Differentiated Differentiation in the WTO Customs Valuation Agreement

Using the WTO Customs Valuation Agreement (CVA), the paper demonstrates the operationalization of differentiated differentiation – an implicit threshold approach to differentiation in the WTO and one that is amenable to the principle of graduation. We use this approach to objectively identify which countries (from a pool of fifty developed, developing, and least developed WTO member countries) are entitled to derogate from specific CVA obligations based on special and differential treatment (SDT). Offering an alternative to the current SDT practice, differentiated differentiation requires that countries must justify, based on objective criteria, the need for a waiver from rule obligation for a limited period rather than qualifying for such a waiver by mere categorization as a developing country. The paper further defines a threshold at which SDT beneficiaries may be graduated out of SDT using a statistically-based scoring procedure.