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Supporting Least Developed Countries (LDCs) in the Commonwealth ahead of WTO Ministerial Conference

26 November 2021

The World Trade Organization’s (WTO) forthcoming 12th Ministerial Conference (MC12), to be held from 30 November to 3 December, comes at a time when the COVID-19 pandemic has disrupted human and economic activities and heightened the significance of trade-related responses to accompany other global initiatives.

Enhancing the participation of developing countries, including Commonwealth least developed countries (LDCs), in the multilateral trading system is indispensable because trade is an essential tool for growth and development. The WTO LDC Group, which includes eleven of the thirteen Commonwealth LDCs, have prepared and advanced proposals on their priorities and expected outcomes at MC12.[1]

The below analysis by Colin Zhuawu, Economic Adviser (Multilateral Trade), Trade, Oceans and Natural Resources Directorate of the Commonwealth Secretariat, assesses the priorities of Commonwealth LDCs at MC12 and suggests possible strategies to pursue a favourable outcome.

Multilateral Negotiating Issues

Agriculture

Discussions on Agriculture focus on several disciplines intended to correct trade distortions in agricultural trade, encompassing domestic support, export competition and market access. The discussions provide an opportunity for developing and least developed countries to address their food security needs through a Special Safeguard Mechanism and provision on Public Stockholding (PSH).

Reductions in trade distorting domestic support by the world’s largest subsidisers is imperative to improve access to markets for farmers in Commonwealth LDCs. 

Due to the highly complex and technical nature of deliberations on domestic support, a realistic outcome at MC12 would be agreement to initiate a specific work programme post-MC12 on the necessary reductions. However, Commonwealth LDCs might recommend a few interim measures for agreement at MC12, for example, adopting a product-specific approach to avoid concentration of subsidies and reviewing the use of green box subsidies. 

Disciplining export restrictions is critical to uphold food security as illustrated by the experience of the COVID-19 pandemic. Greater transparency and monitoring might contribute towards restraining Members from unilaterally restricting food exports. With regards to PSH, LDCs have an interest in ensuring that any permanent decision includes future programmes.

Fisheries subsidies

The fisheries sector is important to some Commonwealth LDCs to meet their food security needs and disciplines on fisheries subsidies should not impede this objective. Commonwealth LDCs must ensure that coastal State rights and domestic fishing regimes are not overburdened by a fisheries agreement. The agreement must focus on prohibiting harmful subsidies that deplete the world’s fisheries resources.

At the same time, LDCs must ensure they preserve policy space for small scale and artisanal fishing and small global production fishers. This requires agreement on appropriate S&DT, which is mandated by the negotiations.

Some consideration must be given to ensuring that Commonwealth LDCs graduating before the entry into force of the agreement or during the transition period can benefit from S&DT provisions. However, such S&DT should not be tied to meeting burdensome fish stock assessments and other obligations in the WTO. In addition, Commonwealth LDCs must contribute to ensuring that the WTO does not become a fisheries management organisation and deliver what the WTO can offer as a minimum contribution within its mandate.

Services Waiver

Since the Nairobi Ministerial decision on a waiver in favour of LDC services suppliers in 2015, the challenge for Commonwealth LDCs has been to build a critical mass of preference granting countries. Only 25 WTO Members have notified preferences extended to LDCs. One difficulty for taking advantage of these preferences is that Commonwealth services suppliers must themselves establish commercial contacts with consumers in those markets.

These suppliers may also have limited capacity to conform with domestic services regulations in export markets, such as credit requirements, health insurance or visa policy.  Sometimes Commonwealth LDC services suppliers may even be unaware of the existence of the waiver provision.

Commonwealth LDCs can request the WTO to provide greater assistance to track, in a more granular way, trends in the export performance of their services suppliers and their buyers. Preference granting countries can also be asked to better facilitate commercial ties with services suppliers in committed sectors.

Work Programme on Electronic Commerce

The COVID pandemic has demonstrated the significance of electronic commerce and the need to tackle the digital divide. LDCs have called for the WTO to explore ways by which they can better harness e-commerce, while also highlighting obstacles.

The extension of the WTO E-Commerce decision — encompassing both the Work Programme and the moratorium on the imposition of customs duties on electronic transmissions — is critical for e-commerce to thrive and to provide certainty and predictability to Commonwealth LDC entrepreneurs, consumers and governments.

Addressing the development dimension is equally essential for the benefits of e-commerce to be shared and bridging the digital divide remains paramount. Commonwealth LDCs continue to struggle with issues related to basic access to the internet. They also need to address gaps in regulatory knowledge, especially considering the introduction of complex rules governing issues such as data privacy and cybersecurity.

Given the complex nature of e-commerce, Commonwealth LDCs could contribute to reinvigorating the Work Programme by helping shift some of the discussions away from the moratorium and towards other elements of the e-commerce ecosystem. This is a critical moment for making progress in these areas given that e-commerce has played a pivotal role in providing solutions to the challenges created by the COVID-19 pandemic and is fast evolving alongside the growth of the digital economy.

Systemic Trade Issues

Special and Differential Treatment

Discussions on the G90 Agreement Specific Proposals remain deadlocked, despite proponents stating this is a critical outstanding Doha negotiating area that is part of the development component. Recently, the G90 proposed draft decision text for MC12 containing two LDC specific proposals: reaffirming S&DT as enshrined in the Marrakesh Agreement establishing the WTO and reminding Members that strengthening existing provisions forms an integral part of the rights of developing countries and LDCs and should be seen as complementary to the overall purpose of the WTO.

Bearing in mind the severe economic hardship brought by COVID-19, especially for Commonwealth LDCs, mainstreaming development in the WTO agenda is more relevant than ever.

LDC Graduation

In 2017, at the Buenos Aires Ministerial Conference, LDC Ministers called for positive measures to support LDCs graduating from this category[2], including smoothening the process to avoid the adverse impact of discontinuing their special and differential treatment (S&DT)[3]. During 2020, progress on several indicators for graduation was reversed, wiping out decades of progress.[4] Since November 2020, WTO LDCs have renewed this call for a smooth graduation process.

The countries are seeking an outcome at MC12 to create special provisions. There is an overarching need to extend S&DT for LDCs to all existing WTO Agreements and Understandings as well as decisions taken at Ministerial and General Council levels. It is also important to sustain technical assistance and capacity building support granted to LDCs. The LDC Group have put forward an interim proposal to extend unilateral market access schemes for graduated LDCs from six to nine years. This could be accompanied by a work programme for specifically agreed phase-out periods.

Their proposal would allow more time to agree specific solutions for graduated LDCs, instead of adopting a case-by-case approach that provides little certainty to Commonwealth LDCs in the queue for graduation, namely Solomon Islands and Bangladesh.

WTO Reform

At the heart of WTO reform discussions is the need for an institution that is fit for governing world trade in the twenty-first century. WTO Members are addressing several areas, including dispute settlement and reform of the Appellate Body, the negotiating function and transparency, monitoring and surveillance.   

Reform proposals should bear in mind the capacity constraints of LDCs for participating in the work of the institution and preserve flexibilities in favour of LDCs to be able to cope with legal obligations and disciplines. The reforms should also take into consideration specific LDC concerns, maintain cardinal principles of the WTO – such as consensus, non-discrimination and inclusiveness – and respect for WTO structures.

COVID-19 Impact

The socio-economic impact of the pandemic differed across countries and LDCs, in general, were more severely hit by suffering larger declines in exports and growth. Their ability to respond to the pandemic was limited due to little fiscal space for stimulus packages.

One of the greatest challenges facing LDCs is access to vaccines. An outcome on the TRIPS waiver proposal will greatly benefit Commonwealth LDCs.

MC12 also presents an opportunity for LDCs to seek special technical assistance and capacity building in the context of trade-related impacts of COVID-19 to strengthen their economic resilience against external shocks. For example, they need support for adopting digital technologies and bridging the digital divide to benefit from new opportunities like digital trade.

Joint Statement Initiatives

At MC11, Joint Statement Initiatives (JSIs) were announced on e-commerce, services domestic regulations, investment facilitation and micro, small and medium enterprises (MSMEs) to discuss potential rule-making in these areas. Other JSIs are surfacing, with work underway on plastics, trade and environmental sustainability, trade and health, and trade and gender.

Some WTO Members have questioned the legal status of JSIs. However, some Commonwealth LDCs have shown an interest in some of the JSIs. Three JSIs are aiming for negotiated results at MC12, namely e-commerce, investment facilitation and domestic services regulations. LDCs have not shown interest in the latter. Commonwealth LDCs are advised to keep abreast of the JSI discussions and developments to assess and understand the implications for them.

Possible strategic approaches at MC12

Commonwealth LDCs must strive to help secure a package on COVID-19 trade-related responses, including access to vaccines, ingredients and therapeutics, which are essential for their recovery.

There is need for further exploration of market access schemes and examination of various WTO Agreements to determine what provisions benefitting Commonwealth LDCs should continue to be accessible to those graduating from this category.

Commonwealth countries must ensure that S&DT is an integral part of a fisheries subsidies outcome in line with the SDG 14.6 mandate. This would preserve their right to subsidise artisanal and small-scale fishing, along with policy space to sustainably develop their fishing communities, without the burden of onerous new WTO rules.

The development component within the Work Programme on Electronic Commerce must be strengthened, especially to help reduce the digital divide.

Food security, especially against the backdrop of COVID-19, requires a robust response involving a permanent decision on public stockholding and restraint on export restrictions

WTO reform must make it easy for Commonwealth LDCs to adapt as well as uphold the competence of the WTO, especially the principles of the Marrakesh Agreement, which are still relevant today. In particular, the preservation of the rules-based multilateral trading system by making it accountable, transparent, non-discriminatory, and more inclusive.

[1] (a) WTO Members: Bangladesh, The Gambia, Lesotho, Malawi, Mozambique, Rwanda, Sierra Leone, Solomon Islands, Uganda, Tanzania, and Zambia.

(b) Non-WTO Members: Kiribati and Tuvalu.

[2] WTO (2017) LDC Minister’s Meeting Buenos Aires, Argentina, 9 December 2017. WTO Document WT/MIN(17)/40, 11December.

[3] Ibid.

[4] Two more Commonwealth LDCs are expected to graduate soon: Solomon Islands in 2024 and Bangladesh in 2026. The latter was also due to graduate in 2024, but its transition period has been extended by two years on the back of the pandemic.

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