Thomas Fritz has examined the history of special and preferential treatment in a report for the Heinrich Böll Foundation. Developing countries first demanded special rights to protect their weak markets from the economic supremacy of the North shortly after the negotiation of the GATT agreement on trade and tariffs in 1947. Gradually, special rights were conceded to them permitting them special and preferential treatment. In contradiction of the founding principle of the equal treatment of all states, developing countries were allocated unilateral import benefits or tariff reductions which could be negotiated bilaterally, especially with industrialised countries. Special trade regimes were negotiated between some countries which without these special rights would have violated the GATT rules.

Special and Preferential Treatment: A Study by Thomas Fritz
Special Products and Protection Mechanisms: A Project Dialogue

But in the Uruguay Round starting in 1986, the developing countries allowed these hard won special rules to be extensively watered down. Many had lost their confidence in the efficiency of the special treatment, according to Fritz.  Not everything went as successfully as hoped. “Preferential treatment could be unilaterally revoked at any time. Only a few countries enjoyed the special treatment anyway, and even if they did, many particularly important products were exempted from the preferences.” The view of many developing countries was: if we take on the same responsibility of the industrialised countries, perhaps we can profit more. “Today we know that that was a grave error,” says Fritz.

The rules on special and preferential treatment in the GATT successor, the WTO, have become an instrument for very few countries, mainly the poorest. This at a time when the probelems of developing countries have risen. In one survey, developing country governments listed 88 WTO regulations which they were having serious problems implementing and where they urgently needed special treatment. But the strategy of the USA and the EU is to only allow special or preferential treatment - in the agricultural sector for example - if the markets of developing countries are in return opened for their industrial goods. The developing countries reject this with reference to the history of the concept of special treatment. They consider unilateral agreements a basic principle to which they have a claim as developing countries.

But in the political struggle in Hong Kong such arguments hardly play a role, criticises Caroline Lucas from the European Greens. “Special and preferential treatment - for example freedom from quotas and tax free market access - for the poorest states is used by the EU commission as a sweetener to persuade the developing countries to swallow the rest of the agenda.” The USA’s proposal even lists quite openly the opening of markets to its industrial goods as the condition for every kind of special treatment regulation. For the developing countries the situation is especially muddled because, in contrast to GATT, they are forced to implement all WTO rules, Lucas says. In GATT they were allowed to remain outside some agreements.

As a consequence many developing countries have failed helplessly in the desperate attempt to implement the mass of agreements. Many simply do not have the necessary capacity. With the negotiations in Hong Kong it is no different. “I counted,” says Lucas, “the USA has more than 800 representatives in Hong Kong, the EU 350. Mauritania has four delegates, Burundi three, Gambia two and Djibouti one – how are these countries, on a purely practical level, supposed to assert themselves against the superiority of the North?” Another reason why the developing countries don’t want any more regulations is that they still need time to implement the old ones. In a Christian Aid survey, two thirds of the delegations from developing countries said they believed the new proposals being discussed in Hong Kong would damage their economies.

Lucas also addresses the problem of the increasingly diverging interests of the developing countries. “’Divide and Rule’ is the new tactic of the EU and the USA,” she says. “In Cancún the industrialised nations got cold feet when they saw that a united group of developing countries could easily trip up their WTO policy.” In Hong Kong some African heads of government have already warned the industrialised countries to immediately cease their behind the scenes manoeuvring. Given such developments, Lucas thinks it will be difficult to begin the negotiations on special and preferential treatment at this time. “Some developing countries could see it as a further attempt to play individual states against each other.”

The discussion “Special and Preferential Treatment - Chances and Risks” took place on 14 December 2005 as part of the Böll Forum in Hong Kong.

Information on further events here