TWN Info Service on WTO and Trade Issues (Oct19/09)
14 October 2019
Third World Network

South to oppose US attempts at denying S&DT at GC meeting

Published SUNS #8993 dated 9 October 2019

Geneva, 8 Oct (D. Ravi Kanth) – A group of developing countries led by China, India, and South Africa are expected to fiercely oppose attempts by the United States to bring about differentiation/graduation among developing countries for availing special and differential treatment (S&DT) at the World Trade Organization’s General Council (GC) meeting on 15 October, trade envoys told the SUNS.

In their draft proposal that would be issued at the GC meeting on 15 October, eight developing countries – China, India, South Africa, Uganda, Namibia, Zimbabwe, Oman, and Cuba – will convey a powerful message that “the GATT [General Agreement on Tariffs and Trade] and WTO have recognised that developing countries need S&DT to access and benefit from international markets as they face more serious challenges compared to developed countries.”

The eight countries would tell the US that “S&DT is an unconditional and treaty-embedded right that has been provided to all developing countries, including in Part IV of the GATT.”

“The WTO allows developing countries to make their own assessment about their development status,” the eight countries will assert in their response to the much-condemned US proposal on “procedures to strengthen the negotiating function of the WTO” that seeks to bring about differentiation/graduation among developing countries, said trade envoys familiar with the proposal.

The US has already threatened the developing countries, especially China, India, South Africa and Indonesia among others, that they will be named and shamed if they don’t give up their S&DT status by 26 October.

“The WTO allows developing countries to make their own assessment about their development status,” the eight countries are expected to argue when the issue comes up for discussion at the GC meeting.

More importantly, they said, “S&DT has provided developing Members including LDCs the space to calibrate their trade integration and formulate their domestic trade policies in ways that help them reduce poverty, generate employment and integrate meaningfully into the global trading system” in accordance with the Marrakesh Agreement that established the WTO in 1995.

With the “development challenges” having multiplied for developing countries in the past 25 years since the establishment of the WTO, “Ministers at the Doha Ministerial [meeting in 2001] agreed to strengthen and make the WTO’s S&DT provisions “more precise, effective and operational”,” the eight countries will convey to the US.

The US and other developed countries almost abandoned the Doha Development Agenda negotiations since the ninth WTO ministerial meeting in Bali, Indonesia, in 2013, after pocketing the Trade Facilitation Agreement, said several trade envoys, who asked not to be quoted.

However, “today, S&DT remains extremely important for trade to be more inclusive and equitable, as well as for developing countries to meet their Sustainable Development Goals (SDGs),” the eight countries are expected to argue it out at the GC meeting.

Without naming the US, which has resorted to a series of unilateral actions over the past two years, the eight countries will maintain that “any unilateral action depriving developing Members including LDCs of treaty-embedded rights would be inconsistent with Members’ obligations, and would in fact erode the foundation of the multilateral trading system which functions on the basis of being “rules-based”.”

Such unilateral action(s) by any member of the WTO “will cause lasting and systemic damage to the trading system,” the eight countries would maintain at the GC meeting, said a trade envoy, who asked not to be identified.

The eight countries will firmly reaffirm the following principles:

* Developing countries’ unconditional rights to S&DT in WTO rules and negotiations must continue.

* Developing countries must be allowed to make their own assessments regarding their own developing country status.

* Existing S&DT provisions must be upheld.

* S&DT must be provided in current and future negotiations.

“Attempts to water down these principles would be a recipe for intractable deadlock at the WTO, including in the negotiations on fisheries subsidies,” the eight countries will emphasize during the meeting.

Therefore, “it is in the interest of the entire Membership to avoid this [ugly] situation,” the developing countries are expected to tell the US and other developed countries such as the European Union, Japan, Canada, and Australia among others – who are silently supporting the US on the issue of differentiation/graduation.

The eight developing countries also have statistical data on why the S&DT must be continued without any interruption.

The data would include GDP per capita among select developed, developing, and LDC members, Human Development Index values for select countries, the global multi-dimensional poverty index, including the countries with the largest proportion of the world’s poor such as India, Nigeria, Ethiopia, Pakistan, Bangladesh, and China among others, the number of people currently undernourished in developing countries, and imbalances in distribution of wealth.

Citing a recent UNCTAD study on imbalances arising out of the Uruguay Round commitments, the eight countries will indicate how developing countries are losing out due to “reverse S&DT” to the tune of $700 billion, and how “despite S&DT put in place, there is no level playing field for developing countries” due to export barriers erected by the developed countries.

At the GC meeting on 15 October, the US is expected to re-introduce its draft GC decision on “procedures to strengthen the negotiating function of the WTO” that will call for excluding several developing countries from availing “themselves [of] special and differential treatment in current and future WTO negotiations” based on a four-point criteria.

The four points include:

i. A WTO Member that is a Member of the Organization for Economic Cooperation and Development (OECD), or a WTO Member that has begun the accession process to the OECD;

ii. A WTO Member that is a member of the Group of 20 (G20);

iii. A WTO Member that is classified as a “high income” country by the World Bank; or

iv. A WTO Member that accounts for no less than 0.5 per cent of global merchandise trade (imports and exports).

The US proposal has been consistently rejected at the GC meetings since March.

However, Washington has issued a threatening Memorandum on 26 July, warning that if leading developing countries fail to give up the S&DT status then they will be named and shamed in a public statement to be issued after 26 October. (See SUNS #8957 dated 30 July 2019).

[S&DT, embedded in Part IV of GATT 1947, was a best endeavour provision; but this changed under the GATT 1994, by virtue of para one of GATT 1994 (pp 21-22 of Legal Texts). It thus became part of the contractual rights and obligations of WTO Members, and something no Member can withdraw from without withdrawing from the WTO itself.

[As such, even declarations as by Brazil’s Bolsonaro government about not using its S&DT rights, has no legal binding force. Any changes to the S&DT provisions of the GATT 1994 needs an Amendment that would be accepted by all Members before it can be effective. The subject is being addressed at length in a forthcoming article. SUNS]