China gets developing country status at WTO

Q What is the context  ?

A China’s status as a ‘developing country’ at the World Trade Organization (WTO) has become a contentious issue with a number of countries raising concerns.

 Q What are conditions for Defining a country’s ‘Development’ ?

A

• There are no WTO definitions of “developed” or “developing” countries.
• Developing countries in the WTO are designated on the basis of self-selection although this is not necessarily automatically accepted in all WTO bodies.
• The WTO however recognizes as least-developed countries (LDCs) those countries which have been designated as such by the United Nations.

Q What are Benefits of ‘Developing Country’ tag ?

A

• Special and differential treatment: Certain WTO agreements give developing countries special rights through ‘special and differential treatment’ (S&DT) provisions.
• Preferential treatment: The classification also allows other countries to offer preferential treatment.
• Longer timeframe for pacts: WTO can grant developing countries longer timeframes to implement the agreements and even commitments to raise trading opportunities for such countries.

Q What are the issues with Chinese ‘Developing Country’ status ?

A

• China has become an upper-middle-income country according to the World Bank.
• It involves in unfair trade practices such as preferential treatment for state enterprises, data restrictions and inadequate enforcement of intellectual property rights.

Q How has China responded?

A

• China has consistently maintained that it is the “world’s largest developing economy”.
• It has recently indicated that it may be willing to forego many benefits of being a developing country.

Q What are the benefits of LDC classification?

A

• The WTO recognizes LDCs relying on a classification by the UN based on criteria that is reviewed every three years. LDCs are often exempted from certain provisions of WTO pacts.
• Bangladesh, currently classified as an LDC, receives zero duty, zero quota access for almost all exports to the EU.
• It is, however, set to graduate from the LDC status in 2026 as its per capita GDP has risen sharply surpassing that of India in FY21.