North declares war on SDT and improvements at WTO

A proposal for more flexible WTO rules for developing countries has met with rejection from developed-country negotiators ahead of the Buenos Aires conference.

by D. Ravi Kanth

GENEVA: The United States and other major developed countries seem to have declared a war against proposals for specific improvements in special and differential treatment (SDT) as demanded by a large majority of developing and poorest countries for the upcoming WTO Ministerial Conference in Buenos Aires, several trade negotiators told the South-North Development Monitor (SUNS).

At a meeting of the Doha negotiating body on development issues on 14 September, the US, the European Union, Japan, Australia and Canada, among others, aggressively rejected a comprehensive proposal from the Group of 90 countries – the Africa, Caribbean and Pacific (ACP) Group, the African Group and the group of least-developed countries (LDCs) – for a “fruitful outcome” on specific improvements in special and differential flexibilities at Buenos Aires.

SDT proposals

In their nine-page proposal, the three groups demanded – “as a first step towards achieving the target of paragraph 44 of Doha Ministerial Declaration” – an outcome on specific proposals for overcoming the constraints “in promoting much needed industrialization, structural transformation and diversification of their economies for raising the standard of living of their population, which is the prime objective of the WTO, and integration into the multilateral trading system.”

The G90 countries called for “constructive discussions” from WTO members on their proposals “with a view to have a fruitful outcome during upcoming Eleventh WTO Ministerial Conference (MC11) to be held in Buenos Aires.”

They said their initial proposal contained 25 agreement-specific proposals. As a first step towards an outcome at Buenos Aires, the G90 members said they prioritized 10 proposals so as to enable members to complete negotiations during the remaining two-and-a-half months. They called for specific improvements in the following agreements:

(i)       Agreement on Trade-Related Investment Measures (TRIMs)

(ii)     Article XVIII of the General Agreement on Tariffs and Trade (GATT) 1994 (provisions A and C)

(iii)    Article XVIII of GATT 1994 (Section B) – the balance-of-payments (BOP) provisions applicable to developing countries

(iv)    Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures

(v)      Agreement on Technical Barriers to Trade (TBT)

(vi)    Agreement on Subsidies and Countervailing Measures

(vii)   Agreement on Customs Valuation

(viii)  1979 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries

(ix)    Transfer of technology

(x)      LDC accession.

Uganda introduced the proposal for improving several provisions in the TRIMs Agreement. Uganda proposed that “notwithstanding Articles 4 and 5 of the TRIMs Agreement and Articles III and XI of GATT, Members agree that developing countries shall be free to deviate temporarily from the provisions of Article 2 of the TRIMs Agreement, and introduce new investment measures related to trade in goods” in accordance with various provisions.

The developing countries, for example, can notify measures that shall remain effective for an initial period of about 15 years or more for accelerating their industrialization and thereby achieve socioeconomic transformation.

The other provisions include upgrading and modernizing the domestic manufacturing capabilities of small and medium enterprises for employment generation and promoting domestic manufacturing capabilities in high-value-added sectors or technology-intensive sectors. The improvements are also aimed at accelerating domestic competition and/or correcting restrictive business practices, according to the proposal.

Further, “LDCs shall be allowed to introduce and maintain measures that deviate from their obligations under the TRIMs Agreement” and “members agree that least-developed country Members shall not be obliged to implement, apply or enforce the provisions of the TRIMs Agreement as long as they remain LDCs”.

South Africa, which spoke on improvements in the application of sanitary and phytosanitary measures, called for the following specific changes:

(i) In pursuance with the condition set out in Paragraph 5(d) of Annex B of the Agreement on the Application of Sanitary and Phytosanitary Measures, reasonable time for making comments on any SPS measure notified by the developed-country members shall be understood to mean at least 180 days for   LDC members and developing-country members facing capacity constraints before the adoption of the measure, which shall commence with the circulation of the notification by the WTO secretariat. Upon request, a longer period of time shall be granted for LDC members.

(ii) A developed-country member proposing an SPS measure shall consult directly, at an early stage, with any LDC member or developing-country member facing capacity constraints exporting a product that would be covered by the proposed SPS measure in order to take into account the special needs of those countries for effectively implementing Article 10.1 of the Agreement on Sanitary and Phytosanitary Measures.

Besides, South Africa suggested several other changes “where the trade of a least-developed country Member or developing country Member facing capacity constraints is or will be adversely affected by a proposed or final sanitary or phytosanitary measure taken by a developed country Member.”

The changes also include that “longer time-frames for compliance with the measure shall be accorded to products of interest to least developed country Members and developing country members facing capacity constraints so as to maintain opportunities for their exports.”

As regards changes to the Agreement on Technical Barriers to Trade, the G90 countries proposed that developed countries shall “provide developing and LDC members facing capacity constraints at least a 180 day comment period before the adoption of the measure.”

Further, where a developing or LDC member will be adversely affected by a proposed final regulation or standard taken by a developed country, the proposal called for application of the following procedures:

(i) Longer time-frames for compliance with the measure shall be accorded to products of interest to developing and least developed country Members facing capacity constraints so as to maintain opportunities for their exports. The phrase “reasonable interval” referred to in paragraph 12 of Article 2 of the Agreement on Technical Barriers to Trade shall be understood to mean a period of not less than 18 months.

(ii) Where investments are required in order for exporting developing and LDC members facing capacity constraints to fulfil a technical regulation or standard proposed or applied by a developed-country member, the developed-country member shall provide financial and technical assistance required for compliance with the technical regulation or standard.

On behalf of the G90 countries, Egypt spoke on the need to improve the BOP provisions in Article XVIII of GATT 1994 for achieving developmental objectives during industrialization.

Cameroon highlighted proposed improvements in the Agreement on Subsidies and Countervailing Measures for promoting industrialization and economic development in developing and poorest countries.

Several members of the G90 also took the floor to address issues in the Customs Valuation Agreement as well as changes needed in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) for encouraging international cooperation on and access to technology transfer and innovation.

Bangladesh addressed improvements sought in the process of accession by LDCs to the WTO, which is currently burdened with onerous conditions.

Developed-country opposition

During the 14 September meeting, India supported the proposals for improving the SPS and TBT measures, TRIMs provisions, and changes in the Agreement on Subsidies and Counter-vailing Measures.

But the response from the major developed countries was extremely hostile and threatening, said an African trade negotiator who asked not to be quoted.

The US, for example, said it will not engage in any discussions on the improvements demanded in the specific covered agreements. The US said the proposal is not any basis for further work. It warned the G90 countries that their continued attempts to bring the proposal in one form or another will not help, the negotiator said.

Other developed countries – the EU, Japan, Australia and Canada – ruled out any change in the covered agreements as demanded by the G90 members without concrete evidence from the proponents as to how the existing provisions are hampering their industrialization, the negotiator said.

In conclusion, it is clear that the developed countries, which are embarking on negotiations for e-commerce and MSMEs (micro, small and medium-sized enterprises) at Buenos Aires, are not prepared to address the outstanding/unresolved core developmental issues in the Doha Work Programme, several negotiators said.

[The stand of the developed countries on SDT appears to be challenging some of the fundamental principles of the economic and social provisions of the UN Charter, the Havana Charter (including its trade policy chapter that was applied provisionally as GATT 1947), Part IV of GATT, the Marrakesh Agreement, and the Doha Ministerial decisions and work programme. This developed-country stance jeopardizes the multilateral trading system and its main beneficiaries till now, namely the developed countries themselves. – SUNS] (SUNS8534)

Third World Economics, Issue No. 646, 1-15 August 2017, pp11-12, 16