The Peninsula

Spotlight on Korea’s “Developing-Country” Status

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

• President Trump released a memorandum calling for South Korea to renounce its developing-country status in the World Trade Organization (WTO).
• In response, the Ministry of Trade proposed removing the status, pointing out that South Korea no longer received benefits from retaining the status.
• Meanwhile, the Ministry of Agriculture argued against relinquishing the status, which helps South Korea protect its rural sector.

Implications: The Korean government’s decision to renounce its status as a developing country at the WTO will reveal that the Moon administration has the political capital to appease the Trump administration. As ties with Japan continues to deteriorate, there is a premium on maintaining the status quo with Korea’s other key trade partners. Ties with the United States have already been strained over Seoul’s withdrawal from its intelligence-sharing agreement with Japan. In addition, tensions may arise in the near future as Korea and the United States restart difficult negotiations on cost-sharing for U.S. troops deployed on the peninsula. In this environment, Seoul’s decision on its WTO status will reveal whether the Moon administration has the domestic political space to impose additional burdens on farmers to secure a favorable relationship with the Trump administration.

Context: Currently, WTO status is determined by self-declaration, but the Trump administration identified four standards it believed should be criteria for exclusion from developing-country status. South Korea meets all four of them. The White House also accused other countries of maintaining a dishonest status at the WTO, and some countries have already begun to change. Brazil, for instance, relinquished its status as a developing-country in the WTO in order to be considered for membership in the OECD.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

The picture is from the World Trade Organization’s Flickr account