DTIS, Volume I - Enhanced Integrated Framework (EIF)

The preference offered by Japan on dried skipjack applies to both developing and leastdeveloped
countries, so a change in status will not affect this preference.
As an LDC, Maldives’ exports of canned tuna enter the EU free of duty. This product
now represents around 15 per cent of total exports and is therefore very significant. 21
However, developing country exports to the EU of canned tuna attract tariffs of 12 per
cent. Analysis of the relative competitiveness of canned fish production in Maldives
indicates that Maldives already sells in Europe at above world (duty paid) price in the
order of US$2-3 per case of 24 cans. The higher Maldives price is also partly a function
of quality. But if an additional 12 per cent was required to be paid in duty, current EU
importers may well source cheaper supplies.
Fresh/chilled tuna loins constituted 4 per cent of exports in the first half of 2005, of
which the vast majority were destined for the EU market. At present, these exports enter
duty free but will attract the MFN rate of 18 per cent when the Maldives loses LDC
status. Current exporters believe it would be very difficult for them to compete should the
MFN duty be payable, due to the high production and freight costs.
Over and above these very real losses, Maldives will experience a loss of “potential”
where future export development and diversification could be constrained by the lack of
LDC preferences. Already, Maldives has “natural” disadvantages relating to high
transport costs with high production costs (all electricity is generated from imported oil),
high cost of inputs to production (all inputs have to be imported) and high cost of
transport of the final product. Without the additional preferences accorded to LDCs,
Maldives will be less able to produce and sell competitively. This is a serious
consideration since, after graduation, the Maldives will no longer be able to benefit from
the duty-free-quota-free market access agreement for LDCs that was reached at the
WTO’s Hong Kong Ministerial Conference in December 2005.
A second area of possible loss from graduation is technical cooperation. Several WTO
agreements encourage trade-related technical assistance and support to least developed
countries to enable them to fulfill their obligations. Accordingly, there is a real risk that
after graduation, Maldives would have reduced access to technical assistance and
support.
The third consequence concerns WTO agreements. In some of these agreements, the
benefits for LDCs take the form of non-binding commitments. These are provisions,
which simply encourage developed members to provide “special” consideration to these
countries without any specific details or legally required commitments. These include
Article XI (2) of the Marrakech Agreement; Article 10 (1) of the SPS Agreement; Article
12.8 of the Technical Barriers to Trade Agreement; Article 3 (3) of Agreement on Import
Licensing Procedures; Article IV (3) of GATS; 6 (d) of Annex on Telecommunications in
GATS; and Article 66(2) of TRIPS.
21 15% of total exports for first half 2005 and approximately 16% of non-textile exports in the previous four
years
37