RESTRICTED
WORLD TRADE
WT/COMTD/SE/W/3
28 June 2002
ORGANIZATION
(02-3635)
Committee on Trade and Development
Dedicated Session
Original: English
WORK PROGRAMME ON SMALL ECONOMIES
Concrete proposals to address certain specific concerns and problems affecting
the Trade of Small Economies
Communication from Barbados, Belize, Bolivia, Dominican Republic,
Guatemala, Honduras, Mauritius and Sri Lanka
The following communication, dated 25 June 2002, has been received from the above
delegations with the request that it be circulated.
_______________
This Paper sets out some proposals to address certain specific concerns and
problems affecting the trade of small economies which were detailed in the WTO
Document WT/COMTD/SE/W/1/Rev.1, which was discussed in the first Dedicated
Session of the Committee for Trade and Development on 25 April 2002. The
multilateral trading system needs to identify and implement responses to the issues
which have already been identified in order to offset the inherent economic
disadvantages faced by small, vulnerable developing economies (hereinafter referred
to as small economies).
At this stage of the work, this Paper does not address issues on Agriculture, Services
and TRIPS. The sponsoring members would like to observe that some proposals in
respect of issues on Agriculture have already been made in the context of ongoing
negotiations in Agriculture. As regards Services, they have also highlighted the
vulnerability of their services sectors to external shocks and the difficulties
encountered by their services suppliers in facing competition from large service
suppliers of more advanced economies. Further proposals will be submitted to
address the specific problems faced by their Services sectors. The small economies
will make timely inputs on selected key issues in the context of the Services
negotiations in line with their developmental situation and needs and in keeping with
the provisions of Articles IV and XIX.3 of GATS. Developed and Developing
Countries should fulfil the goals set out in Article IV of GATS and as set out in the
Negotiating Guidelines and Procedures. With respect to TRIPS, proposals will be
made in due course.
This submission is without prejudice to the rights of the small economies to submit
further proposals in future Dedicated Sessions or, otherwise, in other WTO Bodies on
any of the issues contained in this Paper and/or on any other issues not included
here.
WT/COMTD/SE/W/3
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1.
It is already recognised that preferences play a crucial role in the socio-economic
development of small economies. Steps need to be taken to limit the erosion of existing preferences
which are at present governed by Article I, Part IV and the Enabling Clause of GATT 1994. Such
steps are of vital importance to the economies concerned, but would have minimal impact on the trade
of other WTO Members.
Proposal

It should therefore be agreed that the liberalization process shall preserve the existing margins
of preference for products exported by small economies. The preferences should be extended
to other such small economies.
2.
Small economies are also being asked to negotiate WTO compatible trading arrangements
with developed countries to replace their existing arrangements with these countries. The rules for the
formation of regional trading arrangements in Article XXIV of GATT 1994 impose highly restrictive
conditions. When these rules were drawn up, such arrangements between small economies and
developed countries were simply not envisaged. The rules need to be adapted to the present situation.
Proposals

It should therefore be agreed that Article XXIV of GATT should provide that small
economies shall not be required to give reciprocal treatment in return for the preferential
treatment that they receive from developed Members in the context of regional trading
arrangements. In any FTA/Regional Trading Arrangements configuration between developed
and small economies, the latter should be given necessary policy space on the basis of
asymmetry, which needs not be time-bound, in accordance with their developmental and
socio-economic needs.

The developed members do not expect the small economies, in the course of WTO
negotiations to make contributions which are inconsistent with their individual development,
financial and trade needs. Developed members shall therefore not seek, nor small economies
be required to make, concessions that are inconsistent with the latters’ development, financial
and trade needs.
3.
At present, small economies maintain measures in order to compensate for their inherent cost
disadvantages and to attract investment. However, while WTO provisions "recognize that subsidies
may play an important role in economic development programs of developing country members" and
provide some flexibility for developing countries in the application of subsidies, the agreement does
not provide the flexibility that small economies need to address these inherent cost disadvantages.
Current WTO rules (Article XVI of GATT 1994; and Articles 3:1(a) and 27 of the Agreement on
Subsidies and Countervailing Measures) require their existing fiscal incentives to be phased out.
Proposal

It should therefore be agreed that small economies should not be subject to the provisions of
paragraph 1(a) of Article 3 of the Agreement on Subsidies and Countervailing Measures.
4.
The fact that small economies have small administrations also has implications for their
integration into the multilateral trading system. The problems confronting these economies are
compounded by their inability to participate actively in the multifaceted WTO processes and to
implement and administer WTO agreements effectively. These small economies have very limited
capacity in capitals to formulate and administer trade policy. Most of them either have no mission in
WT/COMTD/SE/W/3
Page 3
Geneva or have very small ones. These economies have therefore not been able to participate
effectively in the rule-making process and in securing market access concessions and have not had the
capacity to promote and defend their interests in the WTO in accordance with their national policy
objectives.
It is therefore hardly surprising that the rules and procedures of the present multilateral
trading system, which has evolved through negotiations among its Members, do not adequately take
into account the specific administrative capacity and development needs of the small economies.
Action is needed to restore a balance of rights and obligations by ensuring that rules and procedures of
the present multilateral trading system can be used by all its members, including small economies.
Because they have very limited administrative, financial and human capacity; small
economies are particularly concerned that WTO rules and procedures are extremely complex. They
simply cannot use these measures as more advanced WTO Members do. In particular, they have
faced greater difficulties in coping with the following:
I.
THE ADOPTION AND IMPLEMENTATION OF ANTI-DUMPING
COUNTERVAILING DUTY MEASURES ARTICLE VI GATT 1994 AND
AGREEMENT ON THE INTERPRETATION OF ARTICLE VI OF GATT
ARTICLE XVI GATT 1994 & AGREEMENT ON SUBSIDIES
COUNTERVAILING MEASURES.
AND
THE
1994;
AND
Proposals

The rules and procedures of the relevant Agreements should address the circumstances of the
small economies. Some rules of concern to many small economies include reporting
requirements; standards for the application of antidumping and countervailing measures;
investigation procedures and assessments, including calculations of the dumping margin and
of the benefit derived from the subsidy, the causation principles and the definition of domestic
industry.

It should also be explicitly recognised that if small economies do not have the resources to
maintain a “competent authority”, they can designate a regional body as their competent
authority.
II.
WTO SAFEGUARD PROVISIONS (ARTICLE XIX GATT 1994 & AGREEMENT ON
SAFEGUARDS);
These create similar difficulties for small economies when problems are caused by major
exporters. The existing rules and procedures should be simplified for them.
Proposals

III.
Some rules of concern to many small economies include the provisions dealing with the
definition of domestic industry; serious injury; investigations; reporting requirements;
causation and non-attribution principle; the right of compensation and/or retaliation.
WTO PROVISIONS ON SANITARY AND PHYTOSANITARY MEASURES (E.G.
ARTICLE XX GATT 1994 AND THE AGREEMENT ON THE APPLICATION OF
SANITARY AND PHYTOSANITARY MEASURES) AND TECHNICAL BARRIERS
WT/COMTD/SE/W/3
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TO TRADE (E.G. ARTICLE XX GATT 1994 AND AGREEMENT ON TECHNICAL
BARRIERS TO TRADE).
Besides the difficulties mentioned earlier, it must be noted that unit costs of implementation
of obligations under these Agreements are relatively very high in small economies. However, they
need to implement these measures both to attain domestic policy objectives and to gain access to
export markets.
Proposals

If an exporting small economy identifies specific problems of inadequate technology and
infrastructure in complying with the requirements on sanitary and phytosanitary measures
and/or with the technical regulations and standards of an importing developed country, the
latter shall provide the relevant technology and technical facilities on preferential and noncommercial terms, preferably free of costs.

There should be appropriate flexibility for small economies in dealing with time-frames and
notifications requirements.

It should also be explicitly recognised that a regional body can be designated by any
interested small economy as the competent authority for the implementation of the provisions
of the SPS and TBT Agreements.
IV.
PROVISIONS OF THE UNDERSTANDING ON RULES AND PROCEDURES
GOVERNING THE SETTLEMENT OF DISPUTES
Small economies have limited administrative capacity and limited human and financial
resources which make it difficult for them to use these Provisions. Individual small economies have
no capacity to either mount or defend cases. They cannot participate effectively as third parties in
cases because the relevant procedures are very restrictive and because of the financial, institutional
and human resources constraints.
Proposals

In Article 4 DSU dealing with consultations, the concept of substantial trade interest should
be clarified and the claim of substantial interest should be better defined so as to prevent the
arbitrary application of these provisions to small economies.

The participation of small economies as third parties should be facilitated to permit greater
access to consultations and to all panel and appellate body proceedings.

If a small economy is successful in a dispute against a WTO Member and the WTO Member
concerned does not bring its measure into conformity with the WTO provisions, the small
economy shall have the right to compensation, without prejudice to the obligations of
members to conform to WTO provisions.

When a WTO member invokes the dispute settlement provisions against a small economy, the
parties shall agree on a mediator. If this is not agreed upon within a certain period of time,
the Director General should use his good offices with a view to settling the dispute.
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5.
Technical Assistance and Capacity-Building - Representation in Geneva: Given the
difficulties mentioned earlier, there is a need to strengthen capacity building in small economies so
that they participate effectively in the work of WTO. Technical assistance provided by the WTO
Secretariat and bilateral donors, and activities such as Geneva Week are invaluable, but cannot
provide a substitute for adequate representation in Geneva, which is necessary if the organisation is to
take into account and respond to the needs and interests of all of its Members. The following proposal
is made without prejudice to the right of the small economies to submit further proposals on Technical
Assistance and Capacity Building.
Proposal

The donor community should consider individually and collectively the possibility of
contributing funds to help strengthen or establish missions to WTO, especially for those
Governments, who cannot afford to maintain individual missions in Geneva due to their
resource constraints and who may wish to do so. They could work together in setting up joint
or shared representation to WTO suitable to their respective needs and should show the
flexibility necessary to accommodate such joint or shared missions.
6.
Graduation of Small Economies which are LDCs: Some small economies are also
least-developed countries that may one day graduate from LDC status. Because of the inherent
problems that they face, small economies would be particularly affected by the sudden withdrawal of
benefits that WTO accords to LDCs.
Proposal

Provisions ensuring a smooth transition in WTO for small economies graduating from LDC
status should be worked out and agreed.
7.
Accession: A number of small economies are in the process of accession to the WTO. This
process is not governed by any agreed principles, rules or procedures. Accession negotiations take
place in numerous Working Parties and bilateral meetings that only the largest WTO Members can
take part in effectively. Acceding countries have been required to accept many more obligations than
founder WTO Members at similar stages of development, and certain obligations that no founder
Member has undertaken.
Proposal

Small economies that are acceding to WTO should not be required to accept more obligations
than small economies that are founder Members of WTO, nor obligations that founder
Members have not themselves undertaken.
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