A term Paper Submitted to the School of Law, Debre markos

University in Partial Fulfillment for the Requirements of the course

of International and Africa Economies Law.

By: Alemayehu Sisay Haile

Id number, DMU 1301653

Title: Scrutiny of Developing and Least Developing Country treatment in the

World Trade Organization.

Submitted to: Haile Andargie (LLB, LLM, LLD And Ass. Professor)

Debre Markose University

School of law

Debre markos, Ethiopia

April, 2022

I
Abstract

World Trade Organization are the only international multilateral trade related organization that
establishing an internationally structured trade among the world countries. In this way different
world countries having different economical levels join WTO to make their economies
competitive. Least developing and developing states are among the member of World Trade
Organization. Such countries ( poor countries) are in the disadvantages position in terms of trade
competition to with the rest of developed countries ( rich countries). Therefore the WTO
established different treatment for the developing counties as a special and differential treatment
as a positive discrimination. In this regard the term paper assess the main treatment of the least
developing and developing countries under the WTO framework. It will be scrutiny the type of
treatment that given to the developing countries.

KEY WORD: Special and Differential Treatment, Preferential Treatment and World
Trade Organization.

II
 TABLE OF CONTENTS
Abstract ...........................................................................................................................................II
1. Introduction ................................................................................................................................. 1
2. Developing and Least Developing Country Treatment in the World Trade Organization ......... 2
2.1 WTO Treatment for LDC s and Developing Countries under GATT ...................................... 2
2.2 Pre-Uruguay Round Special and Differential Treatment .......................................................... 3
2.3 Treatment of LDCs and Developing Countries Post-Uruguay Round Agreement ................... 5
2.4 Treatment of Developing Countries under TRIPS Agreement ................................................. 6
A. Transitional time periods ............................................................................................................7
B. Technical and financial assistance ..............................................................................................7
C. Technology transfer: ...................................................................................................................7
2.5 Doha Ministerial Declaration .................................................................................................... 8
3. Conclusion ...................................................................................................................................9
References ..................................................................................................................................... 11

I
1. Introduction

The economic history of the world is an eloquent testimony to the fact that the governments use
the rhetoric of free trade in those areas where their economies are quite strong and try to
negotiate all kinds of exceptions in the areas where their own industries have to catch up.1 In
order to ensure free and fair international trade and remove a number of artificial restrictions
used by major trading nations General Agreement on Tariffs and Trade (GATT) use signed in
1947.2 The culmination of the Uruguay Round of Multilateral Trade Negotiations resulted in
signing of a number of agreements by the member governments and establishment of the World
Trade Organizations (WTO) as successor to the GATT.3
Developing countries make up the majority of the membership of the World Trade Organization.
Many developing countries believe that the welfare gains that were supposed to ensue from the
establishment of the WTO and the results of the Uruguay Round remain largely unachieved.4
One of the major challenges facing the WTO is how to facilitate the fuller integration of
developing countries in the multilateral trading system.5 Historically, special and differential
treatment, technical cooperation, and capacity building have been at the forefront of the
GATT/WTO’s efforts to facilitate the integration of developing countries into the multilateral
trading system. In recent times, however, doubts have been expressed as to the effectiveness of
special and differential treatment in assisting developing countries to participate actively and
derive significant benefits from the multilateral trading system.6
In this term paper I will discuss the major treatment of WTO to the developing and least
developing countries as the main concern of the paper and the concepts of special and
differential treatment. It also tries to see the general treatment of the WTO to the member state as
a whole. Finally, we will have the concluding remarks of the term paper.

1
Professor M. Mushtaque Ahmad and Professor Nawab Ali Khan, World Trade Organization and the Developing
Nations, [undated }, 1.
2
ibid.
3
ibid.
4
George A. Bermann and Petros C. Mavroidis, ‘WTO Law and Developing Countries ’, Cambridge University Press,
New York [2007], 1.
5
ibid.
6
ibid.
1
2. Developing and Least Developing Country Treatment in the World Trade
Organization

The WTO Agreements contain special provisions which give developing countries special rights
and which give developed countries the possibility to treat developing countries more favorably
than other WTO Members.7 These special provisions include, for example, longer time periods
for implementing Agreements and commitments or measures to increase trading opportunities
for developing countries.8
Even though there is the special treatment since the creation of the multilateral trading system
about sixty years ago, developing countries as a group have not benefited significantly from it.9
The lack of active participation of LDCs and of most developing countries in the multilateral
trading system and the global economy has been a source of concern for the WTO.10 This
concern is reflected in the second indent to the preamble of the WTO Agreement, which
relevantly provides that Members of the WTO “[recognize] that there is need for positive efforts
designed to ensure that developing countries, and especially the least developed among them,
secure a share in the growth in international trade commensurate with the needs of their
economic development.”11

2.1 WTO Treatment for LDC s and Developing Countries under GATT

Half the founding members of GATT were developing countries, and there have been references
to ‘countries in the early stages of development’ (WTO, 1994) and their potential need to restrict
imports or intervene in their economies since the first GATT agreement.12 From the Enabling
Clause, 1979, a differentiation between LDCs and other developing countries was accepted; this
category is a legally precise group; (LDCs) were given special status.13 The agreement also
referred to Net Food Importing Developing countries (NFIDC), but neither defined the group nor

7
https://www.wto.org/english/tratop_e/devel_e/dev_special_differential_provisions_e.htm / accessed 24
March 2022.
8
ibid.
9
George and Petro’s ( n 4 ) 12.
10
ibid.
11
ibid.
12
Sheila Page and Peter Kleen, Special and Differential Treatment of Developing Countries in the World Trade
Organization, Global Development Studies No. 2 [2005], 13.
13
ibid.
2
gave them legally enforceable rights.14 Under the Uruguay Round TRIPS agreement on
intellectual property, there had been uncertainty over what circumstances would allow countries
to override the new protection for patent holders and allow unlicensed production of
pharmaceuticals.15 In 2003, there was a decision to modify the TRIPS agreement to allow
countries without their own capacity to import unlicensed drugs. Developed countries (by list)
agreed in a Chair’s declaration that they would not use the provisions.16

Prior to the Uruguay round of multilateral trade negotiation (1986-1994) it was primarily meant
to accord developing countries special right to nurture infant industries, preferential access to
developed country markets and non-reciprocity in the trade negotiation.17 At the successful
conclusion of Uruguay round..……the concepts of S&D treatment was re-oriented to addressing
adjustment difficulties stemming from implementation of the WTO agreement in many
developing countries.18

2.2 Pre-Uruguay Round Special and Differential Treatment

The WTO Secretariat (WTO 1999) presents a comprehensive list of S&D provisions that had
been introduced into the GATT and then the WTO Agreements since the mid-1950s.19 These
provisions fall into three broad categories: (a) those allowing fewer obligations or the easing of
rules for developing countries; (b) those requiring positive actions in favour of developing
countries; and (c) those meeting the special needs of the LDCs.20

From 1947, Article XVIII of GATT allowed developing members to protect imports and use
domestic policy to develop particular sectors; from 1955 this was strengthened.21 Countries could
also continue to offer special access to colonies or other associated countries (defined by lists in
the agreement).22 The first major step in this direction was the re- drafting of Article XVIII at the

14
Sheila and Kleen (n 12) 13.
15
ibid.
16
ibid.
17
Klichiro fukasaku, Special and Differencial Treatment for Developing Countries, World Institution for
development working no. 197 [2000], 1.
18
ibid.
19
ibid 3.
20
ibid 3.
21
Sheila and Kleen (n 12) 14.
22
Ibid 14.

3
1954-55 GATT Review Session. This Article allowed developing countries to withdraw tariff
concessions and apply non-tariff measures under certain conditions, in order to promote a
particular industry and deal with balance-of-payments difficulties.23

Contracting parties took another major step in 1965 with the introduction of a special chapter on
'Trade and Development' (Part IV) into the GATT.24 Part IV contained provisions on the
principle of non-reciprocity in trade negotiations between developed and developing countries.
Article XXXVI:8 states that '[t]he developed contracting parties do not expect reciprocity for
commitments made by them in trade negotiations to reduce or remove tariffs and other barriers
to the trade of less-developed contracting parties'.25

In the years following the introduction of Part IV, there was a growing demand for taking
positive actions in favour of developing countries in terms of market access. Such demand led to
the authorization of three waivers from Article I (the MFN obligation) of the GATT in
association with (a) introduction of tariff preferences in 1966, b) implementation of the
Generalized System of Preferences (GSP) in 1971 to the developing countries and c) the 1971
Decision on Trade Negotiations among Developing Countries.26 In 1979, following the Tokyo
Round, the Enabling Clause (GATT, 1979) was adopted……to allow not only preferences for
developing countries, including further flexibility in the application of rules, for example on
developing country regional trade agreements, but special treatment for LDCs (the first
differentiation among developing countries).27

As early as the 1980s, however, doubt was raised over the effectiveness of S&D treatment as a
means of promoting trade and development of developing countries. One of such critiques was
the Leutwiler Report (GATT 1985) the Report recommended 15 specific, immediate actions, one
of which addressed the problem of trade and development.28 'Developing countries receive
special treatment in the GATT rules, but such special treatment is of limited value. Far greater
emphasis should be placed on permitting and encouraging developing countries to take

23
Klichiro fukasaku (n 17) 3.
24
Ibid.
25
Ibid.
26
Ibid 4.
27
Sheila and Kleen (n 12) 14.
28
Klichiro fukasaku (n 17) 6.

4
advantage of their competitive strengths and on integrating them more fully into the trading
system’ (The Leutwiler Report, GATT 1985: 44).29

Underlying this view was the growing recognition that developing countries may have missed
the opportunity of gaining effective market access by having failed to participate actively in the
Tokyo Round (1973- 79) on a reciprocal basis…..this is why a number of developing countries
decided to participate more actively in the Uruguay Round through the exchange of reciprocal
tariff concessions.30

Generally the Pre-Uruguay round agreement provides a less expected treatment for the
developing countries and the treatment itself doesn't much practical in the nature. It also the
treatment is depend on the developed countries choice and preference which may be fail to do
and there was not in the position to be treat as the agreement reach in the organization. Such
problems were emanated from the absence of binding legality.

2.3 Treatment of LDCs and Developing Countries Post-Uruguay Round

Agreement

It was a negotiating objective of developing countries during the Uruguay Round to accept a
dilution of S&D treatment in exchange for better market access and strengthened rules.31 Much
of S&D provisions are aimed atassisting developing countries in the implementation of the WTO
Agreements by providing a longer period of transition, greater flexibility in application of trade
rules and technical assistance. We will see the aims of those special and deferential treatment
provisions of world trade organization under Uruguay round agreement.32

A. First, developing country members are granted a longer time frame for implementation of the
WTO Agreements than developed country members.The length of an initial period of transition,
however, varies considerably from 2 years (SPS and Import Licensing), 5 years (TRIMs,
Customs Valuation, and TRIPS), 10 years (Agriculture) even up to an undetermined time
(GATS).33

29
Klichiro fukasaku (n 17) 7.
30
Ibid 6.
31
EDWINI KESSIE, The Legal Status of Special and Differential Treatment Provisions under the WTO Agreements,
Cambridge University Press, New York [2007], 20.

32
Klichiro fukasaku (n 17) 9.
33
Ibid.

5
Second, the provision of technical assistance to developing countries has become part and parcel
of S&D treatment under the WTO Agreements. It aims to assist developing country governments
in their efforts to build institutional capacity needed to implement the Agreements and
participate more fully in the multilateral trading system.34

Third, the WTO Agreements include special provisions for the LDCs. Thepreamble to the 1994
Marrakesh Agreement Establishing the World Trade Organization recognizes that: positive
efforts designed to ensure that developing countries, and especially the least developed among
them, secure a share in the growth in international trade commensurate with the needs of their
economic development.35 Moreover, Article IV:7 of this Agreement requests the Committee on
Tradeand Development to review periodically the special provisions for LDC ….there is also a
clear recognition of safeguarding the general interests of developing countries.36

Least-developed countries shall be accorded substantially increased technical assistance in the

development, strengthening and diversification of their production and export bases including
those of services, as well as in trade promotion, to enable them to maximize the benefits from
liberalized access to markets (para.2 (v))'.37

The Uruguay round agreement create abroad means of treatment for the developing countries
between the member state of WTO. Treatments under the Uruguay round agreement includes a
longer period of transaction, flexibility in the application of the rules and technical assistance in
the major one of among the treatment of least developing and developing countries.

2.4 Treatment of Developing Countries under TRIPS Agreement

Unlike most WTO agreements, it contains no significant differences in the rules for developing
countries or least developed countries (LDCs) and developed countries. It is a clear case of ‘one
size fits all’ regarding the minimum rules for IPRs protection, for example in patents, trademarks
and copyright, except that the timing of implementation of the rules differs, through the
provision of longer transition periods for developing countries and LDCs.38 The lack of
substantial SDT poses serious problems for developing countries in many areas but especially in
the patent system where the balance of costs and benefits of IPRs.39

34
Klichiro fukasaku (n 17) 9.
35
Ibid.
36
Ibid.
37
Ibid 10.
38
Constantine Michalopoulos, Special and Differential Treatment of Developing Countries in TRIPS, [undated], 2.
39
Ibid.

6
As noted in the above, there are relatively few SDT provisions in the original TRIPS Agreement;
the main SDT provisions are as follows;

A. Transitional time periods

Transitional time periods have been established for developing countries in general in the
implementation of most aspects of the Agreement (Articles 65.2 and 65.4) and even longer
transition periods for the implementation of the Agreement in LDCs: developing countries had
been given four extra years and LDCs an additional six years from entry into force of the TRIPS
Agreement to begin applying its provisions.40

Moreover, an additional five years were given to countries that have had to introduce product
patent protection in areas of technology that were less protected at the time of general application
of the Agreement; but all members agreed to accept patent applications and exclusive marketing
rights for pharmaceutical and agricultural chemical products as from the date the Agreement
entered into force (Article 70); these extended time periods only applied to the countries which
joined the WTO at the start.41

B. Technical and financial assistance

Technical and financial assistance to facilitate implementation of the Agreement should be

provided by developed countries to all developing countries and LDCs on mutually agreed terms
and conditions (Article 67).42 Developed countries have agreed to take to support developing
countries participation in international trade: provide technical and other assistance which would
permit them to meet their WTO obligations and otherwise enhance the benefits developing
countries derive from international trade.43

C. Technology transfer:

Technology transfer should be encouraged to LDCs (not to all the developing countries) through
developed country provision of incentives to enterprises and institutions in their territories for

40
Constantine (n 38) 6.
41
Ibid.
42
Ibid.
43
Ibid 5.

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this purpose (Article 66.2).44 In order to operationalized the developed country commitment to
technology transfer, developed countries should establish specific financial targets which could
be met through various actions.45

The Agreement is remarkable in that, unlike most WTO agreements, it contains no differences in
the rules as between developing or LDCs and developed countries. It is a clear case of ‘one size
fits all’, except that the timing of implementation of the rules differs.46 In addition there are two,
non- legally binding provisions, involving commitments by developed countries to give technical
and financial assistance to all developing countries and to provide incentives for technology
transfer to the LDCs.47

2.5 Doha Ministerial Declaration

The WTO Doha Round of multilateral trade negotiations, begun in November 2001, has entered
its 11th year. The negotiations have been characterized by persistent differences among the
United States, the European Union, and developing countries on major issues, such as agriculture,
industrial tariffs and non-tariff barriers, services, and trade remedies.48 In the Doha Ministerial
Declaration, the trade ministers reaffirmed special and differential (S&D) treatment for
developing countries and agreed that all S&D treatment provisions “be reviewed with a view to
strengthening them and making them more precise, effective and operational.”49At the December
2005 Hong Kong Ministerial, members agreed to five S&D provisions for LDCs, including the
tariff-free and quota-free access for LDC.50

Provisions aimed at increasing trade opportunities for developing and least developed countries,
flexibility in implementing certain rules and commitments and technical assistance.51 It also
Extension of S&D treatment to developing and least developed countries in the application of
quota restrictions, import licensing procedures, and trade remedy (or contingency protection)
measures, such as safeguard actions, and antidumping and countervailing duty measures.52

44
Constantine (n 38) 5.
45
Ibid 6.
46
Ibid.
47
Ibid.
48
Ian F. Fergusson, World Trade Organization Negotiations: The Doha Development Agenda, [Dec. 12, 2011] 1.
49
Ibid 19.
50
Ibid 19.
51
MINISTERIAL DICLARATION MINISTERIAL: CONFERENCE Fourth Session Doha, 9-14 November 2001,
Art. 36-37.
52
Ibid Art. 38.

8
The Doha ministerial declaration also under article 44 declares all member of the WTO to the
commitment of treatment of the least developing countries. The commitment of the declaration
accepted the seriousness of the concerns expressed by the least developed countries (LDCs); and
recognizes that the integration of the LDCs into the multilateral trading system requires
meaningful market access, support for the diversification of their production and export base,
and trade-related technical assistance and capacity building.53

A major topic at the Doha Ministerial regarded the WTO Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS).54The issue involves the balance of interests between the
pharmaceutical companies in developed countries that held patents on medicines and the public
health needs in developing countries.55

On December 16, 2002, then-TRIPS Council chairman Eduardo Perez Motta produced a draft
that would allow countries that lack the manufacturing capacity to produce medicines to issue
compulsory licenses for imports of the medicines.56 All WTO members approved of the
chairman’s draft except the United States; to the position, representing the interests of the
pharmaceutical industry.57 On August 30, 2003, WTO members reached agreement on the
TRIPS and medicines issue.58 Voting in the General Council, member governments approved a
decision that offered an interim waiver under the TRIPS Agreement allowing a member country
to export pharmaceutical products made under compulsory licenses to least-developed and
certain other members59.

Therefore the declaration recognized the concerns of the developing countries and give treatment
to those countries which needs trade related assistance market access and other capacity building.

3. Conclusion

World trade organization incorporated Special and Differential Treatment for Developing
Countries (SDT) is a staple of the world trading system. It is present in many forms. For example,
members of the World Trade Organization (WTO) can sidestep the nondiscrimination
requirement established in Article I of the General Agreement on Tariffs and Trade (GATT),
which establishes Most-Favoured-Nation (MFN) treatment among its members, to offer

53
MINISTERIAL DICLARATION MINISTERIAL: CONFERENCE Fourth Session Doha, 9-14 November 2001,
Art.44
54
Ian F. Fergusson (n 48) 18.
55
Ibid.
56
Ibid.
57
Ian F. Fergusson (n 48) 18.
58
Ibid.
59
Ibid.

9
preferential access to developing countries.60 The most known WTO treatment of developing
countries is special and differential treatment and non reciprocal preferential treatment.

WTO framework under different aspect enacts different treatments in order to make a
compromised the position between the member states. In such case the WTO incorporated some
treatment for the least developing and developing countries to treat in a special and differential
ways with the positive discrimination with the rest of the member state. The treatment are
incorporated by the agreement of the member states. Some of the agreement which incorporated
are general agreement on trade and tariff (GATT), agreement on trade related aspect of
intellectual property (TRIPS) and GATT different round agreement are the main aspects of the
treatment. The main aspects of WTO treatment is transitional periods, technical and financial
assistance and technological transfer among the general once.

Generally, even though WTO incorporated treatments to the least developing countries and
developing countries til the treatment is not practical supported the economies of the states
specially least developing countries as expected when they are join WTO. Therefor, the
treatment must be incorporated in a way that the developed countries can be practicably treat
those states which are in a disadvantages position.

60
Emanuel Ornelas, Special and Differential Treatment for Developing Countries, CEP Discussion Paper No 1415
[2016], 1.

10
References

Laws
- MINISTERIAL DICLARATION MINISTERIAL: CONFERENCE Fourth Session Doha, 9-14
November 2001.

Books

- EDWINI KESSIE, The Legal Status of Special and Differential Treatment Provisions under the WTO Agreements,
Cambridge University Press, New York [2007].

- Sheila Page and Peter Kleen, Special and Differential Treatment of Developing Countries in the World Trade
Organization, Global Development Studies No. 2 [2005].

- Professor M. Mushtaque Ahmad and Professor Nawab Ali Khan, World Trade Organization and the Developing
Nations, [undated }.

- George A. Bermann and Petros C. Mavroidis, ‘WTO Law and Developing Countries ’, Cambridge University Press,
New York [2007].

- Ian
F. Fergusson, World Trade Organization Negotiations: The Doha Development Agenda,
[Dec. 12, 2011]

Articles

- Klichiro fukasaku, Special and Differencial Treatment for Developing Countries, World Institution for
development working no. 197 [2000].
- Emanuel Ornelas, Special and Differential Treatment for Developing Countries, CEP Discussion Paper No 1415
[2016].

- Constantine Michalopoulos, Special and Differential Treatment of Developing Countries in TRIPS,

[undated].

Internet

https://www.wto.org/english/tratop_e/devel_e/dev_special_differential_provisions_e.htm / accessed 24
March 2022

11