Context:As China is considered as a developing nation in WTO,the President of the U.S has accused it of taking advantage of the US and other countries through the medium of WTO.
China in WTO
- China became a WTO member in 2001, the organisation’s 143rd.
- Argument against calling it developing nation
- As per a WTO document noting its better performance from the time of accession to the organisation till 2011,
- China became the second-largest economy in GDP terms
- The first largest merchandise exporter
- The fourth largest commercial services exporter and
- The first destination for inward FDI among developing countries.
- Argument in favour of calling it developing nation
- Implications on other developing countries:If China is forced to forgo the benefits of a developing country, the other developing countries that are ahead of China (at least in per capita terms) can be asked to do the same.
- By this logic, the developing country status of China is of interest not only to China, but also to their counterparts in other developing countries.
- Stance taken by China:
- It has maintained that it will not give up its rights as a developing country. As a large developing country, It has been trying to make more contributions to the multilateral trading system within their capabilities.
- The country is also facing various challenges, difficulties and gaps in achieving a balanced and adequate development. So they have decided not to give up their rights as a developing Member.
About developed and developing countries classification in WTO
Procedure for classification:
The WTO doesn’t define countries as ‘developing’ or ‘developed’.
Member nations themselves are required to declare which category they fall under.
- It is in contrast to the World Bank that classifies countries based upon per capita income.
But these declarations can be challenged by other member nations.
Advantages of a ‘developing country’ status
Some WTO agreements give developing countries special benefits and rights, which are referred to as “Special and differential treatment provisions”.
- It allows for reduction of adjustments that a developing country has to make while commiting to various agreements under the WTO.
- S&DT has an important provision of Non-reciprocity by developing countries.
- Under it, the developed countries do not expect any reciprocity for the commitments made on their behalf in trade negotiations.
- It helps developing countries immensely in protecting their domestic industries by means of imposition of Import Tariffs.
- Provisions under these include a longer time period for implementing agreements and commitments or measures to increase trading opportunities for developing countries.
- Also under these agreements, developed countries may treat developing countries more favourably than other WTO members.
But on the other hand a country that announces itself as ‘developing’ does not automatically benefit from unilateral preference schemes.
Developing nations:Over two-thirds of WTO’s 164 member countries are considered as developing countries.
About World Trade Organisation (WTO)
- The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
- At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
- The goal is to ensure that trade flows as smoothly, predictably and freely as possible.
- Origin:The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT)
- Members:The WTO has 164 members (including European Union) and 23 observer governments.
- Ministerial Conference:
- The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years.
- It brings together all members of the WTO, all of which are countries or customs unions.
- The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.
- Decisions are normally taken by consensus.