Developing Countries, Special & Differential Treatment in the WTO

Developing countries account for over two thirds of the 153 Members of the World Trade Organization (WTO), with over 32 of them classified as Least Developed Countries (LDCs), as designated on the UN list of 50.  Despite this, there is still no official definition of a “developing country” within the WTO framework which complicates the discussion on “development”.  Nonetheless, WTO Members have agreed on an extensive set of provisions addressing the flexible rights and obligations of LDCs, given this category is already defined by the UN.  

Given the lack of a definition of "developing countries", these countries use this designation " on the basis of “self selection” and as a consequence, Singapore with a per capita income of US$34,761, United Arab Emirates with a per capita income of US$54,606 and Kenya with a per capita income of US$766 (World Bank, 2009) are all expected to benefit from the same Special and Differential (S&D) treatment and development provisions and S&D negotiation.  

There is a crucial need to redefine criteria to access S&D treatment.  Suggestions has been put forward for a “needs based”, more customized approach to S&D whereby countries are given the opportunity on an ongoing basis to explain in developmental terms why they need access to S&D provisions.  Measuring economic need against legal provisions can be accomplished using a threshold such as $ 1000 GDP per capita, which is already used in determining subsidies under Article 27.2(a) and Annex VII of the Agreement on Subsidies and Countervailing Measures.  Members could also use staggered time frames, thresholds, benchmarks, multi-tiered phase-in periods, economic criteria at disaggregated and/or provision-specific levels. 

Additionally, current country groupings need to be renegotiated.  Specifically, this would mean that developing countries would cease to self-select their developing country status and would be categorized into a larger number of sub-groups than is presently the case.  It is contended that a LDC plus group of small and poor developing countries determined by size and per capita criteria as defined by international institutions, would by and large capture those countries in real need of S&D across all WTO agreements.  

However, a common critique of all of the above approaches is the emphasis on the creation of new developing country categories.  Among the reasons why WTO Members resist such an exercise, even if assured of its limitation to S&D provisions, is the fear of spill-over effects in the overall negotiations, where the impression of belonging to a sufficiently advanced sub-group receiving comparatively less S&D treatment is likely to lead to extensive demands by negotiating partners.  

As a compromise, Members could however consider the providing S&D benefits to all developing countries, based on a monitoring mechanism which would systematically evaluate the basis for requesting the S&D treatment.  Analysis of credibility would be based on a set of indicators or aggregate data, the basis of which an appropriate solution would be provided. Without a new approach to S&D treatment among developing countries, it is difficult to see how African developing countries could benefit from development measures and flexibilities when  other developing countries oppose any differentiation.