The South Korean Government has recently announced that it will not seek any special treatment as a developing country in future negotiations at The World Trade Organization (WTO). This declaration, however, doesn’t imply that the country will relinquish its developing country status within the WTO.
Background
South Korea, the fourth-largest economy in Asia, has retained its developing country status since the WTO was established in 1995. The primary motive behind this status maintenance was to protect its major industries such as agriculture. A prime example of this protection scheme is South Korea’s enormous tariff of over 500% on rice imports.
Developing Country Status in WTO
Interestingly, the WTO lacks concrete definitions for “developed” and “developing” countries. The onus of this categorization falls on the individual members who identify themselves as belonging to one of the two categories. However, this self-proclamation can be contested by other members. WTO Agreements integrate special provisions, termed “Special and Differential Treatment” (S&D) provisions, which endow developing countries with specific rights.
Special Provisions in WTO
The S&D provisions incorporate various measures including extended time frames for implementing Agreements and commitments. They also include strategies aimed at enhancing trading opportunities for developing countries, safeguarding their trade interests, and providing support to enhance their capabilities in managing WTO work, resolving disputes, and adhering to technical standards. These provisions also address concerns related to least-developed country (LDC) Members.
Benefits to Developing Countries
In line with the Agreement Establishing the WTO, international trade should aim to boost the economic development of developing and least-developed countries. The General Agreement on Tariffs and Trade (GATT) authorizes developing nations to restrict imports in order to support industry development and assist in cases of balance-of-payments difficulties.
| Provision | Purpose |
|---|---|
| GATT Part IV | Non-reciprocal preferential treatment for developing countries |
| S&D Provisions | Measures to safeguard trade interests of developing countries and enhance their capabilities |
Current Issues
The method of designating developing countries in the WTO has recently come under scrutiny, particularly from U.S. President Donald Trump, who argues that nations, like China (a nation with which the U.S. is currently experiencing significant trade conflicts), are unfairly benefitting from preferential treatment.
In response to the criticism, countries such as China, India, South Africa, and many others have submitted proposals maintaining their stance on self-declaration, while emphasizing the paramount significance of per capita indicators in assessing development levels.
Suggested Solutions
The approach presented by South Korea, to refrain from claiming differentiated treatment without declaring themselves as “developed”, could potentially be adopted by other countries to aid the integration of developing countries into global trade. The negotiations could also consider differentiated treatment that recognizes policy-making challenges in developing countries without establishing permanent exemptions. These provisions could either be time-bound or have clear threshold and phase-out criteria, as proposed in the WTO Agreement on Subsidies and Countervailing Measures.
