LDC Graduation and Trade Impact: Bangladesh

Bangladesh Trade Situation & Future Pathways
With Special Reference to LDC Graduation and other Emerging Perspectives
Md. Hafizur Rahman
Director General
WTO Cell, Ministry of Commerce
e-mail: hafiz_maisoon@yahoo.com

Presentation Outline
• International Trade
• Bangladesh Trade Situation
• Graduation Implications
• Emerging Issues
• Way forward

Trade Theories
1. Mercantilism-An Inquiry into the Nature and
Causes of the Wealth of Nations -Adam Smith
Economic system based on individual self-interest
led by an “invisible hand,” which would achieve the
greatest good for all- The Theory of Moral
Sentiments (1759)
The doctrine of laissez-faire

Trade Theories
2. Absolute advantage –Adam Smith (1776)
A country should specialize in those products,
which it can produce efficiently.
Resources used to produce a ton of Tea and Coffee without trading
Products Country A
(200 labors)
Country B
(200 labors)
Tea 10 labor for 1 ton 25 labor for 1 ton
Coffee 20 labor for 1 ton 5 labor for 1 ton

Trade Theories
Total production without trade=39 ton
Products Country A
(200 labors)
Country B
(200 labors)
Tea 10 labor for 1 ton
=10 ton
25 labor for 1 ton
=4 ton
Coffee 20 labor for 1 ton
=5 ton
5 labor for 1 ton
=20 ton

Trade Theories
Total production when trade=60 ton
Resources used to produce a ton of Tea and Coffee when trading
Products Country A
(200 labors)
Country B
(200 labors)
Tea 10 labor for 1 ton
=20 ton
0
Coffee 0 5 labor for 1 ton
=40 ton

Trade Theories
2. Comparative advantage –David Ricardo
“…a nation, like a person, gains from the
trade by exporting the goods or services
in which it has its greatest comparative
advantage in productivity and importing
those in which it has the least
comparative advantage. ”

Trade Theories
Before trade: total production- 85 ton
Products Country A
(200 labors)
Country B
(200 labors)
Tea 20 ton 15 ton
Coffee 40 ton 10 ton

Trade Theories
When trade: total production- 100 ton
Products Country A
(200 labors)
Country B
(200 labors)
Tea 10 ton=50 labor 30 ton=200 labor
Coffee 60 ton=150 labor 0

Trade Theories
When trade: total production- 100 ton
Resources used to produce a ton of Tea
and Coffee when trading
Product
s
Country A
(200 labors)
Country B
(200 labors)
Tea 10 ton+14
=24 ton
30 ton-14
=16 ton
Coffee 60 ton-14
=46 ton
0+14
=14 ton
Resources used to produce a ton of
Tea and Coffee without trading
Products Country A
(200 labors)
Country B
(200 labors)
Tea 20 ton 15 ton
Coffee 40 ton 10 ton

Contribution of Export Earning to National GDP
FY
Total GDP
(Billion US$)
Export
earning
(Billion
US$)
% of share
in GDP
2010-11 128.68 22.92 17.82%
2011-12 133.40 24.30 18.22%
2012-13 149.99 27.02 18.02%
2013-14 172.88 33.01 17.46%
2014-15 194.55 30.12 16.04%
2015-16 221.02 34.25 15.50%
2016-17 249.72 34.84 15.25%
2017-18 274.02 36.66 13.38%
2018-19 302.60 40.53 13.39%
Value in million US$
0
50
100
150
200
250
300
350
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
GDP and Contribution of Export to GDP
Total GDP Export earning (Billion US$) % of share in GDP

Export-Import Balance of Trade
FY
Exports
(Million
US$)
Imports
(Million
US$)
Balance
(Million
US$)
2010-11 22928 33657 -10729
2011-12 24302 35516 -11214
2012-13 27027 33969 -6942
2013-14 30187 40693 -10506
2014-15 31209 40639 -9430
2015-16 34257 40036 -5779
2016-17 34847 43666 -8819
2017-18 36668 52953 -16285
2018-19 40535 56061 -15526

Our Export Basket
01. Woven garments 42.54%
02. Knit garments 41.66%
03.
Leather & leather
products
2.52%
04. Jute & jute Goods
2.01%
05.
Agricultural
products
2.24%
06.
Frozen foods 1.23%
07. Others 7.40%

Export Markets
Bangladesh Exports to 202 Countries
 European Region 56.38 %
 American Region 22.01%
 Asian Region 12.23 %
 Middle-east region 2.01 %
 African region 0.79 %
 East European Region 2.48 %
 Oceania Region 2.23 %
 Other Region 1.87 %
Export Market
European Region American Region
Asian Region Middle-east region
African region East European Region
Oceania Region Other Region 1.87

Major Country Wise Export Share (2018-2019)
Countries Export Performance
Share in
total export
USA 6876.29 16.96%
Germany 6173.16 15.23%
UK 4169.31 10.29%
France 2217.56 5.47%
The Netherlands 1278.69 3.15%
Japan 1365.74 3.37%
Canada 1339.80 3.31%
Poland 1273.09 3.14%
Belgium 946.93 2.34%
Australia 804.63 1.99%
China 831.20 2.05%
Denmark 731.43 1.80%
Sweden 696.04 1.72%
Turkey 404.45 1.00%
Cz Republic 503.38 1.24%
Other Countries 10923.30 26.95%
Value in million US$

Bangladesh Trade Situation in Last Seven Months
Months 2018-19 2019-20 Changes
July 3581.48 3887.86 8.55%
August 3213.54 2844.31 -11.49%
September 3145.58 2915.85 -7.30%
October 3711.18 3073.23 -17.19%
November 3421.98 3055.85 -10.70%
December 3426.11 3525.09 2.89%
January 3679.72 3617.31 -1.70%
Total 24179.59 22919.5 -5.21%

Export performance (Goods) for FY 2019-20 July-January
Products
Export for
2018-19
Export
Target of
2019-20
Strategic Target
for July-Jan.
2019-20
Export
Performance for
July-Jan. 2019-20
Export
Performance
for July-Jan.
2018-2019
% Change of
export
Performance
Over
s. Export Target
% Change of export performance
July-Jan. 2019-20 Over
July-Jan. 2018-19
1 2 3 4 5 6 7 8
All products (A+B) 40535.04 45500.00 26345.00 22919.47 24179.59 -13.00 -5.21
A. Primary Commodities (Chapter 1-24) 1409.37 1640.00 949.58 941.24 940.71 -0.88 0.06
(1) Frozen & Live Fish (Chapter 01-03) 500.40 520.00 301.09 337.33 361.09 12.04 -6.58
(2) Agricultural Products (04-24) 908.96 1120.00 648.49 603.91 579.61 -6.87 4.19
B. Manufactured Commodities (Chapter 25-98) 39125.68 43860.00 25395.42 21978.22 23238.88 -13.46 -5.42
(4) Chemical Products (28-38) 205.18 282.00 163.28 126.25 124.78 -22.68 1.18
(5) Plastic Products ( 39) 119.80 150.00 86.85 66.42 67.06 -23.52 -0.95
(6) Rubber (Chapter 40) 27.16 30.00 17.37 17.61 13.88 1.38 26.87
(7) Leather & Leather Products (41-43 & 6403) 1019.78 1093.00 632.86 558.9 626.42 -11.69 -10.78
(9) Handicrafts (Chapter 46) 19.95 25.00 14.48 13.23 12.77 -8.63 3.6
(16) Jute & Jute goods (Chapter 53, 630510) 816.27 824.00 477.11 602.49 498.66 26.28 20.82
(18) Carpet (Jute & Others -57) 19.49 22.00 12.74 13.71 11.3 7.61 21.33
(19) Specialized Textiles (Chapter 58-60) 143.93 186.00 107.7 75.65 84.03 -29.76 -9.97
(20) RMG(Chapter 61&62) 34133.27 38200.00 22118.22 19063.24 20217.48 -13.81 -5.71
(a) Knitwear (Chapter 61) 16,888.54 18,850.00 10,914.36 9,620.02 10,140.58 -11.86 -5.13
(b) Woven Garments (62) 17,244.73 19,350.00 11,203.86 9,443.22 10,076.90 -15.71 -6.29
(21) Home Textile (Chapter 63 Excluding 630510) 851.72 891.00 515.9 442.67 490.2 -14.19 -9.7
(22) Other Footwear (64)
(Excluding 6403)
271.53 320.00 185.28 188.78 150.32 1.89 25.59
(23) Headgear/Cap (Chapter 65) 206.51 250.00 144.75 133.66 123.8 -7.66 7.96
(24) Umbrella Waking Sticks (66) 0.03 0.03 0.02 0 0.01 -100 -100
(25) Wigs & Human Hair (Chapter 67) 32.52 38.00 22 17.75 18.11 -19.32 -1.99
(26) Building Materials (Chapter 68) 1.62 1.65 0.96 0.99 1.14 3.13 -13.16
(27) Ceramic Products (Chapter 69) 68.97 90.00 52.11 20.52 54.2 -60.62 -62.14
(28) Glass & Glass ware (Chapter 70) 1.43 2.00 1.16 2.06 0.62 77.59 232.26
(29) Engineering Products (Chapter 71-88) 341.3 369.00 213.66 194.82 199.36 -8.82 -2.28
(30) Ships, boats & floating structures (Chapter 89) 4.73 5.00 2.9 11.25 0.17 287.93 6517.65
(31) Other mfd Products (90-98) 254.61 325.00 188.18 174.5 147.69 -7.27 18.15

Export Earning of Bangladesh From Goods & Service Sector
in million US$
FY Export Earning Total Growth (%)
Goods Service
2012-13 27027.36 2936.30 29963.66
2013-14 30186.62 3243.88 33430.50 11.57
2014-15 31208.94 3210.85 34419.79 2.96
2015-16 34257.18 3494.90 37752.08 9.68
2016-17 34846.84 3653.71 38500.55 1.98
2017-18 36668.17 4586.31 41254.48 7.15
2018-19 40535.04 6293.76 46828.80 13.51

Bangladesh: Review Results 2018
Criteria Threshold Score of
Bangladesh
Target
1. GNI Per Capita US$ 1,230 or above US$ 1,274 Achieved
2. Economic Vulnerability
Index (EVI)
32 or below 25.2 Achieved
3. Human Asset Index
(HAI)
66 or above 73.2 Achieved

What we will achieve through graduation ?
 Better Country Image
 Improve Credit Rating
 Attract FDIs
 Competitive Voice in Trade Negotiations
 Forced Capacity Building of the Private Sector
 Preparedness of the Public Sector
 Better Understanding of Trade Rules and Games
 More IP Protection and Encourage Innovation & Creativity.

Challenging Issues:
1. Trade Related Challenges
2. ODA
3. Technical Assistance
4. Technology Transfer

Trade Related Challenges:
1. Preferential Market Access for Goods with flexible
Rules of Origin
2. Preferential Market Access for Services
3. Intellectual Property Rights
4. Domestic Support Mechanism
5. Dispute Settlement

Preferential Market Access
Preferential Market Access of goods come from two domains:
1. Special and Differential Treatment given under WTO
Regime
2. LDC Specific S&DT in the BTAs and RTAs
----------------------------------------------------------------------------
S&DTs in the WTO Agreements:
• Total S&DT Provisions 145 (171)
• Total LDC Specific Provisions 23

WTO is like the
Operating System
of the World Trade

• GSP Schemes
• Duty Free and Quota Free (DFQF)
Market Access
• Preferential Rules of Origin

Opportunities for LDCs under WTO Regime
“Enabling Clause”
Differential and More Favourable Treatment, Reciprocity
and Fuller Participation of Developing Countries
(28 November 1979)

Trade Opportunities for LDCs
Duty Free and Quota Free (DFQF) Market Access for
Least Developed Countries
Hong Kong Ministerial Declaration-Annex F: Para-36
Developed country Members shall, and developing
country Members in a position to do so should:
•(a)(i) Provide DFQF market access on a lasting basis
for all products originating from all LDCs by 2008 or
no later than the start of the implementation period…

LDC-specific Preference Schemes
Source: Based on WTO Secretariat Note WT/COMTD/LDC/W/67.
Preference granting Member Schemes Duty-free tariff line coverage (and major exclusions)
Australia DFQF 100%
Canada GSP – Least-developed Countries' Tariff
Programme (LDCT)
98.5% (dairy and other animal products, meat, meat preparations, cereal
products)
European Union GSP – Everything But Arms (EBA) initiative 99.8% (arms and ammunition)
Iceland
(2018)
GSP – Tariff preferences for the world’s
poorest countries
91.8% (meat, food preparations, vegetables, dairy and other animal
products, plants and trees)
Japan (2018) GSP – Enhanced duty- and quota-free market
access
97.8% (fish and crustaceans, footwear, milling products, cereal products,
sugar)
New Zealand GSP – Tariff Treatment for LDCs 100%
Norway GSP – Duty- and quota-free market access 100%
Russian Federation GSP scheme in the context of the Eurasian
Economic Union between Armenia,
Kazakhstan, Kyrgyz Republic and the
Russian Federation
61.4% (transport vehicles, machinery and mechanical appliances,
beverages, iron and steel products, electrical machinery, meat
products, articles of wood)
Switzerland GSP – Revised Preferential Tariffs Ordinance 100%
United States of America (2018) GSP - for least-developed beneficiary
developing countries (LDBDC).
82.4% (apparel and clothing, cotton, fibres, footwear, dairy and other
animal products)

LDC-specific Preference Schemes
Source: Based on WTO Secretariat Note WT/COMTD/LDC/W/67.
Preference granting
Member
Description Duty-free tariff line coverage (and major exclusions)b
Armenia (2016) Duty-free treatment for LDCs 43.9% (electrical machinery, chemicals, iron and steel products, alcoholic beverages)
Chile (2018) DFQF scheme for the LDCs 99.5% (cereals, sugar, milling products)
China (2017) Duty-free treatment for LDCs 96.6% (chemicals, transport vehicles, machinery and mechanical appliances,
electrical machinery, paper)
India (2016) Duty-Free Tariff Preference Scheme (DFTP) 94.1% (plastics, coffee and tea, alcoholic beverages, tobacco, food residues)
Kazakhstan GSP – Tariff Treatment for LDCs 62.9% (vehicles, machinery, beverages, articles of iron and steel)
Korea, Republic of Presidential Decree on Preferential Tariff for LDCs 89.9% (fish and crustaceans, mineral fuels, oil seeds and oleaginous fruits, wood
products, vegetables)
Montenegro Duty-free treatment for LDCs 93.9% (fish and crustaceans, alcoholic beverages, meat and dairy products)
Chinese Taipei Duty-free treatment for LDCs 30.8% (machinery and mechanical appliances, chemicals, electrical machinery, fish
and crustaceans, plastics)
Tajikistan (2017) Duty-free treatment for LDCs 3.7% (Duty-free access includes machinery, glass products, petroleum products)
Thailand (2017) DFQF scheme for the LDCs 71.0% (transport vehicles, electrical machinery, machinery and mechanical
appliances, iron and steel products, apparel and clothing)
Turkey (2016) GSP 80.5% (iron and steel products, fish and crustaceans, food preparations, meat, oil
seeds and oleaginous fruits)

Flexible Rules of Origin
Nairobi Decision on Preferential Rules of Origin for LDCs
For ad valorem based calculation method:
•Non originated material up to 75% (25% Local Content)
•Freight and Insurance not included to the inputs from
other countries
•Equivalent treatment to methods other than ad
valorem

Flexible Rules of Origin
Nairobi Decision
For Change of Tariff Classification Method:
• Simple Change of Tariff Heading and Sub-heading
• For HS 61 and 62 –From fabric into finished products (single stage
transformation)
• For Chemical- Chemical reaction that forms a new chemical identity.
• For Agro-products – Raw agriculture products to processed products
• For Machinery and Electronics- Assembling from parts to finished products
Avoid combination of two or more criteria for the same product
Cumulation

After Graduation most of these Preferential
Market Access will be lost !

Graduation Effects
Utilization of Different Schemes

Graduation Effects
Expected tariff rate changes in destination markets

Graduation Effects
Expected tariff rate changes for graduating LDCs

Graduation Effects
Initial exports, change in exports and change in tariffs of graduating LDCs
Exporter Initial exports Change exports Percentage change Change applied
tariffs
Angola 33,832,481 -34,177 -0.10% 0.02
Bangladesh 34,509,103 -4,966,219 -14.39% 5.69
Bhutan 310,890 -2,845 -0.92% 0.16
East Timor 200,338 -30 -0.01% 0.00
Kiribati 157,223 -252 -0.16% 0.05
Lao People's
Democratic Republic
3,758,168 -69,956 -1.86% 0.82
Myanmar 12,384,365 -329,422 -2.66% 1.17
Nepal 787,495 -20,991 -2.67% 0.97
Sao Tome and
Principe
13,787 -3 -0.02% 0.01
Solomon Islands 752,226 -29,714 -3.95% 1.29
Tuvalu 42,566 -32 -0.08% 0.02
Vanuatu 296,843 -717 -0.24% 0.14
Total 87,045,484 -5,454,359 -6.27% 2.49

Product-wise Effect of LDC Graduation
MTN category Initial exports Change exports Percentage change Change tariffs
Clothing 31,580,483 -4,717,546 -14.94% 6.06
Leather, footwear, etc 1,781,039 -212,522 -11.93% 4.54
Textiles 2,640,234 -187,732 -7.11% 2.38
Fish and fish products 1,460,167 -164,370 -11.26% 2.96
Cereals and preparations 502,831 -52,904 -10.52% 4.92
Transport equipment 808,739 -32,250 -3.99% 0.99
Minerals and metals 11,490,109 -20,709 -0.18% 0.05
Sugars and confectionery 46,861 -13,976 -29.82% 18.03
Beverages and tobacco 277,584 -13,350 -4.81% 2.78
Petroleum 30,005,287 -12,956 -0.04% 0.01
Chemicals 473,632 -10,098 -2.13% 0.45
Fruits, vegetables, plants 1,476,711 -7,948 -0.54% 0.18
Oilseeds, fats and oils 220,682 -2,202 -1.00% 0.23
Wood, paper, etc 1,574,763 -1,989 -0.13% 0.04
Other agricultural products 220,134 -1,235 -0.56% 0.19
Manufactures n.e.s. 1,288,881 -944 -0.07% 0.02
Animal products 71,317 -909 -1.27% 0.72
Electrical machinery 641,844 -291 -0.05% 0.01
Dairy products 4,601 -207 -4.50% 1.43
Coffee, tea 140,137 -156 -0.11% 0.04
Non-electrical machinery 327,687 -65 -0.02% 0.01
Cotton 11,761 0 0.00% 0.00
Total 87,045,484 -5,454,359 -6.27% 2.49

Preferential Treatment to Services and
Service Suppliers of Least-developed Countries
(Decision of 17 December 2011)
• Any preferential treatment accorded pursuant to this Waiver shall be
designed to promote the trade of least-developed countries in those
sectors and modes of supply that are of particular export interest to the
least-developed countries.
• 26 Members notified their preferential schemes
• Service waiver will be available for LDCs till 2030.
• Preferential market access for services and services suppliers of LDCs
will no longer be available after graduation.

Special and Differential Treatment in
General Agreement on Trade in Services (GATS)
Flexibilities in Schedule of Specific Commitments
Average commitments among 160 subsectors:
• LDCs made commitment in 34 sub-sectors
• Developing Members- 44 sub-sectors and
• Developed countries-105 sub-sectors
• Acceding LDCs have undertaken higher level of commitments

Service Waiver for LDCs
Countries notified the service preferential schemes:
Notifying
Member
Date of notification Notifying Member Date of notification
Australia 29-May-15 Korea, Rep. of 10-Jul-15
Brazil 04-Nov-15 Liechtenstein 30-Nov-15
Canada 14-Dec-15 Mexico 20-Aug-15
Chile 08-Oct-15 New Zealand 28-Jul-15
China 22-Jul-15 Norway 25-Jun-15
European Union 16-Nov-15 Panama 4-May-17
Hong Kong,
China
24-Jul-15 Singapore 24-Jul-15
Iceland 09-Oct-15 South Africa 02-Dec-15
India 29-Sep-15 Switzerland 30-Jul-15
Japan 31-Jul-15 Chinese Taipei 24-Jul-15
Korea, Rep. of 10-Jul-15 Thailand 17-Feb-16
Liechtenstein 30-Nov-15 Turkey 14-Jun-16

Agreement on
Subsidies and Countervailing Measures
Subsidy defined as asupport programme, measure, incentive etc., which
constitutes-
• a financial contribution
• by a government or any public body within the territory of a member
• conferring a benefit to the recipient
• Actionable Subsidies
• Non-actionable Subsidies

Agreement on
Two types of subsidies:
• Actionable Subsidies
• Non-actionable Subsidies

Agreement on
• LDCs are exempted from prohibition of actionable subsidies including export subsidies
for non-agricultural products (Article 27.2 and Annex VII(a))
• Developing Members which are listed in Annex VII(b) are also exempt from this
prohibition until their GNI per capita reaches USD 1,000 in constant 1990 dollars
• The 2001 Doha Ministerial Decision on Implementation-Related Issues and Concerns clarified that a
Member would remain listed in Annex VII(b) until its GNI per capita reached US$1,000 in constant 1990
dollars for three consecutive years (Art. 10.1)
• Re-inclusion if GNI falls to US$ 1000 (yearly assessment)
• In 2017 Bangladesh had GNI US$ 587 (Constant 1990 dollar), in 1990 it was US$ 210
• If the Member's share in world trade of a product is at least 3.25% for two consecutive years then it lose
the flexibility for export subsidy (Article 27.5, 27.6 ).

Annex VII: Developing Country Members Referred to in Paragraph 2(A) of
Article 27
The developing country Members not subject to the provisions of paragraph 1(a) of
Article 3 under the terms of paragraph 2(a) of Article 27 are:
(a) Least-developed countries designated as such by the United Nations which are
Members of the WTO.
(b) Each of the following developing countries which are Members of the WTO
shall be subject to the provisions which are applicable to other developing country
Members according to paragraph 2(b) of Article 27 when GNP per capita has
reached $1,000 per annum: Bolivia, Cameroon, Congo, Côte d'Ivoire, Dominican
Republic, Egypt, Ghana, Guatemala, Guyana, India, Indonesia, Kenya, Morocco,
Nicaragua, Nigeria, Pakistan, Philippines, Senegal, Sri Lanka and Zimbabwe.
Annex VII of SCM Agreement

Subsidies Under
Agreement on Agriculture
LDCs benefit-
• No reduction commitments
• No change in commitment after graduation
• But such facilities will not be available in
future negotiation

Challenges under
1. Market Access
LDCs were not required to undertake tariff reduction
commitments and most of the LDCs bound their
agricultural tariff lines at ceiling levels

Challenges under
2. Domestic Support
• No LDC had scheduled any Aggregate Measure of
Support (AMS)
• De minimis level for Trade Distorting Domestic
Support for LDCs is 10% (5% for Developed
Country Members)

Challenges under Agreement on Agriculture
3. Export Competition:
Nairobi Decision 2015
LDCs and NFIDCs enjoy more favourable treatment
than other developing countries in three areas.
• Firstly, LDCs and NFIDCs can provide certain export
subsidies (i.e. subsidies to reduce the costs of
marketing exports, costs of international transport and
freight as well as internal transport and freight
charges) until 2030.

• Secondly, the LDCs and NFIDCs also enjoy S&DT
over and above other developing countries in the area
of export financing support.
(36 to 54 Months for LDCs instead of 18 months for
developing countries)

• Thirdly, LDCs and NFIDCs can also monetize for the
purposes of transport and delivery of the food assistance, and
they can do so to redress short or long-term food deficit
requirements or to address insufficient agricultural
production situations which give rise to chronic hunger and
malnutrition.

• Graduating LDCs can continue to benefit from these
additional transition periods and flexibilities after
graduation if they remain included in the WTO list of
NFIDCs.
• Graduating LDCs have apply to the COA for inclusion
in the NFIDC list.

Notification:
LDCs are required to report to the WTO on their use of
domestic support every two years. Upon graduation,
notifications have to be made every year to the WTO.

Special and Differential Treatment Under Various WTO Agreements
Agreement on Trade Related Aspects of Intellectual Property
Rights (TRIPS)
• General Transition Period-1 July 2021
• Article 66.1: Patent protection waiver for pharmaceutical products and agro-
chemical
• Article 70.8: Mailbox
• Article 70.9: EMR
• Paragraph 6 & 7 (of DOHA Declaration)
• Public Health
• Article 66.2 Technology Transfer

Special and Differential Treatment Under Various WTO
Agreements
WTO Trade Facilitation Agreement
• Commitments classified as A, B and C
• LDCs have an additional year to implement category A and B commitments
• LDCs have longer periods to notify their implementation dates for category B and C
commitments
• The LDCs have to submit their last implementation notifications by 22
August 2022 for category C.
• LDCs also benefit from longer grace periods for dispute settlement – 6
years for category A (Developing 2 Years) commitments and 8 years for
category B and C (No grace period for developing countries) "due
restraint“

Special and Differential Treatment Under Various
WTO Agreements
WTO Trade Facilitation Agreement
• After graduation, LDC-specific timeline for submitting the
implementation notifications will not be available while the
transition periods for developing countries had already lapsed
• LDC-specific grace-periods for dispute settlement will not be
available
• If a new implementation date is longer than four years than
original notification date, it needs to be approved by the
Committee (Article 19)

LDC Specific Grace Period for Dispute
Settlement (Article 20)
Category LDC Members Developing Country Members
A 6 years 2 years
B 8 years N/A
C 8 years N/A
Source: TFA Facility, https://www.tfadatabase.org, accessed 20 September 2019

Special and Differential Treatment Under Various WTO Agreements
Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU)
• Article 24.1: WTO Members to exercise due restraint in bringing up cases involving
LDC Members and in asking for compensation or seeking authorization to suspend the
application of concessions or other obligations against an LDC Member.
• Article 24.2: Use of good offices, conciliation or mediation of the Director General or
the Chair of the Dispute Settlement Body, upon request by an LDC Member, before the
establishment of a panel.
• After graduation the option to resort to good offices, conciliation and mediation will
remain available under Article 5 provided that the parties to the dispute agree
• To date, there has been no cases brought against LDCs.

Preferential Market Access in the RTAs
SAFTA: LDC Specific Benefits
APTA: LDC Specific Benefits
D-8
TPS-OIC
BIMSTEC

Emerging Issues and their Impact on Trade
• Corona Virus
• US-China Trade War
• Brexit
• Deadlock in the WTO

Corona Virus

Corona Virus
Food and Spices
Ginger- 70% import from China
Garlic- 40% import from China
Onion- 02% import from China
Raw Materials
Cotton- 16%
Man-made staple fibres - 5.5%
Knitted or crocheted fibres- 5.5%
Iron and Steel 5.8%
Plastic - 2.8%
Chemical – 4.4%
Special woven fabrics - 1.3%
Accessories 1.0%
Others – 13.7%
Total raw materials – 40.0%
• Knock on effects will first affect the emerging economies like Bangladesh
• Shortage of some spices supply
• Rattled supply chain of raw materials may affect regular exports

US-China Trade War
• China is the second largest economy with
US$ 14.1 trillion GDP (USA- 21.4 trillion)
• US has long accused China of unfair trading
practices and intellectual property theft.

US-China Trade War
• Negotiations are ongoing but
have proven difficult. In
January, the two sides signed a
preliminary deal but some of the
thorniest issues remain
unresolved.
• Uncertainties around the trade
war have hurt businesses and
weighed on the global economy.

US-China Trade War
• Under the so-called "phase one" deal signed in January, China pledged to
boost US imports by $200bn above 2017 levels and strengthen intellectual
property rules.
• Health situation in China (Corona virus) may linger implementation of the
US-China deal.
• In the short term Bangladesh may get some benefits (already achieved
12%) from trade diversion from China to other countries.
• If trade war lasts for a long period there will be an economic recession in
the world and Bangladesh’s export will be affected.

Brexit
• UK Officially departed from the EU common market
• Bangladesh used to enjoy EBA facilities for exporting to UK like all other
EU countries.
• The UK is the third single largest export destination after the United
States of America (USA) and Germany.
• UK accounted for 10.9 per cent of Bangladesh’s total global exports.
• Since the overwhelming part of Bangladesh’s export to the UK is
consumer items, demand of which tends to be price elastic.
• Besides, many EU importers tend to import through the UK for onward
shipment to the other EU countries, taking advantage of the EU-wide free
trade area .

Brexit
• Exports from Bangladesh are produced and marketed according to the
product standards and certification procedures applicable under the current
trading arrangements with the EU. If more stringent standards are imposed
by UK after the separation, for example with regard to Intellectual
Property Rights (IPR) or Sanitary and Phytosanitary (SPS) measures
applicable under the trading specifications of the UK, this may negatively
affect Bangladesh’s exports to the UK.
• Exports to the UK will also depend on how the post-Brexit UK economy
fares in terms of its likely impact on consumer behavior, and consumer
confidence and overall gross domestic product (GDP) growth.
• If MFN duty is imposed then it will be 11.7% which likely to be serious
loss of export competitiveness for Bangladesh.

Deadlock in the WTO
• US letter to WTO on developed and
developing country status.
• Appointment of judges in the Appealed Body
• Obstructing Ministerial Declaration in the
Buenos Aires

Policy Initiatives
• Initiatives to get GSP+ (6.5% import threshold+ Minimum
working age, good governance, compliance)
• Enhance productivity of the private sector to become more
competitive (Labour saving technologies?)
• Ease of doing business (Urgency vs reality)
• IP enforcement (Cost and benefit).
• Awareness of the private sector
• Develop API Capacities (How long).
• Quality improvement (Cost vs. return)
• Development of port capacities and infrastructure.
• Social compliance: workers rights and working environment

Negotiation Components
 Negotiating with WTO Members for Extension of TRIPS
Transition Period until 2033 for the newly graduated LDCs
(When and how).
 Continue EU EBA for another 03 years. (However, not
granted. Current GSP scheme will expire in 2023).
 GSP plus negotiation
 Signing FTAs (With whom and how).
 Inclusion Bangladesh at the Annex 7 list of WTO Subsidies
Agreement.

Way Forward: Better Market Access
 Concerted efforts are to be taken for obtaining GSP+ in EU
 Initiate FTA/RTA negotiations with potential countries
 Diversifying export baskets & diversifying Markets
 Enhancing productivities.
 Ensure better compliance in factories.
 Enhancing overall trade-related capacity;

Graduation: Way Forward
• There is no explicit theoretical framework for LDC graduation. Bangladesh will
have to develop its own.
• Graduation may increase FDI, but needs strong professionalism and conducive
economic and political regime in attracting FDI.
• Graduation should be accompanied with
• structural shifts towards high value added industries,
• strengthening governance,
• mobilizing domestic resources,
• develop infrastructure and
• investment in human development.
• Improvement of ease of doing business

Thank You for Patience Hearing
WTO Cell, Ministry of Commerce BFTI 26 May 2016

LDC Graduation and Trade Impact: Bangladesh

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