The criteria for the Least Developed Countries (LDCs) graduation are set by the UN and focus on three keysare: low income (GNI per capita), weak human assets (health/education), and high economic and environmental vulnerability to shocks.
The Income criterion, based on a three-year average estimate of GNI per capita, based on the World Bank Atlas Method (under $1,035 for inclusion, above $ 1,242 for graduation as applied in the 2015 triennial review)
The Human Assets Index (HAI) is based on indicators of: (a) nutrition: percentage of population undernourished; (b) health: mortality rate for children aged five years or under; (c) education: the gross secondary school enrolment ratio; and (d) adult literacy rate.
The Economic Vulnerability Index (EVI) based on indicators of: (a) population size; (b) remoteness; (C) merchandise export concentration; (d) share of agriculture, forestry and fisheries; (e) share of population in low elevated coastal zones; (f) instability of exports of goods and services; (g) victims of natural disasters; and (h) instability of agricultural production.
LDCs are enjoying various incentives. They are entitled to enjoy some differential and preferential facilities in international trade, development assistance, including development financing and technical cooperation; and in general support and other forms of assistance.
Among the preferential facilities, Special and Differential Treatments for LDCs under the WTO agreements are the most important given our export-led economy. Under these, LDCs enjoy preferential market access including special and differential treatment from some WTO obligations (other than preferential market access), and trade-related capacity-building. Preferential market access for goods and services.
After graduation from LDC, countries will also lose eligibility above said preferential treatment. Withdrawal of all benefits upon graduation will certainly be a challenge for LDCs including Bangladesh. After formal graduation on 24 November 2026, Bangladesh would keep implementing and monitoring the smooth transition strategy (STS) with support by development and trading partners
An important initiative in support of the LDCs is the Enhanced Integrated Framework (EIF), the successor of the Integrated Framework (IF). The EIF is a multi-donor programme which supports LDCs to increase their participation in the international trading system. It focuses on three main activities, viz., mainstreaming trade into national development strategies; setting up structures needed to coordinate the delivery of trade-related technical assistance; and building capacity to trade, including addressing critical supply-side constraints.
There are various preferential market access facilities are available for LDCs, which include: (1) Duty-free & quota-free (DFQF) market access facilities; (2) GSP facilities; (3) Special market access facilities for LDC members in various RTAs (Regional Trade Agreements), like SAFTA, APTA; and (4) Preferential market access for trade in services under LDC Services Waiver.
In the WTO system and Agreements, out of 140 Special and Differential Treatments (S&DTS) that are available for developing countries and for LDCs,15 are exclusively for LDCs. These S&DTs can be grouped into five main categories: (1) increased market access;(2) safeguarding of the interests of LDCs;(3) increased flexibility for LDCs in rules and disciplines governing trade measures;(4) extension of longer transitional periods to LDCs; and (5) provision of technical assistance.
In other words the benefits for LDCs are: (1) LDCs enjoys 12% preferential margin on its export to the European Countries which provides a substantial price advantage over other countries, (2) Relaxation (One stage Transformation) in provision of rules of origin in exporting commodities to EU countries, (3) Recipient of aid in absolute terms from the aid target of 0.15%-0.20% ofdonors' GNI. (4) Budget caps for LDCs' contribution to regular budget of UN, ILO etc, (5) Technology Transfer to the LDC of TRIPS (Trade Related IntellectualPropertyRights.), (6) Assistance from LDC fund constituted under UNFCC (United Nations Framework on Climate Change) to mitigate the effect of climate change, (7) Assistance under EIF (Enhance Integrated Framework) to strengthen the capacity of ministry of commerce with a view to mainstreaming global trade with national development plan, (8) Enjoyment of transitional period up to 2033 regarding patent provisions especially for pharmaceutical sector under article 70.8 and 70.9 of TRIPS agreement, (9) Various types of scholarships and fellowships for the citizens of LDC, (10) Travel incentives for the representatives of LDCs participating in conference or summit organized by UN or its bodies.
In the 4th LDC Conference (LDC4) held in Istanbul in 2011. The conference resulted in the adoption of the Istanbul Declaration and the Istanbul Programme of Action (IPoA) for the decade 2011-2020.The primary goal was to help LDCs overcome structural challenges, eradicate poverty, and enable their graduation from the LDC category. The primary goal was to help LDCs overcome structural challenges, eradicate poverty, and enable their graduation from the LDC category. This graduation, while a sign of success, also means losing special UN support measures, requiring countries to develop "smooth transition" strategies.
To reach eligibility for graduation, a country must reach threshold levels for graduation for two of the three criteria in two consecutive triennial reviews. Bangladesh has achieved all the thresholds of three categoriesi.e.GNI (Gross National Income, $1272), HAI (Human Assets Index, 72.8) and EVI (Economic Vulnerability Index, 25) for graduating from LDC.
After graduation from LDC, countries will also lose eligibility above said preferential treatment. Withdrawal of all benefits upon graduation will certainly be a challenge for LDCs including Bangladesh. After formal graduation on 24 November 2026, Bangladesh would keep implementing and monitoring the smooth transition strategy (STS) with support by development and trading partners. Bangladesh would submit to the CDP its annual report on STS implementation in 2027, 2028 and 2029 and at the triennial reviews in 2033 and 2036.
The writer is legal economist & CEO, Bangla Chemical
