Reforming Developing-Country Status in the World Trade Organization

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 []
[FR Doc No: 2019-16497]
[[Page 37553]]
Vol. 84
No. 147
July 31, 2019
Part VI
The 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                continues to rest on an outdated dichotomy between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.
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                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
                Sec. 4. Publication. The USTR is authorized and
                directed to publish this memorandum in the Federal

                    (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