Examples of provisions for differential and more favourable treatment of developing countries

The following are three major examples of provisions for differential and more favourable treatment of developing countries:

In Article XXXVII of GATT 1994 the developed Members of WTO have committed themselves to accord high priority to the reduction and elimination of barriers to products currently or potentially of particular export interest to developing countries, including customs duties and other restrictions which differentiate unreasonably between such products in their primary and in their processed forms.

The 1979 Decision on Differential and More Favourable Treatment (the “Enabling Clause”) permits developed Members to grant preferential tariff treatment to developing countries. It also permits developing Members to enter into regional or global arrangements among themselves for mutual reduction or elimination of tariff and, in accordance with criteria and conditions which may be prescribed by the Ministerial Conference, for the mutual reduction or elimination of non-tariff measures.

Article IV of GATS stipulates that the increasing participation of developing country Members in world trade shall be facilitated through the negotiation of specific commitments, relating to the strengthening of their domestic service capacity and its efficiency and competitiveness through access to technology on a commercial basis; the improvement of their access to distribution channels and information networks; and the liberalization of market access in sectors and modes of supply of export interest to them.


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Provisions which require WTO Members to safeguard the interests of developing country Members   

Examples of such provisions are:

The Anti-Dumping Agreement provides that special regard must be given by the developed country Members to the special situation of developing country Members when considering the application of anti-dumping measures. The Agreement also stipulates that constructive remedies provided for by the Agreement must be explored before applying anti-dumping duties duties where they would affect the essential interests of developing country Members.

The Agreement on Subsidies and Countervailing Measures calls for any countervailing duty investigation of a product originating in a developing country Member to be terminated as soon as the authorities concerned have determined 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 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.

The Agreement on Safeguards provides that 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.

The TBT Agreement provides that in the preparation and application of technical regulations, standards and conformity assessment procedures, Members must take account of the special development, financial and trade needs of developing country Members.

The SPS Agreement similarly provides that in the preparation and application of sanitary or phytosanitary measures, Members must take account of the special needs of developing country Members, and in particular of the least-developed country Members.


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Provisions allowing flexibility to developing countries in the use of economic and commercial policy instruments

The following is an illustrative list of such provisions:

The Agreement on Agriculture provides that:

(a) investment subsidies which are generally available to agriculture, agricultural input subsidies generally available to low-income or resource-poor producers, and support to producers to encourage diversification from growing illicit narcotic crops are exempt from domestic support reduction commitments;

(b) the de minimis percentage of Aggregate Measurement of Support (AMS) under which no reduction need be made either for product specified or non-specific measures is 10 per cent as against 5 per cent for developed country Members;

(c) the requirements to reduce budgetary outlays for export subsidies and the quantities benefitting from such subsidies are 24 and 14 per cent respectively, as against the requirements for the developed countries to reduce by 36 and 21 per cent respectively.

(d) during the implementation period, no reduction commitments need be undertaken in respect of market and freight subsidies or internal transport subsidies on export shipments.

(e) special and differential treatment in respect of commitments has been provided as set out in the relevant provisions of the Agreement and embodied in the Schedules of concessions and commitments. In the Schedules the developing country Members with a total AMS have had to make reductions by 13.33 per cent as against 20  per cent for the developed country Members. Similarly the simple average reduction of tariff for the developing country Members was only by 24  per cent (subject to a minimum of 10 per cent) as against 36 per cent (subject to a minimum of 15 per cent) for the developed country Members.

(f) the provision of foodstuffs at subsidized prices with the objective of meeting food requirements of urban and rural poor in developing countries is not to be considered to be a domestic support programme subject to reduction commitment.

The TBT Agreement recognizes that, in their particular technological and socio-economic conditions, developing country Members adopt certain technical regulations, standards or conformity assessment procedures aimed at preserving indigenous technology and production methods and processes compatible with their development needs.

Consequently it is provided that developing country Members are not to be expected to use international standards as a basis for their technical regulations or standards, including test methods, which are not appropriate to their development, financial and trade needs.

The Agreement on Subsidies and Countervailing Measures provides that the prohibition on export subsidies envisaged in Article  3.1 (a) are not to apply to:

(a) least-developed Member countries designated as such by the United Nations;

(b) developing country Members listed in Annex VII which have a per capita income below USD 1000 per annum.

GATT 1994 Article XVIII permits a developing country to control the general level of its imports by restricting the quantity or value of merchandise to be imported in order to safeguard its external financial position and to ensure a level of reserves adequate for the implementation of its programme of economic development. The import restrictions instituted, maintained or intensified shall not exceed those necessary:

(a) to forestall the threat of, or to stop, a serious decline in its monetary reserves, or

(b) in the case of a Member with inadequate monetary reserves, to achieve a reasonable rate of increase in its reserves.

The Understanding on the Balance-of-Payments Provisions of GATT 1994 confirms the commitment of Members (made originally in the 1979 Declaration on Balance-of-payments) to announce publicly, as soon as possible, time-schedules for the removal of restrictive import measures taken for balance-of-payment purposes. It also encourages Members to “seek to avoid the imposition of new quantitative restrictions for balance-of-payments purposes unless, because of a critical balance-of-payments situation, price-based measures cannot arrest a sharp deterioration in the external payments position”.

Further according to Article XVIII: B developing countries maintaining restrictions for balance-of-payments reasons are required to hold consultations biennially instead of annually. The Understanding on Balance-of-Payments Provisions of GATT 1994 provides that as a rule least-developed countries shall be subject to “simplified consultations” and such consultations shall also be available to developing country Members if they are pursuing liberalization efforts in conformity with the schedule presented in previous consultations or when the Trade Policy Review of a developing country Member is scheduled for the same calendar year as the date fixed for consultations.

Article XVIII: C entitles developing countries to take any measure not consistent with other provisions of GATT 1994 in order to promote the establishment of a particular industry.

 However, deviation from the obligations of GATT 1994 is subject to prior consultations with affected Members in cases where the product is not subject to a tariff concession, prior concurrence of the General Council when the measure involves impairment of a tariff concession, and adherence to time limits. The 1979 Decision entitled “Safeguard Action for Development Purposes” waives the requirements regarding prior consultation with affected Members, prior concurrence of the General Council and adherence to time limits in urgent cases. In such cases it allows the developing country Members to institute the measure on a provisional basis immediately after notification.

Article XXXVI of GATT and the Enabling Clause provide for non-reciprocity in trade negotiations among developed and developing country Members. It is provided that developed country Members shall not seek, nor shall the developing country Members be required to make, concessions that are inconsistent with the latter's development, financial and trade needs.

GATS provides that in the negotiations for specific commitments in the process of liberalization, there shall be appropriate flexibility for individual developing country Members for opening fewer sectors, liberalizing fewer types of transactions, progressively extending market access in line with their development situation and, when making access to their markets available to foreign service suppliers, attaching to such access conditions aimed at achieving the objectives of increasing their participation in world trade.


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Provisions allowing longer transitional periods to developing countries  

The following is an illustrative list of such provisions:

The Agreement on Agriculture provides that developing country Members have the flexibility to implement reduction commitments over a period of up to ten years as against six years for developed country Members. The least-developed country Members do not have to make any reduction commitments.

The TRIMs Agreement requires developing country Members to eliminate all TRIMs notified under Article 5.1 within 5 years and the least developed country Members within 7 years as against 2 years for developed country Members. There is provision also for extending the transition period for developing and least-developed country Members.

The Agreement on Customs Valuation permits developing country Members, not parties to the corresponding Tokyo Round Agreement, to delay the application of the provisions of the Agreement for a period not exceeding five years. The Agreement also provides for sympathetic consideration of requests for extension of the transitional period.

The Agreement on Customs Valuation also gives the possibility to developing country Members which currently value goods on the basis of officially established minimum values to make a reservation to enable them to retain such values on a limited and transitional basis under such terms and conditions as may be agreed.

The Agreement on Subsidies and Countervailing Measures provides that a developing country which is not a least-developed country or a country with per capita income of less than USD 1000 per annum shall have eight years to phase out prohibited export subsidies. The Agreement also provides for a transitional period of five years for all developing country Members and of seven years for the least-developed country Members during which the prohibition of Article 3.1 (b) on subsidies contingent upon the use of domestic over imported goods does not apply.

The TRIPs Agreement entitles developing country Members to delay the application of the provisions of the Agreement by five years from the date of entry into force as against one year for all Members.

If in a developed country Member product patent production is not extended with respect to any areas of technology (chemicals and pharmaceuticals, for example) on the date of general application of the Agreement, the Member is entitled to delay the application of the provision on product patents to such areas of technology for an additional period of five years.

Least-developed country Members are entitled to delay the application of the provisions of the TRIPs Agreement (except those on national treatment and MFN treatment) for a period of 11 years from the date of entry into force.


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Provision of technical assistance to developing country Members  

 Many agreements provide for technical assistance to developing countries. In particular such provisions exist in the Agreement on SPS Measures, the Agreement on TBT, the Agreement on Implementation of Article VII (Customs Valuation) and the Agreement on TRIPs. Technical assistance may be given directly by developed country Members or under the technical cooperation programme of the WTO Secretariat.