RESTRICTEDWORLD TRADE
ORGANIZATIONWT/COMTD/SE/M/2
9 September 2002
(02-4708)
Committee on Trade and Development
Second Dedicated Session
NOTE ON THE MEETING OF 1 JULY 2002
Chairman:  H.E. Mr. Toufiq Ali (Bangladesh)
Subjects discussed:
A. A DOPTION OF THE DRAFT AGENDA ...........................................................................................1
B. W ORK PROGRAMME ON SMALL ECONOMIES .............................................................................1
C. O THER BUSINESS ........................................................................................................................7
A. ADOPTION OF THE DRAFT AGENDA
1. The Chairman said that the draft agenda for the meeting was contained in Airgram
WTO/AIR/1826 of 7 June 2002.  Two communications had been received, one from the delegation of
Macao, China and one from the delegations of Barbados, Belize, Bolivia, Dominican Republic,
Guatemala, Honduras, Mauritius, and Sri Lanka.  Those documents would be introduced under
Agenda Item B.
2. The agenda was adopted.
B. WORK PROGRAMME ON SMALL ECONOMIES
3. The Chairman proposed that Members begin by considering the documents submitted.  He
suggested that the Committee listen to introductions of those documents.  The first submission was by
the delegation of Macao, China.
4. The representative of Macao, China said that his delegation's late submission
(WT/COMTD/SE/W/2) was due to the resource constraints of his delegation.  He said that he did not
intend to discuss the substance of the paper in detail as the content was self explanatory, addressing
the structural impediments of small economies and the nature of their economic vulnerabilities.  He
was limiting himself to focus on some salient points that small economies encountered at a time of
trade globalization.  He was going to structure his intervention by way of emphasising the quantitativeand qualitative aspects of smallness.  Additionally, he would make reference to two profound
objectives that his delegation's paper had taken into account.  The first was the developmental aspect
of the Doha Development Agenda (DDA) as set out by Ministers at the Doha Ministerial Conference
and the second objective was the fuller integration of small economies into the multilateral trading
system as stated in Paragraph 35 of the Doha Ministerial Declaration (WT/MIN(01)/DEC/1).  He
recalled that in the last Dedicated Session of the Committee on Trade and Development (CTD), his
delegation had stressed that small economies faced many structural impediments. Smallness was theWT/COMTD/SE/M/2
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problem per se which led to other constraints.  Smallness was common to most of the small
economies.  Smallness in quantitative terms, coul d be interpreted from two perspectives, either in
terms of population size or in terms of geographical size.  His delegation was of the view that
smallness from those two perspectives highly limited the economic performance of small economies,
regardless of the level of development.  On the qualitative front, small economies had similarproblems in international trade, in that their exports were limited to a narrow range of products and
services.  The difficulty of achieving export diversification was one of the vulnerabilities in small
economies' economic structure which lead to heavy dependence on the demand of their major trading
partners.  Therefore, small economies were continuing to rely on exports of a limited set of products
and services in foreign trade and or a limited number of trading partners.
5. He continued by saying that his delegation had identified some parameters of structural
impediments that many small economics had faced over decades.  From his delegation's point ofview, smallness was a core issue which was conducive to other constraints.  His Government had
faithfully been upholding its free trade tradition, even at the time of globalization.  It believed that the
economic growth of small economies could benefit from trade liberalization complemented by
remedial measures.  There was no doubt that his Government was one of the free trade pioneers,
having created the most far-reaching liberal trading system in the world.  The system was based onzero tariffs, no burdensome trade regulations and free movement of capital.  He said that his
Government believed in free trade, but free trade should take into account the structural impediments
of small economies in the context of trade globalization.  Like other small economies, his Government
expected positive responses from its trading partners.  Better and more meaningful market access
conditions and arrangements for small economies would be the best way to reduce the risk ofmarginalization of those most vulnerable economies in the WTO.  The multilateral trading system had
already put in place some complementary market access mechanism particularly in favour of small
suppliers, such as Articles 1.2, 1.3, 2.18, and 6.6 of the Agreement on Textiles and Clothing.  His
delegation looked forward to hearing from its trading partners of any innovative mechanism that
would respond to the afore mentioned structural smallness and complement the exports of productsand services from small economies.  He said that he was pleased to acknowledge the recent
submission by the delegations of Barbados, Be lize, Bolivia, Dominican Republic, Guatemala,
Honduras, Mauritius, and Sri Lanka (WT/COMTD/SE /W/3) and thanked those delegations for their
concrete ideas.
6. The Chairman said that the second document was the one submitted by the delegations of
Barbados, Belize, Bolivia, Dominican Republic, Guatemala, Honduras, Mauritius, and Sri Lanka,
contained in document  WT/COMTD/SE/W/3.
7. The representative of Mauritius recalled that, at the first Dedicated Session of the CTD on
25 April 2002, the small economies delegations had tabled a document (WT/COMTD/SE/W/1) in
which they had underscored the characteristics of small economies and the implications that those
characteristics had on their trade and development.  Those delegations had decided to adopt a broad
approach at the first Dedicated Session with the aim of helping other Members to better understandwhat a small economy was and what it meant to be a small economy.  The small economy delegations
were grateful for the response received at that meeting.  The 25 delegations that had taken the floor at
that meeting suggested that document WT/COMTD/SE/W/1 was a good basis for further work.  It
was on that further work that the small economy delegations would concentrate at the current
meeting.  Since 25 April 2002 , the small economy delegations had been busy working on concrete
proposals.  Paragraph 35 of the Doha Ministerial Declaration asked Members to identify trade-related
issues but also to frame responses to those trade-re lated  issues for the fuller integration of the small
and vulnerable economies into the multilateral trading system.  The small economy delegations had
come up with some proposals.  However, the list of proposals was not exhaustive.  The small
economy delegations did not expect to cover all proposals in one meeting.  It was his understandingthat there would be several Dedicated Sessions, and the small economy delegations would come upWT/COMTD/SE/M/2
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with other proposals for future meetings.  The delegations of Cuba, El Salvador, Fiji, Nicaragua and
Paraguay had added their names to the list of Members co-sponsoring the paper
WT/COMTD/SE/W/3.  The other countries involved we re still awaiting instructions.  He proposed
four presentational amendments to the documen t (WT/COMTD/SE/W/3) which did not deal with its
substance. The first was to be made on page 3, in paragraph 4 where reference was made toanti-dumping and countervailing duty measures.  He proposed that the sentence in the first bullet
point, which stated that "The rules and procedures of the relevant Agreements should address the
circumstances of the small economies", be removed from the beginning of that paragraph and be
inserted at the end of the same paragraph.  The second amendment referred to paragraph 4, section II,
which dealt with WTO safeguard provisions.  He proposed that in the first bullet point the word
"include" in the sentence "Some rules of concern to many small economies include the provisions
dealing with the definition of domestic industr y; serious injury; investigations; reporting
requirements; causation and non-attribution principle; the right of compensation and/or retaliation." be
replaced by the word "including" and at the end of the sentence after the word "retaliation" the words
"should be simplified" be added.  The third amendment was to be made on page 4, section IV, which
dealt with dispute settlement.  In the second sentence which read "Individual small economies have no
capacity to either mount or defend cases.", he proposed to change the word "individual" to "some", forthe sake of consistency with the small economies' first paper.  The final amendment was to be made to
the second bullet point in section IV which read "The participation  of small economies as third parties
should be facilitated to permit greater access to consultations and to all panel and appellate body
proceedings."  He proposed the deletion of the word "all".
8. He continued by saying that from the introduction in the paper by the small economies
delegations WT/COMTD/SE/W/3, it was clear that they were not, for the time being, making any
proposals on Agriculture, Services and TRIPS.  Th ere were ongoing negotiations in those various
fields.  The small economy delegations were theref ore waiting for some way forward in those three
domains before coming up with concrete proposals on them.  The proposals in document
WT/COMTD/SE/W/3 were self explanatory and he w ould not go into them in detail.  The first
proposal dealt with existing margins of preference.  The second proposal dealt with Article XXIV of
GATT and regional trade agreements.  The third proposal dealt with the Agreement on Subsidies and
Countervailing Measures.  The fourth proposal consisted of four sub-sections which dealt with WTO
rules and procedures.  The fifth proposal dealt with the problem of technical assistance and
capacity-building, and especially the question of representation in Geneva.  The sixth proposal dealt
with graduation of small economies which were LDCs and the seventh proposal referred to the
problem of accession for small economies.  He said that all the delegations who had co-sponsored thepaper would be prepared to answer questions on it.
9. The representative of Paraguay said that his delegation adhered to the proposal made by the
small economy delegations.  He wished to add some aspects.  The small economies represented a
reality but did not constitute the category of countries, as had been clearly set out in the previous
paper.  Small economies had specific characteristics that made their participation in the multilateraltrading system difficult.  In addition, it was difficult for them to gain the benefits which were
supposed to accrue from globalization.  Those special characteristics meant that small economies
should be given a form of Special and Differential Treatment (S&D).  He believed that the "Enabling
Clause" and Article I of Part IV should govern those relations.  There was therefore no contradiction
between supporting the small economy proposal and supporting the "Enabling Clause".  Furthermore,the end of the first proposal stated that "The preferences should be extended to other such small
economies."  That meant that that was not something that was exclusive of a group, but that all small
economies should be covered by those proposals.  His delegation agreed with the representative of
Mauritius that it was not possible to make any proposals on Agriculture, Services and TRIPS.  The
small economies would have to wait for the results to see what proposals to make.  The proposals thathad been made were clear and concise.  One specifically was based on past experience.  The proposal
in bullet point 3 of paragraph 4, part IV, of WT/COMTD/SE/W/3 referring to the dispute settlementWT/COMTD/SE/M/2
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understanding made no reference to retaliation but, rather to compensation.  Retaliation was
something that his delegation had seen on several occasions to be of no value.  Emphasis was
therefore put on compensation.  He concluded by saying that he had made those clarifications to
justify his delegation's full endorsement of the proposals made by the small economy delegations.
10. The representative of Barbados said that her delegation was of the view that document
WT/COMTD/SE/W/3 represented important steps in th e formulation of practical measures to respond
to the problems and constraints of small developing economies and to meet their trade and
development needs.  Her delegation hoped that the initial recommendations outlined in the document,
plus additional recommendations which would be proposed in the future, would be the subject of
favourable and constructive deliberations by its trading partners, with the view of incorporating those
recommendations into the General Council's final report to the Fifth Ministerial Conference.  Her
delegation welcomed the submission made by the delegation of Macao, China(WT/COMTD/SE/W/2) on the structural impediments of small economies.  That submission would
contribute to Members deliberations.  She recalled the General Council's decision on 1 March 2002
which adopted the framework for the work programme on Small Economies and wherein it was
agreed that the WTO Secretariat would provide certain information and analyses.  She was confident
that the Secretariat was working hard on those tasks and her delegation was awaiting the fruits of itslabours.
11. The representative of Bangladesh said that his delegation had had the opportunity to glance
through the submission by the small economies (WT/COMTD/SE/W/3).  Representing a
disadvantaged country in the global trade arena, his delegation was concerned that other countries
might also face difficulties.  It was clear that small economies faced many disadvantages which madethem vulnerable as they engaged in trade.  For instance, some small economies might be located far
from established shipping routes, making trade with them difficult.  Alternatively, small economies
might be so small that they were unable to benefit from economies of scale.  Various aspects of small
economies could seriously affect prospects of economic  growth.  His delegation felt that there was a
need for the WTO to address the issue of the vulnerability of the small economies.  His delegation hadnot had much time to thoroughly examine the paper WT/COMTD/SE/W/3.  However, his attention
had been drawn to paragraph 6 which dealt with graduation of small economies that were LDCs.  The
UN and the WTO recognised the category of LDCs and the procedures for graduation were laid down
clearly in the UN and revised by its Committee for Development Planning (CDP).  Within the WTO,
LDCs had their own work programme and negotiating group.  He suggested that paragraph 6 be
deleted from the list in the submission by the small economies and be handled in the LDC group.
12. The representative of Jamaica welcomed the submission by a number of delegations outlining
proposals that responded to some of the trade-related  issues and concerns which were discussed at the
last CTD Dedicated Session and which his delegation believed were anticipated by all Ministers at the
Doha Ministerial Conference.  Those responses covered a range of areas.  His delegation particularly
noted those relating to regional trading arrangements, dispute settlement and technical assistance.
Paragraphs 2, 5 and section IV were of particular interest.  Paragraph 2 addressed the issue of regionaltrading arrangements and the need for Article XXIV of GATT 1994 to provide greater levels of
flexibility, consistent with the development circumstances of small vulnerable economies which
entered into regional trading arrangements and similar arrangements with developed countries.  There
was a growing number of such arrangements and the proposal was thus timely and relevant.  The
proposals on the Dispute Settlement Mechanism highlighted, inter alia, the need for greaterelaboration and clarification of certain aspects of it, especially as it related to small economies.
Paragraph 5 related to technical assistance which was of great importance to small economies,
including those without representation in Geneva.  Strengthened measures in that regard would have
the effect of facilitating those Members participation in the work of the WTO.  His delegation looked
forward to the consideration of document WT/COMTD/SE/W/3 in the Dedicated Session of the CTD.WT/COMTD/SE/M/2
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13. The representative of Switzerland said that section IV of the submission
WT/COMTD/SE/W/3, contained a proposal on technical assistance and capacity building and the
representation of small economies in Geneva.  Members were aware of that problem and in
considering solutions to it, account should be take n of the fact that there was already an institution,
(AITIC) that helped delegations that had resource constraints and Members without representation inGeneva.  The transformation of AITIC into an intergovernmental institution was being considered.
14. The representative of Mauritius said that his delegation was grateful to the representative of
Bangladesh for the statement he had made concerning the problems that small economies faced
because of distance and vulnerability.  He said that the proposal by the representative of Bangladesh
had been noted and Members would hopefully have more substantive discussions on it.  He thanked
the representative of Switzerland for having understood the proposal regarding technical assistance
and capacity-building in paragraph 5 referring to representation in Geneva.  His delegation wasconvinced that the whole WTO Membership was sensitized to the problem of representation of small
economies in Geneva which prevented them from participating more actively and effectively in the
work of the WTO.  AITIC was providing useful help in that regard.  He concluded by saying that he
hoped that the initial proposals made by the small economy delegations would lead to constructive
discussions that would form the basis of the first part of recommendations to Ministers when theywould meet in Cancun, Mexico in 2003.  He was looking forward to work ing closely with the
delegation of Macao, China to adopt a common approach.
15. The representative of the United States said that the proposals had been circulated late and her
delegation had therefore been unable to receive adequate comments from its capital.  Members were
dealing with several topics which were of significant importance to different constituencies of theirGovernments.  She said that her delegation had started to look at document WT/COMTD/SE/W/3 and
she hoped that Members would revert to it at the next Dedicated Session of the CTD.  There were a
few proposals in that document that her delegation was concerned about regarding some particular
agreements.  However, all the agreements were sensitive and important.  Her delegation approached
the exercise with an open mind but with respect to the process she hoped that the proposals madefollowed the parameters of the mandate that Members had in the Doha Ministerial Declaration.  She
noted the delegation of Paraguay's intervention and hoped that Members were not entering into a
realm where a new category was being proposed.  Her delegation always searched the proposals for
the maintenance of the mandate not to create another category.  She said that one proposal suggested
that provisions ensuring a smooth transition in WTO for small economies graduating from LDC status
should be worked out and agreed.  The representative of Bangladesh had made a particular note
concerning that proposal.  That was an interesting approach and she wondered what type of transitions
would be of greatest interest.  One question th at would need to be addressed was whether the
transition should include benchmarks for compliance.  That had been the most successful approach to
date.  On the issue of accessions, the proposal suggested that small economies acceding to the WTO
should not be required to accept more obligations than small economies that were founding members
of the WTO, nor obligations that founding members had not themselves undertaken.  In herdelegation's view there were two issues involved.  The first related to process, where Members had
worked to streamline the process of accession for LDCs with some success.  The question there was
whether the drafters of the small economy proposals were focusing on utilising that approach, to a
greater extent, to some of the countries that were in the process of accession.  The second question
related to the level of commitments to be exp ected of new potential members and the implicit
suggestion that commitments in some way were detrimental to the acceding member.  WTO
accessions, like GATT accessions, involved negotiations with current Members on market access and
the review of the foreign trade regime to ensure ability to implement the obligations that come with
WTO membership.  Her delegation felt that a great d eal of flexibility already existed in the current
WTO accession system and that that flexibility was exercised to match WTO requirements with theindividual and different trade regimes that sought  membership.  Her delegation was not persuaded that
a "one size fits all" approach would be in the interests of the acceding country or the system.  SheWT/COMTD/SE/M/2
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welcomed the comments made be the representative of Macao, China and would comment on that
submission after receiving more feedback from her Capital.
16. The representative of Chile said that both submissions (WT/COMTD/SE/W/2 and
WT/COMTD/SE/W/3) were different in nature and had their own merits.  It was difficult for his
delegation to make any comments as it had only had access to the submissions that afternoon.However, there were some aspects that his delegation wished to comment on.  The work programme
that had been approved needed more factual analysis so that Members would know exactly what
problems small economies faced.  The submission made by the delegations of Barbados, Belize,
Bolivia, Dominican Republic, Guatemala, Honduras, Mauritius, and Sri Lanka contained specific
points which took positions on the agreements.  It was difficult for his delegation to take a position
without knowing what the realities behind the proposals were.  His delegation was concerned that
some aspects of document WT/COMTD/SE/W/3 mentioned exceptions from provisions such asArticle 3.1(a) of the Subsidies Agreement.  That seemed to open a door to subsidize exports.  He said
that some proposals with respect to dispute settlement addressed S&D.  The negotiating group on
dispute settlement could deal with that issue.  He encouraged the delegations of Barbados, Belize,
Bolivia, Dominican Republic, Guatemala, Honduras, Mauritius, and Sri Lanka to present that
proposal to that negotiating group.
17. The representative of Peru said that his delegation was prepared to work constructively in
order to make progression on the issue.  His delegation had not had enough time to respond to the
submissions that had been made.  Neverthe less, document WT/COMTD/SE/W/3 was a positive
advance in the presentation  of concrete proposals regarding small economies.  The proposals referred
to two different courses of action, the need for incr eased flexibility in some of the treatment afforded
to small economies and results within systemic frameworks which went against their development.
The document consisted of technical aspects and his delegation supported it.  However, there was
another course of action which gave rise to concern to his delegation.  Some of those concerns had
been expressed by the representative of Chile.  In practice, there were proposals that would affect
issues of principles such as subsidies and antidumping measures and those were issues that affectedthe delicate balance struck in the Uruguay Round.  His Government had made commitments to
reductions and it did not utilise protection subsidies.  Those efforts went alongside with some concrete
proposals which went beyond the mandate of the Doha Ministerial Declaration.  He said that in
practice, Members should not try to incorporate new categories of countries but deal with issues
within the framework of what had been already been set out by Ministers.  His delegation would give
detailed comments on the documents (WT/COMTD/ SE/W/2 and WT/COMTD/SE/W/3) at a later
stage.
18. The representative of Mexico said that the points mentioned by the representative of Chile
and Peru covered most of what he had to say.  It was necessary to have a constructive dialogue on the
documents.  Capitals needed to be given an opportunity to read the documents and analyse the
consequences of the proposals contained therein for the multilateral trading system.  Document
WT/COMTD/SE/W/3, showed that the proposals and contributions made were without prejudice to
the rights to comment on them in other fora.  It would be a good idea for the CTD Dedicated Session
to coordinate with and keep itself informed about what was happening in other fora.  His delegation
hoped that the discussion on document WT/COMTD/SE/W/3 would be clear so that Members became
aware of proposals being made in other fora.
19. The representative of Argentina said that his delegation agreed with the delegations of Chile
and Peru that some of the proposals in docume nt WT/COMTD/SE/W/3 would have a system wide
impact on the multilateral trading system.
20. The representative of the United States said that she agreed with the suggestion made by the
representative of Chile that it would be useful if Members received more factual information about theWT/COMTD/SE/M/2
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state of play.  After all Members had the opportunity in the Dedicated Session of the CTD to learn
more details about the specific conditions involved.  There had been a useful discussion in the last
Dedicated Session about conditions faced by small economies.  Her delegation looked forward to
seeing what the Secretariat had or could prepare in light of the agreement that had been made in the
Dedicated Session.  It would be useful to incorporate material from Members in the Secretariat'sexamination.  There had been a lot of documentation form over a year ago concerning the situation of
small economies.  If the Secretariat was preparing so mething then her delegation wished to get an idea
of the material that it was using and hoped that there would be some inputs from Members on the
situation. Comments had been made concerning the subsidies and anti-dumping agreements.  Those
were areas that were sensitive to her delegation and she would comment on them in detail at a later
date.  Members had already taken a decision on certain procedures which were working quite well
with respect to Article 3.1 of the Agreement on Subsidies and Countervailing Measures.  It wastherefore unclear why there was a need for any other specific differential treatment in that area.
However, her delegation was open to hear further details that would make a case for the suggested
proposal.  With respect to antidumping, it was important that all countries be able to adopt and
administer appropriate trade remedy laws.  Therefore a more specific description of the problems
faced by small economies would be helpful in providing Members with a further appreciation of theissues involved.  She gave the example of her Government's assistance which involved reporting
requirements and unfair trade remedy investigations.  She noted that document WT/COMTD/SE/W/3
indicated that Agriculture, Services and TRIPS woul d not, at that stage of work, be addressed.  She
asked why particular proposals were not considered on those areas in light of the proposals with
respect to other competent negotiating bodies in the WTO, including dispute settlement.
21. The Chairman said that it was clear that although some delegations had made preliminary
comments, they had not had enough time to examine both the documents (WT/COMTD/SE/W/2 and
WT/COMTD/SE/W/3) that had been presented under that agenda item.  Delegations needed more
time to consider the documents.  There was also a n eed to consult further on how to proceed with the
mandate to provide a work programme on small economies.  An invitation would be sent outsuggesting a date for consultations.  He indicated his intention to call such consultations as soon as
possible.
C. O
THER BUSINESS
22. The Chairman said the provisional date for the next formal meeting was Tuesday,
8 October 2002.
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