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U.S. Announces LDC Trade Initiatives Ahead of WTO Ministerial

Thursday, December 15, 2011
Sandler, Travis & Rosenberg Trade Report

The United States announced Dec. 14 several initiatives designed to help least-developed countries “benefit more fully from global trade.” These measures focus on textile and apparel production and ways that LDCs can improve their use of existing trade preference programs.

The U.S. announcement may be an effort to counter any attempt to secure other LDC-specific concessions at this week’s World Trade Organization ministerial meeting in Geneva. Earlier this year WTO members, having realized that they would not be able to conclude a comprehensive Doha Round agreement by the end of December, proposed instead to work out a narrower deal focusing on issues of importance to LDCs such as duty-free/quota-free treatment, simpler rules of origin, a waiver from implementing a to-be-negotiated agreement on services, and “a step forward” on developed country support for cotton production. However, due to what Director-General Pascal Lamy called “paralysis in the negotiating function of the WTO,” it soon became clear that this effort too would not see a successful conclusion. There have been reports that supporters of an LDC-friendly package could try make another effort to push it forward at the upcoming ministerial.

According to a fact sheet from the Office of the U.S. Trade Representative, the new U.S. initiatives include the following.

AGOA Enhancements. The Obama administration will “work energetically” with Congress to enact legislation extending through 2015 the third-country fabric provision of the African Growth and Opportunity Act, which is currently slated to expire at the end of 2012.

Cotton. The U.S. is taking the following steps to provide duty-free/quota-free treatment for imports of upland cotton fiber from LDCs: (1) launch a review process to consider adding upland cotton fiber to the list of products eligible for duty-free treatment for LDCs through the Generalized System of Preferences, and (2) seek congressional action to provide quota-free access for LDCs on all upland cotton fiber tariff lines.

The U.S. also plans to introduce in April 2012 a follow-on program to build on the positive results of the efforts it has made to support the development aspects of cotton in the C-4 countries (Benin, Burkina Faso, Chad, Mali), including the West African Cotton Improvement Program. The U.S. will provide up to $16 million over four years for the new program, whose key elements will be the use of a development credit authority guarantee and public-private partnership to drive private debt to investment funds and organizations that will make debt and equity investments in small and medium-sized enterprises operating in agricultural value chains in West Africa. The program will also continue capacity-building efforts and work to improve the efficiency of the cotton sector in the C-4 countries.

Preference Program Utilization. The U.S. is launching a new U.S. Agency for International Development program to provide technical assistance aimed at helping LDCs make better use of trade preference programs such as GSP. Work under this new initiative will be demand-driven and could include outreach to improve awareness and understanding of U.S. preference programs and assistance in identifying and navigating markets for exports.

Other Efforts. USTR also noted several other measures it has already taken this year to help increase trade and investment for LDCs, including the African Competitiveness and Trade Expansion Initiative, USAID’s new Partnership for Trade Facilitation, and the launch of talks with the East African Community on a potential new trade and investment partnership.

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