US revokes WTO subsidy preferences for some nations

Bloomberg





The administration of US President Donald Trump is changing a key exemption to the US’ trade-remedy laws to make it easier to penalize about two dozen so-called developing countries, including China, India and South Africa.

The US on Monday narrowed its internal list of developing and least-developed countries to reduce the threshold for triggering a US investigation into whether nations are harming US industries with unfairly subsidized exports, a US Trade Representative (USTR) notice said.

In doing so, the US eliminated its special preferences for a list of self-declared developing countries and territories that includes Albania, Argentina, Armenia, Brazil, Bulgaria, China, Colombia, Costa Rica, Georgia, Hong Kong, India, Indonesia, Kazakhstan, the Kyrgyz Republic, Malaysia, Moldova, Montenegro, North Macedonia, Romania, Singapore, South Africa, South Korea, Thailand, Ukraine and Vietnam.

The USTR said the decision to revise its developing country methodology for countervailing duty investigations was necessary because the US’ previous guidance — which dates back to 1998 — “is now obsolete.”

The development marks a noteworthy departure from two decades of US trade policy regarding developing nations that could result in more stringent penalties for some of the world’s top exporters.

The move also reflects Trump’s frustration that large economies, such as China and India, are permitted to receive preferential trade benefits as developing nations at the WTO.

During his visit to Davos, Switzerland, last month, Trump said the WTO has not treated the US fairly.

“China is viewed as a developing nation. India is viewed as a developing nation. We’re not viewed as a developing nation. As far as I’m concerned, we’re a developing nation, too,” he said.

The goal of the WTO’s special preferences for developing nations is to help poorer countries reduce poverty, generate employment and integrate themselves into the global trading system.

Under WTO rules, governments are required to terminate their countervailing duty investigations if the amount of foreign subsidy is de minimis, which is normally defined as less than 1 percent ad valorem.

However, WTO rules provide a different standard for so-called developing nations that requires investigators to terminate duty investigation if the amount of subsidy is less than 2 percent ad valorem.