On the International Economic Law and Policy Blog, Professor Joost Pauwelyn highlighted a 29 March 2019 proposal by nine WTO Members calling for a compliance mechanism to strengthen the notification procedures and improve transparency.

On 27 June 2019, seven WTO Members [Cuba, India, Nigeria, South Africa, Tunisia, Uganda and Zimbabwe] responded to the proposal by stating that “if developing countries are not able to meet current notification obligations, there would be no possibility of meeting even higher notification requirements in future”, highlighting capacity and resource constraints in meeting the obligations and also hinting to a lack of future cooperation from their side to improve the notification procedures. The response states that the 29 March proposal “presupposes the causes and remedies for non-compliance and proposes increased notification obligations rather than addressing developing countries' difficulties in complying with these obligations.”

However, the 29 March proposal, among other things, also called for mechanisms for developing countries that are unable to meet the deadlines due to resource constraints to seek assistance and support for capacity building from the WTO Secretariat, either in the form of WTO trade-related technical assistance or as ad hoc-assistance for a particular notification. Professor Pauwelyn also highlighted how the “disclose and assist” method may be an efficient route to compliance rather than “litigate and sanction” method. This is correct: a cooperative model may improve the WTO system, rather than use the threat of litigation and sanctions.

While WTO Members who are pushing for the agenda to have a stronger compliance mechanism are working towards formulating a system that can also address the developing countries’ needs by providing a way to seek assistance, developing countries are contesting the proposal to improve transparency in the notification procedures. The response of the seven WTO Members mentioned above states that “[g]iven the challenging issue of resource constraints, developing countries should not be subjected to any transparency obligations which go beyond existing obligations.” The response calls for an “inclusive approach”, but does not seem to take the considerations for resource constraints provided by the developed members into account, such as assistance. These countries seem to be seeking differential treatment in commitments rather than considering the proposals for reforming the system that also seek to address developing country needs.

It is important to note that the 27 June response was made by countries in the lower-middle-income category and the low-income category, as per the World Bank data. But in terms of resource constraints, these countries need not be put in the same category: for example, India, which is in the lower-middle-income classification, need not receive the same relaxation as Uganda, which is in the low-income classification, does. Due to this imbalance in the level playing field, the US in January 2019, called for the abolition of the self-declaration of “developing country” status and proposed for objective criteria. In a response to this proposal, ten countries including India and China responded that the self-declaration practice for differential treatment is long-standing, and that the WTO Agreement recognizes the “customary practices followed by the contracting parties to GATT 1947” under Article XVI:1. India has also claimed differential treatment for obligations in the ban of illegal, unreported and unregulated fisheries subsidies.

From a broader perspective, it is evident that some developing countries intend to reap the benefits of differential treatment for current as well as new obligations in the future. In a 2013 article, Professor Pauwelyn, predicted that “we may expect more, not less, differentiation”. This is what is happening at the moment. The “North-South” divide is being kept intact by the developing countries. The disregard for assistance being provided for “developing country needs” with respect to WTO notification procedures, only further highlights that differential treatment is here to stay. Some developing countries are flashing “differential treatment” to contest the creation of any new obligations and decelerate reforms.

The contestation by developing countries, along with a lack of cooperation for new initiatives, may further divide the WTO’s negotiating arm. It is submitted that developing countries would do better to acknowledge and take into account the assistance being offered to them. They may want to consider a move beyond the threshold of “developing country” status by cooperating in WTO reform negotiations while reaping the benefits of the assistance being provided. This would indicate a move towards a level playing field, where concerns of developing countries are also included in the reforms. In this manner, we can realize an “inclusive approach” towards development, whereby the developed and the developing countries work together for reforms rather than divide WTO negotiations along "North-South” lines. After all, the “inclusive approach” is also what the 27 June response calls for.

Vineet Hegde, PhD researcher in International Law, and Professor Dr. Jan Wouters, Professor of International Law and International Organizations, KU Leuven, and Director of the Leuven Centre for Global Governance Studies, Belgium.

This post originally appeared in the International Economic Law and Policy blog on July 12, 2019.