Special and Differential Treatment of Developing Countries in the WTO

Rules on special and differential treatment (SDT) constitute the centerpiece of the WTO's strategy for integrating developing countries into the world trading system. We examine the theoretical rationale for SDT when trade liberalization in developing countries is impeded by a policy commitment problem. We show that SDT rules, if reconciled with the principle of reciprocity, can help developing countries to reduce trade barriers and improve their trading prospects.