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TWN
Info Service on WTO and Trade Issues (Aug26/10) WTO:
Development track exposes deep rifts on differentiation, S&DT Geneva, 7 Aug (D. Ravi Kanth) -- The Facilitator for "development", Ambassador Nthisana Motsete-Phillips (Botswana), who had been an official of the International Monetary Fund and the World Trade Organization in her earlier career, said that development was consistently described as "a foundational, crosscutting objective of the WTO, anchored in the Preamble to the Marrakesh Agreement and Part IV of the GATT and across numerous Annex 1 Agreements." A few members argued that "a predictable, rules-based multilateral trading system is itself a principal enabler of development, making credible WTO reform one of the most important deliverables for advancing development." However, the above view of the industrialized countries was severely challenged, as it was apparently observed that "thirty years of uneven development outcomes demonstrate that trade growth alone has not translated into development, and that WTO reform must therefore address structural asymmetries within the system if it is to deliver meaningful developmental outcomes." Members called to "move beyond reaffirming development commitments towards their effective implementation," while stressing the need for greater clarity on "the problems this track is intended to address through reform, a realistic scope of work, and a clearly defined objective." On "treaty-embedded rights," many Members reiterated that S&DT constitutes a "non-negotiable treaty right, grounded in Part IV of the GATT and the Marrakesh Agreement." "In their view, these provisions are legal obligations rather than aspirational commitments, forming part of a carefully balanced negotiated package that cannot be conditioned or diluted without the consent of the Members for whom they were intended." However, a few Members seem to have sought clarity, questioning whether the concept extends to future disciplines, observing that "if future rights and obligations are to be negotiated by consensus, greater clarity is needed on how a "treaty-embedded" right that has not yet been articulated would operate in practice." The Facilitator appears to be pushing for a narrative that "these exchanges suggest that a common understanding could assist future discussions," which appears to be somewhat flawed, said trade envoys, who spoke on the condition of anonymity. Differentiation Since 2018, the US has been unabashedly pushing for "differentiation" among developing countries for availing of S&DT based on the self-designation framework. Later, the EU and other members joined the debate to support the US, while China and India vehemently opposed any change to the current framework. China and India, in a joint paper circulated at the WTO in 2019, had argued that "there is a huge development divide between the developing and developed Members of the WTO, not only in aspects of economic development level, industrial structure and competitiveness, regional balance, but also in education, social security and the ability to effectively participate in international governance." Notwithstanding the significant progress achieved by developing Members since the creation of the WTO in 1995, China and India said that "the old divides have not been fully bridged or even have been widened, while new divides, such as those in the digital and technological areas, continue to emerge." Without naming the US, China and India argued in their paper that "it is inappropriate, if not inhumane, to measure a member's development level with select gross economic and trade statistics, so as to deny the divide between developing and developed Members, and to request the former to abide by absolute "reciprocity" or superficial "fairness," essentially depriving the developing Members of their right to develop." On the issue of categorization and differentiation among developing countries, the Facilitator observed in her report that it generated an active exchange of views. While a few powerful countries seemingly referred to voluntary opt-outs as a means of reflecting diverse development circumstances, others questioned "whether reliance on voluntary action alone would be sufficient over time, noting that the concept has long been part of the discussion but has been exercised only to a limited extent." A critical observation apparently made by the US during the discussions last month was that "after three decades of operation, the WTO's architecture for special and differential treatment warrants a fundamental reassessment." The US has also maintained at the WTO's 14th ministerial conference (MC14) in Yaounde, Cameroon, early this year that "the current self-designated system has become increasingly unsustainable and risks eroding the WTO's credibility by enabling major and highly competitive economies to continue accessing developing country flexibilities indefinitely." Without naming the US, the Facilitator said that one member noted that "S&DT was not a delivery mechanism for development" and therefore called for "a more targeted, temporary, and needs-based approach that places least developed countries at the centre and supports other developing Members in progressively integrating into the trading system." The powerful proponents of objective criteria argued that "the uniform application of S&DT no longer reflects today's diverse economic realities" and that "insufficient differentiation among economies with very different relative weights can itself generate or perpetuate inequalities." In sharp response, many countries opposed the new eligibility criteria, arguing that such approaches do not reflect diverse development realities and insisted that any proposal to narrow the scope should be preceded by "a factual, evidence-based assessment identifying the specific provision concerned, the relevant agreement, the Members making use of it, and its practical effects." They advocated for a sequenced approach: "evidence before graduation, balance before narrowing, and usability before new obligations." A proposal for a development index to inform rule design and resource allocation was introduced, alongside discussions on combining it with staged accountability. Members sought clarifications on whether accountability processes would trigger a review rather than automatic withdrawal, and how such indexes would account for structural vulnerabilities, the Facilitator observed. LDC graduation Members also spoke about longstanding imbalances, emphasizing that LDC graduation was described as "a milestone to be welcomed, provided it is accompanied by appropriate and sustainable transition support to ensure that development gains are preserved and that flexibilities are not withdrawn abruptly." Questions were raised regarding "how such transition arrangements should be balanced with considerations of differentiation among developing Members, including why a graduating Member whose relative economic position may improve significantly upon graduation should retain flexibilities that are not available to other developing Members." Persistent asymmetries Many Members called for attention to persistent asymmetries in agriculture, noting that "trade-distorting domestic support provided by developed Members remained outside the scope of the discussion, even as measures available to developing Members were being examined." Calls were made to preserve and expand policy space for industrialization, though some Members called for this to be accompanied by stronger disciplines on industrial subsidies. Technical assistance, emerging areas & mapping exercise Calls were made for a strategic review of technical assistance, given the growing number of trust funds alongside declining funding. Emerging areas like digital trade, AI, and climate-related measures were suggested for consideration through a development lens, with the digital divide identified as a distinct issue. Many members expressed support for a Member-driven, factual, inclusive, and transparent mapping and stocktaking exercise. It was emphasized that this should go beyond cataloguing provisions to assessing "their implementation, utilization, and effectiveness in delivering intended development outcomes." Several members called for a comprehensive assessment capturing unresolved issues like trade-restrictive measures and existing subsidy regimes, including in agriculture and industrial subsidies, to provide an objective basis for reform. Members cautioned against assigning effectiveness assessments to the Secretariat, as such judgments remain the prerogative of Members. As part of "next steps," the Facilitator apparently has begun identifying common themes to provide a basis for more focused discussions. The next informal plenary session is scheduled for 24 September. +
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