Reforming Developing-Country Status in the World Trade Organization
| Published date | 31 July 2019 |
| Citation | 84 FR 37555 |
| Record Number | 2019-16497 |
| Section | Presidential Documents |
| Court | Executive Office Of The President |
Federal Register, Volume 84 Issue 147 (Wednesday, July 31, 2019)
[Federal Register Volume 84, Number 147 (Wednesday, July 31, 2019)]
[Presidential Documents]
[Pages 37555-37557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16497]
[[Page 37553]]
Vol. 84
Wednesday,
No. 147
July 31, 2019
Part VIThe President-----------------------------------------------------------------------
Memorandum of July 26, 2019--Reforming Developing-Country Status in the
World Trade Organization
Presidential Documents
Federal Register / Vol. 84 , No. 147 / Wednesday, July 31, 2019 /
Presidential Documents
___________________________________________________________________
Title 3--
The President
[[Page 37555]]
Memorandum of July 26, 2019
Reforming Developing-Country Status in the World
Trade Organization
Memorandum for the United States Trade Representative
By the authority vested in me as President by the
Constitution and the laws of the United States of
America, it is hereby directed as follows:
Section 1. Policy. The World Trade Organization (WTO)
was created to spur economic growth and raise standards
of living by establishing international trade rules
premised on principles of transparency, openness, and
predictability. Although economic tides have risen
worldwide since the WTO's inception in 1995, the WTO
continues to rest on an outdated dichotomy between
developed and developing countries that has allowed
some WTO Members to gain unfair advantages in the
international trade arena. Nearly two-thirds of WTO
Members have been able to avail themselves of special
treatment and to take on weaker commitments under the
WTO framework by designating themselves as developing
countries. While some developing-country designations
are proper, many are patently unsupportable in light of
current economic circumstances. For example, 7 out of
the 10 wealthiest economies in the world as measured by
Gross Domestic Product per capita on a purchasing-power
parity basis--Brunei, Hong Kong, Kuwait, Macao, Qatar,
Singapore, and the United Arab Emirates--currently
claim developing-country status. Mexico, South Korea,
and Turkey--members of both the G20 and the
Organization for Economic Cooperation and Development
(OECD)--also claim this status.
When the wealthiest economies claim developing-country
status, they harm not only other developed economies
but also economies that truly require special and
differential treatment. Such disregard for adherence to
WTO rules, including the likely disregard of any future
rules, cannot continue to go unchecked.
China most dramatically illustrates the point. Since
joining the WTO in 2001, China has continued to insist
that it is a developing country and thus has the right
to avail itself of flexibilities under any new WTO
rules. The United States has never accepted China's
claim to developing-country status, and virtually every
current economic indicator belies China's claim. After
years of explosive growth, China has the second largest
Gross Domestic Product in the world, behind only the
United States. China accounts for nearly 13 percent of
total global exports of goods, while its global share
of such exports jumped five-fold between 1995 and 2017.
It has been the largest global exporter of goods each
year since 2009. Further, China's preeminent status in
exports is not limited to goods from low-wage
manufacturing sectors. China currently ranks first in
the world for exports of high-technology products, with
such exports alone increasing by 3,800 percent between
1995 and 2016.
Other economic figures tell a similar story. Valued at
nearly $1.5 trillion, China's outbound foreign direct
investment (FDI) exceeds that of 32 of 36 OECD
countries, while its inbound FDI of nearly $2.9
trillion exceeds all but one OECD country. China is
home to 120 of the world's 500 largest companies, and
its defense expenditures and total number of satellites
in space are second only to those of the United States.
[[Page 37556]]
Notwithstanding these facts and other evidence of
economic vibrancy, China and too many other countries
have continued to style themselves as developing
countries, allowing them to enjoy the benefits that
come with that status and seek weaker commitments than
those made by other WTO Members. These countries claim
entitlement to longer timeframes for the imposition of
safeguards, generous transition periods, softer tariff
cuts, procedural advantages for WTO disputes, and the
ability to avail themselves of certain export
subsidies--all at the expense of other WTO Members.
These countries have also consistently sought weaker
commitments than other WTO Members in ongoing
negotiations, which has significantly stymied progress.
Moreover, many of the world's most advanced economies
have used developing-country status as an excuse not to
comply with the most basic notification requirements
under WTO rules, depriving United States traders of
vital trade data. The status quo cannot continue.
The WTO is in desperate need of reform, without which
the WTO will be unable to address the needs of workers
and businesses or the challenges posed by the modern
global economy. The United States is also pressing for
critical reforms in other multilateral international
organizations to help ensure that those organizations
recognize the economic development of their members and
can work within their mandates to address important
challenges. The need to reform international economic
institutions is not just a challenge for the United
States but for all countries that participate in the
global marketplace.
With respect to the WTO, there is no hope of progress
in resolving this challenge until the world's most
advanced economies are prepared to take on the full
commitments associated with WTO membership. To help
ensure that those countries live up to their
commitments, it shall be the policy of the United
States to make trade more free, fair, and reciprocal by
devoting all necessary resources toward changing the
WTO approach to developing-country status such that
advanced economies can no longer avail themselves of
unwarranted benefits despite abundant evidence of
economic strength.
Sec. 2. Changing the WTO Approach to Flexibilities
Associated with Developing-Country Status. (a) To
advance the policy set forth in section 1 of this
memorandum, the United States Trade Representative
(USTR) shall, as appropriate and consistent with
applicable law, use all available means to secure
changes at the WTO that would prevent self-declared
developing countries from availing themselves of
flexibilities in WTO rules and negotiations that are
not justified by appropriate economic and other
indicators. Where appropriate and consistent with law,
the USTR shall pursue this action in cooperation with
other like-minded WTO Members.
(b) Within 60 days of the date of this memorandum,
the USTR shall update the President on his progress
under subsection (a) of this section.
Sec. 3. Ending Unfair Trade Benefits. (a) If, within 90
days of the date of this memorandum, the USTR
determines that substantial progress has not been made
toward achieving the changes described in section 2 of
this memorandum, the USTR shall, as appropriate and to
the extent consistent with law:
(i) no longer treat as a developing country for the purposes of the WTO any
WTO Member that in the USTR's judgment is improperly declaring itself a
developing country and inappropriately seeking the benefit of flexibilities
in WTO rules and negotiations; and
(ii) where relevant, not support any such country's membership in the OECD.
(b) Before taking any action under subsection (a)
of this section, the USTR shall:
(i) consult with the Trade Policy Committee established under section 242
of the Trade Expansion Act of 1962 (19 U.S.C. 1872);
(ii) consult with the National Security Council and the National Economic
Council as to the advisability of interagency coordination through the
[[Page 37557]]
process described in National Security Presidential Memorandum-4 of April
4, 2017 (Organization of the National Security Council, the Homeland
Security Council, and Subcommittees), or any successor document; and
(iii) consider the WTO Member's involvement in global trade, membership in
key economic decision-making groups, placement within relative economic and
other indicators, and any other factors the USTR deems appropriate.
(c) The USTR shall publish on its website a list of
all self-declared developing countries that the USTR
believes are inappropriately seeking the benefit of
developing-country flexibilities in WTO rules and
negotiations.
Sec. 4. Publication. The USTR is authorized and
directed to publish this memorandum in the Federal
Register.
(Presidential Sig.)
THE WHITE HOUSE,
Washington, July 26, 2019
[FR Doc. 2019-16497
Filed 7-30-19; 11:15 am]
Billing code 3290-F7-P
