Korea caves on status at WTO
The government had considered its options since U.S. President Donald Trump complained in July that some richer countries were receiving unfair advantages by claiming developing country status at the WTO.
While his complaint largely targeted China, Korea meets all four criteria of a developed country as defined by the United States.
“Considering [Korea’s] economic status, it is difficult to continue to be recognized as a developing country,” explained Minister of Economy and Finance Hong Nam-ki during a senior government meeting at the Central Government Complex in Seoul on Friday.
“The government has decided to no longer claim ‘developing country’ advantages during future WTO negotiations.”
Korea had held onto the status since joining the trade body in 1995, claiming benefits in agriculture.
The country joins a number of countries that have made similar announcements under mounting U.S. pressure such as Singapore, Brazil and Taiwan.
On the other side, the government faced fierce opposition from farmers and agriculture groups over the move. The status allows the government to give benefits to farmers such as 1.49 trillion won ($1.27 billion) in subsidies a year.
According to the Finance Minister, the decision will not lead to any immediate changes as current benefits given by Korea are only subject to change in future negotiations.
He clarified that Korea is not outright giving up the status, which would impact existing advantages.
Still, farmer groups gathered outside the offices of the Ministry of Foreign Affairs on Friday after the announcement, protesting the decision and calling for its withdrawal.
The Finance Minister highlighted the urgency of its decision, arguing that postponing it would not have helped Korea’s position at the WTO.
“There was great concern that the decision being delayed would result in losing both the country’s stature and bargaining power,” Hong said.
Korea has faced pressure from WTO member countries to give up the status since joining the Organisation for Economic Cooperation and Development in 1996.
The decision could have an impact on the local agriculture sector and also on future FTAs.
“In the long term, Korea loses legitimacy over its high tariffs on agricultural goods,” explained Ku Ki-bo, a professor of global commerce at Soongsil University, expressing caution over Korea’s tariffs on imported rice of up to 513 percent.
“It would also be difficult to argue for the status in FTAs to protect agriculture when it is no longer applicable at the WTO.”
Hong vowed all-out efforts to protect local agriculture goods such as rice in WTO negotiations.
The government has already proposed increasing subsidies for farmers next year by 57 percent to 2.2 trillion won that skirt WTO regulations.
Experts believe the move could spur changes in local agriculture that will help in the long run.
“Agriculture in Korea has been so far focused in protecting farmers,” explained Ku, adding that farmers account for just 5 percent of the total population and mostly consist of the elderly.
“This should change so that the wider public benefits and […] so Korea’s agriculture becomes more export-oriented with more competitive products,” he said.
The decision also has implications beyond Korea and on the U.S. trade dispute with China.
“China will likely feel pressure over its status after Korea’s decision,” said Cheong In-kyo, a professor of international trade at Inha University. “U.S.-China relations could worsen, which would have an impact on Korea.”
BY CHAE YUN-HWAN [email@example.com]
with the Korea JoongAng Daily
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