WORLD TRADE WT/LDC/HL/14
23October 1997
ORGANIZATION(97-4639)
High-Level Meeting onIntegrated Initiatives for
Least-Developed Countries 'Trade Development
MARKET ACCESS FOR LEAST-DEVELOPED COUNTRIES
1. Thisdocumentsurveysbordertraderestrictionsthataffecttheaccessofleast-developedcountries'
exports totheirtwenty-three main export markets (accounting for95percentoftheirexports). It
isintended toserve twopurposes: toprovide background information toAgenda ItemBoftheHigh-
Level Meeting ("Initiatives toImprove Market Access forLeast-Developed Countries"), andtoprovide
governments ofleast-developed countries andprivate business active inthesecountries withup-to-date
informationaboutborderrestrictionsthatapplyintheirmainexportmarkets.Tothatend,theAddendum
tothisdocument(WT/LDC/HL/14/Add.1)provideshighlydisaggregatedstatisticsontariffsandselected
non-tariff measures applied toleast-developed countries 'exports.
I. INTRODUCTION
2. Theresults oftheUruguay Round negotiations recognized thattheleast-developed countries
havespecificneedsintheareaofmarketaccessandthatcontinuedpreferentialaccessremainsanessential
means ofimproving theirtrading opportunities1.Itwasagreed that,totheextent possible, most-
favoured-nation (MFN) concessions ontariff andnon-tariff measures agreed intheUruguay Round
onproducts ofexport interest totheleast-developed countries could beimplemented autonomously,
inadvance andwithout staging, andconsideration would begiven tofurther improving Generalized
System ofPreferences (GSP) schemes andother schemes forproducts ofparticular export interest to
least-developed countries. Itwasagreed alsotokeepunder review thespecific needs oftheleast-
developed countries andtocontinue toseektheadoption ofpositive measures which facilitate the
expansion oftheirtrading opportunities.
3. AttheirfirstMinisterial Conference inSingapore inDecember 1996, WTO Members reiterated
theimportance theyattach toimproving market access fortheexports ofleast-developed countries
andproposed thefollowing initiatives asoptions forexamination2:
- Developed country Members anddeveloping country Members, onanautonomous basis, would
explorethepossibilitiesofgrantingpreferentialduty-freeaccessfortheexportsofleast-developed
countries. Inbothcases, exceptions could beprovided for.
1"Ministerial Decision onMeasures inFavour ofLeast-Developed Countries", TheResults oftheUruguay
Round ofMultilateral Trade Negotiations: TheLegal Texts (p.440-441)
2Comprehensive andIntegrated WTO PlanofAction fortheLeast-Developed Countries, WTO document
WT/MIN(96)/14WT/LDC/HL/14
Page2
- WTO Members should endeavour tomake use,when possible, oftherelevant provisions of
theAgreement onTextiles andClothing toincrease market access opportunities forleast-
developed countries.
- Whenever provided forintheWTO Agreements, Members maydecide toextend unilaterally
andonanautonomous basis certain benefits toleast-developed countries 'suppliers.
- WTO Members should pursue, onanautonomous basis, preferential policies andliberalization
undertakings inorder tofurther facilitate access totheirmarkets forleast-developed countries '
exports, suchasanearly implementation ofUruguay Round undertakings.
4. TheHigh-Level Meeting isadirect result oftheSingapore Ministerial Conference andan
opportunity totakestock ofthemarket access situation oftheleast-developed countries.
5. Both attheMarrakesh andSingapore meetings, itwasrecognized thatmarket access
considerations areneither thesolecause oftheweak export performance ofleast-developed countries
northeonlyareainwhich action isneeded toenhance theirtrading opportunities andtheirintegration
intothemultilateral trading system. TheUruguay Round results addressed thespecial needs ofleast-
developed country Members oftheWTO inavariety ofwaysandonabroad front: through exemptions
from, lower levels ofcommitment to,delayed implementation of,andmore flexible application of
WTO obligations; through accelerated liberalization intheirfavour byotherMembers; through making
available tothemsimplified procedures; through enhanced technical assistance; through theDecision
onMeasuresinFavourofLeast-DevelopedCountries;andthroughtheDecisiononMeasuresConcerning
thePossible Negative Effects oftheReform Programme onLeast-Developed Countries andNetFood-
Importing Developing Countries3.TheWTO PlanofAction fortheLeast-Developed Countries that
wasagreed inSingapore extends thescope foraction further andplaces itwithin thecontext ofa
comprehensive approach, bringing together national efforts andthose oftheinternational community
andencompassing appropriate macroeconomic policies andsupply-side measures4.
6. Improving market access isacknowledged, therefore, byWTO Members tobeonlyoneaspect
oftheefforts thatneedtobemade toassist theleast-developed countries. Ithas,nevertheless, an
important contribution tomake inenhancing theirexport performance. From documents prepared
fortheHigh-Level Meeting itwould appear that,while mostleast-developed countries feeltheirweak
export performance isattributable primarily tosupply-side constraints, many consider itresults also
from overseas market restrictions andlackofinformation about market access conditions and
opportunities5.Similarly, thesurvey ofprivate business opinion inleast-developed countries carried
outbyITCfortheHigh-Level Meeting points strongly tomarket access restrictions andinadequate
marketinformationasobstaclestoexportexpansion,andidentifiesthemasthemostimportantbottleneck
3Implementation oftheprovisions infavour ofleast-developed countries isregularly keptunder review in
theWTO Committee onTrade andDevelopment andinthevarious WTO Committees withresponsibility for
individual WTO Agreements.
4OtherdocumentspreparedfortheHigh-LevelMeetingaddresstheseissues:see,forexample,UNCTAD/ITC,
"Building theCapacity toTrade forLDCs" (WT/LDC/HL/4), World Bank, "Encouraging Investment in
Infrastructure: AnAction Programme" (WT/LDC/HL/10), andIMF, "Review oftheInternational andDomestic
Economic Policy Context inwhich Least-Developed Countries areOperating" (WT/LDC/HL/15).
5Seetheneeds assessments prepared bytheleast-developed countries, ofwhich afirstselection iscontained
indocuments WT/LDC/HL/12 andAdd.1 toAdd.12.WT/LDC/HL/14
Page3
tointernational business development inleast-developed countries afterlackofefficient trade support
services6.
7. Theneedofleast-developed countries foropenandpredictable access totheiroverseas export
marketswillincreaseassuccessfulpolicyreformsandcapacity-buildingleadthemtoincreasedproductive
efficiency, economic diversification andhigher, sustained realgrowth rates. Iftheprivate sector is
torespond effectively totheefforts ofleast-developed country governments andtheinternational
community toimprove supply-side conditions inthese countries, itsexpectations thatattractive and
stable market opportunities existwhich would warrant long-term investment must befulfilled early
on.Inacomprehensive andintegrated approach toresolving thetrade andtrade-related problems of
theleast-developed countries, nocomponent canberelegated tosecond place.
II. EXPORT PERFORMANCE OFTHE LEAST-DEVELOPED COUNTRIES
8. Trade isonlyasmall share ofeconomic activity inmostleast-developed countries: onaverage,
exports andimports account respectively forabout 9percentand16percentoftheirGDP, compared
with24percent and26percent fordeveloping countries asagroup. Theleast-developed countries '
exports havegrown farmore slowly thanworld trade overthepasttwenty years, andtheircollective
share ofworld merchandise exports hasconsequently declined from about 0.8percentin1980 to
0.46percentin1995, when theirexports werevalued atabout $23billion (Chart 1).Inthe1990s,
theannual growth invalue ofleast-developed countries 'exports hasaveraged lessthan2percent,
compared with8percent forworld trade asawhole. Ontheimport side,theparticipation ofleast-
developed countries intradeisequally marginal; theirtotalimport billin1995wasequivalent to0.7per
centofworld merchandise imports.
6"Principal Bottlenecks toInternational Business Development andtheRelated technical Cooperation Needs
ofLeast-Developed Countries: ABusiness Sector Perspective", WT/LDC/HL/3.WT/LDC/HL/14
Page4
9. Over60percentoftheleast-developed countries 'exports issoldindeveloped country markets,
mainly theEuropean Union, Japan andtheUnited States (Chart 2).Thirty-four percent issoldin
developing country markets, ofwhich themain ones(accounting annually for$150 million ormore)
areBrazil, China, Chinese Taipei, Hong Kong, India, Indonesia, Korea, Malaysia, Singapore, South
Africa, andThailand.
10. Theproduct structure oftheleast-developed countries 'exports isfamiliar andhaschanged
littleoverthepasttwenty-five years. Primary commodities, mainly minerals andtropical agricultural
products make upover70percentofthetotal. Most areexported asrawmaterials withverylittle
processing. Manufactured products (mainly textiles andclothing) constitute about 20percentofthe
least-developed countries 'exports inaggregate, buttheyaresignificant foronlyafewofthem, notably
Bangladesh.
11. Mostleast-developedcountriesaredependentuponaverysmallrangeofexportproducts,usually
justtwoorthree. About 75percentofleast-developed countries 'totalexports areaccounted forby
112products (classified atthe6-digit H.S. level), outofover5,000 thataretraded internationally.
Onaverage, thetopthree export commodities account forover70percentofeachleast-developed
country 'stotalexports, leaving them vulnerable tochanges indemand andprices onworld markets
andtoexogenous factors affecting domestic supply7.Onlyfiveleast-developed countries (Bangladesh,
Haiti, Laos, Madagascar andMyanmar) haveasignificantly more diversified export structure.
12. Except forafewproducts, least-developed countries account foraverysmall proportion of
world trade inthecommodities theyexport (Chart 3).In1995, theytraded inthree-quarters ofthe
7OECD, "Market Access fortheLeast Developed Countries: Where aretheObstacles?" OECD document
TD/TC(97)19, Paris, 1997.WT/LDC/HL/14
Page5
products entering world merchandise trade, butin90percentofthese theyaccounted forlessthan
1percentofworld exports, inmostcases substantially less.They account foroverone-third ofworld
exports inonly18ofthe5,000 products thataretraded internationally, ofwhich themostimportant
areunsorted rough diamonds, aluminium oresandconcentrates, wood intherough, andjuteandjute
products (Table 1).WT/LDC/HL/14
Page6
13. Thedependenceofleast-developedcountriesonexportsofanarrowrangeoflargelyunprocessed
primary commodities andrawmaterials, which aresusceptible toprice volatility onworld markets,
whose price andincome elasticity ofdemand islow,andwhose growth hasbeenfarmore sluggish
thanworld trade overall, isoneofthemainfactors hindering theirexport performance. Italsolimits
severely thestimulus thattheexport sector canprovide tothedomestic economy through backward
linkage activities. Ashasbeensuggested repeatedly inthepast,thediversification oftheireconomies
andoftheirexports, especially intomanufactures, isseenasthemost promising long-term solution
totheirincreased participation inworld trade. Itisfromthatperspective, asmuch asfromtheircurrent
economic situation, thatimprovements inmarket access opportunities forleast-developed countries
needtobeconsidered.
Table 1
Commodities forwhich Least-Developed Countries areMajor Suppliers onWorld Markets
H.S.
CodeProduct Exports
(inUS$1000)Market
Share
World* LDCs** (in%)
530310 Jute, andother textile bastfibres 56941 50671 88.98
90700 Cloves 24679 19702 79.83
71390 Dried leguminous vegetables, other 116694 82230 70.46
90500 Vanilla 111804 75761 67.76
10420 Live goats 40536 26697 65.86
130120 Natural gumarabic 151037 86167 57.05
330126 Essential oilsofvetiver 14985 8271 55.2
430130 Raw furskins oflamb 11335 5785 51.04
530710 Yarn ofjute, single 51876 25057 48.3
530720 Yarn ofjute, multiple orcabled 116418 55839 47.96
531010 Woven fabrics ofjute, unbleached 149599 69949 46.75
260500 Cobalt oresandconcentrates 37357 17005 45.52
440333 Wood intherough, other 775184 327639 42.27
630510 Sacks andbags, ofjuteorother textile bastfibres 83096 32073 38.59
560710 Twine, cordage, ropes, ofjuteorother textile bast
fibres33953 12849 37.84
710210 Diamonds, whether ornotworked, unsorted 1801387 661614 36.73
410310 Raw hides andskins, ofgoats orkids 44260 14823 33.49
260600 Aluminum oresandconcentrates 1032742 341170 33.03
*World exports arefigured forthe35leading exporters reporting inHarmonised System chapters for1995.
**Least-developed countries 'exports arecalculated onthebasis oftheimports reported bythesame 35markets.
Source: UNStatistical Database (COMTRADE)WT/LDC/HL/14
Page7
III. MARKET ACCESS CONDITIONS FORLEAST-DEVELOPED COUNTRIES 'EXPORTS
Tariffs
14. Theoverall unweighted average applied tariff facing least-developed countries 'main exports
intheirtwenty-three main export markets is10.6percent8.Intheirdeveloped county markets, the
average is1.8percent; intheirdeveloping country markets itis14.5percent. These averages will
bereduced following fullimplementation oftheresults oftheUruguay Round negotiations.
15. When aggregated together, about seventy percentoftheproducts (reported bytariffline)that
areimported intodeveloped country markets fromleast-developed countries enterfreeofduties, either
under bound MFN tariffs (about 30percent)orunder GSPorspecial least-developed country preference
schemes(seetablesinWT/LDC/HL/14/Add.1).However,thepicturevariesfromonedevelopedcountry
market toanother. Certain offer preferences onanextensive range ofproducts under regional
arrangements orother schemes (e.g., theLomé Convention), which insome cases provide virtually
unrestricted access forthebeneficiaries totheirmarkets. Some others offerpractically notariff line
from among theproducts which represent theirmain imports from least-developed countries thatis
entirely freeoftariffs orspecific duties. Although formany products thelevelofdutyfaced byleast-
developed country exports issmall andisunlikely toaffect market access significantly, products they
export which continue tofacerelatively highapplied tariffs (over 5percent) indeveloped country
markets arebeef, asparagus, cigarettes, processed wood, clothing andfootwear (Chart 4).Together,
these account forabout 10percentofleast-developed countries 'totalexports todeveloped country
markets, andforsomeindividual least-developed countries theyaccount forasubstantially higher share.
16. Seven ofthedeveloping countries covered bythisstudy provide tariff preferences onsome
products under theGeneralized System ofTrade Preferences (GSTP), which benefit exports fromleast-
developed countries (seetables inWT/LDC/HL/14/Add.1). Some provide preferential market access
alsounder regional trade arrangements, which benefit certain least-developed countries. Products on
which least-developed countries continue tofacerelatively highapplied tariffs (over 25percent) in
theirmain developing country export markets arebeef, certain tropical fruits, black tea,sorghum,
groundnuts, sesamum seeds, rawcanesugar, sparkling wines, cigarettes, andclothing (Chart 4).
Together, these products account forabout 35percentofleast-developed countries 'totalexports to
developing country markets, andforasubstantially higher share ofexports forsome individual least-
developed countries.
17. Inbothdeveloped anddeveloping country markets, tariffs tendtobehigher onprocessed than
onprimary commodities, resulting intariff escalation. Tariff escalation willdecline significantly
following fullimplementation ofUruguay Round commitments, butitwillstillpersist tosome extent
formany product chains9.Chart 5shows theescalation ofcurrent applied tariffs forwood products
andfortextiles andclothing, which areofsignificant current orpotential export interest toseveral
least-developed countries. These profiles arecharacteristic ofother product chains ofexport interest
tothem, notably fishandfishproducts andleather andleather products. Theyareofparticular relevance
asobstacles toefforts byleast-developed countries todiversify theirexports intohigher value-added
(andparticularly manufactured) products andtoengage insustained export-led growth.
8Thetwenty-three markets accounted forabout 95percent ofleast-developed countries 'exports in1995.
9OECD, opcit,1997WT/LDC/HL/14
Page8
WT/LDC/HL/14
Page9
Chart 5:Tariff Escalation inWood andTextile Products
WT/LDC/HL/14
Page10
18. Anissuewhichhasattractedconcernfromthepointofviewofleast-developedcountries'exports
istheerosion ofmargins ofpreference thatisoccurring asaresult ofthegeneral lowering oftariffs
indeveloped country markets astheresults oftheUruguay Round negotiations areimplemented.
UNCTAD hascalculated that,onatrade-weighted basis, fullimplementation oftheUruguay Round
tariff cutswillresult inanestimated overall lossofpreference margins forleast-developed countries '
products ofabout 8percentage points forCanada, 3percentage points fortheEuropean Union and
Japan, and2percentage points fortheUnited States10.Calculations bytheOECD Secretariat confirm
thelossofpreference margins11.
19. Theeffects ofpreference erosion should notbeexaggerated12.While theimpact isnodoubt
being feltbyleast-developed countries, particularly forcertain products, several factors havebeen
advanced tosuggest thatitseffect ontheirtrade islikely tobelessimportant thancrude calculations
would suggest13.Themainoneisthat,historically, theutilization ofpreferences hasbeenlimited by
supply-side constraints andbyconditions attached tothegranting ofthepreferences, notably origin
rulesandinsome cases procedural complexities which least-developed countries havefound difficult
tomeet. Other measures affecting imports (such asproduct standards) which least-developed countries
finddifficult tocomply withcanalsolimit theextent towhich benefits canbederived from tariff
preferences. Inaddition, tariff preferences havenotbeenoffered bysome developed countries on
products which areofparticular current orpotential export interest toleast-developed countries. Finally,
itisworth recalling thatthepurpose ofpreferences isatleastasmuch toallow beneficiaries tocompete
onmore equal terms withproducers inthepreference-giving country asitistoprovide them witha
competitive advantage overother foreign suppliers.
20. Asnoted intheresults oftheUruguay Round negotiations, continued preferential access remains
anessential means ofimproving thetrading opportunities ofleast-developed countries. However,
preferences should beviewed asatransitional opportunity which beneficiaries should endeavour to
takefulladvantage of(andbeenabled totakefulladvantage ofthrough simple andtransparent
procedures) intheshort-term. Inthelonger-term, least-developed countries 'bestinterests, aswell
asthose ofothermembers ofthemultilateral trading system, aremorelikely tobeserved byguaranteed,
non-discriminatory andopenaccess tothemarkets oftheirtrading partners.
Quantitative Restrictions andOther Non-Tariff Measures
21. Oneofthemostsignificant results oftheUruguay Round hasbeenthereduction andinmany
casestheremoval ofquantitative import restrictions andothernon-tariff measures affecting merchandise
trade, many ofwhich haveacted inthepasttolimitleast-developed countries 'exports. Chart 6shows,
onthebasisoffrequency ratios, theextent towhich quantitative restrictions andcertain other non-tariff
measures (import quotas, tariff quotas, non-automatic import licensing, prior authorization, import
monitoring andsurveillance, statemonopolies, statetrading andcanalised imports) arecurrently applied
10UNCTAD, "The Least-Developed Countries", 1996 Report
11OECD, opcit,1997
12SeeOECD, opcit,1997, forareview oftheeconomic arguments forandagainst preferences.
13UNCTAD, Ibid, 1996. Arecent OECD Secretariat calculation suggests, asanorder ofmagnitude, that
theoverall effect oftheerosion oftheEuropean Communities 'preferences onimports from theACP countries
under theLomé Convention could amount tobetween 1percent and5percent ofthese countries 'annual export
earnings (OECD, opcit,1997).WT/LDC/HL/14
Page11
tothemainproducts exported byleast-developed countries intheirprincipal export markets14.Based
onthemeasure offrequency ofapplication, least-developed countries havea6.2percentprobability
thattheirexportswillencountersomeformofnon-tariffmeasureintheirmaindevelopedcountrymarkets
andabout a16.5percentprobability intheirmain developing country markets. Chart 6shows also
thatproducts forwhich theincidence ofnon-tariff measures ishighest correlate closely withthose where
theleveloftariffs isalsohighinboththeirdeveloped country anddeveloping country markets.
22. Quantitative restrictions andothernon-tariff measures cancreate aparticularly serious obstacle
toexporters fromleast-developed countries because oftheirmorelimited means forgaining information
about themeasures andmeeting theprocedural requirements thatareinvolved. Thesame goesfor
origin requirements inthecaseoftariffpreferences. From theleast-developed countries 'pointofview,
thegeneralruleaboutoverseasmarketaccessrestrictionsislikelytobethesimplerandmoretransparent,
thebetter.
Other measures
23. Thedocuments prepared byleast-developed countries inthecontext oftheHigh-Level Meeting
report thattheirexporters frequently haveparticular difficulty inmeeting technical regulations, product
standards, andsanitary andphytosanitary measures intheirmainexport markets, andthattheyregard
these asoneofthemainobstacles theyfaceinexpanding anddiversifying theirexports. Animportant
aspect ofthetrade-related technical assistance requested bymany least-developed countries is
strengthening theirinstitutional capacity tomaintain product quality andtotestandcertify products
tointernational standards forexport.
IV. CONCLUSIONS
24. Itisnotthepurpose ofthisdocument toarrive atanoverall judgement onthemarket access
situation forleast-developed countries. Meaningful statements caninanycasebemade by-and-large
onlyatadisaggregated levelforspecific products fromspecific least-developed countries intospecific
export markets, andthetables inWT/LDC/HL/14/Add.1 aimtoprovide information inthisregard.
25. Inthelightoftheagreements reached byWTO Members inMarrakesh andinSingapore
regarding positive measures thatcanbetaken toimprove market access conditions infavour ofleast-
developed countries, thefollowing points maybefound helpful:
- While developed countries arethelargest trading partners oftheleast-developed
countries, developing countries arealready important markets forleast-developed
countries 'exports andtheirimportance islikely toincrease;
14Frequency ratios donotindicate necessarily therestrictive effect ofameasure ortheextent towhich exports
byleast-developed countries areconstrained. Thisisbestunderstood inthecaseofanimport quota, which may
exercise aprohibitive effect onimports ifitissetataverylowlevel ornotaffect imports atallifitissetvery
highandisconsequently notfilled.WT/LDC/HL/14
Page12
WT/LDC/HL/14
Page13
- Improved market access conditions forleast-developed countries willbecome
increasingly relevant asaction istaken tocorrect thesupply-side constraints thatat
present arelimiting theircapacity toproduce forexport;
- Preferential access forleast-developed countries 'exports hasanimportant roletoplay.
Toenable theleast-developed countries tobenefit tothemaximum, preference schemes
should besimple andtransparent. Theconditions attached tothemshould beapplied
flexibly. Withregard torulesoforigin, consideration could begiven toallowing for
product cumulation;
- Preference schemes could bestructured insuchawayastoencourage least-developed
countries todiversify theirexports intohighvalue-added, processed andmanufactured
products;
- Where least-developed countries account forasignificant share ofworld exports of
particular products, consideration could begiven bytheirmain trading partners to
reducing and,where possible eliminating, tariffs onabound MFN basis. Thiswould
minimize theriskofpreferences infavour ofleast-developed countries diverting trade
from other low-income suppliers ofthesame products;
- Non-tariff border measures cancause particular difficulties forleast-developed country
suppliers. Inkeeping withtheproposal made intheWTO PlanofAction fortheLeast-
Developed Countries that"WTO Members should endeavour tomake use,when
possible, oftherelevant provisions oftheAgreement onTextiles andClothing to
increase market access opportunities forleast-developed countries", WTO Members
mayalsowishtoconsider removing quantitative import restrictions onproducts of
particular export interest toleast-developed countries attheearliest opportunity,
particularly where least-developed country suppliers account foronlyasmall share
ofthedomestic market;
- Highpriority could begiven toassisting least-developed countries tobuildthenecessary
domestic institutional capacity tomeet technical regulations, product standards and
sanitary andphytosanitary measures which theyencounter intheirmainexport markets.