A case for special treatment : small island developing states in international trade negotiations

Abstract

Recent international developments have rendered Small Island Developing States (SIDS) more vulnerable than ever before, principally because of their high dependence on trade and their weak capability to adjust. This chapter examines the special conditions of SIDS, and argues that these are more exposed to international trade than other groups of countries, have higher reliance on import duties for their government revenue, need to take steps to help local manufacturers compensate for the high cost of doing business in SIDS and need to put in place relatively high fiscal incentives to attract FDI. The WTO rules, as being developed are likely to impact SIDS much more heavily than other groups of countries, and there is therefore the need to consider these states as meriting some form of special transitional arrangements to enable them to adjust in a reasonable span of time. The chapter proposes a negotiations strategy for SIDS, but it does not make a plea for permanent protection, and for this reason it proposes that SIDS should upgrade their productivity in order to step up their competitiveness to be better able to participate in the globalisation process.