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It’s time to reform WTO’s “developing country” rules

It’s time to reform WTO’s “developing country” rules

China, a so-called “developing nation,” has the second largest Gross Domestic Product in the world

The World Trade Organization (WTO) provides global rules for trade between nations. The WTO has many roles and acts as a forum for negotiating trade agreements, and it attempts to settle trade disputes between its members.

President Trump is always claiming certain countries, including China, take advantage of the United States in trade. You rarely hear of any U.S. agriculture commodity organization supporting the President in attempting to change a country’s “developing-country” status, which takes advantage of the United States agriculture and manufacturing.

We keep hearing from the President that he wants a fair and level playing field for those in agriculture. In fact, the primary purpose of the WTO is to have open trade and a level playing field to benefit all citizens of the world.

Flawed premise

Yet, since the WTO’s inception in 1995, the WTO rests on a flawed premise.

What is the actual difference between “developed” and “developing nations?”  Seven out of the ten wealthiest economies of the world call themselves “developing nations.” Some of the “developing nations” may surprise you: South Korea, Mexico, Turkey, Hong Kong, Kuwait, Qatar, and the United Arab Emirates.

The largest country claiming to be a “developing nation” is China. There has been much moaning by those in Washington that the President is hurting trade with the imposition of his tariffs. Seldom is there discussion regarding a memorandum published by the President on July 26, 2019 which calls for Reforming Developing-country Status in the World Trade Organization.

President Trump believes the WTO is in desperate need of reform because it allows for unfair trade benefits. One of the President’s main concerns according to the memorandum is how a country can designate “itself” as a developing country.’ He wants to stop the WTO from having so called developing countries availing themselves to WTO rules and negotiations.

Is China really a ‘developing country?’

No one ever discusses the fact that China continues to insist it is a developing country. Why? President Trump believes this is nonsense. China has the second largest Gross Domestic Product in the world.  It has been the largest global exporter since 2009. We think of China primarily as exporting goods from low wage manufacturing. However, according to the President’s memo, “China currently ranks first in the world for exports of high-technology products with such exports alone increasing by 3,800% between 1995-2016.”

The President believes the United States is being taken advantage of by countries such as China. His memorandum says that developing countries have many advantages shipping their products into the United States with little or no tariffs.

According to the President’s memorandum, WTO’s so-called ‘developing nation’ members “…claim entitlement to longer time frames for the imposition of safeguards, generous transition periods, softer tariff cuts, procedural advantages for WTO disputes, and the ability to avail themselves of certain export subsidies-all at the expense of other WTO members.”

President Trump believes the WTO is in desperate need of reform. Yet, all you have heard from many of our agricultural commodity groups and some farmers is concern about tariffs. I suspect until you read this blog you had no idea the President of the United States is trying to help you by having trade which is more free, fair and reciprocal.

The President is attempting to get the WTO to change its rules about countries improperly declaring themselves “developing countries.”

Maybe it’s time to get beyond President Trump’s efforts to change the WTO.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

TAGS: Commentary
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