. /.WORLD TRADE
ORGANIZATIONTN/CTD/W/10
8 July 2002
(02-3800)
Committee on Trade and Development
Special SessionOriginal:  English
SPECIAL AND DIFFERENTIAL TREATMENT PROVISIONS
Communication from Hungary
The following communication dated 27 June 2002 has been received from the above
delegation.
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1. The delegation of Hungary wishes to submit a number of written question concerning the
proposal of Paraguay circulated as document TN/CTD/W/5 which was first discussed at the Special
Session of the Committee on Trade and Development on 14 June 2002.  These questions are aimed at
a better understanding and clarification of certain aspects of the proposal and in no way prejudges the
position of Hungary.  It would be most appreciated if the answers were also given in a written form,
preferably well in advance of the next Special Sessio n in order to enable delegations to reflect on their
contents.
2. As the Hungarian delegation understood from the proposal, the introductory statement as well
as from answers given to the questions by the distinguished Ambassador of Paraguay, the basic goal is
to ensure the implementation of the Enabling Clau se (L/4903) in such a way as to prohibit any
differentiation (discrimination) among developing countries in access to the benefits of national GSP
regimes.  Paragraph 10 of the proposal specifies six of the criteria sometimes used by GSP-providingcountries for differentiation among developing countries, reliance on which is considered to be illegal.
The position of Paraguay seems to mean that in contrast with the present situation when GSP regimes
are shaped in an autonomous manner and the providers of such benefits decide whether and under
what conditions these are provided, not just the reliance of GSP regimes on any of the six criteria
would become illegal, but even the possibility to re quest waivers to such effect would be foreclosed.
3. Such consequences of the proposal could have major implications for Hungary for a number
of reasons.  Our country is at an intermediate state of economic development with a per capita GDP
level of about US$5.000; this puts Hungary above most developing countries in respect of this basic
index of development, but well below develope d economies and even many of the more advanced
developing countries.  Still, the Hungarian Government decided decades ago in an autonomousmanner to operate a rather generous GSP system, with tariff preferences for a wide range of products
produced by developing countries and with full duty-free access, without any limitation for all
products of LDCs.  However, due to our intermediate level of development, there is a limitation on
the beneficiaries based on their level of development:  the Hungarian legislation maintains the right
not to provide GSP benefits to countries with higher levels of economic development – as measuredin per capita GDP – than that of our country.  Thus the Hungarian GSP regime contains at least two of
the criteria mentioned in paragraph 10 of the proposal of Paraguay:  the use of development indices
and graduation, which is considered by the proposal to be discriminatory in nature and thus proposed
to be prohibited.TN/CTD/W/10
Page 2
4. With the above considerations in mind, the H ungarian delegation puts forward the following
questions:
1. In order to prevent discrimination among developing countries by excluding any of
them from the beneficiaries of national GSP regimes, does Paraguay foresee the
establishment of a standard list of developing countries, having the right to receiveGSP benefits?
2. Would the present practice of self-election of the status of developing countries be
retained or would there be a multilaterally agreed List of GSP Beneficiaries?
3. How would those cases be treated when some countries on a standard list of GSP
beneficiaries have a higher level of development than that of the country providingthe GSP benefits?  With criteria related to development indices and graduation to be
prohibited, would the latter countries be under obligation, enforceable through the
WTO dispute settlement system, to provide trade preferences to richer, more
developed countries than themselves?
4. If the answer to question 3 is affirmative,  how could such an obligation be justified
from an economic and political aspect?
5. Does it follow from the proposal that if a GSP providing country wishes to avoid
granting such preferences to richer countries, the only way is to abolish its schemealtogether, or does Paraguay see any legal way to limit the availability of preferences
to those WTO Members with a lower level of economic development?
6. Is it a correct understanding that Paraguay proposes to prohibit even the submission
of a request for a waiver aimed at differen tiation among developing countries?  If so,
is a specific change to this effect of the WTO rules governing the requests for a
waiver foreseen?
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