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...have been discussed both in the UN system, as part of the implementation and review of the Barbados Programme of Action for the Sustainable Development of Small Island Developing States, and in the World Trade Organization, primarily through the WTO Work Programme on Small Economies. This article examines proposals made in these contexts to enhance the competitiveness of SIDS in a free global market and their effective participation in the multilateral regime. Responses to these proposals show some willingness to provide assistance to SIDS, but resistance to the recognition of further exceptions for certain subcategories of developing countries, reflecting larger debates about special and differential treatment for developing countries in the WTO. It is concluded that if, as seems likely, limited recognition of SIDS needs will be provided within the trade regime, the international community must take its assistance commitments seriously, and it will be beneficial to maintain linkages between SIDS trade issues and the broader context of the MDGs.] CONTENTS I Introduction II Small Island Developing States III The Millennium Development Goals
A The Millennium Development Goals and International Trade
B Target 14, Small Island Developing States, and the Barbados
Programme of Action IV Small Island Developing States and International Trade A 'Small, Vulnerable Economies' and the WTO B Helping Small, Vulnerable Economies Compete in a Free Global Market
C Effective Participation in the Multilateral Regime D Other Issues V Conclusions I INTRODUCTION
If, as is sometimes suggested, a society can be judged by the way it treats its most vulnerable members, the response to small island developing states ('SIDS') is an important test for the international community. The physical, geographical, economic and demographic characteristics of these states create special challenges for them and result in a degree of inherent vulnerability that must be taken into account in strategies for their development. The United Nations and other international organisations, such as the World Bank, the Commonwealth Secretariat and the World Trade Organization, have recognised the unique difficulties confronting SIDS. (1) In the United Nations Millennium Declaration, UN Members resolved to address the special needs of SIDS, (2) and this is included as one of the targets of the global partnership for development in the Millennium Development Goals ('MDGs'). (3)
One aspect of the response to SIDS is ensuring that the international trade regime accommodates their needs and contributes to their development. This article examines the concerns that have been raised by SIDS with respect to existing trade rules and reforms that have been proposed. In the WTO and elsewhere, small states have been arguing that special provisions are required to address the inherent disadvantages they face in the global trading system. These arguments must be situated and assessed within the context of larger debates about the relationship between trade and development, and the optimal trade rules for the promotion of development. This article therefore explores the intersection between two targets of the MDGs: developing an 'open, rule-based, predictable, non-discriminatory' trading system that is committed to development and poverty reduction (Target 12) and addressing the special needs of SIDS (Target 14).
This subject is one of critical importance to the Pacific region, home to a number of the world's SIDS, and more generally, given that a substantial proportion of the world's states are SIDS. It is also a highly topical subject, since a number of significant developments are occurring in 2005. Trade issues were prominent on the agenda of the January 2005 International Meeting for the Ten-Year Review of the Barbados Programme of Action for the Sustainable Development of Small Island Developing States. (4) The international community will assess progress on the MDGs at a summit convened by the UN General Assembly in September 2005. Meanwhile, discussions are continuing within the WTO on trade issues for 'small, vulnerable economies' in the lead-up to the Sixth Ministerial Conference in December 2005. This article examines some recent proposals for 'special and differential treatment' ('SDT') for SIDS made in these contexts, which form part of a larger debate on trade and small developing economies. After introducing the category of SIDS and the MDGs, this article will consider the activities of the WTO Work Programme on Small Economies ('WPSE') (5) and relevant aspects of the follow-up to the Barbados Programme of Action.
II SMALL ISLAND DEVELOPING STATES
According to the UN, there are 51 SIDS in the world. (6) Although the exact figures will vary depending on the measures used, by any calculation they make up a significant proportion of the world's states: for example, the 37 SIDS that are UN Members represent almost one-fifth of the UN Membership. (7) This category represents the intersection of three groups--small states, island states, and developing or least-developed states--which all face significant challenges in their own right. Consequently, SIDS are among the most vulnerable states in the international community.
There is no consistent definition of 'small states'. A population threshold of 1.5 million is often used, although some states with somewhat larger populations may be included on the ground that they share the relevant characteristics, (8) and higher thresholds have been suggested, along with other measures such as land area and total gross domestic product. (9) Subcategories of 'very small' or 'micro' states can also be identified, although again with some variation in thresholds. (10) There is considerable diversity within the group of small states. However, they tend to share certain characteristics and challenges, which have been widely recognised. (11)
The small land area of these states places pressure on natural resources. Fresh water will often be scarce and its supply easily threatened. The resource base of small states is typically narrow and this is reflected in the production of a narrow range of goods and services. As a result, there are limited opportunities for diversification, leaving producers and the national economy vulnerable to depletion of key resources, global fluctuations in prices and other factors largely beyond their control. The narrow resource base and small area mean that small states are extremely vulnerable to natural disasters and environmental change, because these have the potential to wipe out the supply of key resources for the whole country. This is compounded by the fact that small island states are particularly susceptible to natural disasters such as hurricanes. In the longer term, a rise in sea levels may threaten the very existence of some small island states, and in the short term, disasters and environmental degradation often affect the entire population and physical environment, with potentially devastating consequences. (12)
A small population often means limited institutional capacity in the public and private sectors. Government departments and private firms are relatively small, affecting their capacity and competitiveness, respectively. Economies of scale cannot be achieved in production by small firms, or in the provision of public services. (13) These services are thus relatively costly to provide, and this may be exacerbated by high transport costs. (14) At the same time, sources of revenue are limited, with many small states relying heavily on tariffs for a substantial proportion of public revenue. The economies of small states tend to be relatively 'open' to trade and investment, and rely heavily on them. However, access to external capital is limited and many small states are dependent on official development assistance. (15)
A large proportion of small states are islands or multi-island states, (16) so the SIDS category is an important one. The fact that many small states are islands compounds some of the difficulties they face. Many of these states are physically remote and isolated. Remoteness entails dependence on transport providers and high transport costs, which are already higher for small volumes; (17) this raises the price of imports and exports. Even within individual multi-island states, high costs and difficulties with market access exist. In addition, effective public administration is difficult and expensive. Remoteness discourages foreign producers and service providers, and the domestic market may be too small to support more than one producer, so that competition in the domestic market is limited. (18) Thus small size and geographic location work together to exacerbate certain difficulties.
From this brief summary, it will be appreciated that small states, and especially small island states, face significant challenges in a number of related areas. (19) Although small states tend to do relatively well on some development indicators (such as education and health), they often have more poverty than their per capita income would suggest. (20) For SIDS, a crucial concern is the extent to which size and remoteness or insularity affect their development and economic performance. These issues have been the subject of a long and continuing debate, in which key questions include the extent to which the characteristics of SIDS constrain economic growth and whether these effects can be neutralised or minimised by appropriate policies and actions on the part of SIDS. (21) Discussion has also focused on the concept of vulnerability, which in this context refers to volatility in economic growth, (22) or more broadly, 'exposure to exogenous shocks over which the affected country has little or no control, and relatively low resilience to withstand and recover from these shocks'. (23)
Although the precise relationship between size, economic growth, and vulnerability has not been established, (24) the vulnerability of small states, and especially SIDS, has emerged as an important concern. (25) While all developing countries tend to experience volatility because of their dependence on exports of primary products and on external capital flows, some characteristics common to SIDS make them particularly vulnerable, such as lack of economic diversification, export dependence and susceptibility to damage from natural disasters. (26) Thus it is widely accepted that vulnerability is strongly correlated with the SIDS category: almost all of the states classified as 'most vulnerable' are small states, and about two thirds of these are islands. (27)
Given the importance of vulnerability, it has been suggested that an alternative category of 'small and vulnerable states' would be more appropriate to identify countries in need of special consideration. (28) As will be seen below, discussion in the WTO has revolved around the category of 'small economies' or 'small, vulnerable economies'. This category includes SIDS, along with others such as landlocked developing countries, which have also been recognised as requiring special consideration. (29) Even the boundaries of the SIDS category itself are somewhat flexible; a few countries commonly included in the list of SIDS are not in fact islands, but rather small coastal states which share most of the determinative characteristics. (30) Many would argue that the SIDS category does represent a distinctive intersection of characteristics that requires separate consideration. However, this category cannot easily be defined in strict or absolute terms, and it will be seen below that the question of the degree to which SIDS characteristics are shared by other developing states has important implications for the proposed responses to their challenges.
III THE MILLENNIUM DEVELOPMENT GOALS
In 2000, the Members of the UN unanimously adopted the Millennium Declaration, committing themselves to a broad and ambitious set of objectives in the areas of peace, security and disarmament; development and poverty eradication; environmental protection; human rights, democracy and good governance; protection of vulnerable populations; meeting the 'special needs of Africa'; and strengthening the UN. (31) With respect to development and poverty eradication, Members resolved to achieve certain specific goals by the year 2015. (32) These goals were later elaborated in a report of the UN Secretary-General setting out a 'road map' for implementation of the Millennium Declaration, (33) and distilled into the eight goals now known as the MDGs and their associated targets. (34)
Most of the MDGs and targets relate to specific issues or sectors, for example health indicators such as child and maternal mortality, or the incidence of HIV/AIDS, or education. Goal 8, however, is a much broader, overarching goal: to '[d]evelop a global partnership for development'. (35) It is therefore not surprising that the largest number of targets and indicators are related to this last goal. Of particular interest for this article are the following targets:
Target 12. Develop further an open, rule-based, predictable, non-discriminatory trading and financial system
Includes a commitment to good governance, development, and poverty reduction--both nationally and internationally
Target 14. Address the special needs of landlocked countries and small island developing states (through the Programme of Action for the Sustainable Development of Small Island Developing States and the outcome of the twenty-second special session of the General Assembly) (36) The scope of these two targets is extremely broad. Target 12, especially, is all but overwhelming as a single objective, and Target 14 incorporates the whole of the Barbados Programme of Action. (37) Their inclusion in the MDG agenda is important, as some progress toward these targets is an essential precondition for the full achievement of others, but they are so broadly stated that it is necessary to focus on smaller parts of them in order to allow meaningful discussion. (38) This article is specifically concerned with one issue at the intersection of these two targets, that is, development or reform of the trading system as one means of addressing the special needs of SIDS. It is nevertheless important to consider the issue within its context as part of a larger global agenda.
A The Millennium Development Goals and International Trade
While essential to the MDG 'compact', (39) the eighth MDG calling for a 'global partnership for development' is ambitious and arguably still the furthest from being realised. (40) Although reversing the downward trend in official development assistance is a major concern, (41) the MDGs are also concerned with international trade as 'an important engine of growth' and development. (42) This approach is mirrored by that of the Monterrey Consensus of the International Conference on Financing for Development, (43) which followed the Millennium Declaration and MDGs in 2002. According to these documents, the 'partnership for development' must address not only official development assistance, but also debt, foreign direct investment and other private resources, technical cooperation, and trade. (44) The focus on international trade is based on the understanding that liberalisation of trade can, and should, benefit developing countries by promoting growth, generating employment and increasing foreign exchange earnings; (45) but that to date, the main beneficiaries have been industrialised, 'upper-middle-income' countries. (46)
The recommendations made in the context of the MDGs and the Monterrey Consensus with respect to trade are familiar and echo many of the concerns raised by developing and least-developed countries ('LDCs') in the WTO. They include, for example, ensuring market access for developing country products; addressing the abuse of anti-dumping measures as a barrier to developing country exports, and the impact of non-tariff barriers; facilitating the accession of developing countries and LDCs to the WTO; and providing greater support for capacity-building and technical assistance. (47)
These issues, among others, are currently under discussion in the Doha Round of WTO negotiations, also referred to as the 'Development Round' or 'Doha Development Agenda', launched by the Doha Declaration adopted at the Fourth Ministerial Conference in 2001. (48) The Doha Declaration expresses an intention to place the needs and interests of developing countries 'at the heart of the Work Programme adopted in this Declaration' and to 'make positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development'. (49) Progress in the Doha Round is therefore crucial to the realisation of the eighth MDG and Target 12, and recent MDG documents urge states to commit to the successful conclusion of these negotiations. (50) As will be seen below, addressing the particular difficulties of SIDS and other 'small, vulnerable economies' in the context of international trade is also part of the Doha Work Programme. (51)
B Target 14, Small Island Developing States, and the Barbados Programme of Action
In the Millennium Declaration, UN Member States 'resolve to address the special needs of small island developing States'. (52) Both the Millennium Declaration and MDG Target 14 refer to, and incorporate, the Barbados Programme of Action. (53) This document was the outcome of an international conference in 1994, and it has provided the main focus for efforts to address SIDS development concerns. The preamble recalls the challenges faced by SIDS, and links the Barbados Programme of Action to the Rio Declaration on Environment and Development (54) and Agenda 21, (55) both outcomes of the 1992 UN Conference on Environment and Development. The Barbados Programme of Action summarises the case for special consideration of SIDS...
NOTE: All illustrations and photos
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