South Korea decides to abandon WTO developing nation status
THE South Korean government decided on Friday that it would not seek special treatment reserved for developing countries in future negotiations at the World Trade Organisation ( WTO).
The decision followed allegations from US President Donald Trump that some countries unfairly take advantage of developing nation status – singling out China as an example.
During a nationally televised address in the morning, Deputy Prime Minister and Finance Minister Hong Nam-ki said given the potential economic backlash and protests from farmers, they would enjoy the current trade benefits until the next round of WTO negotiations for the agricultural sector.
“Considering our economic status, conditions at home and abroad and the economic implications, we decided not to pursue special treatment [extended to] developing nations,” Hong said during the news conference at the Foreign Ministry in Seoul.
“Even if we were to delay our decision about special treatment, there is little chance that we would be able to retain [developing nation] status at future WTO negotiations . . . The longer we wait to make our decision, the more likely it is that we will lose our power to negotiate.”
In late July, Trump warned that his administration would no longer treat certain countries as developing countries or recognise their special status at the WTO unless the organisation took steps to fix the issue by mid-October.
The Trump administration demanded that the WTO strip “rich countries” of developing nation status. Its criteria for a country to be considered rich include accounting for at least 0.5 per cent of total global trade, being classified as a high-income country by the World Bank, and membership in the Group of 20 advanced economies and the Organisation for Economic Cooperation and Development. Korea meets all the criteria.
“Countries with similar economic status to us – such as Singapore, Brazil and Taiwan – have pledged not to pursue special treatment as developing nations,” Hong said. “It is a decision we have made for the sake of the national interest.”
South Korea has maintained its developing nation status since the WTO’s establishment in 1995 to protect its agricultural sector from rice imports. As a result, the country has enjoyed greater freedom to impose tariffs and offer subsidies.
Farmers’ groups immediately protested the government’s decision to abandon its claim to special treatment for the agricultural industry.
The farmers demanded subsidies worth one trillion won ($853 million) and called on the government to set aside an additional five per cent of its budget to promote the agriculture industry.
The Moon Jae-in administration pledged to minimise any adverse impact of its decision by taking measures to protect Korean farmers.
The government said it would provide direct payments for farmers to support their income and improve production.
“Our decision [to abandon developing nation status at the WTO] will provide significant momentum for the future of our agriculture industry,” Hong said. “We will make every effort to protect farmers.”