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WTO's 13th ministerial: Any good news for LDCs?

Asjadul Kibria | February 18, 2024 00:00:00

As the 13th Ministerial Conference (MC13) of the World Trade Organization (WTO) is set to start next week in Abu Dhabi, United Arab Emirates (UAE), Least Developed Countries (LDCs) are struggling hard to secure their trade benefits in the multilateral forum. Currently, 35 members (including Bangladesh) of the WTO are LDCs, as per the United Nations benchmarks, and formed the LDC Group in the organisation. As the group's coordinator, the African country Djibouti, submitted the draft LDC ministerial declaration in the second week of January. The draft declaration contains two sets of priorities: one is LDC-specific, and the other is general.

The LDC-specific priorities are placed in four key areas: (a) agriculture and food security, (b) fisheries subsidies, (c) decisions on graduation, and (d) paragraph 8 of the MC12 outcome document. Of these, LDC graduation is the most critical, especially for the LDCs already on the path to coming out of the category within three to five years. 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 will follow these countries. There are 45 LDCs, of which 15 are now on the path to graduation, and 10 are WTO members. Last December, Bhutan came out from the list.

In the document placed for MC13, LDCs categorically emphasised 'the need for fresh support measures by the development partners targeted to LDCs after graduation to ensure smooth and sustainable transition.'

Five months ago, in October last, the General Council meeting of the WTO decided to encourage members of the organisations to provide a smooth and sustainable transition period for the graduated LDCs before withdrawing the unilateral tariff or duty-free and quota-free (DFQF) market access to these countries have been enjoying as LDCs. The decision becomes a big boost to the LDCs, although it is not binding. It is also unlikely that the scheduled ministerial conference will make it binding instead of keeping it voluntary or 'best endeavour' for the member countries. In that case, a continuation of the benefits for the LDCs after graduation will entirely depend on the willingness of the market access-providing countries. In other words, LDCs have to negotiate separately or bilaterally to enjoy the benefit for an extended period.

Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), at a proposal regarding MC13, urged the Bangladesh government to take proactive action plans to negotiate with the respective DFQF and GSP granting countries and preferential trade agreements partners for extension of all support measures for at least three years after the graduation following the European Union's Everything But Arms (EBA) extension for three years for graduating LDCs. EU and the United Kingdom (UK) currently offer DFQF benefits for all the graduated LDCs for three additional years.

In the last ministerial conference, LDCs stressed the extension of international support measures (ISM) available under WTO in favour of graduating LDCs and proposed to phase out unilateral trade preferences granted to these countries for six years or a period determined by the preference-giving country. It was not accepted at the conference, however. The continuation of the trade-related benefits is necessary to ensure the smooth graduation and contain any abrupt disruption in trade in goods and services of the countries, as per the spirit of the UN General Assembly Resolution.

Between 2018 and 2022, LDCs' exports of goods and services increased at an average annual rate of 7.1 per cent, according to the estimate provided by the WTO secretariat. LDCs' share in global trade in goods and commercial services increased from 0.95 per cent in 2018 to 1.02 per cent in 2022. And LDCs' share in global exports reached 1.23 per cent in 2022, which is far below the target set in the UN Sustainable Development Goals (SDGs). Target 17.11 of SDGs underscored doubling the least developed countries' share of global exports by 2020. It means that LDCs' share in global exports should be at least 1.92 per cent in 2020, which was 0.96 per cent in 2015, the year of launching the SDGs. Thus, the countries need continuous support in the multilateral trade forum.

Moreover, those advancing to become non-LDC also require support to make the transition smooth and effective. It is, however, challenging to secure support in the upcoming conference as some developed countries, mainly the United States (US), have strong reservations. Advanced developed countries like India are also less interested in backing the LDC's demand. So, there is no alternative to persistent, tough negotiation, no matter how disappointing that is.

The LDC-specific international support measures also include exemption from the prohibition of export subsidies and an extended transition period up to 2033 for the LDCs on implementing the Trade-related Aspects of Intellectual Property Rights (TRIPS), especially for pharmaceutical products. Currently, there is no provision for a transition period, so when an LDC officially becomes a non-LDC, it will not be able to enjoy the benefits, which means it has to abolish the export subsidies immediately and face stringent IP requirements.

Developed and developing countries have already put several issues of their interests on the negotiation table and are working hectically to get some of those in the outcome documents. Decisions on prohibiting fisheries subsidies, permanent solutions on public stockholding (PSH) of foods, and reforms of the WTO's dispute settlement system are top agendas where Bangladesh and all the LDCs can do little but watch. The withdrawal of suspension of e-commerce taxation is also critical, where Bangladesh has some interests. Then, plurilateral deals on domestic regulations on services trade and e-commerce are also proposed by some members. As the final days of the conference approaches, the temperature of intense fighting rises.

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