World Trade Organization

Copyright infringement is not intended

Context: China's status as a 'developing country' at the World Trade Organization has become a contentious issue.

About World Trade Organization:

It was established on January 1, 1995 through the Marrakesh Agreement, as the successor to the General Agreement on Tariffs and Trade (GATT).
It covers trade in services and intellectual property and introduced procedures for dispute settlement.
It is a Binding institution and its working is Consensus-based.
Presently 151 members that negotiate to reduce barriers in trade.
This Geneva based organisation governs nearly $23 billion of global trade.
This ‘member-driven’ organization is viewed as an
- International platform to negotiate multilateral and plurilateral agreements dealing with trade
- Dispute settlement system for disputes arising out of negotiated agreements

Benefits of WTO membership:

WTO membership provides:

most favoured nation treatment, which means equal access for all companies of all WTO Members to the markets of all Members of the Organization;
national treatment that prohibits national producers from gaining advantages over importers;
reduction of trade barriers, primarily tariffs and quantitative restrictions, which provides for increased trade between Members;
predictability and transparency of international trade – WTO Members have bound their tariffs and cannot, except for good reason, introduce other import restrictions, such as bans or quotas;
increased competitiveness by eliminating unfair practices between trading partners aimed at stimulating trade, primarily export subsidies and dumping;
opportunity to defend trade interests at the WTO Dispute Settlement Body, since all Members will have international commitments towards Belarus for non-application of trade restrictions.

What is the concern raised by other developing countries?

China is an upper middle-income nation that derives benefits reserved for developing countries under WTO norms.
Bangladesh is losing its least developed country’ (LDC) status, after surpassing India in terms of GDP per capita.

What are the benefits of ‘developing country’ tag?

Certain WTO agreements give developing countries special rights through ‘special and differential treatment’ (S&DT) provisions.
Under S&DT provision, WTO can grant developing countries longer timeframes to implement the agreements and even commitments to raise trading opportunities for such countries.
WTO pacts are aimed at reduction in government support to certain industries over time and set more lenient target for developing nations.
The classification also allows other countries to offer preferential treatment.

How is a ‘developing country’ decided and why are some against China being classified as one?

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

What are the benefits of LDC classification?

The WTO recognizes Least developing country (LDCs) relying on a classification by the UN based on a criteria that is reviewed every three years.
LDCs are often exempted from certain provisions of WTO pacts.
Country classified as an LDC, receives zero duty, zero quota access for almost all exports to the EU.

What is India’s current status?

India has self-designated itself as a developing nation and is accordingly, classified by the World Bank as a lower-middle-income economy.