South Korea to shed developing-nation WTO status

Move comes after pressure from Trump for several countries to drop trade privileges

SEOUL • South Korea is abandoning its developing-nation privileges at the World Trade Organisation (WTO) following allegations by the Trump administration that some countries were taking advantage of the status.

US President Donald Trump in July named South Korea in a list of countries claiming the status even though they were among the world's richest nations.

South Korea has mainly used the self-declared status to protect its agricultural sector. It imposes a tariff of more than 500 per cent on rice imports.

"It's difficult to be recognised any longer as a developing nation in international society considering our economic status," South Korea's Finance Minister Hong Nam-ki said in a nationally televised address.

The US has proposed that the WTO strip countries of developing-country status if they meet certain criteria - being members of the Group of 20 advanced economies, being members of the Organisation for Economic Cooperation and Development, being high-income countries as classified by the World Bank, and taking up at least 0.5 per cent of total global trade.

South Korea meets all four of the criteria, but has kept its developing-country status since 1995 to protect its sensitive agriculture industry, especially rice.

"The government will do everything it can to provide maximum protection in sensitive agricultural areas, such as rice, in future WTO negotiations," Mr Hong said.

However, local farmers have voiced their opposition to the move.

"We cannot accept the government's decision and we will hold rallies to pressure the government into retracting the decision," said Mr Park Haeng-deok, chairman of the Korean Peasants League, which speaks for about 300,000 farmers across the country.

The US has proposed that the WTO strip countries of developing-country status if they meet certain criteria - being members of the Group of 20 advanced economies, being members of the Organisation for Economic Cooperation and Development, being high-income countries as classified by the World Bank, and taking up at least 0.5 per cent of total global trade.

The Finance Ministry said in a separate statement that South Korea is not giving up privileges it has already secured as a developing nation, and that the decision affects only future WTO talks.

South Korea will also continue to honour WTO-endorsed agreements previously signed among developing nations, it said.

South Korea's announcement yesterday will likely add pressure on China to drop the status.

Mr Trump has repeatedly called for the world's second-biggest economy to give up the privileges granted by the WTO.

 
 
 

"This is a win for Trump pressuring China," said South Korea's Inha University international trade professor Cheong In-kyo.

"China now has one fewer reason to hold on to its developing-nation status."

The WTO allows countries that claim the status to enjoy longer transition periods for implementing trade deals and protection against emergency import restrictions by developed nations.

Warning of unilateral action in July, Mr Trump named China, Brunei, Hong Kong, Kuwait, Macau, Qatar, Singapore, the United Arab Emirates, Mexico, Turkey and South Korea as those unworthy of the status.

Singapore has since said it would not seek privileges granted by the status in negotiations.

BLOOMBERG, THE KOREA HERALD/ ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Straits Times on October 26, 2019, with the headline 'S. Korea to shed developing-nation WTO status'. Print Edition | Subscribe