The United States on Monday narrowed its internal list of developing and least-developed countries to lower the threshold for initiating a U.S. investigation into whether the nations are harming American industries with unfairly subsidized exports, according to a notice from the U.S. Trade Representative.
In doing so, the United States eliminated its special preferences for a list of self-declared developing countries that includes: Albania; Argentina; Armenia; Brazil; Bulgaria; China; Colombia; Costa Rica; Georgia; Hong Kong; India; Indonesia; Kazakhstan; Kyrgyz Republic; Malaysia; Moldova; Montenegro; North Macedonia; Romania; Singapore; South Africa; South Korea; Thailand; Ukraine; and Vietnam.
The Trade Representative said the decision to revise its developing country methodology for countervailing duty investigations was necessary because previous U.S. guidance, dating back to 1998, "is now outdated."
The development marks a notable departure from two decades of U.S. trade policy toward developing nations that could result in tougher sanctions for some of the world's top exporters.
The move also reflects President Donald Trump's frustration that large economies like China and India can receive preferential trade benefits as developing nations at the World Trade Organization.
During his visit to Davos, Switzerland, last month, Trump said the WTO has not treated the United States fairly. “China is seen as a developing nation. India is seen as a developing nation. We are not seen as a developing nation. As far as I am concerned, we are also a developing nation.”
The aim of the WTO's special preferences for developing nations is to help poorer countries reduce poverty, create jobs and integrate into the global trading system.
Under WTO rules, governments must end their countervailing duty investigations if the amount of the foreign subsidy is de minimis, typically defined as less than 1 percent ad valorem.
But WTO rules provide a different standard for so-called developing countries that requires investigators to terminate the rights investigation if the amount of the subsidy is less than 2% ad valorem.
The Trump administration has sought to end these special preferences for nations that fall into certain categories, such as those that are members of global economic clubs like the Group of 20, the OECD or those the world classifies as high-income nations.
Last July, Trump issued an executive memo asking U.S. Trade Representative Robert Lighthizer to determine whether there has been “substantial progress” in limiting the number of countries considered developing nations. The U.S. can act unilaterally if not, Trump said.
Several of the countries not listed in the USTR notice have already agreed to waive their developing country rights in future trade negotiations, including Brazil, Singapore and South Korea.
Source: Bryce Baschuk, Bloomberg
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