Boosting trade opportunities for least-developed countries - Progress over the past ten years and current priorities
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Boosting trade opportunities for least-developed countries Progress over the past ten years and current priorities
Disclaimer This work is published under the responsibility of the WTO Secretariat. The opinions expressed and arguments employed herein do not necessarily reflect the opinions or views of WTO members. © World Trade Organization 2022. Cover photo: A tea plantation in the foothills of Mount Mulanje, Malawi.
Contents Key messages 02 Introduction 03 1. LDC trade performance from 2011 to 2020 04 2. LDC integration into the multilateral trading system 08 Market access for goods and services 09 Policy flexibility for LDCs 11 Broader areas of interest to LDCs 12 3. Building LDC capacity to trade 18 4. LDC graduation 22 Conclusion 26 Annexes 30 Annex Table 1: Merchandise export values, 30 export growth and trade balance Annex Table 2: Commercial services exports 31 and share in goods and services exports Annex Table 3: Aid for Trade disbursements to LDCs 32 Annex Table 4: List of LDCs 33 Abbreviations 34
2
Key messages
When the international community meets The international community needs to
at the Fifth United Nations Conference on continue to support LDCs so that they can
the Least Developed Countries (LDC5), fully realize their potential in the agriculture
special efforts will be more necessary than and fisheries sectors, which are vital for
ever before to assist with the beneficial the employment and livelihood of people in
integration of least-developed countries LDCs.
(LDCs) into global trade, in view of the
enormous challenges posed by the
COVID-19 pandemic. The international community should explore
options to sustain the development efforts
of economies graduating from LDC status,
The implementation period of the Istanbul especially at a time when the COVID-19
Programme of Action (IPoA) (2011-20), pandemic is threatening to derail the hard-
which set out a vision for LDC development, won socio-economic developments in these
has been marked with important milestones countries.
to boost LDC goods and services exports.
Further improvement of preference schemes
for LDC products, as well as greater support The completion of six LDC accessions since
to facilitate services exports from LDCs, 2011 reflects the importance WTO members
could strengthen the trade performance of attach to integrate LDCs into global trade.
LDCs in the next decade. The WTO and relevant institutions should
continue to provide necessary support so
that the eight ongoing LDC accessions can
LDCs continue to receive special treatment be concluded by the next decade, and make
in the implementation of WTO rules. the WTO more inclusive.
Transition periods enjoyed by them under
the WTO’s Agreement on Trade-Related
Aspects of Intellectual Property Rights The global trading landscape has been
(TRIPS) have been a defining feature of evolving faster than ever before. LDCs
the multilateral trading system. These should keep abreast of the forces shaping
flexibilities will continue beyond the international trade. It is essential that LDCs
timeframe of the Doha Programme of have the necessary digital technology
Action, which is expected to be adopted at so that they can take advantage of the
LDC5. emerging opportunities.
Adequate support from LDCs’ development The international community should make
partners in responding to the technical it a priority to respond adequately to the
assistance needs of LDCs would bring trade capacity-building needs of LDCs,
tangible results in reducing trade costs including how Aid for Trade could be made
and would help LDCs to improve their more effective and efficient.
implementation rates of trade facilitation
measures under the WTO Trade Facilitation
Agreement (TFA) – a key achievement since
the adoption of the IPoA. LDC5 should set a path towards helping
LDCs fully exploit the potential of trade and
should further strengthen the rules-based
multilateral trading system so that it can
continue to support stability and growth.
Boosting trade opportunities for least-developed countries | 3
Introduction
The Istanbul Programme of Action for LDCs (IPoA) for the decade 2011 to 2020
identified trade as one of the eight priority areas of actions for the economic
growth and sustainable development of least-developed countries (LDCs).1 Calls
from the international community to support the integration of LDCs into global
trade have been resonating in the WTO over the last decade.
Major advances have been made in ago, and these are severely impacting
enhancing trade opportunities for their ability to recover from the ongoing
LDCs, as well as in providing continued pandemic.
flexibilities to implement WTO rules and
disciplines. A set of concrete decisions It is in these challenging circumstances
aimed at improving market access for LDC that the Fifth United Nations Conference
products, such as duty-free and quota-free on the Least Developed Countries (LDC5)
(DFQF) market access, preferential rules will be held. LDC5 should aim to forge a
of origin and the LDC services waiver, renewed partnership between LDCs and
indicate members’ commitment to LDCs’ their trading and development partners over
development, while WTO members’ the next decade, in order to build a strong
generous extension until 1 July 2034 of foundation of enhanced economic growth
the transition period for LDCs under the and resilience in LDCs that will overlap with
WTO’s Agreement on Trade-Related the remaining years of the 2030 Agenda for
Aspects of Intellectual Property Rights Sustainable Development.
(TRIPS) attests to members’ willingness
to allow LDCs sufficient time to integrate The latest LDC Trade Ministers’
WTO rules. LDCs have also received Declaration, adopted in October
special treatment in the implementation of 2021, stressed the importance of the
multilateral agreements like the WTO Trade speedy recovery of LDCs from the
Facilitation Agreement (TFA), which has the ongoing pandemic through increased
potential to reduce trade costs in LDCs. trade opportunities.2 It set out LDC
trade priorities, including the effective
LDCs thus continue to remain at the heart implementation of commitments in
of the development dimension of the favour of LDCs and positive actions on
multilateral trading system. LDC graduation. Other priority areas
include specific treatment of LDCs in
At the same time, LDCs have not been able the disciplines on fisheries subsidies,
to take full advantage of the opportunities agriculture, development and trade-related
provided under the multilateral trading response to the COVID-19.
system, and their participation in global
trade has not reached the desired level. The The beneficial integration of LDCs into
IPoA goal of doubling the share of LDCs in global trade continues to be a priority, and
global exports by 2020 was not met. LDCs’ the international community must reaffirm
trade performance is conditioned by their its commitment to and support of LDCs, so
weak productive and institutional capacity, that trade can continue to be a fundamental
narrow export base and limited market driver of their development goals.
destinations, continued and widening
trade deficit, susceptibility to high price
volatility for primary commodities, and,
most recently, by the declining demand
and global economic contractions resulting 1
A full list of LDCs can be found in Annex Table 4.
from the ongoing COVID-19 pandemic.
2
WTO official document number WT/MIN(21)/2.
LDCs are facing challenges similar to those WTO official documents can be searched for via
they were already confronting a decade “WTO Documents Online” at https://docs.wto.org
1
LDC trade
performance
from 2011 to 2020
Boosting trade opportunities for least-developed countries | 5
From 2011 to 2020, the share of LDCs The LDC trade profile continues to be
in global exports declined from 0.95 per characterized by concentration in specific
cent to 0.91 cent (see Figure 1). This is products and markets. A limited number
a disappointing result compared to the of the LDCs account for a larger share of
IPoA’s target to double LDCs’ share in exports of the LDC group. The top ten LDC
global exports over the same period. The exporters represented more than 80 per
COVID-19 pandemic has only exacerbated cent of LDC merchandise exports in 2011;
the subdued trade performance registered this declined to 73 per cent in 2020 (see
by LDCs in the latter half of the IPoA Annex Table 1).
implementation period.
LDC exports continue to be concentrated
Packaging of
The COVID-19 pandemic has had a severe in five major destination markets: China, the
handicrafts for trade impact on LDCs. In the second European Union, the United States, India
export markets in
Lalitpur, Nepal.
quarter of 2020, when many lockdown and Thailand. Due to the sharp fall in the
measures began or were already in force, prices of primary commodities, there has
LDC merchandise exports declined 30 been a distinct change in the commodity
per cent year-on-year, compared to a 21 mix of LDC exports over the last decade
per cent drop in merchandise exports at (see Figure 2). In 2011, primary products
the world level. Overall, in 2020, LDC (mainly petroleum products) dominated
merchandise exports shrank by nearly exports with a share of 73 per cent of
12 per cent in value terms, compared to LDC merchandise exports. In 2020, the
the more than 7 per cent contraction for share of primary products declined to 48
the world as a whole. Exports of primary per cent, due in particular to the sharp fall
commodities, such as fuel and mining in the prices of fuels, while LDC exports
products, have been hit hard with a drop of clothing registered a higher share in
of -41 per cent. Manufacturing plants shut merchandise exports (up from 13 per cent
down due to COVID-19 restrictions, and in 2011 to 30 per cent in 2020).
spending dropped due to stay-at-home
orders; these effects translated into low Over the past decade, LDC merchandise
demand for primary commodities from export growth has seen sharp fluctuations,
LDCs. and it registered a negative growth rate
in 2020 compared to its strong growth
The LDC exports of commercial services performance in 2011 (see Figure 3). The
also declined more sharply than the global share of LDCs in world merchandise trade
average, at -35 per cent compared to -21 stood at 1.01 per cent in 2020, down
per cent, reflecting the disproportionate from 1.06 per cent in 2011. From 2011 to
share of tourism and travel to LDCs. 2019, world exports increased at an annual
Figure 1 LDC shares in world exports, 2011-2020
(Percentage shares, BOP/BPM6)1
1.00 0.99
1.0
0.95 0.96
0.95 0.96
0.9
0.92
0.90 0.90 0.91
0.8
1
2
3
4
5
6
7
8
9
20
1
1
1
1
1
1
1
1
1
20
20
20
20
20
20
20
20
20
20
Source: Estimates by the WTO and the United Nations Conference on Trade and Development (UNCTAD).
6
Figure
Figure
Figure 2:2Evolution
Evolution
2: Evolution of merchandise
of merchandise
of merchandise
exports
exports
of LDCs, exports
of LDCs,
2011
2011 of2020
andand
2020LDCs, 2011 and 2020
(Percentage shares)
Primary products 73% Primary products 47%
Textiles 1% Textiles 1%
Clothing 13% Clothing 31%
Semi-manufacturers 3% Semi-manufacturers 2%
Other manufactures 5% Other manufactures 9%
Residual (n.e.s) 5% Residual (n.e.s) 10%
Source: WTO estimates based on Comtrade.
Note: “n.e.s.” is “not elsewhere specified”.
rate of 0.4 per cent, whereas LDC exports demand for products, which are often not
increased by just half of that (0.2 per cent). produced in LDCs. In addition, many LDCs
One important reason for this has been the are unable to move away from exporting
volatility of prices of primary commodities. primary goods. A combination of these
Thus, from 2011 to 2020, the annual export factors has led to the worsening of their
growth of oil-exporting LDCs was negative trade deficit.
because fuel prices in 2020 dropped to
half those of 2011. This volatility in primary From 2011 to 2019, there was a 7 per cent
commodity prices was exacerbated by the annual growth of manufactured exports
COVID-19 pandemic and the subsequent in LDCs, and over the past decade, the
interruption to global economic activity. general LDC export structure has seen
a gradual decline in primary products
Many LDCs face the challenge of a chronic because of lower revenues from oil
trade deficit. From 2011 to 2019, there exports, and an increase in manufactured
was a fivefold increase in the merchandise goods due to a growing share of clothing
trade deficit of LDCs. The economic exports. In terms of merchandise exports,
growth of many LDCs caused a higher manufactured goods still only account for
Figure 3 Merchandise export growth and LDCs’ share in world exports
30 1.1
24.20 1.06
20.02 1.05
1.04 17.70 1.04 1.04
20 1.05
1.06
Share in world exports (%)
13.10 1.01
10.7 10.40
Export growth (%)
10 1.02 1
3.50 2.30 0.96
0.30 0.80 0.30 0.93 0.96
0 0.95
-1.80 -0.60
-2.80 -2.60
-10 -7.70 0.9
-10.30
-13.20
-20 0.85
-22.50
-30
11
12
13
14
15
16
17
18
19
20
20
20
20
20
20
20
20
20
20
20
Export growth, LDCs Export growth, world Share in world exports
Source: WTO-UNCTAD estimates.
Boosting trade opportunities for least-developed countries | 7
Figure 4 Commercial services export growth and LDCs’ share in world exports
30 0.8
23.10 0.72
0.67 0.68 0.68 0.67
20 0.65 0.7
0.63 0.64 14.20
Share in world exports (%)
13.40
9.59 10.30 9.20 9.10 9.60 9.60
Export growth (%)
10 6.60 7.30 6.90 0.6
4.60 0.53
2.90 1.80
0.59
0 0.5
8.60
-2.80
-10 -5.00 0.4
-20 0.3
-19.90
-30 0.2
-40 0.1
-39.40
-50
11
12
13
14
15
16
17
18
19
20
20
20
20
20
20
20
20
20
20
20
Export growth, LDCs Export growth, world Share in world exports
Source: WTO-UNCTAD estimates in cooperation with the International Trade Centre (ITC) and the United Nations Statistics Division (UNSD).
40 per cent for LDCs, compared to 66 per more sophisticated services exports,
cent for the rest of the world. such as finance, computer services and
professional services; however, tourism and
From 2011 to 2019, LDCs experienced a business travel remain the primary service
6.8 per cent annual growth in commercial sector exports in LDCs.
services exports, and the world share of
LDC services exports increased from 0.59 Because of this, LDCs services exports
per cent to 0.72 per cent. However, there have been hit particularly hard by
has not been a discernible improvement COVID-19. Travel exports dropped 88 per
from a low supply base. cent year-on-year in the second quarter
of 2020 due to travel restrictions and
In 2020, services exports for LDCs lockdowns, and they hardly recovered in
dropped by a staggering 40 per cent, more the third and fourth quarters. Although the
than double the drop in world services shock caused by COVID-19 to service
exports. The share of LDCs in world export demand is probably temporary, it is
commercial services exports accounted for still crucial that LDCs build their supply-
a marginal 0.53 per cent in 2020, down side capacity for services to diversify
from 0.6 per cent in 2011 (see Figure 4). their economies.
For some countries, such as Comoros,
Ethiopia and The Gambia, services exports
constitute more than half of their total
exports (Annex Table 2). Only a handful
of LDCs, such as Bangladesh, Myanmar, 1
International Monetary Fund (IMF) (2013),
Balance of Payments and International Investment
Nepal and Senegal, have been able to Position Manual, sixth edition (BOP/BPM6),
make meaningful progress in exporting Washington, D.C.: IMF.2 LDC integration
into the
multilateral
trading systemBoosting trade opportunities for least-developed countries | 9
MARKET ACCESS FOR enjoy either full or nearly full DFQF access
GOODS AND SERVICES to many of their key export destinations.
Preferential market access for goods and Despite this notable progress, there is
services represents an essential tool to scope for further improvement of the
support LDCs in their efforts to increase DFQF coverage in certain markets of
and diversify their exports. Over the past export interest to LDCs, and steps taken
decade, further progress has been made by members continue to be under review
by WTO members in the areas of duty-free in the WTO’s Committee on Trade and
and quota-free (DFQF) market access and Development. The WTO Secretariat has
of preferential rules of origin for LDCs, and issued dedicated reports on members’
with the LDC services waiver. Preferential DFQF market access for LDCs. Progress in
market access will remain a priority area for DFQF market access is also discussed in
LDCs in the WTO for the next decade. the WTO Sub-Committee on LDCs, which
is the only dedicated forum at the WTO to
Duty-free and quota-free market access look at systemic issues of interest to LDCs.
A potter at work in
Bhaktapur, Nepal. The United Nations (UN) and WTO share
the common goal of achieving DFQF The LDC Trade Ministers’ Declaration,
market access for LDCs. The call for DFQF adopted on 19 October 2021, calls upon
access has been expressed via the IPoA WTO members to implement all ministerial
and target 17.12 of the UN Sustainable decisions taken in favour of LDCs, including
Development Goals (SDGs), and this has on DFQF market access. In recent years,
also been one of the key priorities of LDCs LDCs have submitted proposals for
in the multilateral trading system. studies to find a way forward for the full
and effective implementation of DFQF
There has been significant progress in decisions.
providing comprehensive DFQF market
access for LDC products. Ever since the The international community can also
adoption of the Ministerial Decision on contribute to helping LDCs to achieve full
Duty-Free and Quota-Free Market Access DFQF access for their export products.
for Least-Developed Countries at the Bali Given LDCs’ narrow export base, full
Ministerial Conference in 2013, there has DFQF coverage for products originating
been renewed focus on the implementation from LDCs in all developed-country
of DFQF market access for LDC products. markets and in as many developing-country
Developed-country members have markets as possible is likely to increase the
expanded their DFQF coverage, while key participation of LDCs in merchandise trade.
developing-country trading partners of
LDCs have introduced DFQF schemes for One important development in 2019
LDCs. As a result of these schemes, LDCs was the extension of a waiver allowing
Target 17.12
Realize timely implementation of duty-free and quota-free market
access on a lasting basis for all least developed countries,
consistent with World Trade Organization decisions, including
by ensuring that preferential rules of origin applicable to imports
from least developed countries are transparent and simple, and
contribute to facilitating market access.
un.org/sustainabledevelopment/globalpartnerships/10
developing-country members to provide LDC services waiver.4 At present, the LDC
preferential tariff treatment to LDC services waiver is valid until 2030 or until
products until 2029. This, along with the a member’s date of graduation from LDC
improved transparency mechanism, has status – whichever occurs earlier.5
been providing LDCs with opportunities to
explore new market destinations. In 2013, a process to operationalize the
LDC services waiver was put in place.6
Preferential rules of origin Thereafter, LDCs submitted a collective
Considerable progress has been made request indicating the sectors of interest
in advancing the goal of ensuring simple in which they wished received preferential
and transparent rules of origin for LDC treatment, including travel, tourism,
products. Over the past decade, two sets hospitality, banking and other financial
of preferential rules of origin guidelines services, and transport.7 The LDC collective
have been adopted to contribute to request also indicated mode 4 (movement
facilitating market access for LDC imports.1 of natural persons)8 as a priority mode
These two sets of guidelines provide of supply, particularly for the categories
certain recommendations with regard to the of contractual service suppliers and
assessment of substantial transformation, independent professionals. Other measures
cumulation possibilities and documentary range from waiving visas, work permits and
requirements. related fees, to facilitating the recognition of
LDC professionals and the accreditation of
Most of the preference-granting members LDC institutions.
notified their preferential rules of origin
using a new template adopted by the
WTO Committee on Rules of Origin in
2017.2 These notifications have improved
transparency, and have allowed the Increasing LDC participation
Committee to examine the substantive
aspects of origin requirements of in services trade is an
preference-granting members, as well as important part of global efforts
the utilization of preferences by LDCs.
Developments in preferential rules of origin to support LDCs’ greater
for LDCs are reviewed every year by WTO
members.3
integration into global trade.
LDC services waiver Currently, 25 WTO members have notified
The LDC Services Waiver Decision, which measures under the LDC services waiver in
was adopted in 2011, and subsequent response to the LDCs’ collective request.9
decisions relating to its operationalization They represent over 86 per cent of global
mark an important step forward in the services trade. The notified measures
multilateral trading system. Increasing cover a wide range of sectors and modes
LDC participation in services trade is an of supplies. Top sectors include business
important part of global efforts to support services, transport, and tourism and travel.
LDCs’ greater integration into global trade, At the same time, most of the notified
as has also been reiterated in the IPoA. measures for modes 1 (cross-border supply)
Over the years, WTO members have taken and 3 (commercial presence), according to
incremental steps to support LDC services the General Agreement on Trade in Services
exporters in realizing trading opportunities. (GATS), reflect the applied regime. In
addition, some members notified measures
One of the key milestones in these of specific benefit to LDCs, including
efforts was the adoption in 2011 of a visa waivers for businesspersons, e-visa
decision allowing WTO members to grant applications, authorized destination status
preferential treatment to services and for tourism purposes, and designation of
service suppliers from LDC members – the specific contact points.While the notified measures have services waiver, was also highlighted.
contributed to ensuring the greater Productive services firms in LDCs are
transparency of members’ services regimes, a prerequisite for exploring possible
Farmers work on
rice terrace fields in the limited availability of data makes it export opportunities.
Ambalavao, central difficult to assess whether these measures
Madagascar.
have created new opportunities for LDCs. POLICY FLEXIBILITY FOR LDCS
WTO members periodically review the Over the last decade, WTO members have
operation of the notified preferences and continued to provide flexibilities to LDCs
technical assistance offered to LDCs to to implement WTO rules. Longer transition
strengthen their participation in services periods for implementing the Agreement
trade. In addition, the WTO Secretariat on Trade-Related Aspects of Intellectual
has been organizing workshops to foster Property Rights (TRIPS) have been one of
discussions with relevant stakeholders the key flexibilities available to LDCs at the
on service-related topics of interest to WTO. The WTO TRIPS Agreement initially
LDCs. The recurrent themes over the allowed LDCs to delay the implementation
past two years have included the impact of the Agreement for a period of 11 years.
of the COVID-19 pandemic, experience- This general transition period was extended
sharing by exporters and importers of LDC in 2005, in 2013 and in 2021.10 The
services, the ongoing efforts to improve current extension lasts until 1 July 2034,
LDC services data, and support for LDC or until a member graduates from LDC
services suppliers. An idea to develop status, whichever occurs earlier.
an online services portal, which would
take stock of challenges that LDCs meet At the Fourth WTO Ministerial Conference
in utilizing the measures under the LDC in Doha in 2001, LDCs were also grantedBOX 1
LDC accessions
The fact that LDC accessions have been gaining momentum over time is reflected in the
increasing pace of LDC accessions (see also Annex Table 4). Since the establishment of WTO
in 1995, nine LDCs have joined the organization through the accession process, of which six
joined after the adoption of the IPoA in 2011. These nine completed accessions are:
Cambodia (2004) Lao People’s Democratic Republic (2013)
Nepal (2004) Yemen (2014)
Cabo Verde (2008) Afghanistan (2016)
Samoa (2012) Liberia (2016)
Vanuatu (2012)
Among the completed LDC accessions, three acceded LDCs graduated from LDC status:
Cabo Verde (2007) Vanuatu (2020)
Samoa (2014)
Currently, the following eight LDCs are at different stages of the WTO accession process,
and of these, half are on the path to graduation from LDC status (see Chapter 4).
Bhutan Somalia
Comoros South Sudan
Ethiopia Sudan
Sao Tomé and Principe Timor-Leste
a specific transition period which exempted Incentives related to technology transfer
them from providing patent protection and have also been an important element of
undisclosed information for pharmaceutical support to LDCs. The TRIPS Agreement
products until 1 January 2016. This specific requires developed-country members
transition period has been further extended to provide incentives to enterprises and
to 1 January 2033, or until a member institutions on their territories for technology
graduates from LDC status, whichever transfer to LDCs. Since 2003, developed-
is earlier.11 country members have been providing
annual reports on actions taken or planned
The entry into force of the TRIPS regarding technology transfer to LDCs.12
Amendment in 2017 marked a significant The WTO Secretariat has also organized
achievement in facilitating access to annual workshops to provide a platform
medicine. It offers a legal pathway for for discussion on technology transfer
using compulsory licensing for export, measures. As part of the 2021 workshop,
thereby enabling access to medicines an assessment on LDC needs and priorities
for people in countries with limited for technology transfer took place in the
manufacturing capacity. This is the case form of a survey, to raise greater awareness
for LDCs, which are deemed to have on LDCs priorities. Effective implementation
insufficient manufacturing capacity, and of the relevant WTO agreements and
which are therefore exempt from the decisions will continue to support the efforts
notification obligation for using compulsory of LDCs to develop a viable technological
licensing. base over the next decade.Boosting trade opportunities for least-developed countries | 13
Over the last decade, WTO members have The TFA introduced a new approach for
undertaken special efforts to facilitate LDC implementation. Developing countries
accessions (see Box 1 and Annex Table 4), and LDCs are required to notify their TFA
including by adopting a set of strengthened provisions using three categories, and this
LDC accession guidelines in 2012, which categorization has enabled these members
built on the initial set of guidelines adopted to set their own pace for implementing the
in 2002. LDC accessions guidelines call Agreement, and allows them to identify
upon WTO members to exercise restraint the areas in which they need technical
in seeking market access commitments assistance. The three categories are
from acceding LDCs and set specific category A (implementation upon entry
benchmarks regarding market access into force), category B (implementation
negotiations for goods and services. The after a transition period) and category C
IPoA and WTO share the common goal of (implementation after a transition period
facilitating and accelerating negotiations and the provision of technical assistance).
with acceding LDCs.
Once fully implemented, the TFA will help
BROADER AREAS to cut trade costs by up to 14 per cent
OF INTEREST TO LDCS worldwide. LDCs stand to benefit the most
from full implementation, as they could
Trade facilitation benefit from estimated reductions in trade
The adoption of the Trade Facilitation costs of over 16 per cent. In addition,
Agreement (TFA) at the Ninth WTO implementation of the TFA will also support
Ministerial Conference in Bali in 2013 LDCs in their export diversification efforts,
and its subsequent entry into force in in terms both of products and of markets.
2017 marked a significant milestone in The 2015 World Trade Report finds
the multilateral trading system. The TFA that full implementation of the TFA could
has offered a pathway for tackling support LDCs in increasing the number of
some of the longstanding trade-related exported products by destination by up to
challenges faced by LDCs that IPoA had 35 per cent, and the number of destinations
sought to address. by product by up to 59 per cent.13
LDCs face challenges in implementing the
trade facilitation measures stipulated in the
LDCs could benefit from TFA. The implementation rate among LDCs
is only 36.8 per cent, according to the
estimated reductions in trade existing notification data as of 26 May 2021.
costs of over 16% following full Most of the TFA commitments implemented
by LDCs include category A commitments
implementation of the Trade
Facilitation Agreement.
The TFA aims to cut trade costs by
streamlining and harmonizing customs
procedures, and to speed up the flow
80%
of goods, including goods in transit, Currently, 154 out of 164 WTO
thereby helping to boost global trade and members have ratified the
contributing to the integration of LDCs into Trade Facilitation Agreement,
the global economy. Currently, 154 out representing over 90 per cent
164 WTO members have ratified the TFA, of the WTO membership. Within
representing over 90 per cent of the WTO the WTO LDC Group, more than
membership. Within the WTO LDC Group, 80 per cent of WTO members
more than 80 per cent of WTO members have already ratified the TFA.
have already ratified the TFA.14
(27.8 per cent), followed by category B (5.8
per cent) and category C (3.3 per cent).14
LDCs have also indicated over half of the
total commitments for future implementation,
of which 15.4 per cent required additional
time (category B future implementation) and
39.2 per cent required technical assistance
(category C future implementation).
In terms of technical assistance, 80 per
cent of LDCs have already notified their
technical assistance needs and nine
LDCs have already presented progress in
the provision of assistance for capacity-
building. Human resources and training
account for nearly 60 per cent of the total
requests for technical assistance submitted
by LDCs, followed by requests for
assistance with their legal and regulatory
frameworks and with information and
communication technologies.
The WTO members created the Trade
Facilitation Agreement Facility (TFAF –
https://www.tfafacility.org) to support
developing countries and LDCs in
implementing the TFA. The TFAF helps
LDCs to prepare their notifications, build
capacity and access TFA implementation
assistance from development partners, has been a unique initiative in the WTO’s
by improving information flows and response to the specific concerns of LDCs.
strengthening the coordination of trade
facilitation support. TFAF also has two The WTO launched World Cotton Day in
funding windows for developing countries October 2019 in collaboration with the
and LDCs that cannot access trade Food and Agriculture Organization of the UN
facilitation support elsewhere: project (FAO), UNCTAD, ITC and the International
preparation grants (US$ 30,000 per Cotton Advisory Committee (ICAC). The
project) and project implementation grants UN General Assembly adopted a resolution
(US$ 200,000 per project). on 31 August 2021 recognizing 7 October
as World Cotton Day, which reaffirms the
Agriculture importance of improving market access
Over the last decade, WTO members have opportunities for cotton and cotton-related
recognized the special needs of LDCs in products from LDCs, as well as the need
the agricultural sector, which occupies a to substantially reduce any trade-distorting
central place in the economies of most effects of undue measures in international
LDCs. In 2013, at the Ninth WTO Ministerial cotton trade.
Conference, members recognised the need
to make progress in enhancing transparency At the 10th WTO Ministerial Conference in
and in monitoring trade-related measures Nairobi in 2015, WTO members adopted
in cotton – a sector of vital importance to a number of important decisions on
the economic lifeline of a group of LDCs agriculture, including a commitment to fully
in Africa. Moreover, the dual approach of eliminate all forms of agricultural export
addressing the trade and development subsidies, marking a historic decision in the
assistance aspects of cotton simultaneously reform of international agricultural trade.Boosting trade opportunities for least-developed countries | 15
In the ongoing agriculture negotiations,
special provisions for LDCs are being
contemplated. For instance, LDCs would
be exempted from future tariff reduction
commitments on agricultural products
and would not be subject to the advance
notice provision for export restrictions,
while benefitting from better market access
and enhanced predictability in export
restrictions. In addition, any decision that
would exempt food purchases by the
World Food Programme (WFP) from export
restrictions would benefit any LDCs that are
recipients of food aid provided by the WFP.
Fisheries subsidies
Over the past decade, significant
progress has been made in advancing
the negotiations on fisheries subsidies.
With the adoption of the United Nations
2030 Sustainable Development Agenda,
the international community called for
reaching an agreement by 2020 to
eliminate subsidies for illegal, unreported
and unregulated fishing and to prohibit
certain forms of fisheries subsidies that
contribute to overcapacity and overfishing,
with special and differential treatment being
an integral part of the negotiations (SDG
This decision offers LDCs special treatment, target 14.6). In 2017, WTO members
as they can keep the flexibility of covering reaffirmed this commitment at the 11th
marketing and transport costs for agricultural WTO Ministerial Conference.
Fishing in the
exports until the end of 2030. LDCs also
Salary lagoon, enjoy a better framework for international In 2021, WTO members redoubled their
Madagascar.
food aid and maximum repayment terms for efforts to complete the negotiations on
export financing programmes for agricultural fisheries subsidies at the WTO. The
exports supported by governments. Ministerial Meeting on Fisheries Subsidies,
Target 14.6
By 2020, prohibit certain forms of fisheries subsidies which
contribute to overcapacity and overfishing, eliminate subsidies
that contribute to illegal, unreported and unregulated fishing
and refrain from introducing new such subsidies, recognizing
that appropriate and effective special and differential treatment
for developing and least developed countries should be
an integral part of the World Trade Organization fisheries
subsidies negotiation.
un.org/sustainabledevelopment/oceans/BOX 2
LDC participation in joint initiatives
The global trading landscape has changed rapidly over the past decade, and the views of WTO
members on the future of trade negotiations have evolved considerably alongside it. The WTO
ministerial conferences have served as signposts for marking this evolution.
This has led to the emergence of the so-called joint initiatives (JIs) by several groups of
members in 2017 at the 11th WTO Ministerial Conference in Buenos Aires. The JIs announced
cover electronic commerce, investment facilitation for development, micro, small and medium-
sized enterprises (MSMEs) and services domestic regulation. An informal working group was
established in 2020 to support the economic empowerment of women. In 2020, two more JIs
were launched to intensify work among WTO members on trade and environmental
sustainability and on plastics pollution and environmentally sustainable plastics trade.
Currently the discussions across all of the JIs continue to evolve. There is growing interest from
a number of LDCs in joining these discussions. As of 15 November 2021, 17 LDCs have been
participating in the JI on investment facilitation for development, four in the JI on e-commerce, three
in the JI on MSMEs, three in the JI on trade and environmental sustainability, and three participate
in the JI on plastics pollution and environmental sustainability, while 28 LDCs are participating in
the informal working group on the economic empowerment of women.15 The only initiative in which
none of the LDCs have shown an interest so far remains the JI on domestic regulation of services.
held on 15 July 2021, provided an the SDGs, reinvigorating the WTO and
opportunity for trade ministers to exchange improving people’s lives. It would positively
views about the latest negotiating text on contribute to shielding marine fisheries
fisheries subsidies, thereby offering a new
impetus to the negotiations. Thereafter,
the negotiations intensified, and currently
WTO members are at an advanced stage
of securing an agreement on fisheries LDCs have been given a
subsidies disciplines.
special consideration by WTO
LDCs have been given a special members in the fisheries
consideration by WTO members in the
fisheries subsidies negotiations, and subsidies negotiations.
have been allowed flexibilities in different
disciplines being negotiated. For instance,
LDCs are exempt from the prohibition on from depletion and to securing livelihoods
subsidies that contribute to overcapacity for millions of people dependent on marine
and overfishing. In addition, WTO members fisheries, many of whom are living in LDCs.
have been requested to exercise due
restraint in raising matters involving LDCs, Development
and to take into consideration the specific WTO members continue to reaffirm the
situations of LDC members involved provisions of special and differential
in exploring solutions. LDCs are also treatments for developing countries and
expected to benefit from targeted technical LDCs in WTO agreements, ranging from
assistance to fully implement the agreement provisions aimed at increasing trade
once it enters into force. opportunities, safeguarding developing and
LDC interests, granting longer transition
An agreement on fisheries subsidies will periods and providing technical assistance.
be an important milestone for achieving Over the last decade, efforts to make someBoosting trade opportunities for least-developed countries | 17
of these provisions more effective and 1
See WTO official documents numbers WT/L/917
operational have continued. In 2013, at the and WT/L/917/Add.1.
Ninth WTO Ministerial Conference, WTO 2
See WTO official document number G/RO/84.
members adopted a monitoring mechanism 3
See WTO official document number G/RO/91.
providing opportunities to members to 4
See WTO official document number WT/L/847.
review implementation of existing provisions
5
See WTO official documents numbers WT/L/847
on special and differential treatment (S&D) and WT/L/982.
(i.e., special treatment given to developing 6
See WTO official document number WT/L/918.
countries and LDCs in WTO agreements).
7
See WTO official document number S/C/W/356.
In the ongoing discussions on
8
Under the General Agreement on Trade in Services
(GATS), services can be supplied internationally in
strengthening S&D provisions led by the four different ways, known as “modes of supply”.
G90 Group (made up of the African Group, Mode 4 refers to services traded by individuals of
one WTO member through their presence in the
the Organisation of African, Caribbean territory of another. It covers employees of services
and Pacific States (ACP) and the LDCs), firms and self-employed service suppliers.
several S&D provisions relate to LDCs, 9
See WTO official documents numbers S/C/N/*:
Australia (805), Brazil (839), Canada (792/Rev.1),
reflecting the special needs and specific Chile (834), China (809), Chinese Taipei (811),
constraints of LDCs in integrating into the European Union (840), Hong Kong, China (810),
Iceland (835), India (833), Japan (820), Republic
multilateral trading system. These include of Korea (808), Liechtenstein (841), Mexico (821),
areas such as trade-related investment New Zealand (813), Norway (806), Singapore (812),
South Africa (853), Switzerland (819), Thailand
measures (TRIMs), export subsidies, (860), Turkey (824/Rev.1), United Kingdom (1038)
customs valuation methodologies, (replicating the EU notification), United States (825)
and Uruguay (857).
technology transfer and provisions to
10
See WTO official documents numbers IP/C/40,
promote domestic manufacturing abilities IP/C/64 and IP/C/73.
and accelerate industrialization. 11
See WTO official documents numbers WT/MIN(01)/
DEC/2, IP/C/25, WT/L/478 and IP/C/73.
There has been limited progress in 12
See WTO official document number IP/C/28.
responding to the proposals of developing 13
WTO (2015), World Trade Report 2015 – Speeding
countries with regard to strengthening up trade: benefits and challenges of implementing
certain S&D provisions in the WTO the WTO Trade Facilitation Agreement, Geneva:
WTO.
agreements, partly due to differences
14
See https://tfadatabase.org, accessed on 12 May
of opinion on trade and development. 2021.
However, WTO members continue to 15
LDC participants in the JIs are as follows:
be sympathetic to the specific capacity
For investment facilitation for development:
constraints in LDCs, and S&D remains a Afghanistan; Benin; Burundi; Cambodia; Central
fundamental pillar of the WTO agreements. African Republic; Chad; Djibouti; Guinea; Guinea-
Bissau; Lao People’s Democratic Republic, Liberia;
Mauritania; Myanmar; Sierra Leone; Togo; Yemen;
and Zambia.
For e-commerce: Benin; Burkina Faso; Lao PDR; and
Myanmar.
For micro, small and medium-sized enterprises
(MSMEs): Afghanistan; Lao PDR; and Myanmar.
For trade and environmental sustainability: Chad; The
Gambia; and Senegal.
For plastics pollution and environmental
sustainability: Cambodia, the Central African
Republic and The Gambia.
For the informal working group on women’s
economic empowerment: Afghanistan; Angola;
Benin; Cambodia; Chad; Democratic Republic
of the Congo; Ethiopia; The Gambia; Guinea;
Guinea-Bissau; Haiti; Lao PDR; Lesotho; Liberia;
Madagascar; Malawi; Maldives; Mali; Myanmar;
Niger; Rwanda; Senegal; Sierra Leone; Somalia;
Sudan; Togo; Uganda; and Zambia.3
Building LDC
capacity to tradeBoosting trade opportunities for least-developed countries | 19
LDCs are an important constituency in specifically to build human and institutional
the WTO, representing one-fifth of the capacity in the LDCs.
WTO membership. At present 35 LDCs
are WTO members and eight LDCs are at The WTO Technical Assistance Plan
various stages of their accession process includes annual LDC-focused Geneva-
(see Box 1). A dedicated committee in the based introductory trade policy courses,
WTO, the Sub-Committee on LDCs, looks thematic courses on multilateral topics and
at the systemic issues of interest to LDCs reference centre programmes, and offers
in the multilateral trading system, including LDCs priority in a number of internship
market access, technical assistance, LDC programmes (e.g., the Netherlands Trainee
accession and the LDC-related work of the Programme, the French and Irish Mission
other international organizations. Internship Programme, and the Regional
Coordinator Internship Programme).
The WTO Work Programme for the LDCs Participation in these programmes
has been integrating the trade-related positively contributes to greater
aspects of the UN Programme of Actions understanding of the day-to-day activities of
for LDCs, and the adoption of the Doha the WTO, thereby enhancing participants’
Programme of Action offers an excellent understanding of trade-related topics.
opportunity to advance the priorities of LDCs also benefit from a greater number
LDCs in world trade. of national training activities than non-
LDC members. Although the COVID-19
The WTO LDC Group has evolved into pandemic has affected the organization of
A silk factory one of the most active coalitions in the in-person technical assistance activities, the
in Siem Reap,
Cambodia.
WTO in advancing its priorities in the WTO Secretariat has continued to organize
multilateral trading system. The WTO LDC online courses for LDCs.
Consultative Group is steered by the LDC
Coordinator and seeks to forge common The WTO also administers the China
positions on issues of interest to the Group. Programme, China’s LDCs and
The thematic focal points within the LDC accessions programme, which is aimed
Group follow different areas of WTO work at strengthening LDC participation in
and provide regular updates to the LDC global trade.1 One of the pillars of the
constituency. The LDC Unit of the WTO China Programme, the South-South
Secretariat provides support to the LDC Dialogue on LDCs and Development, is a
Group in all aspects of its participation in flagship capacity-building event for LDCs.
the multilateral trading system. Over the past decade, four South-South
dialogues had been organized by the
The regular work of the WTO LDC Group WTO Secretariat, with the most recent
has been instrumental in supporting the taking place on 16-17 September 2021.
participation of LDC delegations in the These events contribute to strengthening
WTO. The active participation of LDC coordination among LDCs and their
members in the WTO’s regular work and developing-country partners on topics
negotiations is reflected in the adoption of
a number of important decisions taken in
favour of LDCs over the last decade.
WTO TECHNICAL ASSISTANCE
LDCs have been given special priority in
366.9
US$ BILLION
terms of the delivery of WTO technical
assistance over the last decade. Every Since 2011, over US$ 366.9 billion
year, LDCs receive more than 40 per cent, has been disbursed in Aid for
on average, of the trade-related technical Trade, with the LDCs accounting
assistance given by the WTO Secretariat, for 30 per cent of the total.
and special products have been created20
of mutual interests in the multilateral Trade flows in coming years. In this context,
negotiations. continued monitoring of Aid for Trade
remains essential.
AID FOR TRADE
Aid for Trade to LDCs remains
The WTO-led Aid for Trade initiative has concentrated in terms of recipients
been contributing to the implementation of and development partners. The top five
the IPoA, which calls upon development recipients – Bangladesh, Afghanistan,
partners to enhance the share of Ethiopia, Tanzania and Mozambique –
assistance to LDCs for Aid for Trade. account for over 45 per cent of total Aid
Since 2011, over US$ 366.9 billion has for Trade disbursements to LDCs (see
been disbursed in Aid for Trade, with the Annex Table 3). The top five development
LDCs accounting for 30 per cent of the partners (bilateral and multilateral) provide
total. LDCs remain the second largest nearly two-thirds of Aid for Trade to LDCs.
recipient of Aid for Trade flows, with the They are the World Bank, Japan, the United
lower middle-income countries keeping States, the European Union institutions and
the largest share. the African Development Bank.
Between 2011 and 2019, Aid for Trade The monitoring of the Aid for Trade
commitments to LDCs have fluctuated. initiative follows a two-year cycle. The
After reaching a peak of US$ 20 billion in Global Reviews of Aid for Trade mark
2018, Aid for Trade commitments to LDCs the completion of each monitoring
fell by 19 per cent to US$ 16.6 billion cycle and are underpinned by an inter-
in 2019 (see Figure 5). The LDC share agency “Aid for Trade at Glance”
of total Aid for Trade commitments also publication co-published by the WTO
contracted from 36 per cent in 2018 to and Organisation for Economic Co-
31 per cent in 2019. While there are no operation and Development (OECD). Over
detailed Aid for Trade data for 2020, the the past decade, five Global Reviews
measures taken by governments across of Aid for Trade have covered a variety
the world to cushion the impact of the of topics, ranging from global value
COVID-19 might further shape Aid for chains to trade costs, inclusiveness and
Figure 5 Aid for Trade flows to LDCs
(US$ million, constant prices)
60
52.5 52.9 59.3
51.4 57.6
49.3 56.6
50 53.0
41.3
40
US$ million
30
19.3 20.4
20 17.5 18.4
13.6 15.0 16.6
12.5 11.6
10
0
11
12
13
14
15
16
17
18
19
20
20
20
20
20
20
20
20
20
AFT total disbursements LDCs total disbursements AFT total commitments LDCs total commitments
Source: Organisation for Economic Co-operation and Development – Development Assistance Committee
Creditor Reporting System (OECD-DAC CRS), Aid Activity Database, accessed on 25 May 2021.Boosting trade opportunities for least-developed countries | 21
connectivity, and economic diversification to better respond to the emerging priorities
and empowerment, thereby echoing of LDCs. The EIF Strategic Plan (2019-22)
many of the LDC priorities identified in sets out a more granular approach to
the IPoA.2 The next Global Review of Aid trade development in LDCs, with a greater
for Trade is expected to be held in 2022 focus on countries affected by fragility
under the theme "Empowered Connected and conflict. It also places an emphasis
Sustainable Trade". on greater engagement with the private
sector and on the economic empowerment
ENHANCED INTEGRATED of MSMEs, women and youth. Currently,
FRAMEWORK women account for over half of the
beneficiaries of EIF interventions in
The Enhanced Integrated Framework productive capacity.
(EIF)3 aims to strengthen LDC capacity
to trade. It has been mentioned in Graduation from LDC status has been one
the IPoA and the 2030 Agenda for of the aspirational targets at the impact
Sustainable Development. It operates as level, mirroring the overarching objective
a partnership of 46 LDCs, five graduated of the IPoA. The EIF commitment to
LDCs, 24 donors and eight international supporting graduating LDCs in ensuring
organizations, including the WTO, which a smooth transition has been reflected
hosts the EIF within its headquarters. in the EIF policy on graduation, which
The EIF funds evidence-based analysis, allows graduated countries to access
contributes to institutional strengthening EIF funds for a period of five years after
of LDC trade ministries and helps with graduation, including institutional support
building productive sectors with high (US$ 1.5 million), analytical support
export potential. (US$ 200,000) and productive capacity
support (US$ 1.5 million). As a result,
Since the establishment of the EIF in 2009, five graduated countries – Cabo Verde,
over US$ 230 million has been allocated to Equatorial Guinea, Maldives, Samoa
support LDCs in building the foundations and Vanuatu – have continued to enjoy
of strong trade institutions, undertake EIF benefits after graduation, which has
evidence-based analysis of LDC trade allowed for a full completion of the ongoing
priorities and tackle the most pressing development interventions on the ground.
supply-side constraints. LDC governments Currently, EIF investments in 16 LDCs on
have been managing over 70 per cent of the path to graduation account for one-third
EIF investments, reflecting the principle of of the EIF portfolio.
country ownership.
Currently, close to 90 per cent of LDCs
have integrated trade into their national
development plans, while 35 LDCs have
absorbed project-based trade teams
into their national government structures
to better support coordination of trade-
related technical assistance, thereby
1
The China Programme is comprised of five main
ensuring the sustainability of the EIF pillars: the China WTO Accession Internship
interventions beyond the implementation Programme, the Annual China Round Tables on
WTO Accessions, increasing the participation of
of EIF project cycles.4 The EIF has LDCs in WTO meetings, South-South Dialogues on
funded over 50 analytical studies to LDCs and Development and the LDCs’ Trade Policy
Review follow-up Workshops.
identify the trade priorities of LDCs.
Building on these findings, LDCs have
2
See also https://www.wto.org/english/tratop_e/
devel_e/a4t_e/aid4trade_e.htm
benefitted from targeted investments in 3
See https://enhancedif.org
key productive sectors, which account
4
See the EIF Annual Report 2019 at
for over 70 per cent of the EIF portfolio. https://enhancedif.org/sites/default/files/
The EIF has evolved over the past decade eif_annual_report_final_double_page_e.pdf4
LDC graduationBoosting trade opportunities for least-developed countries | 23
Weaving of Graduation from LDC status marks an transition mechanism in the WTO.2 The
rattan baskets
in Mandalay, important milestone in the development main elements included a 12-year extension
Myanmar. path of an LDC. However, the phasing- of LDC-specific special and differential
out of international support measures treatment (S&D) provisions and a phasing-
associated with LDC status could present out of LDC-specific trade preferences over
challenges for graduating LDCs in their a 12-year period.
efforts to continue to integrate into the
global economy. An overarching goal of the The WTO LDC group made a submission
IPoA (2011-20) was to enable half of the in October 2021 taking into account
LDCs to meet graduation thresholds (see the views expressed by members on
Table 1) by the end of the decade. different aspects of its 2020 proposal.
Between 2011 and 2020, four LDCs The latest submission represents an
graduated from LDC status (see Figure interim arrangement, whereby the LDCs
6). Currently there are 16 LDCs at the encourage their trading partners to extend
different stage of the graduation process. LDC preferences to graduated LDCs for
They include Angola, Bangladesh, Bhutan, a certain time period. LDCs are actively
Cambodia, Comoros, Djibouti, Kiribati, engaged with WTO members to draw up
Lao PDR, Myanmar, Nepal, Sao Tomé and an outcome on LDC graduation, including
Principe, Senegal, Solomon Islands, Timor- with a view to supporting smooth and
Leste, Tuvalu and Zambia. sustainable graduation.
The topic of LDC graduation has also The WTO Secretariat, in cooperation
been gaining momentum in the WTO in with the EIF, has been helping LDCs to
recent years. In 2017 at the 11th WTO gain the best understanding possible
Ministerial Conference, the LDC Ministerial concerning trade-related challenges
Declaration called for positive actions on
graduation.1 Thereafter the WTO LDC
Group tabled several graduation-related
proposals in different WTO bodies. LDC
graduation is one of the key priorities for
the WTO LDC group at the 12th WTO
Ministerial Conference.
16
Currently there are
In November 2020, the WTO LDC Group 16 LDCs at the different
put forward a draft ministerial decision stages of the process of
on trade-related challenges and a way graduation from LDC status.
forward in order to set forth a smooth
Table 1 LDC graduation criteria, 2021
Gross national Human Economic
income per capita assets index vulnerability index
(GNI) (HAI) (EVI)
US$ 1,222
Income-only: 66 or above 32 or below
US$ 2,444
Source: United Nations Department of Economic and Social Affairs (UN DESA) (2021).
Note: An LDC can be eligible for graduation, if: i) it meets two of the three graduation criteria, or ii) its income per capita doubles the income
graduation threshold. The graduation criteria should be met at two consecutive reviews for a country to be recommended for graduation.24
Figure 6 Countries graduating from LDC status from 2011 to 2020
Maldives Samoa Equatorial Guinea Vanuatu
(2011) (2014) (2017) (2020)
Source: United Nations Committee for Development Policy (UN CDP) and WTO.
Note: Countries that graduated from LDC status prior to 2011 include Botswana (1994) and Cabo Verde (2007).
of LDC graduation, in response to a The reports also found that the trade-
specific request by the WTO LDC Group. related challenges of graduation have been
The findings of this work have been linked, among other things, to the loss
summarized in two reports on the trade of LDC-specific trade preferences and
impacts of LDC graduation. The reports reduced flexibilities in implementing WTO
found that the trade impacts of graduation rules, especially in areas such as trade-
differ for each LDC, depending on a variety related aspects of intellectual property
Garment-making
of factors, including the export structure, rights (TRIPS), non-agricultural export in Dhaka,
use of LDC-specific trade preferences, and subsidies and agriculture. Bangladesh.
terms of entry into the WTO.You can also read
