LEAST DEVELOPED COUNTRIES
Towards free market access for least-developed countries

In the last few years WTO members have concentrated a lot of efforts into improving the condition of least-developed countries (LDCs) inside the multilateral trading system, both in terms of market access and technical assistance. Measures taken in the framework of the WTO can help LDCs increase their exports to other WTO members and attract investment.

In many developing countries, pro-market reforms have encouraged faster growth, diversification of exports, and more effective participation in the multilateral trading system. Excluding countries at war or in transition, export growth in developing countries has risen from 4.3% a year in the 1980s to 6.4% in the 1990s. Growth in GDP per person has risen from 0.4% year to 1.5% per year.

Even the least-developed countries are doing slightly better, though not as well as other developing countries. Again, excluding countries at war or in transition, export growth in LDCs has risen from 2.9% a year in the 1980s to 3.2% in the 1990s. And whereas GDP per person fell by 0.6% a year in the 1980s, it rose by 0.8% a year in the 1990s.

Specifically, the WTO has “delivered” for LDCs in the following areas:

First, there have been significant improvements in market access opportunities for LDCs. Twenty eight WTO members have pledged market access improvements. Many of them have actually agreed to drop all barriers and provide “duty-free and quota-free” treatment to all LDC exports. They join a number of other countries who already provide open markets. The average non-weighted tariff applied by major trading partners to LDCs exports has fallen from 10.6% in 1997 to 6.9% in the first quarter of 2001.

For example:

• Canada, effective 1 September 2000, added a further 570 tariff lines to the list of goods from LDCs eligible for duty-free treatment. About 90% of all LDC imports will now receive duty-free treatment;
• New Zealand, since 1 July 2001, offers duty-free and quota-free access to all imports from LDCs
• The European Union, Norway and Switzerland provide duty-free, quota-free market access for all LDC exports (except arms). A transition period is in place for a few specific products.
• Japan in December 2000, announced its “99%-initiative on Industrial Tariffs”. Following implementation, in April 2001, the coverage of duty and quota-free treatment for LDCs industrial product exports increased from 94 to 99% and includes textile and clothing exported from LDCs;
• The US has further elaborated on the African Growth and Opportunity Act (AGOA) adopted in May 2000. Thirty four Sub-Saharan countries have been designated as beneficiaries under AGOA in October 2000, who can avail new GSP benefits from 1835 tariff lines as from December 2000.
• Hungary, the Czech Republic and the Slovak Republic provide duty free and quota free access to all imports from LDCs.
• Egypt notified tariff reductions ranging from 10% to 20% of existing applied duties for 77 products of export interest to LDCs, and provides duty free access for about 50 products. In addition, Egypt bound customs duties, with a 10% reduction for industrial products imported from LDCs.

Second, the Integrated Framework (IF) — the joint IMF, ITC, UNCTAD, UNDP, World Bank and WTO technical assistance program for LDCs — has been redesigned and is in operation on a Pilot Basis in Cambodia, Madagascar and Mauritania. It will help LDCs mainstream trade into their national development plans and strategies for poverty reduction. It will help ensure trade, as an engine for growth, is central to development plans. It will also ensure that trade-related technical assistance and capacity building is delivered within a coherent policy framework rather than on a stand-alone basis. The possibility of the extension of the IF Pilot Scheme is being examined, based on progress reported at the Fourth WTO Ministerial Conference.

The agencies have set up a Trust Fund for the Integrated Framework to which several donor countries contributed in total $6.2 million.

The first-ever joint seminar of the six agencies of the Integrated Framework was held in January 2001. It demonstrated the rationale and techniques for mainstreaming trade into LDCs’ development plans and poverty reduction strategy papers and showed how the re-designed Integrated Framework can operate as a mechanism for poverty reduction and delivery of trade-related technical assistance.

Technical assistance to enable LDCs implement their rights and obligations under WTO Agreements is also being provided. For instance, under the Joint Initiative on Technical Cooperation for LDCs by WIPO and WTO, assistance is being offered to make best use of the intellectual property system of these countries.

Third, WTO members are currently looking at means to assist as much as possible those LDCs in the process of joining the WTO. LDCs acceding to the WTO have to learn and to understand how the WTO works. They need to draft domestic laws that comply with WTO rules. They need to establish mechanisms for enforcing those rules. And they need to negotiate with existing members suitable conditions of entry to the WTO. LDCs currently in the process of accession to the WTO are: Bhutan, Cambodia, Cape Verde, Lao People’s Democratic Republic, Nepal, Samoa, Sudan, Vanuatu and Yemen. In addition, Ethiopia and Sao Tome & Principe are WTO observers.

Fourth, WTO members have taken a host of initiatives to help LDCs participate more fully at the WTO. These include:

• activities for non-resident members and observers to ensure that those countries not represented in Geneva can still follow the daily business of the WTO and still be an integral part of the WTO process;
• the “Geneva Week”: an annual event bringing together senior officials from capitals and European-based missions — not only of LDCs but also of other small economies — to learn and exchange views concerning critical areas of the WTO work;
• improvement of the WTO’s Trade Policy Review Mechanism: as well as shedding light on a country’s trade rules, it now helps trade policy capacity building and the mainstreaming of trade priorities into national development plans and poverty reduction strategies;
• expansion of the WTO training and policy courses;
• establishment of WTO reference centres connecting LDCs’ capitals to WTO sources of information through the Internet;
• establishment of a new programme to fund interns within country missions in Geneva;
• facilitating the participation of LDCs at WTO Ministerials — for example, financing LDC trade ministers’ travel and hotel expenses.

Fifth, and finally, the WTO provides a forum where LDCs can and do raise particular problems relating to food safety and quality standards. Indeed, LDCs can find it difficult to comply in their exports with developed countries’ sanitary standards. WTO agreements limit importing countries’ scope to impose arbitrary requirements on LDCs’ exports, and encourage the use of internationally developed standards. The Director-General himself has initiated high-level discussions with the secretariats of international standard-setting bodies to improve LDCs’ participation and capacity to make full use of international standards.

LDCs in the WTO back to top

The WTO recognizes as least-developed countries (LDCs) those countries which have been designated as such by the United Nations. There are currently 49 least-developed countries on the UN list, 30 of which to date have become WTO members.

These are:

Angola; Bangladesh; Benin; Burkina Faso; Burundi; Central African Republic; Chad; Congo, Democratic Republic of the; Djibouti; Gambia; Guinea; Guinea Bissau; Haiti; Lesotho; Madagascar; Malawi; Maldives; Mali; Mauritania; Mozambique; Myanmar; Niger; Rwanda; Senegal; Sierra Leone; Solomon Islands; Tanzania; Togo; Uganda; Zambia.

Nine additional least-developed countries are in the process of accession to the WTO. They are: Bhutan; Cambodia; Cape Verde; Laos; Nepal; Samoa; Sudan; Vanuatu and Yemen.

Furthermore, Ethiopia and Sao Tome & Principe are WTO Observers.