Trump's Memorandum on Reforming Developing-Country Status in the WTO issued yesterday aims to "make trade more free, fair, and reciprocal by devoting all necessary resources toward changing the WTO approach to developing-country status such that advanced economies can no longer avail themselves of unwarranted benefits despite abundant evidence of economic strength". To achieve this, the Memo has a section on "ending unfair trade benefits", which states:
"If, within 90 days of the date of this memorandum, the USTR determines that substantial progress has not been made toward achieving the changes described in section 2 of this memorandum, the USTR shall, as appropriate and to the extent consistent with law:
(i) no longer treat as a developing country for the purposes of the WTO any WTO Member that in the USTR’s judgment is improperly declaring itself a developing country and inappropriately seeking the benefit of flexibilities in WTO rules and negotiations; and
(ii) where relevant, not support any such country’s membership in the OECD."
The memo is clearly targeting China, but I wonder whether it would just end up as much ado about nothing for the following reasons:
- China is not, and will not in the foreseeable future, seek accession to the OECD;
- China did not get full developing country treatments in its WTO accession package. For example, on agricultural subsidy, China agreed to an AMS de minimus level of 8.5%, which is below the normal developing country treatment of 10%.
- In the new negotiations, China has not been getting much of S&D treatment (see, e.g., its TFA commitments).
The more important question, though, is what would the US get out of this, or what would they do if they don't get what they want? On accession package, are they going to renege on the limited developing country benefits China gets in its accession package? That's a clear violation of WTO rules and China would retaliate. On new negotiations, are they going to deny China developing country treatment? Well they have already been doing so for the past 12 years.
So I see this move as very strange, as the US doesn't gain anything in substance beyond what they already have, but it could provoke China so much to derail the barely-restarted bilateral talk, which was already fraught with difficulties. The logic is beyond me, and I hope someone can please enlighten me.
