American President Donald Trump has accused the Macau SAR and six others among the world’s 10 wealthiest economies of obtaining unfair advantages in international trade after declaring themselves to be “developing countries”.
Trump tweeted to express that he was displeased about the World Trade Organization treating China, Macau and Hong Kong – among 27 other jurisdictions – as developing countries. He said that their status afforded them advantages that are intended to support underdeveloped economies only.
“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!” tweeted the U.S. President.
It was made on the sidelines of his actual order which was recorded on the White House’s website as a memorandum. It urges for the reform of the ‘developing country’ status recognized by the WTO.
“There are no WTO definitions of ‘developed’ and ‘developing’ countries. Members announce for themselves whether they are ‘developed’ or ‘developing’ countries,” the WTO website states.
According to the body’s regulations, it is legitimate for any member country to object to any other’s claim about its status.
However, despite Trump’s claim, a jurisdiction that labels itself as a developing country does not automatically benefit from unilateral trade preference schemes.
Macau appears in one single reference in the White House’s memorandum, which pointed out that seven of the 10 wealthiest jurisdictions in the world (measured by their respective gross domestic product per capita on a purchasing-power parity basis) claimed themselves as developing countries.
Seven of the world’s 10 wealthiest economies, Trump said, claim developing-nation status – Brunei, Hong Kong, Kuwait, Macau, Qatar, Singapore and the United Arab Emirates. So do Mexico, South Korea and Turkey, who are all members of the Group of 20 and the Organization for Economic Cooperation and Development, Trump said.
As of last year, Macau ranked second in the world in terms of gross domestic product per capita with $122,489 (MOP990,357), just behind the middle-eastern country of Qatar. Macau is projected to overtake Qatar as the world’s richest place by 2020, on account of faster economic growth created by the gambling industry.
Rufus Yerxa, a former WTO deputy director-general, told Bloomberg there are some provisions in the U.S. trade laws and WTO subsidies agreement that require developed countries to treat developing countries differently in trade investigations.
“It seems like what the Trump administration is saying is that it will not respect those provisions with respect to certain countries that it does not consider to be developing,” Yerxa said. “I’m not sure that this has huge commercial significance but symbolically it might be important.”
The White House’s memorandum moves on to accuse China of abusing the developing country mechanism, since the economy is the world’s second-largest in terms of GDP.
“These countries have also consistently sought weaker commitments than other WTO Members in ongoing negotiations, which has significantly stymied progress,” the memorandum points out.
In reply to the U.S.’s allegation, Singapore’s Ministry of Trade and Industry (MTI) has argued that Singapore “does not take advantage of the flexibility in negotiating agreements that developing countries in the WTO are allowed.”
In the memorandum, Trump made instructions to his trade representative to urge reform in the WTO. He will also lead his country to press for reform in other international organizations.
He has set out a 90-day timeframe, after which if there is no “substantial progress” as deemed by his representative, the U.S. threatens to stop treating wealthy but self-designated “developing countries” in the manner that they claim to be.
Meanwhile, the trade representative is about to lead a delegation to China in the hope of restarting trade talks halted in May. In response, China’s state-owned broadcaster CCTV said in Mandarin that “the U.S. is playing the old trick of threatening and pressurizing just before the two nations are set to have high-level trade negotiations.” Staff reporters
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