This archive report was first published on 29 July 2019.
On July 26, 2019, US President Donald Trump issued a memo to US Trade Representative Robert Lighthizer, threatening to revoke the developing country status of any World Trade Organization (WTO) member that 'improperly declares itself a developing country and inappropriately seeks the benefit of flexibilities in WTO rules and negotiations.'
The move, aimed at pressuring China, comes ahead of trade talks in Shanghai on July 30-31, 2019, between US and Chinese negotiators. The talks aim to resolve a trade dispute that has led to tariffs on over $360 billion worth of two-way trade between the world's two largest economies.
China's state-run Xinhua news agency dismissed the US threat, calling it a 'new bargaining chip' in the trade talks. Xinhua stated that the tactic of imposing pressure is nothing new to China and has never worked.
Developing country status in the WTO allows governments longer timelines for implementing free trade commitments and the ability to protect some domestic industry and maintain subsidies. However, Jennifer Hillman, a former top US trade official, has said that the benefits granted to countries with the special status have long passed.
The Trump administration has long complained that WTO rules are unfair to the United States, and has nearly throttled significant WTO proceedings by refusing to name new members of the appellate body for the dispute settlement system, which will cease to function later this year.
