Daily News Analysis

Developing Status

12th January, 2022 Economy

Figure 3: No Copyright Infringement Intended

Context:

  • China's status as a "developing country" in the World Trade Organization (WTO) has expressed concern about high- and middle-income countries where many countries enjoy the benefits reserved in developing countries under WTO standards.
  • Although the WTO classifies two-thirds of its 164 member states as developing countries, it lacks the correct definition of developing countries.

Benefits of  the tag of "Developing Countries"

  • Preferential treatment: Developing countries can have a longer period to implement the agreement. There is even a commitment to increase trade opportunities in these countries.
  • Special Goals: The WTO Agreement will reduce government support for certain industries in the long run, set more generous goals for developing countries, and achieve those goals compared to developed countries.

Determination of developing countries:

  • Voluntary Declaration: Since the WTO does not define "developed countries" and "developing countries", member countries are free to declare whether they are "developed countries" or "developing countries".

Challenges to China as developing country:

  • China's classification: According to the World Bank, given that China's per capita income will rise and become the top middle-income country.
  • Unfair trade Practices: It is also alleged that the state uses unfair trading practices, such as incentives for state-owned enterprises, data restrictions, and improper enforcement of intellectual property rights.
  • Leadership Role: Many countries have urged China not to pursue its benefits for developing countries or to abandon its classification as a developing country altogether. One way for China to show its leadership role is to abandon the use of services of developing
  • According to the World Bank, China's per capita income in 2020 was $ 10,435, while India's developing countries' economies were $ 1,928.
  • Impact Negotiations: Changing China's status to a "developed country" will affect future agreement negotiations.

 LDC Classification

  • UN Classification: WTO Approves LDCs are based on UN classifications based on criteria that are reviewed every three years.
  • LDCs are often exempt from certain provisions of the WTO Terms.
  • Bangladesh, now classified as LDC, has tariffs and quota access for almost all exports to the EU.

Way Forward

  • Demand of USA: United States China and India are demanding that they voluntarily abandon S & D services due to rapid economic development.
  • National interests: Each country considers national interests and introduces procedures to withdraw S & D services and ultimately strategies to claim the status of developing countries.
  • Graduation: Another idea is "graduation", where Member States are not subject to the status of developing countries once they meet certain objective criteria.