Preparing for post-LDC era

As Bangladesh approaches graduation from the band of Least Developed Countries (LDCs), the imperative for facing the post-LDC era head-on becomes increasingly conspicuous. With the much cherished graduation barely two years away, the need for moving ahead without preferential cushioning is the call of the hour. The challenges to come, hitherto unencountered, demand proactive measures rather than relying on preferential treatment. The message is clear enough: the country needs to adopt a proactive approach, rather than a defensive one, to trade preferences after graduating from the least developed countries' club. The issue came up last week at a discussion session organised by the lead think tank Centre for Policy Dialogue (CPD) ) in partnership with Friedrich-Ebert-Stiftung (FES) Bangladesh. The main focus of the event was to chart a course for Bangladesh in the post-graduation period when the country, in the absence of the preferential treatment in accessing export markets, will need to rely on its skill development, productivity improvement, product diversification and competitiveness to negotiate the global trading environment. In so doing, the country should shift from a reliance on incentives and preferences to a proactive approach that supports the development of new, diversified industries for export. Speaking on the occasion, the state minister for commerce emphasised the best possible use of the available time to get ready for the post-graduation challenges.

The gestation time following graduation assumes paramount importance for fostering self-reliance. The country will be eligible for LDC-specific technical assistance and capacity building provided under the WTO's Technical Assistance and Training Plan for three years following graduation. Also countries so graduated will benefit from a three-year transition period regarding dispute settlement under the World Trade Organisation (WTO). These decisions in favour of the LDCs were taken at the recently concluded 13th Ministerial Conference (MC13) of the WTO. However, the conference did not make any commitment on the continuation of preferential market access for the three-year transition period. Understandably, continuation of preferential access will need to be negotiated bilaterally with preference-offering countries. What is most challenging in the post-graduation stage is facing the competitive global trading system in the absence of support from within or without. That is to say, while there will be erosion in tariff preferences so long received, the incentives and facilities now available from the government in fiscal and financial terms will become prohibitive. Needless to say, the government currently dishes out substantial amounts to various export sectors in the form of cash subsidies and other non-cash benefits.

Evidently, smooth and sustainable transition from the LDC status will critically hinge upon a productive momentum of economic growth. According to experts, three key determinants vital for this smooth transition include accelerated transformation of rural economy, proactive sector-specific industrial policies, and adoption of appropriate science, technology and innovation policy. Broadly speaking, these will entail adoption of policies and strategies for fostering structural transformation.

In fact, these and other related issues have been flagged for quite sometime as actions for sustainable graduation. Also, in order for the country to keep the momentum in external trade, it is imperative to identify the problems well in advance and take measures accordingly.