RESTRICTEDWORLD TRADE
ORGANIZATIONWT/COMTD/LDC/M/34
12 November 2003
(03-6054)
Sub-Committee on Least-Developed Countries
Thirty-Fourth Session
NOTE ON THE MEETING OF 2 OCTOBER 2003
Chair:  Ambassador Johan Molander (Sweden)
A. A DOPTION OF THE AGENDA ........................................................................................................1
B. T HE WTO W ORK PROGRAMME FOR LEAST -DEVELOPED COUNTRIES .......................................1
(i) Market Access for Least- Developed Countries...........................................................................1
(ii) Accession of Least- Developed Countries....................................................................................6
C. O THER BUSINESS ........................................................................................................................8
A. ADOPTION OF THE AGENDA
1. The Sub-Committee adopted the proposed agenda contained in document
WTO/AIR/2163/Rev.1.
B. THE WTO W ORK PROGRAMME FOR LEAST -DEVELOPED COUNTRIES
2. The Chairman recalled that since the adoption of the WTO Work Programme for LDCs
(WT/COMTD/LDC/11), progress had been made in implementing all the elements of the Work
Programme.  He noted that, in accordance with the mandate contained in paragraph 43 of the Doha
Ministerial Declaration, progress on "all issues affecting LDCs" had been highlighted in the report by
the Director-General to the Fifth Ministerial Conference (WT/MIN(03)/1).
(i) Market Access for Least-Developed Countries
3. The Chairman noted that in paragraph 42 of the Doha Ministerial Declaration, Ministers had
committed themselves to the objective of "duty-free and quota-free access" for LDCs and had agreed
"to consider additional measures for progressive improvements in market access for LDCs".  Several
Members, on an autonomous basis, had accorded preferential access to LDCs in their markets.
Additionally, some Members had notified these new or modified measures affecting market access for
LDCs.  In this regard, the Committee on Trade and Development (COMTD), at its 45th Session, had
forwarded a notification by Japan (WT/COMTD/N/2/Add.12) to the Sub-Committee for substantivediscussion and reporting back.  An introduction to this new measure had been provided to the
COMTD in May 2003.
4. The representative of Japan requested that this sub-item be retained on the agenda for the next
session of the Sub-Committee.  His delegation had presented its notification in May 2003, in the
COMTD.  Japan had also recently hosted the Tokyo International Conference on AfricanDevelopment (TICAD-III).  As many LDCs were in Africa, his delegation wished to include the
conclusions of TICAD-III in their presentation of this agenda item at the next meeting of the Sub-
Committee.WT/COMTD/LDC/M/34
Page 2
5. The Chairman urged Members to notify changes and improvements in market access for
LDCs.  This was important for the monitoring of improvements in LDC market access as mandated in
the LDC Work Programme.  He proposed that the Sub-Committee take note of the statement made
and revert to the notification by Japan in do cument WT/COMTD/N/2/Add.12, at its next meeting.
6. It was so agreed.
7. The Chairman invited Members to consider the Note by the Secretariat on LDC market access
contained in WT/COMTD/LDC/W/31 and TN/MA/S/11.  The note had been prepared to facilitate the
work of the Sub-Committee and focused on the elements for review and examination listed in
paragraph 7 of the WTO Work Programme for LDCs.  As the work of WTO negotiating bodies was
also of relevance, the document had been issu ed jointly by the Sub-Committee on LDCs and the
Negotiating Group on Market Access.
8. The representative of the WTO Secretariat said that WT/COMTD/LDC/W/31, built upon the
market access paper issued last year (WT/COMTD/LDC/W/28).  The structure of the paper as
mandated in the LDC Work Programme, examined some market access issues of interest to LDCs.
Section II of the paper looked at the export profile, examining the products of particular interest to
LDCs and the major markets in which they exported these goods.  The subsequent two sections
presented tariff and non-tariff measures.  In the context of tariffs, the tables examined market accessfor LDCs, including in relation to non-reciprocal prefer ences.  The tables outlined the extent to which
preferences differed from the most-favoured nation (MFN) tariff rates.  As the paper was jointly
issued with the Negotiating Group on Market Acce ss, the data on products, where possible, had been
sorted on a agricultural and non-agricultural basis to make it more amenable to discussion.
9. He noted that over the past few years, there had been considerable momentum towards
meeting the objective of duty-free and quota-free access for LDCs.  This momentum had been
apparent at the UN LDC-III Conference in Brussels in 2001, in the WTO Doha Ministerial and as a
target and indicator of the UN Millennium Development Goals.  While there had been a number of
recent initiatives by Members to improve LDCs' market access, there was often a gap between the
announcement of an initiative, the implementation of the initiative and when data on its impact
became available.  The latest tariff data that some Members had made available was for 2001 or 2002.
Initiatives that were announced in 2002 with an implementation in 2003, or initiatives that were
announced in 2003 were very difficult to take into account when data was not available.
10. He stated that on non-tariff measures, the paper examined utilisation of preferences based on
data from UNCTAD.  The paper examined the utilisation rates of the Generalized System of
Preferences (GSP) in four markets for which data was available.  He noted, that in some cases, an
LDC exporter could export its product into a market under a number of different preferential regimesand it was not the case that exporters relied solely on the GSP schemes.  Even in markets that granted
duty-free tariff preferences for all products originating from LDCs, not all eligible LDC imports
actually entered the market at the duty-free tariff level.  In some instances, the actual utilisation rate of
preferences was low.  The utilisation rate of preferences quoted in the literature was of the order of
thirty to forty-five per cent.  One of the reasons ci ted in the paper were the rules of origin provisions
that in some cases were specific to the preference scheme.
11. He said that in Section V, the paper examined the degree of preference margins in a selected
number of markets.  It examined whether the products of relevance to LDCs were among those in
which preference margins were significant, and also looked at the extent to which these preference
margins might be affected by commitments in the current round of negotiations.  No attempt had beenmade to estimate preference erosion.  With regards to data, he said that information on MFN and
bound rates was available as Members had an obligation to notify them.  However, as a paper on
market access for LDCs dealt with schemes that were not MFN based, the coverage depended on
Members providing the data.  In a number of markets, data was not publicly available, which made itWT/COMTD/LDC/M/34
Page 3
very difficult to study LDC market access.  In the context of non-tariff barriers (NTBs), the WTO
Secretariat in 2002 had solicited information from each LDC for the document
WT/COMTD/LDC/W/28, but the initiative was not very  successful.  He noted that an effort was
underway in the Negotiating Group on Market Access for Members to notify NTBs that were of
interest to them in the negotiations.  If better data on NTBs would be available with thesenotifications, the next LDC market access paper could examine specific non-tariff barrier issues.
12. The Chairman noted that apart from tariff and non-tariff barriers facing LDC exports, the
paper also tracked recent initiatives to improve market access for LDCs that had been announced by
WTO Members.
13. The representative of Bangladesh (on behalf of LDCs) said that the note covered a broad
spectrum of market access issues.  He commended the Secretariat for addressing issues such as:
limited markets, narrow export base, tariff peaks and tariff escalation facing LDC products, rules oforigin, and margin of preferences.  Though many developed and developing countries provided LDCs
preferential market access, the granting of preferences did not necessarily lead to the entry of these
products originating from LDCs.  This was because:  (i) preferences were often associated with
exceptions, which denied entry of products in which LDCs were competitive;  (ii) preferences were
associated with stringent rules of origin that diminished the utilisation of these preferences;  and(iii) preferences were associated with exceptions that were subject to tariff peaks.  He added that non-
tariff barriers were a cause of concern for LDCs. Rules of origin were a predominant cause of under-
utilisation of trade preferences.  In addition, ot her non-tariff barriers like anti-dumping actions or
stringent product standards also hampered access.  These issues had not been addressed adequately in
the paper.  Preferences were not able to guarantee effective benefits to LDCs as they had to beassociated with sufficient product coverage or suff icient preferential depth.  Many of the preferential
or GSP schemes excluded products in which LDCs had a comparative advantage.  Moreover, in the
context of the negotiations, the margin of preference s in favour of LDCs wo uld also be eroded.  He
stated that the case to be made for duty-free and quota-free market access for LDCs with flexible rules
of origin was strong.  It was a critical factor through which LDCs could industrialise rapidly.
14. He stated that Table 4 illustrated that Asian LD Cs were facing higher tariffs than other LDCs
in the United States market.  The United States GSP scheme excluded textiles and apparels, which
was one of the items that represented three-quarters of LDC exports.  LDCs, and in particular Asian
LDCs, were therefore not fully benefiting from the GSP scheme.  There was scope for improving
market access by expanding the product coverage of preferences in the United States.  He added that
similar tables could have been shown for the othe r Quad markets.  On preference utilisation, an
UNCTAD study had shown that the utilisation ratio in Quad markets in 2001 was 68.5 per cent.  If oilimports were dropped, the utilisation ratio would fall further.  The low degree of utilisation of
preferences indicated that there was scope for improvements in market access for LDCs.  He urged
Members to take positive measures to facilitate the exports of LDCs.
15. The representative of Canada welcomed the note on market access for LDCs.  Canada's new
market access initiative had, in the first seven months since 1 January 2003, resulted  in a 49 per cent
increase of LDC exports to Canada.  This increase in LDC exports included mainly fuels, apparel,
precious stones, fish and fish products.  During the same period  exports of the rest of the world to
Canada had declined by 0.22 per cent.  She sought cl arification on the total volume of trade of crude
oil that had been listed in Table 2, as it was thought to be significantly larger than what was indicated.
Furthermore, paragraph 13 stated that the United States had some statistics with regional breakdown.
She mentioned that Canada also collected these statistics, that were available publicly, but not free of
charge.  In Table 5, she sought clarification on the international tariff peaks attributed to Canada.  On
rules of origin, in paragraphs 21 and 22, she stated that reasonably stringent rules of origin could
increase the demand for domestic imports and encourage the development of domestic industry in
LDCs.  In the short run, they may reduce the ability of LDCs to export, but the overall effect oneconomic development would not necessarily be negative.WT/COMTD/LDC/M/34
Page 4
16. The Ambassador of Nepal thanked the WTO Secretariat for the Note.  Despite efforts to
diversify, the product and market base of LDCs continued to be heavily concentrated.  Table 1,
reflected the high concentration index and lack of diversification in many LDCs.  He urged
development partners to assist LDCs in their product and market diversification.  Further capacity
building was needed in many LDCs.  He requested trading partners of LDCs to take proactive steps toensure that non-tariff barriers were reduced.  It would allow LDCs to diversify and enhance their
share in the world market.
17. The representative of India stated that the note contained useful data and analysis on LDC
market access.  As his comments were preliminary, his delegation reserved the right to revert to the
paper at a later meeting.  Referring to Figure 1, he pointed to an inadvertent error in the marking of
the legends when referring to import penetration ratios.  He also sought further information on
Table 7, in particular regarding data sources and on the reference years for calculating the variableslisted.
18. The representative of the United States thanked the Secretariat for the note which was
relevant to the Sub-Committee and to the work of the Negotiating Group on Market Access.  As her
comments were preliminary, her delegation reserved th e right to revert to the paper at a later meeting.
Some difficulties with the data had been outlined and this accounted for the challenges in factoring
the AGOA programme into the analysis.  In paragr aph 15, it was notable that a number of developing
countries were markets for LDC products.  It was, therefore, important that a larger number of
countries provided duty-free and quota-free treatment or preferences for LDCs.  She suggested that
discussion on diversification of LDCs should focus on products as well as new markets.  On the issue
of low preference utilisation rates, it was recognised that rules of origin was a factor, but there werealso other factors affecting the utilisation rate of preferences.  Studies based on United States customs
data and requests for importation, had found that, countries were often not asking for GSP treatment.
There was a need for importers, as well as LDC exporters and LDC governments to ensure that GSP
treatment was requested.  Regarding the ongoing notification process on non-tariff barriers, she
clarified that WTO Members could notify the barriers that were affecting their exports.  Finally, shesaid that despite efforts to enhance market access for LDCs, programmes did not guarantee the use of
the preferences.  Work needed to be done with LDCs to expand their trade capacity.
19. The representative of the European Communities noted that Members continued to make
efforts towards the Doha Ministerial objective of duty-free and quota-free market access for LDCs.
The European Union was the largest market for LDC exports.  He suggested that measures should be
taken to diversify LDC exports to other markets and products.  In Table 10, the footnote referred to
only four new notifications and initiatives over th e last year.  New measures, including from those
outside the OECD, would give effect to the common objective of improving market access for LDCs.
Regarding Table 7, on utilisation rates, he said that countries sometimes preferred to import to the
European Union under non-GSP regimes.  ACP countries had the possibility to use the Cotonou
regime rather than the GSP scheme.  He sought clarification on whether Table 7, included trade in
items where the preferential rate was the same as the MFN rate, for example where the MFN rate waszero.  He concurred with Nepal, on the need for LDCs to diversify their exports by product and by
destination and for this technical assistance, capacity building and other initiatives by LDCs
themselves were important to develop a supply-side response.
20. The representative of Switzerland stressed the importance of regularly reviewing LDCs
market access.  She noted that market diversification had been enhanced since the last report.  Three
aspects of the note were of particular interest, namely:  (i) tariff escalation;  (ii) rules of origin; and
(iii) the erosion of preferences.  Tariff escalation was also raised in recent negotiations in the
agriculture sector.  It was a crucial issue for market diversification in low-income countries.
Recently, a study was launched on tariff escalation in the Swiss agriculture sector to examine the
potential protection of the Swiss food industry.  The study faced difficulties especially withmulti-component products.  This was because it was not sufficient to evaluate tariff wedges but ratherWT/COMTD/LDC/M/34
Page 5
one had to examine the effective rate of protection of an industry.  Moreover, she mentioned the need
to be aware of the composition of the final product  which could differ between producers.  Discussion
on methodology was needed to address the problem of tariff escalation.  She said that the definition of
rules of origin, especially as they related to special preferences for LDCs were also important.
Switzerland's rules of origin were closely linked to those of the European Community.  Sheacknowledged the relevance of erosion of preferences, although it was difficult to discuss this without
knowing the outcome of the ongoing negotiations.  Her delegation believed that solutions needed to
be discussed on a case by case basis, as circumstances and impact differed from one sector to another.
Preference margins could not be maintained forever.  Creative solutions were called for, such as to
enhance supply capacity, to allow markets and industries to adjust.  She suggested that if special
conditions were maintained for LDCs, they could also be extended to other low-income countries with
similar economic characteristics.
21. The representative of Senegal thanked the Secretariat for the Note.  Referring to Table 7, he
said that despite all the initiatives, the preference utilisation rates were still low.  Preferences affected
small and medium enterprises.  The supply capacity problem had to be addressed to raise the
utilisation rate of preferences.  For instance, in th e case of fisheries in Senegal, the European Union
had over the past few years supported capacity building efforts to enable the exporters of fisheriesmeet standards and export their products to the European Union.  The European Union had provided
these enterprises with a credit line which enabled them to adapt and export their fisheries products.
He called for studies to be carried out to make preference schemes more effective.
22. The representative of Mauritania thanked the Secretariat for the updated document on LDC
market access.  According to the tables on the use of preferences, few countries appeared to benefit
from the different schemes.  The reason for this was the lack of information.  In LDCs, the public
authorities as well as the entrepreneurs were not fully informed of the preference schemes that were
available to them.  He suggested that seminars or information sessions be organised by Members that
accorded preferences to LDCs.  The second issue was that preferences usually dealt with tariffs only
and they often did not address the problem of non-tariff barriers and rules of origin.  It was essentialto integrate these non-tariff aspects in the structure of preferences.  The third reason for low utilisation
of preferences was the lack of export diversification in LDCs.  The six-digit harmonized system,
included around 5,000 products.  If a country had only two or three products to export, the rate of
utilisation would be very low.  Finally, he called on Members for financial or other mechanisms to
offset the losses that would result from preference erosion in the ongoing negotiations.
23. The Secretariat in response to the comments said that data in Table 7, was sourced
exclusively from UNCTAD.  The year of reference in the table was 2001.  Countries had provided the
data to UNCTAD in different formats.  Some provided  it at the tariff line level, whereas others had
provided it at the HS-2 digit level.  He clarified that that table referred only to the GSP scheme and it
was possible that exporters could enter a particular market under a number of different tariff regimes.
With respect to Table 4, he said that only the United States had provided the data publicly and free of
charge.  The abbreviated product descriptions in Table 2, were of HS 6 digit tariff lines.  Reference tocrude oil in the table was an IDB abbreviation of an HS 6 digit tariff line.  On the tariff data, he
clarified that the LDC rate used was the one that applied to all 49 LDCs and this did not include the
preferential rates that some of the 49 LDCs enjoyed under other regionally-based programmes.  To
clarify the point raised by the United States on NTB notifications, he said that this implied that
Members notified the non-tariff barriers that they perceived that their exporters were facing.  Headded that as this notification process proceeded, the data made available would be useful for both
LDC and non-LDC market access analysis.  Finally, he said that it was difficult to compare LDCs'
import and export data in the annual studies.  Tr ade data had to be estimated since most LDC did not
report their data to COMTRADE.  Tariff data was from the IDB.
24. The Chairman proposed that the Sub-Committee take note
 of the document
WT/COMTD/LDC/W/31 and of the statements made.WT/COMTD/LDC/M/34
Page 6
25. It was so agreed.
26. The Chairman recalled that the Sub-Committee was mandated in paragraph 8 of the WTO
Work Programme for LDCs, to report each year to the COMTD on its monitoring and review of this
item. He proposed that these discussions be an element of the end of the year report to be compiled
and considered in the COMTD.
27. It was so agreed.
(ii) Accession of Least-Developed Countries
28. The Chairman stated that in line with the Doha Ministerial Declaration and the LDC Work
Programme, positive steps had been taken to "facilitate and accelerate" LDCs' accessions, with the
adoption of the Guidelines (WT/L/508).  As highlight ed in the Status Report of the Director-General
to the Fifth Ministerial (WT/MIN/03)/2), steps had been taken to implement these Guidelines.  A
result of these efforts was the accession of Cambodia and Nepal at the Fifth Ministerial Conference.This was a welcome and significant development as these two LDCs, following the ratification of
their accession instruments, would be the first to join the WTO under Article XII of the Marrakech
Agreement.  He added that apart from Cambodia and Nepal, there were eight other LDCs that were at
different stages in their WTO accession process.  Work remained to be done to advance or conclude
these accession negotiations.  He said that the WTO Secretariat had circulated JOB(03)/191 to updateMembers on the state of play of LDCs' accessions.
29. The Ambassador of Cambodia said that it had taken nine years to prepare for their accession.
The accession process was a long and difficult one for LDCs with limited resources and negotiating
capacity.  There was scope in accelerating this process.  He thanked those who had assisted Cambodia
in its accession.  Though there had been some debate on the costs and benefits of WTO Membership,the Cambodian negotiating team had been confident in its negotiations.  Cambodia, as the first LDC
to become a WTO Member, suggested that other acceding LDCs should recognise their economic
potential and level of human resource development.  There was a need to demonstrate that
international trade provided benefits to Members of the WTO.  Cambodia would monitor its trade,
investment and improvement in its human resources that could follow from its accession.  Cambodiasought increased technical assistance, as it still had further work to do to meet its transition deadlines
and fulfil its accession commitments.  Technical assistance had been effectively and efficiently
utilised in the past, in the context of the Integrated Framework.
30. The Ambassador of Nepal thanked the Sub-Committee and all its trading partners for their
support during the process of accession.  Nepal had spent eight years in the process of WTO
accession.  The accession process was lengthy, arduous and complex.  The process placed demands
on limited financial and human resources and also limited the use of policy instruments fordevelopment.  He suggested that LDCs should be offered a time bound accession package.  A target
of three years from the date of establishment of the Working Party or a maximum of three Working
Party meetings was suggested.  He stated that the adoption of the Guidelines was an important step to
facilitate the accession of LDCs.  WTO Membership was a means for economic development and not
an end in itself.  Since LDCs were vying for Membership, their commitments needed to becommensurate with their capacities.  He called for realistic and sufficient adjustment periods for
LDCs to assume obligations under the various WTO agreements.  This could be based on objective
criteria and in view of the limited human capacity of LDCs.  He said that Nepal would be a Member
shortly and this would present challenges and opportunities.  He urged all development partners to
technically and financially support Nepal as it sought to meet its accession commitments.  He lookedforward to the constructive role of the Sub-Committee to implement the Guidelines for accession.
This would assist the eight other LDCs in the process of accession, as well as to address the
challenges faced by the recently acceded LDCs in fulfilling their commitments.WT/COMTD/LDC/M/34
Page 7
31. The representative of Bangladesh welcomed the accession of Cambodia and Nepal to the
WTO.  They were the first two LDCs to accede to the WTO since 1995.  He said that the accession of
LDCs would strengthen the rules-based multilateral trading system.  The adoption of the Guidelines
was welcomed.  He hoped that Members would follow the Guidelines and support the eight other
LDCs in their process of accession.
32. The representative of the European Communities welcomed the accession of Cambodia and
Nepal.  Attention was drawn to advancing the eight other outstanding LDC accessions.  He assured
Members and acceding LDCs that his delegation would continue to apply the spirit and the letter of
the Guidelines agreed to in the Sub-Committee in December 2002.
33. The Ambassador of Uganda congratulated Cambodia and Nepal for concluding their
accession.  The experience of Cambodia and Nepal would be helpful to other acceding LDCs.  He
urged that the Guidelines be strictly adhered to for those LDCs that had not yet acceded to the WTO.
34. The representative of Ethiopia congratulated Cambodia and Nepal on their accession.  He
expected the accession of these two countries to mark  the beginning of a new era that would entail the
accession of other LDCs still waiting to accede.  Concern was expressed on the price paid for the
accession of these two LDCs and that it should not set a precedent for others.  He urged that the letter
and spirit of the Guidelines, as well as other decisions and resolutions such as the Modalities for thespecial treatment of LDCs in services negotiations, be fully implemented.
35. The representative of Canada welcomed the accession of Cambodia and Nepal.  On the listing
of acceding LDCs in JOB(03)/191, a more nuanced  list was suggested for the intermediate LDC
accessions, since only one of these LDCs had held a Working Party meeting.  If information was
available, it would be useful to indicate the status of "requests and offers" for each LDC as well as thetechnical assistance and capacity building required.  Given the points made by Cambodia and Nepal
regarding the length, difficulty and complexity of the accession process, further discussion could
streamline the accession process further.
36. The representative of Japan commended Cambodia and Nepal for concluding their accession.
He drew attention to the technical assistance and capacity building activities provided to acceding
LDCs through multilateral and bilateral schemes.  His delegation would continue to implement the
Guidelines and support LDCs through  their accession process.
37. The representative of the United States congratulated Cambodia and Nepal on their accession.
There was a need to build upon the technical assistance provided during the accession process to
ensure that the newly acceded Members could participate in the WTO effectively.  The accession
process though difficult contributed to a better understanding of the WTO.  The United States
remained committed to work on other LDC accessions.  Her delegation, through its bilateralassistance programs, was working with some acceding LDCs to prepare the initial documentation for
accession.  This would move some of these accessions forward.
38. The representative of India commended Cambodia and Nepal on their accession to the WTO.
He hoped that the Guidelines would be fully implemented to facilitate and accelerate the accession of
the other acceding LDCs to the WTO.
39. The Chairman requested the WTO Secretariat to take the comments made on JOB(03)/191
into account in future updates of the State of Play of LDCs' Accessions.  He counted on Members
continued support to activate or advance the ongoing LDC accessions.  The importance of technical
assistance and capacity building at all stages of the accession process was recognised and to be
supported.  He noted that paragraph 155 of the Working Party Report for Nepal (WT/ACC/NPL/16),
envisaged a role for the Sub-Committee with regard to transitional arrangements.  He proposed that
the Sub-Committee take note of the document Job (03)/191 and of the statements made.WT/COMTD/LDC/M/34
Page 8
40. It was so agreed.
C. OTHER BUSINESS
41. The Chairman proposed that the next formal meeting, the 35th Session of the Sub-Committee,
be convened on 8 December 2003.
42. It was so agreed.
43. In the absence of any other business, the meeting was adjourned.
__________