Flexibilities for developing countries in the doha round as 'à la carte' special and differential treatment: retracing the Uruguay steps?

AutorJuliana Peixoto Batista
CargoLawyer, Master in International Relations
Páginas164-191

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Introduction

The current tensions in the search for flexibilities for developing countries in organizations such as the WTO is part of the historical North-South conflict, how this conflict has been fluctuating through time due to changes in the world power balance, as well as the increasing heterogeneity within developing countries group.

Developing countries have blocked some of the initiatives of developed countries, believing that they fail to consider their interests1. Additionally, although emerging countries — such as Brazil or India — still lag behind the so-called “developed” countries, they are increasingly participating in the decisions of important international organizations such as the IMF, OECD, and the financial G-20. In other words, they are starting to move away from the position of rule takers or rule breakers within the international scenario, to play an increasingly important role as rule makers2 — at a regional level, and process drivers at the global level3.

In these times of change in the configuration of the international community, the development agenda and its search for flexibilities is more relevant than ever before and adopts many forms in different environments. In fact, if the WTO’s agenda on Special and Differential Treatment (S&D) is held up, countries then search for other ways to move on under different names but with the same substantial objective: obtaining the flexibilities they seem necessary in the international environment.

In that context, this paper has two closely intertwined objectives. On one hand, to identify how S&D has been dealt with in the multilateral system, from its inception under GATT to the present negotiations in Doha. On the other, to identify how middle income4developing countries actively participating in coalitions have positioned themselves, as in the case of Brazil, Argentina, India, South Africa. What we see is that the S&D is being restricted to be turned into flexibility room for LDCs, while other developing countries continue searching — under other names — for new flexibilities they see as necessary in the multilateral trading system from their development perspective.

The first section will offer a brief historical overview on Special and Differential Treatment, from its beginnings under GATT to the present day, analyzing it in the light of the WTO’s North-South conflict. The second section will analyze the S&D evolution on specific issues, i.e. subsidies (Agreement on Subsidies and Countervailing Measures), investment (Agreement on Trade-Related Investment Measures), and intellectual property (Agreement on Trade-Related Aspects of Intellectual Property Rights). The third section will provide a summary of the main roads followed by several developing countries to move forward in the search for flexibilities in the Doha negotiations. At the end, some conclusions will be provided.

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Special and differential treatment at the heart of the north-south conflict

In the study of international organizations, structuralist approaches hold that these organizations reflect the underlying power in the relationships among States. They focus on the distribution of resources as the key determinant accounting for the results in the international scheme5. Furthermore, structuralist theories comprising neorealist and neo-Marxist versions of the hegemonic stability theory share the common vision that multilateral trade regimes are instruments of State power or class power. Thus, according to structuralist views, the GATT/WTO is seen as a multilateral trading system created to support and respond to the interests of most industrialized countries, such as the USA, European Union, Japan, Canada, to the detriment of developing countries6.

According to the neoliberal approach of political economy, the system includes rules that enable cooperation through information sharing, monitoring mechanisms, and low transaction costs, although for some, it also tends to preserve the interests of the leading countries establishing the system7.

Along the same lines, according to institutionalist approaches, the GATT/WTO represents an opportunity for developing countries to obtain more positive results in the international arena, thanks to the fact that this organization is strongly rule-oriented. Otherwise, in the absence of any rules, the results would be much more harmful to the interests of the least developed countries (LDCs)8. Furthermore, some views state that in asymmetrical relations, the weak are not always doomed to fail in their demands or, more specifically, that the outcome of international negotiations can be influenced by developing countries9.

Some more heterodox approaches refer to the pressure exercised by developed countries on developing ones. In the case of the WTO, this dynamics would involve a mix of rules and power, where power outweighs rules in critical times, such as at the closing of multilateral negotiation rounds10.

From a more juridical standpoint, in classical theory, when analyzing the relationship between law and power, it is stated that international law favors the status quo and, when that is not so, it becomes unrealistic and the threat of its violation arises11. However, others believe that the law plays a less relevant role in international relations, albeit not less important to the organization of international life12.

At the heart of this debate — regardless of the discipline involved — is the power relationship among states in international organizations, the North-South division of the

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world, developed countries vs. developing countries and, consequently, the discussion around the flexibilities that LDCs must enjoy to make up for the asymmetry in international economic relations and to trigger their development strategies.

While there is no intention for this WTO-driven agenda — including S&D — to replace the countries’ domestic development strategies13, the truth is that, on one hand, there is no level playing field at the WTO, and developing countries need flexibilities to at least negotiate under more equitable terms. On the other hand, it is worth noting that international trade is not an end in itself, but a means to improve the standards of living, as declared in the recitals to the agreement establishing the WTO.

Development is thus still present in the multilateral trading system and the task of analyzing issues that are the basis of the North-South conflict is equally current, as well as complex. For some authors, this discussion will prevail during part of the 21st century14, after the end of the Cold War and the world’s East-West division: the First World became North and the Third World, South, while the Second World vanished (a few countries from the late Second World became part of the North and others, of the South). According to others, the increasing tensions on this issue are also a challenge to more classical views on international relations that are developed on the premise that cooperation leads to an increase in the overall well-being of the international community: in the North-South tension, interests are usually incompatible and cooperation rules are not applied15.

In this debate, the multilateral trading system still manifests very clear indications of the North-South conflict16 and this is directly reflected on the hard struggle in relation to the Special and Differential Treatment (S&D) and the constant re-negotiation of its rules, as described below.

Special and differential treatment under GATT

At the beginning, developing countries on the basis of sovereign determination were considered equal partners in the multilateral trading system, at least under the 1948-1955 GATT17. The only provision available to developing countries was Article XVII, which enabled developing countries to derogate from their scheduled tariff commitments or implement non-tariff measures, such as quotas, in order to promote the setting up of certain industries in their territories, that is, the protection of infant industries18. From then on, the number of developing countries participating in the GATT increased, also increasing the pressure for more flexible rules accounting for the asymmetries of the system. Thus, the S&D is born as a result of the coordination of political efforts by

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developing countries in order to correct what they felt were inequalities in the post-Second World War system, understood as preferential treatment in favor of developing countries, in every aspect of their international economic relations19.

This development paradigm, pioneered by Latin America, India, Egypt and later supported by a wide array of countries from Asia and Africa, was based on the need to improve trading terms, reduce dependence on exportation of primary products, correct the volatility and imbalances in the balance of payments and industrialization by offering protection to infant industries and export subsidies, among other objectives20.

In the following years, several S&D provisions were introduced in the GATT. Firstly, through the amendment to Article XVIII in the GATT Review Session of 1954-55. The new item...

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