Special and Differential Treatment of Developing … and Differential Treatment of Developing...

Special and Differential Treatment of Special and Differential Treatment of Developing Countries within the Developing Countries within the Legal Framework of the WTOLegal Framework of the WTO

EdwiniEdwini [email protected]@wto.org

Council and Trade Negotiations Council and Trade Negotiations Committee Division, WTOCommittee Division, WTO

The Benefits of Trade to Developing The Benefits of Trade to Developing CountriesCountries

�� Generally accepted that trade is an engine of Generally accepted that trade is an engine of

economic growth and developmenteconomic growth and development

�� Developing countries determined to play a greater Developing countries determined to play a greater

role in the MTS role in the MTS –– G20, G33, NAMA 11 etcG20, G33, NAMA 11 etc

�� Potential benefits from the liberalization of trade far Potential benefits from the liberalization of trade far

exceeds current levels of ODA provided to exceeds current levels of ODA provided to

developing countries by OECD countriesdeveloping countries by OECD countries

�� Developing countries focussing on barriers Developing countries focussing on barriers

maintained by developed countries in order to maintained by developed countries in order to

increase their exports and diversify their economiesincrease their exports and diversify their economies


�� Among the concerns of developing countries are the Among the concerns of developing countries are the

subsidies provided by developed countries to various subsidies provided by developed countries to various

producer groups in their countries, particularly in the producer groups in their countries, particularly in the

agricultural sectoragricultural sector

�� They are also targeting tariff peaks and tariff escalation They are also targeting tariff peaks and tariff escalation

as well as nonas well as non--tariff barriers, particularly antitariff barriers, particularly anti--dumping dumping

and countervailing measures, technical barriers to and countervailing measures, technical barriers to

trade and sanitary and phytosanitary measurestrade and sanitary and phytosanitary measures

�� Developing countries also complain about the rigidity of Developing countries also complain about the rigidity of

some WTO Agreements which hamper their efforts to some WTO Agreements which hamper their efforts to

attract investment in certain critical areas of their attract investment in certain critical areas of their

economies, e.g., the TRIMS Agreement and the SCM economies, e.g., the TRIMS Agreement and the SCM

Agreement.Agreement.


�� The link between trade and growth and development The link between trade and growth and development

is fiercely debated by economists. Some of the view is fiercely debated by economists. Some of the view

that the link is tenuous and that there is no that the link is tenuous and that there is no

established link between the two established link between the two

�� The better view seems to be that trade is actually The better view seems to be that trade is actually

beneficial to developing countries. However, they beneficial to developing countries. However, they

need to adopt the appropriate domestic policies in need to adopt the appropriate domestic policies in

order to benefit from the multilateral trading system. order to benefit from the multilateral trading system.

Mere membership of the WTO is not enoughMere membership of the WTO is not enough

�� A favourable external environment can help, but there A favourable external environment can help, but there

is the need for realism. Developed countries need to is the need for realism. Developed countries need to

respond positively to the concerns of developing respond positively to the concerns of developing

countries during this round of negotiationscountries during this round of negotiations


� Millennium Development Goals

� DDA – development at the core of the negotiations

� Aid for Trade

� Technical cooperation and capacity building –

enhanced integrated framework, JITAP, SDTF etc

� Bilateral assistance offered by donor countries to

strengthen the trade capacity of developing

countries

GATT & Developing CountriesGATT & Developing Countries

�� Brief history of the multilateral trading systemBrief history of the multilateral trading system

�� The Havana Charter The Havana Charter -- The General The General

Agreement on Tariffs and TradeAgreement on Tariffs and Trade

�� TwentyTwenty--three contracting parties to the three contracting parties to the

GATT, out of which 11 were developing GATT, out of which 11 were developing

countries (Brazil, Burma (Myanmar), China, countries (Brazil, Burma (Myanmar), China,

Ceylon (Sri Lanka), Chile, Cuba, India, Ceylon (Sri Lanka), Chile, Cuba, India,

Lebanon, Pakistan, Southern Rhodesia Lebanon, Pakistan, Southern Rhodesia

(Zimbabwe) and Syria. South Africa signed (Zimbabwe) and Syria. South Africa signed

as a developed country.as a developed country.

GATT & Developing CountriesGATT & Developing Countries�� The MFN principle The MFN principle –– limited exceptions limited exceptions

�� Developing countries participated as Developing countries participated as

equal partners in tariff negotiations and equal partners in tariff negotiations and

had to justify the introduction of restrictive had to justify the introduction of restrictive

measuresmeasures

�� Why did the GATT not contain elaborate Why did the GATT not contain elaborate

S&dtS&dt provisions? provisions?

�� Could probably be the high level of tariffs Could probably be the high level of tariffs

at that timeat that time

�� Flexibility in the rules covering agricultureFlexibility in the rules covering agriculture

GATT & Developing CountriesGATT & Developing Countries

�� As the number of developing countries As the number of developing countries

increased, discontent about the GATT also increased, discontent about the GATT also

increasedincreased

�� Basic philosophy of the GATT challenged by Basic philosophy of the GATT challenged by

developing countries. Cannot talk about a developing countries. Cannot talk about a

level playing field when countries at very level playing field when countries at very

different levels of developmentdifferent levels of development

�� Unequal level justified the extension of SDT to Unequal level justified the extension of SDT to

themthem

Special & differential treatmentSpecial & differential treatment

�� At the GATT Review Session in 1955, At the GATT Review Session in 1955,

agreement that developing countries should agreement that developing countries should

be granted be granted S&dtS&dt

�� Before examining the measures which were Before examining the measures which were

passed, necessary to define what S&dt is.passed, necessary to define what S&dt is.

�� Basically they are measures designed to Basically they are measures designed to

facilitate the integration of developing facilitate the integration of developing

countries into the multilateral trading countries into the multilateral trading

system. Could be classified under two main system. Could be classified under two main

headings: headings:


�� measures allowing developing countries the measures allowing developing countries the

flexibility to adopt restrictive measures to flexibility to adopt restrictive measures to

promote their economic development; and promote their economic development; and

�� measures which encourage developed measures which encourage developed

countries or advanced developing countries countries or advanced developing countries

to grant preferential treatment to the exports to grant preferential treatment to the exports

of developing countries, particularly leastof developing countries, particularly least--

developed countries.developed countries.


�� Progressive Consideration of the Specific Needs of Progressive Consideration of the Specific Needs of

Developing CountriesDeveloping Countries

�� First Measure was the revision of Article XVIII in First Measure was the revision of Article XVIII in

1955 to permit developing countries to adopt, 1955 to permit developing countries to adopt,

inter aliainter alia, measures to safeguard their balance, measures to safeguard their balance--

ofof--payments problems and also to promote the payments problems and also to promote the

establishment of a particular industryestablishment of a particular industry


�� Scope of Article XVIII of the GATT 1994Scope of Article XVIII of the GATT 1994

�� Paragraph 4(a) Paragraph 4(a) ““provides that a [Member whose] provides that a [Member whose]

economy economy …… can only support low standards of can only support low standards of

living* and is in the early stages of development* living* and is in the early stages of development*

shall be free to deviate temporarily from the shall be free to deviate temporarily from the

provisions of the other Articles of this Agreement, provisions of the other Articles of this Agreement,

as provided in Sections A, B and C of this Articleas provided in Sections A, B and C of this Article””..

Special & differential treatmentSpecial & differential treatment�� Scope of Article XVIII of the GATT 1994Scope of Article XVIII of the GATT 1994

�� According to the Interpretative Notes the According to the Interpretative Notes the

following should be taken into account when following should be taken into account when

interpreting paragraph 4 of Article XVIII:interpreting paragraph 4 of Article XVIII:

�� ““Can only support low standards of livingCan only support low standards of living””

�� Normal position of the MemberNormal position of the Member’’s economys economy

�� Consideration should not be given to Consideration should not be given to

exceptional circumstances such as those that exceptional circumstances such as those that

might result from the might result from the ““temporary existence of temporary existence of

exceptionally favourable conditions for the exceptionally favourable conditions for the

staple export product or products of that staple export product or products of that

[Member][Member]””..



�� ““In the early stages of developmentIn the early stages of development”” applies to applies to

the following countriesthe following countries

�� Countries which have just started their Countries which have just started their

economic developmenteconomic development

�� Countries whose economies are undergoing Countries whose economies are undergoing

the process of industrialisation to correct an the process of industrialisation to correct an

excessive dependence on primary excessive dependence on primary

productionproduction



�� ““Paragraph 4(b) provides that a [Member Paragraph 4(b) provides that a [Member

whose] economy whose] economy …… is in the process of is in the process of

development, but which does not come development, but which does not come

within the scope of subparagraph (a) within the scope of subparagraph (a)

above, may above, may …… [have recourse to] Section [have recourse to] Section

D of this ArticleD of this Article””..


�� Paragraph 4(a) vrs Paragraph 4(b)Paragraph 4(a) vrs Paragraph 4(b)

�� Members which come within the scope of Members which come within the scope of

paragraph 4(a) can have a lot of room to paragraph 4(a) can have a lot of room to

manoeuvre, whereas under paragraph 4(b), manoeuvre, whereas under paragraph 4(b),

their options are restrictedtheir options are restricted

�� Members falling under paragraph 4(a) can Members falling under paragraph 4(a) can

invoke Sections A, B and C of Article XVIII, invoke Sections A, B and C of Article XVIII,

whereas those falling under paragraph 4(b) whereas those falling under paragraph 4(b)

may legally invoke only Section D of Article may legally invoke only Section D of Article

XVIII.XVIII.



�� The issue was considered in the case on The issue was considered in the case on Malaysia Malaysia

-- Prohibition of Imports of Polyethylene and Prohibition of Imports of Polyethylene and

Polypropylene from SingaporePolypropylene from Singapore (WT/DS1). (WT/DS1).

�� Malaysia argued that as a developing country, it Malaysia argued that as a developing country, it

was entitled to invoke Article XVIII:C of the GATT was entitled to invoke Article XVIII:C of the GATT

19941994

�� The United States expressed the view that The United States expressed the view that

Malaysia was not a country in the early stages of Malaysia was not a country in the early stages of

development, and as such was only entitled to development, and as such was only entitled to

invoke Section D of Article XVIIIinvoke Section D of Article XVIII



�� The parties settled the case on 19 July 1995, with The parties settled the case on 19 July 1995, with

Singapore withdrawing its panel request.Singapore withdrawing its panel request.

�� The case was interesting not only because it was The case was interesting not only because it was

the first case to be brought under the DSU, but the first case to be brought under the DSU, but

also it was between two developing countries who also it was between two developing countries who

are ASEAN members. It was also the first time are ASEAN members. It was also the first time

that the right of a developing country to have that the right of a developing country to have

recourse to Article XVIII: C had been contested by recourse to Article XVIII: C had been contested by

a developeda developed--country Member of the WTO.country Member of the WTO.


�� Article XVIII: A of the GATT 1994Article XVIII: A of the GATT 1994

�� Requirement that the developingRequirement that the developing--country Member country Member

comes within the scope of paragraph 4(a)comes within the scope of paragraph 4(a)

�� It must be its objective to promote the establishment It must be its objective to promote the establishment

of a particular industry* with a view to raising the of a particular industry* with a view to raising the

living standards of its people living standards of its people

�� According to the Interpretative Notes, particular According to the Interpretative Notes, particular

industry refers not only to a new industry, but also industry refers not only to a new industry, but also

the upgrading and transformation of an existing the upgrading and transformation of an existing

industryindustry


�� Article XVIII: A of the GATT 1994Article XVIII: A of the GATT 1994

�� If conditions satisfied, it could enter into negotiations If conditions satisfied, it could enter into negotiations

with countries possessing INRs and those with a with countries possessing INRs and those with a

substantial interest to modify or withdraw a substantial interest to modify or withdraw a

concession in its Schedule of Concessionsconcession in its Schedule of Concessions

�� If agreement is reached, then developingIf agreement is reached, then developing--country country

Member could withdraw concessions and give Member could withdraw concessions and give

compensation to the affected Memberscompensation to the affected Members

�� If no agreement, could still withdraw the concession, If no agreement, could still withdraw the concession,

but the affected Members could suspend equivalent but the affected Members could suspend equivalent

concessionsconcessions


�� Article XVIII: B of the GATT 1994Article XVIII: B of the GATT 1994�� Recognition that countries in the early stages of Recognition that countries in the early stages of

development tend to experience BOPs difficulties development tend to experience BOPs difficulties arising mainly from efforts to expand internal arising mainly from efforts to expand internal markets as well as from the instability in their terms markets as well as from the instability in their terms of tradeof trade

�� To safeguard their external financial position and to To safeguard their external financial position and to ensure reserves adequate for the implementation ensure reserves adequate for the implementation of their economic programmes, such Members of their economic programmes, such Members could restrict the quantity or value of merchandise could restrict the quantity or value of merchandise permitted to be imported; permitted to be imported; provided that the provided that the import restrictions instituted, maintained or import restrictions instituted, maintained or intensified shall not exceed those necessary:intensified shall not exceed those necessary:


�� Article XVIII: B of the GATT 1994Article XVIII: B of the GATT 1994� To forestall the threat of, or to stop, a serious

decline in its monetary reserves, or

� in the case of a [Member] with inadequate monetary reserves, to achieve a reasonable rate of increase in its reserves (see Art XVIII:9 )

� COMPARE WITH ARTICLE XII

� To forestall the [IMMINENT ]threat of, or to stop, a serious decline in its monetary reserves, or

� in the case of a [Member] with ---VERY LOW monetary reserves, to achieve a reasonable rate of increase in its reserves

Special & differential treatmentSpecial & differential treatment�� Article XVIII: B of the GATT 1994Article XVIII: B of the GATT 1994

�� Due regard to be had to special factors which have Due regard to be had to special factors which have a bearing on the countrya bearing on the country’’s reserves, including s reserves, including special external credits etcspecial external credits etc

�� Priority could be given products which are of Priority could be given products which are of importance to the Memberimportance to the Member’’s economic s economic development programme. In so doing, however, development programme. In so doing, however, Members are to avoid unnecessary damage to the Members are to avoid unnecessary damage to the commercial or economic interests of any other commercial or economic interests of any other MemberMember

�� Minimum commercial quantities of a product to be Minimum commercial quantities of a product to be allowed, if exclusion could impair regular channels allowed, if exclusion could impair regular channels of tradeof trade

�� Importation of commercial samples to be allowed. Importation of commercial samples to be allowed. Restrictions should prevent compliance with Restrictions should prevent compliance with intellectual property rightsintellectual property rights

Special & differential treatmentSpecial & differential treatment�� Article XVIII: B of the GATT 1994Article XVIII: B of the GATT 1994

�� Conditions to be observed by developingConditions to be observed by developing--country country

Members Members -- para. 11:para. 11:

�� Essential for Member to restore equilibrium in its BOP on a Essential for Member to restore equilibrium in its BOP on a

sound and lasting economic basissound and lasting economic basis

�� Progressively relax any restrictions as conditions improve, Progressively relax any restrictions as conditions improve,

maintaining them only to the extent necessary maintaining them only to the extent necessary ……and shall and shall

eliminate them when conditions no longer justify such eliminate them when conditions no longer justify such

maintenancemaintenance

�� ProvidedProvided that no Member shall be required to withdraw or that no Member shall be required to withdraw or

modify restrictions on the ground that a change in its modify restrictions on the ground that a change in its

development policy would render unnecessary the development policy would render unnecessary the

restrictions which it is applying under this Section (see restrictions which it is applying under this Section (see

interpretative note)interpretative note)


�� Article XVIII: B of the GATT 1994Article XVIII: B of the GATT 1994

�� Conditions to be observed by developingConditions to be observed by developing--country country

Members Members -- para. 11para. 11::

�� According to the Interpretative Notes, the above According to the Interpretative Notes, the above

provision shall not be interpreted to mean that a Member provision shall not be interpreted to mean that a Member is required to relax or remove restrictions if such is required to relax or remove restrictions if such

relaxation or removal relaxation or removal would thereupon producewould thereupon produce

conditions justifying the intensification or institution, conditions justifying the intensification or institution,

respectively under paragraph 9 of Article XVIIIrespectively under paragraph 9 of Article XVIII

�� In In India India -- BOPs, BOPs, it was held that the words in italics it was held that the words in italics

require a causal link of a certain directness between require a causal link of a certain directness between

the removal of the BOP restrictions and the recurrence the removal of the BOP restrictions and the recurrence of one of the three conditions referred to in Article of one of the three conditions referred to in Article

XVIII:9XVIII:9


�� Article XVIII: B of the GATT 1994Article XVIII: B of the GATT 1994

�� Conditions to be observed by developingConditions to be observed by developing--

country Members country Members -- para. 11:para. 11:

�� The Appellate Body agreed with the Panel that The Appellate Body agreed with the Panel that

the word the word ““thereuponthereupon”” expresses expresses ““a a notion of notion of

temporal sequencetemporal sequence between the removal of the between the removal of the

BOP restrictions and the recurrence of one of BOP restrictions and the recurrence of one of

the conditions of Article XVIII:9. ... The the conditions of Article XVIII:9. ... The

purpose of the word purpose of the word ““thereuponthereupon”” is to ensure is to ensure

that measures are not maintained because of that measures are not maintained because of

some distant possibility that a BOP difficulty some distant possibility that a BOP difficulty

may occurmay occur””..


�� Article XVIII: C of the GATT 1994Article XVIII: C of the GATT 1994�� Requirement that the developingRequirement that the developing--country Member country Member

comes within the scope of paragraph 4(a)comes within the scope of paragraph 4(a)

�� Necessary to show that governmental assistance is Necessary to show that governmental assistance is required to promote the establishment of a particular required to promote the establishment of a particular

industry* with a view to raising the living standards of industry* with a view to raising the living standards of

its people its people

�� Notification of special difficulties being encountered to Notification of special difficulties being encountered to

achieve this objective and the specific measures the achieve this objective and the specific measures the

Member intends to take to remedy the situationMember intends to take to remedy the situation

�� Efforts should be made to get the concurrence of Efforts should be made to get the concurrence of Members before the introduction of the restrictive Members before the introduction of the restrictive

measuresmeasures


�� Article XVIII: C of the GATT 1994Article XVIII: C of the GATT 1994

�� Under certain circumstances, measures Under certain circumstances, measures could be introduced before consultations could be introduced before consultations with Memberswith Members

�� Where agreement could not be reached Where agreement could not be reached and the measure affects a product in and the measure affects a product in respect of which a concession has been respect of which a concession has been given, possibility of the affected Member to given, possibility of the affected Member to suspend equivalent concessionssuspend equivalent concessions

�� Recourse to Article XVIII:C very frequent in Recourse to Article XVIII:C very frequent in the early days of the GATT, but hardly the early days of the GATT, but hardly resorted after the entry into force of the resorted after the entry into force of the WTO AgreementWTO Agreement

Special & differential Special & differential treatmenttreatment

�� Article XVIII: D of the GATT 1994Article XVIII: D of the GATT 1994

�� Requirement that the developingRequirement that the developing--country Member country Member

comes within the scope of paragraph 4(b)comes within the scope of paragraph 4(b)

�� Necessary to show that governmental assistance Necessary to show that governmental assistance

is required to promote the establishment of a is required to promote the establishment of a

particular industry* with a view to raising the living particular industry* with a view to raising the living

standards of its peoplestandards of its people

�� Consultations should take place before the Consultations should take place before the

introduction of the restrictive measuresintroduction of the restrictive measures

�� If agreement reached, Member could introduce the If agreement reached, Member could introduce the

measuresmeasures

Special & differential treatmentSpecial & differential treatment�� Progressive Consideration of the Specific Progressive Consideration of the Specific

Needs of Developing CountriesNeeds of Developing Countries

�� Second measure to be introduced at the Second measure to be introduced at the

1955 Review Session was Article XXVIII1955 Review Session was Article XXVIIIbis. bis.

Paragraph 3(b) provides thatParagraph 3(b) provides that

�� ““the needs of lessthe needs of less--developed countries for developed countries for

a more flexible use of tariff protection to a more flexible use of tariff protection to

assist their economic development and assist their economic development and

the special needs of these countries to the special needs of these countries to

maintain tariffs for revenue purposesmaintain tariffs for revenue purposes””..

Special & differential treatmentSpecial & differential treatment�� Progressive Consideration of the Specific Progressive Consideration of the Specific


�� Resolution on particular difficulties connected with Resolution on particular difficulties connected with

trade in primary commodities was adopted in trade in primary commodities was adopted in

November 1956.November 1956.

�� A number of initiatives adopted between 1957 and A number of initiatives adopted between 1957 and

1964. There was the expert panel headed by Prof. 1964. There was the expert panel headed by Prof.

Gottfried Harberler, which concluded that Gottfried Harberler, which concluded that ““therethere

[was] some substance in the feeling of disquiet [was] some substance in the feeling of disquiet

among primary producing countries that the among primary producing countries that the

present rules and conventions about commercial present rules and conventions about commercial

policies are relatively unfavourable to thempolicies are relatively unfavourable to them””..


�� Progressive Consideration of the Specific Needs Progressive Consideration of the Specific Needs

of Developing Countriesof Developing Countries

�� Declaration adopted in November 1960 Declaration adopted in November 1960

implementing the provisions of Article XVI:4 of the implementing the provisions of Article XVI:4 of the

GATT. Developing countries effectively exempted GATT. Developing countries effectively exempted

from the obligation not to provide export subsidies to from the obligation not to provide export subsidies to

manufactured products.manufactured products.

�� Declaration passed in December 1961 aimed at Declaration passed in December 1961 aimed at

promoting the trade of developing countries. CPs promoting the trade of developing countries. CPs

encouraged, encouraged, inter aliainter alia, to abolish tariffs, QRs and , to abolish tariffs, QRs and

tariff escalation on products of export interest to tariff escalation on products of export interest to

developing countries.developing countries.


�� Progressive Consideration of the Specific Progressive Consideration of the Specific


�� While a number of initiatives had been adopted, it While a number of initiatives had been adopted, it

was realised that there was no proper legal was realised that there was no proper legal

framework.framework.

�� At a ministerial meeting in May 1963, it was At a ministerial meeting in May 1963, it was

recommended that there was the recommended that there was the ““need for an need for an

adequate legal and institutional framework to adequate legal and institutional framework to

enable the CONTRACTING PARTIES (CPs) to enable the CONTRACTING PARTIES (CPs) to

discharge their responsibilities in connection with discharge their responsibilities in connection with

the work of expanding the trade of lessthe work of expanding the trade of less--developed developed

countries.countries.”” Principle of nonPrinciple of non--reciprocity mentioned.reciprocity mentioned.




�� The result was the authorisation for the The result was the authorisation for the

Committee on Legal and Institutional Committee on Legal and Institutional

Framework of GATT in relation to LessFramework of GATT in relation to Less--

Developed Countries to draft a chapter on Developed Countries to draft a chapter on

Trade and Development to be incorporated Trade and Development to be incorporated

into the GATT.into the GATT.




�� The chapter was finalised in a Special Session of The chapter was finalised in a Special Session of

the CPs held from November 1964 to February the CPs held from November 1964 to February

1965. It formally came into effect on 27 June 1965. It formally came into effect on 27 June

1966.1966.

�� The adoption of Part IV was seen as a milestone The adoption of Part IV was seen as a milestone

in the history of international trade relations. in the history of international trade relations.

There was the expectation that it would facilitate There was the expectation that it would facilitate

the greater participation of developing countries in the greater participation of developing countries in

the multilateral trading system and lead to the multilateral trading system and lead to

economic growth and development.economic growth and development.


�� Progressive Consideration of the Specific Needs Progressive Consideration of the Specific Needs

of Developing Countriesof Developing Countries

�� The expectations of developing countries were The expectations of developing countries were

dashed, as developed countries interpreted the dashed, as developed countries interpreted the

provisions of Part IV as not imposing legal provisions of Part IV as not imposing legal

obligations on them. They considered them as obligations on them. They considered them as

best endeavour clauses. Developing countries best endeavour clauses. Developing countries

took a contrary view and questioned that if they took a contrary view and questioned that if they

were not meant to have legal force, why insert were not meant to have legal force, why insert

them into the GATTthem into the GATT


�� Scope of Part IV of the GATTScope of Part IV of the GATT

�� Part IV contained three new articles, namely Part IV contained three new articles, namely

Articles XXXVI, XXXVII and XXXVIII.Articles XXXVI, XXXVII and XXXVIII.

�� Article XXXVIArticle XXXVI, entitled principles and , entitled principles and

objectives, contained a number of important objectives, contained a number of important

provisions:provisions:

�� It was recognised that there was the need to It was recognised that there was the need to

increase market access for products of export increase market access for products of export

interest (current and potential) to developing interest (current and potential) to developing

countriescountries



�� The principle of nonThe principle of non--reciprocityreciprocity in trade in trade

negotiations was formally recognised: negotiations was formally recognised: ““The The

developed contracting parties do not expect developed contracting parties do not expect

reciprocity for commitments made by them in reciprocity for commitments made by them in

trade negotiations to reduce or remove tariffs and trade negotiations to reduce or remove tariffs and

other barriers to the trade of lessother barriers to the trade of less--developed developed

contracting parties.contracting parties.””

�� Concept clarified in an interpretative note and Concept clarified in an interpretative note and

also during the Kennedy Round.also during the Kennedy Round.



�� Significance of the nonSignificance of the non--reciprocity principle reciprocity principle

for developing countriesfor developing countries

�� Meant that developing countries could maintain Meant that developing countries could maintain

high tariffs and a host of non tariff barriers. Under high tariffs and a host of non tariff barriers. Under

no obligation to participate in negotiations let alone no obligation to participate in negotiations let alone

give concessions.give concessions.

�� Permitted developing countries to pursue import Permitted developing countries to pursue import

substitution policies to establish and nurture infant substitution policies to establish and nurture infant

industries.industries.

�� Was the adoption of the nonWas the adoption of the non--reciprocity clause a reciprocity clause a

mistake? mistake?



�� Article XXXVIIArticle XXXVII, entitled commitments, obliged , entitled commitments, obliged

developed countries to undertake certain developed countries to undertake certain

actions in favour of developing countriesactions in favour of developing countries’’

trade.trade.

�� Developed countries were required, Developed countries were required, ““to the fullest to the fullest

extent possibleextent possible”” to accord high priority to the to accord high priority to the

reduction and elimination of barriers differentiating reduction and elimination of barriers differentiating

unreasonably between primary and processed unreasonably between primary and processed

products and to maintain a standstill on other products and to maintain a standstill on other

barriers to actual or potential exports from barriers to actual or potential exports from

developing countries.developing countries.



�� In applying contingency protection In applying contingency protection

measures, developed countries were measures, developed countries were

obliged obliged ““to to explore all possibilitiesexplore all possibilities of of

constructive remedies before applying constructive remedies before applying

such measuressuch measures””. .

�� Do you think the provisions are enforceable?Do you think the provisions are enforceable?



�� Article XXXVIIIArticle XXXVIII, entitled joint action, required , entitled joint action, required

the CPs to take action, the CPs to take action, inter aliainter alia, through , through

international agreements to improve access international agreements to improve access

to worlds markets for primary products of to worlds markets for primary products of

interest to developing countries, and to interest to developing countries, and to

devise measures for stabilizing and improving devise measures for stabilizing and improving

the conditions of world markets for such the conditions of world markets for such

productsproducts



�� CoCo--operation with the UN and other operation with the UN and other

international organisations to further the trade international organisations to further the trade

objectives of developing countries in the objectives of developing countries in the

multilateral trading system. CTD and the ITC multilateral trading system. CTD and the ITC

established in 1964.established in 1964.

�� Was Part IV worth it from the view point of Was Part IV worth it from the view point of

developing countries?developing countries?


�� Measures taken between 1966 Measures taken between 1966 -- 1973, when the 1973, when the

Tokyo Round commenced.Tokyo Round commenced.

�� Special procedures for settling disputes in which Special procedures for settling disputes in which

developing countries were involved developing countries were involved -- April 1966April 1966

�� The CPs adopted in 1966 a report of the CTD, which The CPs adopted in 1966 a report of the CTD, which

recognised that trade between developing countries recognised that trade between developing countries could be beneficial in terms of facilitating their could be beneficial in terms of facilitating their

integration into the MTS. In 1968, India, Egypt and integration into the MTS. In 1968, India, Egypt and

Yugoslavia implemented a PTA called Trade Expansion Yugoslavia implemented a PTA called Trade Expansion and Economic Cooperation Agreement.and Economic Cooperation Agreement.

�� UNCTAD UNCTAD -- GSP GSP -- WaiverWaiver

�� Simplified consultation procedures for Developing Simplified consultation procedures for Developing

countries invoking the BOP countries invoking the BOP -- 19721972


�� The Enabling Clause adopted in 1979 as part of The Enabling Clause adopted in 1979 as part of

the results of the Tokyo Round. Provided the results of the Tokyo Round. Provided

permanent legal bases for the ff:permanent legal bases for the ff:�� DerogationDerogation from the MFN principle to allow developed from the MFN principle to allow developed

countries to grant trade preferences on a noncountries to grant trade preferences on a non--

discriminatory basis to developing Countries discriminatory basis to developing Countries

(Generalized System of Preferences (Generalized System of Preferences -- GSP).GSP).

�� Are current schemes nonAre current schemes non--discriminatory? discriminatory?

�� Graduation of successful developing countries by Graduation of successful developing countries by

developed countriesdeveloped countries

�� Disqualifying countries which do not meet certain Disqualifying countries which do not meet certain

standards e.g., the protection of intellectual property standards e.g., the protection of intellectual property

rightsrights


�� DerogationDerogation from the the MFN principle to permit from the the MFN principle to permit

developing countries to enter into regional trade developing countries to enter into regional trade

agreements among themselves.agreements among themselves.

�� Does the Enabling Clause provide an alternative legal Does the Enabling Clause provide an alternative legal

basis for the formation of RTAs?basis for the formation of RTAs?

�� MERCOSUR MERCOSUR -- Precedent or a special case?Precedent or a special case?


deeper preferences to be extended to leastdeeper preferences to be extended to least--

developed countries within GSP schemesdeveloped countries within GSP schemes

�� Other measures adopted in favour of developing Other measures adopted in favour of developing

countries: BOP measures, relaxation of conditions countries: BOP measures, relaxation of conditions

under Article XVIII; tariff preferences on tropical under Article XVIII; tariff preferences on tropical

productsproducts

Special & differential treatmentSpecial & differential treatment�� NonNon--reciprocity principle maintained, but an reciprocity principle maintained, but an

important qualification introduced.important qualification introduced.

�� In the Subsidies Code, it was recognised that In the Subsidies Code, it was recognised that

subsidies could play an important role in the subsidies could play an important role in the

economic development of developing countries. economic development of developing countries.

However, developing countries were required to However, developing countries were required to

enter into negotiations to reduce or eliminate their enter into negotiations to reduce or eliminate their

export subsidies when the use of such subsidies export subsidies when the use of such subsidies

was inconsistent with their competitive and was inconsistent with their competitive and

development needsdevelopment needs

�� Cf. Article 27 of the UR Agreement on Subsidies Cf. Article 27 of the UR Agreement on Subsidies

and Countervailing Measures. Brazil and Countervailing Measures. Brazil -- Canada Civil Canada Civil

Aircraft case. Aircraft case.


�� Relevance of S&dt to Developing CountriesRelevance of S&dt to Developing Countries

�� Questions were raised in the 1980Questions were raised in the 1980’’s , first by s , first by

academics as to whether the grant of S&dt to academics as to whether the grant of S&dt to

developing countries has really made any developing countries has really made any

differences in terms of the participation of differences in terms of the participation of

developing countries in the MTSdeveloping countries in the MTS

�� Most developing countries had not benefitted from it. Most developing countries had not benefitted from it.

The share of ACP countries in the European Union The share of ACP countries in the European Union

market had declined by more than 50% market had declined by more than 50%

notwithstanding extensive preferences granted to notwithstanding extensive preferences granted to

them under the Lomthem under the Loméé Convention. From around 7% Convention. From around 7%

to less than 4%.to less than 4%.


�� Relevance of S&dt to Developing CountriesRelevance of S&dt to Developing Countries

�� View expressed that the grant of S&dt View expressed that the grant of S&dt made it possible for developed countries made it possible for developed countries to maintain barriers in sectors of export to maintain barriers in sectors of export interest to developing countries, namely interest to developing countries, namely agriculture, textiles and clothing and the agriculture, textiles and clothing and the abuse of WTO disciplines on safeguard abuse of WTO disciplines on safeguard measures thorough the imposition of measures thorough the imposition of greygrey--area measures such as VERs, area measures such as VERs, OMAsOMAs


�� Relevance of S&dt to Developing Relevance of S&dt to Developing CountriesCountries

� During the Uruguay Round, the concept

of S&dt was diluted. The implications of

the single undertaking approach

� For the first time, developing countries

were able to forcefully demand a

reduction of the barriers facing products

of export interest to them.


�� S&dt After the Uruguay Round S&dt After the Uruguay Round -- They could be They could be

grouped under 5 main headings:grouped under 5 main headings:

�� Increased trading opportunities for developing countries; Increased trading opportunities for developing countries;

�� Due restraint to be applied when implementing defensive Due restraint to be applied when implementing defensive

measures (to take into account the specific needs of measures (to take into account the specific needs of

Developing countries);Developing countries);

�� Flexibility granted to developing countries in their use of Flexibility granted to developing countries in their use of

trade policy instruments; trade policy instruments;

�� Longer transitional periods with a view to assisting Longer transitional periods with a view to assisting

developing countries to implement WTO obligations;developing countries to implement WTO obligations;

�� Strengthening the technical assistance programme of the Strengthening the technical assistance programme of the

WTOWTO


�� Provisions aimed at increasing trade Provisions aimed at increasing trade

opportunities of developing countriesopportunities of developing countries. .

According to the WTO Secretariat, there are According to the WTO Secretariat, there are

twelve of such provisions in the UR Agreements twelve of such provisions in the UR Agreements

including the GATT 1994. including the GATT 1994.

�� These provisions basically encourage the These provisions basically encourage the

developed countries to adopt positive measures developed countries to adopt positive measures

which would result in increased trade which would result in increased trade

opportunities for developing countries.opportunities for developing countries.

�� An example is Article XXXVII of the GATT 1994, An example is Article XXXVII of the GATT 1994,

which relevantly provides:which relevantly provides:


�� “…“…the developed the developed ……[Members] [Members] shall to the fullest shall to the fullest

extent possible extent possible …… accord high priority to the accord high priority to the

reduction and elimination of barriers to products reduction and elimination of barriers to products

currently or potentially of particular export interest to currently or potentially of particular export interest to

…… [developing countries].[developing countries].””

�� Is this provision enforceable?Is this provision enforceable?

�� Could not it be argued that by using the words Could not it be argued that by using the words

““shall to the fullest extent possibleshall to the fullest extent possible”” the obligation the obligation

on developed countries is unequivocal?on developed countries is unequivocal?

�� What about the use of the words accord high What about the use of the words accord high

prioritypriority””? Does not it indicate that the obligation is ? Does not it indicate that the obligation is

not absolute? not absolute?

Special & differential treatmentSpecial & differential treatment�� Article IV of the GATS relevantly provides that:Article IV of the GATS relevantly provides that:

�� ““[t]he increasing participation of developing country Members [t]he increasing participation of developing country Members

in world trade in world trade shall be facilitated through negotiated specific shall be facilitated through negotiated specific

commitmentscommitments……relating torelating to……the strengthening of their domestic the strengthening of their domestic

services capacity and its efficiency and competitiveness, services capacity and its efficiency and competitiveness, inter inter

aliaalia, through access to technology on a commercial , through access to technology on a commercial

basis;basis;……the improvement of their access to distribution the improvement of their access to distribution

channels and information networks; andchannels and information networks; and……the liberalization of the liberalization of

market access in sectors and modes of supply of export market access in sectors and modes of supply of export

interest to them". (emphasis added)interest to them". (emphasis added)

�� Is this provision enforceable?Is this provision enforceable?

�� Probably not. Developed countries have an obligation, Probably not. Developed countries have an obligation,

however, to enter into negotiations with developing countries however, to enter into negotiations with developing countries

which specifically request market access. No guarantee that which specifically request market access. No guarantee that

negotiations would produce any resultsnegotiations would produce any results

Special & differential treatmentSpecial & differential treatment�� CASE LAW: CASE LAW: United Kingdom United Kingdom -- Dollar Area QuotasDollar Area Quotas: :

The argument by the United Kingdom that it was The argument by the United Kingdom that it was

maintaining the trade restrictions (QRs) so as to further maintaining the trade restrictions (QRs) so as to further

the trade interests of certain Caribbean countries was the trade interests of certain Caribbean countries was

not endorsed by the Panel. not endorsed by the Panel.

�� Norway Norway -- Restrictions on Imports of Certain Textile Restrictions on Imports of Certain Textile

ProductsProducts: The argument by Norway that the QRs that it : The argument by Norway that the QRs that it

had imposed on HK, Chinahad imposed on HK, China’’s exports and the s exports and the

preferential treatment it had accorded the exports of 6 preferential treatment it had accorded the exports of 6

developing countries were justified by Part IV was developing countries were justified by Part IV was

rejected.rejected.

�� EEC EEC -- Restrictions on Imports of Dessert Apples from Restrictions on Imports of Dessert Apples from

ChileChile: There, Chile alleged breaches of Articles XXXVI : There, Chile alleged breaches of Articles XXXVI

and XXVII.and XXVII.


�� CASE LAW(continued)CASE LAW(continued)

�� The Panel expressed the view that the EECThe Panel expressed the view that the EEC’’s s import measures has negatively affected the import measures has negatively affected the exports interests of a developing country (Chile) exports interests of a developing country (Chile) and that there was no evidence to indicate that and that there was no evidence to indicate that the EEC had adopted appropriate efforts to the EEC had adopted appropriate efforts to avoid taking protective measures on apples avoid taking protective measures on apples from Chile.from Chile.

�� Decision quite unique and interesting. Panel, Decision quite unique and interesting. Panel, however, sidehowever, side--stepped the issue of whether the stepped the issue of whether the EEC had breached its obligations under Part IV.EEC had breached its obligations under Part IV.

Special & differential treatmentSpecial & differential treatment� Measures safeguarding the interests of developing

countries

� These require developed country Members of the WTO to take into account the special situation of developing countries before imposing any measures which might affect their trade interests.

� Article 10(1) of the Agreement on Sanitary and Phytosanitary Measures, for example, provides that:

� "In the preparation and application of sanitary or phytosanitary measures, Members shall take account of the special needs of developing county Members, and in particular of the least-developed country Members."


� Is this provision legally enforceable?

� Probably not. There is the obligation on developed country Members to consider the effects that their intended sanitary or phytosanitary measures may have on developing countries, but provision does not compel them to change those measures even if there is the probability that they may negatively impact on the interests of developing countries.

� Developing countries seem to accept that language does not create any enforceable rights, hence the SPS proposal under paragraph 21 of the implementation proposals

Special & differential treatmentSpecial & differential treatment�� Article 12.3 of the TBT Agreement provides:Article 12.3 of the TBT Agreement provides:

�� ““Members shall,in the preparation and Members shall,in the preparation and

application of technical regulations, standards application of technical regulations, standards

and conformity assessment procedures, take and conformity assessment procedures, take

account of the special development, financial account of the special development, financial

and trade needs of developing country Members and trade needs of developing country Members

…”…”..

�� Is it enforceable? Probably not. As stated Is it enforceable? Probably not. As stated

developed countries are only obliged to consider developed countries are only obliged to consider

the probable effects of their measures, but there is the probable effects of their measures, but there is

no obligation to withdraw them.no obligation to withdraw them.


�� Article 15 of the AntiArticle 15 of the Anti--Dumping Agreement:Dumping Agreement:

�� ““It is recognized that special regard must be given It is recognized that special regard must be given

by developed country Members to the special by developed country Members to the special

situation of developing country Members when situation of developing country Members when

considering the application of anticonsidering the application of anti--dumping duties. dumping duties.

Possibilities of constructive remedies provided for Possibilities of constructive remedies provided for

by this Agreement shall be explored before by this Agreement shall be explored before

applying antiapplying anti--dumping duties where they would dumping duties where they would

affect the essential interests of developing country affect the essential interests of developing country

Members."Members."

�� Is this provision legally enforceable?Is this provision legally enforceable?


�� It would appear that developed country Members It would appear that developed country Members

have an obligation to consider, for example, have an obligation to consider, for example,

accepting price undertakings, instead of imposing accepting price undertakings, instead of imposing

antidumping duties. However, it appears that antidumping duties. However, it appears that

there is no positive obligation on them to accept there is no positive obligation on them to accept

such alternative remedies. See Cotton Yarn Panel such alternative remedies. See Cotton Yarn Panel

case and EC case and EC -- Cotton.Cotton.

�� In the In the ECEC-- CottonCotton--type Bed Linen casetype Bed Linen case, India , India

argued that the EC had acted inconsistently with argued that the EC had acted inconsistently with

Article 15 of the ADA by not exploring possibilities Article 15 of the ADA by not exploring possibilities

of a constructive remedy and by not even reacting of a constructive remedy and by not even reacting

to arguments from Indian exporters pertaining to to arguments from Indian exporters pertaining to

Article 15 .Article 15 .

Special & differential treatmentSpecial & differential treatment�� With respect to the first sentence, the Panel observed as followWith respect to the first sentence, the Panel observed as follows:s:

�� ““The key words here are The key words here are ““special regardspecial regard”” and and ““when when

consideringconsidering””. It transpires from the text that the relevant . It transpires from the text that the relevant

moment when the first sentence comes into play is when moment when the first sentence comes into play is when

there is a determination of dumping and injury caused there is a determination of dumping and injury caused

thereby. The importing country authorities then have to thereby. The importing country authorities then have to

determine whether these findings, as well as any other determine whether these findings, as well as any other

elements relative to the case, would militate in favour of elements relative to the case, would militate in favour of

imposition of antiimposition of anti--dumping measures or not. The first dumping measures or not. The first

sentence of Article 15 states a preference that the special sentence of Article 15 states a preference that the special

situation of developing countries should be an element to be situation of developing countries should be an element to be

weighted when making that evaluation.weighted when making that evaluation.””


�� The Panel, however, reached the following The Panel, however, reached the following

conclusion:conclusion:

�� ““The first sentence does not seem to The first sentence does not seem to

create a rockcreate a rock--solid legal obligation. This solid legal obligation. This

follows from the opening words follows from the opening words ““It is It is

recognized that recognized that …… ““ and the wording and the wording

““special regard must be givenspecial regard must be given””. The first . The first

sentence thus contains a statement of sentence thus contains a statement of

preferred policy. This conclusion would preferred policy. This conclusion would

seem reinforced by Article 17.6(ii) second seem reinforced by Article 17.6(ii) second

sentence, of the ADAsentence, of the ADA””. .

Special & differential treatmentSpecial & differential treatment�� With respect to the second sentence, the PanelWith respect to the second sentence, the Panel’’s s

views were as follows:views were as follows:�� ““The text and spirit of the The text and spirit of the second sentencesecond sentence differs differs

considerably from that of the first sentence. To start considerably from that of the first sentence. To start

with, the object of the sentence (with, the object of the sentence (““essential interests of essential interests of

developing country Membersdeveloping country Members””) would seem to be more ) would seem to be more

direct than the direct than the -- rather vague rather vague -- ““special situationspecial situation”” of of developing country Members mentioned in the first developing country Members mentioned in the first

sentence. The obligations in the second sentence are sentence. The obligations in the second sentence are

accordingly stricter accordingly stricter …… It follows that the second It follows that the second sentence, when regarded in the context of the sentence, when regarded in the context of the

Agreement, lays down clear obligations. First, there Agreement, lays down clear obligations. First, there must must ipso factoipso facto be a determination (or assessment) be a determination (or assessment)

whether the essential interests of the developing country whether the essential interests of the developing country

concerned may be involved. This determination must concerned may be involved. This determination must

have been made have been made ““before applying antibefore applying anti--dumping dutiesdumping duties””


� With respect to the second sentence, the Panel held as follows:� “…Then the investigating authorities are required

to explore possibilities of constructive remedies “provided for by this Agreement”. These last words would seem to indicate that the remedy may consist of, among others, the non-imposition of anti-dumping measures, or an undertaking. As to the timing of the “exploration of possibilities of constructive remedies”, these “shall” be explored “before applying anti-dumping duties”. In the EC context, this means before provisional anti-dumping duties are imposed”.

Special & differential treatmentSpecial & differential treatment� With respect to the second sentence, the Panel held as follows:

� “…In our view, Article 15 imposes no obligation to actually

provide or accept any constructive remedy that may be

identified and/or offered. It does, however, impose an

obligation to actively consider, with an open mind, the

possibility of such a remedy prior to imposition of an anti-

dumping measure that would affect the essential interests of a

developing country”.

� “… In light of the expressed desire of the Indian producers to

offer undertakings, we consider that the EC should have made

some response upon receipt of the letter from counsel for

TEXPROCIL dated 13 October 1997. The rejection expressed

in the EC’s letter of 22 October, does not, in our view, indicate

that the possibility of an undertaking was explored, but rather

that the possibility was rejected out of hand”.


�� Provisions permitting the assumption of lesser Provisions permitting the assumption of lesser

obligations by developing countriesobligations by developing countries

�� As a result of the single undertaking approach, As a result of the single undertaking approach,

developing countries developing countries could notcould not pick and choose pick and choose

which agreements that they wanted to become which agreements that they wanted to become

parties to. All the MTAs are binding on WTO parties to. All the MTAs are binding on WTO

Members. However, the plurilateral trade Members. However, the plurilateral trade

agreements are binding only Members which have agreements are binding only Members which have

accepted themaccepted them

Special & differential treatmentSpecial & differential treatment�� Provisions permitting the assumption of lesser Provisions permitting the assumption of lesser

obligations by developing countriesobligations by developing countries

�� Under the Agreement on Agriculture, for example, Under the Agreement on Agriculture, for example,

developing countries assumed lesser obligations than their developing countries assumed lesser obligations than their

developed counterparts.developed counterparts.

�� TariffsTariffs: :

�� Developed countries to reduce their tariffs by 36 per cent Developed countries to reduce their tariffs by 36 per cent

over a sixover a six--year period, while developing countries by 24 year period, while developing countries by 24

per cent over a tenper cent over a ten--year period. year period.

�� Minimum tariff reduction on each tariff line: Developed Minimum tariff reduction on each tariff line: Developed

countries countries --15 per cent, while developing countries 10 per 15 per cent, while developing countries 10 per

cent.cent.

Special & differential treatmentSpecial & differential treatment�� Domestic supportDomestic support::

�� Developed countries to reduce tradeDeveloped countries to reduce trade--distorting domestic distorting domestic

support measures by 20 percent over a sixsupport measures by 20 percent over a six--year period, year period,

while developing countries by 13.3 percent over a tenwhile developing countries by 13.3 percent over a ten--

year period.year period.

�� Export subsidiesExport subsidies::

�� Developed countries to reduce value and volume by 36 Developed countries to reduce value and volume by 36

percent and 21 percent, respectively, while developing percent and 21 percent, respectively, while developing

countries by 24 percent and 14 percent, respectively countries by 24 percent and 14 percent, respectively over ten years.over ten years.

�� Provisions have legal force. Cannot compel Provisions have legal force. Cannot compel

developing countries to assume more obligations than developing countries to assume more obligations than

is envisaged.is envisaged.

Special & differential treatmentSpecial & differential treatment�� LeastLeast--developed countries not obliged to developed countries not obliged to

undertake commitments under the Agreement on undertake commitments under the Agreement on

Agriculture.Agriculture.

�� Why exemption?Why exemption?

�� Paragraph 1 of the Decision on Measures in Paragraph 1 of the Decision on Measures in

Favour of LeastFavour of Least--Developed Countries. Broad Developed Countries. Broad

exemption from assuming obligations.exemption from assuming obligations.

�� Good or bad policy? Consistency or lack of Good or bad policy? Consistency or lack of

consistency?consistency?

Special & differential treatmentSpecial & differential treatment�� Under the Agreement on Subsidies and Countervailing Under the Agreement on Subsidies and Countervailing

Measures:Measures:

�� LeastLeast--developed countries and developing countries developed countries and developing countries whose GDP per capita is less than US$1000 exempted whose GDP per capita is less than US$1000 exempted from the prohibition not to grant export subsidies, unless from the prohibition not to grant export subsidies, unless export competitiveness for two consecutive years.export competitiveness for two consecutive years.

�� Other developing countries Other developing countries -- Eight years to remove Eight years to remove export subsidies, although could be extended upon export subsidies, although could be extended upon request. request.

�� Developed countries Developed countries -- three years to phase out export three years to phase out export subsidies; Countriessubsidies; Countries--inin--transition transition -- seven yearsseven years

�� Regarding import substitution subsidies, leastRegarding import substitution subsidies, least--developed, developing, countriesdeveloped, developing, countries--inin--transition and transition and developed countries given 8, 5, 7 and 3 years, developed countries given 8, 5, 7 and 3 years, respectively to phase them out. respectively to phase them out.

Special & differential treatmentSpecial & differential treatment� It is quite clear that these provisions are legally

enforceable. Issue examined by the Panel and the Appellate Body in the Brazil - Civil Aircraft case.

� Canada alleged that Brazil had provided prohibited export subsidies to Embraer.

� Brazil argued, inter alia, that even if it was providing export subsidies, it had the right to do so under Article 27, as the eight-year period had not expired. The only obligation it had to satisfy was that it had not increased the level of its export subsidies since 1991.

� Canada disagreed. It alleged that Brazil was in contravention of Article 3 of the ASCM.

� Panel agreed with Brazil on this point. However, Brazil could not satisfy the other conditions in Art. 27.4

Special & differential treatmentSpecial & differential treatment�� Provisions relating to transitional periodsProvisions relating to transitional periods

�� With the exception of the AntiWith the exception of the Anti--Dumping Agreement Dumping Agreement

and the Preand the Pre--Shipment Inspection Agreement, almost Shipment Inspection Agreement, almost

all the agreements contain longer transitional periods all the agreements contain longer transitional periods

for developing countries.for developing countries.

�� Agriculture: Developed countries were given six years Agriculture: Developed countries were given six years

to implement their obligations, while developing to implement their obligations, while developing

countries were given ten years.countries were given ten years.

�� TRIPS: LeastTRIPS: Least--developed, developing and developed developed, developing and developed

countries were given 11, 5 and 2 years, respectively countries were given 11, 5 and 2 years, respectively

to comply with their obligations. Additional 5 years for to comply with their obligations. Additional 5 years for

developing countries which were not providing product developing countries which were not providing product

patents under their legislation.patents under their legislation.


�� Provisions relating to transitional periods Provisions relating to transitional periods (cont)(cont)

�� TRIMS: LeastTRIMS: Least--developed, developing and developed developed, developing and developed countries were given7, 5 and 2 years, respectively to countries were given7, 5 and 2 years, respectively to

comply with their obligations. comply with their obligations.

�� Customs Valuation: Developing countries which were Customs Valuation: Developing countries which were not parties to the Tokyo Round Code on Customs not parties to the Tokyo Round Code on Customs

valuation were given 5 years to comply with their valuation were given 5 years to comply with their

obligations. Requests have been made by a number of obligations. Requests have been made by a number of developing countries for extension of the deadlinedeveloping countries for extension of the deadline

�� Provisions relating to transitional periods are legally Provisions relating to transitional periods are legally

enforceable. In enforceable. In India PatentsIndia Patents case, the issue was not case, the issue was not whether India could avail itself with the provisions of Art. whether India could avail itself with the provisions of Art.

65 of the TRIPS Agreement, but whether it had complied 65 of the TRIPS Agreement, but whether it had complied

with the provisions of Art. 70.8 of the TRIPS Agreement.with the provisions of Art. 70.8 of the TRIPS Agreement.


�� Provisions relating to technical assistanceProvisions relating to technical assistance

�� The technical assistance programme of the WTO The technical assistance programme of the WTO

has two basic objectives, namely to assist has two basic objectives, namely to assist

developing countries to comply with their developing countries to comply with their

obligations under the WTO Agreements, and also obligations under the WTO Agreements, and also

to facilitate their participation in the multilateral to facilitate their participation in the multilateral

trading system. trading system.

�� Envisaged that technical assistance would be Envisaged that technical assistance would be

provided by the WTO Secretariat and donor provided by the WTO Secretariat and donor

countries. Under Art. 9 of the SPS Agreement, countries. Under Art. 9 of the SPS Agreement,

for example, :for example, :


�� Members agree to facilitate the provision of technical assistancMembers agree to facilitate the provision of technical assistance to e to other Members, especially developing country Members, either other Members, especially developing country Members, either bilaterally or through the appropriate international organizatiobilaterally or through the appropriate international organizations. ns. Such assistance may be, inter alia, in the areas of processing Such assistance may be, inter alia, in the areas of processing technologies, research and infrastructure, including in the areatechnologies, research and infrastructure, including in the areas of s of processing technologies, research and infrastructure, including processing technologies, research and infrastructure, including for for the purpose of seeking technical expertise, training and equipmethe purpose of seeking technical expertise, training and equipment to nt to allow such countries to adjust to, and comply with, sanitary or allow such countries to adjust to, and comply with, sanitary or phytosanitary measures necessary to achieve the appropriate levephytosanitary measures necessary to achieve the appropriate level l of sanitary or phytosanitary protection in their export marketsof sanitary or phytosanitary protection in their export markets””

�� ……

�� Where substantial investments are required in order for an exporWhere substantial investments are required in order for an exporting ting developing country Member to fulfil the sanitary or phytosanitardeveloping country Member to fulfil the sanitary or phytosanitary y requirements of an importing Member, the latter shall consider requirements of an importing Member, the latter shall consider providing such technical assistance as will permit the developinproviding such technical assistance as will permit the developing g country member to maintain and expand its market access country member to maintain and expand its market access opportunities for the product involved." (emphasis added)opportunities for the product involved." (emphasis added)


�� Are these obligations legally enforceable?Are these obligations legally enforceable?

�� Opinions divided between developed countries Opinions divided between developed countries

on the one hand, and developing countries on on the one hand, and developing countries on

the other.the other.

�� What about the use of the words What about the use of the words ““agree to agree to

facilitatefacilitate”” and and ““shall considershall consider””? Are they meant ? Are they meant

to be mandatory? Probably not.to be mandatory? Probably not.


� Special and Differential Treatment: Is it worth retaining the concept in the WTO legal framework?

� Which way forward – is it necessary to differentiate among developing countries –specificities ?

� Proposals made in the implementation exercise to make all S & D provisions legally binding

� Realistic or not realistic?

� Proposals submitted by developing countries in the context of the on-going negotiations


� Scepticism about the impact of S&dt on the economies of developing countries

� Delay of policy reforms

� Concerns of developing countries

� Best endeavours

� Stringent rules of origin

� Bureaucracy

� Differentiation among developing countries/least-developed countries

� S&DT provisions not an integral part of the UR Agreements. An add-on to the agreements resulting in “minimum standards”

Results of the Fourth Ministerial Conference

�� Special & differential treatmentSpecial & differential treatment

�� Small economiesSmall economies

�� LDCsLDCs

�� Technical assistanceTechnical assistance

�� Trade, Debt and Finance, Transfer of Trade, Debt and Finance, Transfer of

Technology, commodities etcTechnology, commodities etc

The Doha DeclarationThe Doha Declaration� Ministers at Doha recognised the problems that

have prevented developing countries from making full use of the S&DT provisions

� Set out a work programme in para 44 of the Doha Ministerial Declaration:

�� reaffirmed that SDT is an integral part of the WTOreaffirmed that SDT is an integral part of the WTO

�� noted that there are concerns about the implementation noted that there are concerns about the implementation of S&D provisionsof S&D provisions

�� directed that directed that allall S&D provisions should be reviewed to S&D provisions should be reviewed to strengthen them and to make them strengthen them and to make them moremore preciseprecise, , effectiveeffective and and operationaloperational, and , and

�� and linked this work to the decision on and linked this work to the decision on ‘‘Implementation Implementation related Issues and concernsrelated Issues and concerns’’

The Doha Declaration The Doha Declaration

�� The decision on The decision on ‘‘Implementation related Issues Implementation related Issues and concernsand concerns’’ mandates the CTD mandates the CTD

�� to identify the S&D provisions which should be made to identify the S&D provisions which should be made mandatory and the implications of doing so mandatory and the implications of doing so

�� to examine additional ways to make SDT more to examine additional ways to make SDT more effectiveeffective

�� to report to the GC with recommendations by July to report to the GC with recommendations by July 20022002

�� to consider how SDT could be incorporated into the to consider how SDT could be incorporated into the architecture of WTO rules. architecture of WTO rules.

Special and Differential Treatment Special and Differential Treatment Progress to dateProgress to date

� To fulfil the mandate given at Doha, the Special

Session of the CTD under the Chairmanship of

Ambassador Ransford Smith of Jamaica organised

its work around the following themes:

� Agreement-specific proposals

� Cross-cutting issues

� Monitoring mechanism for special and differential

treatment

Phases in the S&D work programmePhases in the S&D work programme

The S&D work programme can be considered to The S&D work programme can be considered to have been undertaken in the following phases:have been undertaken in the following phases:

I.I. Procedural phase JanProcedural phase Jan’’02 02 –– AprilApril’’0202

II.II. Submissions phase MaySubmissions phase May’’02 02 –– SepSep’’0202

III.III. Responses and discussions phase SeptResponses and discussions phase Sept’’02 02 ––DecDec’’0202

IV.IV. Negotiating phase DecNegotiating phase Dec’’02 02 –– FebFeb’’0303

V.V. General Council phase FebGeneral Council phase Feb’’03 03 –– JulyJuly’’0303

VI.VI. The preThe pre--Cancun phase JulyCancun phase July’’03 03 –– SeptSept’’0303

VII.VII. PostPost--Cancun phase SeptCancun phase Sept’’03 03 –– December 05December 05

VIII.VIII. Post Hong Kong to presentPost Hong Kong to present

Special and Differential Treatment Special and Differential Treatment AgreementAgreement--specific proposalsspecific proposals

�� Developing countries tabled nearly 90 AgreementDeveloping countries tabled nearly 90 Agreement--specific specific

proposalsproposals

�� Fundamental differences between Members, coupled with Fundamental differences between Members, coupled with

the large number of proposals on the table, prevented the the large number of proposals on the table, prevented the

membership from meeting the original deadline of July membership from meeting the original deadline of July

2002, which was subsequently extended by the General 2002, which was subsequently extended by the General

Council to December 2002 and later extended to February Council to December 2002 and later extended to February

20032003

�� Differences related both to the merit of some proposals Differences related both to the merit of some proposals

and the forum in which they should be addressed and the forum in which they should be addressed


�� Developed countries of the view that some of the Developed countries of the view that some of the

proposals go beyond what Ministers had mandated proposals go beyond what Ministers had mandated

at Doha eg., requests for indefinite extensions of at Doha eg., requests for indefinite extensions of

transition periods, binding technical assistance and transition periods, binding technical assistance and

requests which would fundamentally change the requests which would fundamentally change the

nature of some Agreementsnature of some Agreements

�� Developed countries want most of the proposals to Developed countries want most of the proposals to

be referred to the relevant negotiating groups for be referred to the relevant negotiating groups for

considerationconsideration


� Developing countries of the view that their requests fell

within the ambit of the Doha mandate

� That the terms of the mandate would invariably imply

amendments to certain Agreements

� Opposed to referring proposals to negotiating groups.

Prefer all proposals to be addressed by the CTD

Special Session

� Strong linkage between progress on various cross-

cutting issues, including graduation, differentiation and

the definition of developing countries etc., and progress

on Agreement-specific proposals


�� Agreement reached in principle on four proposals Agreement reached in principle on four proposals

in December 2002 and another eight in February in December 2002 and another eight in February

20032003

�� No agreement to recommend their adoption by the No agreement to recommend their adoption by the

General CouncilGeneral Council

�� Calls for the General Council to clarify para. 44 of Calls for the General Council to clarify para. 44 of

the DMD and para. 12 of the Implementation the DMD and para. 12 of the Implementation

Decision. Decision.

�� To break the impasse, the General Council To break the impasse, the General Council

mandated its Chairman on 10 Feb 2003 to mandated its Chairman on 10 Feb 2003 to

undertake consultations on how to take this matter undertake consultations on how to take this matter

forwardforward

General Council PhaseGeneral Council Phase

�� The Chairman of the General Council put The Chairman of the General Council put forward an approach based on two fundamental forward an approach based on two fundamental premises:premises:

�� all proposals would be addressed without all proposals would be addressed without prejudice to the outcome, and thatprejudice to the outcome, and that

�� an informal categorization of the proposals an informal categorization of the proposals was necessary to make the work more was necessary to make the work more efficient (three categories)efficient (three categories)

�� Members also agreed to referrals and to Members also agreed to referrals and to consider possible changes in the existing consider possible changes in the existing language language

General Council PhaseGeneral Council Phase

� At the General Council level, further agreement was reached on an additional twelve or thirteen proposals bringing the number of proposals on which agreement had been reached in principle to around twenty-five

� Differences in the views of Members prior to Cancún whether the proposed decisions should be “harvested” at Cancún

� Developing countries “not in a hurry” to adopt the twenty-five decisions

CancCancúún Ministerial Conferencen Ministerial Conference

� Agreement reached on three additional proposals bringing the number of proposals on which agreement had been reached in principle to twenty-eight

� At Cancún, the differences in the views of Members persisted. Whereas developed countries were in favour of harvesting the 28 Agreement-specific proposals, developing countries were opposed to it

� Developing countries argued that the 28 proposals lacked “economic value”

PostPost--Cancun DevelopmentsCancun Developments

� Work put on hold after the Cancun Ministerial Conference, as the GC Chairman’s consultations focussed on Agriculture, NAMA, Cotton and the Singapore Issues

� The new Chairperson (Mr. Faizel Ismail of South Africa) asked Members to respond to the following three questions::

� What did Members wish to do with the proposals on which they have already agreed to in principle

� How can the current discussions on S&D be made more productive and;

� What suggestions did Members have on the way forward so as to fulfil the Doha Mandate of making S&D more precise, effective and operational.

� The Chairman reported at the TNC meeting on 21 April 2004 that there was broad support for his approach

PostPost--Cancun DevelopmentsCancun DevelopmentsJuly 2004 DecisionJuly 2004 Decision

�� Reaffirmation that development concerns form an integral Reaffirmation that development concerns form an integral

part of the Doha Ministerial Declaration. Intention to fulfil part of the Doha Ministerial Declaration. Intention to fulfil

the development dimension of the DDAthe development dimension of the DDA

�� Reiteration of the importance of enhanced market access, Reiteration of the importance of enhanced market access,

balanced rules, well targeted, sustainably financed balanced rules, well targeted, sustainably financed

technical assistance and capacity building programmes technical assistance and capacity building programmes

can play in the economic development of developing can play in the economic development of developing

countriescountries

�� S&D:S&D: Reaffirmation that S&D provisions are an integral Reaffirmation that S&D provisions are an integral

part of the WTO Agreements. Doha mandate recalled part of the WTO Agreements. Doha mandate recalled ––

review of all S&D provisions with a view to strengthening review of all S&D provisions with a view to strengthening

them and making them more precise, effective and them and making them more precise, effective and

operationaloperational

PostPost--Cancun DevelopmentsCancun DevelopmentsJuly 2004 DecisionJuly 2004 Decision

� Progress thus far recognized – No consensus to adopt the 28

decisions agreed to informally at Cancún

� CTD in Special Session to review all outstanding agreement-

specific proposals and report to the General Council with clear

recommendations for a decision by July 2005

� Special Session to also address all other outstanding work,

including on cross-cutting issues, the monitoring mechanism

and the incorporation of S&D treatment into the architecture of

the WTO rules and report to the General Council

� WTO bodies to which category II proposals have been

referred to expeditiously complete their review and report to

the GC with clear recommendations for a decision no later

than July 2005

� No substantive progress in the run up to the HKMC

Hong Kong Ministerial ConferenceHong Kong Ministerial Conference

� Five decisions adopted in favour of the LDCs, including a decision on duty-free quota-free (DFQF) market access

� Special Session and those bodies to which the Category II proposals had been referred to complete the review of the outstanding Agreement-specific and make clear recommendations by December 2006

� Special Session to resume work on the outstanding issues, including on the cross-cutting issues.

Decision on DutyDecision on Duty--Free QuotaFree Quota--FreeFree� Developed-country Members shall, and developing-

country Members declaring themselves in a position to do so should, provide DFQF market access for all products originating from all LDCs, by 2008 or no later than the start of the implementation period

� Members unable to do so are permitted to provide DFQF market access for at least 97% of products originating from LDCs, defined at the tariff line level

� The manner in which the decision is implemented to be set out by December 2006

Status of DFQF DecisionStatus of DFQF Decision

� Japan has implemented the decision – 98% tariff lines

� Countries already providing more than 97% include:

� Switzerland, Canada, Norway, New Zealand, EC, Australia

� India, Brazil and China in the process of undertaking internal consultations on how to implement the decision

Status of DFQF DecisionStatus of DFQF Decision

� No of issues of concern to the LDCs, including

� coverage,

� rules of origin,

� timing of implementation

� LDCs have tabled two submissions to contribute to the discussions on the decision, one on market access and the other on rules of origin

88Total no. of proposals

submitted in the Special Session

38Proposals referred to

other bodies(Cat II)

50Proposals in the Special

Session(Cat I + Cat III)

168 are from Cat I and 8 are from Cat III.

11 are by the African Group & 5 by other dc

23Proposals

remaining in the Special

Session

8Remaining Category III proposals

(6 African Group & 2 other dc's)

8Remaining Category I Proposals(5 African Group & 3 other dc's)

27Agreed to in principle as part of pkg of 28

proposals

5LDC

proposals agreed to in

HK18

Proposals remaining

with the Sp. Session

2Proposals on

the ATC

Current StatusCurrent Status

� Members were unable to meet the December 2006 deadline due to, among others the suspension of the negotiations

� Agreement-specific proposals

� Text based discussions on 7 of the 16 remaining Agreement-specific proposals

� Outstanding Issues

� Considering possible elements of the functions of a Monitoring Mechanism

� DFQF Market Access

� LDCs carrying out bilaterals on the issues relating to the decision, including on rules of origin

Recent Cases on the Recent Cases on the Enabling ClauseEnabling Clause

Scope of the Enabling Clause(1Scope of the Enabling Clause(1))

�� The The Enabling ClauseEnabling Clause adopted in 1979 as part adopted in 1979 as part of the results of the Tokyo Round. Provided of the results of the Tokyo Round. Provided permanent legal bases for the following:permanent legal bases for the following:�� DerogationDerogation from the MFN principle to allow from the MFN principle to allow

developed countries to grant trade preferences on a developed countries to grant trade preferences on a generalized, nongeneralized, non--discriminatory basis to developing discriminatory basis to developing countries countries (para. 2(a) and footnote 3)(para. 2(a) and footnote 3)

�� DerogationDerogation from the the MFN principle to permit from the the MFN principle to permit deeper preferences to be extended to leastdeeper preferences to be extended to least--developed countries within GSP schemes developed countries within GSP schemes (para . (para . 2(d)2(d)


developing countries to enter into regional trade developing countries to enter into regional trade

agreements among themselves agreements among themselves (para. 2(c))(para. 2(c))


�� Purpose of GSP schemesPurpose of GSP schemes

�� shall be designed to facilitate and promote the trade of shall be designed to facilitate and promote the trade of

developing countries and not to raise barriers to or developing countries and not to raise barriers to or

create undue difficulties for the trade of any other create undue difficulties for the trade of any other

Member Member (para. 3(a))(para. 3(a))

�� shall not constitute an impediment to the reduction or shall not constitute an impediment to the reduction or

elimination of tariffs and other restrictions to trade on elimination of tariffs and other restrictions to trade on

an MFN basis an MFN basis (para. 3(b))(para. 3(b))

�� shall in the case of such treatment accorded by shall in the case of such treatment accorded by

developed Members to developing countries be developed Members to developing countries be

designed and, if necessary modified, to respond designed and, if necessary modified, to respond

positively to the development, financial and trade positively to the development, financial and trade

needs of developing countries needs of developing countries (para. 3(c))h(para. 3(c))h

Scope of the Enabling Clause(3Scope of the Enabling Clause(3))�� Purpose of GSP schemesPurpose of GSP schemes

�� With respect to para. 3(c), the delegate of St Lucia With respect to para. 3(c), the delegate of St Lucia stated that: stated that: ““A positive response would, in her A positive response would, in her view,mean addressing the specific needs of each view,mean addressing the specific needs of each country separately country separately -- something which could not be something which could not be done if preferential treatment were made done if preferential treatment were made generalized and nongeneralized and non--discriminatory (see para. 20 of discriminatory (see para. 20 of TN/CTD/M/4; 17 July 2002TN/CTD/M/4; 17 July 2002

�� Paraguay and other countries of the view that Paraguay and other countries of the view that special and differential treatment granted to special and differential treatment granted to developing countries should be nondeveloping countries should be non--discriminatory discriminatory in the sense that all benefits should be made in the sense that all benefits should be made available to all developing countries. available to all developing countries.

�� They argue that the grant of SDT, including They argue that the grant of SDT, including through waivers, should not prejudice the interests through waivers, should not prejudice the interests of other developing countries. of other developing countries.

�� Definition of Definition of ““developing countriesdeveloping countries”” has been raisedhas been raised


�� Transparency Obligations / ConsultationsTransparency Obligations / Consultations

�� Obligation to notify the GSP scheme to the General Obligation to notify the GSP scheme to the General

Council and furnish Members with all relevant Council and furnish Members with all relevant

information information (para. 4(a))(para. 4(a))

�� PreferencePreference--giving Member should enter into giving Member should enter into

consultations when requested by any Member with consultations when requested by any Member with

respect to any difficulty or matter that may respect to any difficulty or matter that may arisearise(para(para. .

4(b))4(b))

�� The General Council shall, if requested to do so by such The General Council shall, if requested to do so by such

Member, consult with all Members concerned with Member, consult with all Members concerned with

respect to the matter with a view to reaching solutions respect to the matter with a view to reaching solutions

satisfactory to all such Members satisfactory to all such Members (para. 4(b))(para. 4(b))

Scope of the Enabling Clause(5Scope of the Enabling Clause(5))�� The NonThe Non--Reciprocity PrincipleReciprocity Principle

�� The developed countries do not expect reciprocity The developed countries do not expect reciprocity

for commitments made by them in trade for commitments made by them in trade

negotiations to reduce or remove tariffs and other negotiations to reduce or remove tariffs and other

barriers to the trade of developing countries, I.e., barriers to the trade of developing countries, I.e.,

the developed countries do not expect the the developed countries do not expect the

developing countries, in the course of trade developing countries, in the course of trade

negotiations, to make contributions which are negotiations, to make contributions which are

inconsistent with their individual development, inconsistent with their individual development,

financial and trade needs. Developed countries financial and trade needs. Developed countries

shall therefore not seek, neither shall lessshall therefore not seek, neither shall less--

developed Members be required to make, developed Members be required to make,

concessions that are inconsistent with the latterconcessions that are inconsistent with the latter’’s s

development, financial and trade needs development, financial and trade needs (para. 5)(para. 5)

Scope of the Enabling Clause(6Scope of the Enabling Clause(6))�� The NonThe Non--Reciprocity PrincipleReciprocity Principle

�� Having regard to the special economic difficulties Having regard to the special economic difficulties

and the particular development, financial and trade and the particular development, financial and trade

needs of the leastneeds of the least--developed countries, the developed countries, the

developed countries shall exercise the utmost developed countries shall exercise the utmost

restraint in seeking any concessions or restraint in seeking any concessions or

contributions for commitments made by them to contributions for commitments made by them to

reduce or remove tariffs and other barriers to the reduce or remove tariffs and other barriers to the

trade of such countries, and the leasttrade of such countries, and the least--developed developed

countries shall not be expected to make countries shall not be expected to make

concessions or contributions that are inconsistent concessions or contributions that are inconsistent

with the recognition of their particular situation and with the recognition of their particular situation and

problems problems (para. 6)(para. 6)

Scope of the Enabling Clause(7Scope of the Enabling Clause(7))�� The NonThe Non--Reciprocity Principle and Para. Reciprocity Principle and Para.

17 of the Doha Ministerial Declaration17 of the Doha Ministerial Declaration

�� “…“… [t]he negotiations shall take fully into account [t]he negotiations shall take fully into account

the special needs and interests of developing and the special needs and interests of developing and

leastleast--developed country participants, including developed country participants, including

through less than full reciprocity in reduction through less than full reciprocity in reduction

commitmentscommitments, in accordance with the relevant , in accordance with the relevant

provisions of Article XXVIII bis of GATT 1994 and provisions of Article XXVIII bis of GATT 1994 and

the provisions cited in para. 50 below [Part IV of the provisions cited in para. 50 below [Part IV of

the GATT 1994, Enabling Clause, the UR Decision the GATT 1994, Enabling Clause, the UR Decision

on Measures in Favour of LDCs etc]. To this end, on Measures in Favour of LDCs etc]. To this end,

the modalities to be agreed will include appropriate the modalities to be agreed will include appropriate

studies and capacitystudies and capacity--building measures to assist building measures to assist

LDCs to participate effectively in the negotiationsLDCs to participate effectively in the negotiations


�� Paragraph 12.2 of the Paragraph 12.2 of the Decision on Decision on

ImplementationImplementation--Related Issues and Related Issues and

ConcernsConcerns provides that the Ministerial provides that the Ministerial

ConferenceConference

�� ““Reaffirms that preferences granted to Reaffirms that preferences granted to

developing countries pursuant to the developing countries pursuant to the ……

Enabling ClauseEnabling Clause”” should be generalized, nonshould be generalized, non--

reciprocal and nonreciprocal and non--discriminatorydiscriminatory””


�� Limitations frequently imposed by Limitations frequently imposed by

preferencepreference--giving countries:giving countries:

�� CompetitivenessCompetitiveness

�� specialization and development indicesspecialization and development indices

�� sectoral and country graduationsectoral and country graduation

�� Linking of benefits to nonLinking of benefits to non--trade issues such as trade issues such as

environmental and labour standardsenvironmental and labour standards

�� Enforcement of intellectual property rightsEnforcement of intellectual property rights

�� To reward countries engaged in the fight against To reward countries engaged in the fight against

drugsdrugs

Cases initiated on the basis of Cases initiated on the basis of

the Enabling Clausethe Enabling Clause�� EC EC -- Conditions for the granting of tariff Conditions for the granting of tariff

preferences to developing countriespreferences to developing countries

(WT/DS246)(WT/DS246)

�� India challenged the consistency of the ECIndia challenged the consistency of the EC’’s s

Drug Arrangements with Article I:1 of the GATT Drug Arrangements with Article I:1 of the GATT

1994, as tariff preferences accorded under these 1994, as tariff preferences accorded under these

arrangements were made available to only a arrangements were made available to only a

select group of developing countriesselect group of developing countries

�� India also claimed that the Drug Arrangements India also claimed that the Drug Arrangements

could not be justified under the Enabling Clause could not be justified under the Enabling Clause

nor under Article nor under Article XX(bXX(b) of the GATT 1994) of the GATT 1994


the Enabling Clausethe Enabling Clause�� The EC claimed that Drug Arrangements fell within The EC claimed that Drug Arrangements fell within

the scope of paragraph 2(a) of the Enabling the scope of paragraph 2(a) of the Enabling Clause which excluded the application of Article Clause which excluded the application of Article I:1 of the GATT 1994.I:1 of the GATT 1994.

�� EC claimed that India had the burden of proving EC claimed that India had the burden of proving that the Drug Arrangements were inconsistent that the Drug Arrangements were inconsistent with the Enabling Clause.with the Enabling Clause.

�� Further, it alleged that since India had not claimed Further, it alleged that since India had not claimed a violation of the Enabling Clause, the Panel a violation of the Enabling Clause, the Panel should not examine the consistency of its regime should not examine the consistency of its regime with the Enabling Clause (see dissenting opinion)with the Enabling Clause (see dissenting opinion)

�� Lastly, if the Panel should find that Article I:1 is Lastly, if the Panel should find that Article I:1 is applicable, then Drug Arrangements justified applicable, then Drug Arrangements justified under Article under Article XX(bXX(b) of the GATT 1994) of the GATT 1994


the Enabling Clausethe Enabling Clause

�� On the issue of nature of the Enabling ClauseOn the issue of nature of the Enabling Clause, the , the Panel held that it was in the nature of an exception Panel held that it was in the nature of an exception to Article I:1 of the GATT 1994to Article I:1 of the GATT 1994

�� The The Appellate BodyAppellate Body upheld the Panelupheld the Panel’’s finding on s finding on this issuethis issue



�� On the issue of whether or not Article I:1 could On the issue of whether or not Article I:1 could apply to a measure covered by the Enabling Clauseapply to a measure covered by the Enabling Clause, , the Panel held that the Panel held that ““as an exception provision, the as an exception provision, the Enabling Clause applies concurrently with Article I:1 Enabling Clause applies concurrently with Article I:1 and takes precedence to the extent of conflict and takes precedence to the extent of conflict between the two provisions ... To say that Article I:1 between the two provisions ... To say that Article I:1 does not apply to measures under the Enabling does not apply to measures under the Enabling Clause would mean that GSP imports from different Clause would mean that GSP imports from different developing countries could be subject to different developing countries could be subject to different taxation levels in the importing countrytaxation levels in the importing country’’s domestic s domestic market. Such a result was clearly not intended by market. Such a result was clearly not intended by the drafters of the Enabling Clausethe drafters of the Enabling Clause””. .



�� The The Appellate BodyAppellate Body upheld the Panelupheld the Panel’’s finding on s finding on this issue:this issue:

�� ““The EC argues that the Enabling Clause exists The EC argues that the Enabling Clause exists ““sideside--byby--side and on an equal levelside and on an equal level”” with Article I:1, and with Article I:1, and thus applies to the exclusion of that provision. In our thus applies to the exclusion of that provision. In our view, the EC misconstrues the relationship between view, the EC misconstrues the relationship between the two provisions. ... [the two provisions. ... [T]heT]he Enabling Clause Enabling Clause ““does does not exclude the applicabilitynot exclude the applicability”” of Article I:1 in the sense of Article I:1 in the sense that, as a matter of procedure, the challenged that, as a matter of procedure, the challenged measure is submitted successively to the test of measure is submitted successively to the test of compatibility with the two provisions. But, as a compatibility with the two provisions. But, as a matter of final determination..., it is clear that only matter of final determination..., it is clear that only one provision applies at a time. This is what the Panel one provision applies at a time. This is what the Panel itself found when, after stating that itself found when, after stating that ““as an exception as an exception provision, the Enabling Clause applies concurrently provision, the Enabling Clause applies concurrently with Article I:1, it added with Article I:1, it added ““and takes precedence to the and takes precedence to the extent of the conflict between the two provisions.extent of the conflict between the two provisions.””


the Enabling Clausethe Enabling Clause�� On the issue of which party bore the burden of proof On the issue of which party bore the burden of proof

of establishing the consistency or otherwise of the of establishing the consistency or otherwise of the Drug Arrangements with the Enabling ClauseDrug Arrangements with the Enabling Clause, the , the Panel held that given the nature of the Enabling Panel held that given the nature of the Enabling Clause as an exception to Article I:1, it was the EC Clause as an exception to Article I:1, it was the EC which bore the burden of proof:which bore the burden of proof:

�� ““It [was] sufficient for India to demonstrate an It [was] sufficient for India to demonstrate an inconsistency with Article I.1 It [was] not the task of inconsistency with Article I.1 It [was] not the task of India to establish further violations of possible India to establish further violations of possible exceptions provisions that could justify the exceptions provisions that could justify the inconsistency of the ECinconsistency of the EC’’s measure with Article I:1. s measure with Article I:1. ...[...[I]tI]t was for the EC to (i) to raise the Enabling was for the EC to (i) to raise the Enabling Clause as an affirmative defence to IndiaClause as an affirmative defence to India’’s claim of s claim of violation of Article I:1, and (ii) to demonstrate the violation of Article I:1, and (ii) to demonstrate the measuremeasure’’s consistency with that provisions consistency with that provision””..


the Enabling Clausethe Enabling Clause�� The The Appellate BodyAppellate Body modified the Panelmodified the Panel’’s finding s finding

on this issue:on this issue:

�� ““[[A]lthoughA]lthough the burden of justifying the Drug the burden of justifying the Drug Arrangements under the Enabling Clause falls on the Arrangements under the Enabling Clause falls on the EC, India was required to do more than simply allege EC, India was required to do more than simply allege inconsistency with Article I. Indiainconsistency with Article I. India’’s claim of s claim of inconsistency with Article I with respect to the inconsistency with Article I with respect to the measure challenged here is inextricably linked with its measure challenged here is inextricably linked with its argument that the Drug Arrangements do not satisfy argument that the Drug Arrangements do not satisfy the conditions in the Enabling Clause and that they the conditions in the Enabling Clause and that they cannot be justified as a derogation from Article I.cannot be justified as a derogation from Article I.


the Enabling Clausethe Enabling Clause�� On the issue of whether or not the Drug On the issue of whether or not the Drug

Arrangements were consistent with Article I:1 of the Arrangements were consistent with Article I:1 of the GATT 1994GATT 1994, the Panel held that:, the Panel held that:

�� ““Because the tariff preferences under the Drug Because the tariff preferences under the Drug Arrangements are accorded only on the condition that Arrangements are accorded only on the condition that the receiving countries are experiencing a certain the receiving countries are experiencing a certain gravity of drug problems, these tariff preferences are gravity of drug problems, these tariff preferences are not accorded not accorded ““unconditionallyunconditionally”” to the like products to the like products originating in all other WTO Members, as required by originating in all other WTO Members, as required by Article I:1Article I:1””. It [follows] therefore that the tariff . It [follows] therefore that the tariff advantages under the Drug Arrangements are not advantages under the Drug Arrangements are not consistent with Article I:1 of the GATT 1994consistent with Article I:1 of the GATT 1994””..

�� Issue not addressed by the Appellate Body as the EC Issue not addressed by the Appellate Body as the EC did not appeal the ruling by the Panel on this issuedid not appeal the ruling by the Panel on this issue


the Enabling Clausethe Enabling Clause�� On the issue of whether or not the Drug On the issue of whether or not the Drug

Arrangements were consistent with footnote 3 of Arrangements were consistent with footnote 3 of paragraph 2(a) of the Enabling Clause, which states paragraph 2(a) of the Enabling Clause, which states that GSP schemes should be nonthat GSP schemes should be non--discriminatorydiscriminatory, the , the Panel expressed the view that consideration of Panel expressed the view that consideration of paragraph 3(c) was necessary to determine whether paragraph 3(c) was necessary to determine whether the Enabling Clause allowed preferencethe Enabling Clause allowed preference--giving giving countries to differentiate among developing countries to differentiate among developing countries in order to countries in order to ““respond positively to the respond positively to the development, financial and trade needs of development, financial and trade needs of developing countriesdeveloping countries””..


the Enabling Clausethe Enabling Clause�� As regards the scope of paragraph 3(c) of the As regards the scope of paragraph 3(c) of the

Enabling Clause, the Panel held as follows:Enabling Clause, the Panel held as follows:

�� [[T]heT]he elements relevant to elements relevant to ““responding responding positively to the development, financial and positively to the development, financial and trade needs of developing countriestrade needs of developing countries”” ... Include ... Include the following: (i) the level of product coverage the following: (i) the level of product coverage and depth of tariff cuts in general should be no and depth of tariff cuts in general should be no less than the level and depth offered and less than the level and depth offered and accepted in the Agreed Conclusions, with the accepted in the Agreed Conclusions, with the possibility of providing further improvements; possibility of providing further improvements; (ii) the design and modification of a GSP (ii) the design and modification of a GSP scheme may not result in a differentiation in scheme may not result in a differentiation in the treatment of different developing countries, the treatment of different developing countries, except as provided in points (iii) and (iv);except as provided in points (iii) and (iv);


the Enabling Clausethe Enabling Clause�� (iii) a priori limitations may be used to set (iii) a priori limitations may be used to set

import ceilings so as to exclude certain imports import ceilings so as to exclude certain imports originating in individual developing countries originating in individual developing countries where the products concerned reach a certain where the products concerned reach a certain competitive level in the market of the competitive level in the market of the preferencepreference--giving country; and (iv) giving country; and (iv) differentiation is permitted among developing differentiation is permitted among developing countries, in designing and modifying GSP countries, in designing and modifying GSP schemes, in the case of special treatment to schemes, in the case of special treatment to the leastthe least--developed countries, pursuant to developed countries, pursuant to paragraph 2(d). paragraph 2(d). No other differentiation No other differentiation among developing countries is permitted by among developing countries is permitted by paragraph 3(c)paragraph 3(c)”” (Italics added)(Italics added)



�� As regards the meaning of the term As regards the meaning of the term ““nonnon--

discriminatorydiscriminatory”” in footnote 3in footnote 3, the Panel held , the Panel held

that:that:

�� ““[[The footnote] required that identical tariff The footnote] required that identical tariff

preferences under GSP schemes [must] be preferences under GSP schemes [must] be

provided to all developing countries without provided to all developing countries without

differentiation, except for the differentiation, except for the

implementation of a priori limitationsimplementation of a priori limitations””..

�� The The Appellate BodyAppellate Body reversed the Panelreversed the Panel’’s s

finding on this point:finding on this point:

�� ““[The] term [The] term ““nonnon--discriminatorydiscriminatory”” in footnote in footnote

3 does not prohibit developed3 does not prohibit developed--countrycountry



�� Members from granting different tariffs to Members from granting different tariffs to products originating in different GSP products originating in different GSP beneficiaries, provided that such differential beneficiaries, provided that such differential tariff treatment meets the remaining conditions tariff treatment meets the remaining conditions in the Enabling Clause. In granting such in the Enabling Clause. In granting such differential tariff treatment, however, differential tariff treatment, however, preferencepreference--granting countries are required, by granting countries are required, by virtue of the term virtue of the term ““nonnon--discriminatorydiscriminatory””, to , to ensure that identical treatment is available to ensure that identical treatment is available to all similarlyall similarly--situated GSP beneficiaries, that is to situated GSP beneficiaries, that is to all GSP beneficiaries that have the all GSP beneficiaries that have the ““development, financial and trade needsdevelopment, financial and trade needs”” to to which the treatment in question is intended to which the treatment in question is intended to respond.respond.””



�� On the issue of the whether or not the On the issue of the whether or not the

term term ““developing countriesdeveloping countries”” in in

paragraph 2(a) meant all developing paragraph 2(a) meant all developing

countriescountries, the Panel held that, the Panel held that ::

�� ““[[T]heT]he term term ““developing countriesdeveloping countries”” should should

be interpreted to mean be interpreted to mean all all developing developing

countries, with the exception that where countries, with the exception that where

developed countries are implementing a developed countries are implementing a

priori limitations, developing countries may priori limitations, developing countries may

mean mean less than allless than all developing countriesdeveloping countries””..



�� The The Appellate BodyAppellate Body reversed the reversed the

PanelPanel’’s finding on this point:s finding on this point:

�� ““[[T]heT]he term term ““developing countriesdeveloping countries”” should should

not be read to mean not be read to mean ““allall”” developing developing

countries. ... Paragraph 2(a) does not countries. ... Paragraph 2(a) does not

prohibit preferenceprohibit preference--granting countries from granting countries from

according different tariff preferences to according different tariff preferences to

different subdifferent sub--categories of GSP categories of GSP

beneficiaries.beneficiaries.””



�� CONCLUSIONS OF THE APPELLATE CONCLUSIONS OF THE APPELLATE

BODYBODY

�� Applying its understanding of the Enabling Applying its understanding of the Enabling

Clause to the facts, the Clause to the facts, the Appellate BodyAppellate Body

held that the EC had failed to prove that its held that the EC had failed to prove that its

Drug Arrangements were justified under the Drug Arrangements were justified under the

paragraph 2(a) of the Enabling Clause. paragraph 2(a) of the Enabling Clause.

�� It noted that the EC itself had It noted that the EC itself had

acknowledged that its Regulation as acknowledged that its Regulation as

currently drafted made available the tariff currently drafted made available the tariff

preferences under the Drug Arrangements preferences under the Drug Arrangements

to only twelve countriesto only twelve countries. .



�� Such a "closed list" of beneficiaries cannot Such a "closed list" of beneficiaries cannot

ensure that the preferences under the Drug ensure that the preferences under the Drug

Arrangements are given to all GSP beneficiaries Arrangements are given to all GSP beneficiaries

suffering from illicit drug production and suffering from illicit drug production and

trafficking. The "nontrafficking. The "non--discriminatory" obligation discriminatory" obligation

in footnote 3 of the Enabling Clause required in footnote 3 of the Enabling Clause required

that the tariff preferences under the Drug that the tariff preferences under the Drug

Arrangements were made available to all Arrangements were made available to all

similarlysimilarly--situated GSP beneficiaries. . situated GSP beneficiaries. .

�� The Appellate Body therefore The Appellate Body therefore upheldupheld the the

Panel's conclusion, for different reasons.Panel's conclusion, for different reasons.


the Enabling Clausethe Enabling Clause�� On whether the Drug Arrangements could be On whether the Drug Arrangements could be

justified under Article XX (b) of the GATT 1994justified under Article XX (b) of the GATT 1994, , the Panel held that the EC had not been able to the Panel held that the EC had not been able to demonstrate that:demonstrate that:

�� ““(a) (a) the Drug Arrangements are a measure the Drug Arrangements are a measure designed for the purpose of protecting human designed for the purpose of protecting human life or health in the EC; or that (b) the Drug life or health in the EC; or that (b) the Drug arrangements are arrangements are ““necessarynecessary”” for the protection for the protection of human life or health in the EC. Consequently, of human life or health in the EC. Consequently, ...they] are not provisionally justifiable under ...they] are not provisionally justifiable under Article XX (b). ... The EC has not demonstrated Article XX (b). ... The EC has not demonstrated that the Drug Arrangements are not being that the Drug Arrangements are not being applied in a manner constituting arbitrary or applied in a manner constituting arbitrary or unjustifiable discrimination between countries unjustifiable discrimination between countries where the same conditions prevailwhere the same conditions prevail””..

�� Not addressed by the Appellate BodyNot addressed by the Appellate Body


the Enabling Clausethe Enabling Clause�� EC EC -- Generalized system of preferencesGeneralized system of preferences


�� Thailand challenged the legal basis of the ECThailand challenged the legal basis of the EC’’s s

GSP. It argued that the scheme was GSP. It argued that the scheme was

discriminatory, as not all developing countries discriminatory, as not all developing countries

were entitled to the preferential rate of duty were entitled to the preferential rate of duty

on certain products, including tuna.on certain products, including tuna.

�� It alleged breaches of the MFN principle and It alleged breaches of the MFN principle and

also the Enabling Clause.also the Enabling Clause.

�� Case was referred to the WTO DirectorCase was referred to the WTO Director--

General under Article V of the DSU General under Article V of the DSU -- Good Good

Offices, Conciliation and MediationOffices, Conciliation and Mediation


the Enabling Clausethe Enabling Clause�� EC EC -- Measures affecting soluble coffeeMeasures affecting soluble coffee


�� Brazil challenged the compatibility of the ECBrazil challenged the compatibility of the EC’’s s GSP scheme with the relevant rules of the GSP scheme with the relevant rules of the WTO (Article I and the Enabling Clause. WTO (Article I and the Enabling Clause. Specifically, it alleged that the scheme was in Specifically, it alleged that the scheme was in breach of paragraph 4(b) of the Enabling breach of paragraph 4(b) of the Enabling Clause in the way it Clause in the way it ““progressively and progressively and selectivelyselectively”” reduced or eliminated preferences reduced or eliminated preferences granted to specific products and/or beneficiary granted to specific products and/or beneficiary countries under its GSP scheme. countries under its GSP scheme.

�� Pursuant to this scheme, BrazilPursuant to this scheme, Brazil’’s benefits were s benefits were initially reduced and later eliminated initially reduced and later eliminated


the Enabling Clausethe Enabling Clause�� EC EC -- Measures affecting soluble coffeeMeasures affecting soluble coffee


�� Brazil also challenged tariff preferences Brazil also challenged tariff preferences accorded under the special tariff arrangements accorded under the special tariff arrangements for combating drug production and trafficking. for combating drug production and trafficking. These preferences benefitted products These preferences benefitted products originating Andean and Central American originating Andean and Central American Common Market countries, including soluble Common Market countries, including soluble coffee. Their coffee entered the EC dutycoffee. Their coffee entered the EC duty--free, free, while Brazilwhile Brazil’’s exports were subjected to s exports were subjected to custom dutiescustom duties (see also WT/DS154)(see also WT/DS154)

�� The parties later notified a mutually agreed The parties later notified a mutually agreed solutionsolution

Special and Differential Treatment of Developing … and Differential Treatment of Developing...

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