On October 5, the WTO Sub-Committee on Least-Developed Countries (LDCs) delved into the role of preferential rules of origin in expanding trade opportunities for LDCs. The session also featured an experience-sharing segment where representatives from academia and the private sector shed light on the challenges and opportunities LDCs encounter when making use of trade preferences. Rules of origin define the location where a product was manufactured, and many preferential trade programs lay out specific conditions related to rules of origin that dictate how LDCs and developing economies can utilize these preferences.
Mr. Elia Mtweve of Tanzania, the chair of the Committee on Rules of Origin, updated members on recent discussions within the committee. The United States presented an overview of its five preference programs for LDCs, including the African Growth and Opportunity Act, the Caribbean Basin Initiative Program, and the Nepal Preference Program, along with various factors influencing preference utilization. The United Nations Conference on Trade and Development and the WTO Secretariat shared information on capacity-building efforts, including analyses of rules of origin conditions for LDC products to access the markets of trading partners.
During the discussions, speakers highlighted the challenges some countries within the WTO's LDC Group face in utilizing the preferences granted to them. These challenges encompass high compliance costs, administrative burdens, and limited awareness of preference benefits. The Coordinator of the LDC Group urged members to take further measures to simplify LDCs' use of preferential rules of origin.
The United Kingdom mentioned its Developing Countries Scheme, which allows up to 75% of non-local content for over 6,700 products. An interactive dashboard facilitates access to product and country information under this scheme.
Representatives from the business sector emphasized that implementing trade facilitation measures and simplifying rules of origin can help companies, particularly micro, small, and medium-sized enterprises, leverage market access opportunities. Greater use of digital tools could ease the administrative burden for LDCs when complying with preferential rules of origin. The European Union's Registered Exporter System, which aids LDC exporters in utilizing preferential market access, was cited as a successful example.
Participants noted that flexible rules of origin requirements can enhance domestic production. Although low value addition thresholds have facilitated LDC exports, policymakers in LDCs should prioritize strengthening productive sectors. It was also emphasized that existing evidence on the utilization of preferential market access opportunities could guide the negotiating priorities of LDCs.
The session aimed to foster a better understanding of how preferential rules of origin can be leveraged to enhance trade for LDCs, ultimately contributing to their economic development. There are currently 46 LDCs, with 35 of them being WTO members, while eight are in the process of accession.