Special and differential treatment for developing countries

1. Special and differential treatment for developing countries • at the beginning little attention to dev’t problems: the Avana Charter contained some provisions GATT 1947: art.XVIII - governmental assistance to economic dev’t: temporary deviation from GATT provisions is allowed - flexibility in tariff structure to create new industries • quantitative restrictions for BOP purposes taking into account the high level of imports determined by dev't needs

2. Special and differential treatment for developing countries • modifications to GATT 1947 (art.XXVIII bis) - negotiations on a reciprocal and mutually advantageous basis are conducted with due regard to the varying needs of parties - the needs of less-developed countries for a more flexible use of tariff protection to assist their economic dev’t and the special needs of these countries to maintain tariffs for revenue purposes

3. Special and differential treatment for developing countries • decolonisation and growing power of DCs • DCs gain majority in the UN General Assembly • Important UN Declarations: - Declaration on the granting of independence to colonial countries and peoples (1960) - A programme for int’l dev’t cooperation (1961) • the non-aligned movement (1961) based on self-reliance

4. Special and differential treatment for developing countries • the Group of 77 (1964) • UNCTAD, UNDP, UNIDO • non reciprocity : developed countries must grant concessional tariffs to DCs without requiring any concession in return and without extending it to other countries • GATT as it stands in that moment and the liberal economic theory are criticised

5. Special and differential treatment for developing countries • decision to amend the GATT by introducing part IV - derogation to the reciprocity principle - commitment to enhance exports from DCs - special attention to primary products - cooperation with the UN - harmonisation of policies and regulations - technical and commercial standards - facilities to increase the flow of information

6. generalised systems of preferences (GSP): unilateral national schemes to grant tariff protection • ex. US suspended Argentina from Trade Preference Scheme • the idea came out in 1970 but it was outside GATT system • the 1971 a 10-year derogation to the MFN is taken by the GATT parties under the form of a decision

7. Special and differential treatment for developing countries • DCs unhappy of this decision because it is a temporary derogation • The Charter of economic rights and duties of States and the Declaration on the Establishment of a New Int’l Economic Order (1974) • power of OPEC countries and of the Group of 77 • In 1979 the “Enabling clause” is adopted: permanent derogation to the MFN (decision of the CPs) • S&D treatment vs gradual implementation of GATT rules by DCs

8. Special and differential treatment for developing countries • the Eighties are difficul years for DCs: - NICs start to emerge - growing role of technology - big external debt of DCs - the Uruguay Round is not a dev't round and the new WTO is not based on S&D treatment - the principles of the new int'l economic order are forgotten

9. Case study: the EU-India GSP • GSP all have a similar scheme: - no criteria on beneficiaries - different sectors are covered - 0 duty for LDCs - safeguard measures - rules of origin • EU regulation 2008/732 applies until the end of 2013; the proposal for the new scheme (GSP+) will come into force on January the 1st 2014

10. Case study: the EU-India GSP • the EU-India GSP contained the so-called “drug arrangement”: tariff preferences for countries having in place programs against drug trafficking • India said this provision was discriminatory, as benefits were allowed just to some DCs (Pakistan) • this had negative consequences on India's exports to the EU, less competitive than the Pakistani equivalent • AB: the Regulation does not allow objective criteria in order to include other DCs with similar problems among the beneficiaries

11. Case study: the EU-India GSP • AB (continued): no objective criteria in order to remove beneficiary countries from the list • the discrimination among WTO countries is incompatible with the Enabling clause • the EU was forced to change its scheme • special arrangements for labour rights and the env't were not at issues, as they were based on objective criteria (ILO conventions and int'l env'l law) • sustainable dev't & social rights can be included in GSP schemes = conditionality

12. THE NEW GSP • the new GSP+ - less beneficiaries: countries which have reached an average standard of living and those enjoying a preferential treatment under other schemes will be excluded - conditionality (env't, labour, etc) - better preferences under the Everything but Arms initiative (LDCs) - predictability and stability: the system becomes open-ended

13. THE EVERYTHING BUT ARMS INITIATIVE Regulation (EC) 416/2001 (EBA regulation) duty-free access to imports of all products from LDCs, except arms and ammunitions, without any quantitative restrictions incorporated into the GSP Council Regulation special arrangements for LDCs are maintained for an unlimited period when a country is excluded by the UN from the list of the least-developed countries, it shall be withdrawn from the list of the beneficiaries

14. The EC and ACP countries • Yaoundé and Lomé Conventions governing EU-ACP relationships • international agreements between EU and ACP countries • non reciprocity in trade relations • stabilization mechanisms for export prices • clauses about human rights and democracy

15. The EC and ACP countries the regime is incompatible with : - the MFN because of preferential treatment - GATT art.XXIV as it is not a regional agreement - the Enabling clause because it does not apply to any DCs but just to ACP starting from the 90s the EC asks a waiver to the WTO at the end of the Doha Round the waiver is extended until 2008

16. The EC and ACP countries The Cotonou Agreement is the solution (2000) regional trade agreement ex GATT art.XXIV 20 years + revision every 5 years reciprocity: gradual opening of ACP economies is supposed the agreement is implemented through Economic Partnership Agreements with each country

17. The EC and ACP countries • the Banana dispute: EU vs US and caribbean countries (1995-2007) • banana imports were subject to a system of licences, discriminating according to the origin • EC has been found in breach of GATT art.I (MFN) and XIII (non-discriminatory administration of quantitative restrictions)