Trump Directs USTR to Clamp Down on WTO Benefits for Rich Countries Claiming Developing Status

President Donald Trump on July 26 directed the U.S. trade representative to seek changes at the World Trade Organization that would prevent rich countries from claiming benefits reserved for developing countries in WTO agreements.

The presidential memorandum requires that USTR “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.” If after 90 days USTR finds insufficient progress has been made, the memo says the U.S. will no longer treat offending countries as developing countries at the WTO, and no longer support such countries’ membership in the Organization for Economic Cooperation and Development.

“The WTO is BROKEN when the world’s RICHEST countries claim to be developing countries to avoid WTO rules and get special treatment,” Trump said on Twitter the day the memorandum was released. “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!”

According to the memorandum, countries including Mexico, South Korea and Turkey, which are members of the G-20 and OECD, as well as seven of the 10 wealthiest countries measured by gross domestic product at purchasing power parity, among them Hong Kong, Singapore and the United Arab Emirates, claim developing country status at the WTO. “When the wealthiest economies claim developing-country status, they harm not only other developed economies but also economies that truly require special and differential treatment,” the memo said.

“China most dramatically illustrates the point,” the memo said. “Since joining the WTO in 2001, China has continued to insist that it is a developing country and thus has the right to avail itself of flexibilities under any new WTO rules. The United States has never accepted China’s claim to developing-country status, and virtually every current economic indicator belies China’s claim.”

These countries’ claims of developing country status entitle them to “longer timeframes for the imposition of safeguards, generous transition periods, softer tariff cuts, procedural advantages for WTO disputes, and the ability to avail themselves of certain export subsidies -- all at the expense of other WTO Members,” the memorandum said. “Moreover, many of the world’s most advanced economies have used developing-country status as an excuse not to comply with the most basic notification requirements under WTO rules, depriving United States traders of vital trade data,” it said. “The status quo cannot continue.”

According to a WTO webpage on developing country status, there is no agreed upon definition for a developing country. “Members announce for themselves whether they are ‘developed’ or ‘developing’ countries. However, other members can challenge the decision of a member to make use of provisions available to developing countries,” the WTO said.

A WTO summary of developing country benefits says countries claiming that status have greater flexibility to set agricultural subsidies, impose technical barriers to trade that are not based on international standards, and can restrict trade to promote a particular industry, although that last benefit requires the permission of other WTO members.