Bridges Weekly Trade News Digest • Volume 7 • Number 28 • 21st August 2003
Members Struggle To Reach Pre-Cancun S&D Early Harvest
Returning after a two-week break, WTO Heads of Delegations met informally on 13, 18, and 19 August to discuss the review on special and differential treatment (S&D) provisions for developing countries (see BRIDGES Weekly, 28 July 2003). The talks resulted in the number of specific proposals agreed upon growing from 15 to 17. The new agreed proposals deal with technology transfer and Article XVIII:C of GATT 1994 (which sets out certain measures related to governmental assistance to establish an industry). A new text from General Council Chair Pérez del Castillo was released on 19 August (available at http://www.ictsd.org/issarea/development/resources/JOB(03)-161.pdf).
Like most of the 15 ‘agreed’ proposals that preceded them — aimed at forming an integral part of the ‘development’ agenda — neither of these new proposals confers more favourable treatment for developing countries. The former "reaffirms" a 19 February 2003 decision of the TRIPs Council (see BRIDGES Weekly, 27 February 2003), and the latter "instructs" the Council for Trade in Goods to develop procedures for recourse to Article XVIII:C. One trade observer speculated that if no meaningful S&D provisions were agreed in coming days, having an early harvest ready for Ministers in Cancun would be "rather difficult".
Technology Transfer
The new ‘S&D provision’ agreed in this area reaffirms a decision taken on 19 February 2003 by the TRIPs Council (IP/C/28), which aims at putting in place a mechanism for ensuring the monitoring and full implementation of developed country obligations in Article 66.2 (Technology Transfer). The TRIPs decision also sets out the arrangements for the annual reports by developed country Members and their annual review by the TRIPs Council.
It differs quite markedly however from the original proposal by the Africa Group (TN/CTD/W/3/Rev.2, http://docsonline.wto.org), which aimed not only at putting in place a mechanism for monitoring the ‘obligations’ of Article 66.2, but also sought to define what could be construed as technology — an omission in the original article that makes its implementation, and more importantly its enforcement, difficult.
As of August 2003, only eight Members had submitted reports on measures in place to meet their obligations under this article (IP/C/W/388 and addenda).
Article XVIII:C
At the 18 August meeting, Members agreed to "instruct the Council on Trade in Goods to develop and adopt procedures for recourse to Article XVIII:C". Article XVIII, entitled Governmental Assistance to Economic Development, recognises that it may be necessary and justifiable for certain developing country Members, under certain conditions, to take measures affecting imports in order to implement programmes of economic development. Section C in particular, deals with "other measures" relating to governmental assistance to establish an industry.
In their new decision, Members noted that developing country concerns related to the suspension of concessions "shall" be addressed. These concerns deal primarily with the chilling effect on Members using the Article, which results from the potential requirement to make compensatory concessions and/or face similar concession removal from affected Members (see TN/CTD/W/4/Add.1, W/8 & WT/GC/W/363, searchable at http://docsonline.wto.org). Proponents of updating Article XVIII support their claim by pointing to the fact that only one Member has used Section C since the WTO came into force.
As has been the rule rather than the exception in this S&D review, the language agreed upon differs vastly from the original two proposals (from St. Lucia and the Group of Least-Developed Countries respectively). Generally speaking, both were aimed at making Article XVIII:C a meaningful S&D provision that developing countries could resort to (not only as a last recourse) to help them build much-needed supply capacity. The final language agreed contains nothing concrete on how these concerns might be addressed, but rather forces the debate to start from scratch in a new forum.
ICTSD reporting.