United Nations, 3 November 2003 

Mr. Chairman,

The developments taking place in the international trade regime is crucial for the Least Developed, the Landlocked and the Small Island Developing States. These most vulnerable countries of the world are yet to receive the degree of international support and assistance that they seek - and that they deserve - to overcome the specific and undue disadvantages they confront in this increasingly globalizing world. This is largely due to a persistent lack of political will on the part of the international community – a situation that is aggravated by the inability of these particularly disadvantaged countries to influence the global decision making process. When the trade of these countries suffer due to factors beyond their control and despite their relentless efforts to undertake demanding reforms of their national economies, it makes it impossible for these countries to achieve the Millennium Development Goals and the effective implementation of the Programmes of Action of Brussels, Almaty and Barbados.

What transpired at the Fifth Ministerial Meeting of the World Trade Organization in Cancun need not be seen as the end of the road. Rather we should prepare to overcome the future hurdles and the most crucial elements in that should be fairness and justice for all, with special attention to the most vulnerable. We need to bear in mind that in international trade, the Least Developed Countries’ share has fallen from 3% in the 1960s to a meagre 0.4%. The Small Island Developing States, 11 of which are also LDCs, fair no better with a share similarly below the half percentage mark. In Africa, which has 34 LDCs, it has fallen to 2%.

In this context, a positive development in Cancun has been the emergence of a number of issue-based alliances and coalitions among developing countries, in particular the “Grand Alliance” of the African Union, the African, Caribbean and Pacific Group and least developed countries, signalling that their concerns are to be taken on board for a successful outcome of the Doha Round. The “Cotton Initiative” led by Benin and joined by Burkina Faso, Chad and Mali – all LDCs- has highlighted effectively negative impact of the agricultural subsidies. Another development that had been and would continue to be supportive of the most vulnerable countries is the activism of civil society, parliamentarians and media, both in the North and the South, adding a new dimension to the course of multilateral trade negotiations. Attention should also be given to the comprehensive set of agreement-specific proposals submitted by developing countries, including the African Group and least developed countries, to strengthen and operationalize special and differential treatment.

The solidarity and efforts of the Least Developed Countries have been productive in that the Cancún ministerial text (Rev.2) acknowledges the seriousness of the concerns of least developed countries as expressed in the Dhaka Declaration adopted in June 2003, and addresses a number of least developed countries’ interests. Key issues of concern to them – as reflected in the Report of the Secretary-General (A/58/414) - include (a) binding duty-free quota-free market access for all products (agricultural and non-agricultural products) originating from Least Developed Countries; (b) measures to address preference erosion; (c) agriculture where they are demanding exemption from all reduction commitments and (d) special and differential treatment where they feel proposals that have greater developmental value have yet to be considered. Revision 2 recognized the need to adopt and implement rules of origin so as to facilitate exports from the LDCs. In addition, it noted under coherence the initiative announced by IMF and the World Bank at the Conference to work with WTO to address the problems faced by these countries in adjusting to more liberal trade environment. In services negotiations, revision 2 provided for members to give priority to sectors and modes of supply of interest to the LDCs particularly, movement of service providers. Furthermore, the modalities for the special treatment of Least Developed Countries in the negotiations on trade in services was adopted in September 2003. In February 2003, the TRIPS Council adopted a decision on the implementation of the TRIPS Agreement relating to grant of incentives for transfer of technology to the LDCs.

In the process to restart the Doha Round, there should be an explicit recognition of the social, economic and political dimensions for granting special and differential treatment to the most vulnerable countries. Recent calculations of the Economic Vulnerability Index used in the triennial review of the list of LDCs by the Committee for Development Policy (CDP) revealed that LDCs, over the 1979-2001 period, had 9.5% more instability in their agricultural production, and 49% more instability in their exports of goods and services, than other developing countries. It was also noted that the African LDCs, over the same period, recorded 25% more instability than all other LDCs in their agricultural production – clearly demonstrating the urgent need for added international attention required in Africa.

For the LDCs, meaningful market access can make a worthwhile contribution to their development. My Office lauds the “Everything but Arms” (EBA) initiative of the EU as it provides greater certainty of market access for the products of LDCs.However, a recent World Bank policy research paper showed that the impact on the volume of trade has been minor for the currently exported products. My Office also encourages the furtherance and continued improvement of the African Growth and Opportunity Act (AGOA) of the United States and expects that this effort should result in direct benefits to the trade and development of sub-Saharan countries. The easing of non-tariff barriers and the rules of origin should ensure the increase in the non-oil exports of sub-Saharan Africa. AGOA’s time frame needs to be increased to give the programme greater stability and certainty. Investments in infrastructure, schools, hospitals, food security, job creation and capacity building have to be given high priority when the next steps in AGOA are undertaken. Japan’s efforts to provide market access to nearly all products of LDCs deserve our recognition.

Several factors have affected the abilities of the LDCs to take full advantage of the market access preferences given by the Quad countries (Canada, the European Union, Japan and the United States). The factors affecting such exports have been attributed to a lack of inherent domestic capacities in the LDCs, including adequate market information, supply side constraints and even security problems and political instabilities. It has been noted that since 1998, despite improvements in the aggregate utilization of market access preferences in the Quad countries, effective utilization by LDCs remained well below its potential.

At the same time, there are many non-tariff barriers that have proved highly restrictive, and has resulted in bottling up the export potential of the LDCs. The stringent sanitary and phytosanitary standards and complex rules of origin as well as the domestic subsidies granted in developed countries inhibit LDCs from gaining access into their markets. In most cases, these subsidies are given to those sectors in which LDCs have a comparative advantage. This is especially so in the case of agriculture and low-tech manufactures that still form the backbone of most LDC economies. A case in point is the recently highlighted issues of cotton and banana exports that are crucial to LDCs and Small Developing Island States.

Another area of serious concern to my Office is the question of transit facilities and transport infrastructure as it relates to the trade and development of the Landlocked Developing Countries. These countries, because of their lack of direct and sovereign access to seaports confront specific problems in their international trade. High transportation costs make their goods less competitive and detract foreign and domestic investments in landlocked countries. The recently-adopted Almaty Programme of Action addresses these issues in a practical and direct way. We expect good progress in the months ahead in the implementation of the Programme. The joint position taken by the LLDCs in Cancun soon after Almaty has made considerable impact in raising the issue of market access for their products.

When it comes to the Small Island Developing States, their international trade and development prospects confront truly formidable hurdles. Small size, vulnerability and isolation from world markets due to their geography make island economies highly dependent on external trade, and for imports like fossil fuels. Their domestic markets are too small to provide significant economies of scale, whilst on the other hand they confront high transport and communications costs. While they are sometimes accused of not diversifying their export products base, the question is how can this be achieved in the absence of foreign investments, and the infrastructure required to make investments viable and attractive? A focussed agenda and an implementable plan of action for the Small Island Developing States at next year’s International Meeting in Mauritius would advance their cause in a big way. Special and differential treatment for SIDS, and especially as it relates to preferential market access for their products, is vital for them.

For the most vulnerable countries, transparency and their increased participation in the complex decision-making processes is imperative. Accelerated and facilitated accession of these countries on terms commensurate with their level of development continues to be a key priority. The accession of Cambodia and Nepal to WTO, the first two least developed countries to do so, is an important step towards the universality of the organization. For other least developed countries in the accession process, the faithful implementation of the decision on guidelines for their accession is called for.

The issue of commodities is at the core of trade and development of the most vulnerable groups of countries and my Office welcomes the significant initiative taken by the UNGA President Julian Hunte to hold the open-ended panel on commodities on 27 October. He highlighted that “About sixty per cent of the total export earnings of the Least Developed Countries come from primary commodities, a problem that also extends to many Landlocked Developing Countries and Small Island Developing States”. Negative impact of the collapse of commodity prices on the HIPC initiative and on the diversification efforts in the LDCs deserves close attention. In this connection, I would like to express my great disappointment in finding that the Report of the Meeting of Eminent Persons on Commodity Issues as presented in document A/58/401 does not reflect at all the problems faced by these three most vulnerable groups. It would be of interest to these countries and to my Office to know why it is so. In any case, this glaring omission should be rectified. Let me also emphasize here that in exploring the possibilities for a new partnership between governments, private business, producers’ and traders’ associations, civil society and international organizations in the commodity area – as recommended by the Eminent Persons, UNCTAD should give special attention to the situation in the LDCs, LLDCs and SIDS.

Before concluding, I would like to commend UNCTAD on the follow-up deliberations undertaken by the Trade and Development Board on the heels of the Cancun Ministerial Meeting on issues confronting the LDCs. The Doha Work Programme must now be pursued with greater vigour. Our objective should be to provide duty and quota-free market access – unhindered by non-tariff barriers – for all LDC exports, and to build up their supply side capabilities. The same objectives should be set for the LLDCs and SIDS. Here I would like to recognize the important role of and to strongly support increased resources for the Common Fund for Commodities to enable it to expand its very useful support to these countries.

An important opportunity to address the issues of trade and development would come at the UNCTAD XI next year in Sao Paulo, Brazil. The LDCs, the Landlocked Developing Countries and the Small Island States need to prepare well to participate effectively and push their agendas forward at UNCTAD XI which should provide special forums for these vulnerable countries for that purpose. On 28 October, addressing the Open Forum for Partnership organized by the Office of the High Representative at the UN, UNCTAD Secretary-General Rubens Ricupero identified commodities, erosion of margins of preference, rules of origin, creative and cultural industries, accession of LDCs to WTO and capacity development for particular attention of the vulnerable countries at UNCTAD XI. I would also add here that that Conference should look seriously into the concrete measures for expansion of South-South trade opportunities to provide market to the products of these countries. The much-needed reinforcing of confidence in the multilateral trading system and among different trading partners and member States can only be generated in Sao Paulo if the concerns and needs of the LDCs, LLDCs and SIDS are duly addressed. That way UNCTAD XI process could contribute positively to a balanced and meaningful progress in the Doha work programme.

I thank you.

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