TRADE AND DEVELOPMENT 1
Elements in the module Trade and Development Why is trade important for development? Challenges and how to meet them Work Programme on Small Economies Special and differential treatment Historical evolution and current state of the negotiations 2
What do we know about trade? Trade can be a powerful source of growth & development; Trade can expand markets, facilitate competition and disseminate knowledge, raise productivity and facilitate assimilation and exposure to new technologies No country has developed by turning its back on trade and long-term capital flows; At the same time trade liberalization will not automatically lead to growth and development; 3
Trade and Development What is development? Economic or social? Is development part of the scope of the WTO? Is the WTO a developmental agency? Who is a developing country? 4
Complex Nature of the Nexus between Trade and Development The relationship between trade and development is complex and largely dependent on both internal and external factors; The causal link between different influencing factors is not clear; Complexity of the issue is compounded by peculiar features of developing countries economies; Trade liberalization alone may not lead to growth and development. 5
Summary A development friendly and conducive multilateral environment can lead to increased trading opportunities; For these opportunities to be converted into actual gains trading partners may have to look beyond mercantilist gains; Even more importantly, the global community would need to work together to help dc s s overcome supply-side side constraints and capacity building 6
Summary (continued) For trade to lead to development the dc s would need to adopt matching domestic policies; Institutional development and innovation would be one of the more important elements of such development strategies; Multilateral trade rules should, therefore, provide flexibility and policy space to dc s to pursue appropriate development priorities. 7
Maximizing Developmental Gains From the DDA Trade liberalization in itself is not enough- need investments in social sector; greater access to productive assets; stronger institutions and infrastructure; Ensure empowering and demand driven technical assistance, build capacity; Making MTS stronger and inclusive Or weakening of rule based multilateral trading system and proliferation of bilateral and regional agreements could leave smaller countries worse off. 8
Developmental Issues in the DDA 9
The DDA mandate Paragraphs 1,2,3 and 6 International trade can play a major role in the promotion of economic development and the alleviation of poverty. The majority of WTO members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration. Enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play. 10
Small Economies 11
CTD Dedicated Session CTD Dedicated Session on Small Economies Para. 35 Doha MD mandate HK MD Para. 41 Proposals in CTD Decision on regional bodies for TBT,SPS and TRIPS Monitoring proposals in other bodies 12
SVEs Doha Mandate We agree to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies. The objective of this work is to frame responses to the trade-related related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not to create a sub-category of WTO Members 13
Who are the SVE proponents? Antigua and Barbuda, Barbados, Belize, Dominica, Fiji, Haiti, Jamaica, Mauritius Papua New Guinea, Solomon Islands, Sri Lanka, St. Kitts and Nevis, St. Vincent and the Grenadines, Trinidad and Tobago Bolivia, Mongolia, Paraguay Cuba, Dominican Republic, Guatemala, Honduras, Nicaragua, El Salvador 14
The two-track track process Proposals in the CTD-DS DS Regional bodies for TBT, SPS + TRIPS WT/COMTD/SE/W/15-16 16 and 18 (Revs.1) Recommendation adopted by CTD WT/COMTD/SE/5 Approved by General Council in October 2006 Other D g countries can also use the same mechanism 15
Monitoring SE proposals in the negotiating bodies Document WT/COMTD/SE/W/22/Rev.1 to serve as basis. W/22/Rev.1 is a compilation prepared by the Secretariat Includes proposals and latest draft modalities 16
SVE proposals in the negotiating bodies Agriculture NAMA Rules (fisheries subsidies) Services Services Domestic regulation Subsidies decision in WT/L/691 17
Definition of SVE In the Agriculture modalities draft: Country does not exceed 0.16% world goods trade 0.10% world NAMA trade 0.40% world agricultural trade In the NAMA modalities draft 0.10% world NAMA trade 18
Special and Differential Treatment 19
Introduction GATT established in 1947 ( 23 CPs) No formal recognition of any difference between the CP s. Fundamental principle of GATT was that all rights and obligations should be applied uniformly. Even though 11 out of the original 23 CP s would today be classified as developing countries, they participated as equal partners 20
Evolution of S&D GATT Review Session, 1954-55 55 Article XVII Introduction of Part IV 1964 Principle of non-reciprocity Enabling clause 1979 GSP, RTAs and LDCs Uruguay Round Transition periods, TA, flexibilities 21
Concerns with S&D After a few years dc s s felt that in many cases most of the S&D provisions were: non-binding best endeavour clauses apparently mandatory, yet de-facto non-binding only a few provisions were mandatory and binding provisions 22
Doha Ministerial Declaration Ministers at Doha, recognizing that problems existed with respect to S&D treatment set out a work programme in para 44 of the Declaration, which reaffirmed that S&D is an integral part of the WTO noted that there are concerns about the implementation of S&D provisions directed that all S&D provisions should be reviewed to strengthen them and to make them more precise, effective and operational, and linked this work to the Decision on Implementation related issues and concerns 23
S&D Work Programme 88 Agreement specific submitted by the African Group and the LDC s. Developed countries also made submissions and raised a number of systemic issues In its report to the General Council, initially in July 02, and then in December 02, the CTD (SS) could only agree on 4 proposals. CTD sought guidance from GC. 24
Objectives of S&D Systemic issues integration or development? Compliance with obligations Transition periods or waiver? Definition of developing country Self-denomination or objective criteria? Categorization Same treatment for all or creation of separate categories? Graduation Is S&D permanent or temporary? 25
S&D Work Programme The CTD recommended that the GC provide a clarification on how to give effect to the Doha mandate. There was no consensus in the GC to provide this clarification The GC only took note of the report and asked its Chairman to undertake consultations on how to take forward the mandated review of all S&D provisions. 26
Negotiations under the GC Chair All proposals to be addressed in 3 categories Category I 38 proposals on which there was greater possibility of agreement. Category II 38 proposals made in areas currently under negotiation for referral. Category III 12 proposals with wide divergence of views. 27
What happened at Hong Kong Annex F on measures in favor of LDCs was the most important achievement in HK Waivers: positive consideration and a decision taken within 60 days, similar for waivers in favor of LDCs DFQF: Duty free quota free access (97%) to markets of developed and d g countries in a position to do so No conditionalities on loans, grants and official development assistance that are inconsistent with WTO Agreements TRIMS: Maintain 1 measure for 7 years, new measures for 5 years TA to implement the agreement 28
Current Status Agreement specific proposals 16 remain in CTD (8 Cat. I & 8 Cat. III) 6 are being discussed, other 10 positions still too far apart Discussion on implementation of DFQF Coverage and Rules of origin Self declaration of developing Members Cat. II proposals still in the negotiating bodies Cross-cutting issues Being discussed Monitoring mechanism for S+D provisions 29
8 Remaining Category I Proposals (5 African Group & 3 other dc's) 88 Total no. of proposals submitted in the Special Session 50 Proposals in the Special Session (Cat I + Cat III) 23 Proposals remaining in the Special Session 18 Proposals remaining with the Sp. Session 16 8 are from Cat I and 8 are from Cat III. 11 are by the African Group & 5 by other dc 38 Proposals referred to other bodies (Cat II) 27 Agreed to in principle as part of pkg of 28 proposals 5 LDC proposals agreed to in HK 2 Proposals on the ATC 8 Remaining Category III proposals (6 African Group & 2 other dc's) 30
Monitoring mechanism for S+D provisions Proposal by the Chairman Regular review technical and high level Gives visibility to S&D issue 2 Levels CTD General Council Scope WTO Agreements Proposals agreed in principle before Cancún MC+GC Decisions 31