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Trump’s challenge to WTO could hurt farmers

July 30,2019
The government called for calm after U.S. President Donald Trump said he wants some countries including Korea to lose advantages given to self-designated “developing countries” by the World Trade Organization (WTO).

The Ministry of Agriculture, Food and Rural Affairs said Monday that Korea would maintain benefits enjoyed by its agricultural industry through its membership status in the WTO.

“Developing country” status at the WTO allows advantages such as longer periods to implement agreements and the ability to impose higher tariffs on certain imports. Korea claims “developing country” status only in terms of agriculture and receives benefits for that industry.

In a presidential memorandum issued last Friday, Trump pressed the WTO to make changes to how it designates “developing country” statuses, claiming the current system leads to “unfair advantages.”

The Trump administration has expressed disapproval of the designations since February, according to Korea’s Trade Ministry.

“The WTO continues to rest on an outdated dichotomy between developed and developing countries that has allowed some WTO members to gain unfair advantages in the international trade arena,” read the proclamation, warning that the United States would end preferential treatment for certain countries if the WTO does not take action.

Although the message targeted China, it cited other countries including Korea.

“Mexico, South Korea, and Turkey - members of both the G-20 [Group of 20] and the Organization for Economic Cooperation and Development [OECD] - also claim this status,” read the statement.

Concerns immediately grew about the effect on Korea’s farming industry if changes were made.

Korea currently provides subsidies of 1.49 trillion won ($1.26 billion) per year to help farmers, based on WTO standards.

The government claimed that any change to Korea’s tariffs and subsidies would depend on further negotiations about the agriculture sector at the WTO rather than Korea’s removal from the list of “developing countries.”

“Until the next negotiations, current tariff rates and subsidies will be maintained,” said the Agriculture Ministry in a statement.

“Although the details of the next agriculture negotiations […] are currently unknown, if the ‘developing country’ status is given up beforehand, it could lead to a significant impact on the agriculture industry […],” said the ministry, “and the government is currently closely evaluating the situation.”

The government said that Korea losing its benefits was unlikely as talks on the agriculture sector at the trade body have been at a halt for over 10 years.

Korea will likely give up its “developing country” status according to a Korea Institute for International Economic Policy report in May. Brazil and Taiwan also recently announced they would give up on the special status.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]