIONS OF THE AGREEMENTS, SUBJECT TO THE WTO DISPUTE SETTLEMENT MECHANISM WTO criterion: the “SHALL” language is mandatory (the “should” is not) The Preambles, Declarations, Decisions and footnotes are NOT mandatory

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

13. UNCTAD HOW TO STRENGTHEN THE S&D PROVISIONS IN THE CURRENT NEGOTIATIONS: • Through AMENDMENTS of the existing provisions (ex.: “should” becomes “shall”) • Through AUTHORITATIVE INTERPRETATIONS (“Understanding on the interpretation” of the rules) • Through the negotiation of a horizontal “FRAMEWORK AGREEMENT” on S&D (para.44 Doha Min.Decl.)

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

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

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

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

18. UNCTAD THANK YOU ! ...QUESTIONS ?