RESTRICTEDWORLD TRADE
ORGANIZATIONTN/CTD/W/8
24 June 2002
(02-3471)
Committee on Trade and development
Special SessionOriginal:  English
SPECIAL AND DIFFERENTIAL TREATMENT PROVISIONS
Communication from Saint Lucia
The following communication, dated 14 June 2002, has been received from the above
delegation.
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SPECIAL AND DIFFERENTIAL TREATMENT IN THE USE OF SECTORAL
SAFEGUARD MEASURES - ARTICLE XVIII OF THE GATT 19941
1. WTO jurisprudence recognises that, "part of the  raison d'être  of the permissible application
of safeguard measures is, unquestionably, that of giving a WTO Member the possibility, as trade is
liberalized, of resorting to an effective remedy  in an extraordinary emergency situation that, in the
judgement of that Member, makes it necessary to protect a domestic industry temporarily."2
2. Certain less developed economies - particularly those with limited human resources and
overburdened administrations - lack the administrative capability to impose safeguards, antidumping
and/or countervailing duty measures in accordance with WTO rules.  As such, vulnerable developing
countries with small administrations have no effective means of countering unfair trade practices andare also by extension unable to protect their markets against import surges which threaten or cause
serious injury to vulnerable domestic industries.  The level of sophistication and expertise which
derives from handling hundreds of investigations annua lly will seldom, if ever, be acquired by small
WTO developing country Members with limited trade volume and human resources.
3. WTO Members, including small and vulnerable developing countries with limited
administrative capabilities, require an effective  remedy, viz. one which takes into account their
particular capacity constraints and is suitable to their circumstances.  Whilst technical assistance and
training play an important role in promoting the development of adequate institutional capacity, the
                                                     
1 The General Council mandate with respect to outstanding implementation-related issues and concerns
raised by developing countries includes the following reference:
- A complete review of Article XVIII shall be undertaken with a view to ensure that it
subserves the original objective of facilitating the progressive development of economies in developingcountries and to allow them to implement programmes and policies of economic development designed to raise
the general standard of living of their people. [JOB(01)/152/Rev.1, 27 October 2001, "Compilation of
Outstanding Implementation Issues raised by Members" GATT 1994 – Tiret 3.].The proposals herein advanced seek to enhance the effectiveness of Article XVIII of the GATT 1994, and inparticular Section C thereof, without prejudice to th e treatment of the broader mandate pertaining to the
outstanding implementation-related issues and concerns referred to above.
2 United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from
New Zealand and Australia , adopted on 16 May 2001, (WT/DS177/AB/R, WT/DS178/AB/R), paragraph 82.TN/CTD/W/8
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overwhelming administrative challenges posed to certain developing countries obviously require a
greater degree of flexibility and simplification of existing WTO rules.  The importance of available
"user-friendly", i.e. effective  trade instruments is of paramount and cross-cutting importance.
4. In principle, almost all WTO Members – irrespective of the level of sophistication of the
economy - advance similar economic justification for the application of safeguard measures.  Themajor difference with respect to the application of contingency protection measures arises both from
the pronounced severity of the potential impact of import surges on small developing markets,
underscoring the need for swift remedial action, coupled with the lack of administrative resources to
implement effective measures which are WTO-compatible.
The need for a more effective safeguard instru ment for less advanced developing countries
5. WTO rules permitting the application of safeguard measures include specific policy
instruments designed to facilitate economic development: the history of Article XVIII of the
GATT 1994 is informative.  Article XVIII of the GATT was redrafted in 1955 with a view to
addressing developing countries’ development needs.  Article XVIII was intended to provide a
suitable solution in the "application to the special circumstances of economic development of the
principle underlying Article XIX".
3
6. Under Sections A and C of Article XVIII of  the GATT 1994, a developing country Member
may, respectively, modify or withdraw concessions listed in its Schedule, or adopt a specific measure
affecting imports which derogates from the requirements of the GATT 1994, in order to promote the
establishment of a particular industry with a view to raising the general standard of living of its
people.4  Significantly, the notion of establishment is given a wide meaning and covers the
reconstruction of an industry destroyed or substantially damaged as a result of hostilities or natural
disasters.5  It also includes "… the development of new or the modification or extension of existing
production structures with a view to achieving fuller and more efficient use of resources in accordance
with the priorities of their economic development".6
7. Only a few developing countries have had recourse to Article XVIII.  Bangladesh’s
invocation of Article XVIII: Section C is the first such attempt since the WTO Agreements came into
force; no developing country has had recourse to Section A of Article XVIII.7  Where developing
countries have taken sectoral safeguard action they have had recourse to Article XIX of the
GATT 1994 and the Agreement on Safeguards.
                                                     
3 Report of the Review Working Party on "Quantitative Restrictions", L/332/Rev.1 and Addenda,
adopted on 2, 4 and 5 March 1955, 3S/170, 179-180, paragraph 36; see also "Safeguard Action for DevelopmentPurposes", L/4897, Decision of 28 November 1979, 26S/209.
4 See Article XVIII.7(a), GATT 1994.
5 See Interpretative Note to paragraphs 2,3,7,13 & 22.
6 "Safeguard Action for Development Purposes", BISD 26S/209 (1980).
7 See Secretariat Note, "Information on the Utilisation of Special and Differential Treatment
Provisions," WT/COMTD/W/77/Rev.1/Add.4, p.3.  Note  also that the measure available under Article XVIII:
Section A is limited to the renegotiation of concessions; a facility which is also available under Article XXVIII
of the GATT 1994.TN/CTD/W/8
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Proposal for enhancing the effectiveness of Article XVIII: Section C
8. The following proposals are advanced as a means towards enhancing the effectiveness of
Article XVIII: Section C of GATT 1994 as a trad e policy instrument which would address, inter alia ,
the needs of small and vulnerable developing country Members:
• Basic guidelines setting out the procedures for recourse to Article XVIII:  Section C should be
elaborated.  The guidelines would assist in clarifying certain procedural ambiguities in the text.
• The condition limiting Article XVIII:  Section C to circumstances involving "infant industries"
should be interpreted broadly to facilitate the implementation of sustainable economicdevelopment programmes in small and vulnerable developing country Members, including
circumstances where established industries are threatened by an absolute or relative increase in
imports.  Additionally, there should be clear reaffirmation that the duration and review of the
measure must be tied to achievement of the objectives for which the measure was imposed asopposed to any arbitrary absolute number of years.
• The right to compensation and/or retaliation should be waived for an initial period of application
given the limited ability of small and vulnerable developing country Members to providecompensatory concessions and the limited impact which restrictions would have on global trade.
8
It is worth noting that there is a lack of symmetry regarding the application of trade remedies.
Generally, the unilateral response of a larger nation against a smaller nation carries markedly
more impact than the reverse.
• Article XVIII:  Section C should be affirmed as a new distinct special and differential (S&D)
trade policy instrument for, inter alia , small and vulnerable developing country Members with
limited administrative capacities; and not merely a measure of last recourse.9  Small and
vulnerable developing country Members require effective trade policy instruments – considered
vital for successful liberalization – to promot e sustainable economic growth and development.
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8 Note that the Agreement on Safeguards waives the right of compensation within the first three years
provided that the safeguard measure imposed has been the result of an absolute rather than a relative increase in
imports and that such a measure conforms to the provisions of the Agreement;  See Agreement on Safeguards,Article 8.3.  This grace period does not extend to measures taken under Article XVIII of the GATT 1994; SeeArticle XVIII.7, 12 & 21, GATT 1994.
9 The condition stated in paragraph 13 of Article XV III, permitting recourse to Section C only where
"no measure consistent with the other provisions of this Agreement is practicable", appears particularly
restrictive; arguably, suggesting that this provision is a measure of last recourse.