The Ambiguous Name and the Possible Redefining of a Developing Country in the WTO

                   The Ambiguous Name and the Possible

Redefining of a Developing Country in the WTO

                                                        

 

                                                      Jiaxiang Hu*

 

    中文摘要： 世贸组织在其成立宣言中明确指出，将广大的发展中国家纳入到世界贸易体系之中是其今后努力实现的目标之一。九年来，世贸组织一直致力于使广大的发展中国家融入于世贸组织这个国际大家庭。然而，1999年世贸组织部长级会议召开期间发生在西雅图街头的暴力事件，以及随后出现在世界许多地方一浪接一浪的反全球化示威游行，向人们传递着这样一个信息，当今的国际贸易制度还存在着一些不尽如人意的地方。目前，世界各国贫富悬殊，两极分化，形成这种局面的原因是多方面的，其中也包括国际贸易制度中的某些不合理因素。虽然乌拉圭回合签订的多边贸易协定中有许多照顾发展中国家的条款，但是，世贸组织对发展中国家界定不明成了有效实施这些条款的主要障碍。本文从比较关贸总协定成立初期与世贸组织在制定国际贸易规则时对发展中国家的不同规定入手，分析多边贸易协定中为发展中国家制定的特别条款的法理依据，列举了部分多边贸易协定中特别条款的实际执行情况。在参照了世界银行提供的数据以后，提出了世贸组织应该以一个国家的人均国民收入等一些客观的经济指标为依据来划分发达国家与发展中国家，并在此基础上重新调整援助发展中国家计划这样的设想。  

 

 

I. Introduction

Despite the short history, the fact that most of the existing States(Russia is one of the few exceptions in terms of its influence in the world) have become its Members has already made the World Trade Organisation one of the most universal international organizations. The participants of the GATT, the predecessor of WTO, consisted of “less-developed contracting parties” and “developed contracting parties”, which have been transformed into “developing country Members” and “developed country Members” under GATT 1994. But the criteria to define whether a WTO Member should be a developing country Member or a developed country Member were not discussed in the Uruguay Round of Multilateral Trade Negotiations. Under the current practice, each country or separate customs territory can select whether it will be taken as a “developing country” or “developed country” when it enters the WTO. This self-selection mechanism has blurred the division of “developing country Members” and “developed country Members” in theory, and made the aid programmes to the developing country Members being implemented more difficult in practice. This article aims to analyse the evolutionary status of developing countries from the GATT to the WTO, the rationality of special and preferential treatment to the developing country Members, then put forward some criteria of how to define a developing country Member in the WTO.

         

II. An evolutionary status of developing countries from the GATT to the WTO      

      The future of developing countries is one of the most pressing issues of international economy in our era, and the resolution of this issue will profoundly affect the lives of the people from both developing countries and developed countries. The intense desire of the majority of the human race to escape its debilitating poverty and join the developed world is a determining feature of international politics. Yet in the final decades of the twentieth century, bitter controversy still exists regarding the causes of and possible solutions to this problem.1

      The causes of this tragic situation for most developing countries are various, both historically and politically. The predatory exploring of their natural resources by the powerful countries in history, the mismanagement of domestic affairs by their own leaders after independence and, the lack of external financial aid and internal technological innovation are the most substantial ones. Aware of this huge gap between the developed countries and the developing countries, and its potential effect upon international politics, some international institutions began to reflect on the way to narrow this gap, and the GATT is just one of them.

      GATT policy towards developing countries owed nothing to the past. There was no Golden Age that pointed the way. Before the World War II, the organising principle for rich-poor relationships had been colonialism. Most of the countries in Africa and Asia were colonies de jure. A goodly portion of those in Central and South America were colonies de facto.2 This colonial past was not what the Bretton Woods system was looking for.3 The GATT started its function to discipline its contracting parties in international trade on a most-favoured-nation and non-discrimination basis.4 Despite the fact that, among the founding States of the GATT, almost half of them could be deemed as “less-developed countries”,5 the first draft of the Charter of the proposed International Trade Organisation(ITO), which was put forward by the United States, provided for a set of rules for all the potential members.6 There were no specific provisions on economic development, nor were there any special rules or exceptions for developing countries.7

      After the failure of the ITO, the GATT took the role to regulate international trade in the global community. Although the GATT was formed on a contractual basis, the GATT rules were no less efficient than those made by many international institutions. The power to govern in the context of an international institution usually brings with it, according to most twentieth-century political norms, a duty to take care of the disadvantaged members of the community to be governed. The GATT had no money to give, only rules. Thus, rule assistance was naturally the core help that most developing countries could seek for in the GATT history.

      The demands for the special and preferential rules during the first years’ operation of the GATT were only limited to some dependent overseas territories of the former colonist powers. A Working Party was set up, by a decision of the CONTRACTING PARTIES on 17 January 1955, to examine the proposal of the United Kingdom relating to the special problems of its dependent overseas territories. The decision to set up the Working Party originated from a discussion, in a Plenary Session, of a proposal by the United Kingdom government to introduce an appropriate article into the General Agreement.8 Since it was considered that the preferential arrangement for the dependent overseas territories contained in this proposal would constitute in effect an amendment to Article I of the General Agreement and would therefore require unanimous acceptance by the CONTRACTING PARTIES, the United Kingdom was advised to change its proposal to a draft waiver, which it accepted.9 

      The 1960s saw some dramatic changes in the GATT, not only in terms of its size, but also in terms of its contents.10 The first significant step made during this period is the Declaration on Promotion of the Trade of Less-Developed Countries, which was adopted by the CONTRACTING PARTIES at their nineteenth session on 7 December 1961. Recognising that there was need for a rapid and sustained expansion in the export earnings of the less-developed countries if their development was to proceed at a satisfactory pace, the CONTRACTING PARTIES demanded that the governments of the contracting parties should give immediate and special attention to the less-developed countries on the following issues: (a)quantitative restrictions; (b)tariff reductions; (c)revenue duties; (d)state-trading; (e)preferential treatment within the customs unions or free-trade areas; (f)the use of subsidies; and (g)the disposal of commodity surpluses.11

      The 1961 Ministerial Declaration set some general principles which demanded the developed countries to give their special and preferential attention to the less-developed countries. Shortly after that, the CONTRACTING PARTIES adopted an amendment to the General Agreement, which became Part IV of GATT 1947.12 Part IV, with the general title Trade and Development, consists of three articles, i.e. Article XXXVI(Principles and Objectives), Article XXXVII(Commitments), and Article XXXVIII(Joint Action). As professor Robert E. Hudec pointed out: “the importance of Part IV is not easy to describe. From a technical point of view, Part IV added nothing to the existing legal relationship between developed and developing countries. Part IV was merely a slightly more impressive statement of the urgent but non-binding texts that the Action Programme had been issuing over the proceeding five years, giving them a permanent form in the text of the General Agreement. The language of Part IV was a bit more legalistic, giving the illusion of greater commitment. Indeed, the title of the new Article XXXVII, ‘Commitments’, actually said so. In fact, however, the text of Part IV contained no definable legal obligations.”13

      Despite its non-binding nature, Part IV did lay the rationale and morale for the developing countries in the GATT to ask for special and preferential treatment, and their constant demanding eventually resulted in the Generalised Special Preferences(GSP) schemes which were adopted in the GATT in 1971.14 In the Ministerial Decision of 23 June 1971, the CONTRACTING PARTIES decided that GATT Article I(General Most-Favoured-Nation Treatment) would be waived for a period of ten years to the extent necessary to permit developed contracting parties to accord preferential tariff treatment to products originating in developing countries and territories without according such treatment to like products of other contracting parties.15 The Ministerial Decision of 26 November 1971 permitted developing countries to exchange tariff preferences among themselves.16 These two ministerial decisions laid the landmark that the GATT’s new relationship with developing countries had been defined.

      Shortly after the GSP was established, the United Nations adopted two major resolutions in 1974, one calling for the establishment of a new international economic order and the other declaring a Charter of Economic Rights and Duties of States. Developing countries regarded these UN resolutions as their victories in the contending with developed countries for more political and economic rights. Using these resolutions as their moral base, they pressed developed countries for more special preferences, which culminated in a series of legal texts known as the “Framework Agreement”.17 The Framework texts included a decision of the CONTRACTING PARTIES, called the Enabling Clause, which was a de facto amendment of the MFN obligation in GATT Article I. The Enabling Clause gave permanent legal authorisation for: (a)the Generalised System of Preferences; (b)preferences in trade between developing countries; (c)more favourable treatment for developing countries in other GATT rules dealing with non-tariff trade barriers; and (d)specially favourable treatment for the least-developed countries.18

      Facing the constant demanding from developing countries, many developed countries changed their strategies. On the one hand, they continued to use the GSP policy selectively, either to bargain for commercial advantage in return or to punish those developing countries whose behaviour was somewhat found wanting. On the other hand, they used the Kennedy Round(1962-67) and Tokyo Round(1973-79) negotiations to codify the international trading rules in some important areas like subsidies and anti-dumping.19 Different from the WTO practice of “buying one, buying all”, which requires the participants to accept all WTO agreements(except the plurilateral agreements) for their membership, the participation for the GATT contracting parties in these codes was optional. Professor Hudec criticised, in this respect, that the code approach had very important implications for the legal relations between developed and developing countries. It proposed a new legal community, limited to those members who were willing to subscribe to the rules. If developing countries wished to participate in the new community, they would have to accept equal obligations. If, on the other hand, they continued to insist on a one-sided relationship, they would find themselves excluded from the really serious work and left with only a GATT membership increasingly empty of any substance.20

      From the non-discrimination basis of GATT 1947 to the permanent status of the GSP, developing countries seemed to have gained much in legal terms in the GATT after almost four decades of struggle. They were able to export some of their products to the developed countries at low tariffs or with no tariffs without giving the same treatment to them. They were supposed to be given more help from the developed world both in legal terms and financial terms. However, the current situation is that, except some “industrialised” countries, most developing countries did not use these specialised preferences efficiently and found the gap with developed countries even bigger when they were requested to co-operate with developed countries in making those all-binding trading rules during the Uruguay Round negotiations. Under these circumstances, it sounds only natural when these developing countries raised such a question: “are the world trade rules fair to us?”

 

III. Are the world trade rules fair to developing countries?

      The issue of developing countries had caught the attention of GATT contracting parties even before the Uruguay Round negotiations. Early in the 1982 GATT Ministerial Declaration, the CONTRACTING PARTIES acknowledged that “many countries, and particularly developing countries, now face critical difficulties created by the combination of uncertain and limited access to export markets, declining external demand, a sharp fall in commodity prices and the high cost of borrowing. The import capacity of developing countries, which is essential to their economic growth and development, is being impaired and is no longer serving as a dynamic factor sustaining the exports of the developed world. Acute problems of debt servicing threaten the stability of the financial system.”21 In light of this situation, the CONTRACTING PARTIES decided to: (a)instruct the Committee on Trade and Development22 to examine how the developed contracting parties had responded to the requirements of GATT Part IV; (b)urge GATT contracting parties to implement more effectively Part IV and the Enabling Clause; (c)urge GATT contracting parties to work towards further improvement of GSP or MFN treatment for products of particular export interest to the least-developed countries, and the elimination or reduction of non-tariff measures affecting such products; (d)strengthen the technical co-operation programme of the GATT; (e)instruct the Committee on Trade and Development to carry out an examination of the prospects for increasing trade between developed and developing countries and the possibilities in the GATT for facilitating this objective.

      Pushed by the 1982 Ministerial Declaration, the CONTRACTING PARTIES began to amend the trade rules made during the Tokyo Round negotiations. The task was so huge that another round of multilateral trade negotiations seemed necessary. In 1986, the Punta del Este Declaration marked the start of the Uruguay Round of multilateral trade negotiations.23 The declaration reaffirmed the principle of differential and more favourable treatment towards developing countries, urged developed countries to further remove tariff and non-tariff barriers. Meanwhile the declaration demanded GATT contracting parties to give more attention to the particular situations and problems of the least-developed countries and to the need to encourage positive measures to facilitate expansion of their trading opportunities.24

      Different from the “codes” made during the Tokyo Round negotiations, the multilateral trade agreements made during the Uruguay Round negotiations are implemented as a “single package”, which means that the precondition to be a WTO Member is to “buy in” all the results of the negotiations with only limited exceptions. Here, one fact deserving our notice is that a large number of former colonies became GATT contracting parties without experiencing the accession negotiations,25 they did not have the opportunities, neither were they required, to familiarise themselves with the GATT rules. During the Tokyo Round negotiations, except some “industrialised” developing countries, most developing countries kept themselves away from the codifying process, devoting their efforts to asking for more special and preferential treatment.26 In the Uruguay Round negotiations, developing countries, half-exhorted and half-threatened by the developed countries, agreed to integrate themselves into the global community. But even then, few of them could predict what impact of these trade rules would have upon them. When the WTO rules began to bind all its Members, developing countries came to realise that they already had no choice but to accept.

      It is important, in this context, to assess how the WTO agreements have been implemented in sectors of international trade covered by the WTO where developing countries have a significant stake. During the 1996 and 1998 Ministerial Conferences of the WTO,27 several developing countries called for such an assessment to be made, so that the benefits expected to flow from the Uruguay Round negotiations to developing countries could be properly evaluated, to see whether the attempt to enable these countries to effectively participate in, and benefit from the WTO system had succeeded.28 The WTO itself had noted in 1996 that “some Members have expressed dissatisfaction with certain aspects of the implementation of the Uruguay Round agreemnts”.29 It was pointed out that trade was “an instrument of development, to raise standards of living, expand production, keeping in view, particularly, the needs of developing countries and least-developed countries”.30 However, despite calls for such an assessment to be made prior to the launching of any further round of trade liberalisation negotiations, the WTO was prevented by developed countries from doing so in a coherent manner.31

      The impact of the WTO rules upon developing countries is uneven in different trade sectors. A panoramic assessment of these impacts seems difficult, if not impossible, in light of the multitude of the WTO rules and the comparatively short period of implementation. A more important factor accounting for this difficulty is the huge difference among developing countries themselves in terms of their development level. In order to be more specific and convincing, the discussion of this part is only limited to those areas of greater interest to the developing countries, such as textiles and clothing, agriculture, trade-related intellectual property rights, and trade in services.

      The textile and clothing industry has always occupied a sensitive position in national economies. It was, after all, the bedrock of the industrial revolution in many developed countries like Britain and Japan. While extremely labour-intensive, textile and clothing production is not particularly capital-intensive, and is often regarded as the first stepping-stone out of an agrarian society. In recent times, when many developing countries attempted to produce textiles and clothing products for the same over-supplied world market, they found that this particular sector had already been kept outside the purview of the GATT system.32 Liberalising this trade sector had been the demand of many developing countries in the GATT for almost four decades. The outcome of the negotiations on this subject during the Uruguay Round is the Agreement on Textiles and Clothing(ATC), which provides a 10-year transition period (1995-2004) for phasing out the quantitative restrictions(quotas) imposed arbitrarily under the Multi-Fibre Arrangement(MFA) by the United States, the European Union, Canada and Norway on imports of textiles and clothing products into their markets.33 Although the phase-out mechanism gives developing countries some assurance that this particular sector will be completely integrated into GATT 1994 from 1 January 2005, it is still disappointing to observe that developed countries, in the initial stages, opened their markets only to the products which were not commercially significant.34 As regards those products which have already been integrated into GATT 1994, developing countries will still possibly meet the barriers raised by developed countries by invoking Article XIX of GATT 1994(with the title Emergency Action on Imports of Particular Products), Anti-Dumping Agreement, and Agreement on Safeguards despite the fact that the use of these measures may become more politically costly. Therefore, the disadvantageous status of developing countries in the textiles and clothing sector has not been changed fundamentally merely because of the implementation of the ATC.   

      The Uruguay Round negotiations resulted in the Agreement on Agriculture(AOA), which is to be implemented over a six-year period beginning from 1995(extended to a 10-year period for developing countries).35 In the AOA, five broad areas were negotiated into the text of the agreement to address the concerns of developing countries. These negotiated areas are market access, food security(with specific reference to net food importing countries), domestic support commitment, export subsidy commitment, notification requirements and technical assistance. From the perspective of developing countries, the conversion of those original restraint measures into ordinary customs duties should give them a more predictable market access. However, as in the sector of textiles and clothing, the implementation of these commitments has not been satisfactory.36 According to Article 20 of the AOA,37 the WTO started the negotiations to review the implementation of the AOA on 27 March 2001. Altogether 125 WTO Members(counting the EU as 16) out of a total of 140 submitted 44 negotiating proposals and three technical submissions in the first phase of the negotiations.38 This reflected the general concerns of the WTO Members, especially the developing country Members, to the ineffectuality of the AOA, and their expectations to reform the present agreement. On 26 April 2001, the WTO Secretariat circulated a detailed study on the post-Uruguay Round market access conditions in three areas: industrial tariffs, agriculture and service,39 which acknowledged: “As required by the Uruguay Round Agreement on Agriculture, all agricultural tariffs are bound, but in many cases these bindings are at very high rates and offer limited market access opportunities”, while “the products of greatest export interest to the least-developed countries---many agricultural products together with clothing and other labour-intensive manufactures---are among the most heavily protected in the markets of their current and potential trading partners”. At the outset of the new round of agriculture negotiations, the impenetrability of the language of the initial agreement, and the lack of substantial reforms of agricultural policies in some developed country Members are serious disadvantages. Without political consensus on such issues as the most desirable size of farming units, the role of food security and environment protection, the influence of multinational agribusiness, and the principal intended outcomes of any further reform, the next agreement on agriculture is likely to remain as obscure in its general aims and effects as the first one.   

      In the years leading up to the Uruguay Round negotiations, the developed countries, those capable of making huge investment in industrial innovations, had constantly urged the newly industrialised countries to cease their practice of mass copying of products that had cost dearly to develop. The reluctance of those countries to continue providing market access to the newly industrialised countries in the event of a continued failure to honour intellectual property rights is understandable. The traditional, uni-focus intellectual property conventions could not possibly persuade the countries of the developing world to alter their domestic regimes, since these conventions had no broader economic leverage over the offending parties.40 Along with the new dispute settlement mechanism, and the “buying in, buying all” acceptance requirement for prospective WTO Members, for the first time, there is a chance that even the most recalcitrant intellectual property violators could be made to provide legal protection for non-national rights holders. But from the point of view of the developing world, paying the full cost of industrial innovation to wealthy corporations is unthinkable, if only because under the existing situation, copied products could be delivered on a mass scale to populations generally unable to pay the price of intellectual property rights. The standards of protection, set out during the Uruguay Round negotiations, “are at a level comparable to those in the major industrial countries today”.41 The benefits guaranteed by the transitional provisions of the TRIPS Agreement42 for developing countries have already been offset by the high standards of protection which have become the WTO norm. Many developing countries, by distancing themselves from the debate in the WTO on these standards of protection, have unwittingly endorsed this approach. This will have major repercussions for them after the end of the transition period, when their intellectual property rights protection regimes will be required to meet the same criteria as those of developed countries which already have a mature market and a complete intellectual property rights protection regime. The consequence of this over-emphasis on the protection of intellectual property rights has diverted peoples’ attention away from the spirit of both the preamble and substantive provisions of the TRIPS Agreement, which deals with the issues of relevance to the developing countries.43 During the first five years of operation of the WTO, attempts by developing countries to seek access to technology on realistic terms have been substantively obstructed by the stance of developed countries,44 creating a new form of protectionism to the international economic order. Two examples can be used to illustrate the favour to the developed countries and the disfavour to the developing and least-developed countries in the TRIPS Agreement. One is Article 23. This article is used to regulate the protection for geographical indications for wines and spirits, of which the developed countries have much advantage, while there are no similar provisions to protect those manufactures of relevance to the developing countries. The other example is that although Article 65(Transitional Arrangements) provides a five-year transition period for developing countries to apply the TRIPS Agreement, pharmaceutical and agricultural chemical products, however, are excluded from this transition period according to Article 69(8). This has already brought much impact on the development of many developing countries. This is also the main reason for the dispute raised by the United States against India’s patent protection regime for pharmaceuticals and agricultural chemical products.45    

      The integration of services into the international trade sphere is another negative impact upon the economy of most developing countries. The General Agreement on Trade in Services (GATS) is designated to regulate the supply of a service: (a)from the territory of one Member into the territory of any other Member; (b)in the territory of one Member to the service consumer of any other Member; (c)by a service supplier of one Member, through commercial presence in the territory of any other Member; (d)by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member(Article I:2 of the GATS). In its contents, the GATS almost covers all modes of internationally traded services which include business services(e.g. professional services, computer and related services, research and development services, real estate services, rental/leasing services without operators, advertising and other miscellaneous services); communication services(e.g. courier services, postal services, telecommunication services, audio-visual services); construction and related engineering services, distribution services; educational services; environmental services; financial services(e.g. insurance services, banking and other financial services); health and related social services; tourism and travel-related services; recreational, cultural and sporting services(e.g. entertainment services, news agency services, libraries, archives, museums and other cultural activities, sporting and other recreational services); and transport services(e.g. maritime transport services, internal waterways services, air transport services, space transport services, rail transport services, road transport services, pipeline transport services, and services auxiliary to all modes of transport).46 The GATS is remarkable for the fact that it marks the first step in making it difficult(perhaps impossible) for the WTO Members to refuse rights of participation in their domestic economies, in almost any capacity, to non-nationals. Along with the GATS, those separate protocols on such heavily regulated sub-sectors as financial services, telecoms and transport indicate that for the first time in economic history, not only the nationality of goods, but also the nationality of economic structures, may be about to crumble. Although the GATS guaranteed a “progressive liberalisation” of markets to the developing countries, the backwardness of basic facilities and low level of education have made it difficult for most developing countries to compete with the developed countries in most service areas in a feasible future. Even in those labour-intensive areas like construction and tourism, in which some developing countries do have competitive advantages, the reality is that those developing countries still cannot earn as much as expected either because of the barriers raised by developed countries under the grounds of licensing or certification of the service suppliers, or because of the low efficiency of those developing countries.47

      In the light of the huge gap existing between developed and developing countries, it is necessary to make the rule-based international economic system more responsive to the challenges which many developing countries are encountering. This becomes more significant with regard to the operation of their economic and legal infrastructures which have to meet the twin demands of economic liberalisation and socio-economic development. Although the special and preferential treatment for the developing countries embedded in the WTO rules has received wide recognition from WTO Members, the rationale behind these rules has rarely been studied in detail. A careful study of this issue will help us to understand the current world trade rules in a more co-ordinated way.

IV. The rationale for the special and preferential rules

      International trade exerts a critical influence on the economic development of any country, be it a developed country, a transitional economy country, a developing country, or a least-developed country. Yet, the role of international trade in economic development is far from settled and uncontroversial. While international trade is widely viewed as an “engine of growth”, developing countries disagree profoundly over the role of international trade in the process of their economic development. The focal point of the debate is whether developing countries, as their economy is lagged far behind those of developed countries, should be bound by the same trade rules as those applicable to the developed countries or should be treated differently during their integration into the world economy. This was also a major issue of the Uruguay Round of multilateral trade negotiations. The justifications for those special and differential rules resulting from the Uruguay Round negotiations are numerous. From an economic perspective, any universal legal system must address the particular concerns of developing countries. The actual relative economic positions of developed and developing countries must be acknowledged and somehow reconciled. This acknowledgement and reconciliation is also the political basis for the development of world economy.               

      The traditional neo-classical theory of international trade regards trade as a means of promoting(both productive and allocative) efficiency, equity, stability and growth on a world-wide scale. An interdependent world economy based on free trade, specialisation, and an international division of labour facilitates domestic development. It has long been understood that foreign trade increases the amount and variety of the objects on which revenue may be expended, and affords, by the abundance and cheapness of commodities, incentives to saving, and to the accumulation of capital. Flows of goods, capital, and technology within and across national borders should work to the economic benefits of all countries, exploiting their comparative advantages. Adam Smith, in The Wealth of Nations, argued that the case for gains from the specialisation in domestic economic activities applied equally to specialisation in international trade: “What is prudence in the conduct of every private family can scarcely be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we can make, better buy it from them with some part of the produce of our industry.”48 While free trade may be theoretically attractive, the assumptions upon which this theory is based do not necessarily apply to the contemporary realties of the global economy and the majority of developing countries. In the real world, there exist imperfect competition, unequal trade, and differential human resource and technological growth. Accordingly, the question becomes one of whether international trade is to be a force of equality or inequality in the world economic growth.     

      In contrast to the traditional view of international trade, some modern scholars argue that a liberal capitalist world economy tends to preserve or actually increase inequalities between developed and developing countries.49 Whereas trade was indeed an engine of growth in the nineteenth century, it cannot continue to perform this role properly today because of the combined effects of free trade and the economic, sociological, and demographic conditions, which are prevalent among many developing countries. These conditions include the combination of overpopulation and subsistence agriculture, rising expectations causing a low propensity to save, excessive dependence on unstable commodity exports, and the consequential impact of long-time feudal elite leadership.50 These misfortunes trap those developing countries in a self-perpetuating state of underdevelopment equilibrium from which they cannot escape without outside assistance.51

      Although the globalists argue that flows of trade, investment, and technology diffuse economic development and reduce international inequalities, the real situation seems going in an opposite way in many developing countries. International market imperfections increase inequalities among developed and developing countries as the developed countries tend to benefit disproportionately from international trade.52 While it may be true that the “developing countries” of the nineteenth century, through international trade, did enjoy the so-called advantages of backwardness that enabled them to learn from the experience of the more advanced economies, many of the twenty-first-century developing countries are, however, said to face almost insurmountable obstacles before they develop their national economy: the widening technological gap, their long experiences of marginalisation in the world economy, the lack of social discipline, conservative social structures, inherited population problems, low education level, harassment of indebtedness, and harsh climatic and geographic conditions. These developing countries are thus trapped in a vicious cycle of poverty from which escape is nearly impossible, and free trade may only make their situations become worse. As Ragnar Nurkse put it: “a country is poor because it is poor” whereas “growth breeds growth”.53

      In order to expose the causes of these social injustices, some scholars point out that the world economy is composed of a core or centre of highly developed countries and a large underdeveloped periphery.54 Technical progress that leads to increasing productivity and economic development is the driving force in this system, but technical advance has different consequences for the economic centre and the economic periphery due to their different economic structures and the international division of labour inherited from the past.55 The heart of their argument is that the nature of technical advance, cyclical price movements, and differences in demand for manufactured goods and primary products cause a secular deterioration for developing countries as they can only rely on their exportation of primary products for the importation of manufactured goods from developed countries. In the economic centre, technical progress is said to arise from the spontaneous operations of the economy and to diffuse throughout the whole economy so that employment displaced by increasing efficiency can be absorbed by investment in other expanding industrial sectors. Without large-scale of unemployment and with the pressures of powerful trade unions, there is an increase in real wages. Moreover, monopolistic corporations can maintain the price level despite the increasing of productivity and the decreasing cost of production. In the non-industrial periphery, however, technical progress is introduced from the outside and is restricted primarily to the production of commodities and raw materials that are exported to the economic centre. Inflexible social structures and immobile factors of production make adaptation to price changes impossible. Increased productivity in the primary sector, a shortage of capital due to a low rate savings, and an elite consumption pattern imitative of advanced countries all combine to increase the level of national unemployment. With surplus labour in primary occupations and the absence of strong trade unions, the real wage in the periphery economy then declines, transferring the fruits of technical advance in the periphery economy to the economic centre via depressed prices for commodity exports.56

      Based on this analysis, we can find that the terms of trade between developed countries(the core economy) and most developing countries(the periphery economy) tend to deteriorate constantly to the advantage of the former and to the disadvantage of the latter. As a consequence of this imbalance of the global economic structures, developing countries are unable to reverse this tragic situation, if they do not change the pattern of exportation. They will export ever more primary commodities in order to import the manufactured goods they need. Under these circumstances, even though the developing countries might gain absolutely from international trade, they would lose in relative terms.57 As Arthur Lewis has cogently argued, the fact that the terms of trade for many developing countries are unfavourable is that they are unable to develop their agriculture. The combination of rapid population growth(which creates an unlimited supply of labour) and low productivity in food grains causes export prices and real wages in many developing countries to lag behind those of developed countries.58 Although it is true that there are some developed countries, like Australia, New Zealand, Denmark and even the United States, which are also major exporters of agricultural products, the point here is that many developing countries, unlike the early modern Europe, are unable to improve their industrial productivity based on a prior rapid development of agriculture.59 Low efficiency in agricultural sector and lack of innovations in industrial sector will place many developing countries in an even weaker position in the current integration of world economy.

      The question of whether developing countries are better off to be outward-looking and to promote more exports or to be inward-looking and to substitute domestic production for imports cannot be answered in the abstract. It depends on the domestic infrastructure, current education level, political democracy and most importantly, the willingness to change their economic structures. In either scenario, international trading rules(either adherence thereto or exemptions therefrom) have a substantive economic impact. In some cases, international trade may help the exporting countries to accumulate more capital and raise their competitive capacity. While in others, international trade may draw the exporting countries into a vicious cycle that the more they export, the poorer they become as the earnings of their exports are not distributed to the people in general, but spent by these elite groups, and their national economy becomes less competitive for lack of input. Therefore, neither policy can realistically be pursued without acknowledging and somehow remedying the disparities between developed and developing countries. As an optimal choice at the moment, special and differential treatment for developing countries can be utilised in making the trade rules to promote their exports and/or stimulate domestic production of manufactured goods.

      The rationale behind the special and preferential treatment accorded to developing countries is based on the recognition that “there is a wide gap between standards of living in less-developed countries and in other countries”.60 If the gap cannot be narrowed, or even becomes wider, it will become more difficult for the trading partners to negotiate the trade rules. This is as indicated by the classic Prisoner’s Dilemma theory, in which both sides inhibit trade liberalisation and everyone is worse off. Therefore, to bring the developing countries into the world trade community and to raise their living standards by means of international trade are the indispensable objectives for any trade rule makers. On the other hand, while we are focusing our attention on narrowing the gap of living standards between developed and developing countries, we cannot neglect another important fact that the gap of living standards among developing countries themselves is widening. The traditional division of developing countries and developed countries is being blurred as some developing countries have already become quite “developed” compared with others. Being aware of this, many developing countries tend to ask: “are these special and preferential rules universal or differential?”

 

V. Special and preferential rules: universal or differential?

      The Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations(hereinafter as Final Act) contains many provisions which accord special and differential treatment to developing and least-developed country Members.61 These provisions are found chiefly in the WTO Agreement(Preamble, Article XI), in Part IV of GATT 1947(which has been incorporated into GATT 1994), in selected provisions of the multilateral agreements annexed to the WTO Agreement,62 in the ministerial Decision on Measures in Favour of Least-developed Countries, and in the ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-developed and Net Food-Importing Developing Countries. The WTO Members recognise the special development, financial and trade needs of developing and least-developed countries in the implementation of the obligations attendant their accessions to the WTO. These special needs arise on both a national and international level. Thus, where the WTO Agreement and its annexed agreements impose obligations on the Member governments, either to take affirmative action or abstain from a certain conduct, developing and least-developed country Members may be given more time to fulfill their obligations. Selected exemptions from obligations may also be available to developing and least-developed country Members. Furthermore, to address the special needs of developing countries, particularly the least-developed countries, some of the WTO agreements require developed country Members to provide for developing country Members the necessary technical assistance.

      In situations where these terms are defined, a country’s international status as “developed”, “developing”, or “least-developed” is determined primarily with reference to its Gross National Income(GNI) per capita. M. Bertrand used GNI per capita 8000 US dollars per annum as the dividing line for developing and developed countries.63 However, while the WTO Agreement, its annexed agreements and the related documents make reference to “developing country Members”, nowhere do they generally define the term “developing country”, nor do they specify any numerical criteria. Hence, in the case of accession to the WTO(as it was in the GATT), designation of a country as “developing” occurs somewhat on an ad hoc basis, mostly through self-selection.64 In the light of this situation, developing countries in the WTO can possibly be referred either to countries like Singapore, Korea, or to countries like South Africa, Kenya. In contrast, as for the term “least-developed”, the WTO Agreement provides a benchmark---the Agreement refers to “least-developed” countries as those recognised as such by the United Nations.65          

      According to Alice Alexandra Kipel, the vagueness regarding what constitutes a developing country can be attributed to two factors: (a)lack of consensus as to a definitive standard, and (b)disagreement over the goals sought to be achieved through special treatment for developing countries.66 The lack of consensus on the definition by over 100 countries, which are at various levels of social and economic development and, therefore, have differing perspectives on this issue, is understandable and merits no further analysis.67 The interplay between a flexible definition and the purposes to be served by special treatment for developing countries is more complex. Indeed, the purposes and the concerns addressed are different depending on whether the point of view is that of a developed country or a developing country.

      Kipel in her article seems to favour a vague definition for developing countries: “a subjective definition likely inures to the benefit of both developed countries and developing countries. If a country is willing to describe itself as developing country and articulates a need for special assistance, there presumably is reason to provide special treatment to enable that country to assume the obligations of the Final Act, thereby helping to ensure that this developing country offers market access and is not a disruptive presence in the international trade arena. Moreover, without a bright-line test, putative developing countries can proffer a variety of justifications in support of their need for special treatment. A rigid definition of the term ‘developing country’, on the other hand, would preclude such a creative approach, thus preventing countries from obtaining the special treatment and assistance which they believe necessary. As such, a country might effectively be blocked from meaningful participation in the world trading system which the Final Act seeks to regulate”.68

      There might be some reasoning in Kipel’s argument, especially for a young international institution like the WTO. Since the WTO Members have resolved to “develop an integrated, more viable and durable multilateral trading system encompassing the General Agreement on Tariffs and Trade, the results of past trade liberalisation efforts, and all of the results of the Uruguay Round of multilateral trade negotiations”,69 a practical way to fulfill this purpose is to attract the WTO Members in a flexible manner. However, the differences among developing countries themselves, in reality, are so huge that a set of vague standards for their definition could only make the special and preferential treatment become impracticable and contradictory. According to the statistics distributed by the World Bank, the world average level of Gross National Income(GNI) per capita in 1999 is 5,020 US dollars, with the average level of high-income countries at 26,440 US dollars, middle-income(including upper-middle-income and lower-middle-income) countries at 1,240 US dollars, and low-income countries only at 420 US dollars. These data profiles also reflect a similar contrast in the areas of technology, infrastructure, trade and finance.70 In the World Bank documents, those low-income and middle-income economies are sometimes referred to as developing economies, but it is not intended to imply that all economies in this group are experiencing similar development or that other economies have reached a preferred or final stage of development. The reference used within the World Bank is just for the sake of convenience. The WTO has no similar criteria to classify its Members. Consequently, some of the WTO Members which label themselves as developing countries are grouped either as high-income countries or upper-middle-income countries by the World Bank.71 Under such a circumstance, if the WTO does wish, as the WTO Agreement proclaims, to raise the living standard of developing countries by means of international trade under the auspices of those special treatment provisions, the definition of developing countries should be clearly-cut, otherwise the treatment accorded to developing countries is not special but universal.

      Furthermore, just as Kipel herself acknowledged, a subjective definition can lead to friction between those countries seeking preferential treatment and the developed countries with whom they have substantial trading relations. For example, much debate and publicity surrounded the application of China for its WTO membership. Among the issues of contention between China and the United States was the question of whether China should enter the WTO as a developing country(the result desired by China) or as a developed country, thereby assuming the full obligations of a WTO Member(the result sought by the United States).72 From 1986, first for the resumption of the contracting party status of the GATT, then for the entry of the WTO,73 China negotiated with all the GATT contracting parties/WTO Members which had significant trade relations with China. It is only about two years ago that the final obstacle in the way of China’s entry into the WTO was removed.74

      Here, one more question which merits noting is that the status of a developing country should not be stationary. Some countries, when they entered the GATT/WTO, were only at the initial stage of their industrialisation process and did need the external help for their fledgling industries. Nevertheless, after these years of development, they are still labelled as “developing countries” even if they have achieved much success and become quite “developed”. In order to maximise the benefits of the special and preferential treatment, and to help those developing countries which still lag far behind others, the WTO needs to specify the criteria for a country which wishes to be accorded the special and preferential treatment. At the moment, to regroup the WTO Members and to redefine a developing country are the practicable means.     

 

VI. Contradictions of the definition and the rationale of regrouping

      We have heard a lot about helping developing and least-developed countries to raise their living standard and to fully integrate into the world economy, but few of us have made any substantive research upon the issue of how we can help them in an effective way. It has been around nine years since the World Trade Organisation came into existence. The real situation is that we are still living in a world which is unsatisfactory---even unacceptable---in many respects. In the words of the former Director-General of the WTO, Renato Ruggiero, “It is a world where…over a quarter of the developing world’s people still live in poverty. About a fifth---1.3 billion---live on incomes of less than $1 a day. And over fifty percent of the global population has less than five percent of global income. These statistics reinforce what our eyes and ears already tell us---that though we are part of an ever more integrated global economy, the distance between the rich and the poor is still intolerably great.”75 This is a tragedy of our times. After we reflect upon why the gap between the rich and the poor is widening instead of narrowing, we may raise such questions: is there anything wrong with the WTO special and preferential rules? how can we help the developing countries in a more effective way?

      The World Trade Organisation has chosen to ensure that developing country Members, especially the least-developed country Members among them, secure a share in the growth of international trade as one of its objectives.76 Most of the multilateral trade agreements annexed to the WTO Agreement contain provisions which accord the special and preferential treatment to the developing and least-developed country Members in their implementations of these agreements.77 However, after these years’ operation, the WTO is still confronted with such a dilemma: on the one hand, the WTO is raising more funds for its technical assistance programmes which are designated to help the developing country Members to benefit these new international trade rules; while, on the other hand, many developing country Members are increasingly dissatisfied with the WTO development policy. Here, the crux is, in the view of the author, that the definition of “developing country” has been blurred by the self-selection mechanism of the WTO.78 At the moment, each country or separate customs territory can select whether it will be taken as a “developing country” or “developed country” when it enters the WTO. This over-flexible method of defining the status of a WTO Member may bring about the following disadvantages. Firstly, the special and preferential rules contained in the WTO agreements, which are designed to help developing and least-developed countries to fully integrate into the global economy and to raise the living standard in these countries, cannot be made in a specific and efficient way. There are altogether 144 WTO Members at the time of Doha Ministerial Conference, eighty percent of them have selected themselves either as developing countries or as economies in transition.79 With the possibility of so many countries applying these special and preferential rules, the real benefits of these rules should be debatable. Secondly, since there is no clear criteria to define a “developing country”,80 it is understandable why the negotiations upon the accessions of some countries to the WTO have taken such a long time. The issue of China’s accession is just one of such examples. Thirdly, the diversified views among the WTO Members upon the criteria of definition may challenge the validity of these special and preferential rules and, eventually, undermine the stability of the current international trade order.

      In order to make the defining process become more precise and predictable, to reduce the conflicts which arise out of the different views to this definition, and more importantly, to help those countries in real need to benefit from the WTO special and preferential rules, the World Trade Organisation needs to clarify the criteria for countries which wish to apply these special and preferential rules. The factors for consideration should include the economic level, development potential, population and a few others. Before I put forward any further suggestions upon this issue, I use a table to depict a real picture of all WTO Members and the observers(countries and separate customs territories waiting for their WTO membership) in terms of the size of their economy.81

Table 1: Size of economy of WTO Members and observers

	Population       million    1999	Gross national    income   $ billion rank  1999  1999		Gross national   income per    capita    $    rank 1999  1999	Gross domestic       product growth per capita    (%)  growth(%)  1998-99 1998-99
Albania	3	3.1  135	930  138		7.2     6.1
Algeria*	30	46.5   52	1,550   117		3.3     1.8
Andorra*	…	…   …	…    …		…     …
Angola	12	3.3  130	270  185		2.7    -0.2
Antigua and Barbuda	…	…   …	…    …		…      …
Argentina	37	276.1  17	7,550    58		-3.2     -4.4
Armenia*	4	1.9 150	490  157		3.3      2.9
Australia	19	397.3   15	20,950   27		4.4      3.2
Austria	8	205.7   21	25,430   14		2.1      1.9
Azerbaijan*	8	3.7  124	460  161		7.4      6.4
Bahamas*	…	…   …	…    …		…       …
Bahrain	…	…   …	…    …		…       …
Bangladesh	128	47.1   50	370  170		4.9      3.2
Barbados	…	…   …	…    …		…       …
Belarus*	10	26.3   61	2,620   94		3.4      4.4
Belgium	10	252.1   19	24,650  18		2.5      2.3
Belize	…	…   …	…     …		…      …
Benin	6	2.3  141	380  169		5.0      2.1
Bhutan*	…	…   …	…     …		…      …
Bolivia	8	8.1   94	990  134		0.6      -1.7
Bosnia and Herzegovina*	4	4.7  114	1,210   127		12.8       9.5
Botswana	2	5.1  109	3,240    87		4.5       2.8
Brazil	168	730.4    8	4,350    73		0.8      -0.5
Brunei Darussalam	…	…    …	…     …		…      …
Bulgaria	8	11.6    81	1,410   121		2.4       3.0
Burkina Faso	11	2.6   138	240   193		5.8       3.2
Burundi	7	0.8   174	120   205		-1.0       -2.9
Cambodia*	12	3.0   136	260   187		4.5       2.2
Cameroon	15	8.8    88	600   150		4.4       1.6
Canada	30	614.0     9	20,140     30		4.6       3.8
Cape Verde*	…	…    …	…    …		…      …
Central Africa Republic	4	1.0   168	290   181		3.4       1.7
Chad	7	1.6   155	210   197		-0.7       -3.4
Chile	15	69.6    43	4,630    70		-1.1       -2.4
China	1,254	979.9     7	780   142		7.1        6.1
Colombia	42	90.0    37	2,170   100		-4.3       -6.0
Congo Republic	3	1.6   154	550   152		-3.0       -5.6
Costa Rica	4	12.8    79	3,570   80		8.0        6.1
Cote d’lvoire	16	10.4    84	670   147		2.8        0.1
Croatia	4	20.2    64	4,530    71		-0.3        0.5
Cuba	11	…    …	…    …		…        …
Cyprus	…	…    …	…    …		…        …
Czech Republic	10	51.6   48	5,020    66		-0.2        -0.1
Democratic Republic of the Congo	50	…    …	…      …		…         …
Denmark	5	170.3    23	32,050      6		1.7         1.2
Djibouti	…	…     …	…      …		…          …
Dominica	…	…     …	…      …		…          …
Dominican Republic	8	16.1    74	1,920     105		8.3         6.4
Ecuador	12	16.8    72	1,360     123		-7.3         -9.0
Egypt	63	86.5    39	1,380     122		6.0         4.1
El Salvador	6	11.8    80	1,920     105		3.4         1.4
Estonia	1	4.9   112	3,400      83		-1.1        -0.6
Ethiopia*	63	6.5    99	100     207		6.2         3.6
European Community	…	…    …	…      …		…          …
Fiji	…	…    …	…      …		…          …
Finland	5	127.8    29	24,730     17		4.0         3.8
France	59	1,453.2    4	24,170     21		2.9         2.5
Former Yugoslav Republic of Macedonia*	…	…    …	…      …		…          …
Gabon	1	4.0   118	3,300     85		-6.2        -8.4
The Gambia	1	0.4   190	330     175		6.4        3.4
Georgia	5	3.4   128	620     149		3.3        3.1
Germany	82	2,103.8    3	25,620     13		1.5        1.4
Ghana	19	7.5    97	400     166		4.4        2.1
Greece	11	127.6    30	12,110      46		3.4        3.1
Grenada	…	…    …	…       …		…        …
Guatemala	11	18.6    68	1,680     112		3.6        0.9
Guinea	7	3.6   126	490     157		3.3        1.0
Guinea Bissau	1	0.2   200	160     202		7.8        5.7
Guyana	…	…     …	…      …		…         …
Haiti	8	3.6    125	460     161		2.2        0.2
Holy See (Vatican)*	…	…     …	…       …		…         …
Honduras	6	4.8    113	760     143		-1.9        -4.5
Hong Kong, China	7	165.1     24	24,570      19		2.9        1.8
Hungary	10	46.8    51	4,640      69		4.5        5.0
Iceland	…	…     …	…       …		…          …
India	998	441.8    11	440    163		6.5        4.6
Indonesia	207	125.0    31	600    150		0.3       -1.3
Ireland	4	80.6    40	21,470     24		9.8        8.7
Israel	6	99.6    35	16,310     36		2.2       -0.2
Italy	58	1,162.9    6	20,170     29		1.4        1.3
Jamaica	3	6.3   101	2,430     95		-0.4       -1.2
Japan	127	4,054.5    2	32,030      7		0.2        0.1
Jordan	5	7.7    96	1,630    115		3.1        0.0
Kazakhstan*	15	18.7    67	1,250    126		1.7        2.7
Kenya	29	10.7    83	360     172		1.3       -0.8
Korea, Republic of	47	397.9    13	8,490    54		10.7        9.7
Kuwait	2	…    …	…      …		…         …
The Kyrgyz Republic	5	1.5    158	300     180		3.7        2.2
Lao PDR*	5	1.5    157	290     181		7.4        2.8
Latvia	2	5.9    106	2,430      95		0.1        0.8
Lebanon*	4	15.8     75	3,700      78		…         …
Lesotho	2	1.2    165	550     152		2.5        0.2
Liechtenstein	…	…      …	…       …		…         …
Lithuania	4	9.8     85	2,640      92		-4.2        -4.1
Luxembourg	…	…     …	…       …		…         …
Macao, China	…	…     …	…       …		…         …
Madagascar	15	3.7    123	250     190		4.7        1.5
Malawi	11	2.0    149	180     201		4.0        1.5
Malaysia	23	76.9     42	3,390      84		5.8        3.3
Maldives	…	…     …	…      …		…         …
Mali	11	2.6    139	240     193		5.5        3.0
Malta	…	…     …	…      …		…         …
Mauritania	3	1.0    169	390     167		4.1        1.3
Mauritius	1	4.2    117	3,540       81		3.4        2.1
Mexico	97	428.9    12	4,440      72		3.5        2.1
Moldova	4	1.5    156	410     164		-4.4       -4.0
Mongolia	2	0.9    172	390     167		3.0        2.1
Morocco	28	33.7     55	1,190     129		-0.7        -2.3
Mozambique	17	3.8    122	220     195		7.3        5.2
Myanmar	45	…     …	…      …		…        …
Namibia	2	3.2    132	1,890     107		3.1        0.7
Nepal*	23	5.2    108	220     195		3.9        1.6
Netherlands	16	397.4    14	25,140     16		3.6        2.9
New Zealand	4	53.3    47	13,990     43		4.4        3.9
Nicaragua	5	2.0   147	410     164		7.0        4.3
Niger	10	2.0   148	190     200		-0.6       -3.9
Nigeria	124	31.6    57	260     187		1.0       -1.5
Norway	4	149.3    26	33,470      5		0.9        0.2
Oman*	2	…    …	…       …		…         …
Pakistan	135	62.9    44	470     160		4.0        1.5
Panama	3	8.7    89	3,080     89		3.0        1.2
Papua New Guinea	5	3.8   121	810     140		3.2        0.9
Paraguay	5	8.4    91	1,560     116		-0.8        -3.4
Peru	25	53.7    46	2,130     101		1.4        -0.3
Philippines	74	78.0    41	1,050     133		3.2         1.2
Poland	39	157.4    25	4,070      74		4.1         4.1
Portugal	10	110.2    34	11,030      49		3.0         2.8
Qatar	…	…     …	…       …		…         …
Romania	22	33.0    56	1,470     120		-3.2         -3.0
Russian Federation*	146	329.0    16	2,250      99		3.2         3.6
Rwanda	8	2.0   146	250     190		6.1         3.5
Saint Kitts and Nevis	…	…      …	…       …		…          …
Saint Lucia	…	…      …	…       …		…          …
Saint Vincent and the Grenadines	…	…      …	…        …		…          …
Samoa*	…	…      …	…        …		…          …
Saudi Arabia*	20	139.4    27	6,900      60		0.4         -2.1
Senegal	9	4.7   115	500     156		5.1          2.3
Seychelles*	…	…     …	…      …		…         …
Sierra Leone	5	0.7   180	130     204		-8.1         -9.9
Singapore	4	95.4    36	24,150     22		5.4          4.6
Slovak Republic	5	20.3    63	3,770     77		1.9          1.8
Slovenia	2	19.9    65	10,000     50		4.9          4.7
Solomon Islands	…	…    …	…     …		…          …
South Africa	42	133.6   28	3,170     88		1.2         -0.5
Spain	39	583.1   10	14,800     39		3.7          3.6
Sri Lanka	19	15.6   76	820     139		4.3          3.2
Sudan*	29	9.4   86	330     175		5.2          2.9
Suriname	…	…     …	…      …		…          …
Swaziland	…	…     …	…      …		…          …
Sweden	9	236.9   20	26,750     12		3.8          3.7
Switzerland	7	273.9   18	38,380      3		1.5          1.1
Chinese Taipei	…	…     …	…      …		…          …
Tanzania	33	8.5   90	260     187		4.7          2.2
Thailand	60	121.1    32	2,010     103		4.2          3.4
Togo	5	1.4   160	310     179		2.1         -0.3
Tonga*	…	…    …	…      …		…          …
Trinidad and Tobago	1	6.1   104	4,750     68		6.8          6.1
Tunisia	9	19.8    66	2,090    102		6.2          4.9
Turkey	64	186.5   22	2,900     90		-5.1          -6.6
Uganda	21	6.8    98	320    178		7.4          4.5
Ukraine*	50	42.0    53	840    138		-0.4          0.3
United Arab Emirates	3	…    …	…     …		…           …
United Kingdom	60	1,403.8    5	23,590      23		2.1          1.7
United States	278	8,879.5    1	31,910       8		3.6          2.4
Uruguay	3	20.6    62	6,220      64		-3.2          -3.9
Uzbekistan*	24	17.6    70	720     146		4.4          2.6
Vanuatu*	…	…      …	…      …		…           …
Venezuela	24	87.3    38	3,680      79		-7.2          -9.0
Vietnam*	78	28.7    60	370     170		4.8          3.5
Yemen*	17	6.1   105	360     172		3.8          1.1
Zambia	10	3.2   131	330     175		2.4          0.2
Zimbabwe	12	6.3   102	530     154		0.1         -1.7

Note: Countries with the asterisks are the observers of the WTO

      The World Bank used the Gross National Income(GNI) per capita as the criterion to classify its members(183) and all other economies with populations more than 30,00(207 in total).82 The countries and other economies with their GNI per capita at $755 or less are classified as the low-income group; those with their GNI per capita at $756-$2,995 are the lower-middle-income group; those with their GNI per capita at $2,996-$9,265 are the upper-middle-income group; and those with their GNI per capita at $9,266 or more are the high-income group. According to this classification, among the present 144(excluding Chinese Taipei as there are no data available for it) WTO Members as of this writing, forty-three are in the low-income group; thirty-five are in the lower-middle-income group; twenty-nine are in the upper-middle-income group; and thirty-six are in the high-income group. This is a more specific and practicable classifying method, compared with that of the WTO.

      From the above table, we can find that all those WTO least-developed country Members with two exceptions,83 together with some other WTO Members, are in the low-income group. The GNI per capita in these countries is only around two US dollars or even less a day. Furthermore, twenty-seven among the low-income WTO Members are classified by the World Bank as severely-indebted countries, twelve are classified as moderately-indebted countries, only three of them belong to less-indebted countries.84 In the global terms, the total population of the low-income countries amounts to 40 percent of the world population, but their GNI totally is only 3 percent of the world totality. The average GNI per capita of these low-income countries is $420, compared with $26,440 of high-income countries, and $1,980 of middle-income (including lower-middle and upper-middle) countries.85 Upon this research, the author of this article may put forward such suggestions that the WTO special and preferential rules currently applicable to these least-developed country Members should be extended to all those Members grouped as low-income countries. Since the gross national products and exports of these countries are so insignificant that other countries should eliminate all the duties and other trade barriers for the imports from these countries. The WTO should also focus its technical assistance programmes mainly on these low-income Members. Meanwhile, there should be a “graduation” system, which is so designated that any country, when it reaches a certain level, e.g. GNI per capita at $756 or more, will “graduate” automatically from the low-income group.   

      The situation of the middle-income countries, however, is not so easy to define. The economic level of those countries contrasts so much that the GNI per capita starts from $756 to $9,265. Even the difference between the lower-middle-income countries and the upper-middle-income countries is so obvious that it is impracticable to accord same special and preferential treatment to the countries from these two different groups. Most of these listed in the upper-middle-income group are the newly-industrialised countries which have diverted their economies of agriculture-orientation to manufacture-orientation and raised the living standard significantly in the recent decades. In contrast, those countries listed in the lower-middle-income group, either encumbered with heavy population and foreign debt, or impeded by the mismanagement of their leaders, can only acquire a subsistent level in their economic development. At the moment, all these countries, from both the lower-middle-income and upper-middle-income groups, select themselves as developing countries in the WTO. Some other countries like Singapore, Kuwait, Qatar, which have already been classified by the World Bank as high-income countries, still have the status of developing country Members. Under such a broad perspective, it is no surprise that about sixty percent of the WTO Members are treated as developing countries. If we apply the WTO special and preferential rules to all of these countries, together with other twenty-nine(about twenty-one percent) least-developed countries, it will become clear that the WTO mechanism to accord special and preferential treatment is neither reasonable nor workable. One practicable way is that the application of the special and preferential rules should be limited in scope, for example, only to those low-income and lower-middle-income countries(about fifty-three percent of the WTO Members), most of which are still devoted to agrarian production, therefore, need more help to readjust their economic structures. The other way available is that the multilateral agreements like the Agreement on Subsidies and Countervailing Measures may set separate criteria for developing country Members to apply their special and preferential rules. For example, Article 27(2) of this agreement stipulates that WTO Members designated as the least-developed countries and those with GNI per capita below $1,000 are not subject to the prohibition of export subsidies. Other developing country Members get eight years of delay, from the date of entry into force of the WTO Agreement, to fully implement this agreement.86

 

VII. Conclusion

      The purpose to regroup developing countries is to remove the ambiguous elements in the definition of developing country Members and to apply those WTO special and preferential rules in a more efficient way. The increasing marginalisation of some poor countries is a big challenge to all of us in the 21st century. Without them, the globalisation can never be in a full sense. The WTO has set one of its objectives as to help developing and least-developed country Members within its ambit, but whether or not these countries have benefited from the current international trade regime is quite another issue which deserves our careful study. To redefine and regroup developing country Members within the WTO is just one of the inspirations based on this study.

 

本文刊登于《跨国法论丛》，2003年第1卷