The Enabling clause revisited

Having the Enabling Clause as the permanent legal base for a departure from the most favoured nation (MFN) obligation and the underlying notions of non-reciprocity and autonomous (i.e. unbound) preferences raises two problems. Substantial trade preferences under the GSP are rare because ‘developing countries’ are a self-designated group of countries without agreed exit criteria. Certain preferences became the object of trade disputes, because they discriminated developing countries. Trade preferences today seem to be the legally safer form of regional trade agreements with reciprocal concessions. This raises the question whether non-reciprocity will end by way of RTAs, leaving small and non-aligned developing countries out.

In this situation, trade lawyers are called upon to present new solutions, if possible without revision of the hopelessly outdated Enabling Clause. A ‘conditional scheduling’ of tariff and other preferences would provide eligible beneficiaries with the necessary market access security. At the same time, GSP donors could spell out objective graduation criteria under which competitive countries, products and perhaps even regions could return to normal MFN market access conditions. The development of such criteria is certainly a challenge for economists and the trading community. Nevertheless the proposed new approach appears to be a politically possible and WTO-compatible gateway for truly interested preference donors, in consultation with beneficiaries, by way of a ‘graduation covenant’.