Trade-related impact of LDC graduation for Cambodia and Zambia

The Project at A Glance

In 2021, both Cambodia and Zambia met the criteria for LDC graduation, and The two countries will be considered for graduation in 2024 at the Triennial Review, provided that the countries continue to meet the criteria.
With funding from the WTO, International Economics Consulting Ltd. (IEC) drafted two country-specific analyses of the trade-related impacts of LDC graduation for Cambodia and Zambia. The overall objective of this assignment was to understand and assess the impact of LDC graduation on market access and with regard to compliance with WTO Agreements.

What We Found

The Cambodian economy has undergone significant transformation over the last decade, making the country one of the fastest-growing economies in Southeast Asia. The country’s growth has been driven by exports of textiles and apparel, bicycles, and gold, among others. Some of the country’s largest export destinations include the United States, the European Union, Singapore, and China. Cambodia enjoys preferential market access owing to its LDC status and through numerous free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP).
Likewise, over the last 20 years, Zambia has recorded remarkable economic growth, with an average GDP growth of 8.8 percent between 2000 and 2020. Some of the commodities most exported by the country include mineral products and agricultural raw materials. Zambia also currently enjoys preferential market access with its biggest trading partners owing to its status as a least developed country (LDC).

Our Strategy and Impact

Graduating from LDC status may have considerable ramifications on exports from both countries. With regard to exports to the United States, Zambia will continue to benefit from preferential market access under the US African Growth Opportunity Act (AGOA) as the scheme is not contingent on LDC status. At the level of the European Union, both Cambodia and Zambia would no longer qualify for the Everything But Arms (EBA) scheme. In fact, Cambodia has already been suspended from the EBA scheme.
Zambia could still retain certain preferences with the EU if it signs the interim Economic Partnership Agreement concluded between the EU and Eastern and Southern African countries. Alternatively, Zambia can also benefit from the EU’s General Scheme of Preferences (GSP) even if it does not sign a free trade agreement with the EU.
At the multilateral level, both Cambodia and Zambia will face stricter requirements and obligations with regard to their membership at the WTO. They will need to submit their notifications for domestic support under the Agreement on Agriculture annually, rather than on a bilateral basis, as is currently the case for LDCs. The two countries will also have to comply with the obligations of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Our Core Solutions

With the rapid proliferation of trade agreements worldwide, there are new market and investment opportunities for countries to explore. We prepare clients to navigate trade and investment negotiations and advocate for their best interests. We also provide customised advocacy solutions for sustainable growth. From determining our clients’ specific requirements and interests to designing an effective strategy, we represent and advocate for our clients in various trade-related matters and facilitate coordination between different organisations.