US bid to alter WTO status slammed

China yesterday said the US threat to pull recognition of China’s “developing nation” status at the World Trade Organization showed its “arrogance and selfishness.”

The reaction followed a memo issued on Friday by President Donald Trump to US Trade Representative Robert Lighthizer, stressing that some countries were enjoying lenient treatment by “improperly” identifying themselves as developing economies.

The memo is seen as a swipe at China.

The Trump administration’s demand “further exposed its wayward arrogance and selfishness,” Chinese foreign ministry spokeswoman Hua Chunying said at a press briefing yesterday.

One or a few countries “should not have the final say” on which nations should be categorized as developing countries, Hua said.

She insisted that China needs to maintain its status as a developing economy to “achieve real trade fairness.”

Trump’s memo said the WTO, which operates a global system of trade rules and settles disputes, uses “an outdated dichotomy between developed and developing countries that has allowed some WTO members to gain unfair advantages.”

The memo provides more detail on Trump’s frequent complaints that many large emerging market countries have been taking advantage of their status as developing economies under WTO rules, which allow them to maintain higher tariffs and other trade barriers aimed at boosting domestic growth. Without “substantial progress” to reform WTO rules within 90 days, Washington will no longer treat as a developing country any WTO member “improperly declaring itself a developing country and inappropriately seeking the benefit of flexibilities in WTO rules and negotiations,” said the statement.

The memo came ahead of meetings in Shanghai today and tomorrow between US and Chinese negotiators aiming to resolve a trade dispute that has led to tariffs on more than US$360 billion worth of two-way trade involving the world’s two largest economies. Hua said yesterday it hopes the United States will fulfill its commitments and create positive conditions for trade talks in Shanghai this week.

“It is true that China has become the world’s second-largest economy, but it is also the biggest developing nation. China’s GDP per capita was only 15 percent of that of the United States in 2017, and it has a prominent imbalanced development problem, with over 10 million people still living under the poverty line,” Xinhua news agency said in a commentary.

“China has never used the special and differentiated treatment as an excuse to shun its due obligations. Since its admission to the WTO over a decade ago, it has actively safeguarded the multilateral trading system and made widely recognized contributions to global free trade and investment.

“The United States, in contrast, has trampled WTO rules and undermined the rights and interests of developing countries for its own benefit, casting a shadow over multilateralism and the open world economy.”

Washington “obviously timed the memo to serve as a new bargaining chip” in the trade talks, it said.

“But the tactic of imposing pressure is nothing new to China and has never worked,” it said.

Xinhua added that the US government’s “latest hegemonic attempt” to coerce the WTO “is destined to hit a wall of opposition.”

If the Trump administration moves forward with steps outlined in the memo to stop treating certain countries as developing economies, it would likely be another move toward essentially ignoring some WTO rules.

Developing country status in the WTO allows governments longer timelines for implementing free trade commitments, as well as the ability to protect some domestic industry and maintain subsidies. The US has been working with Japan and the European Union to formulate and try to push forward WTO rule changes aimed largely at China but never succeeded because altering WTO rules has to be agreed by all its 164 members.