How can China be a developing nation when its GDP is the second largest in the world ?
In a development that will have major repercussions on the Chinese economy, U.S. President Donald Trump has pressed the World Trade Organization (WTO) to change China’s designation as a developing country, saying China is using the designation for getting preferential treatment.
In a memo directed at the United States Trade Representative Trump wrote the WTO should stop treating countries as developing nations for the purpose of WTO membership, if “substantial progress” toward economic reforms had not been made within 90 days.
In a tweet, Trump wrote, “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!!!”
Trump’s memo details how many large emerging countries, such as China, have been exploiting their WTO status of a developing economy, which under WTO rules allows them to maintain higher tariffs and other trade barriers aimed at boosting domestic growth.
The United States, along with the European Union and Japan are collaborating to bring about reform in WTO rules, which are largely aimed at China, which follows non-market trade practices and hugely subsidies its industries.
Altering WTO rules has been a challenge since all 164 member countries will have to agree on any change.
In the event the Trump administration moves ahead with its steps designed to stop treating certain countries as developing nations, it would essentially amount to ignoring some WTO rules.
As per the memo, nearly two-thirds of WTO member countries had been given access to special treatment by designating themselves developing countries, especially China.
“The United States has never accepted China’s claim to developing-country status, and virtually every current economic indicator belies China’s claim,” reads the memo.
China’s gross domestic product (GDP) is the second largest in the world.
“China and too many other countries have continued to style themselves as developing countries, allowing them to enjoy the benefits that come with that status and seek weaker commitments than those made by other WTO Members,” states the memo.
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