Operationalizing the Concept of Policy Space in the WTO: Beyond Special and Differential Treatment*

There are large differences between WTO Members in terms of resource capacity constraints and national trade policy and investment priorities. These affect the ability and willingness to incur the costs associated with implementation of new rules, as well as the net benefits of doing so. The 'adjustment burden' of new rules mostly will fall on developing countries, as such rules will reflect the status quo in industrialized countries ('best practice'). This paper discusses options that have been proposed to address country differences and increase the 'development relevance' of the WTO. These include shifting back to a club approach, more explicit special and differential treatment provisions in specific WTO agreements, and a concerted effort to establish a mechanism in the WTO where development concerns can be considered. A case is made for the latter -- involving a serious effort to increase the transparency of applied policies, including assessments of their effectiveness and the magnitude of any negative spillovers imposed on other developing countries. Copyright 2005, Oxford University Press.