STANDARDS AND TRADE DEVELOPMENT FACILITY AS SPS RESPONSE TO

SPECIAL AND DIFFERENTIAL TREATMENT PROVISIONS OF WTO

Prepared by Mathew P. Andruczyk, LLM 2013














2






Introduction
The following paper is an attempt to examine how the idea of special and
differential treatment for developing countries is implemented in SPS context. By
examining the primary documents relevant to GATT
1
, it will attempt to trace the legal
underpinnings of the Standards and Trade Development Facility and position it with
respect to generalized system of preferences. Finally, it will try to apply the concept of
non-discrimination as elaborated in EC-GSP
2
case to the operation of STDF trust fund.

What is STDF?
The STDF (Standard and Trade Development Facility) is the SPS response to the
development through trade needs
3
. This section will attempt to position the facility within
the legal framework of the WTO agreements and draw some conclusions as to its
legitimacy.

1
The documents are: GATT 1947 Agreement, WTO Agreement, 1971 Waiver Decision and 1979
Ministerial Decision
2
WT/DS246/AB/R
3
Even though the STDF documents do not explicitly relate the facility to SPS Agreement, the linkage is
obvious eg. SPS Committee is involved in preparation of updates on functioning of STDF.
3
What is the STDF? Formally speaking, it appears to be an agreement among
several international organizations
4
, several of which are explicitly designated by the SPS
agreement as the standard-setters for SPS measures. WTO itself is one of the signatories
and has taken upon the responsibility of providing administrative support through the
organ of STDF Secretariat
5
. According to its Operational Rules, STDF has an
overriding objective of stimulating the development of states through increase of their
agricultural export earnings. Those exports are hampered by inability of the developing
countries to meet SPS standards of importers. Get the countries to meet the standards if
the importers, in particular as embodied in the international standards recognized by SPS,
and their exports will increase
6
.
The final objective is to be achieved in twofold fashion. Firstly, by co-ordination,
in a sense of acting as information centre for SPS initiatives undertaken by the partner
organizations or on multilateral basis. The key idea here appears to be letting the
developing countries know what projects are being undertaken and informing them how
they can participate in these various projects. Secondly, through the instrument of Trust
Fund a source of funding for the projects for the applicants from developing countries.
Here, the key notion appears to be encouragement of donations from the developed

4
Note by SPS Committee (G/SPS/GEN/371) lists membership of STDF as: The FAO (including
participation of Codex and IPPC), OIE, World Bank, WHO and WTO

5
For structure of STDF, see OPERATIONAL RULES OF THE STANDARDS AND TRADE
DEVELOPMENT FACILITY, STDF 139 rev.2
6
According to MEDIUM TERM STRATEGY OF THE STANDARDS AND TRADE DEVELOPMENT
FACILITY, p. 4 para 1-2.

4
members, causing the developing states to take notice of the funding available and
stimulating project proposal development
7
.

How does it fit within WTO legal framework?
Having briefly outlined the nature of STDF facility, a natural question is whether
the WTO, as an international organization, possesses a mandate to engage in inter-
organizational partnerships for benefit of developing states, and in particular
administration of a fund for the exclusive benefit of the developing members.
The natural place to begin the search for such mandate would be the WTO
Agreement
8
. The WTO Agreement invokes the developmental needs of the members and
affirms a need for positive efforts in order to increase their share in international trade
9
.
On its own, this general statement of intent appears to be insufficient
10
. A little more
specific reference to an arrangement of this nature may perhaps be found in the statement
of functions of WTO, one of which is the facilitation of implementation of
Multilateral Trade Agreements
11
. Because the STDF facility is designed to assist in
implementation of one of the cornerstones of the SPS Agreement (harmonization of
standards)
12
, it certainly appears to meet the criterion of facilitating.
Perhaps the most explicit direct linkage between the WTO Agreement and the
STDF may be found in Article V, which foresees establishment of arrangements

7
See OPERATIONAL RULES OF THE STANDARDS AND TRADE DEVELOPMENT FACILITY,
STDF 139 rev.2, p. 2, par. 1(1)
8
As the constitutive agreement of WTO, it would be expected to enumerate the powers of the organization.
9
See second recital of the Agreement Establishing World Trade Organization
10
The key issue here is the interpretation of just what constitutes a positive effort and whether the need
may be construed as a mandate to the WTO as a whole to enter an agreement with other organizations.
11
Agreement Establishing World Trade Organization, Art. III(1.)

12
See SPS Agreement, Preamble, recital 6.
5
between the WTO and other actors with related mandates
13
. STDF came into being as an
act of implementation of common desire
14
on the part of WTO and the organizations,
which later became partners in the STDF. The joint statement was issued to inform the
Ministerial Conference that the undersigned organizations were to explore new
mechanisms for co-ordination and resource mobilization. These efforts were to be
undertaken in order to enhance capacity of implementation of international standards
and assist the developing states in taking full advantage of trade opportunities.
Article IV of WTO Agreement provides the linkage with creation of STDF. The
article grants the Ministerial Conference the power to take decisions in pursuance of
functions of WTO, in particular in matters of implementation of the multilateral
agreements. Since the STDF facility reflected the intentions expressed in the
communiqu creation of the STDF may be viewed as exercise by the Ministerial
Conference of the powers vested in it by Article IV of WTO Agreement.
The analysis may be conducted further by examining the text of the SPS
Agreement, in particular its provisions relating to developing members
15
. STDFs
objectives intersect with those of SPS Agreement, therefore it makes sense to seek the
mandate for the facility within its text
16
.
In its preamble, SPS Agreement recognizes the developing countries particular
difficulties in meeting the appropriate levels of protection in the export markets
17
. More
specifically, Article IX of SPS agreement appears to provide an almost perfect mandate

13
Art. 5(2) reads, The General Council may make appropriate arrangements for consultation and
cooperation with non-governmental organizations concerned with matters related to those of the WTO.
14
See Joint Statement issued during Doha Ministerial Conference, Nov.11 2001, WT/MIN(01)/ST/97.
15
See Articles IX and X, Agreement on Application of Sanitary and Phytosanitary Measures.
16
For one, both desire the adoption SPS of measures based on international standards in the interest of
facilitation of trade.
17
SPS Agreement, Preamble, recital 7.
6
for STDF, when it expresses the will of the Members to facilitate either bilaterally or
through international organizations, technical assistance or donations or grants, in order
for the developing members to meet the appropriate level of protection required by the
measures of the developed members. The very raison detre of STDF is co-ordination of
the technical activities as well as the funding activities in pursuit of projects
implementing compliance with international standards
18
. Since these standards are
imposed in order to ensure that the countries are able to meet the appropriate level of
protection of the other states, it follows that STDF enables developing states to comply
with measures to achieve the appropriate level of protection in the export markets.
Hence, Article IX of SPS Agreement provides a very direct linkage between the STDF
facility and the latter.
Article X of SPS Agreement provides for Special and Differential Treatment.
The possibilities afforded to the beneficiary states concern mostly the timeframes of
compliance with the measures of the developed members, so the thrust of this provision
appear to go very much against the objectives of the STDF
19
. However, paragraph 4 may
be viewed as providing a link between differential treatment and STDF. It encourages
Members to facilitate the participation of the developing states in the relevant
international organizations
20
. Since the relevant organizations are either directly or
through its parent organization members of the facility, and since STDF projects are
conducted under the supervision or direction of those relevant organizations
21
, STDFs

18
Supra note 7.
19
While STDF attempts to push the developing states towards adoption of standards, Article X actually
frees them for a limited time from that obligation.
20
These organizations are defined in ANNEX A(3) of SPS Agreement and include the OIE, Codex and
IPPC, all three of which are STDF partners.
21
The partner organizations are charged with supervision of STDF funded projects, see OPERATIONAL
RULES OF THE STANDARDS AND TRADE DEVELOPMENT FACILITY
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facilitation of the developing countries participation in these projects may be construed
as facilitation of their active participation in the work of the relevant organizations.

STDF and the Generalized System of Preferences
In order to increase the export earnings of the developing states, the developed
states chose the road of preferential tariff treatment on generalized basis (GSP). This
much is clear from examination of the documents setting the foundation for the system,
most notably the UNCTAD Resolution
22
establishing the Special Committee on
Preferences.
This Committee published conclusions document
23
, setting the stage for the
promulgation of the 1971 waiver
24
of MFN GATT obligations of Article I. The main
relevance of the Agreed Conclusions document is that through its numerous provisions, it
arguably draws the line between the tariff measures as the core preferential measures
and the so called complementary or related measures
25
. The nature of the latter is
never explicitly stated, but they are invoked in the context of enabling the beneficiaries of
the tariff preferences to take full advantage of the export opportunities. The
complementary measures are mentioned in the context of the work of UNCTAD
committees as well as other international organizations, and their main objectives should
focus around export facilitation. Finally, in the section of the document devoted to the
LCDs, the Special Committee encourages international organizations to extend technical

22
Resolution of the Second Session of UNCTAD on the Expansion and Diversification of Exports of
Manufactures and Semi-Manufactures of developing countries ("Resolution 21 (II)")
23
Agreed Conclusions of the Special Committee on Preferences ("Agreed Conclusions")
24
Decision on Generalized System of Preferences (the "1971 Waiver Decision")
25
These measures are mentioned in part V, paragraphs 5-8 of the document.
8
help to these countries, in order to help them with establishment of viable export
industries.
While it is difficult to draw a straight line between the complementary measures
references to a facility like STDF, the complementary measures arguably encompass
within their meaning a technical co-ordination and funding entity. The main conclusion
based on examination of the UNCTAD documents is that there appears to be intention to
draw distinction between generalized preference measures and other types of measures,
viewed as those complementary to GSP measures.
That line is maintained in the two important development documents adopted
under GATT the 1971 waiver
26
and the 1979 Ministerial Decision
27
(Enabling Clause).
While the first document focuses exclusively on the category of preferential tariff
treatment and reconciling such measures with MFN requirements, the second document
clearly draws the dividing line between generalized preferential system and non-tariff
preferential measures
28
. Therefore, whatever is the meaning of non-tariff differential
and more favourable treatment as envisioned by the drafters of the Enabling Clause, the
logical dichotomy between tariff preferences (GSP) and non-tariff measures means that
STDF facility must fall within the scope of Art. 2(b)
29
.
There exists further textual support for the above interpretation, as Article 2(b)
provision makes reference to non-tariff measures governed by multilateral instruments
negotiated under the auspices of GATT. Since the WTO Agreement was negotiated as a

26
See note 24.
27
Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing
Countries, (Enabling Clause)
28
Supra, compare Art. 2(a) and Art. 2(b) of the Enabling Clause.
29
Of course it is possible that it does not fall within that scope, yet non-tariff arguably has a very open
scope.
9
multilateral agreement within the context of Uruguay Round of GATT
30
and
furthermore the SPS Agreement constitutes integral part of that agreement
31
, it follows
that the SPS Agreement is an instrument negotiated under GATT auspices. Moreover,
SPS Agreement itself does contain provisions regarding non-tariff differential treatment
measures in favour of developing countries, therefore there appears to be a link between
the paragraph 2(b) of the Enabling Clause and Special and Differential Treatment
provisions of Article X of SPS Agreement, the Enabling Clause having the effect of
shielding such measures from the application of the Article I of GATT
32
.

STDF and the EC GSP
33
case
The analysis conducted in the previous sections reveals that the STDF facility
may be traced to the provisions of 1947 GATT agreement itself, certain decisions taken
pursuant to that agreement and the subsequent WTO Agreement with its multilateral
instruments. More specifically, the SPS Agreement contains legal provisions (Article X)
for special and differential treatment, one of whose aims should be to encourage and
facilitate participation of beneficiary states in the relevant international organizations.
Thus, the network of previous legal instruments may be used to construe as
implementation of special and differential treatment in SPS context.
The EC GSP case provided an interpretation of the Enabling Clause
34
. In the
context of that legal claim, the Appellate Body elucidated its understanding of two

30
See Peter van den Bosche, The Law and Policy of the World Trade Organization, 2
nd
ed. p. 82-84.
31
Article 2(2), WTO Agreement.
32
Provided of course that the measures conform to the requirements of the Enabling Clause itself, which
according to EC GSP case acts as an exception justifying such inconsistency.
33
WT/DS246/AB/R
10
criteria applicable to any GSP scheme
35
generality of criteria of inclusion, non-
discrimination among the included members.
In the following section, an attempt will be made to apply the first of these criteria
(generality of inclusion) to the Standard and Trade Development Facility trust fund.
While the facility is most definitely not a generalized tariff preference system, the
assumption made is that the non-tariff based special and differential treatments
represent a natural extension of the GSP modality, and there is no reason to believe SDTs
were intended to escape the constraints imposed upon the original GSP schemes
36
.
.
Is the STDFs trust fund non-discriminatory?
In the EC GSP case, the question was quite simply whether the criteria used to
establish which states would benefit were objective. The Appellate Body concluded that
the fact that the list was closed was sufficient for finding of violation of that criterion
37
.
The STDF Trust Fund treats eligibility concept at multiple levels - country
level, applicant level and finally individual project level
38
. If a developing member
state applicant is to be eligible for project funding, certain criteria pertinent to each of
these levels have to be met. It is only when a particular project proposal meets the criteria

34
Triggered by the claim of one of the affected states (India) that generalized preferential system operated
by the European Community violated MFN provisions of Article I of GATT and was not saved by the
Enabling Clause exception .
35
These criteria apply to generalized preferences according to footnote 3 and 1971 waiver decision and
were interpreted by the Appellate Body.
36
It is difficult to conceive, that the developed states, in the context of SPS assistance extended to
developing states, would want to arbitrarily select which of these states will be eligible to apply for such
assistance, then create a system of SPS assistance which provides it without relating the provision to the
needs of the recipient.
37
EC GSP, para. 188.
38
See STDF Business Plan, p.24-26.
11
at all three levels that the country is eligible to benefit from that project
39
. In this section
attempt will be made to apply the concept of generality to each stage of eligibility
determination.
At the level of country eligibility, the Trust Fund uses differential funding scale
dependent on categorization of the country by the OECD
40
. Since the categories within
that scheme are defined on the basis of GNI measure, whether a country will be eligible
to apply for funding for a project, depends on objective criterion of whether its per
capita income falls within a certain range. Thus, at country level, the Trust Fund appears
to provide general and objective criterion determining which countries can benefit from
funding
41
.
The second level of funding is the applicant level. It is at this level that decisions
are made whether the applicant entity qualifies for a project grant. These entities are
divided into two main categories public and private. Either of the two categories may
apply for project grants, with applications by various configurations of the two also
permitted and encouraged
42
.
The definition provided for public organization is fairly objective, and it refers
to governmental domestic authorities as well as regional and international bodies with
responsibility for SPS measures
43
. In case of private entities, the definition is achieved

39
Therefore one may look at it superficially, treating eligibility as the very ability to apply, or one may
take the view that a member is only truly eligible when the project actually goes through and gets
positively reviewed, allowing it to be submitted for approval deliberations. This paper takes the latter view
of eligibility.
40
<http://www.oecd.org/dataoecd/32/40/43540882.pdf>
41
See Funding Opportunities with the Standards and Trade Development Facility (STDF), Guidance Note
for Applicants, p. 1.
42
See OPERATIONAL RULES OF THE STANDARDS AND TRADE DEVELOPMENT FACILITY, p.
12.
43
Funding Opportunities with the Standards and Trade Development Facility (STDF), Guidance Note for
Applicants, p.1
12
by listing the eligible categories - individual farmers, industry/trade associations as well
as professional service organizations
44
. Anything outside of this set of categories is
simply ineligible for project funding.
As long as the definitions of these eligible categories are not problematic and
there is a consensus on their meaning in relation to various countries, applicant level of
eligibility appears to be objectively defined.
Finally, how general and objective are the criteria to establish eligibility for
funding of individual projects
45
?
Individual projects are to be evaluated at two levels the theme level and the
objective level
46
. The project must fall within one or more of three themes SPS
capacity evaluation, capacity building or co-ordination of technical activities. The
Operational Rules of STDF provide numerous examples of projects, which would fall
within each of the themes specified, thereby making the definition of the theme
categories that much more precise
47
.
In addition to falling within one of the three themes identified the project must be
designed so as to achieve one of two objectives enhance the developing countries
ability to meet commercial standards of the importing states or contribute to
prevention of spread of diseases/pests relevant to trade within their territory
48
.

44
Ibid. It would be interesting to explore what criteria are used by STDF to establish whether a given
individual applicant is a farmer or whether an association applying for funding is indeed representative of a
given industry or trade. Does the STDF use its own objective definitions of these concepts, or does it rely
on domestic definitions of individual states? If the latter, it is possible that different definitions will be used
for different developing states.
45
After all, what would be the value of having formal equality at the level of countries and applicant
organizations, when the final step of project eligibility determination is arbitrary?
46
Supra note 43, p. 13.
47
See STDF Business Plan, p.27 for extensive examples of eligible projects.
48
See OPERATIONAL RULES OF THE STANDARDS AND TRADE DEVELOPMENT FACILITY, p.
13.
13
At the theme level, the categories appear to be defined in such abstract/general
terms, that it may be argued that the real power to decide does not lie in how the
developing state applicant defines the project but whether these who decide on the award
of grant think that it builds capacity or assist in evaluation of SPS capacity. What
remedies this ambiguity is the table of extensive examples of projects falling within each
theme. As long as there is an agreement that a given proposed project does in fact
correspond to one of projects provided as an example, the criterion to make a selection
may be seen to be objective.
At the level of aims/objectives, whether the project will contribute to capacity to
meet import related SPS standards or improve trade-related disease/ pest situation,
appears to be ultimately a rather subjective call about future outcomes. At its face value
the future impact criterion introduces a danger that projects will be deemed ineligible
based on subjective call of whether they will achieve desired outcomes. It is only the
objectivity of the rules adopted to predict these outcomes that can moderate the inherent
subjectivity of this level of project evaluation.
To summarize the section, the developing country SPS project applications are
eligible at three distinct levels country level, applicant level and project level. A
given project to be truly eligible to receive funding must meet the criteria imposed at all
three levels. While the criteria for the first two levels were found to be formally
objective, the real decisions are likely made at the last stage of project evaluations. Here
the final layer of eligibility evaluation leaves a lot of uncertainty about objectivity of
criteria actually employed in the project eligibility determination process. Therefore,
since the last stage is determinative of the outcome, arguably the verdict is out on


14
whether eligibility criteria for developing country project conform to principle of non-
discrimination, as the generality of the whole process depends on the objective
formulation of each of the steps.

Conclusion
Standard and Trade Development Facility is the SPS application of the idea of
special and differential treatment for developing member states of WTO. It is an inter-
organizational partnership, whose mandate may be traced back to the provisions of the
original 1947 GATT Agreement, the developing member instruments issued under GATT
and in particular the WTO Agreement and SPS Agreement provisions regarding special
and differential treatment.
The STDF facility, which provides funding for SPS projects of developing
members, probably falls within the scope of Article 2(b) of the Enabling Clause and as
such is not a GSP scheme.
Even though the existing jurisprudence interpreted the Enabling Clause in the
context of GSP scheme, an attempt was made to apply the principle of non-discrimination
to STDF Trust Fund eligibility, under the assumption that the principle was intended to
be binding for special and differential treatment.
The scheme was found to consist of three levels, each of which had to be passed
in order for a particular project to be considered eligible for approval. While the first two
levels (country, applicant) were based on belonging to categories described in fairly
objective terms, the final level of eligibility (individual project) used criteria whose
formulation left a lot of individual discretion. As a result, the eligibility scheme overall
15
cannot arguably be considered to provide generalized non-discriminatory criteria for
eligibility of applicants project for funding benefits.





















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