RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/COMTD/LDC/M/41 
5 September 2005 
 (05-3851) 
Sub-Committee on Least-Developed Countries 
Forty-First Session  
 
 
 
NOTE ON THE MEETING OF 8 JULY 2005  
 
Chairperson:  Ambassador Ian de Jong (Netherlands)  
  
A.
 ADOPTION OF THE AGENDA ........................................................................................................1  
B. WTO  WORK PROGRAMME FOR LEAST -DEVELOPED COUNTRIES ..............................................1  
(i) Market Access for Leas t-Developed Countries...........................................................................2  
- Options for least-developed countries to impr ove their competitiven ess in the textiles 
and Clothing business (W T/COMTD/LDC/W/37) ......................................................................2  
- Briefing by the Secretariat on the next a nnual review of market access for products 
originating from least-developed countries ..............................................................................11  
(ii) Trade-Related Technical Assistance and Capacity-Building Initiatives for Least-Developed Countries...................................................................................................... .11
 
- Assistance to address supply-side constraints (WT/COMTD/LDC/W/33/Add.1) .....................11  
C. PREPARATIONS FOR THE SIXTH WTO  MINISTERIAL CONFERENCE ..........................................12  
- Arrangements to facilitate the participation of least-developed countries:  Briefing by 
the Secretariat................................................................................................................ ...........12  
D. OTHER BUSINESS ......................................................................................................................14  
 
 
  A. A
DOPTION OF THE AGENDA  
1. The Chairman  congratulated the least-developed coun tries (LDCs) for the successful meeting 
of their Trade Ministers held in Livingstone, Za mbia, from 25 to 27 June 2005.  He expressed deep 
condolence to the Government and the people of the United Kingdom in light of the tragic events that 
took place in London on 7 July.    
2. The Sub-Committee adopted  the draft agenda contained in document WTO/AIR/2605/Rev.1. 
B. WTO  WORK PROGRAMME FOR LEAST -DEVELOPED COUNTRIES  
3. The Chairman  said that he would focus on two elements of the Work Programme, namely:  
market access for LDCs;  and trade-related techni cal assistance and capacity -building initiatives for 
LDCs. WT/COMTD/LDC/M/41 
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 (i) Market Access for Least-Developed Countries 
- Options for least-developed countries to impr ove their competitiveness in the textiles and 
Clothing business (WT/COMTD/LDC/W/37) 
4. The Chairman
 recalled that at its 39th Session held on 20 January  2005, the Sub-Committee 
mandated the Secretariat to prepare a paper that wo uld look into options for LDCs to improve their 
competitiveness in the textiles and clothing business in  the light of the termination of the Agreement 
on Textiles and Clothing (ATC).  Based on the terms of reference, agreed at that meeting, the 
Secretariat had prepared a document contained in WT/COMTD/LDC/W/37.  He said that the Secretariat Note discussed programmes of the IMF a nd the World Bank, looked at technical assistance 
and capacity-building programmes, examined n on-reciprocal preference schemes offered by 
developed countries, analyzed the link between rul es of origin and utilization of preferences and 
explored other means to tackle constraints affecti ng LDC exports.  He clarif ied that the document was 
based in part on information sought from Memb ers which had had an influence on the date of 
circulation of the document. He invited the Secretariat to introduce its note. 
5. The representative of the Secretariat
 introduced the note.  He recal led the mandate of the note:  
"Fully respecting the basic principles and rules of the WTO and rights and obligations of the 
Members, the WTO Secretar iat will prepare a paper that will l ook into options for LDCs to improve 
their competitiveness in the textiles and clothing business, namely coherence programmes of IMF and 
World Bank, more flexible rules of origin, tech nical assistance and capacity building, bilateral 
cooperation programmes and other means to tackle cons traints affecting LDCs' exports".  He said that 
the outline of the note followed those terms of re ference.  It included an introduction containing a 
summary of the main results, information on c oherence programmes of the IMF and World Bank 
Group, information on all programmes and projects relating to trade-related technical assistance 
(TRTA) including the Integrated Framework (IF), an analysis of preference schemes offered by six developed country Members namely Australia, Cana da, the EC, Japan, Switzerland and the US and a 
section on other means which looked at access to developing country markets and supply-side 
constraints.  He then summarized some of the main results of the study section by section.   
6. He said that the overview of World Bank proj ects and programmes revealed that the World 
Bank Group did not have a global strategy to ad dress post-ATC adjustment problems in LDCs.  
Projects and programmes were elaborated on a countr y-by-country basis, which typically were not 
sector-specific.  He pointed out that the privat e sector development (PSD) framework provided the 
broad framework under which the World Bank supported governments' efforts in enhancing 
competitiveness including in the textiles and clothing sect or.  He said that with the exception of Haiti, 
all LDCs with a significant textiles and clothing sector had benefitted from trade-related analytical 
work.  In all those LDCs, except Lao PDR and Nepa l, PSD projects were bei ng planned or were under 
implementation or had been completed in recent years.  Where these were not done or planned, measures of particular importance to the textiles an d clothing sector could be prioritized.  He noted 
that the IMF had introduced the Trade Integratio n Mechanism (TIM) in April 2004 to assist its 
Members in meeting balance-of-payments shortf alls that might result from multilateral trade 
liberalization.  He added that TIM was not a sp ecial lending facility but a policy mechanism designed 
to make resources more predictably available unde r existing IMF facilities.  So far Bangladesh was 
the only LDC that had made use of financial suppor t under the TIM.  He pointed out that several 
highly textiles and clothing depende nt LDCs were not currently engaged in an IMF programme and 
did not have access to the TIM.  These LDCs mi ght consider the possibility of negotiating a 
programme with the IMF.   
7. He continued by saying that Section III of the note focused on TRTA and capacity-building 
projects.  A significant part of TRTA was analytic  work.  Such work was crucial for developing 
coherent strategies for the textiles and clothing sector  in line with global pove rty reduction plans.  He  WT/COMTD/LDC/M/41 
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 noted that the majority of LDCs with an important  textiles and clothing sector had developed a sector 
strategy with the assistance from technical-assistance providers.  The section also presented other categories of assistance such as training programme s for officials and labour force, how to enhance 
access to information and programmes for the promotion of exports.   
8. As regards the IF, he said that few LDCs had chosen to use the scheme to address some of 
their needs in the textiles and clothing sector.  Seve ral LDCs had not sought priority assistance in the 
textiles and clothing sector in their Action Matri ces, which were part of the Diagnostic Trade 
Integration Studies (DTISs).  He said that effec tive follow-up to the DTIS was critical as it involved 
translation of findings of the studies into concrete actions.  It was up to the LDCs to engage their 
development partners to jointly de velop concrete projects relating to the textiles and clothing sector. 
9. He continued by saying that Section IV of  the note discussed non-reciprocal preference 
schemes.  In the last few years, most develope d country Members had extended preferences in favour 
of LDCs offering duty-free and quota-free access to  LDC exports.  The section compared 13 schemes 
offered by six developed country Members.  The Government of Canada had introduced important 
reforms of its scheme, which proved beneficial for LD Cs' exports and contribute d to diversification.  
The number of products exported by existing beneficiaries of the scheme had increased.  He noted 
that although considerable progress had been achie ved there was scope for further improvements.  
Measures might be taken in three different ar eas, namely, geographical  and product coverage, 
predictability of the preferences and rules of origin .  The analysis by the Secretariat showed that 
simple, homogenous and unrestrictive rules of origin tr anslated into higher rates of utilization.  In that 
regard, he noted that the African Growth a nd Opportunity Act (AGOA) type global sourcing 
provisions might translate into higher rates of utili zation of preferential schemes.  He went on to say 
that discrimination between LDCs might be elimin ated, for instance, by extending the AGOA to all 
LDCs.  The rates of utilization varied across sch emes.  He noted that measures to increase the 
predictability of access to pref erences would be useful.   
10. He said that developing countries imported less th an 4 per cent of total LDC clothing exports.  
That could be explained primarily by two factors:  (i) LDCs did not have a comparative advantage in 
clothing over other developing count ries;  and (ii) many developi ng countries applied high average 
tariffs on clothing products.  He said that a reduc tion by developing countries of their tariffs, in 
particular if they did not have a comparative advantage relative to LDCs in clothing might be 
beneficial for LDCs' exports.  The reduction could ta ke the form of non-reciprocal preferences granted 
to LDCs along the lines of paragraph 10 of Annex B of the July Decision.  He added that reduction of 
tariffs for all products would be less distortive than preferences on clothing only.  He said that LDC 
governments had a crucial role to play in leading a nd coordinating a coherent strategy for the textiles 
and clothing sector with the help of donors and inst itutions.  Trade liberalization, technical training 
and streamlining of customs procedures were rela tively easy to implement and had the potential to 
substantially improve the competitive position of firm s within a short period of time.  He concluded 
by saying that each LDC had its own characteristics and would need to devise its own priorities based 
on its specific constraints.   
11. The representative of Bangladesh
 said that given the content and substance of the note, it had  
not been possible for his delegation to examine it in detail.  He requested the Chairman to keep this 
item on the agenda of the next meeting.  He said  that textiles and clothing constituted a major export 
item for a number of LDCs.  Almost all studies done so far including the latest note by the Secretariat 
agreed that LDCs were faced with fierce compe tition in the textiles and clothing sector with the 
termination of the ATC.  He drew attention to th e point made by the note that with elimination of 
quotas, LDCs had lost one important source of compet itive advantage.  As a weaker community in the 
multilateral trading system, LDCs needed assistance a nd support to survive in the new environment.  
There was still a lot of uncertainty with regard to  the emerging pattern of trade in the textiles and 
clothing sector.  WT/COMTD/LDC/M/41 
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 12. He appreciated the listing of various options under each chapter of the note and hoped that 
Members and the larger international community woul d give serious considerat ion to its conclusions 
and findings.  He then highlighted a few points where actions or measures might be taken.  First, he 
pointed out that the existing projects and programmes of the World Bank and IMF were not designed to address the concerns in the textiles and cl othing sector.  The LDCs, therefore, needed a 
sector-specific strategy from these institutions.  The IMF had introduced TIM, which had its 
limitations to address the real concerns of LDCs.  He  added that not all LDCs were eligible to benefit 
from TIM and that TIM was a loan with conditionality  attached, rather than a grant.  He wondered 
whether the World Bank had any plan to develop any specific facility and said that more needed to be 
done by these organizations.  Second, he noted that a significant portion of TRTA and capacity 
building was related to analytical work.  Time had come for the operationalization of such work and 
the donors and other development partners might take  initiatives to help LDCs instead of leaving the 
burden to LDCs to drive this process.  As regard s the IF, he said that without significant resource 
increase, funding for projects dealing with concrete  interventions in specific sectors would not be 
available.  He called upon Members to strengthen the IF resources.  Third, he underlined the need for 
more predictability in the preference schemes as we ll as full coverage of tex tile and clothing products 
under those schemes.  Utilization of preferences had cl ear links with their rules of origin.  He urged 
all Members to relax their rules of origin criteria so that LDCs could effectively utilize preferential 
schemes.  The successful reform of the Canadian  scheme showed that positive results could be 
immediately available.  Utilization of preferenc es for Canadian imports from Bangladesh reached up 
to 100 per cent in HS 61, 62, 63.  He called for a uniform scheme for all LDCs by developed countries 
with simple and homogenous rules of origin.  Fourth, he said that the major markets for textile and 
clothing exports from LDCs were fe w developed countries, mainly the Quad countries.  LDCs' trade 
with developing countries was not very signifi cant.  Developing countries imported less than 
4 per cent of total LDCs' clothing exports.  Deve loping countries might provide LDCs non-reciprocal 
market access.  There was a mandate in the ongoing market access negotiations which called for 
providing such access.  He hoped that in a deve lopment round developing country partners could 
contribute to the economic developmen t of LDCs.  Fifth, he conteste d some of the findings contained 
in the Secretariat note.  Given the lack of backward  linkage in LDCs, he said that the option to go for 
specialization in clothing allowing developing country to go for specialization in textiles might not be 
suitable for LDCs.  Also the point to lower tari ffs on inputs imported for the clothing industry was 
debatable as tariffs were an important source of reve nue as well as an instrument to help build LDCs' 
local textiles industry. 
13. He finally requested the Secretariat to elabor ate more on possible trade-related options or 
solutions or compensatory measures that were av ailable to LDCs to face the challenges in the 
post-quota environment.  Special trade-related f acilities were required to give LDCs' industries a 
gestation period to adjust to the changing environmen t.  He said that his delegation would come back 
to this item at the next meeting with additional observations.  In co nclusion, he expressed appreciation 
for the commitment of the Chairman to advance th e objectives of LDCs in the multilateral trading 
system. 
14. The representative of Djibouti
 said that the presentation by the Secretariat had provided ideas 
to deal with market access for the textiles and cl othing sector.  He thanked donors who offered LDCs 
improved market access in the textiles and clothi ng sector.  He said that capacity to generate 
knowledge about possible markets for LDCs was importa nt.  In that regard, LDCs lacked information 
and lacked awareness.  Access to information w as key.  He said that collaboration with other 
specialized organizations, for instance the ITC, migh t bridge the gap of info rmation and help LDCs 
better utilize generous market access of fers by developed countries.   
15. The representative of Nepal  said that his country had been heavily dependent on the textiles 
sector and the impact of the termination of the ATC had been severe.  He noted the major problems 
faced by LDCs, such as high cost of doing business, in efficient infrastructure, inability to go for full  WT/COMTD/LDC/M/41 
 Page 5 
 
 
 stage production and distance to markets.  There were  also structural constraints which had hampered 
exports of LDCs to developed mark ets.  Because of structural cons traints, LDCs depended on one or 
two products for their exports.  It was crucial fo r many LDCs to have better market access for their 
products.  There were different types of LDCs.  His country was not only an LDC but also a 
landlocked country.  Preference schemes contributed to level the playing field.  He explained that high 
transportation cost increased the total cost by 15 to 20 per cent and pointed out that such high 
transportation costs offset the benefit of preference margins in market access.  Because of structural 
and other peculiar constraints like the one faced by his country, LDCs needed substantial and 
favourable terms of trade in the area of market access.  He said that he  would like to see this particular 
suggestion be further developed and taken into acc ount while dealing with the post-ATC adjustment 
process.  It was important to ensure internationa l support to complement national efforts during the 
adjustment period.  He noted the need for LDCs to undertake liberalization and other policy reforms 
and to make more investment in infrastructure but  underlined the deficiency of adequate capital in 
LDCs.  He stressed the need for a dedicated and su stained adjustment programme in the textiles and 
clothing sector and asked for more detailed analysis in that regard.  He requested all Members to give 
due consideration to the predicament of LDCs becau se of the expiry of the ATC.  He requested the 
Chairman to keep this item on the agenda of the next meeting.    
16. The representative of Japan  said that all stakeholders should do their homework to find 
solutions.  Many developed countries still could cont ribute to improve their preference schemes to 
facilitate imports from LDCs.  His de legation took note of the analysis that rules of origin should be 
simplified in order to enhance the utilization of  preferential schemes.  Also, developing countries 
might reduce their import tariffs for goods originatin g from LDCs.  He emphasized the point made at 
paragraph 151 of the note that most developed countries' GSP scheme for LDCs covered 100 per cent 
or almost 100 per cent of textile and clothing products .  LDCs should also make their own efforts.  In 
that regard, the Secretariat note presented various  forms of domestic reforms.  Paragraphs 279 
and 280 of the note showed the successful exampl e of Bangladesh, which in cooperation with the 
World Bank, institutionalized micro-credit systems in  support of small entrepreneurs.  It would be 
useful to have a detailed introduction on this asp ect by the authorities from Bangladesh as well as on 
their efforts to address issues raised by the termination of the ATC.  It would also be useful to listen to other LDC experiences to find out what could be applie d and what could not be applied.  Finally, he 
said that in order to deepen discussions and avoid ge neral statements, the discu ssions could be divided 
focusing on few sections of the note at the next meeting of the Sub-Committee.  That meeting might 
concentrate on Sections I, II and III inviting e xperts from the IMF and the World Bank to introduce 
their ideas;  the subsequent meeting could fo cus on preference schemes and other means.  
17. The representative of Haiti
 asked for a clarification on to whether Haiti could benefit from the 
preference schemes provided for Africa and when such  preferences would be extended to all LDCs.  
He said that his Government and the private sector had approached the Government of the 
United States to benefit from the US preference sc hemes.  He requested a French version of the 
Secretariat note. 
18. The Chairman  said that the French version of the Secretariat note had been distributed at the 
meeting.   
19. The representative of the Solomon Islands  said that addressing supply-side constraints was a 
major need for LDCs, both for their integration in to the multilateral trading system as well as for 
implementation of commitments re quired by various WTO agreements.  Although in the current 
negotiations LDCs were largely exempted from undertaking reduction commitments, it was important 
that appropriate supply-side capacity  be developed to meet the emer ging challenges.  He noted that 
14 countries had benefited from the IF.  He under lined the importance of disseminating adequate 
information on IF projects to expedite its implem entation.  The IF would be increasingly judged on 
whether it could respond to the real needs of LDCs.  He  stressed that in order to succeed the IF should WT/COMTD/LDC/M/41 
Page 6  
 
 build capacity in LDCs to assist them in exporting more products.  He welcomed the fact that a 
number of LDCs had been ab le to take up a number of projects rela ting to their supply-side needs.  He 
encouraged the donors to continue supporting LDCs in building their respective capacities. 
20. The representative of the European Communities
 said that the Secretariat note was under 
examination in Brussels and by the Member stat es of the EC and therefore his remarks were 
preliminary.  He said that individual LDCs would ha ve to deal with their adjustment challenges.  No 
challenges faced by individual Members were of th e same degree and responses had to be driven in 
the national context of development strategies to raise competitiveness of particular sectors.  It was understood that LDCs could only do so in a suppor tive international environment with appropriate 
technical assistance and support for capacity buildin g and any other assistance from the international 
community.  He said that technical assistance and capacity building including supply-side capacity 
was a demand driven process and had to be built up under nationally owned strategies.  He said that 
both the Commission as well as the 25 Member states had responded and woul d continue to respond 
positively to the needs and requests from LDCs for as sistance in the area of textiles and clothing.  
Members were aware that the EC had in place the Everything But Arms (EBA) scheme, which  
facilitated imports into the EC market which was the largest destination of LDC exports.  He said that 
the EBA scheme covered nearly all products of LD Cs including all textile and clothing products. 
Remaining agricultural products would be covere d by 2009 excluding arms and armaments.  The 
EBA scheme was open-ended and was not subject to a renewal clause which made the scheme 
predictable.  He said that in March 2005 the EC had begun a process of reviewing its preferential rules 
of origin with particular attention to those rul es that were applicable to LDCs and weaker and 
vulnerable developing countries.  That review was on-going.  The guiding principles applied in that 
review process were simplification, cumulation and re laxation.  That was in line with what had been 
suggested in the Secretariat note.  As regards the Cotonou scheme, he said that the idea of extending 
Cotonou to all LDCs was a bit curious as prefer ential access under the Cotonou was marginally less 
than the EBA scheme.  The differe nce between these two schemes was to be found to a large degree 
in the possibilities of cumulation available under Co tonou which were not available in the same 
degree under other GSP schemes.  He said that im proving utilization of preferences was not only a 
question of adjusting the rules of origin.  Other i ssues, such as access to information, were equally 
important.  The EC had created a dedicated website  containing information on tariff and non-tariff 
measures.  Other developed and de veloping country Members should open their markets so as to give 
export opportunities for LDCs as erosion of preferences in EC market was inevitable due to the end of 
the quota system as well as future MFN liberalization.   Trade data showed that liberalization of the 
textile and clothing sector in de veloped country markets would not  only have an impact on EC's 
domestic producers but also in terms of balance of competition between different suppliers.  He 
looked forward to the opportunity to discuss the not e in detail at the next meeting and endorsed the 
suggestion by the delegation of Japan to structure the debate including by inviting agencies such as 
the World Bank, the IMF and the ITC.  
21. The representative of Lesotho
 said that simple, homogenous and unrestrictive rules of origin 
would enable the LDCs to take advantage of th e non-reciprocal preference schemes provided to 
LDCs.  She said that LDCs were unable to take a dvantage of the variety of non-reciprocal schemes 
mainly due to their administration.  LDCs require d some hand-holding in the process.  She said that 
AGOA had been successful in some LDCs since it ha d been given as a package.  In her country, the 
AGOA-implementing organizations were assisted.  The customs officials were trained in the US as 
well as in her country.  Officials from the US also vi sited her country from time to time to ensure that 
things were done in a correct way.  Duty-free and quota-free market access was not enough unless and 
until it was handled in the way it was done under AGO A.  Furthermore, she said that a complete 
market access package should include measures to address supply-side constraints.  Without 
additional production no LDC would be able to take advantage of offers made for them.  She was 
encouraged to see the EC reviewing the rules of origin of the EBA scheme.  WT/COMTD/LDC/M/41 
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 22. The representative of Hong Kong, China  said that the analysis by the Secretariat echoed the 
message of other studies, namely that appropriate reforms of the non-reciprocal preference schemes could significantly improve the utilization of those sch emes.  He underlined the importance of flexible 
rules of origin which would enable LDCs to take fu ll advantage of those preferences.  He agreed with 
the Secretariat note that simple, homogenous and unr estrictive rules of origin were important to 
facilitate exports of LDCs.  Discrimination between LDCs could be eliminated.  Measures to increase 
the predictability of access to preferences would c ontribute to certainty of such schemes.  He 
commended the efforts of Canada in reform ing its GSP schemes and hoped that other 
preference-granting Members would follow that e ffort.  He said that many developed country 
Members had already offered duty-free market acc ess to LDC exports.  He encouraged remaining 
developed country Members to do so covering all pro ducts of LDCs.  He also encouraged developing 
country Members that were in a position to do so to offer duty-free market access to LDC exports.  
His authorities maintained zero tariff across the boa rd and did not maintain any restrictions for 
imports from LDCs. 
23. The representative of India
 said that his comments were preliminary.  He underlined the 
importance of effective utilization of existing n on-reciprocal preference schemes extended to the 
LDCs.  He appreciated that the delegation of th e EC had recognized the problems in their schemes 
and commended their ongoing efforts to address t hose problems.  He considered the section on 
individual LDC experiences useful, which showed that the magnitude of problems differed among 
LDCs.  This called for different approaches and stra tegies to meet those individual challenges.  He 
hoped for greater attention to country-specific examin ation in the Secretariat note.  He took note of 
the suggestion made on the need for greater access of LDC exports of textile and clothing products 
into developing country markets.  He noted the low share of LDC exports to developing country 
markets.  He said that many developing country Members had been addressing this through bilateral 
measures and had been undertaking several initiatives such as the Global System of Trade Preferences 
Among Developing Countries (GSTP).  He said that  his country had extended duty-free and quota-
free access to two neighboring countries in South Asia under traditional arrangements.  Efforts had 
been under way for several years to achieve greater regional integration in South Asia that would be 
beneficial for the LDC textiles and clothing sector.   
24. The representative of China  said that according to her delegation, China's average tariff on 
clothing was 16.5 per cent in 2004 and 15.3 per cent in 2005.  However, on pages 10 and 74 of the 
Secretariat note the figure quoted was 19.6 per cent .  She wished to know to which year the 
Secretariat note was referring to.  She then comment ed that it appeared to her delegation that the 
product coverage used in the note was ATC product coverage.  The product co verage of ATC was a 
result of hard negotiations in the Uruguay Round and was only for the purpose of the ATC.  Such 
product coverage should not be used any longer si nce the ATC terminated on 31 December 2004.  
She understood the difficulties that the Secretariat had encountered to collect data on trade in textiles 
and clothing, but hoped that the Secretariat as well as the Members would give due attention to this 
point.  She appreciated that the note was prepared in  line with its terms of reference with a view to 
helping the LDCs improve their competitiveness in th e textiles and clothing sector by looking into 
various options.  Her delegation noted that there were a number of trade-related technical assistance 
and capacity-building programmes either bilaterally or multilaterally available for LDCs to improve 
their competitiveness in the textiles and clothing sector, which were not just on paper but had been 
implemented.  She hoped that LDCs would make full and effective use of such programmes.  In that 
regard, she observed that some LDCs had reaped  benefits from such programmes and encouraged 
more LDCs to follow those examples.  She also took note of the fact that these programmes needed to 
be improved in order to deliver more effective and efficient results.  To that end, both LDC 
beneficiaries and donor partners w ould have to make concerted efforts.  She went on to say that the 
Secretariat note had confirmed that restrictive rules of origin imposed by preference granting 
countries were a significant obstacle to the textiles and clothing trade of LDCs.  Due to such restrictive rules of origin, LDC beneficiaries were not able to fully utilize th e preferences.  On the WT/COMTD/LDC/M/41 
Page 8  
 
 other hand, with relaxed rules of origin, LD C beneficiaries had taken good advantage of the 
preference schemes granted by Canada, which showed  that a slight move on the part of developed 
preference-giving countries would make significant di fference to the trade performance of LDCs.  She 
hoped that developed preference-giving Members which maintained restrictive rules of origin would 
follow the example of Canada so as to provide genui ne market access for textile and clothing products 
from LDCs.  She believed that the effectiveness of preference schemes provided for LDCs could be 
improved significantly by expanding their geograp hical coverage, product coverage and increasing 
the predictability of the schemes. 
25. She recognised that limited supply capacity of LDCs was a big obstacle to increasing their 
participation in international trade, including in the textiles and clothing trade.  In her view, that point 
had been duly reflected in the note.  Moreover, th e note had proposed several textile-specific options 
to improve the supply capacity of LDCs, such as access to inputs like raw materials, fabrics and 
machines.  In that regard, she informed Member s that one major factor contributing to China's 
competitiveness in the textiles and clothing sector was its access to the most co mpetitive inputs in the 
world.  China's export of garments highly depe nded on the import of fabrics, raw materials and 
textiles machinery from other countries.  China thus  became the world's largest importer of raw cotton 
and one of the top importers of wool.  With re gard to fabrics, Chinese producers sourced from the 
most competitive suppliers from the world.  It was estimated by the Chinese industries that about 
50 per cent of exported clothing was made from importe d textiles, which made China the world's third 
largest textiles importer, just behind the EC and the US.  She said that to overcome  the supply-side 
constraints, concerted and coordinated efforts were needed from both the LDCs and their donor 
partners.  It appeared to her delegation that  imports by developing countries from LDCs were 
increasing at a faster pace than imports by develo ped countries from LDCs.  That demonstrated the 
increasing cooperation between LDCs and developing coun tries.  That also indicated that there was 
much room for expanding cooperation between LDCs  by taking advantage of their own specific 
strength in the textiles and clothing sector.  Given the role of rules of origin in the textiles and 
clothing trade, relaxing the rules of origin in th e preference schemes was important to facilitate and 
promote South-South cooperation.  In that regard, she reiterated that her country would continue to 
assist the LDCs in promoting their trade with China within the limits of their resources and capacity.  
In conclusion, she said that the options enumerated in the note were useful for LDCs to improve their 
competitiveness in the textiles and clothing sector and hoped that LDCs would make good use of them. 
26. The representative of the United States
 said that the Secretariat note contained comprehensive 
information, which provided a number of tools fo r LDCs to improve their competitiveness in the 
textiles and clothing trade.  She suggested that developing countries could benefit from actively participating in the current round of negotiations.  Sh e said that the note had highlighted the merits of 
trade facilitation, which could reduce transaction cost s and contribute to more rapid exports of textile 
and clothing products.  She hoped that participa tion in trade facilitation negotiations could help 
provide additional tools to LDCs.  She said that reduction in input costs through actual reduction in 
applied rates could stimulate competitiveness.  With  reduction of input costs, there could be higher 
amounts of trade with resultant increased revenues for a given country.  In the context of Annex B of 
the July Decision, LDCs could increase their level of bindings.  In that regard, she found the examples 
of Cambodia and Madagascar particularly notable.  She said that the note pointed out that LDCs could 
participate more in the IF.  Many LDCs had not prioritized programmes in the textiles and clothing 
sector.  As the IF moved into the third stage, prio rities had to be established to meet the supply-side 
needs.  Without priorities set by the LDCs themse lves, it would be hard for donors to respond.  She 
said that there was an increasing trend towards deve loping countries investing in LDCs' textiles and 
clothing sector.  Each LDC should complement this effort by improving its own investment 
environment.  A recent report by UNCTAD on technology transfer highlighted that lower tariff rates 
were an important element for attracting technology to a given market.    WT/COMTD/LDC/M/41 
 Page 9 
 
 
 27. As regards preference schemes, she said that there was certainly more to be done by all and 
that her Government was endeavouring to do its pa rt.  Through the extension of AGOA, the coverage 
in textiles was more than it had been in the past.  In particular, her Government had tried to ensure 
beneficial origin rules for a longer period.  In response to a query from the delegation of Haiti, she 
said that some preferences existed under the Cari bbean Basin Initiative (CBI) and that significant 
improvements had been made a few years before to en sure parity with the NAFTA rules of origin that 
were also extensive.  Finally, in response to co mments from Lesotho, she said that her Government 
had put enormous efforts in the AGOA programme to  ensure that bilateral training on the ground or 
sustained assistance was effectively u sed.  She was pleased to hear that such efforts had proved useful 
for LDCs.  In conclusion, she said that her delega tion looked forward to a continued discussion of the 
Secretariat note.  
28. The representative of Canada  appreciated the frank recommendations that had been made in 
the Secretariat note.  She said that recommendations  made by the delegations of Bangladesh, Nepal, 
the EC and others as to how to move further w ith the discussions were worthwhile and should be 
taken on board.  She said that it was gratifying to  see that the significant political capital expended by 
her Government to put in place in  2003 the improved market access schemes for LDCs, had actually 
resulted in positive gains for LDCs.  She took note of  the recommendation in the Secretariat note of 
further flexibilities in preference schemes, wh ich she would convey to her Government.  
29. The representative of Guinea  recalled that in the context of the IF, her Government had 
prioritized three projects which were not in the area of  textiles and clothing.  She said that in the area 
of textiles, her country, like other LDCs, bene fited from several prefer ence schemes including the 
AGOA, the GSP and the Cotonou Agreement.  She clarif ied, however, that they were not able to take 
full advantage of all these prefer ences because of the production incapacity and other constraints such 
as lack of infrastructure lack of financing for capac ity building, both human and institutional, and lack 
of investment in the sector.  She said that her c ountry lacked the capacity to process cotton despite 
having a comparative advantage in its production.  Sh e added that the problem relating to the rules of 
origin needed to be solved through greater fl exibility.  Her country also required strengthened 
technical assistance to support infrastructure and human  capacity building.  She specified that direct 
investment in the textiles sector would allow her c ountry to take advantage of the increased market 
access offered.  She said that some foreign invest ors in the textiles sector  from both developed and 
developing countries had enabled her country to creat e jobs;  in those cases, it had been possible to 
upgrade the infrastructure, to improve export capacity , to increase income and thus reduce poverty.  
She hoped that in future, funds would be forthcoming for projects in the textiles and clothing sector.  
30. The representative of Pakistan  said that the Secretariat note contained a number of elements 
for the LDCs to build upon depe nding on their individual circumstances.  Measures such as trade 
liberalization, technical training and streamlining of customs procedures were easy to implement.  These measures had the potential to substantially im prove the competitive position of the firms within 
a short period of time.  She said that a lot of hard work had gone into the study and that the separate 
conclusions for each section made it a very useful document.  She said that her delegation would like 
to come back in detail on the various areas covere d by the Secretariat note and that she supported the 
suggestion made by the EC to get representatives of the World Bank, IMF and other specialized agencies to appraise the Sub-Committee in greater detail on projects and programmes that directly or indirectly contributed to improving the competitiven ess of textiles and clothing sector in the LDCs. 
31. The representative of Tanzania
 said that her delegation would require more time to reflect on 
the Secretariat note.  More time was also needed for LDCs to come up with common position on various elements of the note.  She underlined th at her country had a potential in the textiles and 
clothing sector as it was a cotton producing country and also involved in the manufacturing of textiles.  
She added that her Government had made domestic reforms.  It was im portant that all trading partners 
pull their resources together to solve the problem s of LDCs.  She also noted that there was a WT/COMTD/LDC/M/41 
Page 10  
 
 typographical error on page 110 of the note, where Tanzania did not figure as a full Member of the 
WTO.  
32. The Chairman
 invited the Secretariat to respond to the points raised by Members. 
33. The representative of the Secretariat  apologized for the typographical error concerning 
Tanzania.  In response to the question from the de legation of Haiti, he said that the Secretariat note 
had basically compared AGOA with the United St ates - Caribbean Basin Trade Partnership Act 
(CBTPA).  He said that there existed little diffe rences as to the conditions granted by these two 
agreements.  He then commented on the remarks ma de by the delegations of Bangladesh and Nepal, 
according to which the recommendation to reduce tari ffs on textiles contained in the note might not 
prove to be in the direction in which LDCs would like to go.  He clarified that the note considered that 
if the LDCs had a comparative advantage in the tw o sectors, it would probably be greater in the 
clothing industry as the latter was less capital intens ive and less skilled-labour intensive.  He said that 
the report did not deny that in the medium- and l ong-term it would be possible for LDCs to move to 
textiles, but it showed rather that in the short -run clothing exports mattered the most.  That was why 
the note suggested that the LDCs should strengthen their clothing sector.  On the remarks made by the 
delegation of China, he clarified that the data used  in the note for tariffs referred to the IDB for 2003.  
Concerning the question on the definition of textiles and clothing that had been used in the note, he said that on the basis of the mandate and due to the reference to the post-ATC phase, the decision had been taken to refer to the ATC definition.  
34. The Chairman
 said that he would invite the IMF, the World Bank, and the ITC to contribute 
to the debate at the Sub-Committee's next meeting.  He then highlighted few points from the 
Secretariat note.  First, he said that the note was to be seen as an effort to assist LDCs on how they 
could increase their competitiveness to benefit from the textiles and clothing trade.  A number of 
options had been listed in each of the chapters, for consideration by Members.  He would, therefore, 
encourage LDC authorities to further examine the op tions, conclusions and fi ndings contained in the 
note, so as to devise their strategy to overcome co nstraints in the textiles and clothing sector and to 
see how the WTO, within its mandate, could be of  assistance to them.  Second, he said it was 
important to make use of the analytical work done so far, and added that some tools were available 
from the IMF and the World Bank in that regard.  He also referred to untapped opportunities that 
existed with regard to technical assistance.  He sa id that the LDCs could consider using the IF to 
realize concrete assistance in the textiles and cl othing sector.  Third, he believed that the larger 
international community had a role to play.  The note indicated that more flexible rules of origin by 
preference-granting countries could help LDCs make better use of the market access opportunities 
created through preference schemes.  He said that st atements made by the LDCs indicated a sense of 
urgency in this regard.  Fourth, he said that LD Cs also had to do their homework by maintaining 
appropriate policies and facilitating measures in  order to cope in an increased competitive 
environment.  There were measures that could be undertaken and implemented within a short period 
of time to improve the competitiveness of LDCs' te xtiles and clothing business.  He said that the note 
indicated that competitiveness in any given sector depended on a host of factors and that measures 
taken by the international community without complementary actions by the LDCs would not 
succeed.  He said that the Sub-Committee would revert to the item at its next meeting.  The Chairman 
proposed that the Sub-Committee take note  of the submission by the Secretariat contained in 
document WT/COMTD/LDC/W/37 and of the statements made.   
35. It was so agreed .  WT/COMTD/LDC/M/41 
 Page 11 
 
 
 - Briefing by the Secretariat on the next annual review of market access for products 
originating from least-developed countries  
36. The Chairman  recalled that paragraph 7 of the LD Cs' Work Programme mandated an annual 
review of market access for products originating fro m LDCs.  In this regard, he informed Members 
that the Secretariat had begun to prepare the annual review for 2005.  He said that the review would 
seek to provide comprehensive information on the LDCs' market access situa tion in the multilateral 
trading system.  He invited the Secretariat to brie f the Committee on the next annual review of market 
access for products originating from LDCs. 
37. The representative of the Secretariat  said that the Secretariat had begun its work on the market 
access review for 2005 as mandated by paragraph 7 of the LDCs' Work Programme.  He clarified that 
the review would be the fourth one in the series and that the previous studies had been released as 
WT/COMTD/LDC/W/28;  WT/COMTD/LDC/W/31 and WT/COMTD/LDC/W/35.  He stressed the importance of Members providing data concerning changes in market access conditions for products 
originating from LDCs to the Secretariat on a timely basis.  It was of utmost importance to gather as 
much up-to-date information as possible.  He ment ioned that the Secretariat would meet with the 
WTO LDCs' Consultative Group to discuss progress in the study.  Based on the comments on the 
previous report and developments  in the recent years, the proposed special topic for the 2005 study 
was market access conditions in developing count ry markets for products originating from LDCs. 
38. In the absence of any comments, the Chairman
 proposed that the Sub-Committee take note of 
the briefing by the Secretariat.   
39. It was so agreed . 
(ii) Trade-Related Technical Assistance and Capac ity-Building Initiatives for Least-Developed 
Countries 
- Assistance to address supply-side constraints (WT/COMTD/LDC/W/33/Add.1) 
40. The Chairman  recalled that document WT/COMTD/LDC/W/33/Add.1 provided information 
on the implementation of supply-side actions in the IF process.  This  document was first considered 
at the Sub-Committee's previous meeting.  The Comm ittee had requested that this item be kept on the 
agenda of the current meeting.  He recalled that  at the previous meeting he had urged the IF 
beneficiaries who had not done so to provide inform ation to the Secretariat on the extent to which 
their supply-side needs were being addressed throu gh the IF process.  He informed Members that 
since then, three LDCs had provided additional info rmation to the Secretariat.  The countries were 
Mauritania, Nepal and Yemen.  He thanked these Me mbers for their cooperation.  He specified that 
these LDCs were at different stages of the IF pr ocess.  While in Yemen, Window II project proposals 
were being finalized, in Mauritania Window II proj ects concretely provided for funding to promote 
exports such as in the fisheries sector.  The Gove rnment of Nepal had undertaken domestic initiatives 
to address supply-side constraints in parallel to activities funded by Window II.  The Chairman said 
that it was noteworthy that in these three LDCs as a result of the DTIS a number of actions, other than 
Window II activities, had been initiated with the overarching goal of increasing the competitiveness of 
their economy. 
41. The Chairman  noted that out of 14 LDCs that had entered the post-DTIS phase, five had so 
far provided information to the Secretariat.  He, ther efore, encouraged LDCs to continue to share any 
information or observation in the IF process that coul d assist in delivering better results for LDCs.  He 
said that first-hand information on what was happeni ng in the field was critical for the improvement 
of the IF and particularly for its enhanced contribut ion in alleviating supply-side constraints in LDCs.  
He said that the issue of supply-side constrai nts would remain an important item of the Work WT/COMTD/LDC/M/41 
Page 12  
 
 Programme.  He said that at the recent Livingstone Meeting of LDC Trade Ministers, the IF 
mechanism had been reiterated as an important tool on the trade and development agenda that could 
effectively address LDCs' trade development, includ ing supply-side constraints.  He recalled that 
discussions were on-going in a wider context and outside of the WTO on "Aid for Trade".  He said that leaders of the G-8 countries were meeting in Gleneagles at the same time as the Sub-Committee's  
meeting and that "Aid for Trade" was an item on their agenda.  In parallel, the Development 
Committee of the World Bank and the IMF had mandated the staffs of the World Bank and the IMF to come up with a concrete proposal on Aid for Trade for their meeting in September 2005.  He reported 
that consultations in this respect were on-going an d that the principles and objectives of the IF were 
part of those discussions. 
42. The representative of the United States
 said that as one of the donor coordinators for the IF, 
she believed that a great deal of progress in IF implementation had taken place over the last couple of months.  Her delegation remained committed to c ontinuing its effort to make progress in the IF 
process.  Her delegation had made suggestions to help increase the number of validations of the 
DTISs, regarding practical improvement in the disbursement of Window I and Window II funds and 
regarding IF specific donor conferences.  She said that there were other initiatives currently under 
examination, most notably by the G-8 countries, which might come to fruition in the lead up to the Hong Kong Ministerial Conference.  The IF had move d into the stage where major projects had been 
identified.   What was needed was to bring funding to those projects in order to meet the supply-side 
needs of LDCs. 
43. The Chairman
 said that many diagnostic studies had been undertaken and it was therefore 
important to move into an action mode, to whic h all Members would contribute, both donor countries 
and LDCs governments. 
44. The Chairman  proposed that the Sub-Committee take note  of the statements made. 
45. It was so agreed . 
C. PREPARATIONS FOR THE SIXTH WTO  MINISTERIAL CONFERENCE  
- Arrangements to facilitate the participation of  least-developed countries:  Briefing by the 
Secretariat 
46. The Chairman  invited the Secretariat to brief the Sub-Committee on the arrangements being 
made to facilitate the participation of LD Cs at the Hong Kong Ministerial Conference. 
47. The representative of the Secretariat , the Director of the Development Division, briefed the 
Sub-Committee on the special arrangements being unde rtaken by both the WTO Secretariat and the 
host country, Hong Kong, China, to facilitate the part icipation of LDCs at the Hong Kong Ministerial 
Conference.  He said that the WTO Secretariat was making arrangements to provide air tickets for three participants from each LDC, one Business-cl ass ticket for the Minister/Head of Delegation and 
two Economy-class tickets for two accompanying offici als.  He reported that so far 42 LDCs had 
informed the Secretariat of the names of their par ticipants to be funded by this arrangement.  Some 
delegations in Geneva had not communicated their nom inees yet.  He invited delegations that had not 
done so, to communicate their nominations as soon as possible, since there were already serious 
difficulties to secure suitable flight itineraries.  He  said that the participants availing of the WTO 
funding should not purchase their own tickets, whic h would instead be handled through the WTO's 
administrative division.  He also reminded LDCs th at the itineraries scheduled by the WTO's travel 
agency in Geneva should not be modified after the air tickets had been issued.    WT/COMTD/LDC/M/41 
 Page 13 
 
 
 48. He recalled that in order to finance these travel expenses, the WTO had established a Trust 
Fund with extra-budgetary contributions from Members.   In order to meet these expenses, the Trust 
Fund would require Swiss Francs (CHF) 1.1 million.  To date, less than 100,000 Swiss Francs were 
available in the Trust Fund.  This sum corres ponded to the unspent balance from the previous 
Ministerial Conference.  He, therefore, underlin ed that the Trust Fund needed to receive new 
contributions from Members and he urged Members to contribute to this Trust Fund.  As regards the 
arrangements being taken by the host Government, he reported that  the Government of Hong Kong, 
China, had agreed to provide hotel accommodation and per diem  expenses to three participants from 
each LDC.  Arrangements were being made by the Hong Kong, China authorities to house these 
delegates.  He said that as soon as details of the ho tels were made available to the Secretariat they 
would be communicated to delegations.  He adde d that on the opening day of the Conference, the 
participants would receive a daily subsistence al lowance and terminal expenses at the applicable 
UN/WTO rate and that details in this respect would be provided at a later stage.  He also informed 
Members that special arrangements were being ma de by the Hong Kong, China authorities to provide 
LDCs with a conference room and lounge within the Convention Centre.  He hoped that as in the past, 
these arrangements would facilitate the work and coordi nation of LDCs at the Ministerial Conference.  
He invited LDCs to register their participants  on-line to help the Hong Kong, China authorities 
prepare the necessary identification badges.  In co nclusion, he said that the WTO Task Force would 
organize a more detailed briefing on all administ rative and logistical arrangements for LDCs.  
Information in that respect would be provided in due course. 
49. The representative of Guinea  sought clarification concerning hotel reservations.  She said that 
the organizing committee had explained to Members that hotel rooms had to be booked at some point 
in time so that those reservations could be blocked and finalized.  However, it seemed to her that the 
reservations were finalized only by providing th e credit card number.  She wondered whether LDCs 
could benefit from special conditions in that regard as many LDC delegates did not necessarily 
possess credit cards.  She said that they would be gratef ul if the issue could be reconsidered so that the 
LDCs could have their reservations without providing a credit card number. 
50. The representative of Haiti  shared the concern expressed by the representative of Guinea.  He 
asked whether the three delegates per LDC that would enjoy the facilities being undertaken by the 
WTO and the host Government were dispensed from making their own hotel reservations.   
51. The representative of the Secretariat  clarified that for the time being the three participants per 
country who were being communicated by LDCs woul d be taken care of by the arrangements he had 
just explained.  In case LDC delegations were larger  than those three participants, LDCs should also 
provide full lists of the additional members of thei r delegations to the Secretariat so that their 
reservations could be made at the same time.  As regards the issue of credit cards, he recalled that in the past alternative solutions to make hotel reser vations, such as a letter from the embassy, had been 
found.  He suggested that it would be better to ask the Hong Kong, China authorities what other 
means they would be prepared to provide to facilita te reservations.  He pointed out that such queries 
could be taken up at the meeting on logistical arrange ment to be organized by the WTO Task Force.   
52. The representative of Hong Kong, China
, said that the question of credit cards as guarantee 
for room reservation had been raised  in the information meeting.  She said that the hotel situation was 
tight in December as it was a busy season.  All hot els in Hong Kong, China operated on a commercial 
basis and there were competing demands for the mont h of December.  She suggested that delegations 
contact hotels directly to explore possible available options to solve the problem.  She underlined that 
it was important to do it soon in order to find a posi tive solution in a timely manner.  She added that 
her Government was working closely with the WTO Secretariat to sort out all logistical problems to facilitate the participation of LDCs at the Conference.  WT/COMTD/LDC/M/41 
Page 14  
 
 53. The Chairman
 proposed that questions of that sort be  solved bilaterally with the delegation of 
Hong Kong, China.  He then proposed that the Sub-Committee take note  of the briefing by the 
Secretariat as well as of the statements made.  
54. It was so agreed . 
D. OTHER BUSINESS  
55. The Chairman  informed Members that the next meeting of the Sub-Committee was 
tentatively scheduled for 29 September 2005.   
56. In the absence of any "Other Busi ness", the meeting was adjourned . 
__________