Within five months, World Trade Organization (WTO) members will meet at the highest-level decision-making summit in Abu Dhabi, the capital of the United Arab Emirates (UAE). It will be the 13th ministerial conference (MC13) of the multilateral trade-rule-making organisation. Preparations are in full swing, and member countries are doing their homework. Though some critical issues will be tabled in the conference, only a few will be finalised.
The Least Developed Countries (LDCs) are expected to push several agendas, including the extension of trade benefits for the graduating LDCs. During the MC12 in Geneva last year, their effort in this connection did not bring any fruitful results. The MC12 Outcome Document acknowledged the challenges, including the loss of trade-related international support measures (ISMs) for the graduating LDCs. However, there was even no mention of the continuation of the steps to be taken for a certain period so that the countries leaving the LDC category could avail of those even after graduation. Instead, the document added a general statement that specific measures in the WTO can facilitate a smooth and sustainable transition for these members after graduation from the LDC category.
It was in 2021 that the LDCs floated a proposal to allow LDC-specific Special and Differential Treatment (S&DT) and preferential market access for 12 years after an LDC has graduated from the group. There is no doubt that the demand was highly ambitious and non-LDC members of the WTO were not ready to pay heed to the arguments behind the proposal. Later, the LDC group revised the proposal, seeking the continuation of trade preferences and gradually phasing out those over six to nine years.
The scaled-down proposal was submitted in MC12 by the LDC group, which was not welcomed by many developed countries. Some advanced developing nations also expressed their reservation about such a move. Against this backdrop, LDCs resubmitted another revised version of the proposal, which suggested a comprehensive and effective smooth transition package in the WTO to support members when they leave the LDC category. The core element of the proposed package is extending and gradually phasing out unilateral trade preferences granted to LDCs for six years or a period determined by the preference-providing country. As mentioned earlier, the demand received a cold shoulder in MC12.
Nevertheless, the LDCs jointly submitted a slightly revised proposal at the general council meeting in December last, seeking support from the WTO members. Besides extending duty-free quota-free (DFQF) market access for countries that graduated from the LDC category, the proposal also demanded smooth transition support measures in favour of the same countries. These include exemption from any action under the WTO dispute settlement mechanism, an extension of time for LDC-specific special flexibilities incorporated in future WTO agreement, and continuation of all LDC-specific technical assistance and capacity-building programs and facilities provided under the WTO system. LDCs seek these supports for 'an appropriate period of time', which is negotiable.
Two opposing views may be presented here for understanding the pulse in this regard. During the WTO Public Forum 2023, which took place in the second week of September in Geneva, this scribe approached two international trade experts to get their views.
Dr Arancha González Laya, the former Executive Director of the Geneva-based International Trade Centre (ITC), briefly said that the multilateral trading system is already there to protect the LDC interests.
She believed that gradation means improving the overall condition of the least developed country (LDC) like Bangladesh. She added: "Bangladesh has been doing better gradually in terms of trade and economy and social sectors, and all these are reflected in the country's advancement to coming out from the LDC category. It also indicates that the country becomes more competitive in the global market as it is now more productive."
Dr Rupa Chanda, director of the trade, investment and innovation division of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), expressed her views elaborately. She said: "The LDCs' move to push the agenda of extending the preferences for the graduated LDCs for a couple of years is necessary. Whether it is feasible in the WTO is not the issue, as the continuation of the S&DTs for LDCs coming out from the category is required for various reasons."
Dr Chanda explained that the graduating LDCs have to work hard to keep pace with their changed status and adjust to stringent standards. "So they need more time, especially when changes in many areas are quite fast," she added. "There are new and complex issues like digital trade, tariff, how to tax digital trade, complex supply chains, rapid technological advancements, etc. What was negotiated yesterday may change tomorrow or may change very fast. Commitments or obligations taken today can affect policy flexibility tomorrow." The ESCAP director also argued that the extension of preference of DFQF for a couple of years and phasing out the perference gradually will help the graduated LDCs.
It appears from the above views that not all are convinced of the necessity of extending and continuing preferences for the countries leaving LDC status. Bangladesh, along with Nepal and the Lao People's Democratic Republic, will formally come out from the UN-defined category by the end of 2026. More LDCs follow these countries. There are 46 LDCs, of which 16 are on the path to graduation. Ten are WTO members.
LDCs are likely to push their demand in the upcoming ministerial conference in February. The proposal, already submitted to the general council last December, has some merits. It, however, requires strong support, especially from the influential members of the WTO. Getting support is a challenging task as these countries also have some arguments for not allowing the benefits to graduating LDCs. They believe such an extension would be discriminatory as both LDCs and some non-LDCs, graduated LDCs to be specific, get similar treatment regarding market access and other waivers.
LDCs have already argued that graduated countries need these supports to adjust themselves in a post-graduation era to sustain the primary pressure in a competitive environment. It is to see how developed nations and advanced developing countries respond to the demand.
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