Trump tells WTO to stop lenient trade treatment of China

US President Donald Trump said that the WTO ‘is in desperate need of reform.’ (AFP)
Updated 28 July 2019

Trump tells WTO to stop lenient trade treatment of China

  • Trump said the designation lets powerhouse China and others take “unfair” advantage of trade rules

WASHINGTON: President Donald Trump pressed the World Trade Organization to stop letting China and other economies receive lenient treatment under global trade rules by calling themselves “developing” countries.
In a memo, Trump directed US Trade Representative Robert Lighthizer to “use all available means” to get the WTO to prevent countries from claiming developing country status if their economic strength means they don’t need beneficial treatment.

FASTFACT

Among wealthy countries that claim developing status are Singapore, South Korea, Brunei and Kuwait.

Developing countries, supposedly not yet competitive with advanced economies such as the US, get more time to open their economies, more leeway to subsidize their exports and procedural advantages in WTO disputes. Countries can choose their own status, and other countries can challenge them.
Trump said the designation lets powerhouse China and others take “unfair” advantage of trade rules. If the US decides the WTO has not made “substantial progress’ after 90 days, it will seek unilaterally to stop treating those countries as developing economies.
In a tweet, Trump wrote that the “WTO is BROKEN when the world’s RICHEST countries claim to be developing countries to avoid WTO rules and get special treatment. NO more!!! Today I directed the US Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!”
Despite claiming developing country status, China is the world’s second-biggest economy and No. 1 exporter. Among wealthy economies that claim developing status are Singapore, South Korea, Brunei, Kuwait and the UAE.
“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,” Trump’s memo said, adding that “the status quo cannot continue.”
But former WTO official Jennifer Hillman said that she doubts Trump’s move will make much difference. Most of the more-generous deadlines developing countries got to open their economies have long since passed.
“While there may be a few places in the agreement that still give some small break to developing countries, they are not many,” said Hillman, senior fellow on the Council on Foreign Relations. “The proposal to stop treating countries as developing countries for purposes of the WTO won’t change much.”
The US and China are locked in a trade war over American allegations that Beijing is using predatory practices, including outright cybertheft, to challenge US technological dominance.
The Trump administration has complained that the Geneva-based WTO, which referees trade disputes, is ill-equipped to handle China’s unique economy in which the government plays a major role and boundaries between state-owned and private companies can be blurry. “The WTO is in desperate need of reform,” Trump said.


STC postpones its acquisition of Vodafone Egypt for second time

Updated 13 July 2020

STC postpones its acquisition of Vodafone Egypt for second time

  • Kingdom’s largest telecom company says it will need an additional two months to complete the deal

CAIRO: The Saudi Telecom Company (STC), the Kingdom’s largest telecom company, said that it will need an additional two months to complete a deal to purchase a 55 percent stake in Vodafone Egypt.

In January, STC was in agreement to buy the stake for $2.4 billion. In April, it extended the process for 90 days due to logistical challenges stemming from the spread of COVD-19. The company said in a statement that it would extend the period again to September for the same reason.

The Public Investment Fund, the Saudi sovereign wealth fund, owns a majority stake in STC. The ownership of Vodafone Egypt is divided between 55 percent for Vodafone International, which is the target percentage of the Saudi purchase offer, 44.8 percent for Telecom Egypt, and the remaining 0.2 percent for small shareholders.

Telecom Egypt is awaiting the results of Vodafone’s evaluation of the final share price to announce its position on the deal. A Telecom Egypt official stated that the company is still awaiting STC’s position regarding the purchase of the share. If the deal is not completed, it may be presented with its rights to acquire Vodafone’s share, which would allow it to take over 99.8 percent of the company’s shares, leaving 0.2 percent for small investors.

Ashraf El-Wardany, an Egyptian communications expert, pointed out the importance of waiting until the procedures between STC and the Vodafone Group are complete. The results will determine the next steps by Telecom Egypt.

El-Wardany said that the Saudi operator must, after completing the relevant studies, submit a final binding offer at the share price and any conditions for purchase. If approved by Vodafone, it must submit the offer with the same conditions and price to Telecom Egypt, provided that the latter responds within a maximum period of 45 days to determine its position regarding the use of the right of pre-emption and the purchase, or lack thereof, of Vodafone’s share.

According to El-Wardany, there are other possible scenarios. Vodafone International may not be convinced of the offer or the conditions presented by the Saudi side and the sale may be withdrawn, or the Vodafone group may be ready to sell and has prepared another buyer for its stake in Egypt in the event of rejecting the Saudi offer. It may also it back away from the deal and continue to operate in Egypt for a few more years.

El-Wardany said that if Telecom Egypt decides not to use the right of pre-emption to acquire the remaining Vodafone shares for any reason, it will continue with its 44.8 percent stake.
It may also resort to selling all of its shares or part of it to the Saudi side or to any company that wants to acquire its stake.

“This raises the question of whether STC can acquire all of Vodafone’s shares,” El-Wardany said, adding that the coming months “will make the answer clear.”