Special and Differential Treatment for Developing Countries

Abstract

Special and Differential Treatment for Developing Countries (SDT) constitutes a central feature of the GATT/WTO system. Its formal goal is to foster export-led growth in developing countries. Its theoretical foundations and empirical support are, however, weak at best. In particular, SDT conflicts with the GATT's two key principles of reciprocity and non-discrimination, compromising the efficiency of the multilateral trading system. Still, if SDT provisions help those who most need help, sacrificing economic efficiency may be justifiable. However, there are numerous criticisms, on theoretical and empirical grounds, to the premises and the achievements of SDT-based disciplines, casting serious doubt on its effectiveness in helping developing countries trade and grow. For researchers, the good news is that there is plenty of room for progress, with several important areas where our understanding remains unsatisfactory but progress is feasible-that is, where the expected return to research effort seems unusually high.

The Development Dimension: What to Do about Differential Treatment in Trade

“…His 2016 study elaborates on the effects of the current approach to SDT in impeding development. 54 SDT must be a means to achieve development and not an obstacle preventing it. Human, natural, and capital resources are everywhere and always limited.…”

“…In this way, "the expansion of their export sectors has been severely constrained by the lack of their own liberalization." 55 Ultimately, SDT may best be described as a "minimalist bargain" that leaves all sides worse off. 56 In fact, the limited empirical evidence on this topic strongly suggests that SDT has done little to improve development outcomes.…”

“…56 In fact, the limited empirical evidence on this topic strongly suggests that SDT has done little to improve development outcomes. 57…”

Assessing the impact of unilateral trade policies EBA and AGOA on African beneficiaries' exports using matching econometrics

“…the NRPTAs) on the integration of developing countries in world trade is subject to debate. As pointed out in Ornelas (), results in various theoretical and empirical papers raise serious doubts about the effectiveness of NRPTAs in helping developing countries trade and growth. For African countries, despite being granted NRPTAs since the 1970s, their share of exports is only 3% of world trade (WTO, ).…”

Politicized trade: What drives withdrawal of trade preferences?

“…We study this question using GSP country eligibility reviews regarding worker rights violations. GSP allows developed countries to offer unilateral preferential treatment of imports from developing countries (for an exhaustive overview, see Ornelas, 2016). The goal of this special provision is facilitating market access of developing countries' exports to foster their development.…”