Bridging the Divide between Developed and Developing Countries in WTO Negotiations

Photo Credit: REUTERS/Amit Dave

by Anabel González , Peterson Institute for International Economics.

The Trump administration, in another sign of its tough approach to trade, moved in March to exclude India and Turkey from a program that has long granted the two countries preferential duty-free access to US markets. India, said the president, was being punished for failing to provide “equitable and reasonable access” to its markets for US goods. The administration’s action came after Brazil and Australia lodged parallel claims that India’s sugar subsidy regime has depressed world prices. Earlier this year, the World Trade Organization (WTO) took a similar step, ruling against China’s rice and wheat subsidies.

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These actions underscore an important issue, bringing the role of larger developing countries in the trading system to the front burner. Developing countries’ exports have grown to represent almost half of total world exports, with the largest 15 developing economies accounting for some three-quarters of that share (table 1). When the players—advanced or emerging—are large, their actions can have sizeable economic effects in international markets. There is thus a strong rationale to have them play by the same rules.

Table 1 Merchandise exports by selected countries and groups and share in total world exports
CountryMerchandise exports(billions of US dollars)Percent increase in merchandise exports in 2017 from 2000Share in total world exports (percent)
South Korea172.3573.7233.0%2.7%3.2%
Hong Kong202.7550.3171.5%3.1%3.1%
United Arab Emirates49.8313.5529.1%0.8%1.8%
Saudi Arabia77.6218.4181.5%1.2%1.2%
South Africa30.088.8196.3%0.5%0.5%
Developing economies2,240.88,460.6277.6%34.7%47.8%
European Union2,457.15,900.6140.1%38.1%33.3%
United States781.91,546.397.8%12.1%8.7%
Developed economies4,215.49,246.1119.3%65.3%52.2%
Source: World Trade Organization, http://data.wto.org.
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