[Federal Register Volume 84, Number 147 (Wednesday, July 31, 2019)]
[Presidential Documents]
[Pages 37555-37557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16497]



[[Page 37553]]

Vol. 84

Wednesday,

No. 147

July 31, 2019

Part VI





The President





-----------------------------------------------------------------------



Memorandum of July 26, 2019--Reforming Developing-Country Status in the 
World Trade Organization
 
 
                         Presidential Documents 
 
 

  Federal Register / Vol. 84 , No. 147 / Wednesday, July 31, 2019 / 
Presidential Documents  

 ___________________________________________________________________

 Title 3--
 The President

[[Page 37555]]

                Memorandum of July 26, 2019

                
Reforming Developing-Country Status in the World 
                Trade Organization

                Memorandum for the United States Trade Representative

                By the authority vested in me as President by the 
                Constitution and the laws of the United States of 
                America, it is hereby directed as follows:

                Section 1. Policy. The World Trade Organization (WTO) 
                was created to spur economic growth and raise standards 
                of living by establishing international trade rules 
                premised on principles of transparency, openness, and 
                predictability. Although economic tides have risen 
                worldwide since the WTO's inception in 1995, the WTO 
                continues to rest on an outdated dichotomy between 
                developed and developing countries that has allowed 
                some WTO Members to gain unfair advantages in the 
                international trade arena. Nearly two-thirds of WTO 
                Members have been able to avail themselves of special 
                treatment and to take on weaker commitments under the 
                WTO framework by designating themselves as developing 
                countries. While some developing-country designations 
                are proper, many are patently unsupportable in light of 
                current economic circumstances. For example, 7 out of 
                the 10 wealthiest economies in the world as measured by 
                Gross Domestic Product per capita on a purchasing-power 
                parity basis--Brunei, Hong Kong, Kuwait, Macao, Qatar, 
                Singapore, and the United Arab Emirates--currently 
                claim developing-country status. Mexico, South Korea, 
                and Turkey--members of both the G20 and the 
                Organization for Economic Cooperation and Development 
                (OECD)--also claim this status.

                When the wealthiest economies claim developing-country 
                status, they harm not only other developed economies 
                but also economies that truly require special and 
                differential treatment. Such disregard for adherence to 
                WTO rules, including the likely disregard of any future 
                rules, cannot continue to go unchecked.

                China most dramatically illustrates the point. Since 
                joining the WTO in 2001, China has continued to insist 
                that it is a developing country and thus has the right 
                to avail itself of flexibilities under any new WTO 
                rules. The United States has never accepted China's 
                claim to developing-country status, and virtually every 
                current economic indicator belies China's claim. After 
                years of explosive growth, China has the second largest 
                Gross Domestic Product in the world, behind only the 
                United States. China accounts for nearly 13 percent of 
                total global exports of goods, while its global share 
                of such exports jumped five-fold between 1995 and 2017. 
                It has been the largest global exporter of goods each 
                year since 2009. Further, China's preeminent status in 
                exports is not limited to goods from low-wage 
                manufacturing sectors. China currently ranks first in 
                the world for exports of high-technology products, with 
                such exports alone increasing by 3,800 percent between 
                1995 and 2016.

                Other economic figures tell a similar story. Valued at 
                nearly $1.5 trillion, China's outbound foreign direct 
                investment (FDI) exceeds that of 32 of 36 OECD 
                countries, while its inbound FDI of nearly $2.9 
                trillion exceeds all but one OECD country. China is 
                home to 120 of the world's 500 largest companies, and 
                its defense expenditures and total number of satellites 
                in space are second only to those of the United States.

[[Page 37556]]

                Notwithstanding these facts and other evidence of 
                economic vibrancy, China and too many other countries 
                have continued to style themselves as developing 
                countries, allowing them to enjoy the benefits that 
                come with that status and seek weaker commitments than 
                those made by other WTO Members. These countries claim 
                entitlement to longer timeframes for the imposition of 
                safeguards, generous transition periods, softer tariff 
                cuts, procedural advantages for WTO disputes, and the 
                ability to avail themselves of certain export 
                subsidies--all at the expense of other WTO Members. 
                These countries have also consistently sought weaker 
                commitments than other WTO Members in ongoing 
                negotiations, which has significantly stymied progress. 
                Moreover, many of the world's most advanced economies 
                have used developing-country status as an excuse not to 
                comply with the most basic notification requirements 
                under WTO rules, depriving United States traders of 
                vital trade data. The status quo cannot continue.

                The WTO is in desperate need of reform, without which 
                the WTO will be unable to address the needs of workers 
                and businesses or the challenges posed by the modern 
                global economy. The United States is also pressing for 
                critical reforms in other multilateral international 
                organizations to help ensure that those organizations 
                recognize the economic development of their members and 
                can work within their mandates to address important 
                challenges. The need to reform international economic 
                institutions is not just a challenge for the United 
                States but for all countries that participate in the 
                global marketplace.

                With respect to the WTO, there is no hope of progress 
                in resolving this challenge until the world's most 
                advanced economies are prepared to take on the full 
                commitments associated with WTO membership. To help 
                ensure that those countries live up to their 
                commitments, it shall be the policy of the United 
                States to make trade more free, fair, and reciprocal by 
                devoting all necessary resources toward changing the 
                WTO approach to developing-country status such that 
                advanced economies can no longer avail themselves of 
                unwarranted benefits despite abundant evidence of 
                economic strength.

                Sec. 2. Changing the WTO Approach to Flexibilities 
                Associated with Developing-Country Status. (a) To 
                advance the policy set forth in section 1 of this 
                memorandum, the United States Trade Representative 
                (USTR) shall, as appropriate and consistent with 
                applicable law, use all available means to secure 
                changes at the WTO that would prevent self-declared 
                developing countries from availing themselves of 
                flexibilities in WTO rules and negotiations that are 
                not justified by appropriate economic and other 
                indicators. Where appropriate and consistent with law, 
                the USTR shall pursue this action in cooperation with 
                other like-minded WTO Members.

                    (b) Within 60 days of the date of this memorandum, 
                the USTR shall update the President on his progress 
                under subsection (a) of this section.

                Sec. 3. Ending Unfair Trade Benefits. (a) If, within 90 
                days of the date of this memorandum, the USTR 
                determines that substantial progress has not been made 
                toward achieving the changes described in section 2 of 
                this memorandum, the USTR shall, as appropriate and to 
                the extent consistent with law:

(i) no longer treat as a developing country for the purposes of the WTO any 
WTO Member that in the USTR's judgment is improperly declaring itself a 
developing country and inappropriately seeking the benefit of flexibilities 
in WTO rules and negotiations; and

(ii) where relevant, not support any such country's membership in the OECD.

                    (b) Before taking any action under subsection (a) 
                of this section, the USTR shall:

(i) consult with the Trade Policy Committee established under section 242 
of the Trade Expansion Act of 1962 (19 U.S.C. 1872);

(ii) consult with the National Security Council and the National Economic 
Council as to the advisability of interagency coordination through the

[[Page 37557]]

process described in National Security Presidential Memorandum-4 of April 
4, 2017 (Organization of the National Security Council, the Homeland 
Security Council, and Subcommittees), or any successor document; and

(iii) consider the WTO Member's involvement in global trade, membership in 
key economic decision-making groups, placement within relative economic and 
other indicators, and any other factors the USTR deems appropriate.

                    (c) The USTR shall publish on its website a list of 
                all self-declared developing countries that the USTR 
                believes are inappropriately seeking the benefit of 
                developing-country flexibilities in WTO rules and 
                negotiations.

                Sec. 4. Publication. The USTR is authorized and 
                directed to publish this memorandum in the Federal 
                Register.
                
                
                    (Presidential Sig.)

                THE WHITE HOUSE,

                    Washington, July 26, 2019

[FR Doc. 2019-16497
Filed 7-30-19; 11:15 am]
Billing code 3290-F7-P