LDCs request dedicated WTO CTD session to discuss implementation of Bali DFQF decision

25 June 2015

Bangladesh, on behalf of the Least Developed Countries (LDCs) group, advanced a request for a dedicated session of the Committee on Trade and Development (CTD) to discuss the implementation of duty-free and quota-free (DFQF) market access for LDCs. The letter dated 10 June 2015 and addressed to the Chairman of the CTD, followed from a suggestion proposed at the CTD meeting held the day before.

“While there has been some progress in the implementation of DFQF market access for LDC products, gaps remain in achieving the objective of providing increasingly greater market access for LDC products as agreed,” reads the communication.

To this end, it specifies the need to realize at least 97 percent DFQF coverage at the tariff line level with the conclusion of the Doha Development Agenda (DDA).

“All pertinent issues surrounding the implementation of DFQF for LDC products should be addressed in the dedicated session, with the ultimate aim of attaining an outcome that takes into account the interest of all stakeholders,” further adds the communication.

The CTD serves as a focal point for the consideration and coordination of work on development in the WTO. The Committee has a mandate to keep under continuous review the participation of developing country members in the multilateral trading system.

The objective of such dedication session of the CTD would consist in collectively identifying the elements that could form part of the Post-Bali Work Program as well as the Tenth WTO Ministerial Conference to be held later this year in December, in Nairobi, Kenya.

The request for this dedicated session comes ahead of the July 2015 deadline for agreeing on the post-Bali Work Programme.

“Moreover, in the context of the Post-Bali Work Program, Ministers have instructed members to further build on the LDC issues and to prioritize issues where legally binding outcomes could not be achieved at Bali,” continues the communication.

DFQF market access was a prominent item on the ‘LDC package' at the Bali Ministerial Conference in 2013 where Members were asked to improve their DFQF coverage for LDC products. This follows from the 2005 Ministerial Conference in Hong Kong where developed countries, and developing-country members “declaring themselves in a position to do so” agreed to implement duty-free and quota-free (DFQF) market access for products originating from LDCs. For WTO Members with difficulty meeting this requirement, the text included the option of providing DFQF access for 97 percent of LDC products, while working to progressively achieve full compliance.

In this vein, China recently announced that it will extend zero tariff treatment to 97 percent of tax items from LDCs by the end of the year. Since 2010, China’s duty-free scheme covered 60 percent of LDC exports with the objective of extending zero-tariff treatment to 97 percent. (See Bridges Africa, 2 June 2015)

Exact details about which tariff lines will be covered by the extended Chinese preferential scheme have not yet been revealed.

Still, some observers remain sceptical about developing countries’ preferential schemes towards LDCs, arguing that the very design of it could constrain their effectiveness. For example, studies conducted by ICTSD [publisher of Bridges Africa] show that while the Indian offer of a duty-free scheme for LDCs is a welcome initiative it excludes some products of key export interest to African LDCs – such as coffee, tea, some spices and oilseeds, milk and cream, onions, cashew nuts (shelled), tobacco, copper and related products. The study also finds that LDCs ought to build their productive and export capacities in order to effectively benefit from the scheme.

The decision related to DFQF adopted during the WTO Ministerial Conference in Bali in 2013 encouraged developed-country members to improve their existing DFQF coverage for products originating from LDCs, so as to provide greater market access to LDCs. The decision instructed members to notify DFQF for LDCs to the Transparency Mechanism for Preferential Trade Arrangements and the Committee on Trade and Development.

Members have struggled with multiple hurdles in trying to achieve a concrete outcome. It has even proven divisive within the LDC Group itself, given that some members fear the possibility of "preference erosion."

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