S&DT TALKS FORGE AHEAD WITH LDC PROPOSALS

Negotiations on special and differential treatment (S&DT) at the WTO moved ahead at meetings on 10 and 12 May, in which Members agreed to examine agreement-specific proposals that have been put forward by least developed countries (LDCs). At the two-day meeting of the Committee on Trade and Development Special (negotiating) Session (CTD-SS), Members put aside -- for the time being -- the Chair's previous approach and instead moved forward by examining five proposals that the LDCs have put forward for enhanced S&DT.

CTD-SS Chair Faizel Ismail made a proposal earlier this year to group both agreement-specific proposals, promoted by developing countries, and cross-cutting issues into two broad categories -- flexibility and capacity-building, to be taken up in negotiations (see BRIDGES Weekly, 9 February 2005). The last CTD-SS meeting was adjourned early, however, after disagreement over the agenda, which some developing countries argued gave undue emphasis to cross-cutting issues (see BRIDGES Weekly, 13 April 2005).

Instead, after extensive consultations, Members decided to move forward by looking at the agreement-specific special and differential treatment proposals that have been put forward by LDCs, with the understanding that WTO Members can discuss and consider cross-cutting proposals as solutions to the LDC agreement-specific proposals. Some Members suggested that this would "break an artificial barrier" in discussions allowing Members to look in detail at the agreement-specific proposals, most of which were drafted over four years ago and haven't been examined in more than two years, and consider what they aim to address.

Delegates examined five LDC proposals at the meeting, namely proposal 22/23 (Understanding in Respect of Waivers of Obligations), 38 (Enabling Clause), 84 (Agreement on Trade-Related Investment Measures (TRIMS), 88 (Measure in Favour of LDCs) and 36 (Enabling Clause para. 3b).

In its most recent text, proposal 22/23 calls for "special consideration" of requests from developing and LDC Members for waivers of WTO obligations. In the discussion on the proposal, Australia, Canada, and the US wanted to hear more about the problems facing developing countries when requesting a waiver. In addition, the EU, Canada and Norway said they could only agree to a provision that would apply solely to LDCs. A number of other countries, including India, Colombia, Costa Rica, Brazil, Japan, Malaysia and Pakistan supported current language, and Paraguay suggested different wording providing for "adequate safeguarding" of "all developing country Members" while granting waiver requests.

Proposal 38 calls for the revision of the Enabling Clause (Decision on Differential and More Favourable Treatment, Reciprocity and Full Participation of Developing Countries) to ensure that the "extent and pace of liberalisation shall be determined in consultation with the government" of LDCs, taking into account that LDCs should not be required to take liberalisation measures that are inconsistent with their development, trade and financial needs. According to the proposal, the Enabling Clause should also be revised to provide flexibility regarding determinations of the base year from which liberalisation commitments are made to give credit to earlier liberalisation measures taken by developing countries and LDCs. The most controversial part (c) of the proposal, suggests that LDCs shall be allowed, if warranted by their economic and trade situations and stage of development, to make no reductions of tariffs in the agricultural and/or industrial sectors; exclude sub-sectors within these sectors from tariff reductions; and bind the rates reduced in the negotiations and the prevailing applied rates at levels consistent with their needs.

Switzerland, Australia and the EU said that situation had changed since the proposal was written and that this issue was being addressed in current negotiations. In particular, the need to provide flexibility and less than full reciprocity was addressed in the July Package's text on non agricultural market access (NAMA) and agriculture, including in provisions on less than full reciprocity in the former and special products/special safeguard mechanism (SP/SSM) in the latter. LDCs and the Africa Group said, however, that they would like to see such provisions considered not only in the current round of negotiations but on a longer-term basis, as they sought for a permanent solution to be incorporated into the structure of the WTO and not one for this round of negotiations only. However, a number of developed countries, including the US, said that LDCs could not expect to make no commitments or receive a blanket perpetual exemption, as the objective of WTO Membership was to integrate LDCs into the multilateral trading system at some point and enable them to use it to full advantage. Some LDCs suggested that the intent of the proposal was to address the costs of implementation of WTO disciplines, not to ask for a blanket exemption. India and Brazil, along with several other countries, suggested that the LDCs redraft the proposal.

The remaining proposals ask for an exemption for LDCs from TRIMS (proposal 84), for LDCs to not be required to make commitments prejudicial to their development needs or capacity (proposal 88), and for the mitigation of negative impacts of erosion of preferences for LDCs (proposal 36, which was not discussed).

According to trade sources, the level of ambition and pace of discussions in the CTD-SS is being affected by overall progress in the Doha round and the slow pace of agriculture negotiations in particular. The discussions on the LDC proposals specifically revealed that some were outdated, or did not address the concerns and needs of the countries that proposed them. As such, LDCs met informally with other Members after the session to discuss how the proposals could be redrafted to better address their needs, a process they will continue in small groups with the assistance of the Chair. Redrafting will occur with support from the WTO Secretariat. Whether the next meeting will look at the same five proposals, as some Members hope, move on to other proposals, or come back to the Chair's original approach, will be determined in coming weeks.

ICTSD reporting.