Policy Brief on  

Issues and Priorities for the Fourth UN Conference on LDCs in 2011: Bangladesh Perspectives 

 

TRADE POLICY BRIEF NO. 43

(A Policy Brief Prepared Under CPD’s Trade Policy Programme)

by Kazi Mahmudur Rahman  Senior Research Associate, CPD 

 

and Hasanuzzaman 

Senior Research Associate, CPD 

October 20, 2009      

CENTRE FOR POLICY DIALOGUE  House 40C, Road 11, Dhanmondi R/A, Dhaka 1209

Tel: 9141703, 8124770; Fax: 8130951; E-mail: info@cpd.org.bd

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Issues and Priorities for the Fourth UN Conference on LDCs in 2011: Bangladesh Perspectives

1. Introduction

The United Nations defined the category of least developed countries (LDCs) in 1971,

identifying 24 countries that it classified as the world’s poorest countries in terms of

economic performance and overall socio-economic context. Today, there are 50 LDCs

where 81 per cent of the population lives in rampant poverty and in fragile economies,

characterised by political volatile situations where conflict is all too common. Three

quarter of a billion or 12 per cent of the world’s population live in these 50 LDCs. By

2015, the year by which the international community has targeted to achieve the

Millennium Development Goals (MDGs), this population is estimated to rise by more

than 200 million reaching 13.1 percent of the global population. This is clearly a

reflection of broad aid and development policies over the years, to prevent deterioration

of socio-economic conditions in these countries. Analyses of progress and projections

into the future do not present an encouraging picture for the LDCs as a group.

Poverty is not merely a home grown problem of the LDCs, it is a global concern. Poverty

is not only a reflection of lack of income or lack of access to basic services; it is the lack

of power to decide one’s own destiny the marginalisation that manifests itself in

exclusion from the mainstream economic activities. Poverty eradication therefore is the

foremost challenge and responsibility, before the world today a task to free those

countless millions from the brutal clutches of structural injustices.

Against this background, the Third UN Conference on the LDCs took place in Brussels in

May 2001. Declaration and Programme of Action for the LDCs for the Decade 2001-

2010 was adopted on 20 May 2001 and endorsed by UN General Assembly Resolution

55/279, 12 July 2001. It resulted in the adoption of the Brussels Programme of Action

(BPoA) which includes 30 time-bound and measurable international development goals,

including those contained in the Millennium Declaration. The BPoA aims to ensure that

the LDCs achieve sustainable development by 2010 and stipulates that “its success will

be judged by its contribution to progress toward achieving international development

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targets, as well as their graduation from the list of LDCs”. Since the inception of BPoA, a

mid-term global review has been conducted in 2006. The scenario did not appear

optimistic, urging attention and commitment, more than ever, from all the key

stakeholders. One-size-fits policies1, best endeavor nature of commitments in a number

of areas including duty-free and quota-free market access, global impacts including food

crisis and economic meltdown continues to marginalise the LDCs, which in turn has led

to the perpetuation of poverty, indebtedness and underdevelopment in these countries.

Moreover, much needed international support to tackle its inherent vulnerabilities and

constraints have also remained ineffective.

There is still more than a year for the fourth UN Conference on LDCs where LDCs and

development partners will meet to take a retrospective of the progress and set backs and

explore ways to fulfill the unfinished agenda and outline the future doables. The current

paper attempts to review the BPoA in the current context in order to make policy makers

aware of the situation. This policy brief aims to equip them by analysing the BPoA in

terms of the reviews conducted in the recent past, coupled with progress and set backs in

Bangladesh’s economy. Overall, it provides policy options that the government of

Bangladesh could consider in playing the lead role in the LDC group.

1 The ever-growing wave of neo-liberal globalisation.

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SECTION I: THE FOURTH UN CONFERENCE ON THE LDCs: THE CONTEXT

In order to attract international attention and promote action to reverse the continuing

deterioration of the socio-economic condition of these most vulnerable countries, the

First UN Conference on LDCs, held in Paris in 1981, adopted a comprehensive

Substantial New Programme of Action (SNPA) for the decade. The SNPA was

subsequently endorsed by the UN General Assembly in its resolution 36/194 on 17

December, 1981. To continue focus on the need for special measures for these countries,

the Second UN Conference on the LDCs was held in 1990, also in Paris, adopting the

Paris Declaration and the Programme of Action for the LDCs for the 1990s. The Third

UN Conference on the LDCs was held in Brussels hosted by the European Union from 14

to 20 May 2001. We will briefly look at the outcomes of these conferences in the

following section.

The First UN LDC Conference

The conference adopted the SNPA which contained guidelines for domestic actions by

the LDCs that were to be complemented by support measures by the international

development community. However, economic situation of the LDCs suffered further

deterioration in the 1980s, despite major policy reforms initiated by LDCs towards

structural transformation of their economies, which were often a part of policy designs

and conditionalities of the donor community. Also, inspite of some of the supportive

Box: The chronology of events leading to the Fourth UN LDC Conference � 1971: International Community recognises the existence of a group of LDCs(LDCs) � 1981: First UN Conference on the LDCs is held in Paris

• Substantial New Programme of Action for the LDCs in the 1980s (SNPA) is adopted � 1990: Second UN Conference on the LDCs is convened in Paris

• Programme of Action for the LDCs in the 1990s (PoA) is adopted • A Mid-Term Global Review of the PoA is held in New York in September, 1995 which concludes that marginalisation of the LDCs was continuing and deepening

� 1997: The UN General Assembly decides to convene the Third UN Conference on the LDCs in order to design new strategies for the new millennium

� 2001: Third UN Conference on the LDCs was hosted by the EU in Brussels, May 14-20, 2001.

� 2006: Mid term review of the Third UN Conference on the LDCs. � 2011: Fourth UN Conference on the LDCs to be hosted by the Turkey, in first half of the

2011

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actions on the part of a number of developed countries and agencies such areas as aid,

LDCs have continued to be marginalised and often excluded in the global arena. The

obvious failures in alleviating the economic situation in the LDCs prompted the necessity

of holding a new UN Conference on the LDCs.

The Second UN LDC Conference

The decision of the Conference got embodied in the Paris Declaration of 1990 and in the

Programme of Actions for the LDCs. A comprehensive mid-term review of this

Programme of Action was undertaken under the initiative of the High-level

Intergovernmental Meeting which was held in 1995 in New York. The review carried out

an assessment of the progress in implementing the Programme of Action and came up

with some mid-course corrective measures. However, in the context of the continuing and

growing marginalisation of the LDCs, the need for new initiatives and new actions were

to become apparent very soon. Accordingly, in December 1997, the UN General

Assembly passed a resolution which decided to convene, the Third UN Conference on the

LDCs in 2001.

Third UN LDC Conference

The mandate of the Third UN LDC Conference thoroughly assessed the results of

Programme of Action during the 1990s at the country level. It reviewed the

implementation of international support measures, particularly in the area of ODA, debt,

investment and trade. The conference considered formulation and adoption of appropriate

national and international policies and measures for sustainable development of the

LDCs, and their progressive integration into the world economy.

Brussels Programme of Action

The Brussels Declaration and the Programme of Action for the LDCs for the decade

2001-2010 put forward the framework for partnership, identified goals and targets to be

fulfilled. Seven specific commitments of the LDCs and their development partners were

made in this conference in tackling some of the cross-cutting issues of concerns. (see box

1).

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The challenges in implementing the seven commitments of the BPOA are multifaceted

and complex. Nevertheless, two most critical challenges, as we will discuss in the

following sections related to strengthening partnership between LDCs and mobilising all

stakeholders and actors in all levels (domestic, regional and global).

Box 1: BPoA Framework for partnership: "to accelerate sustained economic growth and sustainable development in LDCs, to end marginalization by eradicating poverty, inequality and deprivation in these countries, and to enable them to integrate beneficially into the global economy". Goals and targets: The overarching goal of the Programme of Action for the LDCs (PoA) is "to make substantial progress toward halving the proportion of people living in extreme poverty and suffering from hunger by 2015 and promote the sustainable development of the LDCs". The Programme of Action contains 30 international development goals, including those contained in the Millennium Declaration. They are embedded in the commitments of the LDCs and their development partners.

Commitments: The Programme is based on shared but differentiated responsibilities or mutual commitments of the LDCs and their development partners and articulates their policies and measures by the LDCs in seven interlinked areas: 1) fostering a people-centered policy framework; 2) good governance at national and international levels; 3) building human and institutional capacities; 4) building productive capacities to make globalization work for LDCs; 5) enhancing the role of trade in development; 6) reducing vulnerability and protecting the environment and 7) mobilizing financial resources.

Cross-cutting issues: The Programme contains ten cross-cutting priority issues: poverty eradication, gender equality, employment, governance at national and international levels, capacity-building, sustainable development, special problems of landlocked and small island LDCs, and challenges faced by LDCs affected by conflict.

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SECTION 2: STOCK TAKING OF THE THIRD UN CONFERENCE: GLOBAL, REGIONAL AND BANGLADESH PERSPECTIVES

Although LDCs in the Asia-Pacific (AP) region acknowledge that some progress has

been made, there is consensus that overall progress in meeting the goals has been

lethargic and uneven. In the aftermath of the global financial crisis (GFC), LDCs, whose

export baskets tend to be destined by the countries most affected by the GFC, were

poised on a very unstable balance. The WTO had anticipated world trade to decline by

9%, with the UNCTAD estimating a 6-7% fall in foreign investment flows.

2.1 Mid-Term Review of the BPoA

2.1.1 National Government’s Review

In spite of the new realities, five years after the Brussels Declaration in 2006, the general

consensus consumed that fact that progress was not sufficient to achieve the goals of the

Programme of Action and its dual objectives of eradicating poverty and achieving

sustained growth and sustainable development in LDCs by 2010.

Mid-term progress report identified the actions/steps taken by the AP LDCs under the

each commitments of the BPoA. Despite economic growth averaging 6 percent per

annum since 2001, the incidence of poverty in AP LDCs remains high. Most of the

countries prepared PRSPs in fulfilling the commitment 1 towards fostering a people-

centred policy framework. However, in a number of occasions, PRSPs lack domestic

ownership alongside fiscal constraints in the implementation stage.

A number of LDCs are on track for promoting good governance at the national level

(commitment 2). As part of promoting good governance, AP LDCs implemented a

comprehensive judicial reform programme and adopted strategies to combat corruption.

In 2005, all Asia-pacific LDCs signed the Convention on the Rights of the Child.

Despite high population growth in the AP LDCs, net enrolment in primary education

increased as part of their commitment towards building human capacities (commitment

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3). Major challenges reported by the AP LDCs are the training of teachers and pupils who

drop out before reaching high school remains high.

A number of LDCs have geared up their efforts to deregulate agricultural markets,

provide a greater role for the private sector, attract investments and promote new

agricultural technology for building productive capacities (commitment 4). However,

advancement in ICT has also widened the gap between the poor and the rich. LDCs lack

building for infrastructure and receiving appropriate technology as a result of the severe

deficiency in transfer of technology.

Despite intervention to improve market access under the various preferential schemes for

LDcs, almost half of the market access preferences granted under these schemes remain

underutilised by LDCs due to supply side constraints and non-tariff barriers. LDCs were

not able to receive Duty-Free Quota-Free market access from the developed countries as

pledges under the Hong Kong Ministerial Declaration. Nevertheless, LDCs have been

committed towards fulfilling to be enabling commitment-5 of the BPoA to enhancing the

role of trade in the development.

All the LDCs were fully aware of the Commitment 6 for reducing vulnerability and

protecting the environment. However, lack of technical staff and resources to manage the

National Disaster Plan has prevented the good intention of the LDCs in translating into

reality.

Most of the AP LDCs manage to mobilise financial resources (commitment 7). However,

financial resources in a number of occasions limited to technical assistance rather then for

building physical infrastructure and other productive capacity (a matrix of the Mid-Term

review has been placed in annex 1).

2.1.2 Bangladesh Government’s Review

The commitments, in overall terms, have not yet been realised by Bangladesh although

significant progress has been made in a number of areas. Bangladesh implemented PRSP-

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I in 2005, which acted as the guiding principle for all development activities, and is in the

process of adopting PRSP-II (commitment 1). During the Care-taker Government’s

tenure, Bangladesh had also witnessed establishment of a Regulatory Reforms

Commission (RRC), with the mandate to provide recommendations on streamlining the

business related procedures in the country (commitment 2). A number of these

recommendations were also implemented though the fate of the RRC is not clear today.

Bangladesh indeed has been successful in building human capacities (commitment 3). It

has attained a high level of primary enrolment rate and though access to education is no

longer an issue, quality of education services has been a concern. Further, Bangladesh has

been somewhat effective in disaster management planning (commitment 6). In the PRSP,

emphasis has been attached on various issues including environment management and

capacity building. Details of the Bangladesh review has been placed in annex 3.

Nevertheless, in case of the remaining three commitments pertaining to external factors,

Bangladesh has not yet registered any progress. Though Bangladesh has been active in

the multilateral level and various bilateral/regional forums, the country has been

chronically constrained due to supply-side factors and non-tariff constraints such as Rules

of Origin (RoO) and standards requirement. In similar vein, Bangladesh has not been able

to pursue a policy which prioritises the role of trade in the development process.

Bangladesh has long been financially constrained and mobilising resources for

development purposes have not been effective.

2.1.3 Regional and Global Level Review Evaluation of Regional Initiatives for monitoring BPoA

Various regional and global initiatives have highlighted the importance for the

implementation of the BPoA. In Africa, the LDCs comprise the majority in many

regional and sub-regional arrangements and as a result, their target often coincides with

the priorities of the BPoA. In Asia, where the LDCs lack numerical superiority, some of

the sub-regional organisations that include both LDCs and non-LDCs, such as the South

Asian Association for Regional Cooperation (SAARC), have agreed on a number of

measures of the BPoA in favour of their LDC members.

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Evaluation of Global Initiatives for monitoring BPoA

Since the adoption of the BPoA in 2001, there has been resurgence in international

cooperation for development alongside the emergence of new programme of action

including the Monterrey Consensus and the Johannesburg Programme of Implementation

which indicate the strong willingness of the international development community

towards promoting poverty eradication and sustained economic growth in the LDCs.

There has also been a continuing expansion of programmes to confront specific

development challenges facing the world’s poorest including HIPC initiatives, the

Education for All Fast Track Initiative, the Global Fund to Fight AIDS.

However, ODA from developed countries to LDCs was only 0.08 per cent of the former’s

GNI in 2004; seven donors met the 0.20 per cent target and a further two the 0.15 per

cent target. At the World Trade Organisation (WTO) Ministerial Meeting in December

2005, developed countries agreed to eliminate duties and quotas on imports from the

LDCs accounted for by 97 per cent of each developed country’s tariff lines. The

shortcoming of this arrangement is that, because most LDCs export only a relatively

small number of products, the 3 per cent of tariff lines that are excluded could cover a

large proportion of their exports (details of the evaluation has been placed in annex 2).

2.2 General Assembly Annual Review of the BPoA (2008)

As a part of yearly review of the BPoA, the UN general assembly has met annually to

report on the progress and setbacks toward attainment of the plan of actions and goals.

The details of the 2008 report have been placed in Box- 1.

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Box: BPoA: Annual Review by the General Assembly of the UN Commitment 1: 29 of the LDCs were on track to attain a GDP growth rate of at least 7 per cent per annum. This number was down from 31 in 2005 but up from 24 during the period from 2000 to 2005. All regions, except the Pacific, were on track to achieving the 25 per cent target for the ratio of investment to GDP. In 2006, 30 of the LDCs met or were close to the 25 per cent target, up from 29 in 2005 and 18 in 2000. The number of the LDCs with low rates decreased steadily, from 15 in 2000 to 6 in 2006. Adjusted for PPP, international poverty estimates by the World Bank show that in 9 of the 17 LDCs for which data are available, 50 per cent of the population lives on less than a $1 (PPP) per day. Three of the LDCs have medium (30-49 per cent) poverty rates and 5 LDCs showed low (less than 30 per cent) poverty rates. Malnutrition in the LDCs seems to be increasing during 2007.

Commitment 2: The Worldwide Governance Indicators for 2007 show steady improvement in the performance of the LDCs In 2006 since 48 of the 50 LDCs were eligible for external lending from the IDA. However indicators like Doing Business and Global Competitiveness Report indicated that the LDCs were the most difficult in which to do business.

Commitment 3: In 2006, 14 of the 45 LDCs for which trend data are available were on track to achieving the target of reducing maternal mortality by three quarters by 2015, and an additional 7 were making significant progress towards that goal. About one third of the 50 LDCs has achieved or is on track to achieving the goal of reducing the infant mortality rate. Twenty-six of the LDCs are on track or are making rapid progress towards achieving the universal primary education enrolment goal, up from 17 a decade ago. Of the 40 LDCs for which data are available, 22 either met in 2005 or are on track to reaching the gender equality target in primary education by 2010. Twenty-eight of the LDCs were on track to achieving the sanitation target in urban areas, up from 26 in 2002, but little progress was made in the others. Commitment 4: Data available for the period from 1999 to 2003 showed a significant increase since 1995 in the number of countries with 15 per cent or more of paved roads but little or no change in the total length of roads in the majority of the LDCs since 1990. Railways lengths are limited in most of the LDCs. Air services have been increasing significantly in one half of the LDCs. In 2006, 36 of the LDCs reached the target of increasing average telephone density to 5 or more main line telephone and cellular service connections per 100 inhabitants, with 11 more on track to meeting it by 2010. The number of the LDCs with 1 Internet user per 100 inhabitants increased from 7 in 2000 to 27 in 2006. Commitment 5: Merchandise exports of the LDCs as a percentage of world exports have been growing steadily since 2002 and reached 0.9 per cent in 2006. However, excluding oil, their share in world trade in 2006 remained at the level of 2002: 0.4 per cent. The annual rate of growth in exports by the LDCs in 2006 decreased by 9 per cent compared to 2005. There has been almost no change since 1996 in duty-free access to developed country markets for products originating from the least developed countries. Between 2001 and 2004, official development assistance (ODA) provided by the Organization for Economic Cooperation and Development/Development Assistance Committee (OECD/DAC) to trade-related capacity-building in the LDCs fell by 42 per cent Commitment 6: By 2008, 46 of the LDCs had prepared or were preparing national adaptation programmes of action, many with the assistance of the LDCs Expert Group. During the period from 2000 to 2005, the average annual rate of deforestation in the LDCs was 0.70 per cent, compared to 0.18 per cent globally. Commitment 7: Total donor ODA received by the LDCs has continued to increase since 2000 and reached US$ 29.4 billion in 2006. As a result of the debt relief measures, 32 of the LDCsin 2006 reduced the ratio of debt service to exports of goods and services to below 10 per cent, compared to 29 in 2004 and only 14 in 1990. Total foreign direct investment (FDI) inflows to the least developed countries, in current United States dollars, have almost tripled since 1990 and in 2006 reached US$ 12,334 million. Workers’ remittances to the LDCshave doubled since 2000 and in 2006 reached US$ 14.02 billion.

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2.3 Evaluation of the all Reviews and Priority for the LDCs

2. 3.1 LDCs in the Global Regime: Mixed results

The UNCTAD LDCs Report 2008 underlined that LDCs as a group achieved the highest

GDP growth in 2007 after more than 30 years. The positive changes which we observe

for the LDCs as a group can be attributed to trade and investment performance, coupled

with foreign aid inflow. However, we should also not lose sight of the broader picture of

marginalisation of the LDCs as a group. The dynamism is also characterised by a

continuing and persistent process of severe differentiation and acute polarisation. For

example, the proportion of undernourished population in the LDCs has remained stagnant

at 38 per cent since the early 1970s. Today, nearly 650 million hungry people live in the

LDCs – a number which has hardly changed during the last decade. Reviewing the

progress indicators of the LDCs, the optimists proclaim that we live in the best of all

worlds, and the pessimists fear that this might very well be true.

On average, LDCs exporting to high income countries face tariffs 4 to 5 times higher than

barriers applied in trade between high income countries. We are all aware of the

celebrated comparison between Bangladesh and France as regards their relative market

access in the US. Customs duty on Bangladesh’s export of $2 billion worth of goods to

the US is $300 million, whereas the duties on goods exported by France are same

although France’s export to US is worth $30 billion. It has been estimated that LDCs are

losing about $2.5 billion per year as potential exports earning as a result of the high levels

of tariff protection in the developed countries.

2.4 LDCs priority spelt out in the reviews

Need for strengthening partnership

It has been observed both in the mid term and latest yearly (2008) review that

capacity-building and resources mobilisation are key challenges which could be

remedied by strengthening the partnership between the LDCs and their

development partners, the very foundation of the BPOA.

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LDCs urged developed countries to fulfill their commitments on overseas

development aid, debt relief, trade and technology transfer, fully and

expeditiously, to enable them to achieve the goals of the BPoA by 2010.

Furthermore, LDCs recommended that the BPoA be integrated in the

development policies, strategies and programmes of the development partners of

the LDCs, incorporating monitoring and reporting mechanisms.

Inclusion of New Areas

For effective implementation of the BPoA, there should perhaps be more focused

consideration of some of its elements. Rural development and agriculture should

be brought more to the centre of the development efforts of LDCs. In addition, the

development of ICT and of health services, and their interface in rural sector.

Successful implementation of the Doha Development Agenda

LDCs also highlighted that special international support measures, such as

preferential market access and special and differential treatment of the LDCs

under WTO provisions, need to be expanded and deepened bearing in mind their

supply-side constraints. Enhanced market access for LDCs’ products to other

developing countries could also contribute to the expansion of their trading

opportunities. All efforts should be made to reach a successful outcome of the

Doha Round of multilateral trade negotiations and the effective implementation of

the Doha Development Agenda, which included inter alia, DF-QF market access

for the LDCs.

Promoting Good governance

Various reviews call for democratisation of national governments, the IFIs and the

WTO and the reform of the UN to ensure a pro-people governance system in

place. Moreover, good governance applies both to the North in their dealings with

the South as well as within the South itself.

Demand for unconditional debt cancellation

Total unconditional debt cancellation for all LDCs is a prerequisite to provide

LDCs with some fiscal space and a reinforced effort is required in this direction.

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Predictable, enhanced, targeted and unconditional ODA

All ODA to LDCs should be untied. Due understanding and impact of social,

cultural, institutional and environmental dimensions and priorities is crucial to

offering development assistance. It is not only the quantity but the quality of

development assistance too that equally matters in meeting the goals of poverty

eradication.

Enhancing FDI

Foreign Direct Investment (FDI) cannot suffice by itself in driving the growth

process in the LDCs. To ensure that any investment makes a long-term positive

contribution to development, internationally agreed terms for investment within

LDCs is imperative. Also, FDI inflows to LDCs are seen to be selective, biased

and conditional. Only demand-driven and needs based FDI would contribute

towards achieving sustainable development. This is evident from the past that oil

and mineral rich countries such as Angola and Equatorial Guinea received 25

percent of total FDI flows to LDCs.

Introduction of right based approach for mobilising resources

The rights based and pro-poor development approach should be used as a system

in mobilising resources and creating an enabling environment for eradication of

poverty in LDCs. LDCs attempt must look at the ethical dimension of

development which demands attention particularly in the context of globalisation

and its perpetual threats for exclusion and marginalisation of the weakest sections

of the global society. Rights based and pro-poor approach ensures participation

and protection of the poor which is fundamental to social justice.

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SECTION 3: IMPLEMENTATION OF BPoA: OPPORTUNITIES AND CHALLENGES AHEAD

Despite some very impressive accomplishments, overall progress on meeting the goals

and targets of the BPoA has been slow and uneven. As documented in the previous

section, many of the specific targets and goals of the BPoA are unlikely to be met by

LDCs as a group if current trends persist. The challenges facing LDCs in implementing

the BPoA are significant and demands interface of the two-level (national and global)

game playing fields.

3.1 Implementation of BPoA: Role of LDCs and Development Partners

Last wake up call for implementation of the BPoA

The BPoA has set clear objectives, goals and targets to reach its development

objectives. Equally, clear commitments have been undertaken to put these into

effect. The time is ripe to meet these commitments through concrete actions.

ODA will remain a critical source for financing these actions and achieving the

objectives of the Programme.

Reviewing the MDGs with the emphasis on the LDCs progress and setback

The recent improvement in the economic performance of many of the LDCs,

notably in attaining a 7 per cent annual growth rate in GDP, is encouraging;

however, that growth remains non-inclusive in nature making the achievement of

the Millennium Development Goals (MDGs) more difficult.

Tackling food crisis and promoting sustainable development

On the demand side, energy consumption could be significantly decreased by

adopting cost-effective, energy-efficient technologies in buildings, industry and

transport, as well as carbon saving strategies which will enable the tackling of

climate change, and securing the provision of sustainable energy.

On the supply side, the short-term strategy should include (a) provision of

immediate humanitarian assistance to countries in food crisis, which requires

scaling up of international assistance and closing a US$ 750 million deficit doled

up by high food prices, particularly in the WFP budget; (b) social protection

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programmes, such as cash support, food-for-work programmes and school feeding

programmes; and (c) financial lending and crop insurance schemes.

Need for a rule based enforceable trading system

The LDCs need a rule based enforceable system more than any other country in

the world to protect themselves from arbitrary and discriminatory actions of the

powerful and influential countries. It is in the best interest of the LDCs to

embrace a proactive engagement at the WTO, based on vibrant agenda. There is,

however, no scope for being oblivious of the systemic issues which militate

against the LDCs interests.

Implementation and follow-up of all documents related to the LDCs

It is crucial to build monitoring and follow-up mechanisms in the BPoA.

Meetings between LDCs government officials need to be made more frequent in

order to off-set any divergence from attaining the set goals. In this context, it is

also imperative to refer to the latest UNCTAD LDC report on the LDCs to work

towards establishing a developmental state.

Creating a developmental state

The Least Developed Countries 2009 Report offers new policy orientations that

are viable and argues that the role of the state is crucially important in promoting

development in LDCs. The report further argues that it is now necessary to adopt

more active state policies to promote structural transformation and the

development of productive capacities. This will require the development of both

industrial and agricultural policies embedded within a framework of growth-

oriented macroeconomic policies.

Scaling up aid and improving its quality and effectiveness

Resource mobilisation for development objectives has undermined the full and

effective implementation of the outcomes of previous United Nations

Conferences on LDCs. While the success of the BPoA will depend on the scaling

up of development resource flows to LDCs, ensuring that these resources are used

effectively towards reaching the MDGs and the goals of the BPoA is vital. The

sectoral composition of ODA has also changed markedly since the 1990s with a

significant increase in the proportion devoted to social sectors and an equivalent

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reduction for economic and productive sectors, especially agriculture.

Furthermore, a recent war in Iraq and Afghanistan has re-channeled aid flows to

these war affected countries. This calls for a rebalancing of development aid with

a focus on the productive sectors of LDCs.

Enhancing importance of remittances

In many LDCs, remittances from migrant workers account for a sizable portion of

external resource flows. UN LDC IV should provide policy guidance on how to

sustain the flow of remittances to poor countries and how such resources could be

best used to advance the trade and development interests of LDCs. In this

occasion trade in services particularly on movement of natural persons appeared

to be of crucial importance for LDCs.

A new generation of international support measures

Building entrepreneurship and enhancing the role of the private sectors is key to

strengthening the competitiveness of LDC economies, including through the

transfer of technology and know-how as well as by building technological

capabilities and innovation in these countries. A new generation of international

support measures should also include ways and means of operationalising the Aid

for Trade agenda in the LDCs.

3.2 Implementation of BPoA: Role of Bangladesh for setting priorities for negotiations

No infringement of the Ranks

Bangladesh needs to keep in the perspective that the LDCs as they stand today are

not a homogeneous category any more. This is particularly because of the

differential development performance of these countries during the last decade.

Accordingly, Bangladesh should remain mindful of the incipient tension which

currently afflicts the LDCs as a group, and should be very careful about not

breaking ranks with the other LDCs. Rather it should try to build on its successes

to be a role model for the LDCs.

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Being Aware of the Divisive Policies

Some of the recent initiatives such as the "US Trade and Development Act 2008

show that the developed countries are inclined to take initiatives favourable to a

particular substrata of LDCs. Bangladesh needs to remain vigilant against such

divisive moves and impress upon the LDCs that these types of differential

approaches work against their long term concerns and interests.

Selective and Targeted Approach

Obviously, not all the seven areas identified in the BPoA will be rewarded with

concrete commitments on the part of the developed countries (and multilateral

organisations). Bangladesh may need to be selective both in terms of monoting

and implantation purposes in targeting its efforts in particular areas which are of

critical importance to it. Bangladesh should demand translation of best

endeavours in the areas of Commitment 5 (Enhancing the role of trade in

development) and Commitment 7 (Mobilising financial resources) for the

remaining period before the fourth conference.

Buy-in the support of the developing countries

Bangladesh should try to buy-in the support of the developing countries by

pointing out that the major commitments and affirmative actions must originate

from the developed industrialised countries.

Mobilising Financial Resources

The other area of strategic interest of Bangladesh relates to enhancing non-debt

creating capital flows.

Public awareness and an information campaign

An appropriate strategy for public awareness and for an information campaign

needs to be developed in consultation with other stakeholders and their

development partners. Such a strategy should focus primarily on the Conference

and its objectives as well as the ways and means of attaining them. Developing a

well thought-out strategy for public awareness and an information campaign

should also involve national and regional institutions, government agencies and

civil society and private sector stakeholders in the preparatory processes, the

Conference and during the implementation phase of the outcome document. This

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will not only enhance awareness of the complex development problems and

challenges of LDCs in general and Bangladesh in particular but it will also help

mobilise stakeholders and secure necessary resources for the cause of

development.

Monitoring the progress of the BPoA

Continued efforts should also be made to put in place a mechanism for systematic

and result-oriented monitoring and evaluation and to track progress of the

implementation of actions and commitment of the BPoA. Government may form

a core technical group to monitor and evaluate the BPoA.

3.3 Emerging Areas of Challenges to be addressed by UN LDC IV

Accommodating the global financial crisis (GFC) impacts • As a result of the GFC, a large number of LDCs have been adversely affected through

various transmission channels including exports, imports, remittances, portfolio

flows, FDI and foreign aid. As may be recalled, prior to the crisis, LDCs had been

suffering from high import prices of food, fuel and fertiliser which had seriously

undermined their balance of payments and macroeconomic fundamentals. Once the

crisis set in, falling commodity prices had led to deteriorating balance of payments

position for commodity exporting LDCs.

• Most LDCs were not able to come up with the required stimulus packages because of

lack of adequate resources. On the contrary, they had to bear the brunt of the negative

affect originating from the stimulus packages and incentive schemes of developing

and developed countries which were provided to respective export-oriented sectors of

these countries. This in many cases had undermined competitiveness of both export-

oriented and backward linkage industries.

• The challenge before Bangladesh and other LDCs in the new context, when the worst

impact of the crisis appears to be behind, and when green shoots of recovery appears

to be sprouting in major partner countries are manifold: (a) Addressing the adverse

impact of GFC on the job market (lower absorption, lower migration); (b) Designing

appropriate use of the fiscal stimulus package alongside Safety Net Programme for

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the vulnerable sections; (d) Putting in place appropriate programmes for returning

workers; (e) Addressing the adverse impact of competing countries’ policies; and (f)

Positioning LDCs’ export sectors in view of the envisaged global economic recovery

(addressing impact of stimulus packages, and currency depreciation of competing

countries).

• Initiative in the area of facilitating trade finance as a means to stimulate global trade

should be highlighted by the LDCs. Though Aid for Trade (A4T) is not hostage to the

conclusion of the Round, progress in operationalising the initiative has been sluggish.

Given the urgency of the need to mitigate the consequences of the GFC, fresh and

enhanced commitments particularly for infrastructure development must be

forthcoming under A4T initiative. A dedicated share must be apportioned for the

LDCs under the A4T initiative.

Climate change

• There is a two-way link between natural disasters and environmental degradation.

Deforestation and soil erosion increase mudslides, landslides and flash flooding.

Rises in sea level can result in substantial coastal flooding, salination of soils and

drinking water, and the destruction of coral reefs and mangrove stands vital for

fishing and coastal protection. They can also threaten crop production and

livelihoods in countries with large areas of low-lying land, such as Bangladesh,

thereby worsening food insecurity in many LDCs.

• Integrated climate risk management can serve to reduce and mitigate the

associated with climate change. This could range in scale from actions to manage

the local symptoms of global climate risk to global measures to reduce

greenhouse gas emissions. It would need to include three main elements:

preventative risk management to ensure that future development reduces rather

than increases risk; compensatory measures to moderate the losses associated with

existing risk; and reactive risk management to ensure that risks is not recur after

disaster events.

• Lack of access to financial resources and high levels of debt are additional

challenges facing LDCs. It is imperative that ODA related to mitigating effects of

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climate change remains targeted to meet the needs of the concerned country. This

is crucial to ensure aid effectiveness in fulfilling the goals. Management and

utilisation of fund is crucial. Not only financial, but more importantly, technical

assistance will be strategically vital in ensure that technology transfer and

subsequently, technology diffusion helps facilitate building mechanisms for

climate change management.

Galvanising market access agenda

• The issue of availing duty-free and quota-free market access to developed and

advanced developing countries’ (such as Brazil, China and India) has long been

the aspiration of the LDCs. LDCs could urge the advanced developing countries

to expand their current preference schemes and at the same time, LDCs will need

to ensure that they have the required supply-side capacities to make full use of

market access opportunities.

• As has been highlighted in the previous sections, one of the major strategic

priorities for Bangladesh and other LDCs ought to be securing non-reciprocal

guaranteed market access for their exports including duty-free and quota-free

market access for essentially all products being exported from LDCs in the US

market.

• Nevertheless, LDCs’ export baskets remain highly skewed with few products

playing the dominant role (RMG in case of Bangladesh, oil for Angola). Without

diversifying the export basket, it would not be rational to move forward with the

agenda of exploring new destinations.

• Together, these two factors will likely put LDCs in a severely disadvantageous

position once the recovery phase gains momentum. In view of this, a special

window should be created to help export-oriented sectors of the LDCs by way of

support for mitigating the substantive adverse affects of preference erosion to be

suffered by the LDCs once the Doha Round is concluded. Effective trade

facilitation measures coupled with the removal of NTBs will be the key

determinants for successful diversification of export.

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Strengthening south-south and regional cooperation

• The South-South record of cooperation has been subjected to a limited review and

assessment in terms of goals met, but available information points to significant

progress in a number of countries. A good number of developing countries

extended to LDCs low-interest funds, establishing joint ventures and contributing

to human resource development. In 2000, China decided over two-year period to

reduce or cancel the debt worth over $1.2 billion owed mostly by African LDCs.

• While aid and other forms of assistance have traditionally flowed from countries

of the global North to the South, South-South Cooperation is viewed as an

alternative to North-South aid, which has been criticised for failing to meet its

own commitments and for its implications for economic hegemony.

• Some examples of South-South cooperation include India’s investment in farming

initiatives in Mozambique, biofuels development in West Africa, and the textile

industry in East Africa; India’s fight against producing generic versions of AIDS

medications and make them cheaper for developing countries; China has invested

in pre-fab bamboo housing projects in Ethiopia and Nepal.

• LDCs, in maintaining the group’s cohesiveness, needs to work harder on

strengthening South-South relationships with the dual-objectives of

operationalising the duty-free and quota-free market access and the A4T

initiative.

Preparedness for the IP regime and an inclusive competition policy

• The second LDC trade ministers' meeting in Dhaka in 2003 observed that most

LDCs lack competition laws and regulations, and agencies that are able to

implement the laws. Furthermore, fiscal constraints have not allowed for an

effective implementation of competition policies even in countries where it is in

operation.

• This lack of exposure to, and experience in, competition laws have hampered the

participation of LDCs in the current negotiations. The subsequent declaration

called for strengthening efforts aimed at assisting LDCs in formulating national

competition laws and in establishing requisite institutions.

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• Bangladesh’s (and other LDCs) experience with the recent price escalation of

essential commodities has renewed the importance of implementing an inclusive

competition policy in order to deter anti-competitive behaviour in the market.

• Keeping in view the future obligations of enforcing intellectual property rights

(2013 for all goods excluding pharmaceuticals, for which, the duration is 2016), a

concerted effort by all the LDCs is needed in implementing the TRIPS agenda.

Once again, A4T needs to be operationalised as early as possible since it is

expected to play a bridging role of financing the implementation of TRIPS and

keeping the LDCs’ governments accountable for their progress and setbacks.

Attaining Food Security

• In view of the recent price volatility of essential commodities and its

consequences both for consumers (high commodity inflation) and producers

(depressed food prices often due to conscious government policies), the issue

of food security has one again emerged as a major critical area of concern for

the LDCs. The ongoing WTO Doha Round negotiations have been discussing

the concerns of Net Food Importing Developing Countries (NFIDCs) through

various initiatives. There has also been a demand that during times of high

inflation of essential items in global market, exporting countries do not apply

export ban or minimum export prices (as they have done in case of rice during

the recent price hike) when imports are being made by LDCs. LDC IV

Conference will need to take concrete steps to address the attendant emerging

concerns of LDCs in this context.

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SECTION IV: CONCLUSION The ultimate objective of the BPoA is the strehnghtened integration of the LDCs into the

global economy towards accelerated poverty reduction and sustainable inclusive

development in those countries. But with just over two years left before the conclusion of

the programme, LDCs are still very far from that goal. As the current programme of the

LDCs draws to a close, it is imperative that both LDCs and their development partners

redouble their efforts to consolidate and build upon the achievements that have been

made till date. The midterm review of the implementation of the Brussels Programme of

Action undertaken by the General Assembly in 2006 identified the actions that the LDCs

and their partners needed to take to accelerate progress towards attaining the goals of the

programme. In particular, there is a need for investing in the productive capacity of the

LDCs, including capital accumulation, technological progress and strengthening

institutional and human capacities. This calls for increased assistance from the donor

countries and more efficient and transparent management of resources by LDCs.

Civil society has a major role to play through advocacy, mobilising international support,

and holding both LDCs and donor governments accountable to their commitments under

the Brussels Programme. Equally important is the private sector as the source of

sustainable economic growth. Indeed, without the private sector, the integration of the

LDCs into the global economy cannot become a reality.

One should not overlook the fact that the BPoA was a refreshed and reassured

commitment by the governments against the background of lack of progress in socio-

economic development in the LDCs and in the implementation of the Paris Programme of

Action for the 1990s. The challenge and pressure of implementing the BPoA is hence

litmas test to uphold the political will and credibility of the commitments made by

concerned Governments and development partners. Let us not see ourselves once again

acknowledging failure in 2010, paying lip service with another Programme of Action,

extending the target timeline to another decade. If this be the case, at the least we would

need to ensure that monitoring and follow-up of the BPoA takes place more frequently

and on a continuing basis involving all relevant stakeholders in order to legitimise the

BPoA’s agenda and facilitate its implementation.

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Annex 1

Table 1: Mid –Term evaluation of BPoA by the regional monitoring body 2 Commitments Achievements Concerns

Commitment 1: Fostering a people-centred policy framework

Despite economic growth averaging 6 percent per annum since 2001, the incidence of poverty in Asia-Pacific LDCs remains high (except Maldives).

Over the past five years most of the 14 LDCs had prepared interim or complete PRSPs including the Lao People’s Democratic Republic in 2004 and Bhutan in 2005. However, a number of LDCs report that despite the strong pro-poor policies underscoring the PRSPs, the impact on poverty reduction remains weak.

Rural and infrastructure development.

Weak public sector and aid absorption capacity

Commitment 2: Good governance at national and international levels

GENDER As part of the broader process of democratisation, a number of LDCs have adopted affirmative measures, such as reserved seats and quota, to ensure the participation of women in decision-making (in Afghanistan, Lao PDR, Samoa). Countries like Bangladesh have already implemented this provision.

POLITICAL PLURALITY Since 2001, Asia-Pacific LDCs have regularly held presidential, local and municipal elections (in Afghanistan in 2004, Yemen in 2006) while Bhutan is on the threshold of becoming a constitutional monarchy with a multi-party political system.

JUDICIAL REFORM In 2003 Bangladesh undertook major reform in the civil procedure code with the objective of modernising court processes, reducing case backlog, expediting dispute settlement, and facilitating access to justice. Introduced Money Loan Court Act 2003. A new initiative to strengthen the Lao Bar Association and thereby the legal profession came into force in 2004. In Cambodia, a clear plan of action for judicial and legal reform has been adopted, while the Solomon Islands has reported that since 2003, there has been an improvement in the legal system. Samoa has established a Law Reform Commission. The Panel with Exclusive Jurisdiction over Serious Criminal Offences was established in Timor-Leste. Bhutan National Assembly adopted the Code of Civil and Criminal Procedures.

COMBATING CORRUPTION National anti-corruption strategies were enacted in Yemen,

Tuvalu, Timor-Leste, Lao PDR and Samoa. In 2004, an Anti-Corruption Commission Act was passed by

Parliament in Bangladesh. Cambodia reported it was finalising an anti-corruption law

between 2001-2005. A number of LDCs acceded to the International Covenant on

Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights and the Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment.

Afghanistan became party to key international conventions against narcotics and organised crime.

HUMAN RIGHTS In the period 2003-2004, Timor-Lest acceded to the International

Covenant on Economic, Social and Cultural Rights and the Convention against Torture and Other Cruel, Inhuman and Degrading Treatment or Punishment.

Good governance approach appeared to be top down where the aid is attached with conditionality.

2 Regional Preparatory Meeting of Asia and Pacific Least Developed Countries for the Comprehensive Mid-Term Review of the Brussels Programme of Action, held in Bangkok, 14-15 March 2006.

25

During 2003-2004 period, Afghanistan, Kiribati and Timor-Leste acceded to the Convention on the Elimination of All Forms of Discrimination against Women and Bhutan and Nepal submitted their country reports on their compliance with it.

In 2004, all Asia-pacific LDCs were States parties to the Convention on the Rights of the Child.

Commitment 3 – Building human and institutional capacities

POPULATION GROWTH Lao PDR reported that high population growth increased the

demand for educational services Although, the under-five mortality rate remains the high, some

Asia/Pacific LDCs reported progress. Notably, Maldives has successfully reached the under-five mortality target of 45 per 1,000 live births and maternal mortality now stands at 78 per 100,000.

Yemen reported a marginal improvement in fertility health. Improving accessing to health in Timor Leste has been

challenges given the dispersal of communities. EDUCATION

Although the net enrolment in primary education increased over the period under review, with the most dramatic changes observed in Maldives, Lao PDR, and Bangladesh, LDCs acknowledge, the quality of education needs to be improved.

ACCESS TO WATER AND SANITATION Between 2001-2005 access to water and sanitation has improved

in most LDCs in the region. Access to safe drinking water in reached 84 percent in Bhutan up from 78 percent in 2000. The Government expects 100 percent coverage by 2007. Bangladesh reported that it had already achieved the Millennium Development Goal in respect to ensuring access to pure drinking water.

All Asia/Pacific LDCs reported that they needed to improve capacity and educational standards, especially at secondary level. Major challenge is the training of teachers. Pupils who drop out before reaching high school remains high.

Gap between urban residents and their rural counterparts exists

Commitment 4: Building productive capacities to make globalisation work for the least developed countries

A number of LDCs have geared up their efforts to deregulate agricultural markets, provide a greater role for the private sector, attract investments and promote new agricultural technology (Bangladesh, Lao PDR and Yemen).

AGRICULTURAL PRODUCTION The development of high-value agricultural products features

prominently in the recent PRSPs of Nepal and Bhutan. Efforts of the LDCs were supported by their development

partners. ITC provided support to silk production in Cambodia and jute production in Bangladesh.

IMPROVING ROAD INFRASTRUCTURE In an effort to improve transport infrastructure, Lao PDR has

received substantial external support. The country reported that most primary highways and major airports are in fair to good conditions although much needs to done to improve secondary and tertiary roads. The East-West Economic Corridor connecting Vietnam with Thailand via central Laos is scheduled for completion soon. Construction of the section through Lao PDR of the North-South Corridor from Kumming to Chiang Mai has commenced with financing from the People’s Republic of China, Thailand and the Asia Development Bank.

In Afghanistan the “ring” road which encircles the country is under construction with the assistance of the donor community, while large-scale programmes to rehabilitate farm-to-market access roads are underway.

Solomon Islands highlighted that with the support of the European Union seven new wharves were completed in 2005. Additionally, funding from Japan enabled the country to upgrade only international airport.

Maldives has pressed ahead with the rehabilitation of the infrastructure destroyed by the 2004 tsunami.

Samoa reported that road networks covering the two main islands

ICT has also widened the gap between the poor and the rich.

26

have been completed under a World Bank financed infrastructure asset management project.

TECHNOLOGY TRANSFER Between 2001-2005 tele-density and Internet penetration has

almost doubled in the LDCs, although the digital divided between LDCs and developed countries remains stark.

In 2003 Samoa approved a national ICT strategy, while a new telecommunication Act was passed which prescribes the new regulatory role of the government.

In Nepal, the national IT policy has been revised with a focus on cyber regulation, e-governance, and e-commerce. Telephones have more than tripled since 2002.

Commitment 5: Enhancing the role of trade in development

MARKET ACCESS Despite intervention to improve market access under the various

preferential schemes almost half of the market access preferences granted under these schemes remain under utilised by LDCs, owing to supply side constraints, lack of trade-related capacity and non-tariff barriers, notable rules of origin and product standards.

So far, only two LDCs(Nepal and Cambodia) have joined WTO in post-Doha period. Yet six LDCs in the Asia-Pacific region remain in different stages of the accession process (Afghanistan, Bhutan, Lao PDR, Samoa, Vanuatu and Yemen).

The International Trade Centre continued the export-led poverty reduction programme, aimed at integrating poor communities into international markets in for example in Cambodia. The ITC World Trade Net Programme, aimed at facilitating business community participation in the world trading system, currently covers three Asian LDCs, Bangladesh, Cambodia and Nepal

The share of the LDCs in the world trade remains below 1 percent.

Integrating the LDCs into the global economy requires their voice and effective participation in the WTO. However, their accession to WTO has been hampered by policy issues related to the adjustment of development strategies, implementing instruments and legislative frameworks of LDCs to WTO requirements; insufficient expertise, resources and infrastructure required for accession negotiations.

Commitment 6: Reducing vulnerability and protecting the environment

Timor-Leste reported that “slash and burn” methods and extensive logging have created soil erosion, but there was a steady progress was being made to combat this phenomenon. The Government has also established an Inter-Ministerial Commission for Natural Disasters whose focus is the strengthening capacity to deal with disasters.

Bangladesh has drawn up a Five-Year Strategic Plan for the Comprehensive Disaster Management Programme (2004-2008). In Samoa the Ministry of natural Resources and Environment was restructured. Furthermore, in 2004 a legal framework for the management and control of unsustainable types of land use was created.

In an effort to alleviate Tuvalu’s vulnerability to natural disasters, the Government has established a National Disaster Office in collaboration with regional organisations.

There are, however, concerns about the lack of technical staff and resources to manage the National Disaster Plan.

Commitment 7: Mobilizing financial resources

It is worth noting that LDCs accounted for most of the OECD/DAC aid (41.1 percent) and European Union aid (47.1 percent) in the period 2002-2003. In 2003, 92 percent of OECD/DAC aid was untied and 94.7 percent of bilateral aid to LDCs was provided in grants, a total of 0.08 percent of donors’ GNI/ODA, a modest

27

increase over 2002. It is projected that OECD/DAC aid to LDCs will further increase in 2006. The Paris High Level Forum on Aid Effectiveness, held form 28 February to 2 March 2005, also signalled the determination of donors to improve effectiveness by monitoring progress on ownership, aid alignment, harmonisation, managing for results and mutual accountability.

The share of net FDI flows to LDCs has increased, reaching almost 5 percent in the period 2003-2004. A number of countries have also succeeded in attracting South-South FDI (Nepal). Workers’ remittances have recently emerged as an important source of external finance for development. They are currently a primary source of external finance to several least developed countries (Bangladesh, Kiribati, Nepal and Samoa. Several least developed countries, with the support of donors, have also made sustained efforts to improve their investment and economic governance. However, inwards FDI to the LDCs was not encouraging enough.

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Annex 2

Table 2: Comprehensive Review (Midterm Review) of BPoA: Regional and Global Initiative

Regional Level Global level In Africa, the LDCs comprise the majority in many regional and subregional arrangements and for this their targets often coincides with the priorities of the LDCs. In Asia, where the LDCs lack numerical superiority, some of the subregional organizations that include both LDCs and non-LDCs, such as the South Asian Association for Regional Cooperation, have agreed on a number of measures in favour of their LDCs members. A number of global-level South-South arrangements give special attention to the least developed countries. The Organization of the Islamic Conference includes 22 LDCs and, in 2005, launched a capacity-building programme to support a number of these members. The South-South Healthcare Delivery Programme, established as a result of the South Summit in 2000, has provided assistance to a number of least developed countries. During the eleventh session of the United Nations Conference on Trade and Development in 2004, developing countries launched the third round of trade negotiations under the Generalized System of Trade Preferences in which they agreed to give special consideration to least developed countries. The Negotiating Group on Market Access has elaborated four stages of negotiations, with the conclusion scheduled for November 2006.

International economic environment The international environment has been generally

favourable to most LDCs since 2001. The five oil-exporting LDCs have benefited from the

surge in oil prices since 2003. International cooperation for development

Since the adoption of the Brussels Programme, there has been resurgence in international cooperation for development and the emergence of a wide degree of consensus on the actions required to achieve development, as reflected in the Monterrey Consensus and the Johannesburg Programme of Implementation.

There has also been a continuing expansion of programmes to confront specific development challenges facing the world’s poorest, such as those included in the Heavily Indebted Poor Countries and Enhanced Heavily Indebted Poor Countries Initiatives, the Education for All Fast Track Initiative, the Global Fund to Fight AIDS, Tuberculosis and Malaria and an array of others.

Official development assistance Measured in 2003 prices, ODA to the LDCs rose by

about 75 per cent between 2001 and 2004 and is likely to have increased further in 2005.

However, ODA from developed countries to LDCs was only 0.08 per cent of the former’s GNI in 2004; seven donors met the 0.20 per cent target and a further two the 0.15 per cent target. Although not yet reflected in expenditures, there have been several commitments of additional ODA since 2004.

An increasing proportion of the external assistance for LDCs is being directed to education and health (including water and sanitation).

Quantitatively, the expenditures of the United Nations system on operational activities for development in LDCs were 80 per cent higher in 2004 than in 2000.

External debt The ratio of debt service to exports of goods and

services for the LDCs as a group fell by about half between 1990 and 2004 and should decline further as a result of subsequent measures.

The Enhanced Heavily Indebted Poor Countries Initiative has been extended until the end of 2006 and the list of eligible countries has been revised. Of the 40 countries that are now considered eligible for assistance under the Initiative, 32 are least developed countries.

As an additional measure, the Multilateral Debt Relief Initiative was created in 2005 to cancel the debt owed by the heavily indebted poor countries to their major multilateral lenders. Of the 32 eligible least developed countries, 13 had reached the Heavily Indebted Poor Countries Initiative’s completion point and were receiving irrevocable debt relief as of May 2006, including full multilateral debt cancellation under the

29

Multilateral Debt Relief Initiative. A further nine LDCs were receiving interim relief on their debt service payments and could receive full debt cancellation if they meet the necessary criteria. Political instability or special financial factors are impeding the consideration of the remaining cases.

Private sector financial flows Foreign direct investment began to expand in the latter

part of the 1990s and has doubled since 2000. The sources and nature of foreign direct investment

inflows are becoming more diversified as flows from developing countries increase and host Governments increasingly cooperate with the foreign business sector, sometimes in public-private partnerships.

International trade The European Union introduced its “Everything but

Arms” initiative for LDCs prior to the Brussels Conference and a number of other developed countries have eliminated or reduced the barriers to imports from all or some of the LDCs under the Generalized System of Preferences or a special regime

At the World Trade Organization Ministerial Meeting in December 2005, developed countries agreed to eliminate duties and quotas on imports from the LDCs accounted for by 97 per cent of each developed country’s tariff lines.

The shortcoming of this arrangement is that, because most LDCs export only a relatively small number of products, the 3 per cent of tariff lines that are excluded could cover a large proportion of each Least Developed Country’s exports.

WTO Ministerial Meeting voiced support for “Aid for Trade”, particularly for the Least Developed Countries, and established a Task Force to make recommendations on an enhanced Integrated Framework.

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Annex 3

Table 3: Mid-Term Review of the Status of Implementation of the Brussels Programme of Action: Case Study Bangladesh

Commitments Actions mentioned in the Mid -Term review (in 2006)

Commitment 1: Fostering a people-centred policy framework

Interim Poverty Reduction Strategy paper (I-PRSP): Preparation initiated in 2001. PRSP: Implemented in 2005, now acting as the guiding principle for all development activities.

Commitment 2: Good governance at the national and international levels

Government has taken a number of incremental steps towards reform in five core areas: (i) improving public expenditure and fiscal management- New Public Procurement Regulations (PRA), better Public Financial Management (PFM) (ii) reforming public administration: (iii) strengthening revenue mobilization: NBR prepared a mis-term modernization strategy, in 2003 Large Taxpayer Unit (LTU) was restructured, in 2004 NBR established an LTU for VAT, Tax ombudsman has been established, (iv) establishing an independent Anti-Corruption Commission: ACC act passed by the parliament in 2004, and (v) reforming civil justice system: Major reforms in civil procedure code were made in 2003, introduction of Money Loan Court Act in 2003, as a step towards full separation, a Judicial Service Commission has been created under the jurisdiction of supreme court.

Commitment 3: Building human and institutional capacities

Bangladesh is ahead of 50 LDCs in terms of HDI and has graduated from low level to the medium level countries. UNDP’s Gender Development Index (GDI) - Bangladesh ranked 110 among 144 countries (increased by 13 positions since 1999). Increased primary school enrollment (gross enrollment rate in 2004 was 97 percent). Bangladesh has been allocating over 20 percent of the total public outlay for social sector.

Commitment 4: Building productive capacities to make globalization work for the least developed countries

Bangladesh active member of multilateral trade from and various bilateral and regional forums. Bangladesh introduced liberal trade policies that include reducing the coverage of quantitative restrictions, reducing the maximum tariff rate by 5 percentage points from 32.5 percent, rationalizing the structure of supplementary duties, withdrawing license fee on all imports, introducing a unified exchange rate system and introducing to current account convertibility. In order to cope with the process of globalization, Bangladesh is pursuing the strategies of diversifying export basket, quality and standard development, develop infrastructure supportive to backward and forward linkage industries, encouraging FDI, market promotion, developing physical infrastructure, strengthening human and institutional capacity.

Commitment 5: Enhancing the role of trade in development

In the latest Import Policy Order (IPO) 2003-2006 the number of items appearing on the control list have been brought down to 63 (from 122), of which only 23 are due to trade reasons. The highest tariff rate has been brought down from 350 percent in 1992 to 25 percent in FY05. The number of tariff slabs (including zero) has come down from 24 in the 1980s to 3 in FY05. The liberalization and rationalization of tariff structures have caused the unweighted tariff rate to fall from 57.2 percent in 1991-92 to only 16.5 percent in 2002-03. The unweighted average duty rate has declined from more than 82 percent to 35.5 percent during the same period. Import weighted average duty rate stood at 40 percent in 1993-94, but fell to 27 percent in 2002-03. An important element of trade policy of the Government has been the introduction of lower rates of interest on bank loans, duty free imports of machinery and intermediate inputs, cash incentives, duty drawbacks, and

31

exemption from value added and other taxes. the anti-export bias in Bangladesh’s economy has fallen from as high a s 59 percent in 1991-92 to 18 percent in 2002-03. On the other hand, with import weighted protective effects, the estimated comparable figure is found to have fallen from 22 percent to 13 percent during the same period. Export Policy 2002-06 aims at increasing export, creating job opportunities and alleviating poverty.

Commitment 6: Reducing vulnerability and protecting the environment

Bangladesh is one of the signatory countries to 28 agreements, conventions and protocols on environment. Notable among them are: convention on climate change, Agenda 21, Convention Concerning the protection of the World Cultures and Natural Heritage, Convention of International Trade in Endangered Species of Wild Fauna and Flora (CITES), Convention on Biological Diversity, Ramsar Convention on Wetlands, Convention to combat Desertification, marine Pollution Convention (MARPOL), Global Tiger Forum, etc. In PRSP emphasis has been given on various issues including environment management and capacity building for environment. The government of Bangladesh has drawn up a Five-Year Strategic Plan for the Comprehensive Disaster Management Programme (2004-2008)

Commitment 7: Mobilizing financial resources

The Government has taken measures to increase domestic resource mobilization (tax and non-tax) through better compliance, collect arrears, reduce exemptions, extend the VAT net and improve tax and customs administrations, rationalize public expenditure, reducing subsidies to SOEs, implementing non-productive expenditure control measures and improving procurement and financial accountability. Over the years significant changes have taken place in the total aid package to the country. The share of grants has been declining gradually. Bilateral aid, which was 75.4 percent in total aid during FY 1973-1978, has decreased to 49.0 percent in FY 2003-04. Multilateral aid, on the other hand, has grown from 24.5 percent to almost 51.3 percent over the same period. The decreasing volume of grants has resulted in large proportion of loans in the total aid package. The share of grants, which was 89.0 percent in FY 1972073, declined in 53.2 percent in FY 19798-80, 55.4 percent in FY 1984-85 and 33.8 percent in FY 2003-04. The flow of Food Aid and Commodity aid has been showing a declining trend.