At WTO, China a developing country-Why many nations are raising concerns

News: China’s status as a ‘developing country’ at the World Trade Organization (WTO) has become a contentious issue. 

A number of countries have raised concerns over the upper middle-income nation deriving benefits reserved for developing countries under WTO norms.

Moreover, concerns have been raised over the ‘least developed country’ (LDC) status, with Bangladesh potentially losing this tag after surpassing India in terms of GDP per capita.  

What are the benefits associated with developing country status? 

Certain WTO agreements give developing countries special rights through ‘special and differential treatment’ (S&DT). 

More on this here. 

It also allows other countries to offer preferential treatment.  

How is a ‘developing country’ status decided? 

WTO has not defined ‘developed’ and ‘developing’ countries and therefore member countries are free to announce whether they are ‘developed’ or ‘developing’.  

Which all countries have objected to China’s developing country status? 

Please refer here. 

Why are so many countries objecting to China’s developing country status? 

China’s per capita income has come to a level of upper middle-income country, according to the World Bank’s classification. 

Apart from this it has been alleged of unfair trade practices such as preferential treatment for state enterprises, data restrictions and inadequate enforcement of intellectual property rights. 

How has China responded? What would be the impact of China losing this status? 

China has in the past reacted quite negatively to such views by the countries, and has also maintained that it is the “world’s largest developing economy”. 

For more: Read here. 

However, it has recently indicated that it may be willing to forego many benefits of being a developing country. 

For example: It may forego all exemptions available to developing countries in negotiations aimed at cutting fishing subsidies to curb overfishing. 

If China in future decides to forego the developing country status, It would impact negotiations in future agreements. 

What are LDCs, and what are the benefits of LDC classification? 

WTO recognises Least developed countries (LDCs) relying on a classification by the UN. It is based on a criterion 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 lose its LDC status in 2026 as its per capita GDP has risen sharply, surpassing that of India in FY21.  

Source: This post is based on the article “At WTO, China a developing country-Why many nations are raising concerns” published in The Indian express on 11th Jan 2022.