Smoothing the Transition

On 7 December 2012, the General Assembly of the United Nations adopted a resolution on smooth transition for countries graduating from the list of LDCs. The resolution endorses several of the recommendations put forward by the ad hoc working group of the General Assembly on strengthening smooth transition provisions. The working group initiative had been mandated by the Fourth UN Conference on the LDCs which took place in Istanbul in May 2011.

Graduation has been a source of concern for many LDCs. Despite the introduction of smooth transition provisions by some development  (for example, UN General Assembly travel benefits) and trading partners (the EBA is a case in point), overall, there is a great deal of uncertainty about the transition process.  It is not clear whether and how fast the support a LDC gets from the international community will be withdrawn. Particularly worrisome for LDCs is the possibility that support (LDC and otherwise) disappears altogether. Yet, graduation does not imply an end to the need for support, but, rather, that the nature of the need has changed. Accordingly, the nature of the support may change too but it should not disappear.

The resolution clarifies several aspects of the smooth transition process including the required actions by graduating countries and their development and trading partners and the nature of support extended by the UN during this process. It also provides guidelines on the phasing out of some LDC-specific international support measures. It requests a series of monitoring reports both by graduating countries and by the CDP as complement to those already envisaged in previous resolutions.

The main provisions include:

  • Reiteration that graduation should not disrupt the development progress of the country.
  • Reiteration of the importance of preparing a smooth transition strategy. The strategy indicates actions necessary to address the impact of the phasing out of LDC-specific support. It is to be prepared by the graduating country in consultation with its partners and with the support of the UN system.
  • A request to the UN system to provide capacity building to support the formulation and implementation of national transition strategies.
  • An instruction to other relevant consultative mechanisms operating in the country (for instance IMF and World Bank programmes) to incorporate the implications of graduation and smooth transition decisions in their operations with the country.
  • A call on partners to establish and clarify smooth transition provisions for the support they extend.
  • Reports by graduating countries on the preparation and implementation of their smooth transition strategy so as to allow for better monitoring of this process by the Economic and Social Council.
  • The recommendation the LDC criteria (GNI per capita, human asset index and the economic vulnerability index) should be included in donors’ ODA allocation criteria

The last point is particularly relevant for smoothing the transition from the LDC category as it makes the support much less binary (either a country is or is not an LDC) than it is at present. Moreover, it addresses the concerns of countries graduating from the category but which still confront acute structural economic vulnerability as it is the case of some of SIDS. More importantly, it may present a solution for “fuzzy areas” where the separation between LDC support and developing country support is not clear cut such as in the case of the official development assistance.

Not withstanding the above, the resolution advances little in other areas. Trade is a case in point. Paragraph 4 urges trading partners to pursue or intensify their efforts for providing smooth transition measures but in a manner that is consistent with the rules of the WTO. Those rules, however, do not foresee smooth transition provisions. On the contrary, currently there is no waiver for granting preferential market access for graduated LDCs and several of the exemptions LDCs currently enjoy clearly state they should last until those exemptions expire or when a country graduates, whichever takes place first. Hopefully, progress can be achieved in these areas next time the GA reviews the issue at its 70th session.

Moving forward, it is also important for LDCs to take advantage of the mandates and provisions given by this resolution and take greater ownership of the smooth transition process. This could be done, for instance by requiring clarification, obtaining information and giving inputs to relevant development partners–particularly institutional partners such as funds and programmes– on the most suitable ways to introduce smooth transition provisions for the benefits these partners offer. By providing inputs to and actively participating in the decision making processes of these partners, LDCs would be able to better tailor the smooth transition process to their needs.