WORLD TRADE  
ORGANIZATION  WT/COMTD/SE/W/13 
23 May 2005 
 (05-2082) 
Committee on Trade and Development 
Dedicated Session Original:   English 
 
 
WORK PROGRAMME ON SMALL ECONOMIES 
 
An Approach to Framing Responses  
to the Trade-Related Problems of Small Economies  
 
Communication from Antigua and Barbuda, Barbados, Bolivia, Cuba, Dominica,  
Dominican Republic, El Salvador, Fiji, G renada, Guatemala, Honduras, Jamaica,   
Mongolia, Nicaragua, Paraguay, Solomon Islands, St. Kitts and Nevis,  
St. Lucia, St. Vincent and the Grenadines and Trinidad and Tobago 
  
 The following communication, dated 20 May 2005, is being circulated at the request of the above delegations.  
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Introduction
 
 
 Paragraph 35 of the Doha Declaration reads as follows:  "We agree to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies.  
The objective of this work is to frame responses to  the trade-related issues identified for the fuller 
integration of small, vulnerable economies into th e multilateral trading system, and not to create a 
sub-category of WTO Members."   
 In addressing the trade-related issues, Members have adopted an approach that seeks to avoid 
forming any new category.  The Dedicated Session has reported to the General Council accordingly at 
its meeting of 15 February 2005.   In this regard, Members will recall that decisi ons based on the needs and concerns of certain 
developing countries have been taken into account in the GATT/WTO at the Ministerial Conferences 
and at the General Council.  Members will recall the following: 
(i) In the Uruguay Round the characteristics of net food importing developing 
countries were taken into consideration. 
(ii) In Paragraph 11 of Annex A of the July 2004 Decision, Members recognized 
that "developing countries that allocate almost all de minimis  support for 
subsistence and resource poor farmers will be exempt". 
(iii) In Paragraph 1(d) of the July 2004 Decision provides, under the rubric of 
Other Development Issues, there is mention that "special attention shall be given to the specific trade and develo pment related needs and concerns of 
developing countries,….. (T)he trade-related issues identified for the fuller 
integration of small, vulnerable ec onomies into the multilateral trading 
system, should also be addressed , ……" WT/COMTD/SE/W/13 
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Background
 
  Document WT/COMTD/SE/W/12 contains an indicative list of characteristics and trade-related problems specific to small, vulnerable economies. 
 
 Members have agreed to explore a character istics-based approach whereby characteristics 
capable of identifying small, vulnerable economi es have been discussed.  Members have also 
discussed some problems which could reasonably result from the combination of characteristics.  Members also understand that none of these characte ristics and problems by itself can be assumed to 
be unique to small, vulnerable economies.  Howe ver, the proponents have argued that it is the 
combination and intensity of several characteristics,  and the combination and intensity of several of 
these problems that give rise to vulnerability in sm all economies.  Small, vulnerable economies also 
suffer from a lack of resilience and exhibit difficu lty in adjusting when faced with these problems. 
 
The Way Forward
 
  The determination of Ministers at Doha and Members in the July 2004 Decision to achieve results from this work programme is clear.  Members are now seeking to make progress in the 
negotiations in all areas in an attempt to arrive  at a July 2005 "First Approximation" of the 
Hong Kong China Ministerial Conference results in December 2005. 
 Being aware that Paragraph 35 of the Doha Decl aration states, in part, that "(T)he General 
Council shall review the work programme and make  recommendations for action to the Fifth Session 
of the Ministerial Conference," the proponents ar e presenting this paper as a basis for discussion and 
in preparation of a report to the General Council as  part of the process in the lead up to the next 
Ministerial Conference in Hong Kong. 
 Taking into account document W/12, as well as the debates around it, and recalling the 
specific proposals tabled in the Committee on Tr ade and Development Dedicated Session by the 
proponents in W/3, W/10 and W/11 within the context of the mandated work programme, it is 
intended to pursue our work as follows : 
 
(i) Consider this paper as providing a b asis for a CTD report to the General 
Council; 
(ii) Pursue examination in the CTD of more concrete responses to the 
trade-related problems of small, vulnerable economies with a view to also providing more detailed inputs to th e relevant negotiating bodies after 
July 2005 as directed by the General Council; 
(iii) Continue examination of the responses in the CTD as well as their progress in 
the negotiating bodies where relevant  and inform the General Council 
accordingly. 
 On the basis of the progress made in the Committee on Trade and Development and 
recommendations from the General  Council, the  Sixth WTO Ministerial Conference shall adopt 
decisions for the meaningful implementation of concrete measures designed to address the problems 
of small, vulnerable economies and to ensure thei r fuller integration into the multilateral trading 
system.    WT/COMTD/SE/W/13 
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 Considerations for Responses to Trade-Related Problems  
  The following indicative list of considerations  has been identified as bearing heavily on the 
insignificant share of small, vulnerable economie s in international trade as well as their limited 
capacity to participate in the WTO negotiations:     
 
1. In the Uruguay Round small, vulnerable econom ies undertook commitments, some of which 
have resulted in severe difficulties.  
 2. In general small, vulnerable economies do not apply trade-distorting domestic support 
policies or subsidies.  Even where  there are legitimate possibilities to apply support policies, 
de minimis , or green box measures, these economies do not have the necessary financial 
resources and capabilities to do so.  
 
3. Small economies have simple and transparent tariff structures.  
 
4. Tariff peaks and tariff escalation affect sma ll, vulnerable economies as they impede the 
diversification and exportation of products with high value added.  
 
5. The agricultural and fisheries sectors in small, vulnerable economies play key roles in the 
attainment of their economic de velopment goals, in particular with regard to food security, 
rural development, exports and employment.  The volatility of international prices for 
products exported by small, vulnerable econom ies constitutes an important factor of high 
vulnerability.  The very limited participa tion of the small, vulnerable economies in 
international markets for agricultural and fisher ies products is itself an indication that they 
cannot create distortions in the market and therefore concessions within the rules cannot 
affect the multilateral system.  In addition, the special safeguard in agriculture (Art. 5 of the 
Agreement on Agriculture) does not sufficiently  respond to the realities of the small, 
vulnerable economies.  
 
6. The very limited participation of small, vulnera ble economies in international trade prevents 
them also from effectively defending their export interests in cases of modification of 
schedules under Art. XXVIII of GATT 1994 and in  the renegotiation of tariff concessions, 
which under current arrangements recognize only substantial interest defined narrowly.  
 
7. The high transaction costs, the isolation of island countries and the environment surrounding 
land-locked countries, are basic problems for small developing economies.  Thus, the 
potential of the industrial sector to provide ne w development options for small and medium 
enterprises, for employment generation and high er exports, and for the integration of women 
to the productive sectors cannot be achieved.  
 
8. The size of small and medium sized enterp rises (SMEs) varies significantly across 
Members' jurisdictions.  In the case of small economies, their SMEs principally comprise 
'micro' or very small enterprises which face particular challenges in terms of human 
resources, market development and financial constraints.  
 
9. Small, vulnerable economies have a specific and urgent need for technical assistance and 
capacity building.  It is recalled that paragr aph 38 of the Doha Ministerial Declaration 
provides for priority to be accorded to small,  vulnerable economies in the delivery of WTO 
technical assistance. 
 
 WT/COMTD/SE/W/13 
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 10. The WTO Agreement on Subsidies and Countervailing Measures contains provisions 
resulting in the low cost incentives granted by  the small, vulnerable economies, which are 
essential for the development of export oriented industries, being unfairly treated as prohibited subsidies. 
 
11. In small, vulnerable economies, employment opti ons are few and hence in  general, they face 
high levels of unemployment.  Small, vulnera ble economies have an interest in developing 
their services sector as a means of enhancing employment both on-shore as well as off-shore.  
 
Elements of Responses
 
  In view of the above considerations, Me mbers are asked to examine the following non-
exhaustive elements proposed as components of a ho listic response to the trade-related problems of 
the small, vulnerable economies.  Concrete r esponses along these lines will facilitate the enhanced 
participation by small, vulnerable economies in th e multilateral trading system.  These elements will 
be further elaborated at a later stage:  
1. Small, vulnerable economies have issues of s ubstantial interest in the agriculture and 
NAMA negotiations in terms of market access,  including special flexibilities and economic 
development broadly.  These issues should be  addressed satisfactorily so that small, 
vulnerable economies can participate meaningfu lly in the multilateral trading system in 
accordance with their level of development. 
 
2. Special priority will be accorded to the services and products of export interest to the small, 
vulnerable economies, especially to those that show a real potential to increase their exports.  
 
3. Market access for service suppliers of sectors and modes of interest to small, vulnerable 
economies will be ensured in order to promote the development of their services sector so 
that they can contribute more substantially to employment creation, revenue generation and 
overall growth.  
 
4. It is important that special efforts be made to  facilitate the full range of services exports of 
small, vulnerable economies which can assist in compensating for their size and geographical disadvantages.   
 
5. With regards to subsidies and countervailing me asures, decisions should be taken in order to 
allow small, vulnerable economies to better r espond to the needs of their small business 
sector, and further their trade and economic  development objectives in the multilateral 
system. 
 
6. With regard to the mandated work on rul es governing regional integration schemes, the 
special problems and characteristics of small,  vulnerable economies should be taken into 
account. 
 7. The specific needs of the small, vulnerable economies should be addressed in the trade 
facilitation negotiations bearing in mind that sm all ports will always have inherently high 
operating costs relative to the volume of goods processed.  Special consideration should be 
given to the provision of technical assistance  and capacity building for small, vulnerable 
economies.  The specific elements of the trad e facilitation mandate regarding financing and 
costs should also be meaningfully addressed. 
  WT/COMTD/SE/W/13 
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 8. The specific needs of the small, vulnerable,  landlocked economies should be addressed in 
the trade facilitation negotiations bearing in mind that these small economies have no 
seaports and will therefore always have inherent ly high transit and other costs relative to the 
volume of goods processed. 
 
9. In both the multilateral negotiations on rules and in the bilateral negotiations on market 
access commitments, acceding small economies will not be required to undertake commitments greater than those of WTO Members at a similar level of development.  Guidelines for the accession of small economies will be proposed, taking into consideration 
existing guidelines and further proposals from the small economies delegations. 
 
10. Special attention should be given to addr essing the outstanding implementation issues of 
interest to small, vulnerable economies including the issue of the redistribution of negotiating rights in favour of these small e xporting members in the trade negotiations.  
 
11. The limited administrative capacity of small, vulnerable economies makes it difficult for 
them to comply with all the detailed and complex WTO rules.  For example, they are unable to effectively (a) use the provisions of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes (DSU) and (b) to enforce the decisions of the DSB.  
Special attention should be given to these matters. 
 
12. In accordance with Paragraph 38 of the Doha Ministerial Mandate and given the limitations 
in the human and institutional capacities of sma ll, vulnerable economies, priority shall be 
accorded to the provision of supply side capac ity building and human resource institutional 
development in particular. 
 
Conclusion
 
  The elements of responses outlined in this  paper take into consideration the unique 
circumstances of small economies in regard to their market share a nd participation in the multilateral 
trading system as well as their lack of resilien ce.  These responses do not attempt to minimize the 
flow of special and differential treatment to develo ping countries, but merely to build on them.  These 
responses are also not intended to, and cannot in any way, undermine the special treatment being 
extended to LDCs.    Recognizing that trade is not a zero-sum ga me, the paragraph 35 mandate should only be 
interpreted as offering an opportunity for Members to  recognize the particular circumstances of the 
small, vulnerable economies and to frame responses accordingly.  
  This opportunity should also facilitate south- south trade in a manner that creates new and 
complementary trade rather than diverting or in any way disrupting north-south trade.   Keeping in view that the fundamental objective of the Work Programme is to integrate small, 
vulnerable economies into the multilateral tradi ng system, the implementation, compliance and 
transparency of this exercise will be review ed under the auspices of the General Council. 
 
 Members are therefore invited to consider these elements of responses to the problems of 
small, vulnerable economies in the Work Programme  as well as within the overall balance of the 
outcome of the Doha Development Agenda. 
 
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