The development dimension has been an unstated part of the multilateral trading system since the General Agreement on Tariffs and Trade (GATT) was agreed to in 1947. Ten of the original 23 GATT contracting parties could have been classified at the time as developing countries, including (pre‐communist) China.34 However, the original GATT made no formal distinction between developed and developing countries. In part, this initial textual absence can be attributed to the underlying assumption about trade negotiations (which prevailed then as now) that a decision by one country to lower its tariffs or other trade barriers to the goods of another country is a “concession” to that other country. Almost all economists will be quick to note that this is a political and not an economic assumption.35 It is based on the fundamental fallacy that opening one’s market involves “concessions” that need to be “paid” for—that tariffs and other barriers to trade are national assets that should be relinquished only in exchange for improved market access abroad. Economically, this makes no sense, as a country generally benefits from reducing its barriers to trade with other countries, regardless of what those other countries do.
Nevertheless, proceeding from this assumption, from its inception the GATT sought to create a balance of “concessions” in which all countries could claim back home that they got at least as much as they gave in negotiated agreements. Still underlying trade negotiations today, this internationally agreed architecture of multilateral trade negotiations is called “reciprocity.” A trade agreement is seen as “reciprocal” if every country that has negotiated the agreement believes that the agreement contains a “balance of concessions”—that the “concessions” it has obtained through the agreement match the “concessions” it has made.
In adherence with this principle of “reciprocity,” generally all countries were treated equally in the give and take of the first several postwar GATT rounds of multilateral trade negotiations, which focused mainly on liberalizing trade by lowering tariffs. But, of course, in their stages of development, all countries were far from equal. In the first few decades following World War II, the United States, emerging economically unscathed and fully mobilized from the global conflict, was by far the leading force in the global economy. The economies of Europe and Japan gradually recovered (thanks in no small part to the generosity of the United States). Meanwhile, the poorer countries, including dozens of the newly independent countries freed from colonialism, at first composed only a small slice of the global economy.
But, one by one, many of these poorer countries, often with the sponsorship of their previous colonial masters, joined the GATT. Gradually, their numbers grew, and before the first decade following the agreement on the initial GATT, developing countries succeeded in exacting from the developed countries two changes in the GATT that instilled the concept of SDT for developing countries in the legal text of the multilateral trading system.
First, in 1955, the GATT contracting parties adopted a substantial revision of GATT Article XVIII, which was rewritten to give clear authorization to developing countries to enact measures to protect infant industries and to afford them additional ease in imposing trade restrictions when facing balance of payments difficulties.36 In addition, the GATT contracting parties introduced GATT Article XXVIII bis, which formally introduced the concept of “non‐reciprocity” into the legal text. It did so by stating that multilateral trade negotiations should take into account “the needs of less‐developed countries for a more flexible use of tariff protection to assist their economic development and the special needs of these countries to maintain tariffs for revenue purposes; and … all other relevant circumstances, including the fiscal, developmental, strategic and other needs of the contracting parties concerned.”37 With this change in the GATT, the multilateral trading system’s original rigid adherence to “reciprocity” was relaxed, and its previously implicit distinction between developed and developing countries in the trading system became more explicit.
But which countries were entitled to SDT? The revised GATT made no attempt to provide a definition of a “developing country,” and each country was therefore left to choose for itself whether it wished to be treated as one. The identification process became (and remains) one of self‐selection, in which “developing countries” justify their “developing” status simply by announcing it.
One aspect on which all countries have agreed from the beginning is that LDCs must be treated differently and so are not expected to provide “reciprocity” in trade agreements. The WTO recognizes LDCs as countries that the UN has designated as such.38 There are 47 such countries on the UN’s list. To date, 36 of these countries have become WTO members. In contrast to all other “developing countries,” classification as an LDC requires a country to meet established criteria. The UN classifies a country as an LDC if it is determined to have human resource weakness, economic vulnerability, and a GNI per capita of less than $1,025.39
Yet, for all those countries that are not LDCs but that nevertheless claim “developing country” status, the practice of self‐selection has prevailed. By the 1960s, developing countries made up most of the GATT contracting parties, and they sought further recognition of their “developing” status in the trading system. Desirous of additional SDT, they used their newfound majority as negotiating leverage to secure the adoption of Part IV of the GATT, on “Trade and Development,” which took effect in 1966.40 Part IV added three articles—XXXVI, XXXVII, and XXXVIII—to the GATT. Most notable by far is Article XXXVI:8, which recognizes the notion of “non‐reciprocity,” stating: “The developed country parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of less‐developed contracting parties.”41 But the fact that these three articles of Part IV of the GATT have no legal force has “led to resentment among developing countries” and hardened the division over development status in the trading system.42
With developed countries still firmly committed to an ultimate goal of “reciprocity” and with developing countries equally committed to “non‐reciprocity,” multilateral trade negotiations in the succeeding decades gradually became, for almost all countries—and for developing countries especially—more and more a matter of seeing how little they could “give” in trade concessions in exchange for what they “got.” The concept of “non‐reciprocity” sowed the seeds of resentment over being unfairly treated by the trading system, a sense that today grips developed and developing countries alike. Both believe they are giving too much and getting too little under the multilateral rules of trade.
Along the way, additional efforts have been made to afford more substantial privileges to those with “developing country” status. In 1971, the GATT approved for 10 years the establishment of trade preferences for developing countries that would have otherwise violated the basic obligation of “most favoured nation” treatment, which forbids trade discrimination between and among imported like products.43 This preferential arrangement is known as the “Generalized System of Preferences” (GSP).44 Between 1971 and 1976, about 20 developed countries, including the United States, implemented tariff preferences for developing countries. In 1979, GSP approval was extended permanently through the adoption of the Enabling Clause, which permits developed countries to adopt discriminatory tariff arrangements that favor imports from developing countries.
It was in the 1970s that the United States first began to express the antecedents of the view on SDT now given voice by Trump. This was about the same time when the products of developing countries first began to compete with those of the United States. In response, the United States began “insisting that at some stage some of the developing countries should ‘graduate’ and be counted among the developed contracting parties” of the GATT.45 Confronted by mounting domestic resistance to giving developing countries SDT, and continuing to hold economic reservations about the efficacy of such treatment, developed countries undermined GSP privileges even as they granted them. GSP preferences usually omitted the labor‐intensive, and therefore politically sensitive, products in which developing countries could have been most competitive in the domestic markets of developed countries. Furthermore, GSP was discretionary and therefore less than certain, which undermined investments in the production of GSP‐traded products by developing countries.
In addition, in what amounted to reverse discrimination, developed countries began to impose quotas, voluntary export restraints, and other forms of managed trade to protect their domestic producers from competition from the products of developing countries in sectors in which developing countries enjoyed a comparative advantage and could benefit significantly from freer access to the domestic markets of developed countries. Most notably, these protectionist arrangements have limited the trade of developing countries in textiles, clothing, footwear, and agriculture. Through actions such as these, developed countries have implied to developing countries that their support for SDT is “only a political gesture.”46
Questions surrounding the development dimension were on display throughout the eight years of the Uruguay Round of multilateral trade negotiations that concluded with the Marrakesh Agreement in 1994. Each of the negotiating countries was required to agree to all 17 multilateral agreements before any agreement could take effect. This legal requirement amounted to a movement away from “non‐reciprocity” that many developing countries resented. Yet diminishing the extent of this resentment was the fact that many of these agreements contained provisions that promised SDT to developing countries.
The WTO Secretariat has listed 183 provisions for SDT contained in the WTO‐covered agreements—a sum that does not include the additional subsequent provisions for such treatment found in the decisions of the WTO Ministerial Conference and the WTO General Council and in the new TFA.47 Some of these provisions give flexibility to developing countries in the fulfillment of their trade obligations and in the domestic measures and other actions they take. Some are simply “best efforts” undertakings that lack any binding legal force. Others provide transitional periods for phasing in WTO legal obligations. Still others relate to delivery of technical assistance to developing countries by developed countries. And a number are special provisions exclusively for LDCs.
The Uruguay Round effected a pivotal change in the provision of SDT by shifting the focus from different levels of trade obligations for developing countries to the time that these countries would need to adjust to and therefore comply with WTO rules.48 Since this change when the GATT transformed into the WTO in 1995, and despite the numerous provisions for SDT in the WTO‐covered agreements, many developing countries have complained repeatedly that they have not received the economic benefit of the bargain that they thought they had struck with developed countries in the Uruguay Round.
Soon after 9/11, WTO members gathered in Doha, Qatar, to launch the Doha Round of multilateral trade negotiations, the first full round of negotiations since the establishment of the WTO six years earlier. One of the Doha Round’s clearly stated purposes was to promote the further “development” of developing countries by granting them enhanced market access, balanced rules, and well‐targeted, sustainably financed technical assistance and capacity‐building programs.49 But obstacles to success in the negotiations were their lack of specificity on what constituted a developing country and on what precise rules and programs would augment their development.
One of the principal underlying reasons for the collapse of the Doha negotiations was the utter lack of anything approaching a consensus over the meaning of Paragraph 44 of the Doha Declaration, which mandated a review of all existing SDT provisions. This lack of consensus contributed much to the prolonged stalemate in multilateral trade negotiations and to the eventual demise of the ill‐fated round at the WTO Ministerial Conference in Nairobi, Kenya, in 2015.50 The Doha Round was a huge missed opportunity for all WTO members, developed and developing countries alike. By failing to forge a consensus to fulfill the Doha Development Agenda, the WTO members also failed to make any progress on advancing development. In the aftermath of these failures, the issue of SDT has become even more divisive.
Ordinarily, WTO members might look to the WTO’s formal avenues for dispute settlement to clarify their mutual obligations. But on this issue, in the absence of a definition of SDT in the legal text of the WTO‐covered agreements, panels and the appellate body have not been able to clarify the distinction between “developed” and “developing” countries. Jurists in WTO trade disputes have assumed that WTO members are “developing countries” when they say they are. Nor has there been any clarification in 25 years of WTO dispute settlement of how, if at all, SDT should apply to specific WTO obligations. The limited WTO case law has mainly dealt with the details of GSP treatment under the Enabling Clause.51 In the absence of any definitive guidance from the WTO agreements on a legal definition of SDT, panels and the appellate body have rightly sought to avoid taking an interpretive approach that would arbitrarily add to or subtract from the rights and obligations provided in the covered agreements. Instead, panels and the appellate body have found that SDT can only exist through a specific WTO obligation—and only to the extent that it is specified by that obligation. Thus, the issue has been largely left to further negotiations.