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Explained: As Trump accuses China over WTO status, a look at the trade body’s rules

President Donald Trump has accused China of taking advantage of the US through the World Trade Organisation (WTO), saying that if Beijing is considered a 'developing country', the US should be called one too.

By: Explained Desk | New Delhi | Updated: April 12, 2020 3:01:34 pm
Explained: As Trump accuses China over WTO status, a look at the trade body's rules President Donald Trump speaks during a coronavirus task force briefing at the White House, Friday, April 10, 2020, in Washington. (AP Photo: Evan Vucci)

Alleging that China had taken advantage of the US through the World Trade Organisation (WTO), President Donald Trump Friday said that if Beijing was considered a developing country, the US should be called one too. He reiterated that the rules of the organisation were unfair to the US.

“China has unbelievably taken advantage of us and other countries. You know, for instance, they are considered a developing nation. I said, well then, make us a developing nation too,” Trump told reporters during his daily White House news briefing on COVID-19.

“If you look at the history of China, it was only since they went into the WTO that they became a rocket ship with their economy. They were flatlined for years and years,” he added.

This is not the first time that Trump has made such an allegation. In July 2019, he took to Twitter saying, “The WTO is BROKEN when the world’s RICHEST countries claim to be developing countries to avoid WTO rules and get special treatment. NO more!!! Today I directed the US Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!”.

How does WTO classify developed and developing countries?

The WTO doesn’t define countries as ‘developing’ or ‘developed’. Member nations themselves are required to declare which category they fall under. However, these declarations can be challenged by other member nations.

Over two-thirds of WTO’s 164 member countries are developing countries.

Advantages of a ‘developing country’ status

Some WTO agreements give developing countries special benefits and rights, which are referred to as “special and differential treatment provisions”. These provisions include a longer time period for implementing agreements and commitments or measures to increase trading opportunities for developing countries.

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Essentially, under these agreements, developed countries may treat developing countries more favourably than other WTO members. However, a country that announces itself as ‘developing’ does not automatically benefit from unilateral preference schemes.

Should China still be classified as a developing nation?

China became a WTO member in 2001, the organisation’s 143rd. As per a WTO document noting its performance from the time of accession to the organisation till 2011, China became the second-largest economy in GDP terms, the first largest merchandise exporter, the fourth largest commercial services exporter and the first destination for inward FDI among developing countries.

So, should it still be called ‘developing’? WTO answers this question by quoting the former director of South Centre, Martin Khor who said the following, “So if China is forced to take on the duties of a developed country and forego the benefits of a developing country, the West could soon ask other developing countries that are ahead of China (at least in per capita terms) to do the same.

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“… China’s fight to retain its developing country status is of interest not only to the Chinese people, but also to their counterparts in other developing countries,” he added.

Meanwhile, China has maintained that it will not give up its rights as a developing country. In a statement, China’s ambassador to the WTO Dr Zhang Xiangchen said in October 2019, “As a large developing country, China never evades our international responsibilities. We have been trying our best to make more contributions to the multilateral trading system within our capabilities. At the same time, we clearly know that our country is facing various challenges, difficulties and gaps in achieving a balanced and adequate development. So, we will not make commitments beyond our capabilities, nor will we give up our legitimate and institutional rights as a developing Member.”

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