TWN Info Service on WTO and Trade Issues
3 August 2026
Third World Network

Trade: Sharp divisions emerge at WTO over future of S&DT
Published in SUNS #10492 dated 29 July 2026

Geneva, 28 Jul (D. Ravi Kanth) — A large majority of developing and least-developed countries (LDCs), including China, on 27 July appeared to remain firmly opposed to a bloc of powerful nations led by the United States and the European Union, who are seeking a regime change in the rules- and treaty-based “development” track of World Trade Organization (WTO) reform, said people familiar with the development.

This small but influential group – comprising all major industrialized countries and spearheaded by the United States – seems intent on fundamentally reshaping the crucial development component of special and differential treatment (S&DT) by imposing conditions such as time-bound, evidence-based, and targeted provisions.

The ultimate goal of these powerful countries seems aimed at pushing through plurilateral agreements without adhering to the Marrakesh Agreement, said people familiar with the development.

In sharp opposition, the majority of developing and least developed countries – including coalitions such as the African Group, the ACP (African, Caribbean, and Pacific) Group, and the LDC coalition – appeared to maintain unequivocally that S&DT is a treaty- and rules-based component of the WTO’s development architecture and is non-negotiable, said people familiar with the discussions.

During a three-and-a-half-hour discussion on the “development” component of “WTO reform” – which is seemingly aimed at bringing about a regime change in the WTO rules to be governed by the unilateral principle of “might is right” – the two sides apparently echoed clashing views, said people familiar with the development.

One side insisted that there can be no change to the current development architecture, while the small but powerful group of countries demanded wholesale change based on its own priorities, said people familiar with the development.

The facilitator for “development”, Ambassador Ms. Nthisana Motsete-Phillips of Botswana – who had previously worked for the International Monetary Fund and the WTO in different capacities – had informed members on 7 July that she would hold a plenary session on development.

“It appears to be somewhat incongruous to have a former representative of the IMF and WTO and now as a trade envoy of Botswana to act as a facilitator in her new role”, said a trade envoy who asked not to be quoted.

In her restricted email (ICN/GC/Reform/3) sent to members on 15 July, she stated that “in line with Members’ preference that our discussions be driven by Members’ written and oral contributions, I will invite Members to introduce their papers.”

She said that the presentation will follow the order set out below:

* “WTO reform – Communication from the African Group (WT/GC/W/971) and WTO Reform: Development- centred priorities for a balanced WTO – Communication from the African Group (WT/GC/W/992);

* Fundamentals for WTO reform – Communication from the ACP Group (WT/GC/W/975);

* EU submission on WTO reform – Communication from the European Union (WT/GC/W/986);

* WTO reform considerations – Communication from Paraguay (WT/GC/W/987);

* China’s position paper on WTO reform under the current circumstances – Communication from China (WT/GC/W/989);

* More relevant, more flexible, more accessible – Communication from the United Kingdom on WTO reform (WT/GC/W/993);

* LDC submission on WTO reform – Communication from The Gambia on behalf of the LDC Group (WT/MIN(26)/17-WT/GC/W/991/Rev.1);

* Further perspectives on WTO reform – Communication from the United States (WT/GC/W/998) and On WTO reform – Communication from the United States (WT/GC/W/984);

* Designing together a fairer and more dynamic system – Communication from Japan (WT/GC/Reform/W/8).”

Following the presentations, the facilitator said, “I will open the floor for Members to make oral contributions and to exchange views on both the written submissions and the oral contributions, as well as to raise any other issues they may wish to discuss.”

She noted that “as part of our discussion, it would be particularly helpful for me, in my capacity as Facilitator, to gain a better understanding of Members’ perspectives on what they would like this reform track to achieve.”

Ambassador Motsete-Phillips said: “In addition, in response to the request from several delegations for a mapping and stocktaking exercise, I would welcome Members’ views on how such an exercise could best be conducted.”

UNBRIDGEABLE DIFFERENCES

During the discussion, after all the proposals on “development” were presented by the respective proponents, it appears that the US asked the African Group, the ACP Group, and the LDC coalition to explain what “treaty- embedded” means – suggesting that the country which basically created the rules-based organization seemed blissfully ignorant of the legal provisions that emerged during the past eight rounds of trade negotiations, said people who asked not to be quoted.

A major developing country from Asia apparently reminded the powerful nations how they continued to avail themselves of S&DT in agriculture and TRIPS, said people familiar with the development.

It also seemingly asked where is the evidence that S&DT has undermined market access, suggesting that there seems to be an asymmetry in the use of S&DT, said people familiar with the development.

Brazil apparently demonstrated how the paralysis of the Appellate Body has undermined crucial “development” for developing countries and LDCs, as one major country continues to resort to seemingly illegal and arbitrary tariff strikes against developing countries, said people familiar with the proceedings.

The major industrialized countries seemingly struggled to provide credible answers to various questions raised by several developing countries, said people familiar with the discussions.

At the end of the meeting, the facilitator appeared to suggest that a detailed report on the interventions will be prepared and sent to members soon.

A snapshot of the proposals seems to suggest that the divide between the majority of countries on one side and the major powerful countries on the other will be difficult to resolve – unless, under pressure from one powerful industrialized country, namely the US, the tables are turned on S&DT and development, several trade envoys said.

PROPOSALS

During the discussion, the African Group, which was the first to present its proposal, titled “Development: Strengthen S&DT and secure policy space for structural transformation”, argued that the group “has consistently advocated for special and differential treatment as a treaty-embedded right that must be strengthened through more precise and effective implementation, including through resolving long-standing agreement-specific proposals that developing members have tabled over many years, but left unresolved.”

The Group said that it “firmly rejects any attempt at forced “graduation” of developing countries based on arbitrary income criteria.”

According to the African Group, “development should be framed as capability expansion: enabling countries to diversify, raise productivity, increase value addition, and secure more meaningful integration into global value chains.”

It said that such a change “requires policy space that responds to structural challenges at the nexus between domestic production and trade.”

As “existing rules constrain industrialisation and diversification for countries facing commodity dependence and premature de-industrialisation, reform should introduce calibrated flexibilities.”

The Group called for “a review of industrial subsidy rules to enable support for emerging strategic industries and SMEs, which are the engines of employment in Africa.”

The African Group argued that “on the application of SDT, categories of eligibility such as OECD membership do not reflect the trade-related development challenges faced by developing countries.”

It added: “World Bank income measures do not take into account structural vulnerabilities which are reflected in uneven development between developed and developing countries, as well as risk of reversals due to ongoing disruptions in global trade and other vulnerabilities.”

The Group called for “a development-centred approach” that “should recognise vulnerability in a broader and more realistic manner than income classification alone.”

In its proposal, the ACP Group maintained that “the Marrakesh Agreement recognizes that Members are at different levels of development, and that developing countries require flexibilities to industrialize, diversify, and transform their economies and to implement the rules.”

According to the ACP Group, there is no room “to renegotiate these principles, but rather to make them work better in practice.”

It argued that “Special and Differential Treatment must be operationalized – not just as best endeavour clauses, but as an integral part of any Agreement or treaty” and “it must include capacity building and where relevant, Aid for Trade, which we see as partnerships for trade, investment and development to support implementation.”

The ACP Group said that “the fact is, however, that SDT across many agreements has not been effective or workable for most developing countries that need it,” arguing that “mere transition periods alone have not worked.”

It also pointed out that “there is need for deeper analysis on why existing SDT has not met its intended needs and where it has worked.”

Further, the ACP Group emphasized that “SDT should not be seen as an exception or privilege; it is enshrined in the mandates and an essential feature of a fair and development-oriented multilateral trading regime,” arguing that “SDT must be precise, effective, and operational.”

It said that “more use of the voluntary opt-out approach by developing countries who have determined they do not require SDT, would be one way to advance discussions”, adding that “it must, however, be noted that as a treaty-based right linked to the level of economic development, decisions by a Member not to use certain flexibilities is up to them.”

On S&DT, the ACP Group said that “widespread exclusions make it impossible to move multilateral negotiations forward.”

Also, “the current self-classification system, without objective criteria or graduation criteria, makes it difficult to achieve consensus on formulating new rules,” it added.

In its proposal (WT/GC/W/989), China said “on development and fairness, the reform shall aim to develop tools and rules for trade integration and reinforce a predictable, transparent, and non-discriminatory rules framework for fair competition.”

According to China, “Special and differential treatment (SDT), policy space, capacity building and aid for trade are important tools for developing members to achieve development goals.”

Beijing called for implementing SDT provisions “in a more precise and effective manner to better facilitate the full integration of developing members into the multilateral trading system.”

As part of development, China underscored the need to unlock “development potentials,” while embracing “digital transition and green transition, and harness artificial intelligence, all of which are opportunities of our time.”

It said that “expanding trade in these areas requires further efforts to develop relevant international rules that foster a conducive trading environment.”

Beijing argued that “fairness discussions could include government measures that distort international trade, notably with respect to potential update to the Agreement on Subsidies and Countervailing Measures (ASCM) and ongoing dialogues on industrial policies, with due regard to the need to maintain flexibility for development policy objectives, including for industrial development.”

In its proposal (WT/GC/W/998), the US contended that “the WTO’s Special and Differential Treatment (SDT) system requires urgent reform to remain credible.”

“Yet, the WTO remains trapped in an outdated binary system. Highlighting that over 75% of members currently access SDT, the UK warned, “that so many Members, including some of the largest economies of the world, have access to SDT undermines the credibility of the organization”,” the US maintained.

According to Washington, “the core problem is self-declaration,” as “unlike other international bodies, the WTO lacks an analytical classification system.”

“Since 1995,” the US argued, “any member can unilaterally declare itself “developing”‘ to secure carve-outs and extended timelines, completely ignoring three decades of economic heterogeneity.”

Citing a proposal floated during the Trump administration’s first term, the US argued that this practice breaks the WTO’s negotiating function: “Simply put, self-declaration has severely damaged the negotiating arm of the WTO by making differentiation among Members near impossible.”

However, “it seems somewhat incredible that at a time when it has seemingly imposed tariffs on WTO members illegally and unilaterally,” Washington has been preaching to scrap the “self-designation system for developing countries,” said an African trade envoy who asked not to be quoted.

Meanwhile, the LDC Group said it “does not see SDT as the problem in reform,” arguing that “how Members react to implementation and practical application of SDT across agreements is a concern.”

The group maintained that “many developing countries and LDCs have difficulties in utilizing SDT provisions due to inherent complexities in the nature of the provisions or transition periods provided have not been matched to the objectives of the treatment expected.”

It said that the Marrakesh Agreement that established the WTO in 1995 “recognizes asymmetries in levels of development, and the need to ensure policy space for all Members, developed, developing and LDCs.” +