More Favorable and Differential Treatment of Developing Countries : Toward a New Approach in the World Trade Organization

The authors discuss options that could be considered in the World Trade Organization (WTO) to provide more favorable treatment-so-called special and differential treatment (SDT)-to small and low-income countries. They argue that there is a need bot...

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Bibliographic Details
Main Authors:	Hoekman, Bernard, Michalopoulos, Constantine, Winters, L. Alan
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCESS TO SERVICE MARKETS AGRICULTURAL MARKET ACCESS AGRICULTURAL PRODUCTS AGRICULTURAL SUPPORT AGRICULTURAL SUPPORT POLICIES AGRICULTURAL TRADE AGRICULTURE ANTIDUMPING APPAREL AVERAGE LEVEL AVERAGE TARIFF BALANCE OF PAYMENTS BENCHMARKS BENEFICIAL IMPACT BENEFICIAL TRADE BORDER TRADE COMPARATIVE ADVANTAGE COMPETITION LAW COMPETITION POLICY COMPLEMENTARY POLICIES CONCESSIONS CONSUMERS CONSUMPTION GOODS COUNTRY LEVEL COUNTRY MARKETS CROSS-BORDER TRADE CUSTOMS VALUATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT GOALS DOMESTIC INDUSTRY DONOR COMMUNITY ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EXCESSIVE COSTS EXPORT GROWTH EXPORT MARKETS EXPORT SUBSIDIES EXPORT TAXES EXPORTS FINANCIAL RESOURCES FOREIGN FIRMS FREE ACCESS FREE TRADE FREE TRADE AGREEMENTS GENERALIZED SYSTEM OF PREFERENCES GLOBAL TRADE GROWTH POTENTIAL IMPORT QUOTAS IMPORTING COUNTRIES INCOME INCOME COUNTRIES INCOME LEVELS INDUSTRIAL COUNTRIES INSTITUTIONAL DEVELOPMENT INTELLECTUAL PROPERTY INTENSIVE PRODUCTS INTERNATIONAL TRADE INVESTMENT INCENTIVES LABOR MARKETS LABOR- INTENSIVE LABOR-INTENSIVE LABOUR INTENSIVE LDCS LESS DEVELOPED COUNTRIES LIBERALIZATION OF TRADE LIBERALIZATION OF TRADE IN GOODS MARKET DISTORTIONS MARKET FAILURES MARKET IMPERFECTIONS MERCHANDISE TRADE LIBERALIZATION MOST-FAVORED-NATION MULTILATERAL DISCIPLINES MULTILATERAL TRADE NATIONAL AVERAGE NATIONAL LEVEL NONDISCRIMINATORY TRADE NONTARIFF BARRIERS OPEN MARKETS PER CAPITA INCOME POLICY REFORMS POLICY RESEARCH POLICY RULES POOR COUNTRIES POOR HOUSEHOLDS POOR PEOPLE POSITIVE EXTERNALITIES POVERTY ALLEVIATION POVERTY REDUCTION PREFERENTIAL ACCESS PREFERENTIAL ACCESS TO MARKETS PREFERENTIAL MARKET ACCESS PREFERENTIAL TARIFF PREFERENTIAL TRADE PREFERENTIAL TREATMENT PRIORITY AREAS PRODUCERS PROTECTION OF INTELLECTUAL PROPERTY RIGHTS QUOTA RENTS REAL INCOME RECIPROCAL CONCESSIONS RECIPROCITY REDUCING POVERTY REDUCTION STRATEGIES REGULATORY POLICIES REGULATORY REQUIREMENTS RESOURCE ALLOCATION RESOURCE CONSTRAINTS RULES OF ORIGIN SAFETY STANDARDS SERVICE PROVIDERS SPECIALIZATION SUSTAINABLE DEVELOPMENT TARIFF BINDINGS TARIFF CUTS TARIFF RATE TARIFF REDUCTION TARIFF REDUCTIONS TARIFF STRUCTURES TECHNICAL ASSISTANCE TELECOMMUNICATIONS TRADE BARRIERS TRADE DIVERSION TRADE FACILITATION TRADE LIBERALIZATION COMMITMENTS TRADE NEGOTIATIONS TRADE POLICIES TRADE POLICY TRADE POLICY INSTRUMENTS TRADE POLICY REFORM TRADE PREFERENCES TRADE PROTECTION TRADE REFORMS TRADING PARTNERS TRANSACTIONS COSTS UNILATERAL TRADE UNILATERAL TRADE LIBERALIZATION URUGUAY ROUND VALUE OF IMPORTS VALUE OF RECIPROCITY WELFARE GAINS WORLD MARKETS WORLD TRADE WORLD TRADE ORGANIZATION WORLD TRADING SYSTEM WTO WTO AGREEMENTS WTO MEMBERS WTO MEMBERSHIP WTO RULES WORLD TRADE ORGANIZATION NONTARIFF TRADE BARRIERS MOST FAVOURED NATION CLAUSE MANUFACTURES TRADE LIBERALIZATION PREFERENTIAL TRADE AGREEMENTS MARKET ACCESS DOMESTIC RESOURCES INDUSTRIAL COUNTRY PROTECTIONISM CAPACITY BUILDING RULES & REGULATIONS NEGOTIATION PROCEDURES DUTY-FREE IMPORTATION QUOTA FORMULAS GENERAL AGREEMENT ON TARIFFS & TRADE WTO RULES
Online Access:	http://documents.worldbank.org/curated/en/2003/08/2487583/more-favorable-differential-treatment-developing-countries-toward-new-approach-world-trade-organization http://hdl.handle.net/10986/18139

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Summary:	The authors discuss options that could be considered in the World Trade Organization (WTO) to provide more favorable treatment-so-called special and differential treatment (SDT)-to small and low-income countries. They argue that there is a need both for differentiation across WTO members and for steps that would benefit all developing countries. The authors suggest the following to make the Doha Round more supportive of development: 1) A binding commitment by industrial countries to abolish export subsidies and nontariff barriers (tariff quotas) and to reduce most-favored-nation tariffs on labor-intensive products of export interest to developing countries to no more than 5 percent in 2010, and to no more than 10 percent for agricultural products. All tariffs on manufactures should go to zero by 2015, the target date for the achievement of the Millennium Development Goals. Liberalization should also be undertaken by developing countries on the basis of a formula approach. 2) A binding commitment by industrial countries on services to expand temporary access for service providers by a specific amount-for example, equal to an additional 1 percent of the workforce-and not to restrict cross-border trade (for example, by telecom channels). 3) Unilateral action by all industrial countries to extend preferential market access for less developed countries, and to simplify eligibility criteria, especially rules of origin. 4) Affirmation by the WTO that core disciplines relating to the use of trade policy apply equally to all WTO members. 5) Acceptance of the principle that for small and low-income countries "one size does not fit all" when it comes to domestic regulation and to WTO agreements requiring substantial investment of resources. 6) Recognition that some WTO agreements need to be adapted to make them more supportive of development, and a consequent willingness by industrial countries to modify them. 7) Expansion of development assistance to bolster trade capacity in poor countries and strengthening of the links between trade-related technical assistance and the mechanisms through which aid priorities are determined in developing countries. In practice, calls for specific types of SDT often appear to be motivated by a perception that a certain WTO rule is "anti-development" and that therefore developing countries should be exempted from the rule in question. The authors suggest that the appropriate solution to such problems is to change the rules rather than seek an opt-out. What should be up front changes in rules and what should be part of the negotiating agenda is a major issue which needs to be addressed at the Cancun Ministerial meeting. The suggestion that SDT should focus primarily on WTO rules and be limited to those countries that need it most-very small and poor economies-implies that criteria should be adopted to differentiate between countries. Leaving this to self-declaration-the current approach-is not feasible, while reliance on case-by-case, agreement-specific negotiation can generate excessive costs, discretion, and associated uncertainty. While the authors' preference is for a simple rule-of-thumb approach to determine eligibility, this is an issue that requires much more thought and discussion. They suggest that WTO members establish a high-level group to consider criteria that could be used for differentiation purposes and to determine the set of agreements to which differentiation will apply.

More Favorable and Differential Treatment of Developing Countries : Toward a New Approach in the World Trade Organization

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