The Financial Express

Smooth transition of poor countries

LDC group to seek support for 10 years after graduation

| Updated: September 15, 2020 12:39:59

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The group of least developed countries (LDCs) has opted to request the rich nations for extending support measures, available to the graduating LDCs, for at least a period of 10 years after they are excluded from the category, officials said.

The proposal will be placed in line with the UN General Assembly resolution 59/209, which stated the need for creation of "smooth transition strategies for countries graduating from the list of LDCs".

The United Nations, through the resolution number 67/221 of 2012, had called all members of the World Trade Organisation (WTO) to consider extending the existing special and differential treatment measures and exemptions, available to the graduating countries, for a period appropriate to development situation of the country.

The LDC group, in a draft communication, recently circulated among the member states, referred to the context of the current COVID-19 crisis "which may reverse many of the development progress, achieved so far by the graduating LDCs".

It said since the creation of the category in 1971, only three LDCs have been able to graduate. "The progress accelerated since 2011, and several LDCs are progressively reaching the different graduation thresholds as defined by the UN Committee on Development Policy (CDP)."

"While meeting these criteria remains a major achievement, the graduated LDCs still face significant trade and development challenges and risk of falling back in the LDC category, if their progress is not sustained," it noted.

As they are leaving the LDC category, it is implied that the graduating countries will lose access to a wide range of international support measures, which have often contributed to their socio-economic development.

Such support measures not only take the form of official development assistance but also include a wide range of trade-related measures, such as preferential market access or special and differential treatment provisions in the WTO rules.

"Mitigating the negative impacts associated with the removal of these support measures is therefore essential to ensure a smooth transition away from the LDC category," the group added.

It said practically there are no formal WTO procedures for smooth transition in relation to LDC-specific assistance measures and special and differential treatment provisions as called in the UN resolutions.

"This has put the graduating LDCs in a very difficult situation, not least because of their economic vulnerabilities and their limited capacity to negotiate specific extensions on a case by case basis."

The group in the submission to the WTO ministerial conference, slated for June 2021, will request the member states to respond to the general assembly resolutions and to introduce a comprehensive and effective smooth transition mechanism for the graduating LDCs under the WTO system.

"Agreement on this decision would be an important contribution to remedy the difficult circumstances that the graduating LDCs encounter," it noted in the draft.

A senior official of the Ministry of Commerce told the FE that Bangladesh is scheduled to be graduated from the LDC category by 2024.

The government is negotiating bilaterally with different trade blocks, so that the existing preferential treatments continue even after the graduation, he said.

Contacted on Tuesday, Disting-uished Fellow of the Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya told the FE that many trade preferences, including the duty-free and quota-free system, is not in the hands of the WTO.

"It is the blocks concerned, which will decide whether to extend these preferences for the graduating LDCs (or not). The WTO has very limited scope to create influence in this case."

He said the LDC group can request for many facilities, but apart from the flexible implementation of the various WTO treaties, the rest preferences are in principle morally guided.

"At this moment I am working on a major proposal on what can be done for the graduating LDCs in the context of the Covid-19 outbreak," said Mr Bhattacharya, who is a member of the UN CDP.

He feared that graduation of some LDCs may be deferred due to the impacts that the pandemic have on their economies.

"Of course, I can see two countries, whose graduation may be delayed," he concluded.

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