Trump threatens not to recognize China's special status at WTO

President Donald Trump on Friday threatened to withdraw recognition of the special “developing nation” status of China and other relatively rich countries at the World Trade Organization unless changes are made to the body’s rules.

The salvo fell the week before top US trade officials are due to return to China to rekindle trade talks that acrimoniously collapsed in May.

Trump said in a statement the global trade body uses “an outdated dichotomy between developed and developing countries that has allowed some WTO members to gain unfair advantages.”

Without “substantial progress” to reform WTO rules within 90 days, Washington will no longer treat as a developing country any WTO member “improperly declaring itself a developing country and inappropriately seeking the benefit of flexibilities in WTO rules and negotiations,” the statement said.

While the statement points to multiple countries that benefit from the designation, it focuses mostly on China.

“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!!! Today I directed the U.S. Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!,” Trump said on Twitter.

The statement notes that seven of the 10 wealthiest economies in the world claim developing country status, as do Mexico, South Korea, and Turkey, which are members of the Group of 20 leading economies.

Trump’s order directs the US Trade Representative’s office to “use all available means to secure changes at the WTO,” with the cooperation of other countries where possible.

It is unclear how the measure would change US policy but it likely would open the door to even more retaliatory tariffs against China and other countries.

- ‘Cannot go unchecked’ -

“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,” the statement said, and that “cannot continue to go unchecked

Developing country status in the WTO allows governments longer timelines for implementing free trade commitments, as well as the ability to protect some domestic industry and maintain subsidies.

The Trump administration has long complained that WTO rules are unfair to the United States, and has nearly throttled key WTO proceedings by refusing to name new members of the appellate body for the dispute settlement system.

In fact, the United States has won the majority of complaints it has file with the WTO.

And other governments, including the European Union, share concerns about China’s status in the WTO, refusing to recognize China as a market economy by the end of 2016.

The Trump administration also has rolled out new complaints against China using domestic trade rules almost weekly, covering a host of goods as varied as steel, industrial chemicals and rubber bands, imposing tariffs of 200 percent and more.