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China Monday said the US threat to pull recognition of China's "developing nation" status at the World Trade Organisation showed its "arrogance and selfishness", ahead of crucial trade talks this week.
The reaction followed a memo issued on Friday by President Donald Trump to US Trade Representative Robert Lighthizer, stressing that some countries were enjoying lenient treatment by "improperly" identifying themselves as developing economies.
The memo is widely seen as a swipe at China.
The Trump administration's demand "further exposed its wayward arrogance and selfishness", Chinese foreign ministry spokeswoman Hua Chunying said at a regular briefing Monday.
One or a few countries "should not have the final say" on which nations should be categorised as developing countries, Hua said.
She insisted that China needs to maintain its status as a developing economy to "achieve real trade fairness".
Trump's memo said the WTO, which operates a global system of trade rules and settles disputes, uses "an outdated dichotomy between developed and developing countries that has allowed some WTO members to gain unfair advantages".
Without "substantial progress" to reform WTO rules within 90 days, Washington will no longer treat as a developing country any WTO member "improperly declaring itself a developing country and inappropriately seeking the benefit of flexibilities in WTO rules and negotiations", said the statement, which focused mostly on China.
The memo came ahead of meetings in Shanghai on Tuesday and Wednesday between US and Chinese negotiators aiming to resolve a trade dispute that has led to tariffs on more than $360 billion worth of two-way trade involving the world's two largest economies.
Washington "obviously timed the memo to serve as a new bargaining chip" in the trade talks, the official Xinhua news agency said in a commentary.
"But the tactic of imposing pressure is nothing new to China and has never worked," it said.
Xinhua added that the US government's "latest hegemonic attempt" to coerce the WTO "is destined to hit a wall of opposition".
Developing country status in the WTO allows governments longer timelines for implementing free trade commitments, as well as the ability to protect some domestic industry and maintain subsidies.
But Jennifer Hillman, a former top US trade official who served at the WTO, has said the benefits granted to countries with the special status in most cases has long passed.
The Trump administration has long complained that WTO rules are unfair to the United States, and has nearly throttled significant WTO proceedings by refusing to name new members of the appellate body for the dispute settlement system, which will cease to function later this year.
Despite Trump's criticisms Washington has, in fact, won the majority of complaints it has filed with the WTO.
Trump threatens not to recognize China's special status at WTO
Washington (AFP) July 26, 2019 -
President Donald Trump on Friday threatened to withdraw recognition of the special "developing nation" status of China and other relatively rich countries at the World Trade Organization unless changes are made to the body's rules.
The salvo fell the week before top US trade officials are due to return to China to rekindle trade talks that acrimoniously collapsed in May.
"The WTO is BROKEN when the world's RICHEST countries claim to be developing countries to avoid WTO rules and get special treatment. NO more!!! Today I directed the U.S. Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!," Trump said on Twitter.
In a memo to Robert Lighthizer, the US trade representative, Trump said the global trade body uses "an outdated dichotomy between developed and developing countries that has allowed some WTO members to gain unfair advantages."
Without "substantial progress" to reform WTO rules within 90 days, Washington will no longer treat as a developing country any WTO member "improperly declaring itself a developing country and inappropriately seeking the benefit of flexibilities in WTO rules and negotiations," the statement said.
It was another unilateral attack on the multilateral trade body, which was created to settle disputes and prevent all-out trade wars but which Trump has repeatedly criticized the WTO since taking office.
Trump's order directs Lighthizer's office to "use all available means to secure changes at the WTO," with the cooperation of other countries where possible.
Lighthizer applauded the move.
"This unfairness disadvantages Americans who play by the rules, undermines negotiations at the WTO and creates an unlevel playing field," he said in a statement.
While Trump's statement points to multiple countries that benefit from the developing nation designation, it focuses mostly on China.
The statement notes that seven of the 10 wealthiest economies in the world claim developing country status, as do Mexico, South Korea, and Turkey, which are members of the Group of 20 leading economies.
It is unclear how the measure would change US policy in practice though it likely could open the door to even more retaliatory tariffs against Beijing.
- 'Cannot go unchecked' -
Jennifer Hillman, a former top US trade official who served at the WTO, questioned the rationale since the benefits granted to countries with the special status in most cases has long passed.
"Therefore even self-declared developing countries are now obliged to meet most of the same legal requirements that the US and other developed countries must meet," she told AFP.
Any new tariffs Trump wants to impose still would have to be justified under current US law, which requires an investigation into whether developing country status harms US companies.
And she said Trump's unilateral approach already has angered countries like India and South Africa.
But Trump said allowing wealthy economies to claim developing country status will harm "economies that truly require special and differential treatment," and that "cannot continue to go unchecked."
Developing country status in the WTO allows governments longer timelines for implementing free trade commitments, as well as the ability to protect some domestic industry and maintain subsidies.
The Trump administration has long complained that WTO rules are unfair to the United States, and has nearly throttled key WTO proceedings by refusing to name new members of the appellate body for the dispute settlement system, which will cease to function later this year.
Hillman said that is a much more pressing threat to the world's trade referee since it will block the ability to enforce rules or for countries to comply with decisions.
Despite Trump's animosity, in fact, the United States has won the majority of complaints it has file with the WTO.
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