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How to use it

Boosting trade opportunities for least-developed countries

Published 31 January 2023

The past three years of pandemic, war, and inflation, have been particularly challenging for least developed countries. How can LDCs use trade to strengthen their economies in these challenging times? What more can the international community do to integrate LDCs into the multilateral trading system? The World Trade Organization provides some guidance.

Here’s how to use the WTO report entitled Boosting trade opportunities for least-developed countries: progress over the past ten years and current priorities.

Why is the WTO LDCs report important?

The international community has demonstrated a serious interest in promoting the economic development of LDCs, including through trade, as evidenced by the Istanbul Programme of Action for LDCs from 2011 to 2020. As this decade progresses, it is important to understand what progress, if any, LDCs and the international community have made in expanding LDC participation in trade. The WTO LDCs report provides a summary of these accomplishments and identifies areas for improvements and further work going forward in order to incorporate LDCs fully into the global trading system.

What’s in the WTO LDCs report?

The WTO LDCs report includes four sections followed by statistical annexes:

  • LDC Trade Performance from 2011 to 2020;
  • LDC Integration into the Multilateral Trading System;
  • Building LDC Capacity to Trade;
  • LDC Graduation; and
  • Annexes with key trade data for each of the 46 LDCs.

Page index

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How to find the key insights

LDC Trade Performance from 2011 to 2020 | LDC Integration into the Multilateral Trading System | Building LDC Capacity to Trade | LDC Graduation

Chapter I: LDC Trade Performance from 2011 to 2020

  1. As of 2020, LDCs’ share of global exports was 0.91%, down from 0.95% in 2011; LDCs made up only 1.01% of global merchandise exports and 0.53% of commercial services exports. (pp. 5-7, Figures 1, 3, and 4)
  2. LDC trade is highly concentrated: 10 LDC exporters accounted for 73% of LDC exports in 2020; most exports went to five major markets: China, the EU, the US, India, and Thailand. (p. 5)
  1. The largest share of LDC merchandise exports is petroleum-based primary products; clothing exports have increased significantly over the past decade. (p. 5-6, Figure 2)

Evolution of merchandise exports of LCDs, 2011 and 2020

  1. Tourism is the primary services export sector for LDCs; LDC commercial services exports dropped by around 40% in 2020 due to Covid’s impact on travel. (p. 7)

How to apply the insights

  • The WTO LDCs report makes plain several insights into LDC trade, particularly that LDCs’ share of global trade is very small and highly dependent on oil prices and tourism. Consequently, ongoing economic shocks from the pandemic and fluctuating oil prices are having a disproportionate impact on LDCs.
  • Policy makers can use this report to highlight the need to help LDCs transition to more diversified and sustainable sectors for trade and to support LDCs during future similar crises.

Chapter II: LDC Integration into the Multilateral Trading System

  1. Preferential LDC market access is a key tool for LDC integration into the multilateral trading system; over the past decade, WTO Members have expanded this by adopting full duty-free and quota-free market access, simple and transparent rules of origin and preferential services market access for LDCs. (pp. 9-11, 19)
  2. Flexible implementation of WTO rules, particularly for intellectual property, have helped LDCs accede to the WTO and supported LDC access to medicines and technologies. (pp. 11-13)
  1. 35 LDCs are WTO Members; 9 acceded after 1995 of which, 3 have already graduated; 8 more LDCs are in the process of acceding. (p. 12, Box 1)
  2. The Trade Facilitation Agreement can particularly benefit LDCs by reducing trade costs by up to 16%; LDCs need additional time and support to implement the commitments. (pp. 13-14)
  3. WTO Members continue to be sensitive to LDC needs in agriculture trade and fisheries subsidies, and to give special and differential treatment in WTO agreements. (pp. 14-17)

How to apply the insights

  • The WTO LDCs report lists efforts WTO Members are taking to assist LDCs integrate into the multilateral trading system. The Report also makes clear that much more can be done, particularly in helping LDCs diversify their export sectors, improving coverage for duty-free and quota-free market access and preferential services market access, supporting implementation of the Trade Facilitation Agreement, and expanding special and differential treatment for LDCs.

Chapter III: Building LDC Capacity to Trade

  1. The WTO gives technical assistance to build LDC human and institutional trade capacity. (p. 19)
  2. The WTO has distributed 30 percent of over US$366.9 billion in Aid for Trade to LDCs, to implement the Istanbul Programme of Action for LDCs. (pp. 19-20)
  3. The Enhanced Integrated Framework, a partnership among LDCs, former LDCs, donors, and international organizations, has provided US$230 million since 2009 to fund analysis, strengthen LDC trade institutions, and build productive sectors with high export potential. (p. 21)

How to apply the insights

  • The WTO LDCs report supplies a helpful list of WTO initiatives that support LDCs to build trade expertise and technical capabilities, which is useful in order to understand what work is already underway. The report also makes obvious the need for specific details of what these initiatives actually accomplish and metrics for assessing performance of these programs to help policymakers fill in gaps in support and funding.

Chapter IV: LDC Graduation

  1. LDC graduation is a WTO priority: between 2011 and 2020, 4 LDCs graduated from LDC status. 16 LDCs are in the process of graduating. (pp. 23-24, Figure 6)

Countries graduating from LDC status from 2011 to 2020

  1. Graduating LDCs face the challenge of sustaining progress they have made once they graduate, in part because of the loss of preferences and special rules related to their LDC status. (pp. 23-25)
  2. The WTO has produced research and analysis to better understand the issue and identify resources to address it. (pp. 24-25)

How to apply the insights

  • The WTO LDCs report highlights a key challenge for LDCs participating in the WTO system – the prospect of eventual graduation from preferences and assistance that helps sustain their participation in the trading system.
  • The report makes readers aware that more research is available for understanding the impact of LDC graduation, and of efforts the WTO is undertaking to work with current and former LDCs to plan for sustainable trade engagement after graduation.

Conclusion

The WTO LDCs Report provides a good summary of LDC performance in the multilateral trading system, how the system is structured to include and incorporate their participation, the tools used to provide aid to increase their capacity, and the challenges of graduation. This report serves as a useful starting point for anyone researching how the WTO assists LDCs in using trade as a tool for economic development.

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