A contract theory approach to special and differential treatment and the WTO

Purpose This paper is prompted by the dissatisfaction of developing countries regarding the grant of special and differential treatment (SDT) under the legal framework of the World Trade Organisation (WTO). As a result of such dissatisfaction, the Doha Round of multilateral trade negotiations explicitly called for a review of such treatment with a view to making it more precise, effective and operational. This mandate has not yet been met to the satisfaction of many developing countries. This paper aims to provide an alternative way of examining and evaluating the contestation which exists regarding SDT in the WTO. Design/methodology/approach This paper employs the conceptual framework provided by economic contract theory and in particular, the concept of the incomplete contract to provide a scaffold for analysing SDT. This approach is intended to offer insights beyond those elucidated so far in the literature on the topic. Findings This paper, by employing an economic contract theory approach, finds that SDT is constructed as an incomplete contract. Furthermore, the suboptimal outcomes associated with incomplete contracts are apparent in the constitution of SDT. This finding is useful in both an evaluative and programmatic sense; providing us with an alternative entry point to explain some of the shortcomings with SDT as well as garnering us with a useful conceptual tool to think upon how SDT can be improved. Originality/value The paper contributes to the literature on SDT within the WTO in particular as well as differential treatment in international law in general. Drawing on literature on the WTO as an incomplete contract, the paper provides an original frame for analyzing SDT and draws attention, in particular, to the utility of economic contract theory as a programmatic and evaluative frame for SDT and differential treatment more generally