Trump steps up pressure on South to forgo S&DT
As part of the US push to restrict flexibilities accorded to developing countries in the WTO rules, Washington’s top trade official had written to his developing-country counterparts urging them to forgo such treatment.
by D. Ravi Kanth
GENEVA: The United States President Donald Trump has stepped up pressure on developing countries to “forego special and differential treatment [S&DT] in current and future WTO negotiations” on the grounds that it would make the intergovernmental trade body a viable forum for meaningful trade negotiations.
In a letter sent to trade ministers of developing countries on 26 April, the US Trade Representative (USTR) Robert Lighthizer said “at the direction of President Trump, I am reaching out to you to ask you to support this initiative by agreeing to forego special and differential treatment in current and future WTO negotiations.”
The two-page letter, obtained by the South-North Development Monitor (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 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 WTO General Council meeting in February, which it repeated in May, for establishing “four categories of members who, based on specific criteria, would forego new special and differential treatment under current and future negotiations.” These categories to be excluded from S&DT were WTO members which: are members of the Organization for Economic Cooperation and Development (OECD) or have begun the accession process; are members of the G20; are classified as a “high income” country by the World Bank; or account for no less than 0.5% of global merchandise trade (imports and exports).
In his 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.
Lighthizer said that he was not asking the developing countries to forgo 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 firmly rejected the US proposal at the General Council meetings in February and May.
In addition, trade ministers from 17 developing countries who met in New Delhi on 13-14 May 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 [least developed country] issues,” the trade ministers said.
The 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 emphasized the principle of sovereignty and said: “More than two-thirds of the WTO Members are developing countries ... 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 shows that from the outset the US had been opposed to any such categorization. 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, which the UN General Assembly had convened in 1963 as a result of an initiative by key developing countries dissatisfied with their treatment under the GATT. Subsequently, at every stage, the US tried to do away with S&DT but failed repeatedly. During the Uruguay Round negotiations, it attempted to restrict S&DT to the LDCs but again failed. It found itself forced to accept, under the Marrakesh Agreement Establishing the WTO, the self-designation of developing countries, and their S&DT became part of the contractual rights and obligations of developing countries in the WTO. – SUNS) (SUNS8921)
Third World Economics, Issue No. 682, 1-15 February 2019, pp8-9