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WTO status of China as a developing country

Date: 12 January 2022 Tags: Miscellaneous

Issue

China currently enjoys the status of a ‘developing country’ under World Trade Organization (WTO), which has been disputed by many countries.

 

Background

The ‘developing country’ status is reserved for countries that are growing, so that they get derive benefits under trade laws.

 

Details

Apart from ‘developing country’ status, the ‘least developed country’ status for Bangladesh has also been disputed. The country could soon lose it after overtaking India in terms of per capita GDP.

 

Benefits of ‘developing country’ status

  • Special rights are given to such countries under WTO agreements through ‘special and differential treatment’ (S&DT) provisions.

  • Lenient target for developing nations are set when it comes to reducing government support for certain industries. They have more time to achieve targets.

  • Several countries can give preferential targets to developing countries under the WTO provisions.

 

Deciding developing country tag

Member countries have the right to announce themselves as ‘developed’ and ‘developing’ countries as WTO has not defined these terms.

 

Concerns against China

China has become an upper middle income country as its GDP per capita has grown. Apart from that, China is making use of unfair trade practices such as preferential treatment for state enterprises, data restrictions and inadequate enforcement of intellectual property rights.

 

Demands

Member countries of WTO are asking China to refrain from seeking benefits available to developing countries or forego its classification as a developing country altogether.

 

Response by China

  • China claims to be the world’s largest developing economy. It has however indicated that it may be willing to forego many benefits of being a developing country.

  • China is planning to remove all exemptions available to developing countries in negotiations aimed at cutting fishing subsidies to curb overfishing.

 

Least Developed Countries (LDC)

  • The classification as a Least Developed Country is granted based on a UN classification criterion that is reviewed every three years.

  • The tag ensures that the beneficiary country, such as Bangladesh, receives zero duty, zero quota access for almost all exports to the EU. 

  • Bangladesh in all certain is set to graduate from LDC status in 2026 after witnessing a sharp rise in GDP per capita to overtake India.