Extension of trade benefits for LDCs

The journey for a Least Developed Country (LDC) on way to a United Nations (UN)-set development milestone is long and tortuous. But once the criteria have been attained, it is a momentous event to celebrate for the nation concerned. Bangladesh is in the interim period of three years before its graduation to a developing country completes in 2026. Any LDC country can graduate by meeting two of the three criteria – income, human assets and economic and environmental vulnerability – or by garnering per capita income of more than twice the threshold of income level set by the UN at two consecutive triennial meetings of the UN Committee for Development Policy (CDP). Following the recommendation by the CDP at the second meeting, it takes at least three more years to complete the process. Bangladesh is now in that three-year period.

If the graduation from the LDC status is a celebratory occasion, a country discovers itself in a somewhat unfamiliar, if not hostile, international economic regime in the post-graduation period, where the challenges are stiffer. Of course, there are opportunities too but at a time when the world is reeling from the economic recession due to the pandemic, the Ukraine war and lately the Houthi attacks on commercial ships in the Red Sea during Israeli genocidal activities in Gaza, the challenges are more overwhelming than before and the avenues of opportunities have shrunk. With graduation, the image of a nation brightens internationally and exportable items, services and resources can bring in foreign investments. On the negative side, the privileges in international trade an LDC country enjoys continue to disappear. Duty-free access to rich countries and the Generalised System of Preferences (GSP) enjoyed by commodities of LDC origin are removed.

The four-day 13th Ministerial Conference (MC13) in Abu Dhabi, UAE, scheduled to conclude today has been working on the contentious issue of the timeline for continuation of the trade privileges for the LDCs after graduation. The first impression is that a three-year grace period may be agreed upon but the supporters would like to get those extended up to six years. The global economic downturn certainly makes the case stronger in favour of the demand. True, both rich and poor nations have suffered on account of the pandemic and the war but their sufferings have qualitative differences. A nation like Bangladesh has met with reversals at the time it was about to take a millennium leap forward in terms of economic progress from a mere backward traditional production system whereas the industrialised nations are facing consumption slumps.

Had there been no Covid-19 and the war, Bangladesh would surely find itself in a better position to attract investments from abroad. If the seven countries that have so far graduated from the LDC status beginning with Botswana in 1994 followed by Cabo Verde (2007), the Maldives (2011), Samoa (2014) Equatorial Guinea (2017) Vanuatu (2021) and finally by Bhutan in 2023 are compared with Bangladesh, all are smaller in sizes except Botswana which has a land area nearly four times larger but with a population of fewer than 2.5 million. Bangladesh has a large population which is both its disadvantage as well as advantage. If it can reap its demographic advantage and diversify export basket, the country can chart its course to its cherished destiny with aplomb.