WORLD TRADE  
ORGANIZATION   
WT/COMTD/SE/W/11 
6 May 2004 
 
 (04-2018) 
Committee on Trade and Development 
Dedicated Session Original:   English 
 
 
 
WORK PROGRAMME ON SMALL ECONOMIES 
(Further elaboration of key proposals outlined in WT/COMTD/SE/W/3) 
 
Communication from Barbados, Fiji, Mauritius, Papua New Guinea,  
Solomon Islands and Trinidad and Tobago 
  
 The following communication, dated 4 May 2004, is being circulated at the request of the 
delegations of Barbados, Fiji, Mauritius, Papua New Guinea, Solo mon Islands and Trinidad and 
Tobago. 
 
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Introduction 
 
This paper from the above-menti oned small economies is a first response to the request made 
at the Sixth Dedicated Session of the Committee on Trade and Development for refinement of the 
proposals in WT/COMTD/SE/W/3.  Whilst this pa per addresses the issues relating to preferences, 
subsidies and market access, the proposals on other issues still remain on the table. 
I. PREFERENCES 
A. TRADE  
1. Trade preferences have a long history in th e multilateral trading system and have been 
recognised as an established mechan ism for promoting development.  Small economies have a limited 
range of export products based on preferential a rrangements granted by trading partners and these 
have constituted an essential basis for their survival. 
2. This dependency on trade preferences exists in both the agricultural and non-agricultural 
sectors.  Existing market access arrangements ha ve been critical for the stability, growth and 
predictability in both sectors.  The importance of preferential trade arrangements has been recognized 
by the WTO.  However, the process of liberalizati on has exacerbated the loss of preferential margins.  
Furthermore, this situation, along with the incr easing frequency of challenges of these arrangements 
in the WTO, has created uncertain ty for market access and compounded the vulnerability of the small 
economies. 
3. Smallness has hampered the efforts of the sm all economies and their producers, characterized 
by small market, limited production capacity and lo w competitiveness, to take full advantage of 
market access opportunities.  Time-bound waivers that ha ve been provided in the past with respect to 
preferential arrangements benefiting developing coun tries do not address the particular challenges 
confronting these small vulnerable economies, which face permanent and inherent constraints to the WT/COMTD/SE/W/11 
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 development of their export sectors.  Waivers therefore do not provide the stability and predictability 
of market access needed for small producers. 
4. Due to small size and vulnerability of these economies, it is therefore proposed that the 
preferential market access arrangements provided by WTO Members be grandfathered.  This has also 
been outlined in the proposal made by the Af rican Group for grandfathering of preferential 
arrangements as they pertain to Agriculture (WTO African Group:  Joint Proposal on the negotiations 
on Agriculture, G/AG/NG/W/142). 
5. Proposals 
 Grandfathering of Trade Preference Arrangements 
 
Existing arrangements available to products of export interest to trade preference dependent 
small economies shall be grandfathered in the WTO. 
 
 Trade Preference Erosion 
 
In view of the existing and potential erosion and loss of margins of trade preferences resulting from the liberalization process, adequate alterna tive arrangements shall be created to offset 
the inherent structural disadvantages of these economies.  These arrangements should include 
inter alia  specific grant and concessionary financing to be secured within the time frame of 
the Doha Round.  
B. I
NVESTMENT PREFERENCES  
6. Investment preferences are cr itical to the small economies in enabling them to meet the 
objectives of their development and trade policies.1 
7. Proposals 
 Investment Preferences 
 
- Measures to facilitate investment flows into these economies through long-term 
preferential investment facilities are to be  developed by appropriate regional or 
multilateral financial institutions  and implemented in a way as to support the full and 
effective participation of the small vulnerable economies in the multilateral trading system. 
- There should be focused efforts by trading partners to create appropriate incentives 
and flexibilities for investment in small economies. 
II. SUBSIDIES 
8. Small economies need measures to compensate fo r their inherent cost disadvantages and to 
attract investment.  However, whilst certain  measures may fall under the ambit of the SCM 
Agreement, which recognises in paragraph 1 of Arti cle 27 that "subsidies may play an important role 
in economic development progra mmes of developing country members", and thus provides some 
flexibility for developing countries in the appli cation of subsidies, the SCM Agreement does not 
provide the flexibility that small economies require  to address these inherent cost disadvantages and 
                                                      
1 Small economies have inherently high operatin g cost structures.  See Winters et al – Beautiful But 
Costly:  An Analysis of Operating Cost of  Doing Business in Small Economies,  Commonwealth and UNCTAD.  WT/COMTD/SE/W/11 
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 resource constraints.  Current WTO Rules (Article  XVI of GATT 1994 and Articles 3.1(a) and 27 of 
the Agreement on Subsidies and Countervailing Measur es) provide that their existing fiscal incentives 
are to be phased out. 
9. Proposals 
 Exemption from Export Subsidies 
 
It should be agreed that paragraph 1(a) of  Article 3 of the Agreement on Subsidies and 
Countervailing Measures shall not apply to smal l economies.  Accordingly, Annex VII should 
be modified to insert a new sub-paragraph (c) reading as follows:  
"each of the following small economies: 
Barbados, Fiji, Mauritius, Papua  New Guinea, Solomon Islands, 
Trinidad and Tobago        ............................... " 
 Reactivation of Non-Actionable Subsidies 
 
It should be agreed, firstly, that the provisions  of Part IV of the Agreement on Subsidies and 
Countervailing Measures be reactivated and, sec ondly, that the following sub-paragraph 8.1 
be included in favour of small economies: 
 
"subsidies which are specific within the meaning of Article 2 but which meet all of the conditions provi ded for in paragraphs 2(a), 2(b) 
or 2(c) and are applied by the following Members:  Barbados, Fiji, Mauritius, Papua New Guinea, Solomon Islands, Trinidad and 
Tobago". 
C. M
ARKET ACCESS NEGOTIATIONS  
10. The proponents would like to recall that proposals in respect of issues  in Agriculture and 
Non-Agriculture Market Access (NAMA) have al ready been made in the context of ongoing 
negotiations in Agriculture and NAMA.  The interests of these economies are reflected in 
WT/MIN(03)/W/17 and WT/MIN(03)/W/18.  The cont ribution to be made by the small economies in 
the area of market access in Agriculture and NAM A will be commensurate with their capacity which 
is limited by their inherent constraints and vulnerabilities. 
Conclusion 
 
 The proponents will, in due course, a ddress the other proposals in the document 
WT/COMTD/SE/W/3.   
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