TWN Info Service on WTO and Trade Issues (Apr18/06)
12 April 2018
Third World Network

Major developing countries face concerted assault on S&DT flexibilities
Published in SUNS #8659 dated 11 April 2018

Geneva, 10 Apr (D. Ravi Kanth) - Despite conflicting messages by the United States and China about tamping down the threats of a trade war between them, major developing countries - China, India, Brazil, and South Africa among others - face a concerted assault on their special and differential flexibilities by the US and its allies in the North.

On Friday (6 April), President Donald Trump mocked at China availing of special and differential flexibilities despite emerging as a great economic power.

He said: "China, which is a great economic power, is considered a Developing Nation with the World Trade Organization. They, therefore, got tremendous perks and advantages, especially over the US."

"Does anybody think this is fair," he asked, emphasizing "we are badly represented."

"The WTO is unfair to the US," President Trump denounced.

Asked to comment on the tweet issued by the leader of the largest economy which played a crucial role in creating the WTO, the WTO's spokesperson Keith Rockwell said on Monday (9 April): "We have nothing to add to the statement s we have already made."

Earlier, the US President had said the "WTO is a catastrophe".

But the WTO's director-general Roberto Azevedo told Stephan Sakur of BBC on 28 March that it is important to address the concerns raised by the US.

Azevedo said the US is fully engaged in consultations on all issues, particularly electronic commerce.

Following the interview, Sean O'Grady wrote in the Independent newspaper on 2 April that "the world economy rests, then, on barmy Donald Trump, some autocratic Chinese communists and peevish Eurocrats - but crucially on the flabby, nervous, unsteady hands of the deeply unimpressive Azevedo."

Azevedo is yet to speak out on the issue of "differentiation" and curbing special and differential flexibilities to China and other major developing countries.

At the recently held informal ministerial summit in New Delhi on 19 March, almost all representatives of major industrialized countries - the US, the European Union, Japan, Norway, Switzerland - and Kenya, from developing Africa, spoke about the need to bring about differentiation among developing countries for availing special and differential flexibilities.

At the New Delhi meeting, a senior trade official from China said categorically that China is a developing country that needs special and differential flexibilities for its development.

South Africa's trade minister Rob Davies made a strong case for enhanced special and differential flexibilities to enable African countries to make progress in their industrialization and economic development (see SUNS #8610 dated 30 January 2018).

"More than 100 of us of the Group of 90 countries supported changes in special and differential treatment flexibilities throughout the WTO rule book," but "it does not manage to get through the process and does not get attention in Buenos Aires," he said.

Minister Davies made a strong intervention at the New Delhi meeting on 19 March that a narrative advanced by developed countries is on "differentiation and the special and differential flexibilities."

"Here the narrative that is emerging," said the South African trade minister, "is that special and differential flexibilities will be decided on a case-by-case basis for major developing countries."

Norway, New Zealand, and Kenya among others welcomed differentiation, Davies said.

"For a number of countries, including India and South Africa, this is a no- go and a red line," because there is no easy self-reclassification process for many countries, he said.

Moreover, such a controversial system would "involve all of us going into a n application of the onerous process of certification subject to approval from other members," he said.

In short, the US President's remarks on China availing special and differential flexibilities is very much in line with the sustained campaign that the developed countries have launched over the past five years.

Clearly, the developing countries remain divided and fractured in offering a united position against the assault on S&DT flexibilities.

The developing countries, particularly China, must now rally round in safeguarding their S&DT flexibilities.

Meanwhile, China's President Xi Jinping on Tuesday (10 April) cautioned about the rising "cold war and zero- sum mentality."

Without naming the US which is poised to pursue a trade war with China, President Xi said: "Arrogance or only focusing [on] one's own interests will get nowhere."

"Only peaceful development and cooperation can truly bring win-win or all-w in results," the Chinese President said at the Boao Forum for Asia in China's southern province of Hainan.

According to a news report in the Financial Times on 10 April, the Chinese President "offered no major concessions" to the US after President Trump created the trade war clouds over the last one month.

"Mr Xi said the Chinese government would "broaden market access" for financial services companies, reduce limits on foreign investment in the automotive, shipbuilding and aviation sectors, improve the operating environment for foreign investors and lower import tariffs."

On Monday (9 April), President Trump said a deal with China on the so-called theft of US intellectual property and technology is a possibility, according to a report in Washington Trade Daily on 10 April.

"When a car is sent to the United States from China, there is a tariff to be paid of 2 =BD [two and a half] percent. When a car is sent to China from the United States there is a tariff to be paid of 25%. Does this sound like free or fair trade? No, it sounds like STUPID TRADE - going for years."

President Trump also discounted fears about the adverse effect on American farmers if China presses ahead with additional tariffs on soya and other agricultural products.

The farmers are "great patriots" and "we will make it up to them," Trump argued, according to WTD.

In crux, the developing countries, particularly China, will be subjected to multiple trade retaliatory measures, including the whittling down of S&DT flexibilities.

Unless the developing countries rally around their core developmental concerns, they might soon discover that the rug under their feet has disappeared.