Page 68 - IBT December 2020

LDC Category If Bangladesh graduates, it will be one of the first FY21. In the downside scenario, a second wave of Yeah No, Yeah.
Least Developed Countries (LDCs) are characterized South Asian LDCs to do so, and it is the first COVID-19 infections and a prolonged global In case CDP review comes back with flying colors,
by low levels of income and severe structural country to meet all three graduation thresholds of recession would result in the realization of some Bangladesh will need to pursue negotiations in
impediments to sustainable development. The the LDC criteria. Debapriya Bhattacharya, a leading contingent liabilities, especially from the financial various fora, making allies with other graduating
category was established by the UN General Bangladeshi Economist, who began serving as a sector. The recovery from the pandemic is expected LDCs, to secure their common interests in view of
Assembly (UNGA) in 1971 to acknowledge that CDP member starting in January 2019 noted that to be very gradual, with some increase in export the emerging challenges. The country’s
special support measures are needed to assist the Bangladesh is characterized by a “double demand and higher public spending amid potential policymakers will have to take a proactive stance in
least developed among the developing countries. transition” since, in addition to its expected economic disruptions and increasing fragilities in the WTO and lead the effort to design a package of
Currently 47 countries are part of the LDC category. graduation from the LDC category in 2024, it the banking system. supports sustainable graduation of the LDCs.
Decisions on inclusion into, and graduation from, transitioned from a low-income country to a Bhattacharya, in his article for Daily Star writes, Already the idea of a package of support for
the list of LDCs are made by the UNGA based on lower-middle-income country in 2015. “Notwithstanding the immediate and visible adverse graduating LDCs has been mooted in various global
recommendations by the U.N. Committee for There is no denying the fact that graduation will impacts of the COVID-19 contagion, all the three fora. The proposed package would have provided the
Development Policy (CDP) that are endorsed by the invite a number of new challenges. Important core LDC graduation criteria of Bangladesh will graduating LDCs and their apparels sectors a
U.N. Economic and Social Council (ECOSOC). The questions that merit attention, are related to the most probably be above (or below) the required much-needed breathing space as they embark upon
CDP, a subsidiary advisory body of ECOSOC and possible impacts of graduation on the thresholds. This projection is guided by the fact that their post-graduation journey.
composed of 24 members, analyzes the list of LDCs export-oriented readymade garments industry. The the pre-pandemic scores had been high enough to Negotiating trade deals of their own is another idea.
every three years during triennial reviews to identify impact on the RMG sector in terms of its withstand a certain level of erosion. Moreover, even South-South Cooperation is another possible option
countries that may qualify for inclusion into or competitiveness and performance; the implications if the country does not fulfil one of the criteria, it for Bangladesh. The country take the lead in
graduation from the LDC category. for the enterprises; what initiatives will need to be will still be eligible for graduation based on the two exploring the possibility of extending preferential
There are two ways to become eligible for undertaken towards technological upgrading, other criterions.” treatment under unilateral LDC schemes, such as
graduation: LDCs can either meet two out of three social compliance, labor standards and rights Therefore, it seems likely that, during the review in those run by India and China, for some years
graduation criteria or have a GNI per capita that is compliance, to address the post-graduation February 2021, the impact of COVID-19 will not be following graduation. Indeed, China extended LDC
at least twice the income threshold for graduation challenges. reflected in the available data for the assessment of preferential treatment to Samoa following its
(income-only criterion) in two consecutive triennial graduation criteria of the LDCs. However, the graduation in 2014.
reviews. Scopes and Repercussions U.N.-CDP has recently adopted a broader assessment Bhattacharya has talked about the three pronged
approach, which includes; Bangladesh campaigning
Since 1971, five LDCs have graduated from the LDC According to the World Trade Organization (WTO), framework as well as country-specific risk analysis, B
category, namely: Botswana, Cabo Verde, Equatorial LDC graduation will have the greatest impact on to make an informed decision. The candidate for a comprehensive agenda of transitional ISMs for
Guinea, the Maldives, and Samoa. Five additional the exports of Bangladesh, which is estimated to countries are entitled to put up their views in the graduating LDCs; the country has to develop and
LDCs should graduate by 2024. Those are: Vanuatu see a decline by 14%. The report goes on to written form, and CDP may also seek their advice implement a strategy which has to be in alignment
(graduation in 2020); Angola (graduation in 2021); mention that Graduation from LDC status will regarding the graduation process. It will be a with the Sustainable Development Goals (SDGs) of
Bhutan (graduation in 2023), São Tomé and Príncipe eventually result in the loss of preferences received country by country decision, including the one on 2030 Agenda and embedded in the upcoming Eight
(graduation in 2024); and Solomon Islands by the LDCs on trade deals negotiated with Bangladesh. Five Year Plan (2021-25); and lastly engage the
(graduation in 2024). developed country members. Access to LDC-specific institutional arrangement of the Bangladesh
preferences in regional trade agreements may also But What About Us? government dealing with the LDC graduation.
LDC Graduation cease to exist. This impact will vary depending on LDC graduation will result in Bangladesh losing the Graduation from the LDC category is an important
In March 2018, the CDP found that Bangladesh met the extent that graduating LDCs have used these preferential market access facilities enjoyed by the milestone for Bangladesh’s pursuit of development.
the criteria for graduation for the first time. If preferences. For some, the impact will be limited, LDCs thanks to the various unilateral, and bilateral, The Graduation process is happening at a time when
Bangladesh meets the graduation criteria for a while for others the likely impact may necessitate regional and global initiatives. While the E.U. has the world is witnessing fundamental changes,
second time, at the next triennial review in 2021, that the graduating governments identify effective offered to extend the preferential market access for including in terms of rising nationalism, and that
options to continue their integration into the
an additional three years following graduation (i.e.
the CDP will recommend it for graduation from the protectionist measures could create strong
LDC category in 2024. global economy. till 2027 in case of Bangladesh), there is no denying disincentives for graduating countries. With so
that future market access scenario for Bangladesh much of our livelihood at stake, the government
The C Word will undergo profound changes in the coming years. needs to be on their own in case Bangladesh does
Things were going pretty well for Bangladesh till Bangladesh will face an increased tariff structure in emerge as a middle income nation.
COVID-19 intervened in the first quarter of the destination markets after graduation compared to
year. Due to the pandemic situation, growth has the LDC duty rate. Thereupon, Bangladesh will also
fallen to 5.24%, export earnings dropped 16.93% lose the preferential market access for goods,
and import plunged by 8.56% in FY20. preferential treatment for services and service According to the World
Furthermore, Foreign Direct Investment inflow supplies, special treatment regarding obligations
plummeted, in FY 2019-20 to $2.5 billion which and flexibilities under WTO rules, IPR facility for Trade Organization (WTO),
was $3.97 billion in the corresponding period of pharmaceuticals, official development assistance, LDC graduation will have the
the previous FY. In the meantime, inflation has scholarships and other forms of financial support
risen to 6.02% in June 2020 where the average for education and research, caps and discounts on greatest impact on the
inflation of the FY was 5.65%. Unlike the other the contribution of LDCs to the United Nations exports of Bangladesh,
sector, private investment is also projected to system budgets, capacity-building for participation
sharply decline to 12.72%. in negotiations, flexibility in reporting requirements which is estimated to see
The World Bank predicts GDP growth in FY20 is to etc. In a nutshell, phasing-out of preferences may
be in the range of 1 to 1.6%, and 1.0 to -3.0% in substantially impact our economy along with the exports decline by 14%.
post COVID-19 new economic order.

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