US President Donald Trump has criticised the World Trade Organization (WTO) for its selection process of “developing countries” adding, in a memo, it was allowing too many countries to claim the status and subsequently gain preferential treatment that is damaging to global trading.
The White House issued the memorandum to the US Trade Representative (USTR) on Friday (26 July) stating the system needed “reform.”
It called for USTR Robert Lighthizer to “use all available means to secure changes at the WTO that would prevent self-declared developing countries from availing themselves of flexibilities in WTO rules and negotiations that are not justified by appropriate economic and other indicators.”
Trump named China, Hong Kong, Singapore, Macau, Kuwait Qatar, and the UAE among claimants to the scheme which he believed should not be classified as developing, adding they were seven of ten of the world’s wealthiest economies, as measured by Gross Domestic Product per capita on a purchasing-power-parity basis. Turkey, Mexico and South Korea were also named.
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 U.S. Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!
— Donald J. Trump (@realDonaldTrump) July 26, 2019
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The WTO agreements contain special provisions which give developing countries special rights and which give developed countries the possibility to treat developing countries more favourably than other WTO members. These special provisions include, for example, longer time periods for implementing Agreements and commitments or measures to increase trading opportunities for developing countries.
Many of these countries, eligible for preferential trade terms such as access to the Least Developed Countries scheme, are able to trade with other WTO members on a duty-free basis.
Recently, the WTO said it expected Bangladesh to graduate from the LDC scheme by 2024, under which it enjoys duty-free access to the European Union, Canada, and Japan. The WTO noted that Bangladesh’s GDP growth at an average annual rate of approximately 6.8% to reach nearly 7.9% in 2017-18, has “been driven mainly by the ready-made garment sector.”
The White House memo said should there be no progress at the WTO in policing the use of the status within 90 days, the US would no longer treat certain countries as developing and not support their membership in the OECD.
In a statement, Lighthizer wrote: “For far too long, wealthy countries have abused the WTO by exempting themselves from its rules through the use of special and differential treatment. This unfairness disadvantages Americans who play by the rules, undermines negotiations at the WTO, and creates an unlevel playing field. I applaud the President’s leadership in demanding fairness and accountability at the WTO, and I look forward to implementing the President’s directive.”
