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Policy Analysis

Development Issues for the Thirteenth Ministerial Conference—Deal Breaker or Game Changer?

As developing countries and LDCs comprise 75% of the WTO, negotiations regarding development issues remain prevalent. However, certain conversations have been historically difficult and protracted. Rashid S. Kaukab showcases the importance of reaching outcomes relevant to special differential treatment for developing economies and the treatment of LDCs post-graduation from their category.

By Rashid S. Kaukab on January 11, 2024

Development Issues Permeate All Areas of World Trade Organization Negotiations and Talks

Numerous development issues presented by developing and least developed countries (LDCs) are being negotiated in almost all the World Trade Organization (WTO) committees dealing with specific agreements and negotiating topics. The importance accorded to development issues in the WTO is understandable, as 75% of WTO members are developing countries and LDCs, and their economic and social development is essential for global prosperity. Beyond this broad and common acceptance of the importance of development issues, however, negotiations on specific development issues at the WTO have often been difficult, complex, and protracted. The situation is no different in the run-up to the Thirteenth Ministerial Conference (MC13).

Negotiations on specific development issues at the WTO have often been difficult, complex, and protracted.

While acknowledging the value of all agreement- and topic-specific development issues—some of which are discussed in other articles in this issue of the Review—this article focuses on two development issues that are broad and encompass multiple WTO agreements and negotiating topics. These are special and differential treatment (SDT) for developing economies and the treatment of the LDCs immediately after their graduation out of the LDC category to ensure their smooth transition to their new status in the WTO.

Strengthening and Operationalizing the SDT Provisions in WTO Agreements

The SDT provisions that give developing countries special rights and allow other members to treat them more favourably are an integral part of the WTO agreements and negotiations. There are 157 such provisions in the WTO agreements, according to the WTO Secretariat, and 16 more in ministerial decisions.

Developing countries and LDCs argue that most of these provisions, as currently drafted, are either vague or use hortatory language without providing the clarity, predictability, and certainty that are necessary for their implementation by WTO members. Hence, they have been of limited use, they say. Developing countries and LDCs obtained a mandate to address this deficiency in SDT provisions from the Fourth Ministerial Conference in 2001. Specifically, paragraph 44 of the Doha Ministerial Declaration adopted at the ministerial says that all SDT provisions “shall be reviewed with a view to strengthening them and making them more precise, effective and operational.” This mandate was to be implemented by July 2002.

To this end, developing countries and LDCs submitted 88 proposals related to SDT provisions in almost all WTO agreements, suggesting how these provisions could be strengthened and made more precise, effective, and operational. Negotiations on these proposals did not yield positive outcomes, however, except for five pertaining to the requests of LDCs only and where a decision was adopted at MC6 in 2005.

No progress has been made since then, with developed countries arguing that the proposals seek blanket and indefinite exemptions from WTO rules. They want developing countries and LDCs to provide further justifications and support their proposals with concrete evidence of why they are needed. Developed economies have also expressed concern about the indiscriminate use of the requested flexibilities by all developing countries without considering the differences in their levels of development.

There were two key developments during this long period on the side of developing countries and LDCs, which examined the original 88 proposals and selected 25 that they submitted as a package for consideration by MC10 in 2015. They did that as the G90, a grouping that includes all members of the African Group, the LDC Group, and the Group of African, Caribbean and Pacific countries in the WTO. Then, with developed countries failing to engage on that package, the G90 reduced the number of priority SDT proposals to 10 and presented them as a draft Ministerial Decision for MC11 in 2017. However, ministers failed to reach any decisions or make any declarations.

Since then, the G90 has sought to negotiate an outcome on these 10 agreement-specific proposals by responding to other WTO members’ questions about them, providing economic and developmental justification—including the relationship of individual proposals with the relevant United Nations Sustainable Development Goals and the need for these provisions to deal with COVID-19 and climate change crises, among others—and persuading developed countries to hold in-depth discussions on the proposals in the Committee on Trade and Development – Special Session (CTD-SS) to find acceptable outcomes. The CTD-SS is the WTO body responsible for conducting the negotiations under paragraph 44 of the Doha Ministerial Declaration.

Despite these efforts, MC12 in 2022 failed to reach consensus on any of the proposals. On the positive side, ministers reaffirmed the provisions of SDT for developing country members and LDCs “as an integral part of the WTO and its agreements” and instructed officials to “continue to work on improving the application of special and differential treatment in the CTD-SS and other relevant venues in the WTO, as agreed and report on progress to the General Council before MC13.”

In February 2023, South Africa made a detailed submission on behalf of the G90, providing further justification for the 10 proposals, taking into account the earlier questions and concerns of developed countries. This submission clarifies that the proposals do not seek blanket, indefinite, and/or indiscriminate exemptions from WTO rules. Rather, they aim at specific, time-bound, and clearly stated flexibilities for developing countries that face constraints and LDCs.

The submission, which is restricted, also proposed a series of formal meetings of the CTD-SS for focused and technical discussions on the 10 proposals. It indicated that the first such meeting should be dedicated to substantive discussions on the proposals related to the Agreement on Technical Barriers to Trade and the Agreement on the Application of the Sanitary and Phytosanitary Measures. The G90 also indicated that its next submission will include revised proposals on the agreements on Subsidies and Countervailing Duties and on Trade-Related Investment Measures and the General Agreement on Trade and Tariffs 1994 (GATT), Article XVIII B, to be followed by revised proposals on the remaining five (these relate to GATT Article XVIII A and C, the Enabling Clause, TRIPS Agreement Article 66.2, Agreement on Customs Valuation, and Accessions to the WTO). The G90 is seeking substantive discussions on all 10 proposals with a view to achieving outcomes by MC13.

Treatment of LDCs Immediately After Graduation

The United Nations accords LDC status based on well-defined criteria. This status makes the countries eligible for substantial international support measures, including at the WTO. The United Nations also decides to graduate individual LDCs from the category when they achieve certain developmental thresholds. Once graduated, LDCs are ineligible for international support measures.

Ten of the 35 WTO’s LDC members and four of the eight that are in the process of acceding to the WTO are on the path to graduation. While this is a positive development, LDCs have highlighted the need to ensure a smooth transition process for these countries. They argue that given their formidable developmental challenges and continued structural weaknesses in a world beset by crises, a sudden loss of international support measures can nullify the progress they have made and may even push them back into the LDC category.

The LDC Group brought this issue to the attention of WTO members through several submissions. Their main demands in the WTO are:

  • The preferential market access granted to LDCs, e.g., through duty-free, quota-free exports to many developed and developing countries, should be extended to graduating LDCs for a certain period of time;
  • Graduating LDCs should continue to benefit from LDC-specific flexibilities under various WTO agreements, as well as the trade-related capacity-building assistance for a certain number of years after graduation. The common justification is the need for a smooth transition process for graduating LDCs to prepare them for their new non-LDC status in the WTO.

Other WTO members generally recognize the concerns of graduating LDCs. MC12 took note of these, and the ministers recognized “the role that certain measures in the WTO can play in facilitating smooth and sustainable transition for these Members after graduation from the LDC Category.”

A major breakthrough was achieved when the WTO General Council adopted a decision on October 23, 2023, that encourages members to offer a smooth and sustainable transition period for the withdrawal of their duty-free and quota-free preference programs to LDCs after their graduation.

Aiming to build on this success, the LDC Group is continuing to engage in discussions in the Sub-Committee on LDCs on other elements of its submission—specifically, those related to the use of LDC-specific flexibilities in the WTO agreements including trade-related capacity-building assistance for graduating LDCs for a certain number of years—to be determined case by case—after graduation.

Development Outcomes at MC13

Members agree on the central importance of development in the WTO and some development-related issues are part of the agreement- and issue-specific negotiations in the run-up to MC13. It is reasonable to expect that development-related elements will be part of any MC13 outcomes in these areas.

With constructive and sustained engagement by both developing and developed countries, members could look for common ground—and possible outcomes—on at least some of the proposals tabled.

Outcomes on two broader development issues at MC13 would be both an outstanding achievement and a strong signal to developing countries and LDCs that their interests and concerns remain at the heart of the WTO. One of these is the longstanding issue of strengthening and making the SDT provisions in WTO agreements more precise, effective, and operational. With constructive and sustained engagement by both developing and developed countries, members could look for common ground—and possible outcomes—on at least some of the proposals tabled.

The other is the pressing issue of agreeing on the treatment to be accorded to graduating LDCs to ensure their smooth transition to their new status in the WTO. The General Council’s adoption of part of the LDC proposal has created positive momentum. What remains to be seen is whether that momentum can carry forward to the remaining part of the proposal to reach an agreement by MC13 to help graduating LDCs manage the transition to developing country status.

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