The South Korean government has decided not to maintain its developing country status in the WTO. This is because the status is no longer leading to substantial practical benefits and South Korea as a developing country member of the WTO may be seen as a proxy for China with China, which wishes to continue to enjoy its developing country status, continuing to quarrel with the United States in their trade war. The latter point is related to concerns that the South Korean government is cracking its alliance with the United States by having decided to terminate the General Security of Military Information Agreement (GSOMIA) with Japan.
“The number of future trade negotiations in which South Korea needs to participate with the status is close to zero and its rights as a WTO member will remain effective regardless of the status,” the Ministry of Trade, Industry and Energy said on Sep. 4, adding, “The status is no longer beneficial and will result in some confrontation with the United States, which is undesirable, and inter-ministerial talks are currently underway regarding the waiver.”
South Korea became a member of the OECD in 1996. At that time, the country agreed to limitation of its developing country status to the agricultural sector in return for some favors, including lower tariffs and more subsidies than those applied to developed OECD members.
In July this year, U.S. President Donald Trump told the Office of the United States Trade Representative to block certain countries such as China from continuing to receive preferential treatment based on the WTO’s country classification standard, adding that the matter should be addressed by Oct. 23.
“Each country that is an OECD member and a G20 member at the same time, is classified as a high-income country by the World Bank, and accounts for 0.5 percent or more of the global trade of goods should no longer be regarded as a developing country in the WTO,” the president remarked. South Korea satisfies all the three conditions.
The waiver is likely to result in an intense backlash from the local agricultural and fisheries industries. The Ministry of Agriculture, Food and Rural Affairs of South Korea is yet to make its final decision in the inter-ministerial talks.