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WTO Sub-Committee on Least-Developed Countries: Market access for products and services of export interest to LDCs

WTO Sub-Committee on Least-Developed Countries: Market access for products and services of export interest to LDCs
Photo credit: CIFOR

25 Oct 2017

Document prepared by the WTO Secretariat for the Formal Meeting of the Sub-Committee on Least-Developed Countries held on 3 October 2017, as revised

Over the period 2005-2016, LDC exports of goods and services grew by an annual average of 6.4%, slightly more than the exports of other developing economies (6.1% average). Most of this average growth, however, stems from distinctly higher growth rates in the first part of the period. During 2010-2016, average annual export growth of LDCs’ exports was even slightly negative (-0.02%).

In 2016, LDC exports of goods and services decreased by 3.9% to US$187 billion. The share of LDCs in world exports of goods and commercial services stood at 0.91% in 2016, compared to 0.93% in 2015.

Merchandise exports of the LDCs decreased by 6% in value terms in 2016, declining more than world exports which fell by 3%. The share of LDCs in world merchandise exports stood at 0.94% in 2016, dropping further from 0.97% in the previous year.

The LDCs continued to record a sizable trade deficit, which reached US$92.9 billion in 2016, representing a nine-fold increase compared to the trade deficit in 2005. On the positive side, the sharp reduction of prices of primary commodities in 2015 had almost come to a halt in 2016, with the exception of energy prices. The stable prices of food and beverages have helped agricultural exporters to somehow arrest negative export growth.

In 2016, the top merchandise exporter within the LDCs was Bangladesh (share of 24%), followed by Angola (17%) and Myanmar (8%). While the top ten exporters represented almost 80% of LDCs’ exports in 2005, this share went down to around 76% in 2016 – indicating a slight decrease in terms of country concentration among the LDCs.

The share of primary products in total exports of LDCs continued to decrease in 2016 – from 73% in 2005 down to 49% in 2016. This was mostly due to the lower value of exports of petroleum products (HS 27.09, 27.11 and 27.10), which constituted more than half of all LDC exports in 2005, but accounted for only about a quarter (26%) of LDC exports in 2016. In contrast, the share of manufactured products in LDC exports increased from 21% in 2005 to 40% in 2016. This was mainly due to a higher share of clothing products in LDC merchandise exports, which increased from 13% in 2005 to 29% in 2016.

In 2016, the European Union was the top destination for LDCs’ merchandise exports (share of 31%), followed by China (21%) and the United States (11%). The top 10 importers accounted for 88% of LDCs’ total exports in 2016, which was slightly higher than the respective share of 87% in 2005.

In the period 2005-2016, LDCs’ services exports expanded by 12% on average per year, compared to 8% in other developing economies and 5% in the developed group. Following a decade of sustained growth, LDCs’ exports of commercial services have slowed down since 2014. This downward trend accentuated in 2016, when services exports fell by 4% to US$32 billion. In 2016, LDCs’ participation in global exports of commercial services stood at 0.7%, up from 0.4% in 2005.

Services trade in LDCs remained concentrated within a few economies, an unchanged pattern since 2005. In 2016, the top ten leading exporters (e.g. Myanmar, Cambodia, Tanzania, Ethiopia) accounted for almost 70% of the group’s services receipts. Imports were equally concentrated with the first five importers, led by Angola, representing around half of LDCs’ total commercial services payments.

Over recent years, the number of international tourist arrivals to LDCs multiplied, rising from over 10 million arrivals in 2005 to more than 28 million in 2015. Increasing inflows of foreign tourists and their purchase of goods and services in the countries they have visited has boosted LDCs’ travel revenue. In 2016, travel revenue reached US$17 billion compared with US$5 billion in 2005. As a result, LDCs’ share of world travel exports has doubled in ten years, reaching 1.4% in 2016.

Progress has continued in advancing market access opportunities for the LDCs. From a global perspective, the proportion of duty-free tariff lines has risen from 49% in 2005 to 65% in 2015 for LDCs, which signifies the commitment of Members to grant preferential market access to the LDCs. Average tariffs levied by developed Members on products originating in LDCs are close to 0%, with the exception of clothing and textiles.

Most of the developed Members accord either full or nearly full duty-free and quota-free (DFQF) market access to LDC products. A number of developing Members have significantly expanded their DFQF coverage over the last decade and now offer almost comprehensive DFQF market access to LDC products. Notable progress has been made in the implementation of the Nairobi Decision on Preferential Rules of Origin for LDCs. There has also been an incremental progress in the number of notifications regarding preferential treatment for services and services suppliers from LDCs. By the end of September 2017, a total of 24 Members have submitted notifications pursuant to the LDC Services Waiver.