WTO and India

China’s disputed ‘Developing’ Country Status at WTO

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Read the attached story

Mains level : WTO reforms

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.

Defining a country’s ‘Development’

  • 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.

Benefits of ‘Developing Country’ tag

  • 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.

Issues with Chinese ‘Developing Country’ status

  • 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.

How has China responded?

  • 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.

What are the benefits of LDC classification?

  • 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.

Try this question from CS Mains 2018:

 

Q.What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India?

 

Reference: https://www.civilsdaily.com/sansad-tv-perspective-wto-reforms/

(Aspirants need not write whole answers. Just a quick summary with keywords would suffice.)

 

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