3.5 Developing countries in the WTO system.

1. Are there any special Rules for Developing Countries?

Expansion of the negotiating agenda to include sectors of interest
to most developing countries, notably agriculture and textiles.
Many special provisions in favour of developing countries that have
been incorporated into the individual agreements and decisions of
the Uruguay Round. Take into account the special needs of these
countries, supplementing a number of previously existing
measures carried over unchanged from the GATT 1947.
Article XVIII, Part IV and the “Enabling Clause” introduced in 1979.
The first allows flexibility in the use of trade measures to protect
infant industries and in the use of quantitative import restrictions to
alleviate balance-of-payments difficulties. The second is a section
covering the principles and objectives of the GATT with regards to
developing countries.
Page. 71
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 1
TO System
It encourages developed countries to improve access to their markets
and states that developing countries are not expected to reciprocate
trade barrier reduction commitments made by developing countries.
The Enabling Clause (Decision on Differential and More Favourable
Treatment, Reciprocity and Fuller Participation of Developing
Countries,28 November 1979 (L/4903) permits preferential treatment
to be given to, and exchanged among, developing countries subject
to stated conditions. It also authorizes specially favourable treatment
for least developed countries. Page.71
2. Least-developed countries (LDCs) which have been specifically
targeted as beneficiaries of many special treatment clauses included
in the Round. Ministerial Decision on Measures in Favour of
Least-Developed Countries, gives them special treatment, all
aspects of all the agreements and requires regular reviews of their
needs. Permits LDC members to apply only those commitments
which are consistent with their development needs and individual
capabilities, and it sets a framework for other countries to follow when
formulating and implementing their national trade policies so that 2
these are helpful to the LDCs. Page. 72
3. Specific provisions within the individual agreements allow LDCs
more flexibility in implementing certain WTO rules and encourage
other members to cooperate when LDC interests are involved. Help
them to have access to technical cooperation from other members
and from the WTO Secretariat. Many special provisions are not
automatic, must be requested by the member concerned. In some
cases, reviews of special treatment given are also required in order
to encourage the gradual integration of all developing countries into
the regular WTO legal framework.
4. Overview of the contents of all the new special provisions made in
the agreements, Legal Instruments and Ministerial Decisions.
Uruguay Round package, which refer specifically to developing
countries. Each was written in the context of an individual agreement
or decision. Ministerial Decision on LDCs is listed first, and
reproduced almost in full, as it affects the whole Marrakesh
Agreement.
Page. 72
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 3
TO System
 The special measures have also been grouped under four
headings:
i) Those recognizing the interests of least-developed/developing
countries in a general manner;
ii) Those easing the rules or numbers of obligations to be met;
iii) Those providing longer time-frames for the implementations of
certain obligations
iv) Those providing for technical assistance.
5. Synopsis of Provisions of the Uruguay Round Concerning
Developing Country Members:
5.1 Marrakesh Agreement Establishing the World Trade
Organization:
1. Recognition of general interests: Developing country members,
and especially least-developed countries (LDCs), secure a share
in the growth on international trade that is commensurate with
4
their economic development needs. Page. 73
2. Fewer obligations or differing rules: Committee on Trade and
Development periodically review the special provisions in favour of
developing country members and, in particular the LDCs which
reporting results to the General Council for appropriate action.
LDCs are only required to undertake commitments and
concessions consistent with their individual development, financial
and trade needs, or their administrative and institutional
capabilities.

5.2 Decision on Measures in Favour of Least-Developed

Countries:
1. Recognition of general interests: Effective participation of LDCs
in world trade requires improved trading opportunities for products
of interest to them. Regular reviews of the implementation of all
special and differential measures taken in favour of LDCs help
ensure their actual execution.
Members encouraged to apply Uruguay Round concessions on
tariffs and non-tariff measures in advance with without staging.
Sri Ram Khanna Aug09 3.5 Developing Countries in the W
TO System
Page.74
5
 Import relief measures or other restrictions special consideration
to the relevant export interest of LDCs.
Difficulties faced by LDCs will be kept under review and efforts
will be made to adopt positive measures to help expand their
trading opportunities.
2. Fewer obligations or differing rules: LDCs will only be required
to apply individual commitments, obligations and concessions
which are consistent with their individual development, financial
and trade needs, or their administrative and institutional
capabilities.
Rules be applied in a flexible and supportive manner with regards
to the LDC members. Page. 74
4. Technical assistance: Given substantially increased technical
assistance to develop, strength and diversify their production and
export bases.

Sri Ram Khanna Aug09 3.5 Developing Countries in the W Page. 675
TO System
5.3 Decision on Notification Procedures:
4. Technical Assistance: Council for Trade in Goods undertakes a
review of notification obligations and procedures, some
developing country members may need assistance in meeting
these administrative obligations.
5.4 Understanding on Rules and Procedures Governing the
Settlement of Disputes:
1. Recognition of general interest: Dispute involved an LDC,
particular consideration will be given to its special situation.
Members exercise restraint in raising matter under the dispute
settlement procedures and in asking for compensation, [Article
24.1]
2. Fewer obligations or differing rules: Developing country
members has a complaint, entitles developing countries to the
good offices of the Director-General and a shorter panel
procedure. Page. 75
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 7
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•During dispute consultations, special attention to the particular problems
and interest of developing countries. [Article 4.10]: In cases where:

•Consultations involving a measure taken by a developing country

may be extended beyond the usual time period.
•If consultations involving an LDC fail, LDC may ask the Director-
General of the DSB chairman to offer his good offices before a formal
request for a panel is made.

5.5 Trade Policy Review Mechanism:

2.Fewer obligations of differing rules: Developed country members
subject to review either every two of four years. Most developing
countries will be reviewed only once every six years.

4.Technical Assistance: Trade Policy Review Body with annual

statistical information, special briefs. Technical assistance will be
available from the WTO Secretariat for developing countries,
especially LDCs. Page. 76
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 8
TO System
5.6 Understanding on the Balance-of Payments provisions of
GATT 1994:
1. Recognition of general interests: in (BOP) consultations
concerning developing country members, background and
analytical material on the impact of the external trading
environment on the consulting member’s financial situation and
prospects by WTO Sectt.
2. Fewer Obligations of differing rules: As agreed in 1972,
balance-of-payments consultation procedures may be used by
LDCs and other developing country members that are already
pursuing liberalization efforts in conformity with a BOP Committee
time-schedule.
4. Technical Assistance: Available to developing country to help
prepare documentation for BOP consultations for WTO Sectt.
Page. 76 & 77

Sri Ram Khanna Aug09 3.5 Developing Countries in the W 9

TO System
 COW ECONOMICS
Perhaps we all need a bit of cheering up...
• SOCIALISM
You have 2 cows.
you give one to your neighbour.

• COMMUNISM
You have 2 cows.
The State takes both and gives you some milk.

• FASCISM
You have 2 cows.
The State takes both and sells you some milk.

• NAZISM
You have 2 cows.
The State takes both and shoots you.

Sri Ram Khanna Aug09 10

 COW ECONOMICS…contd
• BUREAUCRATISM
You have 2 cows.
The State takes both, shoots one, milks the other, and then
throws the milk away…

TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies.
You then employ someone else to do the work and you grab
all future profits to fund your indolent lifestyle.

SURREALISM
You have two giraffes.
The government requires you to take harmonica lessons
Sri Ram Khanna Aug09 11
5.7 Agreement on Agriculture:

1. Recognition of general interest: Special and differential

treatment of developing country members is considered to be
an integral part of this agreement and have been taken into
account for reform in agriculture trade.
* Possible negative effects of the implementation of the reform
programme on LDC and net food-importing developing country

members should be considered.

* Developed country members will provide greater market
access for agricultural products of particular interest to
developing countries. Page. 77
2. Fewer obligations or easing of rules: Developing countries

do not have the commitment to reduce certain domestic

support measures which are an integral part of their
development
Sri Ram Khanna Aug09 programmes.
3.5 Developing Countries in the W 12
TO System
 Developing countries have a higher de minimus level with respect
to trade distorting domestic support (10 percent as opposed to 5
percent for developed countries). [Article 6.4].
Developing countries are not required to undertake commitments
on subsidiesto reduce the costs of marketing exports of
agricultural products or internal transport subsidies for export.
Developing countries not required to consider the food security
concerns of other members when applying an export prohibition
or restriction of foodstuffs.
For developing countries, the required cuts for tariffs are lower, by

one third, that the rates applicable for developed countries.

LDCs not required to undertake reduction commitments in
agriculture market access, domestic support of export subsidies.
Page. 78
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 13
TO System
 Agriculture negotiations take into account, special and differential
treatment for developing countries. Page. 78
Special and differential treatment includes public stockholding for
food security.
“Special treatment” clause, allowing agriculture-specific non-tariff
measures.
3. Longer time-frame for implementation: Their commitments to
reduce protection and trade-distorting support in 10 rather than
six years.
5.8Measures Concerning the Possible Negative Effects of the
Reform Programme an Least Developed and net Food-
Importing Developing Countries.
1. Recognition of general interests: Negotiations to establish food
aid commitment levels sufficient to meet the needs of developing
country members during the reform. Page. 79
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 14
TO System
Increasing proportion of basic foodstuffs is provided to LDCs and net
food-importing developing country members in grant form, or on
concessional terms.
Any agreement on agricultural export credits makes provision for
differential treatment in favour of LDCs and net food-importing
developing country members. Page. 79
4. Technical Assistance: LDCs and net food-importing developing
country members for technical and financial assistance, for the
improvement of their agriculture productivity and infrastructure,
will be given full consideration.
5.9 Agreement on Sanitary and Phytosanitary Measures (SPS):
1. Recognition of general interest: Developing country members
difficulty in complying with the SPS measures, therefore, receive
assistance, need help to formulate and apply SPS measures
within their own territories.

Sri Ram Khanna Aug09 3.5 Developing Countries in the W

Page. 15
80
TO System
Phased introduction of new SPS measures, members should accord
longer time-frames for compliance an products of interest to
developing country members.

3. Longer time-frame for implementation: Time-limited exceptions

from some or all obligations of this granted to developing country
members by the Committee on SPS Measures.
LDCs may delay until 2000 the application of all other developing
countries may also delay, until 1997. Page. 80

4. Technical Assistance: help developing country members by

technical assistance in the form of advice, credits, donations and
grants.
Exporting developing country members to fulfil the SPS requirements
of an importing member, necessary technical assistance.
Facilitate the active participation of developing countries in
international organizations related to SPS regulations. [Article 10.4]
Page. 81
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 16
TO System
 COW ECONOMICS…contd
• AN AMERICAN CORPORATION
You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyse why the cow has dropped dead.

ENRON VENTURE CAPITALISM

You have two cows.
You sell three of them to your publicly listed company, using 20 letters of credit opened
by your brother-in-law at the bank, then execute a debt/equity swap with an associated
general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island
Company secretly owned by the majority shareholder who sells the rights to all seven
cows back to your listed company.

• The annual report says the company owns eight cows, with an option on one more.
You sell one cow to buy a new president of the United States , leaving you with nine
cows.
No balance sheet provided with the release.
The public then buys your bull.

Sri Ram Khanna Aug09 3.5 Developing Countries in the W 17

TO System
5.10 Agreement on Textiles and Clothing (ATC):
1. Recognition of general interest: LDCs should be accorded
special treatment.
Cotton-producing exporting members to be consulted.
Transitional safeguard actions used as sparingly as possible.
More favourable treatment in the application of quota base-levels,
growth rates and flexibility is to be given to small suppliers, wool-
producing developing country members and countries having a
significant proportion of their trade in outward processing.
. Transitional safeguards cannot be taken against: exports of hand-
loom fabrics from developing country members, hand-made
cottage industry products or folklore handicrafts when properly
certified. Page. 81
2. Fewer obligations or differing rules: LDCs may also benefit.
Improve the access possibilities of small suppliers and new
entrants to trade may move ahead one stage in the relaxing18of
restrictions (growth process). Page. 82
3. Longer time-frame for implementation:
Due early 1995 for these members, as opposed to October 1994.
Members countries part of MFA.

5.11 Agreement on Technical Barriers to Trade (TBT):

1. Recognition of general interest: Developing country encounter
special difficulties in the formulation and application on technical
regulations, standards and conformity-assessment procedures.
Members wish to assist developing countries in this matter.
Members should allow sufficient time between the publication and
entry into force of new technical regulations. So that producers
particularly in developing country may adapt their products or
production methods. Page. 82
Members are to take care not to create unnecessary obstacles to
exports from developing country members.
Page. 83
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 19
TO System
Members shall try to ensure: International standardizing bodies and
international conformity-assessment systems take into account the
special problems of developing countries; upon request by
developing country members, international standardizing bodies
examine the possibility of preparing international standards for
products of special interest to them.
Developed country members take into account, special and
differential treatment that is being accorded to developing country
members.
Committee on Technical Barriers to Trade periodically examine the
special and differential treatment that is being accorded to
developing country members.

2. Fewer obligations or easing of rules: Developing country

members not expected to be use international standards as the basis
for their own technical regulations, standards or testing methods.
Page. 83
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 20
TO System
3. Longer time-frame for implementation: Developing country
members, time-limited exceptions from obligations.
4. Technical Assistance: WTO Secretariat draw attention of
developing country members to any notification relating to products
of particular interest to them.
Members obliged to provide advice and/or technical assistance to
other countries, developing country priority going to LDCs.
5.12 Agreement on Trade-Related Investment Measures (TRIMS):
1. Recognition of general interests: Take into account the
particular trade, development and financial needs to developing
country members, LDCs. Page. 84
2. Fewer obligations or easing of rules: Right of developing
country members to temporarily apply otherwise prohibited TRIMs.
3. Longer time-frame for implementation: LDC members have a seven-
year transitional period to eliminate all GATT inconsistent TRIMs.
Developing countries have five years and developed country members
21
5.13 Agreement on Implementation of Article VI of the GATT
(Anti-Dumping):
1. Recognition of general interests: Developed country members
give special regard to the situation of developing country
members.
Constructive remedies provided explores before anti-dumping
duties are applied.
5.14 Agreement of Subsidies and Countervailing Measures:
1. Recognition of general interests: Subsidies play an important
role in economic development programmes of developing country
members. Page. 85
2. Fewer obligations or differing rules: Annex VII (LDCs and
certain other developing countries) not subject to the prohibition
on export subsidies. (non-Annex VII) developing countries have
an eight-year transition period to phase out their export subsidies.

Sri Ram Khanna Aug09 3.5 Developing Countries in the W

Page. 86 22
TO System
LDCs have eight-year transition period, other developing countries
have a five-year transition period of phase out their “local content”
subsidies.

Subsidies presumed to cause serious prejudice to the interests will

not be presumed to do so in the case of developing country members.
Include: total ad valorem subsidization exceeds 5%, subsidies to
cover losses sustained by an industry, direct forgiveness of debt.

Actionable subsidies maintained by developing country members only

actionable multilaterally if they cause injury to an industry in the
complainant’s market, or nullify or impair another member’s benefits
under the GATT 1994, by displacing or impeding that member’s
import of like products into the developing country’s market.
Investigation on an export from a developing country member must
be terminated if: volume of subsidized imports is negligible, i.e. less
than 4%.
Page. 86
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 23
TO System
Termination of countervail investigations against developing country
if the level of subsidization is no more then 2% of the per unit value
of the product. For Annex VII countries de minimus level is set at
3%. Page. 86
3. Longer time-frame for implementation: Developing country not
included in Annex VII, allowed to phase out their export subsidies
over a period of eight years. Phasing-out period for developing
country export subsidies may be extended year by year. Any
developing country applying for an extension before the original
eight years are up will automatically gain two more years exemption,
even if the application is turned down.
The prohibition on local content subsidies does not apply to
developing country members for a period of five years, nor to LDC
members for a period of eight years. Page. 87
Developing country members other than Annex VII countries that
attain “export competitiveness” for particular products have two
years to phase out export subsidies if a developing country’s exports
24
of a product reach 3.25% of world trade, for two consecutive years.
 COW ECONOMICS…contd
• A FRENCH CORPORATION
You have two cows.
You go on strike, organise a riot, and block the roads, because you want three cows.

A JAPANESE CORPORATION
You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty
times the milk.
You then create a clever cow cartoon image called 'Cowkimon' and market it worldwide.

A GERMAN CORPORATION
You have two cows.
You re-engineer them so they live for 100 years, eat once a month, and milk themselves.

AN ITALIAN CORPORATION
You have two cows, but you don't know where they are.
You decide to have lunch.

Sri Ram Khanna Aug09 3.5 Developing Countries in the W 25

TO System
5.15 Agreement on Safeguards: Exempt from safeguard measures
if: (a) those imports share of the importing member’s imports of
the product concerned does not exceed 3%; and (b) total imports
from those developing country members having less then a 3%
individual import share do not account collectively for more than
9% of the total imports of that product.
Developing country may apply safeguard measures for a
maximum initial period of four years. Additional period of six years,
rather than the four-year extension allowed for developed country
members.
Generally, safeguard measures more than 180 days cannot be
reimposed until after a period of time equal to the original duration
of the safeguard – with a minimum country allowable non-
application period of two years. For developing country members,
reimposition is allowed after the lapse of a period equal to half the
time that the original measures was in place, although the two-
year minimum still applies.
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 26
TO System
Page. 88
5.16 Agreement on Implementation of Article VII of GATT 1994
(Customs Valuation), and related decision:

1. Recognition of general interests: Secure additional benefits for

trade if developing country members. Page. 88
2. Fewer obligations or easing of rules: Developing countries
refuse a request form an importer to reverse the order of the fourth
destructive and fifth computed methods of valuation listed in the
agreement.
Developing countries may also reserve the right to value imported
goods on the unit price at which the imported goods have been
resold in the country of import.
3. Longer time-frame for implementation: Five-year grace period
for Developing countries
Developing countries an extra three-year extension.
Developing country members may retain a system of officially
established minimum values.
Page. 89
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 27
TO System
 4. Technical Assistance: Developing country request technical
assistance.
Developing country problems regarding the non inclusion in the
customes value of special discounts and commissions. It can
request that a study be undertaken. Customs Cooperation
Council to conduct research in domains of potential concern to
developing country members. Page. 89 & 90
5.17 Agreement on Preshipment Inspection:
1. Recognition of general interests: Developing country need to
do so for as long as it is necessary to verify the quality, quantity
or price of imported goods.
4. Technical Assistance: Developing country technical assistance
on a bilateral, plurilateral or multilateral basis.
Page. 90

Sri Ram Khanna Aug09 3.5 Developing Countries in the W 28

TO System
5.18 Agreement on Import Licensing Procedures:
1. Recognition of general interests: Take into account the trade,
development and financial needs of Developing country members.
Special consideration to those importers buying products from
developing country members.
2. Fewer obligations or easing of rules: Developing countries
must provide, upon request, all relevant information not expected
to undertake additional administrative or financial burdens to
provide this last requirements. Page. 90 & 91
3. Longer time-frame for implementation: Developing country
delay the implementation of the following obligations for up to two
years: (a) the acceptance of applications for automatic licences on
any working day prior to the customs clearance of the goods; and
(b) the granting of automatic licenses, receipt within a maximum of
10 working days.
Page. 91
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 29
TO System
 COW ECONOMICS…contd
• A RUSSIAN CORPORATION
You have two cows, You count them and learn you have five cows.
You count them again and learn you have 42 cows.
You count them again and learn you have 2 cows.
You stop counting cows and open another bottle of vodka.

A SWISS CORPORATION
You have 5000 cows. None of them belong to you.
You charge the owners for storing them.

A CHINESE CORPORATION
You have two cows. You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.

AN INDIAN CORPORATION
You have two cows. You worship them.

Sri Ram Khanna Aug09 3.5 Developing Countries in the W 30

TO System
5.19 General Agreement on Trade in Services (GATS):

1. Recognition of general interests: Developing country members

need to regulate the supply of services in their territories in order to
meet national policy objectives.
Members will negotiate specific commitments to facilitate the
increasing participation of developing countries in world trade in
services. Page. 91
Developed country members are to establish enquiry points to help
suppliers from developing countries.
Developing country members will try to be flexible when negotiating
new multilateral disciplines on certain trade-distorting subsidies
within the service sector.
In future negotiations liberalization of the movement of natural
persons. An objective of the GATS to increase the participation of
developing countries in trade in services and expand their service
exports.
Page. 92
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 31
TO System
2. Fewer obligations or differing rules: Flexibility exercised with
respect to developing country members which are parties to any
such agreement, concerning the elimination of discrimination.
Developing country members will have some flexibility for opening
fewer sectors, liberalizing fewer types of transactions, offering
market access extension only so far as their development
situations allow, and attaching market access conditions.
Developing country may place reasonable conditions on access

to, and use of, public telecommunications networks and services,

according. Page. 92
3. Longer time-frame for implementation: Two-year deadline for
setting up enquiry points applied with flexibility for developing
countries.
4. Technical Assistance: Support telecommunications cooperation
among developing country.
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 32
TO System Page. 93
 Information available to developing countries on
telecommunications services and developments in
telecommunications and information technology.
Opportunities for the LDCs to encourage foreign suppliers of
telecommunications services to assist in the transfer of
technology, training. Page. 93
5.20 Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS):
1. Recognition of general interests: LDCs need maximum
flexibility in the domestic implementation of laws and regulations in
order or enable them to create a sound and viable technological
base.
3. Longer time-frame for implementation: Developing country
have a five-year transitional period. LDCs an 11-year period, they
do not have to apply the provisions of the TRIPs. Developed
country members gave only a one-years transitional period.
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 33
TO System
Page. 94
 For developing country further delay of five years will be allowed.

4. Technical Assistance: Incentives to enterprises and institutions

to help promote the transfer of technology to LDCs. Technical and

financial cooperation in favour of developing country members,
and LDCs.
Page. 95
5.21 Declaration on the Contribution of the WTO to Achieving
Greater
Coherence in Global Policy-Making:
1. Recognition of general interests: Timely flow of concessional
and non-concessional financial and real investment resources to
developing country members is needed.
Page. 95
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 34
TO System (Source: Pages 71-95 Handouts)
 COW ECONOMICS…contd
• A BRITISH CORPORATION
You have two cows.
Both are mad.

AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the **** out of you and invade your
country.
You still have no cows, but at least now you are part of Democracy….

AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.

A NEW ZEALAND CORPORATION

You have two cows.
The one on the left looks very attractive.
• Source: 35
http://unrepentantcommunist.blogspot.com/2008/11/cow-economics.html
Sri Ram Khanna Aug09 3.5 Developing Countries in the W 36
TO System