Brief Introduction To The 25 Special And D Ifferenti Al Treatment Textual Proposals

Proposals no 1 to 3 deal with Article XVIII (18) GATT. According to its preamble, developing countries should enjoy ‘additional facilities’ to enable them (a) to maintain sufficient flexibility in their tariff structure to be able to grant the tariff protection required for infant industries and (b) apply quantitative restrictions for balance of payments purposes. The reality is that Article XVIII does not provide any ‘additional facilities’ to developing countries, compared to what is available to all the membership under Article XXVIII GATT.

Proposal no 1 is on Article XVIII (18), Sections A and C and deals with infant industry protection. In order to protect infant industries as defined in Article XVIII, countries can under conditions modify or withdraw concessions. However, a very onerous and burdensome procedure needs to be followed (e.g. offer of compensation) and Members can retaliate. According to WTO secretariat, Section A has never been utilised since the inception of the WTO. Three developing countries sought recourse to Article XVIII:C, but is has not been operational in the sense that results were achieved for these countries.

Hence we propose a more straightforward process, allowing for temporary modification or deviation from WTO commitments for an initial period, using a broader definition of infant industry that also includes industries battered by climate change or hostilities.

Proposal no 2 and 3 concern Article XVIII Section B and the Uruguay Round Understanding on Balance of Payment provisions. In proposal no.2 we propose better guidelines for determining the adequacy of Member’s reserves that are adequate within the context of developing countries’ economic development programmes. We also propose suspension of the right to retaliate against countries that use this this Article. In proposal no. 3 we promote the use of simplified procedures for new Balance of Payment measures as well as those under regular review by the Balance of Payments Committee.

Proposal no. 4 is on Article XXVIII and its Understanding. We propose three things. One, we clarify the meaning of substantial interest to include countries whose share of export is significant to the Member wishing to renegotiate its commitments. This will benefit smaller countries which currently do not have a seat at the negotiation table when larger countries opt for modification or withdrawal of commitments. Two, if the proposed modification or withdrawal adversely affects the exports of LDCs, LDCs are to be exempted. This is perfectly possible within the current format of the Schedules of Members. Three, in forming or joining a customs union, some developing countries might run into WTO bound rates overruns for certain tariff lines. We are proposing a solution allowing these Members to withdraw or modify their tariff commitments in accordance with the common external tariff maintained by the customs union.

Proposal no. 5 – Article 15.1 of the Agreement on Agriculture is about binding special and differential treatment in favour of developing countries into Members’ Schedules. We are proposing that developed country Members are to bind all their LDC preferences for agricultural products, with a goal of 100% DFQF in agriculture. This is possible within the confines of the current Schedules.

Proposals no. 6 and 7 deal with Article 10 of the SPS Agreement. Developing countries and LDCs are regularly confronted with changing and too stringent SPS measures, which do not take into account our interests. Therefore, we are proposing that developed countries are to notify all proposed SPS measures, not only a subset of SPS measures. Currently, only SPS measures that are not substantially the same as international standards and have a significant effect on trade of other Members are to be notified.

In addition, a comment period of at least 90 days should be provided, and longer for LDCs, if requested. Upon request, developed countries are to consult at an early stage with developing countries, prior to adoption of the measure, not after the fact as often is the case. Where possible, WTO Members are to provide longer time frame for compliance for developing and least developed countries, at least 12 months.

A stronger legal basis is laid for the provision of technical and financial assistance by developed countries in cases where substantial investments are required to comply with their SPS measures. In the case of SPS measures adopted in urgent circumstances, the market share of developing and LDCs should be maintained.

Finally, importing developed countries shall not ban the importation and marketing of products from developing countries and LDCs based on the rejection of shipments from one or a limited number of suppliers. This is important as arguably the Trade Facilitation Agreement does not facilitate trade in a big way for agricultural products, because the TF Agreement is without prejudice to the rights and obligations of the SPS Agreement. It is also of importance for smaller LDC exporting countries that are flagged more often in risk management systems of importing countries due to lower volumes exported by LDCs.

Proposals no. 8, 9 as well as 17 deal with the TRIMs Agreement. As you are aware, the decision by ministers on TRIMs contained in Annex F of the 2005 Hong Kong Ministerial Declaration will expire in 2020. We are therefore proposing a solution that will enable developing countries to introduce new TRIMs such as local content development policies, in order to promote domestic manufacturing capabilities, stimulate the transfer of technology, promote domestic competition and correct restrictive business practices, among other things.

Proposals 10 and 11 concern the TRIPS Agreement. Here we propose a position that is consistent with our demand in the TRIPS Council. In other words, we propose that LDCs should be exempted from the TRIPS Agreement until they cease to be LDCs. Furthermore, we safeguard access to medicines by graduating LDCs that were in a so-called ‘LDC-RTA’ as of December 2005.

Proposal 12 is about increasing participation of developing countries in services trade, Article IV of GATS. Here we propose minimum quotas for services and service suppliers from developing countries and LDCs and the elimination of horizontal limitations maintained by developed country Members on movement of natural persons from developing countries and LDCs.

For LDCs specifically, we propose measures to boost LDC services exports, including removing limitations on movement of natural persons as well as national treatment barriers which are currently not covered well by the LDC Services Waiver. We also propose the adoption of concrete domestic measures for facilitating transfer of technology. Such measures to boost LDC services’ exports are to be taken by developed countries and developing countries that are in a position to do so.

Proposal 13 clarifies Article V.3 of GATS, which is similar to an Enabling Clause for services agreements. We propose to promote progressive regional integration between developing countries, as services agreements between developing countries do not necessarily need to have to cover substantially all services sectors.

Proposal 14 and 16 concern the Agreement on Subsidies and Countervailing Measures. Proposal no. 15 takes from paragraph 10.2 of the 2001 Doha Implementation Decision which stipulates that during the Doha Round, WTO Members shall exercise due restraint with respect to challenging subsidies provided by developing countries, in order to achieve development goals. If the Doha Round concludes, we need to have a deliverable to continue such flexibility, and that is what we propose here. Such subsidies should continue to be non- actionable.

Further, proposal no. 16 creates space for developing countries to have subsidies based on local content. Such measures pose compatibility challenges with the TRIMs Agreement as well as the Agreement on Subsidies and Countervailing Measures. While currently Annex F on the TRIMs Agreement addresses to some extent the TRIMs part of the equation, we are proposing to solve the subsidy part of the equation as well.

Proposal 15 concerns Article 12.3 TBT, which is similar to Article 10.2 SPS – taking into account the concerns of developing countries. So we apply the same approaches proposed with respect to SPS measures, as mentioned before, to technical regulations, standards and conformity assessment procedures. The main difference is that the proposal on prohibiting bans based on one or limited number of shipments does not feature in the TBT context, as this is more relevant in the SPS context.

Proposal 18 is on the Customs Valuation Agreement, a technical agreement. One important issue that plagues our countries is import under-invoicing, which deprives our governments from money for development expenditures. We therefore propose that LDCs shall be allowed to use minimum or reference values in cases of insufficient or inadequate technical and financial assistance, lack of customs cooperation or lack of access to international pricing data.

We also propose that developing countries shall not be required to implement provisions from this agreement until implementation capacity has been acquired, a principle from the TF Agreement. Developed countries and developing countries in a position to do so should provide technical and financial assistance to enable LDCs to comply with the Customs Valuation Agreement.

Proposal 19 deals with the Agreement on Safeguards, Article 9. LDCs are generally not users of safeguard measures but we might be hit by safeguard measures applied by others. Therefore, we propose that when a WTO Member applies a safeguard measure, this safeguard measure shall not be applied to an LDC whose import share into that country is 10 per cent or less. The percentage for developing countries is 3 per cent. Developed countries are to provide a list with Members excluded from safeguard measures. The other proposals broaden to a certain extent the flexibility to apply safeguards, with a view to promoting industrialization.

Proposal 20 is about paragraph 6 of Article XXXVI (36) of GATT and the Declaration on the

Contribution of the WTO to Achieving Coherence in Global Economic Policy. Article

XXXVI.6 addresses international lending agencies and the relationship between trade and financial assistance to development. We therefore propose, among other elements, that WTO Members coordinate their work to ensure that LDCs are not subjected to conditionalities on loans, grants and ODA that are inconsistent with their rights under the WTO Agreements. LDCs are also not required to make concessions that are inconsistent with their needs or capacities.

One element within proposal 20 concerns S&D for developing countries with regards to the pace and extent of commitments that they may undertake in regional trade agreements involving developed countries. There is a pending question on whether to keep this text as part of proposal 20 or to place it somewhere else, as it relates more to Article XXIV.

Proposal 21 concerns preference erosion. Paragraph 3 of the Decision on Measures in favour of LDCs states that ministers are to keep under review the specific needs of LDCs and continue to seek the adoption of positive measures to facilitate the expansion of trading opportunities of LDCs. MFN tariff liberalisation as foreseen in the Doha Round could lead to diminished trading opportunities of LDCs due to preference erosion. Here we propose certain general solutions to this problem, mainly by putting obligations on developed countries to provide compensatory and adjustment support.

Proposal 22 is about the Enabling Clause. At present it is unclear to what extent agreements on non-tariff measures between developing countries are covered by the Enabling Clause. Hence, we propose a clarification. Furthermore, we propose that developed countries are to consult with LDCs to ensure that meaningful market access is obtained under GSP and other non-reciprocal schemes for LDCs.

Proposal 23 concerns joint action in the area of trade and development policies (Part IV of GATT). More specifically, we propose to make the right to adequate food an objective of current and future WTO negotiations and clarify that LDCs can adjust their applied tariffs beyond the bound in order to safeguard this human right.

Proposal 24 concerns state trading enterprises (STEs) which is regulated by Article XVII and its Understanding. STEs fulfil a range of essential and vital functions in developing countries. We clarify that, in the case of developing countries, the “general principles of non- discriminatory treatment” as referred to in paragraph 1(a) of Article XVII only cover the MFN principle not the national treatment obligations. This would allow STEs to play a role in inter alia preventing consumer prices from exceeding certain limits, enabling the implementation of stabilization arrangements etc.

Proposal 25 concerns dispute settlement and proposals to better give attention to the particular problems and interest of developing countries and LDCs, before establishment of a panel as well as during panel proceedings.


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