Shri Narendra Modi
Shri Narendra Modi
Prime Minister of India
International Trade
Special and Differential Treatment for Developing Countries – Proposals on DSU by Cuba, Honduras, India, In[…]i Lanka, Tanzania and Zimbabwe
TN/DS/W/19 9 October 2002

Dispute Settlement Body Special Session (02-5429)

Special and Differential Treatment for Developing Countries Proposals on DSU by Cuba, Honduras, India, Indonesia, Malaysia, Pakistan, Sri Lanka, Tanzania and Zimbabwe

The following communication, dated 20 September 2002, has been received from the Permanent Mission of India on behalf of Cuba, Honduras, India, Indonesia, Malaysia, Pakistan, Sri Lanka, Tanzania and Zimbabwe.

Suspension of Concessions and other Obligations

Developing-country Members have participated in as many as 149 disputes (out of 262) either as complainants or defendants. They raised 47 complaints against developed-country Members and 37 between themselves.

However, securing compliance from the defaulting Member is proving to be a difficult task and it is likely that in many disputes the developing countries may be left with no option other than to seek recourse to suspension of concessions and other obligations under the provisions of Article 22. However the tremendous imbalance in the trade relations between developed and developing countries places severe constraints on the ability of developing countries to exercise their rights under Article 22. The economic cost of withdrawal of concessions in the goods sector would have a greater adverse impact on the complaining developing-country Member than on the defaulting developed-country Member and would only further deepen the imbalance in their trade relations already seriously injured by the nullification and impairment of benefits.

A considerable portion of developing-country Members’ imports comprise essential commodities like raw materials, food items and capital goods. In such situations withdrawal of concessions in the goods sector would not be practicable or effective. Same is the case in the services sector, especially in case of important services like telecommunications, etc. Moreover, it would be recalled that the “cross-retaliation” provision seemed to have been incorporated in the DSU at the instance of developed-country Members, who felt that in case of non-compliance by developing-country Members in the IPRs area, they would not be able to effectively retaliate against developing-country Members, who would have limited, if any, trade marked or patented products of their own. Therefore, cross-retaliation in goods and services sector would be more effective. It is proposed that a complaining developing-country Member should be permitted to seek authorization for suspending concessions and other obligations in sectors of their choice. They should not be required to go through the process of proving that, (1) it was not “practicable or effective” to suspend concession in the same sector or agreement where the violation was found; and (2) the “circumstances are serious enough” to seek suspension of concessions under the agreements other than those in which violation was found exist. This burden of proving is quite onerous as Ecuador’s experience in Bananas dispute showed. Accordingly a new paragraph 3bis, it is proposed, be inserted in Article 22 as follows:

“Notwithstanding the principles and procedures contained in paragraph 3, in a dispute in which the complaining party is a developing-country Member and the other party, which has failed to bring its measures into consistence with the Covered Agreements is a developed-country Member, the complainant shall have the right to seek authorization for suspension of concessions or other obligations with respect to any or all sectors under any covered agreements.”

The above proposal is without prejudice to the other proposals tabled/to be tabled by other developing-country Members on “collective retaliation” “large scale retaliation” “prohibiting non-complying Members from invoking dispute settlement procedures under the DSU and covered agreements”, etc.