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