LDC Graduation and the WTO: Assisting LDCs to address the trade-related implications of graduation from LDC Status

The textile and clothing sector is the backbone of many LDCs, particularly in Asia. Specifically, clothing is the most dominant sub-sector across the Bangladesh, Cambodia, Lao PDR, Myanmar and Nepal, an industry that has flourished thanks to the unilateral trade preferences granted.
International Economics Consulting, through its CEO, developed a report for the World Trade Organisation on the impact of LDC graduation on the textile and clothing sector in Bangladesh, Cambodia, Lao PDR, Myanmar and Nepal.

What We Found

Given their weak productive capacities and high export concentration in limited sectors and market destinations, LDCs benefit from various LDC-specific trade preference schemes. The market of Textile and Clothing for example experienced an impressive transformation over the years. The removal of LDC-specific preferences threatens the survival of this industry in Bangladesh, Cambodia, Lao PDR, Myanmar and Nepal. However, graduation also presents an opportunity to tackle some of the countries’ most pervasive challenges – such as the limited product and market diversification, weak business environment and high trade costs, thereby aiming to capture greater value addition. Our CEO, conducted a research in order to assist LDCs to address the trade-related implications of graduation from LDC Status. The aim of the study was to assess the trade and market access dimension of the textiles and clothing sector in each country as part of an EIF-WTO project, in cooperation with UN DESA, UNCTAD and ITC.

Our Strategy and Impact

Most of the South Asian LDCs have benefitted significantly from a strong export performance that has been fueled by the high preferential margins from tariffs, and favourable rules of origin available for the LDCs under the various unilateral initiatives offered Our study included an analysis of the global sectoral trends and the impacts of covid-19, it also provided an overview on the trade profiles for graduating LDCs – although clothing sector is considered dominant in Bangladesh, Cambodia, Lao PDR, Myanmar and Nepal, the weight of the Textile and Clothing sector across the South Asian LDCs varies from country to country. The outcome of the research was a discussion on the rules of origin and specifically, changes in the rules of origin requirements in destination markets when moving from LDC preferences to preferences under GSP schemes or RTAs, as well as on structural and competitiveness issues in the textile and clothing sector including structural disadvantages and potential factors conditioning competitive positions

Our Core Solutions

As businesses seek to expand operations into new markets, the need to explore global supply chains and understand the international regulatory framework becomes crucial. At International Economics Consulting, we build tailor-made strategies for both import and export-oriented business solutions.

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