WT/GC/W/806  
 
17 November 2020  
(20-8250) Page: 1/7 
General Council  
16-17 December 2020  Original: English  
 
COMMUNICATION FROM CHAD ON BEHALF OF THE LDC GROUP  
TO THE GENERAL COUNCIL  
 
The following communication , dated 16 November 2020 , is being circulated at the request of the 
delegation of Chad on behalf of the LDC Group.  
 
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LDC GRADUATION FACT SHEET  
THE LDC CATEGORY IN A NUTSHEL L 
1. LDCs suffer from common structural challenges including low income levels, high vulnerability 
to external shocks, and weak human assets. In turn, these handicaps hamper LDC productive  
capacities, trade performances and development prospects.  
2. The definition of LDCs is based on three criteria developed and regularly reviewed by the 
Committee for Development Policy (CDP) - a subsidiary advisory body of the United Nations 
Economic and Soc ial Council (ECOSOC).  
3. These include the Gross National Income (GNI) per capita, the Human Asset Index (HAI) and 
the Economic Vulnerability Index (see figure 1 for a list of indicators used to measure these criteria) . 
Figure 1: LDC criteria as of the 2018 triennial review  
 
 
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  Inclusion in and graduation f rom the LDC category  
4. Countries are eligible to enter or leave the LDC category if they meet the inclusion or 
graduation thresholds defined by the CDP.  
5. To be included, a country must meet each of the three inclusion criteria during one triennial 
review and its population must be lower than 75 million.  
6. To graduate, a country must meet at least two of the three graduation thresholds in two 
consecutive triennial reviews. Countries can also graduate based on the income -only criteria if their 
GNI per capita is at least twice the gr aduation threshold in two consecutive reviews.  
Table 1: Inclusion and graduation thresholds as defined by the 2018 Review  
Criteria  Inclusion Threshold  Graduation Threshold  
Gross national income 
(GNI) per capita  Three -year average of 
GNI per capita lower 
than USD 1 ,025  Set at 20% above the inclusion threshold: USD 1 ,230  
The income only graduation threshold is twice the 
graduation threshold: USD 2'460 or above  
Human Asset Index (HAI)  60 or below  Set at 10% above the inclusion threshold: 66 or 
above  
Economic Vulnerability 
Index (EVI)  36 or above  
 Set at 10% below the inclusion threshold: 32 or 
below  
 
Figure 2: LDCs performance under the three criteria in the 2018 review  
 
 
 
 
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Source:  Elaboration based on data by the UNCDP available at: https://www.un.org/development/desa/dpad/  
least-developed -country -category/ldc -data-retrieval.html  
 
The Graduation Process  
7. The Istanbul Programme of Action (IPoA) for the period 2011 -2021 sets, for the first time, the 
goal of "enabling half the number of least developed countries to meet the criteria for graduation by 
2020". 
8. When an LDC meets the graduation criteria for two consecutive triennial reviews, the CDP 
may recommend it for graduation based on an ex-ante impact assessment, a vulnerability profile 
and taking into account the position of the country concerned.  
9. Once endorsed by the ECOSO C, the UN General Assembly (GA) takes note of the CDP 
recommendation and the graduation becomes effective three years later.  
10. Under exceptional circumstances, the General Assembly may grant an additional transition 
period during which the country remains i n the LDC category.   
11. Currently 12 LDCs are scheduled for graduation  and another 13 have already met one 
criterion  in the 2018 triennial review and may soon become eligible to graduate.  
Table 2: Schedule for graduating LDCs  
LDC Expected year of 
graduation  Graduation criteria met  
GNI per 
capita only  GNI per 
capita  HAI EVI 
Vanuatu  2020 X X X  
Angola  2021 X X   
Bhutan  2023  X X  
Sao Tomé and Principe  2024  X X  
Solomon Islands  2024  X X  
Bangladesh  2024  X X X 
Lao PDR  2024  X X  
Myanmar  2024  X X X 
Nepal  2024   X X 
Timor Leste  2024 X X X  
Tuvalu*  Not scheduled  X X X  
Kiribati*  Under review  X X X  
* Not WTO Members or observers.  
Source: UNCDP . 
 
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  Table 3: LDCs meeting one graduation criterion in the 2018 triennial review  
GNI EVI HAI 
Djibouti  Democratic Republic of the Congo  Cambodia  
Comoros  United Republic of Tanzania   
Zambia  Togo  
Sudan  Guinea   
South Sudan  Haiti  
Lesotho  Uganda   
Source: UNCDP . 
 
International Support measures  
12. To help overcome their structural impediments, LDCs benefits from specific international 
support measures (ISM) targeting their handicaps and vulnerabilities.  
13. In the area of trade, these include, among others, enhanced technical assistance, preferential 
market access and special and differential treatment (S&DT) provisions in WTO rules.  
14. While graduation represents a significant achievement, leaving the LDC category also implies 
that graduating countries lose access to the LDC -specific ISM, which contribut e to their socio -
economic development.  
15. This has prompted calls for supporting graduating countries with additional targeted measures 
after losing their LDC status as an incentive to graduate and enable them to adjust to their new 
status.  
A "smooth transition " to facilitate graduation  
16. In recognition of this need, the UN General Assembly  introduced the principle of 'smooth 
transition '1 to ensure that graduation does not cause disruption in the development progress of the 
country concerned.  
17. In partic ular, the GA calls for LDC -specific ISM to be phased out in a gradual and predictable 
manner following the final exit of countries from the list.  
18. The COVID -19 outbreak significantly reinforces the need for such a smooth graduation process 
as the pandemic risks undoing many of LDCs ' development achievements so far (see box 1).  
19. To date, there is no clarity on the length of time for the transition period. Furthermore, smooth 
transition arrangements lack formal and binding procedures that are applicab le to all LDC -specific 
ISM across the board2. 
20. In practice, the extent to which LDCs can retain access to relevant ISM depend therefore on 
their ability to negotiate ISM extensions bilaterally or multilaterally with development and trade 
partners.  
 
1 For further details, see UN resolution A/RES/59/209; A/RES/65/286; or A/RES/67/221.  
2 See Tesfachew, T. (2018). Support for post -graduation soft -landing of LDCs: Implications in the context 
of the WTO. Geneva: CUTS International, Geneva.  WT/GC/W/806  
 
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"Smooth graduation " in the WTO context  
21. Paragraph 16 of the General Assembly Resolution adopted on 21 December 2012 on smooth 
transition for countries graduating from the list of least developed  countries  (A/RES/67/221) focuses 
specifically on trade -related ISM and invites all Members of the WTO:  
 "to consider extending to graduated countries the existing special and differential treatment 
measures and exemptions available to least developed cou ntries for a period appropriate to 
the development situation of the country ". 
 
22. Paragraphs 17 and 18 of the same Resolution also invite the trading partners of LDCs to 
establish procedures for extending or phasing out preferential market access, and LDC -specific funds 
to continue providing technical assistance to graduated countries over a certain period of time.  
23. In practice - with the exception of the Enhanced Integrated Framework (EIF) - there are no 
formal WTO procedures for smooth transition.  
24. After leav ing the category, graduating countries would normally lose access to all trade -related 
support measures and flexibilities granted to them, unless they request a waiver which must be 
approved by the whole membership. This puts graduating LDCs in a difficult  situation, not least given 
their economic vulnerabilities and their limited negotiating capacity.  
Trade -related international support measures (ISMs) in favour of LDCs  
25. Trade -related ISM can be broadly organized under three categories:  
• Unilateral trade pr eferences in favour of LDCs  (e.g. in the form of duty -free quota 
free (DFQF) market access or through the WTO services waiver).  
• Most developed Members and a growing number of developing Members have 
implemented DFQF schemes covering all or nearly all tariff lines with only a few 
exceptions.  
• Empirical analysis shows that LDCs use and benefit significantly from DFQF schemes 
when the se provide a comprehensive product coverage combined with flexible rules of 
origin3.  
• Most preferential schemes do not include any specific smooth transition or phasing out 
mechanism for graduated LDCs.  
 
3 See Klasen S., I. Martínez -Zarzoso, F. Nowak -Lehmann and M. Bruckner (2016) "Trade preferences for 
LDCs. Are they effective? Preliminary econometric evidence. CDP Policy Review Series. United Nations, New 
York, or Elliot, K.A. (2015) "Trade Preferences for the Least Deve loped Countries: Opportunities Not Panaceas". 
E15 Initiative. Geneva: International Centre for Trade and Sustainable Development (ICTSD) and World 
Economic Forum.  Box 1 : LDC Graduation and the COVID -19 Pandemic  
 
According to UN/DESA, the COVID -19 pandemic threatens to undo many of LDCs’ progress achieved 
towards sustainable development over recent decades. As of mid -October 2020, the WHO reported 
nearly 880 ,000 cases and  more than 15 ,000 deaths affecting LDCs. By putting national health 
systems under stress, the virus affects graduating LDCs performance under the Human Asset Index. 
Exports are also likely to face sharp declines. Prices for primary commodities have already  gone 
down, as have revenues from tourism or remittances. Finally, manufactured goods have suffered 
from disruptions in value chains, for example in sectors like textiles and clothing. All these impacts 
will affect jobs, income and savings in graduating LD Cs and will be reflected in increased economic 
vulnerability and declines in GNI. Some LDCs may opt for delaying their graduations under those 
circumstances but for those who decide to go ahead, the risk of falling back into the LDC category 
may be signifi cant in the absence of effective smooth transition measures.  WT/GC/W/806  
 
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  • Only the EU and Turkey provide a transition period of at least 3 years from the date 
of graduation and, in the case of the EU, additional periods have been granted in the 
past.  
• Special and differential treatment in WTO Agreements and relevant decisions  
• A recent report on "Trade impacts of LDC graduation " published jointly by the WTO 
and the Enhanced Integrated Framework (EIF) provides a detailed overview of the LDC 
specific S&DT provisions in WTO Agreements and relevant Ministerial or General 
Council Decisions4.  
• While some of these provisions are in the form of best endeavour provisions, several 
are potentially significant from a development perspective.  
• These include, the extension of the implementation periods of the TRIP S agreement, 
the right to maintain and allow time limited measures deviating from TRIMS 
obligations, or the goods and services benchmarks under the accession decision.  
• LDCs also enjoy some flexibility in terms of frequency of WTO notifications, for 
example, in the area of domestic support notifications.  
• Most of these provisions are the  result of decisions, by the General Council or the 
Ministerial Conferences, taken after 1994. Any smooth transition arrangement in the 
WTO should therefore also include Ministerial, General Council, and other relevant 
decisions in addition to S&DT provisi on in WTO agreements.  
• LDC-specific technical assistance facilities and funding mechanism  
• The main channel of LDC -specific support is the Enhanced Integrated Framework (EIF).  
• Other facilities include, the Standards and Trade Development Facility (STDF), whi ch 
requires lower co -financing requirement from LDCs for technical assistance, or WTO 
programmes targeting LDCs such as the Geneva -based Introduction Course for LDCs.  
• So far, only the EIF allows for smooth transition arrangements, with graduated 
countries having access to EIF benefits for a period of five years after leaving the LDC 
category.  
Conclusion  
26. LDCs leaving the category will lose access to most trade -related support measures, and this 
may hamper their sustainable graduation.  
27. While they may ask for  a time -limited waiver under certain WTO obligations, this request will 
have to be accepted by the rest of the WTO membership.  
28. Such process is particularly burdensome for LDCs with limited negotiating capacities and 
leverage in international negotiations.   
29. Given the potentially high cost associated with the loss of key trade -related ISM at a time 
where the world is affected by a global pandemic, it is not surprising that several LDCs have been 
reluctant to graduate.  
30. Addressing this concern in the WTO could  consist in securing ex ante,  that LDC specific support 
measures would continue to apply after graduation for a certain amount of time, to be negotiated, 
and would be phased out progressively.  
 
4 See tables 39 and 40 available at 
https://www.wto.org/english/news_e/news20_e/rese_08may20_e.pdf . WT/GC/W/806  
 
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  31. Such an approach would be consistent with UN resolution A/RES/ 67/221.  
32. It would also enhance predictability and confidence for those LDCs about to graduate.  
33. In practice it will be difficult to establish a hierarchy among LDC -specific ISM provisions and 
decide ex ante  which one should be extended or discontinued.  
34. For this reason, an ex ante  extension of LDC specific provisions should cover all LDC specific 
S&DT provisions in WTO Agreements, and any Ministerial, General Council or other Relevant WTO 
Decisions and benefit equally all graduating LDCs.  
35. It would represent a significant deliverable for LDCs and send a strong signal in support of 
LDCs by the multilateral trading system.  
 
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