LDC graduation: The future path for Bangladesh

The recent decisions taken by the World Trade Organization (WTO) members at their General Council have made a fresh wind of breeze for the least-developed countries (LDCs) as it has created a path to include special sub-provisions in favour of these countries for a sustainable graduation.

However, as Bangladesh holds a completely different economic profile among the LDCs, the country will need an extent of the decisions along with ensuring several bilateral or multilateral agreements to ensure market access and trade facilities.

While most of the LDCs depend on agriculture, forestry, fishing, tourism or border related service providing facilities for foreign earnings, Bangladesh is among the two countries along with Cambodia that depend on ready-made garment (RMG) products or textile products.

Besides, Bangladesh is the only country among the LDCs have a potentiality of pharmaceutical exports.

So, at the time when the path of realising the benefits has opened, the political conditions along with geopolitical and bilateral situations could make it a challenge for Bangladesh.

The LDCs status

Among the 46 least-developed countries on the United Nations (UN) list, six countries -- Botswana, Cabo Verde, Equatorial Guinea, Maldives, Samoa and Vanuatu -- have already graduated by 2020.

And in light of the ongoing Covid-19 pandemic, CDP in its 2021 triennial review approved an additional five-year preparatory period for four countries--Bhutan in 2023, and Angola, São Tomé and Príncipe and Solomon Islands in 2024-- scheduled to graduate from the LDC category.

Bhutan and São Tomé and Príncipe are scheduled to graduate on December 13, 2023, Angola on February 12, 2024, Bangladesh, Lao PDR and Nepal on November 24, 2026 and Solomon Islands on December 13, 2027.
Other countries have either differed their graduation or under consideration for graduation.

LDCs enjoy free or easier market access to the developed WTO member countries, relaxed Quota and Duty and TRIPS facilities.

The long persuasion

According to WTO member countries' decisions once any least developed country becomez graduate it will not get any facilities provided for the LDCs group. But at the DOHA WTO MINISTERIAL meeting in 2001, it decided to facilitate the graduated countries which will be the member of WTO for sustainable development.
However, as the world was hit by Covid pandemic the requirement of the measures felt more likely and so the then coordinator of LDCs Group, African Country Chad wrote for a sub-provision for the LDCs so that they can have 12 years of time for their sustainable developments.

The members of WTO, especially the United States opposed the idea and it got rejected.

LDC Group made the second revision of the submission in this regard on December 5 last year. The communication was made from the office of Djibouti on behalf of the group, as it is the coordinator of the group right now.

According to the WTO wing under the commerce ministry of the country, the proposal was made to ensure trade and other WTO support measures, especially in the field LDCs exemption from prohibition of export subsidies, implementation of TRIPS (Trade-Related Aspects of Intellectual Property Rights) facilities for LDC members, provide transfer of technologies (ToT) incentives in favour of LDCs, grace period for application of the understanding on rules and procedures governing the settlement of disputes, and agreement on fisheries subsidies.

They also seek support for the post-graduation countries from the special decisions taken in favour of LDCs from time to time.

However, In the General Council meeting held October 23 and 24 this year reached an important milestone in the global efforts to assist LDCs on the path to graduation from LDC status by extending their duty-free and quota-free preference programmes to provide a smooth and sustainable transition period.

The decision as to how the programme will be implemented will be made at the 13th WTO Ministerial Conference, scheduled for February 2024 in Abu Dhabi.

A long way for Bangladesh

Currently, Bangladesh's products have duty-free market access to 38 countries. Of the countries, 28 member-states of the European Union (EU) are giving duty-free market facilities to Bangladeshi products.
Besides, Japan, Chile, Norway, New Zealand, Australia, Canada, India and China are also providing such facilities.

According to WTO, as the exit will take place in 2026, like other graduating countries, Bangladesh will no longer avail support provided to LDCs from the day final completion of tge graduation.
Former Director General of Trade Organization (DTO) Wing under Ministry of Commerce Md Hafizur Rahman welcomed the measures and said the decision is the opening of the new era that will assist the developed country to be more cooperative towards LDCs for their gradual and sustainable development.

The decision is the beginning and the country has to complete huge rounds of work to avail its benefits, he added.

He said now the WTO cell will have to prepare themselves well for the upcoming ministerial meeting in Abu Dhabi.

Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, a private think-tank, has marked the decision as the beginning and said the decision will only ensure a unilateral tariff or duty-free and quota free (DFQF) preference.

“But Bangladesh will have to ensure the preference on TRIPS as well as the country is progressing in the pharmaceutical sector. And without TRIPS producing medicine at lower prices would not be possible,” he added.
The European Union has already agreed to extend the facilities for three years more and so it can be said that it would not be less than three years and again it might not be six years as well, Prof Mustafiz said.

Again, there is not any agreement for what the WTO member countries will force implement it. And so, Bangladesh has to go for several bilateral agreements to ensure access to the markets, he explained, adding that the relations with the governments of the member countries also may affect the decision.

An official from the wing informed the Views Bangladesh that Bangladesh has sought an extension of the LDC trade facility under the WTO multilateral system, which includes the Trade-Related Aspects of Intellectual Property Rights (TRIPs) for pharmaceutical products, for six more years after becoming a developing country in three years. The negotiation is underway for the extension of the TRIPs waiver.

Dr Md Alam Mostafa, Joint Secretary, WTO wing of the commerce Ministry of the country, said that senior secretary Tapan Kanti Ghosh has informed that of the decision and now they are working on other facilities to be ensured as the country would need to obtain TRIPS for pharma and other technical industries.

Asked if the election process can harm their preparation, he passed no comments over it.