Trump lashes out at rich economies’ ‘unfair’ WTO advantage

Singapore's central business district.
Singapore's central business district.PHOTO: REUTERS
People travel on a sightseeing boat along the Huangpu River as it passes the skyline of Shanghai's financial district.
People travel on a sightseeing boat along the Huangpu River as it passes the skyline of Shanghai's financial district.PHOTO: AFP

WASHINGTON  - Singapore does not take advantage of the flexibility in negotiating agreements that developing countries in the World Trade Organisation are allowed, the Ministry of Trade and Industry said  on Saturday (July 27) after US President Donald Trump called on the WTO to change how rich countries can enjoy certain benefits by declaring themselves developing countries.

Mr Trump said on Friday that Singapore, China and other rich countries are unfairly taking advantage of their self-declared status as developing countries to gain preferential treatment in the WTO.

“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!!!” he wrote on Twitter. 

In a memo, Mr Trump directed US Trade Representative Robert Lighthizer to stop treating such countries as developing countries for the purposes of the WTO, if it deemed that they had not made substantial progress towards reform within 90 days.

The memo took aim primarily at China for gaming the system by benefiting from unfair trade benefits while having weaker commitments compared to other WTO members. But it also highlighted 10 other rich economies whose developing-country designations it said were “patently unsupportable in light of current economic circumstances.”

These economies are among the wealthiest in the world by Gross Domestic Product(GDP), or are members of the Group of 20 and the Organisation for Economic Cooperation and Development. They included Singapore, Brunei, Hong Kong, Kuwait, Macao, Mexico, Qatar, South Korea, Turkey and the United Arab Emirates.

“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,” said the memo. 

“Such disregard for adherence to WTO rules, including the likely disregard of any future rules, cannot continue to go unchecked,” it added.

Mr Lighthizer said in a statement that he looked forward to carrying out the President’s directive, adding: “This unfairness disadvantages Americans who play by the rules, undermines negotiations at the WTO, and creates an unlevel playing field.”

In response to queries from The Sunday Times, MTI said that Singapore fully supports the importance of updating WTO rules to ensure the organisation’s continued relevance. 

 

“We are key partners in discussions on strengthening and updating the WTO,” it said, citing as an example Singapore’s role as co-convener in the WTO Joint Statement Initiative on E-Commerce, which focuses on developing new rules for the digital economy.

“We are in contact with our WTO partners, including the US,” added MTI.

It also cited how Singapore committed to implement the WTO Trade Facilitation Agreement upon its entry into force instead of seeking a transition period that it was entitled to, as an example of how the Republic was not taking advantage of its developing country status.

Washington’s move to push the WTO to reclassify Singapore as a developed country is unlikely to have a significant impact on Singapore’s trading relations, said Dartmouth College associate professor Davin Chor, who specialises in international trade and political economy.

“Singapore is already committed to a very free and open trading system, with minimal tariffs levied on imported goods. In particular, Singapore does not make extensive use of some of the provisions and exceptions that developing countries can appeal to with respect to the WTO,” he told The Sunday Times. 

Singapore’s exports to its major export markets are also largely covered under free trade agreements, which a change in development status label is unlikely to affect, he added.

“The memo itself appears to be part of the wider strategy by the current US administration to put more pressure on China on the trade front. This is evident from how the text of the memo singles out China, going into some detail as to why China should be viewed as a developed country, ” said Dr Chor.

But this was debatable, he said. Dr Chor noted that while China’s coastal provinces have economies that resembled those of middle-to-upper income countries, China’s large population size mean that its per capita income remains very much in the range of developing-country status.

Separately, in a reference to the ongoing US–China trade dispute, Mr Trump said on Friday that Beijing might wait until after the 2020 presidential election to sign a trade deal in hopes of inking it with a Democrat president. 

“I think that China will probably say, Let’s wait. It’s 14, 15 months until the election,” he said ahead of an upcoming round of trade talks with China in Shanghai this week. “And I’ll tell you what: When I win, like almost immediately, they’re all going to sign deals."