D. Ravi Kanth
Geneva: Continuing his trade wars on multiple fronts, President Donald Trump has dropped another bombshell. He threatened on Friday that the US will no longer treat China, India, South Africa, and Indonesia as developing countries for availing special and differential treatment during the current and future multilateral trade deals negotiated at the World Trade Organization (WTO).
The US, he said, will “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 economic and all other indicators.”
In 90 days, China, India, South Africa, Indonesia , and 30 more countries must stop designating themselves as developing countries for availing what is referred to as the S&DT (Special and Differential Treatment).
Otherwise, the US (a) “will not support any such country’s membership in the OECD (the Organization for Economic Cooperation and Development)”; (b) “consider the WTO member’s involvement in global trade, membership in key economic decision-making groups, placement within relative economic and other indicators, and any other factors the USTR (United States Trade Representative) deems appropriate”; and (c) the USTR shall publish on its website a list of all self-declared developing countries that the USTR believes are inappropriately seeking the benefit of developing country flexibilities in WTO rules and negotiations.”
In addition to the trade wars with China over a range of issues and with France on the new tax to be levied by Paris on transactions of major international internet behemoths, President Trump lunched this multilateral trade war with some 30-odd countries over a treaty-embedded right — S&DT — for developing countries since the establishment of the WTO in 1995.
“How absurd it is to launch a multilateral trade war against developing countries by President Trump and his trade representative Ambassador Robert Lighthizer,” said a developing country trade envoy, who preferred not to be quoted. “It is only on Wednesday ( 24 July) that a large majority of countries rejected the US’ proposal, for the third time, on differentiation/graduation for availing S&DT among developing countries.”
The US is aggressively pursuing a ” slash-and-burn” strategy at the WTO by destroying a major arm of the dispute settlement system — the Appellate Body — while making “outrageous demands for denying S&DT to developing countries,” the envoy maintained.
Coming back to the S&DT provisions, developing countries are allowed under S&DT longer time periods for implementing WTO agreements and commitments, lower level of commitments or what are called less-than-full reciprocity and measures to increase trading opportunities.
Further, there is a built-in non-reciprocity provision under the S&DT architecture, implying that developing countries are not required to provide the same level of market access to developed countries.
The Decision on Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries — called the Enabling Clause in trade jargon — was adopted under the Tokyo round of the GATT in 1979.