Basis for preferential treatment of merchandise exports from LDCs by WTO members

The legal basis for developed country WTO members to grant preferential market access. terms to LDCS is the decision on “Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries” (known as the “Enabling Clause”). Adopted in 1979 by the Members of the GATT, it allowed developed countries to depart from their MFN obligation with respect to all developing countries, including LDCs. The Enabling Clause is not time constrained. After graduation, in developed country markets, former LDCs generally have access to the standard Generalized System of Preference (GSP) schemes. In certain cases, in response to calls by the United Nations General Assembly, these preferential schemes have “smooth transition” provisions, which extend eligibility for a period after graduation (see www.gradjet.org for information on graduation).

In developing country markets, trade preferences for LDCs are allowed under the waiver to the MFN obligation under the decision on “Preferential-Tariff Treatment for Least-Developed Countries”, originally adopted in 1999 and extended in 2009 until 30 June 2019 (see WTO document WT/L/759). After graduation, former LDCs export under most favoured nation (MFN) tariffs or the terms of any applicable regional or bilateral agreements.

In the Decision on Measures in Favour of Least Developed Countries adopted by WTO Members at the 2005 Hong Kong Ministerial Conference, developed countries, and developing-country members declaring themselves in a position to do so, agreed to implement duty-free and quota-free (DFQF) market access for products originating from LDCs. Further commitments were made in the Ministerial Decision on Duty Free Quota Free Market Access for Least Developed Countries adopted a the Bai Ministerial Conference in 2013.