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China will drop its claim to benefits available to developing countries in trade negotiations under the WTO in a move that follows long-standing US objections to the practice.
China’s Premier Li Qiang announced the plan to refrain from claiming “special and differential treatment” on the sidelines of the UN General Assembly meeting in New York, potentially removing one barrier to much-needed reforms of the WTO.
“China will not seek any new special and differential treatment in the current and future World Trade Organization negotiations,” said Li, China’s second-ranked official after President Xi Jinping, according to state media Xinhua.
WTO director-general Ngozi Okonjo-Iweala said the decision was “a pivotal moment for the WTO”.
“China’s decision reflects a commitment to a more balanced and equitable global trading system. It sends a strong signal of support for WTO reform and will help foster a more level playing field for all members,” she said.
Mindful of the different and sometimes harsh effects of liberalisation on rich and poor countries, WTO agreements have long allowed “special and differential treatment” to be given to developing economies.
This includes longer transition periods to adapt to agreements. But the status of developing country is self-defining, with no objective criteria, and China has continued to define itself as such, based on its level of income before it joined the WTO.
Petter Ølberg, the Norwegian ambassador to the WTO who is co-ordinating the organisation’s reform agenda, said China’s decision would now help to advance broader discussions over fairness in world trade.
The debate over China’s status has been a major source of contention between the US and other developed and developing countries that want to see WTO agreements updated to reflect modern economic realities.
“China’s willingness to be flexible over exercising its right to special and differential treatment — and we have already seen this in a recent deal over fisheries subsidies — is an important step that will help us to make headway in the wider discussion about fairness,” Ølberg said.
The European Commission said it welcomed the move but said China should also “stop availing itself [of] developing country status under existing agreements”.
The WTO is also seeking to reform its dispute settlement process, which has been moribund since 2019 when the US stopped appointing adjudicators to the WTO’s Appellate Body, preventing it working.
World trade ministers will gather in Cameroon next March at the WTO’s 14th ministerial conference to try to thrash out a new reform agenda.
China voluntarily decided not to ask for special treatment in some recent WTO accords. It agreed to phase out harmful fishing subsidies quicker than it could have.
And in 2022 it facilitated a deal allowing developing countries to produce Covid vaccines without the consent of the pharmaceutical company holding the rights in the event of another pandemic.
Jens Eskelund, president of the EU-China chamber of commerce, which represents European business in the country, said before the announcement on Tuesday that Beijing was in danger of a global tariff backlash.
Eskelund said manufacturing production was outstripping economic growth, and the falling renminbi meant Chinese goods were pricing out domestic competitors in many countries.
“We are trying to let them know that a trajectory where you grow your share of global exports by 1 per cent a year is not sustainable,” he said. “They would be better off talking about how to rebalance trade in manufactured goods before things blow up.”
China’s senior trade negotiator Li Chenggang told a briefing on Wednesday after Li’s announcement that, while China would forgo the benefits of the classification, it still saw itself as a developing country.
Geopolitically, the developing country characterisation is important to China’s strategic aims, which place it at the head of a new grouping of “global south” emerging nations opposed to the US-led multilateral order.
Li Qiang made his remarks at a meeting on China’s “Global Development Initiative” on the sidelines of the UN General Assembly. The initiative is one of several policy frameworks from Beijing aimed at defining a new world order to replace the US-centred system.
