S. Korea to abandon developing nation status in future WTO talks

By Yeo Jun-suk

Published : Oct. 25, 2019 - 16:12

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The South Korean government decided Friday that it would not seek special treatment reserved for developing countries in future negotiations at the World Trade Organization. The decision followed allegations from US President Donald Trump that some countries were unfairly taking advantage of developing nation status.

During a nationally televised address in the morning, Deputy Prime Minister and Finance Minister Hong Nam-ki said the government would no longer seek developing nation privileges in upcoming trade negotiations at the WTO.

Given the potential economic backlash and protests from farmers, Hong stressed that farmers would enjoy the current trade benefits until the next round of WTO negotiations for the agricultural sector.

“Considering our economic status, conditions at home and abroad and the economic implications, we decided not to pursue special treatment (extended to) developing nations,” Hong said during the news conference at the Foreign Ministry in Seoul.

“Even if we were to delay our decision about special treatment, there is little chance that we would be able to retain (developing nation) status at future WTO negotiations. … The longer we wait to make our decision, the more likely it is that we will lose our power to negotiate.”

Finance Minister Hong Nam-ki holds a press conference at the foreign ministry building in Seoul. Yonhap

The announcement came as Trump continued to put pressure on the WTO to change the way it designates developing countries. The US president has accused some countries of abusing the system, singling out China as an example.

In late July, Trump warned that his administration would no longer treat certain countries as developing countries or recognize their special status at the WTO unless the international organization took steps to fix the issue by mid-October.

The Trump administration demanded that the WTO strip “rich countries” of developing nation status. Its criteria for a country to be considered rich include accounting for at least 0.5 percent of total global trade, being classified as a high-income country by the World Bank, and membership in the Group of 20 advanced economies and the Organization for Economic Cooperation and Development. Korea meets all the criteria.

“Countries with similar economic status to us -- such as Singapore, Brazil and Taiwan -- have pledged not to pursue special treatment as developing nations,” Hong said. “It is a decision we have made for the sake of the national interest.”

Korea has maintained its developing nation status since the WTO’s establishment in 1995 to protect its agricultural sector from rice imports. As a result, the country has enjoyed greater freedom to impose tariffs and offer subsidies.

Farmers’ groups immediately protested the government’s decision to abandon its claim to special treatment for the agricultural industry. The farmers demanded subsidies worth 1 trillion won ($851 million) and called on the government to set aside an additional 5 percent of its budget to promote the agriculture industry.

The Moon Jae-in administration pledged to minimize any adverse impact of its decision by taking measures to protect Korean farmers. The government said it would provide direct payments for farmers to support their income and improve production.

“Our decision (to abandon developing nation status at the WTO) will provide significant momentum for the future of our agriculture industry,” Hong said. “We will make every effort to protect farmers.”

(jasonyeo@heraldcorp.com)

S. Korea to abandon developing nation status in future WTO talks

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