The fight to save special and differential treatment

Apart from seeking to jettison the multilateral approach, developed countries in the WTO are also taking aim at the principle of ‘special and differential treatment’, which entitles developing countries to certain rights and support measures under the WTO rules. Abhijit Das explains why such rights must be preserved and why their removal would undermine equity in the trading system.

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OVER the past few years, the developed countries have raised questions regarding the WTO’s approach to special and differential treatment (S&DT) provisions, especially in respect to a member country’s self-determination of its development status to avail of these provisions.¹ The US had in the past strongly advocated that the following categories of members should not avail themselves of special and differential treatment in current and future WTO negotiations: OECD membership; G20 membership; classified as a ‘high-income’ country by the World Bank; or accounting for no less than 0.5% of global merchandise trade.² The arguments made by the US in favour of graduation and differentiation among developing countries were effectively and repeatedly refuted by some developing countries, especially in the submission to the WTO (WTO document WT/GC/W/765) dated 18 February 2019.

While the developed countries seek graduation and differentiation among developing countries for having recourse to S&DT, the approach of many developing countries is to strengthen the existing S&DT provisions and make them more precise, effective and operational.³ In another development, China has voluntarily opted out of having recourse to S&DT in current and future negotiations.⁴ Meanwhile, some WTO members have recently made submissions on WTO reform which put forward, among others, their proposed approaches to S&DT.

This article discusses some of the recent proposals on S&DT. Thereafter, it looks at the legal underpinning of S&DT provisions and examines whether the socioeconomic realities in most developing countries have changed so as to warrant new approaches to S&DT. Subsequently, it proposes arguments against some of the approaches to graduation and differentiation. The concluding section suggests the way forward for developing countries.

The attack on S&DT

Some of the recent submissions by certain WTO members on WTO reform include specific suggestions and approaches to S&DT. In its submission, the US is of the view that ‘it may be appropriate for least-developed countries (LDCs) to benefit from certain flexibilities’, and that reform in the area of ‘development’ must focus on ‘transitioning all Members to follow the same rules, regardless of their economic differences’.⁵ The message of the US is clear – S&DT would be available only for LDCs, and it would be confined merely to longer transition periods to implement the rules.

After noting that ‘developing countries have had different experiences in terms of reaping the benefits of global economic integration’, the European Union suggests that ‘more granular, targeted and differentiated approaches are needed going forward to ensure that the most vulnerable developing countries can unlock the benefits of global trade’.⁶ The EU is further of the view that ‘pragmatic approaches as well as objective and transparent criteria should be considered when it comes to differentiation between developing countries’, and that reform work should be ‘based on factual analysis of the effectiveness of the S&DT provisions in WTO agreements’. As some of the key S&DT provisions do not include any articulation of specific objectives that they seek to pursue, it remains unclear how ‘effectiveness of the S&DT provisions’ would be determined.

In its submission, Paraguay is of the view that ‘the current self-classification system, without objective criteria or graduation criteria, makes it difficult to achieve consensus on formulating new rules’.⁷ As a solution, it has proposed the following: ‘Special and differential treatment must be needs-based, precise, effective and operational, so that it helps to address the particular difficulties of each Member and leads to the application of the negotiated rules, ensuring that the benefits of trade extend to everyone’.

China’s approach to S&DT is that these provisions should be implemented in a ‘more precise and effective manner to better facilitate the full integration of developing members into the multilateral trading system’.⁸ The basis on which China links S&DT to facilitating full integration of developing countries into the multilateral trading system is unclear. Instead, it may have been appropriate to link S&DT provisions with ‘positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development’.⁹

Based on his consultations with WTO members, the facilitator appointed by the WTO General Council chair to hold discussions on WTO reform has articulated the following perspective on S&DT: ‘Reform should ensure inclusive integration of developing Members and Least Developed Countries (LDCs), balancing the need for effective flexibilities aimed at common rules applicable to and adherence to rules. Pragmatic, widely acceptable approaches are required to maintain legitimacy while advancing development objectives.’¹⁰ The facilitator appears to suggest that there must be a balance between S&DT provisions on the one hand and adherence to common rules on the other. It also indirectly questions the present practice of self-determination of development status by WTO members for having access to S&DT provisions. This perspective does not capture the positions that developing countries have taken regarding S&DT, and could be utilised to promote approaches that divert from current practices, including reliance on criteria to govern access to S&DT.

As the recently held 14th Ministerial Conference of the WTO in Yaoundé remained inconclusive on the question of WTO reform, developing countries have an opportunity to push development-oriented perspectives on S&DT provisions in future. 

Closing economic gaps – the legal underpinning of S&DT provisions

In Article XXXVI:1(c) of the General Agreement on Tariffs and Trade (GATT) 1994, the Contracting Parties noted that ‘there is a wide gap between standards of living in less-developed countries and in other countries’ (emphasis added). Provisions in paragraph 3 of the article specified the following: ‘There is need for positive efforts designed to ensure that less-developed contracting parties secure a share in the growth in international trade commensurate with the needs of their economic development’ (emphasis added).

What could constitute positive efforts was specified in paragraph 8 of the article, which states that ‘The developed contracting parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of less-developed contracting parties’. Over the past six decades, this has formed the basis for the concept of S&DT provisions and the principle of ‘less than full reciprocity’ under GATT/WTO, including less than full reciprocity in tariff negotiations.

Economic gaps between developed and developing countries have widened

While many developing countries have made impressive progress in addressing hunger and poverty, they have actually fallen behind the developed countries in the standards of living as seen from calculations using per capita gross domestic product. A comparison of the gaps in per capita GDP between the US and 119 developing countries for which the data is available, shows that from 1994–96 to 2022–24, the gap has widened for 118 developing countries. Even if Portugal is taken as the comparator country, the results do not change significantly: 106 developing countries fell further behind Portugal in terms of the gap in per capita GDP over the same two periods.¹¹

Thus, the rationale for S&DT continues to remain relevant and in fact has become even stronger now as compared with 1995 when the WTO was established. It is thus incorrect to focus on the absolute value of the GDP of some of the developing countries to argue for their exclusion from S&DT provisions in current and future negotiations.

Why a needs-based S&DT approach will not work

It has been argued by some countries that instead of permitting developing countries to have recourse to S&DT in current and future negotiations on the basis of self-determination of development status, any member desirous of seeking recourse to S&DT must demonstrate why its circumstances justify a need for S&DT. This approach is riddled with pitfalls for most developing countries. The following arguments could be made against this approach:

• Many developing countries, especially the smaller economies and LDCs, may not have the technical expertise and human resources to demonstrate their need for S&DT, despite their circumstances warranting such provisions.

• As in the past, especially in the context of addressing implementation issues, proposals of interest to the developing countries in the WTO often face a web of technical questions aimed at impeding their progress.

• Given the current lack of trust among WTO members, there is concern that the developed countries will not allow developing countries to have recourse to S&DT even after the latter have demonstrated why their circumstances compel them to do so.

• A needs-based approach to S&DT is likely to become an exercise in bargaining, whereby the developed countries would seek to extract concessions in other areas.

• As most developing countries would not be able to negotiate collectively under this approach, their negotiating leverage would be substantially diminished.

Why sector-specific graduation from S&DT will not work

It is the view of some members that some economic sectors may have dominant players who are developing members or LDCs. This may raise questions about ‘incentives for competitors to commit to certain rules or grant flexibilities’. This hints at adopting an approach whereby developing countries which are presently dominant in certain sectors may not have recourse to S&DT in those sectors. The following arguments could be made to counter this approach:

•  Countries that are competitive in some sectors today could face significant economic and social disruption if path-breaking innovations subsequently emerge in that sector. S&DT provisions, say in the form of the flexibility to maintain high bound tariff rates, would help these countries make the transition from old to new technologies less disruptive.

•  In the absence of suitable S&DT, even the developing countries that are competitive today would not be able to implement policies to catch up with those countries at the new technology frontier. In such a situation, developing countries would not be in a position to generate income and create jobs in the sectors deploying new technologies.

•  Using the share of a country in international trade, especially exports, or in global production as the indicator of sector-level competitiveness can yield outcomes harmful to most developing countries. The ongoing WTO negotiations in respect of fisheries subsidies that contribute to overcapacity and overfishing (OCOF) provide a good illustration of this reality. Under the most recent negotiating text, developing countries whose share of the annual global volume of marine capture production exceeds 0.8% would be deprived of the ability to provide capacity-enhancing subsidies and hence would not be able to create a vibrant industrial fishing fleet. Sector-specific graduation in negotiations in other areas apart from fisheries subsidies could have similar perverse implications for most developing countries.

•  It is likely that the indicator and the threshold for determining competitiveness within a particular sector may not reflect the prevailing economic realities in that sector for many developing countries.

•  Small economies, many countries in Africa and LDCs do not have a diversified production base. These countries are competitive in just a handful of products. They would be hit hard if they are graduated out of having recourse to S&DT provisions in the few sectors where they are currently competitive.

Why criteria-based graduation from S&DT will not work

As mentioned above, the gaps in standard of living between the developed countries and most developing countries have widened since the establishment of the WTO. This reinforces the need to have precise and more effective S&DT in favour of developing countries, instead of the larger among them being compelled to give up recourse to S&DT in current and future negotiations.

It is difficult to understand how criteria-based graduation would take into account this stark reality in most developing countries. It is relevant to mention that three out of the four criteria proposed by the US as the basis for graduation – OECD membership, G20 membership and share in international trade – have little nexus with standards of living. Membership of the OECD and the G20 are based on a complex web of geopolitical considerations, while share in international trade or global production has little to do with standards of living. To take the US criteria to their logical conclusion, all the African countries which are members of the WTO would have to be graduated and hence would not be able to have recourse to S&DT in current and future negotiations, as the African Union is now a member of the G20.

If larger developing countries graduate out of S&DT, will other developing countries secure more effective S&DT?

A narrative is sought to be created that if the larger developing countries cannot have recourse to S&DT, this would improve the prospects of other developing countries to secure effective S&DT. There is little evidence in support of this narrative. In fact, it is likely that some of the smaller developing countries may eventually get graduated and thereafter be compelled to give up their recourse to S&DT provisions.

Further, it is a reality that in some of the negotiations over the past 2–3 decades, in order to split the developing countries, smaller developing countries were offered greater flexibilities as compared with those developing countries that could provide competition to the exports of the developed countries. S&DT provisions in negotiations on non-agricultural goods under the Doha Round and in the negotiations on the OCOF pillar in fisheries subsidies provide relevant illustrations of this trend. Given this reality at the negotiating table, it is unlikely that the developed countries would continue to have the strategic incentive to provide more effective S&DT provisions to smaller developing countries if the larger developing countries get graduated. Instead, after the larger developing countries get graduated, the prospects for the remaining developing countries to secure effective S&DT may actually be diminished.

The TFA approach to S&DT needs strengthening

Section II of the WTO’s Trade Facilitation Agreement (TFA) was hailed as a new approach to S&DT that would provide a template for the future. Indeed, the experiment of designing Section II is proof that developing countries and LDCs have been open to assessing and reviewing the approach to S&DT. However, it is important to note that Section II did not meet the initial proposition of developing countries and LDCs when negotiating the TFA, and its limitations have become increasingly clearer as implementation advances.

Developing countries had agreed to start negotiating a TFA in 2004 based on the premise that (1) they would be able to self-designate the provisions that they can immediately implement (Category A), those that require a transition period for implementation (Category B) and those for which they need a transition period plus technical and financial assistance (Category C); and that (2) the obligation to implement the latter would be conditional on their acquisition of capacity through provision of technical and financial assistance by developed-country members, and after a self-assessment of their capacity to implement.

Yet, the negotiations resulted in a significant dilution of the main S&DT concepts that were supposed to underpin Section II, namely, ‘self-assessment’ and ‘conditioning implementation on acquisition of capacity’. The procedural requirements under Section II ended up being burdensome, imposing narrow timelines and complex notification requirements on developing countries and LDCs. Extension of implementation timeframes beyond 18 months is subject to approval of the Trade Facilitation Committee overseeing the agreement. Moreover, the TFA does not capture any binding obligation for provision of financial and technical assistance by developed-country members; this was dropped from the text except for a weak and non-binding reference in a footnote.

In light of the financial constraints recently facing the TFA Facility (which was set up to provide assistance and support in implementing the agreement), it is not clear what would be the status of obligations for which developing countries or LDCs had requested a transition period and financial and technical assistance (i.e., Category C) if the assistance does not materialise before the identified transition period ends.

If the future of S&DT is to be inspired by Section II of the TFA, it is important to:

•  put in place clear and mandatory rules to condition implementation by developing countries and LDCs on the effective acquisition of capacity through technical and financial assistance;

•  ensure procedural rules (including timeframes and notification requirements) are not burdensome on developing countries and LDCs in a way that dilutes their S&DT rights;

• safeguard self-assessment in determining the acquisition of capacity by the developing countries and LDCs, and allow extension of implementation timeframes in line with this assessment, based on a ‘notification’ procedure rather than a ‘request’ from the committee overseeing the agreement;

• establish clear mandatory rules regarding the obligation of developed-country members to provide the resources needed to deliver on the required financial and technical support, together with an effective process to monitor and annually report on the compliance with this obligation.

Self-designation for access to S&DT provisions remains best option

As mentioned above, new approaches to S&DT, including needs-based and criteria-based approaches, are likely to be divisive, fraught with considerable uncertainty and technically complex. It is unclear whether a developing country would have to demonstrate its need for S&DT provisions during the negotiation for a new agreement or modification of an existing agreement, or during the implementation of the agreement.

Further, the needs-based and criteria-based approaches would diminish the incentive and opportunity for developing countries to forge coalitions during negotiations. This would have negative consequences for the negotiating dynamics from the perspective of developing countries. In the absence of effective coalitions of developing countries, these countries may find it onerous during negotiations to counter proposed provisions that are aimed at benefiting mainly the developed countries.

Overall, continuing with the present approach of self-designation for access to S&DT provisions appears pragmatic and less beset with problems that would afflict other approaches.

Conclusions

Despite the impressive economic progress made by many developing countries over the past 2–3 decades, the gaps in living standards between most developing countries and the developed countries persist and have actually widened. Further, developing countries continue to confront many formidable socioeconomic challenges, which provides a strong argument for the continued relevance of S&DT provisions in their favour.

If future negotiations at the WTO do not fully consider these challenges and the developing countries fail to secure S&DT provisions, then they would be compelled to participate in a multilateral system in which they are not able to benefit from the rules. Such a system would not serve the overall objective of economic development in a large number of developing countries. If the multilateral trading system is unable to respond to their needs and development imperatives, some of the developing countries may not retain a high stake in the system.

To accept the proposition that the large developing countries should take on the same obligations as the developed countries in future multilateral trade negotiations would be a travesty of equity and fairness. Instead, in ongoing and future negotiations at the WTO, developing countries must have access to effective and precise S&DT on the basis of self-determination. Any debate on harmonising the obligations among developed and some developing countries must start with removing the asymmetries and imbalances in various existing WTO agreements (particularly the Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures) which contain many provisions that provide substantial advantage primarily to the developed countries.                     

Abhijit Das is an international trade expert and former Head of the Centre for WTO Studies at the Indian Institute of Foreign Trade, New Delhi.

Kinda Mohamadieh contributed to this article, focusing on the Trade Facilitation Agreement.

Notes

1. WTO document WT/GC/W/757, dated 16 January 2019.

2. WTO document WT/GC/W/764, dated 15 February 2019.

3. Strengthening of S&DT provisions and addressing implementation issues have been core to the WTO rule reforms that developing countries have called for since 1996, and this subject was incorporated into the WTO’s Doha Development Agenda in 2001 (see WTO document WT/GC/W/778/Rev.3). The Doha Ministerial Declaration provided a clear mandate (in paragraph 44) to review all S&DT provisions with a view to strengthening them and making them more precise, effective and operational.

4. WTO document WT/GC/274, dated 24 September 2025.

5. WTO document WT/GC/W/984, dated 15 December 2025.

6. WTO document WT/GC/W/986, dated 21 January 2026.

7. WTO document WT/GC/W/987, dated 3 February 2026.

8. WTO document WT/GC/W/989, dated 18 February 2026.

9. Preamble to the Marrakesh Agreement Establishing the WTO.

10. WTO document JOB/GC/483, dated 12 December 2025, ‘WTO Reform’, Written Report by Facilitator to the General Council H.E. Mr Petter Řlberg (Norway) – Facilitator on WTO Reform.

11. Abhijit Das, Paavni Mathur and Sushil Kumar, ‘Special and Differential Treatment Provisions in the WTO: Evaluating Pathways for Development’, RIS Discussion Paper No. 328, 2026.

*Third World Resurgence No. 367, 2026/2, pp 21-25