The US Senate Foreign Relations Committee has approved a legislation that the US should stop granting China the ‘developing country’ status in future treaties and on international forums.
Key points
- The legislation known as the “Developing Nation Status Act,” was unanimously passed by the US Senate Foreign Relations Committee.
- Now, the US needs to persuade multilateral organisations like the World Trade Organisation to classify China as a ‘developed’ economy.
- This would make it easier for developed countries like the US, and its allies in Europe, to take away the trade privileges and reduce room for subsidies that China can provide, as well as cut down fresh international aid from the likes of the World Bank.
- The current list of 152 developing countries, according to the IMF, includes the whole of South America, Africa and many Asian countries.
- Developing economies get cheaper loans and more time to adhere to international obligations, for instance, under the World Trade Organisation.
- The World Bank lends billions of dollars to developing countries every year.
- The International Bank of Reconstruction and Development (part of the World Bank Group) has committed over $677 billion to 442 projects in China.
- The WTO itself doesn’t categorise countries as ‘developing’ or ‘developed’. The member country can claim any status it likes, and others can challenge it.
- A developing economy can decide to give its populace subsidised food and it won’t be a violation of the WTO rules.
- The WTO provides extra room for agricultural subsidies to export incentives and import tariffs, a provision to delay the applicability of patents, and much more.
