Statement on Asia-Pacific LDCs' Graduation, Trade and Pandemic

Statement by Ms. Fekitamoeloa Katoa‘Utoikamanu, High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States

27 January 2021 
New York, USA

Excellencies, 
Colleagues, 
Ladies and gentlemen,

First, I would like to thank ESCAP for organizing this webinar meeting.

Graduation and the issues and challenges surrounding it have long been at the core of the work of the United Nations system and of the work we do at OHRLLS.

Graduation from the LDC category is more than a symbolic step in a country’s development journey.

The label, if I may say so, sends a strong signal about strength and stability in socio-economic progress, encourages investors, and encourages the business community.

In turn, that means greatly enhanced potential for trading, investment and commercial activities.

I stress that we talk potential because , let us be clear,  the overall set of development challenges that a country faces as an LDC do not disappear overnight with graduation.

Take, for example, a shared  threat  cutting across all graduating LDCs. That is the threat of their extreme vulnerability to climate change and related hazards.

Let us also not forget that graduation means the end of access to LDC-specific international support measures. It also implies loss of flexibility in the implementation of various international agreements, including TRIPS.

Ever since the advent of the global COVID pandemic, we can see that graduation faces additional challenges given the intertwined health, economic and financial consequences of COVID-19.

The pandemic spreads at a rapid pace through weak and vulnerable health system. The new and emerging variants and mutations pose additional and not yet really known threats.

The protracted economic recession triggered by the pandemic will result in massive economic downturns and, let us not overlook this, societal disruptions all threatening hard won gains and stability.

The impact is likely to be the hardest on micro-, small- and medium-sized enterprises (MSMEs), on the informal sector and the labour markets of graduating LDCs. Yet, this often is the engine room for growth in LDCs!

The pandemic’s impacts on exports of goods and services coupled with growing costs of imports are likely to result in growing trade deficits of LDCs exceeding those of the pre-COVID levels.

Export items graduating LDCs rely on- like RMGs, fuels and tourism services - will be hit hard.

The small island LDCs are projected to be hardest hit by the severe downturn in world tourism. Yet, tourism is their GDP driver !

What is already clear is that this puts into question the achievement of SDG target 17.11- which is “doubling the LDCs’ share of exports by 2020 compared to 2011”.

Add to this that remittances, another major source of income for some graduating countries, are also under stress. This will further worsen the current account balance of countries.

More than ever timely, adequate  and appropriate external support must kick in if we do not want to lose the hard won gains countries achieved in the past on their trajectory to a sustainable and inclusive development for their peoples.

However, we are concerned that all categories of external flows of funding are either waning or at best stagnant.

In short, the multifaceted challenges graduated and graduating LDCs are confronted with , demand NOW and not tomorrow bold and decisive action.

What is at stake is to ensure that the encouraging development trends of graduating countries remain sustained and can reach  a higher trajectory.

I believe there is a mix of  measures we could consider taking.

First : policies and measures must be taken to recover from the massive impacts of COVID-19. Reinforcing the public health infrastructure ecosystem is needed more than ever. The Secretary-General has already appealed to make  vaccination as a global public good.

Graduating countries and other LDCs need immediate access to appropriate and affordable vaccines and  therapeutic medicines as well as equipment. 

A virus does not know borders and we know that it is only if we globally can achieve immunity, and not just in some parts of the globe, can we overcome the dramatic challenges this pandemic poses to all.

Secondly: We need to work on and invest in comprehensive transition strategies,  developed through consultative processes, to ensure what I call smooth transitions.

This requires ex-ante impact assessments and vulnerability analysis. Appropriate policies and measures can then  be put in place for sectors that are highly sensitive to preference erosion.

Thirdly: Graduating countries need to engage with their key development partners to negotiate extension of select LDC-preferential treatments for a period of time  consistent with development needs and priorities.

In this regard, OHRLLS leads an Inter-Agency Task Force on LDC Graduation. The aim is to strengthen and better coordinate UN system-wide support to graduating countries.

Fourth: trade is and  will continue to remain a key driver of development for graduating and graduated countries.

The Group of LDCs have already placed their proposals for the extension of LDC-specific special and preferential treatments. This  includes a provision for a transition period under TRIPS Article 66.1 for a certain number of years after graduation.

This proposal warrants a review and favorable consideration by the international community, especially in the current context of the impacts of COVID-19.

Fifth: COVID-19 once again exposes the digital divide in LDCs. It is with urgency that we must  build the infrastructure for a digital economy and e-commerce but also distance learning, health services and so much more. 

Sixth: the pandemic has taught us once more the deep lesson of the history of our shared humanity that there is no certainty or predictability about  future shocks and hazards.

Yet, the pandemic has also brought home once more that the LDCs are  highly exposed to shocks and hazards while suffering from poor resilience systems.

Investing in building sustainable and comprehensive resilience systems in LDCs is not a luxury but a must.

Finally, allow me to alert you to a shared opportunity we have to put this into action.

We have embarked on the preparation of the Fifth UN Conference on LDCs to be held in Doha, Qatar from 23-27 January 2022.

Graduation will be a key priority in the deliberations and negotiations of the outcome of the LDC5.

In  preparation of the LDC5, OHRLLS, jointly with Bangladesh and ESCAP, is holding the Asia-Pacific Regional Review meeting in Dhaka tentatively from 22-26 April 2021. The primary focus is on how to make graduation sustainable. 

The outcome of Dhaka meeting, which is a Ministerial Declaration, will be an important building block for the next Programme of Action for LDCs.

So, I invite you all to actively participate in this meeting and contribute to its outcome.  

Thank you.