WTO sees extended LDC transition period as opportunity for Bangladesh to accelerate reforms

The World Trade Organisation (WTO) has underscored the importance of utilising any extended transition period for Least Developed Country (LDC) graduation to strengthen productive capacity, improve competitiveness, diversify exports and prepare for operating under standard WTO rules.

"WTO members have already taken steps to support graduating LDCs in ensuring a smooth and sustainable transition," said WTO Deputy Director-General Xiangchen Zhang while talking to BSS.

He noted that the decision adopted at the WTO's 13th Ministerial Conference provides graduating LDCs with additional time to align with WTO disciplines.

As an example, he said if Bangladesh graduates in 2026 as originally scheduled, it would have until 2029 to complete the alignment process.

"Regardless of the exact timing of graduation, the transition period is an important opportunity for graduating LDCs to further strengthen their productive capacity, enhance competitiveness, and improve the overall investment and business environment," Zhang said.

He added that the period should also be used to prepare for operating under more general WTO rules in a predictable and sustainable manner.

The WTO official observed that Bangladesh has demonstrated strong development dynamism over the years and is well positioned to continue making the necessary adjustments.

Where challenges arise during the transition process, he said, there remains scope for constructive engagement with trading partners to address specific concerns in a cooperative manner.

Highlighting trade priorities, Zhang said Bangladesh should focus on diversifying export destinations and strengthening export resilience, particularly in sectors that may face adjustments following graduation.

He stressed that continued efforts to upgrade productivity and increase value addition would help ensure smoother integration into the global trading system.

Earlier, Bangladesh formally requested a three-year extension of its LDC graduation timeline until November 2029. Recently, the United Nations Committee for Development Policy (CDP) expressed support for Bangladesh's request.

In a recent communication to the Bangladesh government, CDP Chair Professor José Antonio Ocampo stated that, based on the committee's assessment, it would be appropriate for the United Nations General Assembly to approve the requested extension.

The CDP noted that Bangladesh has exceeded the graduation thresholds by a significant margin under all three graduation criteria and faces a very low risk of falling below them in the near to medium term.

However, the committee emphasised the need for substantial progress in domestic reforms to address structural vulnerabilities during the extended period.

According to the CDP, priority reform areas include ensuring financial sector stability, increasing tax revenue, strengthening domestic resource mobilisation, enhancing productive capacities, promoting economic diversification and preparing the private sector for post-graduation challenges.

The committee also pointed to uncertainties stemming from global economic conditions, supply chain disruptions, energy market volatility and changes in the international trading environment as factors that could affect Bangladesh's graduation preparedness.

The CDP emphasised that the extension should not be viewed as an opportunity to delay reforms, but rather as a catalyst for accelerating them and ensuring a smooth, sustainable and successful graduation from the LDC category.