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The Financial Express

LDC proposal to extend trade preference after graduation yet to be backed by the rich

| Updated: January 12, 2021 11:20:50


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The rich nations are yet to support a request by the LDCs to extend the existing trade preferences for an additional period of 12 years after their graduation, officials said.

Against this backdrop, economists and trade experts have urged the government to intensify diplomatic efforts to drum up supports particularly from the influential members of the World Trade Organisation (WTO) before its crucial meetings likely to be held in March next.

They informed that two proposals by the LDCs related to trade preferences received "sympathetic gesture" in the WTO general council and TRIPS council meetings in October and December last year and the next meetings would be held in the first quarter this year.

So, the supports from the member countries especially developed ones will be critical to get the proposals passed in those meetings, they added.

Earlier, the group of least developed countries (LDCs) had placed the proposals before the WTO.

Officials informed that only a handful of developing countries like China, India and Turkey and the African Group have so far favoured the proposals, but the influential members of the WTO did not support those.

The LDCs have urged for continuation of the support measures and trade-related aspects of intellectual property rights (TRIPS) for the extended period after their graduation to the developing country status.

They also sought extension of the transition period, allowed under Article 66.1 of the TRIPS agreement that will expire on July 1 this year, as long as a country remains in the LDC category and, for a period of twelve years after exclusion from the LDC category.

Bangladesh's permanent representative in the WTO Mustafizur Rahman in a recent letter to the foreign ministry requested the officials in Dhaka to play an active role to drum up support from the top western countries so that the proposals get passed.

He suggested that the foreign and finance ministry officials should reach out to the influential delegations of counties and blocs like the European Union, the United States, the United Kingdom, Japan, Switzerland, and Russia to pursue them to favour the proposals.

"As we continue to follow up the issue in Geneva, our capital's active role to garner support from the influential countries will be vital," he wrote in a recent letter.

Bangladesh is expecting to graduate from the LDC group by 2024 and the country, according to the WTO rules, will lose various trade preferences which are now being enjoyed as a poor nation.

The LDC group's draft proposal on continuation of the support measures was discussed at the WTO's general council meeting on December 17 last year when the members were found "sympathetic to the special challenges" of the poor countries. They also agreed to engage further discussion on this proposal, wrote Mr. Rahman.

The issue is scheduled to appear in the next general council agenda in the first quarter of this year while the WTO members will continue bilateral discussions.

On the other hand, the TRIPS agreement related proposal also received "sympathetic gesture" during TRIPS council meeting on October 16 last year. The issue will be discussed again during the next TRIPS council meeting in March next.

Contacted on Tuesday, distinguished fellow of the Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya told the FE that the rich WTO members are sympathetic to the LDCs taking into consideration the impacts of Covid-19 pandemic on their economy and as a whole.

He said there are two positive developments - the LDC group could manage to put together a more or less wholesome proposal and some of the southern countries have shown positive signal to the issues.

"The challenge is that the most important providers of the preferences are yet to agree," he said.

In order to find a realistic solution now, hard negotiations will take place and the LDCs have to be prepared to respond to the queries and criticisms likely to be raised by the preference providing countries, he said.

Mr. Bhattacharya said now the question is whether the preferences will be universal in the sense that if only the developed counties or also the advanced southern countries will participate as preference providers.

He said there will be an issue of differentiation in the negotiation whether all the LDCs need all types of support they sought even after graduation.

The issue of twelve year extension of the support measures is also considered as too long, he said, adding that there is also a legal issue that the countries which have already graduated as a developing country can be given the preferences which are specifically awarded to non-developing nations.

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