Rich or Poor, does it Matter? How the Wealthy are Defined in Public International Law

[Fan Huang is an LLM candidate in Public International Law at Leiden University, the Netherlands.]

1. Introduction

On 8 June, the US Senate Foreign Relations Committee unanimously approved the “Ending China’s Developing Nation Status Act”. Likewise, the US House of Representatives has recently passed an act “cancelling” China’s status as a developing country, with a stunning 415-0 vote. In response, Beijing defends its developing country status, citing international law arguments and economic indicators (see here and here). In addition to the binary views, some contend that China is a country mixed of both characters due to its economic uniqueness (see here).

This particular dispute between two geopolitical powerhouses has once again thrust the term “developed/developing country” into the limelight. At first glance, the term may seem like a simple economic descriptor that commonly associates with “rich/poor” nations, rather than a legal norm. However, “developed/developing country” is not just an economic label; it is documented in many international treaties and other legal documents and carries legal implications for states.

The problem is, however, international law sometimes employs the term “developed/developing country” without offering a clear interpretation of its meaning. As a result, controversies arise in practice, as exemplified in the beginning of this piece. The discrepancy between the legal significance of “developed/developing country” and the confusion it presents in international documents deserves our attention.

2. Why Rich/Poor Matters

The term “developed/developing country” and similar vocabularies are regularly documented in international trade law, and they determine whether a country can enjoy preferential treatment. For instance, developing countries are not expected to provide reciprocal commitments in eliminating trade barriers (Article 36.8 of the General Agreement on Tariffs and Trade); developing countries enjoy flexibility in implementing economic integration (Article 5.3.a of the General Agreement on Trade in Services). In addition, developing countries have a longer transition period to fully implement some World Trade Organization (WTO) agreements and have the right to receive technical assistance from WTO Secretariat (see WTO’s overview on this issue).

The “developed/developing” dichotomy also matters for climate change issues. Article 4.3 of the United Nations Framework Convention on Climate Change (UNFCCC) establishes that developed country parties shall also provide financial resources, including the transfer of technology, needed by the developing country parties. Similar obligations for developed countries can likewise be observed in Article 9.1 of the Paris Agreement. Furthermore, Article 5.1 of the Montreal Protocol on Substances that Deplete the Ozone Layer entitles developing countries to delay their compliance with the control measures for ten years.

Likewise, the “developed/developing” differential treatment is considered in other international conventions, such as the United Nations Convention on the Law of the Sea (UNCLOS) (Article 202), International Covenant on Economic, Social and Cultural Rights (ICESCR) (Article 2.3), among others.

3. To Be (Rich/Poor) or Not To Be, That is the Question…of Whom?

Since the classification matters, the question then arises as to who holds the authority to determine the “developed/developing” status of a State. This is quite problematic, as international conventions and international organizations adopt different approaches that often contradict one another.

3.1 The Autonomy of States

In certain fields, international law leaves the authority to states to determine their own status. For instance, WTO allows Members to announce for themselves whether they are “developed” or “developing” countries (see WTO’s website). This self-declaration approach thus renders the “developed/developing” status artificial, and often leads to a jaw-dropping contrast between the common understanding of a state and the legal reality. Singapore serves as a case in point. Despite being one of the most competitive economies, and ranking high in various economic indexes (see World Bank’s overview on Singapore), the global trading hub claims itself as a developing country. Accordingly, Singapore does not provide official development assistance to least developed countries, and it undertakes South-South capacity-building programmes with other developing countries. Other countries such as Brunei, Kuwait, UAE, and Qatar also declare themselves as developing countries in WTO (see WTO’s list of developing countries) in spite of their economic data suggesting otherwise.

3.2 The Power of Others: Recognition and Negotiation

The developing status is, however, not purely self-judging. WTO clarifies that the announcement of being a developing country does not automatically bring benefits. In practice, it is the preference-giving country that decides whether or not to grant such benefits or not (see WTO’s website).

In the context of climate change, things are clearer. States parties have negotiated two annexes attached to the UNFCCC. Nations that are not included in these annexes are recognized as developing countries.

Some other international treaties have employed the “developed/developing” division without offering definitions. UNCLOS and ICESCR serve as examples in this regard. Nevertheless, the United Nations (UN) has furnished references for related terms found in UNCLOS, such as “developing landlocked States” (Article 69.3) and “least developed States” (Article 161.1.d). This reminds us to look at the approaches adopted by international organizations to define the rich and the poor.

3.3 International Organizations

States aside, international organizations employ diverse languages to describe what is “developed/developing”. For example, the World Bank classifies countries into high, upper-middle, lower-middle, and low-income groups based on their Gross National Income per capita.

Beyond economic figures, the UN Development Programme relies on the Human Development Index as ‘the ultimate criteria for assessing the development of a country’. Interestingly, the UN acknowledges that ‘there is no definition of developing and developed countries (or areas) within the UN system’, but still adopts this term ‘for statistical use’. Likewise, the International Monetary Fund (IMF)’s classification is ‘not based on strict criteria, economic or otherwise’, and ‘the objective is to facilitate analysis by providing a reasonably meaningful method of organizing data’ (see IMF World Economic Outlook Statistical Appendix).

Certain international organizations, such as the World Bank, have considered abandoning the problematic term (see here). However, the term continues to appear frequently in the most relevant international commitments of recent times (see the UN 2030 Agenda for Sustainable Development). Besides, alternative nomenclatures such as “Global South” are not immune to criticism (see here, here, and here).

In short, the question to be “rich/poor” or not to be, is in the hands of different authorities depending on the context. Additionally, the practice of international organizations is far from coherent.

4. Conclusion

The “developed/developing country” division is problematic. While it is commonly used for statistical convenience, it is however widely embedded into international conventions that give rise to legal rights and obligations on States. With few exceptions, international treaties and organizations often employ the term without explaining its meaning. The lack of clear definitions has led to controversies in practice.

The term “developed/developing country” seems to reflect some major features of international law: it is centreless, given that no one always has the final say in determining the status; it is also incoherent, as different actors use the same term but with varying and even contradictory meanings.

What would be a possible solution? The clearest way to categorise countries seems to be negotiating lists in the treaties to specify which countries will or will not receive differential treatment, as is the case of UNFCCC mentioned above. However, this approach would still be problematic if it overlooks the constraints that many countries face in terms of negotiation capabilities. A case in point: representatives from Latin American Group, Monaco, Bangladesh and other delegations have voiced concerns about their limited capability to engage in frequent meetings, either formal or informal, during the ongoing negotiation of World Health Organization (WHO) instrument on pandemic prevention, preparedness and response (the recording of these speeches are accessible on WHO’s website). It is therefore necessary to address these concerns and difficulties from the outset of negotiations, ensuring that countries are not disadvantaged due to factors such as insufficient information, knowledge, and human resources.

What factors should be kept in mind while negotiating such lists? The aforementioned WHO instrument negotiations serve as a reminder that some countries are developing countries not only for economic reasons. It is essential to consider other criteria related to pertinent issues, whether social, technological, educational, or environmental, to ensure a fair assessment of a country’s eligibility for preferential treatment.

As for international organizations, it would be prudent to consider phasing out the term “developed/developing country” in their reports, guidelines and other documents, as demonstrated by the World Bank’s initiative mentioned above. Alternatively, they could introduce clear definitions, utilizing objective and multi-faceted criteria to provide a more precise framework to classify countries for their purposes.

With these reflections in mind, we may go back to the dispute mentioned in the beginning. Washington’s proposal certainly does not unilaterally determine a country’s “developed/developing” status. Meanwhile, China’s position, together with other states’ declarations, is likely to be viewed by the international community within a broader context of international law reform. Any attempt to prevent and resolve similar disputes must take into account the complexity behind the term and its broader implication: the justice of development.