Special and differential treatment in the WTO: framing differential treatment to achieve (real) development

• DOI: https://doi.org/10.1108/JITLP-08-2020-0052
• Published date: 26 May 2021
• Date: 26 May 2021
• Pages: 83-100
• Subject Matter: Strategy,International business,International business law,Economics,International economics,International trade
• Author: Aniekan Ukpe,Sangeeta Khorana

Special and dif‌ferential treatment

in the WTO: framing

dif‌ferential treatment to achieve

(real) development

Aniekan Ukpe

Law Group, Wageningen University and Research, Wageningen,

The Netherlands, and

Sangeeta Khorana

Department of Accounting, Finance and Economics,

Bournemouth University, Poole, UK

Abstract

Purpose –Special and differential treatment(SDT) in the World Trade Organisation (WTO) has failed to

integrate developing countries into the international trading system, as contemplated by the WTO

Agreement, itself. This paper aims to interrogate the current application of SDT by WTO members as the

possibleundermining factor for SDT not delivering on itsobjective.

Design/methodology/approach –The research uses a qualitative legal methodology. This study

conducts desk analysisof primary legal materials and existing literatureto assess current ref‌lections of SDT

and draw lessonsfor reforms in the WTO.

Findings –From interrogating current SDT practice in the WTO and a comparative analysis with a similar

differential treatment under the Montreal Protocol, this paper f‌inds that indeed, the problem lies in the current

approach to SDT application in the WTO. This study f‌inds that the existing absence of eligibility criteria for

determining access to SDT by countries is the core reason for the abuse and sub-optimal outcome from its app lication.

Originality/value –While making a case for a rules-basedapproach to differentiation in the WTO, this

paper proposesa unique methodology for differentiating betweendeveloping countries for SDT, including the

use of a composite indicator to ensure that indicators that are used suff‌iciently ref‌lect their heterogeneous

needs. Drawing inspiration from Gonzalez et al. (2011a),this study introduces an adaptation for selecting a

threshold for graduation. Specif‌ically,the proposal on the value of the standard deviation of countries from

the weightedmean of the composite indicator as the thresholdfor graduating countries from SDT isnovel.

Keywords Developing countries, WTO, Special and differential treatment

Paper type Research paper

1. Introduction

The use of special and differential treatment(SDT) in the World Trade Organisation (WTO)

has attracted a great deal of academic attention and it is widely debated whether SDT is a

© Aniekan Ukpe and Sangeeta Khorana. Published by Emerald Publishing Limited. This article is

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Special and

dif‌ferential

treatment

83

Received26 August 2020

Revised4 February 2021

Accepted7 March 2021

Journalof International Trade

Lawand Policy

Vol.20 No. 2, 2021

pp. 83-100

EmeraldPublishing Limited

1477-0024

DOI 10.1108/JITLP-08-2020-0052

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1477-0024.htm

development tool (aimed at addressingthe problems of developing countries) or a trade tool

(to support the integration of developingcountries into the trading system) (Lee, 2016;Page,

2004;Conconi and Perroni, 2015;Hoekman,2005;Ornelas, 2016;Surono and Hidayati, 2019).

Furthermore, the accessibilityof SDT by members at different levels of development is long

overdue for reconsideration. Our paper aims to critique the current framework for SDT,

review extant literatureand propose an alternative framework for determining eligibility for

and content of SDT.

Traditionally, SDT was designed to help developing countries to develop their

economies through exports and to enable them to pursue policy options that they

considered appropriate for development [1](Kleen and Page, 2005;Ornelas, 2016).

Discussions have, however, continued to rage in the academic and policy domains on how

best to streamline SDT to align with developing countries’national economic

development strategies and invariably, better respond to their development needs

(Prowse, 2002;Hoekman et al., 2004;Hoekman et al., 2003;Cottier, 2006;Keck and Low,

2004). The focus has since changed and the justif‌ication for SDT is now to support

developing countries to overcome problems faced in implementing trade commitments

(Page, 2004;Keck and Low, 2004;Imboden, 2017). Furthermore, there is growing dissent

against the “one size f‌its all”principle of SDT, including calls to introduce a higher level

of differentiation between developing countries (Hoekman et al., 2003;Finger, 1991). The

objection has been underscored by former US Trade Representative, Robert Zoellick and

former EU Commissioner for External Trade, Peter Mandelson [2]. They both expressed

concerns on the need to ensure the “right degree of differentiation”for a robust SDT

regime that addresses the needs of developing countries in the WTO. The Trump

administration has explicitly sought changes to the f‌lexibilities provided and has claimed

that SDT ref‌lects an outdated dichotomy between developed and developing countries,

such that the need for countries to “self-declare”their developing country status amplif‌ies

the problem (USG, 2019;WTO, 2019a). While there is a lack of support for SDT as a

growth-promoting strategy, there is also an emerging need for further research that

explicitly tackles the challenges that it presents. Past WTO Rounds, inextricably linked

SDT negotiations to introducing differentiation between developing countries,

suggesting that an ambitious SDT regime can be achieved as a trade-off for

differentiation amongst benef‌iciaries. While developing countries on their part made no

pretext about the rejection of the principle of differentiation [3], SDT continues to be

couched in a vague and faded language without specif‌ic objectives and measures

(Paugam and Novel, 2005). In effect, SDT talks at the multilateral level have remained

deadlocked for over two decades [4]. Within the current context, an important question is

whether the rules of the multilateral trading system, as currently framed, suff‌iciently

promote development. If not, how best can the current rules be redesigned to achieve the

development objectives?

The paper discusses the current SDT framework at the WTO, examines options and

suggests how the WTO could promote development by allowing targeted SDT. In

particular, the paper examines whether the existing rules-based approach to

differentiation in the WTO can serve as a blueprint for an effective and development-

oriented application of SDT. The structure of the paper is as follows: Section 2 reviews

underlying factors that determine SDT eligibility at the multilateral level. Section 3

outlines the case for differentiation in the WTO. Section 4 reviews alternative theoretical

options for differentiation and advances to present reform proposals. Section 5 offers

conclusions.

JITLP

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