Breaking the WTO logjam: towards enforceable special and differential treatment

Should developing countries adopt the same trade rules as developed states – or should they be given Special and Differential Treatment (SDT)? Are existing SDT mechanisms out of synchronisation with emerging rules of trade policy? How can researchers assist the incorporation of achievable SDT regimes within the World Trade Organisation’s (WTO) rule-making process?

A paper from the Institute of Development Studies makes the case that consensus around SDTs must be reached if the current WTO negotiations to remove barriers to trade (the Doha Round) is to move forward. Warning against a rapid growth of country-specific mechanisms, it calls on the WTO to rise to the challenge of applying agreed SDT rules to broad groups of countries identified on the basis of objective data.

SDT had its origins in a view of trade and development that questioned the desirability of developing countries liberalising border measures at the same pace as industrialised countries. Much of the ‘old SDT’ (particularly provisions relating to financial and technical assistance or technology transfer) is unenforceable within the WTO system and what is enforceable has often been overtaken by events.

The report notes that:

• By making dispute settlement binding, the Uruguay Round has removed the inherent ambiguity in the vague texts of the WTO’s predecessor (the General Agreement on Tariffs and Trade – GATT) that were used by developed and developing countries alike.
• This means that there must be more explicit provision to allow the flexibility required by different countries’ circumstances.
• Traditional SDT measures, such as extended implementation periods, are inappropriate for some of the new rules that are agreed. Different types of SDTs that relate to the specific problem are required.
• In some cases, such as patents and other Trade-Related Aspects of Intellectual Property Rights (TRIPs), the issue is whether or not it is developmentally desirable for small, poor countries to adopt the same rules as industrialised ones. What is required is not a longer period to implement the common rules, but permanent exemption until it is developmentally desirable to do so.
• In other cases, such as the WTO’s very tentative steps to liberalise world agricultural trade, the problem being addressed has largely been created by rich country protectionism (such as that provided by the EU’s common agricultural policy). It is the rich countries that need to have their misdeeds curtailed by new rules, not the poor ones.

The timetable for reviewing and systematising SDTs agreed by the WTO in Doha in 2001 has slipped. Many developing countries are understandably wary of agreeing yet more new rules with complex effects when binding dispute settlement may result in unexpected costs. The rich countries’ reluctance to adhere to the Doha timetable and make positive moves on SDT simply confirms these fears. Agreeing to new rules that they do not yet fully understand and without an ‘SDT safety net’ would place them in a dilemma: while the implementation of new rules may entail high administrative, financial or political costs, non-implementation might leave them open to the threat of trade sanctions by their trade partners following recourse to the WTO’s dispute settlement provisions.

Both developing states and the multilateral trade system would gain from averting the current risk of a shift from multilateral to bilateral/regional decision-making. The development of appropriate new SDT to prevent the WTO rule-making process from seizing up – becoming strongly advisable rather than legally enforceable – will require:

• acceptance within the WTO that while the one-size-fits-all approach is flawed, the interests of each member are not so dissimilar that they can only be dealt with through unique variations in their national WTO schedules
• recognition that for the ‘new agenda’ of intellectual property rights and investment rules there is a dangerous lack of a research base to identify the differential impact for groups of states
• more focused research to identify the shared interests of developing countries and elaborate ‘do-able’ SDT prior to the final stages of the Doha Round
• identifying actionable modulations in the rules suited to the characteristics of groups of countries with common features
• research to demonstrate the feasibility and country eligibility of SDT in the ‘old areas’ of trade policy – for example to create a ‘Development Box’ or a ‘Food Security Box’ in the agriculture sections of the WTO agreements.

Source(s):
‘The Future of Special and Differential Treatment (SDT) for Developing Countries in the WTO’, Working Paper 163, Institute of Development Studies, September 2002 Full document.
‘Special and Differential Treatment in terms of trade’ IDS Bulletin Vol 34, no 2, edited by Christopher Stevens, assisted by Jane Kennan, April 2003

Funded by: DFID (SSRU R8007)

id21 Research Highlight: 6 October 2003

Further Information:
Christopher Stevens
Institute of Development Studies
University of Sussex
Falmer
Brighton BN1 9RE
UK

Tel: 44 (0)1273 678790
Fax: +44 (0)1273 621202
Contact the contributor: C.Stevens@ids.ac.uk

Institute of Development Studies (IDS), UK

Other related links:
'Dumping: blocking the trade escape route from poverty?'

'Level playing field? Making world trade work for all'

'Free market: at what cost? International trade and sustainable development'

'Trade for life: making trade work for poor people'

Christian Aid focuses on Trade

Refer to the UN Conference on Trade and Development

The World Bank aims to help countries to use Trade for development