RESTRICTED
WORLD TRADE WT/COMTD/SE/M/7
16 July 2004
ORGANIZATION
(04-3049)
Committee on Trade and Development
Seventh Dedicated Session
NOTE ON THE MEETING OF 12 MAY 2004
Chairman: H. E. Mr. Trevor Clarke (Barbados)
Subjects discussed:
A. ADOPTION OF THE AGENDA ........................................................................................................ 1
B. WORK PROGRAMME ON SMALL ECONOMIES ............................................................................. 1
(i) Submission by Bolivia, Mongolia and Paraguay (WT/COMTD/SE/W/10) ................................ 1
(ii) Submission by Barbados, Fiji, Mauritius, Papua New Guinea, Solomon Islands and
Trinidad and Tobago (WT/COMTD/SE/W/11) ........................................................................... 3
A. ADOPTION OF THE AGENDA
1. The draft agenda for the meeting as contained in Airgram WTO/AIR/2303/REV.1 of
6 May 2004 was adopted.
B. WORK PROGRAMME ON SMALL ECONOMIES
2. The Chairman said this item was discussed at the last meeting of the Dedicated Session on
17 October 2003. He said since then two new submissions had been received. He asked the
representative of Paraguay to introduce his proposal in document WT/COMTD/SE/W/10 on behalf of
Bolivia, Mongolia and Paraguay.
(i) Submission by Bolivia, Mongolia and Paraguay (WT/COMTD/SE/W/10)
3. The representative of Paraguay said his country, Bolivia and Mongolia had submitted a
document which sets out proposals that have emerged in the course of various discussions held among
land-locked developing countries in the WTO. The proposal is designed to contribute to the debate
and to fulfill the mandate in paragraph 35 of the Doha Ministerial Declaration, namely to prepare a
WTO Work Programme on Small Economies. He explained that he did not wish to repeat what his
delegation had said on past occasions regarding the terms of the Almaty Ministerial Declaration and
the statement made in Cancún by the Ministers of land-locked developing countries concerning the
need to address in the WTO the particular difficulties facing land-locked developing countries. He
referred to the latest high-level meeting of the United Nations Economic and Social Council on
26 April 2004 and quoted from the report as follows: "At key multilateral forums in the last 12
months, the international community has emphasized the political will that is required for the rapid
implementation of actions agreed to in the [Monterrey] Consensus... in this regard, the
marginalization of the least-developed countries, land-locked countries and small economies in world
trade underscores the importance of addressing their particular needs". He said land-locked
developing countries wished to make the following specific proposals for inclusion in the Programme
on Small Economies. On market access, it was necessary to provide tariff-free and quota-free access
for all exports of goods and services originating from small economies. The vital importance of
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market access has been amply recognized as a sine qua non condition for a country's development. In
the United Nations framework, 16 of the 31 land-locked developing countries are least-developed
countries and almost all of the remainder are close to that threshold. He said all of them stand on the
sidelines of the multilateral trading system and that poverty affects more than 50 per cent of their
respective populations. Furthermore, 10 per cent of the overall population of developing countries,
i.e. 350 million people, lived in land-locked countries, and that the implementation of this proposal
would be of unquestionable benefit for these millions of individuals. Facilitating imports of products
from small economies, and in particular from those without seaports, is an obligation that has been
emphasized, directly or indirectly, at a number of international forums. The Almaty Ministerial
Declaration, the Millennium Summit, the Monterrey Consensus and UNCTAD meetings have
expressly referred to this issue. He added that leading trade partners in the WTO have also stressed
the point on various occasions in referring to the aspects of special and differential treatment, which is
included in the Doha Development Agenda.
4. He remarked that the submission proposes granting tariff-free and quota-free access for all
products from small economies to all developed and developing country markets. This is a measure
aimed at integrating small economies into global trade as a key prerequisite for their development and
a primary objective for the achievement of world peace. He explained that since many small
economy WTO Members are still dependent on exports of a narrow range of primary commodities, it
is also necessary to adopt measures that will help them escape from that dependent situation, which is
synonymous with high vulnerability. The adoption of the WTO Programme for Small Economies
provides the opportunity to do so. The proposal calls for reserving for small economies a minimum
percentage of the product tariff quotas on the schedules of WTO Members, and that according to the
WTO documents, 37 Members have scheduled commitments in respect of a total of 1,371 tariff
quotas. He added that the land-locked developing countries, as well as many small economies, do not
participate in this mode of trade in the WTO. Paraguay and others believed that reserving a minimum
percentage so as to enable developing countries with small economies to participate in trade under a
specific heading will not only facilitate diversification of their export markets but will also boost
investment and create new opportunities for more effective integration in the multilateral trading
system, which is one of the fundamental objectives of the WTO. A series of simple disciplines for
quota administration that would be manageable for these countries will also complement the
endeavours of WTO Members to extend the benefits of tariff quotas to smaller economies. He added
that the increasingly rapid expansion of trade as a result of market liberalization measures has yielded
genuine benefits in terms of global economic growth. According to a World Bank study, opening up
to foreign trade leads to greater income for poorer countries and raises their gross domestic product.
On the other hand, countries with increased exports of manufactured goods are faced with non-tariff
barriers, primarily sanitary and phytosanitary measures and technical barriers to trade. He explained
that it was difficult for developing countries to overcome such barriers and that in the case of small
economies, the obstacles were almost insurmountable. This is why in many cases the allocation of
quotas or the granting of duty exemptions fails to generate any trade flow, precisely because small
economies lack the technical capacity to meet the SPS and TBT requirements.
5. He said the proposal is aimed at ensuring that small economies receive the technical
assistance required for them to attain the level of knowledge and build up the technical infrastructure
they need to benefit from any trade opportunities that may open up for them. On the basis of this
proposal, Members could help small economies in need of technical and financial assistance to
conduct trade operations. He emphasized that in a globalized world where everything is measured
according to the level of productivity and competitiveness in international markets, it is indispensable
to provide small economies with the tools required to increase the efficiency of their production
systems. Although there are other international bodies directly responsible for such matters, the
support that small economies can receive in the WTO will have a crucial impact when it comes to
channelling existing resources. He added that the small economies value the Integrated Framework
for least-developed countries, and he hoped that a similar framework would be established to address
the specific needs of small economies and that consideration would be given, at the appropriate time,
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to warrant an extension of the Integrated Framework for least-developed countries for other
economies as well. In the area of accessions, he reiterated the recommendation made by Ministers in
Doha to adopt simplified procedures to facilitate and speed up the accession of small economies
(several of which are land-locked). He explained that he tried to summarize the reasons and basis for
the document that is now before the CTD and there are certainly other reasons and arguments, but that
some Members may perhaps raise objections to the proposals. These would be given careful
consideration, but he asked Members to bear in mind that however high the cost of trade may be for
them, various technical studies have shown the cost to land-locked countries is at least 20 per cent –
and in some cases as much as 60 per cent – higher. This is a legitimate reason for requesting
differential treatment.
(ii) Submission by Barbados, Fiji, Mauritius, Papua New Guinea, Solomon Islands and
Trinidad and Tobago (WT/COMTD/SE/W/11)
6. The representative of Mauritius said the proposal introduced by Paraguay contains seven
elements which are not new but which serve as complements to those set out already in document
WT/COMTD/SE/W/3. The latter was tabled on 28 June 2002 and was discussed a few days later on
1 July. He viewed the contribution from Paraguay and other small, vulnerable and land-locked
countries as a further refinement of past proposals and hoped the Dedicated Session would take note
of these elaborations.
7. The proposal WT/COMTD/SE/W/11 – a joint proposal by Barbados, Fiji, Mauritius,
Papua New Guinea, Solomon Islands and Trinidad and Tobago – was in response to the last meeting
of the Dedicated Session when the proponents were asked to elaborate on past proposals. The paper
does not attempt to refine all the past seven proposals at once but focuses on three proposals in
particular. The others will be examined during future meetings of the Dedicated Session.
8. The proposal focuses on preferences, subsidies and market access. He explained that the
section on preferences had been divided into two categories: the first was trade preferences and the
second concerned investment preferences. Trade preferences are recognized as an established
mechanism for promoting development. Small and vulnerable economies have a limited range of
exports and do not distort international trade in any way because their share of trade is so
insignificant. Furthermore, small economies have always depended on these existing market access
arrangements for their stability, growth, export earnings and food security. The elimination of these
preferences will bring uncertainty for market access and will increase existing vulnerabilities. He
added that this is not the purpose of the WTO and that with the disappearance of these preferential
access arrangements and corresponding waivers vulnerabilities will be compounded. Since waivers
do not provide stability and predictability, preferences should be grandfathered. The African Group
had already made such a proposal in the Negotiating Group on Agriculture and his Government and
others were fully aware of the efforts undertaken by the Bretton Woods Institutions to provide
assistance. Their efforts should be seen as complementary solutions to what is going to be decided in
the WTO. A trade issue needs a trade solution. Therefore, the proponents welcomed the IMF and
World Bank offers to grant small and vulnerable developing economies concessionary financing
within the time-frame of the Doha Round and especially the Trade Integration Mechanism (TIM)
which the IMF hopes to deliver in due course. In regard to investment preferences, he said investment
flows do not accrue to small and vulnerable economies because of their small markets. Therefore, the
Committee should come up with measures to facilitate investment flows into the small economies
through, for example, long term preferential investment facilities. This should be developed with the
help of the CTD and appropriate regional or multilateral financial institutions. He suggested that
WTO Members create the appropriate incentives and flexibilities for investment in small and
vulnerable economies. The proposal WT/COMTD/SE/W/11 concerns the subject of subsidies already
addressed in WT/COMTD/SE/W/3. He added that it is widely recognized that subsidies can play an
important role in the economic development programmes of developing country Members. While the
Agreement on Subsidies and Countervailing Measures contains some flexibilities for developing
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countries, such flexibilities do not cater to the needs of small, and vulnerable economies and they do
not help to address the inherent cost disadvantages and resource constraints. Since current WTO rules
which provide some fiscal incentives are going to be phased out, he said the proposal under the
chapter "Exemption from Export Subsidies" states that paragraph 3.1(a) of Article III of the
Agreement on Subsidies and Countervailing Measures should not apply to small economies. It is
proposed that Annex VII should be revisited to include small and vulnerable countries like Barbados,
Fiji, Mauritius, Papua New Guinea, Solomon Islands, Trinidad and Tobago and others. He said the
Annex should include small and vulnerable economies so that they can benefit.
9. Concerning the re-activation of non-actionable subsidies, the proponents suggested that the
provisions of Part IV of the Subsidies and Countervailing Measures Agreement should be reactivated
and that sub-paragraph 8.1 be included in favour of small economies. He said it could read as
follows: "Subsidies which are specific within the meaning of Article II and which meet all the
conditions provided for in paragraph 2(a), 2(b) or 2(c) and applied by the following Members:
Barbados, Fiji, Mauritius, Papua New Guinea, Solomon Islands and Trinidad and Tobago".
10. In regard to the current negotiations on agriculture and non-agricultural market access, he
recalled that the proponents had already submitted specific proposals. He said contributions that the
proponents will have to make in the areas of agriculture and non-agricultural market access will have
to be commensurate with their capacity. This capacity is limited by inherent constraints and
vulnerabilities. The latest proposal was a response to the Committee to elaborate on the proposals
already tabled in June and July 2002. He added that the proponents would come back with further
elaborations on other issues already tabled.
11. The representative of Bolivia recalled that in November 2001, Ministers had agreed on a
Work Programme incorporating the interests of all Members on issues related to implementation, the
negotiating areas making up the "single undertaking" and a special paragraph, namely on "small
economies". He said two decades had passed since Bolivia undertook a programme of liberalization
measures and opened its borders to trade while eliminating non-tariff barriers and embarking on an
open and integrated regionalism based on multilateral provisions. These measures resulted in high
social costs but have not reduced the incidence of poverty which, according to 2002 statistics, affects
64 per cent of the population.
12. He said Bolivia has not seen an increase in its exports which currently represent barely one
per cent of the total for South America.1 Exports previously consisted solely of mineral products, but
now include soya bean by-products, as the main manufactured products, and primary products, which
still account for a large share of national income. Bolivia has a chronic trade deficit and he explained
that applied tariff levels are low and the tariff reductions have affected the annual fiscal revenue.
13. He explained that a country's export capacity basically depended on its productive
development. In the case of Bolivia, in spite of its trade reforms, the country has not succeeded in
developing a competitive export supply which would enable it to gain access to new markets and, in
many cases, to position itself to achieve sustained growth in its traditional export markets.
14. Developing countries with no direct access to a sea coast from which to transport their limited
production are even more vulnerable. He said that any tariff reductions and/or elimination from
which Bolivia could benefit turns out to be an artificial advantage in percentage terms, compared with
the high costs of transport from the production area to the nearest sea port.
15. Numerous studies have shown a correlation between the lack of sovereign access to the sea,
export levels and growth and show that, in the case of Bolivia, its land-locked status means an
additional cost of 40 to 60 per cent in the transported value of the goods, which is reflected in both
1
Andean Development Corporation (CAF) Annual Report 2002.
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their end price and the delivery time. Because of such a trade handicap, countries like Bolivia deserve
to have recourse to differential treatment in order to be able to compete on an equal footing.
16. This unfortunate geographic reality had prompted the development of concrete suggestions
designed to strengthen and reinforce the "work programme" in areas which are crucial to increasing
participation in international trade. The vulnerability of small economies is the result of a number of
adverse factors, which often give rise to situations beyond the reach of political will and the very
management of the national economy. In the WTO, major trading partners are now more aware of the
specific circumstances and needs of small, land-locked economies. Furthermore, he referred to a
recent Appellate Body ruling in the case European Communities - Conditions for the granting of tariff
preferences to developing countries - set a precedent in jurisprudence by interpreting that developing
countries may mean less than all developing countries.
17. He said that since the participation of small economies in world trade is insignificant, granting
all their exports of goods and services tariff-free and quota-free access would prove an effective way
of applying the principle of differential treatment. At the same time, and in the full knowledge that
trade liberalization may involve several stages, he considered that the administration of existing tariff
quotas should afford real market access opportunities to exports from small economies, which may
also necessitate working together to implement the appropriate technical assistance. These and other
measures would contribute to the development of production chains, thereby boosting trade and
reducing the levels of vulnerability and poverty currently suffered by Bolivia.
18. The representative of Mongolia said the land-locked countries had come up with the paper
WT/COMTD/SE/W/10 to raise awareness of the difficulties for certain Members. Being land-locked
represents a permanent cost disadvantage and that is why he was asking for an elimination of tariffs
and was requesting quota-free privileges. He welcomed the recent proposal announced by the
European Communities which would help the weakest and the poorest Members or the
least-developed countries and encouraged other Members to do the same. He stated that land-locked
countries never graduated but least-developed countries could. He referred to the Maldives and the
discussion of its graduation from LDC status as being a new situation for the WTO. As the
representative from the Maldives explained, a transitional period would be needed for the Maldives
after graduation. He said that WTO Members would have to clarify what to do with those countries
that graduate from LDC status and that the work programme on small economies could also look at
some of these aspects. In regard to land-locked countries, the focus should be on small economies
like Mongolia and not large land-locked countries. In addition to tariffs, land-locked countries face
other problems linked to a dependency on the transit countries. They have to negotiate with
neighbours to have access to transit facilities. They also have the associated infrastructure costs. He
said the proposal made by Mauritius on behalf of a number of small economies is in line with
proposals made by a few land-locked developing countries. Positions of both have to be considered
when moving ahead with the negotiations.
19. As one of the co-sponsors of COMTD/SE/WT/W/11, the representative of Barbados
supported the statement made by Mauritius. She said the proposals contained in
WT/COMTD/SE/W/11 were an elaboration of some of the key proposals raised in
WT/COMTD/SE/W/3. She hoped they would help move discussions closer to the objective of
framing and adopting concrete measures to facilitate the full and beneficial integration of small and
vulnerable economies into the multilateral trading system and to fulfilling the mandate on small
economies of the Doha Ministerial Declaration. She welcomed the proposals contained in the new
submission and said they should be considered in the context of the parameters of the Doha
Ministerial Declaration's mandate contained in paragraph 35. These proposals must be seen as being
applicable to countries which share attributes of being small in economic size and which have
inherent vulnerabilities because of their "smallness".
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20. The representative of Guyana welcomed the two proposals presented by Paraguay and
Mauritius. Trade preferences are of great importance to Guyana and he wished to urge Members to
examine the proposals in WT/COMTD/SE/W/11 and eventually incorporate them into the multilateral
trading system.
21. The representative of Jamaica supported WT/COMTD/SE/W/11 as an elaboration of the
proposals submitted to the CTD in 2002. The refinement and clarification of several concerns
provided Members with a better understanding of the specific difficulties faced by small and
vulnerable economies and the possible means and measures which can be implemented to address
these situations. She also welcomed the new proposal WT/COMTD/SE/W/10.
22. The representative of Zimbabwe said that as a land-locked country, she supported the
proposal contained in WT/COMTD/SE/W/10 and those in the proposal WT/COMTD/SE/W/11
presented by Mauritius. Land-locked countries require special attention and also special and
differential treatment.
23. The representative of the Solomon Islands said there are serious challenges facing small
economies. There is a lot that the WTO Membership can and should do to assist with meeting the
challenges which are not of their own making. He supported the paper by Mauritius which identified
some of these challenges.
24. The representative of Suriname said she supported the proposal contained in
WT/COMTD/SE/W/11 on small economies and urged that the Work Programme on small economies
should continue to focus on specific issues of concern. She also welcomed the paper
WT/COMTD/SE/W/10.
25. The representative of Fiji also expressed support for the proposals contained in
WT/COMTD/SE/W/11. While the full list of issues has not been addressed yet in the proposal, the
proposal does contain elements which represent priority items for the proponents. She also supported
proposal WT/COMTD/SE/W/10 from Paraguay. The two proposals emphasize the vulnerabilities and
identify the challenges faced by land-locked and sea-locked countries.
26. The representative of Grenada thanked Paraguay for its proposal and said it helped to address
some of the vulnerabilities Paraguay and other countries face. He said the issues raised were also
reflected in other proposals and concerns already stated by Grenada and CARICOM. He thanked the
authors of WT/COMTD/SE/W/11 and said his delegation would like to make some additions which
would help with the general interpretation of the proposal. Grenada was particularly interested in
investment incentives especially since as a member of CARICOM, such incentives will be part of the
CARICOM single market on 1 January 2005. He asked other Members for their support with the
measures to help them overcome structural disadvantages. He said his delegation viewed subsidies
similarly and that fiscal incentives have been used throughout the region to stimulate non-agricultural
and agricultural manufacturing. They are export incentive measures and he said he was pleased to see
that they formed part of the submission. Market access questions and further concessions in this area
on the basis of less than full reciprocity should also be taken into account as stated in previous
proposals.
27. The representatives of Saint Vincent and the Grenadines and Malawi welcomed the proposals.
28. The representative of Sri Lanka said that while he understood and even shared the concerns of
small developing countries, the process of providing concessions for one group of countries should
not by any means further marginalize another group of small developing countries. Sri Lanka is one
of those small countries which has been left out of enhanced preferential arrangements to smaller
developing countries by major markets. Furthermore, Sri Lanka depends on textiles and clothing for
more than 50 per cent of its export earnings. Unlike many of its competitors, Sri Lanka does not
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receive any preferential market access in its main markets. Even where there is preferential access,
the utilization rate is extremely limited because of strict rules of origin requirements. It is difficult for
Sri Lanka to justify the preservation of tariff preferences only for the present beneficiaries. He said if
it is agreed to preserve such preferences, that would mean that these products would not be subject to
any tariff reduction negotiations. If that happens, negotiations in such areas as non-agricultural
market access would become meaningless because 50 per cent of Sri Lanka's exports which presently
face peak tariffs would be excluded. Therefore, the concerns of all small, developing countries should
be taken into account.
29. The representative of the Dominican Republic said his economy has all the characteristics
which are described in WT/COMTD/SE/W/3. External factors such as the recent financial crisis have
increased the Dominican Republic's vulnerability and caused decreases in the national budget and in
gross domestic product. More institutional strengthening is now required.
30. The representative of Saint Kitts and Nevis supported the two new proposals
WT/COMTD/SE/W/10 and WT/COMTD/SE/W/11, and agreed with the statement made by Grenada
about the concerns expressed on investment. The proposals can do much to address the
vulnerabilities of small economies.
31. The representative of Saint Lucia said WT/COMTD/SE/W/11 and WT/COMTD/SE/W/10
was a further step towards elaborating proposals for the full integration of small economies into the
multilateral trading system. His delegation also shared the views expressed by Grenada.
32. The representative of Papua New Guinea said issues contained in WT/COMTD/SE/W/10 and
WT/COMTD/SE/W/11 were not the only ones affecting small economies and that others would be
submitted soon. She requested that other trading partners support her delegation's request so that
Papua New Guinea could be an effective partner in the trading system. She explained that the
Dedicated Session provided a unique forum to discuss issues related to small economies.
33. The representative of Belize also supported WT/COMTD/SE/W/11 and was particularly
interested in hearing reactions to the proposals contained therein.
34. The representative of Sao Tome and Principe expressed support for the two new proposals
presented by Mauritius and Paraguay and encouraged more fruitful discussion which would lead to
concrete measures for small economies.
35. The representative of Canada said she had extensive comments on each of the proposals but
that she would summarize these into general comments. Canada is fully supportive of the efforts of
small economies to address their specific concerns. Most of the proposals discussed provided more
definition to proposals put forth in WT/COMTD/SE/3 several years ago. However, the two proposals
effectively serve to request the creation of a sub-category of WTO Members and this is not consistent
with paragraph 35 of the Doha Ministerial Declaration in that the paragraph explicitly states the
intention of not creating a sub-category of WTO Members. She said that while Canada does not
support the creation of a separate category of small economies, her Government believes there are a
wide range of existing provisions which can address the particular needs of small economies. In the
various negotiating areas, Canada and others are cognizant of the different capacities, constraints and
challenges faced by countries participating in these negotiations. These differences will be considered
in the negotiations. She said market access issues are addressed in the proposal
WT/COMTD/SE/W/10. She added that the WTO only recognizes that the least-developed countries
constitute a distinct category but does not provide this distinction to small economies. In regard to
WT/COMTD/SE/W/11 and its paragraph "C", Canada could accept the last sentence which states:
"The contribution to be made by the small economies in the area of market access in Agriculture and
NAMA will be commensurate with their capacity which is limited by their inherent constraints and
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vulnerabilities". Canada recognized the need for flexibility in its expectations of the developing
countries in the DDA Round.
36. As regards WT/COMTD/SE/W/10, there were many references to increased technical
assistance and to using technical assistance to assist small, land-locked economies. Canada fully
supports using the WTO Global Trust Fund to benefit small economies and endorses using such funds
for small economies. As regards the market access negotiations, she said Canada would like to have
these discussions take place in the NAMA and agricultural context rather than in this Dedicated
Session of the CTD. Concerning accessions, WTO Members already take into account the situation
and characteristics of each acceding state or customs territory. In addition to comments made on the
WT/COMTD/SE/W/11, the representative of Canada said that as far as preferences and
grandfathering, Canada presumes that the existing arrangements would in Canada's case include the
GPT (General Tariff Preferences), the "CARIBCAN" and the LDC tariffs. She explained that Canada
did not see the need to go beyond the existing waivers for these tariffs and does not support
grandfathering. However, Canada has extended its GPT and LDC schemes for an additional 10 years,
until 30 June 2014. Mongolia has been added to the Canada's GPT scheme as a beneficiary.
37. With regard to trade preference erosion, Canada maintained that this is not specific to small
economies. Solutions to this issue should be sought in other negotiating fora. Canada is grateful for
international agency assistance such as the International Monetary Fund which is looking seriously at
this issue and has supported and encouraged such assistance. As concerns investment preferences,
she asked what the proponents of the paper see as examples of incentives and flexibilities for
investment in small economies. She thought it would be helpful if examples were put forward to
further the discussion. She also asked proponents to comment on the prospective role of policy
instruments, including investment protection and other treaties. As concerns the two proposals on
subsidies, she explained that the Doha Ministerial Declaration indicates that pursuant to
paragraph 12(b), commitments related to the provisions on the Agreement on Subsidies and
Countervailing Measures are to be dealt with in the Negotiating Group on Rules. And pursuant to
paragraph 51, Canada thinks it useful to identify and debate development aspects of the subsidies
negotiations in the CTD to convey messages to the rules negotiating group. Pursuant to paragraph 35,
Canada maintains its stance of not wishing to create a sub-category of WTO Members.
38. The representative of Australia welcomed the elaboration of the two new proposals but that
she shared a number of the concerns similar to those expressed by Canada, in particular in regard to
the creation of a new sub-category of WTO Members. She emphasized that it was also important to
avoid duplication of existing work and that issues should be dealt with in a manner that is consistent
with the Doha Ministerial Declaration, for example the subsidies proposal mentioned by Canada in
the WT/COMTD/SE/W/11 proposal. Australia continues to reflect on a number of proposals that
have been presented. There are many different views on such issues as preferences and there are also
various actors involved in dealing with these issues. Australia is also not supportive of the
grandfathering provisions. In the broader negotiating context, there are now new proposals on the
table which are the subject of high level discussions, and these may have some interface with the
issues being discussed. Australia is interested in further discussion of these issues in the Dedicated
Session and other appropriate fora. Her delegation was looking forward to the elaboration of other
issues in due course.
39. The representative of Japan said his delegation acknowledged the difficulties small economies
face with fully integrating into the multilateral trading system. He recalled that in 2003 there was
intensive discussion to identify what the specific difficulties were for small economies and what could
be done to deal with the difficulties. Even though no conclusion had been reached, the discussion had
been constructive. While his delegation was ready to continue working on small economies, Japan
was somewhat cautious about taking up new elements. He asked whether or not the proposal
presented by Paraguay, Bolivia and Mongolia described elements which are unique to land-locked
countries or whether these proposals can be applied to small economies as a whole. He explained that
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Japan was not in a position at this stage to examine the details of the proposal but sought some
clarification on WT/COMTD/SE/W/10. He was aware of the difficulties facing the land-locked
countries and that Japan was ready to provide assistance on a bilateral basis. But Japan questioned the
inclusion in the proposal of paragraph 5 which he thought deals with supply-side constraints. He
stated that this cannot be dealt with in the WTO and he wondered how this issue will be handled in
the WTO. With regard to WT/COMTD/SE/W/11, his delegation was still examining the proposal.
He questioned why the proposals put forward were specifically relevant to small economies. He said
his delegation was ready to continue the work but wanted to do so in a more focused way.
40. The representatives of the European Communities said his delegation was still examining the
proposals but that the EC was strongly committed to the mandate of paragraph 35 of the
Doha Ministerial Declaration and to finding responses to the particular needs of small and vulnerable
economies and to support their integration into the multilateral trading system. In regard to
WT/COMTD/SE/W/10, his delegation, like Japan, questioned whether the proposals were meant to
address issues of concern to all small economies or only to those which are land-locked. He asked
whether being land-locked automatically constituted vulnerability or whether it constituted
"smallness" or whether there are other factors beyond the geographic factors which need to be taken
into account. In regard to the specific proposals in WT/COMTD/SE/W/10, he asked about market
access and the coverage of services. He could understand the concept of duty-free, tariff-free and
quota-free for goods, something which the EC had proposed in the various negotiating groups in
relation to imports from least-developed countries, but wondered how this might pertain to services.
On points 2, 4 and 5 – all of which involve aspects of technical assistance, he asked whether these
were specific questions for small economies or developing economies as well, because they too face
similar problems in terms of diversification or compliance with Sanitary and Phytosanitary Measures
and Technical Barriers to Trade. He asked where the constraints were on small economies and now
these proposals were intended to address them and about the existing instruments in terms of
developmental support – not only WTO support but also the support of bilateral donors and other
agencies. He wondered where such instruments are failing to find an appropriate response to these
needs. In regard to the supply-side issue mentioned by Japan, he thought that this is not something
that the WTO technical assistance programme is well placed to address. He referred to point six of
WT/COMTD/SE/W/10 on the Integrated Framework, which states that the vast majority of small
economies are at stages of development identical to those of current beneficiaries of the Integrated
Framework. His delegation would like further elaboration especially since the "IF" is a programme
for the least-developed countries. It does not cover all of them, only some of them, but the LDCs are
all eligible. With regard to what the proposal mentions on accession matters, he shared the views of
Canada in so far as accessions to the WTO essentially follow a course that is specific to the candidate
country and that the process and course of negotiations tend to reflect the specific situation of a given
applicant country. He supported the guidelines for LDC accessions but that this proposal as drafted
covers not only LDCs but also small and vulnerable economies, land-locked countries and transit
countries, which is quite a broad group of potential countries. He thought that this may be slightly
outside of the context of the framework for the Dedicated Session which is to focus on the particular
needs of the small and vulnerable economies. In regard to WT/COMTD/SE/W/11, the EC had
participated actively in a series of informal consultations over the past months with some of the
proponents for actions on small economies. It was a useful and helpful process for deepening
understanding of what the particular constraints are that the proposals are intended to address. His
delegation welcomed the new paper and the further elaboration provided to three areas and awaited
other proposals. On the question of preferences, he thought this was a matter under negotiation in the
negotiating groups on agriculture and on non-agricultural market access. But there may be other
horizontal questions which his delegation might want to consider in light of the evolution of work in
these other two contexts. He wondered what was envisaged by the term "grandfathered" and
questioned whether this was a purely legal device which would essentially equate to an open-ended
waiver for preferential arrangements which are in place or whether it is also intended to cover
grandfathering the margins of preference which would have implications for MFN liberalization on
some products subject to preferences. He thought that preference erosion was an important issue and
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that some of the Bretton Woods institutions are making efforts in this area. The IMF, for example,
had begun its Trade Integration Mechanism (TIM), a recent initiative from the Fund. As concerned
the subsidy element of WT/COMTD/SE/W/11, this was an issue which had already been addressed
earlier in proposal WT/COMTD/SE/W/3. Some of the same elements which were part of the
discussions then remain relevant. In regard to market access issues mentioned in paragraph 10 in
proposal WT/COMTD/SE/W/11 - mainly that liberalization commitments made by small and
vulnerable economies should in fact be commensurate with their capacity and ability to engage - he
said European Communities officials had made a recent announcement in a letter in this regard. The
letter and its ideas will be under discussion and remains an important political context for the WTO
work and the contribution of the Communities to this particular exercise in the Dedicated Session.
41. The representative of Chile thanked the proponents of the two new proposals for their
submissions and said her delegation understood the problems related to small economies and in
particular to land-locked countries. However, her delegation was concerned about the creation of a
sub-category of countries, something which paragraph 35 says should be avoided. She asked about
the proposal WT/COMTD/SE/W/10 and wondered about those proposals which require technical
assistance in areas which go beyond the WTO's scope. In regard to proposal WT/COMTD/SE/W/11
and investment preferences, she asked what was meant by the development of long-term preferential
investment facilities. Her delegation wondered what exactly is being requested. With regard to
subsidies, this issue was dealt with in the negotiations on rules. Her delegation was not clear on what
was meant by the re-activation of non-actionable subsidies. She said the way the proposal is written,
it appears that what is being requested is the re-activation of these subsidies. She asked if these
subsidies were automatically re-activated, would that then apply to these countries backing the
proposal. This proposal went beyond the mere re-activation of non-actionable subsidies and she
asked if the proponents were looking for something more specific.
42. The representative of Costa Rica said in regard to WT/COMTD/SE/W/10, that Costa Rica
shared the views expressed by the representative of Chile. In regard to WT/COMTD/SE/W/11, his
delegation was concerned about the initiatives to perpetuate preferences. He questioned whether the
proponents of the proposal had looked at paragraph 3 of the Enabling Clause which states that tariff
preferences should not constitute a barrier to the principle of most favoured nation treatment.
Costa Rica is a beneficiary of these preferences but thought it was not appropriate to perpetuate these
preferences, much less compensate one Member in the course of multilateral trade liberalization.
Questions raised by the European Communities concerning preferential treatment and grandfathering
were relevant and his delegation would like to know whether this is to cover trade preference erosion
and what implications the liberalization of markets would have for the disadvantaged. Costa Rica
firmly believes that the principle of the Enabling Clause must be respected. There should also be a
focus on the process of liberalization. Preference erosion should be looked at from the perspective of
the Bretton Woods institutions as the EC had mentioned in regard to the IMF's TIM programme. For
Costa Rica, tariff preferences hide a development problem that has yet to be resolved. These
proposals would contribute to a further perpetuation.
43. The representative of the United States said in regard to the proposals contained in
WT/COMTD/SE/W/10 that her delegation shared the views of others who spoke before. She noted
that it would be helpful to understand the distinction, if any, being made in WT/COMTD/SE/W/10
between land-locked, small economies and the notion of small economies that are not land-locked.
She would also be interested in knowing more about the distinction between land-locked small
economies and land-locked LDCs. Her delegation believed that land-locked Members are
overlooking some potential areas that might serve their interests such as customs and border issues
and trade facilitation. The United States agreed with those delegations which refer to paragraph 35 of
the Doha Ministerial Declaration about not creating a sub-category of Members. She questioned
whether the notion of land-locked was a sub, sub-category being offered and looked forward to any
response that the proponents of WT/COMTD/SE/W/10 could put forward to further the discussion.
The Secretariat could prepare a short list of recent research on the situation of land-locked countries.
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In regard to WT/COMTD/SE/W/11, she welcomed the further refinements of past proposals as a way
to further discussion and looked forward to focusing the discussion and framing pragmatic responses.
Where small economies can articulate their unique challenges, she thought a more productive
discussion could take place. Her delegation will study the proposals in more detail. In some
preliminary remarks on the paper, she noted that the proposal touched on topics that have been raised
before, such as preferences and subsidies as well as issues of operational costs for a limited range of
exports due to preferential arrangements and the challenge of maintaining competitiveness. She
welcomed the fact that the paper further elaborated concepts that the proponents have identified in
WT/COMTD/W/3. The Dedicated Session should – as a way forward - work with the rules
negotiating group and with other WTO bodies in order to deepen discussion of the proposals, for
example in the area of subsidies. She appreciated the effort that went into the paper and her
delegation is now reviewing the proposal.
44. The representative of Thailand thanked the proponents for their proposals and said her
delegation sympathized with their problems. Thailand was still examining the proposals and she
explained that it might be helpful if these proposals were discussed in the relevant forum. She
recalled the mandate of the Doha Ministerial Declaration and that the work on small economies
should not create a new sub-category of Members.
45. The representative of Malaysia also welcomed the new proposals. She said her delegation
shared the sentiments expressed by Thailand and that her Government was still examining the
proposals. Her Government recognized the serious problems and vulnerabilities of small economies
but was concerned about having sub-categories in the WTO. She said work should follow according
to the mandate.
46. The representative of India said his delegation also welcomed the proposals. However, more
time was needed to examine and review the proposals and that he would like to discuss them in more
detail in subsequent meetings. His delegation concurred with others in that the Dedicated Session had
to operate under paragraph 35 of the Doha Ministerial Declaration.
47. The representative of Korea welcomed the proposals and said he understood the concerns of
the proponents. However, paragraph 35 of the Doha Ministerial Declaration states that it is not the
aim to create a sub-category of WTO Members. It was still not clear whether some proposals are
targeted at all land-locked developing countries or small economies or some other developing
countries. Some proposals would be better addressed in other WTO fora, as already stated by Japan
and the European Communities. He explained that some of the proposals run the risk of going
beyond work taking place in other negotiating groups and that attention should be paid to trade
preferences which are granted voluntarily.
48. The representative of China welcomed the two new proposals. As a developing country,
China attached great importance to the vulnerability of small economies. He said the mandate
provides that the concerns of small economies should be addressed effectively but without creating a
sub-category of WTO Members. Given the complexity of the subsidy issue, his delegation agreed
with Canada that this should be discussed in the negotiating group on rules. He thought the Dedicated
Session should examine the developmental aspects, for example, of some horizontal issues.
49. The representative of Mauritius thanked the delegations for their comments and said that
concerns and requests for clarification in regard to proposal WT/COMTD/SE/W/11 had been noted.
He wanted to reassure all delegations that it was not the intention of the proposal to create any
sub-category of Members and that the proponents will keep to what is mandated in paragraph 35. As
a possible way forward, the Chairman could organize a series of informal consultations where
Members can clarify elements of what has been discussed so far.
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50. The representative of Paraguay said the proposals made by the land-locked countries do not
just address the case of these specific countries, but are also a contribution to the discussion on how to
implement paragraph 35 of the Doha Ministerial Declaration. Land-locked countries are generally
small economies. Furthermore, work on land-locked countries is not only being carried out at the
WTO but at other fora as well, for example as in the Almaty Plan of Action where Ministers met to
discuss difficulties faced by land-locked countries. One important aspect deals with trade and with
transportation services to reach seaports and international destinations. In regard to technical
assistance, his delegation believed that not all matters of technical assistance had to be covered by the
WTO. But a statement from the WTO on this matter would be of great help in attracting more
technical assistance resources from other organizations. Land-locked countries are particularly
vulnerable and that only six out of 31 land-locked countries have an annual per capita income above
$1,000. Another 20 have incomes of less than $500 per capita and are least-developed countries, and
only one of them has an income of $3,000 per annum. All of them are small economies with scarce
resources. The request for technical assistance programmes in favour of LDCs could be extended to
certain countries in specific cases. He wanted to emphasize that his delegation did not wish to create
a sub-category of WTO Members and that he agreed with the mandate. However, in order to
implement the Doha Ministerial Declaration mandate, a degree of flexibility was needed to address
the vulnerabilities of some countries, including some of the land-locked countries.
51. The Chairman said he would reflect on what was said during the Dedicated Session in his
report to the General Council. He urged the proponents to continue refining their proposals and called
on Mauritius and others to come forward with the elaboration of other areas. In spite of the
considerable efforts already made in the Dedicated Session since 2002, delegations are still talking
about consultations, refinements and clarifications. He said the way ahead will still require more
patience but that he would continue with his consultations to help the process move forward.
52. The meeting was adjourned.
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