Developing Countries and Special and Differential Treatment

Abstract

The multilateral trading system that emerged in the post-World War II period was mainly a creation by and for developed countries to address protectionist measures adopted in the 1930s. The events that marked the interwar period were characterised by both economic and political challenges that created fertile ground for the outbreak of the Great Depression and the rise of fascism. The developed world, steered by the United States (US), had a strong desire to avoid repeating these experiences after World War II and sought to create a new approach to international economic cooperation. This eventually led them to agree on a set of rules as a solution to the challenges that had led to protectionism, symbolized by the return to the liberal theories of the ninetieth century. The creation of General Agreement on Tariffs and Trade (GATT) in 1947, after a failed attempt to ratify the Charter of the International Trade Organization (ITO), is thus a response to the objectives of the developed countries toward free trade and multilateralism. Most developing countries in Africa, Asia, Central and Latin America were colonies (de facto or de jure) at the time the developed countries decided on these rules. They consequently did not (actively) take part in shaping them, and their aim has since been to seek to integrate into the system. Consequently, following decolonisation in the late 1950s and early 1960s, newly independent states started to reject the liberal principles that underlie the GATT claiming that their less-developed status dictated that they also build and protect their economic independence. In the name of equity of multilateral trade relations, they gradually sought to adapt the GATT rules to their economic reality. Special and differential treatment (S&DT) for developing countries in the GATT, which recognises the differentiated legal status within the world trading system, was created out of these considerations. These considerations were later carried over into the World Trade Organization’s (WTO) covered agreements. While the advocates of S&DT saw it as necessary to foster developing countries’ development through trade, its critics instead viewed it as a threat to the ‘delicately constructed’ multilateral trading system. In this chapter, I reflect on the past, present, and (likely) future of S&DT provisions in the multilateral trading system. I begin with tracing the evolution of S&DT in the multilateral trading system and the role played by the United Nations (UN) in addressing developing countries’ pleas for a variable geometry. This includes highlighting the roots of the self-selection principle which is today one of the sources of the troubles in the negotiating arm of the WTO (section 2). I then address the concept of S&DT and the difficulty in defining objectively who the beneficiaries are (or should be) by providing a sample of S&DT provisions in WTO covered agreements (section 3). Thereafter, I analyse the challenges faced by developing countries to enforce this right in the WTO’s vexed multilateral trading system (section 4). Finally, I offer some concluding remarks (section 5).