U.S. Sens. John Thune (R-S.D.), a member of the Senate Finance Committee, and Angus King (I-Maine) last week introduced a resolution that confronts China’s self-designation status as a developing country at the World Trade Organization (WTO). The resolution states that the WTO should reform its special and differential treatment rules so that globally competitive countries, such as the People’s Republic of China, are not able to self-designate as a developing country in order to gain unfair trade advantages.
“It makes no sense that a country like China, which has the second-largest economy in the world, should be able to self-designate as a developing country to gain unfair trade advantages, especially as the Chinese Communist Party takes advantage of actual developing countries through the predatory lending of the Belt and Road Initiative,” said Thune. “China declaring itself as a developing country at the WTO misidentifies its economic stature, undermines countries that are truly developing, and corrodes trust in the rules-based trading system. Reforms at the WTO need to extend beyond words on paper, but special treatment should be reserved for truly developing countries.”
“China’s self-identification as a ‘developing nation’ – despite having the globe’s second-largest economy – doesn’t pass the straight face test,” said King. “This is yet another example of China’s willingness to manipulate or flat-out violate international economic norms for its own gain, at the expense of the rest of the world, especially those nations in need that warrant additional considerations. Enough is enough; to confront the ongoing harm done by this false designation, the United States should build a coalition of our friends and partners to tell the WTO to change these rules and ensure that China cannot continue to claim economic benefits it should not receive.”
Under the WTO, developing countries can receive special and differential treatment which includes weaker market access commitments and longer timeframes for implementing agreements. Since the WTO does not define ‘developed’ or ‘developing,’ member countries self-declare their development status. When China entered the WTO in 2001, its true development status at the time was vastly different than it is in 2021. Today, China has the world’s second-largest economy, and the World Bank categorizes China as an upper-middle-income country. In addition, China is a major source of foreign direct investment and provides billions of dollars for cross-border infrastructure through the Belt and Road Initiative and other geo-economic projects around the world.