LDC graduation a key agenda at 13th WTO Ministerial Conference

The 13th World Trade Organization (WTO) Ministerial Conference kicked off in Abu Dhabi, UAE, with a focus on the smooth transition for Least Developed Countries (LDCs) as they graduate. The LDCs, represented by the WTO’s LDG Group, are voicing their shared concerns, with 15 out of 45 countries currently navigating the graduation process.

Leading the Nepali delegation is Minister for Industry, Commerce, and Supplies Ramesh Rijal. 

During the four-day conference, WTO members will be seeking to secure “deliverables” during their four-day meeting in areas such as fisheries subsidies, agriculture, WTO reform, development, e-commerce, services and investment facilitation. Also on the ministers’ agenda will be how to make progress in their discussions on gender and the environment.

In his welcoming speech to the Conference,  Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade of the United Arab Emirates (UAE) and MC13 Chair, stressed the historically important role the WTO has played to provide “stability, transparency and predictability for international trade,” contributing to “raising living standards, improving employment opportunities and enabling the expansion of trade in goods and services” around the world.

WTO Director-General Ngozi Okonjo-Iweala urged members to show leadership, flexibility and compromise to deliver important outcomes at MC13 for people and the planet. “Success is changing the tone about the WTO, both outside and within it. We will always have our naysayers and detractors but there is no doubt that members have shown that we can deliver when members roll up their sleeves and muster the requisite political will. During the last several weeks, the atmosphere in our preparatory discussions in Geneva has been more constructive and conducive than it was in the run-up to MC12,” she said.

In Oct 2023, WTO members reached a significant milestone with the adoption of a General Council decision on the market access element of the LDC’s proposal. This decision encourages preference-granting members to provide a smooth and sustainable period for the withdrawal of duty-free market access opportunities once countries graduate from LDC status.

Nepal qualified to graduate from the LDC category in 2021 and it is set to graduate in 2026. But the country still faces numerous challenges. The issue of LDC graduation remains a key foreign policy agenda item, with Nepal urging larger countries to continue providing trade privileges for a few years post-graduation. In turn, these larger countries are seeking Nepal’s LDC graduation strategy as soon as possible. 

While graduation is a significant development achievement, it also presents challenges, particularly the loss of preferential access to other countries’ markets, which could hinder integration into the global economy. Currently, LDCs receive special treatment from the international community, particularly in trade and development cooperation, known as international support measures.

That is why, according to the WTO secretariat, LDC Group has been discussing with other WTO members the issue of special and differential treatment in the sub-committee on LDC, with the aim of potentially reaching consensus at the ongoing conference. For an LDC like Nepal, special measures are necessary to prevent any loss of economic growth and maintain a current space of development.

Over the past four years, the WTO’s LDC Group has been discussing a smooth transition mechanism to extend LDC-specific preferences and provisions in WTO agreements after graduation. Discussions are also underway in the WTO sub-committee on LDCs’ other requests relating to special and differential treatments.

A WTO member graduates from LDC status when it meets certain socio-economic thresholds set by the United Nations, with the decision made by UN members based on the recommendation of the Committee for Development Policy. Out of the 15 LDCs on the path towards graduation, 10  (Angola, Bangladesh, Cambodia, Djibouti, Lao PDR, Myanmar, Nepal, Senegal, Solomon Islands and Zambia) are WTO members. Three (Comoros, Sao Tomé and Principe, and Timor-Leste) are in the process of negotiating their WTO accession. Ministers formally approved the WTO membership terms of Comoros and Timor- Leste at a special ceremony held at the 13th WTO ministerial conference.The other two graduating LDCs are Kiribati and Tuvalu.

Meanwhile, ministers representing 123 WTO members issued a joint declaration marking the finalization of the Investment Facilitation for Development (IFD), which is expected to contribute to LDC graduation. Vice-Minister of Trade of Chile Claudia Sanhueza highlighted that the agreement demonstrates the WTO’s ability to deliver for global trade and development and address current challenges.  “Once implemented, the IFD agreement is expected to foster significant economic growth in developing and LDC members and extend its benefits to non-participants,” she said. 

LDC countries like Nepal are in dire need of more sustainable investment flows.

Similarly, small economies integration into the international trading system is another major issue for the LDC countries. The draft decision calls for WTO members to address the issue of integrating small economies into the multilateral trading system by looking into issues such as the impact of non-tariff measures on trade costs, the link between trade policies and climate change adaptation, global supply chains, e-commerce and digital ecosystem. The decision on small economies was adopted by the trade ministers at the12th ministerial conference held in Geneva in 2022. 

The WTO meeting which has 166 members is taking place at a time when geopolitical tension is rising, ongoing trade war between US and China, Russia’s invasion of Ukraine and growing trade restrictions across the globe. According to Reuters, the WTO faces a large number of difficult issues  among its 166 members, including reforming its hobbled dispute settlement system, cutting fishing subsidies, resolving disagreements over agriculture subsidies and deciding whether to extend a 25-year-old ban on duties on electronic commerce data transmissions.

Key agendas:

Accessions

Agriculture

Development

E- commerce

Environment

Fisheries subsidies

Investment Facilitation

Ip/ Tripes

Wto reform

LDC graduation