He said that nearly two-thirds of the members of the World Trade Organization (WTO) have been able to avail themselves of special treatment and to take on weaker commitments under the WTO framework by designating themselves as developing countries.
“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!,” Trump said in a tweet.
He directed the United States Trade Representative (USTR) 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” in a presidential memoranda on Friday.
Citing China and seven out of the 10 wealthiest economies in the world as measured by Gross Domestic Product per capita having claimed the developing-country status, Trump directed the USTR to not support any such country’s membership in the OECD.
Though India is not named in the memoranda, the US had removed New Delhi from the list of developing countries exempt from application of the safeguard measures on certain crystalline silicon photovoltaic (CSPV) products and large residential washers while withdrawing the duty free benefits to Indian exporters under the Generalized System of Preferences.
“They have already stopped treating India as dveloping country for the safeguard investigation. Even if India is not mentioned, it is already under threat,” said an expert on WTO issues.
Another expert said that this move means the US has taken the right to declare the developing status of a country.
Developing country status ensures special and differential treatment (S&DT) or provisions which allow them more time to implement agreements and commitments, include measures to increase trading opportunities, safeguard their trade interests, and support to build capacity to handle disputes and implement technical standards.
Instead of floating a proposal in the WTO, the US has unilaterally decided to review the developing country status, something that is unprecedented, experts said.
“Instead of engaging in the WTO to reform it by appointing judges and help the crippled dispute settlement mechanism, the US is trying to bring in unilateralism in multilateralism by issuing directives. This is a new format of negotiations,” another expert said.
Earlier, the US had proposed withdrawal of special rights and exemptions for emerging economies which are members of the Organisation for Economic Cooperation and Development (OECD), Group of 20 (G20), classified as “high income” by the World Bank or account for more than 0.5% of global merchandise trade. Brazil had renounced its developing country status in lieu of OECD membership.
Such disregard for adherence to WTO rules, including the likely disregard of any future rules, cannot continue to go unchecked.
“Where appropriate and consistent with law, the USTR shall pursue this action in cooperation with other like-minded WTO Members,” he said in the memoranda.