WORLD TRADE
ORGANIZATIONTN/CTD/W/15
16 September 2002
(02-4889)
Committee on Trade and Development
Special SessionOriginal:  Spanish
ORGANIZATION OF WORK
Communication from Paraguay
The following communication, dated 12 September 2002, has been received from the above
delegation.
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I. TASKS AND NEW DEADLINES
1. There are two deadlines to be met and two very important tasks to accomplish if the Special
Session of the Committee on Trade and Development is to proceed expeditiously to fulfil its mandate.
First, Members should provide detailed responses  to the various Agreement-specific proposals no
later than 31 October 2002, and second, Members, via this Committee, should report to the
General Council with clear recommendations for a decision no later than 31 December 2002.
II. PROPOSAL FOR STRUCTURING AND ORGANIZING THE DISCUSSION ON
SPECIAL AND DIFFERENTIAL TREATMENT
2. In view of the above, and to order matters for consideration in appropriate clusters, we have
five major themes or matters to be settled and decided, namely:
(a) To analyse and examine the various cross-cutting issues and proposals, according to
the terms established in the Report of the Special Session of the Committee on Trade
and Development to the General Council (TN/CTD/3), Annex II, "Table of
Submissions by Some Members on Cross-Cutting Issues";
(b) to determine, for the General Council's approval, the functions, structure and terms of
reference of the Monitoring Mechanism for special and differential treatment, takinginto account the proposals made by the African Group;
(c) to examine other proposals on institutional arrangements submitted by the African
Group and the Group of Least-Developed Countries (LDCs);
(d) to present to the General Council proposals on criteria for technical and financial
assistance and training, for inclusion of the agreed elements in future technicalassistance plans; and
(e) to consider how special and differential treatment may be incorporated into the
architecture of WTO rules, in accordance with Paragraph 12.1(iii) of the Ministerial
Decision on Implementation-Related Issues and Concerns.TN/CTD/W/15
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3. The delegation of Paraguay therefore proposes that, within the parameters of the mandate and
the recommendations approved by the General Council, on the basis of the Report of the Committee
on Trade and Development and in order to address theme (a) above – i.e. to analyse and examine the
various cross-cutting issues and proposals – we shou ld organize the work by dividing the topics and
analysing them under the following two headings:
Heading 1. To analyse and examine the operativeness, accuracy and effectiveness of all the
specific Agreements, with a view to making them more precise and to strengthening
them if Members conclude that there is a need to do so.  The analysis and examination
should be conducted on the basis of the proposals already made, as well as those
arising over this new period and those presented in response to proposals already
made.
Heading 2. To analyse and examine the consequences and effects of applying special and
differential treatment to developing countries within the context of the Enabling
Clause.  In this case, the analysis and examination should be conducted according to
specific modalities and criteria, including:
(a) those of an economic nature:  (i) competitiveness criteria;  (ii) specialization
and development indices;  (iii) sectoral and country graduation;
(b) those of a political nature:  (iv) linking the benefits to non-trade issues, such
as environmental and social (labour) standards;  (v) intellectual propertyrights;  and (vi) the fight against narcotic drugs.
4. Members have agreed that the deadline for the above is 31 October 2002.
III. FOCUS AND BACKGROUND OF THE AIMS AND PURPOSES OF SPECIAL AND
DIFFERENTIAL TREATMENT
5. When the GATT was created, the primary objective was to build a "freer and fairer trading
system" through the elimination of tariffs and other barriers to trade.  The GATT functioned on the
basis of following three principles:
(a) Application of most-favoured-nation treatment to all Members; multilateralism and
hence non-discrimination;
(b) expansion of trade through the reduction of trade barriers; and
(c) unconditional reciprocity between all Members.
6. Experience showed that such principles did indeed contribute to freer trade but that
mechanisms needed to be established to achieve the other, equally crucial, objective of "fairer trade".
In recognizing such a need, the developed countries affirmed their belief that it was fair and equitable
to accord special and differential treatment to the developing countries, in order also to ensure the
latter's full and effective integration in the multilateral trading system.
7. In the substantive discussions on special and differential treatment, Members also agreed that
it should not raise new barriers to trade for other contracting parties.  This led to the adoption of the
Enabling Clause as a mechanism for improved management of the Generalized System of Preferences
(GSP).  The Enabling Clause authorizes " preferential tariff treatment accorded by developed
contracting parties to products originating in developing countries in accordance with the GSP ", as
agreed and harmonized under the Decision of 25 June 1971 on the Generalized System ofTN/CTD/W/15
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Preferences, which provides that preferences must be " generalized, non-reciprocal and non-
discriminatory ".
IV. INTERACTION AND IMPACT OF THE IMPLEMENTATION OF WTO
PRINCIPLES AND RULES
8. Some delegations seeking to help developing countries make the best possible use of special
and differential treatment provisions hold that it is wrong to take the approach that such treatment
should apply in a generalized, non-reciprocal and non-discriminatory manner .  The argument they use
to explain their doubts about the validity of this approach is that the developing countries stand at
different levels of development.
9. The multilateral trading system is based on principles, rules and regulations that were agreed
and are now in force.  As the Paraguayan delegation sees it, all Members – i.e. both developed and
developing country Members – must comply and ensure compliance with the existing rules andregulations of the multilateral trading system.
10. In addition to the principle of non-discrimination, these rules among others establish three
levels of economic development of Members, that is, the developed countries, the developing
countries and the least-developed countries.  This is a matter on which we agree.
11. The delegation of Paraguay does not see special and differential treatment as an end in itself.
Special and differential treatment is a means of building a freer and fairer trading system; it should
thus provide positive answers for all the developing countries.
12. We therefore agree that some of the waivers from Article I of the GATT are necessary and are
in conformity with the provisions of the Enabling Cl ause, such as those provided for in paragraph 6 of
the Clause:  " Having regard to the special economic di fficulties and the particular development,
financial and trade needs of the least developed countries (LDCs) … ".  This is confirmed in
paragraph 8, which states that "[ p]articular account shall be taken of the serious difficulty of the least
developed countries in making concessions and contributions in view of their special economic
situation and their development, financial and trade needs ".
13. In this context, it is worth recalling the Paraguayan delegation's clarification, distributed as
document TN/CTD/W/5/Add. 1, which states that "[t]he delegation of Paraguay sees no contradiction
between the principle of non-discrimination and the principle of flexibility.  Non-discrimination is the
general norm and is based on Article I of the GATT 1947, i.e. equality of treatment based on the
most-favoured-nation clause.  It should also be remembered that "the elimination of discriminatory
treatment" (non-discrimination), apart from being rooted in a principle recognized in various
Decisions and Agreements of the WTO multilateral system, constitutes an objective clearly expressed
in the third paragraph of the preamble to the 1947 General Agreement on Tariffs and Trade.
14. Flexible action is possible under this basic principle and objective, but the limit to such
flexibility is that it should not cause injury to thir d parties, because such injury, if it occurs, destroys
the balance between the principles of non-discrimination and flexibility.  It is unacceptable that, in
order to help some, allegedly under the principle of flexibility, others should be injured.  This is
discrimination, not flexibility.
15. As Members of the WTO, we all accept the principle of flexibility, but we do not accept that
the application of that principle to some should cause  injury to others.  If such injury occurs, two
optional lines of approach are available to the aggrieved developing country Member:  (i) The
adoption of opposition to the waiver without applying flexibility; and (ii) the acceptance of reasonable
compensation for a lesser injury, involv ing the application of flexibility.TN/CTD/W/15
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16. The implementation of existing trade standards and rules, without discrimination and by
applying positive flexibility, is a guarantee of increasing stability that encourages nations to advance
along the road towards trade liberalization.  This is how the Paraguayan delegation sees the question
of compatibility and balance between these two principles in accordance with WTO rules and
standards, within a fair, equitable and predictable trading framework.
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