TWN Info Service on WTO and Trade Issues (Jun19/05)
11 June 2019
Third World Network

Trump steps up pressure on South to forgo S&DT

Published in SUNS #8921 dated 7 June 2019

Geneva, 6 Jun (D. Ravi Kanth) – The United States President Donald Trump has stepped up pressure on developing countries to “forego special and differential treatment in current and future WTO [World Trade Organization] negotiations” so as to make the inter-governmental trade body as a viable forum for meaningful trade negotiations.

In a letter sent to trade ministers of developing countries on 26 April, the US Trade Representative Ambassador Robert Lighthizer said “at the direction of President Trump, I am reaching out to you to ask you to support this [American] initiative by agreeing to forego special and differential treatment in current and future WTO negotiations.”

The two-page letter, obtained by the SUNS, says that “currently, any WTO Member may “self-declare” as a developing country in order to avail itself of special and differential treatment.”

According to the letter, “while many developing-country designations are proper, some are clearly not, considering the great strides made by several Members in raising standards of living, increasing income, and expanding production and trade. These members seek special and differential treatment despite abundant evidence of economic strength.”

“The practice [of self-declaring as developing countries] for availing S&DT,” says Ambassador Lighthizer, “has damaged the WTO’s negotiating arm by inhibiting the ability to differentiate among self-declared developing members.”

Consequently, “trade agreements do not materialize because many of the more advanced economies are unwilling to assume trade commitments that are commensurate with their role in the global economy and in trade,” the USTR emphasized.

The US had tabled a proposal at the General Council meeting in February, which it had repeated last month, for establishing “four categories of members who, based on specific criteria, would forego new special and differential treatment under current and future negotiations.”

In its proposal circulated on 15 February, the US had said that “to facilitate the full implementation of future WTO agreements and to ensure that the maximum benefits of trade accrue to those Members with the greatest difficulty integrating into the multilateral trading system, the following categories of Members will not avail themselves of special and differential treatment in current and future WTO negotiations.”

The categories to be excluded from S&DT were WTO members who are OECD members or have begun the accession process; who are members of the G20; classified as a “high income” country by the World Bank; and account for no less than 0.5 per cent of global merchandise trade (imports and exports).

In the letter to the developing countries, the USTR said that “to be clear, the United States is not requesting that a developing country change its special and differential treatment in existing WTO agreements.”

“All members will retain the ability to negotiate their priority interests in current and future negotiations,” the letter said.

Ambassador Lighthizer’s letter to each developing country says that he was not asking them to forego S&DT in current and future WTO negotiations, but that by taking this step, “you would be making a significant contribution to ensuring that the WTO remains a viable forum for meaningful trade negotiations.”

An overwhelming number of developing countries have firmly rejected the US proposal at the General Council meetings in February and last month.

Trade ministers from 17 developing countries who met in New Delhi on 13-14 May had categorically said that “special and differential treatment is one of the main defining features of the multilateral trading system and is essential to integrating developing members into global trade.”

More important, “special and differential treatment provisions are rights of developing members that must be preserved and strengthened in both current and future WTO agreements, with priority attention to outstanding LDC issues,” the trade ministers from developing countries said.

The trade ministers rejected the concept of “differentiation” that the US has sought to introduce in the current and future WTO negotiations.

Commenting on the WTO reforms being proposed by the US and other developed countries, the trade ministers emphasized that “the process of WTO reform must keep development at its core, promote inclusive growth, and fully take into account the interests and concerns of developing members, including the specific challenges of graduating LDCs.”

India had warned that “the attack on the right of developing countries to special and differential treatment, and efforts at differentiating among them can further erode trust and push the organization [WTO] into a deeper chasm.”

At the WTO General Council meeting on 7 May, South Africa had emphasized the principle of sovereignty, and said: “More than two thirds of the WTO Members are developing countries …. (and) there is no agreed definition of what is to be considered a “developed” or a “developing” Member; it is the right of every Member to decide which category is most appropriate for itself, and not for any other Member to impose criteria for graduation.”

[The history of the multilateral trading system, initially as the provisional GATT-1947, and from 1995 as the WTO, shows that from the outset the US was opposed to any such categorisation. The concept of S&DT was brought in “on a best endeavour basis”, by the then GATT Director-General, Eric Wyndham White, in his attempts to undercut the UN Conference on Trade and Development (that the UN General Assembly had convened in 1963, as a result of the initiative of key developing countries dissatisfied with their treatment under the GATT).

[Subsequently, at every stage, the US attempted to knock off or get rid of S&DT but failed repeatedly. During the Uruguay Round negotiations, it attempted to restrict it to the least developed countries, but again failed. It found itself forced to accept under the Marrakesh Treaty the self-designation of developing countries, and their S&DT became part of the contractual rights and obligations of developing countries. SUNS]