U.S. President Donald Trump has stepped up pressure on the World Trade Organization (WTO) to change the rules on the status of developing countries. Trump’s main target is China, but Korea was also mentioned as a major case.
As President Trump ordered the U.S. Trade Representative (USTR) on July 26 (local time) to take all measures to ensure that relatively developed countries do not benefit from the status of developing countries in the WTO, Korea and China may lose the status of developing countries, experts say.
Trump said that if the WTO does not make any real progress in this matter within 90 days, the United States will unilaterally stop treating these countries as developing countries.
The WTO is implementing “special treatment for developing countries” in order to encourage the participation of developing countries. If the status of a developing country is recognized in the WTO system, the country is given more time for the implementation of WTO treaties and benefit from favorable treatment in about 150 provisions. For certain items, developing nations pay a smaller amount of tariffs or enjoy tariff exemptions within the quota.
The United States has insisted since this past February that such benefits from the WTO General Council not be given to countries that meet any of the four criteria: OECD member countries or countries in the process of joining it; G20 member countries; countries classified as high income countries by the World Bank (gross national income per capita of 2017: at least US$12,056); or countries which account for 0.5 percent or more of world trade. Korea meets all the four criteria.
It is difficult to immediately change the way the WTO judges whether a country is a developing country, or to introduce a new system to subdivide developing countries as the United States insists. The WTO uses a unanimous voting system and developing countries such as China can strongly oppose such changes. However, Korean international trade authorities believe that WTO member countries can discuss the revision of the current self-declaration system to determine whether a country is a developing country or not. According to the self-declaration system, a country is classified as a developing country if it declares itself a developing country.
Korea’s trading environment are rapidly deteriorating as it faces the likelihood to lose the status of a developing country in the World Trade Organization (WTO), on top of Japan’s export restrictions. Professor Chung In-kyo at Inha University said, “Considering the size of the Korean economy, no country will take Korea’s side with respect to the U.S.’ insistence. This concerns me."