WTO recognises need for duty benefits for graduating LDCs

Bangladesh and other graduating least-developed countries (LDCs) might not have received a clear-cut extension of the current duty-free trade benefit at the ministerial conference of the World Trade Organization (WTO) that concluded today (June 17, 2022), but their demand was recognised at the declaration.

After an intense negotiation for nearly six days at the 12th Ministerial Conference (MC12) in Geneva, the 164 member countries of the global trade body were able to reach a consensus on major global issues to facilitate the growth of trade.

It delivered the Geneva Package, which contains a series of unprecedented decisions on fisheries subsidies, WTO response to emergencies, including a waiver of certain requirements concerning compulsory licencing for Covid-19 vaccines, food safety and agriculture, and WTO reform.

The declaration acknowledged the particular challenges that graduation presents, including the loss of trade-related international support measures, as they leave the category of the LDCs.

"We recognise the role that certain measures in the WTO can play in facilitating the smooth and sustainable transition for these members after graduation from the LDC category," said the declaration.

As a result, Bangladesh's opportunity to enjoy the LDC-related trade benefit even after graduation to a developing country in 2026 has brightened.

The declaration did not specify how long the benefit would be granted.

Bangladesh, along with other LDCs, has been lobbying for the last two years seeking an extension of the trade benefits for six or nine years for the graduating LDCs.

Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said the declaration has taken into account the challenges the graduating LDCs face.

"Now, member countries will hold talks to decide what steps could be taken for them to ensure their smooth graduation and sustainable development."

A concrete decision might come at the next conference, said Rahman, who took part in the conference as a civil society delegate.

Speaking about the overall outcome for Bangladesh, Rahman said there are some positive outcomes that would benefit Bangladesh as an LDC before its graduation and as a developing country after the graduation.

Bangladesh may enjoy the benefit of the waiver the countries agreed to extend under the Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The concession would allow developing countries to produce coronavirus vaccines and export them for five years.

The TRIPS waiver for Bangladesh was supposed to come to an end with the LDC graduation.

The country may also benefit from the decision on e-commerce although the conference did not take any concrete decision.

According to an agreement made in 1998, levying on the import of digital products was prohibited. Bangladesh loses more than $6 billion worth of business a year because of the tariff-free trade on digital products.

"We agree to maintain the current practice of not imposing customs duties on electronic transmissions until MC13," said the declaration.

The next conference should ordinarily be held by December 31, 2023. If the next conference is delayed beyond March 31, 2024, the moratorium will expire on that date unless ministers or the General Council take a decision to extend, said the WTO.

"This is a good decision for Bangladesh since it will pave the way for us to impose tariffs on the products sold digitally," said CPD's Rahman.

On fisheries subsidies, WTO members have, for the first time, concluded an agreement, which prohibits support for illegal, unreported and unregulated fishing and takes a significant step forward to curb subsidies for overcapacity and overfishing by ending subsidies for fishing on the unregulated high seas.

The agreement on fisheries subsidies would be helpful for Bangladesh, like other developing countries, as there is a peace clause for them, said Debobrata Chakrabarty, commercial counsellor of the permanent mission of Bangladesh to Geneva and a negotiator.