RESTRICTEDWORLD TRADE
ORGANIZATIONTN/CTD/W/9
28 June 2002
(02-3626)
Committee on Trade and Development
Special SessionOriginal:  English
REMARKS OF THE UNITED STATES DELEGATION IN THE COMMITTEE
ON TRADE AND DEVELOPMENT SPECIAL SESSION ON SPECIAL AND
DIFFERENTIAL TREATMENT, 14 JUNE 2002
1. The United States appreciates the time and effort that delegations have given to the important
subject of special and differential treatment (S&D) and the mandate given to the Committee before
the Doha negotiations were launched.  We are interested in progressing the discussion and providing
some value-added to the negotiations now underway.
2. On 3 October 2001, the General Council gave a detailed mandate to the Committee on Trade
and Development (CTD) to review all S&D provisions with a view to making them operational.
Stuart Harbinson, then Chairman of the General Council along with one of the Deputy Director-
Generals, remarked that the project would be difficult given the time constraints Members imposed.We believe that the discussion has been rich thus far, and that we can begin to draw some conclusions
from the discussion to report to the General Council in July, as required.  That should leave us free to
focus our work on the broader mandate given to the CTD by Ministers in Doha Declaration paragraph
51 and the other work assigned to the CTD.
3. Discussions to date have correctly focused on the important balance of rights and obligations
that comprise the commitments of Members to the WTO.  Simply put, when looking at this complex
contract, we all recognize that this cannot be a situation where one group of WTO Members has onlyrights but is without obligations to the system.  Full access to opportunities of the multilateral trading
system can only be achieved through full participation in the multilateral trading system, which is a
matter of rights as well as obligations.  Sound economic and governance principles are at the core of a
rules-based trading regime, and as such, should be an integral part of every aspect of our review.
4. The Africa Group’s paper rightly points out that various forms of special and differential
treatment have been more effective than others.  The Secretariat’s paper on utilization rates is
interesting in this regard, and we would welcome fu rther work as it will help to inform our work, in
particular, with respect to the trade-related technical assistance plan that the WTO must approve for
2003.
• For example, it is noted early on in the Africa Group’s paper that transitions are somewhat
arbitrary in their application, largely because they are applied in a general manner rather
appropriately defined and tailored to individual needs.
5. This is an area of great interest to many Members at various levels of development and not a
north/south issue.  For example, we saw this during the discussions in areas such as subsidies and
trade-related investment measures.  As we design solutions to make S&D more effective, we need tocontinue to ensure that we have a dynamic, rather than static solution to S&D and one which is able to
produce benefits for those Members truly in need.TN/CTD/W/9
Page 2
6. Accordingly, we believe that it is appropriate to take a step back and focus on the underlying
objectives behind S&D.  There seems to be a difference of view among Members.  Some appear to
view S&D as an end in itself, while others perceive S&D as one of several tools to foster economic
development, adjustment and integration into the multilateral trading system.  This latter view is
reflected in many of the comments submitted by the Africa Group in its paper.
7. The drafters of the Africa Group paper wisely noted that existing S&D provisions were the
subject of negotiations in negotiated agreements and part of the overall settlement which created
certain expectations on all sides.
8. We would raise a number of questions for discussion, following the format of the Africa
Group’s papers.
On the issue of principles and objectives:
9. Special and differential treatment is recognized as an integral part of the system, and it is to
be provided consistent with an individual country’s trade, financial and development needs.  The
problem arises, however, as to who determines what is appropriate, and what methodology or
methodologies should be used for such a determination.  This is a difficult question which has not
been answered to date.
• Instead, the approach has been to take a more generalized approach to S&D, where any
"developing-country Member" can seek the benefits of S&D with little discipline ormonitoring.  Unfortunately, the underlying purpose of the transition to– ensure full
participation in the system of rights and obligations– is lost.
10. We would suggest that in considering principles, we will need to examine further the
relationship between adoption of sound economic policies and open trade policies with the utilization
of S&D provisions.  The certainty and predictability of adhering to a rules-based system, combined
with thoughtful recourse to S&D provisions are shown to be the best way to promote long-term
economic growth.
A few examples broadly illustrate the point.
Adopting WTO Rules Fosters Development
11. In the area of IPR, empirical evidence points to the fact that adoption of WTO consistent IPR
laws encourage economic growth and stimulate investment.  An International Institute for Economics
study found developing countries that implemented strong intellectual property protections under
TRIPS enjoyed an increase in technology transfer and investment, critical for economic growth.
12. Evidence suggests that local firms in developing countries tend to become more competitive
as intellectual property rights are strengthened.  Countries that maintain weak IPR standards tend to
foster uncompetitive firms that rely on counterfeiting and imitation.1
13. Adoption of a rules-based, transparent and open services regime is critical to the development
of infrastructure for trade to take place.  Th ose who have taken on commitments have been more
effective in their participation in the system.1
                                                     
1 Maskus, Keith. 2000.  Intellectual Property Rights in the Global Economy.  Institute for
International Economics.TN/CTD/W/9
Page 3
14. The World Bank's 2002 Global Economic Prospects 2 cites econometric evidence indicating
openness in services increases long-run growth prospects.  After controlling for other factors,
countries that fully liberalize their financial services sectors grew on average 1 percentage point faster
than those that did not.  If telecommunication and financial services are liberalized estimates suggest
countries grew on an average 1.5 per cent faster.
15. In the financial services area, the WTO Secretariat reports that countries affected by the Asian
financial crisis undertook macroeconomic stabilization and structural reform, including the unilateral
liberalization of their trade and foreign investment regimes.
• Several of these countries also strengthened their financial systems to encourage more
market-oriented lending practices, a process that has been supported by their participation in
the WTO Agreement on Financial Services.  Such commitments reflect the recognition that
liberalization of financial service sectors will help to avoid some of the practices that
contributed to the financial crisis and thereby facilitate a more efficient allocation of capital.3
16. In the manufacturing sector, developing country Members who have chosen to join the
Information Technology Agreement (ITA) have realized important benefits as they have opened their
own markets.
• The commitment to eliminate duties by 2000, or by 2005 at the latest with a transition, has
served to streamline crucial product costs and attract investors for domestic and export
production of this highly globalized industry.
• The nineteen non-OECD developing-country Me mbers who signed the ITA have a growing
trade surplus with OECD Members, totaling over $30 billion in key ITA products in 2000. 4
Trends Analysis Shows that International Trad e Grows in Economies that Adopt Outward Looking,
Open Strategies
17. Since the inception of GATT, the multilateral trading system has served those Members open
to international trade and investment flows to access global markets, diversify their economy, and
raise their standards of living.
18. Research by Dollar and Kraay finds that for developing countries most open to trade (as
defined by the top third of countries with high trade to GDP ratios) their economies grew faster-- at
about 3.5 per cent per capita in the 1990s compared to  negative growth in the rest of the developing
world.5  A few examples help to illustrate this point.  I hope my colleagues will not mind if I identify
a few countries where trade has become an essential part of GDP.
19. Malaysia has achieved considerable success in its efforts to diversify its economy – where it
has been successful in agriculture and light manufacturing, and is now a considerable force in the high
                                                     
2 The studies cited are found of page 77 of the World Bank’s Global Economic Prospects and the
Developing Countries, 2002: Making Trade Work for the World's Poor.
3 WTO Secretariat Report. 1999. Overview of Developments in the International.  Trading
Environment. (WT/TPR/OV/5).
4 OECD balances are calculated for harmonized HS6- digit ITA products (primarily in chapters 84, 85,
90). Exports minus imports were totaled for the 30 OECD reporting members with non-OECD partners that aremembers of the ITA using U.N. COMTRADE data for 2000.
5 Figures cited are taken from Peter Collier and David Dollar’s letter to the editor of the Financial
Times dated January 2, 2002.TN/CTD/W/9
Page 4
tech field.  Real per capita income has increased 86 per cent or $1,900 in nominal U.S. dollars since
1986.6  Trade flows of goods are over 300 per cent of gross domestic product.  Malaysia has lowered
applied average tariffs from 21 per cent in 1988 to 7 per cent in 1997.7
20. Costa Rica's economy has primarily been agricultural.  Recently, Costa Rica demonstrated
success in expanding tourism exports and attracting foreign investment to build an export-oriented
information technology industry.  Costa Rica was successful in part because of its commitment
(demonstrate by joining the ITA) to an open trading regime.  Costa Rica has increased real per capita
income by 31 per cent or $2,300 in nominal dollars since 1986.6 Trade flows of goods are
166 per cent of gross domestic product.  Cost Rica has one of the lowest applied average tariffs in the
region --about 3 per cent in 1999.7
21. Botswana's economy traditionally has been resource-based, but Botswana is now increasing
exports of banking services and tourism.  Real per capita income in Botswana increased 86 per cent or
by $2,150 in nominal dollars since 1986.6  Trade flows in goods are 200 per cent of GDP.  Applied
tariffs averaged 11 percent in 1996 8, still high, but lower than the Africa-wide average of
19 per cent.9
22. Notable, too, is the incontrovertible fact that small and medium sized enterprises can be
disproportionately harmed by a trading environment that is not rules-based.  And as we furtherdescribe later, the untapped economic potential trade opportunities between developing countries can
best be addressed through continuing progress toward full entry into a rules-based trading regime.
Effective Recourse to Transitions
23. We take on board the criticism of the Africa Group on the operation of transitions, and note
the suggestion that transition periods should be designed to ensure that the period is adequate to carry
out institutional change.
• Experience has shown us that while we may need to establish broad parameters for transitions,
we have been most effective when the transitions are tailored and take into account the
individual circumstances of the country in question.
24. Transition mechanisms however must lead to full integration in the WTO system and not to a
two-tiered system of obligations that would ultimately undermine the very purpose of transition
provisions.
25. For this reason we believe the WTO must use a flexible and individualized approach to
special and differential treatment to assist Members in the transition to openness.  Such an approach
would be the most effective way to strengthen the WTO system and support the development aims of
WTO Membership.
                                                     
6 Figures for real and nominal per capita income growth were calculated from 1986 to 1999 using data
from the IMF’s World Economic Outlook Gross Domestic Product tables.
(www.imf.org/external/pubs/ft/weo/2000)
7 Merchandise trade to GDP ratios and average app lied tariffs are from World Development Indicators,
2001. World Bank. tables 6.1 integration in the global economy and table 6.6 tariff barriers.
8 Applied tariff average is from U.S. Trade and Investment with Sub-Saharan Africa. USITC
publication 3476, second a nnual report. pp 76.
9 Applied tariff average is taken from an IMF article on African
Trade.( http://www.imf.org/external/pubs/ft/fandd/2001/12/index.htm )TN/CTD/W/9
Page 5
26. We do not believe that the debate on mandatory vs. nonmandatory provisions will help us in
making S&D more operational.
27. The Agreement on Customs Valuation is a good example of constructive engagement that
combined work on rules with technical assistance and capacity building.  The Agreement on Customs
Valuation (CVA) provides developing-country Members with special transitional measures, allowingindividual implementation deadlines.
• While many developing-country Members undertook timely implementation of the
Agreement, the Committee continues to address re quests for special and differential treatment.
Members can request either a transitional reservation for implementation methodology or a
further extension of time for overall implementation.  The Committee Members work together
to develop detailed decisions based on work programs submitted by each requesting Member.
28. The key, as we have found, is that the transitions and work reflect a close, cooperative
consultation between the country, its customs serv ice and its industries to find a way forward that
helps build the base for a transparent, open customs regime which is an essential part of the
infrastructure needed to have trade contribute to economic growth.  A few examples are instructive.
29. Our colleagues in Tanzania, despite their least developed status, sought the Committee's
agreement to a one-year extension to delay implemen tation of the Agreement.  Tanzania asked for the
extension to train its customs personnel and familiarize its business community with the new
valuation methodology.
• The extention was granted, and a work program that ensured effective implementation and
assistance was established at the same time.
30. According to its specific-needs, Jamaica was granted a one-year extension to pass legislation
to establish new customs valuation regulations and train its Customs service. At the end of this
extension, Jamaica was then granted a two-year reservation to use minimum values in order to address
industry-specific issues.
31. Bolivia was granted a 15-month extension to develop valuation regulations.  Through the
Committee's progress reporting mechanism, Members learned that Bolivia implemented theAgreement ahead of its 15-month extension.
32. Kenya is implementing the Agreement without an extension.  Kenya's implementation was
verified through its notification of its domestic implementing legislation and the Committee checklist.
33. This Committee's work demonstrates a cooperative effort to individualize special and
differential treatment among Members and to work toward practical methods to address the specificproblems.  This cooperative effort can also be used to identify technical assistance needs, and thus the
Committee continues to take an active role in exploring how best to ensure effective technical
assistance, including meeting post-implementation needs of developing country Members.
34. This leads us to support the idea raised by the Africa Group that each WTO body, within its
mandate, should be responsible for monitoring the application of Special and Differential Treatment
and include a clear schedule of progress.
35. The bodies responsible for each agreement need to be on the forefront of ensuring that S&D
treatment issues are addressed, and the CTD should continue to be tasked to monitor the overall
situation.TN/CTD/W/9
Page 6
The Importance of South-South Trade to Economic Growth and Development
36. Evidence is mounting that trade among non-OECD countries is an area for substantial growth,
if only the barriers are removed.  Research cited in a recent World Bank paper estimates that70 per cent of duties on developing-country exports of manufactures are levied by developing
countries. 
10
37. Most income gained for developing countries are from liberalization of other developing
countries.  According to the World Bank's Global Economic Prospects 2002  "...the greater source of
income gain among developing countries is from their own reforms.  Thus full trade reform by
developing countries generates an income gain of $121 billion (in the static) simulation, some two
thirds of their gains from global trade reform."11  It is $184 billion when both developed and
developing countries fully liberalize.  Thus the inclusion of liberalization by developed countries only
provides an additional $63 billion in additional income for the developing countries.
38. In the dynamic simulation, full trade reform by only the developing countries resulted in
increased income of $424 billion dollars compared to an increase of $539 billion if full trade reform
took place by developed and developing countries.  Thus the inclusion of liberalization by developedcountries only provides an additional $115 billion income for the developing countries.
12
39. Three-quarters of potential income gains in agricultural trade negotiations derive from
liberalization in developing markets.
40. The World Bank's Global Economic Prospects reports the largest gains from merchandise
trade liberalization are to be realized from eliminating all forms of agricultural protection.  Usingdynamic models of negotiation results for Agriculture, full liberalization in agriculture by just the
developed countries would result in $99 billion in additional income for developing countries.  If
there was global liberalization, the developing countries would gain $390 billion in additional income.
Even if only the developing countries were to fully liberalize, they would receive $294 billion in
additional income.  This is $195 billion more than if just the developed countries fully liberalizedagriculture.
12
The Role of Technical Assistance in the Process
41. The Africa Group has focused on the important contribution of commitments to good
governance and openness to the broader development agenda, and the provision of assistance
programs.
42. We agree that technical assistance should be considered a cooperative endeavor involving
shared responsibilities by both donor and recipient Members.
43. We take particular note of the suggestions in Annexes I and II of the Africa Group’s
submission and believe that they merit further discussion.  We are particularly interested in ensuring
                                                     
10 Martin, Will. Trade Policies, Developing  Countries, and Globalization. World Bank.
October, 2001.
11 The quotation is found of page 167 of the World Bank’s Global Economic Prospects and the
Developing Countries, 2002: Making Trade Work for the World's Poor.
12 Data is taken from the table on page 171 of the World Bank’s Global Economic Prospects and the
Developing Countries, 2002: Making Trade Work for the World's Poor.TN/CTD/W/9
Page 7
the effective utilization of resources.  Feedback of the type contained in the Annex is an important
contribution from the CTD, particularly as we look to the 2003 plan.
44. In some cases, the suggestions go well beyond th e competence of the WTO, and are part of a
larger discussion on coherence.  We should discuss how best to share these views while fully
respecting the mandates and prerogatives of other institutions.
Suggested Recommendations/Conclusions for the July General Council Meeting:
45. The CTD must begin to shape its report to the General Council in July, and consider how to
contribute to the on-going negotiations.  Based on our work to date, we believe the CTD will need to
give some practical, operational direction to the work underway in the negotiations , continually taking
into account the underlying objectives of S&D.  Among the recommendations, we identify thefollowing possible recommendations for the Committee’s consideration:
(a) In light of the large number of proposals submitted at this stage, the Committee
should agree that the Chair should provide each of the Chairs of the relevant Special
Sessions, Negotiating Bodies, and Committees the proposals to date submitted by
Members, so that they may be taken into account as the discussions in negotiationsproceed;
(b) That in his report to the General Council that the Chairman acknowledge that the rich
discussion has shown that there are a wide range of issues that need to be further
explored in the appropriate bodies, including and in some cases drawing upon the
Africa Group paper:
(i) crafting appropriate provisions to ensure the effective integration of Members
into the existing Agreements now under negotiation;
(ii) ensuring appropriate flexibility in de termining parameters for transitions in
the Agreements given the varied experiences and needs of Members;
(iii) that the work on utilization be taken into account as the trade related
technical assistance work plan for 2003 is developed;  and
(iv) establish an appropriate monitoring mechanism, during the course of
negotiations, to review the application of S&D.
(c) That the Chair suggest that the Annexes on technical assistance provided by the
Africa Group be further discussed with a view to discussions the ideas with the
individual bodies before the end of the year.
(d) That the Chair confirm that CTD Members support the goal of a single undertaking as
it was agreed in the Uruguay Round.  The ultimate objective is to ensure a single set
of rights and obligations to which all Members are accountable.
(e) That any further discussion of a “framework for S&D” which was suggested by a
Member before Doha and noted in the Ministerial Declaration, will require us to
explore mechanisms to ensure that Members no longer in need of S&D treatmentrelinquish such treatment in an appropriate manner, linking to similar points on
graduation during our discussion this morning.  A further discussion of principles and
objectives should be considered in the this light.TN/CTD/W/9
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(f) That the CTD recommend to the General Council that it continue to explore its work
on objectives and principles and report periodically to the General Council to obtain
further direction and guidance in line with the rhythm of the negotiations.
(g) That the CTD, working with the Sub-Committee on Least-Developed Countries,
explore further the specific areas where S&D will contribute to the greaterparticipation of the least-developed countries in the trading system.
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