US caveats on S&D, wants ‘full integration’ of developing countries

Geneva, 30 Nov (Chakravarthi Raghavan) - While the Committee on Trade and Development (CTD) is holding consultations on Special and Differential Treatment issues in terms of the Doha mandate to make the S&D provisions in various agreements more effective and operational, and how it could be incorporated “into the architecture” of the WTO rules, the US has come out insisting on complete and “full integration” of developing countries into the system as early as possible, and against anything more than a short time-frame to adjust.

The Doha 4th ministerial meeting of the WTO has provided a mandate to the Committee on Trade and Development (CTD) - para 12 of the Ministerial Decision on Implementation-related issues and concerns on S&D questions as a cross-cutting issue. The CTD has also been asked in the same paragraph to consider how S&D treatment may be “incorporated into the WTO architecture.”

In terms of the Doha mandate, and the decision of the Trade Negotiations Committee, the CTD in Special Sessions under the chairmanship of the Jamaican ambassador, Mr. Ransford Smith, is working to a deadline of December 2002 - the original deadline set of 31 July could not be met and has been extended till end of the year.

In the runup to the 3rd Ministerial at Seattle, and subsequently, developing countries individually and in groups have formulated a number of proposals under each of the agreements under S&D - in effect tackling the questions of the various promises made in terms of the Punta del Este declaration and the UR agreements, and making these provisions operational and effective.

However, according to trade diplomats from the developing world, there has not been much engagement or progress - with the majors merely agreeable to set up a monitoring mechanism (one of the demands of the African group, to monitor the implementation of what would be agreed upon), without however any agreement on the substantive questions of S&D that could be monitored.

In terms of the extended deadline, the US and other industrialized countries seem to be merely trying to meet the deadline, by a decision to set up a monitoring mechanism, but nothing more.

The others, from the developing world, are however arguing that the various proposals under each agreement should first be discussed and agreed upon, before setting a monitoring mechanism to monitor their implementation.

While the industrialized world argues that there is not enough time to study the proposals and agree on them, the developing countries point out that these proposals have been on the table since about mid-1999, and that there has been no serious engagement or dialogue on these.

The chair of the CTD special sessions has begun since Friday consultations on an outcome that could be reported to the TNC and the General Council.

However, during the discussions in the Negotiating Group on Rules (where proposals have been put forward on questions for clarification of the anti-dumping rules and on the subsidies and counter-vailing measures agreement), the US states in a communication on the question of S&D treatment on the Subsidies Agreement, that it has dealt both with the S&D issues in this agreement, as well as the more general questions it notes have been raised in the CTD and in individual negotiating groups.

After setting out its views about the S&D issues and how it was treated in the Uruguay Round, the US in its communication has expressed concerns over “some of the comments and proposals” regarding S&D treatment raised in the Rules Negotiating Group and in other WTO fora.

In the context of disillusionment (not only in civil society, but among domestic business enterprises and parliamentary and legislative bodies) over the WTO and its agreements, and their deficiencies and asymmetries, and the fact that developing countries have not benefited from the system, other international organizations and trade diplomats and establishments of developing countries, have been pointing to or holding out the prospects of the S&D treatment as a solution.

Even if the US communication were to be taken only as an opening gambit in what are called ‘give-and-take’ bargaining (though all the give since the Uruguay Round negotiations have been on the part of the developing world, and the take is on the part of industrialized world and their corporations), the US communication can leave little doubt that the US is in no mood to agree in any way to reduce the obligations to full disciplines for the developing world.

At the same time, as critics of the system have brought out, the only nations enjoying special benefits out of the system are the industrialized world - who have written themselves rules to enable high levels of subsidies and support and protection in agriculture, wide subsidisation of industry (through socalled general subsidies out of the budgets) and other measures.

The US used the SCM agreement to argue its case against S&D excepting for limited periods in specific cases and circumstances.

The US commended the approach of the SCM agreement, of a classification based on per capital incomes and in effect wanted this to be carried out into other agreements, where S&D was to be provided.

“The special and differential provisions are not meant to be permanent, or lead to a permanent group of second-class Members,” the US communication said. “The goal rather is to completely integrate all Members under the full disciplines of the Subsidies Agreement as soon as practical in order that all Members enjoy the same rights and responsibilities, and are able to reap all the benefits that trade liberalization under the WTO affords.”

The US concluded: “The United States is confident that the certainty and predictability of adhering to a rules-based system, combined with a thoughtful recourse to special and differential treatment provisions only where appropriate, are the best way to promote long-term trade liberalization and economic growth.”

In the CTD Special Session, where the proposals under various agreements are being considered, in relation to the Agriculture Agreement, where the proposals of the African group and the least developed countries (LDCs) were discussed, most of the developed countries did not want changes in the provisions for S&D such as Art.6.2 of the AoA (which deals with input subsidies as permissible domestic support).

Longer deadlines or new tariff preferences should be negotiated in the context of the Agriculture negotiations, they argued.

However, developing countries again pointed out the difference between the mandate on S&D and the other negotiations.

On Article 6.2 of the AoA itself, in response to the African Group’s request for permitted subsidies without limitation, the US said that it was ready to look at conditions for developing countries with respect to the Green box and Article 6.2 but only in the context of the Doha Round (meaning in the Agriculture negotiations).

On Article 14, the African Group proposes to restate that Sanitary and Phytosanitary (SPS) measures should not be used as disguised restrictions against the trade of developing and least-developed country Members. The US commented that this was already included in the Uruguay Round Agreements, and thus nothing more needs to be done.

The United States also opposed the African group proposals on Article 15.1 of the AoA, for including binding S&D commitments in the schedule of commitments under the AoA. In the US view this would be ‘renegotiation’ of the Uruguay Round Agreements and not possible.

On Article 15.2, the African Group has also proposed, extending the transition periods for developing countries and LDCs. But the US said that if certain countries wanted to revise the Agreement on Agriculture, they would have to do it through the Agriculture negotiations.

On Art 6.2, the European Communities said that the current consensus should be prolonged since no problem regarding that Article had arisen so far. The EC said that they preferred to look at this question in the context of the Agriculture negotiations. On Art 14, the EC said that this issue should be brought back to the SPS Committee. On Art 15.1, the EC asked for clarification. On Art 15.2, the EC said that there had been no implementation problems and that it was impossible to say out of the blue that transition periods were no longer valid.

Kenya stated that there existed a difference between the Doha S&D mandate and the negotiations going on in various bodies. Kenya urged other Members not to muddle the two. Kenya said that Members were talking here about existing S&D and how to make them effective and operational.

Norway said on the LDC proposal that Art 15.2 already exempted LDCs from taking commitments but that it understood that there was a lack of coordination with other international bodies. Norway added that this issue should be dealt with by relevant financial institutions. On the African proposals, Norway agreed with the EC.

Switzerland said that Article 6.2 had worked quite well in the past and that there was no need to change it. Switzerland said that it could envisage a change of the de minimis in the amber box for low income developing countries and LDCs.  Switzerland said that reporting on the effects of SPS measures in the Agriculture committee would not hurt. On Article 15.1, Switzerland said that it could consider the demand for binding tariffs on preferential margins but only once market access condition had been negotiated.

Once preferential schemes are agreed, Switzerland said, they will see if binding rates were important. On Article 15.2, Switzerland said that it was against a blank cheque exception. On the LDC proposal, Switzerland agreed with Norway that this was a complicated question of coherence and said that it was looking forward to a proposal in the Working Group on Trade, Debt and Finance.

China said that most developing countries had too few means to use subsidies and that thus subsidies played very little role in favour of developing countries’ competitiveness. China said that the S&D provisions were important for developing countries in the domestic support and subsidy review. – SUNS5247

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