WORLD TRADE
WT/COMTD/SE/W/6
23 October 2002
ORGANIZATION
(02-5794)
Committee on Trade and Development
Dedicated Session
WTO PROVISIONS POTENTIALLY OF PARTICULAR INTEREST
TO SMALL ECONOMIES
Note by the Secretariat
1.
The General Council, at its meeting of 1 March 2002, instructed the Committee on Trade and
Development (CTD) to establish a programme of work on small economies, to be conducted in
Dedicated Sessions1. The General Council also instructed the WTO Secretariat to provide relevant
information and factual analysis of issues affecting small economies in the multilateral trading
system. This note has been prepared in response to this requirement. It has been prepared under the
Secretariat's own responsibility and is without prejudice to the positions of Members or to their rights
and obligations under the WTO.
2.
The note is a first attempt to distinguish provisions in the Uruguay Round Agreements and
documents emerging from WTO Ministerial Conferences which could possibly be of particular
relevance to small economies, in the broadest sense. An identification of provisions of particular
importance to small economies is not a straightforward exercise. Most special and differential
treatment provisions in the WTO Agreements of importance to developing countries in general are
also of importance to small economies. In addition, there are a number of special provisions for leastdeveloped countries which would be of importance to any small least-developed country economy.
Such provisions of interest to developing and/or least-developed countries in general have not been
included in the following list. Lists of such provisions have previously been provided to the CTD.2
3.
The provisions identified as possibly being of particular relevance to small economies are
reproduced in the following list. The Secretariat does not claim that the list is exhaustive, nor that
precise criteria justify the inclusion of any of the listed provisions. Moreover, the exclusion from the
listing below of special and differential treatment provisions of more general relevance to developing
countries as a grouping might also mean that some of the provisions of most practical importance to
small economies do not appear. The attached selection of provisions merely aims to provide
Members with a basis for discussion and possible future work.
1
2
Document WT/L/447
Documents WT/COMTD/W/35, WT/COMTD/W/66 and the WT/COMTD/W/77-series for example.
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A.
GENERAL AGREEMENT ON TARIFFS AND TRADE 1994
2.
Understanding on the Interpretation of Article XXVIII of the General Agreement on
Tariffs and Trade 1994
Members hereby agree as follows:
1.
For the purposes of modification or withdrawal of a concession, the Member which has the
highest ratio of exports affected by the concession (i.e. exports of the product to the market of the
Member modifying or withdrawing the concession) to its total exports shall be deemed to have a
principal supplying interest if it does not already have an initial negotiating right or a principal
supplying interest as provided for in paragraph 1 of Article XXVIII. It is however agreed that this
paragraph will be reviewed by the Council for Trade in Goods five years from the date of entry into
force of the WTO Agreement with a view to deciding whether this criterion has worked satisfactorily
in securing a redistribution of negotiating rights in favour of small and medium-seized exporting
Members. If this is not the case, consideration will be given to possible improvements, including, in
the light of the availability of adequate data, the adoption of a criterion based on the ration of exports
affected by the concession to exports to all markets of the product in question.
B.
GENERAL AGREEMENT ON TARIFFS AND TRADE 1947
Article XXXVI
Principles and Objectives
4.
Given the continued dependence of many less-developed contracting parties on the
exportation of a limited range of primary products,* there is need to provide in the largest possible
measure more favourable and acceptable conditions of access to world markets for these products, and
wherever appropriate to devise measures designed to stabilize and improve conditions of world
markets in these products, including in particular measures designed to attain stable, equitable and
remunerative prices, thus permitting an expansion of world trade and demand and a dynamic and
steady growth of the real export earnings of these countries so as to provide them with expanding
resources for their economic development.
C.
AGREEMENT ON TEXTILES AND CLOTHING
Article 2
18.
As regards those Members whose exports are subject to restrictions on the day before the
entry into force of the WTO Agreement and whose restrictions represent 1.2 per cent or less of the
total volume of the restrictions applied by an importing Member as of 31 December 1991 and notified
under this Article, meaningful improvement in access for their exports shall be provided, at the entry
into force of the WTO Agreement and for the duration of this Agreement, through advancement by
one stage of the growth rates set out in paragraphs 13 and 14, or through at least equivalent changes as
may be mutually agreed with respect to a different mix of base levels, growth and flexibility
provisions. Such improvements shall be notified to the TMB.
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Article 6
6.
In the application of the transitional safeguard, particular account shall be taken of the
interests of exporting Members as set out below:
D.
(b)
Members whose total volume of textile and clothing exports is small in comparison
with the total volume of exports of other Members and who account for only a small
percentage of total imports of that product into the importing Member shall be
accorded differential and more favourable treatment in the fixing of the economic
terms provided in paragraphs 8, 13 and 14. For those suppliers, due account will be
taken, pursuant to paragraphs 2 and 3 of Article 1, of the future possibilities for the
development of their trade and the need to allow commercial quantities of imports
from them;
(c)
with respect to wool products from wool-producing developing country Members
whose economy and textiles and clothing trade are dependent on the wool sector,
whose total textile and clothing exports consist almost exclusively of wool products,
and whose volume of textiles and clothing trade is comparatively small in the markets
of the importing Members, special consideration shall be given to the export needs of
such Members when considering quota levels, growth rates and flexibility;
(d)
more favourable treatment shall be accorded to re-imports by a Member of textile and
clothing products which that Member has exported to another Member for processing
and subsequent reimportation, as defined by the laws and practices of the importing
Member, and subject to satisfactory control and certification procedures, when these
products are imported from a Member for which this type of trade represents a
significant proportion of its total exports of textiles and clothing.
AGREEMENT ON TECHNICAL BARRIERS TO TRADE
Article 2: Preparation, Adoption and Application of Technical Regulations by Central
Government Bodies
2.3
Technical regulations shall not be maintained if the circumstances or objectives giving rise to
their adoption no longer exist or if the changed circumstances or objectives can be addressed in a less
trade-restrictive manner.
2.4
Where technical regulations are required and relevant international standards exist or their
completion is imminent, Members shall use them, or the relevant parts of them, as a basis for their
technical regulations except when such international standards or relevant parts would be an
ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued, for instance
because of fundamental climatic or geographical factors or fundamental technological problems.
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E.
AGREEMENT ON IMPLEMENTATION OF ARTICLE VI (ANTI-DUMPING) OF THE GENERAL
AGREEMENT ON TARIFFS AND TRADE 1994
Article 6
Evidence
6.13
The authorities shall take due account of any difficulties experienced by interested parties, in
particular small companies, in supplying information requested, and shall provide any assistance
practicable.
F.
AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
Article 27: Special and Differential Treatment of Developing Country Members
27.2
The prohibition of paragraph 1(a) of Article 3 shall not apply to:
(a)
developing country Members referred to in Annex VII.
(b)
other developing country Members for a period of eight years from the date of entry
into force of the WTO Agreement, subject to compliance with the provisions in
paragraph 4.
27.5
A developing country Member which has reached export competitiveness in any given
product shall phase out its export subsidies for such product(s) over a period of two years. However,
for a developing country Member which is referred to in Annex VII and which has reached export
competitiveness in one or more products, export subsidies on such products shall be gradually phased
out over a period of eight years.
27.6 Export competitiveness in a product exists if a developing country Member's exports of that
product have reached a share of at least 3.25 per cent in world trade of that product for two
consecutive calendar years. Export competitiveness shall exist either (a) on the basis of notification
by the developing country Member having reached export competitiveness, or (b) on the basis of a
computation undertaken by the Secretariat at the request of any Member. For the purpose of this
paragraph, a product is defined as a section heading of the Harmonized System Nomenclature. The
Committee shall review the operation of this provision five years from the date of the entry into force
of the WTO Agreement.
27.10 Any countervailing duty investigation of a product originating in a developing country
Member shall be terminated as soon as the authorities concerned determine that:
(a)
the overall level of subsidies granted upon the product in question does not exceed
2 per cent of its value calculated on a per unit basis; or
(b)
the volume of the subsidized imports represents less than 4 per cent of the total
imports of the like product in the importing Member, unless imports from developing
country Members whose individual shares of total imports represent less than
4 per cent collectively account for more than 9 per cent of the total imports of the like
product in the importing Member.
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27.11 For those developing country Members within the scope of paragraph 2(b) which have
eliminated export subsidies prior to the expiry of the period of eight years from the date of entry into
force of the WTO Agreement, and for those developing country Members referred to in Annex VII,
the number in paragraph 10(a) shall be 3 per cent rather than 2 per cent. This provision shall apply
from the date that the elimination of export subsidies is notified to the Committee, and for so long as
export subsidies are not granted by the notifying developing country Member. This provision shall
expire eight years from the date of entry into force of the WTO Agreement.
27.12 The provisions of paragraphs 10 and 11 shall govern any determination of de minimis under
paragraph 3 of Article 15.
Annex VII: Developing Country Members Referred to in Paragraph 2(A) of Article 27
The developing country Members not subject to the provisions of paragraph 1(a) of Article 3
under the terms of paragraph 2(a) of Article 27 are:
G.
(a)
Least-developed countries designated as such by the United Nations which are
Members of the WTO.
(b)
Each of the following developing countries which are Members of the WTO shall be
subject to the provisions which are applicable to other developing country Members
according to paragraph 2(b) of Article 27 when GNP per capita has reached $1,000
per annum3 (Bolivia, Cameroon, Congo, Côte d'Ivoire, Dominican Republic, Egypt,
Ghana, Guatemala, Guyana, India, Indonesia, Kenya, Morocco, Nicaragua, Nigeria,
Pakistan, Philippines, Senegal, Sri Lanka and Zimbabwe).
AGREEMENT ON SAFEGUARDS
Article 9: Developing Country Members
1.
Safeguard measures shall not be applied against a product originating in a developing country
Member as long as its share of imports of the product concerned in the importing Member does not
exceed 3 per cent, provided that developing country Members with less than 3 per cent import share
collectively account for not more than 9 per cent of total imports of the product concerned.
H.
GENERAL AGREEMENT ON TARIFFS AND TRADE 1947
Article XVIII
Governmental Assistance to Economic Development
1.
The contracting parties recognize that the attainment of the objectives of this Agreement will
be facilitated by the progressive development of their economies, particularly of those contracting
parties the economies of which can only support low standards of living* and are in the early stages of
development.*
3
The inclusion of developing country Members in the list in paragraph (b) is based on the most recent
data from the World Bank on GNP per capita.
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2.
The contracting parties recognize further that it may be necessary for those contracting
parties, in order to implement programmes and policies of economic development designed to raise
the general standard of living of their people, to take protective or other measures affecting imports,
and that such measures are justified in so far as they facilitate the attainment of the objectives of this
Agreement. They agree, therefore, that those contracting parties should enjoy additional facilities to
enable them (a) to maintain sufficient flexibility in their tariff structure to be able to grant the tariff
protection required for the establishment of a particular industry* and (b) to apply quantitative
restrictions for balance of payments purposes in a manner which takes full account of the continued
high level of demand for imports likely to be generated by their programmes of economic
development.
3.
The contracting parties recognize finally that, with those additional facilities which are
provided for in Sections A and B of this Article, the provisions of this Agreement would normally be
sufficient to enable contracting parties to meet the requirements of their economic development. They
agree, however, that there may be circumstances where no measure consistent with those provisions is
practicable to permit a contracting party in the process of economic development to grant the
governmental assistance required to promote the establishment of particular industries* with a view to
raising the general standard of living of its people. Special procedures are laid down in Sections C and
D of this Article to deal with those cases.
4.
(a)
Consequently, a contracting party, the economy of which can only support low
standards of living* and is in the early stages of development,* shall be free to
deviate temporarily from the provisions of the other Articles of this Agreement, as
provided in Sections A, B and C of this Article.
(b)
A contracting party, the economy of which is in the process of development, but
which does not come within the scope of subparagraph (a) above, may submit
applications to the CONTRACTING PARTIES under Section D of this Article.
5.
The contracting parties recognize that the export earnings of contracting parties, the
economies of which are of the type described in paragraph 4(a) and (b) above and which depend on
exports of a small number of primary commodities, may be seriously reduced by a decline in the sale
of such commodities. Accordingly, when the exports of primary commodities by such a contracting
party are seriously affected by measures taken by another contracting party, it may have resort to the
consultation provisions of Article XXII of this Agreement.
(a)
Ad Article XVIII
Paragraphs 1 and 4
1.
When they consider whether the economy of a contracting party "can only support low
standards of living", the CONTRACTING PARTIES shall take into consideration the normal position
of that economy and shall not base their determination on exceptional circumstances such as those
which may result from the temporary existence of exceptionally favourable conditions for the staple
export product or products of such contracting party.
2.
The phrase "in the early stages of development" is not meant to apply only to contracting
parties which have just started their economic development, but also to contracting parties the
economies of which are undergoing a process of industrialization to correct an excessive dependence
on primary production.
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Paragraphs 2, 3, 7, 13 and 22
The reference to the establishment of particular industries shall apply not only to the
establishment of a new industry, but also to the establishment of a new branch of production in an
existing industry and to the substantial transformation of an existing industry, and to the substantial
expansion of an existing industry supplying a relatively small proportion of the domestic demand. It
shall also cover the reconstruction of an industry destroyed or substantially damaged as a result of
hostilities or natural disasters.
Paragraphs 16, 18, 19 and 22
1.
It is understood that the CONTRACTING PARTIES may concur in a proposed measure
subject to specific conditions or limitations. If the measure as applied does not conform to the terms
of the concurrence it will to that extent be deemed a measure in which the CONTRACTING
PARTIES have not concurred. In cases in which the CONTRACTING PARTIES have concurred in a
measure for a specified period, the contracting party concerned, if it finds that the maintenance of the
measure for a further period of time is required to achieve the objective for which the measure was
originally taken, may apply to the CONTRACTING PARTIES for an extension of that period in
accordance with the provisions and procedures of Section C or D, as the case may be.
2.
It is expected that the CONTRACTING PARTIES will, as a rule, refrain from concurring in a
measure which is likely to cause serious prejudice to exports of a commodity on which the economy
of a contracting party is largely dependent.
I.
GENEVA MINISTERIAL DECLARATION
6.
We remain deeply concerned over the marginalization of least-developed countries and certain
small economies, and recognize the urgent need to address this issue which has been compounded by
the chronic foreign debt problem facing many of them. In this context we welcome the initiatives taken
by the WTO in cooperation with other agencies to implement in an integrated manner the Plan of Action
for the least-developed countries which we agreed at Singapore, especially through the High-Level
Meeting on Least-Developed Countries held in Geneva in October 1997. We also welcome the report of
the Director-General on the follow-up of this initiative, to which we attach great importance. We
commit ourselves to continue to improve market access conditions for products exported by the leastdeveloped countries on as broad and liberal a basis as possible. We urge Members to implement the
market-access commitments that they have undertaken at the High-Level Meeting.
J.
DOHA MINISTERIAL DECLARATION
Small Economies
35.
We agree to a work programme, under the auspices of the General Council, to examine issues
relating to the trade of small economies. The objective of this work is to frame responses to the traderelated issues identified for the fuller integration of small, vulnerable economies into the multilateral
trading system, and not to create a sub-category of WTO Members. The General Council shall review
the work programme and make recommendations for action to the Fifth Session of the Ministerial
Conference.
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Technical Cooperation and Capacity Building
38.
We confirm that technical cooperation and capacity building are core elements of the
development dimension of the multilateral trading system, and we welcome and endorse the New
Strategy for WTO Technical Cooperation for Capacity Building, Growth and Integration. We instruct
the Secretariat, in coordination with other relevant agencies, to support domestic efforts for
mainstreaming trade into national plans for economic development and strategies for poverty
reduction. The delivery of WTO technical assistance shall be designed to assist developing and leastdeveloped countries and low-income countries in transition to adjust to WTO rules and disciplines,
implement obligations and exercise the rights of membership, including drawing on the benefits of an
open, rules-based multilateral trading system. Priority shall also be accorded to small, vulnerable, and
transition economies, as well as to Members and Observers without representation in Geneva. We
reaffirm our support for the valuable work of the International Trade Centre, which should be
enhanced.
K.
DECISION ON IMPLEMENTATION-RELATED ISSUES AND CONCERNS
Agreement on Subsidies and Countervailing Measures
The Ministerial Conference, …
10.6
Having regard to the particular situation of certain developing-country Members, directs the
Committee on Subsidies and Countervailing Measures to extend the transition period, under the rubric
of Article 27.4 of the Agreement on Subsidies and Countervailing Measures, for certain export
subsidies provided by such Members, pursuant to the procedures set forth in document G/SCM/39.
Furthermore, when considering a request for an extension of the transition period under the rubric of
Article 27.4 of the Agreement on Subsidies and Countervailing Measures, and in order to avoid that
Members at similar stages of development and having a similar order of magnitude of share in world
trade are treated differently in terms of receiving such extensions for the same eligible programmes
and the length of such extensions, directs the Committee to extend the transition period for those
developing countries, after taking into account the relative competitiveness in relation to other
developing-country Members who have requested extension of the transition period following the
procedures set forth in document G/SCM/39.4
__________
4
Document G/SCM/39 states: "Programmes eligible for extension pursuant to these procedures, and
for which Members shall therefore grant extensions for calendar year 2003 as referred to in 1(c), are export
subsidy programmes (i) in the form of full or partial exemptions from import duties and internal taxes, (ii) which
were in existence not later than 1 September 2001, and (iii) which are provided by developing country Members
(iv) whose share of world merchandise export trade was not greater than 0.10 per cent 4, (v) whose total Gross
National Income ("GNI") for the year 2000 as published by the World Bank was at or below US $ 20 billion, 4
(vi) and who are otherwise eligible to request an extension pursuant to Article 27.4, 4 and (vii) in respect of
which these procedures are followed."
However, document G/SCM/39, in its final provisions, also states:
(a) "The decision by Ministers, these procedures, and the SCM Article 27.4 extensions granted thereunder, are
without prejudice to any requests for extensions under Article 27.4 that are not made pursuant to these
procedures.
(b) The decision by Ministers, these procedures, and the SCM Article 27.4 extensions granted thereunder, shall
not affect any other existing rights and obligations under SCM Article 27.4 or under other provisions of the
SCM Agreement.
(c) The criteria set forth in these procedures are solely and strictly for the purpose of determining whether
Members are eligible to invoke these procedures. Members of the Committee agree that these criteria have no
precedential value or relevance, direct or indirect, for any other purpose."