Issues covered by the WTO’s committees and agreements

Update Phase 2: trade preferences

Trade preferences

See also Phase 1 (developing countries).

Most countries, both developed and developing, say trade preferences are important for poorer countries, and therefore the preferences should not be removed abruptly. But most also acknowledge that preferences will be eroded as tariffs in general are reduced, and so countries enjoying preferential treatment may need help to adjust.

One or two countries argue that they may depend on preferences over the longer term because they see little chance of becoming competitive. A few argue that their exports are such a small proportion of world trade that they have little impact on other countries — therefore others should not be concerned about the preferences remaining in force.

On the other hand, some countries doubt whether preferences are truly beneficial because they encourage small countries to be dependent on a small number of uncompetitive products, discourage diversification and prevent other countries from supplying those products. The countries currently depending on preferences would be better off when major markets liberalize and eliminate subsidies, according to this argument.

A number of developing countries say that the trade preferences cover non-agricultural products as well. Because the subject is now mandated more broadly under the declaration of the Doha Ministerial Conference, these countries say it should be discussed outside the agriculture committee.

Among the details developed in the new proposals and the Phase 2 discussion are:

  • Criteria for deciding which countries should be eligible for preferences, e.g. those currently enjoying preferences, with some additions, but perhaps only small players
  • Clearer criteria for “graduation” (determining that a country’s products have progressed enough to continue without preferential treatment)
  • Ensuring preferences are predictable (including longer or better defined time periods), stable, and have no “reciprocal” conditions attached.

One developed country currently giving trade preferences extensively says that in the long run, free trade agreements would provide more stability, predictability and transparency.

Papers or “non-papers” from: the African Group, EU, Namibia, Paraguay and Swaziland.

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The second phase consists of detailed discussions on the many issues raised in the first phase, organized topic by topic. The meetings are largely “informal”, meaning that there is no official record except for chairperson’s summaries presented at the formal meetings. Papers presented so far have not been official WTO documents. Despite the increased complexity, developing countries continue to participate actively.