Trade Policy Note Final-rev08 - Development

Box 14: Export Policies and WTO and other Tra de Agreements
The Agreement on Subsidies and Countervailing Measures (Article 27.2(a)) exempts LDCs
from the prohibition on export subsidies. The same exemption is also provided to a list of
countries (in Annex VII) as long as their per capita GDP remains below $1000. Note that
some acceding countries have forsaken this right in their terms of accession to the WTO. The
Agreement on Agriculture permits countries to subsidize exports up to the level of their
negotiated commitments. Very few developing countries have negotiated such commitments,
and thus cannot subsidize.
The TRIMs Agreement prohibits trade balancing requirements, i.e. that investing firms must
export to the extent they import. However, it does permit export performance and transfer of
technology requirements. The GATS Agreement permits performance requirements for
developing countries in order to help strengthen services in developing countries and it has no
effective disciplines on export subsidies.
However, many countries have given up the right to these and other performance
requirements in their terms of accession or in bilateral agreements (BITs and FTAs).
Access to Export Markets
Export-led development strategies obviously require the most free and secure access
to world markets possible. For several decades developing countries have enjoyed
preferential access to developed countries’ markets under the Generalized System of
Preferences negotiated in UNCTAD. These had the advantage of being nonreciprocal,
but the serious disadvantages of not being bound and thus insecure, and of
containing many exceptions, precisely in sectors, (e.g. textiles and clothing and
agriculture) where developing countries possess a comparative advantage. Some
poorer developing countries, notably those in the ACP group, benefited from
contractual preferences in the EU. Most developed countries (excluding the USA)
have complied with their commitment to extend duty free treatment to LDCs. Other
developing countries are granted autonomous preferences to assist them in dealing
with specific problems, such as dependence on exports of illicit drugs.
Many developing countries are seeking to negotiate FTAs with major developed
countries as a means of ensuring conditions of access equal to those of their
competitors. Negotiations have already begun to convert ACP preferences into
reciprocal FTAs (“Economic Partnership Agreements”).
However, barriers and distortions to world trade, particularly subsidized agricultural
production and exports in the industrialized countries, ha ve heavily penalized many
developing countries. Contingent measures such as anti-dumping duties have served
to “nip in the bud” export expansion in developing countries, while stricter sanitary
and technical regulations have also had a disproportionate impact on poor people,
excluding them from export income. Stringent rules of origin have resulted in many
exports not benefiting from available tariff preferences. Poorer people are much more
adversely affected by insecure access to markets, as sudden disruptions to their
exports can provoke immediate unemployment in export industries and bankrupt
small independent producers.
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