In addition to preferential tariffs and rules of origin, certain regional trade agreements contain special provisions for LDCs:
- African Continental Free Trade Area Agreement (AfCFTA) (member states listed here): The AfCFTA, which was launched on 1 January 2021, draws a distinction between LDCs and non-LDCs for the purposes of tariff negotiations. LDCs have 10 years to achieve 90 per cent liberalization, while non-LDCs have 5 years. The remaining 10 per cent of tariff lines are divided into two categories: 7 per cent can be designated sensitive products and 3 per cent of tariff lines can be excluded from liberalization entirely. LDCs have 13 years to eliminate tariffs on sensitive products and may maintain their current tariffs for the first 5 years, backloading liberalization during the remaining 8 years. Non-LDCs have 10 years to eliminate tariffs on sensitive products and may also retain the status quo, starting liberalization in year 6. Both LDCs and non-LDCs may exclude 3 per cent of tariff lines, but the excluded products may not account for more than 10 per cent of their total trade;
- South Asian Free Trade Area (SAFTA) (Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, India, Pakistan and Sri Lanka): among other measures, LDCs benefit from smaller sensitive lists adopted by some of the partners (meaning they receive tariff concessions on a larger number of products) and preferential rules of origin (requirement of change of tariff heading and value addition of 10 per cent less than the requirement for non-LDCs). The SAFTA agreement contains a special provision for Maldives (article 12), which graduated from the LDC list in 2011, granting it LDC-equivalent treatment in the Agreement and in any subsequent contractual undertakings. See also, on this portal, SAFTA;
- Asia Pacific Trade Agreement (APTA) (Bangladesh, China, India, Lao People’s Democratic Republic, Mongolia, Republic of Korea and Sri Lanka): LDCs benefit from larger lists of tariff concession items as well as deeper tariff concessions (higher margin of preference for market access) in some of the partners and have additional flexibility in rules of origin (domestic value requirement of 35 per cent instead of 45 per cent);
- Pacific Agreement on Closer Economic Relations (PACER) Plus (as of April 2024, Australia, Cook Islands, Kiribati, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu had ratified the agreement; Nauru had signed but not yet ratified): while tariff reduction by non-LDCs started from the date of entry into force (13 December 2020), tariff reduction by LDCs will start after each country’s graduation from the LDC category or after 10 years, whichever is later; and tariff elimination will take up to 25 years or more. For more information, see "Pacer Plus: Trade in Goods", Department of Foreign Affairs and Trade of Australia and Pacer Plus.
- Regional Comprehensive Economic Partnership (RCEP) agreement: RCEP includes 10 ASEAN countries and five Asia-Pacific economies (Australia, China, Japan, New Zealand and Republic of Korea). Under Article 15.6, member countries with LDC status (currently Cambodia, Lao PDR and Myanmar) are entitled for special and differential treatment in the form of either exemption or delayed implementation of the RCEP commitments. They also have access to economic cooperation support, including official development assistance and aid for capacity building and trade reforms. Additionally, Article 19.18 provides special and differential treatment for LDC Parties whereby the Complaining Party is obligated to exercise due restraint in raising matters where an LDC Party is involved. For more information, please visit RCEP Legal Text.
- ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA): Article 18 provides that parties shall exercise due restraint in raising matters under dispute settlement procedures involving an LDC party and, if applicable, in applying compensatory measures.
For further information on LDC-specific provisions in regional and other free-trade agreements please see Legal TINA, an initiative of UN ESCAP, allows users to search for specific terms, including "LDCs" or "least developed countries" in trade agreements.
What happens when countries graduate?
It depends on the terms of the agreement and the nature of the LDC-specific flexibilities. In some cases LDC-specific flexibilities were limited to the initial stages of implementation of the agreements. These are reciprocal agreements and some aspects could be the object of negotiation.
