Developing status on the agendaKorea needs to think about its status as a developing country, Finance Minister Hong Nam-ki said, but he added that if it loses that distinction, nothing much will change.
Developing country status under the World Trade Organization comes with certain benefits, like more government subsidies for industries. Korea has enjoyed the status since joining the WTO in 1995 and currently receives advantages only in the agriculture sector.
“There are increasing cases of other developing countries at the WTO taking issue with Korea’s developing country benefits,” said Hong, who doubles as deputy prime minister, during a senior government meeting at the central government complex in central Seoul on Friday.
“We are at a point where we need to make a fundamental consideration on whether it is possible to maintain the benefits in the future,” he added.
Hong’s remarks come as U.S. President Donald Trump set a deadline of late next month for advanced economies receiving benefits under the status to make changes.
This year, Taiwan and Brazil said they will no longer seek benefits given to developing countries, while the United Arab Emirates and Singapore have made similar announcements.
While Trump’s complaint was targeted at China, Korea satisfies all four criteria of a developed country as defined by the United States: a member of the Organisation for Economic Cooperation and Development, a member of the Group of 20, designation as a “high-income” country by the World Bank and accounting for over 0.5 percent of global trade.
Korea has faced pressure to give up the status since 1996, when it joined the OECD.
Although the finance minister did not explicitly call for changes to the status, the announcement brings to the fore a sensitive subject for the local agriculture industry.
The status allows for 1.49 trillion won ($1.23 billion) in subsidies to farmers every year.
The Ministry of Agriculture, Food and Rural Affairs has been the most vocal opponent to the status change, as it could potentially hurt local farmers.
The finance minister dampened concerns on a potential change, explaining that Korea would maintain the advantages even if it forgoes the status.
“This is about whether developing country advantages will be applied in future WTO negotiations,” said Hong.
There are currently no negotiations planned on the sector, according to the Finance Ministry.
Hong added that the government will prioritize national interest, Korea’s stature on the global stage and discussions with the agricultural sector in weighing the advantages of holding onto the developing country status.
Hong also addressed complaints by the United States, China, Australia, Thailand and Vietnam on Korea’s 513 percent tariff rate on rice imports.
Korea currently imposes the high tariffs on rice imports beyond 409,000 tons a year.
The finance minister explained that Korea is in the final stages of reaching an agreement with the five countries and that the existing tariff rate will be maintained, while adding that domestic policy changes should be made.
“There is a need to preemptively reform domestic policies so that they are in line with global trade norms,” said Hong.
BY CHAE YUN-HWAN [email@example.com]