Donald Trump hits out at WTO developing economy designations

Donald Trump hits out at WTO developing economy designations

Donald Trump has launched a new broadside against the World Trade Organization, saying the Geneva-based body allowed too many countries to claim the status of a developing economy and special treatment that damaged the global trading system. 

In a memo to Robert Lighthizer, the US trade representative, on Friday, Mr Trump wrote that the WTO was based on an “outdated dichotomy” between developing and developed economies that needed to be addressed quickly — and was in “desperate need for of reform”. 

In the past, Mr Trump has threatened to withdraw the US from the WTO unless it changes, as administration officials have criticised the organisation’s negotiating record, dispute settlement system and struggles in ensuring that countries disclose new subsidy measures. 

Trump administration officials have also been unhappy that many countries — including China — obtained developing country status at the WTO, which allows them to operate under different rules than advanced economies in certain areas. 

In Friday’s memo, Mr Trump took the frustration to a higher level, saying Mr Lighthizer should “use all available means to secure changes” at the WTO that would prevent countries benefiting from “flexibilities” deriving from developing economy status. 

As well as China, Mr Trump singled out a series of other countries that he thought should not be classified as developing, including Asian city-states such as Hong Kong, Singapore and Macau, as well as Gulf countries such as Kuwait, Qatar and the United Arab Emirates. He also said Turkey, South Korea and Mexico claimed the status of a developing nation, even though they were part of the OECD group of advanced economies. 

“While some developing country designations are proper, many are patently unsupportable in light of current economic circumstances,” the US president wrote, adding that their designations harmed other truly developing nations. 

Mr Trump also outlined the benefits that came from having developing economy status at the WTO, including procedural advantages in disputes, softer tariff cuts, the ability to maintain export subsidies and weaker commitments in negotiations. 

Mr Trump asked Mr Lighthizer to update him on his “progress” in clamping down on the use of developing country status at the WTO within 60 days — but said that if there was no breakthrough within 90 days, the US would no longer treat certain countries as developing and not support their membership in the OECD.

The WTO did not respond to a request for comment. 

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