WORLD TRADE
ORGANIZATIONTN/CTD/W/5
24 May 2002
(02-2891)
Committee on Trade and Development
Special SessionOriginal:  Spanish
APPLICATION OF THE SPECIAL AND DIFFERENTIAL TREATMENT
PROVISIONS CONTAINED IN THE AGREEMENTS AND
DECISIONS OF THE WTO
Communication from Paraguay
Differential and More Favourable Treatment – Reciprocity and
Fuller Participation of Developing Countries
"Enabling Clause"
Decision of 28 November 1979
The following communication, dated 16 May 2002, has been received from the above
delegation.
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I. INTRODUCTION
1. As was reaffirmed by the Ministers in the Doha Declaration, the special and differential
treatment provisions are an integral part of the WTO Agreements and must be understood as an
"established right" for the relevant countries desi gned to give them the opportunity to participate
effectively in the multilateral trading system.
2. In this connection, at the fourth Ministerial Conference, the WTO Members agreed that the
special and differential treatment provisions should be strengthened and made more precise, effective
and operational.  These four measures should be taken in order to give effect to the ministerial
mandate set out in paragraph 44 of the Doha Declaration, the purpose of which is none other than toimprove the conditions for the "development" of the developing country Members.
3. The aims pursued by developing country Members, specifically for the sake of more effective
participation in the multilateral trading system, include securing transparent, predictable and
sustainable conditions for the implementation of measures contributing to the expansion of
developing countries' export trade, and respect for the interests of all developing country Members,without distinctions or exclusions, on a collective rather than an individual basis, so as to ensure
transparency and "non-discrimination" in the implementation process.
4. In the light of the above-mentioned aims, the delegation of Paraguay considers that the
differential and more favourable treatment and re ciprocity and fuller participation of developing
countries, provided for in the Decision of 28 November 1979 (L/4903), more commonly known as the
"Enabling Clause", must be implemented, and that such implementation must not give rise to
discrimination between developing countries or any attempt to evade the implementation requirement.TN/CTD/W/5
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5. If these are understood to be mutual commitments, implementation of the development
objectives of developing countries will guarantee equal opportunity in the multilateral trading system.
II. OBJECTIVES, MECHANISMS AND SCOPE OF THE ENABLING CLAUSE
6. When considering ways of facilitating implementation of the special and differential
treatment provisions and making it more effective, it is necessary to understand the aims andobjectives on which Members based their agreement to implement each of those provisions.
7. To that end, it should be borne in mind that the Enabling Clause was designed to increase the
commercial opportunities of developing country Member s by making the provisions of Article I of the
General Agreement (GATT) more flexible, through preferential tariff treatment accorded by
developed contracting parties to products originating in developing countries in accordance with the
Generalized System of Preferences.  This also applies to differential and more favorable treatment
with respect to the provisions of the General Agreement concerning non-tariff measures governed bythe provisions of instruments multilaterally negotiated under the auspices of GATT, and to the
provisions of regional or global arrangements entered into amongst less-developed contracting parties
for the mutual reduction or elimination of tariffs an d, in accordance with criteria or conditions which
may be prescribed by the contracting parties, for the mutual reduction or elimination of non-tariff
measures, on products imported from one another and to special treatment accorded to the least-developed countries.
8. Furthermore, under subparagraphs (a), (b) and (c) of paragraph 3, it was agreed that any
differential and more favourable treatment accorded under the Enabling Clause shall be designed to
facilitate and promote the trade of developing countries and, at the same time, not to raise barriers to
or create undue difficulties for other parties.  Differential and more favourable treatment should be
adapted to the needs of developing countries, and the developed countries should not expect
reciprocity or impose conditions in respect of commitments undertaken in the trade negotiations.
III. BROAD INTERPRETATIONS WHICH GIVE RISE TO DISCRIMINATION ETC.
9. Paragraph 2(a) of the Enabling Clause provides that the provisions of paragraph 1 apply to
preferential tariff treatment accorded by developed contracting parties to products originating indeveloping countries in accordance with Generalized System of Preferences.  In this connection, it is
important to observe that they are to be applied in the manner defined in the Decision by the
contracting parties of 25 June 1971 concerning the establishment of a "system of generalized,
non-reciprocal and non-discriminatory preferences beneficial to the developing countries"
(BISD 18S/26).
10. The rules laid down in both the Generalized System of Preferences and the Enabling Clause
are frequently infringed by requests to the WTO for waivers from Article I of the General Agreementin order to accord privileges or benefits to specific developing countries, excluding other developing
countries.  This gives rise to discrimination inconsistent with the Enabling Clause based on arguments
for the grant of such privileges of facilities, such as:  (i) competitiveness criteria; (ii) specialization
and development indices;  (iii) sectoral and country graduation;  (iv) linking the benefits to non-trade
issues, such as environmental and social (labour) standards;  (v) intellectual property rights;  and(vi) the fight against drugs.  All these arguments in favour of measures under the Enabling Clause are
based on a subjective, arbitrary and unilateral position taken by certain developed countries, thereby
giving rise to discrimination.
11. The most serious consequence is non-compliance with the Enabling Clause giving rise, for
whatever reason, to discriminatory privileges benefiting a number of specific countries to theTN/CTD/W/5
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detriment of others, since no case can be made for the view that the agreements on concessions by
certain developed countries are covered by Article XXIV of the GATT.
12. The discrimination arises from the fact that those who pay for or finance developed country
concessions to developing countries, by means of such waivers, are the other injured developing
countries whose export competitiveness is undermined by tariff or other benefits under concessions.It can be asserted that waivers of this type gene rate unfair competition leading to the impoverishment
of those developing countries which do not receive such benefits, and constituting a distortion of the
fundamental purpose of multilateralism.
13. The establishment of a waiver based on one of the six arguments referred to in paragraph 10
above, as a means of achieving non-commercial objectives, frequently entails a benefit for the
developed rather than the developing country concerned.  In this way, the basic WTO concepts of
"transparency and non-discrimination" are distorted.
IV. COMMITMENT AND COMPLIANCE
14. One means of ensuring compliance is an agreement under the Decision of
28 September 1979;  mechanisms also exist for the approval of waivers through WTO working groups
and there is also the possibility of recourse to the WTO dispute settlement mechanism to enable
injured countries to claim compensation for the injury caused by such distortions, exceptions orviolations of the Enabling Clause.
15. However, developing countries have very few possibilities of obtaining positive results
through such mechanisms, because of political problems as well as problems of access to the markets
of developed countries, for example, where retaliatory measures are requested.  At the same time,
many developing countries are very limited in their ability to finance consultations within the DisputeSettlement Body, and there is also a limited capacity of response on the part of their institutions and
human resources responsible for dealing with these issues.
16. The upshot of these and other problems is that it is impossible for the aggrieved developing
countries to obtain fair compensation for injury caused by discrimination.  Consequently, they are
unable to participate effectively in the multilateral trading system.
V. PROPOSAL BY THE DELEGATION OF PARAGUAY
17. The delegation of Paraguay considers that the correct interpretation of the provision
concerning special and differential treatment is that the Enabling Clause should be applied as an
instrument designed to facilitate and promote the trade of developing countries and not to raise
barriers or create difficulties for other parties.
18. The delegation of Paraguay proposes that waivers from Article I of the General Agreement
should not be used to accord advantages or privileges to developing countries where they clearlydiscriminate against other developing countries.  When developed countries wish to grant advantages
or privileges to developing countries, they should do so through the Enabling Clause and in
accordance with the spirit and the letter of its provisions.
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